Lord Lilley debates involving the Department for Energy Security & Net Zero during the 2024 Parliament

Lord Lilley Portrait Lord Lilley (Con)
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My Lords, it is a great privilege and pleasure to follow and pay tribute to my noble friend Lord Mackinlay of Richborough. His was an outstanding maiden speech from an outstanding new Member of this House—robust, inspiring, informative, energetic and with a touch of provocation, which he uncharacteristically toned down.

My noble friend Lord Mackinlay is a friend whom I knew before his illness to be as courageous intellectually as he proved to be physically. He is a fighter and a winner, and, mercifully, his lovely wife Kati is also a fighter. We are grateful to her for ensuring that my noble friend is with us today. He entered the Commons in 2015 for South Thanet in a forcefully fought general election, when both Nigel Farage and the comedian Al Murray had the temerity to stand against him. I am glad to say that he saw both jokers off and had the last laugh.

As I rapidly discovered when I got to know him after he entered the House in my last Parliament as an MP, he is refreshingly different from so many of the new intake. He is not just a spad and a PPE graduate, like so many of them; he has a science degree and an accountancy qualification. So he takes into account facts and figures, which is terribly refreshing in Parliament. Noble Lords will find that they have to contend with his facts and figures in debates to come.

My noble friend told me that his mother gave him a piece of advice early on in life: above all, to your own self be true. That he always has been, and it is perhaps one reason, he says, why he did not become a Minister in the House of Commons: he was quite prepared to back up his beliefs with his vote, and clearly the Whips did not think he would cease to do so if they tried to buy him off. But he had more influence in the House of Commons than many who did have a period on the Front Bench, as most of them did during the rapid turnover in the last Parliament. This influence was not least through the Net Zero Scrutiny Group, which I have the privilege to belong to, as well as the Common Sense Group and the European Research Group, in all of which he was an influential person. We look forward with enthusiasm to hearing his combative and well-informed contributions to this House in the years ahead.

I also pay tribute to the noble Baroness, Lady Beckett. She, like me, was President of the Board of Trade, and we presidents must stick together. Probably not all presidents would meet her approval currently, but I have always admired her contribution in the House of Commons over an enormous period of time.

I want to welcome this Bill, which is essentially a prospectus—an incredibly attractive investment opportunity. I use the word “incredibly” advisedly. It is backed by 22 of the most prominent people in this country—members of the Cabinet. True, none of them has ever launched a company before. Indeed, none of them has ever worked in the private sector. But that perhaps gives them a clarity of view which enables them to see investment prospects that have escaped the attention of commercial businesses up and down the country.

The principal promoter of the Bill is of course the Secretary of State, Ed Miliband. It can be said that no company he has been involved with has ever failed—because he has never been involved with any company. He will have the power to issue directions to the board about anything. There is no limitation in the Bill on what he can direct them to do or not to do. He has said, however, that he will use that power sparingly—which will be a disappointment to the board: only rarely will it have his superior wisdom to guide it on the true path.

We are asked to endorse this prospectus before the priorities and strategy of the new company have been published: they will be in due course, but they have not been yet. Investors may be concerned that the Government are putting up costs in the sector in which all the investments are to be made but are saying the prices are going to come down by some £300 per family. Investors might think, “Well, how on earth is it going to make a profit, with rising costs and falling prices?”. But do not worry, the Government have abandoned their promise to cut prices by £300 per family and have rejected all amendments in the other place which would have made that part of the duties of the company, as promised by the Labour Party at the last election. Anyway, as a nationalised company, it will clearly bring the cost control of HS2 and the profit-making capacity of the Post Office to the businesses in which it invests. That must give us all great confidence for the future.

I do not see noble Lords reaching for their chequebooks to invest in this—although clearly the noble Baronesses, Lady Winterton and Lady Hayman, will be, as indeed will the noble and learned Lord, Lord Falconer. They have all welcomed it and they will be putting in their money in—or they would if they could. Sadly, the Government have concluded that they might not be able to attract equity investors into this rather strange company that will not tell us quite what its priorities and strategies are going to be. I think the only previous company that was ever successfully launched like that was the South Sea bubble company, which said in its prospectus that its purposes would be revealed “at a later date”. And it went on to have initial great success—before the bubble burst.

