I had the opportunity to speak to Lord (Peter) Lilley, a former speaker at a Bruges Group conference who served in Cabinet in the Thatcher and Major Governments as Secretary of State for Trade and Industry and Secretary of State for Social Security – and later in William (now Lord) Hague's Shadow Cabinet as Shadow Chancellor of the Exchequer and Deputy Leader of the Opposition. We spoke about the government's climate change policy, the recent social care levy, and the European Union.
"We have enhanced our own vulnerability and declined to make ourselves self-sufficient in gas" - Lord Lilley on the 'gas shortage'
On the issue of the 'gas shortages' currently dominating the headlines, Lord Lilley, once a member of the House of Commons Energy and Climate Change Committee, attributed it to a number of moving factors. Firstly, it was a worldwide issue given the recovery from the global pandemic, but it was also "self-inflicted". "...we had the opportunity to develop our natural resources by fracking", citing oil in the North Sea and the Boland Shale - "we could've developed that and had cheap, plentiful gas while possibly still phasing out fossil fuels in the future, if people want to do that". However, given that gas remains necessary for the while, gas must be imported instead of being developed domestically, "so, we missed that opportunity". "Over-reliance on unreliable renewables" has aggravated these issues, given that they were producing "very little" electricity. Moreover, the periods when they were producing significant amounts of electricity, "you can't store it, except at astronomical cost". "They are relying on something intricately unreliable", Lord Lilley argued, referring to 'unreliable renewables'.
When asked about the implications of government's net-zero agenda on the cost of living, Lord Lilley argued "it's a very costly programme", criticising Parliament for "[endorsing] the commitment to move to net-zero carbon emissions without any proper debate and without any proper costings". He also criticised the Climate Change Committee (CCC), the government's independent adviser on climate change, chaired by former Environment Secretary Lord Deben on the basis for their recommendations and their supposed lack of transparency when interacting with the Global Warming Policy Foundation, of which Lord Lilley was a trustee. "They went to great legal expense to try and prevent themselves from having to reveal themselves under Freedom of Information rules – which itself is extraordinary", Lord Lilley said, pointing out how for electric cars, "the cost is going to be far higher –and is already higher - than they were predicting". While he "wished electric cars were cheaper than petrol and diesel cars because they are cleaner and simpler to run", explaining that "it's much more logical to have electricity to doing if you could overcome the battery and the recharging problems, than having the controlled explosions", he reiterated how "we are a long way from that and we should not pretend it can be done quickly". On issues like insulation of homes and gas boilers, he argued that "every household will have to spend tens of thousands of pounds, and that money cannot just come out of thin air" and "ordinary people are going to have to pay for that". Looking beyond the actual implementation of these policies, he argued that there would be significant political discord. "In every case where the cost of meeting targets to reduce climate change has become a political issue", he argued, citing the gilet jaunes protests in France and the re-election of the Morrison government in 2019 in response to Labour's climate plans, as well as results in Canada and the Netherlands.
"The very name 'Extinction Rebellion', of the principal lobby group, is based on a lie."
Emphasising his belief in climate change, Lord Lilley linked these policies, which clearly increased the cost of living with 'some distant fears'. Even when looking at those 'distant fears', such as those laid out in the Stern Report, the basis for government climate change policy, he highlighted how Lord Stern had himself said that "in his estimates, the benefits of a slightly higher climate exceed the costs for the next century. Even if you move into the next century, in the worst case scenario...that just means that people then - instead of being 100% better off than now – will be 85% better off". "The very name 'Extinction Rebellion' of the principal lobby group, is based on a lie. There's no threat of extinction or the worst is the threat of not being as rich as we otherwise would be".
"...it provides a wonderful excuse for those who've wanted to control the economy and our lives in detail, to do just that" - Lord Lilley on those with a 'wilful desire to foresee disaster'
Looking at the issue of the imbalance of views – something that Lord Lilley has previously spoken against in the past, Lord Lilley argues that "[humans] are hard wired to be concerned about things going wrong...when we were hunter gatherers we were terrified that out of the dark would come a tiger, so we took every precaution, even if it was a rabbit running through the undergrowth". Referencing Macauley, he asked "how is it that when history shows never ending progress, we nonetheless assume, in the future, never ending disaster". "People don't read the intergovernmental climate change reviews, the reviews of all the science that's been produced – which by and large are pretty good – scientists rarely lie...and they say that in the event of the greatest threat (I.e. the ice caps melting and sea levels rising 100s of metres)...they say this will happen over thousands of years, so it is not something imminent.", adding that "I think over thousands of years, mankind will have solved those problems. We'll have harnessed nuclear fusion, we'll have cost-less energy, we'll be able to extract CO2 from the atmosphere, so it's almost wilful desire to foresee disaster".
He concluded that such alarmism "provides a wonderful excuse for those who've wanted to control the economy and our lives in detail, to do just that" Almost anything can be justified by saying 'it's necessary to mitigate climate change, so it's an excuse for socialists to have socialism."
"We ought to, by all means, try and persuade others... but once you fail, there can be no justification for pursuing unilateral net-zero" - Lord Lilley on British diplomatic efforts running up to COP26 and climate policy moving forward.
