The Chancellor was seeking the mantle of Thatcher in his joint article with the PM yesterday in the Sunday Times. He claimed to be a low tax Conservative, but also a supporter of sound money which he attributed to her. He also says he wants “lighter,better,simpler regulation”.  So what does the track record show?

So far the Chancellor has hiked taxes on entrepreneurs and the self employed through IR35. He has raised National Insurance, frozen Income tax allowances and put in a huge future  increase in Corporation tax. He seems keen to ensure we collect less in tax than he would by setting competitive rates. Margaret Thatcher and her Chancellors cut Income tax rates substantially, cut Corporation tax, made it easer for the self employed and for entrepreneurs. As a result revenues surged, the rich paid more tax and paid a bigger share of the tax, and substantial increases were made in the NHS budgets from the extra revenue.

So far the Chancellor has approved huge increases in money printing proposed by the Bank of England but needing his consent, which have now brought on a sharp rise in inflation. I strongly supported the early pandemic related money boost, but called for it to end last year when the Bank carried it on well into recovery. Margaret Thatcher battled for honest money and brought inflation down from the high levels under Labour. Towards the end she was forced by her  Chancellor  and Foreign Secretary to take the UK into the European Exchange Rate Mechanism, against her instincts and my advice. That led to a surge in money and credit creation by the commercial banks and to a nasty bout of inflation. This was followed by the inevitable bust under John Major who took her job and the then unhelpful  economic inheritance he had  created . This ended the Conservative reputation for economic competence for a good few years.

I look forward to the plan to have better and lighter regulation. More than a year into Brexit there has still been no Bill to change the main huge body of EU regulatory law which we rolled over as a temporary measure. The Chancellor would say he has streamlined alcohol duties a bit. The ones that have gone up are not popular, but it is a minor set of adjustments so far. We await the promised Freeports and trust they will have some good freedoms  in them. Why not one for Northern Ireland?

The Opposition still regards the Thatcherite label as a term of abuse. The Chancellor seems to regard it as a plus, but has misunderstood the nature of Margaret’s policies compared to his own. His approach to tax is the opposite of hers.

During the referendum on the EU the car industry and its Remain supporters were full of fears that if we left the EU without a free trade deal with them the 10% tariff the EU would impose on our car exports would do grave damage to our industry. They did not accept that a zero tariff deal was likely, though one was finalised in the end. Nor did they accept that if there were 10% EU tariffs we could have imposed the same on their cars and made more of our cars at home, substituting  them for the  dearer continental imports. Out of the EU we are also free to take tariffs down on components needed from abroad to lower our total costs of production. I did not  see anyone suggest output of our industry might halve if we ended up with some EU tariffs.

The passion behind these fears makes the lack of noise about the collapse of car output since 2016 more surprising. The near halving of output in the last five years has  nothing to do with Brexit. We can all agree the pandemic measures dented output badly in 2020 and may have had some lingering effects on 2021.  Last year we only made 859,000 cars in the UK. We can agree that the worldwide shortage of microprocessors has impeded production in the last year, as the car industry failed to secure enough supply at a time of maximum competition from the digital revolution companies needing more chips for their successful products.  Apple’s gain was BMW’s loss. What seems more contentious is the impact of the race to net zero on  the domestic industry which most of the insiders seem unwilling to talk about, let alone cite as an important cause of the decline.

In  the last couple of years there has been a collapse in purchases of new diesel cars, and a decline in new petrol cars as a  result of governments in advanced countries especially the UK telling people not to buy them. Advanced countries have been discussing how quickly they can end their production altogether and making it clear to customers they wish to become increasingly hostile to the use of internal combustion engine vehicles. The UK has proposed 2030 as the cut off date. The Treasury has also added its contribution to car output decline with a substantial increase in the cost of VED for a new dearer car. The diesel hit has been particularly tough on the UK industry. With government encouragement not so long ago the UK  had become  an important world centre for diesel technology development and for engine manufacture. Ford for example moved its car assembly out of the UK but built a lot of engines here.

Tesla has turned out to be the winner so far in the expensive end electric vehicles. Tesla makes no cars in the UK. The UK based brands have been slower to compete, and the UK is struggling to  catch up with battery production investment, essential if the UK is to be a serious producer of electric vehicles. Maybe it is time to assess the progress of these policies, and to ask how much more damage there is likely to be to an industry which used to make twice as many cars here.

