Climate Change Act 2008 (2050 Target Amendment) Order 2019
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Lord Henley
My noble friend is absolutely correct. I should have said 1.5 degrees centigrade and 2 degrees centigrade, and I am grateful for that correction.
The panel made it clear that countries across the world, including the UK, need to do more.
The House has heard of the great progress we have made in tackling climate change; of how we have cut emissions—on this occasion I will correctly give a percentage—by 42% since 1990, while growing the economy by 72%; of how we have cut coal from 40% of our electricity generation to less than 5% in just six years; and of our leadership role in sectors from offshore wind to green finance. That progress has been delivered by parties across this House and by communities across the UK. But we know that this is only the start and that we need to do more. That is why we commissioned our expert independent advisers, the Committee on Climate Change, to see if we should, and could, go further than our 80% target and set a target for achieving net zero greenhouse gas emissions. On 2 May the committee responded.
In its report, the committee has told us, quite clearly, that ending the UK’s contribution to global warming is now within reach. It has advised that a net zero emissions target is necessary, because climate change is the single most important issue facing us; feasible, because we can get there using existing technologies and approaches, enabling us to continue to grow our economy and to maintain and improve our quality of life; and affordable, because it can be achieved at a cost equivalent to 1% to 2% of GDP in 2050. Due to falling costs, this is the same cost envelope which Parliament accepted for an 80% target back in 2008. That is before the many benefits, from improved air quality to new green-collar jobs, are taken into account.
The Secondary Legislation Scrutiny Committee drew particular attention to the economic and societal impacts of this transition. While this statutory instrument does not in itself place a direct burden on any other body than central government, it is right that we understand how to meet the costs of this transition in a fair and balanced way. That is why the Treasury will be taking forward a review on how to achieve this transition in a way that works for households, businesses and public finances. The review will also consider the implications for UK competitiveness. We provide full impact assessments when we set carbon budgets and will continue to do so for the sixth carbon budget when that is set.
In its report, the Committee on Climate Change made it clear that 2050 is the right year for this target and is the appropriate UK contribution to the Paris agreement; it does not currently consider it credible for the UK to aim to reach net zero emissions earlier than 2050. I thank the Committee on Climate Change for the quality, breadth and analytical rigour of its advice.
Recent months and weeks have been a time of huge and growing interest in how we tackle the defining challenge of climate change. Calls for action have come from across society, and we all know that in doing this, it is important that we take people with us. My message today is that we have listened and we are taking action.
This country has long been a leader in tackling climate change. Thirty years ago, the then Prime Minister Mrs Thatcher was the first global leader to acknowledge at the UN,
“what may be early signs of man-induced climatic change”.
Eleven years ago, Parliament—under a different Government, of a different hue—passed the ground-breaking Climate Change Act, the first legislation in the world to set legally binding long-term targets for reducing emissions. That Act, passed with strong support from all sides of both Houses, created a vital precedent on climate: listen to the science; focus on the evidence; pursue deliverable solutions. Today I believe that we can make history again as the first major economy in the world to commit to ending our contribution to global warming. I ask the House to come together today in the same spirit to support this draft legislation.
Lord Howell of Guildford (Con)
Before my noble friend comes to an end, does the measure address carbon consumption, as opposed to carbon production? Carbon consumption is increasing fast and will increase further under this measure. Is that not considered important?
Lord Henley
My noble friend is of course correct: as he is aware, this is about carbon production. If we wanted to measure total consumption, we would need worldwide agreement with other countries and changes would have to be made. At this stage, that is not the case. We believe that this is an important moment to show the world what we are determined to do, and not to rest on our achievements.
I was not coming to an end, because now is the time to say a word or two, particularly as it came up in various interventions after Question Time, on the Motion—
UK Net Zero Emissions Target
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Lord Henley
My Lords, I shall try to keep my answers short. I accept what the noble Baroness said: in 2008 we were the first country to legislate and we are now bringing forward tighter proposals to take us to net zero by 2050. I think the French have just brought forward legislation on this. Let us see if we can pass ours before the French.
