Northern Ireland After Brexit (Northern Ireland Scrutiny Committee Report)
Lord Lilley Excerpts(2 days, 8 hours ago)
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Lord Lilley (Con)
My Lords, it is a great privilege to follow the noble Lords, Lord Murphy and Lord Carlile. I do so with some temerity; I cannot understand why I have been put so high up the list, since my expertise in these areas is probably less than almost everybody else on this Committee. But I pay tribute to the committee for producing a report that is thorough and detailed in its analysis of a labyrinthine problem. Every tree in the forest of issues has been identified and described, but the report stopped short, as the noble Lord, Lord Murphy, mentioned, of examining why this forest of problems exists and whether there is some way of removing them or finding a permanent route through the forest.
The basic reason for the impenetrable barriers that we have to get through and which prevents the people of Northern Ireland having a proper say, or even a veto, over the laws that govern them is that Northern Ireland is, effectively, a condominium. We should recognise that fact. It is governed jointly by the EU and the UK in many respects. It is a bit like the old condominium of Sudan and Egypt, which was an Anglo-Egyptian condominium, or, more recently, the New Hebrides, which was jointly controlled by a Franco-British condominium. It was such a nightmare that it was known as the pandemonium, not the condominium. I suspect that the consequences of trying jointly to govern Northern Ireland by EU law, 300 areas of law and UK law elsewhere, and a consultation between the UK and EU authorities are inevitably bound to create pandemonium. It is impossible, under that arrangement, to give voice to the local people any more than it was possible in Sudan or the New Hebrides.
That raises two issues. Is this situation permanent? If it is not, is there an alternative that would provide a much more satisfactory long-term arrangement that would allow democracy to return? I was struck when I bumped into some young people from Northern Ireland who said how insulted they felt that they were not allowed to vote for people who would determine the laws in large areas of life that affected them. We have to deal with that issue.
We all agree that there should not be a hard border in Northern Ireland. That is the basis of the present arrangement. The only body ever threatening to erect a hard border with physical facilities and carrying out checks at the border was, of course, the EU itself. The EU has a perfectly legitimate objective, which is to prevent goods that do not conform to its rules entering its territory. It has to maintain the integrity of the single market. To do that, it insisted and persuaded at the very opening of the negotiations on the withdrawal agreement that there should be no hard border. Effectively, that led to the continuation of EU law north of the border. The EU insisted that all goods produced in Northern Ireland must conform to EU rules and all those entering from GB must conform to EU rules if they go into the Republic. This is a sledgehammer to crack a nut.
I want to see whether there is a case for removing this present situation before I come to an alternative. Let us think back to the time when the withdrawal agreement was negotiated. Mrs May—now the noble Baroness, Lady May—asked to negotiate the trade arrangements that would follow on from us leaving the European Union alongside the withdrawal arrangements. She was refused by the EU, which said that it was not possible for it to do that under EU law. It could not reach a permanent agreement on trading arrangements with us until we had left, because the EU had powers to reach agreements only with independent countries—non-members. So we needed first to have left the EU before it was possible to reach any agreement with us.
The EU then went ahead and agreed the withdrawal agreement before it would start proper negotiations on the trade and co-operation agreement, but it insisted on including trading arrangements with Northern Ireland in the withdrawal agreement. Whenever I raised this and said, “Well, hang on, I thought you couldn’t reach trading agreements”, the EU said, “Oh, we can, as long as it is temporary and designed to deal with the problems that may arise if Britain leaves without a permanent trade and co-operation agreement”, or other transitional arrangements to do with us leaving. But it is intrinsically temporary. We need to remember and remind ourselves of that.
This was all discussed in the House of Commons at the time. The then Attorney-General, Geoffrey Cox, explained to the House that
“article 50 of the Treaty on European Union does not provide a legal basis in Union law for permanent future arrangements with non-member states”.
He went on to say that, if European traders felt disadvantaged by aspects of the protocol in future, they should,
“beat a path to the door of the Commission and the Court, and there to say, ‘Didn’t you say that article 50 is not a sound legal foundation for this arrangement?’ And I tell you frankly, Mr Speaker, they are likely to win”.—[Official Report, Commons, 3/12/18; cols. 547-55.]
So the Attorney-General, who rarely expresses opinions on the possible outcome of hypothetical legal cases, thought it was absolutely clear-cut that this is a temporary arrangement that cannot continue permanently.
The withdrawal agreement, which is based on Article 50 of the European Union treaties,
“does not aim at establishing a permanent future relationship between the EU and the UK”—
that was the wording in the original protocol. It was not in the second protocol, but that does not mean that it did not apply, because the second protocol was bounded by exactly the same aspects of the treaties of the European Union. So it is temporary and it must sooner or later be replaced. With what can it be replaced that will meet the legitimate objectives of the European Union to maintain the integrity of its single market, the people of Northern Ireland to have a say in their government and the United Kingdom as a whole to maintain the integrity of its own market?
It has been suggested by very distinguished people, such as a former director-general of the EU Commission, Sir Jonathan Faull, and distinguished professors of EU law at both Harvard and Madrid, Joseph Weiler and Daniel Sarmiento, that we should collectively agree mutual enforcement. We do not need to go even that far. We can have unilateral enforcement. Britain can pass a law that will prohibit the export of goods that do not meet EU laws, checks and standards from our territory to the EU.
In the normal way, that law would not be enforced at the border. Indeed, existing export controls to the rest of the world are rarely, if ever, enforced at the border, port or airport. Applications to export goods, or likewise to import goods under customs duties, are analysed electronically. If analysis or intelligence suggests that a company may be exporting or importing non-compliant goods without having obtained an export or import licence, enforcement action would normally be at the point of production or dispatch, not at the port or border. Likewise, should the UK suspect or be informed by the Irish Government that non-EU compliant goods were being or planned to be dispatched across the border, enforcement would take place at the trader’s premises in Great Britain or Northern Ireland, or in transit, not at the Northern Ireland border.
