Cost of Living

David T C Davies Excerpts

Tuesday 14th May 2013 Commons Chamber

[Mr Davey]

People who run food banks are doing an extremely good job and deserve credit for their work. However, it is completely wrong to suggest that there is a statistical link between the Government’s benefit reforms and the provision of food banks. It is good that people are helping others. I hope the hon. Gentleman supports that.

I wish to make progress and to talk about energy and climate change policy. My Department has three major objectives. The Department wants to ensure that energy is as affordable as possible for consumers and business; that we keep the lights on with energy security; and that we decarbonise the power sector. With the Energy Bill, the green deal and many other policies, we have the most coherent energy and climate change policy of any Government in Europe—and indeed of any Government in this country for many, many years. Our approach also tries to maximise the jobs and growth potential from our energy and climate change policies. We also try to ensure that the impact on the bills of consumers and businesses is as low as possible, and we have policies to try to meet the climate change challenge.

[David T. C. Davies (Monmouth) (Con)]

The total increase in average global temperatures since we started industrialising is approximately 0.7° Celsius. How much of that is due to carbon emissions and how much is due to the natural warming that was going to take place anyway as the earth came out of a cool period?

[Mr Davey]

I am disappointed that my hon. Friend seeks to deny the science of climate change. He may have heard Sir John Beddington, the Government’s recently retired chief scientist and a very distinguished scientist, say that the science showing climate change was human-made was “unequivocal”. When it comes to science, I like to listen to the experts.

It is important that we gain jobs, especially green jobs, through our investment in low carbon. We also need to ensure that these are profitable enterprises in which people can invest. We need £110 billion of investment in our energy infrastructure over the rest of this decade. That will be in low carbon, in gas and in other energy security measures.

On prices, we have to drive a wedge between the rising global prices and the bills that people have to pay. We also have to rise to the climate change challenge. We need to recognise that the challenge is serious and that—contrary to what my hon. Friend suggests—the science tells us that we have to act.

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[Jim Dowd]

I see quite easily how a logical person could reach that conclusion.

I myself am in favour of a referendum on the question of Britain’s continuing relationship with the European Union, but I believe that it is a matter for the next Parliament. I hope that we can prevail on the Opposition Front Bench to include a manifesto commitment, but of course the manifesto for the next election is still two years away.

[David T. C. Davies]

Am I to understand that the hon. Gentleman is perfectly happy to support a referendum in the next Parliament, but believes that anyone who wants to give the people a chance to have a say in their future in Europe in this Parliament is a fruitcake?

[Mr Speaker]

Order. We must not pursue this exchange, whether in relation to fruitcakes or in relation to a prospective amendment which has not been selected. The hon. Member for Monmouth (David T. C. Davies) should not seek to divert the hon. Member for Lewisham West and Penge (Jim Dowd) from the path of virtue to which I think he had just about returned.

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[Clive Efford]

I think the IFS puts the increase at 1 million children, but I take the hon. Gentleman’s point.

There are no proposals in the Queen’s Speech to stimulate the construction industry and build social housing. It is worth remembering that the Government inherited the biggest council house building programme for more than two decades, and then scrapped it as part of their austerity measures. In London, there were 11,328 social rented housing starts in 2010-11. That figure plummeted to 1,672 in 2012-13. That is a time bomb hitting young people in London, and the problem goes right up the social scale. It does not just affect people on low incomes who are in desperate housing need. People on above-average incomes who have children cannot afford to rent or buy in the private sector in London. That time bomb will not go away, and the Queen’s Speech does nothing to address it.

[David T. C. Davies]

I cannot comment on the London statistics, but I know that social house building has fallen off a cliff over the past two years in Wales, an area that is run by a devolved Labour Government. What does the hon. Gentleman say to that?

[Clive Efford]

I say that we need to build more houses. I said that when we were in government, I am saying it now and I will continue to say it consistently.

There is nothing in the Queen’s Speech on sport. We have just had the greatest year for sport that this country has ever known, but the Government have not come up with a coherent strategy across the whole of Government that will deliver sport in our communities and use the armies of volunteers up and down the country who are working hard in sport. We need a coherent strategy that will allow them to plan ahead for the long term and deliver the elusive sporting legacy, but there was nothing of that in the Queen’s Speech.