Lord Howell of Guildford (Con)
I declare an interest, as in the register. Has my noble friend seen yesterday’s reports that last year worldwide carbon emissions rose faster than for many years past? Indeed, the amount by which carbon emissions increased is said to be the equivalent of putting 400 million new motor cars on the road—that is an additional third of all the cars on the roads on the planet. Energy consumption rose even faster—to record levels—last year. Does this not indicate that whatever we do here, however admirable it is and however we try to promote our example, the fact is that the fundamental approach—even despite Paris—to world carbon emissions is not working. Is not a totally new approach now needed?
Lord Henley
My Lords, my noble friend is right to say that what we do on our own about emissions will not make that big a difference. However, the leadership we can show is important. That is why we are committed to going further and trying to secure the hosting of COP26 next year. We will do all we can to continue to show leadership in that area.
Climate Emergency
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Lord Henley
I will restrain my carnivorous habits in the future. However, the noble Lord makes a good point, and everyone should get that message—there is a great deal of waste in the food chain, just as there is throughout the world. We have possibly a lot less waste than in the third world as a result of the efficient means we have of moving food around and processing it, but as the noble Lord said, there is still a great deal of further waste, and more must be done.
Lord Howell of Guildford (Con)
My Lords, in support of the point made by the Labour Member just now, and in light of the fact that 99.3% of all carbon emission increases arise not, alas, in this country but in the wider world—in particular in Asia, Africa and the United States, where the per capita energy consumption is the highest of all—can we have an outline from the Government, maybe through a White Paper or a climate report, on exactly what the younger generation and the whole country are doing to bring to bear the resources on the technology needed to fight climate change and determine our own future rather than just make speeches?
Lord Henley
My Lords, the gist of what I am trying to say is that what we are doing through our actions is important in this country. Obviously, as my noble friend makes quite clear, what is happening throughout the rest of the world is far more important, because we are only a small island, producing a relatively small amount of carbon emissions. However, as a result of what we do—and we have a good record, which goes back through all Governments who have been in power over the last few years—we believe that we in this country can show international leadership and hope to persuade other countries to follow suit.
Reducing Greenhouse Gas Emissions
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Lord Howell of Guildford (Con)
My Lords, I declare an interest as chairman of the Windsor Energy Group and a consultant to Mitsubishi Electric. We always say that these debates are timely, but this debate really is timely, not just because of the recent protests or the mighty new plan presented so eloquently by my noble friend Lord Deben a few moments ago, but because we are raising overdue questions about the whole of UK energy policy and its present trend and the global climate struggle, which we and the whole world community are, frankly, now busy losing.
In my short time, I shall make three points. First, of course carbon reduction is an essential priority. I certainly do not question that. It is necessary, but some compassion is also needed. It is also a priority to provide affordable clean energy for the millions across the world who do not have it and for the millions in the developed world who have it but face extreme difficulties, including in many parts of our United Kingdom. It is utterly shaming that we are a nation of fuel banks—of agonising choices for some families between eating and heating and of ineffectual price caps. There is a real choice here on pace and balance to prevent serious social harm and economic damage. It is callous to ignore that or to pretend otherwise, and in practical terms it is unwise and self-defeating. We have only to see what happened with the gilets jaunes in France a few weeks ago to get a good idea of what happens if we get the balance wrong.
Secondly, we face a massive growth in electricity demand worldwide, not least from billions of people without any power at all. The future is electric. However successful we are with cheap renewables plus storage technology, which we must of course press ahead with, and however clever we are with conservation, electric cars, distributed energy resources, carbon capture and storage or any of the other very desirable technological improvements, the only way to meet this inevitable and huge demand will be through low-carbon nuclear power. Everyone knows that—it has been recognised throughout the world. France recognises it. It has now decided to delay the closure of its highly successful low-carbon nuclear electricity system to achieve zero emissions by 2050, in line with the aspirations of my noble friend Lord Deben. It cannot be done without keeping open part of its vast nuclear power low-carbon system. Germany is in a complete muddle. Having abandoned nuclear power, it is now seeing a higher level of coal-burning. CO2 is rising, not falling, and it has ended up 50% dependent on Russian gas, which is highly dangerous.
In the United Kingdom, we are trying to expand clean nuclear power but it is not going well. Hinkley Point C is being built with colossal burdens on consumers for years ahead. Wylfa is on hold, with Hitachi suspending operations. The Moorside plan has been completely halted by Toshiba abandoning it. The Chinese are taking over. They are going to build their own Hinkley nuclear plant at Bradwell and possibly at Sizewell C. We, and the world, cannot achieve even the present targets without substantially increased nuclear power. All the mess that we have got into with the British system needs a thorough review, because without nuclear power we will not deliver the green targets or keep within the legal bounds that we have set ourselves.
