Energy Policy

HC Deb 17 April 2000 vol 348 cc697-712 3.31 pm

The Secretary of State for Trade and Industry (Mr. Stephen Byers)

With permission, Madam Speaker, I would like to make a statement to the House on energy policy.

The central objective of the Government's energy policy is to ensure secure, diverse and sustainable supplies of energy at competitive prices.

In 1998 the Government published a White Paper on energy sources for electricity generation. The White Paper identified significant distortions in the operation of the electricity market. In particular, there were distortions in the operation of the electricity trading pool. These distortions had artificially encouraged a rash of new investment in gas-fired generation, mainly at the expense of existing coal-fired plant. There was also inadequate competition in the electricity market, particularly in the coal-fired generation sector. These distortions in the market meant that electricity prices were higher than necessary. The White Paper set out a programme of reform to remove the distortions and create a competitive market that could operate more vigorously and effectively.

While the reforms identified were being implemented, the Government decided to apply a stricter consents policy for gas-fired stations. We made it clear at the time that this policy was a short-term, temporary measure, aimed at protecting diversity and security of supply while the distortions in the market were removed.

This policy has been in place since October 1998. It created a temporary presumption against the approval of any new gas-fired power stations. It was a tough policy, but one that we felt was justified.

Under the application of the policy proposals, 15 gas-fired power stations were refused clearance. As I know from the representations received from a number of hon. Members, those decisions often meant that employment opportunities were denied and economic regeneration was not created. The White Paper set out a radical reform programme that would need to be implemented before we lifted the stricter gas consents policy. The main elements of the programme were, first, reform of the trading arrangements in England and Wales; secondly, seeking practical opportunities for the sale of generating capacity by the major coal-fired generators; and thirdly, pressing ahead with competition in electricity supply for all customers, including domestic customers

Good progress on the reform programme has been made. We have opened the domestic market to competition, giving choice to all consumers, and there has been a substantial degree of divestment of coal-fired generating plant, increasing the number of coal-fired generators. Our programme for reforming the trading arrangements is well under way. There are already signs that the electricity market is becoming more competitive, and that wholesale electricity prices are considerably lower than they were at the time of the White Paper.

In the White Paper, we made it clear that we expected to lift the stricter gas consents policy as soon as we concluded, on the basis of advice from the Director General of Gas and Electricity Markets, that the reform programme had been implemented, and that the market distortions had been removed.

Last Thursday, the director general reported to me that, in his view, substantial progress had been made in the areas of reform outlined in the White Paper. I have placed a copy of his report in the Libraries of the House and in the Vote Office. In short, his report concludes that the reform programme is almost complete. The sole remaining element are the new electricity trading arrangements. I expect them to be in place by October this year. As soon as that has been achieved, I intend to lift the stricter consents policy.

Lifting the stricter consents policy will represent an important step forward in the Government's energy policy. It will provide for full competition in the electricity market by allowing new entrants to challenge existing players. That will ensure that electricity prices remain as low as possible to the benefit of all consumers, including businesses, who need low electricity prices to compete internationally.

It will also enable new power station developments to go ahead if they are viable in the reformed market, thus providing new job opportunities, especially through the creation of new energy parks, which have been proposed by some potential developers.

Today's announcement will be welcomed by the offshore oil and gas industry and its contractors. It will also allow new gas stations that are genuinely competitive, especially combined heat and power stations, to contribute to the enhancement of the United Kingdom's energy efficiency and carbon saving.

Lifting the stricter gas consents policy will mean that the existing presumption against new gas-fired generation will no longer apply. The new initiative for proposals for power stations will remain for private sector companies to consider, to meet the evolving needs of the energy market. That market will be influenced by measures such as exemption from the climate change levy for combined heat and power and enhanced capital allowances.

The Government strongly support CHP and we will expect developers to be able to show that they have explored opportunities to use it. We shall discuss with developers information that needs to be submitted as part of notifications under section 14 of the Energy Act 1976 and applications under section 36 of the Electricity Act 1989.

I have given careful consideration to the impact of lifting the stricter consents policy on the coal industry. From 1985 through to the early 1990s, the coal industry suffered a steep decline, with employment falling from 270,000 people to fewer than 20,000. That was a severe blow to workers and their families. It had a devastating impact on many small—and in some cases isolated—communities. The Government have put in place a major regeneration programme for those coalfield areas. My right hon. Friend the Deputy Prime Minister announced in December last year that some £354 million would be invested over three years in coalfield regeneration. That was in addition to the more than £1 billion that is devoted each year to regeneration of local authority areas containing coalfields.

