House of Lords
Monday, 28 October 2013.
2.30 pm
Prayers—read by the Lord Bishop of Lichfield.
Introduction: Lord Sherbourne of Didsbury
2.38 pm
Sir Stephen Ashley Sherbourne, Knight, CBE, having been created Baron Sherbourne of Didsbury, of Didsbury in the City of Manchester, was introduced and took the oath, supported by Lord Hill of Oareford and Lord Howard of Lympne, and signed an undertaking to abide by the Code of Conduct.
Introduction: Lord Paddick
2.45 pm
Brian Leonard Paddick, Esquire, having been created Baron Paddick, of Brixton in the London Borough of Lambeth, was introduced and took the oath, supported by Baroness Barker and Lord Macdonald of River Glaven, and signed an undertaking to abide by the Code of Conduct.
Public Services: Private Sector Companies
Question
2.50 pm
To ask Her Majesty’s Government what assessment they have made of the reliability and value for money of public services provided by private companies.
Lord Wallace of Saltaire (LD): My Lords, the Government’s overarching principle in procuring public services in the private sector is to secure the best quality and value for money for the taxpayer over the life of the contract. On coming to power in 2010, the Government found that public sector procurement was fragmented, bureaucratic, protracted and expensive, both for bidders and for procurers. The procurement reforms we have introduced since 2010 have made the way we do business more competitive, more transparent, better value and far simpler than before.
Lord Haskel (Lab): Does the Minister agree with me that blaming the past for our problems in the present does not actually get us very far? Does he also agree with virtually everybody else that we are being ripped off by these companies, not only on energy prices but also in the Work Programme and in health assessments and rail fares? We learnt from the Financial Times only this morning that the Government are concerned that we are being ripped off by the water companies. What steps are the Government taking to rebuild public trust, and hold down the cost of living, by giving social obligations a higher priority and encouraging an attitude of public service?
Lord Wallace of Saltaire: My Lords, I hope you will accept that there is, to some extent, a difference between the relationship that the Government have with water companies and energy suppliers, which have regulators, and the direct contracts that the Government have with particular suppliers such as Serco and G4S. The concerns that we have at present over Serco and G4S are widely known. The Government are conducting a review of contracts with Serco and G4S across the board.
Lord Naseby (Con): Does my noble friend recall that, prior to 1979, hundreds of local authorities had direct labour departments building council homes and carrying out maintenance at a massive loss of billions of pounds to the local ratepayers and the taxpayer in general? In 1979, very early on, those councils were prevented from doing that and the private sector construction industry was brought in to build those flats. Is that not a better way forward, and has that not been proven over the years?
Lord Wallace of Saltaire: My Lords, I think we have discovered yet again that there is no perfect way of providing goods and services and that each model has its own advantages and disadvantages. The Government are currently doing their best to encourage the development of mutuals. Some weeks ago I went round the mutual housing association operating in Bradford, and it was doing a superb job, in particular in training apprentices. But of course there are good examples and bad examples in almost every sector.
Lord Wills (Lab): My Lords, does the Minister agree that transparency can only improve the delivery of public services by private sector companies? If he does, can he explain exactly why the Government continue to resist the extension of the Freedom of Information Act to the provision of public services by private sector companies?
Lord Wallace of Saltaire: My Lords, that is a familiar question. There are, of course, problems of commercial confidentiality, as the noble Lord well knows. I will take it back and write to him yet again on the subject.
Baroness Greengross (CB): In the light of the recent criticisms of past exercises in public procurement, can the Minister give the House an absolute assurance that the Government will in future ensure that in every such procurement the reasons and objectives are clearly laid out so that delivery can be monitored and success assessed; that a realistic and workable alternative is available so that the Government do not in the last hours find themselves negotiating over a barrel; and, lastly, that the Government are clear about which risks they will keep and, when they want to allocate those risks to the operator, how that will be achieved?
Lord Wallace of Saltaire: My Lords, I wish that every potential risk was clear before one ever signed a contract, as that is part of the problem. The Government are aware that part of the problem with public procurement is that it has proved easier to contract with very large-scale providers which then very often subcontract to other suppliers. We are moving towards
the target of 25% of contracts going to small and medium-sized suppliers so that there are direct relations with those who are actually on the ground providing the service in the regions and the localities. That is one of the things that we hope will improve the quality.
Lord Sugar (Lab): My Lords, does the Minister agree that the original concept of hiring commercial enterprise to conduct the business of the Government was meant to gain better efficiency and value for money? Does he agree that this has failed in the sense that most of these private contractors actually spend most of their time enhancing their profit margins instead of looking after the service that they are supposed to be providing? Serco, as he has already mentioned, is the classic example where, I believe, there are allegations of fraudulent activities.
Lord Wallace of Saltaire: My Lords, in the case of Serco, the noble Lord will have seen that a number of senior executives have resigned in recent weeks. We welcome that and see it as a positive first step in the process of corporate renewal. Across the board, however, I am not sure that I would wish to blacken every company providing services for the state in the way that the noble Lord has perhaps suggested.
Lord Blackwell (Con): My Lords, I declare my interests as set out in the register. Does my noble friend the Minister accept that there are millions of privately employed workers delivering public services who go to work every day completely dedicated to the quality of services that they deliver to the public? Does he recognise that, in tribute to their efforts, we should be clear that you do not have to be a public sector employee in order to be a public sector servant?
Lord Wallace of Saltaire: My Lords, one of the reasons why the Government are attempting to encourage more mutuals in this area is that there is considerable evidence that people who work for mutuals have a much stronger sense of service, job satisfaction and co-operative working.
Baroness Farrington of Ribbleton (Lab): My Lords, the Minister referred to one of the earlier questions as familiar. Does he accept that questions would become less familiar on the Order Paper if they were answered?
Lord Wallace of Saltaire: Yes.
Lord Berkeley (Lab): My Lords, can the Government explain why, on the recently announced east coast main line franchise, they have allowed the state railways of the Netherlands, Germany and France to bid but not the directly operated railways that are owned by this Government? What is the difference?
Lord Wallace of Saltaire: My Lords, that is a little bit on the edge of this Question. However, as a frequent user of the east coast railway line, I know exactly where the noble Lord is coming from.
National Curriculum: Violence against Women
Question
2.58 pm
To ask Her Majesty’s Government what plans they have to review the National Curriculum with the aim of preventing violence against women; and whether any such plans include making sex and relationship education a statutory part of the school curriculum.
The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con): My Lords, violence against women is unacceptable. We expect schools to teach children not to tolerate violence. Schools may include this topic in personal, social, health and economic education as a non-statutory subject. Maintained secondary schools are already legally required to provide sex and relationship education, and we would expect all academies also to do so. The SRE guidance, which schools must have regard to, states that teachers should support children to avoid all forms of abuse, bullying and violence.
Baroness Prosser (Lab): I thank the Minister for that reply, but does he agree that with women and girls experiencing higher levels of physical and sexual abuse, the Department for Education should actively support the Home Office’s strategy entitled A Call to End Violence Against Women and Girls? This includes sending schools information about prevention campaigns and overseeing the implementation of such campaigns.
Lord Nash: I pay tribute to the noble Baroness’s work on women’s and girls’ rights and opportunities. We support the principle behind her Question, and the DfE fully supports the Home Office’s excellent strategy in this regard. However, we do not believe that the most effective way of doing this is for the department to try to send messages to all girls. We are looking into how best to get information and messages to them. The This is Abuse campaign run by the Home Office is already doing good work in this regard. Later this year, Ministers from the Department for Education, the Home Office and the Department for International Development are to meet representatives from head teachers’ and teachers’ unions to discuss how best to raise awareness among staff and pupils of risks linked to gender-based violence. I am sure that the noble Baroness will also agree that any messages need to go to boys as well as girls.
Baroness Butler-Sloss (CB): My Lords, the noble Lord, Lord Northbourne, has been passionate about the importance of parenting being part of citizenship. If the Government took that on board, the very important issue of domestic violence would fit very neatly into it.
Lord Nash: I take the noble and learned Baroness’s point. We should do everything we can to improve parenting in this country. But, I am afraid, it is also the case that there are many children whose parents are not going to do the job and we must do that in schools.
Baroness Hamwee (LD): My Lords, does the Minister agree that behaviour and attitudes tend to get repeated down the generations? This includes the repetition of violence and, among men and women, the acceptance of violence. Therefore, does he think it is important to say that violence is wrong and to give victims the confidence to speak up and say that it is wrong and that they will not put up with it?
Lord Nash: My Lords, I entirely agree with my noble friend’s point. I think she is particularly referring to domestic violence, where we have a lot of work under way, but there are a number of cycles that we need to break through work in schools: worklessness is one; violence is another good example.
Baroness Nye (Lab): My Lords, the last time the sex and relationship guidelines were updated was at the turn of the century, when the founders of Facebook were still in high school and Twitter was confined to the bird world. Will the Minister explain why the Government are so opposed to updating those guidelines to help teachers help children understand the internet world that they are growing up in now?
Lord Nash: My Lords, as part of the recent PSHE review, we looked at whether or not the SRE guidelines needed to be updated. We concluded that they represent a very sound framework for guidance in this area. We are doing a great deal on internet safety, as the noble Baroness knows, including bringing it into the curriculum for the first time, and a great deal of work with CEOP. We think that the framework is there and that to keep constantly changing it due to changes in technology is counterproductive, as technology is moving so fast.
Baroness Jenkin of Kennington (Con): My Lords, is my noble friend aware that recent polling shows that one in three girls is groped at school and sexual harassment is routine? May I suggest that where schools do best practice, other schools are encouraged to learn from them?
Lord Nash: I agree entirely with my noble friend’s comments. We have asked Ofsted to publish best practice on PSHE, and we encourage all schools to do what the best schools can.
Baroness McIntosh of Hudnall (Lab): My Lords, may I take the noble Lord back to the Answer that he gave to my noble friend Lady Prosser? If I heard him right, he said that he thought that the message did not need to go to all girls. Can he tell the House which girls he thinks do not need to hear this message?
Lord Nash: I did not intend to give that impression. If I did, I apologise. I just think that the method of getting the message to all girls needs to be carefully thought out.
Lord McColl of Dulwich (Con): My Lords, as millions of men are brutalising millions of women and that means that millions of other people know about it and do nothing, can we encourage the public to take some responsibility? For instance, a few weeks ago, two 14 year-old boys heard a woman being
beaten up, went and bashed on the door and then informed the police. Can we not encourage the public to become more involved?
Lord Nash: The noble Lord makes a good point. We can try to do this but I feel that it is really a job for the police authorities.
Lord Sutherland of Houndwood (CB): My Lords, the two topics mentioned in the Question clearly refer to abhorrent sides of our society; we all agree on that. However, does the Minister agree that dealing with all those problems by inserting them on a statutory basis into the national curriculum is almost a confession of failure and that there have been many other interesting suggestions made from around the House today?
Lord Nash: I am grateful for the noble Lord’s question and I agree entirely. Pupils will often respond better to dialogues with mentors from outside agencies that are skilled in their work. It is right to help pupils in this way: issues around drug-running in gangs, for instance, are completely different from those relating to forced marriages. Schools should be free to engage with outside agencies as appropriate.
Sudan
Question
3.05 pm
To ask Her Majesty’s Government what is their response to recent developments in the Republic of Sudan.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con): My Lords, the Sudanese Government’s violent crackdown on recent popular protests was disproportionate and unacceptable. We have called for an independent investigation into the use of force by the security forces. These events have demonstrated once again the need for an opening-up of democratic space in Sudan for real political debate. The Government must engage in a process of reform that addresses the needs of all groups and parts of the country, including those regions currently in conflict.
Baroness Cox (CB): I thank the Minister for her reply. Is she aware that the suffering inflicted on their people by the Government in Khartoum is escalating, with continuing aerial bombardment of civilians in the Nuba mountains and Blue Nile? Half a million people have been displaced and are dying; I myself have witnessed that. In Khartoum, over 200 legitimate protestors have been killed. Not only that—some of their relatives were forced to sign forged death certificates saying that their deaths were from “natural causes” rather than from live ammunition. The scale of suffering in Sudan is second only to that in Syria. Would the Minister agree that the time is long overdue for really robust measures to be taken to stop the impunity with which Khartoum is continuing to slaughter, terrorise and cause suffering to its own people?
Baroness Warsi: I thank the noble Baroness for keeping this House up-to-date with what is normally the most up-to-date information on Sudan and South Sudan—usually because she has just visited once again. Of course there is immeasurable suffering taking place in Sudan; 3 million people have been displaced or affected by various internal conflicts. It is felt that the way to deal with these matters is through the United Nations Security Council, which regularly addresses this issue: it discussed this matter only last Thursday. We feel that the best responses are, first, through UN peacekeeping; secondly, through humanitarian assistance; and thirdly, through concerted international efforts led by the African Union, all aspects of which are supported by the British Government.
Baroness Kinnock of Holyhead (Lab): My Lords, what response is likely to be given to the increased violence taking place in Darfur and the planned reduction simultaneously in the number of UNAMID personnel? Will urgent attention be given to the need for a more viable and inclusive process to replace the much discredited Doha process? Can we expect Darfur civil society and local stakeholders to be directly involved?
