Energy

Baroness Worthington Excerpts

Thursday 31st October 2013 Lords Chamber

[Baroness Worthington (Lab)]

My Lords, I am grateful to the Minister for repeating the annual energy Statement in this House. I have listened to the content carefully twice now, and I am disappointed to say the least.

There are many important questions about the future direction of our energy sector that this Government are simply failing to clarify. One of the biggest, which was referred to in the debate that we had on Monday, is the degree to which this Government are still committed to decarbonising our electricity sector, yet there was no mention of this in the Statement. The Prime Minister has indicated that he wants to roll back green support mechanisms, without stating which ones. This is bound to decrease investor confidence across the board and increase the cost of borrowing. Just this morning the Leader of the House in the other place wrongly said that it was only Labour that wanted a decarbonisation target and that had we won the vote on Monday, this would have added £125 to consumer bills. Has there been a change of policy? Are the Government no longer committed to setting a decarbonisation target? Are the first few clauses of the Energy Bill now redundant? If so, we need to be told. Will the Minister please confirm that the official estimate of the cost of adding the decarbonisation target is £20, not the £125 which is being repeatedly trotted out by government claims that that is what the target would add to bills.

The other reason why I was disappointed was that the Secretary of State appeared, quite wrongly, to be trying to blame the situation in the energy market today on the previous Labour Government. Let us be clear, under Labour, 26 gigawatts of new capacity was added to the grid—19 gigawatts of non-renewable capacity and seven of renewables. Since then we have seen a hiatus in investment, with reports that renewable energy investment has now halved under this Government. The Statement says that £20 billion-worth of new infrastructure projects have been consented, but does not list what they are. To consent a project is nowhere near the same as having one delivered, built and providing electricity to the grid. We know this because there are many gigawatts of consented gas stations sitting by with absolutely no movement towards bringing them on to the grid. Will the Minister state clearly how much capacity has been added under this Government—not what is proposed or under construction, but what has been added?

We support a few things in the Statement. The most important is the Secretary of State’s statement that the main driver of energy price rises has been wholesale energy costs, not social and environmental policy. We know that they contribute less than 10% of the increase in bills that we have seen in recent years, and that many of them are precisely the measures we need to insulate ourselves against higher prices in the future, and to help the poorest and most vulnerable in making their homes more energy efficient. I am delighted that he made that very clear statement, and I hope that that could be reiterated by government across the board.

Sadly, to return to things that disappointed me, clearly the weakest part of the Statement is the Secretary of State’s claim that he is standing up to the big six. That is very hard to believe. The Government have given everything to the big six that they have asked for. They wanted a rollback in green and social measures, so the Prime Minister says that that will happen. They wanted a review of competition, and the Secretary of State has said today that that is what he will do. We do not need any more reviews; there have been 17 investigations into energy market competition since 2001. What has the regulator been doing all these years? Why do we still not have a competitive market either in generation or retail? We do not need another review. What we need is another approach and another Government; we need to split the big six generation companies from the supply companies to open up that market forcing them to sell their product through an open and transparent market in which everyone can compete fairly; and we need a new regulator. This is what Labour is committed to and what it will deliver.

On security of supply to the UK energy system—of course, there has been another statement today on this issue—the Government are failing to face up to the fact that the greatest uncertainty in security of supply of electricity at the moment is what will happen to our coal-fired power stations. Twelve such stations remain on the system. Built in the 1960s, they are ageing relics and have twice the emissions of gas-fired stations; they are old and they are prone to break down. There is no indication in the Statement that the Government are interested in finding out what these stations intend to do. As long as we do not know what they will do, we cannot move forward with investment in new infrastructure. The longer the coal-fired stations stay on the system, the less there is a clear incentive for investors to bring old gas-fired stations back into the market and to invest in new gas capacity. This is the big question on security of supply but the Government do not have an answer. We need to seek clarity, and soon.

It is welcome that the Secretary of State will be introducing new measures to bring the cost of bills down—we all want to see wholesale prices coming down—but this Government have not got to grips with the scale or the nub of the problem. Labour has a clear plan—we have been crystal clear on what we will do—but the Government simply do not have an answer. They do not even have a consistent message across the department and across government as a whole. The Statement is sadly lacking, but that is not surprising given where the Secretary of State finds himself these days.