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Ms Hewitt: I am afraid that the hon. Gentleman and I will never agree on that matter. I strongly support the European Commission’s proposal and welcome the fact that our Government have endorsed it. The proposals set a stretching target for Europe to increase its renewable energy supplies. Indeed, our renewable obligations in Britain, which I extended when I was Secretary of State, have helped to secure a massive increase in investment—
Sir Nicholas Winterton: Only 1 per cent.!
Ms Hewitt: That significant investment was not only in wind farms, but, as we have seen with the Severn barrage, in tidal power.
Mr. Cash: Is the right hon. lady implying that she is responsible for the ridiculous idea that we could get 15 per cent. of our energy requirements from renewables?
Ms Hewitt: I have no doubt that we can achieve a substantial increase in that regard, especially through the use of wind power. The UK is blessed with wind resources, and we also have some of the world’s leading technology companies—something that I should have thought the hon. Gentleman welcomes.
Sir Nicholas Winterton: They are subsidised.
Ms Hewitt: The reality is that rising demand for energy, increased competition for supplies and climate change mean that all countries, including Britain, will have to find the right energy mix. We need much greater energy efficiency, and we lag behind many of our European partners in that respect. We will also need to make use of renewables, cleaner coal, oil and gas, and nuclear energy—although the latter is not for all countries, and some member states do not wish to go down that route. Different countries will use all those energy sources in different combinations, as the new treaty makes clear.
Mrs. Curtis-Thomas: My right hon. Friend may have heard the sedentary intervention to the effect that renewables will be subsidised, but does she agree that subsidies will be needed if we are to develop the technologies necessary for tackling climate change and carbon dioxide production?
Ms Hewitt: I completely agree: that was the logic behind the introduction of the renewables obligation and its subsequent extension. Most renewables technologies are still too little developed to be able to stand on their own two feet in commercial terms, but the renewables obligation has pulled in the necessary investment much faster than would otherwise have been the case. That investment will help us to meet our carbon reduction targets, and to achieve the security of supply that hon. Members of all parties are worried about.
Sir Stuart Bell: Before my right hon. Friend leaves the point, does she agree that the European Council of 8 and 9 March last year made it clear that decisions about the choice of energy mix, the sovereignty of primary energy sources and the use of nuclear energy are matters for individual member states?
Ms Hewitt: My hon. Friend is absolutely right, and I am grateful to him for that clarification. He spoke earlier about Europe’s dependence on Russia for so much of its energy supplies, and about Russia’s dependence on earnings from its oil and gas exports. I should like to develop the points that he made a little further.
Despite Russia’s economic dependence on oil and gas exports, it is failing to make the investments that it needs if it is going to meet its own growing demand for energy as well as the demand among the countries to which it exports. In addition—and Ukraine is the most notable example of this tendency—it has succumbed to the temptation of using its oil exports for blatantly political purposes. As long as the EU remains fragmented about energy policy, both politically and economically, the danger exists that Russia will be able to pick off individual member states. Europe must therefore speak with one voice on the common interests that all its member states have—certainly in respect of energy policy, but about many other matters as well.
We know that Russia is increasingly closed to EU investment in its energy infrastructure. Russia desperately needs that investment for its own domestic purposes, but it is denying it to its consumers and businesses. At the same time, Gazprom, one of the largest energy companies in the world, is increasing its investments in the European Union. It has investments in at least 20 European Union member states—it may well be more by now—including investments in some distribution networks. Not surprisingly, given how Gazprom is run and its close and rather murky relationship with President Putin, there are worries among our European Union partners about its growing influence within Europe’s energy markets.
It is a reflection of the strength of existing provisions, which the treaty will re-enact and clarify, that the concerns about Gazprom’s growing influence have already been referred to the European Commission’s redoubtable Competition Commissioner, Neelie Kroes. I understand that President Putin complained at a meeting with Chancellor Merkel last year about Neelie Kroes’s proposed investigation of whether Gazprom’s growing role could impede the liberalisation of European energy markets, and that Chancellor Merkel replied that Gazprom should consider it an honour to be treated like Microsoft. It is a reflection that we might all enjoy of how important it is to have a strong Commission with strong pro-competition powers and a Council of Ministers that uses qualified majority voting in appropriate cases.
Mr. Brady: Many of us have concerns about Gazprom’s strength and reach in European markets. Would the right hon. Lady go so far as to say that either the Commission or national authorities should be able to prevent Gazprom from investing in EU countries, to the extent of buying significant national energy suppliers?
Ms Hewitt:
No, I would not. Indeed, I am pretty certain that such a move would be unlawful under European Union rules, which rightly prohibit discrimination against investors on the basis of nationality. My own strong view, which is reinforced by my years at the
Department of Trade and Industry, is that Britain is a shining example of an economy that has benefited from being open to foreign investment. I welcome my right hon. Friend the Prime Minister’s recent statement on sovereign wealth funds.
