Session 2010-11
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General Committee Debates
Welsh Grand Committee Debates

UK Government's Energy Policy


The Committee consisted of the following Members:

Chairs: Martin Caton  , †Mr Dai Havard 

Andrew, Stuart (Pudsey) (Con) 

Bebb, Guto (Aberconwy) (Con) 

Brennan, Kevin (Cardiff West) (Lab) 

Bryant, Chris (Rhondda) (Lab) 

Cairns, Alun (Vale of Glamorgan) (Con) 

Clwyd, Ann (Cynon Valley) (Lab) 

Crabb, Stephen (Preseli Pembrokeshire) (Con) 

David, Mr Wayne (Caerphilly) (Lab) 

Davies, David T. C. (Monmouth) (Con) 

Davies, Geraint (Swansea West) (Lab/Co-op) 

Davies, Glyn (Montgomeryshire) (Con) 

Edwards, Jonathan (Carmarthen East and Dinefwr) (PC) 

Evans, Chris (Islwyn) (Lab/Co-op) 

Evans, Jonathan (Cardiff North) (Con) 

Flynn, Paul (Newport West) (Lab) 

Francis, Dr Hywel (Aberavon) (Lab) 

Gillan, Mrs Cheryl (Secretary of State for Wales)  

Griffith, Nia (Llanelli) (Lab) 

Hain, Mr Peter (Neath) (Lab) 

Hanson, Mr David (Delyn) (Lab) 

Hart, Simon (Carmarthen West and South Pembrokeshire) (Con) 

Irranca-Davies, Huw (Ogmore) (Lab) 

James, Mrs Siân C. (Swansea East) (Lab) 

Jones, Mr David (Parliamentary Under-Secretary of State for Wales)  

Jones, Susan Elan (Clwyd South) (Lab) 

Llwyd, Mr Elfyn (Dwyfor Meirionnydd) (PC) 

Lucas, Ian (Wrexham) (Lab) 

Lumley, Karen (Redditch) (Con) 

Michael, Alun (Cardiff South and Penarth) (Lab/Co-op) 

Moon, Mrs Madeleine (Bridgend) (Lab) 

Morden, Jessica (Newport East) (Lab) 

Murphy, Paul (Torfaen) (Lab) 

Newmark, Mr Brooks (Lord Commissioner of Her Majesty's Treasury)  

Owen, Albert (Ynys Môn) (Lab) 

Ruane, Chris (Vale of Clwyd) (Lab) 

Smith, Nick (Blaenau Gwent) (Lab) 

Smith, Owen (Pontypridd) (Lab) 

Tami, Mark (Alyn and Deeside) (Lab) 

Williams, Hywel (Arfon) (PC) 

Williams, Mr Mark (Ceredigion) (LD) 

Williams, Roger (Brecon and Radnorshire) (LD) 

Willott, Jenny (Cardiff Central) (LD) 

James Rhys, Committee Clerk

† attended the Committee

The following also attended ( Standing Order No. 102(4))

Hendry, Charles (Minister of State, Department of Energy and Climate Change)  

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Welsh Grand Committee 

Thursday 10 March 2011  

(Morning)  

[Mr Dai Havard in the Chair] 

9 am 

The Chair:  The first business before the Committee is oral questions. 

Oral Answers to QuestionsEnergy and Climate Change

The Secretary of State was asked—  

Tidal Power 

1. Jonathan Edwards (Carmarthen East and Dinefwr) (PC):  What recent discussions he has had on future use of tidal power in the Severn estuary. [42519] 

The Minister of State, Department of Energy and Climate Change (Charles Hendry):  It is a pleasure to serve under your chairmanship, Mr Havard. 

My officials are talking to private sector consortiums and individual companies about their ideas for developing tidal energy schemes in the Severn estuary. 

Jonathan Edwards:  A project to develop a tidal lagoon in Swansea bay with an output capacity of 60 MW has been in the pipeline for a number of years. Will the Minister update the Committee on what discussions he has had with the Welsh Government and other stakeholders about that development? 

Charles Hendry:  We have had discussions with the Welsh Assembly Government on that scheme and other schemes. We are keen to see a range of ideas. We have been developing the concept of marine energy parks so that we can make the United Kingdom one of the most attractive places in the world for investors, and that very much includes the potential in Wales for the development of marine and tidal technology. 

Jessica Morden (Newport East) (Lab):  We have heard little more from the Government about tidal energy since the announcement about the barrage. What has happened to the money allocated by the then Secretary of State to consider emerging and newer technologies and their use on the Severn? 

Charles Hendry:  We are continuing to look carefully at that range of technologies. This year, we have put in place a marine energy programme to identify barriers to the potential development of marine technologies. We are now developing the concept of marine energy parks, which I believe will make Britain a beacon for investors. The problem is that some people have started building their technologies here but have then taken them overseas. We want to ensure that Britain is a magnet for that sort of investment. 

Mrs Siân C. James (Swansea East) (Lab):  I am glad to hear the Minister’s words. We in Swansea bay have been fighting for a long time for this lagoon. With

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750 miles of coastline in Wales and the second highest tidal range, we are well placed for it. It is the tidal lagoon’s time, and Swansea will welcome it. 

Charles Hendry:  I agree strongly with the hon. Lady. There is immense potential not only in Wales but more generally. We have some of the highest tidal reaches in the world on our shores. We want to be certain that investors consider the opportunities for coming here. We are putting forward a much more integrated and structured approach to these developments. We are already seeing a lot of interest, and in the course of this year we will also be reviewing support for renewables obligation certificates. We brought that forward by a year in order to give greater clarity to investors. 

Nuclear Power 

2. David T. C. Davies (Monmouth) (Con):  What plans he has for the provision of nuclear power in Wales; and if he will make a statement. [42520] 

7. Stuart Andrew (Pudsey) (Con):  What plans he has for the provision of nuclear power in Wales; and if he will make a statement. [42526] 

The Minister of State, Department of Energy and Climate Change (Charles Hendry):  With permission, Mr Havard, I would like to answer questions 2 and 8 together. It is the Government’s policy to enable energy companies to invest in nuclear power but without public subsidy. We have completed our consultation on the draft revised energy national policy statement, which includes nuclear and which identified eight potential sites for new nuclear power stations, including at Wylfa. We shall be considering responses to the consultation, and we intend to present the finalised statement to Parliament for ratification in the spring. 

The Chair:  For clarity, the two questions are No. 2 and No. 7; they have been renumbered. 

David T. C. Davies:  Does the Minister agree that nuclear power is the safest and most reliable way of generating large amounts of electricity in a manner that does not create carbon dioxide emissions, so all keen environmentalists should support it? 

Charles Hendry:  I apologise for the earlier confusion, Mr Havard. If question No. 2 had been linked with question No. 8, it would have made for an interesting debate. 

We certainly see a strong role for nuclear power. We are very encouraged by the interest being shown in the development of the Wylfa site, and there are great opportunities for nuclear technology in Anglesey and more generally in north Wales. It is one of a range of technologies that we believe are terribly important in this sector. We believe that coal with carbon capture and storage, and in time gas with CCS, and the wider roll-out of renewables add up to a sensible balanced energy policy. We believe that we need the full range of technologies. 

Stuart Andrew :   As someone who was born and brought up in Anglesey, I know how important Wylfa is to the local economy. What is the Minister’s Department doing to secure training and skills so that local people can enjoy the benefits when Wylfa comes along, and would he comment on the joint working between coleg Llandrillo

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and coleg Menai, which are trying to develop skills to ensure that local people can enjoy the benefits of a new power station at Wylfa? 

Charles Hendry:  I was pleased to have the chance to meet those involved in the provision of education when I visited Anglesey a few weeks ago. My hon. Friend is right to say that we must secure the skills base. It is encouraging to see that work is being done through the National Skills Academy for Nuclear, and a number of universities are starting to bring forward nuclear engineering courses. Colleges see wide potential in areas where nuclear build looks likely. 

Paul Flynn (Newport West) (Lab):  In 1979, a plan for a nuclear power station in Wales failed for technical reasons; the planning permission ran out of time. Will the Minister tell us whether the Government plan to revive the plans for a nuclear power station at Portskewett in Monmouthshire, so that we can ask the public? We can then find out whether the hon. Member for Monmouth is as enthusiastic to dump on his own doorstep as he is on other people’s doorsteps? [ Interruption . ]  

Charles Hendry:  Given the response of the Committee, it appears that there may be a degree of controversy about that. We have identified eight sites that we believe can realistically be developed by 2025. They are listed in the national policy statement. We have consulted on them. The final list will be put before Parliament soon after Easter, once we have reviewed the responses to the consultation. 

