Energy Company Licence Revocation

Debate between Graham Stringer and David T C Davies

Wednesday 3rd September 2014 Commons Chamber

[David T. C. Davies (Monmouth) (Con)]

I begin with an apology to the House because, as I mentioned to Madam Deputy Speaker earlier, I am meeting a representative of the National Association of Probation Officers trade union in a few minutes. I am sure that Labour Members would not wish that meeting not to take place. It will shorten my speech considerably, but I hope that Members will forgive me because it was arranged before I knew about the change in timings.

Let me make another apology for being one of the Members of Parliament who voted for the Climate Change Act 2008, which underpins some of the issues alluded to by Members in all parts of the House. As the Secretary of State said in his closing remarks, what we want now is cheap energy prices for people. Of course, we have to take the energy companies to task over bad behaviour. There has apparently been some confusion as to whether Ofgem does or does not ultimately have the power to remove their licences. He says that it can. He challenged, unsuccessfully, the right hon. Member for Don Valley (Caroline Flint) to say under what circumstances she thought that it should have further powers. She did not wish to reply, so I am inclined to agree with him on this occasion. It does have the power, in the most extreme circumstances, to remove licences, and it is absolutely right that it should. It is not a power, though, that should be used lightly.

The real concern is that energy prices are too high. The reason is that all of us—or most of us—voted for the Climate Change Act, which has forced the Government to bring in all sorts of green taxes and subsidies that have pushed prices up. The Government now have a policy of rolling back some of the green taxes which Labour Members enthusiastically supported and which have pushed up prices. There is no getting away from that. Labour Members will not be able to do anything about the wholesale price of fossil fuels or of any other energy source, but they could do something about taxes. Any sustainable cut in prices to the consumer and to businesses will have to be underpinned by cutting back on green taxes.

I welcome the fact that the Leader of the Opposition and the shadow climate change Minister are trumpeting these issues. That is absolutely fantastic. It plays straight into the hands of people such as me—climate change sceptics—that Labour Members are making a huge issue out of energy prices. They are no longer worried about trying to outbid the Government on who has the greenest policies but trying to show who is going to deliver the cheapest energy prices. I say, “Great”, because I know that whoever is in government at the next election will be able to do that only by cutting back on green taxes.

[Graham Stringer]

I did not vote for the Climate Change Act, knowingly. Whatever one’s position on green levies, it is a bit rich for the hon. Gentleman to support a Government who have fixed energy prices for the next decades when nobody can predict the price of energy. That guarantees that people will pay higher prices or greater subsidies because of the strike price. The latest predictions of Aurora, a well-known consulting company, suggest that prices are likely to be half what the Government say, and that will mean larger subsidies. Does he still support the Government on those policies?

[David T. C. Davies]

No, I do not. I have a great deal of respect for what the hon. Gentleman says. I do not support the Government at all on this particular policy. I think it was a huge mistake—

--- Later in debate ---

[David T. C. Davies]

I am not going to defend that. I think there is—shall we say?—a change in mindset going on at the moment. It is obviously happening in the hon. Gentleman’s party as well, and that is why we are having this debate. Front Benchers on both sides of the House seem to agree that we should be making energy as cheap as possible. Everyone is absolutely right about that. However, we are not going to do that by attacking the big six energy companies. The only way we will be able to bring about a sustained decrease in energy prices is by reducing the taxes and other regulations that the hon. Gentleman mentioned.

[Graham Stringer]

Does the hon. Gentleman agree that the most significant point about green taxes, whether my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) is right or wrong, is that they are not working? This country and the European Union are now responsible for more carbon dioxide going into the atmosphere than they were before. Emissions have gone down, but because of imports we are importing embodied carbon dioxide. These policies therefore have a perverse effect, whether or not one agrees with the global warming theories.

[David T. C. Davies]

That is absolutely right. I do not wish to stray too far from the debate, but it is interesting what has happened in Germany, where people decided to get rid of nuclear power stations in order to follow a more environmental policy and ended up burning large quantities of lignite, which has increased their carbon dioxide emissions. That proves that these green policies do not even end up having the consequences that those calling for them want.