So there is a perfectly workable and enforceable system that we could introduce. We would like it to be reciprocated by similar arrangements for goods coming into Britain from the EU, but we do not need that. HMRC said repeatedly in all our debates and discussions that there were no circumstances in which it would need to carry out checks at the border to maintain the integrity of the United Kingdom internal market.
I congratulate the committee again on having looked at ways to try to ameliorate the problems that are inherent in the present situation, but let us not forget that the present situation is temporary. It legally must be replaced, and there are alternatives to replace it with that meet the legitimate expectations of the EU, as well as the needs of the people of Northern Ireland and the rest of the United Kingdom.
Baroness Anderson of Stoke-on-Trent (Lab)
I am. Noble Lords heard it here first. Perhaps I do have a little power, as the noble Lord, Lord Empey, said—or rather, the people behind me do.
My noble friend Lord Murphy touched on the SPS agreement and how important it is. We are currently negotiating with the EU on an SPS agreement to make agri-food trade with our biggest market cheaper and easier, cutting costs and removing barriers to trade for producers and retailers across the whole of the UK. The agreement will benefit Northern Ireland through the interplay with the Windsor Framework, by making a more consistent approach to agri-food and plants. We will smooth the flows of trade still further. On 9 March, the Government provided an update on the changes this would entail for businesses. This includes a call for information from businesses so that the Government can understand exactly what they need.
My noble friends Lord Murphy and Lord Hain asked about the Office of the Northern Ireland Executive in Brussels and the investment provided. The Government have agreed to provide funding to this office to cover up to three additional posts to ensure that Northern Ireland’s interests are accounted for in Brussels and that EU policy-making is accounted for in Belfast.
Parity of esteem was raised by my noble friend Lord Murphy. This seems particularly apt given how close we are to the anniversary of the Belfast/Good Friday agreement. We are committed to the agreement in all respects, which of course includes parity of esteem for the identities and aspirations of both communities. The application of the Windsor Framework does not shake that commitment.
Gently, I want to touch on the speech of the noble Lord, Lord Lilley. He raised many issues related to how we got to this point and the question of what is temporary. I was given a slight history lesson earlier today about how many pieces of legislation have the word “temporary” in them, and that has not exactly been an unusual part of our legislative framework historically. I gently suggest that the agreements we have been discussing today were signed by his party when in government, and my party is trying to make the Windsor Framework work for the people of Northern Ireland, which is why we are also currently in the process of resetting the relationship.
Lord Lilley (Con)
They were, of course, signed by the past Government, but they were described by the EU as temporary. That was the sole justification the EU gave for including trade with Northern Ireland in the withdrawal agreement. She cannot make a party-political point about it. She is either going to ignore the EU or believe it.
Baroness Anderson of Stoke-on-Trent (Lab)
I believe my party is quite clear on our position on the EU, not least because I believe in international law and complying with our agreements.
One of the issues raised by the noble Baroness, Lady Foster, was on veterinary medicines and the prices going up. She raised a specific case. I should very much like to hear the detail of it because to date, we do not have any evidence of prices going up.
Secondary International Competitiveness and Growth Objective (FSR Committee Report)
Lord Lilley Excerpts(2 weeks, 2 days ago)
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Lord Lilley (Con)
My Lords, it has been a great pleasure and privilege to serve on this committee, not just because I have served under the distinguished and stimulating chairmanship first of my noble friend Lord Forsyth and now of my noble friend Lady Noakes but because of the calibre of the committee. None of the committees I have ever served on, in this or the other House, has assembled so much expertise. Indeed, I shocked my wife by pointing out that I had the least expertise of anybody on the committee. She thought for a moment that I was becoming modest, but it actually is true. This reflects the high level of expertise of everybody else, including the noble Lord, Lord Eatwell, who actually has expertise of having been a regulator as well as having worked, as many of us have, in the financial sector.
The only benefit of delaying this debate, from when the report was committed until now, is that it falls in the week when we celebrate the 250th anniversary of the publication of The Wealth of Nations by Adam Smith. This gives me an opportunity to try to bring to bear some of the insights he brought to this issue of regulation. Above all, he was famous for saying:
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest”.
Of course, competition ensures that businesspeople, in pursuing their self-interest, must satisfy the desires of their customers efficiently.
Self-interest is not our only motive, but it is the strongest, and it is the strongest for all of us, not just those working within business—and that includes regulators. That is why we should recognise that regulators regulate in the interest of regulators, and that interest does not necessarily and always coincide with promoting the growth of either the financial sector that they are regulating or the economy as a whole and its competitiveness, which of course are new secondary objectives. Because of the relative absence of competition between regulators—although there is of course competition between the regulators of different countries, as pointed out by previous speakers—we are tasked, as a committee, with ensuring that the regulators in this sector try to pursue the objectives of promoting growth and competitiveness.
We found a number of symptoms of this factor that regulators regulate in the interest of regulators. For example, time can be of the essence for any company setting up, appointing new management or undertaking some new activity for which it requires approval, but time is much less pressing for regulators. There were complaints that regulators take an inordinate time to approve, for example, board appointments and even appointments of people who have been approved for other financial services companies and are active there. The regulators get around time limits that have been imposed on them for concluding their appointments or approvals by restarting the clock whenever they seek new information.
I have a second example. Other people complain that regulators refuse to answer “what if” questions from people being regulated: “What would happen if I did such and such?” But regulators should not see their task as simply deterring or punishing companies for breaching the rules. They should help them actively comply and tailor their business to make sure that it is legitimate.
Thirdly, we were told that in Singapore the regulators offer a sort of concierge service, as it is called, particularly to companies newly entering the market and those newly entering Singapore itself and unfamiliar with its rules and regulations. In the past there seems to have been a reluctance for our regulators to add that role of helping people to the role of telling them what they cannot do.
