| Previous Section | Index | Home Page |
Charles Hendry (Wealden) (Con): We have had an excellent debate, but it is a tragedy that we had far too little time for it. It is sad that we were confined to three hours. The debate provided plenty of heat, power and light and I am sorry that we were deprived of outstanding speeches by my hon. Friends the Members for Wellingborough (Mr. Bone) and for Broxbourne (Mr. Walker) and the hon. Members for Aberdeen, North (Mr. Doran), for Southampton, Test (Dr. Whitehead), for Stoke-on-Trent, North (Joan Walley) and for Copeland (Mr. Reed).
The debate began with a speech by the Secretary of State, which he made in his normal balanced and reasonable manner. If he were not a politician, he would make a great country GP, able to tell people difficult things in a way that made them sound pleasant. He started by saying that this country was in a strong position. That must have been the press release, because when we got to the detail, he started to admit the genuine position: we are failing to meet our targets on renewables, and he is concerned about the extent to which reserves have declined. He admitted that prices have been rising through the roof, accepted that, nuclear power provision will be largely out of action in 20 years and made a gloomy assessment of the geopolitical challenges that confront us.
12 Jan 2006 : Column 529
The Opposition welcome the Secretary of State's commitment to introduce legislation to create new offshore gas storage facilities. We support that in principle and I urge the Minister for Energy to say in his winding-up speech that it will be introduced as quickly as possible.
The extent of the Secretary of State's lack of concern about our increasing reliance on imported energy was worrying. My hon. Friend the Member for Rutland and Melton (Mr. Duncan) said in his opening comments that, by 2020, 60 per cent. of electricity generation in this country would come from gas and that 80 per cent. of that could be imported. That means that half our electricity supply would depend on imported gas. I find that worrying.
The need for diversity ran through the debate and my hon. Friend the Member for Mid-Worcestershire (Peter Luff), who chairs the Select Committee, admirably set out the choices for that diversity. Everyone agrees about the need for it, but no one agrees about the exact balance.
Mr. Charles Walker (Broxbourne) (Con): To make use of the last line of my speech, does my hon. Friend agree that we need a diverse energy supply that is based on a robust and resilient domestic capability?
Charles Hendry: If that was the last line, it is a shame that we did not hear the rest. I agree that we need to ensure that we have diversity and that we must also build on our inherent strengths.
The hon. Member for Barnsley, Central (Mr. Illsley) put the case for coal eloquently.
Mr. Andrew Smith (Oxford, East) (Lab): Will the hon. Gentleman give way?
Charles Hendry: Although the right hon. Gentleman has been present throughout our proceedings, I shall not give way because our time is so limited.
The case for coal was also made in an excellent speech by the hon. Member for Barnsley, West and Penistone (Mr. Clapham) and by the hon. Member for Elmet (Colin Burgon). The case for nuclear power was eloquently and passionately put by my right hon. Friend the Member for Fylde (Mr. Jack), my hon. Friends the Members for Grantham and Stamford (Mr. Davies) and for Croydon, South (Richard Ottaway) and the hon. Member for Glasgow, North-West (John Robertson). The case against it was equally eloquently and passionately made by the hon. Member for Lewisham, Deptford (Joan Ruddock). The Liberal Democrats popped in to say that they wanted lots of research into nuclear power but, having done the research, they would do nothing about it.
There is a need for urgent decisions to avoid a crisis. The hon. Member for Barnsley, Central made the case for that clearly. He quoted from the White Paper of three years ago and said that we have known about the problems for a long time, but, three years on, we are still talking. He also expressed his concern at what he saw as an anti-coal DTI. I want to assure him that, as we consider the energy review, we will welcome representations from him and his colleagues about the
12 Jan 2006 : Column 530
case for coal, because we are genuinely open-minded on the issue, especially as we are now considering exciting new technologies such as clean coal and co-generation.
Mr. Peter Bone (Wellingborough) (Con): Will my hon. Friend give way?
Charles Hendry: I will in a moment.
