My contribution to the Third Reading of the Energy Bill, 14 March 2016

John Redwood: I welcome the Bill because it attempts to deal with some of the damage that has accumulated in recent years as a result of the policies of the Labour Government, who neglected the need for more energy and security of supply, and some of the European Union’s interventions.

I welcome the cross-party attempts to breathe some life into the North sea industry, which has been crucial over many years. As many have pointed out, it is going through a troubled time and anything that can be done by the Oil and Gas Authority or directly by the Government is to be welcomed. For example, now is a good time to remove the petroleum revenue tax, which is a rather silly, unpleasant tax introduced by the Labour party for internal political reasons near the beginning of activities in the North sea. It yields no revenue at the moment, so it would be a good time to get rid of it to show that we want normal profit and revenue taxes, not super-taxes, on North sea activities when the good times return. I hope that the Chancellor will bear in mind the needs of the industry in his forthcoming Budget, because things could be done on tax to promote more investment against the background of a weak oil price, which is no great incentive for making new things happen.

I hope that the Bill will contribute towards taking security of supply seriously. The Government regularly tell us that they want our country to be secure—an aim that I hope is shared across the Chamber. An important way for a country to become more secure is through controlling its own energy resources. The United Kingdom is a relatively privileged country geographically, because it has substantial reserves of oil, gas and coal. We have recently discovered the likelihood of new gas reserves onshore, which should be available to exploit sensibly. We also have plenty of water around that allows us to have hydro-type renewables, which are genuinely renewable and continuously available, unlike the unreliable wind, about which we had a good debate earlier. As the Government go about implementing the Bill, I trust that they will have security of supply at the forefront of their mind.

George Kerevan (East Lothian) (SNP): Where does the security of supply lie in the Prime Minister flying to Paris to ask the French President to fund a nuclear power station that will supply 7% of our electricity, when France clearly will not do so?

John Redwood: That must be worked out between the contracting parties. I have not been urging them to do that, but I wish them well in whatever negotiations are under way. I accept that if they can find a way of producing relatively sensibly priced power on a continuous basis from a nuclear power station, that has all sorts of advantages for the security of supply. I assume that they will ensure that all the technology and the ability to control, repair and maintain the station will rest in the United Kingdom, because we can have true security only if we control the technology and have the industrial resources to be able to build and mend the facility being created. We must also bear that in mind for weapons procurement. If we want a secure country, we need an industry that can support it and is capable in adversity of seeing us through. We cannot rely on imports for everything, and we are already relying too much on imports in the crucial area of energy, so I hope the Bill will help us to stop thinking that we can automatically rely on French electricity and Russian gas indirectly through the European system.

George Kerevan: On that point, after France, the Chancellor of the Exchequer seems bent on handing over the entire British nuclear industry to China.

John Redwood: I trust not. I have not seen all the documents, but I am sure that we will see more of the detail in due course as and when more decisions are taken. If my right hon. Friend the Chancellor is negotiating such a deal, I urge him to ensure that we have control of and an understanding of the technology. I see from the nods from my Front-Bench team that that is exactly what they have in mind. A country does not have secure power if it is dependent on those abroad to maintain a power station and does not understand how to mend it, improve it or make it function at a crucial moment. Of course we need to probe to make sure that the Government are doing the right thing, but we get that security only if we control the technology.
Let me return to the point about security vis-à-vis imports and our own capability. We are becoming too dependent on imported power, and we have to remember that if our imports are to come from the European continent, that area is short of energy in general, and it has a policy to make energy scarce and very expensive. The west of the continent does not get on well with Mr Putin, yet indirectly it relies on his gas, and that is not a strong strategic position to be in. I want our country not to be in any way beholden indirectly to Putin’s gas or to the general network on the continent, which is clearly weakened by the necessity to have Russian supplies in the eastern part of the system. The UK, as an island nation, with access to such riches both onshore and offshore, and with the ability to generate more genuine renewables that are continuously available, should be able to have a secure supply and sufficient capacity in reserve when need arises.

We wish to be a greater industrial power than we are. We are the fifth largest economy in the world but we are very dependent on a very big service sector and our industrial sector has, under Governments of all persuasions in the past 30 years, shrunk as a proportion of it. We still have some great companies and some great technology but we need more of them and we need to broaden the industrial base. In order to have that capability in Britain, so that we can make our own power stations, generators and engines, we need to make sure that we have sufficient and cheap energy to fuel those factories, forges, facilities and blast furnaces.

