Air Quality Strategy

Debate between Matthew Pennycook and Andrea Leadsom

Monday 24th April 2017 Commons Chamber

[Andrea Leadsom]

I completely agree with my hon. Friend. A number of advisers and, indeed, serving Members on the Labour Benches now admit that their decision to promote diesel between 2000 and 2008 was not the right decision. The decision to promote diesel was a great shame, because we are now trying to deal with some of the consequences of that. It is important that we have cross-party co-operation to try to make sure that we tackle what is a very significant issue.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

As we all know, air pollution contributes to the premature deaths of tens of thousands of people, but do I take it from the Secretary of State’s previous answer that she thinks air pollution is only a public health issue and is not categorically a public health emergency?

[Andrea Leadsom]

Clean air is a top priority for this Government. We have been working on our new proposals for the last five months and are ready to go with them. We are now seeking a very short deferral to meet the propriety rules around purdah, but we do not expect that that will delay the implementation of our plans to deal with what is a very significant and urgent concern.

Oral Answers to Questions

Debate between Matthew Pennycook and Andrea Leadsom

Thursday 24th March 2016 Commons Chamber

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

17. What progress she has made on developing a legislative and regulatory framework for energy storage devices in the UK energy market.

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

Energy storage has been identified as one of the eight great technologies in which the UK can genuinely lead the world. More than £80 million of public sector support has been committed to UK energy storage research and development since 2012. Last December, my Department published the document, “Towards a smart energy system”, and we are urgently investigating the potential barriers to deployment of energy storage. We will be issuing a call for evidence in the very near future.

[Matthew Pennycook]

I welcome that statement from the Minister. However, regulatory barriers, some minor, are having a chilling effect on the roll-out of innovative energy storage technologies. Can the Minister give the House an assurance that the Government are approaching the removal of these barriers with the degree of urgency that is required if we are to remain a world leader in this field?

[Andrea Leadsom]

Yes, I can absolutely give the hon. Gentleman that assurance. Very recently, I held a roundtable meeting with players in the storage sector and heard at first hand exactly where they think the challenges lie. I can absolutely assure the hon. Gentleman that my Department is working very hard to try to ensure that we remove barriers in the easiest and quickest way possible.

UK Energy Market

Debate between Matthew Pennycook and Andrea Leadsom

Wednesday 9th March 2016 Westminster Hall

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

I congratulate my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) on securing this debate within such a short time of the CMA report coming out.

I want to reiterate that my Department puts consumers at the heart of everything we do. We are determined to be genuine consumer champions. Hon. Members will know that our priorities are to ensure that we have secure supply of energy and that we decarbonise at the very lowest cost to consumers. I remind hon. Members that we are determined to focus available support on the fuel-poor.

My hon. Friend was right to mention the appalling story of E.ON and Age UK selling poor deals to pensioners and it is right that Ofgem is looking carefully at that. He also mentioned the scandal during the last Parliament of price comparison websites not giving the best prices. That has been addressed in amendments to the voluntary code, but he was right to highlight that some of these issues are extremely serious and that we must always take steps to prevent them. I want to use this opportunity to reiterate to any energy companies listening to the debate that when wholesale prices go down, the Government expect them to pass those reductions directly to their customers.

The CMA, as hon. Members know, published its provisional findings last July. It is very clear that it found that retail competition is not working. It found that a lack of competition means that about 70% of households remain on their supplier’s most expensive energy tariff, despite the savings that they could make by moving to someone else. In fact, by switching from a standard tariff to the best fixed direct debit deal on the market, many people could save about £200 and some could save more, so again I will take this opportunity to say to anyone listening out there: please do shop around; it is really worth doing.

However, there is some good news to report. We have been working hard with Ofgem to improve competition, and the work is beginning to bear fruit. We now have 31 independent suppliers competing with the big six in the domestic retail market. That is up from just seven small suppliers in 2010. The independent suppliers are making inroads into the market share of the big six. They now have almost 15% of the dual fuel market; that is up from less than 1% in 2010. The Government have worked with the industry and Ofgem to halve the time that switching supplier takes from five weeks to 17 days. An increasing number of households are switching supplier. Ofgem recently reported a four-year high in the number of energy account switches; 6.1 million energy account switches took place last year. That is increasing competitive pressure on the big six, and prices are falling. We saw the price of the cheapest one-year fixed tariffs fall by more than £100 during 2015, and prices are continuing to fall. That is good news for consumers who shop around and switch tariffs and supplier.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

Will the Minister give way?