Baroness Warsi: The noble Baroness makes an important point. Of course, 10 years after the start of the conflict, the situation in Darfur remains serious. We have been pressing the Government of Sudan to honour their commitments. I understand the concerns that the noble Baroness has about the Doha peace agreement, but that is the framework within which we are working at the moment, supporting the efforts of the African Union and the UN joint chief mediator to engage the armed movements and encourage them to end violence and not to obstruct the peace process. We continue to give support, predominantly through humanitarian aid, of which a large chunk goes into Darfur.
Lord Avebury (LD): My Lords, as I am sure my noble friend knows, the Security Council last Thursday expressed grave concern about the highly volatile situation in Abyei. What information does she have about the proposed referendum to determine the constitutional status of that territory being held among its permanent inhabitants towards the end of this month? What does she know about the increased military activity by the Sudan armed forces, particularly around the capital, Kadugli? Does she think these two events are connected?
Baroness Warsi: We are of course concerned about unilateral actions by either side in Abyei, but we believe that the Ngok community is organising a popular consultation of the community. However, this has not been endorsed by the Government of South Sudan. We understand the frustration that has led to this, but we encourage all parties at this stage to refrain from unilateral action. We are aware of the reports to which my noble friend refers of the build-up of Sudanese forces in South Kordofan. Whether or not that is linked to Abyei or the ongoing conflict in South Kordofan, we are not sure at this stage, and we urge restraint from the Sudanese armed forces. The noble
Lord will of course be aware that, during the dry season, there is generally a build-up of armed personnel in the area, but we are keeping a close eye on the situation.
Lord Triesman (Lab): My Lords, I understand the call on the Sudanese Government to open up greater democratic space, but that is rather like inviting any violent dictator to think about his behaviour and mend his ways—it is unlikely to create the outcome sought. Is not the truth of this, whether we are talking about Abyei or anything else happening in Sudan, that Omar al-Bashir is wanted for war crimes? This Government—indeed, it was the noble Baroness on 17 July speaking about strengthening the International Criminal Court—made the point that impunity was not acceptable. What steps will be taken to bring this man to justice? He travels freely throughout Africa and much of the world. He is not immune.
Baroness Warsi: We regularly remind states party to the Rome statute of their responsibilities under that statute. Only three months ago, we brought this fact to the attention of Nigeria, where President Bashir was travelling.
Universal Credit: National Rollout
Question
3.11 pm
Asked by Lord McKenzie of Luton
To ask Her Majesty’s Government when they will publish an agreed plan for the national rollout of Universal Credit.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con): Our priority is to deliver universal credit safely and securely over a four-year period to 2017. We remain committed to that objective, these timescales and the budget. We have already announced plans to expand universal credit into additional jobcentres from today and to roll out the claimant commitment nationwide by next spring. We have also said that we will provide more details around our implementation plans later in the autumn.
Lord McKenzie of Luton (Lab): I thank the Minister for that Answer. Any confidence that we may have had in the Government’s ability to deliver universal credit was dramatically shaken by the NAO report last month. It concluded that the DWP was not achieving value for money and that there was,
“weak programme management, over-optimistic timescales, and a lack of openness about progress”.
Alarmingly, it stated that the department does not know to what extent its new IT systems will support national rollout. When will those systems be fit for purpose to support national rollout as well as enable detection of fraudulent claims? I also note that the department has written off £34 million-worth of abortive IT expenditure. How much more will be written off as abortive before the Government get their act together?
Lord Freud: My Lords, first, I take the opportunity to congratulate the noble Lord on taking up a slightly more relaxed lifestyle on the Back Benches with this portfolio. I pay tribute to him for his formidable contribution over many years from the Front Bench. To deal with his latest and just as formidable contribution, I remind noble Lords that the NAO said in its report:
“Spending so far is a small proportion of the total budget … and it is still entirely feasible that [universal credit] goes on to achieve considerable benefits for society”.
Lord German (LD): Would my noble friend agree that the introduction of universal credit represents one of the largest system changes we have ever seen in the public sector in this country, sitting as it does on a hugely complex IT platform? Given the significance of universal credit in that it will always make work pay more than being on benefits, does my noble friend agree that getting it right is more important than making mistakes as we go along? But, if he will forgive my impatience, when will we see the first families with children being able to receive universal credit?
Lord Freud: My Lords, I entirely agree with the sentiment. When you are introducing a large cultural change like this, it is important to do it in a careful and controlled way, and to make sure that it is safe and secure. That is how we have been introducing our series of changes, such as child maintenance, PIP and benefit cap. I am not in a position, until we announce Howard Shiplee’s plans later this year, to give a timetable of when couples and children are brought into the migration strategy.
Lord Foulkes of Cumnock (Lab): My Lords, this is really depressing. Why do the Government not pay attention to Sir John Major? Last week in the Press Gallery he advised the Government not to pay attention to the bean counters and cheerleaders, but to the people working with the disabled, the elderly and others who are suffering. John Major also said that this was going to fail, that all these reforms were going to fail, unless Iain Duncan Smith was a genius, and he saw no proof of that. Does the Minister have any proof? Unless he does, is it not about time that for the sake of our disabled people the Government started to think again?
Lord Freud: My Lords, the party opposite is not saying that universal credit is not the right transformation. Although it voted against various aspects, it is actually saying that it is the right way to go. The issue is how to introduce it. We are introducing it safely and securely, and we are doing that exactly for the kind of people to whom the noble Lord was referring. We are making sure that we do not produce shocks by introducing a new system on one day in the way, for instance, that tax credits were introduced and which was a failure. We are doing this slowly and securely.
Lord Cormack (Con): My Lords, as this is such a profound change, would it not be sensible to have a Joint Committee of both Houses to monitor and supervise its introduction and development?
Lord Freud: My Lords, I can assure noble Lords that there is no shortage of people overseeing this particular programme. I do not really think that there is a need for another layer.
Baroness Royall of Blaisdon (Lab): My Lords, undoubtedly the Minister is right that there are an awful lot of people overseeing the process, but the suggestion made by the noble Lord, Lord Cormack, is a good one. There may be better people to oversee the process. The noble Lord was generous in his tributes to my noble friend, but he did not answer the Question. My noble friend is still a valued member of the Front Bench and speaks on the Department for Communities and Local Government.
The DWP has estimated that a three-month delay in transferring cases to universal credit would reduce savings by £240 million in the current spending review. Will the Minister please tell the House how this reduction is to be funded?
Lord Freud: My Lords, I am not aware of any such mathematics. We have always said that we will introduce universal credit in a safe way and that we will adjust the timetable in the light of experience. We now have Howard Shiplee on board, and he is immensely experienced. He produced the Olympic Park on time, and he is working to make sure that we have a plan that will introduce this programme effectively.
Baroness Wheatcroft (Con): My Lords, our welfare system is broken. If it takes a little while longer than we had originally hoped to put it right, surely it is right that we should take the time. Universal credit is a massive step in the right direction. Does the Minister agree that the real tragedy would be if benefits claimants were reduced to such desperate circumstances that they had to superglue themselves to benefit desks?
Lord Freud: My Lords, when you introduce a big programme of change, the important thing is that you test and trial it thoroughly. We have a major programme of testing and trialling, whether it is the intensive-activity programme, the in-work conditioning pilots, the housing demonstration projects or the 12 local authority pilots. I am hoping soon to publish the next issue of the local support service framework that is designed exactly to make sure that there is a support network for people who might otherwise look for the superglue.
Baroness Hollis of Heigham (Lab): Like others in this House, I support universal credit and I welcome it, but I am deeply worried that it is going to be a paperless system accessible only online. A very large number of people in their 40s and 50s in limited financial circumstances on benefit do not possess computers, smart phones or computer skills. They will not be able to interrogate or correct errors on the system, and even if the Minister successfully delivers the structure, which I hope he is able to do, although I have my doubts, I am profoundly worried that an awful lot of people who should receive their full benefit will not be able to do so because they will not have access to a paper system.
Lord Freud: My Lords, we are designing the system to be digital, which must make sense in the 21st century. It also makes enormous sense to get people into the digital environment, not least because 94% of all jobs now require that kind of capability. However, our plans do not rely on everyone having to interrogate the digital system themselves. We will have back-up systems in a telephone service and a face-to-face service for those who absolutely need it. We will have a system to encourage people into the digital environment.
Inheritance and Trustees’ Powers Bill [HL]
Membership Motion
3.21 pm
Moved by The Chairman of Committees
That, as proposed by the Committee of Selection, the following Lords be appointed to the Special Public Bill Committee on the Inheritance and Trustees’ Powers Bill [HL]:
L Ahmad of Wimbledon, L Beecham, E Courtown, B Hamwee, V Hanworth, L Henley, L Jones, L Lloyd of Berwick (Chairman), L McNally, L Plant of Highfield, L Shaw of Northstead;
That the Committee have power to send for persons, papers and records;
That the evidence taken by the Committee shall, if the Committee so wishes, be published.
Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill
Order of Consideration Motion
Moved by Lord Wallace of Saltaire
That it be an instruction to the Committee of the Whole House to which the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill has been committed that they consider the bill in the following order:
Clauses 1 and 2, Schedule 1, Clause 3, Schedule 2, Clauses 4 to 26, Schedule 3, Clauses 27 to 32, Schedule 4, Clauses 33 to 44.
Energy Bill
Energy Bill5th 6th 9th 11th Reports Delegated Powers Committee
Report (1st Day)
3.22 pm
Relevant documents: 5th, 6th, 9th and 11th Reports from the Delegated Powers Committee.
Clause 1: Decarbonisation target range
1: Clause 1, page 2, line 4, leave out subsection (5) and insert—
“(5) The first decarbonisation order must be made before 1st April 2014 and the year in relation to which the decarbonisation target range is set must be 2030.”
Lord Oxburgh (CB): My Lords, I begin by declaring an interest as a director of two small companies with interests in energy efficiency and energy from waste, GEO and 2OC, and as honorary president of the Carbon Capture and Storage Association. As indicated in the register of interests, I occasionally advise other bodies on matters relating to energy, water and environment.
Other noble Lords have longer memories than I, but I can recall no other Bill for which the external atmosphere has changed so dramatically during its passage through the House. For that reason, a few introductory remarks that range more widely than normal may be appropriate and may answer questions that could be raised by noble Lords later.
The price rises that are causing so much concern today are, in part, attributable to the increase in the world price of gas. Whether we like it or not, we can expect the 20-year ragged upward trend of fossil fuel prices to continue, driven by steadily increasing world demand and partly because reserves and oil are becoming more expensive to extract. Temporary market gluts apart, we have to expect carbon-based energy systems to become progressively more expensive relative to the other items on which we spend our money.
However, looking at today’s low price of natural gas in the United States, we might ask whether we should not completely rethink our energy strategy in the light of possible US shale gas resource. Shale gas appears to be abundant and carries only half the environmental penalty of coal. I answer in the following way. It is widely recognised within the industry that the current low price of shale gas in the US results from overproduction and cannot be sustained. For the large US shale gas resource to become an economically exploitable reserve, the price will need to be around three times what it is today. The fact is that extracting gas from shale requires more energy and is more expensive than producing gas by conventional means. Either most of the gas in US shale will not be produced or its price will be much higher than today.
These considerations apply to the UK as well, except that the operational conditions here are likely to be tougher than in the US. If the UK shale gas resource is exploited, its main consequence would be a greater degree of resource independence rather than lower prices. That said, in almost any realistic scenario, gas has an important role to play in the UK energy supply for some decades to come, particularly if cost-effective carbon capture and storage technology is developed. The bottom line is that shale gas does not provide a “get out of jail free” energy card for the UK and does not provide a reason for a major rethink of energy policy or for changing the thrust of the Bill.
The original thinking behind the Bill is correct; namely, that it is prudent to spend more in the short term to build a strategic infrastructure that will substantially decarbonise our economy and reduce our exposure to rises in the cost of fossil fuels, which are likely to remain a continuing political concern. For reasons so well known that I will not rehearse them here, we need this Bill urgently so that the first steps in building the new infrastructure can be taken soon and
in the right direction. The two defining characteristics of energy infrastructure are the long timescales and the high costs. With sufficient forethought and consistency of policy, both can be reduced. That is what the amendment seeks to achieve. As the Bill stands, important decisions on timing are deferred until at least after the next election, and who knows what other distracting pressures on government time there will be then. This is our opportunity and we should seize it.
The amendment would require the Government to settle next year the outlines of a measured approach to a longer-term UK energy strategy, taking into account the advice of the Committee on Climate Change. Once the bare bones of the strategy and above all its timescale are clear, industry can begin to plan. It is not just major companies that are involved. It is sometimes forgotten that the nominal times taken to extend the grid or build a new power station depend on essential components being available when they are needed. This means having a robust and specialised supply chain, which itself can take a number of years to establish. Without such a supply chain, major components that are urgently needed will probably have to be imported at high cost and with no benefit to the UK economy. More clarity now will help UK jobs and the manufacturing industries.
