At the Paris negotiations the central words will be “common but differentiated,” and while I entirely agree with the Secretary of State’s response on the subject of consumption emissions, does he accept that consumption emissions will play into that debate about common but differentiated responsibilities?
I have met a range of climate change negotiators, particularly the Chinese negotiator Minister Xie, and interestingly they have never raised that issue. They have raised many other issues, but they have never raised that specific one, so it would be a first for the negotiations. There are other issues that we need to focus on, however, and we set out our position in a publication last September.
(9 years, 9 months ago)
Commons ChamberLet me reassure the hon. Lady that energy efficiency is at the heart of our policies. That is why we have managed to achieve our 1 million target early, and why I have put forward legislation for the private rented sector, which I hoped the hon. Lady would welcome. She might be interested to know that today John Alker, acting chief executive officer of the UK Green Building Council said:
“This could be the single most significant piece of legislation to affect our existing building stock in a generation”.
I am proud that this Government have introduced that.
What specific energy efficiency measures has the UK proposed should be included in the European INDC—intended nationally determined contributions—and how will the Secretary of State ensure that, unlike the domestic green deal, a rate of success is not promised in one year when less than half of it has been achieved in two?
(9 years, 10 months ago)
Commons ChamberUrgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The great thing about a National Audit Office report is that it is consensually agreed between the Department and the NAO. I am afraid that rather disproves the points that the Secretary of State has tried to make. He tried to locate the original plan in 2008 under the now Leader of the Opposition, but the report says that the previous plan was designed in 2007. The Secretary of State called this the revised plan, but the NAO report is very clear that, in fact, the
“Authority accepted the revised plan in May 2011”,
so this is a revision of the revision that his predecessor approved. Finally, the report was produced in 2012, when the Secretary of State was in post, and states that there were significant uncertainties back then. Why did he not act on the uncertainties that he agreed with the NAO existed then and work up an improvement for the time break in the contract?
(10 years, 2 months ago)
Commons ChamberI am going to deal with the right hon. Lady’s proposal, as I have said. However, she failed to deal with one of the comments made by a Government Member about the importance of competition. Competition does drive good customer service, as I hope she will recognise. I wish she had done so in her intervention on me, but she did not.
The Secretary of State has given himself the power to change the contract for difference allocation framework, which is part of his regulation on competition, and the budget notice as close as 10 days before an allocation round begins. Can he assure the House that the European Commission regards 10 days as a sufficient period to determine whether the round is state-aid compliant? If he cannot, what assurance can he give that delays will not result from this? Crucially, what impact might this likelihood of change and delay have on investor confidence to create the very competition he is talking about?
I congratulate the hon. Gentleman on getting that question into this debate. I say gently to him that on CfD and state aid we have clearance, so presumably the Commission has examined that matter. I have not specifically asked it that question, but it has given us state-aid clearance. The way we have proceeded with the allocation proposals for CfD is to ensure that we get just that investor confidence, and the fact that we are seeing such interest and such investment is tantamount to showing that we have it right.
Failing to focus on competition is a serious mistake by the Opposition, because many smaller suppliers competing against Labour’s big six are doing so not just on price but on the basis of better customer service. If we talk to the independents about their business model, we hear some of them say that higher quality customer service is their main competitive edge. The growth of competition since 2010 suggests that they are right and that competition has a key role to play here. From less than 1% of the market, the small suppliers now have more than 7% and it is still growing. Customers now have more choice than ever, with 25 suppliers competing for their custom.
Small suppliers provide electricity to 2 million customers, and they have gained more than 1 million customers in the past 12 months. Clearly, customers are voting with their feet when they are not happy with the service they are getting. Yes, we need to make the competition rule work more effectively, which is why we support the independent Competition and Markets Authority in the most profound investigation of British energy markets ever seen.
It was telling to hear that the right hon. Lady does not intend to wait to hear the result of the Competition and Markets Authority investigation. She will prejudge the authority’s report. That is quite a revelation, which is worthy of more debate. We are not simply waiting for that report from the Competition and Markets Authority. We have already done so much to encourage new suppliers and to make switching easier, simpler and quicker. We believe that we must continue to sharpen the competition tool for consumers, so that when they are poorly treated, they can vote with their feet.
I am acutely aware that competition has not always worked for the most vulnerable in society, such as elderly people who might not be internet savvy. During my time as Secretary of State, I have placed a focus on new business models and new ways of helping such people—from collective switching to developing, with the voluntary sector, citizens advice bureau, Age Concern and so on, new forms of advice with the big energy saving network. Ofgem is also increasingly focused on how we can ensure that energy markets better serve the fuel poor and the less well off.
