House of Commons
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Oral Answers to Questions
Stephen Barclay (North East Cambridgeshire) (Con)
1. What recent steps his Department has taken to encourage the sharing of best practice between local authorities on using their powers to repair derelict buildings.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Don Foster)
My right hon. Friend the Secretary of State apologises for his absence today; he is at an important trade mission in India. However, his thoughts and those of the whole House will be with the family and friends of Drummer Lee Rigby.
Local authorities have powers under planning, environmental and local government legislation to intervene to bring derelict buildings back into use. Our best practice guidance sets out those powers, and we believe that local authorities should use them proactively.
Stephen Barclay
Will the Minister join me in urging councils to use their full powers, especially section 215 notices, to tackle the problem of derelict buildings, given that many of them are not currently doing so? Will he also publish a full list of English councils showing their use of section 215 notices over the past three years?
Mr Foster
I congratulate my hon. Friend on the work he is doing to encourage councils to do more to tackle the blight caused by derelict and empty buildings in town centres such as Wisbech in his constituency. As I said, we have published the best practice guidance relating to section 215 notices, and we will certainly do more, if we can, to encourage councils to use those powers. I will also look at his suggestion.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
2. What assessment he has made of the effect of the introduction of the flexible use class of planning permission on the high street.
The Parliamentary Under-Secretary of State for Communities and Local Government (Nick Boles)
The rise of internet shopping and the changes in people’s working patterns pose immense challenges to the traditional high streets. Our recent relaxation of use class restrictions will support innovation and promote imaginative new uses for existing buildings.
Jonathan Reynolds
We have been working hard in my constituency to improve our town centres by knocking down derelict buildings, encouraging more civic events and attracting new businesses, but we need more powers and tools at our disposal, not fewer. These changes will make it easier for clusters of businesses such as betting shops and payday lenders to open. Why are the Government ignoring public opinion and not allowing local communities to have the powers they need to shape the decisions that affect their local high streets?
Nick Boles
First, the relaxation relates to temporary use for only two years, so it is more about innovative models of business than about established businesses that would have substantial start-up costs. Secondly, local authorities already have powers, known as article 4 directions, to set aside any permitted development that they think inappropriate for a particular part of their area, and I encourage them to use them.
Andrew Bridgen (North West Leicestershire) (Con)
High street businesses rely on footfall; indeed, that is their lifeblood. Does my hon. Friend believe that his planning reforms will give sufficient help to the high street businesses in my constituency to increase their foot traffic and ensure that they thrive?
Nick Boles
My hon. Friend is absolutely right. We in this House and the people in the town halls cannot entirely predict what will work in the different town centres of the land. The best way to do this is to make it easy for new businesses to set up and pull in the people who will then benefit the existing businesses in our town centres.
Roberta Blackman-Woods (City of Durham) (Lab)
Given what the Minister has just said, will he explain why he has taken away from local councils and local communities the power to shape their high streets? Who does he think will benefit from the deregulation of use classes?
Nick Boles
Labour through the ages—including, indeed, the father of the right hon. Member for Leeds Central (Hilary Benn)—famously believed that the Government could run the economy and decide how we should be competitive. Government Members believe that it is business and entrepreneurs who can decide how best to achieve thriving high streets and town centres, which is why we are determined to make life easier for them, as Mary Portas recommended in her review.
Roberta Blackman-Woods
I am not sure the Minister answered my question, so I will answer it for him. The people who are likely to benefit are payday loan companies, whose presence on our high streets has already increased by about 20% in the past year. Why does he think that those companies need a further helping hand, rather than our communities who are crying out for the powers to diversify their high streets according to local needs determined by them?
Nick Boles
It is classic, is it not? “Determined by them” means determined by public servants and councillors, not by entrepreneurs and the people they want to attract as customers. There is still, as there has always been, an ability to suspend a permitted development that is not right for an area. That is why Barking and Dagenham council is consulting on an article 4 direction, which we welcome. That is exactly the right use of the law, which existed under the Government whom the hon. Lady supported.
Pamela Nash (Airdrie and Shotts) (Lab)
3. What assessment he has made of the average change in income of working families as a result of changes to council tax benefit.
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
The impact assessment for the Government’s policy framework for localising council tax support is available on the Department’s website, but it is very important to note that the design of local schemes, and the assessment of their impact, is the responsibility of the local authorities.
Pamela Nash
The changes to council tax benefit and the subsequent cuts have come in at the same time as the freezing of child benefit and working tax credit, the linking of benefits to CPI rather than RPI and, of course, the introduction of the bedroom tax. How can the Government justify this multiple attack on low-income working families on the same day as bringing in a tax cut for millionaires?
Brandon Lewis
Unfortunately, we have to bear in mind the background to this, with spending on council tax benefit doubling under Labour and currently costing taxpayers £4 billion a year—around £180 per household. Welfare reform is vital to tackle the deficit left by the last Labour Government. Under the last Administration, more was being spent on this than on defence, education and health combined. That simply has to stop. The reforms we have put in place to localise council tax support give local authorities the power and the incentive to deliver local growth and get people back into work.
Mr Clive Betts (Sheffield South East) (Lab)
Does the Minister accept that many of the families who have to pay extra council tax are the very same families who have to pay the bedroom tax? Many of those families will simply not be able to meet the extra demands placed on them. Given the limits faced by local authorities on the amount of the discretionary housing benefit they can award, does the Minister accept that local authorities and housing associations will eventually be placed in the inevitable position of having to take enforcement action against families whose only crime is that they simply cannot afford to pay?
Brandon Lewis
Actually, I do not accept that. With the greatest respect to the Chairman of the Select Committee on Communities and Local Government, I think that the important point of these changes is that they incentivise local authorities to see economic growth and get more people into work. It is against the local authorities’ interests to penalise people. They should be wanting people to get into work to drive economic growth. This change gives them the incentive to do that, and through the Localism Act 2011we have given them the freedom to do just that.
Dr Julian Huppert (Cambridge) (LD)
4. What steps he plans to take to increase the supply of local authority and social housing.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Don Foster)
With £19.5 billion of public and private investment, our affordable homes programme is on track to deliver 170,000 new affordable homes by March 2015. In addition, the introduction of self-financing for local authority housing provides authorities with flexibility to increase supply.
Dr Huppert
I thank my right hon. Friend for that answer, but will he consider also instructing the Homes and Communities Agency to allow councils and registered social landlords to switch grant funding from sites where progress has been delayed to other sites where the prospect of an early start on the ground is better, so that we can have the social and council housing that we so desperately need?
Mr Foster
I am sure my hon. Friend will welcome the funds made available for 717 new affordable homes in his area. I know he is concerned about the Trumpington Meadows development. The Homes and Communities Agency is in discussion with the developers and we entirely accept my hon. Friend’s suggestion that, in the appropriate circumstances, the HCA could transfer the funding to another developer in the nearby locality.
Ann Coffey (Stockport) (Lab)
Stockport Homes is rated as one of the best housing organisations in the country, but it is not going to be allowed to bid for funds from the 2013-17 affordable homes guarantees programme, which I understand will be open only to those classified as being in the private sector, such as independent housing associations. This will adversely affect the building of badly needed affordable homes in Stockport. Will the Minister meet a delegation of all Stockport MPs so that we can discuss our concerns with him?
