§ (2) In subsection (2)(a) after "regulations" there is inserted "other than regulations under section 33 (10)".
§ (3) In subsection (2)(b) after "than" there is inserted "an order under section 33 (5B)".'.—[Mr. Redwood.]
§ Brought up, and read the First time.10.15 pm
§ Mr. Deputy Speaker (Sir Alan Haselhurst)
With this, it will be convenient to discuss the following amendments: No. 6, in clause 1, page 1, line 6, at end insert—'(1A) After subsection (5) there is inserted—(5A) The aggregate of any amounts paid by way of levy under this section in any period of six months shall not exceed the average amount so paid in the previous two six month periods unless the Secretary of State by order so provides.(5B) An order under subsection (5A) shall be by statutory instrument and shall be subject to approval by the Commons House of Parliament".'.No. 3, in page 1, line 18, leave out from 'to' to end of line 21 and insert'add further classes of electricity generation to the definition of "leviable electricity" contained in subsection (8) above.'No. 2, in page 1, line 21, at end insert—'(c) substitute for paragraph (a) of the definition of "leviable electricity" in subsection (8)—'is generated by a fossil fuel generating station other than a coal-fired generating station which the Secretary of State has certified is a coal-fired generating station using "clean-coal" technology'.No. 4, in page 1, line 21, at end insert—'(10) The levy imposed on a supplier of electricity generated in pursuance of qualifying arrangements under paragraph (c) of the definition of leviable electricity in subsection (8) above may not be greater than the aggregate payments received in respect of that electricity under this section.'.No. 5, in page 1, line 21, at end insert—'(10) Any extension of the levy by regulations made under subsection (9) above which results in the levy becoming chargeable in respect of electricity on which it was not previously chargeable shall not have effect until such regulations are approved by resolution of the Commons House of Parliament.'.No. 8, in title, line 1, after '33', insert'and in consequence section 106'.
§ Mr. Redwood
It is a pleasure to be back at the Dispatch Box after a brief interruption to Department of Trade and Industry business, which seems to dominate the House this week. [Interruption.]
§ Mr. Deputy Speaker
Perhaps the right hon. Gentleman will wait a moment, and perhaps the interruption will be as brief as possible. Will right hon. and hon. Members please withdraw quickly and quietly?
§ Mr. Redwood
I am grateful to you, Mr. Deputy Speaker, for getting the House to settle down. I pay tribute 429 to my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond), who has been particularly assiduous in studying this short but complex Bill and in helping with preparing the necessary amendments. I hope that he will catch your eye a little later, as I am sure that the House would benefit from his expertise in these matters.
I wonder whether Labour Members have access to a briefing document, rather like the one with which they were equipped for DTI questions. If only that had been issued to all Members of the House before DTI questions, we would not have needed the questions, because everything that Labour Members said during those questions had been written for them from Walworth road. I assume that they will operate tonight on a similar basis.
Whether Labour Members are briefed or not, it is our job to bring to the notice of the House this complex, muddled and difficult little Bill and to illuminate its fundamental aspects with a series of new clauses and amendments designed to probe, test and pin the Government down as they go about their nefarious ways.
The main purpose of our amendments will be to impose some control for the House of Commons—Labour Back Benchers as well as Opposition Members—over the tax-raising powers that the Bill represents; to put in a plea for the coal industry and for the renewable energy industry, which we do not think is properly protected by the provisions of the Bill; to give Labour Members an opportunity to voice their views on the necessary balance of energy policy between gas, coal and oil; and to use the Bill to help to fashion a policy that might produce a better energy mix than the one towards which Ministers are muddling by their actions, inactions and lack of concern for many of the important energy industries in this country.
This is a complex measure because of the way in which it is drafted, and the way in which the original legislation was drafted. I shall try to simplify it for the House. Once upon a time there was a fossil fuel levy. That was an extra charge on electricity generated from coal, oil and gas. The money from the levy was given to power generation from cleaner and greener means. It was given to renewables and to nuclear. It was a boost to a green strategy. On that basis, it was introduced and approved by the House—a limited but helpful measure for the greener and cleaner energies that Ministers then had in mind.
Then there was a Labour Government. After all the muddles which we have seen, it seems a long time ago that they were elected. They were elected both to generate more power from cleaner methods and to save the coal industry. So far, they have found that impossible to achieve, and we see them slipping and sliding into ever bigger difficulties with the Bill, as our amendments will expose tonight.
§ Mr. Ian Bruce (South Dorset)
Is my right hon. Friend a little surprised to know that in Committee we had the greatest difficulty in getting any information from the Minister about what the Labour Government would do to the coal industry? The Electricity Act 1989, with the non-fossil fuel obligation, allows the Government to 430 help the coal industry in any way they want, using the levy mechanism that was originally put in place to help the nuclear industry.
§ Mr. Redwood
My hon. Friend has put his finger on a crucial point. I hope that it will be a matter for serious debate by hon. Members on both sides of the House. I know that there are good Labour Members who represent mining constituencies and who are deeply worried by the Government's approach to the coal industry. We have tabled an amendment that offers one partial solution to the problems of coal by offering opportunities to stimulate clean coal technology. We trust that debate on that subject will illuminate some important issues.
The Labour Government have not been able to make up their mind, so they have decided in the Bill to equalise the misery of the levy by proposing it for all, or most, electricity generation. The Bill is unclear because it gives an enabling power to impose the fossil fuel levy on—of all things—renewables. That is quite extraordinary. If the original measure had a single prime purpose, it was to impose a levy on fossil fuels to stimulate renewable energy. For that reason, it was very welcome to many elements of the green movement. Ministers are now taking the enabling power, which will mean that they could impose the levy on the very renewables that it was originally designed to help, as well as preserving the levy in part on the fossil fuels from which it originated.
The Labour Government clearly do not wish to call this new tax—which is what it would become—a fuel tax. However, that is what it is in effect. Under the legislation, the Government have decided to continue to call it the "fossil fuel levy", even though they intend it to apply to non-fossil fuels and perhaps to all fuels used in various types of power generation in this country.
At the same time as we have witnessed confusion, rows and disagreements in the DTI about whether to be more pro-coal, pro-gas, pro-renewable or pro-coal again, we have seen a rapacious Chancellor of the Exchequer, in his public capacity, acting entirely legally but undesirably in taking more money from business. We are worried that the open-ended powers of the Bill will give the Chancellor and his Government colleagues the opportunity to extend on that wider base an ever bigger fuel tax by the back door of the so-called fossil fuel levy.
Part of the purpose of our proposed new clause and amendments is to try to pin down the Government on the seriousness of their taxing ambitions and on whether some limits might be imposed—at least, the necessity to return to the House of Commons for affirmative resolution following debate before additional taxation can be imposed on the energy sector.
The Chancellor has found it relatively easy, in his own terms, to tax pensions, personal savings and businesses massively. He obviously views this as a rather modest measure to tax fuels more generally, and perhaps then will propose diverting some of the moneys from their original purposes to others that he already has in mind.
Our amendments Nos. 6, 4 and 5 are designed primarily to place some limit and parliamentary control on the tax-raising measures. I shall go into some detail on our new clause. New clause 1 is consequential on the drafting of amendment No. 4—it does not make sense unless one refers to that amendment, which inserts new subsection 431 (10) in the Bill. It tidies up the order-making powers in the original Electricity Act 1989, consequent on the suggested changes in amendment No. 4. I shall not detain the House further with technical explanations of new clause 1 unless Labour Members request that by way of intervention. I think that this will become clearer when they see the way in which amendment No. 4 is intended to operate.
New clause 6 is of considerable substance. It is one of our suggested mechanisms to impose a ceiling on the levy or tax-raising powers—
§ Mr. Deputy Speaker
Order. I am sorry to interrupt the right hon. Gentleman, but for clarification's sake and for the benefit of the House, I think that he is referring to an amendment rather than a new clause.
§ Mr. Redwood
You are quite right, Mr. Deputy Speaker. I had misread the significance of the firm line under new clause 1; I mean amendment No. 6.
Amendment No. 6 is an attempt to impose a ceiling on the levy, and we propose to do that by ensuring that the aggregate of amounts paid by way of levy under section 33 of the 1989 Act in any period of six months does not exceed the average so paid in the previous two six-month periods. That should be relatively easy for the Government to accept, if we are to trust them when they say that they have no wish to increase the tax burden on the industry.
If the Government are not willing to accept this or a similar formula, our worries will indeed be confirmed that the intention of the Chancellor and his colleagues is to find an easy means of taxation by the back door, without the normal scrutiny of a Finance Bill, at the expense of the fuel industry and, ultimately, the fuel consumer, the person whom the Government often say that they are keen to help, but to whom their measures on company taxation do the opposite.
