Afghanistan
Debate between Barry Gardiner and Michael Fallon(9 years, 12 months ago)
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Michael Fallon
I thank my right hon. Friend. Few Members of this House have as much experience as he gained in his time as Minister with responsibility for this area, and he probably knows better than any other Member of this House just how deeply this attack will be felt in the FCO family. There are going to be attacks like this. The terrorist threat—the insurgency—has not been fully defeated, and I know the Government there and their armed forces expect that and are ready to take that on.
My right hon. Friend is also right to focus on the future economic development of Afghanistan. While I am pleased that other NATO countries have now fulfilled the commitment they made to the Resolute Support mission and that finally, the numbers of troops we need from the different participating countries have been pledged, it is equally important that other countries now rally behind the London conference and make the same kind of commitment to Afghanistan’s longer term economic development. We have a Government of national unity in place there now—a Government whom I believe have a better prospect of delivering the kind of economic reform that is well placed to tackle corruption, but they are going to need the help of the international community, and I grateful to my right hon. Friend for continuing to underline that.
Barry Gardiner (Brent North) (Lab)
I welcome the Secretary of State’s statement. He will know that the UN Office on Drugs and Crime has said there is a 7% increase in the number of hectares under poppy cultivation this year, and a 17% increase in opium production. What measures will be taken and what money will be allocated at the London conference specifically for farmers to move from the production of poppies and opium to other crops, and what money will be made available to them to make up the shortfall in their income resulting from losing that high-value crop?
Michael Fallon
If I may, I will write to the hon. Gentleman on the details of the subsidy that is made available to farmers. We should be frank about this, however, and he is right to draw attention to the challenge posed by the poppy crop. It has increased—let us make no bones about that—and it presents a threat not just to the future of Afghanistan but to the west as well, where these drugs eventually get through. So it is a challenge that the new Government have to surmount, and in doing so they are going to need all the assistance and expertise that other countries can offer.
Oral Answers to Questions
Debate between Barry Gardiner and Michael Fallon
Michael Fallon
I am afraid that the hon. Gentleman is not right about that. This reference is of the energy market; it includes power generation. Simply winding up Ofgem would mean that another regulator had to be set up in its place. Labour set up Ofgem, and now they want to abolish it, but they would have to set up another regulator. They seem to have a quango fetish.
Barry Gardiner (Brent North) (Lab)
Does the Minister of State agree with the consumer report published by Which? at the end of last year which said that consumers had been put out by £4 billion a year since 2010? If he does agree with that report, does he think it is consistent with the regulator having done a good job, as he has just assured the House it has done?
Michael Fallon
On 21 March, new proposals for a managed closure of the two collieries—not survival—were submitted to the Government on behalf of a number of interested parties and supported by the existing UK Coal management team. We have been considering those proposals with interested parties and with the Commission in Brussels. I am fully aware of the urgency of the situation and will continue to keep the House informed.
Barry Gardiner (Brent North) (Lab)
The Secretary of State rightly spoke of the importance of last week’s IPCC report on climate change. Will he tell the House of any new policy he is considering in the light of that report as a way of advancing progress from the UK on these matters?
Energy Markets (Competition)
Debate between Barry Gardiner and Michael Fallon(10 years, 8 months ago)
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The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I, too, congratulate the hon. Member for Edinburgh North and Leith (Mark Lazarowicz) on securing the debate and on his immaculate timing in fitting it between SSE’s announcement this morning and the forthcoming publication of Ofgem’s assessment. We have had a good debate on some of the major issues.
My hon. Friend the Member for Warrington South (David Mowat) made an excellent speech, which was all the more impressive for him not being able to stick to his prepared text. He made some important points of comparison with the European Union and the key point that all of us need to have regard to the need to ensure that energy companies are able and willing to invest in the new energy capacity the country requires. He also made the point that, in the end—this answers a question from the shadow Minister, the hon. Member for Sunderland Central (Julie Elliott)—it is not for politicians to decide on profit margins or the merits or disadvantages of vertical integration. Such matters need to be weighed up on the basis of evidence and investigated by regulators that are independent of Government.
The hon. Member for Southampton, Test (Dr Whitehead) is usually knowledgeable on these matters, but he was not right about the effect of the threshold on the smaller suppliers. Three suppliers now have more than 250,000 customers and a taper is in place to deal with what I think he called the £7 million problem.
My hon. Friend the Member for East Hampshire (Damian Hinds) emphasised the importance of switching. I will later give him the latest statistics on that, which are encouraging.
The hon. Member for Brent North (Barry Gardiner) was a little out of date in his reference to the Engineering Employers Federation. It was concerned about energy costs, but I do not think that he has picked up its latest release, which followed my right hon. Friend the Chancellor’s excellent Budget last week, in which it welcomed the new support package being given to the most energy intensive industries. He was also not quite right about the regional monopoly among the suppliers. After 2000, the 14 suppliers were free to compete nationally, not just in their regions, but after 10 years, we discovered that there was still a regional concentration and that obviously needs to be looked at.