We meet tonight against the backdrop of our steel industry gravely at risk. One of the main contributory factors to the risk to our steel industry is scarce and dear energy; there are also chronic problems with steel prices and Chinese competition now, but this began with an energy problem. We cannot hope to be one of the big world forces in energy-intensive industries if we do not have more plentiful energy at cheaper prices.

I wish the Bill and the Secretary of State well. The Government must have as their fundamental aim security of supply, because without secure energy a country is very limited in its foreign policy options and has to tailor its diplomacy accordingly. I see us becoming too dependent. We wish to correct our balance of payments, and getting into energy surplus would not only be a very good contribution to that aim, but would strengthen our diplomatic and political security. As we wish to reindustrialise, we need more and cheaper energy. We are not going to get that on a diet of wind farms and speculative renewable technologies that are not yet available, and are very expensive and difficult to scale up. We can get that affordable energy if we extract the oil, gas and coal, and process it in an environmentally friendly way to the extent that can be achieved, if we have more gas turbine power stations and more reliable baseload power stations. We are going to leave ourselves vulnerable and insecure if we depend on a combination of European imports and too many wind farms. I therefore say: may the OGA do well, may it find ways of bringing on stream the new reserves we are just discovering and may it find ways of extending the lives of the existing fields and of the pools of talent and expertise we have, particularly in Scotland, where we need them still.


  1. Lifelogic
    March 19, 2016

    All good sensible stuff. Hinckley point c is the wrong nuclear project, far too expensive. Use the cheap fossil fuels for a while longer and explore the far better and cheaper nuclear options that are available.

    1. Hope
      March 19, 2016

      The point is missed again. The EU is deciding the energy policy for our country implemented through the Climat Change Act. Miliband created it and Cameron endorsed it through the Tory manifesto. Those who voted for it should realise how stupid they were.

      I admire JRs tenacity in a range of matters, but it is difficult to equate his comments to the fact his party is against what he is saying. As for wishing the minister well, it beggars belief. She is following the Climate Change Act which is essentially an EU policy which he disagrees with. JR supported his party’s manifesto, no point moaning about it. This is the same as JR claiming the public voted for more EU supporting parties., when in fact we were deceived and lied to by both Labour and Tory governments- and still are a we see from EU immigration figures. I read today Cameron has delayed Chilcott until after the EU referendum!

  2. Horatio
    March 19, 2016

    Sorry JR but I have to requote from your utterly brilliant blog/speech yesterday. It touched a nerve by describing a future of possibilities not risks.

    “We are an island of coal, oil and gas set in a sea of coal, oil and gas. We also have lots of natural renewables, particularly lots of potential water power. Why cannot we create an energy policy in which we do not need to rely on importing timber from Canada, electricity from France and energy from Norway?”

    Utter optimistic, positive, logical eloquence. I’ve been forwarding it on all over the place. It continually frustrates me that Outers never appear to have read any briefing notes pre- interview. That paragraph is a wonderful positive vision of a post brexit future without risk. Of course it would also mean spending less of our money on foreign imports and increasing British jobs. What’s not to like?

    It also infuriates me when, typically on the environment or employment law, Outers in a two sided discussion never challenge the assertion that the EU protects the UK and ‘hard won rights’. It’s a simple rebuttal : ‘if post brexit the sovereign democracy of the UK, votes to change a law or discard a ‘right’ why is that a bad thing? Don’t you trust the British people to know what’s good for them?’

    1. Hope
      March 19, 2016

      Anything the EU might have give to Britain is nothing that British governments could not have given itself.

      This seems to escape the Labour Party and Unions in most of their reasoning for staying in the EU. Blair could have changed employment laws at any time he wished or reversed anything the Tory party had changed, if he had not given it away to the EU! He could have brought back the mining industry, helped the steel industry or many of the othe accusations layer at another party’s door.

  3. stred
    March 19, 2016

    It is a pity you were unable to point out that the Finns have formed a consortium to finance a different type of nuclear power station, that is being built around the world at half the cost and is well proven and equally safe.

