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8 Jan 2008 : Column 20WH—continued

10.46 am

The Minister for Energy (Malcolm Wicks): It is a pleasure to serve under your chairmanship, Sir Nicholas, and to have listened to the debate. The debate is not only important, but topical for our constituents. I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) on the way in which he introduced it—not only for form’s sake, but sincerely. We heard important contributions from my right hon. Friends the Members for Islwyn (Mr. Touhig) and for Coatbridge, Chryston and Bellshill (Mr. Clarke)—the latter takes a strong interest in such social matters—and from my hon. Friends the Members for Southampton, Test (Dr. Whitehead) and for Selby (Mr. Grogan), who demonstrated a great deal of expertise.

I welcome the hon. Member for Northavon (Steve Webb) to his role of Liberal environment and energy spokesperson. He is a colleague who has a great deal of expertise. We worked together on pensions some two and a half years ago—I rather hoped that I had shaken him off but that turns out not to be the case. We also heard an interesting speech from the Conservative spokesman, the hon. Member for Wealden (Charles Hendry). It was interesting, of course, because of the history of the matter—I do not have half a degree in history, so I do not bring the 50 per cent. of expertise that my hon. Friend the Member for Selby brought. The Government inherited from the Conservative party a massive amount of fuel poverty, which the hon. Member for Wealden did not acknowledge. Of course, we inherited a social security system whereby, following those years of a Conservative Government, it was felt proper that elderly women living alone could live on as small an amount as £69 a week under the income support system. Given that record, I listened to the hon. Gentleman with interest but also, if I may say so, a certain amount of cynicism.

Tackling what we now call fuel poverty involves a range of issues. We are talking about the impact of poverty and low incomes, energy-inefficient housing, cold housing and, especially at the moment, rising energy costs. Tackling those problems is a significant priority of the Government. We have set challenging targets and we remain committed to maintaining and strengthening the framework to help us to reach our 2010 target in England and, beyond that, to reach our ultimate goal of eradicating fuel poverty altogether in the whole of the United Kingdom by 2016 to 2018.

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I shall say something about what the Government have achieved, which was acknowledged by colleagues, how the issue stands at present, and what we need to do in future. Since 1996, more than 4 million households in the UK have been removed from fuel poverty. Some £20 billion has been spent on fuel poverty benefits and related programmes. The Government introduced the winter fuel payment, which has helped some 11.7 million people, the importance of which was acknowledged by hon. Members. I am always struck when I talk to older people by the comfort that that £200 or £300 brings just before Christmas to many who are worrying about fuel bills and costs at that time of year. If counted against fuel bills, the winter fuel payment is estimated to have removed a further 1 million households from fuel poverty in the UK.

In addition, we have assisted more than 2 million households in the UK through energy efficiency measures of different types. I certainly agree with colleagues when they stress the importance of energy efficiency measures in housing—in both new build and the existing stock. I think that that is the key to tackling this issue, and doing so in a way that is in full accord with our climate change objectives.

The hon. Member for Wealden is right. I have to say to him that even in opposition one cannot have it both ways. Of course programmes such as the renewables obligation increase costs. That is inevitable and it puts pressure on the fuel poverty issue, but we need some consistency here. Surely such climate change measures are important.

Let us recognise that millions of homes have been lifted out of fuel poverty, but now, because fuel bills are increasing—much of the debate has focused on that increase—the number of people in fuel poverty is also increasing. It is important to recognise the context, although, to be fair, the hon. Gentleman did so. Wholesale energy costs are rising across the world because of global demand. A great global grab for energy is going on, not least in emerging economies such as China and India. Since January 2007, crude oil prices have increased by some 80 per cent. Gas forward prices have increased by 50 per cent. and, in north-west Europe, coal prices have increased by 85 per cent. There can be no getting away from the fact that those increases are bound to have an impact on domestic prices. However, it is important that we ensure that the supply companies are playing fair by customers, particularly the most vulnerable ones.

