Simon Hoare
Main Page: Simon Hoare (Conservative - North Dorset)Department Debates - View all Simon Hoare's debates with the HM Treasury
Energy BILL [ Lords ] (Fifth sitting)
Simon Hoare Excerpts(8 years, 3 months ago)
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Clive Lewis
I have no doubt that they have made that investment in renewables. However, I am talking about investor confidence. I will give an analogy of investor confidence. I was in the Army, where we orienteered by taking a reference point from something 100 or 200 metres away that we could see on our map. However, if you want to make the best progress—if you want to allow your men to make the best speed—you look at the far horizon, find a point and aim for it.
That is what this is about: investor confidence for the long-term future. What the Government have done, with one fell swoop, by trying to end the renewables obligation early, is say they can chop and change as they see fit for political motives. That sends the wrong signal to the market and investors.
Simon Hoare (North Dorset) (Con)
I am grateful to the hon. Gentleman for being generous with his time. May I put to him this countervailing thought? The onshore wind sector is now very mature. It has got a good basis and is “proving its worth”. Is the hon. Gentleman saying that it should always be subsidy-reliant?
I do not buy this lack of market confidence. Paris and everything else point to a decarbonisation of energy generation. Investors are not going to have that policy pulled from under their feet. That should give plenty of market confidence to the private sector and others to invest. To have them continually drip-fed public money, irrespective of which purse it is taken from, has to stop. If the market pretends to be surprised by that, the Government would be surprised, because our policy was trailed very well months in advance of the election.
Clive Lewis
I thank the hon. Members for their interventions. We are not talking about subsidies ad infinitum. We are just saying stick to the plan; that is all we are saying. Whether it is solar or wind energy, subsidy should be seen as a glide path. What the Government have done is chop the wings off. I have lists of quotes from investors who will say that this is not the best way forward.
A report last week from Bloomberg New Energy Finance research forecast that these measures will see the UK lose at least 1 GW of renewable energy generation, enough to power 660,000 homes over the next five years. The figures suggest that after 2020 the renewables infrastructure will collapse to almost nothing because of a lack of investment.
David Hostert, the analyst behind the research, said:
“Without some form of change in policy support, we could see investment drop off a cliff after 2019.”
Meanwhile, Maria McCaffery, chief executive of RenewableUK, said:
“The Government’s decision to end prematurely financial support for onshore wind sends a chilling signal not just to the renewable energy industry, but to all investors right across the UK’s infrastructure sectors. It means this Government is quite prepared to pull the rug from under the feet of investors even when this country desperately needs to clean up the way we generate electricity at the lowest possible cost—which is onshore wind. People’s fuel bills will increase directly as a result of this Government’s actions. If Government was really serious about ending subsidy it should be working with industry to help us bring costs down, not slamming the door on the lowest cost option.”
I come back to the point on bills, Let us look at what this saves the average household. According to the Government’s own assessment, the changes will save just 30p on consumer annual energy bills and increase the UK’s carbon emissions by 63 million tonnes.
Ultimately, these measures are a backtracking, chaotic travesty. They make no sense, punish one of our most cost-effective and successful renewable industries and endanger this country’s energy security by undermining investor confidence. As such, I urge the Minister to drop them.
Simon Hoare
I fear that there is an inherent danger in the amendments. It is simply the conflation, which I think the planning process should quite specifically seek to avoid, of arguments surrounding financial viability, whether funded from the private or public sector, and whether a proposal dovetails with planning policies and the acceptability and suitability of a particular physical proposal. By trying to conflate the two, the hon. Gentleman puts an undue weight on the viability case, which local authorities will find very difficult to opine upon, and even a very casual review of planning inspectors’ decisions would also suggest that the Planning Inspectorate itself finds it very difficult to balance the two as well.
Philip Boswell
I assure the hon. Gentleman that this is merely an attempt to clarify or articulate the position from a legislative perspective. It remains our firm intention that the decision remains, as per policy, with local authorities and local people.
