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Oral Answers to Questions
(13 years ago)
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Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
1. What discussions she has had with ministerial colleagues and Ministers in the Welsh Government on the effects of fuel prices on (a) rural and (b) urban areas in Wales; and if she will make a statement.
The Parliamentary Under-Secretary of State for Wales (Mr David Jones)
My right hon. Friend the Secretary of State and I have regular discussions with ministerial colleagues and the Welsh Government on a range of issues, including the effects of fuel prices in Wales. The Government are addressing the rising cost of fuel through the abolition of the fuel tax escalator, the introduction of the fair fuel stabiliser and a cut in fuel duty announced at the Budget earlier this year.
Mr Llwyd
I thank the Minister for that response. Will he impress upon the Secretary of State the need to push the Government to introduce a true fuel duty stabiliser that would trigger an annual reduction in the pump price, as the so-called fair fuel stabiliser announced in the March Budget does not go anywhere near far enough? The volatility in petrol prices means businesses cannot budget, as was noted yesterday by the Federation of Small Businesses in its submission for the autumn statement.
Mr Jones
I hear what the right hon. Gentleman says, but I must point out to him that the tax measures we have taken have resulted in petrol prices being approximately 6p per litre lower than they would have been had that escalator not been scrapped. Even taking VAT into account, fuel prices are approximately 3p per litre lower than they would have been.
Mr Llwyd
Further to that response, may I ask the Minister about a slightly different matter? What support are the UK Government providing for the use of electric cars? There are hardly any charging points all in Wales. There is not even one per constituency. What is being done to encourage that?
David T. C. Davies (Monmouth) (Con)
Does the Minister agree that although it would be highly desirable to reduce fuel costs, it is impossible to do so while we are running a deficit of £160 billion a year as a result of the past actions of Opposition Members?
Jessica Morden (Newport East) (Lab)
For commuters and businesses in my constituency, high fuel prices are painful enough without the exorbitant cost of the Severn bridge tolls. If price increases follow the normal pattern, tolls will hit almost £6 per car this year. What action is the Secretary of State taking to help my constituents?
Karl Turner (Kingston upon Hull East) (Lab)
2. What recent assessment she has made of the level of unemployment in Wales.
Andrew Miller (Ellesmere Port and Neston) (Lab)
8. What recent assessment she has made of the level of unemployment in Wales.
The Secretary of State for Wales (Mrs Cheryl Gillan)
The latest unemployment figures in Wales are disappointing and show that there is still much for both the UK Government and the Welsh Government to do. We have made it clear that while tackling the deficit remains our top priority, we are committed to creating the right conditions for the private sector to expand and grow in Wales, in order to create much-needed jobs.
Karl Turner
Will the Secretary of State join me in congratulating the Labour Welsh Government on the launch of Jobs Growth Wales, which I am told will create 4,000 jobs per year, and will she encourage her Cabinet colleagues to establish a similar scheme in this country, because our constituents are desperate for jobs?
Mrs Gillan
As the hon. Gentleman knows, I would congratulate any Government who tried to reduce unemployment, which blights so many families, particularly in Wales—and never more so than under the last Labour Government. However, I must say to him that the jury will be out until we see the results from that scheme.
Andrew Miller
As the Secretary of State will be aware, in my constituency hundreds of people cross the border both ways for employment. Constituents of mine work in Broughton, and people from Welsh constituencies travel the other way to Vauxhall, Essar and other major employers. Does the Secretary of State agree that there needs to be some joined-up thinking with her colleagues in the Department for Business, Innovation and Skills, in order to address the challenge my hon. Friend the Member for Kingston upon Hull East (Karl Turner) has just raised? There is a good scheme in Wales; why not replicate it in England?
Mrs Gillan
The hon. Gentleman is wrong; this is a new scheme in Wales, being introduced by the Welsh Government. I agree that the £400 million investment in the Airbus factory will secure 6,000 Welsh jobs and many jobs in the supply chain to that factory. My right hon. Friend the Prime Minister recently opened the new North factory, which will secure employment and development in that area for a long time to come.
Guto Bebb (Aberconwy) (Con)
Does the Secretary of State agree with me that the inaction of the Labour Government on enterprise zones is a real concern to the business community in Wales?
Mrs Gillan
I am grateful to my hon. Friend for reminding me of the fact that we started the enterprise zones in England at a much earlier stage than the Welsh Government, but I am pleased to welcome the fact that the Welsh Government have designated some areas in Wales as enterprise zones. I know, however, from my discussions with business and industry that they are keenly awaiting some more details on the enterprise zones, which have been very slow in coming forward.
Roger Williams (Brecon and Radnorshire) (LD)
Will the Secretary of State join me in welcoming the announcement by the BSW Timber sawmill in Newbridge-on-Wye in my constituency that it is about to create another 20 jobs, bringing Christmas cheer to those families who will benefit from that employment?
Mrs Gillan
The hon. Gentleman is absolutely right and I know how hard he works in his constituency to secure jobs. I offer my congratulations and hope that the business goes from strength to strength. I think we forget in this day and age when unemployment figures are going in the wrong direction that plenty of companies are creating jobs and plenty of enterprising—
Mr Speaker
Order. May I ask the Secretary of State to face the House so that we can all hear her dulcet tones, from which we will greatly benefit? I think she has finished and we are grateful to her.
Mr Peter Hain (Neath) (Lab)
Does the Secretary of State not realise how out of touch she is? The unemployment figures in Wales are not “disappointing”, they are shocking. We have had a 20% rise in the number of women claiming jobseeker’s allowance since she came to power in May 2010, including an increase of a fifth in the number out of work for more than 12 months. Why, according to her parliamentary answers to me, has her Wales Office business advisory council not yet discussed the plight of jobless women in Wales?
Mrs Gillan
The right hon. Gentleman is right to commiserate with those people who are looking for employment, but I am not going to take any lessons from him—he was part of a Labour Government under whom youth unemployment rose by more than 40% and female unemployment rose by more than 30%.
Mr Hain
What world is she living in? We created a record number of jobs in Wales. There are 10 men on her business advisory council—why does she not appoint at least one woman to it? With the deficit rising and growth stalling, is it not also time that her Government adopted Labour’s five-point plan for growth and jobs in Wales, including a cut in VAT on home improvements to 5%, a tax break for every small firm that takes on extra workers and a £2 billion tax on bankers’ bonuses to create 100,000 new jobs? Unless she acts now, she will condemn tens of thousands of men and women in Wales to misery.
Mrs Gillan
In Wales, there is an acid test of Labour’s policies. The fact is that a Labour Government are in power in Wales and, as the First Minister in Scotland said the other day:
“If Labour has the answer to economic problems and unemployment, why are unemployment and youth unemployment in Wales higher than they are in Scotland? If Labour has the magic solutions, why is it not implementing them in the one place in these islands where it is still in government?”—[Scottish Parliament Official Report, 17 November 2011; c. 3582.]
Chris Bryant (Rhondda) (Lab)
3. What recent estimate she has made of the number of 16 to 24-year-olds who are unemployed in Wales.
The Parliamentary Under-Secretary of State for Wales (Mr David Jones)
Current levels of youth unemployment in Wales and across the UK are, of course, disappointing. We are determined to tackle that and will announce additional measures as part of phase 2 of the growth review.
Chris Bryant
That is two Ministers now who have used the word “disappointing” about unemployment. Frankly, it is a tragedy and one of the worst things about it is that a previous Conservative Government consigned constituencies such as mine and whole communities like the Rhondda to long-term mass unemployment. They are doing exactly the same now to a generation of young people. Will the Minister suggest one single thing that he personally is doing in his Department to tackle youth unemployment in Wales and in the Rhondda?
Mr Jones
Of course youth unemployment is too high and of course, sadly, that is not a new phenomenon. In the last Parliament, youth unemployment in Wales increased by 73% and we have not heard a word of apology from the hon. Gentleman for that. We recognise the importance of the problem and that is why we have introduced the Work programme, which provides properly targeted support to young jobseekers.
Jonathan Evans (Cardiff North) (Con)
Is not export-led growth one route to addressing youth unemployment? In that regard, will my hon. Friend take this opportunity to congratulate private sector business in Wales, which since the last election has seen a 31% increase in Welsh exports—double the national average and the largest increase of any part of the United Kingdom?
Chris Evans (Islwyn) (Lab/Co-op)
4. What recent discussions she has had with the Chancellor of the Exchequer on the effects in Wales of the rate of inflation.
The Secretary of State for Wales (Mrs Cheryl Gillan)
I have regular discussions with the Chancellor and other ministerial colleagues on a range of issues affecting Wales. I welcome the latest fall in inflation, which was published by the Office for National Statistics last week.
Chris Evans
On this Government’s watch, average food bills have increased by 5%, putting more pressure on hard-working families. I have listened to the Secretary of State’s responses, but can she give a guarantee that she is really fighting Wales’s corner and fighting for hard-working families in Cabinet?
Mrs Gillan
I thank the hon. Gentleman for what I think was a question. There can be absolutely no doubt about whether I always fight Wales’s corner in Cabinet. I thought he would at least be encouraged that the Bank of England has forecast that inflation should fall rapidly over 2012. In the mean time, the Government are taking very strong action to help consumers with high costs. We all want to help households and the Government go to the last degree to do so.
Mr David Hanson (Delyn) (Lab)
5. When she next expects to meet representatives of the solar industry in Wales to discuss the feed-in tariff consultation.
The Parliamentary Under-Secretary of State for Wales (Mr David Jones)
My right hon. Friend the Secretary of State is meeting representatives from the Welsh solar industry next week along with the shadow Minister for Wales to discuss concerns that businesses have about the feed-in tariff review.
Mr Hanson
The Minister will know that confidence in the solar industry has been considerably damaged by the decision on feed-in tariffs. Will he and the Secretary of State now stand up for Wales and ask the Department of Energy and Climate Change to defer the decision date for implementation of 12 December so that the consultation, which finishes on 23 December, can at least have the views of the solar industry he is meeting next week?
Hywel Williams (Arfon) (PC)
Antur Nantlle community business group in my constituency has well developed plans for a hydroelectric scheme that will benefit the environment as well as provide an income stream for the venture, but it is concerned that any future change in the tariff will undermine the financial basis of the scheme. What can the Wales Office do to ensure that this example of the big society in action is not jeopardised by the Government’s actions?
Nia Griffith (Llanelli) (Lab)
The Government’s feed-in tariff fiasco risks shattering all investor confidence in manufacturing in Wales. What will the Minister do to influence ministerial colleagues to prevent imminent job losses in the Welsh solar industry and ensure that any change to the feed-in tariff is given a long lead-in time and is set at a rate that will encourage investment and not increase unemployment?
Mr Jones
We fully understand the difficulties that companies involved in this sector of the economy face as a consequence, but if things had been left as they were, the feed-in tariff budget would have been eaten up. There is a consultation and I have no doubt that the hon. Lady will participate in it.
Caroline Dinenage (Gosport) (Con)
6. What recent discussions she has had with ministerial colleagues and Ministers in the Welsh Government on the cross-border economic implications of the development of enterprise zones.
The Secretary of State for Wales (Mrs Cheryl Gillan)
I have regular discussions with ministerial colleagues and with the First Minister on various issues, including enterprise zones in Wales. It is vital that businesses investing in Wales are given the same or even better competitive advantages as businesses in places just across the border such as Bristol and Merseyside.
Caroline Dinenage
Given that enterprise zones not only create jobs but have a wider geographical impact on the supply chain with regard to the economy, does the Minister share my surprise at the procrastination of the Welsh Government in locating enterprise zones in Wales?
Mrs Gillan
This is becoming a common theme. Although the enterprise zones have been declared by the Welsh Government, we have only a recent letter from the Minister for Business, Enterprise, Technology and Science of 22 November to Assembly Members, which says that the Department is currently working hard with colleagues in transport, planning and elsewhere to ensure that its enterprise zone policy can be delivered. We can only hope that it gets a wiggle on and gets those details out to businesses as fast as possible.
Nick Smith (Blaenau Gwent) (Lab)
Blaenau Gwent, with high unemployment but great potential, includes an enterprise zone. I thank the Secretary of State for meeting developers who propose to build a £200 million race track there. She offered to speak to Ministers from the Treasury and from the Department for Business, Innovation and Skills about that infrastructure plan and capital allowances. Following those representations, will she meet me to feed back on progress?
Mrs Gillan
I am always happy to meet the hon. Gentleman, and I was pleased to meet him and the business people who are thinking of investing in Blaenau Gwent. There is a lot of work to be done on the project, which is exceedingly ambitious, but as the area has been designated by the Welsh Government as an enterprise zone for the automotive industry, I hope that good progress will be made. If any help can be given, I am always happy to see what I can do, and I will certainly be pleased to feed back to the hon. Gentleman.
John Howell (Henley) (Con)
Does my right hon. Friend share my regret that it is almost impossible—[Interruption.]
Mr Speaker
Order. I apologise for interrupting the hon. Gentleman, but there is a considerable hubbub in the Chamber, which is very unfair for Members asking questions and the Ministers answering them. Let us have a bit of order and some self-respect.
John Howell
Does my right hon. Friend share my regret that it is almost impossible to answer the question about cross-border implications, because there are no details other than the location and sectors for the Welsh enterprise zones?
Mrs Gillan
It is increasingly difficult when relying on another Government to implement a policy, but I remain optimistic because I want the message to go out that Wales is open for business. Enterprise zones will give an advantage to businesses going into these areas and create jobs, and there are good forecasts for the number of private sector jobs to be created by 2015, so I walk in hope. I encourage the Welsh Government to do everything that they can, and I stand ready to help them.
Geraint Davies (Swansea West) (Lab/Co-op)
The funding available for the Bristol enterprise zone is nearly as much as the entire amount for enterprise zones for the whole of Wales. How can the Secretary of State justify supporting that alongside the tax on trade and investment in Wales that the Severn bridge toll represents? Will she resist this massive investment at the doorway of Wales that would stop inward investment into Wales?
Mrs Gillan
The amount given to the Welsh Government as a consequence of what is being spent on enterprise zones in England is calculated in exactly the same way under our Government as under the previous Government. The Minister in Wales has received £10 million towards enterprise zones, but she also has a budget of nearly £15 billion at her disposal, and she can decide how she spends that. I encourage the hon. Gentleman to encourage her to look at what she can do in those enterprise zones to encourage businesses.
Mr Robin Walker (Worcester) (Con)
7. What recent discussions she has had with (a) ministerial colleagues and (b) others on the work of UK Trade and Investment in promoting inward investment in Wales.
The Secretary of State for Wales (Mrs Cheryl Gillan)
I have regular discussions with ministerial colleagues, UK Trade and Investment and others on promoting inward investment in Wales. I have met the new chief executive of UKTI in the last month and yesterday I met the senior investment adviser for Wales as part of continuing discussions better to promote Wales to potential investors.
Mr Walker
I thank the Secretary of State for that answer. The Select Committee on Welsh Affairs recently heard from the chief executive of UKTI, but he, like our Committee, is still waiting in hope for his first meeting with the Welsh Minister for Business, Enterprise, Technology and Science. Given that surprising fact, and the fact that the Secretary of State herself has met the Committee and UKTI many times, what advice can she give the Welsh Business Minister on pushing the respect agenda and the interests of Welsh business?
Mrs Gillan
My hon. Friend knows that I try to give encouragement to the Welsh Labour Minister for Business, rather than giving her advice, but I am pleased that the Welsh Affairs Committee is investigating trade and investment, and I look forward to giving evidence to the Committee next month. I continue to hold a series of meetings to see how we can assist and work with the Welsh Government to improve those figures.
Paul Flynn (Newport West) (Lab)
But is not inward investment always a second best? Brace’s bakery, an indigenous Welsh firm with its headquarters in Crumlin, took over an inward investment company in my constituency that was about to close down. On Monday, Brace’s increased its work force by a third, so will the Secretary of State give her congratulations and support to indigenous Welsh companies, and ensure that the rest of the country enjoys the great merits of Brace’s breads and Welsh cakes?
Mrs Gillan
Now the hon. Gentleman is tempting me; I always like a good Welsh cake. He should know how much I encourage indigenous Welsh companies, not least by my continuous support of the Fast Growth 50, which celebrates indigenous companies and the way they grow the economy, but he must not do down inward investment. In 2010-2011, 38 inward investment projects led to the creation of 2,444 new jobs and safeguarded another 1,100 jobs in Wales. I think that is pretty important and certainly not second best.
Andrew Selous (South West Bedfordshire) (Con)
9. What recent discussions she has had with ministerial colleagues on measures to stimulate economic growth in Wales.
The Parliamentary Under-Secretary of State for Wales (Mr David Jones)
My right hon. Friend and I have regular discussions with ministerial colleagues, the Welsh Government and other organisations to discuss measures that would help to stimulate economic growth in Wales.
Andrew Selous
Does my hon. Friend agree that the private sector in Wales represents far too small a share of the total Welsh economy? What steps is he taking to change that?
Mr Jones
My hon. Friend is entirely correct. I agree with him, and so do the shadow Secretary of State and the Welsh First Minister. The Government’s plan for growth aims to create the most competitive tax system in the G20 and make the UK the best place in Europe to start, finance and grow a business. That applies to Wales as much as to the rest of the country.
Huw Irranca-Davies (Ogmore) (Lab)
Does the Minister agree that one of the best ways to incentivise good growth in difficult times is to invest in green jobs and the green economy? What would he say to my constituent Labour Councillor Phil White, ex-Tower colliery, who has put together proposals for investment in 1,500 homes in five of the most deprived areas of Wales using the feed-in tariff scheme by next March? This Government have cut the legs away from under that scheme, so what would the Minister say to my constituent?
David Rutley (Macclesfield) (Con)
10. What recent discussions she has had with ministerial colleagues and Ministers in the Welsh Government on support for small and medium-sized enterprises in Wales.
Stuart Andrew (Pudsey) (Con)
11. What recent discussions she has had with ministerial colleagues and Ministers in the Welsh Government on support for small and medium-sized enterprises in Wales.
The Parliamentary Under-Secretary of State for Wales (Mr David Jones)
My right hon. Friend the Secretary of State and I have regular discussions with ministerial colleagues and Ministers in the Welsh Government to support Welsh businesses.
David Rutley
Given the importance of SMEs in the vital task of job creation in Wales and across the United Kingdom, what steps are the Government taking to reduce the burden of regulation on businesses in Wales?
Mr Jones
My hon. Friend is correct. SMEs are the backbone of the Welsh economy and have long been so. Through our programme of reduction of regulation, we are easing the burden on SMEs and setting up new businesses. It is hoped that that will cause the sector to flourish in Wales.
Stuart Andrew
Does my hon. Friend agree that rises in interest rates would be catastrophic for the prospects of SMEs in Wales, and that maintaining our low interest rates could be at risk if we were to lose our triple A rating, making it more difficult for Wales to maintain its competitive edge when it comes to exports?
Albert Owen (Ynys Môn) (Lab)
Small businesses in my constituency have written to me this month saying that they are going to lay people off or may face closure because of the Government’s policy on the feed-in tariff for solar. Will the Minister give a categoric assurance to the House that he will lobby the Treasury and Ministers at the Department of Energy and Climate Change to ensure that the scheme is maintained to help businesses that are doing the right thing in Wales?
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
It is estimated that the SME sector accounts for 90% of employment in Wales. What discussions has the Minister had with the Welsh Government about promoting this vital sector?
Sarah Newton (Truro and Falmouth) (Con)
13. What recent discussions she has had with (a) ministerial colleagues and (b) others on broadcasting in Wales.
The Secretary of State for Wales (Mrs Cheryl Gillan)
I have had recent discussions with ministerial colleagues in the Department for Culture, Media and Sport on a range of issues, including broadcasting in Wales. My hon. Friend the Under-Secretary of State for Wales and I have also had recent discussions with the BBC Trust, the S4C Authority and independent Welsh television producers on the issue.
Sarah Newton
Will my right hon. Friend join me in calling on the head of the BBC to reconsider his savage cuts to BBC local radio so that people in Wales can continue to enjoy Welsh language broadcasting alongside people in Cornwall enjoying Cornish language broadcasting?
Mr Speaker
Order. I do not know whether the microphones are playing tricks on us or—more likely—there is just too much noise. I wanted to hear fully what the hon. Lady was saying.
Mrs Gillan
I think I got my hon. Friend’s drift. I congratulate her on being a champion of the Cornish language. Like me, she will want to recognise and congratulate the BBC and S4C on reaching an agreement on the funding governance and accountability of S4C until 2017, thereby securing Welsh language broadcasting in Wales?
Kevin Brennan (Cardiff West) (Lab)
Anyone watching the BBC’s excellent sporting coverage this weekend might like to know that the odds on the right hon. Lady remaining Secretary of State have dropped from 8:1 to 2:1. Would she recommend that they have a flutter on that?
Mrs Gillan
I would tell the hon. Gentleman not to bother wasting his money.
Andrew Bingham (High Peak) (Con)
Q1. If he will list his official engagements for Wednesday 23 November.
The Prime Minister (Mr David Cameron)
I am sure that the whole House will wish to join me in paying tribute to Private Matthew Thornton from 4th Battalion The Yorkshire Regiment, Lance Corporal Peter Eustace from 2nd Battalion The Rifles, Lieutenant David Boyce and Lance Corporal Richard Scanlon, both from The Queen’s Dragoon Guards, and Private Thomas Lake from 1st Battalion The Princess of Wales’s Royal Regiment. They were all courageous soldiers held in the highest regard by their comrades. We owe them a great debt of gratitude for their service and sacrifice and send our condolences to their families and friends.
I am sure that the whole House will also wish to join me in paying tribute to Alan Keen, who sadly died after a courageous battle with cancer. He was a popular constituency MP who served Feltham and Heston for nearly 20 years. Before entering politics, Alan was a scout for Middlesbrough football club and continued to be a great advocate for sport, not least through his chairmanship of the all-party parliamentary football group, which grew to be one of the largest in the House under his stewardship. We send our deepest sympathies to his wife, Ann, who is a friend to many here, and to his family and all his constituents. He will be missed by Members on both sides of the House.
This morning I had meetings with ministerial colleagues and others, and in addition to my duties in this House I shall have further such meetings later today.
Andrew Bingham
I join the Prime Minister in paying tribute to our brave soldiers who this week gave their lives in service to our country. All our thoughts should go out to them and their families at this very difficult time. Similarly, I join the tribute paid to the late hon. Member for Feltham and Heston.
The mass strike proposed by the unions for this time next week will cause great upheaval for many of my constituents in High Peak. Does the Prime Minister agree that it is wholly irresponsible for the unions to bring their members out on strike based on such a small number of votes and when negotiations on pensions are still ongoing?
The Prime Minister
My hon. Friend makes a very important point. It really is irresponsible, when negotiations are ongoing, to cause strikes that will lead to the closure of most of the classrooms in our country. It is the height of irresponsibility. What is on offer is an extremely reasonable deal: low and middle-income earners getting a larger pension at retirement than they do now; all existing accrued rights being fully protected; and any worker within 10 years of retirement seeing no change in either the age they can retire or the amount they can receive. It is also a tragedy that it is not just the union leaders who do not understand this; the Labour party refuses to condemn these strikes.
Edward Miliband (Doncaster North) (Lab)
I join the Prime Minister in paying tribute to Private Matthew Thornton from 4th Battalion The Yorkshire Regiment, Lance Corporal Peter Eustace from 2nd Battalion The Rifles, Lieutenant David Boyce and Lance Corporal Richard Scanlon, both of 1st The Queen’s Dragoon Guards, and Private Thomas Lake from 1st Battalion The Princess of Wales’s Royal Regiment. All those men died serving our country with the utmost bravery and courage, and my deepest condolences, and those of the whole House, are with their families and friends.
I also want to pay tribute, as the Prime Minister rightly did, to Alan Keen, the former Member for Feltham and Heston. He was, as the Prime Minister said, somebody who had friends across the House. He was somebody who believed in young people, in opportunities for young people and, most of all, in the power of sport to change people’s lives—and, as I heard at his funeral yesterday, he certainly had an unusual idea for his first date. He took his future wife, Ann, to the Orient, which turned out not to be a Chinese restaurant but to be Leyton Orient, who were playing that day. He was a great and lovely man, and he will be missed by all of us, but most of all by Ann and by his family.
Can the Prime Minister tell us the increase in long-term youth unemployment since he scrapped the future jobs fund in March?
The Prime Minister
Youth unemployment is up since the last election, I accept that; and youth unemployment is unacceptably high in this country, as it is unacceptably high right across Europe. The problem is that youth unemployment in this country has been rising since 2004, and under the previous Labour Government it went up by 40%.
What we have to do to help young people back to work is to improve our school system so that they have proper qualifications; improve our welfare system so that it pays to work; and improve our employment system so that there are proper apprenticeships to help young people. We have 360,000 apprenticeships this year, helping young people to get work.
Edward Miliband
Under 13 years of a Labour Government, youth unemployment never reached 1 million; it has taken the Prime Minister 18 months to get to that tragic figure. Given that he did not answer the question, let me tell the House the reality: since he scrapped the future jobs fund in March, long-term youth unemployment has risen by 77%. Now, can he tell us what has happened to long-term youth unemployment since he introduced his Work programme in June?
The Prime Minister
First, let me just repeat: youth unemployment went up by 40% under a Labour Government. Let me also remind the right hon. Gentleman of something that his brother, the right hon. Member for South Shields (David Miliband), said last week. He said very clearly that this Government did not
“invent the problem of youth unemployment”.
We should have that sort of candour from this brother.
The Leader of the Opposition asked me very specifically about the future jobs fund and the Work programme. Let me give him the answer. The Work programme is helping 50% more people than the future jobs fund: it will help 120,000 young people this year, where the future jobs fund helped only 80,000. The waiting time for the most needy young people will be half the waiting time under the future jobs fund; under the Work programme, those who are not in education, employment or training will get help—[Interruption.] I would have thought that Opposition Members would want to hear about what we are doing to help young people. They will get help within three months, rather than six, but the absolute key is that, because we are paying by results, the Work programme will actually help those who need the most help, whereas the future jobs fund put a lot of graduates into public sector jobs and was five times more expensive than the alternative. That is why we have scrapped it and replaced it with something better.
Edward Miliband
Classically, lots of bluster but no answer to the question I asked—[Interruption.] Government Members will be interested in the answer that the Prime Minister did not give, because in June, when the Work programme was introduced, 85,000 young people had been unemployed for more than six months; now, there are 133,000—a massive increase since he introduced the Work programme. If he is serious about tackling youth unemployment, he should get those on the highest incomes to help those with no income at all. Why does he not tax the bankers’ bonuses and use the money to create 100,000 jobs for our young people?
The Prime Minister
We have introduced the bank levy, which is going to raise more every year than the right hon. Gentleman’s bonus tax would raise in one year.
We have just heard a new use for the bonus tax—there have been nine already. Let me give the right hon. Gentleman the list. He has used his bonus tax for higher tax credits; giving child benefit to those on the highest rates of tax; cutting the deficit; spending on public services; more money for the regional growth fund—that is when he is defending it rather than attacking it; turning empty shops into cultural community centres; and higher capital spending. This is the bank tax that likes to say yes. No wonder the shadow Chancellor has stopped saluting and started crying. [Laughter.]
Edward Miliband
Even for this Prime Minister, to be playing politics with youth unemployment is a complete outrage. He is the one—[Interruption.]
Mr Speaker
Order. I apologise for interrupting the right hon. Gentleman. Let me say it again: the Prime Minister will be heard, and the Leader of the Opposition will be heard. Laughing about the denial of a hearing is not to the credit of any hon. or right hon. Member.
Edward Miliband
The truth is, the Prime Minister is the one cutting taxes for the banks year on year in the course of this Parliament. That is the reality. He is creating a lost generation of young people, and he knows it. It is his responsibility; it is happening on his watch.
The Prime Minister said on Monday to the CBI that it was “harder than anyone envisaged” to get the deficit down, but he was warned that his strategy of cutting too far and too fast would not create jobs; he was warned that it would not create growth; and he was warned that he would find it harder to get the deficit down. Is that not exactly what has happened?
The Prime Minister
The right hon. Gentleman accuses us of cutting taxes. Let me tell him what we are cutting. We are cutting interest rates, which is giving the economy the best boost. We are cutting corporation tax, and we now have the lowest rates of corporation tax in the G7. We are cutting tax for the low-paid, because we have taken 1 million people out of income tax. We are freezing the council tax, cutting the petrol tax and scrapping Labour’s jobs tax. That is what this Government are doing.
Let me answer the right hon. Gentleman directly on the issues of growth and debt, because this is absolutely key. [Interruption.] The shadow Chancellor is at it again, I am afraid. All over Europe there is an interest rate storm, with high interest rates in Spain, Italy and even some of the countries at the heart of the eurozone. We must ensure that we keep this country safe with low interest rates. Let me just remind the Leader of the Opposition of this: if interest rates went up by 1% in this country, that would add £1,000 to the typical family mortgage. That is the risk that we would have with Labour’s plans for more spending, more borrowing and more debt.
Edward Miliband
There he goes again; when it goes wrong, it is nothing to do with the Prime Minister. It is his ABC—Anyone But Cameron to blame when things go wrong.
What did the Chancellor say at the time of the Budget last year? He said that his approach would deliver
“a steady and sustained economic recovery, with low inflation and falling unemployment.”—[Official Report, 22 June 2010; Vol. 512, c. 168.]
Three promises made; three promises broken. The Government’s plan is failing, and that is the truth. Does that not show why at the autumn statement, the Prime Minister should change course?
The Prime Minister
Let me just give the right hon. Gentleman the latest growth figures in Europe. Britain grew at 0.5% in the last quarter, which is the same as the US and Germany, faster than France, faster than Spain, faster than the EU average and faster than the eurozone average. That is the fact. Of course it is a difficult economic environment that we are in, but is there a single other mainstream party anywhere in Europe that thinks the answer to the debt problem is more spending and more borrowing? If he is worried about the level of debt, why is he proposing to add another £100 billion to it? It is the height of irresponsibility, and the reason why people will never trust Labour with the economy again.
Edward Miliband
How out of touch does this Prime Minister sound? Some 1 million young people and their families are worried about finding a job and all he offers is complacency and more of the same. Now we know it: however high youth unemployment goes and however bad it gets, it is a price worth paying to protect his failed plan. I tell him this: unless he changes course next week, 1 million young people will become the symbol of his failed economic plan and an out-of-touch Prime Minister.
The Prime Minister
The right hon. Gentleman asks for a change of course. Let me just say to him what the leading economic organisations in our country and, indeed, across the world say about that issue. The IMF says this:
“'Is there a justification for a shift in the policy mix', we think the answer is no.”
Let us listen to the Governor of the Bank of England, Mervyn King:
“There has to be a Plan A”—
[Interruption.] The Leader of the Opposition says that he would not listen to him; it was Labour who appointed him.
“There has to be a Plan A…this country needs a fiscal consolidation starting from its largest peacetime budget…ever”.
Who was it who gave us that peacetime budget? The Labour party. Let us listen to the CBI, the leading business organisation in this country:
“Priorities for the next 12 months: Stick closely to the existing credible plan”.
That is what the experts say; that is what business says; that is what the Bank of England says. Would you listen to them or would you listen to the people who got us into this mess in the first place?
Richard Ottaway (Croydon South) (Con)
Q2. Returning to next week’s public sector strikes— [Interruption.] They don’t like it up 'em, do they? Is the Prime Minister aware that, of the three largest unions, the turnouts in the strike ballot were 32%, 31% and 25% respectively? Does my right hon. Friend agree that any striker has the right to strike if he so wishes, but he should not engage in mass action unless he has the support of the majority of those unions’ membership?
The Prime Minister
My hon. Friend makes a very important point. As I said, it is wrong that these strikes are going ahead when negotiations are under way. It is wrong to strike and to close so many classrooms and essential services, but it is being done on the basis of those turnouts. Just one quarter of Unison members voted to strike, and just 23% of those balloted at Unite voted in favour. [Interruption.] I am not surprised that Labour Members want to shout me down. We know why they will not condemn the strikes, because we got the figures today on where they get their money from. In the right hon. Gentleman's first year as leader of the party, 86% of Labour’s donations have come from the trade unions—86%! Under the previous Labour leader, it was 56%. That is about the only thing the Leader of the Opposition has improved since the time of Gordon Brown.
Ann McKechin (Glasgow North) (Lab)
Q3. I understand that the Prime Minister is having trouble connecting with women and is seeking advice. Given that female unemployment has increased this year by 20%, that women have been the hardest hit by public sector cuts and the VAT rise, and that they have benefited the least from his tax give-aways, does he not agree that it is time for a plan B which reverses the VAT increase and ensures that benefits increase in line with inflation?
The Prime Minister
I do not agree with the hon. Lady. Of course, every family in Britain is facing a difficult time, with rising inflation, tight household budgets and a public sector pay freeze. But let us look at what we are doing in terms of trying to help women. Of the 1 million people we have lifted out of tax at the lowest end, many are women. What we are doing in terms of additional child care is helping women. The extra hours we are giving for two, three and four-year-olds—that is helping women. So I do not accept what she says. This is a difficult economic environment, but the changes we are making to public sector pensions, for instance, mean that low-paid people in the public sector will actually get a better pension, including many women. Because she, like everyone else on the other side, is in the pocket of the unions, they cannot see that or say it.
Simon Kirby (Brighton, Kemptown) (Con)
Q4. Given the Government’s intention to freeze council tax, is the Prime Minister as astounded as I am that Green-run Brighton and Hove council is planning to decline £3 million of council tax grant and is planning instead to raise council tax by 3.5%, so costing local tax payers £4 million?
The Prime Minister
That is a very important point. At a time of difficult household budgets, it is this Government who have cut the petrol tax, and we are freezing the council tax and have made that money available to councils up and down the country. It is a decision for individual councils. If they want the money to go ahead with the council tax freeze, the money is there, but if they reject it, as they plan to in Brighton, that is a huge mistake, because the council will be asking families in Brighton to pay more at a time when it should be on their side.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
Earlier this year, the Prime Minister confirmed that he would meet members of the cross-party inquiry into stalking, which I chair. It is indeed welcome news that the Home Office will now be consulting with a view to legislating. Will he confirm that the inquiry’s evidence-based deliberations and conclusions will be fully taken into account in considering future legislation?
The Prime Minister
I can certainly give the right hon. Gentleman that assurance. It is important that we take forward the work that the Home Office and the Ministry of Justice have done in looking at a proper, separate offence for stalking and recognising that there is a gap in the current law that we should fill, because there are people who are not getting the protection and help from the police that they need.
Mr Edward Timpson (Crewe and Nantwich) (Con)
Q5. There is genuine concern in Crewe about over-development in respect of housing. How can my right hon. Friend ensure that my constituents get a greater say in planning decisions for new housing estates required for our housing shortage?
The Prime Minister
The great strength of the Localism Act is that we are giving local people a much greater say. In many parts of the country, that will be welcomed, because people can see the advantages of development going ahead, and recognise that if they build extra houses they will keep the council tax and that if they attract extra businesses they will keep the business taxes. That will help to end the problem that we have had for so long of communities not seeing any advantage in development taking place. But it should be a matter for them to decide, as in the case of Crewe.
Malcolm Wicks (Croydon North) (Lab)
Does the Prime Minister agree that the history of Northern Rock represents a kind of modern-day morality tale or play, in that here we have a decent, mutual and responsible building society, which is then privatised, then over-extends, then goes bust, is then bailed out by the taxpayer, and now, sadly, instead of returning to mutuality, is sold off dirt cheap to one of the brashest companies in England?
The Prime Minister
I was with the right hon. Gentleman for some of the way through his question, but let us look at the decision the Government have taken. First, we are selling a business that was costing the taxpayer money, and getting well over £700 million for that business. The second thing we are doing, which is in the interests of every single person in this House and everyone in this country, is to get another functioning bank and building society on our high street lending money. How many times do all of us go to our constituency surgeries and hear people say, “I can’t get a mortgage”, or small businesses say, “I can’t get a loan”? We need a good, new, healthy lending institution out there, and hon. Members should welcome the fact that it is going to be based in the north-east of England, as Northern Rock was.
Mark Menzies (Fylde) (Con)
Q6. At a time when the Government are taking steps to drive growth in the economy, will the Prime Minister update the House on what measures are being taken to attract high-quality inward investment to enterprise zones such as Warton in my constituency?
The Prime Minister
I do think the enterprise zones are going to be a success, because we are basing them, as in my hon. Friend’s constituency, in areas where there is already a successful cluster of businesses. Take, for instance, the enterprise zones at Daresbury science park or at Harwell in Oxfordshire, or the one in Wolverhampton, where Jaguar Land Rover has said that it is going to establish a new plant employing 1,000 people. Enterprise zones are being well applied, they are a good success story, and this Government are right behind them.
Chris Bryant (Rhondda) (Lab)
Q7. The personal damage caused by long-term unemployment can be phenomenal. On average, somebody who is unemployed for more than six months is six times more likely to contract a serious mental health problem. Does the Prime Minister not worry that we will have a generation of young people who will suffer many of the problems of lack of self-esteem and of never having a first job? Would it not make more sense to guarantee every under 24-year-old a job after six months' unemployment, thus paying them to work, not paying them benefits?
The Prime Minister
The hon. Gentleman makes an important point about the scarring effect of long-term youth unemployment. We are doing two important things to try to help with that. First, we are helping those not in employment, education or training within three months through the Work programme, rather than the six months under the future jobs fund. Secondly, one of the most successful schemes that there has been in recent years is giving people work experience placements. We will produce evidence on that soon. In many cases, it is leading to direct employment opportunities for young people. The Deputy Prime Minister will say more about that later this week, but we are doing everything that we can to help young people into work and to prevent the scarring effects that the hon. Gentleman talks about.
Louise Mensch (Corby) (Con)
Q8. May I associate myself with the Prime Minister’s tribute to Alan Keen? He was our dear friend and colleague on the Select Committee on Culture, Media and Sport. Everybody who worked with him will miss him greatly. Will the Prime Minister acknowledge that one of most disruptive impacts of next week’s strikes will be on mums and dads with children in school? Will he join me in encouraging employers to allow parents to bring their children to work when it is safe to do so?
The Prime Minister
I am sure that everyone in the House will agree with the tribute that my hon. Friend paid to her colleague from the Select Committee and to the very good work that he did on that Committee.
My hon. Friend makes a good point about the strikes next week. Frankly, the strikes are going to go ahead and everybody should be very clear about where the responsibility lies: it lies with the union leaders and with the Labour party, which is taking their side and backing the strike. She makes the important point that when it is safe for people to take their children to work, organisations should allow them to do so.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
Q9. The Prime Minister is probably aware that up to 20,000 individuals across the United Kingdom have lost considerable sums of money, often their pension savings, through the collapse of the Arch Cru investment fund. That fund was advertised and marketed as being cautious, and turned out to be anything but. Will he heed the calls from all parts of the House for the Government to use the powers of section 14 of the Financial Services and Markets Act 2000 to institute an immediate inquiry so that this never happens again?
