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House of Commons

Thursday 8 June 2006

The House met at half-past Ten o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions

Trade and Industry

The Secretary of State was asked—

Postal Services

1. Mr. Alistair Carmichael (Orkney and Shetland) (LD): What recent discussions he has had with ministerial colleagues on the future of the Royal Mail and Post Office in Scotland. [75718]

The Parliamentary Under-Secretary of State for Trade and Industry (Jim Fitzpatrick): Good morning, Mr. Speaker. DTI Ministers and officials have regular discussions with other Government Department colleagues on matters relating to Royal Mail and the Post Office network.

The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Brent, North (Barry Gardiner), who was previously Under-Secretary at the DTI with responsibility for postal services, met Ross Finnie, Minister for Environment and Rural Development at the Scottish Executive, on 6 March to discuss a range of issues relating to post offices.

Mr. Carmichael: I thank the Minister for that answer. Will he and his ministerial colleagues encourage the chief executive of Postcomm to engage better with communities on the future of Royal Mail and the Post Office? I recently wrote to her inviting her to attend a function in my constituency to discuss the future of postal services, and she told me that she felt that she could learn all that she needed to know by holding seminars in Edinburgh, Perth and Dundee. We in the Isles have some difficulty with that attitude, because there is genuine concern about the issue and people want to engage in the debate. We need better responses from Postcomm than that.

Jim Fitzpatrick: I hear what the hon. Gentleman says and I know that he will have a seminar in Orkney in due course. My understanding is that the head of the rural network in Scotland for Post Office Ltd will attend the Orkney seminar, and that it will also be represented at the Shetland event. The Department is keen to do what it can to maintain a sustainable network. We have
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committed £2 billion to Post Office Ltd, including £750 million up to 2008 to support the rural network in particular. We will be very interested in the outcome of his seminar.

Mr. Brian H. Donohoe (Central Ayrshire) (Lab): The Minister may not know that the post office in Irvine in my constituency, which serves some 30,000 people, is to be franchised. One of my reservations about that proposal is that the franchise will include licensed premises. Many elderly people in the area are opposed to that concept and fear the whole idea. It is also almost bizarre that staff have only recently undergone a training programme to help to widen the scope of the business of the Crown post office, which will now be of no use whatsoever.

Jim Fitzpatrick: I can understand my hon. Friend’s concern, although I have to confess that I did not know about that initiative until he mentioned it to me earlier. The Post Office has to look at modern ways of working, and franchising works in other parts of the country. Having conducted a £25 million pilot to determine modern ways of providing services, we will examine closely anything that has a positive effect on the sustainability of the service. I am happy to hear more from my hon. Friend on the issue. If he drops me a line, I will look further into the initiative that he mentions.

Mr. Mike Weir (Angus) (SNP): Does the Minister understand the fear in rural areas of Scotland when Adam Crozier, the chief executive of Royal Mail, talks about a “radical transformation” of the network as a result of the collapse in Government work, such as benefits payments? In the recent deal between the Government and the Royal Mail, it was made clear that

Who will take decisions on the future of the post office network? Will it be Royal Mail or the Government, depending on the amount of money that they put in?

Jim Fitzpatrick: I hear what the hon. Gentleman says about the lack of Government support, and I hope that I have rebutted that by demonstrating the £750 million that we have committed to the rural network in particular. It is not the Government’s fault that people are not choosing to use the post office. Habits are changing and the internet is available: there are many reasons why people are not using the post offices —[ Interruption. ] Some 1,200 post offices have fewer than 60 customer visits a week and 800 have fewer than 20. The issue of sustainability has to be addressed, and I will be happy to engage with the hon. Gentleman in due course in respect of his local post offices.

Energy Review

2. Mr. Andrew Mackay (Bracknell) (Con): When he will announce the findings of the energy review. [75719]

3. Peter Luff (Mid-Worcestershire) (Con): If he will make a statement on the progress of the energy review. [75720]

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The Secretary of State for Trade and Industry (Mr. Alistair Darling): The Government published a consultation document on 23 January this year inviting responses on energy policy issues. We expect to report to the House before the summer recess.

