The
Committee consisted of the following
Members:
Chairs:
Martin
Caton
,
†Mr
Dai Havard
†
Andrew,
Stuart (Pudsey)
(Con)
†
Bebb,
Guto (Aberconwy)
(Con)
Brennan,
Kevin (Cardiff West)
(Lab)
Bryant,
Chris (Rhondda)
(Lab)
Cairns,
Alun (Vale of Glamorgan)
(Con)
Clwyd,
Ann (Cynon Valley)
(Lab)
Crabb,
Stephen (Preseli Pembrokeshire)
(Con)
†
David,
Mr Wayne (Caerphilly)
(Lab)
†
Davies,
David T. C. (Monmouth)
(Con)
†
Davies,
Geraint (Swansea West)
(Lab/Co-op)
†
Davies,
Glyn (Montgomeryshire)
(Con)
†
Edwards,
Jonathan (Carmarthen East and Dinefwr)
(PC)
†
Evans,
Chris (Islwyn)
(Lab/Co-op)
†
Evans,
Jonathan (Cardiff North)
(Con)
†
Flynn,
Paul (Newport West)
(Lab)
Francis,
Dr Hywel (Aberavon)
(Lab)
†
Gillan,
Mrs Cheryl (Secretary of State for
Wales)
†
Griffith,
Nia (Llanelli) (Lab)
†
Hain,
Mr Peter (Neath)
(Lab)
†
Hanson,
Mr David (Delyn)
(Lab)
†
Hart,
Simon (Carmarthen West and South Pembrokeshire)
(Con)
†
Irranca-Davies,
Huw (Ogmore) (Lab)
†
James,
Mrs Siân C. (Swansea East)
(Lab)
†
Jones,
Mr David (Parliamentary Under-Secretary of State for
Wales)
Jones,
Susan Elan (Clwyd South)
(Lab)
†
Llwyd,
Mr Elfyn (Dwyfor Meirionnydd)
(PC)
†
Lucas,
Ian (Wrexham) (Lab)
†
Lumley,
Karen (Redditch)
(Con)
Michael,
Alun (Cardiff South and Penarth)
(Lab/Co-op)
Moon,
Mrs Madeleine (Bridgend)
(Lab)
†
Morden,
Jessica (Newport East)
(Lab)
Murphy,
Paul (Torfaen) (Lab)
†
Newmark,
Mr Brooks (Lord Commissioner of Her Majesty's
Treasury)
Owen,
Albert (Ynys Môn)
(Lab)
Ruane,
Chris (Vale of Clwyd)
(Lab)
†
Smith,
Nick (Blaenau Gwent)
(Lab)
†
Smith,
Owen (Pontypridd)
(Lab)
†
Tami,
Mark (Alyn and Deeside)
(Lab)
†
Williams,
Hywel (Arfon) (PC)
†
Williams,
Mr Mark (Ceredigion)
(LD)
†
Williams,
Roger (Brecon and Radnorshire)
(LD)
Willott,
Jenny (Cardiff Central)
(LD)
James Rhys, Committee
Clerk
† attended the
Committee
The
following also attended
(
Standing Order No.
102(4))
Hendry,
Charles (Minister of
State, Department of Energy
and Climate
Change)
Welsh
Grand
Committee
Thursday
10 March
2011
(Morning)
[Mr
Dai Havard
in the
Chair]
9
am
The
Chair:
The first business before the Committee is oral
questions.
Oral Answers to
QuestionsEnergy
and Climate
Change
The
Secretary of State was
asked—
Tidal
Power
1.
Jonathan
Edwards (Carmarthen East and Dinefwr) (PC):
What recent discussions he has had on future use of tidal
power in the Severn estuary.
[42519]
The
Minister of State, Department of Energy and Climate Change (Charles
Hendry):
It is a pleasure to serve under your
chairmanship, Mr Havard.
My officials
are talking to private sector consortiums and individual companies
about their ideas for developing tidal energy schemes in the Severn
estuary.
Jonathan
Edwards:
A project to develop a tidal lagoon in Swansea
bay with an output capacity of 60 MW has been in the pipeline for a
number of years. Will the Minister update the Committee on what
discussions he has had with the Welsh Government and other stakeholders
about that
development?
Charles
Hendry:
We have had discussions with the Welsh Assembly
Government on that scheme and other schemes. We are keen to see a range
of ideas. We have been developing the concept of marine energy parks so
that we can make the United Kingdom one of the most attractive places
in the world for investors, and that very much includes the potential
in Wales for the development of marine and tidal
technology.
Jessica
Morden (Newport East) (Lab):
We have heard little more
from the Government about tidal energy since the announcement about the
barrage. What has happened to the money allocated by the then Secretary
of State to consider emerging and newer technologies and their use on
the Severn?
Charles
Hendry:
We are continuing to look carefully at that range
of technologies. This year, we have put in place a marine energy
programme to identify barriers to the potential development of marine
technologies. We are now developing the concept of marine energy parks,
which I believe will make Britain a beacon for investors. The problem
is that some people have started building their technologies here but
have then taken them overseas. We want to ensure that Britain is a
magnet for that sort of investment.
Mrs
Siân C. James (Swansea East) (Lab):
I am glad to
hear the Minister’s words. We in Swansea bay have been fighting
for a long time for this lagoon. With
750 miles of coastline in Wales and the second highest tidal
range, we are well placed for it. It is the tidal lagoon’s time,
and Swansea will welcome it.
Charles
Hendry:
I agree strongly with the hon. Lady. There is
immense potential not only in Wales but more generally. We have some of
the highest tidal reaches in the world on our shores. We want to be
certain that investors consider the opportunities
for coming here. We are putting forward a much more integrated and
structured approach to these developments. We are already seeing a lot
of interest, and in the course of this year we will also be reviewing
support for renewables obligation certificates. We brought that forward
by a year in order to give greater clarity to investors.
Nuclear
Power
2.
David
T. C. Davies (Monmouth) (Con):
What plans he has for the provision of
nuclear power in Wales; and if he will make a statement.
[42520]
7.
Stuart
Andrew (Pudsey) (Con):
What plans he has for
the provision of nuclear power in Wales; and if he will make a
statement.
[42526]
The
Minister of State, Department of Energy and Climate Change (Charles
Hendry):
With permission, Mr Havard, I would like to
answer questions 2 and 8 together. It is the Government’s policy
to enable energy companies to invest in nuclear power but without
public subsidy. We have completed our consultation on the draft revised
energy national policy statement, which includes nuclear and which
identified eight potential sites for new nuclear power stations,
including at Wylfa. We shall be considering responses to the
consultation, and we intend to present the finalised statement to
Parliament for ratification in the spring.
The
Chair:
For clarity, the two questions are No. 2 and No. 7;
they have been renumbered.
David
T. C. Davies:
Does the Minister agree that nuclear power
is the safest and most reliable way of generating large amounts of
electricity in a manner that does not create carbon dioxide emissions,
so all keen environmentalists should support
it?
Charles
Hendry:
I apologise for the earlier confusion, Mr Havard.
If question No. 2 had been linked with question No. 8, it would have
made for an interesting debate.
We certainly
see a strong role for nuclear power. We are very encouraged by the
interest being shown in the development of the Wylfa site, and there
are great opportunities for nuclear technology in Anglesey and more
generally in north Wales. It is one of a range of technologies that we
believe are terribly important in this sector. We believe that coal
with carbon capture and storage, and in time gas with CCS, and the
wider roll-out of renewables add up to a sensible balanced energy
policy. We believe that we need the full range of
technologies.
Stuart
Andrew
:
As someone who was born and brought up in
Anglesey, I know how important Wylfa is to the local economy. What is
the Minister’s Department doing to secure training and skills so
that local people can enjoy the benefits when Wylfa comes along, and
would he comment on the joint working between coleg Llandrillo
and coleg Menai, which are trying to develop skills to ensure that local
people can enjoy the benefits of a new power station at
Wylfa?
Charles
Hendry:
I was pleased to have the chance to meet those
involved in the provision of education when I visited Anglesey a few
weeks ago. My hon. Friend is right to say that we must secure the
skills base. It is encouraging to see that work is being done through
the National Skills Academy for Nuclear, and a number of universities
are starting to bring forward nuclear engineering courses. Colleges see
wide potential in areas where nuclear build looks
likely.
Paul
Flynn (Newport West) (Lab):
In 1979, a plan for a nuclear
power station in Wales failed for technical reasons; the planning
permission ran out of time. Will the Minister tell us whether the
Government plan to revive the plans for a nuclear power station at
Portskewett in Monmouthshire, so that we can ask the public? We can
then find out whether the hon. Member for Monmouth is as enthusiastic
to dump on his own doorstep as he is on other people’s
doorsteps?
[
Interruption
.
