Lisa Nandy
Main Page: Lisa Nandy (Labour - Wigan)(8 years, 10 months ago)
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Lisa Nandy (Wigan) (Lab)
North sea oil and gas production has helped us to fund our public services, such as the national health service, through the taxes it has generated which are worth hundreds of billions of pounds. It has improved our national security by reducing our dependence on imports from other countries. It has bettered our energy security by providing a reliable supply of gas and oil, fuels that will continue to play an important role in our energy mix, particularly for heating and transport, as we become a lower carbon economy. Crucially, the North sea also sustains hundreds of thousands of skilled jobs in Scotland and the north-east of England and in world-class supply chain businesses right across the country.
For these reasons there has been a cross-party consensus for some considerable time that we should do everything we can to protect those jobs and to continue to maximise investment in our North sea oil and gas industry. The incredibly tough economic conditions faced by businesses operating in the waters off our shores because of the major fall in the price of oil only underlines the need for parties across this House to work together to get on and implement the recommendations of the independent review produced by Sir Ian Wood.
James Cartlidge (South Suffolk) (Con)
The hon. Lady talks about the oil price. Does she agree with her hon. Friend the Member for Swansea West (Geraint Davies) that we should be trying to lobby the American Government to reduce shale output and increase the oil price?
Lisa Nandy
One of the most important things we can do to help boost jobs and skills in the North sea is to have a long-term plan. I will say more about that as I make progress.
Sammy Wilson
Does the shadow Minister agree that to a certain extent she is speaking with forked tongue? On the one hand she is saying that we have to decarbonise the economy, but on the other she is saying we have to increase the output of a carbon fuel—oil. Which is it? Does she want to decarbonise the economy or does she want people to buy oil?
Lisa Nandy
Perhaps I can help the hon. Gentleman with that, as it is one of the things that he obviously struggles to understand. As we move towards a clean economy—there is widespread agreement in all parts of the House that that is a journey we must take—we need to think, too, about where we get our energy from in the short to medium term. There is no question about this—it is a fact that we will need to rely on oil and gas in the short to medium term. Because of that, the question that we face on all sides of the House is whether we import that oil and gas or generate our own.
Our view is that this transition must be made with due care and attention to the jobs, skills and investment we need in this country. It must also be made with due care for our environment, our health and our safety. That is a difficult thing to achieve. I very much welcome the fact that we are having this debate, but it seems to me that pitting the interests of the industry we currently have in the North sea against our interests in transitioning to a clean economy will not get us very far at all.
Geraint Davies
Does my hon. Friend therefore agree that, with regard to the need to convert to renewables in the long run, one of the dangers of a very low oil price, other than restricting margins in the oil industry, is crowding out investment in renewables, and that therefore the cost-effectiveness of investing in renewables now should not be engaged by the current spot price of oil in the marketplace?
Lisa Nandy
My hon. Friend has made several comments, some of which I agree with and some of which I do not, but I think he is right to point out the very real problems created by the falling oil price, such as the economic conditions faced by businesses currently operating in the North sea. It is clearly in our national interests to move forward with the recommendations made by Sir Ian Wood. That is why we must move ahead with his proposals to establish the independence of the new Oil and Gas Authority, and why we support the Government’s steps to progress that plan. As the North sea enters a new, mature phase and as investment flows into decommissioning offshore installations, I hope that Ministers will do everything in their power to ensure that that work is completed using the skills and expertise held by workers in the yards of Fife and the north-east of England.
Christopher Pincher (Tamworth) (Con)
I commend the hon. Lady for her bipartisan approach to the Bill. She has talked about the Oil and Gas Authority, which of course will set fees for the services it provides, and the Secretary of State will be able to determine what those fees should be. Can the hon. Lady indicate at what level she thinks the Opposition would set those fees, and for how long?
Lisa Nandy
I am grateful to the hon. Gentleman for that question, which the Secretary of State will have heard. I am sure that either she or the Minister of State will attempt to respond to it later in the debate.
