Queen's Speech

Lord Reay Excerpts

Wednesday 2nd June 2010 Lords Chamber

[Lord Reay]

My Lords, although they are not present, I pay tribute and express my thanks to the Ministers with whom I had to deal in the previous Government on energy, environmental and planning matters—the noble Lord, Lord Davies of Oldham, and, in particular, the noble Lord, Lord Hunt of Kings Heath. They were models of what Lords Ministers should be: immensely skilled in debate, extremely conscientious, and—possessing perfect manners—they ensured that the debates they led were always a pleasure for those who took part in them. I hope that we can produce Ministers worthy to tread in their footsteps; I am sure we will. Looking further ahead, I hope that we will never introduce a reform to this House that will make the achievement of their high parliamentary standards less likely.

I have no problem with being in a coalition. I once sat on the Liberal Benches. A coalition, of course, has differences of opinion within it. However, in one area, unanimity unfortunately reigns, with dangerous possible consequences. I refer to the policies on energy and climate change. Indeed, the coalition policies in that area differ little, if at all, from those of the previous Government. If anything, they aim to go further in the same direction. For example, the coalition’s programme promises support for an increase in the EU carbon emission reduction target from 20 per cent to 30 per cent over 1990 levels by 2020. Last week the European Commission pushed this proposal until, under pressure from France and Germany, it was forced to retreat, despite the support for the Commission from our own Secretary of State. The Commission was apparently attracted by the funds that it would be able to raise by selling additional carbon emission certificates. In other words, it was seen as a revenue-raising tax on industry. How can that possibly be sensible in the present circumstances?

The fact is that in our present economic predicament, the private sector, including our manufacturing industry, needs to be given every encouragement to restore growth to our economy. The whole point of being out of the eurozone is surely to be able to take advantage of our lower costs in world markets. No cost is more significant to industry in determining its international competitiveness than that of energy. How, then, can we afford an energy policy that promises extravagant additional costs for private customers and business alike, the effect of which can only be an increase in fuel poverty; the destruction or emigration of industry, with consequent further job losses; and the threat that the lights will go out as we persist in promoting inefficient means of producing electricity?

Governments are fond of claiming how many jobs they will create through their various schemes to promote green energy. They do not speak about the fear of the far greater number of jobs that will be lost in other sectors as a result of the increase in costs imposed on the rest of industry by the expense of the subsidies. Moreover, jobs in industrial sectors which depend for their very survival in all countries on government subsidies are exceedingly vulnerable, as we are beginning to see. Not surprisingly, across the developed world, those subsidies are now having to be reined in, with consequences that are entirely predictable. In this country, the Secretary of State says that there must be no subsidies for nuclear energy. Fair enough—that was also the policy of the previous Government. The eventual cost of decommissioning nuclear plants should be factored into the lifetime costs of power stations and paid for by energy companies. There should be a level playing field as far as possible, with industry choosing the most efficient technologies. However, in that case, why should wind power be subsidised? It has had plenty of time to reach maturity as a technology and prove that it can stand on its own feet, but it has failed to do so. The previous Government repeatedly had to raise the subsidies for offshore wind to have any hope of meeting their renewable energy targets, and did so again in April of this year. It is just the latest example of how Governments cannot resist picking not winners but losers.

The next example will very likely be solar power. Here we should be warned by what has happened in Germany. Germany, like this country, does not have a notably sunny climate. Nevertheless, thanks to feed-in tariffs, it has more solar power capacity than Spain. According to a study published last year by Ruhr University, which I have quoted before in this House, by the end of this year it is expected that more than €50 billion will have been spent on subsidising solar power in Germany, yet in 2008 solar power produced a paltry 0.6 per cent of Germany’s electricity. Sadly, however, we seem to be setting off down the same road. The coalition programme promises to introduce a full system of feed-in tariffs. However, the Prime Minister stunned everyone with the leadership he showed in establishing the coalition following the election result. In other respects also he has showed pragmatism and an ability to free himself from dogma. Let us hope that in the field of energy too he will eventually embrace reality and abandon childish dreams, and do so before disaster is brought down on this Government and this country.