Lord Lea of Crondall
Main Page: Lord Lea of Crondall (Non-affiliated - Life peer)Energy Bill [HL]
Lord Lea of Crondall Excerpts
Lord Lea of Crondall
“PART 4AEnergy revenues, taxes and subsidies: equitable price effectsEnergy revenues, taxes and subsidies: equitable price effects
(1) The Treasury shall publish an annual financial abstract of all fiscal and quasi-fiscal instruments, including revenues, tax expenditures and subsidies, which relate to the supply of energy, including hydrocarbons.
(2) The Office for Budget Responsibility shall produce annual assessments, having regard to each carbon budgetary period specified under the Climate Change Act 2008, of the incidence on each sector of the economy, including—
(a) manufacturing and services;(b) public and private transport, including—(i) road travel (by bus and private vehicles),(ii) rail and air travel (both personal and freight);(c) home and industrial heating.(3) The Office for National Statistics shall publish in easily assimilable form an assessment of how each fiscal instrument or market intervention affects consumers with different levels of income.
(4) Both assessments shall be tabled for discussion at a periodic forum of industry, trade unions, consumers and other stakeholders; and the forum shall publish its minutes and executive summaries of documentation shall be circulated widely.”
Lord Lea of Crondall
My Lords, the proposal in this amendment is, in some respects, complementary to the green industrial strategy. I think that the Government are doing rather well, in terms of the co-ordination within government, in getting their act together on a green industrial strategy, and this Bill bears witness to that. I know that a couple of weeks ago the Green Economy Council had its first meeting on the green industrial strategy. The council is chaired by Vince Cable and attended by Chris Huhne and Caroline Spelman, together with, I believe, junior Ministers from the Treasury and other departments. Apart from Ministers, there is very wide participation from members of industry, including the modern energy industries, and trade unions.
However, that is totally separate from where I think there is currently a gap in the narrative so far as concerns the general public, although it is in the same family of issues relating to carbon and so on. I refer to the tax subsidy side of the jigsaw puzzle. There is concern at the lack of an easily understandable narrative about how the tax and price side affects industry and how what one might call the fiscal energy accounts affect the consumer.
At the end of my speech I shall come back to the nature of the body that I am proposing to deal with this issue but, first, the question to be asked is: what sort of information flow on the taxation and price effect side is needed? I have set out briefly in the amendment the role of the Office for Budget Responsibility in providing verification of, and therefore greater credibility to, the picture presented by the Treasury. I also mention the role of the Office for National Statistics. It is a very important part of the governance of Britain but in some respects it has its own independent role, as must be the case in all countries. We all go round the world talking about the independence of audit and statistics as being central to a properly run modern mixed economy. Statistical bodies certainly have to be seen to be independent, and the ONS can, separately from the Treasury, produce independent studies—for example, on the income distribution aspect, which is measured in several ways, including through the composition of the retail prices index and the consumer prices index.
However, we need two sorts of information. One is what one might call a flow chart of the final incidence of all the taxes and subsidies faced directly by consumers today and indirectly through industrial sectors—transport being a notable example of that, given the weight of hydrocarbon fiscal imposts, and heating being another good example. Of course, that is information that can be presented at a point in time, but more significant in the dynamics of the hugely changing scenario over the next five to 10 years—and it is more or less a revolution in how the fiscal context of energy is governed—is the carbon floor. Over time, there will be a hugely important set of indirect subsidies relating to the carbon floor compared with if it were not there. Broadly speaking—you could have a very complicated debate on this—you can underpin a carbon price agreed nationally or internationally, or you can have a carbon tax, and we could debate that.
Another idea is the new entry tariff for electricity. That was announced by the Treasury and DECC in a Statement last December. You do not have to look into a crystal ball when you can read the book. A straightforward carbon tax—I shall use that as a proxy for all other hydrocarbon taxes—is highly regressive. We know that four times as much share of income is spent on carbon by the bottom decile compared with the top decile. That information is often fed to journalists. The person in the Rolls-Royce pays more but not as a percentage of his or her income. Unless people are deliberately setting out to mislead, it is not sensible to say that.