Today I publish  four answers I have received to energy questions. They reveal a  slow and painful transition to a more realistic stance on UK energy capacity and needs. On the positive side the government is now recognising the need to replace the current nuclear capacity it is closing. It had already  committed to the expensive Hinkley C  which should come on stream this decade and will offset part of the loss of capacity from nuclear plant closures. It now wants to put in Sizewell C which is also likely to be very expensive and is unlikely before sometime in the next decade. It is also working up plans with Rolls Royce on small modular nuclear reactors. These could be in series production in  the next decade and could make a useful contribution to capacity. They are currently thought to be considerably cheaper than large nuclear. That still has to be grounded by establishing a scalable prototype.

The government’s estimate of how much electricity we will need this decade reveals relatively slow rates of growth after 2025 and  practically no growth for the first half of the decade. This may be realistic, but it implies the government does not expect many  additions to the electric vehicle fleet or to electric home heating before 2025 and a slow rate of climb thereafter. I would have thought they would want to have more capacity available in advance of the breakthrough in the electrical revolution they urge, to reassure potential users that there will  be sufficient power for  the explosion in demand they want to engineer.

Their approach on gas has shifted a bit, with more recognition of the importance of gas to our current energy needs, and recognition of it as a transition fuel. I believe Ministers also now see the need to produce more domestic gas instead of burning imported gas. However, this answer still leaves open the probability that the Regulators will weight the need to run down gas more highly than the obvious need at the moment to produce more of it at home. They clearly still want to end the three coal power stations that have kept the lights on at times of little wind this winter, which is worrying.  Officials seem wedded to energy insecurity as a policy allied to maximising imports. Ministers need to press harder. 

I will continue to press the issues of our vulnerability, both because we rely too much on imports and because their forecasts of growth in demand are so small. We need more domestic capacity.

Question:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what estimate he has made of trends in electricity demand in the UK up to 2030. (105322)

Tabled on: 17 January 2022

Answer:
Greg Hands:

The table below shows the Department’s latest published projections of total electricity supplied by UK generators from the year 2021 up to 2030, net of storage and imports. Supply is modelled to meet projected demand and takes account of demand trends.

These figures are based on central estimates of economic growth, fossil fuel prices and contains all agreed policies where decisions on policy design were sufficiently advanced to allow robust estimates of impact as of August 2019. Further details can be found at https://www.gov.uk/government/collections/energy-and-emissions-projections. Figures provided are extracted from BEIS Energy and Emissions Projections: Net Zero Strategy baseline (partial interim update December 2021) Annex J, Total electricity generation by source.

The answer was submitted on 25 Jan 2022 at 17:16.

Question:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what plans he has to grant permits to allow companies to develop new gas and oil fields that have investment plans and proven reserves; and what the timetable is for the granting of those permits. (105318)

Tabled on: 17 January 2022

Answer:
Greg Hands:

The UK offshore oil and gas sector is important; it continues to heat homes, fuel cars and underpin security of supply while the Government grows its renewables sector and develops its low carbon infrastructure. As the Government moves to a low carbon future, the sector needs a managed transition, to avoid losing the employment and expertise which will help us achieve the energy transition.

Before proceeding to consent, proposals for field development are subject to extensive scrutiny by regulators: the Oil and Gas Authority and the Offshore Petroleum Regulator for Environment and Decommissioning. The Government does not comment on individual projects undergoing the regulatory process. Any decisions made by these regulators are published in due course.

The answer was submitted on 25 Jan 2022 at 17:09.

Question:
To ask the Secretary of State for Business, Energy and Industrial Strategy, if he will ensure that the coal power stations currently used when there is little wind will be kept available until the UK has more reliable domestic generating capacity to cover a shortage of wind energy. (105320)

Tabled on: 17 January 2022

Answer:
Greg Hands:

The Government is committed to phasing out unabated coal generation by October 2024. The Government is confident that the Capacity Market will ensure there is sufficient capacity to offset the retirement of the remaining coal plants. The most recent Capacity Market auctions have already secured the majority of Great Britain’s capacity needs out to 2024/25.

National Grid Electricity System Operator has the ability to manage electricity supply and demand, including at times of low wind generation. It can call on a wide range of technology types to do this, including gas, batteries, interconnectors and demand-side response.

The answer was submitted on 25 Jan 2022 at 17:06.