Wind Farms 

3. Hywel Williams (Arfon) (PC):  What account was taken of his Department’s policy on the delivery of offshore wind farms in the decision on the applicability of the UK Ports Fund to Wales. [42522] 

The Minister of State, Department of Energy and Climate Change (Charles Hendry):  The UK is No. 1 in the world for offshore wind deployment, and we are committed to remaining at the forefront of this technology. It will make a major contribution to meeting our renewable targets. The offshore wind manufacturing supply chain needs to expand to support that ambition, and we have provided up to £60 million of industrial support over four years to support the development of projects in the offshore wind manufacturing supply chain. However, I should make it clear that there is no UK ports fund, and we are not providing financial support for speculative ports development. As industrial support is a devolved matter, that funding applies only to England. 

Hywel Williams:  I thank the Minister for that answer. The Assembly Government in Scotland is investing £70 million in Scottish ports specifically to develop capacity in offshore wind and other renewables. There is a great opportunity for that in Wales. How much are the Government investing in Wales for that purpose, and why is it that sum? 

Charles Hendry:  I hope that the hon. Gentleman will understand that we changed the programme from a speculative programme for ports that may never have

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attracted manufacturing investment to one that was directly linked to manufacturing facilities. We have seen companies deciding that they want to invest on that basis. The Scottish Government put forward £70 million of ports funding, and it is open to the Welsh Assembly Government to do the same. However, we believe that it should be linked to specific manufacturing facilities rather than speculative port developments. 

Owen Smith (Pontypridd) (Lab):  Does the Minister accept that the change in policy on ports funding has significantly disadvantaged Wales? The ports of Holyhead and Milford Haven were ideally placed for the development of wind turbines. Given that offshore wind is the coming thing, does the Minister not accept that Wales is disadvantaged as a result of that decision? 

Charles Hendry:  It is important to understand why we made the change. The danger was that the money could easily have been used to upgrade ports that would never have attracted investment in the marine technology sector. It would have been speculative, and we would not have had the chance to bring forward the investment that we wanted. By making it conditional on manufacturing projects, it inevitably became an economic development support mechanism, and that is clearly a devolved matter. It is therefore up to the Welsh Assembly Government to decide if they wish to make a priority of supporting such investment in Wales, in the same way as the Scottish Government decided to do in Scotland. 

Owen Smith:  Does the Minister not accept that had that money been made available for Wales, we might have attracted further economic development? We might well have seen wind turbine manufacturing coming to the north and the south of Wales. Not allowing that money to be spent has hamstrung Welsh development in respect of renewables. 

Charles Hendry:  I do not accept that argument. The reality is that the funding is Barnettised because it is economic development funding. It is entirely open to the Welsh Assembly Government to go down the same route as the Scottish Government and use their resources to support such development. There is a great deal of interest throughout the United Kingdom in the offshore wind development manufacturing sector. Any company anywhere in the world that is looking to get into that sector will put the UK on its list. The Welsh Assembly Government must decide how they want to take that forward in Wales. 

Energy Policy 

4. Roger Williams (Brecon and Radnorshire) (LD):  What consultation and collaboration on energy policy his Department has undertaken with the Welsh Assembly Government. [42523] 

The Minister of State, Department of Energy and Climate Change (Charles Hendry):  Department of Energy and Climate Change Ministers and officials work in close partnership with all UK devolved Administrations in tackling climate change and promoting sustainable

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energy. Although energy is a non-devolved policy area, we recognise the importance of co-operation and working together on areas of mutual interest. 

Roger Williams:  I thank the Minister for his answer. If I understand correctly, a statement will be made today on the renewable heat incentive. Does he agree that Wales is well placed, both as a producer of biomass and as a user of renewable heat, to produce renewable heat? Will the Minister work closely with the National Assembly on the issue? 

Charles Hendry:  My hon. Friend is absolutely right to say that we expect a statement later today on the development of the renewable heat incentive. It will be the first of its kind in the world, so it is a significant step forward. There is no doubt in our minds about the potential for Wales to play a very significant part in the process. We are thinking both of the growth in development of the materials themselves and of the potential for deployment. We look forward to working closely with the Welsh Assembly Government to ensure that those opportunities are optimised. 

Mr Wayne David (Caerphilly) (Lab):  Will the Minister explain how the interface between the Infrastructure Planning Commission and the Welsh Assembly works in practice? I am thinking in particular of the recent application by Covanta for a major waste-utilising power station on the boundary of the Caerphilly and Merthyr Tydfil council areas. 

Charles Hendry:  There will be no distinction between how the IPC changes will affect Wales and how they will affect England. Ultimately, bringing the decisions back to Ministers, rather than having them be taken by an unelected quango, will ensure that they are taken with a full understanding and with much greater parliamentary scrutiny than might otherwise be the case. We have put in place measures to ensure that during the transition phase, there are no delays. The discussions that we have had with a wide range of potential developers have reassured us that they are now satisfied that that is the case. 

Mr David Hanson (Delyn) (Lab):  What discussions has the Minister had with the Welsh Assembly regarding the review of feed-in tariffs that he announced on 7 February? He will know that in my constituency and that of my hon. Friend the Member for Wrexham there are manufacturing plants that have put investment in, based on the proposals before 7 February. Those plants are now saying to my hon. Friend and me that those investments are at risk and that the market is uncertain. Will the Minister take this opportunity to clarify the position? 

Charles Hendry:  I shall be very pleased to clarify the position. I am grateful to the right hon. Gentleman for raising the issue. We examined the figures and discovered that the assessment made by the previous Administration was absolutely wrong. It had assumed that by 2013 not a single facility of more than 50 kW using feed-in tariffs would have been developed anywhere in the UK. It is now clear that many megawatts are coming through;

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they are already coming through the planning system. We have therefore decided to ensure that the scheme cannot have all its funding taken up by large-scale solar farms, which was not the original intention and, indeed, was not a concept that the previous Government could have anticipated, because the concept did not really exist at that time. We have decided urgently to review the large-scale element to ensure that the programme continues to go forward, that we can prioritise the schemes at household and community levels and that we therefore deliver what the right hon. Gentleman and we wanted to see from the scheme. 

Infrastructure Planning Commission 

5. Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC):  What discussions he has had on the effects in Wales of the discontinuance of the Infrastructure Planning Commission. [42524] 

The Minister of State, Department of Energy and Climate Change (Charles Hendry):  The impact of the abolition of the Infrastructure Planning Commission for Wales is minimal and no different from the impact for England. The pre-application and examination procedures will remain the same and will be handled by the major infrastructure planning unit—the IPC’s successor. However, final decisions will be taken by Ministers. UK Ministers will continue to be responsible for major energy infrastructure decisions in England and Wales. We believe that a streamlined planning system, which minimises delays and ensures investor confidence, is best delivered through a unified planning system for major infrastructure for England and Wales together. 

Mr Llwyd:  I thank the Minister for his response. I served on the Committee that considered the Infrastructure Planning Commission and I opposed it from the first, because I thought that it was a vehicle to steamroller bad neighbour applications through, against public opinion. Will the Minister assure this Committee that the public will have a voice in the new procedure? Also, given the historic vote in the referendum in Wales on Thursday, is it not time to review the veto of applications for more than 50 MW in Wales? 

Charles Hendry:  I am grateful to the right hon. Gentleman. We have considered the issue and decided that it is right that such matters should be decided on a UK-basis, with UK Ministers making decisions about that level as far as Wales is concerned. I assure him that the process is designed to ensure that local opinion will be heard, but at the end of the day, there are significantly important infrastructure projects for which a national decision is required because of the scale of the project. We support the concept of a different planning system for developments of over 50 MW, but we also believe that it is right that those decisions should continue to be made by UK Ministers with regard to Wales. 

Renewable Energy 

6. Ian Lucas (Wrexham) (Lab):  What steps he is taking to promote development of renewable energy projects in Wales. [42525] 

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The Minister of State, Department of Energy and Climate Change (Charles Hendry):  We are committed to creating the right conditions for companies to invest in renewable energy projects throughout the United Kingdom, including the provision of appropriate incentives and the removal of financial barriers. We are also working to reduce or eliminate non-financial barriers, such as planning and grid connection issues. In particular, the ambition shown by Wales in harnessing its great wealth of renewable resource onshore and offshore is highly valuable. 