Setting irony aside, this Government have said that, even though they do not expect to be able to attract investors to put their own money into the company, they are going to take £8.3 billion out of the pockets of taxpayers and put it in. But, more than that, they say it is going to crowd in investment several times that amount into the sector. Will it do so? Yes, it will. I am not being ironic here. It will succeed in attracting other companies to invest alongside it, because other companies will know that, if they invest in projects in which Great British Energy has invested taxpayers’ money, the politicians are not going to let those projects fail. That is why they will be attractive to the private sector: because they know the Government will always come and bail them out, because of the embarrassment of failure. That is why—and the only reason why—a nationalised company such as this can crowd in investment from outside. I think we should all realise that that is the case.

It is significant that the Minister, who spoke with great clarity and little conviction about this Bill, did not give any example of any similar nationalised concern that has ever met the expectations that have been raised for it as they have been raised for this. We know that doing the same thing again and expecting a different outcome is supposedly Einstein’s definition of madness. I suspect that is what we are being asked to vote for today.

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Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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We are. There is always going—

Lord Lilley Portrait Lord Lilley (Con)
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I tabled a Question some time ago to ask the Government whether they knew of any peer-reviewed science or any science collected by the IPCC which suggested that there would be extinction of the human race if we did nothing worldwide—not as much as we are doing now, but nothing—and they said that there is no such peer-reviewed science. Why does the Minister rely on alarmism?

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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I am not alarmist at all. I rely on report after report showing the consequences. Shall we turn to our own independent Climate Change Committee? The noble Lord supported the Conservative Government over a 14-year period. I did not see that Conservative Government disowning the independent advice they had received. He might as an individual, but I do not think his Government did. Noble Lords opposite, when they run down organisations such as the Climate Change Committee—or, indeed, the OBR, as they seem to now—need to remember that they listened to and reflected on the advice of those bodies during that 14-year period.

I agree with the noble Lord, Lord Cameron, that if climate change is critical, energy security comes a close second. That is, of course, what makes the Bill so important, so I hear what noble Lords are saying. The noble Lords, Lord Offord, Lord Duncan and Lord Bourne, the noble Baronesses, Lady Bloomfield and Lady Hayman, my noble friend Lord Hanworth, the noble Earl, Lord Russell, and a number of other noble Lords have commented on the structure of the Bill, with concerns about a lack of detail and questions about the accountability of GBE to Parliament, how it is to be reviewed, and its relationship with the national wealth fund, Great British Nuclear, the Crown Estate, NESO, and, as the noble Lord, Lord Bourne, mentioned, the Climate Change Committee.

I also say to the noble Lord, Lord Bourne, that the fact that GBE is going to be headquartered in Scotland of course does not inhibit its UK-wide responsibilities. I have noted what he had to say about investment in Wales.

However, I accept that there are a number of organisations here and I will take it upon myself to write to noble Lords, setting out how we think the relationships will work together, as I think that will inform our discussions in Committee. On the structure of the Bill, noble Lords will know that this was laid in the Commons very soon after the election as an early priority of the Government. Because of that, we have focused, inevitably, on the provisions that are fundamental to the establishment of Great British Energy. Clearly, we are still working through some of the policy issues on which we need to come to a view, including, of course, discussing them with GBE and the devolved Governments. That is why the Bill, to an extent, does not have the detail which noble Lords wish to see.

However, I have listened very carefully. We will come to Committee, and I hope I can respond constructively to some of the issues that noble Lords have raised. Equally, I want to ensure that GBE is operationally independent and able to make its own decisions within the structure of the Bill and the strategic priorities laid down by the Secretary of State. We are listening very carefully to what noble Lords have to say.

