Neighbourhood Planning Bill

Viscount Ridley Excerpts

2nd reading (Hansard): House of Lords
Tuesday 17th January 2017 Lords Chamber

[Viscount Ridley (Con)]

My Lords, I declare my interest as a landowner in Northumberland with experience of converting farm buildings into houses and offices, who has benefited from the development of land for housing. I probably benefit from the present system because it drives up development premiums, but I think that it needs further reform. The Bill, with its welcome emphasis on plans that come up from communities rather than down from bureaucrats, will not in itself solve our housing problem. However, we should see it alongside the forthcoming White Paper designed to speed up land-use planning decisions—it will be interesting to see what it says. We badly need to address the effective rationing of housing, which has hampered our economy, worsened inequality and benefited people like me. Notwithstanding some of the improvements in the planning system mentioned by my noble friend the Minister at the start of the debate, there is still quite a long way to go. I urge the Government to be as bold as possible in the White Paper and the amendments that they bring forward.

Land-use planning in Britain is not a joke; it is a disgrace, in many ways. The present system is biased, not so much in favour of opponents or proponents of development but in favour of delay and cost. Most of those involved actually benefit from the delay: the statutory consultees maximising their budgets, the councils pleading overwork, the archaeologists getting paid by the developer, the bat surveyors, the great-crested newt industry, the objectors with nothing better to do and, above all, the armies of consultants and lawyers working for both sides.

People think that the planning system is a system of environmental regulation. It is worth remembering that it is not. It is a system of economic planning, left over from the days of the 1940s, when people thought Stalin had the answers. Any environmental protections it produces are, in a way, accidental, capricious, clumsy and actually rather precarious. The existence of the planning system has sterilised and stymied the development of environmental regulations about zoning, similar to those they have in other countries. No common law has been allowed to develop on this principle and so we have to rely, rather embarrassingly, on EU directives such as the habitat directive.

The worst aspect of the current system is that it is so slow. Things take years that could take months. How can it possibly take twice as long to decide, let alone build, a single runway as it took to wage the Second World War? Why do we assume that these delays are natural? We need to speed things up. I welcome the clauses restricting the abuse of pre-commencement planning conditions because I have had first-hand experience of how they slow things down.

I would like to make two more suggestions. First, we need to slim down the list of statutory consultees and incentivise them to take decisions more quickly. At the moment a gravy train is being ridden. The planning system is awash with ex-planners selling their services as heritage consultants, environmental consultants, archaeological consultants and so on. It is a revolving door. Setting time limits makes the problem worse. At the moment, if a conservation officer has to take a decision within, say, three months, then, lo and behold, you get your answer one day before the deadline. Let us set up a sliding scale of fees or fines so that the longer a consultee or a planner takes, the more it costs them.

Next, let us cut out the waste. If the Government want to build a new trunk road bridge over a river—this is a real case that is happening on my land at the moment and I welcome it—the following happens. Over about a year, they hire five separate teams of consultants to survey birds, bats, newts, otters and badgers. The teams get hefty fees and write hefty reports, which nobody reads, and the bridge gets built anyway. Here is a better idea. As soon as the bridge is decided on, the planner tells the developer—in this case the Government—that as birds, bats, newts, otters and badgers may all live in the vicinity, they must spend a bit of money creating suitable habitat for such species somewhere else. Buy a field, dig a pond and plant some trees in it. It would be simple, quick and much better for the wildlife.

As a final point, can we stop pretending that the development of housing is a bad thing for nature? It is not always. When an arable or a silage field gets developed for houses, the biodiversity almost certainly increases massively. Gardens are teeming with wildlife that farmland is not—bats, newts, birds and bees.

Devolution: North-east England

Viscount Ridley Excerpts

Wednesday 12th October 2016 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord will be aware that those are not combined authorities. We are not comparing like with like here. This is an issue where elected representatives, very often from Labour councils, come together to decide whether it is in the interests of their region, as they have done in Greater Manchester and Liverpool City Region, for example. We believe that, just as in London, we need that accountability of a mayor for devolution to work effectively in the interests of the region. That is why we are pursuing that policy.

[Viscount Ridley (Con)]

My Lords, is my noble friend the Minister surprised or not that those in the Labour Party in the north-east are more interested in fighting among themselves than in representing the region as a whole?

[Lord Bourne of Aberystwyth]

My Lords, as I indicated, I come to this brief with a genuine belief that it is in the best interests of our great conurbations and of the north-east that this goes forward. As I said previously, I make a plea to the areas concerned to come together to proceed with this. It has to be from the grass roots up—we are not imposing this—but believe that it is very much in the interests of the people of the area.

