HC Deb 31 October 2002 vol 391 cc986-9
3. Ms Julia Drown (South Swindon)

What assessment she has made of the prospect of improving energy efficiency by 20 per cent. by 2010 without building new nuclear power stations. [76419]

The Minister for Industry and Energy (Mr. Brian Wilson)

The Government are carrying out a review of future energy policy with a view to issuing a White Paper in the new year. The role of energy efficiency and nuclear power are issues that will be included in the White Paper.

Ms Drown

The Energy Saving Trust calculates that energy efficiency in households could produce six times the amount of energy that nuclear power stations provide to households. Does the Minister agree that investing in energy efficiency, renewables and combined heat and power could deliver a low-carbon economy without the need for new nuclear power stations?

Mr. Wilson

I am in favour of all these things, and I certainly agree with my hon. Friend's comments on energy efficiency, which has never been taken half seriously enough in this country. I hope that we can use the White Paper as a mechanism to stimulate a different approach to that, but I do not see them as being in conflict with nuclear power. I do not think that we need additional nuclear power, but whether taking action in respect of our one significant low-carbon contributor at precisely this point is the cleverest thing to do when our objective is to create a much lower carbon energy mix is a question for the White Paper.

Dr. Vincent Cable (Twickenham)

Can the Minister confirm that the Secretary of State will make a statement, at or before the end of November, on British Energy and the fate of the £650 million of public money that stands behind the company? Pursuing the Minister's answer to that excellent main question, does he accept the evidence that there is a significantly higher rate of return on investments in energy saving relative to new generation and that if that were to be at the heart rather than the edge of Government policy, it would be good news for everybody except the energy producing companies that are so aggressively lobbying his Department?

Mr. Wilson

The answer to the first question is a straightforward yes: there will be a statement before 29 November.

I am well aware of the potential for greater energy efficiency, and I assure the hon. Gentleman that it will be at the heart of the White Paper. We have been aware of the potential for energy efficiency for a long time, but have not made a huge amount of progress in realising that potential, especially in the domestic sector.

The difference between six times greater energy efficiency and a 25 per cent. contribution to our electricity mix from nuclear power is this: one remains hypothetical and desirable, while the other actually exists.

Alan Simpson (Nottingham, South)

As I am sure my hon. Friend recalls, Aneurin Bevan said that there was no point in willing the ends if we did not also will the means. I look forward to reading the White Paper, which I hope will address the means, allowing us to focus on renewable energy and energy efficiency.

Will my hon. Friend bear in mind that the amount of public money put into British Energy is five times the amount that the Government said they could not afford to spend on supporting the Warm Homes Bill, which fell last year? In considering the balance of resources, will my hon. Friend ensure that there is a shift in favour of what is renewable and what is sustainable?

Mr. Wilson

Let me gently point out that there would have been an awful lot of very cold homes if we had not supported British Energy during the crisis. We obtain 25 per cent. of our electricity from nuclear power, and the one thing that we cannot responsibly do is turn the key and walk away.

We gave a loan to British Energy for two reasons: to ensure security of supply, which is a responsibility of any Government, and to ensure the safe operation of our nuclear power stations. I am sure that, on reflection, my hon. Friend will agree with me—just as I agree with him about energy efficiency—about the desirability of those two objectives.

Richard Ottaway (Croydon, South)

I am sure the Minister agrees that nuclear energy and energy efficiency can go hand in hand. The real challenge is how to make nuclear energy economically viable. Is not the best way of achieving that to end Britain's uneconomic generating capacity, allow electricity prices to rise to a sustainable level, and encourage inward investment in the industry through rising prices in all sectors—coal, gas, oil and nuclear energy?

Mr. Wilson

The hon. Gentleman makes a good point. The spin-off consequences of driving down the wholesale cost of electricity to the lowest possible point have been a mixed blessing, to say the least. It is an absolute certainty that once capacity starts coming out, prices will start to rise again. What I do not want is for that capacity to be clean in terms of our environmental objectives, while the low price creates an incentive to bring back dirty generation. That would be perverse, both in terms of our environmental policies and in the name of joined-up government.

Mr. Dennis Skinner (Bolsover)

Is the Minister aware that there is another way of looking at the problem? The energy crisis is probably one of the most important that the Government will face over the next two or three years. Not only has British Energy been bailed out, and will probably have to be bailed out again; PowerGen is also in trouble, and UK Coal is sacking people left, right and centre. The problem cannot be solved by putting a few windmills here, there and everywhere. I am not against the idea, but even 3,000 windmills around Highgrove would not make much of a difference.

I hope my hon. Friend will respond to this. Privatisation is now a dirty word in the energy industry. It has passed its sell-by date. Unless the Government reverse their attitude to public ownership and deal with coal and other energy sources in that context, the problem will remain unsolved for a long time.

Mr. Wilson

The one thing on which we can agree is that there will not be 3,000 windmills around Highgrove. I also have a lot of sympathy with my hon. Friend's wider point—[Interruption.] I do have a lot of sympathy with his point. I think we should be past the day when anyone believed that dogma-based solutions, whether applied to the public or the private sector, to ultra-liberalisation or to the ultra-state sector, provided the basket of remedies that we all seek. Conservative Members cannot have it both ways. They cannot subscribe to the extremely reasonable points that the hon. Member for Croydon, South (Richard Ottaway) made about the deficiencies of an ultra-liberalised market and at the same time dismiss entirely the comments that my hon. Friend made.

Mr. Tim Yeo (South Suffolk)

Does the Minister agree that it would be possible to promote energy efficiency and to take decisions about the future of nuclear power more rationally if the true environmental cost of different forms of power generation were reflected in the price, and that to achieve that it is time that the Government scrapped the climate change levy, which has nothing to do with climate change, and replaced it with an emissions trading system compatible with the rest of Europe that allowed environmental costs to be reflected in the prices charged to consumers?

Mr. Wilson

No, I do not believe that. The rationale for the climate change levy is justified in terms of our environmental objectives. The fact that it is revenue neutral is testimony to the fact that its objectives are primarily environmental, but I agree about transparency. There should be transparency in all these things. Decisions must be made in the light of that. As far as I know, no one is arguing against the renewables obligation. It is transparently obvious that if we are to have a renewables industry we have to tilt the playing field in favour of renewables. Once we have all the information and transparency on costs, we will have to ask, "Do we want to tilt the playing field in other directions as well?" These are decisions we must make in the context of the White Paper.

Mr. Yeo

Does the Minister agree that the most basic measure of energy efficiency for consumers is whether they have a supply and that for thousands of consumers in Suffolk and other parts of the country to be without a supply for five days is absolutely disgraceful? Will he join me in condemning the failure of power companies to reconnect supplies promptly, to man helplines properly and to confirm that compensation will be payable to those consumers who have been damaged?

Mr. Wilson

That is an interesting question. The hon. Gentleman may have more in common with my hon. Friend the Member for Bolsover (Mr. Skinner) than he was prepared to admit. Unlike the hon. Gentleman, I am not prepared to make such allegations against the privatised companies, but I have instigated an inquiry to and whether the privatised companies have performed in a manner that is satisfactory, against reasonable expectations. Let us see the answer to that.

The point that the hon. Gentleman makes about compensation is extremely interesting. I do not recall the Tories ever saying when in government that the electricity companies should pay compensation, whether or not they were responsible for the power cuts. The regulation is that they should pay compensation after 18 hours but only if they are responsible. By calling for blanket compensation, he is saying that the privatised companies are responsible. Excellent.