Major infrastructure investment also needs funds. Investors have the choice of where to put their funds and they will not put their money into a decarbonised energy infrastructure unless they see the Government committed not just by good intentions, but by the wording of the Bill. Investment is about risk; and the lower the perceived risk, the better terms we may expect to obtain. Here I must take the Government to task. At a time when investment in energy utilities in Europe has rarely looked less attractive, the Government appear to have gone out of their way to weaken confidence further. Ministers in departments closely involved with this Bill have on at least five occasions made statements that appear to undermine its main decarbonisation rationale. To make matters worse, the Government now seem to have adopted the language of their critics by describing as “green taxes” those elements of consumer charges that are specifically designated to reduce costs by improving energy efficiency and developing better long-term infrastructure.
3.30 pm
The best way for the Government to recover the situation is to accept the amendment today as a reaffirmation of their commitment. The amendment will not guarantee that investment is forthcoming, but it will certainly help. Today, I have said a little about the environmental objectives of the Bill. These are undoubtedly important but, for reasons that I have given, the arguments for decarbonising—energy security and minimising energy costs—all point in the same direction. Others have asked about possible damage to our economy if we are the only country embarking on a decarbonisation strategy now. We are not alone. Around 50 other countries have either enacted or are working on improved energy efficiency and decarbonisation legislation. The Government are making special provisions for those industries which might be particularly disadvantaged by new legislation.
The amendments are about getting on with the job and setting milestones for ordered progress to a new energy structure. They are specifically about setting a power-decarbonisation milestone for 2030. The milestone should be set, if for no other reason than because, the sooner it is set, the less expensive it will be to achieve the energy security and decarbonisation that we seek. Accepting the amendments is the “no regrets” course. Should some miraculous, game-changing new technology appear, or some other unforeseen circumstance arise, the Bill provides Ministers with ways of dealing with the unexpected. There is simply no reason not to get on with the job that has to be done and every reason for doing it now. The amended Bill would be good for jobs, for UK industry, for investors and for the environment. I beg to move.
Lord Teverson (LD): My Lords, I commend the noble Lord, Lord Oxburgh, on his amendment. Decarbonisation is fundamental, and is absolutely what the Bill is all about. The 11th word of the Bill is “decarbonisation”. The Long Title refers to,
“reforming the electricity market for purposes of encouraging low carbon electricity generation”.
The entirety of Part 1 of the Bill is about decarbonisation. The methodology there allows the Secretary of State to set a decarbonisation target. The Bill is about nothing if it is not about decarbonisation.
Of course, the majority of the Bill beyond Part 1 is about ensuring, not just through targets but in practice, that we have decarbonisation. There are many chapters about the nuclear industry. Whether one is for or against nuclear, it is a low-carbon technology and it is enabled by the Bill.
The Bill has a whole chapter devoted to the “emissions performance standard”, which is all about decarbonisation. I have a number of issues with it, but the standard is there and it is the practice for ensuring that decarbonisation actually happens. There is a whole chapter on the capacity mechanism, introducing the possibility of electricity and energy demand reduction and management.
Of course, at the core of the Bill, are the contracts for difference, which have taken up a lot of our time in Committee and elsewhere in the House. Contracts for difference would not exist, would not be in the Bill, if there were not a practical and urgent need to get low or zero-carbon technology investment into the generating sector.
There is no point in having this Bill if not for decarbonisation. As we know, this Bill started back in 2010 with a White Paper and has been through many other processes. It is all around one of the four pillars of government at that time—which are still there and which include carbon capture and storage—trying to decarbonise, in this case, fossil fuels, as the noble Lord, Lord Oxburgh, will know better than anybody. The second pillar of this energy strategy was emission performance standards, which are in the Bill. The third pillar was the carbon price floor, which has already been delivered. In terms of green taxes, we are already taxing output of carbon emission from fossil fuels. That is practical decarbonisation. In addition, the Government have introduced energy reduction through the Green Deal and the energy
company obligation. As well as all these practical actions, do we need another target? That is what I really want to look at.
As this is a coalition Government, there are differences not just between parties but between departments. We have differences between the Treasury and DECC on occasions, and perhaps BIS as well. There are also different directions in which the two coalition parties look. Nevertheless, what the coalition came together for was to provide a specific programme in terms of government for the five years of this Parliament. A key part of that concerned the economy and debt reduction. Another, which both parties shared, was being a green Government with respect to the environment, part of which is decarbonising. The agreement, willingly entered into by both parties, called for a levy control framework that allows contracts for difference and decarbonisation investment to work, with some £7.6 billion by 2021. We have an agreement that the energy company obligation, which is really important in terms of households’ energy efficiency, stays at its present level until the end of this Parliament. We have electricity demand reduction in the Bill. We have an agreement at EU level that a 50% reduction of carbon emissions by 2030 should be negotiated with our European partners. We already have the carbon tax floor and we have emission performance standards legislated for, we hope, when this Bill finally gets through.
We, as Liberal Democrats, ask whether it is more important to deliver targets at this time, when issues of energy—energy bills and energy security—are so fractious, perhaps between all parties. Is it important to make sure that through this Bill we deliver real, practical, £100 billion-worth of investment decarbonisation, or do we go for just another target? I look back at targets, whether they were for fuel poverty being eradicated by 2010, which failed quite considerably, or whether carbon emissions for 2010 were met—they were not in terms of the original obligations. Do they make a difference for business? Yes, I think that they do—the noble Lord, Lord Oxburgh, is right.
What makes the real difference in terms of investment? It is stability and understanding that there is the right environment for investment in terms of cash flow, in terms of where the market is going and in terms of a determination to deliver a much broader agenda for investing in decarbonisation. That is the area that I feel is of the greatest importance. We should have a decarbonisation target. I am happy to wait until 2016 to deliver real decarbonisation.
Lord O'Neill of Clackmannan (Lab): My Lords, in proposing Amendment 2A in this group, I will go roughly along the same lines as the noble Lord, Lord Oxburgh. We had to wait six minutes to get any indication of the previous speaker’s attitude towards these amendments.
We have all had approaches from a plethora of organisations; in my years in this House and the other place I can rarely remember such a broad coalition. You normally get the greens and one or two others, but it is quite surprising to get support from across the spectrum of industry, banking and environmental
concern for an amendment along the lines that the noble Lord, Lord Oxburgh, and I are proposing. The amendment I have tabled is in some ways slightly different from the amendment in the name of the noble Lord, Lord Oxburgh, in so far as it seeks to define the decarbonisation obligation, which it sees as the level of carbon intensity of electricity generation which may not be exceeded in total kilowatt hours. However, it does not set a target by plucking a figure out of the air. The idea is that it should give the Minister probably longer than the amendment in the name of the noble Lord, Lord Oxburgh, which gives the target of 1 April. Amendment 2A mentions 12 months, which would mean another six months in the process. That is important in itself.
The other fundamental requirement is that having set up a Committee on Climate Change, the Secretary of State should take account of what the committee has to say and what its findings are. It is a very important body, formed of a distinguished group of people from academia and business who take an interest in these matters—and it has a distinguished chairman from this House. However, it is not the only body. We are seeking to establish a consensus that would broadly agree to the figures that would then emerge.
We have international obligations, some of which have been imposed upon us, in so far as we have been forced to troop in and put our hand up in the Council of Ministers. In this instance we seek to fill a gap in the British obligations beyond 2020, a gap that would effectively extend from 2020 and 2030. It is important that any Government can go into Europe with a clear programme so that we are not seen to be chasing an agreement—and equally, so that the target figure we would set ourselves would be arrived at by British agreement and British discussion. A country of 60-plus million people with our diverse industry, economy and geography is that kind of country, the limitations or parameters of operations of which are very similar in many respects to a lot of the member countries of the EU that will be sitting on the Council of Ministers in this area.
Some say, “We mustn’t be allowed to be dragged along by the EU”, but in this instance we would be, in many respects, ahead of the game—not, however, to get our green badge to put on our jacket. Rather, we will have made a rational decision on the basis of sound information and wide discussion, and we would be doing so because it is necessary for us to have a degree of foresight. I will not use the word “planning”, but “foresight”. We have to recognise that the investment requirements of our energy economy are not just only long term. I remember talking here about setting down roads. We know that we have a 2050 target, but frankly, at the moment, after 2020 there is no road map and no signposts or proper targets. We must recognise that we will not have 30 years of doing a bit of this and that, then a mad helter-skelter run between 2040 and 2050 to try to get to where we are supposed to be. This has got to be done on the basis of proper consideration. These amendments give business, the investment community and the people who are engaged in research signals regarding the kind of timescales in which to operate.
3.45 pm
I was selected as a parliamentary candidate in 1978 for a seat which had five collieries. The boundary of the seat was the Grangemouth petrochemicals complex. East Stirlingshire in Clackmannan was the kind of place where energy was the life-blood of the local economy. I am not going to dwell on that. Suffice it to say that the number of times I have had to change my mind in the past 35 years has been such that I realise that you cannot chisel things in stone. You cannot pour quick-setting concrete on your ideas and hold on to them. They have changed. We took a very important decision last week, and I commend the Government for getting the strike price although it may not be exactly what we want. We know that the nuclear component will be able to make a contribution. It will be over a period of 60 years, not just 30 or 35 years.
We are talking about a number of other technologies and a number of other things which require support and investment. This investment has a lot of people interested and almost prepared to put their money where their mouth is. People have been writing us letters saying that they would be interested in coming in in the future. The sooner we get this started, the better. We cannot wait till 2016. If something is decided in 2016, it will begin to happen in 2019. We talk about putting off decisions till the next general election. It will be the general election after that. There are too many people in this country who are unemployed. There are too many people who have uncertain industrial futures, whose talents and energies could be deployed if we had a stable path ahead, if we had the opportunity for rational decisions to be made and the flexibility, if things do not go the way we want, to change them. That is why this amendment is suggesting it be done by regulation. In some ways, regulation is not the most democratic of means, but if you get it wrong you can always change it fairly quickly. You can change it on the basis of consultation before you put it into legislation.
There are those who do not wish to have anything to do with carbon reduction because they deny that there is a crisis in this area. The Flat Earth Society used to be their natural home—that has now been changed. Instead, they sit alongside the anti-Europeans who tell us that we are being dictated to. For most people, the need for carbon reduction is understood and appreciated.
We do not need to fear Europe if we have for the next 50 years proposals and policies which can take us into the Council of Ministers and other places with a clear agenda that is in line with the rest of the Bill. This is the thing I find surprising. The last speaker epitomised it. They are in favour of everything but specific action in one particular area.
I can understand that the Whips think that this Bill is the finest work of God and man and therefore need not be amended. I think that is wrong. We need to fill in gaps. We need more specifics. This proposal is the means of providing the specifics which will give the opportunity for rational investment decisions to be taken in the very near future with the prospect of employment and other savings being made with the reduction in carbon in the very near future.
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.
4 pm
Lord Krebs (CB): My Lords, the noble Lord, Lord Lawson, cites as his authority the Financial Times. I want to address the question of energy prices by turning to the authority of the statutory committee set up by this Parliament, the Committee on Climate Change. I declare an interest as a member of that committee. Through rigorous detailed economic analysis it has uncovered the facts. Between 2004 and 2012 the average household energy bill for a dual-fuel household that uses electricity and gas increased by £520, from £610 to £1,130. How much of that was caused by green, low-carbon measures? The answer is that £30, or 6%, of the energy price increases over that period was due to investment in low-carbon energy generation. Another £45 was due to investment in energy efficiency to help with the affordability of energy for vulnerable consumers, and the rest was largely due to increases in the price of gas.
Turning to the present, 2013-14, the climate change committee has calculated that the increases due to the renewables obligation, the feed-in tariff, the energy company obligation and the carbon-price underpin between them amount to 1% of household energy bills. Let us look forward to 2020. The climate change committee estimates that household energy bills will be 10% higher due to low-carbon investment but—and this is an important but—that 10%, which is small in relation to the overall increase, could easily be offset by investment in energy efficiency such as the installation of new boilers and energy-efficient lighting, appliances, heating and insulation in homes. It is therefore a complete canard to claim that investment in low-carbon energy is the cause, and will be the cause, of increases in energy prices. It is simply not true. What about the commercial sector? The climate change committee estimates that by 2020 1p in every £10 will be added to consumer prices as a result of investment in low-carbon energy.
We should not get confused in this debate by the arguments about energy prices. We should also remind ourselves, as the noble Lord, Lord Oxburgh, has said, that this country is by no means the only one to be taking serious steps to transition to a low-carbon economy. China, Germany, South Korea, Mexico and many others are taking steps, just as we are. We are not leading alone but should be among the leading nations that are setting an example to the rest of the world.
The latest report of the Intergovernmental Panel on Climate Change says that if we take no action we are likely to see global warming of between 3.2 and 5.4 degrees by the end of this century, which could be disastrous for our descendants, and that we should take action now. In that context, I commend the amendment of the noble Lord, Lord Oxburgh, and hope that this House will support it.
Viscount Hanworth (Lab): My Lords, the description of the Bill by the noble Lord, Lord Lawson, bears no relationship to what I and many others understand to
be its nature. It is a curious document that is suffused with the free-market ideology that accompanied the privatisation of Britain’s energy industry in the latter years of the Thatcher Administration. The Bill contains evidence of the dangers of global warming and the effects of carbon emissions associated with fossil fuels, which have been well understood. However, notwithstanding its pieties in that respect, the Bill does very little to promote the cause of climate protection. It poses some ineffective and non-binding constraints on the rates of emission and, in truth, will not help in reaching the targets set out in the Climate Change Act 2008.
