Session 2010-11
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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 641 -i

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEn BEFORE THE

ENERGY AND CLIMATE CHANGE Committee

THE COMPREHENSIVE SPENDING REVIEW AND DECC

wednesday 24 November 2010

Moira Wallace, Phil Wynn Owen, Simon Virley and Edmund Hosker

Evidence heard in Public Questions 1 - 129

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Oral Evidence

Taken before the Energy and Climate Change Committee

on Wednesday 24 November 2010

Members present:

Mr Tim Yeo (Chair)

Dan Byles

Barry Gardiner

Ian Lavery

Dr Phillip Lee

Albert Owen

Christopher Pincher

John Robertson

Laura Sandys

Sir Robert Smith

________________

Examination of Witnesses

Witnesses: Moira Wallace, Permanent Secretary, Department of Energy and Climate Change, Phil Wynn Owen, Director General for National Climate Change and Consumer Support, Simon Virley, Director General for Energy Markets and Infrastructure, and Edmund Hosker, Director General for Corporate and Professional Services, gave evidence.

Q1 Chair: Good afternoon, and a warm welcome to the Committee; delighted to see you here. It’s the first time we’ve met in this new Committee. The Permanent Secretary and I had an exchange in Cambridge last Saturday, which covered some of the ground.

Moira Wallace: We covered most things then.

Chair: I think we did, yes. Is there anything you want to say by way of opening remarks, or shall we just crack straight on?

Moira Wallace: Nothing.

Q2 Chair: That’s fine. I have a question about the definition of "environmental spending". The CSR document defines environmental spending as a number of things, including obviously your department’s DEL spending, excluding spending on the legacy, your AME spending on Renewable Heat Incentive, some DEFRA spending, but it also defines as environmental spending, "Spending via the Renewables Obligation and Feed In Tariffs". What is the justification for that?

Moira Wallace: This is a matter on which the classification experts took a view, I think in the course of the last year, so it’s really a matter for the Office for National Statistics. I think it is to do with the way the money is raised, that is raised from bill payers, and the fact that the Government exercise so much control over how it is spent. Obviously they are treated slightly differently from the rest of public expenditure, but it was a matter that decisions were taken on by the Government in the context of the Spending Review for that reason.

Q3 Chair: So to be absolutely clear, the effect of that decision is, if the Government decided to raise Feed In Tariffs or to extend the Renewables Obligation to some additional technologies, although the burden of those changes would fall entirely on consumers through higher electricity bills, the Government could preen themselves and say, "Gosh, we’ve increased environmental spending"?

Moira Wallace: It would score on both sides of the account, so it would score-I think I’m right; you will correct me-both as taxation and spending because of the classification decision.

Q4 Chair: On the whole, I seem to think that the media-and possibly even the public-pay rather more attention to the spending figures than the totals raised in taxation.

Moira Wallace: Yes, but when they equal each other, it would score on both sides.

Q5 Chair: Suppose I was in the Treasury saying, "Gosh, I want to get this next Budget or spending round statement to look really good and green; therefore I will approve a substantial increase in Feed In Tariffs, and then people will look at the figure and say, ‘Gosh, yes, the environmental spending has gone up’".

Moira Wallace: I can tell Simon is dying to come in.

Chair: Good.

Simon Virley: The purpose of the Renewables Obligation and Feed In Tariffs is to stimulate the take-up of renewable energy, which ultimately is one of the key aims for the Government’s green agenda; so in that sense, it is additional resource available to meet one of the Government’s environmental objectives.

Q6 Chair: Yes. I suppose in that sense it is. Therefore, do you think if we allowed the water companies or the telephone companies to increase their bills, we would then claim that Government spending was going up in those areas?

Simon Virley: The Government do have an explicit target on renewable energy-set by the European Commission, of course-and these measures are absolutely critical for achieving that, so-

Q7 Chair: The point I am trying to get at-I am very much in favour of the target, and I hope it remains as challenging as possible-is, do you not think this is a fraudulent way to present the figures to the public?

Moira Wallace: It would be a very brave Permanent Secretary who described the Office for National Statistics and the Treasury as fraudulent, so I don’t think I will. But to take the example that you’ve given, there’s a difference between an increase in prices and an increase in prices that is caused as a result of a direct Government policy, a piece of public policy. The numbers involved are quite significant. The Treasury takes a view-I think we discussed it with the Secretary of State when we were here-that that is effectively competing with other forms of expenditure and with other forms of taxation, on which the amounts are quite significant.

Q8 Sir Robert Smith: So it counts as environmental spending. Presumably, then, does it count as departmental spending against the department’s budget?

Moira Wallace: It counts against the department. I think I am right in saying it’s classified as annually managed expenditure, so it is outside the departmental expenditure limit. So it’s managed in a slightly different way, recognising that it is not so susceptible to linear control.

Edmund Hosker: We’re still discussing with Treasury exactly how it will work out. It’s not clear yet whether it will appear in our resource accounts, but it is something that appears on both sides of the national accounts.

Q9 Barry Gardiner: If I can pick up this theme: we have the figures for your Resource DEL in 2011-12 as £1.5 billion, 2012-13 as £1.4 billion, 2013-14 as £1.3 billion, and 2014-15 as £1 billion; and of course, the total allocation DEL mounts during the period from £3 billion to £3.7 billion. The Secretary of State considers this is a wonderful settlement for his department. But of course, you would probably agree with me-wouldn’t you, Permanent Secretary-when I say that the true figures are £785 million, £670 million, £305 million, and is actually a net benefit to the Exchequer of £20 million in 2014-15, because all that money has come out of business, hasn’t it? It was originally the CRC Energy Efficiency Scheme that has taken £715 million, £730 million, £995 million and £1,020 million away from business that was supposed to go there. So all this business about the department experiencing a growth in its budget-this is actually off the back of business, isn’t it?

Moira Wallace: Okay. There are several aspects to that. Our general reaction to the Spending Review is that it gives us what we need. I don’t think we’re going round over-hyping it. It has obviously been a time when every department has been under pressure and has had to prioritise. Within the numbers, you’re absolutely right to point out that resource is going to reduce and capital is going to increase and that’s the right way round, from our point of view. We are very pleased, for example, that the capital numbers include funding for the first CCS-Carbon Capture and Storage-demonstration, a very high priority for us.

We have had to make a contribution to fiscal tightening across the Government-it’s quite appropriate that we should-and part of that has come from prioritising what we asked for, part of it has come from a reduction in resource and part of it has come from ending recycling of the CRC. That is something that we recognise is unpopular, but allows us to make a contribution to the fiscal deficit and we don’t think it damages the objectives of the CRC scheme or the primary objective, which is to cut carbon.

Q10 Barry Gardiner: So you don’t think that whisking out from business £3.5 billion-worth of cash is either going to have an impact on them negatively or damage in any way their commitment to carbon emission reductions? Is that what you’re telling me?

Moira Wallace: No, it’s not what I’m telling you, but I’m saying that we had to prioritise. If you compare this with the answers to the last question, actually, wherever the money comes from, whether it comes from the generality of taxpayers, whether it comes from consumers or whether it comes from business, it is always costing someone some money, so we do take that very seriously. We’re not saying it will have no impact on business but we do think we can preserve the objectives of the scheme.

Phil Wynn Owen is in charge of the CRC scheme, and I can tell he’s going to add something to this.

Phil Wynn Owen: As our Secretary of State made clear in his speech to the CBI a week ago, the decision not to proceed with revenue recycling under the Carbon Reduction Commitment Energy Efficiency Scheme-

Barry Gardiner: Sorry, "revenue recycling" means giving the money to business to achieve those reductions, is that right?

Phil Wynn Owen: Not exclusively to business, no; to participants in the scheme, because you’ll be aware that there are also public sector participants.

Barry Gardiner: Indeed.

Phil Wynn Owen: But you’re correct that the original policy, as construed by the previous Government, was to, on the basis of league table placings, to recycle the money to those participants in the upper half of the table. Of course, no one knew who that was going to be. This Government, against a background of unprecedented pressure on the public finances, took the difficult decision-as my Secretary of State made clear to the CBI last week-not to proceed with revenue recycling. That was to get to focus not only on best value for money in those difficult fiscal circumstances, but also to send a clear price signal to participants. So a week ago, at the same time as he made that speech, we issued a consultation document on measures further to simplify the CRC with the devolved administrations, including a number of simplifications.

Q11 Barry Gardiner: Sorry, with respect, Mr Owen, you’re not answering the question that I asked the Permanent Secretary. You’re telling me what you want to tell me, but you’re not answering my question. My question was: what will the effect be on those businesses and-as you quite rightly point out-public sector organisations, in terms of their commitment to achieving the emissions reductions that were originally predicated on the scheme? It is an answer to that question that I want, not the flannel about how good what is going to replace it is.

Phil Wynn Owen: May I try again, because I think I did say that it would give them a stronger, clearer carbon price signal, and to that effect, we do believe that we will still achieve the carbon savings that we expect from the Carbon Reduction Commitment Energy Efficiency Scheme.

Q12 Barry Gardiner: In what time scale?

Phil Wynn Owen: In the June projections that we published for carbon savings against a range of measures to meet our carbon budgets, we said that in Carbon Budget Period 1, we expected 0.4 million tonnes of CO equivalent; Carbon Budget Period 2, 3.1 million tonnes of CO2 equivalent and by Carbon Budget Period 3, which ends in 2022, we expect 7.5 million tonnes of CO2 equivalent. So cumulatively, that’s about 11 million tonnes of carbon equivalent over the first three carbon budget periods, and I have no reason to believe that the changes we’ve made will change those carbon reductions.