]
Charles
Hendry:
Given the response of the Committee, it appears
that there may be a degree of controversy about that. We have
identified eight sites that we believe can realistically be developed
by 2025. They are listed in the national policy statement. We have
consulted on them. The final list will be put before Parliament soon
after Easter, once we have reviewed the responses to the
consultation.
Wind
Farms
3.
Hywel
Williams (Arfon) (PC):
What account was
taken of his Department’s policy on the delivery of offshore
wind farms in the decision on the applicability of the UK Ports Fund to
Wales.
[42522]
The
Minister of State, Department of Energy and Climate Change (Charles
Hendry):
The UK is No. 1 in the world for offshore wind
deployment, and we are committed to remaining at the forefront of this
technology. It will make a major contribution to meeting our renewable
targets. The offshore wind manufacturing supply chain needs to expand
to support that ambition, and we have provided up to £60 million
of industrial support over four years to support the development of
projects in the offshore wind manufacturing supply chain. However, I
should make it clear that there is no UK ports fund, and we are not
providing financial support for speculative ports development. As
industrial support is a devolved matter, that funding applies only to
England.
Hywel
Williams:
I thank the Minister for that answer. The
Assembly Government in Scotland is investing £70 million
in Scottish ports specifically to develop capacity in offshore wind and
other renewables. There is a great opportunity for that in Wales. How
much are the Government investing in Wales for that purpose, and why is
it that
sum?
Charles
Hendry:
I hope that the hon. Gentleman will understand
that we changed the programme from a speculative programme for ports
that may never have
attracted manufacturing investment to one that was directly linked to
manufacturing facilities. We have seen companies deciding that they
want to invest on that basis. The Scottish Government put forward
£70 million of ports funding, and it is open to the Welsh
Assembly Government to do the same. However, we believe that it should
be linked to specific manufacturing facilities rather than speculative
port developments.
Owen
Smith (Pontypridd) (Lab):
Does the Minister accept that
the change in policy on ports funding has significantly disadvantaged
Wales? The ports of Holyhead and Milford Haven were ideally placed for
the development of wind turbines. Given that offshore wind is the
coming thing, does the Minister not accept that Wales is disadvantaged
as a result of that
decision?
Charles
Hendry:
It is important to understand why we made the
change. The danger was that the money could easily have been used to
upgrade ports that would never have attracted investment in the marine
technology sector. It would have been speculative, and we would not
have had the chance to bring forward the investment that we wanted. By
making it conditional on manufacturing projects, it inevitably became
an economic development support mechanism, and that is clearly a
devolved matter. It is therefore up to the Welsh Assembly Government to
decide if they wish to make a priority of supporting such investment in
Wales, in the same way as the Scottish Government decided to do in
Scotland.
Owen
Smith:
Does the Minister not accept that had that money
been made available for Wales, we might have attracted further economic
development? We might well have seen wind turbine manufacturing coming
to the north and the south of Wales. Not allowing that money to be
spent has hamstrung Welsh development in respect of
renewables.
Charles
Hendry:
I do not accept that argument. The reality is that
the funding is Barnettised because it is economic development funding.
It is entirely open to the Welsh Assembly Government to go down the
same route as the Scottish Government and use their resources to
support such development. There is a great deal of interest throughout
the United Kingdom in the offshore wind development manufacturing
sector. Any company anywhere in the world that is looking to get into
that sector will put the UK on its list. The Welsh Assembly Government
must decide how they want to take that forward in
Wales.
Energy
Policy
4.
Roger
Williams (Brecon and Radnorshire) (LD):
What
consultation and collaboration on energy policy his Department has
undertaken with the Welsh Assembly Government.
[42523]
The
Minister of State, Department of Energy and Climate Change (Charles
Hendry):
Department of Energy and Climate Change Ministers
and officials work in close partnership with all UK devolved
Administrations in tackling climate change and promoting
sustainable
energy. Although energy is a non-devolved policy area, we recognise the
importance of co-operation and working together on areas of mutual
interest.
Roger
Williams:
I thank the Minister for his answer. If I
understand correctly, a statement will be made today on the renewable
heat incentive. Does he agree that Wales is well placed, both as a
producer of biomass and as a user of renewable heat, to produce
renewable heat? Will the Minister work closely with the National
Assembly on the
issue?
Charles
Hendry:
My hon. Friend is absolutely right to say that we
expect a statement later today on the development of the renewable heat
incentive. It will be the first of its kind in the world, so it is a
significant step forward. There is no doubt in our minds about the
potential for Wales to play a very significant part in the process. We
are thinking both of the growth in development of the materials
themselves and of the potential for deployment. We look forward to
working closely with the Welsh Assembly Government to ensure that those
opportunities are
optimised.
Mr
Wayne David (Caerphilly) (Lab):
Will the Minister explain
how the interface between the Infrastructure Planning Commission and
the Welsh Assembly works in practice? I am thinking in particular of
the recent application by Covanta for a major waste-utilising power
station on the boundary of the Caerphilly and Merthyr Tydfil council
areas.
Charles
Hendry:
There will be no distinction between how the IPC
changes will affect Wales and how they will affect England. Ultimately,
bringing the decisions back to Ministers, rather than having them be
taken by an unelected quango, will ensure that they are taken with a
full understanding and with much greater parliamentary scrutiny than
might otherwise be the case. We have put in place measures to ensure
that during the transition phase, there are no delays. The discussions
that we have had with a wide range of potential developers have
reassured us that they are now satisfied that that is the
case.
Mr
David Hanson (Delyn) (Lab):
What discussions has the
Minister had with the Welsh Assembly regarding the review of feed-in
tariffs that he announced on 7 February? He will know that
in my constituency and that of my hon. Friend the Member for Wrexham
there are manufacturing plants that have put investment in, based on
the proposals before 7 February. Those plants are now saying to my hon.
Friend and me that those investments are at risk and that the market is
uncertain. Will the Minister take this opportunity to clarify the
position?
Charles
Hendry:
I shall be very pleased to clarify the position. I
am grateful to the right hon. Gentleman for raising the issue. We
examined the figures and discovered that the assessment made by the
previous Administration was absolutely wrong. It had assumed that by
2013 not a single facility of more than 50 kW using feed-in tariffs
would have been developed anywhere in the UK. It is now clear that many
megawatts are coming through;
they are already coming through the planning system. We have therefore
decided to ensure that the scheme cannot have all its funding taken up
by large-scale solar farms, which was not the original intention and,
indeed, was not a concept that the previous Government could have
anticipated, because the concept did not really exist at that time. We
have decided urgently to review the large-scale element to ensure that
the programme continues to go forward, that we can prioritise the
schemes at household and community levels and that we therefore deliver
what the right hon. Gentleman and we wanted to see from the
scheme.
Infrastructure
Planning
Commission
5.
Mr
Elfyn Llwyd (Dwyfor Meirionnydd) (PC):
What
discussions he has had on the effects in Wales of the discontinuance of
the Infrastructure Planning Commission.
[42524]
The
Minister of State, Department of Energy and Climate Change (Charles
Hendry):
The impact of the abolition of the Infrastructure
Planning Commission for Wales is minimal and no different from the
impact for England. The pre-application and examination procedures will
remain the same and will be handled by the major infrastructure
planning unit—the IPC’s successor. However, final
decisions will be taken by Ministers. UK Ministers will continue to be
responsible for major energy infrastructure decisions in England and
Wales. We believe that a streamlined planning system, which minimises
delays and ensures investor confidence, is best delivered through a
unified planning system for major infrastructure for England and Wales
together.
Mr
Llwyd:
I thank the Minister for his response. I served on
the Committee that considered the Infrastructure Planning Commission
and I opposed it from the first, because I thought that it was a
vehicle to steamroller bad neighbour applications through, against
public opinion. Will the Minister assure this Committee that the public
will have a voice in the new procedure? Also, given the historic vote
in the referendum in Wales on Thursday, is it not time to review the
veto of applications for more than 50 MW in
Wales?
Charles
Hendry:
I am grateful to the right hon. Gentleman. We have
considered the issue and decided that it is right that such matters
should be decided on a UK-basis, with UK Ministers making decisions
about that level as far as Wales is concerned. I assure him that the
process is designed to ensure that local opinion will be heard, but at
the end of the day, there are significantly important infrastructure
projects for which a national decision is required because of the scale
of the project. We support the concept of a different planning system
for developments of over 50 MW, but we also believe that it is right
that those decisions should continue to be made by UK Ministers with
regard to Wales.
Renewable
Energy
6.
Ian
Lucas (Wrexham) (Lab):
What steps he is
taking to promote development of renewable energy projects in
Wales. [42525]
The
Minister of State, Department of Energy and Climate Change (Charles
Hendry):
We are committed to creating the right conditions
for companies to invest in renewable energy projects throughout the
United Kingdom, including the provision of appropriate incentives and
the removal of financial barriers. We are also working to reduce or
eliminate non-financial barriers, such as planning and grid connection
issues. In particular, the ambition shown by Wales in harnessing its
great wealth of renewable resource onshore and offshore is highly
valuable.