Question:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what plans he has to make up for the reduction in energy derived from nuclear power in this decade as the current fleet of nuclear stations close. (105321)

Tabled on: 17 January 2022

Answer:
Greg Hands:

This Government is committed to nuclear power in our future diverse energy mix:

• Hinkley Point C will supply 3.2GW of secure, low carbon electricity for around 60 years, meeting around 7% of GB’s current electricity requirements. Hinkley has roughly the equivalent output to three of its predecessors.
• The Government are progressing negotiations over Sizewell C in Suffolk.
• Our £385m Advanced Nuclear Fund, the Government have awarded £210m to Rolls-Royce SMR to develop their SMR design and are supporting AMR development.
• The Government also announced a new £120m Nuclear Enabling Fund to provide targeted support to address barriers to entry for future nuclear,
• Later this year the Government will publish a nuclear roadmap setting out the government’s strategy in more detail.
• The Nuclear Energy (Finance) Bill will reduce the obstacles to financing new nuclear projects.

The answer was submitted on 25 Jan 2022 at 17:05.

Background

The Northern Ireland protocol was a difficult part of the Withdrawal Agreement which looked forward to the future relationship in ways the EU otherwise said were not allowed. The UK signed it, promising to improve it and tackle outstanding problems in the final Agreement on future trading. That Agreement did not in the end change some important  contradictions and ambiguities of the original Protocol.

The EU has decided to assert authority and to implement with excessive detail and complexity the bits of the Protocol it likes. This has violated the parts of the Protocol the UK inserted to protect itself. The UK government agrees the EU has now broken the Agreement, and is arguing for revision . This was provided for by Article 13.8 which foresees the need for substantial change in the arrangements.

Urgent political need

The majority community in  NI feels badly let down by the Protocol and resents the way the EU is taking over their part of the UK , diverting trade from NI/GB and requiring strict observance of a widening range of EU laws which they cannot influence. Sinn Fein is currently in the lead in opinion polls for the May Assembly elections. The Unionist parties are desperate for support and action from the UK government that would seek to rebuild the UK internal market in NI and reassert UK sovereignty and democracy as the form of government. The Unionists think the Protocol has upset the political balance and has undermined their Union with GB.They have now taken action to rectify some of the faults of the Protocol.

The UK case under the protocol

There are good parts to the Protocol which the UK wants enforced.

“The Good Friday Agreement….should be protected in all its parts”  Instead the EU has lost the consent of the majority community by alienating NI from the UK

“determined that the application of the  Protocol should impact as little as possible on the everyday life of communities in both Ireland and NI”  Instead it has gravely damaged GB/NI trade and the legitimacy of NI government

“NI is part of the customs territory of the UK and will benefit from participation in the UK’s independent trade policy”  This is impeded by EU rules and controls

“the importance of maintaining the integral place of NI in the UK’s internal market”  The position has been badly affected by gross restrictions on GB/NI trade

“shall use best endeavours to facilitate the trade between NI and other parts of the UK” They have done the opposite

This is why the UK government thinks they can exercise rights under Article 16 to redress the damage being done by the current lop sided interpretation and enforcement

How to proceed

Make one last attempt to persuade the EU to adopt  mutual enforcement. The UK will control the GB/NI trade, whilst legislating to ensure no GB to NI goods can find their way into the EU if they are not compliant with all EU requirements. The EU/Republic will be responsible for all trade flowing into the Republic and will undertake not to send goods to NI that do not comply with UK rules.

If they do not agree, the UK will go ahead and impose this system. The UK will legislate in Parliament with a money Bill to create a UK based system of regulating and taxing GB/NI trade. The legislation will instruct our courts and Customs and Excise service to obey our rules and controls on this trade, and to make it a criminal offence to send the goods onto the Republic.

It is wrong that a UK supermarket cannot send a container of varied food products to Belfast with the minimum of fuss as it can to Birmingham. Trusted traders should have no more paperwork for NI than for England or Scotland.

Rt Hon Sir John Redwood (Wokingham) (Con) – I strongly welcome massive private-led investment in proper broadband, which is what we all need. Could the Secretary of State give guidance to the companies doing it that it is not helpful if they bury cables under main roads, requiring the roads to be dug up again every time they want to improve or mend a cable? Could we not do better, either in ducts or by the side of the road?

Nadine Dorries, Secretary of State for Digital, Culture, Media and Sport – An interesting point. I will certainly take that back to BDUK, Openreach and others. We need to ensure that the legal framework underpinning our digital infrastructure encourages and enables the deployment of the latest networks. In 2017, we made changes to that legal framework. Implementing reforms to the electronic communications code—this goes to the point made by Ben Lake—requires installation agreements between landowners and telecom operators. The aim was to make it easier for digital networks to be installed, maintained and upgraded, and now we will go even further. The Bill will update the electronic communications code to deliver on the Government’s ambitions for digital connectivity and levelling up. Specifically, it will do three things: make the most of existing infrastructure; encourage stronger and more collaborative relationships between telecom operators and site providers; and build on previous measures to tackle the issue of non-responsive landowners.