Westminster Hall

Wednesday 29th June 2011 Westminster Hall

Wednesday 29 June 2011

[Mr George Howarth in the Chair]

Convention on Domestic Workers

Wednesday 29th June 2011 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Stephen Crabb.)

09:30

[Fiona Mactaggart (Slough) (Lab)]

I know that it is customary to praise the occupant of the Chair at such moments as these, Mr Howarth, but I am very pleased indeed that you are presiding over this debate on such a critical issue. My aim in calling for the debate is to hold the Government to account for their unannounced refusal earlier this month to sign the International Labour Organisation convention on domestic workers.

The convention’s introductory text describes why the protection is needed:

“domestic work continues to be undervalued and invisible and is mainly carried out by women and girls, many of whom are migrants or members of disadvantaged communities and who are particularly vulnerable to discrimination in respect of conditions of employment and of work, and to other abuses of human rights”.

It is for that reason that there have been international efforts over some years to produce a convention that covers basic human and workplace rights for people all over the world who work in other people’s homes as cleaners or cooks, or do other kinds of domestic work. The convention will entitle them to the basic labour standards that we expect for all workers.

I intend to show how, in the worst cases of abuse, some domestic workers in the UK are forced to work for no wages and are therefore basically slaves, others are subjected to sexual abuse and physical violence, some are barely fed, many have only a floor to sleep on, and many earn a pittance and work extraordinarily long hours. Some Members might feel that we did that yesterday in the House, but it is a regular occurrence for people in these circumstances.

The convention serves to give international backing to the right of domestic workers to protection against such abuses, and to entitle them to the dignity at work that every human being should expect, yet the UK Government were one of only eight Governments to abstain in the vote. Let us see what company we were in: the Governments of El Salvador, Panama, the Czech Republic, Sudan, Malaysia, Singapore and Thailand. Swaziland did not vote in favour. All other 173 Governments voted in favour of the convention, including the USA and China. All the worker representatives voted in favour, as did many employer representatives. It looks to me as if, in that list of shame—I do regard it as such—the UK is the country that is probably on its own in having a record of receiving rather than generating victims of human trafficking, a problem that is so rife in this sector. We should be especially ashamed of that.

My first question to the Minister with responsibility for employment relations is: why was the UK one of only eight countries to abstain on this vital treaty, which provides clear rights to the 100 million domestic workers around the world? This is not a small sector, and the issue is a very important human rights one. I have heard some excuses already. The UK Government representative at the ILO conference gave the following explanation:

“The United Kingdom already provides comprehensive employment and social protection to domestic workers; however, the strength of our general provisions means that it is occasionally inappropriate to treat domestic workers identically and, sadly, the Convention does not recognize this. For example, we do not consider it appropriate or practical to extend criminal, health and safety laws, including inspections, to private households employing domestic workers. It would be difficult, for instance, to hold elderly individuals employing carers to the same standards as large companies. Accordingly, the United Kingdom will be unable to ratify this Convention in the foreseeable future.”

Colleagues who have raised the issue with the Minister get exactly the same formula and exactly the same “for example,” but my belief is that this is not one example of many problems, but the only fig leaf that the Minister can hang on to. A letter from him refers to

“those few areas, such as health and safety law”,

and I hope that he will take the opportunity of this debate to tell us what the other areas are in which it is inappropriate to treat domestic workers the same.

The Minister’s claim on the grounds of health and safety law is fundamentally unfounded, because he knows, even better than I do, that health and safety is implemented incrementally. Local inspectors, if they engage with a company—I have worked for many small companies and have never been inspected by a health and safety inspector—usually offer advice notes before proceeding to criminal prosecution, unless there has been a death or a very serious injury, for example. Perhaps the Minister will therefore give specific examples of when small employers who are suspected not of putting customers’ health at risk—I accept that there are criminal prosecutions in such cases—but of putting employees at risk, have been subject to criminal prosecution and active investigation without prior advice, unless there has been a fatality or a serious injury. I do not believe that there is the rash of examples of heavy-handed health and safety implementation that the Minister implied in his letter.

In defence of the Government’s position, the spokesman continued:

“We do hope that the principles”—

that the convention enshrines—

“can help to raise standards”.

I want the Minister to tell us, therefore, how the UK Government’s position will help to maintain standards and enhance the rights and protections of domestic workers in the UK and around the world when, unlike the overwhelming majority of Governments, ours have actively chosen not to support the convention.

The statement by the UK’s representative continues:

“Within the United Kingdom, we will continue to see proportionate improvements to the social and employment protections available to domestic workers where particular problems are identified.”

I would like to know what improvements we will see because, in my view, the Government are doing precisely the opposite of improving conditions for domestic workers. On the very same day that the UK abstained in the vote, the Government announced a consultation on proposed changes to visas for the UK, including a proposal to end the domestic worker visa. That consultation includes options either to abolish the route for migrant domestic workers to enter the UK, leaving them open to being brought in by employers through informal routes in breach of immigration controls, or to restrict them to a six or 12 month non-renewable visa and remove the right for them to change employers, even if they are severely abused.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Lady on securing this very important debate. Leaving aside the fact that the coalition has failed to vote on the convention—hopefully we will hear what the Minister has to say on that—does she believe that the unions, the CBI or any other employment agencies are doing enough? Could they do a lot more?

[Fiona Mactaggart]

To my surprise, when I conclude my remarks, I am going to read a quote from the Centre for Social Justice. That is not normally a place to which I look for guidance, but when it launched its inquiry into human trafficking its director said that it was critical that all the sectors—the Government, voluntary organisations, employers and employees—worked together on a coherent strategy to deal with this modern-day form of slavery. My contention is that the Government’s position is confused—if I am kind—or actively malevolent —if I am not—and that it is not working coherently to deal with this serious and substantial human rights problem in the UK.

Removing the right for migrant domestic workers to change employer means a return to bonded labour. The visa has been recognised as the main form of protection for this group of workers, who, as has been recognised by the international convention, are especially vulnerable to severe exploitation, including slavery and trafficking for domestic servitude. Indeed, the 2009 report of the Home Affairs Committee included the statement:

“To retain the existing migrant domestic worker visa and the protection it offers to workers is the single most important issue the government can do to prevent forced labour and trafficking”

of such workers.

At a time when the Government are choosing not to participate in an international convention, they are choosing, domestically, to remove an important protection for migrant domestic workers against slavery and bondage. Removing the visa altogether will increase both trafficking via illegal routes and unlawful working, which will leave these workers believing that they are unable to contact the authorities for assistance and with fewer, if any, enforceable rights. Limiting the length of the visa makes it likely that unscrupulous employers will keep workers working for them beyond the length of the visa, again without any recourse to meaningful legal protection against severe exploitation.

The Government claim that anti-trafficking measures can replace the protections provided by the visa. I have talked to Kalayaan, whose work I praise. It is the most effective group that represents migrant domestic workers. I have known its work since about a quarter of a century ago, when it helped illegal entrants to the UK who did not know that they were illegal entrants. Together with others who work with victims of trafficking, it has produced a report that shows how ineffective the measures we already have are in practice for all victims.

The report shows that the overseas domestic worker visa is a relatively inexpensive and effective way of protecting migrant domestic workers, and that, without that legal channel, trafficking of domestic workers via illegal routes will increase. Workers who do not benefit from those protections, particularly domestic workers who enter the UK accompanying diplomats, are more likely to be in slavery than those who work in private households. Kalayaan’s figures show that seven in every 100 of the diplomatic workers they have seen were trafficked, compared with one in 1,000 migrant domestic workers in private households. That shows how effective the visa is.

Let us be clear: even when they are not trafficked, these workers are commonly subject to the most grotesque abuse and exploitation. Kalayaan has produced figures that show that two thirds of those who approached them did not have any time off—they worked seven days a week. Three quarters of them worked on call and had to be available 24 hours a day. More than half of them worked 16 or more hours a day, and 70% received a salary of £50 or less a week. I do not think that the Minister is proud of that type of exploitation, but it is a reality and the failure to sign up to the convention and to take any effective action means that it will be a more common reality in Britain.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

The hon. Lady has an excellent record on campaigning against human trafficking and slavery. How would signing the convention have helped to tackle slave labour and human trafficking in the UK? What difference would it have made to our domestic legislation?

[Fiona Mactaggart]

Signing the convention would make a difference in three ways. The first is the signal it would send to traffickers, who will otherwise believe, no doubt, that the UK is joining their infamous gang and saying that this country is open to human trafficking. We know how extensive human trafficking is in the UK and that it is more profitable than drug dealing. It is the most profitable activity for organised crime, although the field of human trafficking is unorganised as well as organised, because people as well as agencies supply domestic workers. Moreover, individual families bring domestic workers with them. It is, therefore, important that Britain sends out a signal that we are closed to that kind of abuse.

Secondly, the victims themselves would also get a signal. People who work with victims of trafficking have told me that those victims believe that they have no recourse to help and that the clear signal is that they are dependent on their owners/employers, who usually retain their passports. They do not believe that anyone can help them. They are frightened of approaching the police and, frankly, our national referral mechanism is an incompetent way for them to get help.

Thirdly, if we were signatories to the convention, the Minister would have to do something about this level of labour exploitation. Our laws apparently say, and we claim at international events, that we have fantastic working hours and protection and so on. However, 67% of the migrant domestic workers who approached Kalayaan said that they did not have any time off, were working seven days a week and worked on call for 24 hours a day, and more than half of them worked for 16 or more hours a day. The Minister may say that the UK’s position is that people ought, voluntarily, to be able to work for more than 16 hours a day, but I do not believe that those workers were working voluntarily for more than 16 hours a day when their salary was £50 or less a week. If the Minister were a signatory to the international convention, I think that he would actually have to do something about this level of labour exploitation in people’s homes.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Does the hon. Lady agree that the Government’s position appears to be that signing the convention would either make no difference or create a series of other, consequential problems? Other nations, communities and countries have supported and signed the convention, so does she also agree that the Minister should outline the difficulties that the Government think have appeared and that the rest of us are unaware of?

[Fiona Mactaggart]

The hon. Gentleman is right. I think that we all find what has happened to be depressing.

As well as being subject to labour exploitation, these workers are also subject to horrific working conditions. About half of those who approached Kalayaan did not have their own room and had to sleep on the floor. We do not expect to see those sorts of working conditions in Britain in the 21st century. Two thirds of them were not allowed out unaccompanied, and two thirds had their passport withheld. That is unlawful. I know of no prosecution, except in cases in which someone has succeeded in being declared as having been trafficked, but that applies to only a tiny minority of these poor victims. Many of them are also victims of psychological abuse.

I have tried to show the ways in which the abuse is widespread and serious. I do not want to accuse the Government of bad faith, but, having talked to people who participated in the ILO process, I was shocked at the way in which our national representative behaved during the negotiations as the agenda approached its conclusion. It suggested that our aim was not in any way to improve conditions for these vulnerable workers. Apparently, the UK often led European Union amendments to attempt to dilute the convention in areas such as working hours and occupational safety and health. I have described the working hours that migrant domestic workers frequently face. Will the Minister tell us what working hours he thinks are reasonable for workers in people’s homes? Does he think that they deserve effective, not theoretical, protection in relation to working hours?

Even when all other countries had agreed on positions, the United Kingdom cited continued objections to the consensus, for example, on the working and living conditions of children. What protections does the Minister think that children should have when working in other people’s homes? The United Kingdom stated that the final text of the convention would be unratifiable. Indeed, the Government intend not to ratify the convention and will not even vote for it, citing apparent conflicts with EU regulations. The EU bloc and all other major countries decided wholeheartedly to endorse and vote for the convention, so the United Kingdom representative was the only dissenting voice in the plenary voting session on the convention.

On 23 May, less than a month prior to the final decision, the Minister said in reply to a question asked by two hon. Members about the matter:

“The Government will seek a workable convention that can be ratified by as many countries as possible, and consequently protect vulnerable domestic workers worldwide”.—[Official Report, 23 May 2011; Vol. 528, c. 469W.]

The Minister does, therefore, recognise that an international convention can protect vulnerable domestic workers worldwide. However, having abstained on the ILO vote, can the UK Government play a positive role in encouraging other countries to ratify the convention or protecting vulnerable domestic workers worldwide? We have completely lost moral leadership. Will the Minister tell us what contribution he thinks Britain can make to international action to protect this vulnerable group of workers?

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Lady on bringing this most important matter to Westminster Hall for debate. As far as I am aware, she has not mentioned the UK Border Agency and the role that it should play in relation to the convention. Does the hon. Lady feel that the UK Border Agency should be better resourced and equipped to help those migrant workers who, in reality, are slave labour? Perhaps there is a greater role for the UK Border Agency to play in the matter.

[Fiona Mactaggart]

That organisation should be better at dealing with the issue, but I am not sure that it is easy to do so properly at borders. That is one of the challenges. There needs to be an in-country resource to which vulnerable trafficked people know they can turn for help. Their fear is that if they turn to the authorities for help, they will be outed. Unfortunately, that happens too often as those concerned are classed as illegal. For many people, that is through no fault of their own. They are here without status and they are illegal because their owner—we must not forget that we are talking about a kind of ownership and slavery—has retained their passport unlawfully and has said, “Don’t worry, I’ll sort this out,” and so on.

There needs to be an effective in-country recourse to which people in these circumstances can turn. Unfortunately, the national referral mechanism frequently fails to provide that because it does not consider its first priority to be protecting the individual. There is a laborious tick-box process and, because there is no real prospect of prosecuting someone for trafficking and getting a conviction, often the national referral mechanism will suggest that a person is not really trafficked. That is really sad.

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

Certainly we need to break the coalition’s “Upstairs, Downstairs” mindset in relation to workplace issues. On the question of people having to report the horrific circumstances in which they live, does my hon. Friend agree that the trade unions’ work on taking the evidence that was given—and I hope the Minister will arrange meetings with the trade unions to talk through the issues—is vital? If the trade unions had not been there to pick up these issues, I doubt anyone else would have done so.

[Fiona Mactaggart]

My hon. Friend is absolutely right. One of the powerful things about the ILO is that it is tripartite—it involves Governments, employers and trade unions. Where trade unions have picked up these issues, they have been brilliant. It has been difficult in some ways because trade unions have traditionally organised in big workplaces, and organising domestic workers has been a challenge for them. I had the privilege of speaking to a Nepali trade unionist who talked about how she had organised domestic workers in Nepal. Frankly, if someone can organise domestic workers in Nepal, they must be a genius organiser. It was wonderful to hear about their work in connecting to this vulnerable group of people. That was a strong piece of evidence about how trade unions can, by reaching out to people who are in these completely isolated workplaces, protect workers very well.

I want to draw my remarks to an end. I said that I would conclude by citing the Centre for Social Justice. When Gavin Poole, the executive director of that organisation, launched his very welcome inquiry into trafficking he wrote:

“Enslaved in homes across the UK are vulnerable domestic workers who want to earn money cleaning and cooking, but instead have their passport seized by their ‘owner’ and are forbidden to leave the house in which they live and work; sleeping on the kitchen floor and eating leftovers from the family meal is commonplace. We believe that whilst there is much good work going on in the UK to confront slavery, much of it led by the voluntary sector, there is a need for a strategic overview to detail how this hidden criminal activity can be defeated once and for all. For instance, it is essential that all government departments, the voluntary sector, the police and local authorities move in the same direction in order for the UK’s response to be appropriate and effective…One slave in this country is one too many, and it is time for the UK to take a lead again. I encourage people who think slavery is a thing of the past to look again, and join the CSJ as we work to help build a different future for people trapped in this tragedy.”

The Minister’s coalition Government have borrowed many ideas from the Centre for Social Justice. I hope that they do not make this one an exception because, on this matter, what we see are words going in one direction and actions going in another direction. The Minister should change his mind. Let us have another U-turn.

09:57

[Andrew Selous (South West Bedfordshire) (Con)]

I congratulate the hon. Member for Slough (Fiona Mactaggart) on securing this important debate. I, too, attended the launch of the Centre for Social Justice inquiry into modern-day slavery and human trafficking. When I first heard at that event that the United Kingdom had opted out of the convention, I must admit that I was worried. I did not know why we had done that. On the face of it, it sounded an odd thing to do and it concerned me greatly. However, I have to say to the hon. Lady and other hon. Members that, when I looked more deeply into the issue, I realised that there were reasons why the United Kingdom did so.

The hon. Lady concentrated heavily on the issue of human trafficking, which she and I have made common cause on and no doubt we will continue to do so. I point out to her that the United Kingdom has recently signed the European convention on human trafficking, and I am happy to admit that I was one of the Members who lobbied our Ministers heavily to do so because I thought it was the right thing to do. I join her in saying that slavery and human trafficking is a modern evil; it is a disgrace that it goes on in our age. Some 27 million people are in slavery around the world, not just in domestic labour, but in bonded labour in factories and in prostitution. She is right to be concerned about the issue.

From the hon. Lady’s remarks, hon. Members might have gained the impression that the ILO convention would have an impact purely on those evil employers who traffic people to be their domestic workers. In fact, the implications of the ILO convention are much wider than that. The United Kingdom already provides significant employment protection for domestic workers; in fact, in general, it makes no distinction between domestic and other workers. It is worth reminding hon. Members that domestic workers benefit from being paid the national minimum wage. They receive sick pay, paid annual leave and protection from unfair dismissal. That already exists in United Kingdom law. We do not need an ILO convention. Those are rights enshrined in law by this Parliament. What we need is greater enforcement. We need to seek out and identify employers who are behaving badly.

[Nia Griffith (Llanelli) (Lab)]

Is the hon. Gentleman saying that, if we have something that is better than an ILO convention, we should not sign up to it? That is what he seems to be implying. He is implying that, if we have something better, then we do not need it. Surely, if we have something better, it is not problematic to sign up to it.

[Andrew Selous]

If the hon. Lady will allow me to develop my argument a little further, she will understand what I am saying. I just wanted to make the point regarding the protections that all of us are rightly concerned about. I have taken to task many employers in my constituency and elsewhere who have not behaved properly towards their workers. We need to enforce the law that we already have. I am looking for reassurance from the Minister, as, I am sure, are many hon. Members. There is much in the text of the convention that he will be keen to apply. He will want to ensure that we root out evil employers who treat their domestic staff in the way described by the hon. Member for Slough. There is not one of us here, including me, who wants to see that continue.

There is much in the convention that is good, but there are one or two areas that are problematic. One problem in particular is that it applies to other groups of workers that the hon. Lady did not even mention in her remarks. She read out the list of countries that did not sign the convention, including the United Kingdom. What she did not tell us was that a number of countries did sign it, but then said that they were not going to ratify it.

The United Kingdom has, quite rightly, very high standards when it comes to international agreements. We are a country of our word. If we say that we are going to do something, we do it. We play cricket, we believe in the rules and we follow them. It is pretty dishonest of many other countries, which she did not name, to sign up to the convention and then say that they will not be ratifying this bit or that bit.

[Fiona Mactaggart]

Canada, for example, said that it would find the convention difficult to ratify. I read the whole of the report, but I did not read that any country said that they would not. They said that they would struggle to ratify it, and I think that that was simply being honest.

[Andrew Selous]

I am making a slightly different point. Some countries ratified the convention, but then said that they would not enforce it. I just think that that is dishonest. The United Kingdom could have gone along and signed, got a pat on the back, not have had the aggravation of having this debate today, and then quietly not done anything about it. I am proud that, as a country, if we say that we will do something, we do it—that is important.

[Jim Sheridan]

The hon. Gentleman is right to identify the protection that workers have in this country. Does he understand, however, the frustration of people who are frightened to raise these issues with their employer for fear of losing their jobs? What would his suggestion be for people who are not being paid the minimum wage, and who are being mistreated in the workplace? What does he suggest that they do?

[Andrew Selous]

I am not sure that the convention actually gives them any particular rights that they do not have under employment law. I suggest that they contact Kalayaan, as the hon. Member for Slough said. There needs to be an education campaign. With evil people treating domestic workers like that, we need to find every opportunity to help them to realise what rights they already have.

[Mr Davey]

Before my hon. Friend moves on, his point about the number of countries that are members of the ILO not ratifying is very important for hon. Members to understand. Only one of the 25 conventions agreed in the ILO in the 20 years up to 2006 has achieved more than 30 ratifications, although there are 183 members of the ILO. That speaks volumes for how some member states approach voting on conventions and subsequent ratification.

[Andrew Selous]

I am grateful to the Minister for giving us those points of detail, so that they are now on the record.

The workers whom the hon. Member for Slough did not mention, and the reason that I have come to speak in this debate today, are people such as child minders, carers, housekeepers, cleaners and nurses who work for many of our frail and elderly constituents. The worry is that the imposition of criminal health and safety law in people’s private homes could mean that some of our frail and elderly constituents could be forced out of their homes and into residential care. All I would say to hon. Members is that they can come here and share my passion, and the passion of the hon. Lady, against the evils of human trafficking—we are as one in this Chamber on that issue. If she looks closely, however, at the text of the convention and its implications, inspectors could come into our constituents’ private homes, examine the rooms, gadgets and layout of the house, and perhaps tell a frail, elderly lady that her home is not fit to have a carer. That lady could be forced to move into a residential home.

The Government are right to be wary of some of the unintended consequences that they believe the ILO convention could have. As I said earlier, it is important for the Government to enforce those parts of the convention that are important and that we can agree on. There is, however, another group of perhaps 250,000 or 300,000 workers who we have not heard about—child minders, carers, cleaners and housekeepers. We have not heard what the effect on their employment could be if the enforcement of this ILO convention is not got right.

[Mr Gregory Campbell]

The hon. Gentleman is outlining potential consequences for the United Kingdom. Is there any evidence of any of those problems happening in the countries that have signed the convention?

[Andrew Selous]

This is a new convention that is being signed, so neither the hon. Gentleman nor I know what will happen. I come back to my general point.

The hon. Member for Slough was good enough to say that she was not necessarily impugning the motives of the Government. I am just trying to explain, as I understand it, the rationale for the United Kingdom to hesitate. It is not because the Government, or any members of it, are in favour of employers treating their staff wrongly. On the contrary, as a Government, my hon. Friend the Minister and my hon. Friends here today will say that we hold no candle for rogue employers. We want employers to treat workers fairly and properly, but we think carefully before we sign.

