House of Commons
Prayers
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Mr Speaker
I regret to have to report to the House the death of David Cairns, the Member for Inverclyde. David was a most assiduous Member serving as Parliamentary Under-Secretary of State and Minister of State in the last Parliament, and was much respected by the House. David trained and served as a priest before beginning his political career. I am sure that Members in all parts of the House will join me in mourning the loss of a colleague, and extending our sympathy to the hon. Member’s partner Dermot, his father John, his brother Billy and his many friends and family.
Oral Answers to Questions
(13 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Helen Goodman (Bishop Auckland) (Lab)
1. What recent assessment he has made of the effectiveness of the monetary policy framework.
The Chancellor of the Exchequer (Mr George Osborne)
I begin by expressing my own personal sadness and shock at the death of David Cairns, whom I knew pretty well. I went with him on a trip to the United States some years ago and spent some time with him, and I know that he was principled, gentle—in the best sense of the word—and genuinely liked and respected in all parts of the House. His sudden and premature death is a tragedy, and my sympathies—and, I suspect, those of everyone here—go to his partner Dermot and his family.
The Government have set up a new macro-economic framework to restore economic stability. The building blocks of that framework are an independent Monetary Policy Committee that will continue to target inflation, a new Financial Policy Committee to operate macro-prudential tools, so that we can assess overall levels of debt in the economy—something not done in recent years—and, crucially, a credible, coherent and independently monitored fiscal policy that allows interest rates to stay lower for longer while remaining consistent with the inflation target. It is now widely accepted that this framework is far more effective than the one that went before it.
Helen Goodman
May I associate myself with your tribute, Mr Speaker? David Cairns was a highly valued colleague, and I am sure that all our thoughts and prayers are with his partner Dermot and his family.
I am grateful to the Chancellor of the Exchequer for his answer, and I was wondering whether, in his more reflective moments, he would agree that Portugal, Greece and Ireland face a major problem, in that they cannot run an independent monetary policy attuned to their particular needs. That being the case, will he stop making rather childish comparisons between the UK and the eurozone countries?
Mr Osborne
The hon. Lady is right that those countries do not have a flexible exchange rate. That is because they are in the euro, which I campaigned to keep Britain out of. I do not know how she has campaigned in recent years, but the last time I checked I think it was still official Labour party policy to join the euro in principle. Perhaps the shadow Chancellor will clear that up when he gets to his feet. The comparison I make is a good one: a year ago almost to the day, people were looking at the British budget deficit, which was larger than those of Portugal and Ireland, and asking whether Britain could pay its way in the world. Our credit rating had been put on negative watch. Now, however, thanks to the policies of this coalition Government, Britain has economic stability again.
Sir Peter Tapsell (Louth and Horncastle) (Con)
I also wish to pay tribute to the memory of David Cairns. May I ask the Chancellor how the co-ordination is organised to achieve a synthesis between our tight fiscal policy and our lax monetary policy?
Mr Osborne
Obviously, monetary policy is independent—the MPC sets it in the way we all know—so there is no co-ordination in that sense. I do not have a direct influence on monetary policy, but it is clear that by setting a credible fiscal policy, we give the MPC maximum room for manoeuvre and the freedom to keep interest rates lower for longer. The Governor of the Bank of England made that clear when he gave his Mansion House speech last year, and it is an observation also made by many independent observers of the British economy. Interest rates would be higher if we had a less credible fiscal policy.
Ms Angela Eagle (Wallasey) (Lab)
I would like to thank you, Mr Speaker, and the Chancellor for your tributes to David Cairns, our colleague, and to add our tributes from the Opposition side of the House. David was one of those very rare people who caused a change in the law in order for him to be able to take his seat in this place, and when he arrived his presence was not a disappointment to anyone. He was a great colleague and friend, and our hearts go out to his family and friends. We would like to add our deepest condolences at the shocking news of his untimely and very early death today.
Before the last election, both parties now in government pledged no rise in VAT, but with inflation running at double the Bank of England target, people are facing the biggest and longest squeeze in their living standards for 80 years. How does the Chancellor think that increasing VAT by 2.5% has helped them to cope with this issue?
Mr Speaker
Order. Whatever may be said about the question, I am sure that the Chancellor will focus on the monetary policy framework. That is what he can be relied upon to do.
Mr Osborne
Actually, monetary policy is the thing that I am not directly in charge of, but the point I would make is that the VAT rise is part of a credible fiscal policy. The person who was Chancellor of the Exchequer before me has made it pretty clear in interviews since the election that he, too, was considering a VAT rise, and he would probably have gone ahead with one if Labour had been re-elected.
Mr Osborne
The shadow Chancellor shakes his head. I know that in government he tried to do everything to stop a credible fiscal policy being developed, and he is now doing everything in opposition to stop Labour developing a credible economic policy. Long may he continue to do so.
Mr Andrew Tyrie (Chichester) (Con)
The Chancellor will shortly publish draft legislation on financial regulation making the Bank of England the most powerful central bank of its type in the world. The word “Governor” simply does not do justice to the empire over which Mervyn King will shortly preside. What specific proposals does the Chancellor have to ensure full democratic accountability of the reformed Bank to both Parliament and the country?
Mr Osborne
I thank my hon. Friend for advance notice of his important question. Both the Governor of the Bank of England and the Government take the accountability of the Bank very seriously. Clearly the Bank will receive considerable new powers for its prudential regulation of our financial system and in its macro-prudential tools. We are looking at specific ideas for enhancing the Bank’s accountability, including to this House, but it would be appropriate first for me to appear before my hon. Friend’s Committee—I know that he has contacted my office seeking a date—and to await the Treasury Committee’s findings, so that we can listen to what it has to say before coming up with our confirmed proposals.
Tessa Munt (Wells) (LD)
2. What recent assessment he has made of trends in levels of bank lending to small businesses.
The Financial Secretary to the Treasury (Mr Mark Hoban)
Repayment of debt by small businesses is running ahead of lending to the same sector. As a consequence, net lending fell in the first quarter of this year. However, the availability of credit to business in the same period increased.
Tessa Munt
I would like to draw attention to the situation affecting my constituent George Archer, a business man who has had a £5,000 overdraft that was unused for three years, with the exception of four days when he requested a £20,000 extension. The bank—which is one of the big four—offered him £25,000 on rates that he initially refused, before beating it down to acceptable rates. On paper, that bank has increased its lending to a small or medium-sized business by £20,000, but I wonder what the Minister can do to halt this duplicity and ensure that loans are real, active, needed and utilised.
Mr Hoban
I cannot comment on the particular circumstances that my hon. Friend has raised, although I am happy to look at them more carefully. I am sure that she would welcome, as does the whole House, the commitment of banks to increase their capacity to lend to businesses of all sizes.
Chris Leslie (Nottingham East) (Lab/Co-op)
I wonder whether the Minister still thinks that Project Merlin was such a great deal with the big banks. Lending to small businesses continues to fall, while the charges for those loans are rising. The banks’ promise to support the big society bank looks less generous, as we learn that money will be lent only on commercial terms, and now we hear that Santander is pulling out of the business growth fund, which was a key plank of the deal. Is this a failure of Project Merlin or a failure of the Government?
Mr Hoban
It is rather churlish of the hon. Gentleman to be critical of Project Merlin. When his party was in office it was able to secure lending commitments from only two banks. We have achieved a comprehensive package with all banks, including Santander, to increase the amount of money that they will lend to businesses, including small businesses. The business growth fund, which he also raised, is an opportunity for businesses to seek equity finance in a way that is currently not available and that meets the equity gap, which the previous Government did little to resolve.
Esther McVey (Wirral West) (Con)
3. What fiscal measures he is taking to reduce the costs faced by businesses.
The Chancellor of the Exchequer (Mr George Osborne)
As well as dealing with the deficit, this Government are helping business. To support a private sector recovery, we have cut corporation tax by 2% this year, with 3% to come. We have cut small companies’ tax and extended the small business rate holiday for another year. We have stopped Labour’s jobs tax, expanded enterprise and research tax breaks, announced new enterprise zones and, crucially for millions of businesses and families, we have abolished the fuel duty escalator and cut the duty.
Esther McVey
As Merseyside seeks to expand its private sector, it is looking towards its knowledge economy so that it can build on its substantial science base. Predictions show that, by 2022, it could have growth of 15%, which would mean 58,000 jobs. What are the Government doing to incentivise such growth to ensure that those predictions for Wirral and Merseyside become a reality?
Mr Osborne
First, we have increased science funding in the north-west. Although it is not in my hon. Friend’s constituency, there has been additional money for Daresbury, which was announced in the Budget. Also, Mersey Waters in her constituency is going to be an enterprise zone. We have also announced the redevelopment of the Royal Liverpool hospital at a cost of £450 million. So, whether it is medical research, science at Daresbury, the Atlantic Gateway project or the enterprise zones, we are doing all sorts of things to help the Mersey region.
Ed Balls (Morley and Outwood) (Lab/Co-op)
I endorse the sentiments expressed by my hon. Friend the Member for Wallasey (Ms Eagle) and others about the tragic death of our colleague and friend, David Cairns.
I also congratulate the Chancellor on his successful masterminding of the “No to AV” campaign. We all saw how much he enjoyed it over the past week or so, but now that that political campaign is out of the way, perhaps he could drag himself back to his day job for a moment. The flagship measure of his strategy for growth in last year’s Budget was a £1 billion national insurance holiday for new businesses outside London and the south-east. He said that that would benefit 400,000 companies and create 800,000 jobs. Let me ask him a very specific question. Will the Chancellor tell the House how many companies have so far benefited from that scheme, and how many jobs have been created?
Mr Osborne
I thank the right hon. Gentleman for congratulating the “No to AV” campaign, which many of his colleagues supported, even if he did not. I cannot help but notice that he had a big role to play in Labour’s election campaign, during which he said that
“the Scottish elections are a big test”
for Labour. Well, he was certainly right about that.
Let me say something about that national insurance tax break that was announced in the previous Budget. The take-up has been in the low thousands, and that is something that I acknowledged to the Treasury Select Committee. We are seeking to improve the design of the scheme, to ensure that new businesses are more aware of its benefits. As a result of work being done by Her Majesty’s Revenue and Customs, we expect take-up to increase.
Ed Balls
Despite all the bluster, there was not a specific answer to the question in there. We were told by the Business Secretary in February that the Chancellor would announce the details of how he would develop the scheme in the Budget, yet those details still have not arrived. Actually, I have the figures from the Chancellor’s own Department. How many companies have benefited from the scheme? Not 400,000 but just 3,000. How many jobs have been created? Not 800,000 but just 6,000. If that is the flagship measure of his growth strategy, it is no wonder that the economy is flat-lining, that consumer confidence is down and that unemployment is forecast to rise—[Interruption.] Well, if that is not the reason, perhaps the Chancellor will tell us why the economy has been flat-lining in the past six months. Is not the reality that the country is discovering what the Liberal Democrats discovered on Thursday of last week: that this coalition is hurting, but it is not working?
Mr Osborne
The shadow Chancellor is not just out of his depth; he is drowning. The truth is that he has had absolutely no impact in the several months that he has been doing the job. He had one policy, a VAT cut on fuel that the European Union ruled illegal. He had one idea, which was to follow America, but now the Obama Administration have announced a deficit reduction plan as fast and as deep as the UK’s. He had one prediction, which was that there would be a double-dip recession, and that has not happened. We know that he is a man with a past, but we are beginning to discover that he has absolutely no ideas for the future. If we want any proof of that, this is what the CBI said this week when asked what the outcome would be if Britain followed Labour plans:
“The economy would be weaker because of the impact of a loss of confidence”.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
4. What assessment he has made of the effects of the increase in the standard rate of VAT on levels of economic growth in the first quarter of 2011.
The Exchequer Secretary to the Treasury (Mr David Gauke)
At this stage, it is not possible to make a full assessment of the effect of the increase in the standard rate of VAT on levels of economic growth in the first quarter of 2011. The Office for Budget Responsibility forecast released on 23 March projected growth of 1.7% over the course of 2011. That forecast takes full account of the Government’s fiscal policy measures.
Ms Stuart
The Bank of England expects inflation rates to accelerate over the next few months. The markets, however, seem to have taken the view that interest rates will not increase as speedily as was anticipated just a few weeks ago. How does the Exchequer Secretary reconcile the Chancellor’s notion that the economy has grown with the judgment of the markets?
Claire Perry (Devizes) (Con)
May I return to the topic of VAT on fuel? I have just come from a business session in my constituency of Devizes, where I know that despite the decrease, high fuel prices continue to be a real drag on growth for small businesses across the economy. I have a letter from the EU commissioner saying that the recent motion we debated—that a derogation should be made specifically for motoring fuel—is almost certainly illegal and definitely unworkable under EU legislation. May I ask Ministers what proposals we can suggest to help motorists in the real world now that the Labour party’s suggestion has been revealed as yet another—
Tony Baldry (Banbury) (Con)
5. What fiscal measures he is taking to encourage charitable giving.
The Chancellor of the Exchequer (Mr George Osborne)
The Government think that charitable giving needs a great deal more support than it has been getting, so we announced a major package of new tax breaks in the Budget, ranging from the biggest to the smallest donations. This includes the commitment that anyone giving more than 10% of their estate to charity will have their inheritance tax bill cut by 10%. For the first time ever, the first £5,000 of a donation or donations to a charity will automatically attract gift aid. That is automatic tax relief on the collection plate and the collecting tin on the high street. Overall, 100,000 charities could benefit to the tune of £600 million a year. These are the most generous tax changes for a generation.
Tony Baldry
Over the year, some £58 million in loose change is put in collection plates from just Church of England collections, so the small donation gift aid scheme will be very welcome, as it will enable tax to be recovered on that amount. Welcome, too, will be the reduction in inheritance tax for those who give more than 10% of their estate to charity. After all, we can take nothing with us, and it is probably better to leave as much as possible to charity when we go.
Mr Osborne
I thank my hon. Friend for his support. One challenge is to make sure that everyone hears about these schemes over the next couple of years. Because the Budget focused on big issues like fuel duty and the corporation tax cut, the same amount of attention was not given on Budget day to the charitable giving measures. Over the period before they come into effect, I want to make sure that all the charities are aware of the benefits. Every charity will be able to benefit, but small charities will be disproportionately better off.
Kerry McCarthy (Bristol East) (Lab)
Many local charities would disagree with the Chancellor’s statement. Will he explain why he chose in the Budget to focus on tax breaks for the wealthiest owners when many small local charities who will not benefit from such donations are being hit by the triple whammy of a rise in VAT, the end to the gift aid transitional rate and cuts to local government grant funding? What help is he giving to those charities that he expects to form the backbone of his big society?
Mr Osborne
I am not sure who the hon. Lady has been listening to, but this is what the British Red Cross said: “Allowing charities to—”[Interruption.] I am sorry; it seems that we should disregard the views of the British Red Cross. Let me, however, repeat what it said for the benefit of my right hon. and hon. Friends.
“Allowing charities to claim back on up to £5,000 of small donations per year will have a big impact for small charities”.
The Charities Aid Foundation said:
“The Chancellor has today delivered for charities and those who want to support them.”
Instead of carping from the sidelines, why does the hon. Lady not get behind this good scheme and ensure that all charities in all our constituencies make use of it?
Pamela Nash (Airdrie and Shotts) (Lab)
6. What assessment he has made of the effects on families and children of the tax and benefit changes introduced in April 2011.
The Chief Secretary to the Treasury (Danny Alexander)
I echo your tribute to David Cairns, Mr Speaker. I knew him as a very effective Scotland Office Minister, and as a champion of Scottish broadcasting. It is a tragic loss, and he will be very sorely missed by Members in all parts of the House.
Direct tax and benefit changes introduced in April are progressive. On average, households in the bottom 80% of income distribution gain. As a result of the direct tax changes introduced in April, 21 million individuals earning up to about £35,000 per annum will benefit in real terms this year.
Pamela Nash
Let me take a moment to associate myself with the Chief Secretary’s comments on the sad death of David Cairns. David provided me with a lot of support and a lot of laughter during my time here as a parliamentary researcher and, over the last year, as a Member of Parliament.
Families with two or more children will lose up to £1,560 per year as a result of the cuts in the child care element of working tax credit. Does the Chief Secretary accept that that will deter many parents who would otherwise have returned to work from doing so?
Danny Alexander
The vast majority of people on low and middle incomes will benefit from the income tax cuts that will result from the raising of the income tax threshold by £1,000. For families with children, we have increased the child element of child tax credit by £180 above indexation. I agree with the shadow Chancellor, who admitted on the BBC shortly after the Budget that
“only the majority of families”
would benefit from those moves.
Mr Mark Spencer (Sherwood) (Con)
Does the Chief Secretary share my desire to see a welfare system in which hard-working families are better off than those who choose not to work? Does he agree that, as soon as we can afford it, we should enable as many as possible of those hard-working families to benefit from the lifting of the tax threshold?
Danny Alexander
I agree wholeheartedly. That is why we have set ourselves the agenda of both reforming the welfare system and lifting the income tax threshold to £10,000, which will significantly benefit millions of people on low and middle incomes.
Mr David Hanson (Delyn) (Lab)
Value added tax up, losses of about £1,500 for middle-income families, child benefit frozen, child tax credit cut, working families tax credit frozen: can the Chief Secretary tell me why, when such decisions are made, it remains the Government’s priority to cut the 50p tax rate for the highest earners in the community?
Danny Alexander
I am not sure that the right hon. Gentleman opposed any of the items on that list in votes in the House.
As I said earlier, we have cut income tax by increasing the income tax threshold. We have also introduced a triple lock on pensions, increased cold weather payments, and increased the child element of child tax credit. Of course we must look at the way in which the income tax system works, but our priority has been to cut income tax for people on low and middle incomes by increasing the tax threshold. That is the tax priority of this Government.
Harriett Baldwin (West Worcestershire) (Con)
7. What steps he is taking to ensure that the Financial Services Authority exempts from new domestic regulation businesses employing fewer than 10 people and new businesses for the next three years.
The Financial Secretary to the Treasury (Mr Mark Hoban)
Where the Government are granting new powers to the Financial Services Authority through primary and secondary legislation, we will seek to apply the moratorium. The FSA is, however, an independent regulator with powers to make rules under the Financial Services and Markets Act 2000. The Government’s policy on exempting micro-businesses and start-ups from new regulation will therefore not apply automatically to rules made by the FSA.
Harriett Baldwin
In his testimony to the Treasury Committee, the chief executive of the FSA said that up to 10,000 jobs—in many cases, those of small independent financial advisers—could be lost as a result of the retail distribution review. Will the Financial Secretary meet the chief executive of the FSA as a matter of urgency to discuss ways in which the impact could be mitigated?
Mr Hoban
I know that my hon. Friend has campaigned tenaciously for IFAs. I remind her that although the FSA is an independent regulator—this addresses her question directly—it has an obligation to assess the impact of its rules on businesses, including small businesses, and to make its rules proportionate. I should add that it is not planning any initiatives by means of its powers under the Financial Services and Markets Act apart from those that are already under way.
Jim Shannon (Strangford) (DUP)
I thank the Minister for his response. Clearly, if the economy is to be regenerated and rebuilt, it will be small and medium-sized businesses that will achieve that, and one of the things they tell me as their elected representative is that they need rates relief and assistance. What assistance is the Minister considering giving to such businesses?
Mr Hoban
As the hon. Gentleman will be aware, this Government have taken many actions to provide support to small companies. For example, we have cut the small profits rate of corporation tax—which the previous Government sought to increase. We have done a lot to encourage the growth of small businesses, and we will continue to look at what further measures we might take to encourage their future prosperity.
John Stevenson (Carlisle) (Con)
8. What recent estimate he has made of the size of the public sector borrowing requirement.
The Economic Secretary to the Treasury (Justine Greening)
The public sector finances first release published by the Office for National Statistics estimates that the first provisional out-turn for public sector net borrowing in 2010-11 is £141.1 billion, or 9.6% of GDP. That is £15 billion lower than in 2009-10.
John Stevenson
Manufacturing has been undergoing a renaissance under this Government, and clearly has a role to play in helping the economy grow and in reducing the deficit. Does the Minister agree that manufacturing also has a significant role to play in helping to reduce the other deficit: the balance of payments deficit?
Justine Greening
I completely agree with my hon. Friend; he is absolutely right that manufacturing has a vital role to play. In fact, the total trade deficits narrowed in each of the past three months, and that recovery in exports has been driven largely by strong growth in the export of manufactured goods, which accounted for almost 50% of the UK’s total exports. That is not just good news for those businesses; it is good news for jobs, too. It shows that under this Government Britain is not just open for business in the UK; it is open for business abroad, too.
Kelvin Hopkins (Luton North) (Lab)
When the Government’s cuts really start to kick-in, unemployment will rise by hundreds of thousands, if not up to 1 million. That will result in lower tax revenues and higher benefit payments, and the deficit will get worse and public borrowing will increase. Is not the Government’s policy nonsense?
Justine Greening
The hon. Gentleman is giving a critique of his own party’s policy in many respects, because its proposed cuts are nearly as large as ours this year. The difference is that we have set up the Office for Budget Responsibility, and there is clear evidence that we will start to see employment growing year on year and unemployment falling year on year, so by the end of this Parliament we should see a net creation of almost 1 million jobs. Surely, the hon. Gentleman must welcome that? His party leaves unemployment higher when it leaves office.
Mr Marcus Jones (Nuneaton) (Con)
9. What fiscal measures he is taking to support first-time home buyers.
The Financial Secretary to the Treasury (Mr Mark Hoban)
Until and including 24 March 2012, first-time buyers can apply for relief from stamp duty land tax on properties of up to £250,000. The Government are currently reviewing this relief, and will announce the outcome of the review in the autumn. The Government are also investing £250 million in 2011 to assist more than 10,000 first-time buyers to purchase a new-build home of their own through the FirstBuy Direct scheme. That scheme is being co-funded by developers.
Mr Jones
I thank the Minister for his response. First-time buyers are the lifeblood of the residential property market, and while I congratulate the Chancellor and his team on the deposit scheme announced in the Budget to assist first-time buyers to purchase new-build property, will the Treasury team consider apportioning part of that funding to assist first-time buyers who want to purchase second-hand property, in order to give the property market the vital shot in the arm that it needs?
Mr Hoban
My hon. Friend makes an important point, but it is crucial that we target help where it will deliver the greatest economic benefit. By targeting assistance on first-time buyers purchasing new-build property, the FirstBuy scheme helps to unlock stalled developments and stimulate additional house building, with a further 10,000 homes being built for open market sale, supporting 42,000 jobs directly and a further 24,000 jobs indirectly for a year. If we were to pursue the route my hon. Friend suggests, we would potentially lose the benefit of the financing that comes from home builders.
Kate Green (Stretford and Urmston) (Lab)
Is the Minister concerned that the proposed savings cap in the universal credit will make it more difficult for first-time buyers to save for the much higher levels of deposit that lenders increasingly require?
Mr Hoban
Everyone in the House will understand the challenges that face many first-time buyers in trying to save up for a deposit. That is why we announced this scheme at the time of the Budget, which has been widely welcomed. We should also recognise that a number of lenders are now reducing the loan-to-value ratio, to enable more first-time buyers to get on to the housing ladder with a smaller deposit.
Sheryll Murray (South East Cornwall) (Con)
10. What steps he is taking to support investment in the regions.
The Chief Secretary to the Treasury (Danny Alexander)
Returning the UK economy to sustainable economic growth that is more balanced across the regions of this country and across sectors is a key priority. In the recent Budget, this Government took steps to encourage investment and exports as a route to a more balanced economy. In addition, we have introduced 21 new enterprise zones in England and we have allocated £450 million of investment in the first round of the regional growth fund, including to an excellent proposal from the Western Daily Press and the university of Plymouth to support small firms across the south-west.
Sheryll Murray
I thank my right hon. Friend for that reply. Private sector growth is really important in my constituency, but only six of 464 bids to the regional growth fund were from Cornwall. What can the Government do to encourage more bids from Cornwall in the second round?
Danny Alexander
I would urge my hon. Friend and other colleagues from Cornwall to encourage businesses and the local authorities to support bids from private sector businesses. The regional growth fund is there to support private sector-led bids that create growth and jobs and that support economic development across England, and I would urge her to work with chambers of commerce and local enterprise partnerships.
Mr George Mudie (Leeds East) (Lab)
In view of the indifferent growth in the regions, does the Minister regret the Government’s decision to abolish regional development agencies and to give to their authorities no money, no staff and no authority?
Danny Alexander
No, I do not; I think that that was the right decision. The balance of policies that we are putting forward—on enterprise zones, local enterprise partnerships and the regional growth fund—is designed to ensure that ideas that come from the regions have a much greater chance of success. Our decision was the right one, and the hon. Gentleman will have noted that inequality among the regions actually grew during Labour’s 13 years in office.
Nicholas Soames (Mid Sussex) (Con)
11. What steps his Department is taking to promote economic growth.
The Chancellor of the Exchequer (Mr George Osborne)
As my hon. Friend knows, we inherited an economic mess, we have restored economic stability and we are promoting economic growth by cutting business taxes, encouraging investment, expanding exports, improving and investing in skills, and creating jobs. The whole House will be pleased to know that 400,000 private sector jobs have been created since the Government came into office.
Nicholas Soames
I warmly welcome the excellent record of this Government, led by my right hon. Friend the Prime Minister, and the admirable work done by the Chancellor. Does he agree that, in addition to all this work to encourage growth, the deregulation of the economy continues to be extremely important and that it is not proceeding at as fast a pace as it should? Will he do everything he can to encourage his colleagues in the Government to get on with the deregulatory programme?
Mr Osborne
I certainly am doing that. We announced in the Budget the deregulation of £350 million-worth of business regulation, and we also imposed a moratorium for the coming years on regulation on small businesses. On the first anniversary of this Government, it is worth reflecting that 400,000 extra jobs have been created in the private sector, 89,000 fewer people are on the unemployment count, manufacturing output is up by 5%, business investment is up by 11%, exports are up by 12%, our credit rating has come off negative watch, our market interest rates are down and, as I say, economy stability has been restored.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
Would the Chancellor like to associate himself with the views of the Secretary of State for Business, Innovation and Skills on the cumulative effect of carbon reduction measures on the competitiveness of energy-intensive industries? There is real concern in the ceramics sector in my constituency that the Government are in danger of exporting jobs and importing carbon, which is in nobody’s interest?
Mr Osborne
The hon. Gentleman raises a very specific issue—the cumulative impact of the environmental policies of both the previous Government and this one on some very energy-intensive industries such as the one that he represents in Stoke—which is worth consideration. We are examining it, and it is a challenge for the whole House to ensure that we get the right balance between absolutely meeting our carbon reduction requirements, to which we have all signed up as Members of this Parliament, and ensuring that we can do so in a way that enables Britain to continue to have a competitive energy-intensive industry.
David Mowat (Warrington South) (Con)
12. What his policy is on the operation of the Barnett formula in relation to relative need.
The Chief Secretary to the Treasury (Danny Alexander)
As the coalition programme for Government states, the Government
“recognise the concerns expressed…on the system of devolution funding.”
The Government’s priority, however, must be to reduce the enormous budget deficit and therefore any change to the system of funding for the devolved Administrations must await the stabilisation of the public finances.
David Mowat
I thank the Chief Secretary for that reply. He will be aware, however, that the Holtham commission, the House of Lords Select Committee and the noble Lord Barnett are all of the view that the Barnett formula is in need of urgent review and should be replaced by a mechanism based on need. I understand that the priority must be to tackle the deficit, but can we not at least start the process in the course of this Parliament of putting in place a fairer allocation mechanism based on need?
Danny Alexander
No, I am afraid I cannot make that commitment. As I said earlier, our priority is to reduce the deficit. We have the Scotland Bill to take forward here, and in relation to Wales we have a process that is following on from the referendum and we have the Holtham commission to look at specific issues. I think that is the right set of priorities for the moment.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
As the Chief Secretary knows, his Government have announced a Calman-like process for Wales following the successful referendum in March for further powers. Will he confirm that reform of the Barnett formula will be a precondition of any wider financial reforms to the way the Welsh Government are funded?
Danny Alexander
I cannot confirm that, no. We have said that we will consider the issues to do with tax powers raised in the second Holtham report as well as other issues that were brought forward at that stage. We made a commitment to the previous Welsh Assembly Government to engage in a conversation about those things. If the new Welsh Assembly Government want to take that forward, we will be open to that, too.
Mr Gary Streeter (South West Devon) (Con)
13. What recent representations he has received from the licensed trade on alcohol duty.
The Economic Secretary to the Treasury (Justine Greening)
I met a number of stakeholders ahead of this year’s Budget, including the all-party group on beer and the British Beer and Pub Association. We carried out a review of alcohol taxation last summer and members of the licensed trade contributed heavily to that.
Mr Streeter
I thank the Minister for her answer. Given the importance of the licensed trade to the economy and our culture, particularly in regions such as the west country, where tourism is high, is it not now time to seek to reduce alcohol duty on served drinks and to increase it on cheap booze sold by supermarkets?
Justine Greening
My hon. Friend is absolutely right to raise that issue. In fact, it is part of the rationale behind tackling problem drinking. One way we have sought to do that is by introducing the limits on the below-cost selling of alcohol in supermarkets. That will be done by a formula of assessing duty plus VAT as the below-cost level. My hon. Friend is also right to point out that we need to do what we can to support pubs, which are the lifeblood of many local communities. They will also benefit from the various packages of measures we have brought forward to support small businesses, including reduced corporation tax, increased national insurance thresholds and, of course, the plan for growth.
Jeremy Lefroy (Stafford) (Con)
14. What recent discussions he has had with his international counterparts on strategies to reduce budget deficits.
The Exchequer Secretary to the Treasury (Mr David Gauke)
At the G20 summit in Seoul in November, advanced countries committed to formulate and implement credible growth-friendly, medium-term fiscal consolidation plans. The Chancellor has been involved in discussions with our international and European counterparts since the Seoul summit, including in the International Monetary and Financial Committee and the International Monetary Fund spring meetings. As was the case with the previous Administration, it is not the Government’s practice to provide details of all such discussions.
Jeremy Lefroy
I thank the Minister for his reply. The OECD’s recent report says that the UK is striking
“the right balance between addressing fiscal sustainability…on the one hand, and preserving short-term growth on the other.”
In his contact with international colleagues, has my hon. Friend found other support for this view or, indeed, any support for the opposing view?
Mr Gauke
It is quite striking that on one side of the argument, saying that we must be serious about getting the deficit down, there is the OECD, the IMF, the European Commission, the CBI, the Governor of the Bank of England and the US Government, whereas on the other side we have the Labour party. We do not find the Labour party’s case terribly persuasive. On the evidence of last week, nor do the British people.
Ian Austin (Dudley North) (Lab)
Does not what happened in Greece show that measures that hamper growth make tackling the deficit all the harder? Is that not why, six months after the geniuses opposite took stewardship of an economy that was beginning to recover strongly, growth had ground to a halt? Is it now why, far from tackling the deficit, which is what all this is supposed to be about, the small print of the Budget shows that the Government will have to borrow £46 billion more?
Mr Gauke
I know that the hon. Gentleman is close to the former Prime Minister, but it really is disappointing that he is such a deficit denier. He even seems to suggest that the Greeks should not be doing anything about their deficit. If we do not have a credible plan, then the economy is at risk. We do have a credible plan.
Stephen Williams (Bristol West) (LD)
First, Mr Speaker, may I associate myself and my Liberal Democrat colleagues with your remarks about David Cairns at the start of Question Time?
On the deficit, the Government’s plans will reduce the fiscal deficit from last year’s figure of 9.6% to 7.9% this year, but that will still be roughly double the eurozone average and higher than the figures for Germany, France, Italy and Spain. Does the Minister agree that if we did not take this action to reduce the deficit, it would undermine international confidence in this country and our ability to borrow the funds that we still need to fund our programmes?
Chris Kelly (Dudley South) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure the stability of the economy, to promote growth and employment, to reform banking and to clear up the mess in the public finances that we inherited so that Britain starts to live within her means.
Chris Kelly
The Chancellor will know that fraud and error have plagued the tax system since it was introduced. What measures is he taking to bear down on this and what financial impacts does he expect those measures to have?
Mr Osborne
I can today report to the House that in the past year Her Majesty’s Revenue and Customs has saved an additional £1 billion by tackling fraud and error in the tax credit system. For many years, the flaws in the shambolic administration of tax credits went completely ignored by the Labour party, causing misery for hundreds of thousands of families and costing the taxpayer billions of pounds, but we are now sorting out this mess.
Mr William Bain (Glasgow North East) (Lab)
T3. Has the Chancellor had an opportunity to note the findings of last week’s report from the National Institute of Economic and Social Research, which show the contraction in public and private demand since emerging from the recession to be higher in this country than in any comparable major economy? Does that not show that the Government are cutting too far and too fast?
Mr Osborne
First, the report recommends higher taxes and higher interest rates—perhaps that has become part of the Labour party’s official policy. I think it is worth looking at what the CBI has said this week. I have already quoted what it said when I was asked what the outcome would have been had Britain followed Labour’s plans—it said there would have been weaker economic growth—but its director general has also said:
“We are rock solid behind the chancellor’s plans to eliminate the structural deficit within a parliament”,
which are an
“essential part of putting the economy back on a stable footing”.
That is the voice of British business’s view of the deficit. [Interruption.] The shadow Chancellor says that is not true. A couple of months ago he was quoting the CBI across the Dispatch Box at me, but now that the CBI says that Labour’s economic policies would lead to weaker economic growth, he is in denial about that too.
John Pugh (Southport) (LD)
T2. What financial stress test will the Treasury impose before allowing the Department of Health to authorise general practitioner or clinical consortia?
The Chief Secretary to the Treasury (Danny Alexander)
I am grateful to my hon. Friend for his question, which raises a very important issue. It is a key part of the Treasury’s engagement with this to make sure that the process for authorising GP consortia ensures that those organisations are fully financially capable, as well as clinically capable, of meeting their objectives before they are authorised on whatever timescale.
Vernon Coaker (Gedling) (Lab)
T7. Does the Chancellor recall his statement to the House in October, when he said:“I completely understand the public’s anger that the banks…should now be contemplating paying high bonuses”?—[Official Report, 20 October 2010; Vol. 516, c. 955.]It is all very well being angry about that, but why do the banks continue to pay high bonuses to their high-ranking directors and why does he not do something about it? Why does he not repeat Labour’s bank bonus tax and reinvest the money in jobs, housing and many other things that the people of this country want?
Mr Osborne
Bank bonuses were higher when the hon. Gentleman was a Minister. There is complete amnesia among the Opposition about their having presided over the collapse of the British banking system and over bonuses that were billions of pounds higher in total than those being paid today, and they have no ideas about how to reform the banking system. The Chancellor who introduced the bank bonus tax to which the hon. Gentleman refers said that it would not work again. We have introduced a permanent bank levy which, I think, the Labour party continues to oppose.
Amber Rudd (Hastings and Rye) (Con)
T4. The economy of Hastings received a tremendous boost today when the Heritage Lottery Fund announced that it would support our bid for £8.7 million for the pier renewal but, sadly, seaside towns in general and we in Hastings suffer from bad transport links, high public sector employment and low wages. Will the Chancellor consider what can be done to support seaside towns under this Government?
Mr Osborne
I join my hon. Friend in celebrating the good news about the successful bid for the renovation of the pier. She is right to point out that there are specific issues associated with seaside towns across the country which are well known to the Members who represent them and well known also to the Government. We intend to come forward with proposals later this year to help those seaside towns.
Ian Mearns (Gateshead) (Lab)
T8. Household debt has been revised upwards by £300 billion, and my constituency, Gateshead, has one of the highest rates of personal insolvency in the country. What is the point of cutting the national debt, only to transfer the burden on to the personal finances of ordinary families? It is blindingly obvious that we are not all in this together—some of us are in this up to our necks.
Mr Osborne
I am afraid the hon. Gentleman misses two important facts. First, the most recent figures—within the past week—for personal insolvencies showed a welcome fall. Secondly, household debt reached a record level under the previous Government. As I said in response to the first question today, we are introducing a Financial Policy Committee to assess overall levels of private debt, including business debt, in the economy so that we do not allow dangerous unsustainable levels to grow. That will now be a judgment for the Financial Policy Committee and it will have the tools to do something about it.
Stephen Mosley (City of Chester) (Con)
T5. Can my right hon. Friend update the House on what discussions he has had about the likelihood of a further bail-out of the Greek economy and whether he has made any assessment of the UK’s likely contribution?
Mr Osborne
The answer is that we have not had discussions about a second Greek bail-out and we have not been asked to make a contribution. The question for Greece is whether it lives up to the commitments that it has entered into. There is currently an International Monetary Fund, European Commission and European Central Bank team in Athens assessing Greece’s progress against the plan that it committed to, and we should await the results of that assessment.
Stephen Timms (East Ham) (Lab)
A year ago the Office for Budget Responsibility was projecting growth in the UK economy of 2.6% this year. Now the forecast is down to 1.7%. What has gone wrong?
