House of Commons
Prayers
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Oral Answers to Questions
Dr Phillip Lee (Bracknell) (Con)
1. What steps he is taking to ensure that nuclear power provides a significant proportion of the UK’s future electricity supply.
Mr Marcus Jones (Nuneaton) (Con)
16. What steps he is taking to ensure that nuclear power provides a significant proportion of the UK's future electricity supply.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
The Government remain committed to ensuring that conditions are right for investment in new nuclear power in the UK without public subsidy, and we have taken action to remove potential barriers. The carbon floor price and electricity market reform will provide the certainty needed for investment in low carbon generation, including nuclear. The Government are talking to NNB GenCo about the potential terms for Hinkley Point C, and earlier this week I welcomed the excellent news that Hitachi had acquired Horizon Nuclear Power.
Dr Lee
I thank the Secretary of State for his answer. Like him, I was pleased to hear about Hitachi’s investment. If Britain is to reach its low carbon targets and retain energy security in the longer term, nuclear energy remains the only credible solution. In view of the consequent need for significant investment in order to achieve that, would the Government consider investing in, say, Westinghouse, or purchasing Centrica’s share in what was British Energy, thereby reversing the remarkably short-sighted decisions of the previous Administration?
Mr Davey
I am grateful to my hon. Friend for his support. He is right to say that we need all forms of low carbon generation if we are to meet our demanding targets. I do not think that I am attracted by the idea of the state getting involved in the nationalised delivery of nuclear power. The conditions that we have set up mean that there will be a market-based approach.
Mr Jones
I congratulate my right hon. Friend and his ministerial team on encouraging the substantial investment to secure Britain’s nuclear future that Hitachi has announced only this week. Will he say a little more about what the Government are going to do to ensure that we secure as many British jobs as possible from this substantial investment?
Mr Davey
My hon. Friend is absolutely right. This is not only good news and a huge vote of confidence for the UK’s energy policy; it is also good news for British industry. Hitachi has already signed a memorandum of understanding with Rolls-Royce and Babcock, and the supply chain potential is huge, with 6,000 jobs during construction at Wylfa and Oldbury, and 1,000 permanent jobs after construction. When I announced the Hitachi decision, I also announced that we had set up the Nuclear Industry Council to enable the Government to work with the industry to maximise the potential for the supply chain in this country.
Albert Owen (Ynys Môn) (Lab)
As the Secretary of State said, the decision by Hitachi to purchase Horizon Nuclear Power is a vote of confidence in Anglesey, in north Wales and in UK plc, and I am proud to bat for all three. Will he give the House an assurance that, to make this project a reality, the Office for Nuclear Regulation will have adequate resources to assess the new technology, in order to ensure that we have safe nuclear generation as soon as is practical?
Mr Davey
I thank the hon. Gentleman for his question. I pay tribute to him, to the Government of Wales and to my right hon. Friend the Secretary of State for Wales for the important role that they have all played in this deal. I can confirm that the Office for Nuclear Regulation will have all the resources it needs to go through the generic design assessment for the advanced boiling water reactors that Hitachi is proposing.
Tim Farron (Westmorland and Lonsdale) (LD)
Does my right hon. Friend share my concern that the new nuclear build for the west coast of Cumbria seems to be tied to the storage of nuclear waste at the site? Given the recent earth tremors in west Cumbria, one of which reached nearly 4 on the Richter scale a year or so ago, does he not agree that that would be the worst geological site in the UK on which to store nuclear waste?
Mr Davey
I have to say to my hon. Friend that that is certainly not what our scientists and analysts are saying. I know that there is a debate about the geological disposal facility in west Cumbria, but I am reassured that the local authorities are going about the decision on whether to host such a GDF in a sensible and authoritative way, and I am sure that they will support the proposal, which is an important step forward for new nuclear.
Nadhim Zahawi (Stratford-on-Avon) (Con)
2. What steps he is taking to encourage early take-up of the green deal.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
To drive early take-up of the green deal, we have announced a £125 million cashback incentive for consumers, a £10 million pioneer places fund to encourage early activity from local authorities, and a £12 million fund for core cities to prepare the supply chain. The new energy saving advice service helpline is in place: the number is 0300 123 1234. We have published green deal quick guides, and the new green deal website was launched on Wednesday 17 October.
Nadhim Zahawi
I congratulate my right hon. Friend on the fantastic work that he is doing on the green deal. The supply chain that he mentioned is incredibly important. What steps is he taking to encourage smaller businesses from across the country to become suppliers?
Gregory Barker
I am grateful to my hon. Friend for that question. I know he is a huge champion of smaller businesses, and I can assure him that we see small and medium-sized enterprises as critical to the delivery of the green deal. In fact, I regularly meet SMEs, and this week had a meeting with the Federation of Small Businesses. My Department has set up an expert panel specifically to consider the role of SMEs, chaired by the right hon. Member for Greenwich and Woolwich (Mr Raynsford), for whose co-operation I am very grateful. We have also held a series of national roadshows around the country to alert local businesses to the opportunities right the way through the green deal supply chain, which I am pleased to report to my hon. Friend has attracted a great deal of interest.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
The green deal is an excellent initiative and we obviously hope it will get results, but clearly the current economic situation is not a time when many people are going to be keen to take out loans for anything at all. Will the Minister tell us what steps he is taking to support people on lower incomes who might feel unable at the moment to take out loans under a green deal scheme?
Gregory Barker
First, let me make it absolutely clear that green deals are not loans—certainly not loans as most people understand them. Everybody taking out a green deal should be better off, net-net, on their energy bill after they have had the interventions. It is not something that anybody could feel unable to afford. For those on particularly low incomes, where more work needs to be done on the home than can be financed on a green deal plan, there is £1.3 billion ECO—energy company obligation—programme, which will unleash a huge wave of investment to bring up to standard the homes of the most vulnerable and poorest.
Nick Smith (Blaenau Gwent) (Lab)
3. What steps he is taking to help households improve their energy efficiency.
Alison Seabeck (Plymouth, Moor View) (Lab)
7. What steps he is taking to help households improve their energy efficiency.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The green deal, together with the energy company obligation, is the coalition’s transformational programme to help consumers make energy saving improvements to their homes. We expect the first green deal finance plans to be written by the end of January next year. Our ambitious roll-out of smart meters will have reached every home in the country by 2019.
Nick Smith
Homes in Blaenau Gwent, some more than 1,200 feet above sea level, need energy saving insulation now. Locally based RIS Insulation says there is a serious gap in Government policy as the green deal will not offer loans until late next year and that many jobs could be lost. How are the Government going to bridge that gap?
Gregory Barker
I am very pleased to correct that misinformation. The green deal finance plans will be written from January next year. The ECO is already in place, while the carbon emissions reduction target and the community energy saving programme will continue through to the end of this year, so there is a substantial programme of work that is seamless, running from the end of CERT and CESP right through to the take-up of the more transformational green deal programme.
Alison Seabeck
Evidence produced by the Office for National Statistics and highlighted in the Plymouth Herald this week has highlighted the fact that many more people are working beyond pensionable age, in part because of the need to pay their high energy bills. The last Labour Government put tough obligations on those energy companies to support vulnerable families, including pensioners, with insulation. With only 10 weeks left, Ofgem is now warning that many of those energy companies are not going to meet their targets. What is the Minister doing to nail these energy companies and to explain to my pensioners in Plymouth that they are going to be supported and be warm?
Gregory Barker
The hon. Lady is right: there have been shortcomings in the programmes introduced under the last Government—namely, CERT and CESP. We have done much more to drive deployment of those programmes into vulnerable homes and for the super priority group. I have assurances that we will meet those targets for CERT and CESP, but the great thing about the green deal is that it is applicable to every single home. Whether it be pensioners living in rented accommodation or people living in social housing or on their own, the green deal will be for them, along with a whole range of measures that were not available under CERT.
Mr Tim Yeo (South Suffolk) (Con)
Recognising entirely the important contribution that the green deal will make, does the Minister nevertheless accept the concerns expressed by the Select Committee about the relative absence of energy-efficiency measures from the draft energy Bill? When the final Bill eventually appears, will it include further measures, and has his Department given consideration to a feed-in tariff for energy efficiency?
Gregory Barker
This is one of a number of measures under active consideration at the moment. The energy Bill is very complex, as my hon. Friend the Chair of the Select Committee knows, but it will include the most transformational, radical proposals on energy efficiency ever introduced in this place. Given the complexity and the need to consult, some of these measures may be introduced by way of Government amendment as we take the Bill through the House. I can tell my hon. Friend that the Government are leading and are determined to act on energy efficiency in a way that the Labour party failed to do in 13 years of office.
David Morris (Morecambe and Lunesdale) (Con)
The Hitachi deal is welcome in my constituency, but during a recent Select Committee hearing, the chief executive of EDF said that nuclear was not a done deal and that there would be some underwriting. Can the Minister tell us what that underwriting is, and whether there will be a public subsidy for nuclear generation?
Mr Speaker
Order. May I encourage Members to look closely at the question on the Order Paper, and to frame their supplementary questions accordingly?
Simon Hughes (Bermondsey and Old Southwark) (LD)
4. What his policy is on subsidising new nuclear power stations; and if he will make a statement.
The Minister of State, Department of Energy and Climate Change (Mr John Hayes)
What a pleasure it is to answer energy questions for the first time, and to do so with the wind in my sails!
New nuclear power will have a vital role to play in our energy mix, alongside other low-carbon forms of generation. It must be delivered to provide value for money for consumers, and funded through the investment that will spring from our exciting market reforms.
Simon Hughes
May I seek absolute clarity? Given that the Liberal Democrats oppose a new generation of nuclear power stations, and given that the coalition deal was done only on the basis that there would be no public subsidy for any nuclear power, may I have an express assurance that the construction and operation of every nuclear power station in the future will receive no Government subsidy at all? Can that be made absolutely clear, so that Hitachi understands it and everyone else understands it too?
Mr Hayes
Let me be crystal clear, because the right hon. Gentleman is right to inquire about this. There will be no levy, no direct payment and no market support for electricity supplied or capacity provided by a private sector new nuclear operator unless similar support is provided more widely for other types of generation. I could not be clearer than that.
Caroline Lucas (Brighton, Pavilion) (Green)
With respect, the Minister could be a lot clearer than that. A subsidy is still a subsidy even if it is given to other types of generation as well as nuclear.
According to recently published estimates, just the 16 GW of new nuclear capacity to be built by 2025 will require between £5.5 billion and £12.6 billion a year in finance. That is a huge cost to householders and businesses. Does the Minister agree with those figures, and will he admit that given the constraints of the levy cap, he faces a choice between breaching the renewables directive, breaching the Climate Change Act 2008 and abandoning his increasingly implausible plans for new nuclear build?
Mr Hayes
Nuclear power is a low-emission technology, and the hon. Lady should welcome it accordingly. She obviously regarded this week’s good news as bad news, but it is good news in terms of the supply chain—as my right hon. Friend the Secretary of State has said—it is good news for the British people, and it is good news for our energy mix and our energy security. I will not be influenced by the preoccupations of bourgeois-left academics; I will be inspired by the will of the people.
George Hollingbery (Meon Valley) (Con)
5. What recent assessment he has made of the role of reduction in demand in ensuring the UK’s security of energy supply in the long term.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
Following a recommendation from the Select Committee, I will shortly be publishing the Government’s energy security strategy. It will set out the Government’s framework for considering and addressing energy security, including the contribution of reduced demand. Building on that, the strategy will set the long-term direction for increasing energy efficiency, and the electricity demand reduction consultation proposes policies to unlock potential for further electricity efficiency. All three documents will be published later this year.
George Hollingbery
Will my right hon. Friend outline the balance of the investment required for the building of new energy generation capacity and for measures to reduce consumption?
Mr Davey
The key purpose of electricity market reform is to allow the market to make decisions of that sort. As the hon. Gentleman will know, my Ministers and I are extremely supportive of demand reduction and energy efficiency measures, which have a critical role to play in our energy mix, but we also need to bring in new supply. We face rising electricity demand as we electrify the transport and heating sectors in the years ahead to meet our climate change targets, even if we have the most ambitious energy efficiency policies imaginable, so we need both a supply-side and a demand-side response.
Mike Crockart (Edinburgh West) (LD)
Does the Secretary of State agree that although demand reduction is essential, demand balancing must also receive a bit more attention, and intelligent smart meters in homes would make an important contribution to that?
Mr Davey
My hon. Friend is absolutely right. Sometimes in energy debates people think there is one particular solution or technology. The truth is we need a diverse-mix balanced approach on both the demand and the supply sides, and new technologies such as smart grids and smart meters have an important role to play.
Julie Hilling (Bolton West) (Lab)
6. How many people self-disconnected from their energy supplies in the last 12 months.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The Department does not hold, and never has held, this information. However, Ofgem monitors disconnection issues more broadly, and in particular the obligation on energy companies not to disconnect vulnerable customers during winter months. I am pleased to be able to tell the House that Ofgem’s latest figures show that in 2011 the number of people disconnected from their energy supply for debt-related reasons fell by 54% for electricity and 59% for gas.
Julie Hilling
The energy companies proudly tell us they rarely disconnect customers. However, last year they installed prepayment meters to recover debt in more than 200,000 households, which increases the cost of power and, more importantly, means some households cannot afford to use gas and electricity. Will the Minister ask the energy companies to record the number of people who are so-called “self-disconnecting”?
Gregory Barker
This is obviously an issue for Members on both sides of the House, and we need to do more to address it. I am very pleased that we have made progress in reducing the total number of disconnections, but I take on board the hon. Lady’s point and I would be very happy to meet her to discuss her ideas.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
There is a group of residential consumers who are off the gas grid and do not have the protection of Ofgem: people who use heating oil and liquefied petroleum gas. Will the Minister say something about people who in effect self-disconnect by not buying oil?
Gregory Barker
This is a significant issue. In Sussex I am one of those customers, and the cost of heating oil is staggering. My hon. Friend the Member for Wealden (Charles Hendry) did terrific work in this area when he was a Minister in the Department. Last year, he looked extensively into possible cartels and competition issues, and we continue to look very carefully into that. Again, I would happily meet my hon. Friend to explain exactly what we are doing.
Mr Mike Weir (Angus) (SNP)
The Minister only talked about on-grid electricity and gas in his original answer, but there are also serious off-grid disconnection problems. Sometimes they arise because people are unable to afford supplies, and sometimes there are involuntary disconnections because of difficulties in getting supplies through in bad weather. Has the Minister spoken to the major suppliers in this market to remind them of the difficulties faced by those on low incomes and to ensure there are no disconnections this winter?
Gregory Barker
I have not personally spoken to suppliers of heating oil because that is not part of my portfolio; it is part of the Energy Minister’s portfolio. As I have just said, however, the former Minister, the hon. Member for Wealden (Charles Hendry), was extremely forensic in taking this through, and his work continues in the Department.
Stephen Mosley (City of Chester) (Con)
I welcome Ofgem’s changes allowing households on prepayment meters with debts of less than £500 to switch to a cheaper tariff with a different electricity operator. Does the right hon. Gentleman agree that making it easier for consumers to shop around and get a cheaper tariff will benefit everybody on prepayment meters, as well as those on other forms of payment?
Gregory Barker
Absolutely. We not only want to make it easier for consumers to shop around; we also want to ensure they are supplied with better information. We will use legislation to help people get the best deal.
Claire Perry (Devizes) (Con)
8. What steps his Department is taking to help people lower their energy bills.
Katy Clark (North Ayrshire and Arran) (Lab)
9. What steps his Department is taking to help people lower their energy bills.
John Robertson (Glasgow North West) (Lab)
18. What steps his Department is taking to help people lower their energy bills.
Sir Tony Baldry (Banbury) (Con)
19. How he will ensure that the forthcoming Energy Bill makes provision to enable consumers to receive the best deal on their energy.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
We have three ways to help people lower their energy bills. The first way is to help people save energy through policies such as the carbon emissions reduction target, Warm Front, the green deal and the energy company obligation. The second is to help people switch to get better deals; we will do everything we can, including through the energy Bill, to get people on to the lowest tariffs. The third is to help low-income and vulnerable households with their energy bills directly, through policies such as the warm home discount.
Claire Perry
My hon. Friend the Member for Suffolk Coastal (Dr Coffey) alluded to the fact that many of us who live in the real world—the one not inhabited by bourgeois left-wing academics—live off the grid and are reliant on sources of fuel such as heating oil; indeed, 53% of people in rural Britain rely on heating oil, I believe, as their primary fuel source. I welcome the Government’s recent support for community fuel buying schemes. Will the Minister say a little more about that? We have a very effective scheme in Wiltshire, which is saving people on average £140 a year, which is a sum not to be sneezed at.
Mr Davey
The hon. Lady is absolutely right, and she will know that I have championed collective purchasing and collective switching. People who are dependent on off-grid fuels such as heating oil have been doing an awful lot of work through heating oil clubs over a number of years. They have been trying to take on the imperfections they see in the market and get a much better deal for those communities. She is right to say that this is the way to go, and I commend her and others who support those projects.
Katy Clark
Two weeks ago, the Prime Minister said that he would make the energy companies move everyone on to the cheapest tariffs. Will the Secretary of State update the House on when and how my constituents will be moved on to the cheapest tariffs?
Mr Davey
The hon. Lady is right; we will do everything we can, including through legislating in the energy Bill, to get people on to the lowest tariffs. We are examining the retail market review that we have just had from Ofgem, which contains a number of excellent ideas, and we will be putting forward options on this issue, including legislation in the Bill.
John Robertson
The Secretary of State will know that one of my pet hates is the lack of attention paid to vulnerable people and their bills. Will he consider legislation to ensure that the energy companies actively find those people to help them rather than use mealy-mouthed words that mean absolutely nothing and then do nothing to find them?
Mr Davey
I agree with the hon. Gentleman that we need to do more to help the most vulnerable, who are facing the problems of rising electricity and gas bills. One argument that I am putting forward with collective switching is that if we can get community groups and local authorities involved in helping residents in their areas to buy energy together, they will be able to reach out to those vulnerable groups. In announcing “Cheaper Energy Together”, a £5 million competition in which local authorities and community groups can apply to set up these community switching schemes and community buying schemes, I made it clear that the only condition successful schemes had to meet was that they had to show they were helping people who are in fuel poverty—the most vulnerable in our society. I do see this as a route to helping the people whom the hon. Gentleman wants to help.
Sir Tony Baldry
Does my right hon. Friend support Ofgem’s proposals to limit each supplier to four tariffs per fuel, per meter and per payment type? Does he agree that tariff simplification, greater transparency and increased competition should be the starting points for energy market reform?
Mr Davey
My hon. Friend is right that the Ofgem package contains many attractive proposals. I am not going to say today that we agree with every one of them, but we are studying them. It is right for my Department and my Ministers to study the proposals carefully, because this is a crucial area. I reassure him that we are attracted to many of those ideas, and we will be putting forward our options for consultation and for the Bill.
Caroline Flint (Don Valley) (Lab)
Two weeks ago, the Prime Minister announced that the Government would be legislating so that energy companies have to give the lowest tariff to their customers. In our debate last week, the Secretary of State tried to clarify what the Prime Minister meant, saying that we are going to use the
“Energy Bill to ensure that the energy companies have to inform people of the best deal.”—[Official Report, 24 October 2012; Vol. 551, c. 939.]
But is he not aware that, as I pointed out last week, sections 76 and 77 of the Energy Act 2011 already give him the power to force energy companies to tell their customers about the lowest tariff? So can he explain why he is planning to introduce new legislation to bring in powers he already has?
Mr Davey
The right hon. Lady will know that I have already acted on this issue. Two months into office, I negotiated a voluntary agreement with the big six so that they would provide details of the best available tariff on people’s bills already—so I am afraid that she is behind the times again. I note that she has not commented on Ofgem’s proposals, not least because she wants to abolish Ofgem. That would be very damaging to the interests of energy consumers, both households and businesses. So I have to say to her that she needs to engage with the real debate, which is Ofgem’s proposals and our thinking.
Damian Hinds (East Hampshire) (Con)
Does my right hon. Friend agree that although having multiple price points for exactly the same product can be good for consumers, that stops being true when the poorest and most vulnerable are less able to access them and when the sheer volume, complexity and rate of change of those tariffs makes it almost impossible to make meaningful comparisons and keep up?
Mr Davey
My hon. Friend is right. Under the previous Government we had a multitude of tariffs, which became confusing and complex, but that Government failed to take action. It is good to know that Ofgem, with our support, has brought forward proposals after careful study, and we will act on them. Although it is possible to have too much simplification, which puts us in danger of reducing choice and competition, Ofgem is trying to strike the right balance and that is why we are studying its proposals so closely rather than dismissing them.
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)
When the Minister addressed 400—
Mr Speaker
Order. The hon. Lady has tabled Question 10 and must ask that first.
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)
10. What recent assessment he has made of levels of investment in clean energy infrastructure.
The Minister of State, Department of Energy and Climate Change (Mr John Hayes)
The electricity market reform White Paper, published in July 2011—I have a copy here for those who have not brought theirs with them—stated that up to £110 billion in investment in the power sector is likely to be required by 2020, of which approximately £60 billion relates to investment in clean energy capacity.
Sandra Osborne
I thank the Minister for that reply and apologise for pre-empting it. When he addressed 400 industry delegates at the renewable energy UK conference the other day, he spoke of the need for clarity and certainty in renewable energy policy to provide the right framework for investment. He then told the media that enough is enough when it comes to wind power. Which of those mixed messages represents the Government’s policy and what will he do to retrieve the situation, which has caused such uncertainty in the industry?
Mr Hayes
The commitment to renewable technology is an essential part of delivering the energy mix that I mentioned earlier. It is absolutely right that we should have renewables as part of that mix. That builds sustainability and resilience and helps us to meet our emissions targets. It is also good for consumers, because that mix guarantees our energy security.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Does my hon. Friend agree that Drax provides both clean and renewable energy? Will he see fit to increase the level of investment in and Government support for biomass, which is helping to feed renewable energy into Drax and helping growers in Thirsk, Malton and Filey at the same time?
Mr Hayes
The principle of using biomass as a feed of the kind that my hon. Friend suggests will have had a boost since, as Minister, I have cut the red tape and made it more straightforward. I share her view. I did it very quickly, because I like to do things quickly when it is in the public interest so to do.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
Clean energy infrastructure also includes carbon capture and storage, which is widely supported on both sides of the House. The coalition agreement, lauded by all members of the ministerial team and, I am sure, everyone sitting behind them this morning, made a commitment to fund four commercial scale CCS projects in the UK. Does that commitment still stand?
Mr Hayes
The competition to which the hon. Gentleman refers will allow a record level of investment in carbon capture and storage, in which Britain is a world leader. It is critical that in dealing with emissions we recognise what my right hon. Friend the Secretary of State has said and what the hon. Gentleman has acknowledged, which is that carbon capture and storage can be a vital part of those ambitions.
Tom Greatrex
I am sure the industry, which has expressed some concern over the past couple of days, will have heard the failure of the Minister to confirm whether those four projects will still be funded. Is he not concerned that without any firm commitment on funding by the UK Government, the prospects of securing the European Commission funding under the NER300 funding stream, which the UK did so much to put in place, are limited? Does he not understand the anxiety of those seeking to develop CCS that his failure to give a clear signal to the Commission could jeopardise access to up to €600 million, which could make the difference, as he says, in ensuring that our lead in CCS is realised?
Mr Hayes
The hon. Gentleman knows that the process was competitive. It was described by the spokesman from that sector as “very good news”. My right hon. Friend the Secretary of State took a personal interest in this matter because of its significance and he used his usual endeavour and diligence to ensure that we got it right. He personifies that approach in running this Department.
Mr Henry Bellingham (North West Norfolk) (Con)
Does the Minister share my support for the recent and very high level of investment in clean offshore energy off the coast of Lincolnshire, Norfolk and the Wash? Does he agree that it makes no sense for communities in those coastal counties to have controversial onshore wind farms forced on them unless there is overwhelming public support?
Mr Hayes
My hon. Friend will know that, since I became the Minister, we have called for evidence on both the community benefit and cost of onshore wind. It is critical that communities see that benefit and feel a sense of ownership over developments that affect them. During the process we will of course allow the normal expressions of interest by both proponents and opponents of onshore wind and will then consider them, as the Prime Minister said yesterday. When we have met our current targets, we will have to consider what to do. I suggest, as the Prime Minister has done, that all parties need to have that discussion.
Duncan Hames (Chippenham) (LD)
11. What outcome he will be seeking on climate finance at the UN climate talks in Doha in November 2012.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
At the climate talks in Doha, as part of a balanced outcome, I want to see a collective commitment from developed countries to maintain climate finance at least at Fast Start levels from 2013. We also want work on mobilising sources of finance to continue to reach the goal of jointly mobilising $100 billion a year by 2020. Finally, we will need to endorse the host country for the green climate fund.
Duncan Hames
That is indeed the goal, yet so far there is no agreement on how the funds will be raised. One option is a carbon price on emissions from international shipping, which, as the Secretary of State pointed out in a recent speech at Chatham House, are not covered by existing agreements. Will he raise the matter at the Doha talks?
Mr Davey
I raised it at the pre-COP talks in Seoul. It is a really interesting source of new climate change finance and should be explored alongside other potential revenues. It is absolutely vital that developed countries raise their ambitions in this area. We must show developing countries that we want to support them in this change and that moving to ambitious targets for reducing carbon emissions globally is possible and will not stunt growth. Green growth can go together with economic growth, whether in the developed or developing worlds, and we must support those countries.
Sheila Gilmore (Edinburgh East) (Lab)
Will the Secretary of State explain whether his energy Minister’s disdain for left-wing bourgeois academics signifies any change in the Government’s commitment to climate change science and, therefore, to seeking the necessary funding?
Mr Davey
Left-wing bourgeois academics are obviously welcome to contribute to any discussions in this House, because we want to hear from all sides. I must say that climate change scientists are not noted for their political beliefs; they do their work as scientists. They are providing the evidence that the Government, the country and, I hope, the rest of the world will act on. Their scientific results are extremely disturbing. Most recently we have seen what is happening in the Arctic, where the polar ice cap is melting faster than people had previously thought. That is what the scientists are telling us, and we should take it very seriously.
Chris White (Warwick and Leamington) (Con)
12. What steps his Department is taking to encourage new entrants to the energy market.
The Minister of State, Department of Energy and Climate Change (Mr John Hayes)
Wider participation is key to a competitive market and to securing the investment we need. The forthcoming energy Bill will reform the electricity market to incentivise new investment in a diverse, low-carbon energy mix.
Chris White
In a few weeks’ time I will have the pleasure of opening the new offices of First Utility in my constituency. It is one of the fastest growing energy companies in the country and a major local employer. It is pioneering new ways to help make household bills cheaper through a range of technologies and is an excellent example of the innovation that new entrants to the energy market can bring. Will the Minister meet me and First Utility to discuss how we can support new entrants into the energy market and boost competition to make household bills cheaper?
Mr Hayes
Just this morning I had a meeting with my diary secretary in which I prioritised just such a visit. It is vital that we allow new entrants into the market, because that will create the competitive pressure to drive down prices. The right hon. Member for Don Valley (Caroline Flint) told the House only last week that that had not happened over the past 15 years, and who was in charge of energy policy then?
Dr Alan Whitehead (Southampton, Test) (Lab)
The Minister will be aware that power purchase agreements are extremely important for the ability of independent low carbon generators to enter the market. Does he share my concern about the fact that power purchase agreements are disappearing from the market and that they will probably totally disappear by 2017? Does that not point to a concentration of generator ownership rather than the ability of low carbon generators to enter the market?
Mr Hayes
The Energy and Climate Change Committee, of which the hon. Gentleman is a member, is concerned about that point. We have called for evidence on exactly that subject, too—and for precisely the reasons that lie behind his question. We want to know what the issues and barriers are.
The hon. Gentleman is right to say that a plural marketplace is essential if we are to create the competitive pressure that I have described. Entry to that marketplace is therefore a priority. Actually, I think that that view is shared across the House.
Mr Jim Cunningham (Coventry South) (Lab)
13. What steps the Government are taking to stimulate the manufacturing of renewable energy technology in the west midlands.
The Minister of State, Department of Energy and Climate Change (Mr John Hayes)
We have recently set out support levels under the renewables obligation until 2017 and expect that the support will bring forward £20 billion to £25 billion of new investment in that period.
The energy Bill, the landmark measure to which I refer once again, will transform the electricity market, delivering a diverse energy supply and simultaneously stimulating the economy by bolstering jobs and skills.
Mr Cunningham
I remind the Minister that Coventry and the west midlands have a strong history of manufacturing and the potential to be at the forefront of developing and producing green technology. What are the Government doing to ensure that the region can develop the skills required and get the financial support to create the capacity to become a major manufacturer of renewable energy?
Mr Hayes
I know of the hon. Gentleman’s commitment to manufacturing, not only during his time as a Parliamentary Private Secretary but in the work he has done in his constituency and more widely, particularly in the automotive sector.
Just yesterday, I was in discussion with colleagues at the Department for Business, Innovation and Skills about this precise matter of ensuring an adequate supply of training and skills to meet the demand of the energy sector. There is more to be done, but it will be achieved best by the expression of that demand in stimulating the right kind of supply—from trainers, further education, higher education and elsewhere. It is about not just new entrants, but upskilling and reskilling too.
Mr Speaker
We are getting a very full insight into the Minister’s working week, for which I am sure we are all extremely grateful.
Jeremy Lefroy (Stafford) (Con)
Alstom, a major Stafford manufacturer, has just announced a welcome investment in tidal energy. Will the Minister please update us on the potential for tidal energy and associated manufacturing in the UK?
Mr Hayes
My hon. Friend will know that I am profoundly interested in renewable technologies that deliver. Tidal energy has immense potential. We have already committed resources to the work being done to get it to a scale on which it could be commercially viable. What my hon. Friend points to in his constituency, backed by his personal support, can only assist us in that practice.
Andrea Leadsom (South Northamptonshire) (Con)
14. What his policy is on onshore wind farms; and if he will make a statement.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
Our policy remains the same: to support onshore wind farms. Onshore wind is good for our energy security, emissions reductions, economic growth and jobs, and it reduces pressures on consumer bills. The new wind projects to deliver the ambition of 13GW by 2020 are largely on the table. The Government are clear that those must be properly sited and must provide genuine benefits to local communities.
Andrea Leadsom
I am disappointed that the Minister, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes), did not respond to my question; I have welcomed his comments in the press in recent days. Does my right hon. Friend believe that it is fair that my constituents in Helmdon, Sulgrave and Greatworth have spent two years and thousands of pounds of their own money fighting a wind farm in their area, with support from South Northamptonshire council, only to have the decision overturned on appeal? The inspector said that all their objections were very valid and upheld them, but added that national policy overruled local wishes. What steps is the Secretary of State taking to improve that unfair situation?
Mr Davey
I am sorry if I have disappointed my hon. Friend by my presence at the Dispatch Box. She will know that Ministers do not comment on particular planning applications, but I have made it absolutely clear, working with the Department for Communities and Local Government, that the planning system needs to be more responsive to local communities. I personally launched the consultation on trying to get greater community benefits for communities who host renewable sites. I hope that she will, with her experience, contribute to that consultation process, which is very important in ensuring that communities who host these sites can gain a real benefit.
Mr Speaker
I understand the temptations, but may I ask the right hon. Gentleman to face the House in answering questions, not to look backwards at the hon. Member who happens to be asking the question?
Caroline Flint (Don Valley) (Lab)
The last time we met at Energy and Climate Change orals, I asked the Secretary of State why he was failing to stand up to his Conservative colleagues who want to kill off the British wind industry. He said:
“I have to disappoint the right hon. Lady, because my Conservative colleagues and I are working very closely on this matter.”—[Official Report, 12 July 2012; Vol. 548, c. 433.]
By that, of course, he meant the former energy Minister. After yesterday’s outburst by the Minister of State, the hon. Member for South Holland and The Deepings (Mr Hayes), how closely would he say they are working together now?
Mr Davey
My hon. Friend the energy Minister suggests that I use the word “intimately”, but I can say that we are working very closely. My hon. Friend and I—as you, Mr Speaker, requested I will face the House—may occasionally disagree on issues of substance, and I certainly did not agree with his remarks the other day, but I have to say that I really admire his style.
Caroline Flint
The Secretary of State said to the media yesterday that there has been no change to Government policy, but as we have already heard during questions, investors themselves are saying that this latest shambles is very damaging and is putting investment in new jobs and new industries at risk. The energy Minister says that wind farms are imposed on local communities, but nearly half of all planning applications get turned down. He says that wind farms affect house prices, but there is no evidence in the UK showing that that is so. He says that wind farms are too noisy, but the existing planning guidance already sets noise limits. How does the Secretary of State feel about being tricked into agreeing a review that is nothing more than a hatchet job on the British wind industry?
Mr Davey
What the right hon. Lady did not say is that in the renewables banding review that we announced in July, which was warmly welcomed across the industry, we set the support levels until 2017 and sent a very strong signal to investors in the sector. She also did not tell the House what the Prime Minister said yesterday in supporting my position that the renewables policy has not changed. The Prime Minister and the Secretary of State are at one on this. We will continue with our renewables policy; it has not been changed.
Charles Hendry (Wealden) (Con)
Is the Secretary of State aware that oil and gas-rich countries such as Norway, Saudi Arabia and Kazakhstan recognise that an integral part of their energy security is the development of their own renewable resources, including onshore wind? If it is right for them, it must be right for us as well. He has given us clarity on long-term nuclear policy, developed on both sides of the House over a number of years. Will he now continue his work to deliver exactly the same clarity for investors in other low-carbon technologies such as renewables, because vital long-term investment decisions are being made now and people need that clarity?
Mr Davey
If I may, Mr Speaker, I should like to pay tribute to the great work that my hon. Friend did at the Department in a whole range of sectors and thank him for the support he gave me. He is absolutely right that countries around the world, even those that are richer in oil and gas supplies than ours, are investing in renewable energy, and I think we should continue with that. We should make it clear that this is one of the best places in the world to invest in renewable energy.
John Robertson (Glasgow North West) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
Since my Department’s previous Question Time, I have attended the pre-COP ministerial climate change talks in Korea. In addition, we have announced the winners of the record-breaking 27th North sea licensing round and the shortlist for our £1 billion carbon capture and storage competition. We have put in place the framework for our flagship green deal energy efficiency programme. We have welcomed the news of Hitachi’s major investment in new nuclear power stations in Britain. Energy UK has reported that energy investment in the UK is running at a 20-year high, including record investment in renewables. As you know, Mr Speaker, I intend this month to introduce the energy Bill, which will reform the electricity market, provide long-term certainty to investors, and ensure that British households and businesses enjoy affordable, secure and clean electricity supplies.
John Robertson
I thank the right hon. Gentleman for his short answer. He knows of my great support for nuclear energy and that I would like it to help to reduce our carbon emissions, but we have to respect the public’s concern about radioactive waste. What does he plan to do to ease people’s concerns in the realm of waste?
Mr Davey
I am grateful for the hon. Gentleman’s question. He will know that we have made it clear that new nuclear investors need to be responsible for the decommissioning costs and disposal of their waste. That is part of the deal—they must meet those financial obligations. In addition, as I said earlier to my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron), we are working with a number of communities, particularly in west Cumbria, on a geological disposal facility.
Simon Hughes (Bermondsey and Old Southwark) (LD)
T4. Just over the bridge at the Elephant and Castle, a major regeneration scheme is under way. When the Liberal Democrats ran the council, we proposed that the scheme should have an energy centre whereby the community could generate its own energy as well as keep prices as low as possible. Will the Government commit to supporting such community initiatives, to make sure that we get the best deal in our communities, led by our communities?
Mr Davey
I could not agree more with my right hon. Friend, who has championed community energy for many years. As Secretary of State, I am determined that we promote even more ambitious polices. We will introduce a community energy strategy in the spring. We have already made a number of announcements to encourage community groups and democratic local authorities to support these types of schemes.
Caroline Flint (Don Valley) (Lab)
A year ago today, the Government announced their first round of cuts to the feed-in tariff for solar power. As instillations flatline, Ministers have clung to the line that their plans will allow 4 million homes to be solar powered, with 22 GW of solar to be installed by 2020. Will the plan for 22 GW, which was announced in April, still be the Government’s policy when they publish their renewable road map, or does he now accept that, because of his cuts, Britain will not reach that target for at least another 30 years?
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
I do not know whether the right hon. Lady is deliberately misunderstanding what was said or whether she just did not grasp it in the first place. What we said about deployment rates is that we have the potential to deploy 22 GW if we can continue to drive down the cost of solar.
Gregory Barker
Yes, I did, but there was a little more context to it. If the right hon. Lady stopped muttering and rabbiting on, she would hear what I am saying. If she would like the answer, 22 GW is certainly our ambition, but in order to meet that ambition we need not just deployment, but deployment at a level that the country can afford. That is what we are about on the Government Benches—delivering renewables at a rate that the country can afford and that delivers good value to consumers, as opposed to the open handed, open cheque book, high-cost model deployed under the Labour party.
Duncan Hames (Chippenham) (LD)
T5. Both the Energy and Climate Change Committee and the independent Committee on Climate Change have argued that the Government should set a carbon intensity target for the power sector. Does my right hon. Friend the Secretary of State agree with them?
Mr Davey
I am grateful for my hon. Friend’s question. I think that there is a case for a decarbonisation target for the power sector, but that is still subject to ongoing discussion in Government. We are in a coalition and we need to get Cabinet approval for a decision such as this. However, it is worth noting for the benefit of the House that it is not just the Climate Change Committee and the Select Committee that have called for a carbon limit on the power sector by 2020. More than 50 companies, third sector bodies and trade bodies recently signalled their support in an open letter. There is huge support from industry for this measure and I hope that we can win that argument in this House.
Graham Stringer (Blackley and Broughton) (Lab)
T3. Do Ministers not think that it would help the energy debate in this country if the costs of renewables were itemised separately on energy bills?
Mr Davey
The hon. Gentleman seems to suggest that there is a lack of transparency in the way in which energy costs are delivered. I have to say that I disagree with him. There are huge amounts of information about the different costs of green energy. He will know that the cost of renewables for bills is tiny and that the cost of energy efficiency schemes, such as the carbon emissions reduction target and the energy company obligation, is significantly greater. The real costs involved in and the real reason energy bills are going up are the rising price of wholesale gas on global markets and the need to invest in our distribution networks that need to be replaced. Those are the real drivers behind higher gas and electricity bills, and people who suggest otherwise should look at the facts.
Robert Halfon (Harlow) (Con)
T9. The Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes), has been instrumental in forcing inquiries into the uncompetitiveness of the oil companies in keeping prices high at the pump. Will he also urge the Treasury to stop the 3p planned fuel duty rise in January, which will cost motorists an extra £60 a year?
