Oral Answers to Questions
Debate between Ed Miliband and Chris Huhne(14 years, 2 months ago)
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Chris Huhne
I believe that there will be an important role for tidal energy in our future energy provision. It is too early for us to make a statement about the Severn barrage, but we will do so when we have given full consideration to the findings of the study.
Edward Miliband (Doncaster North) (Lab)
I think that the Secretary of State and I agree about the importance of renewable technology and clean energy to Britain’s economic future, but does he recognise the rising concern about the possibility that, on the crucial issue of subsidies to make that economic future happen, the Government are going backwards? May I ask him in particular about the £60 million that the last Government pledged to improve port facilities? That £60 million is crucial to some of the investments announced by Siemens, GE and others. Can he confirm that it will go ahead?
Chris Huhne
The right hon. Gentleman knows that all the Government’s spending decisions are subject to the comprehensive spending review. It would not be comprehensive if they were not. Decisions will be announced on 20 October, but I can assure him that we consider it extremely important, given the enormous growth in offshore wind generation, that there is a supply chain capable of supplying that tremendously important and exciting market opportunity, and that it is based in this country. We will do what we can to ensure that that happens, given the limits to affordability.
Edward Miliband
Of course there are limits to affordability, but the last Chancellor made this a priority: he said that the £60 million investment would go ahead.
As the Secretary of State did not give me a very satisfactory answer to that question, let me test him with another. We announced four demonstration projects for clean coal technology. That should not be a worry for the Treasury, because it is funded directly by a levy passed by the House of Commons, but there have been reports this week that the projects may not go ahead. Can he scotch that speculation, and confirm that all four of them will go ahead?
Chris Huhne
I am glad that the right hon. Gentleman mentioned the last Chancellor because, of course, one of the legacies we are having to deal with in government is the fact that the last Government, of which the right hon. Gentleman was a member, identified £44 billion of expenditure cuts without a single expenditure cut specified in that total. The reality is that we have had to clear up the legacy of his Government. The reality is exactly as the former Chief Secretary to the Treasury, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), said: there is no money left. We are therefore having to make some extremely tough choices, but on carbon capture and storage I can assure the right hon. Member for Doncaster North (Edward Miliband) that the coalition agreement between the two Government parties says very clearly that there will be four CCS projects. That is an extremely important part of our low-carbon future and, of course, it is crucial in ensuring that we have a competitive advantage in these areas, because the UK has a lead in CCS technology, as we have seen from our university researchers.
Edward Miliband
I am not quite sure whether that answer was a yes or a no. The Government’s short-sightedness in cutting investments that are necessary for our economic future is a fundamental issue affecting the future of the country, and the Secretary of State and the coalition parties have to realise that there can be no credible plan for deficit reduction in this country if we do not have a credible plan for growth and jobs. When will he start fighting for the investments that are necessary in offshore wind, in clean-coal technology and in Sheffield Forgemasters, where there was the absolutely terrible decision to cut back—[Interruption.] Coalition Members groan, but there is no credible plan for deficit reduction and no credible plan for growth and jobs.
Chris Huhne
The passion of the right hon. Gentleman’s oratory reminds me that I ought to wish him luck in the forthcoming Labour leadership campaign. The reality is that we are struggling: we are struggling with the fiscal legacy that his Government left us and we are having to take some very tough decisions. It is fundamental to our national interest that we are not next in line among the countries affected by the sovereign debt crisis. I know that the right hon. Gentleman has in the past pooh-poohed that as the Greek defence, but the reality is that on the weekend after the general election in our country every single finance Minister in the European Union, including—
Annual Energy Statement
Debate between Ed Miliband and Chris Huhne
The Secretary of State for Energy and Climate Change (Chris Huhne)
With permission, Mr Speaker, I wish to make a statement on energy policy. This statement and the departmental memorandum that I am placing in the Libraries of both Houses fulfil our commitment to present an annual energy statement to Parliament. In making this statement within three months of coming into office we are signalling the importance of this policy. We are setting out a clear strategy for creating the 21st-century energy system that this country urgently needs if we are to have affordable, secure and low-carbon energy in future.
We face short-term challenges as a result of the legacy inherited from the previous Government. We have the third lowest share of renewable energy of all 27 states in the European Union, which is the same ranking as in 1997. In the longer term, we must meet the challenges of a volatile oil market and increased energy imports. We are taking three big steps forward: we are creating a market for energy savings through the green deal; we are ensuring a properly functioning electricity market; and we will strengthen the carbon price.
Our actions must be informed by the best information about the future. That is why I am publishing our work on 2050 energy pathways, which has been worked up in consultation with industry, scientists, engineers and economists. We are making the data and analysis available and we are inviting comments over the summer. We want to start a grown-up debate about what a low-carbon future will look like and the best way of achieving it. These are possible pathways; we are not claiming to be able to see the future with certainty, but we cannot continue on the current pathway, which is high carbon and highly dependent on imports, with highly volatile prices.
Like the other industrial revolutions, the low-carbon revolution will be driven by entrepreneurs, the private sector, local communities, individuals, businesses, scientists and engineers—not by government. However, industry needs stable policy and functioning markets. The role of government is to provide the policy framework and to act as a catalyst for private sector investment. As the 2050 pathways work demonstrates, we need to apply those principles to the challenge of changing fundamentally the way we produce and consume energy.
The cheapest way of closing the gap between energy demand and supply is to cut energy use. We need to address the state of our buildings—we have some of the oldest housing stock in Europe. Our green deal will transform finance for improving the energy efficiency of Britain’s homes. It will get its legal underpinning from measures in the first-Session energy Bill. We are also accelerating the roll-out of smart meters, which provide consumers and suppliers with the information to take control of their energy management. Alongside this statement, the Government and Ofgem are publishing a prospectus for smart meters, which sets out how we will do this.
Openness is important to us, as it is to business and the public. Alongside this statement, I am also publishing analysis of the impact of energy and climate change policies on both household and business energy bills up to 2020, and I will continue to do so on an annual basis. At the moment, the UK economy is reliant on fossil fuels. As UK oil and gas production decline, this leaves us more exposed to volatile prices and increasing global competition for the resource. The challenge is to spur the capital investment required for new energy infrastructure. The volatility of fossil fuel prices and continuing uncertainty about the carbon price makes such investment high risk, pushing up costs and slowing development, so the first step is to support the carbon price.