Mr. Mackay: The Secretary of State is aware that energy supplies were very tight last winter and are likely to be even tighter over the next couple of years. What is he doing to ensure that the lights stay on next winter?

Mr. Darling: The right hon. Gentleman is right: energy supplies were tight last winter, and they are likely to be tight again this winter. We expect a pipeline bringing gas from Norway to come online, and that will help, as will an expansion of the capacity to bring gas across from Belgium. We will also have the Rough storage facility back, but there is no doubt that we will have to take various steps over the next few months to ensure that we can get through the coming winter. That is all the more reason why we should take realistic action to ensure that we safeguard the security of our energy supplies, this winter and in the years to come.

Peter Luff: We urgently need investment in new generating capacity, but the single most important issue that the review must resolve is the development of a long-term mechanism for the pricing allocation of carbon. The current emissions trading scheme is welcome, but it does not give investors the confidence that they need to make very large investments. How confident is the Secretary of State that it will be possible to negotiate a mechanism that will apply for, say, 20 years? If that cannot be done internationally, what freedom of manoeuvre does he have domestically to develop a system that will bring forward that investment?

Mr. Darling: Again, the hon. Gentleman is right. The industry must have certainty, as many investment decisions will have to be taken over the next few years and the price of carbon will be one of the elements determining those decisions. As the House would expect, the Government have been actively engaged with our European partners. I attended a meeting in Brussels on Friday, at which we discussed the ETS and emphasised the need to fix a carbon price over a long period. That is very important, as the industry needs that certainty before it takes the decisions that we need it to take in respect of the provision of power supply in the future.

Miss Anne Begg (Aberdeen, South) (Lab): In all the discussions about the energy review, will my right hon. Friend assure me that he will not get bogged down in the nuclear debate? The oil and gas industry still has a long-term future: Cogent, the sector skills council, has an oil and gas training arm called OPITO that is encouraging young people to go into the industry to fill existing skills shortages and gaps. It is seeking to convince them that the industry has a future and that they will still have jobs in 20, 30 or 40 years.

Mr. Darling: My hon. Friend is right that nuclear is only one element of our energy supply. It makes up 19 per cent. of our provision, and we need to consider the totality. I have said on many occasions—and I repeated the point when I was last in Aberdeen—that a lot of oil and gas remains in the North sea and that there is a lot of work there. The industry employs many
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people, and provides many highly skilled and good jobs. I certainly agree that we ought to be encouraging people, in the north-east of Scotland and across the whole country, to consider a career in the oil and gas industry. It has a very good future, and it is an industry that we want to encourage.

Helen Goodman (Bishop Auckland) (Lab): Obviously, one part of the energy review will consider measures to reduce demand. In an important speech earlier this week, my right hon. Friend floated the idea of changing the role of electricity producers to suppliers of total services. How quickly might that happen, and what impact will it have on reducing demand?

Mr. Darling: My hon. Friend is right that we must reduce the demand for energy. A central question in the energy review is how we as a nation can reduce the amount of energy that we consume, and a successful resolution of that question could mean that we would not need as many new power stations as might otherwise be the case. Earlier this week, I set out my belief that we need to consider how we can incentivise energy supply companies to deliver ways in which demand might be reduced—such as through the use of insulation, smart metering or other technology, for example. That approach is radically different from the way in which companies at present are incentivised to sell as much heat and light as they can, albeit in a way that causes prices to be driven down. The process will therefore take some time, but the industry is willing to discuss it and it will be a central part of the review when we report in a few weeks.

