Energy Bill [Lords]

Debate between Bim Afolami and Ed Miliband

2nd reading
Tuesday 9th May 2023 Commons Chamber

[Edward Miliband]

No, I will not.

Let us talk about how we can get an energy system that is fit for purpose. Nowhere is that more true than when it comes to the grid, where the delays that have been allowed to build up are a disgrace. For all of the Conservative party’s boasts, this is what Keith Anderson of Scottish Power says about the delays to the grid:

“The wind farms that are coming online today were approved when Gordon Brown was in power—that’s a long time ago and we need to be much faster to move beyond this crisis”.

The new independent system operator is a step forward, but there are questions remaining about whether it goes far enough in its powers, remit and independence.

What the energy system sorely lacks at the moment—this goes to the question that the hon. Member for Hitchin and Harpenden (Bim Afolami) asked the Secretary of State—is a guiding mind. It is about not simply balancing the system day to day and hoping that the market provides—this is the purpose of the regulator—but planning for the future of the system as we transition. This is the point: at the moment, that planning role is a job for everyone—the Energy Department, Ofgem and the network companies—but the ultimate responsibility of nobody. That needs to change with the ISOP so that we auction offshore wind in the right places, we plan and build the grid in the right places and on the right timescale, and we have the right amount of power in the system in the years ahead. For us, that is the purpose of ISOP, and during the Bill’s passage we will test out whether its proposals for ISOP adequately meet that vision.

If the regime is to work—I concur with the interventions on the Secretary of State—we need a price regulator in Ofgem that supports and never stands in the way of change. I hope that the Secretary of State’s failure to say that he would oppose such an amendment is a good sign, but obviously Ofgem should have a formal net zero duty. I think that was recommended by the net zero tsar, the right hon. Member for Kingswood (Chris Skidmore), and it was rightly inserted by the House of Lords. However—this is boring but very important—we also need to sort out the issues of planning.

The National Infrastructure Commission recently produced an important report about the delays to planning. It said that, in part, that was the fault of Government, who have not updated their energy national policy statements for a decade. It also said that there should be a statutory duty on the Government to review them every five years, and we agree. Here is the other thing that is important: all relevant regulators, including the Planning Inspectorate, should have a net zero duty, because otherwise we will find the system being slowed down and gummed up. Of course, the views of local people are important and must be taken into account, but we must also make progress.

The Bill could achieve those things to speed up the planning process. However, even if we get all the forms of low-carbon power that we need—I think that we should have all of them—and we sort out the grid and planning, there is an obvious question that the Secretary of State did not address. Even if we get all of those renewables and indeed nuclear, the price of electricity is currently tied to the prevailing price of gas. We do need reform of that system. Labour first called for that in January last year, and I say to the Secretary of State that we will be talking about that in the Bill Committee. We believe that there should be a commitment in the Bill to a timetable for that delinking; otherwise, we will get more drift and delay and we will not reap the benefits of the move to zero-carbon power.

On the one hand, we need the drive to zero-carbon power, but we also need a decisive shift away from the high-carbon expensive path—again, that was raised earlier—and unfortunately the Bill does not attempt to make that shift; it is business as usual on fossil fuels.

On coal, the Secretary of State rather dismissed the intervention of the hon. Member for Bath (Wera Hobhouse). Yes, there has been a good record on coal in the last decade. [Interruption.] He says “Thank you”, and he wants to chunter away, but opening a new coalmine drives a coach and horses through that record. [Interruption.] He says that it does not. We cannot go around the world, as did the former President of COP, the right hon. Member for Reading West (Sir Alok Sharma), telling everybody that they have to power past coal, and then say, “But not us,” because that totally undermines our moral authority. Here is the thing: the steel industry in Britain says it will not use the coking coal, it will not provide the long-term jobs that Cumbria needs and it sends utterly the wrong message on climate. That is why their lordships inserted a provision to ban new coalmines. Labour supports that amendment.

Labour will also table an amendment to ban dangerous, expensive, unpopular fracking. I know that Conservative Members want to say the Truss period was a bad dream—Bobby Ewing in the shower and all that. [Interruption.] I am showing my age, that is true. I am a big “Dallas” fan, actually. Labour will table an amendment on fracking.