In addition, I can announce that we are carrying out a comprehensive review of the electricity market and I will issue a consultation document in the autumn. This will include a review of the role of the independent regulator Ofgem. The Government will also put forward detailed proposals on the creation of a green investment bank. The coalition agreement is clear that new nuclear can go ahead so long as there is no public subsidy. The Government are committed to removing any unnecessary obstacles to investment in new nuclear power. In the memorandum, I have outlined some clear actions to aid this. As a result, I believe that new nuclear will play a part in meeting our energy needs. In the heating sector, I can confirm our strong commitment to action on renewable heat. The Government are considering responses to the renewable heat incentive consultation and will set out detailed options following the spending review.
The UK is blessed with a wealth of renewable energy resources, both onshore and offshore. We are committed to overcoming the real challenges in harnessing those resources. We will implement the connect-and-manage regime, and I am today giving the go-ahead to a transitional regime for offshore wind farms. Both those measures will help to speed up the connection of new generation to the grid. We remain committed to developing generation from marine energy, biomass and anaerobic digestion. Biomass investors that were promised help under the renewables obligation will continue to benefit.
We also need incentives for small-scale and community action. We are consulting on a new microgeneration strategy, and I am today laying an order to allow local authorities to sell renewable electricity to the grid.
Fossil fuels can also have their place in a low-carbon future, provided that we can capture and store most of their carbon emissions. We will introduce an emissions performance standard and we intend to launch a formal call for future carbon capture and storage demonstration projects by the end of the year.
This is a bold vision. We will not be able to deliver it without a 21st-century network that can support 21st-century infrastructure. The statement sets out practical measures that we are taking to improve network access and begin the building of a truly smart grid. However, the vision needs to be grounded in reality. The low-carbon economy must happen, but it will not happen tomorrow. There are potentially 20 billion barrels of oil equivalent remaining in the UK continental shelf, but we must maximise economic production while applying effective environmental and safety regulations. We are doubling the inspections of offshore oil and gas rigs, and we will undertake a full review of the oil and gas environmental regime.
We must also be mindful of our inherited responsibilities. My Department is responsible for managing the country’s nuclear legacy. I am committed to ensuring that those essential duties are carried out with the utmost care and consideration for public safety.
The UK does not stand alone. The Government will work together with our international partners in efforts to promote action on climate change and energy security across the world. We are working hard to put Europe at the front of the race for low-carbon technology. This will help to refresh the appetite for action across the world after the disappointment of Copenhagen.
In conclusion, the statement is about planning ahead and providing clarity and confidence in the policy framework. That is why I am also publishing today my Department’s structural reform plan to show how we are carrying out our priorities. Once we have completed the spending review, we will publish a full business plan. At last we can have an energy policy with real direction and purpose, and a Government who are willing to take the bold steps necessary. I commend the statement to the House.
Edward Miliband (Doncaster North) (Lab)
I thank the Secretary of State for early sight of his statement and the associated documents. There are some things in the statement that I welcome: the continuation of our work on the 2050 pathways and scenarios; the role of local authorities; and what he said about smart metering, although I think that he has adopted our timetable for the roll-out of smart meters despite the great rhetoric before the election about a faster timetable.
The problem with the statement, however, is that the Secretary of State did not tell us that, on a whole range of issues, he is going backwards not forwards compared with the actions of the previous Government. The truth is that the Government have gone from the rhetoric without substance of opposition to rhetoric without substance in government. Let me take the issues in turn and ask him some questions.
Contrary to what the Secretary of State says, we had a clear plan on the long-term transition to the low-carbon economy that Britain needs—it was the low-carbon transition plan that was published in summer 2009. That plan was widely applauded by industry, employers and green organisations. The problem, however, is that he is unpicking parts of that plan. If he wants a higher renewables target, will he explain why he is abandoning the measures that we put in place to meet the existing renewables targets? He has given in to Conservative nimbyism by abolishing local and regional targets for renewables.
It is absolutely unclear from the documents that the right hon. Gentleman has presented to the House how he will meet the higher targets. We do not even know what they will be. On onshore wind, his own Minister, Lord Marland, in another place, says:
“It is our determination there should be no dramatic increase in this”.—[Official Report, House of Lords, 5 July 2010; Vol. 720, c. 5.]
How will the right hon. Gentleman meet his renewable targets without a dramatic increase in onshore wind? If he does not agree with Lord Marland, he had better get a grip on his own Department.
The right hon. Gentleman is going backwards on wind power and on the incentives to use renewable heat in our homes. We were set to be the first country in the world in April 2011 to have a renewable heat incentive in place. All that he has done in the statement today is to postpone any decision on this until after the spending review. Will he explain why has he done so and what the timetable will be for the renewable heat incentive?
On nuclear, the right hon. Gentleman has finally said something positive, but I do not think that anyone will really believe that his heart is in it. Let me test him out. We said in our national policy statement that we believed that new nuclear should be free to contribute as much as 25 GW towards new capacity. Does he agree with that?
On a green economic future for Britain, I am afraid that his statement goes backwards too, most shamefully with the decision on Sheffield Forgemasters. A written answer has been smuggled out by the Secretary of State for Business, Innovation and Skills this morning trying to explain how it is possible that the Prime Minister, the Deputy Prime Minister and others said in this House that Sheffield Forgemasters had refused to dilute the loan when that was not the case.
Will the Secretary of State for Energy and Climate Change explain once and for all, because it has not been explained before, why, given that it was a loan, given that the money was set aside, given that there was value for money as judged by the independent panel that looks at these issues, he cancelled that loan? Why has he taken the £1 billion away from the green investment bank? We set aside resources from the sale of High Speed 1 towards the green investment bank and he has taken that money away. So the right hon. Gentleman is going backwards, too, on the question of our industrial future.
Finally, on fairness, we all accept the huge challenge of fuel poverty amid the green transition. Will the right hon. Gentleman explain why, in the documents that he publishes today, he no longer says that he will necessarily be going ahead with the compulsory social tariffs that will give cut-price energy for the most vulnerable? Again, it is put off until after the spending review, and again it is subject to review. Does he agree that it is vital? The Liberal Democrats’ position before the election was to do more to help the most vulnerable, including through compulsory social tariffs.
