Ed Davey
Main Page: Ed Davey (Liberal Democrat - Kingston and Surbiton)
Jim McGovern (Dundee West) (Lab)
20. What steps he is taking to help households with their energy bills.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
Helping people with energy bills is a top priority for us, so we have a range of initiatives including tariff reforms, energy-saving policies and direct help to cut the bills of those on the lowest incomes. From our consultation on proposals to help to get consumers on the cheapest tariffs to the green deal, and from the warm home discount to our promotion of collective switching, this Government will do whatever we can to help people and businesses to combat the effects of rising energy prices.
Dr Whitehead
Has the Secretary of State had a chance to peruse the report just produced by the Committee on Climate Change on the customer price differential between a renewable-rich strategy and a gas-rich strategy? Does he agree that that could represent a sixfold difference in long-term price increases for customers? Does he agree with the committee’s view, and will he be sharing his views with the Chancellor shortly?
Mr Davey
The hon. Gentleman got a lot of questions in there. I have looked at the headlines but I cannot say that I have read the full report, although I certainly intend to do so. I agree that it poses some challenges to those who debate energy policy, because it suggests that with a high gas price prediction, we could see energy bills going up by, I think, £600, whereas under a renewables strategy it would be only £100. The Government are adopting a mixed-energy approach, so that we are not dependent on any single energy source and can therefore manage the risks, because we cannot know the future of gas prices or predict how the cost of renewables will go down. I believe that our approach is the best one for the British economy.
Bill Esterson
The cost of energy is crucial for the nearly 10,000 pensioners in my constituency, and I am worried about the Government’s policy to get people on to the lowest tariff. What would happen if the energy companies simply raised the price of the lowest tariff? How would the Secretary of State address that problem?
Mr Davey
We have taken a balanced approach in our tariff reform proposals, on which we are now consulting. We have tried to ensure that those people who are on so-called dead tariffs, or on unnecessarily high tariffs, will automatically be switched down to the lowest tariff, given their preferences. We have also tried to ensure that there will still be competition, in that there will be four classes of core tariff so that the energy companies will be able to compete using those tariffs. The key is to try to help people who do not engage with the energy market to get a good deal, as well as to ensure that competition can deliver for consumers and for businesses.
Meg Hillier
With respect, the Energy Secretary has not answered my hon. Friend’s question. How are the Government going to ensure that the energy companies do not simply raise the price of their lowest tariff so that it is no longer as low as it was in the past?
Mr Davey
With respect, I did answer the question. It involves something called competition. On this side of the House, we understand competition and how it supports consumers. I have to say to Opposition Members that an awful lot of people were asking the last Labour Government why they did not sort out the multitude of tariffs that were creating complexity and confusion and getting in the way of competition. Through our simplification, we are helping the most vulnerable people and those who have been on dead tariffs and paying far too much for their energy, but we are also ensuring that competition can deliver for our economy.
Ann McKechin (Glasgow North) (Lab)
23. The Secretary of State will be aware that Scottish and Southern Energy has indicated that pre-payment customers will now be able to enjoy the same rates as other customers. Is he going to persuade the other suppliers to do exactly the same?
Mr Davey
It is great news because it shows how competition can assist in this process. I refer the hon. Lady to Ofgem’s retail market review analysis, which showed that customers on prepayment meters can save an average of £65 and up to £152 by switching to the cheapest deal within that prepayment method. The proposals we are taking forward really will help people on prepayment meters.
Mike Crockart (Edinburgh West) (LD)
Does my right hon. Friend agree that the best way to reduce energy bills is to reduce energy use? With that in mind, can he tell us whether he has reached an agreement with the green investment bank to help to fund the green deal?
