Hughes on the Energy Bill

• [Dec 07] Simon Hughes (North Southwark & Bermondsey, Liberal Democrat): ' . . CAN he confirm that the logic of that is that the UK Government . . will go for the toughest, strongest, clearest binding agreement . . ?'

The Energy Secretary is clear that he is persuaded by the science and that the scientific evidence is overwhelming, which is the view on the Liberal Democrat Benches and on the Conservative Front Bench. Can he confirm that the logic of that is that the UK Government, this week and next, on their own and with the European Union, will go for the toughest, strongest, clearest binding agreement so that we can not only follow the precautionary principle but remember that we are going in to bat for a world where countries such as Bangladesh and the Maldives have the chance of a future, not just countries such as ours which caused the bulk of the problem in the first place?

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Edward Miliband (Secretary of State, Department of Energy and Climate Change; Doncaster North, Labour): I think I can say yes to that intervention. I agree with the hon. Gentleman that we need the toughest and most ambitious agreement possible and the shortest track to a legally binding treaty.

• . . Simon Hughes: I am happy to follow Paddy Tipping, the acting Chairman of the Select Committee on Energy and Climate Change, who speaks with a long-held interest in energy issues.

The hon. Gentleman ended where I begin: by contrasting the Bill before us with the great task that begins today across the North sea in Copenhagen. Earlier, I put it to the Secretary of State-he responded positively-that Copenhagen requires the United Kingdom and the European Union to be ambitious, bold and brave in reaching for the best possible permanent deal. That is obvious. We could also have had an ambitious energy Bill being debated in this country at the same time but, to repeat the word used by the hon. Member for Sherwood, this is a very modest Bill indeed.

Having been in the House throughout the period, my analysis is that, after nearly 13 years in government, Labour's energy policy is perceived by many of my constituents and those of many colleagues as having left millions of the British public out in the cold. They feel worse off, not better off, as a result of the energy policies of the past 12 and a half years-and they are worse off. Energy is costing them more and the future is less certain. The number of people who spend more than 10p in the pound on their fuel bills has gone up, not down, and that situation is likely to get worse, not better, given the price increases in oil and gas that they know they are to expect. If the Government had been really bold and determined, they could have said, "This is the opportunity to try to put high fuel bills that people cannot afford behind us once and for all."-in other words, to do the sort of social justice legislating that I thought Labour came to power to deliver. It is therefore sad that, on the first day of the Copenhagen conference, when people are calling for radical action abroad, we are not seeing extensive and radical proposals at home.

Over the past 12 and a half years, the response to variations in fuel costs has been a system that, although welcome when delivered, is very much one in which Labour makes people dependent on themselves. The winter fuel payment, which is a better system than the benefits system if people do not claim the benefits, has been given irregularly, spasmodically and unpredictably. There has not been a built-in subsidy for poor people, or a guaranteed, legislated-for provision so that people know they will be able to afford their bills. That is in the Bill-we are now seeing it for the first time ever-but it has taken 12 and a half years for a Labour Government to realise that without guarantees in law, people often end up paying much too high a price.

As we have heard, there are three issues before us. Many of us wish that there were many more and that this was legislation in which the Government nailed their colours to the mast of continuing to support and to develop support for the renewables sector, which is growing, but from a terribly lame and slow start. Of course, in some respects there is a difference between my colleagues and I and both the Government and the Conservatives. We do not think that the future lies in nuclear power, which is always expensive, always delivered late and always risky because of the fuel that we import and the failure to find ways to store, let alone to dispose of properly, the waste that is created. Nothing that has recently come to light suggests that nuclear power will become any more safe or secure in future, as the climate change crisis affects Britain and we get more floods, more storms and more risk of disruption, with the same things happening around the world. For this country, which is so well placed with our wind, wave and tidal power, renewables are a far safer and saner route forward, and that is the way we should go.

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Tobias Ellwood (- Shadow Minister, Culture, Media and Sport; Bournemouth East, Conservative)

As I do with much Lib Dem policy, I am having a few problems understanding this. If the hon. Gentleman is against nuclear policy per se, why does he support the nuclear deterrent? From a safety perspective, he seems to have one rule for our service personnel working on nuclear submarines and another for the civilian population.