Mr Philip Hollobone (Kettering) (Con)
As a member of Kettering borough council, may I share with the Minister the fact that the council has one of the best records in the whole of the east midlands on the delivery of affordable housing? For seven of the last eight years, it has provided an additional 100 affordable homes a year, and in three of those years, a level twice that.
Mr Foster
I am delighted to congratulate people in Kettering and the neighbouring area on that. I hope that the new homes bonus is providing an additional incentive, and we have of course recently brought on stream the £10 billion loan guarantee scheme, which will help to provide funding for further such homes.
Jack Dromey (Birmingham, Erdington) (Lab)
The all-party Treasury Select Committee, the Governor of the Bank of England and the International Monetary Fund have all expressed concern that the Government’s policies will not build the homes our country needs. With the comprehensive spending review but three weeks away, the shadow Chancellor persuasively argued this morning that the Government should reject the economic illiteracy of austerity, which is pushing up the costs of failure through additional borrowing and soaring housing benefit bills. Does the Housing Minister agree that the time has come to invest in badly needed social and affordable homes to rent or buy, creating jobs and apprenticeships, bringing down the costs of failure and getting our economy moving?
Mr Foster
I think that the whole House will have been somewhat amused by the cheek of the hon. Gentleman, given that under his party’s Administration we saw a reduction of 421,000 in the number of affordable homes. This Government have introduced measures to reverse that trend, and we hope to announce further measures in the near future.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
5. What plans he has to enable external organisations to have greater involvement in the operation of fire and rescue services.
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
The hon. Gentleman may have not realised, or may have forgotten, that the last Government’s Fire and Rescue Services Act 2004 allowed external organisations to become involved in the provision of fire services. For my own part, I am helping fire and rescue authorities to explore the best way of delivering their services to meet the needs of their communities.
Mr Bailey
What the Minister said in his letter to the Regulatory Reform Committee rather conflicts with the answer he has just given. The fact is that, as part of his drive to make further savings, he wants to remove—as he said in his letter—the legal obstacles to the privatisation of the emergency fire services. Given that West Midlands fire service is already two years into a programme to cut its budget by nearly a quarter, and has lost nearly 10% of its firefighters, my constituents will regard with alarm—
Mr Speaker
Order. I apologise for interrupting the hon. Gentleman, but we need a question with a question mark: one sentence.
Brandon Lewis
If the hon. Gentleman looks at the Hansard reports of what has been said over the last few months, he will see that I have made clear on more than one occasion that we will not privatise the fire service, notwithstanding the scaremongering of members of his party. He should also note—if he is not already aware of it—that West Midlands fire service is currently advertising for firefighters.
Robert Neill (Bromley and Chislehurst) (Con)
Does my hon. Friend agree that, rather than carping at chimeras and imagined proposals for privatisation, Opposition Members might do better to study seriously a report by Sir Ken Knight—arguably the most distinguished and experienced operational commander of his generation—which sets out serious and important proposals for efficiencies in the organisation?
Brandon Lewis
It is somewhat surprising—although I suppose that it ought not to be—that the Opposition seem to have wanted to create a campaign to prevent something that was never going to happen in the first place.
My hon. Friend is right about Sir Ken Knight’s report. It is very well written, and there is much in it for us to note. I look forward to the responses that we shall receive from the sector itself and from authorities more generally. We have already held a teleconference on the report, and I shall return to the subject more formally later in the year.
Andy McDonald (Middlesbrough) (Lab)
20. Given the Minister’s statement to the Communities and Local Government Committee on 15 May that Cleveland fire authority had decided not to proceed with mutualisation, will he confirm that documentation relating to that mutualisation will not be blocked by a section 35 exemption, but will be available to the public via freedom of information requests?
Brandon Lewis
What I actually said was that the Government supported mutuals and co-operatives. What Cleveland fire authority does is a matter for the authority itself. I note that the Labour party does not support mutuals now, which is surprising given that a Labour authority wants to mutualise. I commend the authority for having looked at new ideas, but it really is for Cleveland fire authority to decide how it should proceed.
Chris Williamson (Derby North) (Lab)
It seems from the Minister’s answers that either he is in denial or he does not understand the measures that he is seeking to introduce. As for the Ken Knight review, on page 74 he explicitly recommends privatisation. [Interruption.] I am afraid he does. [Interruption.] The hon. Member for Bromley and Chislehurst (Robert Neill) ought to look at the report. [Interruption.] I have read it.
Will the Minister now concede that procurement law requires any fire and rescue authority that opts to mutualise its services to re-tender those services periodically and open them up to the private sector?
Brandon Lewis
I am sorry that the hon. Gentleman was not here for the debate on Cleveland fire authority, when we said explicitly that we were not going to privatise the fire service. We cannot allow something to be introduced that would allow that. We have been categorical about that. To be clear, he should take care to read Sir Ken Knight’s review, which is superb and has given us a lot to discuss but does not make a single recommendation.
Simon Danczuk (Rochdale) (Lab)
7. What assessment he has made of progress made by the Portas pilots and their effect on high streets.
The Minister for Housing (Mr Mark Prisk)
This Government believe our high streets need to adapt to changing consumer habits, especially online shopping. The Portas pilots are test-beds for developing new ideas. They are part of a comprehensive approach designed to strengthen local leadership, reform planning and parking policies, help small shops and boost local markets.
Simon Danczuk
Ministers must acknowledge the huge discrepancy between the £20 million Ministers have spent on the Portas pilots and the fact that the Government have increased business rates for retailers by over £500 million in the past two years. With a recent survey showing that the UK has the highest business rates in the European Union, is it not time that the Government stopped treating the high street as a cash cow to milk to exhaustion?
Mr Prisk
Nothing has changed in rating policy. Ever since 1990, business rates have gone up by the retail prices index—it was the same under the Labour Government. It is right to say, however, that they are fixed overheads. That is why, unlike the Labour party, we have doubled the threshold for small business rate relief and taken a third of a million small businesses out of business rates altogether. I thought that the hon. Gentleman would welcome that.
Justin Tomlinson (North Swindon) (Con)
I am a fan of Mary Portas and her recent TV programme showed that Mary and some traders have great vision. However, all too often, the local authority and some traders could not agree on how to proceed. Can we time-limit grants and, if they are not spent, transfer them to areas that will spend them quickly?
Mr Prisk
My hon. Friend is absolutely right. The key—it was referred to by the planning Minister, my hon. Friend the Member for Grantham and Stamford (Nick Boles)—is the strength of local civic and business leadership. That is what we are seeing in the pilots. On the grants, the key is ensuring that the money is spent wisely, not quickly, but I take the point about disputes that block activity on the ground.
Mr James Gray (North Wiltshire) (Con)
I very much welcome the Minister’s strong support for the Portas principles and that of the planning Minister. Does he agree that one sure-fire way of wrecking high streets is to allow local authorities to allow out-of-town shopping centres?
Charlie Elphicke (Dover) (Con)
8. What recent steps he has taken to help pensioners with their council tax bills.
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
The Government have protected pensioners from any change as they have fixed incomes and cannot reasonably be expected to go back to work. Pensioners who have saved and worked hard all their lives deserve dignity and security in retirement, and we are pleased to be able to introduce that protection and to freeze council tax.
Charlie Elphicke
Is not keeping council tax down the best help local authorities can give to pensioners? Does the Minister agree that freezing council tax, which some councils, including Kent, which I represent, have done in the past few years, is the best way to help people on fixed incomes?