Fourthly, we had some rather confused discussions with the FCA about its request that the Government should define the appropriate appetite for risk. Many of us thought that it was for individual investors to decide what risks they were prepared to take with their money. Of course, financial advisers need to make sure that investors whom they are advising do not unwittingly take risks that they could not absorb, and the adviser should tailor their advice to the reasonable risk appetite of those they are advising. But it emerged that the regulators meant that they were worried about the risks to themselves, since the regulator would be blamed if any companies failed or defrauded investors. It seems that they wanted some quota of companies that would be allowed to fail or not be properly regulated and carry out frauds. That was their idea of a risk appetite, rather than the risk appetite of the investor.
For a similar reason, regulators—not just in the financial sector—put too great an emphasis on box-ticking. They are conscious that if something goes wrong, questions will be asked about how assiduous the regulator has been. So the regulator needs to be able to show that it has at least ticked all the boxes, made companies go through all the formal checks et cetera, even if those procedures rarely prevent wrongdoing or financial mismanagement. Ideally, regulators should allocate most effort to supervising companies that are the greatest cause of concern. When I was a financial analyst, we were always aware of some of the symptoms of companies that should be a cause of concern—late accounts, constant changes of accountants or lawyers, dodgy people on the board and so on. It is these to which the regulators should devote most of their attention.
An unusual feature of financial regulation is that since Brexit the regulators have had the task of setting regulations as well as administering them. They have had to review the body of regulation inherited from the EU, at the very least adapting it to make it work where they—the FCA and the PRA, rather than the EU—are now the ultimate regulators, but also revising it to fit the UK’s needs now that we are free to do so.
So far, there have been only relatively modest changes. Why is that? Partly, I think it reflects bureaucratic inertia: people are always happy with the status quo. More significant is that even companies that implemented EU regulations reluctantly and at great cost are not keen on changing it, even to make it simpler, especially if those companies recognise that the more burdensome the regulations, the greater the barrier they are to the entry of new competitors.
Despite there being only modest changes so far to the rules that we inherited from the EU, industry values the changes that have been made and seems to have lobbied successfully to be excluded from the reset of our relationship with the European single market, which is currently going on. The financial sector seems to have no desire to return to EU rules, still less to accept dynamic alignment in future without even having a vote on it. Indeed, the Chancellor herself is implicitly willing to diverge further where it helps and has called on the regulators to seek ways to change the regulations to make them encourage growth and competitiveness.
I recommend that the Government go back to the ministerial briefs that were prepared when these directives and regulations were first negotiated. I had to negotiate some from the very first in the single market, the second banking directive and so on. I cannot remember a brief that did not begin, “We don’t want this directive, Minister, but we can’t avoid it so let’s try to seek some of the following list of amendments to improve it”. If we went back to those briefs, we would find a good working idea of changes that might be needed to make those directives simpler, less burdensome, more appropriate and more growth and competitiveness promoting.
The final point that I want to make echoes that made by the noble Lord, Lord Eatwell. It became known as the Eatwell thesis and I was its seconder in the committee. It is that the impact on the economy—the growth of the whole economy, not just the financial sector—depends on the amount of lending by banks and investment of the nation’s savings by financial institutions that goes into the creation of new assets, not just the purchase of secondary assets. Sadly, in this country the total volume of lending has not recovered to the previous level since the great financial crisis of 2008, unlike in the United States where, after a couple of years of delay, it returned to that rate of growth. We received conflicting evidence about why this may be. Some said that it is simply that the United States is different from us and the rest of Europe because it has the tech giants and that stimulates the economy and demand for lending. That may be part of the reason, but others said that US banks, especially regional banks, have been regulated with less onerous demands for new capital, which means that they are freer to increase the amount of lending to the real economy. That is a crucial issue, to which we need to return and make sure that, if it is true, we increase the amount of lending that meets the Eatwell criterion.
UK-EU Customs Union
Lord Lilley Excerpts(1 month, 3 weeks ago)
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Lord Lilley (Con)
My Lords, it is a great pleasure to follow the noble Lord, Lord Docherty of Milngavie, to congratulate him on his excellent and witty speech and to welcome him to your Lordships’ House, where he will no longer have to depend on the votes of his opponents or anybody else to retain his seat.
The noble Lord was very modest in his speech and did not mention his professional career as chief executive of Tees Valley Regeneration and executive director of the Home Group, one of the biggest UK social enterprises. He also did not mention his passion for the arts, which I look forward to hearing about in future speeches. He was a founding trustee of the Baltic gallery in Gateshead and commissioned Anish Kapoor’s Temenos in Middlesbrough, which features on the British passport. He was also a trustee of Arts Council England. In an interview last year, he said:
“What gives me joy … is when I have been involved in recruiting people who have gone on to excel and grow in their roles”.
He has excelled and grown in his roles up to now and will continue to do so, no doubt, in your Lordships’ House.
As far as trade relations are concerned, Britain is to the EU much as Canada is to the United States of America. We both have free trade agreements with zero tariffs and zero quotas with our large continental neighbour. Neither Britain nor Canada has a customs union or a single market requiring it to adopt the tariffs and all the product laws and standards of its large neighbour. Yet I know of no Canadians who, even pre-Trump, ever advocated Canada joining a customs union, still less dynamically aligning its laws and standards with those of America.
Can the noble Lord, Lord Newby, tell us why a customs union or single market is good for Britain but would be bad for Canada—or vice versa? Why did he not tell us that a customs union would require Britain to reinstate the over 2,000 tariffs on goods that we do not produce, which we abolished when we left the EU? Why should British consumers pay higher prices to protect inefficient EU producers? For example, since Brexit we have allowed a tariff-free quota of sugar, which costs $449 a tonne coming from Brazil. Back in the customs union, it would cost us $892 per tonne from France. Vote Lib Dems for higher prices. A customs union would also mean scrapping our trade agreements with the Pacific trade pact, the largest grouping by GDP in the world, and with India, the largest country by population, with which our trade deal has important service industry chapters.