The hon. Lady spoke just about human trafficking. From her remarks, we would not have thought that the convention would apply to many of our constituents who work as carers, cleaners, nurses or housekeepers for our frail and elderly constituents who need extra help. All I say to hon. Members—who I think have come to the Chamber for honourable and proper reasons, and for reasons that I think we all share—is that there are wider implications to this issue. There could be unintended consequences. I will press the Minister to ensure that we enforce the convention—we can do this ourselves, we do not need to sign all parts of it—where we think that it is right, and where we think it bears down properly and legitimately on unscrupulous employers. I believe that he will be able to give me that reassurance when he comes to reply to the debate.

[Several hon. Members]

rose—

[Mr George Howarth (in the Chair)]

Order. It may be of assistance to those present if I point out that I intend to call the Opposition Front Bencher at 10.40 am. If those who speak in the meantime could keep their remarks within that time frame, we should be able to fit everybody in.

10:09

[Jack Dromey (Birmingham, Erdington) (Lab)]

First, I pay tribute to my hon. Friend the Member for Slough (Fiona Mactaggart) for securing the debate.

May I start by telling a story? We need to bring alive the human face of what we are talking about. It is about a young Nigerian woman who was deserted by her father when she was five, went to live in Benin and came to this country as a domestic servant. She told, in her own words, of her experience:

“I would wake up at 7 am to start the work, bring the 2 children to school and the youngest at 11.30 then picked them altogether at 3.00 pm. I did the general housework while the children at school. At night, I had to wait for my employer to open the door even at midnight though she had a key. I didn’t remember any single moment that she wasn’t angry, the moment I saw her, I felt very scared already.”

She then talks about how her employer effectively held her captive:

“She took my suitcase, kept my passport. Bank card and National Insurance card and did not give my salary for 2 months which was £250 per month only. My employer shouted non stop at me and pulled me out of the house. As I had nowhere to go, I knocked and knocked the door but for three days and three nights, my employer never opened the door. It was raining and winter, I was cold, hungry and scared in the dark.”

The teacher of the two young children then advised the young woman to escape from such a form of modern-day slavery. In her words:

“I had nowhere to go so I went to the Park and slept there for nights. I was very scared but there’s nothing I could do, I was all alone in the dark, I thought of my mother and sisters. How I wish they were just near me that at least I could hug them. The sky was very dark, I could see the beasts coming out from the dark, they were wild and heartless creature living in a beautiful Rose Garden”—

she was hallucinating—

“they would come out and attack helpless life wandering around like me. I couldn’t see any hope but I prayed and prayed, this was all I could do.”

The young woman went to that admirable organisation, Kalayaan. She was then supported—I am proud to say this—by my former union, of which I was deputy general secretary; for many years, the old Transport and General Workers Union, now Unite, has championed the cause of domestic servants in this country.

I will cite figures from a union survey of hundreds of domestic servants in London, whose length of service varies, but whose answers reveal a depressing pattern. Fewer than half of them were issued with written terms and conditions of employment. Almost half received itemised payslips with their wages and, typically, they worked long hours, aggregating well beneath the national minimum wage. In terms of treatment in the home in which they are working, fewer than a third received sick pay, with the majority forced to work when they were unwell, and a third of them were injured in that workplace, their employer’s home.

[Andrew Selous]

The hon. Gentleman has read out an appalling list of employer abuses, but does he not agree that they are already illegal? He went through a list, but we have legislation dealing with almost every issue that he read out. What we need is greater enforcement and vigilance to apply the law that we already have.

[Jack Dromey]

The law is not properly enforced but nor are our Government giving leadership. What message does it send if we are in a sorry minority worldwide in not signing up to the convention? I will come to the point made by the hon. Gentleman in a moment but, if we look at the grounds cited by the Government for refusing to sign the convention, they include objections on the basis of working time and health and safety, yet the evidence is absolutely clear: most individuals concerned work unacceptably long hours for less than the minimum wage and often in unsafe conditions, given the injuries they sustain.

All of this has a depressing pattern. In relation to the convention, the Government have failed to give moral leadership—that is what is necessary—or to show determination to enforce the law. They also dragged their heels over the European Union directive on sexual trafficking, and took a minimalist approach even when finally accepting their responsibilities. My hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) is in the Chamber. He led on bringing the Gangmasters Licensing Authority into being but, sadly, the effectiveness of another organisation with an outstanding track record in combating modern-day slavery is being watered down by the Government. Now, it is the ILO convention.

When the convention was debated, one of the TUC representatives was a woman called Marissa Begonia, who is a member of Unite. She and the other worker representatives hoped that our Government would accept their responsibilities, as had, she said, virtually all the other employer and governmental representatives. She thought, “Surely, our Government must share in this consensus that there must be effective action internationally and nationally.” She was utterly dismayed that the country to which she is devoted failed to sign up.

In conclusion, it is utterly extraordinary that our Government, led by our Prime Minister, who quite rightly last week told China that it needed to accept its human rights responsibilities, did not sign up to the ILO convention, but China, America and virtually every other Government in the world did. We are in a sorry minority of those failing to accept their responsibilities. We are talking about desperate circumstances facing good women, of whom I have met many over the years. I remember a particular meeting, with 30 of them. They were people with bright eyes and hope on their faces, who had come here often to support their families or villages back home. They thought that coming to and working in this country would be a brave new world, but they came here and were treated utterly shamefully. This Government and this House should be on the side of such people. What this Government have done is to abrogate completely their moral responsibility.

10:16

[Grahame M. Morris (Easington) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Howarth. On the record, I thank my hon. Friend the Member for Slough (Fiona Mactaggart) for securing this important debate on Government policy on the ILO convention on domestic workers.

Many debates in this Chamber, such as on the issue we are discussing, might be lightly reported. Nevertheless, the Government decision on the ILO convention has significant consequences which will reverberate across the globe. It is significant because of what is being said to some of the most vulnerable people throughout the world as well as to potential traffickers. It leaves a stain on Britain’s reputation as an advocate of basic human rights, casting a cloud over our democratic values.

So important is the decision, that the Government have been accused by many commentators of betraying Britain’s 200-year history of anti-slavery and of isolating itself on the margins of the world stage. By abstaining from voting on the ILO convention on domestic workers, Britain has lined itself up alongside countries where workers’ rights are routinely infringed. Press reports state that the Department for Business, Innovation and Skills does not intend to ratify the convention “for the foreseeable future”, ruling out the application of the convention to British workers.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Does my hon. Friend share my concern that the Government’s position seems to be at odds with their international development policies, which are stated to be working towards improving the support for and the working rights of marginalised workers? Britain is therefore put in a difficult position when trying to speak on the world stage on such issues.

[Grahame M. Morris]

My hon. Friend makes a good point well. I completely agree with her.

The decision to abstain has two damaging effects. First, it will leave domestic workers in the UK, namely nannies, cooks, cleaners and the like, vulnerable to the risks prevalent for them. Secondly, it will undermine the UK’s standing and moral leadership on the international stage. For countries whose citizens, including domestic workers, have far fewer legal protections, Britain has abdicated its position as their champion. By neglecting their duty in this matter, the UK Government have tarnished their international reputation. People would be astonished to learn that workers who live with their employers in the UK and are treated as family are not covered by the working time or health and safety legislation, and are not entitled to the minimum wage. In fact, the ILO convention would have extended to those in domestic employment only very basic labour rights that are available to all workers—rights such as reasonable hours of work, weekly rest of at least 24 consecutive hours, a limit on in-kind payments, clear information on terms and conditions of employment, and some of the most basic rights of workers, including freedom of association, and the right to collective bargaining. Those are not extreme demands; they are moderate requirements.

ILO estimates of the number of domestic workers worldwide put the minimum at 53 million with the likelihood of the true figure exceeding 100 million. Domestic workers are often hidden behind closed doors, so they are all too often unregistered, and that higher estimate may be conservative. The ILO’s Director-General, Juan Somavia, said:

“Bringing the domestic workers into the fold of our values is a strong move, for them and for all workers who aspire to decent work”.

Unfortunately, that modest move was too strong for our Government.

The improvement on gender equality has also taken a hit from the British Government’s neglect because, as my hon. Friends have said, many of those workers are young women and girls. The ILO document “Questions and Answers on the Convention Concerning Decent Work for Domestic Workers” states unequivocally:

“The impact is tremendous. The mere fact of stating unambiguously that domestic work is work is a very important step toward gender equality in the world of work, because domestic work mainly employs women.”

The Government’s position has been weak and disingenuous. They have claimed that domestic workers in this country are covered by protective laws anyway. The truth is that they are not treated like workers in any way at all. Many are poorly treated, as we have heard, and are paid nowhere near the minimum wage. Some are effectively prisoners in the homes where they work, and rely on their work for their home, shelter, food and livelihood.

[Andrew Selous]

On the minimum wage, does the hon. Gentleman agree that we do not need to sign the ILO convention because we already have legislation on that? It is already illegal not to pay the minimum wage, and rightly so.

[Grahame M. Morris]

My hon. Friends have indicated that many domestic workers feel intimidated, and are unwilling to resort to traditional means. I do not accept the hon. Gentleman’s assertion. Many of his arguments were deployed against the UK Government signing up to the convention on human trafficking, and in relation to basic health and safety. I do not accept that domestic workers are already covered by effective legislation.

[Jim Sheridan]

Does my hon. Friend share my sadness at the suggestion of the hon. Member for South West Bedfordshire (Andrew Selous) that if the ILO convention were signed, old women would have their houses raided by inspectors to make sure that the working conditions and their houses are suitable for people to work in? That is ridiculous.

[Grahame M. Morris]

I am grateful for my hon. Friend’s intervention. The point made by the hon. Gentleman is a scare tactic. I remind hon. Members that basic health and safety regulations apply in the workplace, so it is nonsense to suggest that signing up to the ILO convention would somehow disadvantage the groups identified.

It is appalling that the CBI voted against the convention, but no more so than the fact that the British Government abstained. The only way for the Government to restore their credibility, not just here in the UK, but internationally, is to lay out their plan to ratify the convention for the benefit of domestic workers in Britain. I am aware that the TUC has set up a campaign for ratification in alliance with domestic workers and several charities and non-governmental organisations. I hope that hon. Members will take note of that, and that those who follow our proceedings will support it.

I know that other hon. Members want to participate, but before finishing I want to touch on one of the progressive moves that set the ball rolling on improving rights, particularly for migrant domestic workers. The visa for domestic workers was introduced in 1998 for the specific purpose of protecting migrant domestic workers from abuse and exploitation. It recognised their vulnerable position in the under-regulated work environment, their isolation from co-workers, and their absolute dependency on their employer for finance, accommodation, immigration status, and information about their general rights.

Signing the convention would be a first step in putting the employment relationship, visa demands and working choices in the hands of migrants to some degree. Migrant domestic workers could, for the first time, enforce their rights. I hope that the Minister will not simply read out the line on the Government’s absolutely unacceptable position. Instead, I hope that he will reflect on what has been said today, and that he will take steps to rectify the damage that has been done to our international reputation and standing on workers’ rights, taking the cause of domestic workers backwards and aligning the British people with some of the most deplorable regimes, which have been labelled an axis of evil—I do not know whether that is a fair assessment—and which would make many decent people in the United Kingdom ashamed.

Will the Minister review the Government’s position, and dissociate themselves from the CBI on this issue? Will he also lay out a plan for Britain to ratify and abide by this internationally backed convention?

10:27

[Nia Griffith (Llanelli) (Lab)]

I congratulate my hon. Friend the Member for Slough (Fiona Mactaggart) on securing the debate. She has a long track record of vigorous campaigning on this and related issues. She has explained the reason for the debate: to call the Government to account for their decision to abstain on the vote a fortnight ago on the International Labour Organisation’s convention on domestic workers. Detailed preparation of the ILO’s landmark convention continued for some time—indeed, since last year—with opportunities for countries to contribute to the work in progress in readiness for the vote on the convention at this year’s ILO international labour conference in Geneva some two weeks ago on 16 June.

Many people were taken aback to discover that although 173 Governments voted for the convention and only one, the Swaziland Government, voted against, the UK was one of eight countries that abstained from voting for the ILO’s convention on domestic workers. It is even more surprising that given the recent media reports about abuses in other countries and inexcusable treatment of domestic workers, the UK has, in abstaining, aligned itself with El Salvador, Malaysia, Panama, Singapore, Thailand, the Czech Republic and Sudan. The USA Government voted for the convention, and with the exception of the Czech Republic all EU countries voted for it. As we know from our previous discussions on the European working time directive, there is a plethora of different opt-out arrangements in many EU countries, but that has not prevented them from signing up.

Only last week, The Times reported on the

“abusive conditions endured by domestic workers...and their powerlessness”.

I believe that the Government have, by remaining silent, condoned that. We have heard horror stories today, and it is now clear that our Government are sending out completely the wrong message to millions of domestic workers around the world. When trying to help and protect them, they are often among some of the hardest to reach, particularly if they have recently arrived from abroad, live in, and have little knowledge of where to find help. Since 1998, following legislation by the then Labour Government, the UK has offered the overseas domestic worker visa, which provides workers with the possibility of independence from their employers. Will the Minister tell the Chamber what plans the Government have for the future of the overseas domestic worker visa, and whether there is any truth in the suggestion that they are looking to scrap it? I remind the Minister that the visa was introduced in 1998 with cross-party support, and that scrapping it would be a backwards step.

In 2008, the Labour Government set up the vulnerable worker enforcement forum, recognising that there was still much to be done to tackle hidden exploitation, and that vulnerable workers need an awareness of their employment rights and to know what to do if they suspect that those rights are being breached. My right hon. Friend the Member for Wolverhampton South East (Mr McFadden), then the Minister responsible for employment relations, set up and chaired a fair employment enforcement board. Campaigns were run to raise awareness of employment rights and encourage the reporting of abuses. Some £6 million of extra funding was provided to supply information about workers’ rights. As the hon. Member for South West Bedfordshire (Andrew Selous) suggested, that educational role is important and we must get information about workers’ rights to the relevant people. That campaign included outreach work using buses, but domestic workers are particularly difficult to reach, and both the carrot and the stick are important. We need education, but also the Gangmasters (Licensing) Act 2004, the temporary and agency workers directive, and now the domestic workers convention.

The ILO stated that

“this instrument sends a very strong political signal.”

By not backing the convention, the Government also send a strong political message, but of a different order. I am disappointed with the decision, and hope that the Minister will explain what he is doing to ensure that Britain protects its work force, no matter what jobs they do.

Let us look at some of the detail in the convention. Before the meeting in Geneva, the UK Government expressed concerns about three areas of the draft text: first, the articles covering working time; secondly, the potential application of health and safety regulations to private dwellings where domestic workers are employed; and thirdly, those sections of the convention that call for greater regulation of private employment agencies.

Considerable preparation went into the drafting of the convention, and if we look at how it is worded, we see that its articles refer repeatedly to bringing the law concerning domestic workers into line with existing national laws for the rest of the work force. For example, article 10 states:

“Each Member shall take measures towards ensuring…normal hours of work, overtime compensation, periods of daily and weekly rest and paid annual leave,”

which should not be less favourable than those provided for workers generally in accordance with national laws and regulations. In other words, as would be expected for an agreement that is prepared for endorsement by countries across the globe that have different laws and traditions, the convention allows countries to refer back to their own national laws and regulations. Legislation already in place for workers generally can be extended to domestic workers.

[Mr Davey]

Will the hon. Lady explain why the previous Government never extended the working time directive to domestic workers?

[Nia Griffith]

We could have an entire debate on the working time directive, but I am not going to get too distracted by that. I remind the Minister that we had an interesting discussion the other day in a European Committee, and it became apparent that most of the 27 countries in the EU operate various types of opt-out from the working time directive. Our original opt-out has been copied in many different ways, but each country has its own ideas. It is recognised that we need a full and frank discussion about what happens next; the picture across the EU has been a little confused and when we look at our domestic law, we need to ask what is appropriate, including for domestic workers. It is clearly not appropriate for people to work seven days a week, 24 hours day. We need to look at best practice and ensure that we follow that type of model.

[Jim Sheridan]

My hon. Friend should not be so modest. The Leader of the Opposition has said clearly that mistakes were made by the previous Government that we need to rectify. Although we recognise that, it is not an excuse for the current Government to bring in legislation.

[Nia Griffith]

Absolutely, particularly on issues that have taken years of discussion to get to our current position.

Let us return to how the articles in the convention are worded. They state that we should try to make national laws that apply to the general work force apply to domestic workers. That is not easy because domestic workers are often the hardest to reach. Nevertheless, we need to educate people and use the stick as well as the carrot.

The Government have said that they

“do not consider it appropriate or practical to extend criminal, health and safety laws, including inspections, to private households employing domestic workers. It would be difficult, for instance, to hold elderly individuals employing carers to the same standards as large companies.”

Let me remind the Minister of two parts of the convention: article 13 and the relevant recommendation. Article 13 states that each member should take appropriate action,

“with due regard for the specific characteristics of domestic work”.

It is clear that the convention views work undertaken by corporations and that carried out in people’s homes as different, and does not demand that they be treated similarly.

[Mr Davey]

The hon. Lady argues that the convention would not require health and safety legislation to be extended to homes where there are domestic workers. Is that her position? It is certainly not the legal advice we have received.

[Nia Griffith]

It is certainly not my position. Article 13 states that appropriate measures should be taken,

“with due regard for the specific characteristics of domestic work”.

We all know the benefits of health and safety provisions. For example, when students come to do work experience with me I receive a form from the school, asking about fire exits and smoke alarms. Those are sensible and routine questions that every office should be able to answer appropriately. Exactly the same should be the case with domestic workers. We would not want people to work in circumstances that are not safe. We now have higher standards than we used to have—thank goodness; those standards have considerably reduced the number of accidents at work. The convention states that although what is appropriate in a home may be different from what is appropriate in a corporation, that does not mean that protection should not exist.

[Mr Davey]

Is it therefore the Labour party’s position that the Health and Safety at Work, etc. Health and Safety at Work, etc. Act 1974 should be extended to households where there are domestic workers?

[Nia Griffith]

It is appropriate to endorse what is in the convention. The convention seeks to sort the issue out and find what is suitable.

[Fiona Mactaggart]

The Health and Safety at Works etc. Act 1974 does apply to domestic workers. The only exception relates to criminal legal sanctions. We know that in practice the Act is already enforced differently for small employers and large employers. Therefore, in response to the hon. Member for South West Bedfordshire (Andrew Selous), it would be perfectly proper for the Act to be imposed more lightly in a domestic workplace with only one worker than it would be in a big workplace with dangerous machinery and many workers. That is already the case in Britain. My view is that the Government are trumpeting an excuse.

[Nia Griffith]

I thank my hon. Friend for her excellent explanation. Let us move on to recommendation 20, which states:

“Members should consider additional measures to ensure the effective protection of migrant domestic workers’ rights, such as…providing for a system of visits to households in which migrant domestic workers will be employed”.

The emphasis in the recommendation is on looking into and trying to find out the best way to deal with the matter. What has the Minister done, for example, to find out what happens in Finland or Ireland? What has he done to find out what happens in other countries, so that we can learn from those models, look into the best ways of dealing with the matter—best practice—and achieve improvements in standards?

The Government’s actions so far send a stark message to the world. By not supporting the convention, the Government are sending a bleak message to domestic workers not only in the UK, but throughout the world—perhaps 100 million people, who in some countries constitute up to 12% of the work force. The UK still commands considerable respect in the world, but at a time when the convention has been supported by 173 countries, including the US and almost all of the EU bloc, the Government seem to be suggesting that they will not stand up for the idea of extending to domestic workers the same basic rights as those enjoyed by workers throughout the economy. That is sending a very gloomy message to the world.

I would like to ask the Minister a few questions before I finish. Will he explain exactly why the UK chose to abstain from voting for the convention? It would have formed the basis for the UK to improve protection for domestic workers in the UK and would have shown leadership to the many countries in the world that still respect the UK and whose Governments may be trying to ratify the convention in very challenging circumstances.

Media reports quoted the Minister’s Department as saying that the Government would not be ratifying the convention to bind the UK by its rules “for the foreseeable future” and so they felt that it would be wrong to vote for it at all, but why do they not intend to ratify it for the foreseeable future? Is it just a low priority? Is it that no one in the Government wants to work out how existing UK law can be extended to cover domestic workers? That is what the convention is about—extending existing UK law. After all the times that hon. Members on both sides of the House have raised the related issue of the EU directive on human trafficking, are the Government still not aware of how much concern there is about this issue?

Will the Minister explain why a spokesperson for his Department is quoted in the press as saying that the Government “strongly support” the principles enshrined in the convention and that the UK

“already provides comprehensive employment and social protections to domestic workers”

when there is clearly plenty of evidence to show that, in reality, domestic workers do not always enjoy such rights and benefits?

What is the real reason behind the Government’s decision? Is it a complete phobia of anything that might look like a regulation, and the hollow-sounding promise on regulation? This year, it has been a case not of one in, one out, but of 53 in and three out. Are the Government succumbing to the constant demands from their Back Benchers, the hon. Members for Shipley (Philip Davies) and for Christchurch (Mr Chope), who regularly propose scrapping the minimum wage and heap ridicule on measures to protect workers from exploitation? I sincerely hope not.

Now that the UK has not voted for the convention, what do the Government intend to do to improve the rights of domestic workers in the UK? Having abstained in the ILO vote, how can the UK Government play a positive role in encouraging other countries to ratify the convention? Can the Minister confirm whether it is true that in the negotiations, the UK also asked to be officially disassociated from an agreed EU position on encouraging countries to consider adopting voluntary codes to cover incidents of abuse of domestic workers by their diplomats while posted abroad? I ask that in the light of a report this week in The Guardian, which states:

“The US state department has expressed concern about the abuse of domestic staff working in foreign embassies in London, saying repeated allegations of mistreatment have not been addressed by the government.”

That is a very serious accusation indeed.

If the legislation and the reality are already better than what is required by the convention, what is the problem with signing up to it? If we are saying that our existing laws are too good to be extended to domestic workers, I find that disgraceful. If we are not yet in a position to meet all the demands of the convention, surely it would be an aspiration to work towards and we should look towards ratifying it. Will the Minister explain why the Government have chosen to put us in an extremely embarrassing position in the world by not signing up, sending out a very negative message to workers both in this country and abroad?

