Oral Answers to Questions

Debate between Ed Davey and Tim Yeo

Thursday 19th March 2015 Commons Chamber

[Mr Davey]

I am surprised to hear the hon. Gentleman make that point. There has been a great improvement in bills, which are much simpler now. Furthermore, the energy suppliers must now inform consumers if a lower tariff is available, even if it involves different payment methods. However, if there is an issue I shall be happy to look into it. and the hon. Gentleman should also contact Ofgem.

One of our purposes in setting up and investing in the Big Energy Saving Network was to ensure that vulnerable people could obtain face-to-face advice, and organisations such as citizens advice bureaux, Age Concern and National Energy Action are funded and trained to deliver that advice.

[Mr Tim Yeo (South Suffolk) (Con)]

A few minutes ago, my right hon. Friend the Minister of State gave a very helpful answer to a question about demand-side response. In support of the Government’s fully justified claim to be the “greenest Government ever”, which I congratulate them on achieving, may I press him a little further? Is he aware that some people in the demand-side management industry are worried about the way in which the capacity market auction operated just before Christmas, and will he undertake to look into exactly how it is working in good time before the next auction, with the aim of establishing a level playing field as between different types of demand?

Oral Answers to Questions

Debate between Ed Davey and Tim Yeo

Thursday 5th February 2015 Commons Chamber

[Mr Davey]

I disagree that the policy is creating failure, but I agree with the hon. Gentleman and other Opposition Members that high energy bills need to be dealt with. The question is what is the best way of dealing with them. We have been dealing with them every single day since I took office by using competition, energy efficiency and direct financial support, and by helping energy-intensive industries. Our policies are working. Frankly, if we had listened to the Opposition, people would be paying higher energy bills.

[Mr Tim Yeo (South Suffolk) (Con)]

Does the Secretary of State agree that transmission and distribution charges account for more than a fifth of many household bills? Will he press Ofgem to bear down more toughly on the charges made by the monopoly transmission company, National Grid, and by near-monopoly distribution companies all over the country?

--- Later in debate ---

[Mr Davey]

I absolutely will answer the questions put to me by the workers and their representatives, and I will ensure that the NDA and Sellafield Ltd make sure that they answer those questions, too. That is only right.

[Mr Tim Yeo (South Suffolk) (Con)]

Does my right hon. Friend agree that maintaining high levels of generating capacity to meet peak demand, which may be for very short periods, imposes a cost on all consumers? Will he therefore undertake to look carefully at the capacity market mechanism next year to see whether a greater contribution can be made by demand-side response—the system under which consumers are incentivised to reduce their consumption at short notice during periods of peak demand?

Nuclear Management Partners (Sellafield)

Debate between Ed Davey and Tim Yeo

Tuesday 13th January 2015 Commons Chamber

[Mr Davey]

The hon. Gentleman was doing quite well until his peroration. I will explain why it was a big political mistake for him to go down that route, but first I shall answer his specific questions, because they were important. He began by praising the staff, and I agree that they deserve huge praise because they are tackling one of the most difficult and dangerous jobs in Britain today. I can confirm that their terms and conditions are not affected by this at all. There will be full discussion with work force representatives. At this point, I should like to pay tribute to the hon. Member for Copeland (Mr Reed), who has worked assiduously on this issue.

The hon. Member for Rutherglen and Hamilton West asked why we allowed the contract continuation in 2013, given the findings in the National Audit Office’s report of weaknesses in it. The Nuclear Decommissioning Authority recommended that the contract be continued, and we had to endorse that recommendation. It was not a question of approving it; we endorsed it. At that time, when I looked at the structure that we had inherited from the last Government, I was concerned about the model. It was the model that I started asking questions about, and it is the model that has been reviewed. I have already explained a little about the review process; it is the model that we feel needs changing for the long term.

The hon. Gentleman asked why there was no alternative solution. The contract renewal process looked at the performance, which had not been good enough, but it is worth putting on record the fact that the performance of Nuclear Management Partners since the contract renewal has improved significantly, so this decision has not been taken on account of the performance of NMP. If we look at its performance over the past year, we can see that it has delivered on things that no one has delivered on for years. For example, the sludge-packing plant, which is needed to take out the toxic sludge from B30—a pond that has been there for decades—has now been commissioned and is ready for operation. That is a big achievement and I pay tribute to NMP for that. The decision has not been taken on account of performance; it has been taken because Ministers and the NDA questioned the model that we inherited from the last Government. We then put in place a proper review of that model.