My other concern is the extent of the Government's complacency on these matters, and I think that my hon. Friend the Member for Wellingborough might wish to touch on that issue as well.
Mr. Bone: Ofgem has told the Trade and Industry Committee that the forward electricity price in Europe is €50 per megawatt-hour, whereas it is €80 in the UK. Does my hon. Friend think that the European Union is letting us down?
Charles Hendry: There is clearly a tremendous difference between energy prices in this country and elsewhere in Europe, and the Government missed the opportunity to do more to address that issue during our presidency of the European Union last year. Domestic and business customers are hurting now. Domestic prices have risen by 14 per cent. in just one year. Domestic electricity prices are 27 per cent. higher than they were in 2003, which is adding £51 a year to the average domestic electricity bill. Gas prices are 40 per cent. higher than they were three years ago, adding £111 a year to the average domestic gas bill. A survey by the Engineering Employers Federation found that gas was 47 per cent. more expensive, and electricity 34 per cent. more expensive, for energy users than a year ago. Those increases are having serious consequences for businesses, particularly those in the manufacturing industry.
Towards the end of last year, Michael Ankers, the chief executive of the Construction Products Association, wrote to the Secretary of State for Trade and Industry. In pointing out the consequences of these price increases, he said:
"Over the last week alone one company with a turnover of £3.5 million saw their gas cost increase by £400,000."
"The problem facing industry is here and now, and what is really alarming is to learn that the country is 'awash with gas'—as Energy Minister Malcolm Wicks told the Commons last week—at a time when prices have reached the levels they have. One can only conclude from this that gas supply is being deliberately restricted to keep prices high, and this suspicion is reinforced by the news that the inter-connector pipeline between Britain and the continent is only running at 65–75 per cent. capacity despite the enormous price discrepancy with countries in Europe."
Businesses are hurting as we speak.
A further aspect of the Government's complacency is that they have put off the big decisions that need to be made. By 2015, coal-fired power stations currently producing 13 GW of electricity will be obliged to close. The closure of nuclear power stations will remove a further 8 GW of capacity. In 10 years' time—taking into account a projected increase in demand of 40 per cent. of our present capacity—some 32 GW of capacity will have been closed. To avoid shortages in 10 years' time, we need new projects every year that will produce 5 GW of capacity, yet not a single large project was started last
12 Jan 2006 : Column 531
year. Will the Minister tell us what his predictions are for the years ahead, and how many new large projects are in the pipeline?
The Minister also needs to tell us what the Government are going to do, in concrete terms, to make the EU co-operate more widely. Ofgem has said that there are serious malfunctions in the energy practices of other European countries, and this is costing the United Kingdom £10 billion a year in higher charges. Why are the Government not doing more to address this? And why is energy so much more expensive here than elsewhere in the EU? We remain the largest gas producer in the EU, and we have fully liberalised markets, yet we still pay so much more.
Why is our storage capacity so low? This clearly poses a threat to the continuity of supply. We have gas storage capacity for just 11 days, compared with the EU average of 55 days. How many large new projects does the Minister expect to start in the coming years?
The Government are right to initiate an energy review to examine how we shall meet our long-term energy needs, meet out environmental goals, and reduce our reliance on imported sources of energy. We agree with all that, and we shall work with the Government to get the right long-term answers. The problems are here and now, however. Domestic customers and businesses are hurting—they have been hurting for months, and all that they have heard from the Government are complacent platitudes that we are awash with gas and that there is no structural problem. Until today, the House has been denied the chance to debate such issues.
My final plea to the Minister is that he must involve the country. He should not restrict the review to experts in the DTI, industry and academia. There is huge expertise in the House, as we have heard today, and huge enthusiasm in the country at large to be involved in the debate. We will manage to get energy conservation only if the public buy into it. Above all, we need them to buy into the solutions put forward in the energy review. It is a great tragedy that the debate has been so curtailed, but the Minister has many answers that we look forward to hearing.
5.50 pm
| Next Section | Index | Home Page |