Green Investment Bank

Debate between Caroline Lucas and Callum McCaig

Wednesday 25th January 2017 Westminster Hall

[Caroline Lucas (Brighton, Pavilion) (Green)]

It is a pleasure to serve under your chairmanship, Mr Owen. I thank the hon. Member for Edinburgh West (Michelle Thomson) for securing this important debate. Like her, I am deeply concerned by the way in which the Government are proposing to sell off the Green Investment Bank. It is widely known that the Government’s preferred bidder is the Australia-based firm Macquarie. As has now been well documented, there are serious concerns about Macquarie’s corporate record and its commitment to the GIB’s environmental goals.

Macquarie has admitted rigging the Malaysian foreign exchange markets. It has settled charges in the US for violating underwriting laws related to a China-based coal company. It is currently facing legal action in the US for rigging Australian interest rates. In a separate investigation, it was found to have breached market integrity rules in Australia and to have “systemic deficiencies” in its compliance with financial services laws. Closer to home, its ownership of Thames Water has also been deeply controversial, with £10 billion of offshore debt loaded on the company and a £250 million pension deficit allowed to accumulate while profits were extracted.

Macquarie also has an appalling environmental record, funding fossil fuel extraction projects across the world. From open-cast coal mines in China to fracking here in the UK, it has a track record of supporting climate-wrecking projects. By any measure, Macquarie is unfit to be custodian of the UK Green Investment Bank; if anything, there is a very clear risk that it will destroy it.

The Government have so far refused to respond to those concerns. Instead, we see ample evidence that the Government are not only willing to allow an asset strip, but may have actually helped to facilitate it. With the support of Treasury-owned UK Government investment, 11 subsidiary companies of the GIB were set up presumably to allow Macquarie to asset-strip the UK’s Green Investment Bank. The Minister passed on the opportunity to deny Macquarie’s involvement in those changes in response to a written question I tabled last week.

Meanwhile, the Government continue to point to the creation of a special share as the answer to all our concerns. That is simply not true, as the hon. Member for Edinburgh West set out—we know that the special share will not protect the green purposes of the GIB under an owner such as Macquarie. In response to another written question I tabled, the Government made it clear that the special share will not ensure that individual investments are low-carbon. The special share will not stop asset stripping, will not ensure adequate capital is available for future investment and will not ensure an investment focus here in the UK. To protect the GIB as an enduring institution that is investing here in the UK, we ultimately and simply need the Government to stop this sell-off.

[Callum McCaig (Aberdeen South) (SNP)]

I thank the hon. Lady for giving way, and add my thanks to my hon. Friend the Member for Edinburgh West (Michelle Thomson) for her contribution in securing this debate. The whole basis behind the privatisation is that the market failure has been corrected. I simply do not agree with that. We may have seen progress in the power sector, but in transport and heat we are lagging way behind what we need to be doing to meet our carbon reduction targets. Does the hon. Lady agree that the Green Investment Bank can play a critical role in addressing the market failure that continues to exist in those sectors?

[Caroline Lucas]

I thank the hon. Gentleman for his very informed contribution. He will not be surprised to hear that I entirely agree with him. Anybody who thinks that market failures have been corrected is being extraordinarily complacent. Just a quick scan of the way in which we are not meeting the targets that we have—our climate, environmental and energy-efficiency commitments—would lead people to conclude that market failure remains, and therefore that the need for the Green Investment Bank to be in the public domain remains.

I believe that Ministers have it within their power to cancel the sale and pursue a different path. For the GIB to be properly protected, it should remain wholly owned by the UK Government. That is my bottom line, but if Ministers refuse to do that, various other options are available to them. We know that there was and still is on the table an alternative bid—it is the one that lost out to Macquarie. That bid would help to keep the GIB British, green and growing, so why are Ministers not pursuing it if they do not want to keep the GIB in the public domain?

EU Referendum: Energy and Environment

Debate between Caroline Lucas and Callum McCaig

Tuesday 12th July 2016 Commons Chamber

[Callum McCaig (Aberdeen South) (SNP)]

This is a good debate to be having and I thank the shadow Secretary of State, the hon. Member for Brent North (Barry Gardiner), and the Labour Front Bench team for giving us the opportunity. It is a shame, however, that the hon. Gentleman did not get beyond his introductory remarks in what was an excellent overview of the issues.

