Oral Answers to Questions
Debate between Andrew Gwynne and Ed Davey
Mr Davey
We have discussed the matter extensively with the Treasury, and we have introduced something called social investment tax relief. It is better than its predecessor, because it gives community energy companies tax relief not just on equity finance but on debt finance, thus expanding the instruments.
There is an issue concerning which types of organisation should be able to claim the tax relief. The whole purpose of supporting community energy is to support schemes that give real benefits to the community, and energy co-operatives do not necessarily do that, although they benefit their membership. However, we have been working with the community energy sector as well as the Treasury, and I think that if the hon. Gentleman reads today’s update, he will see that we have come up with a very effective solution.
Andrew Gwynne (Denton and Reddish) (Lab)
Before the last election the Prime Minister, when he was Leader of the Opposition, said:
“I think we all feel that when the gas prices or the oil prices go up, they rush to pass the costs onto us and yet when we read in the papers that the oil price has collapsed…we wait for a very long time before we see anything coming through on our bills, and I think the first thing you’ve got to do...is give the regulator the teeth to order that those reductions are made and that is what we would do.”
Why did he break that promise?
Oral Answers to Questions
Debate between Andrew Gwynne and Ed Davey(9 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
We have extended our successful energy companies obligation to 2017 and reformed the green deal with changes such as the green deal home improvement fund. Together, ECO and the green deal have helped more than 1 million homes become more energy efficient. As I have said, I laid regulations before Parliament yesterday to require landlords to bring their properties up to a minimum level of energy efficiency by 1 April 2018. If the House agrees these new, tough rules for the private rented sector, we estimate that around 1 million tenants will benefit from warmer and cheaper-to-heat homes.
Andrew Gwynne
It was almost two years ago that the then Energy Minister, the right hon. Member for Bexhill and Battle (Gregory Barker) said that he would be having sleepless nights if fewer than 10,000 people signed up for the green deal. Since then, 5,000 people have benefited from the measures—that is all. For how long is the Secretary of State seriously going to insult the intelligence of Members by saying that the green deal has been a success?
Mr Davey
Not for the first time, the hon. Gentleman is wrong with his statistics. More than 445,000 green deal assessments have taken place, and our evidence shows that over 70%—[Interruption]—over 70% of those people having assessments go on to install measures or intend to install measures. That is far more than the hon. Gentleman talks about. For the benefit of the House, let me clarify that the figures he used relate to people who have gone through the system and used green deal finance—only one part of the green deal. Green deal assessment is a key part: it has been working and it has played forward to enable us to meet our target for insulating 1 million homes four months ahead of schedule.
Oral Answers to Questions
Debate between Andrew Gwynne and Ed Davey(9 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Davey
I do not recognise the figures that the hon. Lady gives, and I have to tell her that the energy companies obligation is one of the most successful energy efficiency policies ever implemented. A huge number of steps are being taken, and I hope that any future Government will continue and build upon them. We have given the industry much greater stability—it has never before had three years of reassurance about the future regime, which we gave it last year.
Andrew Gwynne
The Government claimed that the green deal would be the largest home improvement programme since the second world war. If that is correct, will the Secretary of State tell the House why fewer than 3,500 homes have had work done?
Mr Davey
The hon. Gentleman’s figures are, shall we say, inaccurate. Our analysis shows that large numbers of people—getting on for 350,000—have had green deal assessments, and more than 80% of those have either gone on to have that work done or plan to have it. There are now nearly 8,000 green deal finance plans, and that number is increasing. Although I will happily admit that the green deal has not been as successful as we had hoped, we have learned a lot of lessons and a lot of measures have been taken because of the green deal.
Oral Answers to Questions
Debate between Andrew Gwynne and Ed Davey
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
The UK enjoys a stable and secure energy supply, and we are working hard to ensure that it continues. As a Government, we are actively managing a number of risks to our current and future energy supplies, including the current challenges from Iraq, Russia and Ukraine. Our recent national gas risk assessment demonstrated that our gas infrastructure is robust. The measures recently announced by National Grid respond to the energy crunch that, owing to the legacy of under-investment and neglect, was predicted for this winter, but which will not now happen.