Brandon Lewis
My hon. Friend is right. Good councils such as Kent county council have worked hard to drive down their core costs while still investing in their communities and freezing council tax. That is good for all residents on all levels and I congratulate councils such as Kent on doing that.
Ian Mearns (Gateshead) (Lab)
9. What assessment he has made of the potential effect on local authority budgets of increased demand for adult social care.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Don Foster)
In recognition of the pressure that local authorities face, we prioritised adult social care at the last spending review and provided an extra £7.2 billion to protect access to services that support vulnerable people. It is for local authorities to choose how best to use the available funding.
Ian Mearns
In asking my question, I should point out that I am a vice-president of the Local Government Association.
The LGA believes that local government is facing a financial black hole and that the Government’s severe cuts to local authority budgets are a false economy, as those unable to pay the escalating charges for social care are more likely down the line to require costly hospital or residential care. Before making cuts to local government budgets, did the Secretary of State have any meaningful discussion with the Secretary of State for Health on the potential implications for health service budgets?
Mr Foster
There are constant discussions between the Secretary of State and his colleagues in the Department of Health. As a result of those discussions, we have now not only introduced the £7.2 billion, but are encouraging much closer working between health and social care and are putting in an additional £300 million over two years to facilitate that joint working.
Annette Brooke (Mid Dorset and North Poole) (LD)
I am also a vice-president of the LGA.
Given the pressures that we know are falling very heavily on our councils, particularly along the south coast, what plans does the Minister have to showcase best practice as councils begin to bring health and social care funding together, particularly in terms of early cost-effective interventions?
Mr Foster
My hon. Friend raises a very important point. Many local councils are now working much more closely and effectively with the health services in their area. They are providing greater focus on preventive care and a joined-up approach to the commissioning and delivery of services. Colleagues in my Department and the Department of Health will be working closely to make sure we promote the sorts of successes we are seeing around the country.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
19. Councils across the country are facing budget cuts of 28%, and my council in Oldham is facing a cut of up to 50%. The impact on social care budgets is devastating, as one quarter of local authority budgets are made up of adult social care. The King’s Fund has said that the amount of money the Government have found for social care is absolutely inadequate. On that basis, will the Government support Labour’s call to use £1.2 billion of the NHS under- spend to invest in social care, and make sure that the people who need care are getting it?
Mr Foster
What we are doing is looking at the great success of those local authorities that are coming together to work more effectively to drive down costs. There are very good examples, including west Cheshire, where integrated health and adult care could save £26 million over a five-year period. This integration is delivering better quality care at lower cost.
Nick de Bois (Enfield North) (Con)
10. What steps he has taken to help local authorities deliver sensible savings in their budgets.
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
With permission, Mr Speaker, I would like to take Questions 10 and 22 together. We have published—
Mr Speaker
Order. That grouping was not requested and has not been granted—but leave it to the Chair and we will see how we get on. The hon. Gentleman can start by answering Question 10.
Brandon Lewis
Of course, and apologies, Mr Speaker.
We have published “50 ways to save”, a practical guide to councils on how they can make the most of their budgets through saving money—making sure the pennies get taken care of, so the pounds do as well. We have also developed the transformational challenge award to encourage councils that are looking innovatively at how they can work together, such as St Edmundsbury borough council, which I visited this morning and is saving almost £1 million a year through shared management with its neighbours.
Nick de Bois
I thank the Minister for his answer. Does he also agree that councils should review their portfolio of literature requiring translation, as in the last three years over £40 million was spent on that in England, and my council spent £1 million?
Alison McGovern (Wirral South) (Lab)
The people of Wirral have had many words to say about the level of cuts to our local authority budget that we have had to face, but “sensible” has not been one of them. May I therefore ask the Minister what conversations he has had with Treasury Ministers about the forthcoming spending review, and what he is going to do to help out areas such as Wirral and the Liverpool city region that took very serious cuts last time?
Brandon Lewis
We will have the spending review in just a few weeks’ time, of course, but the hon. Lady needs to look at the starting point as well and understand that the amount of money spent per household in Liverpool was among the highest in the country. All authorities, however, should be making sure that they have got the right management cost structures and are spending money on front-line services, not back-office costs.
Rehman Chishti (Gillingham and Rainham) (Con)
22. In this year’s budget Medway council is using half of its unallocated reserves for a new development fund to support future regeneration. What are the Government doing to encourage local authorities to use their reserves to support local communities?
Brandon Lewis
My hon. Friend makes a good point. Authorities that are looking carefully at what to do with their reserves are doing the right thing. It is right that they should keep reasonable reserves, but they should not be at too high a level, as they are there to be used. It is absolutely right that authorities look at using their reserves to invest in their communities, to the benefit of their communities both now and in the future.
Stuart Andrew (Pudsey) (Con)
11. What steps he is taking to promote take-up of the right-to-buy scheme.
The Minister for Housing (Mr Mark Prisk)
Since we reinvigorated the right to buy last year, sales have more than doubled, to the highest level in six years. We believe it is vital to ensure that all eligible tenants know exactly how to exercise their right, which is why this month we are writing directly to more than 500,000 households right across England, including in the metropolitan city of Leeds.
Stuart Andrew
Enabling families on the estate I grew up on to be the first generation to own their own home really did open up social mobility. Does my hon. Friend share my concern that certain councils have refused to promote the new right-to-buy scheme to their tenants? Does he think that has something to do with the fact that those councils are run by parties that are against home ownership as an aspiration?
Mr Prisk
My hon. Friend puts his finger exactly on the point: some Labour councils and, indeed, some trade unions, which, as we know, bankroll the Labour party, are bitterly opposed to the idea that people should be able to buy their own home. I can tell him that this Government are determined to ensure that eligible tenants who want to exercise their right to buy will be able to do so, and never mind the politics on the other side of the House.
Sheila Gilmore (Edinburgh East) (Lab)
The Government said that the proceeds of these right-to-buy sales will be used to build new affordable homes, but the problem surely is that these are not going to be affordable homes and one direct consequence will be a big increase in the housing benefit bill if any houses actually get built for that kind of rent.
Mr Prisk
I am sorry to disappoint the hon. Lady, but some 844 dwellings have started or been acquired already, and those are affordable homes to rent. So she is wrong on the facts and the Opposition are wrong on their ideology against the principle that people should have the right to buy their own home.
Mr Robin Walker (Worcester) (Con)
The right to buy is a very important policy that can hugely enhance social mobility but, unfortunately, in some areas of the country that went through stock transfer early it does not reach our constituents and benefit them. May I encourage the Minister to examine ways of improving the right to purchase and the discounts available under the scheme, and to work more closely with registered social landlords to make sure that my constituents can also benefit?
Stephen Mosley (City of Chester) (Con)
12. What steps he is taking to help high streets adapt to changing consumer trends.
Damian Hinds (East Hampshire) (Con)
18. What steps he is taking to help high streets adapt to changing consumer trends.
The Minister for Housing (Mr Mark Prisk)
The rise in online shopping means that high streets must change if they are to compete. The Government are actively helping high streets to adapt, but we need councils, landlords and businesses to play their part. That is why we have established the joint future high streets forum so that, together, we can better understand this complex challenge and so reinvigorate our town centres.
Stephen Mosley
Chester is bidding to be the city of culture 2017, and we are using our bid to encourage people to use our culture, heritage and festivals, and thus breathe life back into the high street. Does my hon. Friend agree that making shopping an enjoyable experience that is also informative and entertaining is one way of encouraging shoppers back to the high street?
