Cost of Living

Lord Young of Norwood Green Excerpts

Thursday 3rd February 2022 Grand Committee

[Lord Young of Norwood Green (Lab)]

My Lords, I, too, would like to offer my thanks to my noble friend Lord Whitty for initiating this important debate. I could not help smiling when he referred to the conversion to gas boilers. I remember it well: the sheer delight of coming down in the morning and not having to rake the ashes out of the grate and start the coal fire again, because it had been replaced by a gas fire.

What I would say about the current situation is that it is a very dynamic one. There is not going to be one system in the future, by any means, but one thing we do know is that gas is going to be with us for the next 20 to 30 years. That is a reality, and one that lots of people do not like to face, including some of those sitting alongside me. No doubt I will be chastised and told that it is not true and we can do it all with renewable energy, but that is a very debatable assessment of the situation.

When I say that it is a dynamic situation, well, carbon capture and storage is there and it needs to be refined, but it is certainly something I believe will happen. However, there is a supreme irony in the current situation, and this Government have to take the blame. We decided that fracking was not acceptable any longer, and nobody seemed to worry about the fact that they are still fracking in the USA and Qatar. Could the noble Baroness, Lady Bennett, tell us why it is acceptable to ship liquid natural gas all the way from the USA and Qatar, then deliquefy it and use it? We do not want fracking in this country, but we do not care how it happens elsewhere. We could have had a safe, reliable system and created thousands of jobs; it was ready and there, but a hysteria was created about it. We were told that we had to stop drilling, because we had 0.5 on the Richter scale. If a lorry rumbles past your house, it would be more than that. It was an absolutely ridiculous decision to make. I can understand the political pressures, and why it was made, but it is a situation that we are paying for and will continue to pay for—and it will not do anything about improving the environment.

Of course I believe in renewable energy. I was a bit puzzled when the noble Baroness, Lady Scott of Needham Market, said that nobody was going to invest in their houses. Plenty of people around me are investing in solar panels, even though the subsidy has gone, and there is a good return on them. She is shaking her head, but you only have to look at roofs if you do not believe that. I want to make a plea, when we talk about renewable energy and nuclear and so on, or hydrogen, that we have a holistic analysis and not the idea that there is just going to be one solution.

The noble Lord, Lord Howell, referred to small-scale medium reactors, and it looks like a promising area—who knows? There is hydrogen as well. I also think that there are some possibilities, without wanting to seem patronising to people, and ways in which you can save energy. You can save by the way you cook, and by wasting less food, which makes an important contribution. Trying to educate people in their lifestyle is important, and the Government should be thinking about that, in my view.

Of course I believe in things such as the green homes scheme. I am puzzled why that has been abandoned because that would have a long-lasting effect. I also agree with noble Lords who have referred to things such as the windfall tax. I am looking forward to the Minister being able to address all these issues. There is a real challenge—and not just for the Government—in how we analyse the best way to help people in the future when we know the cost of living is rising. Is the only solution to increase benefits? Part of the solution, in my view, is getting people back into employment. Not only is that better for them individually; it sets an example to their families, so that another generation of young people do not feel that the only income coming into the family is benefits.

I hope that people will recognise that I am trying to make a serious contribution on things such as fracking and the need for a more holistic analysis.

Climate Change

Lord Young of Norwood Green Excerpts

Tuesday 29th June 2021 Lords Chamber

[Lord Callanan (Con)]

I understand why the noble Baroness wants us to go further and faster, but I remind her that we have already driven down emissions by 44%, which is the fastest reduction of any G7 country, and that we have set some of the most ambitious targets in the world for the future. So, while I am sure she is going to push us to go further, I think we have made good progress so far.

[Lord Young of Norwood Green (Lab) [V]]

My Lords, as the noble Lord, Lord Teverson, said, this issue clearly has added importance as we are hosting COP 26. How we set our targets and the metrics that we use are vital. Do we take into account the impact of technical innovation?

[Lord Callanan (Con)]

The noble Lord makes a very good point. Over the past three decades, as I have said, we have reduced our emissions by 44%. We will continue with policy engagement. We regularly review the frame- works that incentivise the further deployment of new technology. I can give the noble Lord an excellent example in the form of the UK electricity market framework.

