Graham Stuart
Main Page: Graham Stuart (Conservative - Beverley and Holderness)Energy Spending Priorities: Investors and Consumers
Graham Stuart Excerpts
Mr MacNeil
It is not simply a unilateral UK issue. CCS is in Canada and Norway. The fact that, unfortunately perhaps, I am not in the German Parliament and so am not scrutinising the German Government possibly explains why I am not talking about the point the hon. Gentleman raises. CCS is certainly not unilateral. Further, we could argue that German Government feel they are off the hook because other Governments feel it is nothing to do with them, either. Someone has to start taking responsibility somewhere. Other countries are. We should play our part. That competition would have helped immensely.
Graham Stuart (Beverley and Holderness) (Con)
One of the report’s recommendations is for clarity over the three CfD auctions. I have not seen the Government’s response, so will the hon. Gentleman enlighten the House about what details there were on timing, technology and the other questions he raised in the report?
Mr MacNeil
I refer the hon. Gentleman to the report. We have had only one response on carbon capture and storage. As for the other reports, I think a response came early today, but we are waiting for the response on the main report on investor confidence.
I will move on to the report on home energy efficiency. All the policies mentioned affect consumers, as they are subsidised through the levy control framework. My Committee also looked at Government changes to spending that affect consumers more directly, namely changes to spending on energy efficiency measures that are levied on consumer bills but sit outside the LCF. As with the report on investor confidence, our energy efficiency inquiry was another piece of work that stakeholders urged us to take on at the roundtable meetings we held early in my time as Chair of the Committee. At this point, I would like to thank Josh Rhodes, the Committee specialist, for his work and help on the report.
We know that improving energy efficiency is a win-win for households and the UK as a whole. It enhances energy security, cuts carbon emissions from housing and reduces costs. For consumers, the benefits include lower energy bills, and, critically, warmer, more comfortable homes—more arguments should be made on that point—and improved health and wellbeing. When we work on the technical energy side, we sometimes forget that these things are for human beings, who have very nuanced and different reasons for wanting to insulate their homes and have warmer homes.
Mr MacNeil
The hon. Lady makes a good point, and if she wants to pull the very wealthy out of those schemes that might be an idea. Often, these things start by aiming at certain groups, but unfortunately the target and those who get hit are very different, and the Government often miss that.
Insulating draughty homes can save vulnerable people from fuel poverty—a problem that remains unacceptably prevalent across the UK. My Committee’s recent report concluded that the Government’s latest efforts to improve household energy efficiency had proved inadequate. Although the energy company obligation delivered many improvements, it did so at much lower rates than previous schemes. The green deal did not significantly increase demand for energy efficiency; it fell far short of original ambitions and was too complex and costly, and it also failed to address the hassle factor that can prevent customers from signing up. If anyone should know and understand the hassle factor, it is MPs after their recent dealings with the Independent Parliamentary Standards Authority, as that is an example of hassle and why people do not do things—there is something to be learned there about behavioural economics and desiring a scheme that will work for people. We in this House should have known better when the green deal was coming.
The Government’s new ideas, which include their plans for the energy company obligation in 2017, gave us cause for serious concern, and the decision to use the new obligation to tackle fuel poverty may well be misguided. The UK is the only country in Europe to take such an approach, and a scheme that charges the households it is designed to help appears inherently regressive. Alongside that, given the huge number of homes yet to benefit from energy efficiency measures, the reduced ambition of the new obligation is a major disappointment to me, to the Committee, and to many who gave evidence to the Committee.
There is now no support to help households that wish to install energy efficiency measures but cannot meet the costs upfront. The Government disagreed with our argument in their response, but we still do not know what the reformed scheme will look like. We have asked Ministers to look again at pay-as-you-save mechanisms, as well as at the infrastructure behind the Green Deal Finance Company, when considering how to assist such households. We also need demand drivers such as stamp duty and council tax reductions for efficient homes. I am pleased that the Government agreed in their response that the Green Deal Finance Company could play a role in the future. If the Government take concerted action now they can help to insulate consumers from future energy price rises. That would be money well spent and an investment, and it would prevent the need for large-scale retrofitting in future.
Graham Stuart
Previous efforts have tended to end up being implemented in more urban areas, but those who are poorest and whose homes are the most difficult to insulate often live in rural areas. Does the Committee have any recommendations for the Government to try to ensure that any future programmes reach those on low incomes in rural areas who are particularly vulnerable?
Mr MacNeil
As a rural MP, I am aware of that issue. The hon. Member for Eddisbury (Antoinette Sandbach) is also assiduously aware of it, and I commend and congratulate her on raising it in Committee on just about every possible occasion. The hon. Gentleman will be delighted to know that on several occasions the Scottish Government were praised for their actions and—perhaps tongue in cheek; perhaps not—maybe I could recommend that energy policy in that area be devolved to the Scottish Government who, according to the evidence, seem to be doing a better job of it for the whole UK than other Governments.