The truth is that the Bill is attempting to appease a powerful faction within the Conservative Party that is strongly opposed to any measures that might be taken to staunch the emissions of greenhouse gases. There is solid and highly disturbing scientific evidence that should alert every one of us to the perils that we face through global warming. However, many in the Conservative Party believe that they are as entitled to their own contrary opinions on such matters as any of the scientists are to theirs. The climate change deniers have a powerful ally in the Chancellor of the Exchequer, George Osborne. He envisages a dash for gas based on fuel that might be conjured up by fracturing the ground on which we stand. This vision has strongly influenced the Bill. Such a dash for gas would utterly negate the purposes of the Climate Change Act 2008, which proposed that the emissions of greenhouse gases in 2050 should be 80% lower than those in 1990.
The Labour Party brought the matter to a head in the Commons by tabling a reasoned amendment declining to give the Bill a Second Reading in the absence of a decarbonisation target. In the absence of full support from the Liberal Democrats, the amendment was defeated by 279 votes to 206. Perhaps now we can trust that the Liberal Democrats are not bound by whatever agreement it was that made them adhere to the Government’s position on the amendment, and that they will support the amendment of the noble Lord, Lord Oxburgh, which surely accords with their natural instincts. There is clamorous support from industry for a binding emissions target. A target somewhere between 100 grams and 50 grams of CO2 per kilowatt hour, to be set in 2014, would indicate that the UK Government are genuinely committed to their climate change obligations, and give much needed confidence to investors.
The privatisation of the power industry, according to the nostrums of free-market economics, has given rise not to a competitive market but to a dysfunctional oligopoly consisting of six big companies. On the sidelines are a few small independent companies specialising in renewable power generation. Given adequate protection, the independent companies could be expected to provide a large proportion of the new investment in renewable power generation. At present, there is a danger of their being squeezed out of the market by the big six, who are intent on fulfilling their renewables obligations with their own power plants. The Government and the Department of Energy and Climate Change have paid scant attention to the plight of the independent generators. They need to act with urgency to protect these players.
The Government’s free-market ideology and aversion to government sponsorship and national ownership have severely prejudiced the prospects for nuclear energy in the UK. It is an outstanding irony that in their pursuit of a free-market ideology they have bequeathed our nuclear future to two foreign state-owned monopolists, Électricité de France and the China General Nuclear Power Company. These suppliers are expecting a rate of return in double figures as a consequence of a high price for their electricity that is guaranteed for a period of 35 years. This return is supposedly justified by the risks inherent in the project and the difficulties of raising the necessary finance on the open market.
However, in their attempt to attract firms to undertake nuclear projects, the Government have provided a so-called infrastructure guarantee that guarantees 65% of the necessary funds. Surely under such circumstances, it would have been appropriate for the Government to raise the necessary funds by selling bonds and to commission the building of the nuclear power stations directly, thereby taking them into national ownership. Such a course of action would have given the Government powers to ensure that native suppliers would be fully exploited and that our nuclear industry would stand a good chance of revival. Instead, foreign suppliers will predominate and Britain’s taxpayers will have the burden of supporting a much troubled French nationalised industry.
Lord Jenkin of Roding (Con): My Lords, the noble Lord, Lord Oxburgh, has posed a fairly simple question to the House. There is widespread agreement that we are aiming for a very substantial reduction—80%—in carbon emissions by 2050. There is also wide agreement, embodied in the Bill, that we should have a considerable measure of decarbonisation by 2030. For the most part, there is no dispute about that. When I have discussed this with some of the companies outside, they all accept that that is what we are heading towards. The question is whether we set the figure for 2030 now or wait until 2016, as the noble Lord, Lord Teverson, suggested at the end of his speech, a bit to my surprise. The argument for 2016 is really quite strong. Under the Climate Change Act, this is all administered by the climate change committee, of which my noble friend Lord Deben is the chairman, and which is engaged in setting a series of five-year ceilings as the measure of decarbonisation, leading to an 80% cut by 2050.
The fifth carbon budget comes up in 2016. It seems to be of the highest importance that the figure agreed for 2030 should be consistent with what the climate change committee comes to in 2016. I think that the effect of the amendment of the noble Lord, Lord Oxburgh, would be to set now what the figure would be—which would seem to make that extremely difficult if not very doubtful. The noble Lord, Lord O’Neill of Clackmannan, said, “Let it be done by regulations and then you can change it”. I am not sure that is not exactly where we are anyway. The climate change committee will be setting a fifth carbon budget in 2016, which will of course be part of the then Government’s policy. The question is whether we do it now or wait until then.
I have attended a number of meetings in the past two or three weeks on this subject but will just mention,
in passing, one thing that disturbs me. I read the short report from the Intergovernmental Panel on Climate Change. The report of the Nongovernmental International Panel on Climate Change also came into my possession, which takes the view that the intergovernmental panel is completely wrong. What disturbs me about these two bodies, and I will leave it there, is that they do not argue with each other—they abuse each other. One side calls the other climate change deniers and that side calls the others back a bunch of government stooges. I find that a very tiresome argument. If one is going to have an argument about something, one should have a proper one, not one that just descends into abuse.
One of the most interesting meetings that I attended was the one chaired by my noble friend Lord Deben and also, I think, by the noble Baroness, Lady Worthington. One of the points that my noble friend made was that the climate change committee has always been determinedly technology-neutral. It does not seek to identify how a particular target should be reached. It accepts the international figures and then sets a British target for that. I have found that the people I talk to are worried that this is all very well for this country but that Europe has gone and set a technology target, with a figure for 2020—I cannot remember the exact figure—that has to be covered by renewables. The companies who are having to invest and develop their investment programmes say, “Which are we to believe? Are we free to work towards the 2030 target or do we have to pay attention to this?”. The one thing I agreed with my noble friend Lord Lawson about was when he quoted from that extremely interesting Financial Times article and said that if one thinks there is something wrong—as I think there is with this technology target—the right answer is to renegotiate. One of the questions that I therefore ask my noble friend is: what are the chances of our going to the European Union and saying, “Look, this 2020 target for renewables is really quite inconsistent with the much broader target, which will lead on to our 2050 target”? It seems to me that it is an aberration, and that is unfortunate. We should renegotiate that directive.
4.15 pm
The other meeting that I attended was chaired by the right reverend Prelate the Bishop of London, and that was extremely interesting too. There we were harangued—well, not harangued, that would be quite wrong as he was very polite—by Mr Andrew Raingold of the Aldersgate Group. He said that industry is clamouring to know now what the 2030 target should be, and we had a bit of that with some of the earlier speakers this afternoon. Indeed, he feels that there is a massive loss of confidence because they do not know what the 2030 target should be, and that is why we having what is described as a hiatus on investment.
I do not think that is right. If one talks to the companies—and I talk to quite a number of them and their advisers—about why they are having a bit of a hiatus in investment at the moment, they say it is because they cannot yet see the full shape of the electricity market reform system which is the heart of this Bill. The Government have gone a very long way
now to publish the details but, as I said to my noble friend’s officials the other day, if they were as good at producing investment as they were at producing paper we would not have a problem. However, all the details are there now and they are becoming clearer. With each new publication there is a new element of certainty, and the industry tells me that it wants the Bill through without hesitation. Industry wants it, as planned, before Christmas. Then the regulations can be made next year and the scheme can start effectively in 2014-15.
That is what industry wants. I have not heard any company, until I heard Mr Raingold quoting them, tell me that the real thing they need to know now is what the 2030 target is going to be. I am sorry, but that is not right. It may suit his argument, but it does not actually represent the facts. I find the argument given to me by the CBI much clearer, and others may have seen it. It states:
“The debate over the carbon intensity target should not hold up important policy details … The CBI supports the Climate Change Act and the carbon targets and budgets enshrined by it, and the Bill must deliver the pace of decarbonisation required to achieve them”.
I agree with that. Investment cases will stand or fall on the details of the contracts for difference,
“the capacity mechanism, and the levy control framework—not on a carbon intensity target”.
We ought to be sensible and have the date that we decide on the 2030 target consistent with the fifth carbon budget of the climate change committee, have the two of them together in 2016 and then take it from there. For that reason, I do not think that I will vote for the amendment tabled by the noble Lord, Lord Oxburgh. If he puts it to the vote and tests the opinion of the House, I shall be in the opposite Lobby.
Lord May of Oxford (CB): My Lords, I am a member of the Committee on Climate Change and was a member of the committee of both Houses that helped draft the legislation. I want to inject a fact or two into the discussion. The first thing the Committee on Climate Change did was to ask, “How much carbon, looking to 2050, do we think the world can have put into the atmosphere without exceeding a dangerous level of climate change?”. On that basis, we then divided that total by an estimate of the population of Britain in 2050. I would be the first to admit that that second figure is a little uncertain but that was the basis of the ambition that we set and of the overall target that was given for our goal for the end of 2050. We then put the committee together and asked, “Feasibly, how do we think we can get there?”. It was decided—I think sensibly—that the first thing to do was to decarbonise power. Once you do that, you can begin to do other, more difficult things. When looking at decadal timescales, you can look at the possibility of having surface transport primarily done by electricity and that will be okay if we decarbonise the power supply.
We then set intermediate goals. One of them was to come as close as we can by 2030 to decarbonising the energy source through renewables and other things. It was seen that the trajectory to that from 2010, which was when we were talking, was still going to involve coal and gas—gas more efficiently than coal. One thing that the noble Lord, Lord Lawson, and I agree
on is that, given that we have to make that trajectory to 2030 and we will still have to use carbon-producing products to generate the energy, shale gas might be the best intermediate way to get there.
To get there, we also need industry to see that we are committed to getting there, to get it in turn preparing and talking of massive investment, but on the premise that there will be support and continuing commitment to those goals. This is primary legislation and the goals that have been accepted by the Government are legally binding, and I am in the habit of asking, on the Committee on Climate Change and elsewhere, “What does legally binding mean?”. I have not yet had a satisfactory answer. In so far as that phrase means something to some people, we have a legally binding interim target of decarbonising electricity by 2030.
That is why at the draft stage of the Bill the Committee on Climate Change recommended that it include not a vague statement of aspiration but the explicit wording essentially equivalent to that of the amendment moved by the noble Lord, Lord Oxburgh. In some sense, you could say we are legally committed to it but it would make common sense to vote for that amendment, as it is consistent with the history and where the facts lie. There are no two ways about it.
Viscount Ridley (Con): My Lords, I declare my interests in various forms of energy as listed in the register. I cannot declare the probably seven-figure annual sum that I do not receive because I do not allow wind turbines on my land in a very windy part of Northumberland. I say that not to elicit the House’s sympathy, obviously, but to emphasise the point that the Government would be right to resist this amendment because it would hit the poorer even harder and reward the rich even more, by encouraging enormously expensive renewable energy, particularly the wind industry, particularly offshore wind. Effectively, this amendment would lock in now the wrong technologies, the ones that we know are inefficient in producing decarbonisation and which are immensely expensive.
We have heard a lot already today about the interests and needs of producers of energy. As I said in Committee, it is much more important that we think about the needs and interests of consumers of energy. We do not build power stations for the people who build them or the people who plan them; we build them for the people who use the electricity that comes from them, and thereby provide jobs with that electricity.
We know three things now that we did not know at the start of the summer when the Bill first arrived in this House. The first is that the public are right royally fed up with rising energy bills and are not going to take kindly to further increases, which is what we are talking about. Secondly, wind in particular—as with a lot of renewables—needs even bigger subsidies than we have been led to expect. We were told that the strike price for offshore wind would come down from around £150 per megawatt-hour to about £100. That target has now been abandoned; it is coming down to £135. That is an extremely expensive product—about three times the price of wholesale electricity at the moment. The third thing we have learnt—and I am going to come on to this at the end of my speech—is that climate change is happening more slowly than expected.
If all three of those points are taken together, it would be completely mad to lock in a target now for 2030. It would also be potentially callous because it would encourage an increase in the price of electricity.
Lord May of Oxford: My Lords, what the noble Viscount, Lord Ridley, has just said was factually incorrect. Climate change temperature has fluctuations. The noble Viscount does not understand the statistics properly; it is basically the same problem he had with his thesis. It fluctuates; it goes up; it flattens a bit. But the statement made by the noble Viscount, as if it were a flat generality, was inaccurate.
Viscount Ridley: My Lords, I shall repeat the statement. Later in my remarks I shall come back and justify it. Climate change is happening more slowly than expected. Far from locking in highly expensive energy, as we are doing, we should be reconsidering the huge cost that we are afflicting the most vulnerable with to comfort the most comfortable. Offshore wind costs about four times as much as gas: £270 per megawatt-hour is the total cost, including connections and system costs, for offshore wind compared with about £66 for gas. We are asking hard-working families to pay over the odds for their electricity in order to provide subsidies to generate power and in order to provide subsidies not to generate power. Last year, £30 million was paid to wind companies not to produce power at a time when it was not needed. Furthermore, we are asking them to pay over the odds to pay for the short-term operating reserve, which is the balancing mechanism by which we make up for the fact that wind is unpredictable. That consists largely of fleets of diesel generators, which are being increased in number by the national grid towards 8 gigawatts, combined with open-cycle gas turbines—both of which are higher carbon than combined-cycle and extremely expensive.
