Mr William Bain (Glasgow North East) (Lab)
1. What steps he is taking to increase protection for consumers in the energy market.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
As the independent regulator of the gas and electricity markets, Ofgem’s primary duty is to protect consumers, and it has consulted on proposals to improve consumer protection and competition in its retail market review. The Government have consulted on new powers for Ofgem to compel energy companies to provide redress to consumers who have lost out because of a regulatory breach.
Mr Bain
According to the Government’s own figures, fuel poverty in England is set to rise by 400,000 this year. In Scotland, more than one in four people are in fuel poverty, in Wales the figure is one in three and in Northern Ireland it is nearly one in two, yet 5 million customers are still being overcharged by the big six energy companies. When will the Government take the strong action that is needed with those companies to ensure that over-75s are always put on the cheapest tariffs—a change that would help 6,299 people in my constituency and 4 million pensioners across the country?
Mr Davey
The Government have consulted on how we can change the measure of fuel poverty so that it is more exact and so that we can ensure that we tackle the worst fuel poverty. The previous Government could not even measure fuel poverty properly. As regards ensuring that the big companies give a fairer deal, Ofgem’s retail market review is considering everything from standards of contact to improving billing and tariff simplification. Those and other measures will help people.
Mr John Baron (Basildon and Billericay) (Con)
The Government have accepted the billing stakeholder group’s recommendation that information should be put on all energy bills, by this Christmas, detailing how much a customer could save if they were on that company’s cheapest standard direct debit tariff. Understandably, Ofgem cannot confirm whether it will implement that, so what will the Government do to raise the matter with the Prime Minister and the big six in any forthcoming deliberations?
Mr Davey
First, I thank the hon. Gentleman for all his work on this important issue. He has made a valuable contribution. We are raising the matter, because we take it very seriously. Ensuring that consumers have the right information so that they can switch to cheaper tariffs is very important.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
It is not just households that need better protection in the energy market. Small businesses are also consumers under pressure from soaring bills. In the debate on the Queen’s Speech on 16 May, my right hon. Friend the Member for Don Valley (Caroline Flint) asked the Secretary of State to end unfair roll-over contracts, stop small businesses being subject to six years of back-billing and ensure that energy companies act responsibly towards small firms that have fallen into difficulty. On that occasion, he was not able to give an answer. Now that he has had a chance to reflect on those issues, will he give an answer and indicate whether the Government are serious about Britain’s small businesses having support in the energy market if they are to help us to get out of recession?
Robert Halfon (Harlow) (Con)
Sixty-five Members of Parliament of all parties have signed a Back-Bench motion calling for an Office of Fair Trading inquiry into the uncompetitive role of oil companies in keeping prices high at the pump. Will my right hon. Friend put pressure on the OFT to carry out that inquiry?
Mr Davey
My hon. Friend will know that my right hon. Friend the Secretary of State for Transport and I have been looking into that issue, but as a former competition Minister in the Department for Business, Innovation and Skills I am clear that independent competition authorities are critical to effective competition policy. I would not want to be seen to be putting undue political pressure on a valuable independent institution.
Mrs Mary Glindon (North Tyneside) (Lab)
2. What assessment he has made of the potential effects on consumers of proposed changes to the Consumer Credit Act 1974 regarding early repayments and the green deal.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The hon. Lady raises an important issue and we have taken a lot of care over it. Any green deal provider will be able to charge additional penalties only if it is genuinely able to prove that it will suffer a loss as a result of a consumer’s decision to repay early. In addition, all consumers will have the ability to challenge any additional penalties, with recourse to the Financial Ombudsman Service where necessary.
Mrs Glindon
Given that the Department’s own impact assessment predicts interest rates as high as 9.5% under the green deal, does the Minister think the added possibility of a hefty penalty for early repayment will help to present a compelling case to families hoping to bring their energy bills down?
Gregory Barker
I understand the hon. Lady’s worries, which are why we have considered the matter so carefully, but there is a balance to be struck. If there are not penalties for those who repay early, the rest of the market will bear the additional risk and lack of profit, pushing up the cost of green deal plans for everybody else. I hope the interest rates will be significantly lower than she said, but we think we have got the right balance between consumer protection and a dynamic market.
Dr Phillip Lee (Bracknell) (Con)
3. What estimate he has made of likely capital costs for new electricity generating capacity under (a) contracts for difference and (b) a premium feed-in tariff.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
The impact assessment published alongside the electricity market reform White Paper provides details of the capital costs of different approaches. The analysis shows that the cost of capital is lower under the contract for difference than under the premium feed-in tariff. The same low-carbon generation mix would cost £2.5 billion less to build under our chosen approach.
Charles Hendry
I assure my hon. Friend that we are always looking for measures that will simplify the structures, although I would draw attention to comments from EDF, a key investor, which says:
“The Contracts for Difference…which sits at the centre of the Bill, will be key to delivering investment that represents value for money, and protects consumers. It is a simple, transparent and proven instrument.”
Dr Alan Whitehead (Southampton, Test) (Lab)
Does the Minister accept that the contracts for difference impact study was undertaken when the idea was that the state would be the counterparty to the CFD? Now that is no longer the case, will he provide a new impact assessment that compares the relative costs and advantages of CFDs and premium FITs before the proposal is finalised in the energy Bill?
Charles Hendry
I am grateful to the hon. Gentleman for the work that he and his fellow members of the Select Committee on Energy and Climate Change have done on the proposal and on alternative counterparty models. The Government have made one approach clear in the draft Bill, but we have also made it clear that a single counterparty model could work separately. If we propose different models, we will publish a separate impact assessment.
Andrew George (St Ives) (LD)
4. When he plans to announce the outcome of the renewables obligation banding review.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
I plan to announce the outcome of the renewables obligation banding review very shortly.