Mr. Tobias Ellwood (Bournemouth, East) (Con): In his reply to my right hon. Friend the Member for Bracknell (Mr. Mackay), the Secretary of State talked about gas distribution but failed to cover the price rises that were the real problem for people last winter. To a large extent, those rises were caused by the continued absence of the common gas market that Britain was supposed to pursue during our EU presidency. Will the right hon. Gentleman indicate whether we are going to go down that road, and whether it will be included in the energy review?

Mr. Darling: The right hon. Member for Bracknell asked me about distribution, which is why I answered the question as I did. The hon. Member for Bournemouth, East (Mr. Ellwood) is right that there is considerable concern about recent price rises. During the course of our presidency, we asked the Competition Commissioner to do everything possible to ensure a far more open and transparent market. The hon. Gentleman will doubtless have seen that over the past few weeks the Competition Commissioner has served notice that she will enforce the current rules and regulations. Recently, there have been raids on some electricity companies in different parts of Europe and I hope that, right across Europe, people are getting the message that if we believe in a genuine open market, everyone has to play by the rules so that we can see exactly what the prices are and exactly how much gas there is. That is essential if we are to bring down prices and we fully support everything that the Competition Commissioner is doing.

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Colin Challen (Morley and Rothwell) (Lab): Will the energy review have anything to say about providing more information to energy consumers? If we buy a tin of beans and can see how many calories are in it and every other food product has similar labelling, why cannot we see from our fuel bills how much CO2 we are emitting as a result of our consumption?

Mr. Darling: I agree that we should provide far more information on our fuel bills—not just about how much CO2 is emitted. It would also be useful to make comparisons so that consumers can see how much electricity or gas they consumed this quarter as opposed to the previous quarter. Smart metering would mean that people could see exactly how much electricity they were consuming and how much they were paying for it at any time. A range of measures can be adopted to help reduce the demand for energy, which has to be a good thing.

Mr. Alan Duncan (Rutland and Melton) (Con): Only last week, I visited three intensive gas users in Yorkshire and found that the price that they have to pay for their gas is far higher than they would pay for the same gas in France or Germany. The punitive and unfair premium on their costs is destroying some UK companies and is undermining UK competitiveness. Further to what my hon. Friend the Member for Bournemouth, East (Mr. Ellwood) asked a few moments ago, when does the Secretary of State believe that the EU will have resolved its illiberal and selfish practices, which are currently protecting its own companies and severely disadvantaging ours?

Mr. Darling: As I said to the hon. Member for Bournemouth, East (Mr. Ellwood) a few moments ago, the Competition Commissioner is taking action. One problem is that, historically, companies in this country have bought electricity on a short-term basis whereas many of our European competitors have entered into long-term contracts. As I have said, it is important that markets operate openly, and part of the reason the price is so high is the uncertainty in the market, which needs to be resolved as quickly as possible.

Mr. Duncan: One of the main ways of resolving the exposure that intensive gas users face is to see just such an increase in long-term pricing contracts, but Ministers have been foolish enough in the past to recommend that companies forsake such contracts and buy on the spot market instead, which is rather like the Chancellor selling our gold. What prospect does the Secretary of State see for the creation of new and better contracts that can alleviate the volatility that industrial users of gas face in Britain today?

Mr. Darling: It is not for the Government to tell energy consumers how they should conduct their business; it is for companies to use their own business judgment. It might be useful to remind the House, if hon. Members are not already aware of it, that we set up a joint forum between Government and business to discuss some of these issues, but the main thing is to ensure that the energy market actually works.

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Mr. Dennis Skinner (Bolsover) (Lab): We heard on the radio this morning that there are large supplies of North sea oil and gas, and large supplies of coal sweeping out to the North sea and eastern England and large supplies in Scotland and Wales. The key to ensuring that we have more coal as part of the energy review is not to rely on foreign sources, but to ensure that we keep the continuity of the mining industry. That is vital if we are to exploit the reserves that still remain.

Mr. Darling: My hon. Friend is right that coal is a very important part of the energy mix in this country at the moment. Coal provides a significant degree of our security and supply. I can assure my hon. Friend that coal will be one of many aspects that will be covered in the energy review.