Moreover, we are asking hard-working families to pay over the odds to upgrade the grid and the network costs involved in that, specifically for wind. We are asking them to pay for a carbon floor price, the specific purpose of which is to make fossil fuels look less cheap compared with renewables. Finally, we are asking them to pay over the odds to compensate energy-intensive industries for these costs that we are putting on to them. All of these things end up on people’s bills at the end of the day and they are not paid through general taxation, where the richest could pay more of them: they are paid through people’s electricity bills. Green levies have risen by about tenfold in 10 years, but we ain’t seen nothing yet. By 2020, about £13 billion, if you include system costs and VAT, will be spent every year, compared with about £2.9 billion today, on the support for renewable energy, particularly wind. The biggest part of that will be going to offshore wind. People’s bills will go up as a result of green subsidies by 33% by 2020 and 41% by 2030, according to figures from the Department of Energy and Climate Change.
Lord Krebs: My Lords, I invite the noble Viscount, Lord Ridley, to explain to the House why he disagrees with the climate change committee’s calculations to which I alluded earlier.
Viscount Ridley: My Lords, we are taking about the same sorts of numbers. The percentage addition I am talking about is how much of the increase we shall see in future will come from energy subsidies. As I said, I took the figures from the Department of Energy and Climate Change.
4.30 pm
Lord Krebs: So does the noble Viscount accept the climate change committee’s calculation that less than 10% of the addition to energy bills for households by 2020 will be attributable to investment in low carbon energy, and that that could easily be offset by greater energy efficiency in the home?
Viscount Ridley: My Lords, why are we to assume that greater energy efficiency in the home will only happen if we invest in renewable energy? We will be able to invest in greater efficiency in the home later anyway. The idea that we will get more efficiency in the home because we invest in renewable energy has never seemed very sensible. As for the cost of renewables towards energy prices, we can agree or disagree about the figures but it depends on your assumptions about what will happen to wholesale gas prices.
What have we achieved with the £2.9 billion we are spending this year on subsidies to renewable energy? We produced about 1% of our total energy from wind and solar this year. If you take total energy—including transport, fuel and everything else—wind provides only about 1% of the energy we use in this country. After accounting for the back-up—wind needs about 80% back-up to make sure that energy is available when it is not blowing—we have cut our carbon emissions through the use of wind and solar by probably less than 0.5%. That is surely a very small return on our investment.
All we are really doing is driving carbon emissions abroad, as has already been mentioned. Professor Dieter Helm, who has also been mentioned, said that carbon production in Britain fell by 15% while consumption rose by 20% between 1990 and 2005. We are consuming the carbon, it is just that somebody else is producing it. As Professor Helm also said, if we follow the leader of the Opposition’s proposal and decarbonise altogether by 2030, “we may actually make global emissions higher than they would otherwise have been” because of this effect. Unilateral decarbonisation is like building a flood bank at the end of your garden when your neighbour does not.
The noble Lord, Lord May, challenged me on the point about climate change. We have heard that the position on climate change has become more certain. Those who have come to that conclusion are obviously reading a different Intergovernmental Panel on Climate Change Summary for Policymakers than I am. The one I saw said that it is now 95% sure that more than half the warming since 1951 is man-made. That is a slightly weaker statement expressed slightly more strongly than six years ago, and a statement about the past not the future.
In what the Intergovernmental Panel on Climate Change says in its latest report about the future, you find more uncertainty than six years ago. Let me give
nine separate examples of ways in which the Intergovernmental Panel on Climate Change has retreated to a slightly less alarming and less certain position than six years ago. First, it acknowledges the pause or standstill in temperature for the first time, which has taken place for either 15 or 17 years depending on whether you look at surface or satellite temperatures.
Secondly, it acknowledges for the first time since its report in 1990 that the medieval warm period was at least as warm as today on a global level and therefore that today’s temperatures are not unprecedented in the last thousand years. Thirdly, it acknowledges for the first time that Antarctic sea ice is slowly expanding not retreating, which was not predicted by its models. Fourthly, it acknowledges that 111 of its 114 models overstated warming in the last 15 years.
Fifthly, it acknowledges that the range of equilibrium climate sensitivity is lower than it was six years ago. It says that it cannot now give a central estimate, whereas six years ago it gave a best estimate. Why can it not do that? The average of 16 separate estimates of that quantity made by empirical studies since 2011 is 60% cooler than the ECS that was assumed in the IPCC models. The noble Lord, Lord May, says that it is important to make a calculation of how much carbon we must produce by the middle of the century, but that depends upon your estimate of equilibrium climate sensitivity. If it turns out that it is as low as the range is now suggesting, and as the latest studies suggest, that changes the calculation entirely.
The sixth thing that the IPCC acknowledges is that transient climate response is lower. That is the more immediate policy-relevant number because it tells you how much warming actually happens by a particular point in the future rather than what takes a lot longer later. Seventhly, it acknowledges that sea-level rise, which is definitely happening, is lower than some authorities, such as Professor Rahmstorf, have tried to persuade us that it is. Eighthly, it says, using the words “very unlikely”, which it specifically defines in statistical terms, that a collapse of the Gulf Stream is very unlikely, that a collapse of the west Antarctic or Greenland ice sheet is very unlikely and that an explosion of methane from clathrates on the ocean floor is very unlikely.
Ninthly, it says that it has low confidence in a number of tipping points that were previously thought to be possible concerns: the collapse of tropical forests, of boreal forests and of the monsoon, an explosion of greenhouse gases from the Arctic permafrost and an increase in megadroughts. It says that it has low confidence in these things. These are major retreats. We know that the harm being done by climate change will arrive considerably later in this century. There is the harm being done now by decarbonisation policies: biofuels driving people into poverty, and wind costs driving up people’s energy bills and causing them trouble in heating their homes.
These problems are arising now and we are being dangerously close to callous if with higher energy costs we tighten even more the noose around the necks of needy people in this country. This week the Minister President of North Rhine-Westphalia, Hannelore Kraft of the Social Democratic Party in Germany, has said that she thinks we should slow down this transition to renewables until we are more certain.
Lord May of Oxford: At the risk of being tedious, can I ask for a response to this account of what the IPCC said? This is not printed by some bunch of touchy-feely greenies, but comes from the Economist of a week or so ago. It stated that,
“the upper 75 metres of the oceans have warmed by 0.1°C a decade in the past 40 years and there is no sign of this slowing down. Water expands, and ice melts, as temperatures rise, so sea levels have risen 19cm in the past century and the Arctic sea ice has shrunk by about 500,000 square kilometres a decade since 1979.
These facts matter because the oceans cover seven-tenths of the Earth’s surface and are its primary heat sink (90% of the extra warming over the past 40 years has gone into the oceans). By most measures—though not all—global warming is continuing.
But what about the pause in air temperatures? Isn’t that a fact? Indeed it is. But right now it matters more to climate science than climate policy”—
Lord Gardiner of Kimble (Con): My Lords, I hope that the noble Lord will understand that we are at Report stage. I am conscious of the rules at this stage and if there are frequent interruptions it gets very difficult. We should try to keep the rules on these matters.
Viscount Ridley: My Lords, I will try to be brief. There has been no increase in sea surface temperatures over the past 10 years or so. The noble Lord, Lord Oxburgh, says that shale gas does not provide an excuse to rethink this target, but the shale gas break-even price has come down dramatically in the United States as a result of increased experience of how to develop shale gas. Fields that were once thought to be break even at $6, $8 or $9 are now breaking even at $3, $4 or $5. Then if you add gas liquids—some fields have gas liquids and they are much higher value—and so on, it is very possible that we will see shale gas have the same effect on prices in this country as we saw in the United States.
I feel we must retain flexibility to research low-carbon technologies, to explore the possibilities of solar, carbon capture and storage and other forms of nuclear and, above all, to see what shale gas can do, but we should not lock in an expensive target now.
Lord Smith of Finsbury (Non-Afl): My Lords, I support the noble Lord, Lord Oxburgh, and Amendments 1 and 2. At the heart of this debate is the question of why decarbonisation is important. As the noble Lord, Lord Teverson, said, it sits at the heart of the Government’s Bill, and the amendment moved by the noble Lord, Lord Oxburgh, seeks to strengthen the position of decarbonisation at the heart of energy policy. The noble Viscount, Lord Ridley, told us that climate change is happening more slowly than expected. He justified that with some somewhat selective pickings from the fifth report by the Intergovernmental Panel on Climate Change. The reality of that report is that its overwhelming conclusion is that the atmosphere and the oceans have warmed, the amounts of snow and ice have diminished and are continuing to diminish, sea level has risen and each of the past three decades has been successively warmer at the earth’s surface than any preceding decade since 1850.
Climate change is real and is happening. I wish the noble Viscount were right. I wish that it was not happening. I take no pleasure whatever in the fact that it is.
Viscount Ridley: My Lords, did I say that it was not happening? Everything that the noble Lord, Lord Smith, has said about what has happened, I completely accept, but it does not say that it is happening faster than expected.
Lord Smith of Finsbury: It is rather good to have on the record the noble Viscount’s opinion that climate change has been happening, and I have to say to him that it is a process that it is continuing.
I am the chairman of the Environment Agency in England. We are already seeing increasingly erratic and extreme patterns of weather here in the UK. Last year, in 2012, the first three months saw us in near drought. That was followed by 11 serious flooding events during the summer and autumn. In March, the River South Tyne was flowing at 28% of its average flow for that time of year; by June, two months later, it was running at 408% of its average flow for that time of year. I cannot say that the erratic weather patterns that we are now increasingly seeing in the UK are directly attributable to climate change, but I can say that this is precisely the sort of effect that climate science tells us we are going to see an awful lot more of over coming decades unless we do something serious about decarbonisation.
It looks as if we are heading for at least a 2 degree rise in global temperatures, and probably more, and the consequences of that for flooding, water supplies, agriculture, movement of population and human health are incalculable. Therefore, it is important for all of us to do what we can to take carbon out of our activities. Decarbonising energy production over the next 20 years is not just a “nice to have”, a luxury, or something to be thrown aside the first moment that some flak appears; it is essential if we are going to have anything remotely resembling a coherent and sustainable energy policy in the future.
A decarbonisation target is not just important because of climate change; it is essential in order to give confidence and certainty to the burgeoning renewables and energy efficiency industries. Putting clear targets in place will stimulate innovation and enable long-term investment and planning to take place. Energy, perhaps more than any other field of government policy, needs long-term thinking and, if at all possible, cross-party thinking, too. We have to put the parameters in place and make the target clear but achievable, then the ideas, investment, work and economic benefits will flow. The amendment of my noble friend Lord Oxburgh seeks to do precisely these things and I fully support it.
4.45 pm
Lord Deben (Con): My Lords, we should start by recognising that the latest report of the IPCC is very clear. It is the product of the world’s most distinguished scientists and is looked at by the Governments of the world. The report is clearer than it has ever been that climate change is happening and that it is largely being caused by humankind. That is the summation. We could go through it and pick out the bits we want in order to make our particular point, saying that the position is worse or better than it seems. The truth is that the likely increase in temperature will be within a range of between 1.5 and 4 degrees centigrade, which
is almost precisely the figure that the very first IPCC report put forward. There is a continuity, and that continuity now seems to be more certain.
These are, of course, carbon equivalents. In addition to that, there are the concerns related to other climate-changing effects—not least the fact that we now know that clouds amplify rather than diminish the effects of climate change, unhappily for those who used to put forward the argument that they were the future. We also know there is a severe likelihood of melting permafrost having a serious effect, in addition to methane. All these are in addition. We do not know by how much, but we do know that they are adding to rather than subtracting from, climate change.
The one thing we have to accept is that most of those skilled in this matter are warning us that climate change is a real danger. That puts those who disagree into difficulty because what they are asking us to do is to bet on them against those skilled in climatology and the like. They are asking that we should accept their interpretation against that of the IPCC. They may be right—I am not for one moment suggesting that they might not be—but it would be the foolish father of a family, a foolish government or a foolish company that bet the future not on the majority view of scientists, but on the relatively small minority of those who disagree. Therefore I am not surprised that more and more governments around the world are taking this view, as the GLOBE report—I declare an interest as its president—by the London School of Economics shows. They recognise that it is not possible to ignore climate change and still maintain their duty of care.
For that reason, I welcome the Government’s Energy Bill. As the Committee on Climate Change will serve any Government to do their job properly, and in speaking as its chairman I speak independently, I remind the House that the Government have already committed £7.6 billion in order to achieve what we need to achieve by 2020. In many ways, what the Government have done has been remarkable. The question is therefore whether the Committee on Climate Change is right in suggesting that a carbon intensity target for 2030 is a sensible way forward. I put it to the House that it is, for several clear reasons.
The first reason is that, having spent that £7.6 billion, if there is a cliff at the end of 2020 so that people do not realise how we intend to deal with things later, we will not get the investment we need and, in particular, we will not get the supply chain investment that is crucial for securing the jobs which should come from a green economy. This is not a climate-change reason at all; it is a business reason. As somebody who comes from the business world, it seems clear to me. The letter in today’s Financial Times, if that is a popular read at the moment, shows a large number of business people who are making that point. It is certainly true that most of those who are concerned with the industries we are talking about see it clearly.
