Debate resumed (Order, 22 June),
Extracts on
energy policy
Chris
Huhne: Let me make a bit of progress with the
argument. The deeper answer is the profound change that must take place
in our economy over the next 10 years, which will also be a great source
of growth, jobs and profit. I am talking about the transition of our
economy-the third, or green, revolution-to being powered from low-carbon
sources. That is potentially as great a shift as some of the biggest
changes in our economic history-from water to coal, from coal to oil and
from gas to electricity. With each of those fundamental changes of
technology, there was a wave of new investment that powered the recovery
of a new and very different economy. We can look at the legacy of the
rapid recovery in the 1930s from the point of maximum downturn in 1931.
That was one of the fastest periods of British economic growth, with the
development of new electrical appliances, other light industries and
the suburbs around our major cities.
Let me cite some numbers to
give a feel for the scale of the potential transformation that we face
as a result of the green revolution. Thanks to the ageing of our energy
infrastructure, my Department estimates that we will need £200
billion-worth of new investment in the next 10 years. That scale of
investment will have substantial macro-economic consequences for
businesses in the supply chain and for all those who work in them. I am
pleased that my right hon. Friend the Chancellor announced in the
emergency Budget, even though the focus was inevitably on averting a
fiscal crisis, two measures that will support that investment. The first
was our coalition commitment to remodelling the climate change levy and
providing a carbon price floor to encourage low-carbon sources of
energy, renewables and others. We will consult on that in the autumn.
The second was, of course, the commitment to the green investment bank.
We will be looking at the scope of the bank through the autumn and we
hope to bring forward proposals on that.
Toby Perkins (Chesterfield) (Lab): A lot of
environmentalists were deeply disappointed that there were not more
green taxes. Is that just another example of how little influence
Liberal Democrat policy has had on what was a classic Tory Budget?
24 Jun 2010 : Column
450
Chris Huhne: I honestly
think that the hon. Gentleman is misreading the situation dramatically.
We had three announcements; I have mentioned two of them already and I
am going to expand on the green deal. It was an emergency Budget, and I
would not have expected a substantial programme of reform on green taxes
in an emergency Budget that was designed to take us out of the firing
line. We have a clear coalition commitment, going forward, to a rise in
revenue from green taxes as a proportion of total revenue. That is in
the coalition agreement and I have absolutely no doubt that that is what
we will see when the full Budget is brought forward in the normal
way after the processes of consultation throughout Government.
Chris
Huhne: I shall give way a bit more, but let me make a
little progress. I have been making the argument that the need to
replace our ageing energy infrastructure
24 Jun 2010 : Column
451
will give enormous impetus to growth in coming
years. The other part of the argument has to be about looking at the
centrepiece of the Bill that my Department will bring forward later in
the year and at what we are proposing on the green deal. That, too, is
an enormously significant package that will have genuine macro-economic
consequences for the transformation of the economy and the creation of a
whole new industry.
Edward Miliband: That was
not mentioned in the Budget speech.
Chris Huhne: The right
hon. Gentleman mutters from a sedentary position that that was not
mentioned in the Budget speech, but the Budget documents contain a clear
commitment in that regard. It is very clearly something that we are
proceeding with rather dramatically.
The point that I want to make
is that this will be the first genuinely comprehensive attempt to make
sure that all of our housing stock is retrofitted. We know that most of
the homes that we will be using in 2050 have been built already, so we
need a comprehensive way to get carbon emissions from our residential
housing sector way down if we are to meet our 80% overall reduction
targets.
Dr Alan Whitehead (Southampton, Test)
(Lab) rose-
Barry Gardiner rose-
Mark Lazarowicz rose-
Chris Huhne: Before I
give way, let me make a couple of points about the economic significance
of that approach. First, the potential increase in demand as a result
of the creation of new industry will be absolutely enormous if we can
get the Bill, the framework and the pay-as-you-save measures right. By
way of indication, we would be talking, in practical terms, of 14
million homes that could be insulated with the support of the green
deal. Purely arithmetically, if the average cost were £6,500, for
example, we would be talking about a market worth literally tens of
billions of pounds-£90 billion over a substantial period.