10:44

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

I congratulate the hon. Member for Slough South East (Fiona Mactaggart) on securing a debate on this important subject. She spent quite a lot of time talking about trafficking, and I understand her campaigning role on that and her record, but we do want to talk about the text of the convention, so I thank her for the opportunity to explain why the Government abstained on the vote on the convention while strongly supporting its principles.

A key factor in understanding our position is recognition of how the convention would or would not have changed our domestic laws for domestic workers. In the UK, we already have a legal framework of basic employment rights and social protections for employees and workers, including domestic workers. So, like other workers, most domestic workers benefit from the national minimum wage, statutory sick pay, paid annual leave and protection from discrimination and unfair dismissal, as well as other protections. My hon. Friend the Member for South West Bedfordshire (Andrew Selous) was completely right about that: the key question is enforcement.

[Fiona Mactaggart]

The Minister says that most domestic workers benefit from paid annual leave.

[Andrew Selous]

They should.

[Fiona Mactaggart]

I am sure that they should. I want to know how the Minister knows that most actually do, because in my experience, it is very likely that most do not. I do not know how he knows that most do.

[Mr Davey]

This is a question of the law. The law says that those workers are entitled. Signing the convention would have made no difference to that. The question that my hon. Friend the Member for South West Bedfordshire raised was about enforcement. The hon. Lady should understand that. It is about enforcement.

[Nia Griffith]

If the issue is about enforcement and we already have existing legislation, what is the problem with signing up to the convention? Of course we need to improve our enforcement. We need to do that in many areas. However, if the legislation is sufficient, in the Minister’s view, to meet the convention, what is the difficulty?

[Mr Davey]

Of course I will come to that point as it is central to my speech, but let me say for the record that I am undertaking a review of enforcement and compliance rights in the UK to try to improve enforcement in the UK. I hope that my hon. Friend the Member for South West Bedfordshire would welcome that.

Domestic workers have the same access as other workers to mechanisms for enforcing their rights. The national minimum wage and statutory sick pay, for example, are enforced by Her Majesty’s Revenue and Customs, and those and other rights can also be enforced by individual workers, if necessary by taking a case to an employment tribunal.

If the domestic worker is an agency worker, they have additional protections under the Conduct of Employment Agencies and Employment Businesses Regulations 2003. Those regulations prohibit agencies from charging work-finding fees; require agencies to pay workers for all the hours worked; and provide other protections. They are enforced by my Department’s employment agency standards inspectorate, which responds to complaints and, additionally, carries out a programme of proactive, risk-based inspection.

The pay and work rights helpline, set up by the previous Government, provides an accessible single point of contact for all workers—and, indeed, employers—seeking advice about or wanting to report abuses. It covers basic employment rights, such as the national minimum wage, working hour limits and the special regulations applying to agency workers. A translation service is provided in more than 100 languages for those who need it.

As required by the convention, our child employment regulations are robust. Children under the minimum school leaving age can only do light work, and there are strict rules on when and for how many hours children can work.

For egregious offences at the serious, criminal end of the spectrum, the UK has recently introduced a new offence of holding someone in slavery or servitude or requiring a person to perform forced or compulsory labour. The offence builds on existing statute and will in some circumstances make prosecutions easier.

Signing the convention would have made no difference to the measures that we have in the UK. It would have made no difference to stopping slavery or human trafficking. Why? Because we already, rightly, have some of the strongest laws in this area. There is no question, then, about the Government’s commitment to the principles behind the convention. In almost all respects, our laws already match the requirements set out in the convention.

I come now to the question posed by the hon. Member for Llanelli (Nia Griffith): if we already comply with almost all of the convention, why did we abstain? The main sticking point for us is the convention’s approach to health and safety in private households. The wording does not provide sufficient flexibility to meet the UK’s long-established approach. Nor does it match our principles of proportionate regulation based on risk. Indeed, because it is inflexible and disproportionate, it could, if implemented, have damaged the interests of vulnerable people. I am sure that the hon. Member for Slough South East would not want that.

[Fiona Mactaggart]

I am not Slough South East; I am all of Slough.

[Mr Davey]

I apologise to the hon. Lady.

Let me explain the position in detail. Article 13 of the convention requires each member to take

“in accordance with national laws, regulations and practice, effective measures, with due regard for the specific characteristics of domestic work, to ensure the occupational safety and health of domestic workers.”

For the UK, that requirement to take effective measures would, in practice, mean extending the Health and Safety at Work, etc. Act 1974 to private households employing domestic workers. I ask colleagues to consider what that would entail.

[Fiona Mactaggart]

As I understand it, the Act does apply to private domestic workers, with the exception of section 51, which provides a specific exclusion in relation to criminal prosecution. It is not usual for people in a small workplace to go to criminal prosecution without previously having been advised by inspectors, unless there has been a death or serious injury. As I said in my speech, perhaps the Minister can give us an example of where criminal prosecution has taken place in a small workplace.

[Mr Davey]

I have to tell the hon. Lady that domestic workers are excluded from part I of the Act, which covers health, safety and welfare in connection with work and the control of things such as dangerous substances, and which includes some general duties. There are protections under civil law, and I will come to them in a second, but I am afraid that signing the convention would have meant extending the Act to private households employing domestic workers.

Anyone employing a domestic worker such as a cleaner, a home help, a child minder, a carer for an elderly or disabled person, a gardener, a nanny or an au pair—it is a long list—would have been covered by a range of health and safety regulations, and, in particular, by the 1974 Act. Hon. Members might ask what is wrong with that, but they should consider the implications. The Act would place specific duties on such employers to ensure the health, safety and welfare of domestic workers in so far as that was reasonably practicable, and individual householders would have to familiarise themselves with the law. According to the Act, they would need to consider the information, training, instruction and supervision that their helper needed. They would need to assess the helper’s tasks and any risks from equipment and substances to which the helper might be exposed. The householder would also have to carry out a wide range of risk assessments, which would be different for each home.

The sanctions for non-compliance would be criminal. Householders failing to comply with the law would be subject to criminal penalties providing for unlimited fines and imprisonment for up to two years.

[Nia Griffith]

Does the Minister not think that it would be highly desirable for the workplace to be made safe? Does he really want people to be exposed to all sorts of dangers, particularly when a large number of accidents happen in the home? What is his objection to strengthening the health and safety situation of domestic workers?

[Mr Davey]

I will come to the evidence for not applying the provisions in a second, but if I may, I will continue my remarks, because I want to answer the hon. Lady’s questions.

The Act would place a serious regulatory burden on individuals and create a fear of criminal liabilities if things go wrong. That speaks to the point made by the hon. Member for Slough, who says that there are not many prosecutions of small and medium-sized enterprises and that lots of advice is provided before such things happen. We could, of course, contest that, but what she fails to recognise is the fear of prosecutions, so let us look at the implications of that.

There would be new and significant disincentives to employing domestic workers in a private arrangement. Individuals may cease to employ the additional help they need, which could have serious social consequences. Elderly or disabled individuals, for example, could be deterred by the increased burden they would face from employing carers in their homes, potentially forcing them into residential care.

I assume that hon. Members, like me, visit constituents who are unable to come to their advice surgeries. I have two advice surgeries a week, but I also go to the homes of disabled and elderly people who are not able to come to see me. I have gone into many constituents’ homes, and my understanding of the health and safety legislation is that those homes would have to be significantly improved and changed. I do not believe that the people I visit would welcome inspections of their homes, which would be very intrusive.

[Jim Sheridan]

The Minister is a decent man, and I do not believe that he is reading out the script he has been given to scare people, but does he honestly agree with the hon. Member for South West Bedfordshire (Andrew Selous) that old women’s houses will be raided to ensure they comply with health and safety provisions? Is he seriously suggesting that will happen?

[Mr Davey]

I am not suggesting that, because health and safety inspectors do not raid people’s homes.

I ask colleagues to reflect carefully on the legal implications of the position they are taking. The convention would undermine the Government’s policy to support independent living, which includes offering personal budgets in the form of direct payments to people receiving state-funded care. In line with Government policy, social care is increasingly being delivered in the recipient’s own home, and more than 150,000 people are currently working as social care personal assistants in private homes. That policy was begun by the previous Government, and we support it.

[Andrew Selous]

I am glad that my hon. Friend has mentioned the personalisation agenda. Does he agree that many of our vulnerable constituents who employ people are quite worried about their obligations as employers anyway? They are not evil people, and they just want their care, but they are quite worried about the implications of being an employer in their own homes.

[Mr Davey]

Indeed. That is why previous Governments, understandably, did not choose to extend domestic law in the way proposed in the convention; they had the choice, but they did not do that.

[Nia Griffith]

Is the Minister not aware of the many local authorities and private care companies that provide care? Their arrangements could be replicated in the independent care packages.

[Mr Davey]

Of course, those would be covered if we went down this route.

What would be the benefit of extending health and safety laws to individuals and increasing the scope of our criminal regime? Why would we want to give health and safety inspectors a new right to visit millions of homes? Why would we want to pass quite an intrusive law, which the previous Government baulked at? The evidence of the need for such a change is weak, to say the least. Despite what the hon. Member for Llanelli said, households are low risk in health and safety terms. If there is any increased vulnerability for domestic workers, it arises not from health and safety concerns, but from issues such as their treatment by their employers, which is already covered in other legislation.

Of course, we could have voted for the convention and then not ratified it.

[Fiona Mactaggart]

Before the hon. Gentleman leaves health and safety, will he answer the first question I asked him? I asked for a specific example of a small employer, none of the employees of which had died and which was not suspected of putting customers at risk, but which had been prosecuted.

[Mr Davey]

I do not have such an example at my fingertips. I will write to the hon. Lady. However, she fails to address the fear that introducing these provisions would engender, which my hon. Friend the Member for South West Bedfordshire addressed.

If we had voted for the convention and then not ratified it, what would that have said about the UK? We have heard a lot about our reputation, but other ILO members undermine the ILO by not going ahead and ratifying conventions they have voted for, which is no good for the ILO or labour rights. In the negotiations, we tried to come up with a convention that we could have voted for and ratified—that is what we want. We worked very hard on that and we supported the development of the convention because we see it as important. We rightly meet our legal obligations and do not run away from them.

That is a conventional approach to the ILO, and it is one the previous Government took. Let me explain that by giving some examples. The previous Government abstained in an ILO vote on the maternity protection convention in 2000. I think they would have supported the convention, but it no doubt had some burdensome implications in domestic law. The previous Government also abstained in the 2006 vote on the ILO’s recommendations on employment relationships. That was probably not because they were against the principles, but because they realised that the provisions would have an impact on UK legislation. In other words, we are taking exactly the same approach as the previous Government.

During the debate, it has been suggested that we are letting the rest of the world down and sending a signal that we do not care about these issues, which is one of the more outrageous suggestions I have heard, given the records of the previous Government and this Government. This Government are leading the world in taking practical action to combat human trafficking and to help exploited workers around the globe. Members should consider the Department for International Development’s funding for the Salvation Army anti-child trafficking project in Malawi or its new programme aimed at reducing human trafficking in south Asia, which focuses on helping women and girl domestic workers and garment sector workers. Members should also consider our support for other Governments’ anti-trafficking efforts, such as the Bangladesh police reform project, which established a specialised police unit to combat human trafficking. Above all, Members should consider the increase in the overseas aid budget, which comes when other budgets at home are being cut.

I therefore totally reject the suggestion that we are not showing leadership in the fight against some of the awful crimes we have heard about. We are showing leadership here, and we showed leadership on the convention. We regret that we were unable to vote for it, because others were unable to give member states more flexibility in a sensible and measured way.

Kirkstall Forge Railway Station

Wednesday 29th June 2011 Westminster Hall

11:00

[Rachel Reeves (Leeds West) (Lab)]

I am pleased to have secured this debate, which means an awful lot to my constituency. The prospects for Kirkstall Forge are hugely important to local residents, who have been waiting a long time for them to advance. My predecessor worked hard on the issue, and I too have devoted a lot of time to it as the Member of Parliament for Leeds West. It would be reassuring to hear some answers about the future of Kirkstall Forge today.

If you will indulge me slightly, Mr Howarth, I want to explain some of the history of the site, which gives an important context to the issues I want to raise. The site lies between the A65 and the river Aire, one of the major routes in and out of Leeds. The A65 runs along the valley floor, past the remains of the Cistercian abbey. Hon. Members may have seen the production “Frankenstein’s Wedding” that took place there, on the BBC recently. It is one of the best preserved abbeys in the country, and as well as playing host to fictional weddings it is the home of an annual festival, which will take place next week, live concerts, plays and, recently, a farmers market.

The monks of the abbey commenced work on the site of the forge more than 800 years ago, and until its closure at the turn of the century it could lay claim to being the longest operating forge in the country. The monks powered their forge through a mill race diverted from the river, which remains today. More recently the forge was turned to heavy industrial use, seizing the opportunities of first rail and then road transport to manufacture axles for trains and motor vehicles. The forge employed an army of workers, who were housed in Hawksworth wood, just up the hill from the site. Its economic success depended on a stop on a railway line at the forge site.

Now that has all gone. The high wall that once hid a hive of activity is now a barrier between the community and derelict space. Since the forge closed it has been purchased by a developer, laying the groundwork for a major project that could mean the forge being brought back into the heart of the Kirkstall community. The plans for Kirskstall Forge are exciting. They offer the prospect of more than 2,000 jobs and more than 1,000 new homes—regeneration for an area much in need of investment. Crucially, however, they also offer improved sustainable transport into Leeds city centre in the east and Bradford to the west, because a new station is integral to the plans. That is why this debate falls within the remit of the Department for Transport.

High-speed rail and the southern entrance to Leeds city station are welcome developments in transport infrastructure in our city. I know that they will bring Leeds significant benefits. However, the project I am outlining, incorporating improvements to stations and the development of two stations—at Kirkstall Forge and at Apperley Bridge—is part of the Leeds rail growth package. When decisions were made about investment in major transport projects in October, there were three categories: supported projects, unsupported projects and a rather more ambiguous development pool in the middle. Kirkstall Forge fell into that uncertain hinterland, where 22 schemes must find extra money if they are to be successful. Those schemes have sat in limbo since then.

The Secretary of State for Transport told the House that schemes in the development pool would be

“challenged…to consider the scope of the scheme, its cost, lower-cost alternatives and their ability to contribute more locally.”—[Official Report, 26 October 2010; Vol. 517, c. 179.]

The Secretary of State also referred to a further 34 schemes that would be considered as candidates for the development pool, but which had not quite made it that far. The Government have invited improved funding offers, and indicated that final decisions about support for schemes would be made by the end of 2011. I would appreciate it if the Minister would today confirm the timetable for making those decisions, so that we can have some clarity about the process, and tell us the number of schemes in the development pool at the moment, their combined value and the money that is likely to be available for them.

People in Leeds West want to know what is happening to the forge site, and developers, councillors and local transport officials need to start putting plans in place.

[Stuart Andrew (Pudsey) (Con)]

I congratulate the hon. Lady on securing this important debate. Does she agree that the benefits are far greater than just for the site itself? The massive developments in my constituency, in Aireborough and Pudsey, could also benefit enormously.

[Rachel Reeves]

The hon. Gentleman is correct. He has been a big supporter of the development, and I appreciate that. The benefits of the Kirkstall Forge site, including the jobs and housing that it will bring, will have an effect across Leeds but also, I believe, as far away as Bradford.

First and foremost among the scheme’s benefits are its transport benefits. The forge site used to depend on a rail halt to distribute axles around the country. Now, the development that is planned depends on a rapid link into Leeds city centre, and to Bradford. The construction of a station at that point would offer journeys of five minutes into Leeds city centre, a vast improvement on the prospects when travelling by bus or car on the busy A65, which can take as long as 30 minutes, as I know well. The new station would be linked to both Kirkstall and Bramley, and would encourage more sustainable transport for both those communities. Does the Minister agree that we should be encouraging a shift away from cars, particularly in busy urban areas where traffic jams are a common problem, with big environmental, business and economic costs?

As well as offering sustainable, efficient transport, the Kirkstall Forge development promises major opportunities for Kirkstall. It would lever in £350 million of investment in the area, and support 2,400 jobs, in construction and then on site permanently in offices, shops and leisure venues. That is hugely important to an area that has for a long time missed out. Average earnings in my constituency are £18,000—two thirds of the national average—and unemployment stands substantially above the national average. The Hawksworth Wood estate, initially built to house workers on the forge site, now has no major local employer, and residents look to the city centre for work, when it exists. The take-up of free school meals at the local primary school runs at 60% —among the highest in the country. Does the Minister recognise that the scheme could bring multi-million pound investment to an area much in need of regeneration, and will he take that into account when considering the funding allocation for the scheme?

Housing is also a big issue. The proposed development includes living space for 2,600 people. It would make use of brownfield land that is currently lying empty to develop houses that would not impinge on Leeds’s green belt, or demand that residents use cars to get to or from work. From my constituency surgeries I know about the huge demand in that part of Leeds for social housing, but also for housing to buy and rent in the private sector. The pressure on developments just a couple of miles away from my constituency in the green belt is also well known to the hon. Member for Pudsey (Stuart Andrew) and other MPs in the area.

When I have raised the issue in the past, I have been told that local support is important. In a letter to me, the Minister of State said:

“We are happy to support the re-opening of new railway stations where the relevant Passenger Transport Executive believes that this is the best way to meet local transport needs and where the scheme demonstrates value for money and is affordable.”

I can confirm, as I have done in the past, the support of Metro, the West Yorkshire passenger transport executive. Leeds city council, local councillors and MPs of all parties across Leeds support the plans, as do the chamber of commerce and local businesses. Crucially, the Minister also knows that the development has strong support in the local community: I have received a significant number of letters and e-mails in support of the project, including from residents’ associations and community groups. I know that many residents will be watching proceedings today or following them later in Hansard to see where we stand. Will the Minister recognise those factors in the decision-making process?

I accept that developments need to be affordable; and cost savings have been made to the scheme. Metro has found approximately 20% in savings through changes to the scheme, and it has also been in discussion with the developers to increase their contribution to the station. At programme entry, the developer had pledged £4 million towards the overall £23 million cost of the Leeds rail growth package. That in itself is a considerable investment on top of the wider investment in the Kirkstall Forge site. The funding requested from the Department for Transport will have fallen by more than 30% since the development pool was initiated, and the station will now cost the Department between £12.3 million and £12.9 million. The local contribution will be over £5.5 million, or more than 25% of the total cost of the project, reflecting an additional £2.6 million investment, subject to agreement.

Will the Minister outline the extent of private contributions to other schemes in the development pool, in comparison with contributions from the private sector and locally for the Leeds rail growth package and the Kirkstall Forge development? Does he believe that this extensive contribution reflects the developer’s commitment to the scheme, as well as the commitment of Leeds city council and the passenger transport executive?

Kirkstall Forge can again play an active part in the life of the local community, as it has done in the past. The Minister’s Department holds the key to unlocking that potential, and the railway station is integral to the development. Without the station, the economic benefits of new business space and housing will be much less clear, as the site will be poorly connected to the urban hubs of Leeds and Bradford. Moreover, the impact of the development on the local community will be significantly enhanced if local people can benefit from improved transport links, and if roads are not congested because of the new homes—and new commuters.

The original Kirkstall forge powered jobs and growth in Leeds and Leeds West, and the new development could play a huge role in the economic future of the area, encouraging more sustainable transport, as well as sustainable housing and sustainable jobs. It has major financial backing, it has widespread local support and it fits the Government’s criteria for rail development. Will the Minister clarify the future of Kirkstall Forge railway station, and its place in the Leeds rail growth package?

11:11

[The Parliamentary Under-Secretary of State for Transport (Norman Baker)]

I welcome the chance to engage twice in one week with the hon. Member for Leeds West (Rachel Reeves), and I congratulate her on securing this debate. It is on a subject that is of great interest to her existing constituents and to those who may contemplate moving to the Kirkstall Forge area in the years to come, as well as to my hon. Friend the Member for Pudsey (Stuart Andrew) and others in the area.

I assure the hon. Lady and her constituents that the coalition Government have rail at the heart of their transport strategy. We recognise that railways can contribute fundamentally to the key overarching objectives of the Department for Transport, which are to foster economic growth and reduce the carbon emissions of the transport sector. The railways can also help to reduce our fiscal deficit, if the money is appropriately deployed. Given the significant pressure on public spending, we are determined to maximise the value of that expenditure, as people would expect.

Investing in our rail network will help to cater for the rapidly growing number of people making rail journeys in all parts of the country. Our rail network is essential in allowing millions of people to get to and from work every day, and in moving people around the country for business and for leisure or pleasure. Between 1994 and 2009, the number of miles travelled by rail passengers in Britain every year nearly doubled from 18 billion to 32 billion, and that growth shows no sign of slowing. It has been resistant to the problems in the economy of the last three or four years.

Transport did well in the comprehensive spending review, and over the next four years we will invest over £30 billion in transport projects across Britain, with £18 billion being committed to the railways. There is significant pressure on public spending, so we are determined to maximise the value of our expenditure.

The Government welcome the publication of Sir Roy McNulty’s independent study on rail value for money. The study found that although performance and safety have improved markedly over the last decade, our railways are 40% more expensive per passenger mile than those of our European competitors. The Government are considering the recommendations that are directed to them, and will deliver their response later this year.

In parallel, the Government are developing a wider rail strategy to ensure an affordable, sustainable, safe and high-quality railway that will deliver a better deal for taxpayers and for fare payers. That strategy will clearly set out the roles of Government, both central and local, of the train operators and of Network Rail in securing the future of the railway.

The Government have ambitious plans for investment in rail infrastructure and rolling stock. That is possible only because the Government have taken the tough decisions necessary to protect future investment in the UK’s rail industry. Over the next four years, we will provide £14 billion to Network Rail to support capital maintenance and infrastructure investment. We are funding and delivering the Thameslink programme, virtually doubling the number of north-south trains running through central London at peak times. About 600 new carriages will be provided for the Crossrail project, and up to 1,200 new carriages will be procured for Thameslink. A further 650 carriages will have been delivered to the network by March 2014.

