Energy: Fourth Carbon Report

Baroness Smith of Basildon Excerpts

Tuesday 17th May 2011 Lords Chamber

[Baroness Smith of Basildon]

My Lords, I thank the Minister for repeating the Statement and for his customary courtesy and co-operative approach to the issues. I know that he will understand how concerned we were that an issue of this magnitude could have been presented to Parliament as a Written Statement. I am very pleased that there was no hint of reluctance on his part to repeat the Statement to your Lordships’ House today.

Tackling the environmental impact of energy production and use, and energy security, are issues that concern and affect us all, whatever our politics. We broadly share similar objectives and commitments, although we may have differences in how to achieve them. The objective to reduce emissions of greenhouse gases by 80 per cent to 1990 levels with targets along the way to assure energy security for the future are crucial to the well-being and economic prosperity of this country. I welcome the fact that this Government have been prepared to continue the work started by the Labour Government when they set up the Committee on Climate Change, and I thank the Minister for his recognition—indeed his appreciation—of that.

I also thank the Committee on Climate Change for the work that it has done, not just on this fourth budget for the period 2023-27, but on its work to date, which has been of enormous importance. It is not an easy task to balance national and international environmental interests with the needs of the economy, and at the same time recommend environmental changes. As we have found, not everyone will welcome the changes that are recommended. They are challenging and can be difficult to achieve, but the Committee on Climate Change does not act in a vacuum and it makes it clear that it gives advice,

“based on the latest climate science, the evolving international framework, feasible and cost-effective emissions reductions …and plausible paths for 2050 targets”.

As the Minister indicated, this legislation for the current budgets has to be in place by the end of next month. I have three specific points for him, but first I would like some clarification on the review. If I understand him correctly—I am happy to be wrong on this—this report has only been accepted conditional on a review in 2014 that seeks to ensure that our own carbon targets are in line with those of the EU. I know that the Minister understands the need for certainty for business and for investors who will support the Government’s objectives, but is he aware of the sense that the Government lack such certainty? We have seen changes to the feed-in tariffs, the ending of the commitment to zero-carbon homes, delays and bickering about the green investment bank and, even worse, delays and bickering about this very report. I do not for a second doubt the noble Lord’s commitment—he has been very clear with this House—but I am sure that he will privately share some of the despair we feel about the lack of clarity on a number of issues.

If the review that is to take place in 2014 does not show that the EU is coming into line with the UK, does that mean that there is more than just wriggle room for the UK and that the entirety of the Government’s carbon budgets could be thrown out? That is our concern. Could that review completely change the results of the Government’s announcement today? Any enlightenment that the Minister can offer on this issue would be greatly appreciated.

I wish to raise three specific issues. First, we welcome the Minister’s indication of support for the energy-intensive industries. All of us understand their concerns, and they face the greatest potential competitive impact. Action to support those businesses is essential. It is clear that they are willing to and want to reduce their energy use. As well as contributing to our national emissions reduction targets it also reduces their costs. Any further information that the Minister can give on the package that will come forward would be helpful— when it is likely to come forward, and what discussions and consultation with the industry there will be. We would be keen to be kept involved as that matter progresses.

My second point is on transport. This weighty report of more than 400 pages highlights the significant impact that more fuel-efficient cars are having on government income from fuel duty and vehicle excise duty. It estimates a potential loss of up to £10 billion by 2030. The report then highlights the fact that this will create the need for fiscal rebalancing and suggests that because road congestion is likely to increase, road pricing is an option that the report says will have environmental, economic and fiscal benefits. However, the report also adds that this should be in addition to fuel duty, not instead of it. When the report was published back in December, the average price per litre of a gallon of unleaded petrol was 13 or 14 pence less than it is today—partly, but not just, as a result of the Government’s increase in VAT. In their acceptance of the report, are the Government really considering that the motorist should pay to use the roads as well as paying fuel duty and vehicle excise duty?

Will the noble Lord look at this issue again? If the car industry and the motorist play their part, and their actions have a real impact in reducing emissions, and as a consequence that reduces their contributions to the Treasury, it seems grossly unfair that they should be penalised for doing so through widespread road charging in order to raise the money lost to the Treasury through the actions we have demanded of them. That would create a disincentive to the motor industry and to the motorist. I am sure that that is not what the Government intend, but it could well be the consequence. We know that the car industry wants to play its part—there are new hybrid and electric cars for example. The survey by Road Pilot indicated that 46 per cent of motorists claim to have reduced their speed to save petrol and save money. We should not penalise them for doing so.

The third and final issue I wish to raise with the Minister is fuel poverty. The committee recognises that since its 2008 report rising fuel prices have significantly increased the number of people living in fuel poverty. The report predicts that gas and electricity prices are likely to increase even further and that household income growth will be slower than the previous committee report indicated. The current report recommends that this issue can and should be addressed through energy-efficiency improvements and other measures such as social tariffs, and arrangements such as winter fuel payments, which unfortunately were reduced in the Budget—after the committee’s report.

I appreciate that in the Energy Bill the Government are bringing forward the Green Deal and other energy-efficient measures. We have already considered the Bill in this House. As the Minister knows, we welcome the concept, but consider the Bill to be too weak in its ambition and scope, and too light on detail. I assure the Minister, your Lordships’ House and Members of the other place that we will work with all colleagues and with the Government to get the improvements this Bill needs.

I highlight the need to improve the provisions for the private rented sector, where fuel poverty and emissions are very serious matters. Therefore, I ask the Minister and his colleagues to consider the changes to the Bill that we have proposed to bring about energy-efficiency improvements for the private rented sector and to set minimum levels of energy efficiency for those properties in order to reduce emissions.

Written Answers that I received today from the Minister confirm that in the past year 127,930 households have been assisted by the Warm Front scheme, yet over the next two years, due to government cuts, this number will fall dramatically to around 47,000 and 45,000 respectively. Given that fuel poverty was specifically raised in the committee’s report, I ask the Minister to look at this matter again. In the light of the report that the Government have accepted, I seek an assurance that there will be no further reductions in winter fuel payments for pensioners.

My initial enthusiasm when I heard about the Government’s acceptance of the report has been somewhat dampened. I hope that the Minister can address some of the points that I have raised today, and I look forward to welcoming the Government’s response with great enthusiasm.