Budget Resolutions

Jesse Norman Excerpts

Thursday 12th March 2020 Commons Chamber

[The Financial Secretary to the Treasury (Jesse Norman)]

Madam Deputy Speaker, or may I say Chairman of Ways and Means? What a delight it is to see you in the Chair. It is an epochal moment—the beginning of a new decade, a new Government and a new Chairman of Ways and Means. How delightful is that.

I very much support what the hon. Member for Salford and Eccles (Rebecca Long Bailey) said about the quality of the maiden speeches in this debate. We have greatly enjoyed them. I was struck by the crazy golf. I was struck by the Amber seaside express, but what came through all the speeches—not just that from my hon. Friend the Member for Hastings and Rye (Sally-Ann Hart) but also those from my hon. Friends the Members for Warrington South (Andy Carter) and for Leigh (James Grundy)—was the tremendous sense of pride that they exhibited. They had pride in their community, pride in their history and pride in their own achievements in coming to this House. They also, I thought, showed a wonderful fair-mindedness about predecessors of both political parties and I very much associate myself with that spirit. I congratulate them on that.

I salute the men and women of the Treasury and HMRC who made this Budget possible. In fact, they did not just make one Budget possible; they made two Budgets possible, including the one that never got delivered. Their expertise, dedication, good humour and sheer hard work is something that I think everyone in this House should be aware of and thank them for.

I also pay tribute to my fellow Ministers for their contributions to the Budget and pay tribute especially to the Chancellor. A new Budget from nothing in weeks; a vast array of measures, including measures not taken up. A fully integrated cross-Government response to a national crisis of coronavirus, but which also lays the foundations for decades of higher investment in infrastructure. That, to me, speaks of a parliamentarian of enormous ability, mastery of detail, warmth and humanity, for which I salute him. A new Budget, leadership on coronavirus and new energy and direction on infrastructure—I hope my colleagues will agree that he got them done.

This Budget has been well received and well supported by many groups across the business sector. Today’s debate has been on business and innovation, and it is good to see the CBI acclaim it as

“a bold Budget at scale…which will help people and business through tough times.”

The Federation of Small Businesses calls it an

“excellent pro-small business budget”.

And the British Chambers of Commerce says:

“Much to welcome for UK business communities”.

How important is that?

I am particularly pleased that Make UK, or the Engineering Employers Federation as it used to be known, says:

“Today’s measures to boost R&D will be applauded by industry and will help the UK lead in the technologies”—

including, of course, the green technologies—

“of the future.”

The shadow Chancellor began his remarks by saying this is not a time for partisan politics and, of course, I agree. I was therefore slightly surprised when his first move was to descend into partisan politics, and I am sad that the shadow Business Secretary has done the same.

I am struck that one particular measure in the Budget has not received the attention that it perhaps should have done. Paragraph 2.77 on page 76 addresses the support we are giving to assist in opening up and reviewing private finance initiative projects across the public sector. We know that PFI has been a disaster for this country, and it was overwhelmingly initiated and carried out by the Labour party in the hospital sector. The idea that the NHS, in which virtually every PFI project was conceived and executed under a Labour Government, should be a topic of the Labour party’s criticism is astonishing. [Interruption.] I welcome you to the Chair, Mr Deputy Speaker.

PFI costs this country £10 billion a year, and any steps we can take to remove that burden on current expenditure—[Interruption.] I am sorry but, as I understand it, the shadow Business Secretary was intimately involved in PFI. I wonder whether, in her seven years in that area, she looked at the PFI project in Hereford, on which I had to run a process that saved £5 million for the taxpayer and greatly improved the delivery of hospital care to my constituents.

The fact of the matter is that this Government and their predecessors have had to deal with the terrible crisis of 2008, even now, and I remind the House that the tragedy—[Interruption.] Those are desperate attempts by the Opposition Front Bench to put me off.

The fact of the matter is that the banking sector in this country was at 20 times its capital leverage in 1960, at 20 times its capital leverage in 1970, at 20 times its capital leverage in 1980, at 20 times its capital leverage in 1990 and at 20 times its capital leverage in 2000. Between 2000 and 2007, that 20 times went up to 50 times—pin seven years. No further explanation need be given for why, when the crisis struck, it had a catastrophic effect, an effect that we are still seeking to remedy.

The United Kingdom has entered a new decade and a new era in which our prosperity as a nation will be shaped by the dynamism of our economy, the ingenuity of our entrepreneurs and the success of British businesses of all kinds. Yesterday’s Budget is emblematic of the sense of purpose and energy that defines this Government as we seek to chart a bold new path for this country in the global economy to ensure that we remain a competitive place to do business; that we deliver the infrastructure and investment necessary to spread jobs, growth and opportunity across this country; and that we build on our historical strengths, referenced on many occasions in this debate, in science, technology and innovation to position ourselves at the forefront of the industries of the future. Thanks to the decisions we have made, we are building on firm foundations. We have kept corporation tax at 19%, the lowest in the G20, so that businesses have more freedom to invest in their own priorities. We have cut business rates—referenced in speeches on several occasions and rightly so—for more than half a million of the smallest firms, which pay nothing at all a result.

We are delivering £20 billion of patient capital action—

[Alison Thewliss]

Will the Minister give way?

[Jesse Norman]

There have been so many interventions and I simply cannot cover all the speeches if I take an intervention now. I know that the hon. Lady will excuse me. We gave the party opposite the chance to intervene.

We are delivering a £20 billion patient capital action plan to unlock private financing in high-growth innovative companies, and we have established a regulatory system that strikes the balance between responsibility and opportunity to allow us to embrace the most exciting ideas in technology.

Let me touch on many of the important speeches that have been made today. The hon. Member for Glasgow Central (Alison Thewliss) raised the question of Barnett consequentials and, if she looks at page 49 of the Red Book, she will find them in paragraph 1.159.

The right hon. Member for Wolverhampton South East (Mr McFadden) raised the question of human capital. I know that he will be thrilled that we have a £2.5 billion skills fund—

[Alison Thewliss]

Will the Minister give way?

[Jesse Norman]

I will not give way, for the reasons I have already described. I can continue to waste the hon. Lady’s time and the House’s time responding to these interventions, but we need to press on.

I am sure that the right hon. Member for Wolverhampton South East will also enjoy the investment we have made in further education colleges—more than £1.5 billion for further education capex over the next few years.

The hon. Member for Kingston upon Hull North (Dame Diana Johnson) asked where the revenue from the tampon tax would go. The tampon tax fund supports women’s charities, as she knows, and I am happy to tell her that the revenue will go to that. The competition for the next round of funds will be launched by the Department for Digital, Culture, Media and Sport shortly for the 2019-20 VAT receipts.

My right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) rightly stressed the importance of long-term investment and as little bureaucracy as possible in making capital investment, and how right he was.

My hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat) asked us to reach for wartime analogies in fighting coronavirus. He will have seen that the Chancellor made it perfectly clear that we are prepared to do whatever it takes to assist the British people in dealing with this temporary crisis. We will continue to do that.

The hon. Member for Makerfield (Yvonne Fovargue) asked about free debt advice. I think she knows that the Government are investing an initial £12.5 million in HMRC in 2020-21 to begin implementing the breathing space initiative. Those in problem debt will be able to get 60 days’ breathing space, including from HMRC, while they engage with debt advice, and I think that is a very important contribution.

What a delight it is to see my hon. Friend the Member for North East Bedfordshire (Richard Fuller) back in this Chamber. He rightly celebrates the small business focus of the Budget and asks us to consider business rates in relation to nurseries, and other petitions have been made in relation to that, including by my hon. Friend the Member for Arundel and South Downs (Andrew Griffith). Let me remind my hon. Friend the Member for North East Bedfordshire that most nurseries will pay no rates if their rateable value is under £12,000 because of the small business rate relief. They will now also get a £3,000 coronavirus cash grant, of course, if they are in receipt of small business rate relief. There should be some bounce already in there, but of course we continue to reflect on business rates. We have a business rates review coming up, and he and my hon. Friend the Member for Arundel and South Downs would be welcome to contribute to that.

The hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) raised the question of red diesel. As she will know, there is a consultation associated with the changes we are making and she is welcome to support it and to make a petition to it if she wishes.

The hon. Member for Birmingham, Selly Oak (Steve McCabe) raised a range of questions, some of which I have already touched on, such as business rates. He asked whether we would be monitoring the impact of the reduction in entrepreneurs’ relief. Let me tell him that of course we will. The problem with entrepreneurs’ relief is that it is not very well targeted on entrepreneurship. We wish to support entrepreneurship, small business growth and rapid innovation and that is what we are seeking to do.

The hon. Member for Richmond Park (Sarah Olney) raised the question of green packages and rightly stressed the tough choices involved in a Budget. Let me refer her to the national infrastructure strategy. We already have a green package in this Budget. It is quite wide-ranging, but we intend to do more on it. What will not be true of us is what was true of Lord Prescott when he was in this place, when he said, “The Labour party supports the green belt and we intend to build on it.” We will not be doing that.

My hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) raised the question of the “Winds of Change” and gave us a historical dimension. I celebrate that, and I celebrate Lord Hennessy in his wisdom, because he is truly an ornament to the House of Lords.

Let me close by saying that this is a Budget for this country as a whole. It will make our economy and our country stronger still.

