Energy Bill
Debate between John Robertson and Tim Yeo
Mr Yeo
I draw the attention of the House to my entry in the Register of Members’ Financial Interests, in particular to my interests in the energy industry. In doing so, I emphasise, as I have done before, that my views on climate change and on the need for Britain to move more swiftly to a low-carbon economy and to cut its dependence on fossil fuels were formed two decades ago when I had ministerial responsibility for this area of policy.
I have not changed these views at any time since and have repeated them publicly and privately on many occasions throughout the past 20 years. My views have never been influenced at any time or in any way by my financial interests, all of which were acquired after I left the shadow Cabinet in 2005. That was 12 years after I accepted the overwhelming scientific consensus on this subject and began campaigning for a more urgent response to the challenge of climate change. Various bloggers, columnists and others, including one or two of my hon. Friends, who imply otherwise and who ignore the scientific consensus, invariably overlook my strong and consistent support for nuclear power, which is a low-carbon technology that should be part of Britain’s energy mix.
I am grateful for this opportunity to debate amendment 11, which stands in my name and the name of hon. Members from most parties. It is based on a unanimous recommendation made last July in the report of the Energy and Climate Change Committee on the draft Energy Bill. I am glad to say that the Government accepted many of the Committee’s recommendations, and by doing so materially improved the Bill, and I congratulate my right hon. Friend the Secretary of State and his team on their response to our report and on the outcome of their negotiations with the Treasury on a range of issues, including the levy control framework.
For a variety of reasons, however, the need for the amendment is even greater now than when my Committee’s report was published. First, despite some positive signs on the Government’s support for low-carbon electricity generation, the publication of the gas strategy on the very day of the autumn statement confused many investors. The possibility that the Government might sanction 37 GW of new gas-fired generation capacity rests uneasily with their acceptance two years ago of the fourth carbon budget, which covers the period 2023 to 2027, and raises the fear that the purpose of next year’s review of the budget is to water it down and weaken the incentives for low-carbon investment.
John Robertson (Glasgow North West) (Lab)
As a member of the Energy and Climate Change Committee, I want to compliment the hon. Gentleman on his chairmanship. He has done an excellent job. Does he agree that unfortunately the Government have dragged their feet over the Energy Bill? They did not give us enough time to scrutinise it. The Bill then disappeared for a while and came back at short notice. Does this smack of a Government who are putting their heart and soul into energy?
Mr Yeo
It is certainly true, as the hon. Gentleman says, that we waited a long time for the draft Energy Bill. I think that the industry, the non-governmental organisations and the academic world were all hoping to see it appear a lot earlier than last summer. Our Committee was given a very limited period—about half the time normally given to Select Committees to comment on a draft Bill. We completed our work—with great assistance not just from my colleagues on the Committee, but from the staff—in about six weeks. Having received our recommendations at the end of July, we waited another five months before the actual Energy Bill was published, although I recognise that some of that period was used in the negotiations on which I have already congratulated the Secretary of State. The Public Bill Committee stage was completed in the first week of February, however, and we have now waited a further four months to get to Report, so the matter has not been conducted with the urgency that I think the needs of the situation required.
The understandably envious glances cast across the Atlantic by the Treasury at the transformation of the US gas market in the wake of the exploitation of shale gas have not passed unnoticed. Not surprisingly, there are now doubts in the minds of many prospective investors about the depth of the Government’s commitment to decarbonising electricity generation.
Incidentally, the Energy and Climate Change Committee was one of the first bodies to urge the Government, more than two years ago, to approve more exploration and testing to establish the scale of Britain’s recoverable shale gas reserves. If our dependence on imported gas can be cut and if consumers can be partially protected against fluctuations in international gas prices, which have been the main cause of the rise in domestic energy prices in the last few years, that is wholly to be welcomed. However, my Committee also warned, in a more recent report on shale gas, that it would be rash to base energy policy on the assumption that Britain will soon be a major shale gas producer. The opposition to exploring for shale gas in Sussex, which is already emerging, is a foretaste of the battle for public opinion, which must be won before domestic production of shale gas on even a modest scale can occur. The case for a diversified energy mix is therefore as strong as ever.
Energy and Climate Change Committee Report
Debate between John Robertson and Tim Yeo(11 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Tim Yeo (South Suffolk) (Con)
I beg to move,
That this House has considered the matter of the publication of the Fifth Report from the Energy and Climate Change Committee, on Consumer Engagement with Energy Markets, HC 554-I, and the launch of inquiries into Energy prices, profits and poverty, and Smart meter roll-out.
I am grateful to you, Mr Speaker, and to the Backbench Business Committee for the chance to launch my Committee’s report on consumer engagement with energy markets, which was published today. My Committee has been paperless since the summer recess so my notes are on an iPad, rather than hard copy. I draw attention to my entry in the Register of Members’ Financial Interests.
