Energy Bill [HL]

Lord McFall of Alcluith Excerpts

Wednesday 22nd December 2010 Lords Chamber

[Lord McFall of Alcluith]

My Lords, in contributing to this debate, I will focus on Part 2 of the Bill, which covers energy security, and make passing reference to fuel poverty. These issues, particularly energy security, are ones that I have discussed with a local company, Aggreko, in my home town and its chief executive, Rupert Soames, who, as many know, is the grandson of Winston Churchill and the brother of the Member of Parliament Nicholas Soames. I never asked Rupert what he wanted to be remembered best for; I left that aspect. Rupert is chief executive of a company that started 20 years ago in Dumbarton as a tiny business and has now grown to be a FTSE 100 company. It is a global leader in temporary electricity generation and has a market capitalisation of more than £4 billion. Only yesterday it was announced that Aggreko had secured the temporary electricity generating arrangements for the London Olympics. That builds on its success last year in the World Cup and the Winter Olympics in Canada.

I should also like to promote the theme of localism. As I have mentioned, Aggreko started locally. It reached the stage where it was deciding, in the interests of growth, whether it would stay in Dumbarton or move abroad to China or elsewhere. I chair a public-private enterprise company, Strathleven Regeneration Company, which was established on the closure of the JNB bottling plant 12 years ago. We have 120 acres of land, which we are developing for housing and business development. For example, the BBC has come to the site to film the Scottish soap “River City” and a programme with which Members will be more familiar—“The Deep” with Minnie Driver and James Nesbitt. It is a growth area. Aggreko and the Strathleven Regeneration Company got together to decide where Aggreko’s next plant would be; we hoped that we could influence it to stay in Dumbarton, which indeed it did. A headline in the Times on Saturday read:

“Dumbarton is driving Aggreko’s new global growth”.

Rupert Soames is very clear about why he stayed in Dumbarton. He said that Dumbarton, not China or elsewhere, was chosen because that is where there are skilled engineers. There is an issue here for manufacturing and localism. We must take this seriously in the debate on energy and energy security.

Energy security was something that the Labour Government came up against very clearly at the beginning of the decade when, with panache, the Prime Minister said that we would not focus on nuclear energy. Two years later, given the instability in Russia and elsewhere, it was decided that we had better have another White Paper, look at the issue of energy security and embrace the nuclear option. That was the right step for us to take. It is hugely important in maintaining provision. I commend to the Minister the speech that Rupert Soames made to the Scottish Parliament on 12 November when he said that, in his travels around the world, he sees the consequences for countries whose energy policies do not work as they intended. He commented:

“Customers come to us when they have run out of power; when they have power cuts for five or six hours a day; when hospitals operate by candlelight; when traffic lights don’t work; when sewage works stop”.

That is how essential energy is to us. We need to inject the word “urgency” into our debate on energy.

We should start this debate by saying that energy is vital. We cannot do without it and it is directly relevant to the daily lives of everyone in this country. Therefore, we must continue to think about the long-term future. However, there is a danger that this could distract us from the more pressing, immediate problems. For example, over the next three years we will lose 30 per cent of our electricity generating capacity, including a third of our coal-fired capacity, two-thirds of our oil-fired capacity and nearly three-quarters of our nuclear capacity. Currently, we are not building enough capacity to replace this. Major projects have been put on hold, including Kingsnorth, Baglan Bay and Drakelow power stations and the gas storage facility at Caythorpe. Planning consent has been granted for 7,000 megawatts of wind farm capacity but less than a third of that is under construction. While it is important for us to think about 2030, we also need to focus on how we will keep the lights on in 2018. We must reinvigorate this debate with more realism. The targets for carbon reduction are vital but we must be realistic about their timing. Power generation capacity takes a long time to build. For example, it is unlikely that the new nuclear power stations could be fully up and running by 2018. As I mentioned earlier, we have planning consent for new wind energy capacity but much of it is not being built.

We must also be realistic about how we will reach these targets. We would all like to see new capacity come from renewable energy sources, but given the time and technological constraints I fear that this is not possible. Over the medium term, if we wish to decarbonise energy, we will need to build up nuclear capacity. In the future, as we replace capacity in the UK, there will be huge global demand for power. By 2015, 25 per cent of the world’s power stations will be more than 40 years old, so we will need to be strategic about how we attract investment in energy into the UK. One of the key elements that any investor will look at is the stability of the regulatory regime. That means that, rather than making short-term political decisions on energy policy, we must create a long-lasting consensus around a strong system that can create confidence. The target for all of us in this House is to create that confidence for the longer term.

I have already mentioned fuel poverty. The Labour Government tackled child poverty targets admirably; I think that they took more than 600,000 children out of poverty. However, they did not realise the ambitious targets that they had set themselves given the complexity of those targets. One of the themes of the House of Commons Treasury Committee that I chaired, and to which Members on all sides agreed, was to press the Government to ensure that they reached those targets. Poverty, particularly fuel poverty, is something that we cannot allow to go out by the side door. I fear that it will be a casualty of the cuts if we do not keep it well in our sights. Some 500,000 higher rate taxpayers receive the winter fuel allowance. The Government should look at that area if they wish to combat fuel poverty. If the coalition’s public spending cuts are to be governed by fairness, that issue has to be embraced, difficult though that may be.

The Minister said that the Green Deal is working for ordinary people. Indeed, between 1996 and 2003, fuel poverty fell by more than 70 per cent, thereby helping more than 4 million people in poorer households with their fuel bills. However, there is a worry about that going forward. Charities have commented on the Warm Front scheme, which helps households with heating and insulation costs. That scheme will not take on any more cases until next April, so there will be a backlog of people needing it. Age UK has said that that could be “disastrous” for many people. That has to be a primary element in the Government’s agenda. Age UK, along with Consumer Focus, has said that, despite past problems, the Warm Front scheme has,

“provided much-needed help for millions of older people during the last decade. With an estimated 3.5 million older people living in fuel poverty, it is a huge concern that many frail and vulnerable older people … will now be left to their own devices”.

We cannot allow that to happen. The Government have to embrace this concept. We cannot leave the Government to their own devices as regards energy security. They have to work with others in this area where examples of decentralisation and localism are all around. Only by doing so can we ensure that we keep the lights on for the long term.