Mr Prisk
I entirely agree with my hon. Friend, who points out that town centres have to adapt so that they are about not just shopping, but hospitality and culture. It is terribly important to get that balance right. I wish to put on the record my encouragement for Chester’s bid to be city of culture, for I know the support he is giving to it.
Damian Hinds
Amid the adverse effects of e-commerce, one positive recent trend has been the growth of click and collect, with Royal Mail now having announced its own version. What can be done to encourage such schemes and bring a bit of footfall back to the high street?
Mr Prisk
Again, my hon. Friend is right in what he says. We must be careful about assuming that online retailing is wholly negative for town centres, as it can be a great opportunity. That is why we have asked the Post Office to be part of the future high streets forum; it has a tremendous retailing network and we want to tap into that expertise.
Nigel Adams (Selby and Ainsty) (Con)
13. What steps his Department is taking to support the reuse of brownfield land and empty buildings. [R]
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Don Foster)
We are investing £235 million to bring back more than 15,000 empty properties into residential use and we have made it easier to convert empty offices into homes. As a result of those and other measures, there are over 40,000 fewer long-term empty homes than there were when the coalition Government formed.
Nigel Adams
I thank the Minister for that answer. A small number of commercial buildings in the town centres of Selby and Tadcaster have been unoccupied for several years. What are the Government doing to help the local residents and councils to bring those buildings back into use?
Mr Foster
I am grateful for the work that my hon. Friend is doing to encourage bringing empty properties back into use. I am sure that he will be delighted with the changes to permitted development that we announced very recently. They will make it much easier for what he wants to be achieved.
Andy Sawford (Corby) (Lab/Co-op)
What steps is the Minister taking to encourage the adoption of community land trusts and mutual home ownership models to bring back into use empty properties and brownfield sites?
Mr Foster
The hon. Gentleman is absolutely right that those models are a good vehicle for achieving our objective in this area. We are doing all we can to encourage them, just as we are encouraging other voluntary organisations to become actively involved in the programme that we have introduced.
Greg Mulholland (Leeds North West) (LD)
Residents in Pool in Wharfedale, Yeadon, Otley and Adel are dismayed at proposals to build on green-belt land introduced by Leeds city council. Considering the number of brownfield sites and empty homes in the Leeds area, does the Minister understand that concern? Will he ensure that any housing plan from this Government will concentrate on houses to deal with the affordability crisis, not on expensive houses in greenfield areas?
Mr Foster
The national planning policy framework makes it absolutely clear that brownfield sites, unless they are of exceptional environmental value, should be treated as a priority over greenfield sites, but, ultimately, it is for the local authority’s planning department to determine where those houses should go. We are certainly doing all we can to encourage the use of brownfield before greenfield.
Jake Berry (Rossendale and Darwen) (Con)
On Friday, I met residents around the Barlow Fold site in Rossendale, which is a playing field given to local residents by the Barlow family for recreation. Can the Minister advise me what steps I can take to stop the borough council and Calico Homes acting in concert to develop that greenfield site, which is vital for the local community, when there are more than 30 brownfield sites in a similar area?
Mr Foster
I encourage my hon. Friend to make use of the community rights that are available to ensure that that land has been registered as a community asset and encourage residents in the area to make use of the opportunities provided by the neighbourhood planning facilities that we have now made available.
Caroline Lucas (Brighton, Pavilion) (Green)
14. What steps he is taking to ensure that all tenants have the option to sign up to longer-term tenancies.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Don Foster)
The initial fixed term under an assured shorthold tenancy is usually six months, but there is nothing to stop a landlord and tenant agreeing to a longer tenancy if that suits them both. I am encouraged to see that Build to Rent investors are keen to promote longer tenancies.
Caroline Lucas
In Brighton and Hove, we have an acute housing crisis with a private rented sector that is twice the national average at 21% and a generation of families living in uncertainty with short-term tenancies. Does the Minister agree that longer-term tenancies should be much more widely available and will he consider measures to incentivise landlords to offer longer-term tenancies through changes to capital gains tax and national insurance contributions, which have been proposed by a number of housing charities?
Mr Foster
We are already considering the proposals the hon. Lady mentions. May I remind her that only 9% of tenancies are ended by the landlord, and that is usually because they want to live in the property or to sell it? The majority of landlords want to keep their tenants rather than face empty properties, but we need to get the balance right between the rights of landlords and those of tenants while maintaining the confidence of mortgage lenders.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Hackney has more people renting privately than owning homes, so this is a big issue. Mortgage lenders are one of the bars to tenants, so what is the Minister doing to discuss that issue with the Treasury and other interested Departments? I should draw Members’ attention to my entry in the Register of Members’ Financial Interests.
Mr Foster
The hon. Lady is absolutely right to say that we need to increase the availability of privately rented accommodation and that is why the Government have introduced £1 billion of funding through various schemes to provide support for that. I suspect that further announcements will be made in a relatively short time.
Tim Loughton (East Worthing and Shoreham) (Con)
15. What assessment he has made of the results of the neighbourhood planning referendums to date.
Harriett Baldwin (West Worcestershire) (Con)
16. What assessment he has made of the results of the neighbourhood planning referendums to date.
The Parliamentary Under-Secretary of State for Communities and Local Government (Nick Boles)
In all three referendums, residents have voted overwhelmingly in support of neighbourhood plans. More than 90% of voters said yes in Eden and Exeter St James and 76% in Thame.
Tim Loughton
I welcome the Government’s use of referendums in neighbourhood plans, which contrasts with the heavy-handed, top-down regional planning strategies of the last Government. Will the Minister confirm that my constituents in Adur, who face excessive house building on our diminishing green spaces—including, often, on floodplains between the downs and the sea—will be able to influence our draft local plan through the use of referendums, and that the planning inspector will be sympathetic to this manifestation of the localism promoted by the Government?
Nick Boles
I am delighted to be able to reassure my hon. Friend that a plan cannot be found sound unless it has undergone a great deal of consultation by local people; an inspector will expect that to have happened before they examine the plan.
Harriett Baldwin
Further to that question, will the Minister help my communities, who are very excited about this neighbourhood planning idea? Once the local plan has been submitted, can they still work on developing their neighbourhood plan?
Nick Boles
Yes. It does not really matter what state the local plan is in; it is always possible for communities to work on neighbourhood plans and we strongly encourage that. Whether the neighbourhood plan is made before or after the local plan, it simply has to be in conformity with the core needs identified in the local plan; it can move ahead independently of it.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
17. What recent assessment he has made of the effect of government schemes to increase house building. [R]
The Minister for Housing (Mr Mark Prisk)
First, I commend the right hon. Gentleman on his clear, common-sense leadership during the recent events in Woolwich.
The Government closely monitor the rate of house building. We are on target to deliver 170,000 affordable homes by 2015, and we completed 58,000 of them in 2011-12. We assess that to be one third higher than the annual average delivered in the 10 years leading up to the last election.
Mr Raynsford
May I draw attention to my interests, and thank the hon. Gentleman for his kind remarks?
The National Audit Office, in a recent report, described the new homes bonus as not only badly modelled, but largely ineffective, yet it is hugely expensive, having already led the Government to commit more than £1 billion, with that commitment rising to over £3 billion in the short term. When will the Government reconsider this measure, which appears to have little or no effect and comes at vast cost?
