Energy Prices

Charles Hendry Excerpts

Wednesday 11th January 2012 Commons Chamber

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

I am delighted to have the opportunity to respond to the debate, which I think we all would agree has dealt with some extremely important issues that concern us all. I think we should start with the recognition that there is no monopoly of care when it comes to fuel poverty. Every Member of the House, regardless of party allegiance, cares about their constituents being able to pay their bills and worries about how they can do more to assist them. This is a long-term concern. Fuel poverty started to come down in the 1990s under the Conservative Government and continued to decline until 2002. It then increased from 2 million households living in fuel poverty to almost 6 million over the course of the Labour Government. As prices have continued to rise, fuel poverty has continued to go up. It is an issue that no party can claim to have addressed, but one that every Member cares about finding the right solutions to.

Important issues were raised in the course of the debate. The hon. Member for Glasgow North West (John Robertson) talked about the difficulty of insulating the types of housing found in his constituency and the hon. Member for Angus (Mr Weir) referred to the problems faced by people on prepayment meters. We heard the continuing debate about off-gas grid customers. We welcome the progress and the interaction we have had with the hon. Members for Ynys Môn (Albert Owen) and for North West Durham (Pat Glass) and my hon. Friend the Member for Hexham (Guy Opperman) to try to ensure that constituents who are off-gas grid get a better deal than they have had so far. We have ensured that the warm home discount will be payable to those who are off-gas grid and have seen good engagement with the Office of Fair Trading, which said following its market study that if there was evidence of market abuse it would carry out a full investigation in that area.

I have asked Members on both sides of the House to provide evidence of how the market is working in their constituencies and, if they find that there is not the range of market providers that the OFT suggests, ensure that that is brought to my attention. If there are problems with delivery in some areas or with advance payments being required, I want cast-iron evidence so that we can decide on the most appropriate way to go forward on those issues.

We have heard discussions about the green deal, which the right hon. Member for Don Valley (Caroline Flint) raised. I well remember a discussion with the right hon. Member for Lewisham, Deptford (Dame Joan Ruddock) in 2010, when she was Energy Minister, after we had put forward an amendment to the Energy Bill. She said that the green deal was not possible and the Labour Government voted it down. We could have had the green deal in place 18 months ahead of where we are now and delivering the sort of help we want to see. It is the most ambitious programme this country has ever seen for insulating our homes, with the ambition of 14 million homes having good energy insulation over the course of the next decade, which knocks into oblivion any other scheme that has been tried by previous Governments. I well remember the current leader of the Labour party, when he was Secretary of State for Energy and Climate Change, telling the House in December 2009 that their ambition was to have five pilots in different parts of the country. We have taken it from five pilots to a nationwide scheme delivering on a level that has never before been possible.

My hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke) was absolutely right to draw our attention to the upward pressure on prices. Indeed, the Leader of the Opposition, in his Labour party conference speech last year, said that

“over time there is going to be upward pressure on energy prices.”

Yet from the right hon. Lady there was not a word about the global picture—the fact that towards the end of last year gas prices were 40% up on the year before, after the world’s worst oil incident in the gulf of Mexico, the world’s worst nuclear incident in Japan and a war in the middle east. She wrote that out and acted as if the only reason for prices going up is the greed of the energy companies, saying that we in this debate have to get a sense of reality.

What the Government have been doing, however, is working to remove some of the levies that Labour put in place. Indeed, over the course of this decade we will have reduced people’s energy bills by £100 compared with what they would have been if Labour’s levies had stayed in place. The renewable heat incentive is now to be paid from general taxation, rather than from a levy; and the carbon capture and storage levy, which, in the words of the leader of the Labour party, was going to cost £9.5 billion over the coming years and be paid for by consumers, is no longer on consumers’ bills.

Introducing the green deal, the warm home discount and electricity market reform, rebanding the renewables obligation and changing the feed-in tariffs will all help to bring down consumers’ bills by £100 when compared with what they would have been under Labour’s levies. So where Labour put in place stealth taxes on bills, this Government have now removed them.

As my hon. Friend the Member for Warrington South (David Mowat) said, the issue is not just one of global energy prices, but whether there is enough electricity generation to meet demand. There was not a word from the Opposition about the need to rebuild our energy infrastructure—the £200 billion that is necessary, or the fact that during this decade we have to secure twice as much investment as Labour achieved during the previous decade. In reality, if we do not secure that investment, the lights in this country will go out. The leader of the Labour party, when in government, referred to that as “energy demand unserved”, whereas all of us know that in ordinary people’s language it means power cuts. That is why we have started the most ambitious programme of market reform—things that Labour in government told us were not necessary. The carbon floor price, the capacity mechanism and market reform more generally have all been put in place in less than two years by this new Government.

We are also clearing Labour’s backlogs. Last year, the highest number of planning consents since the Electricity Act was passed in 1989 were granted to get those new projects under construction, and the highest number of oil and gas licences for more than a decade were approved, as we try to get the most out of our indigenous resources. We have already brought forward by 12 months the roll-out of the smart meter programme, because of its importance in giving consumers control over their bills, so it was no wonder that Steve Holliday, the chief executive of National Grid, when interviewed on television a week ago said that we were closer to having an energy policy now than at any time in his lifetime.

My hon. Friend the Member for Ipswich (Ben Gummer) also highlighted the role of the Leader of the Opposition in the issue. It is worth looking at what he has said and where his policy has gone. It has not been a good week for the right hon. Gentleman, and it may not get any better now. In government, he said that there should not be a Competition Commission inquiry, yet the Labour party in August said that there should be, and now it is silent. We do not know its view on that issue now. In government, he said also that the energy companies should not be broken up, but in his conference speech he talked about breaking the dominance of a market that has clearly failed. Now, a few months later, he is silent on that as well.

The right hon. Gentleman talked about pooling electricity generation, yet he did not agree with that in government, and now the Labour party is silent. Ahead of his conference speech, he talked about cutting energy bills for four out of five families, but that has been lost. All we hear today is that people who are over 75 years old should be given extra support: bizarrely, a Labour party giving more support to wealthy 75-year-olds than to 74-year-olds who are struggling to pay their bills.

As my hon. Friend the Member for Truro and Falmouth (Sarah Newton) said, we have in place measures that are working. We have simplified tariffs, and we have helped with switching, although there is more to be done, as my hon. Friend the Member for Norwich South (Simon Wright) said. We have introduced the biggest energy efficiency initiative ever, and there is more help to encourage new entrants—

[Ms Rosie Winterton (Doncaster Central) (Lab)]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.