Mr Osborne
As I am sure the right hon. Gentleman knows, there are very significant global headwinds of the high oil—[Interruption.] I know that Labour Members live in a complete vacuum but, according to the most recent growth figures for this first quarter, the British economy posted a higher quarterly growth rate than the United States of America. Of course we have the high oil price and the ongoing problem in the eurozone, but what is required above all is a credible deficit reduction plan that keeps Britain out of the financial danger zone.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
T6. Given that Plymouth is a low-skills, low- wage economy with 38% of the work force dependent on the public sector, can my right hon. Friend give me the timetable for the creation of enterprise zones? What role could green deal manufacturing play within that?
Mr Osborne
I know that my hon. Friend is a trenchant supporter of his constituency and a promoter of green industry there. He has raised the issue with me on a number of occasions. I know that Plymouth has put forward a bid for the second round of enterprise zones. An announcement will be made later this summer, in July, and I am afraid he will just have to wait until then, but as I say, he has certainly brought to my attention the potential for the green economy in the city that he represents.
Stewart Hosie (Dundee East) (SNP)
May I offer my condolences to the friends, family and colleagues of David Cairns? He was a man who always argued his corner with intelligence and humour, and carried the rare gift of being liked and respected across the Scottish political divide. We will all miss him.
I am sure the House is pleased that both Santander and RBS have access to European Investment Bank funds to issue discounted loans into the economy—£150 million in the case of Santander, and a third tranche of £300 million in the case of RBS. Can the Chancellor confirm that this is new, additional money, or will it be rolled into the gross lending figures already agreed?
Mr Osborne
Let me write to the hon. Gentleman on the specific issue of the Santander loan and the application to the European funds. I take this opportunity to congratulate the Scottish National party on its victory in the Scottish parliamentary elections and say that we respect their outcome. As he knows, my right hon. Friend the Prime Minister contacted the Scottish First Minister to congratulate him personally. I hope that we can work together in the next few months and years to deliver what we both want to see, which is jobs and prosperity in Scotland.
Joseph Johnson (Orpington) (Con)
T9. US Treasury Secretary, Timothy Geithner, recently praised the Government’s fiscal reduction plans, saying that the Chancellor had locked the coalition Government into a set of reforms that were “very good”. What lessons has he drawn from this powerful endorsement?
Mr Osborne
Of course it is welcome to have the support of the US Treasury Secretary. It is interesting that we have been urged for some months by Labour to follow the US example. The Obama Administration, in the speech the President gave at George Washington university, set out a deficit reduction plan—it is not yet legislated for in Congress—that goes faster and deeper than the one we are promoting here in the UK. I suspect that we will not now hear the argument that we have heard for the past few months from the Labour party.
Alison McGovern (Wirral South) (Lab)
May I associate myself with the remarks about our much-missed colleague David Cairns that you, Mr Speaker, and others have made?
Recent commentators have suggested that it is possible that the Government will not meet their target to balance the cyclically adjusted current budget by 2015-16, by the end of this Parliament. If it becomes clear that Tory cuts are not working to reduce the deficit, at what stage will the Chancellor change course?
Mr Osborne
I have just been told by my hon. Friend the Member for Chelsea and Fulham (Greg Hands) something about the hon. Lady that I did not know: she is the Parliamentary Private Secretary to the previous leader of the Labour party. It is presumably not a job with onerous responsibilities, but it sounds as though he may have written that question for her. The Office for Budget Responsibility is the independent body that assesses our ability to hit the fiscal mandate. The reason we set it up was because under the stewardship of the person to whom she is PPS all credibility for Treasury figures was lost.
Mrs Helen Grant (Maidstone and The Weald) (Con)
Only 14% of small businesses are owned by women. What action will the Chancellor take to improve this figure?
Mr Osborne
It is incredibly important to try to increase the number of women who set up their own businesses. The Government have undertaken a number of specific initiatives, driven from No. 10 Downing street, and I will ensure that my hon. Friend is closely involved in them.
Mr Chuka Umunna (Streatham) (Lab)
Yesterday, in a welcome move, the British banking industry abandoned its legal fight with the Financial Services Authority over the mis-selling of payment protection insurance. Does the Chancellor agree that this scandal, as a result of which millions of people in this country were fleeced by the banking sector on a large scale, was an absolute disgrace and that the banks involved should settle the claims that arise, immediately and without further delay?
The Financial Secretary to the Treasury (Mr Mark Hoban)
The hon. Gentleman is right to highlight the mis-selling of PPI. This happened under the regulatory regime that his colleagues set up when they were in government. One aspect of the reforms that we are introducing by setting up the financial conduct authority is to give the regulator more powers to intervene earlier to prevent that sort of scandal happening again.
Duncan Hames (Chippenham) (LD)
Given the Chancellor’s concern for the use of taxpayers’ money, will he really allow members of GP consortia boards to be paid as much as £30,000 a year for just one day’s work a week?
Danny Alexander
As I said in response to my hon. Friend the Member for Southport (John Pugh), one of the things we need to do as part of the listening exercise is hear the concerns about how consortia will work and ensure that the financial regime that is in place is sustainable and puts the maximum amount of resource to the front line.
Bill Esterson (Sefton Central) (Lab)
The Chancellor did not answer the question from my hon. Friend the Member for Gedling (Vernon Coaker), so I would like to give the right hon. Gentleman another chance. Will he repeat the bank bonus tax that was so successful last year and use that money to build the extra affordable homes, to rent and to buy, which are desperately needed by people in this country and by the construction industry, and which would be good for the economy?
Mr Osborne
As I was explaining to the hon. Member for Gedling (Vernon Coaker), the bank bonus tax was introduced by the previous Chancellor of the Exchequer, and it was his judgment that it would not work for another year because the banks would find a way of avoiding it. That is why we introduced a permanent bank levy not just for one year, but for each and every year. In any one year it raises more than the bank bonus tax net, so that is what we have done. It is pretty striking: Labour Members had 13 years in government to introduce a permanent bank tax; they did not do so, and they cannot carp from the sidelines now.
Charlie Elphicke (Dover) (Con)
If our gold had not been sold off some years ago, how much would it be worth today?
Mr Osborne
The gold was sold, I think on the advice of the current shadow Chancellor, at $3.5 billion—a princely sum, except that it would now be worth $19 billion.
St George's Day (Public Holiday)
Jessica Lee (Erewash) (Con)
I present and support the petition prepared by George’s Tradition, with 3,674 signatures supporting the petition or wording in similar terms.
The petition states:
The Petition of residents of the Erewash constituency and others,
Declares that England is one of very few countries in the world that does not have a public holiday to celebrate its national day; notes that St Patrick’s Day is a bank holiday in Northern Ireland, and that St Andrew’s Day is a voluntary public holiday in Scotland; and further declares that everyone who is part of England should be able to celebrate its traditions, its heritage and the English way of life with a public holiday on St George’s Day.
The Petitioners therefore request that the House of Commons urges the Government to bring forward proposals to make St George’s Day a public holiday in England.
And the Petitioners remain, etc.
[P000920]
Off-quota University Places
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr John Denham (Southampton, Itchen) (Lab)
(Urgent Question): To ask the Secretary of State for Business, Innovation and Skills if he will make a statement on the proposals for students to buy off-quota university places.
The Minister for Universities and Science (Mr David Willetts)
Fair access to university is crucial for achieving equality of opportunity, and there is a clear issue of principle here. Access to a university must be based on ability to learn, not on ability to pay. There is absolutely no question of wealthy students being able to buy their way into university.
As the coalition prepares its White Paper on higher education, we are considering possible ways to allow universities to recruit extra students in addition to their student number allocation. Any such arrangement would have to comply with the principle that access to university must be based on ability to learn, not on ability to pay. That is why, in the Secretary of State’s speech to the Higher Education Funding Council on 6 April, he said:
“Another measure for the longer term could be to remove student number controls which inhibit universities’ ability to recruit students who represent no burden to the public purse. For example, I don't believe that universities should be prevented from expanding courses where employers cover students’ costs”.
We are considering two options: first, making it easier for employers to sponsor students at university; and secondly, making it easier for charities to sponsor students at university. Any such scheme would need to comply with the following conditions: the principles of fair access must apply; there would need to be genuine additional places; there would be no reduction in entrance standards; and, of course, rich individuals should not be able to buy their way into university.
Everything this coalition does is guided by our belief in the need to improve social mobility after it stagnated under the Labour party. We will set out our proposals in the White Paper, which will be published shortly.
Mr Denham
In The Guardian and on the “Today” programme, the Minister set out plans to allow students who have access to private funds to buy their way into universities that they cannot get into on merit. Why was the House not told of those plans when we voted on tuition fees? How many hon. Members would have trebled fees if they had known that he planned to allow students to buy entrance to selective universities? Or has the Minister just made up this plan? He has cut 20,000 student places, lost control of fees, £9,000 is the norm not the exception and access agreements have no teeth. There is a black hole in his budget and threats to cut more student places or teaching budgets.
Given that mess, why is it that every time the right hon. Gentleman puts a sticking-plaster on the wounds that he has caused he makes things worse? Yesterday he launched the communications plan for the new fees system. Can he not imagine the dismay that he has caused for thousands of hard-working A-level students today? They now know that hard work, ability and ambition will not be enough.
Students from low-income homes want fairness, not favours. Does the Minister not understand that a few places will not soften the brutal message that, for this Tory Government, access to wealth and privilege will always trump ability and ambition? Poor families have no chance of buying their way in, but is this not also a cruel betrayal of middle England—those hard-working, middle-class, middle-income families who want to do the best for their children and face agonising pressure to take on huge private debts to remortgage their homes to make sure that their children get what the kids of the wealthy take as a right?
Does the Minister accept that although there is nothing wrong with employers getting universities to provide bespoke courses for their employees and nothing wrong with employers paying fees once the university has decided whom to admit, his plans will corrupt university admissions with a two-tier system—one for the best qualified and another for those with access to fatter cheque books? And who will pay? The Minister’s response was remarkable, because it is clear from his interviews today that he wants to allow wealthy families to buy places: he did not deny that in several interviews. Now incompetent Government Ministers are arguing about it in public. Where are these charities that want to pay £70,000 per student? Who are the employers who want to pay for the second best, not the best?
I am glad that the Minister has been forced here today. We will study his plans to see whether he really has climbed down, because if so, it is the most humiliating and fastest U-turn in the history of this discredited Government. This House needs what we needed last December—a proper White Paper to tell us how this whole mess is going to be sorted out.
Mr Willetts
The shadow Secretary of State clearly has not been listening to what I have been saying. He has invented a policy and then denounced it. He has no excuse for that, because in every public statement I have made, I have made it absolutely clear that we are looking at employers and charities. Those are the actual words that I used in The Guardian this morning when I referred to the current rules which, for example, limit the ability of charities or social enterprises to sponsor students.
Let me make the position clear regarding the two proposals that we are considering. First, Members in all parts of the House have endlessly urged us to do more to get employers involved in sponsoring students at university. Only 6,000 students out of well over 1 million in total are currently sponsored by employers outside quota controls. That is why, yes, we are looking at ways in which extra places outside quota controls can be made available for students sponsored by companies, but they must meet the conditions that I clearly set out in my earlier response.
Secondly, we are pursuing another objective that I thought was shared by Members on both sides of the House—encouraging greater endowments for our universities. Many people who are considering charitable support for our universities like to know that real individuals will benefit. At the moment, if they identify and provide for any places for poor students, they come up against a universities quota limiting total numbers. That deters charitable giving. So, again, we are investigating whether charities and social enterprises can support people at universities outside quota controls.
Whatever we do will comply with the fundamental principle that rich individuals should not be able to buy their way into university. Labour Members left the public finances in a mess. They left universities with a £1 billion deficit and in a straitjacket, they restricted places, they fined institutions, and they blocked ambitions. We are determined to reform Labour’s broken system.
Mr Graham Stuart (Beverley and Holderness) (Con)
Will the Minister again reassure the House that there will not be an uneven playing field for those from lower-income families? Will he ensure that we have fair and equitable access to our universities while ensuring that Labour Members do not stand in the way of employers and charities being able to make the maximum number of places available to everyone, regardless of background?
Mr Willetts
I can absolutely give my hon. Friend the assurance that he seeks. The challenge to Labour Members is to join us in explaining to young people in schools and colleges across the country that none of them will have to pay up front to go to university. Under our proposals, the threshold for repayment is increased from the £15,000 we inherited from Labour to £21,000 now.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Will the Minister tell the House what discussions he has had with the Office for Fair Access on this policy?
Mr Willetts
Consultation on our proposals will take place after we publish the White Paper. In a speech that I gave to Universities UK and in the speech that I quoted by my right hon. Friend the Secretary of State to HEFCE, we made it clear publicly that this is the option we are looking at.
Dr Julian Huppert (Cambridge) (LD)
I have the great privilege to represent three great universities: the university of Cambridge, Anglia Ruskin university and the Open university. Will the Minister assure me that nothing he does in this or any other policy will force any of those universities to lower their standards for financial gain?
Mr Willetts
Yes. I have made it clear and am happy to confirm it again for the hon. Gentleman that there should be no reduction in entrance standards for our universities.
Mr David Lammy (Tottenham) (Lab)
Was it wise of the Minister to give the impression on Radio 4 and in The Guardian that our universities are like easyJet in that people can buy their way to the front of the queue? He knows that our lecture halls, universities and university accommodation are only so big. Surely, if extra places are put on, places will be denied to those who want universal access.
Mr Willetts
We inherited from the previous Government, of whom the right hon. Gentleman was the Minister for universities, a system of student number controls so tight that he was fining universities for taking on extra students. There were students who wanted to go to university and universities who wanted to educate them, but he fined the universities for wanting to recruit them. We are trying to break free from the constraints that he placed on opportunity, while making it absolutely clear that people cannot buy a place at university.
Mr David Evennett (Bexleyheath and Crayford) (Con)
I note my right hon. Friend’s comments on off-quota university places, and am reassured by his statement on the issue of standards and entry. However, is it not the case that across the HE sector, discussions about this topic are already taking place?
Mr Willetts
It is the case. I have read with interest the reaction to the speculation today. I was struck by a comment released today by the chief executive of GuildHE:
“Providing off-quota places can be socially progressive.”
He went on to say:
“This could give students of all backgrounds a wider set of choices, including whether or not to take out a long term loan.”
That gentleman is, of course, the former special adviser to the shadow Secretary of State.
Mr Ben Bradshaw (Exeter) (Lab)
Chaos on health policy; Ministers rowing in public about whether to abandon our carbon reductions; and now this, all in the space of 24 hours: is this not the most serially incompetent Government in living memory? When will the Prime Minister get a grip?
Mr Willetts
I do not know what the right hon. Gentleman is getting quite so aerated about. The Government are committed to improving social mobility and to easing the controls under which universities function. We will put forward proposals in the White Paper to achieve precisely those objectives.
Lorely Burt (Solihull) (LD)
We welcome any measure to aid social mobility and increase fair access. I welcome my right hon. Friend’s ideas to increase the number of places by getting charities and businesses to sponsor degrees. Will he confirm that rich students will never be able to buy their way into university under this Government?
Mr Willetts
I am happy to give the hon. Lady the assurance that she seeks. That is not the proposal that we will put forward in the White Paper.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Does the Secretary of State accept that it was he who started this hare running? The minds of those of us who want to be fair to him have not been put at rest by what the Minister has said today. We do not want a twin-track or two-tier system. May I add that, as the Minister knows, many of the leading public schools in this country are charities?
Mr Willetts
The Secretary of State and I have publicly referred to this idea. I referred to it in a public speech to Universities UK and he referred to it in a speech to HEFCE. We both said that we were looking at ideas for off-quota places. We make no secret of the fact that we are investigating those ideas. I have also made it clear in every public remark that we are looking at employers and charities as the people who would sponsor such places.
Mr Rob Wilson (Reading East) (Con)
May I welcome my right hon. Friend’s desire to create more university places? More sponsorship of students by businesses and charities would be very welcome to both students and universities, but does he agree that taking the Government cap off student numbers is the only real way to create a fully functioning market?
Mr Willetts
I share my hon. Friend’s dislike of the system that we have inherited. I deeply dislike a system in which universities are fined for taking on students who meet their entry requirements, but of course there are public expenditure constraints, because each student comes with a cost. That is why I am being perfectly explicit about the fact that we are considering ways in which it would be possible for students to be accepted into university outside the quota, under the conditions that I have clearly set before the House this afternoon. I hope that moves us some way towards his admirable objective.
Sheila Gilmore (Edinburgh East) (Lab)
How will the Minister monitor the bona fides of charities that might be involved in these transactions?
Mr Willetts
I agree that that is very important, and that the principles of fair access must apply. When we produce our White Paper and our proposals are consulted on, that question will of course need to be properly addressed.
Alun Cairns (Vale of Glamorgan) (Con)
Will the Minister confirm that the policy of off-quota places can expand the opportunities of some people from all sorts of backgrounds to go to university, including those who would not normally have the opportunity to go, provided that they have the support of a business or charity?
Mr Willetts
My hon. Friend is absolutely right. We are trying to spread opportunity to go to university, even at a time when money is tight. That is what we are committed to achieving, and it is a great pity that the Labour party has completely failed to suggest anything that would deliver on our belief in improving social mobility.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
Given his absence from the House today, can the Minister assure the House that this policy has the full support of his boss, the Secretary of State, and will continue to have it in the future?
Mr Willetts
I am setting out the approach of the coalition Government, and of course we will set out in the White Paper our proposals to deliver on the coalition’s commitment to improving social mobility.
Simon Wright (Norwich South) (LD)
Is the Minister aware of a scheme run by KPMG, which pays the fees for students who go on to work for it? Is he attracted to that model?
Mr Willetts
The KPMG scheme is an excellent example of exactly what we are trying to encourage. The trouble is that at the moment, so far as such estimates can be made, we believe that only approximately 6,000 students out of well over 1 million are benefiting from extra places sponsored by companies such as KPMG. That is far too low, and we are considering ways in which we can encourage more such schemes, because we believe they are a way to spread and improve opportunity in this country.
Clive Efford (Eltham) (Lab)
Affluence is influence, and this is a triumph of affluence over ability. The Government have to recognise that it is social networking that leads to people accessing this type of support to go to university, so it will not be directed at the poorest people from our constituencies. It will be an opportunity for those who do not meet the criteria for entering university to get in by the back door because they have access to private finance.
Mr Willetts
I am afraid the hon. Gentleman is more interested in fighting class war than in considering practical proposals to improve access to university. Not only are the particular conditions that I have set out to the House today intended to ensure that his concerns do not come to pass, but in general, I believe that the expansion of higher education places is of itself a good thing for social mobility and opportunity in this country.
Elizabeth Truss (South West Norfolk) (Con)
Is it not the case that quotas and rationing have served low-income students very badly? In Britain, only 19% of low-income people go to university, which can be compared with more open systems such as those in Australia, which has 30%, and America, which has 50%. Does that not show the poor record of the previous Government?
Mr Willetts
My hon. Friend is absolutely right. There is a problem. We are restricting access to university, and social mobility in our country is far too low. This Government are looking at how we can tackle that problem, but all we get from the Labour party is completely wilful misrepresentation of what we are doing, and no practical proposals whatever.
Paul Blomfield (Sheffield Central) (Lab)
As my hon. Friend the Member for Huddersfield (Mr Sheerman) has pointed out, public schools are charities. Will the Minister unambiguously rule out that his proposals would allow any public school to buy places at any university?
Mr Willetts
It is absolutely not our intention that such purchasing of places at university should happen. That is why the criteria that I have set out are absolutely clear on fair access. People should not be able to buy places at university. We are not proposing what the hon. Gentleman claims.
Mr Sam Gyimah (East Surrey) (Con)
Employers, among others, benefit from well-educated students. Is it not right that if we can find a way for them to share in that burden, we should use it, rather than jumping in and getting over-excited at the mere mention of them?
Mr Willetts
My hon. Friend is absolutely right. Indeed, the previous Government, towards the end of their time in office, produced a report, “Higher Ambitions”, which on page 47 specifically calls for employers to be more engaged. It says that
“businesses have a crucial role in the funding and design of programmes, in the sponsorship of students”.
We are trying to ensure that more employers have the opportunity that was talked about by the previous Government, but which, not for the first time, they failed to deliver.
Gavin Shuker (Luton South) (Lab/Co-op)
The Minister has categorically refused not to rule out private schools buying places for their students. Is this yet another idea dreamt up on the playing fields of Eton?
Nadhim Zahawi (Stratford-on-Avon) (Con)
Access to Russell group universities from the lowest income groups has abysmally flatlined over the past 20 years. Ideas such as allowing companies and charities to create social mobility and greater access should be debated. They should not become the subject of scaremongering and misrepresentation. It is a shame that the Opposition have done that with a cynical letter to The Guardian in support of its scaremongering headline.
Mr Willetts
Not for the first time, my hon. Friend is a voice of sanity in this debate, and I completely agree with his point. Government Members are engaged in improving social mobility and people’s opportunities to go to university, while making absolutely clear the principle that nobody should be able to buy a place at university using their personal wealth. That is the principle we are applying, and I am grateful to my hon. Friend for his support.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
When I read this story in The Guardian, my first inclination was to check the date, but it clearly could not be 1 April, because we have had May’s elections, when Labour took Keele university from the Liberal Democrats because of broken promises on tuition fees. I then thought that the story must be a clever wheeze by plotting Conservative Ministers, who are thinking, “What can we do to make Vince Cable, the Secretary of State, finally jump ship?”
The Minister has clearly not told colleagues and the House in his responses how he would discriminate between different charities: which would qualify, and which would not?
Mr Willetts
I am afraid that I have made absolutely clear the principles that will guide our policy. It is not our intention that schools should be able to buy places at university.
Graham Evans (Weaver Vale) (Con)
I congratulate my right hon. Friend the Minister on the help and support that he has given to mature, part-time students—students who did not do well at school first time around, but who in their 20s and 30s decide to be socially mobile and to get qualifications and further education.
Mr Willetts
My hon. Friend is right. That is one reason why one proposal before the House is to extend loans for fees for the first time to part-time students, many of whom are mature students, which will enable them to take the opportunity of going to university. Our central objective is to give that opportunity to as many people as possible who have the ability and commitment to gain from it. That admirable objective is what drives the coalition.
Barry Gardiner (Brent North) (Lab)
Will the Minister assure the House that there is no truth in the rumour that this policy was announced today to add the final humiliation to the Lib Dems and precipitate a general election?
Mr Willetts
This policy has been referred to in speeches by me and the Secretary of State. [Hon. Members: “When?”] In speeches we gave to Universities UK and the Higher Education Funding Council. The policy will also be set out in the White Paper, after which I look forward to debating it further in the House.
Gavin Barwell (Croydon Central) (Con)
Given the constraints on public spending, allowing businesses and charities to provide additional places at no cost to the public purse is, in principle, a good idea, but can my right hon. Friend tell the House exactly how the Government will ensure that no university in this country will have different entry criteria for quota and off-quota places?
Mr Willetts
My hon. Friend is right to raise that important principle. I hope that I made it clear earlier that there should be no question of sacrificing university entry standards. We are not considering that.
Stewart Hosie (Dundee East) (SNP)
The Minister will want to confirm to the House that university education in Scotland is fully devolved—thank goodness—but will he also confirm that should this extraordinary plan ever see the light of day, it will apply to English universities only, and that there will be no requirement to roll it out in Scotland?
Mr Willetts
The hon. Gentleman says, “thank goodness”, but hon. Members on both sides of the House are still looking forward to hearing the Scottish National party’s long-term plans for the financing of universities in Scotland. We have set out our proposals to ensure that universities in England are well financed and able to offer to our students a high-quality education. I hope that that opportunity is also available to students at Scottish universities.
Helen Jones (Warrington North) (Lab)
If the Minister intends to allow charities to sponsor university places, can he explain to the House what amendments he will introduce to change charity law so that public schools are not counted as charities for that purpose?
Mr Willetts
After the White Paper, we will—with the consent of the House, I hope—introduce legislation that will provide the framework within which all the assurances I have given today can be met.
Kate Green (Stretford and Urmston) (Lab)
How can it be socially progressive to devote time and energy to facilitating access for students from better-off backgrounds at the same time as the Government have axed Aimhigher, which means that projects in my constituency to reach out to poorer students will run out of funding by October this year?
Mr Willetts
It is socially progressive to consider how to provide more opportunities for people to go to university and whether they can be sponsored by their employer or whether that can happen as part of a charity wishing to endow a university. That is socially progressive, which is why these proposals will help to tackle one of the biggest challenges facing Britain today—our very low levels of social mobility.
Simon Danczuk (Rochdale) (Lab)
Twenty-six per cent. of young people in Rochdale get the opportunity to go to university, compared with the national average of 31%. That gap narrowed under the previous Government. Instead of coming up with fanciful policies that will help his wealthy mates’ kids get into university, will the Minister start helping youngsters in places such as Rochdale?
Mr Willetts
It is important to help young people in places such as Rochdale through educational reform and raising school standards. However, in the many debates on higher education that I have attended in the House over the years, hon. Members on both sides have called for greater employer involvement in course sponsorship, and for greater endowments and charitable giving to universities, yet as soon as we introduce practical ideas to achieve these objectives, Opposition Members suddenly no longer support principles that I thought were widely endorsed on both sides of the House.
Chris Bryant (Rhondda) (Lab)
The key point is that people have to get into university first and then get the sponsorship from outside, otherwise the hon. Member for Vale of Glamorgan (Alun Cairns) will be right: this will be a charter for extending access to universities, because more thick rich people will be going to university.
Mr Willetts
That is why we have made it clear that there should be no reduction in entrance standards, and that in no circumstances should rich individuals be able to buy their way into university. I have made that clear to the House all afternoon, and it has been made clear in every statement on this matter from me and the Secretary of State.
Chris Ruane (Vale of Clwyd) (Lab)
I say, Mr Speaker, there might be many on the Tory Benches who think it an absolutely spiffing idea to allow mummy and daddy to purchase privilege through this toff quota. Should this principle be extended, perhaps to allow mummy and daddy to purchase a parliamentary seat, the odd ambassadorship or even, dare I say it, a top judge’s job?
Mr Willetts
If that constitutes the Labour party’s response to our proposals, we can understand why our party is serious about improving conditions in our country and Labour is not.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
What consultation did the Secretary of State have with UCAS before launching the policy, and what was its response? Will he clarify what the range of fees will be for students who try to jump the queue?
Mr Willetts
As I have said, the idea was mentioned in public speeches to Universities UK and the Higher Education Funding Council for England. The proposals will be further set out in the White Paper, after which there will be further consultation.
Bill Esterson (Sefton Central) (Lab)
Wealthy families often set up charitable trusts for themselves. How will the Minister prevent family-run charitable trusts from circumventing his rules and buying places, given that they are governed by exactly the same charity legislation as the other charities to which he has referred?
Mr Willetts
It is very important that endowments for universities absolutely meet the criteria of fair access, and that there should be genuinely additional places and no reduction in entry standards. It is the university that will decide who is admitted, and it is essential that we do not compromise on that principle.
Ian Mearns (Gateshead) (Lab)
I listened carefully to the Minister’s reassurances to the Chairman of the Education Committee. I also listened to his accusations of class war against the Opposition, but I wonder whether there has been any cross-departmental collaboration to ensure that social mobility will come about under his policy. Has he consulted the Secretary of State for Education about his policy, which has seen 500,000 youngsters receiving education maintenance allowance at the higher level to get into further education reduced to 12,000 receiving bursaries under the new scheme?
Mr Willetts
The Secretary of State for Education, just like me, is trying to deliver improved education opportunities after inheriting a total mess in the public finances from Labour, so we have to take tough decisions. We are trying to save money, but at the same time we are delivering reform of schools, improved access to universities, a better way of funding them in future and the freedom for them to escape from student number controls, albeit under carefully controlled conditions and with clear principles. That is the way to improve education standards in our country, even when money is tight.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
Will the Minister tease out for us the conversations he has had with his adviser on fair access, the right hon. Member for Bermondsey and Old Southwark (Simon Hughes)? Has not this whole problem arisen because of the ideological experiment that the Minister is conducting with our universities? What is wrong with the state and the private sector working together, rather than this neo-liberal vision that he has for our universities, undermining their integrity and world-class reputation?
Mr Willetts
We absolutely do want the public and private sectors to work together. That is why we do not like the regime that we inherited from the previous Government, which had what are called “closed places”—that is, specially restricted places that are the only off-quota places that employers can sponsor. I very much value the advice of the right hon. Member for Bermondsey and Old Southwark (Simon Hughes)—who, if I might say so, made a powerful intervention in a previous debate in this House on higher education, only last week or the week before, about how our student finance reforms will work, which was exactly the right way forward for student finance in this country. [Interruption.]
Mr Speaker
Order. I want to hear—and I am sure that the House wants to hear—Mr Dave Watts.
Mr Dave Watts (St Helens North) (Lab)
Will the Minister explain what is to stop a rich business man buying his son a place at university?
Mr Willetts
Admission to university is determined by the university. It is the university that has the admission standards, which cannot be compromised, the university that does needs-blind admissions, which cannot be compromised, and the university that is bound by the clear conditions I have set out. Of course there is no suggestion that anyone other than the university looking at who can best benefit from a course should be deciding on admission to university. After our White Paper, when we have a further opportunity to debate our proposals, I very much hope that it will be possible to carry forward these exchanges, to show that we on the Government Benches remain committed to expanding our universities and improving social mobility in our country.
Passenger Name Records
(13 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Immigration (Damian Green)
With permission, Mr Speaker, I would like to make a statement on the draft EU directive on passenger name records—PNRs—and the Government’s decision to opt into it. My appearance today fulfils a commitment that I made to the European Scrutiny Committee.
Global travel brings with it countless benefits—economic, cultural and social—and there is no doubt that our more interconnected world is a better world, but greater freedom of movement also provides opportunities for those who wish to do us harm. We know that terrorists have long had an interest in aviation-related attacks. We know, too, that serious criminals, people traffickers and drug smugglers have exploited easy international forms of travel to carry out their crimes. They often plan and execute their crimes in meticulous detail, using intricate ruses to escape detection and capture. In response, Governments around the world are increasingly exercising greater vigilance to keep their citizens safe. Passenger name records—passenger data collected by air carriers as part of the operation of their business—are a vital and proven tool in the fight against terrorism and other serious crimes.
Passenger name records help our law enforcement agencies to prevent, detect, investigate and prosecute terrorists and other serious criminals. Their power lies in the fact that, by using an automated system and interrogating it intelligently, we are able to sift data quickly and in such a way that they reveal patterns and make links that would otherwise not be readily apparent. For example, the case of David Headley, the terrorist facilitator convicted in the US of involvement in the Mumbai attacks, shows the benefits of PNRs. All that was available to US investigators initially was the first name, “David”, a vague travel window of “the next few weeks” and the partial travel itinerary of a flight from the United States to Germany. The US used these PNR data in association with other known flight information to identify the suspect before he could travel. Headley was later arrested and pleaded guilty to terrorism-related crimes.
PNR data therefore have a proven capability to protect our citizens from harm. Along with advance passenger information—API—PNRs are a crucial element of the UK’s own e-Borders system. Since 2005, e-Borders has led to more than 1,500 people being refused entry and to more than 8,700 arrests, including 57 for murder, 175 for rape or sexual assault, 25 for kidnapping, 441 for fraud, 397 for drugs offences and 920 for violence. That is why we committed to supporting e-Borders in our coalition agreement.
Critical to our decision of opting into the directive was the aim of securing an ability to mandate the collection of PNR data on flights between two EU member states, for the full usefulness of the system to be realised. I am pleased to say that the coalition Government made significant progress on this, ahead of the opt-in deadline, and that the European Council has given a clear political signal that it favours collection of data on intra-EU flights, following a UK amendment to that effect. The Home Secretary pressed the argument for it at the April Justice and Home Affairs Council meeting, which has been reported to the House via letters to the Chairs of both scrutiny Committees. At the Council, 15 member states supported the UK’s position to include intra-EU data collection. So, although we have reservations about some aspects of the directive that will need to be resolved in due course, we can enter into negotiations from a position of strength, knowing that we have the support of a majority of other member states on this key issue for the UK. Indeed, the official outcome of proceedings of the 11 April JHA Council states that
“the preparatory work on the draft PNR Directive will continue...on the basis of the indication by the Council that the Directive should allow individual Member States the option to mandate the collection of PNR data with regard to targeted intra-EU flights”.
The draft directive as it stands is not perfect, but it is right that we work with our European partners to get a directive that best serves Britain’s interests. Initial parliamentary scrutiny of the directive has already taken place, but it will continue as the negotiations progress. Debates have been held in both Houses. The Lords strongly recommended that we opt into the directive and the Commons supported the Government’s negotiating position. We already have domestic legislation to underpin the collection of PNR data, but the directive will provide an unequivocal legal framework at EU level for the collection and sharing of such data. I know, however, that some hon. Members have concerns about the PNR directive, which I want to address directly today.
Let me address the two basic issues of why using PNRs is both necessary and proportionate. I set out earlier how PNR data have been used to target suspected terrorists. The application of this data also has wider benefits in tackling serious organised crime. For example, in 2009, working with our Italian colleagues, we used PNR data to identify Chinese passengers attempting to travel to London from Italy in a human trafficking operation. This led to the conviction in the Italian courts of several traffickers in January 2010. Modern criminality requires modern methods to seek out and shut down criminal activity. We cannot just focus on solving crimes after they have happened; instead, we must use the tools available to prevent them from happening in the first place.
Our commitment to a proportionate approach is made clear by our proposal to collect data only on routes of high risk, whether these are between a third country and a member state or between member states. Our starting position is thus about reducing the amount of data collected rather than imposing blanket coverage on all routes from outside the EU as the directive currently proposes. A further benefit of our approach is that it should help make costs manageable, in terms of both data transmission by carriers, and management and maintenance of the system by the member state. We will want to see stringent data protection requirements, overseen by independent information commissioners, so that people’s rights over their personal data are protected. We will also work to ensure that the directive allows data to be retained only for as long as is necessary and proportionate to the task in hand.
Thirdly, some hon. Members will have concerns about sovereignty. Let me be clear: this directive is not about handing over responsibility to a European institution. Rather, it is about member states collecting and processing PNR data on travel under an agreed legal framework to help protect citizens from harm. The draft proposals are based on each member state collecting and analysing the data, and we will vigorously stand by that way of operating. Indeed, the current directive would not allow for the creation of an EU-wide database. We must recognise that criminals are no respecters of national boundaries—they will exploit any perceived gaps or weaknesses within the EU—so it is our collective responsibility to ensure that we close loopholes, wherever and whenever we can.
Finally, carriers will not be required to collect any more data than they already collect as part of an ordinary business transaction. Transmission costs will be borne by the carrier, and have been estimated by the Commission at less than 8p per passenger per flight—a small price to pay for increased safety and security.
Opting in to this directive is good for our safety, good for our security and good for our citizens. It is necessary and right. Opting in to this directive will make Britain a safer place. I commend this statement to the House.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
I thank the Minister for advance sight of his statement. The current UK regime that allows for the collection of PNR data and their use for both immigration control and combating terrorism was brought in by the previous Labour Government through their creation and roll-out of the e-Borders programme. We therefore recognise the vital importance of the role played by PNR data to achieve both those policy objectives.
Given that PNRs are a proven tool for the prevention and detection of serious crime and terrorism, we believe that it is sensible to have a Europe-wide regime to ensure similarity of methodology and approach to PNR rather than have member states going their own way and making individual agreements. We are thus supportive of the UK decision to opt in to the directive.
We note the different approach taken by the Conservatives, now that they sit on the Government Front Bench, to EU co-operation on home affairs and justice matters. That was not something they championed in opposition, but, as we have seen with their change of heart on the extension of the European arrest warrant and their position on PNR data today, that is what happens when rhetoric confronts reality. It is a shame that the Minister took such a long time to sign the directive on human trafficking, where the reality is so shocking.
As the Minister has already told us, the biggest change between the first draft directive and the new draft directive is the inclusion of intra-EU flights within its scope. That is a positive step. As the Minister and I discussed in European Committee B, the inclusion of intra-EU flights is necessary to prevent a security gap from emerging. Will the Minister tell us whether negotiations are continuing with the member states that have not yet expressed support for the proposal—in particular, Germany—and give us his assessment of the effectiveness of the directive without universal support for the inclusion of intra-EU flights?
I note from the new draft directive that the new article 1(a) leaves open the ability of member states to decide which intra-EU routes they wish to include in their PNR data collection coverage, and I note from the Minister’s statement that, in the UK at least, that will focus data collection on routes that are considered to be high risk. However, there is a danger that that will displace the problem rather than deal with it. If potential criminals and terrorists know that certain routes are being targeted, they are likely to move to other routes. Is the Minister confident that we have the necessary flexibility and resources to pre-empt that, and to ensure that we keep pace with what is a constantly changing and developing security picture?
One of the questions I raised with the Minister when this matter was last debated in the House was whether all terrorism offences under the Terrorism Acts 2000 and 2006 would be within the scope of the directive allowing PNR data to be collected and shared. The Minister has written to me. I note that he does not yet know whether all those offences will be covered, and that
“complex legal analysis”
will be required
“during the negotiations to determine the overlap between definitions in the Directive and those in our domestic legislation”.
