Electric Vehicle Battery Production
Lord Sikka Excerpts(1 year, 2 months ago)
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Lord Callanan (Con)
Like the noble Lord, I am familiar with the rules of origin provisions of the TCA. There was a lot of debate about this at the time, and we continue to keep an eye on it. Of course, there are discussions across government. One of the reasons for setting up the automotive transformation fund was to attempt to get more of these gigafactories into the UK, and we stand ready to talk to any other prospective investors to do that.
Lord Sikka (Lab)
My Lords, since 2016, UK car production has nearly halved. Honda has closed its factory in Swindon and BMW is moving production of its electric Mini from Oxford to China. We really need to make sure that we have good infrastructure, especially when it comes to electric batteries. With that in mind, would the Government consider bringing Britishvolt into public ownership? That is the only way to make sure we have a viable local player.
Lord Callanan (Con)
I note the noble Lord’s nostalgia for the great, successful British industries of the 1970s under public ownership, but I do not think that is a viable suggestion. Government has proved that it is not good at running businesses and industry—we should leave that to the private sector, with appropriate government support where required.
COP 27: Outcome
Lord Sikka Excerpts(1 year, 4 months ago)
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Lord Callanan (Con)
As far as I am aware, the Prime Minister’s pledge has been kept. If that is not the case, I will certainly write to the noble Baroness.
Lord Sikka (Lab)
My Lords, can the Minister confirm that the UK’s share of the cost of reparations relating to damage from greenhouse emissions will be borne solely by the ultra-rich? Research shows that billionaires are responsible for a million times more greenhouse emissions than the average person.
Lord Callanan (Con)
If the noble Lord is referring to the UK’s taxation system, it is clear that those at the top end of the scale pay the largest amounts of taxation by far. If that translates through to our international climate commitments, where we are proud to be contributing something like £11 billion, then I suppose in a strange way the noble Lord gets his wish.
Government Departments: Communication with Industry and Commerce
Lord Sikka Excerpts(1 year, 5 months ago)
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Lord Callanan (Con)
The noble Lord is wrong. There is consistent policy from the Government. In a whole range of areas of policy, life continues as it did. There are of course unique challenges facing us at the moment—the headwinds of Covid, the energy crisis, et cetera—but this Government have the solutions and will carry on implementing them.
Lord Sikka (Lab)
My Lords, businesses associated with the City of London gave us the last financial crash and have also routinely been involved with the mis-selling of numerous financial products. They have been involved in money laundering, tax abuses, frauds, forgery of customers’ signatures, and numerous predatory practices. Can the Minister explain when the Government will launch a public inquiry into the City’s predatory practices and clean up this industry?
Lord Callanan (Con)
The noble Lord is wrong, as he is on so many of these matters. Of course, proper regulation is important, and we will shortly be considering the economic crime Bill, to clamp down on many of those practices. The noble Lord forgets that the City of London is one of the most successful financial centres in the world. It contributes billions of pounds to the British economy. He is always calling for more public expenditure; if he kills the City of London, he will have even less to spend.
Economy: The Growth Plan 2022
Lord Sikka Excerpts(1 year, 6 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, I begin by joining my noble friend Lady Neville-Rolfe in welcoming the noble Baroness, Lady Gohir, and congratulating her on her maiden speech, which I listened to with great interest, although I do not think she is in her place any longer. The noble Baroness, Lady Hayman, said that she is full of fire and passion, evidence that she will be an eloquent voice for women. She is no doubt delighted to discover that we are now on our third woman Conservative Prime Minister, and I am sure we are all looking forward to hearing her future contributions.
Today is clearly a day for our second city. I thank the right reverend Prelate the Bishop of Birmingham for the contribution he has made to this House over the years. He joked about my noble friend Lady Neville-Rolfe’s reference to his “mature” and “sensible” contributions, and then proved how right she had been to say it. The right reverend Prelate made many noteworthy points in the few minutes allotted to him, not least about the importance of the need for the devolution of power and influence. He asked about “wealth created for whom”, an important question which I am sure we will be debating for many weeks to come, sadly without his presence.
It is a privilege to close this debate on behalf of the Government and I thank noble Lords for their many contributions. We have heard about and debated the many steps the Government are taking to achieve economic growth: a series of bold initiatives which we believe will, together, reboot this country’s long-term prospects. It is an agenda which protects and reassures now in the form of our plans to cut energy bills at a time of global uncertainty for our people, and an agenda which lays the foundations for a future about which we all can and should feel optimistic. In her introduction, my noble friend Lady Neville-Rolfe rightly said that we need to do things differently and we need to do them better. This Government are making growth their guiding mission, which I am sure many of us agree it needs to be.