Our coal industry is by far the most efficient in Europe. Germany, which has the largest coal industry in the Community, produces about 20 per cent. more coal than us with nearly ten times our labour force. The German industry benefits from massive Government subsidies, as do the French and Spanish coal industries.

Our coal industry faces stiff competition not only from gas generation but also from imported coal. The Government's policy remains that it is for the coal industry to find its own place in a competitive energy market. However, we recognise that ending the stricter consents policy will create a new market and new challenges for the coal industry.

We cannot block international competition. Indeed, we do not wish to do that. However, it is the task of Government to lead people through the process of change, to create a framework which enables the coal industry to move forward, to help it manage change rather than be submerged by it and to respond positively to the challenges ahead.

In those circumstances, the Government have been discussing with the European Commission the potential for state aid to the coal industry. Any proposal to pay aid will, of course, be subject in advance to approval from the European Commission. Any aid would be temporary—during the transitional period—and would end with the termination of the European Coal and Steel Community agreement in 2002.

Of course, the Government cannot give absolute guarantees about the future shape of the industry. It will be for the owners to determine the future of any individual pit. Although it is too soon to give an indication of the total cost of any aid over the two years before we have spoken to all the parties and had further discussions with the Commission, we need to identify eligible mines that might be entitled to aid. The cost would also be affected by movements in world coal prices. There has been speculation that the total aid to the coal industry could be as high as £100 million. I am not ruling out the possibility of expenditure at that level.

Our arrangements will treat coal producers in a fair and non-discriminatory way. My Department is developing an appropriate scheme of state aids for the coal industry in discussion with the European Commission. We will consult the coal industry and other interested parties and invite interested parties to make their views known to my Department.

In relation to the continued development of our policy for energy, we faced a choice: uncontrolled change, forced by markets and commercial pressures, or a process of reform that delivers economic efficiency and social justice so that individuals and the communities in which they live can be partners in change. The Government have chosen the latter approach.

Lifting the stricter gas consents policy, coupled with the new trading arrangements, will complete our reforms of the electricity market, provide cheaper electricity and lead to economic regeneration and job creation. Today's announcement will allow the coal industry to compete in the new markets that we are creating. It is a vital part of our programme of modernisation and reform and will be good news for hard-working people and their families and communities. I commend it to the House.

Mrs. Angela Browning. (Tiverton and Honiton)

In three years, the Government have failed to produce a coherent energy strategy, and nothing that we have heard today suggests a long-term strategy. They introduced the moratorium on gas-fired power stations, but were quick to make an exception for south Wales when the Welsh Assembly elections were looming. The Secretary of State's rationale in his 1998 energy White Paper was bogus, because no one believed that companies would invest in new power stations based on a temporary hike in electricity prices.

We welcome the Secretary of State's U-turn on gas-fired power stations, but his policy was wrong in the first place. On coal, the former Secretary of State, the right hon. Member for Derby, South (Mrs. Beckett), said: Our aim is to put all fuels on a level playing field, and not give priority to any one. We do not propose to subsidise any part of the UK coal industry. Coal producers themselves have asked for fairness, not favours.—[Official Report, 25 June 1998: Vol. 314, c. 1171.] What action has he taken to ensure fairness for our efficient UK coal producers, bearing in mind that France, Germany and Spain subsidise their industries by some £3 billion a year? He referred to it, but what action have the Government taken to address the concerns expressed by RJB Mining and others at the unfair subsidies given by European Union grants? Does he believe that many of those are illegal? If so, what has he done about it?

What approaches has the Secretary of State made to the Commission to date? He mentioned that he is speaking to the Commission, but will the aid be approved swiftly or will we be treated to another fiasco like Rover? Is it true, as reported in The Guardian today, that he removed two civil servants from key posts because of their opposition to the Government's energy policy?

How does today's announcement fit into an overall energy strategy? What plans has the Secretary of State made to achieve a reduction in nuclear components by 2020, and then to meet environmental targets? Surely an energy strategy must cover the whole energy mix.

Is not the announcement contingent on the separation of distribution and supply of electricity for which the Utilities Bill provides, together with the new electricity trading arrangements in the Bill—a Bill whose drafting and passage have been handled with unprecedented incompetence?

As the Secretary of State has now clearly indicated that the Government intend to subsidise the coal industry, may we hear from him the broader strategy for subsidising industry in general? Will he explain why one sector is deemed to be eligible for subsidy, while others are not? What is the rationale behind subsidising coal and not, for example, shipbuilding? It is important for the House to understand what the overall strategy is.

This Secretary of State runs a Department that works on a piecemeal basis, producing policy on the hoof. Given what we have heard today, energy is included in that piecemeal approach.