The UK regime for counter-terrorism reflects the UK’s national experience, and is therefore more extensive in some ways than the regimes of other European Union states. Legislative parity, given the extensive provisions of the Terrorism Acts, will therefore be vital. May I impress on the Minister the importance of keeping that point under review, and will he assure the House that it will be a priority as negotiations continue?
One of the important features of the UK’s internal arrangements is that through the e-Borders programme we can use API and PNR data together, and can use both types of data set for crime fighting and immigration control purposes. I know that the Minister agrees that the full benefits of e-Borders are realised when API and PNR data are collected and used together.
I have asked the Minister before whether he thinks that the current directive is sufficiently clear to enable the UK to continue to use PNR data for immigration control purposes, but I note that the potentially relevant paragraphs of the draft directive remain unchanged. Will the Minister assure the House that signing up to the draft directive will not diminish or weaken the UK’s e-Borders programme in any way, and that he will continue to press for clarity in the directive in order to leave no doubt that member states can collect and use PNR data not just in respect of terrorism and serious crime, but for immigration control? There should be no unintended consequences that would prevent the UK from maintaining effective control of its border.
The draft directive currently states that PNR data will be collected and retained for a period of 30 days, after which it will be anonymised and held for a further five years. The UK Government have been pressing for the data to be held for much longer than that. First, will the Minister tell the House where the negotiations stand in relation to that important part of the proposal? Secondly, will he explain how this conforms with the coalition Government’s emphasis on the removal of data held for the purposes of fighting serious crime? That is what they are doing by weakening the DNA database under the Protection of Freedoms Bill, but they do not seem to be particularly concerned about it in the context of the directive. Does the Minister believe that the Government are adopting a consistent approach, or will they continue to be—as they are at present—all over the place?
Using appropriate information in the fight against serious crime and terrorism is, of course, entirely necessary. We welcome this European initiative, which may make the Government think again about the fight against other serious crime.
Damian Green
I am grateful for the hon. Lady’s support for the Government’s decision, although I am slightly puzzled by her suggestion that there has been some enormous change since my party was in opposition, given that from 2005 onwards the Opposition spokesman on this subject was me. There has been no change at all, either in the person of the spokesman or in the attitude I have taken to PNR and the collection of data. What we are doing is putting into practice what we said in opposition.
The hon. Lady asked a number of specific questions. Negotiations are continuing now that we have decided to opt into the directive. She asked whether the directive will be useful if it ends up not containing the intra-EU provisions that we regard as so important. First, I should emphasise that we have already ensured that a majority of member states are now in favour, so we are extremely hopeful of getting this in place. Secondly, it will be useful, but not as useful as it will be if the intra-EU travel provisions are allowed.
The hon. Lady asked about targeting and whether we can keep pace. It is an important point that some routes are much more high risk than others, so concentrating our resources on them is likely to make us more effective than just having a blanket collection. We and other countries will need to flex to meet the circumstances. The hon. Lady is right that criminals and terrorists will change their patterns of activity. One of the advantages of collecting PNR is that it enables us to see patterns emerging and changing, and to meet that by being fleeter of foot in changing the routes we cover.
The hon. Lady mentioned our exchange in Committee on terrorism offences. She read out part of my letter to her, but neglected to continue. The answer to her question is in the next couple of lines:
“As the negotiations progress…we will need to keep this point under review and, if necessary, seek any changes during the passage of the Directive.”
That is, of course, what we are going to do.
I am happy to be able to assure the hon. Lady that this will not diminish our e-Borders programme. I should point out to her that the most effective immigration part of the e-Borders programme is the API collection, not the PNR collection. I am sorry to be talking in jargon to the House. The API data are essentially the basic information that comes off the passport of any traveller. The collection of that is what will enable us, under e-Borders, to count people out as well as in, and that is what is crucial for immigration.
The hon. Lady talked about the period of time for which data will be held. That will be at the core of the negotiations, and it is extremely important. Under the current British e-Borders system, we hold the data for, essentially, 10 years, and we think that is too long. The Commission is proposing 30 days, and for it then to be anonymised for a few years. The Canadians have a different system again, under which it is held for three and a half years. This issue will be at the heart of the negotiations.
As for the hon. Lady’s idea that there is any inconsistency between our approach on this and our approach on domestic data collection, that is absolutely dead wrong. As I emphasised in my statement, we believe in the necessary and proportionate use of data to combat crime and terrorism, while preserving the civil liberties of the British people. That is what we apply in our domestic field, and that is what we will apply in the international field as well.
Mr Speaker
Order. In wishing the hon. Gentleman a happy birthday, I call Mr William Cash.
Mr Cash
I am extremely grateful to you, Mr Speaker; thank you very much for that.
As the Minister knows, the European Scrutiny Committee is somewhat concerned, to say the least, about the blizzard of opt-ins and the fact that the negotiations on a number of very important matters are still going on. There is therefore some concern about the possibility of our opting in on the hoof, and we will keep these negotiations under close scrutiny, in particular the negotiation on the length of time for the retention of data, but also that on the definition of a serious crime and the question of proportionality in using these data for offences such as racism, xenophobia and sabotage. There is also the whole issue of sensitive personal data in itself. I know the Minister is apprised of these issues, but will he understand that we are extremely concerned and that as there are these important continuing negotiations it is not good enough simply to say, “We will accept it in principle and then discuss it all afterwards”?
Damian Green
First, may I add my good wishes to my hon. Friend on reaching his 39th birthday? I assure him that the Government are keenly aware not only of the key issues he has raised but that he and his Committee will be scrutinising what the Government do. Indeed, as the negotiations are likely to go on for at least a year, if not longer, there will undoubtedly be opportunities for the Committee to return to its perfectly proper scrutiny arrangements during that time.
Keith Vaz (Leicester East) (Lab)
May I also support the Government’s decision to opt in to this directive? The Minister has dealt adequately with the two issues raised by the Home Affairs Committee when it considered the matter—privacy and cost—but will he confirm that the information being collected will not be shared outside the EU? It had been suggested that it might be given to other countries, such as the United States. Secondly, will he also assure us that now that the contracts have been issued under the e-Borders programme, which of course suffered an unfortunate delay under the previous Government, it will be fully operational by 2014, when he may still be the Immigration Minister?
Damian Green
The right hon. Gentleman always paints a happy prospect of life ahead. I am grateful for his support and on the data protection issues I can say that the British information will be dealt with by the British Government, so we will not see the random international sharing of information that he suggests—I agree that that would be bad for data protection issues. On the e-Borders system, we are indeed proceeding with letting the new contracts. We already have more than 90% of routes outside the EU covered by e-Borders and we hope that within the next 12 months that coverage will be more or less complete, so that will proceed quickly. Clearly the biggest single gap in the e-Borders coverage is within the EU, which is what this directive is very precisely going to help us with.
Tom Brake (Carshalton and Wallington) (LD)
The Minister rightly says that the directive will make Britain safer, but will he say a little more about the safeguards? Specifically, will he confirm that the data will not be used for profiling and that the UK’s data protection standards will apply?
Damian Green
I am very happy to give my hon. Friend that specific assurance that the data will not be used for profiling. Indeed, the amount of sensitive personal data that will be put on the system is one of the liveliest matters for negotiation. I entirely share his instincts, which I know to be that although data need to be collected and stored for the protection of our citizens, that must done proportionately. In many ways, the ideal situation is that we collect and store the exact minimum of data that we need to enhance the security of the people and do not drift into the situation that the previous Government fell into. They believed that they made us safer by collecting and storing more and more data and keeping them for longer. That did not make any British citizen safer but it did amount to an assault on our civil liberties.
Kate Hoey (Vauxhall) (Lab)
The Minister has said on a number of occasions that opting into this directive will make Britain safer. I presume that he meant to say the United Kingdom of Great Britain and Northern Ireland, although I frequently hear Ministers refer to “Britain”. He said that this approach would be used “only on routes of high risk, whether these are between a third country and a member state or between member states.” Does he envisage it ever being used for journeys between Belfast and London?
Damian Green
I am perhaps careless in saying “Britain” when I mean the United Kingdom, and I am happy to assure the hon. Lady that I mean the United Kingdom on this occasion. Like her, I regard flights between Belfast and London as being entirely British domestic flights and therefore certainly not included in the terms of an international agreement between EU member states.
Mr Rob Wilson (Reading East) (Con)
I congratulate my hon. Friend on what seems to be a very pragmatic anti-terrorism measure, but will he tell the House how the implementation of this directive fits into the Government’s very positive record of balancing civil liberties, on the one hand, and anti-terrorism work, on the other?
Damian Green
It will fit in during the course of the negotiations, and I hope that my hon. Friend will observe that we want to reach a position in which the amount of information collected, as well as the length of time for which we keep it, are proportionate, and the number of offences for which it is used is both sensible and proportionate. I take the point raised by my hon. Friend the Member for Stone (Mr Cash), which must be considered, too. We will be concentrating hard on those details of the negotiations, always with the view that we want to ensure that this measure is entirely consistent with our stance of enhancing both security and civil liberties.
Emma Reynolds (Wolverhampton North East) (Lab)
I congratulate the Minister and the Government on opting in to this important directive. I also welcome the eventual, although late, decision to opt in to the human trafficking directive at the end of the negotiations. Contrary to the advice that he has received from the hon. Member for Stone (Mr Cash), does the Minister agree that it is important for the UK to opt into such directives at the start of the process, so that we can be at the forefront of negotiating the finer detail of the proposals? We did not have the chance to do that with the European human trafficking directive.
Damian Green
I am grateful to the hon. Lady for her support, but I do not agree that we should take a blanket decision always to opt in at the beginning. With some directives, of which this is one, we are clearly leading a majority of European countries towards a position that would be extremely desirable, and without which the directive would be much less powerful. As for the human trafficking directive that we agreed to opt in to last night, in that case there was more of a threat than a promise during the negotiation procedure, and we needed to know that when we reached the end of the procedure the directive would still be entirely safe for Britain. As the hon. Lady will know, one difficulty is that if we opt in at the beginning there is no chance of opting out at the end if we discover that the negotiations have gone wrong. This is a question of taking every case on its merits, and that is what we seek to do.
Oddly enough, what has happened in the past 24 hours illustrates the virtues of such pragmatism. For the trafficking directive it was sensible to opt in at the end of the process, and for this directive it was sensible to do so at the beginning. With other directives it will be sensible for us not to opt in at all, because they might be harmful. I can assure the hon. Lady that the Government will continue to operate a pragmatic case-by-case approach to such directives.
Mr Peter Bone (Wellingborough) (Con)
My view is completely the reverse of what the hon. Member for Wolverhampton North East (Emma Reynolds) has just said. It was absolutely right to opt in to the human trafficking directive yesterday after it was finalised. I am a bit worried that we are now opting in to a directive that we cannot opt out of before we see the final version, although the Minister already has concerns about it. Why does he think that we should opt in now, rather than waiting until the end, as we did with the human trafficking directive?
Damian Green
Because one of the crucial elements of this directive concerns travel between EU states. That, more than anything else, is what will help make British citizens safer, as 72% of the flights in and out of this country are flights between EU member states. Although the directive would still be useful if it did not cover such flights, it would be significantly less useful. We have devoted our negotiating efforts, successfully so far, towards building a coalition in the EU to promote that policy. So far, that is going well. This is a prime example of where opting in at the beginning and leading the discussions will be to the advantage of this country and its citizens.
Point of Order
Sir Menzies Campbell (North East Fife) (LD)
On a point of order, Mr Speaker, of which I believe that you have been given advance notice. You may be aware that this morning the Select Committee on Standards and Privileges met to consider the confidential report from the Parliamentary Commissioner for Standards following the self-referral to the commissioner of my right hon. Friend the Member for Yeovil (Mr Laws). Shortly after the conclusion of that meeting, Sky News and the Evening Standard were reporting that the commissioner had found my right hon. Friend guilty of breaching expenses rules. What protection is available to hon. and right hon. Members who find themselves in such a position? Such leaking risks undermining the work of the commissioner and of the Committee on which we all rely. What confidence can my right hon. Friend have that he has been, and will continue to be, given a fair hearing and that the principles of natural justice will be upheld?
Mr Speaker
I am grateful to the right hon. and learned Gentleman for his point of order, and to the right hon. Member for Orkney and Shetland (Mr Carmichael), for giving me advance notice of the intention to raise it. Like the right hon. and learned Gentleman and other hon. and right hon. Members, I strongly deprecate any leaks that take place that constitute a discourtesy to this House. However, I have to say to him that at this stage I have no detailed or authoritative knowledge of the matter and that it is not, at this juncture, a matter specifically for me. However, the very real concern that the right hon. and learned Gentleman feels, for his own part and that of others, has been registered, and if there has been any unauthorised disclosure it is, in the first instance, a matter for the Committee concerned to consider. I hope that is a clear and fair response. I am grateful to the right hon. and learned Gentleman.
Lip-reading
Ian Lavery (Wansbeck) (Lab)
I beg to move,
That leave be given to bring in a Bill to require lip-reading to be classified as an essential skill for the purpose of skills funding; to require the Secretary of State to ensure that people who are deaf or hard of hearing have access to lip-reading classes provided by local learning providers at no cost to the learner; and for connected purposes.
There are an estimated 9 million people in the UK who are deaf or hard of hearing—a staggering one in seven of the population—and this issue touches every family in every community in the land. Lip-reading is a vital communication skill. It prevents social isolation, increases confidence and independence and helps people in work and in employment. It is a key part of the rehabilitation process for people with any kind of hearing loss, and it can greatly help people to adapt to using a hearing aid.
There are a number of reasons why someone might be deaf or might lose their hearing, including, but not only, noise, age and genetics. In areas such as my constituency and throughout the north-east, exposure to noise in mining, shipbuilding, engineering and other heavy industry has contributed significantly to the problem. More than 50% of people over 60 have experienced hearing loss, and about one in every 1,000 babies born is moderately to profoundly deaf.
I recently met constituents and volunteers at a Royal National Institute for Deaf People meeting in the town of Morpeth in my constituency. I should like to place on record my support for the excellent work undertaken by the RNID, its staff and its network of hard-working volunteers. At the meeting I had an opportunity to learn about the hearing problems that my constituents have, about how their everyday lives are affected and about the huge difference that lip-reading would make to their quality of life. I want to share some of their thoughts and personal experiences with you, Mr Deputy Speaker, and with the House, because they effectively illustrate the need for, and the benefits of, lip-reading.
One of my constituents, a 69-year-old former miner, was in his 20s when his hearing went rapidly into terminal decline. He came out of a session at the local swimming baths to discover that he was deaf. Although he is articulate, intelligent and motivated, his inability to hear has had a huge impact on his and his family’s lives. He regularly attended lip-reading classes and found them enjoyable and sociable. His confidence improved and he could interpret lip shapes to communicate with others. He was learning to lip-read when the classes were stopped. He was making good progress and the classes were making a real difference to his confidence, so it was a huge disappointment and setback when they were stopped.
In another case, a man who had been in the armed forces and later employed in the building trade lost his hearing on a holiday flight as the aeroplane began to land. He became deaf and his hearing never returned. His hearing loss caused him severe depression and caused problems in his relationships with his wife and family. He eventually lost his job because of his hearing loss, could no longer communicate by telephone, and missed so much conversation that all involved became concerned for his welfare. He became known to the care trust and was assigned a specialist social worker. He attended lip-reading classes, which met his needs. The course was local, always full and with a waiting list, and cost-effective. He found that meeting other people assisted him in his mental health recovery. The lip-reading classes were abruptly stopped, and concern mounted for his welfare.
The man was eventually sent, together with his wife, on a LINK course financed by the NHS after referral by the care trust. LINK is a specialist course for those who have hearing loss, and because it is residential and out of the area—it is usually held in Bournemouth—it is an expensive course, which is financed by the care trust. Had lip-reading classes not been stopped, they would have met his needs and those of his family locally. Lip-reading classes would have stopped the social isolation that he experienced and, in his case, would have negated the need for costly NHS mental health intervention, which required him to travel to Bournemouth.
Another case is that of a chap working in education. He took early retirement after 26 years because of his deafness, which prevented him from being an effective teacher. He was unable to hear young children who were learning to read. Ironically, he became a part-time lecturer at a local university, teaching local history. He said, “I can teach, but I can’t listen!” His family have had deafness problems throughout the generations. He read a novel, “Deaf Sentence” by David Lodge, which showed how lip-reading improves the individual’s quality of life. At the time he was concerned that he had withdrawn from the company of others and had stopped doing things that he enjoyed.
The man searched for a lip-reading class and joined Northumberland RNID as an active volunteer. He was amazed that there were no lip-reading classes available in Northumberland, yet in Durham, the adjoining county, nine classes were held throughout the year. The round trip to the classes in Durham was more than 100 miles so it was not practical to travel. He believes that this life skill should be available to all and free at the point of service. Lip-reading should not be regarded as a recreational pursuit. He says, “To suggest that lip-reading should be linked to adult education or leisure is deeply insulting to those of us with hearing difficulties.”
The final case is that of a constituent who became profoundly deaf as a four-year-old child, following an illness. She struggled in mainstream school and felt excluded and lonely. She later married and raised her twin daughters together with her loving, caring family. Her hearing loss has caused her severe problems throughout her life. Some six years ago, in her mid-50s, she was considered as a candidate for an implant. The operation took place in Middlesbrough and was extremely expensive for the NHS. For the first time in decades she could hear sounds and was able to distinguish between them. It took time for the “Dalek-like stimulus”—her description, not mine—to be assimilated by the brain and for her to make sense of people’s mouth shapes.
Hearing again has made an enormous difference to my constituent and her family. She has had good support from the NHS. However, she feels that although she is fortunate and that the pre and post-operative care were good, there was a vital ingredient missing from her long-term care—lip-reading classes.
Lip-reading is classified in the UK as personal and community development learning within adult safeguarded learning. The Skills Funding Agency policy summaries describe one of the purposes of such learning as enjoyment. The document also highlights the fact that adult safeguarded learning
“is increasingly being referred to as Informal Adult Learning”.
Examples of other skills in the same classification are cake decorating and balloon modelling.
There appears to be a postcode lottery in the UK for lip-reading classes. Surely that cannot be acceptable. The benefits of someone learning to lip-read are well proven. It assists greatly in employment, health and life skills. From my experience it is clear that there is a demand for lip-reading classes, and urgent action must be taken to halt the current decline in the number of classes available.
In all our constituencies and communities there are individuals and families who would benefit hugely from the provision of such a service. It is our responsibility to ensure that those services are available locally and at no cost to the learner. We must remember that one in seven people suffers from hearing loss—9 million people in the UK. Lip-reading classes should be treated very seriously indeed. The simple fact is that we should all band together, and there should be no dissent from the motion so that we can ensure that all people suffering from serious hearing loss at least have the chance to attend lip-reading classes, and a modicum of quality of life as a result.
Question put and agreed to.
Ordered,
That Ian Lavery, Grahame M. Morris, Ian Mearns, Mrs Sharon Hodgson, Catherine McKinnell, Mr David Anderson, Mrs Mary Glindon, Mr Ronnie Campbell, Mr Dennis Skinner and John Cryer present the Bill.
Ian Lavery accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 4 November, and to be printed (Bill 186).
Energy Bill [Lords]
The Secretary of State for Energy and Climate Change (Chris Huhne)
I beg to move, That the Bill be now read a Second time.
Over the past year, energy policy has been in the spotlight. From the gulf of Mexico to Fukushima, no one can doubt the importance of our energy choices. For the first time, scientists have linked greenhouse gas emissions to an increased risk of major floods. Faced with a difficult financial situation, the Government’s objectives are clear: we must secure affordable energy supplies for the future and avoid dangerous climate change. Neither will be easy. The gap between our energy demand and our energy supply is growing and we are increasingly dependent on imported energy. We still rely heavily on unclean and unsustainable fossil fuels. By law, we must cut our emissions by 80% by 2050, and we must get 15% of our energy from renewable sources by 2020 under EU law. Our energy infrastructure is ageing. Our old polluting power stations are shutting down.
Barry Gardiner (Brent North) (Lab)
While the Secretary of State is talking about the targets, will he expand on the dispute that appears to be taking place between Cabinet colleagues on whether the recommendations of the Committee on Climate Change should be met or abandoned?
Chris Huhne
The hon. Gentleman can take it from me, as a former journalist on The Guardian, that he should not always believe everything he reads. The Government will make our announcement on the question of the fourth carbon budget in due course.
Building the next generation of power plants will take time and money. If we are to cut our carbon emissions and keep the lights on, we must act now. The cheapest way of closing the gap between supply and demand is to reduce the amount of energy used.
Mr John Baron (Basildon and Billericay) (Con)
The Government are rightly concerned about fuel poverty and whether customers are paying too much for their energy—a situation not helped by a myriad of tariffs and complex energy bills. As my right hon. Friend’s fellow Ministers know, I have submitted simple proposals to his Department that would oblige energy companies to show customers how much they would save if they were on that company’s cheapest standard tariff, based on the customer’s actual usage, rather than a generic or average usage. Other Ministers have been supportive. Will he be?
Chris Huhne
I am grateful to my hon. Friend, and I know that he has been very active in promoting that cause. I thank him for the way in which he has been championing that change, which will help to increase consumers’ control of their energy bills, and I very much hope that he will continue to do so. I can certainly say—for myself and the whole ministerial team—that we are supportive of his work and the ideas that he has brought forward; we see a lot of merit in them. I would want to consult more before introducing detailed legislation, but we very much welcome the thrust of that work.
Mr John Redwood (Wokingham) (Con)
Given the looming shortage of capacity, how much new capacity is in-build as a result of decisions taken in the last year, and how much does the Minister wish to get in-build as a result of decisions in the forthcoming year?
Chris Huhne
I am grateful to the right hon. Gentleman for his question on that issue. Obviously, there is an absolutely central objective of the electricity market reforms, on which we are consulting, and it is that we bring forward proposals. We are determined that we should have an adequate supply margin through even the toughest of winters. My whole ministerial team is determined to ensure that, and I merely urge him to wait for our White Paper, which will I hope reassure him about the prospect.
Joan Ruddock (Lewisham, Deptford) (Lab)
In the light of what the Secretary of State has just said, what does he make of Centrica’s threat not to reopen its gas field because of the punitive taxation that his colleagues have imposed on it? If he really wants security of supply, surely that is central to its future.
Chris Huhne
Perhaps the right hon. Lady has more information on that than I do. I read the comments very carefully, but I did not read a comment about closing down the Morecambe gas field. That would be a very odd thing for an operator to do, but we will have to wait for the fullness of time to see whether she or I are right.
Chris Huhne
I will give way once more—to the right hon. Gentleman—before making a little more progress.
Mr Andrew Smith
The Secretary of State said a few moments ago that we need to act now to combat climate change. Will he therefore act now to bring in emissions performance standards for power stations by adding an enabling clause to the Bill, so that we make progress in that crucial area as soon as possible, the electricity companies know where we stand, and we do not have to wait months and years for action that, as he says, needs to be taken now?
Chris Huhne
The right hon. Gentleman knows that it is not a question of months or years; the proper place for the House to debate as significant a change as emissions performance standards is as part of the electricity market reforms. We will give a very clear indication, as I said to the right hon. Member for Wokingham (Mr Redwood), of exactly what direction we are taking with our energy policy on the production side. The thrust of this Bill, which we are debating today, is more on the energy saving side, but we will make very clear the detailed proposals on emissions performance standards. We have a clear commitment in the coalition agreement—and, indeed, in our parties’ manifestos.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Will the right hon. Gentleman give way?
Chris Huhne
I am going to make a bit more progress, if I may, and if the hon. Gentleman will excuse me, because I have taken four interventions without being able to draw breath between any of them.
Building the next generation of power plants will take time and money. If we are to cut our carbon emissions and keep the lights on, we must act, and the cheapest way of closing the gap between supply and demand is, as I said, to reduce energy use.
The Bill contains provisions to boost our energy security, to encourage low-carbon technologies and to improve energy efficiency. It gives energy companies a new obligation to reduce carbon emissions and to support vulnerable consumers, and it delivers a key coalition commitment: the green deal—a self-financing building improvement scheme to bring our properties into the 21st century.
The UK has some of the oldest and least efficient buildings in Europe. Every day, throughout the country, our homes and businesses leak heat and waste energy.
Mr Dave Watts (St Helens North) (Lab)
As up to 24% of heat can go out of the window, will double glazing be included in the green deal?
Chris Huhne
The exact specifications of the measures that can be included in the green deal are properly left to secondary legislation—and for several reasons, because setting it out will require detail and my officials are in the process of talking to industries throughout the country about getting costs down. The scale of the green deal gives us an opportunity for economies of scale that may well bring a whole new series of measures into the possibilities that it offers. I would very much like to see the maximum possible range of measures—including, indeed, double glazing. As the hon. Gentleman rightly says, a quarter of the UK’s energy emissions come from energy used in the home, and billions of pounds spent on domestic heating literally disappear up the chimney. Businesses are wasting money and our outdated building stock is costing us the earth. Not any more: under the green deal—
Mr John Leech (Manchester, Withington) (LD)
Does my right hon. Friend accept that the biggest problem is in the private rented sector, and that one of the best ways to deal with some of the worst properties is to stop landlords being allowed to let F-rated and G-rated properties by 2016?
Chris Huhne
I entirely agree with my hon. Friend, and I will respond to his point later if he will allow me to make a bit of progress.
Under the green deal, energy-saving packages worth thousands of pounds will be installed in millions of homes and businesses right across the country. There has never been anything quite like it. It is the most comprehensive energy-saving plan in the world. Green deal measures will be provided by trusted businesses, installed by accredited professionals, and backed up with a watertight legal framework. Customers will pay nothing up front; businesses will do that for them. Once the property has been refitted, green deal providers will get their money back from the expected savings on energy bills over the lifetime of the measures. This is the big change: payments can be made not just by the existing tenant or owner-occupier but by the new beneficiaries once the original installers have moved out and moved on, so there is a longer repayment period. That makes the whole scheme much more financeable and much more attractive.
Andrew George (St Ives) (LD)
My right hon. Friend refers to the companies that will undertake the assessments and potentially the work itself. Has he had time to reflect on the lessons from the Warm Front scheme, where large companies cleaned up all that work when a lot of it could have been undertaken efficiently by small local companies? Will he ensure that the way in which the legislation is framed does not keep those small local companies out of undertaking this important work?
Chris Huhne
My hon. Friend makes a good point. We are absolutely determined to ensure that this scheme is open to small businesses that are properly accredited and properly qualified as installers. I am sure that all of us, in all parts of the House, want not only the biggest companies but small businesses to benefit from the advantages of the green deal.
Barry Gardiner
The right hon. Gentleman talked about householders moving and the contract then being taken on. However, in the evaluation process that took place at the beginning, the estimated savings were based on usage by the initial occupier. What will happen when the occupier changes and those savings then change as well?
Chris Huhne
As the hon. Gentleman knows, when we are looking at savings or cash flow, money today is worth more than money tomorrow, so from the point of view of the installer, the longer the period, the more the work is worth doing. The key change in the Bill is to introduce the ability to go beyond the existing owner-occupier or tenant in order to spread payments out over a long period.
At the heart of the green deal is a golden rule—that for typical households, expected savings will offset costs. Each month, a green deal home will save energy while providing the same level of comfort. Money from likely energy savings will pay off the costs of the work. This is not a personal loan. Let me repeat: once a property has had the green deal, payment will stay on the energy bill at that address, even if the occupants then move out. When someone moves into a green deal home, they inherit the energy savings that pay for the work. Everyone has a part to play. This is about Government helping businesses and households to come together to deliver energy savings that are important on a national scale.
Through this legislation, we are creating a new market in energy saving. Just as the law establishing joint stock companies unleashed big investment, so this law will set the legal framework for a new green growth industry.
Mr Andrew Tyrie (Chichester) (Con)
The Secretary of State said that he is creating a new market. Considerable consumer protection and competition concerns have been expressed to me about the creation of this market. What advice has he taken on the aspects of the Bill that will set aside the Consumer Credit Act 1974? Is it not the case that many people will feel tied to a particular energy provider? How will he ensure that these measures do not inhibit people from switching between energy providers?
Chris Huhne
We have taken extensive advice on the provisions of the Consumer Credit Act 1974, and the Bill is absolutely in line with the protections.
In the view of this ministerial team, it is essential that the consumer has the highest possible protection, both financially and in terms of the quality of the installation, for the simple reason that the success of the scheme will depend on word of mouth. If people go around saying that they have had a bad experience, either financially or in terms of the installation, the scheme will not be the success that we want it to be. That is why we have been careful not to rush the Bill through. A lot of pressure has been brought to bear on us, because of the state of the economy, to ensure that we get it through as quickly as possible, but we have been determined, particularly drawing on the experience of Australia, to avoid the mistakes of countries that have rushed this matter, and to ensure that we get it right. I assure the hon. Gentleman that we have done that. I will turn to some of the more detailed answers to his question later.
Caroline Lucas
I am grateful for the opportunity to speak. Is it not the case that the golden rule will not help people in fuel poverty much because they are far more likely to feel any green deal benefits through greater thermal comfort rather than through reduced fuel bills? The energy company obligation pot does not have much money in it, although £2 billion is a good start. However, even that is being paid for by a levy on consumers’ bills, and there is research to suggest that that mechanism will push more people into fuel poverty than it pulls out.
Chris Huhne
I do not agree with the hon. Lady’s assessment. It is important to deal with people in fuel poverty. The energy company obligation, as she pointed out, will enable us to fund green deal measures for those in fuel poverty. The ECO will ensure that people, such as the stereotypical little old lady in her extremely draughty home who could suffer from hypothermia, can enjoy more comfort and do not have to generate energy savings to install insulation. The hon. Lady is right that we want such people to have more comfort and to enjoy a higher temperature, because we do not want to see our fellow citizens dying from hypothermia. Providing more comfort is explicitly allowed for in the Bill, and we have just introduced legislative measures for the warm home discount. We want to ensure that there are means through the green deal to tackle the root of the problem of fuel poverty, and to deal with fuel poverty problems for those who have not benefited from that.
Dr Alan Whitehead (Southampton, Test) (Lab)
On the ECO, does the right hon. Gentleman regret agreeing with the Treasury cap on Department of Energy and Climate Change levy-based spending over the current funding cycle, under which any new levy spending—if it is so defined by the Office for National Statistics—would come within the levy cap? Under that scenario, what present levies does he intend to carve out in order to carve in the ECO?
Chris Huhne
The hon. Gentleman should first realise that the ECO is not covered by that as yet, although it may be in the future. Secondly, it is legitimate for the Treasury to have an interest in the taxable capacity of the country as a whole. If we impose an additional obligation on electricity consumers through legislation, we should be absolutely transparent about it, and we have committed to do that through the annual energy statement, for example. It is also absolutely appropriate that the Treasury should have oversight of that, and that there should be ongoing negotiation to ensure that the balance is struck between the progress that we want to see on fuel poverty and hard-to-treat homes, and the charges that are put on the electricity consumer.
Chris Huhne
I will make a little progress, if I may.
Millions of homes, and millions of businesses, could benefit from the green deal in the next decade. We expect that households will be able to install measures worth up to £10,000. That is a massive undertaking, and it can make a real difference. Heating is the second biggest driver of energy demand in Britain, and British Gas pilots show that householders who put in energy efficiency measures can cut their gas consumption, and their bills, by up to 44%. That is a very substantial and significant saving, but so far energy efficiency has passed under the radar. We estimate that between £2 billion and £3 billion of energy is wasted every year because our homes are poorly insulated and inefficiently run. We may as well be standing outside our front doors burning £50 notes. That waste represents £2 billion to £3 billion of gas and oil imports that make us more vulnerable to the vagaries of global oil and gas markets.
Gavin Barwell (Croydon Central) (Con)
What estimate have the Government made of the contribution that the energy efficiency measures in the Bill will make to the UK’s obligations on reducing carbon emissions?
Chris Huhne
One problem that we have in making that assessment is that, as I have said, this is the first scheme of its kind in the world. If an economist is trying to make a projection of what is going to happen in future, they usually examine what has happened in the past, but there is no history for this scheme, so it will be a case of “suck it and see”. However, later in my speech I will give some estimates of what will happen if the scheme progresses as rapidly as I would like it to.
Joan Ruddock
I am exceedingly grateful.
I have to say that much of what the Secretary of State is telling the House is familiar to me, as the person who pioneered and piloted so much of the history of the green scheme that he denies exists. What conversations has he had with the banks? How investment is to be raised is the key element that has not been described to date.
Chris Huhne
I am grateful to the right hon. Lady, and I pay personal tribute to her for her work on the matter. I am not—repeat not—attempting to make any partisan points. This has been a genuinely important piece of work to which Members of all parties have contributed, and I think it will be a game changer.
On the banks, I shall read the right hon. Lady a quotation that I believe sums up better than anything that I could say what is likely to happen with the financing of the scheme. It comes from Conor Hennebry, the director of global capital markets at Deutsche Bank, who says:
“We believe the Green Deal has the potential to improve access to home energy efficiency for families across Britain, and we are delighted to be working with DECC on this exciting initiative.”
He added on another occasion that
“the City is practically champing at the bit to finance the government’s green deal.”
I believe that the finance for the scheme will come through very strongly. The securitisation market is opening up—Eaga, for example, has already gone to the bond market with a securitisation, and many of the utility companies have securitised gas bills. I think that finance will be readily available, which will be an important part of making the green deal work.
Andrea Leadsom (South Northamptonshire) (Con)
I welcome the Bill—it is a superb idea, and I applaud the Government for bringing it forward so quickly. May I press the Secretary of State on consumer protection? As with any new initiative that a tremendous number of people want to take up, some providers will inevitably promise the earth and not deliver. What protection will there be for consumers, particularly those in fuel poverty to whom much is promised but little is delivered, to ensure that they get the insulation and the reduction in their fuel costs that they are expecting?
Chris Huhne
I absolutely sympathise with the hon. Lady’s question—I spent a number of years on the board of the Consumers Association, and I am a firm believer in the need for good consumer protection. There are several layers of protection, and the first line of defence for the consumer is competition. The inability of householders to get an assessment and an alternative quote—such competition keeps suppliers lean and mean—is perhaps what went wrong with the Warm Front scheme.
In addition, we will have all of the usual protections. I mentioned the Consumer Credit Act 2006 in respect of finance, but there is also the accreditation scheme for assessors, so we will know that assessors are properly trained to assess what people need in their homes to meet that golden rule. We will have properly qualified installers, so avoiding the problems that occurred, for example, in Australia, where untrained people crawled through people’s lofts, banging nails into wires and setting fire to homes. The whole Australian energy efficiency industry was given a bad name for many years because of that, but we are avoiding those problems. The hon. Lady will see in Committee that we have delivered a lot on consumer protection.
Mr Michael Meacher (Oldham West and Royton) (Lab)
The Secretary of State has concentrated on the benefits of the Bill, which of course depend on whether there is high take-up, which in turn depends on the interest rates on loans under the green deal. Will he give us some idea of what he intends the interest rate to be? Most expect that it will be of the order of 8% to 10% over a 25-year period, which will rule out very large numbers of people, particularly the poorest.
Chris Huhne
The right hon. Gentleman is right to say that the interest rate is important. However, it is up to competing businesses to arrange that finance. I also very much hope and trust that finance houses will make pools available for the small businesses of which my hon. Friend the Member for St Ives (Andrew George) spoke, so that providers other than the B&Qs and the Scottish and Southerns—the big providers—can get involved. The key point is that the securitisation market is opening up for such businesses, and the finance available is at a reasonable level, which I believe will ensure that we have take-off. However, the right hon. Gentleman is right that that is a market decision.
Mr MacNeil
The Secretary of State mentioned qualified installers, which in theory are all very well. However, one problem, especially in rural and island areas such as mine, is that in practice, local businesses are often unable to tender for the work because of the big contracts that are put together. People in the locality are cut out and left without the work while people come in from outside and take it up.
Chris Huhne
As I have already said, the Government are committed to trying to make the benefits of the green deal available to small businesses, which obviously includes those in remote islands and rural communities. We have consulted widely on that with both of the devolved Administrations, including the Scottish Government. We have a very substantial measure of consensus with the Scottish Government, but if issues need to be addressed in Committee, we will happily address them. I am terribly keen to ensure that the Bill works throughout the UK, because the homes that need insulating exist throughout the UK. Some of the greatest beneficiaries will be communities that are off the mains gas grid. Homes in such communities are often quite hard to treat, and the Bill will be of enormous benefit to them.
Under the green deal, households could save up to £400 a year once the measures have been paid off. That will flow through to spending power, boosting living standards for all, yet many people have never even considered making their homes more efficient—they do not know what better energy efficiency could do for them. New green deal assessments will set out clearly and consistently just how homes and businesses can save energy. The green deal is a new way of doing energy efficiency.
Chris Huhne
Let me make a bit more progress, but I will give way again later.
There will be no more picking off the easy bits, with a little insulation here and a low-energy light bulb there; no more relying on regulation alone to change behaviour; and no more top-down schemes imposed using public money. Instead, we are creating a new dynamic market in energy efficiency, shifting from small-scale improvements to deep retrofits on a national scale. This dynamic market will bring jobs across the length and breadth of the country, and real growth, reaching into the most deprived areas, with no regional bias.