Q13 Barry Gardiner: That is very helpful. Therefore, can I ask you: those advisors who originally put forward the policy that you’ve now changed, who were recommending that £3.5 billion was given away, to what you’ve now revealed is no purpose-what’s happened to those advisers?

Phil Wynn Owen: I don’t know the answer to that question, but this Government are very clear that they’ve inherited a scheme that is well intentioned, achieves carbon savings, but was far too complex.

Q14 Barry Gardiner: Could we have a note then, please, Permanent Secretary, to the Committee as to what has happened to those advisers who gave that advice: have they been reprimanded for the recklessness with which they sought to give away £3.5 billion of public money to achieve no emissions reduction purpose?

Moira Wallace: I will certainly give you a note.

Q15 Chair: Thank you. All Government departments are now required to cut emissions from their own estate and the profits for which they have responsibility, and obviously that applies to DECC as well, but at DECC you will have a particular interest in the achievements of other departments in this, because that contributes obviously towards the achievement of UK standards. Given the reductions that are taking place now, or will take place in the next three or four years in departmental spending across departments as a whole, are you confident that the other departments will now be able to meet their own reductions that are required in carbon emissions?

Moira Wallace: We’re as confident as we can be, but obviously there are still decisions to be made, in the wake of the Spending Review, and in most departments some internal prioritisation is going on. Overall, we would say the result of the Spending Review contains lots of things that we were really hoping for and relying on to meet carbon budgets. We have already covered some of them, but obviously, carbon capture and storage, Renewable Heat Incentive, commitment to the continuation of Feed In Tariffs, Green Investment Bank and so on; so there’s a lot in there that’s necessary. What we will do before the end of the financial year is re-forecast our current expectations for carbon budgets, which will take account of any policy changes that have still to feed through, as well as what’s going on in the real world in the economy. But overall, we feel the Spending Review gives us what we need.

Q16 Chair: So will we be able to see that in the Business Plans of other departments as well, to see how they’re handling this?

Moira Wallace: You will to an extent, but I think the Prime Minister has already said that, on this issue of carbon alone, he wants us to do a cross-cutting plan that brings together the impact of what’s going on across all departments, both domestically and internationally. We will be doing that in the next few months, so that, above the Business Plans that have already been published, there is one Business Plan that sets out how we’re planning to go ahead on carbon.

Q17 Chair: Right. Because the environmental spending, as defined-apart from the areas I’ve already mentioned-covers parts of DEFRA as well as DECC, how have you come out of this in terms of the carve-up between the departments? There is reference to a 21% increase in environmental spending. How much of that actually belongs to DECC?

Moira Wallace: Quite a lot of it belongs to DECC, but there are other significant contributions from the incentives we’ve just talked about, which will score under us, from DEFRA, and also on international climate finance, where obviously there’s a very significant amount pledged-£2.9 billion over the four years. So it’s a cross-departmental effort.

Q18 Chair: The claimed 21% increase, is that a real terms increase or-

Moira Wallace: It’s real terms.

Chair: Real terms. Okay.

Q19 Sir Robert Smith: I just wondered, on the performance measurements, performance measurement I, "The total number of energy efficiency installations"-you have brackets there-"cavity wall and loft insulation". Are you not more ambitious about tackling all the hard-to-treat homes, or are you just going to measure your performance on the easy hits?

Moira Wallace: I don’t know that we exclude solid walls from that. We’re certainly very interested in them. I’m not sure whether it’s actually in that indicator-

Sir Robert Smith: I am just worried, once you have performance measurement things, do they sort of-

Phil Wynn Owen: No, it’s a good question. For instance, we certainly don’t exclude solid wall insulations, which is the biggest challenge in many of the hardest-to-treat homes. So I think those were given as an example rather than as a definitive list. There remain significant problems on unfilled lofts and cavity walls. If you wish I can give you some statistics, but I think going forward probably the biggest challenge we face is getting cracking on solid wall insulation-as you say, many of them in homes that are otherwise hard to help.

Sir Robert Smith: Yes.

Moira Wallace: Sorry, can I just follow that up? I was slightly surprised when you put that to me, but I see you’re describing what we put in the Business Plan. But actually these are draft indicators and we’re looking for comments on them. I think that is rather a good point, so I’ll make sure that we include that. Certainly, in terms of policy, we’re spending an awful lot of our effort trying to work out how to improve the situation on solid walls, so we might as well get some credit for it.

Q20 Sir Robert Smith: Yes, that would be helpful. On point IV, I’m just wondering how you’re going to measure that performance measurement of the spare capacity of the UK gas and electricity networks. Are you looking for a safety margin? If you have too much spare capacity, that’s an unnecessary cost on consumers, and if you have too little risk on consumers-

Moira Wallace: Simon will tell you about this.

Simon Virley: You are right, and we publish some figures with National Grid, on an annual basis, that essentially show what spare capacity there is available on both gas and electricity networks, and that will be the basis of these indicators. You’re absolutely right-you don’t want the indicator to be showing we have huge margins because then consumers would be over-paying. Equally, you don’t want to have very tight margins because then, of course, there’s the risk of power supply interruptions.

Q21 Sir Robert Smith: So who will choose what the optimal margin is?

Simon Virley: We don’t have a target for the optimal margin, but obviously we have a range of historical experience that we draw on in assessing whether things are getting too tight or we have too much.

Q22 Sir Robert Smith: Because obviously as we move towards a different mix, especially with intermittent generation, the margin will have to be greater. But this is still in draft. I’m just wondering, to be a meaningful performance measurement you’d have to have some kind of suggestion as to what a good target would be.

Simon Virley: Clearly, if we end up with a situation where there’s no margin, then that would be an unsuccessful outcome. What we are doing, as far as the Energy Bill goes, is actually sharpening the incentives on suppliers to make sure there aren’t disruptions to energy supply. But you’re right, there is a broad range within which we would be comfortable, but we have not set an explicit target for that.

Moira Wallace: One of the ways that we deal with that-because it is a matter of judgment and it does depend on the underlying mix-is, in the annual security of supply outlook that we publish, we will take a view not only on what the numbers are but whether that’s satisfactory, given the likely profile of generation.

Q23 Laura Sandys: You have several different performance measurements. We also have issues that we’ve been discussing in previous meetings about fuel poverty, and so on. Some of these will be competing up to a point, and there will be a moment where you might have to make a decision. What is your priority in the sense-is it energy security, is it cost of carbon? If there was a crunch moment, what would you put at the top of the list and what would you compromise on, particularly with security of supply?

Moira Wallace: Low carbon energy security, which I recognise already includes two-

Laura Sandys: Has a contradiction.

Moira Wallace: That is absolutely at the heart of these. But actually those are indistinguishable because the Government do believe that there is a form of energy security that ignores low carbon. So, it’s not just a sort of game to put them together; they go hand in hand. Of course there are trade-offs, and you make these judgments all the time-we have just made some of them in the Spending Review-but this is not an unreasonable set of priorities for a department. The whole point of the department was to bring these decisions together and try and make sure that we were making those trade-offs in the right way, but to recognise that they are all important.

There are some particular issues within here, where we’re doing more work to try and judge the appropriate level of ambition. Fuel poverty is one such case where, as you will see in the Business Plan, it mentions the need for an independent review of the fuel poverty target and definition, because that’s obviously an area where we’re some way adrift.

Q24 Laura Sandys: But then when you start to also look at the increased costs that are coming into the energy sector through carbon management, we’re going to have quite an increase in those people who fall into fuel poverty as a result of that.

Moira Wallace: Yes, which is why we need to be really clear: what is the definition of "target"?

Q25 Laura Sandys: So if fuel poverty is your objective, or is on your priorities, then if there was a so-called crisis moment, would you then have to look again at your carbon measures, because at some point these issues will force you to make certain decisions if there was any form of energy crisis on supply or on economic development?

Moira Wallace: Yes. Basically, what we’re trying to do is chart the course that gives us the best trade-off-that’s the whole point of the department-to make sure that we’re able to deliver energy security, both now and well into the future when we need to be looking at security of supply and low carbon hand in hand. So I don’t really think one can choose. It’s our job to make sure that we’re able to have both. There will be difficult judgments to be made, but I don’t think the Government are going to say, "Low carbon matters and security of supply doesn’t", or the reverse. They both matter, and we’re deliberately locked into a framework where they both matter.

Q26 Barry Gardiner: Two brief questions: one is in relation to the three input indicators of the Business Plan; the second of those speaks of, "Leverage of UK international climate change finance-US$ of international plan leveraged per US$ of UK funding". It strikes me that what happens in these things is: one country puts in some money and says that it has leveraged the money that another country puts in; and the other country, meanwhile, is reporting to its own taxpayers and legislators that its money has leveraged the money that the other country has put in. What do you really mean by "leveraged" here because, in ordinary parlance, "leveraged" means that there has been a cause and effect, and it’s extremely difficult to determine, in the sort of baskets of funds that are put forward within the international community, whether your contribution has actually had an effect?

Moira Wallace: I don’t think I’m going to be able to tell you the detail of how we’re going to calculate that. I agree with you exactly-there’s a risk of a sort of facile connection being made, but also it’s hard to know exactly. As you say, people may claim each other’s money. I’m quite happy to give you a more detailed note on that, but I don’t think I could answer that now.

Q27 Barry Gardiner: Fine. In that case, the second question, which I think you will be able to answer because it is much easier-

Moira Wallace: Excellent.