Although statements from Ministers in the House of Lords have indicated that the Government intend for modified consents to remain eligible, clarity on this in the Bill would remove any doubt and allow investments to proceed. Amendment (l) provides for cases where a planning permission was granted on or before 18 June 2015, but where that planning permission has been varied under the provisions recorded in sub-paragraph (ii). Permissions under section 73 of the 1990 Act or section 42 of the 1997 Act are in law new permissions, and without this provision such further approvals based on permission granted before 18 June would be shut out from receiving a ROC. Deemed planning permission issued with section 36 consents can be varied under section 73 or 42, but there is a need to refer to section 90 of the 1990 Act and section 57 of the 1997 Act because they will be engaged on an application to vary section 36 consent under section 36C of the 1989 Act.
Amendment (m) ensures that applications to vary an existing 1990 Act or 1997 Act permission that was granted on or before 18 June, that may result in an increased capacity which takes the total generating capacity of the station above 50MW and must therefore be done by way of an application for a section 36 consent rather than by way of a variation of the 1990 Act or 1997 Act permission, will still qualify for the grace period. Amendment (n) ensures that a project is still eligible for the grace period where a planning permission granted on or before 18 June 2015 is superseded by a subsequent permission granted after 18 June 2015 for a generating station of the same or lower capacity on the same site.
Amendment (o) is a new amendment to cover judicial review and statutory challenges relating to planning permissions granted on or before 18 June 2015. It envisages that the planning permission which is ultimately granted or confirmed following court proceedings can be accredited under the RO. How much capacity may come through the door as a result of the amendment that can be easily quantified by reference to any proceedings now in the court.
It is common practice within the sector for grid agreements to be varied by parties after initial agreement. Amendment (p) will clarifies that, provided a grid connection agreement is in place by 18 June, eligibility for grace periods will not be affected by any subsequent variations of that agreement. So far, Ministers have been unable to provide sufficient clarity that subsequent alterations or replacement of agreements would be eligible for the grace period. If the Government intend projects in those circumstances to proceed with construction and be accredited under the RO, that should be made clear in the Bill, for the avoidance of any further doubt and further delays. Amendments (q) and (r) are intended to make it clear that deemed planning permission is included within the definition of permission in the 1990 Act and the 1997 Act, and thus fall within the definition of planning permission.
Our amendments (s), (t) and (u) relate to new section 32LK of the Electricity Act 1989, inserted by Government new clause 2, which sets out the criteria for projects that would be eligible to meet the investment freezing condition. This condition is necessary—I thank the Minister for her stated intention of respect—because the way that the Government have chosen to close the RO a year earlier than planned through primary legislation has caused so much uncertainty that some investors cannot have stopped investment in onshore wind projects until the Energy Bill receives Royal Assent.
Amendment (s) addresses an illogicality within new section 32LK(4)(a)(i). The Government-drafted amendment envisages a developer requiring funding from a recognised lender, a term which is defined in subsection (5). However, it must have been intended that the only condition should be that the relevant developer required funding from any source, hence the proposed deletion of the reference to a recognised lender in this clause.
Amendment (t) deletes certain words as they unnecessarily narrow the definition of “recognised lender”. If the words proposed for deletion were included, they could exclude lenders who are new to the market and who have not previously given loans to onshore wind developers. Amendment (u) is consequential on amendment (t). The change proposed by amendment (t) removes the terms defined in subsection (6) from the definition of “recognised lender” so there is no longer any need to define those terms, making subsection (6) unnecessary.
I move on to new clause 3, and again I thank the Minister for her efforts and intents on new Northern Irish onshore wind. The new clause covers the development of wind generating stations in Northern Ireland. When the Energy Bill provisions were published, they related only to projects in Great Britain, because energy policy is devolved to Northern Ireland. Subsequently, Northern Ireland Ministers consulted on equivalent changes to the Northern Ireland renewables obligation, with cut-off dates for planning consent proportionate to this later consultation and notification date. Northern Ireland Ministers proposed setting two closure dates which related to different sizes of projects, and to the manner of connection to the Northern Ireland electricity market of these different project types. Smaller projects which connect at 33 kV to the Northern Ireland grid network would have to have been consented to by 30 September 2015. Larger projects which connect as clusters of projects would have to be consented to by 31 October 2015.