It is clear that there are still substantial remaining oil and gas reserves in the North sea, and future investment must absolutely not be limited to decommissioning activities. We remain the second largest producer of oil in Europe, after Norway. There are 300 fields currently in production, and it has been estimated that as many as 20 billion barrels of oil and gas remain to be exploited in UK waters. Much of that is understood to be in hundreds of small and marginal fields, which are much more difficult and expensive to exploit, so it is important that the newly independent Oil and Gas Authority is able to maximise investment in those fields if we are to seize that potential. That will require strong powers to encourage collaboration within the industry, resolve disputes between firms, and drive greater efficiencies to make further extraction viable, including consideration of costs.
Jeremy Lefroy
Does the hon. Lady also agree that it is not just a matter of extracting the remaining oil from around the United Kingdom but about the huge oil and gas support services industry, which does so much around the world, contributing to the balance of payments and to jobs in the United Kingdom?
Lisa Nandy
Yes, I agree. In particular, the ripple effect of what we do now in relation to North sea oil and gas will be felt not just directly by the workforce employed there, but by the UK workforce as a whole and around the world.
The Wood review also noted that carbon capture and storage has the potential to be of huge benefit.
John Redwood
Is not the awful truth at the moment that, with oil at $29 a barrel, there will be practically no new investment in new projects in the North sea because it simply is not viable? What does the hon. Lady’s plan suggest on that?
Lisa Nandy
We were keen to explore the future potential for the North sea for two reasons, one of which is the potential for the oil price to rise in future. While we have a rigged infrastructure worth a substantial amount of money still standing there, now is the time that we ought to explore the use to which we could put that infrastructure in the short term while trying to predict longer-term trends.
The fourth recommendation in the Wood review was that the Government need to work with industry to develop strategies in different areas, including for carbon capture and storage. Lord Deben, one of the Government’s own chief advisers on energy policy, argued that
“it would be very odd to produce legislation that did not allow specifically for the transportation and storage of greenhouse gases.”—[Official Report, House of Lords, 7 September 2015; Vol. 764, c. 1227.]
Lord Oxburgh, the former head of Shell, said:
“We need some kind of strategic framework within which private industry can operate in the CCS area.”—[Official Report, House of Lords, 19 October 2015; Vol. 765, c. 483.]
They are absolutely right. Some of the infrastructure in the North sea could be used to create an entirely new maritime industry with very many new jobs. This would also help us to realise the commitments on climate change that the Prime Minister and the Secretary of State recently agreed, rightly, at the Paris summit.
James Heappey (Wells) (Con)
While the shadow Secretary of State may indeed be correct that there is an opportunity for a new industry, does she not agree that to include it in this Bill would be to put an unnecessary burden on the industry at a time when it is challenged in an international market?
Lisa Nandy
The Wood review pointed to the need for the Oil and Gas Authority to be able to take a strategic view. It also pointed to the need for us collectively, including Government, to consider a long-term strategy for carbon capture and storage. In our view, unless the Oil and Gas Authority is tasked with considering the future of carbon capture and storage, it will not form part of the plan. As I said to the hon. Member for South Suffolk (James Cartlidge), now is the time that we ought to be considering what the long-term future of the North sea is. That simply cannot afford to wait. We also believe very strongly that this should not come at the cost of jobs in the North sea in the immediate term. However, we should not let our urgent need for short-term solutions preclude longer-term thinking. In future, CCS could become a huge new North sea asset. That is why we propose that consideration be given to the opportunities that exist to use North sea infrastructure for CCS where that is economically viable.
Unfortunately, since the Bill was discussed by peers in the autumn, resulting in the one now before us, the Chancellor took the reckless decision to axe the £1 billion fund that he had promised to support new CCS projects during the course of this Parliament. That is one of the clearest examples yet of how this Government are damaging confidence among the people we need to invest in this country’s energy system by once again chopping and changing energy policies without any notice. The mishandling of the Government’s CCS programme means that the public will most likely pay, as companies understandably seek to recover costs relating to the CCS projects in Yorkshire and Scotland that they progressed in good faith but that will now not proceed. That is why I have written to the head of the National Audit Office to ask that he launch an investigation so that we can fully understand the cost to the public of the Chancellor’s sudden decision. It is also why we will seek to amend the Bill to require the Secretary of State to bring forward a new carbon capture and storage strategy within a year.