The Minister of State, Department of Energy and Climate Change (Mr John Hayes)
Needless to say, I will not make any commitments above my pay grade or outside my remit, but my hon. Friend has been a doughty campaigner and as a result of that campaign will know that I have taken a series of measures along the lines that he has proposed, in my Department and elsewhere, to ensure that we can meet the objectives that he sets out. I am a Blue Collar Conservative by origin, by inclination and, as you can see, Mr Speaker, by sartorial choice.
Mr Speaker
Order. May I remind the House that there is much interest in topical questions, which I am keen to accommodate? Brief questions and brief answers would assist.
Mr David Hamilton (Midlothian) (Lab)
T6. Cockenzie coal-fired power station, in my neighbouring county, will close very shortly. That will be followed by a spate of closures of coal-fired power stations. What discussions is the Minister having about the gap that that will leave and the skills that will be lost in that important industry, and indeed in what we still have of the coal industry?
Mr Hayes
The hon. Gentleman is right that one challenge that the Government and the country face is ensuring that we get sufficient capacity, taking account of closures. It is true that our generating stock is ageing, and there are of course issues to do with the gradual end of coal and an ageing nuclear stock, so capacity is critical. Part of our reforms in the Energy Bill will be to do exactly what he asks and create sufficient incentive for investment to meet that capacity challenge.
Mark Pawsey (Rugby) (Con)
The Rugby Advertiser reports that a local pensioner has been scammed into paying £99 for a device that was claimed to save energy but that, according to Warwickshire trading standards, is dangerous and will not save any money. Will the Minister join me in condemning companies that take advantage in that way of consumers who are concerned about their energy costs?
Gregory Barker
Absolutely. I was appalled to read of the case raised by my hon. Friend, who is a great champion of his constituents. Trading standards exists to help such victims, and I am pleased to hear that Warwickshire trading standards is investigating the case. I would be grateful if my hon. Friend kept me informed of progress, as we take the matter very seriously indeed.
Mr Ben Bradshaw (Exeter) (Lab)
T7. If the new nuclear power station at Hinkley Point goes ahead, the people of Bridgwater will face 700 extra lorry movements a day and other massive strain on their infrastructure. Will the Minister ensure that they get long-term community benefit in return?
Mr Hayes
I am looking closely at the community benefits from new capacity, including new nuclear. The right hon. Gentleman is right that part of getting things right in the long term is to examine the effects on communities, which I have spoken about before in the House. We are doing so, and I will respond to him about the particular circumstances that he raises.
Andrew Stunell (Hazel Grove) (LD)
Energy demand management must be based on reducing demand in the home. Will Ministers assure the House that they are working closely with colleagues in the Department for Communities and Local Government to ensure that building standards reflect the need to improve the performance of our homes?
Mr Davey
I can confirm exactly that. I pay tribute to my right hon. Friend for the fantastic work he has done in pursuing those policies for many years, not least as a Minister in the DCLG. He will know that the Under-Secretary of State for Communities and Local Government, my right hon. Friend the Member for Bath (Mr Foster), is continuing his excellent work.
Ian Lucas (Wrexham) (Lab)
T8. Does the Secretary of State agree that investment in onshore wind is not a matter for levity, and that his relationship with his energy Minister is not sustainable?
Mr Davey
I do agree that investment in onshore wind is a serious matter. We need to ensure that industry and investors know that the Government are committed to a long-term, stable and consistent framework. The hon. Gentleman will know that I lead on renewable energy strategy and I decide the policy, and the industry has heard that.
Neil Carmichael (Stroud) (Con)
I, too, welcome Hitachi’s expression of confidence in our nuclear industry, especially as the plans include Gloucestershire. What does the Minister think about the need to develop skills and the labour market to support that infrastructure?
Mr Hayes
When I was the Minister responsible for skills, I convened a meeting that was attended by DECC and Department for Business, Innovation and Skills officials to ensure that we had a clear expression of demand from the industry, and the Government met that demand by talking to skills suppliers to ensure that we attracted new people to the industry and built the skills necessary. We are on the case, and the nuclear skills academy is leading that process. I can assure my hon. Friend that nuclear presents a chance for new jobs and skills as well as being important for our energy security.
Mr Nigel Dodds (Belfast North) (DUP)
Following the reductions in winter fuel payments that the Government have implemented, many senior citizen households are finding it difficult to meet bills, especially for lump-sum payments for home heating oil. What are the Government doing to address that problem?
Gregory Barker
I am afraid I did not catch the last part of the right hon. Gentleman’s question about heating oil.
Gregory Barker
As the right hon. Gentleman may know, more than 2 million of the most vulnerable households—primarily pensioners—will receive the warm home discount in addition to winter fuel payments. The Government are taking record action to ensure that our support is directed at those who need it most, and we are proud of our record.
Christopher Pincher (Tamworth) (Con)
Are Ministers on the Treasury Bench aware of the assertion by GE Hitachi, which is engaged in buying the Horizon consortium, that it can build fast nuclear reactors in four years, thus reducing the time to market and, potentially, the subsidy required?
Mr Davey
I am aware of Hitachi’s record, and with its Canadian partner it has a fantastic record of building new nuclear reactors on time and on budget. It has built 20 nuclear reactors over the past 40 years—an impressive track record—and I welcome it to the UK energy market.
Ann McKechin (Glasgow North) (Lab)
Does the Secretary of State agree that the development of carbon capture technology should be a priority for the new green investment bank?
Mr Davey
As the hon. Lady will know, the Government have already made a big commitment to carbon capture and storage, and we have announced the next stage of our £1 billion competition, with four of the original eight bidders going forward. It is not for me to set the investment priorities of the green investment bank; the purpose of it being at arm’s length from the Government is so that it can set its priorities.
Mr Graham Stuart (Beverley and Holderness) (Con)
This country accounts for 2% of global carbon emissions, and that level is falling. It is, therefore, essential that we engage with countries around the world that have larger emissions. When did a Minister from the Department of Energy and Climate Change last visit China?
Mr Davey
I will write to the hon. Gentleman with the exact dates of when a Minister from our Department last visited China. I recently met the relevant Minister from China in London, and in Seoul at the international climate change talks. We are working closely with the Chinese, and they have taken up our 2050 road map calculator for how we can plan to reduce carbon emissions in an ambitious way. Our relationship with China in that area is solid.
Helen Goodman (Bishop Auckland) (Lab)
When the Government changed the rules on feed-in tariffs, 100 jobs were lost in my constituency. What calculation has been made of the number of jobs that will be lost if, as in the view of the Minister of State, no more onshore wind turbines are to be built?
Gregory Barker
We have big ambitions for microgeneration and distributed energy, but only if it provides real value for money for consumers who pay the bills and will be buying that technology. We can do that if we provide a long-term stable framework, which is what we are doing. The feed-in tariff was never designed as a job creation scheme in itself; it was designed to drive a mass take-up of distributed energy.
Tessa Munt (Wells) (LD)
The National Grid Company has a statutory duty to consider social and environmental costs when evaluating routes for electricity transmission, whether overhead, underground or undersea. It wrote to my constituents acknowledging that duty, and assured them that it would provide detailed analysis for the Hinkley C connection project. As the company has plans to announce its route alignment on Tuesday 6 November, but has not yet provided that information, will the Minister intervene on behalf of my constituents to ensure that it does not ignore its statutory duties—
Mr Speaker
Order. We are extremely grateful to the hon. Lady, but we need a sentence question.
Mr Speaker
Order. I am sorry to disappoint colleagues, but we must move on.
Business of the House
(12 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ms Angela Eagle (Wallasey) (Lab)
Will the Leader of the House give us the business for the next week?
The Leader of the House of Commons (Mr Andrew Lansley)
The business for next will be:
Monday 5 November—Second Reading of the Growth and Infrastructure Bill.
Tuesday 6 November—Second Reading of the European Union (Croatian Accession and Irish Protocol) Bill, followed by motion to approve European documents relating to banking union and economic and monetary union.
Wednesday 7 November—Opposition day (8th allotted day). There will be a debate on regional pay in the NHS, followed by a further debate on a subject to be announced. Both debates will arise on an Opposition motion.
Thursday 8 November—A debate on a motion relating to the medium-term financial plan for the House of Commons administration and savings programme, followed by a general debate on stimulating growth through better use of the prompt payment code. The subjects for these debates have been nominated by the Backbench Business Committee.
Friday 9 November—Private Members’ Bills.
The provisional business for the following week will include:
Monday 12 November—Opposition day (9th allotted day). There will be a debate on an Opposition motion. Subject to be announced.
Tuesday 13 November—Business to be nominated by the Backbench Business Committee.
I should also like to inform the House of business in Westminster Hall:
Thursday 22 November—A debate on the Transport Select Committee’s report on air travel organisers’ licensing reform, followed by a debate on the Committee’s report on flight time limitations.
Thursday 6 December—A debate on fisheries.
Ms Eagle
I thank the Leader of the House for announcing the business for next week.
Last week, I welcomed the new Chief Whip to his position. This week, I should congratulate him on another parliamentary record. John Wakeham, his predecessor, lost a Commons vote within 40 days in the job; this Chief Whip has done it in only 13 days. At least his experience in John Major’s Cabinet means that he knows what it is like to serve under a weak Prime Minister who is unable to control his parliamentary party.
Yesterday lunchtime, the Prime Minister said he was in favour of cutting the EU budget, but yesterday evening he voted against cutting the EU budget. It says something about his unique negotiating strategy that he thinks he strengthens his position by voting against the very thing he says he will argue for; and it says something about his approach to party management that, ahead of last night’s vote, he told his Back Benchers—in colourful terms—that the House
“is not some…sixth-form debating society”.
Yesterday, the Prime Minister said the Government were seeking a real-terms cut in the EU budget, but today the Deputy Prime Minister has ruled that out. Who speaks for the Government?
Two weeks ago, the House voted against the scrapping of 2nd Battalion the Royal Regiment of Fusiliers, and the Government ignored the vote; last week, the House voted against the badger cull and the Government carry on regardless; but they must not ignore the vote of the House last night—after all, this is not a “sixth-form debating society”. May we therefore have an urgent statement from the Foreign Secretary on what steps the Government will now take?
I am afraid I owe the House an apology. Last week, I tipped Flashman for the 4.25 at Doncaster, but when it came to it Flashman over-promised and under-delivered. He turned out to be a great disappointment. There is a lesson in that for Conservative Back Benchers: don’t waste your money on a gelding called Flashman.
Back in September, the Prime Minister announced with great fanfare that he was setting up a growth implementation committee. He said it would be
“a forum which will be focused on implementation and driving implementation.”
When asked, the Business Secretary—vice-chair of the committee—could not remember its even being set up. So unmemorable and unimportant was the committee on “driving implementation” that the Business Secretary’s officials had to remind him that the committee had in fact met twice and that he had been there. There we have it: the PR Prime Minister announces by press release a drive for growth, and nothing happens.
It is no wonder that, halfway through the life of this Government, they had to ask Lord Heseltine to report on how to drive economic growth. His report concluded:
“the UK does not have a strategy for growth”.
They did not need to ask Lord Heseltine to find that out. So far, we have had a growth implementation committee and a growth report, and next week we will debate the Growth and Infrastructure Bill, but since the Government were formed and over the entire period they have been in office, the economy has grown in total by just 0.6%. Whether plan B or plan H, the Government need a plan for growth, so may we have an urgent statement from the Chancellor on what the Government are doing to implement the report’s recommendations?
The Conservative Energy Minister said this week about onshore wind farms that “enough is enough”. Hours later, up popped his boss, the Liberal Democrat Secretary of State, to announce the opposite. For good measure, a “source” told the Guardian that the errant Energy Minister “has been very silly”. We clearly need an urgent statement from the Secretary of State for Energy and Climate Change so that we can find out precisely what this Government’s policy on onshore wind farms really is, because it did not become any clearer in today’s questions. We also need an assurance that his junior Minister will not contradict the policy the day after it is announced.
Then there is Trident. This week, the Defence Secretary announced one position, and then the Deputy Prime Minister announced a different one. We have not heard from the Leader of the House on the subject, so maybe he would like to announce a third.
This week we have had two defence policies and two wind farm policies and today we have got two EU budget policies. Even a sixth-form debating society would do better than this.
Mr Lansley
I am grateful to the shadow Leader of the House for her tip last week, but I was looking forward to one this week. It turns out that all we get from the Labour party is a non-starter. The hon. Lady has to get it right—if the horse does not run, you keep your money, and that is what we are going to do. We are going to keep the money.
The hon. Lady is right: we are not a sixth-form debating society, but people might have thought differently from the way the Labour party approached yesterday’s debate. It was a classic of student politics—do one thing and say another. This is a party which in government saw the EU budget rise by 47%. It said it would go and negotiate toughly on the budget, but gave away the rebate and saw the budget go up by £8 billion. That is not a party that has any credibility. On the contrary, our Prime Minister will go to those negotiations looking for a cut, not—as the shadow Leader said—aiming for no cut. We have already started with the toughest position ever achieved in relation to the EU budget, with the Prime Minister already having done what the Labour party talked about but never did—creating allies in Europe for constraining the EU budget, as he did in December 2010. Contrary to what the Labour party says, the Prime Minister is prepared to use the veto on the EU budget if necessary, whereas Labour says it would not.
The hon. Lady did ask a question—I always search for them. She asked whether the Chancellor would make a statement about Lord Heseltine’s report “No Stone Unturned”. The Prime Minister and Chancellor commissioned that report and welcomed it. It rightly stressed that we are on the right track. Anyone who knows Michael Heseltine well—as I do—will recognise that he always wants to be pushing forward, and that is what we will do. The Chancellor will make the autumn statement on 5 December and show how we are taking forward growth, because from our point of view it is vital to achieve growth in the economy.
The hon. Lady asked about Trident. All that my right hon. Friend the Secretary of State for Defence was doing was announcing the next phase of what was announced back in May in relation to the design and development process. There was nothing new or exceptional about that. The shadow Leader of the House seems to have written her response to the business statement before she came to the House to listen to the Secretary of State for Energy and Climate Change respond to questions. He and his Ministers could not have been clearer. We are achieving improvements in renewable and green technologies in ways that Labour could only dream of.
I remind the shadow Leader of the House that she told her constituents in the Wirral News yesterday that
“we desperately need…some good news on the economy.”
I find that astonishing. Does she not realise that we have reduced Labour’s deficit by a quarter? Under this Government, there are more than 1 million more people working in the private sector and an increase in employment of 750,000. The number of people claiming the main out-of-work benefits has fallen by 170,000. Furthermore, 950,000 people have started apprenticeships in the past two years, and more new businesses have been created than in any other year on record. That is happening under this Government. Only Labour believes in a plan B— B for borrowing!
Mr Speaker
Order. As usual, a large number of hon. and right hon. Members are seeking to catch my eye. If I am to accommodate anywhere near all of them, in the light of the important and heavily subscribed Back-Bench business to follow, brevity from Back and Front Benchers alike will be vital. We can be led in this important parliamentary endeavour by the Chairman of the Procedure Committee, Mr Charles Walker.
Mr Charles Walker (Broxbourne) (Con)
May we find time for an urgent debate on the shocking performance of the East of England ambulance service? I am in no doubt that the performance of the chairman, Maria Ball, and the chief executive, Hayden Newton, is falling well short of acceptable.
Mr Lansley
May I take this opportunity to congratulate my hon. Friend on his election to the chairmanship of the Procedure Committee and say how much we look forward to working with him in discharging our business efficiently and effectively and in making the procedures of the House increasingly accessible, so that the public can engage with what the House does?
Mr Lansley
I am addressing Mr Speaker, if that is all right with the hon. Gentleman, as I think I am required to do.
The East of England ambulance service, like all other ambulance trusts across the country, has for the first time met all its category A response times, but it is important that it continue to do so right across the territory, not just on an aggregate basis. It is important for colleagues to raise this matter, and my hon. Friend and his colleagues might have the opportunity to pursue it in an Adjournment debate.
Andrew Miller (Ellesmere Port and Neston) (Lab)
Last week, the Leader of the House’s successor in the Department of Health made some strong comments in the media about the need to improve the regulatory regime around medical implants. The Science and Technology Committee has just published an important report on this subject. Given the anxiety among the public, may we have an urgent statement from the Secretary of State so he can explain what he is doing about this important subject?
Mr Lansley
Given my knowledge of these subjects, the hon. Gentleman will know that although I recognise that his Committee’s report is an important contribution, my noble Friend Lord Howe and other Health Ministers have never regarded this matter as anything other than important and urgent, and I am sure that they will endeavour to inform the House fully of any matters that arise. Their work not only in response to the breast implant scandal but, in particular, on how hip implants are regulated is proceeding apace.
Mr Christopher Chope (Christchurch) (Con)
May we have an early debate on the lack of accountability of NHS foundation trusts? The Royal Bournemouth and Christchurch Hospitals Foundation Trust is proposing to merge with the Poole Hospital NHS Foundation Trust. The Office of Fair Trading has given a two-week opportunity for public comment, but the trust has refused to supply me, under the Freedom of Information Act, with the 50-page document purporting to set out the public benefits. Without that document, it is very difficult for a Member of Parliament to comment constructively on the merits or otherwise of such a proposed merger. Is this not an outrage?
Mr Lansley
My hon. Friend will recall that the arrangements reducing the accountability of NHS foundation trusts to this House were established in legislation passed under the last Government, but in the future the NHS competition provisions will be transferred from the OFT to Monitor, which should enhance accountability. He raises an important point, however, about the application of the Freedom of Information Act to NHS foundation trusts, and I will ask my colleagues in the Department of Health to respond to that matter.
Nick Smith (Blaenau Gwent) (Lab)
Health professionals say that 125 amputations occur weekly owing to diabetes, yet 80% are preventable. The National Audit Office says that we could save £34 million annually if late referrals to specialist teams were halved. In the interests of patients and NHS budgets, may we have a debate on how to prevent amputations from diabetes?
Mr Lansley
I am grateful to the hon. Gentleman. I do not recall: does he have an early-day motion on this matter?
Mr Lansley
I hope there will be opportunities to discuss these issues. The hon. Gentleman might talk to his colleagues on the Opposition Front Bench. Instead of a debate on regional pay in the NHS, which is not proposed, he might have invited his colleagues to have a debate on improving outcomes in the NHS, which is what this Government are setting out to do. Where diabetes is concerned, that is one of our priorities.
Mr Speaker
Order. Can the hon. Gentleman assure me that he was present in the Chamber at the start of the Leader of the House’s statement?
Greg Mulholland
Indeed, and before the end of Energy and Climate Change questions, Mr Speaker.
Greg Mulholland
May we have an urgent debate on the nonsense of empty properties having to pay rates? It is hugely damaging and is preventing business. Wharfebank business centre in my constituency renovates old mill space to provide wonderful office space. The business is desperate for tenants, yet it cannot renovate further space, because if it does it will be forced to pay full rates on it. It does not make sense and is holding back growth.
Mr Lansley
Many Members will be aware of this issue, and my hon. Friend makes an important point. I will not dwell on the arguments, but he might note that, given the importance of the issue to small businesses, there will be an opportunity to consider it in the context of the Growth and Infrastructure Bill, which I have announced is due for debate on Monday.
Alison Seabeck (Plymouth, Moor View) (Lab)
I draw the House’s attention to my indirect interests, in relation to this question and the one I asked in Energy and Climate Change questions.
The NAO report “Managing the impact of Housing Benefit reform”, which is published today, makes it clear that private and social rents are rising fast—private rents in the south-west are expected to rise by 48% in the next eight years—and that the housing benefit budget is rocketing as more people in work find it more difficult to meet their housing costs. May we have a debate on the report and the desperate failure of the Department for Work and Pensions and the Department for Communities and Local Government to understand the implications of their own shambolic policies?
Mr Lansley
I do not recognise what the hon. Lady describes as the view inside the Department for Work and Pensions, which is well aware of the necessity of reducing what under the last Government became the ballooning costs of housing benefit, but in a way that recognises the difficulties that people may have. That is why the Government are providing additional funding, totalling £190 million, to smooth the transition over the next five years. If the hon. Lady wishes to raise the matter again, there will be opportunities to do so at Work and Pensions questions on Monday.
Bob Stewart (Beckenham) (Con)
The 6 December is the 30th anniversary of the Ballykelly bombing, when 17 people were killed—murdered, rather. Six of them were civilians and 11 were soldiers, six of whom were from my company. May I ask the Leader of the House, on our behalf, to note this very sad anniversary and, on behalf of all of us, to pass on our thoughts to the relatives, who are still grieving after 30 years?
Mr Lansley
I am grateful to my hon. Friend for raising this, as I think colleagues across the House will be. It is important that we take opportunities in this House not only to debate current issues but sometimes to stand back and to recognise and commemorate losses in the past. The sadness of those losses lasts to this day and will continue to do so.
Mr Nigel Dodds (Belfast North) (DUP)
Following the question from the hon. Member for Beckenham (Bob Stewart), next week marks the 25th anniversary of the Poppy Day massacre in Enniskillen, in which 11 people were murdered by the IRA. Clearly the House will want to join me in expressing condolences to the victims and their families. Today’s dastardly news of the murder of a prison officer by terrorists in Northern Ireland reminds the entire House that the battle against terrorism and for democracy and freedom continues in Northern Ireland and across this kingdom. We wish to send our condolences and sympathy to the family of the victim this morning.
Mr Lansley
I am grateful to the right hon. Gentleman; he is absolutely right. Members across the House know that we must never relent in the fight against terrorism. Equally, building democracy and creating the opportunities for people to take charge of their own destiny in a way that is peaceful in the long term is something that we have all contributed to and that we all support.
Philip Davies (Shipley) (Con)
May we have debate on localism? In a referendum with a 49% turnout in Menston in my constituency, 98% of those who voted opposed a proposed 300-house development in that village. However, Labour and Lib Dem councillors from other parts of the Bradford district came in and voted to impose that housing development on the village, which was clearly against the express wishes of the local people. Until the Government resolve issues such as these, localism will seem like a pipe dream to my constituents.
Mr Lansley
I understand my hon. Friend’s point. In my experience, we should have more locally led planning decisions, which this Government are making possible. Also, local authorities’ use of neighbourhood plans can give further force to local decision making, but that has to be pursued within each local authority.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
Sir Howard Davies has been appointed by the Government to look into aviation. Lord Heseltine, echoing the call from the shadow Secretary of State for Transport, says that the report due in 2015 will be far too slow in arriving, and Mayor Boris Johnson is threatening legal action against the Government if they do not advance that timetable. Is there any indication from the Department for Transport that it will be issuing a statement accepting that advice and bringing forward the report earlier?
Mr Lansley
Ministers have been clear about the nature of the complexities involved and the task required of Sir Howard Davies, and said that an interim report will be available next year.
Richard Fuller (Bedford) (Con)
May we have an early debate on career progression opportunities for black and minority ethnic employees in the health and care sector? There are hundreds of thousands of BME employees at the lower levels, but it would be good to see more at the higher levels, where there is just a handful at the moment.
Mr Lansley
I am grateful to my hon. Friend for that question. I do not have an immediate opportunity for a debate on that subject, but he might like to pursue the matter through other routes, such as an Adjournment debate. This is an important issue. I know how important it is that the national health service should pursue equality and diversity policies that are truly effective. To that end, I will ask my colleagues in the Department of Health to contact my hon. Friend to tell him how they are doing that.
Barbara Keeley (Worsley and Eccles South) (Lab)
Despite having had three spare hours of debating time on Tuesday, the House has still done nothing effective to hold the Department of Health to account for its lack of action on the alleged abuses by Jimmy Savile on NHS premises. Those three hours could have been used to question the lack of an independent inquiry, and to ask why the Department believes that internal reviews overseen by NHS insiders are sufficient when abuses against children and vulnerable patients are being alleged. The Leader of the Opposition has called for a single independent inquiry. Will the Leader of the House now allocate available time for a debate on this vital issue?
Mr Lansley
I do not have time immediately available for a debate on the investigations and inquiries relating to Jimmy Savile. Indeed, it might be difficult to hold such a debate while police investigations are taking place. None the less, I will of course ask my right hon. Friends to reply to the hon. Lady on this. I would also say, as someone who knows Kate Lampard, that I am sure she will conduct her investigations in relation to the NHS independently and effectively.
Pauline Latham (Mid Derbyshire) (Con)
Will my right hon. Friend grant us a debate on the employment figures? The Opposition seem to want to do down those figures, but I would particularly like to celebrate the fact that there are more women in employment now than ever before.
Mr Lansley
My hon. Friend makes an important point. It is important to recognise that, if employment were not rising, Labour Members would have been the first to say that we should debate the matter. Instead, they dwell on bad news. Such, I suppose, is the nature of opposition. They seem to be wallowing in that kind of thing. They seem to like being in opposition, and I think we will leave them there for a long time. My hon. Friend is absolutely right, however. The increase in employment, especially among women, and the reduction in youth unemployment are things that we should take the opportunity to celebrate.
Jonathan Ashworth (Leicester South) (Lab)
May we have a statement from the appropriate Minister on Government endeavours to help get back from the US the UK citizens who are stranded there because of the hurricane? I am particularly concerned about a party of 38 school girls from Leicester high school who are stranded in New York. They have been offered a flight on Tuesday, but the problem is that many of them have exams next week, so may we have a statement and will the Government look at ways of getting those schoolgirls back in time for those exams?
Mr Lansley
Ministers from the Foreign and Commonwealth Office were here answering questions on Tuesday, when I think this issue might have arisen. The hon. Gentleman makes an important point. There are probably something approaching 50,000 British nationals in the most affected parts of the United States. The events, the damage, the distress and the loss of life and livelihood in America are dreadful. One of our responsibilities is to do as the hon. Gentleman asked and offer consular assistance wherever possible for those who need it, so I will contact my colleagues in the FCO to see if they can respond to him.
Charlie Elphicke (Dover) (Con)
May we have a debate on unemployment? In my constituency, Dover and Deal have seen unemployment rocketing over the last Parliament. The latest quarterly claimant count figures are welcome, showing a decrease of 5%. That is a great result, but we should look at what more we can do to win the war on unemployment.
Mr Lansley
My hon. Friend is absolutely right. In that context, support for the Work programme is terrifically important. It is an unprecedented campaign to help the longer-term unemployed to get back into work. Encouraging as those employment figures were, we know that a substantial number of people have been out of work for some considerable time. The Work programme is directed to that, and 693,000 people are already accessing support through it.
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)
May we have a debate on communication between Government Departments and Members of Parliament with regard to individual constituents’ issues? Until recently, I have had named individuals in the Department for Work and Pensions whom my office could contact to discuss benefit inquiries on behalf of very vulnerable individuals, but I have now been told to contact the general inquiry line. At a time when, thanks to this Government’s draconian policies, DWP offices are inundated with inquiries from vulnerable people, this is not an adequate response.
Mr Lansley
I was not aware of any reduction of such facilities, but I will of course talk to my colleagues in the DWP. I know from conversations I have had with them that they are looking for Members to continue to be able to access dedicated support in looking after their constituents’ interests, but I will take a personal interest in the matter and ask DWP colleagues to reply to the hon. Lady.
Henry Smith (Crawley) (Con)
Tragically, in 2006 Captain James Philippson was killed in Helmand province. Disturbingly, a year later, the Ministry of Defence blamed my constituent, Army Major Jonny Bristow, for his death, yet in 2007, a coroner’s inquest exonerated Major Bristow of any wrongdoing and, indeed, identified a lack of proper equipment supplied by the Ministry of Defence at the time. May we have a statement from the Defence Secretary about the lack of equipment that used to exist for our troops in Afghanistan and about the way in which the Ministry of Defence handles its justice procedures?
Mr Lansley
I am grateful to my hon. Friend for raising this clearly important issue. I am aware that Major Bristow has submitted a formal service complaint, and I understand that the Ministry of Defence is in direct contact with him. That complaint is ongoing and is being considered at the highest level within the Army’s internal complaints mechanism. I am sure that my hon. Friend would not expect me to comment—it would be inappropriate for me to do so—while that process is continuing. He has had the opportunity to put the matter on the record; I will raise it with my right hon. and hon. Friends in the Ministry of Defence and ensure that they are made aware of it.
Ian Murray (Edinburgh South) (Lab)
My hon. Friend the shadow Leader of the House was correct to mention the confusion at the heart of government with regard to the Cabinet Growth Implementation Committee. If that Committee has met twice, why have the Government refused to answer my parliamentary question about its membership? May we have an urgent statement on the membership of this Committee, when it has met and what will be on the agenda for its next meeting?
Mr Lansley
I am sorry that the hon. Gentleman appears not to be aware that the document listing the members of Committees and Cabinet Committees was published on Tuesday. He could have seen it already.
Mr John Leech (Manchester, Withington) (LD)
The number of my constituents who are waiting more than six months for the UK Border Agency to process their applications for indefinite leave to remain is on the increase. May we have a statement on the agency’s performance in that regard, and also an explanation for the delays?
Mr Lansley
I will of course ask my colleagues at the Home Office to respond to the specific point that my hon. Friend has raised, but let me say to all Members that we are continuously trying to improve the Border Agency’s performance. I hope that the Government will look for opportunities to update the House as soon as possible.
Mr Andrew Love (Edmonton) (Lab/Co-op)
Against the backdrop of growing concern about the fact that the local economic partnership strategy is simply not working, may we have an early debate on the Heseltine growth strategy paper? It contains radical proposals, not least for the shifting of resources from the centre of localities and a fundamental shake-up of local government. This is urgent, and we cannot wait for the Chancellor’s December statement.
Mr Lansley
I do not think for a minute that we are waiting for the autumn statement. Things are already happening. For example, the local enterprise partnerships are established, and 24 enterprise zones have been set up across the country. On the Friday before last the Deputy Prime Minister announced regional growth fund allocations for hundreds of projects all over the country, totalling more than £1 billion, and more than 60% of the projects in rounds 1 and 2 are up and running.
Simon Kirby (Brighton, Kemptown) (Con)
The St James’s street area of central Brighton is very important to the social life of the city. May we have a debate about the importance of city centres to the cultural and economic life of their communities, and about the need for the police to maintain order in such locations?
Mr Lansley
Yes. I cannot identify an immediate opportunity for such a debate, but my hon. Friend’s point about the vibrancy of city centres is important, and I think that many Members will share his view. The policing aspect is part of a wider issue, namely the need to ensure that people feel that they can go to such places confidently and in safety.
I hope that there will be an opportunity for the debate for which my hon. Friend has asked, but he may wish to look for one himself. For instance, it may be possible for him to raise the matter on the Adjournment.
Kevin Brennan (Cardiff West) (Lab)
May we have a statement on the continuing mystery and whiff surrounding the decision by the former Secretary of State for International Development to restore aid to Rwanda? During international development questions yesterday, the present Secretary of State confirmed that the humanitarian situation in eastern Congo had worsened, but also said that she understood the decision to have been made on the basis of officials’ advice. May we have a statement so that that advice can be published and we can all see exactly what happened?
Mr Lansley
As the hon. Gentleman will know, the Prime Minister responded to a question about that on the Wednesday before last. However, I understand that the former International Development Secretary is due to give evidence to the International Development Committee, which will provide an opportunity for the position to be set out very clearly.
Guto Bebb (Aberconwy) (Con)
The interest rate swap mis-selling scandal, to which Members on both sides of the House have drawn attention, resulted in the setting up of a redress scheme by the Financial Services Authority. May we have a debate on the issue in Government time before Christmas, once the pilot programme for the scheme has been completed?
Mr Lansley
The issue of redress is important. As my hon. Friend knows, it is important for the pilot scheme for the review process to be completed—although it has now been extended for two weeks—and to focus on the need to provide redress for customers, when appropriate, as swiftly as possible, because of the impact on small businesses of the mis-selling of interest rate hedging products. I will ask my colleagues whether there will be any opportunities for the issue to be raised in a debate—I am not aware of one at present—but the hon. Gentleman should consider using the Parliamentary Commission on Banking Standards, for instance, as a mechanism enabling him to raise the issue more extensively.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
Last week an individual collapsed suddenly right outside Hamilton jobcentre. A constituent of mine went to the aid of the individual and asked the jobcentre staff to phone for an ambulance. They refused to do so, citing rules that they were not allowed to call ambulances for outside their premises. May we have a statement from the Department for Work and Pensions on this appalling situation so that we can have common decency, good sense and even, perhaps, life-saving activity, rather than adherence to strange rules?
Mr Lansley
The hon. Gentleman will understand that I am not aware of those circumstances, but I will, of course, talk to my DWP colleagues so that they can investigate what happened and respond to him.
Andrew Selous (South West Bedfordshire) (Con)
May we have an urgent debate on how to stop unnecessary EU regulations strangling UK businesses? My constituent Mr Hart from Leighton Buzzard is faced with losing his car transporter business because of EU regulation 1071, despite the fact that the Department for Transport has confirmed that there is no evidence for this whatever.
Mr Lansley
My hon. Friend will be aware that the EU regulation he cites came into force in December last year, so the flexibility to exempt vehicles and small trailers of up to 6 tonnes that existed under the previous EU directive is no longer permitted. That adds burdens to some businesses using small trailers, but my hon. Friend will also be aware that vehicle and trailer combinations of over 3.5 tonnes that carry their own goods can still make use of the small trailer exemption. I hope that is some small comfort.
Helen Goodman (Bishop Auckland) (Lab)
The unemployment rate in the north-east is almost 10%, which is the highest rate in the entire country. Will the Leader of the House make time for a debate on the state of the economy in the north-east?
Mr Lansley
The hon. Lady might like to talk to her colleagues about holding a debate on the economy in Opposition time. I have encouraged the shadow Leader of the House to consider that over the past two or three weeks, as good news on the economy has been emerging, which she has signally failed to recognise in her communications with her constituents. The hon. Lady, or her other colleagues representing north-east constituencies, might like to seek an opportunity to raise the topic of the economy on a regional basis in an Adjournment debate, when they could celebrate the fact that on Friday the Deputy Prime Minister announced £120 million, I think, of the regional growth fund round 3 moneys for the north-east, which is the largest sum of regional growth fund moneys.
John Glen (Salisbury) (Con)
Many bank complaints are not dealt with internally by banks, but are referred to the financial ombudsman, causing massive delays and adverse credit ratings for individuals, including my constituent Mr Ashley. Will the Leader of the House make time for a statement on the complaints procedures of banks and the performance of the financial ombudsman?
Mr Lansley
I fear, Mr Speaker, that I am at risk of repeating a number of times that there is an opportunity to raise issues with the Parliamentary Commission on Banking Standards. It is examining a very important area, and it could consider the topic my hon. Friend raises. I will also make sure that we take it into account as we look at opportunities for discussions relating to banking, perhaps as legislation on banking reform comes forward in the new year.
Helen Jones (Warrington North) (Lab)
Will the Leader of the House find time for a debate on transparency in pay and taxation, because I am sure the House would like an opportunity to debate recent reports that the interim chief executive of the Independent Parliamentary Standards Authority is being paid off the books through a company, thus, one assumes, saving a great deal in tax and national insurance contributions? Could we also then debate why IPSA, an organisation dedicated to transparency, refuses to publish details of these arrangements and say to its press officers that no matter how many stories they then leak, we will keep raising this issue?
Mr Lansley
I remind the hon. Lady that we will—not immediately, but at a future date—have an opportunity to discuss the appointments of further lay members to IPSA, which might enable her to raise such issues. On the specific point about the temporary chief executive, I should point out that it was very much a temporary appointment, with a contract for a short period of time, and those are precisely the circumstances in which, as is the case in business life, one would tend to have a special contracting procedure.
Gavin Barwell (Croydon Central) (Con)
With help from the Government and the Mayor of London, Croydon council is today announcing a package of nearly £9 million to regenerate west Croydon and the London road area, which was so badly affected by last year’s riots. However, many businesses are still waiting for compensation through the Riot (Damages) Act 1886 or from their insurance companies. May we have a debate about how government—local and national—and the insurance industry have helped the areas affected by those riots?
Mr Lansley
I am sure that the House will welcome what my hon. Friends says about the support being given by Croydon council to west Croydon as a consequence of the riots. I will ask my colleagues at the Home Office to write to him about what is being done in relation to the Riot (Damages) Act.
Sheila Gilmore (Edinburgh East) (Lab)
In the past few days, a number of important reports have been published, including one from the Joseph Rowntree Foundation suggesting that far from lifting people out of poverty, universal credit may leave them in poverty, and one from Gingerbread saying that universal credit will not get more single parents back to work. So will the Leader of the House make time during Government business to discuss those important reports?
Mr Lansley
The hon. Lady will be aware that there will be Work and Pensions questions on Monday, which is one occasion when this matter can be raised. She referred to a number of reports, so may I draw her attention to the one from the Resolution Foundation, which rightly pointed out how important it is for low-income and middle-income households in this country to move from dependence on benefits into work? Work is the best solution to poverty.
Stuart Andrew (Pudsey) (Con)
The independent Safe and Sustainable review into children’s heart units has recommended that Bristol children’s hospital be designated as one of the centres of excellence, but yesterday it became clear that the Care Quality Commission has issued a formal warning about staffing levels on one of its cardiac wards. That has resulted in a reduced programme of cardiac surgery. Many of us have had grave concerns about the validity of the Safe and Sustainable review’s decision. May we have a statement on this, because the warning raises new concerns, and means that the review’s decisions are now dangerously flawed and that all confidence in them has been lost?
Mr Lansley
My hon. Friend will be aware, not least from the debates that have taken place in Westminster Hall, that following the Safe and Sustainable review, which was carried out as an independent review within the NHS of child heart surgery, and the referral of these matters to the Secretary of State, he has asked the independent reconfiguration panel to look at the review’s recommendations. So, if I may, I will not trespass on the panel further than that.
Wayne David (Caerphilly) (Lab)
Last night, the Government were attempting to argue that there should be public expenditure cuts in all member states of the European Union but not in the EU itself. This morning, the Government seem to have changed their position somewhat. May we have a debate about precisely what the Government’s position is now on the EU budget?
Mr Lansley
I think that the House heard from right hon. Friends very clearly what the Government’s position is. The Government will listen to and hear what the House said in yesterday’s debate and vote. As I said earlier, my right hon. Friend the Prime Minister will set out at the European Council to deliver the very best deal he can for this country. He has already demonstrated his determination to do that by building alliances on the EU budget and by his willingness to use the veto, if necessary.
Andrew Jones (Harrogate and Knaresborough) (Con)
Please may we have a debate about Government investment in skills training, particularly on what further can be done to tailor it to the needs of young people who have not yet been able to get a job, despite the encouraging economic news recently, including the news from my constituency, where the youth unemployment rate is 3.5% and falling?
Mr Lansley
My hon. Friend makes an important point, not least in relation to the commendable enterprise in his constituency. I draw the House’s attention to what is really important about the Youth Contract, launched by the Deputy Prime Minister, which is its fantastic range of support for young people. In addition to apprenticeships, it involves: 250,000 work experience or sector-based work academy places; 160,000 wage incentives to take on 18 to 24-year-olds; 20,000 incentive payments specifically to support additional young apprenticeships; and £126 million to support the hardest to reach 16 and 17-year-olds. The Youth Contract will make the biggest difference we have seen yet in helping young people into work experience and then into work.