Q28 Barry Gardiner: On 18 November, in his exchange with me in the climate change debate in Westminster Hall, the Minister for Energy said, "The £2.9 billion is new in that it is drawn from the rising aid budget". That is at Hansard 345WH. Can we just have absolute clarity that the proportion that was set out of 10% maximum overlap between aid spending and climate change spending is therefore not being breached? That’s an important principle, which I think gained adherence on all sides of the House, and I think it’s really important that you’re able to clarify that now.

Moira Wallace: Okay. I’m not sure I can do the detailed reconciliation, unless you can, Edmund?

Edmund Hosker: I think if you’re asking what share of UK ODA will be devoted to climate finance, then the answer is that that’s going to increase to about 7.5% by the end of the Spending Review period.

Q29 Barry Gardiner: 7.5%?

Edmund Hosker: Yes.

Barry Gardiner: Thank you very much.

Q30 Laura Sandys: Moving on to the Feed In Tariffs and the Renewable Heat Incentive, there is a question about whether you’re going to be reviewing the Feed In Tariffs, when that might be and what sort of criteria you would use? One of the issues that one is very keen to look at is the ability for people to invest with certainty with long-term planning. Obviously, there are question marks over what that review will look like and whether it will impact existing operators or just future operators; and that aspect of uncertainty I think may be holding people back at this moment.

Moira Wallace: Simon can put your mind at rest.

Simon Virley: FITs will be reviewed in 2012, with any changes taking effect from April 2013, unless there is higher than expected take-up in advance of that. So we’re going to be publishing details about what we’re calling "a trigger mechanism", so that if we have very rapid take-up, way above our expectations, then we will pull forward that review. There is no intention to apply these changes retrospectively, so people can look at the tariffs that are available now and make their investment decisions on that basis, and there is every indication that, in the first few months of this year, people are taking up Feed In Tariffs. We’ve had over 14,000 installations since April, which is definitely a kick-start to the market. So we’re keen to avoid any investment hiatus, but obviously we do have to keep these things under review as the cost of technology changes, and obviously as we monitor developments towards our target on renewable energy.

Q31 Laura Sandys: Obviously, the other issue is the review of technologies and what the process is you’re going to go through on that; and whether there are certain technologies that are now being looked at as being not as effective as others, and how that will impact on investment again.

Simon Virley: Part of that review will be to look at the costs of different technologies and how they’re changing over time, and where we can get the most cost-effective sources of renewable energy. Of course, FITs aren’t just about those considerations. There is a wider public engagement argument as well and every evidence that once people install their own renewable technologies, they pay more attention to their own energy use, which is a positive behavioural impact. So we are going to be looking at all those issues, in terms of the review that we’ll undertake of the future tariffs.

We have said in the Spending Review documentation that we would expect that review to generate savings of at least 10% of the cost of the scheme, as inherited from the previous Government, but we haven’t set exactly those figures, pending the outcome of the review.

Q32 Chair: Just reverting to where I started: if the take-up, say, of solar was very much higher than expected-and the tariffs do look quite generous to me-and then you were to review them even earlier and reduce them, that would of course show as a cut in public spending on environmental issues.

Simon Virley: It would, in aggregate, but of course there would be an offsetting reduction on the other side of the balance sheet.

Q33 Chair: Yes, but unfortunately no corresponding tax cut. If we have one technology where the take-up is lower than expected, can we expect reciprocity? In other words, will you consider reviewing the tariff upwards?

Moira Wallace: I think we’ll review everything, but the key is cost-effectiveness. So what you’ll be looking at is the electricity you’re getting, the carbon you’re saving, how much you’re subsidising. Of course, the cost of these things are moving and part of the point of the scheme is to get larger deployments of the costs to fall, so there will be a lot of things that we look at in that review to make sure that we’re getting what we need in terms of renewables, but also what we need in terms of value for money.

Q34 Chair: The cost-effectiveness argument, is it likely to be extended to comparisons with nuclear power in future?

Moira Wallace: We look at costs across all our electricity technologies. So when we look at value for money we look at everything, but of course they’re not all at the same stage of maturity.

Q35 Chair: Is there a risk that if the consumers think that, because of a low take-up of a particular technology, a review might lead to an increase in the Feed In Tariff? Would that not cause a complete cessation of any investment in that technology at all?

Simon Virley: I think we’re into some very complex dynamics now in terms of consumer take-up.

Chair: It’s called a market.

Simon Virley: As I say, we’re encouraged by what we’ve seen by way of take-up so far. There have been a large number of installations. We’re obviously monitoring the developments very closely, including making sure that we have appropriate accreditation and checking mechanisms in place, and the developments in the market will all factor into any review of the tariffs going forward.

Q36 Sir Robert Smith: Obviously it’s good to hear the reassurance that anyone who adopts the technology has the certainty that they know they’re going to keep the tariff, even after the review. But the tariff was there to stimulate two things: one was the take-up, but the other was to create a market and investment in the production that would then bring economies of scale. You’re not now putting an uncertainty over that investor to know the size of the market you want to see before the incentive starts to disappear, or is that in the public domain already?

Simon Virley: I think we have indicated previously that we would expect around 750,000 installations by 2020, if we’re to hit our targets. That sort of information has been published in our impact assessments, so we have given an indication of the sort of scale of the industry that we expect to develop. What we’re doing in the UK is not at all unprecedented: Germany has changed its tariffs; France has changed its tariffs; the Spaniards have changed their tariffs. This is a market that is evolving all the time and of course we have to change the tariffs; otherwise, we won’t reflect the cost of the technologies as they change.

Q37 Sir Robert Smith: On the Chairman’s point, the early adopters do feel penalised, don’t they, because they took the flag-waving up early, adopted the technology and then don’t get the Feed In Tariff?

Simon Virley: But there will be no additionality, and, indeed, I imagine I might be appearing before another Committee accounting for the wasted public money if we had not actually incentivised additional plant. For the early adopters, they’ve already made their decisions.

Q38 Dan Byles: I am interested in discussing the Renewable Heat Incentive briefly, which is due to come in next year. Do you see the scheme as simply paying a fixed amount, based on the quantity of heat produced, or will the scheme actually look at the efficiency of individual sites and individual households?

Simon Virley: We are going to be publishing details of how the scheme is going to work very shortly, so we are working on a document setting out all of this. The principle would be around a deeming based on the type of technology, which would take into account the efficiency of that technology as well as the heat output. Heat is unlike electricity. You can’t continually monitor it in the same way, and it is very difficult, so we are going to have to have some sort of deeming arrangement where specific technologies are calculated on the basis of the contribution they would be able to make to that particular household or industrial insulation. But as I say, we will be publishing the details of this very shortly in terms of how it’s going to work.

Q39 Dan Byles: On that, you must be familiar with the Energy Saving Trust’s recent UK heat pump trial, which I found very concerning. I went into a presentation on the report very positive on ground source heat pumps and came out very troubled, because they found that only 13% of the sites they looked at actually achieved a COP and systems efficiency ratio of three or more, which is what they consider to be the minimum for it to be justifiable to give someone some money to install one of these things. So if only 13% of the ones that are currently going in are actually doing any good, then if you were to adopt the approach you’re suggesting, of some sort of a deemed average, then you could be paying people to produce heat in a way that is no more efficient or possibly even less efficient than simply having a gas boiler.

Simon Virley: We’re looking closely, and indeed, are aware of the Energy Saving Trust report you mentioned. Of course, as we stimulate this market, we will get technological improvements from the types of heat pumps that are available, and indeed other technologies. But it’s very important that we have appropriate accreditation schemes in place so that the scheme isn’t subject to fraud, and that we have the best sector advice to work out what those deemed ratios should be. So we are planning to put in place, using the Microgeneration Certification Scheme, the appropriate checks to ensure we have the right tariffs in the first place, but also that people are using these technologies in the right way; and it’s envisaged there would be some sort of annual check on the installations to avoid the sort of problems that you’re referring to.

Q40 Dan Byles: Do you mean an annual check on every installation or an annual check?

Simon Virley: There would have to be both an installation check and a future annual check by an accredited installer.

Dan Byles: So you anticipate something like the CORGI scheme or the Gas Safe Scheme, some sort of accreditation scheme?

Simon Virley: Indeed.

Q41 Dan Byles: You mention the technology improving, but my understanding is one of the points behind, for example, ground source heat pumps, is we keep being told, "This is mature technology that has been used in Sweden for 25 years; it’s not new, untested technology". Yet we’re only achieving 13% of current installations having been worth bothering to put in in the first place. So I’m a bit concerned that there are differences in climate, differences in geography and differences in the quality of the housing stock in the UK compared with countries like Sweden, and my concern is that we have to get this absolutely right or this is going to end up being a waste of money-but we’re not even going to know we’re wasting the money, if that makes sense.

Simon Virley: I think the key point is that we need to get new developers and new technologies into this market. Unless we develop this market, we won’t get the improvements in the technology, and indeed the cost reductions that we need to deliver cost-effective sources of renewable heat in the UK.

I think my colleague, Phil, wants to come in as well.

Phil Wynn Owen: Just to build on that, like you we were concerned by the findings of the Energy Savings Trust study, because clearly ground source heat pumps and air source heat pumps are going to have an important role in the future towards our 2050 vision. When you get results like that, you have to consider very hard what the drivers of the findings might have been. To put it simply, at least three things could have happened or played a part: the kit may not have been delivering what it actually said on the box, which would probably be the most serious grounds for concern. On the other hand, it may be that we have a very inexperienced fitter industry, because these things are not going in in scale in the UK as they were in Sweden, so it’s possible the implementation-the service delivery of the goods-didn’t put them in in a way that maximised their potential. Or it is always possible that the research was conducted in a way that produced figures erring on the high or the low side.

