In their rush to remove the Winter Fuel payment from anyone over 66 who is earning  or receiving more than £35,000 a year Ministers have forced HMRC and pensioners into a lot of extra work.  They have decided in their haste to pay everyone the £200 who is over 66, then  to get the money back by a variety of different ways. So the state has to find the money, and  has to spend money on getting the money back with a delay. HMRC is burdened with a new chore to use the tax system for something which should have been sorted out by the Benefits department.

I have no problems with the idea that people on comfortable incomes do not need fuel subsidy even when living at home all the time because they are not working. There will be arguments about what is comfortable these days. I do have arguments with this clumsy benefit as amended.  Now a large number of people have to declare to HMRC their £200 which they are not entitled to so it can be  clawed  back in an awkward and delayed system. The system does cope with some other categories of people who do not qualify for Fuel benefit.

I have seen the letters the DWP  is sending out to everyone over 66  this year.  It tells them all that they “will get £200 for Winter Fuel payment” as before.

It then states their new policy “If your personal income is over £35,000 HMRC will take your payment back. You can find more about this under the heading “Check if HMRC will take your payment back”. There is no explanation of why this new policy is coming in and under what powers.

It goes on to say “This is your personal income only. If someone you live with will also get a payment, HMRC will look at their income separately. You can check if your income is over the threshold at www.gov.uk/guindance/payingback the winter fuel payment…..You will need to include the Winter fuel payment on your tax return. If you file your tax return on line where possible HMRC will include the Winter Fuel payment for you. You should check that your payment is automatically shown on your online return and include it if it is not”.

Why can’t DWP Ministers design a scheme that does not involve sending £200 to millions of people that are not entitled to it and then having to ask HMRC to recoup it sometime somehow? Why do they lack any ability to explain this cut in benefits in a friendly way? People who do not want to receive a benefit if they are not entitled to it  have to take responsibility for paying it back. Why?

The government tells us that UK electricity prices are amongst  the highest in the world because our electricity is priced from gas generated power on many days and this is now expensive. They claim that as we add more and more wind and solar to the grid, so the price of electricity will come down, replacing the dear gas generated energy. This has not happened so far, with our electricity prices climbing as we add large amounts of new renewable power. It also leaves open the question why the government does not change the pricing arrangements if the cause is as they describe. The result of days of shortage of wind when gas is a larger part of the mix and also  pushing up the prices of every other type of generation  could presumably be adjusted by different pricing methods.

         How can I put this tactfully to the government?  It is likely to be dearer to  rely on increasing amounts of renewable power when you have to allow for all the capital and running costs of a duplicate back up system for when the wind does not blow. Whilst it is true that the costs of the gas fuel can be high when world markets are disrupted by wars, the costs of the windfarms do not stop with just the costs of putting in the turbines and blades. The investor in new facilities would need to find the high up front capital costs and the debt service. They would need to pay for maintenance and accept a shorter active life for the wind farm than for the gas power station. They  would need to pay a gas power station to be on stand by for days when the wind did not  blow. They   would have to pay premium prices for the gas power when they  did need to rely on a gas power station . It would have  to charge more as it stands idle for long periods of time and so needs a higher price when it can run.  By definition it is likely to run most when gas prices are dearest, as it runs when all else has failed in the system leaving us short of energy. It is true just building  a new gas power station  would also  have a high capital cost and also have higher running costs as it needs to buy in gas.  It is difficult for renewable power to be cheaper all the time there has to be a duplicate gas system on stand by as well.