Andrew Gwynne
I thank the Secretary of State for that reply. As he will know, this week National Grid suggested that interconnection could save the UK £1 billion in its efforts to meet its supply requirements. What support are the Government giving to ensure that there are potential options for interconnection in future?
Mr Davey
I am grateful for the hon. Gentleman’s question. We are giving huge support. We published the first ever interconnection strategy in December and we are working with Ofgem, which recently published a new registry framework. We hope that three interconnector projects will get to financial close very shortly—the Eleclink through the channel tunnel, the Nemo Link project with Belgium and the NSN project with Norway—and we think that two other projects could come forward with France. The question is really important as it involves the single European energy market, of which we are strong supporters. We are working tirelessly on that very point.
Oral Answers to Questions
Debate between Andrew Gwynne and Ed Davey
Andrew Gwynne (Denton and Reddish) (Lab)
10. What steps he is taking to improve competition in energy markets.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
From day one of the coalition we have worked to improve competition in energy markets. Deregulation stimulated growth in the number and size of small independent suppliers, competing with the big six we inherited, and we have taken action to encourage switching, including easier switching, faster switching and collective switching. Ofgem’s retail market reforms and market maker obligation are also improving competition in both wholesale and retail markets. However, because we believe more should be done, I asked Ofgem and the competition authorities to make an annual assessment and last week we backed its proposal for a market investigation reference.
Mr Davey
It is always interesting to hear about this because when the Leader of the Opposition talks about an energy price freeze, he is not absolutely clear that it will go ahead. When he was on the “Today” programme in September 2013, he was asked what would happen if wholesale prices were to rise, and he admitted that the price freeze might not go ahead, which is not something that the right hon. Member for Don Valley (Caroline Flint) is prepared to admit. I have to say that we need to read the small print of this price freeze because it might not happen. It is a con.
Andrew Gwynne
The Secretary of State wants to have his cake and eat it. Does he not see that the Ofgem report and the referral to the competition authorities makes it clear that the market is just not working in the interests of consumers? It is going to take at least 18 months for them to report, and then he is going to have to implement the recommendations. Why does he not just do the decent thing and introduce a price freeze now?
Mr Davey
We have been reforming the energy markets since day one, but we were not happy enough with the results and we wanted to do more, because of the mess we had inherited. That is why we asked the competition authorities to look at this matter. They have proposed a market investigation reference, and we are completely behind that. Neither we nor Ofgem are going to stand still during that 18 months, however. We are going to be working on trying to improve the markets even before the market investigation reference reports. We are being really active on reducing switching times, for example. We also want to push the smart meter roll-out programme, which will help people, and the Ofgem retail market review will complete and implement its proposals, including taking customers off dead tariffs. We have acted, we are acting and we will continue to act on behalf of customers. The last Government failed to do so.
Energy Price Freeze
Debate between Andrew Gwynne and Ed Davey
Mr Davey
I agree with the market investigation reference looking at all those issues. Not only is the Labour party’s policy position behind the curve, as I will explain in a second; it wants to pre-judge the outcome of the conclusion reached by the competition authorities. We have expert, independent competition authorities that will look at these issues in a considered way, but Labour wants to pre-judge them. That is not surprising, however, because its policies in this area are so hopeless.
The right hon. Lady talks about a pool. She does not know that the day-ahead market, which is very much like a pool and was trading only 5% of electricity when Labour was in power, is now trading over 50% of electricity—a massive increase in liquidity in the day-ahead market. Moreover, the Ofgem analysis, which the right hon. Lady clearly still has not read, shows that the small independent generators that would benefit from more liquidity said that the problem is not in the day-ahead market, and that the pool would not help; rather, the real problem is with the liquidity in the forward market, and that is exactly what Ofgem is dealing with. As of this month, the market maker obligation will create far greater transparency than ever existed in the markets under the last Government. Whether it is through Ofgem or this Government, we are taking action—real action—to bring in competition where Labour did nothing.
Andrew Gwynne
The Secretary of State talks the talk on competition. I know he is a Liberal Democrat, but does he not regret that the Energy Act, which took more than a year to complete its legislative passage, did not contain a single concrete measure to improve competition in the wholesale or retail energy markets?
