Energy Bill [Lords]
Debate between James Cartlidge and Callum McCaigMonday 9th May 2016
(7 years, 11 months ago)
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James Cartlidge (South Suffolk) (Con)
I will speak briefly given that we have been here before in this ping- pong process.
This was my first Bill Committee and Reasons Committee—I believe I am already coming up for my second, which is interesting—and we are now down to one key point: there is wide acceptance of the broader need for the Bill, but we are told that if it is so important, we need only accept one more wafer-thin amendment and then it can go through. Conservative Members take the view that a Government could not govern if they did that every time. There are, unfortunately, cut-off points in lots of Bills, and many are unpopular, and although I can understand why people who will lose out are aggrieved, we take the view that the wider principles are incredibly important.
Others have spoken about the Oil and Gas Authority. Every time I have spoken, I have referred to the oil price, which I think is now up to about $49. There is still no sign of stability returning to the sector. Who knows where it will be in weeks if not days, given all that is happening in the world? The measures in relation to the OGA are not a magic wand for the oil sector but will bring an extra level of stability and demonstrate Government support at an incredibly sensitive and important time for what remains one of the UK’s largest industries and one of Scotland’s key industries. We should dispense with this process, move forward and pass the Bill, for the simple reason that it is about the fundamental strength of the UK economy.
Callum McCaig (Aberdeen South) (SNP)
It is with an unfortunate sense of déjà vu that we return to debate an issue we should have put to bed months ago, if not longer. I struggle to recall when the Wood review reported, but it was well in excess of 18 months ago, and as has been said many times, including by me, it was a completely different time in the oil industry’s lifespan. Up to a point, the Government have taken the action expected, but they did so at the time of the Wood review, when things were very different. Further delay should not have happened.
The Bill should have been on the statute books months ago and should not have conflated the OGA with onshore wind. It might have seemed like a neat parliamentary ruse at the time, but it is causing potentially significant damage. The last time we dealt with this—a week or so ago—the Minister told Opposition Members that we should be ashamed of ourselves. The most unedifying aspect of all this is that we are now talking only about projects in Scotland—four Scottish wind farms—and the OGA, which will largely deal with the oil industry in Scotland, and yet this House and that House cannot get their act together to protect two vital Scottish industries. That, for me, is utterly shameful and unacceptable.
Not content with decimating the wind industry in Scotland, the Tory party, supposedly in the name of public opinion, is twisting the knife in the face of public opinion. The four projects affected by the Bill all got planning permission from the local council. That is the definition of public support, which is what this should be about. There is public support for wind farms that would have significant community benefit. We have talked about the £7 million cost. I wonder how much we would have saved had we not delayed in establishing the OGA and provided it with the teeth it should have had months ago. We are squabbling over a relatively small figure, in the grand scheme of things, compared with the colossal amounts of money the Government will waste on the white elephant at Hinkley Point C. That sticks in my craw and that of folks in Scotland.
The Lords have compromised—good on them—because they want to get a deal done. I am no expert in parliamentary procedure, but the Minister talks about wanting to pass the Bill. It could be done very simply by accepting the amendment. We run the risk, before we prorogue for the Queen’s Speech, of the Bill falling. If that happens, it will be a shameful betrayal of the entire cross-party process over the establishment of the OGA, the development of its agenda and the provision of the tools it requires to help our oil industry. That cannot be allowed to happen. The risk is that we sacrifice the OGA on the altar of Tory party dogma on onshore wind. That is utterly unforgiveable.
Energy Bill [Lords]
Debate between James Cartlidge and Callum McCaig
Callum McCaig
Sometimes it is better to know the answer to a question before asking it. A number of my colleagues are meeting constituents down from Scotland who suffer from motor neurone disease. Given the hugely debilitating impact that that illness can have on people, and given the impact that Westminster can have on welfare, it is important that a number of our folks are there.