The second reason it is so important is that statements made by prominent people unfortunately appear to have caused some to fear that we will not keep to our direct trajectory. I am not one of those; I am absolutely sure that we will. My noble friend Lady Verma, her
team and the entire Government have made it clear that we have a statutory requirement to deliver by 2050 an 80% reduction in emissions, and that we will do that. I am therefore in no way concerned about this, but a lot of businesses are. I had a phone call over the weekend from a distinguished individual to ask whether I was sure that we are still going to do these things. If he as a man of considerable ability and an investor thought that, I can understand perfectly well why so many others do. So the second reason is to ensure that clarity.
The third reason is that we need a non-prescriptive mechanism. I served my noble friend Lord Jenkin for a long time as his parliamentary private secretary; I acknowledge and admire him enormously. He is right to put his finger on whether we need this in these circumstances, first, because of the concern about the European Union renewables target. I admit that when this Government came to power I tried to get them to go back on the decision of the previous Government to sign up to a renewables target, because I thought that it covered far too great an area. That was a mistake. It was a misunderstanding of the difference between energy and electricity and should not have been agreed to. However, we have it, and all the pressures will be to have a bigger renewables target. If I may for one moment lapse into party politics, I do not think that that is a very Conservative way forward. I do not think that you should choose winners in that way. It is one thing that worries me a bit about nuclear energy, because you have to if you are going to have it at all. That is why I am in favour of this non-prescriptive target. It merely gives the level of decarbonisation that we will need in 2030 in order to reach the 2050 target. Of course, those who do not believe in any of this will be opposed to it, and therefore it would be wrong of me to detail each of the differences that I have with those who have spoken. In case anyone should need to know them, I will make sure that the reasons why the interpretations of the documents are not right are available to the whole House, and why the noble Lord, Lord May, is correct.
The fourth reason why it is important to have this target is that it is the only thing that is consonant and consistent with what the Government are seeking to get in Europe. In other words, if we have this target, it is possible for the Government to say, “We prefer this target over a target for renewables”. Surely that is better for Britain, better for science, better for the future, and better for price. Furthermore, at the moment we are negotiating for a level of ambition in Europe that can be met only if we have such a target, so this fits in with the Government’s demands.
I have two further things to say. First, the Government have, as you would expect, put forward arguments against this amendment. I hope my noble friend will not mind me saying that one of them does not actually stand up. It is that, somehow or other, we cannot make this decision until we know what is happening in the European Union. The Committee on Climate Change took this argument very seriously. It spent a great deal of time looking at it and concluded that, whatever possible likely scenario happens in the European Union—
unless it goes backwards—this particular proposal fits. Therefore, I do not think that we need to be concerned about that.
I come to my second point. If climate change is dangerous, and all the evidence shows that it is, what is the insurance worth? Everybody in this House has fire insurance costing around £140 or £150 a year. We all know that it is 99% likely that our house will not burn down, but for the 1%, we pay the premium because it is too frightening not to. We have something here that is 95% likely, and the cost we are charging this year is £60. By 2020, it will be £100. If we have the carbon intensity target, to that £100 will be added £20 a year. This is based on the most detailed and precise research. Frankly, the figures that have been quoted elsewhere are not true. They come from bodies like the TaxPayers’ Alliance, who want to have a big figure in order to frighten people. I do not think that that is helpful. You have sensible people on both sides—sensible people who think this is not the right way forward and sensible people who think it is the right way forward. However, let us not try to frighten anyone with figures that are not true.
If we want the jobs here, we need this amendment. If we want to reassure the country and the world that we are serious and that they can place their confidence and their business here, we need this target. If we want to keep ourselves in line in order that we do not end up with an impossible task later on, we need this target. Above all, what is the downside? Actually, the Government know that they have to reach this target. All they are doing is putting into legislation now—and getting so much for it—what they know they have to do. Surely the House should support the amendment on an all-party basis and make sure that this good Bill becomes a better one.
5 pm
The Earl of Caithness (Con): My Lords, I take a very different view from my noble friend Lord Deben. I thought that his last comments were quite inaccurate. He said that we will get jobs here because of the amendment but the wind farms that proliferate in Scotland do not bring any jobs here, as they are all made overseas. I have talked to the companies that say that they need this amendment in order to invest here. They are all worried about investment, but not because they are worried about whether this amendment will go through; they are worried about whether Britain will remain part of the EU or not. That is where they will invest. They are not worried about whether they will invest in a tiny little island on the north-west coast of Europe; they will invest in Europe, and if we are not part of Europe we can have as many amendments as your Lordships like, but the investment will not come here. I think that my noble friend Lord Deben was quite wrong and misleading to the House to stress that last point in the way that he did.
It was also confusing—as the noble Lord, Lord Smith of Finsbury, was confusing—to talk about climate change as though it was something new. My ancestors sailed to Newfoundland and the new world long before Columbus got there. They had settlements in Greenland. Between that time and now the Tiber has frozen over,
and if the historians are correct, the Nile has frozen over. Climate change has happened. If one wants to talk generally about climate change, yes, we all agree that it is happening, has happened and will happen in the future. The specific argument is about what percentage of that climate change is related to the carbon emissions of the past 200 years or so, which is a different and much more specific argument.
Before I address Amendment 1, I will chide the noble Lord, Lord O’Neill, who, sadly, is no longer in his place. It is very unfair to the House to put down a starred amendment on the first day of Report. It is a bad way to treat the House, and a bad way for the amendment to be treated. None of us is discussing it; none of us has been able to look at it and give it the attention it is due. Considering that the House reassembled at least three weeks ago, it is quite unnecessary to have a starred amendment for the first day of Report.
I turn specifically to the amendment in the name of the noble Lord, Lord Oxburgh. I agree with him that shale gas is not a panacea, for two reasons. As I said in Committee and in earlier debates on energy in this House, the cost of extraction of shale gas will be considerably more than most people realise. In this country it will be very hard to be allowed to extract gas. There are all those who say, “We mustn’t burn coal and gas—but you can’t do anything that will make it better. If shale gas makes it better we’re going to block the roads and stop the development and research”. That will make it increasingly hard to try to develop shale gas to its potential—to what it could do, regardless of the costs of its investment.
The noble Viscount, Lord Hanworth, criticised the Government for putting nuclear energy into the hands of two foreign companies. Who is to blame for that? In the 1950s we were the world leaders in nuclear energy and had a huge advantage. We could have a number of small nuclear reactors all around the country, very low carbon—or, rather, with no carbon emissions at all—and this amendment would not be necessary. We have thrown away the lead we had in nuclear energy, which was a huge mistake. Even in 2003 the Labour White Paper, quite rightly condemned as a disaster by the noble Lord, Lord Rooker, last Thursday, ruled out any option of nuclear. We have shot ourselves in the foot on one of the greatest resources we have, to decarbonise this world.
I disagree, therefore, with my noble friend Lord Deben on this amendment. What we are now talking about is whether the decarbonisation target comes in in 2014 or in 2016 because it will be part of the fifth carbon budget. That is now written into the legislation. What are the consequences if we go ahead by ourselves? Again, I disagree with my noble friend Lord Deben on this. It will affect Europe because there will be continued carbon leakage. There is no doubt, regarding investment, that if people and companies look at this country and see that the rules are tighter here than in the rest of Europe, they will move their resources and production elsewhere.
I think it was my noble friend Lord Ridley who mentioned the amount of leakage there has already been. It is important in Europe that we act as one and that we have the same targets. When Sub-Committee
D looked at energy and produced its report
No Country is an Energy Island: Securing Investment for the EU’s Future,
it was clear that one of the problems in Europe is that each country is doing its own thing. Here is a chance, on the question of energy, to get a more European approach to stop the carbon leakage.
That carbon leakage, on an international scale, is costing the EU dear. It is one of the great drawbacks to getting any growth back into Europe. Businesses in America are thriving. They are taking business that emigrated to the Far East back into the US because of the cheapness of shale gas. There are downsides in going ahead by ourselves. If there is carbon leakage, it is going to affect our international competitiveness. We need every bit of help we can get for our businesses.
When we looked, in Sub-Committee D, at the question of energy, it was quite clear that there is what is termed a trilemma. The trilemma is the green issues—how to decarbonise as quickly and as safely as possible— security of supply, and affordability. Getting that balance right is an almost impossible target, not just for this Government but for any Government.
The evidence to date proves to me that that scenario is out of kilter. There has been too much emphasis on the green issues, not enough on security of supply and affordability. That is another reason why I think we should wait for 2016. I do not see the justification for moving forward now as this can be done in a much more rational and less costly way in two years’ time.
Lord Donoughue (Lab): I have never spoken against a Labour amendment in my 28 years in this House, but I propose to do so today because I am troubled by this misguided amendment. I should make it clear I am not a climate-change denier—an offensive word, from which I have suffered. I am a questioner. I accept that the globe is warming mildly, 0.8% of 1 degree in 131 years, although the surface stopped warming 17 years ago. I accept that the warming is almost certainly linked to carbon emissions and human activity, and I support curbing those emissions in a measured way. The questions that concern me are how much warming will happen, how damaging it will be, how we react in our policies, and how sensitive the climate is to carbon emissions. I note that this century carbon emissions have rocketed, but there has been no further warming of the surface of the globe.
As regards extreme weather, I say to my noble friend Lord Smith, for whom I have the greatest respect and affection, that I believe the IPCC said it could find no evidence that extreme weather was occurring globally. I am troubled from a Labour position—not a denier position—that reactive policy-making, as is the case with this amendment, is not justified by the evidence, and I am troubled by the consequences of that for ordinary people. These policies hurt the poor, given rocketing energy prices, although there seems to be argument about how much the relevant figure will be. The noble Lord, Lord Turner, tried to set it very low. Last week I received an answer from the Department of Energy and Climate Change that put a figure of 9% on green taxes. However, they will increase significantly by 2020. The increases may not look much to noble Lords but will be painful for ordinary people. Such
increases will hurt jobs as high energy costs make industry uncompetitive. Indeed, Grangemouth stated that one of its reasons for being unviable was the high cost of energy. Not much notice has been taken of the fact that its rescue plan contained a proposal to build a terminal to import shale gas from the United States. It is sad that it has to import it from the United States. The greens, of course, oppose shale gas.
I oppose the amendment because it entrenches the rapid switch to inefficient and grossly expensive renewable energy sources. I understand that those of a strong green faith—and we are frequently dealing with faith—support this amendment. As has been made clear, their main priority is the rapid decarbonisation of our planet regardless of the costs. However, as a Labour person, I believe that other priorities should be balanced with that—not against it—such as protecting jobs and protecting the public from fuel poverty. Under recent green energy policies, but not wholly because of them, fuel poverty threatens to rise, affecting more than 6 million people. The figure will rise further if these renewables policies are imposed to the extent intended.
I listened to the noble Lord, Lord Oxburgh, and read the briefing from my Front Bench. I question at least three of its main arguments. The first is that gas prices will remain very high and so renewables will not seem expensive by comparison. However, we simply do not know what energy prices will be. I do not share the certainty of the noble Lord, Lord Oxburgh, in that regard. In 1974, I was in No. 10 when we were hit by a 400% increase in energy prices which no one had forecast. In the 1980s, in the City I managed top energy analysts and they did not know what would happen with energy prices, and, of course, firms such as Shell and Centrica spend billions of pounds hedging because they do not know either.
It is a mistake to do as is proposed in this amendment and further lock in the commitment to the massive use of renewables at high prices with no escape if, for instance, gas prices halve. I do not know what will happen. I do not think that those who have put their name to this amendment know either although they claim to. It is possible that shale development could reduce gas prices, as it has in the United States. I am not convinced by the opening dismissal of that on the basis that shale prices in America mightincrease in time, because shale supply will increase greatly throughout the world. However, most greens oppose shale, perhaps because if we had shale we would not need the inefficient and expensive windmills which blight our countryside.
5.15 pm
The second assertion I question is that renewable prices will fall in the medium term because greater efficiency will cut energy use. That may be but, again, we do not know. I hope so, but it is speculation. The Green Deal to increase efficiency of use, which I support broadly—though not in all of its implementation—is a testing point. However, according to the department, only 54 households have signed up so far: not much increased efficiency of use there. We need more flexibility in our approach and, although I have rarely supported the proposals of a Conservative Government, the Government are actually right on this.
A third disputable assertion is that we must commit to huge renewable investments now, with tight targets and huge subsidies. It has been quoted that business is very keen to have this. Of course they are keen: I have floods of leaflets through my door asking me to invest in these green projects. As they say, this is a bonanza; we are guaranteed an annuity of a huge real return. However, who pays for these huge subsidies? I can tell you, and you know. If we stick to the current regressive consumer subsidies through energy bills, it is customers—especially the poor—who pay. Or, if we switch to taxation and debt to pay them, it is the taxpayer and a higher deficit pay. Neither of those courses is particularly attractive to me, as a Labour person.
