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The Secretary of State for Energy Security and Net Zero (Ed Miliband)
With permission, Madam Deputy Speaker, I shall make a statement about the review of electricity market arrangements.
The central challenge that we face is the urgent need to get off expensive, insecure fossil fuels and to deliver an energy system that meets at least double the level of current electricity demand by 2050. In doing so, we need to design the electricity network to ensure that infrastructure is built in the right places, so that we can effectively provide power where it is required. As a result of previous failures to do so, power now goes to waste, costing consumers in higher bills. That is one reason why reform is needed.
The task of this review is to help deliver a fair, affordable, secure, and efficient clean power system. The key question has been whether to proceed with zonal pricing or a reformed national system. Under zonal pricing, we would split the country into different zones relying on price differentials to guide investment decisions. Under a reformed national price system, we would rely on more deliberate strategic co-ordination in advance of investment—planning our network and areas of intended generation more closely and then delivering.
I have applied three tests to this choice in the time since the Government took office: first, what is the fairest approach for families and businesses, both now and in the long term; secondly, which reform can deliver energy security and will best protect consumers and ensure bills savings as soon as possible; and, thirdly, what will do most to ensure the investment, jobs, and growth that we need across the economy? On the basis of these tests, I have concluded that the right approach is reformed national pricing. Let me set out why.
On the fairness test, under reformed national pricing, there would be one national wholesale price, as now. As I have said, under zonal pricing there would be different wholesale prices in different zones. Lower prices will tend to occur in zones with more renewable energy and a smaller population, and higher prices in those with less power and more people.
This would be a significant departure from the current system, which, while it has some differences in network costs, means that wherever a person lives, they pay the same wholesale price for each unit of electricity. The challenge will be obvious to the House. People and businesses could find themselves disadvantaged through no fault of their own and many would see that as unfair. Such a postcode lottery is, in my view, difficult to defend.
The Government have considered whether it would be possible to mitigate these effects under zonal pricing. We have concluded that, while it might, it would be a very complex and uncertain process. And it would be even more challenging to do so for large businesses, given the way that they purchase electricity. Therefore, firms in higher priced zones, such as the midlands, Wales, and the south of England, would therefore face damage to their competitiveness. That is why we have seen so many business groups express such concern about zonal pricing. Indeed, today’s decision has already been welcomed by UK Steel, Make UK, the British chambers of commerce, Ceramics UK and others.
The next test that I applied is which system can best help deliver energy security, protect consumers and ease the cost of living crisis as soon as possible. Long-term reform is essential to cut costs and save money for consumers compared with the status quo, but there is a key question as to what happens in the meantime. The clear advice of my Department is that moving towards zonal pricing would take around seven years to complete in full—assuming no delays. Over that seven-year period, the costs of financing essential investment in our energy system would be likely to rise to accommodate investor uncertainty, at a moment when we urgently need to replace retiring assets and build a clean energy system to boost our energy security. This risk premium would be paid for by consumers in higher bills in the coming years. There is also a danger that it would leave us stuck on fossil fuels for longer by deterring investors from bringing forward the investment that we need for our energy security.
By contrast, reformed national pricing could be delivered more quickly and at lower risk. Indeed, some elements of a reformed national pricing system are already under way, including building network infrastructure, and we intend to proceed with other measures, such as reform of transmission charges, as soon as possible in this Parliament. Having studied this in detail over months, I see real risks that zonal pricing would deter the investment we need and that bills would rise in the transitional period.
The third test is the investment and growth we need as a country. Many businesses make decisions to invest based on the energy costs that they face. The industrial strategy took a crucial step forward in lowering the costs faced by businesses, and clean power will help get us off the fossil fuel rollercoaster, which has so damaged our country’s businesses.
We know that the biggest enemy of business investment is uncertainty, and the risk of zonal pricing is that it would create very significant uncertainty. Imagine a business seeking to invest not knowing for a number of years what zone it would be in and what price it would pay. This would harm investment not just in the energy sector but well beyond it, and it would inevitably risk reducing investment in our country precisely when we need it and undermining the tens of thousands of good jobs in constituencies across the country that our clean energy mission will support.
On the basis of those three tests, I believe that the best choice is to proceed with reformed national pricing. The key elements will include: effective planning through the strategic spatial energy plan to be published next year; national pricing reforms, such as making transmission charges more effective and predictable and taking relevant powers through Parliament to do so; and making changes working with the National Energy System Operator and Ofgem to improve the operation of flexibility and the balancing of markets.