SNP history is being made today in that it is the first time that the full force of “Team Callum” has been deployed at the same time. We will hear later from my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr)—or, as I like to call him, the junior member of the team.

Today’s debate feels a little bit like the last day of school. There is a little bit more work to do, but not a huge amount of Government work is going on as we discuss things, pick over the bones of Brexit and ask questions about how we go forward. I am sure that the Secretary of State is pleased—as we all are—that we have a new Prime Minister because that will help to ease some of the uncertainties that were building up and it is welcome that we will not have several weeks of uncertainty. I hope that the Government use the summer recess to come up with some plans, because plans are badly needed.

Last week, we discussed the excellent Energy and Climate Change Committee report on investor confidence and were able to discuss some of the issues affecting the sector that have been exacerbated by the Brexit vote. It is fair to say and it bears repeating time and again that Scotland did not vote for Brexit, and we will be doing everything in our power to ensure that we do not leave. We should change the lexicon slightly and refer either to “Exit” or perhaps “Wexit”. Scotland is not for leaving, and our Parliament and Government have united around keeping Scotland in the European Union. However, the uncertainty afflicting the United Kingdom following the vote will have some effects while we wait for clarity about our maintained position in the European Union

On energy bills, The Guardian reports today on uSwitch research suggesting that, since 23 June, 12 providers have pulled their cheapest fixed-rate tariffs and replaced them with more expensive deals. That is the impact of Brexit, which will be felt by consumers and those who can ill afford to pay more. The weak pound will have another cost impact as the UK is a net importer of electricity. Such things will drive up bills and are an unfortunate consequence of the Brexit vote. The future of interconnection is also uncertain. Interconnection is important and represents a valuable and sensible Government aim. I have often said that we should not see it as a way of importing cheap electricity from the continent, as the Secretary of State said in her “reset” speech; we should be using it to export electricity to the continent. We should be investing in domestic, low-carbon electricity generation, for which Scotland has immense and highly enviable potential.

The prospect of cheap electricity from the continent is also slightly questionable. Exchange rates will obviously change over time, but the assumptions about future interconnection decisions built into the sums might not look so good when the pound is not faring so well against the euro. Such things will come out in the wash, as we say in Scotland, but we need to look at energy policy and interconnection to see whether it is the right thing to do.

Hinkley is another big question about which we have had some discussion and it will come as no surprise to anyone on the Government Benches that the SNP is not in favour of it. We have discussed it ad nauseam, but it bears repeating that the economics of Hinkley were, in the views of my party, myself and a large number of people in the Chamber, highly dubious. The fundamental economics have only been undermined by the Brexit vote, and we need to reconsider them. We cannot afford to have all our eggs in this particular basket, because if it does not happen—I suspect it will not—there will be a rather large hole to be filled. We cannot, like we did with the Brexit vote, enter the unknown with no back-up plan.

[Caroline Lucas]

To give some shape to the hole that the hon. Gentleman mentions, does he agree that it is shocking that the expected fall in wholesale electricity prices has driven up the Government’s estimate of the whole lifetime cost of Hinkley to £37 billion from the £14 billion of only a year ago?

[Callum McCaig]

I thank the hon. Lady for that intervention. The costs are eye-watering. Given the extent to which Hinkley is an international project, the costs could rise even further still. It is time to have a sincere look at the plans and to decide whether the project is possible, but I strongly assume that it is not, so we require a back-up plan. If we do not address the huge strains on our energy system, the bread and butter of keeping the lights on will be put in jeopardy—perhaps not today but in the decades to come. It is incumbent upon the Government and the Department of Energy and Climate Change to act now.

We also need clarity from the Government on the position of the internal energy market in the European Union. The Vivid Economics report that was cited last week and again today about the potential of being outwith the system adding £500 million per annum to the costs of our energy system is sobering. When DECC and the Government as a whole are engaged in their summer homework of working out how to get out of this particular pickle, I suggest that ensuring that we keep the co-operation of the IEM should be high up the agenda because it delivers for us here and for folks abroad. It will help us to meet the trilemma of energy costs and should not be sold down the river lightly.

