Government Levies on Energy Bills

Jim Shannon Excerpts

Monday 3rd March 2014 Commons Chamber

[Tom Greatrex]

I was very impressed by what I saw and heard from people at the conference in Belfast last week. The hon. Lady referred to the impact of the announcement on strike prices in the marine energy and wave and tidal sector. I am sure she is also aware that we are talking about nascent technologies, which could be a significant contributor in the 2020s. I hope she gets to the event that my hon. Friend the Member for Southampton, Test reminded her is happening tomorrow, because I am sure that others will be there who will be able to reiterate these points. It is also important, particularly for those technologies, that there is a signal beyond 2020.

The Minister seemed puzzled by the suggestion that an indication of the size of levy control framework beyond 2020 might be appropriate, but a 2030 de- carbonisation target would be appropriate. I am sure I need not remind the hon. Lady that that is supported by all parties in the House, other than hers.

[Jim Shannon (Strangford) (DUP)]

When the hon. Gentleman was in Belfast last week, did he have an opportunity to speak to anyone from the Northern Ireland Assembly about the role of the regulator in Northern Ireland who can have some control over energy prices in Northern Ireland? If he had such a discussion, has he been able to raise it with the Minister, and do the Opposition intend to give more power to the regulator so that prices for consumers can be reduced?

[Tom Greatrex]

I thank the hon. Gentleman for his intervention. I did not speak to any Assembly Members last week because I was there on Thursday when, as the hon. Gentleman will be aware, there were significant issues of immediate and pressing concern to Assembly Members and many others. Some Assembly Members who were due to be at the conference were unable to attend, for understandable reasons. However, I had the opportunity to talk to some players in the Northern Irish and Irish markets about the role of the regulators there, and I will send the hon. Gentleman a copy of our Green Paper so that he can see our proposals for a reformed and refocused regulator to ensure that there is a better balance in our regulatory regime.

The hon. Member for Southport said he had learned not to talk about estimates during estimates day debates. We had a master-class in that from the hon. Member for Angus (Mr Weir), who made a wide-ranging contribution on a range of energy policy issues, many of which were common ground to many of us, and we were able to agree with much of what he said. He touched on the impact on jobs and growth in his constituency from the renewables sector. As a fellow Scottish Member, I share his interest. Some engineering companies in my constituency are part of that supply chain, and I hope and anticipate that it will continue. The tone of this debate has been positive and thoughtful. The opportunity for my constituency and his to benefit most from opportunities in the renewables sector is underpinned by being part of the UK and the single energy market which we currently enjoy as a result.

The hon. Member for Brigg and Goole (Andrew Percy) touched on a number of issues, but most extensively those affecting Eggborough power station and his constituents. He may recall that I raised this issue at business questions just prior to Christmas, when I asked about the rumours that were circulating at that point. I think that the announcement in which the decision was confirmed was made on the day after the House went into recess. There are significant concerns about the way in which the FID-enabling process has progressed to date. I anticipate that further questions will be asked of the Government in relation not only to Eggborough but to other projects that slipped off the list and that had anticipated a different answer from the one that they got.

We are well aware of the proportion of the bills that consumers receive that is accounted for by levies within and outside the levy control framework: it is about 9% of the average bill, with the total amount added to bills being less than a third of the increase in bills since May 2010. It therefore does not stack up to attribute the majority of the increase in bills to levies, or green levies specifically. As the Minister is now well aware, 60% of the levies on bills have been introduced by the current Government since May 2010. I suspect that when he described the carbon price floor as an “absurd” waste of money and “assisted suicide”, he was not necessarily aware that it was a tax that had been introduced by his own Government. I am not sure whether those comments reflect his current view.

Apparently, as the Chancellor considers the Budget in the weeks ahead, he might reflect on the significant escalation of the additional element in bills. I join the Chair of the Select Committee and others who rightly noted that we in Parliament should be vigilant about the impact of levies on the bills of consumers and businesses. The oversight of a number of the arrangements relating to the levy control framework—which, as my hon. Friend the Member for Southampton, Test made clear, does not include all levies on bills—was a theme of several of our discussions in the Committee on the Energy Bill last year.

I ask the Minister to respond to some specific points. Will the capacity mechanism, and the demand-side options that will be considered as part of it, fall within the scope of the LCF in future? The Select Committee recommended that there should be a single annual report covering all DECC-funded schemes—those within and outside the levy control framework—to measure outcomes through spending, albeit that these moneys do not come from the consolidated fund. Have the Government looked into how that might be achieved, and does the Minister think it is a worthwhile exercise?

In its report on the operation of the LCF published in late November, the National Audit Office highlighted the failure of the joint Treasury and departmental governance board to link spending and outcomes in its deliberations. What assurance can the Minister provide that that will be rectified? The NAO also drew attention to schemes not covered by the framework and recommended that the Department should not only explain how it will control aggregate costs of consumer-funded schemes but elucidate on whether, together, those schemes are delivering what they are intended to deliver. What action do the Government intend to take in response to that?

The NAO returned to an issue that has been a matter of concern to many of us in recent months in relation to the allocation of contracts for difference within the LCF and the risk of breaching the cap if the wholesale price falls—another point made by the Chair of the Committee.

The NAO recommended that the Department and the Treasury should supplement published reporting on individual framework schemes by reporting routinely on levy-funded schemes. Has the Minister given that any consideration? The LCF is important, but it is also important that there is sufficient published information and accountability and that it should be taken with the same degree of seriousness with which this House views public spending from the consolidated fund. As the Chair of the Committee said, taxpayers and consumers are mostly the same people, and the impact falls on the same shoulders. The balance between the impact of the levies on consumers and the point of those levies has to be very carefully struck. The discussion about that balance can be better informed by a much stronger level of analysis being provided to this House for scrutiny.

I hope that the Minister will reflect on these important points to ensure that there is better, more thorough and more comprehensive parliamentary oversight of the levy control framework for the future, so that we can all be confident that it is delivering the policies that the Government are expecting it to deliver.