[Andrea Leadsom]

I will not give way at the moment. I want to get through part of my speech, as it has already been severely curtailed.

It is a massive challenge to inject the sort of competition that we are seeing for fixed tariffs into the standard variable tariff segment of the market. That is the default tariff that most people are on. Despite the good news that all of the big six have announced price cuts to their standard variable tariffs this year, we want to see much more effort.

The Government, too, must do more, so we are working with Ofgem and the industry to move to 24-hour switching and we are continuing with our Power to Switch campaign. In just one month of the Government-funded Power to Switch campaign last year, more than £38 million was saved by 130,000 households switching energy supplier. Of course, we have already committed to acting urgently on the CMA recommendations that we expect to see tomorrow.

[Matthew Pennycook]

Does the Minister think that there is any merit in looking at what more Ofgem can do to help new entrants better to understand the regulatory environment, as Ofcom does, I think, with the telecommunications sector?

[Andrea Leadsom]

Yes, the hon. Gentleman makes a good point. It is something that Ofgem is very aware of, but I will certainly take that point away and look at it again.

I want to address the point made by the hon. Member for Glasgow South West (Chris Stephens). He is absolutely right to say that prepayment meter customers are particularly ill served by competition. That has been picked up by the CMA. It is true to say that those customers have far less choice of tariffs. We had a very good debate about that quite recently in the main Chamber. However, we are beginning to see some improvement in competition, with some suppliers offering smart prepay tariffs. We are working with Ofgem to remove the barriers that those customers face in switching supplier. For example, Ofgem is working with suppliers to help customers who are on prepayment meters and in debt to switch supplier for a better tariff. The hon. Gentleman raised a very important point.

We are also starting to see some improvement in customer service. The latest Ofgem data showed that the six major suppliers received 1.5 million fewer customer complaints in 2015 compared with 2014, but with a total of just under 5 million complaints, they still have a long way to go. We are therefore working with Ofgem and the energy ombudsman to identify and then fix systemic issues to stamp out poor customer service. Ofgem carried out a review of the role of the ombudsman last year and recommended that it should carefully analyse the specific complaints and use that information to reduce the underlying causes of complaints. That work is ongoing and will be very important.

As well as working to improve competition, the Government have a range of programmes to help vulnerable and low-income consumers with their energy bills. We are supporting 2 million customers a year with the warm home discount. We have increased the level of the discount, and in 2014-15 more than 1.4 million of the poorest pensioners received £140 off their electricity bill, with more than 1.3 million of them receiving the discount automatically. We have confirmed that the warm home discount will be extended until 2020-21 at the current level of £320 million a year, and we will be consulting on proposals for 2016-17 shortly. It is the case that 600,000 low-income and vulnerable households, including families, also benefit from £140 off their bill. Altogether, a total of £1.1 billion of direct assistance has been provided to low-income and fuel-poor households since the scheme began.

The winter fuel payment, which went to about 12.5 million older people in 9 million households last winter, is a significant amount of help towards higher fuel bills in the winter, with households getting between £200 and £300.

Also, and vitally, the cold weather payment, which is paid to vulnerable people during periods of very cold weather, has been permanently increased to £25. Last winter, more than 400,000 payments were made, during the very coldest weeks of the year, at an estimated cost of £10.6 million.

A reformed domestic supplier obligation from April 2017 will improve the energy efficiency of well over 200,000 homes a year to deliver on our commitment to help 1 million more homes in this Parliament.

In response to the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on fuel-poor households in Scotland, he will know that fuel poverty is a devolved issue. However, some of our schemes to help tackle fuel poverty are GB-wide. That includes the energy company obligation. The hon. Gentleman will be aware that with 35.3 households per 1,000 homes treated, Scotland receives the greatest share of ECO, followed by England, with 25.4 households per 1,000 homes and Wales with 21.9.