Ian Lucas:  What the Minister said about the 50 kW limit and the review of the feed-in tariff was entirely wrong. If he talked to the industry and people such as Andrew Lee from Sharp’s in my constituency, which on the basis of Labour’s feed-in tariff has created 300 additional jobs in Wrexham this year, he would know that, far from solar farms beings a problem, the Tory non-growth, anti-growth policy is stopping the development of small neighbourhood projects and putting doubt into an industry that is growing and creating jobs. I thought that that was what the Government wanted. 

Charles Hendry:  I am sorry that the hon. Gentleman takes the matter in that vein. The issue is that we must confront massive growth of large-scale solar applications, which the previous Administration had simply not anticipated. We understand why: they were not even on the horizon at that time. More importantly, the previous Government did not put in a threshold between 50 kW and 5 MW. If that had been put in place at the time under the original legislation, it would have been possible to do this differently, but the previous Government did not do so, so we must review the matter. His constituents and those of many other hon. Members would wish to take advantage of the available funding for their own homes in their own communities. We want to preserve that for people to be able to take advantage of it. The funding would otherwise be swallowed up by large-scale facilities, which was never the original intention. 

Nia Griffith (Llanelli) (Lab):  Given that the Minister wrongly believes that 50 kW would supply 1,500 homes and not 15 homes—5 MW is needed for 1,500 homes—will he now reinstate the original feed-in tariff conditions so that excellent projects such as those in my constituency, which are using brownfield, inaccessible pit-top sites in former mining communities to produce energy for perhaps 800 houses, which is exactly the number of people in the village, can go ahead and not sit in jeopardy of being cancelled, with the likelihood that the whole project will fall? Not only will jobs be lost in the local solar panel factory, but the use of the infrastructure grid that is already on those sites will not be put to maximum use. 

Charles Hendry:  I hope that the hon. Lady will also make representations to her colleagues who were Ministers when the miscalculation was made. If they had introduced intermediate thresholds, it would have been possible initially and from the absolute outset to protect community schemes. Of course, we want community schemes to go forward, but this is a direct result of the miscalculation that occurred in the original estimation, which assumed that there would be no single application anywhere in the country before 2013 for over 50 kW. That was

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fundamentally flawed. We must address the matter to ensure that the scheme can go forward in the way that many people want. 

Several hon. Members  rose  

The Chair:  Order. Before we move to the next question, will hon. Members keep their supplementaries shorter? Otherwise, we will not make progress. Thank you very much. 

Marine Energy 

8. Paul Flynn (Newport West) (Lab):  What plans he has to develop marine energy in Welsh waters. [42527] 

The Minister of State, Department of Energy and Climate Change (Charles Hendry):  The Department assessed the potential development of marine energy projects in Wales as part of the development of the second offshore energy strategic environmental assessment scoping report. The SEA environmental report has just been published and is now open for consultation. It should pave the way for a future leasing round for marine energy in Welsh waters. 

Paul Flynn:  Wales has marine energy as its North sea oil. There are very few countries in the world that have the length of coast that we have with pulses of energy coming throughout the 24-hour cycle. We have hills that can be used for pump storage for storing that energy. There are sumptuous opportunities. When will we see an energy project in the marine area delivered in Wales? 

Charles Hendry:  I agree strongly with the hon. Gentleman about the potential for a whole range of different types of renewable projects. We are also keen to open up some of the stranded areas in the Irish sea where projects cannot currently be developed to see how they can be brought into a wider strategy with a view to considering the opportunities across the British isles more generally. 

By bringing forward the ROC regime by a year, we will give greater long-term clarity to investors. By looking at the way in which the feed-in tariff system can work, we can consider smaller schemes as well as the wider market reform package to ensure that we put in place the incentives to encourage investment across the whole sector of low-carbon technologies. We are keen to see greater progress in this area, and have acted quickly to take that forward. 

Energy Efficiency 

9. Huw Irranca-Davies (Ogmore) (Lab):  What discussions he has had with the First Minister on improving the energy efficiency of the least energy-efficient homes in Wales. [42529] 

The Minister of State, Department of Energy and Climate Change (Charles Hendry):  The Secretary of State has had discussions with the First Minister on all aspects of energy policy, including through several exchanges of correspondence. The coalition recognises the importance of helping those who live in the least efficient homes to take up energy-saving measures. That

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is why we are developing our next generation of energy efficiency policies, including the green deal and the energy company obligation, so that they are accessible to all Great Britain households. 

Huw Irranca-Davies:  The Minister will know that there is some fear among those who install insulation products that, after this rush to make good on the carbon emissions reduction target funding—there are also companies that are putting in free insulation at the moment, which is great for consumers—there will be a precipice and nothing is there to take the place of the funding as we wait for the fulminations of the green deal. Has he considered how we can keep people in those green jobs with insulation so that they do not fall off the cliff at the end of the CERT funding? 

Charles Hendry:  The reason why we have put in place the energy company obligation is that we wanted to provide energy companies with the incentive to carry forward that work. We recognise that there are a number of people who already have significant skills in this area. We have announced this week a greater apprenticeship scheme—1,000 new apprentices—to prepare people for the development and deployment of the green deal measures. We see this as one of the most important growth areas in the energy sector. We are very alive to those issues and, through the changes that we are making, we can respond to them appropriately. 

Chris Evans (Islwyn) (Lab/Co-op):  Does the Minister agree that the green deal must hit the hardest to reach homes, especially the solid stone terraces in the valley in constituencies such as mine? Will he be setting clear targets to reach those homes and recognise that that will be a vital mark of success of the scheme? 

Charles Hendry:  The hon. Gentleman raises an important point, which he also raised very effectively in a recent Westminster Hall debate. As the green deal comes through—the legislation has just completed its passage in the other place—there will be a great deal of opportunity to discuss exactly how it should be prioritised. We absolutely share a commitment that the hardest to reach homes and the people who are at the greatest risk of suffering from fuel poverty should be prioritised and targeted to ensure that they are early gainers from this new development. 

Renewable Energy 

10. Mrs Siân C. James (Swansea East) (Lab):  What consideration he has given to alternative methods of energy production including wave and tidal power in Wales for the purposes of tackling increasing energy costs and demand. [42530] 

The Minister of State, Department of Energy and Climate Change (Charles Hendry):  The Government are committed to reducing our dependency on fossil fuels, reducing carbon emissions and improving our energy security. The Government’s marine energy programme works to address barriers facing the wave and tidal sector and is looking to establish marine energy parks to attract further investment in that sector. The Government’s electricity market reform package will

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support cost-effective investment in all low-carbon technologies. Although the reform package may have a small impact on electricity bills in the near term, bills are expected to fall by 2030 as more low-carbon investment is delivered. 

Mrs James:  I thank the Minister for his answer. The Welsh Affairs Committee made several visits and considered the matter very carefully. We saw projects in places such as Lynmouth, where there have been some very successful trials. However, alarmingly, we heard about companies that were having to pull out of Britain because they felt that other countries in Europe gave them greater opportunity and bigger grants. What does the Minister think about the Stranraer loch project and of the Lynmouth trials? Could he give me an update? 

Charles Hendry:  We are very much aware of the concern that the hon. Lady has rightly expressed. If we want companies to invest in Britain, they must feel that the right support mechanism is in place in order for that to happen. The previous marine renewables deployment fund was never accessed because the bar was set too high for it. Therefore, we are looking at how to use those resources in a more proactive way to encourage development. That is why we have the marine energy programme. We have put a board in place to look at where the potential barriers are, and we are looking at marine energy hubs and parks, so that we can bring together that expertise and excellence from around the world. We are determined that those technologies should be developed here, rather than companies feeling that they have to move overseas to get more support. 

Tidal Power 

11. Jessica Morden (Newport East) (Lab):  What plans he has for tidal power in the Severn estuary; and if he will make a statement. [42532] 

The Minister of State, Department of Energy and Climate Change (Charles Hendry):  The conclusion of the Severn tidal power feasibility study was that the Government do not see a strategic case for public investment in a Severn tidal power scheme in the immediate term. However, the Government recognise that the factors that will determine the feasibility of Severn tidal power could change over time. The report contains potential triggers for a review, although it is not expected that a review will take place before 2015 at the earliest. 

Jessica Morden:  I appreciate the Minister’s earlier responses, but could he be more specific about where we go from here, so that we are not wasting more time while we wait to harness tidal power? 