Points of Order

Jesse Norman Excerpts

Monday 27th March 2017 Commons Chamber

[Mr Speaker]

I am very grateful to the hon. Gentleman. The short answer is that I have not received any indication that the Secretary of State is minded to come here. From the record of dealing with this Secretary of State—this particular right hon. Gentleman—I can say that he has always been fastidious in wanting to come to the House, often telephoning me and trying to make contact. Indeed, I am advised that he has sought to make contact with me by telephone. I have, however, received no written communication from him at all and no indication of an early statement. I think that one would have been forthcoming anyway, and in the light of my exchange with the hon. Gentleman I feel even more confident that it will be.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

Further to the point of order raised by the hon. Member for Ross, Skye and Lochaber (Ian Blackford), Mr Speaker. I am afraid that I did not have notice of it, and I was not clear from what he said whether it was me to whom he referred. If it was, I would of course be delighted to meet him to discuss the issue he raised.

[Ian Blackford]

I am grateful for that clarification, but just to be absolutely clear—

Draft Electricity and Gas (Energy Company Obligation) (amendment) Order 2017

Jesse Norman Excerpts

Wednesday 22nd March 2017 General Committees

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

I beg to move,

That the Committee has considered the draft Electricity and Gas (Energy Company Obligation) (Amendment) Order 2017.

It is a pleasure to serve under your chairmanship, Mr Hanson, especially since you are not Geraint Davies, whose name I see on the form. In addition to thanking you, I thank all colleagues who have come at this early hour to assist us with this piece of legislation.

[Michael Fabricant (Lichfield) (Con)]

We are keen.

[Jesse Norman]

Especially my hon. Friend, who is—

[Hon. Members]

What about us?

[Jesse Norman]

If other Members wish to proclaim themselves keen as well, I welcome that.

In the Prime Minister’s first speech of her term in office, she acknowledged the hardships faced by poorer households in Britain—those hard-working families who, in her words

“can just about manage but worry about the costs of living”.

As part of the response to that dilemma, the Government are committed to helping households in fuel poverty or on lower incomes and those living in homes that are expensive to heat. The order is designed to move us further towards that goal.

[Michael Fabricant]

Regarding the cost of living and the cost of heating people’s homes, I have one question, having briefly looked through the explanatory notes. I wonder whether these tighter regulations, while perhaps helping to save the planet, might increase the cost of installation or operation. Has the Department made any analysis of the effect that the order will have on installation?

[Jesse Norman]

I am very grateful to my hon. Friend for that intervention, and I congratulate him on making it when my remarks have barely started, such is his eagerness. The Department of course scrutinises the cost of legislation, and the order is designed to allow a transition period precisely to set the suppliers up for the next supplier obligation, which will be introduced in 2018. That should allow time for any costs associated with the changes to be absorbed within the system.

The order will also make an important contribution to the Government’s clean growth plan and to reducing carbon emissions. We are making amendments to the existing Electricity and Gas (Energy Company Obligation) Order 2014, which covers the period from 1 April 2015 to 31 March 2017. The amendments extend the current scheme from 1 April 2017 to 30 September 2018 to enable reforms to be introduced while also allowing the industry time before further improvements are made through a new longer term scheme that will run from 2018 to 2022. Planning ahead to 2022—beyond the life of this Parliament—reflects announcements on funding made in the 2015 spending review. The longer term confirmation of funding is designed to give greater certainty to energy suppliers, installers, local authorities and other energy stakeholders.

The Government are facing up to the enormous energy challenges our country faces over the coming years. With the overhaul of the electricity market and continued investment in renewable technologies, we are making good progress towards ensuring that the UK’s energy is secure, low carbon and affordable. Improving the energy efficiency of the UK’s homes is central to that challenge and to reducing fuel poverty. The energy company obligation scheme helps occupants to keep warm, reduce their energy bills and protect their health and wellbeing by requiring energy suppliers to reduce carbon emissions and energy costs through installing energy efficiency measures in households across Great Britain. The supply chains involved in that endeavour also provide economic benefits across the country.

Since the introduction of the ECO in 2013, the scheme has proved to be a remarkably reliable and cost-effective means of upgrading our housing stock. Altogether, more than 2 million energy efficiency measures had been installed in more than 1.6 million homes by the end of December 2016, with around 1.2 million of those measures going to 900,000 low income and vulnerable households and households in deprived areas. That is a significant investment in addressing energy efficiency and fuel poverty. Thanks to the amendment order we are introducing today, we forecast more than half a million more insulation measures and around 45,000 more heating measures will be delivered through the ECO by 2018.

[Ian Murray (Edinburgh South) (Lab)]

The Minister has mentioned fuel poverty several times. Will he say what the Government are doing to prevent fuel poverty with regard to energy companies and their double-digit price rises?

[Jesse Norman]

As the hon. Gentleman will know, the Government made clear in a debate last Thursday and in other remarks that they would bring forward a consumer Green Paper and a response to the Competition and Markets Authority. A specific response on the issues he raises will be addressed in those documents.

The order will reduce the overall spend of the scheme from £860 million a year now to £640 million a year. That has been done to constrain the impact of Government policies on all consumer bills. In making the change we have also sought to ensure that the support offered by the ECO is focused more on those in more need.

[Callum McCaig (Aberdeen South) (SNP)]

In this and any future scheme, has any consideration been given to putting the burden on to the taxpayer as a whole, as that would be far more progressive and would go some way to reducing fuel poverty? As the Minister will know, those with lower incomes pay more on fuel bills and therefore a bigger share of the contribution to schemes that are meant to reduce fuel poverty.

--- Later in debate ---

[Jesse Norman]

The purpose of the proposal is to shift the scheme towards those in fuel poverty. It sits alongside the warm home discount scheme, which was also aimed at those people. The independent Hills review, which looked at supplier obligations a few years ago, concluded that the supplier obligation was the best means and most cost-effective way to reduce fuel poverty.

In introducing the order today, we are forecasting that more than half a million more installation measures and around 45,000 more heating measures will be delivered through the ECO by 2018. The changes implemented by the order were consulted on in summer 2016. The consultation received 236 formal responses that were broadly supportive of the proposals and the Government response was published at the end of January this year.

The order makes clear that we have increased the period of the obligation extension from 12 months in the consultation to 18 months. That is in response to the views of stakeholders and is designed to make the transition as smooth as possible. It will avoid costs associated with industry implementing changes within constrained timelines, and will allow lessons from the operation of the extended period to be fed into the design of the longer term scheme from 2018.

The separate carbon-saving community obligation element of the ECO, part of which currently delivers energy efficiency improvements in rural areas, will be brought to an end for reasons of simplification, but there will still be a safeguard guaranteeing a minimum level of rural delivery under the remaining carbon reduction obligation. The affordable warmth element of the scheme, which places the greatest focus on targeting low-income and fuel-poor households, is increased from 34% to 70% of the overall estimated spend. That means that the carbon emissions reduction obligation element, which allows delivery to any home for carbon-saving purposes, will be decreased to approximately 30% of the overall spend.

Changes are also being introduced to target better the affordable warmth obligation towards low-income and fuel-poor households. First, the use of income thresholds will be deployed to determine eligibility under affordable warmth; the process will be simple but will recognise differences in household size. Secondly, eligibility for the affordable warmth element has also been extended to allow the installation of particular measures to social housing occupants in the least efficient homes, that is those in an energy performance certificate band of E, F or G. Thirdly, a new voluntary provision will allow local authorities to use their local knowledge to determine eligible fuel-poor or vulnerable households for up to 10% of a supplier’s affordable warmth obligation. In particular, they will have opportunities to help people with health problems living in cold homes. Fourthly, mains gas boiler replacements delivered under affordable warmth have been limited to the equivalent of approximately 25,000 a year. Our analysis suggests that other measures, such as insulation and first-time central heating, are more beneficial and cost effective. We will also require a minimum level of the more expensive solid wall insulation, equivalent to 21,000 homes a year, to protect the development of that sector and improve some of the least efficient homes. A key focus of the changes made by the order is simplification to reduce administrative burdens and complexities associated with the scheme, which may allow more measures to be delivered within a given amount of supplier spend.

These are important changes to the existing ECO order. They will continue to drive large-scale investment in energy efficiency across the country. Support will be targeted more at those who need it most, those living in fuel poverty and those on lower incomes who are struggling with bills. The order will promote measures that reduce energy bills, and it will simplify scheme delivery and better target energy efficiency funding to vulnerable and low-income households. I commend the draft order to the Committee.

--- Later in debate ---

[Jesse Norman]

I thank both the hon. Member for Southampton, Test and my hon. Friend the Member for Reigate for their useful and interesting speeches. First, I shall pick up my hon. Friend’s comments about the general picture, then return to the shadow Minister’s specific comments about the draft order.

There are many reasons to bemoan the Conservatives’ failure to win the 2005 general election, but my hon. Friend gives a cogent personal reason—our energy policy might well have been very different and, in some respects, improved. Nevertheless, I take issue with a couple of things that he said. I do not think there has been any hiding away of costs. Whatever we think of the policy design, the costs are pretty explicit and public, and have been extensively debated and consulted on, so I do not think they are hidden.

[Crispin Blunt]

On that narrow point, are the subsidies provided by the Government to encourage the creation of wind farms all over the place an intelligent or economically efficient way of contributing to our climate reduction goals?

