Energy Costs

Lord Lilley Excerpts

Thursday 6th January 2022 Lords Chamber

[Lord Lilley (Con)]

My Lords, I congratulate my noble friend on securing this timely and important debate. I will make four simple points.

First, higher energy costs hit the cold, the old and the poor hardest. The further north you go, the colder it gets and the bigger your heating bills. The lower your income, the higher the proportion of it that goes on your energy bills. The older you are, the more warmth you need, so the bigger your heating bills. So higher energy bills do not just target the cold, the old and the poor but are directed straight at the Government’s new supporters in the working class and the north as well as their long-standing supporters among the elderly.

Secondly, wherever net-zero policies which increase energy costs have become a political issue, they have been electorally disastrous. In France, they provoked an uprising of the gilets jaunes, forcing President Macron to rescind his diesel tax increase. In Australia, a Conservative Government looked doomed to defeat by a Labor Party waving the green flag, but when the Conservatives opposed the carbon tax they snatched victory from the jaws of defeat. In the Netherlands, when the government coalition proposed green taxes, an entirely new party formed to oppose this became the biggest single party in the municipal elections. In Canada it was a similar story for the provincial elections, and yesterday an uprising in Kazakhstan was triggered by an increase in LPG prices.

Thirdly, we will need gas for many years to come. At this very moment—or 10 minutes ago—40% of our electricity is being generated by gas power stations. Only 37% comes from renewables. Even if we install more windmills, we will need gas back-up because the wind often does not blow and the sun never shines at night. We will need gas for electricity generation for ages. There is no economic alternative. Moreover, we will need gas for home heating for years to come. Even if we go ahead and ban new gas boilers in 2030, millions of homes will continue to rely on gas for their existing home boilers to heat their homes for decades thereafter.

We have a huge gas potential in the North Sea and the Bowland shale in Lancashire. Eco-fanatics opposed using this, even though domestic gas would reduce emissions compared to importing LNG from Oman or the US. They oppose it because their priorities are deindustrialisation and virtue signalling; reducing carbon emissions is not really their top priority. We should stop caving in to them and give permission for development of new fields in the North Sea and drilling for shale gas in Lancashire and elsewhere.

Fourthly, this is not just a temporary problem. There is an acute short-term problem, which the Government should alleviate by reducing VAT on fuel to zero—as we can now do since we are outside the EU—and suspending green levies, which add 23% to electricity bills. Even after the present world shortage subsides, households will continue to face long-term rises in energy costs as long as we pursue a policy of net-zero carbon emissions without any reference to cost-effectiveness. Indeed, the cost of installing heat pumps and the necessary insulation will have a far greater impact on the households affected than has been the case with the present energy crisis. The reaction of those households will probably be enough to bring down a Government—we ain’t seen nothing yet.

I hope we will think again and take the impact on households into account.