I shall address in turn the different aspects of the Government’s plans that were raised in the debate. I start with plans to reduce millions of energy bills, an issue raised by many speakers, including the noble Baroness, Lady Smith of Basildon, the noble Lords, Lord Fox and Lord Burns, my noble friends Lord Forsyth of Drumlean and Lord Lamont, and others. The Government had previously announced £37 billion of support, meaning 8 million of the most vulnerable households receiving £1,200 of support and others receiving £400. Last month, the Government built on that and announced the energy price guarantee to limit the energy bills of typical households to £2,500 a year for the next two years—that is an average, of course. In turn, another benefit of that is significantly reducing the rate of inflation.
As many noble Lords observed, there are no cost-free options. The Government must now intervene to guard against the worst economic outcomes going forward, and that intervention will therefore initially be funded by the Exchequer.
The noble Lord, Lord Fox, asked about the case of fixed-rate contracts that were agreed before 1 April this year. I can confirm to him that the Government will be revising the cut-off date such that only contracts taken out before 1 December 2021 are excluded from the non-domestic energy scheme. This means that all fixed-rate contracts taken out when the wholesale prices were above the government-supported price will be eligible for relief under the scheme. I am sure that that will be welcomed by the whole House and in particular by the noble Lord; I thank him for asking the question which gave me the opportunity to say that.
The noble Baroness, Lady Brinton, argued that business energy bill support is needed for more than six months. I am also pleased to be able to tell her that after the initial six-month period we will provide further support for vulnerable sectors. We will publish a review of the energy bills support scheme after three months to assess effectiveness and how the scheme might be extended, further targeted or revised beyond the six-month period for vulnerable non-domestic customers. Continuing support to those deemed eligible would begin at the end of the initial six-month support scheme without any gap.
The right reverend Prelate the Bishop of Edmundsbury and Ipswich—he must have the longest title in the House—also raised the important subject of energy poverty. In addition to the extensive support I have just mentioned to support people who need additional help on top of the warm homes discount, the Government are also providing an extra £500 million of local support via the household support fund, which will be extended from this October to March 2023. The household support fund helps those in most need with payments towards the rising cost of food, energy and water bills.
The Government are also aware—again, this point was raised by many Members—that the energy price guarantee will leave those households currently with unregulated energy sources, such as those living off the gas grid, with uncapped bills this winter. However, our objective is that all households, regardless of their heating source, will be no worse off than an equivalent domestic gas household under the energy price guarantee.
As the noble Baronesses, Lady Hayman and Lady Walmsley, and again, the right reverend Prelate the Bishop of Edmundsbury and Ipswich, noted, there is more at stake here, and there is a need for a more holistic approach. That is why the Government are investing more than £6.6 billion over this Parliament to improve energy efficiency and decarbonise heating. Despite the comments of some Members, we are making good, steady progress on this issue. In 2008, 9% of homes had an energy performance certificate of C or above, and that figure is now 46%. Meanwhile, the energy company obligation, or ECO, has been extended from 2022 to 2026, boosting its value from £640 million to £1 billion a year, which will help about 450,000 families with green measures such as insulation. I am sure that it did not escape the attention of Members that last week the Chancellor announced an additional £1 billion investment over three years in the ECO-plus energy efficiency scheme—something I am sure we will return to in this House when we bring the legislation forward to implement it.
The noble Baronesses, Lady Smith of Basildon and Lady Kramer, and the noble Lords, Lord Burns and Lord Razzall, and other noble Lords, all raised the issue of a windfall tax on energy companies. We already have a tax on energy companies. The energy profits levy was introduced on 26 May 2022. It is an additional 25% tax on UK oil and gas profits on top of the 40% headline rate of tax that they already pay, which takes the combined rate of tax on profits to 65%. I do not know how much further Labour and the Liberal Democrats want to increase that tax, but it already appears to be at a very high level.
Lord Callanan (Con)
If the noble Lord will have patience, I will finish my paragraph and then he can intervene.
It applies to profits earned by companies from the production of oil and gas in the UK and on the UK continental shelf.