The sole benefit of a customs union is that it avoids the need for declarations of origin. The Swiss calculate that these cost less than 0.02% of the value of their trade with Europe. Hence Switzerland, like Norway and Iceland, refuses to join the EU customs union. Turkey does have a customs union with the EU, but that means that when the EU negotiates a free trade deal with another country, Turkey has to remove its tariffs on that other country’s goods, but the other country does not have to remove its tariffs on Turkey’s goods. Is that what the Lib Dems want?
I was the Trade and Industry Secretary who oversaw Britain’s entry into and creation of the open market back in 1992, and I assumed it would benefit our trade. I also negotiated the Uruguay trade round, the last successful world trade agreement, which halved tariffs and created the WTO. I made bullish speeches about how both of these, particularly the single market, would boost British exports. A quarter of a century later, a study showed how British exports had actually fared. I confess it proved that I had been wrong. Britain’s goods exports to the single market stagnated over nearly 25 years, growing by less than 1% a year. By contrast, our goods exports to more than 100 countries with whom we traded solely on WTO terms grew fourfold, by 87%.
I have long been at a loss to explain why anyone should want to return to a relationship with our former partners that was of so little benefit to us and would involve handing back control of our laws and our tariffs and paying for the privilege of doing so, but a psychotherapist friend explained to me that people who have escaped from a long-term coercive relationship often have an irrational urge to return to the partner who controlled their lives, dictated how they spent, made them subject to detailed and unnecessary rules and restricted their relationships with anyone else. I think we should be understanding of the noble Lord, Lord Newby, and, indeed, the Government’s European Minister as they endeavour to recover from this syndrome, and gently point out that others who once succumbed to coercive control from the EU, such as the National Farmers’ Union, now warn against returning to the ban on gene-edited crops and bovine TB vaccines and ending the ban on live animal exports. The City now wants to be excluded from any reset and has allegedly, according to the Financial Times, persuaded the Government that that would be right. The AI industry rejoices in escaping from the stifling controls of EU law. I wish the Lib Dems and their friends on the Labour Benches a speedy recovery from their addiction to coercive control.
Lord Liddle (Lab)
My Lords, it is a great pleasure to welcome my new colleagues who are making their maiden speeches today—my noble friends Lady Gill and Lord Docherty, my good friend who is to come later, and my noble friend Lord Doyle, who is a very close friend and from whom we have just heard an excellent maiden speech. I first came across my noble friend 30 years ago, when he had just arrived in Westminster and was working for the newly elected Labour MPs for East Anglia. He was so keen on this job and he was homeless, so he camped out in Charles Clarke’s office while he sorted out his personal affairs. He always had that trademark, and he has kept it: he is the man with the duffel coat. He always reminds me, whenever I see him, of Paddington Bear. In a way, that is appropriate, because he is a man of great culture and a real expert on film, so he will bring great wisdom on cultural questions to this House.
In the past 30 years since I first met my noble friend, he has done a great variety of very interesting things. He has worked intimately with some of the most consequential people on the centre-left of British politics: first for Tony Blair in No. 10 and then in his role as Middle East peace envoy, then for David Miliband—Labour’s lost leader—in his role with the International Rescue Committee, and finally for Keir Starmer. Working for Keir Starmer, he was not one of the fast-rotating group of people who have been in and out of No. 10; he was a crucial aide. I do know how many people know this, but he sustained Keir Starmer at what was the deepest crisis point of his leadership of the Labour Party after the loss of the Hartlepool by-election in 2021. When he worked on the Batley and Spen by-election, he persuaded Kim Leadbeater, Jo Cox’s sister, to be our candidate and we squeezed home by 300 votes. That is probably one of the most consequential acts of his political career. In his three decades of politics, has shown outstanding loyalty to the bosses he has worked for.
My noble friend is a very considerable person. He is a man of faith who has struggled with some of his inner tensions and conflicts and overcome them. He brings to this House much more than the experience of a press officer; he is well informed across a wide range of national and international issues. He is a committed lifelong social democrat and he is going to make a great contribution to this House.
On the subject of the debate, I will not delay the House long, but I will say this. I have great respect for the intellect of the noble Lord, Lord Lilley, but I have never heard such rubbish on the question of Europe. He referred to his role in the Uruguay round. Let me remind him, it was the European Commission that negotiated the Uruguay round.
Lord Lilley (Con)
In fact, it was jointly negotiated by member states and the European Commission. I was there for all nine days of the negotiations in the Heysel stadium, so the noble Lord is wrong.
Lord Liddle (Lab)
Do you know why we won the Uruguay round? It is because we had the strength of the bloc of the European Union behind us. It was not just something that Britain achieved on its own.
Secondly, the noble Lord talks about the stagnation in our export of goods and completely ignores the vast expansion of our trade in services with the European Union, which is being put at risk by increasing barriers. He neglects the fact that, in 2016, the British public were promised a growth miracle as a result of leaving the EU. Where are the benefits of all that loosening of rules that were supposed to happen? We were promised the end of free movement, and what did the Conservatives do? They went on to create the biggest inward movement of people into this country we have ever seen, so what hypocrisy they have talked on immigration. If we had stayed in the single market and in Europe, the growth we would have seen as a result would have meant that none of the tax rises that we needed to have since the 2024 general election would have been necessary. Those are facts.
The economic situation is getting worse as we lose the strength of the European bloc. We no longer have the competitive pressure of the single market, which is what makes business efficient. As we lose that competitive pressure, we will find that Brexit is not a one-off loss; it will affect our competitive position for years to come.