Northern Ireland Ministers have yet to announce their decision on Northern Ireland closure, as agreement between the Northern Ireland Executive and the UK Government has yet to be reached. This means that any subsequent Northern Ireland legislation cannot be enacted via the Northern Ireland Assembly until after the Bill is enacted. It is therefore necessary that the Bill is clear as to the limits of the application of the provision to Northern Ireland and that it respects timescales proportionate to the Northern Ireland generating stations. Failure to do this would mean that generating stations in Northern Ireland could be penalised because of a misalignment of timescales between reserved and devolved powers in the UK. I urge the Minister to seriously consider these amendments.
New clause 15 would,
“return to the Scottish Ministers the power to close the renewables obligation in relation to electricity generated by onshore wind generating stations in Scotland”.
Before the Energy Act 2013 was passed, Scottish Ministers had full control over renewables obligations in line with the Scotland Act 1998, which devolved powers to the Scottish Government regarding the supply of electricity from renewable sources. The Energy Act 2013 took back this control through a UK Government amendment tabled in the House of Lords that gave the Secretary of State the power to close the RO, including in Scotland. The justification for this change in the law was that it would facilitate a coherent and transparent closure across the UK and move toward the new contract for difference system. Those powers were taken back to Westminster under the previous Energy Act on the clear understanding and promise from the Government that there would be no policy implications; it was said to be just a technical change that would not affect any policy decisions.
At the time, the move was condemned by the Scottish Government’s Fergus Ewing, who said that the UK Government produced the amendment in the House of Lords with “no consultation or explanation”. He said:
“We are deeply concerned about this summary removal of the Scottish Government’s discretion in an area of such vital importance to our people and economy.”
Clearly, the original justification for stripping Scotland of a power devolved in 1998 no longer holds water. There has been a policy change by the UK Government, and it is one to which the Scottish Government dissent.
Simon Hoare
Picking up on the point just raised by the hon. Member for Norwich South, as far as I am aware the Minister has clarified that the carbon capture arena will now move within the purview of the OGA and it will be the OGA that will decide what is best to be done in that field, rather than the very costly blanket ban which the other place sought to impose on the Bill. The hon. Gentleman’s fear is misplaced.
Chris Heaton-Harris
I thank my hon. Friend; I could not have put it better myself and that is handy, because I was quoting from a Library document and I could not have told hon. Members what the next paragraph would have been, so I very much appreciate my hon. Friend’s help.
I gave a bit of a history lesson explaining why I set up what was almost a caucus, to use American terms on the day we are getting the results of the Iowa presidential caucuses. I think I could say that the 101 Members of Parliament I got to sign a letter and then campaign pretty hard were a caucus. The caucus that I led—it was not just me leading it; there were plenty of people taking a strong lead in this area—was certain about what it wanted to achieve when it came to the future policy for onshore wind. We wanted to make sure that onshore wind received no new subsidies. We were fed up with the way our communities had been treated.
As I said on Second Reading and as I think the Committee has agreed, I was quite happy about the second part of the commitment—a change to the law so that local people have the final say on wind farms—because I thought that that was pretty much the case, until a particular wind farm planning appeal came about. That was the Kelmarsh wind farm appeal, when the planning inspector ruled in favour of the development going through because he said that national policy in the area of renewable energy trumped all local concerns. And those local concerns were huge: they were concerns about a grade 1 listed building built in 1732 and about the site of the battle of Naseby. The inspector said in his report that this wind farm would have a “distinct visible presence” over Rupert’s viewpoint, King Charles’ oak viewpoint, Sulby hedges, the Royal Observer Corps lookout post and Mill Hill viewpoint. These are places and viewpoints from the battle of Naseby which I would argue—and I do argue with my colleagues—was the battle where Parliament fought for itself properly and won properly for the first time. The birthplace of Parliament was going to be overlooked by massive turbines, nearly the size of the London Eye.
The inspector said that national policy outweighs
“any harmful impacts it may have in terms of the setting of heritage assets, the living conditions of local residents in terms of visual impact and noise in particular, the…enjoyment of the countryside, biodiversity, notably bats, and other matters”
What I thought was a local issue to be dealt with local planners, which is where I think the whole Committee wants to return such matters, was being elevated to national policy level.
Jonathan Reynolds
Some interesting points are being raised, which the Government would do well to treat fairly.