    1. hefner
      March 19, 2016

      Are you talking about the Rosatom type of nuclear power stations?
      If positive, please note the Ros…
      JR points out the potential indirect dependency on Russian gas. Are you willing to exchange French/Chinese nuclear technology for a (even if well working but) Russian one?

      1. stred
        March 19, 2016

        Yes. Anything that works. The Russian design was also ordered by the Germans and other countries including Turkey, because it works and is half the price. The design is adapted to modern safety standards. Cameron prefers to ignore it because he is upset that his EU expansion to the Urals has ended in a civil war at the first stage. Are the Russians less of a threat than the Chinese, where Osborne travels around organising his CHIFIs? Maybe the Japanese could sell us the type we sold them for nothing back. Regulation presumably stops us building any more Sizewells, which are economical and seem to be safe enough to be supplying us at the moment.

  4. JJE
    March 19, 2016

    My eye was caught this morning by the reports in the FT and elsewhere that GCHQ has had to intervene in the Smart Meter programme as all the meters had been given the same encryption key – a fundamental schoolboy error that beggars belief.
    These meters are capable of being turned off remotely. That means they can be hacked and that an attacker can cause enormous damage to the whole grid.
    We really urgently need some capable engineers put in charge of DECC. The current crew are causing even more destruction than we knew.
    I expect the whole Smart Meter programme is going to be very late and way over budget. It is an area that could benefit from some further scrutiny. For example I think the NAO must be asked to update its assessment.

    1. stred
      March 19, 2016

      We recently had a smart meter installed and I was glad not to have to crawl under the stairs and shoes to read the old one. Then I found the forecast bill was quite high and decided to change energy company to save £200pa. We were asked whether we had a smart meter. Then the new company asked me to read the smart meter, as they did not have the right reading system for ours. It is now called a dumb meter and I have to crawl in and press button 9 seven times to find the right number.

      As to water meters, I queried why a tenants bill had gone up £100 since the bill was metered and why there was no meter. I was told that the council had covered it up when mending the footpath and that the bill was correct. They asked how many people were in the house. I said four and was told that the bill was quite low for this number and it should have gone up to £650. Another result of EU directives on sewage quality and water saving by expensive meters rather than reservoirs, while population increases.

    2. Jerry
      March 19, 2016

      @JJE; I expect the whole Smart Meter programme will end up being scrapped.

      Also these meters are being sold on the idea that people will be able to save money by having them, what utter tosh and lie, people can already save money by simply turning off or down what they do not need. So just what is the real reason for these so called smart meters, and why are they capable of being turned off remotely, surely it is not just to make it easy for non bill payers to be disconnected…

      1. stred
        March 19, 2016

        Jerry. Absolutely true. Ours made no difference to consumption at all. It just tells you how uch you have used, and have to use. They are for future control in order to have a smart grid for windmills.

        I read that the Italians have a smart meter which is a fraction of the cost, but perhaps it does not control the customer.

    3. bluedog
      March 19, 2016

      Incredibly, the British government has permitted electronics sourced from the Chinese company Huawei to be installed in critical national infrastructure. Huawei, like every major Chinese corporation, has very close links to the PLA and the US has banned their product for fear of cyber disruption. But then if your security assessment is such that you are happy with Chinese nuclear plants, presumably the risks of using Huawei electronics pales into some sort of insignificance.

  5. Antisthenes
    March 19, 2016

    Our world these days is being run by mostly dreamers and theorists who put social justice, environmental concerns and statism before commercial and economic practicality. So we end up with decisions being made that are costly and inappropriate. Practical governments would make for practical solutions. They would put security of supply and simplicity of provision at the heart of decision making on energy, armaments sourcing and many other things.

    Wealth creation is the priority because without wealth to pay for it it is not possible to have all those social and environmental things we would like. Statism of course is something we should not want at all and we can start reversing that by leaving the EU.

    1. fedupsoutherner
      March 19, 2016

      The billions of pounds put into wind could have gone to something much more useful. Instead we now have to fund two systems. Agree John, we are too reliant on other sources for our energy and other countries can pull the plug when it suits them. Sent to me yesterday by a friend in Scotland where we are awash with useless wind turbines.

      As I type the metered wind turbines in the UK are producing a mammoth 478MW (out of a metered capacity of 9000MW) – and Scotland is importing some 500MW from England. What a mess politicians have got us into – through total ignorance!

