Carbon Budget Order 2026

Lord Harlech Excerpts

Tuesday 23rd June 2026 Lords Chamber

[Lord Harlech (Con)]

My Lords, it is a pleasure to follow my noble friend. I declare my interest as the owner of a Welsh upland portfolio with agricultural tenancies, livestock, woodland and heritage assets serviced by renewables. I am therefore someone who lives with both the duty of stewardship and the economics of the transition we are debating. Let me say at the outset that I am not going to deny the science nor unpick the architecture of the Climate Change Act: climate change is a real and present threat to our food, our water, our coasts and our security, and the Conservative tradition of conservation demands that we take it seriously. My concern today is not with the direction of travel, it is with the means. The means before us are too reliant on central direction, too costly and too inattentive to the people and the industries asked to carry them.

Let us consider the foundation of this budget. The Climate Change Committee tells us that electrification must deliver around 60% of the savings through heat pumps in our homes and electric vehicles on our roads. Yet we ask families and businesses to electrify while our electricity remains among the most expensive in the developed world.

The ratio of electricity to gas prices in this country is roughly 4:1, against the European average of 3:1. If we want people to make the switch, the most effective step this Government could take is to make clean electricity cheaper, through levy reform, market reform and competitive auctions, rather than through state-led projects that risk crowding out private investment and adding further cost to the bill.

Let me give your Lordships an example. At the house in north Wales that I mentioned in my interests, the domestic hot water and heating is generated by two water-source heat pumps. However, electricity becoming so expensive has blown out of the water all the projections of cost saving and non-domestic RHI—they went completely out of the window. We have had to consider whether it would be more worthwhile to turn them off and go back to LPG. I am sure we are not alone in facing that cost crisis. Affordable power is not a threat to this budget: it is the condition for delivering it.

Then there is the land. The committee’s pathway implies halving the national flock and herd and reducing consumption of meat and dairy by a quarter. I know the people who farm that land. They are the ones who plant the trees, restore the peat and work to hold carbon in our soils, because good farmers have long been among our first conservationists. However, we do not decarbonise this country by reducing British livestock production and importing food from countries that farm to lower standards. That approach moves emissions abroad, rather than removing them. The better course is to reward farmers for the public goods they already provide and support domestic food production alongside the recovery of nature.

I put this question directly to the Minister: if the Government intend to press ahead with these reductions in livestock numbers, will they pay farmers full market value in compensation for the herds and flocks they are asked to give up, or is this simply another thinly veiled attack on farmers and the rural economy?

This brings me to the second order, and to the concern that my noble friend Lord Moynihan sets out in his regret amendment, which I support. A limit of zero on overseas credits, set against a carbon price among the highest of any market in the world, risks a self-defeating outcome. Energy-intensive industry may relocate abroad, taking its jobs, tax revenue and emissions with it, so that those emissions reappear on another country’s account while global emissions are no lower at all. Carbon leakage of that kind is not decarbonisation, and it weakens our industrial base in the process.

Let me conclude where I began. I support the framework and the goal. The United Kingdom should lead, but leadership means delivery that is affordable rather than not, that supports our farmers rather than reduces them and that keeps industry here rather than driving it overseas.