(10 years, 5 months ago)
Commons ChamberThe Secretary of State talked about the benefits to the consumer from competition in the energy market. He says that the Labour Government did not act properly in this way, but does he recall that of the 14 suppliers that existed when Labour came to power, there was no possibility for any customer to transfer their account from one to the other? What Labour did in creating new electricity trading arrangements and then the British electricity trading and transmission arrangements was to reform the market twice so that competition benefited the consumer.
The hon. Gentleman is mixing up two things. The reforms to which he referred created the big six. There was a consolidation in the markets as a result of those reforms. What is helping competition is the ability to switch. What we have been doing is making that easier, simpler and faster, and that is the right thing to do. I am proud that we now have—or will shortly have when it is confirmed by Ofgem—a full-scale market investigation. The large energy companies will need to think very carefully about their pricing decisions. If they do not pass on falling wholesale costs, the competition authorities and, more importantly, their competitors will be very interested.
This autumn, I intend to ensure that British people know that if their energy supplier hikes up their prices, they will have a real choice to switch firms and cut their bills. The switching choices will be simpler, easier and quicker than ever before.
In this Session’s legislative programme, my Department will be putting forward a number of measures in the infrastructure Bill. First, I draw the House’s attention to our plans to introduce a community electricity right. Communities will be offered the chance to buy a stake in a new commercial renewable electricity scheme in their area. Community energy can play an increasingly important role in our energy mix, not least as we increase renewable energy in the UK.
When I published Britain’s first ever community energy strategy earlier this year, we showed how greater involvement by communities could significantly support our goals of decarbonising the power sector, increasing energy security, reducing bills and helping the fuel poor. One of the key aims of the strategy is to see greater community involvement and ownership of local renewable energy projects. We hope and believe that that will come about through voluntary agreement. A taskforce of industry and community energy specialists is already working out how a win-win can be achieved, with investors gaining greater public support and additional capital investment, and with communities receiving greater benefits and a greater stake.
Since we are pursuing a voluntary approach, the power in the Bill is a back-stop. The community energy sector was clear that the voluntary approach should be given a chance to succeed, and I agree. By legislating as proposed, we can send the strongest signal that Government and Parliament want to see both community energy and local shared ownership of renewable energy succeed. I hope that the measure will receive support from all parties.
Other key energy measures in the infrastructure Bill involve the implementation of the review that I commissioned into the future of Britain’s North sea assets, conducted so brilliantly by Sir Ian Wood. Given recent events in Crimea and Ukraine, we know more than ever that secure supplies of gas are vital to our economy, but cannot be taken for granted. As we cut our carbon emissions, with our dramatic shift out of coal over the next decade, we know that the replacement electricity must involve low-carbon electricity from renewables and nuclear and lower carbon electricity from gas. Our energy security and climate change objectives require gas, so we must conclude that our North sea oil and gas assets are at least as important now as they have always been.
In spite of rising and indeed record levels of investment in the North sea under the coalition, figures show declining production and exploration, which should worry us all. Gas imports have been rising for some time already and if we do not act to improve conditions in the North sea, our dependency on imported gas could reach worrying levels. As we implement the Wood recommendations, specifically to enable a new arm’s length regulator, I hope that we will get support from all parts of the House.
In order to ensure that the UK can benefit even more from its home-grown energy, we will introduce a final set of measures, subject to consultation, so that Britain can be more secure and reduce our reliance on imports and on coal. The measures are to support the development of the shale gas and geothermal industries. Although both industries are still in their infancy, they are both concerned that the existing legal situation could delay or even stop their ability to drill horizontally deep underground to recover gas or heat. Ironically, given the urgency of climate change and unlike the situation for dirty coal—a landowner or property owner high above a coal seam cannot object and delay work—for cleaner gas and clean heat, landowners and property owners can object.
To assist the shale gas and geothermal industries, we are consulting on how to address those access issues. We published our consultation paper on 23 May, and the consultation will run for the full 12 weeks. Members of the House may respond to that consultation, as may all interested parties. We want feedback and input, because that will help us to refine our proposals, to develop alternative ones or even to convince us that the existing system is fit for purpose. We will listen during the consultation and, subject to its outcome, we will introduce proposals when parliamentary time allows.
The Secretary of State rightly spoke of the importance of last week’s IPCC report on climate change. Will he tell the House of any new policy he is considering in the light of that report as a way of advancing progress from the UK on these matters?
I think that the most important thing we are doing at the moment on this issue is trying to get EU-wide agreement on the energy and climate change package for 2030, including a very ambitious binding target on greenhouse gas reductions, which will be binding on the UK as well as other member states. We have been leading that, and last year I set up the green growth group to get all the ambitious states together. Following the March Council, I am very optimistic that we will get agreement on an ambitious package for Europe and the UK at least by October.