The Prime Minister
Like the hon. Gentleman, I have been contacted by constituents who have lost money because of that fund and who are very concerned about what is happening. There has been a Westminster Hall debate on this issue, where the Financial Secretary to the Treasury set out the position and the responsibility of the Financial Services Authority. I will look carefully at what the hon. Gentleman says and see whether we can do more.
Mr Alan Reid (Argyll and Bute) (LD)
Q10. I fully understand that savings have to be made in the defence budget, but I am very concerned by the proposals for significant cuts to the Ministry of Defence police budget and the possible implications for security at the nuclear bases at Faslane and Coulport in my constituency. Will the Prime Minister please look at those proposals carefully?
The Prime Minister
My hon. Friend makes an important point. The defence budget overall is £35 billion and it will continue at pretty much that cash figure throughout this Parliament. It will still be the fourth largest defence budget anywhere in the world. I assure him that there are no current plans to reduce the number of Ministry of Defence police at the Faslane or Coulport naval bases. Those are vital sites, as he knows, but obviously we have to look at all the costs at the Ministry of Defence and ensure that we are getting the safety that we need.
Dr Alan Whitehead (Southampton, Test) (Lab)
Q11. Does the Prime Minister favour the establishment of local authorities that meet only to give out contracts to others and that provide no direct services to the local population?
The Prime Minister
What I support is local authorities that provide good services and keep their council taxes down. I think that the hon. Gentleman’s part of the world has had the advantage of a bit of change and some common-sense conservatism.
Mr Stewart Jackson (Peterborough) (Con)
Some 1,600 people are employed by Thomas Cook at its headquarters in Peterborough. They are rightly concerned about the media coverage over the last two days of the company’s difficulties. Will my right hon. Friend join me in supporting this great British institution, which has been providing travel to British people for 170 years? People can support the company by booking their holidays through Thomas Cook, safe in the knowledge that it is part of the ATOL scheme, and they will have an excellent holiday to boot.
The Prime Minister
My hon. Friend speaks up for an iconic and important British business that has given people a lot of pleasure over the years. I have asked the Department for Business, Innovation and Skills to give me a report on what is happening at Thomas Cook, because it is important to ensure that it is in a good, healthy state.
Helen Jones (Warrington North) (Lab)
Q12. Recent research has shown that the NHS achieved the biggest drop in cancer deaths and the most efficient use of resources among 10 leading countries. Will the Prime Minister accept that he did not inherit an NHS in crisis, but one that was rapidly improving? Will he stop using dodgy 10-year-old statistics to justify his wasteful and destructive NHS privatisation?
The Prime Minister
I am a huge supporter and fan of the NHS. There are many things that are truly wonderful about our NHS. We should celebrate that, but under the last Government, the number of managers in the NHS doubled—the number of NHS managers was increasing six times faster than the number of nurses—and NHS productivity was falling. If a Government inherit a situation like that, it makes sense to make some changes. That is why we see, since we have come in, 14,000 fewer non-clinical staff, but more doctors and midwives, and more operations taking place. If the hon. Lady wants something to celebrate in the NHS—[Interruption.]
The Prime Minister
Thank you, Mr Speaker. If the hon. Lady wants celebrate something in the NHS, mixed-sex wards are down 90% since this Government came to office.
Mr John Whittingdale (Maldon) (Con)
Q13. Is my right hon. Friend aware of research by the TaxPayers Alliance—[Interruption]—that shows that residents of the Maldon district are paying more in motoring taxes and receiving less in direct benefit than anyone else in the entire country? My constituents appreciate that they would be paying even more in motoring taxes under the plans of the previous Labour Government, but does my right hon. Friend accept that, for them and others in rural areas, such taxes are becoming an intolerable burden?
The Prime Minister
I do accept what my hon. Friend says. That is why in the Budget we took the decision not only to get rid of the tax increases on petrol that were coming down the track, but to make a cut in petrol duty. Effectively, that was 6p off a litre of diesel or petrol. It seems to me essential that, at a time of economic difficulty, we demonstrate that we are behind those people who want to work hard and do the right thing, by freezing their council tax, scrapping Labour’s jobs tax and helping them with their motoring expenses. This Government are absolutely committed to doing that. It is all very well Opposition Members shouting about the TaxPayers Alliance, but it does a good job of drawing attention to those things. Also, the difference is that the TaxPayers Alliance does not pay us to put down amendments.
Mr Gordon Marsden (Blackpool South) (Lab)
Q14. The whole House will approve of the belated conversion of the Justice Secretary to the office of the chief coroner, but there are many concerns in the House about war memorials. The other week I brought a petition to the Prime Minister, which 3,000 people in Blackpool had signed. Will he now use his office and his weight to persuade the Justice Secretary and his Ministers to look urgently at new protections for war memorials and new penalties for those who attack them?
The Prime Minister
I think that the hon. Gentleman speaks for the whole House and the whole country in saying that what has been happening to our war memorials is completely unacceptable. I do not think there is a single answer. It may lie, as he said, in some new punishments and rules, but it also lies in looking at how the scrap metal market is currently regulated.
I hear very clearly what the hon. Gentleman says about the office of the chief coroner. I am delighted that we have been able to put forward an amendment and to accept some of those points. The one thing that we should try to avoid—this is really important, because all of us want to do the right thing for those soldiers and their families who have given so much to our country—is having an endless right of appeal. I do not think that that would be a good idea. I think it would actually damage the interests of families—
Stuart Andrew (Pudsey) (Con)
Over the last 30 years, thousands of vulnerable and disadvantaged children in the UK have been supported through projects funded by Children in Need. Will my right hon. Friend join me in congratulating Children in Need on raising more than £600 million over the years, and will he pay tribute to my constituents, who came together as a town, raised thousands of pounds and welcomed Pudsey bear home for the first time?
The Prime Minister
I am very glad my hon. Friend managed to get in, and I apologise, Mr Speaker, for almost squeezing him out. It would be a tragedy if we did not have this opportunity to pay tribute to Pudsey and all that Pudsey has achieved over many years.
Jim Shannon (Strangford) (DUP)
Q15. Last week, I visited Afghanistan through the armed forces parliamentary scheme and had the opportunity to meet the commanding officer in Helmand province. He stated that he needs two things before any British withdrawal in 2014: political help and influence with countries neighbouring Afghanistan to enable it to develop, and sufficient training and adequate equipment for the Afghan army. Can the Prime Minister assure the House today that those requests will be delivered prior to any 2014 withdrawal from Afghanistan?
The Prime Minister
The hon. Gentleman is right to speak up on this issue and to repeat what he heard in Afghanistan. He is absolutely right that we need to help the neighbouring countries—and, as we speak, my national security adviser and other members of my team are in Pakistan speaking with the Pakistani Government. On the equipment, assistance and training given to the Afghan national army, we now publish a monthly report to the House so that everyone can see the progress that we are making in equipping and training the Afghan national police and army. In spite of all the difficulties in Afghanistan, that is broadly on track.
Mr Speaker
We now come to the statement from the Secretary of State for Energy and Climate Change. I appeal to right hon. and hon. Members leaving the Chamber to do so quickly and quietly so that those who remain can hear the statement.
Annual Energy Statement
The Secretary of State for Energy and Climate Change (Chris Huhne)
It is important that when we discuss feed-in tariffs later today we understand the impact of our policies, and that is why we have brought forward the annual energy statement—so that the House can discuss the matter in its proper context during the debate later.
I am today publishing alongside the annual energy statement a consultation document on secondary legislation to provide for the green deal. It is important that we get this consultation under way as soon as possible because it will allow an expectant industry to begin planning for this vital energy saving policy.
The statement on our energy policy fulfils a commitment in the coalition agreement, and in describing the progress made and the policies under way, the statement also honours one of the coalition’s principles: our commitment to open and transparent government.
The consumer is at the heart of everything we do. Our decisions must ensure that the consumer is protected as far as possible from rising prices, and so we will secure our energy at the lowest cost. We will do so in the short term by promoting competition, in the medium term by insulating our homes and in the long term by steering us away from excessive reliance on fossil fuels and on to clean, green and secure energy.
The ultimate goals of the Department of Energy and Climate Change are to deliver clean energy for the future and to tackle dangerous climate change. Our vision is of a thriving and globally competitive low-carbon economy with cleaner energy, more efficient homes and lower bills. Over the past 12 months, we have taken significant steps to achieve just that. On both supply and demand, we have begun to deliver key coalition commitments, starting with energy efficiency.
Energy saving is now an equal priority with energy production. An economy that wastes energy cannot thrive in a high-demand, low-emissions world. Improving energy efficiency will save money and cut carbon, which is why we are creating a new energy efficiency deployment office within the Department. Our first task is to make our homes and businesses less leaky and wasteful. The Energy Act 2011, which received Royal Assent earlier this year, provides for the green deal—the pioneering programme under which businesses will install energy saving measures in our homes and recoup the costs over decades from the energy savings.
I am today launching the consultation on the secondary legislation that will allow green deals to begin next autumn, including the energy company obligation, which will support those who need the most help. Improving our buildings is vital but we must also change how we warm them in the first place. We are determined to help consumers heat their homes and businesses securely and affordably, and we will publish a heat strategy next year.
We are also making it easier for people to save energy. In March, we set out the strategy and timetable for introducing smart meters, which can help consumers to manage their energy use. Furthermore, we continue to push for ambitious EU vehicle emissions standards, and are providing £300 million in consumer incentives for ultra-low emissions vehicles and further support for research and development.
We are also working to secure Britain’s energy supplies. We need significant new investment in power plants and infrastructure to meet future demand. In July, we published the White Paper on electricity market reform, heralding the biggest change to the market since privatisation. We are also introducing a new system of long-term contracts, to remove uncertainty and attract investment, and a new mechanism for back-up electricity generation, to keep the lights on. We are setting new standards on emissions from power stations, to ensure that they are clean, and the Treasury is supporting low-carbon generation with a floor price for carbon, to help encourage low-carbon investment in the UK. Together, the reforms will deliver secure, affordable electricity from a diverse mix of sources, including renewables, new nuclear and fossil fuels, including carbon capture and storage.
Each of those energy sources will be important. They will work together in concert to deliver a reliable energy system, and over the past year we have introduced a range of policies to support them. We have published the first ever renewables road map, setting out the barriers to deployment and what must be done to deploy renewable energy at scale. We have also published a consultation on the right level of subsidy to support jobs, investment and growth. Professor Weightman’s report into nuclear safety after Fukushima reassures me that nuclear can be an important and safe part of the energy mix without public subsidy. In October, as part of our work to enable new nuclear build, I published the regulatory justifications for two reactor designs. Fossil fuels will remain important. That is why we are firmly committed to carbon capture and storage, with £1 billion still available for projects in the CCS programme, despite the disappointment of the Longannet project. Promising projects have been proposed, and we are developing a streamlined selection process, which we will set out shortly. Gas will continue to feature strongly in our energy mix, and our policies are designed to allow new gas plant to be built. I welcome Ofgem’s proposals to sharpen incentives for reliable gas supply.
We may need further measures to ensure that we are ready for low-probability, high-impact events. I am asking Ofgem to report to us by next spring on any such measures. We are improving the technical foundation of our energy security. Earlier this month, we laid the statutory security of supply report before Parliament, which sets out future supply and demand forecasts, and discusses risks and drivers. We are also making it easier for new nationally significant energy projects to be delivered. In July, this House approved the national policy statements for energy infrastructure, against which major energy projects will be assessed. Developers can now have greater certainty about how applications for consent will be considered and absolute certainty on when decisions will be made, with statutory time scales to ensure investor confidence.
Our actions will maintain the diversity and security of our energy supplies. We are working hard to ensure that they are delivered at the lowest possible cost. In a world of volatile fossil fuel prices—we all know about the events in the middle east and Libya—those objectives complement each other. We believe that the policies we have introduced will deliver the best value for consumers, as we move towards a cleaner energy future. However, as we embark on the transformation of our energy system, we must take people with us. That is why I am today publishing an assessment of prices and bills, and the impact of our policies.
Overall, we anticipate that rising world gas prices will push up bills for both gas and electricity, but our policies will moderate that rise. By 2020, we expect household bills to be 7%—or £94—lower than they would otherwise be without our policies. Moreover, bills will be lower during this Parliament. Britain’s homes will be cheaper to heat and to light than if we did nothing, in this Parliament and in the longer term. Those savings will result above all from our energy-saving policies and from market reform. In addition, we decided to fund the renewable heat incentive and carbon capture and storage commitments from general taxation, rather than from planned levies.
To sum up again, rising global fossil fuel prices and decades of under-investment will mean that prices for energy will rise in the UK, just as they will elsewhere. We cannot control global gas prices, but we can, as a Government, soften the blow. Prices and bills are forecast to rise, but we can ensure that they rise less than they would otherwise have done.
We want to leave a fairer energy legacy than those before us did. Between 2001 and 2009, fuel poverty doubled. The warm home discount and the affordable warmth part of the ECO, on which we are consulting, are targeted at the poorest and most vulnerable households. The warm home discount will support up to 2 million homes each year, helping more than 600,000 poorer pensioners, with £120 off their energy bills this winter. Other vulnerable people will also be eligible for a rebate. That discount scheme is worth two thirds more than the voluntary scheme that operated under the last Government. The Warm Front programme helped 130,000 households last year, providing advice and installing heating and insulation, with a further 90,000 set to benefit over the next two years. As it phases out, the affordable warmth part of the ECO subsidies will phase in to replace it.
We are also helping consumers more generally to take advantage of a competitive energy market. Consumers could save up to £200 by shopping around for the lowest online rate, but last year fewer than one in five households switched suppliers. We are making it easier and faster to switch, and we have launched a campaign to encourage consumers to check, switch and insulate to save.
We are also mindful of the impact on businesses. Earlier this year we published our proposals on the simplification of the CRC—carbon reduction commitment—energy efficiency scheme and for the new climate change agreements. We are committed to simplifying the regulatory burden on industry, while driving behaviour change to improve efficiency and reduce emissions.
Lower levels of energy efficiency savings mean that our policies will typically have a larger impact on energy bills for businesses. By 2020, policies are estimated to add 19% to the average energy bill of businesses that are medium-sized energy consumers. For large energy-intensive users, who are more exposed to fossil fuel price volatility, that figure is between 2% and 20%. It is important that these industries play their part in the transition to a low-carbon economy, but it is also important that they remain competitive. That is why we are working with the Department for Business, Innovation and Skills and the Treasury to announce measures before the end of the year to support those energy-intensive industries whose competitiveness is most at risk.
The energy sector is a vital part of our economy. Energy industries employ 173,000 people, contribute nearly 4% of our gross domestic product and provide more than half of our industrial investment. More than 51,000 companies in Britain provide low-carbon and environmental goods and services. Exports are now £11.3 billion a year—up 3.9%. Last year, nearly 4,500 new jobs were created in the sector, which grew by 4.3%.
We expect that our policies, like the renewable heat incentive, will strengthen supply chains across the country, bringing jobs and growth. The green deal alone will kick-start at least £14 billion of investment in the decade to 2022 and support at least 65,000 insulation and construction jobs by 2015. We want to ensure that young people today can play their part in the industries of tomorrow, so we are supporting green apprenticeships to build the skilled work force we need to deliver the green deal.
In conclusion, between now and 2030, our relationship with energy will change fundamentally. We have to build a new energy portfolio—one that is equal to our changing needs and our ambitious carbon targets. It has to be supported by a new consensus. Helping consumers to understand their energy costs, and how our policies affect them, is key. The decisions we take now will affect the way our energy is delivered for decades to come. I commend the statement to the House.
Mr Speaker
We are grateful to the Secretary of State, who has significantly exceeded his time. I gently remind him of the merits of the use of the blue pencil. So far as today is concerned, I must obviously make an allowance in respect of the response from the shadow Secretary of State.
Caroline Flint (Don Valley) (Lab)
I thank the Secretary of State for briefing the media about his statement today, before informing either the House or the Opposition. Is it any surprise that he is becoming increasingly rattled by growing opposition from his own Benches to the Government’s cuts in the solar power sector, and has chosen to bring his statement forward in order to squeeze time in our Opposition day debate this afternoon? Perhaps he is also trying to put a gloss on the Government’s energy policy before the energy statistics are published tomorrow—or perhaps advisers or lobbyists with “excellent contacts” with Ministers advised him to bring his statement forward. Whatever the reason, disrespect has been shown to the House today.
The Secretary of State said, “The consumer is at the heart of everything we do.” Will he start by telling us what the Government will actually do to deal with soaring energy prices? Energy bills are up by 20% this year, and standard tariffs rose by £175 between June and November alone, driving up inflation and squeezing household budgets. The Government, however, are so out of touch that their only answer is to tell people to shop around, and their only policy is to cut help to pensioners this winter. Can the Secretary of State explain why, with the end of the Warm Front scheme, for the first time since the 1970s a British Government are not offering grants to help to reduce fuel poverty?
The most effective and sustainable way of cutting bills is to reduce energy use, but the Government’s flagship energy efficiency programme, the green deal, has been delayed and is in chaos. We were expecting the green deal consultation back in September. More than two months later, it has finally appeared, but we are still not clear about what incentives households will be offered to take up the green deal, or what the Government will do to ensure that the 10p rate for a green deal package is low enough to secure the widest possible range of energy efficiency measures and the best deal for bill payers. Can the Secretary of State confirm that the Government’s forecast of the number of jobs to be created by the green deal has been slashed from 100,000 to just 65,000 by 2015?
Earlier this year, my right hon. Friend the Leader of the Opposition set out bold plans to break the dominance of the big six by requiring energy companies to sell power into a pool, thus allowing new suppliers to enter the market, increasing competition, and driving up choice for consumers. Will the Secretary of State explain why he is so afraid of standing up to vested interests in the energy industry, and delivering the reform that our energy market needs?
The green economy currently employs 800,000 people. It is estimated that the global market for low-carbon goods and services will be worth £4 trillion by 2015, with the potential to create 400,000 new jobs, but as a direct result of the uncertainty that the Government have created, the UK is falling behind. Last year, when we left office, it was ranked third in the world for investment in green growth. We are now ranked 13th, behind Brazil and India. That is bad for our economy, bad for our energy security, and bad for the prices that consumers pay, because it makes us ever more reliant on events overseas that are beyond our control.
Just yesterday, the Science and Technology Committee in the House of Lords accused the Government of complacency over the skills required for the nuclear industry. Given that power stations in the UK already import staff from the southern hemisphere to run them, given that many of the firms currently providing solar power are about to go to the wall, and given that British Gas has just announced that 850 jobs are to go, will the Secretary of State tell the House how he plans to halt the worrying decline in investment in the UK?
We look forward to the Government’s forthcoming announcements on how they propose to support energy-intensive industries, and we hope that their proposals will extend to both gas and electricity, but will the Secretary of State tell us exactly how much of the proceeds of CRC are going back into Treasury coffers? Under Labour's scheme, the money was returned to the hands of businesses to be invested in energy efficiency.
We shall have time to deal with the Government’s cuts in feed-in tariffs later this afternoon, but what sort of message does this whole debacle send out? How can the Government encourage investors to support the renewable heat incentive, the green deal or any other green policies in the future, when a growing sector, built on a flagship policy that had cross-party support, has been cut off at the knees with just six weeks’ notice? How can anyone have enough confidence to make the investment that we need when the Government are so short-sighted and so short-term, and chop and change their policies at every turn?
Today’s statement is just more evidence that the Government are out of touch, are cutting too far and too fast, and have no plans for jobs and growth.
Chris Huhne
The right hon. Lady asked what we were doing to help those who face substantial increases in energy bills. Over the last year there has been a 38% increase in world gas prices for delivery this winter, and that will inevitably be reflected in both gas and electricity bills. We have tried to protect consumers by taking the renewable heat incentive off the levy system and into general public expenditure, and by taking similar action in relation to carbon capture and storage. We have capped the feed-in tariff, and we are helping the consumer as much as we possibly can.
Far from our being afraid to take on the big six, Ofgem has clamped down on mis-selling, and we have ensured that the big six must inform people before raising tariffs. We have reduced the period within which consumers can switch suppliers to three weeks, and we are considering giving Ofgem powers to require companies to provide redress. All those steps constitute clear evidence of the determination of the Government and Ofgem to make this a highly competitive retail and wholesale market, which is the best guarantee for consumers that they will be given the best possible deal now and in the future.
The right hon. Lady mentioned the Warm Front scheme. She gave us no credit for the fact that the consultation documents on the green deal that were published today clearly show that we are replacing that scheme with the affordable warmth obligation referred to in the ECO consultation, or for the fact that the warm homes discount scheme is now statutory—it is not a voluntary scheme like that operated by the Labour Government—and will make the discounts available to those experiencing fuel poverty two thirds higher than those provided by the old voluntary scheme.
The right hon. Lady asked about incentives. The Chancellor of the Exchequer could not have made it clearer in his Budget speech that he would consider them. I believe that if the right hon. Lady waits for a matter of weeks, all will be made clear in regard to the Chancellor’s commitment to ensuring that the green deal is a great success. She should also bear in mind that we have already provided incentives, in addition to those that the Chancellor is considering. For example, all F and G-rated homes in the private rented sector will have to be upgraded by 2018 so that tenants can enjoy the benefits of energy saving.
Finally, the right hon. Lady asked what we were doing to encourage investment. The whole purpose of the electricity market reform which will be the centrepiece of the energy Bill that we will present in the second Session in May, and which we have already announced in the White Paper, is to provide the certainty that will lead to investment which, for years, the last Labour Government failed to deliver. A quarter of our power stations are going offline in the next 10 years: a quarter of our capacity. What did the last Labour Government do? Nothing—absolutely nothing. Yet the right hon. Lady, seemingly arriving from Mars, has had the temerity to come here today and pretend that we are not taking action, as if the last Labour Government had. I have to hand it to her: for sheer brass neck, she gets the prize.
Mr Speaker
Order. There is notable interest in the statement, but I remind the House that today is an Opposition day, and that there are two well-subscribed debates to follow. I want the first of them to begin before too long. Brevity is essential from Members—led, I feel sure, by Mr Peter Lilley.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
My right hon. Friend made the breathtaking claim that he intended to keep energy prices as low as possible. How does he square that with the Stern review, on which his policy to combat climate change is based, and which makes it clear that that policy can work only if energy prices are raised to include the external cost of global heating, and if the cost of hydrocarbon-based energy is also raised to make it more expensive than other forms of sustainable energy? In short, if his policy is not hurting, it is not working.
Chris Huhne
I am grateful to the right hon. Gentleman for his question. If he is in any way unsatisfied with the explanations that we have given in the documents—explanations which are considerably more detailed than those provided by any previous Government—he should ask for a briefing, and we will ensure that he receives any additional answers that he may require.
The key point, however, is that a substantial part of what we need to do to tackle climate change involves measures included in our green deal legislation which pay for themselves and do not involve a cost, while those that do involve a cost—namely the raising of prices to enable us to move to a low-carbon economy when it comes to electricity generation—are offset by the reduction in energy volumes precisely because of our energy-saving measures.
I commend the document to the right hon. Gentleman. I am sure he will find is persuasive.
Malcolm Wicks (Croydon North) (Lab)
If the last Labour Government did nothing about energy policy, I cannot think why I was so busy all the time.
To raise the tone of this discussion, I welcome what the Secretary of State said about long-term contracts, and I would like to hear more. On carbon capture and storage, the Secretary of State knows that despite all the excitement about feed-in tariffs, renewables and nuclear, the world, including the United Kingdom, will mainly be using fossil fuels for the next few decades. What is happening in respect of CCS? There have been some disappointments in recent months. When does the Secretary of State think the first CCS plant in the UK will be operating and helping to clean up our planet?
Chris Huhne
I certainly did not want to imply that the right hon. Gentleman, who has considerable expertise in this area, was in any way slacking when he was an Energy Minister—although I think he might have had better support from his colleagues on certain occasions.
CCS is a key technology. The right hon. Gentleman is absolutely right to say that we are going to continue to be reliant on gas and other fossil fuels. If we move to unabated gas rather than coal, that in itself will save about half the carbon emissions. For the longer term however, CCS is essential if we are going to be able to use gas, especially if we find, as I hope we will, that we have considerable exploitable reserves of shale gas under Lancashire and elsewhere.
As I have said, Longannet was a disappointment—I made a statement to the House on that—but other projects are coming forward. Peterhead is nearer the reservoirs than Longannet, so the pipeline costs are likely to be lower, and less investment will be needed to upgrade the plant in line with the large combustion plant directive. All the parties who were involved in the Longannet negotiation are confident that we can deliver a commercial-scale CCS plant for within that £1 billion budget, and we intend to do so.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
The Secretary of State highlighted the future role of gas in the economy, and producing our own gas is obviously the best option. To that end, will he stress to the European Union that its attempt to regulate the offshore oil and gas industry is in danger of creating regulatory confusion and more uncertainty, and that it would be far better to go down the directive route?
Chris Huhne
I am grateful to my hon. Friend for making that point. He is absolutely right. If we are going to introduce minimum standards for offshore oil and gas—the Commission has been kind enough to say they should be modelled on those for the UK continental shelf—that should be on the basis of a directive, so that we can use our own legal means to enforce the standards, rather than a regulation. A regulation that would apply directly in all the member states would be inappropriate because countries’ circumstances are inevitably different.
Caroline Lucas (Brighton, Pavilion) (Green)
In spite of the warm words about the importance of tackling fuel poverty, next year will be the first year in three decades when there has not been a Treasury-funded scheme to do precisely that. Instead, we have a regressive scheme that will fund the energy company obligation through a levy on fuel bills. As the ECO will be split into two pots—the hard to treat and the fuel poor—will the Secretary of State ensure that the latter group does not end up in effect subsidising the former, by making sure he focuses on the fuel poor, the 1.9 million households in fuel poverty who happen to live in hard-to-treat homes?
Chris Huhne
The hon. Lady will know that I am passionately committed to helping the fuel poor. That is why we have increased the amount of warm home discount compared with the voluntary schemes. I disagree with her that the ECO subsidy is an ineffective way of reaching such people or that it is more regressive than other schemes. The fact that the previous scheme was Exchequer-funded was by the bye. What is important is achieving the key outcome of tackling the root causes of fuel poverty, and that we will do.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I understand that France has persuaded the European Commission to accept nuclear power as a renewable. Will the Secretary of State negotiate a similar deal for this country, and will he also make sure that the information on our energy bills is transparently clear, so we know how much of what we pay is subsidy for renewable energy?
Chris Huhne
I can do better than that, because the document published today contains precisely that information on the impacts on prices and bills. We want to be as transparent as possible, because it is important that people understand that although there will be price increases, we can, particularly as a result of our energy saving measures, also get volumes down, which is crucial to getting bills down. There is no point in our having unsubsidised energy and merely heating the atmosphere; we want to heat our homes, not merely push the heat out of leaky and draughty homes into the atmosphere.
Mr Frank Doran (Aberdeen North) (Lab)
I heard the Secretary of State’s comments about the potential of the Peterhead CCS project, and I would welcome investment there. However, is it not true that the Longannet project was much more important to the country because it is a coal-powered station, as opposed to the gas-powered station at Peterhead, and coal is the main export market for CCS? Is it not also the case that Shell and Scottish Power have got their sums right, and that their assessment of the investment required for the CCS power we need is much more realistic than the Government’s? We have thrown away the great potential of a large export market.
Chris Huhne
CCS is a catch-all for a substantial number of different types of technology designed to do the same thing: take the carbon out of the process of the combustion of fossil fuels. I disagree about gas versus coal, as I think gas, along with coal, will play a very important part in world supply for a long time, and there will be substantial CCS markets in both of them. It is important that the UK is in the lead in that.
Mr John Baron (Basildon and Billericay) (Con)
The Government support the three recommendations of the billing stakeholder group, which I chaired at the Government’s behest, but there is strong evidence that one of those key recommendations is being ignored by the energy suppliers: the requirement that they contact each of their customers informing them on whether they are on the company’s cheapest standard direct-debit tariff. What are the Government going to do to put this right?
Chris Huhne
First, I want to pay tribute to the hon. Gentleman for his efforts in this area. We raised this point with the big six at the consumer energy summit, and my understanding is that they are in the process of notifying their customers. Perhaps not all those letters have gone out yet, but one of the commitments was that customers were going to be notified when there was a cheaper tariff they could move to online.
Mr Mike Weir (Angus) (SNP)
In what was a lengthy statement, the Secretary of State made no mention of either the long-standing problem of transmission charging, which affects green energy, or Ofgem’s Project TransmiT. What progress is being made, and will he finally take action to tackle this problem?
Chris Huhne
I have had continued discussions with Ofgem and, indeed, with the First Minister of Scotland. He and I think absolutely alike on the importance of moving to a regime that does not penalise energy sources for being further away from the market, precisely because renewable sources will inevitably be located where the renewables are. Also, nuclear is generally not welcome in the middle of our cities. For those reasons transmission charging should be amended. Ofgem is looking at that at present, but it is up to it to do so as an independent regulator.
Justin Tomlinson (North Swindon) (Con)
The majority of consumers seek to shop around when their tariff rises, only then to run the danger that their new tariff will rise even further only days later. What measures are being considered to protect consumers on new tariffs for either six or 12 months?
Chris Huhne
The hon. Gentleman is right. Consumers have the option to choose a fixed rate of course, which will be for a specified period. At the time of the recent consumer energy summit, we made the key point that the big six, which supply 99% of our households, had announced their tariff changes and that some of them had committed to keeping them all the way through the winter. Right now is therefore a rather good time to compare prices and switch to the cheapest tariff.
John Robertson (Glasgow North West) (Lab)
I understand that it is important to get money into the Treasury, but is that more important than people’s lives? The Hills report found that thousands of people will die as a result of this Government’s policies. What is more important: money to the Exchequer or people’s lives?
Chris Huhne
I am afraid that the hon. Gentleman is not giving credit where it is due, although I cannot say that it is terribly surprising. I commissioned John Hills to produce that report precisely because I wanted a really good and authoritative review of how we can best tackle fuel poverty. I am determined that we shall do that. One conclusion of the interim report from Professor Hills was that there are 25,000 excess winter deaths and that perhaps 10% of them—a similar figure to those killed on the roads—are due to fuel poverty. We are determined to tackle that issue—[Interruption.] That is after 13 years of Labour government; let us please have a little cross-party consensus on trying to tackle the problem while recognising that it needs to be dealt with in the long run and that we have the means to tackle it at source as well as in the short-term through the warm home discount.
David Mowat (Warrington South) (Con)
The Secretary of State will be aware that in the last year of the previous Government, less than 3% of our energy came from renewables and we were 25th out of 27 in the EU. By what extent does he expect to improve on that by the end of this Parliament?
Chris Huhne
I thank the hon. Gentleman for his question. We are determined to be the fastest-improving pupil in the class. At the moment, as the hon. Gentleman has pointed out, the inheritance from the previous Government puts us firmly in the dunces corner on renewables, but we are working our way out.
Ian Lavery (Wansbeck) (Lab)
The right hon. Gentleman will be very much aware of the situation at Rio Tinto Alcan in my constituency, where 650 jobs are likely to be lost as a result of green taxes and high energy costs. What assurances can he give the work force at Rio Tinto Alcan that the package of measures that have been promised and promised again for energy intensive industries will be sufficient to keep the plant in operation and maintain the jobs, plus 3,000 jobs in the supply chain?
Chris Huhne
I understand the hon. Gentleman’s concern, which I have shared. I met the executives from Rio Tinto Alcan who deal with that plant and I put to them a simple question: if we were able to provide support for electricity generation through, for example, conversion to biomass, would they guarantee that they would keep the plant open? They did not give me an answer and one executive is quoted as saying that the 40-year-old plant was beyond Government subsidy. I do not think that, and I very much hope that we can work on finding a solution, but I can assure the hon. Gentleman that the energy intensive package is under serious and urgent consideration. It is on course to be announced by the end of the year, which is what we were committed to doing, and it is also a matter of regret to me that the announcement was made about the Rio Tinto Alcan plant before the managers had the opportunity to read what we were able to say, which suggests to me that they had previously made up their mind.
Andrew George (St Ives) (LD)
Of course, energy bill payers contribute a few quid towards the support of renewables, but the big six help themselves to £150 per annum per household. Does my right hon. Friend believe that that is a reasonable balance, and how can we achieve a reasonable balance?
Chris Huhne
The key in any market is to ensure that it is properly competitive. I am absolutely in favour of shareholders, particularly since they are usually our pension funds and our insurance companies, making the best possible return in a competitive market. That is why we are stressing the key competitiveness requirements of the wholesale market and the retail market. When we get that right, we will have the assurance that the rates of return in the marketplace for the big six and, I hope, for the new entrants to the market will be fair, precisely because they have been earned fair and square in a competitive market.
Gordon Banks (Ochil and South Perthshire) (Lab)
The Secretary of State referred to the green deal in his statement. What is he doing to ensure that VAT on products used in the green deal is set at the same level as for the energy it is designed to save—that is, at 5% and not 20%?
Chris Huhne
The hon. Gentleman raises an important point. There are substantial anomalies—and not just that one—in the VAT regime. It is not always possible, because of the commitments in the EU legislation, for member states to make unilateral changes to that regime but he certainly makes a sensible point and I am sure that the powers that be at the Treasury will listen carefully to it.
Chris Heaton-Harris (Daventry) (Con)
Does the Secretary of State understand the concerns of those who have “prepared their homes”, to use his words, and fitted solar panels about the pace of the reduction in feed-in tariffs, especially when they see the onshore wind industry being rewarded for inefficiency and destroying the UK countryside?
Chris Huhne
My hon. Friend raises an interesting point. We have cut the subsidies for the offshore and onshore wind industry, too, and we have done so because this Government are firmly committed to making sure that we deliver what we intend to deliver—that is, the shift to a low-carbon economy—at the lowest possible cost to British consumers. I am sure that we will have a greater opportunity to debate this subject later today, but I merely point out that the subsidies for solar feed-in tariffs now reflect a substantial fall in the costs of the underlying technology. That fall in costs, caused by the global changes in circumstances over the past year, means that those subsidies are providing a very similar real rate of return to that which was planned when the scheme was launched in April 2010.
Mr Speaker
Order. If it is possible to find a one sentence question and a relatively pithy reply—I do not wish to be too ambitious—that would be a considerable achievement. I look to one of the wise heads of the House and call Dr William McCrea.
Dr William McCrea (South Antrim) (DUP)
During the winter months, the poorest members of our society will face soaring electricity bills and many in Northern Ireland have no alternative to heating oil. What action will the Secretary of State take to make home heating oil affordable to the most vulnerable in our society?
Chris Huhne
I am grateful to the hon. Gentleman for raising the issue of home heating oil because, as he knows, last winter that issue caused us a lot of concern. We referred the matter to the Office of Fair Trading and I was surprised with its conclusion but we must accept that it followed a full investigation. The longer-run solution will be to ensure that people are less reliant on the heat from heating oil through energy insulation and the green deal. We are determined that those who are off the gas grid will be able to take every opportunity to enjoy the benefits of the green deal, too.
Mrs Anne Main (St Albans) (Con)
Small solar panel companies about which I have written to the Secretary of State’s Department are having a particularly hard experience following the change in the tariff. They will lose jobs over it and they are asking whether the domestic 4 kW rate can be considered as a taper for a longer period so that they can recover from the shock of the quick cut in the tariff rate when they cannot deliver as quickly as the big boys.
Chris Huhne
I am grateful to my hon. Friend for that question. This is a consultation and a genuine one. We have made serious proposals and we are waiting for the responses. We will take those responses into account when we come to make decisions.
Nia Griffith (Llanelli) (Lab)
Energy companies often cite investment in generating power as the reason for the price rises. What assessment has the Secretary of State made of the amount of money made on the price rises compared with the companies’ investment in generating power?
Chris Huhne
The hon. Lady raises an interesting point. The need for new investment is clearly factored into the price projections in the documentation. It is not just about the rise in the overall world price in gas that is driving what is happening to our bills but the need to build a quarter of the capacity that is coming offline. That is factored into the calculations.
Jeremy Lefroy (Stafford) (Con)
Has my right hon. Friend had the opportunity to look at how other countries, particularly Germany, support their high intensity manufacturing users of energy to keep bills down and jobs in the country?
Chris Huhne
My hon. Friend will know that my esteemed colleague, the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), was there in September. We have done considerable work to look at the experience of other countries, which is a theme that we might come back to in the debate on the solar feed-in tariff. This Government do not believe that it is sensible to sit in a room and try to develop things from scratch and a priori if other countries have already done so and we can learn the lessons from them.
Bill Esterson (Sefton Central) (Lab)
How can the policy change on the tariff possibly be a consultation when it is already set to change on 6 December? My constituent, Keith Bonner, wanted to install solar panels and he tells me that the £12,000 investment is no longer viable because of the change in policy. How does the change in policy fit with the requirements set out in the Secretary of State’s statement of increasing renewable energy, tackling climate change and reducing emissions?
Chris Huhne
The hon. Gentleman should know that there will not be a change in tariff before April. The key point is that the old tariff is applicable to any scheme that is installed either before or after 12 December, but any scheme that is installed after 12 December will have a lower tariff from April. We will have plenty of opportunity to debate this later today and I am sure he will want to contribute to that debate.
Christopher Pincher (Tamworth) (Con)
Will my right hon. Friend encourage Ofgem to deal with the tariff anomaly whereby household energy bills fall when households use more energy? Surely, that places a burden on single and less well-off households and flies in the face of our desire to encourage greater energy efficiency in households.
Chris Huhne
There are many anomalies that Ofgem is looking at in this area. A key part of that will involve looking at any unfairness in the system and making sure particularly that we simplify tariffs. There are far too many tariffs and that is confusing for consumers. If we can get a dramatic simplification, that will make the market work much more effectively. Currently, only 15% of consumers switch, whereas with car insurance about half do so through online sites. We need to get up to that figure and we will then find that the market works much more effectively.
Angela Smith (Penistone and Stocksbridge) (Lab)
Constituents have informed me not only that they are angry about the drop in the tariff and the potential loss of jobs in my area—these are people who have invested in the solar energy industry—but that the arbitrary deadline of 12 December means that there has been a rush for installation of solar energy in people’s homes, which is producing a sharp increase in the price of the components in panels. Does this not show that the Secretary of State has thought very little about the impact of this policy on the energy industry?
