EU Referendum: Energy and Environment

Barry Gardiner Excerpts

Tuesday 12th July 2016 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

I beg to move,

That this House recognises the uncertainty created by the result of the EU referendum for the protections currently in place for the UK’s energy security, climate change commitments and the natural environment; notes that the discussion leading up to the EU referendum made little mention of environmental protection or climate change and considers that regulations and ambitions in those areas should in no way be diminished as a result of the outcome of that referendum; has serious concerns about the signals being sent to investors in those sectors by continued uncertainty; and therefore urges the Government to identify and fill any legislative gaps in environmental protection that may arise from the removal of EU law.

The motion stands in my name and those of other right hon. and hon. Members in the shadow Cabinet.

Before the referendum vote, the Government were already facing major problems securing the energy needs, emissions targets and environmental protections that the UK requires for the 21st century. These problems were mainly self-inflicted: an energy policy that left companies and investors confused, with feed-in tariffs for solar changed retrospectively; an effective moratorium on onshore wind power, despite its being the cheapest form of renewable energy; the subsidy for offshore wind cut; and the Government failing to indicate what would happen to the levy control framework beyond the cliff edge of 2020.

Investors were told that the Government were simultaneously incentivising new unconventional gas and phasing out unabated coal by 2025, yet the £1 billion still remaining for the development of carbon capture and storage was cut just four weeks before the final bids were to be made, with the consequent announcement by Drax of the abandonment of the White Rose CCS project and the announcement by Shell that it no longer saw a future in the near term for the Peterhead project. The Secretary of State’s energy reset speech last November ended up leaving us the equivalent of 54 million tonnes of CO₂ further from achieving the fourth carbon budget.

[Mark Tami (Alyn and Deeside) (Lab)]

For many of the companies involved, the investment lead-in times are quite long, resulting in a very uncertain environment in which to work. That is leading to some of them pulling out of the UK altogether.

[Barry Gardiner]

I must, reluctantly, agree with my hon. Friend. This is not good news; it is really bad news for all of us. The investment climate in the UK is in a really dire state. In fact, the UK has now fallen from eighth to 11th to 13th in the Ernst & Young index of the best countries for investment in low-carbon technology, when we have previously never been outside the top 10. These are really worrying matters.

[Margaret Greenwood (Wirral West) (Lab)]

I recently asked the Secretary of State for Energy and Climate Change what action she was going to take to promote zero-carbon homes, given that the Government had announced last July that they were going to scrap the target set by the previous Labour Government for all homes to be carbon-neutral by this year. She replied that she could reassure me that an EU directive was due to come into force in 2020 and that she believed near-zero carbon emissions would help to reduce bills. Given that we are leaving the EU, does my hon. Friend agree that the Government should take immediate action to reintroduce ambitious targets for zero-carbon homes?

[Barry Gardiner]

What an excellent point my hon. Friend makes. She knows, as I do, that the Secretary of State was someone who saw the value in the UK’s staying in the European Union and in all the directives and regulations that came from Europe, which afforded the sort of environmental protections and energy policies that would secure our future. No doubt the Secretary of State will respond responsibly to today’s brief, but I think she will feel a great deal of sympathy both with the remarks that my hon. Friend has just made and indeed my own remarks from the Dispatch Box.

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

The hon. Gentleman is making a powerful case about the lack of investment and about economic instability. Does he agree with me that now is a good time for the Government to reverse their decision to privatise the Green Investment Bank, and that when they negotiate withdrawal the Government should make a strong case to remain in the European Investment Bank? If those two things do not happen, we will be in really difficult times.

[Barry Gardiner]

The hon. Lady, whom I regard as an hon. Friend, particularly on these matters, speaks with great knowledge. She is absolutely right about the Green Investment Bank, which was set up for a particular purpose: the Government recognised that there was a market failure. It was quite right of the Government to put the Green Investment Bank in place, but unfortunately the borrowing powers did not come quickly enough, and I think it is a huge mistake now to privatise the bank. It is a matter of deep regret to all who work in this environment. As for the hon. Lady’s remarks about the European Investment Bank, I shall come on to that subject later in my speech.