There used to be consensus on this. The Prime Minister used to be a strong supporter of CCS too. Back in 2007, he said:
“even though in the UK we have the depleted oil and gas fields that are ideal for testing this technology, not a single pilot is yet taking place in Britain. We cannot afford this kind of delay.”
He was right then, and he is wrong now. The UN’s Intergovernmental Panel on Climate Change has stated that if we do not have CCS on a global scale, we are likely to see the costs of achieving targets on climate change being double what they would be otherwise. These targets may even be put out of reach entirely.
Jeremy Lefroy
I am grateful to the hon. Lady for her generosity in giving way. Does she agree that there are a lot of opportunities for exporting CCS technology around the world and that they should be taken up?
Lisa Nandy
I do agree with the hon. Gentleman. There is also an opportunity for us to make sure that the British workforce benefit from the skills to be gained from investing in that technology, so that we can export around the world not just the technology but the skills and knowledge of our workforce. That short and medium-term investment would be for our long-term gain, and it is important that we see it as such.
Experts at the Energy Technologies Institute have estimated that, without CCS, by 2020 the costs of reaching our climate targets could be in the order of £40 billion to £50 billion a year more than if CCS were deployed. Ruling out technologies that can cut the cost of low-carbon transition is bad news for bill payers and for taxpayers.
Mr David Anderson (Blaydon) (Lab)
Does my hon. Friend agree that the debate about CCS should not be happening today because it should have been concluded at least half a decade or even a decade ago? We led the world in clean-coal technology for decades, but that is no longer the case because of the actions of the Conservative party. We should be doing it now, not talking about it.
Lisa Nandy
I agree with my hon. Friend. I am not one who is keen to cast back into history to appoint blame, but what I will say to him and to the Secretary of State is that a 10-year promise was made not just to industries and companies, but to the communities that stood to benefit and to gain a huge amount from CCS. Given that the Government have announced £250 million of investment in a competition for nuclear small modular reactors, we seem to be creating a complete lack of confidence that any of the other schemes will proceed. Such decisions and the way in which they are taken damage our energy security, not just in the short term but in the long term. We have to give a signal that Britain is open for business, but the Chancellor’s decision has done precisely the opposite.
That brings me to the part of the Bill relating to wind farms. There was once a time when the Prime Minister was so keen on wind turbines that he even put one on the roof of his house. Now his Government are trying to legislate to close a scheme that has successfully driven investment into the cheapest low-carbon energy source available. Wind farms already provide power to more than 8 million homes in Britain, and once again it will be energy bill payers who pay the price for the Government’s short-term decision. The Institute for Public Policy Research has estimated that ruling out onshore wind farms and relying on other low-carbon technologies to achieve our energy targets could increase costs for bill payers to up to £3 billion through to 2030. There will also be a cost to jobs and growth in an important clean-energy industry.
There is one area on which we agree with the Government, and that is that wind farms should not be imposed on communities that do not want them. That is why we support the Government’s proposals to put local authorities in charge of approvals for such projects. Yet the reality is that the Government are using the Bill to try to block wind farms even where they enjoy strong local support, and they are taking powers away from local authorities in relation to other areas.
Graham Stuart (Beverley and Holderness) (Con)
I am glad that the Labour party has effected a U-turn, because I argued for years under a Labour Government that imposing wind farms on communities against their will would lead to a backlash and to the project being brought to a halt. That is what has happened, so it is a bit late for the hon. Lady to say that she wants to listen to local communities. If we had listened to local communities all along, we could have had more onshore wind turbines where they were desired, rather than the backlash that has resulted in the current situation.
Lisa Nandy
As the hon. Gentleman often reminded me when I served on his Select Committee, he is always right, and usually long before everybody else. We very much support the right of local communities to decide, but we do not understand why the Government do not. The real-time actions they are taking in this Bill will, in effect, block wind farms where there is strong local support for them. Moreover, the Government are taking exactly the opposite approach to fracking applications and seeking to deny local communities the right to decide what happens in their areas.
Christopher Pincher
My right hon. Friend the Member for Wokingham (John Redwood) has pointed out that now onshore wind generates 1% of generating capacity. At most, when the wind is blowing, it is 7% or 8%. What percentage of our generating capacity would the hon. Lady like wind to supply? If it is significantly more than 8%, how would it be done without imposing wind farms on areas that do not want them?
