| Fossil Fuel Levy Bill [Lords]
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Mr. Ian Bruce: Will the Minister give way? Mr. Battle: In a moment. All the output of nuclear-generating stations in England and Wales is contracted under the primary nuclear contract. As the hon. Member for South Dorset said, that primary nuclear contract, signed up under the Electricity Act 1989, runs out on 31 March 1998. Nuclear energy will be scot-free then. We would be widening the levy base to get support for renewables, which in turn would reduce the levy. The hon. Member for South Dorset thinks that that will put prices up, as a tax would. Broadening the levy base to ensure that nuclear energy is included will reduce the levy rate needed to support renewables. It is good news for consumers. Mr. Bruce: The Minister has missed the point that I was trying to get across. It was not about the fact that by 31 March we shall have reduced to nothing money going to the nuclear industry. I was asking the Minister to clarify whether, if the Government's decision was to have, say, four times as much under the NFFO and to have more energy generated, the levy collected would have to be greater, thereby putting up the price of electricity. I wanted the Minister to say ``No, we're keeping it more or less as it is and we will for ever more''; but the Government's policy may be to increase it four or five times. The Chairman: I remind the Committee that we are debating a sittings motion. Mr. Battle: As I tried to explain earlier to your predecessor, Mr. Welsh, it is difficult to debate the detail of the Bill before we come to the Bill. We are now debating whether we should debate it or not. Maybe the reasons for the Bill are the reasons why we should debate it. I believe that there is a fundamental misunderstanding. The hon. Member for South Dorset seems to think--I may have misunderstood him--that the levy is raised, put in a pot and then handed out, but it does not work like that. Under the NFFO contracts, a system of bids is set in train: NFFO 1, NFFO 2 and NFFO 3, all signed under the previous Government, come on stream and could affect the amount taken out of the levy through the kitty system, which operates by the companies bidding in and then getting money for the electricity that they generate. It is not a tax that is then shared out: it depends on companies' capacity to generate projects and get them up and running. There is a time lag, and we shall inherit the projects that have been approved, including those approved by the previous Government. I do not object to that. We support NFFO 4, which will come on stream, and we have also initiated a round for NFFO 5. Yes, it could vary, but if we broaden the base, the chances are that bills will not increase. If we do nothing now, bills will increase. Therefore, consumers should welcome the Bill. The purpose of the Bill is to raise the funds used to support renewable energy technologies for the generation of electricity. We are trying to put the levy on a sound base, which means ensuring that nuclear energy is included. With that I hope that we can come to the amendments that Opposition Members have tabled, as that will enable us to respond in detail to the content of their points. Mr. Hammond: I thank the Minister for giving way. I thought for a moment that, after saying earlier that he would, he was not going to. The Minister has talked about widening the levy base. It is a tautology to say that, if one has a set amount of spend and one widens the base on which one taxes, the tax rate will be lower, but he has talked about widening the levy base to support renewables. Will he accept that some people will find it strange that the Government are taking powers to impose the levy on unsubsidised renewables, as that is counter-intuitive as a way of supporting and encouraging renewables' growth? Mr. Battle: Not all fuels are levied now. Hydro is not in NFFO and is not included in the Bill. We can debate these matters in detail on amendments Nos. 6 and 10 to clause 1, if we can come to the amendments tabled by Opposition Members. Mr. Bruce: I understood that the Minister did not really want to answer my question and that I was stretching your patience, Mr. Welsh, in intervening on him. However, I rise on that very point. The Minister announced on 25 November via a Department of Trade and Industry press notice that NFFO 5 was the first step in increasing the amount of electricity generated under NFFO to 10 per cent. That was a Government announcement. We need to know what the Government are trying to do in this round of NFFO 5 because of the problems of the electricity industry. We know that they take the lowest bidding amount--the lowest cost of having non-fossil fuel obligation money--which must be used by the electricity supply companies, and that the levy pays for it. Unless the Minister tells us what he thinks of NFFO 5 and details the implications of that 10 per cent. increase, we do not know--because the Government will not tell us their policy--whether the Bill is a suitable means of allowing the fetters to be removed. That is what will happen. We must know whether we are going to meet the 31 March deadline. The Minister has failed to talk about the most crucial element of the sittings motion. Mr. Hammond: I crave your indulgence, Mr. Welsh, to make one further point, which the Minister will perhaps clarify for the Committee's convenience. He referred, in relation to the noble Lord Ezra's Bill, to the possible requirement for European Union approval for any extension of NFFO spending to include clean-coal technologies or other options. However, in answer to a parliamentary question on 22 May 1997, he made it clear that it would be necessary to have not only primary legislation include other forms of energy, but to have clearance from the European Commission. Will he tell the Committee what steps have been taken since 22 May 1997 to establish the position of the Commission and whether clearance has been granted? We would then know that if the Government decided to extend the scope of the NFFO, it would be in order for the European Union. Mr. Battle: I assume that we are winding up again, but I want to answer the question of the hon. Member for South Dorset. We are having long and tortuous conversations with the Commission about coal, not least because we are challenging unfair imports that are subsidised in Europe. The row over coal subsidies in Europe is massive, but that is an inherited situation and we cannot sort it out overnight. The Bill is another element of it. We are asking whether it would be classified as state aid to give support to energy bought from clean-coal power stations, if they were to be built, which is different from the question of who subsidises imports from Germany, Spain and elsewhere. The conversations are on-going and take place regularly. The purpose of the levy is to support renewable technologies. It depends on what comes forward as a result of the bids. I said in the press release of 25 November that our target is for 10 per cent. of energy to come from renewable sources by 2010. I said that I hoped that having a fifth round of NFFO to build on the other rounds that have gone before would help us to move in that direction. I note that rounds one and two have given us 1 per cent. of renewables, which could possibly move to 2 per cent. or even 5 per cent. of electricity generation within the rounds that are set out here. We still have some way to go, but we have set ambitious targets. Question put and agreed to. Resolved,
The Chairman: Before we begin proceedings on the Bill, I remind hon. Members that adequate notice should be given of amendments. As a general rule, my co-Chairman and I do not propose to select starred amendments, including any starred amendments that may be reached during an afternoon sitting.
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