§ Mr. Ian Bruce
I do not know whether my right hon. Friend had a chance to read the Standing Committee debates. Did he notice that the Government's intention to have 10 per cent. renewable energy would put up the price of electricity by at least 15 per cent., which is roughly the percentage on which they won the election by telling pensioners that they would not allow the Conservative Government to increase VAT on electricity bills to 17.5 per cent.?
§ Mr. Redwood
Indeed. I am grateful to my hon. Friend. He is ahead of me in the argument that I shall set out to the House. He is right to warn that the current energy policy could undo some of the good that had been established by competitive Conservative energy policies in lowering the price of energy delivered to customers. No small Budget measures by way of subsidy or compensation could offset measures of this magnitude if the Government did their worst through the blunders that they seem inclined to make on energy policy.
I notice that the Minister is not rising on any of this, so I assume that we are hitting home when we say that there are considerable dangers to customers as well as businesses in the policy that is unfolding in the Bill and elsewhere, and in the Executive actions and inactions of the ministerial team. 432 Amendment No. 3 offers the Minister greater flexibility in the proposed legislation. It shows how thoughtful we on the Opposition Benches are about the Minister's conduct. At times, we try to make his life easier, rather than more difficult, as well as to elucidate the mountainous problems that sit on his desk. This is a genuine attempt to assist him. The powers drafted by him or his advisers in the current text are rather clumsy. The amendment would allow the Minister to disaggregate. [Interruption.] The hon. Member for Bolsover (Mr. Skinner) says that I often understate my case. He is quite right.
§ Mr. Redwood
I did not for one moment think that the hon. Gentleman was being anything other than ironic. I know that irony is the lowest form of wit and that he loves indulging in irony from his sedentary position below the Gangway, but as it was such a weak piece of irony, I thought that Hansard should have the advantage of it.
I am sure that the hon. Gentleman will be grateful for the way in which I read it into the record for him. If only he would refer to his Order Paper and his amendment paper, he might learn something about a subject that should be dear to his heart. I am shortly coming to the coal industry, where I shall look to him for some support. [Interruption.] The hon. Gentleman is saying rather a lot from a sedentary position. I am grateful for that correction. I hope that he will give the House the advantage of his expertise shortly, because coal is of considerable importance to the people he represents, as well as to the constituents of other hon. Members.
Amendment No. 3 allows the Minister greater flexibility. It allows him to disaggregate the definitions of leviable electricity. It would, for example, allow him to make distinctions between different types of renewables, because we would urge him not to extend the tax to renewables. If he finds it irresistible to extend the tax to some renewables, amendment No. 3 will give him an opportunity to select from within the range and be kinder to those that are more speculative, that represent a bigger technical leap or that, by reasons of scale, are more difficult to see through to a successful conclusion.
I hope that the Minister will speak about the way in which the Government will look after the renewable energy industry and how he intends to promote it in the light of the change against it in the projected levy under the Bill; if he is going ahead with the powers and intends to take disadvantage of them from the point of view of the renewable energy industry, I hope that he will tell us what other measures he is planning to take to offset that and foster that important series of industrial activities.
I come now to perhaps the most important and contentious of the amendments, amendment No. 2, concerning coal. We are offering the House the opportunity to exclude clean coal technology power generation from the definition of leviable electricity.
The Minister has from time to time said, as did his colleagues in the run-up to the election, that one of the ways in which it was hoped to square the circle of wanting greener policies, but also wanting a reasonably sized coal industry, was by promoting and helping clean coal 433 technology. We have so far seen very little of substance from this ministerial team to put any weight behind their promise to the hard-pressed and deteriorating British coal industry. This gives the Minister an opportunity to do something more.
§ The Minister for Science, Energy and Industry (Mr. John Battle)
Is the right hon. Gentleman suggesting that he wants an exemption for clean coal power stations? Will he confirm that, unfortunately, at the moment there is none because the previous Conservative Government shut down the possibility when they let the technology go from Grimethorpe?
§ Mr. Redwood
The Government have done nothing of substance so far to promote that technology. I am offering the Minister a way—
§ Mr. Redwood
I am about to answer the Minister. If the Whip will contain himself and return to his usual quiet charm, he may learn something.
I am offering the Minister a way of giving some incentive and promotion to the clean coal technology which he has said in the past is needed to provide a bigger coal industry than we are heading for under current ministerial policies.
I do not know whether the Minister is fully aware of the disaster currently hitting the coal industry as a result of the muddle and confusion created by the Government. Has he seen what has happened to coal output in recent months under the Government—a big reduction in coal output as a result of their policies? Has he seen what has been happening—
§ Mr. Michael Clapham (Barnsley, West and Penistone)
I marvel at the hypocritical and disingenuous way in which the amendment is being moved. A clear illustration of that is the fact that the right hon. Gentleman was part of the Cabinet in 1993 which threw out the recommendation of the Select Committee on Trade and Industry that £380 million a year for five years be taken from the fossil fuel levy to finance clean coal technology.
§ Mr. Redwood
There is no hypocrisy on my part. If the hon. Gentleman had done his homework, he would know that I was a keen advocate of the saving of the Tower colliery in Wales, for which I had some modest responsibility as Secretary of State for Wales. That was bought out by the miners and became a successful enterprise. I am pleased that they did that, and it is a great tribute to their achievements. I was keen that that remaining part of the deep-mine industry in Wales should survive. Partly because of my intervention, but more because of the efforts of the miners, it did survive, and I pay tribute to their work.
§ Mr. Philip Hammond (Runnymede and Weybridge)
Does my right hon. Friend agree that there is a considerable difference between a direct subsidy to 434 a technology and giving it relief from a tax to encourage private sector investment by giving it a relative advantage against other technologies?
§ Mr. Redwood
My hon. Friend is absolutely right. This is a modest tax incentive, but it is a step in the right direction. The Government have an opportunity to accept the amendment and to tell us what more they will do. The only conceivable fig leaf on their lack of policy is that they make something of clean coal technology and look forward to a future where coal can be sold in reasonable quantities without damaging the stringent environmental targets which they have set or are thinking of setting.
I shall return to my argument about the current grave position of the coal industry.
§ Mr. Redwood:
I shall develop my argument a little and then I shall be grateful for my hon. Friend's wise advice.
The Minister was taken off the case and the Paymaster General was brought in by the Prime Minister to rescue the coal industry. The Prime Minister seemed to announce a deal that had saved the coal industry, at least in the short term. We then learned that nothing had been arranged and the Paymaster General was brought in to arrange something. We now believe that all that was arranged was a decision by leading generators to bring forward third-quarter purchases of coal into the second quarter of the current year. Let us assume that that happens. We have had a mild winter so far, and coal burn must have been reduced as a result. That means that, by the time we enter the third quarter, the burn will be down, the stock position will be up—all things being equal—and the crisis in the coal industry will be that much bigger.
The Minister should recognise that the issue is not just how much coal generators buy in any limited number of weeks, but how much coal they buy and burn and how much coal they wish to buy and burn on a continuing basis over the years ahead. I believe that the Paymaster General's intervention will turn out to have been unwelcome for the Government. It will have built up modest expectations that will be disappointed and it will have exacerbated the problem of adjustment when we get to the end of the second quarter. Also, it leaves the basic conundrum completely unsolved: do the Government wish to make people burn more coal, is it possible to burn more coal and keep to the environmental targets which they have set or are inclined to set and are they in a position to deliver on their promises to the greens and the coal industry?
§ Mr. Bruce
I wonder whether my right hon. Friend is missing one of the points made ably by the hon. Member for Barnsley, West and Penistone (Mr. Clapham), which is that clean coal technology was at an advanced stage and nobody wanted to buy it. The previous Government decided not to put money into that. The opportunity for it to be used is available to the Government now and we 435 have not been able to get any commitment from the Minister during the Bill's passage that he will put his money where his mouth is.
§ Mr. Redwood
My hon. Friend is right. Ministers have been reluctant to produce a package of measures which would promote one of their chosen solutions to the problem of their making—clean coal technology.
§ Mr. Geoffrey Clifton-Brown (Cotswold)
I do not know whether my right hon. Friend is aware of the fact that I had the former Coal Research Establishment in my constituency, just outside Cheltenham.
§ Mr. Clifton-Brown
Does my right hon. Friend agree that, if coal is to have any sustainable long-term future, we have to use the latest technology—fluid-bed technology and combined cycle technology with heat recovery? That is the only long-term sustainable way to burn coal.
§ Mr. Deputy Speaker (Mr. Michael J. Martin)
Order. We cannot have the Minister making a contribution right now.
§ Mr. Redwood
I am grateful, Mr. Deputy Speaker. I shall be happy to answer any point that the Minister might like to make by way of a proper intervention.