           The extra costs for the country do not end with the issue of capital cost and running costs of the different generators. The renewables system needs considerably more grid capacity. Much of the wind power is generated many miles away from the electricity consumers so the grid needs to be enlarged. In order to keep the system balanced when more renewables are destabilising the grid  the operator needs to add expensive big investments to create  inertia  to avoid  problems with  system stability. They may need as a cheaper answer old gas power  stations to keep spinning without the boiler. There are black  outs if the system is driven outside its safe power ranges. It is true the country could move to battery or hydro storage of power, so the system can store electricity when there is plenty of wind and run down the stores when the wind drops. All this extra storage capacity has a capital cost. There are losses of electricity from storage and issues about how much storage is needed. The technology of long duration storage is still developing. A longish period of high pressure with little wind especially in a cold winter with high demand for power could stretch the system and would require major storage investment to be safe.

One of the important continuities in British life is Bonfire night. I remember well the excitement as a young boy being allowed the stay up late to watch the fireworks. I enjoyed helping put together the bonfire pile. It was good when the heat came through from the flames on what was often a cold night.

The commemoration has often been a muddled very British one. The official reason for encouraging bonfire nights was to remind people of the dreadful terrorist crime Guy Fawkes proposed to commit, as he got ready to blow up Parliament. He wanted to kill the whole assembly of peers, MP s and the King himself as they gathered together in the Lords chamber for the state opening. He wanted to murder  the whole governing establishment, clearing the way for a new King and Ministers. Burning  Guys on thousands of bonfires around the land was to remind people of what could happen  to such evil criminals.

For others Bonfire night can bring  disparaging remarks about Parliament and government in the British tradition of challenges and jokes at the expense of authority, whilst not approving of mass murder. I have seen one civil fireworks where a mock up of Parliament itself was  enveloped  in flames rather than a representation of the plotter bomber.

I celebrate tonight Parliament’s survival thanks to vigilance and intelligence about the actions of the plotters. When I had to leave my room in the Grand Hotel Brighton following a bomb which did go off, we learned that most of the government escaped but five  were dead. The wish to murder governments can still haunt our Parliament which needs to be vigilant both for  those who would kill to replace a government and  to uphold our precious liberties.

I agree that the current fiscal rules system set up by the previous Conservative Government, and extended and modified by this Government, cannot possibly achieve its main aim, which should be to control debt better. Whether there is a five-year target or a three-year target does not really make much difference. Some people thought that that was a welcoming tightening, but the underlying truth is that year 3 or year 5 never comes and there is no pressure on the Government to make sure that they meet it. By the time they get to that year, it is no longer year 3, so it no longer has a biting target. That is clearly absurd.

I also agree with the committee saying that the OBR’s role has to be that of an independent forecaster and that the Government should be able to talk to it but should not be bound by it. Obviously, a good Government would wish to explain why they disagreed, or should explain how they intend to handle debt and deficit if they do not like the figures that are being produced.

In 2010, when this family of targets first started after the banking crash and the explosion of debt and expenditure over the period of that crash, public spending—that is, total managed expenditure—was £760 billion. This year, according to the latest forecast, it will be £1,449 billion. That is an increase of 90% over the years. I cannot remember a year, until we got to a Labour Government, when I was not told that we were cutting public spending, but spending is up 90% in cash terms. The inflation check from the Bank of England says that there was 62% inflation over that period, so there was a fairly substantial real increase, which occurred in most years. Some individual programmes were cut, and some priorities could not be pursued, but it is difficult to see that we have had a rigorous set of controls over either spending or borrowing.

If we look at where these targets came from, ultimately, they are derived from our Maastricht targets, which we were meant to obey when we were a member of the European Union. Noble Lords may remember that there were two treaty-driven targets. We were to keep debt at 60% of GDP or lower. Every country bar one, I think, broke that—including the United Kingdom—so it was transposed into something saying, “As you are over 60%, you should start getting your debt down towards a 60% target”; that was transformed into our fiscal rules after we left. There was also the 3% running deficit ceiling, which, again, has been often broken; it was broken by us in our period of membership. This Government have revised and tightened that by saying that there should still be a 3% deficit ceiling, but only to allow 3% of GDP borrowing for capital purposes, and that the aim should be to have a current balance. That is a good amendment to a target that does not work.