Mr. Byers

It is unfortunate that the proposals have not received a warm welcome. They reflect important progress in the development of an energy policy that is comprehensive and allows the market to work effectively. It is worth reminding the House of the mess that we inherited in regard to electricity trading arrangements. That is what happened, and Conservative Members know it.

There has been no U-turn. We clearly stated that we would ask the director general to report. He reported to me last Thursday on the progress made towards reform of the electricity trading arrangements, and a copy of his report is in the Vote Office. The report makes it clear that the reform programme is almost complete, apart from the new trading arrangements. They will be introduced in October, which is why we shall be lifting the stricter gas consents policy then. That is entirely consistent with what we said at the time of the White Paper.

The hon. Member for Tiverton and Honiton (Mrs. Browning) asked about Baglan bay in south Wales. We have always said that our policy in that regard is a stricter gas consents policy, not a block on any new development. When considering our proposals for Baglan bay, we noted that it had exceptional technology and was developing an energy park according to a high-quality plan, which we were prepared to approve in the circumstances. I was pleased that we were able to do that.

The German, Spanish and French Governments are able to subsidise their coal industries under the European Coal and Steel Community agreement, which the Conservative Government signed in 1993. [Interruption.] Both the right hon. Member for Wokingham (Mr. Redwood) and the hon. Member for Tiverton and Honiton were members of that Government. It was agreed that the arrangement would hold until 2002. The other countries are simply using the powers that the Conservative Government agreed they could use.

As for the question of civil servants, there is no truth in what was said in the Guardian article.

Environmental objectives are important. That is why we strongly support combined heat and power, and why we feel that gas-fired power stations will make an important contribution.

On the wider issue of subsidy, let me point out that the Government support shipbuilding through the shipbuilding intervention fund. I introduced a degree of flexibility to the arrangements that had not been there before, as a result of which orders have been secured for our shipbuilding and ship repair industry that would not have been secured otherwise.

The Government will provide subsidy where appropriate, but we will not do so in a way that props up failing industries. We will support industries that have a real future. Some of the industries that Conservative Members say have no future, such as shipbuilding and coal mining, do have a real future. People in those industries, and local communities, need to know that they have a Government who are on their side.

Mr. Dennis Skinner. (Bolsover)

Is my right hon. Friend aware that the Tories have a cheek to talk about subsidies because, a fortnight ago, there was an announcement that the farming industry would get several hundred millions and the Tories' answer was that it was not enough?

Will my right hon. Friend take it on board that, instead of handing over a big cheque to Budge, who got the industry for a song from the previous Government, it would have made much more sense to have taken the coal industry back into public ownership? Does he accept that some of us, especially in Derbyshire, where there is not a single pit left—they were all closed by the Tory Government—and where there is mass unemployment, will not take kindly to the idea of some of that money enabling Budge and his allies to exploit opencast operations? It would be much better to ensure that all that money goes to deep mines only.

Mr. Byers

My hon. Friend will be pleased to know that, when the paper was submitted to us on the various options in relation to the coal industry, option number 15 was renationalisation of the coal industry, but we did not take it much further than that. On the significant point about support for the coal industry generally, we will have to introduce a scheme that does not discriminate against one sector over another. However, within the scheme, we will be able to give greater emphasis to particular parts of the industry. When we work up the scheme, we will be particularly mindful of the need to improve productivity, particularly in deep-mine pits.

Dr. Vincent Cable. (Twickenham)

I am sure that all Members representing mining constituencies, particularly my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), who has led the fight for Ellington colliery, will welcome the Secretary of State's support for the industry.

More broadly, I welcome the lifting of the moratorium on gas-fired power stations. Can the Secretary of State quantify some of the effects of that on the Government's Kyoto targets? Today's statement gives rather contrary indicators. It would be useful to know by how much the statement will contribute to the saving of carbon emissions, bearing in mind the fact that every unit of energy produced by gas produces 40 per cent. less carbon than coal.

How important is the high value of the pound for the difficulties of the coal industry, given that the pound has appreciated against the Australian dollar by 20 per cent. and against the South African rand by 40 per cent.—they are some of our major competitors? Does he not accept that the Government's inability to deliver a stable and competitive exchange rate is a major factor for the industry, as it is for other manufacturing enterprises?

Will the Secretary of State comment on this morning's Rowntree report on the effectiveness of Government aid to mining communities? It appears to suggest that much of the aid has been ineffectual and needs to be refocused in a radically different way.

Mr. Byers

Today's statement is primarily about the lifting of the stricter gas consents policy and deals with the consequences of that. It would have been foolish not to recognise that that significant change—which we want to introduce from October—will have an impact on the coal industry. The Government will not walk away from their responsibilities to the coal industry and to the communities that depend on coal mining.