The hon. Member for Angus (Mr Weir) spoke about the importance of transparency. I confirm that that is one issue that Ofgem has been looking at and a great deal needs to be investigated. The hon. Member for Ynys Môn (Albert Owen) asked me about distribution and transmission. Perhaps he will allow me to write to him on some of the detail. It is difficult to get more competition into the major transmission network, but he makes a point about distribution companies. They are monopolies at the moment, although they are rigorously regulated. Perhaps he will allow me to write to him on that particular point.
The hon. Member for Inverclyde (Mr McKenzie) wants to see simpler tariffs. We certainly do, too. That power has been taken and Ofgem has managed to simplify the tariff structure, which will apply from next week. He also said that supply should be separated from generation. I make the point again that integration has advantages and disadvantages. The best way to weigh those up is independently on the basis of evidence so that we can understand whether change is needed.
The hon. Member for Sunderland Central was not able to clarify whether Labour’s proposed price freeze will apply to the very smallest companies outside the big six. There still seems to be some confusion about that. She asked me specifically whether I welcomed SSE’s announcement this morning. The answer is yes, I do. I strongly welcome that and I am sure that customers of other suppliers will be asking whether they will follow suit. She asked me whether that was evidence that the market is not working well. That is exactly why we have referred the market to Ofgem for the annual competition assessment.
Competition is at the heart of our energy policy. Consumers get the best deal when suppliers face tough competition. Competition also helps to deliver innovation, and ensures that prices are kept as low as possible. Investors will only have confidence in a market that they see as fair and in which all participants compete on equal terms. That is what—
Michael Fallon
I hope that the hon. Gentleman will allow me to proceed, because I have a number of points to cover.
That is what both Government and Ofgem are working to achieve. Through the Energy Act 2013, supported by all the major parties in the House, we have introduced far-reaching reforms to the electricity market and supported Ofgem’s reforms to the retail market and the improvements that it is seeking in liquidity in the wholesale market.
Poor liquidity in the wholesale market is cited by small suppliers and independent generators as a key barrier to entry and growth. Since 2010, trading in the day-ahead market has grown rapidly. The amount of power traded on the day-ahead exchanges has increased from just 6% in 2010 to more than 50% last year.
However, we also need to strengthen liquidity in the forward market. That is one of the key concerns. From next week, Ofgem will be introducing tougher licence conditions that further strengthen forward market liquidity. Those conditions will require the big six suppliers and the largest independent generators to trade fairly with small suppliers or face financial penalties. They will also impose a market-making obligation on the big six, meaning that they will have to post the prices at which they will buy and sell power up to two years in advance. That will make it easier for independent suppliers to buy power for their customers. Knowing that the big six will buy power at the prices that they post will also help independent generators to sell their output in the forward market. The new licence conditions will be supported by Ofgem’s powers to fine companies if they are in breach of them. We have underpinned those reforms by taking powers in the Energy Act to act if Ofgem’s reforms are delayed or frustrated.
Michael Fallon
I hope that the hon. Gentleman will forgive me if I do not.
Our work to break down barriers to entry into the retail energy market is already bearing fruit. The supplier base that we inherited had shrunk, as I have said, from 15 majors in 2000 to just six in 2010. In 2011, we raised the customer threshold for participation in the key energy programmes from 50,000 to 250,000. Since 2010, 11 new companies have entered the domestic supply market—they include one that now has more than 800,000 customers—and we see more companies preparing to enter. There are now 18 independent suppliers, which are increasingly penetrating the market share of the larger, more established players. Their market share, although small, has doubled since 2010, and we will continue to work to remove barriers to entry and growth.
According to industry figures—this is the answer to the point made by my hon. Friend the Member for East Hampshire—between October and February alone, about 1.5 million customers switched their electricity supplier and, of those, nearly 500,000 switched their account to one of the smaller suppliers. The smaller suppliers are of course the ones that would be most exposed by Labour’s price freeze. They are less able to absorb any increased costs arising from network charges or increases in the price of wholesale energy and would struggle to compete with the big six in those conditions, so we do need an answer to the question that I put to the shadow Minister.
I was also asked about consumer engagement. An engaged consumer base is a key component of a competitive market, which is why we are reforming the retail energy market and making it easier for consumers to navigate. In 2010, we inherited a market that was not working in the best interests of consumers. There was a profusion of more than 350 complex tariffs, no doubt supported by Opposition Members, but that complexity made it very difficult for people to work out how to get on to the right tariff for their circumstances. Bills were complicated and unclear, making it difficult for consumers to compare their existing tariffs against others on offer.