As I said to the noble Lord, Lord Howell, last week in our debate on energy, I fully accept that our drive towards clean power by 2030 is but one aspect of the decarbonisation of society in this country and the move to net zero. In relation to transport, heating and industrial processes, this is a huge challenge and one which we are committed to achieving. The noble Lords, Lord Offord and Lord Ashcombe, and the noble Baroness, Lady Bloomfield, asked about the clean power target. There are a number of different ways of reading the report from NESO, but it is quite clear that the number one message from NESO was that it is possible to build, connect and operate a clean power system for Great Britain by 2030 while maintain security of supply. I accept that it is very challenging—there is no doubt whatever about that—and the NESO report contains a number of those challenges. However, this is independent advice; it says that it can be done and we believe it can be done. It is very challenging, but it is doable.

On cost, as the noble Earl, Lord Russell, said, the biggest cost is doing nothing. As the noble Baroness, Lady Hayman, said, the Climate Change Committee has said that the net cost of transition will be less than 1% of GDP over the entirety of 2020 to 2050. The OBR has highlighted that delayed action on reaching net zero will have significant negative fiscal and economic impacts and that acting early could

“halve the … cost of getting to net zero by 2050 compared to acting late”.

I noted also the comments of the noble Lord, Lord Ravensdale, on this.

I come to the Bill itself. The noble Baroness, Lady Noakes, and the noble Lord, Lord Vaux, raised that we have partly used the UKIB legislation as a model for some of the clauses in this Bill. The noble Lord and the noble Baroness were particularly focused on the make-up of the board of directors. The fact is that we have brought in clauses from the Great British Nuclear provisions in the Energy Act. The structure very much follows that. We do not think that it was necessary to put into primary legislation provisions in relation to the board, because this will be covered. It is a company, and so will be encompassed within company law, the code of practice and sound corporate governance. GBE will have a chair and a chief executive officer, both of whom will be accountable to Ministers. It will have a board of directors that follows sound corporate governance practice, including the provisions of the UK Corporate Governance Code and those published by the Financial Reporting Council.

We want GBE and the national wealth fund to work closely together. As Great British Energy scales up, we will set out how the two institutions will collaborate and complement each other. On the issue of crowding out investment, surely my noble and learned friend Lord Falconer was right. The whole point about GBE is to speed up the deployment of mature and new technologies but with a focus on where this can complement existing private sector activities.

I must say that the references that the noble Lord, Lord Lilley, made to HS2 and the Post Office were a bit rich, considering the record of the Conservative Government’s stewardship, or not, over 14 years.

I will come on to Clause 3, the objects, which has drawn quite a lot of comment. I say to my noble friends Lady Winterton and Lord Grantchester and to the noble Lords, Lord Cameron and Lord Naseby, among others, that emerging technologies such as CCUS or hydrogen could be very much part of GBE’s portfolio once it is operational. I noted the comments from the noble Baroness, Lady McIntosh, on waste. On Drax, we had a good run on that a couple of weeks ago, although I may not have convinced noble Lords of the Government’s position. I look forward to discussing storage with the noble Lord, Lord Duncan, and my noble friend Lord Stansgate. I also agree with the noble Lord, Lord Ashcombe, on the potential of floating offshore wind.

We, of course, are reluctant to see a list of technologies. Noble Lords sitting on the Front Bench will be readily aware of the list argument, and it is well taken. If you list, you are at risk of excluding other technologies. One must be very careful not to constrain the ability of GBE in its operational independence and its ability to spot the technologies that need supporting. I do accept, with my noble friend Lady Young, that community energy has huge potential in itself and as a way to leverage public support generally for the kinds of changes that we need to see happen. We certainly believe that GBE will deliver a step change in investment in local community energy projects and will work strongly in partnership with local authorities and community groups to deliver this. I know that local authorities would welcome a much stronger partnership to enable this to happen. I take the point from the noble Baroness, Lady Hayman, and my noble friend Lady Young about biodiversity. I look forward to discussing that further with them and in Committee.

I come now to my favourite topic: nuclear energy. First, we want to make sure that GBN can carry on with its work—the technology appraisal of the shortlisted technologies for the SMR programme is particularly important—and that it will work in complementary ways to GBE without there being duplication of effort. I picked up the important contribution from the noble Lord, Lord Ravensdale. I say to the noble Viscount, Lord Trenchard, that nuclear power is not being underprioritised in my department. I need no persuading of the importance of nuclear energy. It acts as the essential baseload, and when it is aligned with gas that, in future, will be abated by CCUS, we will have the right balance to complement the intermittency of renewable energies.