So, subject to very tight public expenditure constraints, we are hoping to work with the industry and to work with specialist bodies to do some further research, so we get a better understanding of what has been going wrong there and was evidenced by the EST trial. So I do share your concern and we need to find out more.

Q42 Dan Byles: Will the rollout of the RHI potentially be delayed if you can’t find that out, or if the results of any further investigation suggest that there’s a more fundamental problem here? Or will you not look at the deeming method-will you look at another way of perhaps seeing whether, when you do an assessment of an individual property, you can actually try and assess exactly what the efficiency of each property is and scale payments towards the efficiency, rather than a deemed figure?

Moira Wallace: We can look at these issues. We’re not planning to delay the roll-out of the Renewable Heat Incentive, but I think Phil’s answer points out that we want to home in very tightly on this issue of effective installation and what we should be accrediting. One thing that we’re very clear about is that we won’t be accrediting things that we think aren’t going to be right for the public. But the RHI itself covers many things and we’re not planning on delaying the introduction of that.

Q43 Dan Byles: The accreditation-do you anticipate that being in place by the time the RHI is rolled out?

Moira Wallace: Yes.

Simon Virley: Yes, we will need the accreditation scheme in place for roll-out.

Q44 Dr Lee: Following on from our hope that technology is going to work, on CCS, I am as pleased as everyone else that you have the funding for it, but what if it doesn’t work? Do we have a plan B?

Moira Wallace: The first thing is, someone has to try and make it work. We have every reason to believe it will. I’m sure-

Dr Lee: I hope it does as well.

Moira Wallace: But all of the different elements of it have been tested in isolation and we will need to test things again. One of the reasons we’re investing in it is because it’s very important for it to work. You will have seen that, earlier in the year, we published the 2050 Energy Pathways, which provided a piece of analysis on what you do if you either don’t wish to or can’t deploy some of the technologies that might play a part in the energy mix in the future, and there are scenarios in there that say, "What if you didn’t have renewables, what if you didn’t have nuclear and what if you didn’t have CCS?" The answer is: you need to do more of everything else-and that’s rather a sort of dull answer-and the risk increases, because you are dependent on less diverse sets of technologies and all the risks that go with them. Obviously, if we didn’t have CCS then we wouldn’t be able to have access to the forms of electricity that often provide flexible back-up now, so we would be looking for flexibility somewhere else, which would be very hard, as you know.

Q45 Dr Lee: My point is: do you actually say, "Okay, if CCS doesn’t work out, we’ll go a bit of a nuclear, a bit of tidal"? Is there a sense within the department that if it doesn’t work out-and the commercial sector aren’t that enthusiastic, I think we have only one company left involved-

Moira Wallace: They’re enthusiastic, but they recognise this is something the Government is going to have to drive.

Dr Lee: Because of the money-the economics of it are causing some doubts.

Moira Wallace: It’s early days.

Dr Lee: Of course, and I hope we pursue it, don’t misunderstand me. My point is: if it doesn’t work, I just don’t want us to be left 10 years from now going, "Right, what’s next?"

Moira Wallace: I would say we’re not putting a huge amount of energy into the plan B right now, because the first thing is to try plan A and to accent that we are working on all fronts, which is what we’re doing. But one of the reasons we want to get on with it is that we want time to take different action if we need to.

Simon Virley: Just to say, there’s more interest than just one bidder. We ran a market sounding exercise over the summer and we had several dozen companies come forward expressing interest in being part of the demonstration programme. As you know, we’re committed to four demonstrations in the UK. But we have to make CCS work, not only for the UK but of course globally, and if we don’t have the means of eventually tackling coal and, ultimately, gas fired power stations around the world then it’s going to be very difficult to achieve the CO2 reductions that are going to be necessary. So, in a sense, we have to make this thing work. As Moira says, the technology has been tested in isolation, the bits all work. Nobody has ever done it at scale with everything together. But Longannet gives us a very good hope, because it’s very close to the North Sea and already has a pipeline, so there are some things in its favour.

Q46 John Robertson: That’s funny. I’ve just met with Doosan Babcocks and they’re telling me that everything is being slowed up in relation to Longannet, and that the other three projects seem not to even be on the horizon. Why would they say that to me?

Simon Virley: There’s no slowing up from our part. In fact, we have meetings with the bidder and negotiations under way, both at an official level and ministerial level, and hope to agree terms in the second half of next year on the first demonstration project.

Q47 John Robertson: Was that not supposed to be agreed by this year?

Simon Virley: No. We’ve been working to a time scale. We have what I’d call the feed studies under way at the moment, which will give us valuable evidence on how CCS might work at scale, but this is obviously a very complex and novel procurement, and obviously we need to get the terms right to make sure we’re getting what the Government ultimately set out to achieve.

Q48 John Robertson: So let me see if I have this right then. The timeline is this: "We’ll keep talking about it until we think it sounds okay, and we won’t do anything about it until after we’ve finished talking about it". So what is the timeline for that?

Moira Wallace: Can I just intervene? A big change has occurred in the last five weeks, which is that we actually have real public expenditure in our department to actually pay for what is now the Longannet project. Until we had that money, which was always being put on hold for the Spending Review-by this Government and by the last Government-then we did everything we could, but actually we couldn’t press the "go" button. Now we will be in a position to do that. We’ve organised everything so that we will be ready to go, so we’ve been doing the front-end engineering studies and we will be ready to go.

Projects 2 to 4 are behind project 1 in the queue. They’re unlikely to need public expenditure over the next four years, but we’re going to identify a source of funding for them, and that was announced at the Spending Review too. So it is complicated-although everything has been tested in isolation, bringing it together is the first of its kind-but internationally we’re going to be one of the first.

Q49 John Robertson: In all honesty, I’m more concerned about getting Longannet up and running and then we’ll worry about the rest of the world. So what is the timeline for Longannet?

Simon Virley: We hope to agree terms with the bidder by the end of the second half of next year.

John Robertson: I’m sorry, what does "hope" mean? We don’t seem to have any clarification here. These companies are desperate to get the work and they’re desperate to get it going. What’s the "hope" mean? Where’s the hold-up? Is the hold-up at our end or is the hold-up at the business end?

Simon Virley: The hold-up involves the sheer complexity of doing a £1 billion deal involving 25 contracts and 10,000-

Q50 John Robertson: Yes, I know that. I know these companies are lining up to invest, so why are we taking so long?

Simon Virley: Because of the complexity of the deal, but our aim is to get Longannet operating at a commercial scale with CCS by 2014-15.

Moira Wallace: I visited Longannet recently, and they are doing the work to work out how they will do this. They have a lot of preparation to do as well, but we’re working very closely with them on this. We’re not delaying-

Q51 Albert Owen: Sorry, there is a little bit of contradiction there. You said you were ready to go and punch the button once you received the money, and now you’re saying, "It’s a complex system". Surely you knew there was going to be a complex system and you put the framework in place and you’ll be talking to the businesses?

Moira Wallace: Yes, we’ve done that, but the stage they’re in at the moment is engineering design. If you go to Longannet, you can see that they are making plans as to, how are they going to extract the CO2, how are they going to transport it? They are doing preparatory work, and both sides need to finish their preparatory work and press the "go" button. We have met one vital condition, which is: we have the money to pay for it.

Q52 Albert Owen: Sorry to cut across, but to answer that, you’re ready to go but the business side isn’t quite ready?

Moira Wallace: No, I’m not saying that. They are going through the engineering studies. Remember that, until E.ON pulled out, they were in a competition, and actually two people were facing off against each other, and they were both racing to do the engineering design. So they have been doing that work, they need to finish it and we have £1 billion to spend, but we want to be absolutely sure that we’re spending that on something that’s going to work and we’re getting a good deal on that, and that’s all the due diligence that you would expect us to go through. We’ll not take for ever on it, but we will do it properly, just as they’ll do the engineering studies properly.

Q53 Ian Lavery: The contract for the first Carbon Capture and Storage scheme will be awarded in December 2011.

Simon Virley: The second half of next year, yes.

Q54 Ian Lavery: Is it December 2011? Is that what is planned?

Simon Virley: If we can reach terms before then, we will.

Q55 Ian Lavery: The process for the next three will take place throughout the following year. Is there any reason why the process for the following three cannot take place at this point in time?

Simon Virley: We have just completed the market sounding exercise to see what expressions of interest there are. We need to resolve the issue of funding for the next three, which obviously, as Moira’s indicated, will largely fall during the next spending review period, i.e. beyond 2014-15, so we are now going through the process of setting out what our requirements for the next three are. We’ve made an important announcement recently, which is that we are going to be opening this competition up to gas projects as well as to coal projects-an important development in terms of our CCS policy-and we will be setting out more about our requirements very shortly.

Q56 Ian Lavery: There is £1 billion available at this point in time. That will be spent-I think, if the figures are right-in 2012-13, mainly on the first project. What funds will be available for the further three CCS plants from plants that DECC believe should be paid for by the public purse?

Simon Virley: That is still to be determined in terms of the funding arrangement for demos 2 to 4, and will be subject to further ministerial consideration going forward. There are a number of options available there, but there are still decisions to be taken about the funding arrangements for 2 to 4.

Q57 John Robertson: Something you said there didn’t ring true with me. You said, and I quote, "We know it’s going to work before we invest the money", but part of the reason for having the pilot was to see if it will work and to try and develop it. So I’m a bit worried that you want to have guarantees that it’s going to work before we even start a pilot.

Moira Wallace: No-I’m sorry, I can see why you ask the question. We need to be satisfied that there is a credible plan.

John Robertson: That’s much better.