The retail market review that Ofgem has already carried out has simplified tariffs and limited suppliers to offering just four simply structured tariffs per fuel. New rules, introduced next week, will make bills clearer and simpler. Suppliers will be required to tell their customers about the cheapest tariff that is available to them and the savings that they could make by moving to it. That information will now be provided on bills and annual statements. By June, all customers on poor-value dead tariffs will be moved to the cheapest variable tariff.
The measures that I have outlined demonstrate our determination to drive greater competition in the energy market, but those measures are not, of course, all that we are doing. My right hon. Friend the Prime Minister announced last autumn that the competition authorities would carry out an annual competition assessment. The first assessment is being carried out by Ofgem, the Office of Fair Trading and the Competition and Markets Authority. We expect it to be published very soon.
Barry Gardiner
I am grateful to the Minister for eventually giving way. He has spoken about competition a great deal. Does he accept that the whole purpose of vertical integration by a company is precisely to be a bulwark against competition and, although what he has said about introducing greater liquidity into the long-term market is absolutely right, does he not accept that that would be achieved by breaking up that vertical integration?
Michael Fallon
That is something, as I have said, that we require independent investigation to establish on the basis of evidence. There are arguments in favour of vertical integration. I am not putting them forward today, but there are those who argue that vertical integration can lower the cost of capital and lead to more efficient risk management. These are issues on which the evidence needs to be properly weighed—with the greatest respect, neither by the hon. Gentleman nor by me, but by independent investigators who are detached from the political process. I am very disappointed to see that the regulator would be abolished if Labour ever came to power. The evidence needs to be weighed independently, and we need to have a proper judgment. The first competition assessment is being completed—
Oral Answers to Questions
Debate between Barry Gardiner and Michael Fallon(10 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text
Michael Fallon
I discussed these issues with the German Government in Berlin yesterday and I agree with my hon. Friend that completing the internal market, with more interconnection and work on network codes and sharing, is part of the answer to making Europe more self-sufficient in its own energy and in reducing our dependence on fluctuating wholesale costs.
Barry Gardiner (Brent North) (Lab)
I draw attention to my entry in the Register of Members’ Financial Interests—and, indeed, also in The Mail on Sunday. The Secretary of State was good enough to welcome the GLOBE conference today in Washington and the fourth legislative study. Will he also welcome the forest legislators initiative that is going alongside that, which is looking into REDD-plus and the expansion of that work in Latin America and Africa in particular?
Energy Bill
Debate between Barry Gardiner and Michael Fallon
Barry Gardiner
If the hon. Gentleman will forgive me, I will not, as I have tried to give way as much as possible and I wish to respect Mr Speaker’s advice. I am conscious that I have spoken at great length, so I will now conclude my remarks.
Earlier this year, the Chancellor of the Exchequer received a letter from many of the companies referred to by the hon. Member for South Suffolk, in which they make the situation very clear:
“Projects can take 4-6 years from investment decision to construction and operation. We are already close to the point where lack of a post-2020 market driver will seriously undermine project pipelines. Supply chain investment decisions depend on reasonable assurance for manufacturers that a production facility to be constructed during this decade, costing hundreds of millions of pounds, will have an adequate market for its products well into the 2020s.
Postponing the 2030 target decision until 2016 creates entirely avoidable political risk. This will slow growth in the low carbon sector, handicap the UK supply chain, reduce UK R&D and produce fewer new jobs.”
The Government must reconsider.
The Minister of State, Department of Energy and Climate Change (Michael Fallon)
These amendments have attracted significant debate and interest across the House. Let me say, first and foremost, that the Government share the view that decarbonisation of the electricity sector, done in the right way, is vital. It will help us to: deliver secure and affordable energy for the long term; diversify our energy mix: insulate the economy from price spikes in the international energy market; and meet our long-term, legally binding goals on renewable energy and climate change. It is because decarbonising energy generation is one of the central pillars of this Government’s energy policy that we introduced these new provisions into the Energy Bill, in order to take that critical step of enabling a legally binding decarbonisation target range for the electricity sector to be set in 2016. That would be the first of its kind in the world.
Energy Bill
Debate between Barry Gardiner and Michael Fallon
Michael Fallon
My hon. Friend tempts me, but I am afraid that, much as I would like to do so, I am not able to speculate about the terms currently being negotiated with Electricité de France.
Finally on this group, amendments 28 and 29 seek to stop nuclear and fossil fuel generation from participating in the capacity market, which is designed to ensure the security of future electricity supplies. To ensure the most efficient mix of capacity and to avoid favouring specific technologies, the market needs to be technology neutral and support a range of generation sources, such as from fossil fuels, existing hydroelectric and nuclear plant and the demand-side response. I can confirm, however, that we do not intend to allow plant receiving a contract for difference, including new nuclear plant receiving a CFD, to participate in the capacity market. We do, of course, expect existing nuclear plant to play an important role.
