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Renewable Energy

2. John Thurso (Caithness, Sutherland and Easter Ross): When she last met the energy regulator to discuss renewable energy supplies. [25546]

The Secretary of State for Trade and Industry (Ms Patricia Hewitt): I met the energy regulator on 15 November, and my hon. Friend the Minister for Industry and Energy met him on 11 December. The matters that we discussed at those meetings included the development of renewable energy supplies.

John Thurso: I am grateful to the Secretary of State for that reply. Is she aware of the article in the Financial Times of 5 December in which the energy regulator was reported as saying that energy projects such as those in my constituency

May I draw to her attention the unique combination of circumstances, both climatic and tidal—and including skills such as those available at Dounreay after decommissioning—that make areas such as my constituency extremely good for renewable energy? Will she ensure that it will be Government policy, irrespective of what the regulator says, to continue to support such initiatives in such areas?

Ms Hewitt: I am aware of the press report to which the hon. Gentleman refers, but I am also aware that the energy regulator was misrepresented in it. If he cares to read the transcript of Callum McCarthy's appearance at the Select Committee on Trade and Industry, he will find that it does not bear out the press report.

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I entirely agree with the hon. Gentleman's other point. In Scotland, we have some of the best offshore wind, wave and tidal resources in the world. We want to use those resources to deliver cleaner energy to consumers. Callum McCarthy was saying that we need to ensure the right transmission and distribution infrastructure, especially on the west and north coast of Scotland and England, to enable us to use renewable energy sources that are situated at some distance from the main centres of electricity demand. That is what we are seeking to do.

Mr. Kevin Hughes (Doncaster, North): What guarantees can the Secretary of State give to the House that huge swathes of the beautiful English countryside will not be blighted by these obnoxious looking windmills—noisy instruments that cannot generate enough electricity even to boil a decent kettle? What guarantees will she give that the English countryside will not be ruined by these obnoxious things?

Ms Hewitt: I am sorry that my hon. Friend does not like the appearance of modern windmills. I think that they are rather beautiful. Environmentalists cannot have it both ways. If we are committed to the development of renewable energy, and if we want to meet our Kyoto targets—and, indeed, targets beyond that—and deal with the problem of climate change, then yes, we have to meet the targets that we have set. That means ensuring that 10 per cent. of our electricity comes from renewable energy by 2010—and, frankly, more beyond that. Environmental issues, especially in respect of areas of outstanding natural beauty, are always taken into account when planning decisions are made on the siting of wind farms.

Mr. Andrew Robathan (Blaby): It is all very well the Secretary of State saying that and telling us how keen she is on renewable energy, but what is she going to do about NETA, the new electricity trading arrangements, which, as she will know, have led to the closure of several small wind farms and other projects, and have caused a reduction of more than 60 per cent. in the production of energy by combined heat and power plants? They are destroying renewable energy projects and not working to increase the amount of renewable energy that is produced.

Ms Hewitt: I am well aware of the concerns that have been expressed about NETA, especially by producers of combined heat and power. Let me stress that, generally speaking, the arrangements have been an enormous success, as we have a much more transparent and efficient pricing system that has brought wholesale electricity prices down by 25 per cent. These are new arrangements and yes, they are causing difficulty, especially for CHP and other small-scale renewables. We are considering that problem and consulting on possible measures to deal with it. We now have a working group that will report to me and my hon. Friend the Minister for Industry and Energy by the end of January on how we can overcome those obstacles and ensure that, within the NETA framework, we can still ensure the development of small-scale renewables.

Mr. Martin O'Neill (Ochil): Does my right hon. Friend agree that until there is a critical mass of facilities in the United Kingdom, renewable energy will be

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considerably more expensive than the traditional, rather dirty and sometimes environmentally unfriendly systems? We must ensure that the attack on fuel poverty continues. She and her colleagues must advise the regulator because the problems with NETA arose in the absence of such advice. The rightly desperate desire to roll out the new system resulted in short-term disadvantage for renewable energy. A balance must be struck, but in the interests of the poor in the first instance.

Ms Hewitt: My hon. Friend is right about the overriding importance of dealing with the appalling problem of fuel poverty, which stems fundamentally from an outdated and inadequate housing stock. The Government are making huge investments in warmer, energy-efficient homes, which allow people on low incomes to heat their homes better at lower cost. We will maintain that programme. We are also doing a great deal to invest in the development of renewable energy, not least through the renewables obligation.

Mr. Roy Beggs (East Antrim): Job losses have occurred in a small company in my constituency that manufactures hydro-generating equipment. It is one of the few remaining such manufacturers in the United Kingdom. When renewable energy is next examined, may I appeal to the Secretary of State to consider thoroughly the delays in the planning process throughout the United Kingdom? Such delays in approval for projects deny jobs in many constituencies.

Ms Hewitt: The hon. Gentleman makes an important point. We have extended the renewables obligation to include smaller-scale hydro-electricity plants. I hope that that will help to stimulate the growth of such plants and thus of demand for the products made by the manufacturer in his constituency. That is the best way in which to deal with his constituents' problems, with which I have enormous sympathy.