Q58 Chair: Just on the credible plans and so on, you said that the gas experiments realistically were not going to get under way until 2014. Given the Climate Change Committee has warned that if Britain is to be close enough to its carbon reduction emission target by 2030, there is no scope for unabated gas after that date, do you think this timetable looks a bit leisurely?

Simon Virley: There will be a huge challenge in the 2020s to essentially apply CCS-if it’s proven by that date-to existing coal and gas-fired power stations, yes. But we are not there yet, and we need to bear in mind the security of supply risk of deterring investment in CCGTs, which are an important part of making sure that the lights stay on for the next decade or so. Clearly there are considerations about how far and how fast we move beyond that, and we will be publishing our proposals on the reform of the electricity market in the next while. So I think it’s very important that we balance the security of supply considerations with the climate change objectives, which of course are the two main objectives for the department.

Q59 Chair: What are the questions about how far and how fast we have to move, when it seems to be increasingly widely accepted-even by the Prime Minister, before the Liaison Committee last week-that we need to have average emissions down to about 70 grams per kWh by 2030? If we’re going to approve lots of unabated gas without any knowledge that we’ll ever have commercially viable CCS applied to gas-these new gas-fired power stations we’re going to be commissioning to meet the very short-term security needs, what will their emissions be? About 500 grams per kWh, so it’s about seven times the level we need to be at in 2030. If a business operated in this sort of way, its shareholders would start selling the shares and go and invest somewhere else.

Simon Virley: I think the 2050 work, that Moira referred to earlier, is quite groundbreaking in that regard, because it sets out various trajectories about how we could achieve the decarbonisation of the electricity supply system while also keeping the lights on. As I say, CCGT is playing a very important part of the mix-certainly for the next few years-to ensure that the lights stay on. But over time, of course, we will have to decarbonise the existing fossil fuel plant on the system. The addition of gas to the demonstration programme is an important step in that regard, but we need to make sure that this transition is phased at the appropriate rate; otherwise, we won’t hit the two objectives that we are seeking to meet.

Chair: Across the Channel in France, they’ll be laughing all the way to the bank, won’t they, with most of their electricity coming from nuclear power?

Q60 Barry Gardiner: Chair, if I can just pick up the point that you were making. In the Climate Change Committee’s June report, they say, "Demonstration of gas CCS under the second competition would provide the option of deployment in the UK from the early to mid-2020s". I just want clarity, one, that in the second round of the competition, it is your intention to have that demonstration project for gas CCS and that the time scale that you are looking at conforms with what the Climate Change Committee was saying-that it should be deployed in the early to mid-2020s. I understand the points that you have made, I welcome the fact that you have said you were going to include gas, and I understand the short-term considerations in not scaring the horses. I don’t think you put it that way, but I will. But it does seem to me essential that we get those commitments from you to co-ordinate with what the Climate Change Committee has said.

Simon Virley: What Ministers have indicated is that they wish to open up the competition to gas, in terms of demos 2 to 4. They have not stipulated in terms of numbers of projects or anything like that, but they have opened it up, which I think is an important step in this regard. Of course, if a bidder came forward for that, we would then need to see the development of that technology and the verification to make sure it all works and that the CO2 of course stays in the ground. So there will be a number of years’ worth of testing. That still leaves us with time to make the transition that the Climate Change Committee has been talking about. But there are a number of different mixes. I think it’s important to recognise that the 2050 work shows there are a number of different pathways, as we call them, that could achieve the essential decarbonisation of the power sector by 2030, and there are different things that can happen to make that true.

Moira Wallace: Can I just add one thing on this whole point about demos 2 to 4, which is just to remind ourselves that in the Spending Review document, after the announcement of the funding for demo 1, we make a position that we will decide whether to introduce a levy-because remember, a levy had been proposed for carbon capture and storage- "Or to fund future demonstrations from general public spending once work has been completed in spring 2011 on the reform of the climate change levy to provide support to the carbon price", and a consultation is due on that very soon. So you will be hearing something after we get that decision on the climate change levy about how demos 2 to 4 are to be funded, whether it is from a levy or whether from general public spending, and I think that will help clarify timing and amounts.

Q61 Barry Gardiner: The other two recommendations that the Climate Change Committee made in this area were support for financing for retrofit and an emissions performance standard. Would you like to comment on those and how closely aligned you are with the recommendations there?

Simon Virley: As Moira has indicated, the support funding arrangements will be clarified once we’ve completed the consultation on the reform of the climate change levy, so there will be further announcements on that.

Q62 Barry Gardiner: Specifically for retrofit?

Simon Virley: In terms of the development of the demo programme, which will obviously in due course make retrofit possible, so in terms of the future arrangements for the demonstration programme. On the EPS, this will form part of our consultation on electricity market reform, which we will be issuing quite shortly now. So there were four elements to the Coalition Government’s programme in terms of electricity market reform, of which the EPS was an important lever, and of course will be important determinant of the shape of the mix going forward in terms of whatever level the Government end up setting it at.

Q63 John Robertson: Can I ask you some questions about the carbon reduction commitment? We reckoned it will be something around about 16.2 tonnes per year by 2020. That’s from your figures, and yet what we’re talking about now is that, between now and the end of the financial year of 2014-15, we’re going to move something like £3.5 billion into the public finances. Will that have an effect on companies investing?

Moira Wallace: I’m going to ask Phil to deal with this.

Phil Wynn Owen: We touched upon this earlier. As the Secretary of State has made clear, in the context of the very challenging fiscal climate the Government made a very difficult decision to not recycle revenues going forward. That is actually worth, in terms of the CSR, approaching £3.5 billion over the Spending Review period to the Exchequer. I also explained earlier that we believe we’ll still get the same carbon effects that you mentioned. The carbon budget period 3 figure was £7.5 billion in the document we published in June 2010. Of course, this will have an impact on participants. I think, at 30 September, there were just under 2,800 registered participants. Some of them had an expectation that they would be at the top of the league tables from October of next year. Of course, none of them could be sure about that at this stage, but those who were hoping to be at the top of the league tables and therefore get some of the money back-both their own money and others-will not now be getting it back, so all else being equal, that will give them a stronger, clearer carbon price signal. In answer to your question, from where I’m sitting I would hope, therefore, that they will invest more in energy efficiency than they might otherwise have done-all the participants-but you’d have to ask the companies concerned as to how it would affect their aggregate investment.

Q64 John Robertson: Okay, let me put it another way then: we’re going to put this money into the public finances, and in your statement it says, "Including spending on the environment". How much of that money is going to be spent on the environment?

Moira Wallace: It’s not been hypothecated in a sort of mechanistic way like that, but it did mean that there was more money available across departments. I think the environment did relatively well. I can’t say that one happened because the other happened, but I think it meant there was more money there.

Q65 John Robertson: Okay. So what you’re really saying is the chance of it being spent on the environment isn’t that good?

Moira Wallace: No, I’m not saying that at all. I think we did a very-

John Robertson: Because if you look at the £1 billion a year, the forecasting from that point, then put that into the public finances, it’s a drop in the ocean compared to the rest of the public finances, but if you talked about £1 billion being invested into the business, then that’s quite a lot of money for companies.

Phil Wynn Owen: Let me just come back at you on that. Three of us have worked in the Treasury; near enough to £3.5 billion of money over the Spending Review period is a significant amount of money, especially when-

Q66 John Robertson: So what’s the total money then in public finances?

Phil Wynn Owen: It’s £1 billion by year 2014-15, and we were just discussing the fact that, coincidentally, £1 billion of money was found for the very important-I think we all agree-CCS project.

Q67 John Robertson: No, you’re missing my point. What is the total bill for public finances?

Moira Wallace: Oh, it’s hundreds of billions, so it’s not in the same-

Q68 John Robertson: So let’s say, in a percentage, what is the £1 billion?

Moira Wallace: I don’t know. I don’t have that figure to hand, but if you look at the amounts of money that, before the Spending Review, people who cared about these issues were wandering around asking, "Will we get this in this kind of spending review?"-I refer not just to the money for carbon capture and storage-"Would we get the money for a Green Investment Bank? Would we actually be able to preserve Feed In Tariffs? Would we be able to preserve climate finance or international climate finance or indeed increase it? Would there be a renewable heat incentive?" If you look at all of those things-

Q69 John Robertson: So what you’re really saying is that climate change doesn’t figure that high in the agenda anymore.

Moira Wallace: No, I am saying exactly the opposite.

Q70 John Robertson: Let me ask you another question, on the impact on businesses and the competitiveness. If devolved areas give the money back to the business, how do you think that’s going to be in competitiveness for the rest of the UK?

Phil Wynn Owen: The document we published last week, our consultation document on amendments to the CRC Energy Efficiency Scheme-I don’t know if you can see-was a document published in tandem with the three devolved administrations. As your question implies, this is a collective arrangement with the devolved administration for the CRC Scheme.

Q71 John Robertson: But things may change next year.

Phil Wynn Owen: Revenue recycling is a matter, as the document makes clear, for all the devolved administrations to review, following the UK Government’s announcement. So they were informed in advance.

Q72 John Robertson: That doesn’t answer my question. What if they do give money to businesses in the devolved areas; how does that affect the rest of the UK?

Phil Wynn Owen: Just to be clear, I’m not here to answer questions on behalf of the devolved administrations, so you would have to ask-

Q73 John Robertson: I am not asking you about the devolved administrations. I am asking you about everything but the devolved administrations. What I’m saying is: if they invest, obviously business then has a better investment in Scotland, Wales and Northern Ireland than it would be in England, so how do you think it would affect them?