The Minister mentioned the overperformance of onshore wind and our 2020 renewables target. I must stress this point clearly: there is a legally binding overall 2020 renewables target, but it is made up of a road map of targets for electricity, heat and transport, which are not binding but form our contribution to the overall renewables target. The target is for 30% of electricity generation, 12% of heat generation and 10% of transport to be renewable by 2020. When conceding that point, the Minister said that the problem is that the subsidies required for electricity and things such as onshore wind are such that we could not possibly try to overperform and that, frankly, we are not hitting our heat and transport targets.
If the Minister is worried about the impact of electricity subsidies on billpayers, she must get the briefing on how we will hit the heat target. To do so through the renewable heat incentive alone would require a budget in excess of the entire budget for the Department of Energy and Climate Change. The Minister will not save money by cutting back on this important area. She will almost certainly incur a much bigger liability for the taxpayer unless she can tell us that we are on track for our heat and transport targets, but we all know that we are not.
The Bill is needed to legislate for the Conservative party’s manifesto position, but the Government should recognise the UK’s pressing situation regarding investability. There are anomalies in the way that the Government’s objectives have been drawn up in the Bill and it is reasonable to correct them at this stage. Most of all, this group of amendments strikes the right balance between the Government’s objectives, investability and the national interest. I hope that the amendments will be considered properly.
Simon Hoare
It is a pleasure to serve under your chairmanship, Mr Bailey.
I was slightly anxious when my hon. Friend the Member for Daventry began his remarks with a clear US feel in talking about caucuses and the like. The Committee will know that today is groundhog day in the United States and listening to some of the speeches of Opposition Members, it did feel a bit like groundhog day today. Google is good for some things. [Interruption.] Trump that, as my hon. Friend says.
My heart sank when listening to an erudite but certainly groundhog day speech from the hon. Member for Norwich South, with all those surveys where this association says that and that association says the other, while 37% do such and such. As we all know, surveys can be made to say all sorts of things. “Bears prefer woods to bathrooms,” says one survey, “Turkeys don’t endorse Christmas as an annual event,” says another. The one survey that the Opposition parties seemed to neglect was the survey at the general election. That was a survey in which the British people said very clearly, among other things––particularly, though not exclusively, in rural England––that enough was enough. The survey at the ballot box demonstrated that this is an incredibly popular policy.
I have a fundamental support for how the Government are proposing to tackle the issue. My hon. Friend the Member for Daventry alluded to it. It would have been entirely within the purview of the Department––had it so wished, based on the election result––to say, “There we are. We’ve won. Any form of financial support or subsidy is going. You’ve got 12 hours to prepare and that’s it.” [Interruption.] For an Opposition Member to say that something the Government might do is very stupid takes a little brass neck. The hon. Member for Stalybridge and Hyde exhorted us all to take front and centre our duties to ensure that the investment markets had confidence in Britain. I look forward to the leaked transcripts of parliamentary Labour party meetings where he makes those points to his leader and the shadow Chancellor because I am not entirely sure that their policies do much to support confidence for investment in UK plc.
The stance that the Government have taken is to have a realistic timeframe whereby the industry, which must have been the most myopic ostrich if it did not see this coming, has time to rethink existing plans and, if it so wishes, seek alternative funding from the market. It is indicative that the Opposition say that this sector must always be subsidised. When David Davies of Llandinam literally sold the family silver––and almost the shoes on his feet––to pay the workers who were digging for coal in the south Wales valleys because he realised that there would be a market for coal to fuel the industrial revolution of which we were on the cusp, I doubt he sat down and thought, “Do you know what? I just wish there was a Government subsidy to support me doing this.” No, he realised that there was a market opportunity with profit attached to it and he went and did it. He did not need a subsidy and I do not believe wind should have one.
Philip Boswell
Does the hon. Gentleman understand that no tax was paid at that time? That gentleman therefore did not have to worry about that cost.
Simon Hoare
I am delighted to hear an SNP Member thinking about a no-tax economy to help entrepreneurs. I am sure he will take that to Holyrood.
Callum McCaig
I am ever so obliged. I thank the hon. Gentleman deeply. He said that this should not have come as a huge surprise. The date of one of the planning applications mentioned by my hon. Friend the Member for Coatbridge, Chryston and Bellshill was 28 May 2013. It does not cost nothing to get an application to that stage before going through the process. Will the hon. Gentleman remind the Committee when the Conservative manifesto was written?
