UK Energy Infrastructure (Wales)
Debate between Geraint Davies and Michael Fallon(11 years, 4 months ago)
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The Minister of State, Department of Energy and Climate Change (Michael Fallon)
I welcome you to the Chair, Mr Bayley. I congratulate the hon. Member for Swansea West (Geraint Davies) on raising the issues. Balancing the impacts of energy infrastructure against the benefits is a key consideration for the planning system, so I welcome the opportunity to talk about energy infrastructure in Wales.
Wales has an essential role to play in meeting our energy needs. We are committed to putting frameworks in place to ensure that the much-needed investment in infrastructure takes place, which is key to getting our economy moving in the short term. The energy sector has the biggest infrastructure programme in the UK, and many such projects are ready to start. It has been estimated that replacing and upgrading our electricity infrastructure alone will require about £110 billion of capital investment in the decade to 2020, supporting up to 250,000 jobs up and down the supply chain. That is half the total infrastructure investment pipeline in the UK, and nearly double the amount needed for transport.
Wales already plays a significant part in powering the United Kingdom, and is home to a range of vital energy infrastructure across the different energy sectors. It is a net exporter of energy, which helps to meet energy demand across the UK. The most recent figures—for 2011—show that it exported 13% of electricity generation to the rest of Great Britain, and it has been even higher in recent years. Since July 2012, Wales has also been a net exporter of electricity to the Republic of Ireland, via the east-west interconnector.
Wales also plays a central role in ensuring that our gas needs are met. It is home to one of our main liquefied natural gas import facilities in Milford Haven, and LNG is an increasingly important part of our energy mix. The terminal has the capacity to import nearly 29 billion cubic metres of gas a year, which is nearly a quarter of our total gas import infrastructure. The facilities there cost upwards of £1 billion, so major global energy players—such as Qatargas, Exxon Mobil and BG Group—have clearly recognised the great benefits of investing in Wales. That decades-long relationship will continue to benefit Wales and thus the rest of the UK.
Geraint Davies
The Minister is making the case that the net export of energy to the UK from Wales will grow. At a time when austerity measures are hitting Wales more than elsewhere, including because it has more public servants and more people on benefits, is there a case for Wales to have, instead of cuts, a greater proportion of investment in infrastructure to build growth to get down the deficit? As we make a growing contribution towards the UK pot, there is a case to be made for more investment, whether in freight railway lines or other infrastructure, to help give people the tools to provide growth and jobs.
Michael Fallon
I was in fact coming to exactly that point. Wales will benefit, and to some extent already benefits, from the steps we are taking to ensure the investment in infrastructure that we need. We are committed to providing the certainty that industry wants and to ensuring that the UK, including Wales, is one of the best places in the world to invest in low-carbon electricity generation. Our electricity market reforms are critical to that. As we know, a large proportion of our existing capacity—the equivalent of about 18 large power stations—has to close by the end of the decade. At the same time, we may need as much as double today’s electricity capacity by 2050 to deal with growing demand from the electrification of transport, heating and industry.
To meet our legally binding carbon targets, significant new electricity generating capacity will be needed by 2030, most of which has to come from low-carbon technologies, such as nuclear, renewables and fossil fuels with carbon capture and storage. By 2050, emissions from the power sector must be close to zero. The reforms that we are delivering through the Energy Bill and electricity market reform will be the biggest change to the market since privatisation and will transform the sector.
I am pleased to say that today, as planned, we have published the draft delivery plan that sets out the detail of how the Government will drive investment in low-carbon technology while securing electricity supplies at lower cost to consumers. Electricity market reform is now at the implementation stage in preparation for its introduction next year.
The challenge now is to unlock the investment, and I believe that Wales is well placed to do so. We have already seen success in Wales. Since 2010, my Department has granted consent to five major energy infrastructure projects there, covering a wide range of types of infrastructure, including onshore wind farms, biomass plants, and tidal and gas generation. In total, the projects already given consent alone can provide a generating capacity of about 1.5 GW, which is enough to power more 1.5 million homes. Many more projects are in the pipeline: developers in Wales have registered an interest with the Planning Inspectorate in relation to bringing forward 17 more major projects that all have the potential to lead to significant jobs and investment there, as well as to increasing our energy security and reducing carbon emissions.