[Jesse Norman]

There are two points to make on that. First, the way to think about all these things is as part of a wider energy mix that is designed to solve the trilemma of security, affordability and decarbonisation. On the contribution of offshore wind, for example, it is true that there is some question as to its total cost when including intermittency. It is also true that, had it not been for the substantial Government investment in this area, we would not have the situation in which costs for this technology are falling faster and further than anyone would have anticipated.

[Callum McCaig]

On intermittency, I understand—and I put a question to the Minister’s colleague at Energy questions last week—that the Government are refusing to publish a report that they commissioned to look at that very thing. If there are questions on the cost of intermittency, publishing that report would greatly help us to have that debate in an informed manner. Will the Minister look at publishing the report by Frontier Economics on the full cost of electricity generation?

[Jesse Norman]

I am happy to look at the hon. Gentleman’s suggestion. On the point I was making to my hon. Friend the Member for Reigate, we are not starting from the position he described. That position has the effect of disguising costs. The reason why we have carbon emissions issues is precisely because of the externalities built into previous models of industrial development. Those substantial costs were not included in the true cost of production of the goods and services concerned. It is simply untrue to suggest, even by implication—I am not suggesting my hon. Friend was suggesting this—that there had been some Elysium or status beforehand in which costs were explicit and are now not; there were costs before that were not explicit and there may be costs now that are not. From a Government standpoint, there is no hiding of costs as regards expenditure by either consumers or the Government.

Let me say a couple of other things. The overall energy market approach my hon. Friend describes was well outlined recently in a report by the House of Lords Economic Affairs Committee, as he may know. It remains an important part of the accountability of Government that we respond to it and are aware of it as an alternative. However, it is worth saying that it would do nothing as such to alleviate the issues of fuel poverty that concern us today. In my judgment, it is not an answer to say that local authorities are somehow a go-to alternative. The truth is that the delivery of those and related measures by local authorities has historically been quite mixed.

On the setting the 10% figure, that was designed, based on the consultation, to allow for a period of experimentation during the transition period, precisely to assess whether that number could be raised in line with the suggestions that have been made. The number involved—even at 10% of £45 million—is not a trivial amount of supplier obligation. I think that is a reasonable and proper justification.

I will say a couple of things about the matters raised by the hon. Member for Southampton, Test. He asked why we were presenting the order so late. I share his concern about that. My preference would be for measures to be presented to Parliament as early as possible. The difficulty has been—in part, this refers to a couple of earlier points—last year’s changes in Government and knock-on effects, which have delayed the process. It is certainly not something that any Government would want to make a habit of, so I take the point.

I have a couple of comments to make in response to what the hon. Gentleman said about a reduction on a reduction: first, the number of homes in fuel poverty has continued to fall since 2010, and it is clear that the measures continue to have a powerful effect. It is also important to bear down on consumers’ bills. If the hon. Gentleman wants to introduce specific costed proposals for restoring the funding that he criticises the Government for reducing, it is incumbent on him to state by how much he would be prepared to put it up, and how much he would be prepared to burden taxpayers or consumers. In addition, we expect, by September 2018, to have met a target of 850,000 homes insulated. That leaves 150,000 by 2020, which is in line with the manifesto commitment made in 2015. The Government believe that they are on track.

As for the fourth carbon budget, the hon. Gentleman was talking about totals—and the challenge for the Government is to meet the fourth carbon budget in total. The support and advice that the Committee on Climate Change offers is always welcome and of interest to us, but the focus is on the total. The hon. Gentleman painted a beguiling picture of towels being tightened and retightened in the bowels of the Department; but I think it is fair to describe the process of aligning all the different carbon saving measures required to meet the budgets as complex and difficult. That is what the clean growth plan, which will be published in due course, will do.

[Dr Whitehead]

Does the Minister want to add anything to the phrase “in due course” with reference to the clean growth plan?

[Jesse Norman]

I thank the hon. Gentleman for that tempting invitation, but I can say that “due course” will be due, and a matter of course; so the answer to his question is no.

As to whether there will be a review of the long-term effects of the ECO, we anticipate that there will be a consultation later this year—I can give the Committee some clarity on that—in line with thinking about what the further process will be after 2018-22. I have addressed the issue of the figure of 10% in relation to affordable warmth, which we have discussed.

Among other key elements worth picking out is the question of the proportion of fuel-poor homes in band E, or above, in England, which is expected to be about 92% by the end of the extension. That will be up from 88% three years ago. Again, that underlines the progress that has been made.

This has been an interesting and useful debate and I thank hon. Members for their speeches. As I said, the scheme has helped to deliver more than 2 million energy saving measures to more than 1.6 million households, including 1.2 million measures to 900,000 low-income and vulnerable consumers. At a time of rising energy bills, the Government think that it is right for support to be targeted to those most in need. At the same time, the amendments being made to the existing order should reduce the cost of the scheme to bill payers to about £25 a year from the current level of £34 to £35—and nearly £60 at the time of its launch in 2013.

With the amendment order the ECO is expected to provide 545,000 households with more energy saving measures. We will thereby give a balance of improvements and continuity to consumers and the energy efficiency industry for 18 months, before further change is made through a longer-term scheme, from 2018 to 2022.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Electricity and Gas (Energy Company Obligation) (Amendment) Order 2017.

Fuel Poverty

Jesse Norman Excerpts

Tuesday 21st March 2017 Commons Chamber

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I welcome this debate. I hope the Minister, in summing up, will reflect on the impact of high energy costs and high energy demand on the highlands and islands of Scotland in particular. As a highlands MP, I know that fuel poverty is a massive issue.

We need the Government to listen to our story, appreciate our particular situation and work with all of us to deliver fairness in energy charging that can offer hope that, working together, we can drive consumers out of fuel poverty. According to Scottish Government statistics, 34% of Scottish households are in fuel poverty, while for the highlands the figure is 56%; for the western isles, it is 59% and for Orkney it is 65%. Those are shocking statistics. More than half of households in much of the highlands and about two thirds of households in Orkney are in fuel poverty. Can we in this House accept those statistics?

I have to say that there have been times in the past when the House listened to the legitimate grievances of highlanders and islanders, and took action to improve our situation. Just over 100 years ago, in 1886, the House passed an Act that for the first time gave security of tenure to crofters. The clearances and the removal of people, often in a brutal way, was stopped by the crofting Act’s coming into force. In 1965, the Government established the Highlands and Islands development board, now known as Highlands and Islands Enterprise—a venture instrumental in reversing decades of economic decline in the highlands and islands.

I ask the House today to recognise the unfairness in the market for electricity costs that penalise highlanders and islanders. I am asking for the same consideration that was shown when the highlands required Government intervention in the past. We need it now to create fairness in electricity pricing. I accept that those of us from these areas live in some of the most beautiful parts of not just Scotland and the UK, but the world. But we cannot heat our homes with the breath-taking scenery. It is perhaps an enchanting landscape, but often there are biting winds, driving rain and long dark cold winter nights. The aesthetic beauty of the highlands can gladden the heart, but it will not deliver warmth to a pensioner at an affordable cost over a long winter.

We hear repeatedly that the Government want to help those who are just about managing. In many cases in the highlands, the cost of heating means that too many of our people are having to make the choice between putting food on the table and heating their homes. I mentioned that 56% of highland households are in fuel poverty, but 74% of our elderly population are in fuel poverty, of whom 34% are in extreme fuel poverty. I ask the House to dwell on these statistics and then consider what we can do to challenge this situation.

On the island of Skye, electricity came with the construction of the Storr Lochs hydro scheme in the early 1950s. The facility, apart from a small upgrade over the last few years, will now be virtually fully depreciated. It will be producing very cheap, almost free electricity on to the grid: cheap electricity that islanders then have to pay a premium to get back. It is simply an injustice that in an area of the highest levels of fuel poverty, where we produce cheap electricity, we are being overcharged. That is the reality.

There is the broader point that Scotland is an energy-rich country, whether from fossil fuels or our ability to deliver renewable energy today and in the future. Our unique characteristics as an energy producer should not be trapping our people in fuel poverty. Let us not forget that Westminster has extracted a bounty of £360 billion in taxation receipts from North sea oil since the 1970s. Where is the long-run benefit of this dividend? Why is it that the citizens of an energy-rich country such as Scotland, which has produced a bonanza for the Government, suffer fuel poverty to such an extent? We need to take into account the human cost of this failure to tackle head on the root cause of fuel poverty—high and unfair pricing through the lack of a universal market as one issue.

The charity Turn2us has found that one in two low-income households are struggling to afford their energy costs, despite being in work. Among the hardest hit are people with disabilities, with more than two in three of them, 67%, reporting their struggles. Families are also hard hit: almost two thirds of working parents, 65%, are unable to meet these costs. Worryingly, of the households that are struggling with energy costs, nearly half have done so for more than a year.

The knock-on effect is severe, with a third forced to skip meals and over a fifth experiencing stress and other mental health problems. Some of the comments made to Turn2us included these:

“The bills are killing me, sometimes I have to contemplate paying all the rent or heating my home…There are many pensioners like myself that don’t qualify for any help but still have to decide whether to heat or eat…Starve or freeze? Either way you get ill, can’t work, eat or pay any bills… No lights only candles, only hoover once a week, only use washing machine once a week, no heating, meals that cook quickly.”

