Energy Bill

Earl Cathcart Excerpts

Tuesday 18th June 2013 Lords Chamber

[Earl Cathcart]

My Lords, I should like to start with the assumption that the Government’s primary objective for energy must be to ensure that it is available and affordable. Self-sufficiency, sustainability, energy security and green energy are equally admirable aims but they are in my opinion secondary to the primary objective. It is no good achieving any of these secondary objectives if energy is not sufficiently available or affordable.

This is an ambitious Bill and I wish for a successful outcome but I have three areas of concern. My first, shared by the right reverend Prelate the Bishop of Hereford, is the alarming number of households in fuel poverty: 4.5 million, or nearly one in five households. This is appalling, if not embarrassing, for one of the richest countries in the world. We are being told constantly that there is no easy solution because if the present tariff system is changed it may put vulnerable households in a worse position. So, nothing is done. I would say, “Where there’s a will, there’s a way”. Unfortunately, there does not seem to be the will.

High fuel poverty probably has something to do with the fact that fuel prices have doubled in the past seven or eight years. That brings me to my second concern. If fuel prices have doubled in the past seven or eight years, what will happen to them over the next seven or eight years? Some experts have argued that they expect them to double again, which no doubt would exacerbate fuel poverty. I hope that the department has done its sums and that the Minister can reassure me that prices will not double. I am quite sure that prices will go up but the question is, by how much?

The Government’s aim is that our energy will come from nuclear and renewables, predominantly wind turbines, with gas as the back-up. Energy from wind is more expensive than that from fossil fuels, and offshore wind generation is more expensive than onshore wind. Also, the cost of building nuclear power stations is enormous but the Liberal Democrats will allow them to be built only if they receive no subsidy from the taxpayer. Therefore, this huge cost of construction will no doubt be passed on to the consumer. Two of our coal-fired power stations have already closed and the Government aim to tax the remaining ones out of existence. Until they finally close, no doubt they will recover this tax charge by passing it on to the consumer.

There is something here that I do not understand. We are taxing our coal-fired power stations out of existence—admittedly they are quite old—no doubt because of an EU directive, while India and China are planning to build 800 new ones between them. I know that China also has huge investment in nuclear and renewables but, all the same, it is still a huge investment in coal when we are scrapping ours. If it is because of a directive from the EU, why is it that Germany is to build 20 new coal-fired powered stations? Will Germany’s 20 new coal-fired power stations be required to have carbon capture and storage built in, or not? If not, why are we taxing ours out of existence? I just do not see the logic.

Getting back to my concern, I do not see how prices will not continue to increase, which will further pile on the agony for those already in fuel poverty and increase the number of households getting into fuel poverty. However, it is not just households: what will these rising costs do to the competitiveness of British business and industry, especially those few industries that are heavily dependent on energy?

Recently, my right honourable friend the Prime Minister, making a speech about Britain being in the global race, said that one goal is to make Britain one of,

“the top five places in the world to do business”.

Quite so, but probably not for those industries heavily reliant on fuel, especially as fuel prices in America—with its shale gas—China, India and no doubt others are already half of ours. Let us hope that our fuel prices do not drive any industries heavily reliant on fuel away from Britain. I hope that the Minister can reassure me on this.

This brings me to my third concern. With these huge changes proposed by the Government, have the Minister and her department done the sums to ensure that there will be sufficient power available for all our needs until such time as all the new proposed power stations are up and running? Is there a margin of error built into their calculations? What concerns me is that the Government are relying on nuclear to be a major part of the new mix, but the Government have yet to agree any contract with EDF, which, worryingly, is the only player in the field.

Obviously, we hope that the new power stations go ahead, but if they do it will take at least eight years, if not more, before the first is commissioned. What happens between now and then, especially as we will be taxing our existing coal-fired power stations out of existence before we have secured any deal with EDF? If agreement with EDF cannot be reached, is there a plan B? I am sure that some of these topics—fuel poverty, energy prices over the next seven or eight years and the possibility of a shortfall in energy during that time—will be raised in Committee. I look forward to the Minister’s response.