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Simon Hughes: Those are entirely different arguments, as the hon. Gentleman well knows, having also been involved in this debate for a long time. I will not be distracted into a debate on defence, although I am happy to have it another time. The position we have always taken is that we have inherited a nuclear deterrent that, in the multilateral negotiations that are coming up next year, we should use to lever down the number of nuclear weapons in the world, with a world policy and a national policy of reducing dependence on things nuclear.

We believe that, having gone down the nuclear road in this country and seen that it is unsatisfactory-it was not at all successfully developed under past Tory Governments-it is completely the wrong road to go down under any prospective Government, whether Labour or Conservative, or with somebody else in the lead.

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Robert Goodwill (Shadow Minister, Transport; Scarborough & Whitby, Conservative)

The hon. Gentleman talked about the security of fuel supply. As I recall, the main sources of nuclear fuel are Australia and Canada, which are surely much more secure places to get fuel from than the middle east or Russia.

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Simon Hughes: Some of the sources of supply that we need for nuclear are not in those countries but elsewhere, and there are predictions that they may run out in the foreseeable future and that prices may become significantly higher. If the hon. Gentleman thinks that, in a world of uncertainty, transporting around the world things that are needed to create nuclear power is a safe and sensible thing to do, he can make that argument, but it is not finding much credence with the public, who, on all the opinion poll evidence, find the idea of renewables a much more satisfactory way forward than nuclear power.

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Several hon. Members: rose -

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Simon Hughes: Let me make a bit more progress. I do not want to get bogged down in nuclear, which is not in the Bill, nor should it be. We are not in favour of it, and we hope that in the end the Government realise that they should not support it either.

The first item in the Bill is carbon capture and storage. Ministers know that we support CCS technology, which is vital if we are to make coal our servant in the years to come and ensure that it does not produce the same problems for our planet in the future that it has in the past. It needs to be seen to be commercially viable, and one difficulty has been that we have been really slow off the mark. That is not the fault of the Secretary of State or the Minister of State, Joan Ruddock, but it was in 2006 that the Select Committee on Science and Technology said of carbon capture and storage:

"Multiple full scale demonstration projects using different types of capture technology and storage conditions are urgently needed."

The first demonstration project was in 1996 in Norway. Why have we been waiting? What has caused the delay? Why, for 12 and a half years, when the technology has been developed elsewhere in the world, have we not sought to advance the CCS that we have always known we would need? We are now going to have to try to catch up, but with other countries much further ahead, it might be as easy for us to take the technology from them as to develop our own.

I would be interested to hear from the Secretary of State why the Government have not yet come clean on their response to the results of their consultation, which ended in September, on having a framework of emissions performance standards for the whole coal industry. He did not allude to that in his opening speech, so I hope that the Minister of State will do so in her response. In the debate in the summer on a Bill introduced by my right hon. Friend Mr. Kennedy, the Under-Secretary of State for Energy and Climate Change said that he supported the general direction of it, but it was a sort of St. Augustine's reply-"But not yet." He said:

"The Government's position is that in our general policy direction, we are where every Member who has spoken has urged us to be. We have already commenced a consultation on the best way to get a detailed policy so that we can travel forward... I believe that consultation is a very good thing and an important component of getting policy right."-[ Hansard, 3 July 2009; Vol. 495, c. 636.]

The consultation has ended, and we are clear that there ought to be- [Interruption.] I know that the Government have responded, but we need to know what they will do now. It is generally accepted that the current carbon price is not the stable one that this country and the world need, and that it needs to stabilise at something much more like €50 or €60 a tonne than the present €14 a tonne.

Given the European Union directive on clean coal, which will come into force at the end of the next decade, we need a clear position on the future of coal in this country. There has to be a clear statement that there will be no new coal-fired power stations without carbon capture and storage working right from the beginning, not retrofitted later. Without that absolute parameter, the industry will not know where it stands, and Ministers know that we are likely to have new coal-fired, dirty coal power stations that will contribute to worsening the climate crisis rather than help to solve it.