Under reformed national pricing, we will build the transmission network we need to the benefit of all consumers, and we will be more directive and co-ordinated in how we plan our energy system. Each upgrade that we deliver will reduce constraint costs and ensure that consumers benefit from clean power. My Department will set out a reformed national pricing delivery plan later this year. Taken together, I believe that these steps can help to deliver a more affordable, fair, secure and efficient energy system and will address the problems that the REMA process set out to solve without the unacceptable risks I have outlined.
These steps build on what we have done over the past year to turbocharge our drive to home-grown clean power. We have consented three times more solar in 12 months than in the previous 14 years. We have lifted the onshore wind ban and consented enough offshore wind to power the equivalent of 2 million homes. We have backed the biggest expansion of new nuclear in half a century. We are kick-starting new industries in carbon capture and hydrogen. We are giving nearly 3 million extra families £150 off their energy bills next winter and upgrading up to 5 million homes to help cut bills.
Every energy decision that this Government make is in pursuit of protecting the British people from fossil fuel markets controlled by petrostates and dictators by delivering clean, home-grown power that we control. It is in that spirit that we have chosen reformed national pricing. We are doing everything we can to ensure energy security, protect consumers and get bills down, and to ensure that businesses can invest for the future. This is underpinned by a commitment to fairness across the country. I commend this statement to the House.
Madam Deputy Speaker (Caroline Nokes)
I call the shadow Secretary of State.
Claire Coutinho (East Surrey) (Con)
I thank the Secretary of State for advance sight of his statement. I know that this has been a difficult decision for him. He told everyone that his flagship mission was to commission more renewable power than ever before by 2030—more wind than ever before and faster than ever before in a market that was already facing supply-chain challenges and soaring costs. I said at the time that it was completely unfeasible but that if he was going to do it he should take every opportunity to minimise the grid infrastructure that needs to be built and the costs of his plans. On the other hand, I know that he will have had wind developers telling him that if he takes those decisions and makes those choices, they will not be bidding into his auction in the next couple of years—the auctions he needs them to bid into so that he can meet his self-imposed targets—because they want to protect their returns.
When faced with a choice between protecting the profits of wind developers and cutting bills for the British people, the Secretary of State has chosen the wind developers, who know that they have him over a barrel. In setting himself an unachievable 2030 target that was based on ideology and ideology alone, he was telling those wind developers that he has to buy whatever they are selling, no matter the price. A little over a year ago, the Secretary of State told the country that bills would come down by up to £300, but his statement today shows that when push comes to shove he will choose higher bills for the British people to fund profits for renewable energy companies. Worse still, what he did not mention is that today’s announcement means higher bills to pay wind farms billions in constraint payments not to produce energy but simply to switch off.
I have warned the Secretary of State repeatedly about the risks of building more wind before grid, and I asked him to continue my work on what a full system cost of energy would look like, which includes the cost of back-up and constraint payments. But he did not listen. He axed that work because he did not want to know what those costs were. Instead, last year he signed us up to the most expensive wind prices in a decade, at about £86 per megawatt-hour. That is almost 15% higher than the average cost of electricity for the last year, which has been about £74 per megawatt-hour. This year’s prices will probably be the same, if not higher, and he wants to extend those contracts to 20 years. He has not explained how locking us into much higher prices for longer will bring down bills—but lower bills is what he has promised the British public.
There is more. The Secretary of State’s plan requires more grid to be built faster than before—that means £74 on to household bills. His plans mean that constraint payments for wind farms to switch off will rise to £8 billion—that means £100 on to bills. Now we read that we will be paying solar farms to switch off when it is sunny too, and the Office for Budget Responsibility says that green levies will rise by £5 billion.
People may have noticed that the Secretary of State used to talk a lot about cheaper energy but now talks about less volatile prices. What his Back Benchers need to realise is that most people would not swap a 4% variable rate mortgage for an 8% fixed one. What they care about is the price of their bills, and they want cheaper prices. If he was truly interested in bringing down bills, he would not have scrapped the analysis that I started last year to find out the true cost of a system dominated by wind and solar.
