Examination of Witness (Questions 40-59)|
WEDNESDAY 31 OCTOBER 2001
40. Why should individual consumers be exempt
from a policy towards reducing energy use?
(Ms Hewitt) You will remember that a key feature of
our 1997 Manifesto was to reduce VAT rates on energy, in order
to deal with the very real problem we have in Britain of fuel
poverty, and it would therefore have been perverse, having reduced
fuel prices by reducing VAT, to slap a carbon tax on it for individual
consumers. We have a huge problem there, which we are addressing
through energy efficiency programmes, insulation programmes, in
the existing housing stock, and as we deal with that then we can
consider issues around energy pricing; but to push the price of
energy up for individual consumers would have a disastrous effect,
particularly on very vulnerable elderly people living on low incomes
and large families living on low incomes.
41. But is it not right that we have a very
real and pressing problem concerning global warming at the present
time, and there is real doubt about whether the targets, for example,
for renewables, of 10 per cent by 2010 can actually be achieved?
Whenever I am attending briefings on these issues at the present
time there is commonly expressed doubt about whether Government
policy is sufficiently vigorous to achieve those targets.
(Ms Hewitt) We are absolutely committed to that target
of 10 per cent of our electricity from renewables by 2010, and
DEFRA and ourselves are working extremely closely on that, for
instance, looking at what more we need to do to promote the development
of Combined Heat and Power. And there will be a consultation paper
coming out on that from DEFRA within the next couple of months
that will set out how the specific target on CHP will indeed be
achieved, and that is an important part of reaching the broader
10 per cent renewables target.
42. Secretary of State, can I ask you whether
you are in favour of integrating further environmental issues
and sustainable development into the 2002 spending review; and,
on the assumption that you are, can I ask you what plans you have
made and what improvements you have made within the DTI to ensure
that that is the case?
(Ms Hewitt) I am indeed in favour of it. The Treasury
has issued guidelines to all Government Ministers and officials
who are involved in the spending review on sustainable development
and how the sustainable development objectives of the Government
should be reflected within departmental bids for the spending
review. As far as DTI is concerned, the work we have already done
on our sustainable development strategy has already had a noticeable
effect on the Department's mind set, so that we are really making
progress in terms of getting officials to think about environmental
and social as well as economic or industrial objectives when they
are formulating policy. In terms of the work we are doing particularly
on SR 2002, for instance, we are in the lead on a cross-cutting
review of science, where we are looking at sustainable development
and particularly sustainable energy, where we look at our own
business support services and our own strategies for technology
and innovation, we are particularly looking at the whole area
we were discussing earlier of greening business and raising resource
productivity. So that will be part of the strategy and the proposals
we make for SR 2002 on technology and innovation proposals.
43. Have you built in internally any specific
goals, that you have set out as targets, that you are going to
try to achieve whilst negotiating the spending review?
(Ms Hewitt) We are not quite at that point yet, no.
44. Right; but will you be thinking about introducing
(Ms Hewitt) Yes.
45. Can I ask you whether you personally have
thought through what those goals might be?
(Ms Hewitt) I have started to do so, yes, but that
is very much work in progress, certainly not work that is ready
to be exposed to the Committee. But I was referring earlier to
the PSA targets that we had from the last Spending Review, and,
clearly, part of the opportunity that we have with spending review
2002 is to take those targets further, we might well want to reduce
them, we do all tend to have too many targets, look at how we
focus them better, and look at where we could usefully have joint
targets that reflect the need for joint working to achieve those
46. And, during the bid process itself, will
you actually be bidding for any money for specific environmental
projects within your Department?
(Ms Hewitt) What we have, within DTI, is a very large
number of schemes, many different schemes, designed to help businesses
improve in various ways, including in this field of greening business
and resource productivity. Frankly, we have too many, and you
may have heard, as I do routinely, complaints from business that
they cannot find their way around Government support to business,
because there is this scheme, that scheme, this one, they are
all doing different things, they have all got different application
forms and rules, and so on; and that is why I am hesitating in
response to your question. Because one of the issues we are looking
at in the DTI's review is how we deliver much more effectively
support to business, and it is not through having 101 different
schemes, it is through having a much clearer strategy and money
and other forms of support that are dedicated to some clear goals.
The goals will include resource productivity and improving the
environmental performance of business. It will not necessarily
include half-a-dozen new schemes with money attached to them.
But the goal, the strategy and the resources to get us there,
absolutely, will be part of the SR 2002 bid that I will be making.
