Energy Price Freeze

Brian H. Donohoe Excerpts

Wednesday 6th November 2013 Commons Chamber

[Charles Hendry (Wealden) (Con)]

I put on the record my entry in the Register of Members’ Financial Interests, including my presidency of National Energy Action, the country’s leading fuel poverty charity.

Anybody listening to the speech from the right hon. Member for Don Valley (Caroline Flint) will have been oblivious to the fact that this country faces an energy crunch. There is no doubt that it is coming. We can debate whether it will be in the latter part of this decade or in the middle of it, but clearly we need an enormous amount of new investment if we are to deliver the energy security we need. I make no apology, therefore, for starting my speech by talking about energy security. We cannot have affordability without security of supply.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

Does the hon. Gentleman agree that nuclear power is part of the equation and that the Scottish Executive have made a grave error of judgment in ruling it out as a source of energy in Scotland?

[Charles Hendry]

I will not get involved in the private discussion between the Labour party and the Scottish National party, which seems to be creeping into this debate, but it is a matter of regret that new nuclear power plant will not be built in Scotland as well as England.

Without the necessary investment, we will see not the lights going out, as people sometimes say, but brown-outs, where major energy users are asked to come off line for a period, and a price spike, which will have very damaging consequences for businesses and consumers. We need huge investment, therefore, in a range of different sectors. As part of the solution, we need to reform the market to bring in more investment than we have seen for many years. The situation was bad under the last Labour Government, but it goes back much further. Although we recognise the need for others to enter the market, I am disturbed by part of this debate, because we cannot secure such investment without the big six. We need the big six alongside other players in the market, and were we to drive them away, it would be much more difficult to deliver the necessary security of supply.

Market reform is part of the process, but until recently, so has been political consensus. When the right hon. Lady reflects on her speech today, I hope she will consider its impact in the boardrooms in Spain, Germany, France and elsewhere around the world. They will be saying, “Is this a party that welcomes our involvement and future investment in the UK?” I can assure her that she is introducing a degree of political risk, making it more difficult to secure the investment we need if we are to deliver the affordability we want.

--- Later in debate ---

[David Mowat]

I am going to talk about progressive versus regressive ways of paying. Let me make the point again that among the 27 countries in the EU, our gas prices are the 26th highest. If a cartel is being operated, it is not a very good cartel. That is not to say that consumers are not in real difficulty now. One of the big issues, and one of the distinctive features of our energy market, is not so much the unit price as the fact that our housing stock is spectacularly poor in terms of energy insulation.

[Mr Donohoe]

The hon. Gentleman is right to say that the prices are lower, but can he explain why in the last few years the increase has been larger than in any other European country?

[David Mowat]

No, I cannot, because I am not an expert on the market. I am merely trying to establish whether the absolute prices that we are paying vis-à-vis our European competitors indicate the existence of a cartel, as has been claimed on many occasions. That does not appear to me to be the case, but someone can always intervene on me—actually, they cannot, because that would be the third intervention and I would not be given extra time, but someone could always discuss the point with me in future.

The fact remains that we have the 26th highest gas prices out of 27 in Europe and we need to be clear about what problem we are trying to solve. The problem that we should be trying to solve is the problem of our housing stock, whose standards need to be raised to the level of the standards in the rest of Europe. Germany’s gas prices are 40% higher than ours, but its gas bills are lower than ours. Why? Because its housing is better insulated and better built.

I have five points to make. My first point is that whatever we decide to do on the basis of the various reviews, we should not reverse the thrust of our policy on insulation. We should not give up on the energy company obligation, the green deal and smart meters. I do not agree with the hon. Member for Brighton, Pavilion (Caroline Lucas) on many issues, but I do agree that far and away the most effective way of making progress on energy in general is to ensure that there is better conservation and more efficiency.

Secondly, we need to make the market work better—