British Steel: EU Emissions Trading Compliance

Debate between Greg Clark and James Heappey

Wednesday 1st May 2019 Commons Chamber

[Greg Clark]

The hon. Lady should know that we have one of the strongest records in the whole world in implementation and delivery of emissions reductions. It is important to acknowledge that mechanisms such as carbon pricing are one of the foundations of that, so it is important that the rules are respected. We are about to have a substantial debate on our next steps. I hope she will contribute to that, as am I. Perhaps we might have some further exchanges later this afternoon.

[James Heappey (Wells) (Con)]

As important as the continuation of the ETS post Brexit surely is, does my right hon. Friend share the view that the really long-term solution for both heavy industry and a zero-carbon economy is the advent of carbon capture and storage, and hydrogen? What measures are the Government taking to advance those causes?

[Greg Clark]

I agree with that. My hon. Friend gives me an opportunity to respond to what the SNP spokesman, the hon. Member for Kilmarnock and Loudoun (Alan Brown) referred to and I neglected to comment on. My hon. Friend is absolutely right that there is the opportunity for energy-intensive industries that are significant emitters to capture that carbon. We have a competition, which is being run at the moment, and sites such as Teesside have put in very impressive and attractive bids. I and my colleagues in Government want Britain not just to be one of the leading developers of the technology of CCUS, but to implement it to the advantage of our energy-intensive industries.

Honda in Swindon

Debate between Greg Clark and James Heappey

Tuesday 19th February 2019 Commons Chamber

[Greg Clark]

The hon. Gentleman is very familiar with and experienced in this area, and I understand his point. I would say that the reasons behind this decision and some others have been not so much about demand—in this case—but about an acceleration of a change in technology and how investment can be consolidated, so I am not sure that his proposal is the answer to the reasons that Honda cited, but I take into account the representation he makes.

[James Heappey (Wells) (Con)]

The car industry is having to reset quickly as consumers turn their back on diesel and, increasingly, internal combustion engine cars more generally. Does the Secretary of State share my view that as we compete for new electric vehicle production lines, one way of making the UK more attractive is to show strong domestic demand by accelerating our planned transition from ICE to electric vehicles?

[Greg Clark]

If a country wants want to be renowned as a source of innovation and manufacturing, there is an expectation that people can look to the domestic market to see that the products are consumed there. That is important, but I am always careful to respect the fact that for some years to come conventional vehicles will be manufactured here and will be a perfectly reasonable choice for people to make. An orderly transition rather than an abrupt shift would be best for investment and confidence.

Nuclear Update

Debate between Greg Clark and James Heappey

Thursday 17th January 2019 Commons Chamber

[Greg Clark]

The hon. Gentleman is quite right. I visited the nuclear advanced manufacturing research centre, as he knows, and I was impressed with the facilities. The sector deal makes a commitment to new nuclear technologies, and a consortium has made an application to the industrial strategy challenge fund. He understands that the operation of that fund, as with all science and innovation investments, is correctly scrutinised by a panel of global experts. They have given the application a positive assessment, but it has further due diligence to complete. Of course, I will update him and the House when that process has finished.

[James Heappey (Wells) (Con)]

I welcome what the Secretary of State said in his statement about the decreasing costs and increasing availability of renewables. If we are to embrace a renewables-heavy energy mix, does he agree that we need to look at what changes we must make to the capacity market to allow demand response, storage and other types of digital flexibility to play their part fully in that energy system?

[Greg Clark]

My hon. Friend is quite right, and he has great experience and expertise in energy matters. We have talked a bit about offshore wind today, but one of the big changes that is taking place in the energy market, and affecting the economics of energy, is in the technologies and ways of working such as demand-side response and storage. We have not mentioned those, but they are contributing to how our energy system can be both more resilient and lower cost than was dreamed possible even 10 years ago.

Nuclear Power: Toshiba

Debate between Greg Clark and James Heappey

Monday 12th November 2018 Commons Chamber

[Greg Clark]

We have regular discussions with investors in nuclear. The decision was taken only last Thursday and has some way to go to be implemented, but the hon. Gentleman has my assurance that prospective investors in this site and others will be able to talk, in the first instance, to the NDA, which owns the land, but are also free to discuss these matters with my officials.