Chris Huhne
I disagree with the hon. Lady. When a policy is clearly going off the rails, it is important to grip it as quickly as possible. The problem with the industry was that it was massively exceeding its budget. If we had not acted, we would have been adding anything between £26 and £55 to the average household bill by the end of this Parliament, which would simply have been too much. We have had to take account of the cost to the consumer and I very much regret that the Opposition do not seem to remember that.
David Morris (Morecambe and Lunesdale) (Con)
Twelve months ago today, after last year’s statement, I put forward a proposal about topping up card meters online, as I have them at home. I have gas and electricity from British Gas, and I am pleased to report to the House that that has happened with British Gas. Hon. Members can take it from me that electricity is far cheaper than gas, and I urge the Secretary of State to take that into consideration. Is not now the time to put more money into nuclear power and push that industry forward for jobs and in my constituency?
Chris Huhne
Nuclear is one of the three key pillars on the supply side, with the fourth pillar being energy saving. Those are the key parts of our policy. We have been meeting all our deadlines except those that arose immediately after the Fukushima disaster when I thought it was important to ask Dr Weightman to come up with a report that answered people’s concerns about making sure that the same thing could not happen here. With that one exception, we have been meeting our deadlines and we are on course for new nuclear without public subsidy.
Mark Durkan (Foyle) (SDLP)
The Secretary of State has referred to the carbon floor price and the carbon reduction commitment simplification proposals, both of which give rise to concerns in Northern Ireland that they will have a perverse impact given our market and geographical realities. Those impacts would be counter to the very policy goals that he has enunciated. Is he receptive to those concerns and will he and his colleagues be responsive?
Chris Huhne
The hon. Gentleman raises some interesting issues. We are in constant touch with the Northern Ireland Executive and others on these matters and of course we are receptive to concerns and to amending anything that would have a perverse effect of the type he describes.
Mr Peter Bone (Wellingborough) (Con)
The right hon. Member for Don Valley (Caroline Flint), who speaks for the Opposition, made the serious charge that the Minister had briefed journalists before coming to the House. In answering her question, it slipped his mind to answer that point. Can he tell us that that did not take place and confirm it by publishing and putting in the Library a copy of the media grid showing which journalists were spoken to before the statement?
Chris Huhne
I assure my hon. Friend that I did not speak to any journalist before making this statement. As far as I am concerned, it is an important principle that the House should be told first.
Stephen Mosley (City of Chester) (Con)
The Secretary of State has set out the future energy supply and demand forecasts within the security of supply report. Is he confident that if those forecasts prove to be inaccurate, we will be able to keep the lights on in this country?
Chris Huhne
Because of the disappointing economic situation, the margin of capacity has been rising. I am confident that we can do that, but we should not be complacent. We need to keep the matter under review and we are certainly doing that, but I am confident that we can keep the lights on.
Points of Order
Ms Angela Eagle (Wallasey) (Lab)
On a point of order, Mr Speaker. I would like to make a point about the scheduling of this annual energy statement on an Opposition day when we have two extremely important debates with very short time limits for speakers. The statement was not a time-sensitive one and I hope that you will agree with me and deplore the fact that it was scheduled in Opposition time. Secondly, the timing of the statement was tweeted to the world by The Guardian environment correspondent at 9.37 this morning, 32 minutes before Opposition Front Benchers were informed that there would be a statement. Thirdly, the contents of the statement were extensively leaked to the same tweeting Guardian correspondent and appeared on its website at 10.35 this morning. Mr Speaker, I seek your rulings on these issues, which show grave discourtesy to the House.
Mr Speaker
I am grateful to the hon. Lady for her point of order, and I shall seek to the best of my ability to respond to each of her three points in turn. First, the timing of Government statements is a matter for the Government and I do not want to get into the merits or demerits of choosing a particular day, but the point will have been heard by the Deputy Leader of the House and, at a distance from the Chamber, by the Leader of the House. Secondly, let me emphasise that notification of an intended statement should first and foremost be to other hon. and right hon. Members and the shadow team. It should not be to members of the press. That is disorderly and discourteous. Thirdly, I listened intently to the Secretary of State, as I always do, when he responded to the hon. Member for Wellingborough (Mr Bone). He assured the House that he had not spoken to journalists about the contents of the statement, and of course I accept without hesitation what he says on that point. However, I would just gently—or perhaps not so gently—remind the Secretary of State that it is not just a question of Ministers not talking to the media. Ministers must not encourage, facilitate or permit any of their team, officials or advisers to do so either. This is the second time this week that there has been an instance of substantial information in a statement being conveyed first to the media. It will be a pity if further measures have to be contemplated and adopted for dealing with situations of this kind. I hope that the Secretary of State will take what I have said as a deterrent against any future such occurrence.
John McDonnell (Hayes and Harlington) (Lab)
On a point of order, Mr Speaker. On 2 November the Chief Secretary to the Treasury made a statement to the House regarding the Government’s latest offer to unions on the public sector pensions issue. In the statement and in the document he published, he included examples of the pensions that public sector workers would obtain under his proposal. Later that day, the Prime Minister told the House—he has repeated this today—that on that basis, low and middle earners would get more from their pensions. The Cabinet Office subsequently published on its website a pension calculator on which people could check what pension they would receive under the Chief Secretary’s latest announced offer. As was revealed on “Channel 4 News” last night, the calculator demonstrated that the Chief Secretary’s original examples were simply wrong, and that his statement and the Prime Minister’s comments were simply incorrect. The calculator showed that low and middle earners would get less at comparable retirement rates. The calculator has since been taken down from the website.
Three million public sector workers may go on strike on 30 November unless the dispute is resolved, so it is vital that accurate information be provided to the House and to the general public. The Chief Secretary has unwittingly conveyed inaccurate information to the House and, through you, Mr Speaker, I would ask that he be requested to return to the House to correct the error and provide an accurate assessment of the Government’s pension proposals.
Mr Speaker
I am grateful to the hon. Gentleman, both for his point of order and for providing advance notice of it. All hon. and right hon. Members, including Ministers, are responsible for the content and accuracy of the statements that they make. If a mistake has been made, a Minister should correct it. I hope that the hon. Gentleman, who is an exceptionally clever chap, will understand if I am reluctant to trespass beyond that, because the detail and minutiae of these matters are probably well beyond my limited competence.
Mr Speaker
I am in a generous mood, so I shall allow the hon. Gentleman to do so.
John McDonnell
Further to that point of order, Mr Speaker, I simply want to disagree with you regarding the phrase “an exceptionally clever chap”.
Mr Speaker
Well, he is certainly a modest fellow, although not with much to be modest about. We will not discuss that any further, but what I would say is that disputes about the impact of the Government’s most recent offer on pension levels are an appropriate matter for debate, and arguments over calculations and hypothetical examples are not tantamount to any deliberate misleading of the House. The hon. Gentleman is an experienced—not an old—hand who has put his concerns forcefully on the record.
John Healey (Wentworth and Dearne) (Lab)
On a point of order, Mr Speaker. Have you received an approach from the Health Secretary to say that he may have misled the House yesterday in Health questions when answering a question from me about the risk register for his NHS reorganisation? He told the House:
“I have been very clear and published all…risk information relating to the modernisation of the NHS”.—[Official Report, 22 November 2011; Vol. 536, c. 149.]
He has made the same argument to the Information Commissioner who, in a legal decision, said that
“he does not accept the argument and considers that disclosure would go somewhat further in helping the public to better understand the risks associated with the modernisation of the NHS than any information that has previously been published.”
Will you advise the House, Mr Speaker, on how we can correct the record and get to the truth about the risks that the Government’s policies on NHS reorganisation pose to our NHS?
Mr Speaker
I am grateful to the right hon. Gentleman for his point of order, but there is not much that I can offer by way of encouragement or comfort. He is an experienced Member of Parliament, and he has put his interpretation of those matters on the record. I said a moment ago that the contents of answers are a matter for Ministers, but answers to parliamentary questions are not themselves covered by the statutory provisions of the Freedom of Information Act. If he thinks either that the Minister has erred or that I have erred in my exegesis of his point of order—or, indeed, both—no doubt he will return to these matters and will require no encouragement from me to do so.
Mr Nigel Dodds (Belfast North) (DUP)
On a point of order, Mr Speaker. I would be grateful if you could advise me how I can put on the record the fact that following the Deputy Prime Minister’s reply to me on 15 November, recorded at column 679 of Hansard, in questions on changes to the law on the succession to the throne, the right hon. Gentleman helpfully wrote to me to clarify that he was in fact referring to his conversation with the Scottish First Minister, not the Northern Ireland First Minister. He further advised me—again, very helpfully—that he has placed a copy of his letter in the Library. I am grateful to his office and to other Ministries for the way in which the matter has been handled.
Mr Speaker
The hon. Gentleman wanted to put that matter on the record, and he has done so with his customary courtesy. If there are no further points of order, we come to the ten-minute rule Bill, which the hon. Member for Kingswood (Chris Skidmore) has been waiting patiently to introduce.
Members of Parliament (Change of Political Party Affiliation)
Chris Skidmore (Kingswood) (Con)
I beg to move,
That leave be given to bring in a Bill to provide that any Member of Parliament who changes voluntarily his or her political party affiliation described on the ballot paper at the time he or she was elected is deemed to have vacated his or her seat; and for connected purposes.
This Bill seeks to ensure that any Member who decides to change parties—in other words, crosses the Floor or “defects”, should trigger an automatic by-election so that their constituents can have the final say on their decision. I realise that some Members may have hesitations about such a Bill. It would, after all, seek to overturn centuries of tradition that have allowed Members to change parties with little regard for their constituents’ opinion on the matter.
At the same time, the question of Members changing parties is not a new one. Former and current Members from all political parties have taken the decision to do so, including a former Prime Minister. Equally, former Members from every political party have previously called for a defecting MP to give their constituents the right to validate their decision. Let me be clear: I do not take issue with the right of Members to defect from parties. In an established democracy, we must value the freedom of individual Members to cross the Floor if they so wish. I can fully accept and understand that Members may, at times, no longer find themselves at one with the party they joined. I ask only that they give their constituents the same choice that they themselves have been able to make.
Nor do I wish to criticise any Member or former Member for the action they have taken, or the judgments they have made according to their own conscience. They will have to live with them. However, it is neither right nor fair that a constituent should live with that decision, often for many years, until a general election is called. According to the House of Commons Library there has never been a debate in the House on this issue. At a time when the public’s faith in our political system is at a low ebb, and when trust in politics remains broken, I believe that this is precisely the kind of topic that we should be debating.
If we asked any man or woman on the street the solution would be obvious: if an MP is elected for a certain party, only to decide to defect to another, it is only right that they should allow their constituents a say on their decision. That is the honest thing to do, and it is the right thing to do. It is easy to state the historical arguments against this Bill, mostly stemming from Edmund Burke’s speech to the electors of Bristol in 1774. Burke argued that we are sent here as representatives, not delegates, and as such sit in the House as individuals, not bound by party constraint, but each free to choose how we best represent our constituents, even if that seems to be against their best interests.
The notion that constituents vote for their Members of Parliament as individuals to exercise their judgment on behalf of their constituents, and not to stand for the party ticket on which they were elected, may have been relevant in the 18th century, but that is no longer the case in the 21st century. We can no longer continue the charade that we are each elected solely as individuals. To do so is simply not to be speaking the same language as our constituents. It is an undeniable truth that the vast majority of constituents will vote for the party, with the Member the embodiment of the party locally.
Parties clearly do matter, otherwise there would be no need for a Member to change from one party to another. Such a Member may as well sit as an independent. Indeed, let those who wish to maintain the illusion, and believe that we are elected as sole individuals, stand as individuals, devoid of a party banner.
There are precedents in this House for a political defection to trigger a by-election. Bruce Douglas-Mann voluntarily triggered one in 1982, in the Mitcham and Morden constituency, when he left Labour for the Social Democratic party. He followed in footsteps of Dick Taverne, who in 1973 resigned from the Labour party, only to call a by-election and be re-elected under the banner of Democratic Labour. By-elections like these should be the rule, not the exception.
Nor would the Bill be the first to legislate on a Member of Parliament’s defection. Defection laws have been passed in India, providing that someone can be disqualified for voluntarily giving up
“membership of his original political party”.
Of 193 countries worldwide, 41 have laws about crossing the Floor. Indeed, in Canada, a Bill almost identical to my own was debated only this month.
I do not deny that this change in the law would raise other issues that would need to be investigated fully, but I would welcome the scrutiny that the House could provide by debating the merits and demerits of the Bill. For instance, the reason why I suggest that the Bill should apply only to Members who have voluntarily changed parties is to ensure that the withdrawal of the Whip would not affect a Member’s ability to remain as a representative. It is not the Bill’s intention to strengthen the party system, or to strengthen the control of any parliamentary party. It is intended only to strengthen the hand of our constituents. Loyalty to our constituents lies at the forefront of what we all, whichever political party we stand for, wish to achieve as Members of Parliament.
Edmund Burke once stated that he was a Member of Parliament, not the Member for Bristol. As a proud Bristolian, I am the Member for Kingswood first and a Member of Parliament second. We have a choice: we can stand by the arguments first formulated more than 200 years ago, noble though they are, or we can choose to face forwards, into the 21st century, and accept that we cannot go on as we have done. We must accept that the status quo cannot remain, and that we must seek to form a new relationship with our voters, our constituents—the men and women who put us here in the first place.
The central issue must be one of trust. At a time when the public want politicians to be more accountable, if a Member of this House decides to defect, it should lie with the voters and the constituents whether that Member should remain a Member of Parliament or not. We need to look beyond the confines of this Chamber, and ask ourselves what is so wrong with a Member who defects from one party to another asking their constituents’ opinion. What should any defecting MP be so afraid of? Who are we to turn our backs on our constituents—the voters who placed us here—without their assent? Without them we are nothing.
I end by paraphrasing the words of that other Bristol MP, Edmund Burke: “Your representative owes you, not his industry only, but his honesty, and he betrays, instead of serving you, if he sacrifices that to his ambition.”
Sir Peter Bottomley (Worthing West) (Con)
Edwina Currie had the bright idea of having equal numbers of men and women in the House by pairing constituencies and saying that the man who got the most votes and the woman who got the most votes each became a Member of Parliament. I asked her what would happen if someone went in for gender reassignment between one election and another, and she thought I was not being sufficiently serious.
When I first started taking an interest in politics, I do not think we had party labels on the ballot paper. I think it would not be a bad thing if we removed them and showed only candidates’ names and addresses. Incidentally, I do not know whether my hon. Friend the Member for Kingswood (Chris Skidmore) would suggest that if I changed my address between one election and another I should have a by-election, because that was on the ballot paper as well.
I do not think many of us would get elected without parties, but the key point is that we have a duty to our constituents and to our party, and we have international obligations as well. In my view the trust comes from what we do, not from whether we decide to change our party. We are at present in coalition with the Liberal Democrats. The Liberal Democrats include people who were Social Democrats. The Social Democrats, in the main, unless they were political virgins, came from the Labour party, so there has been significant moving around.
We could approach this matter from the point of view of narrow self-interest. Do we as the Conservatives, or we as the coalition with the Liberal Democrats, expect to get more people from the Labour party to come and join us, or do we expect to lose more people? If we expect to gain more people, which is what I hope we are going to do, we should not support the Bill. We should say, “Come across and perhaps we’ll see if we can look after you at the next election as well. It may mean changing your seat, as one or two Conservatives who switched to Labour did, but we can have a go.”
Then we come to Burke. Edmund Burke is quoted far too often. He bears the penalty of fighting his great campaign against Warren Hastings for five years, tying up Westminster Hall and stopping the visitors having a good look round. But we forget that having made his declaration of the duties of a Member of Parliament, at the next election he lost his seat. Losing the seat at the election is what such a Member should take the chance of doing.
We have had voluntary by-elections. Our right hon. Friend the Member for Haltemprice and Howden (Mr Davis) caused a by-election to say that he still agreed with what he had said at the previous election so could he be re-elected, and he was. We had the time when the Ulster Unionists, who do not seem to be present at the moment, had by-elections en masse for some reason that we have now forgotten. We ought to recognise that although my hon. Friend the Member for Kingswood is absolutely right—there is no better historian in the House now than he—in saying that the matter ought to be debated, the idea that it should be the subject of a Bill that should be enacted is controvertible, and I would say that it is wrong.
The House should not be delayed by too many of the greater arguments, except of course if we wanted to return to the glory days. Was there not a time when if someone elected as a Back-Bench Member of Parliament was invited to become a Minister, a by-election had to be held? It would be a real test of popularity, especially if a reshuffle came, to make it a requirement that any Back Bencher who became a Minister had to fight a by-election, and anyone who stood at a general election as a Minister and succeeded, but then lost their ministerial position, should also be required to fight a by-election. If by-elections are a good idea, let us have more of them.
Question put and agreed to.
Ordered,
That Chris Skidmore, Dr Sarah Wollaston, Mr Robert Buckland, Zac Goldsmith, Mr Aidan Burley, Conor Burns, Gavin Williamson, Bob Stewart, John Healey, Mr Philip Hollobone, Mr Tom Clarke and Steve Brine present the Bill.
Chris Skidmore accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 16 March 2012 and to be printed (Bill 252).
Opposition Day
Economic Growth and Employment
(13 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
15:59 - The House divided: - Ayes: 236 / Noes: 304 - Question accordingly negatived.
Mr Chuka Umunna (Streatham) (Lab)
I beg to move,
That this House notes with concern that UK economic growth is flatlining and was choked off well before the recent Eurozone crisis, that youth unemployment is now more than one million and that Government borrowing is therefore expected to be £46 billion higher than forecast over the Parliament; further notes with regret that the Government has failed to deliver a credible growth plan, is undermining critical industries in which the UK must compete, is failing to use strategically procurement and other tools to drive growth and innovation, and is holding back regional growth with its flagship projects mired in inertia and with most business still waiting for Regional Growth Fund money seven months after the recipients were announced; therefore calls on the Government to deliver a growth plan that provides an immediate boost to the economy to increase demand and growth, including a £2 billion tax on bank bonuses to fund 100,000 jobs for young people and build 25,000 more affordable homes; and further calls on the Government to bring forward long-term investment projects to get people back to work, to reverse the damaging VAT rise of January 2011 for a temporary period giving families a £450 boost and providing immediate help for the UK’s high streets, to provide a one-year cut in VAT to five per cent. on home improvements, repairs and maintenance to help home owners and small businesses, and to provide a one-year national insurance tax break for small firms to help them grow and create jobs.
In his Conservative party conference speech last October, the Chancellor said he would stick to his plan to cut faster than any other Chancellor in our history, regardless of the consequences, because, he said, it was necessary to put our economy on a sound footing. With reference to the Business Secretary he said:
“Together, Vince and I have started to open Britain for business.”
A year later, what do we find? The economy has grown by just 0.5% in the past 12 months. This compares with growth of 1.5% in the US over the same period and is significantly down from the 2.6% growth in the previous 12 months, thanks to the measures taken by the Labour Government. Have the Chancellor and the Business Secretary opened Britain for business? The figures tell a different story. The number of UK enterprises fell by 20,000 in the year to March 2011, with decreases in business numbers in every region except London and Scotland, and business confidence nose-dived following the announcement of the Chancellor’s spending review.
What effect is this having on the people of this country? More than 2.6 million people are out of work, the highest rate in 17 years. More than 1 million young people are now out of work, the highest since comparable records began in 1992. Let me be clear: these are not our statistics. They are those of the Office for National Statistics. They are the facts.
How have the Government responded to the facts? Last week, when we learned of the youth unemployment figures, the Prime Minister and the Chancellor were nowhere to be seen. Instead, the Minister with responsibility for employment took to the airwaves. He told us that the 1 million figure for youth unemployment was “a distraction.” The 1 million figure for youth unemployment is not a distraction. It is a disgrace. What a tragic waste of talent. He not only described the figure of 1 million as a distraction, but attempted to blame it on the eurozone crisis. Does he really think that the British people will fall for that?
In fairness to the Business Secretary, when the figures came out his unofficial spokesperson, the noble Lord Oakeshott, told The Guardian:
“It’s ridiculous to blame this rise in unemployment on the crisis in the eurozone. All economists know it’s a lagging indicator, so this is the result of what has been happening in our economy over the past year”.
I could not put it better myself. Despite that view, the Business Secretary remains resolutely wedded to the Government’s economic strategy, however disastrous it is turning out to be. He does so in the name of deficit reduction, yet the independent forecasts published last week show that the Government are projected to borrow, on average, more in each remaining year of this Parliament than we would have done under our more balanced deficit reduction plan. Those are neither the Opposition’s figures, nor those published by the Office for National Statistics; the summary of independent forecasts was published last week by the Government themselves. Of course, the Office for Budget Responsibility has already forecast borrowing to be £46 billion higher than previously thought. The evidence is clear: the Government’s strategy is not working because reducing borrowing requires growth, which they choked off by cutting spending and raising taxes too far and too fast, and long before the eurozone crisis.
Richard Fuller (Bedford) (Con)
I welcome the hon. Gentleman to his place on the Front Bench, which gives the Opposition the opportunity for a fresh start in putting forward their policies. He noted that according to later assessments the deficit will be higher than originally estimated, but does he accept that the key thing the Government got right was to set the tone for interest rates so that this country’s businesses can benefit from much lower interest rates than those in other countries, and would not the policies that his party proposes put that at risk?
Mr Umunna
With the greatest respect to the hon. Gentleman, the reason the Monetary Policy Committee has set our interest rates so low is that we are struggling to find growth in this country. Without growth, we will be unable to reduce our borrowing. Our not being in the eurozone is another reason we are able to adopt lower interest rates.
Charlie Elphicke (Dover) (Con)
I, too, congratulate the hon. Gentleman on his much-deserved elevation and on his speech, which has been very interesting so far. I put it to him that the Opposition’s plan would have been to borrow about £100 billion more than the Government plan to borrow in the current Parliament, which would lead to higher interest rates and push us closer to the situation Italy and Greece find themselves in and to what is happening in the eurozone, which would be irresponsible and reckless.
Mr Umunna
I thank the hon. Gentleman for welcoming me to my post. First, if he looks at page 22 of the Government’s summary of independent forecasts, he will see that they are projected to borrow, on average, over £100 billion more than the Government thought they would. Secondly, when he returns to his constituency he might wish to explain to his constituents, particularly the young people—youth unemployment there is up by 155% since January this year—why he cannot get his Government to change course.
Mr Julian Brazier (Canterbury) (Con)
I am most grateful to the hon. Gentleman, who has shown considerable courtesy already in giving way. Does he accept that the markets set long-term interest rates, whatever the MPC does, and that the problems in countries that have let their fiscal position get out of hand with interest rates have been driven not by a choice given by the European Central Bank, but by the markets setting the prices for their medium and long-term bonds?
Mr Umunna
The market is not irrational, as the Government seem to suggest. The suggestion is that if they move their direction and course by even one millimetre, even if economic circumstances justify such a change, they will be hammered by the market, but that is clearly not the case. I invite the hon. Gentleman to read the numerous articles and speeches by the former adviser to the Chancellor and the Prime Minister and former chief economist of the Cabinet Office, Mr Jonathan Portes, now director of the National Institute of Economic and Social Research, who makes that very point.
Stephen Timms (East Ham) (Lab)
Does my hon. Friend recall, as I do, the Prime Minister telling the House in June of last year that employment would rise in every year of this Parliament, and did he notice in last week’s unemployment figures that employment fell by more than 100,000 in the year after that pledge was made? Is it not absolutely clear that the policy is not working and must now change?
Mr Umunna
I completely agree with my right hon. Friend. Of course, another question for the Government is why they will not listen to business organisations that have been calling for action. The CBI is calling for infrastructure spending to be brought forward, the Federation of Small Businesses is calling for a one-year national insurance break for every small firm taking on extra workers, and the Federation of Master Builders would like a targeted cut in VAT to 5% for home improvements, maintenance and repairs. Business organisations, from those representing the food and beverage sectors to those representing businesses on our high streets, which are suffering, are calling for a reversal of this year’s hike in VAT. What do all those measures have in common? They are all part of Labour’s plan for growth and jobs. As our motion stated, the Government must take action now to increase demand and growth and give immediate help to the high street—[Interruption.] The Minister of State, the hon. Member for Hertford and Stortford (Mr Prisk), chunters from a sedentary position. If he wishes to ignore all the various business organisations, people might put a big question mark over his judgment. It is clear that the Government need to back our plan and that they must do so now.
Julian Smith (Skipton and Ripon) (Con)
Does the hon. Gentleman not agree that the Government have been listening to businesses organisations with regard to employment law and deregulation? I am surprised that he, as a former employment lawyer, has not included in the motion a single proposal to make it easier for small businesses in Britain to take on staff.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
When businesses get in touch to tell me about the problems they are suffering from, none of them tells me about problems with employment law. They tell me about the lack of public procurement and problems with VAT and financing from the banks. Those are the concerns that need to be tackled, rather than the side issues that Government Members are pursuing.
Mr Umunna
I agree with my hon. Friend. We all know what is holding back business in taking on workers: the forecast economic projections for this country. That is the real problem. What has been the centrepiece of the Business Secretary’s alternative offer? How will he turn things around? The answer is the regional growth fund. The aim of the fund is to unlock private sector investment, support areas that are dependent on the public sector and help them become more balanced economies. Good. We take no issue with those objectives. We want that money to get to business and to create the jobs that will support growth, yet the scheme has been managed shambolically. It has been an utter fiasco. The fund is a third of the size of the moneys distributed through the regional development agencies, which have been scrapped without effective replacement, so it has been hugely over-subscribed, which demonstrates businesses’ craving for capital. Of the 956 bids received, only 50 were successful in the first round and 119 in the second round. There have been many more losers than winners. It is difficult for the losers, but what of the winners?
Of course, due diligence is needed to ensure the proper use of public funds. The permanent secretary at the Department for Business, Innovation and Skills told the Business, Innovation and Skills Committee that due diligence on successful bids tends to take between two and six weeks, and that until it is complete the successful bidder is not given its money. Yet, clearly, very few successful bidders have received what was promised, because it has taken so long for due diligence to be completed.
I have written to the Secretary of State and tabled parliamentary questions, and in fact the Minister of State, the hon. Member for Hertford and Stortford, who has continually chuntered from a sedentary position today, provided the answers. I tabled those questions to get the answers, to get the facts and to get to the bottom of the delays and mess.
On Monday I received answers to those parliamentary questions, indicating that 30 weeks—30 weeks—after the original announcement just nine of the 50 first-round winners have completed due diligence. When I asked why due diligence has taken so long, I was told:
“It is for successful bidders to initiate due diligence upon receipt of a conditional offer letter from the Department.”—[Official Report, 21 November 2011; Vol. 536, c. 154W.]
Usually, the Government blame us for all the mistakes; now, it seems that they are seeking to pass on blame to the very businesses that they claim to want to help—and the bidder has to pay for the due diligence cost, too.
As it happens, I met—[Interruption.] Ministers shake their heads—
Mr Umunna
I will in a moment.
Last week I met one of the first-round bidders, who told me that on learning of their successful bid in April they immediately sought to progress due diligence but, despite chasing the Secretary of State’s Department, received no further documentation for four months. When they got it, they immediately responded but, again, heard nothing for another three months—until around the time that my right hon. Friend the Leader of the Opposition raised the issue of the regional growth fund at Prime Minister’s questions. I am sure that the timing was totally coincidental.
Even now, formal due diligence is not complete, and the matter is due to go to the permanent secretary’s committee for approval on 2 December.
Angela Smith (Penistone and Stocksbridge) (Lab)
On that important point, the Institute of Chartered Accountants believes that one reason for the length of time taken on due diligence is the disappearance of the RDAs’ expertise in following up the process, and the efficiency savings within the Department, meaning that the skills base there has evaporated, too. Is that not the case?
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I reiterate the point about the expertise that has been lost due to the abolition of the RDAs. The European regional development fund is another vital source of money for businesses. Millions of pounds, particularly in the north-east, remain unspent, and only one fund, from the regional growth fund in Manchester, has been used as match funding for ERD funding. That is a huge waste of important business support that could be going to people throughout the country.
Mr Umunna
Perhaps the Secretary of State will address that comment in his response.
Almost one year after the regional growth fund was announced, and six months after due diligence should have been completed, the winning bidder to which I have referred has still not received any money from the regional growth fund. It is clear to me, in that case, where the blame lies for the delay: it is not with the successful bidder. That organisation provides onward distribution of fund awards to businesses that desperately need it. As a result of the chaos, confusion and delay, the bidder in that case tells me that between 3,000 and 4,000 businesses are being deprived of the moneys they need, putting an estimated 11,800 jobs at risk.
What about the other bidders that provide the onward distribution of funds, and the businesses that could support jobs and growth? As I have said, the situation is a fiasco. It is no way to run a Department, and it is no way to treat our businesses or grow our economy. The Secretary of State and his Department are not doing enough to get our economy growing; what little they are doing, they are doing badly.
Andrew Percy (Brigg and Goole) (Con)
The hon. Gentleman makes a reasonable point about ERDF delays, one of which I have drawn to the attention of Ministers myself, but, having spent 10 years a councillor in the city of Hull dealing with organisations such as Yorkshire Forward, I must say that the nirvana picture of the RDAs that he tries to paint is certainly not my experience. The points he makes now are exactly the same points that we could have made about Yorkshire Forward and its processes for the past 10 years. The problem is the systems, not, as he outlines, how we structure them.
Mr Umunna
With the greatest respect to the hon. Gentleman, the question is whether the Department is doing what it promised to do for those businesses, which is to give them money and to carry out due diligence in a quick and timely way. It has failed to do so. I do not claim that there was a nirvana in relation to RDAs, but we are talking about the regional growth fund, and we actually want it to succeed.
The Government’s latest attempt to grow the economy consists of making it easier to fire, not hire, people. Today, to great fanfare, the Secretary of State said that the service required to claim for unfair dismissal should be increased from one to two years. He said this morning that
“this will mean that business can once again have the confidence to hire the staff they need to grow and thrive.”
That is a retrograde step for a Government who think that watering down employees’ rights is a substitute for a proper growth plan.
Mr Denis MacShane (Rotherham) (Lab)
Even at the height of the Thatcher years, there was no attempt to target individual workers—their unions, yes, because industrial tribunals were a Conservative Government invention, but the measure under discussion is utterly shameless. The efficient European economies are partnership economies, but targeting weaker workers and, particularly, women workers is to the utter and contemptible shame, above all, of a Liberal Democrat Business Secretary.
Mr Umunna
I am glad that my right hon. Friend brings up the Thatcher era, because a well known noble Lord was asked on Sunday whether such initiatives, which seek to make it easier to fire as opposed to hire people, act as a stimulus to job creation. He told the BBC what he thought of that, saying:
“I’ve been responsible for one of those deregulation initiatives for many years and I would be quite frank in telling you that I don’t think we achieved much.”
He went on to say that
“you want to be very careful in political terms that you don’t get the reputation that all you’re trying to do is make life rougher and tougher for large numbers of people.”
Those are the words of the noble Lord Heseltine, and, if a Conservative-led Government are unable to persuade him to buy into the concept, why should the rest of us do so?
Bill Esterson (Sefton Central) (Lab)
My hon. Friend makes an excellent point about what Lord Heseltine said, and the evidence is that, when we create uncertainty for workers by attacking their rights, we find that their behaviour changes in relation to the economy. They stop spending money in the economy, and that undermines the opportunity for growth and the support for businesses, so any Government Member who thinks that cutting workers’ rights is a way to grow the economy is sadly mistaken.
Mr Umunna
My hon. Friend is right, and when the Chartered Institute of Personnel and Development looked at the economic effects of the proposal to increase the service requirement from one to two years, the chief economist, Dr John Philpott, said that
“any positive effect on hiring is likely to be offset by a corresponding increase in the rate of dismissals. Increasing the qualifying period for obtaining unfair dismissal rights thus runs the risk of reinforcing a hire and fire culture in UK workplaces. Although the policy change will undoubtedly be welcomed by the de-regulation lobby, it isn’t the way to boost growth and jobs.”
Nadhim Zahawi
The hon. Gentleman is now quoting selectively. Will he tell us what the Federation of Small Businesses, which he quoted earlier, or the chambers of commerce think of that policy?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Gentleman has had his intervention, and he should please wait for the answer. We do not need comments from the side.
Mr Umunna
I withdraw that comment.
The hon. Gentleman asked whether business organisations were in favour of increasing the unfair dismissal service requirement from one to two years. That policy may sound good on the face of it, but what will happen—I say this as a former employment lawyer—is that we will simply end up with more employees making spurious discrimination claims, because there is no service requirement for them. When we put that to businesses, they take quite a different point of view of the policy.
Mr Umunna
I have given way several times, and I want to make a bit of progress.
Instead of reverting to the tired old mantras and doing over the people who work in this country, perhaps the Secretary of State could tell us what he will do to get banks lending to small and medium-sized businesses that are, by his and the Chancellor’s own admission, currently being starved of credit. We know that the Project Merlin accord between the banks and the Government failed. The Secretary of State more or less admitted as much when he said:
“Merlin was necessary but it was never going to be sufficient. I don’t think any of us pretended it was enough.”
We know that the figures published under Merlin are entirely misleading, because under the agreement between the banks and the Government a gross lending measure was adopted, not the more meaningful net figure used by the Bank of England. The truth is that Project Merlin was really no more than a public relations gimmick designed to get the Government out of a hole when banks’ declarations of bonuses were in full flow earlier this year.
For real businesses, the failure is real. The Bank of England’s “Trends in Lending” publication for last month showed the stock of lending to UK businesses contracting overall in the three months to August. The Bank’s latest agents’ summary, for this month, stated that small businesses were still reporting that credit conditions
“remained tight, and in some cases had become tighter.”
That is supported by the figures released this morning by the British Bankers Association, showing lending by the high street banking groups to non-financial businesses contracting this month.
To resolve that problem, the Government first need to change their overall economic strategy, to give businesses the confidence to borrow and grow. The small and medium-sized enterprise finance monitor published last week showed that the main barrier to future borrowing by SMEs was the economic climate, but that the other major barrier was the lending practices of the banks. The Government need to use their influence with the banks, particularly through United Kingdom Financial Investments in the case of the banks in which the state has a stake, to insist that they get money out of the door to responsible businesses that have sound business models but are struggling to access finance. In addition, they must urge those banks to adopt a better lending culture—for example, by ensuring that they have local relationship managers on the ground who get to know the business concerned.
Charlie Elphicke
I am sure the whole House has considerable sympathy with the hon. Gentleman’s position. Unfortunately, the Government’s hands are somewhat tied, because UKFI was set up on the basis that it was at arm’s length. When the original deal was done with the banks, the then Government did not force any lending targets on them. This Government have been trying their best to undo that damage through Merlin and other measures, but the previous Government should have got it right in the first place and have made it harder now.
Mr Umunna
When will Government Members take responsibility? I wish that we were still in government, but we have not been for 18 months now. It is about time that they got used to the fact that they are in government and took responsibility.
Business is crying out not for a Government who step aside and fail or refuse to act but for one who adopt an active approach, using all the tools at their disposal to create the conditions for private sector growth. For all their claims about our record, such as the ones that we have just heard, the Government have kept in place some of the support measures for business that we left them on leaving office. I should point out that under Labour, 1.1 million businesses were created. When we left office, the UK was rated fourth by the World Bank for the ease of doing business, and first in Europe. Under this Government, the UK has dropped to seventh in the global rankings. We will take no lectures from the Government on support for business.
In government, we set up the Better Regulation Executive and the Regulatory Policy Committee to improve the quality, and where appropriate reduce the quantity, of regulation on business. I note that the Government have continued with them.
Julian Smith
Will the hon. Gentleman clarify the top five deregulatory measures that his party took in the 13 years it was in government?
Mr Umunna
I cannot name the top five, but the whole reason the Better Regulation Executive and the Regulatory Policy Committee were set up was to reduce regulations by a huge number and improve their quality.
In government, we also conceived the technology and innovation centres, to promote innovation. The Government are now rolling them out across the country, and they have sought to build on the measures that we put in place to reduce the bureaucracy of Government procurement and increase SMEs’ access to it.
In many other areas, however, there has been a disorderly retreat from an active approach. The Government have undermined certainty for investment, cut the science and research funding budget by 15% in real terms and abandoned the 10-year funding plan, and they have abandoned sector strategies such as the defence industrial strategy. The Automotive Council continues, but the RDAs, which could have helped make a reality of the ambition to strengthen companies’ supply chains, no longer exist.
The Government have undermined new industries, such as green industries, as my right hon. Friend the Member for Don Valley (Caroline Flint) will outline in the debate that will follow this one. They have delayed the roll-out of universal broadband and undermined the collaborative institutions that we set up to work with businesses, such as the Office for Life Sciences and the Technology Strategy Board, which are widely respected. The higher education sector, the seventh-largest export industry, has been put in disarray by the Government’s visa changes. Support for the digital, creative and educational sectors has been scaled back. Then there is the decision to award the £1.5 billion contract for new Thameslink trains to a manufacturer that will make them in Germany, which means that Bombardier is reviewing its activities in Britain.
The Government have retreated from action, undermined confidence, failed to unlock investment, failed to deliver a credible plan for growth and failed to use action to back business. They need to back our five-point plan for growth now and put in place a credible plan to build for our long-term success. These are difficult and challenging times for businesses and people in this country. They deserve better from a Government who say, “We are all in it together”, but who, time and again, show that they have absolutely no understanding of the concept.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
I should like to respond to the motion, which actually bears only a passing resemblance to the speech made by the hon. Member for Streatham (Mr Umunna). I will start with issues of fact that I hope we can agree on.
The motion makes perfectly legitimate points about the state of the economy. It is certainly true that there is slow growth across Europe and in the UK. We fully understand that. We have not had the double-dip recession that has been predicted since the very first day of this Government, but yes, we do have slow growth. We accept that we have a worrying level of youth unemployment, although the largest component of that, the NEETs—those who are not in education, employment or training—were actually at their peak level before the financial crisis occurred. It is correct to say, as the motion does, that we have a high, and we would argue excessive, level of borrowing. That makes it all the more perverse that the single policy that the hon. Gentleman is offering to us is to increase that level of borrowing, which he considers so toxic.
Joan Ruddock (Lewisham, Deptford) (Lab)
The Prime Minister’s constituency has 1.8% unemployment and mine has 7.9%, yet the Secretary of State’s Government have chosen to leave a full employment service in Witney and to close down the jobcentre in Deptford. Does he agree, and will he support me, in asking his colleague to return an employment service to Deptford to help the 1,000 young people who are out of work now?
Vince Cable
Obviously, I do not know the particular position in Deptford, but I am very happy to take up the specifics if that helps.
The particular question that the hon. Gentleman started with was fair: why did the economic slow-down occur? He quoted my colleague in the upper House and others of varying views about why we have lower growth than was predicted by independent forecasters 18 months ago.
