Caroline Flint's response to the Energy Bill announcement

29 November 2012

Caroline Flint-CHECK AGAINST DELIVERY-

Caroline Flint MP, Labour's Shadow Energy and Climate Change Secretary, responding to the Energy Bill announcement in the House of Commons today, said:

Can I thank the Secretary of State for early notice of his statement?

I have always been clear that where there are areas 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 welcomed Hitachi's decision to buy the Horizon Nuclear Project.

Similarly, we welcomed the progress that was made in Durban last year, and we wish our negotiators, currently in Doha, well.

So it is with genuine regret that over the last year we have seen this Government lurch from one crisis to another on so many aspects of energy policy.

From the disastrous handling of the cuts to the Feed-in Tariff for solar power, to the Energy Minister’s outbursts on wind power, and the Prime Minister’s broken promises on energy bills, this is a Department that has done more than its fair share to get the word omnishambles into the Oxford English Dictionary.

Today, alongside this statement, the Secretary of State has finally published the Government’s long-awaited Energy Bill.

His department’s own press notice helpfully reminds us, that this 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 has 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.

But I want to pick up on two aspects of the Secretary of State’s announcement and ask some specific questions.

First, the state of competition in the energy market.

And second, 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 will be lower during this Parliament.”

Families and businesses up and down the country, who have seen their bills go up by more than £250, know that is not true.

In response the Government launched their click, switch and insulate to save campaign.

But the number of people switching supplier fell to record lows.

The Secretary of State talked about energy efficiency.

But next year this will be the first administration since the 1970s not to have a Government-funded energy efficiency scheme.

The Prime Minister told this 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 is really doing is limiting the number of tariffs these 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’re 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.

These big companies dominate 98 per cent 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 are among the highest.

And most damning of all, whenever these companies announce their price hikes, they tell us that they are only passing on their costs. So why is it, then, 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, what they showed very clearly was that this market is not transparent enough.

So let me ask the Secretary of State three very straightforward questions:

First, does he believe that there is effective competition in either the wholesale or retail energy markets?

Second, whether or not consumers get a fair deal will largely depend on the strike price the Government sets in 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?

And third, for proposals that were originally called “electricity market reform” why does this Bill fail to reform the way energy is bought and sold to make it more open, more transparent and more competitive?

The Secretary of State said that investment us running at a 20 year high.

But the fact is, 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 leads 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 has been knocked off the top spot for offshore wind attractiveness.

And the reason that’s happened is because of the uncertainty the Government has created.

That’s why firms have put investment on hold, or scrapped them altogether.

In June Vestas abandoned their 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, now the Climate Change Minister’s parliamentary private secretary, say at the time?

She said that Vestas’ decision, and I quote, “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.”

And if you listen to firms like Vestas, who whether it’s onshore or offshore their business is wind, what they wanted more than anything else in this Bill was a clear commitment to decarbonise the power sector by 2030.

Just this morning, their Chief Executive told the Guardian that “the failure to establish a firm 2030 power sector carbon cap prolongs uncertainty.”

In his words “this is a significant missed opportunity.”

I make no bones about it – we support a clear decarbonisation target in this Bill.

From what I read in this morning’s papers, so do many honourable members on the Government’s own benches, including the Chair of the Select Committee.

And when the time comes, we will work with colleagues across the House, to put a decarbonisation target into this Bill.