Energy Generation

Debate between David Mowat and Nia Griffith

Wednesday 17th April 2013 Westminster Hall

[Nia Griffith (Llanelli) (Lab)]

I congratulate the hon. Member for St Ives (Andrew George) on securing this debate.

When we served on the Joint Committee on the draft Climate Change Bill, we heard from manufacturers how much they wanted certainty. They said, “Well, whatever you decide, whatever you do, certainty is what we want. We want to have that message. We want to know exactly what we are doing.”

The decarbonisation of the power sector is vital, not only in its own right but as a contribution to decarbonisation in other sectors, such as transport, industry and buildings. If we delay setting decarbonisation targets, that will lead to an increased reliance on gas. We can all understand why we had North sea gas and why we then imported gas to take over from North sea gas, but can anybody understand why a country would wish to rely so much on imported gas now? First, importing gas contributes to greenhouse gases and the speeding-up of climate change, but secondly, following the oil crisis in the ’70s, surely we must understand the volatility of oil prices and, linked to them, gas prices. In addition, there is increased world demand and the volatility of some nations that supply gas to us. Furthermore, the versatility of gas means that when we do have it there are things that we should be using it for, such as piping it directly to industry or homes.

As for shale gas, it is highly controversial in a densely populated country such as our own, and costs will certainly escalate before it can be extracted, not to mention the carbon footprint that its extraction will leave behind. However, tacitly encouraging—

[David Mowat]

Will the hon. Lady give way?

[Nia Griffith]

No, the hon. Gentleman has had many chances to talk; I will give way only to someone who has not yet had a turn.

Tacitly encouraging more reliance on imported gas looks even more bizarre when we have huge potential here for renewables, particularly—

Energy Bill

Debate between David Mowat and Nia Griffith

Wednesday 19th December 2012 Commons Chamber

[Nia Griffith (Llanelli) (Lab)]

First, I must register my disappointment that there is no decarbonisation target for 2030 in the Bill. When Labour was in government, it took the lead and brought in the world’s first Climate Change Bill. At that time, the then Opposition Members were only too keen to parade their green credentials and to ask for demanding decarbonisation targets. It is therefore very disappointing to see yet another broken promise and the Government ignoring the clear advice of their advisers in the Committee on Climate Change who have consistently recommended a target for 2030 of 50 grams of carbon per kilowatt-hour. A sector-specific target for 2030 would give investors a clear signal about the direction of energy policy after 2020 and encourage greater investment in the UK-based supply chains. I hope that that can be remedied in Committee.

I am also concerned about the lack of emphasis on energy saving and reducing demand. Such measures by no means take away from the urgent need to increase generating capacity, but they have a significant role to play. Reducing demand and improving energy efficiency reduce the overall generating capacity that is required. It also reduces bills for consumers when their homes or businesses are made more energy efficient.

The Government’s decision to end the Warm Front programme is short-sighted. It contrasts sharply with the Welsh Government’s commitment to energy efficiency. Following on from their Arbed 1 programme, which put £68 million of investment into energy efficiency, using mainly local installers, they have now embarked on Arbed 2, which will make energy efficiency improvements to 4,800 homes, with a minimum reduction of 2.54 kilotonnes of carbon.

The Welsh Government must be commended on their commitment to renewables. It would be nice if they had the opportunity to take charge of renewables up to 100 MW, but perhaps that, too, will be discussed in Committee.

No one denies that we need to rely on gas for electricity generation in the interim, but it is a mistake to see gas as a quick and easy solution at the expense of renewables. First, there is a problem of the security of supply. Relying on gas makes us dependent on supplies from abroad, but we cannot be sure that supply countries will always want to supply us or that they will not increase prices significantly. The domestic consumer may find that they have all their eggs in one basket because, if gas prices rise, the price of electricity that is produced from gas will also rise, which will be a double whammy. We seem to be wasting the opportunity to use gas for its versatility—it can be transported as gas and used as such, rather than used for electricity generation—and we must look carefully at that balance in the Bill.

As secretary of the all-party group for the steel and metal related industry, let me move on to energy-intensive industries. It is vital that appropriate help is given to those industries, many of which are making significant investments in upgrading their equipment and reducing their energy demand, which is clearly in their interest. At Port Talbot, for example, Tata Steel has spent more than £60 million on the waste gas recovery scheme, reducing carbon dioxide emissions by 240,000 tonnes per annum, and its new blast furnace will be 10% more efficient than previous models.