Lord Sikka (Lab)
My Lords, the net impact of the windfall tax the Minister referred to is only 2% of the earnings before interest, tax, depreciation and amortisation of BP’s profits and only 1.5% of Shell’s. It excludes profits made in the forecourts, from refineries and by trading, which is the biggest source of profits for oil and gas companies. Surely that tax was just a joke and a sop, because a large amount of it is then handed back through accelerated investment allowance.
Lord Callanan (Con)
I know that there has never been a tax that the noble Lord does not want to increase even further, but it is already a very high level of tax. I think I saw a figure of £170 billion mentioned by the Opposition. That is worldwide profits. The UK cannot tax profits made in other jurisdictions; we can tax those that are made in our country, that we have control of. I remind the noble Lord that we also want those companies to invest in renewables, as they are doing. There are many renewable projects—offshore wind projects, hydroelectric projects, et cetera—in which we need additional investment. So the calculation made by the Treasury, which I have never seen to be shy of raising taxes in the past when it could, is that, on the one hand, of course we want to secure a fair return for taxpayers, but we also want to make sure that the profits are there to enable the massive sums that we need to invest if we want to move to a green transition in future.
On the suggestion of the noble Lord, Lord Vaux of Harrowden, of a briefing on energy markets for interested Peers, I say to the noble Lord that, as he knows, this is a complicated subject. Exactly who is making the excess profits under which particular regime is a complicated issue. He will be pleased to hear that we will shortly be debating the legislation to implement the support policies I have mentioned, and I am sure that these matters will be raised further in the debate during the passage of that legislation. I look forward to discussing it further with him then.
The noble Lord, Lord Liddle, made the point that we need to get onshore wind moving—a matter I know is dear to the heart of the noble Baroness, Lady Hayman, and she will no doubt agree. The British Energy Security Strategy recognises the range of views on onshore wind across the country and, as I said before, we will be consulting on developing partnerships with a number of supportive communities that wish to host new onshore wind infrastructure, perhaps in return for guaranteed lower energy bills. The growth plan went further, with specific changes to accelerate delivery of infrastructure, including bringing onshore wind planning policy in line with other infrastructure policies to allow it to be deployed more easily in England. The noble Baroness, Lady Walmsley, has asked many times about that; I am sure she will be pleased to hear that.
The noble Baroness, Lady Fox of Buckley, meanwhile noted the need for green innovative growth. We have indeed established a Green Jobs Delivery Group, headed by Ministers and business leaders, to act as a central forum for driving forward action on green jobs and skills. Our plans for net zero and energy security are driving an unprecedented £100 billion-worth of private sector investment by 2030 into new British industries, supporting about 480,000 green jobs by the end of the decade. To return to my earlier point, many of the companies investing in the UK are those that the Opposition wish to tax to death.
The noble Lords, Lord Bilimoria, Lord Eatwell and Lord Fox, alongside my noble friends Lord Lamont, Lord Lilley and Lord Bridges of Headley, all commented on the Government’s plans regarding taxes. The plain truth is that the Prime Minister promised that this would be a tax-cutting Government and we are keeping that promise.
A number of noble Lords also raised the overall approach of the growth plan.
North Sea Gas
Lord Sikka Excerpts(1 year, 7 months ago)
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Lord Callanan (Con)
To be honest, this Question was the first I have heard of this meeting. I do not know the answer. I do not even know if we have been invited to it, but I will find out.
Lord Sikka (Lab)
My Lords, the Rough gas storage facility was closed because the Government refused to subsidise the repairs, which means that the Government made the decision. I therefore have two questions for the Minister. First, was a cost-benefit analysis conducted from an energy security and public interest perspective? If so, will he now publish it?
Lord Callanan (Con)
Indeed, the reports written at the time were published. There was one report by Cambridge academics studying precisely this matter. It is easy to be wise after the event. If that facility had been retained, the cost would have gone on to gas bill payers—Peers in many parts of the House are criticising us for the high level of prices—and that would have been an additional cost. That was the decision taken at the time. The world looks very different now, so we have received proposals from Centrica, and we are closely examining them. These are important matters; we take the security of supply incredibly seriously; and we will look at it.
Low-Income Families: Energy Cost Support
Lord Sikka Excerpts(1 year, 7 months ago)
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Lord Callanan (Con)
That is another good question, and the answer is complicated. The marginal rate of electricity is set because of the highest contributor to that, which is gas-fired generation at the moment. This is why we have launched the review of market arrangements, which is looking urgently at that exact situation. The noble Lord makes a powerful point.