Antoinette Sandbach
I certainly would, and I will come to that point in touching on the home efficiency section of the report. I am afraid that I have not had a chance to see the Government’s response—the Chair said that it only arrived this morning, but, owing to technical errors and my iPad’s failure to sync, I do not have a copy—so I do not know exactly which recommendations they have adopted. It is absolutely clear, however, that they need to set out a methodology and budget for the levy control framework going beyond 2020.
I very much welcome the fact that the National Audit Office has said that it will look at the levy control framework and “lift the veil”, as the Chair put it, on the funding, on by how much it was exceeded and on the projected spend. It is only by sending out that signal of certainty to the markets that we will encourage the investment to come forward. We need to do that in a way that is responsible to the taxpayer and provides a return to investors, albeit not an excessive one in which the taxpayer or the bill payer loses.
On the macro-level of delivery on the larger scale, I should not forget contracts for difference. We need clear signals on CfD; we need to know when the auctions will happen; we need to look at technologies such as anaerobic digestion, which have been under-adopted in the UK and have huge potential to deliver, particularly in rural areas. As others have highlighted, rural areas face real problems. Many people there have oil-fired boilers and the housing tends to be of older quality. It is vital that CfDs look at how to deliver not just the vast gas projects that are coming forward, although not yet built, but the micro-level projects, which are seen in the section of the report on home efficiency. I shall move swiftly on to that now.
Government policy on home energy efficiency has been stop-start, which has led to policy uncertainty that has damaged consumer confidence with the loss of jobs in the supply chain. I have seen that in my own constituency, where a small business has laid off a number of employees. Over 60 have been lost in this sector as a result of some of the policy changes. That has had a real impact on my constituents. Sixty people out of work is 60 people who have to re-train and learn different skills.
The energy company obligation scheme has not achieved what we wanted it to achieve. I do not praise the Welsh Government very often, but I have to say that the Nest and Arbed schemes in Wales achieved a far greater amount than the ECO did in the UK. Much could be done from the Government looking and learning from over the border. I hear what our Chair says about Scotland, too. It is clear that the ECO will be extended to 2018, but the Select Committee was very concerned that its main policy target was fuel poverty. We have questioned whether it will really deliver on that ambition.
The hon. Member for Southampton, Test (Dr Whitehead) mentioned what was happening in rural areas on solid-wall insulation. Rural areas are a particular concern, and it is quite clear that we need more data at the level of the individual household, so that ECO measures can be targeted more effectively. One major concern is the lack of data at the individual level, and one of the report’s recommendations is to ensure that we set up the sharing of data, so that home efficiency measures can be far more effectively targeted, particularly in rural areas. The evidence relating to ECO suggests that it has gathered the low-hanging fruit and has concentrated on largely urban areas where whole streets can be done at a time. It has failed to deliver in the rural areas where, as I said, housing is older, tends to be of poorer quality and tends to be solid-wall, built pre-1945.
If we are to make the gains that we need to out of home efficiency, it is key that we look at tackling the harder-to-reach homes; to do so, we need the data. For that reason, the Government clearly need to do much more cross-departmental working and they need to set up a proper database. I suspect smart meters can generate the data that will be able to identify which homes are the least efficient and will give the Government and, indeed, the energy companies the information about who is using the most and potentially who is the least efficient.
Graham Stuart
Does my hon. Friend agree that this is not just about energy efficiency? Many homes use liquid gas or oil, so when we are looking at rural areas, we need a combination of programmes to ensure we can get new forms of heat production, as well as improving the efficiency of homes, to make the sensible and rational investment?
Antoinette Sandbach
I certainly do agree and the Government are reviewing the renewable heat incentive at the moment. I declare an interest on this: I point Members to my entry in the Register of Members’ Financial Interests, declaring that I have registered for the RHI. There are some highly innovative new products that have been brought forward by companies like Calor, which work in conjunction with air-source heat pumps and which are so efficient that they qualify for the RHI.
We need to divide the response in home efficiency between those able to pay and those not able to pay. At the moment, it is quite clear—this comes through in our report—that the green deal did not deliver for the able-to-pay market. It was too complicated and confusing, and it delivered for very small numbers of households—less than 15,000, I think.
The Government need to look at how they can incentivise and make those gains on home efficiency. As the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), the Chair of the Committee, has highlighted, there are huge gains in health and comfort. These messages are not getting through, however. There are huge gains and it is an investment that radically changes people’s lives. That kind of programme leads to the consumption of less electricity and is a win in terms of investment for the future. In that context, the abandoning of the zero-carbon homes target was a huge shame. I appreciate that building regulations have driven up the standards, but they are still not as high as the zero-carbon homes target was.
Graham Stuart (Beverley and Holderness) (Con)
The Government have approved the fifth carbon budget—the framework of all frameworks. That is the why people should be optimistic. That is the message that needs to go out from this place to investors. That is where we are headed—to 2050, with the Climate Change Act 2008 intact and supported by the Government and the Labour party.