Hinkley Point

Viscount Ridley Excerpts

Wednesday 11th May 2016 Lords Chamber

[Lord Grantchester (Lab)]

My Lords—

[Viscount Ridley (Con)]

My Lords—

[Lord Tebbit (Con)]

My Lords—

--- Later in debate ---

[Lord Bourne of Aberystwyth]

My Lords, I repeat the point I made about the high standards of nuclear safety. We are aware of the alleged defects at the Le Creusot works. We are working on that, and it will not affect the generic design assessment process that is going on at Hinkley Point C.

[Viscount Ridley]

My Lords, can my noble friend tell us, at the current price of electricity, what his department’s estimate is of the subsidy that will be paid by energy bill payers in this country over the 35 years of the Hinkley Point contract to Chinese and French investors? Is it true that the figure will be a staggering £50 billion?

[Lord Bourne of Aberystwyth]

My Lords, my noble friend will be aware that the strike price is £92.50 on the assumption that we do not go ahead with Sizewell. If we do, which we may well, it will come down. This is unaffected by all these issues with the works council—the strike price is set, and increased costs and any minor difficulties do not affect the strike price at all.

Energy Bill [HL]

Viscount Ridley Excerpts

Tuesday 26th April 2016 Lords Chamber

As I say, what we are seeking is simple justice. I will leave the closing words to the Minister himself, when he was dealing with the amendment moved by my noble friend Lady Featherstone in relation to solar energy.

[Viscount Ridley (Con)]

I apologise for interrupting and am grateful to the noble and learned Lord for allowing me to do so. Given that he is not moved by the arguments made by the Front Bench on our side, perhaps I could try an argument on him that might appeal particularly to a Scottish Liberal Democrat. News came in recently, in the last month or so, of a study that has found that the density of breeding golden plover goes down by 80% when a wind farm is built on a particular piece of moorland.

[Lord Wallace of Tankerness]

The noble Viscount is rehearsing Second Reading arguments. We are dealing with some very small—but very important to the developers—changes to try to ensure justice. As I indicated, the Government will get their policy and will be able to close down the onshore wind industry subsidies, as they wish to do. What we are trying to do is to ensure that this very small and limited number of cases where substantial amounts of money have already been laid out by developers in trying to take the development to planning consent—and where in some cases the council had indicated that it was minded to consent after much local discussion and engagement—should be allowed to proceed.

To us it is a question of simple justice. I read somewhere the other day that the Scottish author William McIlvanney had said that Scotland’s motto was not,

“Wha daur meddle wi’ me?”,

but was really, “It’s no’ fair”. In this case, it isnae fair. The Minister himself said, when dealing with the end of the renewables obligation for solar of 5 megawatts and below, that,

“we have aimed to strike the right balance between protecting bill payers and protecting developers who have made significant investments, while being conscious of the need to decarbonise our energy infrastructure. That is why the order makes provision for a number of grace periods, which mirror those offered last year as part of the large-scale closure. Stakeholders have welcomed this consistency”.

Well, they do not welcome the inconsistency in dealing with onshore wind. He went on to say:

“One of the grace periods was designed to protect developers who could show that a significant financial commitment had been made on or before the date on which the proposals were announced. This required evidence that a planning application had been made, among other things, as a proxy for the financial commitment”.—[Official Report, 16/3/16; col. 1915.]

It seems to me that that is entirely in line with what we are proposing in these amendments. It is a question of simple justice, and even at this late stage I ask the Minister to think hard and seriously about these matters and to respond favourably. I beg to move.

Energy Bill [HL]

Viscount Ridley Excerpts

Tuesday 12th April 2016 Lords Chamber

[Baroness Worthington (Lab)]

My Lords, I, too, express some concerns about the removal of the amendment in the Commons. Although I have listened to the argument that it would detract from the intention behind the OGA, I seriously hope that the Government will look back at the primary objectives that they have given it and conduct a timely review—I know that that will happen.

Since we last considered the amendment, we have had two important events. The first was referred to by the noble Baroness, Lady Featherstone: the cancellation of the carbon capture and storage project. I do not intend to debate the whys and wherefores of that, but it is clear that there has been a significant dent in investor confidence. People have invested in good faith in this technology knowing that, to meet our long-term climate targets, we need a form of capture and storage for certain sectors of our industry.

The second big event is the signing of the Paris agreement, when the Government and the Secretary of State, Amber Rudd, played an enormous role in making it the success that it was. That states a very clear target for the world: that we must get our anthropogenic sources, our sources of carbon emissions, matched and cancelled by anthropogenic sinks. That largely means capturing and storing carbon and putting it underground. We need to take that Paris equation seriously.

[Viscount Ridley (Con)]

I suggest to the noble Baroness that a third event has happened—we have the early results from the Canadian carbon capture and storage project, which is by far the most advanced in the world. They are very disappointing in terms of the amount of carbon dioxide reduction and the cost that it has taken to achieve it.

