British electricity grid virtually “nationalised” pushing up costs, Tory peer claims

Lord Forsyth has said that a Tory-led “revolution” in the electricity industry, which has led to lower costs and a better service, is being “undone”.

He condemned the “over-emphasis on carbon emission reduction at the expense of security of supply, competitiveness and costs to the consumer”.

In debate on a critical Lords economics affairs committee report on reforming the electricity market, Lord Forsyth said: “We are seeing the virtual nationalisation of electricity production in this country.”

He said it was almost impossible for anyone to build a power station without getting some kind of subsidy or guarantee from the Government.

He added it was “a moment of high farce” when coal-fired power stations were being closed so rapidly that consumers and industries had to be paid “not to take the electricity” and diesel generators turned on to supplement the national supply.

Prices had “soared” in recent years after falling due to changes brought in by the Conservatives in the 1980s, and jobs had been lost to countries with lower energy costs.

Lord Forsyth was also critical of plans for a new nuclear power station at Hinkley Point C, warning the delayed project was a “severe risk” to security of supply. 

The committee found interventions in the energy market by successive governments had pushed up prices but not secured supplies - leading to an opaque, complicated and uncompetitive market.

Lord Forsyth said the report amounted to a “big red warning light” for ministers, and Labour former chancellor Lord Darling of Roulanish said he agreed with almost everything the former minister had said.

Lord Darling said there was a big question mark over the future of nuclear power and challenged ministers to set out a “plan B” should Hinkley C not go ahead.

He said the electricity market today was “not a market in any normal sense of the word” due to government intervention, adding it was not nationalisation but it was “certainly part there”.

Energy security was the “number one priority” but the public had been “short-changed” by the Hinkley C project, which was 10 years late and facing rapidly rising costs.

“We are pushing things right to the margin,” he warned.

Labour’s Lord Hollick, who chaired the committee when it made the report, said costs seemed to have been an “after-thought” in policy making over recent years.

He said talk of a freeze on certain energy prices before the election had been “watered down” and become a review by Ofgem.

“The committee did not advocate a freeze but we do advocate a coherent policy and that should include the proper regulation of prices by a strong and effective regulator.”

Lord Hollick warned that the Government’s “complacent” response to criticism over the Hinkley C project “borders on the negligent”.

Tory former energy secretary Lord Howell of Guildford also warned of a “very dangerous situation” over Hinkley C.

He said any failure of the project could threaten thousands of jobs as well as damage UK relations with China, and urged ministers to consider a “plan B”.

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