Solar Power (Feed-in Tariff)

Debate between Lord Lilley and Sarah Newton

Wednesday 23rd November 2011 Commons Chamber

[Mr Lilley]

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

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

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

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

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

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

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

[Mr Lilley]

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