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The Bill proposes a new levy on electricity to pay for carbon capture and storage. The first question to be asked is why we have had to wait for a Bill that cannot possibly receive Royal Assent until 2010 to pay for a scheme that was first mooted in 2006. If it needs this levy, why was it not in the 2006, the 2007 or the 2008 Queen's Speech? We believe that, when it came to payment, the first choice should have been the revenues from the European Union emissions trading scheme. The Secretary
of State tells me that they have been spent, although they do not begin to accrue in this phase until 2012. If they have indeed been spent, there must be an assumption of the amount that they were going to raise. Let me ask the Secretary of State now what that estimate is, and where it appears in the Red Book. I am happy to give way to him. [Hon. Members: "No answer."] This is typical Labour party economics: the money has been spent on something that is completely invisible and the Secretary of State cannot even find it in the Red Book. No wonder we are in the mess we are in.
Greg Clark: I shall give way to the hon. Gentleman. Perhaps he can provide an explanation for the missing billions of pounds.
Mr. Reed: In time. Can the hon. Gentleman confirm whether a future Conservative Government would support a Government subsidy for CCS, and if so, up to what level-and would he also make the same benefits available to the nuclear industry? The answer to that question will be listened to very keenly by international and domestic investors in this country.
Greg Clark: Of course we would support a subsidy for CCS; that is what we have been urging on the Government. The Secretary of State says he has spent the money, although he is unable to say how much he has spent or what it has been spent on. On nuclear, we have said that it is a mature technology, and should not be given a specific subsidy. I do not think there is any difference between us on that.
If the Secretary of State can convince us that the money has, indeed, been spent, it may be the case that the levy is what we will have to fall back on. I still do not think, however, that he can get away with saying that this money has been spent on something the Government cannot account for. [Interruption.] So far, it is impossible to tell what the impact of the levy will be, because, as the Secretary of State has just said from a sedentary position, he is merely proposing powers to charge a levy in the future.
If there were to be a levy, however, would that not offer the Secretary of State an opportunity to provide a clearer price for carbon, which is much needed? Why should suppliers of electricity from renewables, for example, have to pay a levy to support the capture of carbon when they do not generate any carbon dioxide in their production of electricity? Should not the "polluter pays" principle be followed, so that the levy is incurred in proportion to the CO2 emissions generated by each supplier? The Secretary of State might like to consider that, since he has clearly not designed his levy properly yet.
Why are the Government restricting themselves to the same approach that they took in respect of the climate change levy: a stealth tax, which did not do what was described on the tin, as it were, because it had nothing at all to do with climate change? If the Government are serious about forbidding CO2 emissions from new coal power stations, why do they not specify-as we have said we would-an emissions performance standard
so that no coal-generating plant can be more polluting than the most efficient combined cycle gas turbine station? That must be a totem of their seriousness in this matter.
If we are to have investment in CCS, in the hope that it will work and be demonstrated successfully, why will the Government not ensure that the pipelines for the demonstration plants are built oversize so that they can be made use of by future CCS plants, rather than be fully exhausted from day one?
Mr. David Anderson (Blaydon) (Lab): How much oversized should the pipelines be?
Greg Clark: They should be adequate for the potential in their area. The Secretary of State has talked about having clusters for CCS. It is possible to make an assessment of how many such future plants might be able to make use of the pipelines. It is wrong to spend public money on building pipelines that will be adequate only for the demonstration plant and then to have to repeat installation if the process is successful. That is a bonkers approach; it is a waste of public money.
Mr. Anderson: In Select Committee discussions it was said that, if this were a road, it would be either a B road or a motorway. They are hugely different. Has the hon. Gentleman costed his proposal?
Greg Clark: I am delighted that the hon. Gentleman is asking me questions that presuppose that I will be in office. I am saying, assuming that this project works and looking to the future, that it will be rather ridiculous if the Public Accounts Committee holds an inquiry in several years and asks why on earth the Secretary of State consented to spending public money on building a pipeline network that was not adequate for the coal plants that he hoped would be able to access it in future. That is a waste. Will the Secretary of State make clear the criteria for the clusters of CCS that have been promised-but which are mysteriously absent from the Bill? Many parts of the country are keenly awaiting the answer to that.
In particular, with the devastating closure- [ Interruption. ] The Secretary of State should listen to this, because thousands of jobs are affected on Teesside. The people on Teesside, who have lost 1,700 jobs in the last week with the closure of the Corus plant, could benefit if Teesside became a CCS cluster. Can he or the Minister, in the winding-up speech, say anything about whether Teesside can count on being a contender for the cluster and when he will make the decision? I am disappointed that he does not find the situation on Teesside sufficiently meritorious for him even to listen to it. In the interests of giving the Bill and the levy mechanism proper scrutiny, will the Secretary of State commit to publishing in draft form the regulations that he proposes to make before the Bill goes into Committee?
The second part of the Bill creates a framework for obliging energy suppliers to provide social pricing for vulnerable customers.