The right way to respond to the perfectly legitimate concerns about how Gazprom might, presumably at President Putin’s behest, abuse its investments is to ensure that Gazprom, like every other investor and company, abides by European Union single market rules. The treaty—I do hope that I can persuade the hon. Gentleman of this—will not simply repeat the original treaty’s pro-competition stance; it will clarify the legal basis for European Union action in relation to energy in a way that is wholly helpful to the cause of energy market liberalisation, which he and I both support. It will also clarify the subsidiarity of member states, on which I should think he and I also agree.
Mr. Brady: We do have a degree of common ground on that point, if on nothing else relating to the treaty. However, would not article 176A give the EU legislative powers in relation to maintaining the functioning of the energy market and the security of energy supply that would enable it to legislate to prevent Gazprom from taking such a position in the market?
Ms Hewitt: My understanding is that any action by the Commission against Gazprom would have to be taken within the framework of laws prohibiting discrimination on the grounds of the nationality of the investor. We might be getting into rather technical legal issues, on which I am certainly not an expert, but I am glad that I have made at least a little bit of progress with the hon. Gentleman on that point.
Before turning to my final point, I make a point that was made in an excellent bulletin from the Centre for European Reform on the matter. As it says, if Europeans are worried about Gazprom’s role, they need to back the Commission’s efforts to speed up liberalisation of their own gas market. To put it a little more crudely than the Centre for European Reform did, what is sauce for the goose is sauce for the gander. The very powers that enable the Commissioner to examine whether Gazprom might abuse its investment are also powers which, with the support of the Council of Ministers, will enable the Commission to rule out market abuses by Gaz de France, E.ON-Ruhrgas and some of the other monopoly or near-monopoly providers in parts of the European Union.
Mr. Mark Hendrick (Preston) (Lab/Co-op): I agree with my right hon. Friend that the treaty will be effective in co-ordinating European energy policy and ensuring more secure sources of energy for the Union. Is it not the case that the way in which the Russian Government are using Gazprom as a tool, and the fact that they are making bilateral agreements in 20 countries of the European Union, rather than negotiating with the EU as a whole, mean that they have far more leverage than we would want them to have? Although I agree that there should be more sources of energy in Europe to guarantee the security of supply, do not those 20 agreements with EU member states put us in a difficult position?
Ms Hewitt: My hon. Friend makes an important point. There will always be a large number of bilateral and sometimes multilateral agreements within not just Europe’s market, but the global energy market. That is the nature of the contracts and relationships between different companies and different countries, but the response to the concerns that my hon. Friend and many others have expressed about Gazprom, which I share, is that the Commission itself, using its treaty powers, will be able to investigate whether Gazprom is abusing its market position in an anti-competitive way.
Mr. Ian Taylor: More than that, there is the energy charter treaty which the Russians signed up to in 1994. They accepted the legal obligations of that treaty prior to ratification. They have not ratified, but they are obliged to respect it. This regulates reciprocity of investment. The key argument that we have at present with Gazprom is that we allow it to invest in the European Union, but President Putin has steadfastly tried to renationalise the assets within Russia so that private western companies are effectively losing assets or not getting fair value for those assets.
Ms Hewitt: The hon. Gentleman is right. The Russian Government’s action in relation to Sakhalin II is a good example of exactly that. The right response is not tit for tat—I do not think he was implying that—or to lock Gazprom out of European energy markets, even if that were legally permissible, which it is not. It would be wrong in principle, as well as unlawful in practice and damaging to the interests of our own consumers.
We will need to go on making that argument with Russia, and we need to do so with a single voice so that individual member states, perhaps thinking that they are acting in their short-term interests, do not seek to do different deals with Russia. We need Europe to speak with one voice to Russia and to try to persuade President Putin that by blocking off western investment in his energy infrastructure he is doing enormous damage to the interests of his own consumers and his own businesses, whose demand for energy is rising rapidly and needs to rise even more rapidly if the Russian economy is to grow.
Within the next decade or so, there is a real prospect of Russia, hitherto one of the major global suppliers of gas in particular, not having enough to meet its domestic demands, never mind the demands of those of us in the European Union.
Sir Nicholas Winterton: Is the right hon. Lady saying that European Union countries should not, as individual national Governments and countries, enter into bilateral agreements with Russia? If she is, I should say that that would be an extremely dangerous precedent, which could be introduced in many other areas of our economy and would undoubtedly lead to a federal state of the European Union. Surely that is the logical conclusion of her argument. Furthermore, will she also tell the House how many other energy—
Madam Deputy Speaker: Order. The hon. Gentleman is aware that interventions should be brief. Many hon. Members are waiting patiently to contribute to this debate.
