Martin Horwood
Main Page: Martin Horwood (Liberal Democrat - Cheltenham)
Martin Horwood (Cheltenham) (LD)
I welcome the opening remarks made by my right hon. Friend the Secretary of State, particularly the non-partisan tone in which they were made. I have to say, ever so gently, to the hon. Member for Hackney South and Shoreditch (Meg Hillier) that when I was an Opposition spokesman on energy and climate change I took the time to praise her right hon. Friends the Members for Lewisham, Deptford (Joan Ruddock) and for Doncaster North (Edward Miliband), when I thought that the legislation they were promoting was good, and when they were honestly trying to pursue climate change objectives. I do not think that making relentlessly partisan and negative speeches is terribly constructive. I will just let her reflect on that.
The hon. Member for Brent North (Barry Gardiner) made a much more constructive speech and asked an important question about meeting carbon reduction targets in future, particularly the acceptance of the fourth carbon budget recommended by the Committee on Climate Change—a theme taken up by other hon. Members as well. I am sure that my right hon. Friend the Secretary of State was just displaying his notorious tact and reticence by not stating more fully that he was going to press for the acceptance of that carbon budget. It is absolutely crucial that we accept the carbon budget and make it clear that we are on a clear trajectory to meeting the ambitious climate change targets that all parties agreed to in the Climate Change Act 2008.
I warmly welcome many aspects of the Bill, which will deliver an important part of the Government’s green agenda. The ministerial team is to be congratulated on 95% of it. The green deal is a radical, imaginative and ambitious plan. It could deliver energy efficiency not just haltingly to a few thousand homes, as previous energy efficiency programmes have done, but to millions of homes, and perhaps even tens of millions. That will represent a step change in energy efficiency in this country and make a substantial contribution to reducing the UK’s carbon emissions. The additional measures on smart meters and offshore electricity transmission regimes are also very important and much to be welcomed.
Mr Gregory Campbell (East Londonderry) (DUP)
The hon. Gentleman and the Secretary of State have talked about step changing and game changing. Does he not agree with a number of Members on both sides of the House, but particularly Opposition Members, that a crucial element about which we are not yet clear is the interest rate that will be payable? We need to know that in order to ensure that the change is as significant as he claims it will be.
Martin Horwood
I am sympathetic to the hon. Gentleman’s point, which is important, but the genius of the green deal is that it will use market mechanisms and a competitive arena in which providers will compete to provide the best deal, which I hope will help drive down the interest rates offered by different financers and providers.
Barry Gardiner
Does the hon. Gentleman accept that the Department of Energy and Climate Change has predicted that the interest rate would be 11%, which has to be factored in, particularly when dealing with the fuel-poor?
Martin Horwood
The hon. Member makes an important point, but we cannot always predict those interest rates, because we do not know what the situation will be. We must look at the situation in the round.
The additional measures in the Bill are very welcome, but there is one that disappoints me in clause 102, which the hon. Member for Stoke-on-Trent North (Joan Walley) has already mentioned. It deals with the vexed question of the decommissioning and clean-up of nuclear power stations. Cleaning up the last generation of nuclear power stations costs the taxpayer £1.5 billion a year, and it would be a great shame if we were to risk repeating any part of that mistake. This reopens an issue that I thought had been settled in the Energy Act 2008. I remember the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry) and I, as Opposition spokespeople, trying to outdo each other in finding the loopholes in the funded decommissioning programme arrangements in that Act, and the long-term commitments on funding decommissioning that the nuclear industry might try to wriggle out of in order to shift the risk on to the taxpayer. With all due credit to the ministerial team of the time, that was tricky because the legislation was quite tightly drawn. Section 48 even allowed the Secretary of State to amend funded decommissioning programmes, at either their own or the operator’s suggestion, to take account of unforeseen circumstances.
But lo, we have in the Bill a suggestion that the Secretary of State should promise not to amend those decommissioning arrangements in advance when the decommissioning arrangement is being set up, either “in a particular manner” or “within a particular period”. That seems a rather strange thing, because clearly the subsequent amendment of those arrangements would be a matter of negotiation. The Liberal Democrats have discovered quite a lot about negotiation in the past year, and now think, on balance, that it is not a good idea to give away the negotiating position too early in the process. I think that that applies to Secretaries of State as well.
The explanation for that provision is apparently that it is to reassure investors, but that is a rather strange statement. In a way that is a bit of a give-away by the Government, because to reassure investors they are presumably trying to reduce the risk. There are only two possible explanations for that. Either the Government are actually reducing the risk or they are trying to shift it elsewhere. The nature of unforeseen circumstances, of course, is that they are unforeseen. Although I attribute many gifts to my right hon. Friend the Secretary of State, clairvoyance is not one of them. We cannot know what those unforeseen circumstances will be, any more than the Japanese Government could. Therefore, it is only the transfer of that risk that is likely to take place. It is transferring the risk straightforwardly from the operators to the taxpayer. If that is not against the words of the coalition agreement’s promise not to subsidise nuclear power, it is certainly against its spirit.