Vince Cable
Let me try to deal with this issue. We would all probably accept—I hope that the hon. Member for Streatham would accept—that the Governor of the Bank of England is an independent, non-partisan, non-political analyst of what has occurred. Let me read to him the Governor’s account given a week ago on why the slow-down in growth has occurred. He said:
“This reflects the impact on the United Kingdom of the deterioration in prospects internationally, working through weaker net trade, higher credit spreads and the likelihood”
of elevated uncertainty. He goes on to describe the impact of world energy and commodity prices, and the 35% increase in the sterling price of oil, none of which was mentioned in the hon. Gentleman’s speech.
Vince Cable
Let me just finish this argument. Some of us have argued for a long time that the underlying problem is that, since the beginning of the crisis, the British economy has suffered—I use my own metaphor— the economic equivalent of a heart attack. There is a profound problem, and what lies behind it is the fact that, more than any other developed country, we have quite extraordinary levels of debt.
There are different kinds of debt. Household debt is 160% of gross domestic product and, after the boom that took place under the previous Government, it is higher than in other developed countries. Banks’ balance sheets are more than 400% of GDP, after they were allowed to run out of control. Government debt is 180% and rising as a result of the deficit financing we had to undertake. If we put those things together, as McKinsey has done, they show that the position we inherited is one where total debt in the UK is approaching 500% of our GDP. The only other country with a problem of that scale is Japan. That is the inheritance we are now seeking to manage.
Mr Umunna
First, on borrowing, does the Business Secretary accept that the average of the independent forecast that his Government published last week shows that, for all his claims to be working to a strategy to reduce our debts, his Government could end up borrowing more in every single year remaining of this Parliament than under Labour’s more sensible deficit reduction plan? Secondly, does he accept that confidence indicators when he took office and took charge of his Department were not too bad and were improving until the comprehensive spending review was announced, after which it nosedived?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We must have shorter interventions.
Vince Cable
On the level of borrowing, let us wait until next week and see what the independent forecast is in the Chancellor’s statement. Of course, the reason why borrowing rises when the economy slows down is the flexibility that is built in—the so-called counter-cyclical stabilisers that we employ as part of our fiscal policy. Unlike the United States and other countries, we allow slow-downs to be accommodated in that way, supporting the economy.
The hon. Gentleman asked me what our strategy is to deal with this problem. I will summarise it. There are three parts. First, we have to stick to fiscal discipline to maintain the confidence of the people who lend to us. That is a very simple proposition that is very difficult to realise and it is something we have done. He quoted various comments from business organisations around the country. I keep in touch with such organisations regularly and go around the country to the regions and nations of the UK. I have yet to meet a single representative of the business community who has asked us to slacken our process of deficit reduction—not a single one. They all make it absolutely clear, including the CBI, that they regard plan A, as it is called, which is deficit reduction, as an absolutely necessary pre-condition to stabilising the economy.
The second element relates to the first. Precisely because we have a large amount of debt in our economy, the priority for Government has to be to preserve an environment in which there are low interest rates. The stimulus we get in our economy—the source of demand—comes primarily through monetary policy. Through the Bank of England acting on short-term interest rates, through long-term interest rates related to bond yields, through quantitative easing at the Bank of England—now credit easing—and through a competitive exchange rate, we have a monetary policy that supports growth and demand. Given the massive debt we have inherited, it is only through monetary policy—relatively low interest rates—that we can possibly support the economy.
Vince Cable
It is certainly a last resort in a major economic crisis. I am sure he appreciates that we are living through an economic crisis that is unparalleled in our lifetimes. That is why not only Britain, but the United States and other countries are having to resort to unorthodox monetary policy. That is a reflection of the desperation of many western countries. Our Bank of England has been comfortable with our fiscal policy and, to that extent, has been willing to support it through monetary means.
Those are two of the three elements of the strategy. The third is rebalancing the economy. We inherited an economy that was horribly unbalanced in favour of debt-supported consumption and banking, and we are now rebalancing the economy towards exports and trade. Rapid growth is taking place at the moment in British exports. That is the strategy on which we will proceed and on which we will be judged. The alternative we have been offered is something called plan B, which I think has been renamed the “Antiques Roadshow” in respect of the shadow Chancellor. No serious business organisation is arguing that such financial irresponsibility has any prospect of success.
Nadhim Zahawi
In the document that I have in my hand the shadow Business Secretary says, regarding the new economy, that we need to build an economy that is
“less vulnerable to global shocks”.
How does the Secretary of State think that building an economy based on £100 billion of extra borrowing by 2015 will deliver that?
Vince Cable
I can give a bit of substance in answer to that. The National Institute of Economic and Social Research, which has been critical of the Government in some respects, has done its own simulation. On the use of fiscal policy to support growth, which I think is what the Opposition plan B is all about, it says that in order to stimulate growth from 1% to 2% we would need to have a Government borrowing account of about 12% of GDP. Is that actually what the Opposition are proposing, because that is what their plan B—fiscal stimulus—means?
Mr Dave Watts (St Helens North) (Lab)
The Secretary of State is very good at talking about the support he gets for deficit reduction. When he is travelling around the UK, do people support his growth policies, because I have not met a business man who does?
Vince Cable
I have tried to explain that wherever I go, not just in the business community, there is an understanding that, given our inheritance, we have to pursue fiscal discipline. It is as simple as that. We will support that with economic growth measures that I will develop, responding to the comments of the hon. Member for Streatham, in a moment.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Secretary of State knows that some of us, even on the Labour Benches, have always admired his grasp of economics, and his analysis is impressive. I also know that he gets around the country; he has recently been to my constituency. However, what people are telling me when I go around the country is that they understand the analysis but want to know where is the imagination that is needed when a Government see 1 million young people unemployed. Where is the charismatic leadership? Where is the air that something is really being done fundamentally to help these young people?
Vince Cable
I will describe in more detail, as will the Minister for Further Education, Skills and Lifelong Learning, some of the initiatives that we are taking on apprenticeships, for example, which reflect real imagination and real change.
Let me try to respond to some of the points that the hon. Member for Streatham made. First, he wholly misunderstands what is happening with the regional growth fund. More than half the projects are under way in the first wave of the regional growth fund. The factories have been built and the jobs are being created. Because of due diligence, the disbursement—I have had this confirmed—is still taking an average of three to six weeks. I am happy to pursue the individual cases that the hon. Gentleman raised. As I understand it—I may be wrong—the case that he dwelt on at some length is the result of the applicant having radically changed the status of their application, and we will happily look at that. However, I am not going to take lectures on the disbursement of Government money. I do not know whether he is aware of this, but the previous Government set up a £5 billion trade credit insurance scheme which, after two years, has managed to disburse £81,000. The regional growth fund is proceeding as predicted and suggested by Lord Heseltine and his team. We are following those processes. The factories are being built and the jobs are being created, and that is what matters.
The hon. Gentleman challenged me on procurement. I have been to Derby and talked to the people involved. Obviously, we are very concerned about what has happened in that case. The problem with procurement is that for a decade or more the public procurement policies pursued in this country were unbelievably short-sighted and legalistic. In the case of the Thameslink contract, we inherited a contract procedure based principles that did not allow for the wider effects on the British economy. However, that particular decision has been made. I have made it absolutely clear, and my right hon. Friend the Minister for the Cabinet Office made it clear two days ago, that we are going to approach public procurement in a different way. We are going to do it strategically and take account of supply chains. Of course we will operate within the law and will not be protectionist, but a lot can be done through public procurement that we are now going to pursue. My only question is why on earth Labour Members did not do this when they were in office if they care so much about it.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Is the Secretary of State now in a position to give me an answer that he could not give when I questioned his departmental report a couple of weeks ago—namely, exactly how many jobs have been created by the regional growth fund so far?
Vince Cable
No, I cannot do that, because the projects are under construction. When they are fully completed and fully staffed and their supply chains are established, it will be possible to come up with a meaningful number.
The third area of criticism and questioning of the hon. Member for Streatham related to the banks. The motion recycles the idea of a bank bonus tax, so let us go over what that involves. The current estimate from the CBI, which has carried out research on this in the City, suggests that the yield from bonuses this year—the bonus pool—is likely to be something in the order of £4.2 billion. Of that £4.2 billion, £2.5 billion goes to Her Majesty’s Revenue and Customs in tax because of high tax rates on bonuses, and rightly so. That leaves £1.7 billion in bonuses paid out, assuming that the projection is correct. The Opposition are suggesting that they will have a £2 billion tax on bank bonuses. Where is this £2 billion going to come from? It is considerably more than the total bonuses paid out. Even if they applied 100% tax, which is implausible, what would happen, obviously, is that pay would be consolidated. They have not thought this through. Perhaps that is why the hon. Gentleman did not bother to raise it. Can he can tell us how it will work?
Mr Umunna
I am happy to do so. I am slightly bemused that the Secretary of State should quote those figures from the CBI. It represents all the banks, so would he expect it to say anything different? Of course, the bonus round has not yet been completed, so we have absolutely no idea what the final figure will be.
Vince Cable
I see that the hon. Gentleman is playing for time.
Apart from this slightly mysterious bank bonus tax, what is extraordinary is that we are being lectured on the banking system by a party which in government allowed the banking system to run completely out of control. There was no regulation on cash bonuses. Despite the fact that the banks had an implicit Government guarantee, they were not required to pay any tax for it. We have introduced the banking levy. Labour allowed tax avoidance on an industrial scale and did absolutely nothing about it, yet the hon. Gentleman now presumes to lecture me on banking. I really do think that Labour Members need to reflect a little on what happened in the banking system.
Finally, the hon. Gentleman made various references to spending commitments—or our damaging spending cuts, as he saw them—and tax cuts. This is the time of year when my grandchildren write letters to the north pole addressed to Santa Claus. I have to say that compared with what we are hearing, those letters from my five-year-old grandson are a model of financial discipline and economic literacy. The hon. Gentleman’s predecessor was very eloquent in criticising the cuts to the university teaching grant. The hon. Gentleman has adopted other targets—for example, he has criticised the cuts in the regional development agencies. He has also criticised cuts in the science budget. Last week, he made a very eloquent statement on this, despite the fact that the scientific establishment had been very complimentary about the fact that we had protected the cash budget for science.
When I came into my current job, the one thing I knew was that my Labour predecessors were planning to cut the Department’s budget by 25%, and that is what we have done, because that was the economic reality. I am therefore left with a question to which I have been trying to get an answer. Perhaps the hon. Gentleman can be more forthcoming and economically rounded than his predecessor in telling me how the Opposition are going to achieve their plans. Where is the money going to come from? We have a whole lot of spending commitments in every area of our Department, but not a single suggestion about where those heroic cuts are going to come from. Of course we would like to spend more money on science and other things, and of course some of the tax cut proposals are very attractive, such as the VAT rate on building repairs, which would cost £1 billion, but where does the money come from? This gets to the heart of the problem, which is that the Labour Opposition’s proposal is financially irresponsible. It deals with the problem of Government borrowing by adding to it and deals with the problem of Government debt by adding to it.
Mr Umunna
The various commitments that we have made are all costed and fund themselves. The Business Secretary has said a lot about banking. If he is so fiscally responsible, will he join us in committing to use all the proceeds from the sales of the public stakes in the banks towards reducing the deficit?
Vince Cable
The hon. Gentleman’s numbers may have been costed but they do not add up—that is the problem. As for the banks, it will be quite some years before the sales take place. The Northern Rock sale has gone ahead—that is a small bank—but for the major banks, it is likely to be some years ahead. We do not know whether it will be in this Parliament or the next; we have no idea what the economic conditions will be. It would be ludicrous for me to hypothecate about revenue receipts at this stage.
I will move on to my final passage, because I would like colleagues to have an opportunity to speak. I will summarise some of the positive things that we are doing, albeit within a very constrained budget, to support growth. Of course, fiscal discipline and monetary policy have to be supported by interventions. The hon. Gentleman is absolutely right that there is a role for state intervention. I am not in favour of laissez-faire. There are things that we can do.
Our concentration is on export growth. There has been 13% export growth over the past year. We are outward looking. The motion does not even mention trade. It is unbelievably parochial. I spend a lot of my time in emerging markets with British exporters—I have been to all of them—to support export growth. I do not claim personal credit for the growth, but we have acted as a catalyst for export growth in Brazil, Russia, India and China—the BRIC countries—of 26%, in India of 34% and in Turkey of 30%. I keep in touch with our exporters by working with them and alongside them to deal with overseas Governments. That is where the recovery is going to take place. It is on the back of those exports that we are getting rapid growth in manufacturing in certain sectors such as the automobile sector, which has attracted big inward investment from Jaguar Land Rover and others.
Julian Smith
Will the Secretary of State tell us what situation he found exports in when he arrived in his post? What sort of condition was UK Trade & Investment in and what great suggestions did the previous Government have in this area?
Vince Cable
UKTI has been radically reformed, thanks to the Minister for Trade and Investment, Lord Green. I think that it will perform an excellent function. What I found was that British export activity in the big emerging markets, which is clearly where future growth lies, had been sorely neglected for many years. As somebody put it to me, when we turned up on the beach the Germans were already in the deckchairs. They have dominated the market in these countries and we are a marginal player. It will take years to turn that around, but that is where our emphasis lies.
Nadhim Zahawi
Does the Secretary of State agree that under the previous Government we exported more to Ireland than we did to Brazil, Russia, India and China put together?
Vince Cable
I thank the hon. Gentleman for reminding me of one of my best lines. It is partly a compliment to Ireland that we trade with it so extensively, but that fact is an appalling commentary on our neglect of the big emerging markets.
Export growth is one key focus for us. The second is people and apprenticeships. The Minister for Further Education, Skills and Lifelong Learning will say more about this in his summary. Despite a severely curtailed budget, we have increased apprenticeships—actual people doing training—by 50% over the past year. There are now 350,000 people in such training. We do not accept that that is the end of the road. We have to improve the quality and refocus as much as possible on younger apprentices, thereby addressing in part the problem of youth unemployment. This is a major success story and we are proud of it.
On access to finance, one of the major themes of my analysis has been that what we are dealing with is a collapsed and non-functioning banking system. It is right for Members to continue to cross-question us on the Merlin agreement, because that is at the heart of the problem. We have stopped, at least in relation to small and medium-sized enterprises, a process of rapid deleveraging. We are using Government funding through the regional growth fund and, from next year, the Green investment bank to co-finance private capital so that there is access to finance for British industry. We are taking initiatives to support equity finance. The business growth fund is not Government owned or controlled, but it is a major initiative that should have been taken decades ago to get equity finance functioning. Access to finance is a critical issue—of course we accept that. It is a consequence of the banking crisis that we are focused on it.
I want to give one final concluding thought. When I hear the Opposition speaking about the economy, I think that lying at the back of their world view is the idea that what we are currently in the middle of is a cyclical problem—we had a boom, we had a bust, we will press a few buttons, spend a bit more money, and we will get back into a boom again. This is not a cyclical problem; it is a profound, long-standing structural problem. We had the wrong model. Growth was based on fundamentally the wrong principles, it was not sustainable and it collapsed. We are now having to repair the damage.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I remind everybody that there is a five-minute limit on speeches.
Gordon Banks (Ochil and South Perthshire) (Lab)
I will bear in mind your comments, Mr Deputy Speaker.
The problem in a debate like this is where to start. I will start with what I want to see, which is business growth. Business growth delivers job creation, which in turn delivers tax revenues and growth for individuals, the importance of which we should not underestimate at any cost. The fundamental question that we are discussing is whether Opposition and Government Members believe that the Government can be a driver for growth. I and a number of my colleagues believe that they can be.
Why is this debate so important? It is important to my constituents because people in my constituency are losing jobs, and businesses in my constituency are going bust. The industry that I have been involved in since I was 18 years of age has been decimated by the Government. In Ochil and South Perthshire, 5.6 jobseeker’s allowance claimants are going after each job. I realise that that is by no means the highest rate in the UK. The number of JSA claimants in Ochil and South Perthshire has risen by 95% since 2006. The overall number of people in employment is falling. In the last year, 93% of constituencies saw a rise in their claimant count. That has been caused by the speed and depth of the cuts, and by the private sector not being able to keep up with them, just as the Opposition said would happen.
That is why we want the Government to do more to help UK businesses. Helping business helps employment. The Government have cut capital budgets by 11%. Because their deficit reduction plan is failing, they will have to borrow more to pay for unemployment and to cover falling tax revenues. That is the backdrop that has led to this debate. The Government should listen hard to what is said by my colleagues on the Labour Benches.
As I said, I have been in the construction industry all my life. I remain involved in that business today. In the time that I have left, I will talk about what the Government can do and should be doing to help the construction industry. It is my view that the construction industry gives a measure of the economy as a whole. It is of the private sector, but it needs the public sector and the private sector to survive. If businesses want to expand, they need the construction industry to do so if they need premises, transport networks or communication infrastructure. If the construction industry is on its knees, the country is on its knees. The Government need to grasp the fact that every pound spent in the construction industry generates £2.83 in the wider economy. That point is not disputed.
The Opposition’s five-point plan would benefit the construction industry from point one through to point five. I will focus on one or two of the points in the short time that I have left. Bringing forward investment projects to get the industry working again would regenerate our infrastructure, allow future growth and give skills to individuals.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I wonder whether my hon. Friend wants to comment on the call of the International Monetary Fund for a global growth compact, which supports exactly the initiative that he is suggesting. It says that there must be infrastructure development in the west—not just this country but the whole world—to recover from this economic downturn.
Gordon Banks
I agree with my hon. Friend. If we do not get our infrastructure right, we will not be in the position that we want to be in when things move forward and we will be disadvantaged. I ask the Government not to look solely at big individual projects when they are trying to regenerate the economy. We need local and regional regeneration and investment in local and regional infrastructure.
Julian Smith
Does the hon. Gentleman welcome the Government’s introduction of the Work programme, which will help many of those JSA applicants of whom he spoke, and the new enterprise allowance, which gives significant sums of money to unemployed people who want to set up a business?
Gordon Banks
My experience of the Work programme is that it is a not-working programme.
The cut in VAT to 5% for home improvement repairs and maintenance—another part of Labour’s five-point plan—would discourage the black market and encourage investment in our housing stock at a time when the Government are wringing their hands about the green deal. Experian data show that a cut from 17.5% to 5% would have produced a £1.4 billion stimulus to the UK economy in 2010, which would have got Britain building. It is working on reviewing that figure in the light of the current 20% VAT rate.
On housing, which is an important part of the construction industry, social rent starts and affordable home starts have fallen by 99%, but in 2007, there were 357,000 first-time home buyers in the UK, who generated £2.1 billion in our high streets. That is the real power of the construction industry and why the industry is so important to the whole of the UK. I hope the Government plans announced earlier this week to regenerate the housing market deliver progress, but one must ask: why have they been asleep at the wheel for the past 18 months?
On lending, we are a country of small businesses, yet the Federation of Small Businesses tells us that credit lines for financially sound businesses have been tightened and interest rates have increased. The Federation of Master Builders has reinforced the point about that failure.
The Government have announced a desire to look at credit easing, which suggests that Project Merlin has failed. Do they know how much of Project Merlin’s compliance agreements are re-signed and recycled arrangements? Do they know that banks are withdrawing overdraft facilities and setting businesses up with term loans?
Andrew Bridgen (North West Leicestershire) (Con)
The hon. Gentleman echoes the shadow Secretary of State in criticising the Government for undertaking quantitative easing. In truth, this Government and the previous one undertook quantitative easing, but there is a huge difference between them. This Government are using QE to buy bank debt to put liquidity into the banks, which is much needed by business, whereas the previous one used QE to buy Government debt, because at the time, the rest of the world had lost confidence in buying it.
Gordon Banks
I never mentioned quantitative easing—I was talking about term loans. Term loans are being offered to businesses because they are better for the lender, not the borrower, and because they deliver a skewed figure into the Merlin arrangements. That cannot be acceptable. Business should not be run on term loans.
Richard Fuller (Bedford) (Con)
As this is a business debate, I draw Members’ attention to my entry in the Register of Members’ Financial Interests.
I start by congratulating the hon. Member for Streatham (Mr Umunna) on introducing this debate and on the thoughtful way in which he presented his case. As I said in an intervention, he offers an opportunity for a fresh approach. What a contrast this debate is to the one on the economy called by his colleague the shadow Chancellor a couple of weeks ago, which turned into an episode of “Romper Room”—some hon. Members are old enough to remember that—with childish comments being made left, right and centre. The hon. Member for Streatham presented a much more cogent case today, but that is the root of his problem. He is the fresh new hope, but unfortunately he is held back by sad and discredited ideas, the core policy of which, as the Prime Minister has said, has been reheated and resold at least eight times already.
I encourage the hon. Member for Streatham to be a little bolder in setting out his ideas. I know that he agrees—his speech lasted 31 minutes, but only in the 30th did he get round to talking about Labour’s so-called five-point plan. I ask him to spend more time developing his ideas, and not to be held back by the discredited Labour past.
Mr Umunna
Back-handed compliments aside, it is unfair of the hon. Gentleman to say that I did not talk about the different elements of the five-point plan. I remind him that I cited a list of the different business organisations that have called in different ways for parts of that plan to be implemented—from the Federation of Master Builders to the Federation of Small Businesses and the CBI.
Richard Fuller
I appreciate that, and I shall continue to listen intently to all the hon. Gentleman says.
The challenge that this country faces to restore growth is immense. It needs good ideas from both sides of the House and full commitment to the task. On that point, may I say gently to my right hon. Friend the Secretary of State, who is a noble individual and a good gentleman, that sometimes people feel that commitment may not be there 100% of the time from the Department, and that is a commitment to the role of the free market and business. It is as though we have at times a literary equivalent of Dr Cable and Mr Hyde. There is one part of the personality of the Secretary of State that embraces the idea of business and likes the approach of free markets, and then there is the other side of the personality that likes to hang out with a bunch of people on a camping holiday outside a well-known church musing on the merits of capitalism.
Julian Smith
Just to correct my hon. Friend slightly, this Government have done more than the previous Government did in 13 years on deregulation and freeing up British business. We must not lose sight of that.
Richard Fuller
That is absolutely true, but the challenge that we face is more immense because of 13 years of over-regulation by the previous Government, and because of the challenge of the international community. From the Secretary of State’s announcements today, I know that the sunshine side of his personality is more to the fore, and that he will demonstrate a strong and full commitment to the hard work that entrepreneurs and business leaders are putting in around the country.
I encourage the Secretary of State to take action on three further areas. First, I encourage him to work more strongly with the Treasury on ideas for credit that work for all sizes of businesses. Although there is a lot of emphasis on trying to make the banks a useful conduit of finance to small businesses, that is not working for very small businesses. Please can we look at alternative measures? Can we look again at tax relief for debt financing for our micro-businesses? For the first time, can we consider peer-to-peer lending organisations such as Funding Circle, which provides an alternative way of raising funds for small businesses? It is not enough to come forward with another policy that relies on the banks doing something tomorrow that they are not doing today.
Secondly, I encourage the Secretary of State to look at the sector that is the biggest drag on our economy, namely the bureaucratic state. If we want to create a growing economy, we cannot ignore such a substantial part of it. I encourage him to ask other Ministers to enlist our public servants and bureaucrats in the task of identifying growth. Every single day, the employees of small businesses in my constituency work very hard to create growth and the conditions for profitability, and they tell me that they are not getting the support they need from either their local government or their national Government. We need a culture change in our Government Departments. They need to say: “Our primary task—our national mission—is to support the growth of enterprise and business. What can we do every day to help people to achieve that?”
Will the Secretary of State also look at the opportunity provided by social enterprises? The Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), who is the Minister with responsibility for the civil society, is doing a lot of work with social enterprises to free them from some of the burdens of regulation. Will the Secretary of State have his Department look at how the power of social entrepreneurs can be brought to bear on our public services and public sector so that they can be more productive? Social enterprises are a fantastic way to encourage growth.
Will the Secretary of State consider using Parliament to review outdated statutory instruments, laws and regulations that are a bureaucratic drag on productivity and business? Rather than using Parliament to pass new laws, we could use it to scrap existing ones. I am sure we can find time for that.
Thirdly and finally—this underlies all our efforts to create growth—I benefited in my career from two fundamental pushes on growth in our economy: building out the global supply chain and the consequential growth of financial services, which gave people the ability to buy goods and services much more cheaply than they would have got them had we relied only on a national economy; and the growth of information technology. The next source of fantastic growth is likely to be when households in India and China want to buy our goods. But that is not here today. That is not going to be here in the next five years. What we can do in that period of time is have a national campaign led by the Secretary of State to create an entrepreneurial society recognising that there are different motivations for being an entrepreneur. Not only do entrepreneurs want to make money; people are motivated by spiritural objectives. Let that be the mission and legacy of our Secretary of State.
Andrew Miller (Ellesmere Port and Neston) (Lab)
It is a pleasure to follow the thoughtful speech by the hon. Member for Bedford (Richard Fuller). He and I have a common interest in the supply chains that he ended his comments talking about. The Secretary of State knows that I have been working hard in the north-west region to improve the automotive supply chain. That is one of the solutions because we are now in a position to recapture work from countries to which work in the automotive sector was previously exported as a result of changes in those countries’ economies. As labour costs have risen, as they will continue to do inexorably in Poland and China for example, we will be able to start thinking about recapturing that work. There needs to be common ground there.
I want to correct one point: for the second time, the hon. Member for Skipton and Ripon (Julian Smith) made a mischievous intervention concerning the previous Government’s record on deregulation. I think that the hon. Member for Solihull (Lorely Burt) will back me up on this point because she attended the Regulatory Reform Committee assiduously when I was its Chair: we could count on one hand the number of times a Conservative Member turned up to the Committee in the last Parliament. Perhaps they are finding their road to Damascus at last.
Lorely Burt (Solihull) (LD)
The hon. Gentleman and I spent many happy hours tinkering around the edges of much regulation but we did not really power into the important pieces of regulation. Does he agree that that is what the Government are now seeking to do?
Andrew Miller
That was certainly the case with the Regulatory Reform Committee—it used the framework of the House to make limited adjustments—but we should remember the legacy left by Sir William Sargent, who did an amazing amount of work leading the Better Regulation Executive and putting in place the framework now being utilised. To ignore his work would be an insult to a fine public servant.
On skills, I am pleased that the apprentice Minister or the Minister for apprenticeships—whichever way it is—is here. I understand that he has indicated his wish to visit West Cheshire college. He is most welcome to visit that fine college built with resources provided by Labour but I would like him to think about some issues, particularly the needs of apprentices and young people coming to train from areas of extreme deprivation. There are many simple things that he could urge the Treasury to think about. For example, in my area there are plenty of vocational courses leading to jobs in specialist sectors, yet young people from deprived areas who, had they stayed on at school, would have got free school meals get no support to help them eat when at college.
TTE training runs a good training centre in my constituency providing Cogent training courses—I recently had the great pleasure to attend the royal visit to the centre organised at the behest of the royal family. That training centre is doing fantastic work at the high end of the petrochemicals sector—with players such as Shell and Ineos Chlor—but it is having difficulty finding a financial solution to deal with the needs of small and medium-sized enterprises. The Secretary of State will know that in Germany the burden is often placed on the large players, which are encouraged to finance the supply chain. That is one possible solution but the important point is that we need a practical solution, otherwise we will have no way forward and the young people making themselves available to go on such courses will be—
Andrew Bridgen
The hon. Gentleman is being mischievous by suggesting that there was a great deregulatory fervour about the previous Labour Government. For the past eight months he has served assiduously alongside me on the Löfstedt review looking at the reform of health and safety law. Would that review have been carried out under the previous Labour Government? Should it have been carried out? If so, why was it not?
Andrew Miller
I do not want to be tempted to comment on the review because it would breach the embargo—of course, the hon. Gentleman and I have seen its contents—but I shall be happy to express my views publicly in days to come. However, there is a fair amount of agreement between him and me on this point so I ask him not to tempt me down that line.
Mention has been made of the serious issue of the science base. The Secretary of State has got to get to grips with the confusion in the university sector. A combination of things has impacted on the universities, such as the fees structure changes, the capital spend problems and the overseas student issue. Yes, it is welcome that millions of pounds are being spent on a graphene centre in Manchester, but would it not have been ironic that had these rules been in place, Andre Geim might not have been at Manchester university to make those fantastic discoveries? The Government have to think carefully about the possibility of damaging a £5 billion industry that provides us not only with a superb base for our own research and development and science-based companies, but with a huge export of knowledge, which improves our relationship with so many of the countries with which we do business. I urge the Government to rethink what they are doing in the university sector.
Lorely Burt (Solihull) (LD)
When I read the title of this debate—about supporting business to encourage economic growth and employment—I hoped that all the parties might for once argue constructively to come up with ideas together. I am sure that we all agree that business in this country needs support, and we all want it to get that support. On the economy, however, that is probably where the consensus ends. The coalition Government cannot abandon their plans and adopt the seductive mantra of going less far, less fast. The consequences of doing that can be seen across the channel in Greece, Portugal and Spain, which have borrowing rates of 32%, 11% and 7% respectively, compared with Germany’s 1.82%, France’s 3.12% and the UK’s 2.28%.
Mark Lazarowicz
The hon. Lady is in danger of becoming complacent about the Government’s policies, which, as has been pointed out, are resulting in an increase in borrowing well beyond what was predicted. Is there not a danger that the UK could become the target of those who want to speculate on rising debt? We need a change of policy internationally, as was suggested earlier, to prevent the entire world economy from falling into a cycle of more depression, recession and less growth. That is the answer. She should not be complacent about the situation in the UK as a result of the Government’s policies, which are leading to increased borrowing.
Lorely Burt
I am grateful to the hon. Gentleman, and he is absolutely right to say that there is more borrowing than we had anticipated. However, the amount of borrowing will be going down year on year. I am sure that my colleagues on the Front Bench would agree with me that we cannot get out of a debt crisis by borrowing more. At some stage we have to start actually paying the money back. The UK is borrowing at low rates—we have that confidence. Let us just imagine how many more jobs would be lost and how many more people would be suffering if we were borrowing at 32%—that is, if we were in one of those dark places.
The motion starts with the usual party knockabout. For example, we are supposedly “choking off” growth and
“failing to use strategically procurement and other tools to drive growth and innovation”.
However, it is not true that we have failed in that respect. We have cut corporation tax, and by the end of this Parliament we aim to create the most competitive corporate tax system in the G20. Research and development credits will rise by 200% this year and 225% next year. Then there is regulation. We have scrapped the proposals that the hon. Member for Ellesmere Port and Neston (Andrew Miller) was talking about, with savings to business currently amounting to £350 million a year. Whatever we did in our little Committee, it never amounted to that sort of saving. We have also introduced a moratorium on new regulation for micro-businesses.
Then there is technology and innovation centres, and so on—I do not have time to say much more in five minutes.
Julian Smith
The exemption for micro-businesses is a key development from this Government. Does my hon. Friend think that some of the arrogance of Opposition Members comes from their never having worked in a small business, and that that absence of business experience is influencing their views?
Lorely Burt
I would not dream of criticising Opposition Members. I know that quite a number of them have run their own businesses—micro-businesses and bigger businesses, too—but I also give our Government credit for coming up with that exemption, because it is an important source of help at a difficult time.
Finance has been a big issue. We have not got it right yet: there is more lending, but we still need to do more. We have continued the enterprise finance guarantee scheme and the programme of enterprise capital funds. We are also encouraging a more enabling environment for business angel investment, taking forward a package of investment readiness through a network of growth hubs. Then there is the bank-led £1.5 billion business growth fund, to provide funding of £2 million to £10 million for small and medium-sized businesses with strong growth potential. What is more, as I am sure even the Opposition would concede, we have not failed to use strategic tools to bring forward growth. Indeed, a number of those strategic moves are ones that Labour introduced.
After the knockabout we come to the constructive part of the motion, which is very welcome; indeed, I agree with some of it. However, the plan to levy a £2 billion tax on bank bonuses—this week it is to fund 100,000 jobs for young people and 25,000 more affordable homes—is a nice idea, but as my right hon. Friend the Secretary of State said, it is just not practical. We are already taxing banks every year to the tune of £2.5 billion, on the basis of the banks’ balance sheets. That is more than the Labour party raised with its £2 billion bankers’ bonus tax—a move that the right hon. Member for Edinburgh South West (Mr Darling) has already admitted has “failed”.
Opposition colleagues also suggest reversing the VAT rise for a temporary period. That is great, but how are they going to pay for it? What other cuts will they make instead? Is this part of their slowdown programme—their “not too far, not too fast” agenda, which has so spectacularly failed in America, whose credit rating has been downgraded and whose debt is now $15 trillion? The motion calls on us
“to bring forward long-term…projects to get people back to work”.
I totally agree with that—who would not?—and I hope to see more strategies that complement the things that we are already doing, such as the Green investment bank, the green deal, house building, the growing places fund, and so on. I would also like the council house building programme to be brought forward before we receive the receipts from the sale of 100,000 council houses. Why wait? Let us build those houses now.
I also agree with the suggestion of a one-year cut in VAT on home improvements, repairs and maintenance. The Treasury is losing many millions of pounds in revenue because of a growing black market involving private customers and small businesses paying cash for jobs done in their homes. The one-year national insurance tax break to help small businesses grow and create jobs is a great idea—one for which I have lobbied for some time. However, as a start, and to make it more affordable, why not introduce it for small businesses? I would greatly like to see—
Siobhain McDonagh (Mitcham and Morden) (Lab)
It is easy to launch into a debate about the macro policy, but we all represent individual businesses. The most frustrating thing for our electors, whatever seat we represent, is the gap between Government policy and rhetoric, and the reality on the ground. I would like to use three businesses in my constituency to illustrate the way in which Government policy is damaging growth.
The first businessman, who should remain anonymous, is a local plumber, known to Members in all parts of the House because he has replaced many MPs’ bathrooms. He faces a dilemma because of the increase in VAT to 20%. After 40 years in the industry, he tells me that the increase has become a psychological barrier for many customers, as they are immediately able to work out the amounts involved. People understand what they are paying much more than they do when the rate is 15% or 17.5%. He is afraid that the VAT increase is a double whammy for the economy. First, there will be more VAT avoidance and the tax take will fall, thereby making it harder to reduce the deficit. Secondly, the increase will lead to people not doing jobs around their homes, which will stifle economic growth. The Opposition have said that we want to reverse the VAT rise and have a one-year cut to 5% on home improvements. I strongly believe that we should analyse the impact of the VAT increase on small businesses, in the long-term financial interests of the country.
The second concern is about banks’ lending policies. Terry Withers, of Admiral Scaffolding, a company of 20 years’ standing, says that Government-backed RBS refused to let the business go overdrawn by just £5,000, even though it was the first time he had ever asked for an overdraft and the business had uncleared cheques going through its account worth £26,000. The company was also refused a loan that would have seen it convert all its vehicles to the latest green technology and expand its scaffolding kit, which in turn would have allowed it to increase the number of people it employs from 100 to 140. Mr Withers says that he is exactly the sort of business man who has lost out because of the failure of the Government’s Project Merlin.
In the first three quarters of the year, over half the SMEs applying for an overdraft for the first time were refused. A few months ago, when I took up the case of another business in a similar position, the Merton chamber of commerce told me that local firms were pessimistic about the future because of constraints on their working capital and the difficulty of raising finances. No wonder the CBI has found that almost two thirds of business leaders are considering changing their work force plans. The truth is that, so far, the Government have been unable to make the banks lend—that includes even our own banks, such as RBS—and when the banks refuse, direct Government help is pitiful.
My third case concerns Her Majesty’s Revenue and Customs. I would like to take this opportunity to voice my anger about its disgraceful attitude when dealing with MPs’ casework. I have always had difficulties in dealing with HMRC. In the most recent case, which was brought to my attention by Simon Walker of SPS Timber, a window manufacturer and replacement company in my constituency, I wrote to HMRC in August. It wrote back nearly four weeks later to say that it hoped to reply to me by November. Then when the reply came it was full of inaccuracies. The issue concerned HMRC’s penalties for late cheques for payroll. Mr Walker says that HMRC had not told him of the penalties. He argues that those penalties are a false economy, as they could be the breaking point for some small firms.
HMRC’s reply described a letter allegedly sent to Mr Walker in May, even though Mr Walker says that he keeps all his correspondence and has received nothing. My visit to his business showed him to be an assiduous record-keeper. HMRC admits to not having any record of the letter it sent him. HMRC claims that it spoke to a “Catherine Walker” about this in October, but nobody of that name works for the company, and in any case this was months after the penalties were charged. My telephone conversations have been just as infuriating. I am sure I am not the only Member who finds HMRC utterly unsatisfactory.
Mark Lazarowicz
My hon. Friend may recall that the hon. Member for Skipton and Ripon (Julian Smith) said a few moments ago that we were arrogant in raising these issues, but she is absolutely right to raise all the concerns of our constituents. We do not raise them because we are arrogant, but because we see the effects of Government policy on our constituents every day. We know that the Government might be trying to a certain extent, but what they are doing is not good enough and it is not working. That is why we want action now to deal with people’s problems with tax and unemployment—and it must be more than what the Government are doing already.
Siobhain McDonagh
I agree completely with my hon. Friend. I am making this speech because I want the Government to be sure that they know what individual small businesses and manufacturing businesses are saying on the ground.
Siobhain McDonagh
I do not want to take up too much time because I know others have things to say. I am seriously concerned about HMRC’s handling of casework and I do not think that it has the capacity to balance its role in raising taxes with its key role in generating economic growth. I hope that we can explore this concern on future occasions. I am grateful for the opportunity to let the House know how my constituents feel.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
Thank you, Madam Deputy Speaker, for giving me the opportunity to speak in this important debate. There is no doubt that growth and employment should be at the top of everyone’s list of priorities, and I know that that applies to this Government, who are trying to promote that agenda. This motion, however, does nothing to build on that. It is just more of the same from the Labour party—the party that brought us to the brink of bankruptcy. [Interruption.] It is the party that just loves to spend other people's money.
Toby Perkins (Chesterfield) (Lab)
I think that the hon. Gentleman might have dropped his script. According to his own party, growth and job creation are not the No. 1 priority, which is deficit reduction. We absolutely support the hon. Gentleman in what he said, so will he start to put some pressure on his party to put growth and job security at the top of the agenda again?
Stephen Metcalfe
I put the two hand in hand. [Interruption.] Yes I do. The Government have a cogent plan, but as I say, they have to deal with the reality that we inherited.
As I was saying, the Labour party just loves to spend other people’s money. We all like to spend money: it give us that warm glow inside, but I imagine that the rate at which Labour has spent money, and wants to spend it again, would give a white-hot glow. Labour Members do not even try to hide the fact that they spent all the money. The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) informed us in his now infamous note that there was no money left. Again, it falls to us to clear up their mess.