[Baroness Worthington]

I note that, but I would just say that we are not Canada and we are very fortunate to have the North Sea as a reserve to use, which I believe would make it more cost efficient if we could do it in a timely fashion—obviously, not wanting to gold-plate anything, but making the best of the resource that we have in this nation. As I said, we need some reassurances from the Government. I am part of the group that the noble Lord, Lord Oxburgh, has now set up, which is looking at the whole issue afresh. We do not want to push carbon capture and storage for its own sake, but only in so far as it gives us options to decarbonise at least cost. I hope that the Minister will be able to say some words of reassurance about that process and the seriousness with which the Government will take the recommendations of that group.

Feed-in Tariffs (Amendment) (No. 3) Order 2015

Viscount Ridley Excerpts

Tuesday 2nd February 2016 Lords Chamber

[Lord Teverson (LD)]

My Lords, I apologise to the House for not being in my place for the start of my noble friend’s speech. I was interested in the speech of the noble Lord, Lord Grantchester, who I admire and for whom I have a great deal of time. As has been said by Members on the Benches opposite, the whole point of feed-in tariffs is that they should come down in order to reflect the cost of investment by producers in that industry. That is what the Secretaries of State, Chris Huhne and then Ed Davey did during the coalition Government period. Producers should not receive more money than they deserve. The point is that it was done in such a way that the industries did not die. That is why we are debating this subject. As the noble Lord said, this cliff-edge change will probably see the end of these industries, and that is a problem. It is therefore appropriate that we have a fatal Motion for an SI that will be fatal to a very important part of our renewable energy provision. That is why we are here and why this debate is so important.

Last night I was privileged to be at an event where the Secretary of State, the right honourable Amber Rudd, spoke at some length about the Government’s energy policy. It was interesting and I was taken by her enthusiasm for and excitement about the Paris agreement. She and the Minister who is to respond to the debate were involved in bringing about that important agreement. She feels inspired by it and those of us attending the event agree with her absolutely. It has its difficulties, but the fact was that there was unanimity among all the nations present.

This Motion is important because not only do we have to talk the talk, sign the agreements and be the good guys internationally, we actually have to walk the walk as well. All I can see in the Government’s policy, apart from one or two areas such as taking out coal by 2025, for which I give it credit, is that the direction of travel, as the noble Lord, Lord Grantchester, and my noble friend Lady Featherstone put it so well, is going in the opposite direction. That concerns me greatly. Exactly as my noble friend Lord Steel, said, one of the great things about the Conservative manifesto 2015 was that it committed itself to the Climate Change Act. It did that unequivocally; it was there in black and white without fear, and it said it proudly. However, this is not meeting those targets, not meeting the carbon budgets and not finding a way to meet those commitments. That is why this Motion is important and why I support it.

[Viscount Ridley (Con)]

My Lords, like the noble Lord, Lord Teverson, I was not here at the start of the debate, but I hope the House will indulge me if I add a few short remarks. The noble Lord, Lord Grantchester, said that the policy of feed-in tariffs has been highly successful. What do we mean by that? It has been highly successful in taking money off people and giving it to other people. As my noble friend Lord Cavendish said, something in the order of £1 billion a year is now going through this programme. It is going, on the whole, from the poor to the rich because electricity bills are a bigger part of poor people’s bills than they are of rich people’s bills, and most of the people who can afford to put up the upfront costs of drawing down feed-in tariffs are on the whole rich people.

That is not the measure of success surely by which we should judge this policy. The noble Lord, Lord Teverson, just said that it should be judged by its impact on the climate. So how much has it reduced carbon dioxide emissions? How much bang for that enormous billion pound buck are we getting? The answer is: a trivial effect. We know that solar power, which is the bulk of the feed-in tariffs, produced 1% of our electricity last year. Therefore, the emissions reduction cannot be more than 1%. It is probably a lot less because of back-up and other issues. We know roughly where it is and we can therefore make a rough calculation as to the costs per tonne of carbon we are buying these omissions at.

The figure for those who were lucky enough to get Ed Miliband’s first tranche of feed-in tariffs is close to £1,000 a tonne. Not even the noble Lord, Lord Stern, thinks the social cost of carbon is anything like that. He says that it is about $29 per tonne. More recent estimates, because of cuts in the feed-in tariff, show that that number has now come down to something like £200 a tonne, but it is still 10 times higher than the social cost of carbon. We do not have a successful policy. We are doing it on the backs of relatively poor people. It surprises me that the two parties opposite should in this case be taking the side of the Sheriff of Nottingham rather than Robin Hood.

[Lord Deben (Con)]

My Lords, as chairman of the climate change committee, I declare an interest. I also declare a clear view that my job is to be entirely independent on these issues. Therefore, it is with care that I am going to try to navigate the discussion that we have had so far.

