Phillip Lee
Main Page: Phillip Lee (Liberal Democrat - Bracknell)
Dr Phillip Lee (Bracknell) (Con)
In this debate about an energy price freeze we have heard some interesting contributions from colleagues on both sides of the House. I understand that the Opposition’s position, in effect, is to assume that the price freeze is in place and then think about what they are going to do next in the process. I have not heard about the sorts of things they would like to see in future. If the House will allow me, I would rather discuss the future than the present.
It is often said that the energy market involves a trilemma, but I tend to disagree with that principle because it implies that all the elements are equally important. For me, the cost of energy is key. Of course, security and decarbonisation matter, but ultimately energy is directly linked to GDP growth; we need only to look across the Atlantic to see evidence of that. We must concentrate on cost as our primary target. There is also an argument, which I will make, about the limits of markets. The privatisation of the Central Electricity Generating Board in the 1980s was welcome, and it brought about an increase in efficiency, but I wonder whether we are all missing a trick in not realising that there comes a point when the market can deliver no further gain and we might want to consider a different model, particularly in the supply and distribution of electricity and gas.
As I say, the primary concern must be the cost of energy. When I stood for election to the DECC Committee in 2010, more than one colleague came up to me somewhat surprised that I was going for such a “lowly” Select Committee and asking why was I not going for something interesting like health or education. I pointed out to each and every one of them that I thought energy was a key challenge for this Government, and indeed Governments to come, alongside ageing. As a doctor, I could talk all day about the ramifications of an ageing population, but I did not know that much about energy and the energy market. We are now approaching the fourth anniversary of our joining these Select Committees, and in those four years I have concluded that the complexities of the energy market in this country are quite remarkable. Although I think it is going too far to call it a cartel, certainly the public’s view is one of a sense of things acting in concert. An investigation into this market is long overdue.
The motion mentions an increase in competition, but I wonder where that would take us. An analysis of the economic profits of the energy companies shows that they are actually making losses. Centrica made an economic loss of £345 million in 2013. Yet we are expecting these companies to invest and bring private investors into the market. We must reflect on that. Although it makes very easy headlines to say that these companies are making massive profits, in fact they are not. Any profits that they make tend to be in their generation arms, not in their retail arms.
Mel Stride (Central Devon) (Con)
On the increased competition in the market that we would all like to see, does my hon. Friend agree that the suggestion that Government arbitrarily step into a marketplace and apply a blanket freeze is likely to scare off investors and be a significant brake on the very competition that we want to promote?
Dr Lee
Of course. If my hon. Friend will forgive me, many people have already made the case for how simplistic and foolish an energy price freeze would be, and I did not want to add to that, because I thought it would be presumed that I would agree. My hon. Friend smiles. We are about to carry out an investigation into the market, and perhaps we need to start to think about how we might restructure our energy sector in a more profound way.
Before I come to that, I want to mention security. Currently, about 70% of our oil and gas comes from Norway; that relationship is key. Centrica has a long-term contract with the Qataris, worth in excess of £4 billion, which is important. Contrary to the hon. Member for Newport West (Paul Flynn), I am a strong supporter of the nuclear industry, but I have some issues—I have gone on public record about this—because a strategy on the nuclear industry is required.
I am somewhat concerned that we have had to go abroad for the technology. We have had to do so because the Opposition sold all the technology during the previous Parliament. Westinghouse was sold, as was British Energy—we could have made hay about that, but never mind. I am concerned that we have to go abroad for technology that arguably is not the cheapest and that, as the hon. Member for Newport West said, has not been delivered on time anywhere on the face of the earth. We need a strategy as a country. For example, why not have small reactors across the country, built by Rolls-Royce? That is just a suggestion.
Paul Flynn
Does the hon. Gentleman agree that Centrica made a considered and serious decision when it abandoned the £200 million it had already invested in Hinkley Point? That meant that the serious investors had deserted, and so we now have to rely on cheap Chinese money, of which is there is an abundance. What has Hinkley Point got to do with Britain?
Dr Thérèse Coffey (Suffolk Coastal) (Con)
They did not have control of the asset.
Dr Lee
As my hon. Friend says, Centrica did not have control of the asset, because it was not allowed to buy British Energy in 2008—a decision made by the previous Government, and one which I guess the hon. Gentleman supported.
It is time for the Government to concentrate on one thing rather than on a myriad. Whenever the Department of Energy and Climate Change comes before the Select Committee it gives evidence of its lack of fitness for purpose in this area. The Select Committee has been, I think, deeply frustrated by the Department’s performances on many occasions. We should concentrate on one thing, which is energy efficiency. Fatih Birol was in front of the Select Committee the other day—he edits the “World Energy Outlook”. The conclusion of that weighty tome is that this country should concentrate on energy efficiency. We should stop subsidising energy generation and let the market deal with that.
We should concentrate on energy efficiency because the reality is that that is all we can do. Our stocks of gas are declining—they may be mitigated somewhat by shale, but let us not hold our breath or think it will be a significant bounty. This country needs to be able to deliver economic growth in the future with less energy. California has done it so I do not see why we cannot. It requires concentration purely on that one issue. We need to get away from the rather daft level of subsidy for offshore wind, for example. There is some argument for state expenditure on energy security in baseload generation, and we perhaps need to be more transparent about how we fund nuclear energy, and indeed—to refer to the contribution of the hon. Member for Newport West—marine energy projects such as that on the Severn.
My main point is that the solution is not to have yet further energy companies in the market. I believe that the retail and distribution networks should be owned by co-operatives. We only have to look at New York and Pennsylvania to see the benefits, in terms of the lower costs to the consumer and the ability to take a longer-term view about investment in infrastructure so that if there is poor weather, the distribution network does not go down. It might be counterintuitive for a Government Member to talk about co-operatives—that may be politically attractive—but ultimately there are limits to markets and I think we are approaching the limit in the energy sector.
Fiona O'Donnell (East Lothian) (Lab)
It is a pleasure to follow the hon. Member for Bracknell (Dr Lee), who I thought made an illuminating speech. It was illuminating because at no point during his speech did I hear him talk about fuel poverty or about people struggling to pay their fuel bills. My constituents will be disappointed by that and I suspect that his will, too.
Fiona O'Donnell
No—I am on a limit of five minutes. I have not made any interventions in time-limited speeches and I am not going to take any, as I have only five minutes.
It has also been illuminating to see the political tomfoolery of the SNP today. As the hon. Member for Angus (Mr Weir) stood to speak, suddenly two other SNP Members came scurrying into the Chamber to give the right impression of SNP support for action on fuel poverty, and then scurried out, having made one intervention.
Dr Phillip Lee
On a point of order, Madam Deputy Speaker. The hon. Lady has misrepresented my speech. I talked about cost as the primary target of any energy policy, which refers to the fact that I recognise that customers are paying increased bills.
Madam Deputy Speaker (Dawn Primarolo)
With respect, that is not a point of order but a matter of debate. However, the hon. Gentleman has now got his point on the record.