My hon. Friend hon. Friend the Member for Cotswold (Mr. Clifton-Brown) is right. There has been an absence of positive action to back up some of the fine words—interspersed with some less fine words—from the ministerial team. The Minister owes the House an explanation tonight of the Government's stance on clean coal technology. They came to power saying, among other things, that they would be better for the coal industry than the Conservative Government had been, and that they would be better for clean coal technology than they claimed the Conservative Government had been. There is always room for improvement in this world, but nobody can say that, since May 1997, there has been any improvement at all. Indeed, there has been movement in the other direction. The mining communities feel let down by the Administration—they expected better and they are getting worse.
§ Mr. Hammond
Does my right hon. Friend agree that, although the focus over the past six or eight months has been on the pricing of coal contracts to generators, the long-term issue is not about price but about the Government's dilemma—the choice between their environmental targets and their commitment to the coal industry?
§ Mr. Redwood
Indeed, and we are finding it difficult to clarify how stringent the Government's environmental targets are. The Prime Minister—in a sweeping gesture—set a target for carbon dioxide emissions to be cut by a fifth; a massive movement, bigger than our partners were promising at the time of the conference where the 436 Prime Minister made that promise. That would mean a further big reduction in the coal industry. Is the Minister prepared to quantify how much?
§ Mr. Battle
The right hon. Gentleman must be suffering from amnesia. Perhaps the late nights he keeps mean that he cannot cope. Does he remember being a member of a Government who passed the sulphur emission targets which would have shut down every coal power station in Britain. except Drax and Ratcliffe? Who left us that legacy? Can he remind us?
§ Mr. Redwood
We read in the newspapers that the sulphur targets we set are thought to be too lenient by the Government, who are discussing a considerable intensification of those targets. Will the Minister confirm or deny that? It is rash for him to criticise the sulphur targets that we established in government if his Government are about to create stiffer targets which the coal industry will find it difficult, if not impossible, to meet.
The Minister seems quite unaware of the difficulties that the tensions are causing. As my hon. Friend the Member for Runnymede and Weybridge said, there is a dilemma. The Prime Minister once said that he thought that government was about making hard choices. There is a good, hard choice for the Prime Minister, the President of the Board of Trade or the Paymaster General—or even, conceivably, the Minister, if he is allowed back on the brief. The hard choice is: are the Government greener than the Conservatives, in which case less coal will be mined, or are they less green than the Conservatives, in which case more coal could be mined?
How will the Government resolve the issue? Are they primarily a green Government—in which case they should be honest with the miners and tell them that much of the game is up for the mining industry—or are they a Government who are true to their roots in the mining communities, who will set less difficult targets and who will actively promote the market for coal? I trust that the Minister has read the suggestions from the Coalfield Communities Campaign. It would be good to hear whether he thinks that his Administration would like to accept those suggestions. How would that relate to the Bill? Does the Minister agree that amendment No. 2 is a small step in the direction of helping the coal industry? He has the choice, and he should give the House the benefit of his feelings before the night is much older.
Amendment No. 4 concerns renewables, and states:The levy imposed on a supplier of electricity generated in pursuance of qualifying arrangements under paragraph (c) of the definition of leviable electricity in subsection (8) above may not be greater than the aggregate payments received in respect of that electricity under this section.The intention is to make sure that the renewable industry is not cheated under the proposal by having to pay more in levy than it receives from the fund created by the levy payments.
The original intention of the levy was to be generous to the renewables industry at the expense of less clean methods of generating power. The Minister must be more precise than the Bill, given that he wishes to upset the thrust behind the legislation that he inherits. He owes it to the House to say whether he would be happy with the amendment, which is offered in a helpful spirit, or 437 whether he seriously intends to take money away from the renewable energy sector by imposing a higher levy on it than the payments that it receives. Will the Minister answer that point immediately to save the House some time?
§ Mr. Redwood
I am happy to wait until the whole debate is answered, if that is the Minister's wish. He would have saved the House time by saying that he accepted the intention of the amendment, or a lesser or greater intention. We would be happy with an amendment that would allow the renewables industry to receive back more than it pays, for example. We would not be happy with a looser amendment, which would leave the renewables industry potentially subject to the depredations of the Chancellor of the Exchequer and the whims of the President of the Board of Trade, which is the position in the Bill as it stands.
Amendment No. 5 would deal with the democratic difficulties in this proposal. It is a strong principle of our fine and ever-modern unwritten constitution that the House keeps control over the vote of moneys-over the levying of taxation and financial levies on industries or persons. What my right hon. and hon. Friends most regret about the measure is that it gives wide-ranging powers to levy money from businesses without going through separate and normal democratic processes to ensure that the levy rates are properly debated and approved through financial legislation. It would be more honest for the Chancellor of the Exchequer to introduce this kind of proposal as part of a Finance Bill, because its power to levy the whole energy industry is so wide that it has the nature of a tax rather than a special levy for a special purpose, which is how it was originally designed and named by the previous Administration.
The amendment therefore suggests that there should be a separate resolution by the House of Commons in this or a future Parliament to extend the levy. That modest request would be in keeping with the long-established principles on which our democracy is based, and with the principles established by long debate, row and battle centuries ago, when hon. Members rightly thought that it was necessary to have control over the Executive and their ability to raise taxes from industries and people in our community. If the Minister is not prepared to accept this modest proposal concerning the affirmative resolution, I hope that he will give us the benefit of his ideas on how the House of Commons can remain involved in the levying of taxation on the energy industries, given the wide-ranging and open-ended powers that have been drafted in the current version of this obscure but quite important Bill.
§ Mr. Clifton-Brown
My right hon. Friend is dealing with one of the most fundamental issues that the House has to deal with at this point. Does he agree that the use of Henry VIII clauses, thereby giving Ministers unduly wide powers, is a serious deficit in the democratic process, and that even Ministers, who would naturally want to gain those powers, should resist those?
§ Mr. Redwood
My hon. Friend is right. DTI Ministers were detained for some hours last night because they were 438 seeking Henry VIII powers over a minimum wage, with huge and unspecified cost consequences to the public as well as the private sector, and they were not prepared to put in the Bill the issue that concerns Labour Members as well as us—how much the wage would be.
Tonight, we have before us similar legislation, in which the Government wish to impose a levy on new industries and on sectors of an industry that have not previously paid it, without being prepared to specify in the Bill how much that levy would be and exactly how it would be spent on the other side of the ledger.
The Minister is looking around trying to think of something to say in response.
§ Mr. Battle
Sometimes strange things happen in this place: we change sides. Unfortunately, exactly his present argument was put to the right hon. Gentleman when he was in government in February 1989. He did not think that it was a great matter of principle then, because he voted against our attempt to introduce the affirmative resolution procedure under the 1989 Act.
§ Mr. Redwood
The Minister walked right into that; he now says that he thinks that it is a good idea to require an affirmative resolution. We seem to have reached happy agreement.
§ Mr. Redwood
I think, Mr. Deputy Speaker, that the Minister means that he agrees with me—with the right hon. Member for Wokingham. But he does not agree with me, because my view is clearly that we need the affirmative resolution procedure, whereas he is saying that he does not want it. [Interruption.] I do not remember having expressed a view at the time.
§ Mr. Ian Bruce
My right hon. Friend is having an interesting exchange with the Minister, but if he reads the debates from 1989, he will realise that he is now supporting the view that the present Prime Minister held at that time. It is surprising that the Minister, who I suspect is quite ambitious, does not accept the logic of the argument that the present Prime Minister, then simply the hon. Member for Sedgefield, expressed on the issue at the time. I hope that now he will immediately agree to accept the amendments.
§ Mr. Redwood
We live in hope, but I fear that my hon. Friend's hope may have outrun the reality of the Administration whom we are, unfortunately, experiencing day by day.
The new clause and amendments are designed to deal specifically with three important issues. The first is whether the Minister will accept the amendments or give us another way in which the House can retain ultimate control over how high the levy could go. We offer him the route of putting a cap, or ceiling, on the levy, and also the route of giving the House its entitlement—a requirement for an affirmative resolution should any change in the levy, especially an increase, be recommended by the Administration.
439 The second big issue that we seek to highlight is the future of the coal industry. We see an industry that, measured by its output, is in sharp decline. We see an industry subject to quick fixes by the Paymaster General and other Ministers. It may be worthy of a soundbite or a trip down a coal mine by the Minister without Portfolio, but is not considered worthy of a serious energy policy that might provide some relief, although the industry will hit grave difficulties in the summer unless the Minister overcomes his slumbers and gets his job back from the Paymaster General.
We have offered a positive, though modest, suggestion—one of many that could be developed by Executive as well as legislative action, and one that is suitable in the context of the debate—to offer a small fiscal incentive for those developing clean coal technology, which could help the next generation of coal-fired generating plant.
The third important issue which we have highlighted is the treatment of renewable energy, which many Opposition Members believe could play an important role. It represents a very modest proportion of our current power generation, but there are many imaginative and innovative businesses in this country, and it is the kind of technology that may produce a pay-off in exports all over the world as well as at home.