On 1 March, the Secretary of State announced that Scotland, Wales and northern and south-west England are to get a fleet of new trains, and more reliable rail links to London. That will create thousands of jobs, boost the economy and improve services for passengers. He gave the go-ahead for the £4.5 billion intercity express programme and for the plans to electrify the Great Western main line between Cardiff, Bristol and Didcot.

Subject to consultation, the Government will proceed with plans for a national high-speed rail network, spending over £750 million during the period of the spending review. When complete, that will dramatically reduce journey times and increase capacity on routes between Britain’s major population centres; it will bring Birmingham within 49 minutes of London by rail, and Manchester and Leeds—the latter will be of particular interest to the hon. Lady—to within about 80 minutes. Connections to existing lines will also be included, allowing direct high-speed services to our major towns and cities. The capacity released on existing lines would allow an expansion of commuter, regional and freight services.

[Mr George Howarth (in the Chair)]

Order. I have been listening carefully to the Minister, and I realise that he is setting out the context of Government expenditure on transport. However, at some point soon he needs to speak on the specific subject of the debate, which is Kirkstall Forge railway station.

[Norman Baker]

Indeed, Mr Howarth. However, as the hon. Lady finished five minutes early, I have taken the opportunity to put the matter into the general context of our rail policy.

Suffice it to say that we are driving out inefficiencies on the railways and reducing costs. However, we are making what I believe is the biggest investment in rail, including in the Leeds area, that we have seen since Victorian times. That should give the hon. Lady some comfort. There is a hard-nosed economic and environmental case for investing in rail. I turn now to Kirkstall Forge.

A new station at Kirkstall Forge has been a high priority for Metro, the West Yorkshire passenger transport executive, for many years, and I know that considerable progress has been made towards achieving that objective. The coalition Government are committed to localism, and that determines our approach to local rail. We realise that local rail networks have to adapt in order to serve new and expanding communities, which is why we welcome PTEs taking the initiative. PTEs, working with local enterprise partnerships, where they exist, are best placed to identify the needs of local areas, and to identify and secure funding for new lines, new train services or stations, if they believe that that is the best way to meet local transport needs and the wider objectives of economic growth, housing growth and carbon reduction.

The development at Kirkstall Forge is a large one, and in the spirit of localism it is entirely right that Metro should take the lead in developing solutions to the transport issues that the development will give rise to. Metro has a good record in identifying sustainable transport solutions. For example, we welcome Metro’s and Leeds city council’s commitment to more sustainable solutions for the city region, as set out in the local transport plan 3, “My Journey”. We have backed their judgment by providing £12 million towards the cost of the Leeds station southern entrance, which will do much to improve access to new major housing and commercial developments to the south of the city centre.

The proposed Kirkstall Forge station will complement the A65 Kirkstall road quality bus corridor, to which the Department will be making a contribution of £19.8 million, and that is on track to open in 2012. It is a busy and congested corridor that is heavily used by commuters, so these two schemes will help to provide a sustainable alternative to car commuting.

The hon. Lady asked specifically about the shift from the car. The Department recognises, first, that we have to use transport to drive economic growth. Secondly, however, we have a responsibility to use transport in a way that reduces carbon emissions. We are certainly keen to secure a reduction in carbon emissions, and that could mean a modal shift from car to rail, particularly until the road transport network has been decarbonised, which is some way off.

Metro is seeking funding from the Department’s budget for local authority major schemes. The outcome of the spending review is testament to our commitment to such schemes. We recognise that well-designed proposals can make a big contribution to economic growth.

We plan to spend more on local authority major schemes in this spending review period than the average spend over the past 10 years. Nevertheless, that cannot fund all the schemes from the previous regional funding allocations process that promoters wished to deliver, and we will need to rationalise. Put simply, we inherited a completely unrealistic pipeline of schemes, and we have had to rationalise those as best we can. For the future, we want to move away from a top-down approach to determining local transport needs, working towards a more devolved system for funding local authority major schemes, with local enterprise partnerships taking on an important role. However, for this spending review, we need to rationalise the previous Government’s programme, so we have invited final bids from the promoters of 45 schemes from the previous programme. The Leeds rail growth package is one such scheme, and we believe it will now consist of new stations for both Kirkstall Forge and Apperley Bridge. Metro will submit a final bid in September to the Department, which we will consider alongside the others we expect to receive, including bids for maintenance for the Leeds inner ring road and the New Generation Transport trolley bus scheme, and will make an announcement in December 2011. I hope that that helps to confirm the timetable which the hon. Lady asked about.

Although I cannot indicate how successful the Leeds growth package bid might be, because it is a competitive process and obviously the bids are not in yet, we will look favourably on schemes for which promoters have reduced their funding requests to the Department. I can confirm that, and I note the comments that the hon. Lady made about increased private contributions. I am aware that a developer contribution has been secured towards Kirkstall Forge station and that Metro is scaling down the size of the bid by removing some additional car parking schemes at stations elsewhere.

In its bid, Metro will also have to demonstrate that the scheme provides value for money and that there is no ongoing cost to the Department arising from the stations’ introduction. That is an important point, as our policy is that new stations should cover their ongoing costs from newly generated fare income. However, I understand that Metro is confident that over time that will be achieved.

It is proposed that Kirkstall Forge and Apperley Bridge stations will be served by inserting calls in the services that run between Bradford Forster Square and Leeds stations, which have spare capacity to accommodate the new users from the stations. It is for Metro to discuss with Northern train operating company and Network Rail how those calls are to be accommodated within the timetable, given that the additional stops will increase end-to-end journey times by about four minutes in each direction. The good news is that we have recently agreed to fund the provision of additional carriages on the electrified routes to the north-west of Leeds, so Metro and Northern are now in a better position to determine whether further rolling stock will be required to enable the calls to be made.

I have tried to cover the points that the hon. Lady raised. She explicitly asked whether I would take into account wider economic factors in determining applications—yes, we will absolutely do that. The Secretary of State recently published a new transport business case appraisal system, which was announced to Parliament through a written ministerial statement. The hon. Lady may want to get a copy of that. She will be able to see the factors we now take into account to determine transport projects. Broadly speaking, the changes made to the valuation process have increased the value of carbon, so, on the face of it, they marginally benefit public transport schemes and marginally disbenefit road schemes.

The hon. Lady asked about private contributions to other schemes in the development pool. That information is simply not available yet, because we do not know what the final bids from the other schemes will be. The deadline for all bids is September, and obviously we will not be able to make a judgment until they all come in. I reiterate that private contributions are important. We are looking for buy-in, not only from the local transport authority, but from the wider community. Private contributions are therefore important, not simply to reduce the call upon the taxpayer, but to demonstrate commitment to the particular project for which an application is being made. In all the bids that come forward, we will be looking for details of private contributions, the support of the local community, and evidence that there have been sensible attempts to reduce costs wherever possible.

The hon. Lady appears to be confident that Metro has addressed those issues, and if it has, that will count in its bid’s favour, as and when it comes in.

[Rachel Reeves]

I welcome the answers the Minister has given.

To return to the wider economic benefits of the development, a point that I tried to get across was about deprivation in that part of Leeds West, particularly on the Hawksworth Wood estate—I mentioned the proportion of free school meals—and in Bramley, which has one of the highest proportions of young people not in education, employment or training. As well as the aggregate externalities and economic benefits that would come from the development, will the Department look at the importance of economic regeneration and how the returns in areas such as Kirkstall or Bramley might benefit some of the most deprived communities when compared with developments in areas where there are already good jobs and low levels of unemployment?

Norman Baker: As a Government, we recognise the need to support areas where there is economic deprivation. If we applied a simple economic test to everything, there would frankly be a lot of investment in south-east England, because it has a very good rate of return, and not a lot elsewhere. We do not do that. We try to ensure that we take into account a wide range of factors and ensure a modal balance of transport investment, as well as a regional balance. The hon. Lady is right to put those points on the record. They have been noted for when the Department considers the matter, as and when the bid comes in from Metro.

The Secretary of State’s approach to developing a package of bids to be approved has been successful in driving down costs on the bids that have been agreed so far. That has meant that the number of bids that have been able to be approved so far has been greater than if that discipline had not been applied. By driving down costs, we have been able to approve more schemes than would otherwise have been the case, so we have been able to make more progress than many dared hope given the unrealistic pipeline we inherited. That approach is not simply good value for money for the taxpayer, but helpful in spreading the money as widely as possible.

In conclusion, I am grateful to the hon. Lady for raising the issue. I know that there is genuine concern in her constituency and others that the proposed station goes ahead without delay.

[Rachel Reeves]

I have some more questions before the Minister concludes. What is the total pot of money available for the 45 schemes that remain in the development pool? I recognise that due to savings and increased private sector contributions costs may have fallen since the projects went into the development pool, but how much were they worth then? What is the difference between the amount of money in the pool and how much the schemes were bidding for? Does he have that information?

[Norman Baker]

I am not sure that I can give that detailed information now, but I shall write to the hon. Lady. The amount of money available is about £700 million—that is a rough figure for her to consider. I will drop her a line to give her the specific information she asked about.

The debate has been useful. I look forward to receiving a final bid from Metro in September. It will be properly and objectively analysed according to the criteria that Metro has been notified about, which I have referred to today. Decisions will be made known to MPs and others in December.

11:27

Sitting suspended.

Coal-fired Power Stations

Wednesday 29th June 2011 Westminster Hall

[Mr George Howarth in the Chair]

14:30

[Mr Mark Spencer (Sherwood) (Con)]

I am pleased to have secured this debate on what I consider one of the most important issues the country faces at the moment. It is also a pleasure to serve for the first time under your chairmanship, Mr Howarth.

I have a number of concerns that require a great deal of attention. Principally, our nation’s ability to ensure energy security is very important. Will we be able to keep the lights on in the future? Many customers and constituents are keen to ensure that the Government are focused on that question. How are we to keep the lights on, without becoming completely reliant on our European neighbours? Although we have a European market and many nearby nations are able to supply electricity, I am concerned about how secure that supply is, and how amiable their taxpayers will be about giving British people electricity when they may run short at the same time.

Throughout history, this nation has been served well by coal-fired power stations. Coal as an energy source to generate electricity is flexible, reliable and dependable. However, there are a number of pressures, such as the requirement to reduce our carbon footprint, that are calling that into question.

[Mr Marcus Jones (Nuneaton) (Con)]

I congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing this important debate. Does he agree that it is not just an issue of energy security? There is also an issue in relation to facilities such as Daw Mill colliery in my constituency, where nearly 700 people work. In addition to issues around energy security, should we not be concerned to ensure that we still use the coal that is under our feet in Warwickshire, so that we are not exporting carbon emissions abroad and are supporting UK jobs?

[Mr Spencer]

I will come to that point later. I should put on record that some of my constituents in Nottinghamshire travel to Warwickshire to work at Daw Mill. That we have so much coal under our feet is pertinent, as is the fact that so many constituents rely on the coal industry for employment.

I will start by outlining the current usage and how we generate power. Coal produces more than 35% of the UK’s base load of electricity during an average year. In recent winters, when the weather has been cold, that base load lifted to 50% of the supply generated by coal. That emphasises not only how dependent we are on coal, but how flexible it is, responding to the requirements of the British public. On a cold Christmas day when everyone is trying to cook their turkey at the same time, we need a great deal of flexibility in the supply chain to be able to respond. I want to touch later on the fact that, unfortunately, the wind does not blow harder on Christmas day than on any other day of the year. We need that flexibility to respond to demand.

Fossil fuels as a whole account for 80% of our energy supply: coal being 25%, gas 21% and petroleum 34%. In addition, nuclear provides 6.5%; hydro 2.2%; and biomass waste 11%. Only 0.4% of global energy demand is met by geothermal, solar and wind. Estimates suggest that world demand for coal-fired generation will increase by 70% in the period up to 2030. China is currently constructing the equivalent of two 500 MW coal-fired power stations a week, a capacity comparable to the entire UK power grid each year. Those figures are quite pertinent and put in perspective where the UK fits into a global generation market. About a third of UK electricity is generated from coal but it currently emits more CO₂ per unit of electricity than all other forms of generation. That is something we need to address.

The UK has installed electricity capacity of 77 GW. By 2016, it is expected to face a shortfall of 32 GW, as older coal, nuclear and oil plant is closed down, as demand rises. That is crucial and key to the debate today. Government policy is currently to introduce a floor price for carbon. Many of the coal-fired generators recognise that that is going to put enormous pressure to be economic on their business. In the medium to short term, it will not be possible to secure nuclear power stations that deliver the energy that we require. Generators that produce power via coal are working their units very hard to secure as much return on their investment as possible. There will be a period when our ability to generate power will be short, and the Government need to look long and hard at how we will close that gap.

As my hon. Friend the Member for Nuneaton (Mr Jones) suggested, coal is currently plentiful. It is relatively cheap, flexible and able to respond quickly. We are not prone to outages, and coal is not vulnerable to geopolitical risk. Coal generates about 40% of the world’s electricity, with about 10% each for gas and nuclear. Coal burned by major electricity generators, which account for 80% of total coal use, was up 3% in 2005. Coal burned in UK power stations was 23% higher in the third quarter of 2006 than in the same period in 2005. Coal demand is rising. That demonstrates not only how reliant on coal we are in this country, but the pertinent fact that use is increasing.

UK pits and mines are pretty efficient. We have heard about Daw Mill. Thoresby colliery in my constituency is very efficient in its coal production. I am delighted it has now had permission to explore another seam, which will secure the future of that colliery for at least the next 10 to 12 years.

Given current global energy consumption, it is estimated that there are enough recoverable coal reserves to provide the entire planet with all its energy for the next 600 years, at the current rate of usage. Britain is estimated to have 7 gigatonnes of coal left. In power stations performing carbon capture and storage, we could deliver a sustainable and reliable approach to energy production.

[Julian Sturdy (York Outer) (Con)]

I thank my hon. Friend the Member for Sherwood (Mr Spencer) for securing the debate. He is right about the importance of energy security, especially over the next 10 to 15 years. Does he agree that we need a balanced energy market and security of supply, in which, as he says, coal will play a key role? He touched on carbon capture, which will be the key way potentially to keep many of our coal-fired power stations burning and supplying energy over the short term of 10 to 15 years.

[Mr Spencer]

I thank my hon. Friend for that intervention. That point is fundamental to the debate: coal is recognised as being flexible, but we need to embrace the technology of carbon capture and storage. That is something that I want to explore in more detail later. It is interesting that my hon. Friend touches on carbon capture and storage, because those are new clean technologies that have been proven to work. Powerfuel’s new development at Hatfield, Yorkshire, is backed by Friends of the Earth. It is a good example of how new clean coal plant can be developed and can work in practice.

I turn to the environmental side of the argument. Despite legally binding targets to reduce greenhouse gas emissions, in 2008 91.5% of UK energy supply was met by the use of carbon-intensive fossil fuels. We need to address that figure seriously if we are to, first, meet our energy demands and, secondly, reduce this nation’s carbon footprint.

EDF Energy has said that, between now and 2016, 13 GW of coal and oil baseload plant will close. Other ageing coal plants may also close by 2016 and 7.5 GW worth of nuclear closures are scheduled by 2015. EDF Energy reached its figure of a 32 GW shortfall by factoring in the expected closures, the expected growth in demand for electricity and the expected growth in line with the renewables obligation. That figure of a 32 GW shortfall will be a terrifying one unless we find ways of plugging the gap that do not necessarily involve laying cables across the channel so that we become dependent on our near neighbours.

If the UK coal-fired power stations were replaced over time with clean coal plants, the UK would stand at the head of an energy revolution, we would be secure in our energy supply and we would also be comfortably within the environmental emissions targets. I hope that the Government can find a way to support investment in clean coal technology so that we can achieve some of those goals.

Carbon dioxide capture and storage—CCS—is the critical enabling technology that would reduce CO₂ emissions significantly while also allowing coal to meet the world’s pressing energy needs. It is important to recognise that this is a global issue. While we are considering UK energy generation, it would be foolish not to observe what is happening on the rest of planet Earth. I have already mentioned China and the number of power plants that it is producing. If we can find, develop and enhance CCS technology, we could position ourselves well in the world.

[Mr David Hamilton (Midlothian) (Lab)]

I congratulate the hon. Gentleman on raising this very important issue. Given the timetable before us—the site contract is to be signed by Scottish Power by 2011, but we will not see any real production until later—is he as concerned as I am that there will be a gap in the energy market and we will not be able to fulfil the energy requirements of this country? How will we overcome that problem if we do not move the energy agenda forward?

[Mr Spencer]

I thank the hon. Gentleman for that intervention and that is exactly the point—there is this gap and we must find a way to fill it. A Government of whatever colour have to address this issue quickly and grab it with both hands, because we cannot afford to be in a position where that gap increases and we cannot keep the power on. I therefore commit myself to supporting him in lobbying Government to ensure that we fill that gap. I hope that the Minister will reassure us at some point that we can fill it.

CCS is a means of mitigating the contribution of fossil fuel emissions to global warming. The process is based on capturing CO₂ from large point sources, for example power stations, and storing it in such a way that it does not enter the atmosphere. CCS can also be used to describe the “scrubbing” of CO₂ from ambient air as a geo-engineering technique. Although CO₂ has been injected into geological formations for various purposes, the long-term storage of CO₂ is a relatively new concept. The first commercial example of its use was at Weyburn in 2000.

I want to explore the three groups into which CCS can be split: post-combustion; pre-combustion; and oxyfuel.

[Andrew Percy (Brigg and Goole) (Con)]

I congratulate my hon. Friend on securing this debate, not least because I live opposite Drax power station, which is the most efficient, cleanest and biggest coal-fired power station in the country. Is he aware of the consultation that is going on in my own village of Airmyn today, between 2pm and 7pm, which relates to the National Grid’s proposal for a CCS pipeline that would serve the steelworks at Scunthorpe as well as the power stations across north-west and south Yorkshire? As I say, that consultation is going on at the moment. That pipeline is an exciting prospect and it offers the possibility of extending the life of some of our power stations.

[Mr Spencer]

I thank my hon. Friend for that intervention. In fact, I have the Drax report here in front of me and I know that he is working very actively to ensure that his constituents are well represented in that consultation. Drax is a very good example of what can be achieved. The work that it has done in blending biomass with coal to improve its carbon footprint is an example of how we can improve things with the technology that exists today. Also, working with other industries, such as the steel industry, is quite an exciting prospect and I welcome that happening; in fact, I recognise that that good work is ongoing.

Flue gas desulphurisation is not a new technology. It has been used for some time. Ratcliffe-on-Soar, the largest power station near my own constituency, has introduced a great deal of new technology to capture the sulphur emitted from the power unit. FGD is simple, actually. It basically works by mixing limestone with water, which is then sprayed into the power station chimneys through which the flue gases pass after the coal is burned. The sulphur in the flue gas reacts chemically with the injected spray and forms calcium sulphate, with only a small proportion of the sulphur being ejected into the atmosphere. The resultant slurry is then pumped away, dried and made into gypsum, which is beneficial to the power station and can be used to generate income for it. FGD equipment also allows coal-fired plants to meet the requirements of the EU large combustion plant directive.

The second group of CCS technologies is integrated gasification combined cycle, which is a pre-combustion technology. IGCC is a near-zero-emissions clean coal solution for the UK. It would significantly reduce CO₂ emissions as well as providing pressurised gas for injection into North sea oilfields, thereby enhancing the recovery of oil reserves, which is known as enhanced oil recovery. Powerfuel is now constructing one of Britain’s first IGCC clean coal power stations in Yorkshire, again using British coal from an adjacent colliery. I will try to put the process into simple language. It sometimes becomes very difficult to extract crude oil from wells and there is a technique whereby the CO₂ can be mixed to reduce the viscosity of the oil, allowing the oil to be removed from the wells more easily.

Super-critical power plant is a type of clean coal technology whereby it is possible to retrofit this technology to the power stations that we already have. The benefits of operating a super-critical power plant over a conventional plant are clear. Conventional boilers have an operating efficiency of about 30%, which means only 30% of the energy in the coal is converted into electricity with the rest being lost as heat. Super-critical boilers have efficiency levels of around 42% to 46%, so more energy is directed to turning the turbines to generate electricity and therefore less greenhouse gas is produced per kilowatt-hour. Improving the efficiency of boilers used in coal-fired power stations not only reduces CO₂ emissions, because less coal is needed to generate the heat energy that turns the steam turbines, but it results in higher generator efficiencies in the provision of the electricity. The boilers are available commercially and can be retrofitted to existing coal-fired plants, which means no major retraining of staff, faster deployment and reduced capital costs with greater efficiency. It seems like a win-win situation to me.

Doosan Babcock Energy has stated that Britain could cut the cost of reducing greenhouse gases by £3 billion if it fitted such clean technology to its ageing power stations. Lobbying goes on for Government to introduce a form of incentive for power generators—one similar to the renewables obligation certificates—to invest in clean coal technology. Creating such an incentive seems the right thing to do and I hope that this debate will assist the Government in some of their thinking, and perhaps we can consider supporting this technology.

Doosan Babcock Energy says that applying this technology to existing coal-fired power stations would be the equivalent of erecting 7,000 to 10,000 wind turbines. Members in Westminster Hall today who have had the pleasure of a local application for a wind turbine will be relieved that we could reduce the number of those applications, one of which I currently have in my constituency. Typical construction costs for current coal-fired power station designs are in the region of £700,000 to £900,000 per megawatt. More advanced integrated gasification combined gas cycle plants cost between £900,000 and £1.3 million per megawatt, although lower capital costs of £750,000 to £900,000 per megawatt are predicted as technology moves forward and we become better at fitting it. The 2002 energy review by the performance and innovation unit put the costs of coal-fired power stations in the 3p to 3.5p per kilowatt-hour range by 2020. That would make coal competitive with nuclear power, if the costs of decommissioning nuclear power stations were included.

Briefly, I want to explore carbon abatement capture. The idea of carbon capture is simple and powerful. The CO₂ must be segregated from the fossil fuel combustion products and deposited in a place where it will remain. The CO₂ emissions from a clean coal plant will be reduced to virtually zero if the plant has been designed to store the carbon. The CO₂ can then be disposed of in, for example, the emptying fields of the North sea, where it can consequently extend the life of those oil fields by applying pressure to an old and difficult-to-extract reserve, thereby prolonging production. I shall try to put that into layman’s terms. The gas is pumped into the hole where the oil is coming from, which assists in removing some of the oil, and stores the CO₂ back underground, where the carbon was for millions of years. It is a three-step process, of capturing the CO₂ from the power plant, transporting it—as my hon. Friend the Member for Brigg and Goole (Andrew Percy) said—to another place via a pipeline, and finally storing or using it.

