Energy Bill

Public Bill Committee, 7 January 2010.

Hugh Bayley (Labour, City of York)

We are going to hear evidence this morning from Jonathan Stearn from Consumer Focus and Jenny Saunders from National Energy Action. I need to tell the Committee formally that Dr. Gill Owen from the Fuel Poverty Advisory Group, who was due to be with us, has been prevented from getting here by the snow and has telephoned through her apologies.

I remind witnesses in particular that the rules under which I operate are absolutely strict. If we have not finished the proceedings at literally the second 10.25 am comes, I am required to stop you even if you are in mid-sentence. Perhaps with two rather than three witnesses we will not be running up to the clock in quite the same way. It remains for me to welcome our two witnesses to the meeting. Can I ask you to introduce yourselves and the name of your organisations? We will then start the questioning.

Hugh Bayley (Labour, City of York)

Thank you both very much.

Paddy Tipping (Labour, Sherwood)

There has been a lot of discussion on social tariffs over a long period. Jenny—you and I have talked about that. We are moving from a voluntary approach to a mandatory approach in the Bill. Does that really prove that the voluntary approach has failed?

Paddy Tipping (Labour, Sherwood)

I shall ask Jonathan about that as well, but let me add a bit more. Some companies have been pretty good—British Gas, for example. Others, such as EDF, have not performed as well as some of the others. Will a mandatory approach sort that out?

Paddy Tipping (Labour, Sherwood)

In fairness to the companies, the amount they have been spending on social tariffs has increased quite significantly over recent years. Isn’t that the case? Looking into the future, how much should we be spending on social tariffs?

Paddy Tipping (Labour, Sherwood)

Jonathan, you said in your evidence that at the moment energy companies spend about 0.5 per cent. of their turnover on social tariffs. Is that the correct figure? Is that the figure we ought to be shooting at into the future? Picking up on Jenny’s point, why should customers pay for social tariffs? Why can’t companies pay it out of their profits?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Can I follow that up? Clause 8 will give the Secretary of State significant discretion in secondary legislation. Does that worry you? That picks up Paddy Tipping’s point. Would it not be simpler, in your view, to have in the Bill a simple mechanism, for instance to define a social tariff as the lowest cost per unit available by a supplier, which could be done in a very simple way? It would then be very clear that any scheme that included a social tariff thereafter had that definition, rather than there being a plethora of ways in which the companies get over this at the moment—by having a bewildering array of tariffs, often meaning that if you take electricity and gas and other facilities you get a better tariff. Would it not be better to have a simple definition in the Bill?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I agree with that but we could argue over a definition then.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I have a supplementary, Mr. Bayley. What always worries me about legislation is that so much of the detail is in secondary legislation, to be determined sometime later. We are about to have a general election and things may change quite dramatically. Do you feel that it would be helpful if the Minister, when we discuss the Bill, gave an indication of the secondary legislation in order for us to understand the primary legislation’s context?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I am happy with that.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Welcome. It is good to see you and thank you, Jonathan, for your submission. May I first probe the question of the people involved, other than pensioners, before addressing methods of ensuring that people get the best or fairest deal? At the moment, we have systems that generally support people who get a benefit from the state. They are either pensioners, over pensionable age or they qualify because of income support and so on. Have you all thought through the categories that should be included? We will need some precise answers to that first part of my question.

Secondly, some people are entitled to benefits or entitlement, but they have to claim them, which has always been a problem, because the benefit take-up has never been anything like the number of people entitled. How do you deal with that?

Finally, are there people who are just under pensionable age but, for pride and other reasons, do not claim benefits, are just above the limit and should be eligible? People have talked about disability, cancer patients and other categories. Will you help us as precisely as you can as to the groups that we should include and how?

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Except we know that 99 out of 100 houses are not energy efficient.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Just before Jenny comes in, you would say that the starting point should be the current definition of those entitled to cold weather payments but, Jonathan, you would add some other potential categories.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

My last question on this is, would you, as well placed organisations, seek to work out those other categories that might justifiably be entitled? For example, we have had submissions from Macmillan—a fantastic organisation and we know what they do—but cancer patients in their 40s or 50s cannot be the only ones who are more vulnerable and need to be protected and who may still carry on working part-time, or whatever. Given that we are to have a secondary legislation round, would you be willing and able to come to a common view with the charities? Because it would be far better to have consensus rather than lots of negotiation and rather invidious discrimination later on, when people with some conditions qualify and others do not.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Thank you. May we just go on to method of supporting people? I have two questions. One is a specific question that I would like you both to answer, and the other is about your advice as to what methods will work. The specific question is whether there should be an end to the right of companies to charge differently depending on the means of payment. Should we simply say that it will be the same charge whether you pay by cheque, online or through a prepayment meter? It would be very simple and very fair. It does not matter if you also buy gas from the same person you buy your electricity from—that will not give you an advantage. If you are buying electricity, however you pay, you pay the same rate. Do you support a proposal that we have a single rate of payment for that product, irrespective of method of payment?