I have now read—twice in one week—that Downing Street is starting to pressure the Secretary of State about when his plans might actually bring down bills. All I can say is: I share the feeling! Before repeating all the empty promises about cutting bills by £300, Downing Street might have wanted to ask where his evidence was, but I will ask him now. Will he reinstate that cost of energy work so that we can clearly see the differences between the systems? Will he set out a road map to show exactly how he will lower bills? Will he confirm that he will not sign up to prices in this year’s wind auction that are higher than the current average cost of electricity? Can he also confirm whether he saw a full cost-benefit analysis of the choices in front of him today, and does he share the views of Ofgem and NESO?
I will leave the Secretary of State with two quotes. The chief executive of Octopus Energy—one of the country’s biggest advocates of renewables—has said that the Secretary of State’s plans mean
“soaring costs, locked in for years to come, and more on the way… And the more we build, the worst it gets, for years.”
He also said,
“It’s brutal for families and crippling for growth.”
I think the Secretary of State said in his statement that the biggest problem for businesses is uncertainty, but it is not; it is high energy costs.
The second quote—perhaps the most revealing— comes from one of his closest advisers, his chief energy system adviser, who said, “If we procure lots and lots of renewable generation and then we do not build the grid that allows it to get to markets, we will be wasting lots and lots of money.” I could not have put it better myself.
Ed Miliband
This is the first time I am at the Dispatch Box opposite the shadow Secretary of State; I congratulate her on her new baby boy and welcome her back to the House of Commons. I know from my own personal experience that crying at night is challenging, but who is surprised, given the state of the Conservative party?
I think the shadow Secretary of State and I have a number of differences. The fundamental difference is this: she wants to gamble in the fossil fuel casino—she wants to gamble on fossil fuel prices. That is what the Conservatives did when they were in office, and it led to the worst cost of living crisis in generations. [Interruption.] The shadow Secretary of State says from a sedentary position that it is not true. It absolutely is true, and I think she needs to get out there more and hear what people have to say to her. It ruined family finances, it ruined business finances and it ruined the public finances. And what do they do? Do the Conservatives come along, after their worst election defeat in 200 years, and think, “Well, maybe we got it a bit wrong. Maybe we should think again”? No, they double down on a failed strategy. That is the first point.
The second point is this. The shadow Secretary of State says that we have a problem of constraint costs—that it is really a problem that we do not have the infrastructure that the country needs. She is absolutely right, but who was in charge for 14 years? Don’t just take my word for it, by the way. I notice that her colleague the shadow Energy Minister, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie), is not in his place, but he said that it is absurd that, after 14 years of Conservative Government, we are now in a situation where it is more difficult to build critical national infrastructure than it was before they came into power and that it costs more. That is what we have got: the grid system was massively backed up, the planning system was in disrepute, and the network and transmission infrastructure was not built.
The third point is that the shadow Secretary of State now says, “Okay, well let’s forget about the past. Ignore my record—airbrush it out. Let’s build the grid.” Too right we should build the grid, but she is opposing new clean energy infrastructure all around the country. She is going around saying, “Oh, it’s terrible. We shouldn’t be having this happening.” So at the level of strategy and what is the right thing for the country, at the level of her record and why we are in this position, and at the level of what she is doing now, I am afraid she is in the wrong place.
Now, what are we doing? We are actually changing all of this. In the period that the shadow Secretary of State has been away, we have seen a whole set of decisions made that the Conservatives talked about but never delivered. On nuclear power, they talked a lot about Sizewell and small modular reactors and all that, but they did not actually deliver it. We are—with over £40 billion of private investment in clean power unblocked and a record-breaking renewables auction.
By the way, the shadow Secretary of State says that I am somehow on the side of the wind developers. No, Madam Deputy Speaker; I am on the side of UK Steel, Make UK, the British Chambers of Commerce, Ceramics UK and businesses across the country who have said that this is the right decision for the country. [Interruption.] She mentions bills. Let me address that directly. My strategy and my belief is that a clean power system can bring down bills for good, because that is that way that we lower wholesale prices and get off the rollercoaster. Home-grown clean power is the answer for Britain, and I suggest that, now she is back in her post, she does some hard thinking about the past, about strategy and about what is right for Britain.
Bill Esterson (Sefton Central) (Lab)
I am sure the Secretary of State will not be surprised to hear me say that I very much welcome what he has announced. He set out three priorities: fairness, lower bills—including and especially in industry and business, where my Committee heard as recently as yesterday that energy bills are causing real concerns and something of a crisis in certain industries—and attracting investment, not least ahead of auction round 7.