Lisa Nandy
First, the hon. Gentleman is wrong about the figures. Wind generates about 10% of our power. Secondly, there is no question but that we need to move towards a clean energy-driven economy. I think he accepts that case, as do two thirds of the British public, who said in a survey as recently as last September, in a poll of 2,000 adults conducted by ICM, that they would be very happy to have a wind farm operating within 2 miles of their house, if the local authority or community had power over how it was operated. That is one reason I have told the Government we should not seek to block wind farms where they enjoy strong local support, and that we support the right of local communities to decide where they are based.
It looks as though the Chancellor has decided to sacrifice jobs and investment to win personal support from Back Benchers with a particular obsession with wind farms. It is unacceptable, and we will do what we can to defend wind energy from ideological attacks. The Conservative party manifesto said nothing about retrospectively shutting down this existing scheme—it was clear it would stop new subsidies for wind energy, but this is not a new subsidy; it is an existing one.
Lisa Nandy
Now that I have wound him up sufficiently, I will happily give way to the hon. Gentleman.
Chris Heaton-Harris
The hon. Lady was being quite consensual, so would she associate herself with the remarks of the former leader of her party, the right hon. Member for Doncaster North (Edward Miliband), who said that blocking turbines in local communities would amount to antisocial behaviour?
Lisa Nandy
The key thing is that we take communities with us. We have to go to local communities and make the case for how we create jobs, provide energy stability, cut bills and take action on global warming. If we do not take communities with us, we will not do any of that. That is why, I say to Government Members, it is completely hypocritical to argue one thing in respect of wind farms and precisely the opposite when it comes to fracking applications. I hope the Secretary of State has heard me.
Nor does it make sense to claim that the change is about affordability, as Ministers have consistently argued, given that onshore wind farms are one of the cheapest options available to help us secure our power needs and that the Government are pressing ahead with much more expensive options. A Conservative Member asked about this earlier. The Secretary of State is yet to clarify —perhaps she can tell us today—whether subsidy-free onshore wind farms will be allowed to compete for contracts for difference. As with the Chancellor’s decisions on solar energy and carbon capture and storage, this is yet another example of the Government chopping and changing their energy policy to the detriment of investment in jobs, growth and our energy security.
More than anything, the energy sector as a whole needs stability and confidence to get on and invest. I particularly recognise the urgency of supporting our North sea oil and gas industry and that peers have improved the Bill significantly since the Government introduced it. For those reasons, I will support it on Second Reading, but I hope Ministers will engage constructively with the debate and our amendments in the weeks ahead.
Oliver Dowden (Hertsmere) (Con)
With your permission, Madam Deputy Speaker, I will speak briefly about the provisions in the Bill that relate to onshore wind generation. Many Members have mentioned that the provisions in the original Bill reflected Conservative manifesto commitments. However, as my hon. Friend the Member for Daventry (Chris Heaton-Harris) said, they had a much longer genesis. Having played a small part in the formulation of the policy during my time in Downing Street, I think it is important to understand the wider background to this debate.
As my hon. Friend said, the policy reflects a long period of campaigning. I pay tribute to the work that he and other Members of Parliament did before I entered the House to bring the policy to fruition. The policy also reflects the work of my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes), the former Energy Minister, who played a large part in persuading the Prime Minister to take it forward when we were in coalition.
The policy reflects three principles. The first is local consultation—the idea that local people should have a say in decisions that affect them.
Lisa Nandy
I just want to highlight the inconsistency between the principle that local people should have a say, which the hon. Gentleman has set out, and the Government’s approach to decisions about fracking.
Oliver Dowden
I have great sympathy with the argument that local people should have a say, whatever the circumstances. Indeed, my constituency has faced a terrible situation with the Radlett rail freight terminal, in which local decision making has been overridden by national planning policy. I know that adverse sentiments persist for a very long time after such decisions so, wherever possible, one should give priority to local feeling.
As my hon. Friend the Member for Beverley and Holderness (Graham Stuart) said, a lot of the anger about onshore wind farms has come about because local people have not had their say. That is why they have become the cause of such political contention, which was not the case previously. Local communities feel that wind farms have been forced upon them when it has patently been against their interests.
