Tom Greatrex
Main Page: Tom Greatrex (Labour (Co-op) - Rutherglen and Hamilton West)
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
The Minister referred to the amendments introduced in Committee as ones that enabled the Government to set a target, but he is as aware as I am, and as many others are, that that is not what they do; they say that the Government “may” set a target. If he is now saying that the Government will set a target, will he support the amendments proposing to change the wording from “may” to “must”?
Michael Fallon
The amendments we introduced in Committee allow the Government, if they so wish, to set a target. I will come on to deal with that point, but let me turn first to the amendments tabled by my hon. Friend the Member for South Suffolk (Mr Yeo) and the hon. Member for Brent North (Barry Gardiner). I do not believe that these amendments take the right approach for the following reasons.
First, now is not the right time to set a target range. Hon. Members say that doing so will improve investor certainty, but this Government are already giving clear signals about the future of our electricity sector, and I shall address that in a moment. Secondly—this answers the point made by the hon. Member for Rutherglen and Hamilton West (Tom Greatrex)—it would be a mistake to impose a legal obligation now that a target range must be set. Decarbonisation of the electricity sector is inextricably linked to that of the entire economy, so a decision to set a binding target range should be taken in 2016 when we consider the trajectory of the whole economy towards our 2050 target. Thirdly, the Committee on Climate Change is the wrong body to set a legal constraint on what the level of the target range should be.
I wish to expand on each of those three points. Hon. Members say that we must set a target now because investors need greater certainty. The Government agree wholeheartedly that investor certainty is essential to delivering our energy and climate change goals at the least cost. That has been a fundamental part of our policy to date and it will continue to be a high priority. However, it is very important to recognise that we already have legal targets and measures that clarify the long-term future of electricity generation in this country. They include: the 2050 target to cut emissions by at least 80%, which is likely to require the entire electricity sector to be decarbonised; the fourth carbon budget that runs up to 2027, which requires this country to halve its emissions in the whole economy—we have set out in the carbon plan the likely implications of that for the electricity sector; and the 2020 EU renewables directive, which will mean 30% of electricity generation coming from renewables in 2020, compared with around 10% today. We shall also be arguing, as the Secretary of State announced last week, for the most ambitious greenhouse gas emission target ever to be set in the European Union of 50% by 2030.
In addition, we have committed ourselves to providing clarity on the trajectory of the electricity sector up to 2030 by issuing guidance to the National Grid Company on an indicative range of decarbonisation scenarios consistent with the least-cost approach to achieving our overall 2050 carbon target. Of course, we must also not forget that what matters most for investors now is not simply words and aspirations, but funding. That is what we have got through the Government’s decision to increase support for low-carbon electricity year on year to £7.6 billion by 2020, a tripling of support between now and 2020 which provides a clear and durable signal to investors.
Mr Redwood
My hon. Friend is absolutely right. The Americans are playing a blinder on all this, and we need to understand that the American economy is now getting itself back into order, which we should welcome as they are an important ally and a big trading partner, but we should also be warned that they are doing things to have competitive energy that we are clearly not prepared to do.
I hope that the House will join those on the Government Benches in voting down the proposal. It makes a bad situation worse, and I urge Ministers to understand that their prime duty is to keep the lights on and their secondary duty is to make sure that the power is affordable, both so that granny does not have to shiver when we have a cold summer or winter and so that we have some industrial jobs left by not trying to be holier than thou and ending up unemployed.
Tom Greatrex
I rise to speak in support of amendments 11 to 20, which, as the hon. Member for South Suffolk (Mr Yeo) said, stand in the names of a range of Members from almost every party in the House, and certainly from every part of the UK, including Members from both governing parties. In particular, they include my hon. Friend the Member for Brent North (Barry Gardiner) and the hon. Member for St Ives (Andrew George), who is no longer in his place, but who secured a Westminster Hall debate on the issue just prior to the Queen’s Speech.