Domestic Gas and Electricity (Tariff Cap) Bill

Lord Young of Norwood Green Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 11th June 2018 Grand Committee

[Lord Henley]

Midata is a method of electronically transferring customers’ data from a company system to a third party, such as a price comparison website. I was saying that that could lead to innovative third-party switching devices. I think I might have said at Second Reading of the Smart Meters Bill that some apps were already available that could do that for an individual. Therefore, the noble Lord, Lord Lennie, could sign up to something that said, “Always shift me to whatever is the cheapest tariff”. I cannot remember the name of the one already in existence. The noble Lord might then find that two or three times a year he was changing supplier without knowing it, always going to a cheaper one. It might be that the noble Lord, being very virtuous, wanted a greener one or something else, and other such things could be arranged. I hope that is what midata will help the noble Lord and others to do.

[Lord Young of Norwood Green (Lab)]

I hesitate to enter the debate because I do not want to prolong it. My understanding of the current generation of smart meters is that that is their problem: you cannot simply switch to any other provider because they do not yet have the technology to enable you to do that. The next generation will. That is my information and I have not yet heard anything to refute that. I have been talking to energy companies and to people who are heavily involved who say, “I am not signing up to this generation of smart meters”, because they cannot switch you to the complete range of suppliers. They do not yet have that flexibility.

[Lord Henley]

The noble Lord is absolutely right about the SMETS 2 meters. I will write to him about SMETS 1 meters and it might be that he is correct about that. I was only mentioning that as an advantage that will be available in the future to customers.

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[Baroness Featherstone]

I have no legal training—which may be painfully obvious to the Committee—nor much experience of the consumer world, but I have listened to the arguments, which have been well made. There is not a point left in my speech that would not be repetitious. I am intrigued to understand what on earth the Minister is going to say in reply. In my view, these arguments are unarguable.

[Lord Young of Norwood Green]

My Lords, there is no danger of my repeating what I said at Second Reading because unfortunately I missed the cut and was too late to make a contribution. I do not want to repeat what has been said by the noble and learned Lords. I am trying to think of the collective noun for a group of such distinguished legal experts. I am not sure “a clutch” does them justice—if your Lordships will pardon the pun.

[Lord Carlile of Berriew]

Would the noble Lord accept “a brief”? But that depends on him paying the fees.

[Lord Young of Norwood Green]

That is a given! I will not go through the arguments again. I concur with them. The case has been made and I hope the Minister is listening. I, too, look forward to his alternative response—or perhaps there has been an epiphany and he will accept the validity of the arguments that have been so ably put.

I want to make a few points that have not been made. It is important to understand the context within which price caps are going to be set. A number of times in the debate reference has been made to the introduction of smart meters. That is not going to happen by chance, it is going to happen because the major suppliers have been told that they have to be introduced. The cost is not insignificant: 50 million smart meters will need to be installed at a cost of something like £7 billion. There is a long way to go: only about 12% of the smart meter installation has been completed.

An independent analysis by an energy sector expert points out:

“An energy price cap that pushes the industry as a whole to break-even or losses has significant implications on the smart meter roll-out programme”,


and that it is,

“absolutely essential to secure the cost-effective deployment of electric vehicles in addition to enabling the reduction of switching times to 24 hours”.

That will be one of the benefits of the smart meter rollout. If we want to encourage electric vehicles—which we do, as we know—smart meters need to be a key part of that.

I was also interested to see that the report talked about the incentives to switch. It said:

“The cap is intended to be set at a level that provides customers incentives to switch. When the CMA surveyed customers to understand the level of savings from switching that would encourage them to switch, it found that the median amount of savings”,


for customers was £120. It went on:

“At savings of £50, only 7% of customers were interested in switching … The survey did not find any meaningful variation in the level of savings required by different demographic groups”.


That is a really interesting bit of analysis, ironically by the Competition and Markets Authority.

I will go on to what we expect from our major energy suppliers, which are vital to the UK economy and the day-to-day lives of British citizens. They account for something like 2.3% of gross domestic product and £100 billion of investment has been earmarked to 2020-21 to ensure that the lights stay on and customers have reliable, affordable and low-carbon energy. There are 600,000 people employed in the sector—even more, if you include indirect jobs—and it is at the forefront of essential new technology, as I have said, such as the smart meter rollout. That will facilitate the rollout of electric vehicles, which will be a £200 billion global market in 2019.

Energy companies are at the forefront of training apprentices. For example, Centrica has six training academies, employs 27,000 people in the UK and has trained 1,000 apprentices a year in recent years, including 2,500 smart apprentices. These are no mean considerations and they do not just happen. I hope there is recognition of this. Energy companies supply households with their gas and electricity, and the market is more open and competitive than it has ever been. Some of this statistical evidence is interesting. We have had an argument about suppliers but the fact is that there are more suppliers than before. I do not disagree with my noble friend about concentration but there has been significant switching. Nearly 400,000 customers switched during January 2018, a 14% increase on the same period last year, while 5.5 million customers—one in six—switched supplier in 2017. Awareness of the ability to switch is high; I have already given the Committee that information. It is interesting that in the BEIS tracker polling, public concern about energy bills does not rank higher than it does about other household bills.