Mr Prisk
I think that the right hon. Gentleman knows that the National Audit Office also said that it is too early, in the process of the programme, to tell whether there is an impact. He knows that well from his experience as a Minister. It made some suggestions on how the technical modelling could be improved, and we are always open to such suggestions. On the question of a review, it was always our intention, over the coming year, to look to review the programme, as we do all programmes. I remind him and the House that the programme has enabled councils to be rewarded for delivering in the region of 400,000 more homes.
Sir Bob Russell (Colchester) (LD)
In support of Government schemes to increase house building, what action is being taken to press Government Departments and public bodies in general to dispose of surplus sites and property? In my experience, the NHS is by far the worst offender.
Mr Prisk
The hon. Gentleman has been a powerful advocate for the hospital site in Colchester about which he and I had a meeting. We have been able to organise the disposal of land for some 33,000 homes. There is much more to do in the health service, across the defence estate, and elsewhere, but this is an important priority, and I understand the point that he raises.
Mr Andy Slaughter (Hammersmith) (Lab)
21. Does the Housing Minister think that there is any connection between my Conservative council spending £860,000 last year on keeping 365 families in bed and breakfast, the fact that it sells off 10% of council homes that become vacant, and the fact that it has planning policies that forbid the construction of any additional social homes?
Mr Prisk
The hon. Gentleman is nothing if not parochial. He is one of those people, I am afraid, who cannot see the good side in any affordable housing programme. [Interruption.] I am well aware of his connections with Hammersmith and Fulham; we are constantly reminded of, and excited by, that prospect. We are delivering on the completion of 170,000 more affordable homes; the Labour Government presided over the loss of 421,000 homes.
Miss Anne McIntosh (Thirsk and Malton) (Con)
May I invite my hon. Friend to take a joined-up, common-sense approach to the house building programme, and to invite water companies to be statutory consultees, so that they can assess the automatic right to connect for substantially new housing developments?
Fiona Mactaggart (Slough) (Lab)
In his response to my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), the Minister challenged the NAO report. Is he going to do what the NAO report specifically requires, which is to publish urgently accurate ways in which he intends to conduct a review of whether the system works?
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Minister for Housing (Mr Mark Prisk)
My Department has been making progress in accelerating housing supply, supporting local government and introducing new protections for tenants of mobile homes. A detailed written statement is being provided for the benefit of Members.
The whole House will have been shocked by the appalling murder of Drummer Lee Rigby and the impact that this will have had on his family and on the local community. The Prime Minister will shortly outline the Government’s further actions to tackle extremism, but the response to that attack has brought communities and the nation together. The public are firm in their support for the armed forces and we have seen British Muslims stand shoulder to shoulder with other faiths in their condemnation of this brutality. This Department and this Government will continue to challenge the politics of division, for we are stronger as a community and as a nation when we stand together.
Debbie Abrahams
I think the whole House will want to associate ourselves with the Minister’s comments.
However, the Minister’s response to my earlier question was disappointing. I am sure I am not alone in that view, and that millions of carers and people who need care will be disappointed. Given that the Association of Directors of Adult Social Services has said that the pressure on adult social care will get much worse with another £800 million being taken out of the system over the next 12 months, why are the Government so complacent, and why are they not prepared to commit to using the underspend from the NHS—£1.2 billion—to invest in social care? That is needed now.
Mr Prisk
With respect to the hon. Lady, we have, as part of the £7.2 billion funding for adult care services, transferred some £2 billion or more from the health service budget to make sure that that joined-up thinking takes place. When one looks at the evidence, it is clear that 78% of the savings made are not on front-line services, but are efficiency savings.
Andrea Leadsom (South Northamptonshire) (Con)
T3. The localism agenda is welcome, but what can my hon. Friend say to communities in my constituency, such as Collingtree, whose preference for the location of 1,000 new homes is being undermined, or Helmdon and Sulgrave, whose recent judicial review overturned a wind farm proposal, yet the developers are straight away having another go?
The Parliamentary Under-Secretary of State for Communities and Local Government (Nick Boles)
On wind farm developments, the Government will be making announcements shortly. On housing developments, the key is for every local community to produce a plan—either a local plan or, even better, a local plan and a neighbourhood plan. That is the way for local communities to get control over the developments that take place in their area.
Hilary Benn (Leeds Central) (Lab)
May I join the Minister in condemning the cowardly killing of Drummer Lee Rigby, and express from the Opposition Benches our deep condolences to his family and his friends on their terrible loss? I echo the Minister’s remarks about my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford). I am grateful to the Secretary of State for the phone conversation that we had the following day, and he and the Government have the full support of the Opposition for the efforts that he and all of us must make to counter the causes of that kind of hateful extremism. Will the Minister tell us what steps he and his colleagues in the Department now propose to take to do this?
Mr Prisk
I am grateful to the right hon. Gentleman for those remarks. When people see the House of Commons in unity in this purpose, it is a very important signal that we can and should send. We, with the rest of Government, have been actively involved from the moment this dreadful news broke, looking specifically at local programmes and we will clearly be working with the new taskforce that the Prime Minister will comment on shortly. That will be not only about looking at radicalisation, but how we strengthen communities further. I cite to the right hon. Gentleman the excellent work of Show Racism the Red Card, which has helped some 9,000 young people learn why inclusiveness is crucial.
Hilary Benn
I am grateful to the Minister for that reply. Getting people to meet one another is the best way to counter extremism, but, as we know, some people have used this tragedy to try to stir up trouble, and we have seen a number of shameful attacks on mosques that have caused great fear in the Muslim community. This clearly must be one priority for the Government’s extremism taskforce that met for the first time this morning. Will the Minister tell us what specific action was proposed at that meeting to stop such attacks happening?
Mr Prisk
With respect to the right hon. Gentleman, it would be unwise of me to pre-empt the statement that the Prime Minister is about to make on behalf of the Government, but we are actively engaged in ensuring that communities—those of faith and those not of faith—come together in a range of different activities, so that we can make sure that we bring our communities locally, but also the country, together more closely.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
T4. The Government are consulting on the draft environmental statement for HS2, a project that will adversely affect local communities along the proposed route. The Chilterns, a supposedly protected area of outstanding natural beauty, will be adversely affected, both in my constituency and, I believe, in yours, Mr Speaker. Will the Minister therefore outline his Secretary of State’s strategy for defending those communities and their local environment, and tell us what role he will play in the development of the environmental statement?
Mr Prisk
As I think my right hon. Friend will know, a consultation is in hand, and this is something that must be dealt with not only by a single Department but right across Whitehall. I would certainly welcome any local comments that she feels would add to that deliberation.
Mrs Mary Glindon (North Tyneside) (Lab)
T5. Businesses, newspapers and all local authority leaders are joining forces to launch the NEvolution campaign in a bid to win greater financial freedoms to support the regional economy. In the absence of the Secretary of State, will his Ministers pledge their help and backing to this ground-breaking campaign?
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
It was interesting to hear what some of the local authority leaders had to say when I met them. It is great to see anything that is developing more local accountability and, therefore, driving local economic growth. We supported that through the Localism Act 2011 and the changes that we made this year in the business rates retention scheme.
Iain Stewart (Milton Keynes South) (Con)
T6. My hon. Friend may be aware that the urban planning design of Milton Keynes is being exported to China, which is looking to model two new cities on our successful design. Will he continue to work with UK Trade & Investment to help us to explore further export possibilities?