On nuclear and resources, we have just announced a huge resource allocation to Sizewell C to get it over the next two years. We are working very fast towards final investment decisions over the next few months; we have the SMR programme and we are very excited by the potential of AMRs. I very much take what my noble friend Lady Winterton said about the potential of SMR manufacturing in the UK.

A number of noble Lords mentioned the grid and planning and what they described as the roadblocks to developers. I very much take that point. We have already signalled, in parallel with GBE, our intention to reform the planning system to enhance our grid connections. I take the point about the delays to the connection which developers are suffering at the moment. Clearly, we have to do something about that, but GBE’s main priority will be to help developers get through some of the roadblocks and focus on the energies that need support.

I noted with interest the comments the noble Baroness, Lady McIntosh, made about the impact on farmers and on fishing fleets. I accept that consultation and environmental assessments must continue to be made in any more streamlined planning process and expansion of the grid.

My noble and learned friend Lord Falconer and the noble Baroness, Lady Noakes, raised the question of state subsidies and competition law. As an operationally independent company, GBE will be subject to the same legal and regulatory framework as other entities in relation to subsidy control and competition law, such as the Subsidy Control Act 2022. The Bill does not alter that framework.

I hear what noble Lords say on Clause 5 in relation to strategic priorities and the statement. It is unlikely that we will have published the statement of strategic priorities before Royal Assent, but I have listened to what noble Lords have said. I will reflect on that and I am sure we will discuss it further in Committee. Noble Lords seem to be indicating that they would like to discuss it in Committee.

On power of direction, the noble Lord, Lord Lilley, was particularly assertive that the Secretary of State would wish to take almost micromanagement control. I assure him that that is not the intention. It is a backstop, reserve power.

On the annual accounts and reports, there will, of course, be accountability. The chief executive officer will be the accounting officer. The National Audit Office will oversee. Ministers will answer to Parliament. Select Committees can invite GBE in to give evidence. Noble Lords will debate. We will have Questions and more general debates.

I listened to noble Lords and I understand that they have looked at the UKIB legislation. We will reflect on that, but my noble friend Lady Young is right: there is a balance here between due accountability and not putting a load of bureaucratic micromanagement on this organisation, which is not what we want to happen.

I absolutely agree with noble Lords that we must make the most of the supply chain. I picked up the point about skills and managing the transition in the North Sea.

The noble Lord, Lord Alton—my noble friend, if I may call him that—and I have worked together on these issues. I congratulate him on his work and the huge effort that he has made in Parliament, the influence that he has had on legislation, and the help that he gave me around enforced organ harvesting, particularly in Xinjiang province but in China more generally. At this stage, we expect UK businesses, including GBE, to do everything in their power to remove any instances of forced labour from their supply chains. They should not approve the use of products from companies that may be linked to forced labour. I am very happy to talk to the noble Lord about the energy potential of Merseyside, as he suggested, and to discuss the issues that he raised so eloquently.

I have reached the time limit. This has been a very good debate and I am most grateful to noble Lords. I would like to think that contributions were constructive, and I look forward to debating this in Committee.

EV Strategy: (ECC Committee Report)

Lord Lilley Excerpts
Wednesday 16th October 2024

(1 month ago)

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Lord Lilley Portrait Lord Lilley (Con)
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My Lords, it was a great privilege to serve on the committee under the noble Baroness, Lady Parminter. Like her, I am no longer in it. Her departure is greatly missed; I suspect that mine, since I was the grit in the oyster on that committee, was much welcomed by its other members. It is also a privilege to follow the noble Lord, Lord Woodley. He made some important points, which I hope I will be able to suggest—probably to other people’s surprise—are not quite as much of a worry as he suggested.