I want to make my position clear. I am not in hock to the energy companies—I will finish in a minute—and I am in favour of a price cap, but it has to be administered in a way that takes cognisance of the role that energy companies play. It also has to be done in an appropriate way. Unfortunately, my quote from the Green Paper was anticipated by the noble Lord, Lord Hunt, so I will not go through that again but I believe that the evidence to support this amendment is overwhelming and, on those grounds, I support him.

[Lord Henley]

My Lords, the noble Lord, Lord Carlile, spoke of his trepidation in following my noble and learned friend Lord Mackay of Clashfern. That is as nothing compared to the trepidation that I feel in following my noble and learned friend, the noble and learned Lord, Lord Brown of Eaton-under-Haywood, with all his expertise in judicial review, my noble friend Lord Hunt of Wirral, at whose feet I sat many years ago at the Department for Employment, with his great legal knowledge, the noble Lord, Lord Carlile, himself and all the others who have spoken.

I am also grateful to my noble and learned friend Lord Mackay for mentioning that my right honourable friend Claire Perry had written to him at some length on this matter to set out the details. I will probably have to set out similar arguments, which I hope he will listen to. However, having listened carefully to the debate and to the concerns raised by all, I think we may have to have further discussions on this in due course.

Just before I come to the substance of the matter, I ought to make a brief point to my noble and learned friend. I believe that his amendment does not quite work. I advise that we would probably need to import all the CMA appeal provisions if we took up his amendments from the gas and electricity Acts and adjusted them so that they applied to Ofgem’s decisions under the Bill. It could add something of the order of 12 new clauses and a schedule to the Bill. Any amendment could also place a new duty on the CMA; I think the noble Lord’s amendment would also require the CMA to consider conducting a review under a compressed timetable. In the light of that, I would certainly want to seek the CMA’s view on those points; obviously, we will let your Lordships know the outcome of that.

I will come to the amendment because it is important that we deal with the arguments, as my right honourable friend did in her letter to my noble and learned friend. This amendment gives us an opportunity to consider the idea a little further than we did at Second Reading. As I mentioned—I will mention it again during the course of the Committee—the Bill is a temporary and targeted measure to protect consumers from excessive energy prices until the conditions for effective competition are in place. It is important not to lose sight of this fact, nor of the 1.4 billion consumer detriment figure that was established by the CMA in its 2016 investigation into the energy market when considering the route of challenge for suppliers.

For temporary and targeted interventions such as this price cap, the CMA, as an appellate body, is not a “well-established right”, as has been suggested by some stakeholders. In fact, CMA appeals usually exist only for permanent, if periodically updated, price control regimes. The Bill does not replicate an existing price control regime, setting allowed revenues for entire businesses. It is, as I said, a targeted and temporary intervention to deal with a specific problem in part of the market. In fact, we are unaware of any temporary price-related interventions that have included the right to appeal to the CMA. There are also other examples of price interventions by regulators that do not include a CMA appeal right, such as the payday loan interest rate cap introduced by the Financial Conduct Authority in 2015.

Some stakeholders have sought to emphasise the differences between the FCA’s measure and the one we are considering here today. I suggest that these measures are not so different at all. Both measures are direct, targeted interventions operating in the retail end of their respective sectors; both originate from the sovereign will of Parliament via primary legislation; and both have the same express intent to protect consumers from exploitation. Like Ofgem, the FCA also has discretion in the setting of the cap and, as Ofgem has started to do, it carried out its own consultation weighing a list of concerns it should have regard to in a similar vein to the conditions set out in Clause 1(6).

Obviously, decisions relating to the prepayment meter cap are subject to challenge by way of judicial review. Therefore, there is precedent for a direct, price-related measure stemming from the will of Parliament to protect consumers that does not have a CMA appeal right. What is wrong, dare I ask, with judicial review? It provides a sufficient means of challenge to ensure the provision of a fair and public hearing within a reasonable time by an independent and impartial body established by law.

