Annual Energy Statement

Caroline Flint Excerpts

Thursday 6th November 2014 Commons Chamber

[Caroline Flint (Don Valley) (Lab)]

I thank the Secretary of State for what I hope and expect will be his final annual energy statement. What a curious statement it was. He looked very satisfied with himself, but consumers worried about how they will afford their energy bills this winter are not satisfied with the Government; families living in cold and draughty properties are not satisfied with the Government; and businesses—people who want to invest in this country, create jobs here and put us at the cutting edge of innovation in new forms of clean energy—are not satisfied with the Government either.

Let me start with consumers and the energy market. In his statement, the Secretary of State seemed to suggest that the energy market has never been working better, but will he confirm that, with the exception of a brief spike at the end of last year that followed Labour’s price freeze announcement, switching levels are at their lowest point for almost a decade? If things have improved so dramatically, will he also explain why, according to Ofgem, in the past year the profits of the energy companies have increased, as have the number of complaints about poor customer service? Is that what a functioning competitive market looks like? For the record, will he also confirm that under this Government energy bills have risen twice as fast as inflation, four times faster than wages, and faster than those in almost any other developed country in the world? That is why, on the Government’s latest figures, fuel poverty is rising, not falling. Is that a record he can be proud of?

One of the reasons why households and businesses have been hit so hard by recent energy price rises is that we have such low levels of energy efficiency. Looking back at the annual energy statements delivered in this House in 2010 and 2011, it is very interesting to see what high expectations the Government had for their beloved green deal. Yet today, there was barely a mention. I think we all remember when the right hon. Member for Bexhill and Battle (Gregory Barker) said that he would be having sleepless nights unless he achieved 10,000 green deals by the end of 2013. Well, maybe he left the Department to get a decent night’s sleep. So far, despite being billed as the biggest home improvement package since world war two, just 2,500 households and no businesses—not a single one—have had measures installed under the green deal. Does the Secretary of State also regret that, in his panicked response to our energy price freeze announcement last year, he announced sweeping cuts to the energy company obligation that will result in nearly half a million fewer households receiving energy efficiency improvements? Let me tell him that the next Labour Government will not make the same mistakes that he has, as will be clear when we publish our energy efficiency green paper next week.

Never let it be said that I am not a fair woman. Some things have moved slightly further forward in the past year. On oil and gas, we support the Government’s intention to implement the Wood review and establish a new regulatory body. A greater share of our electricity is coming from renewable sources. However, two thirds of the projects that have come online in this Parliament started under the previous Labour Government. The energy legislation we supported is now finally on the statute book. Progress has been made at Hinkley, too. Thanks to the European Commission, consumers will now get a better deal than the one the Government were able to negotiate. In a similar vein, does the Secretary of State agree that the National Audit Office should publish its analysis on the Hinkley deal before he finally signs the contract? Figures from Bloomberg New Energy Finance published just a few weeks ago show that investment in clean energy this year is substantially down on last year. After well-publicised spats and U-turns in Government—first on wind, now on solar—is it any surprise that Ernst and Young has downgraded the UK to seventh in its index of attractiveness for renewable investment?

I understand the Secretary of State has leadership ambitions. Does he agree with me, however, that those ambitions, and the investment climate for low-carbon generation, would be better served if he, like 16 of his Liberal Democrat colleagues, had supported a decarbonisation target for the power sector for 2030, as Labour proposed? The fact that we are missing out on this investment is not just a loss for the jobs and growth it would have supported but for our energy security, which the Secretary of State covered in his statement. As he said, this winter National Grid is taking precautionary measures to maintain the security of our energy supply, which, again, we have supported. However, is not the reason why those measures need to be taken precisely that we have seen so little investment in our energy infrastructure in the past four years? In our last few years in Government, construction on six new gas-fired power stations began, but will the Secretary of State confirm that under this Government just one new gas-fired power station, at Carrington in Manchester, has been commissioned and that even this will not be operational until after the next election?

