13:30 Nadine Dorries (in the Chair)

The Select Committee on Energy and Climate Change is pleased to have been granted this debate on our report. It is timely, given the issue’s high profile and in the context of the price rises recently announced by most of the six largest energy companies. The subject has come to the fore again just as the winter weather has started to set in and people face the challenge of keeping their houses warm. The Prime Minister has made a number of interventions to try to reduce energy bills, by suggesting that environmental levies will be rolled back and, more recently, that transmission costs can be reduced. However, the Energy and Climate Change Committee considered the subject in detail, including profits and poverty, well before the recent spate of interest. Our inquiry was launched on the Floor of the House in December last year, and we reported at the start of this summer.

Our report’s opening conclusion was that energy bills are rising and are likely to continue to rise. The wholesale price of fuel, driven by rising global gas prices, has been the largest contributory factor. Several other factors also contribute, including the need to invest in and finance the UK’s electricity and gas network and energy and climate change policies. The extent to which energy supply companies are actively working to reduce their operating costs remains unclear. The Committee had hoped to uncover the real story behind energy company profits, but alas, that is significantly more difficult than it should be. At the time of the report, the Committee stated its disappointment that

The Committee recommended that the Department of Energy and Climate Change should lead a full and frank conversation about the contribution that consumers are being expected to make towards ensuring that we have safe, secure and affordable energy supplies. It is crucial that the public are made aware of the challenge that we face in meeting our energy needs. In its response, DECC said that it had been up front about the fact that energy prices will continue to rise and told the Committee that the combined impact of decarbonisation and energy efficiency policies led it to estimate that household energy bills will be 11% lower on average by 2020 than they would be in the absence of Government policies.

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13:45 Dr Alan Whitehead (Southampton, Test) (Lab)

“the increasing use of levies on bills to fund energy and climate change policies is problematic since it is likely to hit hardest those least able to pay. We note that public funding is less regressive than levies in this respect.”

Would a review of those particular levies—we concentrated, among other things, on the energy companies obligation—consider moving some of the obligations into general taxation? Or is the purpose to reduce the overall impact of the energy companies obligation on bills? I understand that, in recent days, No. 10 has issued a target to the Department of Energy and Climate Change on the expected outcome of the energy levy review. I am interested to hear whether that target exists, what it looks like and in what form it will be met.

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14:06 Dan Byles (North Warwickshire) (Con)

Furthermore, some of the price rises are clearly the result of Government levies, which are there for different reasons; DECC, however, has estimated that energy and climate change policies will add 33% to average electricity prices by 2020. It is true therefore that an artificial price rise has been put on bills by politicians. The Government are absolutely right to review the impact of such levies and whether the different policies can be managed in different ways.

For politicians in the House to point at the big six and say, “It’s all their fault,” is dishonest and simplistic, however, because the situation is much more complicated than that. As a matter of policy, we are in fact switching off the cheapest ways of generating power and replacing them with more expensive ways of doing so. We are doing that deliberately, with a large degree of consensus, and for sound reasons if we believe that climate change is a real problem that needs to be addressed. I do believe that, and most people in this place—though not all—probably agree.

We need to explore shale gas; we have a potentially enormous resource on our doorstep. It must be done safely and with the consent of local communities, but we must not allow fears that are in many cases built on myths to prevent us from exploring and exploiting that domestic resource. We must also have a much stronger focus on carbon capture and storage, because gas will be part of the mix for a long time and we need to mitigate that by moving much further forward on CCS.

We have an enormous challenge in keeping our energy costs down, in decarbonising and in attracting the huge amount of investment that we need. The fourth part of the trilemma—the right word should be “quadlemma”—is the investment needed. We must come up with a way of keeping energy costs down and decarbonising without frightening away the investors we need to put hundreds of billions of pounds into our energy infrastructure in future to keep the lights on.

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14:17 Graham Stringer (Labour)

The example I gave at the beginning of my speech is an extreme one, but it is a strange policy that decides to invest in energy sources that provide guaranteed income for the generators at three times the current market rate for energy, as is the case with offshore wind farms. As has been said, the reason is fear of climate change and induced global warming because of the increased production of carbon dioxide. We could have a long debate about that, but I do not intend to go into it now.

The fact that our carbon footprint is increasing is not often mentioned, and some Ministers do not seem to understand anything about the issue. When the Minister, the right hon. Member for Bexhill and Battle (Gregory Barker), was asked to define climate change, he gave the useless definition that climate change was climate change. He repeated that twice. When a Minister of State has that level of understanding, it is not surprising that we do not have useful policies.

The other basis of the policy is that the people in the Department of Energy and Climate Change know that the price of fossil fuels will rise over the next 10 or 15 years. If they could predict the market, I suspect they would not be working in the Department because they would all be rich. The fact is that there is a super-abundance of fossil fuels in the world; there are trillions of cubic metres of shale gas in this country and sufficient coal to supply the world for hundreds of years. That is not the problem, although there are constraints on supply at particular times.

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14:31 Albert Owen (Ynys Môn) (Lab)

It is a pleasure to follow colleagues who work together very diligently on the Energy and Climate Change Committee. I begin by paying tribute to the Clerks and staff of the Committee for their work in putting such good reports together, so concisely. This debate is very important, and as other Members have said, a number of issues that are now in the mainstream of politics were initially raised by the Committee and put into the report.

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14:46 Jonathan Reynolds (Labour)

As ever, it is a pleasure to serve under your chairmanship, Ms Dorries, and it is a particular pleasure to be here today to discuss the Select Committee on Energy and Climate Change’s report entitled “Energy Prices, Profits and Poverty”, and the responses to it.

From our exchange at the Dispatch Box yesterday, it seems that the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), and I have substantially different views on the performance of the Government’s flagship ECO scheme. I simply do not believe that the ECO is ambitious or effective enough to meet the fuel poverty challenge in this country. In answer to the right hon. Member for Hitchin and Harpenden (Mr Lilley), the chances are that the ECO’s cost will rise out of proportion to the success of the measures being delivered.

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