Oral Answers to Questions

Bernard Jenkin Excerpts

Tuesday 12th November 2024 Commons Chamber

[Michael Shanks]

I would encourage the right hon. Gentleman to read the NESO report, because it sets out in great detail not only that clean power is achievable by 2030, but that it will lead to lower bills. What he says about investment misses the point: in the last few weeks, we have announced billions of pounds of private sector investment in these projects; indeed, Scottish Power has announced today that it will provide £1 billion. Companies are choosing to invest in this country, whereas they did not under the Conservative party. The reality is that once upon a time, the Conservatives recognised that the drive to net zero was important. They have abandoned that commitment now.

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

I thank the Minister for agreeing to meet the OffSET—offshore electricity grid taskforce—group of MPs later today; we are very much looking forward to the meeting. Does he recognise that achieving the 2030 deadline set out in the NESO report requires an acceleration of the process, which, in turn, is dependent on much higher levels of public consent?

[Michael Shanks]

I recognise the hon. Gentleman’s point, and I am looking forward to meeting him and his colleagues this afternoon to discuss the particular issues in his area. We need to build more network infrastructure across the UK to make this endeavour a reality, but he is right: we want to bring communities with us on this journey. That is why we have said that we are looking again at what community benefits will look like, building on some of the work that the previous Government did in consulting on this issue. Crucially, however, if want to bring down bills and deliver energy security, we will have to build the infrastructure, and that is what this Government are committed to doing.

Oral Answers to Questions

Bernard Jenkin Excerpts

Tuesday 8th October 2024 Commons Chamber

[Michael Shanks]

I thank my hon. Friend for that incredibly important question. Community energy has so many benefits in our energy mix, including giving communities a stake in our energy future. We also know that there are many social and economic benefits that come from that. We are committed to our local power plan, which will deliver investment in community-owned projects. Great British Energy will have a key role to play in supporting communities, capacity building and in that initial funding to help them deliver these projects.

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

Could I invite the Minister to meet a cross-party group of MPs from the east of England to discuss how the review conducted by the electricity system operator can contribute to energy security and in particular to look at how undergrounding high voltage direct current cables could be cheaper in the long term than pylons and more efficient for achieving net zero? Will he agree at least to have a meeting with us on that basis?

[Michael Shanks]

I am always happy to have meetings with any right hon. and hon. Members across the House on a range of issues, so I will take that away. The evidence suggests that undergrounding is five to 10 times more expensive and that actually it can have more of a damaging impact on nature and natural habitats than pylons. The important thing with all of this is that this is nationally important structure, which is necessary for us to get to the targets that we want to get to. I know that the hon. Gentleman takes that seriously, and I will meet him and others, but we have been clear as a Government that we will build this infrastructure if it is necessary.

Great British Energy Bill

Bernard Jenkin Excerpts

2nd reading
Thursday 5th September 2024 Commons Chamber

[Ed Miliband]

I am going to make a bit more progress.

Thirdly, Great British Energy will work with industry to develop supply chains across the UK to boost energy independence and create good jobs. The reality is that the last Government spectacularly underdelivered on the promise of creating jobs in clean energy. It is true that British waters are home to one of the largest floating offshore wind farms in the world: Kincardine, just 15 km off the coast of Aberdeen—[Interruption.] The right hon. Member for East Surrey (Claire Coutinho) nods, but where was it made? Its foundations were made in Spain and its turbines were installed in the Netherlands, and it was then simply towed into British waters. How can that be right?

This Government are not neutral about where things are made. We want the future made in Britain. Clean energy is the economic and industrial opportunity of the 21st century, and the truth is that other countries are seizing this opportunity. Britain is being left behind. The facts are extraordinary: Germany has almost twice as many renewable jobs per capita as Britain; Sweden almost three times as many; and Denmark almost four times as many. That is the previous Government’s legacy.

What our friends and neighbours have realised is that a domestic national champion is a crucial tool to help deliver economic success. The success of the Danes, for example, cannot be divorced from the role of Ørsted in helping to make it happen. That is why Great British Energy will work alongside our national wealth fund and the British jobs bonus, partnering with industry, to build supply chains in every corner of the UK, delivering the next generation of good jobs, with strong trade unions, and reindustrialising Britain.