We are talking about creating a
new industry that would be genuinely jobs rich, as it would use skills
already present in the construction sector and need unskilled labour as
well.
Dr Whitehead: Will the
right hon. Gentleman give way?
Chris Huhne: I will
happily give way to my neighbour in Hampshire.
Dr Whitehead: I thank
the right hon. Gentleman for giving way. He envisages that his green
deal will involve insulating and raising the energy rating of 14 million
homes in the UK. The previous low-carbon transition plan
envisaged that that would be done through the provision of subsidised
loft, cavity-wall and other forms of insulation. Has he succeeded in
defending the money set aside in his Department for subsidising that, or
will he rely on Tesco to do the job instead?
24 Jun 2010 : Column
452
Chris Huhne: I
certainly do not believe that we can rely on achieving the sort of
comprehensive approach that I am talking about merely through
introducing pay-as-you-save measures. The reality is that there will
have to be cross-subsidy, as there already is, but particularly to the
fuel poor and to those in homes that are hard to heat and which need
solid-wall insulation and so forth. I am afraid that the hon. Gentleman
will have to wait for the final proposals in the Bill, but I very much
agree that we need a comprehensive set of proposals to deal with the
whole of the residential housing sector. Those proposals must cover
homes owned by owner-occupiers but also the private rental sector, where
many of the worst offenders when it comes to energy inefficiency are to
be found. I hope that that is what he will see.
Barry Gardiner: I am
grateful once again to the right hon. Gentleman. I welcome the measures
that he is outlining and we will want to study them carefully, but I am
troubled by his suggestion that one element of the coalition agreement
was a decision that green taxes should rise as a proportion of the
revenues into the Exchequer. I have heard him make the argument, from
this side of the House, that green taxes should be used to change
behaviour but not as long-term revenue streams on which the Exchequer
can depend. I agree with that, but will he explain why that element of
the coalition agreement is now seen to fund resource into the future?
Chris Huhne: The hon.
Gentleman knows, as I do, that the two points that he makes are not as
mutually contradictory as he suggests. There is a long history in this
country of applying so-called "sin taxes" to alcohol and tobacco, and
they have had the very desirable effect of helping to get people off
smoking and of cutting their drinking. The success of those taxes is not
perhaps as great as many hon. Members on both sides of the House would
like, yet I am assured by the latest Red Book documents that the
Treasury continues to raise a very substantial amount of money from both
tobacco and drink excises.
The reality is that, while
green taxes will change behaviour, the responsiveness of behaviour is
such that revenue will continue to be raised for a very substantial
period. I have to say that, in the present circumstances, that point is
likely to commend itself to the Treasury, which always used to follow
the motto of Colbert, the finance minister of Louis XIV, who said that
the art of taxation lay in plucking the maximum number of feathers from
the goose with the minimum amount of hissing. In that context, green
taxes certainly are a very justifiable way to pluck the maximum number
of feathers.
I shall give way once more, to
the hon. Member for Edinburgh North and Leith (Mark
Lazarowicz), and then I shall wind up and let the debate make progress.
Mark Lazarowicz: I am very
grateful indeed to the right hon. Gentleman for giving way. I want to
leave Louis XIV and return to future technologies, and I was interested
in the response that he gave to the hon. Member for Chippenham (Duncan
Hames) about support for wave technologies. The right hon. Gentleman
will probably know that two of the UK's leading
marine renewable energy businesses have their headquarters in my
constituency. Can he assure me that support for marine renewables will
be at the centre of his policies
24 Jun 2010 : Column
453
for every constituency in the UK, and not
just those in the south-west of England? More
specifically, will he tell us how the Government's support for marine
renewables will be affected by the Budget that we are discussing?