On the specific points in relation to the Kyoto targets, the fact that more energy will be produced from gas-fired power stations will obviously make a significant contribution, but it will need to run alongside programmes that the Government are already introducing, particularly to develop cleaner coal technology, which we think will help, as we maintain the coal burn at least at present levels—I hope that those levels will rise as a result of our support—to make an important contribution to achieving those environmental objectives.

The hon. Gentleman mentioned the value of sterling. One of the key issues in coal importation, particularly from European countries, has been the subsidy received by industries in those countries. The German coal industry, for example, receives from the German Government the equivalent of £56 million a week in subsidy. The United Kingdom coal industry has asked us for fairness, not favours. Fairness is achieved by providing a level of subsidy which—even at the modest £100 million that we may be prepared to spend—will still enable the UK coal industry to be competitive against German coal, as the UK industry itself is highly efficient.

Like the hon. Gentleman, I have today read the Rowntree report with great interest. It contains important messages, but it also states that the particular needs of some of the communities that have been affected by pit closures will have to be met. I know that the Deputy Prime Minister will be considering very carefully the lessons that we can learn from the Rowntree report's findings and proposals.

Mr. Bill O'Brien. (Normanton)

May I express my thanks and appreciation to my right hon. Friend for his statement on energy policy? For far too long the coal mining industry suffered, particularly from Tory policies. His statement on help to the mining industry is therefore particularly welcome.

Is my right hon. Friend considering a long-term policy on the mining industry? If so, will he examine the possibility of introducing the fluidised bed system for generating electricity from coal? Introduction of such a system would be one way of ensuring a long-term future for the mining industry.

In considering the issue of combined heat and power, how much attention has been paid to using domestic and industrial waste in CHP programmes? Use of such waste would serve the dual purpose of generating electricity and heat and of disposing of waste that would otherwise go into landfill.

We have to address those issues. Doing that, and some assurances on a long-term programme for the coal industry, would be a major step forward in reassuring my communities in the Normanton constituency.

Mr. Byers

I thank my hon. Friend for his welcome of the measures that we have been able to announce today. He is right to say that the arrangement for the state aid that we wish to provide for the coal industry is transitional. We intend that the aid should end in July 2002, when the current European Coal and Steel Community agreement itself ends. We shall therefore have to consider other ways of planning for the industry's s future.

I have no doubt that we will have to consider new ways of developing programmes. There will also have to be greater innovation in the coal industry if it is going to be in a strong position to compete in the years ahead. I have no doubt that, by providing this breathing space for the industry, it will be able to seize those opportunities.

My hon. Friend makes a very important point about combined heat and power and the use of waste. We are developing a policy on renewables, and the use of waste will make a very important contribution within that context. We have set a challenging but achievable target on amounts of energy generated from renewables. The opportunity of linking that policy with combined heat and power offers some very real prospects of meeting both our environmental concerns and our energy objectives.

Several hon. Members

rose—

Madam Speaker

Order. I have 30 Members seeking to question the statement. Questions to the Secretary of State must be very brisk, and I rely on the Secretary of State to give me brisk answers, please.

Mr. Gary Streeter. (South-West Devon)

The Secretary of State will be aware of a specific application to build a new gas-fired power station in Langage, in my constituency, right next to 45,000 houses on the edge of Dartmoor, overlooking the rolling beauty of the South Harris. The application is opposed by everyone in my constituency, including me. Will he undertake to look at that application, which is on his desk, before the moratorium is lifted, consider it carefully on its merits, and then reject it point blank?

Mr. Byers

I am sure that we shall take those representations into account in considering the matter.

Mr. Harry Barnes. (North-East Derbyshire)

My hon. Friend the Member for Bolsover (Mr. Skinner) pointed out that the Conservatives destroyed the mining industry in Derbyshire by closing all the Coal Board pits. However, one small mine—Moorside mine—is left in Eckington, in my constituency. What will be the position of the small mines when state aid is provided? The money is not just for Budge. The 29 jobs at stake in Eckington also need to be protected. What will be done, and when will it be delivered?

Mr. Byers

I invite the owners of the mine at Eckington to get in touch with my Department. The scheme that we want to introduce applies to all coal producers. Even small mines such as that referred to by my hon. Friend will come within the state aid schemes. If the owners contact the Department, we can discuss what methods will need to be put in place to support improving productivity.

Mr. Peter Atkinson. (Hexham)

The coal industry will be disappointed that more details of the subsidy scheme have not been given. How will it help Blenkinsopp colliery in my constituency? It employs nearly 100 miners and is threatened with closure in 18 months unless the management can raise £200,000 to £300,000 to open new seams. They have been unable to do that because of the low price of coal. Will the scheme help such collieries?