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

I congratulate the Secretary of State on his appointment. May I draw attention to the letter he wrote to Fintan Slye, the chair of National Grid ESO, in August, and the response he has given in his open letter to the industry, alongside a question about the cancellation of the offshore co-ordination support scheme, which was coming up with viable alternatives for better delivery of the Norwich to Tilbury project? Mr Slye says that the plan the ESO will develop will be

“a whole systems spatial view of what is required to deliver a clean, secure, operable electricity system by 2030.”

Does that include all the work that ESO has already done in its review of the Norwich to Tilbury project, which includes many viable options that could speed up the process and make it more viable for the long term?

--- Later in debate ---

[Claire Coutinho]

I thank my right hon. Friend for his intervention. It is always a pleasure to see him in the Chamber making excellent points.

The question that I have is this: why has the Secretary of State set up a duplicate programme with no instructions for governance, independent review, investment plans or consumer savings that he can be judged by? Why should taxpayers’ money fund a similar entity when the only difference that I can discern is that it gives the Secretary of State unchecked power? What is it about the £8 billion of taxpayer money that he can direct without checks or balances that first attracted him to the idea of GB Energy? These are fair and reasonable questions for us as the Opposition to ask, and he must look to improve the governance in this Bill.

Let me turn to the promises that he made. The Prime Minister, the Chancellor, the Secretary of State and at least 50 Labour MPs promised their constituents in the July election that GB Energy would save them £300 a year on their energy bills. They said it on their election literature, on social media and in hustings. They said it because they were told to do so by the Secretary of State, but I listened very closely to his speech today and I did not hear him make a promise that GB Energy will save them £300 on their energy bills.

In a debate just before the summer recess, the Under-Secretary of State for Energy Security and Net Zero, the hon. Member for Rutherglen (Michael Shanks), would not repeat the promise either. That is because they all know that it is not true. In fact, one of Labour’s first acts in government has been to take away up to £300 from 10 million pensioners this winter, including two thirds of pensioners in poverty. It takes some nerve for the Labour party to say that it never wanted to do this, because the winter fuel payment was in the manifesto of the Secretary of State’s party when he wrote it in 2010. It was in there when he was leader in 2015, it was in there in 2017 and in 2019, but in 2024 it was omitted. There was no mention at all for the first time in 14 years.

I will give credit to the right hon. Gentleman—something that I do not always do. When he was leader in 2015, he put it in his manifesto that he would take the payment away from the top 5% of pensioners. He will remember that. He had the courtesy of telling the public his plans, but, professional politician that he is, I suggest that he would have clocked that it was not included this time round. He has been in politics for 30 years and would have known what that meant, so I hope that he can confirm today whether he had any conversations with the Prime Minister, the Chancellor or Morgan McSweeney before the manifesto came out. If so, he sent out those Labour candidates—all the people on the Benches behind him—with this false promise of the £300 energy savings when someone clearly knew that they were going to take that amount away from millions of pensioners this winter.

[Sir Bernard Jenkin]

My right hon. Friend referred to the letter that was sent by the Secretary of State to Fintan Slye, the head of National Grid ESO and, curiously, there is nothing in the Secretary of State’s letter that refers to the need to lower electricity prices. The term “electricity prices” does not appear in the letter and neither does the term “security of supply”. Does she agree that those are the two great concerns about rushing the 2030 decarbonisation target?

[Claire Coutinho]

I absolutely agree with my hon. Friend, and I will come on to that point.

There will be a vote next week on the winter fuel payment—I think the Government have confirmed that. Everybody heard the Secretary of State speak today, so I say to those on the Opposition Benches that, if they want to break the Whip, if they want to stand out from the crowd, I am sure that they will have his encouragement.