The British Geological Survey estimates that the potential carbon dioxide storage in the UK sector of the North sea is 775 gigatonnes. That is a considerable amount, given that worldwide CO₂ output is 8 gigatonnes annually, and it means that in the North sea alone there could be almost a century’s worth of CO₂ storage for the whole world. That is a fantastic statistic, which proves that we have the storage available as long as we can embrace it and find a way, via the technology, to make use of it.

Carbon capture and storage in a coal-fired plant would cost just over £20 per tonne of CO₂, while the figure for a gas-fired plant is about £30 a tonne. It could be argued that that is because a coal plant produces more, but coal is certainly cheaper per tonne than gas for CO₂ emitted. Using CO₂ for enhanced oil recovery can generate revenue that offsets the other costs of CCS. The cost of storing CO₂ in aquifers is close to £l per tonne, and the cost of storing it in oil and gas field plants ranges from £1 to £20 per tonne. Therefore, as well as being fairly reasonable, this method could generate income if we can get it right and make it work. Depleted oil and gas fields are the first sites to be considered for storage capacity because they are known to be equipped with infrastructure such as pipelines and platforms, and are almost ready to run now.

The other area that I really want to explore, and which I know my predecessor as MP for Sherwood, Paddy Tipping, and his predecessor Andy Stewart explored, is underground coal gasification. This is a method of converting unworked coal into a combustible gas, which can be used for industrial heating, power generation and the manufacture of hydrogen, synthetic gas or diesel fuel. The basic UCG process involves drilling two wells into the coal, one for the injection of oxidants and another—some distance away—for bringing the product gas to the surface. I acknowledge that the process involves a number of challenges, not least of which is whether once the process has been started it can be controlled, and there are also the impacts on subsidence above surface level, depending on what happens to the coal below ground. Nevertheless, we should consider using UCG for reserves under the sea. Cost estimates of UCG clean gas stand at £2.50 a gigajoule, whereas the current price of national gas is £6 a gigajoule.

As for the economic merits, clean coal is competitive, with an estimated generating cost of between 2p and 3.5p per kilowatt-hour. Wind power, for example, costs between 3.7p and 5.5p per kilowatt-hour. The Government seem fairly committed at this moment in time to wind power, but when the costs are added up and the subsidies stripped out it is not as competitive as some of the other available technology. Clean coal is also more acceptable to constituents than erecting large wind turbines in the vicinity of their homes.

[Graham Stringer (Blackley and Broughton) (Lab)]

I am listening carefully to the hon. Gentleman as he makes his powerful case for coal. Is he not overplaying, however, the role of wind power? He indicated earlier that, when wind is needed most, in the cold weather when there are anticyclones, it is not there, so we have to have the coal-fired capacity, and if the wind blows too much, we again have to have that capacity. Wind power is irrelevant to the security of energy supply in this country.

[Mr Spencer]

The hon. Gentleman is absolutely correct, and I will cite some statistics later that support his view. Offshore wind has a role to play in assisting electricity generation but we do require that base load. I do not want to overemphasise this, but when the World cup final half-time whistle goes or when everyone wants to cook their turkey on Christmas day, we have to have the capacity to lift that generation. However, the Government currently do not have the power to control the wind and can rely only on what is available.

[Andrew Percy]

I have issues with onshore wind, but I never miss an opportunity to sell the Humber for its offshore wind capacity, particularly in front of the Minister. Is it not a bit of a false argument that we are in favour of either one technology or the other? What my hon. Friend and the Government are saying is that we want a broad mix. A technology that is not as far advanced as perhaps it should be is tidal, to which I understand the Government have just committed some money. It is not about being on one side of the argument; it is about being on all sides and having a balanced energy mix.

[Mr Spencer]

It is true that we need to take a balanced view and ensure that we explore the new technologies. I think that tidal and wave power are great, and if they work they will contribute a small amount to this nation’s energy security. The important thing to note though is that it will be a small amount, because those technologies do not have a large enough share of the market. The number of areas where we could secure a tidal scheme—the Severn estuary is one example—is small, and there are no opportunities to generate enormous amounts of electricity via such schemes. I acknowledge that we need a mixed portfolio, but that works only if there is something there to pick up the base load. The crux of my argument is that the only methods that can be used to pick up the base load are nuclear power and coal-fired power stations, and we are not in a position to build nuclear power stations fast enough to plug the inevitable gap.

On the merits of clean coal technology for the environment, the biggest long-term problem for coal is its carbon dioxide level. Approximately 90% of the CO₂ produced by a coal-fired power station could be captured with CCS, and CCS could help to make up to 20% of the global cuts in emissions that are needed by 2050. Therefore, if we can find the technology that will work, we can sell it to the world, continue to use coal and at the same time cut the amount of CO₂ being released into the atmosphere.

Owing to their substantial carbon emissions, coal-fired power stations are currently considered environmentally unacceptable. That is simply because we are looking at the technology of the 1960s and 1970s, rather than at what is available now and might be available in future. Coal-fired power gets a bit of a poor press, but some of what is said about it is not true.

The UK has the opportunity to be at the forefront of developing clean coal technology. That would not only be beneficial to the UK, but be a very effective way of helping developing countries, notably China and India, to take advantage of their own coal reserves in a way that is considered environmentally acceptable. We find ourselves in a situation in which the Department for International Development is funding the World Bank, which in turn is funding electricity generation in other parts of the world, and those countries are spending that cash on coal-fired power stations, which are not as environmentally friendly as they could be. If we can find a way to make the technology work and embrace it, we could sell it to other parts of the world or donate it as part of our aid programme to the more challenged parts of the world, which would benefit the planet and those more challenged countries as well.

It is vital that we are at the forefront of development. That could lead to a whole new industry. Selling the technology and building it for the world would generate enormous amounts of cash and jobs for the UK. If we are not at the forefront of its development, other countries will jump ahead of us and we will lose the opportunity. This great nation of ours has always been at the cutting edge of technology, and certainly of engineering, and we need to maintain that tradition if we possibly can.

The process of coal gasification can capture 90% of CO₂ emissions for storage and can also produce a synthetic gas, known as “syngas”, which is 99.5% pure hydrogen. The beauty of that fuel is that, once fired through a conventional gas turbine, the only emission is water vapour. Although cleaning up the existing plants is welcome, it will not have the impact that those who want to reduce our CO₂ emissions significantly require, nor will it capture any CO₂ for alternative income generation. Coal gasification is the only process that changes one form of energy—coal—into another flexible energy source—hydrogen—but without a clear Government energy policy, IGCC technology will not happen. To be viable, the new IGCC plants require the same allocation of CO₂ allowances as existing coal plants, but at present they receive the allowances for a CCGT-fired—combined cycle gas turbine—power station.

So far, generating electricity from coal has failed the environmental test because of its carbon emissions, but clean coal offers a number of strategic advantages, including the ability to ensure sustainable and competitively priced electricity and to offset security issues and the cost of importing from volatile countries in the middle east and Russia, which is key. In the past, when I challenged Ministers who said that they were more than comfortable with our arrangements with overseas suppliers, they pointed me to the fact that we have imported a vast amount of our food over the past 50 years and we have certainly never been too concerned about that. The arrangement has worked very well, but it is important to recognise that that has been during a period in which food production has been on an enormous scale and food has been plentiful. The situation may change the second we reach a position where we are short of food.

Russia decided last year not to export a single grain of wheat. That had an enormous impact on global wheat prices overnight. I can see us in a situation in which a very similar thing happens to energy. We all remember images on the news of French lamb farmers blockading their ports and stopping imports of British lamb. Such images stick with me. Can we really depend on our neighbours when we are up against the wall? Will they look after their own taxpayers and can they look after British taxpayers at the same time? That makes me very nervous. Such situations make me think that we should ensure that we are on a secure footing and that we have enough energy in the UK to supply ourselves.

[Mr David Hamilton]

The hon. Gentleman does not need to turn to food for an example, because only a few years ago the Russians turned the gas off to the country next to them, and prices spiked right after. If that happened over a long time and more countries did it, it would really harm our energy requirements.

[Mr Spencer]

I thank the hon. Gentleman for that intervention because he makes a pertinent point. The other areas with which we are dealing, for example those in the middle east, are not as politically stable as they could be. We can easily foresee circumstances in which our ability to source energy from those parts of the world is compromised by political upheavals similar to those happening now. That could leave us exposed. I hope that we can find a way of securing our energy. We must meet rising electricity demand and smooth the less predictable output from renewables. We need to foster and promote a high-growth, low-carbon economy.

I shall now address the point raised by the hon. Member for Blackley and Broughton (Graham Stringer) on wind power and explain why I feel that wind power is not adequate to support our needs. Fitting clean coal technology to the UK’s 16 power plants would cost an estimated £6 billion. In comparison, 2,000 wind turbines will be put up in the UK over the next six years at a cost of £9 billion. The Government’s renewable energy policy is currently over-dependent on wind energy. That imbalance is largely the result of the renewables obligation, which provides no clear boundary as regards the merits of various renewable technologies, so the cheapest option in terms of start-up costs—wind power—has been pursued, irrespective of its failures on grounds of unreliability and secure energy.

The dangers of over-relying on wind power were demonstrated in Ireland on 4 December 2003, when the electricity regulator had to take emergency measures to reduce the amount of wind power on the Irish electric grid following major concerns about the security and stability of the power system. Simply because the wind blew too hard, too much power was being generated, so pretty quick action had to be taken to resolve it.

In contrast, Demark has the most intense concentration of wind generation in Europe. At peak output, Danish wind farms can account for nearly 64% of Danish peak power demand. That rarely occurs, but it does happen on occasion. Last year, Danish carbon emissions rose, because the Danish grid fell back on older fossil fuel generation to plug the gap left by underperforming wind farms. Danish power stations used 50% more coal than in 2005 to cover wind’s failings and wind turbines generated 21.7% of electricity, which is down from 29.4% in 2005. To put it in simple terms, when the wind does not blow, the turbines do not move and the power is not there. As the Danes have to have a stopgap base load, they use coal. Ironically, during that period the use of fossil fuels rose, which demonstrates the frustrations with the system that we are pursuing.

[Graham Stringer]

I agree with the hon. Gentleman completely, but the situation is actually worse in Denmark. The Danes have stopped investing in wind, because it is too expensive and destabilises the grid. When the wind is blowing, they are effectively subsidising energy in Germany and surrounding countries. They have made a terrible mistake and it would be a great pity if this country carried on subsidising wind farms—quite frankly, it would be insane given the economic state we are in.

[Mr Spencer]

I thank the hon. Gentleman for that intervention. The irony of the situation is that the German energy the Danish are reliant on is often produced with brown Czech coal, which is worse in terms of carbon emissions than UK coal. It does not make much sense at all.

I am conscious that I am taking up quite a lot of time, and I know that other Members wish to speak, so I will try to conclude as quickly as possible. If we look at the international competition, it is clear that we need to step up and ensure that we keep up with, if not stay in front of, the competition in terms of producing clean coal technology. In 2009, the Australian Government produced a White Paper entitled “Securing Australia’s Energy Future”, which backed the use of clean coal technology with coal from indigenous reserves, and UK climate change economist Sir Nicholas Stern recently told an Australian audience:

“I think Australia will be at the forefront of that technology”.

In the US, coal production is at full capacity. In 2005, 951 million tonnes were produced from indigenous reserves for energy supplies and for industrial use in steel and associated industries. President Obama said:

“We need to act now and make the US a leader in putting in place the incentives that ensure developing countries also embrace clean coal.”

The EU is also adopting a positive attitude towards clean coal technology, with President Jose Manuel Barroso stressing to an audience in February 2007 the need for

“an acceleration of the commercial use of clean coal”.

The UK must demonstrate a firm commitment to clean coal technology if it wishes to influence the behaviour of other nations, such as China and India, where rising C0₂ emissions from fossil fuels will otherwise dwarf any savings made in the UK. By 2020, China’s consumption of electricity is forecast to increase sixfold and to be 30 times that of the UK.

What is the Government’s role? Ensuring our energy security currently appears to involve laying cables under the channel, and I am concerned about how secure such an arrangement is. I can see how it could work in the short to medium term, when energy is in plentiful supply, but, as I said, I do not think French taxpayers would like their country to move to a three-day week to keep the lights on in southern England. As I said, comparisons are made with the food supply, and it is difficult to understand why we are exposing ourselves to the issues involved, when we could do better.

The Government have said that we will continue public sector investment in carbon capture and storage technology for four coal-fired power stations, but the criticism levelled at us is that we have thus far completed only the first of those four. We really need to speed up and get on with things.

In conclusion, I hope the Minister can lay some of my concerns to rest. We must keep the lights on; it is fundamental that we keep the electricity coming to this nation of ours. All the issues that we fall out about in this place will become insignificant if there is no power. Wind turbines may be of assistance, and offshore wind certainly has a role to play, albeit a small one, but I am concerned about how dependable such turbines are. Fundamentally, the base load must come from nuclear or coal, but the nuclear power stations we need to build will not be on stream in time. We are behind the game, and we need to act now to catch up and secure Britain’s energy supply, if we are to keep the economy running and the lights on.

15:13

[Mr David Hamilton (Midlothian) (Lab)]

I did not intend to speak in the debate, because I did not think I would be here, but another meeting was cancelled. I have nothing much in the way of technical details to add to the 40-odd minute speech by the hon. Member for Sherwood (Mr Spencer), so I will not try.

Many people would assume that I naturally support coal because I am an ex-miner, but there is much more to it than that. I was in the pits for 20 years, although there is not a single pit left in Scotland. We now deal with open-cast mining in Scotland, and there are still one or two pits in England and southern Wales.

If we drive the market through carbon capture, that will give deep mining in the UK long-term security. We do not want to talk about carbon capture and then import all the coal that feeds the power stations. There is therefore an issue about creating employment opportunities in the UK and beginning to develop a strategy for developing our coalfields, which have millions of tonnes of coal. We are fortunate that we have more coal reserves than anywhere else in Europe. That is an important issue, which we must address.

My view is quite specific. Four or five years ago, I changed my opinion about something that had been close to my heart all my life. Until then, I had been anti-nuclear all my life, but I began to realise that this country’s security of supply is far more important than any view that I might or might not have about nuclear energy. When it comes to this country’s energy requirements, everything should be on the table. That is an important issue, which we have to address. This is not a matter of one thing or the other.

I accept the point about wind power and all the problems with it, and I agree with many of the points made by the hon. Gentleman and my hon. Friend the Member for Blackley and Broughton (Graham Stringer). However, we need a big mixture, although the base load must come from a few sources. We cannot rely on Russia for fuel, and we should not rely on the middle east, because the supplies can be stopped at any time. Every week in Parliament, we debate the middle east, and things there could blow up at any time; our energy supplies could be cut off at any time, which would mean another price spike.

China is the engine house of the world. Although it was going through a difficult time, it is coming back. That means that we will have to compete with it when it starts to make gains in terms of power. When it buys the power, we will have to pay astronomical prices, because it will determine what is pulled in. It is building power stations and opening up collieries because that provides quick and easy access to energy supplies.

If we are not careful, our leading position on carbon capture and development will be quickly lost, and we will be overtaken. America is putting a lot of money into carbon capture development, and China is doing the same. Indeed, it already has a project that is supported by Germany and others. We are at the tail end.

I was part of the previous Government, and I know the Minister is supportive of coal. The issue, however, is the timing as we move forward on carbon capture projects. The contract at Longannet has to be signed by the end of the year, but the project will not take off until some years later. We also need to get the other three projects up and running. If we want to be at the forefront, we must be able to develop our strategy quickly. I make a plea to the Minister to sign the contracts by September and to bring the other three projects online as soon as possible for the sake of everyone in this country.

We can have all the arguments we want about clean coal technology, sulphur content and everything else, but if the lights go out, not a single person out there will thank us; indeed, my constituents will drum my door down. The bottom line is that we are here to protect and support the people we represent, and we are here to support industry and this country. The only way we will do that is by ensuring that our energy policy utilises everything we have. This is, therefore, an important debate, and I hope that the Minister takes it on board.

Before I sit down, I have one other thing to ask the Minister. When he has his discussions with the Scottish Government, will he ensure that they invest the same amount as us in the Longannet complex? If that fateful day ever happens and Scotland goes independent—I hope it never does—I would not like this country to be putting money into Longannet, when the Scottish Government are not putting a penny in. I would therefore like to hear what the Minister has to say about the Scottish Government putting money into that important project.

[Jackie Doyle-Price (Thurrock) (Con)]

rose—

[Mr George Howarth (in the Chair)]

Order. Before I call the hon. Lady, I should point out that I intend to call the first of the Front-Bench spokespeople at 3.30 pm, and I ask the hon. Lady to bear that in mind.

15:18

[Jackie Doyle-Price (Thurrock) (Con)]

I will be brief, Mr Howarth. First, I congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on introducing this extremely important debate. A compelling case for coal has been made by hon. Members on both sides of the Chamber, and the debate is all the better for that.

I fully endorse my hon. Friend’s comment that energy security is hugely important and that coal must play a major role in it. That said, I want to make a few points about the other opportunities for coal-fired power stations through reference to the Tilbury power station in my constituency.

Tilbury has been running for 50 years on its current site. Until March this year, it was a coal-fired power station, but thanks to investment by RWE npower, it is now becoming the world’s largest biomass-fired power station. That gives the opportunity of a new lease of life for some of our older coal-fired power stations, which will have to be decommissioned because of the EU directives. I therefore beg the indulgence of hon. Members today, while I give the story of Tilbury.

At its peak, Tilbury employed 750 people. Today it employs 250, in highly skilled jobs. It was facing closure in 2014, which would have left a big hole in the economy of Tilbury, which is quite a small town. The power station generates more than 1,000 MW—enough to power 1 million homes. It has never breached its environmental licence, in 50 years of operation. Looking at the debate from the point of view of climate change and environmentalism, it is worth bearing that in mind, particularly as the general manager tells me that when sulphur emissions in the locality have been measured at dangerous levels it is not because of the power station but, generally, when there is traffic congestion on the A13 and the M25. That raises the question whether we are looking at the right things, in our rush away from coal.

RWE npower, which runs the station, originally intended to construct a new cleaner coal power station at Tilbury and its plans were far advanced, but it had to reconsider the decision in November 2009. That was because of the cost, in the economic climate at the time, but also—and this reinforces the point made by my hon. Friend the Member for Sherwood—because of the unclear regulatory status of investment in cleaner coal. It is important to lay the foundations to establish a clear regulatory picture so that companies are prepared to make the investment. Considerable amounts of money are involved.

Having decided not to go ahead with that plan, the company was still wedded to the site at Tilbury—it is a very responsible company and wanted to maintain the relationship. It decided to investigate the burning of wood pellets instead of coal. There was a lot of scratching of heads, but the management decided to have courage and invest money in trying it out. It was a great success.

In March this year the power station burned coal for the final time. I lament that, but what is happening now is very exciting. The company is converting the existing station to burn wood pellets for the remainder of the hours that will take it to 2014; it also intends to invest in creating a new biomass generator beside it. The new arrangement is not quite as efficient at generation as coal. In comparison to the previous figure of 1,000 MW, the wood pellet scheme reaches 750 MW, but it is still an efficient system and it will contribute massively to the national grid—much more than the wind turbines that we have been hearing about, in relation to investment.

The power station will begin generating and contributing to the grid from December. I encourage the Minister to visit the plant. It is exciting and groundbreaking, and gives an opportunity of a new lease of life to some coal-fired power stations. RWE npower deserves to be congratulated on having the courage to make the investment and see whether it would work. It has proved the process, which means that other power stations will find it much less risky.

I endorse the comments made by hon. Members on both sides of the House about coal, which must play a role in this country’s future energy supplies. I reiterate that we should do everything we can to encourage investment in the carbon capture technologies that my hon. Friend the Member for Sherwood so lucidly articulated.

15:23

[Graham Stringer (Blackley and Broughton) (Lab)]

I am grateful for the opportunity to speak, Mr Howarth, and am aware of the time; I did not intend to speak. I congratulate the hon. Member for Sherwood (Mr Spencer) on bringing this important matter before the House.

I have two or three things to say. The policy of the Government—this was true of the previous Government as well—is based on two illusions. One is that what this country does, both in relation to carbon dioxide, and industrially, will affect anyone else in the world. It will not, and the hon. Member for Sherwood developed that argument with his statistics, and illustrated it effectively.

The second illusion is that there is a shortage of fossil fuels in the world. If we read what environmentalists say and look at what is happening, we can see that the real problem will be a huge surplus of fossil fuels in the world in the next 300 or 400 years, not just because of the figures on coal and oil, but because of the new source of shale gas that is being developed, which has already dropped the price of fuel in north America by up to 50%.

That is the background against which this country must consider energy policy. There must be a hierarchy of priorities in thinking about energy policy, and security of energy supply must be at the top. At the moment we are staring at the prospect of a huge problem in three or four years’ time. The Minister shakes his head, and he may or may not be in his post in three or four years’ time, but European obligations at the moment put an absolute limit on the amount of coal that can be burnt in our power stations. If we get another cold winter and they burn twice as much coal as they intended, those power stations will have to be switched off. There will be a gap before we can build new nuclear power stations. Like my hon. Friend the Member for Midlothian (Mr Hamilton), I spent most of my life opposed to nuclear power stations, but in the world we now live in, the facts, and my opinions, have changed.

We must put the facts together. It will take shale gas some time to come on. Because of the dominance of Russia in the gas market, that is insecure. We know what is happening in the Arab world at the moment and we could be in for a real problem. Rather than putting vast subsidy into wind farms, which are likely to destabilise the national grid as they are put in, and to industrialise the countryside—not just because of the wind farms themselves, but because of the power lines, which will have to be taken at huge cost from the wind farms to the grid—we should be bringing the nuclear power programme forward and considering how to develop shale gas in this country. We have some of our own deposits in the north-west. We should also be thinking about how to develop the coal industry.