Mr. Byers

It is worth reminding the House that the price of coal has recovered over the past few weeks. Our scheme will go from pit to pit. Blenkinsopp will be able to discuss it with the Department. If it meets the criteria, it will be able to qualify as well as other pits.

Ann Clwyd. (Cynon Valley)

My right hon. Friend's announcement is excellent news for Wales and for my constituency, particularly for Tower colliery, which remained open despite the best efforts of the Conservatives—with the exception of the right hon. Member for Wokingham (Mr. Redwood), who gave us every assistance when the miners bought out the pit. The pit has made a profit year on year, despite the fact that the then Secretary of State for Trade and Industry told us that the mine should shut and I should tell the men to throw in the towel. We did not throw in the towel and the pit has been a success. That shows that there is a secure future for coal and that the Government care about the social consequences of restructuring our older industries, again unlike the Conservatives. What can Tower hope to get from the announcement? Under the previous Government, I took the case to the European Union and the Energy Commissioner told me that the EU thought that the pit should get a subsidy, but the British Government were against it.

Madam Speaker

Order. Questions must be very much to the point now.

Mr. Byers

The scheme that we have been able to announce today covers Wales and Scotland as well as England. Pits such as Tower will be able to qualify under the criteria that we intend to develop. Given the efforts made by my hon. Friend and some Conservative Members to save Tower, I hope that the colliery will see greater opportunities in the scheme and that the commitment of the work force and the community to Tower colliery will reap long-term rewards.

Mr. Dafydd Wigley. (Caernarfon)

I welcome the lifting of the moratorium and the contents of the statement not only for Tower, but for north-west Wales. The Secretary of State will be aware of representations made by my hon. Friend the Member for Ynys Môn (Mr. Jones) about a scheme that is vital for the future planning of industries such as Anglesey Aluminium. What criteria will be used to decide on the exemption of combined heat and power projects from the climate change levy?

Mr. Byers

I welcome the right hon. Gentleman's comments, particularly about the benefits that may well come to north-west Wales from the lifting of the stricter gas consents policy. We had to defer a decision on an application in relation to Anglesey because of the policy that was in place. That was not a rejection. The application still lies on the table in the Department. If the promoters wish to come forward, we shall be able to consider it again. I am conscious of the important role that the Anglesey Aluminium plant can play. My right hon. Friend the Chancellor has already said all that he wants to say about the climate change levy as it affects combined heat and power.

Mr. Kevin Barron. (Rother Valley)

I welcome my right hon. Friend's statement. After all the years of seeing neighbouring coal mines being closed, the coal miners at Maltby colliery in my constituency will be heartened to hear that the Government are standing up for the coal industry. The British coal industry cannot compete against heavily subsidised coal not only from within the European Union but from countries such as Poland. Will coal's share of the electricity supply in the balanced energy policy be met by coal mined in the British coalfield?

Mr. Byers

I understand my hon. Friend's concerns. We have to ensure that our anti-dumping rules are vigorously enforced. We have raised with the Polish Government the subject of the amount of coal coming in from Poland, and we hope that action will be taken in the near future.

Mr. A. J. Beith. (Berwick-upon-Tweed)

Does the Secretary of State believe that Ellington colliery is likely to be saved under the terms of the statement, especially given its tremendous importance to the local economy of Northumberland? If so, does he realise that people will be grateful, and that he has moved from believing that it would be impossible to give such aid under European rules to recognising that we can actively pursue such state aid?

Mr. Byers

The situation has moved on since November 1999, and we have considered carefully the opportunities that are available to us, but any scheme will still need to be approved by the European Commission. We must work with the EC to ensure that any scheme that we propose satisfies the Commission. I am very much aware of the important role that Ellington plays in the local community. My constituency is a little more than 25 miles away, and I am acutely aware that Ellington is the sole deep mine remaining in the north-east of England. Decisions about individual pits will be taken by the owners—in this case, RJB Mining—but, in the light of today's announcement, the company may have something to say about its proposals for both Ellington and Clipstone.

Mrs. Linda Gilroy. (Plymouth, Sutton)

I warmly welcome my right hon. Friend's statement, particularly in respect of the lifting of the stricter gas consents policy. He may know that, in Plymouth, the city council, the chamber of commerce and the regional development agency will be keen for this to pave the way for the go-ahead for the Langage energy park, which is opposed by the hon. Member for South-West Devon (Mr. Streeter). In addition to considering the important environmental aspects, will he take into account the £600 million investment for jobs and the effect of bringing in the only generator west of Hinkley Point, which, through black start-up, will protect industry, attracting jobs and business to the south-west?

Mr. Byers

My hon. Friend is clearly already making strong representations on behalf of the development. We will need to take those into account when we consider the application.