All that we have had is the Government parties falling into warring factions over different parts of their own Queen’s Speech. It started with the Deputy Prime Minister saying within 24 hours of the Queen’s Speech that he was not happy about the changes to child care ratios in nurseries. We have heard from several people who have been advising the Government on the matter, such as Professor Cathy Nutbrown, whom they commissioned to conduct an independent review of child care qualifications, and Dr Eva Lloyd and Professor Helen Penn, two more experts whom they commissioned. Professor Cathy Nutbrown said:

“Watering down ratios will threaten quality. Childcare may be cheaper, but children will be footing the bill.”,

and Dr Eva Lloyd and Professor Helen Penn said:

“Deregulation in the UK would lead to a reduction in quality.”

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[David T. C. Davies (Monmouth) (Con)]

May I turn to the comments made earlier about our energy policy by the Secretary of State for Energy and Climate Change, the right hon. Member for Kingston and Surbiton (Mr Davey)? That policy will have an impact on the cost of living for all householders and anyone who buys manufactured goods. I do not accept his premise that the science on climate change, on which our energy policies are based, is settled.

The theory is pretty simple: ever since we started industrialising at the end of the 1700s, we started pouring CO₂ into the atmosphere. As a result, the temperature across the world has warmed up and we must do something about it—that is the basic theory our energy policy follows. There are various flaws in that argument. The earth has always gone through cycles of warming and cooling. Coincidentally, at a time when we started to industrialise, we were coming out of a very cool period—a time referred to as a little ice age—when even the Thames used to freeze over. What is the total increase in temperature on which we are basing our policies and fears about climate change? According to all the statistics, it is just 0.7° C, yet some of that is clearly due to the fact that the earth was coming out of that cool period. Nobody can answer this simple question: how much of that 0.7° C is not down to CO₂, but down to the natural warming that would have taken place anyway?

Then there is a problem with correlating CO₂ levels with temperature increases in the past 300 years or so, because there is no straight line between the amount of CO₂ in the atmosphere and temperatures going up. Between 1940 and 1970, temperatures were going down, and that was at a time when we were putting enormous amounts of CO₂ into the atmosphere. Nobody can explain why that is. Since 1998, there has been no increase in average global temperatures—it has completely tailed off. Again, nobody can come up with a convincing explanation for that. Yet despite all that, and many other queries too, we are embarking on policies that will put up costs for householders, through the use of subsidies for solar and wind-powered energy, and put up costs for manufacturers, through the various taxes on carbon that we are levying.

The most serious point is that we are doing so unilaterally: Britain is taking steps that nobody else in the world is taking. Our carbon emissions are actually not that great compared with the rest of the world, yet we are unilaterally punishing manufacturers, forcing them to take their factories elsewhere, where they will continue to emit exactly the same amount of CO₂, taking their jobs and forcing us into foreign exchange deficits as we buy goods that were originally made here.

[Alec Shelbrooke]

My hon. Friend is eloquently putting the case for those who doubt that global warming is down to climate change, and I am sure that many support his views, but does he agree that moving to a more renewable energy environment is important for energy security as much as anything else?

[David T. C. Davies]

My hon. Friend makes a good point, because there is a lot that we can do to generate electricity without CO₂ and one would think that the Greens would be the first to support it. We had a proposal recently for a Severn barrage that could generate 20% of Britain’s electricity. It was an interesting proposal and one for which I would want to see more costings, but it was totally opposed by the environmentalists. We know that we can generate large amounts of electricity on demand and relatively cheaply from nuclear power without emitting CO₂, but where do the environmentalists stand on it? They are totally against it.

In the United States of America, by exploiting shale gas, I understand that they have halved electricity prices and created a wonderful environment for manufacturers—so much so that they are returning to the States. More importantly for the environmentalists, however, that has also reduced American CO₂ emissions. One would think that the Greens would be jumping for joy, but instead they are doing everything they can to prevent the Government from encouraging those companies to get in there, drill and exploit the cheap shale gas that we know we have and which could do so much. I question what their beliefs really are.

I hear the environmentalists saying to me, “The most important thing to do is reduce our CO₂ emissions”, but whenever anyone puts solutions in front of them that would reduce CO₂ emissions and deliver the cheap electricity that we all need, they do not want to know. They are the same people who march against globalisation and capitalism, who totally opposed any form of nuclear deterrent in the 1980s and who a few hundred years ago would have been the Luddites smashing up the spinning wheels. These people live in a fantasy world, believing that if we could just get rid of technology, we could go back to living in wonderful grass huts and things in some Tolkienesque world, like the hobbits before the evil one started attacking them. They are totally opposed to the high standards of living that globalisation and capitalism have delivered in the west and are delivering across the whole world.