47. If we can go back to energy, Minister, to
what extent was your Department involved in defining the objectives
of the PIU review when it was set up?
(Ms Hewitt) We were consulted on them; they are high-level
objectives, really. As I said earlier, it was a question of setting
out the high-level objectives of the Government's energy strategy
over the next 50 years, what is it the country needs from its
energy policy, and then asking the PIU to look at how do we best
achieve those goals.
48. What do you see as those high-level objectives,
what are they, as far as you are concerned?
(Ms Hewitt) As I said earlier, security of supply,
affordable and competitive energy supplies to individual consumers
and to business, and the achievement of our environmental goals.
49. Presumably, the Kyoto targets will play
an essential role in that?
(Ms Hewitt) Not only the Kyoto targets, because, of
course, in energy terms, that is quite a short-term target, so
we are looking beyond Kyoto, and in particular taking account
of the recommendations of the Royal Commission.
50. How do you reconcile, for example, just
looking longer term, development of, say, offshore wind power
with areas such as marine conservation, how do you see your Department
being able to deal with that type of difficulty?
(Ms Hewitt) It is a difficult and indeed quite timely
issue that we need to look at, and we are getting expert scientific
advice on that question. I do not feel I am in a position to say
that there are definitely conflicts between those goals, but there
may well be, in which case, we will have to look at what are both
environmental goals, goals of sustainable development, and see
how we reconcile them.
51. When the PIU report comes out, what do you
see your Department's role as being at that stage, and will you
be an advocate of the content of it, or will you be a party advancing
a distinct case, if you like, on that report?
(Ms Hewitt) PIU reports are obviously commissioned
by the Prime Minister on behalf of the Government as a whole.
We will be the Department that, if you like, will receive the
PIU report; we will then have to consider, in collaboration with
other parts of Government and other colleagues, our response to
that report, we will then have, across Government, to agree the
strategy and then we will be in the lead, of course, in implementing
52. What role will the Deputy Prime Minister
play in that post-review procedure?
(Ms Hewitt) In process terms, I do not know, but given
the enormously important role that John Prescott played in the
achievement of the Kyoto Agreement I would think a rather important
one, in terms of deciding how we move forward on that energy review.
53. Just a couple of things on particularly
offshore wind generation. Your Department published a consultation
paper before the recess, I cannot remember if it was before or
after the general election, so I am not certain if it was you
or your predecessor, I am sorry, but it was a consultation paper,
looking at the need to unify or regulate the different consents
processes that needed to be gone through for offshore wind generation,
we are told that up to 19 are required. Can you tell the Committee
what has happened to that consultation paper, are you now taking
the results forward yourself, are you going to produce DTI proposals
on it, or is it rather subsumed now in the DTLR review of planning
(Ms Hewitt) I am not sure, from memory, whether that
consultation has concluded or whether we are still looking, I
think it is concluded and we are now looking at the responses
that have come in. It might be helpful perhaps, if I may, Chairman,
if I just let the Committee have a note on that, because I cannot
give you chapter and verse now.
Chairman: Thank you.
54. Can I just follow up, to ask what might
be now developing; there is a Marine Conservation Bill before
Parliament, which obviously has impacts perhaps on some of this?
And also, within that context, what work are you doing, as the
Department in the lead on this, on developing guidelines for the
marine landscape, as it were, it would not be a landscape, I suppose,
when it is at sea, but the visual impact of such developments,
and will you be publishing or using guidelines, or developing
others, to inform any decisions about offshore wind developments?
(Ms Hewitt) It is a matter on which my officials and
DEFRA are working together. Certainly, in relation to the Marine
Conservation Bill, we have concerns about its present drafting;
we will be looking at that in more detail. Again, on the question
specifically of who might be producing guidelines on the visual
impact on the marinescape, again, perhaps I could just include
that in the note I have just promised to let you have.
55. Most of the questions I was going to ask,
Chair, have already been asked. But on the Marine Conservation
Bill, since it came up last Friday, your Department had difficulties
with the Bill, you must be fairly clear about what the difficulties
were, even if you are not clear about what the answers to those
difficulties are; could you help the Committee somewhat?
(Ms Hewitt) These are quite complicated matters, and
I do not pretend to be an expert on them. We are concerned about
the impact of environmental regulation in this context, both on
wind farms and on the oil and gas, the offshore oil and gas industry;
and that is what we will need to look at and see whether amendments
can be brought forward to the Bill that will resolve those issues.
56. In other words, you want to keep your options
somewhat open prior to the PIU report, which is quite understandable.