Andrew George
To secure essential jobs and investment, the industry needs certainty, clarity and rational decisions based on evidence and not on emotion. That is especially true of wave energy in my constituency. Will the Secretary of State reassure the House that decisions will be clearly evidence-based?
Mr Davey
I pay tribute to my hon. Friend for his work on promoting renewable energy in his constituency and his county of Cornwall, particularly in respect of marine energy. I can reassure him that the Government will make decisions based on the evidence. We will crunch through the more than 4,000 responses we have had—an awful lot of evidence, including some substantial new evidence—and our decisions will reflect the evidence.
Caroline Lucas (Brighton, Pavilion) (Green)
Does the Secretary of State share my concern about the mooted 25% cut to onshore wind support? Does he agree that it would disastrous for wind? Does he also agree that the recent announcement of a £1 billion loan from the Department for Business, Innovation and Skills to Petrobas for deep-sea drilling in the south Atlantic completely undermines any progress on renewable energy?
Mr Davey
I congratulate the hon. Lady on asking three questions, but I will not anticipate the announcement that we will make shortly. We support onshore wind—we believe it is a cost-competitive renewable technology, and it has an important place in decarbonisation and in a secure energy supply.
Chris Heaton-Harris (Daventry) (Con)
As my right hon. Friend will know, if onshore wind is cost-competitive, it will not need support. If, as he has said in previous answers to me, of our 13GW target, 5GW have been built, 6GW are through the planning gate and 8GW are in planning in the summer of 2012, the level of subsidy is surely way too high.
Mr Davey
I have to disappoint my hon. Friend. The fact that we are supporting the industry is one reason why investment has come forward in large numbers. The 6GW that have been consented and the 6.5GW in the planning system would not necessarily go ahead if there were dramatic cuts in subsidies.
Caroline Flint (Don Valley) (Lab)
In the year in which the solar industry was undermined, there are fears that the Government are turning their fire on the cheapest form of clean energy—onshore wind power—by proposing a cut of 25%. In the words of one industry expert, that would “kill dead” new wind developments. Perhaps some Government Members would like that. The Secretary of State has briefed the press that he does not support such a cut—neither do the Opposition—so why does he not stand up to his Conservative colleagues who want to kill off the British wind industry?
Mr Davey
I have to disappoint the right hon. Lady, because my Conservative colleagues and I are working very closely on this matter. Both Government parties support decarbonisation and understand the critical role that renewables can play, whereas under Labour renewable investment did not occur and we had one of the worst records in Europe. She will have to be patient, but we will make the announcement, and it will be a very good announcement.
Caroline Flint
The mixed messages coming from Government Members have blighted policy in this area. Investors, who want to bring new jobs and industries to this country, are crying out for certainty and confidence, but I am afraid the Secretary of State just does not get that. The message from the Government seems to be that Britain is closed for green business, which is why Vestas has scrapped its plans for a factory in Kent and Siemens is warning that its plans for a new factory and port complex could be put at risk too. Before any more firms axe jobs in Britain, will he tell us today, before the House rises, that the Government will scrap the 25% cut and get behind British low-carbon jobs once and for all?
Mr Davey
Once again, the facts do not support the right hon. Lady’s case. There has been a large increase in investment in renewables in the past year, which has created more than 20,000 jobs, and confidence in the sector is actually extremely high. When we make our announcement, I believe we will see billions of pounds of investment coming forward.
Peter Aldous (Waveney) (Con)
5. What estimate he has made of the level of investment in generating capacity (a) under the existing renewables obligation and (b) in the future.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
The renewables obligation has succeeded in providing support worth about £2 billion a year to renewable electricity in the UK. Industry announcements over the last financial year amounted to renewables investments totalling £6.9 billion, which potentially will support more than 20,800 jobs. We plan to publish details of the additional investment arising from the RO banding review shortly.
Peter Aldous
To maximise investment in the offshore renewables sector, it is important to provide investors with certainty on electricity market reform as soon as is possible. Will the Secretary of State confirm that progressing the draft energy Bill will be given the highest priority when the House returns and that he will take all other steps necessary to provide this certainty?
Mr Davey
My hon. Friend is absolutely right, and has been a champion of the offshore wind industry. I congratulate him on that. The draft energy Bill has been widely welcomed by many people in the offshore wind industry because they see that it contains the instruments needed. We are pressing ahead with the timetable in the White Paper that we published last July. I am grateful to the Energy and Climate Change Committee for how it has gone about is rapid pre-legislative scrutiny. We will look carefully at its report, and we hope to publish the full Bill in the autumn.
Mr David Hanson (Delyn) (Lab)
Will the Minister welcome the creation of more than 100 jobs at Mostyn docks in my constituency, based on the development at Gwynt y Môr offshore wind farm off the north Wales coast, which was supported by the previous Labour Government? Will he recognise that wind farms and wind generation are not just about cheap electricity but about economic development? Will he therefore heed what my right hon. Friend the Member for Don Valley (Caroline Flint) said about supporting the wind industry both onshore and offshore?
Mr Davey
I agree with the right hon. Gentleman. It is very good news that jobs are being created. The story of onshore, offshore, the renewables industry and our energy policies generally is to bring forward new investment and jobs. We are proud of that, and will continue with that support.
Kelvin Hopkins (Luton North) (Lab)
6. What steps he is taking to help households improve their energy efficiency.
Heidi Alexander (Lewisham East) (Lab)
7. What steps he is taking to help households improve their energy efficiency.
Lilian Greenwood (Nottingham South) (Lab)
13. What steps he is taking to help households improve their energy efficiency.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
Our flagship energy efficiency measure is the green deal, which is supported by the £1.3 billion per annum energy company obligation. We are making very good progress towards its introduction, which starts this autumn, and we expect roll-out to grow strongly in 2013 and beyond, bringing new entrants, greater competition, consumer choice and innovation to this growing market.