As it often is with extreme green climate policies, the price paid, either way, comes soon, higher and painfully while the alleged benefits, some of which may happen, are vague, unquantifiable and distant. An additional worry is that the Labour Party is now focusing successfully on cutting the cost of living and even imposing an energy price freeze. The amendment will, most probably, raise the cost of living and is in conflict with a future energy price freeze.
I may be dim, and I may not have been in the Labour Party for long enough to understand how it appreciates these things—it is 60 years this month since I joined—but the amendment is, surely, incompatible with our main policies. I suspect the electorate will see through it. I cannot see why I, as a Labour person, should support the amendment: it hits jobs and is likely to increase fuel poverty. Politically, I am aware that yesterday’s big poll showed that 60% of the public oppose green taxes so I am not sure that is a great flag to wave before the next election. The poor should not pay the price of green dreams.
Lord Stoddart of Swindon (Ind Lab): My Lords, like the noble Lord, Lord Donoughue, I shall not be supporting the amendment of the noble Lord, Lord Oxburgh. I am also a Labour person but an independent Labour person, so I shall not be supporting the Labour Party this afternoon. However, I want to say one or two things about the amendment and the debate.
The noble Viscount, Lord Ridley, in a detailed critique, settled many of the arguments that have been made. The noble Lord, Lord Lawson, was absolutely right to say that the Bill is not about energy but decarbonisation. The two things are quite different. I have been asking a lot of questions about energy and decarbonisation, and the latest reply I received from the noble Baroness, Lady Verma, was that the Government are responsible for 14% of the average bill paid by consumers for energy. The companies, for which I hold no brief, are getting between 5% and 6%. They are being demonised for increasing the bills and yet the Government are responsible for three times as much of the bills as the companies are.
When I was in the Labour Party before I was expelled for supporting Labour people instead of Tories—defecting Tories, incidentally—I opposed from the Front Bench the privatisation of the gas and electricity industries and I believe that was the right thing to do. It may very well be that the Labour Party, because it now apparently believes in socialism, will consider
whether it wants to renationalise those industries if it gets into power at the next general election. However, that is by the by.
My other point is that like most other sensible people I believe that climate changes but like other noble Lords I believe that it is not necessarily carbon emissions that are causing the climate to change at present—if there is any significant climate change at all. However, the Government, Opposition and virtually everyone else say that climate change is due to carbon dioxide emitted by humans and their activities. That may or may not be true but unfortunately the Government do not deal with the problem. If climate change is due to human activity, why on earth are we not doing something about the predicted increase in the population from the present 7 billion to 9 billion? That really is going to exacerbate the problem. An extra 2 billion people will be emitting more carbon dioxide and their activities will add to the problem. Why do the Government not have a population policy? That would meet the problem without the Bill and without the amendment.
Then, of course, there is the possibility that carbon is not the real problem, that perhaps it is not global warming we ought to fear but global freezing. I am old enough to remember a lot of climate changes in my life and there seems to be some sort of circle. They come around now and again. However, suppose the people in the 1970s who said we are going to have a new ice age are right. Then we would be wrong in trying to reduce. If the warmists and the people who believe in carbon dioxide causing global warming are right, we would need extra carbon dioxide to deal with the ice age rather than less. This is becoming quite an issue. I read in the Daily Express today an article—
Lord Stoddart of Swindon: I am sorry I have gone downmarket a bit. I am quite sure noble Lords will want to take more notice of the Financial Times, which was quoted by the noble Lord, Lord Lawson, rather than me, but I saw this in the Daily Express. It is not the view of the Daily Express; it is the view of Professor Mike Lockwood of Reading University, who said that,
“erratic and extreme weather patterns could be the norm in 20 years. He said the risk of harsh winters and wet miserable summers has gone up to 25 to 30 per cent compared with 10 per cent a few years ago. Weakening sunspot activity is to blame for a ‘major change’ in the UK’s weather he told BBC TV. He said: ‘The sun is ‘quietening’ really rapidly. We think it is actually quietening more rapidly than at any time in the last 10,000 years’”.
We are entitled to take Professor Lockwood’s view into account as well as the views of other people. If he is right then we should be taking a completely different course on climate change. I hope that the Government will take note of what he said. Finally, I hope that they will indeed take some action to ensure that the people of this country—the energy consumers—are not put to further expense by additional green measures. Perhaps there could be a reduction in the cost of those as well.
Lord Dixon-Smith (Con): My Lords, I hesitate to intervene at a late stage in this debate. I am grateful to the noble Lord, Lord Oxburgh, for tabling the amendment that we are discussing because it has enabled this
extremely wide-ranging debate over a whole lot of matters that are not specifically aimed at the wording of the amendment. I am bound to express the view, which the House might agree with, that having had this debate at the start of Report I hope we will not have to repeat it.
The debate reminds me so much of the distinction between climate and weather. This morning, I tried to set out to come here. Every road I attempted to pass down was blocked by a fallen tree for about the first three hours of the day, and it was impossible. Of course I am here—that is noble Lords’ misfortune but that cannot be helped. The fact of the matter is that that is weather, and weather is only a part of the climate. This debate makes me think more and more of weather. However, the conclusions we come to and set in our debate will create the Bill and will set the climate. That is the significance of what we are discussing.
5.30 pm
The second thing I wanted to say is that it is entirely appropriate to have this debate here. I ask noble Lords to set their minds back 200 years, although that may not be possible. It was a whole series of British innovations, by people who thought originally and did not accept the limitations under which they worked at the time, which set off the Industrial Revolution, which of course is largely responsible for creating the world as we know it today. It is appropriate that we have this sort of wide-ranging discussion because you could, in one sense, say that our predecessors brought about the conditions which we now have to take steps to correct. It is a pleasure to be doing this.
I want to come back to the opening remarks of the noble Lord, Lord Oxburgh, where he implied that shale gas was not perhaps that significant an issue. For me, disregarding the fact that the amendment is only making two years’ difference in the way we take our decisions, this is the reason why it should not in fact be passed, The thing about shale gas is that it is very much an unknown quantity: it could be a game-changer but it might not be. I do not think we should hasten towards long-term decisions, which will set the investment climate, unless we are fairly sure of the ground on which we stand. Shale gas is not a British or a United States issue but a global one. We know that there are large deposits in the Mediterranean and I understand that there are large deposits in many parts of China. There are presumably large deposits elsewhere in the world, so this is an issue that we have to take care of.
So far as I am concerned, shale has the potential—I would put it no higher than that—to be a real interim technology that can change the nature of the game. Some of the environmental lobbies do not like it, as it is a fossil fuel. When I was first here, a Member of this House at the time said to me that we should remember that all our energy sources are nuclear. We can have our nuclear power station here or we can have it 98 million miles away, but we should remember, when we discuss fossil fuels, that they are nothing more than geologically stored solar energy. Those who deride these technologies need to put their thinking caps on.
The second thing about shale gas is that it would enable a revolution in electricity generation, because of not one but two factors. In conjunction with carbon capture and storage, it should be possible to reduce carbon emissions from electricity generation to almost, if not completely, zero. However, much more important than that, the technology is very clean. One of the things that appals me about our electricity generating industry is that, historically, because it has been a pretty dirty technology, it has had to be sited very far from large communities and conurbations. With clean technology, we could site power generation on the urban fringe, which could bring about a revolution in power generation, because we could use the waste heat productively in the community to heat homes. That is a major consideration as far as I am concerned. It is all very well having a nuclear power station out in the Severn estuary but it means that the energy efficiency of that power station is somewhere between only 40% and 50%, rather like an internal combustion engine. If we want to get efficient generation, we have to find a way of using that waste heat. That is, in a sense, a red herring in terms of the debate, but it is the reason why I do not think that these amendments should pass. I think we need more time to find out what we are really dealing with.
Baroness Worthington (Lab): My Lords, it is a great pleasure to speak at the end of this debate—a wide-ranging debate, something on which other noble Lords have commented. I am delighted to add my name to the amendment of the noble Lord, Lord Oxburgh, this afternoon. I will not get drawn into the debate that we have had about the climate science, because other noble Lords have done that far better than I could: the noble Lords, Lord Smith of Finsbury, Lord May, Lord Krebs and Lord Deben, have all, very clearly and lucidly, explained the dire situation and the threats that we face with climate change. I am also not going to comment on individual technologies, as it is very clear to me that the debate we should be having today is about the principle of decarbonisation, not about individual technologies. Nothing in any of these amendments dictates that we use renewables, do not use shale gas or use nuclear. They are entirely technologically neutral, which is one of their great assets and benefits. It is fair to say that on this issue we, as a party, and the noble Lord, Lord Oxburgh, are very close to DECC Ministers. We are not here to debate whether or not we should set a decarbonisation target but simply to debate when that target should be set. The Bill has been amended during its passage to state that a target will be set in 2016. The lead amendment is really about timing, and I have a few words to say about why it is right to set that target now.
The main reason is that, without this amendment and without bringing forward the setting of this target, the Bill largely lacks purpose. It is an enabling Bill which includes many measures that enable the Secretary of State to do things at his or her own discretion, but does not require anybody to actually do anything very specific. Therefore, despite the fact that we have been deliberating the Bill for many months—indeed, years now—investors are not celebrating the fact that it is nearly complete and are not yet clear about what the Bill actually delivers. There is still insufficient clarity
of purpose, too much doubt about the Government’s commitment to cleaning up and modernising our electricity sector, and too much control now being given to the Government, who, unfortunately, are equivocating about the need for low-carbon investment. The Bill does not enable enough competition to ensure a broader range of projects and investors are delivered by it. The Bill is an enabling Bill and lacks a clear purpose. The amendment of the noble Lord, Lord Oxburgh, is intended to address that failing.
I have no doubt that the Minister will say that it is not targets, in and of themselves, that will drive investment. The noble Lord, Lord Teverson, has already indicated that that is what he believes. That would be true if we could point to detailed elements of the Bill that gave certainty. The mechanisms that the noble Lord, Lord Teverson, alluded to, which I have no doubt the Minister will also allude to, including the contracts for difference, the strike prices and the capacity mechanism, are not being celebrated by industry; in fact, quite the opposite. We are hearing very strongly that, for example, the strike prices being offered for offshore wind do precisely the opposite of enabling investment and actually deter it. The same is true of the capacity mechanism, which we were told would bring forward investment in gas power generation. Again, this part of the Bill is not being celebrated. It is being lamented because it does not appear to give the certainty investors need. We need to see action, not just targets, but unfortunately, without a target, it seems clear that action will not be delivered.
This is a modest and very moderate amendment. The noble Lord, Lord Oxburgh, could, had he wished, have put in place an amendment that dictated a target in the Bill. He has not done that; he has merely asked that the target be set by April next year. One might say, “Well, of course that’s sensible”, but in other parts of the Bill there are numerate and precise numbers which, when the Government see fit to try to encourage gas investment, they seem perfectly happy to put on the face of the Bill. I am alluding to the energy performance standard, which is incredibly prescriptive and detailed. The noble Lord, Lord Oxburgh, has not followed that; he has made a moderate and necessary amendment and I hope that the Members of this House will find support for it.
If we want to get to the real reason why this amendment is potentially going to be blocked by the Minister, it is not because we do not have a fifth carbon budget. It is absolutely clear to me that if the noble Lord, Lord Deben, as the chair of the CCC, can advocate the setting of this target, then there is clearly no link between the need for a carbon budget and the need for a carbon intensity target. The two things do very different jobs, and it is merely a ruse to state that we must wait for it.
It is also wrong to say that we cannot move without Europe. The situation in Europe is that we are being asked to consider a renewables target, as many noble Lords, including the noble Lords, Lord Jenkin and Lord Deben have alluded to. We may not want a renewables target in 2030, but we may be dictated to by Germany to have one, which seems absolutely certain that that is what it wants. If we had a
decarbonisation target set early, we could then influence that debate and prevent the setting of a technology-specific target in favour of a decarbonisation target.
It seems clear that these reasons for opposing these moderate amendments are not the real ones. The real reason is that there is a complete lack of cohesion within the Government on whether we want to seriously pursue our climate change targets. One need look no further than Prime Minister’s Question Time just a week ago when a panicked Prime Minister was making up policy on the hoof. Without a real response to Labour’s challenge on how to bring prices down, he has now started blaming green electricity, or indeed social, environmental and energy-efficiency policies for those price rises.
I reassure the noble Lord, Lord Donoughue, that it is absolutely consistent for us to call for a decarbonisation target while wanting to see changes to the way that our electricity market is run. We have a regulator that is not fit for purpose, and an oligopolistic energy market that needs to be broken open so that we can have true competition and transparency and see that we are not overpaying for the electricity that is generated.
The real nub of this debate is: why can we not set the target now? Why are the Government insisting that it be set after the next election? It is purely political expediency because they have been unable to arrive at a sensible position in government. I really hope that Liberal Democrats—who have this as part of their party policy—will stand up and vote for this amendment because it is absolutely clear that, although many things are being attempted with this Bill, the bargain that has been struck is not yet balanced. The levy control framework that has been wrested from the Treasury is only a promissory note. That £7.6 billion that may be spent on clean energy will be spent only if strike prices are agreed at the right level. If all of the control that is being given to government means that the strike prices are continually set at the wrong level, we will see no investment and we will have sacrificed clarity of purpose for a bargain which will not ultimately deliver what I think the Liberal Democrats believe it will.