Simon Hoare
The hon. Gentleman knows that it was clearly written post-2013, but the sector should have known of the irrepressible commitment of my hon. Friend the Member for Daventry, with his 101 Dalmatians, or however many it was, who had been making such comments during the course of the previous two Parliaments, and realised that something was likely to happen.
One thing that I find of genuine interest/concern—we sometimes have faux interests and concerns, but this is genuine—is that the onshore wind sector is fairly mature and well established. We do not need to argue about its bona fides. We do not need to argue about whether it is generating 1%, 5%, 6% or 14% of electricity, because it varies. It is here and we have it. Very often, Governments of all stripes will provide some form of financial support and backing to a nascent industry or sector, but once it is on its feet and has proven its bona fides, it should be able to stand on its own two feet without subsidy.
In the conversations I have had with people from the sector, the question that was always very hard, if not impossible, for them to answer was what cut-off point they envisaged for the ending of onshore subsidy. When I asked, “What are you saying to Government and to Ministers about how you see this support going?” the general response was, “We will continue to take the subsidy as long as it is there.” That is no way to run a policy, even if the books are buoyant and in the black. It is certainly no way to run a policy when the books are anything but.
I was interested when the hon. Member for Norwich South seemed to suggest that because the subsidy was coming from the public—from their direct debits, bank accounts, purses and wallets—and not directly from Her Majesty’s Treasury, there was some difference. I keep making this point: although the national average salary is around £24,500, in North Dorset it is £17,500. I do not think that my constituents saw it as particularly fair or equitable to provide, through their bills, subsidy to very successful businesses and the landowners who were also getting their percentage of the deal.
Simon Hoare
Let me make this point, because I think this is how the market operates, and will operate in future.
The hon. Member for Coatbridge, Chryston and Bellshill was discussing the planning system. Anybody who has any understanding of the commercial planning process—onshore wind turbines are part of that process as much as supermarkets or hotels are—will know that there are risks attached to it. People can spend an awful lot of money optioning up the land, paying consultants, having surveys done and so on, yet still fall foul of the process. Even if someone does not fall foul of it and secures consent, they might suddenly find that the funding regime from the banks or pension funds has altered or the appetite for the product they were seeking to develop has waned. They just have to chalk it down to experience. If we have some form of system in which as soon as anybody makes a planning proposal the automatic presumption is that, de facto, they will always have consent, that would be a very dangerous sign to send to the commercial development sector.
Philip Boswell
Does the hon. Gentleman agree that under the Twentyshilling Hill wind farm timeline, the sunk costs incurred before 18 June 2014 were £3.5 million, plus commitments of £3.3 million, totalling £6.8 million? The point is that these included placing deposits on turbines with Nordex. Such orders in the industry are long-lead orders and often have to be placed a year or more in advance. Does he not agree that for a project of such efficacy, one has to plan ahead and commit?
Simon Hoare
No, I do not, with the greatest of respect. I can recall in my own commercial career working on a project for at least 11 years, where the client had spent somewhere in the region of £8.2 million propounding a planning proposal and still was not in sight of securing a consent. This is the point that I make. If someone is in the commercial development sector—the energy sector or whatever—there are risks attached.
Jonathan Reynolds
There is a point that has to be stressed here. Onshore wind developers are not arguing against the closure of the RO. They are not arguing for anything that might be unreasonable in terms of the risks that they knew were involved in the planning system. They are asking for the Government’s promises on sunk costs to be honoured. That is what the group of amendments does. They are not about demanding subsidy for ever or about asking for compensation for reasonable risks that were known to be there. It is about the Government honouring their promise on sunk costs.
Simon Hoare
I hear what the hon. Gentleman says. He obviously has a little more faith—I will be charitable and say faith—because I am not entirely convinced that any sector that is so sated by subsidy would ever turn round at any point and say, “Do you know what? Now is a really good time to end the subsidy.” There will always be a reason. We heard it from the solar sector: “Give us another 10 more years because we are on the cusp of doing something quite exciting with storage batteries.” Why they did not think about that when the sector was nascent, I do not know. People who receive a subsidy will always find an argument for the maintenance of the status quo.