It is therefore altogether appropriate that my right hon. Friend the Chancellor of the Exchequer has written to the regulator, Sir John Mogg, the chairman of Ofgem, to ask for his assessment of the association at present between wholesale and domestic prices. I think that that is an important initiative because I am aware of the allegations—I think that they remain only allegations—that supply companies are not playing fair. We need to assess that very carefully. Colleagues have made points today that are very important to our constituents.

The recent announcement on the next comprehensive spending review period of 2008 to 2011 showed the Government’s continued commitment in the area of fuel poverty. Warm Front is the Government’s main scheme to tackle fuel poverty in England—there are related schemes in the other nations of the UK—providing grants for energy efficiency and heating measures to some of our most vulnerable households, not just the
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elderly. Funding for Warm Front will be just over £800 million for the period between 2008 and 2011. That is significant further investment in addition to some £1.6 billion that the Government have committed to date. Warm Front now offers a benefit entitlement check to all eligible households, increasing income on average by £26 a week and £1,300 annually.

We have been examining very carefully what data we can share with supply companies to maximise take-up—that is a familiar theme for some of us. Because of data protection issues, we have decided that we cannot legislate in this area. We will discuss the issue when we consider the energy Bill, particularly in Committee, but the Department for Work and Pensions is keen to help us on this matter so that we can reach the most vulnerable. That will be a feature of the discussion on the energy Bill.

In addition, new proposals laid before Parliament at the end of last year in the form of a carbon emissions reduction target—the successor to the energy efficiency commitment—mean that the major energy suppliers will be obliged to meet carbon reduction targets that will lead to investment of about £1.5 billion over the next three years to install better insulation and improve heating systems. A wide range of other measures will improve efficiency and increase comfort for many of our constituents. The measures will have a particular focus on priority groups such as older people, people on low incomes and those with disabilities. That will double what energy suppliers currently have to do to improve the energy efficiency of their customers’ homes, and much of that effort will help people who are most at risk of fuel poverty. That means that the total help available for energy efficiency for the priority group will rise by £680 million, compared with the previous spending period, to about £2.3 billion.

I take on board—of course I do; it was our proposal—the need to move to the concept of the energy services company that helps all households, whether better-off or worse-off, to reduce their energy demand. That is the revolution that we need to bring about in the future and I am very committed to that.

David Taylor: Will the Minister give way?

Malcolm Wicks: I should not, but I will, as it is my hon. Friend.

David Taylor: I am grateful. The Minister acknowledges the importance of providing ways in which low-income households can reduce their energy commitment. Is not one way of doing that to accelerate the implementation of smart metering? That gives real-time information and is the subject of the look smart campaign, which is supported by the Energy Retail Association, Energywatch and Utility Week magazine. I know that he is aware of that.

Malcolm Wicks: I certainly recognise that my hon. Friend is, as usual, three or four pages ahead of me. I want to mention the issue to which he refers. The development of smart metering is very important, allied to other measures to put an emphasis on educating all of us, as householders, about the importance of these things.

Understandably, much has been made of payment differentials and the problem for prepayment customers.
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That is a more complex area than it appears at first sight, because when we examine the data and the empirical evidence, we see that most poor people—easily the most—are not on prepayment meters. My brief tells me that only 5 per cent. of elderly people are on prepayment meters, so let us not be simplistic about the issue, because if we exert pressure to help the prepayment meter customer, that will be, in part, at the expense of other customers, many of whom are on low incomes.

That said, I share the concern that the differential is now far too great. I have myself put pressure on the company chairmen to examine the issue—I have written to them. I am pleased that EDF and Scottish and Southern have equalised their standard credit and prepayment prices for electricity, while Scottish Power offers prepayment customers a lower price for both fuels than that paid by standard credit customers. We are seeing movement in what I judge to be the right direction, but this is a debate that I am very much engaged in now with the supply companies.

We will continue to work with Ofgem to make it easier for customers to switch suppliers. A great deal of switching is going on. If people are concerned that they are being charged too much, considering switching is very important, but I think that I know enough about this subject to recognise that switching is easier said than done for some of the most vulnerable people, particularly if there is a record of debt payments. I want to discuss that matter further.