That is common ground between the Minister and us. However, the Minister has an advantage that the Opposition do not have: he can take action this day, or tomorrow in his office, to do something about the idea, whereas we can merely urge action on him. We are offering him the opportunity to respond positively to the proposal and, within the confines of the debate, to tell us what else he can do to support the renewable energy industry.
I think that in one of his more fair-minded moments, the Minister would agree that our fossil fuel levy and its allocation did something to promote energy in this country and that, from a slow start and modest beginnings, we succeeded in promoting some interesting technologies and helping some companies. We would like to know how the Minister wishes to continue that work, and trust that he will respond positively to our new clause and amendments.
Will the Minister accept our new clause and amendments—which are good in intention, modest in scope and helpful—or will he make other proposals that will achieve similar jobs for the United Kingdom and for our energy industry? Will he now take seriously the need for democratic accountability, the need for policy that says something to the mining industry that it wishes to hear and the need to do more to promote the renewable energy industry?
§ Mr. Skinner
I have spent quite a while as an hon. Member, but listening to that ex-Minister, the right hon. Member for Wokingham (Mr. Redwood), talking about saving the 17 or 20 pits that are left has been like being in fantasy land. I could laugh, but I really want to cry. When the Tories got into power in 1979, there were 300 pits in Britain and about 13 pits in Derbyshire, where I come from. Now the ex-Minister has come to the House to tell us the fairy story that, after only 10 months in opposition, he has totally converted and wants to save those jobs.
440 Many of the areas that we are talking about have been subjected, with the help of the Tory Government, to opencast mining. Whether we like it or not—it is a sad thing to have to say—the fact is that, once we opencast that land, no one will ever again drive another shaft down it. The geology becomes unstable, preventing anyone from getting at any of the remaining coal. Opencast mining does not get all the coal; it gets only some of it.
I have listened to the ex-Minister for the past 40 minutes, and it has been enough to make a cat laugh. He was there in the Government—a Minister—for the greater part of the time that the pits were closed. If he was not a Minister, he was in the policy unit, telling the other Tory Ministers what to do.
Even after 1984, 174 pits were still left. Then we had the savage experience of Tory Ministers—all of them—going back on what they had told the Trade and Industry Select Committee, which produced its report. My hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) was a member of that Committee, so he knows what he is talking about when he describes the £285 million that should have been used to develop clean coal.
When Ministers set up that Committee, they said that they would abide by its recommendations. But what happened? We had a vote in the House. On the night in question, almost every Tory Member, and every Tory Minister, went into the Lobby to shut those 31 pits, leaving about 20 pits. The Tories privatised the remaining pits, after which we lost another batch of pits, which has left us in this almighty mess.
Whatever phraseology that man—that shadow Minister—uses, the truth is that he could talk a donkey's hind leg off and until his belly warms. But out there in the country, he will not convince the people of anything other than the fact that the Tory Government were hellbent on revenge against the miners after their victories of 1972 and 1974, and that they would go to any lengths to make those miners and their families eat grass.
One of the reasons why we were able to collect money in places such as Bournemouth, Bath, Worthing and all those Tory constituencies—including Wimbledon and Harrow, where I often went—is that people there said, "We want to feed the families that Mrs. Thatcher is starving." When I say "Mrs. Thatcher", I include that shadow Minister. He was involved in it.
So I tell the ex-Minister not to come here with his fancy fairy stories about wanting to help miners. I have never heard such piffle in all my life. I think about the villages that I represent in Derbyshire, and realise that the social fabric has broken down because the Tory Government finally got rid of all their pits.
Let us be clear about it: there is a qualitative difference between how pits were closed when I was working in them and how the Tories closed them. When Parkhouse colliery closed, I had a chance to go to about 15 other collieries within a five or six-mile radius. When they closed down the last 15 pits, make no mistake! There was no chance of being transferred. Ninety per cent. of miners in my constituency were told, "Sorry, there are no more pits left for you to go to." That was the criminal action.
I had a choice; I went to another colliery, but all the young lads were chucked on the scrap heap. There used to be stable communities, where doors were left open at night. When I was first a Member of Parliament, I saw 441 row after row of miners' cottages with their doors open. Now the social fabric has been destroyed to such an extent that people are kicking one another's doors in, and there are three padlocks on the doors.
Let no one tell me that everything has happened in the last 10 months. I can be critical of this Government—I have already started—but I cannot blame them for what has happened in the coal industry. I may have to at some point, but I cannot now. There is not a single pit left in my constituency. There is not one in the whole of north Derbyshire; there is not one in Lancashire; there is only that co-operative left in south Wales—and this man here, the right hon. Member for Wokingham, is claiming credit for saving it. Come on!
I believe that there is one pit left in Durham, and there may be one left in Scotland. Let us think about it. In 1979, there were 300 pits; now we are down to about 20. Let me tell the House something else. The Government can have as many fossil fuel levies as they like, and they can shuffle the pack as much as they like, but they cannot repair the damage that was done over those 18 years of Tory government.
§ Mr. Clifton-Brown
The hon. Gentleman is displaying some of the best rhetoric that I have heard since I have been in the House, but will he tell us, factually, how many pits the Labour Government closed in the 1960s and 1970s, compared with the number closed by the Conservative Government in the 1980s?
§ Mr. Skinner
I can give the hon. Gentleman a rough estimate—and the figures bear comparison; there is no mistake about that.
When I first came down to lobby Parliament in 1967, there was a Labour Government. A fellow who is now in the House of Lords—Lord Marsh—was allegedly the Labour Minister of Power. I had suspected him a long way back, when he wore a CND badge at his selection conference, because I had not seen him on the Aldermaston march. The badge got him the selection and, having been selected, he had a wonderful plan. It was almost like the Heseltine plan—not the Heseltine plan; the plan from Henley-on-Thames. Lord Marsh was going to close down the industry then, although he was not going to use the fossil fuel levy and all the rest of it. He had to be bundled out of office. That is what we did when we marched down here in 1967 and broke into the Labour party conference to save the industry.
I will tell the hon. Member for Cotswold (Mr. Clifton-Brown) the difference in the situation. We were able to force a Labour Government to change course. We tried it in 1991 and 1992 with the Conservative Government, and we could not shift them. Between 70 and 80 pits were closed in the period that the hon. Gentleman is talking about.
I know the industry like the back of my hand; I know about all the closures. I can tell the hon. Gentleman that one pit has been closed in the last 10 months. I could not lay the closure at the door of my hon. Friend the Minister even if I wanted to, because the pit has been closed by private enterprise. The hon. Gentleman must understand 442 this: once the coal industry is handed over to private enterprise, a Government cannot intervene, or can hardly intervene. Why? Because it is all about money—it is about shekels and it is about profit. The moment that Silverdale looked as if it could not deliver the goods, someone came along and said, "Close it."
My hon. Friend the Minister had better be aware of this point, as should every other hon. Member. Budge has about 17 pits. He is also mining about 16 million tonnes of coal a year from opencast. It sticks in my gullet to hear Budge asking the Labour Government for £300 million of subsidy from taxpayers' money, when he effectively stole the coal industry in the first place. With that subsidy, he could solve the problem himself, because all he has to do to save every single pit is turn off the tap of opencast coal production.
My hon. Friend the Minister should remember that point. When he has to make calculations, with or without a levy, he will have to bear it in mind that there are other components. He can say to Mr. Budge that we want to save the 20-odd pits that are left, but that he had better cut back on opencast. Changing the mineral planning guidance rules would make one hell of a difference. We could then save the deep mines and the miners who work in them.
My hon. Friend the Minister could do something about the French power that is coming over here. I do not go a bundle on this Common Market, and never will. I have never been caught up in it, unlike the right hon. Member for Wokingham, who is a Johnny-come-lately. He is anti-Market now, but at one time he was greatly in favour, like most of the Tories.
If 7,000 or 8,000 miners' jobs can be saved in Britain, we had better do that and not save the French nuclear power that is coming over here. If we can shuffle the fossil fuel levy in that direction, by all means let us do it. My hon. Friend the Minister should pay some attention to the question of imported coal, which comes from some of the most unlikely places. We cannot afford to chuck our few miners out of work while subsidising up to the hilt imported coal from Spain, Germany, Colombia and slave-labour economies.
The fossil fuel levy pales into insignificance compared with what can be done, but if Budge decides that a pit is not profitable, perhaps because it has run into some bad geology and is losing money, we can do nothing. Under nationalisation, we could save a pit by getting through the bad work, because there were enough profitable pits for the strong to help the weak.
Under privatisation, that will not happen: Mr. Budge will say, "That pit's unprofitable; it's going." Mark my words, if the coal industry remains in private hands, the owners of the few remaining pits will close them, just as they closed Silverdale, because it was not delivering. That is why the whole question is so important, over and above this tin-pot fossil fuel levy.