This is not an abstract discussion. These are comments from real people who are struggling on a daily basis. I remind Members that 70% of elderly highlanders are in fuel poverty. That is why people get angry when they see a lack of action. When we hear hon. Members questioning the retention of the triple lock on future rises for the state pension, many of us proclaim that this will not happen in our name. I became an MP to stand up for my constituents and I cannot accept that so many highlanders are in fuel poverty. There is a debate on Scotland’s constitutional future, and we will have a vote on our independence. Let me say that in an independent Scotland, we would recognise our responsibilities to those in fuel poverty and would take action to eradicate it.

The UK has a universal market for postal delivery, as for many other services. People pay the same price whether they live in Skye or Somerset, in Ardnamurchan or Avon, in Gairloch or Gloucester. Why is that not the case for electricity distribution charges? Why are highlanders and islanders facing a premium in electricity distribution charges just because of where they live?

The right hon. Member for South Northamptonshire (Andrea Leadsom) said in her capacity as energy Minister in 2015:

“It is not right that people face higher electricity costs just because of where they live.”

I commend the right hon. Lady for those remarks, but if they are to mean anything they have to be matched by actions from this Government. The issue is not just about the highlands and islands; there are 14 regional markets throughout the UK with different levels of network charges. It is not about price competition either, but about a regulated charge varying from region to region through a price control framework. The reality is that if people live in the highlands and islands, they will pay for the privilege—courtesy of the UK Government.

Electricity distribution charges for the north of Scotland are 84% higher than they are for London. Fuel poverty is exacerbated by the lack of a universal market. Westminster calls the tune; highlanders and islanders pay the price. We pay a high price for transmission charges, but we also have a high rate of energy consumption. The highlands and islands are noted for windy and wet conditions. It is not unusual for people in the highlands to have their heating on all year round. Ofgem noted in a study on the matter that households in the north of Scotland would benefit from a cost reduction of about £60 a year if there was a universal network charge. Sixty pounds would make a significant impact on someone on a low income or a pensioner.

In the highlands and islands, not only are people faced with high transmission charges, but many consumers suffer from a lack of choice in energy provision. Most households cannot benefit from a gas grid connection; the choice is often between electricity and domestic heating oil. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), who is no longer in his place, noted that prices will go up substantially because of currency movements in the recent past. With such limitations, the last thing we need is price discrimination—for that is what it is—being foisted on us.

Where people live should not result in their being penalised by having to pay higher network charges. Where is the “one nation” that the UK Government speak of so fondly? [Interruption.] I notice that the Under-Secretary of State is laughing. I will happily give way to him if he wants to explain why he thinks this is a laughing matter; it is no laughing matter to people in the highlands and islands.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

I am delighted to intervene on the hon. Gentleman to ask how he can seriously invoke the principle of “one nation”, to which my party has been an adherent for 100 years, when he is a Scottish National party Member who is campaigning to remove his country from this nation.

[Ian Blackford]

I am glad that the hon. Gentleman has risen to explain that, but he cannot get away from the fact that he sat there and smugly laughed when I made my point about the one nation. The point I am making is that it is your Government—I apologise for using the word “your”, Madam Deputy Speaker. It is the Government who are responsible for over-charging highlanders, because they will not recognise that we should have a universal market. It is the Government of the United Kingdom who should address that. Laughing, which is what the hon. Gentleman did, at highlanders and islanders is not acceptable. I hope people in Scotland were watching what happened on the Government Front Bench just now.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

It is good to see the Minister again.

[Jesse Norman]

Mr Deputy Speaker, I had until recently hoped to be greeting your female colleague—Madam Deputy Speaker—as you and I have spent so much time in the Chamber over the past few days. In her absence, it is a delight to welcome you to the Chair.

I thank colleagues on both sides of the House for their contributions to this debate. I will respond to some of their many points but, first, I will recap the situation. The most recent statistics, as highlighted by my hon. Friend the Minister for Climate Change and Industry in his opening remarks, show that there were approximately 780,000 fewer homes in the lowest energy efficiency rating bands—E, F and G—in 2014 compared with 2010, which demonstrates real, sustainable progress towards the 2020 and 2025 milestones. It is clear from the statistics that the fuel poverty milestones and target are backloaded and that the scale of improvements required to reach each of the target dates increases over time.

Today, the energy company obligation regulations are being debated in the House of Lords. They seek to increase the proportion of support directed at low-income homes. Although the ECO policy has reduced in size compared with the scale of recent years, support for low-income households has been protected. In fact, the regulations for the new scheme to launch on 1 April 2017 represent an increase from £310 million to £450 million a year.

Combined with immediate support on the cost of energy bills provided via the warm home discount, there will be at least £770 million of support for low-income and vulnerable consumers over 2017-18. That is a significant commitment towards some of the households that are faced with the challenge of keeping their home warm. It is therefore far from true that, as the hon. Member for Brighton, Pavilion (Caroline Lucas) said, the Government are turning their back on the situation. Quite the opposite.

The shadow Minister, the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss), criticised what she described as the Government’s “quite abysmal” record. I can do no better than to point out that, in the years from 2003 to 2010, the last Labour Government succeeded in increasing the number of fuel-poor households from 2.41 million to 2.49 million. The result of what she regards as an effective energy policy was to increase the number of people in fuel poverty.

Regulation, particularly for landlords, will also play an important role in making progress towards the milestones, as will other actions such as the safeguard tariff for pre-payment meters and the roll out of smart meters. In the longer term, the Government will be assessing the resources and policy mix required to meet the 2030 fuel poverty target. However, flexibility is important given the long-term, structural nature of fuel poverty. We should not, in 2017, seek to say precisely how best we can meet the target or commit future Governments to 13 years of spending in a particular way given that so much could change in the energy sector and in applicable technologies.

[Caroline Lucas]

On the Government’s commitment to this agenda, can the Minister answer the fact that the notional annual spend on the overall ECO programme has reduced from an original £1.3 billion to £640 million? The new cap on heating measures with the ECO leaves a big gap in provision for low-income or vulnerable consumers who cannot now afford to repair or replace existing gas boilers. What is his answer to that?

[Jesse Norman]

If the hon. Lady had attended closely to my opening remarks, she would have heard me acknowledge that the scheme has been reduced in size but that funding for more vulnerable groups has been increased. If we combine that with the wider support through the warm home discount, let alone the national living wage and other applicable measures, we see that the Government are doing a great deal in that area.

[Mr Jim Cunningham]

The Minister just said that funding for vulnerable groups has actually increased. By what does he measure that? What is the actual figure?

[Jesse Norman]

I have just covered that. I am embarrassed that my remarks should be so ill-attended. The regulations for the new scheme, which launches on 1 April 2017, represent an increase from £310 million to £450 million a year. Combined with the warm home discount, that gives £770 million of support for low-income and vulnerable customers in 2017-18.

We have also taken steps to improve targeting. The eligibility criteria for the ECO scheme, which is proposed to run from April 2017 to the end of September 2018, will improve the targeting rate to 34%. We do not believe that is enough. The targeting rate can go higher, and the Digital Economy Bill, which the hon. Member for Sheffield, Brightside and Hillsborough mentioned, is currently going through Parliament and will enable greater data sharing and give the Government the opportunity to improve the targeting of the next generation of fuel poverty schemes, including the warm home discount.

When the regulations were made last summer, the Government stated that there is more to be done to target the schemes at those who most need them. That is still true, with the current targeting rate of fuel poor households at around 15%. However, Members should note that increasing that proportion in the current scheme, which is committed to 2021, would be at a cost to other low-income households. We will be mindful of that factor when making decisions on the future direction of the scheme.

The hon. Member for Motherwell and Wishaw (Marion Fellows) criticised the Government, whom she regarded as presiding over stagnant real incomes. All I can do is direct her to the fact that, last year, full-time pay grew by 0.7% in Scotland, whereas it grew by 1.9% in the UK as a whole. According to Scottish Parliament numbers, it fell for the three years following 2012.

I yield to no one in my admiration for the hon. Member for Ross, Skye and Lochaber (Ian Blackford), and I was grateful for his support in being elected Chair of the Culture, Media and Sport Committee. He also comes from a nation I deeply revere and whose history I greatly respect, but I am afraid that he has embarrassed himself in this debate with an unworthy attempt to personalise a very serious set of issues. Mine was a response to the gap, which the stricture on unparliamentary language prevents me from describing as anything more than disingenuous, between his words and his deeds. The fact of the matter is that these matters are devolved. Even so, the Government have offered support, as I described, through the ECO, the warm home discount and a hydro benefit replacement scheme of £58 million to reduce energy distribution charges. Were network charges made universal across the country, as he desired, 1.8 million people in Scotland would face higher bills, and only 0.7% would see reductions. Does he really wish to add to the bills of 1.1 million Scotsmen and women?

[Ian Blackford]

It was the predecessor Minister who made the point that people should not be penalised because of where they live—nobody should pay more. It is a matter of fairness that there should be a universal market, as exists in many other European countries. We have such things in other areas in the UK. Why do we not have a universal market for electricity distribution?

[Jesse Norman]

I am grateful for the respectful nature of the hon. Gentleman’s question. The answer is simple: it would increase charges to an additional 1.1 million people in his country, and no responsible Government should look on that with favour.

Finally, the hon. Member for Sheffield, Brightside and Hillsborough referred rightly to the health effects of fuel poverty, and we, correctly, recognise that issue. She suggested that fuel poverty in homes had risen; I have explained how, in fact, it has fallen broadly since 2010—from roughly 2.49 million to 2.38 million homes. She invites the Government to tackle the root causes of fuel poverty, but that is exactly what we are doing.

