Offshore Energy Industry

Debate between Emily Thornberry and Mike Hancock

Tuesday 13th July 2010 Westminster Hall

[Emily Thornberry (Islington South and Finsbury) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hancock, and to listen to a debate by Members of Parliament who clearly know a great deal about the industry. That includes the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith), the right hon. Member for Gordon (Malcolm Bruce), whom I congratulate on securing this debate, and my hon. Friends the Members for Aberdeen South (Miss Begg), for Aberdeen North (Mr Doran) and for Harrow West (Mr Thomas).

It is vital that the Government give a clear direction to the offshore industries. Given the huge amounts of capital investment required and the long time frames within which the industries work, they need uncertainty like they need a hole in the head. Although I am sure that many people were greatly heartened by the Minister’s assertion last week that the Government will provide leadership on such issues, I suspect that the fears likely to have been inspired by the coalition agreement have not been allayed sufficiently. I remind him that the agreement says specifically that the parties share a conviction that the days of big government are over. These are exactly the circumstances in which we need big government to give direction. Since the coalition was formed, a number of uncertainties have arisen in relation to infrastructure for the offshore industry. In my contribution, I hope to clear up some of those uncertainties by asking several questions.

The economic downturn hurt our oil and gas industry, which already faced high costs, low prices and a lack of cheap credit. In January this year, my right hon. Friend the Member for Edinburgh South West (Mr Darling) extended tax relief worth up to £160 million a field to fields west of Shetland. His announcement came at the same time as the announcement of the 26th offshore oil and gas licensing round. I am pleased that the UK North sea oil industry is once again attracting investment, as we heard from hon. Members’ contributions. That is reflected in a great increase in the number of bids made during the licensing round.

In its report last summer, the Select Committee on Energy and Climate Change highlighted the difficulties in accessing infrastructure that some smaller companies experience. The difficulties came to a head when Endeavour International sought arbitration from the Secretary of State regarding the charges levied by Nexen for access to the gas transportation infrastructure. What progress has the Department of Energy and Climate Change made in finding a more equitable solution to that problem?

After the explosion of the Piper Alpha rig in the North sea in 1988, which resulted in 167 fatalities, the UK’s regulatory regime was tightened. I listened with great interest to the highly knowledgeable contribution of my hon. Friend the Member for Aberdeen North and his account of the day-to-day realities of working in the North sea. I was also greatly interested to hear what a contribution the trade union movement has made to ensuring the safety of the work force.

Since the disasters, licensing and health and safety have been separated in the UK. In light of the Deepwater Horizon spill, I understand that the US will now adopt a similar model. Despite our already robust regulatory regime, the disaster in the gulf of Mexico must give us pause for thought in the development of deep waters off the west coast of Shetland. I welcome the Secretary of State’s decision to increase inspections, which seems sensible. Will the Minister tell us when those increased inspections are likely to commence and will he explain the apparent contradiction between an increased regulatory regime and what was promised by his manifesto? The Conservative party promised to streamline government in its manifesto. I would welcome his comments on the following Conservative party quote:

“We will offer exploration companies a simpler, clearer and more transparent licensing process.”

That is question No. 3.

The UK is the leader in offshore wind capacity. Given that only a few countries have more than 3 GW of offshore wind power, the amount of wind power we have is amazing. The annual amount of offshore wind power generated will soon explode, which shows the huge increase in the proportion of wind in our energy mix. The development of the offshore wind industry has been made possible by the leadership and vision of the previous Government. I obviously hope that such leadership and vision will continue under the new Government.

The contribution of public money and the renewables obligation have ensured the fast development of the industry. In the 2009 Budget, £50 million of funding was made available for the testing of offshore wind facilities and £15 million was provided to the new renewable energy centre in Northumberland to test wind turbine blades. Just this month, the Secretary of State reconfirmed the previous Government’s decision to grant £5 million to Siemens Wind Power. In the March 2010 Budget, the Labour Government also announced a £60 million competition to help ports to develop, to which the right hon. Member for Gordon referred. We wanted ports to have the capacity to help to drag out to sea massive, heavy windmill towers for the turbines to sit on. The amount of money offered might not have been large, but it was of sufficient size to be an important signal, and General Electric and Siemens quickly declared that they would be investing £200 million in the UK’s offshore wind industry. On 15 June, the Minister announced that the ports competition was under review. Will he commit to the level of investment proposed by Labour or is he prepared to risk driving away such investment?