The wider question is: what is your advice as to the best way of giving support? Is it that the lowest tariff should be what the company has to offer to everybody in this category, and should that be part of a package that reduces the tariffs from the 4,000 that there are at the moment to a very limited number that the company is allowed to charge? We could legislate and say that you can only have five tariffs, for example, or we could tell Ofgem that that is what companies have to do. I am concerned that we have a ridiculously complex system, and we discriminate against people who pay by the old-fashioned methods by which poor people pay. I want to end that. How do we get that?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I am totally confused by your answer. I am sorry. I am not being disingenuous. Are you saying to Simon Hughes that European law would prevent it being stated in this Bill or in secondary legislation that all companies must offer their lowest tariff available as part of their response to the fuel poor?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

So we could have that on the face of the Bill?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

You said we couldn’t earlier.

Hugh Bayley (Labour, City of York)

We are running into the danger that half of our agenda will be lost. Can I ask Simon to focus on a final question and could I also ask the witnesses to try to give us some concise answers?

Hugh Bayley (Labour, City of York)

Paddy, do you have a supplementary question?

Paddy Tipping (Labour, Sherwood)

Yes. A little while ago, you used the words “Treasury coffers”. Is it not the case that winter fuel payments last year cost £2.7 billion, and that only 12 per cent. of people who receive them are in fuel poverty? Is that a sensible way of going forward? Should we not use that money to support new mandatory social tariffs?

Hugh Bayley (Labour, City of York)

We need to move on. Mike, you had a couple of questions.

Michael Weir (Scottish National Party, Angus)

The most recent figures for 2007 show that there was an increase in homes in fuel poverty from 3.5 million to 4 million from 2006. Will a measure of the Bill’s success be whether that figure declines?

Michael Weir (Scottish National Party, Angus)

Within these numbers of homes in fuel poverty, there is a group that many of us representing rural areas are concerned about: those who are on home fuel oil or liquid petroleum gas, and who, we accept, will not get the benefit of the social tariffs from electricity suppliers. A large percentage of their spend is on heating their homes, which in many cases is not covered by this. There does not seem to be anything in the Bill that helps that group. Is there anything that we can do that would reduce their costs and have the equivalence of a social tariff for this group?

Michael Weir (Scottish National Party, Angus)

It is an interesting idea, but I am sure that the electricity supplier would come back and ask why that is increasing its costs and paying for the fact that the gas supply does not go to those homes. In the Bill, there is the prospect of having a balancing mechanism between energy companies. Is that something that could be used to balance that out and spread the cost more evenly among all the larger energy companies?

Michael Weir (Scottish National Party, Angus)

Jenny has partly answered my second question, which was that the second part of the definition is

“the extent to which any person is living in fuel poverty is reduced”.

Can you give us your views on what the reason is for the second part of that definition? Why do you think that the Government proposed that?

Hugh Bayley (Labour, City of York)

Brian, would you like to come in?

Brian Binley (Conservative, Northampton South)

As you know, clause 27 will allow the Secretary of State to set up schemes to adjust energy prices for disadvantaged customers. Do you think such schemes are required? Are they workable? Does Ofgem have the power to do the job?

Brian Binley (Conservative, Northampton South)

May I ask you a supplementary before I come on to Mr. Stearn? Are you concerned that Ofgem could be overruled by a Minister? This would give greater power and a shift of emphasis of power, bearing in mind that Ofgem’s prime job is to look after the interests of consumers.

Brian Binley (Conservative, Northampton South)

Are you saying that Ofgem has not done its job?

Brian Binley (Conservative, Northampton South)

As my grandmother would say, it is a kick up the bum, is it?

Brian Binley (Conservative, Northampton South)

I understand the reasons and I am grateful for your explanation, but I am still concerned about why we do not make Ofgem work more effectively, rather than split the powers and give greater power to the Minister in the area where Ofgem was set up so that it would not be politically involved in that way.

Brian Binley (Conservative, Northampton South)

Hopefully.

Hugh Bayley (Labour, City of York)

Charles, is there anything in general terms that you would like to address?

Charles Hendry (Conservative, Wealden)

A few issues have come up. The whole area of fuel poverty is incredibly confusing, particularly for those who are affected by it. The names and range of schemes mean that most people do not know where to start looking for the available support unless they get some expert advice. To what extent will the Bill and its measures clarify things, and what more needs to be done beyond the Bill to simplify the system further?

Charles Hendry (Conservative, Wealden)

We and the Liberal Democrats have tabled amendments on efficiency, so we will have the opportunity, even within the timetable available, to discuss them and, I hope, to make those changes.