I was saddened that the shadow Secretary of State was so critical of wind generation. I have her letter of 12 March 2024 to my predecessor as the Chair of the Select Committee setting out her terms of reference for the consultation that the Secretary of State has responded to. She placed great emphasis on the importance of investing in renewables, so it is a great shame to see her change of heart.
Under the reformed national system, does the Secretary of State envisage increasing opportunities to use demand flexibility, and to use it as fast as possible, as a key way of bringing down energy costs for domestic and industrial consumers?
Ed Miliband
My hon. Friend speaks with great expertise on these matters. I will come to his question, but let me say first that I like to talk about issues on which both parties have been enthusiastic. We have the second largest offshore wind generation in the world. It was started when I was Secretary of State with Gordon Brown as Prime Minister, and it was continued under the last Government. It is extraordinary that the shadow Secretary of State is now abandoning that and saying that offshore wind is somehow the problem. It is not the problem; it is the solution.
My hon. Friend is right about consumer-led flexibility. The key point about that is that it is voluntary, and it is a way for consumers to save money. The shadow Secretary of State mentioned Octopus Energy, which is one of the pioneers of this. We are in the foothills of what we can achieve here, whereby consumers are empowered, through things like batteries, solar panels, heat pumps and smart meters, to control when they use energy much more easily, to their benefit and the benefit of the system.
Pippa Heylings (South Cambridgeshire) (LD)
I thank the Secretary of State for sharing his statement in advance. He is right: making the UK a clean energy superpower is the smartest and most strategic way to free ourselves from our dependence on expensive, volatile fossil fuels. However, as we have heard, accelerating the transition to renewables alone is not enough. The Government have to ensure that the clean power mission ultimately brings down customers’ bills and creates a fairer system for households and businesses.
Energy bills in the UK are among the highest in Europe. Our high costs exacerbate cost of living pressures and increase fuel poverty. They also undermine our international competitiveness for industrial and commercial consumers and risk driving some businesses overseas. The Liberal Democrats have long called for electricity prices to be decoupled from the wholesale price of gas so that families in the UK are not left paying over the odds for clean, British-generated electricity just because of volatile global gas prices. We will be looking closely at the details of the Government’s plan following the review of electricity market arrangements.
The Secretary of State outlined his three tests. To ensure that British consumers are not exposed to an unknown level of risk, will he publish his cost-benefit analysis and set out what impact the changes will have on customers’ bills? We will also be looking keenly for the much-needed joined-up approach between planning for renewable energy infrastructure through the strategic spatial energy plan, and the land use framework and local area energy plans, which, worryingly, are a bit out of sync.
Renewable energy can be the cheapest, most secure source of power, but for many people, seeing—and feeling it in their pocket—is believing, and under the current system, many are struggling to see it. Alongside the changes announced today, I hope the Secretary of State will consider other Liberal Democrat proposals, just as they did when putting into practice our proposals for rooftop solar on all roofs. We would like to see free insulation and heat pumps for people on low incomes and the introduction of a social tariff for energy to protect the most vulnerable.
Ed Miliband
I thank the hon. Lady for her questions. There is not necessarily a monopoly on good ideas. On the whole idea of new build housing having rooftop solar installed as standard, the last Labour Government were going to do it in 2016, but it got abolished by the previous Government. It is an absolute no brainer. It actually unites people whether they like solar on land or not, so it is really good that we are doing that.
On decoupling, absolutely—that is part of what clean power 2030 will do. Gas will set the price much less often than it does at the moment, and we will be moving to contracts for difference rather than renewables obligations, which means that the reductions in price will feed through to consumers. That is key. We will publish the cost-benefit analysis later in the year, as our document published today states. The hon. Lady is right about the SSEP, which, to be fair, was started under the previous Government and will be published next year. That will be a crucial way in which we guide where the new infrastructure is built, precisely to get over the problem of the disconnect between the generation we need and the network infrastructure.
Mike Reader (Northampton South) (Lab)
As a member of the Select Committee, I enjoy that I can give a wry smile every single week when academics, non-governmental organisations, consumer groups and industry say they had so much delay and faffing from the Conservative party and now we are getting on and delivering.