Chris Huhne: Quite
properly, the hon. Gentleman wants me to anticipate announcements that
will be made by the Government in the normal course of events. I
understand that game, as I have played it myself on many occasions. At
this stage, however, I can merely tell him that I visited Aberdeen recently
for the All Energy conference, where I had interesting and fruitful
talks with the marine energy specialists currently testing equipment off
Orkney. I am deeply committed, as I believe the Government are, to
making sure that what is a genuinely interesting source of potential
future prosperity and jobs continues to get the support that it needs to
get off the ground.
Obviously, we are in very tough
times and have had to cut our cloth to fit our straitened
circumstances, but I believe that marine energy offers real
opportunities. We have made a number of proposals in that regard, and we
will continue to support the sector.
Chris Bryant: Will the
right hon. Gentleman give way?
Chris Huhne: No. I said
that the previous intervention would be the final time that I would
give way before winding up, and I have given way to the hon. Gentleman
before.
By the way, I should add to my
response to the previous intervention by saying that we have confirmed
some of the grants and soft loans made available, for example, for wind
energy.
Dr Sarah Wollaston (Totnes)
(Con): Will my right hon. Friend give way?
Chris Huhne: I am not
going to give way again. I am sorry, but I am going to end up-[Hon.
Members: "But it's a new Member!"] I am sorry, I did not realise that
the request came from a new Member.
Dr Wollaston: I am
extremely grateful to my right hon. Friend for giving way. My
constituency is home to Transition Town Totnes, of which he may have
heard. It leads the way in looking at climate change and peak oil, and I
am sure that the people involved will be very interested to know the
size and scale of the projects that will be funded by the green banks.
What will be the time scale? When might they be able to start looking
forward to making applications?
Chris Huhne: I thank my
hon. Friend for that intervention. [Hon. Members: "Answer!"] Opposition
Members know perfectly well that there are certain processes in
Government that we have to go through. We have to consult. We have to
make sure not only that we produce decisions at the moment that both
Opposition and Government Members would like, but that those decisions
are right and have gone through all the normal processes.
However, I want to pick up on
one very important point. My hon. Friend mentioned peak oil, something
that, especially in the context of Deepwater Horizon in
24 Jun 2010 : Column 454
the
gulf of Mexico and our exploration west of Shetland, opens up a
terribly important point about the whole thrust of what we are intending
to do. That is that we have been given a wake-up call to move towards a
low-carbon economy even more rapidly than before. That is not merely
for climate change reasons but because an economy that is more
independent of volatile sources of energy from geopolitically troubled
parts of the world is also more resilient to oil price shocks. If the
name of the game is not to end boom and bust, as the right hon. Member
for Kirkcaldy and Cowdenbeath (Mr Brown) used to promise, but at least
to moderate boom and bust, then an important objective for my Department
has to be to ensure that that moderation takes place by making energy
security a more serious objective and defining energy security not
merely in terms of physical interruptions-problems, say, in the straits
of Hormuz-but in terms of our ability to withstand price volatility and
price shocks.
I think I have gone on far too
long- [ Interruption.] As
the hon. Member for Islington South and Finsbury (Emily Thornberry)
says from a sedentary position, and I can agree with her- [ Interruption.] Sorry,
the hon. Member for Wallasey (Ms Eagle)-I was being barracked. I want
to make a key point about the prospect of the move to a low-carbon
economy providing us with a new type of economy that will be more
resilient to shocks, will be jobs-rich and will provide genuine
prosperity, employment and profit for British businesses, including
opening up enormous opportunities in export markets. The framework that
we have set out enables us to do that, and I commend the Budget to the
House.