It is high time that the Government realised that these people will never support anyone in government. Only recently, Friends of the Earth ran a big campaign against increased energy costs, but one reason energy costs have increased is that the Government have been trying to follow policies recommended by that same organisation—policies of supporting wind farms and solar panels that are bound to increase energy costs. It is ludicrous for the people who have been advocating policies that will increase energy costs to demand that we bring them down.

[Caroline Lucas]

I really did not want to intervene, because I did not want to encourage the hon. Gentleman and give him an extra minute in which to continue coming out with this rubbish. I thought that the discussion on Europe was where we found the fruitcakes, but I am finding them this afternoon as well. Is he really suggesting that it is not rising gas prices that are increasing people’s fuel bills right now? It is not renewable energy, but the gas imports that are the problem.

[David T. C. Davies]

It is not rising temperatures that the hon. Lady ought to be concerned about, but rising tempers among the vast majority of the public, who are fed up with paying higher fuel bills and bills for manufactured goods for a problem that simply does not seem to exist.

I say to the Government that we need a proper cost-benefit analysis of our climate change policies before we embark on measures that will drive manufacturing elsewhere in an effort to solve a problem that quite possibly does not exist, and I say to the hon. Member for Brighton, Pavilion (Caroline Lucas) and to the hon. Member for North Antrim (Ian Paisley), who is no longer in his place but who also referred to me as a fruitcake, that it was the fruitcakes who warned against the euro 10 years ago. We were accused of being fruitcakes then, but the fruitcakes were right. Fruitcake is a cheap and reliable source of energy. I am for the fruitcakes. I am proud to be a fruitcake. Long may fruitcakes continue.

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[Caroline Lucas (Brighton, Pavilion) (Green)]

I should like to concentrate on the final two words of the Gracious Speech, which, unfortunately, give the impression of having been tagged on the end, almost as an afterthought. Those words are “climate change”; I am sure that I will not disappoint the hon. Member for North East Somerset (Jacob Rees-Mogg) in what I am about to say.

The forthcoming legislative programme shows that the Government are failing in their first duty—to protect citizens—precisely by failing to address the causes of the worsening climate crisis. They are ignoring warnings, even from conservative bodies such as the World Bank, that without far more urgent and radical cuts in emissions, global temperatures will rise by an average 4° or more by the end of the century, with devastating impacts as a result.

If the throwaway line at the end of the Gracious Speech really does mean that progress on climate change will genuinely be part of the UK’s G8 presidency, then of course I welcome it, not least following reports that the Government have been blocking the attempts of the French and German Governments to give the issue a high priority.

However, for the Prime Minister to suggest that the Government are successfully taking sufficient action to deal with climate change is simply dishonest. I do not use that word lightly, but if we are to have a chance of avoiding the worst of climate change, politicians of all parties and countries will have to get a lot more honest—honest about the scale of the threat that we face and the scope of the changes that we need to make.

Just last week, for the first time in human history, the concentration of carbon dioxide in the atmosphere passed the milestone level of 400 parts per million. The last time so much greenhouse gas was in the air was several million years ago, when the Arctic was ice-free, savannahs spread across the Sahara desert and the sea level was up to 40 metres higher.

The difference between 399 and 400 parts per million may be small in its impact on the world’s living system, but it is overwhelming in its symbolism of our collective failure to put the future of the natural world and its people above immediate self-interest and to tell the truth and admit that reliance on fossil fuels is not compatible with the urgent action needed on climate change. Given the role that fossil fuel lobbyists play in influencing policy, including being seconded into Departments to draft it in the first place, I am also deeply disappointed that the Bill to introduce a register of lobbyists has been dropped from the Government’s plans.

If coalition Ministers are comfortable in their state of denial about the climate crisis and their cosy relationships with the fossil fuel industry, whose core business models are incompatible with keeping global warming below 2°, let it be on the record that young people in particular certainly are not. We can see that in the reaction to the Education Secretary’s attempts to remove climate change from the curriculum for the under-14s and we saw it last week when the fossil fuel divestment movement came in the shape of huge opposition to a new partnership between Oxford university and Shell—a partnership that would have been about getting yet more fossil fuels out of the ground. We see it, too, in the concern that I am sure is manifest in many hon. Members’ inboxes from people still lobbying for there to be a clear decarbonisation target in the Energy Bill, not just promises that that might be looked at in 2016.