Kelvin Hopkins
A crash programme to insulate every home in Britain would save millions of people money on their fuel bills and keep them warm in the winter. It would also be billions of pounds cheaper than investing in nuclear power. Will the Government undertake a rigorous cost-benefit study of these alternatives?
Gregory Barker
The hon. Gentleman is absolutely right. Energy efficiency is a no-brainer. That is why we have given unprecedented importance and attention to it and for the first time have created within the Department an office of energy efficiency deployment. The green deal will involve a far greater range of interventions in people’s homes, unlike previous programmes, which were very limited, so I think the green deal will achieve the aims he seeks.
Heidi Alexander
May I bring to the Minister’s attention the excellent work done by Lewisham council in its insulation partnership, which has seen almost 3,000 homes receive cavity wall and loft insulation in the last six months? Given the difficulties that the Government have experienced in getting the energy companies to meet their household energy efficiency obligations, does he agree that local authorities have a vital role to play in ensuring that as many people as possible can benefit from lower fuel bills?
Gregory Barker
Absolutely. The hon. Lady makes a sound point, and that is exactly why I shall shortly be issuing new guidance to local authorities, under the Home Energy Conservation Act 1995, making it clear that I expect every single local authority to draw up a strategy to roll out the green deal to all parts of their areas. Local authorities and communities are key to the success of the green deal.
Lilian Greenwood
In the last five years of the Labour Government, 2,456 people in my constituency got help through Warm Front to make their homes more energy efficient and to cut their energy bills. Can the Minister explain why just 80 people in Nottingham South were helped last year?
Gregory Barker
I cannot give the hon. Lady a breakdown of that, but I can tell her—[Interruption.] I will happily write with more detail about Nottingham South, but I can say that we helped a large number of people through Warm Front last year. However, we need to do much more than we could possibly achieve under the relatively limited Warm Front programme, which experienced so many troubles when the Labour party was in government. The green deal is going to be transformational and offer not just the very poor but everyone the opportunity to retrofit their homes.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
We have been telling the Minister for months that, to be a success, the green deal must be a good deal. According to calculations confirmed by a spokesman in his Department, if we take the Government’s intended rate of interest—7.5%, which is lower than the highest rate under the impact assessment—a household taking out a green deal of £10,000 would have to pay back around £22,000 over a 25-year period, which is more than double the cost of paying for the measures up front. Does the Minister think that represents a good deal?
Gregory Barker
I do not think there is any division between the hon. Lady and myself in wanting a good deal. We can certainly agree on that, and that is why we have put so much time and effort into this transformational plan. However, the obsession with interest rates alone, to the exclusion of everything else, does not serve her well. I think that the Labour party is actually announcing that it would subsidise interest. That will cost consumers billions and force up everybody’s energy bills. Why do the Opposition not just come clean, say that they are going to subsidise interest and put everybody’s bills up, rather than doing what we are doing, which is coming forward with a progressive market solution?
Luciana Berger
I thank the Minister for that response, but he need refer only to the contributions I made in debates on secondary legislation to know that there are many things in the green deal that we are concerned about, beyond the interest rate. With interest rates so high, there is a great risk that the public will not be interested in the green deal. We know from polling conducted by the Great British Refurb campaign that anything over 6% means that 90% of the British people will just not be interested. Indeed, the Department estimates that the number of homes being insulated next year will fall dramatically. Given that the green deal is meant to launch in October, why is the Minister not doing something about this now, to ensure that consumers really will get a good deal?
Gregory Barker
We are absolutely committed to giving consumers a good deal, which involves a high range of competition, new entrants and more choice. This is not some Stalinist five-year plan; this is a brand new market. It is perfectly valid to suggest that there should be subsidised interest rates, but let us hear how the Labour party is going to pay for that and how much Labour is going to put on consumer bills. We have a proposal for targeted support from the green investment bank, but the hon. Lady’s blanket approach, which does not understand economics, would be very costly for everybody and force up bills for families.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
8. What comparison he has made of the potential capital cost of meeting the Government’s 2020 renewable target using wind power backed up by open-cycle gas plants and meeting the same level of electricity demand using combined-cycle gas plants.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
The capital costs of gas plant are slightly lower than those of onshore wind, although the operating costs are much higher and more unpredictable. An electricity supply reliant on gas would therefore be cheaper to build at present, but it would not offer the security of supply that the country needs. A responsible energy policy requires a diverse energy mix, combining gas, renewables, nuclear and fossil fuels with carbon capture.
Mr Lilley
I am grateful to my hon. Friend for his answer. Can I take it from the fact that he does not give specific figures that he agrees with the figures in the report by Professor Gordon Hughes, the professor of energy economics at Edinburgh university, “Why Is Wind Power So Expensive?”? The cost of providing a given amount of power by wind plus open-cycle gas turbines is greater than the cost of using efficient combined-cycle gas turbines by a factor of 10. Is that really something that the consumer can afford, if it saves only £500 million a year in operating costs?
Charles Hendry
I do not agree with Professor Hughes, and neither does the Committee on Climate Change or the Centre for Energy Policy and Technology at Imperial college. One of the main differences is the assessment of how much wind might be necessary, and we believe that the professor has overestimated that by a third, which automatically reduces the cost by £30 billion. Furthermore, he has not looked at the range of alternative back-up provisions, including interconnectors, or at the likely price of gas in the future.
Nic Dakin (Scunthorpe) (Lab)
What steps are the Government taking to ensure that capital investment in wind monopiles will result in manufacturing taking place in the UK using UK steel, so that UK energy bill payers and UK taxpayers can fund UK jobs?