Michael Fallon
That is an important issue, and one that I have been discussing recently with the domestic wood industry, especially the wood panel industry. I am aware that the Scottish Government require of a biomass plant a plan that shows exactly how sustainable the feedstock is likely to be. If I may, I should like to reply to the hon. Lady in writing, after a little more thought.
As I was saying, Wales is now seeing huge investment in its renewable energy infrastructure. Wales already accounts for around 6% of overall UK renewables. Since 2010, £1.3 billion of investment has been announced in renewable generation in Wales, potentially supporting around 2,000 jobs.
Just last week, the Secretary of State visited the site of the Pen-y-Cymoedd wind farm in south Wales, which is set to be the largest onshore wind farm in Wales and England. The announcement from Vattenfall that construction is to commence on the 76 turbines on the site in 2014, with the first power being generated for the National Grid in late 2016, is welcome news. That project alone represents more than £400 million of investment, creating around 300 jobs, and providing power to 140,000 homes. Furthermore, Vattenfall has confirmed that it will also invest £1.8 million every year in community funds for the 25-year life of the wind farm, ensuring wider benefits for local people.
This is also an exciting time for nuclear new build here in the UK. We were delighted to welcome Hitachi to the new nuclear market in Britain last October, with its purchase of Horizon Nuclear Power. Hitachi brings with it significant experience of building reactors and it holds an excellent track record for building on time and to budget. The first site it is planning to develop in the United Kingdom is Wylfa on Anglesey.
Hitachi is keen to develop its long-standing programme of industrial development in Wales. Horizon held successful supply chain events in Llandudno in May and in Gloucester, which I attended, which attracted some 400 business representatives. Hitachi’s entry to the new nuclear market shows just what a highly attractive proposition new nuclear is and reflects the strength of the Horizon project. I want to assure hon. Members that the Government are firmly committed to ensuring that new nuclear goes ahead in the UK and that all parts of the UK will benefit from it.
Michael Fallon
Yes, I am happy to do so. We are now accelerating the pace of shale gas exploration by putting in place a robust regulatory framework, and ensuring that where shale is hosted by a local community, that local community benefits, just as it benefits from onshore wind farms and as it will do from nuclear stations. The Chancellor has also announced fiscal measures to incentivise the expensive early years of exploration. My right hon. Friend the Secretary of State for Communities and Local Government will be setting out some amended planning guidance so that both developers and local communities that want to consider their applications will be clearer about how the applications are to be handled. We want to make sure that we do not miss out on the potential of shale gas.
Last month, we published the first authoritative estimate of the amount of shale lying underneath the northern basin—the Bowland-Hodder basin covering the northern counties of Lancashire, Cheshire, Yorkshire and so on. We now have a similar study going on in the south of England. Eventually we need to start mapping the resource right across the United Kingdom.
Finally, I can say that I have authorised a new 14th onshore licensing round, which is in preparation at the moment and will commence next year. Again, that should provide opportunities right across the United Kingdom to check and tap the potential of this resource. It is only potential at the moment; we do not yet know whether shale gas is recoverable as cost-effectively and as easily as it is in the United States. We know that the shale here appears to be thicker, so potentially there is a lot of gas that could be extracted and that could make a real difference to our economy. We also know that given the increasing volatility of international oil and gas prices, we have to do more to secure our energy supplies here at home by encouraging a stronger mix of energy from different sources, whether it is wind, other renewables, nuclear, other gas or shale gas.
Michael Fallon
I am certainly prepared to look at that.
In conclusion, with the framework for investment in place, the energy legislation in front of the House and the details of electricity and market reform being published in greater detail and in draft, we now need to get investment flowing. That is the challenge over the coming years. If we can get investment in a new efficient, low-carbon and diverse energy mix, the jobs and growth that we all want to see will follow. Based on the evidence to date, and the points I have been making, I am confident that Wales is up to the challenge. It is already seeing deployment on the ground, and it is well placed to take advantage of the new investment that we need.
