Energy Price Freeze

Debate between Charles Hendry and Tom Greatrex

Wednesday 6th November 2013 Commons Chamber

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

We have had a good and interesting debate this afternoon, with many speeches from right hon. and hon. Members, particularly those on the Labour Benches, that have highlighted the importance of rising energy prices to many hard-pressed families and struggling businesses.

Let me address the thrust of the lengthy and at times tortured speech made by the Secretary of State. It is a shame that he is no longer in his place, but he explained that he would have to leave and I am sure that the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), will report back to the Secretary of State the comments made this afternoon. The Secretary of State started by mentioning consensus on the Energy Bill. As the Minister knows—and as his colleague, the Minister of State, Department of Energy and Climate Change, the right hon. Member for Sevenoaks (Michael Fallon), who is now in his place, will recall from his involvement in the final stages of the Energy Bill, after his two predecessors started the process—we scrutinised the Bill and, on balance, supported many of the measures contained in it. However, on Second Reading—the Minister, the right hon. Member for Bexhill and Battle, can check Hansard and pass this on to the Secretary of State; we said it then and again afterwards—my right hon. Friend the Member for Don Valley (Caroline Flint) warned that the Energy Bill

“fails to include direct measures to increase transparency, competition or liquidity or ensure that the energy market is properly regulated and works in the interests of consumers.”—[Official Report, 19 December 2012; Vol. 555, c. 906.]

Both my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), who spoke in the debate, and I have said that many, many times, and I am sure that the Minister heard it, as did other members of the Energy Bill Committee. This is not new: we have been saying this, and raising aspects of the problem, for at least a year, and raising some aspects for nearly two years. The Secretary of State said that he wanted consensus back. We have consensus on some of the measures in the Energy Bill, but we said at the outset that there were things missing from the Bill. That is what our policies aim to rectify, and if Ministers could get over themselves a little bit they could introduce those reforms, and consumers and other people would be in a much better position.

The hon. Member for Wealden (Charles Hendry), one of the Minister’s predecessors, discussed long-term signals and the importance of securing investment in energy infrastructure. That was the focus of the process called electricity market reform, which became the Energy Bill. There is also an important point about consent. If we expect investment to happen, people who pay energy bills need to know that the market functions effectively and that they can trust their energy supplier. That necessitates changing the retail market to make it clear, fair and transparent.

[Charles Hendry]

In her speech, the right hon. Member for Don Valley (Caroline Flint) was asked two questions. First, she was asked whether she had heard from energy companies saying that they were more likely to invest as a result of Labour policies, but she did not answer. She was also asked if she had heard from anyone saying that they would be less likely to invest, and she would not answer that one. Can the hon. Gentleman answer on her behalf?

[Tom Greatrex]

I can tell the right hon. Gentleman—[Interruption.] Sorry, I can tell the hon. Gentleman—I am promoting him; that is the regard in which I hold him—that in the period immediately after the conference speech by the Leader of the Opposition and since I have had a number of discussions with energy companies, with big suppliers, with small suppliers, with people in the supply chain, and with a whole range of people across the sector, and they have made it clear that they want a situation in which they can be trusted. They want transparency in the market. Indeed, some of the small suppliers that have been prayed in aid in speeches by Government Members have said that the most important thing is to have an open and transparent system in the energy market, which is what our reform is about. Then we will be in a position where we can have a fair debate about these issues and ensure that investment can flow, because people can understand and trust the system that will be in place.

Oral Answers to Questions

Debate between Charles Hendry and Tom Greatrex

Thursday 17th May 2012 Commons Chamber

[Charles Hendry]

The humour arose because I inadvertently sat on the Secretary of State, which shows our commitment to work seamlessly together in this coalition! My hon. Friend makes an important point. We recognise that EDF has already committed about £90 million for a section 106 agreement, but we recognise, too, the need for greater signals for the long-term benefit of the community from those who deliver nationally important projects.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

I will endeavour not to sit accidentally on either of my Front-Bench colleagues this morning. One of the claimed community benefits of Hinkley Point is the ability to create and maintain highly skilled jobs. Will the Minister give his reaction to the comments of Citigroup in response to the reports of construction costs at Hinkley increasing by 40%, suggesting that an already very challenging programme might be reaching the point of impossibility?

[Charles Hendry]

The hon. Gentleman nearly did sit on his right hon. Friend the Member for Don Valley (Caroline Flint). He makes an important point. We are in close conversations with EDF and other potential developers of nuclear plants and we recognise that they have to be delivered in a cost-efficient way. We do not recognise the figures in the Citibank report, but we will continue to work with the company to ensure that this low-cost, large-scale, low-carbon source of generation can be part of the future energy mix.