The climate change committee has clearly stated that we have a requirement, if we are to meet our statutory ends, to meet first of all the fourth carbon budget and then the fifth carbon budget which has been presented to the Government. The Government have committed themselves to the fourth carbon budget, and they must legislate on the fifth before the end of June. That is in the Act. No doubt, Ministers will be thinking very carefully about how they will do that because there is no elbow room in the fifth carbon budget. It is as generous as it is possible to be while still meeting the targets that were laid down—reducing our emissions by 80% by 2050—not by the climate change committee but by the Act itself.

In dealing with the Government’s proposals here today, it is not for the climate change committee to argue that the Government should not do this, should do that, or should do the other. It is for the committee to remind the Minister that the Government are committed to delivering reductions in emissions. The mechanism used must indeed be for the Government—that is the democratic balance we have established in the Climate Change Act.

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[Lord Donoughue]

I have read much of the evidence about who suffers in the world from this but I do not accept what the noble Baroness says. The Secretary of State should be encouraged to do more looking at who pays for so much of this burden. It is understandable if the Secretary of State is concerned about this country’s massive debt, which does not appear to concern many Members in this House. I dissent from this Regret Motion and trust that it will go no further.

[Viscount Ridley]

My Lords, I omitted to mention my interests and I apologise to the House for that. I do not have interests in solar power, which is what I mostly spoke about—mainly because I have turned away solar developers—but I do have other interests in energy, including coal.

[Lord Berkeley of Knighton (CB)]

My Lords, I crave the indulgence of the House, as I missed the opening of this debate, but I did take part in the last one.

Forests: Coal-bed Methane Extraction

Viscount Ridley Excerpts

Monday 25th January 2016 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, I am always grateful for people exaggerating my powers, but this is very much outside my brief in relation to forestry. I will ensure that the right reverend Prelate gets a full response on the subject, and I know that the Government take it seriously.

[Viscount Ridley (Con)]

My Lords, does the Minister agree that if this country had not switched to fossil fuels in the last couple of centuries, the Forest of Dean—and every other forest—would long ago have been cleared for fuel? I declare my energy interests as listed in the register.

[Lord Bourne of Aberystwyth]

My Lords, what I would say is that we, as a nation, must determine that we shall have secure energy, and energy that is not imported. If we do nothing about coal-bed methane or, more broadly, about fracking, by 2030 we will have to import 70% of our gas rather than the 45% that we import now.

Paris Climate Change Conference

Viscount Ridley Excerpts

Tuesday 15th December 2015 Lords Chamber

[Lord Bourne of Aberystwyth]

I thank the right reverend Prelate very much for his kind words and note, in particular, the lead that he has given through the Lambeth declaration and the fact that that pulled together people of many faiths. There was also a massive role of the Muslim climate group in supporting this. The participation of faith in all this, not least from His Holiness the Pope, was significant. I thank him also for what he said about climate finance. The contribution that this was able to make to the debate, and speaking to people, certainly was significant. Obviously, it is important for developing countries, particularly the most vulnerable countries, because there are degrees, as we are all aware, of poverty. Some small island states in particular need an awful lot of assistance on adaptation as well as mitigation.

The right reverend Prelate asked about the domestic agenda. Again, I refer him to what I said previously about falling costs, which is certainly true. The costs, particularly of solar, are spiralling down very quickly. Given the very clear signal that has been sent out worldwide, we can expect that to continue. The Paris agreement is significant in many respects. It is significant that the world has come together in the positive way in which it did but, on the specific, it is very important that it signals the end of the carbon economy. It is only a question of when. That message going out worldwide to business and being welcomed by business will mean that costs fall.

What are we doing within DECC? First, many DECC officials are taking a little bit of a break, having been up around the clock for the past couple of weeks. That said, work is already going on to see how this is delivered but, of course, the work had started before. We are already looking across government at what we need to do on cars and housing to meet our carbon targets. That work will continue but it is important that this is not just a one-nation issue; this is across the whole world. Hence, the importance of the five-year stock takes and the five-year reviews.

[Viscount Ridley (Con)]

My Lords, I hate to pour cold water on this love-in but perhaps I may remind the Minister that the only thing legally binding on countries which are increasing their emissions in this agreement is that they must produce voluntary plans. Paris therefore represents the end of a 20-year attempt to get agreement to legally binding emissions targets. Will he confirm that this leaves the UK as the only country with a legally binding target on emissions? Will he remember the Chancellor of the Exchequer’s pledge that this country should go no faster in this respect than other countries? Will he therefore consider adjusting our policies to fulfil that pledge in the interests of those working in the industry and those struggling to heat their homes this winter and in future winters?