Unfortunately, because much energy policy is based on illusions, the Government are not focused on the world and the energy market as they are now. They are focused on what the Labour Government saw as priorities 10 to 15 years ago. The Government need to look objectively at the world and think about how to deal with the energy gap that will exist in four, five or six years’ time, and how to get the best value for money out of the investment we make in energy.

15:27

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship for the first time, Mr Howarth. I congratulate the hon. Member for Sherwood (Mr Spencer) on securing the debate and speaking eloquently on behalf of his local colliery.

Many hon. Members have spoken today of serious concerns about capacity and a future energy gap in the UK. My hon. Friends the Members for Midlothian (Mr Hamilton) and for Blackley and Broughton (Graham Stringer) spoke about the urgent need to deal with the issue, and several hon. Members have spoken about carbon capture and storage, which I shall mention later. I want to focus my remarks on how coal-fired power stations fit into Britain’s transition to a low-carbon future, and the integral role that clean coal has to play as we reconcile the competing demands of reducing the country’s greenhouse gas emissions and ensuring that enough energy is generated. I want also to highlight some of the challenges that we face.

It is clear that a low-carbon future will not be realised without some contribution from fossil fuels. The urgent challenge that we must overcome is how to ensure through the use of technological innovation that the fossil fuels that we use are cleaner. The UK must be a world leader in investment, research and development, infrastructure and planning across our energy portfolio; but the window of opportunity is closing. We have drifted from 2010 to 2011, still awaiting crucial decisions: from the re-banding of ROCs, to grid investment, to the detailed sign-off on the first CCS project.

At the UK coal conference in February the Minister said that detailed sign-off for CCS1 would be confirmed by July, but when the Energy Bill was in Committee he referred instead to the summer. I would be grateful if he clarified when we will have detailed sign-off of that crucial first CCS project.

At the risk of stating the obvious, it is worth explaining why we are where we are. A quarter of the UK’s energy generating capacity will close by 2018, and as much as 30% will need to be replaced by 2020. Without prompt action, we face an electricity generation gap in the next 10 to 15 years as our nuclear and coal-powered stations are retired. World energy demand is rising and highly politicised. As North sea reserves decline, we are increasingly reliant on imported oil and gas, and UK electricity demand is forecast to double over the next 40 years. Adapting to that increase in demand will require a rapid decarbonisation of our electricity supply and a diversification of the energy sector, moving us from a reliance on fossil fuels and unabated combustion, to an increased use of low-carbon and decentralised energy.

We need a new energy mix, combining renewables, new nuclear and clean coal, but to achieve that mix and meet our climate change targets we will be required to urgently develop carbon capture and storage technology alongside renewables. We will need to create sufficient capacity to meet electricity generation needs at all times, and we will need to put the necessary supply chains in place. We will require the development of smart grid and electricity networks to meet the needs of a reconfigured, smart and diverse electricity infrastructure and, of course, investment in coal and gas infrastructure. All that does not come cheap. Depending on what we read, it could cost between £200 billion and £450 billion to achieve. I have only touched upon the future of coal in the UK energy mix, but it has a strong future.

In 2009, coal-fired power stations produced approximately 28% of the UK’s electricity supplies, using 40 million tonnes of coal in total. Last November, the Minister said that the UK

“will rely on gas and coal for years to come”,

and he is right. Coal is the most abundant worldwide energy resource, yet, unabated, it is also the most polluting. Without finding a way to reduce its harmful effects, we will not be able to tackle climate change.

The question we therefore face is: how do we ensure that the lights do not go out while at the same time meeting the need for greenhouse gas reductions of at least 80% by 2050? In government, Labour committed to funding the first commercial-scale CCS demonstration plant, so we welcomed the coalition’s decision to continue it. As I mentioned earlier, however, we are still waiting for the detailed sign-off of that project.

In addition, many questions remain unanswered in relation to how the crucial second, third and fourth projects will be funded. The Government have committed to funding them from general taxation, but can the Minister give us more detail about where the money will come from? When does he expect the Treasury to release the funds to pay for the project?

It is not just the direct funding for CCS that is required. We need to build the right infrastructure, conduct further research and development into CCS projects, and develop innovative financial mechanisms to devise solutions to the financial challenges facing CCS. We are encouraged that the current CCS demonstration already includes support for nascent infrastructure that will be needed to support the deployment of CCS, but more needs to be done to develop the infrastructure of pipelines and encourage clusters of those facilities in certain areas beyond the demonstration phase.

What work has the office of carbon capture and storage at the Department of Energy and Climate Change done to ensure that those coal-fired power stations that may come forward are able to share infrastructure, such as pipelines and capture plants, with industry, to reduce the overall cost of CCS and to make those plants more economically viable? How will the electricity market reform proposals ensure that a viable supply chain can develop to deliver CCS retrofits to a time that is compatible with our decarbonisation trajectory, as set out by the Committee on Climate Change?

If CCS is to be an integral part of our future energy security and carbon reduction—although we have to prove the technology on a commercial scale first—and if we wish to be at the forefront of the technology, so that we capture the benefits for the domestic and export markets in the future, from China, to India, to Brazil, to the US, we must provide the means. In fact, we have a duty to develop this technology, alongside our European neighbours, because with rising global use of electricity generated by coal, the downsides of delay are significant.

Any delay in the roll-out of CCS will mean higher atmospheric concentrations of CO₂, which in turn will mean that subsequent attempts to limit temperature rises to less than 2°C will be harder to achieve. Some calculations suggest that for every year that widespread global deployment of CCS is delayed after 2020, the long-term atmospheric stabilisation level of CO₂ increases by one part per million. Therefore, if we delay by more than a decade, the stabilisation of atmospheric concentrations of CO₂ at lower levels becomes near impossible. According to the International Energy Agency, without CCS and if we were to rely on other technologies alone, the costs of tackling global CO₂ emissions will rise by more than 70% each year. In simple monetary terms, it is a cost of $1.3 trillion annually by 2050.

During the deliberations of the Energy Bill Committee, the Minister referred to emissions performance standards, but I hope that he will provide more detail today. What will the introduction of EPS mean for the future of coal-fired power stations, and what representations has he received on the issue from industry? Will next month’s electricity White Paper identify the level at which the EPS will be set? What effect does he envisage the EPS having on the British coal industry? As the EPS applies only to new-build coal-fired power stations, is it the Minister’s intention that the carbon floor price will be the mechanism to incentivise a reduction in CO₂ emissions from plants?

Despite concerns from those representing coal-fired power stations, particularly about the burden of an extra layer of legislation and the fact that it will apply to new-build stations, the right EPS, for example, could help drive investment in carbon capture and storage, but only if it is set at an intelligent level. In written evidence to the Energy and Climate Change Committee in January, energy solutions company Alstom said:

“An EPS at a technology-neutral level from, say, 2020, could provide support to the deployment of CCS, increasing the diversity and security of supply by enabling continued, but decarbonised, use of coal.”

As such—and while recognising the positive intention of the EPS to ensure that no new coal-fired power station should be built in the UK without CCS, and the danger, highlighted by Alstom, of the wrong EPS level resulting in no new coal builds—this makes it even more critical that the Government drive on with the four CCS projects, pre and post-combustion, with urgency.

Planning is another big and obvious problem for coal and other new generation capacity. Undoubtedly, with the closure of many coal-fired power stations over the next decade, many planning applications will be made for new coal and gas-fired power stations, alongside applications for new nuclear build, onshore and offshore wind, biomass plants, and so on. What will happen, therefore, now that the Infrastructure Planning Commission is being scrapped? Will there be adequate resources and expertise in the Planning Inspectorate to avoid it being overwhelmed by the resulting workload, or will it simply become a rebranded version of the IPC?

Before I finish, I wish to raise a few issues that I hope the Minister will address in his wind-up. What discussions has he had with the coal industry about the carbon floor price mechanism and capacity payments? What impact does he expect those mechanisms to have on the future of coal-fired power stations?

The European Union’s emissions trading scheme is a cap and trade system. If less CO₂ is produced in the UK, is the Minister concerned that, as fewer CO₂ allowances are used, the introduction of a carbon floor price will simply result in the migration of the carbon to elsewhere in Europe? That point was raised by the hon. Member for Nuneaton (Mr Jones) during an earlier intervention.

Will the proposed single tax rate under the carbon price mechanism disadvantage UK-mined coal against imported coal? There is concern that it will have a detrimental impact on UK coal producers, potentially leading to the closure of more pits, particularly deep mines, and resultant job losses.

Co-firing biomass with coal is a recognised renewable technology and receives renewables obligation support. The hon. Member for Thurrock (Jackie Doyle-Price) has made a powerful case in support of her local plant. However, concerns have been expressed about whether the technology receives sufficient funding. Can the Minister update us on the banding review of renewables obligation certificates? What is his intention in relation to co-firing biomass with coal?

In conclusion, coal is important to the UK’s energy future—as clean coal—to provide the bridge over our energy gap and to a low-carbon future. However, we face significant challenges and must move quickly to develop the required technology to overcome them, if we are to tackle the dangerous threat posed by climate change. I would be grateful if the Minister addresses in his closing remarks the issues I have raised.

Thank you, Mr Howarth, for your stewardship this afternoon. I also thank the hon. Member for Sherwood for securing the debate and all the Members whose eloquent contributions have ensured that we have had an informed discussion.

15:39

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

It is a great pleasure to serve under your chairmanship this afternoon, Mr Howarth. I congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing the debate and on the manner in which he introduced it. If there were any doubt about it, he has proved today that he is a very fine heir to the seat of Sherwood. The bipartisanship, expertise and understanding that he has shown on the coal industry and wider energy issues are certainly traits that Paddy Tipping and Andy Stewart had. I very much welcome the debate that he has instigated. It would also perhaps be appropriate to put on the record that the hon. Member for Ogmore (Huw Irranca-Davies) would normally reply to such a debate for the Opposition. He is understandably not here today because of family circumstances and our thoughts and prayers are with him and his family at a very difficult time.

As I say, we have had an important and useful debate. There should be no doubt that we recognise that coal has been and will continue to be an integral part of our energy infrastructure. As my hon. Friend the Member for Sherwood reminded us, coal makes up on average 35% of our electricity generation, but on a cold winter’s day that figure could readily be 50%. It is therefore vital to our energy security. As we have heard during the debate, coal is also the most carbon intensive form of electricity generation, producing around twice as much CO₂ per unit of output compared with a gas-fired power station, together with other environmental pollutants. He put the issue in an international context and outlined the role that coal is likely to play internationally over many years to come.

The imperative of tackling climate change means that we will need to decarbonise our electricity system. In the future, our energy supply will have to be diverse, adaptable and clean. The technologies that can help to deliver that are: nuclear, which should be built without public subsidy; renewable, including biomass, to which I shall return; and fossil fuels with the use of carbon capture and storage. I absolutely agree with the hon. Member for Midlothian (Mr Hamilton) that this should not be a debate about one technology versus another. We need to secure a tremendous amount of investment in our energy infrastructure, and we should be encouraging that to come from a wide balance of resources. I hope that we can agree that our energy security is enhanced by the breadth of that investment portfolio.

As my hon. Friend the Member for Sherwood mentioned, there is certainly a case for having back-up at times when the wind is not blowing, but that would not necessarily have to be coal; it could be gas. At the moment, the investment case would be much stronger for a new gas power plant than for coal with CCS because of the relative costs. That back-up supply could also be provided through interconnectors. For example, an interconnector to Norway could provide a huge amount of potential clean electricity and there could also be additional interconnectors to France or Iceland. They could be part of that process. During this decade, other storage technologies have been developed, such as battery, the use of hydrogen, compressed air or heating hot water. Those are all ways in which one can enhance the reliability of the renewables sector. Nevertheless, we recognise—and the structure we are looking to put in place recognises—that there will also need to be back-up power plant available.

We should also recognise the continuing role for gas in the mix, which has often been missed out in many of these debates. We have increased the expectation of the likely role that gas will play, which picks up the point made by the hon. Member for Blackley and Broughton (Graham Stringer). The world outlook on gas has changed beyond recognition in the past few years and it is right that energy policy should evolve to take account of that reality. When he noted that I was shaking my head, I was not disagreeing with him about the fact that there is an energy crunch, but about the time scale. My expectation is that the problem will not arise in four or five years, but towards the end of the decade.

A lot of new investment is coming through in gas plant. I opened a new Staythorpe 2 GW plant recently in the east midlands and there is also a new 2 GW plant coming onstream shortly in Pembrokeshire. A lot of new investment is coming through in gas; indeed, of the 20-plus GW of consented plant, 60% is gas. A great deal of new plant is coming through, but when we consider that we will lose a third of our coal plant by 2016—it may be more by the end of the decade—and much of our nuclear plant during this decade, there is a real urgency to secure new investment. During this decade, we are talking about an investment figure in excess of £100 billion in terms of electricity generation and the associated infrastructure.

The hon. Member for Liverpool, Wavertree (Luciana Berger) said that we had been drifting in terms of some targets, but I believe it is hard to see that drift. She talks about drifting on the CCS time scale, but in fact, we will secure that first project much quicker than was anticipated under the previous Administration. She talked about us drifting on the renewable obligation review; in fact, we have brought that forward by a full year from the time scale we inherited precisely to give clarity to investors. Where there was ambition before, we have decided to match that with a delivery programme, and put in place a road map for the development of carbon capture and storage, a dedicated Office of Carbon Capture and Storage and a developers forum to identify the barriers to investment, so that we can directly focus on those. I hope that we are putting in place a clear programme whereby we are saying, “We understand what the challenges are. How do we make dealing with those a reality?”

As I said, coal generation remains an important part of our energy mix. UK coal production to date is much stronger this year than last, with surface mine output up 400,000 tonnes and deep mine output up by almost a million tonnes. Consequently, this year, there has been a significant drop in the volume of imports, which I think we would all be pleased about. That is partly a result of destocking and partly because of a steady output from Daw Mill colliery—I was pleased that my hon. Friend the Member for Nuneaton (Mr Jones) was here to pay tribute to that. We very much welcome the development plans that UK Coal has announced for Thorseby and the extension of its life that that might bring about.

Total production in 2010 was up on 2009 at a little over 18 million tonnes, and total coal use was also up. The net effect of contributions from indigenous production and the use of stocked coal was to reduce UK coal imports from 38 million tonnes to 26.5 million tonnes, which is a significant fall of 30%. The generating sector continues to be the main market for coal from all sources, particularly from indigenous production. Some 80% of the coal we consume is used in electricity generation. I want hon. Members from all parties to be in no doubt whatsoever that I, and the Government, believe that there is an important continuing role for coal, including indigenous coal, in the energy mix. We need to put in place the right structure to secure the investment that will bring that forward. Indeed, we also need the right approach to carbon capture and storage.

We know that a third of our coal plant is closing as a result of the large combustion plant directive and that the industrial emissions directive will result in the closure of additional plant. If we reduce the sulphur oxide and nitrogen oxide emissions, it will improve air quality and bring environmental benefits.

I question my hon. Friend the Member for Sherwood when he calls flue gas desulphurisation a simple technology. I have been to Drax to see it. The technology may, indeed, be simple from a chemical and engineering point of view, but it is vast. It covers many acres and costs many hundreds of millions of pounds. The companies that are looking at such technology have to think carefully about the long-term viability of their plant before they decide to go through that process.

It is clear that the market structure as it currently stands will not enable enough new investment to come through in these low-carbon technologies. That is why, during the past year, we have started the process of electricity market reform. Although the old market structure brought benefits to consumers—we had some of the cheapest electricity and gas prices in Europe, although it did not always feel like that—it did not attract important investment in low-carbon technology.

The key elements that make up the electricity market reform process are, first, long-term contracts for low-carbon generation through a feed-in tariff—a contract for difference—linked with a capacity mechanism. That could be used to provide for the additional plant that is needed on stand-by for those cold days when the wind does not blow, for half-time during a world cup football match or whenever additional capacity is required. Alternatively, we could find better ways of spreading the demand more evenly across the day and using that additional plant more sensibly.

The electricity market reform process will also look at the emissions performance standard, which the hon. Member for Liverpool, Wavertree raised. We will set out our plans on that in the forthcoming White Paper. We have listened carefully to the industry. I agree with her that if we set the EPS at the right level, it could be a strong steer towards new investment. Such an approach will make this country more attractive to investors because they will know what is expected of them over the longer term—for example, what the approach to grandfathering will be and when the reviews might happen. The EPS could be a very important steer and plus point in terms of attracting investment into this country, although I think I heard her indicate that there may be a case at this stage for applying it to gas as well. My anxiety about that is that we are not in the position to turn away investors who want to invest in gas at this time, too. We need to be very clear and careful about how it is introduced. The main drivers for low-carbon technology would be less from the emissions performance standard, and more from the feed-in tariff arrangements that we will introduce. We have also said that we will introduce a carbon floor price in 2013, and increasing gradually to 2020. That gives an early and credible long-term signal to investors that we are serious about encouraging investment in low-carbon technologies.

I understand absolutely the point made by the hon. Member for Liverpool, Wavertree. We have been talking closely with the coal industry and other people who are intensive energy users. We have to balance the urgent need to bring forward investment at twice the rate in this decade than was achieved in the previous decade, to meet the security of supply requirements that this country faces, and to do so in a way that does not create carbon leakage. It would not be sensible to drive away from the United Kingdom industries that can be a critical part of our manufacturing process—carbon emitters and heavy energy users. That would only result in that carbon being produced somewhere else in the world. There would be no net gain to the world. We would lose the jobs and have to import the products at the end of it—there would be no gain. That is why we have committed, over the course of the rest of this year, to put in place a series of measures to protect critical industries that are energy intensive users.

That lays the foundations for a sustainable economy, and will help to bring billions of pounds of investment into the United Kingdom through greater certainty. It will help to safeguard jobs, and will help to bring some of that supply-chain investment to this country, too. That is a right and proper target and objective for the Government. It also means that we have to develop carbon capture and storage.

Carbon capture and storage is not a luxury add-on; it is a fundamental part of our energy approach. We recognise the role that coal and gas will play for many years. That is possible with CCS in a way that could not happen without the development of CCS technology. I am pleased to see the progress in this country at a time when we see CCS deployment slipping back in other countries—Norway has put it back to 2018, and Holland is just delaying it, as are other projects elsewhere in the world. Britain remains one of the leaders on this. The £1 billion is the largest contribution that any Government anywhere in the world has committed to a single project. We have built on the work of the previous Government. Paddy Tipping referred to this as the competition without end, because it was going on for so long. I am glad that, in the course of the next few months, we hope to bring that to an end, although it is a complicated process.

The issues raised by the hon. Lady on shared access for infrastructure all need to be tied up in legal contracts with a variety of partners. We want to bring that to a close as soon as we can, ideally in these summer months.

[Mr David Hamilton]

Will the Minister encourage us to find out just exactly what contribution the Scottish Government are making? I believe that the Scottish Government are entitled to make a contribution, if that is the first big project of its kind to go. Of course, never shall the day come when we have separation—because I am a Unionist through and through—but surely it is right for this Government to check and make sure that the Scottish Government make a contribution if that day ever did come.

[Charles Hendry]

Energy remains a retained power. Clearly, the Scottish Government have decision-making powers on planning. That is why they have ruled out such things as new nuclear in Scotland. Nevertheless, energy policy is driven from Whitehall and Westminster. We therefore believe that if this is something that we want to achieve as a national Government, then we should be in the driving seat. If the Scottish Government were to say, “Here is a few million pounds to make it happen”, we would of course be very enthusiastic and grateful to them, although there are not many indications so far that the cheque is in the post. Nevertheless, this will be taken forward by us, as a Government and as the Department of Energy and Climate Change, with a cross-party approach here, and I hope that we can find that agreement in the course of the next few months.

We have a range of technologies, an issue touched on by my hon. Friend the Member for Sherwood. This should not just be about post-combustion technology. We need to look at oxy-fuel combustion and pre-combustion technologies, and that is what we want to see coming forward. In the course of the rest of this year we will set out the nature of the competition for the remaining projects—projects 2 to 4—and look at where we would like that to add to our knowledge, the type of technology that we may wish to see coming through with that, and to apply that to gas, too. Again, the world outlook on gas has changed a great deal and we need to take account of that.

I would say to my hon. Friend the Member for Sherwood that this is a technology that is still in its infancy. We know that the individual parts of it can work. We know that it can be separated—we have seen that done on a small scale. We know that it can be transported and we know that it can be injected into the sea bed. However, nobody in the world has done that at scale, so we do not yet know what the challenges are of doing that at scale, or what the costs will be. In terms of a time scale, to have four projects running by 2020 is extremely ambitious. We are not going to arrive at a stage where we can move it beyond that. We can absolutely see this technology moving forward in the 2020s. Global ambition suggests perhaps 100 projects by 2020, but 3,000 projects by 2050. This is therefore a process that will inevitably start carefully, but then build up dramatically over time. Everything that we are doing here is determined to ensure that the United Kingdom can be in a real leadership position. What we also see from industry shows that it wants to be part of that process. The NER300 process is a European competition, and almost half of the schemes coming forward for CCS are in the United Kingdom. That shows the appetite among our industry, our universities and our whole supply chain to help lead in this area.

[Mr Spencer]

I am grateful to the Minister for giving way, as I have taken up more than my quota of time. Given that the new technology will not be on the street until 2020, we will not be in a position to build nuclear power stations to that time scale, and renewable energy will not be large enough to make the shortfall, does he anticipate that the only way we can supply the nation will be by importing that power from our neighbours?

[Charles Hendry]

No, I do not, although I see it as being an important contributor. The investment in gas that we are seeing shows that the energy company industry is keen to invest in the gas infrastructure, too. We want to see that bid grow out of renewables, but some of those technologies for UK tidal would be in the 2020s. We want to see offshore wind ramping up in the course of this decade. My hon. Friend is absolutely right that nuclear is towards the end of this decade, but as we start to deal with the crunch to which the hon. Member for Blackley and Broughton referred, we need to see additional gas infrastructure, too. We should not rule out interconnecters as part of that process.