The truth about this Government is that they promised that they would be the greenest Government ever. Any fair-minded person looking at this statement will conclude that they are a huge disappointment—to industry and to the country. In our first debate, the right hon. Gentleman said:
“One thing that the Government are going to do is to under-promise and over-deliver”.—[Official Report, 27 May 2010; Vol. 510, c. 317.]
On today’s evidence, he got it the wrong way round.
Chris Huhne
I am grateful to the right hon. Gentleman for his response. Let me make it clear that we have set out in this annual energy statement a clear route map with a framework that will deliver the low-carbon economy that I believe we both want. That is something that will be seen in the test of results rather than in the test of rhetoric.
If one looks at wind power, for example, I cannot accept that the Government should take lectures from the Opposition on renewable energy. The reality is that we have the third worst record of all 27 European Union member states. I know that the right hon. Gentleman, in the latter years of the last Government, improved the policy settings, to which I pay tribute, but the reality is that, taken as a whole, the record of 13 years of Labour rule on this agenda is truly shocking. For us to take office after 13 years of Labour Government, when they have made no progress whatsoever in improving our rankings on renewable energy compared with all 27 members of the EU, is extraordinary.
The right hon. Gentleman knows very well that, on the renewable heat incentive and, indeed, on Sheffield Forgemasters and the fuel poverty commitment, we are inevitably subject to the spending review for the very simple reason that his colleague, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), said extremely pithily when he left the Treasury, “There is no money left.” Although I have enormous respect for the green credentials of the right hon. Member for Doncaster North (Edward Miliband), I do not think that he does the cause of progressive politics or green politics any good by pretending that there is a bottomless bucket of money that we can dip our hands into and throw at problems.
The right hon. Gentleman did not say anything about the constraints that, if elected, the Labour party as he very well knows would have laboured under exactly as we do. He certainly talks the talk, but we are delivering. We will introduce a carbon price floor; he did not. We will introduce an emissions performance standard; he did not. We will introduce a green deal to tackle energy saving in every household, including fuel-poor households; and he did not. That should be a matter of shame to Labour Members.
Oral Answers to Questions
Debate between Ed Miliband and Chris Huhne
Chris Huhne
My right hon. Friend makes a very good point about the importance of continuing the Government’s efforts to deal with the legacy of nuclear waste and decommissioning as a reassurance to those involved in new nuclear build that the problem will be dealt with properly. The Government have that very much in hand.
Edward Miliband (Doncaster North) (Lab)
Can the Secretary of State explain why it was right to give a grant to Nissan to make electric cars—a proposal we support—but wrong to provide a commercial loan to help a British company, Sheffield Forgemasters, to be at the centre of the nuclear supply chain, particularly in light of the admission by the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk), that £110 million would have come back to the Government from that loan and that the Government would have got extra money if the company had made a profit?
Mr Speaker
The Secretary of State will keep his answer within the confines of nuclear power.
Chris Huhne
The right hon. Gentleman knows that the loan to Sheffield Forgemasters was not a commercial loan. If it had been, it would have been arranged through the banks and not the Government. It was precisely because of the public subsidy element and the fact that that was not affordable that the Government decided not to proceed with it.
Edward Miliband
The Secretary of State is quite wrong about this, because the money was set aside from the strategic investment fund. A process was gone through at the Department for Business, Innovation and Skills about whether the loan would give value for money, and the Industrial Development Advisory Board concluded that it would be. Is not the truth that we have a combination of the short-sightedness of the Conservative party, which sees no role for Government in creating the green industries of the future, and the prejudices of the right hon. Gentleman against nuclear power?
Chris Huhne
I assure the right hon. Gentleman that my prejudices, whether they exist or not other than in his imagination, did not enter into this decision. It was simply unaffordable in the context of the fiscal legacy that he and his friends left this House. We have it on no less an authority than his colleague the former Chief Secretary to the Treasury that there is no money left.
Chris Huhne
There will be measures in the energy Bill that we will bring forward later in this Session to improve the transparency of electricity and gas bills. As part of the annual energy statement, we are also committed to ensuring that there is complete transparency about the levels of cross-subsidy for all forms of activity in which the Department is involved.
Edward Miliband (Doncaster North) (Lab)
May I say to the Secretary of State that the free-market philosophy that he increasingly embraces has led to the announcement this week of the abolition of the regional development agencies? There is real dismay across the country about that. How does he think the abolition will help to promote balanced economic growth and green jobs?
Chris Huhne
The right hon. Gentleman knows that we are very committed to ensuring that there is growth across the UK, especially in those regions where unemployment is high. That has been a focus of our activity. I do not think that the regional development agencies in their entirety are necessarily the best way of ensuring that, but we are going ahead with local economic partnerships and a range of other measures to ensure jobs and growth in the regions.
Budget Resolutions and Economic Situation
Debate between Ed Miliband and Chris Huhne(14 years, 5 months ago)
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Chris Huhne
Thank you, Mr Speaker. Let me merely assert, until the hon. Member for Rhondda (Chris Bryant) has had the opportunity to check this for himself, that the distributional analysis of changing the main VAT rate produced by the IFS today shows that there is not a regressive pattern to that when looked at by decile of expenditure.
I am very happy to defend this Budget, not least on the basis that, astonishingly, it is the first Budget in which we have a serious distributional analysis of the impact of its measures. We had 13 years of a Labour Government producing Budget after Budget, and on not one occasion in one Red Book was there a section devoted in this way to distributional analysis.
Edward Miliband (Doncaster North) (Lab)
Why did the leader of the Liberal Democrats, now the Deputy Prime Minister, say on 7 April 2010 that we should remember that VAT is a regressive tax? How does the Secretary of State square that with the fact that he is seeking to claim from the Dispatch Box today that it is not a regressive tax?
Chris Huhne
If VAT is raised right across without the exemptions that we have for food, children’s clothes and books, for example, and without the lower rate on fuel, then it is a regressive tax. It is a standard feature of basic micro-economics that indirect taxes are more regressive than direct taxes, but I ask that Members please look at the IFS analysis, because it seems to me to undermine directly the case that the Opposition are attempting to make.