Ian
Lucas:
What the Minister said about the 50 kW limit and
the review of the feed-in tariff was entirely wrong. If he talked to
the industry and people such as Andrew Lee from Sharp’s in my
constituency, which on the basis of Labour’s feed-in tariff has
created 300 additional jobs in Wrexham this year, he would
know that, far from solar farms beings a problem, the Tory non-growth,
anti-growth policy is stopping the development of small neighbourhood
projects and putting doubt into an industry that is growing and
creating jobs. I thought that that was what the Government
wanted.
Charles
Hendry:
I am sorry that the hon. Gentleman takes the
matter in that vein. The issue is that we must confront massive growth
of large-scale solar applications, which the previous Administration
had simply not anticipated. We understand why: they were not even on
the horizon at that time. More importantly, the previous Government did
not put in a threshold between 50 kW and 5 MW. If that had been put in
place at the time under the original legislation, it would have been
possible to do this differently, but the previous Government did not do
so, so we must review the matter. His constituents and those of many
other hon. Members would wish to take advantage of the available
funding for their own homes in their own communities. We want to
preserve that for people to be able to take advantage of it. The
funding would otherwise be swallowed up by large-scale facilities,
which was never the original
intention.
Nia
Griffith (Llanelli) (Lab):
Given that the Minister wrongly
believes that 50 kW would supply 1,500 homes and not 15 homes—5
MW is needed for 1,500 homes—will he now reinstate the original
feed-in tariff conditions so that excellent projects such as those in
my constituency, which are using brownfield, inaccessible pit-top sites
in former mining communities to produce energy for perhaps 800 houses,
which is exactly the number of people in the village, can go ahead and
not sit in jeopardy of being cancelled, with the likelihood that the
whole project will fall? Not only will jobs be lost in the local solar
panel factory, but the use of the infrastructure grid that is already
on those sites will not be put to maximum
use.
Charles
Hendry:
I hope that the hon. Lady will also make
representations to her colleagues who were Ministers when the
miscalculation was made. If they had introduced intermediate
thresholds, it would have been possible initially and from the absolute
outset to protect community schemes. Of course, we want community
schemes to go forward, but this is a direct result of the
miscalculation that occurred in the original estimation, which assumed
that there would be no single application anywhere in the country
before 2013 for over 50 kW. That was
fundamentally flawed. We must address the matter to ensure that the
scheme can go forward in the way that many people
want.
Several
hon. Members
rose
—
The
Chair:
Order. Before we move to the next question, will
hon. Members keep their supplementaries shorter? Otherwise, we will not
make progress. Thank you very
much.
Marine
Energy
8.
Paul
Flynn (Newport West) (Lab):
What plans he
has to develop marine energy in Welsh waters.
[42527]
The
Minister of State, Department of Energy and Climate Change (Charles
Hendry):
The Department assessed the potential development
of marine energy projects in Wales as part of the development of the
second offshore energy strategic environmental assessment scoping
report. The SEA environmental report has just been published and is now
open for consultation. It should pave the way for a future leasing
round for marine energy in Welsh
waters.
Paul
Flynn:
Wales has marine energy as its North sea oil. There
are very few countries in the world that have the length of coast that
we have with pulses of energy coming throughout the 24-hour cycle. We
have hills that can be used for pump storage for storing that energy.
There are sumptuous opportunities. When will we see an energy project
in the marine area delivered in
Wales?
Charles
Hendry:
I agree strongly with the hon. Gentleman about the
potential for a whole range of different types of renewable projects.
We are also keen to open up some of the stranded areas in the Irish sea
where projects cannot currently be developed to see how they can be
brought into a wider strategy with a view to considering the
opportunities across the British isles more generally.
By bringing
forward the ROC regime by a year, we will give greater long-term
clarity to investors. By looking at the way in which the feed-in tariff
system can work, we can consider smaller schemes as well as the wider
market reform package to ensure that we put in place the incentives to
encourage investment across the whole sector of low-carbon
technologies. We are keen to see greater progress in this area, and
have acted quickly to take that
forward.
Energy
Efficiency
9.
Huw
Irranca-Davies (Ogmore) (Lab):
What
discussions he has had with the First Minister on improving the energy
efficiency of the least energy-efficient homes in Wales.
[42529]
The
Minister of State, Department of Energy and Climate Change (Charles
Hendry):
The Secretary of State has had discussions with
the First Minister on all aspects of energy policy, including through
several exchanges of correspondence. The coalition recognises the
importance of helping those who live in the least efficient homes to
take up energy-saving measures. That
is why we are developing our next generation of energy efficiency
policies, including the green deal and the energy company obligation,
so that they are accessible to all Great Britain
households.
Huw
Irranca-Davies:
The Minister will know that there is some
fear among those who install insulation products that, after this rush
to make good on the carbon emissions reduction target
funding—there are also companies that are putting in free
insulation at the moment, which is great for consumers—there
will be a precipice and nothing is there to take the place of the
funding as we wait for the fulminations of the green deal. Has he
considered how we can keep people in those green jobs with insulation
so that they do not fall off the cliff at the end of the CERT
funding?
Charles
Hendry:
The reason why we have put in place the energy
company obligation is that we wanted to provide energy companies with
the incentive to carry forward that work. We recognise that there are a
number of people who already have significant skills in this area. We
have announced this week a greater apprenticeship scheme—1,000
new apprentices—to prepare people for the development and
deployment of the green deal measures. We see this as one of the most
important growth areas in the energy sector. We are very alive to those
issues and, through the changes that we are making, we can respond to
them appropriately.
Chris
Evans (Islwyn) (Lab/Co-op):
Does the Minister agree that
the green deal must hit the hardest to reach homes, especially the
solid stone terraces in the valley in constituencies such as mine? Will
he be setting clear targets to reach those homes and recognise that
that will be a vital mark of success of the
scheme?
Charles
Hendry:
The hon. Gentleman raises an important point,
which he also raised very effectively in a recent Westminster Hall
debate. As the green deal comes through—the legislation has just
completed its passage in the other place—there will be a great
deal of opportunity to discuss exactly how it should be prioritised. We
absolutely share a commitment that the hardest to reach homes and the
people who are at the greatest risk of suffering from fuel poverty
should be prioritised and targeted to ensure that they are early
gainers from this new
development.
Renewable
Energy
10.
Mrs
Siân C. James (Swansea East) (Lab):
What consideration he has given to alternative methods of
energy production including wave and tidal power in Wales for the
purposes of tackling increasing energy costs and demand.
[42530]
The
Minister of State, Department of Energy and Climate Change (Charles
Hendry):
The Government are committed to reducing our
dependency on fossil fuels, reducing carbon emissions and improving our
energy security. The Government’s marine energy programme works
to address barriers facing the wave and tidal sector and is looking to
establish marine energy parks to attract further investment in that
sector. The Government’s electricity market reform package will
support cost-effective investment in all low-carbon technologies.
Although the reform package may have a small impact on electricity
bills in the near term, bills are expected to fall by 2030 as more
low-carbon investment is
delivered.
Mrs
James:
I thank the Minister for his answer. The Welsh
Affairs Committee made several visits and considered the matter very
carefully. We saw projects in places such as Lynmouth, where there have
been some very successful trials. However, alarmingly, we heard about
companies that were having to pull out of Britain because they felt
that other countries in Europe gave them greater opportunity and bigger
grants. What does the Minister think about the Stranraer loch project
and of the Lynmouth trials? Could he give me an
update?
Charles
Hendry:
We are very much aware of the concern that the
hon. Lady has rightly expressed. If we want companies to invest in
Britain, they must feel that the right support mechanism is in place in
order for that to happen. The previous marine renewables deployment
fund was never accessed because the bar was set too high for it.
Therefore, we are looking at how to use those resources in a more
proactive way to encourage development. That is why we have the marine
energy programme. We have put a board in place to look at where the
potential barriers are, and we are looking at marine energy hubs and
parks, so that we can bring together that expertise and excellence from
around the world. We are determined that those technologies should be
developed here, rather than companies feeling that they have to move
overseas to get more
support.
Tidal
Power
11.
Jessica
Morden (Newport East) (Lab):
What plans he
has for tidal power in the Severn estuary; and if he will make a
statement.
[42532]
The
Minister of State, Department of Energy and Climate Change (Charles
Hendry):
The conclusion of the Severn tidal power
feasibility study was that the Government do not see a strategic case
for public investment in a Severn tidal power scheme in the immediate
term. However, the Government recognise that the factors that will
determine the feasibility of Severn tidal power could change over time.
The report contains potential triggers for a review, although it is not
expected that a review will take place before 2015 at the
earliest.
Jessica
Morden:
I appreciate the Minister’s earlier
responses, but could he be more specific about where we go from here,
so that we are not wasting more time while we wait to harness tidal
power?