The second principle that the policy reflects is economic viability. There has been much debate about the exact amount of subsidy, but there is clearly large public subsidy for onshore wind. Whether the figure is £20 million or, at the higher end, £270 million, it is still money that is being paid by individual energy consumers, and those individual energy consumers are the least able to pay it. Since every consumer pays pretty much the same amount of subsidy, aside from variations in the size of their house, the impact on the poorest members of society is far greater than on the richest. It surprises me that Opposition Members do not take into account the regressive effect of subsidies on individual energy bills.
The third principle, which is one that we do not talk about enough in this House, is the value of the landscape, the general wellbeing of people who live in beautiful places and the need to preserve those beautiful places. Many of the most beautiful parts of this country have been defiled by ghastly, ugly, enormous wind farms that nobody has consented to. [Interruption.] Opposition Members mention fracking from a sedentary position. A fracking station tends to be a small building and most of the work is done underground. The ghastly great wind farms are often dozens of feet high and block the landscape for miles around. It is not a sensible comparison.
The important point is that if Members are arguing that we should protect our environment in the long run —I agree that we must do so if we believe the scientists that there is a threat, and I have to accept the overwhelming balance of evidence—why should we destroy what we so love in the short term by failing to conserve some of the most beautiful parts of this country?
The important point about these principles is that one cannot take one individual element, as Opposition Members have tried to do. One cannot say, “We agree with giving local people a say on the planning element, but we disagree with the removal of the subsidy.” The two are part of a coherent policy that has been developed over a number of years in opposition and then in government. Most importantly, those policies have been voted for. They were clearly flagged in the Conservative party manifesto and the Conservative party won a majority. The extraordinary thing is that the people who were defeated in that election—principally the Liberal Democrats—have used their superior force in the other place to defeat the elected will of this Chamber.
James Cartlidge
The Scottish Government will have the power to raise tax. They can do that and say to the Chancellor, “We are extremely worried about the crisis hitting our countrymen and countrywomen. We will contribute to a fund to reduce the tax rates on North sea oil.” What is so controversial or naive about that? We had all that passion from the SNP at the referendum about Scotland. Now that we have a crisis in Scotland, what are the SNP Government doing about it? They have a duty to pull their finger out, put their hand in their pocket and step up to the breach.
On the subject of devolution, we also have devolution in England. I have a question for my Front-Bench colleagues. There is an important measure in the Bill on planning and onshore wind. The result of the Bill is that power will go to local people, but I ask the Minister what will happen if a combined Suffolk and Norfolk authority has strategic economic powers. Will that take over the planning powers that will be devolved to local authorities under the measure in the Bill? That is a question about the impact of the measure and English devolution.
As in other constituencies, there have been significant cases in my constituency. In the run-up to the general election, there was a major case of a wind turbine in Pannington farm in Wherstead, near the famous “Jimmy’s Farm” of BBC TV fame. I am pleased to say that it was soundly rejected by Babergh District Council, with great support from the affected communities of Pinewood, Belstead and Wherstead in the northern part of my constituency bordering Ipswich. Of course, those communities will very much welcome the measures in the Bill.
On the subject of planning, several hon. Members, including the hon. Member for Wigan (Lisa Nandy), asked this question: if communities have a say in onshore wind, why should the same not apply to fracking? I see the point they make, but that planning currently rests with the minerals planning authority of the higher authority—in Lancashire, that meant Lancashire County Council. As a result of the time that it is taking, I understand that the decision will eventually go to the Secretary of State. [Interruption.] Is the hon. Lady trying to intervene?
James Cartlidge
I did not say that it did not; I was talking about Lancashire, which obviously has an extremely important fracking issue at the moment.
My position is that fracking is clearly incredibly controversial. The point is that, because of some of the stuff coming out in the media—warnings of terrible things that could happen—I do not see how a district council in that climate would ever approve a fracking application, and yet that industry potential offers so much. We at least have to give it a go. Indeed, shale production could create up to 74,000 jobs, many in areas of high unemployment. It has to be said that it is easier for the MP for South Suffolk to support it—east Anglia apparently has no shale deposits—but we have to recognise the different context. Renewables is a developed industry and shale has not got going. We have exploratory drilling but no commercial drilling. We at least need to give it a chance to get commercial drilling going to see what impact it has in reality, so that we can get away from some of the hysteria and examine the potential. It could be a vital economic resource for this country.