Charles Hendry:  The fundamental decision we took was that the £34 billion scheme was simply unaffordable in the current climate. Therefore, we wanted to try to focus attention on the range of other ideas that are coming forward. We are already having discussions with potential developers and investors about a range of other schemes that could take place, either as smaller barrages elsewhere around the United Kingdom or through the development of tidal lagoons. There is a great deal of expertise among British and other companies

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that are looking to invest in the United Kingdom. We are actively talking to them and developing such an approach through our marine energy programme, so that we can ensure that there is some progress in that area. 

Geraint Davies (Swansea West) (Lab/Co-op):  In the Minister’s deliberations, did he consider not only the 5% contribution of energy, but the fact that a Severn barrage would constitute a massive flood defence and would enable economic redevelopment upstream? That would certainly add value both to Wales and England and therefore change the calculus in terms of economic value and growth. Will he look again at that? 

Charles Hendry:  The scheme that was set up by the previous Administration looked at a very wide range of different issues, for example, the economic benefit and losses and the full range of environmental impacts. It particularly focused on the electricity generation aspect, rather than the flood defence mechanism potential. However, it was a very wide-ranging report and the conclusion we have to reach was that £34 billion made it an unaffordable scheme this time. If there needs to be public subsidy to make this happen and we have the funding available, we ought to make sure that that is not siphoned away from other renewable projects for a project that would be very long scale in its development and would have real challenges. 

Geraint Davies:  Will the Minister look again at that? 

Charles Hendry:  The hon. Gentleman asks me to look at the project again. We have said that we have not written it off for all time, but we do not anticipate coming back to it before 2015. 

Training and Skills (Energy Sector) 

12. Nick Smith (Blaenau Gwent) (Lab):  What recent discussions he has had with the Welsh Assembly Government on the provision of training and skills development programmes in the energy sector in Wales; and if he will make a statement. [42533] 

The Minister of State, Department of Energy and Climate Change (Charles Hendry):  The Secretary of State has regular discussions with the First Minister on all aspects of energy policy. The coalition Government recognise that it is crucial we have a skilled work force to enable energy security and a successful low-carbon transition. We also realise the growth opportunities that the sector presents. I am aware that the energy sector faces specific challenges, in terms of both an ageing work force and the increase in the skills base required to deliver low-carbon generation and networks. The UK Government are working with industry and the skills sector to address those challenges. 

Nick Smith:  I thank the Minister for his answer. Can he guarantee that excellent initiatives such as the British Gas Academy in Tredegar in my constituency will be part of the green deal? I visited the academy with my hon. Friend the Member for Bridgend just a few weeks ago. 

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Huw Irranca-Davies (Ogmore) (Lab):  Ogmore. 

Nick Smith:  Sorry, I mean my hon. Friend the Member for Ogmore. I hope my hon. Friend will excuse me. It is a fantastic initiative and a great place, which must be continued and tied in with the green deal. 

Charles Hendry:  I agree with the hon. Gentleman—even if he is confused about who his colleagues are. The facility in Tredegar is extremely exciting. It has the opportunity for training something like 1,000 to 1,300 people, and would be an important part of that. British Gas has been a key partner in developing the concept of the green deal, to ensure that we understand its opportunities and so that it understands how it can most effectively co-operate with the wider programme. 

Onshore Wind Energy Projects 

13. Simon Hart (Carmarthen West and South Pembrokeshire) (Con):  What steps he plans to take to support communities affected by the development of onshore wind energy projects in Wales. [42535] 

The Minister of State, Department of Energy and Climate Change (Charles Hendry):  I believe it is right for communities hosting renewable energy projects to be rewarded for the contribution they make to the wider society. Many wind farm operators already provide generous benefit packages to local communities. In addition, planning applications for projects over 50 MW in England and Wales must provide a statement of community engagement. In England, we propose to include a requirement for the development of large-scale schemes below that threshold to consult the local community prior to submitting a planning application. 

Simon Hart:  The Minister mentioned significant financial benefit for those communities affected by wind farm applications in Wales. Will he shed light on what that means, and whether it involves communities within sight or sound of a wind farm, or just those within the general area? 

Charles Hendry:  My hon. Friend raises an important point. Sometimes, the communities closest to the facility will not necessarily be those most affected by it, and my colleagues in the Department for Communities and Local Government are working to look at exactly how the scheme should be structured. In England, we have given an assurance to ensure that the business rates are kept locally rather than siphoned off to the Treasury in the early years of a new development, and that may be an issue that could be looked at for Wales as well. It means that communities that host a facility on behalf of the wider national need get recognition for what they do. 

The Chair:  That has exhausted the time for questions this morning. I thank the Minister and members of the Committee for their co-operation. Some questions were not raised, but I am sure that the Minister will write quality answers to them. We now move to the formal business and the UK Government’s energy policy as it relates to Wales. 

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UK Government’s Energy Policy 

9.31 am 

The Secretary of State for Wales (Mrs Cheryl Gillan):  I beg to move, 

That the Committee has considered the matter of the UK Government’s energy policy as it relates to Wales. 

I begin by welcoming you to the Chair, Mr Havard. It is the first time that you have chaired the Welsh Grand Committee and it is a pleasure to serve under your chairmanship. I thank my hon. Friend Minister for taking the time to answer questions from the Committee so fully. It was his first visit to the Welsh Grand Committee, and I hope it will not be his last. It is the first time that an Energy Minister has attended this Committee since 2008, when the then Secretary of State, the right hon. Member for Torfaen, invited the right hon. Member for Croydon North (Malcolm Wicks) to attend. I hope that members of the Committee think this is a useful exercise. It gives us the opportunity to hear at first hand the Minister directly responsible for these policy areas, and means that all Members of Parliament for Wales have the opportunity to make their points and put questions to the Minister. I am pleased to say that we have already spoken to the Chief Secretary to the Treasury. I understand that he intends to offer his time to the Committee post-Budget, so that members of the Committee will have the chance to put to him at first hand all the points that are so important to Wales. 

I will keep my remarks brief to allow maximum time for others to participate. The energy sector is important to Wales, both in the contribution that it can make to the carbon reduction agenda and in terms of the much needed economic benefits that will come by putting Wales at the heart of the new green economy. Wales is an energy rich country, and for generations we have been at the forefront of energy supply in the UK. That is natural, given the natural resources at hand, and the hard work and efforts of Welsh people. We now have the potential to build on that expertise by exploiting energy potential and ensuring that Wales is at the forefront of the transition to a low-carbon economy. Welsh coal was at the heart of powering the industrial revolution, and I want to see Welsh resources and expertise powering the coming green revolution. I believe we will achieve that through the development of wind and marine energy, solar and nuclear power and clean coal, which will make a significant contribution to the energy security of our nation. 

Mr David Hanson (Delyn) (Lab):  I am grateful that the right hon. Lady wants to see jobs created in the energy sector, but I have a letter from a company in my constituency, which has been copied to the Minister responsible for energy. It states that the change in the feed-in tariff regime that we discussed earlier, 

“is putting at risk job creation in Wales.” 

Will the right hon. Lady comment on that? 

Mrs Gillan:  The right hon. Gentleman has had the opportunity to put that matter directly to the Minister and his constituent company. I hope he will copy me in on that letter, because I have not had the advantage of seeing it. He knows that there is a comprehensive review

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of the feed-in tariffs, and that has followed the evidence that the Energy Minister discussed earlier on with the Committee that large-scale solar farms could soak up the money that was intended for smaller contributors. So I hope that the Minister will now respond to the right hon. Gentleman, and that the right hon. Gentleman will copy me in on that letter from his constituent company. 

The challenge faced right now in the UK is certainly to de-carbonise, and now is the right time to address that. We need to change our energy infrastructure. The current market has worked well, delivering adequate capacity margins, but continued investment in energy plants would maintain our medium-term energy security. 

Mark Tami (Alyn and Deeside) (Lab):  What we are seeing from the Government is a lot of talk and not very much action. Does the Secretary of State agree with me that it would help—particularly in respect of nuclear power—if we had a Secretary of State for Energy and Climate Change who actually supported the Government’s policy? Would not her honourable colleague, the Minister with responsibility for energy, make a far better Secretary of State than the current one? 

Mrs Gillan:  I am not going to be drawn down that path; I think that is a gratuitous political point, but I am grateful for the suggestion. I always work closely with my Friend the Minister of State, who has been so good as to come here this morning. His talents are not wasted on me, but we have some excellent members of the Cabinet who do the job extremely well. 

