Energy Bill

Lord Lawson of Blaby Excerpts

Monday 28th October 2013 Lords Chamber

[Lord Lawson of Blaby (Con)]

My Lords, this is such an unbelievably bad Bill that it is difficult to see how it could be made any worse. However, no one should ever underrate the noble Lord, Lord Oxburgh, because he has found a way to make it even worse. I agree with one or two of the things he said. For example, he said that a lot has changed since the Bill was first thought about.

The noble Baroness who is the spokesman for the Labour Opposition probably knows a lot about how the Bill first came into being because I believe that she had a hand in it, but a long time has passed and a lot has changed, including the arrival of what is known as the shale gas revolution, although that includes shale oil. This is of the first importance. I disagree with the comments made by the noble Lord, Lord Oxburgh, but I will reserve judgment on those because your Lordships’ Economic Affairs Select Committee has just embarked on an inquiry into UK shale gas and shale oil and we have only just begun to take evidence. I will reserve my judgment until we come to a conclusion in the light of the evidence, but it is clearly a change of the first importance.

My noble friend Lord Teverson put his finger on the real reason why the Bill is such a bad Bill—that is, it is not an energy Bill at all but a decarbonisation Bill, as he made very clear. As a former Secretary of State for Energy, I take the old-fashioned view that an energy Bill ought to be an energy Bill concerned with how to provide the people of this country—particularly the poorest—and the businesses and industry of this country, with the cheapest possible supply of reliable energy. Energy needs to be supplied cheaply, efficiently and reliably. This Bill, not being an energy Bill, is about how to supply energy expensively, inefficiently and unreliably. This has become a very sensitive issue. Energy prices in general, and electricity prices in particular, have understandably achieved a very high profile as families up and down the land are suffering from the introduction of a policy which the Bill will make even worse.

I do not know whether noble Lords have had the opportunity to read today’s Financial Times which has a very good leading article on this issue. Like the noble Lord, Lord Oxburgh, I think that this group of amendments goes to the heart of what the Bill is about. One needs to put the thing into perspective. The article states that, on the Government’s own figures, by 2030 environmental levies will account for 41% of the cost of electricity. I suspect that is a great underestimate but it is the Government’s own estimate. The article points out:

“If Britain never adequately reckoned with the cost of its carbon commitments, it may also have been too optimistic about the benefits. The country accounts for less than 2 per cent of world emissions. The heroic reductions that are planned will have a negligible effect on global temperatures.

This would be true even if the UK’s moderation were not offset by intemperance elsewhere. In fact, investment in energy-intensive industries is already being drawn to countries such as the US where costs are lower. Britain may end up exporting emissions–and jobs–to countries that have shunned such onerous environmental commitments. The halting progress towards a global carbon pact provides scant vindication for those who thought that where Britain led, others would follow”.

It goes on to say, quite nicely, that:

“Such wilful naivety gives an unintended meaning to Prime Minister David Cameron’s pledge to lead the greenest government ever.”

This policy is so damaging that even the Financial Times says that the commitments we have entered into—because there is absolutely no point in doing it on a unilateral basis—should be either repealed or amended.

However, that is not the only objection to the Bill. As I have pointed out, I have some interest in this as I was Secretary for Energy at the time in question. The Financial Times also says:

“Since privatisation the electricity industry has been run on market principles. Price controls were abolished and politicians placed their faith in competition to keep prices low and the grid adequately supplied. Now, the government is becoming the industry’s Gosplan. It decides what plants are built, sets their prices and guarantees financing for their construction.”

This is a Gosplan Bill: those are not my words, but those of the Financial Times, which concludes that the Bill,

“combines the inefficiency of state planning with the expense of private capital, exacerbated by the fear that politicians will retrospectively change their minds ... Britain cannot afford to hobble itself with overly high energy costs as it embarks on the road to recovery.”

That is the considered view of the Financial Times which knows what it is talking about. That is why the Bill is fundamentally flawed and the amendment proposed by the noble Lord, Lord Oxburgh, seeks to make it even worse and make the flaws go even further. By 2016, nobody in their right mind is going to have the time of day for this policy.

Nobody who knows anything serious about energy policy has a good word to say about the Bill. The Oxford Institute for Energy Studies is probably the most reputable forum for the study of energy in the country. The greatest expert there, Mr Malcolm Keay, described the Bill as entailing,

“a massive and unprecedented degree of centralisation and detailed decision-making by the Government.”

This is quite extraordinary. Prior to the changes we made in 1979, the previous Labour Government’s policy of nationalisation was of the highest parliamentary standards compared with the discriminatory system in this Bill where the Secretary of State has the power to sign contracts—with no effective parliamentary scrutiny whatever—with particular energy suppliers, on a completely arbitrary basis, to decide how much should be supplied, at what price and for how long. This makes old-style nationalisation something one would look back to with nostalgia. It is worse than a return to the past: it is a return to something even worse than the past, which was bad enough. The policies we introduced in the 1980s worked and served the country very well. A final witness for the prosecution, as it were, is Professor Dieter Helm, Professor of Energy Policy at Oxford University, who is widely regarded as the country’s greatest authority on energy policy and who has condemned the Bill with bell, book and candle.

This is quite appalling. Over all the time that I have been in this House, which is a long time now, I have never come across a Bill as bad as this. I therefore support the Government wholeheartedly in opposing the amendment proposed by the noble Lord, Lord Oxburgh. The amendment is certainly within the logic of the Bill but it would just take it further and make it even worse.

--- Later in debate ---

[Lord Oxburgh]

My Lords, I thank all those who have participated in this very interesting discussion. I apologise for the fact that what I had intended to be a rather narrow, technical discussion has turned into a debate that has been much more like a Second Reading. Nevertheless, I think it has done a great deal to clear the air. I am extremely sensitive to the question of consumer prices and there is a real debate to be had about to what extent some of the measures that we have been talking about should go on to energy bills and to what extent they should be borne by general taxation. I am not taking a position on that but it is well worth discussing.

I think I found something with which I could agree in almost all the speeches that have been made, from whichever side of the House—even in the case of the noble Lord, Lord Lawson. There are things about this Bill that I do not like but we have to have a Bill and we have to have it urgently. However, I think his cover is blown: on the basis of his comments today, we can be pretty sure that he is moonlighting as a leader writer for the FT. I also agree with those noble Lords who have questioned the overly prescriptive nature of the EU targets. We could well do without them and I would like to see the Government do what they can to renegotiate or indeed disregard them. On the other hand, to believe that what I and my co-proposers have suggested today will have any additional impact on consumer bills beyond that to which we are already committed through existing agreements is a misunderstanding.

On the 2030 target, I have to say that, given the length of time this proposal has been around, the “rushing” argument is a little bit rich. We know precisely the views of the Committee on Climate Change. We have had them from several members of the committee today. We know what the committee expects and what its forward look demands for 2030. Waiting for the next carbon budget is a little bit of a procrastination and I do not think that it is a serious, substantial objection.

If one takes the position taken by the noble Lord, Lord Lawson, that one is unconvinced that human intervention is having a significant effect on long-term climate—

[Lord Lawson of Blaby]

I never said that. But even if one thinks it does have an effect, the policy prescription does not stand up. That was the point I was making.

[Lord Oxburgh]

I thank the noble Lord. I was about to go on and say that I think his position is rational in that situation but that he is entirely wrong in his assessment of the science. There is also a political argument to be had over what one subsequently does.

This is something on which I feel it is necessary to test the opinion of the House, so I would like to do that.