Ian Paisley (North Antrim) (DUP)
I know that the House will be saddened and outraged in equal measure to learn of the dastardly murder of a prison officer this morning in Northern Ireland, ambushed on his way along a motorway in our country. Given that that happened 10 days after the security threat level was reassessed across the whole United Kingdom, will the Leader of the House ensure that the Secretary of State for Northern Ireland comes to the House at her earliest convenience and makes a statement about the current security threat level in Ulster and what she is doing about it?
Mr Lansley
The House will share the hon. Gentleman’s sense of shock and outrage in relation to that death. My understanding—I am happy to correct this if I am wrong—is that the Home Secretary made it clear that there was a change in the security assessment for mainland Britain, but not for Northern Ireland. I will talk to my hon. Friends at the Home Office, who continuously consider and assess these matters.
Mike Crockart (Edinburgh West) (LD)
Today is the first day of Movember, and who can forget the transformation in a previous year of the Deputy Leader of the House into Tom Selleck? Can time be set aside for a debate on men’s health and awareness of prostate and testicular cancer in particular? We need to do all we can to overcome men’s reluctance to discuss these issues and drive down the high number of preventable deaths.
Mr Lansley
My hon. Friend makes an important point and I share his view. I hope that tens of thousands of people across the country will demonstrate their support for Movember. We need to ensure that there is just as much recognition of the symptoms and of the necessity of seeking medical advice and diagnosis for cancers that affect men, particularly prostate and testicular cancer, as there is about breast cancer for women. In the past, we have made some successful steps forward on breast cancer that have led to improvements in diagnosis and survival for women, and we now want to see that happening for men with prostate cancer.
Mark Garnier (Wyre Forest) (Con)
My right hon. Friend will be aware that there have been a number of questions asked about the poor performance of London Midland trains, particularly in the west midlands. Despite that, their performance continues to be absolutely atrocious. Given London Midland’s habitual underperformance, will the Transport Secretary make a statement on how that pitiful situation can be resolved?
Mr Lansley
My hon. Friend will know that London Midland has been experiencing a high level of cancellations for about two months now. London Midland is not yet technically in breach of its obligations, but if improvements are not seen in very short order, the Department for Transport will need to consider taking action against the train operator. I will talk to my colleagues and ensure that they update relevant and interested Members.
James Morris (Halesowen and Rowley Regis) (Con)
Earls high school, an excellent academy in my constituency, recently received a grant from a local company to invest in an innovative scheme to teach primary school children mathematics. May we have a debate on what more the Government can do to encourage innovative teaching methods, particularly in maths and science?
Mr Lansley
I will, of course, talk to my colleagues at the Department for Education about whether and when we might have an opportunity to do that. My right hon. Friend the Secretary of State was in Cambridge to talk to the department of mathematics there to see precisely how we can ensure improvements in mathematics teaching and I know that he, like my hon. Friend, is very exercised about improving standards in that respect. I shall seek advice about when we might be able to debate that further.
Fiona Bruce (Congleton) (Con)
I understand that this week the House of Commons Commission met to discuss the future of this great building. Will the Leader of the House clarify when Members will be given the opportunity to have some input into those considerations?
Mr Lansley
I am grateful to my hon. Friend, who is right that the House of Commons Commission and the House Committee in the other place considered the internal study group report. In this House, we took the clear view that we know our responsibilities are to ensure the efficient and effective delivery of the business of this House while protecting a building that is vital, historically and otherwise, and protecting value for money. We have asked collectively for further challenging work to be done on those options. Part of that challenge will be to ensure that the House of Commons Commission and the House Committee know well and fully the views of members of both Houses about the options.
Stephen Mosley (City of Chester) (Con)
Last year my constituent Rebecca Coriam went missing from a Bahamian-registered Disney cruise ship off the coast of Mexico. The Bahamas authorities have apparently conducted an investigation and provided a summary to Cheshire police but, despite assurances given to me personally by the high commissioner, they have not granted the police permission to release it to Rebecca’s family. May we have a debate on the appalling record of some Governments to investigate thoroughly and openly incidents on ships flying flags of convenience?
Mr Lansley
My hon. Friend is absolutely right to pursue the interests of his constituents as fully and rigorously as he can. As the ship in question was off the Mexican coast, Foreign and Commonwealth Office consular staff have been actively pursuing the initial police report from the Mexican authorities and, as he knows, are in contact with the family, Cheshire police and relevant local authorities. He also raises the issue of ships flying flags of convenience, and I will raise that with colleagues at the Department for Transport and ask them to get in touch with him about it.
Natascha Engel (North East Derbyshire) (Lab)
The Leader of the House has witnessed for himself the large number of Back Benchers who come to the Backbench Business Committee and seen the high quality, topicality and importance of the debates brought to us. As a business manager, he will also be aware that Government business sometimes collapses before the full allotted time. Will he work with the Committee to ensure that precious parliamentary time is put to best use and to see whether Back-Bench business debates can be slotted in on those occasions when it is quite predictable that Government business might collapse?
Mr Lansley
As a relatively new business manager, I will of course be very glad to discuss these matters with colleagues, not least the House authorities and my hon. Friend the Member for Broxbourne (Mr Walker)—he is no longer in his place—who chairs the Procedure Committee. [Interruption.] I know, as does the hon. Lady, that there are circumstances in which it is proper to allow time for debate and not proper to assume that there will not be a substantive debate on an issue that will take all the time available, so it can sometimes be difficult to anticipate when business will finish sooner than it might otherwise do.
Bob Blackman (Harrow East) (Con)
The improved economic figures are clearly welcome, but it is important that we improve our trade with developing nations. The Indian state of Gujarat has achieved record year-on-year growth, yet its First Minister, Narendra Modi, was denied access to the UK by the previous Government. May we have a statement from the Foreign and Commonwealth Office facilitating a state visit by Shri Narendra Modi to this country so that we can hear at first hand what wonders he has performed in Gujarat?
Mr Lansley
I will, of course, talk with colleagues in the Department for Business, Innovation and Skills about what opportunities there might be to look at Gujarat’s economic performance, but I remind my hon. Friend that, as he probably knows, over the past two years British exports of goods have increased to China by 72%, to India by 94% and to Russia by 109%. The Government are only too conscious of the importance of developing our trade with these leading emerging economies and will continue to give that real push.
Christopher Pincher (Tamworth) (Con)
Will the Leader of the House find time for a debate on local jobs fairs? I am holding a jobs fair in Tamworth tomorrow, where 40 employers, local and national, big and small, are coming to offer jobs to local people. I think that a debate would highlight the value of such fairs and the role that Members of Parliament can play in helping our communities get into work.
Mr Lansley
Yes. I congratulate my hon. Friend on the steps he is taking and am sure that his constituents really value his support for the jobs fair. It is vitally important. We all know how frustrating it is that there are continuing and persistent levels of long-term unemployment in circumstances in which the number of vacancies is approaching 500,000, so providing opportunities for people who are out of work to find work is something we can all support and work towards.
Mr Speaker
I have been saving up the hon. Member for Harlow (Robert Halfon).
Robert Halfon (Harlow) (Con)
Thank you very much, Mr Speaker.
Has my right hon. Friend seen my early-day motion 669?
[That this House notes the Chancellor’s strong support for motorists thus far, in particular the 1p cut in fuel duty in 2011 and the overall freeze in fuel duty that has lasted for two years; urges the Government to stop the 3p fuel duty rise planned for January 2013; and believes that this is an issue of social justice, as highlighted by the PetrolPromise.com website, showing that a 3p petrol tax will cost motorists an extra £60 at the pumps in 2013 and the Office for National Statistics, which shows that fuel duty is regressive, hitting poorest citizens the hardest.]
The 3p fuel duty rise in January will cost motorists £60 next year; for anyone who has to drive to work, that undoes one third of the benefit of raising the tax threshold. Will my right hon. Friend do everything possible to lobby the Treasury to stop the January rise and may we have a debate on the cost of living and fuel duty?
Mr Lansley
I am grateful to my hon. Friend; I have indeed seen his early-day motion. He will know, and it is important to remember, that as a result of the steps that the Government, not least Treasury Ministers, have taken, pump prices are now approximately 10p per litre lower than if we had stuck with the Labour party’s plans. That is tremendously important.
On the cost of living, if somebody is on the minimum wage and in full-time work, the effect of the increase in allowances coming through in April next year will be to halve the income tax that they pay. That, too, is an important point about the cost of living, among other things.
Points of Order
Henry Smith (Crawley) (Con)
On a point of order, Mr Speaker. Last week, the hon. Member for Derby North (Chris Williamson) accused me in a point of order of wrongdoing. I am pleased that you rejected his claims. May I seek your advice, sir, on the protocol, and not least the courtesy, that hon. Members should show each other in giving prior notice of when they are making an accusation against another hon. Member?
Mr Speaker
I am grateful to the hon. Gentleman for his point of order. The position has been and remains entirely clear. If a right hon. or hon. Member is going to allege misconduct on the part of another Member, there is a duty to inform the subject of the complaint in advance of making that complaint on the Floor of the House.
Mr Speaker
Order. The hon. Gentleman must contain himself; his appetite will be satisfied ere long.
It is in all our interests for us to operate on the basis that I have described. I thank the hon. Member for Crawley (Henry Smith) for giving me the opportunity to make the position absolutely clear.
Greg Mulholland
On a point of order, Mr Speaker. The Government have now decided that they will deal with Back-Bench business by ignoring it, not taking part and therefore not giving the House the opportunity to express a view. I do not believe that that is acceptable, Mr Speaker. Would you like to comment?
Mr Speaker
That is not really a point of order for the Chair now, although I could have an interesting discussion with the hon. Gentleman or other Members about it. How the Government react to individual Backbench Business Committee debates must be a matter for the Government.
I do not think that now is the occasion for me to enunciate an entire doctrine on the subject, but suffice it to say that I am hearing what is being said and attending to it rather closely. I am sure that the Government will want to respect the debates that take place under the auspices of the Backbench Business Committee; after all, the House, with Government support, established the Backbench Business Committee.
Backbench Business
Beer Duty Escalator
(12 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Speaker
Before I call the hon. Member for Burton (Andrew Griffiths) to move the motion, I remind the House that, on account of the level of interest, I have imposed an eight-minute limit on each Back-Bench speech. That limit will take effect after the motion has been moved.
Andrew Griffiths (Burton) (Con)
I beg to move,
That this House welcomes the essential contribution of brewing and pubs to the UK’s economy in providing one million jobs; notes the 42 per cent increase in beer duty since 2008 and HM Treasury forecasts that have shown that there will be no additional revenue generated from beer duty despite planned increases over the next two years; is therefore concerned about the effectiveness of this policy in tackling the Budget deficit, its impact on valued community pubs and the continued affordability of beer in pubs; and therefore urges the Government to support the UK’s beer and pub sector by conducting a thorough review of the economic and social impact of the beer duty escalator to report back before the 2013 Budget.
I begin by thanking the Backbench Business Committee for giving us the opportunity to debate this important issue on the Floor of the House. I know from the number of e-mails and telephone calls that I have received that publicans, brewers and people in pubs up and down the country are tuning into the Parliament channel to listen to the debate, such is their level of interest. I commend the Backbench Business Committee for giving us this opportunity.
Colleagues will know that the debate is a result of the fact that 104,000 people have signed a petition demanding the scrapping of the beer duty escalator and calling for the issue to be debated on the Floor of the House. I congratulate everybody who took the time and opportunity to familiarise themselves with these issues and sign in support of their pubs and breweries. Of course, 104,000 signatures do not appear overnight. I pay particular tribute to the work of the British Beer and Pub Association; CAMRA, the Campaign for Real Ale; SIBA, the Society of Independent Brewers; and brewers such as Hobgoblin, which has done so much to raise the profile of Britain’s brewers.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
I must declare an interest as secretary of the all-party Scotch whisky and spirits group. This issue affects Scotch whisky as well as beer. The whole whisky industry employs some 34,000 people in this country, and they are being affected too. Will the hon. Gentleman include them in his plea to the Government to look again at the escalator?
Andrew Griffiths
I completely understand the hon. Gentleman’s wanting to defend an important industry in his constituency, but I gently point out to him that the Scotch whisky industry had a 10-year freeze on duty under the previous Government, that 95% of Scotch whisky is exported, and that spirits have now become the drink of choice for young people across the country. I am making the case on behalf of the brewing industry, which has been so badly served.
Thomas Docherty (Dunfermline and West Fife) (Lab)
On the hon. Gentleman’s point about the choice that young people are making, Dunfermline Round Table recently held a beer festival that raised more than £20,000 for local good causes and charities, and I assure him that very many young people came along to support that event and had a very good evening drinking beer.
Andrew Griffiths
I thank the hon. Gentleman not only for making that important point—I agree that the pub offers a safe environment particularly for young people to be introduced to alcohol—but for the work that he has done on behalf of the all-party beer group, as have other colleagues in the Chamber, particularly my hon. Friend the Member for Leeds North West (Greg Mulholland), who, with the all-party save the pub group, has done such a lot to champion our pub industry.
Sir Tony Cunningham (Workington) (Lab)
With 16 pubs a week closing, it is important to remember that is what is really at risk is the football team, the cricket team, the golf society, the theatre at the back of the pub, the small library, the shop, the bowling green—the list goes on and on. The pub is a huge part of the community. I hope that the hon. Gentleman agrees with that.
Andrew Griffiths
Clearly, the hon. Gentleman has read my speech. We all recognise the value of the community pub in our communities. Be it the last pub in the village, the pub on the council estate, or the bar on the high street, we recognise that those establishments are at the heart of our communities. They not only provide employment but give people an opportunity to come together to celebrate and to meet friends, and they run football clubs, for example.
Dr Julian Huppert (Cambridge) (LD)
I congratulate the hon. Gentleman on securing this important debate. He is right to mention not only the social role but the economic role of pubs. Is he aware that each pub injects an average of £80,000 into a local economy? In my constituency alone, pubs employ just under 1,500 people, many of them young.
Andrew Griffiths
I thank the hon. Gentleman for that intervention. He is absolutely right. Some 85% of pubs across this country are small and medium-sized enterprises—small businesses that are trickling that economic impact down into our communities.
I draw the hon. Gentleman’s attention to the statistics released today by CAMRA, which show that there is an alarming increase in the number of pub closures. We all thought that we had seen the back of the bad old days in 2010 when 26 pubs per week were closing, once the figure had fallen to 12 per week. However, the new figures released by CAMRA show that 18 pubs per week are closing. That means that since March this year some 450 pubs have closed, and since the introduction of the beer duty escalator in 2008 some 5,800 pubs have closed.
Christopher Pincher (Tamworth) (Con)
A regrettable statistic—and I remember the days—is that one used to be able to buy six pints for a fiver. [Interruption.] I did not drink them all, I might say; I was buying a round. Since then, the cost of beer has increased and, as my hon. Friend says, the number of pubs that have gone to the wall and are going to the wall is increasing. As a result, revenue to the Exchequer is falling. Does he agree that the beer duty escalator is not simply raising money? It is losing money for the Exchequer.
Andrew Griffiths
My hon. Friend has put his finger on the nub of the problem. I want to remind the House that when the then Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), introduced the beer duty escalator he said that,
“as incomes have risen, alcohol has become increasingly more affordable…In order to ensure that alcohol duties keep pace with rising incomes, alcohol duty rates will increase by 2 per cent above the rate of inflation”.
Andrew Griffiths
If I could finish my point, I will then give way. The reality is that since the introduction of the beer duty escalator in 2008, beer duty has increased by a crippling 42%.
Jesse Norman (Hereford and South Herefordshire) (Con)
I congratulate my hon. Friend on securing this debate. Herefordshire has wonderful pubs, which are hard-pressed, breweries and some of the finest hops in the country. Does my hon. Friend agree that part of the review’s solution must be to include a rebalancing of duty away from pubs and towards retailers?
Andrew Griffiths
My hon. Friend makes an important point. The gap between prices charged at the pub and those charged at the supermarkets has widened. The supermarkets have driven the price down, as they did with milk, which affected our dairy farmers, and every time there is a duty increase it is the brewers who are forced to stand it.
Andrew Griffiths
I think I am in danger of breaking the record for the number of interventions taken, but I will give way to the hon. Member for Coventry South (Mr Cunningham).
Mr Jim Cunningham (Coventry South) (Lab)
I thank the hon. Gentleman for giving way. As he has said, since March 2008 the duty has gone up by 42%, which is surely not sustainable. It has had an effect on pubs since 2008, and over the past 10 years at least 18,000 pubs have closed.
Andrew Griffiths
The hon. Gentleman makes a valid point. We should consider the impact that the beer duty escalator has had on our brewers.
Andrew Griffiths
I would like to make a little progress, if I may.
Since the introduction of the beer duty escalator, beer sales have reduced by 16%. To put that in perspective, it is the equivalent of the loss of 1.5 billion pints as a result of the beer duty escalator. To put it another way, it is the equivalent of one major brewery in our country closing every year since the introduction of the beer duty escalator.
Andrew Griffiths
The hon. Gentleman is quite exercised, so I will give way to him.
Mr Donohoe
I am very grateful to the hon. Gentleman for giving way. Will he reconsider his previous answer to me? Scotch whisky is the heaviest taxed of all the spirits, beers, ciders and wines in this country. [Interruption.] It is the heaviest taxed.
Madam Deputy Speaker (Dawn Primarolo)
Order. The hon. Gentleman will sit down. We are not discussing duty on whisky, as much as some Members would like to discuss it. We will keep to the debate, which is about beer duty and pubs.
Andrew Griffiths
Thank you, Madam Deputy Speaker. What I would say to the hon. Gentleman is that 95% of all Scotch whisky is exported. In the UK, 87% of all the beer that is drunk in this country is brewed in this country. Beer is a great British manufacturing success story, which is why we need to support it.
Sir Roger Gale (North Thanet) (Con)
Shepherd Neame, a Kent family brewer, and Thorley Taverns in Margate are both major employers in one of the areas of highest social deprivation in the south-east. They are both under threat, paying huge amounts of their revenue in tax while companies such as Starbucks pay virtually nothing at all. Putting the beer duty escalator to one side, I remember going to see John Cope—now Lord Cope—when he was a Treasury Minister about 20 years ago, and our parliamentary delegation demonstrated then that the more we tax, the less revenue we take in the end. Is that not the nub of this argument—it is counter-productive?
Andrew Griffiths
I agree completely with my hon. Friend. The point about an escalator is that we stop when we get to the top. We have reached the top of the escalator and we are in danger of going off the edge of a cliff. That is why we must do something about the beer duty escalator.
Robert Halfon (Harlow) (Con)
I congratulate my hon. Friend on securing this debate on the cost of living. I recently attended the Campaign for Real Ale’s Harlow beer festival, which was supported by small independent breweries. Does he accept that the big breweries have a role to play, and that we need evidence to understand whether they are partly responsible for keeping beer prices high?
Andrew Griffiths
I commend my hon. Friend for supporting CAMRA, but I do not think there are such things as a bad brewer and a good brewer. We need large breweries just as we need micro-breweries, because we need a mixed economy. The problem is that all brewers are being hammered by the escalator.
The figures speak for themselves. In the last quarter alone, beer sales reduced by 5.6%, which is absolutely unsustainable. The Economic Secretary knows the figures better than I do, and he will know that the Treasury’s own projections for the next two years demonstrate clearly that the beer duty escalator will raise absolutely no money. Instead, it will hit the brewing industry and cost jobs and production.
Mark Pawsey (Rugby) (Con)
My hon. Friend is making a strong case. He has just spoken about micro-breweries. Does he agree that they provide great diversity in the beer market? We have fantastic micro-breweries such as The Atomic Brewery and Wood Farm Brewery in my constituency, and we need to support the concession necessary to provide the breadth and diversity of product that is now available.
Andrew Griffiths
I congratulate my hon. Friend not only on supporting breweries but on managing to get both his local brewers into Hansard in one attempt, which is absolutely fantastic.
Bill Wiggin (North Herefordshire) (Con)
I am grateful to my hon. Friend for his generosity in giving way. He will be aware that we need it, as he is one of the few Members whose speech does not have a time limit.
Will my hon. Friend use his excellent speech and the sense of unity in the House today to ensure that people paying duty on beer do not fight with people paying duty on cider? We must stay united, otherwise the Treasury will win.
Andrew Griffiths
I completely understand what my hon. Friend is saying. Nobody wants one industry to fight against the other, but we are seeing a reduction in the brewing industry simply because it is being treated unfairly. All that we are calling for is fairness. He talks about cider, and he will know that there is a 50p difference between the duty paid on a pint of cider and on a pint of beer. How can it make sense to the Treasury that every time somebody buys a pint of cider instead of a pint of bitter, it not only disadvantages brewers but costs the Treasury 50p?
Greg Mulholland (Leeds North West) (LD)
I am delighted to be working with my hon. Friend on this matter. He is aware that beer carries higher duty per serving than any other form of alcohol—spirits, wine or cider. Duty is 19p on a pint of cider and 41p on a pint of beer, which is simply not fair. We are calling today for fair duty on beer.
Andrew Griffiths
My hon. Friend hits the nail on the head.
We need to understand that the beer and pubs industry employs 1 million people across the country, 50% of whom are under the age of 25. We have a problem with youth unemployment, so surely supporting such a dynamic industry is the right thing to do.
Heather Wheeler (South Derbyshire) (Con)
I congratulate my neighbour on introducing the debate. We rely greatly on jobs in the industry in South Derbyshire and Burton. We have some fantastic local brewers such as Tollgate Brewery in Shardlow, John Thompson in Ingleby and of course the Burton Bridge Brewery, which has opened its fantastic pub, the Brickmaker’s Arms, in Newton Solney. They all create jobs, and we are asking Treasury Ministers to understand the cost-benefit analysis and bring the price down.
Andrew Griffiths
I thank my hon. Friend; nobody does more to support the brewing industry than she. I am astounded at the level of understanding shown by right hon. and hon. Members. Clearly Parliament gets it, and our job today is to ensure that the Treasury gets it, and that it scraps the tax and does more to support Britain’s beer and pubs industry.
Dr Sarah Wollaston (Totnes) (Con)
Last week, I met people from the Victoria Inn and the Kings Arms in Salcombe, as well as the publican from the Ferry Boat Inn in Dittisham. Those are among the finest pubs in Britain, and I was told that they could employ more young people if they had lower overhead costs, which includes the beer duty escalator. Does my hon. Friend agree that the greatest threat to those wonderful pubs is the toxic effect of ultra-cheap alcohol from our supermarkets? We must do more to level the playing field.
Andrew Griffiths
My hon. Friend does a great deal of work on alcohol and responsible drinking, and I am pleased that she has seen for herself the benefits that pubs can provide in educating young people and providing low-strength, high volume drinks such as beer.
I am getting some looks from the Chair, so I must press on and finish my speech. I hope hon. Members will forgive me, but Madam Deputy Speaker is giving me that stern look.
The beer and pub industry pays £11 billion in tax, and many of our brewers pay more than 50% of their turnover in tax and duty to the Treasury. This is not special pleading, and the industry does not expect to be treated any differently from others, but as my hon. Friend the Member for North Thanet (Sir Roger Gale) pointed out, companies such as Starbucks and Kentucky Fried Chicken, which have vastly larger turnovers, pay no tax. We want proper support for a good, British manufacturing industry.
We also want fairness. Britain pays 40% of all EU beer taxes, yet we drink just 13% of the beer—we are clearly not drinking hard enough. Why do we in Britain pay eight times more duty than a French drinker, 10 times that of a Spanish drinker, and 11 times that of a German drinker?
Philip Davies (Shipley) (Con)
I commend my hon. Friend on his speech, which is excellent as ever. Is not the point that beer duty disadvantages pubs against supermarkets? Supermarkets have 40,000 other products that they can cross-subsidise, perhaps by selling beer at a loss or a reduced price. We are in an economic mess because we have over-spent, not because we are under-taxed, and the Government’s solution should be to reduce spending, not to seek to increase taxation for ever.
Madam Deputy Speaker (Dawn Primarolo)
Order. There is a great deal of pressure on this debate, and I wish it took only a look from the Chair to remind Members that introductory remarks are supposed to last for 10 minutes or so. The speech by the hon. Member for Burton (Andrew Griffiths) has already lasted considerably longer, and I would be grateful if he would make progress so that others can contribute in full speeches, rather than interventions.
Andrew Griffiths
Thank you for reminding me of my obligations, Madam Deputy Speaker. I will come quickly to a conclusion.
My hon. Friend the Member for Shipley (Philip Davies) makes two important points. First, supermarkets have the ability to force brewers to include in the price paid for the beer any increases in duty, whereas publicans, who tend to run small businesses, do not have that opportunity. Secondly, supermarkets use their bulk buying power to drive down the price and use alcohol as a loss leader, which disadvantages pubs.
Mr John Leech (Manchester, Withington) (LD)
Will the hon. Gentleman give way?
Andrew Griffiths
I will not; I am going to finish my speech if I may.
The reality is that most pubs get 65% of their income from the sale of beer. That is why beer duty—rather than duty on wine, spirits, cider or anything else—is so important. Publicans, those small businesses in all our constituencies, rely on selling beer, and the 45% increase in duty that we have seen is simply unsustainable.
This is an opportunity. A fair taxation system for beer would help to drive growth, and if beer were given a fair break, it would challenge the industry to find ways of providing growth and employment, particularly for young people. I remind the Minister that some 2,370 people are employed in the beer and pub industry in 78 pubs in his constituency, including at the fabulous Bird’s Brewery in Bromsgrove of which he will be aware. A study by Oxford Economics showed that scrapping the beer duty escalator would save 5,000 jobs in the first year alone, and stop the closure of hundreds of pubs in all our communities. This is a huge opportunity to bring balance and fairness into the duty system, and to support our pubs and breweries.
I thank the House for taking such an interest in the debate. The Minister has a perfect opportunity today to demonstrate that the Government understand the pressures on hard-working families and do not want to penalise them by over-taxing the great British pint of beer. This is a great opportunity for the Minister to be the man who saves Britain’s brewing industry, protects the nation’s pubs and saves the great British pint. Scrap the duty!
Mr David Hamilton (Midlothian) (Lab)
I will try not to take up too much time. I want to be specific, because it appears from the interventions on the hon. Member for Burton (Andrew Griffiths) that hon. Members have a wide range of opinions that all go in the same direction. They will give the facts and figures during the debate.
When I was a young man, there were 23 pubs in Dalkeith high street. Times have changed. The price of alcohol has created problems for the brewing industry, but so have changes in habits and priorities. There is no doubt that taxation is one of the many factors that have created a problem for our pubs. Every day, we see on television and in the newspapers the problems on high streets at weekends, but no one talks about the thousands of pubs in villages and housing estates where there are no problems whatever. We want to protect those pubs.
No doubt the Minister will say that treating alcohol-related diseases costs 3% of the NHS budget; that only £10.6 billion is raised in tax; and that £21 billion is spent through the NHS on treating alcohol-related injuries and so on. I understand that, but I have a specific point for him to consider. Many hon. Members will talk about draught beer and cider, which are disproportionately affected by what happens in the supermarkets. In Scotland, there will be a threshold for alcohol pricing in supermarkets, but a minimum pricing regime will mean that the supermarkets take the money—nobody else will get it. Will the Treasury consider transferring the duty, and reducing the tax on some products and increasing it on others?
If hon. Members go to Tesco across the road from the Palace, they will find that four cans of John Smith’s will cost them £3.50—so I am told. A pint of the same beer will cost them £4.10 in The Red Lion. The tax on alcohol in supermarkets is completely disproportionate to the tax on alcohol bought at the bar.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
The hon. Gentleman makes a serious point about the health impact of alcohol on our society. Does he agree that pubs are a more controlled environment for drinking, and that people are less likely to abuse alcohol in pubs than if they buy cheap booze from the supermarket?
Mr Hamilton
I could not agree more. As a side issue, the central location of television soap operas is the pub. Things might be exaggerated on television, but pubs are about families and people getting together. Pubs are controlled environments where people look after one another. It is not uncommon for the bar steward to say to someone who is too drunk, “You’ve had enough. Away you go.” Somebody might look after someone who is too drunk in the pub. Drinking at home is uncontrolled and causes far more bother. Another problem we must face is that, nowadays, people—youngsters especially—meet in houses and get drink-fuelled before going out to the nightclubs.
Mr Jim Cunningham
Does my hon. Friend agree that one big problem with our high streets is the fact that there have been a lot of pub closures? Working men’s clubs are also affected. Are they not contributing factors to why we have ghost city centres, as we call them these days? A commission is looking into that.
Mr Hamilton
It is also the case that it is not just about pubs and the price of beer. Pubs, and especially clubs, have a far wider role. My local club, the Dalkeith miners club, has about 25 different organisations, including ones for kids, using its big halls during the day, and it is looking at other avenues. In many cases, clubs are community centres where no other community centre exists. They become the focal point for everyone.
I know that other hon. Members will raise a host of issues, but I have a specific point I wish to make. Surely it is not beyond the wit of the civil servants in the Department to come up with a mechanism that would tax a 50-pint cask of beer differently from anything else. That would allow draught beers to be taxed at a different rate—nobody is going to go to Tesco and buy a 50-pint cask and carry it home. Draught beers, ciders and lagers could be taxed differently.
Mr Leech
Is not the easy solution a differential on beer duty as between off-sales and on-sales? Minimum pricing for alcohol in supermarkets is still going to make supermarket alcohol much cheaper than in the pubs. If there is a massive differential in duty between supermarket alcohol and on-sales, it would make a massive difference in terms of encouraging people to drink in the pub instead of front-loading from the supermarket.
Mr Hamilton
I agree with the hon. Gentleman’s point, but without a cross-subsidy—the money raised from one being transferred to the other—I would be reluctant to go down the road of minimum pricing as proposed by the Scottish Government. Nobody has yet told me where that extra money will go, and that is a really big question that has to be answered. It has to be taken on board by the Department.
On the wider issue of alcohol taxation, it is a fact that the tax nowadays is so draconian compared with many years ago that it is a case of beer drinkers subsidising tax revenues. That has to stop, and the European Commission has to be drawn into line. I believe strongly that there is an alternative to the present proposal of cutting tax across the board. A selective cut could be effective. There have been many campaigns on beer, cider and lager, but there is an easier method if the tax is considered in terms of barrels of beer. It would have to be cleared through Europe, but the civil servants could do it.
Greg Mulholland (Leeds North West) (LD)
I am delighted to be a co-sponsor of the motion and to work with my hon. Friend the Member for Burton (Andrew Griffiths). He is the chair of the all-party parliamentary beer group and I am the chair of the all-party parliamentary save the pub group, and we are delighted to be working together on this very important campaign. I add my thanks to the Backbench Business Committee for granting us this time. I also congratulate the 104,000 people, and counting, who have signed the e-petition, and CAMRA and others who have achieved that figure.
This debate is about our national drink, beer, but it is also a Treasury debate about a major national industry. There are brewers up and down the country—
Greg Mulholland
Despite being a co-sponsor, I only get eight minutes, so I will take only two interventions.
Neil Carmichael (Stroud) (Con)
I wish to highlight the fact that I have four breweries in my constituency—Uley brewery, Severn Vale, Stroud and John Kemp’s excellent brewery, which has produced a Coalition ale, appropriately for this debate. All four do a huge amount for the community. Does my hon. Friend agree that that is a powerful reason to support this motion?
Greg Mulholland
It is, indeed. I have not tried Coalition ale—perhaps we can toast with it when the Government abolish the duty escalator next May. Exactly the same point applies to my own breweries: Wharfebank, Briscoe’s, Rodhams and other Leeds breweries all contribute to the local economy.
John Hemming (Birmingham, Yardley) (LD)
I declare an interest on behalf of myself and my hon. Friend the Member for Cheadle (Mark Hunter). We are both members of the Campaign for Real Ale. Does my hon. Friend agree that the social environment of pubs is very important?
Greg Mulholland
My hon. Friend is absolutely right. The key point from the hub perspective, as opposed to the beer perspective, is that beer duty is simply absorbed by the big supermarkets. They do not need to pass it on. They do not even have to make a profit from beer. Indeed, they have been shown to be selling irresponsibly at a loss. The point is not one of unfairness, though; the escalator simply makes no sense in terms of the Government’s own agenda, because it pushes people away from drinking in the sociable, controlled environment of the pubs and social clubs around the country, and encourages them to drink at home.
Beer is now 10 times more expensive in pubs than in supermarkets. That cannot be good. I am delighted to see the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), who has responsibility for community pubs, in his place. I welcome him to his post and look forward to working with him, as well as with the Economic Secretary. Frankly, though, we should also have a Health Minister attending this debate, given the health impacts that are being discussed.
The beer duty escalator does not make economic sense. It was introduced in 2008, at a time when alcohol duties were keeping pace with rising incomes and when inflation was considerably lower. Now, incomes have fallen, inflation is higher and VAT has risen. The simple reality is that since 2004 beer duty rates have increased by 60% and beer duty revenue by just 10%—a significant fall in real terms. As well as the damage to jobs, in putting up the duty, the Government are simply not taking the revenue projected. It is nonsense. It is a tax that simply does not add up.
It is encouraging to see Opposition Members now opposing the escalator. We have this strange situation, though, in which Labour, which introduced it, now opposes it, and Conservative and Liberal Democrat MPs who opposed it at the time now support it. Can we not unite the House now and say that this silly tax should go? We are sending that message loud and clear today.
I know that the Economic Secretary is a fan of pubs, and I know his Bromsgrove constituency well, because it is where my in-laws come from. I often visit and am pleased to drink in some of his local pubs. As well as announcing—I hope—that he will conduct this review, will he take the opportunity to consider other forms of progressive taxation that can help the British pub? There are various ways of doing that.
On the question of whether we can tax cask beer or real ale—or, indeed, all draught ale—separately, there is of course the problem of European regulation, as the Economic Secretary will point out when he sums up. First, we should challenge those regulations, but secondly may I put to him the interesting possibility presented by the duty-free element on cask beer? The reason for the duty-free element is the sediment in cask beer and the fact that cask beer requires much more care and effort to store, and lasts for a much shorter time. At the moment, we have a complex regime under which different breweries have different rates for different casks of beer. It is very complex and costly to administer. Could we not consider standardising the allowance and being generous with it, because it could provide a perfectly legal way of applying a lower rate of duty for real ale, our great British beer?
I also ask the Economic Secretary to consider the report by the Institute for Public Policy Research on the possibility of community pubs being granted 50% business rate relief if they can demonstrate their social and community impact. It has come up with a test, and I urge him and his officials to look into that and other ways of benefiting the pub in the way that right hon. and hon. Members are suggesting, alongside getting rid of the beer duty escalator.
As the chair of the save the pub group, I would be the first to say that the beer duty escalator is not the only issue facing pubs. There are others that should also rightly be tackled. I want to raise with my hon. Friend the Minister the issue of large pub companies and the large pub-owning breweries. Unfortunately, the large pub companies’ tenants and lessees also face their own pubco escalator, with unfair rises resulting from the eye-watering debts that those companies incurred because of their irresponsible actions some years ago. It is also important to tackle that. When my hon. Friend announces the review, as I hope he will, I hope he will also make it absolutely clear to those companies that they should pass on any drop in beer duty, because if they do not, those tied pubs will see no benefit whatever. In conducting the review and, we hope, making that announcement in the Budget next year, he must issue and receive a firm guarantee that any drop will be passed on, so that it benefits licensees and can therefore be passed on to customers, so that those pubs can become more attractive in competing with free houses.
My final point—I say this to the community pubs Minister—is that we must look at giving more protection to pubs in planning law.
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
Does my hon. Friend agree that the work we have done to allow the community right to buy and to bid has been helpful—just this afternoon I am visiting the Norton pub, which has been taken over by the community in order to save its local pub—and that any work we can do to support those pubs will be helpful?
Greg Mulholland
I thank the Minister for that, and I look forward to working positively with him. The inclusion of pubs in the national policy planning framework is hugely positive. I would also point him in the direction of Cambridge city council’s excellent policy, which I hope he will encourage other councils to follow.
At the moment we face a ludicrous situation, which is absolutely pertinent to this debate. We talk about supermarkets and wanting people to drink in pubs, but at the moment the planning system allows pubs to be turned into Tesco and Sainsbury’s shops without even having to go through the planning process and without any opportunity for the community to have a say. The supermarkets are engaged in the predatory purchasing of profitable pubs from indebted pub companies that are desperate to sell them just to try to balance their books. The Minister is the man who can stop it, by making very simple changes to the planning law and dealing with the fact that free-standing pubs can be demolished. I hope that there is progress, but there are also simple things that I hope he will do—both as part of this process and in getting rid of the beer duty escalator—so that the Government can live up to the Prime Minister’s claim about this being a pub-friendly Government.
As I hope I have pointed out already, and as I know many colleagues will, it is absolutely fantastic to see so many colleagues here when those of us on this side of the House have been put, I believe wrongly, on a one-line Whip. Whatever the vote, and even if there is no vote, it is absolutely clear what the will of the House is on this issue, and the Government must not ignore it. The beer duty escalator does not make economic or social sense. It is unfair, unsustainable and unjustifiable. I hope the Minister will have the courage today to say, “We will have the review,” and I look forward to a sensible economic strategy for growth in next year’s Budget which involves abolishing the beer duty escalator once and for all.
Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to follow the hon. Member for Leeds North West (Greg Mulholland). I do not think it does either of our reputations any good to declare to the House that he once bought me a pint at Huddersfield railway station—and very good company and a very good pint it was too.
This is an important issue, and I pay tribute to the Backbench Business Committee for arranging the debate. I want to focus on the impact in my constituency. The pub and brewery industry is of both historical and current importance to Hartlepool. It is said—I do not know about the accuracy of this, but it is a good statistic regardless—that in the early part of the 20th century, Hartlepool had the highest ratio of pubs to streets in the entire country. Sadly that is no longer the case, and we have seen a steady stream of pub closures. The hon. Member for Leeds North West quite rightly talked about the planning system. Only in the last month one of the pubs in Hartlepool—the Pink Domino—has been earmarked for demolition. There is a planning application going through at the moment for a supermarket to be built in its place, with a loss to the community.
However, I am not just looking backwards. The pub and brewery trade is still hugely important to my town, both socially and economically. We have first-class pubs, such as the Causeway, the Fisherman’s Arms, the Pothouse and the Jackson’s Arms. Hartlepool has an economy that employs about 34,000 people. Of those, some 1,000 are employed in the pub trade, so it is not an insignificant part of the town’s economy. Indeed, that figure does not take into account those employed in working men’s clubs or, like my mother, behind the bar in venues such as the town hall or the borough hall on the Headland. The pub trade therefore has a major impact on the town’s economy and employment, particularly for younger people and those in part-time flexible working.