I begin by paying tribute to the lead proposers for their efforts in securing cross-party support for the amendment. There have been three Ministers in eight months so it is easy to lose track, but the hon. Member for Wealden (Charles Hendry), who unfortunately cannot be with us this afternoon, spoke in a debate in the House last November about the need to take energy policy out of politics, because investors need to know that there is support for long-term measures. That is key, and it is in that spirit that the amendment is offered to the House this afternoon and that the Opposition will seek to support it in the Division Lobby.
As the hon. Member for South Suffolk and others who have spoken have made clear, the crux of the amendment is that if, as the Government keep repeating, their intention in relation to energy policy is to seek renewal of our energy infrastructure in a way that safeguards security of supply and reduces our carbon emissions, and does so in the most affordable way, then the greatest prize in securing that investment is clarity, predictability and purpose. That is precisely what a decarbonisation target provides, and it does so in conjunction with the carbon budget and other measures in the Bill. That is why I believe that there is, or certainly was, near universal support for a decarbonisation target. My right hon. Friend the Leader of the Opposition called for it last year. As we have already heard, the Chief Secretary to the Treasury moved such a motion at the Lib Dem conference last year. Two years ago, the Prime Minister himself said that decarbonisation is necessary if we are to meet our ambitious climate change commitments. As we heard from the Chair of the Select Committee, it unanimously concluded that
“providing greater clarity about the contribution that the power sector is expected to make towards meeting these targets would help to provide certainty to investors. The Government should set a 2030 carbon intensity target”.
Many Members present today served on the Bill Committee and they will recall that the Secretary of State said in evidence that he supported a 2030 target. He is no longer in his place, but when asked whether he supported a target he said:
“I do not think that it is a secret. That is my position and the position of my party. We are in coalition and we have had discussions with assertive colleagues.”––[Official Report, Energy Public Bill Committee, 15 January 2013; c. 8, Q11.]
A number of others are assertive about the importance of the target, however, and I am talking now about those outside of the House and politics. There is strong support for this in the energy industry, business in general, academia, public bodies, the Government’s own advisers on these issues, the Committee on Climate Change, as we have already heard, organisations and industry, including companies as diverse as Microsoft, Sky, Unilever, the EEF—to respond to the point made by the right hon. Member for Wokingham (Mr Redwood), the steel industry is a member of the EEF, which supports a 2030 decarbonisation target—the Carbon Capture and Storage Association, Oxfam, the Catholic Fund for Overseas Development, the Environment Agency and many more, not just those who seek to benefit directly from the investment that we know needs to happen. Memorably, when the Secretary of State was challenged in Committee by my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) to name a company that opposed the target, he was unable to do so.
Anas Sarwar (Glasgow Central) (Lab)
The Minister talked repeatedly about investment and my hon. Friend refers to the uncertainty of investors. Does he recognise the analysis by Bloomberg New Energy Finance that investment in renewable energy has fallen drastically since the Government came to power? What does that say about the Government’s ambition to be the greenest Government in history?
Tom Greatrex
My hon. Friend is absolutely right about the worrying signals on confidence. That is part of the case being made today for the target. We need to have that confidence if we want to get that investment, those jobs and that manufacturing capacity, quite apart from the other benefits in terms of security of supply and carbon emissions. That is why I am sure that those industries and companies will be concerned to hear the tenor of some of the Minister’s remarks, which seemed to be going further back even than those of his predecessor, who I think was moved to the Loftus road of Government, the Cabinet Office, the home for displaced Ministers, in suggesting that this is something that we might not want to do in the future. The right hon. Member for South Holland and The Deepings (Mr Hayes) made it clear in Committee that he felt that this was not a debate about the principle of a target, but about when it was going to be set. It seems that the Minister has rowed back further from that position.
Dr Phillip Lee (Bracknell) (Con)
Does the hon. Gentleman agree that if we set a territorial decarbonisation target, we can make industry off shore, hit our decarbonisation target and retain the subsidy on shore, but the jobs will have gone elsewhere?
Tom Greatrex
If we want the best chance of getting those jobs in the UK, the best chance of Siemens building its offshore turbine factory in Hull and the best chance of Gamesa building its factory in Leith, and to get the wider jobs and growth benefits, we need a target. If costs are disproportionately high in the UK we must look at the cause—a carbon floor price that is completely different from what is happening elsewhere in Europe. That is the real focus on where those costs are higher. If we want those economic benefits, we need the target, because that is what industry needs to make those decisions, to convince those global boards that have a number of different options about where to make that investment and to make sure that it happens within the UK.