As well as supporting low-income and vulnerable consumers directly with their energy bills, we fund the big energy saving network. Again, I think that this addresses the point made by the hon. Member for Glasgow South West about the need particularly to help the extra vulnerable and the fuel-poor. Face-to-face help and advice through trusted organisations is one of the most effective ways to help vulnerable consumers to engage with the energy market. The big energy saving network reached more than 90,000 people in 2013-14 and about 130,000 in 2014-15, and we are well on track to reach a further 100,000 this winter. The programme has helped some of the hardest consumers to reach, with above average percentages of those with a disability, off the gas grid or without internet access—issues that a number of hon. Members pointed out—and about half of participants, 51%, have reported that they now spend less on heating their home as a direct result of being helped through the network.

My hon. Friend the Member for Central Suffolk and North Ipswich has made very good points, as have other hon. Members. This has been a lively and thoughtful debate, and we have covered a lot of ground. We already have work in train: rolling out smart meters, moving to next-day switching and continuing to help vulnerable and low-income households with their energy bills. We are committed to acting on the CMA’s recommendations. I therefore hope that my hon. Friend and others will leave the debate reassured that the Government are determined to make the energy market work in the interests of all consumers.

Energy BILL [ Lords ] (Sixth sitting)

Debate between Matthew Pennycook and Andrea Leadsom

Thursday 4th February 2016 Public Bill Committees

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

I gently point out to the hon. Gentleman that the reference to CCS in the Conservative party’s manifesto was as an example, not as a manifesto commitment.

[Matthew Pennycook]

We will have to agree to disagree again. I am probably one of a handful of people who have read the manifesto in the name of which so much is being enacted. I think that is just another example of the Government trying to have it both ways and to interpret what I and, more importantly, industry and commercial funders took to be a clear statement of the Government’s intent.

It is worth bearing in mind—the Minister touched on this—the context in which the decision was made. Funding was abruptly withdrawn at a time when a number of companies had been working tirelessly for many years to progress their projects, and just weeks before they were expected to submit their bids. Business and investors were given no notice. We heard evidence in the Select Committee that the industry first got wind of this through the Financial Times, when it reported expectations of the Government about that settlement. That was just a few hours before Department of Energy and Climate Change officials posted the notice on the London Stock Exchange and a week after the “reset” speech in which CCS was mentioned as a central part of the Government’s energy policy. To say it was unexpected is an understatement. As a witness in the Select Committee said, it was a shabby way to treat those involved in trying to further this technology.

It is important to bear in mind that millions of pounds of public money have already been wasted, for example, in proving up the Goldeneye store for the Peterhead project through two competition processes, or in the White Rose projects. Those are public investments and public money has been put into them, but they are now at risk of abandonment and sterilisation. Like the Government’s decisions on onshore wind and in a host of other areas, it reflects incredibly badly on their relationship with business and their ability to drive long-term investment in this area.

As Richard Simon-Lewis, financing director of Capture Power Ltd told the Committee, the decision had

“the effect of taking the wind out of our sails. I think the cancellation by UK Government of the competition signals to the market that there is a question mark in the UK Government’s mind over CCS.”

I think the only thing captured here is UK energy policy by Her Majesty’s Treasury. The justification given that in a tight spending review—we all accept that it is tight—now is not the time for this simply does not stack up.

Waiting or buying in technology from other parts of the world will have an impact and costs down the line. It is important that the Government come forward with a strategy for carbon capture and storage. We do not have one in place as things stand. We have uncertainty and muddle.

Energy BILL [ Lords ] (Fifth sitting)

Debate between Matthew Pennycook and Andrea Leadsom

Tuesday 2nd February 2016 Public Bill Committees

[Andrea Leadsom]

I welcome the hon. Gentleman. I think this is the first sitting of the Committee that he has been able to attend and it is good to see him here. He will appreciate that grace periods have to be set and a line has to be drawn somewhere. We have tried to accommodate the need for investor certainty and to be fair both to the businesses building onshore wind and to the consumers who are paying for them. We will get on to that in due course.