Jonathan Stearn, do you think that any other elements are missing from the Bill?

Charles Hendry (Conservative, Wealden)

You referred earlier to the problems of identifying who is in fuel poverty and the accompanying difficulty in identifying the right people who should benefit. The Government made some changes in data sharing. Have they done enough to provide accurate information to companies? What more needs to be done? Does any of that require legislation?

Charles Hendry (Conservative, Wealden)

You have also talked about the importance of smart metering as a way of helping people. My understanding is that, in Northern Ireland, people on pre-payment meters pay less than others, so there is a positive benefit for them rather than a gap. Would you like the roll-out of smart metering prioritised so that homes occupied by people in fuel poverty are targeted first?

Charles Hendry (Conservative, Wealden)

Just one more question, if I may, Mr. Bayley.

Picking up on the conversation earlier with my colleague Mr. Binley about clause 27, would it be your preference that, if Ofgem had the powers and was using them as you would think appropriate, those powers should rest with Ofgem rather than the Secretary of State? Do you think that the Secretary of State having some powers to help disadvantaged customers and Ofgem having others creates scope for confusion, as some might fall through the net because neither organisation knows whose job it is to deal with things? Also, the Secretary of State’s powers appear pretty arbitrary, and subsection (7) essentially gives him the power to make up what evidence he does not have. That is a degree of proof that is not available to Ofgem, which must have evidence-based material to go forward. Would you prefer, if possible, that this should be done through Ofgem rather than the Secretary of State?

Derek Twigg (Labour, Halton)

May I just come in on a point in Charles Hendry’s second question—the issue of Ofgem? I get the impression, although maybe I am wrong, that you think that Ofgem is not intervening and using its powers to the extent it should, and that you believe the Bill would force its hand on that. What exactly is it not doing that it should be doing?

Derek Twigg (Labour, Halton)

It seems rather interesting that the regulators just do not have the confidence to know whether they should intervene. Will the Bill give them that confidence?

Hugh Bayley (Labour, City of York)

There is time for a couple more questions.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

If we are really trying to deal with fuel poverty and make Ofgem effective, is the following something that we ought to do, as well as simplifying the tariffs hugely? We can ensure that every consumer—either twice a year, just before the winter begins and after the winter, or three times, at beginning of the new year, when people think about things, the school year and the tax year—has something through their door that says, “These are the options available to you to buy your electricity. There are five or six companies in your area, and these are the prices they are offering.” Therefore, everyone can choose. They can see the choice and would not have to go groping on. Is that not simple? It does not require anything other than a power for Parliament to say, “Ofgem, you will insist that this is done.” Is that not the sort of thing that would make a fantastic difference?

Hugh Bayley (Labour, City of York)

Thank you. The first witness for this afternoon’s session, Jeremy Nicholson from the Energy Intensive Users Group, has now also given his apologies. He is unable to make it to London because of the weather. I understand, however, that the Ministers and departmental officials are available to give evidence from 1 pm, so the Committee will still meet at 1 pm—the time agreed by the Committee on Tuesday in the programme motion. After the private session to allocate questions, we will move straight into questions to the Ministers and the Department. I expect that the Committee will finish about one hour early as a result, at approximately 2.30 pm.

Peter Atkinson (Conservative, Hexham)

Welcome. We know two of the panel, who also happen to be members of the Committee. It would be very helpful if you could, for the record, please introduce yourselves and particularly if the officials could give us some indication of their role.

Peter Atkinson (Conservative, Hexham)

Thank you very much indeed. Who can start off the questioning? Simon Hughes.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

If we can start generally, as you would expect, Joan, please. We explored with others how much of the content of the Bill had come as a proposal from Ofgem. We were told that some of the ideas were Ofgem generated. Could you first tell us which of the other ideas are Government generated or come from any other sources? Are these parts in this Bill now because they are thought to be manageable, ring-fenced subjects that can get on to the statute book before an election in the spring, or were they in any event at the top of DECC’s list of things it wanted to do? I guess the last bit of that is if there are other things that DECC has on the list but has left out, we would be glad to know that so we know they are coming down the track, even if not in this Bill.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Minister, thank you. I have one supplementary question and one other thing by way of introduction. I will then leave you to colleagues. We know that there are announcements to be made by the Department in coming weeks; the Secretary of State referred to one about a national programme for home insulation during Question Time this morning in response to questions from me and others. Just so we are clear, will you confirm which announcements you already intend to make and whether any of them will potentially require legislation? I am thinking in particular about any national warm homes programmes and so on. I have seen statements of the announcements that are expected from the Department and you will have them in your grid. Are there any announcements that have legislative implications? Bluntly, we might think that some of those things, understanding time constraints, could be added to the Bill, and some of our amendments might be coming down the track by way of Government announcements in the next few weeks.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

One last question. Quite a lot of the Bill, as we have discussed, is legislation that has secondary legislation trailed in it, not least in relation to fuel poverty. There have already been requests for the draft secondary legislation to be shared with the Committee before we move on to the next stage. Is that possible in all respects where it is referred to in the Bill? If not, what is the delay and why can we not look at the secondary legislation in draft?