Phil Wynn Owen: Sometimes they do follow our patterns. So we were delighted recently, for instance, when in the Spending Review we said that up to £60 million would be spent on ports’ infrastructure in England, and we were swiftly followed by an announcement by Alex Salmond that he was investing up to £70 million of Scottish Government money in ports’ infrastructure in Scotland, which is exactly the reinforcement of policies-

Q74 John Robertson: Of course this time last year we were saying different things, but we’ve had a general election since then and things changed slightly, otherwise we wouldn’t be having this discussion. Things could change next year-another general election north of the border and in Wales and Northern Ireland. So I go back to the question: what would the effect be on England if all the devolved areas paid the money back into business?

Moira Wallace: It would be that there’s a difference and we will see the impact. The Government made this decision on the basis that, compared with all the other ways of saving money, it seemed less damaging and it seemed like the policy objective could be preserved. It did make a contribution to closing the fiscal deficit. It did mean there was more money available for spending. We think the environment received a fair share.

Q75 John Robertson: Okay. So you just don’t know. That’s okay, I can accept that, because I don’t think you do know.

Phil Wynn Owen: Could I just answer your question in another way? I’ve made it clear that almost £3.5 billion of revenue from not recycling was in the Spending Review settlement. This was taken account of in the Spending Review settlement. Therefore, the overall spending envelope was not reduced as a result. They weren’t offsetting cuts in public expenditure or possibly tax increases and therefore, all else being equal, that was allowed for in the Barnett formula that applies to the money that accords to the devolved administrations. Thereafter, it’s a matter for the devolved administrations to spend their money as they choose. We saw the Scottish and Welsh Governments-in the middle of last week-begin to allocate their funding for future areas.

John Robertson: No, I accept that.

Chair: I am certainly impressed and I am sure my colleagues are impressed by your attempts to defend the decision on the CRC, but it is of course perfectly obvious, even to someone who takes very little interest in these matters, that this was a straightforward swipe by the Treasury to fill a financial hole. It is absolutely unjustifiable from any environmental point of view. I think it represents a significant setback in the relationship between DECC and the rest of the business community. It is perfectly true, as Mr Robertson argues, that supposing the devolved administrations do take a different view, a company which operates throughout the UK will decide that the places to invest in energy saving is not in England. That is absolutely unavoidable.

Q76 Albert Owen: Can I just latch on to that? You mentioned the ports issue. When it was first allocated before the general election, it was £60 million for UK ports. All of a sudden that became English ports only, with a Barnett consequential for the devolved administrations. My basic maths for Wales would be, of that, there would be only £3 million available to Welsh ports, so they could not compete for the remaining. Is that how you view it? Are you the lead department on it, or is it BIS? Is it £60 million from your pot that will go to England only, or will there be less than £60 million because £3 million has gone to Wales and the equivalent to Scotland and Northern Ireland?

Moira Wallace: Simon is going to answer that.

Simon Virley: Yes, the £60 million is for England only and it will be delivered through grants for business investment, which relates to assisted areas in England.

Q77 Albert Owen: Sure. Why was that decision made when ports are not a devolved matter, they’re a reserve matter? Why can’t all ports in the United Kingdom be treated the same?

Simon Virley: It is a matter for the devolved administrations, obviously, in terms of the spending they wish to make in their own areas, and we’ve seen that the Scottish Government have made a-

Q78 Albert Owen: Yes. But, with respect, Northern Ireland and Wales can’t match that because they don’t have the same funds that Scotland has. So there is a disadvantage to UK ports in Wales bidding for this money.

Simon Virley: There are important offshore wind areas off the coast of Wales, but there is a very important offshore wind development in the North Sea of course, and we’ve seen on the-

Q79 Albert Owen: So they get priority against the round two ones in the Irish Sea?

Simon Virley: We have seen on the back of the ports announcements, announcements by Mitsubishi, Siemens, General Electric and Gamesa-

Q80 Albert Owen: But that is going to follow the money, isn’t it, rather than the other way around? If there was an equal opportunity for developments of ports in Wales and Northern Ireland, then they would have a level playing field to entice the large companies to their areas.

Simon Virley: Strategically, I would argue that for the UK as a whole the North Sea is a critical part of-

Q81 Albert Owen: But you know about round two in the Irish Sea, and that would be one of the biggest. So that’s not very forward looking, then.

Simon Virley: As I say, it’s a matter for the devolved administrations as to how they allocate-

Q82 Albert Owen: I just want to finish on this, Chairman.

With respect, you have made it English only. DECC has said that the £60 million is for England ports only. So it’s not a decision for them ; it’s a decision they have to deal with, because in Wales they are not going to have the opportunity to compete for more than £3 million, which will be the ban of consequential. You can’t build many ports and areas for £3 million. It is the opposite o f what you are saying. They have to raid their own budge t s of health and education to compete with English ports. Surely that’s not fair.

Simon Virley: As I say, the Scottish Government have taken a different view and they have announced a £70 million fund.

Q83 Albert Owen: Well they have a fund up in Scotland. They’re not very happy about the fact that they can’t compete for the £60 million, believe you me. It’s just that they have reserve funds for this type of work. It is an issue and it is DECC that is leading on it, because I have asked this question of the Leader of the House.

Phil Wynn Owen: I certainly discussed the matter with Scottish officials on the day of the CSR, who had already spoken to colleagues in our renewables division, and they fully understood the fact that in Scotland industrial support measures in a port area are a devolved matter. They would want it that way and, therefore, they understood the position with regards to the English funding. Presumably that’s why they are keen to play their role in the North Sea. As Simon said, they recommended to Alex Salmond to make a similar announcement with their own funds.

Q84 Albert Owen: That’s not what the Scottish Government said on the day. The Scottish Government said that they were disappointed that you changed it from UK ports to English ports. I will move on from that, but that is a big issue in Wales because we feel left out, and it will be something I will be taking up with DECC. Thank you, Chair, for allowing me to pursue that issue.

Can I move on now to cuts to specific programmes and new programmes that you have? There is v ery little detail in either the C omprehensive S pending R eview or the Business Plan , apart from the one that has been well trailed with one front going and being replaced by a Green Deal. What other programmes will be discontinued over the period of the Comprehensive Spending Review ?

Moira Wallace: We’ve listed a number of things that we are going to do less of. Obviously, Warm Front is one. We’ve said that we are going to focus our spending on innovation, which is the right thing to do anyway, because some of the spending on innovation-we have already invented the thing we were trying to invent and we’re now deploying it through some of the incentives that we talked about earlier. We’ve said that we are going to look again at our subscription to some international organisations, because-

Q85 Albert Owen: Sure. I will come onto that in a second, but which technologies are you now not going to be supporting that DECC was previously going to do?

Moira Wallace: It’s very easy to give you examples-things like the Low Carbon Building Programme, for example, which previously supported the technologies that are now supported through the Feed In Tariff and through the Renewable Heat Incentive. So it used to be there was a grant system; it was in our budget, it was part of our innovation budget. Now we have these very significant levy-funded incentives to roll them out, so you wouldn’t carry on that spending. We’ve focused in very hard on what innovation we do want. It’s going to be a smaller budget, but that’s because some of the things that we were trying to do we have achieved and other things can be done later. So it’s not that we have decided to stop doing things that we still needed to do right now. It was that they have achieved their purpose and we didn’t replace them with others.

Q86 Albert Owen: Okay. So there’s no technology-marine development, tidal, anything like that-that’s not going to be discounted altogether?

Moira Wallace: It’s not going to be discounted altogether, but we’re going to focus on the priority. Of course, we have to remember we are cutting the total amount we spend on innovation-except, of course, that we’ve just received £1 billion for CCS, which is the biggest innovation of them all. So overall we’ll be spending more. That’s the capital sum that we have.

Q87 Albert Owen: But that is ring fenced. That’s not going to be-

Moira Wallace: That is ring fenced, yes.

Q88 Albert Owen: Okay. You touched on contributions to international energy and climate organisations. How much money are you going to be saving there, and which organisations are you going to be pulling out of or reducing your involvement in?

Moira Wallace: We’re still at the stages of negotiating that, so I’m afraid I’m not going to be more specific today, because obviously we want to talk to the organisations concerned themselves. So we are working that through with them and we’ll make an announcement.

Q89 Albert Owen: Can you give a ballpark figure of how much you want to save there?

Moira Wallace: I’m afraid I won’t, which brings me on to the fact that we are now going through a budget-setting exercise, both for us and for the arm’s length bodies that we fund. We’ve made some difficult decisions and we’ve set some priorities, but there are other decisions to be made. This affects spending within DECC, both on the people and programmes, and affects spending within our arm’s length bodies. So that process is going to-

Q90 Albert Owen: So there is a review of arm’s length bodies?

Moira Wallace: Yes.

Q91 Albert Owen: You can’t make it public, but you know within yourselves roughly how much you want to save?

Moira Wallace: Obviously we know what our budget is and we know how much it’s-

Q92 Albert Owen: From this specifically, you have a rough idea how much you want to save?

Moira Wallace: On international subscriptions?

Albert Owen: On subscriptions.

Moira Wallace: We have a rough idea. We’re going to talk that through with the bodies concerned and when we’ve talked it through with them-which is the right way to do it-then we will make announcements about that. But there are other decisions that are not yet made, so I want to be open with you that we do not have a detailed budget, all settled, that covers exactly how it will fit into the budget that has been set. We believe we can do it but it will take some further hard decisions.

Q93 Albert Owen: One example I can give you, which is publicly available, is that your contribution to the International Atomic Energy Authority is approximately 64% of your total contribution to international organisations. So the savings are going to be in the other areas, or are you going to reduce that amount as well that you put into them?

Moira Wallace: I am afraid I’m not going to give any more detail.