Hazel Blears (Salford and Eccles) (Lab)
My hon. Friend is making a powerful case. I have had the pleasure of visiting his constituency and having a drink of beer in Hartlepool at the time of his election. My community in Salford and Eccles is similar to the community in Hartlepool. We have a great brewery, Joseph Holt, which just this year has been forced to get rid of 11 pubs, with the loss of 94 jobs, at the same time as seeing massive increases in duty. Does my hon. Friend agree that the escalator is punishing communities in poorer areas such as ours, where people’s wages have not kept pace with duty increases?
Mr Wright
My right hon. Friend is exactly right. She mentions the importance of the pub trade in the local economy—the economies of Salford and Hartlepool are very similar—but she also talks about breweries, which brings me to my next point.
We have a major brewery in my constituency: Camerons brewery—I am pleased to confirm to the House that it has nothing to do with the Prime Minister, thank goodness. Camerons brewery has been on the same site for more than 140 years, using the unique Hartlepool water from its own well to make the beer. It now employs 100 people and is involved in large-scale ale and lager production. Not only does Camerons produce quality ales of its own—I would recommend to hon. Members Camerons Strongarm and 6th Sense, which are particularly good pints—but its modern manufacturing facility and investment in plant means that the brewery is now capable of producing 1.3 million hectolitres per annum, with the potential to increase that, given certainty in the brewery trade, to 2 million hectolitres. Camerons has been well positioned to win orders for beer and ale production from global brands such as Carlsberg. The brewery continues to be—and has been for the best part of 150 years—an important part of the town’s manufacturing base.
Andrew Bingham
Does the hon. Gentleman agree that it is not just the big breweries that are affected, but small microbreweries, of which there are many in rural constituencies, where pubs are extremely important socially, such as Howard Town brewery and Buxton brewery in my constituency of High Peak?
Mr Wright
I absolutely agree with the hon. Gentleman. If manufacturing is to be an important part of this country’s economic base, with small and medium-sized enterprises forming a key part of that, the food and drink sector—of which microbreweries have to be an essential and growing component—will be vital to that.
I have listened closely to other hon. Members’ contributions to this debate, which has been fair and balanced. It is unreasonable to suggest that beer duty is the sole reason that the pub and beer trade is facing difficulties. There are long-term social and economic forces at work. Over the past 30 years, people have switched away from beer to wine in their alcohol consumption. That is true not just in Britain, but throughout western Europe and the United States. Significantly—this point has been touched on many times in the debate, but it is worth repeating—people are now consuming alcohol in their homes rather than in pubs. In fact, some 70% of the alcohol purchased in the UK is bought for consumption at home. Traditionally, 30 or 40 years ago, people probably bought alcohol only in a pub; now, it is far more likely that beer will be bought in a supermarket.
Dan Rogerson
The hon. Gentleman is making a good point about wine drinking in the home. Does he agree that, because wine has a much higher alcohol content and because people are often drinking not in pub measures but in much larger glasses at home, the health issues are a result more of wine and spirits than of beer, which has a much lower alcohol content?
Mr Wright
The hon. Gentleman makes an important point. Among even the strongest beers and ales, Cameron’s 6th Sense, which I mentioned earlier, is only 6%, but some of the bottles of wine that are being consumed in one go at home can be 13% or 14%. That has health implications, as does the departure from responsible and supervised drinking in pubs.
The switch from on-trade to off-trade purchase and consumption via the supermarkets has had major effects on the pub industry. The Treasury’s own analysis of alcohol consumption in the UK, which was published in December 2010, showed enormous price elasticity for off-trade beer. That illustrates the enormous competition between supermarkets, the price wars that are going on and the cutting of margins on beer by supermarkets, all to the detriment of the pub trade.
Pubs have an enormous disadvantage, in that they tend not to have the buying power, or the ability to achieve economies of scale, of the major supermarkets, and the nature of their business model means that they have to pass on increases in prices—whether in the form of additional duty, increased VAT or rises in the cost of raw materials—directly to the consumer. Supermarkets are, by and large, able to cross-subsidise, as the hon. Member for Shipley (Philip Davies) pointed out, and they often have the ability to absorb any price rises. Beers can even be used as loss leaders to encourage shoppers, a practice that the pubs cannot afford to compete with.
These problems arise not just from the beer duty escalator but from rises in raw material prices, and there must be concern that beer prices will rise still further because of the recent wet summer, which has had an impact on barley crops, and the increase in VAT last year by the Government. The rise in VAT must have put an extra 5p or 6p on the price of a pint, which in turn will put additional pressure on the viability of pubs. Has the Minister looked at the impact on pubs of that VAT rise, of the rises in barley prices and of the beer duty escalator?
On the point about raising revenue, it was estimated when the beer duty escalator was introduced in 2008 that it would generate between £500 million and £600 million for the Exchequer. Given the difficulties since then, and the squeeze on household incomes, has it actually generated that much revenue? What cost-benefit analysis has the Treasury put in place to determine whether the escalator is raising revenue for the Exchequer to the detriment of local economies and local pubs?
I appreciate that the duty is, and should be, a source of revenue for the Exchequer—about 2% of all Government receipts. I appreciate that beer has generated revenue for the Treasury for centuries, to the dismay of beer drinkers everywhere, and that it will continue to do so. I also appreciate that, in a free country, the manner in which people wish to consume a legal product is up to them and not up to the Government. If somebody wants to drink beer bought from the supermarket in their front room while watching the football or a film and having a takeaway, without causing any hassle or intimidation to anybody else, that is entirely up to them. However—this is my key point—if we as a country value the social and economic importance of the pub as a focal point for the community and a means of encouraging responsible and supervised drinking, what steps can the Government take to nudge consumers towards drinking beer in pubs?
In responding, will the Minister set out how he proposes to tackle the growing gulf in prices between pints in pubs and beer in supermarkets? I am not suggesting that he attempts to turn back the tide of social trends over the past 30 years, but I hope he will tell us how the Government value the pub as one of the great British institutions and how he will work with his colleagues, using the tax system, beer duty and any other means at his disposal, to ensure that the pubs and brewing industries of Britain have a brighter and longer-term future as part of a revitalised manufacturing base. I think we would all drink to that.
Bob Blackman (Harrow East) (Con)
It is a pleasure to follow the hon. Member for Hartlepool (Mr Wright), who has made an impassioned case for pubs and beer drinkers across the country. I have a passionate belief in beer drinking; I have been doing it, and keeping the brewers and the Treasury going, for more than 40 years. Pubs, working men’s clubs, social clubs, sports centres and students union bars all have an important role in our society, not only as places to meet and greet people but as social centres where people can sit down and have a quiet drink and a bite to eat, along with some social interaction. They offer a wide variety of drinks, including soft drinks, wines and spirits, although it is much better to drink beer. They also provide a place for families to get together.
One problem that has arisen in the past few years as a result of the pressure on pubs to make money is the loss of that social atmosphere and the emergence of vertical drinking establishments, whose aim is to pour as much alcohol as possible into individuals in order to maximise profits. That presents huge risks. Similarly, in urban and suburban areas, big pubs with car parks that occupied large plots of land have been bought by ruthless developers and turned into flats, destroying the local community. It is important to protect our pubs from those predatory developers, and I look to the newly appointed Economic Secretary to the Treasury to assist in that task.
Neil Carmichael
My hon. Friend is making some excellent points. Will he join me in commending the work of the Campaign for Real Ale, which does an outstanding job of promoting local pubs and sensible drinking? It certainly does that in my area of Gloucestershire.
Bob Blackman
I thank my hon. Friend for his intervention. I must declare an interest as a member of CAMRA. I have been a strong supporter of the organisation since I was at university. It is indeed important to promote the responsible drinking of real ale.
Jane Ellison (Battersea) (Con)
The problem that my hon. Friend has just raised about developers is particularly acute in London, where development land is so valuable. We have seen more than 40 pubs go in the past six months. A popular Battersea pub, The Castle, which has been in existence for more than 300 years, is now threatened with demolition, precisely because the land is worth more than the pub. Does he agree that this is an acute problem in London?
Bob Blackman
Indeed. Pubs in my constituency have been closed down and redeveloped as flats. The loss of those extremely valuable centres results in the destruction of the whole community.
Beer has a relatively low alcohol content. Those who promote the beer duty escalator talk about the health risks related to drinking, but I am a great supporter of responsible drinking and of transferring people to beer drinking, given its relatively low alcohol content. A person would almost have to drink more beer than their capacity would allow in order to damage their health, whereas relatively small quantities of spirits can cause immense damage.
The supermarkets have not only helped to destroy local pubs; they have completely eliminated off-sales from other environments. Anyone can wander into a relatively small supermarket in my constituency today and buy six cans of beer for a fiver, but if they go across the road to the local pub, The Duck in the Pond, they will have to pay £3 for a pint. Why would anyone do anything other than buy beer from the supermarket and wander off home, or drink it on the street? This is causing real damage to the people who are providing these important facilities.
Some people call for minimum unit pricing for alcohol, and I can understand why they do so. I believe that there are huge risks involved in minimum pricing, but we have to address the supermarkets’ predatory pricing and prevent them from subsidising alcohol sales. We need to ensure that they compete fairly with local pubs, rather than ruthlessly getting customers by selling alcohol as a loss leader.
The Treasury’s own figures show that the beer duty escalator will produce only a flat level of income. If that is the case, and if the duty is going to increase year on year, that can only mean that the Treasury is forecasting reduced volumes of beer sales in this country. That can only mean more threats to our pubs and our communities, and there will be implications for other forms of alcohol as well.
Guto Bebb (Aberconwy) (Con)
I have three breweries in my constituency—Bragdy’r Nant, Bragdy’r Gogarth and Bragdy Conwy—and for those slow on the uptake, Bragdy is Welsh for brewery. Those businesses are paying about 50% of their turnover in tax. They recently invested in a pub in the local community, but they will not be able to do that again because so much of their turnover currently goes in tax.
Bob Blackman
Indeed, and the potential of local pubs to contribute to growth in the economy is threatened by the beer duty escalator.
There is an alternative. If we abolish the beer duty escalator, promote the responsible drinking of beer, as my hon. Friend the Member for Leeds North West (Greg Mulholland) mentioned, and allow the price of a pint at the pump to be reduced, that will help people to move away from irresponsible supermarket drinking back into pubs. That would mean they consumed less over a longer period and in a more sociable atmosphere, while the Treasury would get more income as those sales increased. We would therefore see a better outcome—for health, for pubs and for the Exchequer—making this a win all round. I thus urge our new Minister to have a full and proper review of how to reduce the price at the pump and dissuade the supermarkets from cross-subsidising their sales, leading to much better social interaction in our society and encouraging pubs to grow, and make sure that it continues.
My final point relates to the growth of small pubs in areas where they are taking over empty shops. I think this is a potentially serious problem, when large groups of relatively small pubs become a threat to the local environment and to local communities. It is a threat to the big traditional pubs, which have served this country so well over many years, particularly in the suburban and urban areas. Landlords of these new pubs often do not have the same sense of responsibility as the previous landlords. We need to look at the impact of that and understand why this it is happening. I look to Ministers to review the situation so that everyone can see the benefits of the great British pub and, indeed, of all the social centres that we have discussed in the debate. We must ensure a fair and reasonable deal for pubs—from the Exchequer and in competition with supermarkets.
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)
I greatly welcome the opportunity to participate in today’s debate, and it is a pleasure to follow the hon. Member for Harrow East (Bob Blackman), who made an interesting and insightful speech. I would like to thank the hon. Member for Leeds North West (Greg Mulholland) and others who have kept the all-party group going for a number of years, providing a strong focus for this issue, which is important for all our constituencies. I shall concentrate my remarks on my concern about the pub trade in my constituency.
There are 86 pubs in Ayr, Carrick and Cumnock, which support 877 full and part-time jobs in my constituency. Pubs inject an average of £80,000 into the local economy each year, but these pubs will be under threat if the beer duty escalator remains in place, because, as hon. Members have said, this mechanism is making a pint in the pub unaffordable. In my constituency, many pubs have already closed.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Was the hon. Lady as surprised as I was to learn that beer tax in the UK is 13 times higher than in Germany?
Sandra Osborne
I am not really surprised: I am well aware of it, and I was going to make a similar comment. I know that this will be of concern to many Members.
In their first Budget after the 2010 general election, as hon. Members will be aware, the coalition Government launched a review of the taxing and pricing of alcohol, including the beer duty escalator, which was first introduced by the former Labour Government in 2008. The coalition’s aim was to ensure that it
“tackled binge drinking without unfairly penalising responsible drinkers, pubs and important local industries.”
If the views expressed so far are anything to go by, we would all agree that that is simply not working. I am aware that the Government have stated that they intend to keep the escalator in place until 2014-15, although Treasury forecasts have shown that no additional revenue will be generated from beer duty, despite the increases of 2% above inflation planned in forthcoming Budgets over the next two years. The Government are not even going to make any money out of it. The planned 2% rise above inflation, equating to a 5% price increase, came into effect from 1 April 2012.
The Campaign for Real Ale, which has 450 members in my constituency alone, and the British Beer and Pub Association have criticised the decision not to abolish the escalator in the Budget, claiming that the increase could cost thousands of jobs. CAMRA has also expressed concern about the impact of the escalator on the industry, stating that a third of the cost of a pint of beer goes to the Exchequer—as was said earlier, that is the second highest rate of duty in the EU—while 16 pubs now close in the UK every week. The Government need to recognise the harm this is doing to brewers as well as to community pubs.
Since the escalator was first introduced, beer sales in pubs and clubs have fallen by 23%, leading to more than 6,000 pubs closing. Since that time, so much has changed: inflation has risen, VAT has increased, brewing costs have risen and household incomes have fallen. According to the Beer and Pub Association, beer taxation now costs the average pub around £66,000 a year. As other Members have stated, this is having a terrible impact on towns already suffering from the current economic situation, as more people are purchasing alcohol from supermarkets, which is competitively priced, to drink within their homes rather than having a social drink in their local pub. I am aware that the most common complaint received by the local licensing department in my constituency is about the threat posed to the local pub trade by the volume of cheap sales of alcohol by supermarkets.
Given that beer and pubs support almost a million jobs in the UK and that 48% of pub employees are under 25, the Beer and Pub Association has stated that if the escalator is removed, the industry has a real capacity to create jobs, raise more for the Exchequer and contribute to growth.
Heather Wheeler
I am interested in the hon. Lady’s point about how many jobs are created by our pubs. The 115 pubs in South Derbyshire employ 1,040 people. It is a hugely important industry for us locally. I am grateful to the hon. Lady for making the point that this is about jobs, industry and growth. I am sure that Ministers will be listening intently to that.
Sandra Osborne
I thank the hon. Lady. Another problem is that when many of the small pubs that employ only a few people close, that is not highlighted. With bigger announcements about redundancies, it is always made clear that huge job losses are involved, but I would argue that this is just as insidious for those working in the smaller pubs.
I recognise concerns about alcohol-related harm and the serious problems that alcohol causes, of which we are very aware in Scotland. I recognise, too, that campaigners have called for some time for the Government to introduce a duty rate escalator on alcoholic drinks as part of a wider strategy to tackle the social impact of alcohol consumption.
Mr Iain McKenzie (Inverclyde) (Lab)
My hon. Friend makes an impassioned point about the alcohol problems that continue to be encountered in Scotland. Pubs are more sociable places for the consumption of alcohol and are more family friendly nowadays, but what we are seeing is the mass purchase of alcohol in supermarkets for home consumption.
Sandra Osborne
That is very true, and I think we should give some credit to UK pubs which they have made great efforts to be family friendly places where people can drink with the assurance that there will be no problem if they take their children with them. That is important.
I share the concern that continued increases would penalise only responsible drinkers and, as stated earlier, drive responsible social drinkers out of pubs and into supermarkets because the price of alcohol is increasing in pubs but decreasing in supermarkets. The current duty system ensures that higher-strength drinks are the cheapest drinks available to consumers. Pubs are already being hit hard by the current economic situation and are suffering further with the escalation of beer duty.
On 23 March 2012 the Government published their alcohol strategy, which seeks to reduce the UK’s relatively high drinking levels and the serious health and disorder problems that are caused by excessive alcohol consumption. The strategy contains a number of proposals to
“reshape our approach to alcohol and reduce the number of people drinking to excess”,
including the introduction of a minimum unit price. As Members will know, minimum pricing has already been introduced in Scotland, but is currently being challenged in court by the Scotch Whisky Association.
Following a recent Adjournment debate, a Minister said that abolishing the escalator would cost the Exchequer £35 million in 2013-14, and that that revenue formed
“a vital part of the Government’s plan to tackle…debt”.
However, the Government would
“continue to keep all taxes under review and monitor the impact of alcohol duty”. —[Official Report, 2 July 2012; Vol. 547, c. 733-36.]
I ask the Government to recognise the tough challenges that face the beer and pub industry, and to take them into consideration. I think it would be a good idea for the Government to cut VAT temporarily and to undertake a wider reform of the industry, including the introduction of a statutory code to regulate pub companies. The last Labour Government introduced a 12-point plan to support community pubs, which was backed by CAMRA, and my colleagues on the Opposition Front Bench have pressed the Government to build on it.
As we have already heard, there is an online “Stop the beer duty escalator” petition, which currently has 104,000 signatures. I ask the Government to note that significant number, to support the country’s beer and pub sectors by conducting a thorough review of the economic and social impact of the beer duty escalator, and to announce before the 2013 Budget that they will abolish it.
Charlotte Leslie (Bristol North West) (Con)
It is great that so many Members are in the Chamber today despite a one-line Whip. Let me begin by congratulating my hon. Friends the Members for Burton (Andrew Griffiths) and for Leeds North West (Greg Mulholland) on being such staunch campaigners. I know that there are other campaigners on the Opposition Benches.
All of us probably enjoy a pint, but why is this debate so important? It is about a bit more than a pint in the pub, although of course that is very important to a lot of us. The debate is important for several reasons. First, if we are to talk about the big society, we should recognise that the pub is at the heart of it. It is a little-known fact that pubs donate more than £120 million a year to charitable causes. That is impressive stuff. My local pub, the Bear and Rugged Staff, raised over £1,000 recently to help Lisa Fry, a lady who had tragically been diagnosed with cancer. Pubs are where people come together, they often support local sports clubs, and—another little-known fact—27% of couples first met in the pub, so I do not know what we are all doing here.
Empowering people also happens in the pub. The Bristol free school, which was one of the first free schools in the country, was started as a result of a conversation between me and some parents—guess where? In the local pub. Thank you very much, the White Lion and the Mouse. Moreover, I am sure that I am not the only Member present who, wanting to find out what is happening in the constituency, goes first of all to the pub and enjoys a nice pint at the same time. Pubs are also where discussions take place. In many ways, they are the Chamber of the real world, where there are proper debates about real things.
I have mentioned the social value and the big society value of pubs, but what about the economic value? Pubs not only donate £120 million a year to good causes but contribute £21 billion a year to the economy, and, as has already been said, each pub contributes an average of £80,000 to the local economy.
David Rutley (Macclesfield) (Con)
We are very fortunate in Macclesfield. Passionate Pubs owns pubs such as the Wharf, the Vale Inn and the Snow Goose, and there are vibrant micro-breweries such as the Storm Brewing Company, Bollington Brewing and the Wincle Beer Company. They have helped to make Macclesfield an important and distinctive destination. Does my hon. Friend agree that it is easy to underestimate the impact of such institutions on the visitor economy as well as the wider economy?
Charlotte Leslie
Absolutely. My hon. Friend has made an extremely good point. A tourist’s picture of Britain always includes the beautiful and the great British pub. The trouble is that once such institutions have gone, they have gone for ever. We are currently overseeing the decimation of the keystones of our culture and heritage, which not only have social and morale value, but are massively important to our economy.
I am probably not the only Member present whose first job was in a pub. In my case it was the Fox, in the constituency of my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti). I was not brilliant behind the bar, so I moved swiftly on.
Justin Tomlinson (North Swindon) (Con)
My hon. Friend is making a very interesting speech. She has just mentioned first jobs in pubs. Having spoken to representatives of my local family brewery, Arkell’s, I know that they are crying out for young people—graduates, and those with hospitality management skills—who have the potential to become pub landlords. The pub sector is very important for young people.
Charlotte Leslie
That, too, is a good point. More than a million people are employed in the pub industry in this country, and more than half of them are young people. Pub employment not only constitutes an important first step on the jobs ladder, but provides a great opportunity for career progression. People learn a multitude of skills that will be useful in future careers.
I think that the Government have done quite well. The appointment of a pubs Minister was a very good move—I am sure that we all wish to pay tribute to the previous pubs Minister, my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), for the work that he did, and to welcome the new Minister—and, having produced the Live Music Act 2012, localism and the right to buy, we are now making progress with minimum pricing. All that is good stuff. However, pubs are still closing at the rate of about 12 a week, and we need to do more.
Given that beer represents about 60% of sales in community pubs, it is not very surprising that the beer duty escalator is having such a dramatic impact. It is true that there are other factors, such as social and demographic changes and the fact that, as my hon. Friend the Member for Leeds North West pointed out, it is so easy to sell a pub and turn it into a Tesco—we have probably all seen that happen—and issues involving pub companies and pub ties also need to be considered. However, the escalator is a major component of the problem. Given that all the beneficial elements are being stripped away as pubs close, and that beer sales fell by 5.6% in the third quarter of this year, it is hardly surprising that the Treasury’s own figures show that the escalator is not doing what it is supposed to do and raising funds.
Bob Stewart (Beckenham) (Con)
We have already demonstrated that the beer duty escalator will not increase the finances going to the Treasury, so why the heck do we have to wait until the Budget? Why cannot a Minister make a decent decision and scrap it?
Charlotte Leslie
I think that many of us would like the Minister to make a snap decision and scrap it, but this debate is about a review, and that is an important first step if we want accountability. I should prefer a quicker decision, as I am sure would many other people, because my hon. Friend is right: every day while the escalator continues, pubs are closing, including historic pubs such as the Lamplighters in my constituency. We are struggling to save the Lamplighters, and Pete Bridle, of the local branch of CAMRA, has been fantastic in that regard. Although it is a review for which we are asking, there is definitely a degree of urgency.
So what can we do? Let us get the review done, and I think that its conclusions will be pretty clear. We must also press on with minimum pricing, and we must tackle the discrepancy between off-trade and on-trade alcohol prices. The damaging social effects of cut-price booze in supermarkets are plain for all to see. One solution may be to deal with the discrepancy between pub and supermarket licensing fees. At present, any pub with a rateable value of more than £87,000 pays fees two or three times higher than those paid by a supermarket with an equivalent rateable value, because the multiplier for pubs does not apply to supermarkets. If the Treasury is concerned about tax revenue, we could act now to produce a far more tax-neutral measure.
Let us look at what is at stake. If we end the escalator fast, we can save 5,000 jobs a year—an estimated 16,000 over three years—we can secure a national foundation stone of the big society, which I know is important to our Government; and we can secure our great British beer industry and the pride of Britain, our pubs. I urge the Minister and the Government to end this disastrous beer duty escalator with all speed.
Madam Deputy Speaker (Dawn Primarolo)
Order. I am reducing the speaking time limit immediately to five minutes. There are still 13 Members wishing to contribute to the debate, and I shall do my best to ensure that they are all able to do so.
Mr John Denham (Southampton, Itchen) (Lab)
I am very pleased to have an opportunity to speak in this debate, and I commend the Backbench Business Committee on securing it. When I was briefly Secretary of State for Communities and Local Government at the end of the last Labour Government, we appointed my right hon. Friend the Member for Wentworth and Dearne (John Healey) as the first pubs Minister. His 12-point plan has been mentioned today, and it still sets the agenda on issues such as the community right to buy, the need to change the planning rules, and the relationship between pub companies and pubs. I am very pleased to have a chance to return to this issue today, prompted by not only the wider concerns, but the fate of one pub in my constituency that illustrates some of the wider problems.
The Castle pub in Midanbury in Southampton has been sold by Enterprise Inns to Tesco, which has just put in a planning application for the minor changes needed to develop a convenience store. That is deeply unpopular with the 600 people in the area who signed a petition against the move, partly because they did not want to lose the pub and partly because they do not want a Tesco. They have been utterly powerless to influence the decision, however.
Similar situations have been described by other Members. The latest figures I have from CAMRA show that its members have identified 189 conversions of pubs to supermarkets since the start of 2010, with a further 41 pubs under serious threat. Of those 189, Tesco has done 124 conversions, while Sainsbury has done 21.
In my constituency, in addition to the Castle pub, the Bulls Eye in Sholing and the Woodman were also owned by Enterprise Inns and are being converted by Tesco. Other pubs have been sold to the Co-op, the Best-one convenience stores, the Alfresco group and the One Stop group.
Beer duty is one of the factors contributing to this trend. Because it impacts on the profitability of pubs, for the big pub companies considering what to do about a pub it is one of the factors that tips the balance away from investing in it and strengthening the management and towards simply seeing selling the pub as a property deal, which is often what those capital-hungry companies are after. The bigger picture is of communities such as mine being left without any say when two giant companies —Enterprise Inns and Tesco in this case—have commercial strategies that they work on together and which suit them, but that give local people no voice and no say at all in the future of their pub and community.
Greg Mulholland
I congratulate the right hon. Gentleman on raising this serious problem. It is a tragedy to see our local pubs being turned into supermarkets. What is happening is predatory purchasing. I will send the right hon. Gentleman the Save the Pub group planning charter, which addresses this issue. I ask all Members to urge the community pubs Minister to make simple planning law changes to give communities the right to have a say, and to stop the nonsense of no planning permission being required for supermarket conversions. That would stop the collusion the right hon. Gentleman mentions between the giant indebted pub companies and the giant supermarkets. What is currently happening is certainly not an example of the big society.
Mr Denham
I commend the hon. Gentleman on his work on this issue. What he says is right. In the case I have mentioned—and, I suspect, in many others—there was never even an open disposal. There was never an opportunity for somebody else to come in and start up a microbrewery for instance. The whole thing takes place behind the scenes, and the deal is done. The first thing the community ever knows is that the property has already changed hands and is on the way to being converted.
Greg Mulholland
There are huge growth opportunities in the pub sector. Many pubs are being taken on by small pub companies, and their figures show they are doing well. The managed pubs sector is doing perfectly well. Lots of small breweries around the country are also buying pubs, but they are often prevented from doing so because of the situation the right hon. Gentleman describes. This can be solved through the planning system, and it must be, or else growth in the sector will be hampered.
Mr Denham
The hon. Gentleman again makes a fair point. I say to the Treasury Minister on the Front Bench, the hon. Member for Bromsgrove (Sajid Javid), that in addition to reviewing beer duty and changing the planning laws, the way in which these big companies operate needs to be looked at.
The hon. Member for Bristol North West (Charlotte Leslie) talked about the big society. We cannot have a big society if two big companies shut the community out. Labour Members talk about responsible capitalism; it is not responsible capitalism if big companies collude to stop small entrepreneurs starting up businesses of the sort we want to see in our communities.
In every one of the cases I have raised where a Southampton pub has been turned into a convenience store, that pub offered a safe, social environment for the responsible consumption of alcohol, and it was replaced by an off-licence that trades on cheap booze. I am not saying nothing ever goes wrong in a pub, but there are social constraints on how much people drink and how they behave. If the outcome of public policy is that we lose the places where alcohol is consumed responsibly and replace them with outlets for cut-price booze that encourage people to drink too much at home, where those constraints might not exist, there is something wrong with public policy. The message from Members on both sides of the House is that the Government need to look at beer duty and the wider context.
The Minister on the Front Bench and other current Treasury Ministers, along with previous Treasury Ministers over many years, have all said—because this is in the word processor in the Treasury—that it is difficult to untangle the impact of beer duty from the other factors affecting pubs. Of course that is true, but that is no reason for not looking at beer duty and all the other factors affecting pubs.
Dr Julian Lewis (New Forest East) (Con)
I thank the right hon. Gentleman, my near neighbour, for giving way. To encourage him in his line of argument, may I say that when my party was in opposition we had a standard letter to send to people who inquired about beer duty, saying we were launching a campaign entitled “save the great British pub” and urging them to sign the online petition? I am sure, therefore, that the Minister will want to give a positive response to the right hon. Gentleman’s excellent speech.
Stephen Gilbert (St Austell and Newquay) (LD)
I am grateful to have been called to speak in this timely and important debate. I pay tribute to my hon. Friend the Member for Burton (Andrew Griffiths) for his work on this issue, and to my Liberal Democrat colleague, my hon. Friend the Member for Leeds North West (Greg Mulholland), for the work that he does with the all-party save the pub group. I also thank the Backbench Business Committee for responding to the legitimate calls from the public for the House to debate this topic.
I share the concerns expressed by other Members about the inevitable effect of the beer duty escalator, and I join them in calling for a review. Without a review, I fear many more pubs in my beautiful constituency might close, leading to job losses, mostly among younger people. The loss of these important institutions in our communities might also lead to cultural decline.
The pub is a gathering place for the local community. As has been said, it is the equivalent of this Chamber out there in the country, where debates are held every day. It is a place where people can gather to drink safely and responsibly. Speaking for my constituency, the pub is also part of Cornwall’s legendary charm. Many Members will have been to Cornwall and walked down the narrow streets and sat inside the solid granite walls of our local pubs, rich in history, legend and atmosphere. We need these pubs to survive to keep Cornwall full of character and competitive in the tourist market. Having spent the past few weeks talking to constituents about this subject, I can confidently say that if the beer duty escalator continues without review, jobs, community spirit and the local economy will be under threat.
The beer and pub industry contributes £45 million a year to the local economy in my constituency. St Austell brewery is a fantastic local family business that has more than 160 years of history, that runs 170 pubs, predominantly in Devon and Cornwall, and that employs a significant number of my constituents. Since the beer duty escalator’s introduction in 2008, the brewery has seen a 23% reduction in demand, and on an annual turnover of about £100 million, it pays £25 million in tax. The burden is too high not only for that brewery but for the countless independent and unique pubs from coast to coast in the heart of Cornwall. Some 2,500 people are employed in the sector in my constituency.
Alison McGovern (Wirral South) (Lab)
The hon. Gentleman is painting a wonderful picture of pubs in Cornwall. Does he agree that it is important that we visit and support not only local pubs, but local breweries such as the Brimstage brewery in Wirral, which has an excellent relationship with local pubs, ensuring that people in Merseyside can drink good, local beer?
Stephen Gilbert
The hon. Lady is, as ever, a firm advocate for her local brewer, just as I am for mine. I take on board the point she makes; she is entirely right.
I will not detain the House for too long, but it must be recognised that beer tax in the United Kingdom is high compared with that of equivalent countries in the European Union. Ours is nine times higher than France’s and 13 times higher than Germany’s. British consumers pay 40% of the total EU beer duty, and beer duty has increased by 42% since 2008. Of course, I share my right hon. Friend the Chancellor’s view that we are all in it together, but we need to redress the balance and ensure fairness.
Sir Alan Meale (Mansfield) (Lab)
Drinkers in Britain pay 40% of the EU beer tax bill, but consume only 13% of the beer.
Stephen Gilbert
The hon. Gentleman cites a stark contrast. When he makes the point in that way, the uneven spread becomes even more apparent and visible.
I support the motion, because we need to protect pubs, which are at the heart of our communities, not only in Cornwall, but across the country. We need to make sure that we are doing all we can to drive down youth unemployment, and the beer and pub sector plays a key part in that.
Grahame M. Morris (Easington) (Lab)
I wish to place on record my thanks to the hon. Members for Burton (Andrew Griffiths) and for Leeds North West (Greg Mulholland) for securing this debate, and I congratulate them on doing so. I also thank the Backbench Business Committee for allowing this important and timely debate to take place. I realise that the Minister is relatively new to his position, but he should know that these arguments were made when clause 186 of the Finance Bill was debated. Similar arguments were pursued by my good self and by my hon. Friends the Members for Livingston (Graeme Morrice), for Gateshead (Ian Mearns) and for Wansbeck (Ian Lavery). I ask the Minister to have a look at those arguments and to review the decision, as that would be extremely helpful.
I was rather alarmed to hear the hon. Member for Leeds North West suggest on a point of order earlier that the Government were not giving serious consideration to issues chosen for debate by the Backbench Business Committee. I hope that is not the case, because there is a powerful case for the Minister to consider the House’s decision on this motion.
I must declare an interest as the vice-chair of the all-party save the pub group. I am also a member of the Working Men’s Club and Institute Union, and as such I am very concerned about the impact of the beer duty escalator on working men’s clubs—this was also raised by my hon. Friend the Member for Midlothian (Mr Hamilton). Nobody in this House can be in any doubt about the impact of the current economic climate and, in particular, the beer duty escalator on the pub trade—the Minister certainly cannot, unless, like the Olympic flame, he does not go out. [Laughter.]
It is apparent that since the beer duty escalator was introduced in 2008 a range of new and demanding costs have been applied across the industry. Like many hon. Members, I have received briefings from the British Beer and Pub Association and, through the all-party save the pub group, I have had discussions with stakeholders. It has been pointed out to me on numerous occasions that inflation has risen, VAT has increased and brewing costs have risen, whereas incomes have fallen right across the sector. The fuel duty increases have also had an adverse impact on delivery costs.
Hazel Blears
My hon. Friend is clearly well versed and an expert on these issues. As well as the economic costs, there are clearly important social costs to our pubs closing. A constituency such as mine has only a handful of remaining public houses, many of them intimidating places where the general public do not want to go. Will he therefore support communities that want to take over those pubs and bring them back to life, as we are trying to do with the Woolpack pub in Salford?
Grahame M. Morris
My right hon. Friend makes a really good point, and I hope the Minister is taking note.
As we all know from our constituencies, pubs are a vital part of our social life and a social hub. No matter what sort of area we represent, be it Labour, Tory, Lib Dem or nationalist, be it in the north or the south, be it countryside or urban and be it wealthy or poor, public houses are the hubs of our communities. Just as important is the fact that pubs and brewing are vital to the UK economy. Other hon. Members have mentioned the figures, so I will not repeat them, but the sector makes a huge contribution—I believe it is in excess of £20 billion. I believe that the Minister acknowledges that the proposals in the beer duty escalator would be revenue-neutral—they would not generate any additional revenue for the Treasury—so what can be the justification for continuing with it? The only answer I can come up with is that this is part of another public policy agenda—perhaps the Minister can enlighten us. Might it be an issue of public health? Perhaps the Government think it desirable to force up the price of alcohol to dissuade people from consumption. We have heard from various hon. Members that the consequence has actually been the reverse, so perhaps this is a perverse application of policy, resulting in the public buying beer, wine and spirits from the supermarkets in cut-price deals, and consuming them at home. There is a strong case for reviewing the escalator.
Mr Jim Cunningham
Does my hon. Friend agree that this issue affects not only pubs, but working men’s clubs up and down the country? We are in danger of destroying our cultural heritage, whereby the family could go out on a Sunday and have an entertaining afternoon in the pub as a family unit. That whole thing is being destroyed, as we have lost a large number of working men’s clubs in Coventry, as well as pubs.
Grahame M. Morris
I absolutely agree with my hon. Friend, and a similar point was made by my hon. Friend the Member for Midlothian. I am a strong supporter of working men’s clubs and the whole ethos of inclusivity, so I completely agree with that point.
In the limited time available to me, I want to mention something that has been alluded to by one of my colleagues: it is time for the Government to be much more proactive, not only to help the pubs struggling now, but to boost growth in the pub and brewing industry, as it could be a vital engine of economic growth. If that is the strategy, we have an opportunity to pick up the baton and run with it. The previous Government went so far as to appoint a Minister with special responsibility for pubs, as has been mentioned. That was my right hon. Friend the Member for Wentworth and Dearne (John Healey), who came up with some excellent ideas in a 12-point plan, which was agreed with the trade and CAMRA. I hope that the current Minister is familiar with that; it would be beneficial if he could build on it. That would create vital jobs and build on a great UK manufacturing success story.
Our British beer is famous around the world and our pub culture is envied by many countries. There is also the multiplier effect: one job in brewing supports one in agriculture, one in retail, one in the beer supply chain and 18 in pubs and clubs. We are all concerned about the wider economic implications and I urge hon. Members on both sides of the House to support the motion.
Caroline Nokes (Romsey and Southampton North) (Con)
I pay tribute to my hon. Friends the Members for Burton (Andrew Griffiths) and for Leeds North West (Greg Mulholland) for securing the debate. I agree with the hon. Member for Easington (Grahame M. Morris) that this is a powerful and important message for the Minister.
I also want to pay tribute to the right hon. Member for Southampton, Itchen (Mr Denham), my immediate constituency neighbour, who drew attention to the conversion of The Woodman pub in my constituency to a Tesco. I remind him that The Castle Inn has on occasion—I recollect this from the 2001 general election—played host to a polling station, which is evidence of a pub playing its role in the big society.
Historically, Romsey is a brewing town. I vividly recall from my primary school days the smell of the brew from Strong’s brewery hanging over the playground. On my 11th birthday the last brew began at Romsey brewery, but I am pleased to say that after a short gap Romsey is now host to a micro-brewery in Flack Manor, which brews some wonderful ales. The proprietor of Flack Manor, Nigel Welsh, and publicans in Romsey and Southampton North have forcefully told me that the beer duty escalator is deeply harmful to their commercial success. They are not alone; their opposition is shared by such august organisations as CAMRA and the Society of Independent Brewers.
The pub trade employs nearly 1,000 people in my constituency and contributes more than £14 million to the local economy, but publicans tell me that their trade is held back by a policy based on false assumptions about its social, economic and health benefits.
Mr Robert Buckland (South Swindon) (Con)
My hon. Friend highlights the contribution made to her local economy. In Swindon, 1,425 people are employed by the brewing and pub industry, which adds about £17.2 million to our local economy. The issue touches not just Romsey but every community in the country.
Caroline Nokes
My hon. Friend makes an excellent point. The economic argument is also flawed. As we have heard many times today, the amount of money raised through the Exchequer since the rise in beer duty in 2004 has failed to match the predicted levels of revenue. That has cost 5,000 jobs a year and VAT revenue has been lost through reduced beer sales.
The basic laws of supply and demand dictate that if the price of a commodity is increased, demand will fall. Demand for beer in pubs certainly has fallen. I am not suggesting that the beer duty escalator was the sole reason for the closure of pubs such as The Vine Inn in Stockbridge, or The Wheatsheaf in Braishfield, which has fortunately now reopened, but figures show that, despite the Olympic games and Euro 2012, in the three months to October this year pubs sold 117 million fewer pints than in the same period last year. I am not suggesting that nationally we are drinking less beer; we are simply changing our habits, giving an advantage to supermarkets over the traditional pub.