Another question about the CCS levy has been asked a couple of times already. I assume that the Secretary of State-again, he was silent on the matter-does not expect the parts of the energy industry that do not release carbon into the atmosphere to contribute to the levy to fund CCS demonstration projects. I assume that under the regulations that he anticipates-like Greg Clark, I believe that it would be helpful to see them in draft-the renewables sector will not have to contribute. It would be a nonsense if the sector that does not contribute to the climate crisis and the emissions problem had to pay to develop the technology for making dirty coal clean.

One other point on the technology of carbon capture and storage has not so far been alluded to, and I would be grateful if the Minister of State mentioned it in her response. She has said before how important it is that we share the technology that we develop in this country with developing countries in other parts of the world. It is not just we in the rich west who will need CCS; it is eastern European countries such as Poland, as well as countries such as China. What will happen to the intellectual property of the technology that the prototype plants will produce? I hope that it will be shared and that we do not just develop it to be nationalistic. I understand that all the CCS interests are to be consortiums of companies, some British but mostly international, in locations up and down the east coast, so I hope it is clear that we will share the technology and intellectual property and ensure that we have the power to help the developing world and not just ourselves.

The second section of the Bill is probably the most immediately important to our constituents, because it is about how we deal with rising and, for many people, unaffordable fuel bills. The Government know how embarrassing their record on that is. Again, that is not because of this Secretary of State, but his Government should be embarrassed about the cost of fuel to the poor over the past 12 and a half years. They set a statutory target, which still exists in law, to eliminate fuel poverty in vulnerable households by 2010 and all households by 2016. I understand that 4.5 million or more households now spend more than 10p in the pound on their fuel bills, compared with 2 million or thereabouts only four years ago. We know that there are explanations for part of that and that there has been a massive failure to take up benefits and tax credits that could help to pay the bills. However, it is not just pensioners who are affected but single-parent families and those with long-term illness, who do not benefit from the winter fuel payment. The hon. Member for Sherwood alluded to that. The whole system has failed to ensure that the poor and the vulnerable are protected.

Another group affected, which is often spoken for by Liberal Democrat Members such as my hon. Friend Sir Robert Smith, is the large number of people who live off the gas grid. They may live near it, but they have not been protected at all by the system. They have had to buy their liquid petroleum gas or oil fuel and get it into the tank at the bottom of the garden, and nothing has protected them. There have been 12 and a half years in which some of the rural poor have not been assisted at all, along with many of the urban and suburban poor.

Ministers know that the Liberal Democrats are again going to criticise the fact that all the schemes for warm homes have been piecemeal, limited, inadequate responses. They have told us this year that only one in 80 homes in Britain is a warm home, so we need a scheme that encompasses everybody. The carbon emissions reduction target and Warm Front are inadequate. Age Concern tells me that it receives 5,000 complaints about Warm Front every year, and CERT does not have reducing fuel poverty as a key objective. I understand that Warm Front funding will be cut by half next year, from £350 million to about £176 million, because some of the money was brought forward. The size of the grant has been kept the same, but fewer and fewer people are benefiting. We have heard the example of the latest pilot scheme, which is for but a handful of people.

If Ministers had said that they wanted a scheme rolled out across Britain, led by Government and using local councils, to make every home a warm home within 10 years, as we have argued for, they would have had our support. [Interruption.] Of course it costs money, but there are ways of doing it and I have explained them in the House. The Government could underwrite a loan that was paid back over a maximum of 10 years. Of course there would have to be investment for that underwriting, but it would be worth it. It would save on CO2 emissions, produce warm homes, reduce winter deaths and insulate housing.

I would have liked the Government to display that sort of ambition, and I would have liked them to tackle the problem of those who pay far more than average for their fuel bills because they are not connected to the gas grid. The figures that I currently have are that the average bill of someone on mains gas is £568 a year, that of someone on domestic fuel oil more than £1,000 a year and that of someone on LPG more than £1,300 a year. There is no justification for that inequity in this country today.

