Energy Prices

Robin Walker Excerpts

Wednesday 19th October 2011 Commons Chamber

[Sammy Wilson]

Yes, and I shall say more about that later.

Part of the problem is a direct result of Government policies that have an impact on households and businesses throughout the United Kingdom. About 50% of those who are in fuel poverty in Northern Ireland are over 60, but just as worrying is the fact that 27% of those who will find it difficult to pay their fuel bills—who will be, as we loosely term it, in fuel poverty—are in work. They are going out every day to do their business, and their wages are so low that they still find it difficult to pay. That is another reason for my belief that the debate is timely and will resonate throughout the United Kingdom.

I will not repeat all the many causes of the problem that have already been mentioned today, but I think it worth drawing attention to the way in which large energy companies have used the prices of raw materials to raise the prices that they charge consumers, and the fact that—as a number of Members have observed—there is not the same flexibility when prices fall. That is one of the reasons for the level of profits that companies are experiencing. As many Members have pointed out, in the short term some of those profits could be used to deal with the problems.

A second cause is lack of investment. Because of that lack of investment and because of the demand that exists, prices are bound to be fairly buoyant anyway, and there is a captive market. A third—I suspect that many people will secretly agree with this, but will not be prepared to say so openly—is the impact of the Government’s climate change policies. When we say that because we want a low-carbon economy we will charge those who use carbon-based fuels in ways that cause carbon dioxide to be released into the atmosphere, and when we say that we will introduce policies to stop that happening, we cannot run away from the fact that such action will have implications for people’s fuel bills throughout the United Kingdom. The facts are clear. This year, simply to deal with the renewables obligations, being forced to purchase electricity from renewable sources has added £1.8 billion to the cost of producing electricity, and by 2020 the cost will be £6 billion a year. According to the Department’s own estimates, domestic consumers will face a 33% increase in the cost of electricity and non-domestic consumers such as industry will face an increase of 43%.

I support the motion, but it makes a rather glib reference to climate change. Many people will feel that they can agree with such sentiments, but behind them is the reality of what will happen to fuel bills: people will pay more for their energy. Denmark, not our country, has the highest costs per unit and the highest fuel bills, and Denmark produces 20% of its electricity from wind power. That is the highest proportion in Europe. The lowest costs are in France, which produces 75% of its energy from nuclear power.

[Mr Robin Walker (Worcester) (Con)]

Does the hon. Gentleman agree that the fact that France has the lowest energy costs serves to highlight that Governments of all colours have been short-sighted in not investing in new nuclear before, and that we ought to be going ahead with new nuclear now?

[Sammy Wilson]

I absolutely agree. I have consistently supported that, and back home have received some criticism for doing so, as people ask, “Are you therefore saying we should have a nuclear power station in Northern Ireland?” If it produces cheap electricity and deals with some of the problems people in my constituency face, of course I am happy to support that—although whether there are sufficient economies of scale in the Northern Ireland market to support a nuclear power station is another matter.

I agree with the hon. Gentleman about the short-sightedness of previous Governments, and I welcome the Secretary of State’s U-turn. Although he tried to cover that up today, he has clearly performed a U-turn on this issue. When he was in opposition he opposed nuclear energy, but now that he is in government he supports it, although he adds about 100 caveats to that support—the conversion process may take a little longer than we expected.

Reference has been made to the possibility of huge shale gas finds in Lancashire. The relative costs of electricity generation are as follows: 2.2p per kW for gas-fired electricity as against 7.2p per kW for offshore wind farms. Offshore wind is therefore three and a half times more expensive.

We say that we want 30% of our electricity to be generated by offshore wind by 2030, but that has implications for consumers across the United Kingdom. Regardless of our views on climate change, there ought to be some honesty in this debate. I do not know what the impact on global temperatures might be if we were to decarbonise our economy and reduce our CO₂ emissions, which account for 2% of the world’s CO₂ emissions, by 10% or 20% by 2020, but there will be a price to be paid by each of our constituents, and we ought to make that clear.