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
Welsh
Grand
Committee
Thursday 10
March
2011
(Afternoon)
[Martin
Caton
in the
Chair]
UK
Government’s Energy
Policy
2.30
pm
Question
again proposed,
That the
Committee has considered the matter of the UK Government’s
energy policy as it relates to Wales.
Hywel
Williams (Arfon) (PC):
Hon. Members will remember that
before the break I was talking about the domestic supply of LPG and the
problems—
Mr
Elfyn Llwyd (Dwyfor Meirionnydd) (PC):
On that point, may
I say—and I am sure that I speak for the whole
Committee—how encouraging it is to see my hon. Friend so quick
off the mark in this
sitting?
Hywel
Williams:
My right hon. Friend is very kind. To follow the
Secretary of State and the former Secretary of State—well, wait
till I tell them at
home.
I
was saying that there is a lack of transparency in the market, and
making real comparisons between the different deals is difficult,
especially for lay people. The industry seems to be competitive, but
some people, including my constituents, think that that is illusionary,
and that large players in the business have a profound influence on
prices. That affects people’s ability to buy sufficient gas
ahead, especially in critical periods such as
Christmas.
I
understand that the Office of Fair Trading has looked at the industry,
and concluded that there was no problem with competition and, by
implication, with supply and its robustness—the crucial point
that I was making this morning. It pointed to the healthy, large number
of small suppliers at local level, but I understand that some large
players have bought some of the smaller ones, and may have achieved a
dominant market position. The main supplier, Stanlow in Cheshire, has a
profound effect on the robustness of supply. Given that possible market
dominance, does the Minister think there is room for the OFT to look
again at LPG supply? I will be interested to hear his opinion, either
now or by
letter.
Gas
and electricity suppliers have a social tariff, but there is no social
tariff for LPG. I understand that details of the renewable heat
obligation are being announced
today.
Nia
Griffith (Llanelli) (Lab):
I wonder whether the hon.
Gentleman is also aware of the problem of LPG gas contracts, which fix
people to a contract for a period and from which they cannot escape.
Although the OFT rejected that problem first time round, it reopened
its consultation. Perhaps he will press the Minister to explain what
has become of the answers that we were expecting from that further
investigation.
Hywel
Williams:
I thank the hon. Lady for her intervention. I
have recently had correspondence with a supplier, while trying to get
one of my constituents out of a contract. He said that he was held by
golden handcuffs because the initial deal was so good, but he is now
regretting at
leisure.
On
the renewable heat obligation, I want to press the Government to
consider the possibility of providing additional help for people who
use LPG to enable them switch, perhaps to heat-source pumps or woodchip
boilers, in rural areas where there is no piped gas.
Does the
Minister see a greater role for emergency planning for contingencies
such as the interruption of supply in extreme weather? I referred this
morning to the break in supply for my constituents around Christmas.
The OFT has also been investigating the supply of home fuel oil, and in
my rural constituency, as throughout Wales, many people will look at
the result of that investigation with
interest.
Turning
briefly to the Energy Bill, I want to relate some of what I said this
morning to it, and to the green deal scheme, of which we heard a little
this morning, which aims to encourage the uptake of energy efficiency
measures in the housing stock. There has been a coalition of several
groups in Wales—Friends of the Earth Cymru, Haf Elgar from that
organisation, NEA, Shelter, Oxfam, National Association of Citizens
Advice Bureaux and many others. It put together a useful briefing
before consideration of the Energy Bill, and I recommend it to hon.
Members on both sides of the Committee.
The
briefing points out, for example, that private rented homes in Wales
are the worst maintained parts of housing stock. They contain many
vulnerable households and people living in fuel poverty. People in
rented private houses are over four times more likely to live in cold
homes than those in social rented houses. More than a third of private
rental tenants in Wales are fuel-poor; the private sector has a greater
proportion of the most energy-inefficient homes—those in band
G—and they are twice as common in the private rented sector as
in other sectors. So there is a particular question
here.
The 2008
Living in Wales data showed that, on average, an E rating is
the most common in private rented properties—lower than in any
other kind of tenure. As we heard this morning from an Opposition
Member, there is a particular problem in Wales with houses with solid
walls—there being no cavity to fill.
Friends of
the Earth Cymru and the others have called for tenants to be
empowered—as the word is now—through access to high
quality and reliable information about the energy performance of their
properties to enable them to make informed choices. This is even more
critical given the Government’s proposals on housing benefits.
Restricting housing benefits to the bottom third of the private market
will, I am certain, drive poorer households dependent on benefits not
only into cheaper accommodation but into the poorer quality end of the
market, where the standards of energy efficiency are lowest.
Unsurprisingly, I am against the proposed changes. I believe they show
clearly that this is not just a matter of empowering individual
consumers—important as that is—but there are structural
considerations as well.
Friends of
the Earth say that landlords need information about the full range of
measures that can be taken to improve the energy efficiency and carbon
emissions of
their properties. It says that the energy performance
certificate—EPC—rating of properties should be displayed
in adverts and marketing materials, and it calls for a wide range of
measures to be adopted, from establishing a timetable for the
introduction of minimal legal standards of energy efficiency to giving
Welsh Ministers a duty to establish incentives for landlords to meet
and exceed the minimum standards and provide access to a scheme of
low-cost capital for energy efficiency improvements. Lastly, it wants
to give Welsh Ministers the power to require landlords to register
their properties with the relevant local authority. These would all
improve the market conditions for individual tenants looking to rent
the most fuel-efficient, as well as the most economical,
properties.
The
Welsh Government have high ambitions for energy efficiency in homes.
Fuel poverty is, of course, an enormous problem in Wales and the Energy
Bill will be an opportunity to tackle that problem. I hope the Minister
can reassure me that the Government here will take full advantage of
that opportunity.
2.38
pm
David
T. C. Davies (Monmouth) (Con):
May I say what a pleasure
it is to serve under your chairmanship, Mr Caton? I am sure I will
learn much, as I chair the Welsh Affairs Committee, from esteemed
colleagues such as your good self.
May I also
say that it is a pleasure to debate energy policy as it relates to
Britain at the moment? This is one area that has not yet been entirely
devolved to the Welsh Assembly. As a proud Welshman and a proud British
citizen, I have never been a supporter of the Assembly, but I support
the fact that it is there and needs to be able to work as effectively
as it can for Wales. It is no secret that I voted against further
powers for the Assembly, but I fully accept—like any
democrat—the results of the recent referendum. I look forward to
working with the Assembly and trying to make a positive contribution to
it on energy and all other matters.
I took some
heart from the result of the referendum campaign, which showed that the
vast majority of people in Wales, while supporting the Assembly in some
form, also believe that many powers need to reside at Westminster.
Energy is a case in point. It was interesting that so many of those who
campaigned for a yes vote were saying, “We’ll go this
far, but we don’t want to take it any further. Don’t
listen to the
nationalists—
Mr
Llwyd:
Will the hon. Member give
way?
David
T. C. Davies:
I will in a minute—I would be
delighted, but let me finish because I was just about to talk about the
nationalists. Many of the yes vote supporters were campaigning in
Caerphilly along the lines of, “We will not campaign with the
nationalists, because unlike them, we think that these powers will be
enough and we don’t want to see it go any further.” They
campaigned for a yes vote on the basis that they were supporters of the
Union. I would be delighted to hear a contribution from the right hon.
Gentleman on
that.
Mr
Llwyd:
Speaking of duality, does the hon. Gentleman
remember canvassing for the position of Chair of the Select Committee
on Welsh Affairs, saying that he
would take no part in the no campaign, and then suddenly announcing on
the Tuesday before that he was in favour of a no vote? That is duality
for
you.
David
T. C. Davies:
No. Let me correct the right hon. Gentleman.
His memory deceives him. I said that I would take no part in the
campaign and I did not. However, I also said that people had a right to
know what my views were, and I let them know, but not under the
umbrella of the no campaign. I had no involvement in any of the
campaigners’ meetings. They held a public meeting in Usk,
Monmouthshire, just before the referendum. I was asked to go along and
speak and I declined on the basis that it was important to maintain
neutrality. I do not have any sort of a guilty conscience about
that.
Let us return
to energy, which, as I said before, should remain the prerogative of
the UK Government. One way to ensure that is to allow the only part of
the United Kingdom that does not yet have its own Parliament to have
one. I refer of course to England. If we did that and we made it clear
which parts of energy and other policies were to be devolved to the
regional assemblies and which parts were not, we would underpin
the Union in a way that supporters of the Assembly and
people concerned about the Assembly could thoroughly support. All those
in favour of the Union of the United Kingdom—I think most of us
in this room are—could support the idea of an English Parliament
to underpin that Union—we need to consider
that.
Geraint
Davies (Swansea West) (Lab/Co-op):
Surely there is a
problem here of David and Goliath. Wales has only 3 million people out
of 60 million. Would the hon. Gentleman’s case not logically
lead to 20 separate legislatures of 3 million people dotted around
England? If not, it would be very
unbalanced.
David
T. C. Davies
rose—
The
Chair:
Order. Mr Davies, before you resume, I have allowed
you to stray into constitutional territory, but I would like you to get
back to energy
policy.
David
T. C. Davies:
Mr Caton, you have been extremely kind to
me. We all know who won the battle between David and Goliath.
Let me return
to energy, which is the subject that I most wanted to talk about. I am
a big supporter of the Government policy of reducing our requirement
for carbon-based fuels. I have a slightly different reason for
supporting it. I am not convinced that all of the temperature rises
that have taken place over the past 250 years are a result of
man-made carbon emissions. We have had warmer and colder cycles over
the past 2,000 years. It was warmer when the Romans were here, then it
got colder through the dark ages and then warmer again. It got cold
during the little ice age. Coincidentally, the little ice age ended at
about the time that we started to develop the steam engine and to
industrialise. Therefore, the earth would have been getting warmer
quite naturally anyway because we were coming out of a cold period.
Most people who have looked at the facts would find it
hard to disagree, unless Members think that we would still be in the
little ice age, which most scientists think ended around
1650.
Mr
Llwyd:
Is there a doctor in the
House?
David
T. C. Davies:
I do not know whether the right hon.
Gentleman is referring to a medical doctor or one of those people who
have gone off to a polytechnic and done one exam more than anyone else,
but I am neither. None the less, I know how to read statistics
properly. I am also not convinced about the arguments over peak
oil.
Geraint
Davies:
Does the hon. Gentleman not accept now that some
99% of the scientific community say that if we look at a simple chart,
global warming can be explained through natural causes—the sun,
earthquakes and so on—to a certain extent. However, if we take
all that out, the differences in temperatures over the last couple of
hundred years can be explained by human activity. That is not doubted
by anybody other than the hon. Gentleman and a few other maverick
planks.