One of the problems with most Select Committee reports is that they tend to be all words and no numbers. Committees show an extreme reluctance to discuss the costs of their proposals to the taxpayer or the consumer. I was originally trained as a scientist; drilled into us was Lord Kelvin’s remark:

“When you can measure what you are speaking about, and express it in numbers, you know something about it. When you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind”.


It may be the beginning of knowledge, but you have scarcely in your thoughts advanced to the stage of science. That is even more true in economics. If you cannot even estimate the costs or benefits of a policy, you can scarcely claim to have advanced to the stage where you can make policy recommendations.

Happily, this report is not devoid of numbers, albeit that most of the important ones are well hidden and the obvious conclusions that might be drawn from them have not always been drawn. I will focus on some of the key numbers in this report, but none of them appear in the initial recommendations. The upfront conclusions on page 4 use all sorts of euphemisms and verbal circumlocutions to avoid mentioning that they will cost money.

Perhaps I might translate what the report actually says. The first recommendation is:

“Tackle the disparity in upfront costs between electric and petrol and diesel cars”.


That means subsidising or, as the noble Lord, Lord Woodley, remarked, penalising the sale of petrol and diesel cars. The second recommendation is:

“Turbo-charge the charging infrastructure rollout”.


That means subsidise it. The third is:

“Ensure charging is reasonably priced, convenient, and reliable”.


That means subsidising fuel costs further. The report goes on to say that

“the Government must explore options for equalising the discrepancy between the VAT rates for domestic and public charging”.

Now there is no conceivable likelihood that the Government will put up VAT on domestic electricity, so that is a call for VAT on public charging points to be reduced, further increasing the subsidy on fuel costs for electric vehicles. I will return to the important fifth point later, but the sixth point is:

“Enhance UK manufacturing and battery innovation”.


That means more subsidies. The seventh is “Invest in UK recycling”—a new area for government subsidies. And so it goes on.

The problem is that the existing level of subsidies is very high, before we add to them from any of the proposals in this report. You have to get to page 33 or 34 to find out how much the subsidies are. They reveal that a privately owned EV is already subsidised, relative to petrol cars, to the tune of £5,000 over 10 years—it actually says £5,000 on page 34 and €5,000 on page 33, but I think the former is correct. However, corporately owned vehicles are subsidised to the tune of £10,000 in just four years. Those are big subsidies, particularly the latter. No wonder the vast majority of sales are to company fleets. If we are to subsidise EVs, it baffles me why the bulk of the money should go to those owned by companies—but so it is.

The main subsidy for private vehicles is, of course, the fact that they pay no duty on their fuel, which is electricity. You have to reach page 36 to find the total costs of this as EVs gradually replace fossil-fuel vehicles. The OBR has pointed out that fuel duties raised £23.4 billion last year, equivalent to £867 per household. That means that, if we forge ahead and succeed in phasing out those vehicles by 2030, we will have created what we might call a black hole in the nation’s finances, heading towards £23 billion as older vehicles are retired and used less.

The committee mentions the important issue of road tax in its fifth recommendation. It simply says that we should:

“Begin an urgent review of road taxation”.


It calls for an honest conversation with the public—quite right. Sadly, the committee did not agree to initiate this honest conversation by honestly admitting that the only option to replace this revenue is to introduce road charging. If we in this House, who do not have to get re-elected, do not have the courage to be honest enough to say that we are going to have to introduce road charging to replace fuel duty, how can we expect the people in the other House, who do have to get re-elected, to broach the subject until that black hole in the public finances is upon us?

The penultimate figure from the report is highly relevant to the decision on whether to phase out the sale of non-EVs sooner or later. There was much criticism of the previous Prime Minister’s decision to postpone the date beyond which sales of fossil fuel cars would be banned—delaying it from 2030 to 2035. There is rather less criticism now. The car companies seem rather relieved he did that, since sales are slower than was anticipated. We were told by the Society of Motor Manufacturers and Traders—which is of course largely a society of traders, and largely represents foreign companies exporting cars to this country—that this had a damaging effect on British manufacturers, who would not have the incentive to develop EVs. However, this ignores the strange nature of the British car market.