Lisa Nandy
I am sorry to detain the hon. Gentleman on this matter, but is he really arguing—I cannot honestly believe he is—that, because fracking is incredibly controversial, communities should be denied a voice? Surely that is a reason why communities should be given a say.
James Cartlidge
That is the point I am making. If there is a lot of hysteria about a sector, it can be very difficult to achieve a rational, objective decision. Let us not forget that the whole point of planning applications is that they must be considered in a semi-judicial and balanced fashion. That might not be possible—that is just a statement of fact—and yet, strategically, we need that industry. That is my view. I know it is divisive and that not all hon. Members share that view. As I have said, if I were an MP in Lancashire and had the problems that some of my hon. Friends have had, it would be difficult to cope with that pressure, but there is no doubt that shale has huge strategic potential.
David Mowat (Warrington South) (Con)
It is a pleasure to follow the hon. Member for Brighton, Pavilion (Caroline Lucas). It will not surprise the House to learn that there was not one paragraph in her remarks with which I agreed. [Interruption.] I am sure that she will wear my words proudly like a badge of honour.
We should remember why we are all here tonight, because, with a few exceptions, we have not really addressed the main purpose of this Bill, which was to implement the Wood review. That is why the Bill was initially introduced. That review, compiled by Sir Ian Wood, was very necessary as it looked to create a more participative and sharing environment in the North sea over the last decades of its life. At the time, the life of the North sea looked longer than it does now. We should recall that, over the past two decades, this country has had two world-class industries—banking, and oil and gas. The latter has been centred in Aberdeen and has made a massive contribution to the Exchequer, to jobs and to our prosperity. The situation that it finds itself in now—I think the House is a little sanguine about this—is worse than some of the speeches have implied.
Right now, the operating costs—not the development costs or the exploration costs—in the North sea are round about $28 to $30 a barrel. That is where the world oil price is now, which implies that, unless something changes, not only will we not develop new oilfields, but we will struggle at current oil prices to keep operating the platforms we already have and our current activities. It behoves this House to sort that out and do what it can. I do not think that the Wood review will make a big enough difference to make a big enough impact, but let us remember that there are 475 installations in the North sea that have to be decommissioned in the next few decades, 10,000 km of pipeline and 5,000 wells. The industry employs nearly 400,000 people, and it does not employ them all in Aberdeen. When I knock on doors in Warrington and speak to people, I ask where they are working. The answer is often that they work offshore or in some part of the supply chain. Every Member here will find that many of their constituents work in highly paid jobs in the North sea. It therefore behoves us to get this right.
We are trying to create a facilitative environment. In the future, for example, when Shell wants to abandon a platform, or no longer use a pipeline that might be useful to Total, it will be prevented from doing so because people will be looking at the bigger picture and trying to maximise the whole basin. That has to be a sensible target, as is the central objective of the Bill, which is the maximisation of economic recovery. That is why I really regret the fact that the Labour party has sought to change that in the Lords, with this point on carbon capture and storage. It is not that we do not agree with CCS, or that it is not important, but, to use the good phrase the hon. Member for Aberdeen South (Callum McCaig) used earlier, we need to have a laser-like focus on the objective of keeping that industry and those 400,000 highly paid jobs in existence for as long as possible. That is why the amendment is wrong; it is not because we do not believe in CCS. [Interruption.] If the shadow Secretary of State wants to intervene on me, she should please do so.
Lisa Nandy
I say to the hon. Gentleman that that is precisely why we need a long-term and a short-term strategy. We should not be seeking to pitch one against the other, which is why we will be seeking to amend this Bill to ensure that, where economically viable, those options will be considered.
David Mowat
I just go back to this point: how many objectives can we give a new agency such as this? The North sea is not that far from being unviable. We need to put our shoulders to the wheel in this House to come up not with caveats but with a practical set of solutions that were set out in the Wood review.