Thirdly, however well we do here, our climate fate will be decided in Asia and the US, and in China and India in particular. I think that the noble Lord, Lord Rooker, and others have recognised that. In 2018, emissions grew by 4.7% in China and 6.3% in India. In the US, by far the biggest per capita emitter of all, they grew last year by 2.5%, having fallen in earlier years because of the shift from coal to shale gas.
Throughout all that time, the UK has undoubtedly done comparatively quite well. We have reduced emissions but the trouble is that not only is there a heavy cost for the poor consumer but we account for only 1% of world emissions. The figure was much higher during the era of the Industrial Revolution but now it is 1%. Therefore, our influence on climate change worldwide will be only by example. In fact, even if we closed down the whole of the United Kingdom, the direct effect in the battle against climate change throughout the world would be marginal, as 99% of CO2 is pumped out elsewhere. Unfortunately, no virtuous little carbon-free zone would be maintained above us—it is not like that. We are caught up in the global system. Because of vast Asian demand as living standards rise, hydrocarbons will still be 74% of energy source by 2040, and 37% of energy still comes from coal, with many new coal-powered stations still being built, as earlier speakers have reminded us.
The lessons of this are clear: let there be protest and let the young and the old be motivated—that is fine—but let this protest be focused on real issues, without fantasy, and ideally without hitting and hurting hard-working people, the vulnerable or the weak, as I fear some measures have already done. Resources should be provided on a Marshall plan scale to put behind low-carbon technologies that will meet Asia’s colossal thirst for power and electricity, including clean coal technologies and particularly cheaper nuclear power. Smaller, cleaner and safer reactors may well be the solution, instead of the expensive behemoths that we keep building here, without great success.
Without this new focus, there is not the slightest hope of even meeting the inadequate Paris targets. Whatever we do here, legal or not legal, protest or no protest, that is the case and those are the facts. I hope that the Intergovernmental Panel on Climate Change will play its part—dare I say possibly a stronger part than in the past?—in bringing honesty and realism to the debate and in focusing on the real needs before it is too late. We do indeed need to think again urgently, sensitively and differently on all these issues.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, like all other noble Lords, I pay tribute to the noble Lord, Lord Rooker, for securing a timely and high-quality debate. I also thank him, as always, for his positive tone. He perhaps does not like me saying that, but on this occasion he was positive—I should probably say that he does not always want to be positive on other issues.
All noble Lords have made clear the importance of working together and, looking back on the history of these matters, I am reminded that that is what we have done. The noble Lord, Lord Rooker, mentioned my friend Lady Thatcher, who made a great speech in 1989—a time when my noble friend Lord Deben was in government and possibly even wrote the speech—the first from a government leader warning the rest of the world about the dangers facing us.
In talking about the history, it is worth mentioning the cross-party support for the Climate Change Act 2008, which the Labour Government took through. As the noble Lord, Lord Prescott, will remember, it had support from the Opposition. We recommended amendments increasing the targets, which the then Government accepted and we all took forward. This Government are well aware of their responsibilities under the Climate Change Act and, however much the noble Lord worries about the fact that no Parliament can bind its successor, he knows that we have followed that Climate Change Act and stuck with it. We have not sought to amend it downwards, if I can put it that way, and want to continue with it. It is important for us to remind ourselves of the history of what we have achieved under the coalition Government and the current Government, and what we are still achieving.
That legislative framework, with its ambitious package of policy proposals, has been matched by a vigorous programme of international action as we work and invest to help other countries mitigate and adapt to—I am grateful for what the noble Baroness, Lady Brown, said about adaptation—the impacts of climate change. I hope that, as a result, this country can offer leadership and encouragement to the rest of the world. The noble Lord, Lord Rooker, asked for action. There has been and will continue to be action on what we can achieve domestically and what we can do in the wider world, either by our individual actions or through the process of offering encouragement.
As the House will be aware, my right honourable friend the Secretary of State will publish an energy White Paper in the summer which will seek to address the challenges arising from the transformation of the energy system over the coming decades. That will be important, as many of my noble friends have pointed out; my noble friend Lady Altmann referred to electric cars and the strains they will put on the electricity system. The White Paper will take a long-term view of the energy requirements—up to 2050—consistent with what the Government wish to do on climate change.