[Tom Greatrex]

I am grateful to the Minister for that response. I am sure he will also be aware of the evidence that Volker Beckers, the chief executive of RWE npower, gave to the Energy and Climate Change Committee earlier this week. He explained that the company was pulling out of the Horizon joint venture because continuing

“would have meant a downgrading and we could not afford to do that”.

Given the report from Moody’s suggesting that if EDF were to continue with Hinkley and, indeed, Sizewell, it would be at risk of having its credit rating downgraded, how concerned is the Minister about the prospects for nuclear new build in the UK?

[Charles Hendry]

The hon. Gentleman provides a partial quote, in that Volker Beckers also said that this was a result of German Government policy and of the constrained balance sheets that resulted from the nuclear levy in Germany, and that RWE is selling off £7 billion-worth of assets worldwide, making a further €2 billion-worth of cost reductions elsewhere. Essentially, this is part of a global restructuring of the company. We continue to believe that the measures we are putting in place through market reform—more detail will be published very shortly—will create the right environment for investment in our low-carbon infrastructure for the future, which is so critical for our energy security.

Carbon Capture and Storage (Scotland)

Debate between Charles Hendry and Tom Greatrex

Tuesday 17th January 2012 Westminster Hall

[Charles Hendry]

The hon. Gentleman’s point is critical to the whole Scottish electricity sector. The work is being taken forward by Ofgem through Project TransmiT, which is considering the appropriate regime for charging when electricity is transmitted over long distances. It will set out its thoughts during the next few weeks, and that can be discussed in more detail. I am very encouraged by the progress that I understand is being made to find a formula that will work for those who are developing projects north of the border and in other parts of the country. More detail will be available shortly, but it is critical to the development not just of CCS in Scotland, but to the whole electricity generating sector north of the border.

We are putting in place a strong financial offer for early CCS projects, and it is one of the best offers anywhere in the world. It includes the £1 billion that is available for the up-front capital costs of projects, the potential for low-carbon contracts for difference to support operational costs and the potential for European new entrant reserve funding, which we fully support.

In response to the point made by the shadow Minister, the Chief Secretary to the Treasury has said that, realistically, because the programme is being put back, the money that we had anticipated being spent in this spending round is unlikely to be spent, and it cannot be spent in the time scale originally intended. If Longannet had gone ahead, it could have started to be drawn down this year and certainly into 2013. With new projects coming through, that will happen at the very end of this spending round and primarily into the next one. However, there is a clear commitment, and the £1 billion remains.

In response to the point made by the hon. Member for Banff and Buchan, good progress is also being made on finding additional sources of funding to bring into the process. Discussion is taking place with sovereign wealth funds overseas to trap their investment in this area. We are seeing a greater appetite from industrial investors to put in their own funding, instead of the Government providing funding. Projects involving enhanced oil recovery might also make a significant financial contribution.

[Tom Greatrex]

I am grateful to the Minister for his partial answer to one of my questions. May I press him on how much of that £1 billion will be available during the current CSR period and the current Parliament if demand is present and whether the projects are advanced enough for the money to be available to spend? How much of that £1 billion could be spent on CCS during this time, or has it been subsumed into a wider infrastructure pot?

[Charles Hendry]

Certainly, the funding that was assumed would be spent on CCS in the middle of this spending round and that will not now be spent and cannot be spent is being made available to other infrastructure projects. I am sure that the hon. Gentleman welcomes that, because it will help to drive forward our economic recovery. Until we have seen the scale and type of the projects and the extent to which they will co-operate and collaborate, we cannot set out exactly what the funding will be. Some of them will access the new entrant reserve fund; some will be more dependent on a predictable income stream through the contracts for difference; and some will need more up-front funding. Until we know exactly what the projects will be, we cannot say exactly how they need to be financed. I understand why the hon. Gentleman wants clarity now, but until we understand the nature of the front-runner projects, we cannot say with certainty exactly how that funding should come forward.

[Tom Greatrex]

I am grateful to the Minister for his response. How much money would be available if those projects were advanced to a stage where they would be considered to be appropriate for that funding? How much of that funding would be available for projects in this comprehensive spending review period if they were in that position? Would the figure be up to £500 million, £200 million or £300 million? How much would be available from that £1 billion during this CSR period if the projects had the applicable framework for that money?