Charles
Hendry:
The fundamental decision we took was that the
£34 billion scheme was simply unaffordable in the current
climate. Therefore, we wanted to try to focus attention on the range of
other ideas that are coming forward. We are already having discussions
with potential developers and investors about a range of other schemes
that could take place, either as smaller barrages elsewhere around the
United Kingdom or through the development of tidal lagoons. There is a
great deal of expertise among British and other companies
that are looking to invest in the United Kingdom. We are actively
talking to them and developing such an approach through our marine
energy programme, so that we can ensure that there is some progress in
that
area.
Geraint
Davies (Swansea West) (Lab/Co-op):
In the
Minister’s deliberations, did he consider not only the 5%
contribution of energy, but the fact that a Severn barrage would
constitute a massive flood defence and would enable economic
redevelopment upstream? That would certainly add value both to Wales
and England and therefore change the calculus in terms of economic
value and growth. Will he look again at
that?
Charles
Hendry:
The scheme that was set up by the previous
Administration looked at a very wide range of different issues, for
example, the economic benefit and losses and the full range of
environmental impacts. It particularly focused on the electricity
generation aspect, rather than the flood defence mechanism potential.
However, it was a very wide-ranging report and the conclusion we have
to reach was that £34 billion made it an unaffordable scheme
this time. If there needs to be public subsidy to make this happen and
we have the funding available, we ought to make sure that that is not
siphoned away from other renewable projects for a project that would be
very long scale in its development and would have real
challenges.
Geraint
Davies:
Will the Minister look again at
that?
Charles
Hendry:
The hon. Gentleman asks me to look at the project
again. We have said that we have not written it off for all time, but
we do not anticipate coming back to it before
2015.
Training
and Skills (Energy
Sector)
12.
Nick
Smith (Blaenau Gwent) (Lab):
What recent
discussions he has had with the Welsh Assembly Government on the
provision of training and skills development programmes in the energy
sector in Wales; and if he will make a statement.
[42533]
The
Minister of State, Department of Energy and Climate Change (Charles
Hendry):
The Secretary of State has regular discussions
with the First Minister on all aspects of energy policy. The coalition
Government recognise that it is crucial we have a skilled work force to
enable energy security and a successful low-carbon transition. We also
realise the growth opportunities that the sector presents. I am aware
that the energy sector faces specific challenges, in terms of both an
ageing work force and the increase in the skills base required to
deliver low-carbon generation and networks. The UK Government are
working with industry and the skills sector to address those
challenges.
Nick
Smith:
I thank the Minister for his answer. Can he
guarantee that excellent initiatives such as the British Gas Academy in
Tredegar in my constituency will be part of the green deal? I visited
the academy with my hon. Friend the Member for Bridgend just a few
weeks ago.
Huw
Irranca-Davies (Ogmore) (Lab):
Ogmore.
Nick
Smith:
Sorry, I mean my hon. Friend the Member for Ogmore.
I hope my hon. Friend will excuse me. It is a fantastic initiative and
a great place, which must be continued and tied in with the green
deal.
Charles
Hendry:
I agree with the hon. Gentleman—even if he
is confused about who his colleagues are. The facility in
Tredegar is extremely exciting. It has the opportunity for training
something like 1,000 to 1,300 people, and would be an important part of
that. British Gas has been a key partner in developing the concept of
the green deal, to ensure that we understand its opportunities and so
that it understands how it can most effectively co-operate with the
wider programme.
Onshore Wind
Energy
Projects
13.
Simon
Hart (Carmarthen West and South Pembrokeshire) (Con):
What steps he plans to take to support communities
affected by the development of onshore wind energy projects in
Wales.
[42535]
The
Minister of State, Department of Energy and Climate Change (Charles
Hendry):
I believe it is right for communities hosting
renewable energy projects to be rewarded for the contribution they make
to the wider society. Many wind farm operators already provide generous
benefit packages to local communities. In addition, planning
applications for projects over 50 MW in England and Wales
must provide a statement of community engagement. In England, we
propose to include a requirement for the development of large-scale
schemes below that threshold to consult the local community prior to
submitting a planning application.
Simon
Hart:
The Minister mentioned significant financial benefit
for those communities affected by wind farm applications in Wales. Will
he shed light on what that means, and whether it involves communities
within sight or sound of a wind farm, or just those within the general
area?
Charles
Hendry:
My hon. Friend raises an important point.
Sometimes, the communities closest to the facility will not necessarily
be those most affected by it, and my colleagues in the Department for
Communities and Local Government are working to look at exactly how the
scheme should be structured. In England, we have given an assurance to
ensure that the business rates are kept locally rather than siphoned
off to the Treasury in the early years of a new development, and that
may be an issue that could be looked at for Wales as well. It means
that communities that host a facility on behalf of the wider national
need get recognition for what they do.
The
Chair:
That has exhausted the time for questions this
morning. I thank the Minister and members of the Committee for their
co-operation. Some questions were not raised, but I am sure that the
Minister will write quality answers to them. We now move to the formal
business and the UK Government’s energy policy as it relates to
Wales.
UK Government’s Energy
Policy
9.31
am
The
Secretary of State for Wales (Mrs Cheryl Gillan):
I beg to
move,
That
the Committee has considered the matter of the UK Government’s
energy policy as it relates to Wales.
I begin by
welcoming you to the Chair, Mr Havard. It is the first time
that you have chaired the Welsh Grand Committee and it is a pleasure to
serve under your chairmanship. I thank my hon. Friend Minister for
taking the time to answer questions from the Committee so fully. It was
his first visit to the Welsh Grand Committee, and I hope it will not be
his last. It is the first time that an Energy Minister has attended
this Committee since 2008, when the then Secretary of State, the right
hon. Member for Torfaen, invited the right hon. Member for Croydon
North (Malcolm Wicks) to attend. I hope that members of the Committee
think this is a useful exercise. It gives us the opportunity to hear at
first hand the Minister directly responsible for these policy areas,
and means that all Members of Parliament for Wales have the opportunity
to make their points and put questions to the Minister. I am pleased to
say that we have already spoken to the Chief Secretary to the Treasury.
I understand that he intends to offer his time to the Committee
post-Budget, so that members of the Committee will have the chance to
put to him at first hand all the points that are so important to
Wales.
I will keep
my remarks brief to allow maximum time for others to participate. The
energy sector is important to Wales, both in the contribution that it
can make to the carbon reduction agenda and in terms of the much needed
economic benefits that will come by putting Wales at the heart of the
new green economy. Wales is an energy rich country, and for generations
we have been at the forefront of energy supply in the UK. That is
natural, given the natural resources at hand, and the hard work and
efforts of Welsh people. We now have the potential to build on that
expertise by exploiting energy potential and ensuring that Wales is at
the forefront of the transition to a low-carbon economy. Welsh coal was
at the heart of powering the industrial revolution, and I want to see
Welsh resources and expertise powering the coming green revolution. I
believe we will achieve that through the development of wind and marine
energy, solar and nuclear power and clean coal, which will make a
significant contribution to the energy security of our
nation.
Mr
David Hanson (Delyn) (Lab):
I am grateful that the right
hon. Lady wants to see jobs created in the energy sector, but I have a
letter from a company in my constituency, which has been copied to the
Minister responsible for energy. It states that the change in the
feed-in tariff regime that we discussed
earlier,
“is
putting at risk job creation in
Wales.”
Will
the right hon. Lady comment on that?
Mrs
Gillan:
The right hon. Gentleman has had the opportunity
to put that matter directly to the Minister and his constituent
company. I hope he will copy me in on that letter, because I have not
had the advantage of seeing it. He knows that there is a comprehensive
review
of the feed-in tariffs, and that has followed the evidence that the
Energy Minister discussed earlier on with the Committee that
large-scale solar farms could soak up the money that was intended for
smaller contributors. So I hope that the Minister will now respond to
the right hon. Gentleman, and that the right hon. Gentleman will copy
me in on that letter from his constituent
company.
The
challenge faced right now in the UK is certainly to de-carbonise, and
now is the right time to address that. We need to change our energy
infrastructure. The current market has worked well, delivering adequate
capacity margins, but continued investment in energy plants would
maintain our medium-term energy
security.
Mark
Tami (Alyn and Deeside) (Lab):
What we are seeing from the
Government is a lot of talk and not very much action. Does the
Secretary of State agree with me that it would help—particularly
in respect of nuclear power—if we had a Secretary of State for
Energy and Climate Change who actually supported the
Government’s policy? Would not her honourable colleague, the
Minister with responsibility for energy, make a far better Secretary of
State than the current
one?
Mrs
Gillan:
I am not going to be drawn down that path; I think
that is a gratuitous political point, but I am grateful for the
suggestion. I always work closely with my Friend the Minister of State,
who has been so good as to come here this morning. His talents are not
wasted on me, but we have some excellent members of the Cabinet who do
the job extremely
well.