We also believe—this is an important point—that the Bill should remove the 2015 duty to extract every last drop, the so-called maximum economic recovery, from the North sea. I can do no better than to quote the net zero tsar, the right hon. Member for Kingswood, praised by the Secretary of State, who did a very serious piece of work—Government Front Benchers are nodding. What he said could not be clearer:

“developing new oil and gas fields is incompatible with limiting warming to 1.5°… There is no such thing as a new net zero oilfield.”

Those are not my words, or those of the Liberal Democrats or any other party in this place. [Interruption.] The Secretary of State starts chuntering, but he should talk to his own net zero tsar, who did a brilliant report that he himself praised.

Let me just explain, for the benefit of right hon. and hon. Members, why that is the right position. That approach will have no impact on bringing down bills. How do we know that? Because every previous Energy Minister has said that. Gas and oil are traded on an inter—[Interruption.] Just pipe down for a minute. The price is set on the international market and 80% of our oil is exported. It drives a coach and horses through any possibility of keeping global warming to 1.5°, according to hundreds of leading scientists and the right hon. Member for Kingswood.

Here is the other thing, which is a new part of this. We now know how much the Government are having to shell out to the oil and gas industry to persuade it to make this investment, because it is in the detail of the Budget Red Book: over £11 billion. The current Prime Minister, the previous Chancellor, introduced a windfall tax, but then he introduced an absolutely massive super-deduction—not available now to any other industry, including renewables—of over £11 billion. Massive, massive cost to the taxpayer, no impact on bills, the oil from Rosebank exported, and driving a coach and horses through our climate commitments—no wonder the net zero tsar concluded that it is the wrong policy for Britain. It is. Government Members can carry on pretending that business as usual is consistent with the science and consistent with what we go around the world saying, but it is not and the net zero tsar has rightly said so. Labour will seek to improve the Bill so that it delivers on the zero-carbon sprint we need.

Next, I want to turn to the second part of my remarks —I will try to speed up, Mr Deputy Speaker—on what the Bill can do to ensure the fairness of the transition. We know that the fairness of the transition is essential if we are to take the public with us, and we know there are huge opportunities. I want to come back to the issue of energy efficiency, because Government Members go on and on about their great record on energy efficiency. Here are the facts. In 2010, there were 1.6 million energy efficiency upgrades. In 2022, there were 160,000 equivalent measures. In other words, there were 10 times more when the last Labour Government left office than there are now.

We know why that has happened. The Chair of the Environmental Audit Committee, the right hon. Member for Ludlow (Philip Dunne), has done many important and learned reports on this question. Massive cuts were imposed on energy efficiency schemes when David Cameron said, “cut the green crap” and the investment has not recovered. That is why the UK Business Council for Sustainable Development says it will take almost 200 years at the current rate to get all homes up to EPC C—200 years. That is not just bad for the constituents of my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), who intervened earlier, and the constituents of many others in this House; it also means we import more gas and use more gas supplies. The estimates are that we could cut gas demand by 20% if we got all homes up to EPC C.

[Bim Afolami]

I thank the right hon. Gentleman for giving way in an unexpectedly amusing speech from the Opposition Front Bench. On gas and fossil fuels, he made a serious point which should be responded to. The International Energy Authority said that even by 2045 fossil fuels will still make up between 28% and 30% of our total energy mix. Fossil fuels will be with us for decades to come, although of course everybody in this House is working to bring their use down as fast as possible. In the transition period, particularly in relation to gas, does he accept that we will have to, as best we can in existing areas that are within our control, improve our energy security and resilience by exploiting our own gas rather than importing more, as he has just referred to?

[Edward Miliband]

I have great respect for the hon. Gentleman. Let me try to explain the position. Nobody is talking about turning off the taps in the North sea. The question is this: do we defy the International Energy Agency? He cites the IEA. The IEA says, in absolutely clear terms, that if we invest in new fields in the North sea and have new exploration, we will bust way through 1.5°. The point is that every country can say, “Well, we’re going to do it, but you shouldn’t.” But if we do that, we will end up at a 3° world. That is what all the scientists tell us.