[James Heappey (Wells) (Con)]

The Secretary of State has championed the development of battery technologies, through the Faraday challenge, and his Department is also looking closely at demand response technologies. Can he say whether these renewables plus storage/flexibility options are quickly replacing the need for centralised thermal plant, and whether we should be looking at those options alongside the new nuclear programme as a priority for our future energy mix?

[Greg Clark]

My view is that we should have a mix of energy sources. It is true that storage, and the progress being made in storage, plus renewables is increasing the possible contribution to our electricity generating system, but, as I say, we are always wise to have a diversity of sources, which is why nuclear has an important role to play.

Oral Answers to Questions

Debate between Greg Clark and James Heappey

Tuesday 16th October 2018 Commons Chamber

[Greg Clark]

My hon. Friend is right. Part of the industrial strategy is about making more patient capital available in Scotland and all across the UK for growing businesses, of which he has many in his constituency.

[James Heappey (Wells) (Con)]

Does the Secretary of State agree that our membership of the internal energy market is not necessarily conditional on our membership of the wider single market? Does he agree that we would be better off were we to remain within the internal energy market, with all the energy security advantages that that brings?

[Greg Clark]

My hon. Friend anticipates some negotiations that will need to take place on our future economic partnership. Suffice it to say, however, that we have a mutual interest in the interconnection between the UK and the continent, and it is strongly in the interests of consumers in this country and on the continent that the ability to trade over those interconnectors should continue.

Industrial Strategy

Debate between Greg Clark and James Heappey

Wednesday 18th April 2018 Commons Chamber

[Greg Clark]

I would not read too much into that. The defence industrial strategy is a very important part of our overall strategy. There are many references to industries—I mentioned aerospace—in which the innovation that comes from defence work can have important spillovers for the wider economy. We recognise that across the world that tends to be the case. The defence sector is very important to the strategy, and when some of the sector deals that I will come on to discuss are agreed, the hon. Gentleman will see that in abundance.

Drawing on input across the United Kingdom, we have an approach that is the distilled wisdom of many different contributors. It is a vision to help businesses raise their productivity performance, which is essential if we are to increase the country’s earning power. If we want to pay ourselves better as a nation and a society, we need to earn the way to do that by creating better-paid jobs and putting our country at the forefront of the industries of the future.

Let me introduce the four grand challenges that we have set out. I mentioned that we are uniquely well placed in this country, having leadership in some of the areas of the future, but we should not take that leadership for granted. We should have a deliberate plan and programme to reinforce that success. The four areas we have set out in the strategy, on advice, are artificial intelligence and the data-driven economy; clean growth; the future of mobility; and meeting the needs of an ageing society. Those challenges have been identified on the advice of our leading scientists and technologists, and they will be supported by investment from the new industrial strategy challenge fund and matched by commercial investment.

Let us take each of those briefly. We know that, whether in the Alan Turing Institute or in our companies throughout the UK, we have some of the most innovative thinkers and practitioners in AI and the use of data. We already have that reputation, but we need to keep at the forefront of those developments. A big part of the strategy is to recognise that, historically, as all Members know, we have been better at the “R” of R&D than the “D”. We have had brilliant ideas, but sometimes we have let them slip through our fingers and seen them implemented in industrial processes and investments in manufacturing in other countries. A big part of the challenge is therefore not just discovery but applying those discoveries in UK industry.

[James Heappey (Wells) (Con)]

When travelling overseas on parliamentary business and visiting universities, I have noticed, particularly in America, that people are much more entrepreneurial in their research projects and mapping out a route to a market. What might the Department do to encourage that sort of entrepreneurial spirit in our universities?

[Greg Clark]

We are getting better at it. Most colleagues will have experience of their local universities and others, and most research universities have active programmes to spin out discoveries and reap the benefits. Again, through the industrial strategy challenge fund, funding is available on a match basis to universities to pursue that implementation of good ideas. My hon. Friend is absolutely right.