Before the introduction of the escalator, it was four times more expensive to drink in a pub than at home, but it is now 10 times more expensive. Beer sales in pubs are falling and the proportion of alcohol consumed outside that responsible, supervised environment is increasing. That brings me to my second point, about the benefits of the escalator to health and social policy. I believe that that merits close scrutiny. A recent study of the impact of alcohol pricing on consumption in Sweden produced some interesting results, showing mainly that increasing the price of alcohol in an attempt to reduce consumption might actually have the opposite effect, since drinkers who were buying more expensive brands simply switched to cheaper drinks and as a consequence bought and drank more. In other words, making it more expensive to drink in pubs simply pushes people to drink cheaper alcohol and possibly fuels binge drinking.
Binge drinking is a real and growing problem. Just last night Romsey police tweeted a picture of a massive quantity of alcohol they had seized from under-age drinkers. The beer duty escalator does nothing to prevent that. I give full credit to the local police for their action, and I encourage hon. Members to look at that photo on Twitter. It does not show alcohol bought at a pub—far from it. The cut-price bulk offers on alcohol in supermarkets often encourage parents to buy more, and that means easier access to large quantities of alcohol stored at home.
According to data from the World Health Organisation, alcohol consumption in the UK increased by approximately 4% between 1985 and 2003, whereas in Europe it decreased. Over the same period, alcohol-related harm has grown. For example, there were 8,758 alcohol-related deaths in 2006, twice as many as 15 years previously. The Government know this: in a preliminary assessment of the economic impacts of alcohol pricing policy, published by the Home Office in June 2010, the conclusion stated that duty increases are
“a ‘blunt instrument’ that does not target those drinkers who cause harms”.
The tax raises little revenue, causes unemployment and encourages binge drinking on cheap alcohol—and the taxpayer has to bear the burden.
I am on record as supporting minimum pricing for alcohol, but that does not in any way contradict my support for a review of the beer duty escalator. Major supermarket chains, such as Tesco, ruthlessly promote cut-price deals, so it is not the traditional public house, supplied by excellent local breweries, that promotes excessive drinking, but the supermarkets, which use their ability to buy and sell alcohol cheaply, often as loss leaders, to the detriment of the local pub, the local economy and the local community.
Albert Owen (Ynys Môn) (Lab)
It is a pleasure to speak in the debate and I pay tribute to the hon. Members for Burton (Andrew Griffiths) and for Leeds North West (Greg Mulholland) for securing the debate. I am happy to be a co-sponsor of the motion, which is very important.
I have only five minutes, so I cannot list the fine establishments in my constituency. I would be a fool to miss some of them out, so I will not attempt to list them. I do not have any major breweries, either, but I want to give the debate a different dimension and add something new. People have quite rightly promoted their public houses and breweries, but there is an important link between the breweries and the pubs—that is, between the suppliers and the distribution industry. In rural and periphery areas, they are vital in getting the product to the licensed outlets, whether they are clubs, pubs or hotels. In periphery areas such as mine, and in many other parts of the country, visitors make a very important contribution to the local economy. They use the public houses for their leisure activities and we need to put the multiplier effect into its proper context. Hundreds of millions of pounds are generated by the tourism industry and the public house is key to that. It is not just a local pub, but a centre of attraction for visitors.
Mr Graham Stuart (Beverley and Holderness) (Con)
The hon. Gentleman is making a very important point, particularly about the knock-on impact of pub closures in rural areas. The Great Newsome brewery, a small brewery in my constituency, has seen six of the pubs it supplies close in just the last two years. Evidence has shown that each pub puts £80,000 into the local community and makes the East Riding of Yorkshire a more attractive place for tourists. The hon. Gentleman is absolutely right and I hope that we will see a change of direction from the Government.
Albert Owen
I am grateful to the hon. Gentleman. I am very fond of going to Yorkshire. I went to university there and regularly visit York and the fine pubs in that area, so I might come to Humberside and the east coast at some point.
The suppliers are important small and medium-sized enterprises. A family business in my constituency, Joseph Keegan and Sons, wrote to me. It has been established for many years and supplies the area and its concerns are about beer duty and fuel duty, too. Many companies have been hit by the high levels of fuel duty when transporting their goods, so there is a double whammy of which the Minister must take note in his review.
The motion before the House is very moderate, because all it calls for is a review. The hon. Member for Leeds North West, in his measured contribution to the debate, was right to say that Members across the House have supported escalators when there was a need to do so. The beauty of an escalator is that we can get on or off it when the conditions are right, so the Government would not lose face by coming off it. A previous Conservative Government brought in the fuel duty escalator and then came off it when they thought that was necessary, so that can happen quite simply.
Andrew Griffiths
I agree completely with the hon. Gentleman’s point about the rising cost of fuel for brewers. He will also be aware of the rising cost of the raw materials that brewers must purchase and the falling incomes of households across the country.
Albert Owen
The hon. Gentleman is absolutely right. We are talking about the business of pubs, clubs, hotels and suppliers, but we must also consider the producers. Much of the problem is beyond the control of Governments and the terrible weather this summer has affected the price of raw materials, and that all has an impact on costs.
I want to talk, as many Members have done, about the social value of the pub as a hub in our towns and villages. My hon. Friend the Member for Hartlepool (Mr Wright), who is no longer in his place, said that Hartlepool once had the highest concentration of pubs in the country, a claim that many of us could make for our constituencies. In the port communities of Holyhead and Amlwch in my constituency there is certainly a tradition of pubs, but they are more than just public houses serving food and drink; they are social hubs. Many local sports clubs meet in the public houses, particularly in the winter when they cannot train. I have known one or two rugby and football clubs that spend an awful lot of time in pubs; they get their business over with very quickly and then get on to the drinking and the sandwiches. The pub is an important place for people to meet in those communities.
I pay tribute to the hon. Members who tabled this important motion. Yes, it is specifically about beer duty, but I am sure that the Minister and the Treasury will take on board all the points that have been made today. It is nonsense to impose a duty that does not make any money for the Treasury. That is the nub of the debate. But many other issues have been raised by Members in their contributions. It is worth emphasising the importance of the pub, but we must not forget the supply chains that help the pub, hotel and catering industries across the United Kingdom, which are major contributors to the British economy.
I will draw my remarks to a close as I know that other Members wish to speak. I do not want to walk past pubs in my constituency with “For Sale” signs outside, and I do not want to see empty pubs; I want to be invited by members of the local community to open a pub, because I want to see a renaissance of the great British pub in both rural and urban communities across the country. The Government can make a difference by having the review and looking at its results and, if it shows that the duty is cost-neutral or loses the Treasury money, they will have my backing for coming off the escalator and putting the emphasis on the great British pub.
Peter Aldous (Waveney) (Con)
I am grateful to my hon. Friends the Members for Burton (Andrew Griffiths) and for Leeds North West (Greg Mulholland) for securing the debate and for their hard work and to the 104,000 people who signed the e-petition. I wish to speak in favour of the motion, and there are compelling reasons for doing so. First, if we do nothing and carry on regardless, an iconic British business will wither on the vine—or should I say the hop? Secondly, small businesses will close at an accelerating rate, with a devastating impact on individuals, families and communities, both urban and rural. Thirdly, it is important to base fiscal policy on well-founded and up-to-date research. Times have changed significantly since 2008.
Indeed, the face of the industry has changed dramatically over the past 30 years. In East Anglia, great names such as Lacon’s, Bullard’s, Mann’s, Tollemache and Cobbold have long gone. Visionary and iconic businesses remain: Adnams, St Peter’s brewery and Green Jack in my constituency, the latter being the most easterly brewery in Britain. We owe it to them to promote a level playing field on which they can develop their businesses, play a full role in the economic recovery and create new jobs.
If we go on as we have been doing, we will kill the goose that lays the golden egg. Beer duty has risen by 40% since 2008, yet the pub trade has shrunk by a third over the same period. Britain pays over 40% of EU beer tax but consumes only 13% of beer sold in Europe. Investment in the beer and pub sector has shrunk dramatically, from over £2 billion in the late 1990s to £600 million in 2010. A sector that employs 1 million people, often young people, needs nurturing, not suffocating.
If there was a rationale for introducing the escalator in 2008, it has long since gone. Time are very different: inflation, VAT and input costs are all higher; there has been a poor harvest; energy costs are higher; and these are compounded by a fall in household incomes. The escalator today is in many respects a straitjacket; it is no longer fit for purpose in these straightened times.
It is important to bear in mind the unique nature of the industry, the effect of the punitive form of taxation and its potential for growth if properly nurtured. It is very much a British industry, with a supply chain that creates a significant number of jobs. As we have heard, one job in brewing supports one job in agriculture, one job in retail, one job in distribution and 18 jobs in pubs and clubs. In my constituency, more than 1,200 people are employed directly or indirectly as a result of the industry, and there are nearly 100 pubs and the industry puts £26 million into the local economy. Some 85% of pubs are small or medium-sized enterprises, the foundation stone on which we must build the recovery. They are particularly vulnerable to rises in duty, being less able to absorb duty and other cost increases. It is also important to take into account the community and social benefits of pubs, both in villages and in urban areas.
Pubs are under attack on all fronts. The landlords who lease from pub companies find themselves confronted with excessive rent increases. Landlords find themselves strangled by red tape; lock-ins have long since gone, having been replaced by late-night sessions of burning the midnight oil and completing VAT returns. Many are told, “You don’t want to rely on beer; you want to get into food.” Yet landlords find themselves competing on an unlevel playing field with supermarkets as they have to charge VAT on their sales.
Andrew Percy (Brigg and Goole) (Con)
On that point, I commend the Percy Arms in Airmyn, a pub that has transformed itself, but purely around food, because making money out of beer has become almost impossible.
Peter Aldous
My hon. Friend makes a good point.
It would be churlish not to commend the Government for the good work they have done. They have made it easier for pubs to put on live events, they have introduced the community right to buy through the Localism Act 2011, and the forthcoming proposed introduction of a minimum unit price for alcohol will help to provide a level playing field.
However, the elephant in the room remains. This brings me back to the motion and the need for a full review of the economic and social impact of the escalator before decisions are made in next year’s Budget. Tax policy must be underpinned by proper research. The research that has been carried out shows that there will be devastating unintended consequences if the escalator is retained. Oxford Economic Research Associates has shown that if the rise goes ahead, there will be 5,000 job losses and the additional beer duty received will be offset by a loss of employment, lower revenues from other taxes and an increase in social security spending. I urge the Government to carry out the review with all haste.
Sir Bob Russell (Colchester) (LD)
I wish to pay tribute to Mr John Parrick, the doyen of Colchester’s publicans and the town’s longest-serving landlord, who in little more than three months will celebrate 27 years as “mine host” of the Odd One Out public house, which I had the honour to open officially on 16 February 1985. The former Mermaid pub had been shut almost a year earlier by the late brewers Ind Coope and John Parrick, a former military policeman who at the time was a staff sergeant at the military corrective training centre in Colchester, left the Army and took the bold step, alongside his wife Bridget, of taking on the abandoned hostelry, which he has turned into an incredible success story, a dream establishment for those who appreciate real beer and real cider.
Under Mr Parrick’s stewardship, The Odd One Out has won many local and regional awards from the Campaign for Real Ale for its range of real beers and ciders. His is a traditional pub, which resonates with a bygone age and has been in the “Good Beer Guide” for 25 consecutive years. However, such is the plight of community pubs—and not exclusively because of the high taxation imposed by successive Governments—that Mr Parrick’s reward is lower than the minimum wage, given all the long hours that he is putting in. He made that clear to me last night that, having studied the economics and the balance sheet. The situation must be even more dire for many other community pubs that do not have the niche appeal of The Odd One Out, particularly if they are tied to the onerous terms of pubcos and brewers.
I hope that this debate will lead to the Government’s restructuring of the taxation on alcoholic drinks. If the coalition is serious about localism, it should know that the local pub is an important part of many of our urban and rural communities. Fiscal policy should be tailored to help small community businesses, including neighbourhood public houses, which are shutting at the rate of a dozen or so every week.
Sadly, a cut in the tax levied on beer sold in community pubs is too late to save The Maypole and The Drury Arms in my constituency, which both shut earlier this year—or, for that matter, The Beer House and The Clarendon, which are currently closed, although many hope that the closures will be temporary. There is uncertainty at The Britannia, which shut recently, although there is talk of its reopening as a gastropub, and at The Lord Nelson, which displays a “For Sale” sign.
I am grateful to Colchester historian Mr Jess Jephcott, author of “The Inns, Taverns and Pubs of Colchester”; he has provided me with useful comments about the decline of the local pub, that great British institution, because of the actions and inactions of successive Governments. Today’s debate about the beer duty escalator must not be viewed in isolation as we look at this sorry saga. Mr Jephcott is an authority on public houses, both historic and contemporary, so I value what he says. He told me:
“Whilst the Beer Escalator issue is an important one, and does play a part in the loss of our pubs, there is a far more damaging issue—that of pubcos imposing unrealistic terms on their tenants. I have this week been reading about Vince Cable’s frustrations with self-regulation over this. It is the pubcos that are killing our pubs, to my mind.”
With great emphasis, he added:
“Tenants are tied to the pubco and cannot shop around and negotiate prices. That is precisely what is killing many of our pubs.”
He says that free houses, or those free of tie arrangement, thrive:
“Cases in Colchester are The Odd One Out, Fat Cat, etc. No tie, no problem.”
Mr Jephcott concluded, with a sigh:
“This is our heritage as well as our way of life. Yet Colchester is plagued by drunks who get drunk before they go out and by bars that make matters worse with their special deals to get them drunker.”
That scenario, of course, afflicts towns and cities throughout the country. Successive Governments have failed to address the scandal. Taxation policies have made matters worse. We need to amend the tax levy on beer sold in our traditional public houses. We should have a tax-neutral approach to keep the Treasury happy and bring huge social benefits, including job retention and creation, rather than there being the loss of jobs that we continue to witness in the sector.
Most publicans of neighbourhood and village public houses run responsible establishments. Their customers should be rewarded, not financially penalised because of the irresponsible marketing carried out by supermarkets and mega-drinking establishments.
I should declare an interest: Adnams Broadside, brewed on the Suffolk coast at Southwold, is my favourite tipple. Some have suggested that I should promote the former Essex brewer Ridley’s Old Bob beer, which has now been absorbed within Greene King’s product range, but I will stay loyal to Adnams and Broadside.
In conclusion, I should say that this debate is taking place in British pub week. I commend those who have secured the debate. I shall resist the temptation of listing every public house in my constituency, but they are all doing a grand job and I hope that they can all be saved.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I will have to drop the time limit to four minutes. I ask hon. Members not to make interventions so that we can get everybody in.
Pauline Latham (Mid Derbyshire) (Con)
I congratulate my hon. Friends the Members for Burton (Andrew Griffiths) and for Leeds North West (Greg Mulholland). I know that my hon. Friend the Member for Burton has a large brewery in his constituency, but I want to speak up for micro-breweries. My understanding is that there are more micro-breweries and members of CAMRA in Derbyshire than anywhere else. In Derby we also have a beer king, whose ceremonial role includes opening the annual beer festivals in Derby and representing Derby when the city mayor and others go to our twin city of Osnabrück in Germany.
In my constituency of Mid Derbyshire, the brewing and pub sector is a vital and dynamic part of the local economy. It creates jobs, adds to the local economy and is at the centre of the hospitality industry, our cultural heritage and the social life of every community. A world heritage site runs through my constituency.
The beer and pubs industry is a vital part of the local economy in Mid Derbyshire. There are 75 pubs and three micro-breweries, which generate 1,076 jobs—some 307 of those are filled by young people between the ages of 16 and 24. The point about the employment of young people is important, because in spite of recent good news on the employment front, people in that age group continue to find employment very hard to come by.
Some 65% of staff at the Derby Brewing Company are under 25; the company also operates entry-level management schemes that have promoted many promising young people from bar-staff to senior-manager level, none more so than at my local, The Queen’s Head in Little Eaton, which has recently reopened. The brewery is working towards brewing real ales with a much lower alcohol content; it is working down towards a 4% beer.
This debate is critical to business in Derbyshire. Representatives of the Derby Brewing Company, which owns three pubs, have told me that since the introduction of the beer duty escalator, excise duty has increased by 42%—almost 20p per pint.
My husband and I are supporters of the Campaign for Real Ale because we believe that going to the pub, particularly the local, is a core British tradition and so is enjoying great beer, although personally I am not a beer drinker. Unfortunately, however, beer sales in pubs and clubs have fallen by 23% and more than 6,000 pubs have closed. I believe one of the main reasons for that is that beer taxation now costs the average pub around £66,000 per year. I strongly believe that those unintended consequences go completely against the Government’s strategy for economic growth. The Treasury forecasts a small increase in duty revenues from the policy—so small that no additional revenue is predicted in the Budget document.
I recognise that we have alcohol-related problems in our society that we need to tackle, as they cost the NHS billions of pounds every year. There is also the crime and disorder associated with alcohol and the fact that alcohol is the second biggest risk factor for cancer after smoking. But trying to tackle those problems with increased tax at this time is not the right way forward. The issue is having a profound effect in Derbyshire; pubs continue to close across the county. Brewing and pubs are fundamental to British industry, generating a huge amount locally and nationally to GDP. In these troubled times, local pub owners are urging me, as their MP, to ask for their industry to receive some relief from the excessive duty increases. In Derbyshire, a change to the policy could make a big difference and safeguard jobs.
Richard Fuller (Bedford) (Con)
I very much welcome this debate and would like to draw attention to two aspects. I want to call for the economic and social impacts, both of which are equally important, to be covered in the review.
On the economic impact, there is the principle of the automatic above-inflation tax increases enshrined within the escalator principle. I shall address myself directly to the Minister, who is new to his post. I do not wish to test his mettle today, but he will be keen to make an impact so I ask him this. What ethics lead to a Government’s presuming that they should increase taxation—automatically, year on year—on such staples of life as beer and fuel? I can think of no more regressive taxation than to continue with above-inflation increases on those items.
We have already had a debate on the automatic fuel duty escalator; I am sure that the Minister heard the strong voices of those on the Government Benches arguing that the Government should abandon that policy. The same applies to beer duty. Many hon. Members have talked about the economic impact of the brewing sector in their constituencies. My constituency of Bedford is home to the largest family-owned brewery, Charles Wells, maker of Bombardier beer. What could be more patriotic than drinking Bombardier beer on St George’s day—or, indeed, any other day of the year?
Brewing is now taxed at 50% of its turnover. A 50% tax on brewing turnover will almost certainly tax our brewers out of existence. This is not an issue that the Treasury can avoid, and that is why so many hon. Members have spoken in favour of the motion.
Richard Fuller
I will not, if that is all right, because time is limited.
I would like to mention the social aspect of pubs. As part of “MP in a pub” week, which must be one of the easiest campaigns to organise that I have heard of, I met Nickie and Roger McGlory at The Half Moon. I am sorry for the impact on the profitability of The Half Moon during my session there! I have also spoken to Nigel and Sue Anstead at The White Horse, who, every single week, do something to support local charities and endeavours. This Saturday, many of us will be joining Paul Davies at The Cricketers Arms as Bedford Blues rugby club gets ready to thrash Newcastle in a very important game. Whether it has to do with sports or charities, pubs are an essential part of what we do in our communities.
The vital point, as several hon. Friends have said, is the role of pubs in ending pre-loading. When the Minister deals with this issue, will he also consider the imposition of minimum pricing such that the health benefits can more than outweigh the reduction in revenues from scrapping the beer duty escalator?
Dan Rogerson (North Cornwall) (LD)
It is a pleasure to follow the hon. Member for Bedford (Richard Fuller). As a Cornish exile in Bedford for a number of years, I am well aware of the great contribution that Charles Wells, and Wells and Young’s, make to the economy. I once saw the Blues beat Newcastle at Goldington Road, and I wish them every success this weekend.
Beer is part of the culture of this country. I do not mean that in the sense that the tabloid press would have us see it in focusing on the sad events we see on streets around the country, when most of the problem is not due to beer but to alcopops and novelty drinks, irresponsible promotions in the night-time economy, and people pre-loading before they go out in the evening. I am talking about the centuries of beer culture that we have in this country in producing an incredible, natural product. When the water was not safe to drink, beer was, and people would brew it at home. In the Victorian era, there was a huge growth in regional and family brewers, which—those that remain—are well- loved institutions in the parts of the country that they inhabit.
The pub is very much at the heart of the community, whether in a village or in an urban neighbourhood. In North Cornwall, they are where charitable events take place and huge amounts of money are raised, where clubs and societies meet, and where the fabric of the local community is stitched together. I was recently at The Bullers Arms in Marhamchurch, where the owner of the pub, having lost his most recent tenant, is concerned about its future and putting forward plans to build housing on part of the site. People in the village are very worried, but I know that by coming together they will guarantee the future of that pub and keep it there.
I am very fortunate to have in my constituency such small, innovative brewers as Penpont and Tintagel, and, more recently, Harbour brewery on the edge of Bodmin, and Frys. That is adding to the diversity of the beers on offer to local people and visitors to the area alike. We also have a great success story in Sharp’s, which was acquired a couple of years ago by Molson Coors. I was apprehensive about that. I feared, as did many local people, that it would buy the brands and shut the brewery down, but it did not. Instead, it has invested in those brands, and Doom Bar is now a fast-growing brand across the country. It has also created jobs for young people who are now getting into a career in brewing. It has brought increasing numbers of skilled jobs to the low-wage economy of North Cornwall. We need to underpin the industry by supporting pubs but supporting brewing too.
We have heard about the growth in wine drinking, which has happened without the need for any economic support. Can you imagine, Mr Deputy Speaker, a similar situation in France or Italy, with the wine industry needing to have a debate to try to get support from its own Government? I cannot imagine such a scenario, so why do we need to have a debate about the urgent need to support our brewing industry, which is the equivalent in this country?
Because our beer industry is so innovative and forward looking, with the growth in craft brewing, many people from across the world are coming here to learn these skills. As a result, we now see craft brewing in places such as Italy, America, Australia and New Zealand, where people look to the styles of beer that we brew—the stouts, the milds, the IPAs, and all those kinds of products. We must be proud of the contribution that our beer is making to the culture of the world, let alone the culture of this country. It would be such a small thing for the Government to take account of that by getting rid of this punitive and unrealistic levy on a core industry that could create many more jobs and do far more to underpin the lives of our towns and villages. I urge the Minister to listen to what everybody has said today.
Richard Drax (South Dorset) (Con)
Thank you, Mr Deputy Speaker, for calling me to speak in this debate. It is a pleasure to be tail-end Charlie, and to follow the hon. Member for North Cornwall (Dan Rogerson).
Richard Drax
In that case, I am probably the gunner instead.
It is a great sadness to me that a great friend of mine, David Woodhouse, who was the boss of a brewery in Dorset, has died before the beer duty escalator was removed, as I hope and believe that it will be. Aged 49, he died prematurely of a heart attack. This tax was one of his main concerns, fears and worries, because, sadly, every time it went up, he had to lay people off.
The beer duty escalator provides the perfect illustration of the law of diminishing returns: the higher the duty, the lower the volume of beer sold. Yet despite the evidence, brewing has been cruelly lumbered with a 2% above-inflation increase every year since 2008. That means a 27% increase in beer tax in the life of this Parliament alone. Beer taxation now costs the average pub about £66,000 per year, with 35p in every pound taken over the bar being passed on in taxes, most of them duty, and while beer prices have risen, sales have fallen sharply by 23%. Over 6,000 pubs, or thereabouts, have closed, and a pint of beer is, sadly, fast becoming an unaffordable luxury. In fact, the Office for Budget Responsibility forecasts very limited additional revenue from beer tax in the next two years, and the wider costs—the loss of jobs and reduced VAT and corporation tax payments—have not been accounted for.
In my constituency, more than 2,000 people are employed in the brewing and pub trade. They form a small but vital part of the quarter of a million people who work in the sector in rural constituencies. The Dorset brewery that I mentioned, Hall and Woodhouse, has just invested £5 million in a new brewery, which will safeguard more precious jobs. Its reward? Yet more duty on a pint of beer. In the struggle for growth, how can it make sense to strangle this vital part of the UK economy?
Pubs have historically been a focal point for a community—a place to meet, eat, drink and socialise. Our naturally brewed ales are world renowned, and pubs are high on every tourist guide’s must-see list. Smaller, tenanted pubs, in particular, are suffering, and each new rise in duty is nothing less than a kick in the teeth. We are penalising one of Britain’s oldest and most cherished industries. This is not a recipe for growth—something that this Government have banged on about day after day—nor is it fair. As we have heard, UK consumers now pay 40% of the total EU beer tax bill, yet we consume only 13% of the beer. I could argue that perhaps the EU officials are guzzling too much, but that would be facetious. We are driving people out of pubs, where, in the main, law-abiding citizens consume a low-alcohol drink in a controlled environment.
I see that my time is running out because, being the gunner, we are now down to four minutes. I shall therefore end by making this appeal to the Minister: on behalf of the breweries and all those in the business, not least in my constituency, and my friend David Woodhouse, who has sadly passed away, please get rid of this dreadful tax.
Jane Ellison (Battersea) (Con)
Thank you for calling me to speak, Mr Deputy Speaker. I am now officially tail-end Charlotte.
I want to make two brief points, the first of which concerns the nature of the debate, which is an ideal use of Back-Bench time. I congratulate the hon. Members who secured it from the Backbench Business Committee, of which I am a member. The Government have reasonably taken the view that, for the most part, Thursday debates are advisory and give them a steer on what people think about policy, and this really is an advisory debate. It has painted a picture—a vivid mosaic—of the micro-economic growth that is taking place in lots of constituencies all over the country, and many hon. Members have spoken on behalf of enterprises that are far too small to employ clever lobbyists like so many of the big industries do. It is therefore an ideal use of Back-Bench time to allow hon. Members to talk about the incredible enterprises that are growing and generating wealth.
In Battersea, Sambrook’s brewery, which I saw start when I was a parliamentary candidate in 2008, has grown. It is employing more people and brewing more beers. It has gone from being an enterprise that started in 2008 to winning a world beer award last month. We have heard from other hon. Members that that is happening all over the country. Sixty-eight per cent of the small breweries—the micro-breweries—in this country are investing and growing and reporting that they are planning for growth. This is an important area for driving growth, but it is in danger of having too small a voice, because we perhaps tend to focus on bigger industries with more organised lobbies. We as Members of Parliament are, I hope, the organised lobby for our small enterprises—our pubs, small breweries and micro-breweries. I hope that that is what we have done today by painting a picture of lots of individual enterprises throughout the country that, in their own way, are making important contributions to economic growth in their area.
In 2012, the number of breweries in Britain has exceeded 1,000 for the first time since the great war, which is extraordinary, but that success story cannot continue unless there are pubs in which to serve the ale. I therefore hope that the Minister will consider the picture that has been painted and use this opportunity to say that this is the very moment to back this important engine of economic growth in Britain.
Graham Evans
Was that a penultimate, or just a Charlie?
I must confess that I have stopped many barrels of beer going sour over the years. Indeed, I met Mrs Evans in my local pub, The Church House inn in Bollington near Macclesfield, when I was a wee slip of a lad—I was 20-something—serving behind the bar. My mother worked in a pub, by brother and sisters worked in a pub and my father spent most of his time in a pub, so it is fair to say that I grew up in pubs.
Many hon. and right hon. Members have mentioned socialising and communities during this excellent debate, which was ably secured by my hon. Friend the Member for Burton (Andrew Griffiths). As has been said, pubs are often at the heart of the community. They are not just watering holes, but the glue that binds the fabric of local society. The decline in the number of pubs across Britain is, rightly, a source of concern for us all, so I welcome the steps that the Government have already taken to halt that decline. The right to buy has given many local communities the agency to control their own environment, and I sincerely hope that the rate at which pubs are closing continues to drop, as it has done in the past two years.
We are here to discuss the economic value of the beer and pub industry. It has contributed £21 billion to the national economy this year, with some 60% of that coming from beer sales alone. It is understandable that groups such as the Campaign for Real Ale believe that the impact of the beer duty escalator will result in reduced beer sales and a reduction in profit for our hard-working publicans.
We are all aware that society’s relationship with alcohol has changed. With less money in people’s pockets, the appeal of cut-price booze from supermarkets is clear. Many hon. Members have touched on the social and health implications of that change in drinking habits. I welcome the Government’s commitment to a minimum unit price, which will encourage responsible drinking and, I sincerely hope, realistically allow pubs to compete with supermarkets.
It is also worth considering that the previous Government increased beer duty by 60% while spirits duty increased by a mere quarter. Unit for unit, spirits are becoming cheaper and cheaper, and their increased consumption makes it much harder to encourage responsible drinking.
Of course, we are in a difficult economic position. Alcohol excise duty makes an important contribution to reducing our inherited deficit, but it is clear that the escalator is of concern to publicans, constituents and hon. Members. I therefore urge the Minister to carefully consider the duty’s impact on the profitability of pubs, responsible drinking and the future of local communities before making recommendations for the 2013 Budget.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
I first congratulate the Members who secured this important Backbench Business debate. We have heard a number of thoughtful, well-informed and impassioned contributions from hon. Members of all parties. I am sure that the various groups in the beer and pub industry that have provided briefings, met with hon. Members and given them information ahead of the debate will be pleased that their comments and concerns have been not only taken on board by Members from all parties, but reflected during the course of the debate. By my reckoning, there have been 20 speeches plus numerous interventions, and I think that that demonstrates the level of concern and the interest in this issue. The question now is whether the Government will not only take those concerns on board, but take some action in response to them. I look forward to hearing what the Minister has to say.
As we have heard, Backbench Business debates are important because they give everyone the opportunity—perhaps in a less partisan way—to explore issues and to come together and agree on certain things that need to be done. We may have differences of opinion from time to time, but none the less we are able to give advice and guidance on how we would like the Government to take things forward.
As we have heard, the beer and pub industry is a vital part of the economy, both nationally and locally. Many hon. Members have mentioned how local establishments in their areas contribute to the community. I will say more about that shortly.
In 2009, the industry paid more than £6 billion in tax, and the average pub will employ—we have heard this figure repeatedly today—about 10 people, many of whom will be young people who are trying to find their way into the job market or who are having difficulties in finding work at present. We have also heard that, according to the Beer and Pub Association, nearly £21 billion a year is contributed to the UK economy by the production and sale of beer. Worryingly, CAMRA’s latest figures—it released them only today—show that 18 pubs close every week across the UK. The hon. Member for Burton (Andrew Griffiths) referred to that in his opening speech and the point was repeated and reinforced by a number of other hon. Members, including my hon. Friend the Member for Hartlepool (Mr Wright), who gave an interesting history lesson on the number of pubs that used to be in his constituency. I am sorry that I have not yet had the opportunity to sample any of them; perhaps he will invite me.
Cathy Jamieson
I think that I have just been invited. In order to take my duties as a shadow Minister seriously, I have now identified a whole list of areas throughout the UK where I have not yet had the chance to sample the local hostelries. It would be remiss of me if I did not plan a tour at some point over the coming months.
To return to the important points, I have also heard from my local publicans and CAMRA members. Some of them spoke to me about the beer escalator in particular at the recent Ayrshire real ale festival, which was held in the constituency of my hon. Friend the Member for Central Ayrshire (Mr Donohoe) at which I had the very difficult Friday afternoon task of judging one of the beer contests. I am sworn to secrecy as to which beer won the Scottish heat. All will be revealed in due course. CAMRA members and, indeed, many other people who had travelled to the beer festival took the opportunity to make their case to me.
We have heard about the e-petition, which now has more than 104,000 signatures. I am sure that all Members appreciate the work of both the British Beer and Pub Association and CAMRA in providing information by constituency, and I believe that important information from Oxford Economics has been circulated to all of us, showing how the beer and pub industry affects our own areas.
In my constituency, which is next door to that of my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) and not dissimilar from it, there are about 88 pubs. As she said, they provide an average of £80,000 a year to the local economy, and they support about 894 full and part-time jobs. I am aware that that is not as many as in the Economic Secretary’s own constituency, where I understand there are slightly fewer pubs but also a brewery. I am sure he is well aware of the importance of jobs in the industry to his local area, as I am in my area.
I want to put the Opposition’s position on record. I do not want to introduce a discordant note, because everyone has spoken in favour of the motion so far. I hope that the Economic Secretary will take that on board. However, it is incumbent on me to explain why we will support the motion. [Interruption.] I hear somebody say from a sedentary position that it is because we are in opposition, but I have some important points to make that are pertinent to the debate.
A number of Members have referred to the impact of VAT, and we believe that the Government made a mistake in increasing it back in January 2011. That hit families hard, costing a couple with children the equivalent of £450 a year. It also hit confidence, cost jobs and undermined the economic recovery.
The extension to the beer duty escalator was introduced when VAT was 17.5%. The rise in VAT was equivalent to a 12% increase in duty, and in 2011, the coalition Government’s first full year, there was the biggest ever pence per pint annual increase in the beer tax. A couple of hon. Members have mentioned that the VAT rise increased the price of a pint in a pub by some 5p but the price of a can of beer in a supermarket by less than 2p. It has hit pubs harder than supermarkets, and it risks hitting the pub trade harder than the duty increases have.
As hon. Members will know—we have said it in a number of previous debates—as part of the five-point plan for growth and jobs that we set out back in 2011, we called for a temporary VAT cut back to 17.5% until the economy was growing strongly again. We wanted to ease the squeeze on families and ensure that the economy was moving. That would have had an effect on the price of beer in pubs, and I hope that the Government will take account of VAT when considering whether to support the motion.
We will not oppose the motion, because we believe that there should be a review of the beer duty escalator and its impact on the economy and jobs in the pub trade. It would clearly need to include an examination of the impact of VAT as part of the wider debate and discussion. As a number of Members have said, VAT amounts to half the total tax paid on beer in pubs. A review would also provide an opportunity to consider other issues that have been raised today, including barley prices.
A number of Members, including my hon. Friend the Member for Midlothian (Mr Hamilton), have made the point that pubs are at the centre of our local communities. He had been doing some research—desk research only, obviously—by comparing prices in local establishments and supermarkets. I note that Dalkeith miners club is a responsible establishment that is well worth visiting.
A number of hon. Members have mentioned their concerns about the traditional community-based pub disappearing, not only in the rural areas to which many Members have referred but in urban ones, where the issues are slightly different. In rural areas, many pubs are closing because they find it difficult to sustain custom for a range of reasons. In urban areas, as we have heard from a number of Members including my right hon. Friend the Member for Southampton, Itchen (Mr Denham), supermarkets, off-sales and other forms of licensed trade are appearing instead of the traditional pub. As Members have said, that changes the culture and our approach to alcohol and can bring different problems to local communities. Those points have been made powerfully during the debate.
I realise that time is short, so I will conclude. I ask the Minister to give thought to all the points that have been made today, and specifically to ensure that he links up with Ministers in the Department for Business, Innovation and Skills to ensure that the wider economy of the pub trade and the brewing industry is seen as an important issue for BIS, not simply a matter for the Treasury.
The Economic Secretary to the Treasury (Sajid Javid)
I congratulate my hon. Friends the Members for Burton (Andrew Griffiths) and for Leeds North West (Greg Mulholland) on securing what has been an excellent debate, and on the excellent work that they do through chairing the all-party beer group and the all-party save the pub group respectively. I also thank all Members who have contributed to the debate—I, too, counted 20 Back-Bench colleagues—as well as the 104,000 people who have signed the e-petition and all Members who are in the Chamber today.
Richard Graham (Gloucester) (Con)
Does my hon. Friend agree that the British brewing sector, British pubs and the British people have paid a heavy price for the previous Government’s beer duty escalator? May I urge him to hold a review and then do what Treasury Ministers have done to the previous Government’s fuel duty escalator, which is to stop it? In that way, he will deserve a celebratory pint from all my constituents in Gloucester, a pint of beer from the—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The Minister will not have time to drink the pint if we have such long interventions.
Sajid Javid
I thank my hon. Friend, and I will come on to that point.
The Government really do recognise the importance to the British economy of pubs and brewers. I fully support the industry, and I know that Members of all parties would like to see it prosper. We have heard a lot from hon. Members about beer duty, but let us be clear that the previous Government introduced the escalator. They increased beer duty by 60% while they were in office, and in fact for the poorest households it went up by 80%. That was the inheritance that we had to deal with. At the same time, as we all know, we were burdened with a huge budget deficit of £159 billion, or 11% of gross domestic product, which was greater than that of any other developed country. That inevitably meant that the incoming Government had to take some difficult decisions that the Labour party dodged. We had to deal with that legacy.
We set out a clear plan to deal with the deficit, part of which was the planned increase in beer duty rises until 2014-15, about which we have heard so much today. We have announced no changes to that policy. Cancelling the planned 2% duty rise represented by the escalator portion of beer duty would cost £35 million next year and £70 million the following year. If that tax were cancelled, the revenue would have to be recouped one way or another, either through further public spending cuts over and above what is already necessary or by finding increases in other taxes or duties.
Richard Drax
The whole point is to reduce taxation and thereby encourage growth and employment. That will create wealth, which will inevitably end up in the Treasury’s pockets. Is that not the Conservative way forward for the long term?
Sajid Javid
My hon. Friend makes a good point, but I think he will accept that the Government need to raise taxes to pay for public services in one way or another. However, we continue to keep all taxes and duties under review, including the ones that have been discussed today, and we regularly monitor alcohol duties to ensure that we are on top of their impact on the industry and consumers.
Cathy Jamieson
I hear what the Minister says about keeping matters under review, but in my experience that sometimes means keeping something on a shelf. Is it not time to dust down some of that information and hold a review that reaches a conclusion?
Sajid Javid
I assure the hon. Lady that, as an incoming Minister who is new to this portfolio, I plan to keep nothing on the shelf. I will be looking at everything, which includes all duties and taxes for which I have responsibility. That would be a sensible thing for any Minister to do.
Let me say a word about the importance that the Government attach to pubs and brewers in the wider economy. The sad truth is that pubs have been closing for many years, and that decline has been influenced by many factors, not just alcohol duty. Lifestyles and consumer tastes are changing and individuals have increased choice in their leisure activities. Those things have an impact, and those factors—not just alcohol duty— determine the size of the pub sector. The number of pubs continued to decline in the early 2000s, despite relatively flat alcohol duties in real terms. The Government are rightly doing a lot to support pubs and brewers, and those businesses will benefit from many decisions taken in the tax system and elsewhere.
Let me give a couple of examples. Changes to business rates mean that small pubs can benefit from small business rates relief, or rural rates relief. The Government have extended the small business rates relief holiday until March 2012. We have also legislated to allow local authorities to give grant discounts to businesses, including pubs and brewers, as appropriate.
Other wider actions will also benefit the pubs and brewing industry, and the cut in corporation tax from 26% to 22% by April 2014 will help brewers. Small businesses such as pubs benefit from the small profits rate, which has fallen from 21% to 20%. The change in machine gaming taxation will affect the majority of pubs. From February 2013, machine games duty will replace the current system of taxation on gaming machines, and more than 70% of pubs will benefit from that move to MGD through reduced tax liabilities.