To maintain security of supply, the time has come to scrap Hinkley and to invest in viable and cheaper forms of domestic energy, including onshore wind, on which we need to lift the embargo. We need the contract for difference auctions that the Secretary of State has mentioned. They should be as wide as possible, technology neutral—as they are supposed to be—and no one should be excluded from bidding. We need to get serious about building the suggested new gas plants, and I will make the case for Scotland again: if we can get the anomaly of transmission charging sorted, we are ready to go with gas plants in Scotland that will contribute significantly to reducing the forthcoming hole in energy production.

Above all, we need to invest in energy efficiency. The Scottish Government are doing strong work and that needs to be replicated right across these islands. If we are to deal with an ever more challenging set of energy circumstances, including where we get it from, the best way is to use less of it. The benefits for everyone are substantial in the long term.

On climate change, I agree with the hon. Member for Warrington South (David Mowat), who is no longer present, that it is regrettable that the UK will not be a member of the European Union. I pay tribute to the Secretary of State for her role in the Paris talks, where the UK played a strong hand—perhaps not as strong as I and others would have liked, but it was played well and resulted in a pretty good deal. The fact we are no longer going to be at the heart of the decision-making process is regrettable, because the UK can be proud of what it has done on tackling climate change and has more it could offer the EU. We need to work out how that will happen in a renewed relationship with the EU, but there will be an absence and that is regrettable.

I have some specific questions to ask about what the process will be and what the impact of Brexit is on our commitments from the Paris talks, which have been touched upon. Our nationally defined contribution was the European Union’s NDC, and I am not clear whether that still applies to us. I assume it does, as we are still a member, but we can and should do more. I am also unclear about some issues on the ratification of the deal. Do we have to ratify this before the Brexit deal is concluded? Is there an impact on the EU as a whole? I understand that the EU ratification process requires all member states to ratify before the EU can ratify it as a whole. Ultimately, the UN requires ratification by the 55 countries that account for 55% of the emissions. So are there implications for us? Are there implications for ratification by the EU? Are there implications for the whole deal if we are not able to do that?

Draft Onshore Hydraulic Fracturing (Protected Areas) Regulations 2015

Debate between Caroline Lucas and Callum McCaig

Tuesday 27th October 2015 General Committees

[Callum McCaig]

At no stage did I say that there would be deliberate poisoning of water. If the Minister took some more time to listen and reflect, it might be more helpful. What we are dealing with here is the potential for drilled wells—fracked wells—under protected groundwater source areas.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Far from talking about scaremongering, the Government would do well to look at the impact assessment by the Department for Environment, Food and Rural Affairs on rural economy impacts. Of course, the Government tried to prevent it being in the public domain, but it states:

“There is a risk that even if contaminated surface water does not directly impact drinking water supplies, it can affect human health indirectly through consumption of contaminated wildlife, livestock or agricultural products.”

That is from the document that the Government tried to hide. We now have it in the public domain, and what the hon. Gentleman is saying is far from scaremongering.

[Callum McCaig]

I thank the hon. Lady for that. To dwell for a second on the terminology here, we are talking about protected groundwater source areas. Why are we talking about that? The agencies have suggested that the areas are in need of protection. Someone drilling a well is going through the aquifers to pump chemicals down into the ground to cause a chemical reaction that causes mini-fractures. That is the process. If people think that what happens 1,200 metres below the ground has no relevance to what happens at the surface, they are deluding themselves. Even were it not for the large hole that is required to get the chemicals down there in the first place, there is the chance of seepage to the surface and the aquifers, causing damage.

I understand that the Government have a different approach to fracking than my party’s Government in Holyrood, and I am entirely thankful that the matter is devolved to the Scottish Parliament. I have great sympathy for Members whose constituencies may be adversely affected by the regulations. If the Government are to proceed with fracking, would it not be sensible to demonstrate its safety before they consider allowing it in protected groundwater source areas? To me, that seems a logical way of dealing with the race for gas.