Next Wednesday, the Budget will provide a further testament to thirteen years of Labour irresponsibility. However, it won’t tell the whole story – not even in the small print. To the purely financial debt that Gordon Brown has bequeathed to future generations, we need to add another kind of liability: Labour’s failure to ensure Britain’s energy security.
When Labour came to power, we were still enjoying an age of energy abundance. Thanks to record levels of oil and gas production in the North Sea, this country was a net energy exporter. Meanwhile, ample power station capacity meant that our ability to keep the lights on wasn’t an issue.
However, it was always clear that circumstances would change. The Government knew that our North Sea reserves would soon peak and go into decline – leaving Britain increasingly dependent on fossil fuel imports. They knew that much of our coal-fired and nuclear generating capacity was approaching the end of its working life, creating the need for new investment. They knew that UK commitments to reduce greenhouse gas emissions and local air pollution would bring additional challenges.
With so much changing so fast, a responsible Government would have prepared us for all the challenges ahead. But despite – or rather because of – an endless stream of energy ministers, reviews and consultations, the fundamental decisions were left too late or haven’t been made at all.
For instance, ministers didn’t lift their moratorium on new nuclear power until 2007 and then took another two year to make essential changes to the planning framework. That means the first new reactors aren’t scheduled to come online until 2018 at the earliest, i.e. after most of our existing nuclear capacity is scheduled to close. And nuclear isn’t the only energy technology where progress has been held up by Government inaction – others include energy efficiency, natural gas storage, CCS, renewables and smart meters.
This across-the-board failure matters because there is no magic bullet solution to our energy needs – rather, we need progress on the broadest possible front. As Sir Winston Churchill once argued, energy security lies in diversity and diversity alone. The energy green paper that I am launching today with David Cameron is entitled Rebuilding Security and is our blueprint for achieving that diversity.
Our proposals are designed to give Britain the active and comprehensive energy policy that it so urgently needs. We reaffirm our commitment to liberalised energy markets, but make it clear that where a Conservative Government needs to intervene to ensure our energy security, then it will do so. The parallel we make is with the financial markets, where it is better for the central bank to ensure that other banks to maintain prudential reserves, than to have to pick up the pieces of a banking crisis.
Urgent action is not only needed to secure the investment required in new generating capacity and infrastructure, but also to minimise the cost of that investment – a cost that consumers ultimately have to pay. The policy drift of the last decade has increased the risks that investors face – and therefore the cost of capital. We will put British energy policy back on a sure footing, providing a stable framework within which long-term investment decisions can be made with confidence.
This new framework will include:
- Clear incentives for sufficient generating and storage capacity in the electricity and gas markets so that the lights stay on and our homes stay warm
- A streamlined fast-track planning system, a reliable carbon price, and the timely provision of infrastructure to attract investment in nuclear, CCS, renewables and other low-carbon forms of energy
- A Green Deal on energy efficiency to help consumers save money as they meet their energy needs, cut their emissions and generate new jobs
Ensuring that our energy supplies are secure, sustainable and affordable is a challenge. One made more difficult by a Labour Government that put its head in the sand rather than face up to the need for change. Nevertheless, there is a huge opportunity too. An opportunity to build a diverse and resilient energy infrastructure, to reduce our dependency on uncertain and polluting sources of imported fossil fuels and to establish Britain’s position in the advanced energy industries of the 21st century. I am confident that in an economy hungry for new opportunities, Britain has the required reserves of enterprise and innovation. All that we lack is a Government willing and able to play its part – and that’s something we can put right very soon.