I have met the chief executives of all the supply companies to talk about social tariffs. As a result of those discussions, energy suppliers have come forward with significant new investment of about £16 million, and I hope that that will be only the start of the story.

We have had an important debate about this matter of great concern. I am proud of our record in government, but I am very concerned now about the impact of price increases on some of the most vulnerable, and I am absolutely determined that we make progress as soon as possible on this important issue on our social policy and energy policy agenda.

Sir Nicholas Winterton (in the Chair): The House thanks the Minister for his reply, and I congratulate hon. Members on the excellent debate that we have had on this important issue.

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Nitrate Vulnerable Zones

11 am

Mr. Philip Dunne (Ludlow) (Con): It is a great pleasure, as always, to serve under your chairmanship, Sir Nicholas. I am grateful for the opportunity to raise this issue, which relates to amendments that the Government will introduce shortly to the regulations governing nitrate vulnerable zones. Those amendments could cause significant harm to this country’s agricultural economy, particularly in certain sectors that are least well equipped to cope with the increased regulatory burden proposed by the Department for Environment, Food and Rural Affairs. I should remind you, Sir Nicholas, and the House of my entry in the Register of Members’ Interests.

The Government’s proposals for those sectors affected are potentially extremely significant, particularly for the long-suffering dairy sector. It is good to see the chairman of the all-party group on dairy farmers, my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), in the Chamber today; I hope that he will have an opportunity to catch your eye, Sir Nicholas, as the debate progresses. However, the proposals have much wider ramifications for farming practice and enterprise viability across much of the livestock and arable sectors in England. Indeed, the Minister for the Environment has indicated in a parliamentary answer that, if the 70 per cent. NVZ proposal is implemented, approximately 139,500 farmers will be affected and, if the action programme covers the whole of England, approximately 195,500 farmers will be affected, as could each of the 272 Members of Parliament with a farm in their constituency.

Before commenting on the proposal in detail, I should like to dwell for a moment on the objectives and evolution of nitrate vulnerable zones. According to DEFRA, nitrogen discharge from agriculture accounts for 60 per cent. of diffuse nitrate pollution of the aquatic environment. In layman’s terms, nitrogen pollution leaching into the watercourses stimulates algae growth, which damages water quality, in respect of both human activity—from the quality of drinking water to swimming in the sea—and biodiversity within our rivers and oceans. I accept that nitrogen can contribute to water pollution, but we have to ask ourselves whether draconian, new and costly regulations are the right answer to a problem that seems already on the way to being solved without them.

David Taylor (North-West Leicestershire) (Lab/Co-op): I am a member of the Select Committee on Environment, Food and Rural Affairs. It is true that farming has reduced its nitrate footprint over the past 10 years or so by about 25 per cent. The hon. Gentleman mentioned aquatic levels. The River Trent forms part of my constituency boundary, and there has been a significant reduction in nitrate levels over the past 15 years—approaching a quarter—so there is substantial progress. I hope that the Minister will take that progress into account when looking at the costs and impact of the suggestions that we are discussing at the moment.

Mr. Dunne: I am grateful to the hon. Gentleman for his intervention. Indeed, I was going to mention the great progress that has been made in respect of the River Trent in his constituency.

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How did we get to where we are today? The current proposals for extending and revising NVZs do not result from any new European Union directive; rather, they stem from DEFRA’s need to abide by commitments originally entered into under the 1991 nitrates directive, which was agreed as part of the EU Environment Council in June 1991 and adopted in December that year.

Mr. Tim Boswell (Daventry) (Con): Will my hon. Friend give way?

Mr. Dunne: I give way to my hon. Friend, who was probably there are the time.

Mr. Boswell: I am not quite sure that I can claim that, but perhaps I could remind my hon. Friend that I had ministerial responsibility in the mid-1990s. Will he accept my assurance that at all times Ministers then, regardless of their party colour, were anxious to ensure that the European regulations were operated in a way that had minimal impact on United Kingdom agriculture?