Let me deal with some of the wider issues in this group of amendments, including bill impacts, biomass, liquidity and so forth. Amendments 32 and 33 specifically relate to biomass. I would like to thank my hon. Friend the Member for North Devon (Sir Nick Harvey) for raising this issue. His amendment 32 seeks to define biomass in the Bill. Let me make it clear to him that I see no problem with the definition he has drafted, but I suggest that this would be better left to secondary legislation, which would give us the flexibility to amend the definition over time to reflect changes in technologies or, indeed, in the evidence.
In respect of amendment 33, I would not want to limit the amount of support that an individual biomass generator could receive under a CFD, or to impose a condition that biomass generation greater than 15 megawatts could receive support only if it utilised combined heat and power or carbon capture and storage. That would risk excluding efficient forms of biomass generation or forcing all new generation to include combined heat or power, or carbon capture and storage equipment, which it might not be possible to utilise effectively, and I think that it would have the unintended consequence of increasing costs for consumers.
Barry Gardiner
I am grateful to the Minister, who has been extremely generous in engaging in debate. Will he clarify one point? My understanding was that the definition that had been proposed was already incorporated in primary legislation, in an earlier Act of Parliament, and that the objection that he seems to have to it would therefore not apply.
Michael Fallon
I should be happy to check that. I suspect that the hon. Gentleman may be right, but I think that some of my objections would still apply. These things change over time, and I should prefer to have them in secondary legislation. However, if I have wrongly suggested that this is a novel approach, I will certainly get back to the hon. Gentleman.
On amendment 94, we need to be sure that independent generators have a fair chance of entering the market. I am sure that my hon. Friend the Member for Rochester and Strood (Mark Reckless), and other Members who have signed his amendment, would support that. Ofgem will shortly be releasing details of its proposed reforms to improve market liquidity, and I welcome that progress. However, it is crucial for the Government to be able to act if Ofgem is unable to deliver ambitious reforms allowing more independent generation in a timely fashion. That is why we need the backstop powers in clause 38.
Amendments 95 to 99, also tabled by the my hon. Friend the Member for Rochester and Strood, would remove the emissions performance standard from the Bill. I know that my hon. Friend is concerned about its impact on coal-fired generation, and suspect that he feels that the carbon price floor provides sufficient market signals to disincentivise such generation, but the Government's objective is to deliver a clear and unambiguous message to investors that coal-fired generation must significantly reduce its emissions to have a long-term role in our energy mix.
The commitment to decarbonisation is delivered through economic signals such as support for the carbon price, through planning policy—which states that new coal-fired power stations should be equipped with carbon capture and storage—and through the EPS, a coalition commitment that places a firm limit on the amount of carbon that can be emitted, regardless of the price of coal or carbon. That commitment to reducing emissions would be undermined by amendments 173 to 175, and I hope that my hon. Friend the Member for Daventry understands why I cannot accept them. In relation to amendment 174, I should point out that the formula in clause 42 was carefully designed to ensure that potential emissions from new coal plant would be at least halved.
Amendment 148, tabled by the hon. Member for Brent North, would apply the EPS to existing coal-fired plant that installed pollution abatement equipment to comply with the industrial emissions directive. I understand his fear that, if the relatively low price of coal continues, it may lead to levels of coal generation that will put our decarbonisation objectives at risk. However, our electricity market reform measures should mitigate the risk of carbon “lock-in” by driving investment in new low-carbon generation which will increasingly displace generation from fossil fuel.
Amendment 150 would reduce by 15 years the period in which the emissions limit for a new plant is “grandfathered”. Grandfathering until 2045 gives investors in new gas plant the regulatory certainty they need that the EPS will not stop them from making a return on their investment, thus assisting the provision of the new plants that we require in order to replace ageing capacity. Let me be clear: we need gas-fired generation in our future energy mix to balance increasing levels of intermittent and inflexible plant coming on to the system. Amendment 150 would deter such investment and thus reduce, not increase, the reliability of our electricity supplies.
Oral Answers to Questions
Debate between Barry Gardiner and Michael Fallon(12 years ago)
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Barry Gardiner (Brent North) (Lab)
The growth of businesses in rural areas is being constrained by the lack of access to broadband. Even where businesses can achieve the Government’s target of 2 megabits, they are finding that that is the download speed, and they are still constrained by the greatly inferior upload speed. Will the Government consider reassessing the 2015 target of 2 megabits?
Michael Fallon
I will certainly do that. This is an issue for businesses in rural areas across the country. Clause 7 of the Growth and Infrastructure Bill will help to accelerate the roll-out of broadband, not least in rural areas, but the hon. Gentleman joined his party in voting against it on Monday night.