James Morris (Halesowen and Rowley Regis) (Con)
On that point about the added benefit of the scheme to regional economies, can the Secretary of State estimate the number of the quality jobs that will be created in areas such as the west midlands and the black country, a part of which I represent?
Chris Huhne
That will depend on the take-up in different areas, but we estimate that nationally—there is no reason for any geographic or regional disparity; the numbers should be the same across the country—that the number of people employed in insulation alone could soar from 27,000 to 100,000 by 2015. The potential benefits are huge, with opportunities for skilled and unskilled labour alike up and down the supply chain.
The green deal will save energy and help us to hit our carbon emissions targets. It will also give us a chance to get people thinking about how they can reduce their own energy consumption. Millions of homes and businesses could benefit from the green deal, but as with any new product, building consumer trust will be critical to success. We want people to know that the green deal is not just a smart choice, but a safe choice, which is why the Bill also ensures that consumers will be protected. The green deal will be delivered by partnerships across the country.
Jim Shannon
For a minute I thought that as a Democratic Unionist Member I was not going to be allowed to speak in a green debate. When I was a Northern Ireland Assembly Member, I was involved in discussions on these measures, so it is appropriate that I have the opportunity to speak today. At the time, we proposed a clause on guaranteed performance standards that made it clear that if providers did not live up to their promises, they would be accountable for losses and monetary penalties could ensue. Does the Secretary of State intend to enshrine that principle in the Bill, so that what the Assembly proposed will be applicable across the United Kingdom? It would ensure good customer service and enhance security and protection.
Chris Huhne
The short answer is that there is a limit to what we can guarantee—the hon. Gentleman used the word “guarantee”—for reasons that will become obvious: if someone were suddenly to marry a Brazilian and wanted to keep their temperatures 3° or 4° higher in the winter, I could not guarantee that their energy bills would be lower. We have to be cautious, therefore, but if there is no behavioural change, we would expect energy savings.
We will ensure that high-quality, standardised advice is given so that each customer can see clearly where and how the green deal will work for them, and that those installing green deal measures must meet robust standards. We will guard against mis-selling, and ensure that the right information is on hand at the point of sale. Competition will keep suppliers keen: if a customer does not like the quote from one green deal provider, they will be able to get another.
Heather Wheeler (South Derbyshire) (Con)
This is a key test that will give legs to the Bill. Some of my constituents have contacted me about their troubles with Warm Front. There has to be a clean break with the past. This has to be a better way of doing business and giving us all a green deal for the future. I am looking forward to that particular piece of the Bill.
Chris Huhne
The hon. Lady is right. Many of us have been visited in surgery by constituents saying that they were quoted under Warm Front for an improvement, but oddly the entire subsidy was taken up by the provider, rather than going to the constituent. The point of introducing this competitive provision is to ensure that the subsidy goes where it is meant to, instead of disappearing into the pockets of some large business.
The Bill will also introduce a new energy company obligation to replace the carbon emissions reduction target and the community energy savings programme, which have not unlocked carbon savings fast enough. The new obligation will be more ambitious. Energy companies will be expected to pay to support hard-to-treat properties such as those with solid walls, where insulation costs can be higher and the payback period longer than with the typical home. ECO payments from energy companies will be bundled with green deal finance and delivered together to ensure that the green deal is available to all. The scheme will also help the most vulnerable people—those in the coldest homes—to get the heating improvements that they need to keep warm and stay healthy. Cold homes cost lives. By targeting support more closely, we can reach more people more effectively.
Tessa Munt (Wells) (LD)
I wonder whether this Energy Bill might be the right place for the Government to instruct the regulators to say that companies should no longer charge so much for the first units of electricity used—or whatever power it is—but instead swing that round to the point where there is better use of power. That will help the vulnerable and those in fuel poverty, because the whole thing has tipped the wrong way.
Chris Huhne
My hon. Friend makes a good point. There are many difficulties in the energy market of the kind that she describes—for example, with prepayment meters, which often make things more expensive. That is precisely why we introduced the Warm Homes discount, which provides people in vulnerable households with extra support, and why the green deal is so important. We are not just using a sticking plaster—which is what we do when we subsidise people—but dealing with the root cause of the problem. One of the key points is that people in fuel poverty and those at the bottom end of the income distribution have an enormous range of energy use. Their use can vary by a factor of six merely depending on the kind of property they happen to be in. If they are lucky enough to have a social landlord who has recently renovated the property to the decent homes standard, their energy bill can be low; if they are in the private rented sector, it can be six times as high.
Chris Huhne
If I may, I am going to make some progress.
We will focus our resources on where they can do the most good. That means finding practical solutions to identify households that need the most support. We are determined to get to grips with the causes of fuel poverty, not just the symptoms, but the tools at our disposal are not up to the job. That is why I have asked Professor John Hills to conduct an independent review of the fuel poverty target and definition, so that we can understand the problem and what we can do to fix it, and also be held to account as a Government for the progress that we make. The review will produce an interim report in the autumn and a final report early in 2012.
For too long, a sizeable minority of tenants has suffered from higher bills and colder homes. Privately rented houses are more likely to have the lowest energy efficiency rating than those that are owned outright.
Caroline Lucas
I thank the Secretary of State for giving way again. Are not tenants unlikely to challenge their landlords on the introduction of the green deal because of a fear of retaliatory eviction? Would it not be much more effective to introduce minimum energy efficiency standards that landlords have to keep to if they want to put their buildings on the market?
Chris Huhne
The hon. Lady anticipates a point that I will turn to very soon.
Landlords do not want to invest because tenants benefit; tenants do not want to invest because they will move on. By linking the green deal measures to the property, not the tenant, the Bill bridges that divide. With the green deal, everybody wins. Landlords will face no up-front costs; tenants will keep warm for less.
I welcome many of the positive responses that we have had from landlords to the prospect of the green deal. However, some individuals and organisations feel that we are not committed to securing improvements to the least energy-efficient properties in the private rented sector. Many tenants suffer appalling conditions without the power to agree improvements with their landlords. The debate has been lively, and we have listened. That is why I am pleased to announce that we will change the current provisions to make it clear that we will regulate. This is significant step and a marker of our intent. From 2016, any tenant or their representatives asking for their landlord’s consent to make reasonable energy efficiency improvements cannot be refused. From 2018, the rental of the very worst performing properties—those rated F and G—will be banned through a minimum energy efficiency standard. We will of course seek to work with landlords well in advance to support their take-up of the green deal. The precise form of these regulations will be subject to the usual scrutiny processes.
We also remain committed to ensuring that all councils play a role in delivering the green deal. The recent memorandum of understanding between DECC and the Local Government Group recognises the enthusiasm that councils have for delivering the green deal.
Malcolm Wicks (Croydon North) (Lab)
I have a question about the private rented sector, and I ask it in a spirit of non-partisanship because I know that the Secretary of State likes that kind of thing. I welcome what he has said about putting some pressure on landlords but, given that the public sector will in effect be paying the rents of some of these energy-efficient dwellings, through housing benefit and housing allowances, has his Department had talks with the Department for Work and Pensions to see whether the withdrawal of housing benefit could become another weapon in his Department’s armoury?
Chris Huhne
We have discussed this with the DWP, and that would certainly be one route down which we could go. There would be dangers in doing so, however, not least because some of those on housing benefit find it hard to get into privately rented property. The simpler route that I have suggested will have a clear and predictable effect and will touch more than 680,000 homes in the private rented sector that are currently rated F and G. This is a substantial move.
Stephen Gilbert (St Austell and Newquay) (LD)
The Government are clearly announcing significant changes to improve energy efficiency in the private rented sector. Will the Secretary of State expand on what he would consider to be reasonable, in the context of his saying that any reasonable request from a tenant would not be refused? Also, why has 2018 been chosen, rather than 2016 as many outside groups have been calling for?
Chris Huhne
The clear idea here is to give a point at which we know people are going to be able to aim. It is not reasonable to introduce changes very rapidly when, for example, there might not be voids in property renting. We do not want to impose unnecessary costs, and it is therefore appropriate to set a date. Let us remember that the scheme does not begin until October 2012, and we want to set a date by which the private rental sector can deliver.
Andrew George
Before he took those last two interventions, my right hon. Friend had just reached the point about the memorandum of understanding between his Department and the Local Government Group. The Bill does not at present include any powers for local authorities, and some of us are concerned that if it is simply left to the private sector to generate the scheme, it might not be sufficiently targeted at the communities that need it the most. Should we not give a duty, or at least a power, to local authorities in this regard? Does the Local Government Group sign up to that kind of joint arrangement with the Government?
Chris Huhne
My hon. Friend needs to recognise that a substantial number of councils are very enthusiastic about the scheme, because of the benefits that it can bring in regard not only to energy saving but to local jobs. I personally think that we are going to see go-ahead councils trumpeting the work that they do in this area. They already have substantial powers to monitor and to ensure that this will happen.
Alongside the green deal provisions, the Bill also contains measures to enhance energy security. They include legislative changes to reduce the likelihood, duration and extent of gas supply disruption, and to protect consumers from very high wholesale prices. These new powers would sharpen the commercial incentives for energy companies to meet their contractual supply obligation during a gas supply emergency. The Bill also introduces a special administration regime for gas and electricity suppliers, which will help to maintain market stability and protect consumers.
Mr Mike Weir (Angus) (SNP)
The right hon. Gentleman is rapidly going through energy security measures, but clause 100 provides a power to change the boundaries of the continental shelf. According to Library research papers, the aim is to provide flexibility in managing the UK continental shelf resources. Will the Secretary of State give us more information about which parts of the UKCS he envisages changing, what resources are involved and what consultations have taken place with the devolved Administrations?
Chris Huhne
We have indeed had consultations with the devolved Administrations on all aspects of the Bill. One objective of this part of it is to ensure that the smaller and more difficult to get at fields, which have potentially higher costs, are nevertheless attractive and can be handed on to companies who will exploit them to the full. I hope that the hon. Gentleman will see from the Public Bill Committee that that is what we are trying to achieve.
Chris Huhne
I must make progress.
The regime will ensure that if a large supplier becomes insolvent, customers will be supplied with gas and electricity as cost effectively as possible until the company is rescued, sold, or its customers are transferred to other suppliers.
The Bill also includes an updated regime for third-party access to oil and gas infrastructure. Timely access to infrastructure on fair terms will be increasingly critical over the next decade. The discoveries now being made in the North sea are typically smaller than those in the past and need to make use of existing infrastructure where possible. The measures in the Bill will help us to secure the full economic benefits of our North sea oil and gas resources.
The Bill brings energy efficiency to homes and businesses across the country. It boosts the security of our energy supply, protects consumers and supports green technology. In setting up the green deal, it places us at the very forefront of the low-carbon drive—with an innovative, dynamic market delivering energy efficiency at scale, with no extra cost to the public purse.
Chris Huhne
I have come to my peroration and I have given way many times. I would like to continue.
Together with our reform of the electricity market, which will open up our energy portfolio and deliver the next generation of low-carbon electricity, the Bill represents a signal step towards a cleaner, greener future for the UK. In the scale of its ambition, this Bill is a statement of intent. It will help cut our carbon emissions, reduce our dependence on imported energy and protect the most vulnerable in society. This is our flagship policy on energy saving. This legislation provides for it, and this Government will deliver it. I commend the Bill to the House.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I was starting to think that my moment might not come this afternoon. I am delighted that the Secretary of State managed to make it to the House this afternoon to speak to his own legislation. The power of Twitter knows no end!
It is important to outline where the Opposition stand on the vital issues facing the Department of Energy and Climate Change and the Government. We would all agree that there is no greater threat facing the planet than global warming. In the 19 years since the Earth summit in Rio de Janeiro, when climate change was firmly put on the agenda, the issue has moved from the fringes to the centre stage. Even during the 13-year period of the last Labour Government, for whom I had the privilege to serve, the issue became more urgent and pressing. That is why Labour not only introduced tough targets to reduce our emissions of the gases that cause global warming, but enshrined them in law.
This coalition Government cannot be accused of ignoring climate change. The Prime Minister himself put the environment at the top of the Tory agenda when he took his husky ride to the Norwegian glacier. At the time, there were sceptics—including the Secretary of State for Energy and Climate Change—who dismissed that as merely a public relations stunt. We could doubt the Prime Minister’s commitment; after all, he has uttered hardly a word on the matter since. Why else, though, would one install a wind turbine on the roof unless one were committed?
As the Secretary of State has said, the Energy Bill provides a once-in-a-lifetime opportunity to catalyse Britain’s journey from a high-carbon to a low-carbon economy, to change customer behaviour for ever, to lead the world in reducing carbon emissions and to be a bright beacon to our partners in Europe, America and the Commonwealth. So the coalition Government have set out their stall, claiming to be “the greenest Government ever”, and what have they come up with? After months of bravado, bragging and boasts from the Energy Secretary and his ministerial team, we have a Bill that adds new meaning to the word “disappointment”. It is a flaccid lettuce leaf of a Bill, laden with missed opportunities and ducked decisions. If the school playgrounds of Britain have indeed adopted a new phrase, “doing a Clegg”—which, for the benefit of Liberal Democrat Members, means saying one thing and doing another—the lexicon will soon contain another new phrase, “doing a Huhne”. That will mean “talking big”, for 45 minutes in this instance, “but delivering little”.
Andrea Leadsom
I am very disappointed by what the hon. Lady is saying, on behalf of many of my constituents. A couple of months ago I was at a fish-and-chips supper with some retired people, and one elderly lady was literally in tears, saying that given her very limited resources she did not know how she would manage to keep warm in the winter and eat as well. I find it pretty shocking that an initiative that is making a bold effort to remedy that situation should meet with such complete disregard from the Opposition.
Meg Hillier
The hon. Lady may be jumping to conclusions. It is this Government who are removing the Warm Front scheme, and it is this Bill that is failing to deliver for the fuel poor. I shall say more about that shortly.
In his 45-minute peroration, the Secretary of State promised 100,000 jobs. He promised that the poorest would be saved from the cold, and that the market would protect the consumer and many others. However, he did not give us the details of some important matters. We have a Secretary of State who has been rolled over by the Tory Chancellor—and, we have learned in recent hours in days, by his own party colleagues, particularly the Business Secretary—on every important issue in his Department. We have also learned today that the ECO may be within the levy cap, but not yet. We have a Liberal Democrat sheep in a wolfish Government: a Government who want to be green-tinged, but who are under-delivering on their grand promises.
David Mowat (Warrington South) (Con)
When the last Government left office, one half of 1% of the UK’s total energy production was delivered by renewables. Is that under-delivery or not?
Meg Hillier
The Opposition seem to misunderstand—[Hon. Members: “You are the Opposition!”] They are the Opposition to me. They seem to misunderstand the position. There is cross-party agreement on the need for more renewables and a lower-carbon economy, but we believe that the Bill could do more to deliver that. What disappoints us is that a Bill that promised so much is delivering so little. We hope that in Committee we shall see some movement from the Government.
At the heart of the Bill is the green deal, which the Secretary of State spent much of his speech telling us about. The task is obvious. We all agree that Britain needs to insulate its homes and buildings. It needs to improve energy efficiency in millions of households. Given rising energy bills and the need to hit our carbon reduction targets, that work must be done, as Labour’s manifesto made clear at the last general election.
Laura Sandys (South Thanet) (Con)
If the hon. Lady wishes to improve energy security and insulation in homes and to reduce carbon, I do not understand why she does not recognise that the Bill is a game-changer. I recall another game-changing piece of legislation, the Clean Air Act 1956. That was the first in the world; this is the first in the world. That attracted—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I think that the hon. Lady has made her point.
Meg Hillier
First does not always mean best. We want the Bill to succeed in its aims, but if the hon. Lady looks at the detail of the Bill and reads the report of proceedings in the other place, she will observe the glaring gaps that I will shortly highlight. As I have said, the task is obvious and the challenge is great.
Neil Carmichael (Stroud) (Con)
For the record, can the shadow Secretary of State tell us whether the level of fuel poverty went up or down under the last Labour Government, for whom she, of course, served?
Meg Hillier
The point is that this Government are removing Warm Front, and there will be nothing for the fuel poor; this Bill will not deliver for them.
The challenge is great. As the Secretary of State said, 27% of all UK emissions come from our homes. All Members are committed to an 80% reduction in emissions by 2050; there is cross-party agreement on that. However, during the Bill’s passage in the other place Ministers were offered opportunity after opportunity to make their proposals clearer, to introduce proper measures of accountability such as an annual report, and to safeguard consumers, but they rejected those offers of help, and we have not heard any further detail throughout the entire 45 minutes of the Secretary of State’s speech today.
Other Members may have longer memories, but I do not believe that this House has ever been asked to vote on the Second Reading of a Bill in which so much of the detail is unclear or not worked out. We are being asked to buy a massive pig in a poke, and that is simply not good enough. At the very least, the Secretary of State should concede the need for evidence sessions for the Bill, so we can shed some light on its murkier aspects, but he has refused to do so. As a result, Members will not have a single opportunity to discuss the Bill outside Committee. Today, the longer the Secretary of State’s answers were, the less we learned. [Interruption.] No, those are my words.
The key question this afternoon is whether the Government’s proposals meet the challenge. Sadly, my confirmed conviction is that they do not.
Christopher Pincher (Tamworth) (Con)
The hon. Lady seems to turn disappointment into an art form. Is she not aware that many people are very disappointed that under the Government with whom she served fuel prices and the number of people in fuel poverty went up, and she did nothing about it?
Meg Hillier
I am sure the Secretary of State would be delighted if he had the power to control fuel prices, but now may not be the time for a lesson on the global oil economy.
Steve McCabe (Birmingham, Selly Oak) (Lab)
What impact does my hon. Friend think a VAT rise has on fuel prices, and what impact does that have on elderly people?
Meg Hillier
I agree with my hon. Friend’s point. This Government cannot lecture us, given the impact of their policies on the budgets of households throughout the country, leaving them nowhere to go when oil prices increase.
In answer to a question from the hon. Member for Harlow (Robert Halfon), the Secretary of State said every home would benefit from the green deal—he clearly has no shortage of ambition in this area—but the Department for Communities and Local Government predicts that there will be more than 27 million households in England by 2033, so how can the green deal possibly hit that target? The Secretary of State talks about companies being keen to get involved, but we know that most have already stepped back, so unsure are they of what the Bill will deliver.
If the Secretary of State is so confident about his proposals, why has he refused to set a target for the number of homes that would benefit? He gave us a waffly answer earlier, but at a public event he said he had wanted to call this Bill the Energy Saving Bill but was told that the parliamentary Clerks would not allow it.
I am sure that all Members are far less concerned about the title of the Bill than about what it achieves, and there are a number of obstacles to achieving the Secretary of State’s aims. First, we have no details about the interest rates at which the green deal cash will be loaned. Evidence suggests that an 8% rate will deter many households. Although there were rumours that incentives would be provided in the Budget, none were announced, yet without any tangible incentives most householders just will not bother. A loan of about £6,000 will barely scratch the surface of paying for what will need to be done to make most homes as green as they will need to be to meet our targets. The Minister of State, the hon. Member for Bexhill and Battle (Gregory Barker), has now suggested that loans could be as much as £10,000, which I hope is a sign that the Government finally recognise that there are inadequacies in the Bill, but that higher sum will be more off-putting to the poorest households whose homes are often the most expensive to improve.
On the golden rule, I was interested to hear the Secretary of State’s version of things—perhaps this is a new addition to the Bill—which was that “money today is worth more than money tomorrow”. That shows a level of financial literacy that clearly bodes well for the Bill. We also face the question of whether the banks will be interested, and the only banker that he could cite is a former Tory special adviser—he would be in favour, wouldn’t he? We need the banks to be on board if the Government’s model is to work.
Secondly, this Bill contains no assurances about who will conduct all the assessments and repairs. Who will accredit the legion of assessors—the 100,000 people that the Secretary of State talks about? Where will this army of assessors come from? We all know that the Government are doing their best to create a vast pool of newly unemployed nurses, RAF pilots and other skilled workers who need a new job, but even at the rate that this Government are destroying our services and putting manufacturing firms out of business, there will not be enough skilled people to do the job on the scale required.
The Secretary of State has been asked today, as Ministers in the other place have been, which measures could be put into a home under the green deal. Again, we have heard lots of words—for example, when he talked about double glazing—but he simply does not know the answer, and neither do suppliers, householders and landlords. Hard-to-treat remote and rural homes that are off-grid provide particularly big challenges, but the green deal, as it stands, does not step up to deliver on them. When the Secretary of State talks about success that will be determined by word of mouth, we know he has a great plan that will certainly deliver the results he sets out. [Hon. Members: “Hear, hear.”] Clearly Government Members do not understand irony.
Thirdly, and most shamefully, the Bill—[Interruption.] I think that Government Members ought to listen to the detail. I say that for those who have perhaps not followed it as closely as some of us. Thirdly, and most shamefully, the green deal fails the basic test of fairness, as the poorest households will get the least help. The constituents of mine who, like some of your constituents, Mr Deputy Speaker, and those of other hon. Members, shiver under blankets every winter will not be reassured by the coalition placing the responsibility for tackling fuel poverty with the energy companies. Those households, who have the most to gain from decent insulation and lower bills—I do not doubt that Members across the House are committed to solving this problem—should be the Government’s first priority, but instead they have been left until last.
Finally, I come to an important question on which we have not been given enough detail: what about consumer rights? If the work under the green deal is botched, how can consumers get redress? If the projected savings do not add up to the value of the loan over 20 years, who will pay the shortfall? What guarantees can Ministers offer consumers that they will not be saddled with debts, especially when they buy a house with a green deal loan already in place?
The Secretary of State talks with passion about stopping cowboys getting in on the deal, but his Government have abolished Consumer Focus, the watchdog that has successfully taken up consumer issues with the energy companies. No detail on consumer redress is available to us as we debate this Bill on Second Reading. People are rightly asking these questions and even where Ministers are coming up with answers those answers are not very reassuring. We simply need more detail. We are expecting about 50 pieces of secondary legislation after the House has made its decision on the Bill tonight, on Report and on Third Reading.
Stephen Gilbert
The hon. Lady seems to be “doing a Hillier”, snatching embarrassment from the jaws of defeat. We have heard real detail from the Secretary of State today on minimum energy efficiency standards for the private rented sector. Is it not a bit churlish of her not to welcome the detail that we have heard on the private rented sector, which has been called for by many external organisations?
Meg Hillier
That tells us all we need to know about the relationships in the coalition. If the hon. Gentleman, a Liberal Democrat, believes that what we heard from the Secretary of State today is detail, he perhaps needs to look again at the Bill. The detail is missing. The Secretary of State is keen to talk about the Bill with passion but he is not giving the answers. We are waiting for detail on the 50 pieces of secondary legislation, but we have seen none at all. I lay this marker down for the Secretary of State that in Committee we will seek further detail on many of these important issues and others—
Meg Hillier
The Minister of State says from a sedentary position that that is unusual in Committee—
Meg Hillier
I’m not your love, matey, and I suspect someone else might find that surprising, too.
It is important that we get the detail in Committee and I make that point for a good reason. The Government have form on not giving answers in Committee. The Bill has been in the other place and so we might have expected it to be better. We gave it a fair wind and we would still like to see it succeed, but we need more detail before it can do that.
There is a yawning gap between Ministers’ rhetoric and their actions and it grows day by day. In public, Ministers talk about being the greenest Government ever, so why have they called the Climate Change Act 2008 “red tape” and placed it in a review of what they call “burdens on business”? Ministers might huff and puff and say that the Act is safe in their hands, and I do not doubt the commitment of the DECC team, but why then is it in the red tape review? Perhaps they need to talk to other members of their Government.
Why have Ministers ended the commitment to zero-carbon homes? That fact caused the WWF to resign its place on the working group as the decision was so out of the blue. Why will the green investment bank not be up and running for two more years? Allegedly, the money to fund it is coming from Britain’s stake in a uranium enrichment company, URENCO, which the Financial Times suggests is in doubt.
There is an elephant in the room and we all know what it is. The Energy Secretary has had his eyes on a prize other than reducing carbon emissions. I know that he has had to pull himself away from the detail of the Bill in recent days to attack his coalition partners by article, letter and leak, and it is a shame that he has had to do so because—to give him credit—it might be a better Bill if he had applied himself to it. We also know that the demands of the alternative vote campaign have, for some reason or another, taken up much of his time when he might have been meeting with green groups, consumer groups or businesses that would have told him what a mess the Bill was and how to improve it. There is still no excuse, when he is backed up by the gold-standard civil service of this country, to come to the House with this dog’s breakfast of a Bill. It is weak on specifics, clouded in uncertainty and built on such shaky foundations that few can have confidence in its standing up to scrutiny. We want the Bill to succeed, but we have no detail and no plan from the Government about how it will be implemented.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I agree with my hon. Friend that there is still much to do before the Government can claim to be the greenest ever. There are also significant gaps in the Bill. One example from my constituency concerns a community hydro project in Saddleworth that might not go ahead because of the anomaly in the current legislation, which is not addressed by the Bill, that prevents it from securing the higher feed-in tariff rates. Surely that is something we should be encouraging.
Meg Hillier
That is another example of the Government’s dither and delay in making decisions that can have perverse effects on the ground.
Andrew George
If the hon. Lady does not mind, I will sidestep the disappointingly partisan nature in which she has engaged in the debate. I am genuinely confused. She appears to endorse the principles behind the Bill and, quite understandably, is expressing some anxieties about the details. That is certainly a matter for debate in Committee. Will she urge her colleagues to vote for or against Second Reading?
Meg Hillier
I think the hon. Gentleman wants to know whether he can get home early for tea tonight.
Let me reiterate: we set out that we wanted to give the Bill a fair wind, and I personally made that clear to the Secretary of State. It builds on ideas and work that were carried out by the previous Government and it needs to work to deliver the emissions reductions that we need in this country to meet our targets. It is light on detail, however.
John McDonnell (Hayes and Harlington) (Lab)
I think the tenor of the argument in the House is that the whole House wants to see the Bill succeed, but there is an issue with the delegated legislation and with its range. May I suggest that those on the two Front Benches meet at some stage to discuss how that can be dealt with so that we can have a constructive debate as well as holding the Government to account? We all want the Bill to succeed.
Meg Hillier
I am in discussions with those on the Government Front Bench. When I asked to see draft secondary legislation so that we could be comforted that it would deliver the securities we have been asking for if the Bill was passed, I was told in a letter from the Secretary of State that that would not be possible until the primary legislation had been passed. I live in hope that the Secretary of State—he is a man who believes in this issue; I do not doubt his commitment—and I can continue to have a dialogue.
John McDonnell
Even if the delegated legislation comes after the Bill is passed, may I suggest that there is a discussion about evidence sessions on it and some form of progress report on the Floor of the House so that there can be a wider ranging debate?
Meg Hillier
My hon. Friend makes an excellent suggestion, which I have also made to the Secretary of State. I am sure that with the support of the House the Secretary of State will see the good sense in that suggestion and I hope he will talk to officials about how they can ensure that we facilitate it.
Overall, climate change is too important to leave to the market, and that is one of the problems with the Bill. The market and the market alone will decide. We need a strong Government to lead the fight against global warming and fuel poverty, but I fear that instead we have a Government who are at war with themselves.
Mr Tim Yeo (South Suffolk) (Con)
I begin by drawing attention to my entry in the Register of Members’ Financial Interests.
I would very much like to find something nice to say about the speech that has just been delivered by the hon. Member for Hackney South and Shoreditch (Meg Hillier). I listened carefully for 25 minutes and I could not really say that it made any serious contribution at all to the debate. It was extraordinarily churlish in tone and very ill-judged. If ever there was an issue that cried out for a bipartisan, long-term and constructive approach, it is energy policy and climate change. That was wholly lacking from every sentence of the hon. Lady’s speech.
I warmly welcome the Bill, which is a big—and overdue—step in the right direction. I agree that some details remain to be filled in, but no doubt they will be addressed in Committee. I want to comment briefly on four aspects of energy policy that relate to the Bill. The first, of course, is energy efficiency. The Bill is especially welcome because of its intense focus on energy efficiency, which has always been the Cinderella of energy policy. I have always found that to be extraordinary—it is truly the no regrets policy. Even people who do not accept that climate change is a threat to the conditions of climate stability that have prevailed in the very recent history of our planet, thereby allowing one of the most recently arrived species, human beings, to proliferate in number and enjoy phenomenal and unprecedented success, and who see no advantage, either environmental or economic, in moving to a low-carbon economy can see the merits of greater energy efficiency, which has economic as well as environmental advantages. Those economic advantages accrue to households, rich and poor alike, and to businesses.
The green deal, which is the centrepiece of the Bill, is an excellent concept, even if there remain some areas of its implementation that we would like to know more about. The principle that energy efficiency measures can be financed through savings on fuel bills is a good one that is attractive to consumers. In practice, however, although most of the energy efficiency measures needed have a large and fast enough payback to meet the golden rule to which the Secretary of State referred-that instalment payments for the improvements will not exceed the cost of the savings made-there will be some measures that probably do not come into that category. I hope therefore that the Government will recognise—not necessarily in the context of the Bill, but soon—that some further incentive might be needed to improve all the housing stock in this country. I urge Ministers, as I have before, to explore more fully how discounts on council tax could be used to encourage faster progress to a comprehensive energy efficiency process. Those discounts could even be introduced on a revenue-neutral basis.
Chris Huhne
Powers for councils to do that are already on the statute book. A number of councils have introduced incentives through council tax, which have been very effective. We do not need new powers to do that, and I think that a lot of the most go-ahead councils will do it.
Mr Yeo
I am grateful to the Secretary of State for that point. I hope that means he will encourage the use of those powers in areas in which a significant number of households are not able to use the green deal measures as a sufficient mechanism and incentive to get the improvements that are needed. The same approach could be adopted for business premises by giving discounts on business rates.
Smart meters might also help. Helping consumers to understand the costs of energy and how they can better manage their energy consumption could be very valuable, but I hope that the Government will take a close interest in the roll-out of smart meters. There is a risk that the whole initiative might turn sour if the meters do not get off to a good start, if mistakes are made or if consumers become suspicious that they are going to benefit suppliers more than consumers.
Nicky Morgan (Loughborough) (Con)
Would my hon. Friend agree with a very simple suggestion that was put to me by a constituent about smart meters—that we need the information to be understandable to the average consumer who is not an energy expert? If the meter told the consumer how much energy had been consumed and its cost, that would mean a lot more than complicated numbers and figures that one cannot understand if one is not an expert.
Mr Yeo
The test of smart meters will be how user-friendly they are at giving people information that is relevant to their decisions in a manner that they can easily understand. That includes older people who might not have as much facility for modern information technology communications.
On security, I welcome the duty placed on Ofgem to report on the adequacy of future capacity. Demand for electricity will rise substantially not just because of economic growth but because several of the measures designed to reduce greenhouse gas emissions involve the greater use of electricity—for example, for transport and heat. We shall need a lot more generating capacity and the lead times for new capacity are such that decisions taken in this Parliament are absolutely crucial. A further dash for gas might be the quickest and cheapest way to expand capacity, but it would mean becoming even more dependent on gas imports, threatening a different aspect of security of supply. Even in a world in which gas can be imported from a large number of countries and in which we have the possibility of perhaps abundant supplies of shale gas from Poland and the United States, I do not think that anyone would be comfortable with our relying more on imports.
Furthermore, unabated gas emissions are so much higher than the target for emissions that the Committee on Climate Change quite rightly set for 2030 of 50 grams per kWh that a dash for gas could lead to expensive stranded assets in the 2020s unless we achieve carbon capture and storage, which is by no means a certainty. Yesterday, in its excellent review of renewables the committee reminded us, as it helpfully and regularly does, that nearly all new generating capacity must now be low-carbon. After all, electric cars and electrically heated houses are not going to cut greenhouse gas emissions if the extra electricity is generated by coal. The committee’s review is welcome as a common-sense judgment on renewables. It reaches the unavoidable conclusion that even with an enormous increase in offshore wind and solar power there remains an absolutely essential role for nuclear. We therefore need from the Government today, and regularly in future, an assurance that as soon as any safety issues raised by Professor Weightman have been addressed, every possible assistance will be given to ensure that new nuclear capacity comes on stream as soon as possible.
In the context of how more low-carbon electricity can be produced, a more explicit acknowledgment is needed of the risks of blithely assuming that carbon capture and storage will work viably at scale. With the abundant availability of coal in many countries, lots of coal is going to be burned in the next few decades. It is beyond doubt that the single technological breakthrough that the world most urgently needs is carbon capture and storage. There is huge potential for it, but I have not been encouraged by the fact that when the UK Government offered £1 billion in a competition, there was only one bidder at the end of the process. I therefore urge that more attention be given to issues such as waste-to-energy, which could provide a renewable source as some unrecyclable waste will be always be produced by a growing economy.
Mr Yeo
I am running out of time, I am afraid, and I think I get only two goes at giving way. I am sorry.
It is clear that whatever the precise mix of our portfolio of electricity generation, the cost of secure, low-carbon electricity will be higher in future—possibly much higher—although the Government have rightly pointed out that reliance on fossil fuels might turn out to be even more costly by 2030. Last week, in an evidence session held by my Select Committee on Energy and Climate Change, I asked Ministers what the Treasury’s assumptions about oil prices would mean if they were translated to gas prices, and they were a bit reluctant to explain what they thought gas prices might reach. Clearly, fuel poverty is going to be a key challenge in the next few years and the solution is not to divert investment into cheaper but higher-carbon power stations, but to ensure that household incomes are sufficient to meet unavoidable increases in fuel bills.
Equally important is the need for more low-carbon capacity. Tinkering with UK or European Union targets for the exact proportion of energy to be achieved from renewable sources by this date or that date is of little relevance. The only real question is how Britain, in an increasingly energy-hungry world in which China and the other BRIC countries—Brazil, Russia, India—will be consuming huge amounts of energy, can attract the funds needed to finance massive new capacity in all kinds of low-carbon electricity. The Intergovernmental Panel on Climate Change has reported today that £15 trillion will be needed in the next two decades to develop renewable energy. To attract our share, we must make sure that returns on investment in electricity generation in Britain are high enough and reliable enough. I urge Ministers to recognise that every policy change runs the risk of raising the cost of capital because each switch increases uncertainty in the minds of investors. Individual decisions such as the revision of feed-in tariffs for large-scale solar projects are understandable and perhaps unavoidable, but their impact on investors is harmful and will prove to be expensive in the long term. It is vital that the electricity market reform package promotes stability in the framework of incentives that are designed to promote low-carbon electricity. I urge Ministers to recognise in all policy statements the danger that investment in new capacity in this country is not an entitlement. We live in a genuinely global economy. Investors can easily migrate to places where returns are more secure, where planning delays are shorter and where policy is predictable.
There is a lot more in the Bill, not least the green investment bank. The bank’s contribution to funding some of the investment needed could be considerable if the Treasury allows it. In view of the imminent decision about the fourth carbon budget, I want to close by making a strong plea to the Government to accept the Committee on Climate Change’s recommendations. The Government’s credentials as the greenest Government ever will be enormously strengthened if the carbon budget put forward by the committee last December for the 2023-27 period is accepted. A budget for a period more than a decade away might seem a remote concept, but carbon budgets are much less susceptible to last-minute tinkering than financial ones. Carbon emissions in the middle of the 2020s will be affected by decisions about new electricity generation capacity taken during this Parliament.
Our accepting the committee’s fourth budget will show that Britain wants to lead the way to a low-carbon world. I understand the anxieties about our competitive position, but I believe that those risks are relatively small and are confined to the short and medium term. If the world really means to decarbonise by 2050, and I believe that it does, the countries that lead the way will not only be doing the right thing environmentally, but will reap a huge financial reward.
Let us look east at what China is doing in making huge strides towards a more sustainable, low carbon transport infrastructure and energy system. In the international climate change negotiations in the 2020s it might be China that takes the hawkish stance on greenhouse gas emissions and the measures needed to reduce them, and it will do so from a position of greater strength than many countries in the west. It would be tragic if Britain, one of the first places where the science of climate change was properly understood, were not in the vanguard of the world’s response. I urge the Prime Minister to overrule the reported resistance of the Secretary of State for Business, Innovation and Skills on this point, and I commend the Bill to the House.
Joan Walley (Stoke-on-Trent North) (Lab)
I shall start exactly where the hon. Member for South Suffolk (Mr Yeo), who so ably chairs the Energy and Climate Change Committee, just finished. The whole debate on the Bill is underpinned by the Climate Change Act 2008. Reference was made earlier to new legislation. It was the previous Government who passed that Act.
I agree that the fourth carbon budget is critical. I do not know whether I believe reports in The Guardian, but if the Government are to have any chance of being the greenest Government ever—there is some doubt and dispute about that—the Cabinet must accept in full the recommendation from an independent body that was set up for that purpose. When the statutory instrument comes before the House in June or whenever it comes, that must be agreed, or much of the debate on the Bill today will be irrelevant. So I hope the right Cabinet decision will come out next week or whenever it is made.
It is crucial that the Bill succeeds, but it is very short on detail. Given the comments of my hon. Friend the Member for Hayes and Harlington (John McDonnell), proper parliamentary scrutiny is needed and there can be a role for Select Committees to examine the cross-cutting aspects of the Bill, particularly in relation to the issues that have been mentioned, including the role of the Department for Business, Innovation and Skills. That should be borne in mind when we get to the Committee stage. We have seen what happened to amendments in the other place. They are not before us now for our consideration. A huge amount of work needs to be done very quickly.