I said I would not talk for long, but may I just make one point? We should look at the customs union and try to speed up the reset. I agree with the noble Lord, Lord Hannay: we need independent expert advice on what we would try to achieve and how. This is something of great complexity. We need to look objectively at the consequences of having an independent trade policy. I do not think they are very considerable, but I am willing to be proved wrong in an independent expert inquiry, which I hope Keir Starmer will set up.
Social Cohesion and Community during Periods of Change
Lord Lilley Excerpts(1 year, 3 months ago)
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Lord Lilley (Con)
My Lords, it is a daunting privilege to follow both an Archbishop and a Methodist preacher, but I participate in this debate because it is one of the few occasions in the year when we can hope to hear from the Lords spiritual—I welcome in particular the most reverend Primate’s contribution—some spiritual guidance based on the gospels, rather than on the Labour Party manifesto and the latest progressive critique of the last Government.
I hope to achieve a positive response and some answers from the Lords spiritual to the sort of questions that engage me as both a Christian and a Conservative, which are rarely addressed because it is assumed—I hope to challenge this, but not in an aggressive way—that if you are a Conservative you cannot be a Christian, and if you are a Christian you cannot be a Conservative. I want to think particularly about the political implications, if any, of our Lord’s injunction to love our neighbour as ourselves. When Christ asked that question, “Who is my neighbour?”, he told us the parable of the Samaritan. I do not need to repeat it, but we can all agree that one thing that shows is that there can be no discrimination between Samaritan and Jew, between Christian and Muslim, between any different people, on the basis of their colour. That is a clear lesson of that parable, but some conclude that our obligations must therefore extend to the whole world, and that our job to love our neighbour as ourselves means that we must love everybody throughout the world equally. Dickens parodied that in Bleak House, in a chapter on telescopic philanthropy, in which he had the characters Mrs Jellyby, who devoted herself to the Tockahoopo Indians, and Mrs Pardiggle, whose “rapacious benevolence” was directed towards the tribes of the Borrioboola-Gha in Africa, to the detriment of the people of their own country and even their own families.
At the other extreme are those who interpret the parable as meaning only that we should help those we personally come in contact with, and that if we meet someone wounded by the wayside we should help them, especially if others are passing by. But even in a community where everybody was motivated by genuine, generous, Christian charity, leaving that philanthropy and charity to anarchically express themselves would mean that some people get a lot of help and others get no help.
The Church itself recognised at an early stage that it had to create an embryonic welfare state. It pooled resources and helped both its own members and others in the society around it. The earliest Church, in due course, became a sort of welfare state through the churches and the monasteries. Then, after the abolition of the monasteries, the state began to take over with the Poor Law and, ultimately, the modern welfare state. As a result, we have moved a long way from the original Samaritan, who acted voluntarily. We, as members of the welfare state, contribute compulsorily. The Samaritan did not say, “Oh, there is someone in need. I will pluck some money out of the Levite’s wallet and some out of the priest’s wallet and give it to him and claim virtue”. He did it himself with his own means. We have to participate in the welfare state, and we cannot attribute to the welfare state the same moral virtue as we do to the Samaritan. If we did, I would be the most generous person in this place, because as Secretary of State for Social Security I distributed £200 billion of your money, in modern money, to the poor, the needy and so on. But it was not my virtue: I was simply doing what society had decided.
Ultimately, the welfare state exists; we agree to do that, with compulsion on ourselves to contribute, because of a sense of national solidarity. Here, I think we get to some questions that are often ignored. Most of us feel a hierarchy of obligation: to our family, to our immediate friends, then to our nation—of course there is an obligation to people outside our nation, but it is primarily to our nation. I ask the Benches opposite this: is that okay? Is it reasonable that we have a hierarchy of obligation, feel more obligation to those in our own country than to those in others, and feel that other countries should themselves have their welfare states and look after their own people according to the means they have?
Well, I suggest that we have to, because we cannot be open to the whole world; we cannot because our welfare level is greater than the norm, or median, income in many of the countries in the third world. My first career was working in developing countries on aid and development programmes, and the level of incomes then was dramatically below what people on welfare in this country got—so we cannot, for that reason.
Anyway, if we do, to the extent that we do, we find that generous-minded people in this House, who all have their own homes, start allocating housing that would have gone to people on the housing list to people from abroad. That is why there is resentment if there is an excessive influx from abroad—and not illegally: I mean, over the last 18 months, we have allowed a net inflow into this country of the population of Birmingham. Where are we going to build another Birmingham before we can build a single extra house for the people already here? We rarely hear about that from those who find any criticism of mass migration to be improper.
That raises the question: should we accept anybody who manages to get here? It is apparently legitimate that we try to stop them getting here—we try to stop the boats and smash the gangs, and no one has ever criticised Starmer for wanting to do that, but it is a bit odd that, when people manage to get here nonetheless, they are then effectively awarded prizes, very often at the cost of the least well-off in this country. Matthew Parris equated it to a rugby match: you can try to stop people getting across the line, but as soon as they get across the line and touch down, they are granted the prize of five points and can try to convert it into a goal. That is a funny business.
Anyway, it is always the least poor who get here. When I worked in Africa and Asia, none of the poor people I was working among ever talked of the possibility of coming to Europe: it was beyond their comprehension, the costs of travel were so much greater, and the knowledge through media was so much less that they did not. Now, the people who do get here are those who have access to a few thousand pounds, perhaps £10,000, which is an enormous amount of money in those countries—and we are saying, “Oh, well, we’re generous. We’ll allow them to stay. We mustn’t try to stop them”. I simply ask the question: why is it reasonable to try to prevent them coming here but not fair to try to deter them from coming here, as we did through the Rwanda programme?
There are lots of issues that we—and I—have to wrestle with, and I would like the bishops occasionally to wrestle with them. Is it reasonable that we have national solidarity or is that an evil and wicked thing? Is it reasonable that we give priority to the poor in our own country while recognising that charity, although it begins at home, does not end at home? We may have to offer help to countries that are overwhelmed by some disaster, but then, normally, we should expect people in other countries to look after themselves and our duty is to the poor, needy and vulnerable in our own community.