James Cartlidge (South Suffolk) (Con)
That is a very fair response, but it is also notable how few Scottish National party MPs were in the Chamber on Second Reading of this Bill, which relates directly to one of the great issues facing the hon. Gentleman’s nation.
Callum McCaig
I started by saying that at one point in my youth I was guilty of taking my eyes off the ball. With these diversionary tactics, Conservative Members are well and truly taking their eyes off the ball. We could discuss who is here. It is disappointing that there are not many Members in the Chamber, and I am not sure proportionately how many Tories are present. I could do some back-of-a-fag-packet sums—that might appeal to them—but instead I shall persevere.
We are talking about 90 MW of onshore wind. The Minister said in Committee on 2 June that
“it is absolutely our intention to give local communities the final say on wind farm developments.”––[Official Report, Energy [Lords] Public Bill Committee, 2 June 2015; c. 76.]
Six of the seven schemes that have received planning consent are in Scotland. The committee dates were 24 November 2014 for West Benhar in North Lanarkshire; 11 December 2014 for Twentyshilling in Dumfries and Galloway; 3 June 2015 for the Chruach extension in Argyll and Bute; 15 September 2014 for the Barlockhart Moor extension; 27 January 2015 for Poniel in South Lanarkshire; 24 February 2015 for Crookedstane in South Lanarkshire; and 5 June 2015 for the Melton Common wind cluster in Hull. Those were all before the Government’s cut-off date of 18 June 2015.
As the hon. Member for Southampton, Test (Dr Whitehead) suggested, if we are to put local consent at the heart of this issue, we must respect the outcome and will of local councils that decided to proceed with these schemes, but which through no fault of their own—or indeed of the developers—were not granted planning consent and a decision notice until after this decision. For the Twentyshilling Hill wind farm, evidence to the Committee from the provost and chair of the Royal Burgh of Sanquhar and District Community Council, and the chair of Kirkconnel and Kelloholm Community Council stated:
“Our two Communities number nearly 5000 inhabitants, and, since the closure of the coal mines nearly 50 years ago, have stumbled from crisis to crisis. Despite the problems affecting our area, we are not dependent communities, and both Kirkconnel and Sanquhar can boast good public initiatives and an earnest desire to improve our lot through self-help. Windfarm monies will, at least allow local people the ability to take decisions which will improve the area in which we live.”
Twentyshilling Hill wind farm has the potential to offer life-changing improvement to the lives and living conditions of the populations of Upper Nithsdale. That is local empowerment. We are talking about local consent and support, and Twentyshilling Hill wind farm has unmistakeably got the support of the communities in which it will be set. For the sake of a few points of dogmatic principle from the Government, we are seeing that taken away through no fault of the community or the developer, but purely to persevere unnecessarily. I urge the Government to put their eyes back on the ball and allow the Energy Bill to proceed. If we go back and forth with ping-pong we risk delaying that further.
James Cartlidge
The hon. Gentleman is generous in giving way. Let me make a point that I also raised in Committee. I accept that there may not be time for this with some of these schemes, but on a point of principle, if the Scottish Government and the SNP wish to continue these schemes in Scotland, why will they not pay for them themselves?
Callum McCaig
Because there is no mechanism. We discussed that in Committee, and the hon. Gentleman voted against the mechanism that would have allowed that to happen. I do not see how that question focuses on the issue. If we want Scotland to receive support for such projects, that could have been provided.
James Cartlidge
On a point of correction, I seem to recall that the hon. Gentleman wanted Scotland to have the power, but that the Scottish Government were not going to pay for it. That is what we discussed in Committee—they were not prepared to pay for it.
Callum McCaig
There were two different aspects, and we had a number of debates. The hon. Gentleman asked how we would do something, but we cannot do it—pure and simple. Let me return to the nub of the matter. People would like pragmatic government, but we are seeing dogmatic government that dismisses the views of communities.