Again, the noble and learned Lord, Lord Brown, and others have made the point that judicial review is focused on process. A judicial review will consider the lawfulness of a decision, but there is also scope for the court to consider issues around the proportionality of any decision. They rule on many highly complex cases each year, so I am afraid I do not agree with the argument that in this area alone the issues are so complex that the courts simply would not be able to cope. The price cap is for Ofgem to determine in accordance with its duties and the court would not need any particular expertise to review that. As was made clear by my right honourable friend in her letter, if it did need particular expertise, which would be rare, it could still sit with assessors.

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I think that it will be for the noble Lord, Lord Stevenson, to withdraw his amendment, and then it will be for my noble and learned friend Lord Mackay to deal with his. While I am more than happy to have further discussions, I have set out the Government’s position just as my right honourable friend set it out in her letter.

[Lord Young of Norwood Green]

The Minister said that the route of an appeal to the CMA could be abused by the major suppliers. What would prevent them seeking a judicial review at that point? What is the difference?

[Lord Henley]

My Lords, as I made clear, they would be using the CMA to delay this process, and we do not think that that would be right. I do not think that that would be the case with judicial review, but, as I said, I am more than happy to discuss these matters later. We have set out our position here and in the letter that my right honourable friend sent to my noble and learned friend.

Shale Gas

Lord Young of Norwood Green Excerpts

Tuesday 7th March 2017 Lords Chamber

[Lord Young of Norwood Green (Lab)]

My Lords, I think that I would have congratulated my noble friend Lord Truscott on introducing this debate if I had not had to listen to the way he introduced it, which was another example of all the scare stories that we have heard about fracking in the past. I am disappointed to hear them reiterated, because they have all been roundly disproved. The earthquake stories have been recycled again, but even if there was a slight worry about earthquakes, if monitoring of fracking in this country should show anything like 0.5 on the Richter scale I do not think that the earth would be moving, even for my noble friend. We have the toughest fracking safety regulations anywhere in the world.

I do not understand the idea that, apparently, anybody else can do fracking—it does not matter where else it is done—but it cannot be done here. We do not care if it is done in Qatar, or what the conditions are. We do not care about the fact that if it is liquefied and then de-liquefied that in itself causes emissions. Apparently that is okay with my noble friend.

The plain fact of the matter is that gas will continue to be used in this country, for 20, 30 and even more years. It is the largest source of electricity, accounting for around 45% of electricity generation, which has allowed the share of coal-fired generation to fall to record lows. Gas-fired power stations can run continuously or as flexible back-up for intermittent wind and solar energy.

I shall partly repeat what the noble Lord, Lord MacGregor, said, because it was nice to hear a voice telling us about the real benefits that we can expect from fracking, assuming that we actually get round to doing it. At the moment we are significantly dependent on imports, not only of liquid natural gas but also of pipe gas. Whether or not we worry about energy security, surely we should be worried about price volatility, because we do not control the import prices. That exposes the UK to international currency fluctuations, with imported LNG, for example, priced in dollars.

This also harms the UK’s balance of trade, which apparently does not really matter to my noble friend. In 2015 the UK spent over £14 billion on net primary fuel and energy imports—crude oil, oil products, natural gas, coal and electricity. It is estimated that by 2030 imports of gas alone could cost the UK economy £10 billion a year. We could be producing that ourselves.

Among the benefits would be energy security and employment. What do we know about shale gas? We know that potentially there are billions if not trillions of cubic feet of gas here. We do not know for sure, but even taking the most conservative estimates—taking only 10%, say—that would give years and years of gas supplies. Employment does not seem to matter any longer either, but there are potential skilled jobs there. We have set up training colleges to train people, but apparently that does not matter either.

I listened carefully to my noble friend’s arguments, but I direct him to the report by the American Environmental Protection Agency, which looked at 38,000 wells. I did not notice it issuing an instruction that fracking had to stop immediately. If it were such a serious environmental danger, listening to my noble friend one would think that the whole of the US water supply was poisoned. That is just not the case.

The UK has the industry experience to make a success of shale gas production. More than 2,000 wells have been drilled onshore, with around 200 having been hydraulically fractured at lower volumes to enhance recovery. The Wytch Farm oilfield is located in an area of outstanding natural beauty on a world heritage coastline whose property prices are among the highest in the country and it produced 100,000 barrels of oil a day at peak production, yet I never noticed the whole of Dorset being contaminated as a result. Today the industry has 230 operating oil and gas wells onshore on 120 sites, producing about 8 million barrels of oil equivalent per year.

We have very large potential shale gas resources and what we are doing about them beggars belief—including, unfortunately, the decision taken by my own party to endorse a ban on fracking—when we could be using them to reduce the cost of fuel. If we cared about fuel poverty, I would have thought that that would be uppermost in our minds.