There is plenty of evidence and Select Committees have put the argument for change on an all-party basis, but the problem is getting worse. We know that last year, gas bills year went up 58 per cent. and that this year, when gas prices came down, bills decreased by only 6 per cent. Last year, electricity bills went up by 28 per cent., but when prices came down this year, they decreased by only 8 per cent. The reality is that the system has not properly regulated bills according to the wholesale prices paid by the utility companies that supply the product.

There have been opportunities in this place to legislate along these lines. My hon. Friend Mr. Heath introduced a Bill to deal with high fuel bills earlier this year, but the Minister resisted and talked it out, and did not let it proceed. The reality is that it is bit late now, in the last months of a Labour Government, to get a Bill through to paper over the cracks and to try to cover the embarrassment that they know they feel, in however limited a way. They have not delivered to their constituents, but far worse, they have not delivered to the public as a whole.

There is one very odd bit of the Bill that I hope the Minister can explain. Clause 14, "Schemes for reducing fuel poverty", states:

"For the purposes of this Part, fuel poverty is reduced if... (a) the number of people living in fuel poverty is reduced, or...(b) the extent to which any person is living in fuel poverty is reduced"

and clause 14(4) appears to give the Secretary of State by regulation the opportunity to redefine fuel poverty. I should like clarification of that, because we have seen plenty of figures massaged over the years. I know the Government are embarrassed, and they know they are embarrassed, but we need to be clear. If the general understanding is that when we talk about fuel poverty, we are talking about people who pay more than 10 per cent. of their income for fuel, that should remain as the definition. Ministers, whether of this Government or the next, should not have a chance to change it and to pretend that the problem is less than it is.

On the regulation of the energy market, if this was a Bill to really get to grips with Ofgem and produce a regulator that regulated in the consumer interest, the people would say, "Amen." However, I sense the Bill will be not nearly as tough as that. The Secretary of State has spoken to Ofgem and told it that if it does not behave, there will be more draconian powers, but the Bill introduces only a modest change to its regulatory authority.

Of course, there is some good stuff. The provision to ensure that energy transmission costs, which could result in higher bills if companies argued that they had low capacity in the grid, cannot be a method of exploiting the consumer is a good thing, and we welcome it. It is also good that the time period for investigations will be extended. There have been lots of abuses. I have seen cases in the paper and I have spoken to people who have had repayments of more than £1,000 from npower, because there has been a fiddling of the tariff and a misrepresentation of the cost. Those cases were taken up and awards were made in favour of those people. What will happen to cases that are currently timed out, but in which there has been a clear breach? I am not asking for retrospective legislation, but what remedy is there for people who have a clear, justifiable complaint against utility companies that has not been met?

I am concerned that nothing in the Bill will make Ofgem more open to the consumer, accountable and transparent. Ministers know what is being asked for by Consumer Focus, Which? and others-that Ofgem meet in public and that it include representatives of the public. The regulatory body needs to be much more accountable if it is to have the confidence of the public.

There is now going to be, for the first time, an ability to change the rules on the method of payment and the Government will have the power to control such things. The current voluntary system to which, as I understand it, the energy companies have subscribed, means they do not currently charge more, for example, for pre-payment meters. However, I am concerned that some of the companies have indicated, even this winter, that they may be willing to go back on the system and charge more. Scottish and Southern Energy, for example, has said that it intends to withdraw its offer of equalisation at the end of this winter.

The hon. Member for Sherwood led into my speech by saying that this is a modest Bill, which sadly it is. In Committee, we will seek to make it tougher. We will seek to make Ofgem's powers tougher and the rights of the consumer greater and to ensure that the schemes for making our homes in Britain warmer and better insulated are much more extensive. We will also seek to ensure that the CCS proposals do not penalise the renewables sector, which has just been re-incentivised by increased support. We need that support to go on growing, and not to be seen punishing or hindering such development.

We hope that we will make the Bill stronger and tougher. The Secretary of State has promised to be bold when he goes to Copenhagen in the next couple of days. I hope he will be, but I also hope that he will leave a message for his ministerial colleagues who will be in Committee that if the last of the Labour Government's Energy Bills is to be worth having, it needs to be much tougher, bolder and socially just.

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