Further to my comments about the last Labour Government, it should never be forgotten that the real wages of the bottom third of the population of this country stopped growing in 2003, not in 2008—it was a function not of the financial crash but of a whole series of factors and of bad government, and we should recognise that.

The hon. Lady said the Government need to be more ambitious, and we are being extremely ambitious. We have a transitional arrangement that runs through until September 2018. We then expect a further supplier obligation, on which we will consult later this year, to take us through to 2022.

We know that households living on low incomes are all too often left to live in the coldest and least efficient homes. We know that living in a cold home can have negative implications, to say the least, for health and wellbeing. The official 2016 fuel poverty statistics showed that, despite progress towards the 2020 milestone, with 88% of homes rated E or above in 2014, there remains a significant challenge if we are to make progress to the 2030 fuel poverty target.

The statistics show that only 7% of fuel-poor households were rated B, C or higher in 2014, which clearly shows that the fuel poverty target we have adopted, which was set in 2014, is ambitious, and rightly so. That legal target makes it clear that the Government do not accept the situation. [Interruption.] If I may respond to the hon. Member for Southampton, Test (Dr Whitehead), who is chuntering from a sedentary position, it also shows that we are committed to providing support to those households that need it most. Undeniably, that means there is a lot of work to do to ensure that the energy-efficiency of low-income homes is improved. We cannot now, in 2017, prescribe exactly which policies, regulations and innovation will be required to meet the 2030 target—we will consult next year on work to a target until 2022—but we can ensure that we continue as a nation, as a country, together to move forward and take action.

Parliament will, of course, continue to play an invaluable role in holding Government to account against this objective over the next decade, and I thank the hon. Members who have spoken today for their contributions to this worthwhile and useful debate.

Question put and agreed to.

Resolved,

That this House has considered fuel poverty.

Draft Electricity Supplier Payments (Amendment) Regulations 2017

Jesse Norman Excerpts

Monday 20th March 2017 General Committees

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

I beg to move,

That the Committee has considered the draft Electricity Supplier Payments (Amendment) Regulations 2017.

It is a pleasure to serve under your chairmanship, Sir Alan. This statutory instrument amends regulations concerning the contracts for difference scheme and the capacity market. Those schemes are designed to incentivise the significant investment required in our electricity infrastructure, keep costs affordable for consumers and help to meet our decarbonisation targets, while ensuring security of energy supply.

CfDs provide long-term price stabilisation to low-carbon generators, allowing investment to come forward at a lower cost of capital and therefore at a lower cost to consumers. The capacity market provides regular payments to reliable forms of generation or demand-side response in return for such capacity being available when needed, the purpose being to ensure that enough capacity is always in place to maintain the security of supply. In both schemes, participants bid for support via a competitive auction, which ensures that costs to consumers are minimised.

The next CfD auction, with a budget of £290 million, opens in April and will be available to less-established renewable technologies. That should result in enough renewable electricity to power 1 million homes and reduce carbon emissions by about 2.5 million tonnes per year from 2021-22 onwards. It will thus allow developers of innovative renewable technologies to come forward, while delivering the best deal for bill payers.

There have been three main capacity market auctions, held each December from 2014 to 2016, to secure capacity for four years ahead—that is, from 2018-19 to 2020-21. The latest of those secured 52.4 GW of capacity at a price of £22.50 per kilowatt per year. In January 2017, an early capacity auction was also held to secure capacity for winter 2017-18. That auction secured 54.4 GW of capacity at a clearing price of £6.95 per kilowatt per year.

The regulations will implement a second tranche of minor and technical amendments to improve the efficiency of the CfD supplier obligation—that is, the levy on suppliers that pays for the cost of CfDs. They build on a first tranche of changes that were approved by Parliament last year and became law in April 2016. These further changes are being implemented now to allow time for necessary changes to be made to the settlement system, which determines the way in which CfD payments are calculated and paid. The changes under consideration and those implemented last year were both the subject of public consultation and received a largely favourable response. The regulations also amend the levies that fund the companies established to deliver the CfD and capacity market schemes.

The supplier obligation is a compulsory levy on all Great Britain energy suppliers to meet the costs of clean electricity generation under CfDs. The levy is collected by a private company called the Low Carbon Contracts Company, of which the Government are the sole shareholder. The funds levied are paid to CfD generators for the electricity they have produced. The rates are set on a quarterly basis and consist of two payments: the first paid daily, based on every unit of supply; and the second a quarterly reserve amount, designed to ensure that the LCCC faces as little risk as possible in covering payments to generators. Both rates are set based on forecasts of payments to the CfD generators and levied on suppliers based on their market share. At the end of each quarter, the supplier payments are reconciled with actual payments to generators.

The changes made by the regulations will further improve the efficiency of the supplier obligation mechanism. The most significant changes will speed up reconciliation payments, so that over-collected funds are returned more quickly after the end of the quarter and suppliers face less onerous cash-flow risk. Secondly, they will allow the LCCC to reduce the reserve amount without notice when it has been overestimated, to ensure that suppliers do not overpay for renewable generation and to reduce the call on their cash flow. Thirdly, they will enable the LCCC to recover funds from suppliers when a compensation payment to generators is due in respect of generation that happened more than 10 quarters ago. Finally, they will prevent double counting of the green import exemption and the energy intensive industry exemption to avoid suppliers demonstrating a negative market share, thereby avoiding the payment of levies altogether.

Taking the regulations together with the changes introduced last year, we have estimated that the cost of CfDs to consumers will be reduced by £38 million between 2016 and 2020, which is a small reduction of 40p to 60p on consumer bills. The current set of changes alone is estimated to reduce bills by £22 million over the same period.

The second objective to be delivered through the statutory instrument is to set a revised operational cost levy for the LCCC and a revised settlement costs levy for the Electricity Settlements Company, which is the company responsible for collecting and making payments to capacity providers under the capacity market. Those companies play a critical role in delivering the CfDs in capacity market schemes, and it is important that they are sufficiently funded to perform their roles effectively. The Government closely scrutinise their operational cost budgets to ensure that they reflect the operational requirements and objectives for the companies and deliver value for money.

Both companies have performed well and the cost of their core activities is slightly down from 2016-17. The increase in both budgets is due to the cost of software upgrades to the settlement system, which are necessary to reflect policy changes that simplify and improve the overall effectiveness of the capacity market and CfD schemes. For example, the changes to the supplier obligation will need to be reflected in the settlement system. The software upgrades are being treated as operational costs rather than as funded via capital, which means that they will be charged in full to the levy in 2017-18 rather than being recovered over the lifetime of the asset through a depreciation charge. Overall, there is no difference in costs to supplier.

The operational costs were also subject to consultation, which gave stakeholders the opportunity to comment, and they subsequently remain unchanged. The amendment revises the levies currently in place to reflect the operational cost requirements in 2017-18.

Subject to the will of Parliament, the settlement costs levy for the Electricity Settlements Company is due to come into force by 28 March 2017, the operational costs levy for the LCCC by 1 April 2017 and the changes to the CfD supplier obligation later this year.

[Sir Simon Burns (Chelmsford) (Con)]

I am interested to know on what day the regulations will be made.

[Jesse Norman]

The regulations will be enacted today by a vote in the Committee and the settlement costs will come into force at the times indicated: the Electricity Settlements Company by 28 March; the operational costs levy for the LCCC by 1 April; and the changes to the CfD supplier obligation later this year.

Finally, I would like to assure right hon. and hon. Members that the Government will continue to evaluate and monitor the reforms following implementation, ensuring that the measures put in place remain effective and continue to represent value for money for the consumer.

--- Later in debate ---

[Jesse Norman]

I am grateful to all hon. Members who have contributed for their comments and questions. If I may, I would like to correct something that I said earlier in response to my right hon. Friend the Member for Chelmsford. Officials have reminded me that regulations 1 and 19 will come into effect the day after the regulations are made. Regulation 14 will come into effect on 1 April, regulation 8 on 1 October, and all others on 1 July. I hope that that will comfort him. I apologise for misleading him earlier. I have been corrected on one other thing: it is not just the day, but the day after the day on which the regulations are made. I am doubly corrected

On the questions raised by the hon. Member for Kilmarnock and Loudoun, I hope he will correct me because I did not quite catch his final point about mutualisation. On onshore wind, as he is aware, the Government issued a consultation in November 2016 and continue to be heavily engaged in discussing the situation with the Scottish Government, developers, island communities and other Members. I hope that gives him comfort.

On the issue of costs, the hon. Gentleman will see that they have been included. We expect the costs for Hinkley Point to be in the region of £1.4 million for 2017-18. It is not at all clear why that should go up, but it is worth saying that Hinkley Point C is a complex contract and the Government’s approach is based on a flexible outsourcing model of getting professional advice to fit the needs, so that may change. If there is an issue of mutualisation, I invite him to come back to me because I did not quite understand the point he made.

The hon. Member for Southampton, Test was right to separate out the fixed levy portion from the lump sum reserve payment, and to point out that the intention of the lump sum reserve payment is to give 95% confidence that that will be paid. In the past, the effect of the previous regulations meant that the LCCC over-collected. The purpose of the regulations under discussion is to allow it to remit more quickly those funds that may have been over-collected, rather than trap them in parallel with the faster settlement process that has been introduced. Therefore, the question whether the organisations are under-constrained does not arise. As I have said, their operating costs are scrutinised by the Government, and of course they are subject to mutualisation and are therefore undoubtedly subject to question by the suppliers who pay their costs.