Mr Davey
That is simply not true. I have talked about the powers to back up Ofgem on the retail market and wholesale market review, which clearly the hon. Gentleman either does not understand or did not notice. For example, there is the power of the off-taker of last resort to promote greater competition in the generating market. I do not know where Labour Members have been, but they certainly have not been focusing on the debate.
The right hon. Member for Don Valley asked me about energy prices under the last Government and this one, so let us go through them. We should not fall into the trap of simply blaming the energy markets and Labour’s big six for higher energy bills. Let us be honest: everyone in this House knows that the main driver of energy price rises in recent years has been rising wholesale costs. The average wholesale gas price in 2013 was more than double that of 2007. [Interruption.] I will say that again, because the right hon. Lady was not listening. The average wholesale gas price in 2013 was more than double that of 2007. The wholesale electricity price was up by almost two thirds. According to DECC statistics, in almost every year under Labour, energy bills rose. Under Labour in 2005, energy bills went up by 12%. In 2006 under Labour, energy bills went up by 20%. In 2008 under Labour, energy bills went up by 16%. In the last Parliament under Labour, energy bills rose by a whopping 63%. In this Parliament, yes, they have risen, but at a significantly lower rate than in the last Parliament, when the current Leader of the Opposition was Energy Secretary—8% a year in this Parliament compared with 11% a year in the last.
Energy Bills
Debate between Andrew Gwynne and Ed Davey(10 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Davey
First, the hon. Gentleman is wrong about the green deal; he was referring to green deal finance plans. He talked about insulations, but an awful lot more have gone on because of the green deal, with the success of green deal assessments—more than 100,000 of them—even though they have not necessarily been financed by a green deal finance plan, so he is completely wrong.
One thing we have done to reassure the industry is to have a minimum of 25,000 solid wall insulations a year for the next four years. I hope and believe that there will be a lot more than that, but that will give the industry the reassurance and confidence that I think it needs.
Andrew Gwynne (Denton and Reddish) (Lab)
The Secretary of State has panicked because he knows that Labour’s two-year price freeze has struck a popular chord. Is not the inconvenient truth of his fix with the big six energy companies that consumers across Tameside and Stockport, as well as the rest of the country, will still pay much more in energy prices, and that his plans do absolutely nothing to reset the energy market, which Labour’s price freeze would allow?
Mr Davey
I am afraid that the hon. Gentleman is wrong on every count. This Government—working positively with the independent regulator, Ofgem—are delivering reforms to reset the failed market that we inherited from the last Government. It is a shame that not a single Labour Member has welcomed the average £50 cut that will help households.
Energy Price Freeze
Debate between Andrew Gwynne and Ed Davey(10 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Davey
No, I am not giving way.
Ofgem has looked at whether or not it should mandate 100%. It will ensure that there are new reporting requirements so it can check what is happening. It will say that, if the number does not improve and stays as it is, it will intervene. It is not intervening now—the right hon. Lady will not know this because she has not read the document—because the independent generators have not asked for it to do so. The independent generators say that the day-ahead market is not the problem for competition and that the day-ahead market is not the market in which there is room to drive down prices. They say that the problem is the forward markets—the month-ahead, six months-ahead, year-ahead and the two years-ahead markets.
Mr Davey
No, I will not give way. I want to explain to the House why the document is so important, and why Ofgem’s policies, which the Government support—we have put reserve powers in the Energy Bill to push them through—are so important for competition and pushing prices down for consumers.
Independent generators need to know who will buy their electricity. The right hon. Lady is right that the big six can sell it to themselves, but independent generators cannot do so—they must sell it to someone else. That is a big risk for the independent generators, and they need to be able to cover it. Primarily, they do so at the moment through purchase power agreements or through bilateral trades, which are used mainly when selling to businesses. However, they say that they cannot guarantee those, so they must spend more, and that their capital costs increase because of those risks.
Independent generators face another risk. The question is not only whether they can sell energy, but whether they can buy it. If they have a contractual power purchase agreement and their generation capacity is not working for a particular month and they are unable to supply, they fail their contract. To be able to enter more contracts and expand their businesses, they therefore need to know that they can buy energy in the wholesale markets if their generating capacity is not working.