Charles Hendry
The hon. Gentleman raises a critical point. We have secured agreement with the offshore wind industry that it will work to ensure that 50% of the supply chain involves UK companies, compared with perhaps 10% in the early projects. We want this to be a real industrial policy that brings help to constituencies, such as his, that have a great industrial heritage. We want this to be a joined-up policy.
Damian Hinds (East Hampshire) (Con)
9. What steps he is taking to ensure that small and medium-sized enterprises can participate in the green deal.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
Small and medium-sized enterprises are key to the successful delivery of the green deal. To give them the help that they need to get started, we have given them special financial help to get the training that they need, and waived SME installer and assessor registration fees for the first two years of the green deal. We have also begun a series of regional green deal road shows aimed at explaining to SMEs exactly how they can access the market, and I am pleased to tell the House that they are proving highly popular.
Damian Hinds
Large installer companies will partner large financing companies to offer a seamless product to households. How will my hon. Friend promote white-labelled financing products so that small businesses in my constituency can do the same?
Gregory Barker
My hon. Friend is absolutely right to suggest that a lot of SMEs want to be green deal providers and offer that service in their own right to consumers, and it is vital that they should be able to do so. I am pleased to say that a number of commercial offers are now coming forward to create exactly that white-label proposition, and the Department is doing everything it can to facilitate that. We are also looking at other ways in which we can give confidence to the SME sector.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
Given the current financial situation, SMEs are often reluctant to take on additional loan finance even if they are offered it. Would the Minister therefore accept that it is particularly important that the support for SMEs under the green deal should have a large element of either grant or long-term financial support, rather than deals that are attractive only in the short term?
Gregory Barker
The hon. Gentleman is right to say that we must have an easy-to-access offer for SMEs. The good news is that that can take a number of different shapes and forms, depending on an SME’s needs and on the offer that they want to provide for their customers. It is early days yet, but some interesting models are being put forward, and we are keen to support anything that helps to increase SME take-up.
Graeme Morrice (Livingston) (Lab)
10. What assessment he has made of the potential effects of the provisions of the draft Energy Bill on the competitiveness of the energy market.
Huw Irranca-Davies (Ogmore) (Lab)
20. What assessment he has made of the potential effects of the provisions of the draft Energy Bill on the competitiveness of the energy market.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
The draft Energy Bill focuses on encouraging greater investment and competition in the energy market as we make the transition to a low carbon future. The provisions in the Bill are about removing barriers to entry and allowing all forms of low carbon generation to come forward and compete on a level playing field. In addition to the provisions in the draft Bill, Ofgem has consulted on liquidity proposals and the Government have issued a call for evidence regarding the availability of long-term contracts for independent generators.
Graeme Morrice
I thank the Minister for his answer. A report by the Institute for Public Policy Research, a respected think-tank, shows that if the energy market was more competitive, efficiency savings alone would knock £70 a year off the average energy bill. So why will the Government not get behind Labour’s plan to break up the dominance of the big six by requiring them to sell power into a pool? That would allow new businesses to enter the market, increase competition and drive down energy bills for families and businesses.
Mr Davey
Because Labour’s plan would not work. The critical factor for independent generators—the new competitors in the current and future markets—is liquidity in the futures market, not in the day-ahead market. Liquidity in the day-ahead market has increased significantly, and the pool proposal that the right hon. Member for Don Valley (Caroline Flint) has made would be about the day-ahead market. So we have already sorted that problem, and Ofgem is focusing on managing auctions for the futures markets, which is where the competition issue is.
Huw Irranca-Davies
Yet the Secretary of State knows that the whole sector of independent generators is sceptical about whether the necessary radical reforms are enshrined within the energy market reform as currently proposed. Does he think he will need to go further to have a more fundamental shake-up of the electricity market so that his vision of a genuinely competitive market for the interests of business and individual consumers will actually happen?
Mr Davey
The draft energy Bill is a fundamental shake-up of the electricity market, and it is widely recognised as such. That is why it has created such heated and interested debate. I have to say that I do not recognise the views the hon. Gentleman ascribes to independent generators. I have met groups of independent generators, and they welcome much of the Bill. They argued—and we listened—that more work needs to be done to ensure that finance is available, so we recently published a call for evidence to see whether we can make sure that the power purchase agreement market is as healthy as possible. That is another critical way in which we are trying to help competition.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
11. What steps he is taking to encourage biomass-based generation in appropriate and sustainable locations.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
Alongside our bio-energy strategy, we have introduced the renewable heat incentive and are currently reviewing support levels for biomass electricity. We are introducing sustainability controls into financial incentives. We have reformed the planning system in England to promote sustainable development and to encourage local authorities to plan for renewables development in the right places.
Mr Sheerman
But does the Minister agree that there is enormous potential for biomass in this country, particularly because it is capable of being produced at the right size, volume and quantity in a location—and there is less resistance to that sort of biomass? The real problem comes when the biomass raw material is imported from South America and Africa and not grown in our own country.
Charles Hendry
The hon. Gentleman is absolutely right to highlight the benefits of biomass. In our estimate, in the areas of heat and electricity, biomass could account for 40% of the renewable energy that we need to achieve by 2020. We have to strike the right balance, as there are other uses for wood fuel in this country: it can be used in furniture and in panelling, which are important industries for this country. We believe it right to look at imported fuels as well, as long as they are sustainably produced.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Drax power station takes fast-growing crops, grown especially in Thirsk, Malton and Filey, and provides a great source of income to farmers in very difficult times. Will the Government and the Minister do all they can to promote biomass in preference to wind farms as a renewable and sustainable source of energy?
Charles Hendry
We do not have to be either/or; we need a balanced energy portfolio. I think biomass offers a very significant immediate carbon gain when we move from coal-fired generation to biomass generation. Some exciting developments are happening in that sector, but having wind in the right locations is an important part of the mix, too.