Ms Hewitt: The hon. Gentleman is certainly misunderstanding me—whether deliberately or not, I do not know. I thought that I had made the point clearly in response to an intervention. Of course there will continue to be a whole range of bilateral—or even multilateral—agreements between companies and countries. However, Europe needs to speak with one voice on Russia’s policy intentions.
Let me conclude on a more general point, which comes back to a point made by the hon. Member for Northavon. Since its inception, European Union member states have been able to choose to pool sovereignty and work together with others in the interests of each of us. In this interesting debate it has been extraordinary to hear the hon. Member for Rutland and Melton and many other Conservatives, although not all, on one hand claiming to support energy liberalisation across the European Union, and having no serious argument against the Lisbon treaty’s energy provisions—as the right hon. and learned Member for Rushcliffe (Mr. Clarke) made clear—yet on the other being absolutely determined to oppose the treaty and vote against the Bill.
Furthermore, if and when the treaty is ratified by this Parliament and those of every other member state across the European Union, those Conservatives threaten to reject and denounce the treaty and throw into jeopardy the whole legal basis of the European Union’s operation—and thus disrupt all the efforts, which they claim to support, towards energy liberalisation. That would be disastrous for our constituents’ interests, for Britain and for the European Union as a whole. That fundamental contradiction in the official position of the Conservative party, which has undoubtedly allowed its anti-European prejudices to triumph over its supposed commitment to the interests of the British people, will lead the House to reject its position and, I believe, will lead the British people to reject it as well.
3.58 pm
Peter Luff (Mid-Worcestershire) (Con): I regard this as having been a rather unsatisfactory debate. I managed largely to avoid the debates on the Maastricht treaty, although sadly I was once called by the Whips to make a filibustering speech lamenting the then Opposition’s wasting of time during the debates—there was a certain irony to that, although I managed to discharge my duty with reasonable decorum.
I find it unsatisfactory that we should be having a Second Reading debate on energy policy that lasts for four and a half hours, followed by a Committee stage that lasts for one and a half hours. My understanding is that things would normally be the other way round: normally a Committee stage lasts three or more times as long as Second Reading. We have it the wrong way round. It is a shame that it has taken more than three hours for the first Opposition Back Bencher—and I am not only a Back Bencher, but the Chairman of a Select Committee—to make their first contribution.
Having said that, I am delighted to follow the right hon. Member for Leicester, West (Ms Hewitt). I did not agree with everything that she said—particularly her concluding remarks—but it is good to see a former Secretary of State for Trade and Industry using her
skill and expertise and coming back to participate in debates. The right hon. Lady set a model for other former Cabinet Ministers in joining us in that way and showing herself to be a true parliamentarian, and I thank her for that.
There is another unsatisfactory aspect of the debate. We waited more than a year for a debate on energy policy, and then, rather like London buses, two came along together. We had an energy debate last week, we are having another this week, and the Minister of State and I are to have a third opportunity to catch the bus tomorrow, when the Minister will attend a sitting of my Committee to discuss energy prices and generating capacity. I am sure that many of these issues will be dealt with again in detail and in a very congenial forum, and a fine job I am sure the Minister will do of it.
So far in today’s debate there has genuinely been little disagreement about the objectives that we all share. It has been very much a debate about mechanisms, which has made it slightly frustrating in many ways. I must tell the Secretary of State and the Minister that I am concerned about the provisions in the treaty, although not for the reasons identified by the right hon. Member for Leicester, West and certainly not for the reasons offered by the Secretary of State in his opening remarks. He suggested that the treaty was some kind of proxy for opposition to the European Union itself, and some kind of cover for a wish to withdraw from it.
I believe that the Government were once opposed to these provisions. They had sound, well-argued reasons for opposing precisely the provisions that they now ask us to endorse. It is a shame that they lost the negotiations on the issue, because their negotiating position was the right one for the country, but sadly they abandoned it, which is why we are in the position in which we find ourselves today.
As for my own position, it is simply this: ever-closer union must have its limits. There are some matters that all Members, however Europhile they may be, do not believe should be transferred to the competence at the centre. The limit must come somewhere. The question is where we should draw the line, and my contention is that in the case of energy policy the line pre-Lisbon was drawn in about the right place. I believe that the treaty pushes it a bit too far.
Why does this matter so much? All Select Committee Chairmen think that their subjects are the most important to the country, and I genuinely believe that energy policy is one of the two most important issues that the country faces. The other, for my money, is probably skills, in which we have some competence in another Department. Those are the two key issues involving United Kingdom competitiveness, and hence the United Kingdom’s future ability to pay its way in the world and our long-term security.
Mercifully, skills are not in any sense a European Union competence, and I think that that is the answer that the hon. Member for Northavon (Steve Webb) should have given when he was challenged on the point earlier. Skills are an example of the competences that we believe should remain firmly in this country. [Interruption.] Perhaps there was no specific suggestion to the contrary, but it is a good example nevertheless, and I hope that the hon. Gentleman would have endorsed that view in any event.
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