Q94 Albert Owen: Okay. The worrying factor for many people is the lack of influence we might have if we pull out of these international organisations. All the good work that has been done in the UK that we’ve been talking about could be undermined by international organisations going in a different direction because we have no input.

Moira Wallace: We will be very focused on that in these decisions.

Q95 Albert Owen: But isn’t the drive cost and savings?

Moira Wallace: Well, it’s both. Looking across what we do, at a time when everyone is being asked to shrink their budgets-I’m sure the same is true of all our international partners who fund these organisations as well-we have to work out what the things are that we must do to retain influence to deliver things for the public, deliver energy security, and what are the areas where we can make economies, or someone else could fund things for us. So we’re working through that process now and we’re very alive to the issue you raise.

Q96 Albert Owen: Sure, and you will be able to report back to us when decisions have been settled?

Moira Wallace: We will have made all these decisions before the beginning of the financial year and we will probably announce some of them before then.

Q97 Albert Owen: Okay. One final point, Chair. How much would we save by reducing the funding to the overseas nuclear legacy, and when will that start and how much are you likely to-

Moira Wallace: Simon?

Simon Virley: Yes, it’s a similar situation to the international subscriptions that Moira is describing at the moment. We have under our Global Threat Reduction Programme an allocation of-I think-£17 million. There are some existing commitments that will be completed over that period. If I give you an example of that: the work that we’ve been doing at Andreeva Bay in Russia, which is one of the most toxic sites in the world, will be coming to an end and we will be able to complete that commitment. But DECC will not have the funding to continue any additional work, but we are working the EPRD and other partners to see if others may be able to step in to take on the next phase. So we’re not able to give you the details yet because, as Moira says, we’re still working through that. But that’s an example of an area where we will complete our existing commitments but not be able to take further that work, but we will be looking for others to step in.

Q98 Albert Owen: Will there be any reduced commitments to the UK and its nuclear legacy?

Simon Virley: No. Indeed, part of this is making sure that we get our own house in order in terms of dealing with our own nuclear waste. Obviously, we have a very significant real-terms increase in funding for the Nuclear Decommissioning Authority as part of this settlement. So that is a big focus for DECC in making sure that we’re dealing effectively with the waste that we have here in the UK.

Q99 Christopher Pincher: Can I ask, Chairman, with specific respect to the programme spend that we have been talking about, and with respect to the Green Deal replacing Warm Front. There has been talk from Ministers about the creation of an MOT for houses, whereby each house will be assessed; each property will be assessed to determine whether it meets the MOT criteria for energy efficiency. Can you tell us what might be in that MOT? Will it just be about lagging or will it also include boiler efficiency; will it include smart metering? What’s going to be in it?

Phil Wynn Owen: I can’t tell you yet because that will be determined in secondary legislation and that will follow the primary legislation, which will be introduced very shortly this calendar year into the House as part of our Energy Bill. So I’m grateful to you for raising the Green Deal. You’re right, the Ministers and ourselves see this as potentially groundbreaking in terms of creating a more vibrant market for energy efficiency, with more players in the market than the traditional energy companies who have driven the cert mechanism, and with more choice for consumers. You are correct that the process will begin for the customer with an assessment of their house, identifying those Green Deal accredited products that would help them save money and cut carbon. Obviously we will determine the details of accreditation and which products are on the list in secondary legislation following the primary. So I would expect us to be consulting on that. If all goes well on the primary legislation and we introduce within the next month or so our Bill and get-subject to Parliament, of course-Royal Assent by, say, the middle of next year, we would then consult on the secondary in the second half of next year, with a view to the Green Deal being introduced summer/autumn of 2012.

Q100 Christopher Pincher: You will appreciate, though, that businesses are on tenterhooks to find out what they have to do to qualify to provide services through the MOT. So the sooner information can come forward, and the sooner you can publish your timetable, clearly for them, the better.

Phil Wynn Owen: Absolutely. The steer I can give you at the moment is this is about both helping the customers secure energy efficiency in their homes and, therefore, save money. The exciting thing about the Green Deal is that the financing mechanism we’ll have in the primary legislation will help customers overcome the fear of high costs; for instance, solid wall insulation, which we were discussing earlier, for an average size house can cost £10,000 or £12,000. Most of us don’t have £10,000 or £12,000 and may not be able to borrow it. So by having no payment up front and with the repayments tied to the energy meter, rather than to the individual, it will also overcome the rational inertia some people have if they think, "Well I’m going to move in six or seven years", and the payback period is longer. So the mechanism is very exciting.

You’re absolutely right. There is an awful lot of business out there-they would, wouldn’t they?-wanting their products on the accredited list. I think we’ve had everyone, short of patio heater companies, frankly, coming to see us saying they want their goods on the accredited list. The only steer I can give you now is that this is about both saving the customer money, but also about cutting carbon. That will be our focus, and I make no apology for that. We were discussing earlier the unsexy, boring, often invisible measures-like lagging your loft; filling your cavity walls, if you’ve got them; doing your solid walls, if you’ve got them- and those will be the focus. There is a debate to be had about what other products may be on the accredited list. It starts now. As I’ve said, we’ll be consulting in the second half of 2011 on what will be the accredited products, but the focus is on cutting carbon and bringing those bills down.

Q101 Ian Lavery: In the Spending Review there are a number of financial commitments. One of those was the £200 million for the manufacturing facilities at port sites, which would involve the development of offshore wind farms, offshore wind power and also energy efficiency savings. Can you tell us how much has been spent-how much has been allocated already from that pot of £200 million?

Moira Wallace: I think this is like the innovation budget, which is, as we were just saying, is smaller than it has been before-leaving aside CCS-and a large part of it is going to ports, which we’ve already discussed. But it won’t all go on ports and we will have an innovation budget which will cover other things. Some of it I imagine will go on looking at innovative technologies around housing and insulation, which is one of the areas where obviously there are big gains to be made.

Q102 Ian Lavery: What was specific to the £200 million that the Spending Review allocates to the facilities at port sites?

Moira Wallace: It wasn’t as much as £200 million. I think ports were the largest element of the £200 million. But ports, as we were just discussing earlier, is around the £60 million mark. The balance we haven’t publicly allocated yet; so the rest of the £200 million that isn’t ports we haven’t allocated yet.

Q103 Ian Lavery: So you are saying it wasn’t £200 million?

Moira Wallace: No, it was £200 million; £60 million of it is going on ports; the remaining £140 million, we are still discussing what that will go on. It has not been publicly announced yet.

Q104 Ian Lavery: And that hasn’t been allocated yet?

Moira Wallace: It hasn’t been allocated yet. It starts next year, so we’ll be making decisions on that in the next couple of months.

Q105 Ian Lavery: Right. The second commitment was in relation to the Capital Fund and for the Nuclear Decommissioning Authority.

Moira Wallace: Yes.

Ian Lavery: That will certainly increase over the Spending Review period. At this point in time, can you say how much of the capital programme will be allocated to the Nuclear Decommissioning Authority?

Moira Wallace: Do you want to comment on this, Edmund, or I can if you want?

Edmund Hosker: You go first.

Moira Wallace: All right. Again, we haven’t broken this down between the Nuclear Decommissioning Authority and everything else, but a very substantial bit of the capital increase will go to the Nuclear Decommissioning Authority. It needs that money because its commercial income has declined, and so we have to make up more of a gap, and we received a good settlement for that. Again, I’m afraid that hasn’t been announced publicly so I’m not going to announce it here today, but it will be announced, I would imagine, before the end of this calendar year.

Q106 Sir Robert Smith: If we could move on to the administration budget, I should remind the Committee of my entry in the Register of Members’ Interests as a shareholder in Shell. The department has committed itself to a 33% cut in real terms over the Spending Review, which is some £62 million in cash terms. How much of the baseline budget cut is core departmental spending and how much is non-departmental public bodies?

Moira Wallace: It’s about half and half. Sorry, Edmund, you might as well take it away.

Edmund Hosker: I was going to say just what Moira said: it’s about half and half. It’s very slightly more for DECC than for its arm’s length bodies, but not far off 50:50.

Q107 Sir Robert Smith: Is the 33%, the £62 million, half and half between the two, or are you expecting more of a saving from the arm’s length bodies?

Edmund Hosker: That, again, is something that remains to be determined as part of the business planning process that we’re going to be doing over the next couple of months, so we don’t know the answer to that question at the moment. We don’t have a preset formula to be applied to DECC on the one hand and to the arm’s length bodies on the other, so we’ll have to go through that business planning process to work out the answers.

Q108 Sir Robert Smith: Obviously we’re all striving for efficiency, but given that the admin budget has been going up recently, how realistic is this offer?

Moira Wallace: We’re going to have to do it. You will have seen the table in the Spending Review document that showed this is equal across all departments, so it applies to everyone. It will force everyone in all departments to look at their priorities and make sure they’re only doing those things that are most valued; to look at making sure they’re done efficiently; to check that they’re not still doing things that no longer need to be done, or can be done by someone else. In fact, in our case we are at a bit of a turning point for the department, in that quite a lot of our policies are just going through a big change. If you think about what we’re talking about here, we have moved from grants for innovation to big scale incentives that the public can access to install their own renewable heating or do their own generation. We’re moving towards the Green Deal, where we finally unlock the economics, as Phil was just explaining. We’re moving into some very big capital projects. We’ve always has many at the Nuclear Decommissioning Authority but we now have Carbon Capture and Storage, an enormous capital budget.