It must be very complicated trying to work out what an energy
policy should look like when there are such huge variables, and
if one variable moves in one direction then you can move the other
one in another direction. I realise the report has not come out,
but can you try to help the Committee in understanding where these
variables may move?
(Ms Hewitt) It is incredibly complicated, and part
of the complication is that, of course, the timescales are so
long, and indeed decisions that were made 50 years ago in relation
to the prospects in North Sea oil and gas will still have consequences
in 50 years' time; the same clearly is true, we are dealing today
with issues of nuclear waste that arise from decisions made 50
years ago. And that is why I think it is so useful that we have
paused, in a sense, and charged the PIU with looking at all these
issues, the PIU has assembled a pretty expert team of energy economists
and energy experts to assist on this. And what you are trying
to look at is both the variables on the demand side and the variables
on the supply side; so on the demand side, obviously, you are
looking at what is happening both with individual consumers and
with business consumers. And that really comes back in part to
the point I was making earlier about decoupling economic growth
from resource and, in particular, energy use, so that you reduce
the energy intensity of the economy, and you are looking at what
scale of reduction in energy intensity of industrial production
would you need in order to achieve not just Kyoto but post-Kyoto
emission targets. And then, on the supply side, you are looking
at issues like the impact of technology and the possibility, certainly
in the timescale we are talking about, of very small-scale energy
generation, within domestic homes as well as within industries,
that then changes completely the nature of the energy market-place.
You are also looking at the security of supply issues and where
on different projections what the extent of Britain's dependence
on gas imports might be and where that gas might come from; that,
in turn, takes you into a whole discussion about energy liberalisation
and the operation of the gas market on the Continent, which is
causing us very real problems at the moment. So you have got a
whole series of interrelated issues, and what we are really charging
the PIU with doing is mapping out those different variables and
those different drivers of change, and helping us to understand
much better the connections between them, and what happens if,
as you rightly say, one thing changes, what then happens in other
parts of this complex system.
57. Thank you, Secretary of State. We know that
the position is extremely complicated, which was why I tried to
say there are all these variables, and we also know that the decisions
are often long term; but there are some pretty short-term targets
which the Government has set, the renewables target by 2010 is
not a long-term target, especially when you look at the present
level of progress towards that target. Also, we know a number
of other certainties, we know that we have achieved our present
growing position, with regard to the energy position, largely
by getting rid of most of our coal use, when I say "we",
of course, I mean collectively we, Governments, and we know how
that arose. But we are not going to do that again, we do not have
the capacity to do it again, because we do not have a coal industry
of a scale to destroy again. So there are some pretty clear certainties
about some of the direction that we must go; can you help a little
about where you see that taking us?
(Ms Hewitt) I am not going to try to pre-empt the
58. I am just trying to tempt you.
(Ms Hewitt) No; because they have not written it yet.
They are at the point of doing the analysis, they have certainly
discussed that with us, but they have not shared with me their
conclusions that I am seeking to hide from you, we are not at
that stage yet. As far as the 2010 targets go, we are not really
looking to the PIU report to help us achieve those targets; the
timescale for the PIU work is 50 years out. The issues as far
as achieving the 2010 targets go, that is about action that is
being taken now. I referred earlier to what is being done on CHP
and the fact that DEFRA is about to publish a consultation report
on that. We have the renewables obligation to help us achieve
that goal of 10 per cent from renewables. We are working as hard
as we can with industry to get the whole photovoltaics market
going. We are working on the offshore wind farm developments,
the 18 that your colleague referred to earlier on. So we have
a strategy in place and we are working to refine that, for instance,
in relation to CHP in order to achieve the 2010 renewables target.
The issue for the PIU is, in relation to renewables, how much
more contribution can renewables make in the context of that much
longer timescale. And I think on that issue we will really need
to come back to it after we have had the PIU report.
59. Can I ask one last question, about the 2010
target then. We have asked this question in Committee before,
of other Ministers, and we will ask it again now to see if you
can help us some more. How do you understand the relative contribution
to the various devolved organisations adding to the total sum,
in order to meet the 10 per cent target?
(Ms Hewitt) We are working with our colleagues in
the devolved administration to ensure that we do meet that 10
per cent target, and we have, for instance, of course, the first
commercial, it is small but first commercial wave power station
on the island of Islay, which my colleague, Brian Wilson, recently
visited. So we are working with colleagues to achieve the target,
but within the very clear context that we are all signed up to
that UK-wide target.