If I am disappointed that we heard only one mention of climate change in the Gracious Speech, I am even more disappointed by the lack of meaningful action on fossil fuels. Ministers must be honest with themselves and the public and admit that, if we are serious about avoiding the worst impacts of climate change, the vast majority of fossil fuel reserves must be left in the ground.

[David T. C. Davies]

Is the hon. Lady going to address the issue of why environmental groups will not support methods of generating electricity that do not produce carbon dioxide emissions, such as nuclear power?

[Caroline Lucas]

If the options were either nuclear or more and more fossil fuels, obviously nuclear would be the least worst option. But that is a false choice that we are not facing. There are plenty of technologies out there that need further support—solar, wind, geothermal and many others that are now coming to be equal in terms of price parity. We do not need to go down the nuclear route, which is hugely expensive as well as dangerous. We do not need to go there, so why would we? Why not use the technologies that we know will get our emissions down and keep the lights on much more cheaply, effectively and safely?

I turn to a report published last month by Carbon Tracker. It makes the point that we cannot go on using more and more fossil fuels. As Lord Stern explains in the foreword,

“most fossil fuel reserves are essentially unburnable because of the need to reduce emissions in line with the global agreement”

to keep temperatures below 2° warming. That 2° warming is the first critical number in the Carbon Tracker report. Governments around the world have agreed that we should not exceed that level of warming. There is already an increase of 0.8° in the atmosphere, so we are getting close to 2°, and 0.6° is locked into the atmosphere. If we are not careful, we will get to 2° very fast, and many people believe that 0.5° would be a safer threshold.

The second number is the 2,795 gigatonnes of carbon dioxide that industry figures indicate are locked up in the known, proven coal, oil and gas reserves around the world. Finally, the figure of 565 gigatonnes is the amount of CO₂ that research by the Potsdam Institute for Climate Impact Research identifies as remaining in our carbon budget for the period 2011 to 2015. In other words, we can safely burn only one fifth of known fossil fuel reserves and still keep within the global carbon budget, as the International Energy Agency confirmed in its recent report.

Many people will suggest that carbon capture and storage is the way out of this problem. However, even if CCS were deployed in line with an idealised scenario by 2050, that would extend fossil fuel carbon budgets by only about 125 gigatonnes, which is equivalent to only 4% of the total global budget. CCS is not likely to come online in any serious way until at least 2030, by which point the carbon budget may well have been used up.

The implications of all this are clear. First, the decarbonisation target needs to be in place. We need to make sure that we do not have a second dash for gas. Most crucially, Ministers must require extractive companies to include the greenhouse gas emissions potential of fossil fuel reserves as part of an update on company reporting regulations. If they do not, there is a real risk that our financial markets will have a carbon bubble worth an estimated $16 trillion globally. Because we are so over-exposed in the UK given the global role played by London, our financial centre, in raising capital, there is great concern that companies are inflating their worth because of these reserves.

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[Geraint Davies]

Obviously, I disagree with that. I do not agree with a referendum, but if the overwhelming majority of people in Britain want one, I accept that we should have one. I am simply saying that the case for a referendum has been whipped up because of the Conservatives’ fear of UKIP. They have fed it red meat, and it is coming back for more.

It is the same with immigration. Everyone is going, “Oh no, there’s too much immigration. It’s terrible, isn’t it?” However, immigration was part of the reason for our economic growth. We prematurely let in some of the people from Poland who would have been able to come here anyway, and meanwhile Germany is saying that it needs more immigrants to pay for the generation that is growing old. We obviously need to manage immigration properly and carefully, but we should consider that 6% of immigrants are on benefits compared with 16% of indigenous people.

We are providing ammunition for people to blame immigrants, and what was in the Queen’s Speech? Private landlords and health providers will have to find out whether someone is an immigrant and whether they are legal. What will be the easiest test of that? “Are you white or are you black?” It is institutional racism. We are feeding the UKIP voters by saying, “The austerity problems aren’t Tory austerity problems, they’re because of all the immigrants.” Is that helping anyone and creating a united and strong Britain with a one nation future? No, it is creating a weak, divided nation of people who are being crushed by the Tories, and the poorest are blaming the immigrants. It stinks.