Where one needs to go from here is to say, as the committee does, that we are close to running out of money—and the people who lend it to us are close to running out of patience—for us to carry on spending at the rate we are doing. We have had three very big spending increases over the past 20 years: over the banking crash, with a big increase in debt; over Covid; and post Covid. I do not think that enough was done to control the spending coming out of the Covid exceptional expenditure; the extra borrowing was complicated, with a massive programme of quantitative easing. We then had, of course, a very substantial policy decision to go for more spending and more borrowing by the incoming Government in 2024.

I think that we would be much better off if, on a cross-party basis, we could agree on two overarching aims for the UK economy, based on one of our targets at the moment and some of the American experience. We should have as our aims 2% inflation and 2% growth, so that all policy and Bank of England considerations recognise that there can be trade-offs between those two, and we should embed the 2% inflation target on the Government as well as on the Bank of England, because inflation in public sector costs is one of the main forces of inflation at the moment; that should be taken much more seriously by the public sector.

In the brief time I have, I want to mention two expensive quirks in our figures, which I have highlighted and in which I would like other people to get interested; I find them fascinating, and they might be of use to those conducting public policy. The first is that Rachel Reeves made a decision, which I and my party condemned as being anti-jobs and anti-vacancies, to increase national insurance. The curious financial thing about it was that, of course, the bulk of the national insurance revenue has to be paid into the National Insurance Fund. That is now accumulating a surplus of £12 billion extra each year and has a surplus of £100 billion already, so I am not quite sure why she wanted a bigger surplus in the fund; it has to be lent back to the Government at the base rate.

The second funny money is the dreadful situation with the ownership of bonds by the Bank of England. The latest OBR figure says that the losses will come down a bit: it now thinks that, from 2022, when the losses started, until 2033, the losses will be £228 billion. Can we not get that figure down a bit?

The UK governing establishment can be both wrong and nasty to anyone who dares to suggest a different way of thinking. I seek to change their approach to inflation, growth, energy and public sector management. In order  to do so I have to argue within narrow parameters they lay down, as they seek to condemn or ignore anyone who disputes their consensus follies.

They say the Bank of England is independent and that is essential to control inflation. The Bank’s policy since 2008 has been dominated by buying up £895 bn bonds at increasingly absurd prices, all needing the sign off by the Chancellor. They then in 2022 switched to selling them off at big losses. They needed a Treasury guarantee to pay the losses. The Bank is on taxpayer life support needing more than £10 bn a year subsidy. The government appoints the Governor and the Bank has to report directly to Parliament as well. That’s not a definition of independence. Meanwhile inflation has been well above the 2% target for more than five years but no-one is meant to blame the Bank.

They say UK growth will come from higher public sector investment in infrastructure and utilities with more nationalisation and regulation needed. They ignore the disasters of HS 2 and Post Office computer investment and suppress the records of the loss making employee sacking polluting nationalised industries of the 1970s.They overtax the private sector leading to an exodus of talent and money that could generate faster growth.

They make the UK race to net zero, forcing our energy prices up and closing down our oil,gas and high energy using industries through high taxes and bans. This forces us to rely on imports and increases world CO 2 as a result. It is the worst form of economic self harm adding to the carbon problem it says it wants to solve.

They preside over a public sector in denial about poor productivity  and poor quality of service in many areas. Why have there been so many hospital avoidable deaths and hospital transmitted infections? Why did the Post Office send many good staff to prison  on false charges? Why does the railway have so many  cancelled and delayed services? Why are the roads riddled with potholes presided  over by Councils out to make life difficult for van and car drivers?  They always blame lack of money and hide behind cuts. Instead in recent years there has been a surge in public spending, borrowing and taxing which they deny. Where does all that money go?