The hon. Gentleman asked about the termination fees, and I can tell him that they are very low. The mechanisms under the current contract allow for termination and appropriate fee awards of less than 1% of the annual fee, and those mechanisms will be adhered to. Of course, during the transition, NMP will earn the fees that it would normally earn under the existing contract while it is still carrying out the work, but the termination fee is very small.

The hon. Gentleman also asked about the cost to the NDA of the KPMG report. I do not have that figure with me but I would be happy to write to him about that. He also mentioned the parent body organisation model that we are getting rid of at Sellafield, and asked whether we should get rid of it elsewhere. Our argument is that we should not. Let me explain why Sellafield is different.

At other nuclear power plants that are being decommissioned, such as Dounreay, the PBO model is working well. At Dounreay and other decommissioning sites, it is easy to specify the performance, the activities and the outcomes that are required. Those requirements are more certain and clear, and therefore easier to contract for. At Sellafield, because it is so complicated and because of the huge uncertainties about some of the materials that they are trying to clear up, it is very difficult to do that. Those huge uncertainties make the risks of contracting much more difficult, which is why the PBO structure needs to go there but not elsewhere.

The hon. Gentleman asked why the announcement was trailed in the press. I am afraid that it was not, and I am pleased that it was not, but there was some sort of leak. I do not know where that came from. He then suggested that this was a frantic U-turn, which is complete rubbish. We have been working on the issue carefully and diligently for some time. The NDA set up a review of the model, which I think was required. It made recommendations to officials who looked at them and made recommendations to Ministers and we have been looking at them for some time. Indeed, I asked questions when I got the initial recommendations to ensure that during the transition any risks were properly mitigated and I was not prepared to take the decision until I saw a proper risk mitigation plan for the transfer.

Ministers have been involved in the process, and given that the hon. Gentleman made a political point at the end of his peroration, let me make a political point back to him. These contracts and this model were drawn up under the previous Labour Government. The contract came into effect when the Leader of the Opposition was doing my job, so the hon. Gentleman should be addressing his questions about the model and the contract to the Leader of the Opposition, his own party leader. Once again, we have had to clear up the mess left by the Labour party.

[Mr Tim Yeo (South Suffolk) (Con)]

I welcome the Secretary of State’s emphasis on safety and value for money in making this decision and his clear explanation of the difference between Sellafield, with its difficult history and unique circumstances, and the other sites where this work takes place. In the light of what he has just said, is it his view that this model was never appropriate for Sellafield, given its unusual situation, whereas it might be working perfectly satisfactorily elsewhere?

Oral Answers to Questions

Debate between Ed Davey and Tim Yeo

Thursday 4th September 2014 Commons Chamber

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

We have taken a number of measures to ensure the security of the UK’s energy supply, including introducing new electricity system balancing measures. Our recent national gas risk assessment demonstrated that our gas infrastructure is resilient. In the autumn, I will publish the statutory security of supply report for 2014, which will provide a further assessment of our energy security, and set out my response to the Office of Gas and Electricity Markets’ recent electricity capacity report. We have also engaged closely with EU and G7 partners on measures to increase the EU’s energy security.

[Mr Yeo]

Does my right hon. Friend agree that one of the most cost-effective as well as greenest ways to address concerns about security is through greater use of demand-side response, which has been successfully deployed at scale in the United States? Will he undertake to ensure that the treatment of demand-side response providers in the forthcoming capacity market and the transitional arrangements is no less favourable than those available to electricity generators?

[Mr Davey]

I am pleased at the way in which our demand-side measures have been advancing. They are something on which I have placed a lot of stress. I know that my Minister of State appeared before my hon. Friend’s Committee when it was investigating this matter. We certainly want to ensure that we move forward on this and that there is nothing in the way of taking up more demand-side measures.

Energy Markets Competition Assessment

Debate between Ed Davey and Tim Yeo

Thursday 27th March 2014 Commons Chamber

[Mr Davey]

First, I welcome the right hon. Lady’s welcome for today’s announcement. That is very important for people outside this House to see: not just consumers and small businesses who will be the beneficiaries of this action, but investors and the industry. Cross-party agreement on the way forward to promote competition in energy markets is very important for investment, so I strongly welcome her welcome. Political agreement is a good step forward for energy markets.