Tobias Ellwood (Conservative, Bournemouth East)

I am slightly dismayed at the way in which the Minister answered the last question, by saying that the relatively short Session that we now face is the reason why we have a pretty light Bill in front of us today. That said, it could be compensated by her agreeing to amendments that would beef up the Bill somewhat, and she is now suggesting that she is closing that door and that, “If we want to get this through, we really need to agree what we have on the table, rather than advance anything further”.

Is that not a little short-sighted, considering that there is very much a desire on both sides of the House to expedite this process of moving forward with carbon capture and storage? Surely we have a vehicle here in which to do that. If there is consensus, why can we not agree on things such as the size of the pipes, and on the introduction of exploratory works on looking at the inclusion of gas as well, rather than waiting for the next opportunity for a Bill to come around under another Government? That could be some time away.

Tobias Ellwood (Conservative, Bournemouth East)

I hope that that is not the Minister’s catch-all for some of the amendments that will be put forward to try to change things. I would hate to think that we are using the reason—sound though it may be—that we are coming to the end of the Parliament and therefore need to get this Bill through. We heard very clearly in the first sitting that had this exact Bill—the identical wording—been put in front of us five years ago, we could have had a more substantial Bill. We would have had more time for the consultation that the Minister speaks about, and we could have been tackling some of the issues that are now becoming very serious indeed.

Tobias Ellwood (Conservative, Bournemouth East)

I invite the Minister to read the Hansard from the first sitting, when we had the representatives from the companies themselves, who said that they were in a position to take advantage of the funding schemes that are being promoted in the Bill: they could have been utilised five years ago. Those were the facts of the day. We are now faced with this very difficult, awkward situation, where we are running out of time and having to squeeze through a Bill that is not going to do enough. I do not say that it is not useful, but it is not as useful as it could be, considering the pressure we are under to get carbon capture and storage up and running.

Peter Atkinson (Conservative, Hexham)

Order. We are developing a debate and we should be seeking information from the Ministers and the ministerial team. The Minister may want to respond, but perhaps we may then draw a line under the matter.

Charles Hendry (Conservative, Wealden)

It is ironic, because when the Energy Act 2008 was being considered we tabled amendments that were defeated on exactly the same grounds being used now: that there was no need for them to be added. Now they are being introduced with a degree of urgency in the Ofgem remit on mandatory social tariffs. Sometimes things that are ruled out at the time have an urgency a little bit later.

I want to ask particularly about the levy. You will be aware that in the past we talked about a preference for funding carbon capture and storage through the receipts from the EU emissions trading scheme. We have been told that that money is not available: it has been spent. We have asked, and never been told, where it has been spent or allocated to. Could you give us that evidence? It would be very helpful for us in formulating our views in response to the Bill.

Charles Hendry (Conservative, Wealden)

Could you refer to the page and paragraph?

Charles Hendry (Conservative, Wealden)

Thank you very much. We also heard from Jeff Chapman a couple of days ago that the way in which the levy will be operated is a contract for difference. That is not set out anywhere in the legislation about the nature of it. Could you describe for us a bit more how it would work and how the contract for difference approach would work in practice?

Charles Hendry (Conservative, Wealden)

One more, if I may. Tony White and other witnesses talked about the importance of having an authority or organisation that would manage this process—not just the process of the levy, but the contracts for the pipelines and other parts of the process—and be responsible for the scoping work, to see which sites might be able to cope with the sequestration facilities. Have you had a chance to consider the recommendations he made in that respect?

Paddy Tipping (Labour, Sherwood)

Joan, you just mentioned the competition. It seems a long time since the Chancellor announced the competition. The intention is to have a plant up and running by 2014. Is that realistic? Is that time scale going to be achieved?

Paddy Tipping (Labour, Sherwood)

It is not much of a competition if there is only one competitor who can reach the finishing line at the appropriate date. Can I reinforce a point I made in questions this morning? There are real consequences for the indigenous coal industry in the UK. It can now compete against the economic test, but the environmental tests are very difficult. Unless we can burn coal cleanly, the UK coal industry is going to close down.

Let me reinforce the position at Harworth: when new reserves can be opened there is going to be a cost of £200 million. The company cannot afford that at the moment. It is talking to the European Investment Bank and has jumped many of the hurdles but the EIB is now saying, “You have got to be able to burn this coal cleanly,” and there ain’t nowhere to do it at the moment. What reassurance can you give to miners that I represent in Nottinghamshire?

