Energy Bill

Lord Dixon-Smith Excerpts

Thursday 18th July 2013 Grand Committee

[Lord O'Neill of Clackmannan]

I follow on from my noble friend’s remark and say that Amendment 51N is pretty vacuous. It is giving us the excuse to have a debate, but it will not come to anything. It is certainly the case that the Government have been reasonably successful in demand reduction because of their economic incompetence over the past three years. We have been in recession, we have seen emissions fall and we have seen the demand for electricity change. That is the first point which has to be made.

Sooner or later, we will come out of this recession—and when we do, we are going to need far more than Amendment 51N would do regarding capacity changes. We are, I hope, going to have an economy growing in a manner which, in its early stages, will probably not be the most attractive for energy efficiency. In some respects, we want to get out of the recession as quickly as possible. Having to chase around for the most energy-efficient way of doing that when we are trying to find economic prosperity for our people would be questionable in the eyes of the public and their sense of priorities. Frankly, the quicker we move on from this amendment the better, because it is a waste of time, although the other amendment has a degree of merit. I am also always dubious about split infinitives in law at the best of times.

[Lord Dixon-Smith]

My Lords, I do not know whether my noble friend Lord Deben is getting up to speak or walking out. I did not realise that the noble Lord who just spoke would have such a potent effect that he would drive my noble friend nearly out of the Room.

I am bound to say that it is very dangerous to blame the state of the economy in the past three years for what has gone wrong. That is a bit like trying to compare last week’s weather with the global climate. When you look at matters affecting the global climate or, indeed, the national economy in the wider scale, the blame lies rather more out of the three years that we are completing. It has a great deal to do with what went on before, but that is not what I really rose to speak about.

I should perhaps explain that there was a time, quite a number of years ago, when I had the ultimate responsibility for the complete built estate owned by Essex County Council, which is a major operation. Among the things that we had to do, there was the little matter of energy efficiency. There was also the question of the quality of buildings, because there were some truly appalling buildings around in those days. It was a constant balancing act as to what we did. Two factors were vital. In those days interest rates, which fortunately we do not have to consider today, went up and down rather like a yo-yo so that schemes went into and out of our plans depending on those rates. The other factor was of course the price of energy itself. If your Lordships want people to take an interest in economising on energy, the quickest way to do it is to put the price up. That is a brutal reality and we should not forget it. Price will always be an important factor.

When we get into the question of demand management, I have my own view on smart meters. First, they are not very good at demand management; what they do is to move the demand around so that you can reduce the peaks and troughs on the supply side, to a certain degree. However, they do not actually reduce demand in total. We may as well bear that factor in mind. Secondly, we have to bear in mind that the idea that we might somehow reduce demand for electricity is unreal in the present context. We are looking at a period when we have to decarbonise the whole economy, in effect. That means that everything has to go down to zero emissions at the end of this period. In order to do that, we will be obliged to have an electricity generating market which is probably twice as big as it is today, if not even bigger. The idea that we are going to reduce demand for electricity, bearing in mind this evolution, is completely unreal.

My last point is that the same person has to pay, whether it is for energy or for the economy measures. There is only one customer. We do not want to fool ourselves that the Government have a fund of money to do this with. The Government have our money, and one way or another the customer is going to pay. It is a question of balance. I am all for getting all the efficiency that we can into the generating system and into the demand system. However, we should not fool ourselves—whichever way the equation goes, it is still the case that one person is paying. I am slightly pleased about the initial criticism of these amendments, because introducing a phrase such as “where economically possible” into the equation puts a bit of sense into it. If it were not there, you could start taking some very rash decisions which in fact were not economically sensible.