Let us come back to those savings. The Secretary of State has promised bill savings by 2030 through GB Energy —I believe that is correct. The question is how. Does he have any serious energy expert who thinks that that is possible with an investment of £8 billion over five years? That is a drop in the ocean when it comes to energy investment. It is a fraction of the amount of investment that he is deterring from the private sector into clean energy with his plans to shut down the North sea. He talked about offshore wind, nuclear and hydrogen in his founding statement, but none of those things get built in five years. Let us be honest, the likelihood of his plans bringing any power online by 2030 is tiny. The idea that it will be enough to lower bills across households is, frankly, for the birds. When we asked his Department how much energy he wanted to enable through the Bill, his Department said that it would be looked at in due course. That is just not good enough.

The second promise is clean power by 2030. GB Energy was supposed to be the silver bullet to reach the Secretary of State’s target of a decarbonised grid by 2030. We will come on to whether that is a good idea a bit later. To do that, he said that he needed £28 billion a year. His Chief Secretary to the Treasury talked about hundreds of billions of pounds, and he has in fact secured from his Chancellor £1.6 billion a year. He talked about national ownership. This is not enough money to do that, and he knows it. He himself thought that his plans would cost vastly more, yet he is promising to do it all now with 6% of the funds. That is just not credible.

Then we come to promise No. 3. The Government say that

“in every single project”

that GB Energy invests in

“there will be a return for the British taxpayer”.—[Official Report, 26 July 2024; Vol. 752, c. 937.]

That is what the Under-Secretary of State for Energy Security and Net Zero, the hon. Member for Rutherglen said on 26 July—it is in Hansard if Members want to check. It says “in every single project”.

What Labour is telling industry is very different. It says that it will use that money—£8 billion of taxpayers’ money—to de-risk its projects. I believe that the Secretary of State said that in his speech today. What does that mean? That means that it will be investing in the parts of those projects that the energy companies do not expect to be profitable. May I ask this: what is it about the Secretary of State’s vast private sector experience, which he gained as a researcher at Channel 4, that makes him think he can turn a profit, when experienced, multimillion-pound energy companies cannot? He has not set out an expected financial rate of return, any risk profile or a timeframe for these returns. Those are the minimum things that anyone seeking investment should set out, and I say that as someone who is financially trained. I know that the right hon. Gentleman is not, but this is basic stuff.

Here is the problem. If the Secretary of State’s goal is to give taxpayers a good deal, he should be investing on commercial rates, which would just displace private sector capital and would not speed up his decarbonisation targets, produce more energy or lower bills. But if his goal is to de-risk more speculative projects—that is the line that he is giving industry and the thing that he said today—then by definition he will be throwing taxpayers’ money into the least attractive parts of investments, by which I mean the parts that multimillion-pound companies do not want. The risk is that GB Energy, far from generating any profit for taxpayers, will become a skip for all and everyone to put their problems and their failures inside. This is crucial, because we cannot let the Government repeat at a national scale what Labour councils have done at a local level. [Interruption.] Labour Members groan, but they should think about what local taxpayers have had to face.

Robin Hood Energy in Nottingham, which collapsed, left residents with debts of £38 million. Bristol Energy, which failed, cost residents £43 million. Warrington’s stake in Together Energy left residents with a potential liability of £37 million. These were small-time projects with budgets in the tens of millions.

[Sir Bernard Jenkin]

On a point of order, Madam Deputy Speaker. I cannot hear what the shadow Secretary of State is saying because there is so much noise coming from those on the Government Front Bench. They do not want to hear what she is saying, because it might be true.

--- Later in debate ---

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

Let me be the first to congratulate the hon. Member for Northampton South (Mike Reader) on his maiden speech. He has demonstrated in two ways that he is quite a rare beast. Being an engineer is not a widely held profession in this House, and he will no doubt bring great value with that expertise and experience, but his business experience is also extremely valuable. I am afraid that if he looks around him on the Labour Benches, he will see precious few people with any business experience—as the Secretary of State has shown with his Bill.

The Bill is about setting up a shell company. That is it. The idea that that constitutes an energy policy is a complete myth. In fact, the Government have not even produced an energy policy. There has not been a White Paper on UK energy policy under this Government. There are no pages full of data and numbers to give us any confidence that the Government know what they are trying to achieve, how they will achieve it, or what the risks are.