[David T. C. Davies]

rose—

[Richard Graham]

rose—

[Geraint Davies]

I had better give way to the hon. Member for Monmouth (David T. C. Davies), because he is likely to say something more ridiculous, as a fruitcake.

[David T. C. Davies]

I am grateful to the hon. Gentleman, not least because I am married to an immigrant and fully support the Government’s policies.

The hon. Gentleman mentioned a statistic, but 100% of indigenous people in Britain are entitled to receive benefits. What percentages of those who have emigrated here are entitled to receive them? I do not know, but it is much lower than 100%, so the statistic that he gave is inaccurate.

[Geraint Davies]

I certainly do not accept that. My basic point about the cost of living, which is what we are talking about, is that the bottom 10% of people in Britain spend 37% of their money on food, energy and housing costs, whereas for the top 10% it is less than half that proportion at 17%. As basic costs escalate, benefits are squeezed and the overall amount of money that people have is crushed, including their working tax credit and the like, and the people right at the bottom can barely survive while the people at the top are laughing. It is all very well saying that the rich are paying more, but the wages of the top 10% have gone up by 11% in the past two years.

I am not even talking about the 5% tax giveaway, but what a laugh that is, with the Government saying, “Oh, we’ll raise more from a 45p rate than a 50p rate.” People on the top incomes can move their income between tax years, so that is why there will be a lower take. There will be a behavioural change. If the 50p rate was ongoing, we would raise more. Indeed, some people already pay 50%, because those who pay 40% also pay 12% in national insurance, so their marginal rate is already 52%. The only difference is that they do not have accountants. It stinks. The reckless bankers, who were two-thirds responsible for the deficit in 2010, are being rewarded in their pay packets while the poorest are being squeezed and we are giving a bit to the squeezed middle.

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[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Last week’s Queen’s Speech was delivered at a time when most people’s wages are being frozen or cut and both measures of inflation—the consumer prices index and the retail prices index—are above the Bank of England’s target of 2%. The sad fact is that many people, in work as well as out of work, are struggling. We have heard examples from my colleagues, and I have regularly had people in my surgeries in tears at their plight. Last week, I had somebody who had just had a heart bypass operation and had been made homeless. She had been living on her in-laws’ couch for the past three months. Such is the plight of many people across the country.

With energy prices increasing by 20% since 2010, nearly 8,000 households in my constituency—nearly one in four—live in fuel poverty. Given that there was no change in economic and social policy in the Queen’s Speech, the situation is set to get worse. Nationally, it is estimated that by 2016, 9 million households will be living in fuel poverty. The knock-on effects will be felt particularly by our health service and social carers.

My local Oldham council is doing all that it can to address the problem, through the fair energy campaign. It is getting households to sign up to a collective energy deal, using people power to negotiate with energy companies for the cheapest energy tariff for consumers. That contrasts starkly with what the Government are doing. We know that the Warm Front initiative, which we introduced many years ago, closed in January, and the new scheme that the Government have introduced provides less than half the support that Labour provided. On top of that, the Government have cut the winter fuel payment for older people by £50 for the over-60s and £100 for the over-80s, in the full knowledge that every winter tens of thousands of older people become seriously ill or die as a result of the cold. In 2010-11, there were 25,000 excess winter deaths just as a result of cold, and there are fears that the number will be larger as energy prices rise.

The warm home discount scheme, which is meant to help households at risk of fuel poverty, has been shown to help only a fraction of those intended—25,000 families, instead of the 800,000 it was supposed to help. As some of my constituents have already discovered, the Government’s green deal is another white elephant because the interest payments alone are set to exceed the cost of the energy efficiency measures they are meant to support.

I wish to raise a couple of other points in the few minutes remaining, the first of which is food banks. A number of colleagues have already mentioned increased demand for food banks, and the Trussell Trust recently reported that demand has exceeded its estimations by 170% since last year. My constituency of Oldham has had a food bank for the first time in its history. In the past three months, demand exceeded that of all the previous year, and it is set to get worse. Figures I have just received indicate that the number of people accessing food banks has increased by nearly 100 times in the past two years. When I visited my food bank recently, I was told that it is desperately in need of people to contribute, and that is the sort of thing we have to contend with in different ways.

[David T. C. Davies]

Will the hon. Lady give way?