Finally, I want to come to the issue of biomass. I am grateful to my hon. Friend the Member for Thurrock (Jackie Doyle-Price) for the point she made on that. Electricity from biomass is important to our renewable energy targets, because it brings security of supply benefits. It is dispatchable; in other words, when we need more power, we can generate more power. It can be turned up and it can be turned down. It is one of the few renewable energy sources that is genuinely adaptable in that respect. Large-scale dedicated biomass has the potential to develop significant levels of renewable electricity by 2020. Electricity from dedicated biomass is cheaper than some other large-scale electricity sources. If biomass generation needed to meet the renewable energy target was displaced by more expensive technologies, then inevitably there would be a higher cost to consumers.

It is encouraging to see the interest from Drax, which is developing dedicated biomass. The work at Tilbury is ground-breaking and I join my hon. Friend the Member for Thurrock in paying tribute to RWE npower for the work it is doing to make that happen. Part of the renewables obligation banding review, which, as I said, we have brought forward by a year, will be to determine the appropriate level of support to bring forward either biomass conversion or co-firing, because of the contribution that they can make.

In conclusion, we believe, without any doubt, that coal can play an important role in our electricity-generating mix in the future, but only if its carbon dioxide emissions can be reduced significantly. Electricity market reform will provide the commercial incentives to deliver new low-carbon plant, and our CCS demonstration programme will ensure that there is a cost-competitive solution to the emissions from coal.

I congratulate my hon. Friend the Member for Sherwood. This has been a long-overdue debate, and one that has been extremely constructive. I rejoice at the fact that we can talk about coal, with Members on both sides of the House talking about its opportunities and its importance. I welcome that—it is a big step forward.

Local Rail Services (Bristol)

Wednesday 29th June 2011 Westminster Hall

15:59

[Charlotte Leslie (Bristol North West) (Con)]

This debate is on the future of local Bristol rail, an issue that affects not only my constituency of Bristol North West and the city of Bristol but, because the south-west is so important a part of Britain, our nation as a whole.

Bristol is a significant city facing enormous developments, but the transport infrastructure is poor. Traffic congestion at our key motorway junctions can stifle the city and—not unrelated—bus fares are among the highest in Europe. Indeed, instead of being the gateway to the south-west, Bristol and its region can be described as the tourniquet of the south-west. The city is not standing still, however, with a new deep-water port at the port of Bristol making the docks of greater national and international significance, the possible sale for commercial use of Filton airfield in the constituency of my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti) and the substantial housing development across the northern arc of Bristol. They are all opportunities but, unless the city’s transport infrastructure is capable of supporting them, opportunities could represent burdens. I asked for this debate to emphasise to the Government the importance of supporting long-term transport infrastructure in Bristol, and to point firmly towards rail providing the bedrock of that transportation.

I am delighted that electrification of the Bristol to London line is going ahead—a major boost for the city—and it paves the way for the kind of long-term thinking we need.

[Stephen Williams (Bristol West) (LD)]

I agree with my hon. Friend that the electrification of the Great Western main line is a fantastic announcement by the coalition Government. Does she agree that that announcement will be enhanced if we could get a commitment from the Government for the Severn Beach line, which is merely a small spur off the main line, to be electrified at the same time?

[Charlotte Leslie]

My hon. Friend makes an extremely good point, which anticipates what I was going to say. He has done a lot of work lobbying for electrification, and I thank him for that.

The electrification is fantastic and, as I said, long-term thinking is massively important, not that the current smaller schemes for improvement are not welcome. However, unless we also think long term, and think big, those improvements will merely scratch the surface and we will not have the available infrastructure to maximise the effects of the small schemes. I am tempted to draw an analogy with Joseph Bazalgette’s building of the great London sewer system. There is no more time for devising more effective ways of throwing waste out of the window. For transport in Bristol, we need to devise a structural system that completely changes the way we do things.

When we come to the solution, there is good news: the bare bones of that new structure for transport in Bristol already exist. Disused and used freight lines lace the city, in particular in and around my constituency of Bristol North West, in the north of the city, and there are disused stations such as Henbury. The city of Bristol is sitting on a dormant giant of rail travel.

I have campaigned with the Friends of Suburban Bristol Railways and others for a Henbury station and a Henbury loop line. The solution is a no-brainer: the resurrection of our local lines in Bristol, to complete the circle line around the city that we partially enjoy already with the Severn Beach line. A Henbury loop circle line could link with the major stations of Bristol Temple Meads and Bristol Parkway, and could provide a reference point for shuttle transport to major visitor destinations such as the Mall at Cribbs Causeway, in the constituency of my hon. Friend the Member for Filton and Bradley Stoke. He cannot be here today because he is opening the new St Peter’s school in Pilning, but he has rightly said that, given the likely commercial and residential development if the sale of Filton airfield goes ahead, the case for examining existing rail provision and the possibility of resurrecting mothballed stations such as Filton would be really strong. With section 106 moneys coming from the significant housing development in the area, investment for such infrastructure does not seem out of the question.

In Bristol, which in the past I have talked about in terms of “A Tale of Two Cities” because of the deep socio-economic divides running through it, a circle line could open access and economic regeneration to some of the more deprived pockets of our great city, but the economic benefits do not end there. I understand that some Ministers have already travelled on the Severn Beach line, which runs from Temple Meads station up the west side of the city. That suburban line provides a demonstration of the untapped need and desire for local railway infrastructure, and the benefits of pump-priming investment. Since welcome investment by Bristol city council in 2008, which my hon. Friend the Member for Bristol West (Stephen Williams) was active in campaigning for, introducing more frequent services on the Severn Beach line, passenger numbers have rocketed by about 60%, enabling a long-term subsidy decrease as the service becomes economically more successful. Were the circle line circuit complete around the city, that percentage of passenger increase and revenue would likely be an awful lot higher—but what we need is joined-up thinking.

Among parliamentarians, I am delighted there is broad and energetic consensus on the need to work together for the future of rail in our region. Sadly, in the past, however, a certain lack of co-ordination has led to our region missing out on some major transport investment opportunities. That is why I take this opportunity to back strongly the creation of an integrated transport authority for the region. Other areas, such as West Yorkshire and Merseyside, have seen a major resurrection of their local suburban rail services and they have something significant in common: an ITA. So I congratulate our local paper, the Evening Post, and a one-man campaigning army, Dave Wood, on making the case for an ITA so energetically.

An integrated transport vision is as central to the beating heart of our city as a circulation system of veins, arteries and capillaries. With a strong, united voice, bids for projects such as the reopening of the Portishead line and the Henbury loop line can be more effective. If other regions can do it, why cannot we? The strong progress of our local enterprise partnership gives further hope and might provide a great basis for more joined-up thinking. So the big vision is a circulation system of rail around Bristol, linking with cycling and bus routes, and park and ride, to make all the schemes more effective.

More specifically, a major structural concern is to secure quadruple tracking up the Filton bank to Parson Street station, to alleviate the significant bottleneck which limits services locally. Failing to secure that now is a false economy, holding us back for the future, in particular given the existing demonstrable demand for more services. The electrification of the Bristol to London route is incredibly welcome, not only in itself but for the further opportunities it will provide, but any update from the Minister on how far the electrification will extend—for example, to Yate or Weston—would be most appreciated. Such an extension would open enormous opportunities for the suburban lines, with greater flexibility in rolling stock, new routes and diversionary routes for electric trains when needed. A 30-minute service from and to all stations in the former Avon area would be transformational, although it is quite a modest vision when compared with other major cities around the country.

As I said, the reopening of the Henbury loop and Portishead lines are particularly important specific proposals. An issue worked on and frequently raised by the hon. Member for Bristol East (Kerry McCarthy) is the safeguarding of Plot 6 at Temple Meads for a bus and train interchange. In the more immediate term, I seek clarification from the Minister about additional carriages for crowding relief in Bristol; more rolling stock is badly needed, which is an indication of the appetite for rail travel and the enormous unmet demand. I ask him to consider that seriously.

A Henbury loop line circuit is big thinking indeed, but rail gets to the core of tackling the underlying problems of Bristol’s transport system. Rail infrastructure for Bristol would be an absolute game changer for all the other methods of transport that we need to improve, freeing up the roads for buses and cyclists and transforming the park-and-ride potential. The idea has backing—indeed, the scheme is recommended in Network Rail’s route utilisation strategy—and I ask the Minister to look specifically at backing the scheme with practical financial support. Yes, the thinking is ambitious and long term, but I argue strongly that long-term strategic thinking and infrastructure investment is exactly what is needed if the entire Bristol region is to meet the real, pressing and ever-increasing transport challenges of the future. I called for the debate today because the future comes sooner than we think.

[Chris Skidmore (Kingswood) (Con)]

rose—

[Mr George Howarth (in the Chair)]

Order. Before the hon. Gentleman starts his speech, I should point out that I intend to call the Minister at 15 minutes past 4.

16:10

[Chris Skidmore (Kingswood) (Con)]

I thank my hon. Friend the Member for Bristol North West (Charlotte Leslie) for securing this extremely important debate, and I am pleased to see my hon. Friend the Member for Bristol West (Stephen Williams). It is rare to be able to talk about local issues in Parliament, and this debate is a great opportunity to do so. It is a shame that more hon. Members could not be present, but I want to give a personal apology from my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti) who, as my hon. Friend the Member for Bristol North West said, is in his constituency. It is a shame that the right hon. Member for Bristol South (Dawn Primarolo) and the hon. Member for Bristol East (Kerry McCarthy) are not here, because we would then have had a full complement of local MPs to discuss transport issues in our local area.

As the MP for Kingwood, I do not specifically cover Bristol rail matters, but they are vital for my constituents in terms of integration, and I fully support the development of the rail networks: the West of England Partnership and local enterprise partnership have done excellent work in pressing the case, as the Minister knows, for rapid transit links to the northern fringe. My hon. Friend the Member for Filton and Bradley Stoke asked me to read out a statement that he would have made if he had been here:

“The Henbury loop line, presently a freight line used by coal trains from Avonmouth, will become a very important line for the local area with expansion of the Avonmouth Docks. It is also a very important diversionary route; there is a lot of residential and industrial units being constructed in North Bristol so this line needs to be opened up as a passenger line.

To achieve this a new station could be built at Henbury, and the closed North Filton station could be rebuilt with a park and ride site perhaps on land near the now closed airfield.

Filton North station is next to the A38 main road. Airbus, Rolls Royce, GKN Systems, Royal Mail and countless other firms are based in the near vicinity and the re-opening of this station could alleviate some of the rush hour traffic problems that the local area currently experiences.

With the closing of Filton airfield, land which is likely to be redesignated to residential and commercial needs, we must get the local transport infrastructure right to ensure that we can avoid serious traffic problems stifling the local area.”

Although my constituency lies outside Bristol, all those issues affect the greater Bristol area, and as united coalition partners we want to ensure that we regenerate Bristol for the better. I again thank my hon. Friend the Member for Bristol North West, and look forward to the Minister’s reply.

16:12

[The Parliamentary Under-Secretary of State for Transport (Norman Baker)]

I congratulate my hon. Friend the Member for Bristol North West (Charlotte Leslie) on securing this debate, and my hon. Friends the Members for Bristol West (Stephen Williams) and for Kingswood (Chris Skidmore) on contributing to it. The subject is important and timely.

My hon. Friend the Member for Bristol North West set out with great clarity the importance of the rail network in Bristol to the local economy, and how it can contribute to helping to address congestion problems in and around the city. She said that Bristol is the gateway to the south-west, and the Government fully recognise that in our planned investment in the inter-city rail network to Bristol. Indeed, it would not be possible to discuss local rail issues—I will return to them later—without referring to the significant developments that are planned for the network over the next five to 10 years, and which will transform Bristol’s links with London and the south-east.

The announcement that the Great Western main line between London, Bristol and Cardiff will be electrified has been warmly welcomed in the west of England, and I am pleased to hear hon. Members’ support for that project today. The line will be equipped with brand new inter-city express trains, and the current proposal is for four trains an hour to run between Bristol and London, two an hour via Bath and Chippenham and two an hour via Bristol Parkway. Those via Bristol Parkway will transform the links between the constituency of my hon. Friend the Member for Bristol North West and London, given the proximity of Bristol Parkway station.

Both routes into Bristol will be electrified and, with electrification of the Severn tunnel route through to Cardiff, three of the local routes—Cardiff to Bristol, Bristol Parkway to Bristol, and Bath to Bristol—will be able to accommodate electric trains. There are no plans to electrify the line to Weston-super-Mare or the Severn Beach line. However, because some of the new inter-city trains will be bi-mode trains and able to run on electric or diesel power, some inter-city trains will continue to operate to Weston-super-Mare, as they do today, and will switch seamlessly—at least, I hope so—from electric to diesel power at Bristol Temple Meads.

Another recent announcement is significant for the area. The Secretary of State has announced that the Thameslink route through London will receive new rolling stock from about 2015. That means that, as far as Bristol is concerned, there will be a pool of electric rolling stock available to operate some Bristol area local rail services should the operator of the new Great Western franchise choose to use them. I realise that capacity is an issue. We are currently negotiating with First Great Western for provision of additional diesel carriages, but I cannot confirm at the moment when they will arrive or what the exact number will be. However, the prospect of electric trains will ease the position considerably.

I said that this debate is timely, and there are three reasons. First, detailed planning of the electrification scheme is now under way, and there may be opportunities to add to the scheme better to meet the needs of the local area if funding can be identified locally. Secondly, First Great Western has recently announced that it is taking up the option that the previous Government made available to it under the terms of the franchise of terminating it in 2013 rather than 2016. Therefore, detailed work will have to be carried out on the specification for the new franchise. Local authorities need to be ready to input into the process, and to discuss their ideas with bidders when they emerge in due course. For the avoidance of doubt, we welcome local people’s views of the new franchise arrangements which we are putting in place throughout the country. Thirdly, we are keen to explore the scope for devolving further aspects of rail to local authorities, and a good time to do so is when a franchise is due for renewal and the area is set to benefit from major investment.

The electrification scheme creates major opportunities for the local rail network around Bristol. Electric trains are cleaner, quieter and have better acceleration than diesel trains, so they are ideally suited to providing local rail services in densely used urban areas. The journey-to-work area in Bristol is expanding, as my hon. Friends know only too well, so now is the time for the local authorities to consider how the local rail network can be adapted to maximise the benefits of electrification. That may require some reconfiguration of local services, but the local authorities are well placed to understand passengers’ needs. For example, we are aware that the West of England Partnership is keen to see the local rail service extended from Bristol Parkway to Yate. We would welcome local input into matters such as whether a short extension of electrification from Westerleigh Junction to Yate would offer value for money. Likewise, new stations have been suggested for the Bath route, and now is the time for the partnership to consider such issues.

We are keen that proposals for infrastructure enhancement are robust and based on sound evidence. It is in nobody’s interest to promote unsustainable or undeliverable schemes or schemes that have little chance of securing funding. It is therefore important that work is undertaken to understand the viability of those options. I want to make it clear that the Government are pro-rail. We have a major programme of investment in the rail network. Indeed, it is reasonable to conclude without hyperbole that our rail investment programme is the biggest since the Victorian era.

In the Bristol area, the local authorities work closely together as the West of England Partnership. Although they are free to consider whether there might be benefits in forming an integrated transport authority—my hon. Friend the Member for Bristol North West referred to that, and some people believe that there would be significant benefits—it is not essential that they do so for the purposes of securing improvements or investment in local rail services. If local people want to consider forming an ITA, we will pay close attention to that. The partnership has a number of plans for rail, and there are no institutional barriers preventing them from achieving them.

We are keen to see the local authority partnership aligned with the local enterprise partnership, and together to play a leading role in determining the future of the local rail network. For example, that structure could deal with the safeguarding of Plot 6 at Bristol Temple Meads. The West of England Partnership already takes an active role in transport, and has established a rail protocol with train operators and Network Rail. I understand that the local enterprise partnership has plans for regeneration around Temple Meads station.

The West of England Partnership has created the concept of a Bristol metro network of regular-frequency local rail services, and has been very supportive of North Somerset council’s efforts to reopen the Portishead line. The next step will be to identify how those enhancements could be delivered and, more importantly, funded. The reopening of that line would require the reopening of passenger services on a freight-only line from Parson Street junction to Portbury junction, and the reinstatement of track from Portbury junction to a new station at Portishead. Our rough estimate is that reopening would cost £35 million to £40 million. Steps are obviously under way to make Network Rail more efficient, and to drive down costs, but that is our present estimate. Such a move would require the provision of new train services, perhaps every half hour during peak times and every hour off-peak. At the moment, that would need an ongoing subsidy, which is an important consideration when working out the economics of any reopening.

Reference was made to the possibility of reopening the line to passenger services between Avonmouth and Filton Abbey Wood. That would create a north Bristol circle line that would run from Temple Meads via Clifton Down to Avonmouth, and back to Temple Meads via a reopened Henbury station. I am sure that such a circle line would be more reliable than the one I use on a regular basis, which runs not far from this Chamber.

[Stephen Williams]

I share the vision of that north Bristol circle line with my hon. Friend and neighbour the Member for Bristol North West (Charlotte Leslie). It would also provide the opportunity for new stations along that route. My hon. Friend mentioned some stations that she would like in her constituency, and I will add Ashley Hill station to that list. It would be on the Filton Bank line and serve about 20,000 residents either side of where the station used to be—the platform is still there. It would also serve Gloucestershire cricket club and Fairfield high school.

[Norman Baker]

My hon. Friend has long campaigned very strongly on these issues and I welcome his involvement. Objectively, if we are to reopen a line it is a good idea to attract as many passengers as possible, and the provision of extra stations could be a useful way to achieve that. A cost-benefit analysis would be carried out for each station to look at whether reopening it would make sense to the project as a whole. My hon. Friend has given several examples of why he believes that would be the case for the station that he mentioned.

Although the line between Filton Abbey Wood and Bristol is intact, we would need to increase its capacity, and Network Rail is considering how to accommodate the extra trains. There would also be the question of how to serve the branch line from St Andrews road to Severn Beach. In the first instance, the West of England Partnership will determine whether that scheme should be a priority, although to date it has provided no indication that it would seek to explore that proposal, given that the Bristol metro and the Portishead line appear to be higher priorities. Hon. Members from the Bristol area may wish to pursue that point with the West of England Partnership. Bristol city council funds additional services on the Severn Beach line, which has contributed to a significant growth in the usage of the line. Perhaps that model could be employed elsewhere in the area.

Let me take the opportunity to congratulate the community rail partnership. It has done tremendous work in improving stations, promoting the network around Bristol and, importantly, involving local people in its schemes. That has produced a tremendous sense of pride and ownership in the local rail network. My right hon. Friend the Minister of State for Transport recently visited the line and was impressed with the achievements of the community rail partnership. She was keen for me to refer to those achievements in my remarks today.

Conditions already exist for local authorities to take on greater responsibility for local rail services. The Department for Transport will be happy to discuss ways of achieving that with those local authorities, and help as best it can. As I have already mentioned, there may be scope to modify the electrification scheme to take account of local needs and aspirations, and as we have seen, local authorities are already able to finance rail services and schemes using funds available for local transport. We believe it is important that decisions on local priorities are made by local authorities rather than central Government, so there are currently no plans to establish a central fund for local rail schemes. Instead, local authorities should identify which local funding sources are most appropriate for a rail scheme, and decide whether such a scheme should have a higher priority than, for example, a highway or bus scheme.

Although the coalition Government’s current priority must be to reduce the budget deficit, we are making available a significant amount of money—£560 million—through the local sustainable transport fund. That is more money for local transport than was provided over the past four-year period, despite the difficult economic climate that we face. We are also making a contribution to the regional growth fund to enable some schemes to proceed before 2014. All that is in addition to the major local transport schemes budget, and in September the West of England Partnership will make five bids to the Department for schemes linked to the development pool. We will make decisions on those schemes around Christmas. The area has already had one scheme approved for the Greater Bristol bus network, which is nearing completion. The West of England Partnership has made a key component bid and a large project initial proposal to the local sustainable transport fund, and an announcement on the key component bid will be made shortly.

We will soon be consulting on a more devolved approach to major local schemes that will be in place from April 2015. Such an approach will provide the opportunity for groups of local authorities, working with local enterprise partnerships, to consider once again the transport priorities for their area that the fund might help to meet. That is particularly important for the reopening of the Portishead line, which has been frequently mentioned in this debate, through correspondence with the Department, and in other forums.

The aspiration is to reopen that line by 2017, but it is essential to first establish that that is the best way to meet the needs of the area and a priority for investment among other potentially competing claims. The local authority has carried out important work with Network Rail through the governance for railway investment projects process—GRIP. It also, however, needs to establish demand for the scheme and to demonstrate that there is a business case and that ongoing financial support is affordable. Initially, that must be demonstrated locally and not by the Department. We will respond to that local pressure.

To conclude, electrification brings opportunities for improvements to the local rail network around Bristol. There is an important role for local authorities, working together through the West of England Partnership, to carry on the good work and seize the initiative by taking advantage of such schemes. The Department will be happy to provide advice and guidance to hon. Members, councillors and others in the Bristol area, to ensure that people are able to maximise the opportunities in their area. Ultimately, however, it is for local people to lead on such matters, and the Department will have a supportive role.

Computer Games Industry

Wednesday 29th June 2011 Westminster Hall

16:26

[Jim McGovern (Dundee West) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Howarth, and I thank the House and the Speaker’s Office for giving me the opportunity to raise an issue of great importance to my constituency: the computer games industry.

As hon. Members will be aware, calls for the Government to provide more support to this important industry have been made for some time, and during both the previous Parliament, and this Parliament, I and many of my colleagues have asked the Government to act. The previous Labour Government committed themselves to introducing tax breaks to encourage start-up companies and overseas developers to establish operations in the UK. The election of the coalition Government saw that policy scrapped, despite the support of Liberal Democrat and Conservative Front-Bench spokespeople before the election.

The UK computer games industry is a substantial contributor to investment in the UK. In Scotland alone, £30.2 million is invested in salaries and overheads, £27.5 million is contributed to the Exchequer, and a direct and indirect contribution of £66.8 million is made to UK GDP. In the UK as a whole, those figures rise to a £1 billion contribution to GDP, and £400 million a year that goes to the Treasury.