David
T. C. Davies:
The hon. Gentleman should look at what I
said. I said that I am not convinced that all the rises in temperature
have taken place as a result of man-made carbon emissions. I am
prepared to accept that some of them have, but I am not prepared to
accept that all of them have. All too often, the argument is framed by
people who say, “This is the rise in temperature, and
it’s all down to the fact that man has been emitting
carbon.” That is their
message.
I
am not convinced of the argument about peak oil, not least because many
of those who advocate it make similar arguments about global warming.
If we stop and think about it, it is not entirely logical to say,
“Mr Davies, stop all carbon emissions. Stop taking
oil from the ground and burning it, because it’s heating up the
earth,” and the next week to say, “Mr Davies, the oil is
about to run out, so we must start to build an economy based on basket
weaving and other stone-age skills, because that’s all
that’s going to be left.” That is fine if people believe
it, but they should stop worrying about global warming. If the oil is
about to run out, we will not be burning any more of it, so the earth
will not be getting warmer.
For some
reason, I have never received an answer to why those who believe in
peak oil are the most fanatical about global warming. It worries
me.
Ian
Lucas (Wrexham) (Lab):
It’s a
conspiracy.
David
T. C. Davies:
The hon. Gentleman says that it is a
conspiracy. Although I do not always communicate very well, I read the
arguments on all sides. I have children and I hope one day to have
grandchildren, and I do not want to do anything that could damage the
earth.
What worries
me when I make these comments or raise these questions is that people
look at me as if I have just blasphemed. Indeed, it is worse than that,
because blasphemy is perfectly acceptable these days.
However, it seems that we should never question the idea that every rise
in temperature that has taken place since 1750 is the result of
man-made carbon emissions, and that the only way to get around it is to
completely abandon industrialisation and return to some sort of
pre-industrial era. I dismiss all such
thoughts.
I
agree thoroughly with the idea of doing away with our dependence on
carbon, because of the instability of the regions from which we derive
most of those fuels. Our gas comes from parts of the middle east and
the former Soviet Union. Our oil comes mainly from the middle east, and
about 10% or 15% comes from Saudi Arabia. Much of it has to be
transported through unstable parts of the world. It makes sense from
any point of view to reduce our reliance on gas and oil because we
cannot rely on the regions that currently supply it.
What we
should be doing, and are doing to some extent, is thinking about
alternative methods of energy generation. We hear a lot about wind
power. I am not against it, and it has its place, but it will never be
able to supply the base load of electricity that we need. We are never
going to be able to rely on wind power to supply the large amounts of
electricity that we need—especially when we need it. That is
another reason why we were right to think carefully about going ahead
with the Severn barrage. Although it may have been able to generate the
large amounts of electricity being spoken of—everyone accepts
that it was a first, so we would have had to wait with bated breath to
find out—it could not have generated that electricity exactly
when we needed it. One of our biggest engineering problems is that
there is no efficient way of storing
electricity.
Simon
Hart (Carmarthen West and South Pembrokeshire) (Con):
I
wonder whether my hon. Friend knows that during the recent cold weather
over Christmas, up to 20% of the UK’s gas supply came through
two terminals at Milford Haven; at about the same time, slightly less
than 2% of our energy requirements were delivered by wind
power.
David
T. C. Davies:
My hon. Friend makes an important
point—one that we should think about. As for a solution that
should make everyone happy, from the most ardent environmentalist to
the most realistic user of oil or gas, the obvious answer to the
problem of how to get large amounts of electricity when we need it is
to use nuclear power.
Hywel
Williams:
There is of course another way to store
electricity. The prime example in the UK is in my constituency, in the
Dinorwig pumped storage scheme. It can produce sufficient electricity
to supply Manchester for three hours at the flick of
switch—within eight seconds. If we had more such facilities, we
might be able to store electricity more
efficiently.
David
T. C. Davies:
The hon. Gentleman makes an important point,
but such systems are still not 100% efficient. Using water
turbines—placing water further uphill than the turbine—is
only about 80% efficient. That is still good, but it will work only
with the right geography. It will not be available across the United
Kingdom. I welcome the idea, but there are other means.
We can use
electricity generated from wind to run electric currents through water
to generate hydrogen, which is being used in cars and buses, but that
technology is decades away from being affordable. There are solutions
in the future and over the next few decades, but we face a problem
right now in that many of our power stations—coal, gas and
nuclear—will close in the next 10 years, and there simply will
not be enough electricity.
Again, the
environmental movement needs to think about this. At the moment, there
is a lot of good will towards it—most people in most parties
have signed up to most of the agenda—but we are all politicians
and we recognise some realities here. If the flat-screen TVs go off and
the lights go out, the public will not be worried about the possibility
of global warming in 50 years; they will tell politicians of
all parties, “Get your act together right now. Get the
electricity back on right now, and we don’t care how you do
it.” If we are not prepared to do it in the quickest way
possible, someone else will get elected who will, and that will
probably mean coal-fired power stations going up all over the place. So
we need to think about that, and the environmental movement needs to
think about it as well.
Nuclear power
does not generate any carbon dioxide emissions. It is reliable. There
is no issue about security of supply. People say that the uranium is
going to run out in 50 years’ time, but most of it is mined in
places like Australia, which are inherently stable countries. We do not
have more than 50 years’ worth that we know about because we are
not looking for it. In any case, there are two isotopes of uranium, and
for reasons that scientists could explain better than I could, we are
only using one of them at the moment. The other isotope is in plentiful
supply, and we could adapt and use it if we wanted
to.
Mrs
Siân C. James (Swansea East) (Lab):
In evidence
given to the Welsh Affairs Committee in the past two years, the nuclear
energy providers admitted that uranium was a finite resource. When they
were asked about this question, they said they currently had lots of
people out there looking for more uranium. So we do not have a steady
uranium source; it is depleting rapidly, and they are desperately
searching for
more.
David
T. C. Davies:
I would probably take my career into my
hands here, except
that—
Geraint
Davies:
Again.
David
T. C. Davies:
I have done that many times. I suspect that
not every scientist in the UK will be poring over the report of this
debate.
The
answer to the hon. Lady’s point is that there are two isotopes
of uranium— uranium 235 and uranium 237—one of which is
in use in most nuclear power stations across the world. I think it
might be—I listen out for inspiration. Let me guess that it is
235, and there is apparently about 50 years’ worth left. The
other isotope can be used in certain types of nuclear power stations,
most of which are under test at the moment. There is a lot of it about,
and if the supply ever fails—I think that there is several
hundred years’ worth—then it is possible, believe it or
not, to get fissionable material out of sea water.
There are
plenty of alternatives to the currently used uranium, of which there is
a 50 year supply. So I do not think that security of supply will ever
be an issue with nuclear power stations. In any case, the next
generation of nuclear power stations would only be expected to last 50
years or so—so this is unlikely to trouble us—by which
time one would hope that we would have developed cold fusion plants and
might have moved on in technological
terms.
The
Secretary of State for Wales (Mrs Cheryl Gillan):
I have
been listening carefully to the hon. Gentleman. He may also like to
welcome the extension of the Wylfa project’s life, because that
is really important in relation to the Nuclear Decommissioning
Authority finding ways of extending the life of nuclear power stations
and to the more efficient use of rare fuel supplies that we have left.
That is a good thing both in terms of income and in getting maximum use
out of the
facilities.
David
T. C. Davies:
I thank the right hon. Lady for that. I do
welcome it very much, but not as much as the Member of Parliament for
the Wylfa area, because one of the amazing things about nuclear power
stations is that the most enthusiastic supporters tend to be the people
in whose constituencies they are built—once things have had time
to settle down—because of the wide range of well-paid, highly
skilled jobs that they provide. Even MPs—dare I say
it?—whose political parties are not known for supporting nuclear
power have a sudden change of heart when somebody threatens to close
one down in their constituencies.
The hon.
Member for Newport West, who is no longer in his place, asked me,
“How would you like it if there was one in
Monmouthshire?” The answer is that no one wants to live next
door to a nuclear power station, or a gas-fired power station, a coal
station or an industrial estate of any sort. We all like our houses to
be in nice residential areas with other houses. My constituency is
opposite the Oldbury nuclear power station, which has been there for
many years, but it has not been a big problem for the vast majority of
people in the constituency, and it will not be if it is
rebuilt.
The
Parliamentary Under-Secretary of State for Wales (Mr David
Jones):
My hon. Friend is making the accurate point that
those who live near nuclear power stations frequently do not mind them,
but many politicians support them. The prime example is the hon. Member
for Ynys Môn. Even more remarkable, will he not acknowledge, is
the conversion of the Assembly Member for Ynys Môn, who is the
leader of Plaid Cymru—a party that is opposed to nuclear
generation but nevertheless supports it in his
constituency?
David
T. C. Davies:
I think the road to Damascus obviously leads
to Ynys Môn. I have covered the referendum, global warming, the
energy crisis and nuclear power. Many other Members want to speak, and
I am happy to sit down and listen to their
contributions.
2.56
pm
Mr
David Hanson (Delyn) (Lab):
Thank you, Mr
Caton, for allowing me to contribute to this debate. I shall not follow
the train of thought of the hon. Member for
Monmouth. I wish to concentrate on one issue today:
the Government’s policy on the feed-in tariff regime. My hon.
Friend the Member for Wrexham shares my great concern about this issue,
which impacts on jobs in my constituency and on the potential for
creating new jobs for the future in Wales and, indeed, throughout the
United Kingdom.
I should like
to take the Committee back to February 2010, when my right hon. Friend
the Member for Doncaster North (Edward Miliband), then the Secretary of
State for Energy and Climate Change and now the leader of my party,
announced a feed-in tariff regime, which encouraged businesses, such as
Kingspan in Holywell in my constituency and Sharp in the constituency
of my hon. Friend the Member for Wrexham, to continue to develop the
potential for photovoltaic cells to be placed on buildings for the
microgeneration of electricity. Electricity supplied using the feed-in
tariff procedure provides income for those who generate it.
At the time,
the right hon. Member for Bermondsey and Old Southwark (Simon Hughes),
representing the Liberal Democrat party,
said:
“This
will disappoint anyone looking to do their bit to contribute towards
our energy supply. Another opportunity has been
squandered...Labour’s plans are too little too
late.”
Given
those comments, I was very surprised that, on 7 February this
year, the Secretary of State for Energy and Climate Change announced in
a written ministerial statement that he had ordered a review of the
feed-in tariff regime that the Labour Government initiated in February
2010.