12.51 pm
Edward Miliband (Doncaster North)
(Lab): May I start by congratulating the
Secretary of State? He is by my reckoning the first Liberal to open a
Budget debate in peacetime since 1914. That is a remarkable honour,
which we should note today…….A further problem with the Budget is that
it has no plan for growth. The right hon. Gentleman waxed lyrical about
green industries, but he can point to nothing in the Budget that will
support the green industries of the future. The Liberal Democrats said
at the election that they opposed cuts this year, but they are making
not only the efficiency savings that the Conservative party promised at
the election, but real cuts to regional development agencies, university
places and Government support for industries of the future,
the
most outrageous example of which is the case of Sheffield Forgemasters.
24 Jun 2010
: Column 458
During the debate on the Gracious
Speech, I told the right hon. Gentleman that we would hold him to
account on the Sheffield Forgemasters decision-and he will be held to
account for it. I have to say to him in all honesty that the decision is
short-sighted, damaging and wrong. The Labour Government approved a
loan to Sheffield Forgemasters-not a grant, a loan. We had money from
the European Investment Bank-those people do not throw money at problems
when it is not required-and Westinghouse, which was going to order
parts for the nuclear power stations that it wants to build in the UK, which will
involve one of the only two reactor designs that we are going to have
in the UK. The decision was therefore central not only to our
economic strategy but to our green strategy. I know that the right hon.
Gentleman does not like nuclear power, but prejudice against it will get
us nowhere, either economically or in relation to the green industries
of the future.
The grant to Sheffield
Forgemasters would have given us the ability to make key components for
the nuclear industry that currently have to be sourced from outside Britain, but the
Government have turned their back on it. The Minister of State,
Department of Energy and Climate Change, the hon. Member for Wealden
(Charles Hendry), who is in the Chamber, is an honourable guy whom I
respect, because he supports nuclear power-that is slightly complicated
given his Secretary of State-but during a debate on Tuesday, he said
about Sheffield Forgemasters:
If one went
to a bank and said, 'I need an overdraft because I want to give more
money to charity,' the bank would question the wisdom of that
approach."-[ Official Report, 22 June 2010; Vol. 512,
c. 26WH.]
Sheffield Forgemasters is not a
charity. It has the potential to be at the centre of the green
industrial revolution that our country needs. I have spoken to the
management of Sheffield Forgemasters, the unions and people in Sheffield, so I know
that they are bemused by the Government's decision.
I was the Minister who, along
with Lord Mandelson, signed off the loan-it is not a grant-after we had
looked at the arrangements over 18 months in government. It passed a
whole set of value-for-money considerations, yet the Government have cut
it off. I hope that the Secretary of State can force a reconsideration
of the decision-
Chris Huhne rose-
Edward Miliband: I have given
way to the right hon. Gentleman a number of times, but if he is going
to say at the Dispatch Box that he will reconsider the decision, I shall
give way, albeit more in hope than expectation.
Chris Huhne: Does the
right hon. Gentleman really think that an appropriate use of public
money would be to ensure that the major shareholders in Sheffield
Forgemasters do not have to reduce their equity holdings below 51%? I do
not think that it would be.
Edward Miliband: That is an
extraordinary statement to make on the Floor of the House. A set of
commercial negotiations was carried out with Sheffield Forgemasters. The
decision was signed off by the permanent secretaries of DECC and the
Department for Business, Innovation and Skills as a value-for-money
loan, but now the right hon. Gentleman questions that.
24 Jun 2010 : Column 459
The right hon. Gentleman's
explanation is different from that offered by the Chief Secretary to the
Treasury, who said that the loan represented value for money, but the
Government did not have the money. The Secretary of State is not only
wrong to oppose the loan, but confused about the reason why it is not
being offered. I am afraid that the Government are hampering the green
revolution that we need.
Toby Perkins: Does my
right hon. Friend agree that the fact that a Liberal Democrat Chief
Secretary to the Treasury came to the House to tell us the decision
about Sheffield Forgemasters, and that a Liberal Democrat Secretary of
State is supporting that decision today, is just another sign of how the
Conservative Government are using the Liberal Democrats as a fig leaf,
which will shame the leader of the Liberal Democrats in his Sheffield
constituency?