My test of the Bill is whether it will reduce fuel poverty around the country in constituencies such as mine, Stoke-on-Trent North. In my constituency, 59% of people in private rented sector housing, 44% of owner-occupiers and 75% of pensioners living in private sector accommodation are in fuel poverty, despite the huge benefit derived from the Warm Front programme. It is crucial that the detailed measures in the Bill deal with that and the implications for public health.
What will the Bill do to deal with the effect of the comprehensive spending review of October 2010? We have already heard about the major reduction in Warm Front funding, and the intention that the programme will be phased out by 2012-13. Will the measures in the Bill offer a fair and proportional replacement strategy? I am conscious that the shift from the Warm Front programme towards the green deal has put many installer jobs at risk as the scheme is wound down. I ask the Secretary of State to give some attention to that. I refer to installers in my constituency and the fact that the Warm Front scheme closed and then started again this year. That has serious repercussions and needs to be addressed.
There are concerns about the green deal. We need greater clarity and certainty about the scale of ambition, the take-up and the long-term nature of the green deal so that businesses can feel confident about investing in the capacity and the infrastructure necessary to deliver it. Reference has been made to the interest rate. That will be a key driver in take-up of the deal. The lower the interest rate, the more attractive it will be. When my own Select Committee went to Germany, we saw how that had been addressed. I am disappointed that so far there does not seem to be a direct link between the green investment bank and the green deal. If interest rates are not at about 2%, difficulties will arise.
Another important topic is energy efficiency measures. I chair the all-party lighting group. We need to consider not only energy efficiency in the traditional sense, but issues such as lighting. Windows are another aspect of industry that has been referred to. A briefing that I received from Wolseley sets out other technologies linked to jobs and to insulation, heating controls, energy pumps and water management. All these contribute to the wider agenda that we need to address. I am not sure whether the detail of the Bill takes account of that.
Citizens Advice has flagged up concerns, particularly in relation to clause 18, which would empower the Secretary of State to modify the energy supply licence to allow an energy company to disconnect a customer for non-payment of green deal payments. Currently, 8.8 million energy consumers in the UK rely on pre-payment meters. Citizens Advice is worried that those consumers have received little consideration in the development of the Bill. It must clarify how green deal payments will be collected from people with pre-payment meters, who are among those at highest risk of fuel poverty. It is not clear how customers’ meter credit will be allocated against green deal payments and arrears, fuel arrears payments and payments for ongoing energy supply. That is another cross-cutting social consideration that the Bill must address.
I shall deal briefly with the private rented sector and chapter 2. It is an important part of the Bill and there have been many interventions referring to it. Research commissioned by the Chartered Institute of Environmental Health, of which I remain an honorary vice-president, shows that the annual cost to the NHS of private rented homes with excess cold is £145,335,000 nationally. In my region, the west midlands, the cost is high, and we need to consider how we are addressing that, linked to the new proposals for public health and those in the Localism Bill. This is a further aspect of the cross-cutting agenda.
I am concerned that making regulation conditional on a review increases the likelihood that landlords will not act voluntarily before 2015. I am not sure that the Government have got that right. Further consideration is urgently needed. The Bill provides for a minimum standard for commercial rented properties. The Government have not explained why that is appropriate for the commercial sector but not for the domestic sector. MPs, including me, have had a briefing from the Green Building Council on the issue, which needs to be addressed before Royal Assent.
The bottom line for me, which has been referred to in interventions, is that the Bill must set a deadline of no later than 2016, after which it will be an offence for a landlord to re-let or market for rent a property where the energy efficiency rating is band F or G. It is vital that we ensure that properties that do not meet energy efficiency standards are not rented out.
On the energy company obligation, the Government should show that they will be able to deal properly with the gap between what the green deal delivers and what is needed. We do not have the detail of the energy company obligation, and clear information is needed. The coalition agreement was clear that there should be no public subsidy for nuclear. One of my concerns relates to clause 102, whereby, if anything unexpected happens, such as an accident at a plant or problems with stored waste, the Government could become liable for the additional costs. The coalition agreement stated that there will be no public subsidy for nuclear, and it is incumbent on the Secretary of State to set out exactly what that means, because my concern is that clause 102 could represent a hidden subsidy. There must be total transparency on that.
On low carbon budgets, no amendment was made in the other place, but that needs to be considered again. There is some support for the memorandum of understanding with local councils, but we are nowhere near getting on the face of the Bill what we need in relation to local carbon budgets. There is wide support from more than 60 organisations for a warm homes amendment, which must be addressed and brought forward in Committee.
I genuinely want to see Parliament play a role in the whole climate change agenda. I desperately want to see action that does what it says for those experiencing fuel poverty. I want the parliamentarians and Select Committees of this House to play a real role in cross-cutting and hope that as the Bill proceeds, despite its many shortcomings, there will be an opportunity to make at least some improvements.
Martin Horwood (Cheltenham) (LD)
I welcome the opening remarks made by my right hon. Friend the Secretary of State, particularly the non-partisan tone in which they were made. I have to say, ever so gently, to the hon. Member for Hackney South and Shoreditch (Meg Hillier) that when I was an Opposition spokesman on energy and climate change I took the time to praise her right hon. Friends the Members for Lewisham, Deptford (Joan Ruddock) and for Doncaster North (Edward Miliband), when I thought that the legislation they were promoting was good, and when they were honestly trying to pursue climate change objectives. I do not think that making relentlessly partisan and negative speeches is terribly constructive. I will just let her reflect on that.
The hon. Member for Brent North (Barry Gardiner) made a much more constructive speech and asked an important question about meeting carbon reduction targets in future, particularly the acceptance of the fourth carbon budget recommended by the Committee on Climate Change—a theme taken up by other hon. Members as well. I am sure that my right hon. Friend the Secretary of State was just displaying his notorious tact and reticence by not stating more fully that he was going to press for the acceptance of that carbon budget. It is absolutely crucial that we accept the carbon budget and make it clear that we are on a clear trajectory to meeting the ambitious climate change targets that all parties agreed to in the Climate Change Act 2008.
I warmly welcome many aspects of the Bill, which will deliver an important part of the Government’s green agenda. The ministerial team is to be congratulated on 95% of it. The green deal is a radical, imaginative and ambitious plan. It could deliver energy efficiency not just haltingly to a few thousand homes, as previous energy efficiency programmes have done, but to millions of homes, and perhaps even tens of millions. That will represent a step change in energy efficiency in this country and make a substantial contribution to reducing the UK’s carbon emissions. The additional measures on smart meters and offshore electricity transmission regimes are also very important and much to be welcomed.
Mr Gregory Campbell (East Londonderry) (DUP)
The hon. Gentleman and the Secretary of State have talked about step changing and game changing. Does he not agree with a number of Members on both sides of the House, but particularly Opposition Members, that a crucial element about which we are not yet clear is the interest rate that will be payable? We need to know that in order to ensure that the change is as significant as he claims it will be.
Martin Horwood
I am sympathetic to the hon. Gentleman’s point, which is important, but the genius of the green deal is that it will use market mechanisms and a competitive arena in which providers will compete to provide the best deal, which I hope will help drive down the interest rates offered by different financers and providers.
Barry Gardiner
Does the hon. Gentleman accept that the Department of Energy and Climate Change has predicted that the interest rate would be 11%, which has to be factored in, particularly when dealing with the fuel-poor?
Martin Horwood
The hon. Member makes an important point, but we cannot always predict those interest rates, because we do not know what the situation will be. We must look at the situation in the round.
The additional measures in the Bill are very welcome, but there is one that disappoints me in clause 102, which the hon. Member for Stoke-on-Trent North (Joan Walley) has already mentioned. It deals with the vexed question of the decommissioning and clean-up of nuclear power stations. Cleaning up the last generation of nuclear power stations costs the taxpayer £1.5 billion a year, and it would be a great shame if we were to risk repeating any part of that mistake. This reopens an issue that I thought had been settled in the Energy Act 2008. I remember the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry) and I, as Opposition spokespeople, trying to outdo each other in finding the loopholes in the funded decommissioning programme arrangements in that Act, and the long-term commitments on funding decommissioning that the nuclear industry might try to wriggle out of in order to shift the risk on to the taxpayer. With all due credit to the ministerial team of the time, that was tricky because the legislation was quite tightly drawn. Section 48 even allowed the Secretary of State to amend funded decommissioning programmes, at either their own or the operator’s suggestion, to take account of unforeseen circumstances.
But lo, we have in the Bill a suggestion that the Secretary of State should promise not to amend those decommissioning arrangements in advance when the decommissioning arrangement is being set up, either “in a particular manner” or “within a particular period”. That seems a rather strange thing, because clearly the subsequent amendment of those arrangements would be a matter of negotiation. The Liberal Democrats have discovered quite a lot about negotiation in the past year, and now think, on balance, that it is not a good idea to give away the negotiating position too early in the process. I think that that applies to Secretaries of State as well.
The explanation for that provision is apparently that it is to reassure investors, but that is a rather strange statement. In a way that is a bit of a give-away by the Government, because to reassure investors they are presumably trying to reduce the risk. There are only two possible explanations for that. Either the Government are actually reducing the risk or they are trying to shift it elsewhere. The nature of unforeseen circumstances, of course, is that they are unforeseen. Although I attribute many gifts to my right hon. Friend the Secretary of State, clairvoyance is not one of them. We cannot know what those unforeseen circumstances will be, any more than the Japanese Government could. Therefore, it is only the transfer of that risk that is likely to take place. It is transferring the risk straightforwardly from the operators to the taxpayer. If that is not against the words of the coalition agreement’s promise not to subsidise nuclear power, it is certainly against its spirit.
If we need an extreme and sobering warning of what might happen in such situations, we need only look at what is happening in Japan right now. The operator of the Fukushima nuclear power station, TEPCO, has now asked formally for Government help to fund the compensation for the 80,000 people who are still evacuated from their homes in the area, which it is estimated will cost around £61 billion in total.
Chris Huhne
My hon. Friend should recognise that the clause intends not only to provide more certainty for investors, but to recognise that there might need to be changes. Those changes would not necessarily be downwards, either; they might well be upwards, in circumstances that would have been set out clearly in an agreement. That applies to costs as well, so, far from saying that the measure would drive a coach and horses through our commitment to no public subsidy, I am saying exactly the opposite: it puts flesh on our commitment to no public subsidy for nuclear.
Martin Horwood
I did not say that the measure would drive a coach and horses through our commitment to no subsidy. I am sure that our commitment to it is absolutely intact, but the clause seems to insert a rather large crack in the edifice. The arrangement that my right hon. Friend mentions—in which the operator and the Secretary of State may agree to the necessity of some amendments, which might be upwards or downwards —is in the existing legislation. The difference between that and the clause under discussion, however, is that in the existing legislation the final decision rests with the Secretary of State, and in the clause before us the Secretary of State gives away that right in advance. That seems to represent poor negotiation.
To return to the situation in Fukushima—
Martin Horwood
I will not—or perhaps I will; I have a few minutes to spare.
Barry Gardiner
I am grateful to the hon. Gentleman. Does he accept that the DECC’s proposals for a “contract for difference” feed-in tariff are precisely the subsidy to the nuclear industry that he counsels his right hon. Friend not to introduce?
Martin Horwood
I am not sure about feed-in tariffs, but if the hon. Gentleman is talking about the floor price for carbon, that certainly risks inadvertently subsidising the new, and indeed existing, nuclear industries. Perhaps a windfall tax on the nuclear industry might help to compensate for that, because the floor price for carbon is an important policy for operators.
To return—for the final time, I hope—to Fukushima and the example in Japan, the compensation bill looks likely to be about £61 billion for the 80,000 people who have been evacuated from their homes, and for the damage to agriculture, businesses and so on in the area. That is a very extreme case, but it is not impossible to imagine much smaller disasters—natural shocks to the system, terrorist attacks or whatever—that might deliver similarly unexpected large bills.
The situation in Japan has resulted in its Government announcing today that they will examine their energy policy from scratch, with a brand new emphasis—surprise, surprise—on renewables and energy efficiency, and almost certainly less emphasis on nuclear. That seems to me a wise decision to take, in the circumstances.
I am pleased that we are emphasising energy efficiency before we are forced to do so, and it is important that the Government promote renewables and energy efficiency as cornerstones of their energy policy, but I would not want energy subsidy for nuclear to creep into that mixture, and it seems to me that clause 102 is unnecessary. As the Secretary of State says, it provides reassurance to investors, but it provides very little reassurance to me or to the taxpayer.
Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to follow the hon. Member for Cheltenham (Martin Horwood). I have fond memories of debating with him the glorious merits of the south-west regional spatial strategy, and I am sure that you, Madam Deputy Speaker, as a fine Bristol Member of Parliament, have your own thoughts on that, too.
I welcome the notion of the Bill, because it is difficult to oppose in principle a Bill that intends to increase energy efficiency, improve energy security and ensure greater competitiveness for energy companies in the UK, but, as my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) said, this Energy Bill is such a wasted opportunity. It treads water so much that British industry and enterprise, in a field where we could lead the world, will be left behind by other countries, and the poorest and most vulnerable households, which face massive increases in fuel bills over the next few years, will not be helped quickly enough. I want to focus on two broad themes, and in particular on where the Bill does not provide enough detail—a recurring theme of this Second Reading—or enough ambition.
Let me outline the huge potential that we have in Hartlepool, my area, and the wider Teesside and north-east areas to lead the world in modern energy production and distribution. In my part of the world we have always been at the cutting edge of energy infrastructure and technology. The docks and the railways in Hartlepool and elsewhere in the north-east were built in the 1820s and 1830s to transport coal from the south Durham coalfields —I see my hon. Friend the Member for Sedgefield (Phil Wilson) seated on the Front Bench—to London, and the world’s first bulk oil tanker for Standard Oil, the Marex, was built at west Hartlepool docks in 1892.
My area has the potential to lead the world in energy in the 21st century, as it did in the 19th century. Our assets in the region are second to none. The largest heavy industrial area in the country is on Teesside, and we already have a cluster of world-class petrochemical, energy and industrial biotechnology plants. In my constituency I have a nuclear power station with the prospect of a replacement in the next decade, the fourth largest port in the UK, a steel industry specialising in construction and energy infrastructure, and a world-class advanced engineering industry.
The port of Hartlepool is the closest such facility to the Dogger bank, the location in the North sea of the biggest offshore wind project this century, which could provide one quarter of Britain’s energy requirements by the middle of this century. We also have a highly skilled and flexible work force who can innovate and adapt their engineering expertise to design and manufacture new forms of energy production and distribution for the 21st century.
In my constituency PD Ports has introduced the concept of “Chain Reaction”, the Teesside renewable energy supply chain cluster, where firms work together in Hartlepool and in the wider Teesside and north-east areas to provide facilities and skills for other companies that wish to invest in the energy industry.
We have other ambitious companies determined to grow and succeed, such as JDR Cables and Heerema Hartlepool, which are located on land provided by PD Ports and supply the components for offshore wind developments. Tata Tubes in Hartlepool manufactures pipes that sit on the bottom of oceans throughout the globe, allowing oil and gas to be extracted, transported, processed and distributed to the highest possible specification.
Our region has identified a £6 billion pipeline of commercial investment for the next decade with regard to energy policy, but we have to move quickly if we want to lead the world in this field, because other nations are already stealing a march on us. The Pew Environment Group states that the UK is losing the race to be the leading economic powerhouse of the global green economy. Last year we declined from third in the world in terms of investment in green growth to 13th, behind Brazil, Mexico and Singapore.
Frustratingly, Singapore’s energy industry is similar in many respects to Teesside’s: centred on oil refining, with successful spin-offs into chemicals, oilfield equipment manufacturing, shipping and logistics. Singapore is moving much more ambitiously than the United Kingdom, particularly in new growth areas such as solar power, fuel cells, biofuels and energy management, and it aims to increase the value-added from its energy industry from $20 billion to $34 billion in four years and to triple employment in the sector in little over five years.
Closer to home, Rotterdam is pushing itself as the energy port of Europe. The city’s port authority has aspirations to become the CO2-free hub of north-west Europe, and about €6 billion will be invested in the port authority in the next few years to help realise that aspiration, with an emphasis on hydrogen production, supply and distribution.
Given what other countries are doing, the possibility of a missed opportunity is particularly frustrating, because we in this country remain very well placed to lead that global industry. Pew Environment Group estimates that $2.3 trillion could be invested in clean energy infrastructure in the next decade, and, although much of the attention is focused on the east, on China and the Pacific rim, Pew concludes that the UK, the US and India are the three countries with the most to gain from what it terms the
“adoption of aggressive clean energy, when enhanced policies are compared to current policies.”
I do not see the ambitions of my area, Hartlepool and Teesside, matched by the Government’s actions in the Bill. The rhetoric is often positive and encouraging, but the Bill demonstrates that the Government are merely providing warm words. After so much rhetoric about the green investment bank, there is nothing in the Bill to help it to move forward successfully and quickly. Businesses in the field are requesting a clear vision for the road ahead, with certainty and stability to allow for large-scale investment decisions, but that is not happening. Uncertainty about the green investment bank, one-off raids on small and medium oil and gas explorers in the Budget, and further delays to round three of the Crown Estate project to increase offshore energy generation are undermining confidence and stalling investment decisions.
I cannot stress this enough: we would miss the opportunity of our generation if we failed to grasp the huge potential that this country, not least my constituency and region, possesses. I fear that in five, 10 or 15 years’ time we in this House will be reflecting on how we could have been pioneers of a noble and groundbreaking world industry, but are instead rueing the loss of jobs, ambition, wealth, social equality and climate stability.
The second theme that I wish to explore is the pressing need to improve the energy efficiency of much of our housing stock, particularly in the private rented sector. As the Secretary of State articulately explained, there are more energy-inefficient properties in the private rented sector than in other tenures. For instance, privately rented properties are much more likely to have inadequate loft and cavity wall insulation, and less likely to have double glazing or a condensing boiler. The landlord’s energy savings allowance, an incentive introduced by the last Labour Government, had considerable merit, but—I must be honest—a very disappointing take-up. The Secretary of State mentioned that over 40% of tenants in F-rated and G-rated homes in the private rented sector are fuel-poor, and I imagine that there is a big risk that that proportion will get worse as energy prices increase. In this context, the Secretary of State’s announcement about minimum efficiency standards is very welcome, although I do not understand why it was not announced during the Bill’s passage through the other place.
Questions still remain about certain elements of this aspect of the Bill, particularly whether big and numerous Government amendments will be needed to put in place their ambitions in chapter 2. The Bill’s impact assessment acknowledges:
“It is assumed that landlords will not act on primary powers”
provided in the Bill. It concludes that
“no benefits are expected to arise from primary legislation”.
In that case, what is the point of the provision? I understand the need for secondary legislation in this field, but why cannot we act more quickly to ensure that tenants are helped now? The powers in the Bill are very weak, and the prospect of secondary legislation is so far into the future as to be completely meaningless to tenants in my constituency.
What is the point of having a review of energy efficiency in the private rented sector that is not required to report until 1 April 2014? And under the powers in clause 43, regulations relating to energy efficiency for tenants mean that improvements may come into force no earlier than 1 April 2015. We all know that energy efficiency is bad in the private rented sector; even if we did not, the Bill’s impact assessment tells us so. Why can the Government not move faster to do something about it now, instead of making somewhat vague promises about acting in three or four years’ time?
Dr Whitehead
Will my hon. Friend reflect on how landlords are going to be found under the arrangements that have been announced? Will he also reflect on the fact that the Government recently removed the secondary legislation that provided for the creation of a national landlords register for homes in multiple occupation, by which landlords could be found for energy efficiency purposes?
Mr Wright
I remember with great affection going to Southampton to see my hon. Friend’s constituency and talking to people who lived in homes in multiple occupation. I was privileged to be a Minister with responsibility for the private rented sector in the last Labour Government. We put in place the Rugg review, which recommended to us the importance of a landlords register. It is incredibly disappointing that that important database of information will not be put in place, as it could have helped to implement this move much faster.
I welcomed the prospect of an Energy Bill in this parliamentary Session. In such a Bill the Government could have achieved so much to help British industry, particularly in my region, to become world leaders in this growing sector, and they could have been much more resolute in providing help to more vulnerable households, particularly in the private rented sector. The fact that they have not done that is deeply frustrating and disappointing. I fear that this missed opportunity is something that we will regret for decades to come.
Dr Phillip Lee (Bracknell) (Con)
Let me begin by congratulating Members on their contributions, particularly my hon. Friend the Member for South Suffolk (Mr Yeo), who made a very interesting speech, although he had the good fortune to follow the shadow Secretary of State, whose speech was terribly negative. If there is one thing that energy and climate change policy needs, it is some cross-party agreement. Dealing with these challenges does not fit in with five-year parliamentary terms; there needs to be agreement and understanding on policy over decades.
Barry Gardiner
Does the hon. Gentleman believe that his party should reaffirm the statement by the Committee on Climate Change that there should be a 50% reduction in carbon emissions by 2025?
Dr Lee
My view is that these targets are extremely difficult to meet, partly because the energy policy of the previous Administration was woeful; admittedly, it improved when the Leader of the Opposition took over the position that the hon. Member for Hackney South and Shoreditch (Meg Hillier) now shadows. The hon. Gentleman knows that we are in a difficult position as regards hitting these targets, and that difficulty was not aided by the previous Government’s performance.
In the spirit of the Bill, I will try to speak within the generous time limit and save some energy. I am struck by the fact that the time limit is so long, because energy and the need to secure energy supply is one of the most important strategic challenges for our generation. We cannot have more hospitals, schools, aircraft carriers or anything else provided by Government unless we have energy, so the subject matters very much. I want to speak primarily about the green deal, because that is at the heart of the Bill, but will move on to discuss energy generation and my thoughts and views on the technology of the future that, as a country, we should be backing.
The green deal is an ambitious plan, and the first of its kind in the world. I hear that Opposition Members want more detail, and of course it requires additional clarification that will no doubt come in Committee. The reality, however, is that this is the first time that such a scheme has been attempted. I am very proud of that and to support a Government who are introducing it. It will benefit homes and businesses, allowing them to save money. At the moment, saving money matters to individuals, to families, and, very much, to businesses. It is a tough environment out there economically, and if they can save money, all the better.
The green deal involves the introduction of a new financial framework that is subject to market forces. I say to those calling for details about the interest rates that we should wait and see and let the market dictate. We are talking about long-term energy products, particularly in the area of generation, and I would invest in that sector if I were in control of a sizeable pension fund because that would produce a return in the medium to longer term. I do not buy into the idea that interest rates will be driven higher by this scheme. It is “pay as you save”, and it will benefit people who are struggling with their bills. The loan is supposedly £6,500—I hear rumours that it may be slightly increased—and it will be made against the property, not against the individual; that is an important distinction. In the past, when we have tried to go down this policy path, we have worried about the loan going with the individual and the fact that those who are less able to afford it will therefore not take one out. The reality is that it will be attached to the property.
The second aspect is the introduction of the energy company obligation to replace the carbon emissions reduction target. As I understand it, it will target those who could experience fuel poverty and have homes that are difficult to insulate. I think that it was a Scottish Member who referred to the difficulty of insulating some homes. The idea in the Bill is to deal with those problems. In view of the fact that 25% of carbon emissions are thought to come from those very homes, it strikes me as an investment worth making.
There are estimates on the benefits of the green deal. I am always cautious about such estimates because they are always dependent on human behaviour. The Secretary of State referred to the situation of someone having a Brazilian wife, and the reality is that such estimates are not always accurate. However, it is suggested that the benefit to society will be in the realm of £8 billion to £9 billion. Fourteen million insulation measures are required, which could lead to an average saving of £550 per year on domestic bills. That will lead to an increase in manufacturing jobs. In my constituency of Bracknell, small and medium-sized construction firms are crying out for this kind of work. There will be no shortage of companies willing to do it. There will be an increase not only in manufacturing jobs, but in service jobs. If we hit 26 million homes taking up the scheme, the number of jobs in the sector may increase from 27,000 to 250,000. That is pretty good.
I welcome the changes to the Energy Act 2008 to ease the introduction of smart meters. A number of companies in my constituency, not least General Electric, will be pleased to hear about that. If smart meters function properly and are able to connect to the network—I know that there are problems with that—they will play an essential part in reducing energy usage. Ultimately, that is what this legislation is all about. I congratulate Ministers on making energy efficiency the key part of their first Bill, because that is the easiest way to reduce our carbon footprint. On a recent trip to Norway, I was struck that even though it generates huge amounts of energy, the first thing I was told was, “Phillip, the best thing that Britain can do is become more energy efficient.” I know that the same view is held in Sweden.
I am also pleased about the balance of powers between Government and the nuclear industry in regard to decommissioning. I am a strong advocate of nuclear power, and I found it depressing to hear yet another speech on the dangers of nuclear power from the hon. Member for Cheltenham (Martin Horwood). I remind him that, as yet, there has never been a proven death from nuclear power in the west.
Martin Horwood
I have on occasion made speeches about the dangers of nuclear power, but today’s was not one of them. I actually talked about the dangers of subsidising nuclear power through the use of clause 102.
Dr Lee
Forgive me. I thought that the hon. Gentleman said something about compensation to agriculture and people moving house. However, I shall move on.
The final part of my speech will be about energy generation. I commend the previous Government for their commitment to offshore wind, which was a strategically important decision. Given that we have shallow water in the North sea, I think that it was the right decision. I am not so sure about onshore wind, but offshore wind, for sure.
This country needs a sustainable energy policy. It needs sustainable sources of energy that are low carbon and, most importantly, secure. There is an increasing world population, which is going to hit the 7 billion mark earlier than projected. One does not have to be a doctor to know that that means that the 8 billion, 9 billion and 10 billion marks will be hit earlier, because that is what human beings do. That concerns me because it means that future wars on this planet will be fought over not just energy and fuels such as oil and gas, but also over food and water. This country has to get real. It has to realise that energy matters. Energy is associated with prosperity, as everybody knows. We cannot rely on how we have done things in the past, but must look to the future and work out how Britain can become as energy independent as possible.
I will mention two areas. The first is marine technology. The UK is surrounded by energy; water is just the medium that transmits that energy. Tidal power comes from the moon, and we have the Severn bore. Waves, particularly off Scotland, provide remarkable sources of energy. Why are we not concentrating on harnessing that energy? It strikes me as a no-brainer. Why is it that there are more renewables obligation certificates for tidal and wave in Scotland than in England? How is that paid for? I encourage the Minister to look at that, and I know that there is a review of ROCs at the moment. Why is solar so subsidised, and not marine? That was a decision by the previous Administration. Solar is subsidised nine times more than onshore wind. I know we are having some good weather at the moment, but I do not think that that makes sense in this country.
I know that the Government are reviewing low-carbon technologies and that £200 million will be allocated. I hope that they look at marine technology and do their best to support it. I think that it is an opportunity for us to lead the world. If one believes RenewableUK, it is an opportunity for us to generate 20% of our energy. I recognise the capital cost and the potential local environmental impact of the Severn bore project, but that one project could provide 12% to 15% of the UK’s electricity needs. We need to look at that again.
Andrew George
The hon. Gentleman is making a number of interesting points about the renewables sector. He is right that there are five ROCs for marine renewables in Scotland and three south of the border. That does not particularly help. The wave hub off the north coast of my constituency will be the first project of that commercial scale in the world. We clearly need to find a way forward, but how does he propose that we get parity north and south of the border?
Dr Lee
I thank the hon. Gentleman for that intervention, but I do not know the answer to that question. This is just another example of how Scotland is different from England, and I am getting somewhat frustrated by that.
I will quickly move on to new nuclear technologies. First, molten salt reactors eat nuclear waste and have no proliferation concerns. That is a no-brainer, so how come we are not pursuing it? Finally, I will talk about thorium, which is found in the cliffs of Cornwall and may well be in the hon. Gentleman’s constituency. It is also found in Wales. The greatest resource is in Norway, a relatively stable country compared with the countries that we get most of our energy from. Thorium is three times more abundant than uranium and does not produce any dangerous waste. Incidentally, that is why it was not pursued in the ’50s because it does not create the plutonium needed for nuclear weapons. China is now going big time on this, as is India. How come we are not? It strikes me as an obvious thing for us to go for. Doing so may satisfy my Liberal Democrat colleagues because it is safer to produce and does not produce any nuclear waste of note. It has certainly satisfied me because we can source thorium more easily.
In conclusion, at a time when Britain has significant economic challenges, finding ways to save energy is an obvious target. The green deal is fantastic for families, fantastic for individuals, and fantastic for businesses. That is why I am pleased to support the Bill. I hope that the Minister will give some thought to what I have said about energy generation.
Mr Mike Weir (Angus) (SNP)
I must confess that when the Secretary of State was at the Dispatch Box and talked about a golden rule, a slight shiver went up my spine as I remembered the last person who went on about that.
The hon. Member for Bracknell (Dr Lee) asked about the Scottish system of ROCs. It is different from England’s because the Scottish Government have emphasised the importance of renewables and have a target of 100% renewable energy. They have rejected new nuclear power stations, a stance that was endorsed by the people of Scotland only last Thursday.
I generally support the main aims of the Bill, and the Scottish Parliament has approved a legislative consent resolution in respect of some of it. I came to the Chamber intending to support the Government should it be pushed to a vote, but I listened to the Secretary of State and one or two points gave me pause for thought. In particular, when I asked him about clause 100, I found his answer very strange indeed. The explanatory notes state:
“This clause enables designations under section 1(7) of the Continental Shelf Act 1964 to be revoked, amended and re-enacted. This will provide flexibility in making arrangements about maritime boundaries with the United Kingdom’s neighbours by enabling us to swap areas which have already been designated under section 1(7).”
However, the Library research paper specifically states that the clause will
“facilitate the signing of a comprehensive agreement with Ireland about maritime boundaries. The aim is to provide flexibility in managing the UK Continental Shelf resources.”
When I asked for clarity about what was actually intended, he talked about marginal fields in the North sea. As far as I am aware, Ireland does not have a boundary in the North sea. I wonder exactly what is intended by the clause, and I ask the Minister to provide a bit more clarity. As the clause appears in the Energy Bill, I assume that it has something to do with energy resources, whether they be offshore renewables, oil and gas or whatever. We need some clarification of that point.
Barry Gardiner
If the hon. Gentleman will allow me, I will try to help him. When the six counties of Northern Ireland were established and the treaty with Eire was concluded, the land was designated but there was no mention in the treaty of the continental shelf. The Republic of Ireland has therefore always maintained that the six counties’ land is Northern Ireland, but not the area around the coast, as would normally be the case. There has therefore always been a dispute between the Foreign and Commonwealth Office and the Irish Government about exactly what the status of that area is, which is why the clause appears as it does.
Mr Weir
I thank the hon. Gentleman. If that is the case, I understand that there is a rather strange boundary in that area, but the Secretary of State’s mention of oilfields in the North sea set alarm bells ringing about what is intended. That is the point on which I seek clarification.
Mr Binley
I am grateful to my hon. Friend for giving way—he is my hon. Friend, and I am pleased to call him such. Has he read the explanatory notes, which make the point that the areas concerned are more than 200 nautical miles from the Irish baseline, and therefore cannot be included in the Irish exclusive economic zone? I believe we are talking about a matter of tidying up, and I hope that explanation is enough for him to carry on his intention to vote for this worthy Bill.
Mr Weir
I thank my hon. Friend, but again, I would refer to what the Secretary of State said. My hon. Friend may understand what the clause means, but from the answer I received earlier I am not sure the Secretary of State does. I want clarity about what is intended.
On the green deal, we welcome any moves to increase the number of homes with good energy efficiency and make use of domestic microgeneration, but we have some concerns about the Government’s approach. There is talk of amendments on warm homes, and we are generally sympathetic to what they are intended to achieve. However, I wish to mention a point made by the Federation of Master Builders in its briefing on the Bill. It quotes the Minister as saying that the Government’s aim is to have 14 million homes transformed by 2020, and states that that
“would require work to be completed at the rate of 1.5 million homes per annum which equates to almost 30,000 homes per week or put another way 4,274 homes per day!”
There is nothing wrong with such an ambitious target, but to achieve it we need to ensure that there is a veritable army of installers to take on the work.
I fear that, because of the way in which the green deal is being set up, it might be dominated by a few large companies, as my hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil) said to the Secretary of State. The Minister may remember that I have previously raised with him the concerns of SELECT, which represents the Scottish electrotechnical industry, about the microgeneration certification scheme, which it feels works against small firms in several ways. It drew up an alternative scheme, which should be acceptable under the relevant EU directive and is consistent with the Scottish Government’s building standards system, but DECC would not agree to that system being put in place.
I understand that under the current scheme, it is difficult for firms to become certified. For them to qualify, the equipment that they install must be MCS-certified and installed by an MCS-certified installer. The difficulty for small firms, particularly those in rural and island areas of Scotland, is that many are unable to obtain certification because they cannot provide the required number of installations. Nobody is likely to want such installations unless they are certified. I fear that that problem will be transferred from the MCS to the green deal scheme if it is carried out by larger companies.
Gregory Barker
I am listening carefully to the hon. Gentleman, and I am aware of and responsive to his concerns, but which technology in particular is he talking about? The MCS covers a whole range of technologies, and some providers are perfectly happy with the scheme whereas others have specific problems.
Mr Weir
The Minister says that, but firms involved in a range of technologies have approached me. Scottish Renewables has raised problems with the scheme, and it covers all sorts of microgeneration technologies that will be important in providing renewables in future, particularly in remote rural and island areas. We hope that those technologies will be financed partly under the green deal. Unless the problem of not allowing small firms to install equipment is solved, smaller communities in rural areas may not get the benefits that could come from the green deal. They may not get the jobs that the Secretary of State talked about.
Gregory Barker
The MCS is quite outside the scope of this Second Reading debate, but I take the hon. Gentleman’s point entirely. I have had concerns about it myself, or at least about some parts of it, and I have been considering how we can improve it. If he would care to come to see me, I would be very happy to sit down and talk to him about it to see whether we can address his concerns in more detail.
Mr Weir
I thank the Minister very much for that offer, which takes two pages out of my speech. I will certainly take him up on that. It is an important point: although we support the aims behind the green deal, it must benefit all areas of the country and not just the B&Qs of this world—not that I have anything against B&Q.
I note with interest clauses 80 to 89, relating to offshore petroleum and gas and particularly to the difficulties of a common carrier arrangement. The Select Committee on Energy and Climate Change considered that matter back in 2009, when I was a member. We heard evidence on the issue, and it is fair to say, and hardly surprising, that there was a great deal of difference of opinion on the need for a common carrier arrangement for North sea infrastructure.
With specific reference to the future development of fields west of Shetland, which may or may not proceed given the Government’s tax grab, the Committee noted:
“We understand the Government’s argument for not wanting to interfere in a heavy-handed way in the establishment of a common carrier arrangement for oil and gas west of Shetland. But two things are clear: west of Shetland resources offer enormous potential—possibly a fifth of our remaining oil and gas resources; and putting in place a shared infrastructure to exploit those resources is expensive and complex. The Government should continue its dialogue with industry and agree a timescale for the establishment of such a shared infrastructure and the arrangements governing its use. If progress does not meet that timescale the Government should be prepared to take a more active role, probably through regulation but not precluding assistance with funding.”
The all-party group on the British offshore oil and gas industry recently heard from a representative of small companies working in the North sea, who talked about the difficulties that exist. The problem with the common carrier arrangement is that many of the fields in the North sea are now smaller fields that have been sold off by the majors and redeveloped by smaller companies. However, to bring the oil and gas ashore those companies need access to the infrastructure, which is generally owned by the majors. There are sometimes difficulties in gaining such access.
The group was told that there is a legal process known as a determination, whereby if negotiations on access to infrastructure fail, DECC can be called on to set terms and conditions and a tariff price. A determination has never been effectively used, and although DECC is making efforts to address that shortcoming, a determination is a backstop that comes too late in the process. Oil & Gas UK set up a voluntary agreement, but it says that it is difficult to get much of the information it requires, particularly on tariffs and previous commercial deals. It is therefore difficult for smaller operators to gain access to infrastructure.
The Bill continues the existing arrangements and does not address that difficulty. I recognise the difficulty of Government action, but such action is necessary to ensure that small companies that currently work fields that would otherwise not be worked can access that infrastructure. Currently, the Secretary of State can make a decision, but it is difficult to see how he could do so unilaterally without referral from one or other party.
On an allied matter, RenewableUK notes that the Crown Estate currently gives oil and gas developers leasing priority over offshore wind farm developers if supplies are found, with no compensation payable to the developer. It says that the existence of that measure leads to insecurity and uncertainty in development at a time when offshore wind is rapidly expanding. The Minister needs to consider that matter in more detail, although the obvious solution is to devolve the Crown Estates to Scotland and we will sort out our own solution.
That brings me to my final point, on offshore transmissions, which is allied to my shared infrastructure concerns. Ofgem makes the point in its briefing that
“the Bill contains provisions to facilitate the next stage of the enduring offshore regulatory regime, allowing wind farm generators to build network assets before transferring their ownership to the successful winner of the tender.”