[Dr Whitehead]

I am sure the Minister will agree that the existence of the reserve fund still has some salience in this process, in so much as it functions as a backstop when there have been hiatuses—if that word exists—in payment or collection. The reserve fund can, in such circumstances, be brought in to smooth the passage and allow for the continuation of business, even if there are problems at either end. The question of reducing the reserve fund unilaterally and with no notice, which is in the regulations, is not just a technical issue; it is a real issue that has a bearing on how the rest of the company works, and therefore the probability within which it works overall.

[Jesse Norman]

I take that point, but I think the hon. Gentleman has got the incentives the wrong way around. The incentives are to maintain a large reserve fund because that gives a degree of comfort and prevents challenge. The point of the provision is to create an inventive if it is perfectly clear that more money has been accumulated than is required to be paid out. In general, the companies concerned will have a tremendous incentive to retain what reserves they can, precisely for the reasons he suggests. In reality, I do not think there is any real danger.

Question put and agreed to.

Energy Prices

Jesse Norman Excerpts

Thursday 16th March 2017 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

This is the second debate in which I have had the pleasure of speaking this week, Mr Deputy Speaker, and, as the fellow said, truly you’re getting to be a habit with me, and I thoroughly welcome that.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Always a pleasure.

[Jesse Norman]

Let that be noted in the record. Thank you, Mr Deputy Speaker.

I congratulate my hon. Friend the Member for Weston-super-Mare (John Penrose) on fighting his way through the dragons of dragons’ den and, with his colleagues, securing the booty of this debate, which I greatly welcome. Whatever else its effect might be, it sends a powerful signal about the feelings of not only the Members who have spoken so well today but Members up and down the country on the issues that have been described. I will talk about those issues and the policy and will try to weave in my responses to the speeches during the course of my comments.

The Government are firmly focused on getting the best deal for energy consumers and on ensuring that the market works for everyone. We absolutely expect energy companies to treat all their customers fairly. We therefore continue to be concerned about price rises that will hit millions of people already paying more than they need to. It is not acceptable that five of the largest suppliers are increasing their standard variable prices, hitting customers hard in the pocket when they are already paying more than necessary. It must be noted that wholesale prices, which account for about half of an average bill, are still lower than in 2014. This is a moment not for crisis, but for sober reflection.

Prices are not the same as bills. The recent report from the House of Lords Economic Affairs Committee reminded us that electricity bills have risen little over the past 25 years, which is due to insulation, appliance improvement and other things. Prices are not the same as bills, but that is not to say that prices are not important and that price rises are not a matter for concern.

[Caroline Flint]

It is important that we have a candid, open and honest discussion. The Minister makes a good point about prices versus bills, because the amount of energy that we use has gone down significantly over the past 10 years. Is he as concerned as I am that the big six might be keeping their tariffs unwelcomely high because they are having to compensate for the fact that we are using less energy?

[Jesse Norman]

It is an interesting suggestion that the changes may have cushioned the effect of price rises in the way the right hon. Lady describes. I thank her for that thought, and I would certainly like to give it some reflection.

[John Penrose]

Further to the intervention of my co-sponsor, the right hon. Member for Don Valley (Caroline Flint), the point about prices versus bills is an important one. Does the Minister agree that if prices stay unfairly or unnecessarily high, one of the Government’s other main goals of improving overall productivity across the economy—energy bills are a vital and central part of the cost base for most businesses—will be much harder to achieve? We can do more with less if we are more efficient in our energy sector.

[Jesse Norman]

This is really a debate about retail energy prices. The problems are less marked in many areas of the business market, but it is undoubtedly true that business bills must be kept as low as possible to encourage productivity. As my hon. Friend knows, the Government have undertaken several steps precisely to achieve that.

Colleagues on both sides of the House have noted that, with suppliers buying their energy up to two years in advance, suppliers should be protected from recent fluctuations in the wholesale energy price. Some suppliers have chosen to act differently by freezing standard variable prices through winter and beyond, which alone shows that price rises are not inevitable. It is a fact that the majority of customers—around 66%—are on standard variable tariffs and continue to pay considerably more than customers on fixed-term deals.

The Competition and Markets Authority highlighted that such customers have been losing out by an estimated £1.4 billion a year—that figure is disputed—over the past few years. There have been persistently high differentials between the cheapest fixed deals and standard variable tariffs. The latest published Ofgem data show the differential to be some £200. There has been good focus today on fuel poverty, as there was the other night, and it is those who can least afford it who are most likely to lose out. Households with low incomes, people with low qualifications, those in the rented sector and those over 65 are more likely to lose out than others. The recent price rises serve only to underline the fact that the majority of consumers are paying more than they need to pay.

What can be done about it? The House widely recognises that, in many markets, effective competition drives down prices, promotes innovation and assists improvement in customer services. The Government have worked hard with Ofgem to try to improve competition. The right hon. Member for Don Valley (Caroline Flint) mentioned “Groundhog Day,” possibly inadvertently casting herself in the role of Andie MacDowell, which is certainly how I see her. It is not fair to say that we are in “Groundhog Day” because there has been some progress. Members rightly point to the fact that there are now more than 50 energy suppliers in the domestic market, up from 13 in 2010, and of course there are potential new entrants, including local authorities, waiting in the wings—we welcome them to the market. Independent suppliers now have more than 18% of the dual-fuel market, up from less than 1% seven years ago.

I was pleased to hear from the hon. Member for Bristol East (Kerry McCarthy), who mentioned Bristol Energy and the social conscience it brings to energy supply, which is typical of a tier of new and wider-ranging suppliers, including not-for-profit suppliers, that have entered the market—there are housing providers, too. Smaller suppliers are leading the way in using smart, pre-pay and other technologies to support customers in finding the best deal using their mobile phone.

We had a good discussion on switching, and it has been rightly noted that an increasing number of households are switching their energy supplier. There were some 7.8 million energy account switches last year, an increase of 28% on the previous year. Switching is putting increasing competitive pressure on the big six—although, as my hon. Friend the Member for Weston-super-Mare noted, there is a great deal of churn—but it is still only 15.8% of gas and electricity customers, so we are a long way from a position where anyone should feel that a large number of people are actively availing themselves of the opportunity to switch, as one might expect in a more competitive market.

For too long, too many customers have been left on poor-value deals. At the end of last year, the Government announced new measures to increase transparency for consumers. I welcome the point the hon. Member for Southampton, Test (Dr Whitehead) made about transparency, and he is right: several studies have found that the markets are less transparent here in many different ways than one might like. An effort was made to begin to crack that and increase transparency for consumers, including through the publication of an energy supplier league table by Ofgem, which was designed to shine a light on the most expensive standard variable tariffs.

We know that some consumers worry that switching supplier may be difficult and time-consuming. This is not just an economic matter; it is also a cultural matter. We must recognise that and not allow purely economic analysis to take over. We are also taking forward proposals to mandate Midata in the energy sector, which should also have an effect. Midata will allow consumers to get hold of their energy data electronically and use them to find the best deal. It will make the switching process quicker, easier and more accurate, and, with luck, it will allow people to switch using tablets and smartphone applications more easily. We are very keen that the benefits of this are not restricted, in any sense, to the tech savvy, but are available to anyone who owns a mobile phone at the very least. We will therefore work with industry, switching companies and consumer groups to ensure that all consumers can access and use their data to switch.

The hon. Member for North Ayrshire and Arran (Patricia Gibson) rightly mentioned the time it takes to switch supplier. All I would say is that it used to take five weeks and the Government are working with Ofgem to get it down now to 21 days. Once we have done that, we will work to push it down to where it should be, which is at 24 hours. That will be a major improvement to our system.

There was some discussion about customer service, where some improvement has been made. The latest Ofgem data show that suppliers received more than 3 million fewer customer complaints in 2016 than in 2014, but as there were still 3.5 million complaints that is not saying much and they still have a long way to go. We are working with Ofgem and the ombudsman to identify and fix systemic issues, which damage customer service. As the House will know, an Ofgem review last year resulted in increased communication between Ofgem, the ombudsman and Citizens Advice, an organisation I greatly esteem, as I know many colleagues do. It is working on developing a rating system that will help customers to see at a glance how their energy suppliers are performing.

As Members noted, the CMA had some positive things to report after concluding its two-year energy market investigation. It found that wholesale energy markets and the retail market for larger businesses are working well, but for domestic energy suppliers the report is a wake-up call. It is important to note that the CMA’s report was not unequivocal in every sense, and it has been contested; I note a letter from some senior energy regulators who raised the question of whether it is true to see detriment in the way the CMA has. It is important to acknowledge that fact. However, the CMA’s position was clear: consumers should be able to trust energy companies and to know that they are getting a good deal. The CMA found that a lack of competition meant that about 70% of big six customers remained on their supplier’s most expensive tariff despite the savings they could make by moving to another tariff. We have encouraged, and Ofgem is introducing, a prepayment meter cap, which will protect 4 million households across Britain from the beginning of next month.

We are determined to go further and, as the House will know, we have a consumer Green Paper in prospect, which will examine specific sectors. We will respond sooner rather than later, and separately, to the CMA energy market report. Our Green Paper will examine markets that are not working fairly for consumers. In general, consumers in this country enjoy strong protections and an effective regime which help them get the best deal, but where those markets are not doing their job—where competition is not effective—the Government will look to intervene to improve competition and to strengthen outcomes.