Brian Binley (Conservative, Northampton South)

I wish to continue from where Mr. Tipping left off. It could be construed from the scenario of the last two and a half or three years that the Government now recognise that they got it wrong in the first place and have decided to do something about it. If that is the case, I am perfectly happy because this is a very emerging technology. So let me lead on to what you are doing now—up to four demonstrations—because I think that is an important part of the scenario. Can I ask what response your early estimates suggest you might have for the demonstrations over and above the first? What you are doing about it to encourage a response?

Brian Binley (Conservative, Northampton South)

I am sure you wouldn’t.

Brian Binley (Conservative, Northampton South)

Is it definitely four?

Brian Binley (Conservative, Northampton South)

Will you allow me to press you a little further on a question that I raised this morning in the Chamber about the connection between CCS and oil? It is said that the window to exploit that possibility is not very wide. Can I ask what you are doing, because I have not seen a great deal about that potential connection in the stuff emanating from Government? Can you tell me what the latest position is on that and whether the Government are going to put more energy behind that possibility, bearing in mind the estimate that we could get another 15 per cent. out of the North sea if we move quickly?

Brian Binley (Conservative, Northampton South)

Absolutely. To shove down—

Brian Binley (Conservative, Northampton South)

Forgive me, I understand that you are mates with the industry and I am perfectly happy with that. I just want to know what the Government are doing to further this possibility, which will be considerably in the interests of this nation.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I do not share the Minister’s rosy picture of our position regarding CCS. In 2005 we had an opportunity to go ahead with the Peterhead project, which would have made us world leaders, when BP pulled out because of the Government’s intransigence in not supporting the programme. We could have had a full demonstrator up and running and operating. I say that by way of comment.

The issue of enhanced oil recovery that Brian Binley raised is absolutely crucial. In terms of being able to get some certainty, the difficult issue, as the Minister will know with her friends in the oil industry, is that the gas and oil fields in the North sea have to be capped as soon as the usable oil and gas is taken out. There is then a short window of opportunity in which they can be opened up before the saline gets into them and they are ruined. If we do not meet those timelines, we are finished. I do not think that it is a matter of leaving it up to the oil companies, it is also a matter for Government policy. I make that point as a helpful suggestion rather than because I am trying to be difficult.

I am really interested in the competition and am delighted that we are now definitely going to have four funded projects. That is a very positive statement. The reality is that with the first demonstrator, on which we are about to make a decision, the whole pack of cards was stacked in favour of post-combustion—collecting CO2 after combustion. In reality, if you talk to the scientists and technologists, and to your friends in the oil and gas companies, they are particularly interested in not simply having a silo approach to this but in looking at creating opportunities for future economic growth. Pre-combustion is crucial. The Chinese are more interested in pre-combustion because they can then take the chemicals out and use them appropriately. They could also create a hydrogen facility and a hydrogen economy at the same time.

My understanding is that every one of the companies that were interested in pre-combustion, in terms of demonstrators, pulled out because the Government were not interested. What steps can the Minister take, including with this legislation, to encourage companies to come back in so that we get at least one, if not two, pre-combustion demonstrators? If we do not have those rival technologies, both of which are going to have global impacts, we may miss a massive opportunity and, particularly in terms of pre-combustion, we may miss the opportunity to create a world-leading hydrogen-producing economy.

Michael Weir (Scottish National Party, Angus)

I am deeply concerned about what the Minister has said about the competition and the time scale. If 2014 is going to slip back to 2017 or 2018, that is very significant and undermines our reliance on CCS meeting our targets. If we are not going to get the first demonstrator up and running until 2017 at the earliest, when are we likely to get the next four projects up and running? She has said that two of them will be pre-combustion. I remind you that, during his evidence on Tuesday, Professor Gibbins said that

“we will have to fit a significant amount of natural gas plant with carbon capture and storage in the 2020s. To be able to plan for that, you need to have demonstrated the technology and to have the reference plants to look at and say, ‘This is how it’s done’”.——[Official Report, Energy Public Bill Committee, 5 January 2010; c. 44, Q94.]

If we are not having the first plant until 2017, that time scale becomes very tight indeed.

Michael Weir (Scottish National Party, Angus)

You have said that it may well do.

Tobias Ellwood (Conservative, Bournemouth East)

It is interesting that the Minister quoted Jeff Chapman from the Carbon Capture and Storage Association, who said that this was one of the best financial structures for CCS in the world. He went on to say that, had this Bill been put forward five years ago, technologies would have been no different and it would have been just as easy to introduce the Bill five years hence. That places his contribution in context.