In the case of offshore wind generation, a loss of investor confidence would be an absolute tragedy because, according to the Select Committee on Energy and Climate Change, it is the only low-carbon technology that is ready for large-scale deployment now. Perhaps another way of asking question four is this: what plans does the Minister have for offshore wind infrastructure and for port development? In the energy security debate last week, the Minister was kind enough to agree that the renewables obligation has helped to expand the UK’s offshore wind capacity. Will the Minister commit himself today to continuing with our commitment to renewables obligation certificates?

I would also like the Minister’s help with the offshore grid and how that will develop, because it is particularly important to the infrastructure for offshore industry. The offshore wind industry and network industry are awaiting Ofgem’s decision about what the offshore transmission regime will look like. I understand that the Minister’s party has a different emphasis in terms of how the competitive tenders should be administered. I certainly hope that there will be no undue delay while the coalition decides what to do. An announcement on the offshore grid was expected at the end of June. Does the Minister know what the hold-up is, and when will the industry know what will happen to such a vital part of its infrastructure?

Of course, the offshore grid connects to the onshore grid. We hope that the onshore grid will become a smart grid, which we hope will be informed by smart meters. I would like to ask the Minister a number of questions about smart meters and his ambition to put a smart meter in every home by 2017—not 2016 as promised in the manifesto. I have what I would call a number of sub-questions to question six. How does the Minister expect to install smart meters in every home in the country? How many staff will be required and, if he wants all smart meters to be put in by 2017, when is the process likely to start? Given that the Digital Britain programme will ensure that all hard-to-reach homes are linked by 2012, will he link in that programme with the smart meters installation programme?

[Mr Mike Hancock (in the Chair)]

Order. We are drifting slightly from the subject of the debate .

[Emily Thornberry]

The thrust of my remarks is that there are a number of questions about this aspect of Government policy. My biggest and most important point is that we could clarify many of those questions if the Government were to publish their energy national policy statement. I understand that a consultation on that statement finished in February. Is the statement likely to be radically different from the one that was to be published by the previous Government? Is that the reason for the delay or is there another reason why there might be some delay in the statement being published? The industry needs to have some certainty about what has been happening. Perhaps the Minister is reconsidering the Lib Dem manifesto.

[Mr Mike Hancock (in the Chair)]

Order. That is not the Minister’s responsibility, is it? We need to stick to the subject of infrastructure support for the offshore energy industry. If the hon. Lady confined her comments to that, I would be extraordinarily grateful.

[Emily Thornberry]

Is the Minister considering making a commitment to investing £400 million in refurbishing the shipyards in the north of England and Scotland, so that they can manufacture wind turbines and marine renewables? I understand that that is a commitment of one of the parties in the coalition. If there is a hold-up in publishing the statement, perhaps it is because he is reconsidering that aspect of policy.

Housing Benefit

Debate between Emily Thornberry and Mike Hancock

Tuesday 13th July 2010 Westminster Hall

[Emily Thornberry (Islington South and Finsbury) (Lab)]

Well, six minutes.

[Mr Mike Hancock (in the Chair)]

More than you could have hoped for, I think.

[Emily Thornberry]

Much more than I could possibly have hoped for, although I have to say that most of my speech will appear on my website.

[Mr Gary Streeter in the Chair]

In some areas of the country—my constituency is an obvious example—there is a serious mismatch between earnings and housing costs. The average worker in my constituency earns £20,000 a year and pays tax on that. The average rent for a two-bedroom flat in inner north London, which is not the most expensive part of my constituency, is more than £17,000 a year. That leaves an average working parent with less than £60 a week for food, clothes, travel and council tax. It is clear, therefore, that there has to be some form of intervention in areas where the rent is so high. Either we build more affordable housing—I am sure that everyone here knows and agrees that that is exactly what we should do with the money—or we intervene to subsidise rents and put people in the private market.