I disagree, I am afraid, with some of the right hon. Lady’s other comments. Of course I agree that there are serious problems. One of the reasons why the Government have been reforming energy markets from day one is that we thought there were problems. One of the reasons we asked Ofgem and the competition authorities to do this work is because we were impatient that not more was happening in the markets. What is interesting about the referral is that the Leader of the Opposition could have done it when he was doing my job, but he refused to take this measure. He refused to do so when he had the power, so I have to say to her that Labour does not really have a leg to stand on. Labour created the big six; we are taking action to create competition.

I am surprised that the right hon. Lady continues to bash Ofgem, the independent regulator. It has taken action in the past few years, particularly under this Government, to improve competition. I thought Labour supported the retail market review and the wholesale market reforms of the market maker obligation. I know she was not on top of reforms in the wholesale market, but Ofgem has taken that action and is now proposing the referral. In the spirit of welcoming the statement, she should also welcome the action Ofgem has taken. Labour set up Ofgem and when the Leader of the Opposition was doing my job he reformed it to make it more effective, so it is ironic for the right hon. Lady and the Opposition to criticise their creation that they reformed.

The right hon. Lady asked one or two specific questions. She asked me whether small business would be covered in the reference. Yes, it will. That is, of course, the independent competition authority’s business, but we believe that it will be and that it should be. On the timetable, as I set out in my statement, we expect the consultation to finish by 23 May. Ofgem will then make its final decision. We expect all of that to happen and the assessment to get going before summer.

The right hon. Lady asked about the price freeze. The problem with Labour’s blanket price freeze is that it is a pro-big six policy. Labour created the big six and it is supporting the big six. Of course SSE is able to have an energy price freeze—it is a big company. Big companies have the balance sheets that enable them to buy 18 months ahead. We have never said that the big six could not have a price freeze. It is the smaller competitors who oppose the price freeze. When the Leader of the Opposition made his announcement to the Labour conference, it was the small companies that were complaining, saying that it would put them out of business. That is the true Labour party: putting the smaller competitors out of business.

The right hon. Lady needs to reflect on all her policies. I am delighted that she has, at long last, changed her mind and agreed to the market investigation reference. That is good to hear, but the Government have been acting to help people with their bills through the warm home discount for the 2 million lowest income households, through the average £50 we took off bills before December, and through our work on energy efficiency and switching. We have been extremely active and will continue to be active during the review, as will Ofgem. The Government are in favour of better prices through more competition to deliver secure green energy.

[Mr Tim Yeo (South Suffolk) (Con)]

I warmly welcome my right hon. Friend’s statement and, in particular, the recognition by Ofgem—belated, admittedly—of both the market failure and the dangers of vertical integration in the energy industry. Will he confirm that although it is absolutely right for the Government to do everything they can to promote competition in the energy industry, it would be dishonest for any Government, either current or future, to pretend to consumers, anxious as they are, that energy bills may never rise in future? By far the biggest component in the energy bill is the wholesale price of gas, which is completely beyond the Government’s control.

Energy Bills

Debate between Ed Davey and Tim Yeo

Monday 2nd December 2013 Commons Chamber

[Mr Davey]

Members will notice that the right hon. Lady did not welcome this cut in energy bills for her constituents. Her constituents will want to know why she is not prepared to welcome it, and the constituents of every Labour Member who stands up to speak today will also want to know whether their Member of Parliament welcomes it.

We looked at the Opposition’s energy freeze proposal, and it was clear that it would not work. The energy companies would put up bills before it and afterwards. It was, and remains, a con. Worse than that, it would undermine competition and investment. Our proposals are real measures based on real facts, and they are going to help people across the country.

The right hon. Lady asked about the big six. We made it clear in our discussions that we expect them to pass on these cuts so that average bills go down by £50, and that is what will happen. She wants to know what we have said about the big six. We have pushed real competition measures. The big six were created by Labour. In 2000, there were 17 companies in the sector. By the time Labour left office, there were just six. The big six are Labour’s big six. This coalition has produced competition, which is really having an effect.

It was interesting to listen to the last Opposition day debate on this subject, in which the right hon. Lady revealed that she had not even read Ofgem’s proposals for competition in the wholesale market. That shows how much she is not on top of her brief. On the ECO, she has tried to suggest that we are cutting support for fuel poverty, but it is quite the reverse. As I made clear in my statement, we are not only maintaining support for the fuel poverty schemes within the ECO but extending them for two more years.

The right hon. Lady asked what had happened to the impact assessment. I have made it clear that we are going to consult, as she would expect. We will publish the impact assessment when we publish the consultation paper, as we would normally.

