---

Energy Bill

My Lords, I am very pleased to follow the noble Lord, Lord Taylor, who made a most thoughtful speech. He offered a range of options and considerations which were sadly lacking in the two Front Bench speeches so far. It is fashionable to suggest that the Labour Government, after 10 years in office, have run out of ideas and steam. If that is what the Cameron-Clegg axis can provide as alternative solutions to our energy problems, God forbid that Labour loses the next election. I am very pleased to participate in this debate. I have interests in energy recorded on the register. A number of the areas that I have advocated for some years are being followed and I am very pleased that there has been this change of recognition by the Government. It can be argued that this is not a lurch; it is certainly a rather slow change. The tanker took a long time to move, but we have had incontrovertible evidence of the need and the urgency from, for example, the Stern report, that a great deal more has to be done and should be done very quickly. It is certainly the case that we have come to the renewables issue rather later in the day than a lot of countries. We did not have renewables in the 1990s when the Conservatives were in power because we had gas. We not only had gas, we had a dash for gas. A year after the Labour Government came to power, having assessed the situation, they embarked on an embargo on gas power stations. Otherwise we would have had an even greater commitment to them and an even earlier shortfall in our gas supplies. Some Conservative speakers today seem to be incapable of remembering their own political history and the rather cack-handed way in which they went about privatisation, regulation, and, only at the very last gasp, liberalisation. It was such an ill thought through process of liberalisation that we now have no national champions to speak of, apart from National Grid, on energy in this country. We do not have British-owned companies which could have been capable of defending the national interest in any major way. That is not to disparage Iberdrola, RWE, e.on or EDF. But large foreign companies with deep pockets are able to acquire vulnerable British businesses and the blame lies at the door of the Conservative Party for the way in which they reorganised British energy when it was privatised. In the first instance, I welcome the commitment to nuclear power, about which I have spoken here. The Government have a realistic programme. More will have to be done on skills. We are moving on at a reasonable pace in respect of the generic design assessment of the new reactors. I am confident that we will be able to see nuclear power being generated within the next 10 to 11 years in this country. I would hope that nuclear power will bring a degree of stability to price, because dependency on gas means that we are thrown to the four winds as far as the vagaries of the international pricing system are concerned. Much has been said about gas and gas storage, which I welcome. It is long overdue and should have been set in train 15 years ago. The Government were incredibly complacent over the whole issue of gas storage over the years. Some of us on Select Committees in the other House argued with the Government that it should be dealt with as a priority. We were told that if the market was left to its own devices, everything would be for the best in all possible worlds. Pangloss has little place in the energy debates and the energy markets, and has never had much of a place. I am not advocating state direction, but I am advocating facilitation, encouragement and incentivisation, if the profit motive is not in itself enough. However, I find it hard to believe at times that when there are all these fantastic opportunities, the entrepreneurial instincts of British business cannot rise to the challenge of building windmills or of getting their act together on what, obviously, is a very attractive and important issue; namely, carbon capture and storage. We are told that people take their ball away in a huff if they do not receive sufficient subsidy or incentive from Government. We are receiving in a new form the old argument about backing national champions. I thought that we had left all that behind and the idea of subsidising companies to take advantage of market opportunities when these market opportunities are so blindingly obvious that even latter-day socialists like me can see that. Anyone with a bit of wit and intelligence should be able to get something going there. Certainly, if the Government are going to have another competition it should be modest in scale and they should be selective in which of the two technologies they want to have judged. Broadly, I sympathise with the position that has been adopted. We will have to have a debate about the forms of tariff and the ROCs arrangements in much of the provision in the renewables area. We may have a fight about what is very little in terms of the respective merits of one option against another, but the Committee stage of the Bill will be helpful in this area. I share the anxieties of the noble Lord, Lord Oxburgh, about the implications of disparate and limited, on occasions, renewable generation and the cost that that will have on the funding of the National Grid. The National Grid will have to have an alternative grid to accommodate intermittent sources of supply while at the same time having the usual motorway system to deliver the power from the baseload generators that we will have to live with in the future, whether they are gas, nuclear, or, as I hope, coal. But let us not forget that coal is an imported fuel. If we were going to restore the coal industry in the United Kingdom to even a shadow of its former state it would require degrees of training, investment and new forms of technology, the like of which we cannot begin to realistically think of at the present