Jonathan Evans (Cardiff North) (Con):  I take the opportunity of putting a serious point to her, in which people in Wales might be interested. At the present time, there is a review in relation to the structure of the electricity market, and yet very many people in Wales—including a number of smaller companies seeking to supply energy to the network—have rightly pointed out that there is a real concern about the structure of the market in the United Kingdom, particularly in respect of the monopoly of transmission companies. They exercise that monopoly in ways that result in half of them being investigated by Ofgem. Will that be part of the electricity review? 

Mrs Gillan:  I am grateful to my hon. Friend for raising a serious point, which is part of the review that is being conducted by Ofgem. I know that it is being taken very seriously because it is a matter of great concern and I have been reassured by my hon. Friend here that it is being looked at. 

Huw Irranca-Davies (Ogmore) (Lab):  Will the right hon. Lady give way? 

Mrs Gillan:  I would like to make some progress now. 

Many power stations are coming to the end of their lives; many are too polluting for modern standards. By 2018, we are going to see 16 power stations with a generating capacity of around 19 GW or some 25% of Britain’s total closing. This presents the UK with a challenge, and Wales with an opportunity to help fill

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the gap that it leaves. Over the next 10 to 15 years, £200 billion needs to be spent on new generation, transmission and distribution so that we can build secure supplies of low-carbon generation. This is a major investment, some of which is going to come to Wales. 

The starting point of energy policy must be energy saving: after all, the cheapest energy is the energy that we do not use at all. That is why the Government are taking steps to help households and businesses control their energy bills and reduce energy consumption through proposals such as the green deal. The potential of the green deal is not just in reducing energy use. There are big opportunities for our businesses—not only in the insulation industry, which in itself could quadruple in size within the UK, but in the supply chains across the country. The green deal proposals have the potential to unlock tens of billions of pounds of private sector funding in the coming years, and that means, as we all know, jobs and investment, which we need so badly in Wales. 

The development and take-up of energy efficiency measures will also offer the training and skills opportunities for Welsh workers that were referred to earlier. We are already benefiting from that. As the hon. Member for Blaenau Gwent mentioned, the British Gas green skills training centre, which is the first in the UK, opened in Tredegar last year, creating 60 jobs. As I understand it, the centre will each year give green training to more than 1,300 people, including local long-term unemployed people. That will help to equip people from the area with the skills to deliver these emerging technologies in the communities where they live. 

The Government are determined to maximise UK growth, as we move to a green economy, by addressing the existing barriers to investment. We will listen to business on that. We are currently consulting on proposals that are designed to strike a balance between the best possible deal for consumers and giving both existing players and new entrants in the energy sector the certainty that they need to invest. 

Geraint Davies (Swansea West) (Lab/Co-op):  May I pick up the point about inward investment and green carbon infrastructure? Will the Minister and her colleagues consider again rail electrification to Swansea? I appreciate that the argument against that was that there are many stops on the way from Cardiff to Swansea, although that seemed to be lost on the Government when they were considering the proposals for electrification up the valleys, with the number of stops there. Will they particularly consider the opportunity for a Swansea parkway, which would be above Swansea, of course, and would run across to Milford Haven and connect up with Ireland, as an idea for improving the carbon infrastructure and inward investment for Wales? 

Mrs Gillan:  The hon. Gentleman knows that it was a red letter day on St David’s day when we announced the rail electrification into south Wales. Swansea will be a beneficiary of that electrification, as will Cardiff, Newport and, indeed, the Welsh economy. He will also know that it was a red letter day in so far as we will be working with the Welsh Assembly Government to look into the electrification of the valleys lines. Of course, there is always the possibility that the business case will be made and the electrification will continue further down. 

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Nick Smith:  It is interesting to hear about the electrification of the valley lines. There was an omission from the statement on electrification of the valley lines. The line from Cardiff up to Ebbw Vale was not discussed. 

Huw Irranca-Davies:  And Maesteg. 

Nick Smith:  And Maesteg. Will the Minister give an assurance that the Cardiff to Ebbw line will also be electrified? 

Mrs Gillan:  I have already received representations about Ebbw Vale, and that is certainly a matter that we are looking into. We are looking into it in conjunction with, quite rightly, the Welsh Assembly Government, who are responsible for that area. I shall now give way again. Just let me check that it is the hon. Member for Ogmore. 

Huw Irranca-Davies:  It is, although I am representing also Maesteg railway station all the way to the Cheltenham line. However, my question is not on rail but on electricity market reform. What meetings or discussions has the Minister had directly with energy-intensive users in Wales, including people such as Tata Steel and others? It is very important that we decarbonise energy and that we have affordable and secure energy for the future. It is equally important that we protect the many thousands of jobs and employers in energy-intensive industries. 

Mrs Gillan:  My right hon. Friend the Secretary of State for Energy and Climate Change has recently had meetings—in the past week, I think—with the organisations to which the hon. Gentleman refers. I have set up a business advisory group, which includes representatives from across industry in Wales. At the group’s first meeting, energy requirements and energy policy were at the forefront of people’s minds. I can therefore reassure the hon. Gentleman that I am examining the issue in my capacity as Secretary of State for Wales. I will continue to do whatever facilitating I can of the dialogue between the Department of Energy and Climate Change, my Department, the Welsh Assembly Government and businesses, because the hon. Gentleman raises a very valid point. We need to consider this issue carefully. It is extremely important to our business community. 

Owen Smith (Pontypridd) (Lab):  Will the Minister give way? 

Mrs Gillan:  I will, but I would like to make some progress because plenty of hon. Members want to speak. 

Owen Smith:  I am grateful to the right hon. Lady for giving way once again. She mentioned a moment ago her business advisory group. Has she asked that group what its view is of the Opposition proposal that fuel prices could be reduced were the Government to cut VAT on fuel, paying for it out of a bank bonus levy? 

Mrs Gillan:  I thank the hon. Gentleman for his question, but I shall not pre-empt anything that my right hon. Friend the Chancellor may do in his Budget.

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The hon. Gentleman knows very well that the Treasury is considering the cost of fuel, and announcements must keep until the Budget. 

With your permission, Mr Havard, I shall make some progress. The renewable industries are a vital piece in the green jigsaw, and our national policy statements contain a firm commitment to generate at least a third of our electricity from renewable energy by 2020. Wales, with its wealth of wind power and its historical strength in the energy sector, is well placed to play a full part in meeting that challenge. 

Mr Mark Williams (Ceredigion) (LD):  The right hon. Lady mentioned our strengths. Does she accept that there is huge strength in our higher education sector? She will be aware of a pioneering project being undertaken at the Institute of Biological, Environmental and Rural Sciences in Aberystwyth on biofuels, which presents huge opportunities not only through the value of the research but through its potential for inward investment. 

Mrs Gillan:  I am so glad that I gave way to my hon. Friend, as I visited that project the other day and had discussions with the research team. It is one of the most exciting projects, and we need to encourage that sort of thing. Wales has expertise, and we must cherish it and ensure that it grows. Both here and internationally, there is a good opportunity to learn from the technology and inventions taking place in Wales. 

Wales has great natural resources, and they should be at the heart of our renewable energy solutions. We already have offshore sites at North Hoyle and Rhyl Flats, and another will soon be built at Gwynt y Môr, and we will deliver an offshore electricity grid to support the development of new offshore wind power. 

We also have one of the most technologically advanced solar module manufacturing plants in Sharp’s installation at Wrexham, which was referred to earlier. Only a month ago, it announced that it was doubling production, opening a training academy and creating 300 new jobs. That is another example of how crucial private-sector employers are in creating new jobs and investment, and in providing skills for the local work force. 

Some time ago, I visited G24 Innovations in Cardiff. In its main manufacturing plant, it is dedicating about 190,000 square feet to producing dye-sensitised solar cells. It is based on pioneering research; indeed, it won the Millennium prize last year. Yet again we see Wales leading the way in cutting-edge energy production. Those are two examples of many, and they all point to a strong energy presence in Wales. We are continuously building on that presence with potential developments such as Anglesey’s energy island and the Atlantic array in the Bristol channel. 

I recognise the economic importance of the existing nuclear power station in Wales, and I welcome the news that its operational life has been extended, allowing it to continue generating energy until the end of 2012. I am delighted that Wylfa is on the draft list for potential sites for new nuclear, which could be deployed by 2025. As well as the benefit of carbon reduction, the economic benefits are also huge. A new power station could bring

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significant investment to the area, creating opportunities for companies involved in the construction, operation and decommissioning of nuclear power stations. It could also create up to 5,000 jobs in construction and, I believe, up to 1,000 permanent jobs. All of that is much-needed good news for Anglesey, helping to secure its long-term economic stability—and it is good news for Wales. 