Tax Avoidance and Evasion
Debate between James Cartlidge and Callum McCaig(8 years ago)
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James Cartlidge
There are shouts from Labour Members, because I made that point earlier, but it is worth repeating. I am delighted that my hon. Friend made it, because it is so strong.
Callum McCaig
The hon. Gentleman is exceptionally popular today. The point about the richest 1% paying the largest amount of tax has been baffed about a number of times today as though it is some sign of virtue. It is, in fact, a sign of the gross inequality that exists in the country, which needs to be addressed.
James Cartlidge
It is a sign that the rich are paying more tax. How does that make society more unequal?
Let me talk about the measures that we should be pursuing. Yes, we should be cracking down on aggressive tax avoidance, but if we are to help people across society to have a share, we need measures such as the national living wage, which was introduced on 1 April by a Conservative one nation Government. There are those who say that the national living wage is not generous enough. They have obviously not been reading The Guardian, which recently used The Economist’s Big Mac index to prove that the national living wage is more generous than the minimum wage in any other European country except Luxembourg. Only in Luxembourg can someone buy more burgers with the minimum wage than they can with the national living wage in this country. [Interruption.] The hon. Member for Glasgow South (Stewart Malcolm McDonald) asked what this had to do with tax avoidance. The underlying issue is fairness. It is about how we achieve an economy in which there is a widespread sense that everyone has opportunity and the chance to earn a decent wage.
We are delivering that in circumstances far more adverse than those that faced the Government before 2010. We have had a small majority and the first coalition since the second world war. We have had the biggest deficit since the second world war—11.5% of GDP—which we have cut by two thirds. In that context, it is difficult to grow our way out of such a problem and deliver fairness. [Interruption.] The hon. Member for Glasgow South keeps chuntering, but he is not adding a great deal to the debate.
Energy BILL [ Lords ] (Sixth sitting)
Debate between James Cartlidge and Callum McCaig(8 years, 2 months ago)
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Callum McCaig
I thought that we were having another vote, so I was not quite ready. You have taken me by surprise, Mr Davies, but I shall soldier on valiantly.
Many of our discussions during the last few days of this Committee have been about subsidies for onshore wind and how they can best be dealt with. I am not sure that we have dealt with them in the best manner possible, but there we are. The Minister has said today, in debate between her and the hon. Member for Norwich South, that as the costs come down, so should the subsidies. The renewables obligation was not perfect in its operation. That is probably widely accepted and why it was replaced with a much better form of subsidy or price control or stabilisation mechanism—whatever one wishes to call it. I am referring to contracts for difference. That model has provided a competitive option whereby energy producers’ projects come forward and suggest a price that they can provide their electricity at. That has brought a greater sense of competition and a greater bearing down on costs. It is an important part of the development of the industries to enable us to meet our carbon commitments and, I would argue, to deal with our security of supply issues in a cost-effective manner.
New clause 5 suggests that there should be a CfD allocation every year in which the carbon intensity of electricity generation in the United Kingdom exceeds 100 grams per kWh. That figure comes from the policy recommendations from the Committee on Climate Change in “The Fifth Carbon Budget: The next step towards a low-carbon economy”. One of its recommendations was that the Government should develop policy approaches consistent with reducing the carbon intensity of the power sector to below 100 grams of CO2 per kWh in 2030. That compares with 450 grams in 2014 and the projection for between 200 grams and 250 grams by 2020. That last point indicates that significant and welcome progress is being made on reducing the carbon intensity of the power sector in terms of electricity generation, but it suggests that there is still a long way to go.
Why is it important that we hold auctions annually, in terms of the CfDs? I think it comes back to what has been another key theme of this debate, the need for investor certainty and investor confidence. I believe that this would provide that. While there is a requirement to decarbonise the electricity sector, there must be a clear path for us to do so and a clear indication given to businesses that scale up their investment, if they put forward the proposals that are required—the research and development, the site appraisal work and all that is needed to bring forward whatever it is, whether it is a solar farm, a wind farm, offshore wind or other technologies, including tidal, perhaps, which is further from the market but I hope will play a considerable part in electricity generation, certainly by 2030, given the potential that we have to do it.