[Lord Bourne of Aberystwyth]

My Lords, I am also disappointed that my noble friend has ended the “love-in”, as he calls it. If this is regarded as something that states will just cast away, it is significant that it was such a hard agreement to drive and achieve—if it really was, as he perhaps implies, just a piece of paper and not worth the paper it is written on, why was it so hard an agreement to reach? Only one state stood apart from this process and that is North Korea. I suggest that this is no time for strategic alliances with North Korea. This is a world problem that needs a world solution. The agreement is a step on that road.

Electricity System Resilience (S&T Committee Report)

Viscount Ridley Excerpts

Tuesday 3rd November 2015 Lords Chamber

[Viscount Ridley (Con)]

My Lords, I congratulate my noble friend Lord Selborne—I think I can call him my noble kinsman, since we share a great-grandparent —on this excellent report and on chairing this inquiry with his characteristic skill, courtesy and perceptiveness. I declare my interests as listed in the register, including, most importantly, an indirect interest in coal mining and a small shareholding in National Grid.

I would like to make four main points. The first is that I think our report was, if anything, a little too sanguine. The string of closures of power plants since then has left us even more exposed. The closure of Longannet, Eggborough, Ferrybridge and Ironbridge and the delay to the Trafford gas-fired station make the capacity margin even tighter this winter. As Professor Dieter Helm of Oxford University told our inquiry:

“It is a quite extraordinary state of affairs for a major industrialised economy to find itself even debating whether there is a possibility that the margins may not be sufficient in electricity to guarantee supply”.

My second point is that “the lights going out” is a red herring. The national grid has many weapons at its disposal to keep the lights on somehow. That is a misleading test of policy health. The risk of system failure, which is always present, can be kept within bounds—but by pouring consumer funds into the sector.

My third point is that rising costs are the correct index of policy success or failure, and here I am afraid the news is bad. Even leaving aside the emergency costs of bringing on diesel generators when the wind does not blow, we are paying very heavily to have a resilient electricity system because of what I would consider deliberate policy mistakes. The Office for Budget Responsibility has recently published data showing that the cost projected for the capacity mechanism, which my noble friend mentioned, will be £1.3 billion in 2020—about 10% of the total levy control framework cost in that year. As my noble friend said, it is not for new capacity but for existing capacity. We should remember that most of that is going to fossil fuel plants, which should not need subsidising at all.

So why are we subsidising them? Because we have destroyed all incentives to build new, efficient, dispatchable generators, by using the law to force unproductive, expensive renewables on the consumer. That is why nobody is building new combined cycle gas turbine plants here unless they get subsidised. We should remember that those subsidies do not come from general taxation. They are added to electricity bills so they hit the poor hardest. As Rupert Darwall of the Centre for Policy Studies told our inquiry,

“if you subsidise high-fixed-cost, zero-marginal-cost intermittent electricity generation, you will end up destroying the market and incentives to invest in the capacity to keep the lights on when the wind is not blowing and the sun is not shining. That outcome was wholly predictable but wholly unanticipated by policymakers”.

Can my noble friend the Minister assure us that the study currently being carried out by Frontier Economics into whole-system impacts of electricity generation technologies will take this into account—how much has wind prevented new gas being built and at what cost?

We have spent £14 billion so far subsidising renewable electricity. The cost is rising rapidly and will soon hit roughly £10 billion a year and stay that way for decades. What are we getting for that money? A less reliable electricity system, a big increase in cost and no discernible cuts in CO₂ emissions, because of the need for back-up, the failure to allow gas to replace coal, and the leakage of energy-intensive industries to other countries with the loss of jobs here. I do not think that is a trilemma: it is a trisaster.

My fourth point is that interconnectors, while clearly a good thing, are in many ways irrelevant to the resilience debate, for two reasons. First, the current ones from France and the Netherlands are running one way—into the UK—at near-full capacity most of the time anyway, so they are no use for extra electricity in times of emergency. Secondly, they are not much use in in managing the variability of large renewable fleets because, as John Constable of the Renewable Energy Foundation pointed out to us, wind speeds are well correlated across Europe: a calm day here is usually a calm day in Germany. At 3 pm today, for instance, I looked up how much electricity was coming from wind in this country and in Germany: 1.4% in this country and less than 1% in Germany.

Where do the four points that I have raised leave us? It is now clear that instead of building windmills in the North Sea, whose electricity will cost three times the wholesale price, we should have been using cheap gas to phase out coal and putting more money into R&D designed to bring down the price of nuclear power. What Professor Helm called the “Miliband-Huhne-Davey policy” was based on the assumption that fossil fuel prices would go up. Instead, they went down.