Chris Huhne
I shall give way a bit more, but let me make a little progress. I have been making the argument that the need to replace our ageing energy infrastructure will give enormous impetus to growth in coming years. The other part of the argument has to be about looking at the centrepiece of the Bill that my Department will bring forward later in the year and at what we are proposing on the green deal. That, too, is an enormously significant package that will have genuine macro-economic consequences for the transformation of the economy and the creation of a whole new industry.
Chris Huhne
The right hon. Gentleman mutters from a sedentary position that that was not mentioned in the Budget speech, but the Budget documents contain a clear commitment in that regard. It is very clearly something that we are proceeding with rather dramatically.
The point that I want to make is that this will be the first genuinely comprehensive attempt to make sure that all of our housing stock is retrofitted. We know that most of the homes that we will be using in 2050 have been built already, so we need a comprehensive way to get carbon emissions from our residential housing sector way down if we are to meet our 80% overall reduction targets.
Edward Miliband (Doncaster North) (Lab)
May I start by congratulating the Secretary of State? He is by my reckoning the first Liberal to open a Budget debate in peacetime since 1914. That is a remarkable honour, which we should note today.
Chris Huhne
I am delighted to accept the right hon. Gentleman’s commendation, but I should remind him that my right hon. Friend the Secretary of State for Business, Innovation and Skills opened the debate.
Edward Miliband
I do not want to be a pedant about this, but he was not the first speaker in the day’s debate. That was the only point that I was making. The Secretary of State can accept my congratulations or not. I also want to congratulate him on something else. Today we have seen the completion of a remarkable political journey by the right hon. Gentleman. Remember the Liberal Democrat leadership election, Mr Deputy Speaker? He was the tribune of the left. He ran to the left of the current leader of the Liberal Democrat party. Today we heard the most remarkable political transformation from left-wing Liberal to Thatcherite. He could be the Reg Prentice of 2010. He could easily qualify as a Conservative candidate at the next election on the basis of the speech that we heard today.
There is a proud tradition here—Reg Prentice, Hartley Shawcross; maybe soon he will join those predecessors. But the problem for the right hon. Gentleman is that in order to complete this political journey, he has to engage in the most remarkable amount of doublespeak, which speaks to the heart of the traditions of liberalism. I come to this House today to praise the traditions of liberalism; he comes to bury them. What is the legacy of John Maynard Keynes? [Interruption.] I know that the right hon. Gentleman does not want to hear it. John Maynard Keynes taught us about the dangers of fiscal austerity at a time of global downturn. This Budget pays no heed to those warnings.
What is the lesson of William Beveridge? It is the principles of social insurance and protecting the most needy. What is the legacy of David Lloyd George? In 1909, 101 years ago, David Lloyd George delivered the people’s Budget. The people’s Budget—I say this as a Labour Member of Parliament—was a remarkable example of showing that one could be fair at a time of fiscal challenge. Nobody could claim that Tuesday’s Budget was anything like a people’s Budget. So I am afraid I give up on the right hon. Gentleman, but there are some Liberal Democrats in the Chamber today, and of course the new tribune of the left is the hon. Member for Bermondsey and Old Southwark (Simon Hughes). I am afraid that we have to put our faith in him as far as this Budget is concerned, because we have to give up on the Secretary of State. [Interruption.] My hon. Friends say he is conning me. I think that we should give him a chance during this debate.
The Conservatives will vote for this Budget at the completion of the Budget debates on Tuesday because they vote for unfair, unjust, unequal Budgets. I say to Liberal Democrats in all candour that they have to make a judgment. If the Budget is akin to the people’s Budget of 1909 and if it shows fairness at a time of fiscal austerity, they should by all means vote for it. But if it is a rerun of Lord Howe’s Budget of 1981, they have a duty to vote against it. I know that power is tempting. The Secretary of State is in power and has been tempted by office, but there are Liberal Democrat Members who are not in office, and they need to examine their consciences between now and next Tuesday. They should ask themselves, “Is this what I came into politics for?” That is the argument that I shall develop in my speech.
Chris Huhne
I wish to nip in the bud any temptation for the right hon. Gentleman to make parallels between what my right hon. Friend the Chancellor has announced and what Lord Howe announced in the early 1980s. The right hon. Gentleman says that this Budget is worse, but if he looks at the fiscal tightening set out in the cyclically adjusted budget deficit in the Red Book, it is 0.5% of GDP. The right hon. Gentleman is too young to remember, but the Howe Budget was more than 2%. So this is a very different Budget. We are talking about something that allows growth to continue, and indeed safeguards growth, precisely because it takes us out of the firing line of the southern European crisis.
Edward Miliband
I am afraid I disagree with the right hon. Gentleman. The fiscal tightening may be less than the Howe Budget, but he has to look at overall conditions in the world economy. There is a reason why President Obama has written to G20 leaders ahead of the meeting this weekend to warn about the dangers of early exit from fiscal stimulus. President Obama is worried about the world economy. Of course one has to look at fiscal tightening, but one also has to look at conditions in the world economy.
Let me develop my argument. First, let us look at economic growth. There was an honest difference of opinion at the election about economic growth and how we could ensure that growth, which is the surest way of reducing the deficit, could be maintained. The Labour party was on one side of the argument. We said that growth should be maintained by maintaining spending this year. The Liberal Democrats—the Secretary of State admitted this—were also on our side of the argument, and the Conservatives were on the other side of the argument.
The Secretary of State made much play in his speech about Greece—the Greek defence as I called it last time. He said that everything had changed because of Greece. Has the right hon. Gentleman changed his position because he is now in power and must defend a Conservative Budget, or is his change of position genuine? If it is genuine, we should give him credit for that, but I am afraid I have to say to him in all candour that it cannot be a genuine change. Look at the facts. He made great play of the fact that Greek bond yields had gone up from 7% at the beginning of the election campaign to 12% on the day of the election. The question is not whether Greek bond yields went up but what was the impact on the UK. What happened to UK 10-year bond yields between those two dates? Ten-year bond yields went down during that time, so there is no evidence for his claim about contagion.