Edward Miliband: My hon.
Friend is completely right. He has experience of booting out Liberal
Democrats locally-something that will happen in many constituencies at
the next general election. It is blinkered short termism: that is the
only way to describe what they have done.
What is the
assessment of the Budget from a green point of view? Friends of the
Earth says that the
"June Budget does
little to suggest"
that the coalition
will keep the
"promise to be the
greenest Government ever."
That is not a very
good start, but I want to reassure the Secretary of State by telling him
that there is praise for the Budget from an unlikely quarter. Roger
Helmer, a Conservative MEP and a well known climate change denier, quite
likes the Budget and says:
"Green lobbyists are
whingeing that 'this is the least green Budget for years'. Brilliant!
Well done George. Maybe we've come to our senses".
I have to tell the
Secretary of State that for the first Budget in which he was involved to
have congratulations from Roger Helmer and condemnation from Friends of
the Earth is not a very good start.
24
June 2010 : Column 464
1.26 pm
Simon Hughes
(Bermondsey and Old Southwark) (LD): I
am happy to take part in what is clearly an important debate, in which
we are invoking the spirits of forebears of mine, of ours, whom I pray
in aid as part of the traditions to which I belong. Lloyd George, Keynes
and Beveridge are indeed part of the family of progressive liberals, of
whom I regard myself as a modest inheritor.
The most important
thing that was announced in the area of energy and climate change and
environmental policy, the specific theme of today's debate, was the
green investment bank. It had been a Labour party commitment, and the
Conservative party and Liberal Democrats were clear that it should be
invented, created and got up and running. It is absolutely central to
this Parliament's strategy that we set up that bank in the near future.
It must not be a modest little invention hidden away in a corner; it
must be a central part of the new stage of the British economy and it
must draw on money from the private sector, which will be used for
projects that would not otherwise be funded. But it must also help us to
invest in the new generation of green jobs that will make us again the
country that can export our manufacturing abilities and the success of
the world. For the last 25 years, we have slipped back in manufacturing
and exports in these areas and have relied too much on the City, on
finance and on banking. That is not enough to sustain a modern economy,
and it is not enough to change the environmental way in which we do our
business and honour our international obligations.
The
second specific area that was much discussed when I shadowed the right
hon. Member for Doncaster North (Edward Miliband) and my neighbour the
right hon. Member for Lewisham, Deptford (Joan Ruddock) was how to
ensure that households and individuals play their part. The Labour party
started that process and I pay credit to the right hon. Lady and her
right hon. Friend for beginning to ensure that we make households energy
efficient, reduce bills, insulate homes properly, protect the
vulnerable, and so on. But the scheme was never big enough; it was
always a set of schemes that were confusing and lacking in coherence.
The phrase "Green Deal" comes from the Conservative manifesto, but the
idea comes from both manifestos. That we have a green deal for
households must also be a central part of the Government's strategy. We
need to ensure that the new housing that is built and the housing that
needs to be renovated and improved give us the safe, warm and pleasant
housing that we need. My right hon. Friend the Secretary of State knows
as well as anybody else, because he was the architect of the policy in
our party a mere three years ago for a carbon neutral Britain, that the
crucial area here is to ensure that the poor and the vulnerable are
protected first, and that the people who spend a huge amount of their
money on fuel when they cannot afford it are given the help that they
need. One of the criticisms that I must repeat of the Labour Government,
which I made when they were in office, is that when it came to helping
the fuel poor-those who pay more than 10p in the pound of their income
on fuel-they sadly failed. They tried, and I do not doubt their
integrity in trying, but they failed, and we have to do better than
that. We have to ensure that single people on their own, who make up 40%
of
24 Jun 2010 : Column 465
households,
and those with families do not have the ridiculous, out-of-control
bills that they had; that we save the fuel and reduce the energy that we
need as a country; and that we reduce our climate change liability.