It is also not sensible for people to say on the BBC or anywhere else, unless they want to be mendacious, that people who no longer own cars because they cannot afford them are no longer part of the calculation under the heading of cars. Although that is the rule in the Office for National Statistics, there is a linking mechanism. If you are a youth looking for a job and you do not have a car, there is not much comfort in someone saying, “By the way, you haven’t got a car so this is not a cost to you as measured in the retail prices index”. People have to get their brains round that—this is the central theme of my speech and my amendment—so that they do not think they are being sold a pup. On home heating, currently the top decile of people pay 2 per cent of their income and the bottom decile pay no less than 16 per cent of their income.
I think the Treasury, DECC and others collect an amazingly interesting variety of statistics, some of which are hidden. Officials very kindly took me through some of the things available. I thought I knew roughly what was available but there were two or three things I had not heard of. That is not hiding one's light under a bushel; it is a failure to factor in or agree, a priori, the fact that statistics do not speak for themselves but they need some relevance to a narrative that is presented to people in Burton upon Trent. That does not happen at the moment. It is vital and it will be increasingly challenging to ensure that that happens in future. I put it to the Treasury—some of my best friends work in the Treasury—that they deliberately confuse the need for confidentiality and secrecy when it comes to the Budget. There is a question of how open they should be when it comes to simplifying information for popular consumption. You cannot get away from the fact that the Treasury is a highly political department because it and the Chancellor take a lot of heat from the public and the media on the big issues of the economy, taxation, employment and so on.
Against that background, I strongly welcome the creation of the Office for Budgetary Responsibility. I shall be corrected if I am wrong, but I think that the precursor to that was a statement by Gordon Brown or Alistair Darling before the election; they were present at the conception. I think it is now separate from the Treasury in terms of the building; it has its own Act of Parliament and I think it even has a telephone number. I spent months trying to ring it up and someone said, “Who do you want?”. I said, “Who are you?”, and he said, “I’m in the Treasury”. I said, “I’m trying to get the Office for Budget Responsibility”. There was a lot of shuffling around and then I heard, “Jonathan, are you the Office for Budget Responsibility?”—I am caricaturing it of course. That will be an increasingly important part of the national governance furniture.
Baroness Northover
Perhaps I could remind the noble Lord that, according to the Companion, he is expected to keep to 15 minutes. Given the time on the clock, he might want to draw his remarks to a close.
Lord Lea of Crondall
I am sorry. I have read the Companion. I am moving on amendment so the time limit is 20 minutes.
Baroness Northover
The important thing is for us to focus on the matter in hand; perhaps the noble Lord might bring his remarks to a sharp conclusion.
Lord Lea of Crondall
No, I am sorry, but I think that that is a bit rough when I planned on the basis of what I was told this afternoon was the interpretation of the Companion. Are you making a ruling?
Baroness Northover
I am reading what it says in the Companion. We are losing time. Whether it is 15 minutes or 20 minutes, I am sure that the noble Lord will wish to bring his remarks to a clear conclusion.
Lord Lea of Crondall
I will take another three minutes as a compromise, if I may, because I am not there yet.
Carbon capture and storage is another good example where lobbyists say that they need to give confidence that they can recover their up-front costs. That is in fact a demand for an open-ended subsidy. I could go on. Those are all difficult questions to put into the jigsaw puzzle that the statisticians have to put together. We cannot just have random subsidies all round.
I could mention the electricity market reform proposals, where there are four options—the noble Baroness, Lady Northover, will be pleased to know that I will not read them all out. How many people in this country —how many people in this House—know about them? If we are talking about baseload nuclear and the problems of making wind power work, we cannot shut down wind power, so will nuclear have to shut down when the range of electricity use between the summer night and the winter night is between 25 gigawatts in summer and 50 gigawatts in winter? What will the rules be about that?