The hon. Member for Southampton, Test, who leads for the Opposition, is about to burst a blood vessel unless I let him in. Having listened to him for the past two and a half days, I am loth to do so, but of course I will let him in.
Dr Whitehead
May I gently ask the hon. Gentleman whether he has ever heard of digression? When the subsidies for wind were first introduced, one of the reasons that they received clearance for state aid in the EU was that they were not permanent and were based on digression, and everyone agreed that that should be the case. Secondly, I could have sworn the hon. Gentleman was here earlier in the debate when we were discussing the application of subsidies to a mature industry: North sea oil and gas exploration. Will he compare what happened earlier in the debate and what is happening now?
Simon Hoare
In fairness to the hon. Gentleman, he makes a valid point, and I will answer his point in the way that I have answered it when constituents have talked to me about it. For those who try to seek a golden thread of thinking that runs through all of energy policy, they will look in vain, because there are inconsistencies. I am a huge supporter of the nuclear sector. I must confess it makes me slightly glow. [Interruption.] No, that is not the word I am looking for. It is not a rational approach to say I do not like subsidies for onshore wind, but I can understand the need for a subsidy for the nuclear sector. The problem with what the hon. Gentleman is trying to find—and he is legitimate in his search—is that we have so siloed our means of energy generation that they have to be viewed silo by silo, rather than according to the product that is being generated: electricity.
I do not want to take up the Committee’s time more than I need to, but I want to slightly echo what my hon. Friend the Member for Daventry said. My hon. Friend the Minister may recall that I mentioned this point on Second Reading in the House. At some point, there will need to be a side conversation between her Department and the Department for Communities and Local Government about the national planning policy framework. There is a slight danger that in the Localism Act 2011, we raised too much expectation of the phrase “local decisions”.
The Minister confirmed this morning—we are absolutely right to keep to this regime—that an aggrieved applicant would still be able to trot off to the Planning Inspectorate to appeal a decision, in the same way as the Secretary of State will be able to recall an application that may have been determined favourably by the local planning authority. Again, both an aggrieved applicant and an aggrieved third party will still have recourse to the courts for a judicial review, but the wording of the national planning policy framework—I am afraid I do not have the paragraphs to hand—provides a strong and reliable crutch to the inspectorate. It says that national planning policy, such as decarbonisation and so on, will trump a number of the key topics that my hon. Friend the Member for Daventry was talking about: areas of outstanding natural beauty, sites of special scientific interest, heritage and listed buildings and so on.
I do not think that we need to ramp that up too much, but I welcome the fact that instead of segregating proposals by size, local councils will be able to determine applications through the democratically elected process of the council chamber. Local people will, of course, be able to have a say there and will be able to appear as third parties at a public inquiry, but the final decision will not be taken by local people if an applicant decides to appeal. In my constituency, prior to the election, we had a terrible proposal for a very obvious place in terms of local vista and impact. North Dorset District Council turned it down, to the huge relief of the community, and the applicant read the room and did not appeal, realising that they would not get it. However, that avenue will remain open to an aggrieved applicant or developer.
It goes back to the point that I was making to SNP Members and others: all planning has a risk. In the absence of a provided subsidy, it may well be that applicants and landowners will think far more carefully about what they are applying for and where they apply for it. If they are reliant on the private sector to fund their initiatives and enterprises, we may find—
Simon Hoare
I am just coming to a close, if the hon. Gentleman will forgive me.
Rather than jiggery-pokery such as applying for two turbines in a 22-acre field to establish the principle and then coming back for more through variations to consent, which the amendments from the hon. Member for Coatbridge, Chryston and Bellshill sought to protect, we may well find that local communities and their planning authorities will see the whole picture at the start of the planning process rather than planning by salami-slicing, having established the principle.
The Government are absolutely right in their approach to the subsidy. My hon. Friend the Member for Daventry spoke wisely about the civil war. I must say that I would probably have found myself more of a cavalier than a roundhead, but there we are. However, there is an important point to make. If the civil war was about the proportionate balance between Crown and Parliament, the clauses inserted in the other place are, without over-egging this particular pudding, potentially as significant. If the Salisbury convention is to mean anything, something that passed the survey of the general election and a policy that commanded strong public support should not be challenged by the other place. I hope that we do not get involved in an overly long game of ping-pong with their lordships, because the view of the democratically elected House, certainly on this matter, must prevail.
