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Peter Luff (Mid-Worcestershire) (Con): I was grateful to the Secretary of State for the opportunity to discuss with him my Committee’s report on fuel prices that was published in July, which proved that increased prices were the fault not of the companies but of the market. We are addressing market failure. Since we published that report, there has been a significant deterioration in market conditions. BizzEnergy, an electricity supplier in my constituency, has gone bust, with 160 jobs lost. The Government are allowing British Energy to be bought by EDF. Transparency and liquidity are being reduced in the electricity market. There will be one consequence— higher prices for consumers. Does the Minister agree?
Mr. O'Brien: To ensure that we get long-term affordable electricity, gas and energy supplies, we need to make sure that there is diversity of supply. The hon. Gentleman rightly says that there are issues in relation to the market, which is why we asked Ofgem to look at it. It has reported and made a number of recommendations, which it has said must be put in place. We are waiting for the outcome of that consultation now. The hon. Gentleman is right to say that there are issues in relation to the market, but they are being addressed.
On British Energy, the Government have looked at the proposal, which would bring £12.5 billion of investment into the UK. Do the Conservatives think that is a bad thing? We think that it will help to provide security of energy supply for the long term. I am sorry if the Conservatives take a different view.
Mr. Lindsay Hoyle (Chorley) (Lab): When my hon. and learned Friend met Dick Turpin and the rip-off bill merchants, I hope he said to them that it was not on and that the time had come for a windfall tax. Did he also ask them why they failed to invest in storage capacity, as a result of which gas prices are being kept artificially high?
Mr. O'Brien: There has been some investment in storage capacity and we have been anxious to make sure that that is brought on. We have given strong indications to the gas and electricity suppliers that—particularly in the current economic climate, with families concerned about the bills and where the economy is at the moment as the result of the global problems in the financial markets—they have a responsibility to bring down energy prices as soon as they reasonably can. We gave that clear message to the chief executives. We will not be satisfied if we think that there is any delay in doing that. We are looking to Ofgem, the regulator, to do its job.
Steve Webb (Northavon) (LD): Will the Minister accept that the energy market is a mess when it comes to social tariffs? Of the big six energy companies, one provides most of the social tariffs, and it has now stopped; it will not let new customers go on to social tariffs. Some of the others do not do any at all. Is that the right way for vulnerable customers to be treated? Is it not a risky strategy to rely on the goodness of heart of the energy companies?
Mr. O'Brien:
We have had an assurance from the energy companies that they will put a further £225 million into social tariffs. The way in which the energy companies were privatised means that they all have to compete. Ofgem has taken the view that they also compete on
social tariffs. There is an argument for greater standardisation of social tariffs, and I have some sympathy with it, but the companies take a view, as, indeed, Ofgem does, that there is a market and this is one of the areas where they need to compete. Some 600,000 people are able to access these lower social tariffs, and I want to put more people on them so that they pay lower prices. That is why the Pensions Bill contains a provision to allow data sharing by the Department for Work and Pensions to enable the energy companies to know which people are on pension credit—in due course we would want to extend that further—so that they can be put on a social tariff, as I hope would happen.
Mr. Brian Jenkins (Tamworth) (Lab): My hon. and learned Friend gives us assurances that the companies say this and say that, but does their track record not bear investigation? A company’s role is to maximise its profits at any cost, and we knew that when we introduced the regulator. It has watched the industry for a few years, but when are the Government going to buy it some new teeth?
Mr. O'Brien: My hon. Friend is right to say that we must always examine the track record of the companies. There is public concern that they have been quick to indicate that prices will rise and slow to indicate when prices will fall, which is why I have welcomed the statement by Scottish and Southern Energy in response to our meeting with it and with the other chief executives. I look to those other energy companies to follow its example and start to say when some prices will come down. Parliament has said that it wants an independent regulator, which Ofgem is, so Ministers cannot keep telling the regulator what it has to do, because it is supposed to be independent. None the less, we have had meetings with Ofgem and we have indicated that we want it to be robust in ensuring that it protects the interests of the market and of competition.
Greg Clark (Tunbridge Wells) (Con): Why do gas and electricity cost more in Britain than on the continent?
Mr. O'Brien: All the way through the early part of this decade, we have had much lower gas prices than most of the continent, because the market was able to operate very effectively to ensure that prices fell. Europe operates using a different system. It operates long-term and often not very transparent deals, particularly in the business sector. Deals that can last for some years are signed, holding down some of those prices. When our market falls and we get the benefits, Europe does not. When the market starts to rise and our prices rise, it takes some time before Europe renegotiates some of its long-term contracts. We are pressing, with the EU Commission, to get more transparency into some of those deals and to get a more effective market operating in Europe. We want to ensure that we all get the benefit of a more successful and competitive market, because we all want to pay the lowest price that we reasonably can.