[Dawn Butler (Brent Central) (Lab)]

On the subject of insecurity in investment, National Grid has said that fuel prices are about to rise as a result of the Brexit result. My “Prepay Rip Off” campaign showed that consumers were being overcharged to the tune of £1.7 billion a year. Does my hon. Friend agree that it is important that the Government outline what they are going to do to ensure that consumers are not ripped off further by having to pay more for their fuel?

[Barry Gardiner]

My hon. Friend and constituency neighbour has run a superb campaign on fuel poverty. She makes reference to the £1.7 billion that the Competition and Markets Authority report showed UK bill payers were being overcharged—overcharged by quite obscene amounts. It is, of course, right for the Government to come up with clear proposals about how to tackle that abuse, without just saying, as they have to date, that people need to be enabled to switch more easily.

[Mr Robert Syms (Poole) (Con)]

This is one of the first of our debates to mention the result of the EU referendum. I know that the hon. Gentleman was on the other side of the argument, so it would be useful if he told us whether, when it comes to a vote, he will vote to leave the EU despite his heavy heart or will he vote against the wishes of the British people?

[Barry Gardiner]

I always try to look at the motion in front of me on the Order Paper and make a judgment on it when I see what it says. I have done so for the past 19 and a half years, and I suspect I shall probably do it for the next few years as well.

Even the Government-dominated Select Committee has warned that what it calls the “hiatus” in project developments could threaten the UK’s ability to meet its energy and climate security targets, so when the Department’s own figures show the need for £100 billion of investment by 2020 to make our electricity infrastructure fit for purpose, the Secretary of State really does have to explain where she believes that investment is going to come from, given that investor confidence in her Department is at an all-time low.

Before the Secretary of State does so, however, perhaps she will confirm whether she instructed her Department not to prepare in any way for a leave vote, as the Prime Minister apparently directed. If that is so, can she explain why, because that is what business leaders out there are asking? It seems incomprehensible to them that the Prime Minister took such a gigantic risk with their future—a risk that will increase their cost of capital and the cost of energy to bill payers, both corporate and domestic alike—yet made absolutely no preparations for what might happen when that risk went the wrong way.

The IIGCC—Institutional Investors Group on Climate Change—a group of institutional investors representing over €13 trillion in assets, said in the aftermath of the vote to leave that it had brought

“considerable uncertainty and market turmoil.”

That only goes to prove that the art of litotes is not yet dead!

[Geraint Davies (Swansea West) (Lab/Co-op)]

In the light of that dramatic uncertainty, does my hon. Friend agree that one thing the Government should do is to give a cast-iron guarantee that they will honour, post-Brexit, the environmental standards and undertakings that we have made in the EU to date?

[Barry Gardiner]

My hon. Friend, who takes a consistent and committed interest in these matters, is absolutely correct, and the precise intention of this motion is to flush out those issues and ensure that the Government do precisely as he says.

In the aftermath of the leave vote, the Government’s own external adviser has stated that a future for the Hinkley C nuclear power station is now “extremely unlikely”. Vattenfall has said it is now reassessing the risk of working in the UK, which could jeopardise its plans for a £5.5 billion wind farm off the east coast of England, while Siemens has announced that it is putting a freeze on its future—not its current—clean energy investments in Hull as a result of what it called the “increased uncertainty” from the leave vote.

I must say that for all the talk from the Minister of State, Department of Energy and Climate Change, the hon. Member for South Northamptonshire (Andrea Leadsom), about the “sunlit uplands” of the post-Brexit world, there is really no use in the Secretary of State trying to pretend that she thinks the vote is anything but a disaster when she herself is on record quoting the analysis of Vivid Economics warning that the result of an exclusion from the EU’s internal energy market could cost the UK up to £500 million a year by the early 2020s. The stock response of the right hon. Lady that Labour Members should not “talk Britain down” will simply not serve, given that these quotations come from her own advisers, industry leaders and, indeed, her!