We export the overwhelming majority, more than 80%, of the cars we manufacture, and more than 80% of the cars we consume are imported. Indeed, on page 22 of the report you will discover that no less than 97% of the electric vehicles sold in the UK in the last quarter were imported. Most of the EVs produced in this country are presumably exported. So these changing rules only really have a major effect on EVs and other vehicles sold in the UK. Given that 80% of our vehicles are exported, the effect of these rules on our production falls on only one-fifth of the production, 20%. They are mainly affected by the rules of the countries to which they export, so I hope the damage that it does to British manufacturing will be less than the noble Lord, Lord Woodley, fears.

I am reasonably sure that electric vehicles will, eventually, displace petrol and diesel cars without subsidy, when their upfront price comes down to equal that of petrol and diesel cars, when the range of batteries is sufficient so that a normal journey would never require recharging, and when recharging is rapid. Actually, recharging is probably less of an issue than we imagine in this report. For the 60% of people who can keep cars off-road, the normal thing they will do after they use their car and come home is plug it in. The next morning it will be charged. They will not have to stop at the gas station as they would in a petrol car because they will have a fully charged car—so it is actually better. But for the 40% who do not have off-road parking, there is a problem we did not really find a solution to.

When will the price of electric vehicles come down to that of petrol and diesel? In the report, we quote people as saying that

“Other predictions for when average EV prices will meet those of petrol and diesel vehicles range from 2025–27”,


so, apparently, it will be quite imminent. So why are we subsidising people to buy expensive vehicles when they could have them at more or less the same price as the alternatives in a couple of years’ time? It is forecast that, by 2025, the price would be down to about £21,000 for an EV in Europe. Actually, you can get one for £22,000 now in the UK, so they are coming down to a similar price.

We should remember Dieter Helm, the great energy expert, who was asked by the Government to analyse their energy policy. He concluded that the big failure was that we had invested in immature technologies. He said that investing in technologies—which were going to become mature and cheap—when they were still immature and expensive had probably cost us the best part of £100 billion. So why are we encouraging people to do that in the EV market?

I suggest that we should look at this report and the figures, and draw conclusions from them. We might be a little more optimistic than some of the pessimists and a little more realistic than some of the super-optimists.

King’s Speech

Lord Lilley Excerpts
Thursday 18th July 2024

(4 months ago)

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Lord Lilley Portrait Lord Lilley (Con)
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My Lords, I welcome the new Ministers to their posts. I wish them well and sincerely hope that they will succeed in their mission to promote economic growth.

The great advantage of speaking in this Chamber is that we can speak perfectly frankly in the certain knowledge that nothing we say here will ever leak out to the world outside, so I want to take advantage of the privacy of this Chamber to offer some advice to Ministers opposite and to tell them some possibly inconvenient truths that we, or I, certainly would not be allowed to voice on the BBC and which they may not even hear from their officials. That is not to impugn the integrity of officials. My officials over 10 years in government were wonderful. Only twice in 10 years did two very virtuous officials succumb to the “noble lie” temptation of concealing information from me or distorting it because they thought that if I knew the truth I might misbehave. I hope it will be rare in the Minister’s department for that sort of thing to happen, but unfortunately virtuous enthusiasm and groupthink go together, so he may find that it is a bit more prevalent than it was in my days.

I met recently an official from my old department who said that they were initially very disconcerted when I took over, because when they gave me some facts or arguments that they were convinced would be absolutely in line with my prejudices, my instant response was, “But is it true?” I urge Ministers to take the same attitude, not least in this area.

The Government promise that tackling climate change and accelerating the move to net zero will lower energy bills and generate economic growth, but is it true? There is no doubt that cheap energy is a prerequisite for growth. America has proved, relative to Europe, that because it has cheap energy it is growing far faster. Equally, we know that expensive energy kills growth. I became an energy analyst in the early 1970s. In 1974, the quadrupling of oil prices killed growth—the end of Les Trente Glorieuses, as the French say. The 30 years of rapid growth after the war was signalled by that and we had much slower growth thereafter. We tend to forget that, in 2009, the great financial crisis was triggered by a rise in oil prices, and growth worldwide has been slower since then.