Jonathan
Evans (Cardiff North) (Con):
I take the opportunity of
putting a serious point to her, in which people in Wales might be
interested. At the present time, there is a review in relation to the
structure of the electricity market, and yet very many people in
Wales—including a number of smaller companies seeking to supply
energy to the network—have rightly pointed out that there is a
real concern about the structure of the market in the United Kingdom,
particularly in respect of the monopoly of transmission companies. They
exercise that monopoly in ways that result in half of them being
investigated by Ofgem. Will that be part of the electricity
review?
Mrs
Gillan:
I am grateful to my hon. Friend for raising a
serious point, which is part of the review that is being conducted by
Ofgem. I know that it is being taken very seriously because it is a
matter of great concern and I have been reassured by my hon. Friend
here that it is being looked
at.
Huw
Irranca-Davies (Ogmore) (Lab):
Will the right hon. Lady
give
way?
Mrs
Gillan:
I would like to make some progress now.
Many power
stations are coming to the end of their lives; many are too polluting
for modern standards. By 2018, we are going to see 16 power stations
with a generating capacity of around 19 GW or some 25% of
Britain’s total closing. This presents the UK with a challenge,
and Wales with an opportunity to help fill
the gap that it leaves. Over the next 10 to 15 years,
£200 billion needs to be spent on new generation,
transmission and distribution so that we can build secure supplies of
low-carbon generation. This is a major investment, some of
which is going to come to
Wales.
The
starting point of energy policy must be energy saving: after all, the
cheapest energy is the energy that we do not use at all. That is why
the Government are taking steps to help households and businesses
control their energy bills and reduce energy consumption through
proposals such as the green deal. The potential of the green deal is
not just in reducing energy use. There are big opportunities for our
businesses—not only in the insulation industry, which in itself
could quadruple in size within the UK, but in the supply chains across
the country. The green deal proposals have the potential to unlock tens
of billions of pounds of private sector funding in the coming years,
and that means, as we all know, jobs and investment, which we need so
badly in
Wales.
The
development and take-up of energy efficiency measures will also offer
the training and skills opportunities for Welsh workers that were
referred to earlier. We are already benefiting from that. As the hon.
Member for Blaenau Gwent mentioned, the British Gas green skills
training centre, which is the first in the UK, opened in Tredegar last
year, creating 60 jobs. As I understand it, the centre will each year
give green training to more than 1,300 people, including local
long-term unemployed people. That will help to equip people from the
area with the skills to deliver these emerging technologies in the
communities where they
live.
The
Government are determined to maximise UK growth, as we move to a green
economy, by addressing the existing barriers to investment. We will
listen to business on that. We are currently consulting on proposals
that are designed to strike a balance between the best possible deal
for consumers and giving both existing players and new entrants in the
energy sector the certainty that they need to
invest.
Geraint
Davies (Swansea West) (Lab/Co-op):
May I pick up the point
about inward investment and green carbon infrastructure? Will the
Minister and her colleagues consider again rail electrification to
Swansea? I appreciate that the argument against that was that there are
many stops on the way from Cardiff to Swansea, although that seemed to
be lost on the Government when they were considering the proposals for
electrification up the valleys, with the number of stops there. Will
they particularly consider the opportunity for a Swansea parkway, which
would be above Swansea, of course, and would run across to Milford
Haven and connect up with Ireland, as an idea for improving the carbon
infrastructure and inward investment for
Wales?
Mrs
Gillan:
The hon. Gentleman knows that it was a red letter
day on St David’s day when we announced the rail electrification
into south Wales. Swansea will be a beneficiary of that
electrification, as will Cardiff, Newport and, indeed, the Welsh
economy. He will also know that it was a red letter day in so far as we
will be working with the Welsh Assembly Government to look into the
electrification of the valleys lines. Of course, there is always the
possibility that the business case will be made and the electrification
will continue further down.
Nick
Smith:
It is interesting to hear about the electrification
of the valley lines. There was an omission from the statement on
electrification of the valley lines. The line from Cardiff up to Ebbw
Vale was not
discussed.
Huw
Irranca-Davies:
And
Maesteg.
Nick
Smith:
And Maesteg. Will the Minister give an assurance
that the Cardiff to Ebbw line will also be
electrified?
Mrs
Gillan:
I have already received representations about Ebbw
Vale, and that is certainly a matter that we are looking into. We are
looking into it in conjunction with, quite rightly, the Welsh Assembly
Government, who are responsible for that area. I shall now give way
again. Just let me check that it is the hon. Member for
Ogmore.
Huw
Irranca-Davies:
It is, although I am representing also
Maesteg railway station all the way to the Cheltenham line. However, my
question is not on rail but on electricity market reform. What meetings
or discussions has the Minister had directly with energy-intensive
users in Wales, including people such as Tata Steel and others? It is
very important that we decarbonise energy and that we have affordable
and secure energy for the future. It is equally important that we
protect the many thousands of jobs and employers in energy-intensive
industries.
Mrs
Gillan:
My right hon. Friend the Secretary of State for
Energy and Climate Change has recently had meetings—in the past
week, I think—with the organisations to which the hon. Gentleman
refers. I have set up a business advisory group, which includes
representatives from across industry in Wales. At the group’s
first meeting, energy requirements and energy policy were at the
forefront of people’s minds. I can therefore reassure the hon.
Gentleman that I am examining the issue in my capacity as Secretary of
State for Wales. I will continue to do whatever facilitating I can of
the dialogue between the Department of Energy and Climate Change, my
Department, the Welsh Assembly Government and businesses, because the
hon. Gentleman raises a very valid point. We need to consider this
issue carefully. It is extremely important to our business
community.
Owen
Smith (Pontypridd) (Lab):
Will the Minister give
way?
Mrs
Gillan:
I will, but I would like to make some progress
because plenty of hon. Members want to
speak.
Owen
Smith:
I am grateful to the right hon. Lady for giving way
once again. She mentioned a moment ago her business advisory group. Has
she asked that group what its view is of the Opposition proposal that
fuel prices could be reduced were the Government to cut VAT on fuel,
paying for it out of a bank bonus levy?
Mrs
Gillan:
I thank the hon. Gentleman for his question, but I
shall not pre-empt anything that my right hon. Friend the Chancellor
may do in his Budget.
The hon. Gentleman knows very well that the Treasury is considering the
cost of fuel, and announcements must keep until the Budget.
With your
permission, Mr Havard, I shall make some progress. The renewable
industries are a vital piece in the green jigsaw, and our national
policy statements contain a firm commitment to generate at least a
third of our electricity from renewable energy by 2020. Wales, with its
wealth of wind power and its historical strength in the energy sector,
is well placed to play a full part in meeting that
challenge.
Mr
Mark Williams (Ceredigion) (LD):
The right hon. Lady
mentioned our strengths. Does she accept that there is huge strength in
our higher education sector? She will be aware of a pioneering project
being undertaken at the Institute of Biological, Environmental and
Rural Sciences in Aberystwyth on biofuels, which presents huge
opportunities not only through the value of the research but through
its potential for inward
investment.
Mrs
Gillan:
I am so glad that I gave way to my hon. Friend, as
I visited that project the other day and had discussions with the
research team. It is one of the most exciting projects, and we need to
encourage that sort of thing. Wales has expertise, and we must cherish
it and ensure that it grows. Both here and internationally, there is a
good opportunity to learn from the technology and inventions taking
place in Wales.
Wales has
great natural resources, and they should be at the heart of our
renewable energy solutions. We already have offshore sites at North
Hoyle and Rhyl Flats, and another will soon be built at Gwynt y
Môr, and we will deliver an offshore electricity grid to support
the development of new offshore wind power.
We also have
one of the most technologically advanced solar module manufacturing
plants in Sharp’s installation at Wrexham, which was referred to
earlier. Only a month ago, it announced that it was doubling
production, opening a training academy and creating 300 new jobs. That
is another example of how crucial private-sector employers are in
creating new jobs and investment, and in providing skills for the local
work force.
Some time
ago, I visited G24 Innovations in Cardiff. In its main manufacturing
plant, it is dedicating about 190,000 square feet to producing
dye-sensitised solar cells. It is based on pioneering research; indeed,
it won the Millennium prize last year. Yet again we see Wales leading
the way in cutting-edge energy production. Those are two examples of
many, and they all point to a strong energy presence in Wales. We are
continuously building on that presence with potential developments such
as Anglesey’s energy island and the Atlantic array in the
Bristol channel.
I recognise
the economic importance of the existing nuclear power station in Wales,
and I welcome the news that its operational life has been extended,
allowing it to continue generating energy until the end of 2012. I am
delighted that Wylfa is on the draft list for potential sites for new
nuclear, which could be deployed by 2025. As well as the benefit of
carbon reduction, the economic benefits are also huge. A new power
station could bring
significant investment to the area, creating opportunities for companies
involved in the construction, operation and decommissioning of nuclear
power stations. It could also create up to 5,000
jobs in construction and, I believe, up to 1,000 permanent jobs. All of
that is much-needed good news for Anglesey, helping to secure its
long-term economic stability—and it is good news for
Wales.
