Energy Prices

David T C Davies Excerpts

Wednesday 14th January 2015 Commons Chamber

[David T. C. Davies (Monmouth) (Con)]

My colleagues have done a very good job of rubbishing the economics behind this ludicrous Labour policy. I do not need to add much, except to say that we have heard some deprecating comments about shareholders. Opposition Members tend to forget that shareholders are not toffs walking around the City in top hats. Shareholders are millions and millions of ordinary working people who do not have the luxury of a public sector pension. Private sector pension funds rely heavily on companies, including energy companies, to ensure that working people have decent and fair pensions at the end of their working lives. It is about time that Opposition Members realised that shareholders are millions of ordinary people.

I welcome this debate—I really and truly do—because although what the Opposition are suggesting is ludicrous, it is very interesting that the shadow Secretary of State for Energy and Climate Change has chosen to use her Opposition day debate to talk all about energy and to forget all about climate change. She has realised one thing that I could have told her and some Government Members many years ago, which is that people are far more worried about rising energy bills than about so-called global warming.

I should declare an interest at this point, because I do not buy the consensus at all. Unfortunately, I do not have time to point out the obvious flaws in the argument, but suffice it to say that even those who buy the idea, hook, line and sinker, that the climate only started changing 200 years ago—actually, what the Intergovernmental Panel on Climate Change says is very different from what the environmentalists say—must surely be aware that the UK emits only 2% of the world’s carbon emissions. Therefore, the policies that we have implemented, which have pushed up energy prices, are having no impact whatsoever on the climate, and it is about time that we threw them overboard.

If Members of all parties are interested in reducing energy bills—I hope they are, because I certainly am—they need to look at the fundamental point of how much that energy costs to produce. I have recently seen figures that suggest, and I think at least one Member who is present will correct me if I am wrong, that it costs about £20 per megawatt-hour to generate our electricity from coal, about £40 per megawatt-hour to do so from gas, about £95 per megawatt-hour with subsidies to do so from nuclear or onshore wind and a lot more to do so from offshore wind and other renewables. It is a fundamental economic fact that if we want to reduce electricity prices, we need to ensure that as much electricity as possible is generated from coal and gas, not from expensive renewables. That is one sure fire way to bring prices down.

[Dr Whitehead]

The hon. Gentleman presents a bit of a puzzle. How does he explain his own Government’s recently rolled out policy of putting 11p on everybody’s bills precisely to generate more power for consumers from gas and coal? It has nothing to do with climate change; it is just an 11p increase in people’s bills.

[David T. C. Davies]

The hon. Gentleman would have to ask a member of the Government about Government policies. I have always taken a rather different view on energy, as he will be well aware—that we ought to generate it from the cheapest sources possible, which at the moment are coal and gas. That would bring prices down.

Of course, there is more that we could do to bring down prices. Currently, about 40% of our electricity—actually 47%, I see from my notes—comes from gas. It is worrying that Opposition Members are so quick to rule out the possibility of hydraulic fracturing as a means of getting our own gas out of the ground. That energy technology could generate thousands of well-paid jobs and deliver cheaper prices to consumers. It certainly will not do any harm, and provided that all the environmental safeguards are put in place, to which we are absolutely committed, we should explore that technology.

Finally, I turn to smart meters. Like many people, I have a smartphone. Nobody forced me to buy one; they were out there in the shops and somebody else bought one, and it looked like good technology so I went out and bought one. I have absolutely nothing against smart meters. If somebody wants to produce one and put it on sale in Currys, I might think about it. What I object to strongly is the idea—an anti-conservative one, in my opinion—that we will all be forced to have them.

The latest report I have seen on smart meters, from June, suggests that the price of putting them in has gone up to £11 billion, and there is a possibility of its going much higher if people are not as enthusiastic about them as the Government think. I am certainly not enthusiastic about them. That £11 billion will simply be added to our energy bills, but we are told that it does not matter because there will be £17.1 billion of benefits. Of course, if we look at the report carefully it is clear that those benefits, if they ever arise, will not come through until about 2030. One of those benefits is that people will be using less electricity, which will presumably be because their prices have gone up because they have a smart meter. Some of the benefit calculations have been derived from the fact that the Government will be paying less of the taxes that they are effectively imposing on themselves for carbon emissions. It is all smoke and mirrors, and a return of £17 billion on a risky £11 billion investment over 15 years is frankly a pretty poor one anyway. I suggest that the Government might want to think again about that.

It is great news that the shadow Secretary of State has used her Opposition day debate for this subject. Let us talk about energy prices and getting them down as low as possible. People have a right to cheap energy. I knock on thousands of doors—I am up for election in a few months, like everyone else, so I am putting my money where my mouth is—and people in my constituency are more worried about rising fuel prices than about the non-existent rise in temperatures. No rise has taken place since 1997. It is the economic climate we should be worrying about, not the geographical climate.