Energy Price Freeze

Caroline Lucas Excerpts

Wednesday 6th November 2013 Commons Chamber

[Caroline Flint]

I will make some progress before I give way again.

What the Secretary of State has to understand is that markets work only with consent. We know that there are some on the Government Benches who want to turn concern about rising energy bills into opposition against renewable energy. Unless we reform this market and restore trust, those same people will continue to undermine public support for the investment we need.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I support the Opposition motion, as far as it goes, but does the right hon. Lady accept that without serious investment in energy efficiency, there will be no permanent end to fuel poverty? If so, can she explain why there is no mention of energy efficiency in her motion?

[Caroline Flint]

The hon. Lady is right. Energy efficiency is important, and I am sure that, like me, she is saddened by the attacks on those parts of the Bill that support energy efficiency measures for the most vulnerable and poor households in our country. It is interesting to see how the big six—[Hon. Members: “Seven.”]—the big seven have gone to Government saying, “Relieve us of this burden,” but they take out full-page adverts in national papers talking about how they have helped millions of people with their energy efficiency. They cannot have their cake and eat it. Labour will produce a Green Paper in 2014 with more detailed proposals on energy efficiency to make sure that we deal with both parts of the problem—market reform, prices and investment in renewable and clean energy, as well as how we help people keep bills down through energy efficiency.

--- Later in debate ---

[Mr Davey]

I certainly will because I believe we have the best policies. There are two routes to rebuilding that crucial consensus. The first, which I would love to take, is to invite the right hon. Lady and the leader of the Labour party to discuss the issues with me so that we can try to reach out to Labour Members, explain why we think their policies are extremely damaging, and try to get the energy policy back on to that important political consensus. I fear, however, that that will not be possible. The noises we have heard from the Leader of the Opposition and the right hon. Lady suggest that they do not see the error of their ways, despite many people explaining it to them.

[Caroline Lucas]

rose—

[Mr Davey]

I will give way to the hon. Lady but I then must make some progress.

[Caroline Lucas]

Will the Secretary of State accept that the green deal is not working, that zero-carbon homes are off the agenda and renewable energy is under attack, and that a late amendment to the Energy Bill in the other place shows that the Government are trying to scrap their legal duty to end fuel poverty altogether? Is he really surprised that the public do not believe his Government’s crocodile tears over rising energy bills when the Government’s own policies are making that worse?

[Mr Davey]

I completely reject everything the hon. Lady said. First, £31 billion has been invested in clean energy since 2010, and according to Ernst and Young we are now the fourth best place to invest in renewable energy—that is up, despite what the right hon. Member for Don Valley often says. More than 85,000 assessments have been made under the green deal, and more than 81% of those who have had green deal assessments have either had work done, are getting it done, or are considering having it done. That is much more of a success. The hon. Member for Brighton, Pavilion (Caroline Lucas) does her case no good by talking down the green deal.

--- Later in debate ---

[Neil Carmichael]

I will give way to the hon. Member for Brighton, Pavilion (Caroline Lucas) if she is quick.

[Caroline Lucas]

That is immensely kind; I thank the hon. Gentleman so much. He talked about the smaller company in his constituency. If it is the one I think it is, its chief executive has said that the reason it was able to keep prices lower was because it had been investing in renewables, not getting hooked up in gas or other fossil fuels. Is that not the conclusion to draw from the hon. Gentleman’s remarks?

[Neil Carmichael]

That brings me to my next point, which is, ironically, that there is a tension between wanting to have lower prices and protecting the environment. I have often thought that the Department of Energy and Climate Change is both poacher and gamekeeper. We need to continue investing in green energy. I will always promote green energy because my constituency has a lot of important companies that are working extraordinarily hard to develop green technologies. However, we must respond to the price issue as well. That is why the Government are right to calibrate the green taxes more sensibly to reduce prices in the energy market. I get the sense more and more that the Opposition agree that the price freeze is simply idiotic.

I will talk about two other important matters. The first is energy storage. We do not give enough attention to that subject. Energy storage technologies will help and we need to invest in them. I hope that we will see energy storage treated as a capacity in the Energy Bill and that it will be invested in. Liquid air, for example, provides us with an opportunity to store energy and thereby flatten out demand and sort out the trough problems.

My hon. Friend the Member for Warrington South (David Mowat) spoke sensibly about the need to focus on making houses more energy efficient. Of course we must do that. We have the least energy-efficient houses in Europe in broad terms. We have to continue with the green deal. I am delighted that the Minister is promoting that and that it has got off to a good start. We have to ensure that our houses do not leak energy, but contain it and therefore use less of it. That is one way to reduce bills.

Something that has not been discussed in the debate thus far is competitiveness, not just in this country, but across Europe. In January, the Prime Minister set out the stall for renegotiating our position in the European Union. One of the key points that he made was that we should strengthen the single market in energy. He was absolutely right. We have to recognise that there are lower commodity prices on the continent. We must be able to benefit from those prices. We need to attract investment from the continent and we must invest in the continent so that we have a more competitive and more connected energy policy.

