Queen’s Speech

Lord Howell of Guildford Excerpts

Monday 16th May 2022 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, it is a huge pleasure to follow the right reverend Prelate the Bishop of St Edmundsbury and Ipswich in his maiden speech. I note in passing that St Edmundsbury Cathedral celebrated its 1,000-year anniversary last weekend, so the right reverend Prelate is in a position to take the long view on certain things. He has huge international experience combined with parish experience on the ground—both angles. He is engaged, I have been informed, in a “Transforming Effectiveness” project in the Church of England. I think we could all do with a bit of transforming of effectiveness, so maybe he will take the lead on that as well. I note personally that he is an honorary canon of Ely Cathedral, a most graceful and beautiful cathedral and certainly my favourite. Aside from all that, his is just the voice we want here in London on the great social and other challenges that he has mentioned; I hope that we will hear a very great deal more from him.

I shall speak mostly about energy, climate, prices and inflation. I declare my interests as in the register, including as an adviser to the Kuwait Investment Office. The cost of living and inflation crisis is basically driven by the energy prices and energy crisis, and energy price roots are international and demand immediate international understanding and action. Obviously, we can try, and we are trying, to marginally alleviate the suffering and damage here, which affect not merely the very poorest households but more or less half the households in this nation; but the real and immediate solutions to this intolerable situation lie elsewhere. The only effective short-term—I emphasise, short-term—answer to all this demand and shortage is more supply. The OPEC countries can easily add 3 million or 4 million barrels a day in quite short order, and their current refusal to do so must be vigorously challenged.

If we followed this course and could make some precious advance there, we would send all fuel prices, and by knock-on effects gas and petrol prices and so on, tumbling and take the steam out of inflation far more effectively than any subsidies, grants, or jiggling with the bank rate—which anyway only has an effect a year ahead, if at all—or other relief measures. Even an extra £10 billion one-off windfall from the oil companies’ vast and fortuitous profits—a take which I am at all not against as it is a sensible thing to do—will be only marginal relief from the biggest cost jumps in a generation, with much more to come, so they say. I cannot see that accelerating more North Sea oil development, with results in maybe three to four years’ time, will help either the immediate crisis or our longer-term security. People forget that the North Sea is an international province, as Ted Heath discovered in 1972 at the time of the oil shock and, of course, has to supply its oil into world markets.

We should be using all our famed soft power and diplomacy to get our Middle East so-called friends to stop their dogged refusal to help and start pumping more right now, and point out the sheer foolishness and short-sightedness, both political and commercial, of not doing so. How is that to be done? If the EU is divided and cannot decide which way to go and the United Nations is hamstrung by the fact that Russia is in the chair, our own country should seek to lead a coalition of like-minded nations to confront our so-called OPEC friends with the immorality and danger of their persistent refusal to use their spare capacity now and offset the effect of Russian exports being cut. Even Iran, if we can get through the JCPOA crisis, wants to add another million barrels a day. Every day that OPEC leaders delay in pumping more ensures that billions continue pouring into Russian coffers to finance the Ukrainian butchery.

In fact, the scene for gas is changing fast. Covid has already shrunk the Chinese market, and I am told that Milford Haven and other ports are now jammed with diverted LNG ships wanting to put more gas into the UK grid system. The global price for gas has dropped sharply, so why on earth are we still being told about charging consumers hundreds more for gas this autumn? Why we cannot we get this production into our pipelines and to hard-pressed households beats me, and I hope that the Minister will explain that odd conundrum.

I turn to our longer-term energy security and to the climate struggle in the White Paper. Yes, the promise of expanded nuclear power is good, although it is disgraceful that a firm and reliable block of low-carbon nuclear power has ever been allowed to run down the way it has. Some of us tried to begin the replacement of outdated nuclear plants 40 years ago, when I announced 15 gigawatts of new nuclear in December 1979 in the other place. It was nearly all defeated by political weakness, public fears and, above all, short-termism. Only one plant ever got built—Sizewell B—and that took 15 years from my announcement.

There is much more to say on whether the programme is going the right way but, as I am over my five minutes, I shall just add that I look with sadness on the numerous blunders in our energy policy over the past 30 years under all parties. Warnings were consistently neglected and short-termism prevailed, politically and financially. Here we are in a total energy mess, and it is time to start digging ourselves out of it.