However, how will the energy be brought onshore from those offshore wind farms? There is a lack of joined-up thinking on how offshore energy is fed into the national grid. To illustrate, there are three wind farms off the coast of my constituency. I have asked their developers how they intend to bring the energy to land, and each has its own proposal. We are in danger of running into public opposition to offshore wind farms not because of the wind farms themselves, but because of the on-land infrastructure needed to bring the energy ashore, especially if there are myriad onshore connections within a small distance of one another.
I have urged those developers to speak to one another about linking up offshore so that they can bring one cable on to land, but that does not seem to be happening. The Government need to look at that to ensure that we do not run into the difficulties with offshore wind that we ran into with onshore wind.
If the Minister gives me some assurance on those points, I might remain quite happy to recommend supporting the Bill to my hon. Friends. The Bill has many good measures in it, so the little clause on swapping bits of our continental shelf is odd. That gives us cause for concern, particularly given actions by previous Governments on the continental shelf that mean that I look out from my constituency on to an area of water that is English for fishing purposes.
Madam Deputy Speaker (Dawn Primarolo)
Order. A very large number of Members still wish to speak in this debate, and we will not get everybody in at this rate with a 12-minute limit on speeches, so I am taking the time limit down now, from the next speaker and for the remaining Back-Bench speeches, to 10 minutes. If hon. Members can use less than that, we should comfortably run up to the period for the wind-ups. If not, I shall have to revisit the limit.
Mr Steve Brine (Winchester) (Con)
Thank you very much, Madam Deputy. I shall be speedy.
It is a great pleasure to contribute to this debate and to be part of the Government who have brought this landmark—I do not use that word lightly—Bill before the House. I am sorry to return to this point, but I agree with the shadow Secretary of State on one thing: climate change is too important to be kicked around. That is why her kicking it around was so very disappointing. I support the Bill, and I hope the Opposition come through the Lobby with Government Members this evening. They are very welcome to do so.
I wanted to speak on Second Reading because the Bill has the potential to be truly transformative. Let me make it clear, however, that I am not writing a blank cheque. The Bill is seriously radical and very welcome, but it could be better, and I shall try to explain how.
I was adopted to fight the general election in Winchester back in November 2006—a long time ago. At that time, Al Gore’s Oscar-winning film, “An Inconvenient Truth”, was absolutely everywhere except Winchester. One of the first things I did was to get it shown at the excellent small, independent Screen cinema in Winchester. The response to the film was overwhelming, proving once again to anybody who does not know the great city of Winchester just how important the green agenda, the fight against climate change and the drive for a low-carbon economy are to my constituency and the people whom I now represent. I should declare an interest in that I have long since been signed up to that agenda, but I love the commitment of many of my constituents to handing a cleaner, greener and better environment on to the next generation, and I back it wholeheartedly.
It was therefore hugely to my satisfaction that in opposition my party developed plans for the green deal and many of the measures in the Bill. I remember welcoming to Winchester my right hon. Friend the Member for Arundel and South Downs (Nick Herbert), then the shadow Environment, Food and Rural Affairs Secretary, to help to explain the green deal to the good people of Hampshire—and a good job he did of it too. He described the policy as a game-changer, and he was not wrong. He is not alone in using that expression, as we have heard in the debate.
The Conservative manifesto was succinct on the subject, stating that:
“we will create a ‘Green Deal’, giving every home up to £6,500 worth of energy improvement measures…paid for out of savings made on fuel bills”,
and the coalition agreement reaffirmed the two parties’ shared commitment to the policy. I am pleased that that part of the coalition agreement will not be reopened.
The green deal was a positive policy to sell as a candidate in the general election. It was one of those rare beasts in politics, because everyone who heard about it saw the logic of it, and no doubt thought, “Why didn’t I think of it?” including the Labour party, which might explain its reaction to the Bill.
I outlined the policy at a special hustings meeting purely on the environment—we had only 12 hustings meetings. The meeting was organised by Winchester Action on Climate Change, to which I pay great tribute. As I said at the meeting, what I like about the green deal is that it replaces the stick with the carrot. All too often, changing behaviour to reduce our carbon footprint is about what we must stop doing, and about how awful we are for living our lives, having children and so on—finger-wagging at its worst—but the green deal is different. Yes, it is a game-changer, but I would prefer to describe it as a no-brainer. To my mind, it changes behaviour and reduces carbon footprints the easy way.
Ian Lavery (Wansbeck) (Lab)
Does the hon. Gentleman agree that the introduction of the green deal in its current form will hit the poorest hardest?
Mr Brine
I do not agree, and I will come on to why not.
On the economic case for the green deal, I am clear that the Bill is about growth as much as it is about saving energy and reducing carbon emissions. As we heard from the Secretary of State, the Bill, and the green deal it ushers in, will create in legislation a whole new market, which, as we know, does not happen every day. We heard from him about the tens of thousands of new jobs in the green economy that these measures will create. We should remember that these are new jobs in the private sector, many of which will, we hope, be in small and medium-sized enterprises. I hope therefore that Ministers will keep SMEs at the forefront of their minds at all times as the green deal is developed and rolled out. The industrial opportunities that the green deal presents for some of the big guys, such as John Lewis, B&Q and Asda—I have nothing against them—are great, but I am keen to ensure that the small guys are centre stage and can use the new marketplace as a springboard from which to grow their businesses and employ new people as the green deal comes on line.
In addition to the jobs that I hope will be created as the green deal develops, we will undoubtedly see a fast-growing industry for training. I am fortunate to have one such training company in my constituency—New Career Skills on the Chandler’s Ford industrial estate. The Prime Minister visited NCS while he was Leader of the Opposition and rightly praised its work in training and retraining college graduates and career changers alike in the green profession. The company offers insulation training as well as training in renewables, and is exactly what we need to make the green deal a reality on the ground. I am told that NCS receives thousands of new inquiries every week via its website, but can enrol only a limited number of new students. The Government need to help that business to grow and to up its operation significantly if the green deal is to have the skilled technicians needed to make it work and credible.
NCS told me, as it told the Prime Minister, that many students struggle to raise the funds necessary to take the course and gain the qualifications. As a provider of this key training, it provides finance, but as a small business it is obviously limited in the number of loans it can underwrite on behalf of those students. The Government have urgently to consider the support available, because this sector needs to grow, and if we are to train enough skilled people—legitimate concerns have been expressed in the Chamber about who they are and where they will come from—to ensure that the green deal reaches critical mass and matches Ministers’ obvious ambition, companies such as NCS will be important.
I want to say a word about the third sector and local councils. There is an organisation in my constituency called GreenWin, which sits as part of Winchester city council’s climate change programme, and could be a lean and highly efficient vehicle to drive the green deal in the area I represent. I pay tribute to a constituent of mine, Rob Veck from Colden common, who lives in a house we could call “green deal-plus”—although even that would be an understatement—and who is doing so much to make GreenWin happen. Critical to GreenWin’s success is building a district-wide network of affiliated suppliers and installers. The idea is simple: to build a database with moderated customer feedback that acts as a quality check on the delivery of the green deal. It is 100% community based and is big society-plus with bells on. However, GreenWin has been extremely frustrated by funding issues. I urge Ministers to engage with such groups, which is why I appreciate, and will take up, the Minister’s offer to meet GreenWin through me.
The role of the new green deal assessors is important to the roll-out of the green deal. However, it is not clear to me, and many others, how these GDAs will make a living. Logic suggests that they should be independent—similar to independent financial advisers—but I would appreciate a lead from the Minister, perhaps in Committee, on how they will operate, and on how we can ensure that they will not be cut out of the green deal by the big boys.
I want to touch briefly on the eligibility criteria for green deal homes, and place on record my thanks to Ministers for clarifying, as they did in Department of Energy and Climate Change questions in March, that the green deal will apply to park home residents, if they have an appropriate energy meter and qualify under the normal rules. Park home residents in Winchester and Chandler’s Ford have expressed to me their grave disappointment about how the Warm Front scheme cut them out, and they are very pleased, as is their Member of Parliament, that the green deal will apply to them.
I promised to say where the Bill could be stronger, and I would welcome Ministers’ responses, either today or in Committee, to my suggestions. The Government will be aware that many, including the organisations that make up the Stop Climate Chaos Coalition, do not think that the Energy Bill is strong enough and are calling for an amendment—the so-called warm homes amendment we have heard about today—that would introduce provisions to ensure that the Government’s programme on energy efficiency, including the green deal, fits within an overarching energy-saving strategy sufficient to meet the ambition of the Climate Change Act 2008. To remind the House, that ambition is for an 80% emissions reduction by 2050 and a 42% reduction by 2020. Do the Government have any sympathy with this proposed amendment—on first reading, it seems reasonable—if only in the interests of open government and accountability? If not, why not?
People contacted me while the Bill was making its way through the other place, asking that we strengthen the role that local authorities must play. We have heard much about that today. I know that the Secretary of State and the ministerial team are aware of the local government offer on climate change, which has been signed by local authority leaders of all different political persuasions, and which supports the amendment to make climate change a core responsibility of every local authority through local carbon budgets. I appreciate that Ministers might think that at odds with the localism credentials the coalition Government rightly set out, but given that we must meet the ambitious targets set by the Climate Change Act, is this Bill not an opportunity to bring local councils to the table?
Nicola Blackwood (Oxford West and Abingdon) (Con)
Does my hon. Friend not think that a good place to start would be for the Government to set out exactly how the green deal will help them to achieve their climate change targets?
Mr Brine
I absolutely agree with that point. I can see the logic in setting local carbon budgets, because many council leaders up and down the country of all political persuasions believe in the growth and green agenda as much as hon. Members. However, some do not, and they need to come to the table if we are to meet those ambitious targets.
In closing, I want to place on record my genuine excitement: this could be a transformation Bill; it is true to the Prime Minister’s ambition to make this the greenest Government ever; and it is seriously helpful to the Chancellor of the Exchequer in helping to create the growth that we so desperately need right now.
Mr Michael Meacher (Oldham West and Royton) (Lab)
We have listened to a distinctly Panglossian rosy glow of a statement from the Secretary of State. I think that we can all support the green deal’s ostensible objectives, but there are profound problems with the mechanisms and financing necessary to deliver on the rhetoric. The Bill’s biggest flaw is the failure to address adequately the central issue in energy policy, which is to establish a target for the most efficient way of meeting the nation’s energy requirement over the next 20 years or so, and then to put in place secure and effective mechanisms to ensure that those targets are met. I think that the Bill is the wrong way around: it makes assumptions about the level of energy supply in future decades, and then proposes mechanisms, albeit—as I shall show—rather uncertain and dubious ones, to green that supply.
The Government’s draft overarching national policy statement blandly states, as a sort of unchallengeable datum, that a doubling, or even tripling, of generation will be required by 2050. That clearly puts the cart before the horse, however. If, instead of planning for X terawatts of extra power over the next two to three decades, it was practicable to reduce the figure by, say, 40%—I think that is practicable—it would make much more sense to set that reduced level of energy production as the central target, and then to implement measures to ensure that it is met in as green and cost-effective a way as possible. That is all the more the case given that energy saving is more cost effective, which is a mantra that spokesmen, including the Minister, of all three main parties have repeatedly asserted.
Why, then, are the Government still refusing to undertake a proper cost-benefit assessment of energy demand? Obviously one can see that the big six operators and power generators will be anxious about anything that might impact on their future profits, but I think that the Government, who are far too committed to accommodating the private sector, need to put the national interest first.
Then there is the question of whether the measures in the Bill will deliver what the Government purport to be aiming at. The fundamental issue, on which the whole green deal hinges, is what the interest rates will be. When that was put by me and other hon. Members to the Secretary of State, he gave a studiously vague answer—a discourse, but not an answer. However, without a low interest rate, households will be paying a full, unsubsidised rate for measures such as cavity-wall or loft insulation, which were previously available at no cost or little cost under successive supplier obligations. Without a low interest rate, households will be worse off than they are now. I do not wish to be over-critical, because this should be a reasonably non-partisan debate, but it is irresponsible for Ministers to present such a major Bill to the House and yet remain silent on the intended rate of interest, when the success or otherwise of the entire Bill—certainly the green deal part of it—hinges on that point.
WWF has done a lot of research on the issue and reports that the cost of borrowing for the green deal is likely to be around 8% to 10% over the 25-year debt. Do Ministers agree? If that is the likely interest rate, the effect of the Bill is likely to be fairly minimal without much greater financial support being offered. Market research by the so-called Great British Refurb campaign found last September that even if the interest rate were no more than 6%, only 7% of households—one in 14—would be likely to take up the green deal offer. That is all the more significant when, as we all agree, we recall that the people who need help most in energy saving are those in fuel-poor and vulnerable households, who unfortunately live in the most poorly insulated and energy-wasteful houses.
Given the Government’s savage cuts to the Warm Front programme over the next two years and its discontinuance in 2013, it is perfectly clear that they are not going to lift a finger to help with repayment charges for fuel-poor households, so I ask this question. Realistically, within the parameters of the Bill, is there any reason why energy suppliers should not be required to meet green deal repayments on behalf of fuel-poor households? After all, as we know, such companies regularly report vast profits arising from adventitious rises in fuel prices. However, such a requirement would help them, because they would be able to spread the capital costs over the full length of the green deal finance arrangements and thereby be able to install far more packages in a much shorter time than under the carbon emissions reduction target.
Mark Tami (Alyn and Deeside) (Lab)
Does my right hon. Friend agree that our experience of how the big companies have treated the fuel poor—with pre-payment meters, for example—does not really set a good example or give any hope for how they would look to the future?
Mr Meacher
The point about pre-payment meters is important, because, again, it is the poorest households—the most fuel-poor and vulnerable households—that are so often forced to use pre-payment meters. Their experience under the Bill would be questionable if it were left to private companies to decide how to deal with the issue. Again, that is an area where the Government need to step in and offer support.
A minimum energy efficiency standard is clearly needed in the private rented sector—a point that several hon. Members have made. There is little or no incentive for landlords to do very much to improve their properties, because it is their tenants who pay the fuel bills, not them. What is needed, therefore, is an energy efficiency baseline to prevent properties with an energy performance certificate rating of F or G, or whatever the Government choose, from being re-let or marketed for rent after a reasonable period—say, five years—in which the necessary energy-efficiency measures can be installed.
Lastly—and briefly—it is regrettable that the Home Energy Conservation Act 1995, or HECA, which was a Lib Dem private Member’s Bill, is being repealed rather than extended and toughened, because it delivered more savings in domestic fuel than the entire first phase of the energy efficiency commitment.
Gregory Barker
I will address some of the right hon. Gentleman’s thoughtful comments in my wind-up, but let me put it on record that we are not repealing HECA. Rather, it will form an important part of our strategy to ensure coherent and joined-up implementation of the green deal right across the country at the local authority and community levels.
Mr Meacher
I am very pleased to hear that, and I will take that point away and look at it again. Obviously if the Minister says that, I accept that it is the case, and I am also grateful for it, because HECA is an important Act. It never had great support because it was a private Member’s Bill. Local authorities did not have statutory requirements but had to act voluntarily, so the legislation was not as effective as it could be. However, if the Government are to take it over, supporting and strengthening it, that is excellent.
Gregory Barker
The right hon. Gentleman makes exactly the right point, and although the Secretary of State did not mention it in his opening remarks, that is a new advance—which we are making today, on Second Reading—in strengthening the Bill.
Mr Meacher
I am very pleased to hear that. Clearly there is thinking going on in Government about how the Bill can be improved, which is what we all want. This is a good Bill, but there is a risk that it will not achieve its objectives, so it needs improvements.
Many people have said this, but there are still too many unanswered questions about so many aspects of the Bill, which I do not think is acceptable for a Bill on Second Reading. The Secretary of State was generous in being cross-questioned by Members from all parts of the House, but the increment of information that he was able to provide was not really satisfactory. Given that there is no cap on interest rates, how can the golden rule—that the expected financial savings will be greater than the cost—be guaranteed? Clearly it cannot. What consumer assurances are there that the green deal advisers will not be in cahoots with the green deal installers? Where is the major information campaign? I do not like saying this, but the “Tell Sid” campaign for privatisation in the 1980s was very effective. Where is the information campaign—which only the Government can provide—to support the green deal, rather than leaving it to big business, which will put its own spin on it? In the worst scenario, there is always a risk of repeating the kind of mis-selling scandal that we saw in the City in the 1990s.
I want to be positive about the Bill. Members in all parts of the House acknowledge that this country badly needs a programme for green energy, albeit one that is cost-effective, with implementation measures that will ensure the objective—not hope for it on a wing and a prayer—and comprehensively address the energy saving requirements of fuel-poor and vulnerable households, particularly in the private rented sector. The Bill needs a great deal more work in Committee. I hope that the Government Whip will not reject all the helpful and constructive amendments that are suggested, as so often happens. I am glad that the Government appear to be still thinking about the matter. If we make some significant changes, this could be—I stress: could be—a good Bill.
Zac Goldsmith (Richmond Park) (Con)
A number of speakers have already said this, but it is worth repeating that energy efficiency has for so long been bizarrely overlooked in the energy debate, despite the fact that, in terms of value for money, it is a no-brainer. I want to give just one example. Under the energy efficiency commitment, E.ON claims to have installed measures that delivered energy savings equivalent to 2.3 Kingsnorth plants at a cost of £250 million, which is a fraction of what it would have cost to build those 2.3 plants—if, indeed, it were possible to build 2.3 plants.
There will always be debate about the best source of low-carbon energy, but everyone across the House agrees that the best plant of all is the one that we do not need to build because we have eliminated the demand for it. I therefore strongly welcome the Bill, with its focus on efficiency and its simplicity. The green deal will, very simply, enable households and businesses to invest in energy efficiency at no up-front cost, thereby removing the biggest barrier to carbon refurbishment—the up-front cost—by allowing them to repay the debt through savings.
If the green deal works, it will not only reduce our dependence on imported foreign oil but insulate our homes and businesses against rising energy prices. It will also create opportunities on a large scale for green jobs and growth. More than that, it is clear that an ambitious programme of retrofitting is a prerequisite for the UK to meet its carbon targets. That has been made very clear in the fourth carbon budget report of the Committee on Climate Change, which said that we need a major energy efficiency programme to capture what it believes could be a 74% reduction in emissions from our housing stock by 2030.
The right hon. Member for Oldham West and Royton (Mr Meacher) and other Members have aired their concern about how quickly the green deal will be taken up, how far it will go and how much demand there will be for it. The truth is that we have no idea, because it is a new scheme. There are steps that the Government could take, however, to boost the programme. For example, I would strongly urge the Treasury to introduce proposals for a stamp duty rebate for homes participating in the green deal. Given that retrofitting is always disruptive, it makes sense that the biggest incentive should be at the point at which the home changes hands. I suspect that DECC is already lobbying the Treasury on this, and I suggest that if the Treasury wants to avoid being seen as the cuckoo in the nest in relation to green policies—it said that it would try to avoid that—it really ought to take that idea very seriously, because it would have a transformative impact. Another idea is for the green investment bank to have a role in helping to ensure that the necessary low-cost capital can be raised at scale. I am pleased that, as the Bill stands, it does not preclude a role for the green investment bank; at least, that is my understanding of it.
Emissions reduction targets are clearly important, and I want to take this opportunity to urge the Treasury again to accept the recommendation of the Climate Change Committee for a 50% reduction from 1990 levels by 2025. That is important on so many different levels, but they have already been covered in a number of speeches so I will not dwell on them. But, to return to my original point, irrespective of the targets that we set, they will be worth absolutely nothing unless we also develop the mechanisms for delivering and achieving them.
Claire Perry (Devizes) (Con)
Does my hon. Friend agree that one of the new and interesting things about the green deal is that it will work with human nature? One of the big impediments to greening up homes, beside the cost, is a distrust of cowboy installers. If we put together a package, working with household names, it will help to overcome that consumer distrust and give us a much better chance of achieving the targets.
Zac Goldsmith
I agree with my hon. Friend 100%. One of the great aspects of the green deal is that it overcomes the obvious barriers that exist without it. The green deal is very much part of the delivery in meeting the targets, but so too is the next energy Bill. Clearly, this is not the end of the energy story for this Government.
Ian Lavery (Wansbeck) (Lab)
The hon. Gentleman mentioned how imperative the emissions reduction targets are, and I entirely agree with him. The Committee on Climate Change has suggested this week that we should be looking at more nuclear power, rather than at offshore wind power. Taken in context, that means that there will be a shortage of energy supply that can be bridged only by gas, which would increase emissions levels rather than reducing them.
Zac Goldsmith
I am on record as being sceptical about the possibilities of nuclear power, partly because it will take so long for us to generate the new capacity that it will not address our immediate concerns. Nor do I believe it possible that we will see new nuclear power plants being built under a regime that says “No subsidies for nuclear”. I might be wrong—a number of people in the sector have told me that I am—but my hunch is that we will see new nuclear power plants only if the definition of “subsidies” is stretched beyond all recognition. But we will see; we will set the right framework and allow the market to decide. That is a party policy that I am happy with, as long as we reach a clear definition of “subsidies”.
Returning to our attempts to meet the targets that I hope will be accepted by the Treasury, one aspect of the second energy Bill—I am not sure that it is legal for me even to talk about it—is important for providing a context for this Bill. That is the concept of “negawatts”, which effectively puts energy saved on a par with energy generated. This is absolutely crucial, and represents a hugely exciting change. My understanding—although I will probably be corrected by the Minister in the wind-up—is that under the proposed reforms to the electricity market, companies will be allowed to pitch for energy contracts and then to fulfil them by reducing energy use, rather that simply by providing more energy. That in itself will transform things in this country on a very exciting scale. It is useful to consider that future Bill alongside the one that we are considering today. Even so, we are going to need more.
If the Government are really serious about energy efficiency, they need to be willing to push for much higher standards in our everyday appliances. One example that I discovered this morning is that we spend £2 billion a year powering washing machines, tumble driers and dishwashers, and a further £2.2 billion a year powering fridges and freezers. If everyone in the UK upgraded their cold appliances to a recommended energy-saving product, energy waste would be cut by two thirds. If we apply that across the board to all the appliances that we use, it is clear that this is one area in which we need direct Government intervention. We need higher levels of regulation, and we need to see standards improving on a rolling basis.
The Bill represents a significant first step in the right direction, and I strongly support it. I congratulate the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Bexhill and Battle (Gregory Barker) on his involvement in it. It is clearly part of a big journey, however, and there are many more steps to come.
Dr Alan Whitehead (Southampton, Test) (Lab)
I am pleased to follow the hon. Member for Richmond Park (Zac Goldsmith), who has made a thoughtful contribution to the debate. He has underlined a number of the issues that I want to raise in connection with the Bill and the green deal. It is extremely important that the green deal should work well, so it must be as good as it possibly can be when the Bill completes its passage through Parliament. That is important because of the ambition that we must have for energy efficiency, whether through “negawatt” arrangements or other forms of energy management and energy saving. We must have the best and most energy-efficient housing stock that we can bring about. That is an essential part of our climate change action, and our action on energy management and the achievement of the CO2 emissions targets set out by the Committee on Climate Change.
Achieving that will involve an ambitious programme, and as a mechanism, the green deal is certainly ambitious. Indeed, the Minister himself said last summer that by 2050, as a result of the green deal, houses would not have to be visited more than once to assess their energy efficiency. That is the kind of ambition that we need for the green deal; we need to make it work as well as it can. My worry is that as matters stand, many things are missing from that ambition. That is what we need to concentrate on in Committee, so that when the Bill is enacted, the import of the 50-odd pieces of secondary legislation that have yet to be written, let alone enacted, will be much clearer. We shall also need to ensure that that secondary legislation provides the mechanisms to make the green deal work well.
I was pleased to hear this afternoon that among other things, the Government are not now intending to proceed with clause 105, which at the moment proposes the repeal of the Home Energy Conservation Act 1995 in its entirety. I would welcome an intervention from the Minister to confirm that that entire clause will now disappear and not go forward into Committee or beyond. Is that right?
Gregory Barker
I cannot comment on the detail, but I can assure the hon. Gentleman, as I assured the right hon. Member for Oldham West and Royton (Mr Meacher) earlier, that we have looked at this matter in the round. Having listened to a number of experts in the field, we think that we can breathe new life into HECA. It effectively became redundant under the previous Government, but we think that it could be revitalised and become an effective tool that could allow us to avoid imposing new regulation on local government.
Dr Whitehead
I thank the Minister for that clarification.
When we are talking about energy efficiency in homes, we need to understand just how big the task ahead of us is. The SAP—standard assessment procedure—rating of UK homes went up considerably under the last Labour Government. To be precise, the average SAP rating, which measures the energy efficiency of homes, went up by 11 points between 1996 and 2010—from an average of 42 up to 53. Over the last five years, the SAP rate increase went up one a half times as fast as in the previous five years and the five years before that. That shows how measures such as Warm Front and CERT—carbon emissions reduction target—which are going to disappear when the green deal comes in, were having some success in ensuring that homes were more energy-efficient.
In order to get anywhere near the sort of targets that hon. Members have suggested that the Government should consider introducing in an amendment to align energy efficiency with climate change targets—which I hope will happen in Committee—we need to move the SAP ratings much further up over the next few years, perhaps to 70 or more on average at band C by the end of the decade. That means making progress getting on for twice as fast as we have over the last few years. That is the sort of ambition that the Bill needs to encompass. My concern—hon. Members have already mentioned a number of concerns—is that it remains unclear whether that ambition can be achieved under the current mechanism, despite the claims for the efficacy of the green deal.
Mark Tami
Other Members have mentioned the problem of poorer homes, and private landlords are a particular problem, because they have no vested interest in doing anything about them. I am sure we have all had people coming to our surgeries with horrific stories about windows that do not fit, damp all over the place and so forth—yet the landlord often does not care at all.
Dr Whitehead
Indeed. I welcome what I understand to be a change of heart by the Government about the extent to which compulsion can be used to get landlords to improve their properties. Sanctions on landlords with F and G-rated properties have been mentioned; we could argue about when those sanctions might be introduced, but compulsion to prevent landlords from letting properties below certain minimum energy standards is right. The standards are well below the sort of average rating that we have talked about this afternoon, but they are nevertheless minimum standards. If that is indeed a change of heart reflected in this part of the Bill, I welcome it.
I am sure that the detailed provisions affecting landlords can be sorted out effectively in Committee—but first we have to find the landlords. It was not a good sign that when this Bill was being discussed, another Department helpfully removed the idea of having a landlords register as the responsibility of local government. Without that, it will be more difficult to find the landlords who should carry out these arrangements. I trust that the Minister will have a word with his counterpart in the Department for Communities and Local Government and perhaps think again about that particularly destructive act.
The problem of finance has been mentioned. It is essential to making the green deal work. It is not just a matter of suggesting that the market will sort the finances out one way or another and that competitive interest rates will be charged. We can be fairly clear about how finance for the green deal as it stands, without changes, will turn out, because that is how the market works in respect of the sort of return that can be expected at different interest rates. The rate may well be around 9%, or perhaps a bit less. If we look at what can be got under the golden rule with finance at 9%, we find that it turns out to be very little in terms of improvements for properties to which the green deal and the golden rule apply. Loft cavity wall insulation and draft-proofing are probably the only things that work out at that sort of level. With interest rates at 7%, we get draft-proofing, some glazing, some internal wall insulation. With interest rates at 5%, we may get loft cavity wall insulation, glazing and a condensing boiler. If the green deal comes in at 9%, hardly any of the properties that need that sort of level of serious work—glazing, condensing boilers, perhaps microgeneration—will be touched by the mechanism. We must have a better mechanism for making the green deal work.
The energy company obligation exists as a back-up for fuel poverty and hard-to-treat properties. Hon. Members might have noticed that with interest rates at about 5% or so, solid wall insulation, which is present in about 7 million homes up and down the country, will not be touched. The ECO programme might touch it and might have a substantial hand in dealing with those in fuel poverty. Perhaps they should have their green deal underwritten by the ECO so that they can join in the benefits that other people get.
If we are thinking about how the ECO might underwrite the green deal, it is important to understand whether the ECO will exist to any great extent as a financial mechanism. What greatly concerns me—I hope the Committee will be able to look at the problem in much greater detail—is that as matters stand, DECC has signed up to a Treasury-based cap on levy-based arrangements. Under the present financial arrangements—for the spending round up to 2015—DECC has signed up to a cap on renewable obligations, feed-in tariffs and warm homes discount. That cap is set at £11.8 billion over the whole period, but there is also an annual cap.
The Treasury says that any new initiatives that come in the form of a levy must be financed within that cap. If the Department wished to undertake an ECO programme and it proved to be a levy as defined by the Office for National Statistics, it would have to be found under the present cap. That means either that the Government will have to go slow on renewable obligations and reduce the amount of renewable energy, or that the ECO will prove to be so small as to make it impossible to produce the sort of mechanism that many people hoped for—one for adding value to the green deal, getting on with the hard-to-treat properties, dealing with people in fuel poverty and homes off the grid that need extra assistance to make the green deal work, and so forth.
Unless we get the mechanisms right and have the right finance in the system—and, I would suggest, among other things, unless the ECO works properly—the green deal will not work. I am the last person who would want to see the green deal fall. Because a great deal of work has to be done to make our country as energy-efficient as possible, the green deal has to work. The task of making it work properly is the task of the Committee. I hope the Government will be generous in taking on board those ideas, which will make the green deal work as well as it can to bring our energy efficiency targets as close to realisation as possible.
Mr Brian Binley (Northampton South) (Con)
I congratulate the hon. Member for Southampton, Test (Dr Whitehead) on his typically thoughtful speech, which I thought made an important contribution to the debate and was delivered in a helpful tone. I say to the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Bexhill and Battle (Gregory Barker) that I greatly welcome the general thrust of the Bill. I believe it will be a major advance, provided we get it right, but there is a lot to do to help it become a better Bill. I hope that Ministers will approach Committee with that thought in mind. I think that, in general, the House wants the Bill to succeed and considers it important, and we should be able to tap into the House’s collective knowledge of an issue that is so important to the future well-being of our country. Knowing the Minister as I do, I am sure that that will be his approach.
Gregory Barker
My hon. and very wise Friend is absolutely right. We want to try to capture some of the positive cross-party engagement that ensured that the Climate Change Act 2008 was scrutinised and improved during its passage. We will seek to draw on the wisdom that exists on both sides of the House to improve this Bill, and we will be open-minded. We are extremely ambitious for the Bill, and we do not want to rule out good ideas just because they were not invented in our Department.
Mr Binley
I am sure that the whole House will welcome the Minister’s generous remarks, and I hope that we can set the stage for a consensual approach to this important matter. I was going to say something about limp lettuce leaves, but in view of my desire for that consensual approach, I shall refrain from doing so.
Mr Deputy Speaker—the change is slightly off-putting, but it is good to see you in the Chair—we all know that improvements in energy efficiency are a vital part of the wider picture of our energy policy, for a number of reasons. They are central to the success of our economy, and to the well-being of the environment that we want our children, grandchildren, and those who come even later to enjoy. They are extremely important to the jobs market. However, they are even more important to consumers, particularly those who are less privileged than many other people in the country. I believe that the Government are genuinely willing to ensure that the benefits of the Bill spread to the sections of the community that we know need help because they suffer from fuel poverty, and I believe that those people would be particularly grateful to the Government if we managed to pull this off.
The Bill provides a welcome opportunity for us to consider the wider question of the direction of energy policy, which chapter 4 of part 1 and chapters 1 and 2 of part 2 refer to in no uncertain terms. Issues such as future generation and supply, low carbon innovation and investment and energy security are vital to the overall picture, and I was pleased to learn that the Minister envisages a review and report in the coming years that will deal with those vital issues more widely.
I think we all agree that a low-carbon energy future offers the strong economic opportunities to which I have referred, but energy can be saved only if there is energy to save. The whole process of generation has become even more delicate and important as a result of happenings on the other side of the world, and the future of energy policy is now a very pertinent matter to which we need to devote serious attention. I do not think that either this or the last Government have embarked on that process to the extent that would satisfy me and, I believe, a number of other Members.
Low-carbon energy provides a tremendous opportunity for us to create new jobs, improve energy security and reduce fuel poverty, and making existing energy supply go further is a positive concept that we would all support. The green deal programme is one of most startling and innovative policies that I have seen during my time in the House. As I have said, there are ways in which we can improve it, but it is a gem of an idea on which we can build, and which will have a massive impact on the people whom we serve. I hope that the rest of the House sees the Bill in the same way. I know that the Builders Merchants Federation will be interested in it, but the federation is only one organisation that will be interested in the possibilities for job creation, let alone improvement of our housing stock and help for those who are less fortunate than many of us in this country.
I am delighted that there will be a focus on the sectors to which I have referred, and I am delighted that those sectors will help to provide the growth that we need to ensure the success of the whole Budget strategy. The Bill is at the heart of that Budget strategy, which is one of the wider considerations that we need to bear in mind in Committee and on Report. However, it poses some difficulties that I think worth identifying from the perspective of a friendly supporter. I find its tone more than a little prescriptive, and I feel that it could have been more flexible at this stage, not least because so much of the detail is yet to be supplied. I hope that my hon. Friend the Minister will take that point on board.
I believe that we should make the green deal more attractive to domestic and commercial energy consumers. In that context, I pay tribute to my hon. Friend the Member for Richmond Park (Zac Goldsmith). I agree that we need to use fiscal drivers such as council tax rebates and changes in stamp duty. Although the green deal is tremendously exciting, it must be sold carefully and honestly, and the marketing process must contain incentives to change the minds of the many people who may be suspicious about phrases such as “Everyone’s a winner”. Whenever I wanted extra money to spend at the local fairground where the guy cried out “Everyone’s a winner”, my grandmother warned me to be wary of catchpenny deals. I do not want that sort of marketing to be part of this process; the deal must be marketed in a sensible, mature and honest way.
Nicola Blackwood
When deciding on a marketing strategy, should we not think about how to attract those who are most vulnerable, most likely to be subject to fuel poverty and, in general, least likely to access the support available to them?
Mr Binley
That is an important point, and I note from one or two nods from Opposition Members that there is agreement on it across the House. If we are to attract those who are at the bottom of the poverty chain, our marketing must be subtle. It worries me that the House often does not think about the management of the projects suggested by the Executive. We have seen that in the context of support for small business, and I should hate the same thing to happen to an idea as good as the green deal.
My time is quickly coming to an end. Before it does, let me say a little more about the need to reduce our carbon need. That is particularly relevant to what has happened on the other side of the world, which has changed the way in which some countries think about the production of energy. I therefore want to refer briefly to the vital role carbon capture and storage will play in ensuring we have the energy supply that we need in order to be able to save energy. The Government claim to recognise its importance, yet the levels of uncertainty that have beset progress of late are concerning. I welcome the Minister’s recognition that CCS is the only home-grown energy source technology that can help to reduce significantly CO2 emissions from fossil fuel power stations—indeed, by as much as 90%. I also recognise that the Bill as it stands does not deal with this issue, but there are serious discussions going on about the future supply of power in this country. Doubt has been created as a result of the Government giving £1 billion for the first test model of a CCS facility but then saying we are doing away with the remaining £9 billion and we are going to deal with this from a general tax perspective. That has worried the marketplace and could hold back CCS development. I urge my Front-Bench colleagues to take this on board. There are 300 years of energy requirement under our feet and we have an opportunity to help coal communities. If we do not make progress with CCS, others will and we will miss massive opportunities.
Tessa Munt (Wells) (LD)
It is an honour to follow the hon. Member for Brighton, Pavilion (Caroline Lucas). She made many of the points that I would wish to make, so I shall briefly address the issues of particular concern to my constituents.
I welcome the green deal, in particular the potential for green jobs, the energy-saving capacity measures, the potential savings for those who most need the money and the emphasis on the benefit to individuals. The first thing I wish to focus on is that we should be setting targets on an annual basis. An annual report should be given to Parliament on the progress made, not only on the number of homes that have been dealt with, but on the carbon saving.
I am concerned that there will be no separation between the assessor and the supplier. As such, there will have to be a strong resolution capacity for those who have disputes and grievances. I wish to see something similar to a green ombudsman put in place, as that would help to keep consumer confidence high—we saw what happened in Australia when confidence fell.
Local authorities have been mentioned, and I particularly wish to know the Government’s view on including housing associations and some of the larger estates, possibly the Duchy of Cornwall, the Grosvenor estate and many others, in the Bill’s arrangements. Would they have the capacity to become green deal providers? The economies of scale that would, thus, be brought in would, of course, have to benefit individual consumers. The idea of introducing schemes so that individual roads, villages, neighbourhoods or districts are dealt with in that way—in a fairly consistent way—is an interesting one.
Heather Wheeler
The hon. Lady raises an interesting point. I recall that when I was serving on Wandsworth council 20-odd years ago we looked at regenerating areas such as the Battersea triangle. I remember writing out a cheque for £4 million for one year. We took over and regenerated entire streets, and the economies of scale involved were superb. When I think of what Battersea is like now compared with what it was like 20-odd years ago, I realise that she is hitting on an interesting point. Perhaps the Minister might be able to wrap this up later.
Gregory Barker
I can do that now. I am very happy to say that we want to make the green deal as permissive as possible. These sorts of ideas, which encourage housing associations and other community groups to come together to be green deal providers, alongside the big boys, demonstrate exactly the sort of innovative approach that we want to see.