Guto Bebb (Aberconwy) (Con):  Does the Secretary of State agree that the economic benefits of the development of a second nuclear power station in Anglesey would be positive not only for the island but for the rest of north-west Wales? With the A55, people from my constituency of Aberconwy will be able to enjoy the benefits that a second power station will bring to the economy of the region. 

Mrs Gillan:  My hon. Friend is right. I have been working on the timing of new nuclear build in Anglesey. One of the great things that we have in Wales is the great decommissioning knowledge to be found in the pool of skills and labour that we are using at Trawsfynydd. I am keen to ensure that we do not lose those skills in that technology—it is a case of mind the gap—so, with my hon. Friend the Minister of State, I am saying that we need to pay attention to the time scales here. The extension of life of Wylfa assists, but the work at Trawsfynydd will be coming to an end, and we want to ensure that we retain and build on those skills in Wales. These are good, stable and sustainable jobs for the future for people in Wales. 

Although climate change means that we must focus on renewable and nuclear energy, we must not forget Wales’s proud tradition as the energy powerhouse of the UK, which is built on its strengths in coal and steel production. Coal will remain an important contributor to the UK total energy needs for decades to come, but we cannot shy away from the challenge of managing carbon emissions, and we cannot underestimate the problems. Demonstration of carbon capture and storage is achievable but definitely difficult. The work that Tata is doing and the CCS pilot being built by RWE at Aberthaw shows that coal still has a future in Wales, even if we must work hard and be innovative to ensure that it fits with our responsibilities to the environment. 

We also recognise that transition to a low-carbon economy will come at a cost, which is why we are bringing in measures to support consumers, address fuel poverty and help households to become more energy efficient. Current predictions suggest that energy prices will continue to go up. That is the unavoidable reality facing not just the UK but economies across the world. The central question is how we can ensure that these increases are kept as low as possible for consumers while also giving us the secure and sustainable power supply on which our way of life depends. 

The Government proposals for electricity market reforms will ensure that the necessary investment in renewables—nuclear, clean coal and gas-fired power stations—is as cost-effective as possible. We are taking steps to help people control their energy bills, through proposals such as the green deal, to which my hon. Friend the Minister of State referred earlier on, and to reduce energy consumption. Through the energy rebate scheme, we are helping some of the most vulnerable people in society to pay their fuel bills. 

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Cold weather payments provide vital reassurance to the most vulnerable households across Wales so that they can afford to turn up the heating during cold weather. On top of that, around 700,000 older people in Wales benefited from winter fuel payments last winter. 

High fuel prices are placing a huge burden on families across Wales, but world oil prices and Labour’s fuel duty rises have also had a big impact. Everyone knows that the new Government faced a situation in which the country had run out of money and difficult decisions have had to be made. As a Government, we are examining options, including a fair fuel stabiliser, and those decisions will be taken in the Budget. 

In conclusion, Mr Havard, a low-carbon industrial revolution is necessary to ensure future prosperity. UK expertise and an innovative low-carbon business environment can lead the way in refocusing our economy to capture the global opportunities presented by the move to a low-carbon economy. The UK Government have shown that they are ready to lead that revolution, and I want to ensure that Wales is at the heart of it. We need all of us in Westminster and Cardiff bay to work together for the future viability and success of a diverse Welsh energy industry and to push forward, in readiness for the substantial opportunities that are coming our way. 

The Chair:  Before we go any further, let me say that we need to co-operate and collaborate with one another if everyone is to achieve their ambition of making the points that they wish to make. You all know that, and you have all played this game before, so can I have a little co-operation from both the Front Benches and the rest of the Members of the Committee so that we can all make progress? I should like to call a number of people to make their main contributions before we finish at 10.25, so some co-operation will be welcome. 

9.54 am 

Mr Peter Hain (Neath) (Lab):  Mr Havard, I welcome you to the Chair. I am delighted that the Secretary of State has recognised your excellent work on the University of the Valleys by awarding you the new title of “Mr Harvard”. I remind the Committee that, historically, the red flag first flew over Merthyr and that it is now flying, personified by you in the Chair, over this Welsh Grand Committee, and very welcome that is. 

I congratulate the Secretary of State on one energy efficient policy: the Government’s announcement last week that they will endorse the Labour Government’s decision to proceed with electrifying the south-western line to Wales. However, could she tutor the Prime Minister that Wales is not on the west coast line, as he told Parliament last Wednesday?

The electrification of rail is crucial to energy efficiency. Electric trains can carry more passengers, they are up to 20% cheaper to purchase and 35% cheaper to operate than diesel trains, and they travel 40% further before failure. Electric trains also emit more than 25% less carbon per passenger and can use regenerative braking. Bi-modal trains—electric trains with a diesel engine option—will be greener than pure diesel, but obviously not as green as pure electric. The diesel engine takes up space, so there is no passenger capacity gain. Such engines are also heavy, so acceleration or deceleration

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are not as optimal. Will the Government therefore look again—I ask the Secretary of State to do so—at having pure electric all the way to Swansea? 

Regardless of that issue, the Secretary of State has an absolute duty to ensure that electrification goes all the way to Swansea, as I ensured would be the case when I was Secretary of State. 

Glyn Davies (Montgomeryshire) (Con):  What about money? 

Mr Hain:  I will come to money shortly. Surely cost cannot be the issue. London to Swansea would cost £1.1 billion, with the marginal cost of Swansea being just £140 million. Surely, having committed nearly £1 billion, the Government will not persist in denying those towns beyond Cardiff, including Bridgend, Port Talbot and Neath, the electrification that they need. 

Geraint Davies:  My right hon. Friend will know that the cost of upgrading Tottenham Court Road tube station alone is £1 billion. Surely a case should be made by the Secretary of State and others for the marginal extra £150 million to electrify to Swansea and bring massive inward investment to the second city of Wales and to west Wales generally? 

Mr Hain:  I agree entirely with my hon. Friend because to deny south-west Wales the enormous economic opportunity provided by electrification is both inexplicable cost-wise and unacceptable energy-wise. Is the Secretary of State saying that, having admirably committed £1 billion to electrify to south Wales, the Government do not think Swansea is worth a tenth of that? 

The Railway Safety and Standards Board showed that, taking into account all economic benefits, the benefit-to-cost ratio for electrification all the way to Swansea would be 2:2, compared with a benefit-to-cost ratio on the same basis for Crossrail, which the Government are supporting, of 1:9. The Treasury rule of thumb is that a BCR of 2 is needed for a project to have a good business case, and Swansea clearly meets that criterion. 

Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC):  In supporting what the right hon. Gentleman says, I remind the Committee that more than £16 billion is being spent on Crossrail, which has a lower cost-benefit analysis figure. 

Mr Hain:  Indeed. The right hon. Gentleman is absolutely right. 

For the good of Wales, the Government must not proceed with next month’s increase in fuel duty, which, because of the consequential, could add 5p to a litre. The previous Labour Government often postponed planned duty increases when world oil prices were rising, as they are now. I urge the Secretary of State to do the same. 

Mrs Gillan:  I did not realise the right hon. Gentleman was moving so swiftly off electrification and on to another subject. To take him back, will he remind the Committee how many centimetres of railway line in Wales he electrified when he was Secretary of State? What assessment has he made of the line speed restrictions

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between Cardiff and Swansea? Also, is it now Labour policy to be for electric-only trains and to say that bi-modal trains are not the way forward, in which case, if there were a breakdown in the Severn tunnel, will he explain how the trains will get into Wales? 

Mr Hain:  The Secretary of State ought to know because the studies have shown—I have spoken to the previous Transport Minister about the Severn tunnel and he looked into it—that the problem is easily soluble. That is not a serious objection to electrifying all the way to Swansea. Perhaps by talking to the previous Transport Minister, Lord Adonis, the right hon. Lady should get the business case that he had before him, which included electrification all the way to Swansea. 

Mrs Siân C. James (Swansea East) (Lab):  As for speed restrictions, the last major upgrade on the line was in 1965 when coloured signals were introduced. That was a long time ago, so an upgrade from Cardiff to Swansea is long overdue. Many line speed restrictions need to be looked at and need modernisation. We travel on the Vale of Glamorgan line at practically walking speed and the whole journey takes an hour for historic reasons. We need to look at the line speeds. 