Andrew Bridgen
The hon. Member for Mitcham and Morden (Siobhain McDonagh) talked about problems at the Inland Revenue, but is not the truth that the botched merger with Customs and Excise has meant a vast deterioration in performance, which has affected many of my constituents? That is the fault of the Labour Government.
Stephen Metcalfe
I could not agree with my hon. Friend more. That is another problem that we have to sort out by clearing up the mess left by the previous Government.
Despite what Labour Members say and despite the sentiment behind this motion, we are, I believe, making good progress. As we have heard, we are creating the most competitive tax system in the G20; we are investing in businesses to help them start up and grow; we are encouraging inward investment and supporting exports; we are investing in science and technology and creating a more educated and more flexible work force. Of course there is still more to do, and I believe we are doing it.
For example, today, my right hon. Friend the Business Secretary announced new reforms to employment law—mentioned by the hon. Member for Streatham (Mr Umunna)—as part of the Government’s plan for growth, which will cut unnecessary demands on business while safeguarding workers’ rights. However, if we listen to the instant reaction from Labour, we find that they would have us believe that these measures are anti-employment and the reforms are about making it easier for companies to fire staff. I believe that the reverse is true. The Opposition spend a lot of time trying to cast employers as the bad guys—as a group of money grabbers trying to get rich off the backs of the workers.
Guto Bebb (Aberconwy) (Con)
Is my hon. Friend interested to hear the comments of the former Labour MEP Eluned Morgan, who is now a Baroness, when she stated that many in the private sector had sensed the animosity of the Labour party towards that sector?
Stephen Metcalfe
I would indeed agree with that view. I believe that all Government Members, and I suspect some Opposition Members too, would agree that the vast majority of businesses, especially small and medium-sized enterprises, know that their most valuable asset is their staff. Employers need staff and staff need employers. The problem has been that in the current economic climate firms are cautious about taking on additional risk, and that often means being cautious about taking on additional staff. I believe that making it easier for companies to manage their staff levels makes it easier for them to take on staff. Knowing that the risks of employment have been reduced might well unlock the employment door.
Bill Esterson
Does the hon. Gentleman agree that one of the worst things for an employer, particularly a small business, is having staff who are unsettled, looking for other jobs and fearful for their own future, which is actually bad both for the business and the economy, because those people spend less money? The measures proposed by the Government will simply contribute further to that, and make the situation worse.
Stephen Metcalfe
I agree that having an unsettled work force is not healthy, which is why it falls to business men to reassure their staff. However, it is possible to unsettle a business by insisting that it employ staff when there is not necessarily a role for them and it might be difficult to afford them.
Stephen Metcalfe
No I will not, I am afraid.
Responsible businesses have, and recognise that they have, a duty of care towards their employees and will often put their welfare before their own. They will not take decisions that would destabilise an existing business. As someone who has run my own business—and, unfortunately, had to let staff go—I know how difficult those decisions are to take and how painful they can be on both sides of the divide. Businesses do not want to take risks with the livelihood of those whom they already employ, so they may not hire additional staff unless absolutely they are sure that they are needed and affordable. Trying to downscale later could be costly and time-consuming, so they avoid the risk.
The proposals announced today might well help employers to make the decision to hire earlier, thus stimulating employment and growth, especially in small and medium-sized enterprises. If each one were to employ one additional member of staff, we would have an employment deficit. This will build on what has already been achieved in the last 18 months, with 500,000 new private sector jobs, more than 500,000 new businesses created, the manufacturing sector growing and our credit rating restored.
Labour Members would have us believe that they left us with some golden economic legacy, but nothing could be further from the truth. In the 13 years they were in power unemployment rose, workless households rose, and households where no one had ever worked more than doubled. Unfortunately, we also saw youth unemployment, which we all accept is a problem when it has risen to nearly 1 million. That is why I welcome the measures that the Government have brought forward, particularly in my own constituency, which has seen the number of apprenticeship places rise this year from 560 to 740.
The Opposition’s plan B is not credible. It just means spending more money that we do not have, because they have spent it all. It means borrowing more, and hang the consequences. It means saying, “Hide the bills, stop opening the post, don’t answer the door.” Well, that will not work. When you are in a hole you must stop digging, but we are trying to climb out of the hole that we are in. The Opposition’s solution means doing the equivalent of going to a payday lender to borrow and spend your way out of trouble. We all know what happens when people do that: they lose their credit rating, and that is a really serious problem which could cost this country many billions of pounds that it does not have.
Roberta Blackman-Woods (City of Durham) (Lab)
The audacity and complacency of Government Members is truly extraordinary, given the present state of the economy. The headline figures for UK economic growth are deeply worrying. Growth is flatlining, and it is becoming increasingly obvious to anyone with any sense that the Government’s decision to cut too far and too fast is choking it off. We also know that growth began to stall before the effect of the eurozone crisis kicked in, and that even now the full impact of that crisis has not yet been felt.
Bill Esterson
The figures show that consumer and business confidence began to decline when the coalition Government were formed, at the time when the Prime Minister started talking about Britain being bankrupt. Was not the Prime Minister very unwise to make such comments?
Roberta Blackman-Woods
Indeed. We also know that as a consequence of Government policies—and according to independent forecasts—it is very likely that borrowing will have to increase. That is having devastating consequences. Unemployment is rising, particularly among the young, although women are also being disproportionately affected.
The headline figures should concern us, but what should also trouble us greatly is the uneven way in which the consequences of the Government’s disastrous economic policies are being felt across the country. Once again the north-east seems to be bearing the brunt of the Conservatives’ economic policies, but this time—and I hope that this point is not lost on the voters of the north-east—they have the collusion of the Liberal Democrats.
The current unemployment rate is 11.6% in the north-east, but only 6.3% in the south-east. Similarly, the claimant count is highest in the north-east and lowest in the south-east. As I have said, the situation is even worse for young people. In the north-east, unemployment among young people increased by 106.3% between January and October 2011, prompting real fears that the region would return to the economic dark times of the 1980s. Yet this dire situation is so unnecessary.
Contrary to what the Secretary of State said—it is unfortunate that he is not present, because I wanted him to hear this—in the north-east gross value added actually grew between 1989 and 2008, as did GVA per head of population. That was primarily because money channelled through the regional development agency One North East levered in £9 for every pound spent—much more than the national average—and skills levels also improved year on year.
Angela Smith
The first technology innovation centre, Sheffield’s advanced manufacturing park, was established by a Labour Government through a regional development agency working with the private sector. Such arrangements have been criticised by Government Members, particularly Liberal Democrats.
Roberta Blackman-Woods
My hon. Friend has made an excellent point. It is interesting to note that before the general election, in my region at least, the Liberal Democrats were apparently in favour of regional development agencies.
Roberta Blackman-Woods
I am sorry; I am running out of time.
We know that the RDA helped to invest in a new generation of advanced technologies with expanding markets around the world, which greatly helped growth in the north-east. Through industry, Government and university collaborations, a number of sectors were identified in which growth should be prioritised, including the processing and chemical industries, automotive and advanced manufacturing, and printable electronics. Those sectors, critically, were underpinned by centres of excellence supported by the regional development agency.
Did the incoming Government seek to build on that? No. What they did instead was get rid of One North East, although it had extensive support from businesses and the community in the north-east, and what we have in its place is the regional growth fund, about which I shall say more in a moment. The loss of the regional development agency led to a loss of expertise in regard to the sectors that needed to be developed in the north-east, and a loss of what was necessary to support that development. In great contrast, the regional growth fund not only has less money but is not strategic at all. I am very pleased that a number of north-east companies have benefited from the RGF, although the Secretary of State must address the fact that getting the money through to the companies is taking a long time.
Roberta Blackman-Woods
No; I am sorry, but I am running out of time.
The RGF along with local enterprise partnerships and enterprise zones do not by any stretch of the imagination add up to an economic policy for growth for the north-east, or for anywhere else for that matter, because they are fragmented initiatives with no local coherence. The RGF will not help to narrow the north-south divide, either. As I have acknowledged, a number of companies in the north-east have benefited from the RGF, and according to the Government’s own figures that will secure about 8,500 jobs, but in the same RGF round money went to the south-east to secure 30,000 jobs.
The north-east’s problems are compounded by the fact that the RGF money is not a sufficient injection to the private sector to enable it to make up for the jobs that are being lost in the public sector. To put the figure of 8,500 jobs in context, last month alone unemployment in the north-east rose by 19,000. The Government must do more, therefore. In the past couple of weeks a number of independent commentators, including the North East chamber of commerce and PricewaterhouseCoopers, have said that the Government need to do more to support private sector development in the north-east, and our five-point plan for growth sets out a clear way for them to start supporting the economy.
Guto Bebb (Aberconwy) (Con)
I am grateful to have the opportunity to bring a Welsh perspective to this debate. The hon. Member for Streatham (Mr Umunna) is no longer in his place, but I must say that his speech was much more coherent than the Opposition’s motion.
When considering economic growth across the entire United Kingdom, it is important to remember that there is a Labour Government in Wales, and we can compare and contrast what is happening in Wales with the positive steps the coalition Government are taking in supporting enterprise and private sector growth. Businesses in Wales are crying out for the enterprise zone idea to be implemented in Wales, yet we are still awaiting a coherent announcement from the Welsh Assembly. We in Wales have a Labour Minister for enterprise and the economy who has stated that she regrets capitalism. It is therefore no surprise that the Institute of Directors and other organisations have stated they feel that there is no partnership with the Labour Assembly Government and that Labour rejects, rather than embraces, the private sector.
Steve Rotheram
Does the hon. Gentleman not understand that there is a symbiotic relationship between the public and private sectors? If we cut one, the other bleeds. What is needed at present is a transfusion for the private sector, which is part of Labour’s five-point plan.
Guto Bebb
If what we are seeing in Wales is an example of Labour economic thinking, I am very pleased that it is in opposition in the rest of the United Kingdom. The truth of the matter is that the Labour party in Wales has shown across the generations a failure to understand the importance of supporting enterprise.
Guto Bebb
Not at the moment, as I wish to finish the point I am making. The valley communities in Wales have suffered extremely badly not just for 10 or 15 years, but over a period of 30, 40 and 50 years, and it is fair to point out that throughout that entire time they have, unfortunately, been electing Labour councillors, Labour MPs and Labour Assembly Members. There was a fantastic business support programme in the south Wales valleys called the heads of the valleys innovation programme. It was such a good programme that in 2010 it won the award for the most successful enterprise support programme in the entire United Kingdom. What did the Labour Administration in Cardiff do? They cut its funding, and that was the end of an organisation that had supported hundreds of businesses and protected more than 4,000 jobs in some of the most deprived communities in the United Kingdom. It was cut because it was supporting private enterprise, which the Labour party does not understand or embrace.
Despite the fact that the motion, in general, is incoherent, I want to follow up a few points. In my constituency, we are extremely dependent on tourism, which is a major driver of growth in north Wales. It is imperative, in my view, that that sector is supported. I should point out that under pressure the Welsh Assembly has finally acknowledged that the sector deserves support, but initially the Welsh Assembly Government stated that tourism deserved no support whatsoever.
My concern about tourism is that as a coalition Government we stress the need to create a competitive tax regime for our businesses but in Europe other countries are significantly reducing VAT on tourism. It is important that we have a level playing field and I ask the Secretary of State to consider discussing the issue with the Treasury to ensure that tourism in Wales can benefit from similar VAT rates to those in other parts of Europe, including Ireland and France. There are reports to which I have access that state that the multiplier effect of making such cuts would be financially beneficial to the Treasury.
The other issue that is imperative for growth in the economy is support for small businesses. It is all very well to say that there will be a cut in the corporation tax rate, but most of the new start-up businesses that are creating real employment in my constituency will be sole traders and partnerships. Obviously, they will benefit from the increase in personal allowances, but a key issue that creates a problem for them is the VAT registration threshold. Nobody denies that the UK has a very high VAT registration threshold at £73,000, but that is not my complaint. As businesses grow and start to reach the threshold, they find themselves on a cliff edge. If they go over that level, they have to register for VAT and lose a significant part of their profitability. We need to reconsider the VAT threshold to support small businesses.
I understand that we are running out of time in the debate, so I shall leave that issue with the Secretary of State. To support small businesses in my constituency, we need to consider the VAT threshold and how it interacts with profitability.
Mr Gordon Marsden (Blackpool South) (Lab)
I thank all those who have participated in today’s debate. On this side, we heard sparkling presentations from my hon. Friends the Members for Ochil and South Perthshire (Gordon Banks), for Ellesmere Port and Neston (Andrew Miller), for Mitcham and Morden (Siobhain McDonagh) and for City of Durham (Roberta Blackman-Woods). We heard interesting contributions from Members on the other side of the House, too, including a speech from the hon. Member for Solihull (Lorely Burt), who appears to give our five-point plan two out of five, and a particularly stimulating speech from the hon. Member for Bedford (Richard Fuller)—I do not think, however, that it will put him on the Secretary of State’s Christmas card list.
It is clear that for businesses, councils and communities across England, this has been a wasted and frustrated year for growth in England’s regions under the Department’s watch. It has been a wasted and frustrated year for the entrepreneurs and communities who have found their ability to grow and innovate stifled through the Department’s inability to present a coherent framework for growth or to stand up for their interests against other Government Departments. In all three key areas that are vital to growth—supporting the local enterprise partnerships, making the regional growth fund work properly and securing regeneration funding from Europe—the Department has been weighed in the balance and found wanting. Time and again, the Department has failed to be the Department for growth.
As long ago as last September, the Minister of State, the hon. Member for Hertford and Stortford (Mr Prisk), felt the need to write to the Secretary of State to warn of the icebergs ahead. He listed the organisations that were anxious about the way the LEPs were being set up and the failure to make them more sufficiently business-orientated and he ended by warning that
“the danger is that the CBI and others become detached from this policy heralding likely failure in large parts of England”.
Who can forget that the Secretary of State himself famously described the process as Maoist and chaotic, while the former CBI director general, Richard Lambert, simply confined himself to saying that it was a shambles?
That should come as no surprise given that in June 2010 the Secretary of State went to the Northwest RDA, praised the work that it and other agencies had done and gave them assurances, only to have to confirm their abolition two weeks later after he lost the argument with the Chancellor, who wanted them axed. It was an early example of the loss of authority and dismemberment of decision making that his Department has endured ever since. BIS Ministers allowed a decade’s worth of expertise and local know-how to be lost almost overnight. Experienced RDA staff were let go before the LEPs were up and running and at the very time when they could have provided crucial assistance.
No wonder that even the Government’s growth tsar, Lord Heseltine, who heads up the regional growth fund, has come out and said that their hasty abolition of RDAs was a mistake. Not the least of the errors was the fact that this swept away all the informal architecture and channels of connection between business, further education, higher education and small employers that had been built up to boost growth in the English regions. We saw the cost of their hasty abolition when Pfizer announced the closure of its Sandwich plant in February. The South East England Development Agency had previously been able to act swiftly with a task force to help those affected to find jobs, but this time the Government failed to use that RDA even though it still had some people in post who could have given advice.
Mr Marsden
No, I will not because there is not time.
The Government failed to put Sandwich in the initial list of enterprise zones or to approve any of Kent’s first-round RGF bids. We saw the same pattern of help being denied initially and then an enterprise zone being hastily cobbled together when disaster struck at Derby with Bombardier and with BAE at Warton and Samlesbury. The Department is behind the curve and out of touch with events on the ground.
Back in February, the Labour Front-Bench team made six proposals to support LEPs, such as giving them first refusal on assets, providing them with start-up funding, giving them powers over skills funding, allowing them to form larger groups for infrastructure projects and giving them a central role in the delivery of funding from the European regional development fund. The Government’s response, however, was to block them from receiving assets or even acquiring them by deferred payment. It was only the broad support across a whole host of business organisations for our direction of travel that pushed the Government into a climbdown over their proposed fire sale of RDA assets.
The Government have given only limited seedcorn funding to LEPs—about £6 million for 40. That remains inadequate and the future of LEPs, especially for those without enterprise zones as growth vehicles, remains fragile. The Government have also failed to address other key measures that would empower LEPs and give them the tools to do their job—despite repeated calls for the LEPs to be given more powers. As has been warned by the Federation of Small Businesses and, more recently, Centre for Cities in its report, the Government need to get a grip of underperforming LEPs before it is too late. There are real fears that entrepreneurs and local businesses in LEPs will simply walk away if they simply become talking shops—as the Forum of Private Business has warned in its briefing today.
We have always argued on principle that money intended for the regions should remain in the regions. That is the stark contrast between our real localism and the Government’s sham localism. They preach localism but when they had the chance to give LEPs additional powers in the Localism Bill they funked it. As growth in the economy has flatlined, the Department for Business, Innovation and Skills has become progressively enfeebled as it has lost turf battles to the Department for Communities and Local Government and the Treasury.
The Department for Business, Innovation and Skills still protests that the regional growth fund will save the day but, as my hon. Friend the shadow Secretary of State has so forensically detailed, there is no more fitting emblem for its failures than the regional growth fund. Right from the start, the Department’s grasp on the fund has been feeble and flawed. In rounds one and two it was hopelessly oversubscribed, but the only response of the Minister of State was “That’s life”. Well, he should tell that to the consortia and to businesses. He should tell it to those who have had to wait an age for the cheque in the post. No wonder Andrew Neil said so memorably on “Daily Politics” to the Secretary of State for Environment, Food and Rural Affairs, “The £1.4 billion fund has so far disbursed £5.8 million. Why is your Government so useless?” How many people does the Department have working on round two? The answer that was dragged out of them through parliamentary questions was that there are only 11 full-time staff working on the fund. We can do the maths ourselves. How long will it take 11 people to work through the 119 successful bids to the second round?
Small and medium-sized enterprises, which are a key element in growth across the regions, find themselves short-changed and unrepresented on a number of the boards. They are frozen out by the Government’s thresholds of £1 million minimum on RGF funding and £5 million on the business growth fund. No wonder there is such frustration. What is more, the growth fund seems to have hardly any regional input. All the decisions are being micro-managed by Whitehall civil servants. There is no regional consultation or input and no sign that local offices will play a meaningful role in the process. With the propriety of some of their decisions called into account, the Government have pulled down the shutters on the detailed parliamentary questions that we have tabled about the process and the conflicts of interests on the advisory panel. That is not surprising, as BIS presides over a scheme into which it does not put a penny. Despite proclaiming, as he has done again today, the number of jobs that will be created, the Secretary of State has admitted that they are merely going on their own estimates.
Despite the money that the Department for Transport has put into the growth fund, the fund has failed to look at new public transport projects or build on the importance of travel-to-work areas. The Government have abandoned the active industrial policy that, in our last years in office, we pursued, and that led to the successful carbon strategy pursued by One North East. Ministers from the Department for Business, Innovation and Skills should have done everything in their power to unlock the European funding that did so much good and boosted jobs and growth across the regions, but in this, as in other areas, they have been sidelined.
Why have the Government produced the Growing Places fund like a rabbit out of a hat? Is it because even the Chancellor and the Secretary of State for Communities and Local Government have given up on the Department for Business, Innovation and Skills? Once again, there will be no BIS input in the process—only tanks on its lawn from the Secretary of State for Communities and Local Government.
England’s regions are full of people with ambitions and ideas about how to bring growth to their area, but the indecision and powerlessness shown by the BIS ministerial team has short-changed them and failed to rebalance our economy or provide a plan for growth. They have failed to stand up for the needs of local businesses, whether it is small towns in Kent or former industrial areas in the north-east. They have gone too far, too fast, in scrapping the regional development agencies and their collaborative structures, and become mangled in lost turf wars with CLG and the Treasury. They are like a rabbit caught in the headlights, petrified of the markets, but there are positive things that could be done for the fight. Roosevelt famously said that there is nothing to fear but “fear itself”, and Lincoln said that when the
“occasion is piled high with difficulty…we must rise high with the occasion. As our case is new, so we must think anew, and act anew.”
The Opposition understand that, which is we have a five-point plan for growth. We understand that young people across England’s regions are crying out for the opportunities that our national insurance changes will provide by enabling us to build affordable homes and reduce VAT to 5% on repairs. We understand the need for an industrial strategy, and we understand the need for new ideas, and then, by thinking anew and acting anew, we will save our country.
The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)
First, the previous Government inherited a boom, and then they bequeathed a bust and a massive deficit, so our top priority must be to deal with the consequences of that and keep out of the downward spiral into which countries such as Greece and Italy have fallen.
As my hon. Friends the Members for Bedford (Richard Fuller), for Solihull (Lorely Burt), for South Basildon and East Thurrock (Stephen Metcalfe), and for Aberconwy (Guto Bebb) have argued, more than ever we need a plan to give confidence to markets, businesses and our people. This debate was introduced by the shadow Secretary of State, the hon. Member for Streatham (Mr Umunna). It was his first major outing, and I thought that his speech was fair. It was better on structure than on presentation—but then again, I suppose the 11 advisers write the speeches; they do not deliver them. [Interruption.] No, I am a fan of the hon. Gentleman. It has become orthodox to say that he has been over-promoted, but I think that that is a welcome change from the self-promotion that has characterised his career so far. We can therefore be grateful that he is at the Dispatch Box, as he predicted he would be for so long.
The problem with the hon. Gentleman and other Opposition Members—in fairness, we heard some good speeches from them—is that they still refuse to acknowledge that reducing the deficit is central to any credible plan. We only have to look at the continuing crisis on the continent to see what would happen if we do not do so. To be analytical about it, the hon. Gentleman made a speech about cyclical problems in a structural context. The issues around debt and deficit in this country are structural, and they will not be solved by cyclical solutions.
Mr Umunna
The Minister seeks to give me a lecture on reducing the deficit. Can he explain why, as I asked the Secretary of State earlier, in the average of the independent forecasts, his Government are forecast to borrow more in every remaining year of this Parliament than we were under our more responsible deficit reduction strategy?
Mr Hayes
That was the ponderous exaltation of a basic economic fact: when tax yields fall because there is less growth than expected, and welfare payments go up, of course that is a result, but it is not a reason not to have a credible fiscal policy. The hon. Gentleman remains in denial, just as the shadow Chancellor remains in denial, but the OECD—
Mr Hayes
I am sorry, I will not give way. I usually do but I do not have time.
The OECD says that we have a £37 billion structural deficit and that it is the largest in the G7. It is not just about the Government debt. The hon. Member for Streatham must know that if we look at debt as a whole, we have the largest debt as a proportion of GDP in the developed world, with the exception of Japan.
Mr Hayes
No, I will not give way again. Time does not allow.
So, the first thing we have to do is deal with the deficit. The second thing, as the Secretary of State said in his penetrating analysis of this weak motion, is to rebalance our economy in favour of making things, selling them and exporting them. That means an investment in human capital as well as in infrastructure. That is why we have put so much emphasis on apprenticeships.
I noticed that, sensibly, neither the proposer of the motion, the hon. Member for Streatham, nor the hon. Member for Blackpool South (Mr Marsden), who summed up and who has rather sensible views about these things for the most part, attacked our apprenticeships policy. They know that we have delivered the biggest growth in apprenticeships in modern history. They know that across regions and across sectors, we have shown growth in apprenticeship numbers. There is a great deal of discussion about this so let us get the facts on the record.
Apprenticeships among 19 to 24-year-olds have grown by 64% in two years, and among 16 to 18-year-olds by 29% in two years. They have grown even more among over-25-year-olds, but the biggest proportion of growth has been at level 3. It has been across sectors and across regions. The biggest regional growth—I say this to the hon. Member for City of Durham (Roberta Blackman-Woods)—has been in the north-east.
The third element of the strategy must be to deal with tax, cut red tape and bureaucracy, and support businesses to create jobs and fuel growth. Much has been said about what the Government have done in that respect. It is true that we have launched the growth and innovation fund, which is supporting life sciences, the creative industries, the hospitality industry and others. It is also true that the regional growth fund is doing that job as well. In the first phase the regional growth fund will support 50 projects and ultimately more than 150 projects. That will leverage more than £8 billion of private sector investment to create or safeguard more than 300,000 jobs. That is the simple fact of the matter.
Labour does not have a credible alternative. The Opposition’s five-point plan is rooted in a denial about deficit which would undermine confidence in business and in the markets, push up interest rates and do lasting damage to Britain. The Labour party inherited a boom. Its legacy was a bust.
The shadow Chancellor is not present, but his fingerprints are on the motion once again. He said recently that he cries at “The Sound of Music” and “Antiques Roadshow”. We all wondered why “Antiques Roadshow”. I will tell the House: he is wedded to the idea of an over-valued, tired out, worn out old Cabinet, and it is the one that he was in. The previous Government and current Opposition would be better taking advice from a singing nun than from the shadow Chancellor or the hon. Member for Streatham.
I urge the House to choose between the past and the future, between despair and hope, between fantasy and reality, and vote for hopeful reality by opposing the motion.
Question put.
Madam Deputy Speaker (Dawn Primarolo)
I now have to announce the result of a Division deferred from a previous day. On the motion relating to Schengen governance, the Ayes were 461 and the Noes were 23, so the Question was agreed to.
[The Division list is published at the end of today’s debates.]
Solar Power (Feed-in Tariff)
18:59 - The House divided: - Ayes: 226 / Noes: 297 - Jeremy Wright
19:13 - The House divided: - Ayes: 292 / Noes: 220 - The Deputy Speaker declared the main Question, as amended, to be agreed to (Standing Order No.31(2) and Order, 14 November).
Madam Deputy Speaker (Dawn Primarolo)
I have to inform the House that Mr Speaker has selected the amendment in the name of the Prime Minister. Before we start the debate, I also have to inform the House that some 28 Members wish to participate, so we will need some adherence to the time limits, which Members will see is five minutes for Back-Bench speeches.
Caroline Flint (Don Valley) (Lab)
I beg to move,
That this House believes that solar power gives families, community organisations and businesses greater control over their energy bills and will help the UK meet its renewable energy targets and reduce carbon emissions; notes that since the creation of the feed-in tariffs scheme under the last administration, introduced with cross-party support, nearly 90,000 solar installations have been completed in the UK and the number of people employed in the solar industry has increased from 3,000 to 25,000; believes that the Government’s cuts to feed-in tariffs go too far, too fast, will hit jobs and growth in the solar industry, undermine confidence in the Green Deal and deter investment in the wider green economy; regrets that the cuts to feed-in tariffs were announced with just six weeks’ notice and come into force before the consultation has even finished; further regrets that the Government’s plans would exclude nearly nine out of ten households from installing solar power under the feed-in tariffs scheme, will disproportionately hit social housing and community projects, and could affect thousands of households which have already installed solar power; and calls on the Government urgently to withdraw the 12 December 2011 deadline and bring forward more measured proposals that guarantee the continued growth of the solar industry, put feed-in tariffs on a sustainable footing and are fair to the public.
Exactly a year ago today, in a speech to the Micropower Council, the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), lauded the feed-in tariff scheme. He said:
“The coalition is absolutely committed to FITs…I have been really encouraged by the positive response that the FITs scheme has received since its introduction in April and hope this will continue. It’s still early days but early indications show that the scheme is working well”.
Well, they say a week is a long time in politics, but a year is obviously an eternity. However, at least the Minister is not on his own today, and we are glad to see the Secretary of State in his place. We all remember his famous energy summit, which went so well he decided to do a disappearing act. When his Department announced these cuts to feed-in tariffs, first, it tried to sneak them out in a written statement. Then, when I secured an urgent question, he sent his junior Minister to take the flack instead. Anyone would think he was trying to avoid me, or perhaps the Secretary of State is just very good at not getting caught at the crime scene. Either way, his fingerprints are all over this one.
Although talk of feed-in tariffs might sound technical, their impact could not be more real. Some 25,000 jobs are on the line. Thousands of businesses are at risk and tens of thousands of people who have already installed solar could still lose out. Millions more have been excluded from having solar under the Government’s new rules and have been denied the chance to control their energy bills. That is all because we have a Government who are out of touch, cutting too far and too fast, with no plans for jobs and growth.
Caroline Flint
I will make some progress because a lot of people want to speak in this debate.
At the outset, let me deal with a few of the myths that the Government have desperately resorted to peddling in defence of their plans and that appear in their motion today. The first and most bizarre is the idea that we were opposed to the introduction of feed-in tariffs and that somehow the Tories and the Liberal Democrats introduced them. It takes some audacity to try to claim credit for a scheme that was enacted, introduced and came into force under the previous Labour Government, but to try to take credit for a scheme that they are scrapping really takes the biscuit. The record will show that while Labour began this growth industry, the Government’s policies have all but killed it in its infancy.
The second myth is the Government’s claim that the reason they are cutting the tariff level is that they are worried about energy bills.
Caroline Flint
I will give way to the right hon. Gentleman in a moment. This from a Government who have cut help for more than 12 million pensioners with their heating bills this winter and who have stood back and done absolutely nothing as customers’ bills have soared and energy companies’ profits have rocketed.
If the Secretary of State really wants to talk about energy bills, I will tell him a thing or two. Let us start with how much the average annual energy bill costs under this Government—£1,345—and how much feed-in tariffs cost the public. From what the Government have said, one might think that this is costing us all hundreds of pounds a year, but it is not. Is it perhaps £50 a year, or £20, or even £10? No, the actual figure, according to the independent regulator, Ofgem, is less than £1 per household per year—less than £1 at a time when the average energy bill stands at £1,345, when pensioners are seeing their winter fuel payments cut by £50 or more, and when standard tariffs are up by £175 only since June. Labour and I will not take any lectures on energy prices from this Government.
Caroline Flint
If the Secretary of State really wants a debate about this, let us start one.
Chris Huhne
There was only ever one vote in the House of Commons on feed-in tariffs, in April 2008, when the right hon. Lady voted against. What has made her change her mind?
Caroline Flint
There was an amendment tabled by the former Labour Member, Alan Simpson. My right hon. Friend the Member for Croydon North (Malcolm Wicks) said at the time:
“I sympathise with, and fully support, people’s yearning for appropriate incentives to encourage the faster take-up of microgeneration.”—[Official Report, 30 April 2008; Vol. 475, c. 393.]
He told my hon. Friend and the House that he wanted to go away and look at what could be possible. On 5 November in the same year, the Labour Government tabled an amendment in the House of Lords that paved the way for the scheme that we have today. We do not need any lectures by the Secretary of State on who created the opportunity for feed-in tariffs in this country—it was the Labour Government.
Mark Tami (Alyn and Deeside) (Lab)
Companies such as Sharp in Wrexham have expanded and employed more people because they believed the Government on feed-in tariffs, only to find that they have pulled the plug.
Caroline Flint
My hon. Friend makes a good point about the damage that has already been done to many businesses around the country. I will come to his point about the impact not only on insulations but on manufacturing in Great Britain.
We are happy to have a debate about why the Government are cutting help for pensioners this winter, when they need it more than ever, and about why this Government have stood back and allowed the big six to increase their profit margins to record levels while energy bills have soared, but let us also have a debate about why this Government have failed to stand up to vested interests in the energy industry and failed to reform our market.
Let us not pretend that the Government’s approach to today’s debate is about some new-found concern for bill payers. However much Ministers like to claim feed-in tariffs cost the public, when 25,000 people lose their jobs—[Interruption.] Government Members might not like to hear this, but people may be laid off this Christmas as a result of an ill-thought-through strategy. When 25,000 people lose their jobs, when the Treasury loses the taxes and national insurance they pay, and when we have to pay out unemployment benefit, the costs will be a lot higher. This Government would rather pay people to be on the dole than support an industry of the future.
Andrew George (St Ives) (LD)
I think we all accept that this is an extremely difficult issue to resolve. Given that the right hon. Lady is advancing the case that the Government are making the wrong decision, by how much is she prepared to see bills rise in order to sustain the tariff at the current level and in line with the level of income for people with solar PV?
Caroline Flint
I respect the fact that the hon. Gentleman has probably raised concerns about how his coalition Ministers have approached this issue. As I said, according to Ofgem, we are talking about less than £1 on people’s annual bills. What we said in our urgent question and have proposed in the motion is that we need to work to see how we can change the scheme as it moves forward, but in a sustainable way. The problem is that we have not had a chance to have this debate because the hon. Gentleman’s Ministers, in his Government, have chosen to set a cut-off date of 12 December even though they are still consulting until 23 December. When answering the questions about how we have got to where we are today, they have more to answer for than us.
Myth No. 3 is that the scheme would run out of money if it carried on as it is. In the past few weeks, I have spoken to a lot of people in the solar industry. I have yet to find a single person who argues that the scheme should carry on unchanged. I am sure that that has come across in the lobbying of Members on both sides of the House. Not even the industry is calling for that. It wants planned, sensible reductions in tariffs. That is exactly what we would have done. When we introduced the scheme in 2010, we made it clear that there would be a review in 2013, or earlier if needed, to look at tariff levels and whether the scheme was delivering value for money.
Let us get serious. We have a cut of more than 50% with just six weeks’ notice. Is that reasonable? Is that fair? Is that sustainable? I suggest that it is not. To make matters worse, the first that the industry heard of it was when it was summoned to the Department after the announcement had been made.
Frankly, the only reason that feed-in tariffs need reform is that this Government have managed the scheme so badly since coming to power. It is no good blaming us. Before the election, Conservative and Liberal Democrat Members accused us of lacking ambition. They said that what we set up did not go far enough. The Conservative party said that feed-in tariffs should be paid to solar installed before April 2010 and that it would raise the capacity threshold for qualifying schemes from 5 MW to 10 MW. The position of the Liberal Democrats was also clear. Far from saying that our scheme was too generous, they wanted it to be more generous. Their spokesman at the time, the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), said:
“Labour’s plans are too little too late.”
I tried to speak to him on Monday to confirm that that was still his position, but he spurned my advances. We wait to see whether he will join us in the Lobby this evening.
The fourth myth is that if we did not implement the Government’s cuts, solar power would be available only to the lucky few. However, it is the Secretary of State’s cuts that will exclude nearly nine out of 10 households from having solar power. It is his cuts that will prevent families living in social housing from having solar power. It is his cuts that will once again make solar power the preserve of the wealthy few.
Kate Hoey (Vauxhall) (Lab)
Perhaps my right hon. Friend might like to tell Members who do not have any of these companies in their constituency or who do not understand this issue that they might like to walk five minutes from here across Westminster bridge and along Lower Marsh to visit Solar Century in my constituency. A large number of people there will be out of work precisely because of what the Government are doing.
Caroline Flint
I was pleased to take the opportunity to go to Solar Century on Monday with my right hon. Friend the Leader of the Opposition. It was very similar to the firm that I visited in Glasgow the other week with my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex). It is a company that employs young graduate engineers and other skilled people. It has links with small businesses and contractors around the country, including installers and fitters. Some people who had been working on the digital switchover have been trained up to do this work. There is a chain of despair and destruction throughout our country as a result of these proposals.
Huw Irranca-Davies (Ogmore) (Lab)
Will my right hon. Friend expand on that point, because this proposal has affected not only the solar industry, but general confidence in the Government’s handling of the renewables sector? I spent an interesting evening yesterday speaking in depth with farmers who are concerned about the handling of this matter and about its impact on confidence in the anaerobic digestion sector, the biomass sector and so on. They do not trust this Government any more and they never will.
Caroline Flint
That is an important point. Some people say to me, “Caroline, this is all just about solar.” I say, “No it isn’t. It is actually about confidence, about the direction of travel and about being able to rely on the goalposts not being moved on a whim to effect some crazy policy dreamed up by these coalition Ministers.” What Ministers are doing is destroying this growing industry.
Interestingly, some of the social housing projects that have been brought to my attention wanted to put solar panels on the roofs of some of their properties, but they were also looking to use some of the gain from the tariff for other energy efficiency schemes, so the tariff would also have provided benefits beyond using solar power.
On Monday Solar Century brought it to my attention that it knew of a number of farmers who were interested in establishing solar. They were not thinking of solar farms, which caused some concern last year; they just wanted to generate energy to run their farms. They are now rethinking and cancelling their plans. That is not good enough.
Laura Sandys (South Thanet) (Con)
The mixed energy economy will include all renewables. Is it sensible or sustainable to subsidise solar at twice the rate of offshore wind? We have lacked an energy strategy for 13 years. At least we have now got ourselves in gear and there is a clear path ahead.
Caroline Flint
We are talking about things that are on totally different scales. Solar is pretty much for small businesses and communities. Of course we want a diverse mix, but the solar industry in our country—I will come to myth No. 5 in a moment—is 3% the size of Germany’s. Our industry is a baby in terms of what we need for the future and what we need from other energy sources. The Opposition will work consensually to tackle climate change and reduce our carbon emissions, but we cannot stand by when idiotic proposals are made that will strangle a growing industry at birth. That is just not good enough.
Caroline Flint
I shall make a little more progress before giving way.
Myth No. 5 is the idea that the Government’s plans are just like what has happened in Germany. Nothing could be further from the truth. The German Government invested €6.5 billion in solar last year; we are investing £860 million over four years. Germany has installed half the solar panels in the world and supports 250,000 jobs in solar; we have installed just 90,000 panels and have only one tenth of the jobs. This year the tariff for solar power in Germany was cut by 15%, in agreement with industry and only after installation levels reached a fixed benchmark: here the Government have announced a cut of more than 50%, with no proper consultation and only six weeks’ notice, which will take our solar tariff below that of Germany.
None of the Government’s excuses will wash, because the truth is that their cuts to the feed-in tariff for solar power are a triple whammy. They are bad for jobs and growth, bad for the public and bad for the environment.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The right hon. Lady is right to say that the German Government are reducing the tariff by a much smaller amount. In January they are reducing it by about 15%, but they are reducing it to €0.24, which is almost exactly equivalent to the 21p tariff that the Government propose. They are reducing the tariff to the same level as ours.
Caroline Flint
Dearie me! The Germans have been planning how to staircase down their tariffs for years. They have a mature industry that is the world leader. We are not in that ballpark. That is why we must ensure that we do not strangle our industry at birth.
The cuts are bad for jobs and growth, bad for the public and bad for the environment. When growth is flatlining and unemployment rising, solar is one industry that is growing and creating jobs. When the previous Government introduced feed-in tariffs, just 3,000 people were working in 450 firms; today more than 25,000 people work in 3,000 companies. By 2020, as many as 360,000 people could be working in solar—but not if the Government’s cuts go ahead. Be in no doubt that the Government’s current plans will strangle the solar industry and cost thousands, if not tens of thousands, of jobs.
A survey conducted by the Renewable Energy Association and the Solar Trade Association earlier this month forecast in excess of 10,000 job losses. Fifty-seven per cent. of companies anticipate having to lay off at least half their current staff, a third are worried that their business will be forced to close altogether, and fewer than one in six are confident that they can weather the changes. That is the reality.