In fact, that was given away in an astonishing letter that the Secretary of State wrote to the director of the electricity system operator, asking for all the information that one would expect the Government to have given that this was a major platform in their manifesto. [Interruption.] The Under-Secretary of State for Energy Security and Net Zero, the hon. Member for Rutherglen (Michael Shanks), shakes his head—I will give way to him if he wants to intervene—but where are the numbers? Where is the data backing up this wild assertion that just going all out for renewables will provide security of supply and lower energy costs? It is a mantra that Labour Members keep repeating to themselves with increasing enthusiasm and vehemence to make up for the fact that they have no numbers to back up their assertions.

Let me be clear about one thing: I am an advocate of achieving net zero. I believe in the target of net zero by 2050—indeed, I am a member of the net zero all-party parliamentary group. When Members hear me speak, they are not listening to some luddite or climate change denier. I want this policy to work, but there are very considerable risks, which are evidenced by reading between the lines for what is not in the Secretary of State’s letter and what is clearly flagged in Fintan Slye’s response to it.

[Wera Hobhouse]

Does the hon. Member not recognise that under the previous Government, the UK was falling badly behind on investment, when other countries— particularly the US—had transformed the investment that they were drawing in by making very big Government commitments to some projects, particularly nascent ones? Does he not recognise that that sort of Government support makes a big difference to business confidence?

[Sir Bernard Jenkin]

I do not agree with that, simply because we have seen massive investment in renewables over the past 14 years, as the former Minister, my right hon. Friend the Member for Beverley and Holderness (Graham Stuart), and the shadow Secretary of State, my right hon. Friend the Member for East Surrey (Claire Coutinho), set out. We have been making fantastic progress with bringing renewables on stream, but there are considerable questions to ask. I wish it were as simple as setting up a shell company and saying, “We are going to get the state to do everything”, but I am afraid it is not. As the shadow Secretary of State pointed out, Ørsted and EDF make massive losses, and either the taxpayer has to pay for those losses or those costs go on to electricity bills.

The Secretary of State announced on Tuesday that we have got all this renewable capacity coming on stream—enough to power 11 million homes. That is if we match the maximum capacity of the renewables with the average annual demand of those homes, but of course renewables are intermittent. It seems such an obvious thing to say, but we have to say it: sometimes the sun is shining, sometimes the wind is blowing, and sometimes we have enough water for hydroelectric power, but sometimes not. In the winter months, solar makes very little contribution—it makes no contribution in the dark, at night. [Interruption.] It may seem obvious, and the hon. Member for Stroud (Dr Opher) may laugh, but we need to point these things out, because when the Secretary of State says that renewables are cheaper than fossil fuels, he is comparing the strike price with the cost of buying marginal supply capacity when we need that extra marginal supply.

The strike price will not be reflected in our electricity bills, because we have to add in other things, such as system balancing costs. We have to add in grid infrastructure costs, because renewables require massive investment in grid infrastructure. We have to add in the costs of importing through interconnectors when we do not have enough domestic supply. We have not begun to factor in storage costs—the storage capacity of our electricity system is still miniscule. Members should read the Royal Society paper on creating electricity storage in this country: it is going to be astronomically expensive, and will probably still not be enough. Then there are constraint payments—oh, yes, the constraint payments. This year, we are paying £500 million to renewable producers under the contracts for difference scheme not to produce electricity when they can produce it, because that is how the system works. That is how we have attracted so much investment, but those payments are going to be about £1.5 billion next year.

I would like the Government to produce some forecasts. How much will the balancing costs be in each year over the next 10 or 15 years? How much grid infrastructure investment will need to be funded? That appears on our electricity bills—it is the standing charge, and boy, that charge is going to go up with all the infrastructure investment that we will require. How much will we have to spend on importing electricity? The two interconnectors coming into East Anglia as part of the Norwich to Tilbury programme will be importing electricity. They are not for exporting, because the only security of supply we will have if we have shut down all our combined cycle gas power stations by 2030 is from other places.

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

indicated dissent.