The Chair:  Order. I appreciate that the electrification of rail is important to Wales, and it has a relationship to energy. However, we are debating energy policy, so perhaps we can restrict ourselves to the business on the Order Paper. 

Mr Hain:  Thank you, Mr Havard, for that correction. I was about to mention fuel duty increases, but I want first to correct one point made by the Secretary of State about rail. We inherited a rail infrastructure that was falling apart. Those of us who use the lines to Paddington will know that, during the 1990s and well into the years of our Government because of the inheritance, the trains were always late. They were terrible. We massively invested in rail infrastructure, doubled the passenger numbers and increased the number of trains so I am not taking any lectures from her on investment in rail. We have a proud record on that. 

The right hon. Lady should listen to Labour’s campaign and act now to help millions of families by reversing the Tory VAT rise of 20% on petrol. It has added nearly 3p to the price of a litre or £1.35 to the cost of filling up a 50-litre tank. Petrol and diesel prices are crippling motorists in Wales, especially those on low and middle incomes. 

Huw Irranca-Davies:  Petrol pricing is an integral part of our energy security, but would my right hon. Friend care to speculate on why the Chief Secretary to the Treasury is locked in discussions with his Treasury colleagues and the EU on special dispensation for parts of the highlands and islands in tackling rural petrol poverty and why he is not engaged in the same discussions for somewhere else in the UK such as rural Wales? 

Mr Hain:  My hon. Friend, who is an expert in such matters, given his shadow ministerial role, has raised an important issue, on which the Secretary of State and the Energy Minister might like reflect. 

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Now is the wrong time to be making things even worse for hard-pressed families in Wales by hiking up VAT on fuel. The Chancellor should admit that he got it wrong and reverse the VAT rise on petrol now. In communities with limited public transport infrastructure, such as my constituency, many people have no choice but to drive, especially now that they can no longer take a local job for granted. 

Roger Williams (Brecon and Radnorshire) (LD):  The right hon. Gentleman’s point about VAT on petrol is one that we all recognise. However, I remember that, when the matter went through the House of Commons, the Opposition did not table an amendment to limit the increase in VAT to exclude petrol. 

Mr Hain:  The hon. Gentleman misses one fundamental fact that has emerged in the meantime: oil prices have gone through the roof and are continuing to do so. The dramatic rise in fuel prices is punitive and completely indiscriminate, hitting the poorest hardest. Fuel is an essential resource in day-to-day living, both for transport and domestic use, and the dramatic rise in fuel prices to about £1.40 a litre for petrol and £1.45 for diesel is unacceptable. 

There could be much worse to come. In a speech on the oil crisis, the Secretary of State for Energy and Climate Change speculated last week that oil prices could rise from just over $100 a barrel to $160 a barrel later this year. Another Minister suggested that soaring oil prices could raise the cost of petrol to £4 a litre, or £120 to fill a tank, as The Independent on Sunday reported a few days ago. With wages being frozen or cut, unemployment rising, and inflation running at 5%, people are becoming desperate about the price of petrol and diesel. The Secretary of State and the Government must recognise that, and recognise it soon. 

Jonathan Edwards (Carmarthen East and Dinefwr) (PC):  The right hon. Gentleman may recall that a few weeks ago my party and the Scottish National party had a debate about the fuel escalator. Will he explain why his party abstained on the motion? 

Mr Hain:  Because we do not take nationalist motions seriously. 

Jonathan Edwards:  Will the right hon. Gentleman give way? 

Mr Hain:  No, I must make some progress. I have been generous in giving way. 

The fuel price crisis reinforces the urgency of moving decisively to a low-carbon strategy, which this Government, rhetoric and spin aside, show little sign of doing. Policies to tackle climate change are no longer just about the long-term threat to our planet. They are now about daily bread-and-butter matters of living standards, which is why I again appeal to the Secretary of State to reverse the Government's short-sighted and reactionary rejection of the Severn barrage. It is the single most important low-carbon, renewable energy project in Britain. If the Government do not reverse their decision, no one will believe that they are serious about tackling climate change. 

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Mrs Gillan:  Will the right hon. Gentleman give way? 

Mr Hain:  Let me make a little progress. The Cardiff-Weston barrage would generate 8,640 MW, equivalent to three or four medium gas-fired power stations, and contribute fully 5% of Britain's entire electricity requirements. It would be the world’s largest green energy project, and would harness the enormous tidal power of the Severn estuary, which has the second highest tidal range in the world. 

Tidal energy generation has a considerable advantage over other renewable energy technologies, because tides are predictable and constant. Wind and solar are intermittent, but tidal power is continuous. If the Government are willing to turn down an opportunity as good as Severn tidal power, their entire green energy strategy has no credibility. 

Mrs Gillan:  The right hon. Gentleman has always been consistent in his support of the Severn barrage project. He will correct me if I am wrong, but the former First Minister likened it to the environmentally catastrophic Three Gorges dam in China, so he has a bit of work to do in his own party to convince it about the project. 

At the conclusion of the study, the Government saw that there was not a strategic case for public investment in the tidal scheme, which could cost up to £34 billion in the immediate term, but we recognised that the factors that determine feasibility of Severn tidal power could change, and the report contains potential triggers for a review. That is not expected before 2015, but it does not preclude a privately financed scheme coming forward in the meantime. We must make that clear. The right hon. Gentleman always refers to us as having cancelled the Severn barrage scheme, but that is not accurate. 

Mr Hain:  If a private investor comes forward, it will be interesting to see what the Secretary of State does. There are private investors who are willing to come forward, and I will return to that, and to the cost issue. The way the Government made their announcement last year completely traduced reality. Leaving the decision to 2015 effectively loses another four to five years of progress. 

Cardiff-Weston would deliver an enormous 9 TWh a year, more than three times the proposed Shoots barrage, which would deliver just 2.75 TWh a year. Lagoons and reefs are not a credible alternative. There would also be significant economic benefits. The construction and maintenance of the barrage would provide employment for thousands of skilled workers who would use materials and resources from local producers and suppliers. At the peak of construction, the barrage would create 35,000 jobs throughout the UK, with about half in south Wales, and the deep-water facilities at Port Talbot docks are ideal for constructing the barrage. Well over 10,000 permanent jobs would be created around the estuary. 

The Welsh economy could be further boosted through the opportunity provided by Cardiff-Weston to establish new road and rail links across the barrage, bringing reduced travel times and costs between the south-west and south Wales, and opening up much needed investment opportunities. For instance, Cardiff airport, which has some of the best landing conditions in the UK, could attract extra passengers and flights. 

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The Welsh tourism industry would also be boosted. The impressive architecture of La Rance barrage in France and of the Thames barrier has made them tourist attractions in their own right. There would be huge opportunities for new leisure activities such as water sports, fishing and bird watching on both sides of the Severn estuary. The Cardiff-Weston barrage would also act as a storm surge barrier, protecting people’s homes and assets that are under threat from rising sea levels and increasingly volatile weather—that point was made by my hon. Friend the Member for Swansea West. That would enable inhabitants to remain living in low-lying coastal settlements on the Gwent and Somerset levels. Some 4 million people live in those low-lying communities. They and their properties would be significantly safer with that reduced flood risk. 

There would also be incalculable, yet invaluable, benefits to local wildlife with the Cardiff-Weston option offering protection for the Severn’s fragile ecosystems. One of the greatest threats to this delicate environment is the climate change that the barrage would help to fight. Every year that passes without a commitment to construct the barrage is a year lost in the battle against climate change. Research suggests that the barrage would also reinvigorate the environment and protect declining species such as the dunlin, an iconic bird in the Severn that has experienced a catastrophic fall in numbers over recent years. 

Not only would existing ecosystems be protected, but a study of La Rance barrage suggests that there would be a significant increase in faunal abundance and biodiversity. The barrage would slow down the fearsome Severn tide, introducing more light and oxygen, and therefore improving the water quality and attracting more fish, which would support greater and more diverse birdlife. Investment in the barrage would be investment in the long-term future of the Welsh economy and environment, producing electricity for generations to come, with a life expectancy of 150 years as a tried and tested technology. 

The Parliamentary Under-Secretary of State for Wales (Mr David Jones):  I commend the right hon. Gentleman, because he has consistently supported the Severn barrage. Does he accept, however, that the cost to the public purse would be in the region of £34 billion? If not, what figure would he suggest? In these straitened economic times, how could the country to afford it? 

Mr Hain:  I say politely that the Minister is completely wrong and I am about to come to precisely that point. 