The first part of our manifesto commitment is now well on its way: clause 79, together with supporting secondary legislation, will ensure that the Secretary of State is no longer the primary decision maker for any onshore wind applications in England and Wales. New planning guidance for England, issued by my right hon. Friend the Minister for Communities and Local Government, complements this change by ensuring that local people have the final say on new onshore wind planning applications.

It is imperative that we deliver the second part of our manifesto commitment—to end new subsidies for onshore wind—to protect consumer bills and manage spending under the levy control framework. These amendments will ensure that we do exactly that by reinstating the provisions that were removed in the other place. We are committed to delivering our manifesto commitment while protecting investor confidence. It is my view that these provisions, including our grace period proposals, strike a fair balance between the public interest—including protecting consumer bills and ensuring the right mix of energy—and the interests of onshore wind developers and the wider industry.

At the end of April 2015, there were already 490 operational onshore wind farms in the UK, with an installed capacity of more than 8 GW—enough to power the equivalent of more than 4.5 million homes when the wind is blowing. That significant achievement was made possible only by providing consumer-funded subsidies. The Government estimate that in 2015-16, £850 million of support will go towards funding onshore wind across the UK, of which about £520 million, or approximately 60%, will fund Scottish onshore wind farms.

Recent levy control framework forecasts indicate that spending on low-carbon generation in 2020 will be £9.1 billion in 2012 prices. The Government previously set a limit of £7.6 billion, so the current forecast is already £1.5 billion above that, and additional costs would need to be met through increases to consumer energy bills. As my right hon. Friend the Secretary of State for Energy and Climate Change said on 18 January,

“New, clean technologies will be sustainable at the scale we need only if they are cheap enough.”—[Official Report, 18 January 2016; Vol. 604, c. 1152.]

When costs come down, as they have for onshore wind and solar, consumer-funded support should, too.

Let me reassure all Committee members that we already have enough onshore wind in the pipeline to meet the projected 11 to 13 GW needed to meet our ambition of generating 30% of electricity from renewables by 2020. That 11 to 13 GW is the deployment range clearly set out in the electricity market reform delivery plan. It is our best estimate of what we need to meet our 2020 targets, compared with what we can afford under our low-carbon spending cap.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

Does the Minister accept that if we do not make up lost ground on heat and transport, we will have to do more on renewable electricity to meet our EU renewables target?

[Andrea Leadsom]

As the hon. Gentleman knows, there are separate binding targets for different types of renewable energy. He also knows that we are making good progress in meeting our targets. We expect to be within the deployment range for onshore wind that was projected in the electricity market reform plan.

If we do not implement the early closure proposals in these amendments, there is a risk that we will deploy beyond the range that we forecast. There is the potential for up to 7.1 GW of further onshore wind under the renewables obligation. Without action to close the renewables obligation early and manage the spending under the levy control framework, there is a risk of deploying beyond the delivery plan range, which would add more costs to consumer bills.

I remind the Committee that, as my right hon. Friend the Secretary of State for Energy and Climate Change said on 18 January,

“Subsidies should be temporary, not part of a permanent business model.”—[Official Report, 18 January 2016; Vol. 604, c. 1152.]

That is what we seek to implement.

--- Later in debate ---

[Andrea Leadsom]

I could agree with everything the hon. Gentleman said until that last comment. That is the point: he says it is the cheapest form of renewable electricity, and we are saying that as costs come down industries need to stand on their own two feet. Opposition Members accuse us of attacking them, stopping them and killing them—they use those sorts of emotive words—but that is simply not the case. The hon. Gentleman must realise that developers are looking for a subsidy-free, market-stabilising CfD. Does he accept that he may be wrong—that the subsidy may not be the be all and end all, and that the success of the onshore wind industry could continue with local support and without the subsidy? Does he think that if we want the industry, we have to keep adding to the consumer bill?

[Matthew Pennycook]

I do not think that if we want it we have to continue to add to the consumer bill. I very much agree that a contracts for difference regime is a much more stable mechanism for driving down costs. I do not use the words “killing” or “attacking”, but I do think that the Government have undermined support in a way that the industry was not expecting. It had stability in this regard.