If we are to keep heavy industry in the UK and stop carbon leakage—allowing our steel to be replaced by imports from countries that are less strict on emissions—we must get things right for energy-intensive industries. As the Bill goes through Committee, it is essential that the Government stick to their pledge to give sufficient consideration to protection against the rising cost of energy from electricity market reform. Tata Steel paid £13.9 million in 2011 in renewables obligations and feed-in tariffs, which will rise to £26.4 million in 2013. That risks making steel in the UK uncompetitive compared with other European countries.

What measures—if any—are the Government considering to compensate for the impact on energy-intensive industries of existing pre-EMR renewables subsidies, the renewables obligation and small-scale FITs? What analysis has been made of the impact of the proposed capacity mechanism and increased balancing costs on industrial electricity prices, and how will energy- intensive industries be compensated for that?

[David Mowat]

The hon. Lady makes a number of interesting points on energy-intensive industries, most of which I agree with. Does she agree that, although the Government may be doing some things to help energy-intensive industries, energy use is a continuum and any energy that is differentially expensive compared with our competitors will hurt our economy? It is not only the intensive industries that we have to sort out.

[Nia Griffith]

It is important to be aware of the effect of our provisions on all industry and business.

In conclusion, I congratulate my right hon. Friend the Member for Neath (Mr Hain) on his support for the Severn barrage, and I hope that such support will be found more generally. It disappoints me significantly that the right hon. Member for North Somerset (Dr Fox) has taken to opposing the barrage and whipping up opposition, rather than engaging constructively and looking at ways to make it a valuable project. I congratulate my new hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) on his contribution to the debate, and I emphasise his point that we must remove barriers to independent and community generators to allow them to take part and contribute to energy sources in this country.

Royal Mail Privatisation

Debate between David Mowat and Nia Griffith

Tuesday 18th January 2011 Westminster Hall

[Nia Griffith]

The hon. Gentleman rightly mentions geographical spread, which is important. Provision should be made for it. Perhaps we should look to the Australian model. There it is guaranteed that 90% of the urban population will have a post office within 2.5 km; and almost unbelievably in such a large continent it is guaranteed that 85% of the rural population will have a post office within 7.5 km. If they can manage that in Australia, we could introduce a guarantee that is much more robust than what we now have. The irony is that, if Deutsche Post were to purchase Royal Mail, consumers here could have a reduced service, while they contributed to the profits of a company which must provide a specified number of outlets in its own country. In other words, we could have a poorer service here, while propping up a better service in Germany—a scenario we might associate more with 19th-century colonialism than modern Britain.

The Under-Secretary did not give convincing answers on Report about what exactly the legal obstacles are to the inclusion in the Bill of a guarantee of an inter-business agreement. He did not tell us about any legal precedents on which he was drawing, or what research his team has done on any relevant challenges in EU law.

The Under-Secretary has also failed to tell us about options outside the Bill itself. Currently both Royal Mail and the post office network are in public ownership. Both the chief executive and the chairman of Royal Mail speak favourably of the post office network. They recognise the respect it commands, the trust it enjoys in our communities and its value as a business partner. What, therefore, is preventing the signing of a new inter-business agreement now, while Royal Mail is still in public ownership? I am not now talking about a new clause in the Bill, but a new business agreement: an agreement that goes beyond the end of the current inter-business agreement, which could run out within a couple of years of privatisation, depending on the time scale, and that lasts for an additional 10 years. Has the Minister explored that possibility with Royal Mail? What would be the legal difference between an inter-business agreement with just a couple of years to run and one that was to last five or 10 years? Has he sought to capitalise on the warm words of Moya Greene and Donald Brydon about the post office network? Has he had any talks about an extended IBA between Royal Mail and the post office network?

I am sure that the Minister does not need to be reminded that Royal Mail is currently in public ownership. He must realise how serious the loss of business would be to the post office network. Even though any decision by Royal Mail to abandon the Post Office will be taken after privatisation, and therefore will technically not be a Government decision, he knows that the people of this country will not be slow to make the connection between the privatisation of Royal Mail and the demise of their local post offices.