Unfortunately, in the green movement there are many scare stories. My noble friend talked about leaving it to local people to decide. I would be happy if it really were local people who decided, but we know that, as soon as there is any local activity in relation to fracking, the usual opponents flood the area, spreading scare stories about earthquakes and poisonous substances. The fact that 99.5% of the substances consists of sand and water did not stop Friends of the Earth claiming that the silicon used caused cancer. On that basis, I presume that none of our children will be playing on beaches any longer, because to my knowledge—although I do not claim to be an expert chemist—that is what sand consists of. These are irresponsible scare stories. Why people persist in spreading them is beyond me.

I do not want to exaggerate the impact of shale gas but, according to the British Geological Survey, in the Bowland shale there are something like 1,300 trillion cubic feet of shale gas. If only 10% of that could be extracted, it would be equivalent to 40 to 50 years of UK gas consumption. Surely that is worth doing. I cannot understand the opposition. If we were in the situation where there were not sufficient safety regulations, I would be the first to endorse the concern, but that is not the case. This Government have ensured the tightest set of safety regulations. My view is that there are real economic and energy security benefits, as well as employment benefits, to this country if only we could get on with the production of shale gas.

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[Baroness Featherstone]

As my noble friend Lord Stoneham reminds me, their environmental standards are somewhat lower than ours. I am not saying that everywhere in America is unpopulated, but it is a very different territory from most of the United Kingdom.

There will be people—such as people in Ryedale, for example—who object strongly to what is projected for their local environment. They will use the planning process to object in the way that they are entitled to do. Promises were made that national areas of exceptional beauty would be protected and that local people would hold sway, but that has gone and the promises have been broken.

Putting all that to one side, the most damaging effect of developing the shale industry is one that to an extent was referred to by the noble Lord, Lord Smith. It will set back our ability to reach our legally binding targets by 40 years and undermine the development to scale of renewable heat technology. Renewable heat is vital. Industry will develop the technologies we need for renewable heat if we have the right policy framework and incentives. There would have to be incentives that carry a cast-iron guarantee from the Government that they will not be taken away in a precipitate manner, as happened with the Government undermining investor confidence by the precipitate removal of agreed subsidies on wind and solar. The noble Lord, Lord Smith, raised the breaking of the manifesto pledge on carbon capture and storage.

The Government’s reputation will no longer be adequate to reassure investors; they will need an agreement that is literally written in blood. Additionally, as several noble Lords have said, all we have in the UK so far is licences for exploratory drilling. We are years if not decades away from producing shale gas at any scale, if it happens at all. The Environmental Audit Committee concluded that shale will not contribute to replacing coal because, by the time it comes on stream, coal will no longer be used. I do not believe that fracking is the answer. I do not put my trust in this Government. Everything we have seen since the end of the coalition—when the Liberal Democrats held sway in the Department of Energy and Climate Change, which is also no longer—is pretty indicative of the importance that the Conservative Government attach to climate change. Everything indicates that this Government do not favour a green approach, green understanding or the imperative, for both the planet and the economy, of taking our future energy supply seriously and not introducing something that is a stop-gap and not sustainable. If we had a Government who encouraged cutting-edge technology—renewables, energy efficiency, home energy improvements—

[Lord Young of Norwood Green]

I hesitate to interrupt the noble Baroness, but twice she has referred to fracking being not sustainable. Can she therefore explain why she is in favour of gas being imported for at least the next 30, 40 or 50 years? That is the bit in her argument that I do not understand. I could dispute many things that she says on the environmental impact, for which she has produced no evidence whatever to back it up, but why is she in favour of us importing gas for the next 30 or 40 years rather than using our natural resources?

[Baroness Featherstone]

Other resources are coming on stream, such as green gas, hydrogen and so on. I object to creating a whole new industry, which will be a stop-gap, rather than encouraging our homegrown industries to develop the new technologies that we need to produce renewable heat. I do not see developing the shale industry as the answer to our question. I am not that keen on importing gas, but for the time being, that would be my preference rather than starting a whole new industry with the destruction it brings in its wake.

There is a list of what the Government should be doing in terms of regulation, intervention, sequestration and demand reduction—and then we would actually get somewhere. There seems to be a general prayer that somehow shale will save us. My faith in that not happening is based on the fact that the companies that are taking up the exploratory drilling licences are not huge companies but middle-sized companies, and because of the difference in geology and geography, they will find that it is not profitable. That is the main reason why I am hoping that shale will go away with its drills between its legs.