Let us take the future of mobility. The hon. Member for Coventry South (Mr Cunningham) and I have had many conversations about this country’s reputation not only for the efficient manufacture of vehicles—that is a proud record—but for innovation, whether in the west midlands or the world-beating cluster of Formula 1 businesses around Oxfordshire and Northamptonshire. The world comes to the UK for the next generation of technologies. Forty-year veterans of the automotive industry say that this is the most exciting time in their career, when not only the powertrain but the way in which vehicles navigate is undergoing a revolution. Around the world, there is increasing demand for that set of technologies and we have a strong capability in them. Again, setting a grand challenge is crucial.

We have set the Faraday challenge to be a world leader in the development and application of new battery technology. It is already attracting great interest around the world, and the hon. Member for Coventry South will know that the national battery manufacturing development facility will be located in Warwickshire at the heart of our cluster there.

On the ageing society, whether in Glasgow and Edinburgh or Cambridge, we have some of the best researchers in the world looking at medical breakthroughs that will be in increasing demand around the world. I make it clear that now and long into the future, we will invest in the facilities and the people to make us the place to come to research new innovations. As Members from Scotland will know, the Glasgow city deal had a big medical component to build on our success there.

Domestic Gas and Electricity (Tariff Cap) Bill

Debate between Greg Clark and James Heappey

2nd reading: House of Commons
Tuesday 6th March 2018 Commons Chamber

[Greg Clark]

The hon. Lady makes a very important point. The statutory instrument that will allow that data sharing will be tabled shortly, before this Bill, which we hope will make rapid progress, receives Royal Assent. She is absolutely right.

I was explaining that the original RPI minus X model, which required annual reductions in prices by incumbents, was followed around the world, but with new developments in technology and practice, it is vital to keep our regulatory system up-to-date. In recent years, it has become more and more possible for suppliers to have extensive information on the habits and behaviour of individual consumers—often more information than the consumers know about their own habits, which are studied so minutely. Incumbent suppliers can identify which of their consumers do not respond to higher prices and instead display loyalty to what they might think of as a long-standing and trusted supplier. They can then penalise those customers with ever higher prices.

The CMA identified the problem and recommended that certain consumers, those on prepayment meters, should be protected from such pricing behaviour. It also recommended measures to drive up the rates of switching. The roll-out of smart meters in particular can make information that is currently only available to the incumbent supplier available to other potential suppliers, with the customer’s permission, which is what everyone wants to be able to drive up competition.

In its report, the CMA was in two minds about whether that action was sufficient, and a minority report thought that such remedies, including smart meters, would not come soon enough to eradicate this detriment quickly enough. The minority report said:

“The harm which is presently inflicted on households…is very severe…the remedies proposed for the large majority of households will take some time to come into effect. That is why…they must be supplemented by a wider price control designed to give household customers adequate and timely protection from very high current levels of overcharging”.

[James Heappey (Wells) (Con)]

I agree with the report that the march of technology was not correcting the market quickly enough, but there is no doubt that the arrival of all this technology in the energy system is creating a market that will benefit consumers in the future. Can the Secretary of State reassure us that while the Bill provides a temporary measure to correct the current market, it will in no way impede the arrival of the digitised market that will be so greatly to consumers’ advantage in the future?

[Greg Clark]

My hon. Friend has captured the position very succinctly. That is exactly the point. These remedies will introduce more competition based on technology, allowing consumers to have access to the data that will drive it. However, it will take a few years for that to come into effect, so the Bill is doing what my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) advocated—it is addressing the current problem with greater agility than the regulator has shown.

In 2016, the CMA’s minority report stated:

“These customers are exposed to the prospect of excessive prices on a scale which might amount of many billions of pounds of harm over the next four years”.

Experience has shown that the CMA was right. In the last few years, prices for customers on the standard variable and default tariffs have not declined; in fact, they have continued to increase, in some cases by double digits. There has certainly been no change in the behaviour of many of the companies.

--- Later in debate ---

[Greg Clark]

The capacity auction arrangements that have been pursued over the last few years have been very successful. We have had a higher margin this winter than last, and the prices of securing that capacity for future years have fallen in successive auctions. My right hon. Friend is right to raise the question, but the framework is actually delivering more resilience than has been delivered in the past.