Julian Smith (Skipton and Ripon) (Con)
12. What recent discussions he has had on the subsidy received by wind farm operators.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
Throughout the renewables obligation banding review and the comprehensive review of feed-in tariffs, I have had discussions with many stakeholders and with my officials and ministerial colleagues on subsidies for wind farm generators.
Julian Smith
The Coates family near Skipton were recently offered a bribe of £275,000 to put one wind turbine on their farm. They also received late-night bullying calls from the company, ConEnergieKontor. This behaviour is happening right across North Yorkshire. Does the Minister agree that the only way to fix it is drastically to cut the subsidy paid to these companies?
Mr Davey
I do not agree with my hon. Friend’s last point, but I would say that any bullying tactics by developers are completely unacceptable, and I join him in condemning them. The wind industry generally is committed to a good standard of community consultation and to providing community benefit. If my hon. Friend would like to send me the details of what he raised with me, I will take them up with RenewableUK. I do not believe such practices are widespread or that they are a consequence of renewable subsidies, but they are unacceptable.
Dame Joan Ruddock (Lewisham, Deptford) (Lab)
14. What assessment he has made of the report by the Royal Society and Royal Academy of Engineering on shale gas extraction in the UK.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
In response to calls for an independent and rigorous examination of the evidence on fracking, there could be no more authoritative or independent sources of advice than the UK’s science and engineering academies. Their report is therefore particularly welcome, and we will study it carefully in considering the future of fracking for shale gas in the UK. Its main message is that shale gas fracking could be allowed within strict environmental and safety constraints.
Dame Joan Ruddock
As the Minister will know, the report says that some issues merit further consideration, including climate risks. For the avoidance of doubt, will he carry out a comprehensive assessment of the emissions arising from the extraction of shale gas, and indeed its subsequent use?
Charles Hendry
The right hon. Lady brings tremendous expertise to this debate. We have already commissioned independent advice on some of the fracking issues, which is being subjected to wider analysis and peer review. One of the most thorough assessments has been requested by Sir John Beddington, the Government’s chief scientist. We will look at all the evidence. We believe that the technology has a potential that must be explored, but that will be done only with the most careful analysis of all the environmental and safety considerations.
John Pugh (Southport) (LD)
When can we look forward to the commercial production of shale gas in this country?
Charles Hendry
I think that it will be a while before we see commercial production. The situation here is very different from that in the United States, where, for example, landowners own the mineral rights beneath their homes. That is not the case in this country, so there is not the same economic driver. We are seeing some exciting assessments of the potential, but it will be some time before we see specific licences for development.
Caroline Nokes (Romsey and Southampton North) (Con)
15. What assessment he has made of the effect on security of supply of the Government’s renewable energy policy.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
The Department carries out a range of analyses to assess future security of supply. That includes the impact of all technologies, including renewable energy. Our most recent analysis was published in December 2011, and reinforces our commitment to a balanced energy mix to help to deliver security of supply. Ofgem will provide an assessment of future security of supply by 1 September, in line with its obligations under the Energy Act 2011.
Caroline Nokes
Gas continues to play an essential role as both a transition and a destination fuel for a low-carbon economy. What measures is the Minister considering to ensure that we have a secure and affordable gas supply to underpin electricity generation and support our energy-intensive manufacturing sector?
Charles Hendry
As my hon. Friend may know, we are putting together a gas generation strategy. We will look at the long-term role for gas, including the role that it can play in combination with other technologies. Other work is being done in relation to the implications for security of supply. We shall need to address wider issues as we move towards becoming a net importer of gas, but we are in no doubt whatsoever about the contribution that it can make.
Damian Collins (Folkestone and Hythe) (Con)
16. What progress his Department has made on negotiations to build a new generation of nuclear power stations.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
The Department of Energy and Climate Change regularly meets industry and other parties that are interested in the development of new nuclear power stations in the United Kingdom to discuss progress and the UK policy context. We are working with developers to address all relevant issues, so that they will be in a position to take final investment decisions as early as possible.
Damian Collins
Is the Minister prepared to maintain an open mind about the suitability of sites such as Dungeness in my constituency for new nuclear build, particularly if new evidence suggests that some of the initial concerns about the sites that have been raised by Natural England could be overcome?
Charles Hendry
Let me reassure my hon. Friend that we will always keep an open mind in regard to new evidence. The problem with the Dungeness site was that development there was not compatible with the EC habitats directive. The Government’s major infrastructure environment unit is continuing to investigate, and if there is additional evidence, I shall be pleased to meet my hon. Friend at any time to discuss it.
Mr Dennis Skinner (Bolsover) (Lab)
If the Minister is happy to meet the nuclear generation people, will he also take an interest in coal? We have 100 years’ worth of coal beneath our feet, and it is high time the Government paid some attention to the industry. Not many pits are left, and some of those are in jeopardy. It is high time the Minister met those people, together with the National Union of Mineworkers.
Mr Speaker
I assume that the hon. Gentleman is suggesting that as an alternative to new generation.
Charles Hendry
I had never seen the hon. Gentleman as an advocate of alternative energy policies.
I had a meeting yesterday with the head of the National Union of Mineworkers and the head of the National Association of Colliery Overmen, Deputies and Shotfirers, but if the hon. Gentleman feels that it is time for another meeting, I will of course consider that.
Neil Carmichael (Stroud) (Con)
17. What assessment he has made of the likely implications for his Department’s energy policy on the green investment bank.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
The UK green investment bank policy is one of a number of policies that together will support the Government’s green and growth objectives. The bank, funded with £3 billion over the three years to 2015, will tackle gaps in the financing of green infrastructure projects. It will operate to a “double bottom line” of both achieving green impact and making positive financial returns. The initial priority sectors for the bank are offshore wind, waste and recycling, energy from waste, non-domestic energy efficiency, and support for the green deal.