If we need an extreme and sobering warning of what might happen in such situations, we need only look at what is happening in Japan right now. The operator of the Fukushima nuclear power station, TEPCO, has now asked formally for Government help to fund the compensation for the 80,000 people who are still evacuated from their homes in the area, which it is estimated will cost around £61 billion in total.
Chris Huhne
My hon. Friend should recognise that the clause intends not only to provide more certainty for investors, but to recognise that there might need to be changes. Those changes would not necessarily be downwards, either; they might well be upwards, in circumstances that would have been set out clearly in an agreement. That applies to costs as well, so, far from saying that the measure would drive a coach and horses through our commitment to no public subsidy, I am saying exactly the opposite: it puts flesh on our commitment to no public subsidy for nuclear.
Martin Horwood
I did not say that the measure would drive a coach and horses through our commitment to no subsidy. I am sure that our commitment to it is absolutely intact, but the clause seems to insert a rather large crack in the edifice. The arrangement that my right hon. Friend mentions—in which the operator and the Secretary of State may agree to the necessity of some amendments, which might be upwards or downwards —is in the existing legislation. The difference between that and the clause under discussion, however, is that in the existing legislation the final decision rests with the Secretary of State, and in the clause before us the Secretary of State gives away that right in advance. That seems to represent poor negotiation.
To return to the situation in Fukushima—
Barry Gardiner
I am grateful to the hon. Gentleman. Does he accept that the DECC’s proposals for a “contract for difference” feed-in tariff are precisely the subsidy to the nuclear industry that he counsels his right hon. Friend not to introduce?
Martin Horwood
I am not sure about feed-in tariffs, but if the hon. Gentleman is talking about the floor price for carbon, that certainly risks inadvertently subsidising the new, and indeed existing, nuclear industries. Perhaps a windfall tax on the nuclear industry might help to compensate for that, because the floor price for carbon is an important policy for operators.
To return—for the final time, I hope—to Fukushima and the example in Japan, the compensation bill looks likely to be about £61 billion for the 80,000 people who have been evacuated from their homes, and for the damage to agriculture, businesses and so on in the area. That is a very extreme case, but it is not impossible to imagine much smaller disasters—natural shocks to the system, terrorist attacks or whatever—that might deliver similarly unexpected large bills.
The situation in Japan has resulted in its Government announcing today that they will examine their energy policy from scratch, with a brand new emphasis—surprise, surprise—on renewables and energy efficiency, and almost certainly less emphasis on nuclear. That seems to me a wise decision to take, in the circumstances.
I am pleased that we are emphasising energy efficiency before we are forced to do so, and it is important that the Government promote renewables and energy efficiency as cornerstones of their energy policy, but I would not want energy subsidy for nuclear to creep into that mixture, and it seems to me that clause 102 is unnecessary. As the Secretary of State says, it provides reassurance to investors, but it provides very little reassurance to me or to the taxpayer.
Dr Lee
My view is that these targets are extremely difficult to meet, partly because the energy policy of the previous Administration was woeful; admittedly, it improved when the Leader of the Opposition took over the position that the hon. Member for Hackney South and Shoreditch (Meg Hillier) now shadows. The hon. Gentleman knows that we are in a difficult position as regards hitting these targets, and that difficulty was not aided by the previous Government’s performance.
In the spirit of the Bill, I will try to speak within the generous time limit and save some energy. I am struck by the fact that the time limit is so long, because energy and the need to secure energy supply is one of the most important strategic challenges for our generation. We cannot have more hospitals, schools, aircraft carriers or anything else provided by Government unless we have energy, so the subject matters very much. I want to speak primarily about the green deal, because that is at the heart of the Bill, but will move on to discuss energy generation and my thoughts and views on the technology of the future that, as a country, we should be backing.
The green deal is an ambitious plan, and the first of its kind in the world. I hear that Opposition Members want more detail, and of course it requires additional clarification that will no doubt come in Committee. The reality, however, is that this is the first time that such a scheme has been attempted. I am very proud of that and to support a Government who are introducing it. It will benefit homes and businesses, allowing them to save money. At the moment, saving money matters to individuals, to families, and, very much, to businesses. It is a tough environment out there economically, and if they can save money, all the better.