The Green Paper will complement and sit within the Government’s industrial strategy to build on the work to deliver an economy that, as I have described, works for everyone. We announced some proposals in the Budget, including the ending of the cycle of subscription traps, the shortening and simplification of small print, and the introduction of new powers to impose fines on companies that mistreat customers. The Green Paper will provide more detail on those proposals.

Let me round up my speech with a couple of reflections on some of the helpful comments that were made in Members’ speeches. I was intrigued to notice that, according to the hon. Member for Brent Central (Dawn Butler), it is now Labour policy to renationalise the big six companies. I would welcome further clarification on that, together with an explanation of how much it would cost and how it would be funded. That was an interesting contribution.

I very much congratulate and thank my shadow, the hon. Member for Southampton, Test, for recognising the complexity of the problem we face. He is certainly right to focus on transparency. In recognition of that, I assure him and my hon. Friend the Member for Weston-super-Mare that the Government will reflect on such contributions. The Government’s record on intervening in electricity and energy markets is not absolutely unblemished. On several occasions, changes have been made, only for them to have to be unwound because it turned out that they were contrary to competitive pricing or innovation. That is worth recognising.

[Caroline Flint]

I listened positively to what the Minister said about the Government being prepared to intervene when a market is not working. I remind him that the Confederation of British Industry refers to the energy market as a managed market, because energy is an essential-to-life product; it really is set apart from the products that we discussed earlier, such as toothpaste, that we buy every day. I urge the Minister to stand up for what Governments should do, which is set the framework in which markets operate.

[Jesse Norman]

The right hon. Lady’s point is well taken. One does not need to have read far into “The Wealth of Nations” to know that markets are most effective not only when they are as deep as possible—when the benefits of specialisation and the division of labour, and therefore value generation, can be realised—but when they are supported by a strong state and a strong system of justice and enforcement. That is absolutely the tone of our approach to the market in this case.

I thank right hon. and hon. Members for a thoughtful and interesting debate that has covered a great deal of ground in a limited time. As the House will know, the Government are acting to make switching easier and quicker. We are rolling out smart meters and we are continuing to help the vulnerable and those in low-income households with their energy bills. The CMA did important work to highlight how much consumers are currently losing out, and we recognise that the recent price rises underline the fact that the majority of consumers are paying more, it appears, than they need to. We believe that current practice is not acceptable, and we will set out proposals to address the issues shortly.

Business, Energy and Industrial Strategy

Jesse Norman Excerpts

Wednesday 15th March 2017 Ministerial Corrections

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I thought the Minister was a touch complacent in his earlier answer on smart meters given that this will cost the taxpayer £11 billion by the end of the Parliament. What is he going to do about the fact that they do not work when a customer switches supplier?

[Jesse Norman]

The smart meter programme should be judged on its long-term effect. It will save £47 billion by the end of that decade.

[Official Report, 14 March 2017, Vol. 623, c. 178.]

Letter of correction from Jesse Norman:

An error has been identified in a response I gave to the hon. Member for Birmingham, Selly Oak (Steve McCabe) during topical questions.

The correct answer should have been:

[Jesse Norman]

The smart meter programme should be judged on its long-term effect. It will save £47 per year on a household’s energy bill by 2030.”

Oral Answers to Questions

Jesse Norman Excerpts

Tuesday 14th March 2017 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

The oil and gas sector is important for the UK’s economy, for energy security and for jobs. That is why the Government have established the Oil and Gas Authority as a strong, independent regulator over the past two years, providing a £2.3 billion package of support to encourage investment and exploration in the UK. In the spring Budget last week, the Chancellor announced that the Government will consider how tax could be used to assist sales of late-life oil and gas assets in the North sea, helping to keep them productive for longer.

[Martyn Day]

Do this Government stand by or reject comments, which are in contrast to industry voices, made by the Scottish Conservatives’ energy spokesman, Alexander Burnett MSP, that the oil and gas industry does not need any help and that

“People in Aberdeen are not asking for more at the moment”?

[Jesse Norman]

I am unsure whether I entirely caught the hon. Gentleman’s remarks, but the Government have been clear in their support not just for the UK continental shelf and the companies on it, but for Aberdeen through the £250 million city deal.

[Michael Fabricant (Lichfield) (Con)]

22. Is my hon. Friend aware that at this very moment crude is trading at just $48.31? Has he read the OECD report which states that and many other structural factors mean that an independent Scotland would have a worse debt to population ratio than even Greece?

[Jesse Norman]

I am sure that my hon. Friend will understand that I will not comment on that specific economic issue. However, I admire his awareness of the oil spot price. The Government have managed to engineer a significant fall in oil and gas supply costs on the continental shelf—[Interruption.]

[Mr Speaker]

Order. A cerebral Minister is at the box responding to a pertinent inquiry, and the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) is behaving in a mildly boorish fashion—very uncharacteristically. I am sure that this is an exceptional case.

[Jesse Norman]

I am not sure that anyone can recover from the attribution of being “cerebral.”

The way in which the Oil and Gas Authority has lowered costs on the UKCS is testimony to how competitive our economy can be in oil and gas, even when oil prices are falling.

[Justin Tomlinson (North Swindon) (Con)]

5. What steps he is taking to support growth in the UK space sector.

--- Later in debate ---

[Chris Green (Bolton West) (Con)]

8. What steps he is taking to improve the UK’s energy infrastructure.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

Just yesterday I was a few miles away from my hon. Friend’s constituency in Carrington, opening a new combined-cycle gas turbine plant. A few weeks before that, I was in Folkestone to see the new interconnectors being built through the channel tunnel. Both schemes remind us of the Government’s commitment to the UK’s energy infrastructure, underscored by a capacity market and contracts for difference. We are also investing £320 million in new heat infrastructure, which underlines the size of our whole commitment.

[Chris Green]

Base load energy supply is fundamental to delivering our energy needs. Solar and wind power do not provide base load, and there is a pressure not to increase the consumption of hydrocarbons, so does my hon. Friend agree that, in the absence of energy storage capacity, future investment must go to the nuclear industry, especially small modular reactors?

[Jesse Norman]

As my hon. Friend knows, we are spending a great deal of time working with developers, with new investment, alongside the plans that are already being executed at Hinkley. Small modular reactors could be part of that conversation. However, there are many possible storage technologies that might come on stream over the next decade or two; undoubtedly, they will also be an important part of the picture.

[Albert Owen (Ynys Môn) (Lab)]

The country needs 21st century systems such as smart metering. Will the Minister update the House on the progress of the roll-out, and will he have a word with the energy companies to stop them blaming the Government for smart metering being part of the hike in energy prices that is ripping off the consumer?

[Jesse Norman]

We are in no doubt at all about the need for energy companies to bear down on prices. As they will be aware, the costs of policy are a relatively small part of those prices.

[Mrs Flick Drummond (Portsmouth South) (Con)]

Tidal energy gives the UK an opportunity to provide a clean and predictable source of renewable energy. It is a sector in which we have world-leading business expertise in the Solent region. Will my hon. Friend consider giving tidal a higher priority in the UK energy strategy so that we can maintain our competitive edge?

[Jesse Norman]

My hon. Friend will know that we are looking at tidal energy and related issues closely in the context of our consideration of the Hendry review.

[John Pugh (Southport) (LD)]

Following on from that question, will the Minister tell the House when a final decision will be made on the Swansea tidal lagoon?

[Jesse Norman]

It is fair to say that we have stated that we will come to the House as soon we can and that the matter is presently under consideration.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

The Minister mentioned the capacity market. I am sure he will agree that the prime purpose of that market has been to procure new infrastructure capacity. Will he tell me how many new gas-fired power stations have been procured with the £3.4 billion that has been spent so far on the capacity market? What plans does he have to improve that number?

[Jesse Norman]

rose—

[Dr Whitehead]

To be helpful, the answer is: one new power plant in King’s Lynn.

[Jesse Norman]

Well, I am all in favour of the self-answering question, but I remind the hon. Gentleman that the last capacity market procured energy at a cost of £7 per kilowatt, which is cheaper than any conceivable alternative.

[Jess Phillips (Birmingham, Yardley) (Lab)]

10. What assessment he has made of recent trends in the number of people employed in the gig economy.

--- Later in debate ---

[Pat Glass (North West Durham) (Lab)]

19. What recent steps his Department has taken to promote renewable energy.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

Nearly £56 billion has been invested in renewable energy since 2012. In the Budget last year, my right hon. Friend the former Chancellor of the Exchequer announced £730 million of annual support for less established renewable energy projects, including offshore wind. In the previous autumn statement, the renewable heat incentive was announced, at £1.15 billion by 2021.

[Pat Glass]

We have heard a lot about the importance of small business this morning. There are 44,000 small businesses that have their own solar microgenerators. Currently, they are exempt from business rates, but from 1 April they face an 800% increase in business rates, which is clearly damaging for them and for the solar industry. I hope that that is not deliberate, so will the Minister meet the Chancellor to see what can be done to relieve the situation?

[Jesse Norman]

Of course, the impact of rates differs from company to company as regards their solar panels. Three quarters of businesses are projected to have rates that fall next year and there is of course transitional rates relief, but the Department has long recognised the problem in some cases to which she refers, and we are in active discussion with other Departments about it.