    2. Lifelogic
      March 19, 2016

      Not even real social justice or real environmental concerns, just fake religions and fake solutions too

    3. Bert Young
      March 19, 2016

      Very sensible response – I endorse it .

    4. Antisthenes
      March 19, 2016

      Money going up in smoke by burning gas to make our electricity is by far better than putting billions into wind to do it. It uses less of it for a start. Until we have enough nuclear either fission or fusion then that is the sensible thing to do. Want to bring down CO2 emissions quickly then use the money being swallowed up by bird mincers for research and building nuclear power stations.

  6. Ex-expat Colin
    March 19, 2016

    Why do so many people in the UK despise heavy engineering? Is it miserable, dis-interesting or too hard for them to understand. Or are people too damned lazy with some close to insane?

    Don’t want the engineering of the distant future being pulled to the now. That leaves us weak as is demonstrated currently in trying to build critical services. The “act of trying” is rather late also. Its rather easy to predict doom…but success seems to be constantly unavailable?

    Thank you for that speech. Pity that recent strange beliefs have disabled us in so many ways.

    1. Jerry
      March 19, 2016

      @Ex-expat Colin; The people do not despise heavy engineering, successive UK government have.

      1. hefner
        March 19, 2016

        Just a precision: Successive UK governments decided that opening the UK economy to the world would bring less costly solutions. To start with it might have been true, but it has also led over the last 30+ years to a reduction in the appeal of engineering programs in universities, thus in the number of UK-trained engineers.

        Now it would be very difficult for the UK top engineers to be able to embrace and deal with several large infrastructure projects (like HS2, Hinkley Point C, CrossRail2, tidal energy, … whatever the merits or not of these projects).

        Joined-up thinking beyond the next election? Not under our watch! Much better to be yelling at “the other side” during PMQ.

        1. Mark
          March 20, 2016

          UK engineering courses are propped up by large numbers of students from the Far East. They are the ones who take their expertise away with them to build their own economies. This is particularly true of the more skilled postgraduate students, as statistics from HESA reveal. (Table 6a, 9)

  7. Ian Wragg
    March 19, 2016

    As the government is willing to underwrite the building of Hinckley Point, why can’t we fund our own home grown technology and lease the station to one of the power companies

    After all we can borrow to finance £16billion of foreign aid.
    I see our local supermarket has made 19 staff redundant from 1st April to pay for the new living wage. This is on top of cutting premium rates for nights and weekend working.
    Gideon is doing a good job of pricing labour out of the market

    Still we can import millions more now Turkey have been given the nod.

  8. A different Simon
    March 19, 2016

    John ,

    You talk about hydro power renewables .

    The amount of energy released is proportional to the mass and the head of water – difference in water level on the sea side and lagoon side . Thus a single tidal lagoon produces power at high tide and low tide . There are 2 tides a day so power is produced four times a day .

    In order to provide efficient power which can be dispatched at other states of the tide one needs dual or multi-lagoons or electrical energy storage .

    A single tidal lagoon enclosing an area the size of the M25 harvesting a 6m tidal range would produce about the same number of gigawatt hours per day as two of the proposed Hinckley points .

    Why is it that a tidal scheme can be approved for Swansea bay which would have serious environmental impact once dredging starts , including on the local fishery , yet onshore drilling in Lancashire has to operate at the noise levels and opening hours of a library ?

  9. Jerry
    March 19, 2016

    “I urge [the Chancellor] to ensure that we have control of and an understanding of the [nuclear] technology.”

    The easiest way of achieving that is to finance [1], design, build and maintain the whole project ourselves, even if we end up building to older but now proven designs.

    Quite frankly we are in no position to use new and perhaps unproven technology, that is a luxury for when a country is in energy surplus, not deficit – with all the then added risks of perhaps resisting a shut-down as it would cause distribution problems or even a wide spread blackout.

    [1] so what if the cost can’t be hidden off balance sheet, the electorate are not stupid, they understand the state has to invest in such projects

    1. A different Simon
      March 19, 2016

      Quite right Jerry but Hinckley Point seems to be more about ingratiating The City Of London to Beijing .