Michael Fallon
In further conclusion, let me just say—I am sorry not to be more helpful—that I am aware of the proposal from Tidal Lagoon Power to develop a bay tidal lagoon in Swansea. My officials have met the developers concerned, but because the project is now at the pre-application stage in the consent process of the Planning Act 2008, I am not able to offer from here any particular comment on the merits or otherwise of the proposal, but I look forward to the outcome of the planning process with interest.
National Insurance Contributions Bill
Debate between Geraint Davies and Michael Fallon(14 years ago)
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Michael Fallon (Sevenoaks) (Con)
I am not alone in finding that a rather disappointing response—an untypically disappointing response. Part 2 of the Bill introduces something that the Labour Government never introduced in their 13 years in power, yet the minute we introduce it, they say: “Well, it doesn’t really go far enough”. We have heard 25 minutes of “We want a better Bill, but we never backed it”. Labour has still not proposed to make this provision part of its own policy, yet it wants it extended to other parts of the country.
Unlike the Labour party I welcome part 2, comprising clauses 4 to 11, just as I welcome any reduction in the burden of taxation on small businesses, even if it is described—rather unfortunately, I think—as a “holiday”. Only in the weird and wonderful world of Her Majesty’s Revenue and Customs could the process of allowing a business to keep more of its own income and turnover be described as some sort of holiday. I rather regret that this phrase has now crept into the legislation. Small businesses pay too much tax, so anything we can do to reduce that burden has to be helpful. Why? Because the bulk of private sector job creation has come, and will continue to come, from small companies. Sadly, it is large companies that continue to reduce their costs, to strip out unnecessary manpower and to outsource various functions, while it is small businesses that have been, and will be, the engine of job creation.
Geraint Davies (Swansea West) (Lab/Co-op)
Is not the main engine for job growth among small and medium-sized enterprises the expansion of existing SMEs rather than the creation of new ones, although of course that is an important engine as well? Does the hon. Gentleman favour the extension of the measure to new employees of existing SMEs? As he may know, and as I know from personal experience, starting a business involves a number of risks, and obviously this is one of the factors. An established SME could probably do much more with the “holiday”.
Michael Fallon
I was about to suggest that the measure might well be extended. It is true that job creation comes from existing small businesses, although it also comes from new ones. I think that we can find some common ground in that regard.
I have three main reasons for supporting the Bill. First, I believe that it is the right way to help small businesses. It is not the only way, but I do not think that the other ways that have been tried in the past—grants, loans, business link services, and a great deal of bureaucracy—are nearly as effective as allowing small businesses to keep more of their own money, and to employ more people more cheaply. Given that a Government cannot create jobs, this is the easiest, simplest and most effective way of encouraging businesses to take on more people.
My second reason for supporting the Bill, which is directly relevant to the intervention from the hon. Member for Swansea West (Geraint Davies), is that it is clearly future-proof. I note that the Opposition do not oppose it, either in principle or in detail; indeed, they want to extend its provisions throughout the country. If it turned out to be spectacularly successful—and none of us in the House knows yet whether it will—its provisions could be extended. At present, the scheme applies only for the first year of a new business, it is open for only three years, it applies only to the first 10 employees, and it applies only to the regions that we have been discussing.
If we discovered that the Bill really did encourage the creation of more jobs and did not divert employment from existing businesses, it would be perfectly possible—once the economy had recovered, we had closed off the deficit that we inherited, and more money was available—to extend the scheme in different ways. It would be possible, for example, to apply it to the first two years of a business. It can take longer than a year for a very small business to establish itself. It would be possible to keep the scheme open for the whole of the current Parliament, matching the reductions that are sadly necessary in public sector employment to encourage private sector employment alongside it. It would also be possible to apply it not simply to the first 10 employees but to, say, the first 20 or 30. I see nothing particularly magical about the step change involved in employing that 11th person. And yes, if the scheme really was working, it might well prove desirable and cost-effective to start extending it to some of the other regions. I note that the three excluded regions contain the south-east—my own region—East Anglia and London, which currently contain half the number of all our small businesses. If small businesses had already been successful in those regions, perhaps, if costs allowed, it might be possible to extend the scheme in four or five years’ time if it worked particularly well.