John Healey (Wentworth and Dearne) (Lab)
Is the Minister not missing the point about the comparison with Germany? The purpose of the tariffs in this country is to build up our industry and get it up and running, but cuts on this scale at this pace risk throwing the industry into reverse. Those production and new design skills that my right hon. Friend mentioned will be lost at a time when the Government should be helping to cut fuel bills for householders and cut the country’s reliance on fossil fuels.
Caroline Flint
I can add nothing to my right hon. Friend’s comments, except to say that there is another organisation that agrees with him—the CBI.
The Government claim, on page 2 of their impact assessment, that they can slash the solar industry by anything between 70% and 95% and still, as page 26 claims, increase the number of people working in it by up to 10,000. As someone I met at the lobby of Parliament yesterday put it, the Government may think that they can get full employment by shrinking the economy, but month after month we see that their plans are hurting but not working. We knew that the Government were out of touch, but today we see that they have lost the plot.
Richard Graham (Gloucester) (Con)
I am grateful to the right hon. Lady for eventually giving way. It was she who said only one month ago:
“The Government do not understand the reality for families who struggle to pay the bills at the end of the month”.—[Official Report, 19 October 2011; Vol. 533, c. 937.]
Does she agree that today’s debate is not about whether we support solar power, which we are all in favour of, but about the cost of the subsidies for solar—a small-scale industry—which will cost families about £26 a month extra by 2020? Would that not be an unreasonable cost on hard-pressed families?
Caroline Flint
I am afraid that the hon. Gentleman has neither read his brief nor sought other views. Ofgem, the independent regulator, made it absolutely clear that the feed-in tariffs cost less than £1 a year per household. The bigger problem is how prices have been put up while energy companies are making exorbitant profits, and while this Government are cutting the support available to people this winter. That is a price debate that I would like to have. The hon. Gentleman’s comments imply that he is in favour of those businesses going under, of social housing not having solar panels, and of this industry not even getting out of the cradle. That is rich coming from a party that prides itself on being the small business champion.
Nic Dakin (Scunthorpe) (Lab)
Does my right hon. Friend agree with a constituent of mine, Mr Robert Borrill, who described the Government’s decision as devastating, especially given that people have entered into commitments? Even those who have entered into financial commitments now will be penalised because of the six-week period. Surely, at the very least, the Government should consider that.
Caroline Flint
I absolutely agree, and I will come to that point later, because it is a travesty that the cut-off date has been set two weeks before the consultation finishes.
Caroline Flint
I want to make some progress, because I am conscious of time and lots of people want to speak.
For every job in the solar industry, many more in the supply chain are also at risk. According to the Minister’s colleagues in the Department for Business, Innovation and Skills, the solar industry and its supply chain employ about 39,000 people and resulted in nearly £5 billion of sales last year. All of that is in jeopardy. Sharp Solar, which was mentioned by my hon. Friend the Member for Alyn and Deeside (Mark Tami) and which is in the constituency of my hon. Friend the Member for Wrexham (Ian Lucas), currently employs about 500 people at its plant manufacturing solar panels. It is now warning that because of these cuts it is reviewing its presence in the UK, putting hundreds of jobs on the line. Given that we need to invest up to £200 billion in our energy infrastructure in the next 10 years, how can anyone have confidence in a Government who are so short-sighted that with just six weeks’ notice they are killing off a flagship policy that has cross-party support?
Gregory Barker
Before the right hon. Lady scaremongers any further, may I confirm that I spoke to the European head of sales at Sharp yesterday, and it has no plans to close its UK plant? It remains an important centre of European manufacturing.
Caroline Flint
Such companies are worried about the policies on the table, and they will be waiting with bated breath to see what happens. There are containers full of panels on our docksides all round the country not being used because sales orders are being affected by the Government’s policies.
Since we introduced feed-in tariffs nearly 90,000 families have benefited. That has helped those who want to do the right thing and green their homes, while also trying to protect themselves from soaring energy bills. However, under the Government’s plans nearly nine out of 10 households in England will be excluded from solar power and denied the chance to get just a little more control over their energy bills. That is because properties will be eligible for feed-in tariffs only if they have a minimum energy performance rating of C or above.
Andrew Bridgen (North West Leicestershire) (Con)
Will the right hon. Lady give way?
Caroline Flint
No, I will not give way.
However, the most recent estimate showed that 86% of properties in England had an energy efficiency rating of D or below. Those households will be excluded from solar power. The Government’s plans are unfair, too, not least because they could hit people who have already installed solar power. In fact, the cuts could hit people who installed solar power before the Government even announced the changes. That is the problem with a six-week deadline, when it takes up to seven weeks to get a solar installation on the FITs register. Those people are going to lose out. In answer to a parliamentary question the Minister of State, the hon. Member for Bexhill and Battle, said:
“We recognise though that some prospective FITs generators who have incurred or committed expenditure may not be able to complete their installations and submit their applications for FITs before the proposed reference date.”—[Official Report, 10 November 2011; Vol. 535, c. 409W.]
What the Minister calls “prospective FITs generators” are people—thousands of them—who have already installed solar, but not yet registered. They will be caught up in a mess entirely of the Government’s making. They include, for example, the pensioners who wrote to me telling me that they had invested their savings in solar power to try to get their heating bills down and give themselves a little income in their retirement.
By cutting the tariff by an additional 20% for councils, housing associations and community groups, on top of the 50% cut, the Government’s changes will all but end solar power for social housing. Across the country, from Cambridge to Wrexham, Torbay to Leeds, Reading to Haringey, councils are already scrapping their solar plans; and last week it happened in Doncaster, too. As a result, those councils are forgoing funds that they could have invested—and that they planned to invest—in other energy efficiency measures for their tenants.
All Governments get accused of not listening, but it takes a special kind of arrogance—not to mention a healthy dose of incompetence—to launch a consultation that is half the normal length and closes after the cuts on which it is consulting come into force. What happens when the consultation closes on 23 December and all the responses tell the Government that their cuts go too far, too fast, and will kill the solar industry? What happens to all the projects that have already been scaled back or scrapped altogether? What happens to all the families who have already decided to cancel their solar installation? What happens to all the firms that have had to lay off their staff—to all the engineers, technicians and installation teams who have lost their jobs before Christmas? What happens to them? What all this says is that the Government do not care what anybody thinks; and what it shows is that they are completely out of touch.
When the economy is flatlining, unemployment is rising and even the Prime Minister admits that his plan is failing, what sort of Government choose to kill an industry that is growing and creating jobs? When energy prices are at record levels and millions of families are struggling with their bills, what sort of Government choose to exclude nine out of 10 households and everyone in social housing from installing solar to cut their bills? When Ministers are flying halfway around the world to Durban next week to try and reach an agreement on climate change, what sort of Government choose to cut back on policies that will increase our supply of renewable energy and reduce our carbon emissions?
From the CBI, the Mayor of London and the man who installed the Prime Minister’s solar panels, all the way to the Welsh Liberal Democrats and Friends of the Earth, everyone is backing our campaign and telling the Government that they have got this badly wrong. Today we have come to a crossroads. Much damage has already been done. Many projects have been ditched. Confidence has been dented, with future investment possibly lost for good. However, we can step back from the brink. We can put feed-in tariffs on a sustainable footing, in a way that is fair to the public and which secures the future of one of our brightest industries. Today I call on all hon. Members to support our motion—to tell the Government to scrap their 12 December deadline, to stand up for an industry that is growing and creating jobs, and to stand up for people who want to do the right thing and protect themselves from rising bills. I commend this motion to the House.
The Secretary of State for Energy and Climate Change (Chris Huhne)
I beg to move an amendment, to leave out from “House” to the end of the Question and add:
“notes that the previous administration only introduced a feed-in tariffs scheme following pressure from Liberal Democrat and Conservative hon. Members; further notes that during the period up to October 2011 over 120,000 UK solar installations had been completed; further notes that this is three times the deployment expected by the previous administration; recognises that no commercial-scale solar PV schemes were expected by the previous administration; further notes that the cost of PV panels has fallen by at least 30 per cent. since the current tariff was introduced and that the previous administration set the tariff levels for solar PV to deliver a five per cent. index-linked return; regrets that the previous administration did not draw on the experiences of Germany in setting a sustainable and predictable digression of tariffs; further notes that failing to act could add £26 to the domestic electricity bill of all consumers in 2020 including the 5.5 million people left in fuel poverty by the previous administration; further regrets that the previous administration did not introduce a community tariff; believes that the Government is right to bring the tariff levels back in line with the rates of return envisaged; acknowledges that it is right to link support under feed-in tariffs to energy efficiency and the Green Deal ensuring the most cost-effective carbon abatement measures are introduced first; supports a consultation on the introduction of a community tariff; and further believes that the Government is putting feed-in tariffs on a long-term, fair and sustainable footing.”
We find ourselves here to debate a motion that would add at least £26 to an average consumer bill—that is, if we were to leave the scheme unchanged. The estimates are constantly being revised, and the figure may well reach as high as £80 on the current trajectory. The proposal would give bumper profits to solar companies and do little to tackle climate change. There seems to be no awareness whatever on the part of the right hon. Member for Don Valley (Caroline Flint) or other Opposition Members that those are real costs, being imposed on real people, who will be unable to spend the money on other goods and services as a result. Every corner shop across the length and breadth of the land would be affected if disposable incomes were hit in that way. Some of the people who are in the greatest fuel poverty—about whom Labour Members are meant to be most concerned—will be most affected by these increases.
Feed-in tariffs have been successful. They have helped many people produce green energy locally, which is why, before we were coalition partners, Liberal Democrats and Conservatives supported their introduction. Solar energy has been particularly popular, with more than 140,000 homes now generating some of their own electricity. Unfortunately, this promising scheme was built on shaky economic foundations. In setting the returns, the previous Government completely underestimated the potential for cost reductions in the sector. They assumed that solar panels would cost just 9% less to install in 2012 than they would in 2013. As we heard from the right hon. Member for Don Valley, Labour did not propose to review this matter before 2013. In fact, costs are falling and falling fast—at least 30% since the scheme started. The result is that returns on solar photovoltaic investments are double what was originally envisaged.
Mr Ben Bradshaw (Exeter) (Lab)
What would the Secretary of State say to a company in my constituency, Sun Gift Solar—one of many in Exeter and the south-west that has contacted me—which clearly told me that its customers do not have any trust in what it calls this “erratic and inconsistent Government” whose actions have already immeasurably damaged confidence in this industry and will put tens of thousands of people back on benefits?
Chris Huhne
I do not accept that at all. I will come on to some of the flaws in the original design of the scheme. I think it is regrettable that the Leader of the Opposition is not in his place alongside the right hon. Lady to defend the scheme that he introduced. I am going to be very clear—I am not going to pull my punches—about the mistakes made by the right hon. Member for Doncaster North (Edward Miliband) when he was Secretary of State for Energy and Climate Change and this scheme was introduced. I will deal precisely with that.
The right hon. Member for Exeter (Mr Bradshaw) has just mentioned an investor in his constituency, so let me quote another—Martin Bleasby, the business development manager of Driffield-based Dodds Solar who said:
“It was clear something had to happen. It was never supposed to be a get-rich-quick scheme. The way things were going, the budget was going to run out in a few months. Now we can look at building a business which is sustainable for years to come.”
Chris Huhne
I happily give way to my hon. Friend the Member for Colchester (Bob Russell).
Bob Russell
My right hon. Friend is right to draw attention to the fact that the scheme is flawed. That is acknowledged. Does he agree, however, that where a social housing scheme or a community scheme has already commenced the process and panels are being installed almost as we speak, contracts should be allowed to roll even if they go beyond 12 December? Where the contract has already started, I say let it roll to completion.
Chris Huhne
My hon. Friend makes an important point. I have to say that since we announced this consultation I have received e-mails, as have a number of other hon. Members, from solar companies offering to install solar panels before the 12 December deadline. That does not suggest to me that we left inadequate time before the reference period.
Chris Huhne
Let me come back to the point my hon. Friend made about social schemes and social housing, about which I care. Sadly, however, another design flaw that emerged from the inception of this scheme—again, the right hon. Member for Doncaster North was responsible for it—was that it did not have the ability to recognise social housing or social schemes. If we wanted a special scheme to help non-profit-making companies, we would not have the legal basis for achieving it.
Chris Huhne
Opposition Members bounce up and down protesting about this issue, but they had the opportunity when they were in government to achieve this—and they did not do it. It is another one of the cock-ups for which, frankly, the Leader of the Opposition was responsible in designing this scheme. I feel for the right hon. Member for Don Valley as she does not have the support of the right hon. Member for Doncaster North, who is not prepared to stand up here and defend what he did when he introduced this scheme.
The fact is that these returns are funded by consumers through their energy bills, and they are unsustainable. If we allowed them to continue unchecked, they would burn through the entire budget in a matter of months. If we do not act now, the entire feed-in tariffs budget for the current spending review period will be fully committed by next spring.
Chris Huhne
Let me make this point, and then I will give way to the hon. Member for Brighton, Pavilion (Caroline Lucas).
With the current tariffs, each extra installation means that two fewer installations can be funded at the tariff levels. Every time the right hon. Lady or other Opposition Members say that we should not act—that we should defer dealing with the mistakes Labour made in introducing the scheme—they are condemning the industry to less growth than it would otherwise enjoy.
Caroline Lucas
I am frustrated by the Secretary of State’s implication that Opposition Members do not accept that the tariffs must come down, as of course they must. Does he accept that six months ago the solar industry itself asked for them to be reduced by 25%? The reason for the chaos we are experiencing is the incompetence of this Government.
Chris Huhne
I absolutely do not accept that. Not a single solar installer to whom I have spoken does not say that tariffs must fall, and on that point I entirely agree, but that was not the case before. This is another of the key cock-ups made by the Leader of the Opposition when he was doing the job that I am now doing. He failed to learn from the experience of Germany, which was very clear: those who introduce a scheme involving solar feed-in tariffs must introduce an automatic digression to take account of the real world. But of course Opposition Members are not very familiar or comfortable with the real world of business. The fact is that there should have been a reduction in the tariffs as a matter of automaticity.
Caroline Flint
If there was a provision for communities to take advantage of solar power, why are so many local authorities and housing associations cancelling projects? As a result of the right hon. Gentleman’s initiative, 100,000 social homes will not have solar power. Did not the Labour Government set in train a review to be completed by 2013, implicit in which was the need for a “staircasing down” of the tariff to achieve value for money?
Chris Huhne
The right hon. Lady makes a good and serious point, which returns me to what I was saying before. We need to consider, and consult on, whether there should be a separate tariff for social schemes. Many social housing providers offer their tenants free electricity to encourage take-up—free electricity that has been rising in value because of the rise in world gas prices and the rise in UK electricity prices. That is an important part of the rate of return. If providers give all that to their tenants, the amount that is left from the feed-in tariff to compensate for their financing costs will be less. However, we are not legally able to provide a separate tariff, because the Labour party did not implement such an arrangement when it was in government. I regret that, because it would have given us some flexibility.
Dr Julian Lewis (New Forest East) (Con)
I have been lobbied by a constituent, Jeremy Anson, who works for a photovoltaic providing company. He fully accepts the need for a substantial reduction, but says that while the industry could cope with a reduction of 30%, he would struggle with 50%. We wonder whether a phased or gradual reduction would be possible, given that the number of orders received by his firm has fallen from a average of 15 a month to zero after 12 December.
Chris Huhne
I shall explain what we are trying to do later in my speech, but let me reassure my hon. Friend that the returns that the new scheme will provide—if, indeed, we proceed with it following what is a genuine consultation—will be very similar to the returns that were originally intended when the scheme was announced by the Leader of the Opposition in April 2010. As with some of the Opposition’s other achievements, the intention was right but the execution was definitely not, so it falls to this Government to attempt to clear up the mess.
We want to secure the continued success of feed-in tariffs through sustainable growth, rather than boom and bust. That is why we are consulting on new tariffs for solar PV installations. As the climate change Minister, my hon. Friend the Member for Bexhill and Battle (Gregory Barker), just pointed out to the House, they are now in line with those being offered in Germany. If the former Secretary of State, the right hon. Member for Doncaster North, had bothered to find out how the Germans operated this scheme, we would never have been in this position in the first place.
Chris Huhne
Before I give way again, let me address this key point. To wait any longer would put at risk the entire feed-in tariff scheme. Anything that slows this process will substantially increase the risk that the scheme will run out of money. Each week of delay in changing the tariffs leads to additional annual subsidy costs of £4 million, but this is a 25-year scheme, and the figure over the spending review period is £14 million, or £87 million to £110 million over the 25-year tariff lifetime. A very small delay in tackling this problem will therefore result in substantial costs for electricity consumers over a 25-year period.
My experience tells me that when we face such a problem, we should not follow the advice of the right hon. Member for Don Valley and attempt to run away from it by pretending it does not exist. Instead, we must grapple with this problem, and deal with it quickly so the scheme can be put on a sustainable basis that will give the industry the opportunity to grow and prosper.
Charlie Elphicke (Dover) (Con)
This is a strange debate, as the Opposition seem to be on the side of big business, while we are on the side of the squeezed middle. Does the Secretary of State agree that the £1 figure Ofgem cited was for back in the summer when installations were running at about 2,000 to 3,000 a week, rather than the recent rate of 9,000 or so a month, and would that figure not have grown exponentially over time?
Chris Huhne
My hon. Friend is correct. I wish the House had facilities to show a PowerPoint presentation at this point, as I am now holding up a chart showing what has been happening with the scheme. The rising curve represents the installation rate increase. The Opposition cite the Ofgem figure of £1, but that applies down in the foothills of the curve, and we are dealing with a rather different real world today. Installed capacity has doubled since August, and has increased by three times since June and by tenfold since the start of the year. The right hon. Member for Don Valley is laughing; she has obviously had no experience of attempting to manage a budget, because if she had, she would not be laughing at all. This adds real costs to the electricity bills of real people—people the Opposition claim to represent.
Dr Alan Whitehead (Southampton, Test) (Lab)
Will the Secretary of State provide the budget figures for the feed-in tariffs in the levy envelope up to 2015, along with the central analysis undertaken by his Department of how far over that budget we would be under present arrangements? Will he also explain the headroom his Department has for putting things right over that period, and compare that with how far over the budget his Department is according to its central impact assessments?
Chris Huhne
The hon. Gentleman is my neighbour in south Hampshire, so I was delighted to give way to him, and I wish we were able to address that fine granularity of detail, as he suggests. However, I shall place the graph I have been showing in the Library so that everybody can look at it. The situation is moving so swiftly that projections based on the current week’s figures would look rather more alarming than those for last week or the week before that. The real world is changing exceptionally rapidly. The impact assessment gives a clear statement of where we were at the point when the impact assessment was made. At that point, the figure was £26 on average energy bills for 2020 and the latest estimate is now up to £80—and at the high end of that if there is substantial growth. That takes me back to the point that if we do not deal with the issue quickly, we are not saving the industry, as the Opposition would like us to believe, but writing the death warrant for it. There would be a sudden cataclysmic fall in demand.
Chris Huhne
I will give way to the right hon. Member for Lewisham, Deptford (Joan Ruddock), who is a former Minister in this area and whose expertise is well known.
Joan Ruddock (Lewisham, Deptford) (Lab)
May I reiterate what was said by my right hon. Friend the Member for Don Valley (Caroline Flint), who speaks from our Front Bench? It is not about the fact the tariffs are being reduced but the way in which it is being done. Peabody housing association, which works in my constituency, was going to have installed 6 MW of provision by March of next year and the programme has been decimated. The Minister of State has said that it can get ahead with a 5% return but it was planning—and had received—a 7.5% return and its borrowing costs are 5.3%. It cannot be done. The Secretary of State must change his mind.
Chris Huhne
I listen to what the right hon. Lady says, but the reality is that the scheme takes us back to the rate of return when the scheme was introduced by the previous Government in April 2010. It was appropriate then and all we are doing is taking account of what has happened in the real world, where there has been a very dramatic reduction in the cost. I have yet to meet a single manager of a single scheme who has persuaded me that they will lose money by proceeding with their scheme. They might make less money than they previously planned—that occasionally arises—but the business of my Department is not to provide extra rate support grants to local councils but to ensure that we have a successful renewable energy scheme and that we get solar panels out there. It is not a back-door way of funding extra support.
Mr Edward Leigh (Gainsborough) (Con)
I agree with everything my right hon. Friend is saying, but surely the problem is that all the schemes that subsidise renewable energy tend to distort the market and have perverse consequences, and therefore perhaps the Duke of Edinburgh had a point over the weekend.
Chris Huhne
The Duke of Edinburgh was not, I think, talking about solar panels, and I dread to think what his views are on them. He certainly made his views on wind pretty clear. I do not agree with my hon. Friend on the issue of distortions to the market because, curiously, solar photovoltaics are a clear example of a highly successful world market. The right hon. Member for Don Valley was talking about Sharp Solar as though it was dependent on the UK, but more than three quarters of the production in Wrexham goes overseas to the rest of Europe. We have already heard that the funding is exactly in line with that in Germany. The Chinese are exporting dramatic amounts of solar panels and what is fascinating, exciting and positive about the industry is the fact that in the long run—
Chris Huhne
I shall give way to my hon. Friend, who has been very patient.
The key point I want to make, which was drawn to my attention by the US Energy Secretary Steve Chu, is that almost uniquely among the renewable energy forms, solar panels are reducing in price by an average of 6% a year. As a result of that technological trend, which is a bit like the fall in the cost of computer memory that many of us will be familiar with, this area will have enormous potential in the long run. The argument for putting the industry on a more sustainable basis so that it can grow solidly and reliably with a tariff that reflects the fall in the underlying costs means that we will be in a position, when the costs of solar fall to grid parity, to make major and substantial increases in solar installation. I do not agree with my hon. Friend the Member for Gainsborough (Mr Leigh) that this is a waste of time. The world market is working, but the scheme has been thrown out by the fact that we have had a dramatic fall in the costs of solar panels in the past 18 months. Unfortunately, the scheme introduced by the previous Labour Government did not have the automatic reduction that it should have done.
At this point, I shall give way to my very patient and hon. Friend the Member for Brigg and Goole (Andrew Percy).
Andrew Percy
I am almost too tired to stand up now, Mr Deputy Speaker, but I thank the Secretary of State for giving way. It is precisely because of the arguments he has outlined that the Labour Government in New South Wales in Australia cut their tariff by two thirds.
I want to put a question to the Secretary of State on behalf of my constituents at Alexander Electrical Services. They support change and have said very clearly that they accept there has to be change, but one thing they want from the Secretary of State is more of an explanation about the December cut-off date.
Chris Huhne
I come back to the point that if we had not acted quickly on this we would have had a situation in which every installation at the old tariff rate would have meant two fewer installations at the new tariff rate. That would have meant massively over-subsidising when we could have got the deployment at the new tariff rate. There is no doubt about that. We have had many e-mails from reliable, long-standing solar installers who recognise that the scheme needed to be changed. They—particularly the reliable installers—want it to be put on a sustainable basis that will give them the ability to grow sustainably.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
It is the rate of change that is concerning people, particularly in rural areas. A small domestic development of some constituents of mine would have been under threat had they not managed to make the cut-off. They are now looking for retrospective planning permission. Will the Minister look again at the situation, particularly in rural areas where getting basic parts can be a problem? Will he give more time before he introduces this draconian cut-off rate in rural areas?
Chris Huhne
I have to say that, to some extent, I rest my case in that regard. A substantial scheme that requires planning permission in the Western Isles will clearly be one for which, arguably, the solar yield will be very substantial. I do not know whether that is the case, but I come back to the point that if we do not deal with this issue we will deprive the industry of future growth prospects. The more we pay out at the higher rate the less we pay out at the lower rate. That is why we proposed the date of 12 December—to give well-advanced projects six clear weeks in which to finalise and thus receive the current tariffs. We are consulting on this and we are open-minded about it. Hon. Members should remember that schemes after that reference date will continue to receive the old tariff all the way through to April—only then will they go on to the new tariff. We are seeking views on this and on our other proposals, including the one to strengthen the link between FITs, energy efficiency and a new multi-installation tariff frame.
Mr Russell Brown (Dumfries and Galloway) (Lab)
Will the Secretary of State give way?
Chris Huhne
I must make a bit more progress.
We are also considering whether more could be done to enable genuine community projects to benefit fully from FITs. We will provide more detail on that in the second consultation on the comprehensive review.
Stephen Lloyd (Eastbourne) (LD)
On that point, can the Secretary of State, first, give us a reassurance that local authority social housing, or at least social housing, will be included in that? Secondly, if there are problems with the budget, perhaps he could get some money from the nuclear budget.
Chris Huhne
My hon. Friend is mistaken if he believes that there is public subsidy in the nuclear budget. Nuclear power will be built without public subsidy, and I believe that position is shared across the House. I assure him, from the Dispatch Box as someone who is a very clear guardian, that, as we are spending £2 billion clearing up the nuclear industry mess from previous generations, there is someone here who has a very strong incentive to make sure that that never happens again.
On social housing, I have already said that we will consult on whether it is appropriate to have a separate tariff for genuine community projects. Those who have already installed solar PV and who are registered for feed-in tariffs will not be affected. The right hon. Member for Don Valley suggested that they might be but that is completely incorrect and is scaremongering. I can totally reassure anyone that this approach is consistent with our long-standing principle in the House of not making retrospective changes. We have to strike a delicate balance between acting quickly, for the reasons that I have given, and allowing people to finish work that is well under way. That means enabling well-progressed projects—[Interruption.]
Mr Deputy Speaker (Mr Nigel Evans)
Order. May I inform the House that 29 Members have submitted a request to speak in the debate? We will clearly not be able to hear from everyone, but if there are constant interventions, we will hear from even fewer Members than anticipated.
Chris Huhne
I will take some more interventions with your forgiveness, Mr Deputy Speaker, but I will try to make progress too.
A consultation is under way, and we will consider carefully all the representations that are made, including on the proposed reference date and how best to implement an energy efficiency requirement. It is not the case, for example, that large numbers of people will be excluded, because it is possible to insist on a C rating. Many people could easily be upgraded to a C rating, which would increase the market enormously. Furthermore, we could make solar panels available to anyone who is prepared to take part in the green deal when it is launched and which, of course, is cost-free to the household. We will look at that, and we will announce our final intentions early in the new year. Our proposal is that the revised tariffs should take effect from 1 April 2012.
The decision to consult on revised tariffs and the proposed reference date was not taken lightly. I am sure that Members from all parts of the House agree that increasing the share of locally generated renewables is a good thing, not just for our carbon reduction targets, but for households and communities. However, spending the best part of £1 billion of public money to support soaring profits for one part of the energy sector is not the way to build a lasting low-carbon economy. It will not deliver more renewable energy or help more households. As that public money comes directly from the purses of bill payers, including people in fuel poverty, it is not the fairest way either. Many Members will have received letters from companies offering solar PV. Many of those letters are written in defence of the industry, but they are guided by a passion, quite rightly, for clean green energy as well as a stronger bottom line.
I am as disappointed as many of my constituents that the feed-in tariff scheme was not properly set up. To paraphrase the right hon. Member for Don Valley, we would not have to cut so far or so fast if the policy had been properly costed to begin with. A little more foresight then would have gone a long way now. I have described the mistakes that were made by my predecessor in failing to take into account what was happening in the marketplace, but another mess that we had to clear up after the Labour Government left office was the business-scale scheme, which was going off like a rocket. We had to deal with that earlier this year because, under the proposals introduced by the Labour Government, it was assumed that businesses were too stupid to respond to a substantial real return and would not install any solar PV for three years. If we had not acted, half of Devon and Cornwall would have been under PV panels.
Mr Russell Brown
Will the Secretary of State say something about remote rural areas, because I have a constituent who has had solar panels installed but, because of her remote location, she has to pay a further £21,000 for an off-grid connection? There is absolutely no way in which her supplier can connect her before 12 December.
Chris Huhne
By all means, the hon. Gentleman should give us the details of exactly that sort of issue, which we will consider as part of the consultation. However, his constituent might have been better served if there was a proper energy efficiency audit of her home so that she could make substantial energy savings beforehand.
John Robertson (Glasgow North West) (Lab)
You don’t know what his constituent did.
Chris Huhne
We do not, but we do know that under the scheme promoting solar PVs or the scheme that was launched by the Labour Government in April 2010, there was a link to energy efficiency.
Chris Huhne
Opposition Members are getting terribly shirty about this, but there was a link to energy efficiency and that link was abolished with the introduction of the scheme by the right hon. Member for Doncaster North, the Leader of the Opposition, when he was the Secretary of State for Energy and Climate Change in April 2010. We need to deal with that.
There are more efficient ways to clean our energy supplies and grow our green industries than using consumers’ energy bills to support one industry at well over the market rate. If we did nothing, by 2014-15 feed-in tariffs for solar PV would cost consumers about £1 billion a year. If we are to succeed in building a low-carbon economy, we must make sure that we show people that we are committed to value for money.
It is precisely because this Government are committed to a sustainable, long-term future for clean energy that we propose revising tariffs now. Encouraging a minority of companies to feast on bumper profits for six months, swallowing up the entire feed-in tariff budget for a four-year period, would be the acme of short-termism. It is worth keeping things in perspective.
Andrew Bridgen
Will the Secretary of State explain to the House what he believes the Labour Government meant when they said in a consultation document on feed-in tariffs that they did not expect to lower the tariff levels for new projects over the years? Given that, does he not detect more than a whiff of hypocrisy in the comments from the Opposition Front Bench?
Chris Huhne
My hon. Friend makes a good point. If the previous Government had bothered to find out how well-managed feed-in tariffs are run in countries such as Germany, they would have built in an automatic system which brought the tariffs down in line with the fall in costs, but they did not. The result was a massive over-compensation.
Contrary to the claims that we have heard from the Opposition, we are not shutting down an industry, which is what would happen if the money ran out. The revised tariffs will provide inflation-proofed returns for 25 years of around 5%. That remains competitive with other investment opportunities. A householder would still be able to get a 4.5% real post-tax return. This compares well, for example, with the 0.5% post-tax real return currently available through index-linked National Savings bonds.
Zac Goldsmith (Richmond Park) (Con)
The Government are right to cut the tariff. That is the message that I have heard from many in the solar sector, but the 12 December deadline is causing panic. There is no doubt about that, so I ask the Government to publish as soon as possible some kind of cost-benefit analysis showing what the cost would be of sticking to the April deadline and what the cost to the sector would be of a 12 December deadline. That is the issue causing most fear. It is hard to exaggerate the level of that fear.
Chris Huhne
My hon. Friend makes a good point, but I have dealt with that issue in response to the hon. Member for Southampton, Test (Dr Whitehead). This is such a movable feast that every time we do a projection, we find that the budget is being eaten up even more rapidly, so we have put out, in the impact assessment, a very clear projection on the basis of the knowledge that we had when the consultation was launched about what would happen overall—that is, a very substantial increase in the overall budget and a £26 increase in household bills. The revisions that we have done since then suggest that, if anything, things will be moving even more rapidly.
By the way, the returns still compare favourably with the returns intended when the scheme was set up. Our proposals are the difference between windfall profits from double-digit returns and a reasonable return—double-digit returns that would bring into the industry all sorts of curious people who never had any previous interest in it and who were operating tax avoidance schemes to raise money to invest in the industry. The scheme had been growing dangerously unbalanced. We are working to put it back on an even keel. I do not accept that putting right the feed-in tariffs scheme undermines confidence, for the reasons that I have given.
Aside from those such as electricians and scaffolders who have branched out into solar PV installation alongside other employment, our analysis suggests that the number of full-time equivalent jobs in the solar industry is between 8,000 and 14,000. We do not wish to see a single company stop trading or a single job lost, but we cannot continue to prop up unreasonable profits with consumer cash. Jobs created by a bubble of excessive returns and paid for by consumer energy bills are simply unsustainable. Companies that have prepared themselves accordingly are likely to continue. As I have said, I have not come across a single person in the industry who contests the fact that we needed to act, although we did not hear that loud and clear before we acted, contrary to what various Opposition Members have said. Companies that were going all out with installations for the next few months with no plans beyond that will be in a position that is only slightly different from what would otherwise have been the case.
Dr Sarah Wollaston (Totnes) (Con)
The Secretary of State makes a compelling case for the need for change, but will he consider a concession for those businesses that have already paid a deposit? Pennywell farm in my constituency aims to be the first carbon-neutral tourist attraction in the country and has already received a gold business award for energy conservation. It has already paid a 10% deposit, but the costs of meeting the 12 December deadline will increase its costs by 11% and it faces great difficulty as a result.
Chris Huhne
I hear what my hon. Friend says, and she is not contesting the fact that there will still be a positive return. That comes back to the point I was making. People might not make as much money as they thought they would, because the scheme had not been brought into line with the fall in the cost of panels, but they will still make a positive return. My Department’s key objective is to ensure that we make the transition to a low-carbon economy, not to provide excessive subsidies where they are not warranted by the action that is to be taken. If she would like to write to me with the details of her example, we will take it into account as part of the consultation. I repeat that it is a genuine consultation.
The revised tariffs will allow the feed-in tariffs to work in the way they were intended to, supporting the industry and jobs in the long term, rather than burning brightly for a few short months before fading away. The right hon. Member for Don Valley might urge on us the attractions of becoming a sort of policy Catherine-wheel in which we are all fizz, but we do not particularly want to be followed by all phutt, which is exactly what we would have if the Labour party was to have its suggestion. I am sure that Members will join me in supporting long-term ambition across the whole green economy, rather than windfalls for the few.
The Government are committed to supporting sustainable low-carbon energy, but we cannot continue to write blank cheques. By bringing solar PV returns in line with other investment opportunities, we are guaranteeing the success of the feed-in tariff scheme as a whole, which will mean more renewable energy delivered to more households in a sustainable way.
Mr Deputy Speaker (Mr Nigel Evans)
Order. A great number of Members wish to take part in the debate, so a five-minute limit has been introduced for Back-Bench contributions.
Albert Owen (Ynys Môn) (Lab)
It is a great pleasure once again to follow the Secretary of State, but I am afraid I cannot resist referring to his last remark on policy Catherine-wheels. He is the man who said that the nuclear industry was flawed and should not continue, but today he is Mr Nuclear. He said that solar panel feed-in tariffs were not ambitious enough, but now he says that they are flawed and too ambitious. He is the undisputed champion of flip-flops. Today he has told us that he is looking after the interests of the consumer, but he is doing exactly the opposite.
Since entering the House, I have been a consistent supporter of nuclear energy, renewable energy and energy efficiency as a package. I see no contradiction in that whatsoever. It will help consumers in the short term and the environment in the long term, which is what proper policy is about.
We do not have much time today, but, because of the country’s anger at the policy changes, we are here today, arguing the case for consumers. I shall read out a few examples, because they show how out of touch the Secretary of State and Government are on this important issue.
It was not just the industry, but ordinary individuals who took this Government on trust, and they have broken it. The Liberal Democrats know that, because they argued that the scheme was not ambitious enough. Indeed, the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), who is in the Chamber, said that the then Government were not going far enough.
Albert Owen
I am happy to take an intervention from the right hon. Gentleman. I wanted to wake him up and stir him so that I could get an extra minute and listen to his remarks. Is he prepared to intervene?
Albert Owen
I shall take an intervention first from the right hon. Gentleman’s previous boss.
Simon Hughes
I did press for a scheme when we were in opposition, and a scheme was introduced, but it was not adequate. I support the fact that it has to be reviewed because of the take-up, and the answer lies in the Secretary of State’s answer, which I heard very clearly. It is to look at a new community tariff, to be announced as soon as possible, which I heard him say will be in January.
Albert Owen
But the right hon. Gentleman said in opposition that the rates were not ambitious enough. Those were very his words, and he has now done a flip-flop on that. Yes, we need a proper review; of course we do, because the industry is calling for it and everybody is calling for it, but it should be done on a sliding scale, not at the rate that the Secretary of State describes.
Chris Huhne
Will the hon. Gentleman please admit to the House that there has been a colossal fall in the cost of panels and, as a result, an enormous increase in the real rate of return? That is what has changed in the real world. Since my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) made those points, the world has changed. Government Members have responded to that; Opposition Members do not appear to have done so.
Albert Owen
The Secretary of State has not read the Opposition’s motion or listened to what the shadow Secretary of State said about the need for a sliding scale.
I shall read out three examples, because they speak not just for my constituents, but for constituents throughout the country. A Mr Jones wrote to me this month, saying:
“I am writing to you as a retired NHS employee, who recently decided to invest my pension lump sum monies into clean energy and have just installed PV solar panel system on my house. My decision was based on the Government’s existing tariffs and estimated returns on the substantial investment and proceeded with the installation in the last week of October. I was unaware of the Government’s consultation document before proceeding. I only recently heard about the changes on a news bulletin”.
He believes that the process is deceitful, because it cuts off before the consultation period is done. He says that he understands the rationale for changes, as do all of us, but the proposed changes will be made without any meaningful public consultation. Indeed, the Secretary of State has suggested that individual write in, and that the consultation changes will be made on a case-by-case basis. What a sham—for the Government of the day to say, “We will look at individual cases and maybe give a bit of leeway.” People want a proper strategy and consistency.
Another constituent, a young person who has been self-employed for 10 years—the kind of person whom the Government say they want to help—came to see me. He has moved from various installation projects, including central heating systems, to the PV system, and he has employed extra people. He says:
“I am writing regarding the recent feed in tariff problems as I am sure you are aware of. I have had to lay off two installers last week for two weeks so far”,
and he cannot see himself bringing them back. His office assistant is, he says,
“down to two days a week from five days”,
and he cannot honestly see his company trading: it will cease trading because of the proposals. That is the kind of reaction we are getting from communities.
A third person who wrote to me put across her point straightforwardly, as Anglesey people do, saying:
“I was horrified to see the high handed fashion in which the Government has eliminated the…Micro Generation Industry. By…slashing the value of the electricity feed-in tariff, they are effectively ending the provision of free solar panels to the electorate and endangering the jobs of tens of thousands of people. Not since the Thatcher Government of the 1980’s have those in power set out to put an end to a sector of the economy overnight.”
That was not a Labour supporter who was known to me, but an ordinary constituent who took the trouble to write in. That is the situation that people are finding themselves in, and it is the scale of the downgrading of the tariffs that is concerning everybody.
I say to the Minister of State, the hon. Member for Bexhill and Battle (Gregory Barker), who is going to wind up the debate, that he should listen to the debate—I do not think he is listening at the moment. He should not just give the speech that has been written for him by civil servants, but he should listen to the debate and listen to what the people of this country are saying. They understand the need for deficit reduction, but they also have trust in Governments, and when they enter a scheme, they want to see it through. They want to help the country’s economy and create jobs, and jobs have indeed been created. They want to save the economy, but they also want to save the environment. That was why the scheme was set up. Yes, it needs to be reviewed, but the Government are destroying it, and I ask them to think again.