Climate Agenda
Lord Lilley Excerpts(1 year, 5 months ago)
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Lord Lilley
That this House takes note of the impact of His Majesty’s Government’s climate agenda on jobs, growth and prosperity.
Lord Lilley (Con)
My Lords, it is a great and somewhat unexpected privilege to open this debate. I particularly look forward to the maiden speech of my noble friend Lady May of Maidenhead. It is fitting that her first contribution should be to this debate, since the net-zero commitment is very much her personal legacy. It also gives me a chance to thank her for what she and your Lordships may feel was a less wise part of her legacy, which was nominating me to this House.
It is hard to overstate how crucial cheap energy is for economic growth and prosperity. The quadrupling of oil prices in 1974 ended three decades of rapid growth in western economies. Energy price rises have invariably been followed by a slowdown in growth. On the other hand, thanks to shale oil and gas in America, that country has had cheaper energy and grown faster than other western economies, and China’s extraordinary growth has been fuelled by cheap coal.
Let me start with a few facts about climate change and the climate agenda impacts. First, Britain has reduced its territorial emissions of CO2 more than any other major economy and they are now back to the level they were in 1879. Secondly, Britain has more offshore wind power than any other country bar China, not to mention its onshore wind, solar and bio energy.
Thirdly, despite or because of this, British industry pays the highest electricity prices in Europe. They doubled in real terms over the two decades up to the start of the Ukraine war, even though real gas prices remained largely unchanged over that period.
Fourthly, we have already lost most of our aluminium industry and are losing our primary steel-making capacity and, with it, thousands of jobs. We are seeing the Grangemouth refinery turning into an import terminal and other British refineries under threat. We import an increasing proportion of energy-intensive goods, such as cement and bricks.
Fifthly, when our manufacturing industry moves abroad, it does not reduce global emissions at all—far from it. We now import many carbon-intensive products, so the reduction in Britain’s carbon footprint is only 36%, much less than the near halving of our reported territorial emissions.
Finally, the Government propose to accelerate the move to net zero regardless of cost, to prevent new North Sea exploration and instead import oil and gas, and to ignore or deny the impact this will have on our energy costs, growth and jobs.
This is an unusually significant debate because, as far as I can tell, it is the first time that Parliament has formally debated the impact on jobs, growth and prosperity of our decision to decarbonise our economy. Our failure to do so has been part of a collective institutional failure by Governments of all parties, both Houses of Parliament, the BBC, the Climate Change Committee and other public bodies to permit or promote an informed debate on the economic costs and benefits of net zero.
Costs were never discussed during the passage of the Climate Change Act in 2008, nor during the 90-minute debate committing us to net zero in 2019. It is extraordinary that we still have no official cost-benefit analysis of net zero, five years after embarking on the project.
Long ago, our national broadcaster formally decided not to give airtime to any views that might undermine public support for net zero. I discovered this when expressing doubts not about the science of global warming, which is rock solid, but about its scale and impact. The BBC published an apology “for giving voice to Peter Lilley”, removed the offending programme from the BBC iPlayer lest other people hear my voice, sent the producers on a re-education course and banished me from their studios on this issue ever since. Now my absence is no great loss to me or the nation, but our national broadcaster’s refusal to allow serious debate on the costs of the most expensive commitment since the welfare state is a travesty.
The most egregious failure has been that of the Climate Change Committee, which should have provided unbiased estimates of costs for public debate. I am glad that my noble friend Lord Deben will be able to explain why it has refused to do so. It even spent large sums of taxpayers’ money resisting a freedom of information request for details of its forecast that net zero would cost the nation 1% to 2% of GDP by 2050. Many assumed that this was the cost of getting to net zero but, actually, this is the cost we will face after 2050 once we have eliminated our emissions. The CCC has not calculated the cost of getting there; maybe its forecasting instrument is like one of those telescopes that can focus with great clarity on distant objects but renders anything near at hand a blurred and fuzzy image. There seems to be no other reason for not giving us the costs of getting to 2050.
The CCC’s reluctance to publish its workings was perhaps understandable given that it was so optimistic but, as it turns out, that is true of estimates produced by most public bodies. Sir Chris Llewellyn Smith—the lead author of the Royal Society’s report on the cost of large-scale electricity storage—recently pointed out that all official estimates were grossly optimistic, and he was honest enough to include his own, by the Royal Society. It is sad that we do not have the information on which we can have an honest and informed debate.
True believers in net zero are reluctant to discuss its costs because they have convinced themselves that there are none. It will give us cheap energy and boost growth by creating new jobs in new industries, exporting clean technologies worldwide, making the world greener and ourselves richer. How wonderful if that were true. There is an old saying that if something seems too good to be true, it probably is not true. I hope that wind power, in particular, because we have lots of it, will one day be cheaper than fossil fuels, but it patently is not yet. If wind and solar are cheaper, why have our electricity prices doubled as they have replaced fossil fuels? If renewables are cheaper, why is our electricity more expensive than in other European countries, which have less than us? If renewables are cheaper, why do they need subsidy?
Apologists say that those are the costs of old technologies and that the costs are coming down. The first part is true, although it is a shame they did not tell us at the time. Dieter Helm has calculated that Britain wasted up to £100 billion by investing prematurely in immature technology, rather than waiting until it was cost effective.
The Secretary of State assured us last month that, on the basis of recent auctions, renewables are the cheapest form of power to build and operate. Unfortunately, that is simply not true. The latest auction price for offshore wind was £82 per megawatt hour in today’s money, whereas his own department’s figures—for reference, on page 24 of the Electricity Generation Costs 2023 document—put the cost to build and operate a new gas plant at less than £60 per megawatt hour. Does the Secretary of State repudiate his own departmental figures?