One great thing in this House, compared with other countries, is that we have established a cross-party consensus on following the science. But the science could not be clearer. That is why 700 scientists wrote to the newspapers a few weeks ago to say, “This is our view.” That is why the IEA says it. That is why the UN Secretary-General says it. That is why the net zero tsar, when he looked at the evidence, said it. It is not me making it up; it is what the clear evidence is. The hon. Gentleman is right that we will continue to use our existing fields, but to grant new licences and new exploration, defying what all the science tells us, would be a betrayal of future generations. I do not pretend it is easy—I do not—but it is absolutely crystal clear. [Interruption.] They say, “More imports.” No, the answer is to get off fossil fuels and drive towards low carbon.

On fairness, energy efficiency—the Lords have done us a favour and I hope that we keep their amendments in the Bill—is incredibly important. Part of making the transition fair is striking the right balance between levies on bills and public expenditure. When I was Energy Secretary we introduced things through levies, so I am not saying that the Labour Government did not do it, but there is a balance. The Treasury is never keen on investing public money—not just under this Government, although it may be particularly true under this Government—but we have a problem and I have to be honest with the House about it.

If any cost in green investment must be borne through levies, we will pile more and more on to bill payers. Take hydrogen. There is a strong economic case for investing in hydrogen through public investment. That is what the US is doing. Much of the benefit of new investment in hydrogen will go to industry—not consumers directly—which will be at the front of the queue for its use. Putting the cost of hydrogen on consumer bills, as the legislation originally proposed, is not the right way forward. I know that discussions in Government are tricky, to put it mildly, but I say to the Secretary of State that the right thing to do is surely to make public investment, through public expenditure, in hydrogen, not just bung the money on to bill payers. In the course of discussing the Bill, I hope we know how much will be put on to bill payers. We cannot just add levy after levy because the Treasury says, “We don’t want to invest.”

I shall conclude on Britain’s place in the race for the low-carbon jobs of the future. The Inflation Reduction Act has had a massive impact in the US, where nearly 10 times more jobs have been created in low carbon and renewables in seven months than we have seen in the UK over the last seven years. The Bill should be our answer to IRA but, in truth, the Government face a number of different ways: first, they say, as the Secretary of State did, that it is “dangerous”; then they say that we are already doing it; then they say that we will have a response in the autumn. With every day that goes by, we hear another business say, “We are losing the global race.” It may interest the House to know that there are 23 clean steel demonstration projects across Europe. There are none in the UK. Forty gigafactories are due to open across Europe by 2030, but just one is certain in the UK. Where is the national wealth fund in the Bill to invest in our ports, clean steel and gigafactories? It is in the interests of all parties in the House to put pressure on the Government to make the investments to put us in the lead in the race for green jobs. Today, the chief executive of Johnson Matthey said that we have lost the race for gigafactories and are in danger of losing the race for green hydrogen.

Every country that leads the world in renewables has a publicly owned energy generation company. Why doesn’t Britain? This is not a matter of ideology. EDF, Ørsted, Vattenfall and Statkraft all invest in our infrastructure. These are state-owned companies. It is an extraordinary fact that 46% of our offshore wind assets are owned not by foreign companies but by state-owned foreign companies. That means that the proceeds go back to those countries and they build the supply chains. I welcome GB Nuclear, but GB Energy is a much wider version of that. GB Energy is about understanding that reality and saying, “Why not Britain?” This is a moment of peril for Britain in the race for low-carbon jobs. This Bill is not the answer.

It is Labour’s view that the Bill is necessary but not sufficient given the scale of challenge and opportunity that we face. We welcome many of its measures, which are long overdue reforms that will make the delivery of net zero easier. On the basis of the common ground that does exist, we will work constructively with the Government. The Bill will be useful to whoever is in government after the next election, but for all its length, the truth is that it is further proof that Britain will require a new Government to do what is truly needed to lower bills, give us energy security, create jobs and show the climate leadership that we need.

Corporate Insolvency and Governance Bill

Debate between Bim Afolami and Ed Miliband

2nd reading & 2nd reading: House of Commons
Wednesday 3rd June 2020 Commons Chamber

[Edward Miliband]

My hon. Friend has been powerfully advocating for the steel industry, along with other hon. Members in all parts of the House, and there is real urgency in this respect.