Ministers must pass the message on to Downing street or anywhere else that the only way of saving the few remaining pits, and taking them out of the grip of Mr. Budge and all the rest, is to bring the industry back into public ownership. That does not go down very well with new Labour, but it has to be said. It is much more important than some of the rubbish coming out of the mouth of the right hon. Member for Wokingham.
443 It has been a sad story, mainly because we had 18 years of a Tory Government who were determined to do the dirty on the miners and their families. By God, did they rub it in. Now we have to set up task forces in every single pit village to try to get work back into the communities. It is a sad story, all right.
I will give my hon. Friend the Minister the benefit of the doubt tonight, for what that is worth, but the decisions that we make on this little Bill are unimportant compared with what we have to do if we want to save the industry. If a Labour Government make the decision to save the 20-odd pits in Britain, it is possible to do it.
If we want to use the levy to shift a bit here and there and move the balance this way or the other, so be it: I go along with that. I believe in intervention and Governments moving in. I do not know whether it is old Labour or new Labour, or old-fashioned socialism. I do not believe in the principle of market forces.
I am like the farmers who ran the march the other week. They say they cannot produce food like the Mediterranean countries because they cannot compete with them. I am not against the principle of that dreaded word "subsidy". I believe that it is important to get people into work. I believe in welfare into work—in keeping miners in their jobs rather than chucking them on the scrap heap as window cleaners. We have got more window cleaners and taxi drivers in Bolsover and Barnsley than we have ever had before. That is a sad commentary on the proud pit villages that were destroyed by that lot opposite. I just had to stay to tell them.
The right hon. Member for Wokingham can spout as much as he likes. Some Tory audience might take it all in when he tells them, with his jerky movements, what he wants to do to save the industry. It is all but destroyed. The Labour Government must do something to save what remains of it. I will help my hon. Friend the Minister to do that. I had to do a little deal with him the other week to save concessionary coal; I hope that that show is on the road permanently. I will give him a hand with a shovel to save what remains of the industry, but I will not expect any help from that lot opposite, who destroyed the miners' jobs and left them to rot in nearly every pit village in Britain.
§ Mr. Deputy Speaker
Order. I did not want to stop the hon. Member for Bolsover (Mr. Skinner) in full flight. I have allowed a wide debate so far. Perhaps we can return to new clause 1. It would assist the Chair if mention were made of it.
§ Mr. David Maclean (Penrith and The Border)
Mr. Deputy Speaker, we were privileged that you did not stop the hon. Member for Bolsover (Mr. Skinner) when he was in full flight. I have been here 15 years. I would never patronise the hon. Gentleman, but I must say that it was a privilege to listen to him and to the passion that he put into his speech. I hope that you will not stop the Minister if he decides to respond to the hon. Gentleman's points. I would love to hear his detailed response to them rather than to what the hon. Gentleman called this shabby little measure or little piffle of a Bill.
It is to this little piffle of a Bill that I must turn. I oppose the measure, but I am a pragmatist. I accept that the Government have a huge majority; they can do what they like. They could do what the hon. Member for 444 Bolsover wants if they had the mind and the guts. As the Government will get the measure through, I say only that, if they are minded to try to square the circle by taking the illogical step of imposing a levy on fuel generated by alternative, green means while going into the fifth round of the non-fossil fuel obligation, I assume that it is because they wish to show their green credentials.
The Government do not want to abandon NOFFO. They will continue to fund alternative means such as extra hydro power in Scotland, which is awash with it, and extra wind power in parts of England that are fed up with that. To continue with that and impose a levy on electricity generated by green means is illogical. If that is what they want, I urge the Minister to pay attention and to accept amendment No. 3. As my right hon. Friend the Member for Wokingham (Mr. Redwood) said, it would give him the flexibility and scope to impose levies on different sorts of electricity generated by alternative or green means.
If the Minister is minded to do that, I should be particularly interested to hear his views on the sort of levy that he might impose on wind power generated in parts of the country where wind power might no longer be so desirable as it was in the past. If the non-fossil fuel obligation is intended to encourage alternative energy sources and technology that are on the frontiers of science, one of the areas of wind power that should be looked at is wind power generated by offshore means. I believe the technology to do that has been developed, and, with the subsidy which NOFFO grants, the technology is capable of coming on stream which would enable us to build much bigger, more substantial and more stable wind farms, slightly offshore—perhaps even quite a bit offshore—where they would not be an eyesore and a nuisance to constituents of mine living in the Lake district or close to it. I hope that the Minister will seriously address that point.
I have written to the hon. Gentleman in the past suggesting that, as we have now had four rounds and are entering the fifth round of NOFFO, and as the previous Government's policy—slavishly followed by the present Government—has succeeded in encouraging alternative forms of energy and alternative renewables, the time may have come to look at the direction in which we are going. I know that the Labour party is reviewing most areas of policy—indeed, everything seems to be under review—but I wish that the Minister would put the policy on renewables, particularly as it affects wind farms on sensitive sites in this country, under urgent review.
The Minister has decided not to use the planning mechanism as a means of further tightening things up. Although that is a possible avenue which I should happily encourage a socialist Government who believed in extra planning controls to follow, he has decided not to go down that route. As he is taking in the Bill the additional instrument of imposing a levy on renewables, he should take up the suggestion in amendment No. 3 to give himself more flexibility. Rather than adopt a broad-brush approach and impose a levy on all forms of renewables, he would be able to target the levy on certain types of renewable that we might consider, after a review, are less appropriate now.
I have skirted the subject, but let me say bluntly that I am concerned that some operators have now decided that wind farms are a good cash cow. Because of the subsidy 445 that is available, parts of my constituency are now plagued by speculative planning applications, not for half a dozen windmills, but for up to 200 windmills in areas on the edge of the Lake district national park and other areas of outstanding natural beauty.
Although, at the end of the day, many of those wind farm developments have been turned down by the planning authority and, thankfully, by the Department of the Environment, Transport and the Regions inspectors, and although some will no doubt be turned down in future, they cause enormous concern and blight for a period of 12 to 18 months while the application goes through.
§ Mr. Peter Atkinson (Hexham)
Is my right hon. Friend aware that in my constituency, which his borders, there are six existing applications for wind farms, two of which are in the north Pennines area of outstanding natural beauty?
§ Mr. Maclean
My hon. Friend is absolutely right. In all corners of my constituency and that of my hon. Friend, which cover some of the most beautiful parts of Northumberland, there is a rash of planning applications in areas of outstanding natural beauty. No doubt many of those applications will be turned down, but the concern caused is considerable.
That offers another chance for the Minister to show his green credentials. I assume that he has not abolished NOFFO, for the simple reason that he does not want to tell environmentalists, "We are getting rid of the renewables policy." I accept that there are parts of the renewables policy which are perfectly sensible.
It is correct and appropriate to introduce a policy such as NFFO, which we did in 1995, to encourage alternative technology. Wind farm technology is now well proven. It works. The time has come for it to stand on its own feet without taxpayer subsidy. Let us take the subsidy that is available to land-based wind farms and push some of it towards new technology that would enable wind farms to be built offshore, for example.
That option is available to the Minister. I do not suggest that his whole Bill should be scrapped, much as I dislike its concept, but if he is going to go ahead with it, for goodness' sake let him take the appropriate power in amendment No. 3. Let him take the suitable power, so that he is able to target the levy towards those renewable sectors that we want to encourage and towards some of the renewable sectors where we already have sufficiency and of which we do not want any more, particularly in sensitive areas.
§ Mr. Ian Bruce
My right hon. Friend makes an important point, particularly as the Government, by press release, have told the world that we are going towards a 10 per cent. requirement of electricity generated. However, they will not tell the House or the world how they are going to achieve that. Clearly, one of the problems that has brought so many Labour Members into the Chamber is that that requirement will almost certainly mean a reduction in coal generation.
§ Mr. Maclean
My hon. Friend makes a good point. No doubt the hon. Member for Bolsover will fight that 446 corner as robustly as he did tonight. In many ways, my suggestion is a tiny help to him. I suggest that some parts of the renewables policy go too far. If the Minister wishes to divert some of the energy and some of the subsidy through NOFFO into alternative forms of renewables, rather than into large wind farms in inappropriate areas, he will have my full support.
While he is at it, will the Minister talk to Scottish Office Ministers? I have no political connection with Scotland at all now; I am merely an occasional visitor when I am allowed across the border. However, it still seems extraordinary to visit some favoured haunts in the highlands, an area that is awash with hydro—electricityScotland, I believe, is an exporter of hydro—electricityto see NOFFO being used in Scotland, encouraging the damming up of yet more small lochs, and to see small, unnecessary hydro-electric projects there, adding to the plethora of hydro-electricity it already has.
