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27 May 2010 : Column 309

The coalition agreement also clearly envisages a role for new nuclear, provided that there is no public subsidy. I hope there will be cross-party support for that, as I believe it was also the position in the Opposition's manifesto. We also have to reduce our overall demand for energy.

Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab): I would be grateful for a reassurance to the House, and the people of Sheffield, that the personal opposition of the right hon. Gentleman and his right hon. Friend the Business Secretary to nuclear will not get in the way of confirming the substantial beneficial loan to Forgemasters, and therefore its ability to create jobs and to produce and export to the world the tremendous forging capacity for nuclear that was agreed by the previous Government.

Chris Huhne: I am grateful to the right hon. Gentleman for his question. That is obviously an important interest for the city of Sheffield and for his constituents. As he knows, the Government have announced that they are re-examining all the contracts that have been signed off since the beginning of this year. That process is under way and will be completed in due course, and further announcements will be made.

Several hon. Members rose -

Chris Huhne: I wish to make a little more progress.

We have to reduce our overall demand for energy by making a step change in the levels of energy efficiency in our homes, our businesses and the public sector, helping people to heat their homes and meet their fuel bills affordably. We need to put the right incentives in place to ensure that sufficient generating capacity is available and to promote the reliable supply of energy imports by deepening trading relationships, improving the working of EU energy markets and global gas and oil markets, and promoting investment in new infrastructure, both in the UK and overseas.

Andrew Miller (Ellesmere Port and Neston) (Lab): Will the Secretary of State explain to the House the new Government's policy on trading in nuclear enrichment? What is the policy on the treaties of Almelo and Washington? Will the UK have a clear position that applies to all other treaties involving European countries? Presumably any such treaty would be subject to a referendum if changes were involved.

Chris Huhne: The hon. Gentleman will know that Governments always have a clear position on treaties, because they intend to uphold any treaties that they have signed.

The transformation to a low-carbon economy is critical in meeting our climate change objectives and our energy security objectives. We will use a wide range of levers to cut carbon emissions and decarbonise our economy. Achieving the rapid progress that we need to make up for years of inaction and indecisiveness-in that regard, I am looking at some Labour Members-will be a significant challenge, but it also presents a massive opportunity for Britain. The global market in low-carbon
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and environmental goods and services was estimated at £3.2 trillion in 2008-09, and is projected to rise to more than £4 trillion by 2015. By taking action to secure energy supplies and cut emissions we can enable British businesses to seize the benefits of that transition, creating new businesses and thousands of jobs across the country.

Malcolm Wicks (Croydon North) (Lab): I congratulate the Secretary of State on his appointment. I am not sure who he was looking at just then, because Labour Members were very decisive about the need for new nuclear power. When you examine the transition to a low-carbon economy, are you factoring new nuclear power in or out? Similarly, do you factor nuclear power in when it comes to-

Mr Speaker: Order. May I just say to the right hon. Gentleman that I am not factoring in anything?

Malcolm Wicks: Indeed. Is the Secretary of State factoring in new nuclear power when it comes to carbon emissions? Does he recognise that in order to drive forward new nuclear power he must play a decisive, hands-on role?

Chris Huhne: If the right hon. Gentleman were to read the coalition Government agreement, he would recognise that a clear framework is in place for new nuclear power. I am pleased that some of those most interested in investing in new nuclear, such as EDF, have welcomed the clarity with which the new Government have set out their position. If he is concerned about that, he needs to update himself on some of the potential investors.

The steps that we need to take-

Several hon. Members rose -

Chris Huhne: I should make a little progress, because answering one intervention and then moving straight into dealing with another without even delivering a few of the sentences in my prepared text would be -[Interruption.] I am sure that Labour Members were trying to help me, and I am very grateful.