The right hon. Gentleman must face a hard and uncomfortable truth. I do not blame him for taking the chance of office that he was offered, but he must come clean with us and admit that he has had to accept a macro-economic strategy totally at odds with the one that he went into the election defending.
Edward Miliband
I will give way to the right hon. Gentleman. Perhaps he will say that because he wants to do good things at the Department of Energy and Climate Change—I do not doubt his good intentions—it was worth paying the price of supporting a Budget that he would have opposed before the election. That is the reality of the situation.
Chris Huhne
May I remind the right hon. Gentleman that the former Chancellor of the Exchequer said that the ice always looks most solid just before it cracks? The contagion affected other countries in Europe including, as I cited, Spain, which had a lower central Government debt to GDP ratio than ours, and it is irresponsible to suggest otherwise.
Edward Miliband
I would give the right hon. Gentleman more credit if he had been more explicit about all these dangers before the election.
Interestingly, the right hon. Gentleman has been sufficiently concerned about the public finances to put pen to paper. We should take at face value the concern that he expressed at the start of the financial crisis in an interesting article in The Guardian titled “Cameron and Osborne are peddling skewed facts and scaremongering on public finances”. He felt moved to open his article by writing:
“You do not normally expect opposition politicians to leap to the defence of the government of the day, but there is an important national interest in doing so on the key issue of public finances. If David Cameron’s view that the ‘cupboard is bare’ gains ground, not only will policymakers feel more constrained, but we will risk thinking and talking ourselves into a worse downturn.”
He does not even have a blank record to defend, because his record is one of defending us on the public finances—[Interruption.] I do not want to take up too much time, but if he wants to explain away his article, I shall give way to him.
Chris Huhne
The right hon. Gentleman really has to take on board my case that while there was no evidence of contagion at the beginning of the election campaign, there was massive evidence by the end of it. I changed my mind when the facts changed. He has not done so, but he should not be proud of that.
Edward Miliband
No, at the end of the election campaign the right hon. Gentleman was offered the chance of office—and that is the sad truth of why he changed his mind.
Chris Huhne
The right hon. Gentleman recently accused me of not changing my mind because I wanted office when he suggested in a newspaper interview that our negotiating sessions with the Labour party showed that we had somehow become right wing because we were insisting on cuts in this financial year. He cannot have it both ways: either we accepted the cuts for opportunistic reasons because we wanted office; or we are saying that the facts have changed and we need to move the economy away from the risks of contagion from southern Europe.
Edward Miliband
The right hon. Gentleman’s defence is becoming even more contorted—I am not sure that even I understand it now. I shall make some progress.
The real problem with the Budget in respect of economic growth is that it ignores the lessons of Keynes. The right hon. Gentleman is defending a Budget that, on the Chancellor’s own figures, will reduce growth by 0.3% next year and lead to 100,000 fewer people in work not just this year, but next year, the year after and the year after that. Even that scenario is optimistic according to independent forecasters such as the Chartered Institute of Personnel and Development, which says that unemployment will go on rising, so there are real dangers in the Budget strategy.
A further problem with the Budget is that it has no plan for growth. The right hon. Gentleman waxed lyrical about green industries, but he can point to nothing in the Budget that will support the green industries of the future. The Liberal Democrats said at the election that they opposed cuts this year, but they are making not only the efficiency savings that the Conservative party promised at the election, but real cuts to regional development agencies, university places and Government support for industries of the future, the most outrageous example of which is the case of Sheffield Forgemasters.
During the debate on the Gracious Speech, I told the right hon. Gentleman that we would hold him to account on the Sheffield Forgemasters decision—and he will be held to account for it. I have to say to him in all honesty that the decision is short-sighted, damaging and wrong. The Labour Government approved a loan to Sheffield Forgemasters—not a grant, a loan. We had money from the European Investment Bank—those people do not throw money at problems when it is not required—and Westinghouse, which was going to order parts for the nuclear power stations that it wants to build in the UK, which will involve one of the only two reactor designs that we are going to have in the UK. The decision was therefore central not only to our economic strategy but to our green strategy. I know that the right hon. Gentleman does not like nuclear power, but prejudice against it will get us nowhere, either economically or in relation to the green industries of the future.
The grant to Sheffield Forgemasters would have given us the ability to make key components for the nuclear industry that currently have to be sourced from outside Britain, but the Government have turned their back on it. The Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry), who is in the Chamber, is an honourable guy whom I respect, because he supports nuclear power—that is slightly complicated given his Secretary of State—but during a debate on Tuesday, he said about Sheffield Forgemasters:
“If one went to a bank and said, ‘I need an overdraft because I want to give more money to charity,’ the bank would question the wisdom of that approach.”—[Official Report, 22 June 2010; Vol. 512, c. 26WH.]
Sheffield Forgemasters is not a charity. It has the potential to be at the centre of the green industrial revolution that our country needs. I have spoken to the management of Sheffield Forgemasters, the unions and people in Sheffield, so I know that they are bemused by the Government’s decision.
I was the Minister who, along with Lord Mandelson, signed off the loan—it is not a grant—after we had looked at the arrangements over 18 months in government. It passed a whole set of value-for-money considerations, yet the Government have cut it off. I hope that the Secretary of State can force a reconsideration of the decision—
Edward Miliband
I have given way to the right hon. Gentleman a number of times, but if he is going to say at the Dispatch Box that he will reconsider the decision, I shall give way, albeit more in hope than expectation.
Chris Huhne
Does the right hon. Gentleman really think that an appropriate use of public money would be to ensure that the major shareholders in Sheffield Forgemasters do not have to reduce their equity holdings below 51%? I do not think that it would be.
Edward Miliband
That is an extraordinary statement to make on the Floor of the House. A set of commercial negotiations was carried out with Sheffield Forgemasters. The decision was signed off by the permanent secretaries of DECC and the Department for Business, Innovation and Skills as a value-for-money loan, but now the right hon. Gentleman questions that.
The right hon. Gentleman’s explanation is different from that offered by the Chief Secretary to the Treasury, who said that the loan represented value for money, but the Government did not have the money. The Secretary of State is not only wrong to oppose the loan, but confused about the reason why it is not being offered. I am afraid that the Government are hampering the green revolution that we need.