In the spreadsheet released last year by Department of Energy and Climate Change, in the low fossil fuel price scenario, the cost of renewable subsidies for small and medium-sized businesses would add 77% to their electricity bills by 2020. Even in the high fossil fuel price scenario, the impact is still an increase of 45%. In other words, even if fossil fuel prices go sky high, the policies do not in fact offer any significant protection.

Every part of the world is increasing gas consumption at the moment except one: Europe. All the others—North America, South America, Africa, Asia, the Middle East, the former Soviet Union—are all increasing their use of gas, often to displace coal, as a response to the falling price of gas thanks to the shale gas revolution. Europe is doing the opposite. The Competition and Markets Authority has reported since our report that the renewables target is more of a constraint than the carbon budget; that is, there are cheaper ways of meeting our carbon targets.

I feel that we have the worst of all worlds: a system that has the high finance costs of the private sector but where all decision-making is nationalised; a system that has all the costs of renewable energy but trivial emissions reductions; a system that depends on regressive subsidy for even the cheapest and most reliable power; a system whose high cost is driving employers abroad; and a system with such low margins that costs will spike in the months ahead. I think there is a lot of work on my noble friend the Minister’s plate.

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[Lord O'Neill of Clackmannan (Lab)]

My Lords, I have interests in the electricity industry, and I have declared them in the register. First, I congratulate the noble Earl on this report. He and I have served as colleagues on the committee for many years, and I was more than delighted when he assumed the chair. He has already acquitted himself with great distinction today and in the production of the report.

When we embarked on this inquiry, I do not think we anticipated that we would be debating it at such a significant time of year. About now there is usually a meteorological Cassandra forecasting the coldest winter in living memory and concluding that we are all doomed to months of freezing darkness. Although I would not want to adopt a Panglossian view of the prospect for the next few months, I think that some cautious optimism is called for, at least for 2015-16.

National Grid, the system operator, has forecast a loss of load expectation of 5.1% de-rated capacity margin, which will be met by 2.43 gigawatts of additional balancing services. At the time we were given the evidence, I could probably have explained all that to your Lordships in very simple terms, but I will not trouble the House this evening by going into great detail. Suffice it to say that a major element will be demand-side management.

When we were taking evidence, we were told, as I said, that we could be confident that in 2015-16 the lights would not go out. National Grid has a reasonably sound track record in that area. The question remains: what of subsequent winters? It is perhaps easy to say that the margins are getting ever narrower and that we should have dealt with the anticipated problem earlier. I have been participating in debates in the other place and here for nearly 40 years, and I have always heard people saying that we must have a long-term strategy.

I came into Westminster in the 1970s, when, like the welfare state, the coal industry was big. It was something that we took pride in. Within about five years, the coal industry was to be destroyed. After 1989, we embraced gas because we could start burning the gas in the North Sea to keep our houses warm. There was a major change in European policy, and we embraced gas-fired power stations at the expense of everything else. We abandoned nuclear. Then we discovered that it might be a wee bit dangerous if we were to be completely in thrall to gas, because we did not always know where it was going to come from. The somewhat hyper-enthusiasm for gas of the noble Viscount, Lord Ridley, this afternoon suggests that he has forgotten where a lot of the gas that we depend on comes from. We might not want to be overdependent on some of the sources of supply.

Nuclear was out; gas was going to be the answer. Then, people began to wake up to the fact that we were going to be shutting down our nuclear power stations, which in those days accounted for about 25% of our power. Even if we kept just a few coal-fired power stations and imported the gas, European diktats were going to require us to start closing them down as well.

So I am very cautious when people tell us that what we need is a long-term strategy, because most long-term strategies last about seven or eight years, maximum. At the same time, if we are investing in nuclear power, it is very expensive at the beginning but has a very long life. It is therefore possible to pay it back over time. Nevertheless, it is a major expense. We know at the moment that it is very difficult to attract investors to it.

We have been looking at the closure of power stations, the reduction in our capacity quickly to replace them and, at the same time, our dependence on renewables. The dependence is on plants that are too small and, invariably, interruptible. Therefore, while we can look forward with some confidence to Hinkley, it is not quite in the fusion category, yet it is taking rather longer than we had anticipated. It is not that many years ago when we thought the Christmas turkeys of 2017 or 2018 might be being roasted with nuclear-generated electricity; it might be more realistic to talk in terms of 2027. Certainly, the French record of building nuclear power stations is none too encouraging, although one would hope that, having had two test runs in Finland and France, they might be able to make a better job of Hinkley than they have hitherto. One thing that is certain is that the electricity that will come out of Hinkley will not be cheap, because unfortunately the first-generation kit being constructed in the UK is the most expensive, and takes the longest and is the most difficult to build. Some might say that we could get new nuclear from other sources almost as quickly as we get it from Hinkley—but that is another issue.