Mr Prisk
I think that we all want to applaud British design, particularly in the development of new towns and garden cities, especially the great city of Milton Keynes. This is something that we should take pride in, and I am sure that the good people of Milton Keynes will do so.
Mr Graham Allen (Nottingham North) (Lab)
T7. The Minister may have read my Select Committee’s recent report on greater independence for local government. Ministers and politicians of all parties work hard to devolve power, yet the Whitehall culture always seems to suck power back into the centre. What does he propose to do about that as some good advice for future Governments?
Brandon Lewis
We have had a number of conversations on the issue since the report, the launch of which I was pleased to attend. It contained many interesting points. A big issue is for local government itself to take advantage of the powers given by the Localism Act, particularly the general power of competence to drive the agenda locally. From the centre, we are working on the whole place community budgets and the new network to make sure that we get government working across the public sector, particularly driven by the local areas and by local people for local people.
Sir Bob Russell (Colchester) (LD)
T10. Will Ministers confirm that it remains the Government’s policy that the development of brownfield sites will take precedence over building on green fields?
Dan Jarvis (Barnsley Central) (Lab)
T8. Following briefing that new legislation will require private landlords to check the immigration status of tenants, and a reported row between the Communities Secretary and the Prime Minister, in which the latter apparently turned puce, a Whitehall source said that the Government would just be targeting the regulation at high-risk areas. How would the Minister define a high-risk area of private renters?
Mr Prisk
I am sorry to disappoint the hon. Gentleman, but all that press speculation is nonsense. The Government are clear. We want to make sure, as good landlords already do, that no one is living in the private rented housing sector in this country illegally. We are going to put forward some straightforward but effective measures. We will of course consult on them, and they will build on the important work that we are doing already to crack down on the minority of rogue landlords who exploit the vulnerable through programmes such as beds in sheds.
Duncan Hames (Chippenham) (LD)
Firefighters in Bradford on Avon and Chippenham now expect to work to the normal pension age of 60, but they are concerned that they may fail the VO2 max capability test before that time. Where that is the case, at what age will those firefighters be able to draw their pension?
Brandon Lewis
The vast majority of firefighters will be able to regain any lost fitness levels through remedial fitness training, but alternatively they can access their pension from the age of 55 with an actuarial reduction.
Paul Goggins (Wythenshawe and Sale East) (Lab)
T9. Do Ministers share my concern about the impact of welfare changes on housing associations? The Wythenshawe community housing group in my constituency estimates that rent arrears will go up by about £1 million this year following the introduction of the bedroom tax. Do Ministers agree that when universal credit comes in, any claimant already in rent arrears should have their housing costs paid directly and immediately to their landlord?
Mr Prisk
I do not share the right hon. Gentleman’s fears, but I am always happy to listen to individual circumstances such as the one he refers to. Where we are reducing the spare room subsidy, we are doing it for an important reason—there are currently 1 million spare bedrooms in this country, and we have a quarter of a million people living in overcrowded accommodation. It cannot be fair to allow that situation to persist.
Philip Davies (Shipley) (Con)
The Planning Minister is aware of an unacceptable planning application in Micklethwaite, in my constituency, which has already been rejected by the local council, the planning inspector and the Secretary of State, but which through legal proceedings has gone back to the Secretary of State for redetermination. A decision was expected by now. Will the Minister tell us when we can expect that decision from the Secretary of State, and, even better, confirm that he will once again reject that unacceptable proposed development?
Nick Boles
My hon. Friend has been indefatigable in his representations on the issue. He knows all too well that I cannot say anything about it, but he has made his representations here, in his constituency, in the Tea Room and almost everywhere else.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
If a fire brigade is “spun out”, to use the Government’s terms, what procurement route could be taken to prevent tendering to the private sector within a three to nine-year window? If the Minister cannot say, why are he and the Government actively funding the process as a stepping stone from mutualisation to privatisation?
Brandon Lewis
I can only repeat what I said earlier and what I said to the hon. Gentleman in the debate on the matter in the House. We will not allow any change that allows for privatisation of the fire service. I am disappointed that the Labour party seems to be working against the mutuals and co-operatives that the Labour-led Cleveland fire authority is putting forward.
Mr David Nuttall (Bury North) (Con)
Despite a 3.7% increase in Bury’s council tax, taxpayers were denied a referendum because of the small print in the rules governing when a referendum must be held. Will the Minister confirm that those rules will be looked at again to make them clearer, so that council tax payers know for certain when they will and will not be given a referendum?
Brandon Lewis
My hon. Friend asks a very reasonable question. He is absolutely right that we had that situation with a few councils, and we are looking to deal with it as part of the audit Bill that will come before the House later this year.
Mr Gerry Sutcliffe (Bradford South) (Lab)
We look forward to the Prime Minister’s statement on Woolwich, but when the extremism taskforce is put together, will the Minister look at the lessons learned from Bradford and west Yorkshire following the 7/7 bombings? I know he will be pleased that the whole Bradford community has condemned without fail what happened in Woolwich, and that is a great thing. Some great lessons were learned in Bradford and some great work was carried out, and perhaps we can share some of it with the new taskforce.
Mr Prisk
The hon. Gentleman is absolutely right that we can always learn from problems that have occurred in the past. The Prime Minister’s statement will make clear the whole Government’s approach, but this Department is absolutely committed to ensuring that we have genuinely inclusive communities.
Robert Neill (Bromley and Chislehurst) (Con)
Will my hon. Friend look again at how inflated claims for compensation in the case of article 4 directions can deter their proper use by local authorities, as in the case of the Porcupine pub in Mottingham, in my constituency?
Nick Boles
My hon. Friend knows a lot more about article 4 directions than I do, from his experience as a Minister in the Department, and he will know that we are undertaking a review of how they work so that they are properly usable by local authorities.
Caroline Lucas (Brighton, Pavilion) (Green)
If the Government are serious about increasing housing supply, will they look again at lifting the current cap on council borrowing for house building, and at providing direct capital spending to allow councils to build a mass programme of affordable housing?
Andrew Bridgen (North West Leicestershire) (Con)
The Minister was right to remind the House that under the previous Government, house building dropped to its lowest level since the 1920s. Given that in Scandinavia, Germany, Austria and Belgium more than 50% of new homes are self-builds, what steps is the Minister taking to remove barriers to self-builders in this country?
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
One of this Government’s first acts was to get rid of proposals to have a register of private landlords. In many discussions I have had with residents—including at the Hackney housing summit that I hosted recently—it has become clear that there has been a real need to improve landlords, but without knowing who they are we cannot do that. Will the Minister look again at the issue? Again, I draw the House’s attention to my entry in the Register of Members’ Financial Interests.
Mr Foster
The simple answer is that no, we will not. The hon. Lady will be well aware that when her party proposed such a register, the impact assessment showed that it would cost £300 million a year, and that money would be put on to the rent of people seeking to live in those properties.
Charlie Elphicke (Dover) (Con)
How many of the savings made in the Minister’s Department have received positive representations or support from the Labour party?
2013 White Paper on Pension Reform
Tim Loughton (East Worthing and Shoreham) (Con)
I present a petition on behalf of the residents of Lancing, West Sussex, who declare their concern about the Government’s proposals for pensions in the new White Paper on pension reform, “The single-tier pension: a simple foundation for saving”.