The Minister has a chance to use the amendment to be much more selective and incisive in the tools he uses to direct electricity generation and renewables policy. I disapprove generally of his approach, but, if he is minded to take it, let him adopt the scalpel rather than the sledgehammer, which he has in the Bill.
I hope that the Minister will respond to my points, but, if he is not minded to do so, I would dearly love him to respond to what the hon. Member for Bolsover said—if not tonight, then at some other point. This debate will run and run.
§ Mr. Hammond
The hon. Member for Bolsover (Mr. Skinner)referred to this measure as a tin-pot fossil fuel levy. The whole point about the levy is that it is unlimited in its potential extent. At its height, when the levy was 11 per cent., I believe that it raised about £1 billion a year, which by anyone's standards—and whatever the purpose for which it is applied—would hardly be considered a tin-pot amount of money. That sum could be used seriously to tackle many of the problems in different sectors of the energy industry.
I am happy that there is only one group of amendments on the amendment paper, which suggests that we might get home for breakfast, but, with your permission, Mr. Deputy Speaker, I should like to discuss the amendments and the new clause separately, because they have a certain logical consistency.
Amendment No. 5 would add to the wording of clause 1(3), to make any extension under section 33(9) of the Electricity Act 1989 subject to affirmative resolution of the House of Commons. The purpose of the amendment is simply to ensure adequate opportunity for scrutiny on a matter that gives considerable cause for concern not only to Conservative Members but, as we discovered on Second Reading and in Committee, to Liberal Democrat Members, for a variety of reasons.
Our principal concern is that clause 1(3), which inserts a new subsection (9) into section 33 of the Electricity Act 1989, is something of a blunt instrument, which would allow the Secretary of State to remove the definition of leviable electricity altogether, so that all electricity became leviable, or to leave the definition exactly as it is. Clause 1(3) does not allow the Secretary of State any discretion to extend the levy to certain areas that are not currently leviable, without at the same time hitting the full range of unsubsidised renewable technologies and any other technologies that currently escape the levy.
447 It has been suggested by my right hon. Friend the Member for Penrith and The Border (Mr. Maclean), who is no longer in his place, that large-scale hydro-electric projects in Scotland might properly have the levy extended to them. We have tabled amendment No. 3 specifically with the purpose of giving the Secretary of State the ability to add power-generating resources selectively to the scope of the levy without forcing him or her to extend it across the range of all electricity.
It is common ground between Labour and Opposition Members that the NOFFO regime has been a success, not perhaps principally in the large amount of electricity that is generated under it—although some 200 or so projects are approved under the NOFFO arrangements, the amount of electricity generated is still quite small—but in terms of the convergence that has already been achieved. It is now a realistic probability that some of the technologies will reach market pricing and that we will shortly see such electricity sold directly into the retail market as green electricity purchased as such by consumers.
§ Mr. Ian Bruce
It would have been extremely helpful to the Standing Committee to hear from the Minister what he intended to do with the non-fossil fuel obligation. If we could have had a clear picture of what he intended in the next round for NOFFO, we could have been very much more helpful and worked on a bipartisan approach. Is it not ridiculous that the Minister's right hon. and hon. Friends are urging him to take action on things such as clean coal, yet he still will not answer Lord Ezra or anyone about exactly what he intends to do, or what other non-fossil fuel obligation he intends to require?
§ Mr. Hammond
My hon. Friend anticipates the point that I was about to make. A future amendment of section 32 of the Electricity Act 1989 may enable the levy to be used in support of clean coal technology or any other new or existing technologies. It would be interesting in that context if the Minister could tell us the current status of the private Member's Bill introduced by Lord Ezra in another place. I am surprised that the hon. Member for Bolsover did not mention that Bill. The Minister was probed on it in Standing Committee.
The noble Lord was given to understand that the Government would treat his Bill benevolently when it reached this place. By the time of the Standing Committee's proceedings, the Minister had not answered a letter from Lord Ezra; we would be interested to know whether the Government intend to make time for that measure when it gets to this House. That would have a significant impact on the matters we are debating this evening.
Perhaps the Minister will also tell us what steps have been taken—I know that he has taken some already—to clear with the European Commission any moves that the Government might be minded to make to allow the subsidising, through the NOFFO mechanism, of clean coal technology; or to allow other measures to help the coal industry. Such measures would not, I believe, become possible until they had been cleared by the Commission.
The levy is relatively low at the moment—less than 2 per cent.—but at its peak it was set at 11 per cent. At that level, it could provide a technology not subjected to 448 the levy with a powerful competitive edge over one that was subjected to it. In pursuit of environmental and other objectives, it might be useful for the Government to have the power to include certain new technologies in the levy, without necessarily extending it to all technologies.
§ Mr. Ian Bruce
My hon. Friend makes an important point about the amount of money raised under the previous Administration, when there were difficulties with the nuclear industry. That money is no longer included in the price of electricity. The mechanism involved is a very powerful one; yet we still cannot find out from the Minister by how much he intends the levy to rise.
§ Mr. Hammond
My hon. Friend is right. Any measures that the Minister was minded to introduce to extend the use of the NOFFO arrangements to support clean coal technology would require an amendment to section 32 of the Electricity Act 1989. Lord Ezra, when the Bill was introduced in another place, sought to include such a provision, but was ruled out of order.
§ Dr. Ian Gibson (Norwich, North)
On a point of order, Mr. Deputy Speaker. Following the blistering attack by my hon. Friend the Member for Bolsover (Mr. Skinner), may I take it that the shadow Front-Bench team has been chased from the Chamber? The hon. Members for Daventry (Mr. Boswell) and for Chesham and Amersham (Mrs. Gillan), and the right hon. Member for Wokingham (Mr. Redwood), have all disappeared from the scene. What credibility can we ascribe to the remaining members of a party whose Front-Bench team disappears in this manner?
§ Mr. Hammond
We will do our best. Perhaps our right hon. and hon. Friends have gone to the Tea Room for a short break, in anticipation of lengthy proceedings.
§ Mr. Ian Bruce
My hon. Friend will know that we operate a lean and mean team. With so many DTI Bills coming through, and with so many DTI Ministers—with all their flats—dealing with them, Conservative Members still appear able to debate these matters cogently while encountering a great deal of difficulty even getting Labour Members to get to their feet.
§ Mr. Hammond
I will not be tempted down the route that my hon. Friend offers me.
Amendment No. 2 offers the only means, within the limited scope of the Bill, of allowing the Minister to show his practical support for clean coal technology. It is a small start. How much excluding that technology from the scope of the levy would be worth would depend entirely on the level of the levy at the time. Clearly, if the levy was 11 per cent., it could be a considerable advantage which might make a significant difference to a private investor considering investing in clean coal technology for retrofit. If the levy was only 2 per cent.—[Interruption.] I am sorry: I have been tempted off my track by the Minister.
449 The current problems in the coal industry have focused attention on support for coal mining and coal burning processes. The issue is not just the price agreed with the generators, as much of the press speculation and comment over the past few months has suggested. It is also the contradiction, as my right hon. Friend the Member for Wokingham (Mr. Redwood) said, between the Government's commitment to reduced emissions of greenhouse gases, which we all welcome, and the Government's undoubted desire to help the coal industry if they can. Even before the election they were balancing on a tightrope, trying to satisfy the green lobby while masquerading as the friend of the coal mining community. Now they must decide on which side of the tightrope they will fall off.
The only route out of the problem for the Minister is to use the mechanism of the NOFFO—section 32 of the 1989 Act—in the future to support clean coal technology, while not negating the Government's commitments on greenhouse gases.
We are trying to draw out the Government's policy. We know that a number of reviews are taking place. Perhaps it would have been better if the Bill had been limited to subsections (1) and (2) of clause 1, which would have made it truly just a technical measure, as the Minister has suggested at various times that it is.
By including subsection (3), however, the Minister has given himself powers considerably to extend the scope of the levy. In those circumstances, we must probe him about his wider intentions. Had he completed his review of the future of renewables, funding and the NOFFO mechanism and then introduced a new Bill that amended section 32 of the Electricity Act 1989 and widened the scope of the levy as subsection (3) does, that might have been more logical.
We need to know whether the Government intend to use section 32 to try to support the coal industry. Are they interested in using the levy as a tool to support the industry, as our amendment No. 2 suggests? What levels do the Government envisage for the levy in the future? We would not necessarily be hostile to a higher levy if it made sense, but we are not minded to write blank cheques for the Government.
We want to ensure through the amendments that there is a proper system of reporting back to the House, and that any measures that the Government introduce to extend the scope of the levy will be properly reviewed in Parliament. We need to know how they will reach their ambitious emissions targets, how much that will cost, and how they will finance those costs. We seek openness and debate. What I have suggested the Government might be considering would not necessarily be wrong, but it would be wrong to sneak it in through the back door of subsection (3) and other provisions of the Bill.