Mr Davey
My hon. Friend is absolutely right: when it comes to energy bills, saving energy is the best way to save money. The green investment bank is engaging with my Department and the Green Deal Finance Company over the support it will give to the green deal. I cannot make an announcement today. All I can say is that the green investment bank is being helpful on the green deal, as on many other areas, and that it is a victory for this Government that we have introduced the green investment bank.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Energy bills have risen by nearly £300 since this Government came to power. I agree with what hon. Members have just said—that one of the best ways for households to protect against rising prices is to improve the energy efficiency of their properties—yet the launch of the Government’s green deal scheme has been shambolic. I listened to the Secretary of State’s answer and noted that he cannot tell us even whether the green investment bank is going to capitalise the green deal, yet he expects people to sign their green deals in just over a month’s time. The number of homes expected to be insulated next year is set to fall dramatically. The Insulation Industry Forum is warning that low green deal uptake will mean that 16,000 jobs are set to be lost in the sector next year. Will the Secretary of State guarantee that he will not let that happen?
Mr Davey
The hon. Lady does not seem to understand the green deal, For a start, it is being launched on 28 January, after the soft work we have seen over the last few months to prepare for it. We believe it will be a huge success. I believe the green deal should have cross-party support, and I hope that the hon. Lady will confirm from the Dispatch Box that the Opposition support it. The green investment bank’s support for the green deal will not be direct; it will come through supporting the financial arrangements of the credit. I thought the hon. Lady would understand that. As for predictions on insulation, I think we should wait. I believe the green deal will support the market and that it will be a real step forward.
Luciana Berger
I thank the Secretary of State for his answer, to which I listened carefully. We have been working on the green deal for over two years now, yet in five weeks’ time the Secretary of State expects consumers to sign a deal when they do not know what the interest rate and the cost of the finance will be, which I think will be crucial to the success of the scheme, which we all want. Rising prices are hitting all consumers, but their effects are felt most by those in fuel poverty. Two years ago, the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), said at the Dispatch that his Government would really attack fuel poverty, yet uSwitch estimates that the number of those in fuel poverty has risen to 6 million under this Government. Analysis by National Energy Action has shown that even after the measures introduced by this Government, such as the warm home discount, funding for fuel-poor and low-income households will be cut by half from January. Will the Secretary of State now apologise for breaking his promise to the millions of people who will be feeling the cold this winter?
Mr Davey
This Government are doing everything they can to tackle fuel poverty. My predecessor, my right hon. Friend the Member for Eastleigh (Chris Huhne), set up the review to look at how we measure fuel poverty, and that concluded that the last Government could not even measure fuel poverty correctly. We are using a whole set of new initiatives, including collective switching, using the power of people coming together. One would have thought that Labour Members would have used that in their 13 years in power. They failed to use the collective principle to try to help people; we are doing that, and we are determined to tackle fuel poverty.
Andrew Selous (South West Bedfordshire) (Con)
2. What steps he has taken to exploit reserves of shale gas in the UK.
Mark Menzies (Fylde) (Con)
17. What steps his Department is taking to ensure that safety and environmental concerns regarding shale gas exploration and extraction are addressed before shale gas reserves are developed.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
Shale gas may prove to be a useful addition to the UK’s diverse portfolio of energy sources, and would be particularly valuable in replacing declining North sea supplies, with benefits to energy security as well as to the economy and employment—but its exploitation will be acceptable only if it is safe and the environment is properly protected.
Hydraulic fracturing operations for shale gas were suspended last year, pending consideration of seismic events in Lancashire. Based on the latest evidence and expert advice, and having considered the responses to a public consultation on that advice, I have concluded that, in principle, fracking for shale gas can be allowed to resume— subject to new controls to mitigate the risk of seismicity. I have made full details available to both Houses by means of a comprehensive written statement tabled this morning.
Andrew Selous
I want to see proper environmental safeguards and generous community benefits for the areas where fracking will take place, but does my right hon. Friend agree that shale gas has the potential not only to lead an industrial renaissance in this country but to play a serious part in dealing with fuel poverty?
Mr Davey
I agree that shale gas has an important part to play in our energy mix and in our economy, and I also agree that we must ensure that communities benefit and that there is proper environmental regulation. I have been very impressed by the way in which Members in all parts of the House have contributed to the debate and to the Department’s thinking, but I pay particular tribute to the hon. Member for Fylde (Mark Menzies), who, along with the independent experts, has really influenced our thinking. It is very important for us to take the public with us as we explore the potential for shale gas in the United Kingdom.