Roger
Williams (Brecon and Radnorshire) (LD):
I commend the
right hon. Gentleman and the hon. Member for Wrexham for the support
they have given to the photovoltaic industry. However, if we reflect on
the experience of feed-in tariffs in certain continental countries such
as Spain, should we not be cautious? In Spain, demand was so great that
the money ran out, and there was a complete cut-off in support. Surely,
we want more sustained support, even if at a lower level than we first
hoped.
Mr
Hanson:
Let me return to that point. The Secretary of
State for Energy and Climate Change has said that there will be a
review of feed-in tariff regimes over 50 kW. A 50 kW regime is
a very small regime. It will not generate—produce
energy—for more than one, two or three potential properties. As
the Secretary of State said in his statement of 7 February, he is
concerned about the potential development of large-scale wind farm-type
developments to develop solar energy. Such large-scale facilities could
suck in all the resource, killing off the golden egg of generation
through feed-in
tariffs.
To
date, there has been only one planning application anywhere in the
country for such a regime and it is not off the ground yet, but that
was a threat that the Minister took seriously. My plea to
the Ministers today is to look at this in a Welsh context, because we
can certainly stop widespread, large-scale solar panel farms by all
means, if that is an issue that the Minister is concerned
about.
The
point that I raise with the Minister—it will be shared by my
hon. Friend the Member for Wrexham, in relation to his
constituency—is that Kingspan finds
itself in a position whereby it has taken out an investment and, based
on the announcement made by my right hon. Friend the Member for Neath,
made it in potential jobs in the area. It has created employment and is
developing the skills for that employment, but it suddenly finds the
market cut from beneath it. Uncertainty has been put into that market
and the market over 50 kW has effectively been killed until such time
as the review is
complete.
I
am not trying to make political points out of this; I want to ensure
that the Ministers raise these issues with their colleagues in the
Department of Energy and Climate Change, and of course in the
consultation. Our difficulty is that Kingspan—which has put
money in place to invest and has people working on those issues, who
are, like Sharp’s factory in the constituency of my hon. Friend
the Member for Wrexham, producing photovoltaic cells—finds
itself faced with no feed-in tariff proposals after August and the
potential for a review, which could kill the market completely because
of the proposals made by the Secretary of State for Energy and Climate
Change. I say that not because David Hanson, the Member of Parliament
for Delyn, knows about those issues in detail—I do not. I say it
because Kingspan, a company in my constituency, has raised those
concerns with
me.
Let
me read to the Committee a letter dated 15 February 2011,
sent to me by Gilbert McCarthy, managing director of Kingspan, and
copied to the Minister at
DECC:
“A
number of ‘made in good faith’ investments in community
and retail projects, manufacturing capacity and job creation are now at
risk”
because
of that decision. He says that the review of feed-in tariffs for solar
PV systems above 50 kW is causing
concern:
“Kingspan
has accelerated the roll-out of modular photovoltaic systems fixed onto
our insulated roof panels following introduction of the Feed in Tariff
last year. These systems provide the unique benefit of a high
performance insulated building envelope to reduce energy demand coupled
with a highly efficient PV system to provide renewable energy to
minimise carbon emissions and save energy
costs.”
We
are at the cutting edge of that technology in north Wales. We have
firms—Kingspan, and in Wrexham—that are at the cutting
edge. Indeed, the Secretary of State for Energy and Climate Change,
when 300 jobs were created earlier this year, with an effect on my
constituency and that of my hon. Friend the Member for Wrexham, praised
the fact that the job creation came about due to the existence of the
feed-in tariff. We now find that that certainty has
gone.
Let
me put that into context for the hon. Member for Brecon and
Radnorshire, who has raised the issue. The current regime, which is
above 50 kW and which the Government are reviewing, relates to schemes
being produced by Kingspan in Holywell, creating jobs now. Let me give
examples: a 121 kW new build at the Holt Wellbeing Centre, the Isle of
Sheppey academy at 98 kW, Kent university at 200 kW, Great
Harwood Tesco at 100 kW, Quantum business park at 173 kW, Henley
college at 80 kW and Home Farm primary school at 61 kW. They are all
schemes of above 50 kW that are being undertaken by Kingspan, but the
like of which can no longer be commissioned because the 50
kW cap has been put on, pending review.
These are not,
by any stretch of the imagination, widespread, massive farms the like
of which the Secretary of State for Energy and Climate Change has said
he is concerned about. Great Harwood Tesco, a new-build project with
100 kW of regeneration on its roof, is creating jobs in north Wales,
providing energy efficiency in Lancashire, and producing sales and
tariff that can generate electricity. However, that type of scheme
could go to the wall because of the decision made by the Secretary of
State for Energy and Climate
Change.
Mark
Shorrock is the chief executive of an organisation called Low Carbon
Solar. I do not know how he votes, what he does or what he is like, but
this is what he
said:
“In
pulling back on a commitment to support solar energy, the Government
will cause the abandonment of scores of ‘Big Society’
community-owned schemes and hundreds of other developments that could
have seen individual parishes benefit from up to £25,000 every
year and more local jobs created… The ill-conceived and
dangerously short-sighted proposals will have further unintended
consequences, including the Government missing a European target of
generating 30% of electricity from renewables by 2020, and therefore
incurring significant
fines.”
Gilbert
McCarthy, managing director of Kingspan, wrote to the Minister of
State, Department of Energy and Climate Change, the hon. Member for
Bexhill and Battle (Gregory Barker), on 15 February about the
matter:
“I
am writing to advise you of our profound dismay at Chris Huhne’s
statement on Monday 7 February concerning the fast track review…
I would also like to request a
meeting”,
which
I hope the Minister, the hon. Member for Clwyd West, will help to
facilitate. He
continued:
“As
a low carbon business, we pay particular attention to the policy
framework impacting on our products and monitor Government statements
closely. We were therefore acutely aware of DECC’s legitimate
concern… over large ground-mounted systems… but
astonished to see the fast-track review extended to very modest
roof-mounted systems of 50kW for which there was no warning. A number
of ‘made in good faith’ investments… are now at
risk.”
I
do not want to take up much of the Committee’s time, but I hope
that the Minister will reflect strongly on what I have said. This is
about future jobs in north Wales, and I would like to receive some
clear indications from him in his winding-up speech. I hope he listens
to and reads what I have said and what businesses are saying about
wealth generation. I also hope he will go on record today to value the
solar-voltaic industry in north Wales. I hope that he will stand
up—privately, I accept, outside the room—to the Secretary
of State for Energy and Climate Change and press him to ensure that,
whatever he does in response to the review, he does not end the
potential for 50 kW to 500 kW schemes. They will deal with big
supermarkets, big schools, academies and universities, but are not
going to be solar-voltaic wind farm-type schemes, as elsewhere in the
UK.
I hope that
the Minister will raise those issues with DECC; report back to Members,
including me, on his discussions; and, when the consultation comes out
shortly, ensure that there is a Welsh dimension, because these are the
jobs of tomorrow. I am not trying to make political capital out of the
current procedure, even though I could. I am simply making the case
that, if we go ahead as planned, he and the Secretary of State for
Energy and Climate Change will destroy jobs for the future in north
Wales.
I hope that
the strength of my feeling is clear to the Minister and that in his
response—and, more importantly, in his discussions outside the
Committee—he will take those matters on board. It is one thing
for Conservative Ministers and Liberals to come to Kingspan in Holywell
and praise it, as they have done during elections and at other times,
but quite another for them to undermine its business when they are in
power.
Mr
David Jones:
I have been listening carefully to the right
hon. Gentleman. If he would like to accompany me, I would gladly visit
Kingspan in his constituency. That would be
helpful.
Mr
Hanson:
Who am I to refuse such a generous offer? I will
happily ensure that the Minister is invited to Kingspan, but I hope
that, when he comes, he takes away those messages and uses his position
in Government to influence them. I will judge him not on his visit and
a smiling picture at Kingspan, but on the outcome of his discussions
with the Secretary of State for Energy and Climate
Change.
Mr
Jones:
May I assure the right hon. Gentleman that if the
visit was to be a photo opportunity, I would go by
myself?
Mr
Hanson:
I will take the Minister up on that. I will copy
in the Secretary of State for Wales on the letter and judge the
Government on the outcome and on whether we are able, at the
end of this process, very quickly ensure that businesses can access 50
kW to 500 kW schemes, rather than simply facing a blanket approach,
which, unfortunately, the Secretary of State for Energy and Climate
Change has adopted. Such an approach could destroy the golden egg in
north
Wales.
3.10
pm
Guto
Bebb (Aberconwy) (Con):
It is a pleasure to serve under
your chairmanship today, Mr Caton. I will keep my comments brief and
make just a short speech. It has been an excellent debate so far, and I
have enjoyed it thoroughly. As a Member of Parliament for north-west
Wales, it is important to point out that the economy of our part of the
country could benefit immensely from the development of the energy
sector. Such development would have a large regional
impact.
I
want to put on record my appreciation of the development in Anglesey.
The hon. Member for Ynys Môn is not here today, but the Anglesey
energy island development is hugely important in the context of the
economy of north-west Wales. That development is centred on the fact
that we are hoping—I use that word deliberately—to see a
Wylfa B in Anglesey. From talking to people in all parts of north-west
Wales, there is a general opinion that such a development
would be welcome. The development of a second Wylfa—a nuclear
power station—in north-west Wales will lead to economic benefits
across the region. Clearly, my constituents in Aberconwy who use the
A55 will be able to travel to Anglesey and benefit from the economic
opportunities that will be created as a result of a second power
station at Wylfa.
I
would like to make a slight diversion from the A55 because, when I put
this speech together this morning, I was thinking of the fact that my
constituents would have to travel by car to gain employment in Anglesey
as we are hoping to see developments in that part of the world.
However, there is another option. We could try to persuade the
Department for Transport to invest in proper signalling for the north
Wales coast railway line. I stress that the cost of improving the
signalling on the north Wales coast railway line will be significantly
less than electrification to south Wales.
I welcome
electrification to south Wales. That project is an indication of the
work that has been undertaken by the Wales Office to bring pressure to
bear on the Department for Transport. However, in due course, I would
like there to be an announcement about signalling on the north Wales
coast railway line. I could then stand here and say that my
constituents could travel from Aberconwy to take up economic and
employment opportunities created in
Anglesey.
The
Anglesey energy island is a hugely beneficial project and an example of
the public sector, the private sector, the Welsh Assembly, local
authorities and the Westminster Government working together to develop
real employment and economic opportunities for an area that desperately
needs them. If the nuclear power station comes along and is the
centrepiece of the development, it would create the opportunity for
skills to be developed in engineering, mechanical engineering, planning
and construction that will be relevant to tidal and wind power.
