Offshore Wind Infrastructure Competition

Anne Main Excerpts

Tuesday 12th October 2010 Westminster Hall

[Peter Aldous (Waveney) (Con)]

I am grateful to the hon. Gentleman for securing the debate. I share his enthusiasm for wind energy—offshore renewable energy—and ensuring that we make the most of the opportunity that it has presented to us for our industry and for securing manufacturing in the UK. To my mind, we need to be adopting a three-pronged approach—

[Mrs Anne Main (in the Chair)]

Order. May I gently remind the hon. Gentleman that this is a very short debate and he is supposed to make a brief intervention?

[Peter Aldous]

Thank you, Mrs Main. I was referring to the green investment bank, developing the skills base and Government—does the hon. Gentleman agree that Government acting as a catalyst to attract that investment is vital?

[Caroline Lucas (Brighton, Pavilion) (Green)]

Does the hon. Gentleman agree that if the funding is cut, that will show that the coalition Government have little or no real understanding of the returns to the economy and the environment from maintaining investor confidence in green initiatives such as offshore wind infrastructure, and that their savage spending cuts are causing uncertainty for people living near ports such as Newhaven, just up the coast from my constituency? Does he share—

[Mrs Anne Main (in the Chair)]

Order. May I ask the hon. Lady to keep her remarks brief?

[Dr Whitehead]

I thank the hon. Member for Brighton, Pavilion (Caroline Lucas) for her intervention. I am trying my best to be as nice as possible today in ensuring that the points that I think are essential with regard to the future of the competition are placed squarely on the table. However, it is correct that each of the different competitions, incentives and devices all add up to the question whether the present Government are serious about a green agenda; or are they prepared to will the ends but not the means as far as that agenda is concerned? That is a very important consideration in respect of all the issues that we are discussing.

Let us say that the competition is cancelled. It takes more time to re-establish those links and that confidence, once broken, than it does to establish them in the first place; and it is fair to say that as far as North sea wind is concerned, we do not have time to throw away.

Of course, I am aware, as everyone else is in the Room, that hard decisions about the future of public money and investments await us; and I am not one who will rush to the defence of every existing commitment regardless of its intrinsic merit. However, there is a clear distinction between those investments that work within themselves and those investments that work beyond themselves, and this one, as I have shown, will, I hope, work far beyond itself in terms of value added on money invested.

However, there is another factor at work. That relates to the very nature of round 3 itself. Round 3 is one of many stages in licensing processes of various kinds that have gone on in the North sea over the years. Those licensing competitions, under the auspices of the Crown Estate—the owner of the seabed around the British isles—are not charitable auctions. They raise money permanently from the licences that are issued. In the case of the Crown Estate, the money, after investment decisions have been looked after, goes directly back to the Treasury. That is what is required of the Crown Estate by statute.

In this context, it is instructive to consider the sort of sums that we are discussing. The Crown Estate altogether has contributed some £1.8 billion to the Treasury over the past decade. Last year alone, £46 million came the Treasury’s way from the Crown Estate as a result of its overall seabed activity. In its 2010 annual report, it stated:

“Revenue delivered by the renewables sector rose sharply by 44.4% to £2.6 million. From a low base, this part of our business is experiencing exponential growth and we expect it to provide a significant source of total income in the next 10 years.”

In other words, a good proportion of the £60 million for the infrastructure competition comes back to the Treasury through the licensing arrangements on the seabed that are a sine qua non of all the rest of the activity.

This is not a trivial point: we can say with certainty that the offshore renewables industry is providing, up front and as a sign of its intent, substantial sums of money before a single watt of power has emerged from its round 3 investments. Therefore, the investment by Government of that £60 million in port infrastructure can perhaps best be seen as a contribution in kind that jointly will unleash the value added outcome of £1.2 billion in investment as the licences reach maturity. We are talking, in the offshore wind infrastructure competition, not of a quango to cull, but of a world to win. I hope that the Minister, who I know cares deeply about these matters and has stoutly supported the development of offshore wind through its many vicissitudes, will be able to confirm that that is his view also, and that the little notice on the top of the announcement of the competition is shortly due for removal.