asked Her Majesty’s Government:
Whether the rise in oil prices has affected the outcome of their studies into railway electrification.
My Lords, the Government committed in last year’s rail White Paper, Delivering a Sustainable Railway, to keep the case for electrification under review. The Department for Transport is working closely with the rail industry to explore how to improve the affordability of electrification schemes. Part of this work involves evaluating the impact of changes in diesel and electricity prices on the business case for electrifying different routes.
My Lords, I thank my noble friend for that reply and wish him a very happy birthday. Is he aware that the apparent change of heart on the part of the Government towards railway electrification is very much appreciated? He referred to last year’s White Paper, which seemed to have been based on an oil price of $50 a barrel. With the oil price now at $139 a barrel, it seems that those economics need fundamentally to be changed, particularly in the transport sector. A further appeal of electricity as a means of powering trains is that it can be generated from a variety of sources, produces fewer emissions and is a great deal easier to maintain. The Secretary of State for Transport last week referred to the desirability of a rolling programme of electrification. Can we have early announcements on the Great Western main line and the Midland main line north of Bedford?
My Lords, I welcome my noble friend’s support for the Secretary of State’s statement. Our transport appraisal process takes full account of forecast oil prices and the environmental benefits of electrification. We recognise that oil prices are at record levels, which will undoubtedly improve the business case for electrification. If we are moving in the general direction of increasing electrification, a strong business case is to be made for the Midland and Great Western main lines. Indeed, that business case was set out in the Atkins review in 2007.
My Lords, why is the Minister so gloomy about all this? Why does he not openly welcome the sharp increases in oil prices? Is he not aware that the noble Lord, Lord Turner, the chairman of the Government’s climate change commission, acknowledged to the Financial Times only a few days ago that the Government’s climate change policy, as set out in their absurd Climate Change Bill, requires a substantial increase in energy prices? Although we have not got there yet, does he not welcome the fact that at least we are on the way?
My Lords, I guess that I would welcome the change in oil prices in the same way as the noble Lord would have welcomed it when he was Chancellor of the Exchequer.
My Lords, does the Minister agree that one of the paramount duties of any Government is the defence of the realm? We are becoming very open to threats to our energy supplies, with all the devastating consequences that there could be. When will we start this electrification, which is often announced? It will take a long time to do and, the longer we wait, the more vulnerable we are. Are we even training the staff to do the job? I believe not.
My Lords, in any event we cannot begin to introduce a full programme of rail electrification before 2014, because at the moment the priority is to ensure that we increase capacity to meet the extra demand that passengers are making on the rail network. In the interim, we must direct our resources to ensuring that any programme of electrification following on from 2014 is thorough and in the right place.
My Lords, my noble friend inadvertently overlooked answering the Question asked by my noble friend Lord Faulkner, who specifically wanted to know whether the Government will take account of the increase in oil prices. Surely the answer is, yes, they will take account of it. Is the Minister aware that, only the other day, our noble friend Lord Davies said in answer to a Written Question that I had asked about how much extra revenue there would be from the increased oil prices that he could not answer the Question, which is rather different from what the Minister has just told the noble Lord, Lord Lawson?
My Lords, I find that hard to believe. My noble friend Lord Davies is extremely good at replying to Questions. I thought that I had given the noble Lord, Lord Faulkner, an answer to his Question. I indeed look forward, as does the department, to a time when we will see increased electrification of the network, because of the many benefits that it brings.
My Lords, I am sure that the noble Lord will welcome the fact that an increase in oil prices makes nuclear generation even cheaper and more acceptable. The use of base-load CO2-free nuclear toward an all-electric economy, with electric lighting, heating and trains—and with electric cars around the corner—could be the salvation not only of this nation but, if we take a 50-year view, of the world’s energy problems.
My Lords, I am glad to hear that there is a nuclear enthusiast on the Conservative Benches.
My Lords, does the Minister recognise that transport costs both for passengers and for freight would be considerably less if the Government reduced the revenue that they are taking on oil to an extent commensurate with what they were anticipating they would receive before the price rises? Why do the Government not cut that tax in order to make life easier for people in this country?
My Lords, I am not the Treasury spokesman, but I believe that this Government have a good record in ensuring that we have a fair tax take. Our good record on that stands fair inspection in comparison with the record of the previous Government.
My Lords, in Hansard at column WA 59 on 12 December last year, the Government told us that on a high scenario the oil price might be as much as $70 a barrel. Is general government policy still predicated on that price? If not, what price does the Minister expect in future years—in, say, 2010?
My Lords, it would be foolish indeed for me to begin speculating on the price of oil in another 12 months. We err on the side of caution when we make our estimates, which is a wise approach.