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Peter Luff (Mid-Worcestershire) (Con): There will be a degree of scepticism about the Minister's claims about relative prices in Europe and the UK, but leaving that on one side, he has rightly highlighted, in answer to the question from the Liberal Democrats, the importance of the single European market in energy. When he came before the Trade and Industry Committee a few weeks ago, the Minister said that that was the highest priority, but there is not much sign of progress yet. He speaks about forcing compliance on other countries when he chairs the meeting next week. How does he intend to do that? Does he think that there is a realistic chance of making a breakthrough in those crucial negotiations? The market is determined by Governments, and the British Government have a golden opportunity to help resolve it.
Malcolm Wicks: There has been progress. The market has been the major focus during our presidency. The Energy Council does not meet till next week. Meanwhile, with our strong approval, the Commission has published two major evidence-based hard-hitting reports. Commissioner Piebalgs, whom I met earlier this week, is as enthusiastic as I am to drive the matter forward. I believe we will see real action on it. The hon. Gentleman expressed some doubts about prices. Whenever these issues are raised, I try to produce evidencean old-fashioned hankering after the facts. I hope that might become more fashionable on the Opposition Benches. I have given the House some evidence already. Let me also sayI am surprised that the party of the market is not parading this more than Ithat between 1990 and 2004, British industry paid an estimated £7.9 billion less than German industry for gas. Those are the facts, as opposed to the nonsense and the scaremongering.
Paul Farrelly (Newcastle-under-Lyme) (Lab): The Minister rightly refutes the suggestion that he has been in touch with industry only over the past few weeks. I know that he has met high intensive users, including the pottery industry, throughout the year, and they have told me they are grateful that the Government are listening. None the less, there is great concern about gas prices in particular. What can my hon. Friend do to assure the industry, including ceramics, about the prices that it will have to pay not only in the months ahead, but next year and in the future?
We have touched on some of that in relation to the importance of market liberalisation. The dialogue with the industry which, as my hon. Friend acknowledges, and I thank him for that, has been going on for a very long time at both ministerial and official level, is part of that process. One body of evidence to bring to bear on the debate at this stage is that there is
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now a great deal of investment in new infrastructure. I opened the Isle of Grain terminal yesterday, and I am told that the next ship will arrive today with liquefied natural gas. The Langeled pipeline to Norway is being built. There are many, many other projects, including upgrades of the interconnector, which will mean that in terms of the infrastructure of terminals, LNG and pipelines, we will have capacity for some 26 per cent. more gas in a year or so than we currently have. So the infrastructure and the investment by the private market are there.
Mr. Mike Weir (Angus) (SNP): The Minister will understand that we in Scotland find it extraordinary that there is a gas shortage and rocketing prices, when we produce eight times the amount that we consumeindeed, we land at St. Fergus alone six times what we consume. He mentioned infrastructure, but does he accept that much of the problem in the UK as a whole with supply and rising spot prices is due to the lack of investment in the pipeline system over many years, leading to a lack of flexibility and capacity for storage to meet periods of exceptional demand? He spoke about improvements in infrastructure, but when can we go back to manufacturers in our constituencies and tell them that there is no chance of interrupted gas supplies in the future?
Malcolm Wicks: I am glad that the hon. Gentleman acknowledges the strong partnership between Scotland and the rest of the United Kingdom. I have mentioned the investment that is now taking place, which should make an impact on the price issues. I repeat that for most of the economy, certainly for the domestic customer, the spot gas prices are not the relevant feature; they are for those companies who are the intensive users, using gas as the feedstuff for chemicals and other materials, who have chosen freely, as part of the private market, to sign such contracts, which often enable them to reduce their own demand at difficult times. But I hope that, with the extra supply of gas and more generally with the announcements that we have recently made about connecting up the Scottish islands to the national grid in terms of wind power, the situation will steadily improve. I expect it to.
Mr. Michael Jack (Fylde) (Con): The Minister may have heard on the radio this morning the director of the interconnector saying that 30 per cent. of his capacity was not being used due to structural problems in the German gas market that were inhibiting our ability to obtain supplies. What does the hard-hitting report in the Energy Council to which he has just referred say that Germany should do and when should they do it by? Will he ensure that the matter is on the Prime Minister's agenda when he meets the new German Chancellor to ensure that we have some action on this by the end of the year?
The Prime Minister has recently talked about energy and energy strategy as an important component of the European debate, so he needs no reminding about the importance of that. I have acknowledged and talked about what needs to be done in terms of ensuring fair competition across Europe. We believe that liberalisationan end to monopoliesis
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not only good for the UK consumer, but, critically, is also important for the German consumer, business and domestic, as well as elsewhere in Europe. That is why we are driving this forward.
One has to keep reminding the House that the interconnector is a matter for private enterprise; it was built not by the state or the EU, but by entrepreneurs with their money so they make the decisions about it. Nevertheless, I am advised that on a daily basis at the momentthese are bound to be average figures that will vary from day to daysome 25 to 30 million cu m of gas are flowing through the interconnector to Great Britain.
Mr. Crispin Blunt (Reigate) (Con): The Government have no excuse for complaining about the state of the European market. Three years ago at the Energy Council there was a qualified majority in favour of imposing on France and Germany a liberalised market in gas and electricity by 2005. Mr. Brian Wilson, the Minister's predecessor, chose not to press the issue and to do a deal with the French and the Germans that has led to the compromise that means that now there is not a liberalised market in Europe, which is causing us precisely the problems that we are now experiencing with the Germans being able to withhold supplies to the United Kingdom through the interconnector. Equally, the Government failed to take decisions in the Energy White Paper, and now we are to have an energy review by the Prime Minister. Will the Government understand that they must face up to their responsibilities to take decisions in a timely fashion and not go on putting off difficult decisions because of the presentational problems?
Malcolm Wicks: I do not understand the reference to presentational problems, because the issue is top of the Energy Council agenda next week. We have put it there and we have consistently[Interruption.]
We have significantly pushed the issue within the EU. I have described the two new reports as hard hitting. The hon. Gentleman may want to read them one day. They are hard hitting. We need to push the matter through during our presidency, and after that. We do believe in market liberalisation; it is good for European business and good for British business.
Mr. Peter Bone (Wellingborough) (Con): In evidence before the Trade and Industry Committee, we were told that wholesale gas prices in the United Kingdom were more than 50 per cent. higher than in the EU. When will the Government fight for a level playing field in the EU on the matter, or have they given up totally on the EU?
We are committed to the EU. Following my appearance before the Select Committee, we sent it some statistical evidence. I repeat that, when one looks at the record over 10 or more years and the data today, our gas prices, both for domestic customers and the business community, are lower than the median. The hon. Member for Wellingborough (Mr. Bone)
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shakes his head. I can present him with the evidence; I cannot make him understand it. I have acknowledgedit is an important acknowledgementthat those heavy users choosing to buy on the spot market are having to pay very high prices, and we are doing our best to look at that and improve the situation. The market is through great investment.
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