The steps that we need to take do not relate just to the supply and demand of energy; our energy infrastructure is in urgent need of new investment. Much of our national grid was built during the 1950s and 1960s, when consumers were passive and electricity came from predictable, large-scale sources. We need to move to a 21st century system where supplies come from a range of sources-from large to small scale, and from the predictable to the intermittent-and consumers adjust their consumption much more flexibly. Achieving our objectives is not just about having the right regulatory framework; we must act urgently to improve the availability of finance in support of the UK's transition to a low-carbon economy. That is why we will create a green investment bank to unlock private capital and provide individuals with opportunities to invest in the infrastructure needed to support the new green economy. The energy Bill announced in the Gracious Speech is a key part of our programme to deliver a low-carbon future, demonstrating that we are ready to make the difficult decisions and to take swift action to put the right legislative framework in place. The Bill will deliver a
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framework that will transform the provision of energy efficiency in the UK by enabling a "pay as you save" approach.

Mr John Baron (Basildon and Billericay) (Con): The Secretary of State might be aware that in order to reduce domestic energy bills and fuel poverty, and to cut through the confusion caused by having about 4,000 different tariffs, a number of hon. Members campaigned on the issue of obliging energy companies to inform their customers on each bill whether they were on the cheapest tariff and, if not, how to transfer to that tariff. The previous Government compromised by suggesting that that information would be put on an annual statement. The coalition agreement does not make it clear whether that will remain a firm commitment from our side. Will the Secretary of State clarify the situation for the House?

Chris Huhne: I am grateful to my honourable colleague for that question. The coalition agreement states very clearly that the fundamental objective is as he has described, and the Department will examine the best way in which we can deliver it, taking account of the administrative costs.

We know that many people want to take steps to make their homes more energy efficient, but the up-front cost can be prohibitive and there can be uncertainty about the results of measures. Our green deal will enable householders to benefit from energy efficiency and to repay the cost of the work over time, through savings on their energy bills.

Dr Alan Whitehead (Southampton, Test) (Lab): I, too, congratulate the Secretary of State on his elevation to his new post. He will be aware that energy efficiency in the home particularly relates to the ability of that home to operate efficiently, and the emergence of a feed-in tariff and the renewable heat incentive is an important part of that process. Will he tell the House whether he is prepared to stand by the feed-in tariff and its financial implications, and the renewable heat incentive? Will he guarantee the finance that will accompany that, in order to ensure energy efficiency and the development of small-scale generation in the domestic sector?

Chris Huhne: I am always pleased to hear questions from the hon. Gentleman, because he is a neighbour in Hampshire and has followed this agenda closely, with great passion and commitment, for many years. The issues that he raises are key. He will note that the coalition Government agreement contains a firm commitment to feed-in tariffs, and we will take that forward. Renewable heat is an important issue and we want to ensure that we make progress on that. The Department will have to come up with the exact ways in which we do that, but this is a crucial part of the whole package. Broadly speaking, a quarter of our carbon emissions come from our housing stock, much of which will still be there in 2050; people will still be living in it. Given that, what we are trying to do, particularly with the green deal, is move to a situation where we can retrofit that stock with insulating measures that will make a dramatic difference. Our Bill is designed to do that, and I very much look forward to working with people from across the House, including those on the Opposition Benches, whose substantial commitment to this agenda over many years I recognise, to make this a
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really effective, long-term piece of legislation. We want it to be something that we can all take pride in, that will be on the statute book for many years and that will stand the test of time.

Simon Hughes: My right hon. Friend knows that I warmly welcome him, with his fantastic commitment over many years to the green agenda, to his post, as well as the greenness of this Government. Given that our party had the most ambitious programme, with a 10-year programme for home insulation across the country, and that the commitment is continued in outline in the coalition Government agreement, will he assure us that as he and colleagues across Government work out how that can be delivered, they will be as ambitious as possible, not just for five years but over 10, and that every home that it is technically possible to convert will be able to have that programme met most generously from reduced fuel bills? It would make the most fantastic transformation for real people in their homes.