[Mr Speaker]

I call Sir Desmond Swayne.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

Of course, the primary effect of success in that area will be to keep costs down for small business, as well as for large.

[Andrew Stephenson (Pendle) (Con)]

On Friday, I visited Graham Engineering, in Nelson. It is an excellent company in the nuclear supply chain that currently has 30 new vacancies, which will be on offer at my seventh annual Pendle jobs fair on 24 March. What more can we do to support the nuclear supply chain?

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I thought the Minister was a touch complacent in his earlier answer on smart meters given that this will cost the taxpayer £11 billion by the end of the Parliament. What is he going to do about the fact that they do not work when a customer switches supplier?

[Jesse Norman]

The smart meter programme should be judged on its long-term effect. It will save £47 billion by the end of that decade.[Official Report, 15 March 2017, Vol. 623, c. 5-6MC.]

[Rachael Maskell (York Central) (Lab/Co-op)]

When will the business rate review commence and report? The sticking plasters offered last week will do little for small businesses in York.

Fuel Poverty

Jesse Norman Excerpts

Tuesday 14th March 2017 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

What a delight it is, Mr Deputy Speaker, to see you in the Chair. I thank my hon. Friend the Member for Sutton and Cheam (Paul Scully) for selecting such an important issue for debate this evening. I am very grateful to him not just for his interest in fuel poverty, but for his leadership in hosting a discussion in the Palace of Westminster next week. You may have detected, Mr Deputy Speaker, the subtle way in which he wove in the details of the time and place into his speech on how we can support efforts to tackle fuel poverty in the UK.

The Government recognise that fuel poverty is a significant issue, affecting households throughout the United Kingdom, as the Committee on Fuel Poverty rightly highlighted in its 2016 report. I massively welcome the insight and challenge to Government that the committee brings. I also welcome the fact that it can help us, by those means, to deliver a suite of solutions for those who need help that is as effective as possible. Only this morning, I spoke to David Blakemore, the chair of the committee since November last year, and I look forward to working with him and the committee over the coming years.

As my hon. Friend has said, fuel poverty is measured in England by the low income, high costs indicator. According to that indicator, a household is fuel poor if it has an income below the poverty line and, at the same time, higher than typical energy costs. It is a relative indicator that is essentially a balance of two averages. It is fair to say that the total number of households living in fuel poverty has been relatively static over the past few years. However, there has been a fall over time between 2010, when there were just under 2.5 million households in fuel poverty in England—as my hon. Friend will know, this is a devolved matter—and 2014, when the latest official statistics record 2.38 million households. Those households face an average fuel poverty gap of some £371, which is itself a measure of the severity of the problem.

Perhaps I can assure my hon. Friend that, as he has rightly acknowledged, the Government are committed to helping households in fuel poverty, or on lower incomes and living in homes that are expensive to heat. I congratulate him on rightly highlighting the broader measures that the Government have taken in recent years by raising income tax thresholds and introducing the national living wage. Both those things are, at the broadest level, important contributions to solving the problem. He also rightly focused on the significant public concerns about recent announcements of price increases by the energy suppliers. I am glad that, as a result of action by the Competition and Markets Authority, in February this year Ofgem announced details of a cap on the amount that suppliers can charge prepayment meter customers. This will take effect from April and will help to protect those customers from high energy costs.

Energy suppliers have delivered nearly 700,000 measures in 500,000 low-income and vulnerable households since the energy company obligation began in 2013. That is part of a total of some 1.6 million homes that have been improved over that period, but this Government are going further to take action to tackle the root cause of fuel poverty, recognising that improving household energy efficiency is the most sustainable long-term solution to tackling the problem. Next week, the Electricity and Gas (Energy Company Obligation) (Amendment) Order 2017 will be debated in both houses to extend the scheme from 1 April 2017 to 30 September 2018. The measure will seek to reform ECO so that 70% of the support under the scheme will now be directed at low-income homes. That represents an increase from £310 million to £450 million a year that will be invested in improving the energy efficiency of homes that most need support. We expect that the reformed ECO will improve about 500,000 homes over the coming 18 months, and the Government have made a commitment to insulate 1 million homes over the life of this Parliament.

Recognising the fact that people also need immediate support with energy bills, we also have in place the warm home discount, which my hon. Friend recognised. The scheme provides more than 2 million low-income and vulnerable households with a £140 rebate off their energy bill each winter, when temperatures are lowest and bills highest. Together, the schemes mean that there will be at least £770 million of support for low-income and vulnerable consumers over the period 2017-18.

[Jim Shannon]

In my intervention on the hon. Member for Sutton and Cheam (Paul Scully), who introduced the debate, I mentioned having a co-ordinated plan across the whole of the United Kingdom of Great Britain and Northern Ireland so that we can collectively—in all the regions—take on the energy companies and work together. Has the Minister given any thought to how we could progress that?

[Jesse Norman]

As I have said, this is a devolved matter, so that does not specifically bear on it. However, on the wider question of whether there is scope for more joined-up thinking, I would absolutely welcome the hon. Gentleman’s suggestions, or indeed suggestions from the Northern Ireland Executive, as to how those things could be done, and we would give them a very warm interrogation. I am not sure what would come out—we would have to see the suggestions—but the warmth and the interest from our side are certainly there.

I should add that the role of regulation will also be important as we take action to ensure that tenants can live in a home that keeps them comfortably warm. The private rented sector regulations will target the least efficient, F and G-rated properties from 2018 by requiring landlords to improve those properties to at least a band E, unless a valid exemption applies. My Department is considering options for the implementation of the regulations, with a view to ensuring they can be implemented effectively by April 2018.

Of course, there is more work to be done. One important area will be to improve targeting on the households most in need—a topic my hon. Friend rightly raised. The Digital Economy Bill, which is going through Parliament, will be important in that regard, as it will make available better data on householders and properties. That, in turn, will reduce the costs obligated suppliers face in identifying households that are most in need, and it will allow more measures to be installed for the same cost.

I hope my hon. Friend will agree that the Government are taking this matter with the appropriate level of seriousness, but what I have described are all Government-led actions, whereas fuel poverty is a problem for all of society, and the Government cannot tackle it alone, as he rightly said. That is why partnership is a key theme of the fuel poverty strategy. It is important for the Government to play a leadership role, but it is also important for them to work alongside initiatives from local government, businesses, individuals and the charitable sector. Only by making the most of the varied skills and resources of each of these partners—the collective resources of society as a whole—can we collaboratively tackle the long-term social problems of fuel poverty.

In that context, I welcome the Fuel the Change initiative, which is due to be launched next week, and which my hon. Friend mentioned. I am looking forward to hearing the outcomes from the discussion led by my hon. Friend and Baroness Verma of how businesses can support the fight to tackle fuel poverty in the UK. This debate, and my colleague’s excellent speech this evening, are important contributions to that further conversation.

Question put and agreed to.

Energy Council: February 2017

Jesse Norman Excerpts

Tuesday 7th March 2017 Written Statements

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

The Energy Council, chaired by the Maltese presidency, took place in Brussels on 27 February.

The Council began with a presentation by Vice-President Šefcovic on the Commission’s second state of the energy union report, emphasising that 2017 should be the “year of implementation”. He emphasised the importance of co-operation between Council, the Commission and the European Parliament, and the need to adopt the clean energy package swiftly. The Commission stated that the EU was largely on track to meet its 2020 energy and climate change targets, but that some member states were still reliant on third countries for their energy supply and there was a continuing need for diversification.

Commissioner Arias Cañete then gave a presentation on the clean energy package, comprising legislation covering energy efficiency, renewables, electricity market design and governance of the energy union. He saw this as a significant opportunity to prepare European energy markets for the future and highlighted the importance of consumer interests across the whole package.

Nearly all member states considered that the Commission’s timetable of agreeing the proposals by the end of 2017 was too ambitious and that it needed to be more realistic.

On the energy efficiency proposals, a number of member states explicitly expressed support for the Commission’s proposals for a 30% EU-level binding target. Others were more cautious, and were of the view that the legislation should be in line with the October 2014 Council conclusions and by inference propose a 27% indicative target.

On the renewable energy proposals, a number of member states stressed the role that bio-energy can play and wanted the associated proposals for sustainability criteria to apply to bio-energy. Others stressed the need for the proposals to take account of national specificities and that member states should determine their own energy mix.

Member states were generally supportive of proposals to improve the design of electricity markets as a key step towards a successful energy transition and a fully functioning market. However, a number of member states did raise concerns over the Commission’s proposals to phase out regulated tariffs, arguing that such tariffs should be allowed and that the package should not lead to liberalisation of price regulation, as this could result in higher prices for some consumers. Some member states also highlighted the Commission’s proposals to introduce “regional operation centres” considering it unacceptable to give these bodies extensive decision-making powers. A few member states stressed the importance of interconnection if the internal energy market is to operate effectively.

On the governance proposals, member state views were mixed. Some stressed the need for flexibility, others the need for ex-ante rules to address the question of what would happen if the EU were not on track to meet its targets.

The Council then received an update from the presidency on progress on negotiations on the energy efficiency labelling regulation and the gas security of supply regulation, in which the Council is now in discussion with the European Parliament.

The Czech delegation invited member states to attend the 12th meeting of the European nuclear energy forum taking place in Prague.

Finally, the Commission presented the ocean energy forum road map highlighting the important role that ocean energy could play in meeting the EU’s climate and energy objectives.

[HCWS521]