Edward Miliband
I want to be generous to the hon. Gentleman, as a new Member of Parliament, but I fear that he has walked into the most enormous elephant trap. Let me read from the last page of the IFS handout:
“Treasury said that reforms to be implemented between now and 2012-13 progressive, but
—This is mainly because of reforms announced by the previous government
—They only look at reforms to 2012-13—benefit cuts announced yesterday for subsequent years hit the poorest hardest”.
The IFS concludes:
“So likely that overall impact of yesterday’s measures was regressive”.
If the Chancellor wants to bring a new transparency and honesty to the debate, he cannot take credit for measures announced by my right hon. Friend the former Chancellor and say that they are somehow part of his Budget.
Edward Miliband
The right hon. Gentleman is itching to get back in, but let us be clear. The Chancellor’s words—the words a Chancellor uses in his Budget speech are a grave matter—were:
“It is a progressive Budget.”—[Official Report, 22 June 2010; Vol. 512, c. 180.]
I cannot see how that can possibly be the case, but perhaps the right hon. Gentleman, in his newfound role of defending the Conservative party, can.
Chris Huhne
The reality is that it is perfectly legitimate for the Treasury to analyse pre-announced measures as well as the measures that are announced, because a new Government reverse measures that they do not like and confirm measures that they agree with. Look at, for example, the decision to freeze the threshold at which the higher rate of tax begins to be paid. Does the right hon. Gentleman support that measure? It will increase the progressive element by taking more tax from the best-off.
Edward Miliband
The doublespeak just gets worse. The Conservatives spend the election attacking the Labour Government for putting up national insurance contributions on employees, then they produce their own Budget which is regressive and unfair, then they realise that that will be pretty damaging for them, so they take credit for a measure that they used to attack. That cannot possibly make sense. The truth is that the Chancellor made a claim in his Budget speech that the Budget was progressive. The Institute for Fiscal Studies, to which the Chancellor referred in his Budget speech, has said clearly that if one looks at the measures announced in the Budget one sees that it is a regressive Budget—and not just regressive, but deeply regressive, because the poorest 10% pay three and a half times more than the richest 10%. However much they may twist and turn with the help of their new friend, the Secretary of State for Energy and Climate Change, who is auditioning to be a member of the Conservative party, it will not help them. People can smell it. People can see through the doublespeak.
Gulf of Mexico Oil Spill
Debate between Ed Miliband and Chris Huhne
The Secretary of State for Energy and Climate Change (Chris Huhne)
I welcome you to your position, Mr Deputy Speaker. The House will wish to join me in expressing our deepest sympathy to those bereaved or injured in the explosion in the gulf of Mexico on 20 April, and to all the individuals and communities affected by spilling oil or fearing that they will be affected by it over the days and weeks to come. Our thoughts must be, first, with them.
On 20 April, an explosion and subsequent fire on board a drilling rig operated by Transocean under contract to BP in the gulf of Mexico tragically killed 11 workers. On 22 April, the rig sank. On the sea bed, 1,600 metres below, substantial quantities of oil were leaking into the ocean—the blow-out preventer, which should have sealed the leak, failed. The causes of the accident are now subject to a US presidential commission of inquiry, and to civil and criminal investigation.
There has never been such a large leak of oil so deep in the sea. Attempts by BP, under the direction of the US authorities, to seal the leak were not successful. The company then pursued a strategy of capturing as much oil as possible, and in recent days more than 15,000 barrels a day of oil have been recovered. However, it is also thought that the leak is worse than previously believed. The US Government’s estimate of the flow of the leak is now 35,000 to 40,000 barrels per day. BP hopes to be able to increase significantly the amount of oil that it is capturing, but a very large quantity of oil continues to be released into the sea. Moreover, the leak will not be fully staunched until August at the earliest, when the first relief well, which BP is already drilling, should enable the original well to be plugged.
An enormous operation is also taking place to address the environmental impact of oil that is already in the water. Working under Admiral Thad Allen of the US Coast Guard, more than 2,000 boats have been involved, skimming the water and using dispersant chemicals. Thousands of workers and volunteers onshore are removing oil and maintaining coastal defences. The House will wish to join me in paying tribute to those involved in that work.
We understand and sympathise with the US Government’s frustration that oil continues to leak at the rate that it does. In order for us to appreciate the scale of this environmental disaster, I should point out that each week a quantity of oil equivalent to the total spillage from the Exxon Valdez is escaping into the gulf of Mexico. The US Administration have said that BP is doing everything asked of it in the effort to combat the spill. We, of course, look to the company to continue in that, and we will do everything we can to help. The key priority must be stopping the environmental damage. In their telephone conversation at the weekend, President Obama reassured the Prime Minister that he has no interest in undermining BP’s value and that frustrations in America have nothing to do with national identity.
Hon. Members will remember that in 1988 the Piper Alpha rig in the North sea exploded, with 167 fatalities. Following that disaster, our regulatory regime was significantly tightened, and we split the functions of licensing and health and safety in the UK. The US has announced that, in future, separate organisations will deal with those functions in the US, and we hope that we have some experience to offer of building and operating such a system. Officials from my Department and from the Health and Safety Executive have been discussing that with their US counterparts.
It is my responsibility to make sure that the oil and gas industry maintains the highest possible standards in UK waters, and I have had an urgent review undertaken. It is clear that our safety and environmental regulatory regime is already among the most robust in the world, and the industry’s record in the North sea is strong. However, as exploration begins in deeper waters west of Shetland, we must be vigilant. Initial steps are already under way, including a doubling of the Department’s annual environmental inspections of drilling rigs. I will also review our new and existing procedures as soon as detailed analysis of the factors that caused the incident in the gulf of Mexico is available. That will build upon the work already begun by the newly-formed Oil Spill Prevention and Response Advisory Group. Given the importance of global deep-water production during our transition to a low-carbon economy, I will also ensure that lessons and practice are shared with relevant regulators and operating companies.