(10 years, 8 months ago)
Commons ChamberOn that last point, one is illegal and one is not, but I think we can all agree that they both need to be investigated by the independent competition authorities. It is interesting that Labour is complaining—at least, some Labour Members are complaining—that we did not make this referral before, given that Labour’s leader, when Secretary of State, refused to make the market investigation reference. Let us remember that in the previous Parliament electricity bills and gas bills increased faster on average each year than they have done under this Government. He had all the reason to make that reference to try to improve competition, but he flunked it when he had the chance.
May I extend my sympathy to the Secretary of State, as it must be galling for him to have to make this statement to the House, particularly with his minder, the right hon. Member for Sevenoaks (Michael Fallon), present? The Secretary of State has known for many years that what the Labour party has been saying, and what the Select Committee has been saying, has been correct, but he has been prevented from doing anything by the Treasury. Now he has had to come to the House to accept that all the things we were asking for—the Competition Commission referral, a proper examination of this situation and addressing vertical integration—are going to come to pass on his watch. Having said that, can he explain why, when the profits made by the companies in Europe are between 2% and 3%, whereas in this country they are between 5% and 7%, he will not do anything now?
If the hon. Gentleman reads the assessment, he will see that the competition authorities have focused on that last point. On the market investigation reference, I have to remind him, again, that it was the leader of his party who flunked that opportunity. I also have to tell the hon. Gentleman that he should read the record, because Labour’s spokesperson in this area, the right hon. Member for Don Valley, was saying just a few weeks ago that a market investigation reference was not a good idea, that to make such a reference would be to kick things into the long grass and that it should not happen. I am glad that Labour has changed its position.
(10 years, 8 months ago)
Commons ChamberI pay tribute to my hon. Friend for his sterling work in this area. When Ofgem published segmental accounts in November, combined with figures on market share and other data, we saw for the first time a four-year time series showing some real concerns. It was that analysis that led me to write to the competition authorities, drawing their attention to the problems in the domestic gas supply market, which were never raised by the Labour party.
The Secretary of State knows that the big six were set up in the way they were because, after the introduction of the new electricity trading arrangements and then the British electricity trading and transmission arrangements, that spread competition in the market. However, Which? has now said that vertical integration has skewed the market, penalised new entrants and impaired competition. Does he not accept that Which? is right and that the Opposition are absolutely right to seek to break up that vertical integration?
I draw attention to my entry in the Register of Members’ Financial Interests—and, indeed, also in The Mail on Sunday. The Secretary of State was good enough to welcome the GLOBE conference today in Washington and the fourth legislative study. Will he also welcome the forest legislators initiative that is going alongside that, which is looking into REDD-plus and the expansion of that work in Latin America and Africa in particular?
First, may I pay tribute to the hon. Gentleman for the work he does on forestry and the contribution he has made? I am not aware of the details of the legislative initiative he mentions, but it does sound very sensible. This Government have done a huge amount to support efforts to tackle deforestation in Latin America and elsewhere and I will certainly take note of what he said.
First, 57% of the value of this project will go to UK firms, and I hope that the right hon. Gentleman welcomes that. I do not believe that these terms are generous at all. We have had hard negotiations to get them down, and EDF realises that. Some of the benefits of the deal we have negotiated need to be held up in the headlights. There is the construction gain share, so that if the construction costs are lower, the consumer gains. If there is a refinancing by the investors in 10 years’ time from which they make a lot of money, the consumer will gain from that refinancing. That never happened with private finance initiative deals when Labour was in power; rather, the taxpayer lost out. We have the refinancing gain share for the consumer, and I doubt that would have happened if that lot had been in power.
How much of the £16 billion of construction costs will the developers of Hinkley Point C be able to offset in tax reliefs and capital allowances? Does the Secretary of State consider it ironic that EDF has insisted on an insurance clause against his own party’s future policy by stipulating that the strike price will rise to reflect any future tax on or shutdown of the industry? While he is at it, will he explain why the strike price for the Flamanville sister plant in France is only £64—some 30% of the £92.50 he has negotiated?
(11 years, 2 months ago)
Commons ChamberNo. I want to make some more progress and then I will let the hon. Lady in.
We need a genuine debate. I pay tribute to the Energy and Climate Change Committee for its report “Energy Prices, Profits and Poverty”, which I welcomed on the day it was published. It is more balanced and informed than many contributions to this critical debate and we will respond formally to it soon. Essentially, the debate is about how to get the balance right between regulation and competition, the regulations we need and how we can boost competition.