One area on which there is greater consensus is international climate change. I welcome the progress made with the EU 2030 package last month, which, as the Secretary of State knows, we supported. I also send our best wishes to him and the officials who will be representing us in Lima as we build towards the Paris climate conference next year. In that regard, he has the full support of the Opposition, even if the same cannot be said for all Members on the Government Benches.

I am afraid that that is as far as my good wishes extend, because this time next year I hope that I will be delivering the annual energy statement, as part of a Labour Government who have capped energy prices and begun the work of reforming our energy market, ending the scandal of cold homes and securing the investment that our country badly needs.

[Mr Davey]

I thank the right hon. Lady for her reply, even if her last bit was slightly delusional, and for her support for things such as the Wood review, the Oil and Gas Authority and the European deal we secured and led on.

On the energy market, the right hon. Lady talked about switching levels. It is true that switching levels were higher under the last Government, but that was because there was an awful lot of doorstep selling and mis-selling. Does Labour plan to encourage doorstep selling to increase switching levels? Unfortunately, it was a very bad strategy. Under the last Government, we saw lots of people switching between the big six—the big six quite liked that approach to switching—but under this Government we have seen record levels of switching from the big six to new suppliers. That is why consumers are getting a better deal. Switching levels in this country are among the highest in Europe, and are higher than in telecoms or the banking industry, so I think we have a very good record here.

The right hon. Lady rightly talked about profits and complaints about energy companies. We are very focused on that, and it was one reason why I was keen to support the independent competition inquiry into the energy market—it is a shame that the Leader of the Opposition did not do the same when he was doing my job. Energy bills rose faster under the last Government than they have under this one. Between 2005 and 2010, they rose 10.3% in cash terms, whereas, under this Government, they have risen by 8% in cash terms. So she and Labour have a very poor record on electricity and gas bills.

The right hon. Lady talked about the green deal, but she did not mention the green deal home improvement fund, which was so successful it unfortunately ran out of money quicker than we expected, or the fact that in response we have announced another £100 million for the fund. She also failed to notice that the number of green deal finance plans being taken out is at long last beginning to rise.

The right hon. Lady’s characterisation of ECO will not be recognised by the hundreds of thousands of people benefiting from this scheme, which has been much more successful than its predecessor. As a result of the green deal and ECO, we are on track to install energy efficiency measures in 1 million homes. She also keeps making this astonishing request that the NAO audit a contract before it is finalised. It sounds like a rather odd approach for an audit. I have told the House before that, of course, I would expect the NAO to look at the contract after the deal has been agreed and that we would co-operate with it.

The right hon. Lady made some rather odd points about renewables investment. If the investment was all down to the last Government, why was last year a record year for investment and why do we have such a healthy pipeline set to more than double investment in renewable electricity? Bloomberg New Energy Finance, which she quoted, marked the UK down as fourth in the world in 2013 for clean energy transactions, with more than $21 billion of transactions. I think she was referring to the 2014 figures, which she says are coming out soon, but I am afraid she needs to check her facts, because there is a bit of a difference between raw data and model data. I am happy to explain that later, however, because it is an important debating point.

I was glad to have the right hon. Lady’s support for the 2030 deal—it was significant, as was the confirmation that we would keep to the fourth carbon budget, meaning that the Government have met their climate change objectives. She talked again about the power sector decarbonisation target and I have made it clear that the Liberal Democrats will pursue that. I also made it clear why I put in the Energy Act 2013 the power for the next Government to implement such a target.

The right hon. Lady also talked about gas stations. I can confirm that fewer gas stations have been constructed during this Parliament than were previously expected. That has been the case, by the way, across the whole of Europe, because of the changes in the relative prices of coal and gas, which have affected all European countries. That is one of the reasons why we were right to put in place a carbon price floor and reform the EU emissions trading scheme, so that we can get the incentives to move from coal to gas, as part of our climate change strategy.

But overall, I think I detected some consensus from the right hon. Lady.