If support for clean coal and other technologies through the levy is a coherent part of the Government's energy policy in the long term, and not just a short-term fix, it might be sensible to use the mechanism of the non-fossil fuel obligation. We will keep a check on what the Government do in that respect. For that purpose, we have tabled amendment No. 6. We do not suggest that the Government should not contemplate increasing the level 450 of the levy, but, if they do increase it, that should be subject to approval by Parliament, so that a proper check can be maintained.
In discussions such as this, it is important not to forget that, alongside the environmental argument for supporting alternative technologies and managing the fuel equation in our electricity generation industry, there is a second pillar of argument for supporting new energy technologies: security of supply. That tends to be an on-off issue. At certain times—for example, in 1973 and during the Gulf war—security of supply becomes extremely fashionable and the driving force in particular areas of energy policy. At other times, when our energy supply does not seem to be seriously threatened and our energy security is not obviously under threat, the issue slips out of sight, and the environmental focus tends to take over.
Anyone who has attended any of the excellent seminars organised by the various strategic and international study institutes with which London is blessed will realise that, although our energy supplies do not appear to be under any imminent threat, many quite plausible scenarios suggest that we would be wise to consider energy security as an important part of the equation. That is a second, and quite legitimate, reason for encouraging indigenous energy sources—although I do not suggest for a moment encouraging them at any cost.
§ Mr. Clapham
Does the hon. Gentleman accept that the previous Government and the one before that set us on a course of over-dependence on gas? In light of that, it is extremely difficult for this Government—who are trying to do something positive for the mining industry—to be effective.
§ Mr. Hammond
Doing something positive for the mining industry includes immediately approving new gas-fired power stations, which the Government said they would not do. Gas is an indigenous energy source in the United Kingdom—at least at the moment—unlike some of our other energy sources.
I do not suggest that we should pursue energy security at any cost. However, if security can be achieved in a way that is compatible with a sensible environmental policy at a sensible cost, that is a legitimate objective to pursue. Sections 32 and 33 of the Electricity Act 1989 may be a legitimate route for achieving that objective as well as environmental objectives.
§ Mr. Ian Bruce
Looking back at the debates on the original electricity legislation that introduced the non-fossil fuel obligation, one notices that the cost differences between gas, coal and nuclear and wind power then are incredibly different from those levels today. The non-fossil fuel obligation and the fossil fuel levy give the Government flexibility and should be retained. We are rather surprised that the Government do not agree.
§ Mr. Hammond
The flexibility that I believe the amendments would give the Government could prove useful to the Minister. For the second night in a row, I find myself in the somewhat unusual position of urging the Government to give themselves more discretionary power. We can envisage the advantages that that would have.
I turn now to amendment No. 4, which I think stands a little apart from the other amendments, in that it seeks to protect electricity generated from renewable technologies 451 under qualifying arrangements. The amendment seeks to prevent a situation whereby any given source of electricity supply would be subject to a levy that might be more than the subsidy being received in respect of that electricity.
We might contemplate that situation when the price of renewable energy generated from certain technologies converged with market prices. We might see that the subsidy payable is quite low—or very low indeed—at a point in the not too distant future, perhaps under some of the bids that the Minister is receiving under the current NOFFO round.
If at some point the levy were to be raised from its current low level to 5 or 10 per cent.—somewhere within the range that has been experienced since the mechanism was introduced—a technology-based renewable energy generating station could pay more levy than it receives in subsidy. I think that the Minister had some sympathy in Standing Committee for the argument that it would send the wrong signals to the renewable energy generation industry were we to suggest that, as it approached convergence and lost its subsidy, it might become a net payer of levy. We would not like to send it that message.
All these amendments have a certain coherence. Their overriding theme is the need for transparency and accountability as the Minister seeks to use the mechanisms that are available to him to deal with the issues. There is no suggestion that we would not be sympathetic to what he might have to do, but there is a desire to ensure that the House is properly informed, and that proper debate takes place.
§ Mr. Ian Bruce
I notice that the Chamber is starting to fill up with Whips. The Deputy Chief Whip is present. Obviously, he is a little worried that the Whip on duty is the same one who was on duty last night when we were debating the National Minimum Wage Bill. Perhaps the Deputy Chief Whip is concerned that we may talk through the night. I can reassure him that it is not our intention to delay the House unduly, but the Bill before us is important. The Minister, who takes this matter extremely seriously, will want to respond in full to matters that have been raised in this full and sensible debate.
Whips are, supposedly, the silent people. In Committee, they were keen to ensure that the Committee was filled with the Stepford tendency of new Labour MPs who would not—
§ Mr. Deputy Speaker
Order. I do not want to know what the Whips did in Committee. It has nothing to do with me. We have amendments before us and the hon. Gentleman will speak to them.
§ Mr. Bruce
I am most grateful to you, Mr. Deputy Speaker, for reminding me not to be tempted by such important people as the Deputy Chief Whip.
It is important that the House has the opportunity to have a full debate. It has allowed the hon. Member for Bolsover (Mr. Skinner) to speak on a subject about which he is knowledgeable and passionate, and his speech was a treat to us all. Indeed, he spoke directly to the substance of the amendments before us. We also had a treatise from my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond), which went into great detail about the amendments that we tabled.
452 I shall respond to any interventions that hon. Members may wish to make. If they wish me to go wider, I should be happy to do so. I shall talk about the background to the amendments and why it is so important that the Minister is given the opportunity at this early hour to tell the House what is in his mind about where we are going. However, before I start my full remarks, I should speak briefly about the non-fossil fuel obligation, which is part of section 32 of the Electricity Act 1989 and concerns the protection of public interest, and section 33, which the Bill will amend. Those terms can confuse people about exactly what is intended.
You will know, Mr. Deputy Speaker, that, in deciding which amendments to select for debate, Madam Speaker and her Committee are always extremely wise and beyond criticism. Madam Speaker was correct not to select the three amendments that I tabled—
§ Mr. Deputy Speaker
Order. No comment should be made on amendments which have not been selected. There was good cause not to select them, and the House knows that. Nor should the hon. Gentleman deal with the origins of the amendments. The amendments are here for debate, and that is what the hon. Gentleman must do.
§ Mr. Bruce
I am grateful to you, Mr. Deputy Speaker, for keeping me on the straight and narrow.
The Minister may argue, probably correctly, that section 32 of the Electricity Act 1989 already contains powers to promote clean coal technology, and that may well be a reason for rejecting the new clause. We are simply seeking, as we did in Committee, to tease out whether the Government need various powers. It is important to examine the Government's intentions.
The hon. Member for Bolsover, like other hon. Members, will want the Government's fuel policy to be sufficiently flexible. The levy should not go on specific non-fossil fuels when one of the original purposes of NOFFO and the levy to pay for it was to provide for the cost of closing nuclear power stations when they came to the end of their life. That levy has been extremely effective. Electricity prices have fallen since its introduction, rather than risen, as was the suggestion then. The Government may want that fall to continue or they may want to ensure that they can increase electricity prices in the future to pay for Kyoto. No one has yet told us how our obligations under Kyoto will be paid for.
We already know that the Government plan to put taxes on aggregates and landfill, and to encourage the burning of waste to generate electricity—a controversial subject. This evening, I attended a dinner of the Institute of Wastes Management, where the problems of people not wanting what is considered to be invasive technology in their back yards was discussed.
§ Mr. Hammond
Does my hon. Friend agree that amendment No. 4 would allow the Minister to distinguish between technologies in the way that he is suggesting is necessary?
§ Mr. Bruce
Indeed. Section 32 helps the Minister to deal with the protection of public interest—that is what the section is called in the Electricity Act 1989. The additional flexibility is designed to enable the Minister to deal with difficult situations.
453 The mechanism is still being used effectively by the Government and they say that they want to continue to use it. The fact that that mechanism has stood the test of time is a tribute to our Conservative predecessors, who obviously got it right. It is rare for a mechanism which was heavily criticised to have stood the test of time. We should not want Ministers and Whips to have to find more parliamentary time to introduce yet another measure when it was decided how the obligation would be imposed. Our amendment offers the Minister a new mechanism to enable him to do a better job for the future and to tell us about funding.
§ Mr. Hammond
Does my hon. Friend agree that amendment No. 3 gives the Minister every power that he would have within the Bill as drafted, plus some additional powers to use subsection (3) in a more subtle way than is currently offered?
§ Mr. Bruce
I am loth to say that the Minister would not want to be subtle. However, his response in Committee demonstrated that he wanted to bamboozle us. In a rather aggressive manner—I know that that is just his way and that he does not mean anything by it—he seemed to be telling Conservative Members that anything that we do to help him so that he can help the public and his friends in the coal industry should be rejected at every opportunity.