Anglesey is leading with a holistic approach and we should look
carefully at that. In Anglesey and the energy island project, we
potentially have an example of best practice that could be rolled out
to the rest of the United Kingdom. It would be a proud position to be
in to be able to say that an example of best practice in economic
development comes from
Wales.
I
specifically want to make the point that the officers who have driven
this on behalf of the Welsh Assembly Government and particularly the
officers working for the Isle of Anglesey county council deserve
immense praise. I am sure that hon. Members realise that to be
extremely effective as a team of officers when working for the Isle of
Anglesey county council is some achievement. We should place on the
record our appreciation of the work that has been done from an Anglesey
point of
view.
In
addition, I would like to associate myself with the comments made by my
hon. Friend the Member for Pudsey this morning. Another fantastic
aspect of the energy island development in north-west Wales is the
integrated approach to economic development. When the Welsh Affairs
Committee went to Düsseldorf, I was really proud to meet RWE and
E.ON UK. We had a presentation about the potential development of the
nuclear power station in Anglesey and as part of that we were shown
slides about their partner organisations in north Wales. It was very
encouraging to see the names of Coleg Menai and Coleg Llandrillo from
the National Skills Academy for Nuclear coming up on those slides and
to hear German executives talking about the proactive way in which the
further education community in north Wales was working with them to
ensure that young people would have the right skills to work in that
industry.
When
we are talking about why the energy sector in north-west Wales, and the
skills training to ensure that people with the relevant skills can take
up the opportunities available in north Wales, are so important, all we
need to do is look at the demographic picture in counties such as
Conwy, Gwynedd and Anglesey, where there is a huge decline in the
number of young people between the ages of 18 and 35. That decline has
to be dealt with. I am fed up with hearing people talk about the
decline of the Welsh language in rural communities and its heartlands,
yet when we talk about real economic opportunities that will give those
young people the option of remaining in the areas where they were born
and having good employment prospects there, we often hear people
carping about the nuclear industry being unsafe. My view is that we
should talk to the people who are most affected by the development of a
second nuclear power station—the people of north-west Wales.
Generally speaking the view is very
positive.
I do not want
to go on about the Anglesey energy island in isolation, because,
obviously, I represent the constituency of Aberconwy and we are very
aware of the fact that, off the coast, we have a huge development in
the Gwynt y Môr wind farm. It is a £2.2 billion
development—a significant sum of money, again being financed by
a German company. Gwynt y Môr is a 567 MW wind farm.
It is located 13 km off the coast of my constituency in water depths of
12 to 28 metres. It is a huge engineering project and will be a
substantial contributor to the energy needs of this country.
However, it
is important to point out that, as hon. Members in this room know well,
the Gwynt y Môr development was controversial. When asked to
support the development, the local authority declined to do so, in a
democratic decision. That decision was overturned by the then Secretary
of State for Energy and Climate Change, who is now Leader of the
Opposition, because the development was deemed to be of national
significance. We can agree or disagree with that, but I associate
myself with the Secretary of State for Wales, who has stated
categorically that since the previous Administration has made the
decision, it is imperative that the economic opportunities from the
development of Gwynt y Môr are harnessed, and we ensure that
local firms and local individuals looking for employment can
benefit.
Ian
Lucas:
I am interested in the hon. Gentleman’s
arguments. I am pleased to say that Prysmian Cables in Wrexham has
tendered for—and been successful—the cabling for that
project, which is an example of the economic benefit that Gwynt y
Môr brings across north
Wales.
Guto
Bebb:
I associate myself with those comments, and indeed,
inasmuch as my constituents can travel down the A55 to Anglesey for
employment opportunities, there are literally tens of people who travel
down to Broughton, for example, to gain employment. Therefore the
economic impact of large-scale projects in north Wales benefits the
whole region. I accept that completely.
I have one concern. I believe that
we have to make the best of this investment. We must put the past
behind us, accept that that development is happening and concentrate on
the economic opportunities it brings. However, time and again we have
been told that where there are large sustainable energy developments in
Wales, a community benefits package will be afforded to the local
community.
I have raised my concern several times since being elected. The
development of Gwynt y Môr was controversial—I am sure
that my hon. Friend the Minister would attest to that. However, we were
promised a community benefits package, which included a tourism
benefits package, in the arguments for trying to persuade the local
authority to provide support for the development. My concern is that
the amounts of money debated and bandied around pre planning permission
were significantly different from those that were discussed post
planning permission. It has created a real feeling of betrayal in parts
of my constituency, because the figures that were presented as part of
the arguments in favour of the development have certainly not
materialised.
The
question I would ask my hon. Friend the Minister to raise on my behalf
relates to the need for certainty on community benefits packages. I
represent a constituency where there are great opportunities for
renewable energy, whether hydro or wind power. The opportunities exist,
but if local communities are to be persuaded of the merits of the
arguments, they should be able to be confident that when a community
benefits package is promised, it turns into reality when the planning
permission is granted. I have raised the issue on two occasions, and I
have had two different answers. In a parliamentary answer from the
Minister of State, Department of Energy and Climate Change, my hon.
Friend the Member for Wealden (Charles Hendry) I received a positive
response to my complaint about compensation packages changing between
pre and post-planning. It
said:
“There
are no plans to enable local authorities to secure and enforce the
provision of such financial community benefits
compensation.”— [Official Report, 11 October 2010;
Vol. 516, c.
109W.]
I was
obviously fairly disappointed with that
response.
After
that, I took part in a Westminster Hall debate and raised the same
issue. I am beginning to sound like a record, repeating myself. In that
debate the response came from the Under-Secretary of State for
Communities and Local Government, my hon. Friend the Member for Bromley
and Chislehurst (Robert Neill), who stated that the Government want to
spell out with rather more precision exactly how local communities may
benefit from the approval of wind farm development and, where
appropriate, enforce those
rights.
There
is a difference between the two responses, and my final plea today is
for the Secretary of State and the Minister to raise the issue with
their colleagues. There is great good will in my constituency for
energy to be developed from alternative sources. Of course, as my hon.
Friend the Member for Monmouth said, we cannot depend entirely on
energy from renewable sources, which is why I am such a supporter of
the nuclear power station at Wylfa, but it is important that when
communities are persuaded to welcome wind farms and other alternative
forms of energy they should have some certainty that the funds promised
to them prior to planning consent being given are the same sums that
will be provided after the
event.
3.22
pm
Nia
Griffith:
I would like first to make a couple of comments
on feed-in tariffs, and then I shall move on to speak about the effect
of the carbon floor price on our industry in Wales. I have in my
constituency the former
mining site, Cynheidre, a brownfield site with excellent grid
connections. We have an application in for a 3 MW solar panel
installation. That is an absolutely ideal use of that piece of land,
which is not particularly accessible because it is reached by small
lanes, so building an industry that would require a huge number of
lorries going to and fro would not be suitable. It has a grid
connection and it is a brownfield site. The local residents would
welcome the installation of solar panels, which would generate
electricity for some 800 houses. All that has been put in jeopardy by
the decision of the Secretary of State for Energy and Climate Change to
refer the matter to
consultation.
Furthermore,
there is a similar plan for an installation in Ffos Las, near the race
course, which would use land that would probably struggle to attract
anything else. Again, that is likely to be very acceptable to the local
community. It seems a terrible shame that an excellent scheme, which
offers opportunities for our own solar panel industry and which needs
certainty of purchase to up its production, will be jeopardised and
perhaps thrown out for the most spurious of reasons. There seems to be
a complete misunderstanding of the scheme’s self-sufficiency in
the long term, and how it is not a question of robbing Peter to pay
Paul. It is quite possible for such schemes to go ahead simultaneously
with those for individual
householders.
I
turn now to the significant impact that the carbon floor is likely to
have on heavy industry, such as the Trostre steelworks in my
constituency. I know that similar steelworks and energy-intensive
industries throughout Wales are equally concerned. The Conservative
manifesto pledged to reform the climate change levy to introduce a
carbon floor price, but it made that look like a reform that could be
achieved without spending Government money and without raising
household bills, thanks to a system of bill rebates. However, on
entering government, it was quickly accepted that the bill rebates
included in the manifesto commitment were unworkable. It was also
realised that the UK could not unilaterally put a floor under the
European carbon market. Instead, a policy that effectively increases
the cost of carbon for UK electricity generators was
developed.
The
stated intention of the reform in the manifesto was to provide a carbon
price floor, or at least a stability mechanism, so that the total cost
of carbon for generators could be more certain. In practice, the
consultation simply proposed the introduction of another tax, this time
on the fuel used by generators. The tax lever could be used to
stabilise the cost of carbon, increasing the tax when the price of a
carbon allowance was low and vice versa. However, the consultation
document did not suggest any formal link between the two. As a result,
investors would still face uncertainty over the cost of carbon, this
time also consisting of political uncertainty over the level of the
tax.
European
legislation prevents the taxation of the generators directly. To get
around that problem, the proposal intends to tax the fuels used by
electricity generators. Different fuels will be subject to different
rates of tax, with the tax rate based on the carbon content of each
fuel type. The level of tax could be revised periodically in different
ways, as laid out in the consultation, but the general idea is that the
revised climate change levy on generators’ fuel could be raised
incrementally to create an effective carbon price for
generators that is higher than the one in the European carbon market
alone, which could be very serious for some energy-intensive
users.
We
understand that sometimes we have carbon leakage, where when we impose
certain conditions, manufacturers choose to go to parts of the world
where they can get away with less environmentally stringent conditions.
They can therefore continue to produce the same amount of emissions,
while we have lost that industry. Our worry is that we are putting
ourselves not only in an uncompetitive position vis-à-vis the
cheap countries in the world, but at a disadvantage in respect
of our European competitors. That will substantially disadvantage some
of the energy-intensive
industries.
In
its response to the consultation, which closed recently, Tata made
those points clearly. The tax will impose an additional cost on
energy-intensive industries, and it will affect not only the plant in
Trostre in Llanelli, but the neighbouring blast furnace in Port Talbot.
In the consultation document, there is no proper quantification of the
impact of the carbon floor price on energy-intensive industries. In
fact, Tata has found it rather insulting that the consultation makes
unsubstantiated comments about passing on the cost to the consumer. It
knows well that in a highly competitive global market, that is simply
not an
option.
If
Tata compared itself to other firms across Europe, it would find that
other European operators will not be subject to the same type of tax.
Its response to the consultation
states:
“Other
European operators are likely to remain operating under an
‘abatement at least cost’ regime, therefore exposing Tata
Steel UK to a different cost pressure and impacting on our ability to
compete even inside the single
market.”