My question concerns the urgency that I think the Minister agrees exists. There is an amendment to include gas in the Bill with coal. Given the discussions we have had and the delays that may occur in relation to coal, does it not make sense to introduce a view in relation to gas at this stage now, bearing it in mind that gas itself may be hit with delays in the future? It is appropriate to place it in the Bill now because there are no guidelines on how the entire project will be paid for. There is a levy, but we do not know how much it will cost, how it will be managed or what the timetable is. With those unfixed parameters and given the urgency of the need to consider gas as well as coal, I invite the Minister to think carefully about including one demonstrator power station for gas in addition to the four coal stations envisaged in the Bill.

Tobias Ellwood (Conservative, Bournemouth East)

Will the Minister quickly say what those reasons are? There is an amendment on the matter, and it would make sense to include gas now. It is, of course, cleaner than coal. It seems that we need to get the wheels working, given the delays that we are about to experience with coal.

Tobias Ellwood (Conservative, Bournemouth East)

May I correct the Minister? I was not talking about doing coal and not gas, but saying that we should do both.

Tobias Ellwood (Conservative, Bournemouth East)

That is completely separate from gas. We all agree with the Minister’s argument about coal, but that is separate from, and exclusive of, our approach and the issue of when we start the ball rolling with gas.

John Robertson (Labour, Glasgow North West)

Perhaps we can put the record straight on what would have happened five years ago. My recollection, as somebody who has been chair of the nuclear energy group for five years, is that five years ago this Parliament would not have entertained anything to do with nuclear or coal, in any shape or form. So I think, Minister, you are quite right in what you say—that five years ago we would not have gone down that road of investing money in that. The Opposition would, of course, have taken that precisely as their point of view—that it would be a waste of money dealing with those things. You are correct in what you say.

May I go back to the competition? I have some problems with the competition. We have two companies that have gone down the competition road and are still involved. They have done that. Why do you think that all the other companies have said, “No, we’re pulling out.”?

John Robertson (Labour, Glasgow North West)

Professor Jon Gibbins from Edinburgh university said roughly what you are saying. His point was they would have their eyes on the results of the initial successes of the competition. My question is: what criteria will the people who come along afterwards have to meet? What kind of competition rules—if there are competition rules—will there be? I asked that question yesterday. Will there be no rules? Do we just pick a company because we like it and then go ahead with it? Surely there has to be some kind of competition to produce what will be best for the nation.

John Robertson (Labour, Glasgow North West)

While you are looking at that, Jeff Chapman from CCS Association mentioned the Alberta consultation. Have you looked at that?

John Robertson (Labour, Glasgow North West)

It strikes me that the two companies that are still in the competition are going to be out of pocket a lot more than the other companies that come in at the back, so what is in it for them?

John Robertson (Labour, Glasgow North West)

Okay. My last question on that subject is: does that mean that they will get that money over and above what everybody else is going to get in the future projects? I am worried that companies that have stuck by the rules and gone through the competition might, in the long term, be more out of pocket than the companies that are sitting on the sidelines waiting to see what the results are, which will get the benefit of the hard work done by somebody else.

John Robertson (Labour, Glasgow North West)

It affects the Scottish companies—that is neither here nor there, of course.

Peter Atkinson (Conservative, Hexham)

Quite a lot of Committee members are trying to catch my eye. Charles Hendry has been waiting a long time.

Charles Hendry (Conservative, Wealden)

Can you point us to where in the Bill four projects are mentioned?

Charles Hendry (Conservative, Wealden)

Exactly. It is a complete red herring. There may be four, but the Bill is not tied into four. The Bill could be for one; it could be for 10; it could be for 20. It is non-specific. It simply provides a power to provide a levy and that levy will remain in place until the legislation—if the Bill gets Royal Assent—is repealed. To say that the provision is only for coal and should only be for coal is to tie future Administrations into a technology that will be overtaken by other technologies in due course. It must surely make sense to have a power now, even if it is just a power to extend the ability from dealing just with coal-fired power stations to dealing with other technologies as well.

Charles Hendry (Conservative, Wealden)

I hope that the Minister will reflect on that over the weekend.

Charles Hendry (Conservative, Wealden)

It would mean that a new Act of Parliament would not be necessary when gas really comes on to the agenda.

The other issue is that the references to coal-fired generation could exclude pre-combustion technologies. With pre-combustion, you are creating a gas and then burning it. The definition in the Bill refers to coal burning. I think that the definition in the Bill could preclude the development of pre-combustion technologies.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

It would also preclude oxy-fuel if we went down that line. Could I pick up John Robertson’s excellent point about drawing out the advantages to the first two companies—[Interruption.] You can pay me later for that. I was particularly interested in what will happen to the intellectual property. Clearly, the Government are going to invest £90 million to help international companies with their design work, which will then be used for projects all over the world. How do we tie in a share of that intellectual property? In terms of the first one or four or more demonstrator plants which are going to be funded by the consumer paying more through a levy, how do we tie in the intellectual property that emerges through those demonstrator plants, so that UK plc gets the benefit?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I am not saying that.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

None of it?