The petition states:
The Petition of residents of Lancing, West Sussex,
Declares that the Petitioners are appalled by the Governments proposals for pensions in the 'New White Paper on Pension Reform' - The single tier pension: a simple foundation for saving; further that the Petitioners believe it is unfair to give a pension of £144.00 to a pensioner who retires in 2017 with 35 years National Insurance Credit when pensioners today will have to remain on their current lower pension rate, many of whom will have accumulated Working National Insurance Credits of over 40 years or more; further that anyone who has drawn their state pension before 2017 will not be included in these plans and that will be a disadvantage to millions of older women who currently get less than £144.00 a week.
The Petitioners therefore request that the House of Commons urge the Government to discuss the matter of pensions for at least another 12 months and address any equality and discriminatory issues in the Pensions White Paper.
And the Petitioners remain, as in duty bound, will ever pray.
[P001182]
EU Council and Woolwich
(11 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Prime Minister (Mr David Cameron)
With permission, Mr Speaker, I would like to make a statement on the recent European Council, and update the House on the dreadful events in Woolwich.
The European Council was called specifically to discuss energy policy and tax evasion. We also discussed the situation in Syria, prior to the lifting of the arms embargo that was agreed at the Foreign Affairs Council last week. On energy policy, we agreed to continue our efforts to complete the single market in energy, so that we drive competition between suppliers and force prices down. We also put down a marker to get rid of unnecessary regulation in making the most of indigenous resources such as shale gas. Europe has three quarters as much shale as the United States, yet while the Americans are drilling 10,000 wells a year, we in Europe are drilling fewer than 100. We must extract shale in a safe and sustainable manner, but we have to do more to ensure that old rules designed for different technologies do not hold us back today.
On tax, to crack down on tax evasion we need proper exchange of tax information, which in Europe has been stalled for decades because of the selfish actions of a minority of countries. I made tackling tax evasion a headline priority for our chairmanship of the G8, and that has enabled us to ramp up pressure and make real progress. At the European Council we agreed there should be a new international standard of automatic information exchange between tax authorities, and proper information on who really owns and controls each and every company.
In Syria, the situation continues to deteriorate. There is a humanitarian crisis, so Britain is leading the way with humanitarian support. We need diplomatic pressure to force all sides to come to the table, and in recent weeks I have held talks with Presidents Putin and Obama to try and help bring that about. We must be clear: unless we do more to support the official opposition, the humanitarian crisis will continue, the political transition that we want to see will not happen, and the extremists will continue to flourish. That is why I believe it is right to lift the EU arms embargo on the Syrian opposition. There must be a clear sense that Assad cannot fight his way to victory or use the talks to buy more time to slaughter Syrians in their own homes and on their streets.
I regret to say that the EU arms embargo served the extremists on both sides. It did not stop Assad massacring his people, it did not stop the Russians sending him arms, and it did not stop Islamist extremists getting their hands on weapons either. It just sent a signal that for all its words, the EU had no real ability to support the reasonable opposition that could be the basis of an inclusive transition. That is why the Foreign Secretary and the French Foreign Minister secured agreement to lift the arms embargo in Brussels last week.
I believe we should also be clear about the Syrian National Coalition. It has declared its support for democracy, human rights, and an inclusive future for all minorities, and we—not just in Britain but across the EU—have recognised it as a legitimate representative of the Syrian people. The EU has agreed a common framework for those who, in the future, may decide to supply it with military equipment, and there are clear safeguards to ensure that any such equipment would be supplied only for the protection of civilians, and in accordance with international law. That does not mean that we in the UK have made any decision to send arms, but we now have the flexibility to respond if the situation continues to deteriorate. With 80,000 killed, 5 million fled from their homes, rising extremism and major regional instability, those who argue for inaction must realise that it has its consequences too.
Let me turn to the dreadful events in Woolwich. I am sure the whole House will join me in sending our deepest condolences to the friends and family of Drummer Lee Rigby. What happened on the streets of Woolwich shocked and sickened us all. It was a despicable attack on a British soldier who stood for our country and our way of life, and it was a betrayal of Islam and of the Muslim communities who give so much to our country. There is nothing in Islam that justifies acts of terror, and I welcome the spontaneous condemnation of the attack from mosques and Muslim community organisations across our country. We will not be cowed by terror, and terrorists who seek to divide us will only make us stronger and more united in our resolve to defeat them.
Let me update the House on the latest developments in the investigation, on the role of the Intelligence and Security Committee, and on the next steps in our ongoing efforts to fight extremism in all its forms. While the criminal investigation is ongoing, there remains a limit on what I can say. Two men, Michael Adebowale and Michael Adebolajo, have been charged with the murder of Drummer Lee Rigby. Both are appearing in court today. There have been 10 further arrests as part of the ongoing investigation. Two women have been released without charge and eight men have been released on bail.
The police and security services will not rest until they have brought all those responsible to justice. I am sure the whole House will join me in paying tribute to the work of our police and security services for all they do to keep us safe from violent extremists. Already this year, there have been three major counter-terror trials, in which 18 people were found guilty and sentenced to a total of 150 years in prison. Much more of the work of our security services necessarily goes unreported. They are Britain’s silent heroes and heroines, and the whole country owes them an enormous debt of gratitude.
It is important that we learn the lessons of what happened in Woolwich. The Government strengthened the Intelligence and Security Committee and gave it additional powers to investigate the activities of the intelligence agencies. I have agreed with my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind) this morning that his Committee will investigate how the suspects were radicalised, what we knew about them, whether any more could have been done to stop them, and the lessons we must learn. The Committee hopes to conclude its work around the end of the year.
To tackle the threat of extremism, we must understand its root causes. Those who carried out this callous and abhorrent crime sought to justify their actions by an extremist ideology that perverts and warps Islam to create a culture of victimhood and justify violence. We must confront that ideology in all its forms. Since coming into government, we have ensured that the Prevent strategy focuses on all forms of extremism, and not just on violent extremism. We have closed down more websites and intervened to help many more people vulnerable to radicalisation.
Since 2011, the Home Secretary has excluded more preachers of hate from this country than ever before through our Prevent work. Some 5,700 items of terrorist material have been taken down from the internet, and almost 1,000 more items have been blocked where they are hosted overseas, but it is clear we need to do more. When young men born and bred in this country are radicalised and turned into killers, we must ask some tough questions about what is happening in our country. For some young people, it is as if there is a conveyor belt to radicalisation that has poisoned their minds with sick and perverted ideas.
We need to dismantle that process at every stage—in schools, colleges and universities, on the internet, in our prisons and wherever it takes place—so, this morning, I chaired the first meeting of the Government’s new taskforce on tackling extremism and radicalisation. I want the taskforce to ask serious questions on whether the rules on charities are too lax and whether they can allow extremists to prosper; whether we are doing enough to disrupt groups that incite hatred, violence or criminal damage; whether we are doing enough to deal with radicalisation on our university campuses, on the internet and in our prisons; whether we need to do more with informal education centres such as madrassahs to prevent radicalisation; and whether we do enough to help mosques to expel extremists and recruit imams who understand Britain. We will also look at new ways to support communities as they come together and take a united stand against all forms of extremism. Just as we will not stand for those who pervert Islam to preach extremism, neither will we stand for groups such as the English Defence League, which try to demonise Islam and stoke up anti-Muslim hatred by bringing disorder and violence to our towns and cities.