My hon. Friends the Members for St Austell and Newquay (Stephen Gilbert) and for Mid Derbyshire (Pauline Latham) mentioned small breweries’ relief, which helps small brewers up and down the country, and that is vital to our economy. The right hon. Member for Southampton, Itchen (Mr Denham) mentioned entrepreneurship. The Government have supported entrepreneurship by lowering beer duty for small producers, and helping small brewers invest and grow. There were 394 small breweries in 2002 when that relief was introduced, and today there are more than 730. My hon. Friend the Member for Bristol North West (Charlotte Leslie) mentioned the Live Music Act 2012, which came into force on 1 October and is already making it easier for pubs to play live music. The Government have launched a £90 million support programme to help eligible community organisations take on the community ownership and management of assets that are important to them, including pubs.
A number of hon. Members, including the hon. Member for Midlothian (Mr Hamilton) and my hon. Friend the Member for Harrow East (Bob Blackman), mentioned the Government alcohol strategy. Alcohol drunk in moderation can have a positive effect on the well-being of adults, but excessive consumption has negative consequences on both individuals and wider society. The Government published their alcohol strategy earlier this year, which includes plans for minimum unit pricing. Setting a floor price for alcohol will prevent heavily discounted alcohol from being sold in supermarkets and off licences. Raising the price of cheap alcohol will help tackle excessive alcohol consumption, and I hope that pubs will benefit from minimum unit pricing once the demand for cheap alcohol in the off-trade has been tackled.
The Government recognise the importance of pubs and brewers to their local communities and the wider economy. We have done much to try and support that industry—I have given a few examples, which I hope was helpful—and it makes sense for us to keep looking at other ways to continue that support.
May I thank again those who sponsored the debate and all hon. Members who took part, as well as all those who signed the public petition? In conclusion, I will respond to a comment that was made by the mover of the motion, my hon. Friend the Member for Burton at the start of the debate. If I remember his words correctly, he challenged me to become known as “the Minister who saved the great British pub.” I am very tempted, although I would have to compete for that honour with the Under-Secretary of State for Communities and Local Government (Brandon Lewis), who has responsibility for pubs. I am sure, however, that we can work well together and perhaps jointly take that title.
I assure all hon. Members who have contributed to the debate that I have been in listening mode. This debate has been valuable and showed just how important debates tabled by the Backbench Business Committee can be. I will take on board a lot of messages from the debate, and ensure that the Government do even more to help the pubs and the brewing industry.
Andrew Griffiths
I thank all colleagues who have contributed to the debate so passionately and knowledgably, and I thank the Economic Secretary to the Treasury and the Minister responsible for community pubs, who has been present throughout. Both I and my colleague, the hon. Member for Leeds North West (Greg Mulholland) have been encouraged by the positive way in which both Ministers have engaged with the issue in the few short weeks they have been in office.
We are clearly disappointed that the Minister was not able to give us more positive news from the Dispatch Box, but he should be in no doubt about the clear view of the House. Every Member who has contributed to this over-subscribed debate, has spoken out against the beer duty escalator and in favour of Britain’s pubs and brewers. Let me assure the Minister that we will not let the matter rest there, and he would not expect us to. We will continue this campaign because it is not just a business or brewery that is at stake, but the future of a central part of our communities. We will continue to campaign and do all we can to save Britain’s pubs and breweries.
Question put and agreed to.
Resolved,
That this House welcomes the essential contribution of brewing and pubs to the UK’s economy in providing one million jobs; notes the 42 per cent increase in beer duty since 2008 and HM Treasury forecasts that have shown that there will be no additional revenue generated from beer duty despite planned increases over the next two years; is therefore concerned about the effectiveness of this policy in tackling the Budget deficit, its impact on valued community pubs and the continued affordability of beer in pubs; and therefore urges the Government to support the UK’s beer and pub sector by conducting a thorough review of the economic and social impact of the beer duty escalator to report back before the 2013 Budget.
Sir Bob Russell (Colchester) (LD)
On a point of order, Mr Deputy Speaker. Would it be possible for you to discuss with Mr Speaker the conduct of the previous debate? Injury time was given on numerous occasions owing to hon. Members almost wandering in off the street, lobbing a bit into the debate and then disappearing. Perhaps injury time should not be allowed. In particular, the hon. Member for Bedford (Richard Fuller) and my hon. Friend the Member for North Cornwall (Dan Rogerson), were prevented from giving their thoughtful speeches in full, yet they were signatories to the motion.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I have a lot of sympathy with the hon. Gentleman, although as he knows, that is not a point of order. He may wish to take the matter up with the Procedure Committee and it will then be for the House to decide.
Air Passenger Duty
(12 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Priti Patel (Witham) (Con)
I beg to move,
That this House believes that the UK’s air passenger duty acts as a barrier to economic growth and deters both inward investment and inbound tourism; notes the financial impact on families of the rising costs of air passenger duty; further notes the impact on British businesses wishing to export and take advantage of business opportunities overseas; notes that the current air passenger duty regime is the highest air passenger tax in the world, which makes the UK less competitive than countries with lower aviation taxes; further notes that over 200,000 members of the public are calling for a review of the economic impact of air passenger duty; calls on HM Treasury to commission a comprehensive study into the full economic impact of air passenger duty in the UK, including the effects on jobs and growth, reporting in advance of the 2013 Budget; and calls on the Government to use the evidence from the study to inform future policy-making.
I am grateful to members of the Backbench Business Committee for granting this timely debate in advance of the autumn statement next month, and I pay tribute to the outstanding efforts made by the fair tax on flying campaign in securing the support of more than 200,000 members of the public who have lobbied right hon. and hon. Members on the matter. The campaign has given families and businesses across the country a strong voice to express their opposition to air passenger duty.
I also pay tribute to colleagues on both sides of the House who have supported the call for this debate, including my hon. Friend the Member for Crawley (Henry Smith) and the hon. Member for Blackley and Broughton (Graham Stringer), whose early-day motion influenced the wording of the motion. In addition, as part of its recent inquiry into the matter, the all-party aviation group, chaired by the hon. Member for Central Ayrshire (Mr Donohoe), has produced compelling evidence in support of an economic review into air passenger duty.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Of late, I have received more representations on this issue than on any other. It is important that the hon. Lady has been able to raise this issue, and she can count on considerable support.
Priti Patel
I thank the right hon. Gentleman for his remarks. All hon. Members feel very strongly about the representations we have received. The purpose of the debate is to give the issue of APD a thorough airing and to make those representations to my hon. Friend the Minister.
The motion calls on the Treasury to respond to the concerns of 200,000 members of the public and business representatives about the air passenger duty system. It specifically calls on the Treasury to conduct a comprehensive study of the system’s full economic impact and urges the Government to use the evidence gathered from the study to inform future policy making on aviation taxes.
The evidence that I have seen, the views of families and businesses in my constituency, and views from the aviation sector, suggest it is time that the Government considered aviation taxes.
Philip Davies (Shipley) (Con)
I commend my hon. Friend for introducing the debate. Is it not a question of making the UK competitive around the world? In the previous debate, the Minister said that if we cut taxes on one thing, it will mean either more spending cuts or increases in taxes elsewhere, but should not the message be, “Let’s cut air passenger duty and cut spending”? After last night’s vote, perhaps the Government could start with the EU.
Priti Patel
APD has a detrimental impact on our competitiveness, which is why we are calling for the economic impact. I will come to competitiveness later.
I hope my hon. Friend the Minister will be open-minded to the concept of looking at the financials and to doing an economic impact assessment, because families and businesses feel that APD is a punitive tax. Research demonstrates that the costs to the wider economy are far greater than tax receipts for the Treasury. The World Travel and Tourism Council estimates that the cost to the economy in 2012 will be £4.2 billion, and as many as 91,000 jobs.
Sir Malcolm Bruce (Gordon) (LD)
I commend the hon. Lady for introducing this extremely important debate. I represent Aberdeen airport. We are doubly disadvantaged, first because we are much more dependent on air travel—it takes seven and half hours to get from Aberdeen to London by train—and secondly, we must pay tax twice if we inter-line in London. That gives us an incentive to use continental rather than UK airports.
Priti Patel
The right hon. Gentleman touches on both the cost of APD and our competitiveness. A 2011 York Aviation report estimated that Scotland would lose 1.2 million passengers, 148,000 tourists and around £77 million in the period up to 2014.
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)
Is the hon. Lady aware that the Scottish airports consortium has published a report today that says that Prestwick airport, which is in the constituency of my hon. Friend the Member for Central Ayrshire (Mr Donohoe), and which is very important to the whole Ayrshire economy, is the worst affected in Scotland in percentage terms? It will lose 14% of the traffic it currently hosts.
Priti Patel
The hon. Lady demonstrates the scale of the challenge, and why we need a review.
I am sure right hon. and hon. Members are aware that Britain has been ranked 134th out of 138 by the World Economic Forum on air taxes and airport charges. We clearly have a major problem. I am unapologetic in my belief in lowering taxes, which is the most effective way in which to promote sustainable growth in the economy. The figures demonstrate how damaging and counter-productive air passenger duty is becoming to the Government’s growth agenda.
I recognise that the current APD system was introduced by the previous Government and note that it raises £2.9 billion for the Treasury, which is a significant sum of money. I do not doubt that it is an essential contributor to removing and reducing the Government’s deficit, but when taxes cause more harm than good, they need to be reviewed and reformed.
Mark Garnier (Wyre Forest) (Con)
I congratulate my hon. Friend on introducing the debate. Does she agree that APD can act as a barrier to expansion for some regional airports? Were it not for the high level of APD, they could attract other carriers, thereby rebalancing our economy.
Priti Patel
I completely agree with my hon. Friend. That is part of the challenge of our wider aviation policy and strategy.
Already in this Parliament, the Government have rightly recognised a number of counter-productive and damaging taxes, and scrapped a number of them, including the cider tax, the jobs tax and the broadband phone tax, and the planned increase to the small profits rate was replaced with a cut. On that basis, I urge the Minister to consider the economic impact of APD.
Iain Stewart (Milton Keynes South) (Con)
I am grateful to my hon. Friend, who is being generous in giving way. APD will be considered by the Select Committee on Transport when we begin our aviation inquiry. APD has an economic impact, but it is critical to the debate on the UK’s aviation capacity. Perhaps she will refer to that later in her speech.
Priti Patel
The Davies commission has a role. When considering the future of APD, we must remember where we stand internationally in terms of competitiveness. Britain is in a global race, and competing in a global environment that is tougher and more competitive than ever before. Foreign businesses, which can bring much needed investment to our economy, can relocate to other countries. Our competitors in Europe and throughout the world are all too ready to recognise that. Prior to being elected to the House, I saw how our competitors were on standby to welcome new investment, particularly from emerging markets.
Fiona Mactaggart (Slough) (Lab)
Businesses in Slough tell me that they have invested in the town I represent because of its proximity to Heathrow. Some international companies are thinking of disinvesting because of the insecurity of Heathrow’s future. That is a classic example of the importance of airports to inward investment in the UK, and particularly the importance of what used to be the premier airport in Europe.
Priti Patel
The hon. Lady makes a valid point. I have no doubt that right hon. and hon. Members recognise the global trends and the direction of travel when they see the rise of super-hubs and big business destinations, such as Singapore, Dubai and Mumbai. There is certainty around their aviation and economic strategies, and we are competing against many big international centres. We must remain competitive to survive. Tax rates that are higher than those in other economic centres put businesses off when they are making investment choices and decisions. Attracting foreign direct investment is an essential component of the Government’s plan for growth, and current APD rates are a barrier to foreign investors who are looking to expand into the UK.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The hon. Lady is making a great speech. Does she agree that APD, as a gateway tax, sends a signal and puts down a marker, and leaves a bad taste in the mouth for many who are thinking of coming to the UK? Their first taste of the UK, and the first piece of information they have about it, is the very high-tax regime to get into the country.
Priti Patel
The hon. Gentleman makes a valid point on how counter-productive taxes such as APD are when it comes to inward investment and the attraction of Britain as a place to do business.
Martin Craigs, chief executive of the Pacific Asia Travel Association, has stated:
“The UK is an island trading nation, air services are the vital lifeblood of modern global commerce. The UK Air Passenger Duty is now the world’s highest by a wide margin. It is certainly turning away tourism and trade from the world’s fastest growing economic region”,
which, of course, is Asia-Pacific.
APD also acts as a deterrent to British businesses that are looking to exploit lucrative business opportunities elsewhere in the world, and particularly in emerging markets. Businesses in my constituency, including small and medium-sized enterprises, provide more than 80% of local jobs. They are hit hard by APD. They want to export more, but APD is a barrier.
Dr Phillip Lee (Bracknell) (Con)
Many of the businesses in my constituency are based there because of the proximity of Heathrow airport, like the businesses in the constituency of the hon. Member for Slough (Fiona Mactaggart). Many of my constituents who work at Heathrow are concerned about the level of APD. It seems perverse that, at a time when our trade is becoming more non-EU, we are discouraging or making it more difficult to trade with those parts of the world that continue to grow.
Priti Patel
I thank my hon. Friend for his intervention. As I said earlier, this tax is seen as counter-productive when it comes to inward investors, and we have to tackle that. One business man has written to me saying that the tax is having a major impact on both new business opportunities and maintaining current business. A reduction in it would bolster the aviation industry in the United Kingdom. Another has commented:
“I am a frequent business traveller trying my damndest to provide export business for this country and it grieves me to be paying such a punitive tax to travel on behalf of the country.”
A review of the economic impact of APD would show the true extent of the cost to businesses. In fact, the Government previously looked at the impact of APD on the Northern Irish economy and reduced APD to band A—currently, the standard rate is £26 and the reduced rate is £13—to ensure that Belfast could compete with Dublin’s air travel tax, which is just €3. Just as APD needed to be reformed to help Belfast compete with Dublin, APD should be reduced to help London’s airports compete not just with Amsterdam, Paris, Frankfurt and Madrid, but with many of the Asia-Pacific and other international hubs.
Naomi Long (Belfast East) (Alliance)
The hon. Lady is making a compelling case. The Irish Republic has announced that despite the fact that its APD equivalent is only €3, it intends to scrap it, because it believes it is an impediment to growth in the economy.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We have a lot of Members who wish to speak and they should recognise that if they have already intervened, they will go down the list—and not be upset about that.
Priti Patel
I take on board the hon. Lady’s point.
As well as compromising trade, the cost of APD is felt by the aviation and tourism sector across the country. Last year, more than 30 million visitors came to Britain and spent £18 billion in our economy. We all want to see that number increase, and I want to see more foreign tourists flying to our international airports and travelling to see attractions elsewhere in the country—including the county of Essex, where the tourist sector supports 54,000 jobs and adds £3 billion to our local economy.
Heather Wheeler (South Derbyshire) (Con)
I congratulate my hon. Friend on securing this debate. She talks about Essex with passion, which is fantastic. In South Derbyshire we are equidistant from East Midlands airport and Birmingham airport and we have a huge amount of tourism, as well as many jobs based in the airport industry. I hope that Ministers listen to my hon. Friend and think again about a tax that is holding back growth.
Priti Patel
I thank my hon. Friend for her comments.
We would all like to see travellers from Brazil, Russia, India, China and a range of emerging markets choose to spend their dollars, rupees and other currencies here, but the current rates of APD are deterring inbound tourism, especially from developing countries with a growing middle class. Why would a family of four from China wishing to take a holiday in Europe come to Britain where APD would add a further £324 to their travel costs when they could hop on a flight to France and pay aviation taxes totalling £36 or to Germany where they would also pay less? The Government’s tourism strategy clearly warns that we are pricing ourselves out of the mass or middle market and will swiftly relegate Britain from being the sixth most popular destination in the world to the margins of the industry. The aviation sector supports more than 900,000 jobs and contributes more than £50 billion to GDP. I urge the Government to consider how APD can be reformed to support tourism as well as business.
In 1994, modest levels of £5 for short-haul travel in the EU and £10 for destinations beyond the EU were introduced. APD is now having a negative impact on our economy. When the then Chancellor of the Exchequer, the Minister without Portfolio, my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), announced the introduction of APD in November 1993, he said it was a small duty on all air passengers from United Kingdom airports. The predicted revenue was £330 million a year. It now raises 10 times more than that, and a family of four travelling economy class to Florida this winter will pay £260 in APD.
Mr David Hamilton (Midlothian) (Lab)
That figure would be a lot higher if the family were going via one of the regional airports and could not get the same carrier, because they would pay two lots of APD. It is now proving very difficult for many families to have a decent holiday abroad.
Priti Patel
The hon. Gentleman makes his point clearly. APD is having a wider multiplier effect.
If that same family of four were travelling to Australia, they would have to fork out £368. Those figures are not small and are having a severe effect on households with modest incomes throughout the country, including pensioners who wish to visit relatives living abroad. We have all had correspondence from our constituents, and one of mine wrote to me on this point to say that she supports this campaign because both of her children and her grandchildren live overseas and flying is the only way to visit them.
Another has written:
“Having friends and family in the Caribbean we have to pay even more of this excessive tax than flying to the west coast of the USA although the distance flown is less.”
This tax is clearly having a negative impact on families. It is deterring foreign direct investment, it is holding back our businesses, and it is making our country less competitive. For those reasons, I hope that colleagues will support the motion and I urge the Minister to take on board the remarks that I have just made.
Mr Deputy Speaker
Order. I am introducing an eight-minute limit. I hope that I will not have to reduce that, but interventions cause problems.
Paul Goggins (Wythenshawe and Sale East) (Lab)
I congratulate the hon. Member for Witham (Priti Patel) on securing the debate and leading it as ably as she has this afternoon. She described how APD, from relatively modest beginnings, has become a real monster because of the economic problems that it creates and the burdens that it places on the aviation industry and our constituents when they seek to take a holiday. This is a tax on holidays. It is also a tax on the aviation industry and, as the hon. Lady argued so effectively, it is a barrier to economic growth.
Mr Tom Clarke
Like me, my right hon. Friend is a former Minister; in my case, I was a Minister for tourism. Is he worried by the representations we have received that indicate that APD at the current level—the highest in the world—is a disincentive for the kind of tourism that we expected after the Olympic games, the Paralympics and other events?
Paul Goggins
My right hon. Friend was a very able Minister for tourism and he did a superb job. He is right: APD is a tax on our constituents who seek to go on holiday, but it is also a tax on those who want to come here to enjoy the wonderful countryside and the great features of our society, with the associated benefit to our economy.
The APD, as hon. Members know, is the highest in Europe. Denmark, Norway and Holland have scrapped it. Ireland, as my hon. Friend the Member for Belfast East (Naomi Long) pointed out, has all but scrapped it—it intends to do so in the near future.
As the hon. Member for Witham argued, we have to look at this in terms of the wider economy. I wish to look at it particularly from the perspective of the Manchester city region, and it is good to see the hon. Member for Altrincham and Sale West (Mr Brady) in his place. I know that he has a great commitment to Manchester airport. I also see my hon. Friend the Member for Blackley and Broughton (Graham Stringer), who is a former chairman of the airport. It now serves more than 200 destinations, has 24 million passengers a year, and employs 19,000 people on the site, with many thousands more provided in the wider economy. It is estimated to bring in around £3 billion to the UK economy as a whole.
One of my principal concerns, which I have already mentioned, is that APD is a tax on our constituents. Let us reflect on that for a second. Hard-working families already paying tax on their hard-earned incomes have to pay tax again if they want to take their children on holiday. We ought to think about that. In particular, let us consider the economic problems that APD creates. There is clear evidence that airlines are not coming to Manchester airport because of APD. In particular, AirAsia X has dropped its plans for a route from Manchester to Kuala Lumpur and routed instead to Paris Orly. The airlines will go where the profits are greatest, and with those profits will go the jobs and all the additional economic value.
Henry Smith (Crawley) (Con)
AirAsia X also stopped flying from Gatwick to Kuala Lumpur, and cited exactly the same reason—APD being far too high. The right hon. Gentleman makes a good point.
Paul Goggins
The hon. Gentleman makes it clear that this is an issue not only for Manchester but for other airports and therefore the whole economy.
I am particularly concerned about the barrier that APD might pose to Manchester’s ambitious plans for an airport city—a plan that fits squarely with yesterday’s report by Lord Heseltine, which locates the focus for economic development absolutely in the city regions, the ambition, skill and energy of which are the drivers of that development. Manchester is at the forefront of that. The plans would result in major investment in manufacturing, office development, retail, leisure and an ambitious plan for a medipark that would mean major international investment in health and biotech industries. All that would be in the area around the airport and, crucially, would be facilitated by the presence of that international airport. It could become an economic hub drawing in investment from across the world, bringing high-value investment, much-needed jobs and links to destinations throughout the world.
The vision for the airport city has the Government’s full support. They have given it enterprise zone status, which brings with it rate relief and access to superfast broadband. It is utterly contradictory, however, to have that plan in place but then to impose on every business passenger passing through Manchester airport a tax on that business. It is like saying to an investor from north America, “We’re very grateful for your business, and by the way it’s going to cost you an extra £65 every time you want to visit that investment.” It is preposterous, and it is a barrier to the kind of economic growth that we need and want.
We cannot wish APD away. As the hon. Member for Witham said, it brings nearly £3 billion into the Treasury, which of course helps to pay for our schools and hospitals, but one way or another we must think our way out of this creatively. I support—I suspect that not all hon. Members would—a further investigation into regional APD variations, because they could encourage the use of spare capacity at some of our regional airports and facilitate the kind of economic development, such as our ambitions for airport city that I have described.
Stephen Gilbert (St Austell and Newquay) (LD)
The right hon. Gentleman is making precisely the point that I wanted to make. The way APD is implemented can harm the development of regional airports such as Newquay, so I hope that his idea has been heard by the Economic Secretary.
Paul Goggins
The Treasury has already considered the argument for regional variations, which has been made before, and I look forward to hearing what the Economic Secretary has to say. It seemed to park the idea after its review, but I hope that Ministers are prepared to reconsider it, particularly to encourage the use of spare capacity and to get behind the vision and drive for economic initiatives such as airport city.
We must recognise the need to accelerate the economic growth that can come from airports. With that growth would come higher tax returns. We have to get off this hook. The alternative is to keep overtaxing the aviation industry, which should be one of our best industries, and to watch it decline further and further under this burden we have placed on it, without facilitating economic development in and around our airports, which could put our constituents back to work and get our economy on the move again. I welcome this debate and hope that the Minister is listening, because this issue has to be addressed.
Mr Graham Brady (Altrincham and Sale West) (Con)
It is a pleasure to follow the right hon. Member for Wythenshawe and Sale East (Paul Goggins), with whom I share an interest in the importance of Manchester as a key driver of growth, jobs and prosperity in the north-west of England, particularly in the part of Manchester that we both represent. I am pleased to follow the good and cogent case he made about the importance of the airport and of freeing it up to attract more investment into the UK.
I also congratulate my hon. Friend the Member for Witham (Priti Patel) and others on securing this important debate. The case is unanswerable. We always want this country to be a world leader, except when it comes to the levels of taxation we impose on businesses and investment, and on our people when they have the modest aspiration of taking a foreign holiday. That is the position we find ourselves in. I am delighted to see the Economic Secretary in his relatively new position. He is a sensible man and a good Minister, and I hope that he will give this debate a good hearing.
I know that the Government believe in our key point, because they have set about reducing levels of corporation tax with the express intention of making us more competitive in the world and ensuring that businesses see the UK as a place to locate, rather than going to other places. The argument here is exactly the same. We do not want to be at the top of the international league table for aviation tax; we want to be towards the bottom, as that will help to bring in international business and investment.
Neil Carmichael (Stroud) (Con)
I am listening carefully to this important debate and I have heard a lot from my constituents about it. I recognise the revenue-raising function, but should we not underline the importance of international competition in transport and capacity, and think more in terms of an holistic approach to this policy area?
Mr Brady
That is absolutely right. It is also important to note, as the hon. Member for Belfast East (Naomi Long) did, that the Government have recognised the strength of this argument, not just in general terms about levels of taxation applied to business but specifically in relation to APD. They understand that in the case of Northern Ireland competing against the Republic there was an unanswerable case for a reduction in APD. It is apparent to us all that precisely the same argument applies to the UK and particularly to the regional airports—which many Members have mentioned—that compete with airports in continental Europe.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
The hon. Gentleman seems to be talking as though every tax has a similar effect. It is quite clear that this tax is damaging industry, damaging our enterprise and damaging investment, particularly in the regions, although we have even heard from Essex, which is close to London. Would it not be better for the Government not just to rely on broad taxation, such as the 5p reduction for people earning over £100,000, which has no real targeted effect on industry and enterprise, but perhaps to take the revenue from that broad source and offer relief from this damaging tax?
Mr Brady
I do not always agree with the hon. Gentleman, but I am pleased to agree with him about that. This tax precisely targets investment and international trade, which are exactly the things that the United Kingdom needs to focus on if we are to grow our way out of the problems we face.
Mr MacNeil
The hon. Gentleman said that Northern Ireland is competing with the Republic of Ireland, but surely we are all competing with the Republic of Ireland and with each other. We had better make sure we have that mindset; otherwise we will be left very much in the slow lane.
Mr Brady
That is absolutely right. Unlike the hon. Gentleman, I hope we will not be competing internationally with Scotland in the near future, but if we are, I hope we have lower aviation duty. The regional effects—on Scotland and Northern Ireland, but also on airports in the north of England—are clear. There is a plain and unanswerable case.
Like my hon. Friend the Member for Witham (Priti Patel) and the right hon. Member for Wythenshawe and Sale East (Paul Goggins), I want to touch briefly on the impact on families. Air travel should not again become a luxury that only the rich can afford. It is not a luxury in the modern world. Air travel, whether for business or leisure, is an essential part of modern life. It has opened up the world, opened people’s minds and enhanced the quality of life for us all.
I have said that I am confident that my hon. Friend, being such a good Minister, will respond warmly to the case we are all making. The final reason for that is that the proposers of the motion have been so modest in their aspirations. The motion highlights some of the damage that we think is being done by this tax, but we do not call for it to be cut or axed altogether. We are asking only for the Treasury to look carefully at its effect before next spring’s Budget. All we want is a proper detailed review and economic assessment of whether this tax does more economic harm than good. I think that all who have spoken so far believe it does.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
I congratulate the hon. Members for Witham (Priti Patel) and for Crawley (Henry Smith) on securing this debate. As a co-sponsor of the motion, as well as a seasoned and regular air traveller, I apologise to the House: because of the inclement weather coming in from the Atlantic, I shall try to rush back to Scotland this evening rather than waiting, or having my constituents wait until tomorrow afternoon before they see me.
I do not know whether I was targeted, but as chairman of the all-party aviation group I certainly received my fair share of correspondence on the petition connected with this debate. Indeed, I do not believe I have ever been contacted by as many constituents on any subject in my time in this place, and I have been here for some 20 years. As has been mentioned, the all-party group instigated an inquiry, not only into this tax but into the whole question of aviation and its future in the UK. It was clear from that work—a fairly major inquiry, with some 50 submissions and two oral evidence sessions—that we are likely to damage the whole UK economy unless we get this tax right. That was clear to me and the all-party group, with all conclusions supported by all parties in the House that were part of the inquiry, which is a first when it comes to the future of air traffic.
A report is available, and if hon. Members ping me an e-mail, I will send them a copy, if they have not already read it. The report has been sent to the Prime Minister and a fairly sizeable number of Treasury civil servants have asked for a copy, as a consequence of which I presume that the Minister is aware that the report is in existence. If he has not done so already, I would ask him to look at it, because we still await a response from Treasury officials and the Minister. There is overwhelming support from all sections of the House; indeed, we have already heard—as I am sure we will hear again this afternoon as we approach 5 o’clock—about the disadvantages of air passenger duty, as well as the evidence for those disadvantages. The vast majority of submissions received stated that the UK was being placed at a significant competitive disadvantage as a result of the tax. That applied to 43 of the 51 submissions, which I suggest is overwhelming.
But—and it is a big “but”—it is impossible to draw a comprehensive picture of the national economic impact of air passenger duty without Treasury support in looking at the issue far more closely. I am looking for that support from the Government this afternoon, and I also hope to see their response to the report sooner rather than later. The report also mentioned reports from the British Chambers of Commerce and from Oxera. They were good reports with credible data sources, but they were selective. We need a comprehensive assessment of the effects of the tax, and that is a task for the Treasury to undertake.
There are examples of air passenger duty leading to direct commercial loss. We have already heard my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) talk about Manchester airport, and say that AirAsia X cited ever-increasing taxes as its primary reason for abandoning its flights to UK destinations. I have been given other examples as well. It is a matter of public record that Continental Airlines, now part of United Airlines, would have abandoned flights from Belfast to the United States had the level of APD not been reduced in October 2011.
If only some thought could be given to the idea of regional variation, as my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) said. That would have the greatest effect on the regions in question. Only yesterday, Aberdeen, Glasgow and Edinburgh airports called for immediate action on the levy. They estimate that, by 2016, £210 million less will be spent each year in Scotland because of the tax. Glasgow airport’s managing director, Amanda McMillan, has said that APD
“will continue to damage Scottish aviation by making routes unviable and decimating Scotland’s links to the rest of the world.”
As my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) said, the problem is also affecting my own airport at Prestwick.
Mr MacNeil
Given the quote from the managing director of Glasgow airport that the hon. Gentleman has just read out, does he support the Calman commission’s recommendation that air passenger duty should be devolved to Scotland?
Mr Donohoe
The hon. Gentleman might well be shocked by this—indeed, I expect him to fall off his seat—but I do actually support that proposal. I would suggest, however, that any such duty should not be frittered away, as many of the tax receipts obtained by the Scottish Government are. I would suggest that, if it were devolved, it should be hypothecated so that the money could be put into the airports, rather than into some of the other high-falutin’ schemes that happen north of the border at present—[Interruption.] I do not know what the hon. Gentleman is saying from a sedentary position, but I will give way to him again if he wants to intervene.
Mr MacNeil
Surely the idea behind devolving APD would be to cut it to make Scotland more competitive.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I warned the hon. Member for Na h-Eileanan an Iar Mr MacNeil) that he would be at the bottom of the list, but there is a danger that he will fall off the list because the amount of time available is disappearing.
Mr Donohoe
In order not to prolong the debate, and to give the hon. Gentleman time to speak later, I will not respond to his intervention.
The report suggests that, as a result of air passenger duty, 2 million fewer passengers will fly from Scotland from 2016 onwards. That is a fair number of passengers, given the number of people who fly. There are other reasons to believe that the problem is more serious in the regions than it is in the south-east of England, but I will not go into them in depth now. Our report recommended that the Treasury and the industry come together to undertake a comprehensive study. I would echo today’s calls that, until such an assessment is made, APD should be frozen.
I shall briefly mention VAT and fuel duty. If either were to be imposed on aviation fuel, the airlines—and not just those based in the UK—would go abroad for their fuel in order not to have to face that problem. Buying it here would simply no longer be an earner. I put it to the Minister that any suggestion of such an imposition should be studied in much greater detail. Indeed, fuel is not taxed for other forms of transport in the UK. There are a number of unconvincing arguments. One is that whereas the UK does not levy VAT on domestic flights, international air travel is generally VAT-exempt in many other countries. There are all sorts of other things that have to be brought into the picture. The aviation sector has no competitive advantage over other forms of public transport.
Let me look at the question of tax and tax avoidance. There is a good deal of evidence coming to the fore to suggest that families, instead of travelling out of the UK long haul, are travelling to other hub airports in mainland Europe and even further afield. As a consequence, the Treasury will lose the business and “Air UK” will lose the business.
Mr David Hamilton
Is my hon. Friend aware that travel agents throughout Scotland—and, I suspect, in the north-east, where the regional airports are based—are now actively encouraging people to go via Europe because it will save them quite a bit of money? For a family like mine, going to America otherwise means paying £1,000 extra.
Mr Donohoe
I am very grateful to my hon. Friend, but he is eating into my time and I have to be careful in that what happens in that respect has already been mentioned. I am told that up to £380 extra per person might need to be spent in those circumstances.
In conclusion, as we know from the length of the Davies commission, the Government appear to be in no rush to address the competitiveness problems of the UK aviation industry, which are impacting on the whole of our economy. The abolition or reduction of APD has the potential to make the UK more internationally competitive. As a minimum, I urge the Minister’s Department to undertake research to find out what the impact of APD has been on the aviation industry and what it means for that industry.
Henry Smith (Crawley) (Con)
This debate is most important for the well-being of the British economy. I would like sincerely to thank the Backbench Business Committee for allowing time on the Floor of the House for today’s debate, and I particularly pay tribute to my hon. Friend the Member for Witham (Priti Patel) for helping to secure it.
It is perhaps of little surprise that I take a great interest in this subject, as I represent the constituency that contains Gatwick airport—the world’s busiest one-runway, two-terminal airport—and it is also the home of a number of aviation-related companies. We have tour operators, globally renowned companies such as TUI Travel and, of course, British Airways operating from Gatwick. We have the headquarters of Virgin Atlantic, an iconic British company that is innovative in the services it provides, and we also have easyJet, now this country’s largest airline with about 40% of the flights from the area—indeed, 1,078 easyJet flights go out of Gatwick airport every week. I am delighted to say that, from next spring, easyJet is starting a new route to Moscow. It is little surprise, then, that many of my constituents who work locally in the aviation industry are deeply concerned about air passenger duty. Mention was made of the number of e-mails that right hon. and hon. Members received from the fair tax on flying campaign, and I believe I received more than 1,000 such e-mails.
It is not for parochial reasons, however, that I speak in today’s debate and raise my concerns again about the level of APD that we charge. Almost a year ago, I was fortunate enough to be granted an Adjournment debate and warned that if APD were to be increased, as was suggested, we would do some real damage to this country’s economic prospects.
I entirely understand why the Treasury is seeking to bring in revenue. We are all acutely aware of what is happening to the national finances. The deficit that we are sustaining is deeply troubling, and although I warmly congratulate the Government on reducing it by a quarter in just two and a half years, it is little wonder that the Treasury does not view with enthusiasm the prospect of giving up an income of almost £3 billion in APD receipts.
Adam Afriyie (Windsor) (Con)
Although the Exchequer may be raising between 2 billion and £3 billion from air passenger duty, it may be losing an equivalent amount, if not more, as a result of the reduction in trade and improved economics. Is it not for that reason that we should demand a forward view of the economic impact?
Henry Smith
My hon. Friend has anticipated what I was about to say. The Netherlands scrapped air passenger duty after studies conducted by the Dutch Government established that it was costing the economy more than it was bringing into the Treasury. I think that it is for the same reason that only six European countries charge any form of air passenger duty, and the amounts that they charge are very modest.
Guy Opperman (Hexham) (Con)
My hon. Friend is making a very articulate case not only on Gatwick’s behalf but in favour of the change that we all want to see, but does he agree that air passenger duty is not just a London tax? If the Government are interested in supporting the regions of England, at the very least they should bear in mind the fact that a change in APD would make a huge difference to regions such as the north-east and the north-west.
Henry Smith
My hon. Friend is right. Air passenger duty is a bad tax for the UK as a whole, regardless of which nation or region within it Members may happen to represent.
Michael Connarty
The hon. Gentleman is making a very good case. It is estimated that air passenger duty raises £2.6 billion, which is nearly £1 billion more than the £1.76 billion that it raises in all the other European countries. It is a tax on tourism and trade, and the Government should act before it does more damage. It is estimated that up to £3 million will be lost in trade by 2016 if the present position continues.
Henry Smith
The hon. Gentleman is absolutely right.
Members have suggested that we adopt some form of regional banding, but I think that that would be a mistake. I think that the solution is for us to get rid of air passenger duty altogether over time, or at least reduce it to a very modest level. I do not think that we should pit one part of the United Kingdom against another. We, as a relatively small country, achieved global dominance because we are a trading nation, and we either stand together or fall apart when it comes to trade. I think that we need to view the argument holistically, and to see this as very much a British issue.
In the remaining time available, let me deal with some of the misnomers that have been applied to air passenger duty. First, it is not an environmental tax. If it were I would support it, because I think it important for us to reduce our emissions whenever possible, but it is purely a revenue-raising tax—albeit a misguided one and a false economy, because it costs our economy far more than it raises. In fact, we are subject to double taxation when it comes to air duty. The European emissions trading scheme, which was introduced at the beginning of this year, is an environmental tax, and I have no complaint about it; but air passenger duty is almost certainly not.
I also want to debunk the myth that we need APD because aviation fuel and air tickets are not subject to value added tax. Under the conditions of the Chicago convention, it is impossible to charge VAT on aviation fuel and air tickets, but even if it were possible, the current APD represents a far higher amount than VAT would. We are, therefore, greatly overtaxed.
A year ago I had an Adjournment debate in which I asked the Government not to increase APD. I am sorry that I failed in that, and APD went up. Today, we are not calling for a cut in APD, however; we are simply calling for APD to be frozen at its current level until the Treasury assesses whether it is costing our economy more than it brings into the Exchequer, as I contend. The Treasury conducts surveys and studies all the time, and it is perfectly reasonable to ask it to carry out a study on this matter so that we can have some proper facts and figures and are able to make an informed decision.
The stakes are very high. We are a trading nation with competitors, not only in continental Europe but around the world, who are eager to take our business. We will lose out to them if we do not carry out an assessment so that we can understand APD’s impact on our economy and take action if necessary. I therefore hope the Government will respond positively to this reasonable motion. They should carry out a study of the effects of APD. Until that is done, we must not harm the British economy by increasing APD still further.
Dame Anne Begg (Aberdeen South) (Lab)
I support the motion in the name of the hon. Member for Witham (Priti Patel) and others. Aberdeen depends greatly on the airlines, and especially on connecting flights. If the hon. Lady thinks the situation is bad in Essex, she should consider what it must be like for my constituents. Her constituents—and others who live within easy reach of London—have some choice in how to get out of the country; they can travel by Eurostar, for instance. From Aberdeen, however, it is impossible to get out of the country without either flying or spending a very long time travelling.
APD’s great impact on my constituents’ lives is highlighted by the fact that I received more e-mails about the fair tax on flying campaign than any other MP. Although it is good that 800 or so constituents got in touch with me, I do not necessarily want to thank them, because I received half of those messages in a two-hour period one afternoon after British Airways sent out an e-mail to all its executive club members. I thought I was under cyber-attack because my computer went mad; it started constantly pinging. In all the years I have been an MP, this is the issue on which I have received the most e-mails.
Other Scottish Members have mentioned a report published today by York Aviation, which was commissioned by Scotland’s largest airports. Derek Provan, the managing director of Aberdeen airport, said:
“This report shows, quite simply, that APD is damaging Scotland. It is damaging our economy, our tourism potential and our ability as a nation to bounce back from the recession. It limits our opportunities for growth in the employment market, costing as much as £50 million in the process.
At Aberdeen Airport we run a real risk of losing around 200,000 passengers by 2016 through this damaging tax. Each recent increase in APD has had a dramatic impact upon what we, as airports, have achieved and could have achieved without APD. It is imperative that the UK government undertake a detailed and comprehensive review into APD with the utmost urgency, and at the very least freeze APD whilst that is taking place.”