Neil Carmichael
Does the Secretary of State agree that the green investment bank is emblematic of the Government’s determination to promote economic growth, and does he recognise the importance of ensuring that small and medium-sized enterprises are part of that story?
Mr Davey
My hon. Friend is absolutely right: our energy infrastructure and climate change policies are very much part of our growth strategy, and are bringing forward serious investment. He is also right that SMEs play a critical role in this regard, particularly in respect of innovation and the supply chain that is developing in many of the new and existing markets that we are developing.
Joan Walley (Stoke-on-Trent North) (Lab)
How is the Secretary of State following up representations from ceramics companies in Stoke-on-Trent, who are intensive users of energy and who have an agenda for innovation and investment, and who very much want to have the support of the green investment bank for the work they do?
Mr Davey
As the hon. Lady will know, a Department for Business, Innovation and Skills and Department of Energy and Climate Change consultation that has now closed looked at policies to help such energy-intensive industries. My right hon. Friend the Business Secretary will introduce some of the proposals, and we hope they will cover a range of industries.
Graham Stringer (Blackley and Broughton) (Lab)
18. What steps he plans to take to reduce the cost of energy bills for consumers.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
My Department is taking a number of steps to help consumers with energy bills. Programmes such as the carbon emissions reduction target, Warm Front, the green deal and the energy company obligation are helping to make more homes energy-efficient. The warm home discount provides direct help—worth £1.1 billion until 2015—to cut bills for 2 million low-income and vulnerable households. The voluntary agreement announced by the Deputy Prime Minister means suppliers will ensure that all consumers have good information on their supplier’s best tariff.
Graham Stringer
Those measures are trivial compared with the amount of subsidy going into wind farms, which has the effect of making rich landowners filthy rich, and by 2020 will put £1,000 per head on consumers’ energy bills. When is the Secretary of State going to change those policies so the consumer benefits, rather than rich landowners?
Mr Davey
I am afraid that the hon. Gentleman has got his facts wrong. The support for renewable energy costs 6p a day per household, and in this financial year the warm home discount will result in 1 million of the poorest pensioners getting a discount of £130—so I have to say the hon. Gentleman is wrong.
Mr Mark Spencer (Sherwood) (Con)
19. How many solar panels were installed in the most recent month for which figures are available.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
About 13,800 solar PV installations, with a total capacity of 58.5 MW, were confirmed on to the feed-in tariff scheme’s central register in May 2012. I am pleased to report that that is more than double the number of installations—with more than triple the capacity—that were confirmed in the same month last year. Preliminary figures indicate even stronger growth this month.
Mr Spencer
Clearly, this is a very popular technology. Given that—and the discussion that has just taken place in the Chamber—might it be time to consider switching subsidy from wind farms to solar panels?
Gregory Barker
My hon. Friend is right: it is a very popular technology, and as our reformed FIT scheme is now driving down the costs and helping to promote competition, it is also scalable to a very large scale. Solar will be included properly for the first time in our renewables road map that we will publish later in the year. Solar will have a meaningful part to play in the energy future of Great Britain.
Laura Sandys (South Thanet) (Con)
What assessment he has made of the likely level of future global oil and gas prices.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
DECC publishes low, central and high projections for long-term trends in world oil and gas prices. In 2011 prices, our central scenario is for oil to rise to $130 per barrel by 2030 and for gas to rise to a high of over 80p per therm in the middle of this decade, before falling back to settle at about 70p per therm.
Laura Sandys
Does the Minister see a time coming when we can decouple fossil fuel prices from low-carbon production prices?
Charles Hendry
We are already seeing some decoupling. We have seen a decoupling of the oil price from the gas price. We are expecting to see that gas will be an important source of generation in its own right, but that it will also have a very important future in providing back-up to renewable generation, which will inevitably be intermittent in most areas.
Mr Speaker
We are ahead of time today, and we will move on now to topical questions.
David Morris (Morecambe and Lunesdale) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
Since my Department’s last Question Time we have published a draft Energy Bill for pre-legislative scrutiny, set out the next steps for the green deal, publishing the detailed plans and secondary legislation, and we have helped to broker an EU energy-efficiency directive. There is also decarbonising power generation, a new market for energy-efficiency and European leadership on international climate change—it is an ambitious agenda.
David Morris
I thank my right hon. Friend for that comprehensive answer. However, may I ask him what steps his Department is taking to ensure that Horizon Nuclear Power switches from its current owner, E.ON, to a new one with the minimum of disruption to nuclear build in Britain?
Mr Davey
My hon. Friend will know that, ultimately, this is a commercial decision for the owners of Horizon Nuclear Power—RWE and E.ON—but we have been working with them to facilitate investors coming forward to talk to them. We are very optimistic that we will see the Horizon project sold to another consortium and that new nuclear build will continue.
Caroline Flint (Don Valley) (Lab)
Since this Government came to power, we have seen: the chaotic mismanagement of cuts to solar power; delays to the green deal; delays to the borrowing powers of the green investment bank; cuts to the Warm Front scheme, with far fewer people getting a chance to avail themselves of that support, as my hon. Friends have said; and an Energy Bill that was laughed out of the room by the Select Committee. We have also heard in questions today that the assessments for that Bill are going to have to be further revised. This week, we also learned that the Department has underspent its budget by nearly £400 million. Nobody is against the efficient management of office budgets, but this is a ministerial team who fudge decisions, make the wrong choices, cannot keep to timetables and are incapable of managing the budget. Is this not another example of the omnishambles that is spreading through this Government like a virus?
Mr Davey
She says £400 million, but I am afraid that she needs to look at the facts, because the real figure for underspend is £266 million. That is still a large underspend, but I have to tell her that £177 million of that comes from higher energy trading income from the Nuclear Decommissioning Authority’s programme. So better performance by one of our non-departmental bodies is producing more money for the Treasury—I would have thought that she welcomed that.