Guto
Bebb (Aberconwy) (Con):
Does the Secretary of State agree
that the economic benefits of the development of a second nuclear power
station in Anglesey would be positive not only for the island
but for the rest of north-west Wales? With the A55, people from my
constituency of Aberconwy will be able to enjoy the benefits that a
second power station will bring to the economy of the
region.
Mrs
Gillan:
My hon. Friend is right. I have been working on
the timing of new nuclear build in Anglesey. One of the great things
that we have in Wales is the great decommissioning knowledge to be
found in the pool of skills and labour that we are using at
Trawsfynydd. I am keen to ensure that we do not lose those skills in
that technology—it is a case of mind the gap—so, with my
hon. Friend the Minister of State, I am saying that we need to pay
attention to the time scales here. The extension of life of Wylfa
assists, but the work at Trawsfynydd will be coming to an end, and we
want to ensure that we retain and build on those skills in Wales. These
are good, stable and sustainable jobs for the future for people in
Wales.
Although
climate change means that we must focus on renewable and nuclear
energy, we must not forget Wales’s proud tradition as the energy
powerhouse of the UK, which is built on its strengths in coal and steel
production. Coal will remain an important contributor to the UK total
energy needs for decades to come, but we cannot shy away from the
challenge of managing carbon emissions, and we cannot underestimate the
problems. Demonstration of carbon capture and storage is achievable but
definitely difficult. The work that Tata is doing and the CCS pilot
being built by RWE at Aberthaw shows that coal still has a future in
Wales, even if we must work hard and be innovative to ensure that it
fits with our responsibilities to the environment.
We also
recognise that transition to a low-carbon economy will come at a cost,
which is why we are bringing in measures to support consumers, address
fuel poverty and help households to become more energy efficient.
Current predictions suggest that energy prices will continue to go up.
That is the unavoidable reality facing not just the UK but economies
across the world. The central question is how we can ensure that these
increases are kept as low as possible for consumers while also giving
us the secure and sustainable power supply on which our way of life
depends.
The
Government proposals for electricity market reforms will ensure that
the necessary investment in renewables—nuclear, clean coal and
gas-fired power stations—is as cost-effective as possible. We
are taking steps to help people control their energy bills, through
proposals such as the green deal, to which my hon. Friend the Minister
of State referred earlier on, and to reduce energy consumption. Through
the energy rebate scheme, we are helping some of the most vulnerable
people in society to pay their fuel bills.
Cold weather
payments provide vital reassurance to the most vulnerable households
across Wales so that they can afford to turn up the heating during cold
weather. On top of that, around 700,000 older people in Wales benefited
from winter fuel payments last
winter.
High
fuel prices are placing a huge burden on families across Wales, but
world oil prices and Labour’s fuel duty rises have also had a
big impact. Everyone knows that the new Government faced a situation in
which the country had run out of money and difficult decisions have had
to be made. As a Government, we are examining options, including a fair
fuel stabiliser, and those decisions will be taken in the
Budget.
In
conclusion, Mr Havard, a low-carbon industrial revolution is necessary
to ensure future prosperity. UK expertise and an innovative low-carbon
business environment can lead the way in refocusing our economy to
capture the global opportunities presented by the move to a low-carbon
economy. The UK Government have shown that they are ready to lead that
revolution, and I want to ensure that Wales is at the heart of it. We
need all of us in Westminster and Cardiff bay to work together for the
future viability and success of a diverse Welsh energy industry and to
push forward, in readiness for the substantial opportunities that are
coming our
way.
The
Chair:
Before we go any further, let me say that we need
to co-operate and collaborate with one another if everyone is to
achieve their ambition of making the points that they wish to make. You
all know that, and you have all played this game before, so can I have
a little co-operation from both the Front Benches and the rest of the
Members of the Committee so that we can all make progress? I should
like to call a number of people to make their main contributions before
we finish at 10.25, so some co-operation will be
welcome.
9.54
am
Mr
Peter Hain (Neath) (Lab):
Mr Havard, I welcome you to the
Chair. I am delighted that the Secretary of State has recognised your
excellent work on the University of the Valleys by awarding you the new
title of “Mr Harvard”. I remind the Committee
that, historically, the red flag first flew over Merthyr and that it is
now flying, personified by you in the Chair, over this Welsh Grand
Committee, and very welcome that
is.
I
congratulate the Secretary of State on one energy efficient policy: the
Government’s announcement last week that they will endorse the
Labour Government’s decision to proceed with electrifying the
south-western line to Wales. However, could she tutor the Prime
Minister that Wales is not on the west coast line, as he told
Parliament last Wednesday?
The
electrification of rail is crucial to energy efficiency. Electric
trains can carry more passengers, they are up to 20% cheaper to
purchase and 35% cheaper to operate than diesel trains, and they travel
40% further before failure. Electric trains also emit more than 25%
less carbon per passenger and can use regenerative braking. Bi-modal
trains—electric trains with a diesel engine option—will
be greener than pure diesel, but obviously not as green as pure
electric. The diesel engine takes up space, so there is no passenger
capacity gain. Such engines are also heavy, so acceleration or
deceleration
are not as optimal. Will the Government therefore look again—I
ask the Secretary of State to do so—at having pure electric all
the way to
Swansea?
Regardless
of that issue, the Secretary of State has an absolute duty to ensure
that electrification goes all the way to Swansea, as I ensured would be
the case when I was Secretary of State.
Glyn
Davies (Montgomeryshire) (Con):
What about
money?
Mr
Hain:
I will come to money shortly. Surely cost cannot be
the issue. London to Swansea would cost £1.1 billion, with the
marginal cost of Swansea being just £140 million. Surely, having
committed nearly £1 billion, the Government will not
persist in denying those towns beyond Cardiff, including Bridgend, Port
Talbot and Neath, the electrification that they
need.
Geraint
Davies:
My right hon. Friend will know that the cost of
upgrading Tottenham Court Road tube station alone is £1 billion.
Surely a case should be made by the Secretary of State and others for
the marginal extra £150 million to electrify to Swansea and
bring massive inward investment to the second city of Wales and to west
Wales
generally?
Mr
Hain:
I agree entirely with my hon. Friend because to deny
south-west Wales the enormous economic opportunity provided by
electrification is both inexplicable cost-wise and unacceptable
energy-wise. Is the Secretary of State saying that, having admirably
committed £1 billion to electrify to south Wales, the
Government do not think Swansea is worth a tenth of
that?
The
Railway Safety and Standards Board showed that, taking into account all
economic benefits, the benefit-to-cost ratio for electrification all
the way to Swansea would be 2:2, compared with a benefit-to-cost ratio
on the same basis for Crossrail, which the Government are supporting,
of 1:9. The Treasury rule of thumb is that a BCR of 2 is needed for a
project to have a good business case, and Swansea clearly meets that
criterion.
Mr
Elfyn Llwyd (Dwyfor Meirionnydd) (PC):
In supporting what
the right hon. Gentleman says, I remind the Committee that more than
£16 billion is being spent on Crossrail, which has a lower
cost-benefit analysis
figure.
Mr
Hain:
Indeed. The right hon. Gentleman is absolutely
right.
For
the good of Wales, the Government must not proceed with next
month’s increase in fuel duty, which, because of the
consequential, could add 5p to a litre. The previous Labour Government
often postponed planned duty increases when world oil prices were
rising, as they are now. I urge the Secretary of State to do the
same.
Mrs
Gillan:
I did not realise the right hon. Gentleman was
moving so swiftly off electrification and on to another subject. To
take him back, will he remind the Committee how many centimetres of
railway line in Wales he electrified when he was Secretary of State?
What assessment has he made of the line speed restrictions
between Cardiff and Swansea? Also, is it now Labour policy to be for
electric-only trains and to say that bi-modal
trains are not the way forward, in which case, if there were a
breakdown in the Severn tunnel, will he explain how the trains will get
into
Wales?
Mr
Hain:
The Secretary of State ought to know because the
studies have shown—I have spoken to the previous Transport
Minister about the Severn tunnel and he looked into it—that the
problem is easily soluble. That is not a serious objection to
electrifying all the way to Swansea. Perhaps by talking to the previous
Transport Minister, Lord Adonis, the right hon. Lady should get the
business case that he had before him, which included electrification
all the way to
Swansea.
Mrs
Siân C. James (Swansea East) (Lab):
As for speed
restrictions, the last major upgrade on the line was in 1965 when
coloured signals were introduced. That was a long time ago, so an
upgrade from Cardiff to Swansea is long overdue. Many line speed
restrictions need to be looked at and need modernisation. We travel on
the Vale of Glamorgan line at practically walking speed and the whole
journey takes an hour for historic reasons. We need to look at the line
speeds.