We are already seeing the impacts of climate change around the world. Our actions have been determined but we know that more is needed. Last October, the IPCC published its special report on global warming. Its conclusions were stark. Our current rate of warming could see us reaching 1.5 degrees as soon as 2030, which would present many of the threats highlighted by noble Lords in the debate, including to food security, water supply, infrastructure, biodiversity and the ecosystem as a whole.
The science is now clear, and we are witnessing a groundswell of public concern, to which noble Lords have referred. There is an increased sense of urgency and more vocal demands for action. That is why we are seeking to a play a role, both domestically and internationally. I shall address both roles in turn, starting with the domestic sector.
Our legally binding carbon targets, set by our world-leading Climate Change Act, are among the most stretching in the world. We have achieved a great deal since 1990: we have reduced emissions by 42%, while growing our economy by 72%. Doubts have been expressed—first, by the noble Lord, Lord Rooker, and then by the noble Baroness, Lady Jones, and others—about the system of accounting. We have to accept the system that we have, because we cannot change it unless we have the agreement of others. Perhaps that could come in the future but, at the moment, under the current system of accounting, we have reduced our emissions by 42% and, importantly, increased our economy by 72%.
At this point, it is worth looking at the opportunities presented by the growing green economy. Some 400,000 jobs have been created, and we estimate that that figure could rise to 2 million by 2030. The sector is growing faster than the main economy—up by some 11% per annum—with exports estimated to be worth between £60 billion and £170 billion by 2030. The noble Lord, Lord Prescott, referred to opportunities at a local level for areas such as the Humber and what could be—and I am sure will be—achieved there. If the noble Lord were to invite me to the Humber and show me what it is doing, its local industrial strategy and opportunities, I would be more than happy to go. However, one should also look at other opportunities, and I will refer to those in due course.
In 2017, we published our clean growth strategy, setting out our policies and proposals for further decarbonising the economy in the 2020s and the illustrative pathways out to 2050. The strategy also sets out our investment of more than £2.5 billion to support low-carbon innovation from 2015 to 2021, as we seek to realise the opportunities—I again stress the word “opportunities”—of the global shift to a low-carbon economy. I shall give just a few examples of the action we are taking.
In power, 50% of our electricity now comes from clean sources—I am grateful to the noble Lord, Lord Lipsey, for reminding the House of this—and by 2025 we will have phased out coal from our energy mix in its entirety. As a Cumbrian, I shall pause here, because I see the noble Lord, Lord Judd, in his place. Since there was some mention of consent being granted for a new deep mine in Cumbria, I will say that that decision has been made. However, it is not coal for energy consumption but coking coal for the production of steel. At this stage, we have no other way of producing steel without using that coal. The alternative would be to import it across the seas from other, possibly rather dubious, parts of the world. I think it is better to take it out of the mines in that mining area. It may be that the noble Lord, Lord Rooker, does not agree with me.
On 7 March, we published our offshore wind sector deal. It pledges that 30% of British electricity can come from offshore wind by 2030. We have seen dramatic growth in the use of offshore wind and, it is worth reminding the House, an enormous reduction in the cost of offshore wind. We have seen the same in solar power as a result of its use, with enormous reductions in the cost. The noble Lord, Lord Grantchester, asked us to continue to look at tidal and mentioned the Swansea Bay barrage scheme, which we rejected on the grounds of cost. We will of course go on looking at issues such as tidal, but I do not think there are likely to be opportunities for dramatic reductions in costs for schemes of that sort because they are largely about putting large amounts of concrete—a rather carbon-producing product—into the ground, whereas with offshore wind and solar there are genuine opportunities to reduce costs, and we will continue to do so.
There are other renewables that we will continue to look at and research. I can tell the noble Lord, Lord Prescott, that I was very interested to see old mine shafts in a mining park in Glasgow being used as heat pumps. I do not understand the science of it—the noble Lord, Lord Hunt, will no doubt help me out on this—but it is wonderful to see that old mining areas can possibly make a contribution to renewables by making use of those old mine shafts and what goes with them.