That potential is important. The certainty that this new clause would provide would enable the significant investment that needs to come from the sector following the Paris agreement and in terms of meeting our own climate change commitments. By providing the certainty that there will be a market, that there will be potential for projects to be deployed, provided they are cost-competitive, that will, in itself, drive down costs. So it is good for the Government, in terms of meeting their climate change commitments, but it will also ultimately be good for the consumer.
New clause 6 suggests the devolution of the contract for difference mechanism to Scottish Ministers. The operation of the renewables obligation had been dealt with by Scottish Ministers previously and in discussions I have had with many in the industry in Scotland they were very pleased with how the Scottish Government approached the renewables sector. There was the kind of clarity I have just discussed. We need to recognise that there are differing means and differing desires in the different nations of the United Kingdom about how we are to meet our electricity needs and our carbon-reduction targets. This Government legitimately wish to pursue nuclear, which is not something I advocate, largely on a cost basis. That is their right. I do not oppose the principle of their pursuing that, should they wish. I have issues around costs, which will be borne by GB consumers as a whole, but it needs to be recognised that if parts of the UK wish to pursue one form of energy policy, it is legitimate that other parts should be able to pursue a distinct process.
James Cartlidge (South Suffolk) (Con)
It is a national grid, is it not? I am not stating the obvious, but Scotland, for example, cannot cut itself off from the electricity generated by nuclear power in other parts of the country. So we still need a UK-wide policy on the fundamental supply. They may take a different view on onshore wind, but on the fundamentals it is a UK grid.
Callum McCaig
It is a GB grid—I do not mean to be pedantic and split hairs. At this moment, yes, I agree with that. What I am asking for is the replication of what happened previously with the renewables obligation. There was a process by which differing processes were put in to manage that form of support for renewables, and I think that could be replicated in the round. I think National Grid is comfortable with different forms of electricity generation in different parts of the country.
We have heard that National Grid views the concept of traditional base-load to be somewhat outdated: it is about balancing and managing the reserves, providing it knows what there is to be developed in different parts. It would require considerable engagement, should this happen, between both Governments and between each and National Grid in order to work out how it would be developed. I see the Minister champing at the bit to come in.
Callum McCaig
I think my hon. Friend was referring to the strike price for onshore rather than offshore wind. On transmission charging, that does not help how we in Scotland would wish to form our energy supply. We have limited control over that and the cost of producing a gas-powered plant in Scotland, as opposed to within the M25, is prohibitively expensive. I do not think that the process is working, because I do not see a whole new fleet of gas plants being built in close proximity to London and if we do operate a GB grid, that should be done on a level playing field.
James Cartlidge
I do not want to labour the point, but I would like to clarify why I asked that question and why I think the Minister is supportive. When we were discussing amendment 14 or 15, whereby the SNP wanted the power to operate the renewables obligation in Scotland, I asked the hon. Gentleman if his party would be prepared to pay for that and he said that it would not. However, on the nuclear price he said that that must be paid for and that balances it. The SNP seems to assume that Scotland can cut itself off from the nuclear-generated electricity coming into the GB grid, to which presumably Scotland wants access. With respect, it seems that the SNP wants to have its cake and eat it.
Callum McCaig
I have been trying to get on to funding for some minutes but I keep being intervened on. I would like to see developed at a much greater level better connections between not only Scotland and England, which are coming on in terms of the grid, but the British Isles and the continent. The way forward has to be much greater interconnection throughout Europe. That argument has been put forward by the Secretary of State, which is welcome, but it should not be seen as interconnection for the sake of getting energy from elsewhere.
We, as a nation, have issues in terms of the balance of trade, and relying more than we do now on imports of energy would be detrimental. If we can unlock the huge potential we have, particularly of renewables and particularly in Scotland, there is the potential to be a net exporter, though not at all times; the new clause would play a part in that. That should be the ambition, in my view. If we are going to have a European grid, we should not limit our ambitions to being an importer.