--- Later in debate ---

[Lord Callanan (Con)]

Of course there will be other increases in the likes of VAT and other taxes, which are estimated by the OBR. I will certainly speak to the Treasury and ask whether we can give my noble friend a more complete number. However, as I said, the Government keep all these taxes under review. We made it clear that companies must reinvest in the UK. In fact, Shell and BP are already investing hundreds of millions into our economy, including carbon capture infrastructure in the Humber and on Teesside.

But it is not just about energy production. Many noble Lords, including the noble Baronesses, Lady Jones, Lady Parminter and Lady Hayman, the noble Lords, Lord Teverson and Lord Birt, and my noble friends Lord Bourne and Lord Moynihan, talked about the important subject of energy efficiency. Huge progress is already being made in the energy efficiency of UK homes. In 2008, 9% had an energy performance certificate, or EPC, of C or above; today, the figure is 46%. We are already investing more than £6.6 billion over this Parliament to improve energy efficiency, much of it targeted at the poorest in our society. This includes a £1.1 billion home upgrade grant and the energy company obligation scheme, which has been extended from 2022 to 2026, boosting its value from £640 million to £1 billion per year.

Furthermore, the noble Lord, Lord Teverson, and my noble friend Lord Bourne rightly spoke about the importance of reducing energy demand. We are scaling up our consumer advice and information service to help households understand how to reduce their energy demand effectively and what longer-term actions they may need to take as part of the transition to net zero. Noble Lords also asked me about protecting those 4 million consumers on pre-payment meters. Not only were special measures put in place in March 2020 but customers are also protected by the price cap.

To move from the local to the global, my noble friend Lord Howell called on the country to stand up to OPEC. He will be pleased to know that we are in fact working with partners across the G7, the IEA, OPEC+ and other oil-producing countries to press for measures to stabilise oil prices, and with the IEA and our allies on strategic oil reserve releases. However, the current—

[Lord Howell of Guildford (Con)]

It sounds as if my noble friend is coming to the end of his very good speech. I actually asked why, when our ports are crowded with frozen gas ships anxious to put gas into the British system—this is bearing down on the gas price now—this is not coming through to consumers in the way that surely it should.

[Lord Callanan (Con)]

We hope that it will do. Of course the market is in turmoil at the moment, but the noble Lord rightly pointed out that we have some very advanced LNG offloading facilities in the UK. We can play our part in helping parts of the EU that do not have LNG terminals, through the interconnection pipeline. But it is an international market; there is reduced supply and, of course, we all know that the price is at sky-high levels at the moment.

However, the current volatility in global energy prices and security concerns only underscores the importance of building strong home-grown renewable sectors and reducing our reliance on all fossil fuels. The ultimate way to deal with the high gas price is of course to use less of it. That is why this Government are so excited about hydrogen, which the noble Lord, Lord Bilimoria, and others asked about. My noble friend Lord Liverpool and the noble Lord, Lord Grantchester, asked specifically about our plans for so-called green hydrogen. I am pleased to tell the House that we are introducing a comprehensive package of measures to get these projects off the ground and help this outstanding new technology to thrive in the British marketplace. The global market for these technologies is for the taking, and we have the innovation and engineering expertise to be world leaders, just as we are becoming world leaders in EV battery technology.

I reassure my noble friend Lord Young that we have provided £30 million-worth of funding to support vehicle-to-everything projects, and we will provide a further £11.4 million of innovation funding. The noble Lord, Lord Birt, and my noble friend Lord Leicester raised an important point about electric vehicles—EVs. We recently announced our electric vehicle strategy, which sets out our vision and action plan for the rollout of effective vehicle charging infrastructure in the UK; I actually agree that there is much that we can do to improve that. Of course, electric vehicles will not take off unless the appropriate charging infrastructure is in place.

The noble Baronesses, Lady Whitaker and Lady Hayman, and my noble friend Lord Liverpool all spoke about the important subject of tidal power, and they are right in some respects. Along with copious wind, the UK is also blessed with strong tides. The Government’s position is that tidal power could well contribute to our energy mix, as we transition towards a carbon-neutral power sector. Indeed, the energy security strategy commits to aggressively exploring the potential of tidal power to contribute to our net-zero ambitions.

Of course, building these projects requires finance, which is why the Government are introducing the UK Infrastructure Bank. This also answers the question of the noble Baroness, Lady Kramer—