I shall now discuss the position of BP. It is hugely regrettable that the company’s technical efforts to stop the spill have, to date, been only partially successful, but I acknowledge the company for its strong public commitment to stand by its obligations, to halt the spill and to provide remedy and payment of all legitimate claims. As BP’s chairman has said, these are critical tasks for BP, and it must complete them in order to rebuild trust in the company as a long-term member of the business community in the United States, the United Kingdom and around the world.
BP remains a strong company. Although its share price has fallen sharply since April, it has the financial resources to put right the damage. It has exceptionally strong cash flow, and it will continue to be a major employer and a vital investor here and in the United States. In many ways, BP is effectively an Anglo-American company with 39% of its shares being owned in the US, against 40% in the UK.
There has been much speculation in the press about the impact on UK pension funds and about whether the company will pay a quarterly dividend. That is entirely a matter for BP’s directors, who will no doubt weigh all the factors and make a recommendation to their shareholders that is in their best interests, which of course include the best interests of many UK pension funds. Many citizens have real and legitimate worries about their pensions, but I would like to reassure the House not only that BP is financially sound, but that pension funds that hold BP shares generally hold a very diverse portfolio of assets and that their exposure to a single company, even a company as economically important as BP, is limited.
In concluding my statement, I wish again to express the Government’s profound sympathy to those in the US affected by this accident and its aftermath. The priority must be to address the environmental consequences of the spill, and our concentration is on practical measures that can help with that. The disaster is a stark reminder of the environmental dangers of oil and gas production in ever-more difficult areas. Coupled with the impact of high-carbon consumption, it highlights yet again the importance of improving the energy efficiency of our economy and the expansion of low-carbon technologies. We must and will learn the lessons of these terrible events. I commend the statement to the House.
Edward Miliband (Doncaster North) (Lab)
May I start by thanking the Secretary of State for the advance notice of his statement and for keeping the House informed of developments regarding the gulf oil spill? Let me join him in expressing deep sorrow for the 11 people who died in the accident and deep sympathy to their families. As he said, it is a reminder of the dangers that come with life in the offshore oil industry. We saw that ourselves last year with the tragic helicopter accident in the North sea. We should never forget the people who have lost their lives in this accident.
May I join the Secretary of State in expressing deep concern about the environmental impacts of the oil spill, which he summarised in his statement? I believe it is in the interests of the environment as well as the employees, shareholders and pension fund investors of BP that there should be a clear and co-ordinated response from the Governments of Britain and the United States. In that context, I want to ask him five specific questions arising from his statement. First, on the private sector companies involved in this accident, does he agree that all the companies involved in the Deepwater Horizon project—Halliburton, Transocean, Cameron and BP—should be subject to investigation, and that finger-pointing at BP in particular is not helpful?
Secondly, on regulation, does the Secretary of State agree that any process of learning lessons needs to look not just at the actions of private companies, but at the regulator—the United States’ Minerals Management Service—and at the general level of regulatory standards in place in the US and around the world for deep-water drilling? Will he also comment on his specific understanding—I appreciate that things are at an early stage—of the level of regulation in the US compared with that in the UK?
Thirdly, in terms of the implications for Britain, I welcome what the Secretary of State said about the licensing of drilling in deeper waters in the UK, including west of Shetland. Does he agree that it is essential to look at any lessons learned before beginning that deeper-water drilling?
Fourthly, and very importantly for the long-term future, does the Secretary of State agree that the central lesson of Deepwater Horizon is that we cannot, as a world, simply dig deeper and deeper for oil, plundering the world’s natural resources? The opportunity should be seized on both sides of the Atlantic by the Prime Minister and the President, in a way that has not so far happened, to send a louder and clearer message about the need to make the transition to a post-oil economy. It will take decades, but the transition needs to start all around the world.
Fifthly, in the same context, does the Secretary of State agree that, after the tragedy of Deepwater, the best thing that could happen is a renewed push towards low carbon and clean energy around the world, with Europe moving to a 30% emissions reduction, America passing a climate and energy Bill and the securing of an international treaty either at Cancun or as soon as possible afterwards? Does he also agree that domestically we need to play our part? That means maintaining industrial policy support for the low-carbon transition. Looking ahead to his right hon. Friend the Chancellor of the Exchequer’s Budget next week, if we are to make the low-carbon transition ourselves, and send out a clear signal, it is important that the investments promised by the previous Government to Sheffield Forgemasters and Ford, and for offshore wind, go ahead as soon as possible.
The gulf oil spill is an environmental wake-up call for the world. Just as the banking crisis changed the rules of the game for financial services, so this disaster must change the rules of the game across the world for energy policy. That requires strong leadership—including being tough with our allies—in defending British interests, in pushing the United States for a Bill on climate change and in charting a course towards the low-carbon transition. If the Government provide that strong leadership for BP employees, pension fundholders and our environment, we will of course support them.
Chris Huhne
I am grateful to the right hon. Gentleman, not least for the manner in which he has approached this matter. There is not a lot of difference in our approaches. We have seen some examples of what can happen if people attempt to flam up the rhetoric rather than dealing with the issues in a measured way.
The right hon. Gentleman is clearly absolutely correct to say that BP was involved with other partners in Deepwater Horizon. BP’s interest is 65%. In addition, the subcontracted rig was from Transocean, which is a well known and respected United States company, and was using technology produced in the United States. I understand that the blow-out preventer was produced by Cameron International to American petroleum industry standards.
All that said, it is absolutely crucial to let the full investigation take its course. We simply do not know exactly what the events were on Deepwater Horizon, not least because, tragically, so many of the people who could have told us what happened are no longer alive. We need a proper process of investigation if we are to learn the lessons.
I have already said something about the difference in the regulatory regime between us and the United States. The most important feature is the decision we took after the Piper Alpha disaster to separate licensing and operational regulation from the health and safety side, but that is certainly not the only lesson that will be learned from this disaster. When we have a clearer understanding of exactly what went on, I am sure that both technical and regulatory responses will be required. In the interim, we have taken the step of improving inspections.
Precisely because we have already announced an increased number of inspections, I do not believe it would be appropriate to stop the drilling west of Shetland. Our regime has been shown to be robust, but we need to go on learning the lessons.