On zonal pricing, it is fantastic to see that we are giving some certainty to the market, and I thank the Secretary of State in particular for setting out that we are going to start tackling excessive transmission charges. In Northamptonshire, Green Hill Solar is bringing forward a massive opportunity for clean power right on my doorstep. Does the Secretary of State agree that that type of investment, and the certainty that the statement brings, will create quality technical jobs locally in Northampton and reduce people’s energy bills?
Ed Miliband
On my hon. Friend’s point about certainty, which is really important, global inflation has affected the offshore wind sector. I take it from the comments by the shadow Secretary of State that we should just say, “Well, let’s not bother with offshore wind, then. Let’s just stick to gas.” We just have a difference of view. I think that would be such a mistake. It would leave us so exposed, and we know what happened in the past.
On my hon. Friend’s point about jobs, this is a massive opportunity. I had a chance recently to visit the site of the new Rampion 2 wind farm off the English coast. This is going to create thousands of jobs, as well as jobs in the supply chain. When I talk to hon. Members across the House, I am struck by how many places contribute to the supply chain, and we want more of that. We want those jobs made in Britain. That is the point about GB Energy, the National Wealth Fund and the clean industry bonus, which will be part of auction round 7.
James Wild (North West Norfolk) (Con)
Under the current system, the most expensive generator sets the clearing price for electricity, pushing up prices for consumers and businesses. Can the Secretary of State explain how the reforms that he is setting out today change that by moving to a pay-as-bid system and providing more affordable energy for consumers and businesses?
Ed Miliband
The hon. Gentleman asks a bang-on question, and that is why I hope he will support clean power 2030. The key thing is that if we can get these renewables on to the system, gas will set the price much less often. As this is a CFD rather than a renewables obligation, the reductions in price feed through to the consumer. This will have a genuinely transformative effect on the so-called decoupling that he and the Liberal Democrat spokesperson have raised.
Barry Gardiner (Brent West) (Lab)
I congratulate my right hon. Friend on this package of measures, which will reduce energy costs. The system left by the Conservatives needed to tackle three things: transmission charges, constraint payments and marginal cost pricing, by which the price of gas drives the cost of the whole system. I therefore welcome the strategic special energy plan, which will see assets built closer to their users and lower transmission charges, which comprise more than 20% of the cost of power. I welcome the new transmission lines and storage facilities, which will reduce constraint payments. These are game changers, but 40% of the cost of power still comes from the marginal cost of gas. Can my right hon. Friend elaborate on what he said in response to the hon. Member for North West Norfolk (James Wild) and tell us whether there are any plans to decouple the wholesale price of gas from the system? That is the real game changer.
Ed Miliband
I will come to my hon. Friend’s earlier points in a minute, but his last point is absolutely crucial. The last Government looked at this and found it difficult to find a mechanism to do it within the system. A key thing that clean power will do is that gas will set the price much less of the time, and with ROs being phased out and CfDs coming in, that will have a dramatic effect. At the moment, the gas price covers something like more than half the generation, and that will fall to a much lower figure—I can give my hon. Friend the actual figures.
My hon. Friend’s first point about constraint payments is worth dwelling on. If we are worried about constraint payments because the network is not there, we are right to be worried. But if that is our view, we should support the building of the network infrastructure across the country. We cannot have it both ways. We cannot say that we are worried about constraint payments and the cost on consumers but that we cannot have the new infrastructure built. That is an issue and it is a choice— I would not call it a dilemma, exactly—that every Member across the House has to make.
Wera Hobhouse (Bath) (LD)
UK households and businesses pay almost the highest energy costs compared with other European countries. As has already been said many times, although it is worth repeating, that is because the cost of electricity is coupled to the cost of gas. I absolutely share the Secretary of State’s ambition to rapidly reduce our reliance on gas. Long, medium and short-duration storage will play a vital role in bridging the intermittency of renewables. What more can the Government do to rapidly increase support for these emerging technologies?
Ed Miliband
LDES, as it is known to the super-nerds—long-duration energy storage—is really important, as indeed are batteries. We now have a cap and floor mechanism for LDES. Ofgem, along with NESO, is looking at the applications that have been made, and that will now be driven forward. That is really important. What I always say to people is that we need all the elements of the system. We need nuclear—in my view—we need renewables, we need battery storage, and we also need LDES. All of them can contribute to a clean power system.