So both Aberdeen airport and other airports in Scotland are being affected because of not only the level of APD, but its existence and the way it acts as a disincentive to those furthest from the hub airports.
Mr MacNeil
Does the hon. Lady agree with her colleague the hon. Member for Central Ayrshire (Mr Donohoe) that APD should be devolved to Scotland?
Dame Anne Begg
Whether or not APD is devolved to Scotland, the problem we face is the level of APD and the way it is operating. Just because a tax is devolved, does not necessarily mean it would be treated any differently in Scotland—
Dame Anne Begg
It might be, but it could be treated differently down here, too. The problem I have with devolving some of the taxation that the hon. Gentleman would want devolved is that, as we know, the Scottish Government have a huge hole in their budget. So in terms of their priorities and how they spend their money, there is a fear that they would see APD as an easy cash cow, as indeed the Westminster Government do. There is no guarantee that a devolved APD would be any different from the one we see here.
Dame Anne Begg
Mr Deputy Speaker is shaking his head, so perhaps I should not allow the hon. Gentleman to come back in, because we are getting away from the points I wish to make.
Most people who fly out of Aberdeen connect to other routes. Although lots of the flights from Aberdeen go to other domestic destinations, many of the people on the planes—the ones that the right hon. Member for Gordon (Sir Malcolm Bruce) and I are on every week—come to London to connect on to another route. I would like there to be a lot more direct flights from Aberdeen, but that, like the debate on the devolved nature of APD, is an issue for another day.
At the moment, most people in Aberdeen who want to travel abroad have to connect through one of the major hubs. The Government are making it particularly difficult to make Heathrow attractive as that hub. It is important for the British economy that Heathrow remains the main hub and that it is through Heathrow that all the traffic going out of the UK is filtered. There are two main reasons why Heathrow is becoming less and less attractive. The first is the system of APD, as anybody connecting through Heathrow is inevitably caught one way or the other. If they have booked their flights in separate lots they get a double-whammy, and if they have a through-flight, they still end up paying APD. Secondly, it would be remiss of me if I did not mention that part of the reason for Heathrow’s unattractiveness is the congestion there because of the lack of a third runway. People in north-east Scotland strongly support the building of a third runway at Heathrow.
Those two things, put together, mean that people in Aberdeen, and possibly in Edinburgh and elsewhere, are more attracted to using other airports as the hub through which to transfer. For people from Aberdeen that means going through Schiphol or Paris—and Lufthansa now has flights on to Frankfurt. Those who book the different parts of their journey separately pay only one part of APD—they do not pay APD on their full flight. So financially that approach becomes much more attractive. The consequence is business loss not only for Heathrow but for the UK carriers, who are suffering the most. That is a real problem and a shame.
We know that there is often no option other than to fly out of Aberdeen. We do not have an electrified rail service north of Edinburgh and we do not—and probably will never—have high-speed rail. It might get to Manchester, it might get to Scotland, but it is unlikely ever to get as far as Aberdeen. It takes too long for us to get a train to the Eurotunnel, so many people are affected by the rise in APD. This does not just affect business travellers. Aberdeen airport survives because we have a very buoyant economy in the north-east of Scotland because of the offshore oil and gas industry, but that economy will not be enough to support the airport if the Government are intent in undermining much of that travel through the increase in APD.
Many business travellers come through Aberdeen and they want to be connected to the whole world, not just part of it. They want to be able to fly through Heathrow and go on to some of the emerging markets, which often also have oil and gas. That is why it is important that the Government should listen to this afternoon’s debate.
Sir Roger Gale (North Thanet) (Con)
Most Members have made the point about the value of the aviation industry to the UK as a whole. It is of considerable value to all the UK’s major conurbations, and particularly to the south-east. Historically, Heathrow has been one of the major—if not the major—hub airports in the world. The interlining that has gone on through Heathrow over decades has been worth almost incalculable sums of money, not merely to the aviation industry but to business as a whole through the people who hold business meetings in airport meeting rooms and the people who come through London and spend money doing business in the City or as tourists. That is what is at stake and it is difficult and dangerous to ignore those facts.
At the moment, the United Kingdom is losing business. Not in 10, 15 or 20 years—it is happening now, today. Every day we lose business to Schiphol, to Frankfurt and to Charles de Gaulle. Would not the French, give or take Mr Hollande, like to create in Paris the financial centre of Europe, to replace London? It is not a pipe dream on their part; it could happen if we drive the business travellers away from the south-east of England. I am sorry that this is to some extent a south-east problem, but that happens to be where the City of London is and we cannot change that.
There are two issues: airport capacity and air passenger duty. My friend the hon. Member for Central Ayrshire (Mr Donohoe) and the hon. Member for Aberdeen South (Dame Anne Begg) both made the point that people are now travelling short haul to interline and take long-haul flights from Schiphol, Frankfurt and Charles de Gaulle. They pay APD on the short-haul flight and get a much cheaper and better deal on the long-haul flight to the far east, Brazil—a developing market—and, of course, the United States. It is happening now.
Guy Opperman
My hon. Friend is making an articulate case about the impact on the economy of Great Britain, but there is also an impact on overseas economies. For example, the APD banding is so arbitrary and wrong that the APD for somewhere such as the Caribbean is more than for somewhere as far away as Hawaii. Surely that shows the illogicality of this blunt tax.
Sir Roger Gale
If I wanted to use one word to describe the banding, it would be chaotic. That is what it is. We are losing business now.
We have an opportunity—I have a constituency interest in this—in Manston, Kent’s international airport. My hon. Friend the Economic Secretary to the Treasury is aware, I think, of the opportunity Manston presents. It has one of the longest runways in the country and also one of the widest—three runways wide—because during the war it was used for landing planes one after the other. There is no suggestion that it should ever become a fourth, fifth or sixth London airport, but it could be developed at very modest cost to take the pressure immediately—not in 10 or 15 years’ time—off Gatwick, which in turn, with released capacity, could take the pressure off Heathrow. That would create the breathing space we need while the Government work out whether to have a third runway at Heathrow, a second runway at Gatwick, a second runway at Stansted or Boris island—that is not the purpose of this debate. If we are to develop Manston and use its capacity, we must give it a chance to breathe commercially, and air passenger duty is damaging that chance.
We need a modest investment in infrastructure, and the Minister of State, Department for Transport, who has responsibility for aviation, will visit us very soon. As long as the air passenger duty element of travel from the United Kingdom is as high as it is, regional airports such as Manston, and the many others that Members across the House have represented this afternoon, will suffer. Because Manston is in the south-east, it will presumably be banded at a south-east price, which in itself is nonsense. We must take into account the nature and capacity of each individual airport. I want air passenger duty to go completely, but I believe that in the interim, as a short-term measure, we have to look seriously at banding, which has been referred to, and at some kind of variation between regional and hub airports.
The Economic Secretary to the Treasury might be new to his role, but he is very bright and he can do sums, which is why he got the job. It is very easy to say glibly that something is worth £2 billion, £5 billion or whatever to the Treasury without taking into account what my hon. Friend the Member for Windsor (Adam Afriyie) referred to as the downside. The real cost must be calculated in terms not just of aviation lost, but of lost business, tourism and all the other things that flow from being a world-class, international centre, which is what London is, always has been and must be allowed to remain.
There is a Treasury mantra—I am looking to the civil servants’ box—which says that more tax equals more money. That card was played earlier this afternoon with regard to beer duty. It is wrong. A modest amount of tax might raise a modest amount of money, but there comes a point, and my hon. Friend the Economic Secretary must recognise this, when a tax kills the goose that lays the eggs, whether they are gold, silver, bronze or straightforward eggs. We cannot go on killing this industry, and that is what is happening. Of course, another huge concern has been voiced by holiday travellers. The impact on family holidays is dramatic and costly.
Adam Afriyie
My hon. Friend is making a powerful case. It strikes me that at the heart of the debate there is an absence of evidence; there is an evidence-shaped hole at its heart. All the points that have been made, including his points, could be dealt with cleanly and crisply if the review takes place.
Sir Roger Gale
My hon. Friend is absolutely right, and his point leads me swiftly to a conclusion. The sums have not been properly analysed and so we need the review. There is no evidence to support the case that the Treasury is making. In the meantime, United Kingdom Ltd is being damaged. We need the review. I ask the Minister, please can we have it?
Mr Deputy Speaker (Mr Nigel Evans)
Order. The time limit is being reduced to seven minutes.
Graham Stringer (Blackley and Broughton) (Lab)
I do not know whether I should thank you for that, Mr Deputy Speaker, but I do thank you for allowing me to catch your eye.
I congratulate the hon. Member for Witham (Priti Patel), who secured the debate and moved the motion. The debate is important; we can see that from the agreement on both sides of the House and from the number of e-mails, letters and postcards that we have all received. For the first time as a Member of Parliament, I have had more correspondence about a serious economic issue than about the welfare of animals—an extraordinary feat.
I have agreed with almost every word of every speech that has been made this afternoon. By and large I am not an angry person and do not lose my temper, but there should be anger about what is happening to aviation in this country, and air passenger duty is part of the problem. Aviation is absolutely vital to this country’s future; it represents about 4% of the economy when we add up the jobs and its overall impact.
However, aviation is much more important than that. Sadly, we have seen the cotton and other industries go and they have been replaced in the best places by newer, more modern industries. That cannot happen with aviation. This country’s economic welfare depends on its ability to get cargo and people in and out on aeroplanes. We are in a competitive situation to get those aeroplanes to land in this country. In many senses, we are losing that race. I know that the number of passengers expected in Manchester airport’s business plan 10 years ago is down. My guess is that that is true of most of the major airports in this country. They are under a double attack. One attack is on capacity in the south-east. Heathrow is our most important asset in this regard and the sooner the Government make a decision about it the better; I do not believe that any more information can be made available on the third runway at Heathrow. All the information is there and the Government need to stop dithering, make a decision and put some certainty into the issue. The lack of capacity at that hub means, of course, that passengers use other hubs in Europe; they are more profitable and invest in more runways while Heathrow gets less competitive.
Air passenger duty has the same impact. I do not want to repeat figures that have been given out previously, but it is worth going through the figures that show the damage being done. The £2.5 billion raised from air passenger duty is about twice as much as that raised in the whole of the rest of the European Union. A single person flying in the European Union pays about €16 in duty from here; they would pay €3 from Ireland, €4 from Italy, €7.5 from Germany, €5.2 from France and €8 from Austria. Our rates are more than double those of other European countries. We can see the impact of that, not only within Europe but outside it.
It is estimated that Stena Line Ferries is taking 20,000 extra passengers into this country who have flown from India alone. That is a loss to our airports and aviation business. Those are people who have bothered to fly on a plane and then get on a boat. Lots of people would not bother to do that. The trade from China has halved; that is not surprising when we consider how much duty a Chinese family must pay to come to the UK—£648, compared with zero in air passenger duty if they flew into the Netherlands or a number of other European countries.
The hon. Member for Crawley (Henry Smith) is not in his place, but he must have hacked into my e-mails, because he made the same points about green taxes that I was going to make. I will not just reproduce what he said. Part of the camouflage for air passenger duty is that it is somehow an environmental tax. It is not—it takes no account of what sort of aeroplane is involved or of the levels of carbon dioxide or other gases coming out of it. It is simply a tax—and an unnecessary one, given that we have introduced the European Union emissions trading scheme. It is doing serious economic damage, and so this very moderate motion asks for an economic impact study. The World Travel and Tourism Council has carried out a study that shows that in 2012 it expects that damage to equate to over £1 billion more than the amount raised. That is an appalling figure, although it may have got its figures wrong. Perhaps we can rely on the Treasury to get the figures right when it undertakes a study.
I do not believe that our economy now, or in future, can afford to maintain this tax. I am happy to support this very moderate motion, but I hope that Members in all parts of the House will be increasingly critical of Government policies that damage one of our most important industries.
Mike Crockart (Edinburgh West) (LD)
I add my congratulations to the Members who secured this debate, not least because the motion is supported by a large number of Members across the whole House. I should declare a particular interest, as Edinburgh airport—voted best European airport 2011 in the 5 million to 10 million- passenger category—lies within my constituency. As a result, I recently took part in the all-party aviation group’s inquiry, which was mentioned by the hon. Member for Central Ayrshire (Mr Donohoe). Its report made 15 recommendations, four of which related directly to air passenger duty and mirror the tone of the motion.
When APD was introduced in 1994, I do not think that anyone foresaw the likely levels that it would reach 18 years later. The problem is that in those intervening years insufficient notice has been taken of whether those levels were reaching what Gordon Dewar, the chief executive of Edinburgh airport, has described as a tipping point at which they have a detrimental impact on the economy as a whole.
As the hon. Members for Crawley (Henry Smith) and for Blackley and Broughton (Graham Stringer) said, it is sometimes argued that APD is an environmental tax. Perhaps before the inclusion of the aviation sector in the EU emissions trading scheme, that was a valid argument, but it is far more difficult to make it now. If the tax were levied on a per-plane basis to encourage higher occupancy, or if its levels reflected the fuel efficiency of the planes involved to encourage airlines to upgrade their stock, then perhaps that argument could be made again, but as it stands APD is simply a revenue raiser—and an attractive one to the Treasury, at that, because it is easy to administer, has low collection costs, and to a large extent it is hidden from the end consumer. Nevertheless, the Treasury must examine it to ensure that its overall impact on the UK’s tax take is positive, not negative, as seems to be the case.
Mr MacNeil
Would the hon. Gentleman support the devolution of air passenger duty to Scotland, as some Labour Members seem to do?
Mike Crockart
I almost thank the hon. Gentleman for his question, but it is a bit of a broken record and tangential to this debate. Devolution of this tax would merely recreate the problem that existed between Belfast and Dublin; my constituents would get in their cars and drive for two hours to use Newcastle instead. We have already heard the argument about regionalisation of APD, which is a far better and more efficient way of dealing with the problem.
Levels of increase in APD over the past five years stand at between 160%, for the bottom rate, and up to 360% for band D long-haul flights. Many submissions to the APPG’s inquiry, and others made since, including one that I received yesterday from the Federation of Small Businesses, make the case that levels of APD are now putting the UK at a competitive disadvantage in relation to other European and global destinations. The evidence is that that shows itself in a number of ways.
First, APD acts as a disincentive to foreign carriers using UK airports as destinations. A number of hon. Members have mentioned the report by the Scottish airports on their perceptions of the effects of APD. It shows that Scotland’s connectivity grew from servicing fewer than 40 destinations in 2001 to almost 150 in 2009, but the figure has slipped back in recent years to about 130. That hampers not only establishing new business markets, but bringing in new tourists to Scotland. The figure also compares poorly with other small European states. Of course, some of those states have major hubs, but Belgium has links to 220 international cities and Denmark has more than 150 such links.
If APD levels hold back local airports and their connectivity, they will also hold back the surrounding local economies. The Edinburgh airport campus employs 5,000 people and its activities support a further 2,000 across Scotland. It estimates that its contribution to the Scottish economy is £146 million, of which £118 million entered the Edinburgh city regional economy. The question must be: could it do more, if allowed?
One of the key debates on the impact of APD is about price elasticity, a phrase that takes me back to 1984, when I was studying economics at Edinburgh university. Different products have different elasticities—the rate at which demand is lessened by an increase in price. On the impact of APD rises, the report prepared by the three Scottish airports estimates that, accumulatively, by 2016 Edinburgh, Glasgow and Aberdeen will carry 2.1 million fewer passengers each year than if APD had not risen since 2007. Price elasticity is lower in Aberdeen, so the impact would be less, but it might still lose 200,000 passengers. Edinburgh’s higher number of low-cost carriers will result in a far higher potential impact—it might lose 1 million passengers per year.
Those are not just numbers; they are business men making connections and sales, and tourists spending money. The 2009 Civil Aviation Authority’s passenger survey suggests that about 36% of international passengers are visitors to Scotland and that 40% of domestic passengers are similarly inbound to Scotland. If we combine the drop in actual and projected numbers with the CAA figures and apply VisitScotland’s average tourist spend, we will see that the results are very worrying.
The 2007 drop in passenger numbers appears to have amounted to a £90 million per annum loss with regard to Scottish tourism. Following the 2009 APD rise, that figure has risen to £160 million and, if projections are correct, it will rise to £210 million per annum by 2016. This simply cannot continue.
Much of what I have said has come from the industry and some might say, “Well, they would say that, wouldn’t they?”, so I did a small internet survey last night via booking sites. I imagined myself as a business man trying to establish trade with some of the BRIC countries and looked at flying direct to Sao Paulo. A flight on 14 November from Heathrow would cost me a best direct price of £768, the APD for which is about £184. However, a direct flight from Paris, where the APD equivalent is €4, would cost £642—a saving of £126, which is more than enough to cover a Eurostar ticket. If I chose to start a business with Chennai, I could fly there with Gulf Air for £475, but the cost of a flight from Paris would be £240, which is almost half the price.
If I was a tourist heading to Las Vegas—this is the worst example—I could get the 11.20 Virgin Atlantic flight for £644, but if I travelled to Dublin for £17 I could get the exact same flight from there for £453. That is a saving of £191, for which, once I arrived in Las Vegas, would buy me the “hound dog” package, whereby Elvis would sing three songs to me and I could get a rose bouquet and be walked down the aisle. That would be an interesting use of £191. I think we can do better. When the taxation system causes such anomalies, it is not only Elvis who has left the building; common sense has left as well.
Mr Nigel Dodds (Belfast North) (DUP)
I will be relatively brief, because many of the general arguments about air passenger duty have already been advanced. The UK has the highest air passenger duty in the world, twice the level of the next most expensive, which is that levied by Germany. Only five or six other countries in Europe levy APD and, as we have heard, the Irish Republic, which currently levies a €3 rate, is planning to abolish it altogether very soon as it believes that will help its economic growth.
When the tax was introduced it was relatively affordable, but there have been swingeingly massive increases in recent years. I suppose that highlights the danger of new taxes in general, because they are always introduced at a level that is seen as relatively modest and we are given all sorts of commitments about them, but very soon they start to ratchet up. That happens especially when they are perceived as not hitting people directly. We know that income tax, national insurance and so on are sensitive matters, but insurance premium tax, APD and so on start by being seen as easy hits. Now, we have got to the stage at which APD is clearly hitting businesses, families, ordinary people and the aviation industry, and that is causing real damage. As the hon. Member for Edinburgh West (Mike Crockart) and others have pointed out, it is clearly not an environmental tax but purely a revenue raiser.
Lord Heseltine’s growth report was published yesterday. When one considers the effect of APD on the aviation industry’s economic prospects, it is clear that it is a tax on exports, businesses, tourism and families. Like other right hon. and hon. Members, I have received many representations about it. Many of them have come by e-mail—we have all received the e-mails—but more than a fair share have been made to me personally. I have been stopped at airports by business men, travellers and students, and people have come to my advice centre to raise the issue with me. It is a matter of concern to many people.
I will not go over the effect of APD on families and tourism, because the hon. Member for Edinburgh West has done his research on that and shown the price differences, but the aggressive nature of the tax is a real problem for families. What is most concerning is that it puts us at a severe disadvantage as a country, particularly in the part of the world where I come from, Northern Ireland. It helps our competitors and makes us more uncompetitive. It affects London, of course—as has been pointed out, it is often relatively cheap for people to go to Europe and then fly on long-haul from there—but the implications are particularly severe in Northern Ireland.
I acknowledge, of course, that the Government have granted a concession to Northern Ireland on long-haul flights, but there are other important considerations in Belfast. The right hon. Member for Gordon (Sir Malcolm Bruce) said earlier that it took seven hours to get from Aberdeen to London by rail or car, and of course it takes considerably longer to get from Northern Ireland to London or the south-east of England by rail or car and ferry. For businesses, there is no alternative to the air link between Belfast and London and the south-east, so that is a unique consideration. It is also now easy to get to Dublin using the new motorway links that have been created. It is therefore attractive and tempting to businesses, tourists and others to travel to Dublin to avoid the APD that is levied on flights out of Belfast.
The Belfast to London route is particularly important. To go off slightly at a tangent, but not too much, we all need to keep an eye on events following the recent merger of BMI and British Airways, which has raised real concerns in Northern Ireland now that Aer Lingus has moved its operation from Belfast International to Belfast City. There are concerns about future links between Belfast and London Heathrow in particular, which need to be monitored carefully.
I received an e-mail the other day from one of my constituents. He said that he flies often, and that his wife is director of a small company in my constituency that regularly sends its employees all over the world. He continued:
“We have both found it to be significantly less expensive to fly out of Dublin, and as I am sure you are aware, this is money lost to both the Exchequer and to our local economy.”
That is the problem in a nutshell. By holding tax on short-haul flights at its current level, we are losing revenue in Northern Ireland and across the country. The tax acts as a disincentive, and something needs to be done. I therefore welcome the opportunity to contribute to this debate, and I join others in paying tribute to those responsible for securing it. I look forward to hearing contributions from other hon. Members.
Adam Afriyie (Windsor) (Con)
I welcome this debate and the motion tabled by the Backbench Business Committee and moved by my hon. Friend the Member for Witham (Priti Patel).
Of all campaigns in this Parliament, I have received the highest level of communication from my Windsor constituents about the air passenger duty, and that says a lot. My constituents are wonderful people. They are incredibly articulate and eloquent, and although they are extremely good at writing letters on all sorts of subjects, I was taken aback by the level of communication on this issue.
Although we love our noisy neighbour, Heathrow, do not wish to see it close and hope that its status will be maintained, the air passenger duty lies right at the heart of the airport’s future. We will need further capacity in the south-east, but Heathrow is not fully utilised at the moment, and I wonder whether part of our failure to use it to its full capacity is due to air passenger duty.
Let me make some brief observations about APD. First, it is an odd tax in its own right; it is a tax on the free movement of people and goods in our country, the European Union and the world in general. It is a harmful tax—it harms competition and trade—and it is damaging to our reputation and connections with the rest of the world. The tax directly affects people’s behaviour. I am sure that many hon. Members have had their mouse hovering over the online basket when buying air tickets, and then suddenly realised that on occasion, the tax is higher than the price of the ticket. That bizarre anomaly lies at the heart of today’s debate.
It strikes me that there is an evidence-sized hole at the heart of this debate. The Treasury may have conducted reviews into how much revenue is raised and how much money APD brings in, but the absence of a full review leaves a huge hole and lack of information about the overall economic impact of this tax on our nation.
Penny Mordaunt (Portsmouth North) (Con)
I represent Portsmouth, which is quite a deprived area, and my constituents are concerned about keeping interest rates low and expect the Government to be watchful of the cost of living and life’s necessities. Much like my hon. Friend, however, the volume of mail that I have received on this issue suggests that my constituents are sceptical about whether air passenger duty produces a positive return for the Exchequer.
Adam Afriyie
My hon. Friend puts her point incredibly well. This issue has led to more than 200,000 communications with Members of the House of Commons, let alone the House of Lords and other places. Interestingly, just 100,000 names on a petition would have, in any case, triggered a debate in this Chamber, and the Government would have had to listen closely to that.
APD is a very blunt tool. The hon. Member for Edinburgh West (Mike Crockart) referred to his days studying economics in the ‘80s. I also studied economics at that time, and it is clear that air passenger duty does not recognise the elasticity of demand, and potentially the elasticity of supply. It does not differentiate between different types of consumer or passenger.
The APD is also a blunt instrument and an anomaly because it does not deal with carbon emissions or global warming—the EU emissions trading system deals with them. The APD does not recognise opportunity cost. By raising revenue through the APD, the Exchequer might be forgoing a great deal more revenue from trade and travel, which might generate economic activity in other spheres.
The APD is an odd tax, but I should give a little credit to the Government, who had an opportunity to raise even more money from it in the past year or two. Thankfully, they contained the rate of increase. Nevertheless, it is beholden on them to consider the overall economic impact of the APD to ensure we have evidence and move forward on a rational basis and tidy up the matter.
The beauty of the motion is not just its presenter, but the motion itself and the fact that it is reasonable. It is not strident and does not attack the Government, and it is not party political. We have had a free and easy debate because all hon. Members recognise that we are talking about the rational outcome of tax. The motion is not party political or contentious; it is plain common sense. I urge my good and hon. Friend the Minister wholly to embrace the direction of the motion and to commission an overall review of the economic impact of this rather bizarre tax that is holding our country back.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
I apologise in advance to you, Mr Deputy Speaker, and to the general public, for the repetitive nature of the comments I am about to make. I genuinely believe that the more people say these things, and the more often we say them, the more the Government will listen.
APD was introduced under the guise of an environmental tax, but all hon. Members know that it simply is not an environmental tax. No money from it goes back into the aviation industry or into the environment—nothing is ring-fenced. However, it is discriminatory against people who live north of the Watford Gap, because they have to pay twice, which is grossly unfair. From that point of view, will the Minister consider the possibility of ensuring that people do not pay APD twice, even if he does not abolish or freeze it, to ensure that it does not discriminate against people?
The APD has a significant cost impact on passengers, and therefore on the UK’s competitiveness and on the profitability of the UK aviation industry. The UK has the highest air passenger tax in the world. Taking air tax, air ticket taxes and airport charges together, the World Economic Forum ranks the UK 134th out of 138 countries. Only six European countries tax passengers for international air travel, and UK rates are twice the level of the next most expensive tax, which is levied in Germany.
A number of colleagues have identified examples of APD. A Chinese family of four flying to the UK must pay £648 APD to fly premium economy. They would pay only £134 to fly to France, and £141 to fly to Germany. A British family of four holidaying in Florida must pay £260 APD to fly economy. A German family of four would pay £141, and a French family would pay just £133.
We should also look at comparators from other European countries. Aviation duty considered by the Belgian Government was never implemented because of concerns about the impact on industry. In the Netherlands it has already been abolished. In Germany, it has led to a significant reaction from airlines, including the withdrawal of low-fare airline capacity. Denmark briefly introduced a ticket tax, but it has since been withdrawn, and of course we know what is happening in Ireland. In Malta, a duty was removed following a legal challenge from the European Commission, with the tax being described as “discriminatory”.
Several hon. Members have asked for an impact assessment, but that has been being carried out for the past 18 years. Currently, the aviation industry contributes £49.6 billion, or 3.6% to UK GDP, supports 921,000 UK jobs, and pays more than £7.9 billion in tax. Glasgow airport in my constituency provides 5,000 jobs both directly and indirectly.
As has already been said, the APD will cost Scotland more than 2 million passengers per annum. Up to 5% of long-haul demand may be lost. There will be a loss of competitiveness, which is important to the economy, and it will have an impact on the tourism industry, with more than 148,000 trips and £77 million in visitor expenditure lost over the next three years. By 2016, APD will cost the Scottish economy up to £210 million in lost tourism spend per annum. Those figures are from York Aviation.
The aviation industry is under severe pressure. Hon. Members may recall the recent terrorist attacks in Glasgow. BAA, the airport authority, has had to make extensive investment in security to make Glasgow airport more secure, and the airlines have also had to contribute. There are significant pressures on airports such as Glasgow to compete, and both management and the workers whose jobs are on the line are extremely concerned about the competitive nature of aviation. We have already heard about the competition from railways. Like the right hon. Member for Belfast North (Mr Dodds), I am approached by people in airport lounges who tell me that they have done an assessment of travelling from Glasgow to London and it takes almost the same time to fly—given the time it takes to get to the airport, go through security, get on the plane, get to London, get the Paddington Express—as it does on the train. The danger is that we could lose the aviation industry as it stands.
There are other arguments against the APD. Some 200,000 people have written to their MPs calling for an impact assessment, and that is crucially important. Some 90,000 overseas travellers have written to the Treasury asking for similar measures. APD does not do what it was supposed to do. It is not an environmental tax—it goes straight to the Treasury. The three largest airports in Scotland are putting pressure on Members of Parliament to ask the UK Government to look at the tax and do something to help the people in the aviation industry to retain their jobs.
Mr Deputy Speaker (Mr Nigel Evans)
Order. To accommodate the remaining Members, I am shaving a minute more off the time. The limit is now six minutes.
Thomas Docherty (Dunfermline and West Fife) (Lab)
I do not intend to rehearse the arguments that have been made so eloquently by several hon. Members, especially my hon. Friends the Members for Aberdeen South (Dame Anne Begg) and for Paisley and Renfrewshire North (Jim Sheridan) about the impact on Scotland and the wider aviation industry. Like colleagues on both sides of the House, I have had hundreds of e-mails on this subject, and I am delighted that it would appear that the Treasury is beginning to take heed of the arguments.
The issue that I wish to raise is one with which you are familiar, Mr Deputy Speaker. It was first raised with me at last year’s Commonwealth parliamentary conference by many of our colleagues from elsewhere in the Commonwealth, especially the Caribbean. You will be aware, Mr Deputy Speaker, of the excellent work that the right hon. Member for Saffron Walden (Sir Alan Haselhurst) has been doing as the chairman of the Commonwealth Parliamentary Association to highlight to the Treasury the damaging impact that the current APD rules have on the Caribbean.
It is worth noting that some Caribbean countries, particularly our overseas territories, have not yet moved to a fully mature local economy, and in some the percentage of gross domestic product coming from tourism is astounding. In Antigua, it is 75%; in Anguilla, one of our overseas territories, it is 65%; and in the British Virgin Islands—I am the chair of that APPG—is 58%. The way in which APD is structured has a negative impact on those Caribbean countries, because their rather larger neighbour, the United States, is classed as single zone for travel, so regardless of whether someone is going to Washington DC or Honolulu they pay the same rate of APD. That has a significant impact on the Caribbean’s ability to compete. Of course, it is not just about tourism or business going from the UK to the Caribbean. My hon. Friend the Member for Slough (Fiona Mactaggart) tells me that she has a vast number of constituents originally from Anguilla and that for those who wish to travel home to see relatives, loved-ones and friends the cost is prohibitive.
The right hon. Member for Saffron Walden has previously made representations to the Treasury about this matter, and the Economic Secretary, whom I welcome to his place, will be familiar with the representations made earlier this year by the Caribbean Council of Ministers. I would be grateful, however, if he could indicate whether in the near future he would be prepared to meet a cross-party delegation of Members with an interest in the Caribbean, led by me and the right hon. Member for Saffron Walden—I am sure that the hon. Member for Romford (Andrew Rosindell) and others would be keen to take part too—to discuss the impact of APD on the Caribbean, particularly the overseas territories. I would also be grateful if the Minister could indicate whether the Treasury plans to meet the Premiers and Chief Ministers of the Caribbean overseas territories affected when the overseas territories council meeting, which the Foreign Office holds every year, takes place in December.
Finally, I congratulate the hon. Member for Witham (Priti Patel) on securing this excellent debate. Almost every Member has been thoughtful and added something to the debate, and I look forward to hearing further contributions from other colleagues.
Naomi Long (Belfast East) (Alliance)
I am pleased to participate in today’s debate. I am a member of the Northern Ireland Affairs Committee, which has spent some considerable time considering this issue, and I am sure that more of my Committee colleagues would have been here today had they not been in Dublin on an official visit. I also congratulate the hon. Member for Witham (Priti Patel) on bringing this matter to the Floor of the House.
I am committed to rebalancing the Northern Ireland economy from its current over-reliance on the public sector, but I believe that that must primarily be achieved by growing the private sector rather than cutting the public sector, and the current APD regime is a significant obstacle to that agenda. APD is a commercial challenge to Northern Ireland business and it conflicts with the positive measures being taken to boost tourism and related employment, and to encourage foreign direct investment. It adds to the cost of indigenous businesses, particularly those seeking to grow their export market. The Committee received evidence of that just last week from a large fish processor in Northern Ireland now exporting to the far east but finding APD a huge burden on business. At best, it adds to cost; at worst, it could jeopardise connectivity between Northern Ireland and other UK and international markets.
Although APD was originally relatively affordable, it has increased significantly, particularly on long-haul flights. The increases have been very steep since 2007—up to 260% for short-haul flights—and between 2008 and 2011, for example, the number of passengers carried by Virgin Atlantic decreased by 7.7%, but the amount of APD paid by its passengers increased by more than 45.5%.
Members will be aware that this is an issue I have raised frequently in the House. I apologise if what I say today has been heard before, but until it is fully acknowledged and acted on, it bears repeating. I concur with a lot of what other hon. and right hon. Members have already said, but I want to focus on the impact on Northern Ireland. Northern Ireland is unique, but it offers an effective demonstration in microcosm of the impact that APD can have more widely in the UK. The last time I raised the issue with Treasury Ministers, I was mildly scolded for not first acknowledging the work that the Treasury had done on APD for direct long-haul flights from Northern Ireland. In an attempt to be more charming and to heal those wounds, I will therefore refer to that first on this occasion.
The United Continental flight was hugely important, as our only long-haul direct route, for a number of reasons. First, of the 600,000 passengers it carried in the last six years or so, 40% were in-bound tourists and business visitors. Furthermore, the route’s success is a demonstration to others of the viability of Northern Ireland as a tourism and business destination for direct long-haul flights, and provides a base on which we can build. APD placed the flight in jeopardy because the rates are so much lower in Dublin, which is less than two hours away. I give credit to the Treasury for responding to lobbying by MPs, the Northern Ireland Assembly and businesses and to the report of the Northern Ireland Affairs Committee inquiry into air passenger duty by reducing APD for long-haul flights from Northern Ireland and indicating recently in the Budget that it would be devolved to the Northern Ireland Assembly.
Having I trust paid due regard to the progress made, I still have to acknowledge that the change does not assist with the unfair burden placed on Northern Ireland by air passenger duty on necessary regional flights or the double duty that is paid, as our access to the UK hubs often requires separate flights owing to the small number of through carriers. UK economic policy remains to focus development on the south-east;, so other regions need to access that market to develop. In addition, the main hub airports in the UK for international travel are based in the south-east. Connectivity to and through the south-east is therefore vital, yet for those of us living on an island off an island it can only be achieved by flying.
The case for a review of APD is strong across the UK. We are island nations and aviation is crucial. However, in Northern Ireland the situation is more acute, as we are the only region with a land border with another EU member. Price-sensitive advantage in the Republic has directly affected Northern Ireland, which is something we need to be conscious of. I have mentioned the Irish Government’s intention to abolish the tax. We should note that, despite the huge economic pressure on them to reduce their deficit, low rates of corporation tax and APD are two things on which the Irish Government refuse to budge because they recognise them as key economic drivers.
APD also has a detrimental effect on tourism in Northern Ireland. Ultimately, if people fly to Dublin, they stay in the Republic of Ireland and spend there. We are lucky in Belfast if we can extract a day trip out of their visit. We need people to come and have bed nights in Northern Ireland. We need them to spend their money in Northern Ireland, which is best achieved by getting people to fly there.
I recognise that APD is lower on regional flights, but it is also paid on both legs of a journey. When combined with passenger landing charges for those on regional flights for which Heathrow or Gatwick is the destination airport, APD significantly increases costs for travellers. There is a disproportionately negative effect on those travelling from Northern Ireland, and there are few practical travel alternatives for us.
I want briefly to reflect on two other key issues: the environmental impact of aviation and the financial impact of change. APD was introduced as a means of taxing aviation to reflect the environment impact. I have no objection to aviation paying its fair share in that regard, but APD has long since parted company with that objective and is now merely a revenue raiser for the Treasury. That may sound dismissive, but it is not intended to be. Raising revenue is hugely important, given the context of the deficit, but the international evidence suggests that taxation on aviation is such a constraint on other revenue that it outweighs its benefits. I am therefore pleased to be able to support the motion today, which seeks a proper review of the situation.
In the few seconds I have left, I would like to reflect on the need for us also to consider the impact on outbound travel—
Siobhain McDonagh (Mitcham and Morden) (Lab)
I have a large Caribbean community in Mitcham and Morden, many of whom moved to Britain 20, 30 or 40 years ago. For them, air travel is not a leisure choice, but something they save up for over many years, often from low incomes, scraping together every spare penny to visit their friends and families. For most of us in the Chamber, the people we treasure live close by—my mum lives round the corner. We are not charged £81 in tax to see our friends and families, but to my constituents that is what air passenger duty really is: a tax on friends and family. Let us not forget that those constituents are also a lot less well off than we are. Many are pensioners; others are in low-wage jobs, having come to this country to do the kind of work that the rest of us did not want to do.
Earlier this autumn, I hosted a party here in Parliament to celebrate 50 years of Jamaican independence. Mitcham and Morden has a large Jamaican community, and I wanted to celebrate the role that people from that country and the rest of the West Indies play there. Most had never been invited here before, and I am pleased to say that hundreds of people came along. It struck me that this was a community that had had it hard, yet despite often encountering prejudice and discrimination, they had never stopped. They had worked hard to put food on their children’s plates, yet they also found time to help the community, whether through the church or by setting up local youth groups.
Most of all, it struck me that those people were not only proud to be British but determined never to forget where they had come from. They were proud of their culture, proud of the country that they were born in and proud of the country that they now live in. And they have every right to be proud, because they have improved this country, and Mitcham and Morden in particular. However, I am not proud of the effect that this tax has on them and their families.
I appreciate that when air passenger duty was introduced by the Major Government, it was done with the best of intentions. There are problems with emissions, and the aviation industry has an obligation to reduce them, just as every industry does, but I do not think that imposing a duty on every passenger is the best way to encourage airlines to make their planes produce fewer emissions. It is too crude, and regulating emissions achieves better results, as we are now discovering thanks to the efforts of the European Union—not a body that is often praised. At the time, however, APD seemed a modest way of tackling the problem and, right up until 2007, economy class passengers paid only £5 for flights to Europe, and £20 for flights beyond. Sadly, since then, under this Prime Minister and the previous one, air passenger duty seems to have become more about raising revenues than reducing emissions. In the past two years, APD on flights to the Caribbean has risen nearly two thirds, to £81.
What makes the tax so unfair is that it disproportionately targets poorer, ethnic minority communities. Because of the anomaly that says the capital of Jamaica is more than 4,000 miles from London, while the capital of the USA is not, passengers flying to Kingston have to pay more than people going to airports in the States that are further away. In 2010, that anomaly cost passengers to the Caribbean £5 more than passengers to the US. Now the difference has more than trebled, to £16.
What my constituents want to know is: how can it be fair that those travelling to Kingston should have to pay 25% more duty than much better-off passengers flying to Los Angeles, which is about 20% further away? If anyone were to look at this from an equalities point of view, they would be appalled. The impact falls disproportionately on the lower paid and on the black community. Like many Members, I have been petitioned by hundreds of people about this unfair tax, and the unfair anomaly that I have just mentioned is a major concern.
It was disappointing that the Government’s consultation did not respond to those legitimate concerns. It is already difficult and expensive to fly to Jamaica. I had a quick look on Expedia before coming here, and in the week starting 17 November there are only three days on which it is possible to get a direct flight to Kingston, although there are direct flights to Los Angeles every day. As a result, the cheapest return to Kingston costs more than £900, while a return to LA is just £564. Clearly, that is not all because of air passenger duty. It is because there is not enough capacity at London’s airports, which is why I support an extra runway at Heathrow, to bring in extra jobs and cut travel costs for my constituents.