To be fair to the right hon. Member for Don Valley, her motion and part of her speech covered those issues. Her problem is her party’s record and the inconsistent and, frankly, incoherent policies she seems to want to adopt. Let us consider her three-pronged policy package: abolishing Ofgem and replacing it with Ofgem 2; dropping Ofgem’s reforms of the wholesale market in favour of reintroducing a pool; and tackling, in some way, the big six.
It is a fascinating package, because it completely reverses some of the very few things Labour actually did on energy policy. You couldn’t make it up. Labour set up Ofgem in the first place in 1999. On Labour’s watch, Ofgem abolished retail price regulation. It gets worse for Labour because five years ago the Leader of the Opposition, when he did my job, said that he was strengthening Ofgem. If the Labour party wants to abolish Ofgem, which it set up and which was strengthened by the Leader of the Opposition, what on earth went wrong?
We are ensuring that Ofgem’s powers are increased. We have taken a far more measured approach to the independent regulator. We are ensuring that it and we are on the side of the consumer. We started with a review of Ofgem three years ago. We decided on some reforms and are implementing them. We are giving Ofgem tough powers to compensate consumers when an energy firm does something wrong—something that the Leader of the Opposition forgot to do when he was doing my job. Labour was not on the side of the consumer when it was in government. It is noteworthy how much tougher Ofgem has been since the coalition came to power in promoting competition in retail and wholesale markets, in which it has been strongly supported by us.
I will ask the right hon. Member for Don Valley another question—perhaps she will answer this one. Would she keep the tougher powers that we have given Ofgem? Given that it is improving competition in the wholesale and retail markets, would she abandon those reforms? I will give way to the hon. Member for Brent North (Barry Gardiner), because perhaps he will be able to answer.
The Secretary of State knows full well that what he is saying is disingenuous. When Labour created the new electricity trading arrangements, we were moving from two major companies to six. When it created the British electricity trading and transmission arrangements, it expanded the transmission arrangements as well. When it introduced Ofgem, it was introducing a regulator into a competitive situation. He knows full well that in 2007 and 2008, when the Leader of the Opposition was the Secretary of State for Energy and Climate Change, energy prices were going down. It is in the last few years that they have rocketed by 41%. All the accusations that he has just made are phoney and he knows the reality.
The hon. Gentleman always makes very informed contributions to our debates. He is proposing that we adopt the policy of strategic reserve, which is a long-term approach, using the powers that National Grid already has. We have looked at that and rejected it, because it is not the right approach to get best value for money and it would create perverse incentives for investment in the wholesale market. We believe that a combination of Ofgem and National Grid measures, using those existing powers, and the capacity market is the best way to meet the security supply requirements, not to impact negatively on the wholesale market and to get good value for the consumer.
Surely the best way to meet future energy demand is to reduce it, yet unfortunately the Government have focused on the supply side, not on energy efficiency measures. It will not be possible to meet future energy demand without real energy efficiency and reductions in demand.
I am genuinely surprised at the hon. Gentleman’s question, because he knows that the Government have done a huge amount on energy efficiency for both consumers and industry. When the Energy Bill was before the House, we tabled amendments on Report for electricity demand reduction to be part of the capacity market. We are operating on both the supply and demand sides. That is a new initiative which has not been seen before, because other Governments have not done it.
My hon. Friend is right to ask that question, but I remind him and the House that we are talking about allegations, and that we are at the early stage of investigations. It is important that people remember that.
One benefit of the investigations by our independent competition authorities is that we can try to ensure that our markets work more effectively. If manipulation is proved, and if it is proved that the manipulation led to higher prices, we could see lower prices, which would be welcomed by many outside the House.
In January, the OFT did not find no evidence; it found evidence of price fixing, albeit limited evidence. At that time, did the Secretary of State ask what the evidence was? If so, what consideration did he give it, and what actions did he recommend as result?
I have not seen that specific evidence, but I know that it was very small and that the OFT felt that the evidence was unable to lead it to a further investigation. However, it was clear that the OFT announced a call for information—the Government supported that. The OFT wants people to bring forward information, which is exactly what they should do.
I agree with my hon. Friend. Many people—not only in the nuclear industry, but in the low-carbon energy sector generally—will see the statement as a key moment and welcome the boost to confidence more broadly. He has been a doughty champion for Dungeness. He and I have already met formally and talked about the work that he wishes to do locally, and I encourage him to keep going.