The pity is that the Minister does not seem to want to take specific action. He seems to think that he can rely on warm words to guarantee Royal Mail business for the Post Office, but people are wary of warm words. There have been warm words about no rise in VAT and warm words about no increase in tuition fees—people are becoming very cynical about warm words. No shrewd business person would trust future business security to warm words. Surely, in his enthusiasm to privatise Royal Mail, the Minister has not overlooked the fact that it is currently in public ownership, and that he therefore has every opportunity to influence the way forward and to negotiate a longer IBA, here and now, before proceeding to privatisation.

Indeed, the Under-Secretary told us on Report that the Government

“as shareholders, will ensure that the commitment that Royal Mail made in its evidence to the Public Bill Committee—that it would conclude the longest legally permissible contract before separation—is fulfilled.”—[Official Report, 12 January 2011; Vol. 521, c. 357.]

I ask the Minister to enlighten us about what talks he or the Under-Secretary have had with Royal Mail about drawing up a longer IBA with the Post Office before privatisation. What was meant by the “longest legally permissible contract”? Is there a legal limit on such a contract? If so, what is it? As I said in last week’s debate, purchasers take over existing contracts and responsibilities in all sorts of takeovers, and such arrangements can be long-lasting.

The hon. Member for Warrington South (David Mowat) rightly questions what joined-up thinking has taken place on the subsidy. In our debate on the subsidy on 20 December, I said that the taxpayer is paying a large subsidy to the post office network, of which only 48% is necessary to continue the subsidy that Labour introduced to maintain the operation of the current post office network. We have been told that the remainder includes money to convert post offices to the post office local model, which involves paying the sub-postmaster by transaction, but that has been criticised by the Rural Shops Alliance, which questions why anyone would want to work longer hours for less income. It predicts difficulty in attracting new entrants to the post office local model; indeed, a similar pilot in Linlithgow ended with the shopkeeper saying that it simply was not worth his while to provide post office services.

Taxpayers will rightly ask what is the point of so much taxpayers’ money going into the post office network, particularly when they are seeing savage cuts in other services, and given that the Government are doing absolutely nothing to help secure the 37% of post office income that comes from the IBA with Royal Mail.

[David Mowat]

The Opposition continually talk about the IBA as if it were some kind of nirvana. Even with it in place, 7,500 post offices in the network are making a loss. At least the Minister has proposals on fixing that and on modernisation. Do the Opposition have any proposals other than the status quo?

[Nia Griffith]

Frankly, despite the Government’s fine words, the Post Office has no new Government contracts and no new streams of business, and it faces the possibility of losing all its Royal Mail business. Taxpayers will ask why they have to pay for that.

Taxpayers understand the idea of investment that brings returns and the value of business start-up funds, which can help to launch new businesses that subsequently stand on their own two feet, and they accept the need for some subsidy to make the network a truly nationwide service. However, if the post office network does not provide nationwide access to postal services or develop new business streams to improve its viability, the taxpayer may well ask what is the point of allocating £1.34 billion to the post office network. The taxpayer has every right to ask what steps the Minister is taking to ensure that the Post Office continues to do for Royal Mail business that provides 37% of its income.

In its recent report, the Scottish Affairs Committee stated that:

“we recommend the Government take a more proactive approach to facilitating a long and robust IBA, through removing any obstacles: practical, legal or otherwise that may exist. Ideally, a ten year agreement should be reached prior to any sale of Royal Mail. We understand that this may affect the marketability of Royal Mail, but it is essential to the sustainability of Postal Services in Scotland. It is in everyone’s interest”.

Members on both sides have stressed time and again the valuable social role of the post office, and the Government’s recent subsidy allocation suggests that it is a role worth paying for.

Will the Minister say whether concern about the marketability of Royal Mail is the reason for the Government’s reluctance to pursue a robust IBA? If so, does he consider potential diminished marketability to be a price worth paying when it comes to guaranteeing the future of 37% of the post office network’s business? What analysis have the Government made of the cost of a presumed lower price for Royal Mail with a robust IBA with the Post Office, and the cost of continued subsidy of the post office network? Once Royal Mail is privatised and possibly sold to a foreign owner without a long-term IBA in place, it will be too late to insist on one.

The Government will not be able to insist on Royal Mail using the Post Office. They will not be able to do what Lord Mandelson did. They have the chance here and now. I want to know whether they are going to take it.