Chris Huhne: My hon. Friend has stated precisely what the objective of this key centrepiece of the legislation will be. It is essential that we deal with the issue and leave a legacy that will stand the test of time and will genuinely modernise all our old housing stock, including the pre-first world war housing stock. There are a lot of problems, such as solid wall insulation, of which we are all aware, and such measures can make a dramatic difference to our ability to meet our climate change targets. Indeed, we are all committed in the Climate Change Act 2008, which was taken through the House by the right hon. Member for Doncaster North, to a very dramatic cut in carbon emissions. We have to accept the logical consequences of that commitment, one of which will be measures across the economy to decarbonise the economy and to save energy. I agree with the emphasis put on this subject by my hon. Friend.

As well as reducing carbon emissions and helping to reduce energy bills, the investment in energy efficiency will support our green recovery. It will create more green jobs in the building industry as we convert our old housing stock to state-of-the-art standards. It will help industry grow and build a thriving green economy for the UK, as well as help to close our energy gap in the most efficient way possible by saving energy that we waste.

We are also committed to using our Bill to put in place the building blocks for our low-carbon future. The economy of the future is likely to be powered by electricity and we need to be able to generate enough electricity to meet future needs from low and zero-carbon sources. We are still working on the detail and identifying where legislation is required, but these measures might include the reform of our energy markets to meet the challenges ahead in delivering security of supply and the transition to a low-carbon economy, including the introduction of an emissions performance standard to regulate emissions from coal-fired power stations.

Albert Owen: I am grateful to the Secretary of State for giving way for a second time. He was clear and detailed in his response to the questions posed by my hon. Friend the Member for Southampton, Test (Dr Whitehead) and the hon. Member for Bermondsey
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and Old Southwark (Simon Hughes). However, he was less so in response to my right hon. Friend the Member for Croydon North (Malcolm Wicks). On nuclear power, will he be absolutely clear whether, if there was a vote in this House to go ahead with new nuclear power stations, he would, as Secretary of State, give the leadership vote for that, vote against it or stay away?

Chris Huhne: The coalition agreement is very clear. The hon. Gentleman will be aware that investment in particular sources of energy is up to private investors. The agreement in the coalition Government-I hope that this extends to those on the Opposition Benches-is that there will be no new subsidy for nuclear power. Frankly, given the state of the public finances that we have inherited from the last Government, that is a commitment that I can make with the total backing of my colleagues in the Treasury and elsewhere in the Government. If investors want to come forward on that basis, taking account of what is likely to happen to the carbon price and of the framework that we have laid out in the coalition Government, I believe that there will be an overwhelming majority in this House for new build. That is something that we have had to recognise, even though my party has taken a different view on that. The hon. Gentleman's party has supported nuclear power. Our partners in the coalition Government on the Conservative side have been supporters of nuclear power. We have to recognise that there is an overwhelming majority in this House. I come back to the point that I made earlier, which is that if we talk to investors who are considering this, such as EDF, they welcome the clarity with which the coalition Government have put out our statement.

Several hon. Members rose -

Chris Huhne: Let me make a little progress.

The measures might also include a requirement for energy companies to provide more information on energy bills in order to empower consumers, including information on the cheapest tariff available and how a household's energy usage compares to similar households, and a framework for the development of a smart grid to revolutionise the management of supply and demand for electricity in a low-carbon future. Again, the emphasis is on saving as well as on new generation. If we can have a smart grid that enables us to take some of the peaks out of electricity demand, that in turn will allow us to install less capacity and provide what we have to provide in a more economical manner.

Joan Walley: It was remiss of me not to have congratulated the Secretary of State on the important role that he is now playing. On the issue of the grid, may I refer him to the offshore valuation research that shows that there is huge potential for the net export of renewables? Will he assure the House that as the legislation is introduced there will be scope for a supergrid so that we can have all the advantages, which will also cover energy supply, of being able to export to Europe?

Chris Huhne: There are a number of issues, but I was excited, as I am sure the hon. Lady was, by the report on the potential for renewable energy around our shores. It is right to point out, as that report did, that in due
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course we might once again be a net energy exporter, as we were at the peak of oil and gas production in the North sea. That is a very exciting prospect. We have enormous potential when it comes to renewables produced through tidal power, wave power and wind power-perhaps less, given our climate, when it comes to solar power. We have an enormous capacity, and we need to ensure that we have the framework to exploit that.