Mr. Edward Davey (Kingston and Surbiton) (LD): Will the Secretary of State confirm that the Chancellor’s latest estimate of the cost of nuclear decommissioning is about £90 billion—almost double the Government’s estimate fewer than 12 months ago? When he announces whether the Government are to opt for nuclear power, how confident is he that estimates of future decommissioning will be accurate in any shape or form?

Mr. Darling: We must do our best to ensure that whatever estimates we have are as accurate as possible. Of course, we have the question of waste to deal with now, no matter what we decide in relation to the future. That is something on which we will get the advice of the energy review that is due to report in the summer. The hon. Gentleman is right: nuclear waste is one aspect that needs to be looked at. Nuclear has provided us with a base load supply of electricity. It represents about 19 per cent. of electricity generation at the moment. If we do not do anything, that will go down to 6 or 7 per cent. in the next 20 years or so, so it needs to be considered. We cannot simply turn our back on it, as I think—I may be wrong on this—the Liberal Democrats believe we should.

Mr. Denis MacShane (Rotherham) (Lab): In theory, open markets are meant to reduce prices, but according to the Heren report—the international report on electricity prices for the steel industry—the price for the UK steel industry is £52.58 per megawatt hour for this year compared with €52.70 for the same megawatt hour for the same period in Germany. In other words, British steel makers have to pay the same price in pounds as their German competitors pay in euros. Will the Secretary of State write to me so that I can pass his letter to steel makers in Rotherham and explain why British electricity for industry is so expensive?

Mr. Darling: I will certainly write to my right hon. Friend. For the past eight or nine years, British industry has benefited from lower electricity prices. In the past year or so, prices have gone up dramatically for the reasons that we have discussed in the past five or 10 minutes. There is no doubt that some of the uncertainty generated by the lack of transparency in European markets has added an extra element to that price. We will continue the work that we started last year, and additional capacity should be available to us.
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We will continue to support the European Commissioner in her efforts to achieve a more open and transparent market. All those things will help.

The other thing that we have to get right is the long-term solution. There are no easy solutions, but I hope that when we report to the House in July, we will have a constructive engagement with all parties in the House to achieve a long-term solution to this problem.

Ministerial Meetings

4. Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): When he last met the Chancellor of the Exchequer to discuss UK trade with major developing nations. [75721]

The Secretary of State for Trade and Industry (Mr. Alistair Darling): I am in regular contact with my right hon. Friend the Chancellor of the Exchequer on a range of issues. UK trade with major developing nations is an important way to lift millions out of poverty.

Mr. Crabb: I thank the Secretary of State for that reply. As he knows, in this year’s Budget speech the Chancellor announced plans for expanding trade with major developing countries and specifically to set new targets for expanding trade with countries such as China and India. When are those targets likely to appear, and who is responsible for setting them? As he knows, there is significant concern in the export community that the UK has not been capturing anything like a large enough share of the huge increase in international trade that countries such as India have seen in recent years.

Mr. Darling: The targets will be announced in due course. The hon. Gentleman makes a fair point. We need to do more to encourage trade between British companies and China and India and Chinese and Indian companies trading here. We should not overlook the fact that there has been considerable success in the past, but we need to do a lot more. They are important markets to this country, and we want to do everything we can to encourage that trade. My right hon. Friend the Chancellor put in place various ways in which we can encourage that trade and explore things that we can perhaps do better than we have done in the past.

Ann McKechin (Glasgow, North) (Lab): I recently took part in discussions through the parliamentary network of the Royal Bank of Scotland with parliamentarians from both the Asian subcontinent and Africa. They expressed their anger and frustration at the EU position in the current World Trade Organisation negotiations on agriculture. Given the Chancellor’s warnings yesterday about the dangers of protectionism, does my right hon. Friend agree that if it is right to liberalise agriculture markets, we should not make it conditional on concessions from developing countries at the WTO talks?

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