  10. Mark
    March 19, 2016

    I have looked through the Bill which confines itself to the establishment of the OGA as a separate entity (potentially allowing DECC to be closed down), and to the ending of fresh renewables obligation subsidies to new wind farms. Separating the OGA may allow it to develop the professional expertise and attitudes to oil and gas development that keeping it within DECC were preventing, providing that the appointed management do not turn it into a branch of the ineffective Environment Agency.

    However, I read this morning of another bill we’re faced with: some £22bn should we cancel Hinkley Point:

    Enough! We must cancel this white elephant before that clause becomes operative. Instead, we should look to proven technology at far lower cost, and cover the gap before it can be built by retaining our existing fossil fuelled fleet instead of making it uncompetitive by regulation and tax.

    1. stred
      March 19, 2016

      This is staggering incompetence. The deal stinks. Every time the PM or DECC answers the criticism, they just state that we need nunclear base load, which we do- they never explain why they have chosen the worst deal in the world from the most unsuccessful foreign state company.

      Lets hope the MPs expose the shambles when they interview EDF.

    2. Mark
      March 19, 2016

      Further to the above I found the Parliamentary briefing note here:

      It says

      Total support to HPC through the CfD is expected to be in the range of £4bn to £19bn (real 2012 prices, discounted to 2012) depending on the level of future wholesale prices. The wholesale price range used reflects the full range of DECC’s latest fossil fuel price projections and a range for future carbon prices. However, the support through the CfD could be higher if wholesale prices were lower than DECC’s low wholesale price scenario…

      which has to be one of the more intentionally misleading claims submitted to Parliament. Why should real 2012 prices be used, and then why discount them to 2012 (implying double discounting of the money of the day prices that will actually be the prices received by HPC)? Some simple sums.

      3.2 GW capacity (times 8760 hours per year) would produce 28TWh p.a. at 100% load factor, and 24TWh at a more realistic 85% load allowing for maintenance downtime. The £92.50/MWh in 2012 money strike price is already £98/MWh after indexation (and will be much higher by the time the plant starts production). The current market price for power is under £40/MWh, so the subsidy is of the order of £60/MWh or more in 2016 prices, or over £1.44bn per year in constant 2016 money, for 35 years, or £50bn in total in 2016 money.

      Since the subsidy works out to be twice the projected cost of the plant, it would seem that its purpose is to subsidise the loss making EdF at UK bill payer expense.

  11. oldtimer
    March 19, 2016

    Thank you again for stating in the clearest of terms what needs to be done with respect to UK energy policy. I only hope that the front bench nodding heads you referred to were not the heads of nodding donkeys.

    The fact is that these warnings about the inadequacies of UK energy policy have been given for at least the past ten years if not longer. The UK has now reached a crisis point because there is no margin for error left. Businesses are now paid to shut down their activities to save energy! How do you run a competitive business under such circumstances? You cannot. Yet this very policy was endorsed by Mr Cameron in the Carbon Report he signed with his fellow LibDem ministers, Mr Clegg and Mr Huhne, in the last Coalition government. It appears that they accepted the consequences of the policy they promoted. Yet ministers still appear to be promoting it; Ms Leadsom recently was promoting the idea of zero carbon emissions – even though there are no practical means of achieving such an outcome without first crippling the economy.

    DECC is unfit for purpose. It needs to be abolished and an Energy ministry created which is staffed by peoiple who actually know what is required, know how it can and must be achieved. It needs to be capable of devising a tax and regulatory regime that actually will persuade investors and companies with the requisite skills to invest the huge sums required to equip the UK with the efficient energy capacity it needs.

    1. A different Simon
      March 19, 2016

      There are some good geologists at DECC .

      Antoinette Harvey for one who has just been given an OBE .

      We must be careful not to tar everyone who works for departments which have been taken over by fifth columnists .

      Regarding energy investment , investors in shale gas are expected to suck up political risk but investors in all other energy sectors are guaranteed profits and through subsidies .

      1. oldtimer
        March 19, 2016

        I am sure that the good geologists would find a better home in a new energy ministry, one where their skills would be better understood and appreciated.

    2. fedupsoutherner
      March 19, 2016

      Yes, while Amber is TALKING about stopping subsidies for wind, many more are being applied for and erected in Scotland. The rush for wind and the high earnings to be had from turbines knows no bounds. Only today on a drive out into the hills I saw 3 medium sized turbines that were not there 2 weeks ago. Nice little earner for the landowner. Forget about penalising the disabled, tax the landowners of these deplorable turbines. As usual, it is the rich getting richer and the poor paying.