Mr Mark Spencer (Sherwood) (Con)
I am very grateful to you, Mr Deputy Speaker, for calling me early in this debate. Right at the beginning, I want to nail my flag to the pole as being very pro-solar. I believe that solar power offers us a great opportunity to change how we generate power, in a green way that protects the environment and lowers our carbon footprint. As a member of the Environmental Audit Committee, I have been very keen to push forward schemes such as solar and anaerobic digestion, which also offers us a great opportunity. Those schemes provide energy without having a great impact on neighbouring sites.
I am keen to set out the position in which the Government found themselves when they came to power. After 13 years of a Labour Government, we faced the real prospect of an energy crisis. We risked a gap in the supply to the general market and in this country’s ability to find energy to keep the lights on in our homes and ensure that our businesses can thrive and move forward. It is a damning fact that the previous Government did not grasp the nettle and sort out this country’s energy supply to ensure that we can operate securely.
To that end, I probably part company from the Secretary of State in saying that I think that the real answer to delivering large-scale energy production will be nuclear. The previous Government should have taken quicker action to deliver it. Coming from the constituency of Sherwood, and from the former coalfields of Nottingham, I believe that the other way in which we can solve the crisis is through carbon capture and storage, using coal-fired power in a green way so that it does not increase our carbon footprint.
The most important point to recognise is that a lack of action is simply not an option. We cannot continue the way we are going. We are a victim of the enormous success of the feed-in tariffs scheme. People have really embraced the opportunity to put solar panels on their own homes. Unfortunately, we pitched it at an unsustainable level, and the only option is to reduce the subsidy to a level that still allows the industry to continue and people to deliver solar panels.
Opposition Members have referred to what happens in Germany. The simple fact is that we are reducing our support to the same level that exists in Germany, and the industry is sustainable there. I am not an astronomer, but my understanding is that we share the same sun, and the strength of the sunlight is the same. If the industry can thrive in Germany at the same level of subsidy, I believe it can be sustainable in this country. The truth is that time will tell whether we are right or wrong. I believe that as we move forward, the industry will carry on and people will still be able to make use of the opportunities provided.
David Mowat (Warrington South) (Con)
My hon. Friend makes a very interesting point about Germany. He will perhaps be aware that, in the last year of the previous Government, Germany was getting approximately 10% of its energy from renewables, while we were getting 2.5%. We have a lot to learn from Germany.
Mr Spencer
I agree with my hon. Friend. We can learn from some of the things Germany got right and some of the things it got wrong. That is the way to move forward.
Basically, there is a simple calculation. We need to get more solar panels for each pound we spend, and the Secretary of State’s suggestions would deliver more panels per pound. That is the simple calculation we have to make. The other thing we need to do is bring the technology into the mainstream.
Glyn Davies (Montgomeryshire) (Con)
One of the issues the Opposition have been discussing today is that of jobs and lost jobs. Clearly, if twice as many panels are being built sustainably in the longer term, there will be a lot more jobs.
Mr Spencer
That is absolutely true.
As I was starting to outline, the other thing we need to do is to bring the technology into the mainstream. This is no longer some green dream. Solar panels are a real opportunity to deliver a credible energy source to our homes. Many companies that focus solely on solar power have been established, but we need to tackle the matter by ensuring that normal contractors—electricians and plumbers—look at such technologies as an alternative.
At the moment, an example of what happens is this. Mrs Jones’s boiler will break down and a plumber will come along. If the plumber does not have the expertise to say, “These are the alternative renewable sources of energy that you can look at,” she will have a normal gas-fired boiler fitted in her home. We need to bring such technologies into the mainstream, so that regular electricians and plumbers have the experience to deliver them. I hope that, as the scheme is successful, they will be able to tap into it and deliver that. I am not just talking about specialised solar companies, but normal, everyday contractors. That is starting to happen and will continue.
I am very conscious of the time, so I shall summarise the matter quickly and leave my colleagues time to speak. We inherited an energy supply system that was in tatters. We have had to tackle that at the same time as greening our energy supply and lowering our carbon footprint. That is an enormous challenge. We have made some very good progress, but there is a way to go and, under the current Administration and with the support of the Secretary of State, we can make great progress.
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)
I share the concerns of Labour Members. The shadow Secretary of State made a very powerful speech, but I want to concentrate on a constituents’ case because the Secretary of State does not seem to think that the December deadline is a problem. However, my constituents’ case is a perfect illustration of why it is a problem.
On 2 November, my constituents learned that the Department of Energy and Climate Change had changed the date from 31 March 2012 to 8 December 2011 for reducing the feed-in tariff rate for solar panels fitted to domestic properties from 43%. At the 43% FIT level, they calculated that they could borrow £12,000 to install solar panels and that they would break even on the loan repayments. The week before, they signed a contract for solar panels to be installed before 31 March 2012 and paid just over £7,000 as a deposit. At that time, there was no indication that DECC was about to make a sudden change to the date for introducing the revised FIT rate.
My constituents immediately feared that the contractor may not be able to have the system installed and their registration complete within the new time frame set by DECC. If that happened, they would be trapped in a contract from which they would be making a monthly loss that they cannot afford for the next 25 years. They would not have signed up to the contract if DECC had made it known that it was about to change the time frame for introducing the revised rate. My constituents acted in good faith and believe that the original tariff agreement to 31 March should be honoured or maintained at that level for people such as them who have already signed contracts and paid significant deposits with no guarantee that work and registration will be completed before 8 December. That should be taken into consideration. It was completely unreasonable to give five weeks’ notice of such a significant change at a time when suppliers and installers are exceptionally busy meeting the demands of the original 31 March deadline.
Following this shock, my constituents have been working closely with panel suppliers and installation contractors to complete the work prior to the new cut-off date. Luckily for them, the work has been completed, the system is installed, and registration documents have been submitted to their energy supplier. The registration documents were sent to the energy company by special delivery on Saturday 19 November, and they breathed a sigh of relief because this gave, or so they thought, plenty of time for registration prior to the December cut-off. The energy company has now informed them that it cannot guarantee that the registration documents will be processed prior to the December cut-off date because it is receiving unanticipated levels of rushed applications to make the new deadline, and that has resulted in a significant slowing in the registration process.
My constituents believe that this is, by default, another way for DECC to ensure that fewer people are able to receive the previously agreed tariff, and the Secretary of State openly admitted that in his speech. They rightly believe that this looks like another example of people entering into contracts with this Government only to have the goalposts moved without due consideration or proper consultation and find that they are left to take the financial hit. They were already in the position that 60% of the costs had been paid to the contractor and they could not reasonably cancel the contract. Having fast-tracked the installation process, they are now faced with another barrier to registration whereby, through the Government’s action, they will be tied into a green energy contract rather than breaking even. This leaves them with making a significant loss for the next 25 years, through no fault of their own. They tried to do the right thing; perhaps the Government should now do the right thing and change the deadline.
Dan Rogerson (North Cornwall) (LD)
The introduction of the feed-in tariff came about after a long campaign by the parties now in government and by many people out in the community who had seen the gains that had been made in Germany. We keep coming back to the German example. I am sure that any German people watching this debate will feel very smug that much of it is about what they have achieved. I was a member of the Environment and Climate Change Committee during the previous Parliament, and we went over there to look at what had been achieved in Baden-Württemburg and Freiburg, as well as in Stuttgart, where the panels were being produced.
Labour Members on the Committee—who at that time were Government Members—were very impressed but despairing that their party would not listen. I remember the debates in this place when the feed-in tariff was raised repeatedly, and some Labour Back Benchers were bravely standing up and defying the Whips to argue for it. We have to remember that were it not for what happened in another place we would not have made the progress towards the feed-in tariff that we have. The right hon. Member for Don Valley (Caroline Flint) talks about the wonderful achievements of her Government and her conversion to believing in the feed-in tariff, but whatever she says about the right hon. Member for Croydon North (Malcolm Wicks)—
Katy Clark (North Ayrshire and Arran) (Lab)
Does the hon. Gentleman accept that it was 60 Labour Members signing an amendment and negotiating hard within our party to get signed up to feed-in tariffs that led the Labour Government to introduce the legislation?
Dan Rogerson
I have already paid tribute to Labour Back Benchers who were arguing for the tariff—but I am talking about Labour Front Benchers and the official policy of the then Government until that point, which was to reject it. Obviously, that is a matter of historical record.
We now have the feed-in tariff in operation. As a Member of Parliament for Cornwall, where there are huge possibilities for the solar industry and fantastic community groups are coming together in the co-operative sector to drive this forward, I am very pleased that we have seen such growth. However, I am looking to Ministers to give a positive and consistent message on solar, because there is confusion out there, and that is damaging. The Secretary of State made a strong speech today setting out a clear direction. However, confidence has undoubtedly been affected by, as the Secretary of State would say, the success of the scheme, because there has been such a high take-up and high capacity.
Stephen Lloyd
On that subject, does my hon. Friend agree that one concern for many solar and renewables companies who have bought in to the green agenda is that they never know for sure whether the Government will change their mind midway through? Does he agree that this decision, though economically understandable, may feed that concern?
Dan Rogerson
That is the thrust of what has been said by several Government Members, and indeed Opposition Members, who have raised concerns. We accept the need to act, but we must ensure that there is now a consistent vision so that the message gets across.
I am excited about the possibilities. I believe that in the longer term, the message will be much better in terms of how much will be added to the bills of those who cannot take advantage of feed-in tariffs, because we will see a break-up of the small oligopoly of the big six energy producers and there will be a far more dispersed system. That will ultimately provide more competition and drive down price. Clearly the Secretary of State has been looking at this economic model, and he has to consider how much money is in the budget. I advise him to continue to focus on costs being put on to other domestic bills. I think that we can be far more positive about the long-term implications of this policy for all energy bill payers. If we have a far more diverse mix, it will create further competition and drive down prices, or at least will resist the upward trend in prices that we have had because of the issues with fossil fuels.
Huw Irranca-Davies
I ask the hon. Gentleman to agree, if not with Opposition Members, with that very good group within the Liberal Democrats, the Green Liberal Democrats, and with Welsh Liberal Democrat Assembly Members, who have written to the Secretary of State to ask him to delay this decision to ensure that there is an effective transition. That seems to be wholly good sense as a bare minimum. Will he agree with them and then support us in the Lobby to vote for the motion?
Dan Rogerson
As for how I will vote, I have looked at the motion and I am waiting to hear the Government’s position in the summing up. I have a number of issues, such as the need for certainty and the effect of the cliff edge in December, which other hon. Members have talked about. That is the real problem for investors. It would be very welcome if, in looking at the consultation, the Government could come up with any means of tapering that effect, particularly to help the community schemes and social housing schemes that are considering exciting ways to involve tenants and whole communities in taking advantage of the scheme. Those are people who might not be able to do so on their own, because they are not capital-rich enough.
Chris Huhne
We would like to do that, but the legal basis for doing so is simply not there in the scheme that was introduced by the last Labour Government.
Chris Huhne
Well, we could do that, but it would have to be part of the longer-term consultation on the comprehensive review, which we will carry out.
Dan Rogerson
I thank my right hon. Friend for that intervention, as far as it goes. I hope that a huge amount of effort will be devoted to putting that problem right very quickly.
As other Members want to speak and as I have taken so many interventions, I will be brief. One other issue that I want to focus on, which has not been raised, is the concentration on energy efficiency for people who want to take advantage of the tariff. That is hugely problematic in areas such as mine that have older housing stock, which it will be very difficult to get up to the standard. I do not think that there is—
Dan Rogerson
I will not give way, but the Minister will have a chance to respond in his summing up.
Dan Rogerson
I will not, because I need to complete this point.
I do not think that we need to connect this matter with energy efficiency so intimately. In the green deal and other schemes, there are advantages and pressures to encourage people to consider energy efficiency measures. I think that linking these things is unhelpful, particularly for people in areas such as mine.
Although I welcome the Secretary of State’s commitment to move forward with this scheme and the vision for solar that he has set out, I urge him to consider other means for getting the sector to grid price parity, so that we can have confidence that the sector will continue to grow in a sustainable way.
John Robertson (Glasgow North West) (Lab)
This has been an interesting debate. I wonder whether some Government Members live in the real world. The hon. Member for North Cornwall (Dan Rogerson) thinks the Germans will watch the debate, but I wonder how many will. He seemed to get excited because people will be worse off than they are now. The Secretary of State seems quite happy that jobs in the industry will go, and tells us that the industry will grow when everything else is not growing.
We should get back to what this is all about, which is looking after the people who need looking after. Thirteen and a half thousand of my constituents border on fuel poverty. I care about them more than I care about whether solar power is put into houses or whether the money for that is right or wrong. For those people to get their energy, and to ensure they can afford it, we must have solar power, wind farms and everything else that can send power into their homes to help to keep the lights on and give them cheaper energy.
John Robertson
I am not going to give way. Government Members give way to waste time. Let them do it. We will make sure that we say what needs to be said. They can play games.
I should like to move on to fuel poverty, which is what I believe we are here to talk about, and people who will die. I asked the Secretary of State earlier whether the tax taken from the big six and the reduction in the money for solar power are worth the 2,700 lives that will be lost this year owing to the Government’s energy policies, but he never answered me. I am willing to allow him to intervene if he wants to tell me that his policies are worth more than 2,700 lives. We all hear that deafening silence. The money that the Government get from the tax and from reducing solar energy will amount to 2,700 lives. That is what the Hills report says, and the Secretary of State agreed with me when he was questioned about it.
Chris Huhne
The hon. Gentleman is completely misguided to quote the Hills report, which I commissioned because I want a real effort made to combat fuel poverty, which was not happening in the past few years; we saw fuel poverty increase under the Labour Government. He is quite wrong to say that I am not concerned about the big six. We want a competitive market. That is why we are introducing extra consumer safeguards, and why we are making the retail and wholesale markets more competitive.
John Robertson
I can only use the right hon. Gentleman’s own words. He told me that the Hills report said that 27,000 extra people would die this winter, and that 10% of those deaths would be down to the Government’s energy policies. That will be in Hansard for hon. Members to read for themselves. I asked him whether lives were worth more than the tax money, and he never answered me.
At the end of the day, people will make the difference. The Government cannot be trusted. If people cannot trust the Government or what they are saying, how can they move forward? There lies the biggest problem. The 13,500 pensioners who are approaching fuel poverty in my constituency, and the disabled people who need extra help, will not be able to work out whether they can trust the Government to see them through this winter. Everything that has been mentioned is for next year, not this winter, but we need to solve the problems this winter.
The money spent on solar power would have helped in the long term to keep people in jobs, to stimulate growth in industry and to get money circulating in the country, but the Government are cutting it. They want to halve the amount of money that would circulate. They want to halve everything. My hon. Friends the Members for Ayr, Carrick and Cumnock (Sandra Osborne) and for Dumfries and Galloway (Mr Brown) told us about their constituents who, through no fault of their own, will be caught up in this system and will find that they cannot afford what they thought they were going to get, although they did do their risk management.
When the Secretary of State was having a go at my hon. Friend the Member for Dumfries and Galloway, I asked him how he knew that the person in question had not done a risk assessment or worked out the financial situation, and he replied, “Well, I don’t.” So there we have it: we have a Secretary of State who makes policy on the hoof and statements that contradict my hon. Friend, who knows his constituent and knows the situation, and says that my hon. Friend is wrong—and then, when asked from a sedentary position, “How do you know the constituent didn’t do that?” turns round and says, “Well, I don’t.” He is basically saying, “I just don’t care.”
We see it more and more. We have a Government who always use the excuse, “It’s somebody else’s fault. A big boy did it and ran away.” That is their modus operandi. That is what they do. It is always somebody else’s fault and never their fault, but unfortunately it is the people who Labour Members, in particular, represent who will suffer at the end of the day. I want to ensure that the 2,700 extra people who might die this winter do not, but the sad truth is that this Government do not care, and never will care. That is why the people on this side of the House are better than them.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
It is a pleasure to follow the hon. Member for Glasgow North West (John Robertson). I agree that we should focus on the costs and budgets of ordinary people, but I have sympathy for the businesses that were lured to invest by the promise of unsustainable subsidies. I have neither sympathy nor respect for the Labour Ministers who set up the scheme knowing full well that the subsidies were unsustainable, and I deeply regret the fact that my right hon. and hon. Friends on the Front Bench, in the previous Parliament and this Parliament, took so long to recognise, at least partially, the folly of the scheme.
No one in this place has any excuse for failing to recognise that the subsidies were never remotely justified. The House insists that when a piece of legislation is published, we publish alongside it an impact assessment of the costs and benefits, so that the House will not be so foolish as to go ahead with a measure whose costs exceed its benefits. Have any Labour Members actually read the impact assessment accompanying the scheme?
Mr Lilley
Then the hon. Lady should be even more ashamed of supporting it. The impact assessment published by the Labour Government when the scheme was originally introduced calculated the net present value of the scheme’s future costs to be about £8.6 billion, yet the Labour Government also measured the benefits of using solar rather than hydrocarbons and calculated the direct benefits in the shape of electricity and the indirect benefits—far more important—through the reduction in the damage caused by global warming owing to fewer CO2 emissions. They calculated that the net present value of all the future benefits, direct and indirect, compared with the costs of £8.6 billion, would be just £400 million. In other words, we knew when we introduced this scheme that the costs were 20 times the assessed benefits, but we went ahead anyway.
I brought that fact to the attention of the House, but more importantly it was brought to the world’s attention by George Monbiot, a distinguished campaigner—unlike me—for measures to stop global warming, when he wrote:
“The government is about to shift £8.6bn from the poor to the middle classes. It expects a loss on this scheme of £8.2 billion, or 95%. Yet the media is silent. The opposition urges only that the scheme be expanded.”
We knew when we introduced the scheme that it would be nonsense even if it went according to plan. It was self-evidently unsustainable. Even halving it today means that we will merely waste £4 billion, or 90% of the expected expenditure.
When I have raised these issues, Ministers have employed two defences. The first is that the impact assessment excluded many knock-on effects. If it did they should have introduced a new one, because impact assessments are supposed to include all the indirect effects. It should not have been signed off by the hapless Minister, Lord Hunt of Kings Heath. Then Ministers pray in aid the fact that the cost of solar energy is declining. They attribute that decline to the scheme, but none of it is due to the scheme, and the idea that our scheme will in any way accelerate the decline in costs worldwide is ridiculous. If something like Moore’s law does indeed apply, so that costs are likely to halve every couple of years, that is a reason for not investing now, but instead waiting until it is economic to do so, which will not be long. If we invest in expensive stuff when inexpensive stuff is going to be available in a few years, we are wasting money.
Sarah Newton (Truro and Falmouth) (Con)
I am grateful to my right hon. Friend for the background information, which is especially useful for us new Members, who were not here when the policy was discussed previously. He is highlighting an extremely important point. The Government have only so much money to invest in new sustainable energy. It is all the more important to ensure that it is spent wisely, otherwise there will be no opportunity to bring other technologies to market.
Mr Lilley
My hon. Friend is absolutely right, and the argument that such investment creates jobs is—as the Secretary of State will know, being a distinguished economist—completely bogus. We have a fixed amount of money. We can either spend it on gas, oil or nuclear, or we can spend it on solar. If we spend £8 billion on either, we will create roughly the same number of jobs. Spending £8 billion on solar means that many fewer jobs in gas, nuclear, coal and oil. We have not created any net jobs across the economy by means of this subsidy. One never does.
David Mowat
My right hon. Friend is making an extremely powerful speech. In addition to his point about the allocation of £8 billion, is he aware of the recent peer-reviewed research from Imperial college—it was the subject of a Parliamentary Office of Science and Technology note—that said that nuclear power has one third the CO2 emissions per kWh of solar over its life cycle? That is an extraordinary statistic, which goes right to the heart of the policy.
Mr Lilley
My hon. Friend is absolutely right. George Monbiot pointed out in his original article that it costs about £3 to save a tonne of CO2 by investing in geothermal energy, and £8 by building a nuclear power station, whereas the scheme that we are talking about costs more like £800 to save a tonne of CO2.
Not only do we not create any net jobs; we also create only a tenth of the amount of electricity by investing £8 billion in solar than we would by investing in nuclear or something else.
Mr Lilley
I am afraid that I will not give way again.
I will remind the House of something that may have escaped hon. Members’ attention. Even if the price comes down dramatically, solar will never be a substitute for other forms of energy. It will always have to be backed up and duplicated by an equal amount of capacity that can perform when solar is not available. It may have escaped the notice of the House, but the sun comes out only in the day. It is not available at night, when it is coldest and we need most energy. The sun is highest in the sky in the summer; it is lowest in the winter, when it is coldest and we need most energy. The sun is often blocked by clouds, and one cannot predict when that will happen. For every megawatt of solar capacity that we install, we have to install an equal gas capacity to back it up and replicate it. Unless we realise that, and abandon the scheme until solar becomes much more economic, we are wasting the nation’s money and, as George Monbiot says, transferring money from poor people’s and ordinary people’s pockets into the hands of richer people.
Phil Wilson (Sedgefield) (Lab)
If ever there was an example of how not to make an announcement in this House, the announcement of the review of feed-in tariffs is it. The Government tried to slip it out as a written statement, but our ever-vigilant DECC team on the Opposition Front Bench recognised its importance, and managed to get a Minister to the Dispatch Box only by tabling an urgent question. The Government’s code of practice on consultations states that they should last 12 weeks, but this consultation is to last only six weeks, with the changes coming into force nearly two weeks before it finishes. Given the dearth of proposed legislation before the Chamber, I would have expected the Government to allow an oral statement and a full- day debate on the issue—not least to discuss the implied loss of jobs. It would be laughable if it were not so serious.
The change will cost a lot of jobs in this sector, in which up to 30,000 people work. It will remove the opportunity for nine out of 10 households to take advantage of the feed-in tariff to reduce their energy bills at a time of rising fuel poverty. The 12 December deadline is causing planned solar projects nationwide to be shelved and millions of pounds of investment to be lost. A survey by the Renewable Energy Association reveals that 57% of companies now anticipate laying off at least half of their staff, while a third believe that their companies will go under.
Let us take the example of Mr Wayne Richardson, one of my constituents who runs Revolution Power—a small renewable energy company employing 17 people. It has been on the go for about six years. Revolution Power fits photovoltaic units and provides ground and air heat pumps. Mr Richardson tells me that he might have to lay off a third of his staff. He is a young man with a young family; he is an entrepreneur and a trier. We need more Wayne Richardsons in the north-east to promote and protect jobs in the private sector.
Pat Glass (North West Durham) (Lab)
Does my hon. Friend agree that companies such as Romag—a major employer in my constituency that has been in the industry a long time and employs young people and young graduates in its research and development section—recognise the fact that feed-in tariffs are reducing, but are concerned about the shameful way in which this consultation has occurred and the very tight time scale? That is what is going to do them in.
Phil Wilson
My hon. Friend is right. We all agree that the tariff has to come down, but how it is implemented is important. We need to think about the best way of protecting jobs, particularly in the north-east, where I want to see more private sector jobs available.
Wayne Richardson agrees that the value of the feed-in tariff should be reduced, but the cack-handed way in which the Government have introduced this policy is hurting his company. The early reduction in the feed-in tariffs has created a vacuum in the market. As a consequence, parts and materials are in short supply, making it difficult for projects to be finished before 12 December.
One reason behind the reduction is the falling price of installations. Because of the arbitrary deadline of 12 December, however, the price of equipment is going up. The number of inquiries about PV has decreased by 90%, which does not bode well for the future. The FITs scheme is paid for by a levy on energy companies, which is passed on to consumers and costs, as I understand it, only £1 a year. We should compare that with the situation with wind farms. Eon wants to build 45 wind turbines in the constituency. The subsidy from the consumer in that case is close to £200 a year.
The FIT needs to be reduced, but not by 50% in seven weeks. In Germany, where 50% of all PV units are installed, the tariff was cut by 15% and it is being achieved step by step through negotiations and agreement with the industry. Plenty of time and notice has been allowed. I understand that reductions in the tariff there occur year on year so that the industry and consumers can plan ahead—something this Government are daily proving their inability to do. The fact that so little legislation is before the House proves to me that they have no plan and, I suspect, no future.
Chris Kelly (Dudley South) (Con)
Post-privatisation, more than a dozen utility companies provided a great deal of energy competition in this country. Sadly, under Labour, however, the energy market consolidated so that we now have, as the hon. Member for North Cornwall (Dan Rogerson) said, the big six. We also inherited feed-in tariffs in a shambles. It is my belief that the Government’s reform of FITs will protect our energy mix.
As the Secretary of State has pointed out, installation costs of solar photovoltaics have fallen by at least 30% since the FITs scheme began. The Government are controlling the cost of the subsidy because the average installation is now around £9,000—down from £12,000—so the rate of return has shot up.
If the Government’s proposed reforms are introduced, we will mirror Germany’s FITs subsidy levels from January onwards, while still spending £867 million over four years. Money intended to support decentralised energy will not now subsidise energy-inefficient buildings under new energy efficiency requirements, which can only be a good thing. Solar will still be the most subsidised renewable technology, receiving twice the subsidy available for inshore wind. The Government’s changes will also protect consumer energy bills. Labour Members must tell us by how much they would be prepared to increase the average household’s energy bill in order to maintain high tariffs for solar. The amount might be as much as £55 per household.
Julian Sturdy (York Outer) (Con)
My hon. Friend is making some powerful points. It is true that we must make feed-in tariffs more sustainable, although, like many other Members who have spoken, I have concerns about the proposed time scales. Is this not about making the system fairer—fairer for those who are already signed up and going through the process, but also, as my hon. Friend says, fairer for households that are struggling with high energy bills?
Chris Kelly
I agree, but I believe that the consultation timetable is reasonable. I think that people will have time to plan and prepare, and to register installations that are currently under way. In September, 16,000 solar photovoltaic installations were registered, double the number registered in June. There are now 100,000 installations nationally, three times as many as were projected, and the costs of solar PV have fallen by at least a third since the FITs scheme began.
The scheme was designed to encourage deployment of additional small-scale low-carbon electricity generation, particularly by organisations, businesses, communities and individuals who had not traditionally been engaged in the electricity market, many of them in our constituencies. The Government rightly announced the largest reduction in tariffs for the large-scale solar projects. The Government’s proposed FITs reductions for domestic solar energy installations are out for public consultation until 23 December, and are due to come in to effect in April next year. I believe that that is a sensible time scale, and I hope that the Secretary of State will consider carefully the submissions he receives.
The Government are right to address payments for FITs from more than one PV installation located on different sites under single ownership. I am thinking of the likes of Asda, which was mentioned earlier. I think that 80% of the full subsidy is a sensible level. The scheme we inherited from Labour was based on wildly inaccurate projections and participation, and therefore on entirely unrealistic financial assumptions. Any programme in any Department must be sustainable and based on realistic finances. Without urgent action, the whole FITs budget would be swallowed up by solar alone within months, depriving other renewable technologies of support through FITs. Microgeneration, for instance, is a key part of the energy mix that we will need for future energy security. The FITs subsidy cannot go disproportionately to solar.
Each week beyond 1 April next year on the old subsidy tariff would cost more than £500,000 per day, or about £3.8 million per week. While £867 million over four years is a sustainable subsidy, more than that would be unsustainable. None of these changes is retrospective, and fairness is therefore being safeguarded. There has been a big fall in solar PV costs, and a big increase in the rate of return. That will exhaust the FITs budget unless it is urgently addressed. The rate of return needs to be reduced from 12% to 5%. The irony is that Labour wants millions of families in fuel poverty to subsidise a few thousand well-off people with solar panels by adding up to £55 a year to the average bill, with no reform of the feed-in tariff.
Mr Speaker
Order. With immediate effect, I shall reduce the time for Back-Bench speeches to four minutes in the hope of securing the participation of another colleague.
Susan Elan Jones (Clwyd South) (Lab)
It is a pleasure to follow the hon. Member for Dudley South (Chris Kelly), not least because it gives me an opportunity to make the point about the six weeks’ notice and the arbitrary date of 12 December—before the official consultation ends—all of which were totally missing from his speech.
North Wales will be deeply affected by these changes. The following points were made in a column in a local newspaper:
“The Government needs to rethink…There could be considerable impact on jobs in North Wales as local electricians as well as local producers for solar panels are preparing to deal with the impact of cancelled orders for work. In Wrexham, major housing projects which included provision for Feed-in Tariffs are now at risk because of the UK Government’s decision.”
Those are not my words, nor are they the words of any Labour party representative; they are the words of the former leader of Wrexham county borough council, who now sits as a Liberal Democrat Member in the Welsh Assembly. Unfortunately, the Secretary of State is not present to answer the questions raised by that Liberal Democrat representative.
One business constituent of mine tells me customers are now refusing to go forward with work if it cannot be completed by the arbitrary deadline. He says that what the Minister has done to this industry is atrocious.
Nia Griffith (Llanelli) (Lab)
Does my hon. Friend agree that this scheme unlocked thousands of pounds of private capital to create jobs in the local economy, and that this Government’s mad decision to impose a cut with six weeks’ notice will not only completely undermine confidence now, but will put future customers off for ever?
Susan Elan Jones
I entirely agree.
Sharp Solar was mentioned earlier. It has made it clear that big contracts, such as that with Wrexham council to install solar panels on 3,000 council houses, are now in doubt. The 900 installations completed before the 12 December deadline are safe, but no decision has been made on whether the others will go ahead. The stock for that work had to be ordered several months ago, however, and Sharp Solar is now stuck with it no matter what happens.
All the political parties agree that there had to be changes, but the changes could have been made in a way that was manageable, and a proper notice period could have been provided. The Government could have got businesses on their side in order to make the changes work. Instead, we have a total mess.
Businesses have tried to tell the Government about the problems the changes will cause them. Wrexham council leaders wrote to the Government to tell them about the impact of the 12 December deadline on their scheme. They received a reply inviting them to respond to the consultation, but that response will be read only after the deadline has passed. That is totally shambolic. North Wales needs a strong solar industry, but I fear that the so-called “greenest Government ever” have kicked the industry fully in the teeth.
Nicky Morgan (Loughborough) (Con)
I will try to be brief as I know that many Members want to take part in this important debate.
I do not agree with much that the hon. Member for Glasgow North West (John Robertson) said—
Nicky Morgan
Exactly. However, I do agree with the hon. Gentleman that this debate is about people. We are talking about our constituents: those who generate energy, those who consume energy, and those who are innovators in the industry.
We have all been diligent constituency MPs this afternoon and have mentioned a number of constituents who have contacted us to say they are affected by this issue. I could talk about Mr and Mrs Willett, who have agreed to install a photovoltaic system with an installation date of 9 January 2012. I could talk about the company PG Plumbing and Heating Ltd in my constituency; it wants me to put a question to the Minister, and I will come back to that. I could talk about Loughborough Solar Technologies, which has contacted me, or the company C Gascoigne, which I mentioned when I asked the Minister a question earlier. I could also mention SmartGen. I thought I should mention all of them so that they can say, “Yes, she’s done what she should do as our constituency MP.” They are all affected by this decision, and they all have questions for the Minister. However, the key point is that this is ultimately about people—about people when they come to pay their energy bills, as my hon. Friend the Member for Dudley South (Chris Kelly) said.
All the political parties have agreed that there was a need for change. The feed-in tariff scheme as left to us by the previous Government did not add up. The shadow Secretary of State said there would have been a review, but as the Secretary of State pointed out, the last Government had not planned to undertake that review until 2013, which would have been too late.
What do we disagree on? Who is at fault. Is the need for change the fault of consumers who are prepared to generate energy and who wanted to install solar panels? Is it the fault of the companies that have taken advantage of the generous scheme that was on offer? No, the fact that we are having to change the scheme and affect the constituents who have contacted me as well as many others is the fault of the previous Government, who left us with a wholly unsustainable system.
Nicky Morgan
I am not going to take any interventions. I have been asked to be brief and it is only fair that I should be so that other hon. Members can speak.
This is the fault of the previous Government and the one word that was missing, as always, from the shadow Secretary of State’s speech—as it is from those of any shadow Secretary of State—was the word “sorry”. She should have said sorry to those consumers who face higher bills, who thought they had agreed things and who are now having to deal with the date of the cut-off and the changes to the tariff.
The House needs to discuss how to ensure that there is a sustainable system so that we have certainty for tariffs. As my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) said, it is not the Government’s role to support bubbles. Unfortunately, when we are left a bubble by the previous Government, this Government have to burst it. We have to face the realities of the situation and we will potentially get it in the neck, as we have with the other decisions we have had to take, for dealing with the mess left to us by them.
I have some points for clarification. First, will the Minister confirm whether the cut-off date in December is the date of installation or the date when the application for the tariff has been processed? Secondly, I and other Members would appreciate some explanation of how the consultation dates work. Obviously, we have been given the date of 12 December and the consultation closes after that. It is worth addressing that point. Finally, I mentioned the company Loughborough Solar Technologies, which would appreciate a clear commitment from the Government to the industry—
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Like so many others, I am deeply concerned by the Government’s proposals for green energy and the devastating impact the cuts to feed-in tariffs could have on thousands of jobs within my constituency and across Britain, not to mention the sheer irony as the Government renege on their commitment to be the greenest Government ever.
In the past year, nearly 200 families within my council boundary have installed solar power. It is a great way for people to make their homes greener and more efficient and to protect themselves from soaring energy prices.
Laura Sandys
I must point out that although Opposition Members are talking about the total collapse of this industry, households will, on average, get £500 tax-free every year. That might not be £1,000, but it is an extraordinary incentive to companies to sell and households to purchase solar panel products.
Mr Clarke
I am glad that the hon. Lady made her point but, if she does not mind, I shall continue to make mine.
Skyline, a local company in my constituency, made representations to me over the weekend. In partnership with the AVC Group, Skyline has recently opened a brand-new purpose-built premises in Shawhead in Coatbridge. The managing director, Mr Robert Bell, explained to me:
“In this new venture Skyline in partnership with the AVC Group are now introducing solar energy sales, installation and advice to our existing business. A new trade counter will be available covering all aspects of aerials, satellite and renewable energy products.
Skyline and the AVC Group share the new premises. This will help consolidate our main business activities and help Skyline to secure more jobs for local people.
Our training facility will also be used by external companies seeking to train their employees in ladder training at special heights underpinned with customer care.”
The level of entrepreneurship exhibited in my constituency is, quite simply, being placed at risk by the Government. Not only are the Government proposing to cut feed-in tariffs by half so that demand for solar power is reduced by a staggering 92%, they want to do so retrospectively. That means that people with businesses who have already invested in solar power will have to abandon their schemes if they cannot afford the new rate.
I suspect that councils up and down the country will have to pull the plug on thousands of solar panel installations for social housing and community projects. We have heard evidence of that this afternoon. I wrote to the chief executive of north Lanarkshire council and a variety of housing associations in an effort to establish the extent of the Government’s cuts to solar power. It is clear that the new regulations imposed by the Government alongside the tariff reduction will make solar energy inaccessible to most people in my constituency.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
One issue to be addressed is that of customers who find themselves halfway through a contract and who will not now get solar power. They will be betwixt and between because they will not have the opportunity of getting that solar power up and running. Is that not a major issue that the Government have not looked at in the consultation?
Mr Clarke
My hon. Friend makes his point very effectively, and earlier our hon. Friend the Member for North Ayrshire and Arran (Katy Clark) highlighted what he has just said.
The Financial Times today reported that the Secretary of State for Energy and Climate Change is considering
“new limits...on subsidies for households that install renewable energy...as he looks to defuse anger”
about the cuts. I only hope that his words translate into action, as the Government’s own impact assessment reveals that nine out of 10 households will be locked out of the solar energy market. How can that be justified by the so-called greenest Government ever? I will continue to oppose the devastating impact of their attack on feed-in tariffs and I shall fight for a fairer deal for the people of my constituency who are finding it very difficult to cope with rising energy prices. Yes, the solar industry does need to be regulated and, yes, reductions in tariffs do need to be made as energy becomes cheaper, but not on this scale and not so that it is essentially wiped out as an alternative for the average household and small business. It cannot be right that the Government are hitting people who are trying to do the right thing by cutting their energy bills. Their proposals for feed-in tariffs will hit families, put thousands of jobs at risk and devastate the solar industry. That is the reality of what we are debating. The Liberal Democrats once again find themselves between a rock and a hard place as the Government plough ahead with irresponsible cuts that strike at the very heart of what we are told were their core beliefs. If the coalition Government truly strive to be the greenest Government ever, they cannot seriously expect the public to stand by as the solar industry is cut down in its prime—just as the number of companies operating in solar has risen from 350 to 4,000 and as clean energy jobs have soared from 3,000 to 30,000 since 2010. That would simply be unsustainable and unacceptable, certainly to my constituents and the small companies in my constituency.
Sarah Newton (Truro and Falmouth) (Con)
As I have written to my hon. Friend the Minister regarding the concerns raised with me by constituents, I shall not list them all this evening. I was very reassured by the Secretary of State’s assurance that the consultation on the proposed changes to the feed-in tariff is genuine. I am sure that he will listen very carefully to all the arguments and read carefully all the comments from my constituents that have been given to him.
Neil Parish (Tiverton and Honiton) (Con)
I should very much like to ask the Minister to clarify the situation regarding the tariffs and whether they will be retrospective. Mid Devon council in my constituency has 1,800 homes on which it wants to put solar panels. Two thirds of those people are on housing benefit and they would get the benefit of £3 a week off their electricity bill, so I am very concerned about the retrospective side of the tariff.
Sarah Newton
I think my hon. Friend has made his point.
In the few moments I have left, I should like to develop the good points made by my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) and my hon. Friend the Member for Dudley South (Chris Kelly), who rightly reminded us that the Government have only so much money to give away in subsidies and that they need to support a wide range of sustainable and green ways of producing energy.
Sarah Newton
I am sorry, I will press on so that more Members can speak.
I am concerned that we should not use up all our resources, as we need to support emerging technologies. It is vital that we do not spend all the money on FITs for PVs. The Government have introduced a wide range of really good policies that support the emergence of new technologies in my constituency. For example, recent investment by the regional growth fund in deep geothermal engineering will leverage in £42 million of private sector investment, alongside nearly £1.5 million from the Department of Energy and Climate Change to create the first deep geothermal power station in my constituency.
That is a sustainable and inexpensive way of producing energy, and DECC has estimated that it could produce up to 10% of the electricity that the UK needs. That is a very good investment, and the Government are to be congratulated, at a time when there are limited resources, as that deep geothermal energy plant will create thousands of jobs in the company and up to 9,000 jobs in the supply chain around Cornwall for the development of that new and exciting technology.