Mr. Dunne: Indeed. My hon. Friend pre-empts precisely what I was going to say. From my research through the history books into the development of NVZs, it is clear that the original intent was to maintain regulation at the bare minimum. The 1991 directive required member states to designate areas as NVZs where nitrate levels in water were at risk of exceeding 50 mg per litre and where the water was or might become eutrophic. I am sure that I do not need to tell you, Sir Nicholas, that the word “eutrophic” describes water that is rich in dissolved nutrients, photosynthetically productive and often low in oxygen during warm weather. Member states could implement an action programme either for an entire territory or within discrete NVZs.

The Conservative Environment Minister at the time accepted that the aim of the 1991 directive was to improve water quality by reducing nitrate pollution from agricultural practice. He thought that the zone could cover up to 2 million hectares, but crucially said that the precise area would be based on necessary monitoring and other studies by the Government and the then National Rivers Authority. Any additional measures were envisaged to take into account their cost and effectiveness. Those two critical tests of cost and effectiveness should be the guiding principles applied by the Government today in responding to the consultation and bringing forward their final proposals.

It took until 1996 before the initial 66 NVZs were designated, covering a mere 600,000 hectares—just 8 per cent. of England—and focusing on protecting drinking water sources. In 2000, the European Court of Justice found that the UK had failed to protect surface and ground waters and was relying only on protecting drinking water. So DEFRA consulted in 2002 on two options for full implementation in England and received some 13,000 responses. The Government on that occasion wisely decided to take the least regulatory approach to comply with the Court and, in October 2002, designated 55 per cent. of England as an NVZ, including the original 8 per cent. Much of that territory was in the west midlands.

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Those designations must be reviewed every four years, unless the action programme applies to the whole country. Having completed their four-yearly review, the Government concluded that there had been some increase in nitrate pollution in certain areas of England and that the current action programme had not had a significant impact on nitrate pollution. Those findings have not been universally acknowledged, as I shall mention in a few minutes.

In August 2007, the Government published a further consultation paper inviting comments by 13 December, so that they could be in a position to respond shortly, with the stated intention of laying a statutory instrument before the House to come into force from 6 April 2008. I should be grateful if the Minister in summing up confirmed whether he is still working to that timetable.

So what is proposed and what are the implications for English farmers and the environment? The measures currently proposed fall under seven main headings: controlling where, when and how much nitrogen is applied, how manure is stored, requiring cover crops in place of bare stubble and requiring detailed records of manure storage and nitrogen applications to be retained for five years. I should like to describe those measures briefly.

DEFRA proposes to control where nitrogen is applied by increasing the designation of either a further 15 per cent. of farmland to take the NVZs up to 70 per cent. of England’s farmland or incorporating the whole of England in an action programme, as Ireland did in 2003, joining Austria, Denmark, Finland, Germany, Luxembourg and the Netherlands.

Interested observers, such as the National Farmers Union, do not feel that such a major increase in designation is justified. The NFU claims to have provided evidence repeatedly to DEFRA over the past two years analysing Environment Agency data that has shown nitrate levels reducing in many rivers, including in the River Trent in the constituency of the hon. Member for North-West Leicestershire (David Taylor). But we do not have to take the NFU’s word for it, since DEFRA itself admits in its NVZ consultation that

First, DEFRA may consider an analysis over only five years too short to be reliable, but why does it refuse to recognise the validity of the Environment Agency’s calculations of nitrate levels in several rivers, which show that they have been declining steadily for 15 years since 1990? In addition to the River Trent, which we have talked about, other rivers have had a 10 per cent. to 20 per cent. decline in nitrates, including the River Nene at Peterborough, the River Thames at Goring Weir, the River Aire at Sneath—I could go on—where Environment Agency monitoring of nitrate as nitrogen is used.

As recently as 17 December 2007, in answer to a parliamentary question from my hon. Friend the Member for Tewkesbury (Mr. Robertson), the Minister himself said:

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