Connectivity is lacking in certain areas. We need more investment in our infrastructure so that we can be sure that whatever form of energy we alight upon can get to the right place in the most cost-effective and efficient way. That is definitely a way to drive down prices. We must set out the stall for increasing competition in the energy market both locally and internationally, with Europe as a target. That would not be a particularly difficult thing to do.

--- Later in debate ---

[Caroline Lucas (Brighton, Pavilion) (Green)]

I am very pleased finally to have an opportunity to contribute to this important debate, because it concerns a crucial issue that is raised with me time and again by my constituents. We should bear in mind that, as many other Members have said today, behind all the statistics that often dominate debates such as this are real people and real suffering. We are talking about people who wake up with ice on the inside of their windows, and about people who huddle in a single room because that is the only room that they can afford to heat.

More than 1.5 million children in he United Kingdom are growing up in cold homes. Each winter, four times as many people are killed by fuel poverty as are killed on Britain’s roads, and fuel poverty-related illnesses cost the national health service more than £1 billion every year. I think that, given that background, few would deny that we have an energy bill crisis. In the context of the Fuel Poverty Advisory Group’s warning that fuel poverty affects 6 million households, the profits of the big six are deeply offensive. Between 2008 and 2010, their profits doubled to £4.6 billion. Last year, Centrica alone made profits of £1.3 billion, no doubt benefiting in a range of ways from the secondments of its employees to the Department of Energy and Climate Change and from its boss Sam Laidlaw’s influence as a former member of the Prime Minister’s business advisory group. That is just one example of the revolving door between the big fossil fuel companies and Whitehall, which was similarly well oiled under the last Government.

A temporary bill freeze would be a welcome respite from price hikes which, as the Committee on Climate Change has reminded us, are mainly due to increases in the price of gas. I called for a price cap, along with a windfall tax on big six profits and a public inquiry, almost two years ago, on one occasion during a Westminster Hall debate in February 2012, and many Labour Back Benchers signed my early-day motion on the subject. I support the relief that a temporary price freeze would bring, so I shall vote in favour of the motion, but we also need a much more ambitious, far-reaching and coherent response. I hope that today the Opposition parties will be able to unite behind calls for a radical reform of the energy market as well, because I believe that that is the only way—and a permanent way—in which to tackle high energy bills, and I hope that they will get behind effective measures to break the stranglehold of the big six.

As Fuel Poverty Action says:

“Freezing prices at their current level won’t help the thousands of people who already die each winter due to fuel poverty: our bills are already at deadly highs”,

so I want to set out five practical, positive and powerful policies to tackle fuel poverty this winter and for winters to come.

First, the only permanent solution to the Energy Bill crisis is to make all our homes much more energy-efficient, so I am disappointed that there is no mention of energy-efficiency in the motion, especially as the green deal barely scratches the surface. Under the energy company obligation, at current rates it would take about 32 years to insulate all fuel-poor homes. Insulation rates are plummeting when they should be rocketing, and energy-efficiency businesses, often SMEs, are struggling when they should be flourishing.

That is why a huge coalition of organisations representing consumers, families, faith groups and others all back the Energy Bill revolution campaign. It calls for revenue from carbon taxes, which currently disappears into Treasury coffers, to be recycled into a nationwide programme to make all homes super energy-efficient, with full insulation, modern boilers and renewable energy such as domestic PV, solar hot water and biomass heating. That could bring nine out of 10 homes out of fuel poverty, lower people’s bills, deliver four times more carbon cuts than current schemes and create 200,000 jobs. I again ask both the Government and the official Opposition why they will not support it.

Mandatory efficiency standards are crucial, too. Some 70% of Britain’s fuel-poor live in properties with bottom of the barrel energy-efficiency ratings of E, F or G. A genuine fuel-poverty strategy must, at the very least, commit to lifting all these properties to band D standards by 2020 and raising the rest of our housing stock to today’s new-build standards by 2030.

Secondly, we need ambitious fuel poverty eradication targets. I want to highlight a coalition amendment that was sneaked in during the Lords Committee stage of the Energy Bill. Astonishingly, Ministers are trying remove the statutory duty on Government to eradicate fuel poverty. They are replacing it with a vague provision to do something at some point merely to address the situation of those in fuel poverty, and all in secondary legislation, thereby reducing accountability and scrutiny. As the fuel-poor prepare for the onslaught of the cold and avoidable winter deaths, I trust the Minister and the Opposition will rethink their position and give strong cross-party support to the fuel-poverty amendment tabled by Lord O’Neill of Clackmannan when the Bill returns to this House.