The right hon. Lady talks about the insulation industry. I am extremely concerned to ensure that it keeps people employed and keeps investing in people’s homes so that they can have permanently lower bills. Our proposal on the stamp duty—£1,000 off for people who move their homes, even if they do not pay stamp duty, to help the lowest-income home owners—will help the energy-efficiency industry, and it is welcoming it.

Finally, the right hon. Lady asked about shifting costs from bills to taxes. I would have thought she had spoken to the fuel poverty campaign groups, because it is they that have wanted this, as it is more progressive. So not only are our policies helping the fuel poor, but they are far more progressive than those we inherited from Labour.

[Mr Tim Yeo (South Suffolk) (Con)]

Does my right hon. Friend agree that an even bigger proportion of average fuel bills is accounted for by the transmission and distribution charges, and that further cuts in fuel bills could therefore be achieved if there was more pressure on the monopoly providers of transmission and distribution, such as the National Grid Company, whose prices are currently not subject to any competitive pressure or any market forces?

[Mr Davey]

My hon. Friend will have heard in my statement that the electricity distribution network operators will indeed be contributing £5 to this package next year. He will also know that Ofgem has called in the plans of the DNOs and the transmission distribution companies to look at them again, and it is for the independent regulator to scrutinise them with the care we expect.

Annual Energy Statement

Debate between Ed Davey and Tim Yeo

Thursday 31st October 2013 Commons Chamber

[Mr Davey]

I agree with the hon. Lady that the evidence that green taxes are pushing up bills is quite weak. They are a cost to bill payers—we should not deny that and we should look at it as we are looking at every single part of the bill.

I regret that the hon. Lady attacks competition, because that is the way we are going to deliver. People are benefiting from competition and making huge savings on their energy bills now, and the Labour party ought to support it.

[Mr Tim Yeo (South Suffolk) (Con)]

I congratulate the Secretary of State on an excellent statement. Will he now consider the introduction of rising block tariffs to protect the poorest consumers against future price rises without any cost to the taxpayer and without damage to the prospects of urgently needed investment in new capacity, which would be the inevitable consequence of a Government-imposed price freeze?

[Mr Davey]

I am grateful for the hon. Gentleman’s question, which he also asked me when I appeared before the Select Committee a few months ago. I am afraid that my answer is the same: although rising block tariffs are attractive on one level, the problem is that low-income, high-user households—basically, large families on low incomes—would be hit by their introduction, so I do not think they would be the right move. We need to insulate their homes—that is the real way to help them get their energy bills down.

UK Nuclear Energy Programme

Debate between Ed Davey and Tim Yeo

Monday 21st October 2013 Commons Chamber

[Mr Davey]

I am grateful for the right hon. Gentleman’s persistence in this issue. He knows that I have met him and looked at the figures that have been produced by those who want to see a Severn barrage created. It would not be at half the price; it would probably be at double the price; it is extremely expensive. No one would be more delighted than I if we could see tidal power in the Severn. I believe it will come, but the price will have to come down because we must protect the consumer.

[Mr Tim Yeo (South Suffolk) (Con)]

Does my right hon. Friend agree that this news has been very long awaited and is therefore all the more welcome for that? Does he also agree that the prospect of Chinese investment in the nuclear industry in this country is extremely welcome, not least because China entirely shares Britain’s objectives of trying to reduce its dependence on fossil fuels for electricity generation, and also because China recognises that the safety and inspection regime of the nuclear industry in this country is the most stringent in the world?

[Mr Davey]

I am grateful for my hon. Friend’s support in this matter. He is right to make it clear that Chinese investment into Britain, and in this case into our electricity supply system, is very welcome. We already have it. There are billions of pounds of Chinese money invested in the UK’s electricity industry and in our wider industry. I talked to EDF today, which has been working in China for more than 30 years. EDF has been partnering Chinese nuclear firms for a long time, so this partnership ought to be welcomed in the UK.

Oral Answers to Questions

Debate between Ed Davey and Tim Yeo

Thursday 11th July 2013 Commons Chamber

[Mr Davey]

I have to say that I do not recognise the hon. Lady’s points. If one looks at what has happened in the insulation industry, one will see that there was a boom at the end of last year as people worked hard to meet their carbon emissions reduction target obligations to avoid fines. That was the biggest boom we have seen, so the figure was likely to come down, and it would be good if the Opposition admitted that. We are taking huge measures that will transform things not just for a year, but over decades. The problem will take decades to sort out. We are putting the measures in place to do that.

[Mr Tim Yeo (South Suffolk) (Con)]

Does my right hon. Friend—