Amber Rudd (Hastings and Rye) (Con)
T2. The residents of Hastings and Rye are looking forward to cheaper energy bills following the implementation of the green deal. What plans does the Minister have to make sure that residents of social housing also get the benefit of that? May I also invite him, as Minister and constituency neighbour, to come to Rye to share that information with AmicusHorizon?
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
I congratulate my hon. Friend, who has taken a very close interest in this issue of how we are going to help the poorest people in our society access the green deal and to improve the housing stock for everyone. I can assure her that we are working very closely with both the Local Government Association, the National Housing Federation, and with individual local authorities and community groups. I would also be delighted to come across the border and have a round table meeting to see how we can drive forward the agenda in Hastings and Rye.
Alun Michael (Cardiff South and Penarth) (Lab/Co-op)
T3. Ministers will be aware that the Welsh landfall for an optimal Severn tidal barrage will be in my constituency. Given the need for a major increase in renewable energy and the potential for creating nearly 40,000 jobs, will Ministers provide us with some clarity on what the Government will do to promote this project?
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
I am sure that the right hon. Gentleman is aware that a year or so ago we published a report, which had been commissioned by the previous Government, to look at the barrage proposals and the lagoon proposals. It showed that the largest of those would cost £30 billion-odd, and we believe that in the current climate that is unaffordable. We know that work is being done on looking at other ways of bringing finance into that. We have said that we will keep an open mind on the proposal, but it needs to be done at a cheaper cost to consumers.
Sarah Newton (Truro and Falmouth) (Con)
The Department has been a really good friend to the emerging deep geothermal energy industry in this country, through regional growth funding and direct support. Can the Government make that last commitment to give the industry the five renewables obligation certificates it needs as part of the review, which would enable the first commercial deep geothermal power station to be opened in my constituency?
Charles Hendry
My hon. Friend will not have to wait very long before we provide the final decisions on the renewables obligation banding review. She might also be interested to learn that I recently went to Iceland to sign a memorandum of understanding with the Icelandic Government about how we can share some of their knowledge as the world’s leading economy in geothermal power and heat, and see how that can be brought to bear to assist developments such as those in her constituency.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
T4. Since this rather miserable Government came to power, pensioners in my constituency have seen their energy bills rise by £200. If the Government insisted that the big energy companies put those pensioners aged over 75 on the cheapest possible tariff, 5,500 pensioners in my constituency would see their bills drop by £200. Is it not time that the Government stood up for senior citizens rather than the big energy companies?
Mr Davey
I have good news to cheer up the hon. Gentleman. Under the warm home discount, 1 million of the poorest pensioners will get £130 off their bills in this financial year. Under the voluntary agreement negotiated by my Department and announced by the Deputy Prime Minister in April, the big six will ensure that customers who are getting the warm home discount are informed that they can move to the cheapest tariff, if they are not already on it, which will augment the benefit from the discount.
Mr Speaker
Order. May I remind the House that topical questions are supposed to be significantly shorter, and the same goes for the replies? We will then be able to get more colleagues in.
David Mowat (Warrington South) (Con)
Over the past few months, there has been a significant increase in the level of electricity imports, mostly cheap nuclear from France, through the interconnector. Indeed, over the past 24 hours we have imported more electricity by a factor of two than we have produced from offshore and onshore wind. That is a big policy failure and is costing us thousands of jobs. How can we address it?
Charles Hendry
I disagree with my hon. Friend, as the interconnector is an essential part of our energy security. We have seen a new interconnector introduced to Holland and a new connection is coming through to Ireland. We are exploring other aspects of the matter, too. We think that it is a fundamental part of energy security and delivering low-carbon electricity at the cheapest cost to consumers.
Graeme Morrice (Livingston) (Lab)
T5. What steps is the Secretary of State taking to ensure that energy bill standing charges do not unfairly hit the fuel poor and other low-income consumers, especially pensioners?
Mr Davey
The hon. Gentleman will know that Ofgem is undertaking a retail market review that is considering standing charges. We expect its deliberations to be published in the autumn. Given that it is an independent regulator, I am sure that the hon. Gentleman will agree that I should not pre-judge its conclusions.
Tessa Munt (Wells) (LD)
Investing in a balanced mix of low-carbon energy projects has huge job creation potential. The CBI’s analysis has shown that the green economy currently supports 940,000 jobs, two thirds of which are outside London and the south-east. Does the Minister agree that that reveals how the green economy can support a balanced nationwide economic recovery?
Mr Davey
I strongly agree with my hon. Friend and pay tribute to the work she does in her constituency to promote energy efficiency and renewables. She mentions the CBI report and it is clear that the CBI’s director-general, John Cridland, is very supportive of the Energy Bill and our attempts to increase investment in energy infrastructure, which he sees as a key part of this Government’s growth policy.
Lilian Greenwood (Nottingham South) (Lab)
T6. Under Nottingham’s decent homes programme, more than 15,000 tonnes of carbon will be saved each year. Nottingham City Homes, the local arm’s length management organisation, can use decent homes funding to lever in additional benefits from the green deal’s energy company obligation, but that funding remains indicative for 2013 to 2015. What discussions has the Secretary of State had with the Department for Communities and Local Government on decent homes funding and will he join me in praising the environmental benefits achieved by Nottingham’s “Secure Warm Modern” programme?
Gregory Barker
I would go further and praise Nottingham for a whole range of things that it is doing. It has a very progressive agenda and I look forward to visiting Nottingham in the near future to engage on how we can drive that agenda forward. I cannot comment in detail on something that is the responsibility of DCLG—the decent homes programme—but I can say that we are keen for the green deal programme to leverage in all sorts of additional finance where possible. It is about not just energy efficiency but the wider sustainable regeneration of areas such as Nottingham.