There are all sorts of other things that we can and will be doing in research into renewal. One thinks of all the work that goes into storage. The noble Viscount, Lord Hanworth, touched on the production of hydrogen from nuclear power stations. One can also look at the production of hydrogen from wind farms—I have seen it in Orkney—that can be used in transport or other things. We can do research into artificial intelligence and other such things to improve the smartness of our grid. All this can improve energy efficiency, make better use of power and reduce our consumption. I could go on, but I would be in danger of running out of time.
I now turn briefly to my noble friend’s report. I am grateful to my noble friend Lord Deben and the noble Baroness, Lady Brown, for all the work they have done in producing it. It is a great, big, square book. As they said, there are 600 pages, and I make an honest confession that I have not even opened it yet, because I got it only this morning. However, it will be studied in the department by Ministers in due course. I believe we acted rightly and quickly in commissioning that report from independent experts from my noble friend’s committee to provide that advice. It has come at a crucial moment and will be worth serious study. I guarantee that we will study it and I guarantee my noble friend that, in due course, my right honourable friends the Secretary of State and Claire Perry will respond to it and take it forward in the most appropriate way.
I said that I want to talk about what we are doing domestically, but it is also very important that I now turn to our role internationally, what we are doing and how important it is. The noble Lord, Lord Prescott, talked about that from his experience. We can do an awful lot not only by example—I refer to the history—in the way we have shown how individual countries can cut their emissions and at the same time grow economically. We can show that since we have possibly the best record in the G7 or even the G20 since 1990, but obviously we can do more and we will continue to do more. We have offered to host COP 26 next year, which will be a pivotal global moment to take stock, encourage global ambition and prepare the ground for further action.
We know, as I think the noble Baroness, Lady Brown, said, that climate change is a risk multiplier with the potential to exacerbate global instability through resource stress, population displacement and the impact on trade and global economic and food security. For too many people, climate change is already a matter of life and death. The noble Lord, Lord Judd, stressed this. Millions around the world have been left without homes or livelihoods, as we have seen recently following the cyclone that affected Mozambique, Zimbabwe and Malawi. We are promoting climate security internationally and are helping Governments build resilience while reducing emissions. Through the UK-led Centre for Global Disaster Protection, we are working with developing countries to increase their preparedness for and resilience to climate change and natural disasters. Through our world-leading international climate finance, we are supporting cleaner economic growth and so far have helped some 17 million people with improved access to clean energy and some 47 million people to cope with the effects of climate change. Between 2016 and 2021, we are providing at least £5.8 billion in climate finance and are aiming to spend half of that on building resilience and half on emissions reduction.
I shall say a word or two about that. I remind the House—I think this was a question from the noble Baroness, Lady Altmann—that my right honourable friend the Foreign Secretary announced only yesterday three major new aid programmes to help farmers across Africa and in southern Africa affected by climate change and to boost climate resilience in Ethiopia. We are also playing a key role in the commitment from developed countries to mobilise $100 billion a year in climate finance from 2020. The UK will co-lead efforts on resilience and adaptation ahead of the United Nations Secretary-General’s climate action summit in September. Investing in resilience not only reduces the risk to lives and livelihoods but is the opportunity we talked about to create jobs, spread prosperity, accelerate development and enhance security.
I believe this has been a good debate and that—
Lord Howell of Guildford
I hope that my noble friend will forgive me for interrupting, but he is obviously coming to the end of his speech. Our green targets, and indeed those of the wider world, depend heavily on the successful development of low carbon nuclear power. As I indicated, and as is widely seen, our nuclear power programme is in some difficulties at the moment, yet my noble friend has made no mention of that. Would he do so please?
Lord Henley
I repeat a commitment that I have given to my noble friend before—that we remain committed to nuclear power. I accept that we will not have the Moorside development in Cumbria that we were hoping for, nor the Wylfa development, but we continue to believe that there is a role for nuclear power. We continue to get considerable amounts of energy from nuclear power. My noble friend will no doubt be ready for the White Paper that I talked about earlier and there will be further announcements from my right honourable friend in due course. However, I offer him my assurance that we certainly continue to see a role for nuclear power.
I believe that I am coming to the end of my time. I end by thanking the noble Lord and giving that assurance. I believe that we and all other parties and other Governments have achieved a great deal. We have demonstrated to the world how emissions reductions can be delivered while at the same time—I think this is important—growing not only our own economy but those of other countries. Lifting countries out of poverty will be better for them. There is no point in imposing a hair-shirt on ourselves if it imposes an even worse hair-shirt on the rest of the world. We will continue to take action in the United Kingdom, taking our strong progress to date as a template for going further, and we will help other countries to do the same.