Deirdre Costigan (Ealing Southall) (Lab)
I thank the Secretary of State for his statement. It is clear that zonal pricing would not only waste valuable time in the race to reduce our reliance on costly fossil fuels; it would see my constituents in Ealing Southall, many of whom are on very low incomes, and indeed families across London paying more for their bills. Does he agree that this Labour Government’s plan to invest in clean, cheap, renewable energy and to reform energy pricing for the whole country as one is a fairer and more effective way of reducing bills for everyone?
Ed Miliband
I thank my hon. Friend for that really important question; she makes two points that are critical. One is the time it would take to get to a zonal pricing system, and the second is the arbitrary nature of who would benefit and how, and the cost differentials. I think we can see that there would be a great sense of unfairness about that. She is also absolutely right that the choice is not reform or no reform; the choice is: what kind of reform? That is what reformed national pricing is all about.
Above all—my hon. Friend the Member for Northampton South (Mike Reader) referred to this—this is about getting on with it. It might be lost in the mists of time, but the Conservatives used to have a target for clean power. It was for 95% clean power by 2030, but they never really talked about it much, and then they sort of abandoned it quietly. The truth is that they used to understand this. We have got to build the infrastructure and the renewable power generation.
Llinos Medi (Ynys Môn) (PC)
The strategic spatial energy plan must ensure that new large energy projects in Wales work with and not against communities. There must also be a role for local small-scale projects, as these can deliver the large amounts of clean energy we need, with far less impact on our communities and the national grid. Can the Secretary of State say how the upcoming SSEP will put the needs of communities at its heart, and how it will support the expansion of small-scale energy projects?
Ed Miliband
The hon. Lady makes a really important point, if I may say so, about the SSEP and, more broadly, about the role of community energy and, for example, rooftop solar. Even before we introduce the future homes standard, we are seeing an increase in the number of new homes with solar panels on their roofs. We have got community energy—which is much more successful in places such as Germany and Denmark—which GB Energy will be powering forward. Also, I am really interested in how we make it more worthwhile for individual householders to install solar panels. It is right for them and it is a way to cut bills. That is what is really exciting about it. We definitely see small-scale and community energy not just as part of our planning for the future, but as something we want to drive forward.
Tracy Gilbert (Edinburgh North and Leith) (Lab)
I warmly welcome my right hon. Friend’s decision today. Zonal pricing sounded like a good idea, but the reality is that the uncertainty about future arrangements was risking investment and would not lead to jobs in green manufacturing in my constituency of Edinburgh North and Leith, or indeed across Scotland. To meet the needs of consumers and businesses, we need a more flexible energy network, so can he set out in more detail how he envisages that happening?
Ed Miliband
I thank my hon. Friend for that really important question. The impact on Scotland is an important dimension here, because Scotland has really exciting plans to drive forward renewable energy, particularly offshore wind. It can be a massive job creator for the future, and it is something we are really focused on. One other issue with zonal pricing is that I fear it would have had quite an adverse effect on the Scottish green economy, which was a point powerfully made by lots of different stakeholders. I can definitely say to my hon. Friend that we are 100% committed. We think that Scotland has a rightful place as an energy capital and an energy powerhouse, and offshore wind is a crucial part of that.
Seamus Logan (Aberdeenshire North and Moray East) (SNP)
Thank you for allowing my question, Madam Deputy Speaker. I must apologise to the House and the Front Bench for being a little late.
I appreciate the high-wire nature of the act that the Secretary of State and his ministerial team are trying to deliver, but there are two litmus tests in Scotland that are absolutely crucial. First, private investment is essential to make the journey to net zero happen. Secondly, Scotland is such an energy-rich country, as he referenced, and yet we are paying the highest prices for tariffs and standing charges. Will his statement make it easier for private investment to come in and deliver us towards that journey to net zero, and does he foresee lower energy costs for consumers in Scotland?
Ed Miliband
The answer to both those questions is yes. The first point the hon. Member raises is important and goes to the question asked by my hon. Friend the Member for Edinburgh North and Leith (Tracy Gilbert), which was on the fears that lots of people had that it would dry up the renewables industry in Scotland if we went down the route of zonal pricing. That is why we have opted for the reformed national pricing system that we have talked about. To elaborate on the second point, building this clean power system that can lower wholesale prices, which is the absolute prize here, is the route to lowering energy costs for people in Scotland and across the UK.