Paul Flynn (Newport West) (Lab):  To put this into context, it is worth remembering that the contract for clearing up the mess left by the nuclear power programme stands at £13 billion, but will eventually be £93 billion. The new nuclear programme is in chaos and a comparison could be made— 

Mrs Gillan:  What? 

Paul Flynn:  I am hoping to speak about this point later. The new nuclear programme in Finland is already three years late and the profit expectation has been cut by 97%. 

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The Chair:  Order. The point of the intervention is clear. 

Mr Hain:  I think I got the gist, Mr Havard. I will come to the cost in a moment, but I want first to point out that La Rance barrage in France, which is similar to the proposed Cardiff-Weston option, has been reliably generating tidal power for more than 35 years and will have a long and profitable life for many decades ahead. 

The Government gave the cost during a time of public spending cuts as a reason for abandoning Cardiff-Weston—this comes to the nub of the cost issues that have been raised—and the Secretary of State and the Minister have repeated that fiction this morning. It is entirely false, and potential developers have made it clear to me that they do not need any public money. 

Mrs Gillan:  Will the right hon. Gentleman give way? 

Mr Hain:  I will finish my point. The right hon. Lady and the Minister raised the point about cost. The potential developers have told me that, if they have the active backing of the Government, especially through the planning process, they are confident of raising the £20 billion to £30 billion necessary to build it from sovereign wealth funds and other investors, who would see it as an absolutely sure-safe investment option. 

Mrs Gillan:  May I offer clarification to the right hon. Gentleman? We are talking at cross-purposes when we could, in fact, be in agreement. First, I am assured that there is nothing to prevent a privately financed scheme from coming forward before 2015. 

Secondly, the company that believes it can deliver a Severn barrage as a commercially viable project without the investment of significant public funds claims to have the backing of middle east investors. The organisation includes the Halcrow group, Ove Arup, various solicitors and KPMG—the right hon. Gentleman knows many of the people involved who are in the public domain. 

There is no reason why the Government will not look at a private project, but I remind the right hon. Gentleman that there is uncertainty about how the scheme would comply with regulation, which would add to the cost and risk of construction. The scale and impact of the scheme would be far greater than those of La Rance and unprecedented in an environmentally friendly design project. There are many bridges to cross and he must not give the impression that the scheme has been cancelled. We will not put public money into the scheme, but there is nothing to prevent a consortium from coming forward before 2015. 

Mr Hain:  I am pleased that I allowed the Secretary of State to intervene—I always am—because she has said something interesting. She appears to be saying that, if a private consortium—I have met a number of them and it sounds as though she has, too—approaches the Government and says, “We can build this with the private funds we have already accumulated,” they will back it, but what I hear from those investors is that they will not be able to get absolute certainty unless they have the Government’s backing in principle. 

Far from backing in principle, all the Government have given us is obfuscation and all sorts of excuses and reasons why we cannot proceed. If the Secretaries of State for Wales and for Energy and Climate Change

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had said last year, “We can’t put any public money into this, but we will give it backing to get through the planning process,” rather than kicking the issue into the long grass and effectively destroying its prospects, I think that investors would have been queuing up to build. The Government did not say that. Is the Welsh Secretary now changing her position, with a nod and a wink from the Energy Minister, and saying that the Government want the Severn barrage to be built and are giving it all the backing they can? 

Mrs Gillan:  The right hon. Gentleman knows that I am not saying that. 

Mr Hain:  There we are. 

Mrs Gillan:  The right hon. Gentleman takes me further down the road: there is nothing to prevent an application from being made or a private company from coming forward. That will be looked at in the proper fashion. He also fails to realise that, whatever happens in relation to the granting of permission to any proposed scheme, it will not come on stream until well after the 2020 carbon reduction targets to which we are committed. It is right, therefore, that the Government should concentrate on those plans and schemes that would contribute to the targets in the first place, rather than on something in the future. I repeat that there is nothing to prevent a private consortium from coming forward with plans, and they would be considered just like any others. 

Mr Hain:  I am going to make progress by not taking any more interventions. There is a big difference between the enthusiastic backing that I gave the project and the lukewarm and mean-minded “if somebody comes forward” attitude of the Secretary of State. 

The barrage is a unique opportunity to produce green energy and tackle climate change, create employment, safeguard people’s homes from rising water levels, and protect and promote indigenous wildlife and biodiversity. I ask the Secretary of State to lead within Government on the case for them to change their stance and back the barrage. 

Sadly, the Government’s commitment to combating climate change has also been discredited by a series of decisions to review or cancel existing schemes that were working effectively and successfully. For example, as has been mentioned, the Secretary of State for Environment and Climate Change recently announced a review of the feed-in tariff system introduced by our Labour Government, even though it has resulted in 21,000 new solar energy installations throughout the UK—14,000 of them in individual homes—because people are rightly concerned about the enormous dangers of climate change and want to do their bit, which brings the big society to mind. 

This was an industry that was beginning to thrive. It is estimated that more than 17,000 jobs will be created in the solar installation sector in 2011, including in Wales, but only if the feed-in tariff system is not cut. Howard Johns, chairman of the Solar Trade Association says that this is 

“threatening investment and jobs in the sector”. 

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Solarcentury executive chairman Jeremy Leggett agrees, and he condemned the review as 

“the very worst kind of knee-jerk policy response” 

that 

“has done enormous damage to our trust in the new Government and its ability to work with this sector constructively to deliver a positive way forward”. 

That deterioration in trust is already affecting investment and staff recruitment decisions by companies in the sector, yet it is exactly such investment in the new jobs of the future that will help to turn around this Government’s dismal growth record, reduce the deficit and help to generate new growth on a sustainable basis. 

The Energy Island project in Anglesey is in the same position. The potential of the island’s tidal power has been explored, along with the land that is available for the manufacture and maintenance of wind turbines offshore in the Irish sea. With some UK Government investment in new infrastructure, as Labour was planning with our £60 million fund, Anglesey could becoming a leading force in renewable energy production and servicing, attracting thousands of new jobs for the future, as I saw early last year on a visit, as Secretary of State for Wales, to Bremerhaven in northern Germany—an old and declining port that has been turned into a thriving hub for the new, huge, multibillion-euro offshore wind industry, with new jobs and prosperity, backed by the Government, not ignored by the Government, as is happening here. It is high time that the Government got real on green energy and abandoned their anti-jobs, anti-growth dogma by investing for the future. 

The Chair:  I call Hywel Williams. That has come as a surprise. 

10.22 am 

Hywel Williams (Arfon) (PC):  Being called to speak has come as a surprise, Mr Havard, as the right hon. Member for Neath was in full flow there—I was enjoying it. I will press on in the few minutes available before we adjourn. 

I want to talk seriously about some issues that have affected my constituents in the past few months and during the cold snap—specifically, energy supply to homes in rural areas. I also want to talk a bit about the

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Energy Bill. Many homes in rural areas in my constituency and elsewhere depend on liquefied petroleum gas and on fuel oil, and there have been substantial problems, specifically just before Christmas. 

On supply, LPG provides heating for houses and also for hot water. The most worrying problem that my constituents have found recently is the absolute interruption of LPG supplies just before Christmas. A number of constituents found that they had run out, so they could not heat their houses or heat water. There was, apparently, a problem with the main supplier in England. I hardly need say that that was extremely perilous to people, particularly older people, those with a disability and families with children. In individual situations, the danger was as great, or even greater, than that caused by the disruption to water supplies in my constituency some time ago by the cryptosporidium outbreak, so there is a substantial issue here of danger to the public. 

LPG, of course, is very expensive and there is an argument that the high price is a disincentive to people filling the tank to the top just before the cold weather comes along. Why should people put all that money into the ground or into the tank, when they should have the confidence that supplies will be available? 

There is also a more structural problem with the market. I have had complaints and queries over the past few years about the complex and perplexing pricing structure for LPG. The industry appears to be highly competitive—there are lots of special offers, lots of short-term sweetheart deals—but, strangely enough, the stories that my constituents tell me are all remarkably similar in that there is a great initial deal on signing a contract, followed, eventually, by consistently high prices. 

The pricing structure is one of great complexity, with the same company charging different prices to customers in identical circumstances, and a lack of transparency as to the actual cost of the energy when all those special offers are stripped away— 

The Chair:  Order. I am sure that the hon. Gentleman can continue this afternoon. 

10.25 am 

The Chair a djourned the Committee without Question put (Standing Order No. 88).  

Adjourned till this day at half-past Two o’clock.