Fuel Poverty
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Lord Henley
My Lords, I will see whether those figures are available and if they are, I will make them available to the noble Baroness. In my original Answer, I was trying to address the importance of the aggregate fuel poverty gap. We are seeing that come down over the years; the aggregate fuel poverty gap was of the order of £857 million in 2010 and it has now dropped by £25 million to £832 million.
Lord Howell of Guildford (Con)
My Lords, as renewable energy prices become more and more competitive with new technology, would one fairly simple way to ease fuel poverty not be to reduce the subsidy charge on electricity bills that has to be imposed to pay for green subsidies? Does my noble friend not agree that the energy gap Her Majesty’s Government imposed has not been a great success, since fuel bills are rising all round?
Lord Henley
On that last point, I assure my noble friend that we estimate that the price cap will save consumers something of the order of £1 billion annually on their bills. On his first point about setting the levels of subsidy for renewables, it is important to provide the appropriate subsidy to see that we get the appropriate developments in renewable energy. As my noble friend will be aware, we have seen a dramatic drop in the cost of producing offshore wind, for example; the same is true of solar and we hope those trends will continue.
Nuclear Power: Future Energy Needs
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Lord Henley
My Lords, I am glad that the noble Lord stresses the importance of the nuclear industry and the fact that it is supplying some 20% of our electricity requirements and 40% of low-carbon electricity. Some 15 nuclear reactors operate throughout the UK. We would have hoped for a better announcement from Hitachi but that was not the case, and it is obviously right that my right honourable friend looks to the taxpayer to make sure that there is the appropriate deal for them. At the moment, costs in the nuclear sector are still rising, at a time when costs for a great many renewables are coming down. That is one of the reasons why there are problems. However, the fact is that we have seen the development of Hinkley C, and, as the noble Lord was quite right to suggest, we are the first Government for a number of years to make progress in that area.
Lord Howell of Guildford (Con)
My Lords, is my noble friend aware that, with the possible withdrawal of the Japanese from Wylfa and their withdrawal anyway from Moorside, and with the Chinese building at Bradwell, involved in Sizewell C—which has not been mentioned yet—and of course financing Hinkley C, this places the Chinese, as the noble Lord, Lord West, rightly said, in pole position in the rebuilding and replacement of our nuclear fleet? Does the Minister agree that this will have a major impact on our UK energy policy, which already has all its problems, and will he ask his government colleagues, including the Whips, whether we can have a serious and urgent debate on this whole matter, which has major implications for national security and policy?
Lord Henley
My noble friend is quite right. That was the tail end of the question from the noble Lord, Lord West; I apologise to the House for not being able to address it in the time that was available to me. I certainly agree that it would be timely to have a debate on this in the light of the recent announcement; I was hoping to be able to repeat the Statement, and perhaps there might be other moments when this could happen. However, obviously that is a matter for the usual channels.
Nuclear Energy
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Lord Henley
My Lords, I think that is a bit rich from the noble Viscount who speaks, I presume, for a party that was in office for 13 years and did absolutely nothing to produce new nuclear power stations. We have produced a new nuclear power station and we have produced a nuclear sector deal that looks to enhance the sector and aims to support the 87,000 jobs in the sector and increase that number to some 100,000 jobs, and aims to see a 30% reduction in the cost of new-build projects and so on—I could go on. We are committed to the nuclear sector and will continue to be so.
Lord Howell of Guildford (Con)
My Lords, can my noble friend give us a little more up-to-date comment on our attempt to develop a new nuclear fleet? He has mentioned Hinckley C. At Moorside, of course, Toshiba has abandoned the situation and no other role can be found to support the consortium. I understand that Hitachi continues to be very worried about the situation at Wylfa, where, although there is talk of agreement, it has not yet been achieved. Meanwhile, EDF is thinking of building Sizewell C and I learn from CGN’s latest papers that it regards that as a joint venture on top of its undertaking to build one at Bradwell B. So the Chinese are really involved in everything. Is this not a rather worrying situation? Should we not have an update to the House on where we are going on the whole programme, since it does not seem to be going very smoothly?