If you look at the make-up of the department’s budget, it is increasingly becoming dominated-the money that we spend-by big capital projects. So against that background, it’s right for us to look at the skills and the numbers we have in the Department and the skills and the numbers we have in the arm’s length bodies, because all of us were designed for a slightly different world; it’s changed now. So it is a moment of change for us to think about-what skills and structure do we need?-and we’re doing that thinking.

Q109 Sir Robert Smith: One of your administrative tasks, though, brings in a vast fortune to the Treasury, in your licensing of the offshore oil and gas production and exploration.

Moira Wallace: Yes.

Q110 Sir Robert Smith: After the Gulf of Mexico you increased staffing to cope with the increased inspections. Is that area likely to be protected, given how important it is financially to the country?

Moira Wallace: Simon wants to come in on this.

Simon Virley: That additional inspection activity was all funded by the industry, and we’re looking to increase our cost recovery from the industry over time as part of making the books balance.

Q111 Sir Robert Smith: Does that mean it doesn’t come into this in calculating-

Moira Wallace: It means that the net impact on our administration is zero, however many people work there, so long as the industry is prepared to pay for it, which they are.

Q112 Sir Robert Smith: Also in the previous Parliament with the Committee there was quite a lot of concern with the merging of the two departments of some of the costs, but also some of the inefficiencies, and specifically the Correspondence Unit, where DEFRA were still doing environmental correspondence and BIS were doing the energy correspondence, so the joined-up correspondence was a concern. Is there any progress on the correspondence?

Moira Wallace: Yes. I don’t think I would have bothered to turn up today if there hadn’t been. We are now meeting our target most months. Our target is to respond to 80% of letters within 15 days, and we expect to meet that this month; we met it last month; we’re meeting it most months. We have brought correspondence in-house, so that we weren’t depending on other departments. I think it was an area where the shared service model just didn’t work, so we brought it in-house. I’m sure we make the odd slip up but we’re able to hold our heads up.

Q113 Christopher Pincher: Just to pursue the popular topic of efficiency a bit further, specifically with respect to your own department’s efficiency, I see that your main estimate for 2010-11 is to find £85 million in savings. That is made up from £4.8 million in redundancy pay and travel cost savings; £20.2 million in savings from delivery bodies, predominantly the NDA; and a further £26 million from other savings such as funding to the RDAs, which will stop. My rather old and lamentable maths qualification suggests that is just about £51 million-worth; so where is the other £34 million coming from?

Edmund Hosker: The other £34 million is reduction in our low carbon technology spending.

Christopher Pincher: Okay.

Moira Wallace: That was an in-year reduction that we made. Again, we focused in on those schemes where we could sensibly stop them where we felt their main work was done, and we’re managing to achieve that.

Q114 Christopher Pincher: There is no hidden cost to stopping those pieces of work?

Moira Wallace: No. They were things that you could turn off the tap.

Q115 Christopher Pincher: With respect to the specific savings that you are making around the NDA, you said that the capital expenditure on the NDA is going to increase but you can’t say what it is going to be; but you are expecting NDA savings to be in the region of £18.3 million, I understand. Is there going to be any impact to safety as a result of doing that?

Moira Wallace: No.

Edmund Hosker: No. We discussed the savings with the NDA and they are happy with what we proposed. I think it’s around 1% of their costs, and they did not raise the issue of safety at any time.

John Robertson: Sorry, I didn’t quite catch that.

Edmund Hosker: They didn’t raise the issue of safety at any time, so we’re happy that this is not going to impact on safety.

Moira Wallace: They have a very well-developed efficiency programme, and that is indeed one of the whole purposes of the new arrangements in the NDA; they’re good at doing this.

Q116 Christopher Pincher: But does it send a message to the industry that we may not be serious about future build; after all, those skills related to decommissioning?

Moira Wallace: No, I don’t think so. I think the industry is responding very positively to what the NDA are doing through their process of professionalizing decommissioning throughout the UK. I think the industry responds positively to that. The £85 million we are talking about now is about the current year, but both the industry and the NDA are reassured and pleased, I would say, that in a difficult spending review we have found extra money in all the future years to make up for the decline in commercial income of the NDA, and the fact that the Government are going to have to take more of the burden as the power stations of the NDA run down. So I don’t think anyone is in any doubt about our commitment to this, but they would like to see us do it efficiently, which the NDA is doing.

Q117 Christopher Pincher: The NDA is going to undertake "a significant programme of reform to achieve savings". I used to be a management consultant, so I love jargon, but what does that actually mean? What is their significant programme for reform?

Moira Wallace: They’re downsizing; they’re looking to deploy the work force more efficiently in the NDA. I could send you a note with more detail if you like, but they have quite an impressive programme on that.

Q118 Christopher Pincher: Finally on this point, what progress have you made already towards achieving the £85 million of savings?

Moira Wallace: We’re on target. In fact, I think we’re ahead of target.

Edmund Hosker: We are and we’re expecting to achieve progress on all £85 million of cuts to achieve the whole level. They’ve been set out in revised budget allocations and we think we’re on target. We’ve no reason to assume that we won’t deliver that £85 million in savings.

Q119 Albert Owen: Just on the NDA, you said that they would be downsizing, but aren’t they also bringing some of their programmes forward? Aren’t they accelerating their programmes? Isn’t that a way of making savings as well?

Simon Virley: They are producing a revised business plan on the back of the settlement that they’ve now been given. Obviously, within that they’re going to be prioritising their work on high-hazard facilities-some of the legacy pumps and silos that are of most concern. So the aim over time is to shift the balance, so that more and more of the moneys go into actual decommissioning as opposed to just keeping their sites safe, and that Business Plan should be out in December.

Q120 Albert Owen: Okay. You mentioned, Permanent Secretary, that there will be less revenue-raising because some of the stations will be closing. I asked the Secretary of State a question before that he didn’t quite answer. Subsequently, the power station in my constituency has had a two-year extension, so there will obviously be revenues coming in. Do you have a plan for others that safe nuclear generation can continue in the old Magnox site?

Simon Virley: Well it is a matter for the NDA, and the other operators, indeed, to work with the regulators to see whether there is-

Q121 Albert Owen: But do you have a guidance plan? I appreciate the NII has to approve all this.

Simon Virley: It’s not a matter in which we take a view; it’s much better for the operators of the stations to work with the regulators to see what is safe.

Q122 Albert Owen: Obviously safety is paramount, but if it’s going to bring in hundreds of millions of pounds extra into the NDA and thereby help your budget, surely that’s in the national interest as well.

Moira Wallace: I don’t think the NDA is in any doubt that if operators want to extend the life of a station-and if they want to, well, they’re the operators-and if the regulator says it’s safe to do so and it saves money, I don’t think there is any doubt about what DECC’s reaction would be. We’d be pleased about that. We let the decision be taken appropriately.

Q123 Albert Owen: That does answer my question. I have one unrelated one, which I thought we were going to touch on. How many people work in DECC and what percentage of them are consultants, and what are you doing to get rid of many of those consultants?

Moira Wallace: We have about 1,200 people in DECC and we have a grouping of interims that are currently about-

Simon Virley: I think the figure is about 80?

Albert Owen: Eighty?

Simon Virley: Eighty, and just over 1,120 civil servants.

Moira Wallace: The Government have introduced new, tighter controls on consultants, which we are operating, and in common with most Government departments we’re trying to bring interim labour to an end, unless it’s justified in particular circumstances, and reduce consultancy. We’re seeing an impact of that, like everyone else.

Albert Owen: Okay, thank you.

Q124 John Robertson: Could I, as chair of the all-party group on nuclear energy, ask about the cutback on NDA. If they come back to you at some stage and say, "We’ve cut back too much and security is now a problem", what happens?

Moira Wallace: We would take that very seriously. There are a number of checks and balances in the system to make sure that we look at those issues, including not only what the NDA and their board say, but also the involvement of regulators in the decisions. The discussions about the spending allocation for the NDA started a long time ago, so that we were all as well prepared as we could be to understand the impact of different options.

Q125 John Robertson: Would you then be connected with the security police and the calls for security around there?

Moira Wallace: We take an interest in that too, obviously.

Q126 John Robertson: Okay. I’m hearing from the senior police officers that deal with these things that the funding has been cut, and that fewer and fewer police are on patrol of safety areas at nuclear power stations. Why would this be?

Simon Virley: I don’t recognise that picture. Indeed, we have a programme of work to make sure that we have appropriate arrangements in place, and are obviously in discussion with the police force, the CNC and the NDA to make sure that that’s the case. Obviously, there is a lot of detailed work going on on that at the moment.

Q127 John Robertson: Okay. And this work that you have a copy of-is it open to somebody like myself to see?

Simon Virley: I’m afraid not at the moment, because we’re still working on the plans that will be announced in due course.

John Robertson: Okay; we’ll follow that one up later then.

Barry Gardiner: Chairman, I know you want to bring this to a close but could I just-

Chair: Yes, absolutely.

Q128 Barry Gardiner: The Permanent Secretary kindly undertook to provide the Committee with a note about what action has been taken with respect to those officials who designed the CRC Efficiency Scheme, which Mr Wynn Owen informed the Committee was going to waste £3.5 billion when the emission reductions targets can now be met without providing that incentive.

Moira Wallace: That was a characteristically neutral way of putting it.

Q129 Barry Gardiner: Could you please also indicate in that note whether that report came across your own desk as Permanent Secretary before it was passed to Ministers, and if so why you signed off on it?

Moira Wallace: I will answer those questions to the best of my ability, if I can put it that way.

Barry Gardiner: Indeed, thank you.

Chair: Okay. We have much appreciated your answers this afternoon and I genuinely say that it’s very helpful. I respect the defence you put up of some difficult positions, and I’m sure we look forward to talking to you again. Thank you for coming in.