I therefore support the production of energy from whatever sources are cheapest for this country—I welcome the removal of barriers on offshore wind, for example—but I am sceptical, to say the least, as to whether the Government’s commitment to double onshore, triple solar and quadruple offshore will give cheaper energy. My scepticism has nothing to do with global warming. I studied physics at Cambridge and did the online course on climate change at Chicago University, so I know that the science of global warming is rock solid. My concern is about the costs and economics of the ways we are trying to tackle it.

I was just as sceptical about the claims that achieving net zero would give us cheaper energy and faster growth when they came from Boris Johnson as when they come in the Labour manifesto—indeed, I never expected to find Boris being comparatively a paragon of honesty and understatement until I read the Labour manifesto.

There is a respectable case for saying that we must incur higher costs and forgo cheap energy to prevent the impact of climate change on future generations, but it is surely unlikely that this will be costless, let alone miraculously provide a cornucopia of cheap energy and rapid growth. I therefore urge Ministers to ask their officials why, if it is cheaper, renewable energy needs subsidies. I urge them to ask why, if renewable energy is cheaper, UK electricity prices have risen in 22 of the 27 years since we started the transition to renewables.

If officials say that new offshore fields will provide electricity at below £50 per megawatt hour, Ministers should ask them why the recent contracts for difference, in March this year, offered more than £100 per megawatt hour for offshore wind fields and £89 per megawatt hour for onshore fields. They should ask too why they claim that gas is more expensive than offshore wind. They have set offshore wind at more than £100 per megawatt hour, yet the DESNZ energy generation costs document of last year shows that the cost of a new gas-fuelled plant, excluding tax, is only £60 per megawatt hour.

How come wind is supposedly cheaper when it is more expensive? They will say, “Oh, it’s because if you include in the cost of gas the social cost of carbon, that raises it”. And so it does; that is a perfectly reasonable argument. But it is generally accepted that the social cost of carbon is about £50 per tonne—that is about £10 per megawatt hour—so gas is still cheaper if we include that. But then the officials will come back and say, “Oh, well, we don’t use the social cost of carbon. We impose a tax called the appraisal tax”. That is the tax necessary to make gas uneconomic, so it is a self- referential conclusion. Ministers should therefore ask them some hard questions about that sort of thing.

Ministers should also ask why officials always quote costs as levelised costs of energy and do not take the advice of Dieter Helm, the leading energy economist in this country who was asked by the previous Government to do a review, and compare firm costs: the cost of providing energy, including some of the cost of providing back-up power—in the case of wind and solar when the wind is not blowing and the sun is not shining. Why not include some of that cost? It is the obvious and logical thing to do.

If the back-up is gas, we have to include not only a share of that back-up cost but the carbon capture and storage that will be necessary to extract the CO2 from the gas in the back-up. Incidentally, I welcome the fact that this Government are proposing to maintain a fleet of gas plants and accept that gas and oil will be needed well into the future. They might also ask officials why they rely on figures from think tanks—and, indeed, their own officials—rather than on the costs of fields, which are produced and published in companies’ documents that are certified by accountants, who would go to jail if they were lying. Those figures show that there is no significant decline in the cost of offshore oil; it remains high, and higher than that of gas.

The second item in the Government’s rosy outlook is that green investment will generate growth. For the sake of argument, let us put aside the impact on growth of higher energy costs. How will the move to green investments produce growth? The noble Lord, Lord Vallance, formerly an impartial adviser and now a Labour Minister, claims in the Labour manifesto that growth will come from selling technology abroad. He says that we can treat this

“like the vaccine challenge … exporting our solutions worldwide”.

However, he says that that will work only if we do it rapidly because

“if we choose to go slowly, others will provide the answers, and ultimately we’ll end up buying these solutions rather than selling them”.

But what are we going to sell to the rest of the world as a result of this great revolution? It is not going to be generators, wind vanes or towers, and it is not going to be batteries. Unless the Government can tell us what it is, we had better invest in things where we have a comparative advantage, rather than one where the rest of the world is overinvesting already.