I have also been "dining out" lately with the contention that energy costs are replacing labour costs as the most important factor in establishing competitive advantage between countries. Against that background, you will understand my attraction to Viscount Ridley's maiden speech in the Lords on Tuesday.
Matt
Ridley’s Maiden Speech in the UK House of Lords-14th May,2013
Viscount
Ridley: My
Lords, I wish to speak on the subject of energy and, in response to the
prominent references in the gracious Speech, on the importance of economic
competitiveness. However, as this is my first time speaking in the House, I
hope that noble Lords will indulge me in a few preliminary remarks.
It is an enormous privilege and a daunting responsibility to speak
in this House for the first time. I know that it is customary on such occasions
to pay thanks to the staff but I have to say that I have been genuinely
overwhelmed by the generosity and thoughtfulness of all the staff since I have
come here.
I have also been touched by the warmth of the welcome that I have
had from noble Lords on all sides of the House. I particularly thank my noble
friends Lady Seccombe and Lord Henley, who have mentored me in my early weeks.
Listening to debates over the past few weeks, it has become clear
to me that this is a House that not only respects but expects knowledge and
expertise. This is something that my father made clear to me when he was
enjoying a long and distinguished career in this House, but he would speak only
on subjects that he knew something about—in his case, particularly the
Territorial Army, the north-east of England and local government. When I spoke
to the hustings a few weeks ago before being elected here, I said that if
elected I would speak on three main issues: the north-east of England, science
and technology, and enterprise and innovation.
I am here to fill the vacancy caused by the sad death of Lord
Ferrers, and I pay tribute to that giant of a parliamentarian, who was on the
Front Bench under no fewer than five Prime Ministers. I may hope to match his
long legs but I do not expect to match his length of service.
I am that strange chimera—an elected hereditary Peer. As a result,
I am acutely aware that I am here thanks at least as much to the efforts of my
ancestors as to my own. I would not be human if I did not feel a smidgen of
pride in being the ninth Matthew Ridley in direct succession to sit in one of
the Houses of Parliament since the son of a buccaneering Newcastle coal
merchant was elected to the other place in 1747. That brings me to the subject
of my speech.
In
1713, exactly 300 years ago, the Newcomen steam engine was just coming into use
all over the north of England. One of the very first was commissioned at Byker
on the north bank of the Tyne by my buccaneering ancestor, Richard Ridley, in
1713. Within 20 years, more than 100 of these great clanking monsters were
transforming the coal industry by pumping water from deep mines and vastly
increasing productivity.
The effect of that
innovation was momentous and global. By lowering the cost of energy and raising
the wages of labour, it set in train a whole series of events, including the
mechanisation of industry and the increase in demand for the products of that
industry, and so the great flywheel of the industrial revolution began to turn.
For the first time, an economy grew not through an increase in land or labour
but through an increase in energy, because mineral energy from beneath the
ground showed an unusual property that had not been shown by wood, wind and
water or by oxen or people—that is, it did not show diminishing returns; the
more of it you dug up, the cheaper it got.
At this point, I
should like to declare an interest because I am still in the coal-mining
business, albeit indirectly. However, my aim here is not to praise any
particular kind of energy but to praise the cheapness of energy.
Today, an average
British family uses as much energy as if it had 1,200 people in the back room
on exercise bicycles pedalling away on eight-hour shifts. It is worth
remembering that when people talk about how many jobs can be created in any
particular sector of energy. We could create a lot more jobs by making energy
on treadmills. What counts is not the jobs we create in producing energy but
the jobs we create in consuming energy if we make it affordable—or, indeed, the
number that could be lost if we make it unaffordable.
One reason why we in this country are
falling behind the growth of the rest of the world is that in recent years we
have had a policy of deliberately driving up the price of energy. To quote a
recent report from the Institute of Directors:
“The
UK’s energy and climate policies are adding more to industrial electricity
prices than comparable programmes in competitor countries, putting UK industry
at a disadvantage and making a rebalancing of the economy more difficult”.
Household energy
costs have doubled in the past 15 years. In the US, where gas prices used to be
the same as they are here, they are now one-quarter or one-fifth of the level
here. That is an enormous competitive advantage to the US and a disadvantage to
us. The chemical industry, as a result, is very keen to move to the United States,
and other industries, including the cement industry, are feeling the pinch from
high energy costs. Near where I live at Lynemouth on the north-east coast, the
country’s largest aluminium smelter recently closed with the loss of 515 jobs,
largely due to the rising cost of energy.
A nation can compete
on the basis of cheap labour or cheap energy but if it has neither then it is
likely to be in trouble. Surely these are not controversial remarks. I know
that I am not supposed to be controversial in a maiden speech so, lest I go too
far, I will now revert to talking about the north-east of England.
It is worth noting
that the north-east is the only region of England with a trade surplus with the
world, something to which the noble Lord, Lord Adonis, drew attention in his
recent report on the region. We are also a region with strong offshore
engineering capability, and I think that the north-east could once again steal
a march on the world and deliver competitive energy to the rest of the world.
There are 3,000 billion tonnes of coal under the British sector of the North
Sea and, thanks to pioneering work at Newcastle University and elsewhere, the
technology now exists to gasify this coal, getting carbon monoxide, hydrogen
and methane from it and putting carbon dioxide back in. If this technology can
be made to work then we can bring plenty of jobs not only to the region but,
more importantly, to the whole economy by lowering the price of energy. There
is enormous entrepreneurial spirit in our regions but it is held back by the
high cost of energy.
So, for the sake of
pensioners in fuel poverty, for the sake of small businesses struggling to meet
their energy bills and for the sake of large businesses all too ready to leave
these shores, let us repeat what our ancestors did in the early 18th century
and drive down the costs of energy so that we can drive up living standards.