The
Chair:
Order. I appreciate that the electrification of
rail is important to Wales, and it has a relationship to energy.
However, we are debating energy policy, so perhaps we can restrict
ourselves to the business on the Order
Paper.
Mr
Hain:
Thank you, Mr Havard, for that correction. I was
about to mention fuel duty increases, but I want first to correct one
point made by the Secretary of State about rail. We inherited a rail
infrastructure that was falling apart. Those of us who use the lines to
Paddington will know that, during the 1990s and well into the years of
our Government because of the inheritance, the trains were always late.
They were terrible. We massively invested in rail infrastructure,
doubled the passenger numbers and increased the number of trains so I
am not taking any lectures from her on investment in rail. We have a
proud record on
that.
The
right hon. Lady should listen to Labour’s campaign and act now
to help millions of families by reversing the Tory VAT rise of 20% on
petrol. It has added nearly 3p to the price of a litre or £1.35
to the cost of filling up a 50-litre tank. Petrol and diesel prices are
crippling motorists in Wales, especially those on low and middle
incomes.
Huw
Irranca-Davies:
Petrol pricing is an integral part of our
energy security, but would my right hon. Friend care to speculate on
why the Chief Secretary to the Treasury is locked in discussions with
his Treasury colleagues and the EU on special dispensation for parts of
the highlands and islands in tackling rural petrol poverty and why he
is not engaged in the same discussions for somewhere else in the UK
such as rural
Wales?
Mr
Hain:
My hon. Friend, who is an expert in such matters,
given his shadow ministerial role, has raised an important issue, on
which the Secretary of State and the Energy Minister might like
reflect.
Now is the
wrong time to be making things even worse for hard-pressed families in
Wales by hiking up VAT on fuel. The Chancellor should admit that he
got it wrong and reverse the VAT rise on petrol now. In
communities with limited public transport infrastructure, such as my
constituency, many people have no choice but to drive, especially now
that they can no longer take a local job for
granted.
Roger
Williams (Brecon and Radnorshire) (LD):
The right hon.
Gentleman’s point about VAT on petrol is one that we all
recognise. However, I remember that, when the matter went through the
House of Commons, the Opposition did not table an amendment to limit
the increase in VAT to exclude
petrol.
Mr
Hain:
The hon. Gentleman misses one fundamental fact that
has emerged in the meantime: oil prices have gone through the roof and
are continuing to do so. The dramatic rise in fuel prices is punitive
and completely indiscriminate, hitting the poorest hardest. Fuel is an
essential resource in day-to-day living, both for transport and
domestic use, and the dramatic rise in fuel prices to about
£1.40 a litre for petrol and £1.45 for diesel is
unacceptable.
There
could be much worse to come. In a speech on the oil crisis, the
Secretary of State for Energy and Climate Change speculated last week
that oil prices could rise from just over $100 a barrel to $160 a
barrel later this year. Another Minister suggested that soaring oil
prices could raise the cost of petrol to £4 a litre, or
£120 to fill a tank, as The Independent on Sunday
reported a few days ago. With wages being frozen or cut, unemployment
rising, and inflation running at 5%, people are becoming desperate
about the price of petrol and diesel. The Secretary of State and the
Government must recognise that, and recognise it
soon.
Jonathan
Edwards (Carmarthen East and Dinefwr) (PC):
The right hon.
Gentleman may recall that a few weeks ago my party and the Scottish
National party had a debate about the fuel escalator. Will he explain
why his party abstained on the
motion?
Mr
Hain:
Because we do not take nationalist motions
seriously.
Jonathan
Edwards:
Will the right hon. Gentleman give
way?
Mr
Hain:
No, I must make some progress. I have been generous
in giving way.
The fuel
price crisis reinforces the urgency of moving decisively to a
low-carbon strategy, which this Government, rhetoric and spin aside,
show little sign of doing. Policies to tackle climate change are no
longer just about the long-term threat to our planet. They are now
about daily bread-and-butter matters of living standards, which is why
I again appeal to the Secretary of State to reverse the Government's
short-sighted and reactionary rejection of the Severn barrage. It is
the single most important low-carbon, renewable energy project in
Britain. If the Government do not reverse their decision,
no one will believe that they are serious about tackling
climate change.
Mrs
Gillan:
Will the right hon. Gentleman give
way?
Mr
Hain:
Let me make a little progress. The Cardiff-Weston
barrage would generate 8,640 MW, equivalent to three or four medium
gas-fired power stations, and contribute fully 5% of
Britain's entire electricity requirements. It would
be the world’s largest green energy project, and would harness
the enormous tidal power of the Severn estuary, which has the second
highest tidal range in the
world.
Tidal
energy generation has a considerable advantage over other renewable
energy technologies, because tides are predictable and constant. Wind
and solar are intermittent, but tidal power is continuous. If the
Government are willing to turn down an opportunity as good as Severn
tidal power, their entire green energy strategy has no
credibility.
Mrs
Gillan:
The right hon. Gentleman has always been
consistent in his support of the Severn barrage project. He will
correct me if I am wrong, but the former First Minister likened it to
the environmentally catastrophic Three Gorges dam in China, so he has a
bit of work to do in his own party to convince it about the
project.
At
the conclusion of the study, the Government saw that there was not a
strategic case for public investment in the tidal scheme, which could
cost up to £34 billion in the immediate term, but we recognised
that the factors that determine feasibility of Severn tidal power could
change, and the report contains potential triggers for a review. That
is not expected before 2015, but it does not preclude a privately
financed scheme coming forward in the meantime. We must make that
clear. The right hon. Gentleman always refers to us as having cancelled
the Severn barrage scheme, but that is not
accurate.
Mr
Hain:
If a private investor comes forward, it will be
interesting to see what the Secretary of State does. There are private
investors who are willing to come forward, and I will return to that,
and to the cost issue. The way the Government made their announcement
last year completely traduced reality. Leaving the decision to 2015
effectively loses another four to five years of
progress.
Cardiff-Weston
would deliver an enormous 9 TWh a year, more than three times the
proposed Shoots barrage, which would deliver just 2.75 TWh a year.
Lagoons and reefs are not a credible alternative. There would also be
significant economic benefits. The construction and maintenance of the
barrage would provide employment for thousands of skilled workers who
would use materials and resources from local producers and suppliers.
At the peak of construction, the barrage would create 35,000 jobs
throughout the UK, with about half in south Wales, and the deep-water
facilities at Port Talbot docks are ideal for constructing the barrage.
Well over 10,000 permanent jobs would be created around the
estuary.
The
Welsh economy could be further boosted through the opportunity provided
by Cardiff-Weston to establish new road and rail links across the
barrage, bringing reduced travel times and costs between the south-west
and south Wales, and opening up much needed investment opportunities.
For instance, Cardiff airport, which has some of the best landing
conditions in the UK, could attract extra passengers and
flights.
The Welsh
tourism industry would also be boosted. The impressive architecture of
La Rance barrage in France and of the Thames barrier has made them
tourist attractions in their own right. There would be huge
opportunities for new leisure activities such as water sports, fishing
and bird watching on both sides of the Severn estuary. The
Cardiff-Weston barrage would also act as a storm surge barrier,
protecting people’s homes and assets that are under threat from
rising sea levels and increasingly volatile weather—that point
was made by my hon. Friend the Member for Swansea West. That would
enable inhabitants to remain living in low-lying coastal settlements on
the Gwent and Somerset levels. Some 4 million people live in those
low-lying communities. They and their properties would be significantly
safer with that reduced flood
risk.
There
would also be incalculable, yet invaluable, benefits to local wildlife
with the Cardiff-Weston option offering protection for the
Severn’s fragile ecosystems. One of the greatest threats to this
delicate environment is the climate change that the barrage would help
to fight. Every year that passes without a commitment to construct the
barrage is a year lost in the battle against climate change. Research
suggests that the barrage would also reinvigorate the environment and
protect declining species such as the dunlin, an iconic bird in the
Severn that has experienced a catastrophic fall in numbers over recent
years.
Not
only would existing ecosystems be protected, but a study of La Rance
barrage suggests that there would be a significant increase in faunal
abundance and biodiversity. The barrage would slow down the fearsome
Severn tide, introducing more light and oxygen, and therefore improving
the water quality and attracting more fish, which would support greater
and more diverse birdlife. Investment in the barrage would be
investment in the long-term future of the Welsh economy and
environment, producing electricity for generations to come, with a life
expectancy of 150 years as a tried and tested
technology.
The
Parliamentary Under-Secretary of State for Wales (Mr David
Jones):
I commend the right hon. Gentleman, because he has
consistently supported the Severn barrage. Does he accept, however,
that the cost to the public purse would be in the region of £34
billion? If not, what figure would he suggest? In these straitened
economic times, how could the country to afford
it?
Mr
Hain:
I say politely that the Minister is completely wrong
and I am about to come to precisely that
point.