We need to respect the differing modes and choices of the people of these islands, if we are a family of nations that respects our divergent views. If England chooses to produce nuclear, that is fine. Whatever the relationship between the two countries, I see a point where there will be a need for nuclear from England, but likewise, there is a need for energy from Scotland at times. That is the level of co-operation.
Energy Bill [Lords]
Debate between James Cartlidge and Callum McCaig
Callum McCaig
Yes. I am coming on to that point now. I have spoken about carbon capture and storage many times and I will continue to do so. We fully support that. However, there is a requirement, which the shadow Secretary of State talked about, to have the review and the strategy in place before it can be imposed as one of the principal objectives of the OGA. If we dilute the core functions of the OGA, we distract from that attention. We should remember that the OGA and the Wood review come from a time when oil was over $100 a barrel. Those were the circumstances required to support the industry, which was going through difficult times, at a very high oil price. Those pressures are much higher today. I agree that we need to allow the OGA to bed in. Perhaps in future, once there is a strategy in place and it can be demonstrated that it has the support of the Government from both a financial and a strategic point of view, that might be something we want the OGA to do. At the moment, however, I think that is premature.
As I said, the Wood review comes from a time, two years’ ago, when oil was $110 or $115 a barrel. It is now $29 a barrel. The game has changed significantly. We have to accept that, while this is a vital step in supporting a vital industry, it will not be enough in and of itself. We need fiscal changes to the tax regime, particularly on incentives, and to review the tax level as a whole.
Immediately following the autumn statement, the Oil & Gas UK economics director, Mike Tholan, said:
“Since the last Budget, the oil price has declined further, and we must continue to do as much as we can to help boost confidence and encourage investment in the UK Continental Shelf. If the oil price continues to be lower for longer, there is little doubt that alongside industry’s own concerted effort to improve its efficiency, we will need to work with Treasury on additional measures, including revisiting the current headline tax rate—consistent with the government’s commitment to the sector’s tax rate falling over time.”
James Cartlidge
This issue clearly has to be approached through partnership between the UK Government and the Scottish Government. That being so, and given that the Scottish Government are about to get new tax-raising powers and that this is currently a real crisis for the key UK and Scottish strategic economy, will it be the policy of the Scottish Government to use those powers to raise funds to support the industry, if need be?
Callum McCaig
Frankly, I am not sure how income tax could be used to boost the oil and gas industry, but if the hon. Gentleman has any concrete suggestions—[Interruption.] On my understanding of the Scotland Act 2012 and of the progress made on tax-raising powers, I do not see how the Scottish Government would have the ability to do anything that would materially affect the fiscal regime. If the hon. Gentleman wishes to join us in calls for corporation tax for oil and gas revenues to be devolved to Holyrood—or, indeed, for full fiscal autonomy—he would be more than welcome to do so. The suggestion that the minimal powers devolved to Scotland for raising tax revenues and achieving economic objectives such as boosting the business environment could in some way be used to boost the oil and gas sector is, at best, naive.
James Cartlidge (South Suffolk) (Con)
It is a privilege to speak about this Bill and to be asked to serve on the Bill Committee, as well as to follow so many excellent contributions, especially from my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), and my hon. Friend the Member for Hertsmere (Oliver Dowden), who made a passionate defence of the beautiful English countryside.
It is also an honour to follow the hon. Member for Wakefield (Mary Creagh), although I will not attempt to spell or pronounce the age that she said we live in. She spoke a lot about fuel poverty, but I cannot think of a single measure to help my constituents tackle fuel poverty that even begins to compare with the fact that, with so many people heating their homes with oil tanks, it is now 60% cheaper to fill those tanks than it was a year ago. The same goes for petrol and diesel, although the percentage falls are not as steep. I welcome that fall in oil and diesel prices, particularly for our hauliers who have been so hard hit of late. I was intrigued to hear the hon. Member for Swansea West (Geraint Davies) call on those on the Labour Front Bench to lobby the American Government to curtail shale production, so that we can increase oil prices. I would be interested to know what the leader of the Labour party thinks about that policy.