Malcolm Wicks (Croydon, North) (Lab): I have listened very carefully to what the hon. Gentleman has said about the critical issue of CCS, and he has talked about urgency. What would a future Government do that is not being proposed by the Secretary of State? I am not clear about that and I am not clear at all whether or not he supports the levy.
Greg Clark: Of course we will support the levy, if it indeed turns out that the funds from the emissions trading scheme have been exhausted. The detail of the levy requires scrutiny, which is why I have asked the Secretary of State to publish the regulations before the Bill goes into Committee so that we can ensure that there are no perverse consequences.
Mr. Ellwood: Has my hon. Friend noticed that the Bill is so slim and small that we have now lost interest in it almost in its entirety and have moved over to discussing Tory policy? That is all very well, but it is a waste of the time in which we are supposed to be focusing on the Bill. Does he agree that one thing that could have been included in the Bill, considering the threat that is now imposed on us, is what would happen if the lights went out? Should we not be considering an emergency plan in case we do not have power for Britain in the future?
Greg Clark: My hon. Friend is quite right. This should have been a Bill that enjoyed cross-party support for keeping the lights on. The Secretary of State said that we need to work together to keep the lights on, but he seems to have shrunk from an important opportunity to do that.
When average bills for domestic fuel are £1,200, high energy prices are a desperate problem for many families struggling with the consequences of the recession-especially now. There is an unsatisfactory delay in the publication of the fuel poverty statistics. As the Secretary of State knows, the last available figures, which were published in October, are for 2007 and show that 4 million households spent more than 10 per cent. of their income on energy bills. Since then energy prices have risen still further-domestic gas prices have doubled since 2004-and unemployment has risen. To use the Government's projections, it is thought that 6 million households-one family in every four-are in fuel poverty.
We desperately need a strategy to address fuel poverty, but the Bill does not provide one. Again, it does not even set out the Government's plans; it merely hands over another batch of regulation-making powers to the Secretary of State to be used in the future. So, if the Bill is passed into law, only then will the Government come up with detailed proposals. No doubt Ministers will want to consult on them, too, before laying a draft order before Parliament. Not only is that the very opposite of the urgency that is so badly needed, but, in all likelihood, vulnerable households will be lucky if they see a benefit by next winter, let alone this winter.
A serious fuel poverty strategy, as everyone in the House knows, must be based on tackling the cause, not just the symptoms. Our housing stock is appallingly inefficient and yet the Government's approach to energy efficiency, which saves everyone money, is to ration it. The Government's approach is that we should ration energy efficiency improvements. The funding that is
available through Warm Front, for example, is, as we discovered from the Under-Secretary, being cut by £15 million from the next financial year.
Earlier, the Secretary of State briefly skated over his pay-as-you-save scheme. That is not surprising, because it amounts to an exercise in piloting an approach in 500 homes-only 500 homes, when we have a problem on such a scale. This must be the biggest and most gaping hole in the strategy.
Paddy Tipping: As I understand it, the hon. Gentleman would make available a loan of £6,500 for every house to be insulated. That is a big programme with a big cost. What will the cost be, at a time when his colleagues are talking about reducing spending significantly, moving from a big-state approach-and this is it-to a small-state approach?
Greg Clark: I am delighted that the hon. Gentleman has asked me that question, because it allows me to explain once more that not all investment is public investment. It is possible, especially when there are savings to be made, for people to bring about those savings and, given that the savings will exceed the costs, to pay for the scheme through those means. We will allow every household in the country up to £6,500 in approved energy efficiency insulations, and the system will be conditional on money being saved on their bills during the payback time. That is a win-win situation.
Let me refer the Secretary of State to his own words about his pay-as-you-save schemes. He is having pilots for 500 homes, but I do not know why if he does not think that they will work. He has said that the pilots
"will give households the opportunity to invest in energy efficiency...in their homes with no upfront cost. Householders will make repayments spread over a long enough period so that repayments are lower than their predicted energy bill savings, meaning financial and carbon savings are made from day one."
That is his press release from today. I do not know whether he has read his own press release, but it mentions that the limit of his ambition is 500 homes.
Edward Miliband: The difference between me and the hon. Gentleman is that I recognise that this proposal will have a cost: we are providing £4 million to make those pilots possible. This comes back to image versus substance. He wants to claim that he can give £6,500 to every household in the country, costing up to £180 billion, and that it will cost no public money. That is clearly a con.
Greg Clark: I regret allowing the right hon. Gentleman to deliver such a poor response. The difference between us is a lack of ambition. Every household in the country could benefit from energy efficiency improvements, but the limit of his ambition is to treat 500 homes. How can he introduce a Bill with such poor potential for success?