Mr. John Redwood. (Wokingham)

Given that every time the Secretary of State signs a consent for a new gas station, he will effectively be signing the redundancy notices of a large number of coal miners, what is his forecast of how much gas capacity he will license over the next year and how many coal miners' jobs will go as a result? Is not the statement a smokescreen to try to delay the P45s for the miners until after the general election, and does it not in practice mean the death of a large number of mines? Will he come clean and tell us?

Mr. Byers

That is a bit rich from someone who was a member of the Cabinet in 1993, when 33 pits were closed. I have announced a balanced approach. We will lift the stricter gas consents policy, so we will provide state aid to the coal industry to overcome the challenges that it will face over the next two years or so. I do not agree with the right hon. Gentleman, who seems to think that, because a policy decision is taken, redundancies must follow. That was the case under the Government of which he was a member. Tories made decisions and jobs were lost. That will not happen as a result of our policy, which will ensure that there is a viable future for the coal industry within a competitive energy market.

Mr. Ronnie Campbell. (Blyth Valley)

This is obviously a policy through which new Labour will begin to work in the heartlands, and I hope that that continues. The miners of Ellington colliery, and their families, were delighted to hear the news this morning, as I heard it on the wireless on my way here. There was a whisper of it yesterday, but they were delighted by the confirmation that the Labour Government have decided to save Ellington colliery, because their jobs would have gone at the end of the month. I congratulate my neighbour, my hon. Friend the Member for Wansbeck (Mr. Murphy), who has spent enormous energies on the fight to save Ellington colliery. He is not here today, because he is at the pit, addressing concerns about the future. May I also say that it is good to see a Minister, not civil servants, taking decisions?

Mr. Byers

I look forward to continuing to try to convince my hon. Friend that a new Labour Government can act for all our people. This is a new Labour decision, which will help markets work effectively and lead people through change. I look forward to further debates with my hon. Friend on the subject. On a serious point, this is an important development of our energy policy. It will lift the stricter gas consents policy, which stood in the way of the market working effectively. To overcome the difficulties that might be caused as a result, we are also providing state aid to the coal industry. The combination of the two will ensure that we have employment creation through the lifting of the stricter gas consents policy and can maintain levels of employment in the coal industry.

Sir Teddy Taylor. (Rochford and Southend, East)

As the exciting new Labour Government cannot do anything until Brussels allows them to, can the Minister give us some idea when he is likely to get approval? Bearing it in mind that the opencast industry provides jobs in areas of unemployment and now works to strict environmental rules, will he make it clear that there will be no discrimination against opencast in his new proposals?

Mr. Byers

The scheme will be run on a non-discriminatory basis.

Mr. Ted Rowlands. (Merthyr Tydfil and Rhymney)

Let us pursue that issue. Is my right hon. Friend confident that the European Commission will approve his scheme promptly, given the short-term nature of the coal aid, which will be made available only until 2002?

Mr. Byers

Discussions that we have had already with the European Commission indicate that it has no objection in principle to a scheme starting now and lasting until July 2002. We will obviously have to continue those discussions, and I hope that we will be able to put the scheme in place as soon as possible. In the discussions that we have already had, we have been able to assure the coal producers that finance will be available during this financial year, and that is the important element as far as they are concerned.

Mr. Tony Baldry. (Banbury)

Can the Secretary of State confirm that the whole purpose of this announcement today relaxing the gas consents policy is that more gas-fired power stations should come on-stream? Will he return to the question put by my right hon. Friend the Member for Wokingham (Mr. Redwood)? If the Secretary of State intends to lift the gas consents policy, how much more gas-fired capacity does he anticipate authorising during the coming year or two years? The only sector that will lose out from that policy will be the coal sector. Therefore, it is disingenuous to relax gas consents policy at the same time as giving £100 million to the coal industry. The Government are leading the coal industry into believing that it has a secure future, when it has anything but.

Mr. Byers

I made it clear in my statement that the coal industry will need to compete in the new market that we are creating, and that is the reality of the situation. The coal producers are acutely aware of that, and they have said that they would have difficulty competing in the short term without some state aid. That is why we are making those proposals. We will get the balance right and the coal producers have indicated that, with the support that we are able to provide, they will be able to compete effectively against any new gas-fired power stations that come on stream. No restriction will be placed on the number of gas-fired stations, and we will approve those projects that we feel are appropriate for the energy market that we intend to create.

Mr. Michael Clapham. (Barnsley, West and Penistone)

On behalf of the all-party coalfield communities group, may I welcome the package announced to the House by my right hon. Friend today? It will be good for the industry and for mining communities, but especially good for the mining machinery manufacturing industry. My right hon. Friend spoke about lifting the moratorium on gas-powered power stations, but will he consider allowing the electricity pool reforms to bed in before that happens? Collieries in areas such as Ellington Lynemouth are likely to close in four or five years. Will he ensure that miners in such areas are given further training, so that they have the skills to move on to other industries when the collieries eventually close?