Oil prices are key, and the most important part of this Bill is that it establishes the Oil and Gas Authority in what is clearly a time of crisis for the industry. Hon. Members have mentioned the cost of oil falling to $29 a barrel. In fact, according to the internet, today it fell to as low as $27.70, and Ladbrokes are now offering odds of 10:11 on its falling to below $25 in the coming weeks, and 10:1 on oil being below $10 a barrel—incredible prices.
As several hon. Members have said, 65,000 jobs have been lost in the oil sector since the beginning of 2014. It is a difficult time for the industry, but there are roughly 24 billion barrels of oil left in the North sea, which one day will not sell for tuppence ha’penny. We need an effective regulator, because that can bring stability and encourage investment.
I have no expertise or background in the industry—my background is as a director of a small business that was regulated by the Financial Services Authority and is now regulated by the Financial Conduct Authority. It is fair to say that the FSA was not a brilliant regulator—it failed fundamentally—but it is incredibly important that there is now a trusted regulator in the sector. I am sure it will be the same in the oil and gas industry. Oil & Gas UK has said:
“We believe the OGA is a critical catalyst for the work being undertaken to sustain offshore oil and gas activity and the associated employment in the sector, and its tools and capabilities should remain focussed solely on this task”.
I have one other point to mention on oil and gas. I am glad the hon. Member for Aberdeen South (Callum McCaig) is back in his place. When I intervened on him earlier and asked what the SNP could do, he suggested that it was naive to think that the Scottish Government should try to do anything about the crisis. It is a UK crisis, but it is hitting Scotland hard, particularly his constituency.
Callum McCaig
That is not a fair assessment of what I said. In response to the hon. Gentleman’s suggestion that the Scottish Government should use their new fiscal powers to support the oil and gas industry, I said that I did not see that as manageable, and that to think otherwise would be naive. Support is being provided by the Scottish Government and is being well received.
James Cartlidge
The Scottish Government will have the power to raise tax. They can do that and say to the Chancellor, “We are extremely worried about the crisis hitting our countrymen and countrywomen. We will contribute to a fund to reduce the tax rates on North sea oil.” What is so controversial or naive about that? We had all that passion from the SNP at the referendum about Scotland. Now that we have a crisis in Scotland, what are the SNP Government doing about it? They have a duty to pull their finger out, put their hand in their pocket and step up to the breach.
On the subject of devolution, we also have devolution in England. I have a question for my Front-Bench colleagues. There is an important measure in the Bill on planning and onshore wind. The result of the Bill is that power will go to local people, but I ask the Minister what will happen if a combined Suffolk and Norfolk authority has strategic economic powers. Will that take over the planning powers that will be devolved to local authorities under the measure in the Bill? That is a question about the impact of the measure and English devolution.
As in other constituencies, there have been significant cases in my constituency. In the run-up to the general election, there was a major case of a wind turbine in Pannington farm in Wherstead, near the famous “Jimmy’s Farm” of BBC TV fame. I am pleased to say that it was soundly rejected by Babergh District Council, with great support from the affected communities of Pinewood, Belstead and Wherstead in the northern part of my constituency bordering Ipswich. Of course, those communities will very much welcome the measures in the Bill.
On the subject of planning, several hon. Members, including the hon. Member for Wigan (Lisa Nandy), asked this question: if communities have a say in onshore wind, why should the same not apply to fracking? I see the point they make, but that planning currently rests with the minerals planning authority of the higher authority—in Lancashire, that meant Lancashire County Council. As a result of the time that it is taking, I understand that the decision will eventually go to the Secretary of State. [Interruption.] Is the hon. Lady trying to intervene?