However, those differences show that the cost of travel for our low-income, ethnic minority constituents is already disproportionately high. Air passenger duty is a regressive tax that only makes that situation worse. If it is about cutting carbon, it should be based on real emissions, and it should not favour wealthy passengers travelling to developed countries such as Canada and the US over people travelling to developing countries in the Caribbean. This Government have failed to take advantage of the opportunity offered by their consultation to introduce a fair alternative, or to tackle emissions meaningfully. That is a source of considerable disappointment.
Mr Andy Slaughter (Hammersmith) (Lab)
I was first alerted to the air passenger duty issue about four years ago, long before the fair tax on flying campaign. A large number of constituents were writing to me. Many of them, like the constituents of my hon. Friends the Members for Mitcham and Morden (Siobhain McDonagh) and for Dunfermline and West Fife (Thomas Docherty), had family in the Caribbean. They were concerned about the quantum level of the charging—and if they had known that the income from APD was going to double between 2010 and 2016 from just over £2 billion to almost £4 billion, they would have been even more concerned—but they were more concerned about the unfairness and the fact that under the ridiculous banding system, the capital city system, it costs more to fly to the Caribbean than to Alaska or the west coast of America.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
There is another impact of the banding. Alan Glen, who runs an independent travel agency in my constituency specialising in long-haul destinations, is finding that people trying to get these fares is having an impact on his business.
Mr Slaughter
I am grateful for that intervention. I was just going on to talk about the effects not only on families, which is often devastating, but on commercial organisations, and not just those in this country, but, to continue with an earlier example, in the Caribbean as well. I got to meet the Caribbean Tourism Organisation and Ministers from Caribbean countries—sadly, it was here rather than there, but there it is. We share a long historical tradition and we have not just family and cultural ties, but economic ties with the Caribbean. There was and still is a strong feeling that this country was letting the Caribbean down. It came up in many debates under the last Government, particularly during the passage of what became the Finance Act 2009. I found myself in the unusual and uncomfortable position of agreeing with the then Opposition Front-Bench team more than my own. I went to see the then Chancellor with a number of my hon. Friends, particularly my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott), who took a strong stand on this issue. When we debated the Finance Bill, I was perplexed that the then Opposition did not push the issue to a vote, as I thought they might have won. I was a little suspicious about why they did not press it then.
Let me remind the present Government Front Benchers what their equivalent numbers were saying at the time, as it bears repetition. The hon. Member for Canterbury (Mr Brazier), who was a shadow Transport Minister, gave an interview to The Daily Telegraph in late 2009. He said that his party supported
“a per plane tax rather than the existing one based on passengers”
and that
“whatever tax is employed if the Conservative Party wins the next General Election, the ‘absurd capital cities rule’ of APD banding would be abolished.”
On 15 April 2010—some three weeks before the election—the hon. Member for Chelsea and Fulham (Greg Hands) gave a fuller interview to the Travel Trade Gazette, in which he outlined details of the plans for the first time. He said that the Conservative Government
“would scrap the much criticised system of distance bands, which have led to people travelling to the Caribbean paying more than those to the west coast of the US, which is further from Britain. A replacement system possibly using more bands and based on actual distance rather than distance between capital cities…would be introduced.”
He said:
“the reform would change APD to tax aircraft rather than passengers, apply to transfer passengers who are now exempt, and charge a lower rate for newer, more fuel efficient aircraft.”
Finally, he said the aim of the reform was to
“properly tax the environmental impact of aviation, not raise more revenue.”
Let us have a look at how many of those promises, made just three weeks before polling day, have been kept. Those same promises appeared in the manifestos of both coalition parties and in the coalition agreement. We are perhaps used to over-promising, particularly from this Government, but this is over-promising on a tuition fees scale. What happened as a consequence? We had the review during the Government’s moratorium on an increase, but after a year of engagement with the industry, the Government decided not to change the tax’s banding structure in regard to different classes of flights or in respect of the application of APD to the regions. The Government’s only proposed reform was to extend APD to business aviation from 1 April 2013. That may be welcome, but it will raise only about £5 million a year, without addressing the central issue that all hon. Members who have spoken today would, I think, wish to see addressed. The dismay that this has caused to those who lobbied so hard and were promised so much is very clear from a press release put out at the time the consultation was published by the Caribbean Tourism Organisation. It said:
“Today’s announcement on the APD is a slap in the face for all Caribbean people. It dismisses all of the research and information CTO has provided to the British Government over the past three years, and it contradicts the message sent by the UK Chancellor…in March 2011 when he cited the discrepancy between the USA and Caribbean APD rates as one of the reasons for holding a consultation on reform of UK APD. The Caribbean is the most tourism-dependent region of the world and the British Government’s decision totally ignores the negative effect that APD is having on our economies and the Caribbean’s business partners in the…travel industry.”
Thomas Docherty
My hon. Friend is presenting a compelling argument. He may be interested to know that in the last three years the Eastern Caribbean Currency Union has seen a 20% drop in the number of people travelling to the area.
Mr Slaughter
That is a good point.
The fair tax on flying campaign was organised very efficiently, but I do not think that the 200,000 UK residents and about half that number of people living abroad who have written to the Chancellor, either via their Members of Parliament or directly, have been treated terribly well. I have received letters from more than 500 constituents, and I note that the hon. Member for Chelsea and Fulham (Greg Hands) has received 1,281. Perhaps there is some justice, as that is only 10 shy of the highest number received by any MP.
I have seen the standard replies sent by the Treasury and by Conservative MPs, and I am dismayed by them. They are positively insulting to the people who wrote those letters. They do not deal with the issues at all; they simply mention that VAT is not charged on domestic flights, which is almost entirely irrelevant when long-haul flights are the issue, and that the business jet loophole will be closed, which, as I have already explained, goes nowhere near dealing with the problem. I feel that my constituents and those of many others have been treated with contempt. They have been betrayed by the Government’s broken promises, and they have received a wholly inadequate response to the campaign that they mounted.
The demands made in the motion are very modest, and an economic case has also been presented. I urge the Minister to accept the proposals in the motion, and I urge the House to vote for it in the event of a Division. I hope that there will be a review which, unlike the consultation that has taken place so far, will enable us to address the real problems that air passenger duty is causing, not only for my constituents—and not only for the poorer constituents mentioned by my hon. Friend the Member for Mitcham and Morden—but for the economy of this country, and the economies of many regions with which we trade.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I note that no Member has spoken in favour of APD, which I think says a lot. In the midst of a recession, when the cult of austerity is starving the economy, taxes such as APD are bleeding the economy. That is not just my view; it is the view of those in the frustrated aviation and airport sector in Scotland, who see themselves as hostages of a Government policy here at Westminster that is damaging their sector and, by logical extension, the wider economy.
Amanda McMillan, the managing director of Glasgow airport, has said:
“Due to the size of the market in Scotland, we will always find it difficult to attain and sustain new routes, and this situation is compounded…further by APD which simply serves to artificially depress demand and dissuade airlines from basing aircraft here.
Unless APD is reformed, people travelling to and from Scotland—who must fly due to the lack of feasible alternatives—will continue to face some of the highest levels of taxation in Europe which is clearly a disincentive to travel.”
Jim Sheridan
If APD were devolved to Scotland, and Scotland then cut the tax, would there not be consequences for the Barnett formula?
Mr MacNeil
If APD were devolved to Scotland, the economy would grow. I should like all taxes to be devolved, so that the benefits of the policies introduced by the Scottish Government could go to the Scottish Exchequer. That is a logical extension, and it is what is happening in all the other countries. I am sure that, given the level of APD in the United Kingdom, no other country would be as foolish as the Government whom the hon. Gentleman supports at Westminster. He wants a Tory Government to have these powers over Scotland, and, given that he is a Labour MP, I find that quite shocking.
It is calculated that APD will have cost the Scottish economy £210 million in lost spending by 2016. So short-sighted is this policy that it will end up with our losing up to £50 million in other taxes through economic activity that will not take place. The Federation of Small Businesses has been damning of the UK policy on this tax:
“The Government’s determination to tax air passengers has resulted in a sustained negative impact on businesses as well as on leisure travel. IATA reported in June 2012 that UK passenger numbers have declined slightly over the past four years at a period when Germany, France and the Netherlands saw growth of between 2-4%.”
That must have damaged our economy.
The UK has embraced this tax in a helter-skelter fashion. It is regressive and it hits the poor disproportionately. It is a poll tax of the skies. It is felt less by millionaires in the Cabinet and elsewhere than it is by others.
Other countries have been wiser in their approach. Some countries that have introduced APD, such as Germany and Austria, have done so at a lower level. The Germans are economically canny, of course, and after they introduced it, they reduced it, rather than increasing it as the UK has done. We must welcome the fact that Aer Lingus is planning to fly to Edinburgh and therefore give us more choice, but there is still the handicap of high APD.
King Louis XIV of France was known as the sun king, and perhaps his sunny disposition was in part due to this quote from his Finance Minister, Jean-Baptiste Colbert:
“The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the smallest possible amount of hissing.”
For the benefit of Members, I have translated that passage from the French. We have not had much of a sunny disposition from the Treasury for the past two years, but there has been plenty of hissing—and booing—in its direction.
Since 2007, APD has risen by 160% on short-haul flights and between 225% and 360% on long-haul flights. The Aberdeen Airport managing director has said:
“At Aberdeen Airport we run a real risk of losing around 200,000 passengers by 2016 through this damaging tax. Each recent increase in APD has had a dramatic impact upon what we, as airports, have achieved and could have achieved without APD. It is imperative that the UK government undertake a detailed and comprehensive review into APD with the utmost urgency, and at the very least freeze APD whilst that is taking place.”
Gordon Dewar of Edinburgh Airport adds:
“This tax has now hit its tipping point where the damage it is doing to Scotland far outweighs the benefits. This cannot stand and must be reviewed as a matter of urgency.”
No wonder people are concerned, especially as the Calman commission recommended this policy be devolved in 2009 and the MSP representing the Edinburgh airport area, Colin Keir, says:
“APD hits tourism and business and we need to have the power at Holyrood to maintain competitiveness with other countries and fairness to those travellers who have to use our airports.”
The economic mismanagement from Westminster is frustrating people, especially as this Parliament and Government will not devolve this policy to Scotland. I tell Parliament and the wider country, however, that in 2014 people will have a chance to have APD devolved and to give Scotland a competitive edge. After the independence referendum of 2014, I look forward to the devolution of APD, along with everything else, by one means or another.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
I will not be churlish, so let me say only that it is a pleasure to follow the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), with whom I have shared a number of flights to destinations both within the UK and further afield. I have therefore heard him speak at great length on some of the issues he has just discussed, but he has still not persuaded me of anything other than that we are better together.
I congratulate those Members who secured the debate. By and large, we have had some helpful and thoughtful contributions, and I was very aware from the outset that a number of Scots were in the Chamber. I was glad to see that. Most of them are still here, although I note that my hon. Friend the Member for Central Ayrshire (Mr Donohoe), who has an encyclopaedic knowledge of the airline industry and was warning of inclement weather, is no longer in his place. I am worried that the rest of us might be detained here for somewhat longer than we had wished—I hope that will not be the case.
Hon. Members have made the case for the motion powerfully and persuasively. I am not going to repeat everything that has been said, although some points are worth reiterating because the issue has clearly touched a lot of people. The fact that well over the 100,000 people needed to trigger a debate in this place were drawn to sign the fair flying petition is evidence of that. Although I perhaps did not receive as many e-mails as other hon. Members, I know from my postbag that the issue matters to people. It matters to those who fly for business purposes, for family reasons, and for leisure and holidays.
I undertook a short survey of those who responded to the fair flying petition, asking them for their comments. I heard from a 65-year-old woman who flies from Scotland regularly to see her elderly father, who lives in the south of England; from the mother of a young person who is working overseas as a teacher—she told me that she helps to pay for the flights to enable the visits; and from a grandmother who travels regularly to the other side of the world to see her grandchild, who has a long-term condition. Those are the real-life examples that people were bringing to me. It is important to recognise the strength of feeling on this issue.
There has been wider frustration at this Government’s lack of consistency or urgency on aviation policy, as well as concerns about APD. When the economy has been struggling, the family purse strings have been tightened and businesses are crying out for support, the lack of direction has not been helpful. A number of speeches have dealt with the issues of tourism and jobs. I can tell the hon. Members who mentioned the Caribbean question that I have agreed to meet a delegation to discuss that in more detail, just as I have agreed to meet a number of other organisations after this debate to see where we take things in future.
It is important to remember that when Labour was in government APD was restructured so that it would be based on four geographical bands set at intervals of 2,000 miles. It was intended that travellers flying further would pay a higher rate of duty, but I know that hon. Members have discussed some of the anomalies. The intention was that additional taxes on air travel would be targeted at the most polluting, long-haul flights—again, people have raised issues about that today.
As we heard from my hon. Friend the Member for Hammersmith (Mr Slaughter), during the election campaign both the Conservatives and the Liberal Democrats argued for reforming APD further. The Conservatives argued that they wished to
“reform Air Passenger Duty to encourage a switch to fuller and cleaner planes.”
The Liberal Democrats’ manifesto contained more detail, suggesting that they would ensure that pollution was properly taxed by replacing the per-passenger APD with a per-plane duty—PPD—and that air freight would be taxed for the first time. They also said they would introduce an additional, higher rate of PPD on domestic flights if realistic alternative and less-polluting travel was available.
Those statements in the manifestos were supposed to be translated into action following the coalition agreement, which confirmed that the Government would
“reform the taxation of air travel by switching from a per-passenger to a per-plane duty”
and
“ensure that a proportion of any increased revenues over time will be used to help fund increases in the personal allowance.”
Those allowances were referred to in an earlier debate, and they have been referred to again today.
The Chancellor announced in the 2010 Budget that major changes would be subject to a public consultation. We then saw speculation in the press that the Government had had a change of heart over per-plane duty. Indeed, that was what triggered the organisations coming together to launch the fair tax on flying campaign, to apply pressure in order at least to get some action or clarification on APD.
In the 2011 Budget, the Chancellor announced that the Government would consult on simplifying the structure of APD. He also announced that he was dropping the commitment made in the coalition agreement and not pressing ahead with a per-plane duty, and that APD rates would rise in line with inflation, although the next increase would be deferred for a year. After promises of wholesale reform, the industry and the public heard that he was not only keeping the current structure but raising the rates further.
I am always happy to try to give people credit where it is due, not that I have had to do that often in the Chancellor’s case. There was a consultation and it covered a number of areas, including private jets, different tax bands, premium economy flights, flights from regional airports and the devolution of APD—all the things that people have talked about today. However, having consulted, the Government failed to propose anything. They did not propose any changes to the tax’s banding structure, to how different classes of flights are taxed or to the application of APD to the regions. Instead, they seemed for some time to have given up on any reform of APD at all. They argued, as the Minister did again fairly recently, that although no action had been taken there was no reason for another consultation or review.
I have only a couple of minutes left to summarise the debate and I realise that this subject is very difficult, given the range of considerations that must be balanced—including those of industry and business, the travel trade, airlines, consumers and the Treasury. I recognise the Scottish issues and those in Northern Ireland, particularly those outlined as regards Scotland and the connections with the main hub airports.
Mr David Hamilton
If a passenger uses the same airline—British Airways, for example—from Scotland to London and then to America, Australia or South Africa, the duty in the regional airport does not matter. The real issue is the double tax.
Cathy Jamieson
My hon. Friend makes a valuable point and I know that he has raised that question on a number of occasions. A sensible review would allow us to consider such matters. For the Government to undertake a consultation and take no action, without even considering any further work on the issue, was disappointing and showed a lack of leadership. It did not go unnoticed by the aviation industry, and we have heard a string of comments from the travel organisations, airlines and consumers. The Select Committee on Transport stepped in, in a sense, with its inquiry into aviation. The Chair helpfully confirmed that that inquiry would consider APD issues and it has provided an initial focus.
In conclusion, I hope that the Chancellor and the Minister, who will relay this debate to him, will take note of what has been said today and will consider and act on the findings of the Transport Committee’s report when it is published. Many Members are arguing for action and a review. The motion is modestly worded, although at some points I might not have worded it in such a way. However, in the spirit of co-operation, we want to ensure that we have the opportunity to consider the issue in more detail. We recognise the significant economic issues in the UK that need tough decisions, but such decisions should be based on the best available evidence.
The consistent message coming from all sectors of the industry is that the lack of certainty is causing problems, delaying investment decisions, risking future development and, crucially, risking jobs. I hope that the Minister, who comes fresh to this issue—indeed, he is the third Minister I have faced across the Dispatch Box in the relatively short time for which I have been shadow Minister—will take account of the points that have been made today, take away the work that needs to be done and introduce the review asked for in the motion.
The Economic Secretary to the Treasury (Sajid Javid)
We had an excellent debate earlier on beer duty and now we are discussing APD. I am pleased that, as far as I know, there will be no debate on fuel duty this afternoon. After this debate, I would like a cold beer and a trip to the Caribbean.
I congratulate my hon. Friends the Members for Witham (Priti Patel) and for Crawley (Henry Smith) on securing the debate. I will address some of the specific issues raised by my hon. Friends and by all hon. Members —I believe that 15 spoke from the Back Benches.
As the Minister responsible for air passenger duty, I would like to acknowledge clearly the important contribution the aviation industry makes to the growth and development of the UK economy. The sector connects millions of UK consumers and businesses with international markets, enables tourism to and from the UK and makes long-distance visits between families and relatives possible. I also recognise that recent economic conditions and the global downturn have been challenging for both consumers and the aviation sector. However, there are positive signs for the industry, as evidenced by the recent increase in recorded passenger numbers. I believe that the aviation sector will continue to play an important role in helping the UK economy back to health and strong growth.
I would like to say a little about my own experience. Before being elected to the House, I spent 20 years doing business in emerging countries, and I did that from New York, London and Singapore. I relied very much on the aviation industry and on global international hubs. Therefore, I understand the importance of global aviation to the UK economy if we are maintain our position as one of the world’s leading financial and business centres.
Let me respond to the hon. Members who have expressed concern about the overall level of APD and the impact of recent rises in the duty. The real-terms increases in APD in 2009-10 and 2010-11 were legislated for by the previous Government. Despite the challenge of the budget deficit we inherited, this Government have limited the rise in APD to inflation over the period 2010-11 to 2012-13. Also, in recognising the sector’s need to plan ahead, we have sought to provide airlines and passengers with clarity on future rates. The 2012 Budget set out APD rates for 2013-14, and again the rise is limited to no more than RPI inflation. The real burden of APD will therefore remain unchanged for a further year, as my hon. Friend the Member for Windsor (Adam Afriyie) helpfully recognised.
Hon. Members have today raised concerns about the impact of APD on the UK’s competitiveness and ability to attract inward investment. My hon. Friend the Member for Witham described us, rather intelligently, as being in a global race, and she is absolutely right. The UK has the third largest aviation network in the world, after the USA and China. The Government wish to ensure that UK airports and airlines remain internationally competitive. In that regard, it is important to consider the tax system as a whole.
The Government are committed to creating the most competitive tax regime in the G20, and we have already made significant progress towards that aim. The corporation tax rate has already been reduced to 24% and will be cut to 22% in 2014, which is significantly lower than, for example, the rate in the United States, France and Germany. The further cut in the main rate of corporation tax was warmly received and has encouraged businesses that had previously left the UK to return, such as WPP. It is also encouraging new businesses to relocate to Britain. For example, Aon, one of the world’s largest insurance brokers, has announced plans to relocate its global headquarters from Chicago to London.
Changes to controlled foreign company rules have also been welcomed, with the CBI stating that the new rules will meet the Government’s objectives of simplification and greater competitiveness. As part of the Government’s ambition to increase exports, in July 2012 we also announced a £5 billion export refinancing facility, to be delivered through UK Export Finance as part of its UK guarantees. That will help banks to provide long-term trade finance for UK exports.
Let me say a little about the Government’s approach to APD. I know that some hon. Members have called clearly today for a cut in APD, or at least a freeze in cash terms, but let us be frank about the situation we find ourselves in. Let us not forget that when we came to office we inherited a fiscal deficit of historic proportions. We were burdened with the largest budget deficit in the developed world: £159 billion in the last year of the previous Government, which was more than 11% of the country’s income. At that rate, the previous Government were borrowing more in one week than we raise in one year with APD. The Government’s position is that there can be a sustainable platform for economic growth only if we are willing to tackle that overspending. The plan has earned credibility around the world. Our actions to reduce the deficit and rebuild the UK economy have secured interest rates at near-record lows, benefiting thousands of businesses and families alike. APD is forecast to raise about £2.9 billion in 2013-14. Those revenues will be important if we are to maintain progress towards our goal.
I also remind hon. Members that international aviation is generally not subject to tax on fuel and, in contrast to many other countries that apply VAT on domestic flights, no VAT is levied on international or domestic flights in the UK.
Let me also address hon. Members’ concerns about inbound tourism. The Government continue to place great value on the tourism sector, which makes an important contribution to the economy. Tourism is one of the largest industries in the UK and our third highest export earner, worth around £116 billion to our economy, or roughly 9% of GDP. The Government remain focused on building a long-term tourism legacy from the Olympic games, with Visit Britain investing £125 million in one of its largest international tourism campaigns. One ambition is to raise the number of Chinese visitors from 150,000 now to 500,000 by 2015. Visit Britain is developing a specific marketing plan for China to respond to that challenge.
Domestic tourism is also very important. Of course, for tourism to grow, it must remain affordable. We acknowledge that family budgets are being squeezed and we have to take action to help. The changes to the personal income tax allowances that the Government have already made have helped the budgets of more than 25 million individuals and taken 2 million people out of income taxation altogether.
Our action to reduce the deficit has led to near-record low interest rates, which have also made a contribution. We must not forget that. If interest rates today were just 1% higher than they are now, businesses—particularly small and medium-sized enterprises—would face an additional interest rate bill of almost £10 billion in total, and the average mortgage for a family would rise by almost £1,000 a year.
Let me also address concerns that hon. Members have raised about the 2011 APD consultation and calls for further research. The consultation examined whether reforms to the design of APD could improve the overall fairness of the tax. Following the consultation, we confirmed that APD would be extended to business jets, and the majority of people who responded to the consultation agreed with that.
However, in weighing up the case for reform, the Government recognised that no banding structure could be entirely free of anomalies. A number of hon. Members have mentioned flights to the Caribbean. They have made good points on that issue, which we have heard about before in the House. The hon. Member for Dunfermline and West Fife (Thomas Docherty) asked whether I would be prepared to meet him and a delegation; I would be more than happy to do so. The hon. Members for Mitcham and Morden (Siobhain McDonagh) and for Hammersmith (Mr Slaughter) also eloquently referred to flights to and from the Caribbean.
A revenue-neutral change would have required 90% of passengers—those who fly to band A destinations across Europe and band B destinations, such as the US—to pay more for their flights. The Government felt that, in the current economic climate, it would not be fair to ask the majority to pay more to help fund a cut in APD for the minority. They therefore decided to retain the existing structure of four APD distance bands.
Sarah Teather (Brent Central) (LD)
I hope that the Minister recognises that his words are extremely disappointing to many of my constituents who travel regularly to the Caribbean—[Interruption.] I have been watching the debate on television. Those constituents will be very concerned about the Minister’s words. Will he reconsider the issue and look at a more granulated banding system that would ensure that those from the Caribbean were not particularly disadvantaged? I recognise his point about asking others to pay more, but the situation is surely unfair for those who are travelling not very far—not as far as to the US.
Sajid Javid
I thank my hon. Friend for her intervention. I am pleased to hear that she has been glued to her television set watching this debate. I take her point about the Caribbean. Several hon. Members have made a similar point, and I have listened carefully.
Mr MacNeil
The hon. Gentleman has spoken about having a revenue-neutral tax. When the Government cut taxation from 50% to 45% for millionaires, did the revenue-neutral consideration enter into that equation?
Sajid Javid
Absolutely. I can assure the hon. Gentleman that the effects on taxation were taken together and that the Government had determined that the extra 5% was raising hardly any tax whatsoever.
Given that we have recently completed a comprehensive consultation on the subject, we have no plans for further reform at this point.
Henry Smith
Would it not be reasonable, though, to have a study, as proposed in the motion, to see the impact on the economy that air passenger duty is having? Surely a study by the Treasury is a reasonable thing to request.
Sajid Javid
I thank my hon. Friend. I will come to that point in a moment.
As I said, we have no plans at this point for further consultation, but we are keen to ensure that the aviation sector can continue to enable economic growth and support jobs across the country. APD makes an essential contribution to the public finances and to this Government’s plan to create a stable platform for growth.
This has been an excellent debate that has given me and the Government much food for thought. There have been excellent contributions from Members in all parts of the House, and I assure them that I have been listening very carefully. Should the motion pass; I have a feeling that it might well do so—
Jim Sheridan
Before the hon. Gentleman concludes, does he accept that it is grossly unfair for British people to pay APD twice, depending on where they live?
Sajid Javid
I thank the hon. Gentleman. We have looked at these issues in the consultation, and I believe that I have addressed them.
I have listened carefully to the debate, and the many thoughtful contributions from Members on both sides of the House have been very valuable. Should the motion pass, then of course the Government will take note of Parliament’s view; it is important that we listen to the views of Parliament. Let me conclude by thanking my hon. Friends the Members for Witham and for Crawley for raising this important issue with the House.
Priti Patel
I thank all right hon. and hon. Members for their contributions to this powerful debate in which we have heard about the impact of this tax on hard-pressed families and businesses, and about its counter-productive nature. I thank my hon. Friend the Minister for his remarks. I hope that he and the Treasury will keep a very open mind about the call in the motion for an economic assessment and a full review and will not rule it out, because, as we have heard, this tax is having a counter-productive impact on the economy. All Members present will continue to press him and the Treasury to secure a review in future.
Question put and agreed to.
Resolved,
That this House believes that the UK’s air passenger duty acts as a barrier to economic growth and deters both inward investment and inbound tourism; notes the financial impact on families of the rising costs of air passenger duty; further notes the impact on British businesses wishing to export and take advantage of business opportunities overseas; notes that the current air passenger duty regime is the highest air passenger tax in the world, which makes the UK less competitive than countries with lower aviation taxes; further notes that over 200,000 members of the public are calling for a review of the economic impact of air passenger duty; calls on HM Treasury to commission a comprehensive study into the full economic impact of air passenger duty in the UK, including the effects on jobs and growth, reporting in advance of the 2013 Budget; and calls on the Government to use the evidence from the study to inform future policy-making.
Rhiya Malin
(12 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mrs Eleanor Laing (Epping Forest) (Con)
I am bringing before the House the matter of the death of little Rhiya Malin, who was two-and-a-half years old when she died at Eton Manor nursery in Chigwell in my constituency. I do so because it is our duty here in Parliament to hold public bodies to account. The people of this country rely on Government and Government agencies to protect them from wrongdoing. Sadly, however, we sometimes discover instances in which the attitude of a Government Department or agency is based on a box-ticking, passing the buck and “it’s in the rules, so it’s okay” attitude. Sometimes the real effect on real people is passed by—
Mrs Laing
I had not realised that we were ahead of time. We will have an extra minute, so the Minister will be delighted that she will be able to give an even longer explanation of what went on in the case under discussion.
As I was saying, sometimes the effect on real people, who rely on Government Departments and agencies, is passed by, forgotten or ignored. Sadly, that is true in this case.
Before I begin the main part of what I have to say, I welcome the new Minister to her position. I appreciate that she has played no part whatsoever in and has had no personal responsibility for the matter until now, but some of her predecessors, of whom I am critical, should bear some responsibility for passing the buck and an over-reliance on bureaucratic rules. My intention in bringing the matter to the House’s attention is to ensure that, in future, such matters will be dealt with in a better way and have a more satisfactory outcome.
This is a very sad case. Five years ago, on 8 November 2007, Rhiya Malin, a little girl aged two, died while in the care of Eton Manor day nursery in Chigwell in my constituency. The nursery is still operating. Some of the people who had care of—or, it could be argued, did not have care of—the little girl at the time she died are still working there. The facts speak for themselves. Someone put a child aged two and a half in a nursery. We are not talking about a child aged seven or eight, who can run about and do things that lead to accidents, such as climb trees, go up on roofs or fall off bicycles. We are talking about a two-year-old baby who should have been supervised. She was unaccounted for for 25 minutes, so something went wrong. The facts speak for themselves. That little girl should not have died while in the care of that nursery.
I fully appreciate that it is not the duty of Parliament to hold individuals to account and that some proceedings relating to this matter are still sub judice. I also appreciate that neither the Minister nor anyone else can comment on those issues in public, and I will not do so either, because that would be wrong. The question whether a particular individual was or was not responsible for the apparent negligence that led to Rhiya Malin’s death is a matter for the courts, not us, but the nursery has accepted responsibility for the health and safety failings and it is still trading. The people who failed to find that little dying girl for 25 minutes that day are still there.
I am not interested in dealing with a criminal standard of proof, and I am not interested in retribution—as I said, those are matters for the courts. I just want to ensure that we do all we can to hold public bodies to account and ensure that what happened at Eton Manor nursery that day does not happen again, ever, to any other little child who has been put in the care of people who have been presumed to be responsible but have acted irresponsibly.
One aspect of the case that really upsets me is that Ofsted has treated it as though a child had broken a leg or an arm and it were required to ensure that it did not admit liability for fear of having to spend public money on compensation to the parents of the injured child. That has been its attitude throughout.
For me to receive a letter from one of the Minister’s predecessors suggesting that I could hold Ofsted to account by going to a Select Committee or the ombudsman was an utter insult to a family who are bereaved and a little child who lost her life. There has been a box-ticking mentality of passing the buck. The mentality has been, “We have done everything we were meant to do,” and “It says here that this is what Ofsted should do, so that is what it did—no more, no less—so it is okay. Go away, Member of Parliament. What are you getting so upset about?”
I am getting upset because there were many complaints about that nursery before little Rhiya died. I have evidence of complaints or investigations in September 2004, April 2005, June 2005, September 2005 and September 2007. There may have been many more, but those are the ones of which I am aware. Yet nothing was done. Ofsted appears to have gone in and said, “Well, this could be improved on and that was wrong”, or “This was right, but that could be done better”, and nothing happened. There was probably not a good enough ratio of carers to little children, but it is not for me to make that judgment. It is for Ofsted to make it, and to carry through the job that is assigned to it by ensuring that a nursery—a place where little children are supposed to be looked after—is properly run and properly regulated.
I have delayed and delayed bringing the matter to the House, because we were awaiting the inquest, a judicial review result and the result of health and safety hearings, but it gets to the point where enough is enough. Five years have now passed, and in bringing the matter to the notice of the House and the Minister in public today, I think what I would say to myself if, five years after a tragic incident such as this, a similar incident were to occur in that nursery or some other nursery that could have been prevented if steps had been taken and lessons learned from the death of Rhiya Malin. After five years, I perceive that nothing has changed in that nursery. That is why I have brought the matter before the House. I appreciate that the Minister may be restricted in what she can say because parts of the case are still sub judice, but I do not mind because at least we are airing the matter in public.
One of the most concerning issues is re-registration. Soon after little Rhiya died, the nursery in question was re-registered under a different company name. We all know about the ownership of companies and the corporate veil and so on, but it looks as if deliberate steps were taken to re-register the nursery under a different name so that the record was wiped clean, and so that prospective parents researching whether it was a suitable company and place to put their small children would not have been able to find out that a child died. That change in company might have been a coincidence, and the name might have been changed for some other business, financial or tax reason, but it looks very much as if re-registration occurred because the company wished to conceal its responsibility—or possible responsibility—for what happened when little Rhiya died.
In September 2008 a director of Casterbridge Care and Education Ltd applied to register the five nurseries in that company with another company, Casterbridge Nurseries Ltd., of which they were also a director. Ofsted should have inspected Eton Manor in 2008, but because the company had re-registered, that did not happen.
An e-mail from someone at Ofsted states:
“I have an open CIE case…and the Midlands have an open CIE case…on two provisions within Casterbridge nurseries chain…Both provisions have recently been re-registered as the provider has changed its name from Casterbridge Care and Education Ltd to Casterbridge Ltd. The new certificates giving the new registration numbers have already been dispatched to the provider. The provider’s history with Companies House shows numerous changes of names over the last 5 years and a high number of CIE cases. Is it possible for us to transfer these cases which are logged against the old registrations to the new one? Or are we now in a position where we are forced to accept the provider’s resignation…which would effectively mean that the CIE cases trail is lost and the cases that are now live are simply closed?”
I know the Minister will say that the system has changed since 2008. One of her predecessors wrote to me saying that matters have been improved, and that as a result of this case Ofsted now deals differently with such matters. I am still wary, however, that not enough has been done to pinpoint who was responsible on the day that little girl died, and to make them feel their responsibility.
A letter from Ofsted from December 2009, on exactly the same matter, states:
“On the law as it stands, it is not clear that we have the power to publish the regulatory history of the old company in connection with the new company. Our current position is that we do not do so. We do not have any direct evidence to show that providers have used changes in legal entity to remove a poor registration history deliberately, although we are aware and mindful of the risks on this going forward. However, our registration process is sufficiently robust to pick up any significant concerns, such that if required, we would refuse registration.”
That is not so. A little girl died in that nursery five years ago, and it has gone on trading every day since. Other two-year-olds have been in that nursery every day since the death of Rhiya Malin, and Ofsted has not taken the necessary steps to stop it happening again.
As I have said, this is a complicated matter, but I do not want the Minister and her officials to wriggle out of it by saying, “We cannot hold any particular individual responsible because that is a matter for the criminal law,” or, “We cannot hold this company responsible because the nursery is no longer owned by it—it has changed from being this company to that company and another company.” Individuals within those companies have been involved all along. I know what happens when company names change and ownership changes. I am bringing the matter before the House because somebody somewhere in the chain of responsibility should have stopped passing the buck and ticking the boxes. They should have said, “This is not a case in which a child was injured or something remotely distasteful occurred. A child died in this case. It is not run of the mill. It is not an every day occurrence—thank goodness.” This is an unusual and exceptional case, and it should have been dealt with as such.
As I have said, I appreciate that the Minister has not dealt with the matter before, but I ask her to look at these facts. The nursery is still in operation; the people who were in charge are still there; no one has been held responsible for the death; and nothing has been done to ensure that it never happens again. I hope she can give some answers today, but I appreciate that it is difficult for her to do so. I hope that those in the chain of responsibility—through Ofsted and other Government agencies—sit up and take note. It is unacceptable to allow five years and more to pass after the death of a small child in a place that was regulated by the Government, where such a child should have been safe and properly cared for.
In bringing the matter to the House, I pay tribute to Rhiya Malin’s parents—her bereaved, heartbroken parents. They could have drawn a line under their tragedy, but they did not. They have continued to campaign and to do all they can to ensure that no other parents and little children suffer the tragedy they have suffered. I pay tribute to them for all they have done and continue to do.
The Minister is not afraid of taking on a challenge. I hope that by bringing the matter to the House, I have given her an opportunity to take action to ensure that nurseries such as Eton Manor are safer in future, and that the people who run such nurseries as businesses—not for the sake of caring, but simply for the sake of making money—are not allowed to hide behind the corporate veil.
The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)
I thank my hon. Friend the Member for Epping Forest (Mrs Laing) for obtaining a debate on this important issue and bringing it to my attention. Rhiya Malin’s tragic death happened a few years ago and was a truly appalling ordeal for her parents. It was also a truly appalling thing to take place in a nursery that—as my hon. Friend points out—is regulated by the Government. She raised two issues in her very passionate speech. The first was about how individuals who had taken decisions in the chain of command had been held to account, and the second was about the way in which Ofsted operates and the role it plays.
I agree with my hon. Friend that it is extremely important that Government bodies are held to account and that individuals take responsibility for their actions, whether they are in an agency or a central Department. I will certainly follow up on the specific issues that she mentioned.
My hon. Friend also highlighted the processes that Ofsted goes through, especially how it regulates and inspects nurseries and other child care providers. We launched a new early years foundation stage in September which sets stringent welfare requirements that inspectors regulate against. We are being clear that staff have responsibility for the safety and health of children; that children must be properly supervised in nurseries; and that nursery managers and other staff must fulfil certain qualification requirements. One of the very important factors in the safety of children in nurseries is the quality of management and staff. As she pointed out, I have only recently started work on this portfolio and I will shortly make further comments on staff qualifications and Ofsted regulation in response to the Nutbrown review of qualifications. I hope to talk to my hon. Friend before announcing those new measures. I hope also that they will address some of the issues that she has raised, such as box-ticking rather than understanding outcomes, and looking at what is happening on the ground—both important points that she raised in her speech.
On the particular powers that Ofsted has to intervene, Ofsted can set actions on providers that must be met within specified time scales. If failings are serious or pose a risk to the welfare of children, registrations can and should be cancelled. I will consider the implications of the outcome of the health and safety prosecutions of Casterbridge Care and the staff on duty at the time of Rhiya’s death. In response to my hon. Friend’s points about registration and inspection, I understand that the previous Minister accepted Ofsted’s proposals to retain information about previous registrations on its website for three years, and that information will be kept irrespective of whether there has been a change in ownership. That includes the inspection reports, and complaints and actions taken in respect of them. Parents will be able to press nursery owners, whether related to previous owners or not, about possible links with the previous registration.
It is my priority in this role to put in place a system that ensures that safety and quality in our nurseries and child care provision are the most important things. We want our regulatory system to focus on those two important areas. That is what parents care about. They want to know that if they leave their child in the trust of a nursery, they will be cared for and kept safe. If a nursery is not capable of keeping children safe and secure, it should not be in operation.
I mentioned that we were shortly to respond to the Nutbrown review and to consider various issues, including the salaries and qualification levels of staff operating in the child care industry. We are keen to ensure that it is a professional sector where people take responsibility, where there is proper training and development in all parts of the industry and where quality supervision and best practice are followed in nurseries across the county.
I have also been in discussions with Ofsted about how to ensure that our inspection system is of the best possible quality and cannot be accused of simply ticking the boxes. Inspectors must be properly observing what happens in nurseries and child care settings and ensuring that children are properly supervised, engaged with, educated and given the skills and tools they need to lead a successful life. Evidence shows more and more how important those early years are to children’s future development. And of course parents’ No. 1 concern is to ensure that their children are safe. That is all about the quality of the supervision and the people involved.
I congratulate my hon. Friend on pursuing this case for such a long time. I am concerned that she and the parents, who have gone through an extremely distressing time, have not yet had the full answers and full accountability they need. It is right that public bodies be held to account for their actions. I commit to her that, as well as ensuring that the structures under which Ofsted operates are the best possible and ensuring the safety and quality of the care that our children receive, I will also look into the issues that previous Ministers have undertaken to look into to see what further action can be taken.
Question put and agreed to.