Mr. Byers

The decision to lift the stricter gas consents policy from October was based on the report that I received last Thursday from the Director General of Gas and Electricity Markets, which was very much in line with the proposals in the White Paper. We intend to lift those consents when the new trading arrangements come into force in the autumn of this year.

My hon. Friend points out that employment levels might decrease in five or six years. We do not know for certain that that will happen, but it is clear that proposals for retraining and for economic regeneration must be in place. We will need a period of time in which they can develop, and the Government will be responsive to any proposals in that direction.

Mr. Peter Brooke. (Cities of London and Westminster)

The question from my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) to the Prime Minister last Wednesday seems to have provoked a remarkably—and admirably—rapid response from the Government. Its underlying theme was the climate change levy: does today's announcement have any implications, besides combined heat and power, for that levy?

Mr. Byers

As I said in response to the right hon. Member for Wokingham (Mr. Redwood), I do not think that my right hon. Friend the Chancellor will make any significant changes to the way in which the climate change levy will be introduced or implemented.

Shona McIsaac. (Cleethorpes)

As the Member of Parliament whose constituency probably has the most gas stations in it—other developments there have been held up by the moratorium—I certainly welcome the fact that the stricter consents policy has been lifted today. That is good news for job creation and industrial growth on the south bank of the Humber. About 7,000 jobs are at stake, and it is good to know that lobbying pays off in the long run.

However, will my right hon. Friend say how quickly consents will be given after the stricter policy is lifted in October?

Mr. Byers

At the moment, 15 consents have been submitted, and deferred. We will have to talk to the promoters of those consents to see whether they wish to maintain them as originally proposed or whether they want to change certain specifics. Over the next few months, we will study the timing of new applications in relation to the lifting of the stricter gas consents policy.

Mr. Michael Fabricant. (Lichfield)

The Secretary of State said in answer to an earlier question that there is no objection in principle from the European Commission for the grant that he has announced. Does that mean that there was such an objection to the grant for Longbridge, which was never granted by the European Commission? If there is no objection in principle to today's announcement, when will permission for it be given?

Mr. Byers

Two quite distinct schemes are in operation. Any state aid for the car industry is covered by the vehicle framework, which has separate procedures and is administered by a different Commissioner. The state aid proposed today comes under the European Coal and Steel Community's agreement, and the methods involved are quite different. We will need to work out the details of the scheme with the United Kingdom industry. When that is in place, an application will be made to the European Union. However, we expect funds to be made available during the course of this financial year.

Ms Rosie Winterton. (Doncaster, Central)

My right hon. Friend's statement today will be of great help in maintaining continuity in the mining industry. Will he and his colleagues in the Department of the Environment, Transport and the Regions therefore reconsider the closure of the mining inspectorate office in Doncaster?

Mr. Byers

I will certainly draw that issue to the attention of my colleagues in the Department of the Environment, Transport and the Regions, who I think have policy responsibility for that matter.

Miss Anne McIntosh. (Vale of York)

The announcement will certainly be good news for the coal sector. The Secretary of State has also said that there is greater competition in the electricity market. Can he tell the House why he therefore still perceives a need for the overhead line transmission from Lackenby to Shipton in the Vale of York? What will happen to those coal-fired power stations in the constituencies of his hon. Friends—particularly Selby, Ferrybridge and Drax—when those consents are further applied for south of Shipton? Will he admit that there is no need for those pylons to be built?

Mr. Byers

I know that that issue is of great concern to many people in the hon. Lady's constituency. She has been a doughty campaigner, raising the matter and drawing it to our attention. My understanding is that the matter will be subject to an inquiry to see whether it is an appropriate development. It is probably best that we leave the inspector to conduct that inquiry.

Mr. John Grogan. (Selby)

Is my right hon. Friend aware that today's most welcome announcement should provide the opportunity for the signing of a new five-year deal for Selby coal between RJB Mining and AES, the new owner of Drax, the largest coal-fired power station in Europe? Does he think that there is every prospect of British coal, which is now a flexible, modern industry, being able to compete in international markets in a couple of years, particularly with the price of coal rising in those markets?

Mr. Byers

My hon. Friend has been a strong campaigner on behalf of the Selby coalfield. I am pleased that he believes that today's news will be of real benefit to Selby. He is right to point out that RJB is near to concluding an agreement with AES to provide coal to the Drax power station. I hope that that can be concluded in the near future, because, as he says, that will bring some long-term security to the Selby complex.