This inquiry was prompted by our concerns that many consumers do not have a clear idea of how energy prices will be affected by investment in energy infrastructure—investment that is needed to provide a clean, secure and affordable energy supply for the future. Our report concludes that consumer engagement with the energy market is low and that this is linked to low levels of competition and consumer trust in the energy industry. Many consumers seemed unable or unwilling to take action to reduce their energy bills by switching provider. We are particularly concerned that some customers who have not engaged in switching may be among the more vulnerable, and that they are paying considerably more for their energy.
There is little incentive for larger energy suppliers to offer those consumers a better deal. Confusion felt by consumers faced with too many different tariffs has been a barrier to switching. Other barriers include apathy, which I fear I may be guilty of myself as a non-switcher; fear of ending up with a worse deal; feeling that switching is too much hassle; disinterest in energy issues; distrust of suppliers; and feeling that all suppliers are the same.
Ofgem plans to increase both switching and competition under its retail market review proposals by reducing and simplifying tariffs and making it easier for consumers to switch. The Prime Minister, during Prime Minister’s questions, recently pledged to ensure that
“energy companies have to give the lowest tariff to their customers”.—[Official Report, 17 October 2012; Vol. 551, c. 316.]
The Minister of State, Department of Energy and Climate Change, my right hon. Friend the Member for Bexhill and Battle (Gregory Barker), who is in his place,confirmed to us that the Department of Energy and Climate Change would be doing that in the Energy Bill. However, the Government’s proposals are very similar to those put forward by Ofgem. We question the wisdom of legislating to implement measures that are so similar to those Ofgem proposes to implement more quickly without legislation. Whether the Government’s and Ofgem’s measures on tariffs will improve the situation for consumers remains to be seen. It is crucial that, if they do not make improvements soon, stronger action is taken to ensure that consumers get a fair deal from energy providers. Our report concludes that the effect of the proposed reforms should be monitored and it proposes several indicators for tracking the effect on competition and on getting a better deal for consumers.
As I outlined earlier, the rising cost of investing in our energy infrastructure and of paying for DECC’s environmental and social policies will be reflected in consumer bills over coming decades. Currently, there is some confusion about the impact of this investment on consumer bills, and it is important that there is more clarity, because consumers are being expected to take action to offset these costs and avoid large rises in their bills. A very good way of doing that is by increasing energy efficiency, but we are concerned that this message is not getting across to consumers and that plans for informing consumers about energy efficiency lack detail.
Our inquiry heard from members of the public at events held in Southampton, East Bergholt, in my constituency, and Banchory. People told us that they did not know whom to trust for information about energy issues or where to go for advice. Given the importance of increasing consumer knowledge of these issues, we conclude that there is a case for streamlining the sources of information available to consumers to provide a single, independent, reliable and trustworthy source of information about these issues. Most of all, however, we need a full and frank conversation with the public about the contribution that consumers are being expected to make to ensuring that we have safe, secure and affordable energy supplies in the future. DECC should lead that conversation. Consumers need to be aware that bills may continue to rise unless they increase energy efficiency or otherwise reduce their energy consumption.
During our inquiry, energy price rises were reported by all major suppliers, and prices look set to continue rising. We are concerned about the effect on consumers, particularly those in fuel poverty.
John Robertson (Glasgow North West) (Lab)
I thank the Chair of the Committee, of which I have the honour of being a member, and my colleagues for being so forward thinking as to visit Anniesland college in my constituency in February to talk to real people about real problems. Does my hon. Friend—I believe he is my friend in this case—agree that it is important not only that we reach out to people and talk to them, but that we talk to people who have real problems? The Minister might think of trying that for a change, rather than staying within the walls of this palace.
Mr Yeo
I am grateful to the hon. Gentleman, who is a valued colleague on my Committee, for that intervention. I am looking forward to my visit to Glasgow in February. It is truly said that there is more fun to be had at a funeral in the west of Scotland than at a wedding in the east of Scotland.
My Committee is concerned about the effect on consumers, particularly those in fuel poverty. Price rises from energy companies this autumn mean that average annual energy bills have already risen by about 7%, and DECC’s own advisory group on fuel poverty has estimated that 300,000 more homes will be in fuel poverty by Christmas. Millions more may be affected unless radical action is taken. If consumers are to protect themselves against the rising cost of energy, they will need to act to reduce their bills. The success of the green deal and smart meter roll-out depends on public buy-in. Unfortunately, at present, public confidence is low.
Our report found evidence of a lack of consumer trust in energy suppliers, which may in part derive from a lack of transparency in energy company profits and prices. Some consumers blame energy company profits for the rise in prices. A poll undertaken by my Committee showed that one in two people believed that energy company profits contributed most to the 75% increase in the average household dual fuel bill between 2004 and 2010.
Greater transparency is needed in respect of energy company profits and energy prices, including across the whole portfolio of the vertically integrated companies. Our report makes recommendations for increasing transparency, but the issue warrants further investigation. Regaining confidence and trust will require both the Government and energy companies to demonstrate that consumers are getting a fair deal and, importantly, that vulnerable fuel-poor households are being reached and protected.