In Dundee, the arrival of a successful games developer has been a major factor in the revival of the city’s fortunes, following the loss of major manufacturing industries in the 1980s and ’90s. The computer games industry has contributed to help Dundee fast become a destination of choice for investors. Millions of pounds have been invested into the city and much-needed high-quality jobs have been created. Such investment has also provided an opportunity for young graduates, many of whom studied in Dundee, to pursue graduate careers in the city when before they would have left to work elsewhere. That has had a tremendously positive effect on the city.

All that, however, is now at risk. Like many major industries, the computer games industry operates in a globalised economy and faces stiff competition from abroad. In that environment, just as in many others, global competition is squeezing British industry. Like ship building, general manufacturing and steel production before them, UK creative industries are being tempted away by countries that offer ever more enticing business environments. Canada is a particular threat. Last week the Entertainment Software Association of Canada produced a report highlighting the fact that Canada’s computer games industry has significantly benefited by poaching companies from the UK. It estimates that because of tax breaks, the industry will grow by 17% over the next two years. Between 2008 and 2010, the Canadian games industry grew by 33%; over the same period, the UK’s games industry fell by 9%.

We have seen recent evidence of that phenomenon in the UK when a games developer in Warrington closed and staff were offered positions in the company’s Canadian office. There is more bad news for the UK industry. The US state of Pennsylvania announced this week that it is to introduce a 25% tax break for games developers. That makes it the 17th US state to offer such support. Alongside that, the Irish Culture Minister, Jimmy Deenihan, announced at the start of this month that the Irish Government were looking to implement tax breaks to encourage games developers to move to Ireland. That is all the more concerning given what we know of Ireland’s ability to attract high-investment technology companies to its shores—its banks notwithstanding. I am referring to companies such as Microsoft and Apple.

That is why I am calling on the UK Government to reconsider their approach to Government support for the industry. There is a significant risk that our industry will be further outmanoeuvred by countries such as Canada, Ireland and the United States and we will lose the investment that communities such as those in my constituency cannot do without.

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

I congratulate my hon. Friend on securing this debate, which is important for jobs in Dundee. As he rightly identified, just five weeks before the general election, both coalition partners promised that they would introduce tax breaks for the industry. Has my hon. Friend had any indication as to why that policy has changed?

[Jim McGovern]

I thank my hon. Friend for his intervention. I can quote from the evidence taken by the Select Committee on Scottish Affairs, which conducted an inquiry into this subject. It was said in that Committee that on 29 March—just five weeks before the general election—the then shadow Minister said that the Conservatives were

“going to support tax breaks for the video games industry…We are fully behind game tax breaks. This is my unequivocal statement. It’s been approved by George Osborne.”

However, in the very first Budget, in June 2010, they scrapped that. I have never heard a reasonable explanation of why that happened. Perhaps this afternoon we will hear one.

[Lindsay Roy (Glenrothes) (Lab)]

I, too, congratulate my hon. Friend on securing this very important debate. As I understand it, the Government tell us that the key to recovery is growth and support for small and medium-sized enterprises. Is my hon. Friend saying that we are entering this competitive field with one hand tied behind our backs?

[Jim McGovern]

I thank my hon. Friend for his intervention. The Government seem to be saying that differences in corporation tax and research and development tax credits are good enough to support the computer games industry. My view and that of TIGA, the association that represents the computer games industry, is that a one-size-fits-all policy is not good enough and there should be a specific solution for specific industries, such as the computer games industry.

The one policy difference between the UK and our competitors is a scheme of tax incentives for games developers. Canada offers tax breaks of 17.5% to 37.5% on labour expenditure. As I said, Ireland is investigating how best to implement tax breaks, and Pennsylvania is offering a 25% tax break, which is similar to that offered by the other 16 US states that offer such support. It is clear that the UK is being outdone by those tax regimes. That is why I am calling on the UK Government to introduce a tax incentive scheme that rivals those other countries’ schemes.

As the Minister will be aware, the Scottish Affairs Committee investigated the current state and benefits of the computer games industry in Scotland. Its conclusion on tax breaks was clear. It said that there were compelling reasons to introduce tax breaks and that the UK Government should begin a consultation process to see how best to achieve that. That is additional to recent calls by major international developers. Three of the largest—Activision Blizzard, THQ and Ubisoft—have publicly stated that tax breaks in the UK would make them much more likely to invest here. There are many reasons why they do so now.

[Justin Tomlinson (North Swindon) (Con)]

I thank the hon. Gentleman for giving way on that point in this very important debate. Has there been an estimate of the long-term tax revenue that could be generated if the UK’s share of the market was to grow through the use of tax incentives?

[Jim McGovern]

There has been an estimate. TIGA reckons that tax breaks would help 2,500 new jobs to be created and would maintain and protect 3,000 current jobs.

[Mike Weatherley (Hove) (Con)]

Does the hon. Gentleman agree that we need to think not just about the short-term position, but the long term? Given that this is such a transient product, which can go from border to border, we need to think about how the whole market is developing. Therefore, tax breaks are important in our thinking about how we can maximise revenue going into the future, not just in the short term.

[Jim McGovern]

I certainly do agree. We do need a long-term strategy. Everyone involved with the computer games industry—it is a big thing in my constituency of Dundee West—agrees that a long-term strategy is required, but in the short term, to prevent companies from going bust or moving to Ireland or Canada, tax breaks would be very important. They would be a big factor in helping companies to survive.

I and many others are deeply disappointed that the present Government have ignored the call for tax breaks and stubbornly remain of the view that that is a policy they choose to disregard. The Government’s one-size-fits-all approach to tax incentives simply is not working. While the UK Government remain outwitted by our international competitors, it is highly likely that inward investment will be lost. As with other major economic sectors previously, the UK will lose out because of a Government who choose to ignore the calls of industry, rather than listen.

I will move on to another way in which the UK Government can support the industry. This is a case not just of tax breaks, although they are fundamental, but of the range of measures that developers feel would support them. The Scottish Affairs Committee stated in its report that the Government must work with industry bodies to best determine how to better publicise the availability of R and D tax credits and to introduce a more targeted R and D scheme to the industry.

I welcome the recent changes to R and D tax credits, but the Government could do much more in that regard. Only some of the recommendations have been met. I call on the Government to extend that programme to make the available tax credits more generous and to work with the industry to discover how best the scheme could be tailored to its needs.

That brings me to the third way in which the Government could make the business environment more attractive to games developers. Start-up developers face serious trouble in securing loans and financing from the banks. I know that that is a wider problem experienced by small and medium-sized enterprises throughout the UK, but I ask the Government to redouble their efforts to ensure that the banks grant the finance required for start-ups to get going.

Research conducted on behalf of the Department for Business, Innovation and Skills and the Department for Culture, Media and Sport by Dr Stuart Fraser of Warwick business school and IFF Research in May highlights the worrying extent of the difficulties that creative industries face in securing financing. They are much more likely than other industries to be turned down by the banks. That was highlighted in the Scottish Affairs Committee report on this subject. According to research by the trade body TIGA, the majority of 104 surveyed games companies reported either that there was no difference in their ability to borrow from their bank or that the situation had got worse in the course of last year.

The Government have committed themselves to improving the access to finance from banks from the all-time low that we experienced due to the banking crash. Clearly that has yet to produce any results for the computer games industry. As with many creative industries, there is risk associated with games developers, as the sad demise of Realtime Worlds in my constituency illustrates. A product that fails to sell can have a dramatic impact on a company. However, without some risk being taken, industry and the economy simply will not grow. I ask the Government and the banks to work in partnership with the industry to see investment increased and jobs created.

[Lindsay Roy]

Is it not ironic that the Government have invested heavily in Abertay university to enhance the skills profile? If these jobs are not available, we will see a drain from that investment overseas.

[Jim McGovern]

I thank my hon. Friend for his intervention. He is absolutely correct. When we took evidence at Abertay university, we were told that, every day, students there who are studying the computer games industry and will graduate in that subject are receiving phone calls from France, Ireland and Canada saying that they will be offered a job there. Most of the students who study computer games do not end up employed by a company in the UK; they end up starting their own business. It is extremely galling for people in Dundee, who want to locate in Dundee, to find that it is much easier to move abroad than to stay in the UK, so I thank my hon. Friend for that point.

On that subject, if we stifle young companies with a lack of finance, we cannot hope to see economic growth. We must return to rewarding those who take appropriate, but not reckless, risk in starting and running businesses. There are other proposals that the UK Government could implement to support UK games developers. TIGA has called for the creation of a creative content fund. That would allow for funding on a pound-for-pound basis up to £100,000 for companies that produce highly creative content. The UK Government must acknowledge that computer games developers and other creative industries have specific requirements that are not being addressed. The creation of a creative content fund would target funding on those industries, and show that their needs were catered for. It would encourage investment, growth and job creation. I ask the Minister to draw up plans to consult on introducing these measures, and to work with the industry and the Treasury to put in place a policy that encourages and rewards creative investment.

As for the value of higher education and of a skilled work force for the industry, I am well aware that higher education spending is a devolved matter, but the Government could do a number of things. A major requirement for developers is a highly skilled and trained work force. The industry is populated largely by graduates and, as I mentioned earlier, securing jobs for Dundee graduates has had a great effect on the city.

I welcome the Government’s decision earlier this year to award funding to Abertay university. However, it remains a small sum compared with the support that could be offered. The Scottish Affairs Committee’s report highlighted the real concern that there are too few mathematics and computer science graduates to sustain the industry. Abertay has led the way on this, and I urge the Government to work with universities and industry to ensure that we have the work force and skills base that the economy needs. Abertay has acted as an experiment on what can be done in partnership between higher education institutions and the private sector. I ask the Government to work with the Scottish Executive to develop working relationships of that sort, and to ensure that public spending cuts do not harm access to higher education or the quality of teaching and research.

The theme that runs through my speech today is a call for a more coherent and aggressive growth strategy from the Government. I well understand Ministers arguing that we need a simplified tax incentive structure. I am sure that we would all agree that unnecessary complication would be a hindrance to economic growth. However, we sometimes need an element of necessary complication. The temptation to find simple solutions to complicated problems can be far too alluring; instead, we should accept that there is a case to be made for having specific solutions to specific problems. Individual industries require tailored support to meet their needs. Whether it is tax breaks for the UK film industry or tax breaks for games developers, the Government must introduce policies that actually work for the many important industries that we have in the UK.

[Mike Weatherley]

The hon. Gentleman is generous in giving way. Does he agree that it is important not only that the Government are behind the financial incentives but that there is copyright protection for those who produce the product?

[Jim McGovern]

I certainly would not disagree. As I said earlier, the Government could do much more. The hon. Gentleman makes a valid and important point.

I sincerely fear that we have an overly simplistic one-size-fits-all solution that does not address the differing needs of UK businesses. Economic growth is stagnating, inward investment has fallen sharply since the crash and remains low, and computer games developers say loudly that the Government are paying no attention to the problems that they face. That is why I ask the Government to think again about their broad-brush and overly simplistic attitude to supporting business. They must get stuck in and get their sleeves rolled up, working out appropriate solutions for UK business and taking on the job of creating economic growth. Their do-nothing strategy is simply not working.

The best place for The Government to start—I hope that I do not flatter myself—is to commence work on the proposals that I have outlined today to support the UK computer games industry. Constituencies such as mine of Dundee West, and constituencies throughout Scotland and the UK, suffered when the last Conservative Government failed to stand up for UK business, allowing us to be outwitted by foreign competitors. I strongly ask this Government not to make the same mistake.

16:43

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (John Penrose)]

It is a pleasure, Mr Howarth, to see you in the Chair and looking after us this afternoon. I thank the hon. Member for Dundee West (Jim McGovern) for initiating the debate. As he says, the computer games industry is an important part of our national economy. It is responsible for many high-quality and high-skilled jobs, and it is also part of the knowledge economy. The debate is therefore most timely, and I congratulate him on securing it.

I start with a brief apology, Mr Howarth. You may have noticed that I am not the Minister who was supposed to have answered this debate. The reason is that the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Wantage (Mr Vaizey), is currently at an OECD conference in Paris—some people have all the luck, you may say—on the subject of broadband and the internet. I am therefore standing in for him. I toyed with the possibility of getting my ministerial colleague to represent himself by Skype, possibly by superfast broadband, as he is also Minister with responsibility for the digital economy, but I thought that might be a step too far even for the newly modernised House of Commons. I therefore stand in his stead.

I am not sure that the hon. Member for Dundee West and I will agree on all points of industrial strategy—I suspect not—but I shall respond to some of the points that he made. In particular, I respectfully take issue with his comment that the Government are pursuing a “do nothing” strategy. We are doing a great deal, although not necessarily precisely what he suggests. I shall say what we are doing, and then we can debate whether there is room for additional activity.

I am sure that we agree that the economic and cultural value of the UK video games industry is high. The long-term potential of the global market is exciting. PricewaterhouseCoopers suggests that the global market for video games will grow from $56 billion in 2010 to $82 billion in 2015; that is an 8.2% compound annual rate of growth. The hon. Gentleman and I have also said that games companies are typically knowledge-intensive and high value, and offer high-quality jobs. They fit well with our aim to rebalance the economy, both in terms of sectoral ability and geographical coverage, and to move away from the historic over-reliance on things such as the financial services industry and the south-east.

[Lindsay Roy]

I understand that different approaches are taken for the film industry and the video games industry, but they both have huge opportunities for creative development. Why do we have that differential?

[John Penrose]

I think that the hon. Gentleman is referring to the fact that a tax break is already in place for the film industry, but we do not have quite the same system for the video games industry. There is a piece of history here, which I offer as an explanation.

The film industry has an existing state aid exemption; it is an acknowledged piece of state aid that is registered with EU authorities and anyone else who needs to know. We are registering it under the next iteration of those rules, which is coming up. The reason is that it seemed at the time—we continue to agree—that it was an important piece of cultural ambassadorship as much as a business opportunity. We cannot necessarily say that for “Grand Theft Auto”, important though it may be for the UK industry and for jobs. The film industry does both jobs. It fulfils the role of cultural ambassador; the video games industry is economically important. That is the historic explanation. The shortage of money, which I intend to deal with in my response to the hon. Member for Dundee West, is why we are where we are; there is no money to extend such provision, even if we could.

[Jim McGovern]

I thank the Minister for giving way. The figures given to the Scottish Affairs Committee during its inquiry suggest that the tax breaks received by the film industry cost in the region of £110 million a year. The previous Government committed themselves to tax breaks for the computer games industry worth £55 million a year. However, the computer games industry generates more for our GDP than the film industry. Further to that, the Committee said that calling them video or computer games was rather misleading, as the industry is also involved in medical research and architectural science. It is not just people playing “Grand Theft Auto” or “APB”.

[John Penrose]

The hon. Gentleman is quite right to say that there is a broader aspect to the matter. I was using “Grand Theft Auto” as a quick example rather than a widely based covering comment.

As for the numbers cited by the hon. Gentleman, I say this. Businessmen should always face many more ideas that would produce a positive return on their investment than they can afford. That is a fact of life in any industry, and certainly in the creative industries. There might be 100 options that could increase the bottom line, but they will not be able to afford to use them; they will not have the cash, the people or resources in general. That is the case with the Government. We inherited a terrible fiscal position, and the country’s balance sheet was in a very bad state. There are all sorts of things that might create a positive return, but we physically do not have the cash for them.

One of the major points of difference between the hon. Gentleman and me in our approach to macro-economics in general and to the industry—and also on a micro-economic basis—is that I am unsure where we would find the money to do some of the things that he suggests, such as tax breaks here and there. I respectfully suggest that he will need his own Treasury Front-Bench team to sign up to what he suggests. I suspect that those Front Benchers will be leery of doing so, because they would then have to explain which bits of other budgets, such as health or education, they would cut in order to release money for this, which taxes they would raise to pay for the additional tax breaks, or how they would persuade the financial markets, on the day that Greece is voting for its austerity package, that we should be borrowing more money for this, that or the other. This is an essential piece of macro-economic prudence, and I suspect it is a fundamental difference of approach between us. I understand where he is coming from, but I am trying to explain where we are.

[Justin Tomlinson]

I understand 100% the point the Minister makes about the constraints in the financial sector. However, he also referred to the fact that this is a growing market and there is an opportunity. Can we at least have an assurance that the Government are continuing to consider ways to support the industry and that, as and when opportunities arise, they will be considered?

[John Penrose]

I can absolutely make that assurance. I would like to go back to some of the things that we are already doing, which I hope will bring a significant benefit to this industry and others.

[Jim McGovern]

The Minister said that I should ask my Front-Bench colleagues to sign up to this. Obviously, they have: they made a commitment prior to the general election that they would give tax breaks to the computer games industry. The Minister’s party also supported that, as did the Liberal Democrats and the Scottish National party. I am not looking for a U-turn; I am looking to the Government to honour their commitment. The Minister makes the point about the Labour legacy, which I think everybody is getting a bit scunnered listening to. If that is the case, why can Ireland offer tax breaks but the UK cannot? Ireland is held up as an example of a country that is economically worse off than the UK.

[John Penrose]

That brings me neatly to one of the other points made by the hon. Gentleman. He accused us of having an over-simplistic, one-size-fits-all policy. The difference between here and Ireland is that, over 13 years under the previous Government, the UK developed one of the most complicated, long, difficult, baroque and over-ornamented systems of business taxation in the developed world. We start with an incredibly complex taxation system, so moving gently towards a slightly simpler approach does not mean we are becoming over-simplistic or deciding that one size fits all. We would have to go a long way to get anywhere near the scenario the hon. Gentleman describes. Ireland is not starting from that over-complicated position. It has all sorts of other constraints. It has major macro-economic and public finance problems, as he rightly says, but it is not starting from one of the most complicated and baroque business tax systems in the world, as we are.

We need to move to a simpler system. It is difficult to argue that decisions on whether to invest in this or that part of a business will be driven effectively and productively by a system that requires encyclopaedic PhD-level knowledge and understanding of business taxation. What actually happens in business—and having been in business, I can vouch for it—is that one makes the right decision on the basis of what customers want and what is affordable and one tries to position the business in that way. One then turns to the bloke who runs the finance department and says, “Can you retro-fit any of this into some kind of useful tax break that the Government have already introduced?” That does not drive decision making, unless it is a very large and particular kind of system, of which there are few.

Therefore, that kind of over-complicated tax system is fundamentally less effective than it should be in driving investment decisions. That is why one needs to move to a simplistic system with straightforward incentives: if someone invests and does the right thing for customers, they will earn more money, it will drop through to the bottom line and investors will do well. That is the thinking behind it.

That said, as I mentioned to my hon. Friend the Member for North Swindon (Justin Tomlinson), we are trying to do a series of things that will help the industry and others. I will lay out some of those, as the hon. Member for Dundee West challenged me to do so. I want to ensure I respond, to show that we are not a “do nothing” Government. However, he is right to say that the UK faces strong competition for video games investment from overseas, particularly from Canada, which offers targeted tax incentives for games producers. I am aware, of course, of the trade association TIGA’s campaign for the introduction of a specific tax relief to support video games production in the UK. Its job is to campaign for such things; it would not be doing its job well if it did not make that argument. In someone else’s famous phrase, “They would say that, wouldn’t they?”

The Chancellor of the Exchequer, as I have mentioned before, keeps all decisions on tax policy under review. However, we believe that in general providing a low corporate tax rate with fewer reliefs and allowances, as I have explained, will provide the best incentive for business development and promoting economic growth. Many games companies in the UK will benefit from the reforms announced in Budget 2010 and Budget 2011. To remind hon. Members, the UK’s main rate of corporation tax will fall to 23% by 2014. That means we will have the lowest rate in the G7 and the fifth lowest in the G20, ensuring the UK remains a competitive place to do business.

The hon. Member for Dundee West said that businesses are leaving. It is worth pointing out that many major global games companies choose to locate their European headquarters in the UK, and continue to do so. For example, we have Sony Computer Entertainment, Sega, Disney Interactive and Activision all here in the UK.

The Government have also made major reforms to the R and D tax credit. From 1 April 2011 the rate of tax relief for small and medium-sized enterprises increased from 175% to 200% of qualifying tax relief. From 1 April 2012 that will rise further to 225%, subject to state aid approval. I know that many in the games sector have warmly welcomed those reforms as a boost to innovative video games businesses in the UK.

The Government also announced changes to the schemes that help to incentivise equity investment in small, high-growth companies. The hon. Gentleman mentioned the importance of those to this industry, and many others. Those schemes are the enterprise investment scheme and venture capital trusts. We welcome the news that consultants Olswang plan to work with others on an independent analysis considering how measures such as EIS and VCTs can be exploited by games developers and the investment community to boost levels of investment in the sector.

I should also say that it is not just a matter of tax policy, although that is important, and the hon. Gentleman rightly focused many of his remarks in that area. There are other things that can and need to be done to improve the environment for enterprise in this country. For example, the enterprise finance guarantee will provide up to £600 million of additional lending to around 6,000 viable SMEs in 2011 and, subject to demand, over £2 billion in total over the next four years. For the enterprise capital funds, the Government are increasing their commitment by £200 million over the next four years, providing more than £300 million venture capital investment into the equity gap for early stage innovative SMEs with the highest growth potential.

The regional growth fund has made £1.4 billion available over three years for projects or programmes that deliver the fund’s objectives to stimulate enterprise by providing support for projects and programmes with significant potential to drive economic growth.

[Lindsay Roy]

Is there not a criticism that there is a lack of strategic focus on the video games industry? I strongly support the investment in the Abertay graduate programme, but evidence indicates that the majority of young people who graduate from there are going abroad. They are not staying in the UK, whether they are from Dundee or south of the border.

[John Penrose]

That is a fact of life in an increasingly globalising market. This is a globalising market, not just for the product of video games, but for the staff. Many other industries are already incredibly globalised, everything from financial to medical services. This sector will be going the same way. I am sure we will all be delighted to see British brains and talent travelling the world. It is true to say that many people come back to the UK later in their career and start up businesses here or join at a senior level.

I am conscious of time so would like to draw to a close by saying that I fear the hon. Member for Dundee West and I are not going to agree on a fundamental point about macro-economic policy. I hope I have, none the less, laid out that the Government are doing a series of things. Unfortunately, they are not precisely what he recommends. However, it is not true that we are a “do nothing” Government; we are doing a great deal. I fear that he and I will have to disagree on precisely what that should be.

Question put and agreed to.

16:59

Sitting adjourned.