I very much welcome the fact that, this winter, the renewable heat incentive will be made available to commercial businesses and a limited number of consumers installing ground heat pumps and other sources of renewable heat. I hope that, through that work, lessons will be learned so that we can end the debacle that we inherited with FITs. The renewable heat incentive will play an enormously important role in our energy security and in making sure that people switch to sustainable, green energy sources, so I hope that it does its job and works well.
Katy Clark (North Ayrshire and Arran) (Lab)
I am grateful for the opportunity to pay tribute to Alan Simpson, the former Labour MP who tabled the amendment that led to the legislation on FITs. I am sad that the present Administration have succumbed to the lobbying power of the big six energy companies by taking the first step in the erosion of FITs in this country. Government Members have mentioned Germany, which has a strong FITs system, and its tariffs led to far lower energy prices than we have in this country. FITs are about where the power is, and one of their impacts is to transfer power from the energy companies to individuals—to the consumer—and to communities. That is why I am sad that the Government have introduced these proposals.
Gregory Barker
On a very important point of fact, energy prices in Germany are not lower. The cost of electricity to the German consumer is significantly higher and, importantly, 45% of the consumer’s bill there is made up through levies and policy impacts as a result of renewables legislation.
Katy Clark
As the Minister will be aware, energy prices in Germany are at the levels they were in 2008, which is a very different situation from the one we are in. Opposition spokespeople have already spoken about the bills that individuals and businesses have to face under this Government.
The Government are rushing to introduce their proposal, which will cause havoc for all the reasons outlined by many Opposition Members and, indeed, by some Government Members, because they chose to put a ceiling on the solar FIT budget. That was not the position under the previous Government. Will Ministers explain whether they have looked at surpluses in other renewable energy budgets, and ask the Treasury if they can use those budgets to ensure that more money is available for solar, given the runaway success of the scheme?
Dr Whitehead
Would my hon. Friend be surprised to learn that the impact assessment that went with the present changes showed that the budget that this Government introduced would not be exceeded by more than 9% up to 2015? Further to her suggestion that the Treasury might find the money to put matters right, will she suggest to the Minister that if he looks at his own budget and the Treasury rules within it, he could solve the problem now?
Katy Clark
My hon. Friend puts a powerful case. Perhaps Government Members should read the Opposition motion before them. There is acceptance on both sides of the House and within the renewable energy industry, both among consumers and among those who manufacture and install the equipment, that a review of the tariff rates is needed. The problem with the Government’s proposals is the short notice, which has come about because of the rules that the Government created for themselves. I therefore ask the Government to withdraw the arbitrary 12 December deadline and introduce more measured proposals. If Government Members agree with that, the only option available to them this evening is to vote for the Opposition motion.
We have heard a lot from the Government about their being the greenest Government ever, but the proposal that we are discussing shows what a lie that is. The only way to bring renewable energy into mass use in this country, with the economies of scale that make it a viable option for most people, is by providing incentives now for those who are leading the trail. We need a Government with vision, who are committed to developing our renewable energy industry and to combating climate change.
The only way for the Government to achieve those aims is to commit themselves fully to feed-in tariffs and to create a regime that ensures certainty in the market, so that the financial sector, both in the private and the public sectors, knows that it can invest in renewables because there is certainty about the deal on the table. Such a regime will ensure that we have a green Government and a green Britain. I urge the Government to show vision and to re-examine their proposals.
Glyn Davies (Montgomeryshire) (Con)
Thank you, Mr Deputy Speaker, for allowing me to contribute to an important and complex debate. The issue has a significant impact on Montgomeryshire. I know that many other Members have received communications from people who are concerned about the changes to the feed-in tariff.
The core issue is the tension between desirable objectives. On the one hand, we seek to tackle the carbon emissions that threaten our planet through climate change, and renewable energy is a significant part of that. On the other hand, we have to look after consumers. We heard earlier about the impact on the poorest people in society, because the subsidy has to be paid by consumers. That includes probably millions of people who are already suffering fuel poverty. It would be irresponsible of the Government not to consider those who might be driven into fuel poverty if they adopted a cavalier approach towards the subsidy required for the feed-in tariff as it was.
The Government remain committed to a variety of energy sources. Nuclear is clearly an important part of that. Renewables have a big part to play—tidal, possibly shale gas, offshore wind and even solar. Just because there is a change in the regime, I do not believe that solar will be put on the back burner at all.
The problem with feed-in tariffs for solar PV is that they have been far more successful than anybody ever anticipated. A number of Members have mentioned that today. Three times as many applications have gone ahead as could have reasonably been expected. In September alone there were 16,000 new applications. We saw the graph that the Secretary of State showed us earlier—it looked like a hockey stick. If action had not been taken now, the whole tariff scheme would have become completely unsustainable.
Mel Stride (Central Devon) (Con)
Does my hon. Friend agree that not only would the FIT scheme become untenable, but the jobs created in the short term through the gold rush to get into the marketplace would quickly evaporate? What we want is long-term, sustainable jobs, hence the need to bring the FIT down.
Glyn Davies
I very much agree with my hon. Friend; it is a point I made in an earlier intervention. I thought that the Secretary of State’s reference to a Catherine-wheel was a wonderful analogy. A quick burst followed by a reduction in the number of jobs in the long run as a result of not doing something about the scheme would be entirely negative. Any scheme must be sustainable, and the problem with the scheme as it stood was that it was completely unsustainable.
When I first heard about the predicted change, I was as concerned as anyone, which is why I listened to the Secretary of State’s statement very carefully. Afterwards, I understood that the Government had absolutely no choice but to go forward with the changes they have made. That is the only way the scheme can be sustainable in the long term. The issue is the timetable. I was greatly relieved that he pointed out in his contribution that there is a consultation period. If people have lost money—not making less money than they were before—we need to put those cases forward and I hope that he will take them seriously and consider their special circumstances.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
We have had an important debate and a number of significant points have been made by many hon. Members despite their speaking for a limited time. My hon. Friends the Members for Ynys Môn (Albert Owen), for Ayr, Carrick and Cumnock (Sandra Osborne), for Glasgow North West (John Robertson), for Sedgefield (Phil Wilson) and for Clwyd South (Susan Elan Jones), my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke) and my hon. Friend the Member for North Ayrshire and Arran (Katy Clark), among other Members, made important points about the Government’s changes to the feed-in tariff. We could no doubt have had a somewhat longer debate had time not been curtailed by the Secretary of State’s lengthy urgent statement earlier this afternoon and his lengthy speech at the start of the debate, but I want to keep my remarks as brief as possible to enable the Minister to respond. A number of important issues have been raised and I am sure that he wants to respond to them.
The Minister is a politician that many of us have come to appreciate, especially in his recent works, as a master of his art. The reduction in the feed-in tariff
“effectively slowly suffocates the growth that the policy has so far encouraged.”
Not my words but those of the Minister’s close colleague, Boris Johnson, the Mayor of London.
“Industry trust and confidence in the government has evaporated.”
Again, not my words but those of the CBI. The new rates mean
“that unless you have significant savings, you’re unlikely to be able to afford solar panels”.
Once more, not my words, but those of Friends of the Earth. The ability to build such a consensus against his own policy is a formidable feat on which I congratulate the Minister.
I would also like to pay tribute to the Minister’s transformational skills. In a few short weeks, he has managed to turn a policy that was admired, appreciated and effective into a shambles that is mired in confusion, contradiction and potential legal challenge. However, he is a man of great foresight and has the extraordinary ability to set a consultation with an effective date close to two weeks before the close of the consultation. It is a remarkable record from a remarkable Minister. I can only look on in awe and wonderment at his abilities and only aspire never quite to plumb those depths myself.
Pat Glass
Does my hon. Friend agree that the issue for the consumer is not the £1 each that the feed-in tariffs will cost, but the fact that the Government have clearly and demonstrably failed to tackle the big six energy companies that are taking massive and obscene profits from the British consumer?
Tom Greatrex
My hon. Friend is entirely right. When the Minister, as he is about to do, following the example of the Secretary of State, makes points about consumer bills and compares the £1 cost with the £1,345 for the average annual bill, which is 0.08%—less than a tenth of 1%—I think that the figures speak for themselves.
Tom Greatrex
I am afraid I am going to make some progress, because I want to give the Minister time to respond.
The Government have endangered an industry in its very infancy and, as my hon. Friend the Member for Ynys Môn made clear, sent to the rest of industry a signal that is doing the UK a lot of damage. It suggests that we cannot rely on what the Government say because they will change their position with scant consultation, no planning and in an arbitrary way. As E.ON said only yesterday,
“this sort of action creates uncertainty for business, and will have a negative impact”.
The Minister has argued that there is a pressing need to reduce costs, that installation costs have fallen and that the subsidy must follow, and, despite the Secretary of State’s best attempt to muddy the waters earlier, no one argues with that—not the solar industry, not consumer organisations and not the Opposition. Indeed, it might take him six months to answer his correspondence, but, as he well knows, trade bodies have argued for months that there should be a sensible, structured reduction in the subsidy—not a jump off the landing, but a walk down the stairs.
The Government’s consultation states that installation costs have reduced by 30%, but it is no good the Minister getting to his feet and citing the cost of panels in isolation from other costs as a way of justifying the 70% figure from Bloomberg, because, if installation costs have reduced by 30%, why is the tariff being cut by 52% in one go? Perhaps, as he has claimed before, it is part of his cunning plan to cut energy bills, but, as my hon. Friend the Member for North West Durham (Pat Glass) has made clear, that attempt will just not work.
Tom Greatrex
I will make a little more progress and then I may be able to give way. I am conscious of the time and of the Minister needing to respond.
The important point is that the Government’s policy will also cost: it will cost some of the 25,000 jobs; it will cost some of the 3,000 businesses; and it will cost people’s confidence in the UK as a place to invest. It is shameful to pull the plug on one of the few industries providing growth and jobs, which are nowhere else in the economy, for the sake of £1 a year on a bill. It is short-sighted to put at risk 25,000 jobs and, thereby, reduce tax revenues and increase benefit payments for £1 a year. Throughout the country it will cost community projects, which are being cancelled, co-operative models that are being developed, social housing schemes and people’s sense of involvement in electricity generation in this country.
It would be unfair of me to suggest that the Minister, as much as he has united people in opposition to the policy, is without friends. He has a very supportive Secretary of State, with a burgeoning reputation for collegiate behaviour in government and loyalty to his colleagues. He is also known to dabble in Twitter, so I am sure he has made the Minister aware that there is, indeed, a SaveGregBarker Twitter feed. It has 18 followers, but perhaps it will have some more after today’s debate.
There are more than 18 of the Secretary of State’s hon. Friends who have expressed concern at his Department’s action on feed-in tariffs. However, some 24 Liberal Democrats have signed early-day motion 673, which states that
“the feed-in tariff scheme will provide much needed stability for the expansions of renewables up to…2013.”
Andrew George
The Labour motion before us turns on its penultimate line, which refers to “more measured proposals”. Members from all parts of the House want a more sustainable solution than the current one, but what are these “more measured proposals” and how they are going to be paid for?
Tom Greatrex
The hon. Gentleman, as a signatory to early-day motion 673, has expressed his concern about those issues, and I will go on to make a couple of remarks about what we need to do next, following his support for the motion before us and that of his colleagues who signed the early-day motion.
Indeed, the hon. Member for Manchester, Withington (Mr Leech), who is no longer in his place, was quoted on the Friends of the Earth website last week, saying:
“Solar has been the real success story...We can’t afford to jeopardise thousands of jobs by slashing the feed in tariff and creating uncertainty, giving the industry no time to adjust.”
The hon. Member for Lewes (Norman Baker), a Minister no less, says on his website that he has concerns
“about the speed and level of the proposed changes for community size projects and I am therefore asking the Secretary of State to examine urgently the case for some flexibility”.
The Secretary of State’s own Parliamentary Private Secretary, the hon. Member for Chippenham (Duncan Hames), quoted in the Financial Times this morning, said that we should look at the German model of gradually reducing support rather than, as I described it earlier, jumping off the cliff.
If all those friends of the Secretary of State want to be friends to the Government—I understand their desire, however misguided, to support the Government—and if they want to get the Government to right their mistakes; if they want to repair some of the damage of the past few weeks; if they want a sustainable and sensible model for support going forward; if they want to walk down the stairs rather than jump off the landing; if, perhaps, they want to “SaveGregBarker”, they must vote for the motion this evening. They should look at the wording of the motion, which is about having a sustainable, sensible, gradual approach rather than making a sudden cut that is putting people, jobs and businesses in jeopardy and leaving consumers high and dry. Let us help rescue the Government from the mess that they have made for themselves, and support the motion this evening.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
I believe in the huge potential of solar. Like my hon. Friend the Member for Sherwood (Mr Spencer), who made an excellent speech, I believe it is a terrific technology. It is intuitive, dynamic, attractive to consumers and easy to install, and I am determined to see it at the heart of the coalition’s ambitious plans to bring decentralised energy to millions of Britain’s homes, communities and businesses. What is more, unlike the right hon. Member for Don Valley (Caroline Flint), I campaigned for it, voted for it and genuinely believe in it.
However, for those of us who are passionately committed to the green agenda, there are two great threats in these difficult economic times. First, and obviously, there are the climate change deniers, but secondly, and I think even more dangerously at the moment, there are the deficit deniers. There is no greater bunch of deficit-denying opportunists than Opposition Front Benchers, who seem to think that the green economy lives in a vacuum, immune to the economic realities confronting every other sector of the British economy and to the impact that that has on consumer bills.
The fact is that Labour was wrong to vote against feed-in tariffs in November 2008. It was also wrong to introduce them in April 2010 without any budgetary control mechanism at all, and wrong to ignore lessons from the successful FITs model in Germany. It was wrong to ignore totally the potentially huge impact that FITs could have on the fuel-poor in particular, and catastrophically wrong earlier this year when it insisted that our early review of large-scale feed-in tariffs would butcher the entire UK solar industry. In fact, following that statement by the Labour Front Benchers, the deployment of solar technology has risen by more than 300%, and it has risen more than tenfold since the beginning of the year. The statistics are staggering.
No wonder Which? has stated:
“It’s right that the Government properly controls spending on Feed-in Tariffs as everyone pays for this scheme through their energy bills.”
No wonder the chief executive of Consumer Focus has said:
“The Government is taking a sensible approach to protect energy bill-payers with the proposed changes to Feed-in Tariffs. Incentives to overcome the high set-up cost of solar panels and help make our energy supply greener are necessary. But the cost for this is passed onto bills of energy customers and we need to strike a balance.”
That is exactly what we need to do—strike a sensible balance between our high ambition for decentralised energy and recognising the costs of what is still the most expensive to support of the whole array of decentralised technologies.
Unfortunately, Opposition Front Benchers bury their heads in the sand. The notion that spending billions on solar would cost no more than £1 on people’s bills is from cloud cuckoo land. They clearly have not yet got up to speed with their brief. They will know from the impact assessment that we published in September that the central estimate is that it would add £28 to bills every year by 2020. Since then the estimate has risen again, and the higher estimate is £55. We now know, given the level of deployment in October, that if we did not act now it would add up to £80 to everybody’s electricity bills.
Tell that to the 5.5 million people whom Labour left in fuel poverty. Let us not dwell on the fact that Labour cannot add up and are a bunch of deficit deniers. We know that because of the state they left the economy in.
Some very sensible comments have been made in this debate, and I am very grateful to all colleagues.
Dr Whitehead
On the impact assessment that the Minister himself carried out, does he accept that the £26 is relevant only if the tariff at its present level continues until 2015, which was never the scheme’s intention in the first place, on anybody’s reckoning? Will he withdraw that suggestion and replace it with what is the case in the impact assessment? [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order, Minister. Has the hon. Gentleman finished his intervention? Right, now it is the Minister’s turn. I think that we will decide, thank you.
Gregory Barker
I am afraid that the hon. Gentleman is wrong. The impact assessment relates to no change until April next year, and then there will be degression, as planned by the Leader of the Opposition when he was in government and set up this poorly conceived scheme last year. So, as I say, I am afraid that he is incorrect on that point.
We have had some extremely sensible contributions. The one from my hon. Friend the Member for Montgomeryshire (Glyn Davies), in which he flagged up the impact that the scheme will have on not only fuel bills but the fuel-poor, was absolutely right. Too often the voice of the fuel-poor is distorted. Yes, it is great for the few thousand who may benefit from solar panels in social housing, but what about the other 5.5 million whom Labour left in fuel poverty, who will not benefit but would still face the prospect of £80 on their electricity bills? Go and tell the other 5.5 million people who will be left out how they are going to find the extra £80 if we do not act now.
My hon. Friend the Member for Dudley South (Chris Kelly) was spot-on in his analysis and my hon. Friend the Member for Loughborough (Nicky Morgan) was right. I am afraid there is absolutely no sign of anything that even looks like a “Sorry” from Opposition Front Benchers for the mess they made of setting up the scheme. My hon. Friend the Member for Truro and Falmouth (Sarah Newton) was right: we need to learn the lessons from Labour’s failed scheme, particularly because although the feed-in tariff scheme supports solar, it also supports a whole range of other technologies. We must not forget that. We want a diverse, innovation-rich, decentralised energy economy, and there is a lot more to the feed-in tariff scheme than solar alone, important though that is.
My hon. Friend the Member for Sherwood made excellent points about Germany. He was spot-on when he said that we need to pull solar into the mainstream of the green economy, rather than leaving it as a bubble in a silo at one side. That is why the launch of the green deal will bring solar into the mainstream. That is a very exciting proposition. The hon. Member for North Cornwall (Dan Rogerson) also made some excellent points, and I share the view that we need to have a consistent regime. [Hon. Members: “They’re all on your side.”] The hon. Member for Rutherglen and Hamilton West (Tom Greatrex) listed and spoke at length to Opposition contributions. I have very limited time, so I am going to mention those from my hon. Friends first.
However, I recognise that there is genuine concern about the implementation of the reference date of 12 December, and that it will be a real challenge for a lot of companies. We did not do this lightly. We have had to move quickly in order to protect the budget. Unfortunately, if we had not done so we would have had to do what Labour did in the past and close the scheme completely. We will not do that. We are protecting the scheme for the long term and for sustainability. This is a genuine consultation. We are constrained by the budget and by demand, which is going through the roof, but at the same time, I am listening carefully to the many sensible representations—
Mr Alan Campbell (Tynemouth) (Lab)
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Question put accordingly (Standing Order No. 31(2) and Order, 14 November), That the original words stand part of the Question.
Mr David Burrowes (Enfield, Southgate) (Con)
On a point of order, Mr Deputy Speaker. Something happened to one of my constituents today that is of fundamental importance, I believe, to all hon. Members regarding constituents’ access to Parliament. My constituent attended a Palestine lobby, similar to one she has attended on many previous occasions, but on this occasion things were different. As she arrived at security, a police officer confiscated her lobby briefing material and told her that she was not allowed to have anything of a political nature. In fact, she was told that this was a direction from the House authorities. The officer then spoke to a senior officer, who gave the same response. Eventually, the material was returned to her, but she was told, “Yes, we will return this material, but do not do this again.” I ask your advice, Mr Deputy Speaker. Was this a direction from the House authorities? Will you confirm that constituents are not allowed to have anything of a political nature with them when they attend Parliament?
Mr Deputy Speaker (Mr Lindsay Hoyle)
This is a matter for the staff and the police. The hon. Gentleman will know that we do not discuss security issues or what has gone on as a matter of security, but he has put his views on the record. I am sure that the authorities and security will look into the matter, and I am sure that someone will come back to the hon. Gentleman now that he has raised it on the Floor of the House.
Business without Debate
delegated legislation
Bowel Cancer Screening
(13 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Guy Opperman (Hexham) (Con)
Thank you, Mr Deputy Speaker, for giving me the opportunity to raise this matter in the House. Bowel cancer affects men and women, and it is the second-highest killer after lung cancer. The debate is, I suggest, both timely and genuinely needed.
I have personal experience of the NHS that is probably too long to list. When I was a jockey, I was saved by a gastro-surgeon at Warwick hospital. I hoped I was riding the winner at Stratford races, but we turned over and the horse ruptured my spleen, perforated my left kidney and broke nine bones in my ribs. I can assure the House that it hurt a great deal. The surgeon saved my life on that occasion. Subsequently, it is well known that I had a meningioma in April and was recently given the all clear by Mr Neil Kitchen and the amazing staff at Queen Square hospital in north London.
My grandmother was an NHS matron and I have had bowel cancer screening. Certain family members have had this cancer, so I had the colonoscopy that was medically advised in those circumstances. I would certainly not be an MP were it not for the campaigns I waged on behalf of Savernake hospital in Wiltshire, where I was born; that hospital also saved my mum’s life.
I would like to declare an interest as a taxpayer. The NHS’s approach to individual screening is surely an issue in which we should all be interested—from the point of view of prevention of loss of life and the maintenance of good health, but also in respect of how NHS funding, which is clearly finite, is spent on preventing future problems.
I pay tribute to the Beating Bowel Cancer regime, to Cancer Research UK, to the British Society of Gastroenterology, and to Professor Wendy Atkin, her funders and the 170,000 volunteers who took part in her definitive study of flexible sigmoidoscopy, which is known as a flexi-scope. I also pay tribute to Imperial College London, University College London, the University of East Anglia and St Mark’s hospital, and to the variety of doctors, constituents, charities and members of the public who have worked so hard to combat this problem and have helped me to prepare for the debate—including the clinicians, particularly Dr Colin Rees.
As a Member of Parliament representing a constituency in the north-east, I am proud to say that the north-east leads the way in bowel cancer screening. It was the first to complete coverage of an entire region in April 2010.
Before I embark on the substance of my argument, I also make an apology on behalf of my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi), who sponsored the Beating Bowel Cancer reception in the House last year. Much to his regret, he cannot be here tonight. He is a good friend of mine, but he is well known in the House—and, indeed, throughout the world—for having worn the Beating Bowel Cancer tie, which I am now wearing, in the Chamber after that reception. My hon. Friend, who has quite a generous build, was attempting to restrain that generous build with his suit when he accidentally touched a button on the tie, setting off a melody that lasted for nearly two minutes. Madam Deputy Speaker virtually extracted him from the Chamber. I understand that the incident was reported in 25 countries, and did more for the screening of bowel cancer worldwide than anything that anyone has said since.
I have no future as a surgeon, and I assure the House that I have removed the bottom half of my own tie so that there is no possibility of my being extracted from the Chamber for being too musical.
Let me now make some serious points about the clinical position. Traditional bowel cancer screening involves the faecal occult blood test, known as the FOB. In the last few years 11 million people in the country have been offered the test, 6 million have accepted it, 120,000 scopes have followed, and 12,000 diagnostic findings of cancer have resulted. It is clear from the statistics that lives have been saved. Previously those screened were aged between 60 and 69, but screening has now been extended to those aged between 60 and 74. It should be noted that the north-east—leading the way, as it does so often in a medical context—was the first region to extend the age group.
Tragically, take-up of that vital free NHS screening is only 54%, whereas take-up of breast cancer screening is 74% and take-up of cervical cancer screening is 79%. However, the situation is changing. Professor Wendy Atkin and her team have brought flexible sigmoidoscopy to the forefront of bowel cancer screening. The results of their 16-year study were definitive. Their randomised trial, which followed 170,432 people, established that the flexi-scope examination reduces the incidence of bowel cancer in those aged between 55 and 64 by a third. Mortality was 43% lower among that group than it was in members of the control group.
The flexi-scope test works by detecting and removing growths on the bowel wall, known as polyps, which can become cancerous if left untreated. It can prevent cancer from developing by removing polyps before they become cancerous, and provides long-lasting protection from bowel cancer.
Harriett Baldwin (West Worcestershire) (Con)
I congratulate my hon. Friend on securing this very important debate. Does he agree that screening for certain kinds of hereditary cancers, such as non-polypsosis colorectal cancer, should begin at a much earlier age, and should take place relatively frequently throughout the lives of those who are screened?
Guy Opperman
I do indeed. I welcome the fact that the guidelines from the National Institute for Health and Clinical Excellence have changed to allow screening to become considerably more frequent in such cases. I am sure that the Minister will comment on that.
Flexi-scope screening will undoubtedly save thousands of lives. FOB screening saved 700 to 1,000 lives a year, and flexi-scope screening will save about 3,000 lives a year. To confirm that, the Government implemented a pathfinder project in three areas. Unsurprisingly, two of those areas were in the north-east, this country’s leading medical region. The three areas were South of Tyne and Wear and Tees, along with Derby. The pathfinder findings are with the Department of Health and have not yet been published, but I can assure the House that, in broad terms, they accord with Professor Atkin’s findings. Last October, the Prime Minister announced a proposal to pilot the scheme nationally in 2012, but there are clinical and funding issues that need to be addressed.
First, when is the Department of Health going to invite bids for the follow-on pilot process, given that that was supposed to be done in 2011 and it is now 23 November?
Secondly, clinicians raise the specific concern that the flexi-scope system is only manageable if we have a sufficiency of trained nurse endoscopists, so where are we in respect of this crucial training? Even with the most amazing piece of equipment, if we do not have the people to operate and interpret it, it is useless. Under this scheme, several hundreds of thousands of endoscopies will have to be carried out, with colonoscopies to follow in about 10% of cases. Therefore, everything will depend on training.
Thirdly, how does the Department of Health plan to assess its age groups? My understanding is that the current group of 60 to 74-year-olds will have FOB testing, and those aged 55 will have a flexi-scope. That is relatively clear, but what will happen for gentlemen and ladies in the 56-to-60 age group is not at all clear. Will they be offered the flexi-scope as well, or is that to be based solely on GP referral? Trusts need guidance on what they are to do with such a large and unknown number of people, as they need to plan budgets, staffing and much more besides.
Fourthly, we need to assess what we are going to do with those who have a flexi-scope at 55 and receive the all-clear and then reach the age of 60. Will we rescreen? Anyone who has ever worked in the health industry will know that there is “health speak”, and in this case the following question would be asked: “What is the parallel screening modality for the future?” As always, “health speak” is gibberish, but the simple question here is: are we going to rescreen people who are fine at 55?
Jim Shannon (Strangford) (DUP)
I have also gone through the screening process because of a family history of cancer. My GP and consultant at that time said the screening would have to be done again in a year’s time and then again a year later, in order to be absolutely sure. Has the hon. Gentleman considered whether there should be checks not just every now and again, but on a periodic basis?
Guy Opperman
It is ultimately up to the clinician—which it should be, frankly. The Minister must say how this policy will be implemented, but it should always be clinically driven.
Fifthly, trusts need confirmation that the pilot projects to be implemented next year will be funded from national funding.
I want to turn briefly to the financial case. The researchers behind the Atkin study suggest that the screening programme will reduce the costs associated with treating people with bowel cancer. Ministers will be aware of the Department of Health-commissioned report, as set out in the memorably named journal, Gut, in 2006, which suggested that if a screening programme based on this test was effective, it could save an average of £28 for every person screened. I urge the Minister to follow what a lot of doctors and others have recommended. We must understand why people do not take up the state’s offer to safeguard their health. If only 54% of those eligible are taking up this offer, that is a serious issue that needs to addressed.
When should we start screening? I speak as an MP whose constituency borders Scotland, and we are often told that in Scotland the health care system is much better, much more expansive and so much more free. In Scotland, FOB screening takes place at 60, not 50 as it does in this country and my understanding is that they do not intend to take up the flexi-scope screening. Personally, I am yet to be persuaded of the clinical or financial basis for screening at the age of 50 given the immense task of screening from the age of 55 onwards, with all the numbers of people who will go through the system. Although there might be pressure—obviously, the Opposition Benches are packed—to move towards such screening at 50, there is no clinical or financial basis in the current system to justify such an approach.
I want to address the possible role of private or other public organisations, suitably supervised, in this process of change. We need to explore the issue of those whom the state must look after but do not take up the offer of screening. It affects both their health and our finite budget. The state must and will always be the provider of medical services in the future—no one disputes that—but it must also enable change and encourage private or public organisations to help in health care. All acknowledge that the take-up of screening is tragically low, as 46% resist the chance to screen themselves for bowel cancer and more than 20% of women resist the chance to have cervical or breast cancer screening. Everybody must accept that there is a problem with that. How can we address that?
Only the short-sighted or extremely socialist would suggest that the state always has the answer to all those problems. What if public sector organisations were to go the extra mile and care for their employees in a different way? We should bear it in mind that the state spends a fortune training its employees to carry out their designated tasks, whether they are consultants, surgeons, endoscopists or nurses. It surely makes sense to safeguard one’s assets—that is, one’s employees. Why not use the public sector as a lead by making it either mandatory or strongly advisable that all permanent core workers should have the screening that their health deserves and that we ask of the rest of the public? I would suggest that they should lead the way. That follows on from the point that is made about flu jabs and the prevention of winter problems in hospital.
We should also consider companies; I want to finish on a localism point. We always criticise employers in this House, but let us say that we had an enlightened employer. Why could they not be allowed or even encouraged to conduct screening of their workers, in whom they invest so much? There is clearly a benefit to the worker, the employer-employee relationship would improve as the employee was valued and cared for, and the state would not necessarily have to pay for the health care screening provided to its citizens. I am talking not just about bowel cancer screening, which is quite complex. Breast cancer screening, for example, is important but not necessarily that difficult.
The cost of such privately paid screening could then be borne in the form of a reclaimable tax break to the company, such as an equivalent cut in the cost of the company’s local business taxes. That would offer localism, increased health screening and better care for employees. Although there might be some data protection issues and concerns about who would pay for the follow-up care, it would unquestionably improve the take-up of screening. I refuse to accept that there is no mileage in my suggestion, which surely brings true localism and better screening to the workplace.
In the minute or so I have left, I want to address the fact that this is men’s health awareness month and individual members of the public must take responsibility for their own health. All around us, perfectly sane men are sporting moustaches as “Movember” kicks into gear. For too long, men have ignored their health. It is well known that they do not have regular check ups. The reality is—I am not surprised the House is not packed this evening—men do not like to talk about the prostate or their bowel. As one of the nurses I met in hospitals put it to me: “Men and their bits—they get so precious about them! If men had to go through what women have to go through with cervical cancer screening and pregnancy they would be a great deal more healthy and self aware.”
I praise the television celebrity Chris Evans for his campaign to show that there is no shame and in fact great benefit in having bowel cancer screening. The shame in such matters exists when people ignore the signs and even die through false manliness or ignorance.
The Minister of State, Department of Health (Paul Burstow)
I congratulate my hon. Friend the Member for Hexham (Guy Opperman) on securing the debate and on setting out the issues so clearly. Let me just confirm the answer that he gave to his hon. Friend the Member for West Worcestershire (Harriett Baldwin)—it is the case that the NICE guidance has been changed in the way that he said. I hope that helps her. I look forward to reading the Hansard report of his description of his tie and the removal of certain items that would have made a noise in the debate had he pressed the button.
My hon. Friend the Member for Hexham has used this opportunity very well to raise awareness of these issues further. There has been good progress in bowel cancer survival over the past 30 years, with the survival rates for men and women doubling, but it remains a devastating disease. In 2009, some 32,751 people were diagnosed with the cancer and 12,691 people died from it. In the vast majority of cases, the earlier a cancer is diagnosed, the sooner the treatment can begin and the better the outcomes are likely to be. That is why early diagnosis of cancer is central to the Government’s cancer outcome strategy and that is why it is vital that we do more to diagnose cancers earlier and improve survival rates as a result.
We are focusing on survival rates because they are a much more effective way of addressing and assessing NHS performance, as they show how good the NHS is, compared with other countries, at diagnosing and treating people with cancer. Measures such as cancer mortality figures are not a good way of assessing the NHS’s performance as they are an indicator of both incidence and survival. They indicate more about societal changes than about what the NHS has done.
Screening is one of the most important means by which cancer—and in the case of bowel cancer, of abnormalities that may lead to cancer—can be detected earlier. Research undertaken in Nottingham and Denmark in the 1980s showed that screening men and women aged 45 to 74 for bowel cancer using the faecal occult blood test could reduce the mortality rate from bowel cancer by 16%. An independently evaluated pilot in Warwickshire and Scotland showed that this research could be replicated in an NHS setting. Based on the final evaluation report of the pilot and a formal options appraisal, the programme in England began screening men and women aged 60 to 69 in July 2006, and I am pleased to say that full roll-out was achieved last August.
Experts have estimated that by 2025, about 2,400 lives could be saved every year by the current NHS bowel cancer screening programme. However, I agree with my hon. Friend that there may be more we could do through occupational health interventions. As at 31 October this year, more than 12.2 million kits had been sent out and more than 6.9 million had been returned. We have to do more to get more returns, but from those returns 10,785 cancers were detected and 53,616 patients underwent polyp removal. As my hon. Friend said, polyps that are left untreated can develop into bowel cancer. Men and women over the age limit can request a testing kit every two years, and more than 145,000 have self-referred to the screening programme in just that way.
As some 15% of bowel cancers—4,893 in 2009—are diagnosed in men and women aged 70 to 74, the NHS bowel cancer screening programme is currently being extended to men and women aged from 70 up to their 75th birthday. As at the end of October this year, 33 of the 58 local screening centres had implemented the extension of that programme. When the extension is fully rolled out by next year, about 1 million more men and women will be screened each year.
We know that the evidence for faecal occult blood test screening starts at 50, as shown by the trials that have been mentioned. The original programme invited only people in their 60s because the risk of bowel cancer increases with age. Nearly 85% of bowel cancers arise in people over the age of 60. In the pilot, more than three times more cancers were detected in people aged over 60 than in those under 60, and people in their 60s were most likely to complete the testing kit. In addition, there was not enough endoscopy resource to begin the wider age roll-out. To underline a point that my hon. Friend made, in terms of cost, the 2004 working group report on NHS cancer screening programmes, which assessed a number of models for bowel cancer screening, found that starting at age 50 ranked fifth—bottom—in terms of cost-effectiveness.
The national endoscopy training programme has allowed us to begin extending the programme to people up to age 75. However, this extension to the current programme, the planned introduction of flexible sigmoidoscopy screening, which I will come back to in a moment, and the move to more investigations of symptomatic patients mean that a key priority is to increase endoscopy activity. We have begun from a low level, as my hon. Friend suggested, with much lower rates of endoscopy than many other comparable countries. For example, colonoscopy rates in England are eight per 1,000 population, compared with Scotland, where they are 12 per 1,000 population, and Australia, where the rate is 21 per 1,000.
The Department has undertaken further modelling work to estimate the demand for endoscopy services up to 2015-16. That analysis shows that the NHS will need to increase lower GI endoscopic capacity by 15% a year over the next five years to meet underlying growth and the commitments set out in the Government’s cancer outcomes strategy. In response to my hon. Friend’s question, that is how the issue about the work force and making sure that there is a sufficient supply of nurse endoscopists is being addressed.
Funding for an increased number of endoscopies has been put into primary care trust baselines, and that is part of the £750 million over four years that accompanies the cancer outcomes strategy. While it is primarily for the NHS to take the necessary steps to increase endoscopy activity, we are looking at the scope for central support, for example, through service improvement work led by NHS Improvement. However, we are making a huge investment in our bowel screening programme for people in their 50s, in response to my hon. Friend’s fifth question about funding. In September 2010, we announced £60 million of funding for the introduction of a life-saving new screening method—flexible sigmoidoscopy—in the programme.
Flexible sigmoidoscopy is an alternative, and a complementary bowel screening methodology to faecal occult blood. New evidence shows that men and women aged 55 attending a one-off flexible sig screening test for bowel cancer can reduce the risk of mortality from the disease by 43%, and it can reduce the incidence of bowel cancer by 33%. Flexi sig involves a thin, bendy tube, which the doctor uses to look at the inside wall of the bowel and remove any growths—polyps—that are present. Bowel cancer usually develops very slowly from polyps, which are called adenomas. By removing them at an early stage, it is possible to prevent bowel cancer from developing.
My hon. Friend referred to the randomised controlled trials conducted by Cancer Research UK, the Medical Research Council and NHS R&D in 14 UK and six Italian centres. The study concluded that flexi sig is a safe and practical test and, when offered only once between the ages 55 and 64, it confers a substantial and long-lasting benefit. Based on the trial figures, experts estimate that we could prevent as many as 3,000 cancers every year and save thousands of lives.
In 2011, pathfinder sites tested organisational arrangements for the operation of flexi sig screening, with particular attention to the invitation and appointment process. That will enable optimal strategies to be applied in the national pilots. The pathfinder sites were in the Tees, south of Tyne and Wear, and Derbyshire local screening centres. We have formal agreements in place to develop the IT system for flexi sig—I hope that that answers my hon. Friend’s first question—and local screening centres will be invited to bid to become pilot sites early in 2012.
In response to my hon. Friend’s third and fourth questions, the bowel cancer screening advisory committee has advised that people should be invited at age 55, with two reminders, before they become eligible for the faecal occult blood test programme at 60. People from the original trial are being followed up to gain information about the most appropriate faecal occult blood test policy for people who have undergone flexi sig screening. We do not have the answer yet, but we are working to make sure that we do have a clear answer to assist physicians.
The coalition Government’s cancer strategy set out our aim to achieve 30% coverage of flexi sig screening across England by 2013-14, and 60% by 2014-15. It is envisaged that full roll-out will be achieved by 2016. We are also looking at other ways in which we can improve bowel cancer screening. Our cancer outcomes strategy sets out how NHS cancer screening programmes will look at how more accurate and easier-to-use immunochemical faecal occult blood tests—those are words that one can struggle with, and I hope Hansard will be kind to me—can be introduced into the programme, potentially to increase uptake and to provide more accurate results. A protocol has been devised to pilot such testing within the programme to assess the feasibility, practicality and cost-effectiveness of moving to this new technology.
To date our awareness activity has focused on bowel cancer, lung cancer and breast cancer, and we have spent nearly £11 million supporting 59 cancer awareness campaigns and trialling a national bowel cancer campaign. That campaign is about making sure that people do not die of embarrassment when it comes to bowel cancer, and that, if they think there is blood in their poo or if they have loose stools, they will go and see their GP and get a referral for a diagnosis. It is also about Ministers, as much as anyone else, overcoming their embarrassment about talking about it. The more we are prepared to start talking about these embarrassing subjects, the less people will die of embarrassment as a result.
We know that the pilot, the Be Clear on Cancer campaign, which we launched in January this year and ran for seven weeks in the east of England and in the south-west, made a real difference in the number of people being referred into the programme. The evaluation of the Be Clear on Cancer campaign to date has shown that people have become much more aware of the signs and symptoms of bowel cancer, people have been very supportive of such campaigns by the Government, and there has been an increase of about 50% in people over 50 with the relevant symptoms going to see their GP. This increase will lead to people being saved.
I hope this debate has reassured people that the Government take bowel cancer screening as a serious priority. We are determined to save more lives in future and I congratulate my hon. Friend on securing this important debate.
Question put and agreed to.