Paul
Flynn (Newport West) (Lab):
To put this into context, it
is worth remembering that the contract for clearing up the mess left by
the nuclear power programme stands at £13 billion, but will
eventually be £93 billion. The new nuclear programme is in chaos
and a comparison could be made—
Mrs
Gillan:
What?
Paul
Flynn:
I am hoping to speak about this point later. The
new nuclear programme in Finland is already three years late and the
profit expectation has been cut by 97%.
The
Chair:
Order. The point of the intervention is
clear.
Mr
Hain:
I think I got the gist, Mr
Havard. I will come to the cost in a moment, but I want first to point
out that La Rance barrage in France, which is similar to the proposed
Cardiff-Weston option, has been reliably generating tidal power for
more than 35 years and will have a long and profitable life for many
decades
ahead.
The
Government gave the cost during a time of public spending cuts as a
reason for abandoning Cardiff-Weston—this comes to the nub of
the cost issues that have been raised—and the Secretary of State
and the Minister have repeated that fiction this morning. It is
entirely false, and potential developers have made it clear to me that
they do not need any public
money.
Mrs
Gillan:
Will the right hon. Gentleman give
way?
Mr
Hain:
I will finish my point. The right hon. Lady and the
Minister raised the point about cost. The potential developers have
told me that, if they have the active backing of the
Government, especially through the planning process, they are confident
of raising the £20 billion to £30 billion necessary to
build it from sovereign wealth funds and other investors, who would see
it as an absolutely sure-safe investment
option.
Mrs
Gillan:
May I offer clarification to the right hon.
Gentleman? We are talking at cross-purposes when we could, in fact, be
in agreement. First, I am assured that there is nothing to prevent a
privately financed scheme from coming forward before
2015.
Secondly,
the company that believes it can deliver a Severn barrage as a
commercially viable project without the investment of significant
public funds claims to have the backing of middle east investors. The
organisation includes the Halcrow group, Ove Arup, various solicitors
and KPMG—the right hon. Gentleman knows many of the people
involved who are in the public
domain.
There
is no reason why the Government will not look at a private project, but
I remind the right hon. Gentleman that there is uncertainty about how
the scheme would comply with regulation, which would add to the cost
and risk of construction. The scale and impact of the scheme would be
far greater than those of La Rance and unprecedented in an
environmentally friendly design project. There are many bridges to
cross and he must not give the impression that the scheme has been
cancelled. We will not put public money into the scheme, but there is
nothing to prevent a consortium from coming forward before
2015.
Mr
Hain:
I am pleased that I allowed the Secretary of State
to intervene—I always am—because she has said something
interesting. She appears to be saying that, if a private
consortium—I have met a number of them and it sounds as though
she has, too—approaches the Government and says, “We can
build this with the private funds we have already accumulated,”
they will back it, but what I hear from those investors is that they
will not be able to get absolute certainty unless they have the
Government’s backing in
principle.
Far
from backing in principle, all the Government have given us is
obfuscation and all sorts of excuses and reasons why we cannot proceed.
If the Secretaries of State for Wales and for Energy and Climate Change
had said last year, “We can’t put any public money into
this, but we will give it backing to get through the planning
process,” rather than kicking the issue into the long grass and
effectively destroying its prospects, I think that investors would have
been queuing up to build. The Government did not say that. Is the Welsh
Secretary now changing her position, with a nod and a wink from the
Energy Minister, and saying that the Government want the Severn barrage
to be built and are giving it all the backing they
can?
Mrs
Gillan:
The right hon. Gentleman knows that I am not
saying
that.
Mr
Hain:
There we
are.
Mrs
Gillan:
The right hon. Gentleman takes me further down the
road: there is nothing to prevent an application from being made or a
private company from coming forward. That will be looked at in the
proper fashion. He also fails to realise that, whatever happens in
relation to the granting of permission to any proposed scheme, it will
not come on stream until well after the 2020 carbon reduction targets
to which we are committed. It is right, therefore, that the Government
should concentrate on those plans and schemes that would contribute to
the targets in the first place, rather than on something in the future.
I repeat that there is nothing to prevent a private consortium from
coming forward with plans, and they would be considered just like any
others.
Mr
Hain:
I am going to make progress by not taking any more
interventions. There is a big difference between the enthusiastic
backing that I gave the project and the lukewarm and mean-minded
“if somebody comes forward” attitude of the Secretary of
State.
The
barrage is a unique opportunity to produce green energy and tackle
climate change, create employment, safeguard people’s homes from
rising water levels, and protect and promote indigenous wildlife and
biodiversity. I ask the Secretary of State to lead within Government on
the case for them to change their stance and back the
barrage.
Sadly,
the Government’s commitment to combating climate change has also
been discredited by a series of decisions to review or cancel existing
schemes that were working effectively and successfully. For example, as
has been mentioned, the Secretary of State for Environment and Climate
Change recently announced a review of the feed-in tariff system
introduced by our Labour Government, even though it has resulted in
21,000 new solar energy installations throughout the UK—14,000
of them in individual homes—because people are rightly concerned
about the enormous dangers of climate change and want to do their bit,
which brings the big society to
mind.
This
was an industry that was beginning to thrive. It is estimated that more
than 17,000 jobs will be created in the solar installation sector in
2011, including in Wales, but only if the feed-in tariff system is not
cut. Howard Johns, chairman of the Solar Trade Association says that
this
is
“threatening
investment and jobs in the sector”.
Solarcentury executive
chairman Jeremy Leggett agrees, and he condemned the review
as
“the
very worst kind of knee-jerk policy
response”
that
“has
done enormous damage to our trust in the new Government and its ability
to work with this sector constructively to deliver a positive way
forward”.
That
deterioration in trust is already affecting investment and staff
recruitment decisions by companies in the sector, yet it is exactly
such investment in the new jobs of the future that will help to turn
around this Government’s dismal growth record, reduce the
deficit and help to generate new growth on a sustainable
basis.
The
Energy Island project in Anglesey is in the same position. The
potential of the island’s tidal power has been explored, along
with the land that is available for the manufacture and maintenance of
wind turbines offshore in the Irish sea. With some UK Government
investment in new infrastructure, as Labour was planning with our
£60 million fund, Anglesey could becoming a leading force in
renewable energy production and servicing, attracting thousands of new
jobs for the future, as I saw early last year on a visit, as Secretary
of State for Wales, to Bremerhaven in northern Germany—an old
and declining port that has been turned into a thriving hub for the
new, huge, multibillion-euro offshore wind industry, with new jobs and
prosperity, backed by the Government, not ignored by the Government, as
is happening here. It is high time that the Government got real on
green energy and abandoned their anti-jobs, anti-growth dogma by
investing for the
future.
The
Chair:
I call Hywel Williams. That has come as a
surprise.
10.22
am
Hywel
Williams (Arfon) (PC):
Being called to speak has come as a
surprise, Mr Havard, as the right hon. Member for Neath was in full
flow there—I was enjoying it. I will press on in the few minutes
available before we
adjourn.
I
want to talk seriously about some issues that have affected my
constituents in the past few months and during the cold
snap—specifically, energy supply to homes in rural areas. I also
want to talk a bit about the
Energy Bill. Many homes in rural areas in my constituency and elsewhere
depend on liquefied petroleum gas and on fuel oil, and there have been
substantial problems, specifically just before
Christmas.
On
supply, LPG provides heating for houses and also for hot water. The
most worrying problem that my constituents have found recently is the
absolute interruption of LPG supplies just before Christmas. A number
of constituents found that they had run out, so they could not heat
their houses or heat water. There was, apparently, a problem with the
main supplier in England. I hardly need say that that was extremely
perilous to people, particularly older people, those with a disability
and families with children. In individual situations, the danger was as
great, or even greater, than that caused by the disruption to water
supplies in my constituency some time ago by the cryptosporidium
outbreak, so there is a substantial issue here of danger to the
public.
LPG,
of course, is very expensive and there is an argument that the high
price is a disincentive to people filling the tank to the top just
before the cold weather comes along. Why should people put all that
money into the ground or into the tank, when they should have the
confidence that supplies will be
available?
There
is also a more structural problem with the market. I have had
complaints and queries over the past few years about the complex and
perplexing pricing structure for LPG. The industry appears to be highly
competitive—there are lots of special offers, lots of short-term
sweetheart deals—but, strangely enough, the stories that my
constituents tell me are all remarkably similar in that there is a
great initial deal on signing a contract, followed, eventually, by
consistently high
prices.
The
pricing structure is one of great complexity, with the same company
charging different prices to customers in identical circumstances, and
a lack of transparency as to the actual cost of the energy when all
those special offers are stripped
away—
The
Chair:
Order. I am sure that the hon. Gentleman can
continue this
afternoon.
10.25
am
The
Chair a
djourned the Committee without Question put
(Standing Order No.
88).
Adjourned
till this day at half-past Two
o’clock.