Paul Maynard
Many of my constituents remain concerned about the parallels that they perceive between shale extraction in the United States and what is being planned in the United Kingdom. Will the Secretary of State say a little more about why he thinks that the regulatory environment here will be superior to that of the United States, thereby disproving many of the alarmist stories that are circulating?
Mr Davey
Let me also pay tribute to the work that my hon. Friend has done for his constituents, who I know are concerned about shale gas. I can reassure him that the regulations that we already have in the United Kingdom are much stronger than those in many American states where fracking for gas has been taking place for many years. We have the regulations, controls and powers of the Environment Agency, the regulations, controls and powers of the Health and Safety Executive and the regulations, controls and powers of my own Department, so we already have a strong regulatory regime. However, if the exploration suggests that there is potential for commercial development and we move in that direction, we will keep that regime under review, and will tighten and strengthen it if necessary. Today’s announcement is about new controls to ensure that seismicity is not a problem.
Kerry McCarthy
I welcome the Secretary of State’s reassurance that environmental and safety concerns will be given a high priority, but some people fear that those whom the press have dubbed the frackheads in the Government are rushing ahead with tax incentives for shale gas exploration without taking the time to look into those concerns first. Can the right hon. Gentleman reassure me that no tax incentives will be introduced until we are 100% sure that it is safe to go ahead with fracking in this country?
Mr Davey
I do not think that anyone has described me as a frackhead. My job is to make certain that the environmental and safety controls are there, and I believe that the work that we have done, particularly on the seismicity aspect but also on other aspects, can reassure the public in that regard. I am determined to ensure that the environment is properly protected, and as Members will see if they read my statement, I have also commissioned a study of the potential impact of shale gas exploration on greenhouse gas emissions. I hope that that will reassure people on the environmental side as well.
Mark Menzies
I welcomed the announcement of the formation of the Office for Unconventional Gas last week, and I thank the Secretary of State and Ministers for all the work that they have done in that respect. However, some of my constituents have subsequently expressed concern about the possibility that the office is not fully independent. What assurances can the Secretary of State give that it will both improve regulations and be robust, transparent and able to respond to any concerns that Fylde residents may express?
Mr Davey
I repeat my thanks to the hon. Gentleman. The way in which he has stood up for his constituents provides a model for all Members. I can reassure him that the Office for Unconventional Gas will be a strong office, and that it will be in my Department and accountable to Ministers, so that Members can hold us to account in the House. One of its jobs will be bringing together the various regulatory bodies so that they are properly co-ordinated, and our work as we approach potential commercial development in a few years’ time will include ensuring that we have all the regulatory controls that we need.
Mr Dennis Skinner (Bolsover) (Lab)
Is the Minister aware that you cannot be too sure what happens once you start drilling a long way through strata? In my area, after a pit had closed a whole village had to be removed and rebuilt on the other side of the road because of the escape of methane and other gases. I have heard that a company is drilling within a mile of that area now. It may not be anything to do with this fracking business, but I hope that the Minister will tell people to keep their noses out, because otherwise there might be another explosion in the area.
Mr Davey
The whole House listens to the hon. Gentleman closely on these issues because he is an expert on drilling and all aspects of the coal industry. I do not know the case to which he refers, but if he wishes to write to me, I am sure my officials can look into it. He makes an important contribution to this debate, because he highlights the fact that this country has had to tackle methane emissions in the coal and the oil and gas industries, so we have a lot of knowledge, experience and expertise to draw on to make sure we can control emissions from shale gas.
Caroline Flint (Don Valley) (Lab)
I can see how excited Members on the Government Benches are about the potential for shale gas, but I wonder whether they will be equally excited if drilling starts in Wiltshire, Lincolnshire or other parts of the country. As the Secretary of State knows, we have always said fracking should go ahead only if it is safe and environmentally sound. We set out six conditions, and we will be looking to see if they are met in the Government’s written statement today.