Demand management, which is really the self-imposed reduction in demand by major consumers, is seen by National Grid as an important contributor. It will ensure that there will be no enforced blackouts in the foreseeable future, but this will have to be achieved in the context of emerging electricity markets, which are in the process of being reformed. The committee expressed concern about the quality of information on which many judgments are being made, particularly the appropriateness of the reliability standard. The Government are required by law to monitor that every five years. They would be well advised to produce annual reports to let us see what the thinking is, rather than dashing to get the information in place in the last nine months before the end of the five-year period.

As has already been said, it is not all about indigenous generated power, because we have interconnection. However, the situation is not very clear, as the information we received on back-up generation and interconnection was somewhat less than satisfactory. It would be interesting to hear from the Minister whether that information has been updated. Certainly, we would want reassurance regarding the scaremongering that often provides the headlines, fills the space between the adverts in social media and feeds the paranoia of the bedsit conspiracy theorists; we need better information to dampen those anxieties at source. It is fair to say that we were impressed by the awareness of the appropriate authorities of the dangers of cyberattacks on the system and terrorist threats generally. There was a reassuring absence of complacency; they certainly seemed to anticipate what the bad guys would be trying to do. In that sense, we have some degree of consolation. Nevertheless, eternal vigilance is required in this area, as in so many others; we underestimate the dangers of cyberattacks and other attacks on our system.

We must be cautious. People say that we will have smart meters and better integrated grids, and that all kinds of technical possibilities will be realised, such as storage batteries, carbon capture and storage, electrical vehicles and electrification of the transport system. All those technologies will come at a cost; many are still immature and cannot really be depended on with any degree of certainty. We have to strike a somewhat cautious note, but it is a bit frustrating for Select Committees when the report has been produced and we have what we think is the most up-to-date information, yet we get very cautious responses. I draw some consolation from my experience in Select Committees, which goes back quite a while. I am reminded of what George Bernard Shaw said—that when he was 18 he was convinced that his father was one of the most ignorant men he had ever met; yet, by the time he was 21, he was surprised how much his father had learned. We often find that, within a very short time— before the dust has settled on Select Committee recommendations—civil servants, the machinery of government and eventually Ministers change their tune. It will be unfortunate if that does not happen here, because this excellent report can be ignored only for so long. We ignore it any longer at the peril of our economy and our quality of life.

[Viscount Ridley]

The noble Lord says that he is concerned about where the gas is going to come from, but we are more dependent on imported coal than on imported gas, in that 85% of our coal comes from abroad and 40% of it comes from Russia.

[Lord O'Neill of Clackmannan]

I am not sure whether I am supposed to respond to that. My point is that there are a number of uncertain sources of gas. I think we would all agree that the nature of our dependence on coal is essentially temporary. The long-term requirements of a section of our fossil fuel demand will be met by gas, which will still come from areas that will be unpredictable politically and socially, to say the least.

Nuclear Technology

Viscount Ridley Excerpts

Thursday 22nd October 2015 Grand Committee

Asked by

[Viscount Ridley]

To ask Her Majesty’s Government what assessment they have made of the relative merits of different forms of nuclear technology.

[Viscount Ridley (Con)]

My Lords, it is a pleasure and an honour to introduce this debate on the merits of nuclear technologies, and I thank other noble Lords in advance for taking part in it.

I start from a position of great perplexity. I read and hear a lot about different nuclear technologies—fission or fusion, uranium or thorium, light water or heavy water, salt or metal, water or gas, pressurised or boiling. Although I can follow some of the details, I have not really the foggiest idea which one to recommend or champion. I do not expect the Minister to banish my perplexity, but I hope that this afternoon we may suggest a way to let the answer emerge through a sort of bake-off, if you like.

This topic is important because there is both a strong case and an urgent opportunity for the UK to regain its technology leadership in nuclear power. The only way we will bring down the cost of nuclear technology is with new designs and new ways of regulating them. New technologies change the world not when they are invented but when they get cheap. Computing and air travel have been around for a very long time, but it is only when they became dramatically cheaper that they noticeably increased living standards.

In this respect, nuclear power stands out as a glaring exception. It was invented 70 years ago but has failed to get cheaper. That is why it is currently declining—yes, declining—as a percentage of world primary energy. Imagine if we could make nuclear power genuinely cheap. We would make fossil fuels obsolete, we could stop spending billions of pounds a year on futile and regressive renewables subsidies and we would eradicate fuel poverty and all emissions.

Building stations such as Hinkley Point will not make nuclear power cheaper because we are locked into a very high price for a very long time for the electricity, a price that looked reasonable if you assumed very high oil prices, but in fact oil prices came down. Because Hinkley is one of a kind, there is virtually no chance to get the price down by learning by doing. However, this is not a debate about Hinkley, so I shall stop there.