I make my last point. We may think that this is complicated, but it is against the background of a spike in the world price. We must be clear which is the world price effect and which is domestic subsidies for people in the street. That is essential politically. I hope that no one thinks that I am talking in a partisan sense. It can mean less need for higher indirect taxation if people take the view that the important thing is the reduction of carbon growth, but the Treasury will not be keen on seeing that as a scope for lowering indirect taxation.
I am on my last thought. I am very pleased that the noble Baroness, Lady Northover, in our last day in Committee, said that she agreed with a few ideas in my amendment then—there were some things with which she disagreed, which I have therefore taken out. The Government are ticking the box of transparency. Secondly, they are taking the first tentative steps to what I call saleability. We still have to jump the next fence of how to get a high degree of responsibility around the country. That is the signal, which I hope can be taken on board, that there is a good deal of convergence on the view that the approach of the amendment is rational and reasonable. It is very much in the Government’s interest, as well as the wider public interest. I hope that the Minister will now, having heard about the rationale and future adjustments that can be made, give careful consideration with her colleagues before the Bill reaches the other place.
Lord Jenkin of Roding
My Lords, the noble Lord, Lord Lea of Crondall, has adumbrated a number of very important issues. I do not dispute that for a moment. It was not altogether easy to follow all the details, but there is no doubt that we have been moving through a consumer revolution in how energy is priced and sold, and the impact of that on the population at large. There are clearly attractions to the noble Lord’s proposal. He mentioned the new green economy council. I, too, have studied the proposals for that and welcome that initiative. We look forward to seeing what comes from that. I am not sure how far that differs from the forum that he proposes in the last paragraph of his amendment.
The noble Lord’s amendment goes very wide. It covers not just prices but taxes and the whole question of the impact on different sections of the community. There is a need for more clarity on this. I cite just two examples. In case some noble Lords feel that they are being singled out, I shall not mention any names. I find it absurd that people can in two successive amendments or speeches demand that this or that renewable should be supported by the renewables obligation certificate—which, as we all know, is fed straight through the supplier companies and falls on to the bills of consumers—and then in the next amendment set up a great cry of woe because of the impact that this will have on the fuel poor. Some people do not seem to have been adding those two things together and realising that there must be some conflict between them: to ask for more subsidy and say that they are very sorry that it will put the price up.
I agree totally with the noble Lord that there is a need for more public understanding of what this is all about. I give another example very briefly. When the Secretary of State for Energy and Climate Change made an extremely important Statement last October heralding electricity market reform—the noble Lord referred to that in his speech—he drew on the paper published by the department last July entitled Estimated Impacts of Energy and Climate Change Policies on Energy Prices and Bills. At least, I think he was drawing on that. However, there was a freedom of information appeal to the department reported in the Times this January. The headline read:
“Energy shake-up will lift electricity bills to £1,000 in 20 years”.
That may be a massive exaggeration; I do not know, but there are great uncertainties in all this. That seems to be what the noble Lord, Lord Lea of Crondall, is seeking to identify and to provide a process whereby there can be more public understanding. I am sure that we would all applaud that.
The noble Lord proposes to add a major measure, or series of measures, to this Bill, which is quite specific. The Energy Bill is primarily dealing with the Green Deal.
Lord Lea of Crondall
I have a problem with what the noble Lord said. Is he suggesting that the Table Office did not think that this amendment could be made to the Bill?
Lord Jenkin of Roding
If the noble Lord will just wait a moment, that is the point that I am coming to. I think there is a lot in what he said, but I find it extremely difficult to see how we could add at virtually the last stage—although he raised it in Committee and mentioned it at Second Reading—a series of major proposals.