Matthew Pennycook
When I drafted my notes for this speech earlier today, I did not comprehend that it was quite on an English civil war-type level of debate, but I will do my best.
Before I move on to my substantive comments, I will refer to the very interesting debate we had earlier about variability and balancing. It is worth returning to because—like so much of the debate on this issue, and not only in Committee and on Second Reading—we hear less about the costs of particular subsidies or how onshore wind forms part of our energy mix and more about the politics of onshore wind, which is really not what we are discussing when we consider what is the contentious part of the Bill.
Earlier, the hon. Member for Daventry raised the issue of intermittency, but I agree with my hon. Friend the Member for Stalybridge and Hyde that he did so in a way that did not shed much light on the subject, because the notification of inadequate system margin event that he talked about—I believe that it was a NISM event in November, and incidentally it does not mean that the lights are about to go out, but merely that the National Grid would like to see a larger safety cushion of spare generating capacity being brought on to the grid, which is not an unusual practice for the industry—was not caused just by an extended period of low wind, although that was part of it. It was also caused by unexpected plant faults and losses, so it was not just the fault of wind. When one drills down into the costs of that NISM event, one finds that it was in the hundreds of thousands, and not the calamitous figures that we got in the press.
Similarly, I am sure that we can have an extended debate about base load and about whether the idea of large coal-fired or nuclear power stations for base load is outdated, as Steve Holliday, the CEO of National Grid, has himself argued.
However, what cannot be denied is that onshore wind is a flexible technology that helps National Grid to balance the network quickly, by ramping output up and down at times of constraint or system imbalance and, as the Royal Academy of Engineering has estimated, it requires no specific extra back-up until we hit 50 GW of onshore wind, which is five times the current level on the system.
When it comes to the costs of balancing to account for the increased variability, which is a product of moving towards a more decarbonised and flexible energy system, gas is far, far more expensive than wind. For 2014-15, 7% of the costs of balancing the grid were due to payment to wind. In the equivalent year, the balancing costs associated with gas amounted to £240 million, which is five times as much as the costs associated with wind. So we need to bring some sense to the debate about what these technologies do and, in a sense, approach it—as I hope the Government still do—in a technology-neutral manner.
By bringing the Committee’s attention to this point, I am only drawing attention to what I believe is actually the driving force behind the early closure of the RO and the Government’s insistence on reinserting these clauses, which is not a hard-headed calculation of what is required to balance the energy trilemma, or to meet the costs of controlling the levy framework; it is about the politics of the windy caucus and the understandable anger of constituents in parts of the country who have had onshore wind projects foisted on them when they do not support such projects.
As we have heard, onshore wind has been a success story. It is proven; it is mature; and its costs are coming down. That is precisely because of the conducive framework for investment that was provided by 10 to 15 years of energy policy consistency and a large degree of consensus about that policy. It is that consistency and the investor confidence that comes with it that the Government have played fast and loose with since May 2015.
The hon. Member for Daventry said that this whole debate turns on this point, and in a sense he is right to say so. However, to label it dancing on the head of a pin does him a disservice, given the number of people who have invested substantial amounts of money over long periods of time, because—as we heard from hon. Members before—the lead-in times for these projects go back years. Those people invested in those projects in good faith and they did not invest to see them close early.
I am very clear about the manifesto commitment. We are not talking about the localist aspect; there is no dispute about that. The manifesto is very clear that local people will have the final say. On the nebulous wording
“we will end any new public subsidy”,
it is clear that the renewables obligation is not a new public subsidy. It is an existing subsidy that was legislated for by the coalition Government in 2013, and investors were right to think that it would continue. As recently as 13 October 2014, the then Minister—now the Secretary of State—said that
“the RO will be closed to new capacity from 1st April 2017”,
and there have been other similar statements.
Andrea Leadsom
I am sure, then, that the hon. Gentleman will be delighted about our commitment to further deployment of offshore wind and to the new nuclear programme, both of which are a low-carbon future for the UK. Targets for decarbonisation and new gas, and a big decarbonisation away from coal and into gas, are the bridge to a low-carbon future. I am sure that he will welcome the certainty that we have given investors with that, and the opportunity for UK plc to get more jobs, more growth and more business in the supply chain as a result of our changes in policy.