I welcome the Secretary of State’s announcement. I visited Hinkley in November as part of the Select Committee visit and was most impressed by the arguments for community benefit, of which he has spoken. However, he rightly said that this is not the end. I do not wish to press him on the strike price—I understand that those matters are commercial—but will he at least acknowledge two principles? First, the strike price will be based on the construction costs. Therefore, will he incorporate a clawback into the formula, should those costs be overestimated? Secondly, does he accept that Jean-Paul Chanteguet, Chairman of the Select Committee in the French Parliament, has said that Flamanville, on which Hinkley is based, will be producing at €72 per MW, and that that must, in anybody’s account, form the baseline for assessment of the negotiations in which the Secretary of State is engaged?
I pay tribute to the hon. Gentleman and the other Select Committee members who have not only grilled me on this and other issues but made inquiries into the matter and been generally supportive. On the details of negotiations, clawbacks and the actual price, I am afraid that I must disappoint him; I will not be drawn on those. We are determined to get a price that represents value for money, that is fair and affordable and that bears scrutiny.
(12 years, 1 month ago)
Commons ChamberI am grateful for the hon. Lady’s question, not least because I was born in her constituency. The Government want to help everybody. I am surprised that she is focusing simply on over-75s. We are acting on over-75s and on all poorer pensioners, because the warm home discount will get £130 off their bills this year. We are taking action.
No, I will not.
I have spent some time on competition in the retail energy markets, but the right hon. Lady spoke a lot about competition in the generating markets, to which I should like to turn. She made a great deal of wanting to reintroduce a pool to the UK and said it was in the Labour party’s manifesto. She did not really explain why, having abolished the pool in the UK in 2001, Labour wanted to re-introduce it. The Labour Energy and Competitiveness in Europe Minister at the time of pool abolition—she is now the noble Baroness Liddell—told the House:
“There is no question but that the electricity pool has distorted the market”.—[Official Report, 15 June 2000; Vol. 351, c. 1102.]
When the NAO reported on the old pool in 2003, it said that the
“the centralised arrangements of the pool carried with them a risk that some generators could manipulate the market and Ofgem consider that this risk materialised through much of the period of the Pool’s operation to the detriment of consumer interests.”
Indeed, many at the time believed that the pool was leading to higher and not lower energy bills. That is why the Government are not convinced by the Opposition’s policy.
No, there is more than one company, as I think the right hon. Lady will find when she checks.
Ofgem and my Department agree that Ofgem’s voluntary measures do not go far enough, so the latter has been working on a mandatory auction, and it might well be that some sort of trading obligation is the way forward. I can confirm that I have been considering this matter intensively for some time, and that I will bring forward measures in the Bill to address it. At the very least, these will be back-stop powers in case the efforts of industry and the regulator prove insufficient. If we are to drive competition in the generating side of the electricity market to help people and firms struggling with bills, we must address the liquidity problem. The right hon. Lady’s policy does not do that, but ours does.
I agree that it is important to free up liquidity in the forward market—I do not think there is any dispute about that—and, in so far as that goes, it is welcome. However, it will not address the problem of a generator such as Centrica making a £1.5 billion profit while the retail prices of British Gas rise, because it will not be possible to see that integration—it can show its profits where it likes. The Secretary of State talked about integration of the retail and wholesale market. He has to address that, otherwise we will not resolve this problem.
The only way to ensure greater transparency is to have more liquid markets. That is the whole point of liquid markets. Without them, people cannot compete or buy and sell their electricity forward, and we cannot ensure price transparency. That ought to be welcomed by the Labour party. I would be worried if it set its face against greater liquidity in the forward market. It would be a very odd position to take.
I have spent some time explaining how our various policies will promote fiercer competition and help cut bills, and I have set out why I think the Opposition’s proposals are fundamentally flawed.
I am grateful to my hon. Friend for his question. He will know that when I was at the Department for Business, Innovation and Skills, I stimulated a huge amount of research and work on collective purchase and co-operative principles so that together we can purchase not just energy but other things more cheaply. I asked if the Department had any detailed research, because I thought the previous Government, who were supposed to be in favour of collective and co-operative principles, might have done some—they had not.
In his preparation for COP 18, what analysis has the Secretary of State made of Professor Sir David King’s proposals for common but differentiated cap and trade schemes, using the human development index as an appropriate measure?
We are taking forward a lot of analysis, not just on that scheme, but on a number of other things. COP 18 in Doha at the end of the year will be really important; I met the Deputy Prime Minister of Qatar recently, to discuss how we can make sure that it is a successful set of discussions.
Green economic development will be the central focus of the United Nations conference in Rio in June. Given that, which Ministers will attend? Now that the Brazilian Government have changed the date to 15 June in deference to the Queen’s diamond jubilee, will the Prime Minister himself attend?