Solar Power (Feed-in Tariff)

Lord Lilley Excerpts

Wednesday 23rd November 2011 Commons Chamber

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

It is a pleasure to follow the hon. Member for Glasgow North West (John Robertson). I agree that we should focus on the costs and budgets of ordinary people, but I have sympathy for the businesses that were lured to invest by the promise of unsustainable subsidies. I have neither sympathy nor respect for the Labour Ministers who set up the scheme knowing full well that the subsidies were unsustainable, and I deeply regret the fact that my right hon. and hon. Friends on the Front Bench, in the previous Parliament and this Parliament, took so long to recognise, at least partially, the folly of the scheme.

No one in this place has any excuse for failing to recognise that the subsidies were never remotely justified. The House insists that when a piece of legislation is published, we publish alongside it an impact assessment of the costs and benefits, so that the House will not be so foolish as to go ahead with a measure whose costs exceed its benefits. Have any Labour Members actually read the impact assessment accompanying the scheme?

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

I have.

[Mr Lilley]

Then the hon. Lady should be even more ashamed of supporting it. The impact assessment published by the Labour Government when the scheme was originally introduced calculated the net present value of the scheme’s future costs to be about £8.6 billion, yet the Labour Government also measured the benefits of using solar rather than hydrocarbons and calculated the direct benefits in the shape of electricity and the indirect benefits—far more important—through the reduction in the damage caused by global warming owing to fewer CO₂ emissions. They calculated that the net present value of all the future benefits, direct and indirect, compared with the costs of £8.6 billion, would be just £400 million. In other words, we knew when we introduced this scheme that the costs were 20 times the assessed benefits, but we went ahead anyway.

I brought that fact to the attention of the House, but more importantly it was brought to the world’s attention by George Monbiot, a distinguished campaigner—unlike me—for measures to stop global warming, when he wrote:

“The government is about to shift £8.6bn from the poor to the middle classes. It expects a loss on this scheme of £8.2 billion, or 95%. Yet the media is silent. The opposition urges only that the scheme be expanded.”

We knew when we introduced the scheme that it would be nonsense even if it went according to plan. It was self-evidently unsustainable. Even halving it today means that we will merely waste £4 billion, or 90% of the expected expenditure.

When I have raised these issues, Ministers have employed two defences. The first is that the impact assessment excluded many knock-on effects. If it did they should have introduced a new one, because impact assessments are supposed to include all the indirect effects. It should not have been signed off by the hapless Minister, Lord Hunt of Kings Heath. Then Ministers pray in aid the fact that the cost of solar energy is declining. They attribute that decline to the scheme, but none of it is due to the scheme, and the idea that our scheme will in any way accelerate the decline in costs worldwide is ridiculous. If something like Moore’s law does indeed apply, so that costs are likely to halve every couple of years, that is a reason for not investing now, but instead waiting until it is economic to do so, which will not be long. If we invest in expensive stuff when inexpensive stuff is going to be available in a few years, we are wasting money.

[Sarah Newton (Truro and Falmouth) (Con)]

I am grateful to my right hon. Friend for the background information, which is especially useful for us new Members, who were not here when the policy was discussed previously. He is highlighting an extremely important point. The Government have only so much money to invest in new sustainable energy. It is all the more important to ensure that it is spent wisely, otherwise there will be no opportunity to bring other technologies to market.

[Mr Lilley]

My hon. Friend is absolutely right, and the argument that such investment creates jobs is—as the Secretary of State will know, being a distinguished economist—completely bogus. We have a fixed amount of money. We can either spend it on gas, oil or nuclear, or we can spend it on solar. If we spend £8 billion on either, we will create roughly the same number of jobs. Spending £8 billion on solar means that many fewer jobs in gas, nuclear, coal and oil. We have not created any net jobs across the economy by means of this subsidy. One never does.

[David Mowat]

My right hon. Friend is making an extremely powerful speech. In addition to his point about the allocation of £8 billion, is he aware of the recent peer-reviewed research from Imperial college—it was the subject of a Parliamentary Office of Science and Technology note—that said that nuclear power has one third the CO₂ emissions per kWh of solar over its life cycle? That is an extraordinary statistic, which goes right to the heart of the policy.

[Mr Lilley]

My hon. Friend is absolutely right. George Monbiot pointed out in his original article that it costs about £3 to save a tonne of CO₂ by investing in geothermal energy, and £8 by building a nuclear power station, whereas the scheme that we are talking about costs more like £800 to save a tonne of CO₂.

Not only do we not create any net jobs; we also create only a tenth of the amount of electricity by investing £8 billion in solar than we would by investing in nuclear or something else.

[Dr Whitehead]

Will the right hon. Gentleman give way?

[Mr Lilley]

I am afraid that I will not give way again.

I will remind the House of something that may have escaped hon. Members’ attention. Even if the price comes down dramatically, solar will never be a substitute for other forms of energy. It will always have to be backed up and duplicated by an equal amount of capacity that can perform when solar is not available. It may have escaped the notice of the House, but the sun comes out only in the day. It is not available at night, when it is coldest and we need most energy. The sun is highest in the sky in the summer; it is lowest in the winter, when it is coldest and we need most energy. The sun is often blocked by clouds, and one cannot predict when that will happen. For every megawatt of solar capacity that we install, we have to install an equal gas capacity to back it up and replicate it. Unless we realise that, and abandon the scheme until solar becomes much more economic, we are wasting the nation’s money and, as George Monbiot says, transferring money from poor people’s and ordinary people’s pockets into the hands of richer people.