Chris Murray (Edinburgh East and Musselburgh) (Lab)
Last summer was the hottest on record and this summer may be even hotter still. The world faces a climate crisis. To tackle that, we need to move fast to net zero, and Scotland’s energy sector will be crucial in this country’s achieving that. To do that, we need to encourage—not discourage—investment, and we cannot waste any time. Does the Secretary of State think the decision will help Scotland boost its energy sector and through that, this country’s fight against climate change?
Ed Miliband
My hon. Friend speaks with great expertise and passion on these issues. On his first point, it is worth saying something about this, and I hope to say more on it in the next week or so. The impacts of climate change that we are seeing around the world are the new normal, I am afraid, but they are not normal in comparison with the past. We are seeing some horrifying scenes around the world, and the warming of the planet makes them much more likely to happen, so there is real urgency, and he is right to emphasise that. He is also absolutely right that Scotland will play a pivotal role for the UK in answering the questions on energy security and tackling the climate crisis. I believe the announcement today will help in that endeavour.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
Yesterday I hosted a roundtable of manufacturers in the rural part of my constituency. They welcomed the Government’s industrial strategy and particularly the measures on industrial energy prices, but they raised concerns about the grid connections in that part of my constituency. Will the Government work with me to improve these grid connections, because the Teesside region has thousands of jobs in clean energy and green industries, and I want all my industries to benefit from that?
Ed Miliband
The Energy Minister has just volunteered, unprompted— which rarely happens in this House—to meet my hon. Friend, so enthusiastic is he about discussing this issue.
My hon. Friend is right to raise the issue of grid connections. We inherited an absolutely broken system that was massively oversubscribed, with a zombie queue, lengthening delays, and nothing happening, basically. That is why we have ended the first come, first served system and are doing a much more intentional, planned system for the grid. That is good for connecting renewable energy, but the other crucial thing is that by working out which energy projects we need and which we do not, we free up the queue for industrial projects. That is the key, and that is the work that NESO is currently embarked upon. I hope that it will help businesses in his constituency and across the country to deal with the obvious and acknowledged frustration they have on grid connection.
Claire Hughes (Bangor Aberconwy) (Lab)
I thank the Secretary of State for opting for a reform system, which will avoid bills going up in my constituency and provide the certainty to drive investment in our energy system. Does he agree that our clean power mission will be vital not only to generating lower bills and better jobs for areas such as mine, but to providing a future and opportunities for people growing up in the area, where a new Mona wind farm has just been approved?
Ed Miliband
My hon. Friend puts it so well. When I talk to young people who are thinking about the jobs they might do in the future, from nuclear to renewables to carbon capture, I am always struck that, across the board, they know these are the growth industries of the future. There is a huge opportunity for Britain, including for her constituents, and it is incredibly exciting what we can deliver. This is the new case for climate action: it is about energy security, lower bills, jobs and growth, and doing the right thing for future generations.
Jas Athwal (Ilford South) (Lab)
I thank my right hon. Friend for his statement and for his vision. On inheriting zombie systems from the previous Government, does he agree that it is remarkable that the Conservatives have shown no contrition whatsoever about the dire state in which they left our energy system? That resulted in the worst cost of living crisis in memory, and families in Ilford South and across the country are still paying the price.
Ed Miliband
My hon. Friend puts it incredibly well. The Conservatives have shown no contrition or acknowledgment, and they have not learned any lessons—not a single one. They basically say, “We were right and the electorate were wrong.” I say to them gently—or not so gently—that that is a recipe for oblivion, frankly. It is time they took a long, hard look.
Mr Alex Barros-Curtis (Cardiff West) (Lab)
I thank my right hon. Friend for his statement. I want to put on the record my thanks to the Under-Secretary of State for Energy Security and Net Zero, my hon. Friend the Member for Rutherglen (Michael Shanks), for the extensive conversations that he has had with me and other Welsh Labour MPs on our concerns about zonal pricing, and that we felt it would fail the “fair and affordable” test that the Secretary of State has outlined today, so I welcome this statement. Now that we have had this announcement about reform national pricing, will he assure my constituents and businesses that they will see lower consumer bills as a result?
Ed Miliband
That is the key: this decision provides the certainty required. It is the fairer choice. It is the choice that will not lead to seven years of uncertainty, risk premiums and higher bills. It gives us the platform to work with industry to get on and deliver. If I have one message for industry, it is that now is the time for them to step up and come forward with these projects. We are breaking down all the barriers that they face, for example on planning, the grid and uncertainty. Our absolute determination is to get on and deliver for my hon. Friend’s, constituents and people across the country.