On COP26, Lord Lilley said that while the U.K. should indeed try to persuade every nation to take global action and play its part and take the lead but, "supposing we fail, and supposing the bulk of the world...say 'sorry, no', as it's more important to those countries to have access to fossil fuel and cheap electricity to industrialise and reduce poverty, than it is to reduce emissions – so they're going to go ahead. In those circumstances, what we do is irrelevant. Once our example has been spurned...so then we will have to adapt to whatever climate change occurs...it's sensible, therefore, for us to save our money for that purpose rather than to spend trillions of pounds making us carbon neutral when, if we achieve that, it reduces carbon emissions by one percent."
Lord Lilley reiterated that he "was not denying the science of global warming", saying "if you double the amount of carbon dioxide in the atmosphere, the direct effect is to raise the temperature by one degree, and there'll be indirect effects which are much less certain, which could make it more than one degree – in certain circumstances, it depends on the impact of all but clouds". "That's why I am a lukewarmist", he explained, "I think the temperature will continue to rise if we continue to burn carbon dioxide, but not to an extent that makes the temperature likely to be unbearable".
"People have a civilised lifestyle in Helsinki and in Singapore – and the average temperature in those two cities differs by about 25 degrees!" he noted, also adding how in both his times as a Member of the Commons Energy and Climate Change Select Committee and now the House of Lords Environment and Climate Change Committee, he was one of the two members who has scientific degrees.
"The worry is that we've begun to imagine that there is a magic money tree and you can forever print money and not raise taxes" - Lord Lilley, former Shadow Chancellor of the Exchequer, on his concerns about future economic policy.
When the former Shadow Chancellor asked on Conservative Party policy and the perception it was a 'high-tax, high-spending' party both in the context of Coronavirus Pandemic spending and the Social Care Levy – something Lord Lilley has spoken about on GB News - he argued that "there's certainly an element of [doing what is necessary for the moment] ...we were shutting down large swathes of the economy, depriving people of the opportunity of earning a living...we had to compensate them – so we had to print money to do it...across the economy generally, people weren't able to spend the money they had, so they were accumulating money balances without sparking off inflation".
However, he warned that "The worry is that we've begun to imagine that there is a magic money tree and you can forever print money and not raise taxes – you can't. Ultimately, if spending is growing faster than the economy's growing, you will have to raise taxes".
On the issue of social care, which Lord Lilley wrote an op-ed advocating for an alternative to taxation funded care back in September – as well as a paper in March, 'Solving the Social Care Dilemma'.
"Essentially there are two problems as far as social care is concerned. How do we pay for those who need social care but have not got incomes or assets to pay for themselves? Over half of the cost of social care is for working-age adults and those who have got disabilities who are now living longer than they used to in the past – which is good news. There's no way they can pay for themselves – they have to be paid for by the taxpayer...we've been restraining expenditure on that area since the financial crisis in 2008, but it's been creaking at the seams"
However, the former Social Security Secretary pointed out social care reform, as it is today, seeks to answer a different question, which is 'What should we do to alleviate the fear of homeowners...who, ever since 1948...have been expected to pay for their own social care if they need it in old age. Healthcare is free, but social care has always been means tested and if you have assets you're expected to pay for it, and people are naturally worried that they would have to sell their homes and use the entire proceeds for the catastrophic cost of social care".
Lord Lilley pointed out how the Dilnot Commission of 2011 found that insurance companies were unprepared to produce insurance policies for social care and dementia costs as they couldn't ensure changes in government policy and changes in medical science, but the other reason would be that people could not be persuaded to pay for an insurance policy on top of paying for pensions and repaying mortgages – hence Dilnot ruled it out. While private companies could not be incentivised to fill this gap, Lord Lilley argued that "the government should set up a state-backed guaranteed company that would do it." and recommended that this enabled people to, at the point of retirement, take charge on their homes. Lord Lilley attributed this concern to the heirs seeking to inherit property who – if the taxpayer did not shoulder the burden of paying – would lose out on their inheritance.
He described the social care levy, which forces taxpayers to shoulder the burden of paying for social care, in place of using the proceeds of selling potentially million-pound homes in wealthy homes, as 'perverse' and 'not anything to do with levelling-up'.
*Update: Since the invasion of Ukraine and subsequent concerns about energy prices and - to quote the Prime Minister - the "addiction" to Russian hydrocarbons, the issue of Energy Independence has reached the forefront of Britons minds. While Russia only makes up 5% of the UK's gas imports and 8% of the UK's oil imports, energy prices remain a problem - and hence the urgency for the private sector to develop domestic energy, particularly nuclear energy. Past underinvestment in creating a sustainable nuclear energy base has come under renewed scrutiny - this policy needs a reassessment.
I was fortunate to hear from Lord Lilley, a past speaker at a Bruges Group conference, on issues as wide-ranging as COP26, climate policy, social care, and much more.
Further Reading: Lord Lilley mentions two papers that he has authored, one with Civitas on Social Care, 'Solving the Social Care Dilemma' was published in March 2021, and the other a response to Lord Stern's review, The Economics of Climate Change, which Lord Lilley cites as the basis for government climate policy. Lord Lilley's critique of the Stern Review was written in 2012 when he was Member of Parliament for Hitchen and Harpenden.