Lord Henley
My Lords, it is unfortunate that Toshiba had to announce that it would wind up NuGen, and as a result the project at Moorside has been lost—but that was a commercial decision for that company. That site will revert to the Nuclear Decommissioning Authority and it and we will consider options for its future. Moorside will remain available and we hope that others will come forward. Discussions will continue on Wylfa. As my noble friend knows, my right honourable friend made a Statement about that last June, announcing the first signing of proposals with Hitachi, and that will continue. We remain committed to nuclear, as we made clear in our nuclear sector deal. CGN, as my noble friend made clear, is committed to Sizewell, to Bradwell B and beyond, and we look also to other companies to come forward.
Brexit: Galileo Space Project
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Lord Henley
The noble Lord could hardly have put it better, particularly in stressing the capabilities that we have in this country. Only recently I visited an American company making micro-satellites in Glasgow. It could have invested anywhere in the world but it chose Glasgow because it knew Glasgow has the right people with the right skills here in the United Kingdom. We have a great capability and I am sure other people will recognise this.
Lord Howell of Guildford (Con)
My Lords, just for the record, I say that we already co-operate with the Russians in the Soyuz and space station programme, in which Tim Peake flew and which is highly successful. Does the Minister agree that, if we can co-operate with the Russians despite everything, surely we should not have too many problems with the European Union?
Lord Henley
I am sure that the Commission will note my noble friend’s point.
Brexit: Fashion Industry
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Lord Henley
My Lords, the noble Baroness is taking a rather pessimistic view of things, but we are aware of those risks. When one thinks of the strengths of the industry in this country, I think it is very unlikely to leave overnight. We will be in discussion with people such as those at the British Fashion Council and listen to their particular concerns. As I said, we will continue with our negotiation as part of the leaving process.
Lord Howell of Guildford (Con)
Did my noble friend notice the highly successful Commonwealth fashion event the other week, which demonstrated that London fashion was roaring ahead regardless of Brexit? It involved wider-world influences in a highly successful and satisfactory way.
Lord Henley
My Lords, sadly, I missed that, but I am very grateful to my noble friend for bringing it not only to my attention but, more importantly, to the attention of the House.
Industrial Strategy
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Lord Howell of Guildford (Con)
My Lords, I most strongly agree with those last remarks of the noble Lord, Lord Eatwell, on the need to bring benefits to all, not just to limited sections of society. Indeed, the White Paper contains many excellent proposals and ambitions, particularly the emphasis on research and innovation, design and the life sciences, and many other things.
Nevertheless, I confess that I started out with very limited enthusiasm for this kind of project. This is not just because industrial strategies have great difficulty keeping up with rapidly evolving markets and technologies, let alone political events. Past ones have usually disappointed, as my noble friend Lord Griffiths reminded us, and as the noble Lord, Lord Hennessy, reminded us in an earlier debate and no doubt will repeat in a few moments when he speaks. I know this personally from being a member of Neddy way back, on which I was very enthusiastic indeed. In the end it was all very disappointing; there was something missing. It is not just those sceptical past reasons, but this: for the reasons that the noble Lord, Lord Mandelson, touched on in his very telling and encouraging speech, and those touched on by my noble friend Lord Prior, I wonder whether the priorities set out in the White Paper are entirely the right ones for the revolutionary era we have entered, in which we face conditions completely different from anything that has gone before. History is not much of a guide to where we should turn.
Despite plenty of references in the White Paper to the digital age, artificial intelligence, the cyber revolution and so on, I still feel that in a way—perhaps this is unfair—it was drafted by people with a 20th century mindset. In the 21st century, successful industrial progress is part of a much wider constellation of forces than this document seems to recognise: the drive for change begins more than ever in the home and deep in social structures. The authors of the White Paper should have perhaps paid more attention to things such as my right honourable friend Sir Oliver Letwin’s book Hearts and Minds, in which he emphasised, looking back on what was missing, the need to focus not just on the market economy but on the social market economy. Perhaps they should have looked at that before they drafted. It is the social bit and the more difficult to measure but fundamental bit that seems to have got left out of this kind document, which probably should have come not merely in the document, but first.