It
pointed out that the purpose of the tax was to encourage low-carbon
generation, but if there were to be a significant gap—perhaps
10, 15 or 20 years—between the implementation of the tax and the
coming on stream of low-carbon types of generation, the industry would
be very severely penalised in the medium term. It is deeply concerned
that the carbon floor price will not deliver the desired investment
growth. In other words, we are facing a situation where companies such
as Tata Steel UK and other similar manufacturers could make long-term
investment decisions based on what they see in the carbon floor price.
They could turn away from the UK and decide that instead of building a
new blast furnace in Wales, they will take those plans
elsewhere.
In its
response to the consultation, Tata Steel UK states that the carbon
floor price will be
“increasing the
longer-term risk to the sustainability of our UK
operations.”.
That
is a very stark message and I would like the Minister to take that back
to his colleagues in the Department of Energy and Climate Change and
point out that we need a proper understanding and assessment of what
the impact will be on energy intensive industries such as the steel
industry.
At the
moment, given what we understand from the consultation document, we are
talking about tens of millions of pounds of incremental costs to Tata
Steel UK. Those costs are not faced by its European competitors, let
alone by its global competitors. I ask the Minister to
take those comments on board and have the matter looked at carefully. We
are just beginning to benefit a little from a weaker pound, and we have
seen fantastic investment by some manufacturers in recent years. We now
face a situation that could kill that stone dead, and we could lose
excellent industries such as Tata Steel in my constituency. It has
continued throughout the recession to produce a much-used
product—the tin can—that has been popular throughout the
recession. It has managed to keep going in a productive and competitive
way, and we must ensure that we do not drive it elsewhere. I hope that
the Minister will take those comments on board and I shall give someone
else the opportunity to speak.
3.32
pm
Karen
Lumley (Redditch) (Con):
It is a pleasure to serve under
your chairmanship, Mr Caton. It is good to be in my first Welsh Grand
Committee and listen to the right hon. Member for Delyn as that is
where I started my political career. He spoke very
knowledgably.
Hon. Members
from all parties, and wherever we come from in the UK, agree that we
must increase our use of and investment in alternative energies, both
to reduce our dependence on oil and our carbon emissions. The coalition
Government are committed to creating a low-carbon economy. I believe
that is the right way forward, and I would like to highlight the
advantages both for Wales and the UK as a whole.
When planning
to build new wind farms we must, where possible, encourage the use of
British companies to build the turbines and run the farms. Wind farms
must have the ability to stimulate the local economy, and that is where
the benefits begin. It must be a competitive process, and we must
ensure that our low-carbon economy will respond to a healthy and
competitive market. Wind energy is a growing industry and must be
supported and encouraged. Finding suitable sites to build new wind
farms is a challenge and, as I have seen in my constituency, local
opposition can often be ferocious. There has to be better consultation
with local communities about onshore wind farms, and some locations are
more appropriate than others. That is not to say that I do not support
them—far from it. I do, however, believe that offshore wind
farms have enormous potential in the UK, and I hope that they will play
an increasing role in our energy supply in the future. Driving up and
down the A55 one sees lots of wind farms, and when I lived in Wrexham
we used to see lots of oil rigs.
Building wind
farms is one strand in the Government’s energy plan, but we must
also invest in nuclear energy. The Government have made clear their
support for private firms that wish to build nuclear power plants. I
give my full support to the Wylfa power station and the plans to build
there. We need to get moving on providing alternative energy sources,
and that is a fabulous place to start.
We have all
seen how growing green industries stimulate our economy. This morning,
the hon. Member for Wrexham—where I grew up and where my
children were born—mentioned Sharp, the manufacturer
of solar panels that has 300 new employees. That means that 300
families in that area now have an extra income, and more homes and
businesses have been fitted with solar panels. That is great news for
north Wales, and
great news for Wrexham. We can no longer dither over
our energy policies. If we continue to be active and determined, the
future looks bright and green in
Wales.
3.35
pm
Ian
Lucas:
It is a pleasure to follow the hon. Member for
Redditch, who knows Wrexham, where she lost her council seat to a
Labour candidate, well. I endorse much of what my right hon. Friend the
Member for Delyn said about feed-in tariffs. Let me approach the matter
from the perspective of having a Government who want to encourage
economic growth and employment in low-carbon industries. That is what
the Government say they wish to pursue at this particular time. We are
all interested in creating jobs in our communities and constituencies.
In that respect, I will refer to the solar energy industry in north
Wales because it is particularly prominent in that area.
Sharp decided
to make solar panels in Wrexham in 2004. The company has been
in Wrexham since the 1980s when it arrived as inward investors. At the
time, it was making video recorders—remember them?—and
microwave ovens. As video recorders became less saleable, it was clear
that, if the factory was to have a future, the company would have to
introduce new products to Sharp in Wrexham. A great deal of hard work
went in to bringing in photovoltaic cells to Wrexham in the early part
of the decade. A big disadvantage at that time was that we did not have
substantial demand for photovoltaic cells in the UK.
From 2001 to
2008, while I was on the Back Benches, I campaigned hard for the
introduction of a feed-in tariff in the UK. I attended numerous
meetings and was knocked back on many occasions. I say to the hon.
Member for Aberconwy in relation to his campaign that one of the
lessons in politics is never to take no for an answer. As far as the
feed-in tariff was concerned, I had to attend many meetings and debates
and ask many questions before it was introduced. I took my right hon.
Friend the Member for Doncaster North (Edward Miliband), who was then
Secretary of State for Climate Change, to see the Sharp photovoltaic
cell battery in Wrexham. The feed-in tariff was introduced in the early
part of 2010, and I like to think that that meeting that he had at
Sharp was very influential in making the case for the feed-in tariff to
support the photovoltaic cell
industry.
Very
few policies, when introduced, command cross-party support, but the
feed-in tariff was one of them. There are even fewer policies that when
introduced have an immediate beneficial impact in the way that the
feed-in tariff has. Political policies often have a negative impact
very quickly. They rarely have a positive impact very quickly. When the
feed-in tariff was introduced last year, it had an immediate positive
impact, which was confirmed in a parliamentary answer from the Minister
of State, Department of Energy and Climate Change, the hon. Member for
Bexhill and Battle on 28 February. He
said:
“The
UK solar photovoltaic market has seen an increase in production
capacity as a result of the introduction of the feed-in-tariff. Sharp
reports increased production by 25% and Romag, operating in the
north-east, are increasing production by
30%.”—[Official Report, 28 February 2011; Vol.
524, c.
241W.]
Earlier
this year, 300 extra jobs were announced in the Wrexham plant, taking
the number of people who work there up to 1,100. A very positive impact
for a policy
that is not yet a year old. The fact that the Government have made an
inexplicable decision to bring forward the review of the feed-in tariff
and review the particular level at 50 kW is therefore an issue not of
party political point scoring, but of massive import. That level
prevents exactly the type of community project that we all support and
want to see in our constituencies from taking
place.
There
may well be legislative concerns about solar farms of the type that
have been described, but the level at which the review is
proceeding—50 kW—would prevent any reasonably sized
community project from proceeding. I am advised that a project could
have a base level of perhaps 3.9 kW per home. On that basis, 50 kW
equates to 15 homes. So the level that is being considered at present
is completely at odds with the realities of the market, and I implore
the Government to make that point forcefully to the Department of
Energy and Climate Change.
A company
called Sharp in my constituency could have chosen to invest anywhere in
the world. It has chosen to come to my constituency in Wales to invest
private finance—not Government money; there are no massive
grants or anything of that nature—to create jobs and employment
in Wrexham. Within the past year, it has also built an education centre
at the Wrexham factory—I urge all hon. Members to come and look
at it—that describes the benefits of solar power. That company
is bringing young people into that centre regularly to educate
them.
Last month,
on the Friday following the announcement, I attended the opening of a
training centre for the individuals and small businesses that Sharp is
encouraging to invest in installing solar panels on roofs. That creates
jobs not just at Sharp and in Wrexham, but for the future. Such an
approach creates jobs for electricians, roofers and contractors in the
construction sector, which is very hard pressed at the moment, and is
helping to provide the type of low-carbon energy jobs that we talk
about all the time, but that are so difficult to bring to
reality.
This is a
real gift horse—a rare thing in politics—but we are
seriously looking it in the mouth at the moment. The introduction of
the feed-in tariff took so long, and I deeply regret the fact that it
was not brought in earlier. I remember going to Germany in the early
part of the past decade and talking to people there about the 100,000
roofs project, as it was referred to at that time. They talked about
the certainty in the investment framework that was important in
allowing people to invest in the industry. That certainty was created
by the feed-in tariff.
For a party
that purports to understand business, the Conservative party is
undermining that certainty in the investment framework and has made a
massive error. At the very time that business is choosing to invest
because it knew that it had a stable framework, the Conservatives have
created uncertainty by bringing forward the review.
As we heard from my right hon. Friend the Member for
Delyn, that review has undermined the investment framework.
Those
projects were bringing new jobs—I am not just talking about
Sharp; we have heard about Kingspan and others, and I have mentioned
the roofers and electricians—that are desperately needed at the
moment, and they need to be secure. If possible, can we please bring
forward the review? The 50 kW limit is completely
absurd and is preventing good projects from creating good jobs now. It
is a disincentive to private investment. People who are hard-pressed to
pay their mortgages want to have good opportunities to have jobs in the
solar power industry. That was happening until the announcement was
made in February. It was a big mistake, and the Government should admit
that, deal with the review as quickly as possible and ensure that the
solar industry gets back on
track.
David
T. C. Davies:
On a point of order, Mr Caton. I seem to
recall that in the previous Committee sitting, for some reason, Members
decided to pass a resolution condemning the Government. That had never
been done in a Welsh Grand Committee before, but if a precedent has
been set, I wonder whether I could propose a motion, praising the
Government and the wonderful Secretary of State for Wales for her good
work and cleverness in getting an electrification of the rail line as
far as
Cardiff.
The
Chair:
I was not at the previous sitting, but I am advised
that no resolution was passed. [Hon. Members:
“There
was.”]
The
Lord Commissioner of Her Majesty’s Treasury (Mr Brooks
Newmark):
There was a vote on a
motion.
The
Chair:
Yes. The Committee is free to vote on the motion
when we
conclude.
Mr
Hanson:
Further to that point of order, Mr
Caton. The motion does not mention electrification or anything else. It
talks about taking note of concerns on energy policy in
Wales.
David
T. C. Davies:
Further to that point of order, Mr
Caton. The motion that was passed in the previous Committee sitting, if
my memory serves me right, was not the motion that was on the Order
Paper—it was critical of the Government. I should like to have
the opportunity to do what happened at the previous sitting and move a
motion in this sitting in praise of the
Government.