Energy BILL [ Lords ] (Third sitting)

Debate between Matthew Pennycook and Andrea Leadsom

Thursday 28th January 2016 Public Bill Committees

[Andrea Leadsom]

That is exactly the area we are looking at. That issue has been raised, including at the maximising economic recovery meetings before Christmas.

To reiterate, as hon. Members from all parties have repeatedly stated, it is crucial now more than ever that we provide support for this industry that has contributed, and will continue to contribute, so significantly to the balance sheet of our country.

I will now speak to new clause 9, and I thank the hon. Member for Southampton, Test for tabling it. It would require the Secretary of State to report to each House of Parliament on the estimated cost of decommissioning North sea oil and gas infrastructure, one year after the Act comes into force and annually thereafter. As we have discussed, the inevitable consequence of a maturing basin means that the future cost of decommissioning activity in the North sea is expected to be substantial, and the scale of the decommissioning challenge is undeniable. That is why Government measures in the Bill are aimed at preventing premature decommissioning of critical UKCS infrastructure and ensuring that the decommissioning that does occur represents the best value for money.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

Under the new tax regime, we know that the bulk of the costs of decommissioning will be borne by the taxpayer; the Government’s estimates put them at £7.5 billion over the total life of the North sea continental shelf, out to 2040-41. Given how important it is to make decommissioning cost-effective, may I press the Minister, if she is not minded to accept the new clause, on the circumstances under which the Secretary of State might intervene to modify or impose conditions on an abandonment programme?

Energy BILL [ Lords ] (First sitting)

Debate between Matthew Pennycook and Andrea Leadsom

Tuesday 26th January 2016 Public Bill Committees

[Andrea Leadsom]

I am grateful to the hon. Gentleman for raising the issue. As he is aware, although the Wood review looked only at offshore oil and gas, it acknowledged that there were synergies between offshore and onshore. We agree that there are such synergies. In particular, the licensing regimes, technologies and necessary regulatory expertise are all similar. We therefore decided that the OGA will take on a larger range of regulatory functions than originally envisaged by the Wood review.

The clause and the schedule provide for the transfer of DECC’s functions in relation to oil and gas to the OGA, covering offshore oil and gas licensing and regulation, but not health and safety or environment; onshore oil and gas licensing and regulation for England, but not health and safety or environment; carbon capture and storage; and gas storage and unloading. We will transfer the powers that at present lie with the Secretary of State and are exercised by the OGA as an Executive agency. As we have just discussed, an Executive agency has no separate legal identity and so exercises powers that are conferred on the Secretary of State. For the OGA to carry out its functions, the powers will therefore need to be transferred to it as a Government company through legislation.

The Secretary of State’s regulatory functions in relation to the environment will not be transferred, but will stay with DECC. The regulation of health and safety is undertaken by the Health and Safety Executive, and that will remain so. Powers will need to be transferred to the OGA so that it can fulfil its remit. Those include powers to award petroleum licences, issue consents for related activity and regulate third party access to upstream petroleum infrastructure.

With regard to the hon. Gentleman’s particular point, venting is agreed to under licence, but that is determined by safety reasons. Those functions will be under licence to the OGA—so it will take on some of those licensing functions.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Bailey. May I press the Minister for a bit more detail on why the offshore safety directive regulator will remain within DECC under the proposals? In other countries, where an oil and gas authority—or similar—has been set up, that part has also been outsourced to a separate, independent regulator.

[Andrea Leadsom]

As we have made clear, these were very specific recommendations of the Wood review—namely, that there needs to be tripartite co-operation between the industry, the regulator and the Government. In the UK, health and safety and environmental functions are taken on by independent regulators. Careful thought was given to where the boundaries should lie, and therefore health and safety and the Environment Agency will continue to have roles to play.

Question put and agreed to.

Schedule 1 accordingly agreed to.

Clause 3

Transfer of property, rights and liabilities to the OGA

Question proposed, That the clause stand part of the Bill.