On prices, last week the Chancellor said he did not want the British public to miss out if gas prices tumbled as a result of discoveries of shale gas, but does the Secretary of State agree with the former Energy Minister, the hon. Member for Wealden (Charles Hendry), as well as most experts, that
“betting the farm on shale brings serious risks of future price rises”?
Mr Davey
First, I thank the right hon. Lady for saying she will look at our statement carefully. I know that her colleague, the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), wrote to my hon. Friend the Member for Wealden when he was a Minister to set out the Opposition’s conditions. I believe that when the Opposition study the written ministerial statement—we gave a copy to the right hon. Lady before this Question Time, but she should have a chance to examine it—they will see that we have met all the conditions.
The right hon. Lady’s main question was on prices. I agree with my hon. Friend the Member for Wealden that we should not bet the farm on shale gas. I am absolutely clear that the most responsible and sensible way forward for energy policy is to have a diverse set of resources and sources for our energy. Some of the press and commentariat have got very excited about the possibility of gas prices falling, but the independent analysis and the International Energy Agency findings do not necessarily support that.
Mr Speaker
Order. This may be a suitable subject for a full-day debate, but the answers must not take that form. We are grateful to the Secretary of State for his recognition of that important point.
Mr Davey
I agree with my hon. Friend that we should proceed with caution, and we are doing so. The evidence so far suggests that the carbon footprint of shale gas exploration is only slightly higher than that for conventional gas, but I am determined that we in this country examine it seriously, which is why I have commissioned a study.
Mr Mark Spencer (Sherwood) (Con)
3. What assessment he has made of the role of carbon capture and storage in the development of future energy strategy.
Caroline Lucas (Brighton, Pavilion) (Green)
12. What recent advice he has received on the effects of shale gas exploitation on (a) water resources and (b) carbon budgets.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
We liaise closely with the Environment Agency on this issue, and it confirms that volumes of water used in shale gas exploration are not exceptional compared with other industrial activities that routinely take place across the United Kingdom. Any operator who wishes to abstract water as an alternative to using public supplies will need a licence. Additional water abstraction will be authorised only where it is sustainable and no risks are posed to the rights of existing abstraction licence holders.
Shale gas exploration is at a very early stage in the UK, and its possible scale is as yet unknown. We have legally binding carbon budgets, and that should reassure the hon. Lady. In addition, I hope that she will be reassured to know that I have announced today that I am commissioning a study of the possible impacts of shale gas development on greenhouse gas emissions.
Caroline Lucas
On the first part of my question, when one recognises the fact that 4 million gallons of water are needed for every single frack, the Minister’s answer about the water supply is very complacent. On the second part, on carbon emissions, why do the official scenarios published last week alongside his gas generation plan set out an option for carbon intensity that is four times higher than the maximum level compatible with meeting our carbon budgets?
Mr Davey
We have legally binding commitments under the Climate Change Act 2008, and our carbon budgets have been set out for people to look at. When we announce strategies it is not unusual for there to be a whole set of analyses, including sensitivity analysis. Yes, one analysis showed higher carbon intensities, but there was also an analysis that showed lower carbon intensities, and I think that people have missed that.
Mr Ben Wallace (Wyre and Preston North) (Con)
Many of my constituents just to the west of the Singleton Well shale gas site draw their water from their own sink holes in the Bleasdale area and Bowland forest. Will the Minister’s Department monitor the exploration process throughout Lancashire, because if there is going to be a problem with the water supply, it will be in that part of my constituency?
Mr Davey
I am grateful for the hon. Gentleman’s question. The Environment Agency will carry out the monitoring, but because we have increased the co-ordination of regulatory bodies, my Department will be aware of it. I hope that I assured him in my answer to the hon. Member for Brighton, Pavilion (Caroline Lucas) that the terms of any additional licences would have to ensure that the abstraction was sustainable and would not put at risk the rights of existing licence holders.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
14. What steps he is taking to ensure that the forthcoming capacity mechanism is not unduly biased towards large, centralised, fossil fuel generation.