The green deal involves the introduction of a new financial framework that is subject to market forces. I say to those calling for details about the interest rates that we should wait and see and let the market dictate. We are talking about long-term energy products, particularly in the area of generation, and I would invest in that sector if I were in control of a sizeable pension fund because that would produce a return in the medium to longer term. I do not buy into the idea that interest rates will be driven higher by this scheme. It is “pay as you save”, and it will benefit people who are struggling with their bills. The loan is supposedly £6,500—I hear rumours that it may be slightly increased—and it will be made against the property, not against the individual; that is an important distinction. In the past, when we have tried to go down this policy path, we have worried about the loan going with the individual and the fact that those who are less able to afford it will therefore not take one out. The reality is that it will be attached to the property.
The second aspect is the introduction of the energy company obligation to replace the carbon emissions reduction target. As I understand it, it will target those who could experience fuel poverty and have homes that are difficult to insulate. I think that it was a Scottish Member who referred to the difficulty of insulating some homes. The idea in the Bill is to deal with those problems. In view of the fact that 25% of carbon emissions are thought to come from those very homes, it strikes me as an investment worth making.
There are estimates on the benefits of the green deal. I am always cautious about such estimates because they are always dependent on human behaviour. The Secretary of State referred to the situation of someone having a Brazilian wife, and the reality is that such estimates are not always accurate. However, it is suggested that the benefit to society will be in the realm of £8 billion to £9 billion. Fourteen million insulation measures are required, which could lead to an average saving of £550 per year on domestic bills. That will lead to an increase in manufacturing jobs. In my constituency of Bracknell, small and medium-sized construction firms are crying out for this kind of work. There will be no shortage of companies willing to do it. There will be an increase not only in manufacturing jobs, but in service jobs. If we hit 26 million homes taking up the scheme, the number of jobs in the sector may increase from 27,000 to 250,000. That is pretty good.
I welcome the changes to the Energy Act 2008 to ease the introduction of smart meters. A number of companies in my constituency, not least General Electric, will be pleased to hear about that. If smart meters function properly and are able to connect to the network—I know that there are problems with that—they will play an essential part in reducing energy usage. Ultimately, that is what this legislation is all about. I congratulate Ministers on making energy efficiency the key part of their first Bill, because that is the easiest way to reduce our carbon footprint. On a recent trip to Norway, I was struck that even though it generates huge amounts of energy, the first thing I was told was, “Phillip, the best thing that Britain can do is become more energy efficient.” I know that the same view is held in Sweden.
I am also pleased about the balance of powers between Government and the nuclear industry in regard to decommissioning. I am a strong advocate of nuclear power, and I found it depressing to hear yet another speech on the dangers of nuclear power from the hon. Member for Cheltenham (Martin Horwood). I remind him that, as yet, there has never been a proven death from nuclear power in the west.
Martin Horwood
I have on occasion made speeches about the dangers of nuclear power, but today’s was not one of them. I actually talked about the dangers of subsidising nuclear power through the use of clause 102.
Dr Lee
Forgive me. I thought that the hon. Gentleman said something about compensation to agriculture and people moving house. However, I shall move on.
The final part of my speech will be about energy generation. I commend the previous Government for their commitment to offshore wind, which was a strategically important decision. Given that we have shallow water in the North sea, I think that it was the right decision. I am not so sure about onshore wind, but offshore wind, for sure.
This country needs a sustainable energy policy. It needs sustainable sources of energy that are low carbon and, most importantly, secure. There is an increasing world population, which is going to hit the 7 billion mark earlier than projected. One does not have to be a doctor to know that that means that the 8 billion, 9 billion and 10 billion marks will be hit earlier, because that is what human beings do. That concerns me because it means that future wars on this planet will be fought over not just energy and fuels such as oil and gas, but also over food and water. This country has to get real. It has to realise that energy matters. Energy is associated with prosperity, as everybody knows. We cannot rely on how we have done things in the past, but must look to the future and work out how Britain can become as energy independent as possible.
I will mention two areas. The first is marine technology. The UK is surrounded by energy; water is just the medium that transmits that energy. Tidal power comes from the moon, and we have the Severn bore. Waves, particularly off Scotland, provide remarkable sources of energy. Why are we not concentrating on harnessing that energy? It strikes me as a no-brainer. Why is it that there are more renewables obligation certificates for tidal and wave in Scotland than in England? How is that paid for? I encourage the Minister to look at that, and I know that there is a review of ROCs at the moment. Why is solar so subsidised, and not marine? That was a decision by the previous Administration. Solar is subsidised nine times more than onshore wind. I know we are having some good weather at the moment, but I do not think that that makes sense in this country.
I know that the Government are reviewing low-carbon technologies and that £200 million will be allocated. I hope that they look at marine technology and do their best to support it. I think that it is an opportunity for us to lead the world. If one believes RenewableUK, it is an opportunity for us to generate 20% of our energy. I recognise the capital cost and the potential local environmental impact of the Severn bore project, but that one project could provide 12% to 15% of the UK’s electricity needs. We need to look at that again.