How do prices come down in other areas of technology? In a phrase, innovation through trial and error. That is what brought down the price of shale gas, semiconductors and air fares. Therein lies the problem. We cannot allow errors in nuclear power, so we cannot allow trials. We build excessive safety in from the start and we overengineer and underinnovate as a result. However, that is not a problem unique to nuclear power. Aeroplane manufacturers have faced essentially the same issue and, thanks to complex system analysis, they have cracked it. They innovate without accidents. So something is wrong with the way we are regulating nuclear.

As Professor Eric McFarland of the University of Queensland wrote in the Wall Street Journal earlier this year,

“what holds back nuclear power is its high cost, which is almost entirely due to government regulations and restrictions that have kept the industry confined to minor yet expensive improvements to existing reactor designs. Out-of-the-box thinking on new reactor concepts that could be far cheaper and safer is systemically discouraged … Today’s light-water nuclear reactors are constrained by government regulations and agencies appropriate for the 1950s to look much like those built for the production of isotopes for weapons—not because these are the lowest-cost power-reactor designs or the best and safest fuel cycles, rather because these are what we have built a gargantuan regulatory framework to accommodate”.

That does not mean that we should lower our safety standards, but it means that the Government should recognise that misregulation is preventing the invention of inherently safer, as well as dramatically cheaper, designs. Whichever country unleashes that nuclear innovation will reap rich rewards. The world is awash with potential designs for better nuclear power plants—molten salts, accelerator driven, thorium, small modular, fast, and so on—but hardly any of them gets beyond the design stage. They remain PowerPoint reactors, in the joke terminology. That is because of the immense cost of getting to the stage of building a reactor, in particular the generic design assessment cost of about £100 million in this country.

I shall focus now on small modular reactors, which hold real promise of getting costs down because of the ability to roll them off the production line and not make each one a unique project. In theory they can slot into egg crates at sites, so as to build up a large capacity in small steps. They can be up and running within a few years, allowing a return on capital and bringing the finance costs within reach of normal capital markets. They can also be located inland rather than on coastal sites.

We are going to hear more, I think, about small modular reactors from a number of noble Lords this afternoon, including the noble Lords, Lord O’Neill and Lord Rees. In short, small modular reactors could do for nuclear what Samuel Colt did for firearms. Interchangeable parts have done amazing things for the affordability of other technologies and they could do the same for nuclear. They could also possibly allow us to experiment with other technologies, because in some ways small modular is not itself a technology but a vehicle for technologies.

However, here is the obstacle. A 300-megawatt small modular reactor faces almost the same general design assessment as a four-gigawatt leviathan, and the same ludicrously long time to qualify—four years or so. That is the hump that the Government have to help them to get over, and that is what is keeping small modular reactors in PowerPoint form. In their response to the House of Commons Energy and Climate Change Committee last year, the Government promised to look at the generic design assessment process for SMRs. What fruit has that investigation born?

The National Nuclear Laboratory, in a report last year, concluded that there is a significant global market for small modular reactors valued at £250 billion to £400 billion. It reckoned that there are four technologies for PWR SMRs that could be viable within 10 years. They require £500 million to £1 billion to reach production-level maturity over a period of five to seven years. The report identifies,

“an opportunity for the UK to regain technology leadership in the ownership and development of low-carbon generation and secure energy supplies through investment in SMRs”.

As Candida Whitmill of Penultimate Power wrote in a paper for Civitas last year, we should look at what the US is doing. In January 2012, the Department of Energy in the US announced a competition to incentivise the first commercial SMR, offering $452 million over five years on a 50% match-funding basis for successful projects. It also provided the site at Clinch River free of charge.

Instead of spending £100 billion by 2030, forcing poor people to disproportionately subsidise the incomes of wealthy investors in fringe technologies like wind and solar—I know that the noble Baroness, Lady Worthington, was expecting me to say that—let us spend a chunk of money on bringing forward SMRs and on proper, well-funded research into the alternatives, including molten salt reactors, thorium and accelerator-driven designs. We could potentially win a commercial jackpot for the British nuclear industry.

I add one final note on fusion. I know that fusion has been 40 years away for 40 years, but there is good reason to think that may be changing. There is exciting new science, which we heard about at the Science and Technology Select Committee, suggesting that a far lower field strength is necessary because of spherical tokamaks and high-temperature superconductors. Here again, the vital thing is surely to let a thousand small flowers bloom. There is a rash of exciting new start-ups, which threaten to do to public sector fusion what Craig Venter did to genomics 17 years ago—that is, dramatically cut the costs and accelerate the progress. I suspect that we will hear more about this from the noble Lord, Lord Hunt of Chesterton, so I will not go on. We are as well-placed as almost any nation to benefit if we take the plunge into new technology in nuclear, but we must consider taking that plunge.