Joan Walley (Stoke-on-Trent North) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
Since our last Question Time, we have published Britain’s first comprehensive energy efficiency strategy and a consultation on electricity demand reduction; we have announced a landmark agreement across the coalition Government on energy policy, including a tripling of support for low-carbon generation by 2020; and I have attended the UN climate change talks in Doha, where we were able to make steady progress on the Durban platform towards a legally binding global deal on greenhouse gas emissions in 2015. We have also introduced the Energy Bill, which will have its Second Reading next week. It will reform the electricity market, provide long-term certainty to investors and ensure that British households and businesses enjoy affordable, secure and clean electricity supplies.
Joan Walley
Despite all those measures, in Stoke-on-Trent North alone fuel poverty is among the highest in the country at 25%—10,120 households out of a total of 40,000—and Warm Front has been cut. Given the delay to the green deal—the computer software could not be sorted out—and given that we still do not know about the loans from the green investment bank, what emergency measures will the Secretary of State take to help insulate homes and get in place energy efficiency in places such as Stoke-on-Trent North?
Mr Davey
The hon. Lady is wrong to say that the green deal is delayed. It is not delayed—it is on track. She also missed out a whole range of policies that the Government are taking, such as the energy company obligation, which includes affordable warmth, which will be targeted on fuel poverty. It is a very important measure and I think that people should focus on it. We are not complacent. We know that fuel poverty is a real concern, and that is one of the reasons why we have had so many initiatives, whether they be the reform of tariffs or collective switching. We are delighted that 115 applications have been received by our “Cheaper Energy Together” competition. That shows commitment across the country to help on fuel poverty, which is central to that competition.
Andrew Stunell
Thank you, Mr Speaker. As a Liberal Democrat, I am pleased with the progress that the Department is making on decarbonising Britain, but, bearing in mind that 50% of carbon emissions come from buildings, will the Secretary of State tell the House what discussions he is having with the Secretary of State for Communities and Local Government about making sure that zero-carbon homes are on track for delivery in 2016?
Mr Davey
I am grateful to my right hon. Friend for his question. I know that he did an awful lot of work on this issue himself. The Under-Secretary of State for Communities and Local Government, my right hon. Friend the Member for Bath (Mr Foster), is working on it and, when we discuss it as a Government, we will make our views clear. Zero-carbon homes are very important.
John Robertson (Glasgow North West) (Lab)
T2. The Secretary of State will have seen that the big six have laid the blame for the recent price rises on the wholesale prices and Government policies. Given that there is alleged corruption in the pricing of gas and that we have got to the stage where the energy companies do not think that it is their job to worry about whether they put their prices up or not, will the Secretary of State get Ofgem to start to pay its way and look at what is happening to prices and profits in the gas industry?
Mr Davey
I am grateful for the hon. Gentleman’s support for Ofgem’s role, which is not a view shared by his Front-Bench team. Ofgem and the Financial Services Authority are undertaking investigations to make sure that, if there has been manipulation of the gas markets, it is tackled in the strongest possible way. We will have to await the results of their investigations.
Dr Julian Huppert (Cambridge) (LD)
T4. Emissions from international aviation and shipping are not currently included in the UK carbon budgets. The Committee on Climate Change recommends that they should be included, and that has been accepted by the shipping industry and aviation representatives. A decision has to be made by the end of the year. Will the Secretary of State confirm that they will be included? They are emissions, so they should be counted.
Mr Davey
I thank my hon. Friend for that question. He is right that we need to take this issue seriously. We intend to lay a parliamentary report announcing our decision before the end of the year, as is required by the Climate Change Act 2008. In making that decision, we are considering carefully the advice provided by the Committee on Climate Change. We are taking careful note of developments in the international policy framework for aviation, in particular in relation to the EU emissions trading scheme and discussions with the International Civil Aviation Organisation. It is important to clarify that the Government have set the first four carbon budgets, which take account of international aviation and emissions.