Judy Mallaber (Labour, Amber Valley)

May I seek clarity before we get to the Committee debate on one of the other issues that was raised in the evidence sessions on Tuesday? Green Alliance and WWF were very positive, saying that the Bill and the approach it sets out is a tremendous step forward, and they were very encouraging of the development. They also argued strongly that it should be complemented by emissions performance standards—clearly a matter that will come back again. They were careful not to be pinned down to any specific timetable for laying down emissions standards, because they obviously also appreciated some of the difficulties. For example, you do not want to block off current core production by getting it wrong. They were quite clear that there should at least be a framework and a requirement to bring in those standards as a complement to the development of CCS and other technologies. I would be interested in your comments on whether, in principle, that is something you support. Are there technical or timetabling arguments against, or is it an idea that has some favour?

Judy Mallaber (Labour, Amber Valley)

What is the timetable for introducing that kind of provision? Would it not potentially be to the advantage of those engaged in an early stage in the technology? They would be ahead of the game in making sure they could meet whatever standards there were—and not just for coal-fired stations but across the board. I would have thought they would be the ones that would be most pleased to have it because they would be most likely to be there at the beginning, meeting the necessary standards.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Could we publish these consultations, Mr. Atkinson, because I have not seen the results? Are they all in there?

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

There was a controversy as to whether any emission performance standard could breach EU law. My understanding is that it will not and cannot. Can you just confirm that that is the advice given to Government?

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Just one other question, following up Judy Mallaber’s question. If the Government were to be absolute about their view about the next generation of coal-fired power stations and said that there will be no new coal-fired power stations unless there is complete CCS from the beginning, wouldn’t that give the industry much more certainty about what the next generation of power stations would be, on the one hand, but also incentivise people to be much more committed to the project, to the competition and all the other things because they know it has to succeed? It is a bit like when the exhaust rules were changed for cars, and the automotive industry knew that down the track they would have to comply in so many years’ time, and they all did it. They may have found it difficult, or demanding or challenging. Wouldn’t it be a better Government policy, consistent with the Bill, to say that the next generation absolutely has to be, from the beginning, not retrofitted but CCS compliant?

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Maybe we should move on, Chairman.

Peter Atkinson (Conservative, Hexham)

We have done carbon capture and storage very thoroughly for over an hour. We will move on to the question of mandatory social tariffs.

Natascha Engel (Labour, North East Derbyshire)

I will rattle through the questions.

A couple of things on social tariffs. The Bill moves us from having a voluntary arrangement whereby energy companies offer a social tariff, to putting it on a statutory footing. The obvious question that we have asked other panellists before is, “Does that mean that the voluntary system has failed?” But really, why do we need to do this and what will be the benefit of moving it on to a statutory footing?

Natascha Engel (Labour, North East Derbyshire)

Just before you move on. Yes, that is better than nothing, but it still only represents 0.5 per cent. of the energy companies’ turnover. That is not a huge amount. Does the statutory footing mean that the energy companies will be spending more money, in terms of their annual turnover, on social tariffs?

Natascha Engel (Labour, North East Derbyshire)

How will you direct that?

Natascha Engel (Labour, North East Derbyshire)

In terms of the kernel group, are you planning on extending the size of that most vulnerable group to include—we have asked the companies this already—people with chronic illnesses, such as cancer sufferers? By their very nature, they have probably seen a vast drop in their income, certainly in their quality of life. Is that in your calculations?

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

We all know from constituency casework over the years that the real issue for most consumers is knowing what the cheapest offer is, and being able to turn to it and use it. Do Ministers therefore accept that whatever else there may be, the key mechanism should be to require the companies to make whatever their cheapest offer is at any one time available to all these people, in the categories that are the vulnerable, starting with the group you have just described? Is the starting point going to be, “You’ve got to make the cheapest offer”? If the answer to that is yes, which I hope it is, is it still the Government’s view that there will have to be additional financial support to subsidise for the fuel-poor below what the companies can produce as their cheapest offer?

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

May I pursue that? I understand what you say and I am grateful for it, but the risk is that if the offer is money off your electricity bill, there are still going to be quite a lot of people, particularly the elderly, the very elderly, the not very well and so on, who can have the information sent through their letterbox but will actually stay with what they have got because that is what people do. A lot of people have not been used to changing their electricity supplier. They have British Gas or whatever, and that is what they stay with. The public purse, or the industry, will then be subsidising tariffs that could be lower. People could be on the lower tariff but they have not changed to it and will still be on a higher tariff and will be getting something off that. Surely we need to make sure that we bring everybody down to the lowest tariff, before we give them money back, otherwise we are wasting money somewhere in the system, spending money that need not be spent.