Let me address the third aspect of the Bill-the changes that it makes to the regulation of gas and electricity markets. We support in principle the clarification of Ofgem's objective and the clear role that is being given to enhancing energy security and pursuing our low-carbon obligations. We also support the extension of the time limit in which Ofgem can impose penalties for breaches of licence conditions. However, we need to be clear about the respective roles of the Government and the regulator. Ministers should make policy decisions and the regulator should execute them. The changes are
necessary in so far as they allow Ofgem to implement decisions that are made or promoted by Ministers on grounds such as energy security. However, in the past 12 years-and for the past 15 Energy Ministers-there has been a policy vacuum, the solution to which should not be to look to unelected bodies to proliferate policy. Instead, they should implement policy that has been determined by Ministers. I hope that that is what the Secretary of State has in mind with these changes.
Once again, the other two elements in this part of the Bill are simply enabling clauses, and they fail to grasp the urgency of the situation. A year ago, I told the Secretary of State that he should ask for an immediate Competition Commission investigation into the relationship between wholesale and retail energy prices. Initially, his response-I think it was last November, but he will correct me if I am wrong-was to summon the energy companies in to growl at them in some fierce way, but he has proved to be a paper tiger, because nothing has happened and he has done absolutely nothing to protect consumers' interests. Ofgem has today published a report that says that
"customer bill increases have consistently outweighed cost increases"-
this is in relation to the wholesale price cost of gas-
since July 2008".
So, since July 2008, customer bill increases have consistently outweighed cost increases. On present trends, Ofgem expects customers to be losing £17 a month by September 2010, which will make a lot of difference to people's household bills. That should not come as a surprise to the Secretary of State because his own quango, Consumer Focus, told him last June that every household was then paying £74 a year too much. A swift, forensic investigation is needed to settle the matter once and for all. It is in no one's interests-neither those of the energy companies nor those of consumers-to have such a point of contention.
The Secretary of State's response to an intervention from the hon. Member for Selby (Mr. Grogan) on the matter was to say that he would examine the policy options in the spring. Meanwhile, we are approaching a winter in which, if we consider the figures from last winter, people will die because they feel unable to afford to keep the heating on to get them through. The matter has an urgency that I commend to the Secretary of State. I hope that he will think again rather than raising his eyes about a problem that is very real to our constituents.
Although we are, of course, content for the Bill to go into Committee, where we will try to strengthen it and remedy its deficiencies, it is a wasted opportunity. It could have taken urgent steps to keep the lights on, cut CO2 emissions and create jobs. It would then have had broad-based support.
First, the Bill should include a green deal to give all households the energy efficiency improvements they need. Secondly, it should have an emissions performance standard to require all newly built electricity generation to cut emissions. Thirdly, it should include a requirement for gas storage to get us through the winter. Fourthly, it should provide for reform of the climate change levy to make it distinguish between high and low-carbon sources of energy. Fifthly, it should contain measures to require energy companies to say exactly what would have been saved on a cheaper tariff had a customer had access to it, and how to switch to that tariff.
Sixthly, the Bill should have real incentives to allow communities that host wind farms to reap some of the rewards. Seventhly, it should provide for action to ensure that smart meters are fitted in every home, not by 2021-the Government's plan-but by 2017 at the latest. Eighthly, it should require immediate deployment of carbon capture and storage, with a network of pipes big enough for future use, not just for the proposed demonstrations. Ninthly, it should require the national grid to extend its network out to sea to harness the offshore wind, wave and marine energy that is available there. Tenthly, it should include the opportunity for Parliament to vote on the planning statements to ensure that there can be no further hold-ups in our nuclear programme.
The Secretary of State and the House could have been proud of such a measure-a Bill to keep the lights on, cut CO2 and boost the economy. Had the Secretary of State possessed such boldness and ambition, he would attract the admiration of the House and the country. Instead, it will fall to a Conservative Government to take the decisive action that Britain needs.
5.32 pm
Paddy Tipping (Sherwood) (Lab): It is perhaps a coincidence that Second Reading takes place on the opening day of the climate change conference in Copenhagen, which Lord Stern described as perhaps the most significant international conference since the end of the second world war. Britain will show leadership at the conference. There may well be difficulties, but I hope that, at the end, we will get some sort of political agreement that can be translated into action.
It is important to recognise that the Bill's provisions link with the Copenhagen discussions. As has been said, the measure is modest, with 37 clauses and three subject areas. However, we all need to recognise the enormous challenge before us, and the big challenge of Copenhagen is to ensure that we move to having a robust and stable carbon price in future. Ofgem described the new investment required in the generating industry as being between £95 billion and £200 billion by 2020. It is interesting that Opposition Members have said nothing about nuclear power today. Is it still an option of last resort? Do they accept Zac Goldsmith's comment that the Tory policy is "No to nuclear power"? Where do they stand on nuclear power in their priorities for the future?
Greg Clark: I am delighted to have the opportunity to correct the hon. Gentleman. He will discover when he reads Hansard that I made it clear several times that we want to accelerate the deployment of nuclear power.
Paddy Tipping: What is the position then? Is nuclear power still a sort of last resort, ranking behind renewables? What does the hon. Gentleman say to his errant colleague Mr. Goldsmith, who says that his position-and he has been an adviser to the Tory party-is a no to nuclear power.
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