I will come specifically to the amendments tabled by the hon. Member for Coatbridge, Chryston and Bellshill, whom I thank for his excellent portrayal of the intention behind them. I hope to give him some reassurance on some of those points. My hon. Friend the Member for North Dorset is absolutely right to point out that the survey of the ballot box, which is the best survey, has entirely supported our policy on wind. He raised the question of appeals and judicial reviews. The appeals process is still in place for onshore wind. However, any appeal in England on a decision taken after 18 June will need to take into account the clear statement made by the Secretary of State for Communities and Local Government on 18 June, which sets out the new considerations to be applied to proposals so that local people have the final say on wind farm applications, fulfilling the commitment made in the Conservative election manifesto. Importantly, it also makes it clear that planning permission should be granted only if the development site has the support of the local community and that it can be demonstrated that any planning impacts identified by affected local communities have been fully addressed. My hon. Friend is right to raise that point and I hope he is reassured.
Simon Hoare
That is a huge comfort. Will my hon. Friend clarify either now or on Report that the guidance being issued by the Secretary of State for Communities and Local Government in June is of equal status and standing to the guidance in the national planning policy framework?
Andrea Leadsom
My hon. Friend may be asking me about a specific legal point, so it may be better if I write to him. I have been clear on the intention, but he is asking me something that I should probably write to him about afterwards.
I am grateful to the hon. Member for Greenwich and Woolwich for his insightful points about NISMs and the associated costs. It is exactly right that a NISM does not mean that the lights are about to go out, and the associated costs are actually relatively small. As we have said all along, energy security is our top priority and we are not prepared to risk it in anything that we do. He also rightly points out that we are trying to decarbonise at the lowest cost and that we totally support renewables. As many hon. Friends have already pointed out, 98% of solar has been deployed since 2010. In 2015, the UK increased its investment in renewables by 25% compared with 2014. At the same time, EU investment decreased by 30%. This Government have shown a strong commitment to renewables deployment. I hope that hon. Members are reassured by that.
Turning to the amendments to new clauses 2 and 3 and new clause 15, I remind hon. Members the Government have listened carefully to the views of industry and are committed to deliver their manifesto commitment. The amendments have a range of effects, predominately in relation to the eligibility criteria for the grace period conditions set out in new clause 2. I will also cover amendment (a) to new clause 3, which relates to Northern Ireland, and new clause 15, which is specific to Scotland. I will address each of the key proposals in turn.
Amendments (a) and (b) to new clause 2 relate to changing the eligibility date or moving to planning application. The amendments suggest that the key eligibility criteria start date be either pushed back to a later date or moved entirely to include those projects with a submitted planning application as at 18 June that had not yet achieved consent. Either of those actions would have a significant impact on the number of projects that would be eligible for the approved development criteria set out in new clause 2 and therefore on overall deployment figures. I am afraid that to respond adequately to the proposals, and specifically the point on changing the grace period eligibility start date or consent criteria, I must first return to the core principles behind the early closure and the grace period conditions.
As I have said, if one considers those onshore wind projects that already have formal planning consent, there is enough to contribute to what is needed to meet our ambition of 30% electricity from renewables by 2020. The Government have made a commitment to manage costs under the levy control framework, and specifically in relation to this well-established technology. The policy intent is to close the renewables obligation to onshore wind, and the clause, as drafted, sets out clearly that the renewables obligation is closed to new onshore wind farms in Great Britain from 31 March 2016, which is necessary to manage the risk of over-deployment. Furthermore, the grace period set out in new clause 2, called the “approved development condition”, was drawn up specifically to protect investor confidence.
Even in its most early design, as set out in the announcement by my right hon. Friend the Secretary of State for Energy and Climate Change on 18 June, the grace period drew a clear bright line for developers while protecting investor confidence and that of the wider onshore wind industry. That approach has underpinned our engagement with industry and wider onshore wind stakeholders. We have been told that the industry ultimately supports our approach. We have also heard anecdotally that some projects that did not meet the grace period criteria have already fallen away, so to change the goalposts at such a late point would be fundamentally unfair to developers who may have chosen not to continue their projects in the light of our original announcement.