Dominican Republic

3. Mr. Huw Edwards (Monmouth): If she will make a statement on the role of the Export Credits Guarantee Department in supporting British trade with the Dominican Republic. [25547]

The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): In the past two years, the Export Credits Guarantee Department has provided more than £50 million in export credit support for British exporters to the Dominican Republic. It has recently made a further £10 million available.

Mr. Edwards: Fairfield-Mabey in my constituency has negotiated a contract for $125 million of work, providing steel road bridges in the Dominican Republic. However, the ECGD is providing only $10 million of cover, whereas the equivalent agency in America is offering much fuller cover. That may mean the loss of jobs and technology to the Americans. Will my hon. Friend discuss increasing the cover with the ECGD to help to keep the jobs in my constituency?

Nigel Griffiths: The Mabey group has already received substantial support of more than £340 million from the

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ECGD for eight projects in six countries. More than half the ECGD support in the Dominican Republic has gone to Mabey and it has been offered a further £10 million in that country. Of course we shall continue to work hard to eliminate unfair competition among international export control agencies.

Mr. John Wilkinson (Ruislip-Northwood): Is not it essential for the interests of the taxpayer that the ECGD exercises its scrutiny responsibly and carefully on a case by case basis to ensure that unnecessary exposure does not occur? The Dominican Republic has one of the sounder economies in the Caribbean, with a big tourist trade and reasonable political stability. Will the Government therefore maintain a positive attitude towards British business in the area?

Nigel Griffiths: Of course we will maintain a positive attitude. As I have said, more than £25 million out of £50 million of ECGD support to the Dominican Republic alone has already been made available to the group of companies to which my hon. Friend the Member for Monmouth (Mr. Edwards) referred. Each case must be examined on its merits.

Postal Services

4. Mr. Colin Pickthall (West Lancashire): What steps she has taken to ensure that the universal service provision is adhered to in the UK market for postal services. [25548]

The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander): The Government enshrined the universal service obligation in the Postal Services Act 2000. The Act provides that it is the primary responsibility of the postal regulator—Postcom—to exercise its functions in a manner best calculated to ensure the provision of a universal postal service. It is therefore for Postcom to determine how the universal service obligation is implemented in the interests of consumers.

Mr. Pickthall: Is my hon. Friend confident that, given its recent performance, Consignia is capable of sustaining the universal service obligation? Given that that obligation involves reliable daily deliveries to every household and business in the country, will he use his influence to see that it is extended to the Liverpool postal area?

Mr. Alexander: I appreciate the points that my hon. Friend has made. There have been particular challenges in Liverpool, which is why I was pleased that Lord Sawyer attended the Liverpool sorting office while preparing his report on the Post Office.

Of course Consignia has to do more in terms of providing the quality of service that people are looking for, and we have actively taken steps to strengthen its management. I must re-emphasise the point that the primary obligation of Postcom is to secure the universal service obligation. It is the regulator's prime function to ensure that the service is enjoyed not just in Liverpool but right across the country.

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Dr. Vincent Cable (Twickenham): Is it not wholly unrealistic to expect that the universal service obligation, which depends on cross-subsidy within the Post Office, can continue to be maintained when Consignia is making mounting losses because of intensifying competition and industrial disruption? What kind of guarantee can the Minister give that these crucial social service obligations will continue to be provided—by the Government, if necessary—when the Post Office is forced to default on its universal service obligation because of its financial difficulties?

Mr. Alexander: As I said earlier, the primary obligation of the regulator is to secure the universal service obligation. There is no doubt that Consignia faces considerable challenges. Not least as a shareholder, the Government are determined to see the improvement of the company in the months and years to come. That is why we have taken active steps to improve the management. The chairman of Consignia is being appointed at the moment. Allan Leighton has been appointed to the board with particular responsibility for overseeing network issues. A new financial director, Marisa Cassoni, has also been appointed. I am confident that, on the basis of continued application and hard work, not just by the management but by the employees, we shall see the kind of step change in performance that all hon. Members agree is necessary for Consignia.

Geraldine Smith (Morecambe and Lunesdale): Is the Minister aware that the regulator is putting thousands of postal workers' jobs at risk by allowing competitors to cherry-pick the most profitable areas of the postal business while restricting Consignia's ability to raise its prices to the levels necessary for it to meet the universal service obligation and to make a profit? Does he agree that this has the potential to plunge the country's postal services into a shambolic mess?

Mr. Alexander: One of the terms of the licence granted to Consignia was to uphold the universal service obligation. It is also important to recognise that liberalisation is coming not only from the Postal Services Act 2000—which was supported by many hon. Members on both sides of the House—but from Europe. There is simply no alternative for Consignia but to improve its performance, and that is why the Government are taking active steps to ensure that that happens.

Mr. Nigel Waterson (Eastbourne): What action will the Minister urge on the regulator in the light of Consignia's persistent failure to meet its delivery targets, the scrapping of the second delivery, and the loss of 1 million items of mail a week? Given the already deteriorating postal service in this country, will he take this opportunity to condemn unreservedly the threat of strike action?

Mr. Alexander: Of course, any strike action is to be regretted, not least in a service on which so many people rely. It is important at this critical stage in the negotiations that management and unions work together to find a resolution to this prospective dispute. The implementation and securing of the universal service obligation rest

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primarily with the regulator; the terms of any change in delivery schedules by Consignia would also be a matter for the regulator.

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