moment. We will have to use coal but it will not be cheap in the future. If we have the almost exponential increase in demand that we see from India and China, this is bound to impact on the price of coal at a far greater rate than we have envisaged over the past two or three years. That brings me to my final point. Much of what we have been talking about is in the medium to long term. However, fuel poverty, about which the noble Lords, Lord Palmer and Lord Taylor, have spoken, is with us and is growing worse. It is growing worse primarily because no one anticipated the dramatic increases in gas and oil prices and the impact that they have had: a 100 per cent increase in domestic gas prices and a 70 per cent increase in domestic electricity prices. There are 24 million households in the UK. I do not think that the figure is 45 million; it may be that second homes owned by Members of this place or houses abroad were lumped in. I believe that the Minister said 45 million: it is only 24 million, but it is bad enough at 24 million, because if we take England on its own there are around 3 million-plus households in fuel poverty. Some 15 per cent of households in England are in fuel poverty. That means that we have to spend in excess of 10 per cent of gross income to fund the heating bills of those households to keep the house warm or the water hot. We know that the Government have been concerned about the matter and that tough words have been exchanged in Victoria Street. People have complained that Ministers have not been nice to these shrinking violets from the energy companies and that they have succeeded in wringing out of the energy companies an increase of £100 million this year, £125 million next year and £150 million in 2010-11. That is in contrast to the £50 million spent at the moment. We can argue about who is to blame for the price rises and express concern about the level of profits that these companies make, but I do not particularly want to go down that road. If there is a 1 per cent increase in energy prices, 40,000 households go into fuel poverty. But if there is an increase of 2.5 per cent, 100,000 people go into fuel poverty. If it is 25 per cent it is another 1 million. At the present moment, the Government are cutting £80 million per annum for the next three years from the Warm Zones project. Somewhere down the line the Government have their priorities wrong. They are not nearly harsh enough on the utilities. It was said that if the Government did not obtain some money from the utilities they would introduce a mandatory social tariff. I do not believe that the two are mutually socially exclusive. I believe that we need to have a mandatory social tariff. At the moment we have a free market in utility charity towards the fuel poor: a market of such inconsistency, complications and contradictions that we can have a mix and match of any one of about four or five or maybe more forms of assistance. There are price discounts and freezes, fixed price bills and forms of cold weather payments. We could have tariffs on low income households or people living in deprived areas, or occupants of fuel poor areas; households facing difficulty paying bills; all households on supplier priority service registers and then we could have the catch-all of the elderly. It is not beyond the wit and intelligence of either the Government or the House to produce this social tariff and I hope that some of us can make common cause across the divide of the House to get a social tariff on to the statute book. We have to recognise that, even though there are six or seven major suppliers in the country, most of them are geographical in character. If they are offering a good policy in one area, the chances are that it is either not taken up by the poor or not available to them in other parts of the country. So it is incumbent on us to try to have a national gold standard by which companies can be judged. That can be the form of the social tariff. John Maynard Keynes said that in the long run we are all dead. In the short term, a large number of poor, disadvantaged and elderly people will die as a consequence of their inability to afford to keep themselves warm. That is one of the saddest facts and statistics that we have in the United Kingdom. It is not the severity of our winters or the inadequacy of our social benefits; it is the fact that we have a grossly inadequate housing stock, the improvement of which, in the Government’s proposals for Warm Zones, will result in reduced funding for amelioration. That is one example of the problem that we have here. We are dealing with a number of issues in a number of contradictory areas. We can talk until we are blue in the face about smart meters in the certain knowledge that it will take 10 to 12 years to run them out. The companies cannot decide which kind of smart meter they want. They do not even know which parts of the country they should start in. They do not know whether there are low hanging fruit that could be plucked quickly so that disadvantaged people could be helped. Indeed, it could be argued that those who have difficulty handling their bills and payment systems may also find it difficult to handle more complicated meters than they have now. What there is no doubt about is that if you have a prepayment meter, it is a damn sight more expensive than paying a discounted rate by direct debit. There are things we can do. In broad terms, I support this legislation. It can be tweaked and improved, and I welcome the commitment to increases in large-scale generation and the recognition at long last of the need to secure gas supplies and build storage facilities. It was said earlier that we are trying to construct a three-legged stool. Our job at this point is to make sure that the energy leg of the stool is as strong and effective as we know it can be. I think that the Government are making a good start.