Bloomberg New Energy Finance was not scaremongering when it said of the upcoming Brexit negotiations that they were

“likely to cause project investors and banks to hesitate about committing new capital, and could cause a drop in renewable energy asset values”.

That was an authoritative, independent commentator telling the unvarnished truth.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

I always follow the hon. Gentleman’s comments with a great deal of interest, but is it not about time that he and his party moved on? The British people have delivered their verdict. Does the hon. Gentleman not agree that it is not terribly helpful of people like him to continue to talk the British economy down in that way?

[Barry Gardiner]

I understand that there is a need to move on, and the hon. Gentleman is right to say that we must now look to the future, but I think that if he bears with me, he will find that that is what I am trying to do. Yes, I am critical of where we are, but the criticisms that I have adumbrated so far are not my own. They are criticisms made by the Government’s own advisers, they are criticisms made by industry itself, and, indeed, they are criticisms made by the Secretary of State. I am not talking the UK economy down; I am trying to set out the present situation with clarity, and then see whether we can move on from it.

Perhaps the Secretary of State could do the same as Bloomberg in telling the unvarnished truth, and inform the House what assessment her Department has made of the increased price of imported energy as a result of the falling pound. I will happily give way to her if she wishes to do so.

[The Secretary of State for Energy and Climate Change (Amber Rudd)]

indicated dissent.

[Barry Gardiner]

Perhaps, then, the Secretary of State could tell us what assessment her Department has made of the price premiums on loans that will be demanded by investors in energy infrastructure to cover the cost of political uncertainty. Is it 1%? Is it 2%? Again, I will happily give way to the Secretary of State if she wishes to inform the House what assessment her Department has made of those matters. No? In that case, I will give way to the spokesman for the Scottish National party.

[Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)]

Will the hon. Gentleman take the Secretary of State to task on what she intends to do to achieve the climate change targets in respect of completely decarbonising the transport and heating sectors in order to achieve 2050 targets?

--- Later in debate ---

[Barry Gardiner]

The hon. Gentleman is absolutely right. It is clear from what the Committee on Climate Change has said that the area in which the United Kingdom is falling behind most badly is not the power sector, but the transport and heating sectors. Of course, dealing with that does not rest solely with the Secretary of State; it also rests with her colleagues in the Department for Transport and the Department for Communities and Local Government.

Perhaps the Secretary of State would find it easier to explain how the UK might continue to benefit from the EU internal energy market—or does Brexit mean Brexit in this regard as well? We really do need clear answers to all these questions. Perhaps the right hon. Lady can tell us what will happen to the four clean energy projects that are currently being assessed by the European Fund for Strategic Investments. She knows that the European Investment Bank has been the UK’s biggest clean-energy lender, having put €31 billion into clean energy over the last five years. Has she identified a replacement source of funds for such projects?

Perhaps the Secretary of State can explain why, last week, the Government pulled their funding for the only large new gas plant that had managed to secure finance under the capacity market scheme after Carlton Power was unable to secure the investment that was needed for the Trafford plant. The capacity market has resoundingly failed to secure the new gas build that it was introduced to incentivise.

Perhaps the right hon. Lady can explain—after the failure of the green deal, and after acknowledging that neither the warm home scheme nor the energy company obligation is sufficiently well targeted to reach those most in need—precisely how she proposes to address energy efficiency and tackle the fuel poverty experienced by 2.38 million of our fellow citizens. Let me correct that, Mr Speaker: 1 should have said 2.38 million households, in England alone. Perhaps the right hon. Lady might also explain why National Grid warned on Friday that the lights were kept on only by emergency measures last year. The fact is that the Government’s energy policy has pushed us further towards energy insecurity.