In each case trying to hold a public debate requires care in what can be said as the main response of the Establishment  is to  attack the critic whilst perpetuating the common lie they hide  behind. Question net zero strategy and you are a “ climate denier”  who is causing droughts and floods. Question Bank independence and you are regarded as an ill informed danger  undermining economic stability. Question public sector mismanagement and you are said to be covering up spending cuts and wanting to privatise.

One cheer for the government approving the Jackdaw field. We need the gas, We need the well paid jobs. We need the tax revenue. It will mean less world CO2 as imported LNG which home gas will replace generates much more CO 2 when compressed, transported and regassified.

One and a half cheers if and when the government approves Rosebank, as the OBR expects it to do. That brings more jobs, much more tax revenue and will displace other oil that would be produced elsewhere for the world market. Producing more in the UK does not mean more oil is used worldwide.

Two  cheers if the Chancellor means what he wrote yesterday in the Times. He said it makes no sense to sign up for more windpower with expensive contracts and grants if the grid cannot handle the extra electricity. We are already paying a small fortune to wind power providers when they produce more electricity than the grid can handle. It makes no sense to commission more power which would incur yet more of these crazy payments.

To make it three cheers there need to be many more changes of policy. If the PM is serious in saying we need to get the prices of power down, and we  need more national supply then these too need to happen

1. Allow drilling for more oil and gas onshore and offshore. Encourage tie backs of oil and gas into existing North Sea production facilities and pipelines to use them for longer. Decommissioning them prematurely means extra costs and extra CO 2 generated for no good reason, which is what Mr Miliband wanted to do.
2. Extend the lives of our existing fleet of nuclear power stations where the safety case allows. We are about to lose all but one of our stations to old age.
3. Extend the lives and contracts for our existing gas power stations as they are crucial to keeping the lights on.
4. Place a price cap on how much we are prepared to pay for imported electricity other than in an emergency when we have otherwise run out of power. Avoid importing power other than renewable given the government’s environmental concerns.
5. Acknowledge that an aggressive net zero policy in the UK closing  down our energy using industries to rely on imports is not only bad for our economy, undermines our national security and increase world CO 2.

There is no more important topic; the world would be a much better place if there could be peace in places today torn by war, with the damage, destruction, and the violence that brings. I agree with a lot of what the noble Lord said about the opportunities for the United Kingdom with our great diplomatic skills, the reach of our diplomatic service, the experience we have gained over many decades and centuries of intervening around the world and, where we could, trying to find resolution of conflict, and with our own experiences bringing peace out of the very difficult situation in Northern Ireland. But, as the noble Lord referred to at the end, one of the reasons the United Kingdom does have a role in the world and is taken seriously is that we have serious and important defence forces. It is most important that they are used with a view to promoting peace where we are intervening, or to right wrongs that can be righted relatively easily by the judicious use of force. That has not always been true in the interventions that we and our NATO allies have made in recent decades in different parts of the world.

I hope the Government, as they go through a rather long defence review and discussion about how best to spend the money that is clearly needed, will have at the forefront of their mind how those forces can be used to deter violence and the outbreak of new conflicts, and how they can be used for expeditionary forces that can make timely interventions where necessary, particularly where those interventions can help create a peace, or where they are needed to police a peace which has been brought about by diplomatic process.

I am sure all of us agree that talking and diplomatic compromise are usually better than conflict extending into aggressive war, and that we would all agree that you only get a war when diplomacy and politics have failed. We all here believe that politics, particularly democratic politics, should be a benign force channelling the conflicts and disagreements into words and arguments and resolving them by compromise or votes. But that will not always be possible in different parts of the world, and that is why we need to choose to spend our money on defence wisely, and to see how we can best help the world through those places where we have power: through the United Nations, through our senior membership of NATO and through the Commonwealth and all the associations that brings.