For a start, there is a central question of measuring productivity. Everyone is talking about low productivity. We just heard some remarks on it. All the economists seem to be convinced that it is the great issue. Yet everyone also knows that the old measures of productivity are far too narrow and do not tell an adequate productivity story. Nor, for that matter, does the Office for Budget Responsibility’s spuriously scientific forecasts of where the growth of GDP will be in a year or two’s time, when they capture only the market value of goods and services and ignore all other forms of output. I do not think that this will wash any more in modern economic conditions. For example, how do you measure or compare increased productivity—or, for that matter, GDP growth—in the creative arts, media, sport and entertainment, in nail bars or home delivery services, in more comfortable buses and quicker taxi services, faster book printing, aspects of education, health and social care, whether public or private, or infinitely quicker linkages between businesses and individuals? They do not come into any of the official statistics at all. The truth is, it cannot be done. The more we live in an overwhelmingly service economy, as we do, the harder it becomes to measure.
As to the list of priorities and challenges for more industrial success, the “people” section in the document should, of course, come first. By that one means not just people in industry, but everyone who makes daily life and society work. I agree that they are in the strategy document, but they are not at the top of the list where they should be. In an economy that is meant to work for all, the need is not just for priority for schools, well-paid teachers, plentiful technical and vocational courses and colleges, and strong universities, which are there in the strategy document, on which it is rather good. It also means taking account of the real determinants of economic progress that lie at its very foundations—within the home, the household, and in all the human impulses and incentives to share and co-operate, which are very strong in the whole community—and of social relations and attitudes in the surrounding environment and in the routine but essential dealings and requirements of daily and family life, on which everything else depends.
Are these not precisely the core areas that shape the national mood and determine the country’s industrial strength—or weakness—with industrial peace and partnership on the one hand or bad relations, non-co-operation, and inefficient and failed investment on the other? Are they not what decides whether an economy pulls together with a motivated workforce, or slows down to torpor and stagnation levels and falls apart? Yet these are just the considerations and measurements that, I am afraid, almost all economists for the last century, since the days of Marshall and before—with some brave exceptions—have completely ignored. Too many economists have taken a wrong turn and offer a flawed and implausibly narrow base on which to build an industrial strategy, as some of us have been arguing for the past 30 years.
The other priority condition for industrial success, which gets a fleeting mention at the beginning of the strategy but again ought to come near the very top, is the imperative need for a strong sense of fairness in society, and in economic and monetary systems that spread the proceeds of new wealth—not concentrate them—in a redistributive economy, not just one that statistically adds growth via GNP statistics. We need a radical overhaul of the monetary system to bring this about and bring the dignity and security of capital ownership to millions of households. If wages and benefits are just not adequate to provide security and reasonably stress-free living, and instead leave millions of households just not managing, you can say goodbye to industrial dynamism and competitive growth.
Next, I am sorry that the strategy authors still seem unable to resist the old error of picking some winners. Driverless cars may or may not be the next big thing, even though we are told they will not work in cities, in which most people live. In truth, we have no idea at all which ways new technology and innovation will take us, nor which constantly evolving and fluidised needs and wants will emerge. Most predictions on this front will almost certainly be wrong and very expensive. Manufacturing industries are now constantly transforming and are increasingly part of complex producer networks, spanning the globe and blurring sector classifications, as the noble Lord, Lord Mandelson, reminded us. It is simply not given to humans, and certainly not to government officials, to know how these systems and subsystems will work out.
While we need energy to be low carbon as far as possible, we also need it to be cheap, which it is not in this economy—it is some of the most expensive in Europe—and reliable, which it is in danger of not becoming, as well as making warm homes affordable. Without that, industrial growth will be hobbled. The sections in the White Paper on energy and climate seem to have forgotten about that basic requirement.
Perhaps above all we need from the top a narrative and a national purpose to motivate everybody, whether in the home or at work—especially in these confused and very dangerous times. Her Majesty the Queen spoke at Christmas about a vibrant Commonwealth. It may just be that, in a world of networks and algorithms driving everything, the Commonwealth network helps to give us new purpose and direction. Industry and competition will not thrive without a strong sense of where we are heading in the entirely new international conditions, both economic and political, which now prevail.
Finally, while efficient markets are of course important, if the focus on free markets and “growth” leads not just to competition and satisfying the consumer but to immense capital concentrations, massive global monopolies and disequilibrium throughout the planet, as looks suspiciously like happening right now, it is not the right strategy. We need as never before to distinguish between the quantity and the quality of production, growth and productivity. An unhealthy, brittle, unbalanced and divided society will in the end produce none of these.