It is also very interesting that the people who are shouting loudest for such policies are the quickest to distance themselves from the consequences. With all due respect to Members on both Front Benches, who are pandering to Friends of the Earth and Greenpeace, the reality is that Friends of the Earth are very quick to attack the Government—they will attack the Opposition as well—for anything that increases energy prices to consumers: they ran a campaign against increased energy prices. The Secretary of State is trying to placate these people, but they are never, ever going to support him, whatever he does, so there is no point in even trying, in my opinion.

The Secretary of State mentioned smart meters earlier, but the energy companies have said they may not work. The Government are spending a vast amount of money trying to persuade every home owner in the country to accept smart meters. I am always very suspicious when Governments start trying to persuade me to do anything, particularly if it involves Bob Geldof, a quango and two cartoon characters. The Government have said that smart meters will cost £11 billion. I assume that those costs are relatively easy to predict, because they involve the cost of the meters. Incidentally, I am sure that somebody has done very well out of that. I saw in, I think, The Times yesterday that one of the smart meter companies had posted huge profits. I would be interested to know who bought shares in such companies before the EU introduced the regulation that brought all of this about, but I digress slightly.

The Government have said it will cost £11 billion to introduce smart meters by 2020—I assume that that estimate is reasonably accurate—and that the benefits will be about £17 billion. I have managed to get hold of the National Audit Office report, and lo, it is not quite as straightforward as it seems, because the benefits will not be seen until 2030, so we are putting in £11 billion for a possible £17 billion at least a decade later.

When one looks at how the benefits break down, one sees that 48% of the benefits are due to cheaper costs for the energy companies, which I suppose is fairly accurate: there will be fewer visits—and fewer jobs probably, but there we are—and a cut in bureaucracy. That accounts for about half the cost, but that is still only about £8 billion-worth of benefits. The rest all seem nebulous: 33% of the benefit will be due to people using less energy because it will cost more. In fact, therefore, it is being counted as a benefit that people will use less gas and electricity partly because the price of the smart meter will have been added to their bills. A further 8% of the benefits will be due to the fact that somebody somewhere along the line will pay lower carbon taxes on energy that will not have been used. If that is a benefit, the solution is very simple, isn’t it? Don’t bother with Bob, Leccy, Gaz and the quango—just cut the taxes in the first place and leave it all out.

I find this very difficult to accept. It is not simply due to the European Union coming up with a grand plan. I am worried that one of the so-called advantages of smart meters is that they will allow the big six energy companies to turn off people’s gas and electric remotely. Of course, there may be a good reason for doing so if they have not paid their bills, but it may also be convenient for the companies to do it if they decide that they do not have enough electricity at a particular moment to feed the grid and therefore cut off people they think are using too much gas or electricity.

Climate Change Act

Debate between Graham Stringer and David T C Davies

Tuesday 10th September 2013 Westminster Hall

[David T. C. Davies]

There is another explanation, which is that they do not have a clue what they are doing. Based on the precautionary principle, perhaps we should not hobble the entire manufacturing industry in this country alone on the assumption that they have got it right. I accept my hon. Friend’s point about water vapour, which is important. Water vapour is a far more important warming gas than CO₂, although neither is a pollutant. Without CO₂, we would have none of the trees, plants and wildlife that the greens—and I, actually—love so much.

[Graham Stringer (Blackley and Broughton) (Lab)]

Will the hon. Gentleman give way?

[David T. C. Davies]

I will give way one last time and then move on, because there are people in the Chamber from whom I would like to hear.

[Graham Stringer]

The hon. Gentleman need not rely on a conspiracy between the Hadley Centre and the Met Office. He should look at the Oxburgh report on the Hadley Centre and the work of Professor Jones, who leads the centre. He will find that Professor Kelly from Cambridge said that Professor Jones’s methodology is

“turning centuries of science on its head”.

He also found, as the Oxburgh report found, that none of the work the Hadley Centre was doing under Professor Jones was replicable. As I understand science, one must be able to test it, so I hope the hon. Gentleman agrees that what Professor Jones was doing was not science but writing narrative.

[David T. C. Davies]

I am grateful for the intervention and agree 100%. We could argue a long time about the science, but even if the Minister does not accept anything that I am saying—although I hope that he will answer my questions at some point—for us to embark on a unilateral policy, without anyone else in the world following us, is surely folly.