We will also need the right institutional framework to support the reform of our energy system, and we may use the Bill to put any necessary changes in place. Overall, the Gracious Speech has put forward a programme to ensure we have a stable economy underpinned by a robust national infrastructure. The energy Bill will be an integral part of that agenda, as it will kick-start the transformation to a real low-carbon economy and help to drive the country out of recession by creating thousands of new green jobs. I commend the Gracious Speech to the House.

12.8 pm

Edward Miliband (Doncaster North) (Lab): I congratulate the right hon. Gentleman on taking up his post as Secretary of State. He has had a distinguished career as an economist, as a Member of the European Parliament and as an eloquent Member of this House since his election in 2005. He was also one of the architects of the coalition agreement and he deserves his place in the Cabinet. We will be a constructive Opposition and I welcome him to his post.

As the right hon. Gentleman is a Liberal Democrat, I know that he practises what he preaches. I am told by friends that he is going to follow his new leader, the Prime Minister, in putting a wind turbine on his house, but that he is going to go even further and put a wind turbine on all seven of his houses. We look forward to the regeneration of the wind turbine industry that that will produce.

Mark Tami (Alyn and Deeside) (Lab): My right hon. Friend mentioned that the Secretary of State would be putting wind turbines on his house. I wonder whether local Lib Dems will campaign against that, as they always seem to campaign against wind farms, whether onshore or offshore, whereas at a national level they say that they support them.

Edward Miliband: No doubt that will be the case.

Let me say right at the outset that now we are in opposition, I intend for us both to hold the Secretary of State to account and to be constructive. In that spirit, there are some measures that we welcome, which would have been in a Labour Gracious Speech. The help for the home energy efficiency pay-as-you-save proposal is very important and we look forward to scrutinising the measures that come forward on that. The measures on the smart grid are also important, as is reform of the energy market-the work that we started in government. Internationally, we will fully support his efforts to try to get the binding treaty either at Cancun or in Cape Town that we failed to get at Copenhagen, and I will happily share with him some of the scars of Copenhagen if I can be of any help in advance of the Cancun summit.

The issue at the heart of this Gracious Speech, in this area and in many others, is whether the Government can provide the long-term direction that the country
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needs. In the area of climate change and energy, above all others, the country needs a clear sense of direction. The Liberal Democrats and Conservatives had different positions on some key issues at the election. I suppose we cannot blame them for that, as they did not know they would end up in bed together, but the test will be whether they produce a coherent long-term plan on those areas of disagreement or simply try to paper over the cracks, and thus fail to provide the long-term direction the country needs. We should set three tests: whether the new Government have a coherent strategy to deliver on the transition to low-carbon energy, whether they have a plan to secure a green industrial future for Britain and whether they have a commitment to make the transition fair.

Let me address the biggest challenge of all, which is the pre-condition of all other challenges on climate change that we face-the need to take carbon out of our electricity supplies. Our answer, in the low carbon transition plan we published last summer, which I hope was a plan for a decade, was the trinity of low-carbon fuels-clean coal, renewables and nuclear. On clean coal, I am pleased that the coalition agreement supports our investment and the levy that went through the House, as well as the tough coal conditions that we introduced, which are the toughest in the world.

Mr David Anderson (Blaydon) (Lab): My right hon. Friend raises the issue of clean coal. We must also raise with the Government the immoral cost of importing coal from countries such as China and Ukraine, where thousands of miners are killed every year so that we can get relatively cheap coal. When he was the Secretary of State, he agreed to take forward this issue in the international arena. Will he join me in asking the new Secretary of State to do the same?

Edward Miliband: My hon. Friend raised this important issue at the end of the last Parliament. We hope to work with the Government on that, as I am sure it is a cross-party concern. No doubt he will campaign on this issue as eloquently as he does on many others.

We will scrutinise the Secretary of State's plans for an emissions performance standard. There is concern about whether that will lead to uncertainty in investment in coal and gas, but, again, we will judge the Government on the measures they introduce. There is some urgency on this issue, so I hope that plans will be produced speedily.

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