Lord Jenkin of Roding
The noble Lord must allow me to finish my sentence. How could we add a major series of constitutional and economic innovations which would clearly need infinitely more discussion? The House is extremely full at the moment, and we could go on discussing this for some time, but it is not for this Bill. I hope that the noble Lord will find other opportunities to bring this forward on other occasions, because there are many things that could be discussed; but at the moment, at this stage—on the last day on Report; we will have Third Reading next week—I just do not feel that we should accept this amendment.
I do not know what my noble friend is going to say from the Front Bench, but I think that it would be a somewhat bizarre action for this House, at this stage of the Bill, to add the very far-reaching amendment that the noble Lord has tabled. He has spoken to it eloquently and explained what he is trying to achieve. I have indicated that I think there is much merit in that for generating public understanding. However, I would advise the House against trying at this stage, with what would inevitably be a comparatively limited debate, to add a wholly new process of government in order to fulfil the requirements of the amendment. I just do not think that we should do that.
Lord Lea of Crondall
Before the noble Lord sits down, I have to come back and say that he is totally misinformed about how this amendment was written, when it was written, where it has been placed in the Bill, and so on. This amendment was written for debate in Committee—just like the innumerable amendments that were debated with speeches of several hours at a time by the noble Lord, Lord Jenkin. That is the first thing. The second thing is that the fact that it has been placed at the end of the Bill was not my doing. I could have had it in Clause 2, and then that argument would have fallen. Thirdly, I have made it clear that we have reached a stage where a lot of noble Lords have said that the points are interesting in terms of scrutiny. The amendment also has to go to the House of Commons. I find it amazing that that is the best argument that the noble Lord can offer regarding an amendment to which I have given a lot of study and thought. I have looked at statistics and discussed it with civil servants—
Baroness Northover
I remind the noble Lord that he will have the opportunity to respond to all the points made in this mini-debate at the end of the debate, after the Minister has replied.
Lord Marland
My Lords, I am very grateful to all noble Lords who have spoken on this matter. Indeed, the noble Lord, Lord Lea, has yet again provoked a substantial debate—43 minutes on Report so far, and an hour and 15 minutes in Committee—on a very complicated subject. He identified in his speech the complications of getting to grips with this. To some extent—and I will make a partisan point here—we have in his view inherited a complicated situation that could perhaps have been solved over previous years but that is so complicated it is probably very difficult so to do. In fact, he has spent time with our officials, and with Treasury officials whom we put at his disposal, discussing this matter and, I hope, better understanding the complications.
The noble Lord is perhaps concerned that there is not enough information. Well, there is the Office for Budget Responsibility. There is the National Audit Office, which produces annual statistics. There is our own departmental publication, our annual report, which produces the statistics that are being mentioned. We have the Digest of United Kingdom Energy Statistics and an annual publication on energy prices. I could go on.
My noble friend Lord Deben makes an extremely good point. How much continual burden of statistics and information are we going to put on people, which they would have to digest in order to work out what is going on, in the name of transparency? As we have agreed through these debates, transparency is fundamental. That is one reason why we are bringing the smart meter into people’s homes to make readily available the information on the electricity that they will be spending. We have discussed throughout the merits of smart meters, a fundamental platform for this Bill.
I agree with the noble Lord, Lord Jenkin, it is fundamental that we have better public understanding of the cost of electricity and it must be the aim of the Government to do that. Not for one moment do we not accept that the noble Lord, Lord Lea, makes some important points, but we cannot sort this out in nine months of government or, with a click of the fingers, in the short period of time that has been available to this Bill.
However, it should be reviewed and we should look at it. We should embrace it in our electricity market reform programme, which is under consultation, and we will consider it through that process. Perhaps appropriately, as the noble Lord, Lord Jenkin, suggests, it will be part of a Bill that looks at this area and not be part of one which has fundamentally been driven by the Green Deal, admittedly with a few add-on bits. The noble Lord, Lord Judd, recently proposed an addition in an excellent amendment.
