I thank the Secretary of State for early notice of his statement. I was going to say that I felt deprived at not getting two statements—one from the Secretary of State and one from the Minister of State, Department of Energy and Climate Change, the hon. Member for South Holland and The Deepings (Mr Hayes)—because that seems to be the usual manner of doing things this afternoon, but I think we were lucky just to get one. The Secretary of State can catch his breath now.
I have always made it clear that where we can work with the Government in the national interest, we will do so. In that vein, the Secretary of State will know that we have supported the Government’s efforts to attract investment in new nuclear, and we welcome Hitachi’s
decision to buy the Horizon nuclear project. We also welcome the progress made in Durban last year and wish our negotiators in Doha well. It is with genuine regret, however, that over the past year we have seen the Government lurch from one crisis to another on many aspects of energy policy, from the disastrous handling of the cuts to the feed-in tariff for solar power, to the recent outburst on wind power from the Minister of State, Department of Energy and Climate Change, the hon. Member for South Holland and The Deepings, and, I am afraid, the Prime Minister’s broken promises on energy bills. The Department has done more than its fair share to get the word “omnishambles” in the “Oxford English Dictionary”.
Today, alongside the statement, the Secretary of State is also publishing the Government’s long-awaited Energy Bill. His Department’s press notice helpfully reminds us that the Bill has faced repeated delays, which I believe has undermined confidence and left much investment in limbo. We will of course look carefully at the Bill and the other proposals the Government have published today on demand reduction, energy security and energy-intensive industries, and I look forward to debating them more fully with the Secretary of State in due course.
I want to pick up on two aspects of the Secretary of State’s announcement and ask him some specific questions: first, on the state of competition in the energy market and, secondly, on the Government’s failure to set a clear target to decarbonise the power sector. This time last year, when the Secretary of State’s predecessor delivered the annual energy statement, he said that people’s bills would be lower during this Parliament. Families and businesses up and down the country that have seen their bills rise by more than £250 know that that is just not true. In response, the Government launched their “click, switch and insulate to save” campaign, but the number of people switching suppliers fell to record lows.
The Secretary of State talked about energy efficiency, but next year this Administration will become the first since the 1970s not to have a Government-funded energy efficiency scheme. The Prime Minister told the House that he would force the energy companies by law to put everyone on the lowest tariff, but it turned out that all the Government are really doing is limiting the number of tariffs those companies can offer. The simple truth is that even the lowest tariff in an uncompetitive market will not be a good deal.
The Secretary of State says that the burden of investment will not fall on taxpayers, but it will fall on bill payers, and, at a time when we are asking them to pay for as much as £200 billion of investment in our energy infrastructure, it is more important than ever that we have an energy market that delivers fair prices and works in the public interest. For too long, the big energy companies have been able to get away with what they want at the expense of everyone else. Those big companies dominate 98% of the market and, decades after privatisation, still have a virtual monopoly in their former electricity regions. They tell us that electricity and gas prices in the UK are among the lowest in Europe, but when tax is taken out of the equation, they are among the highest. Most damning of all, whenever these companies announce their price hikes, they tell us they are only passing on their costs, so why is it that when those costs come down, consumers rarely see the savings?
Whether or not the allegations of price fixing in the gas market turn out to be true, they clearly show that the market is not transparent enough. Let me, then, ask the Secretary of State three very straightforward questions: first, does he believe that there is effective competition in either the wholesale or the retail energy market? Secondly, whether consumers get a fair deal will largely depend on the strike price the Government set for contracts for difference and the reference price in the market at the time, but if the market is structured in such a way that no one knows what the true cost of energy actually is, how will the Government even be able to set a robust strike price? Thirdly, given that the proposals were originally called “electricity market reform”, why does the new Bill fail to make proposals on how energy is bought and sold in order to make it more open, more transparent and more competitive?
This morning, I looked through the “Electricity market reform: policy overview” document. In paragraph 101, there is an indication that the Government are perhaps beginning to recognise that greater competition is necessary, in its reference to
“Powers for the Secretary of State to make changes to electricity generation and supply licences conditions”.
That is quite interesting. Does it indicate that the Secretary of State is moving closer to some of the more radical suggestions for reforming the market which Labour has been putting forward for the past two years and which were referred to in our 2010 manifesto?
The Secretary of State said that investment was running at a 20-year high, but independent figures produced by Bloomberg New Energy Finance show that since this Government came to power, investment in renewable energy has fallen by more than half. He also said that the UK led the world in offshore wind, but figures out just today from Ernst and Young on renewable energy attractiveness show that, for the first time ever, the UK has been knocked off the top spot for offshore wind attractiveness and is now behind Germany. The reason that has happened is the uncertainty the Government have created. That is why firms have put investment on hold or scrapped it altogether.
In June, Vestas abandoned its plans to create a new manufacturing plant in Kent, which would have created 2,000 jobs. What did the local Member of Parliament, the hon. Member for South Thanet (Laura Sandys), who is now Parliamentary Private Secretary to the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), say at the time? She said that Vestas’ decision
“suggests a lack of confidence within the industry over the government’s commitment to the green economy and crucially, offshore wind. The market needs certainty from government if it is to deliver the thousands of jobs and billions of pounds of investment that could secure our economic recovery.”
Whether onshore or offshore, the business of firms such as Vestas is wind. What they wanted more than anything else in the Bill was a clear commitment to decarbonise the power sector by 2030. Just this morning, its chief executive told The Guardian:
“The failure to establish a firm 2030 power sector carbon cap prolongs uncertainty.”
In his words,
“This is a significant missed opportunity,”
and he is not alone in thinking that.
It is not just businesses in the renewables sector but those elsewhere that are concerned about the Government’s lack of vision. I make no bones about it: we support a clear decarbonisation target in the Bill—and from what I read in this morning’s papers, so do many hon. Members on the Government Benches, including the Chair of the Select Committee on Energy and Climate Change. When the time comes, we will work with colleagues across the House to put a decarbonisation target in the Bill.