Lord Sikka (Lab)
My Lords, I have spent the last few weeks visiting pawnbrokers across parts of London to see how the people at the bottom of the pile are managing. They are pawning vacuum cleaners, microwave ovens, radios, televisions, bicycles and DIY tools. One lady even pawned a toaster so that she could get £5 to buy a birthday card and a present for her friend. That is the level of abject poverty we have at the bottom. Can the Minister invite the Prime Minister on my behalf to accompany me to visit the pawnbrokers and see for herself what has happened to the people under this Government?
Lord Callanan (Con)
I am not sure that pawnbrokers have necessarily arisen just under this Government. However, I totally accept the general point the noble Lord is making: there are many people—actually, on all income levels—who are suffering because of this crisis, which we all know was caused ultimately by Putin’s invasion of Ukraine. This is a difficult problem, and there are no simple and easy answers. All the potential solutions are very expensive and need to be looked at closely, and I am sure that the PM will do that.
Energy: Prices and Supply
Lord Sikka Excerpts(1 year, 9 months ago)
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Lord Callanan (Con)
Ofgem does look very closely at connection cost standard charges and direct fuel costs. Funding the transition from a big node-type power supply to lots of more diverse, renewable sources of energy requires considerable investment in our transmission system. In order to expand the use of electric cars, heat pumps et cetera, we must reinforce the electricity supply system, which of course needs to be paid for.
Lord Sikka (Lab)
My Lords, currently the Government tax people heavily, especially the poorest. They then hand back a few pounds to the people, helping with energy bills—and it is promptly handed over to the energy companies. In this circuit, there is no check whatsoever on curbing inflation, energy prices or corporate profiteering. Why are the Government neglecting these three things?
Lord Callanan (Con)
I am afraid that I simply do not agree with the noble Lord. A number of aspects of his question were wrong. The Government are not handing money over to energy companies: the money is going directly to consumers—more than £37 billion of expenditure. The noble Lord might think that that is a few pounds, but I think it is a considerable sum of money. Clearly, energy prices are likely to go up again in the autumn, and that is something we will need to return to.
Strikes: Cover by Agency Workers
Lord Sikka Excerpts(1 year, 9 months ago)
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Lord Callanan (Con)
As I said, this applies in all sectors of the economy. Agencies already supply a considerable number of personnel in the fields that the noble Baroness mentioned.
Lord Sikka (Lab)
My Lords, even the Prime Minister condemned P&O’s violation of employment laws, and now the Government are going ahead with implementing those despicable practices in UK law. Could the Minister tell us what other bad practices they are ready to implement?
Lord Callanan (Con)
I answered that question earlier. This is an entirely different situation from the P&O dispute, as it was at the time. We were committed to taking action to prevent abuses such as that, and we are still committed to that. This is an entirely different situation.
Trades Union Congress: Levelling Up
Lord Sikka Excerpts(1 year, 9 months ago)
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Lord Callanan (Con)
Because the responsibility for sitting down belongs to the employers—in this case, Network Rail and the train operating companies—and the trade unions. My understanding from listening to Network Rail is that it has set out a very positive agenda. At the end of the day, the taxpayer supported the railways to the tune of £16 billion over the last few years: that is £160,000 for every rail employee in this country. The taxpayer has been very generous; it is about time the unions reciprocated.
Lord Sikka (Lab)
My Lords, last week the Chancellor met with oil and gas company directors to hear their concerns about energy policy. With that in mind, will the Minister explain why the Transport Secretary has not met the RMT? Which law prevents him doing so?
Fuel Poverty
Lord Sikka Excerpts(1 year, 10 months ago)
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Lord Callanan (Con)
The noble Baroness says that this is not enough, but of course, we also need many of those companies to continue to invest both in North Sea production and in renewable production. If we are going to move to the totally renewable power system that I am sure the noble Baroness wants to see, as I do, we need tens of billions of pounds of investment, often from the same companies; you cannot spend the same pot of money twice. We are spending £6.6 billon this year on home efficiency measures, and there is a huge amount of work going on behind the scenes on retrofitting and home insulation measures, and through ECO, the local authority delivery scheme and the home upgrade grant. So, a lot of work is going on in this space.
Lord Sikka (Lab)
My Lords, the cost of producing oil and gas has not changed substantially, but the selling price has. The refiners’ profits from petrol are up by 366%, and from diesel by 648%. May I urge the Minister to commission an inquiry into profiteering, and to introduce price controls to protect people from it?