[Charles Hendry]

The hon. Gentleman is tempting me to go out of line, but I am reluctant to pursue that approach. Until we understand the nature of the projects, I cannot explain to him how they will be funded. They will all have a different funding requirement for longer-term running costs or up-front capital, which may come from one or two sources. We want to make it clear that we want projects to try to find other investors to enter the process. There will inevitably be a process of discovery and of trying to find out exactly what the best projects are, but we have made it absolutely clear that that £1 billion remains available. The hon. Gentleman understands that the time scale has been moved backwards because of the decision on Longannet, but the £1 billion remains ring-fenced.

National Policy Statements (Energy)

Debate between Charles Hendry and Tom Greatrex

Monday 18th July 2011 Commons Chamber

[Charles Hendry]

I welcome the right hon. Gentleman’s interest and expertise in these matters. As he knows, we took on some of the work of his Administration by allocating an extra £1 billion for the first full-scale CCS project—the largest amount any Government anywhere in the world had given to a single project. Over recent weeks, we have been negotiating very carefully with the interested parties about how we can deliver what we want in terms of the knowledge transfer and output for the CCS project, based on what they believe is achievable for the funding. Those discussions are ongoing, and we hope that they will be brought to a conclusion with the first plant being operational by 2015.

We have also said there will be three other projects, and we have evolved the policy we inherited from the previous Administration by saying that one of them should be on gas, in recognition of the long-term role gas is likely to play and the significant interest in this country in developing gas technologies. At a time when other Governments are slipping back their time scales for CCS, it is encouraging that the UK programme has been moving forward. I hope the right hon. Gentleman will warmly welcome that.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

My hon. Friend the Member for Hartlepool (Mr Wright) mentioned China. Does the Minister share my concern about the number of coal-fired power stations still being built there, in that the development of that CCS technology may be accelerating in places other than the UK and we may lose out on the opportunity to export some of the skills and expertise that we might otherwise be able to export if things were to move a little faster here?

[Charles Hendry]

The hon. Gentleman makes an important point. When the original competition was set out by the right hon. Member for Doncaster North (Edward Miliband), the thinking behind it was that we should be developing technology in this country that we could sell to the Chinese. The reality is that the Chinese are rapidly trying to develop technology that they want to sell to us. We have a strong opportunity to lead. We have some of the world’s leading technological and academic experts, and we have fantastic sequestration facilities in the depleted oil and gas fields in the North sea. The UK should be in a position to lead in this area, but we are mindful of the point the hon. Gentleman makes: other countries are equally determined to get there ahead of us. That is why the focus on delivering those four plants has been so important.

The renewables NPS—EN-3—addresses sustainability of biomass, how waste incineration plants fit into the statutory waste hierarchy by using waste that would otherwise go to landfill, and specific impacts of onshore and offshore wind farms, including visual impacts, noise from onshore wind farms and collision risks for birds and bats.

National Policy Statements

Debate between Charles Hendry and Tom Greatrex

Wednesday 1st December 2010 Commons Chamber

[Charles Hendry]

The hon. Gentleman has often raised this issue in the Select Committee in the past, and it should be at the heart of our thinking. At this time of year, when people are struggling to pay their bills, how they will pay them in the future is a matter of great concern to us.

The nature of the green deal is that it does not depend on the creditworthiness of the individual householder. A charge will be set against the future energy bills of their property, with the condition that the total cost of the energy efficiency measures should be such that it can be repaid through that extra charge over a period of 20 or 25 years. So the people living in those properties will get the immediate full benefit in terms of warmth and reduced energy consumption, but the charge will be brought back over time. We think that this policy has been devised in a way that has at its heart the interests of those who are fuel poor and have difficulty in paying their bills. The hon. Gentleman is absolutely right to say that, in all these issues, there are massive costs for consumers. Our job as a Government is to find ways of trying to drive down the number of units that consumers will be using. The green deal is part of that process, as is smart metering.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

May I issue an appeal to the Minister and his colleagues that, as the green deal mechanism is being finalised and formulated, it should not be targeted at only cavity wall and loft insulation? There are many properties in my constituency and elsewhere for which that would be no use at all, and some of those properties are among the least fuel efficient.

[Charles Hendry]

The hon. Gentleman brings to the House a huge amount of expertise on these issues and I very much welcome his contribution. He has touched on an issue that is at the core of our thinking on how to take the green deal forward. He is absolutely right to say that, while a significant number of houses would be helped if it were to address issues of cavity wall and loft insulation, there are many that do not have cavity walls and many that need additional measures. We are looking at the role that boilers can play in regard to energy efficiency, because that area has not been given sufficient attention in the past. The key will be to find a range of measures that are relevant to each individual property, the savings from which will justify the investment over time. I can give the hon. Gentleman an absolute assurance that the type of houses that he is talking about in his constituency, in mine, and in many others across the country will be very much included as the green deal is developed.