Tessa Munt
I thank the Minister for that answer.
I wish to return to the issue of fuel poverty. I cannot say how strongly I feel about the fact that the Government must instruct the companies or the regulator, or whomsoever else we are able to instruct, to ensure that we operate a rising block tariff, rather than a falling block tariff. That would be the most green measure we could implement. Leaving things as they are would be a disincentive. It is bonkers not to make energy cheaper for the first units and more expensive as people use more. This measure would be so green and would provide such an incentive to use less energy that I make a plea for the regulator or whomsoever is able to deal with that to be instructed to do so.
The other issue that I wish to return to is that of the pre-payment meters, as it is very unfair to penalise the less well-off through higher charges for pay-as-you-use gas and electricity. I accept that those with arrears must pay them off, but they should not be penalised after that by having to pay more for their power.
Will the Minister clarify something on the issues of fuel poverty and ill health?
Andrew George
Before my hon. Friend moves on, will she take one brief intervention?
Andrew George
My hon. Friend has mentioned the manner in which the utility companies charge for their power. One further disincentive for those on low income is the advantage that is given to those who can pay their bills by direct debit, as those who live on the margins of credit clearly cannot take advantage of the various deals available to those who have no difficulty in that regard. If we are to wrap up a set of policies that help the less well-off, I would hope that this issue would be addressed as part of it.
Tessa Munt
I thank my hon. Friend for his intervention, and I ask the Minister to add that suggestion to my list.
I assume that it is Government policy, but I am unable to see where it is explicitly stated that all new homes and buildings should be carbon neutral and that that might in some way be reinforced by building regulations. I would like to be given some clarification on that point.
I also believe that it is crucial for assessors to have a duty to ensure the best for the individual customer. I am talking not about the best financial deal or the best deal for the provider, but about the best deal for the individual consumer. We should not be dependent on any one organisation to carry out those assessments, be it B&Q, Marks & Spencer or anyone else; consumers must have some protection and various options.
I would like the Minister to address one particular issue. Park homes have been mentioned and in my constituency there are quite a lot of mobile homes as well as 11-month homes, which are homes, perhaps on the coast, where people are able to live for only 11 months of the year. Do those buildings have any different arrangements? I am concerned about Airey homes and prefab homes, which are definitely not energy-efficient types of building in the first place. Are there special arrangements for them?
I am keen that there should be a tougher stance on private landlords. Private homes, certainly in my constituency, are often occupied by people who are unable to have social housing because there is so little of it. About 2,600 people are waiting for social housing in my constituency and as they have little hope of obtaining a social home of any sort, they move into the private rented sector. I would prefer it if a private landlord could not reasonably refuse any request to be part of the scheme as a huge group of tenants would be affected.
I was interested to hear about appliances, the need to replace many of them and whether that could be done more efficiently. I wonder whether the Government might consider some sort of scrappage scheme.
As I understand it, the Secretary of State has the ability to override offshore wind leases if requested by oil and gas companies. I want a clause that prevents that from happening or, if it is going to happen, provides a clear compensation mechanism for early termination. Otherwise, we will move away from having any investor security.
Finally, I ask the Government to accept the recommendations of the Committee on Climate Change. I hope that this scheme will achieve much more than any previous scheme has before.
Barry Gardiner (Brent North) (Lab)
The Bill is debated under the shadow of the report published this Monday by the independent Committee on Climate Change. The committee has been clear and it is authoritative: in order to achieve our 2050 target of at least 80% carbon reductions, we must adopt a 2025 target of at least 50% emissions reductions. That is the shadow that hangs over the debate today. The Business Secretary has clearly rejected that advice and his Liberal colleague, the Secretary of State for Energy and Climate Change, would, one hopes, wish to accept it. That is the split at the heart of the Government’s decision making on where to go with energy policy.
This is entitled the Energy Bill, but it is really a financial services Bill drawn up to enable energy supply companies to act as long-term finance providers for energy-efficiency measures with repayment coming from the anticipated savings on future energy bills. I have changed the speech that I brought into the Chamber this afternoon, partly because of the excellent speeches made by my hon. Friend the Member for Southampton, Test (Dr Whitehead) and the hon. Members for Brighton, Pavilion (Caroline Lucas) and for Richmond Park (Zac Goldsmith). I thought they made excellent contributions and addressed very serious points.
It was, however, the hon. Member for Northampton South (Mr Binley), with whom I do not normally find myself in considerable agreement, who struck me as injecting a note of realism into the debate. We must consider carefully what the Government expect people in the country to do. It is generally accepted that on both sides of the House we would like the Bill to be effective. We would like to see it achieve its objectives in energy efficiency and energy savings. We all know the McKinsey cost curve and it is clear that it is far better to start at the left hand side and achieve the savings in the negative cost element of the curve before we go up to forestry, carbon capture and storage and so on at €60 per tonne.
Of course, we wish the Bill to be successful but we must have a note of realism about the likelihood of people taking on the loans that are on offer. Under the deal, a householder would engage an independent energy assessor to advise on the level of savings that could be made by efficiency improvements. The householder would then take out a loan by entering into a contract with an energy company that paid for a provider—it could be the energy company itself—to fit those energy-saving measures. We know that the energy companies have said that they have serious reservations about the effect that that would have on the rented sector. My hon. Friend the Member for Southampton, Test made some very apposite remarks in relation to that sector.
Are we being realistic in expecting citizens to take out loans to make anticipated savings on future bills which are, by their very nature, uncertain? Let us look at DECC’s own projections. It has calculated the green deal financial costs as being cheaper than a “market personal loan”, but they could be as high as 11%. My hon. Friend showed a range of interest rates between 9% and 5% and the differential that one might achieve for those rates, but why would a householder take out a loan at 9% to make the changes when it would be cheaper to put it on their mortgage over 20 or 25 years?
Nicola Blackwood
I share the commitment to creating the best incentives possible within the Bill but I think the hon. Gentleman is rather underselling the citizens of this country. Citizens in Oxford West and Abingdon are certainly committed to tackling climate change and I feel that they will undertake some of the financial commitments suggested within the Bill—indeed, many of them already have. Amazing examples have been set by community groups such as Low Carbon West Oxford.
Barry Gardiner
The virtue that the hon. Lady’s party usually claims for itself is that it adopts a hard-nosed business approach to things, so I offer her a hard-nosed business approach. If a householder were offered a deal at 9% over a period of 25 years, why would they take that up if they could take out exactly the same capital amount needed to fit the elements required to achieve the savings that the policy is designed to achieve but at the rate they are getting on their mortgage, which might be 4%, 5% or 6%? The simple point is that householders can already make the changes we are discussing at a lower cost than is offered in the green deal that her Government propose.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Has my hon. Friend seen the YouGov poll that was released today in which only 7% of the people polled said they would take up the green deal if the interest rate was set at 6% or more?
Barry Gardiner
I am grateful to my hon. Friend. I want to assure the Minister and all hon. Members present that I have no intention of talking the measures down. What I want is realism about their likelihood of success. Polls are polls—they are what people say about their future action, but I am not trying to present such evidence. I am simply asking hon. Members to look at what people are doing at the moment. They have the opportunity now to take out money on their mortgages and do exactly what the green deal is offering but at a lower rate of interest, and very few people are doing that. I do not want to talk this down, but I do want realism.
One has to look at this issue in the context of the Government’s overall policies. Of course, it is right that we should look at efficiency savings and energy reduction, but look at the cuts to the Carbon Trust: they do not sit easily with a Government policy of rigid focus on energy reduction. One of the premier schemes, which has been in place for a long time, is being cut. Look at the carbon reduction commitment—a very good scheme that was initiated a couple of years ago to incentivise businesses to lower their carbon emissions, which was welcomed by the CBI and the Institute of Directors. A billion-pound saving was going to be made and then recycled into those businesses. It was revenue neutral.
What did the Government do? They came in and said, “Thanks very much. We’ll have that billion pounds. We won’t recycle it into business.” They did two things: they destroyed the incentives that the businesses had in the first place to reduce their carbon footprint, and they also destroyed the trust that business had in the Government not changing the goalposts. One of fundamentals that we have heard throughout our debate today is the importance of maintaining a stable investment framework going forward. I appeal to the Government to think about everything they said in opposition about stable fiscal regimes and the need for certainty for business. Their actions in government have gone against that.
The hon. Member for South Suffolk (Mr Yeo), the Chair of the Energy and Climate Change Committee, made the point forcefully when he talked about the changes to the solar PV scheme. The important thing is not the changes themselves. It is understandable why those changes were made. The Government did not wish to see businesses profiting from the scheme that was intended primarily to be a domestic or small-scale scheme. That is not the issue. The issue is that they changed the goalposts and destroyed the confidence that business investors had in that area. That is what the Government are doing.
The Bill calls itself an Energy Bill. I am afraid that does not sit well with a coherent energy policy. If this were an Energy Bill, it would address energy much more in terms of electricity market reforms—again, those were referred to by the Chairman of the Select Committee. We should be looking at what sort of structure there is to the energy market in this country. We have a vertical integration of generator and supplier that is destroying the attempts to bring renewables into the mix, yet the four pillars of the Government’s proposals leave that market intact. It is not a reform of the electricity market; it is tinkering around the edges.
What is needed is a genuine reform of that market. That is what the Government are not doing. What is needed is a move to a pooled supply where it can be seen that companies are selling in a transparent and liquid market. At present it is an illiquid market which lacks transparency. That is why the big six are able to rip people off. The Government must do much more to claim that the Bill is an Energy Bill. They must have an energy policy, and the Bill shows that they do not. They are tinkering. Nero fiddled while Rome burned. The Government are fiddling while the planet does.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
Thank you, Mr Deputy Speaker, for calling me to speak on Second Reading of the Energy Bill. I declare an interest, as I retain shares in a communications company that specialises in regeneration and development.
Over the past 15 years I have seen first-hand how the green agenda has risen up the political agenda and how developers have reacted to increasing environmental demands. Whereas most businesses are keen to keep their costs down and avoid regulation, I have noticed that the moves to improve environmental code levels have come about only because politicians have challenged the development industry to meet these improvements. To encourage private inward investment in this new sector and for developers to include windmills, solar photovoltaics and other energy-efficient schemes, it is important that we do not send a confused set of messages to potential investors.
As an aside, I recently received correspondence from a developer in Plymouth who is concerned that the decision to reduce the higher feed-in tariff from 29.3p to 8.5p by 1 August this year could make his business model unviable and waste his original investment. That would be an enormous shame. I have written about this to the Minister of State, my hon. Friend the Member for Wealden (Charles Hendry), and look forward to receiving his reply.
The Stern report, which the previous Government commissioned, clearly set out the global implications of collectively taking no action. The increasing incidence of floods and storms in some of the poorer parts of the world will have a significant impact on helping third-world countries. I welcome the measures set out in the Bill, which will help us to play our part in reducing CO2 emissions by saving energy. Specifically, I welcome the creation of a new manufacturing industry. My constituency of Plymouth, Sutton and Devonport is very dependent on the public sector and needs to use this initiative to help rebalance its economy. As one of the major global players in marine scientific research, it is well placed to help deliver the Government’s green deal by becoming a manufacturing centre for renewable products.
In the 1990s, Cambridge university set up a series of research companies that specialised in genetics. The companies were then sold to the likes of SmithKline and Glaxo to develop pharmaceutical products that helped to build the biotechnology industry we have today.
I have argued for some time that Plymouth needs to develop similar clusters of renewables industries within our travel-to-work area, which will help us to turn the tide in this low-skills and low-wage economy where 38% of the work force are dependent on the public sector. Our university, with its fine reputation for marine science research, should be the catalyst for this economic regeneration. However, to achieve this, we need the Government’s help across a number of Departments.
Later this summer, my hon. Friends in the Ministry of Defence will publish the results of the base-porting review, which I hope will identify parts of the naval estate, especially in South Yard, that are not needed for defence and could be used to realise Plymouth’s full economic potential. Last week, Defence Ministers announced that Plymouth’s seven Type 23 frigates would not be transferred to Portsmouth for the foreseeable future. That is excellent news for a naval garrison city that prides itself on the role it has played in the defence of our country. The Royal Navy’s role in that part of the south-west is a key ingredient in creating this cluster of marine industries. It is part of a commercially focused agenda, working with the private sector, Plymouth city council, Cornwall council and academic partners to create a dynamic programme that can bring ocean renewable energy to the world.
Our vision in that part of the south-west is to exploit domestic and international markets for offshore wind, wave and tidal energy. That will enhance trade and industry policy and the low-carbon skills and jobs agenda and will help us to address the urgent need for climate change mitigation and adaptation. We need to develop products that can be sold not only in our domestic and European markets, but to China, India and emerging economies. That is something that we should most certainly concentrate on in a big way.
We also need joined-up thinking between the Department of Energy and Climate Change, the Department for Business, Innovation and Skills and the Treasury, and we must ensure that we give an important role to the green investment bank to create businesses that will be worth hundreds of millions of pounds in coming decades and help the UK maintain is current commercial and intellectual property advantage.
The MOD and the Navy are well placed to benefit from sharing physical assets in Plymouth: low-carbon energy supplies in our dockyard and the presence of service industries, such as Babcock International and Serco. We need to explore a new commercial relationship between the naval estate and potential wealth creators. Those companies and their supply chains, which are largely made up of small and medium-sized enterprises, will benefit from future enterprise zone status in Devonport and elsewhere in Devon and Cornwall. I believe that it will help us to grow defence-related and civilian businesses and marine and renewable energy to the joint benefit of the country’s future military and energy security.
The Minister of State will be aware of our increasingly unstable and insecure world, with growing threats of climate change, terrorism and economic instability, and we need only to remember what happened when Russia decided that it was going to hold its next-door neighbours to ransom, but to build greater economic, social and environmental security, as well as commercial and trade advantage, we need to ensure that the relevant Departments work together effectively. In order to realise those opportunities, I hope that my hon. Friends will be able to work with me and other interested parties to establish the UK’s first marine energy park in Plymouth and the south-west as soon as possible.
I am delighted that my hon. Friend the Minister has agreed to come to Plymouth later this year to see for himself how we can deliver that economic regeneration. I firmly believe that together we can create a series of green manufacturing businesses in the south-west and help to regenerate our economies in order to improve our skills.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
I, like many other Members on both sides of the House, welcome large elements of the Bill and support its general aims. As the hon. Member for Bracknell (Dr Lee) said, the challenges we face in dealing with energy policy cannot be safely confined to a five-year term, and much of the Bill builds on the work that my right hon. Friends the Members for Doncaster North (Edward Miliband) and for Lewisham, Deptford (Joan Ruddock) did in the previous Government. I am pleased to see some of that being built on and developed in the Bill and in other aspects that the current ministerial team is taking forward, and I hope that that helps to bring some cross-party support to elements of it.
There is huge potential in the green deal, which is a significant part of the Bill, and we want it to work. The aims are laudable, and they have been lauded by Ministers. There is the potential not just for energy efficiency, for wider environmental reasons, but for a positive impact on poorer households, in particular, including people with dependants, long-term conditions and a greater need for domestic heating. Many live in properties, such as those in my constituency and in other parts of the country, that by age or design are inherently inefficient. There is huge potential, and that is why, as many contributors have said today, we want to see the green deal work.
I hope that the Minister will acknowledge, however, that some significant gaps still need to be filled, including those on how the green deal will end up working, and, as many others have said, on the crucial issue of the interest rate. Its impact on what can be managed within the deal has caused concern to many within and outside the House. I hope that Ministers can provide us with further enlightenment on that, if not this evening then in Committee, so that when we return to the Bill we are able to reflect on proposed legislation that is more detailed and comprehensive than that which is currently before us.
I have listened carefully to today’s contributions, and to the Secretary of State’s responses to earlier interventions. My constituency includes many properties in which cavity wall and loft insulation are unsuitable, because they do not have lofts and their walls are too old for insulation. That is the case in many others places, too, and that is why the detail of the proposals is so significant.
I hope the fact that the Bill has been through the other place without that detail will encourage Ministers to find out how the gaps can be filled, and I hope that the work can be done in the bipartisan way that the Bill’s origins and aims naturally dictate. That is why we can support the aims of the Bill and the green deal, but we do not as yet have the confidence safely to proclaim that they will work. There is an obligation on Ministers to help us to reach that position. I am sure that I speak for most, if not all, Members in saying that we want to be in that position on this very important matter. As the Chair of the Select Committee, on which I was privileged to serve briefly at the start of this Parliament, made clear, the need for certainty also has an impact on some of the investment decisions that will help to make the most of the potential of the green deal.
As several hon. Members have said, there are problems relating to energy companies’ tariffs. The Bill includes a requirement that companies must provide information on their bills about the cheapest tariffs, if that is not done voluntarily. I am not sure that goes far enough in dealing with an issue that frequently comes to my attention in my surgeries when I see constituents who have been frustrated and confused by what they are told by energy companies. They are baffled by what their bills mean, having been told by suppliers that they would be saving money but end up paying much more. There are dozens of different tariffs for each energy supplier, and social tariffs are probably the least known about among those who need them most. Research carried out by Consumer Focus shows that many consumers not only do not understand the detail of their energy bills but do not necessarily trust the energy companies to provide them with the most accurate information.
In my constituency, we are fortunate to have Lightburn Elderly Assistance Project, or LEAP, which provides help and support to elderly people, including on energy efficiency. It does a superb job in being able to get into the detail of what tariffs people are on and whether they are the most appropriate ones for them. I am sure that other organisations in other parts of the country perform a similar role and are similarly useful and helpful. However, they will inevitably only ever touch the tip of the iceberg of people who need and will benefit from that advice and that degree of specialised knowledge. It would be much better if we were in a position where some of the vagueness and evasiveness were removed from the information that energy suppliers provide to their consumers, which often leads to mistrust and confusion, and to people who have the lowest level of financial literacy paying the highest tariffs when they can least afford it. That problem needs to be addressed. I am sure that there will be an opportunity to do so in Committee, and perhaps appropriate amendments will be tabled.
It would be wrong not to refer to the role that Consumer Focus has played. That is not covered directly in the Bill, nor is it the responsibility of the Ministers in charge. Nevertheless, it is a cause of regret and concern to me and to many others that the decision to abolish Consumer Focus and roll its functions into citizens advice bureaux might leave us without the specialised knowledge that has benefited consumers by providing expert and helpful guidance.
The Bill has laudable aims. The green deal is a laudable policy and a mechanism that many Labour Members hope will work. However, I have to say to Government Members, following their earlier remarks, that it is not partisan to point out that detail is still required, work is still to be done, and confidence is still to be infused. I hope that, as the hon. Member for Northampton South (Mr Binley) said, Ministers will consider the important issues highlighted by Opposition Front Benchers and others, which need to be addressed in the attitude that the Government take to the Committee stage so that when we come to debate the Bill again—it has already been through the other place—it will be improved, it will be more comprehensive, and it will help to give Members on both sides of the House the confidence to be able to support its most significant measures.
There is an energy challenge in this country, and I have congratulated Ministers before on being adept at facing up to that. It is a shared challenge that crosses party boundaries, and it is in the interests of all our constituents that we address it. I hope that we can do that by constructively filling in some of the missing detail in Committee. As has been said, the Opposition will find it difficult to support the measures without that detail. I hope that Ministers will be constructive in responding to this debate and in Committee.
Chris White (Warwick and Leamington) (Con)
I am pleased to speak in this debate because I believe that this issue is extremely important for our country. It is perhaps the most important issue that we face. In the midst of dealing with a difficult economic situation, restoring strength to our society and empowering local people, we also face the threat of climate change and the need to move away from our dependence on fossil fuels and towards being a greener, more energy-efficient country. The UK has rightly taken the lead on this issue, and the Bill is a welcome step in the right direction.
I am also pleased to speak in this debate because my constituency has great potential as an energy hub. Major national companies such as National Grid, Calor Gas, Wolseley and AGA, and a range of smaller companies such as Encraft, are located around my constituency, providing employment and a potential source of growth.
The Bill marks a significant step forward, but no one can expect it to be the golden bullet. It can only be part of a wider agenda to create a greener energy infrastructure. It is important that we have the strongest Bill possible to build on in the years ahead.
I wish to discuss fuel poverty in particular. In a written parliamentary question, the Department of Energy and Climate Change calculated that about 6,500 households in Warwick and Leamington—about 14% of households —were living in fuel poverty. Across the west midlands, it is calculated that about 65,000 homes may suffer from excessive cold, which costs the NHS about £12 million a year.
I am pleased that the Bill will create a framework to tackle that problem. The energy company obligation will provide a means to support the poorest and most vulnerable households in the country, who would not be able to make their homes more efficient without help from energy companies. The green deal, which will help millions of households across the country, is a welcome development, but we need to ensure that no one is left behind. The energy company obligation will ensure that we bring every home possible into the 21st century. Moreover, the most energy-inefficient households are often the poorest. It is in those homes that the greatest impact on carbon emissions can be made, and it is right for the Government to focus on them.
I believe that the Bill should be more ambitious. If we are to see real progress on climate change and green energy production, we need to ensure that it is carried out at local level. People across my constituency are proud of the efforts that we have made to increase recycling. Many people want more to be done to make our community greener and more energy-efficient. About 80% of UK emissions are generated by local activity, from heating our homes to getting to work. This is an opportunity for councils to make a difference, co-ordinate local activity and give local people a chance to set priorities.
Like many of my colleagues, I believe in localism. I believe that the Bill is an opportunity to set ambitious targets for local authorities and enable them to focus on one of the biggest challenges that our country has ever faced. A scheme that allowed local communities, through consultation, to put together their own budgets, and bound them to reductions that they believed to be sustainable, would be an excellent way forward, and could result in considerable reductions in carbon emissions. I urge Ministers, who I know have had discussions with several organisations on this subject, to look at these proposals in more detail, and to consider amendments in Committee. We need to take action swiftly, and I believe that the Bill provides the perfect opportunity to rally people and local authorities.
Julian Sturdy (York Outer) (Con)
It is a real pleasure to contribute to today’s Second Reading debate. I have a long-held interest in energy-related matters, and I strongly believe that the Bill contains some really positive measures that, together, will lay the foundations for a fairer, more efficient and greener energy market across the country.
Although wide-ranging initiatives covering energy efficiency and the empowerment of the Coal Authority are present in the Bill, it is clear that it is only the first legislative part of the Government’s promised energy reform programme. Missing from the Bill—this is no criticism of it—are provisions relating to the regulation of carbon emissions, the creation of a green investment bank and the security of energy supply, which I think is immensely important and on which a number of Members have touched. I see energy security, along with food security, as being the defining issue over the next decade. The decisions that we take in this Parliament will affect generations to come, so we have to get them right.
It is my understanding that, as the Secretary of State outlined earlier, a second energy Bill is planned for the autumn, to provide the missing pieces of that important jigsaw. In light of that assurance, I must confess that I am extremely optimistic about the Government’s energy ambitions, and thus very supportive of the Bill. However, I would not want to see the time scales in the Bill slip any further. Energy security must not become a political football, because it is far more important than any party politics.
I wish to focus my thoughts on the attempts in the Bill to improve energy efficiency. Such improvements must be made if we are to meet our international and domestic climate change targets—after all, energy efficiency can play a major role in cutting energy use and emissions of harmful gases. Alongside our requirements to meet international targets, we must tackle once and for all the tragic and unnecessary problem of fuel poverty here in our own towns and cities, and we must also bear in mind the often vast financial cost of energy to ordinary households. Together, meeting legal targets, tackling fuel poverty and reducing families’ energy bills make up the triangle of criteria by which we must scrutinise the Bill and judge its success.
In discussing a new approach to energy efficiency, it is worth briefly reviewing previous policies and schemes. The decent homes programme and the Warm Front scheme are two examples. I strongly believe that lessons can be learned from those programmes, particularly Warm Front. I have recently been actively engaged with Warm Front through the provider of the scheme, Eaga, on behalf of local constituents.
As hon. Members will be well aware, Warm Front offers grants to enable certain households in fuel poverty to install energy efficiency improvements such as home and loft insulation and heating measures. Unfortunately, in my constituents’ case, applying to Warm Front to get a new boiler to replace one that was broken took over 13 months. The paperwork was burdensome, and the inefficiency and bureaucracy of the system beggared belief at times. Spending on the Warm Front scheme and its predecessors has totalled £2.6 billion between 2000 and 2011, yet at national level too many homes, particularly in vulnerable communities, remain poorly heated and insulated. I urge the ministerial team to ensure that future schemes under the new proposals are accessible to more people, easier to follow and less bureaucratic in nature. Even those simple changes would, in my opinion, encourage households to take advantage of such Government-led measures.
For the time being, despite huge investment in various schemes, the simple truth is that too many properties continue to achieve very poor energy efficiency ratings. We must embark upon a new pathway, and the Bill provides us with a perfect opportunity to do so through the green deal. To coin a phrase, it is a game changer.
The green deal clearly has a mammoth task ahead. I am excited about the realistic tone, and the practical and flexible nature, of the policy. The current lack of investment in efficiency priorities is not only the result of poorly administrated Government schemes such as Warm Front, but because too many households have been put off by the time and money that it takes to benefit from implementing energy efficiency measures.
When tapping into the green deal, customers can take advantage of up-front money to make responsible energy efficiency improvements. Repayments will be attached to energy bills at the property, rather than the individual having an obligation to pay the money back or pass the cost of improvement on to a future owner of the property. That is an important part of the Bill, because it is increasingly clear that the younger generations move more frequently and more widely than generations before them. That simple measure will in effect encourage participation in the green deal through the flexible transfer of responsibility for repayments to whoever benefits from efficiency savings. Although I am very much in support of the principle, I look forward to more detail as the Bill develops.
I am conscious of the time, and that other hon. Members want to speak, but I shall add another note of caution, which my hon. Friend the Member for Northampton South (Mr Binley) mentioned earlier. There should be further incentivisation measures in the green deal. As the CBI has said, there is concern that the policy, which is a truly exciting one, could become a lame duck if people are not truly engaged to take it up. We must not let that happen, because the consequences are too important.
We should not understate the importance of making a breakthrough in improving energy efficiency in this country. It is therefore imperative for the Bill to win cross-party support and progress successfully. I have been heartened by many of the comments made on both sides of the House this evening. If progress is made, the framework to establish the green deal will be in place, and we can be far more optimistic about meeting our emissions targets, reducing energy bills, tackling fuel poverty and contributing to a greener and fairer energy market. I hope that Members on both sides of the House support those objectives.
Mr Deputy Speaker (Mr Nigel Evans)
Order. Two hon. Members are yet to speak. Perhaps they could divide the time left between themselves. The winding-up speeches will begin at 9.30 pm.
Peter Aldous (Waveney) (Con)
The Government are to be commended for introducing ambitious legislation, for thinking outside the box and for highlighting the importance of realising the potential for Britain to be a world leader in the move towards a low-carbon economy. The Bill contains a wide variety of measures that can help Britain in that aim, including the promotion of smart meters and the move towards greater transparency for energy companies.
The ministerial team are to be congratulated on adopting an open-door approach in explaining their proposals and listening to parliamentarians’ views and concerns. I very much hope that that approach continues in Committee, because although the Government’s ambition and strategy are spot on, we need to look closely at some of the provisions to establish whether they need strengthening so that the Bill achieves its objectives.
It is appropriate for the Government to concentrate much of their efforts on domestic buildings, because 24% of the UK’s carbon dioxide emissions come from the domestic building stock. The flagship green deal is a bold attempt to improve the nation’s housing stock, and giving it every opportunity to succeed is vital.
However, there are a variety of issues to which I would be grateful if the Minister could give further consideration. The CBI, among other organisations, has suggested that there is a need for incentives to encourage take-up of the green deal. I am aware that the Chancellor has indicated that he will look at that. Incentives could include changes to stamp duty, VAT reductions on some works, and council tax rebates.
I would also be grateful if the Minister could consider whether the green deal should include renewables and microgeneration, both of which have important roles to play in the move towards a low-carbon economy. It is also important to consider accepting the warm homes amendment, because the production of an overall plan and strategy kept regularly under review would generate confidence in the green deal and encourage its uptake.
The private rented sector requires specific consideration. Buildings in this sector are more likely to be pre-1919 properties, and thus there is a limit to the energy efficiency improvements that can be made. However, there are other significant challenges in encouraging take-up of the green deal in the private rented sector. First, there is the problem that the initial cost of the works will be borne by the landlord, with the benefits of reduced fuel bills going to the tenants. Secondly, with many tenancies being short term in nature, investment is understandably unattractive to tenants. Thirdly, there is the worry that in the past a non-regulatory approach has invariably not worked. We need to consider how the green deal sits alongside existing tenancy laws and whether legislation is required to encourage landlords to take it up. When the Bill was being considered in the other place, the Government stated that the position would be reviewed after 12 months so that it could be decided whether further legislation was needed requiring landlords to take up the green deal. I welcome the further proposals that the Secretary of State has brought forward today.
I believe that the warm homes amendment has merit, and that consideration should be given to imposing the 2016 deadline for providing minimum energy efficiency standards in the private rented sector, after which landlords will not be able to rent out the worst-performing properties. The warm homes amendment would strengthen the Bill by helping to provide a minimum standard for the private rented sector, and it would help to provide more certainty to businesses expected to deliver the green deal. It is supported by the Federation for Small Businesses and the Federation of Master Builders, and would provide a clear direction for businesses and help to drive the take-up of low-carbon skills across the construction sector.
Although the green deal applies to non-domestic buildings, research carried out by surveyors Cyril Sweett has revealed that the nature of many buildings, such as schools, offices, industrial units and retail warehouses is such that not enough savings will be made to pay for improvements, and that thus they will not qualify for the green deal. Although the green deal will therefore largely apply to domestic buildings, it is important that the UK’s non-domestic buildings are not overlooked as they seek to reduce emissions and energy bills. I therefore urge Ministers to consider carefully the proposal made by the British Property Federation and the UK Green Building Council, which have highlighted an anomaly concerning public sector and private sector buildings: the former are obliged to provide display energy certificates, while the latter are not. The BPF and the GBC believe that a voluntary approach to take-up in the private sector will not work and are of the opinion that it is vital for the Government to provide mandatory DECs. I urge the Government to consider their representations.
It is important that the Bill is framed in such a way as to provide opportunities for small business to play a full role in the roll-out of both the green deal and the energy company obligation, and to ensure that they are not squeezed out by energy suppliers and large companies. There are significant job opportunities for small businesses, ranging from carrying out the energy surveys to installing many of the energy saving works. There is a need for both training and the building up of capacity within the sector in the lead-up to the introduction of the green deal in the latter part of 2012, while with the ECO there is the need to avoid a monopoly situation. There is also a need to encourage banks to provide funding for small and medium-sized enterprises, so that they can get involved in this major opportunity that will help to kick-start the construction sector. With the ECO, it is important to improve access to the market for independent suppliers, and consideration should be given to earmarking a proportion of the obligation for non-obligated suppliers.
Finally, I would be grateful if in Committee the Government could consider addressing a situation that is handicapping the offshore wind sector, which has an important role to play in my constituency. Currently a clause exists in the leases and agreements for lease for offshore wind projects that allows a switch from offshore wind to oil and gas to take place should new oil or gas reserves be found. In that situation, no compensation is payable to wind developers. The existence of the clause continues to cause major problems for offshore wind projects that are seeking finance, with the result that banks view such projects as higher risk than necessary. This comes at a time when both industries are seeking to develop areas of the seabed that are close to each other or even overlap. Efforts to work together to prevent problems will be meaningless unless a fair and clear framework is established in situations where co-existence is impossible. There is an urgent need to ensure that the matter is resolved quickly, through the creation of an early termination mechanism, which would detail how compensation would be paid to the wind developer if a lease is terminated. I urge the Government to take action on the issue now. It has been dragging on for some years and it is important that it should now be resolved, at a time when the offshore wind industry in the UK is rapidly expanding and when companies are looking to make investment decisions. The Energy Bill is an ideal vehicle to tackle the problem.
The Government have the ambition to be the greenest Government ever. I believe that this goal can be achieved if they take on board the helpful suggestions made by right hon. and hon. Members from all parts of the House during the debate this afternoon and this evening.
David Mowat (Warrington South) (Con)
It was not clear to me this evening whether I would make the remarks that I want to make, because it occurred to me that they might be more apposite to the next energy Bill. However, I want to make a few points that perhaps have not yet been made.
First, on the context and the legacy with which this legislation is kicking off, we have heard about two dates this evening. We have heard about 2050, which is the date by which we must reduce our carbon emissions by 80%, and 2020, which is the date by which renewables must account for 15% of electricity generation. However, we have heard less about another date that is equally important, which is 2017 or thereabouts, which is the date by which we will start having power cuts unless we put in place measures to stop that happening.
I have two other pieces of legacy data for the House. Currently, 0.5% of our total energy production comes from renewables. It is also true that 7% of electricity generation comes from renewables, but 0.5% is the measure of what we have to achieve over the next 40 years to meet that 80% reduction. Roughly speaking, even if we achieve a 40% reduction in energy use through such excellent measures as this Bill, we will need to scale up renewables by a factor of about 50. That is absolutely massive.
Although we have talked about fuel poverty, another thing that has not been mentioned in this debate is the fact that energy prices in this country are among the highest in western Europe. Our starting point is that our industries and our people pay more for fuel than others. In particular, those in competitor countries such as France have had cheap, plentiful nuclear power for many years, and they pay less than us. Why does that matter? It matters because we are trying to rebalance the economy towards manufacturing, and a unit of GDP generated from manufacturing requires more energy than a unit of GDP generated from services. That is a further challenge that we have to face.
Broadly speaking, Government policy has two thrusts to it, one of which is energy reduction, which is dealt with in this Bill through the green deal. Our target is to reduce total energy use by some 40%, and that can be achieved—the Royal Academy of Engineering is certainly of that view. Part of that will involve the measures that have been discussed at some length this evening, but part of it will involve, for example, smart meters and smart grids, and all that goes with that.
The other part of our strategy to meet the challenges that I have spoken about is the fact that we are about to manage the market. Why are we managing the market? We are doing so because if the market were left alone, we would end up using gas. That much is clear. Using gas would not be disastrous for our climate change objectives, given that so much energy comes from coal and oil, and that gas is 50% better in terms of carbon emissions, but that is nothing like enough to meet our statutory targets. That is why the strategy on the mixture of renewables, nuclear and carbon capture is important. One of the oddest things about the whole energy debate is that we talk about nuclear and renewables as though they are competing with each other, when we clearly need both. If anything, they are both competing with fossil fuels. The default solution if we react slowly is that we will have to use gas, because that can be obtained relatively quickly.
I have a couple of observations on the Government’s strategy. One relates to urgency. We have heard numbers relating to how quickly we need to implement the green deal, but I do not believe that the 2017 deadline is being treated with sufficient urgency. I was at a meeting recently with some nuclear supply chain people in my constituency, and I was disappointed to hear that they did not believe that any effective nuclear new build would start for at least another year, although time was ticking away. An ex-colleague of mine in Shell once told me that the chief executive officers of the utility companies were quite sanguine about the fact that all this was taking so long, because they had nothing to lose from our inertia. When the time comes, what they have to offer will cost even more. It is important that the Government should take the initiative, rather than leaving this to the utilities, because it would be a perfectly viable strategy for a utility CEO to take their time over this.
Another aspect of the strategy is cost. We have not said a great deal about the differential costs of the different kinds of energy. Energy has to be environmentally sustainable, but it also has to be economically sustainable. I leave the House with the thought that the brilliant technical achievement of the Thanet wind farm, which is a tremendous thing, is going to cost £1 billion in subsidies over its lifetime. It does not produce that much electricity, and its actual cost is therefore very high indeed. Some of the hon. Members who have spoken about fuel poverty today might like to reflect on the fact that a starting point for fuel poverty is when our power costs more than that of other people in the first place.
A third element of our strategy is our approach to technology. Possibly the most impressive technological breakthrough in energy in the past 30 years is horizontal directional drilling, which, combined with a fracture technology, is enabling shale gas and coal gas to be discovered in quantities that would be of material use to the US and the UK, but I am concerned that their use is not forming part of our approach. Perhaps a wider point on technology is that I believe that we should be a fast follower, rather than being at the leading edge—or perhaps the bleeding edge, as one might say. Carbon capture and storage was mentioned earlier. Of course it is a good technology, but it is unproven, and there are other technologies out there that we need to adopt more rapidly.
This all leads me to the subject of nuclear. There is no possibility that we could come close to meeting our 2050 commitment without a massive upgrading of renewables and nuclear. In fact, they go together. Renewables are, by their nature, somewhat intermittent, while nuclear has a very high base-load. The two can be put together quite well. I support the Bill. It is innovative, it is radical and it is right. I hope that it will result in a 40% reduction in energy use, but there is no realistic alternative to nuclear and if we are to meet the 2017 deadline, it is important that we move faster, because 2017 will be here a lot sooner than 2020 or 2050.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
One thing has been proved in the course of this excellent debate—that the Government’s green ambitions are lofty, but that the green reality is far less certain. Just today, we read that the Energy Secretary cannot convince his right hon. Friend the Business Secretary to support the fourth carbon budget and Ministers cannot explain why the Climate Change Act 2008 is included in the list of burdens on businesses that are currently being considered for the bonfire. Ministers are in danger of presiding over a great green betrayal. We on the Opposition Benches want to help them to meet their green ambitions.