Mr
Llwyd:
Further to that point of order, Mr Caton. Surely, a
motion may be pressed to a vote at the conclusion of proceedings, which
I believe is at 4.30 pm. It is premature to suggest that that should be
done
now.
The
Chair:
That is correct. It would be unfair to the two
Government Members who have been here all the time attempting to speak
to not allow them to do
so.
3.47
pm
Roger
Williams:
Thank you, Mr Caton, for dealing with that point
of order. I have enjoyed this morning and this afternoon’s
debate. It shows that we have lots of talent within Wales to take
forward the new technologies and innovations on renewable energy. I
have always said that Wales should be an entrepreneurial country. We
are now coming out of recession, during which there are
always winners and losers. We must ensure that Wales has more winners
than losers. We want to break free from our historical reliance on
former nationalised industries and the public sector and ensure that we
have lots of private industry thriving and succeeding in
Wales.
I
particularly enjoyed the speech of the hon. Member for Monmouth. I will
shortly share a platform with him with the Abergavenny Friends of the
Earth, and I was going to demonstrate how closely aligned coalition
thinking was on a number of matters, but we might have to tease out a
few minor differences in some of our
approaches.
In
the previous Parliament, I was a member of the Select Committee on
Environment, Food and Rural Affairs. At the time, the Department for
Environment, Food and Rural Affairs had more competence in energy than
it did later on, when the Department of Energy and Climate
Change took over some of its functions. Our Committee conducted a
number of inquiries into energy issues. Climate change was the flavour
of the month and the flavour of Parliament, and we tried to look at
niche issues that other people were not looking
at.
We
conducted an inquiry into what we called the citizens’ charter,
which was about how to get private individual and the citizen involved
in mitigating climate change and producing renewable energy. We, like
the hon. Member for Wrexham, went to Germany. We saw its feed-in tariff
system and how it had been successful in not only getting individuals
to produce their own energy, but taking forward a number of new
technologies.
The
hon. Member for Wrexham will remember that the Energy Bill, when first
introduced, did not include feed-in tariffs. He and other hon. Members
across the House believed that that was an omission and campaigned for
them to be included. They will be a powerful tool in creating the type
of industry that he wants. I understand his anxiety over the review,
but I understand that when feed-in tariffs were introduced in other
countries—they might not have been introduced at the right rate
or given the right budget—they had a damaging effect on
industry. There was a huge rush into production and the money ran out;
after a few years there was nothing to sustain
it.
Ian
Lucas:
It is possible that what the hon. Gentleman
suggests happened in some places, but I assure him that
Germany’s sustainable feed-in tariff system was expanded because
of its popularity. Furthermore, manufacturing industry was created on
the back of the introduction of the feed-in tariff. That would be so
valuable for the UK.
Roger
Williams:
I accept what the hon. Gentleman says, but he
will realise that we are working with rather constrained budgets, and
we want to make the best use of them. I am sure that the message that
he and the right hon. Member for Delyn have delivered today will be
taken up by the Minister, and other Members are making the same point.
We need a review of the feed-in tariff that is quick, effective and
efficient as possible.
The other
inquiry was on bio-energy—the production of heat and electricity
from plant materials. Today, the renewable heat initiatives were
announced. It will be a notable event for Wales. I have visited Port
Talbot in the constituency of the hon. Member for Aberavon—he is
not in his place—where such a facility is burning forest
waste and producing electricity. The renewable heat incentive will
ensure that Wales has other such facilities, and they will be used to
great advantage.
I have read
the Secretary of State’s announcement, although I have not seen
the detail, but at a smaller scale, a go-ahead farmer, Edward Davis of
Evenjobb in my constituency, is covering his chicken houses with
photovoltaic cells. He is trying to keep under the 50 kW limit. He now
wants renewable heat incentives; he produces a lot of heat in the
chicken sheds to keep the little chicks going, and that air has to be
removed. He wants to capture the heat from it and use it to heat the
air that he feeds back in. He wonders whether the renewable heat
incentive will cover that sort of technology. People are really
inventive and innovative, and I am enthusiastic and hopeful about such
things.
I
move on to the setting up of technology innovation centres. The
Government have announced that they will put forward £200
million over four years to sustain eight or nine centres, based on the
Fraunhofer centre in Germany. There will be several components. There
will be Government money from the research councils; as they spend
money across the UK, it will be available in Wales. Money will also
come from universities and private business. We, as Welsh constituency
Members, as well as the Wales Office, should ensure that Welsh bids are
made to set up technology innovation centres in Wales. As my hon.
Friend the Member for Ceredigion pointed out, there would a wonderful
opportunity in Aberystwyth. IBERS—the Institute of Biological,
Environmental and Rural Sciences—is a go-ahead research
organisation that does a lot of work on renewable energy. Perhaps I may
be so bold as to suggest to hon. Members who represent north-east Wales
that that would be a wonderful theme for a centre in north Wales. The
photovoltaic industry is one of the few renewable energy sectors that
makes real steps forward for technology to become more efficient, cost
less and deliver more. We need to look at a technology innovation
centre for Wales, and I will be very disappointed if we do not get
one.
We
all look forward to the green deal. Many constituency MPs will have met
constituents who suffered greatly during the cold weather over the
winter. We managed to increase the severe weather payment to
£25, which was welcomed by our constituents. We must encourage
better insulation for our homes. The green deal will work, but it needs
more incentives and I would like the Government to look at that. One
option could be to reduce stamp duty on those houses that meet a
minimum energy efficiency. Another option, suggested by the Federation
of Master Builders, would be to ensure that all materials that go into
the green deal have a VAT rate of 5%, reflecting their contribution to
energy efficiency. The Government should look at a number of those
issues as they introduce the green deal to ensure that it takes off
more effectively and
efficiently.
I
have one last point to make. This is not a reserved matter, but it is
about planning. A number of hon. Members have mentioned the fact that,
although everybody wants the new plants, they do not necessarily want
them in their own constituency, or there is a planning problem about
that. In my constituency, a family farming business—not a big
farm—wanted to invest £2.5 million in an anaerobic
digester. It took it three and a half years to receive yes as an
answer. I do not comment on whether
that was the right decision, but for a planning process to take three
and a half years is an absolute disgrace. There is no incentive for
people to get involved in such matters if they have to put up with that
sort of service. With those few words, I shall conclude my
remarks.
The
Chair:
I will now call Mr Evans, but I advise the
Committee that I would like to start the winding-up speeches at 4.10 pm
at the latest.
3.58
pm
Jonathan
Evans (Cardiff North) (Con):
I will be very disappointed
if I take up all that time, Mr Caton. Making the last Back-Bench
contribution provides an opportunity to reflect on observations made in
other speeches. I was disappointed that the shadow Secretary of State
for Wales, the right hon. Member for Neath, was not prepared to give
way to me earlier. I wanted to congratulate him on making it clear that
he recognises that the previous Government never made a financial
commitment or put any resources towards the Severn barrage project. We
all recognise that he is the most outspoken advocate of the Severn
barrage project, although while sitting here during the debate I have
reflected on the fact that there is one other advocate who is probably
even more determined in her support, and that is Mrs
Hain.
There is a
great curiosity to consider. I look at the right hon. Member for
Cardiff South and Penarth and remember that, when I first came to the
House, he and I spent a good deal of time in Committee discussing
legislation related to carrying forward the Cardiff bay barrage, of
which he was a determined supporter. I seem to remember that there was
rather less support from his fellow Cardiff MP, Rhodri Morgan, and from
the right hon. Member for Neath. It is a curiosity and an irony that
every building that has opened at Cardiff Bay since that time has had
pictures of the glowing, smiling faces of those two individuals. That
event would not have taken place without the efforts of the right hon.
Member for Cardiff South and
Penarth.
Alun
Michael (Cardiff South and Penarth) (Lab/Co-op)
rose—
Jonathan
Evans:
I stimulate the right hon. Gentleman to his
feet.
Alun
Michael:
I am grateful to the hon. Gentleman for provoking
me. He referred to the Severn barrage and the question of financial
commitment. The point is that a private sector consortium is investing
money in the work that would lead to the point where we could take a
decision on whether the Severn barrage should go ahead. The decision of
this Government has been to curtail that, even before it has got to the
point where it is appropriate for this place to be taking
decisions.
Jonathan
Evans:
The right hon. Gentleman has the disadvantage that
he was not here during that particular exchange, when it was clear that
the objection of the shadow Secretary of State is that my right hon.
Friend the Secretary of State did not automatically override all the
planning processes and give the green light, ignoring all the proper
ministerial responsibilities that she has.
I want to get
to the main thrust of what I want to say, if my hon. Friend the
Minister will excuse me, because we are running short of time. I have
been listening to the debate and I must say that I take a much less
benign view of the structure of our electricity market in the UK than
appears to be the case for many hon. Members who have
contributed.
We
know that reform of the electricity market is taking place.
Curiously enough, that reform—the consultation—ends
today. The reform is being driven by the need significantly to increase
the number of investors and the capital available for new renewable
energy production and transmission. The numbers involved are
mind-boggling. By 2020, those factors have to increase by almost
double—we need to double our production. Ofgem has estimated
that the investment needed may be in the order of £200 billion.
Ernst and Young has suggested that it could be significantly more than
that in the 10 years thereafter—the figure could go
up to as much as £450 billion. From Ernst and Young’s
report, it is clear that that investment cannot be produced, even by
the companies that are now in the
market.
A
number of companies are looking to participate in this market
opportunity, including a number of interests in Wales. However, I
understand from those prospective investors that the obstacle to
investment as they see it is the failing structure of our electricity
market here in the UK and in Wales. That is why I applaud the Secretary
of State for Energy and Climate Change on launching this
review.
As
I suggested, one of the failures of the privatised electricity
structure is the market dominance of the supply and transmission
networks, which have effectively become privatised monopolies.
[
Interruption.
] Yes, the hon. Member for Arfon is
right. It might well be that that the Office of Fair Trading is saying
that there is competition elsewhere in the market, but that is not the
case in this sector. It is a scandal that more than half the companies
involved in this part of the market have been targets for investigation
by the regulator, Ofgem. Several have been fined sums that run into the
millions.
The
issues we are considering are abuse of market position, manipulation of
prices, mis-selling to consumers and profiteering. I am a committed
supporter of market economics, but my problem is that those companies
are not subject to proper market disciplines and are viewed as
money-printing opportunities. In the UK, we have 14
transmission regions and fewer than that number—just seven
company groups—have the licences to supply electricity through
those networks. It is of little surprise to find that few of them are
UK based—we have companies from Europe and elsewhere, such as
the United States. I hope that the Secretary of State for Energy and
Climate Change will respond to widespread concerns that have been
raised about the market dominance of these licence holders and subject
the current arrangements to a full-scale
re-examination.