Let me just say something about the CLBIL—Coronavirus Large Business Interruption Loan—scheme, which is for larger loans. We are talking about more than £45 million. I fear that this is Treasury orthodoxy, so I will not expect the Secretary of State to comment. We all know Treasury orthodoxy—I do, as I used to work there. The good news is that the Chancellor raised the limit to £200 million for the amount that companies can get, but the bad news for companies is that the CLBIL loan has to become their most senior loan—it has to be top of their list. The problem is that that means companies then have to renegotiate their other most senior loan, so they are caught in a Catch-22 situation. I suspect the Secretary of State agrees with me, but he cannot say; perhaps the Chancellor is watching. I say to the Secretary of State that companies such as McLaren have said, “We have tried to get this loan but we cannot get it because of this Catch-22 situation.” This is urgent and I urge him to get it sorted. We have had only £1 billion paid out under this scheme; 191 firms have got loans, but that is out of 579 that have applied. This is about manufacturing largely; it is about lots of large manufacturers across our country who are really in distress. There is more to be done in advancing some of the money that is already in the budget for low carbon. That is true in relation to aerospace, where I believe there is a fund—I am hoping that can be advanced— and to steel.

Let me refer to some other sectors, as one of my hon. Friends did earlier. With the public health measures that are necessary, it is obvious that sectors such as hospitality, tourism and the arts will face much greater pressures for longer; they are going to take longer to reopen and recover. To give the House a sense of the scale, I should point out that the British Beer and Pub Association has warned that up to 40% of Britain’s pubs cannot survive beyond September with the current level of financial support; that one third of jobs in tourism-related areas are estimated to be at risk; and that the Society of London Theatre and UK Theatre estimate that 70% of the 290,000 jobs in that sector are at risk. Those are dire warnings we are being given.

That brings me on briefly to the furlough scheme. It has been a really good innovation, but I do not understand why the Chancellor is pursuing a one-size-fits-all policy on that scheme, because the public health measures mean that some sectors will take longer to reopen and recover. Whether through the furlough scheme or a second wave of support, these sectors are going to need extra help. I know the Secretary of State is working on this, but I underline its importance: we are talking about thousands of pubs across our country, hundreds of theatres and arts venues, and jobs in tourism. These things are the lifeblood of our constituencies.

Thirdly, I want to raise with the Secretary of State the issue of the “month 13 problem” of insolvency. This is a bit further off, but it is still an issue. Even if the Government fix their loan schemes and provide the sectoral support required, the more debt there is weighing down companies, the greater the danger of insolvency down the line—this debt overhang is also bad for our economy when it comes to recovery. [Interruption.] I hear the hon. Member for North East Bedfordshire muttering about borrowing from a sedentary position, but I am talking about private debt. The Federation of Small Businesses has been suggesting for some time that loans need to become income contingent. It has suggested a student loan-type approach. In other words, when businesses get to a certain level of financial health, they can start repaying the loans. There may be other ways forward, such as converting the loans into equity, but we are going to need solutions for these firms.

[Bim Afolami (Hitchin and Harpenden) (Con)]

Would the right hon. Gentleman support the ideas that I have been doing some work on—as have lots of people—outside this place in relation to recapitalising the British corporate sector, not just in terms of debt to equity, but in finding ways to get much more equity into our businesses so that they are not weighed down by debt? That approach could be how we recover from this situation.

[Edward Miliband]

I agree with the hon. Gentleman. We need innovative thinking in this area. We are going to have to do things—I think that the Chancellor has said this—that we would not have done in normal times, but we cannot send businesses back out into an economy that is recovering, with this massive debt overhang. [Interruption.] I will not give way again because I need to get on with it so that other Members can speak; I can see the beady eye of Madam Deputy Speaker.

Fourthly, crucial to helping businesses through this crisis is an economic stimulus that matches the moment. In particular, I hope that plans for a green recovery, which the Government have been talking about, will be at the centre of what they do. This is the way to get our economy moving, help to save businesses and meet our climate goals.

The Bill is a step forward. We continue to have worries about the protection of workers in the event of restructuring and insolvency, and hope it can be addressed as the Bill passes through both Houses. I wish that the reforms to corporate governance had been included.

I will end by mentioning the wider economic context. We are only at the end of the beginning of the economic crisis that we are facing, and there is a need for urgency, boldness and action in the coming weeks and months. The Chancellor has said that he will do whatever it takes. In my view, that means support for specific sectors, reform of the loans scheme, imaginative solutions to the debt problems facing the small and medium-sized enterprise sector, a commitment to building back better and a green recovery. It is in the interests of everyone across the country for the Government to act; if they do, they will have our support.