Infrastructure Bill [Lords]

Part of Oral Answers to Questions — Work and Pensions – in the House of Commons at 5:24 pm on 8th December 2014.

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Photo of Charles Hendry Charles Hendry Conservative, Wealden 5:24 pm, 8th December 2014

Thank you, Madam Deputy Speaker. In case the House thinks that you have mis-titled me as you did Richard Burden, I should point out—I thank you for drawing attention to it—my professorship at Edinburgh university, which you and I were very pleased to attend; I should make it clear to the House that you were there some decades after I was. I draw attention to my entry in the Register of Members’ Financial Interests in relation to some of these subjects.

This is a very important Bill. As my right hon. Friend the Minister has said, it has a kaleidoscope of measures. It is positive and encouraging to see so many different measures brought together in one Bill; that shows the Government’s determination to make progress on many different fronts. Bringing the measures together in this way is eminently sensible.

I wish to focus primarily on the energy issues in part 5. I welcome the changes being made to improve the extraction rates in the North sea. We should pay tribute to Sir Ian Wood for his report and the work he did in identifying the real challenges in optimising the returns from the North sea basin. I also welcome the proposals on the extension of community ownership. It has always been my view that renewable energy projects will stand a greater prospect of being approved and endorsed by their communities if there is a significant proportion of local community ownership. We all hope that that will be done in a voluntary way, but the back-stop approach proposed by the Government is very sensible indeed.

The meat of much of this Bill relates to shale gas issues, which I want to focus on. Recognition of the continuing role for gas in our energy mix will be of long-term importance in electricity generation. We need to have a flexible source of generation to make up for the peaks and troughs of renewable sources of generation. That is also vital to heating our homes.

It is clear to me, as president of the National Energy Action fuel poverty charity, that the biggest distinction in fuel poverty is between those whose homes are on the gas grid and those whose are off it. If we do not see greater use of gas in heating our homes, there will be more avoidable winter deaths. The Bill’s proposals recognise the contribution that gas can make in terms of both electricity and heat. There is a focus on security of supply and issues of affordability, and, because new gas will replace dirty old coal, it will also help us reduce our carbon emissions.

Security of supply issues will also be determined by the extent to which the gas will come from our own indigenous resources and the extent to which we will need to import it from elsewhere. If there is a significant source of gas under our ground, we need to quantify and measure it and consider the extent to which it is extractable—the two do not necessarily go together—and whether that can be done in an economical way. The extraction must then take place only if it meets the highest standards of environmental protection and safety.

The Labour party, whose amendment was reported in this morning’s Financial Times, is mistaken in its understanding of the core strength of our regulatory approach. The regulation of our oil and gas reserves—which, along with that of Norway’s, is considered to be the best in the world—is successful not because it is frozen in legislation, which can be changed only by another piece of legislation, but because it evolves and changes as new technology is introduced and new challenges emerge. It evolves because the onus is constantly on the producers—the companies involved—to use the best practices available to them to ensure environmental protection and safety.

That is why the European Commission wanted to replicate the British model elsewhere and why, after what happened in the gulf of Mexico, the Americans considered which elements of the British model they could import into the American system. That process of “best in class” has driven this forward and given us the toughest standards of regulation in the world.