Paddy Tipping (Labour, Sherwood)

I was wondering whether you could describe your thinking about the arrangement for the kernel group, as you described it, and for winter fuel payments. All pensioners get winter fuel payments but, as I understand it, only 12 per cent. of them are in fuel poverty. What is the relationship between winter fuel payments and social tariffs into the future?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Can I take you back to the discussion you had with Simon Hughes? If you are having a flat-rate rebate in terms of your bill—and I understand it is a simple way of dealing with that—the reality is that people who are in the greatest fuel poverty are often people, as we heard earlier today, who do not have access to internet accounts or bank accounts. They are paying the highest at the moment, particularly in terms of prepayment meters. You may well get a poor customer who has a bill of £1,000 because they have to pay the highest tariff. At the same time, somebody who is using the same units of electricity could have a bill of £400. There is that difference between the two tariffs. A flat-rate premium of a £100 rebate would mean 10 per cent. off the top-rate tariff and 25 per cent. off the lower tariff. I do not understand your logic there unless I have missed something. I am a simple creature.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

With respect, Minister, you know that generally speaking the poorest people are paying the highest tariffs. Prepayment meters for the poorest people are incredibly expensive, compared with the tariffs that Simon Hughes gets in his luxury flat in London.

Peter Atkinson (Conservative, Hexham)

Order. Can I just say that the panel has had an hour and a half, which is about all that they were expecting? The first witness did not come, however, so we can go on a bit. I am sure that the panel will not mind as there are a few more questions to be put. I ask those who want to take part to bring their questions fairly quickly to a close, but I would not want to deprive the Committee of the opportunity of having Mike Weir and John Robertson asking their questions. Mike Weir.

Michael Weir (Scottish National Party, Angus)

We have heard conflicting evidence or opinion on how the new duties on Ofgem to take account of carbon emissions and security of supply will affect the way in which it works. What is your opinion? What do you expect will change with Ofgem as a result of these new duties?

Charles Hendry (Conservative, Wealden)

There has always been the sense that the Government will set the framework and Ofgem, as a regulator, will then implement it. There is a potential confusion here in that as Ofgem’s remit is changed, it can then decide the relative importance of affordability, security of supply and low carbon. How does one, with the measures that the Government have put in place, ensure that the Secretary of State, rather than an unaccountable regulator, has primacy in deciding policy?

Charles Hendry (Conservative, Wealden)

There was much less agreement among witnesses about the nature of clause 27, and many people did not understand why it was necessary; they were concerned that it was something that perhaps Ofgem should be doing, even if it was not doing it properly. I sense that this would be the appropriate home for these sorts of measures for looking after the interests of disadvantaged customers. Could you take us a bit more clearly through your thinking as to why you felt it necessary to do this, particularly, to pick up the point made by Rupert Steele, that it does seem to include an element where, if the evidence isn’t there, the Secretary of State can make whatever assumptions he or she wants?

Charles Hendry (Conservative, Wealden)

The assurance on the record has no legal force whatever, does it? It is interesting to compare this with what Joan said at the beginning of our discussions—that the Bill is focusing only on the things that are urgent and must be done now because there is a pressing need for them, and that other things are being kept out of the Bill because of that. But this is a power that has not been used so far and we have no idea when it might ever be used. That seems slightly out of kilter with what we were told earlier.

John Robertson (Labour, Glasgow North West)

I got into quite a discussion with all the groups the other day about the market power licence condition. Rupert Steele from ScottishPower took one side and felt that it was going to attack investment, while Ofgem thought that it was a really good idea and thoroughly supported the Bill. Is this primarily to help the consumer and will it stop investment in the way that Rupert Steele claimed?

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I want to come back to those not on the gas main, who get calor gas, LPG or fuel oil. Apart from those who are going to be the fuel-poor, what will be the beneficial outcome of the Bill for them? What will this do to bring down the—clearly, on average—much higher bills of those people from the high levels there are at the moment?

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

If they are fuel-poor?

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

But they are average punters out in the country not on the gas main?

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

This is my last question. If you wanted to, could you put a provision in the Bill, or support an amendment to the Bill, that could reduce the number of tariffs any utility company could offer to, say, 10 per company? Could you do that and, if you could, why don’t you?

Charles Hendry (Conservative, Wealden)

Are you able to tell us whether the Government will be tabling any amendments to the Bill, ahead of when we meet on Tuesday?

Peter Atkinson (Conservative, Hexham)

Order. Can I thank the panel? I am sure that the Committee will think that this has been a very useful occasion, so we are grateful for all your time. I am sure that you are all pleased that we are finishing earlier.