It is important that we do not send out a message or a tone from this place that suggests that investors should not be confident. There are quite a number of ways in which we can all boost confidence. We are in a time of change, and I hope we will never again have a Chancellor of the Exchequer who says we do not want to lead in this area. We should lead in this area, not least for the reason pointed out by my hon. Friend the Member for Warrington South (David Mowat)—inconsistency elsewhere. If there is a Chinese electric bus company, an innovator in California or somebody anywhere in the world working in this area, they should come to Britain, because we are leading the world, we are committed to this issue and we have a law in place that has support across the House.
On the detail, energy reset will happen this year, and the Government are looking at the issue again, now that we have a Conservative majority. Brexit also provides opportunities. What are we going to do when we leave the European Union? We need to make low carbon our own. In doing that, we need to make sure we get the investment and the jobs here, and that we meet the central task.
That also goes to the point my hon. Friend the Member for Warrington South always rightly raises, which is cost. We have to drive that cost curve downwards as quickly as possible. That requires coherent policy making, sound messages and a constant positive tone across the House if we are to make the UK the low-carbon centre of the world. If we do that, we will get costs down and we will lower our energy costs.
Graham Stuart
I do not think there is time for my hon. Friend to come in. With that, I will sit down.
The Secretary of State for Energy and Climate Change (Amber Rudd)
I welcome the hon. Member for Brent North (Barry Gardiner) to his place. I am grateful to all hon. Members for their contributions, in particular the Chairman of the Energy and Climate Change Committee for his involvement in today’s debate and for his leadership in the Committee.
The Government welcome the Committee’s continued interest in gaining investor confidence in the UK energy sector, household energy efficiency and demand reduction, as well as the future of carbon capture and storage. All remain high priorities for us, and I believe we have a strong track record in all three areas, which I will set out.
Giving clear, meaningful signals for investment in energy is of course essential. That is what we gave when we became the first country to set out plans to close unabated coal power stations by 2025. Recently, we announced a package of reforms of the capacity market that was widely welcomed by stakeholders. The hon. Member for Southampton, Test (Dr Whitehead) spoke with his usual extensive knowledge on the capacity market. I would point out, in answer to part of his question, that the capacity market is technology-neutral and focused on security of supply, while the levy control framework has an entirely different focus, which, as he rightly set out, is on low-carbon electricity. The Government will be setting out more on the future of the LCF in the autumn statement.
The capacity market changes have sent a clear signal to investors that will encourage the secure energy sources we need to come forward, such as gas and interconnectors, as part of our long-term plan to build a system of energy infrastructure that is so needed for the 21st century. We will support over 10 GW of new offshore wind projects in the 2020s, with three auctions during this Parliament if costs come down. In March, it was announced that the world’s largest offshore wind farm would be built off the Yorkshire coast. This will bring jobs and growth to the local community, while powering 1 million homes. We are boosting innovation funding to over £500 million, including £250 million for nuclear innovation and small modular reactors.
The theme that came through again and again during the debate related to the fifth carbon budget, which I am sure the Chair of the Committee intended to welcome in his earlier remarks. I was, however, particularly pleased to hear enthusiasm from my hon. Friend the Member for Beverley and Holderness (Graham Stuart) and I thank him for it. He said it was good and positive news, as well as a clear and important investment signal. The private sector knows the Government are committed to it and will be legally bound by it.
I am grateful to my hon. Friend the Member for Eddisbury (Antoinette Sandbach) for her comments on the private sector. She spoke constructively about the need for investment to help to deliver on these targets. It is encouraging that when we made the announcement last week it was so widely welcomed by the investment community. We will, of course, continue to look at other impacts on the investment community.
On home energy, energy efficiency is rightly seen by many, and certainly by the Government, as an excellent means to not one but several ends. It contributes not only to reducing energy bills, but to reducing carbon emissions and improving the security of our energy supplies. Our manifesto clearly set out how we will help a further 1 million homes this Parliament, as part of our commitment to address fuel poverty.
The hon. Member for Birmingham, Selly Oak (Steve McCabe) gave us a canter through previous home energy efficiency measures. I hope my comments will reassure him about our commitment to deliver on those 1 million homes. I thank the hon. Member for Glasgow North (Patrick Grady) for his comments and hope that his energy usage will indeed be reduced by his new smart meter. We are delighted that the Government programme is on target, so that everybody will be offered the advantages he has by 2020.
Graham Stuart
On a point of order, Madam Deputy Speaker. Just before the debate finishes, the shadow Secretary of State said that investment in Hull by Siemens was “on hold”—I think those were the words—but investment there most definitely is not. He might want to make that clear, unless I misheard what he said. That investment is very important in our local area and that investment is continuing.
Madam Deputy Speaker (Natascha Engel)
That is more of an intervention than a point of order and the Secretary of State may want to address it.