[James Heappey]

My right hon. Friend the Member for Wokingham (John Redwood) made a good point, but does the Secretary of State agree that it is not just additional capacity that is required, but more flexibility in the system so that we can make existing capacity work better?

[Greg Clark]

My hon. Friend is absolutely right. We have already had the pleasure of debating that issue. The hon. Member for Southampton, Test (Dr Whitehead) has spent many hours in Committee scrutinising the Smart Meters Bill, which will contribute to making the energy system more interactive and therefore more resilient.

The Bill follows precisely the advice to set a non-renewable price cap for a short period while competition increases. Address the problem was one of the commitments made by the Prime Minister when she entered Downing Street. I recognise the important campaigning work done by my hon. Friend the Member for Weston-super-Mare (John Penrose) and, indeed, by the right hon. Member for Don Valley (Caroline Flint).

The Bill comes to us today having been scrutinised in draft by the Select Committee on Business, Energy and Industrial Strategy. I am very grateful to the Committee, and to its Chair and members, for their swift yet thorough scrutiny. The Committee took evidence from a wide range of stakeholders and produced a well-considered report. It agreed with the CMA’s minority report and with the Government’s proposed approach.

The Bill has been supported by consumer groups and, indeed, by many energy suppliers. Citizens Advice has said:

“We welcome the…Bill, which will prevent loyal customers being ripped-off”.

Octopus Energy, one of the newer and more innovative entrants to the market, has called the Bill:

“A crucial step towards a fair energy market in which energy suppliers compete to offer their customers the best value and service”.

The Bill constitutes a sensible intervention to address a specific problem in the market. The Government are not setting prices, and this is not a price freeze. Such a freeze could disadvantage consumers by leaving them stuck on high prices when underlying costs fall, or force energy suppliers to face the entire risk of international commodity markets. Subject to parliamentary approval, the Bill will require Ofgem to cap domestic standard variable and default tariffs until 2020. It will be for Ofgem to decide the methodology and the level of the cap, as appropriate. The cap will stay in place until the end of 2020. Ofgem will then be required to assess the conditions for effective competition in the market and make a report and recommendation to the Government, which I am sure the House and its Select Committees will consider as well.

The price cap can be continued for one year at a time up to the end of 2023, when a sunset clause will come into effect. The Government have no wish for the price cap to become a permanent feature of the landscape. The inclusion of the sunset clause relates directly to the point made by my hon. Friend the Member for Taunton Deane (Rebecca Pow) that we need to address the problem by increasing competition. Ofgem currently has the power to impose a cap for vulnerable consumers, and is taking steps to do that. When consumers make an active choice to opt for green standard variable or default tariffs, they will be able to continue to pay extra for such tariffs if they choose, to prevent unintended consequences. That was a very helpful recommendation from the Select Committee, and I can confirm that all of its recommendations have been accepted in full and are reflected in the Bill before the House today.

The Government want the market to thrive. We continue to promote competition as the best driver of value and services for consumers.

Energy Price Cap

Debate between Greg Clark and James Heappey

Monday 3rd July 2017 Commons Chamber

[Greg Clark]

No, it was this Government who referred the whole industry to the Competition and Markets Authority. When the right hon. Member for Doncaster North (Edward Miliband) was Energy Secretary, I urged this measure on him, and he rejected it flat, so it is this Government who have exposed the level of the detriment, and it is this Government who are acting to put a cap in place to prevent this abuse—that did not happen under Labour.

[James Heappey (Wells) (Con)]

As welcome as a price cap will undoubtedly be, does the Secretary of State agree that the real key to bringing down prices for consumers is the liberalisation of the energy market through the digitisation of the energy system, storage in front of and behind the meter, and a demand-side response?

[Greg Clark]

My hon. Friend, who is well informed about such issues, is absolutely right. The opportunity that smart meters bring is that people can have much more knowledge and control of their energy use, and use that to get the best deals available. That is why the roll-out of smart meters is such an important part of our reforms to the energy market.