Looking at defence priorities, it is most important that the Government do not forget that the main priority is to be able to defend these islands and to show that these islands are so well defended that they would be a very hostile environment should any external force wish to intervene. That must mean strengthening our sea forces and our ability to respond to drone and missile attack, and to know how to police our waters when we see possible hostile powers looking enviously at our cables and pipes that are such an important part of our economic progress. So, will the Government please make sure that that is all beefed up and the best modern technology adopted?

When it comes to expeditionary force, we have in the past shown that we have that expeditionary capability, and at times it has been very successful. The Falklands are only free today, and the people of the Falklands are only safe in their wish to be British, because we had enough expeditionary force on our own to drive out the Argentinian invader and restore order. It is most important that we now keep enough force available in case anybody has changed their minds in Argentina about what they might wish to do to try to gain control of islands that are clearly British. British forces were also very successful alongside the American allies leading the operation when Kuwait was liberated, which was a very good example of a sharp use of overwhelming force to right a very obvious wrong where a country had been badly invaded.

Today we have two very big conflicts, which are damaging in themselves—particularly damaging for those involved with them, with too many deaths and too much destruction of property—but also very damaging to the rest of us economically, and because we are morally offended by how they originated. Those are the conflicts in Ukraine and in the Middle East.

We need to hear from the Government a bit more about how they wish to proceed. If we take the case of Ukraine, the war has dragged on for so long and we keep Prime Ministers for such little time that there have now been five United Kingdom Prime Ministers who have had to respond to the difficult situation in Ukraine. They have shown complete unity of understanding and purpose, they have all condemned the Russian invasion and the atrocities that have resulted and they have all wished to offer sensible support to the very brave Ukrainians defending their country. But they have all been very clear that we are not going to declare war on Russia, commit British forces or drag NATO into a conflict with Russia. That would greatly worsen the position and is much against everybody’s interests, including those of the Ukrainians, because it would intensify the exchange of barbarity with all the extra firepower it would bring to the conflict.

That means that we in the West have a dilemma: we are not going to offer a military coalition to beat the Russians, and the Ukrainians, fighting very bravely, have not yet been able to evict the Russians from their territory. I would be interested to know what the latest government thinking is about when and if there is going to be any chance for talking to replace war-fighting and for the two belligerents to be brought to the table in a way that might produce some kind of diplomatic answer. It is not obvious how you do it. President Trump has been much criticised for trying to do it; people thought he was being too kind to Russia, which is not something that people want. It would be interesting to know what the United Kingdom and the European Union position on all this is, and whether there is any way through. I think we all feel that five years of war is excessive and that the awful problems it is creating for the Ukrainian people are unacceptable, difficult though it is to see a way out.

In the case of the Middle East, the United Kingdom does not have a big role to play because it appears that we do not really have serious forces to offer to try to police the sea-lanes and to deal with some of the attacks on our allies in the Gulf. America has the near monopoly of power that can be committed to that, and in that sense it is America’s war. We all rest upon what happens in the exchanges between the President of the United States of America and those now leading Iran.

I would be interested to know whether the Government feel there is anything we can do by way of helping our allies in the Gulf, and whether they can see any way forward, which is more likely to be led by local interests there, as the noble Lord, Lord McConnell, very sensibly said. We too are friends of the UAE, Qatar and so forth—the places most likely to be able to help. It would be good if we could get our defence forces into a shape where we could play a more significant role in trying to help the restoration of normal shipping in the Gulf and Red Sea area. Clearly, energy prices, interest rates and other things globally have been driven up by the extent of that conflict and by the interruptions to trade. In a world that should have plenty of oil and is in transition to using less of it, we find ourselves short of it because of a very nasty war.

I would hope that the defence review would come up with good answers on that combination of defending the home base, which needs more defence, and the appropriate expeditionary force for policing commerce and sea-lanes and going to the aid of allies. It would be very useful to know from the Minister how the Government can extend the skills and the experiences we have had diplomatically and in governing places that are subject to these conflicts. The world desperately needs peace, particularly in those two centres of warfare at the moment, and we would all be better off if that could be brought about.