Queen’s Speech

Lord Oxburgh Excerpts

Tuesday 14th May 2013 Lords Chamber

[Lord Oxburgh]

My Lords, there are some cultures that believe that good things come in threes. Those who subscribe to this view need look no further than today. We have had three maiden speeches—very different but all distinguished.

It is a great pleasure to follow the right reverend Prelate, who will undoubtedly make a major contribution to our discussions here. He was born in east Africa of missionary parents and his early life was there. As he touched on briefly, he returned to east Africa and put in seven years’ service as a very distinguished principal of Carlile College, which taught not only theology but business studies as well. I think that we can expect quite a broad contribution from him.

He has pointed out those areas which he is particularly interested in contributing to in our House, but I would be surprised if his understanding of Africa and the developing world was not also an important aspect of that contribution. Certainly, Africa has played an increasing role in our discussions as a developing continent which has yet to realise its full potential. The right reverend Prelate has indicated that he will use his educational experience and his experience of his local situation in Hampshire and around Winchester to elevate our discussions of agriculture and related topics. We very much look forward to those contributions and are delighted to welcome him to this House.

I turn to the somewhat different topic of energy. An Energy Bill will be coming to us shortly and that will be the time to discuss its detail, but I wish today to discuss the background to the Bill, the serious difficulties in which we now find ourselves and how in future we might avoid them.

I declare an interest as the honorary president of the Carbon Capture & Storage Association and as a director of two small companies, Green Energy Options and 2OC, the former being concerned with better energy management and the latter with renewable energy.

How has a situation arisen in which the shortly-to-retire director of Ofgem, our energy regulator, commented that energy supplies are on a “roller-coaster” heading “downhill—fast”? With hardly any new power stations being built, he warned that there is a serious danger of electricity shortages. Our respite arising from reduced energy demand during the recession is temporary.

The first point to make is that our predicament was entirely predictable. It has long been apparent that much of our electricity-generating capacity would have to be renewed this decade. It has also been apparent that this would be constrained by international agreements on greenhouse emissions. Furthermore, it was clear that North Sea gas would peak around the turn of the century, after which we would be increasingly dependent on imports. There were no surprises. I have a pile of reports, published or commissioned by DECC and others, that must be over half a metre high. The trouble is that action arising from these reports has been half-hearted, late or non-existent. Something like the present Energy Bill should have been introduced in the previous Parliament and the negotiations that are under way at present for the replacement of nuclear power stations should have begun at least two years ago.

It is hard to avoid the conclusion that successive Governments have simply not taken energy policy seriously and that many decisions have been ill-considered, or made ad hoc—in some cases as knee-jerk responses to pressure groups, and in others on the basis of prejudice for or against particular energy sources. In so far as it was policy to promote renewable energy, we had a support regime that in effect could support only wind and did nothing for waves, currents or tides—some of the UK’s most important energy assets. Another key element of successive Governments’ policy was carbon capture and storage. This was the subject of a disastrously failed competition and is years behind where it should be.

Although energy market reform has been trailed for years, there is still virtually no investment in new generating plant because investors do not know under what market arrangements they will trade. Energy markets and energy transmission, fossil fuel reserves and electricity generation technologies are extremely complex. Under-informed decisions have legacies that are generations long. In this most complex and technical area, there have been more than 20 changes of Energy Minister in the past 15 years. I estimate that only a handful of those had either the time in post or the background to make a serious contribution to policy. It seems that when some tried to, they were overruled, moved or sacked. It is physically impossible for energy infrastructure to change rapidly and decisions being made today will take years to implement and will influence our energy supply for decades. Continuity and a long view are essential.

It is hard to avoid the conclusion that at Cabinet level, in so far as any thought was given to energy, there was a Micawberesque hope that somehow something would turn up—but something has not turned up. It appears that the only certain outcome is, at best, unnecessarily high energy prices. Ministers and senior officials have seriously lacked experience and in particular a realistic understanding of timescales: how long it takes to negotiate agreements, obtain planning consents, or design and build a power station. There was also a lack of understanding of markets and experience to judge how investment could be attracted on reasonable terms. It is against this background that we are embarked on a fundamental reform of our energy market and we are doing it in a rush.

The existing arrangements have demonstrably failed. The present situation might have been avoided if we had had some kind of high level, non-political, expert advisory group overseeing all aspects of energy policy with the status and authority to hold the Government to account if they failed to take timely or appropriate action. I believe that an energy strategy committee should be established by Parliament. It would comprise people with experience of different aspects of the energy industry, finance and energy policy. They would serve for relatively long terms on a board that could be chaired by a Minister. Acting within high level policy guidance from Government, the role of the committee would be to propose a long-term energy strategy and to advise the relevant departments on the timescales and practicalities of achieving it. Because of the fundamental and long-term nature of energy investment, the energy strategy committee should report to Parliament and the minutes of its meetings should be published.

Such a committee would embrace not only electricity generation but gas storage, transmission of electricity and gas, interconnectors with other countries and other related matters. At present, there seems to be no forum in which those closely related topics are considered together. If established by amendment of the current Energy Bill, it could provide considerable help with the implementation of electricity market reform, many details of which remain to be settled. It is to be hoped that the long-term national strategic importance of energy would attract cross-party support for such a committee. Its influence would stem from the standing of its members and the requirement to report annually to Parliament. Clearly, it would still be possible for Governments to ignore the advice of the committee, but it would not be easy, and they would be obliged to do so in a more public fashion.

The present arrangements for determining energy strategy have not worked. It is time to do things differently.