Energy: Annual Statement

Lord Hunt of Kings Heath Excerpts

Tuesday 27th July 2010 Lords Chamber

[Lord Hunt of Kings Heath]

My Lords, I thank the Minister for repeating the Statement with his usual eloquence.

The Government told us that this would be the greenest Government ever—an ambition which we would and should welcome—but what a disappointment today’s Statement was. I turn first to the long-term transition to a low-carbon economy that Britain needs. Contrary to what the Statement said, the previous Government did have a clear plan—the UK Low Carbon Transition Plan, published in the summer of 2009—which was widely applauded around industry, among employers and green organisations. But the current Government seem determined to unpick it.

The Minister talks about the challenges posed by the legacy that the current Government inherited. As the Energy Minister in the previous Government, perhaps I may remind him that that legacy included a massive development of power-generation infrastructure, with more than 20 gigawatts in the pipeline. We paved the way for smart meters and the smart grid. We had bold policies on microgeneration. We reformed the planning system. We also made real progress on renewable energy, including being number one in the world in operational offshore wind farms.

As for renewables, one of the major problems with onshore renewables was the record of Conservative-controlled planning authorities. Why are the Government abandoning the key measures which are essential to achieving the targets for onshore wind set by the previous Government? We are told that the Government want more wind power, so why have they abolished the local and regional targets to make it happen? On 5 July, the Minister himself said in relation to onshore wind that,

“It is our determination that there should be no dramatic increase”.—[Official Report, 5/7/10; col. 5.]

Given their energy strategy, the Government will be deep in trouble if there is not a dramatic increase. Moreover, if we are to see progress on onshore wind, why are the Government proposing to abolish the Infrastructure Planning Commission and bring major infrastructure decisions back to Ministers? I can tell the Minister with absolute confidence that that will lead only to delay and uncertainty for investors.

The previous Government pledged that the renewable heat incentive would come into effect in April 2011. That could help thousands of consumers who are off the gas network to lower their fuel bills and gain a cash reward for greening their heating supply. Micropower Council’s chief executive has warned that the industry faces a confidence crisis if clarity about the renewable heat incentive is not provided soon. We were set to be the first country in the world to have such an incentive. The Government, however, are not prepared to make a decision. They have again postponed making a decision until after the spending review, so the uncertainty in the industry will continue.

Something positive has finally been said about nuclear energy. The trouble is that no one thinks that the Secretary of State’s heart is in it. We had the usual negative briefing about nuclear over the weekend to pave the way, no doubt, and comfort the Minister’s partners in the coalition. I only hope that this really lukewarm attitude will not dampen investment in the future. Nuclear energy is a vital part of our low-carbon energy mix. It can provide crucial balance to the intermittency of much renewable energy, and it could be a source of huge growth in jobs, in the industry and, crucially, in the development of the supply chain in the United Kingdom. I ask the Minister to understand that the ambiguity of the coalition agreement, coupled with the Secretary of State’s at best lukewarm support of the industry, puts this at risk. I remind him that we said in our national policy statement that we believe that new nuclear could be free to contribute as much as 25 gigawatts of new capacity. Does he agree?

Then there is the issue of Sheffield Forgemasters. The Minister may laugh, but the Government’s handling of the cancelled loan to Sheffield Forgemasters has been quite extraordinary. It has included misleading statements by both the Prime Minister and the Deputy Prime Minister in the other place. Why did the Minister’s department not defend the loan? Did the Secretary of State’s prejudice against nuclear power play a part, or was the decision taken because a high-level Conservative donor in Sheffield lobbied the Government against nuclear power?

We had a Written Statement this morning from Mr Vince Cable saying that affordability is the issue, but it is not true that the loan was unaffordable. Money was set aside in the Strategic Investment Fund, which was announced as part of the 2009 Budget. It was passed as value for money by the Industrial Development Advisory Board at Vince Cable’s own department. Why was it right to give Nissan a grant to make electric cars—a proposal that we support—but wrong to provide a commercial loan to help a British company to be at the centre of the nuclear supply chain? Will the Minister assure this House that funds will be made available if, as was said in the Written Statement this morning, the Government are ready to work with the company?

The Written Statement also referred to the potential of the UK continental shelf, and I would be grateful if the noble Lord could expand on what action his Government propose to take to ensure that that happens. He will be aware of the incentives which the previous Government introduced to help to develop small and hard-to-exploit fields, and I hope that the Government will feel able to continue the work in this area.

In the light of this Statement, the picture for positive government intervention looks bleak. The Government cancelled the £1 billion investment in the green investment bank, and there is continuing uncertainty about the incentive for electric cars and about investment in ports for offshore wind manufacturing. This is a tragedy. The transition to a low-carbon economy offered so much to this country, and the Government are at risk of dashing those hopes.

Finally, on fairness, we all accept the huge challenge of fuel poverty amid the green transition. Why have the Government not confirmed that the coalition will go ahead with the plan for compulsory social tariffs to ensure help to those who are less able to pay their bills? All that can be said is that they await the spending review. I ask the Minister what his plans are for tackling fuel poverty. We heard much about this from noble Lords on the Liberal Democrat Benches when they were in opposition, but they appear nowhere in relation to the green deal.

We had hoped for a major Statement on energy policy. Instead, it looks rather like a disappointing set of platitudes that raise more questions than they answer.