The Committee on Climate Change has confirmed that by far the greatest contributory factor to higher energy bills has been the rising price of gas. That makes the Government’s dash for gas deeply irresponsible. It will increase our dependence on gas with higher energy bills, as well as fatally undermine our hopes of tackling climate change. That is the third area where we need urgent action. This also makes Labour’s position of conditional support for shale gas inconsistent with its enthusiasm for a 2030 decarbonisation target and its rhetoric on affordable energy.

There is an alternative to gas. Renewable energy can go hand in hand with affordable energy and can help cut our exposure to high and volatile fossil-fuel prices. While fossil fuels are on an upward cost trajectory, renewable technologies have seen dramatic price falls in the past few years. So if we are serious about creating an affordable energy system, we should be going all out for renewables and energy-efficiency.

Fourthly, we should be doing much more to end the big six’s control over power generation and supply, not regulating them better, not just erecting a paper wall between their generation and supply businesses, not just requiring them to sell their power through a different structure. If we are serious about diversity in the energy market and cutting costs by allowing renewables to push down wholesale peak prices of power, we need to ensure renewables are given priority access to the grid.

We have an opportunity to create a radically different energy system, where co-operative and community and independently-owned local renewable energy schemes flourish. In those circumstances, local people benefit from the energy created. The Belgian co-operative Ecopower provides energy for over 30,000 members. Denmark guarantees that 20% of all energy projects are open for community financing. In Germany over half of all the installed renewable energy capacity is owned by private citizens and co-operatives. That is the sort of transformative scale of community power we should be aiming for here, too. It is where the greatest wins for households and business energy bills can be secured. Projects such as the Brighton Energy Co-operative in my constituency provide a glimpse of an incredibly positive alternative energy future where people are active producers rather than just passive consumers.

Community energy should be central to the debate about energy bills. Words alone will not deliver, however; we need policies and action. For every community to generate its own electricity, we need a regulatory framework that allows communities to buy the electricity they generate at wholesale costs, freeing them from the rip-off retail market.

[Mr Weir]

I am very interested in what the hon. Lady is saying. Does she agree that the Government’s obsession with nuclear—in particular, the strike price agreed for Hinkley Point—shows that they are going totally in a different direction?

[Caroline Lucas]

I thank the hon. Gentleman for his intervention, because it makes exactly the point that I want to move on to. For as long as both the Opposition and the Government are committed to these huge subsidies that are going to be behind nuclear power, their outrage at energy bills sounds a bit thin—it beggars belief. The size of the subsidies that will go to nuclear power will lock us into extremely long periods of paying over the odds to companies such as EDF. The rate of return on investment reportedly given to EDF is a whopping 10%—that is 10% profits, guaranteed for decades, going from our constituents to EDF, one of the big six. Why is it acceptable for UK bill payers to be fleeced in order to provide a rate of return to EDF that is double that which Ministers have said they see as fit for renewable projects—schemes that could be owned by communities themselves? Let us not forget that Hinkley Point C will not boil a kettle until the early 2020s, at best, by which time many renewable energy technologies will be a much better deal when it comes to keeping energy costs down.

[Mr Weir]

Hinkley Point C will start boiling a kettle on that date only if it is built on time, and no nuclear reactor has yet been built on time or on budget.

[Caroline Lucas]

I thank the hon. Gentleman, who must have been looking over my shoulder, because these are exactly the points that I would make. When we compare nuclear with renewables, we see that in some cases renewables are already cheaper. They are also asking for a strike price of £91 by 2018, which is substantially less than what we are going to be giving to nuclear.

Consumer Futures said that the Hinkley deal

“moves the risks of future variations in wholesale prices from investors onto consumers, will likely see household bills increase and will distort future investment in electricity generation.

Consumers will again feel that the energy market is stacked against them.”

I just cannot understand why there is not greater outrage at the way in which we are allowing ourselves to be locked into these long contracts with EDF, paying over and above market prices for decades to come. I repeat that it is hard to take seriously the crocodile tears we are seeing from hon. Members on both sides of the House while we are suggesting paying hand over fist to the nuclear companies, which will be laughing all the way to the bank.

In conclusion, I welcome the greater focus on the problem of high energy bills that we have seen in recent months. It is a massive issue in all our constituencies; people come to us on a daily basis worried about how they are going to be able to survive the winter. It is a matter of life and death, not just of discomfort; we are talking about people who are going to be suffering from radically ill health and about the premature deaths associated with fuel poverty. So I welcome this debate, but I regret that most of the solutions put forward do not fully address the root causes of fuel poverty and high energy costs. A fundamental shift should be at the heart of energy market reform. I am worried that we have heard much more about tinkering around the edges of a system that keeps the big six in power and far too many people in fuel poverty, rather than about much more radical energy transformation, which we are beginning to see in other countries. There is a precedent and we could be following it here—if the political will existed.

[Madam Deputy Speaker (Dawn Primarolo)]

I call Christopher Pincher. [Hon. Members: “Hear, hear.”]