The message we hear consistently and very loudly from consumers, industry, green groups and trade unions is that there is no clarity or consistency of policy. Green jobs are being lost; green business is moving overseas; green non-governmental organisations are becoming increasingly alarmed and frustrated. As my hon. Friend the Member for Brent North (Barry Gardiner) eloquently said, Ministers are failing to provide investor certainty from one week to the next, let alone over the next couple of years.
The threat of climate change and fuel poverty grows greater. When we look back in a decade or more at the actions of the Energy Secretary and his Ministers, we do not want to see guilty men who had a golden opportunity to secure our green future. It is not us alone that are saying this. The CBI, for example, has said that the green deal
“has clear potential to help unlock…emissions reductions…But without significant action from government to develop an attractive proposition for businesses and households, this potential is unlikely to be realised.”
As it stands, this has all the dangers of being a deeply disappointing Bill. It could be so much more effective, but warm words will not deliver warm homes.
Let me deal with some of the important contributions made by Members of all parties. I hope that they will forgive me if I fail to do their arguments justice in the short time available. The theme most constantly revisited throughout the debate was the distinct lack of detail in the Bill. As the hon. Member for South Suffolk (Mr Yeo) mentioned, it is a great concept, but as my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) said, the Secretary of State did not provide a satisfactory increment of information in his responses to the many interventions he took.
The Bill is a stab in the dark. Although the Government first published it no fewer than five months ago, none of the secondary legislation has been outlined, which leaves so many questions unanswered.
Many Members asked about the incentives to be made available to home owners and tenants to encourage take-up. The hon. Member for Richmond Park (Zac Goldsmith) referred to a possible stamp duty rebate, which was raised in the press as something that might crop up in the Budget, while the hon. Member for Northampton South (Mr Binley) referred to a possible council tax rebate.
A number of Members raised serious concerns about the maximum interest rates on the green deal. As my hon. Friend the Member for Stoke-on-Trent North (Joan Walley) said, this will be absolutely critical. I referred in an intervention to research and polling done by YouGov, showing that more than 40% of households do not believe that the green deal is an attractive proposition for them, and if the interest rate is above 6%, only 7% of people polled said that they would take up the green deal. We need to reflect carefully on that as we go into Committee.
Another big question is who is going to come into the home to assess the situation and to what level those people will be trained. The Secretary of State said that we can get lots of quotes for the green deal. That sounds fantastic, but who is going to pay for the different assessments of the home?
A number of Members, including the hon. Members for Bracknell (Dr Lee) and for Angus (Mr Weir), referred to the opportunities for small and medium-sized enterprises to take part in the green deal. This is crucial because SMEs, co-operatives, charities and social enterprises must have equal opportunities to participate in the scheme, but the Bill does not provide the detail on that. I am also keen to know what guarantees exist that millions will not be saddled with debts that they cannot afford.
Many Members asked a crucial question: after all the work is done, by how much will our national emissions be reduced? We tabled an amendment on that very issue in the House of Lords, which was rejected. I sincerely hope that the Government will revisit it in Committee.
My hon. Friend the Member for Brent North asked what might happen if a new householder or tenant arrived and the energy savings arrangement changed as a result. The Secretary of State made a joke about a Brazilian wife, but my hon. Friend had asked a serious question that needs to be considered. [Interruption.] It was a Brazilian husband or wife.
Ministers should already have the answers to the many questions that have been asked, rather than deferring them to more than 50 pieces of delegated secondary legislation. The Secretary of State referred to a watertight legal framework. We want and need that framework, but it does not yet exist.
Another key theme that emerged was the poor deal for the consumer represented by the Bill in its current form. Several Members, including the hon. Member for Northampton South, expressed concerns about consumer rights, and my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) spoke eloquently about the confusion felt by his constituents about their energy bills and the implications of the forthcoming abolition of consumer support. If the Bill is not strengthened in that regard, the green deal has the potential to be a poor deal for the consumer. Consumer Focus has warned that it could erode consumer protections rather than enhancing them, and the consumer watchdog Which? has said that Ministers have yet to provide assurances that consumers will be protected from mis-selling and dodgy cross-selling, that they will have access to redress should something go wrong, and that they will not be expected to pay hidden charges. A lack of clarity on those issues will reduce take-up of the green deal.
Many Members also raised the issue of fairness in tackling fuel poverty. I do not have time to go into as much detail as my hon. Friend the Member for Stoke-on-Trent North and my right hon. Friend the Member for Oldham West and Royton, who made an innovative suggestion about how green deal payments might be met for the 5.5 million households in the UK in fuel poverty, but this is an important issue that urgently needs to be addressed.
According to Ministers and others on the Government Benches, the green deal will be a game-changer for fuel poverty—we heard that phrase a number of times—but that too is not yet evident in the Bill. The new energy company obligation, which underpins the green deal, will be targeted at hard-to-treat homes, but currently no amount has been ring-fenced for the purpose. It is worrying that there are no guarantees that the ECO will be adequate to deal with the scale of the problem, not least in the light of the concern raised by my hon. Friend the Member for Southampton, Test (Dr Whitehead) about the inclusion of the ECO in the Treasury’s cap on levies, which the Minister did nothing to assuage.
The hon. Member for Bracknell rightly drew attention to the need for more investment in renewables, referring specifically to marine energy. We know from the Pew Environment Group’s report, which was released only a few weeks ago and mentioned by my hon. Friend the Member for Hartlepool (Mr Wright), that in the past year the UK has fallen from third in the world to 13th in terms of investment. Just before the last election the Labour Government published a marine energy action plan, which is currently gathering dust on a shelf at the Department of Energy and Climate Change. I urge the current Government to resuscitate it and make the necessary investment in more renewables, so that we can take advantage of the £100 billion that is expected to be invested next year alone in renewables across the globe.
In his eloquent contribution, my hon. Friend the Member for Hartlepool spoke of the experience of businesses in his constituency and their concerns about the Government having to move quickly. I have mentioned the £100 million that will be spent next year, and he referred to the figure of $2.3 trillion, which is the amount that will be spent on renewable energies over the next decade. Businesses in his constituency are asking for a clear vision from Government, but they are not currently getting one, and I urge the Government to respond.
Several Members on both sides of the House talked about the private rented sector, and there are a number of relevant clauses in the Bill. Some 40% of tenants in the private rented sector live in F and G energy rated homes. We welcome the move to bring forward the timeline, but we hope we might revise that even further in Committee.
A report last week by Friends of the Earth gave a damning verdict. It talked about the great green betrayal and conducted an examination in forensic detail. The report makes it clear who it believes is to blame for what is happening. It talks about
“Liberal Democrats, who have clearly failed to use their influence inside the Coalition to ensure a better performance on the environment.”
This is not the greenest Government; it does not yet come close. With 27% of all UK emissions coming from homes, the Bill is not yet adequate for the task.
It is essential that the Secretary of State gets the green deal right. He said it was the first such deal in the world, but a similar scheme was set up in Australia. Unfortunately, it was a complete disaster. After 160,000 homes were fitted with substandard insulation, four people died and the scheme was scrapped. There is also a scheme in Germany where the take-up is 100,000 a year, but it has a Government-supported interest rate, which we are not going to get under the current Bill. Such issues must be revisited in Committee.
In spirit and in principle, we want to support the Bill. The hon. Member for Winchester (Mr Brine) tried to rewrite history earlier; it was, of course, the Labour Government who began to implement a pay-as-you-save scheme. In its current form, the Bill could end up being a wasted opportunity, but we will take the Minister up on his assurances that he will work across the Chamber to make it better. We will not vote against it tonight as we support its aim, and we will work hard and positively to make it better. In Committee, we will strive to convince Ministers to give consumers the protections they deserve, to give British businesses the confidence they require, and to build into the Bill the backbone that it so desperately lacks.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
I am delighted to hear from the hon. Member for Liverpool, Wavertree (Luciana Berger) that the Opposition will not vote against the Bill, but I will hold her to blame if my hon. Friends now start to disappear from the Chamber during my winding-up speech. She has just delivered a very polished debut from the Dispatch Box. I think that winding up is a much harder job than opening, but she made a very good fist of it.
I do not agree with the hon. Lady’s rather gloomy scepticism about this important Bill, but she was spot on in one respect: this has been an excellent debate, with powerful and substantive contributions from both sides of the Chamber. In saying that, I gloss over the opening speech of the shadow Secretary of State, the hon. Member for Hackney South and Shoreditch (Meg Hillier), whose contribution was out of tune with the debate we subsequently had. I was genuinely pleased by the way in which Members across the Chamber engaged in scrutinising these radical and far-reaching proposals, and I have to say it is telling to compare and contrast the shadow Secretary of State’s speech with the master-class demonstration by the leader of the Green party, the hon. Member for Brighton, Pavilion (Caroline Lucas), of what can be achieved in an effective and intelligent critique from the Opposition Benches.
This Bill is only the first step in the new Government’s plans to reshape and renew our energy economy, but it is certainly a very clear and substantial demonstration of the coalition’s determination to be “the greenest Government ever”. These measures will be vital tools in helping to meet our stretching carbon reduction targets and they underpin our determination to stop dangerous global warming.
The Bill, however, is no tree hugger’s charter, nor is it a narrow response to the science of climate change; it can provide practical help to families and money-saving improvements to every home in Britain. The British housing stock, which for too long has languished at the very bottom of the European energy-efficiency league table, will be transformed. Finally, government will have a game-changing policy framework that is commensurate with the huge twin challenges of improving our housing stock and eradicating fuel poverty.
That said, I am very conscious of the fact that with this Bill we are putting in place a gigantic project that will stretch way beyond this Parliament and, we hope, the next too. The green deal framework is designed to continue well into the 2020s and beyond, so I do not pretend for a moment that this Bill will be the last word on the issue or that we have anticipated every eventuality. We will continue to consider new incentives and levers to drive the programme forward as the market develops and we reach towards that very ambitious level of retrofitting 14 million homes by 2020 and 26 million homes by 2030. But the long-term direction is clear: there will be no more short-term initiatives and no more stop-start schemes. Business certainty created by the green deal will be essential to unlocking the billions in private sector investment that will be key to this programme’s success.
I am keenly aware that responsible political consensus on the green deal is particularly desirable. I very much hope that, given the shared climate objectives among the parties, we can all show the same resolve and constructive cross-party engagement that was the hallmark of the Climate Change Act 2008. I listened carefully to the thoughtful speeches made by hon. Members on both sides of the House today, and I would be happy to engage in an informal evidence-based session before the House rises for the Whitsun recess. I noted not only the shared ambition that Members on both sides of the Chamber have for the Bill, but the detailed concerns and questions that have been raised. I hope to address many of these issues now. Where I am unable to do so, I hope to deal with them more seriously, and constructively, in Committee.
Broadly speaking, six main themes have emerged from today’s debate, and I hope to hear more about them in that informal session. The first was the scope of the coalition’s ambition, the scale and pace of delivery, and how we measure success. The second was the energy company obligation—the ECO—and the challenge of ensuring that we deal effectively with fuel poverty. Thirdly, hon. Members rightly urged robust consumer protection—that is absolutely essential. Fourthly, hon. Members strongly argued the case for more ways to involve local communities and local councils, and, importantly, challenged us on the provisions to tackle recalcitrant landlords in the private rented sector. Fifthly, we debated the enormous potential of the green deal to drive green jobs and green growth, and to create new investment opportunities. Finally, we must not overlook the importance of enhancing our national energy security, as well as moving our economy beyond dependence on foreign oil and expensive imported fossil fuels.
Let me deal briefly with each of those themes in turn. Many questions were asked on the fundamental point of the scale of our ambition by, among others, the hon. Member for Hackney South and Shoreditch, my hon. Friend the Member for Cheltenham (Martin Horwood) and the hon. Member for Stoke-on-Trent North (Joan Walley), with whom I have served for many years on the Environmental Audit Committee. The issue was also addressed in particularly informative contributions from the right hon. Member for Oldham West and Royton (Mr Meacher) and the hon. Member for Brent North (Barry Gardiner). I am pleased to respond to them by saying that I can announce two important developments. First, my Department will publish a formal aim—that is, on the face of the Bill—to take reasonable steps to improve the energy efficiency of the English residential sector by 2020 so that emissions from that sector follow a trajectory that is consistent with the UK carbon budgets. Secondly, I will table an amendment that commits to an annual report to Parliament on the specific contribution of the green deal and the ECO, within the context of contributing to the carbon budgets set out by the Climate Change Act that have so concerned Members from all parties in the course of the debate.
Many Members raised the issue of the ECO and fuel poverty. Fuel poverty is key to the essence of the Bill and we will certainly be judged on its success. Those Members included the hon. Member for Hackney South and Shoreditch and my hon. Friend the Member for Bracknell (Dr Lee), who is a member of the Select Committee on Energy and Climate Change as well as of the Conservative friends of Bangladesh and so has a particular interest in international climate change issues. The hon. Member for Southampton, Test (Dr Whitehead), with his usual expertise, focused on the ECO and the role it plays in the potential levies cap. The hon. Member for Brighton, Pavilion had some very vivid cases of fuel poverty from her constituency that will be reflected across the land, as did the hon. Member for Hackney South and Shoreditch.
Let me be clear that the ECO is designed to work hand in glove with the green deal to help the most vulnerable households and hard-to-treat properties. The ECO will deliver heating systems and insulation in the most effective way to help low-income vulnerable households heat their homes affordably and it will be tightly targeted. The ECO and the warm home discount provide a range of support mechanisms for low-income vulnerable households. I have heard the calls for more information and so I commit today to bring forward details on the ECO before we go into Committee.
On the subject of robust consumer protection, we heard the shadow Secretary of State’s questions about who will be the regulator and whether we could have more detail. The right hon. Member for Oldham West and Royton wanted to know more about how the green deal would work for vulnerable energy users. My hon. Friend the Member for Northampton South (Mr Binley), in his very statesmanlike speech, also highlighted the need for more protection for the most vulnerable in society.
There will be strong consumer protection. It will be necessary to propose that level of detail in statutory instruments, through which we will all have the opportunity to scrutinise those important points in more detail. There will be a green deal quality mark for installers and warranties against installation failure and poor workmanship. The golden rule is that the charge attached to the Bill should not exceed the expected savings at the time of the assessment and that will be crystal clear. The Consumer Credit Act 1974 will offer protection for green deal customers. I really appreciate the way the industry has got involved on this important issue. Voices such as Kingfisher and the Builders Merchants Federation are essential in helping us to design the green deal so that big companies and local small and medium-sized enterprises can get involved while at the same time offering strong consumer protection.
The question of involving communities and tackling the private rented sector was raised by my hon. Friend the Member for Warwick and Leamington (Chris White), the hon. Members for Stoke-on-Trent North, for Hartlepool (Mr Wright) and for Brighton, Pavilion, the right hon. Member for Oldham West and Royton and the hon. Member for Southampton, Test. We will take robust action on the face of the Bill in respect of the private rented sector. Before we came to the House today, we listened to various voices from a number of stakeholders on the subject of the Home Energy Conservation Act 1995 and we have decided to retain parts of HECA, to breathe new life into it and to ensure that it becomes part of our way of ensuring uniform delivery of the green deal across Britain. We will table those amendments in Committee.
The question of green growth and investment was mentioned by my hon. Friend the Member for Winchester (Mr Brine), who made a very powerful speech arguing that the green deal is a great carrot, rather than a stick, that will throw up a huge number of business opportunities. He also rightly tested us on the need for more training opportunities, which we are taking very seriously. The hon. Member for Angus (Mr Weir) also asked whether we would be letting in small businesses. My hon. Friend the Member for Winchester pointed out that this could mean 100,000 jobs or more. It is important that we do not just capture the carbon savings, but that we really capture the industrial opportunities that this big market push will afford us.
Gregory Barker
I will not, I am afraid, because there is very little time.
On energy security and moving beyond oil dependence, the Chairman of the Select Committee made a very important contribution at the beginning of the debate pointing out the need for stability in electricity markets and for investors and about the role for nuclear and the important role of renewables. That will be delivered through the next stage of our redesign and renewal of the sector in energy market reform. Those points were all reiterated by the hon. Members for Cheltenham and for Angus and my hon. Friends the Members for Northampton South and for York Outer (Julian Sturdy), who listed a number of energy security measures, as well as by my hon. Friend the Member for Waveney (Peter Aldous), who spoke forcefully about offshore renewables, and my hon. Friend the Member for South Suffolk (Mr Yeo). We are very keen to see a resurgence in renewables and support for new technologies, including carbon capture and storage. I promise to write to hon. Members about any important points they have raised that I do not cover in what will be a rather hasty wind-up now.
In summary, no one should underestimate the sheer scale of the ambition that underpins the Bill, which has the potential to upgrade the homes of every family in Britain by allowing every household to access finance for up to £10,000-worth of energy improvements irrespective of age or status. Further subsidy is available for hard-to-treat homes and, of course, the fuel-poor. The Bill will unleash the most far-reaching programme of British home improvements since the second world war. It will drive down family energy costs and will insulate consumers against further sharp rises in future. The Bill will unleash billions of pounds in new investment in our green economy and will create thousands of new green jobs.
The Bill will directly help those in poor rented accommodation whose landlords refuse to make improvements, and it declares war on the root causes of fuel poverty. The Bill will deliver huge steps towards meeting our carbon reduction targets and it will strengthen British energy security. The Bill will create a brand new market and will drive choice and competition. It will unleash British research and development as well as technical and industrial innovation that should propel the UK to the forefront of the giant global markets for energy efficiency, products and services—exports up, emissions down. The Bill will deliver greater choice to the consumer and fairer access to investment for the fuel-poor and it will be a massive boost to British businesses. I commend it to the House.
Question put and agreed to.
Bill accordingly read a Second time.
ENERGY BILL [LORDS] (PROGRAMME)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Energy Bill [Lords]:
Committal
1. The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 21 June 2011.
3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Consideration and Third Reading
4. Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading.
Other proceedings
7. Any other proceedings on the Bill (including any proceedings on consideration of any Message from the Lords) may be programmed.—(Bill Wiggin.)
Question agreed to.
ENERGY BILL [LORDS] (MONEY)
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Energy Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of—
(1) any expenditure incurred by the Secretary of State or the Gas and Electricity Markets Authority by virtue of the Act, and
(2) any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Bill Wiggin.)
Question agreed to.
ENERGY BILL [LORDS] (WAYS AND MEANS)
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Energy Bill [Lords], it is expedient to authorise—
(1) the imposition by virtue of the Act of charges under licences issued under the Electricity Act 1989 or the Gas Act 1986, and
(2) the payment of sums into the Consolidated Fund.—(Bill Wiggin.)
Question agreed to.
Business without Debate
delegated legislation
petition
Jessica Lee (Erewash) (Con)
I present and support the petition prepared by George’s Tradition, with 3,674 signatures supporting the petition or wording in similar terms.
The petition states:
The Petition of residents of the Erewash constituency and others,
Declares that England is one of very few countries in the world that does not have a public holiday to celebrate its national day; notes that St Patrick’s Day is a bank holiday in Northern Ireland, and that St Andrew’s Day is a voluntary public holiday in Scotland; and further declares that everyone who is part of England should be able to celebrate its traditions, its heritage and the English way of life with a public holiday on St George’s Day.
The Petitioners therefore request that the House of Commons urges the Government to bring forward proposals to make St George’s Day a public holiday in England.
And the Petitioners remain, etc.
[P000920]
Hospices (VAT)
(13 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Bob Russell (Colchester) (LD)
The hospice movement is a great British success story. If we wanted to think of something that epitomises the big society, the 209 independent hospices the length and breadth of the land, with an army of more than 100,000 volunteers, tick all the boxes.
The hospice in my Colchester constituency—St Helena hospice, named after the town’s patron saint—which serves the whole of north Essex, has around 800 volunteers who help in a wide variety of ways, raising money and organising events, working at several charity shops and helping at the hospice itself, which is centred on an ancient farmhouse, Myland Hall. Around 180 professionals are employed by the hospice as medical and key support staff, but without the volunteers the hospice could not exist. It is very much a partnership, which for the past 25 years has been a beacon of community involvement. But all this has been achieved with one arm—financially speaking—tied behind their backs.
I refer to the unfairness of the value added tax which penalises the charitable hospices while exempting exactly the same level of operation undertaken at the 36 national health service hospices and hospitals, which are VAT-exempt. This unfairness—the taxman taking money raised for charitable good causes—does not affect hospices alone, of course, but tonight’s debate is specifically about hospices. I look to the coalition Government to take urgent action to provide the necessary means to ensure that the VAT currently paid is refunded so that the money can be spent for the purposes for which it is raised or donated—the treatment of patients.
I am grateful to Help the Hospices, the national umbrella group, for its assistance with background briefing for my speech. I also thank the Charity Tax Group for the information that it provided. The Charity Tax Group estimates that before VAT was raised to 20%, the total irrecoverable VAT across all charities was more than £1 billion. The new higher level of VAT has cost the charitable sector an estimated extra £143 million. For the record, I voted against raising VAT to 20%.
This is not the first time that I have raised with the Government of the day the unintended consequences of VAT charged to charities, and thanks to my intervention several years ago the then Chancellor of the Exchequer, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), moved quickly to came up with a solution whereby the Royal British Legion receives a matching grant for the VAT it is required to pay on the production of its Remembrance day poppies. I invite the coalition Government to use this as a precedent to give matching grants to hospices for the VAT that they pay, as an interim measure in advance of seeking to amend the legislation to exempt them from VAT as if they were part of the NHS for this purpose. After all, the work they do is no different from what the NHS does, other than the fact that it involves the voluntary and charitable sector.
If the “poppy” solution is not acceptable, I invite the Government to see whether the relief enjoyed by local authorities and other public bodies under section 33 of the Value Added Tax Act 1994 and certain health care provisions under section 41 of the same Act could be used to assist hospices. Failing that, why not adapt the provisions in the Finance Bill to ensure that academy schools can recover VAT on non-business supplies in the same way as local authorities can? If it is okay for academies—educational establishments that are not universally welcomed—applying the same solution to hospices would probably generate near unanimous approval. In this respect, I congratulate the hon. Member for Scunthorpe (Nic Dakin) on his ten-minute rule Bill earlier this year, which proposed a simple legislative solution.
When the original European Union VAT system was developed, the special position of charities was not considered. Alas, because hospices provide services that are either exempt from VAT or outside the scope of the VAT system, they cannot recover the VAT they pay on their expenditure on supporting their charitable aims. This is something that I am sure Members across the House would want to see changed.
Increasing demand for hospice care, alongside the Government’s public service reform and big society agendas, is likely to result in more care services being transferred to hospices. Indeed, I am grateful to the Sue Ryder charity, which already has seven hospices. It first alerted me to this serious problem, telling me:
“A recent transfer of an NHS hospice to Sue Ryder under the Transforming Community Services initiative has sparked interest in the viability of charities taking on other NHS hospices and services. We believe there should be a level playing field in VAT between charities and the NHS so that all possible funds can go towards the delivery of care.”
Martin Horwood (Cheltenham) (LD)
One of the Sue Ryder care hospices is in my constituency, and I warmly support what my hon. Friend is saying. Does he agree that as we see the outsourcing of more NHS services to providers such as Sue Ryder, that could deliver a windfall to the Treasury rather than directing funds where they are most needed, which is to health and palliative care?
Bob Russell
I am grateful to my hon. Friend for raising that point, which I was just about to mention. Let me be financially blunt about this: if the hospices did not exist, the excellent work that they do would fall to the NHS and cost the public two to three times more because of the considerably lower cost of hospices, brought about by the special working combination of professionals and volunteers, with fundraising and so on, which is the basis on which hospices were founded and have existed over the years.
I understand that, on average, charitable hospices receive about one third of their funds for the services they provide from statutory sources, which leaves two thirds to be raised to cover all the other costs. This already challenging target is not helped when it is realised that the taxman is helping himself to 20%. I am advised that most local hospices do not have three-year agreements with NHS commissioners, relying instead on year-on-year negotiations that are, by their very nature, subject to budgetary pressures within the NHS. Alarmingly, a survey of member hospices conducted by Help the Hospices last March found that 64% of primary care trusts had frozen NHS funding for hospices for the period 2010-14.
I will set out some statistics about the excellent job that the nation’s hospices do. Collectively, they provide more than 26 million hours of specialist care and support every year, 90% of which is provided through day care services and care in people’s homes, and 77% of adult palliative care in-patient units are run by hospices, with the voluntary sector providing 2,139 adult in-patient beds, compared with just 490 provided by the NHS. All children’s in-patient units in the UK are run by the voluntary sector. Independent voluntary hospice expenditure increased by a fifth between 2007 and 2009, which indicates the continuing growth and importance of hospices in the life of the nation. More than £1 million is raised every day for the nation’s hospices, from fundraising, legacies and donations.
The value of the voluntary work carried out by the 100,000-plus volunteers is estimated to be worth in excess of £112 million every year. Help for Hospices has told me:
“Hospices are unique among providers of healthcare because they contribute so significantly to the funding and provision of hospice and palliative care. In 2009, hospices spent £687 million. For every £1 the State invests in local charitable hospices, those hospices deliver £3 worth of care.”
It thus makes sense that the burden of VAT on hospices should be lifted so that they can do even more good for the benefit of the communities that they serve.
Help for Hospices also told me:
“Hospice care receives overwhelming public support in the UK. A recent survey showed more than 80 per cent of people believe everyone with a terminal illness should have the right to receive hospice care.”
My only observation is that I am amazed the figure is as low as 80%.
I would like to say a little more about the St Helena hospice in Colchester, which I visited on Saturday ahead of this evening’s debate and in order to inspect the newly extended Joan Tomkins day care centre, which was officially opened to coincide with the annual fete in the grounds of the hospice.
The original day care centre, named in memory of the late wife of local business man Mr Robin Tomkins, whose generosity made the building possible, was opened in April 1988 by the Princess of Wales. I remember that well, because my mother was in the nearby hospice and died a few days later. The princess spoke to my father at my mother’s deathbed, and he spoke afterwards of the warmth of compassion that she had shown.
St Helena hospice, the main building, was officially opened in April 1986 by Her Majesty Queen Elizabeth, the Queen Mother, so we have just celebrated its 25th anniversary. As an aside, I should have said that my mother was one of the volunteers in the early months after the hospice opened.
Like other hospices throughout the country, St Helena is rooted in the local community that it serves. It provides free medical and nursing care and therapy to adult patients with any diagnosis. Alongside the two day centres there is also one at Clacton, and there is in-patient accommodation in the purpose-built extension to the historic Myland Hall.
Services are also provided for patients in their own home. Indeed, in the past five years there has been a 58% increase in the services in patients’ homes. St Helena hospice also provides pre and post-bereavement support to family members, including children, and attached to the hospice is an education centre, providing education for health and social care professionals.
It will cost St Helena hospice more than £4.6 million in the current financial year to provide its valuable services, and it would be great if it did not have to pay value added tax, but could instead spend that money on the purposes for which people wish it to be used—supporting the work of their local hospice.
Help for Hospices told me:
“As the population ages and people approach the end of life with ever-more complex co-morbidities, a spectrum of highly flexible and adaptive hospice and palliative care services need to be available.”
Jim Shannon (Strangford) (DUP)
Not only the services and the care provided but also hospice-build should be exempt from VAT. Does the hon. Gentleman agree that the Minister should address that in his reply?
Bob Russell
The hon. Gentleman makes an exceedingly good point. We have the nonsense, right across the construction industry, whereby new-build is VAT-exempt, but when a building is added to or converted, as in the instance to which I believe the hon. Gentleman has just referred, VAT is levied. When a hospice wants to extend its building, as in the extension and modernisation of the Joan Tomkins day care centre that I mentioned, VAT is levied, as I understand it. That is wrong.
Help for Hospices also told me:
“The Government has committed to a ‘level playing field’ for all organisations delivering public services. However, charitable hospices continue to face extra costs that statutory and private providers do not.
Tax burdens should be removed from hospices where they can be. This is particularly necessary as hospices are providing public services and investing considerable charitable funds into the ‘health economy’ and, unlike other private and public providers of healthcare, are subject to significant funding and contracting challenges.”
I believe that the public would overwhelmingly take the view that the coalition Government should urgently introduce measures to deal with the unfairness of levying VAT on our hospices. I have put forward suggestions as to how that can be achieved, and I now invite the Minister to pursue these matters.
The Exchequer Secretary to the Treasury (Mr David Gauke)
I congratulate the hon. Member for Colchester (Bob Russell) on securing this debate and on speaking with such evident passion and knowledge about the hospices in his constituency and the hospice movement more widely. I think I speak for all Members in expressing a sense of admiration for what the hospice movement does. I certainly know of the fantastic work that a number of hospices perform in my constituency.
I am pleased to have a further opportunity to explain and discuss the Government’s policy on an issue that has generated considerable interest and is evidently of concern to a large number of hon. Members. It might be helpful if I could start by reminding Members of the current position with regard to VAT and the constraints that we are acting under. Before I do so, I would like to confirm how much the Government appreciate the energy and input of charities across a wide spectrum of national life and interests. We can all agree on the important role that they play in our society and agree that we are fortunate that they are prepared to come forward with their immense contribution.
As we all know, VAT is a broad-based tax levied on final consumption. It is charged by registered businesses on their supplies and can be recovered by a business when the purchase is destined for use in the making of supplies that carry VAT. In this respect, charities are no different from others when they are in business, as they can recover VAT. A business, however, bears the VAT on purchases when it is making supplies that are exempt from VAT. Since the supplies it makes do not carry VAT, it is unable to claim back the VAT. Exemption is applicable to a limited range of supplies such as the rent of land and buildings, education and health care. The application of an exemption has to be in line with international agreements—in this case, the principal VAT directive. Since health care is included in the list of exemptions, we are obliged to apply an exemption.
The hon. Gentleman’s central concern is how the impact of VAT on hospices can be mitigated. Ideas that have been mooted include the application of a refund system or arrangements similar to those applying to the NHS. With regard to a refund system, it would, in principle, be possible to introduce such a system in respect of the non-business activities of charities. However, such refunds, as a matter of Government expenditure rather than taxation, would place a very significant cost burden on the Exchequer, especially given the current fiscal position. Furthermore, many charities are engaged in activities where they could be in direct competition with private sector organisations: those activities include the provision of care and welfare services. A refund scheme for VAT incurred in relation to these services would represent a distortion of competition. Any scheme that could be devised would be complex and administratively burdensome for charities to operate.
Bob Russell
Will the Minister explain where the competition is in the treatment of cancer patients? That is something new to me; I did not realise that it was in the competitive world.
Mr Gauke
I wanted to apply this initially to the broad issue of costs incurred by charities as a whole. Clearly, there can be an issue in the provision of care and welfare services more generally, and I was looking at it in that context rather than specifically with regard to hospices.
It is true that the NHS can recover the portion of its VAT costs that relate directly to out-sourced services used in the provision of free healthcare—for example, cleaning, laundry, catering and estate management. That amounts to about 20% of the total VAT incurred across the NHS. This ability to reclaim some VAT costs is taken into account as part of the overall funding arrangements for the NHS. Refunds do not extend to VAT paid on goods and services purchased to support business activities that are exempt from VAT, such as private health care and property rental.
In addition to the obligation placed on the Government to ensure that the VAT system is fiscally neutral and does not distort competition, it is not within our gift to change unilaterally a VAT system unanimously agreed in Europe and applying in the single market. We need to apply the mandatory exemption in relation to the business supplies of health care providers, with the associated block on recovery. Similarly, under European agreements the Government cannot extend existing VAT zero rates or introduce new ones. Reduced rates can be applied only to a specific list of goods and services, and there is no such reduced rate that applies to all supplies made by all charities.
Nic Dakin
The Minister is giving a detailed explanation, which is very helpful. May I refer back to situations in which a hospice, for example, takes over services that were previously run by the NHS, for which the NHS could recover VAT on non-business services? Surely such an imaginative Minister can find a way of transferring that across to the hospice movement so that it is cost-neutral for the Exchequer, but beneficial to the community.
Mr Gauke
If the hon. Gentleman will forgive me, I will come back to that point. It is kind of him to say that I am going through this in a detailed way. If I may, I will proceed and then come back to what we can do. It is worth making the point that the last time we tried to change the list of matters that can be zero rated for VAT, it took six years and some negotiation.
It is worth highlighting the help that Government provide for charities. We are limited in the support that we can give through changes to the VAT system, but it is important to understand that the Government can and do support charities more widely through the existing VAT system and in other ways. We are committed to retaining the existing VAT zero rates that apply specifically to charities, which provide a benefit of about £200 million a year. Those include VAT zero ratings for qualifying charities on sales of donated goods, for medical and scientific equipment, and for goods for use by disabled people. Charities are not charged VAT on the costs of advertising and public media. They also qualify for zero rating on the construction of certain buildings to be used for charitable purposes. All those zero rates are derogations from the normal EU VAT rules and are not enjoyed by charities in other member states. Charities also benefit from the more widely available VAT zero rates that are applicable to purchases.
The UK has one of the most generous tax systems in the world for charities. Our existing reliefs for charities are worth more than £3 billion a year. Gift aid is the largest single relief, and it is now worth nearly £1 billion to charities each year. Our position, which is in line with that taken by successive Governments, is that the most appropriate way of supporting charities is to encourage charitable giving, rather than to create a complex and burdensome system of additional reliefs or refunds.
Martin Horwood
As a former director of fundraising for a national charity, I tell the Minister that encouraging giving is easy to say, but more difficult to achieve, whereas a VAT refund would make a substantial and immediate difference. The problem of the burden on the charity would be easily overcome in exchange for the benefit. The important point, which has been made, is that as we commission more health care services, it will not be cost-neutral for the Treasury, but will give a windfall benefit to the Treasury. Surely something can be done so that at least new services that are provided gain a refund for VAT, and do not just deliver a benefit to the Treasury for no benefit to the community.
Mr Gauke
Again, hon. Members are raising fair points. To jump to the conclusion, we are looking closely at this area.
The help that we provide to charitable giving is important. Charities are central to our big society agenda. The 2011 Budget announced the most radical and generous reforms to charitable giving for 20 years, including reducing the inheritance tax rate when 10% or more of the net estate is left to charity. From 2013, a new scheme will allow charities to claim a gift aid-style top-up on small donations that they receive without gift aid declarations for up to £5,000 for each charity every year. Overall, 100,000 charities can benefit from the 2011 Budget changes to the tune of about £600 million.
It is also worth mentioning the transition fund that was announced at the spending review. It makes £100 million available to charities, voluntary organisations and social enterprises that are delivering front-line services and are affected by reductions in public spending. The fund provides grants of between £12,500 and £500,000 to help organisations make the changes necessary to thrive in the long term. Funding was made available in 2010-11 and 2011-12, and the fund is focused on helping organisations transit and adapt to the new funding environment rather than merely keep going. The first 18 awards were made on 15 February, with further awards in March, April and May.
The Government continue to examine ways of ensuring that VAT does not act as a barrier to the reform of public services, which was the point that the hon. Member for Cheltenham (Martin Horwood) raised. We are examining such options where they are open to us and affordable within agreed funding arrangements. For example, the Government announced in the Budget that we would continue to consult charities and organisations in other sectors to explore options for implementing the EU VAT exemption for cost sharing. I can tell the House that one of the options under consideration is to issue a consultation paper on the subject within the next two months, and we are exploring that possibility closely.
More widely, there are often ways of mitigating the impact of VAT within the existing system. For example, where local authorities and other public bodies enter into contractual rather than funding arrangements with charitable providers, it can greatly lessen any irrecoverable VAT incurred by those providers in many cases. It has to be acknowledged, however, that such an approach does not offer much scope for services that fall within the health exemption.
As I said earlier, I recognise that there is genuine concern about VAT among people involved in hospices. That was why, in March, I met the hon. Members for Scunthorpe (Nic Dakin) and for Leeds North West (Greg Mulholland) and people working in the hospice sector, including for Sue Ryder. Following that meeting I asked officials to continue the dialogue, and they have met subsequently with the intention of exploring any viable options. I hope that that provides some reassurance, although I cannot give more detail at the moment. I am certainly keen that we explore options.
Mr Robin Walker (Worcester) (Con)
Will the Exchequer Secretary respond to a suggestion that has been made by Richard Shaw, the treasurer of the excellent St Richard’s hospice in my constituency? He has suggested that under the NHS reforms, if hospices’ income from doctors’ consortia could be deemed to be VAT standard rating, that would allow hospices to recover a lot more VAT on their charges. Will that be one of the options that his officials look into?
Mr Gauke
As the hon. Member for Colchester has just muttered, it will now. My hon. Friend the Member for Worcester (Mr Walker) has put that thought on the record, and my officials will certainly take it up.
As I said, there is clearly strong feeling in the House on the subject, and rightly so. We all recognise and respect the value of the hospice movement, and we all recognise the opportunities and benefits of a greater diversity of supply of services. We agree that it would be most unfortunate if the workings of the VAT system were to get in the way of sensible progress. I hope that my comments will provide reassurance to the hon. Member for Colchester that we understand the issues that have been raised and that the Government are taking them very seriously. I hope that we can continue to work closely with the hospice movement in developing proposals.
Question put and agreed to.