It is therefore essential that we have a liquid market for four months, six months and 24 months ahead. Guess what? The previous Government did nothing to enable that competition in generating markets. Interestingly, the policies the Opposition have proposed today will also do nothing about the real problem. The description that the right hon. Lady gave of her policies proves that point. If she had read the document, she would have seen on page 8 the analysis by Ofgem—working on all the contributions from the independent suppliers and all the people in the industry—is that the problem she has identified is no longer a problem. It has marked that problem “green”. The problems that we have identified, which we and Ofgem are fixing, are all marked “red”. She really needs to do her homework. There is no point the official Opposition coming to this House with ill-thought-through policies that will not work. Our policies will work for the consumer, push competition into the market and get prices down.
Andrew Gwynne
In the Secretary of State’s wibbly-wobbly world, it sounds as though everything in the energy market is working perfectly well. Does he therefore agree with the chief executive of Centrica that a daily profit of £7.4 million is a modest return?
Mr Davey
Let me put it on the record that it is important that our energy companies make profits. I think we need reasonable profits for people to invest. I also know why it is important that companies make profits: the right hon. Lady agreed with me when I asked her, last time we debated this. I asked her whether energy companies should make profits and she agreed.
Energy Prices and Profits
Debate between Andrew Gwynne and Ed Davey(10 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Davey
I always find the hon. Gentleman to be an interesting colleague when I come before the Committee, and with interesting questions. We will respond to the Committee’s report. Of course it is right for colleagues to have criticisms of Ofgem, but the question is what they are going to do about it. Do they want to spend lots of time abolishing the regulator completely, or do they want what we want, which is to make it stronger and give it tougher powers? We have a much better record. We have not just relied on the regulator. Through our collective switching pilot, which we will report on in the autumn, we are trying new ways to help get customers and consumers—especially the most vulnerable consumers—a better deal.
Mr Davey
No, I want to make some progress. Fuel poverty has been rightly mentioned, and ours is a comprehensive approach on which we have consulted fully and on which we will continue to work with all stakeholders. Having published our fuel poverty strategic framework, we are planning to publish our full fuel poverty strategy early next year, and it will be a marked improvement on the past for several reasons.
Oral Answers to Questions
Debate between Andrew Gwynne and Ed Davey
Mr Davey
My hon. Friend is right. We do not want to see carbon leakage; that would not help the climate, and it would not help our economy. That is why I agreed with my right hon. Friend the Secretary of State for Business, Innovation and Skills a very generous package, working with the Chancellor, to compensate energy-intensive industries for the indirect costs of the ETS and the carbon price floor, and it is also why we have exempted energy-intensive industries from the costs of contracts for difference. We want to ensure we make progress on climate change, but we also want to ensure we keep successful businesses in the United Kingdom.
Andrew Gwynne (Denton and Reddish) (Lab)
2. What steps he is taking to help households with their energy bills.
Andrew Gwynne (Denton and Reddish) (Lab)
Earlier, the Minister mentioned that the Government’s policies would result in energy bills being about 7% lower, but is that not correct only if people go out and buy new energy-efficient TVs, washing machines, dishwashers and combi gas boilers, and that if people do not their bills will actually be higher under this Government?
Oral Answers to Questions
Debate between Andrew Gwynne and Ed Davey
Mr Davey
I did not give my hon. Friend’s neighbour a brush-off. His hon. Friend—and my hon. Friend—asked me whether I thought that we had enough onshore wind. I do not think that, but, as my hon. Friend the Member for Skipton and Ripon (Julian Smith) knows, Secretaries of State rightly do not comment on local planning applications.
Andrew Gwynne (Denton and Reddish) (Lab)
The last Labour Government helped to lift 1.75 million people out of fuel poverty. Does the Secretary of State expect next year’s fuel poverty figures, which will show for the first time what has happened under this Government, to reveal that fuel poverty has risen or fallen on his watch?
Mr Davey
I must remind the hon. Gentleman that the figures based on the old way of counting show that fuel poverty increased under the last Government. This Government have conducted an independent review of the way in which fuel poverty is measured, and it showed that the last Government could not even measure it correctly. According to the old measurement, the Queen was sometimes in fuel poverty. However, we are reforming not just the measurement of fuel poverty but the policies themselves, and I shall be producing a fuel poverty strategy later this year.