In
south Wales, we have a licensed, monopolist electricity distributor,
which chooses to base itself outside Wales, in Bristol. It is
controlled from Pennsylvania in the United States of America. Every
approach by our local media to that company and its professional
advisers in relation to local concerns just draws a terse “no
comment.” It employs excellent IT staff who produce
mind-boggling
and engaging websites, expensively portraying their supposed commitment
to environmental standards. We in Cardiff all know they are a work of
fiction, as anyone who observes the performance of that company in
another area—it drained Llanishen reservoir and is now applying
to convert it into a rubbish dump—will know. It is essential
that as part of the Government’s review of the electricity
market we urgently address the market-dominant position of those
companies.
I
was astounded to find when I looked through the legislation that the
only way the licence can be taken away from those companies is by
mutual agreement. We must demand much higher standards from those
companies that are licensed by the Government. We must create a much
tougher regime, and we must be prepared to revoke licences when such
companies abuse their position, instead of just applying meaningless
fines. Companies that are subject to Ofgem investigation should know in
future that revocation of their licences is a measure that the
Government are prepared to add to Ofgem’s powers and
subsequently to see
enforced.
I
touch briefly on some of the remarks from the hon. Member for Arfon on
fuel poverty. I will not go into what that is, because all hon. Members
in the Committee know, but we have had commitments in legislation since
2000 to address that. Members on the Government Benches care about that
as much as Opposition Members. There is a commitment to eradicate fuel
poverty by 2016. Curiously, for reasons that I do not altogether
understand, the fuel poverty strategy for Wales has a target of 2018. I
thought that that was a typographical error, but I subsequently
discovered that it is right. I do not quite know why the Welsh Assembly
thinks it is right to aim to eradicate fuel poverty two years after we
aim to do so in the rest of the
UK.
The
bottom line is that we are going in the wrong direction. A report last
year made it clear that we started with 2 million UK citizens in fuel
poverty in 2004. There were 2.5 million in 2005, 3.5 million in 2006, 4
million in 2007, and 4.5 million in 2008. The projected figure for
2009, which will be published later this year, is 5 million people
living in fuel
poverty.
I
applaud the Minister of State, Department of Energy and Climate Change,
the hon. Member for Bexhill and Battle, who recently reiterated that it
is the coalition Government’s commitment to match that 2016
target, but we must ensure that it is delivered. I support the
Government’s refocusing of support under the Warm Front scheme
to those who need help, but there is a much greater responsibility on
the energy companies that are too often guilty of cheating vulnerable
customers instead of trying to help them. I do not expect Ministers to
come back in 2016 and say that they did their best but, as the Labour
Government said last year, that they were defeated by rising energy
prices. I must tell the Secretary of State and my hon. Friend the
Minister here today that those excuses of the last Administration are
just not good
enough.
4.8
pm
Owen
Smith (Pontypridd) (Lab):
It is a great pleasure, Mr
Caton, to serve under your chairmanship today. I think everyone will
agree that we have had a varied debate. I have enjoyed many of the
contributions, and a favourite was that of the hon. Member for
Monmouth,
who took us on a remarkable tour of Wales, Westminster, the twin poles
of his own unique isotopes, and all points in between. I thank him for
that. I also very much enjoyed the serious comments made by the hon.
Member for Brecon and Radnorshire, particularly his reference to
chicken power as the future driver of the Welsh economy.
The hon.
Member for Cardiff North made an interesting contribution. It was
fascinating that he should launch such a passionate attack on abuse by
the dominant position of capitalist, privatised electricity companies.
They were privatised under the Tory Government, and it is precisely
because of such fears that we oppose the privatisation in the NHS and
elsewhere that is coming from the
Government—[
Interruption.
] It is a
legitimate observation. I support him in his views about cartel
behaviour. I also support the comments by the hon. Member for Arfon
about LPG companies and the disgraceful way in which they have been
ripping off customers, particularly in rural
Wales.
As
ever, it is a pleasure to precede the Minister. Too infrequently do we
have the chance to speak in the Welsh Grand Committee. Between
sittings, I miss the humour and lightness of touch that he brings to
these occasions—so much so that I have recently taken to
following him on Twitter so as to keep up with his wit and wisdom. I
had a couple of recent insights. One
was:
“You
know what? I think I’ll go in the garden
today.”
Another
classic
was:
“Suddenly
I prefer smooth orange juice to the sort with bits, which I always used
to buy. What can this
mean?”
I
was distraught to read this morning that he is giving up Twitter for
Lent. I and all his followers in Wales will be bereft in the coming
weeks.
In all
seriousness, I was looking in the blogosphere, Twitter and elsewhere
for insights into the Minister’s and the Secretary of
State’s energy policy. I did not find much, although I found a
lot of pretty bold rhetoric, most notably the Secretary of
State’s recent observation about Wales:
“Surrounded
by wind, wave and tidal resources, we are in a prime position to be
able to benefit from investment in the green economy whilst making a
significant contribution to the government’s carbon reduction
targets through safe, clean renewable
means.”
None
of us would disagree with that; it is a statement of fact. However, we
disagree about the policies and decisions that have been put in
place—rather, that have not been put in place—to turn
that rhetoric into reality. They are invisible to
all.
We
do not agree that the Government are delivering on their promise for
Wales. Today, we heard that the gap is enormous between the
rhetoric—that they are the greenest Government ever—and
the reality. It includes the cancellation of the Severn barrage, which
would have gone ahead had we taken power— [Hon.
Members: “It is not a cancellation.”] We
keeping hearing that it is not a cancellation, but I do not see the
barrage being built when I visit my parents at Barry. I suggest that we
would have seen it had this Government not come to power on 5 May last
year.
The
gap also includes the handicapping of community electricity projects
and photovoltaic businesses because of the crazy review of the 50 kW
level for feed-in tariffs, which was to the disadvantage of Welsh ports
in developing wind turbine manufacture and maintenance.
The
Government’s record on energy in Wales is lots of hot air but no
turbines. We should not be surprised that a Tory Government are taking
short-sighted decisions. They are the people who shut the pits in
Wales— [
Interruption.
] That is true; it was
a short-sighted decision by a previous Tory Government. We sit on top
of 250 million tonnes of coal. Given the energy crisis, the
security worries and the potential for carbon capture, we could have
been mining it right now. It was a short-sighted decision, and there
have been many
more.
David
T. C. Davies:
The hon. Gentleman cannot get away with such
historical inaccuracies. He must be aware that many more pits were shut
under the Labour Government in the 1960s than were ever closed
by Mrs Thatcher’s Administration in the
1980s.
Owen
Smith:
None of those pits was shut with the same glee that
we saw under the Tory
Government.
Mr
David Jones:
They were caringly
shut?
Owen
Smith:
No, they were shut because of economic
circumstances, not closed down as we saw under Mrs Thatcher.
Everybody in Wales will know that. People do not need to read history
books; they simply need to remember. In communities such as mine in
Pontypridd, people recall the reality of what the Tory Government did
when they were last in power in Wales, and people are fearful today.
That is precisely the sort of past to which we will be
returning.
The
Severn barrage was the world’s largest green energy project,
with the potential to produce 5% of the UK’s energy
needs—the equivalent of two nuclear power stations, with
hundreds of good-quality jobs—and it was clearly a no-brainer to
press ahead with the decision. Indeed, in October, the Minister wrote
about tidal power—not on Twitter this time—saying that it
was
“insane
not to make use of the best form of dependable renewable energy we have
available to us in
Wales.”
That
is why I look forward to hearing more announcements from the Government
in respect of tidal
power.
Mr
David
Jones:
Tidal
lagoons.
Owen
Smith:
The Minister keeps referring to tidal lagoons. We
look forward to hearing precisely what will happen in respect of them.
We will believe it when we see
it.
Ports
are a critical issue. Many members of the Committee have mentioned the
fact that the Labour Government had announced a fund of £60
million available to all ports across the UK. They highlighted Welsh
ports in particular, capitalising on the fact that those ports sit in
ideal locations, given the arrays in the Irish sea and around Lundy in
the Bristol channel, to manufacture and service wind turbines. The
Opposition were shocked when, without any explanation, the decision was
taken to renege on that position and to provide that money for only
English ports, leaving Holyhead and Milford Haven fundamentally
disadvantaged.
Let us put
straight the Labour record on electrification, an area on which we have
also heard a lot today. I fear the Government’s
misrepresentation on rail electrification.
We would have pursued that, just as we pursued, when
we were in power, an enormous increase in spending on
rail—43% over the last five years of the Labour Government, 60%
from 1997 and a doubling of rail freight and rail transport. That is
our record. Had we stayed in power, we would have maintained that and
electrified as far as Swansea. Our record shows that we were committed
to rail, and we would have continued to be
so.
Jonathan
Evans:
Will the hon. Gentleman point directly to the part
of his programme that said that it was going to electrify to
Pontypridd?
Owen
Smith:
No, because we did not say that we were going to
electrify to Pontypridd. One of the things that I am delighted about is
the prospect of electrification as far as Pontypridd, although
it is a prospect, not a reality. One of the other smoke and mirrors
that we have seen from the Government in recent weeks, which was blown
to cover the fact that we were not going as far as Swansea, was the
promise of jam tomorrow for electrification of the valleys line. It
would be terrific if it happened, but all that Ministers have committed
to is to work with the Welsh Assembly to develop a business case. Well,
our Government developed a business case for going as far as Swansea.
So did Network Rail, which said that we should be going to Swansea. We
cannot trust the Government on the issue. If it happens, we will be
delighted, but we will wait to see whether it is
delivered.
Feed-in
tariffs are another enormously important issue in Wales. All of us
have, in our communities, the prospect of community-driven energy
schemes predicated on the feed-in tariff and the energy that can be
generated by photovoltaic cells. We were absolutely astounded that the
blunt tool used by the Government to try to crack what is potentially a
problem regarding solar farms on brownfield sites was to review the
entire stratum of the framework. It does not make any sense and it is
damaging, as we have heard, to great companies such as Kingspan and
Sharp. It hamstrings the prospect of Wales benefiting from a new
cluster of photovoltaic energy and damages communities such as mine and
those of many hon. Members here, who had the prospect of new community
electricity generation. That would have generated vital revenue and
combated fuel poverty, which are two other issues that we heard about
in relation to some of the communities in Wales that are most in
need.
I urge, as my
right hon. Friend the Member for Delyn and my hon. Friends the Members
for Wrexham and for Llanelli have done, the Minister to return to his
colleagues at DECC, look again at the mechanism that is being deployed
to try to tackle the issue and determine a different way forward. If we
do not do that, it will be another short-sighted decision that sees us
missing
out.