Greg Clark:
Mr. Speaker, did you know that the Minister’s new Department has 900 policy advisers? Do you think that he might have done better with that, given that level of advice? One of the reasons why British customers suffer price spikes is that, due to the
absence of a serious energy policy over the past 10 years, we have only 14 days worth of gas storage compared with 99 days worth in Germany and 122 days worth in France. A further reason is the structure of the market. Four weeks ago—not three, as the Minister said—the Secretary of State stood at that Dispatch Box and said that he had given the big six energy companies four weeks to take urgent action or else he would do so. A month later, there has been no change and no action—he has fallen at the first fence. Will the Minister act to stop prepayment meters being used to make the poor subsidise the well-off?
Mr. O'Brien: Well, the hon. Gentleman knows very well that Ofgem has undertaken a consultation and has said that the energy companies must respond by December. In case he has missed it—I know that he is not that well informed —[Interruption.] He starts running down the officials who advise us, but they cannot respond to him; if he wants to start having a go at people, we can all play games like that.
On prepayment meters, the energy companies have been given until December, and Ofgem has said that it wants a response and action. We have said that we are prepared to legislate if the energy companies do not respond on prepayment meters. It certainly is the case that we have ensured that our energy market is able to operate more effectively than those in Europe. In recent years, we have been able to keep our average energy prices lower, and we now need to ensure that we have greater transparency in the broader EU market.
Mr. Russell Brown (Dumfries and Galloway) (Lab): I applaud the work that my hon. and learned Friend is doing on social tariffs, but in rural constituencies such as mine, social tariffs do not matter to many people, as their only form of heating is oil, liquefied petroleum gas or coal—the latter has also risen significantly in price. Will he consider ways to reduce bills for people who rely on those fuels?
Mr. O’Brien: We are already looking at the market for heating oil, which does cause me some concern. We want to ensure that it operates efficiently and effectively. The market for coal is now much more international—and certainly more European—than regional, and that affects the price. Some 90 per cent. of the coal supplied in the UK goes to the power stations, so very small amounts go to domestic use. My hon. Friend is right to say that many people are worried, especially in former mining constituencies such as mine, where people receive and use free coal. Others choose to use coal and therefore have to pay the price, and we want to ensure that they are not overcharged.
Greenhouse Gas Emissions (Road Transport)
4. Mr. David Chaytor (Bury, North) (Lab): What his most recent estimate is of the proportion of UK greenhouse gas emissions attributable to the road transport sector. [235270]
The Parliamentary Under-Secretary of State for Energy and Climate Change (Joan Ruddock): In 2006—the latest year for which finalised data are available—road transport accounted for approximately 126 million tonnes of CO2 equivalent, which is roughly 19 per cent. of total UK greenhouse gas emissions.
Mr. Chaytor: Does my hon. Friend agree that the use of graduated vehicle excise duty is an important measure in reducing emissions from road transport? Does she also agree that exempting the current vehicle fleet from graduated VED—for which the forces of conservatism on both sides of the House have lobbied—would be counter-productive to the Government’s climate change strategy? Will she speak to her colleagues in the Treasury about that before the pre-Budget statement in two weeks time?
Joan Ruddock: I am grateful to my hon. Friend for that question. As he knows perfectly well, all decisions on taxation are a matter for the Chancellor, and it will not be long before we hear more on that subject—and others—from him. The principle of linking CO2 emissions to vehicle taxation is correct, and we began that process in 2001. It is supported by my Department, and we also agree that expanding the range of bands to create greater sensitivity between CO2 emissions and particular vehicles is the right approach. We—
Mr. Desmond Swayne (New Forest, West) (Con): Oh come on!
Joan Ruddock: Well, it is very important—
Mr. Speaker: Order. As a trade unionist, I do not expect the hon. Gentleman to do another man’s job. He is trying to do my job, but in any case, the Minister has done well and we should move on.
Michael Fabricant (Lichfield) (Con): I hope that the Minister gets over her cold soon. While she does so, perhaps she could consider alternative forms of transport. Not every item transported on Britain’s roads needs to be delivered quickly. British Waterways is spending a fortune restoring our canals, and the narrow boat system is far more efficient in terms of greenhouse emissions at moving heavy goods from one part of the country to another. I ask her Department to speak to the Department for Transport and to investigate that alternative way to move goods across the nation.
Joan Ruddock: I apologise if I am speaking slowly; I have a very bad infection. I simply wanted to conclude that it is appropriate that people should understand linkages so that they can purchase the appropriate vehicles.
Let me turn to the hon. Gentleman’s point about moving goods by water. That subject is always under consideration. I can tell him that the Department for Transport is working on a low-carbon transport strategy. I am quite sure that we will be able to consider the points that he has made, because he is right that there are issues about emissions that can be well dealt with by alternative modes of transport.