Dame Joan Ruddock (Lewisham, Deptford) (Lab)
T5. May I take the Secretary of State back to his statements today about investment? He has said before that there was plenty of confidence in industry and that investment would occur as a result of the Energy Bill. That is not the case for the 1,500 leading companies in the UK that have signed an advertisement demanding that the Government set the 2030 decarbonisation target because it is the only way to give confidence to the markets.
Mr Davey
The welcome that industry gave to the publication of the Energy Bill was extremely heartening. The British Chambers of Commerce, the CBI, the Engineering Employers Federation and the Federation of Small Businesses, which represent thousands of businesses, welcomed the Energy Bill. The fact that we are taking powers in the Bill to set a decarbonisation target shows real leadership and many companies have welcomed that.
Mr John Baron (Basildon and Billericay) (Con)
T6. Will the Government do what they can to support the billing stakeholder group’s key recommendation, which has been adopted by Ofgem in its present consultation, that would oblige energy companies to be much more transparent in their bills? That chimes with the Prime Minister’s statement, but we know that the energy companies do not like it.
Dr Alan Whitehead (Southampton, Test) (Lab)
Will the Secretary of State explain why he proposes in the Energy Bill to include contracts for difference that are raised from levies in the levy control mechanism, but to exclude capacity payments that are raised by levies from the same mechanism?
Mr David Amess (Southend West) (Con)
T7. The views of the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes), on onshore wind farms have been greeted with great acclaim in various parts of the country. What action is he taking to ensure that local communities that do not want such wind farms do not have them foisted upon them?
Mr William Bain (Glasgow North East) (Lab)
Do the Secretary of State and the Minister of State, Department of Energy and Climate Change, the hon. Member for South Holland and The Deepings (Mr Hayes), agree with the recent report by Greenpeace and WWF, which states that investment in wind energy could create an additional 70,000 jobs, help us to meet our carbon reduction targets, and boost the economy by £20 billion a year by 2030?
Charles Hendry (Wealden) (Con)
My right hon. Friend the Minister of State has spoken about his support for geothermal energy in the United Kingdom. Will he drive forward the Department’s work with Iceland to develop that country’s vast geothermal potential? Does he agree that an interconnector is not just technically feasible but has the potential to bring vast amounts of low-carbon electricity, thereby helping our security of supply and avoiding price shocks?
Kerry McCarthy (Bristol East) (Lab)
Last week I met representatives from Bristol port to hear their concerns that the Severn barrage might be back on the political agenda, and the possible impact of that on their business. Will the Secretary of State tell me to what extent that issue, in particular the proposal from Wales, is being actively discussed in the Department? Is it on the political agenda again?
Mr Davey
As the hon. Lady will know, a study was done on that early in the coalition Government. It was decided that although the Government would not take the matter forward, if a private consortium wanted to put forward proposals, we would study them. At the moment we have not seen proposals that we could back with any financial regime, whether renewables obligation certificates, contracts for difference or anything similar. I know that people are looking at the issue, but as yet the Government have not taken a decision to support any particular project.
Tessa Munt (Wells) (LD)
In light of today’s announcement, does the Secretary of State agree that fracking is not appropriate for the Mendip hills? The water that feeds the aptly named city of Wells and the villages that surround it in my constituency takes 900 to 1,000 years to reach the spas of Bath. Will the Secretary of State ensure that communities are consulted fully about this issue?
Mr Davey
I can certainly reassure my hon. Friend that communities will be fully consulted. We have made it clear that the regulatory regime is strong, and it will be strengthened if need be. We have put in the co-ordination that will give her constituents the reassurances that they need.
Mr Graham Stuart (Beverley and Holderness) (Con)
What are the Government doing for those who are off-grid and use liquefied petroleum gas or oil-fired heating and have much higher bills than those on-grid? Those in rural areas suffer from poor support and funding for many public services, and they need extra help from the Government recognising their plight at this time.