Contribution
Let me begin by paying tribute to President Zelensky. Thanks to you, Mr Speaker, he gave an extraordinary speech here this week. Like Auden’s “The Shield of Achilles”, it was a speech of poetry and hope, but also of steel. He showed that Ukraine, far from being bowed by Russia, is now sharing its expertise in counter-drone defence with nations across the Gulf and elsewhere.
I give thanks for the swift action that the Government have taken to support households that are now facing sharp and unexpected increases in the cost of heating oil, including many in Herefordshire. As Herefordshire goes, so goes the UK. The events in the middle east have exposed a hard truth: this country is dangerously exposed on energy, and the Government’s policies are compounding that vulnerability. Around a fifth of the world’s oil and liquefied natural gas passes through the strait of Hormuz. When that is threatened, prices spike, and when prices spike, everything else is hit—heating, electricity, industry and jobs. Every industrialised economy relies on secure and affordable energy, yet this country imports around 60% of the gas we use. We pay far more for it than our competitor nations do—around three times US prices—so when shocks come, the benefits of higher gas prices go to other countries, but our citizens bear the higher costs and added insecurity.
That structural vulnerability has built up over decades under Governments of all the major parties, but this Government are negligently or deliberately making it much worse. They have blocked new North sea licences, and sent a clear signal that domestic oil and gas production is to be run down, regardless of demand. The consequences of these decisions are already visible. The CF Fertilisers plant near Chester has closed thanks to high energy costs, so this country now imports ammonia instead. The Grangemouth refinery is ceasing its refining operations and becoming an import terminal. In Aberdeen, Scunthorpe and Teesside, investment is falling and companies are failing. Thousands of jobs have been lost, and tens of thousands more put at risk. Little wonder that a host of businesses and unions, including Unite, the GMB and even RenewableUK, have expressed their concern.
These are not isolated events; they are the predictable effects of policy decisions taken by Ministers without any serious consideration of the economic and strategic consequences in the current context. The Energy Secretary often says that the problem is global gas prices, and that increasing domestic production makes no difference. Of course that is nonsense, because domestic production actually boosts jobs, public revenues and national resilience while lowering emissions. But that line is also dangerously misleading. Gas prices are regional, not global, because gas, unlike oil, is relatively expensive to ship and store. The Energy Secretary is confusing a global market with global pricing. It is a basic error.
Alas, the Chancellor is no less confused. On Tuesday, she said:
“You see countries like Canada and Norway increasing their production, and every country’s got to play their part”.
But, in her view, that does not include the UK. Her policy is precisely the opposite: not to increase but to reduce oil and gas production. You could not make it up. Shortly we will hear the Business Secretary make a statement on how the Government want to increase domestic steel production, even while they are stopping the domestic oil and gas on which that steel production relies. It is an absolute nonsense.
If we cut domestic production in the face of steady demand, imports will fill the gap, but an increasingly import-dependent system is forced to rely ever more on pipelines, LNG cargoes and interconnectors. These are vulnerable fixed assets that are open to damage and disruption from abroad, and there is a further consequence. Modern conflict is determined by industrial capacity in steel, chemicals, fuels and supply chains, yet the Government are allowing these national sovereign capabilities to erode.
So this is a policy that increases carbon emissions, deprives Britain of tax revenues, worsens the balance of payments, hurts consumers and businesses, and weakens both our energy resources and our national security—that is quite an achievement. It is hard to imagine a more confused or dangerous approach. I do not want a debate on this topic as we can all see what is happening: at some point there must be a U-turn, because Iran is making a fool of the Energy Secretary. No, I desperately want the Leader of the House to get the Prime Minister to see the madness of this approach and get the policy changed as soon as he possibly can.