As I said, I am not going to get involved in the debate on climate science. However, I will say that if we are thinking that this amendment will somehow damage our competitiveness, that somehow Europe and the UK are out on their own tackling climate change, then that is absolutely incorrect. The most dynamic economies—China, Germany, California, South America—all now accept that the only future for energy is clean energy, and that we must act together to globally decarbonise. I am sure that we will see in Paris in 2015 the passing of an international framework that will demonstrate that we are not alone and that the big economic powerhouses of the US and China are behind this too. We will therefore move forward in tandem and it will not be a race to the bottom as some would prefer.
In the other place, this amendment was lost very narrowly; had 12 votes gone the other way, it would have been put into the Bill. That, of course, is in a situation where there is a large government majority.
Here, in this House, the balance of power is such that on issues of great importance we can send a strong signal to the Government that they have got something wrong and must institute a rethink. This issue of when we set this target is not a huge issue but it is one of those important issues where we must cause the Government to rethink.
The noble Lord, Lord Oxburgh should be commended for tabling these moderate amendments. I hope that if the opinion of the House should be tested, we will be able to cause the Government to rethink this important issue.
5.45 pm
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con): My Lords, these amendments have attracted significant debate across the House today and I am extremely grateful for the insights of all noble Lords who have spoken. However, the Government do not agree that the Bill should be amended as proposed and I shall set out the reasons for this.
The provisions in Part 1 set out a logical, measured approach that enables the Government to set the UK’s first sector-specific carbon intensity target in law. Once set, the provisions place a legal duty on the Secretary of State to ensure that the target is achieved. This brings with it important responsibilities. It is not something that should be rushed into. A target would have significant implications for the power sector, consumers and the wider economy. It is therefore vital to understand fully, based on evidence, whether a target represents the best approach to meeting our economy-wide carbon budgets cost-effectively and, if so, what level it should be set at.
The right time to consider this is in 2016, not 2014 as proposed by Amendment 1, as 2016 is when, in line with the requirements of the Climate Change Act, we will be undertaking extensive analysis to set the level of the fifth carbon budget in law, incorporating advice from the Committee on Climate Change. At that point we can consider a decarbonisation target within the broader context of the trajectory of our whole economy towards our 2050 target.
Moreover, in 2016 we will have a better understanding of how low-carbon forms of electricity have developed, the commercial deliverability of carbon capture and storage, the uptake of electric vehicles, and how the market is responding to the reforms included in this Bill. We will also have a clearer idea of a future climate change package both at the global and the EU level. These are important considerations when looking at the UK’s targets for 2030. By contrast, the noble Lord’s proposed approach would mean rushing to set a target in less than six months. As it stands, there are significant uncertainties now as to the energy mix that will best meet our objectives of secure, sustainable and affordable energy. This would make setting a robust target challenging.
In terms of investor certainty, according to the British Chambers of Commerce, the Energy Bill as it stands will,
“provide sufficient incentives to attract investment in low carbon forms of energy”.
This is supported by the point made at Second Reading by my noble friend Lord Browne of Madingley. In his experience as a businessman and an investor:
“The incentive structures contained in the Bill are far more important than targets or aspirations, because they are the mechanism for action”.—[Official Report, 18/6/13; col. 192.]
This is not forgetting that since January 2010 there have been announcements that could see more than £29 billion of investment in renewable energy. This speaks for itself. Clearly, a decarbonisation target is not the only way to encourage investment.
On Amendment 2, I fully agree with noble Lords that there should be a role for the Committee on Climate Change. In line with its responsibilities under the Climate Change Act, it is due to provide advice on the level of the fifth carbon budget. This covers the 2030 period. This analysis is perfectly sufficient to advise on a decarbonisation target range and it is therefore unnecessary to include further provisions in the Bill.
Amendment 2A, tabled by the noble Lord, Lord O’Neill, proposes setting annual carbon intensity limits on electricity suppliers. I do not support this amendment for three key reasons. First, the government reforms in the Bill support market-based mechanisms to incentivise a cost-effective transition to low-carbon power. Introducing an annual carbon limit on suppliers would be contrary to this approach. Secondly, the proposal would introduce confusion around accountability. The Government’s provisions clearly place legal responsibility for meeting the target range on the Secretary of State. This position should be maintained since it is he or she who is responsible for setting UK energy policy and is ultimately accountable to Parliament. Lastly, this is a blunt instrument which could have unintended consequences. We are not convinced that the proposal would not undermine our security of supply objectives. We are also concerned that the amendment may lead to an increase in consumer bills if the costs of compliance are passed on from energy suppliers to consumers.
The Government are not willing to accept these amendments today. However, we considered the amendment tabled by the noble Baroness, Lady Worthington, in Grand Committee. This proposed that the Secretary of State explain the actions to be taken to stay on track to meet the target over time. The Government support the aim of transparent reporting and I therefore commit to the House that, where carbon intensity is reported to have increased year on year for three consecutive years, the Government will explain the reasons why, and, where appropriate, report additional actions to address it within the annual statement of grid carbon intensity.
In conclusion, I hope that noble Lords can see the drawbacks of rushing to set a target next year. We want a much more measured approach. We all want to see decarbonisation continue—and this Bill enables that—but we must all be mindful that any targets set now will impact on consumer bills. Without having the more detailed information that is needed across all sectors, and without looking at our position against our European partners and more widely globally, setting a target would put us in isolation and make us uncompetitive against our partners.
We have to be sensible and see this as an opportunity to debate the subject but to set it in the appropriate
context. We do not know which technologies will realistically be able to be deployed in the 2020s. As the EEF has warned,
“should current assumptions about the development of carbon capture technology, the level of investment in nuclear power, the cost of offshore wind or the future price of gas prove wrong the UK could end up committed to an unrealistic and extremely costly target”.
We need to keep these issues very much in mind. Ultimately, what we decide will be borne by the consumer. I hope that the noble Lord will withdraw his amendment.
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.
5.57 pm
Contents 202; Not-Contents 216.
CONTENTS
Anderson of Swansea, L.
Andrews, B.
Armstrong of Hill Top, B.
Bach, L.
Barnett, L.
Bassam of Brighton, L.
Berkeley, L.
Best, L.
Bhattacharyya, L.
Bichard, L.
Billingham, B.
Blackstone, B.
Blood, B.
Borrie, L.
Bragg, L.
Brennan, L.
Broers, L.
Brookman, L.
Butler-Sloss, B.
Cameron of Dillington, L.
Campbell of Surbiton, B.
Campbell-Savours, L.
Carter of Coles, L.
Chandos, V.
Clancarty, E.
Clark of Windermere, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Collins of Highbury, L.
Collins of Mapesbury, L.
Colville of Culross, V.
Coussins, B.
Crawley, B.
Davies of Oldham, L.
Deben, L.
Donaghy, B.
Drake, B.
Drayson, L.
Dubs, L.
Elder, L.
Evans of Temple Guiting, L.
Evans of Watford, L.
Falconer of Thoroton, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Filkin, L.
Finlay of Llandaff, B.
Foulkes of Cumnock, L.
Gale, B.
Gavron, L.
Giddens, L.
Glasman, L.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Grabiner, L.
Grantchester, L.
Griffiths of Burry Port, L.
Grocott, L.
Hanworth, V.
Hardie, L.
Harries of Pentregarth, L.
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haskins, L.
Haworth, L.
Hayman, B.
Hayter of Kentish Town, B.
Healy of Primrose Hill, B.
Henig, B.
Hennessy of Nympsfield, L.
Hollick, L.
Hollis of Heigham, B.
Howarth of Breckland, B.
Howarth of Newport, L.
Howe of Idlicote, B.
Howells of St Davids, B.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Chesterton, L.
Hunt of Kings Heath, L.
Irvine of Lairg, L.
Janvrin, L.
Jay of Paddington, B.
Jones of Whitchurch, B.
Jones, L.
Judd, L.
Kennedy of Southwark, L.
Kennedy of The Shaws, B.
Kestenbaum, L.
King of Bow, B.
Kinnock of Holyhead, B.
Kinnock, L.
Kirkhill, L.
Krebs, L.
Laming, L.
Lane-Fox of Soho, B.
Lawrence of Clarendon, B.
Layard, L.
Lea of Crondall, L.
Leitch, L.
Lester of Herne Hill, L.
Levy, L.
Lichfield, Bp.
Liddell of Coatdyke, B.
Liddle, L.
Listowel, E.
Lloyd of Berwick, L.
London, Bp.
Low of Dalston, L.
McAvoy, L.
McConnell of Glenscorrodale, L.
McDonagh, B.
McFall of Alcluith, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
McKenzie of Luton, L.
Mar, C.
Martin of Springburn, L.
Maxton, L.
May of Oxford, L.
Meacher, B.
Mendelsohn, L.
Mitchell, L.
Monks, L.
Morgan of Drefelin, B.
Morgan of Ely, B.
Morgan of Huyton, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Morris of Yardley, B.
Murphy, B.
Noon, L.
Northbourne, L.
Nye, B.
O'Neill of Clackmannan, L.
Oxburgh, L. [Teller]
Palmer, L.
Pannick, L.
Paul, L.
Pendry, L.
Pitkeathley, B.
Ponsonby of Shulbrede, L.
Prashar, B.
Prosser, B.
Ramsay of Cartvale, B.
Ramsbotham, L.
Rea, L.
Rees of Ludlow, L.
Reid of Cardowan, L.
Rendell of Babergh, B.
Richard, L.
Rooker, L.
Rosser, L.
Rowe-Beddoe, L.
Rowlands, L.
Royall of Blaisdon, B.
St John of Bletso, L.
Sawyer, L.
Scotland of Asthal, B.
Simon, V.
Smith of Basildon, B.
Smith of Finsbury, L.
Smith of Gilmorehill, B.
Snape, L.
Soley, L.
Stern, B.
Stevenson of Balmacara, L.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Taylor of Bolton, B.
Temple-Morris, L.
Thornton, B.
Touhig, L.
Triesman, L.
Tunnicliffe, L. [Teller]
Turnberg, L.
Turner of Camden, B.
Uddin, B.
Wall of New Barnet, B.
Warnock, B.
Warwick of Undercliffe, B.
Watson of Invergowrie, L.
West of Spithead, L.
Wheeler, B.
Whitaker, B.
Whitty, L.
Wigley, L.
Wilkins, B.
Williams of Elvel, L.
Wills, L.
Wilson of Tillyorn, L.
Winston, L.
Wood of Anfield, L.
Woolf, L.
Woolmer of Leeds, L.
Worthington, B.
Young of Norwood Green, L.
Young of Old Scone, B.
NOT CONTENTS
Aberdare, L.
Addington, L.
Ahmad of Wimbledon, L.
Alderdice, L.
Allan of Hallam, L.
Anelay of St Johns, B. [Teller]
Arran, E.
Ashdown of Norton-sub-Hamdon, L.
Ashton of Hyde, L.
Astor of Hever, L.
Attlee, E.
Avebury, L.
Bakewell of Hardington Mandeville, B.
Ballyedmond, L.
Barker, B.
Bates, L.
Benjamin, B.
Berridge, B.
Bilimoria, L.
Black of Brentwood, L.
Blencathra, L.
Borwick, L.
Bourne of Aberystwyth, L.
Bowness, L.
Brabazon of Tara, L.
Bradshaw, L.
Brinton, B.
Brooke of Sutton Mandeville, L.
Brookeborough, V.
Brougham and Vaux, L.
Browne of Belmont, L.
Burnett, L.
Caithness, E.
Carrington of Fulham, L.
Cathcart, E.
Chidgey, L.
Clement-Jones, L.
Cobbold, L.
Coe, L.
Colwyn, L.
Cope of Berkeley, L.
Cormack, L.
Cotter, L.
Courtown, E.
Craigavon, V.
Crickhowell, L.
De Mauley, L.
Deech, B.
Deighton, L.
Dholakia, L.
Dixon-Smith, L.
Dobbs, L.
Donoughue, L.
Doocey, B.
Dundee, E.
Dykes, L.
Eccles of Moulton, B.
Edmiston, L.
Elton, L.
Empey, L.
Erroll, E.
Falkland, V.
Falkner of Margravine, B.
Faulks, L.
Fearn, L.
Feldman of Elstree, L.
Fellowes of West Stafford, L.
Fink, L.
Fookes, B.
Forsyth of Drumlean, L.
Fowler, L.
Freud, L.
Garden of Frognal, B.
Gardiner of Kimble, L.
Gardner of Parkes, B.
Geddes, L.
German, L.
Glasgow, E.
Glendonbrook, L.
Goodlad, L.
Greenway, L.
Grender, B.
Griffiths of Fforestfach, L.
Hamilton of Epsom, L.
Hamwee, B.
Hanham, B.
Harris of Peckham, L.
Harris of Richmond, B.
Henley, L.
Heyhoe Flint, B.
Higgins, L.
Hill of Oareford, L.
Hodgson of Abinger, B.
Hodgson of Astley Abbotts, L.
Home, E.
Hooper, B.
Horam, L.
Howe of Aberavon, L.
Howe, E.
Howell of Guildford, L.