Tom Greatrex
As my right hon. Friend says, they are not mutually exclusive. We need to do both. Some here today might disagree, but not that many.
Mr Redwood
Why does the hon. Gentleman think that industry fell so far and fast as a proportion of total output in the Labour years and what has he learned from that?
Tom Greatrex
What we have learned from the past three years, as was pointed out by my hon. Friend the Member for Glasgow Central (Anas Sarwar), is that confidence in investment in the UK among those new industries has fallen and is falling. What we have learned from what is happening now is that people are not making decisions because they are seeking clarity and certainty from the Government on a range of matters to do with the Bill, including the specific issue we are discussing. If the right hon. Gentleman is concerned about manufacturing industry, he should support the target, which will help give clarity and certainty and ensure that manufacturing jobs come to the UK.
Mark Reckless
The hon. Gentleman tells us that he has learned lessons in the past three years. Did he learn any lessons at all from the previous 13 years?
Tom Greatrex
What I learned from the time towards the end of the Labour Government is that a focus on industrial strategy is absolutely key in diversifying our economy, and that the significant increase and activity in the renewable and low-carbon industry, which were happening and are now under threat, resulted from a clear set of signals from the Government. That is what we need from the Government now, but we will not have it unless the target is included in the Bill.
I will make progress, as other hon. Members wish to contribute. Before the interventions, I was touching on some of the points implicit in remarks made by some Government Members about costs and gas. Rejecting a 2030 target will almost certainly lead us to another dash for gas. As I said in Committee and all the way through our consideration of the Bill, gas has an important place in our system. As I have made clear, I do not take an ideological position on shale gas either; it needs to be properly regulated and monitored, but we need to explore what is there before we can know what we can get out of it.
Making simplistic extrapolations from what has happened in the US indicates a bout of wishful thinking, and a hope—and risk—in respect of something that might well not turn out to be the case. We need gas and will continue to need it; it is important for our security of supply and for our being able to deal with peaks in demand. However, the combination of a failure to decarbonise our electricity sector and increased reliance on gas leaves us more exposed to the volatility of that globally traded commodity.
It is essential that there should be diversity in our energy supply even before we consider any of the impacts in relation to emissions and the climate. The danger is that we will be left open to a greater reliance on gas and consumer prices going up even further. Various hon. Members have referred to the increase in cost to consumers, but they know as well as I do that the greatest element of that cost increase in the past three years has related to wholesale energy prices.
Sometimes there are discussions about how far companies properly pass on savings when the costs fall, but over the three years wholesale prices have certainly increased and that is the greatest single part of the increase in energy bills paid by my constituents and those of the right hon. Member for Wokingham and other hon. Members. The target is also vital for that reason.
The problem is the Government’s approach to decarbonisation and how it is characterised in their amendments in Committee. The Government may or may not, at some point in the future that is yet to be defined—it may never be defined or indeed reached—set a decarbonisation target range for the carbon intensity of electricity generation in Great Britain. The definition of carbon intensity itself and the means of calculating it can be changed by the Secretary of State—and, by the way, the Secretary of State can revoke the order. That is hardly the sense of clarity that the amendment seeks.
The illogicality of the Government’s argument is summed up in amendment 52, which the Minister only barely referred to. It would require the Secretary of State to publish an annual report from 2014 setting out how he had met the duty to meet a decarbonisation target. I suspect that that report would be very thin, simply reading: “A target will not be set until 2016. There is nothing more to report—move along now.”
It was not only the Secretary of State who said that he supported a target. The Minister here, the right hon. Member for Bexhill and Battle (Gregory Barker), did so in the recent Westminster Hall debate, saying:
“I see the strong merit of the argument for a decarbonisation target”—[Official Report, 17 April 2013; Vol. 561, c. 124WH.]