Moreover, this is only half the story, because the comparison is not like for like. Wind is intermittent, and Dieter Helm advised the Government that, to make a true comparison, the costs of wind should include the cost of back-up generators or storage. Electricity that is not there when you want it is less valuable than electricity that is.
My economics lecturer taught us this by the old fable of the two New York bakers. One advertised bagels at 50 cents each, the other opposite at a dollar. A customer went to the cheaper baker and asked for a bagel. “Sorry, we’re out of bagels”, he was told. So he went to the other store and asked if they had any bagels. When the shopkeeper gave him one and charged him a dollar, he protested, “But the shop opposite only charges 50 cents a bagel”. “Well, why didn’t you go there?” “I did, but he’s out of bagels just now”. To which the other shopkeeper replied, “When I’m out of bagels, I only charge 50 cents”. Wind may be as cheap as other things when it is available, but it is a lot more expensive when it is not.
Electricity when it is not there when you want it is less valuable electricity, so you need back-up gas plants or storage. Back-up gas plants are doubly expensive because they can operate only when the wind is not blowing and they in turn need carbon capture and storage, which, even if it can be made to work with gas-fired stations, which it has not yet, will add further costs—again doubly so, because it will operate only part-time.
The second leg of the too good to be true story is that if we plough ahead with decarbonising our economy supply, we will enrich ourselves by generating new export industries. The Industry Minister, the noble Lord, Lord Vallance, who pursued the Sue Gray route to the upper echelons of the Labour Party, was given a little section of his own in the Labour manifesto, in which he said that
“by accelerating the transition to clean, homegrown energy”
we will not only
“end the era of high energy bills”
but be
“helping ourselves and exporting our solutions worldwide. But if we choose to go slowly, others will provide the answers, and ultimately we’ll end up buying these solutions rather than selling them”.
Where has he been for the past 20 years? Far from choosing to go slowly, we have outpaced other countries, but we have had to buy the solutions from abroad. Imports of renewable technologies vastly exceed our exports. Foreign suppliers have finally begun to make wind vanes in this country and assemble generators here, which is welcome, but they are largely for our fields, and those companies are not going to make us an exporter. The only turbines we export are gas turbines, which we are phasing out and urging others to do likewise. The only area where we might take the lead in developing a new industry is small nuclear, which I persuaded the Energy and Climate Change Committee to back a decade ago. I hope this Government will give that project more welly than my Government did.
An honest appraisal of the cost of net zero will conclude that it is bound to be costly. That does not necessarily mean that we should abandon it. If the costs are less than the likely benefits to the world in reducing the impact of global warming, it is worth the world bearing those costs. Of course, Britain’s contribution to global emissions is very small—less than 1%—so our impact alone is negligible. I accept that we must be prepared to make our proportionate contribution to that collective effort.
I know that many noble Lords believe that we should lead the world by going further and faster in that direction. I confess that I have always found the idea that we can lead the world somewhat hubristic—a hangover from our imperial past. So far, the big emitters —China, India and, in future, Africa and Latin America —have made it clear that they do not give a damn what we do. The one thing that we can be sure of is that if we impose such costs on our economy that we self-harm and reduce our emissions by exporting our industry abroad, other countries will take note, learn the lessons from our folly and make sure that they do not follow our lead.
I hope that we can now have an honest, frank, well-informed debate comparing the costs of action with the benefits of action. I am sure that will be a point that my bishop, the right reverend Prelate the Bishop of St Albans, will make in due course since, although we may not agree on this issue, we agree on the importance of honesty. We can have an honest debate only if it is well informed and if we stop trying to convince ourselves that fairy tales are true. I beg to move.
Lord Deben (Con)
My Lords, I remind the House of my declared interests, particularly as the former chairman of the Climate Change Committee. I particularly welcome the maiden speech of my noble friend. By talking about one nation and handing on to the next generation something better than we have ourselves received, she sums up why I am a conservative. Only when the Conservative Party follows those views are we actually conservative.
I thank the noble Lord, Lord Lilley, for producing this debate. He is a very old friend, so he will not mind me reminding him a bit about his past. When Margaret Thatcher was off in the United Nations pleading for international action against climate change, he was telling his colleagues in the Cabinet that he did not really accept the arguments about climate change or global warming—
Lord Deben (Con)
I remember the conversation. The noble Lord said, “I’m a statistician, and the statistics don’t prove this”. But it is perfectly true that he now believes it is rock solid, although he does not accept that, if it is, we have to do everything about it because it threatens us all. His speech could be made in any parliament in the whole world, saying, “Climate change is very serious, but not for us, because we’ve got to do this, that and the other. It’s rather bad for our economy, so we won’t do it”. Every country could say that. His is the “After you, Claude” policy: when other people do it, then we do it. That seems to me to be dishonourable—you cannot put that forward. If you believe in climate change and see it as an existential threat, you have to act.
I am proud of a cross-party attitude; all parties have supported this, although my noble friend Lord Lilley did not support the Climate Change Act. We have to realise that there is a difference between accepting the facts and being prepared to act on them. Action means that we do it ourselves first because, if we do not, as the Bishops’ Benches would accept, there is no point in asking people to do as you say.
And the effect of Britain doing it has been remarkable. If I look back to my first days as chairman of the Climate Change Committee, I have to say that I did not expect that we would ever get to the decision in Paris. Nor would I have expected from Boris Johnson, whose leadership was not my favoured one, the remarkable steps forward which we had at Glasgow. The result was that nations throughout the world have signed up to net zero and have begun to ratchet up what they are doing. That is why we have to get back the leadership we lost by doing entirely unacceptable things such as putting off the date by which we were going to have compulsory electric or equivalent cars. That meant that business, as the noble Lord, Lord Browne, pointed out, did not in any way feel the conviction and the certainty that it needs.