The cap on the levy is dealt with in the amendments. That could lead one to believe that we are suggesting that the non-fossil fuel obligation should be used for all sorts of additional purposes and also that it should be held back. It is somewhat contradictory. We are saying not that the non-fossil fuel obligation and the levy should never go up beyond the level that we are suggesting, but that, if it were to be increased, the House should have an opportunity to discuss it. Those are crucial issues for the future.
The environmental lobby is keen to ensure that we have as much information as possible about where it believes that the country should be going. The Government are looking at all sorts of things, including their transport policy. They are all asking what we should be doing for Kyoto. They are asking what we should be doing for the future.
We are not talking about no-cost options. It is important to know that the Minister has a power that could put up electricity prices substantially—I do not believe that there is any limit. The Minister could wake up one morning and be told by the Chancellor that he is trying to do something for Kyoto but that he does not want to do it by general taxation because he would be found out and people would be critical. In those circumstances, the price of electricity could be increased by an order, which hardly needs to be debated in the House.
§ Mr. Hammond
Does my hon. Friend agree that the levy has something of the nature of a hypothecated tax, which has the extraordinary characteristic of being self-collecting? The spending Department spends and it automatically collects the right amount through the mechanism of the levy.
§ Mr. Bruce
Indeed. It is a subtle and clever mechanism that a hypothecated tax has been operating in the United Kingdom for over a decade without anybody noticing. People have noticed electricity prices going down, despite Labour propaganda suggesting that prices have been going up.
If we are to be honest, it is important that people should know the costs. My hon. Friend the Member for Runnymede and Weybridge knows that the levy, which was introduced by a Conservative Government, transferred existing costs of nuclear power on to the coal industry, as there was inequality between those two forms of energy. Because nuclear power stations were nationalized—nobody seemed to care that they were uneconomical—the extra costs had to be found. A subtle and clever mechanism was brought in, and any Chancellor who recognises how clever that mechanism is will be tempted to use it. Despite the fact that the Treasury is not speaking before the Budget, perhaps it is listening to the debate. It may think that this is an ideal way to raise additional taxation.
The House would like to discuss this matter further, and I am disappointed—as are my hon. Friends—that no Labour Member, other than the hon. Members for Bolsover and for Barnsley, West and Penistone (Mr. Clapham), who intervened passionately, has taken part in the debate. I shall now allow the Minister to respond—assuming that I cannot tempt any Labour Member to express is views. I would not want to hog the limited time we have available, and I should not want to delay the start of the Third Reading debate.
§ 12 midnight
§ Mr. Battle
This is a Bill of two clauses, which deals with the type of electricity on which the fossil fuel levy can be charged. The levy is the main means of raising the funds to support renewable technologies for the generation of electricity, and the Bill will ensure a level playing field in the generation of electricity. It will maintain the existing levy on nuclear energy generated in England and Wales and will bring under the levy for the first time the imports of nuclear electricity—a matter to which my hon. Friend the Member for Bolsover (Mr. Skinner) referred. The imports from France of nuclear energy will be brought under the levy. I accept that it is a small measure, but the Bill will shift the balance in favour of renewables and will ensure that the nuclear industry pays its share.
It has been an interesting debate. We had a wide-ranging speech from the right hon. Member for Wokingham (Mr. Redwood) who, sadly, had to leave us. We have had contributions from the hon. Members for South Dorset (Mr. Bruce) and for Runnymede and Weybridge (Mr. Hammond). I heard critical mutterings, but let us be fair—those hon. Members have been present throughout our proceedings on the Bill—on Second Reading, for the whole of the Committee stage and tonight. At least two Opposition Members are seriously interested in the Bill, and I have listened to what they have had to say.
455 Amendment No. 2 proposes that electricity supplied from clean coal generating plants could be exempted from the levy, but sadly there are no such generating plants operating in Britain. Simply exempting electricity supplied from such stations from the scope of the levy would not give sufficient incentive for such plants to be built. We are looking carefully at how to encourage clean coal technology. We already provide support for the development of clean coal technology under the foresight programme; some £4 million has been provided this year alone.
§ Mr. Ian Bruce
The Minister has clearly done some homework on clean coal. Is the technology ready to go, assuming that a NOFFO bid was allowed and we had some response?
§ Mr. Battle
There are one or two rumours of interest, but no more than that. We are looking for clear proposals. I hope that proposals for clean coal technology at an affordable price can be introduced quickly.
§ Mr. Norman Baker (Lewes)
Will the Minister clarify the Government's position on the coal industry? Do they believe that the coal industry is at its optimum size? Should it be expanded, altered to include clean coal technology, or further reduced for environmental reasons?
§ Mr. Battle
We see a future for deep-mined coal in Britain, and we want clean coal technology as a means of ensuring that. We shall work to that end, but we inherited incredible difficulties from the previous Government.
Amendments Nos. 3 and 5 provide for the scope of the levy to be extended to new categories of electricity, but that approach differs from the approach envisaged in the Bill. I emphasise that the Bill simply amends section 33 of the Electricity Act 1989. For example, had we not acted to extend the levy to the nuclear industry from 1 April this year, as the primary nuclear contract set by that Act runs out, nuclear generators could have benefited from the resulting market distortion to the tune of £60 million to £70 million a year at the expense of customers. That is why we have placed the levy on nuclear energy, including that generated in France. The approach proposed in amendments Nos. 3 and 5 is based on the continuation of that distortion. We introduced the Bill in the first place to get rid of that.
§ Mr. Hammond
I accept what the Minister says, but he misrepresents amendment No. 3, which simply seeks to give the Secretary of State the power, should she wish, to extend the levy sector by sector to other types of technology, rather than extend it to all forms of electricity. How could the Secretary of State object to being given more power to act more subtly if she wants to?
§ Mr. Battle
I was coming to precisely that point. Perhaps I should accept no more interventions but try to answer the debate. The approach proposed in the amendments is based on the continuation of distortions. The problem with that is that support is not closely targeted on the companies that need it, nor is the amount of extra revenue that they can generate in the market tied to the amount of support that they need. In other words, such an approach would be wasteful and inefficient, and would not achieve the objectives that the hon. Gentleman suggests it would.
456 Our approach is better, because we are signalling, through the Bill, that one day all electricity may be leviable. We hope that green, renewable sources of electricity generation will be able to compete on equal terms with other forms of generation in the future, and I see no reason why such electricity should not then be subjected to the levy. The effect would then be that resources could be targeted closely on those renewable generators that need and deserve support, which is precisely the point made by the right hon. Member for Penrith and The Border (Mr. Maclean). I agree with him. The amount of support that those generators receive can be measured according to their needs. We believe that that would be a more effective way to proceed.
At present, most renewable generators cannot produce electricity at prices that are competitive on an open market. Amendment No. 4 fundamentally misunderstands how NOFFO operates. As Opposition Members who have been present throughout the Bill's proceedings know, we have spelt out the fact that the levy is paid to people who produce the electricity: it gives them the difference. Opposition Members are nodding, so we know where we stand. There is therefore no reason to give further support, as the amendment seeks to do.
Amendment No. 6 seeks to ensure that the amount of levy paid by licensed electricity suppliers stays the same or falls. That is short-sighted because we cannot predict what will come in the bids for NOFFO for renewables. The procedure is demand led. If new schemes come forward, even those set up by the previous Government, we shall not shut them down and come back to the House every time. We want renewables to be supported, which is why we have the Bill.
§ Mr. Hammond
The amendment does not say what the Minister says it does. It says that, if the levy is to rise, the Secretary of State must come back to the House and get that rise approved by means of a statutory instrument, subject to the approval of the House of Commons. What is wrong with that?
§ Mr. Battle
It is late and the hon. Gentleman was up late last night, too. He seems unable to listen. If bids 3 and 4 for the NOFFO projects come through, as they will this year, is the hon. Gentleman saying that we must come back to the House for every renewable scheme? There were hundreds of such schemes. The idea is nonsense and would hold the whole process up. I do not think that that is the intention behind the Opposition amendments. NOFFO 3 and 4 projects have yet to come on stream and, as a result, the overall amount of support could rise.
Opposition Members aired the same thoughts under different guises in Committee. Furthermore, the Bill has already passed through the other place and had a good airing there. We gave the Opposition plenty of time in the Standing Committee. Indeed, in the other place the Opposition spokesman, Lord Fraser of Carmyllie, said:Indeed, but for that rare aberration of political judgment by the British people on 1st May, I have no doubt that I would have been introducing this self-same Bill from the other side of the Chamber. In those circumstances, it is unnecessary for me in any way to 457 rehearse the elaborate and detailed argument which the noble Lord usefully gave to the House in support of this measure".—[Official Report, House of Lords, 18 July 1997; Vol. 581, c. 1144–45.]I could not agree more, and I ask the Opposition to withdraw their new clause. They have made their points, and we have taken them on board.
§ Question put and negatived.
§ Bill read the Third time, and passed, without amendment.