[Sir Bernard Jenkin]

The Minister shakes his head, but if we have shut down all that capacity—if we cannot generate the electricity ourselves—we will have to get it from other places. There are phenomena called wind droughts, which can go on for very long periods. What are we going to do when the wind turbines are not turning and the sun is not shining during a very cold spell in the middle of winter? We had one or two close scares this winter. The generating margin that we used to enjoy has gone. The great risk of accelerating the decarbonisation of the electricity system is that there will be more appeals for voluntary or compulsory restraint from industry, because industry is the hidden customer that is shut off when we are short of electricity, or we risk more brownouts or even blackouts. That not impossible, so where is the data that the Minister is placing so much confidence in that shows these forecasts to be wrong? I am not making them off my own bat—there are plenty of people out there making them.

That brings me to the final brief point I want to make. I understand the logic that the Minister explained in his letter to me.

[Mr Amos]

I am sure that a Member with the experience of the hon. Gentleman will know that Britain returned to being a net exporter of electricity last year, so assuming that there will be additional costs from importing electricity due to the transition to renewables simply does not stack up. Does he also recognise that when the sun does not shine and the wind does not blow, the tide still rises and falls twice a day, 365 days a year? A future resting on renewable energy is possible, and we need to have that ambition for the United Kingdom.

[Sir Bernard Jenkin]

I absolutely share that ambition, but the question is how quickly we can get there. At the moment, tidal power produces almost nothing as a proportion of our electricity requirement. It is also intermittent, by the way: four times a day, there is a period during which it does not generate anything and we need to replace that supply with other things. The real challenge is how we get to the objective that the hon. Gentleman and I share in a rational way that carries the British public with us. It is noticeable that what people are complaining about most is the price on their electricity bills. Today, the constraint costs, balancing costs, infrastructure costs and import costs that I mentioned make up perhaps 50% of domestic electricity bills. If that figure is wrong, let the Minister produce some figures of his own that explain what proportion of consumers’ bills arises from all those factors, because it is not explained. There is no transparency on our electricity bills.

On the hon. Gentleman’s point about the objective of decarbonisation, we are not going to get there at all if we lose the public—if the lights start browning out or going out, and we find that we cannot meet demand. To some extent, we are piling up that demand by decarbonising transport and other parts of the system, including decarbonising building heating through heat pumps. The demand for electricity will rise, but our capacity to produce it reliably at all hours and in all conditions is being reduced.

On the question of imports and exports, we might become a net exporter of electricity, but perhaps the hon. Gentleman can explain how the price at which we are exporting compares with the price at which we are importing. The difficulty is that we will be importing when the wind is not blowing or the sun is not shining, and it is likely that the wind will not be blowing across the entirety of the North sea, so we will be importing fossil fuel-generated power at a very high cost to compensate for the fact that we have got rid of our own gas production and gas-fired power stations. I am not sure that situation will be very good.

If the hon. Gentleman would look at the Arup report on the Tarchon interconnector, which will come into my constituency under the present plans, he will see that that interconnector will not actually contribute very much to security of supply, but will be used almost entirely to export when there is too much wind. It will export at below the strike price because there is too much wind and it will export at a loss, and the cost will finish up on the bills of the British consumer. So the British consumer is paying for all the investment, paying for the strike prices, paying for the infrastructure and then paying to subsidise the exports to the Germans, who will be the beneficiaries of all this investment.

I appeal to the Minister to just read the Arup report and look at this. That is why I asked about the offshore co-ordination support scheme work that has been done. I am not going to ask for the impossible and ask him to revive the OCSS, but I would like from him an assurance that the work ESO has done will not simply be thrown away and wasted. Please can he assure the House that that work will be incorporated into the spatial plan that ESO says it wants to produce? Some very interesting innovations came out of that work, but there was also a lot of work discrediting the long-term viability of Norwich to Tilbury and, looking on a different timeframe—in the longer term—that could produce a much more viable alternative than is currently on the table. There is still work to be done on that, but I have no doubt that Fintan Slye will want to do that work as part of his project for the Government.

I would like to know that the Minister is going to support the holistic approach to which the Secretary of State referred, because Norwich to Tilbury is certainly not the product of a strategic approach to electricity grid upgrading. We need a much more strategic approach, and I am looking for that from this Government, but it certainly will not come from this Bill.

[Several hon. Members rose—]