But he also said that we should wait to set it. The Minister’s predecessor said in Committee:
“The principle, that it would be useful and of value to set such a target, is established.”––[Official Report, Energy Public Bill Committee, 5 February 2013; c. 489.]
If that is the case, there is no reason why the Government should not at the very least support the amendments that change “may” to “must”. However, as we have heard from the tenor of the Minister’s and some other hon. Members’ remarks, that is not what the issue is about.
The issue is about a deep division in the Government and a damaging and risky outlook that a dash for gas is the best course of action for our energy policy. That is obviously what the Chancellor thinks, but it is not what the Chief Secretary to the Treasury thinks, unless he has changed his mind. The Committee on Climate Change does not think that; nor does industry or the 200 organisations that support the amendment. As I said, the Secretary of State has supported a target and he does not think that either, although he has lost out in discussions with what he referred to as “assertive colleagues”.
There is an opportunity for Parliament to be assertive this afternoon—assertive about security of supply, about jobs and growth, about investment, about clarity of purpose and in our support for the important amendments before us.
Mike Crockart (Edinburgh West) (LD)
I rise to speak with a fair amount of trepidation; I feel like Lord Cardigan, commander of the gallant 600, charging into the valley of death. Half a league onward, as they say. [Interruption.] Yes, some did make it through; I shall hold on to that fact.
I have spoken to many individuals, companies and organisations over the past few weeks and months and asked each of them what they felt was needed in the Energy Bill. To be frank, nearly all of them asked for different things. This is a mammoth Bill trying to do lots of different things and everyone is clear that those things need to be done in the right way.
I have talked to small generators—new entrants to the market. They would like a decarbonisation target, and so would I, but what they would like more is for their route to market to be easier and free from too great a reliance on the big six suppliers—whether that is through a green power auction market or other means. I know that a great deal of work has already gone into this, but it is essential that the Government table amendments that offer a long-term solution and not merely transitional help.
I have also talked to large generators, which are already investing billions of pounds in new infrastructure. They would also like a decarbonisation target, as would I, but what they would like more is for the strike price to be set at a level that gives certainty in their markets and allows them to plan for the next 20 or 30 years and access finance over that time scale.
I have talked to consumer groups, acting on behalf of hard-pressed electricity customers. They would like a decarbonisation target, as would I, but what they really want is a meaningful simplification of tariffs. They want a single, consistent unit price to allow people to compare and immediately identify cheaper alternatives, forcing suppliers to keep prices down, improving competition and making it easier for consumers to switch.
I have talked to companies, large and small, involved in the manufacturing supply chain for renewable energy. They, too, would like a decarbonisation target, as would I, but what they want more is for access to ports to be sorted out or for the tripling of the levy control framework to happen in a controlled and steady way, rather than being backloaded towards 2020, so that their new technologies get a chance to establish themselves and deliver the tens of thousands of jobs that green growth can bring. Small and medium-sized enterprises more generally are most exercised by uncompetitive energy contracts and unfair renewal terms.
I have also talked to community groups, and guess what? They would quite like a decarbonisation target, but what they crave is an increase in the small-scale feed-in tariffs threshold for community energy schemes from 5 MW to 10 MW. The danger is that, as community schemes become more successful, they may hit 5 MW. An increase in the small-scale feed-in tariff limit will ensure that we do not inhibit their development. That is real and meaningful help for community energy schemes, making routes to market simpler and more attractive for them.
What about investors—investment banks and pension funds? Would they like to have a decarbonisation target? Of course they would, but at the top of their shopping list are things such as detailed contract for difference terms that are fit for purpose, a credible contract for difference counter-party that the market can trust and believe in, an easier route to market for independent generators, and no strike-price auctions before the electricity market reform regime has been operating for a number of years and the financial community has grown comfortable with other aspects of the contracts.
Tom Greatrex
I am listening carefully to the hon. Gentleman’s list. He will know that some elements of it are dealt with in later amendments, particularly the one about community energy, which would increase the threshold from 5 MW to 10 MW. Will he support that amendment if we divide on it?
Mr Deputy Speaker (Mr Lindsay Hoyle)
We can bide our time on that until we get to that group of amendments.