Mr. Andrew Robathan. (Blaby)

In the interests of efficient energy generation and usage, I generally welcome the encouragement given to combined heat and power schemes. However, why will the Government not similarly encourage other renewables, or renewables in micro-CHP, by adopting net metering? Why have they specifically ruled this out in the Utilities Bill? Does the Minister understand that that would encourage the development of many renewable energy schemes?

Mr. Byers

As the hon. Gentleman will know, the Government are neutral with regard to net metering. However, we think that the 10 per cent. renewables target is the best way of encouraging people to use renewables in energy production.

Mr. Jon Trickett. (Hemsworth)

May I assure my right hon. Friend that many of my constituents will contrast favourably his actions with the brutal actions of the previous Government when they closed the pits and rigged the energy market against coal? May I also urge him, when he has the time, to look at another part of the Tory legacy? The interconnector seems to be a one-way device, by which continental electricity is pumped into this country, but we seem unable to send back electricity generated here.

Mr. Byers

My hon. Friend makes an important point. Under the Conservative Government, more than 40 pits were closed in the five years between 1992 and 1997. That is the Conservative legacy. They rigged the energy market against coal. That is the situation that we inherited. It is why we introduced a stricter gas consents policy—to ensure that we began to have a market that was working effectively—and why we are able, this autumn, to lift that stricter gas consents policy.

My hon. Friend raises an important point about the way in which the interconnector operates. I know that there are concerns, among many of my right hon. and hon. Friends and Members of other parties, about that. We will do what we can to make sure that the interconnector works in a way that is favourable to the British coal industry.

Mr. John Bercow. (Buckingham)

Given that the Secretary of State has supposedly been pressing for the liberalisation of the European electricity market, can we take it as evidence of his poor power of persuasion that the French have now committed themselves to a liberalisation of only 26 per cent. and that, thus far, Belgium, Ireland and Greece have committed themselves to precisely nothing?

Mr. Byers

The improvements that we are beginning to see are far greater than those that we saw under the Conservative Government. I welcome the fact that the French Government are taking through their National Assembly the legislation that will open up the market for energy in France. We need to continue to ensure that the other markets are opened up. The real challenge in the context of Europe is to make a reality of the single market. That will benefit businesses in the United Kingdom and throughout Europe.

Mr. Andrew Miller. (Ellesmere Port and Neston)

I remind my right hon. Friend that, within five miles of Ellesmere Port, 11 gas-fired power stations are in operation or are going through the application process. I think that eight are awaiting consent. Will he ensure that he does not grant consent on a first-come, first-served basis, but that he considers the strategic needs of industry in the area so that the approaches are co-ordinated?

Mr. Byers

My hon. Friend raises an important and practical point; we shall need to take a close look at how we deal with the large number of applications that were deferred pending the lifting of the stricter gas consents policy. I have no doubt that many more applications will be made over the next few months because we have indicated that the policy is to change. My hon. Friend makes the important point that we need a strategic over-view of how we can develop gas-fired power stations in the light of the new market that we want to create.

Mr. Owen Paterson. (North Shropshire)

Before committing himself to a large sum of taxpayers' money, will the Secretary of State say what is his best estimate of the number of pits that will be viable once the scheme has ended and mines have to work in open competition with new gas-fired stations?

Mr. Byers

Ultimately, that will obviously be a matter for the owners to decide; it is not for the Government to determine. However, with targeted support, we can ensure that we provide the coal industry with the opportunity to meet those challenges. I regret that the hon. Gentleman would clearly not want to make such a subsidy available. However, that is wholly compatible with the policy adopted by Conservative Governments over the years.

Mr. Bob Blizzard. (Waveney)

As chairman of the offshore oil and gas industry all-party group, I wholeheartedly welcome the lifting of the stricter consents policy on gas-fired power stations. There are thousands of jobs in the offshore industry, with 10 times more onshore. Such jobs are often concentrated in coastal towns, such as Lowestoft, which I represent, where there is high unemployment. Today's announcement is a hugely positive signal for the industry, as well as good news for the environment.

Has my right hon. Friend received any indication from the offshore operators as to the possible additional investment in gas-field development that might arise from the announcement? Will he try to obtain commitments on such expanded future investment from those operators?

Mr. Byers

I congratulate my hon. Friend, who has been a strong campaigner on behalf of the offshore industry. I am delighted to hear of his support for today's announcement. I have no doubt that the offshore industry will benefit as a result of the proposals that we have made—as indeed will those fabrication yards throughout the country that will have greater opportunities as a result of the lifting of the stricter gas consents policy. I am unaware of any specific proposals from the offshore contractors, but there is no doubt that the announcement will make a real difference to them.