Chris Heaton-Harris (Daventry) (Con)
The Department’s own figures suggest that, in 2009, 50,000 people were put into fuel poverty because of the wind element of renewable energy. Will the Secretary of State give up-to-date figures on that?
Mr Davey
I saw the press reports that made that allegation and I am afraid that I do not agree with them at all. The press article was trying to suggest that particular amounts of money that come from consumer bills to support the renewables industry was the top bit that would push people into fuel poverty. It was a very poor analysis and we completely reject it.
Graham Stringer (Blackley and Broughton) (Lab)
T7. The Minister failed to answer the question earlier about when shale gas would come on line, yet this source of energy would create real jobs and partially decarbonise the energy industry as well as lowering fuel bills. Why does he not get a move on?
Charles Hendry
This is not a matter purely for the Government. Companies here are exploring for shale gas and seeking to identify how much of the resource there may be. They will then need to apply for a licence, get permission from the Health and Safety Executive and get approval from the Environment Agency. A range of different bodies, in addition to local planning permission, are a vital part of the process. It may well have a role to play, but it has to be done with the strictest environmental and safety protections.
Damian Hinds (East Hampshire) (Con)
Does my hon. Friend agree that the continued growth of UK solar vindicates the approach of this Government, who keep returns attractive and make the money go further, in stark contrast to the limited ambitions and dodgy maths of a previous Secretary of State, now Leader of the Labour party?
Gregory Barker
Absolutely. We will see far, far more deployment now in the rest of the Parliament than we would have done if we had carried on with Labour’s very expensive, unfit for purpose, form of subsidy. Moreover, there is other exciting news. I am delighted that Sharp, the leading European manufacturer of solar, has announced that subsequent to the reforms, it will move its European manufacturing base from Germany to the UK—a real vindication of our reforms.
Derek Twigg (Halton) (Lab)
The Heath business and technical park in Runcorn in my constituency is one of the most important employment sites in the north-west, but the decision by SP Manweb plc to apply for a wayleave to retain electric lines on the site is putting at risk a multi-million pound investment in jobs and houses, which has been made worse by the fact that the Department will not be able to make a decision on this until well into next year. Will the Secretary of State intervene quickly to ensure that the investment does take place and is not put at more risk?
Charles Hendry
I am interested to hear the hon. Gentleman’s comments. I am not aware that he has written to me on the subject. If he has done so, I will be very keen to talk to him to see if there are things that we can do to speed up the process, because I understand the impact that it could have on employment in his constituency.
Neil Carmichael (Stroud) (Con)
Does the Minister welcome the news that nearly a third of the 900,000 new jobs have come into the green economy, which is obviously underlined by the excellent news that Sharp is moving to this country from Germany?
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
There is real concern, especially among small innovative companies, that the Department’s smart meter programme, which should help reduce energy bills, is behind schedule, disorganised, has no technical standards to help small companies take part and is unco-ordinated with either the smart grid programme or spectrum release. Will the Minister provide some reassurances?
Charles Hendry
Let me provide the hon. Lady with reassurances. We have sped up the programme that we inherited and brought it forward by 12 months, we have been going forward in a very collaborative approach with industry to get its buy-in to all the key decisions, and we have submitted the technical specification for European Commission approval, which is happening in two stages, with one going through now and the second shortly. We see this as a very important aspect of energy efficiency and putting consumers in power, and also for real business opportunities for large and small companies alike.
Andrew George (St Ives) (LD)
Energy bills are still impenetrable to many households. What progress are the Government making to ensure that energy companies improve the transparency and clarity of their domestic bills?
Mr Davey
As we said earlier, work is under way on this. Ofgem, through its retail market review, is looking at tariff simplification, which is important. As my hon. Friend will know, since becoming Secretary of State, I have been pushing the idea of collective switching and collective purchasing, and simpler bills will be a big facilitator for that.
Jessica Morden (Newport East) (Lab)
Like my hon. Friend the Member for Scunthorpe (Nic Dakin), I have concerns about what the Government are doing to maximise the use of UK steel in the low carbon economy and all the opportunities that that brings. I understand that the Minister’s answer was encouraging, but does he appreciate that we must get this right now, because the deteriorating market for steel is impacting on workers in my constituency today?
Charles Hendry
Let me reassure the hon. Lady that that is absolutely at the heart of what we are doing. We are determined that there will be a major industrial gain for this country from building the new low-carbon facilities, as well as some of the older type of facilities. We have strategies for the oil and gas sector, the nuclear sector and the renewable sector. Throughout this area we want to see real industrial gain, often bringing new employment to areas that have been hard hit for a very long time.
Peter Aldous (Waveney) (Con)
Following on from the CBI’s report, the New Anglia local enterprise partnership has just published its manifesto for promoting green growth over the next three years. Will the Secretary of State and his colleagues across Government work with the LEP to discuss how its manifesto can best be implemented?
Mr Davey
We are keen to hear from any LEP across the country. I know that my right hon. Friend the Secretary of State for Business, Innovation and Skills and his ministerial team work closely with LEPs. Across Government we want to support their work in promoting the green economy.
Dr Alan Whitehead (Southampton, Test) (Lab)
Has the Minister spoken with the developers of large-scale wind farms who have difficulties because their development periods straddle the end of the renewables obligation and the start of—if they come to pass—contracts for difference? Does he consider that the end of the RO, if that is necessary, should be in 2020, rather than 2017, in order to accommodate those problems?
Charles Hendry
We are not persuaded by that argument. We think that there needs to be a clear switchover date and are giving a long lead-in time, to 2017, so that there is certainty. Alongside that, we are giving people the choice of whether they go with the existing renewables obligation mechanism or move to the new contract for difference mechanism so that they have the best opportunity to decide what works for them in the longer term.