Energy Market Reform

Jamie Reed Excerpts

Wednesday 24th October 2012 Commons Chamber

[Mr Jamie Reed (Copeland) (Lab)]

Thank you, Mr Deputy Speaker.

Energy costs are soaring and fuel poverty is on the rise. Energy bills are now one of the single largest bills faced by any family. Away from the numbers, what does this mean? It means that in constituencies such as mine across this country, people are choosing to sit in the dark, to sit in the cold, and to fear the winter. It is no exaggeration to state that the choice between heating and eating is a now a reality. At one time, we would have dismissed such a claim as hyperbole, but Members in all parts of the House know that it is true. The consequence of higher energy bills, and the across-the-board inflation that they bring to other goods and services such as food prices, is, frankly, that people will die. That is the stark reality of the scale of the challenge facing us as a country as we set about reforming electricity markets.

I cannot speak in this House about energy policy without mentioning the enormous contribution of the late and much missed Malcolm Wicks. He was a tireless campaigner on fuel poverty and a superb Energy Minister, foolishly removed. In 2005, Malcolm brought me, as a new Member of Parliament, into the No. 10 policy unit to help to create the new nuclear policy for this country, and I will always be grateful to him for that. As a national politician, he made a huge difference to the lives of my constituents.

From the outset, and squarely within the national interest, but also in the best interests of my constituents, I offer the new Energy Minister, who is in his place, all the support he could possibly ask for, should he make the right decisions—but, more importantly, should he make them in a timely manner. The truth is that we are running out of time if we are serious about tackling fuel poverty, tackling security of supply—a looming crisis of incredible proportions that this House too readily ignores—and reducing our greenhouse gas emissions.

Wherever energy market reform ends up—I commend the motion in the name of the Leader of the Opposition—the truth that many of us in this House dare not whisper is that the days of cheap energy may well be over. For years, a deregulated market ensured moderately low prices that the consumer could ordinarily accept. Generating companies, which not only sweated their assets but failed to invest during the fat years, now face massive public policy concerns and—let us be clear—massive public policy responsibilities, and in many cases the market wants to reach for the easy options and the quick fixes. It is in this context that we should view fracking for shale gas. The hon. Member for Wealden (Charles Hendry) was right this weekend to warn the Government against betting the farm on shale—it is short-sighted and idiotic to do so. There are no easy ways out of the situation we now find ourselves in, but there are solutions and I will focus on the nuclear industry and nuclear power production in general.

Unlike fossil fuels, nuclear energy is not subject to major price fluctuations. I could say an awful lot more about the benefits of the nuclear industry and nuclear power. Electricity market reform must deliver long-term price stability for consumers and businesses, and it must also ensure long-term revenue stability and predictable returns for investors. Only in this way will we ensure the investment that we need in our nuclear fleet and the investment necessary, in whatever generating form, for the ultimate benefit of our consumers and our society.

The Minister knows that we need new nuclear and that we need it quickly. He knows that over the next 15 years, barring lifetime extensions, we will be down to one operating nuclear station. The heavy lifting on support for nuclear generation has been done already over many years. The public support it, the need is clear and the demand is great, but we must accelerate delivery or else invite collapse. I urge the Government to pay close attention to the evidence given by Vincent de Rivas, the EDF chief executive officer, to the Energy and Climate Change Committee yesterday. He said:

“With investment going in and demand rising we must expect the unit price of electricity to increase over the coming decades.”

Given that we need that investment, and given that, without question, we need new nuclear, surely the question for Government is: how do we protect the most vulnerable from these rises? This requires a policy response from the Government; it cannot simply be left to the market.

The final investment decision in the first new nuclear reactor at Hinkley will be taken at the end of the year and it is now imperative that the Government do everything they can to assist EDF in making the right investment decision in our national interest. Mr de Rivas said yesterday:

“We are shovel ready. We are on the brink of delivering an infrastructure project similar in scale to the London Olympics. We are poised to deliver immense benefits in terms of jobs, skills and economic growth—locally and nationally.

But like all investors in capital intensive infrastructure projects we need to have a compelling business case. In this respect our final investment decision requires more progress to be made.”

We must please both the consumer and the industries and investors that are ready to help us.

On the vexed issue of subsidy for nuclear, I say to the Minister: do it. I am explicitly pro-subsidy for new nuclear generation, because the reality is that not a single electricity generation source is not subsidised in this country in one way or another. We can call it whatever we like, but the nuclear renaissance in the United Kingdom needs direct Government assistance and I will support any moves to provide it.

Finally, will the Minister say how he will help me to progress new nuclear developments in my own constituency; how we can resolve the mineral rights issues that are affecting them; how we can speedily progress grid connection issues and plutonium re-use; and how we can effectively, assuredly and credibly take forward deep geological disposal with the right, credible partners? Time is of the essence and we have no time to lose.

--- Later in debate ---

[Mr Hayes]

I have to say that in my hon. Friend’s constituency there are really only two principal heating oil suppliers. He is right that that does not create necessary competitive pressure. I shall certainly ask my officials to consider such issues. Indeed, my hon. Friend made a powerful and persuasive speech on the subject during the debate.

We are providing support through the winter fuel payments and cold weather payments, which this Government have increased from £8.50 to £24. I accept that, as the hon. Member for Glasgow North West (John Robertson) and the right hon. Member for Birkenhead (Mr Field) have said, we need to target the support in the most effective way. Through a new obligation from 2013 we will require energy companies to deliver support for heating and insulation for the most vulnerable. This is about demand. As the hon. Member for Burnley (Gordon Birtwistle) said, we have too often debated energy only in terms of production and insufficiently in terms of consumption.

How curious it is that, bedazzled by the glitz and glamour of wealth, the Labour party pandered to corporate power over those 13 years. Keir Hardie must have looked down, wringing his hands in horror. They pander and ponder, bourgeois left minds honed to wander.

As an admirer of Joseph Chamberlain, only in my dreams did I believe that one day I would be the first Tory Minister in decades to advocate tariff reform at this Dispatch Box. Although these are different tariffs and different reform, I am delighted to do so today. I repeat that we will use all in our power to ensure through the Energy Bill that people get the best deal.

That is the difference between my party and the Labour party. We act; they meander, pander and ponder. They want to change the regulations; we want to change the policies. They want a different Ofgem; we want to make a difference to people’s bills.

[Mr Reed]

I would very much like to sit down with the Minister and discuss the concept of bourgeois left minds. Will he also meet me and the Sellafield workers campaign to talk about the energy policies he is discussing and to expedite new nuclear development in my constituency?