Dr Whitehead: Does
the hon. Gentleman agree that, if a programme such as that which he
envisages is to have any real traction, there is an absolute imperative
to defend and increase the almost £200 million that was set aside for
the insulation of hard-to-treat homes and social housing? Will he put
that in his book as a red line on Government investment in the energy
efficiency uprating of social housing? If that investment does not
appear, will he publicly underline his opposition to energy efficiency
improvement methods that are not underwritten properly by Government
funding?
Simon Hughes: The
hon. Gentleman has a good, honourable and knowledgeable track record on
the issue, and, as he would expect, in this Parliament I have already
met the Housing Minister, the Secretary of State for Communities and
Local Government and my friend the Secretary of State for Business,
Innovation and Skills to ensure that those points are made. We are just
beginning the debate about where the spending cuts must be made, and a
coalition of Members needs to put the case for retaining that
expenditure which is necessary to pump-prime, drive and incentivise the
housing stock change that we clearly need. The other central point, on
which the Government have made a commitment, is to introduce the power
of general competence to local councils, so that they have much more
flexibility over how they address such issues.
Thirdly, on the green
agenda, I note the comments that my right hon. Friend the Secretary of
State for Energy and Climate Change made about the carbon price, and we
await with interest the publication of the proposals to reform the
climate change levy. However, I remind him that we ought to reconsider
introducing the emissions performance standard, which both our parties
were willing to do. Labour resisted it, but I hope that it gets back on
the agenda as a way of ensuring that we make progress not just in our
country, but throughout Europe.
Fourthly, and more
controversially, there is nuclear power, to which the Budget referred
not specifically, but indirectly in relation to Sheffield Forgemasters. I
made my position clear about nuclear power before the election, and
when the initial announcement was made about the Sheffield Forgemasters
loan, and I have always believed that the nuclear industry will not have
a viable future unless it receives public subsidy. I have never had a
theological opposition to nuclear power. I believed that it was the
wrong answer, contributing too little to emissions reduction and to the
country's power needs, but in that context the Sheffield Forgemasters
loan was inconsistent with a policy of not subsidising the nuclear power
industry.
The announcement is difficult for
Sheffield and for
south Yorkshire, but we have to have a policy that applies from the
beginning to the end, and we have to be tough on that. In reality, other
countries such as Germany have now introduced a tax on nuclear power
stations to make up for the fact that the industry benefits from a
carbon price but does not pay for the clean-up of the legacy nuclear
waste. There must be
24 Jun 2010 : Column
466
economic realism in the nuclear industry. That has been our
position, and it has been accommodated in our parties' agreement.
There is another
matter on which I have lobbied the Government but not yet seen anything
emerge, and if it could be dealt with in the ministerial winding-up
speech that would be helpful. It is about helping with biodiesel that is
made from recycled vegetable oil. I declare two interests: I drive a
vehicle that uses it; and there is a firm in my constituency from which I
purchase it, and which in turn takes it from firms locally. It is a
good and environmental product, but the financial incentives for
biofuels do not yet encourage the industry to grow. It is an industry of
small businesses, it ought to be incentivised but the Treasury loses
out because of the wrong incentives as well as inadequate incentives for
the sector. I hope that that issue will be looked at, and that we might
introduce an amendment to the Finance Bill in order to pick up on that
individual and ring-fenced item.
24 June 2010 : Column 346W
Graham Evans: To ask the
Secretary of State for Energy and Climate Change what criteria have
been set for companies investing in new build nuclear power plants.
[4265]
Charles Hendry: Government's
position on new nuclear power is clear. It is for the private sector
energy companies to construct, operate and decommission new nuclear
power plants, as long as they are subject to the normal planning process
for major projects and that they receive no public subsidy.
Operator's plans will also have to satisfy the independent safety
regulators. The Government will complete the drafting of the Nuclear
National Policy Statement and put it before Parliament which if approved
will clear the way for planning applications for new nuclear.