Many
of the decisions have been met with widespread criticism in Wales. We
have heard some of them described today. My right hon. Friend the
Member for Delyn quoted a colleague working in the photovoltaic
industry in his constituency, who referred to the ill-conceived and
dangerously short-sighted measures that are being pursued. Such
measures harm our environment and handicap our economy.
Over the
weekend, the Prime Minister declared war on the enemies of enterprise,
as he put it in his speech in Cardiff. However, I would put it to him
that in Wales, those enemies are not, as he implies, in local
government, the National Assembly or the civil service. As far as
enterprise and the economy in Wales are concerned, the enemies are sat
around the Cabinet table at Transport, Energy and the Wales
Office.
In
conclusion, I urge the Minister to be a friend to Wales and to take
back to his colleagues the concerns that he has heard today. He should
think again about preparing our ports for the offshore wind turbine
revolution; about harnessing the power of our seas and delivering on
the lagoons or a barrage as promised; about the feed-in tariffs and the
impact of the review; about the fuel poverty that is blighting so many
of our constituencies; about the need to reduce VAT on petrol; and
about the rail electrification through to the “ugly, lovely
town” in the west of
Wales.
4.20
pm
Mr
David Jones:
I thank you, Mr Caton, for your chairmanship
this afternoon. Once again, the Welsh Grand Committee has produced a
varied and interesting debate on an area—energy—which is,
principally, undevolved. It serves to highlight the importance of this
Committee in the public life of Wales. I can assure the Committee that
under the leadership of this Secretary of State, the Welsh Grand
Committee will go from strength to strength.
The opening
speech of my right hon. Friend the Secretary of State highlighted not
only the challenges facing Wales and the country as a whole in terms of
the need to de-carbonise and to provide reliable and secure sources of
generation, but the opportunity that those challenges present to Wales.
I have to confess to being somewhat disappointed by the response of the
shadow Secretary of State, the right hon. Member for Neath. I will pass
briefly over his predictably curmudgeonly remarks about the
announcement of the electrification of the Great Western line into
south Wales, which I would have thought was, in anyone’s terms,
a good news story. I must express my surprise at the degree of
opportunism when he referred to the increase in road fuel prices, which
was remarkable even by his own standards. Of course fuel prices are
high; we know that. There are a number of reasons for that. The
principal one is the underlying price of oil. This morning, the price
of Brent crude was trading at something like $115 a barrel.
That is an increase of something like 35% over 12 months, and
that is the main reason that fuel prices are so
high.
Ian
Lucas:
Will the Minister give
way?
Mr
Jones:
I will not because I want to address the hon.
Gentleman’s points, and I am sure that he is more interested in
that than knockabout. The right hon. Member for Neath also mentioned
fuel duty. I have to remind the Committee that the fuel duty escalator
is Labour’s escalator. It was imposed by the right hon. Member
for Kirkcaldy and Cowdenbeath (Mr Brown). Hon. Members will also know
that my right hon. Friend the Chancellor is currently looking at the
issue of whether the escalator should be implemented in April. We will
have to wait for the Budget for that.
The right hon.
Member for Neath also mentioned VAT, criticising the Government for the
2.5% increase. Whenever Opposition Members mention the issue of VAT,
they should ask themselves why we need to increase taxes. We need to
increase taxes to reduce the deficit, and that deficit is
Labour’s deficit. It is interesting to note that although
Opposition Members are quick to criticise any measures aimed at deficit
reduction, they are always totally unwilling to say how they would
achieve that themselves. Deficit denial is endemic on the Opposition
Benches. Unless they can be sufficiently courageous to acknowledge that
the deficit exists and needs to be reduced, and come up with credible
plans of their own as to how that should be done, they are in no
position to criticise any of the necessary fiscal measures that this
Government have put into
place.
The
right hon. Gentleman mentioned—as did the hon. Member for
Pontypridd—the Severn barrage, and I will commend him for the
fact that, on this issue, if none other in his career, he has shown
huge consistency. He is a supporter of the Severn barrage and indeed
there is much to recommend it. However, the Government do not consider
that the potential merits of the project are sufficient to commit any
public money to it. Notwithstanding what the right hon. Gentleman had
to say, there is nothing whatever to prevent the private consortium he
mentioned from making its application to the Infrastructure Planning
Commission to gain consent for the project under the single consent
regime. The Government have not ruled that out. If the right hon.
Gentleman would wish to encourage potential developers to make such an
application, it will be dealt with by the IPC in accordance with the
usual
procedure.
The
right hon. Gentleman also mentioned, as did several other Members,
including my hon. Friend the Member for Aberconwy, the energy island
concept. This is a concept that the Government recognise and welcome.
Wylfa, as we know, has been identified as one of the eight potential
sites for nuclear new build. I agree with my hon. Friend that the
economic benefit of Wylfa B would be felt not only on the Isle of
Anglesey, but across north Wales as a whole. It is a huge pity that the
previous Government set their face against nuclear power. The 2003
energy White Paper concluded that nuclear was an unattractive option.
It was not until 2007 that Labour recognised that nuclear had the
potential to provide reliable carbon-free generation. For
some 10 years after the 1997 election, this country was without
any coherent policy on nuclear generation. The consequence is that the
power stations are closing with nothing to replace them. That is the
legacy that Labour left on
nuclear.
The
hon. Member for Arfon raised the issue of the cost of LPG, the
so-called off-grid energy. I fully agree with him that that is a
significant problem and it is experienced by many of my rural
constituents. There is a huge challenge in supplying heating oil and
LPG to rural communities. He will wish to know that the Office of Fair
Trading is currently consulting on its annual plan to help to determine
its work programme from
2011 to 2012. I am glad to tell him that that includes proposals to
prioritise markets affected by high-rising and volatile commodity
prices and the off-grid energy market is certainly one of those. The
Minister of State, Department of Energy and Climate Change, my hon.
Friend the Member for Wealden has written to the OFT asking it to bring
forward its competition and consumer studies into off-grid energy. I
hope that the hon. Gentleman will welcome that. He raised a number of
other issues but because there is insufficient time I hope he will
allow me to write to him on
those.
I
want to deal with the points on PV energy raised by the right hon.
Member for Delyn and the hon. Member for Wrexham. They are both
sensible Members whose views I respect greatly. I have no problem in
raising the issues with the Department of Energy and Climate Change. I
look forward to visiting the Kingspan factory with the right
hon. Gentleman, without photographers, to hear what the people there
have to say. I understand that colleagues in DECC are working closely
with Kingspan on the review. There was a meeting last week to attempt
to find a way forward. I hope that that is of some consolation to him.
The Government are very supportive of the PV industry in Wales as a
whole and in north Wales in particular. It is a huge asset to the
economy of Wales. We will do as much as we possibly can to support
it.
I was
encouraged to hear that Sharp recently issued a press notice saying
that the extra 300 jobs created at the factory are safe. I hope that
that is of some reassurance to the hon. Member for Wrexham. There is an
issue, and it is one that I am happy to address and to discuss further
to see whether we can find a way forward.
My hon.
Friend the Member for Aberconwy raised the issue of community benefits
of wind farms. He is absolutely right. This is an important issue. To
quote the hon. Member for Pontypridd, it always seems to be jam
tomorrow. I believe that it is right that communities hosting renewable
energy projects should be rewarded for the contribution that they make
to wider society. Many wind farm operators are already providing
generous benefit packages to local communities, but planning
applications for projects over 50 MW in England and Wales must provide
a statement of community engagement. We propose to introduce a similar
measure for smaller projects in England through the Localism Bill. It
is a huge shame that the Welsh Assembly Government decided not to adopt
this aspect of the Localism Bill, which I believe would have been a
huge advantage to the people of
Wales.
This
has been an interesting debate, expertly chaired, with some excellent
contributions. I believe that it has made an important contribution to
the debate on energy in Wales, which is of such enormous importance to
the Welsh
economy—
4.30
pm
The
debate stood adjourned (Order of the House, 1
February).
Committee
adjourned.
Questions Not Answered
Orally
Infrastructure
Planning
Commission
14.
Mr
David:
To ask the
Secretary of State for Energy and Climate Change, what discussions he
has had on the relationship between the Infrastructure Planning
Commission and the Welsh Assembly Government in relation to major
energy projects; and if he will make a statement.
[42536]
Charles
Hendry:
The Planning Act 2008 provides a statutory
framework to ensure Welsh issues are properly considered. The Welsh
Assembly Government have nominated eight commissioners to participate
in examinations for applications in Wales. The Government have
established an integration group, with representation from the Welsh
Assembly Government, to ensure the fast track processes of the IPC are
seamlessly transferred into a new Major Infrastructure Planning Unit
within an integrated Planning
Inspectorate.
Electricity
Market Reform
15.
Jonathan
Evans:
To ask the Secretary of State for
Energy and Climate Change, what assessment he has made of the merits of
reform of the electricity market.
[42537]
Charles
Hendry:
Our consultation on electricity market reform,
which was published on 16 December, outlines reforms aimed at moving
the UK to the front of the global race for electricity investment,
driving the growth of clean energy industries in the UK, and ensuring
the best possible deal for
consumers.
We
believe that the proposed policies set out in our consultation document
and evaluated in the accompanying impact assessment will deliver the
investment needed to
meet our longer-term targets, making the UK a prime location for
low-carbon energy
development.
Electricity
Generation (Security of
Supply)
16.
Mark
Tami:
To ask the Secretary of State for
Energy and Climate Change, what recent assessment he has made of
security of supply in electricity generation; and if he will make a
statement.
[42538]
Charles
Hendry:
Capacity margins are at historic highs.
However, by 2018, 19 GW of capacity, roughly 25% of Britain's current
generation, will close. Over 22 GW of new plant is under
construction or has planning consent, but the electricity market reform
consultation document has raised the need for backup generation due to
the shift towards intermittent low-carbon
power.
This
investment challenge would strain the current system as we move into
the 2020s, so the EMR seeks to establish a market design that provides
the right investment signals for new baseload and flexible plant so we
can decarbonise our power supply while maintaining its security now and
in the long
term.
Feed-in
Tariff
Regime
17.
Mr
Hanson:
To ask the
Secretary of State for Energy and Climate Change, what recent
representations he has received on changes to the feed-in tariff
regime.
[42539]
Charles
Hendry:
We have received a range of representations since
the Secretary of State for Energy and Climate Change announced the
start of the first review of feed-in tariffs last month. Detailed
proposals on the fast-track element of the review are being developed
and we intend to publish them for consultation later this
month.