On the right hon. Gentleman’s final point, I very much agree that we need to accelerate the move towards a low-carbon economy. Whatever the risks involved with, for example, offshore wind, onshore wind, tidal stream or indeed a future generation of wave technology, they are not in the same order of magnitude as the sort of risks that we are clearly running by drilling in increasingly hostile environments around the world, as we attempt to find the last hydrocarbons. That message is important. This is an environmental wake-up call. Hydrocarbons—oil and gas—do and will play a crucial part in our transition. We know from our economic history that we cannot suddenly switch off steam power, for example, and move to electricity—these things take time—but it is certainly an important warning to us that there is no time to lose in trying to make that transition as quickly as possible.
Energy and Environment, Food and Rural Affairs
Debate between Ed Miliband and Chris Huhne(14 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Edward Miliband
I am sure that the Secretary of State for Energy and Climate Change will be very grateful for that help from his right hon. Friend, but I do not think that that is enough. Let me explain why. I gave that quote not to embarrass him, but to raise a very important issue.
Edward Miliband
In a moment.
We said in our manifesto that every council should have a local target to help meet the overall 15% target for the country as a whole—not that they should have a disproportionate target, but that they should make a contribution to the overall target. The Conservatives, including the right hon. Lady, were against that, but I thought that the Liberal Democrats were in favour of our strategy. I attended a Guardian debate on climate change with the hon. Member for Bermondsey and Old Southwark (Simon Hughes) during the election, and he said that he supported my policy. By the way, I regret that he is not in the Government, because I think they are poorer without him. Now, what do we see in the coalition document? The Tories have won the argument: there will be no local obligation to contribute to the national target, because of the abolition of regional strategies. So what is it? It is a charter for every council to be able to say, “Not in my back yard.” The Secretary of State said in his first interview in The Times that he is going to build 15,000 wind turbines—he is going to make a start by putting seven on his own houses—but that will not happen without a strategy, and so far, I see no strategy from him.
Chris Huhne
The right hon. Gentleman needs to distinguish between setting a Government target and delivering on the ground, which is much more important. One thing that the Government are going to do is to under-promise and over-deliver as opposed to what happened with the last Government, who over-promised and under-delivered. On the point that my right honourable colleague the Secretary of State for Environment, Food and Rural Affairs made, we should remember what the evidence shows, from good examples of installing wind farms such as the Gigha wind farm in the highlands, where sharing the benefits led to support for it and its rapid installation.
Edward Miliband
The right hon. Gentleman is going to have to do better than that—it is just a load of old hot air. He is trying to increase our target, but he is taking away one of the key levers needed to help us meet the target. You do not have to take my word for that, Mr Speaker—you can take the word of the hon. Member for Bermondsey and Old Southwark, who supported our position. If he would like to intervene to tell me, or his former right hon. Friend, who is now the Secretary of State, that he agrees that local councils need to contribute to the 15% target, I would be very happy to give way to him. [Interruption.] I think that says it all. The splits are already appearing.
Edward Miliband
Let me welcome you to the Chair, Mr. Deputy Speaker, and welcome you back to the House.
I agree with my hon. Friend the Member for Sheffield South East (Mr Betts), and he prefigures the next part of my speech, because the second test is whether we can show that low carbon is about not just climate change, but the future of our economy. To his credit, the Secretary of State talked about the importance of an industrial strategy.
In the last 18 months, the previous Government pursued an active industrial strategy. Four of the world’s five biggest offshore wind manufacturers all said that they were coming to Britain: Siemens, GE, Clipper, and Mitsubishi. Nissan said that it would make electric cars in Sunderland. We also created the chance to be at the centre of the nuclear supply chain through Sheffield Forgemasters. Those things happened not by accident, but because we had a plan that recognised that even in a market economy, Government must nurture new industries that the private sector will not invest in on its own.
In their manifesto, the Liberal Democrats promised £400 million of Government investment in shipyards in the north of England and Scotland, to convert them to wind energy. We no longer hear anything about that; we do not hear of it in the coalition agreement or in the Gracious Speech. It is worse than that, as was indicated in the interventions on the Secretary of State’s speech. Now the Government say that every spending decision since January will be reviewed. That includes decisions on grants to companies such as Mitsubishi to make wind turbines; port investment for offshore wind manufacturers, which is very important; money for Nissan to build electric vehicles; and the £80 million loan to Sheffield Forgemasters regarding the nuclear supply chain.
Remember, the Liberal Democrats said at the election that they agreed with Labour that spending should not be cut this year, so I have to say to the Secretary of State that this uncertainty is a total betrayal of their position at the election. They went round the country telling people that there should not be spending cuts this year; they agreed with us. People will have voted Liberal Democrat, apparently confident in the knowledge that the Liberal Democrats were with us on the question of industrial investment.
Chris Huhne
The right hon. Gentleman will remember that during the election campaign, quite an important event happened on the international markets: the international markets beat up a country in southern Europe called Greece, which happens to have a smaller budget deficit than that bequeathed to this Government by the Labour Government.
Edward Miliband
My hon. Friend gives the House and the Secretary of State an economics lecture.
Chris Huhne
On a matter of fact, may I point out that while Governments sometimes have to refinance parts of their debt, they have to finance their budget deficit? It is the budget deficit that is scaring the markets, not the levels of overall debt.
Edward Miliband
The truth is, though, that since the Budget of my right hon. Friend the shadow Chancellor in March, tax revenues have been stronger and the budget deficit is lower than it was at the time of the election. The Greek defence will not do, I am afraid. The uncertainty that the Secretary of State is causing with his willingness to look again at the decisions that I mentioned is a total betrayal of the Liberal Democrats’ position at the election.
I think that we can hear the sound of old scores being settled, because the orange book, as represented by the Chief Secretary to the Treasury, is winning, and the Secretary of State, who, to be fair to him, is at the more progressive end of the Liberal Democrat party—or so I thought—has lost. I say to the Secretary of State in all seriousness that it would be the worst sort of short-termism—something that the Government are supposed to be against—to cut those investments, which are essential for the long-term health of the British economy. If he is serious about the green industrial agenda, as he said he was in his speech, it is his responsibility to defend those investments, and we will judge him on that, because those investments are essential to make Britain part of the green industrial revolution. I hope that in the coming weeks he will defend tooth and nail those investments in the green industries of the future.