Apart from being a Minister for 16 years, I have been a businessman all my life and I know perfectly well that the most important thing in business is to find out the certainties, and the certainties are clear: that climate change will get worse every year and the cost of not doing something about it gets worse every year. The Climate Change Committee has produced a detailed statement about how much it will cost: it will be something around 1% of our gross national product every year. But that is only if we do it—of course, it builds up. If you do not do it, it costs you more and more. The cost of inaction is huge and it is already true.
Because people—who shall be nameless—pressed Mr Cameron, now the noble Lord, Lord Cameron, as Prime Minister, he rowed back on what was called the “green rubbish”. What did he do? It meant that every family in Britain has had to spend at least £1,000 more because we have not moved fast enough into renewable energy. I do get fed up with people who cherry-pick the facts; the facts are quite simple. The basic cost of gas today is £83 per megawatt hour; onshore and solar have just been agreed at £68 per megawatt hour and offshore at £80 per megawatt hour, so already it is clearly lower, and that is with gas not at its highest price. Do we really want to be in the hands of the volatility of the gas price? Do we want to be in the hands of some of the nastiest regimes in the world, or do we want to have our own energy source at a lower price and at a cost we can afford? The figures are all there. The Climate Change Committee has done it year after year, but I have not noticed my noble friend Lord Lilley present at any of the presentations or discussions. So I merely say to him that he should read the documents again and accept that he is on one side and that science, the Church and the Climate Change Committee are on the other.
Lord Lilley (Con)
My Lords, I am grateful to everybody who has made fantastic contributions to this excellent debate. I pay particular tribute to the Government spokesman, the noble Lord, Lord Hunt, whom we have just heard. His response to everybody and everything that was said was one of the most fair-minded and constructive that I have heard, not least in fairly representing what I was trying to say—though I am not accusing him of agreeing with me.
I want also to congratulate my noble friend Lady May of Maidenhead on an outstanding maiden speech. It was noteless; it was witty; it was compassionate. We are aware, obviously, of her other great legacy on modern slavery. The noble Lord, Lord Willetts, reminded us of her concern for the just about managing in our own country, and she emphasised her concern for the poorest, who are the greatest victims of climate disasters—when you are hit by a flood, it does not matter to you whether they are more frequent than floods in the past; they are still a disaster. But the reason the poor are vulnerable is that they are poor, and the reason that they are poor is that they do not have the access to cheap energy that makes us rich. If we deprive them of access to cheap and affordable energy they will remain poorer for longer. Even if we in this country think that we can afford excessively high energy costs, we should not try to impose them on the poor and slow down their growth.
I next thank the noble Lord, Lord Deben, who offered my greatest support for what I had to say, since, because he could not refute a word that I had said, he chose to criticise things that I had not said. He criticised me for saying, allegedly, that we should not make any contribution on this front. What I actually said was:
“I accept that we must be prepared to make our proportionate contribution”.
He went on to say that I had said something in Cabinet under Mrs Thatcher, which is simply untrue. I remind him of the exchange we once had in John Major’s Cabinet, which was not about this but about statistics, when he was wrong.
The noble Lord did not respond to the points about why he needed to take costly legal action to prevent publication of the analysis that his committee had done on the cost of climate change avoidance in 2050. My general view is that when people do not want to publish facts it is because they think the facts are rather weak. I assume that is why he did not refer to them.
On the general issue of costs, with the exception of the noble Lord, Lord Hunt, almost nobody who was enthusiastic for doing more and spending more and who generally goes around saying that we can do that in a costless fashion commented on the costs I gave. None of them referred to the fact that we have the highest costs of electricity for our industry of any country. One can only assume again that they are embarrassed by the facts. Likewise, when it came to new industries, apart from small nuclear, which I mentioned and have advocated for a long time, nobody gave detail of how these industries are going to generate new prosperity when we have doubled the amount of onshore wind, trebled the amount of offshore wind and quadrupled the amount of solar or whatever it is, when that has not happened so far.
There were a couple of important arguments that it is important for me to address because they go to the heart of the issue. One was on the issue of external costs, which was raised by the noble Baroness, Lady Bennett, and the noble Lords, Lord Willetts and Lord Browne. Theirs was the logical response to what I am putting forward, which is to say: “Yes, you’ve got to balance the costs of doing something against the damage that would be done if you don’t, and the logical way to do that is a carbon tax”. If we take the American Government’s estimates, for example, which say that the carbon tax should be $51 per tonne, which is about the equivalent to $10 per megawatt hour, it does not make any difference to the fact that renewables would still be uneconomic in this country.
Then came the most difficult issue, which people who take my position have to face up to, and that is the threat of existential crisis. If continuing to do nothing—I am not proposing that we do nothing—were likely to result in the extinction of the human race, or even its immiseration, almost no costs would be too great to avoid it. I accept that.
I put down a Question some while ago to the Government asking whether they knew of any peer-reviewed science, or science produced by the Intergovernmental Panel on Climate Change—whose job it is to consider the science—which forecasts that, if we do nothing over the coming centuries, it will lead to the extinction of the human race or even its immiseration. They said that no, there was no such peer-reviewed science, so those who invoke it are invoking something that is not peer-reviewed science, although that does not mean to say that it is wrong. Some things can turn out to be right that have not yet got through the peer review process. But let us not pretend that we are dealing with a threat that scientists have declared to be existential—they have not.
We are left with the central core of the debate: should we have an honest discussion about the costs and benefits of pursuing the path of net zero? I am glad to say that the Church was on my side on that front—that we want an honest debate. We can do that only if the Government and bodies such as the CCC, the National Grid and the Royal Society have the honesty and integrity to admit that about their information. The Royal Society—or the author I cited—has admitted that his figures were underestimates. We can have that debate only if we have that information from those sources in an unbiased way rather than in a campaigning way. I am grateful to everybody for contributing to the beginning of that debate for the first time in Parliament.