Topical Questions
T1. [235287] Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): If he will make a statement on his departmental responsibilities.
The Secretary of State for Energy and Climate Change (Edward Miliband): The new Department of Energy and Climate Change is a recognition that energy and climate change should be considered not separately but together. It brings together the Government’s work on three challenges that face our country: ensuring that we have energy that is affordable, secure and sustainable; bringing about the transition to a low-carbon Britain; and achieving international agreement on climate change.
Mr. Crabb: I thank the Secretary of State for that reply. On the subject of secure supply, the Secretary of State might be aware that recently three of the new super-tugs that will be required to bring in the large cargoes of liquefied natural gas that we anticipate will start to arrive in the UK in the months ahead had to be rerouted via the Cape because of fear on the part of the company that they would not be adequately protected against Somali pirates in the gulf of Aden. What discussions is the Secretary of State having with his colleague the Secretary of State for Defence about measures that can be taken to protect all energy-related shipping serving the UK to ensure that we have security of supply in the future?
Edward Miliband: International piracy is being considered at EU level, and the hon. Gentleman is right to raise that important question. I think that he is also raising the question of the new terminal at Milford Haven, which we hope will be ready next spring. That is very important for bringing in supplies of gas as it will be able to provide up to 20 per cent. of UK gas supplies.
T4. [235291] Mr. David Chaytor (Bury, North) (Lab): In four weeks, the UN climate change conference in Poznan will consider the European Union’s climate change and renewable energy package. Will the Secretary of State assure the House that the stringent targets in that package are fully supported by the Government and that there has been no attempt to dilute the targets with which we are presented?
The Parliamentary Under-Secretary of State for Energy and Climate Change (Joan Ruddock): May I take this opportunity to thank my hon. Friend for that point? It is crucial that the 2020 package goes through. The UK Government have been in the forefront of trying to stiffen the resolve of other European members who have taken the position, which I think is wrong, that in this economic downturn that target cannot be pursued. We believe that it is crucial to jobs, to our future and to our climate change agenda that the energy and climate change package is taken forward. This is not the time, in any sense, to resile from that.
T2. [235289] Mr. Desmond Swayne (New Forest, West) (Con): In his letter of 7 October, Lord Turner, the chairman of the Committee on Climate Change, said that if there was to be any prospect of our meeting the target on emissions, the decarbonisation of electricity generation had to start now. Today, we have had boasts from those on the Treasury Bench about the great leap forward in generation by 2015, which is almost wholly dependent on fossil fuels. Either Lord Turner is wrong and the Minister is right, or it is the other way around. Which is it?
The Minister of State, Department of Energy and Climate Change (Mr. Mike O'Brien): It is not quite as simple as the hon. Gentleman suggests. We need always to ensure that we strike the appropriate balance between getting security and affordability and ensuring that we hit the targets. Lord Turner is right to say that we need to ensure that we hit those targets and start taking the steps now. We have made proposals for nuclear and for building up renewables, particularly wind technology. We are making Britain the leading country—we passed Denmark about a month ago—in terms of offshore wind provision from wind turbines. We are therefore taking the steps necessary to move towards our target. I do not deny that there is a lot more to do, and that is certainly what Lord Turner and his team have told us.
T5. [235292] Ms Katy Clark (North Ayrshire and Arran) (Lab): The Minister will be aware of the concerns that have been expressed about the capacity of the national grid, and in particular about the queuing system, which adversely affects small projects such as community wind farms that are trying to get connected. What are the Government doing to address those concerns?
Mr. Mike O'Brien: My hon. Friend is right to say that there are concerns about how those who are bringing forward renewable projects can get access to the grid and the transmission system. We have asked Ofgem to look at the problem: it is coming forward with proposals and we are looking to have a consultation sometime in December. In the immediate term, however, we have made it clear that we want provision to be made for connect and manage, which basically means that new projects can be brought on to the transmission system. Although the system has not been fully upgraded, it can be managed so that we can get some of the new projects on it.
We have also asked Ofgem to look at how the various cases and applications coming forward can be prioritised, and at whether some will actually be delivered. We know that some will not, so we need to prioritise those that are likely to be delivered and make sure that we get them on to the transmission system more quickly and at an earlier date.
T3. [235290] Miss Anne McIntosh (Vale of York) (Con): In the Secretary of State’s flagship Climate Change Bill, there is a chapter on waste recovery. Will he take this opportunity to say how the Government propose to get rid of the mountains of paper and plastic that have gone to recycling and are being stored by local authorities? I understand that we need energy-from-waste schemes around the country, but at the moment they are not going ahead to a sufficient extent because of concern about incineration. When will the Government take this theme to the country and explain why energy from waste is so necessary at this time?
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