Middle East: Economic Update

Baroness O'Grady of Upper Holloway Excerpts

Tuesday 28th April 2026 Lords Chamber

[Lord Livermore (Lab)]

The noble Lord is absolutely correct to say how important it is to do that. That is why we have taken further action to weaken the link. Last week, the Chancellor announced plans to weaken the link between high gas and electricity prices and to prevent spikes in energy prices from driving up inflation and costs for households. That is why the delinking steps that we have taken are so important.

The Chancellor also announced the extension of the British industrial competitiveness scheme, which was a commitment in the industrial strategy. That will reduce electricity costs from April 2027 by around 25% for electricity-intensive manufacturing frontier sectors in the industrial strategy and foundational sectors in their supply chains. Last week, the Chancellor announced that over 10,000 businesses are now expected to benefit from the scheme, rather than 7,000 as previously planned. Eligible businesses will also benefit from a one-off backdated payment in 2027, covering the support firms would have received if the scheme had been in place from April 2026. The consultation on scheme design and eligibility was published last week.

[Baroness O’Grady of Upper Holloway (Lab)]

My Lords, does my noble friend the Minister agree that conflict in the Middle East underlines the case for ever-stronger relationships with the EU, including on trade? Secondly, does he agree that on industrial strategy, the priority must be protecting plants and jobs? To what extent can we use our considerable procurement power to ensure that we protect the jobs and skills in this country?

[Lord Livermore (Lab)]

I do agree with what my noble friend said. Already, even before this crisis, the damage that Brexit was doing to our economy was apparent. As I say, at the time of Brexit it was estimated it would cost about 4 percentage points of GDP. That has now risen to between 6 and 8 percentage points of GDP. Obviously, cutting ourselves off from our closest trading partner was never going to be good for the economy, and that has been seen absolutely to be the case. It is why this Government have put in place the reset with our European friends, and we are deepening our trade relationships. The Chancellor set out her intention to deepen further our economic relationship with the European Union in her recent Mais Lecture, and I hope we will see more action on that in the near future.

In terms of the industrial strategy, I absolutely agree with my noble friend. That is why, for example, as I was just saying, the British industrial competitiveness scheme is so important in helping electricity-intensive manufacturing frontier sectors. That was a commitment given in the industrial strategy that has now been put in place. What my noble friend says about procurement is absolutely right. The noble Baroness, Lady Neville-Rolfe, will know how hard it is to change procurement rules in government, but I absolutely agree wholeheartedly with what my noble friend says.