Our purpose in securing this Opposition Day debate is precisely to ensure that the Government cannot ignore such pressing concerns following the referendum. The vote to leave was not a vote for blackouts and soaring energy bills; it is the Government’s responsibility to ensure that those things do not happen.

The Committee on Climate Change, which has a statutory duty to advise the Government on the most cost-effective route to decarbonisation, has always made it clear that early action is cheaper action. As its chief executive warned us last week, leaving the EU calls the mechanism of how we reach our targets into question. The Government’s policy failure has created a 10% gap in emissions projections towards our legally binding climate target for the mid-2020s, and they are nearly 50% short of meeting their intended target for 2030—that is, if the Secretary of State ever gets round to actually complying with her statutory obligation to set the target. I believe that that is now due to happen on Monday, which would make it only 18 days beyond the legal statutory limit.

Last year, the Environmental Audit Committee gave the Government a red card for their record on managing future climate change risks. The chair of the Infrastructure Operators Adaptation Forum concluded:

“we simply do not know the capability of the vast majority of stuff out there for current weather, never mind the future”.

The National Security Risk Assessment cites flood risk to the UK as a tier 1 priority risk, alongside terrorism and cyber-attacks, and, of course, it is our most deprived communities that face the greatest increases in flood risk. However, new evidence released today by the Committee on Climate Change renders starker than ever the threat to British households and businesses from a failure to manage climate change. Its published estimates show that, without increased Government action on climate adaptation, the number of homes at high risk from flooding will rise to well over 1 million even if we meet our current climate targets.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Rory Stewart)]

I apologise for intervening so early, Mr Speaker. Will the hon. Gentleman please explain the precise relationship between the European Union issue and the questions that he is raising about flooding?

[Mr Speaker]

The Minister is not intervening that early, although some people might think that the hon. Gentleman was approaching the conclusion of his preliminary remarks.

[Barry Gardiner]

I am sure you are correct, Mr Speaker, in referring to “his preliminary remarks”.

I am happy to explain that relationship. Unless we have clarity about the post-Brexit scenario, unless we know where we will be able to secure funds to replace all the funds that fell within the common agricultural policy to finance measures to mitigate flooding, and unless we are able to deal with land management in the way that was allowed by the European Union, we will not have clarity on these matters, and clarity is vital to adaptation.

We are living at a time of increased risk, and robust planning is required to limit harmful impacts on British communities and businesses. I say in all seriousness that, following the devastation of communities and cities around our country by recent floods, this new assessment requires a new response from the Government. Cuts in the budgets, and in the staffing capacity of the Department for Environment, Food and Rural Affairs and the Environment Agency, have left the UK increasingly vulnerable, and the Government must take responsibility for that.

The UK’s ability to face up to energy and environmental challenges—more than almost any other area of policy—was strengthened by our EU membership. Given that the Treasury’s principal response to the leave vote so far is a U-turn on the Chancellor’s core election pledge to balance the books by 2020—

[Dr Murrison]

Will the hon. Gentleman give way?

[Barry Gardiner]

I think you would like me to press on, Mr Speaker, so I will not. I have, I think, been most generous in giving way.

Given the Treasury’s response, it would be helpful to hear from the Under-Secretary, when he winds up the debate, precisely where he proposes to find the additional resources that are required for adequate flood defences to meet the new assessment. Last week, the Secretary of State for Environment, Food and Rural Affairs told the House:

“It is absolutely clear that it is business as usual while we remain members of the EU.”—[Official Report, 7 July 2016; Vol. 62, c. 1030.]

Perhaps she will understand that what concerns many of us is that, as soon as we are no longer members of the EU, many of the protections the UK natural environment currently enjoys will fall away. The clean air directive has been strenuously opposed in Europe by this Government, who tried to water it down for years; indeed our own Supreme Court has now found them to be in breach. I pay tribute to ClientEarth and its work in holding Government to account for the 52,500 excess deaths every year as a result of polluted air in the UK, and I pay particular tribute to Sadiq Khan as Mayor of London who used the 60th anniversary of the Clean Air Act 1956 to unveil a new clean air programme.