The Government do not feel that this is an appropriate amendment for this Bill. We believe that it is something that we should consider. Like the previous Government, we constantly believe in transparency and helping the general public to better understand this complicated issue of energy and electricity prices. Perhaps I may remind noble Lords that we are committed to this. On that basis and with that assurance, and in recognising the important and great value that this amendment has brought to the debate, I hope that the noble Lord, Lord Lea, will withdraw his amendment accordingly.
Lord Lea of Crondall
My Lords, I hope that I do not have to come back in three years’ time because there are riots in the streets and name all noble Lords who said that this did not need to be done. There will be great anxiety in the everyday lives of people because matters will have got mixed up in their minds about the obligation. I am sorry that the noble Lord, Lord Deben, is now so intellectually confused that he does not remember that it was he, following Kyoto, who brought in a degree of hypothecation whereby we are transferring funds to mitigation in Bangladesh and so on. These are all part of the deal. It involves a huge amount of money, which soon will approach $500 billion a year. Therefore, people should have a chance to understand.
I am afraid that everyone from the noble Lord, Lord Jenkin, on has contradicted themselves and has made totally inconsistent remarks. It seems that if people do not understand the statistics, presumably that is their fault and the poor dears will never be able to understand them. We should put the statistics in a form that people can own and understand, giving them a picture of the problems, and reasons for the price increases, that they can accept. I do not know whether the noble Lord thinks that he is living in ancient Athens, but we have a wider electorate than they had there.
Lord Jenkin of Roding
I think that the noble Lord has totally misunderstood what I said. I went to great pains to indicate that I thought that the noble Lord, Lord Lea, had raised a number of extremely important points. My only argument, which has been supported by other speakers around the House, is that this is not the right Bill in which to do it. There needs to be much more discussion and probably a separate Bill—perhaps the next energy Bill.
Lord Lea of Crondall
On that point we can both read tomorrow’s Hansard to check who used which argument. Certainly, the noble Lord, Lord Deben, and, I think, the noble Lord, Lord Teverson, deployed the argument—no doubt one of them will put their hand up and say whether it was them—that this is an expensive statistics-gathering exercise. I do not think that we are talking about gathering more statistics, which are very expensive to produce. We are talking about £60 billion or £80 billion. What a ridiculous argument.
I hope that Ministers will think about this proposal before the Bill goes to the Commons and that our opposition colleagues in the other place will want to take it forward. We are moving into a dangerous area of potential misunderstanding. We have a huge spike in the world oil price and on top of that an alternative between a carbon floor and a carbon tax—not exactly the same thing—both of which will be regressive.
I am sorry that the noble Lord, Lord Oxburgh, is no longer in his place because he made a sweeping statement of socioeconomic doctrine that we should achieve all this through original income distribution and not try to help people with their home heating Bills. I do not know what responsibilities he has had in the world of meeting actual citizens—he is a very distinguished scientist—but we have to look at the wider public interest and the acceptability of peaceful governance of this country. I think that there is something like that in one of the prayers that the right reverend Prelates read from time to time. Something along those lines at least is in the Book of Common Prayer of the Church of England. That argument is a total red herring at this stage. It has been put down as an amendment just like the amendments of the noble Lord, Lord Jenkin. We will have to consider what to say at Third Reading.
Things are changing fast. In another astonishing aside, the Minister said words to the effect that we are rushing things. For a coalition, which has an agreement to change the world, the constitution, the Parliament, the way in which we elect people, this dog’s breakfast of the Public Bodies Bill, and a long list of other things coming forward, such as the health services Bill, to say that we cannot take these measures in this sort of timescale is not a very telling argument.
In my opening remarks, I made the point that this is not a partisan amendment at all. I am very sorry that the Minister felt that he had to say that this mess, or words like that, has been inherited from the Labour Government. That is ridiculous. Things are happening all the time. We have the world oil shock and the new EU framework, which I understand is about transparency and subsidies as regards renewable energy. All these things are happening and we are trying to get ahead of the curve. All that I can say to noble Lords is “Mark my words”. For the moment, I beg leave to withdraw the amendment.