  12. Bert Young
    March 19, 2016

    The Government priorities should not be over influenced by Brussels ; the energy resources we have that Johns’ comments in the House set out , fully outline why we should steer our own course . Individuals and corporate manufacturing enterprises need all the support they can get if we are to stay warm and produce goods for the world . Energy availability at low cost is a must .

    Yesterday IDS sent a very clear message to the people about the Government getting its priorities wrong ; this was followed up by the news that Cameron , once again , is delaying the publication of the Chilcot report – how much more stupid can he get ?.

    1. A different Simon
      March 19, 2016

      Maybe he (or a close cabinet member) is implicated in the alleged wrong doing ? (beside helping to cover it up)

  13. Shieldsman
    March 19, 2016

    I intend to exercise the right I am told I have to refuse to have a smart meter installed.
    There is a problem here in that all new meters being manufactured are smart meters, but I am told that the transmitter unit can be disconnected.

    But why have a smart meter in the first place, it only shows the monetary cost of the energy you are using ticking away in a convenient position, such as the kitchen. Cutting your energy bill demands discipline in usage, the smart meter does not do that for you.

    It took Margaret Hodges Commons Public Accounts Committee to force out of the DECC the real purpose for smart meters.
    It all came about because wind farms do not supply electricity 24/7. So the idea is by pricing to force the householder to use electricity at times of low demand and when the wind is blowing.
    The smart meters (if they work) will be used as a sophisticated white meter, constantly reprogrammable to charge a different price per unit throughout the day.
    But like most Government IT programs the technology chosen is out of date, so we may be saved by default. It will of course mean many £millions down the drain, but what can you expect from PPE’s, when you need BSc.’s in Engineering.

    1. hefner
      March 19, 2016 has a report on smart meters: they are not compulsory. Equipping the whole of UK with such smart meters will cost about £11 bn, to be paid in fine by the customers.

      1. fedupsoutherner
        March 19, 2016

        Don’t you mean not compulsory yet?

      2. hefner
        March 20, 2016

        On Which? site, at bottom of page “Smart meter explained” , in small characters is “your right to refuse a smart meter”.

    2. ian wragg
      March 19, 2016

      The smart meter is not half as smart as the government would have us think.
      My electricity smart meter fitted last year does not have a remote switch and you have to go online to see how much you are using.
      As Jerry says I think the whole programme will be scrapped because it will only take some whizz kid to create a devise to neutralise it selling for a few quid on the internet.
      That’s the trouble when the public are smarter than the government (not difficult).

      1. Bazman
        March 21, 2016

        Smart meters an be used to direct electricity and influence prices to where the power is needed most. ie Mayfair and Kensington mansions and you can be sure they would be used like that as IDS has pointed out how the country is ran for the benefit of the few.
        IDS can now be wheeled out to fit any anti Tory agenda. Good work man!

    3. fedupsoutherner
      March 19, 2016

      Yes and turning you supply off will be the number one agenda when energy is limited as it will be in the near future.

  14. Richard1
    March 19, 2016

    I see that Lord Deben has said that “most climate change deniers are believers in our leaving the European Union etc”. The Leave campaign should draw attention to his absurd remarks.

  15. sm
    March 19, 2016

    So closing functional existing coal capacity was not in the national interest. Whilst continuing to import lots of new energy users. Surprised not.

    We need to stop closing capacity until the replacements are in place.

    Hinkley will be obsolete by the time it is built.
    Just like HS2 will be made obsolete self-driving electric cars. Maybe a smart motorway with embedded sensors and electric recharging may be more useful.

    Storage technology and decentralisation of generation will change things in a signifcant way if we back our engineers. Power to Gas, storage via liquid air or even new battery tech.

    Wind & renewables may be expensive v coal short term but are cheaper and less risky than Hinckley. Why fund energy projects through bills. Why not via QE? No huge long term expense and risks of nuclear fission reactors.

    I also don’t see Russia as a threat. Threats are much closer to home and are currently in charge.

    A reliable supplier of gas? Why not? They would I am sure agree to provide buffer gas in UK storage, if you made long term deals. Perhaps even helping to build infrastucture. in partnership.

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