The Government must remember that they have a job to do, and that includes taking concrete action to meet the legal air quality standards as ordered by the UK’s Supreme Court. The Government need to explain to the House if they will incorporate the provisions of the clean air directive into UK law and then begin to comply with its provisions in a way that they have, tragically, failed to do for the past six years.

The birds and habitat directives may well already be fully transposed into UK law, but we need to know if our beaches will still be protected from sewage by the bathing water directive or whether swimming through sewage will once again become a feature of a day at the seaside. We need to know which elements of the waste and electronic equipment directive were not transposed into UK law under the 2013 regulations and what the impact of leaving the EU might be for our recycling industries and our commitment to the circular economy.

[Dr Murrison]

Will the hon. Gentleman give way?

[Barry Gardiner]

No, I will not.

The fact is that fish and birds and insects do not carry passports; pollution is oblivious to the strictures of national airspace or inshore waters. If we wish to manage all of these, whether as pests, problems or resources, then it is better to do so in concert with our regional neighbours. The vote to leave the EU has made that harder. The Government must outline how they propose to overcome that problem.

The Environment Secretary told the House last week that the subject of continued subsidies to farmers up to 2020

“is not a decision I can make at this stage.”—[Official Report, 7 July 2016; Vol. 612, c. 1028.]

Surely it is a decision that should have been made long before anyone asked farmers to vote to leave the EU. Much of the subsidy that farmers receive is for environmental stewardship schemes and other land management practices that benefit biodiversity and wildlife. To turn round to farmers now and say that the £3.5 billion total of subsidy that used to flow each year from the EU into their pockets is no longer secure is not just an attack on farmers’ livelihoods; it is an attack on all the work that farmers do to enhance our environment and protect our landscapes.

These are not abstract challenges. Managing the risks born of the uncertainty from the referendum outcome is a responsibility for Government. Ministers must urgently identify any legislative gaps in environmental protection that may arise from the removal of EU law, and develop plans to replace any protections so that the UK does not become a riskier, unhealthier or more polluted place to live in or do business in.

[Zac Goldsmith (Richmond Park) (Con)]

I note the hon. Gentleman’s comments on the CAP, but he would be hard-pressed to find any conservation or environment group in the country that believes it provides a net benefit to the environment. There are bits that are good for the environment, but overall I do not think anyone would defend it as a net good for the environment. Surely Brexit gives us an opportunity to take those funds and tailor them in such a way that they genuinely are used to subsidise farmers in delivering a genuine public good? This is a massive opportunity.

[Barry Gardiner]

I am happy to say to the hon. Gentleman that I have been a critic of the CAP, as he has, for many years, but the pillar 2 arrangements under the CAP and the environmental stewardship arrangements under the CAP were positive and there was a net benefit from those. I want the Government to set out the new arrangements they propose, so that we can be sure that the environmental protections remain in place, and that that money is not frittered away on something else.

The Government must provide answers to Parliament and the public, who want to be reassured that our environmental protections are not to be weakened in some Brexit bonfire of the regulations. The environmental protections we have enjoyed under the EU are not bureaucracy to be done away with; they are part of what it is to live in a civilised country that respects the natural world and believes that the only prosperous future is a sustainable one.

So, finally, I ask three key questions. Will the Government now move swiftly to ratify the Paris climate agreement? How will the Government press for access to the internal energy market? How will the Government ensure that energy bills do not go up as a result of the increased investor uncertainty following the vote?

Ultimately, the Government must commit to safeguarding environmental protections to at least the same level we have enjoyed within the EU, by passing into UK law all those regulations that would otherwise fall away upon leaving the EU.