Let us be clear: the responsibility for this horrific murder lies with those who committed it. However, we should do all we can to tackle the poisonous ideology that is perverting young minds. This is not just a job for the security services and the police; it is work for us all. I commend this statement to the House.
Edward Miliband (Doncaster North) (Lab)
I welcome the Prime Minister’s statement.
I want to start where he did: on the EU summit and its conclusions on tax avoidance. We need international agreement on transparency, transfer pricing, tax havens and other issues. We welcome the steps forward on transparency. Will he tell us whether he agrees that we need proposals for fundamental reform of the corporate tax system to prevent profits being artificially shifted from one country to another? Does he also agree that while seeking international agreement is undoubtedly the right way forward, measures, including measures on transparency, should still be introduced if international agreement is not reached? Will he confirm that Britain will act if we cannot obtain international consensus?
Let me turn to the devastating violence in Syria that continues unabated. I share and recognise the Prime Minister’s deep concern about what is happening. The number of Syrian refugees who have fled the conflict has now reached 1.5 million, half of them children. As so often happens, the most vulnerable are paying the price of war. This is a situation where there are no good options. The question is this: which is the least worst option?
Despite the enormous obstacles, we believe that a comprehensive peace deal still remains Syria’s best chance of ending the two years of violence; in particular, American and Russian efforts to bring Syria’s warring parties around the negotiating table this month in Geneva. The peace conference is due to take place in the coming weeks, but the Prime Minister did not refer to it in his statement. Will he explain why? The conference remains the best—indeed, at present, the only—immediate hope of limiting the violence and achieving an inclusive political settlement, so its success must not be put at risk. In light of that, will he explain his view of the risks that lifting the EU arms embargo may pose to the prospects for any peace talks?
The Prime Minister says that there are safeguards on the end-use of those weapons. Will he set out to the House what those safeguards are? However well motivated, is not the danger of this course of action that it will lead to further escalation, as has been illustrated by Russia’s response in recent days? The Prime Minister is of course right that the international community cannot continue to stand by while more innocent lives are lost, but in the action we take we must also agree that our primary aim must be to ensure a reduction in the violence. Finally, on using the flexibility of the lifted arms embargo, will he assure us that he will come back to the House before any decision is made by the British Government to arm the opposition in Syria?
Let me now join the Prime Minister in expressing our total revulsion at the vile murder of Drummer Lee Rigby. He served his country with the utmost bravery and was killed in an act of the utmost cowardice. All of our thoughts are with his family and friends. Our thoughts are also with our troops, who serve with incredible courage all around the world and have seen one of their own murdered. I also join the Prime Minister in paying tribute to our police and security services, who do such a vital job.
I would also like to join the Prime Minister in what he said in the days after the murder of Lee Rigby, singling out for special praise the members of the public, including Ingrid Loyau-Kennett, who intervened to try and protect Lee Rigby. They showed the true face of our country, as did the quiet determination of local leaders and residents in Woolwich, which the Prime Minister, Deputy Prime Minister and I have all seen for ourselves, not to allow their communities to be consumed by division and hate. As the Prime Minister said, in the past 10 days we have seen attempts by some to use this evil crime as justification to further their own hate-filled agenda and attempt to ignite violence by pitting community against community. They will fail because the British people know that this attack did not represent the true values of any community, including Muslim communities, who contribute so much to our country.
Governments must do three things after such an attack, and we will support the Government on all of them. First, they must bring the perpetrators to justice, which is why we welcome the swift court appearance of the suspects. Secondly, they must seek to bring people together in the face of attempts to divide us, and thirdly they must learn the lessons of the attack. We therefore welcome the ISC investigation and the taskforce on extremism, which I agree with the Prime Minister should look again at issues of radicalisation and helping communities to take a stand against extremism—issues covered in the original Prevent strategy. Will he confirm whether the taskforce will look into earlier intervention—in other words, not just on university campuses—to prevent young people from being radicalised and whether the taskforce will heed the calls from youth workers to look more carefully at the link between violent extremism and gang-related activity, which was something raised with us when we visited Woolwich last week?
In the light of recent events, will the Prime Minister update the House on his current view on the need for legislation on communications data? Whatever the origin and motive of terrorists, our response will be the same—the British people will never be intimidated. Across every faith and every community, every part of the country is united, not divided, in its abhorrence of the murder of Lee Rigby. We have seen people try to divide us with such acts before. They have failed, and they will always fail.
The Prime Minister
I thank the right hon. Gentleman for his comments about the dreadful events in Woolwich and for the strong cross-party support that he has given throughout this period.
The right hon. Gentleman asked about reform of corporate taxes. I agree that we need to take action. It is best if it can be international action, and we should use the G8 summit to drive the agenda, as we have already been doing in the EU, but of course we do not rule out taking action over and above what other countries have done. If possible, however, it is best to pursue it internationally.
On Syria, there is an honest disagreement between us. I agree completely with the right hon. Gentleman that there is no good option and that a negotiated settlement would be best—I have been doing what I can to help bring the parties to the table and look at all the ways we can make it work—but the question for us is this: how do we maximise the chances of a successful political transition and political process? Do we maximise those chances by allowing Assad to dominate militarily and showing that our words of support for the opposition are just that—words and no more? I do not think that that is the right approach, which is why the EU’s decision to lift the embargo—but only, of course, on the official Syrian opposition, not on the regime—is, I think, the right step.
The right hon. Gentleman asked about the Russian response. We should not, for a minute, be naive about the Russian position on Syria; it has been consistent for a very long time: it has always supplied, and continues to supply, arms to Syria. As far as I can see, that has not changed at any point in this process. Finally, he asked whether we would come back to the House. My right hon. Friend the Foreign Secretary regularly updates the House on this matter, and will continue to do so.
On Syria, I would add one final point. Those who argue against amending the arms embargo and doing more to support the opposition are making some of the same arguments used in the Bosnian conflict 20 years ago. We were told then, as we are now, that taking action would have bad consequences, but not taking action is a decision too, and in Bosnia it led to the slaughter of up to 200,000 people and did not stop the growth of extremism and radicalisation, but increased it. We should be clear, however, about the nature of what is happening in Syria today. It is not just a tragedy for Syria; it could end up being a tragedy for us, too, if we do not handle it properly.
I applaud what the right hon. Gentleman said about the Woolwich events and all that needs to be done in response. He was right to praise the community groups that came out strongly and condemned what happened. On the issue of communications data, I think we need a frank debate in the House. There is a problem in that, currently, about 95% of serious crimes involve the use of communications data. This is not about the content of a fixed or mobile telephone call, but about the nature of the call: when it was made, who made it and when they made it. As telephony moves from fixed and mobile telephony on to the internet, our intelligence and police services will have a problem. We need to address that problem, and we should do so sensitively and carefully, looking at all the non-legislative options, but I hope for a measure of cross-party support, on both sides of the House, to try and get this right, because we will suffer if we do not.
The right hon. Gentleman asked some other specific questions. I am pleased that he welcomes the ISC investigation. With its new powers and responsibilities, it is the right body to carry it out.
On the taskforce, let me tell the right hon. Gentleman that there is no monopoly of wisdom on this issue. We will accept ideas from all sides of the House about what needs to be done to prevent radicalisation. We should look at early intervention, and he is right that the connections between gang violence and violent extremism, and between criminal gangs and violent extremism, all need to be looked at. If we can bring the House together to look at these things, we can make real progress in stopping young minds being perverted with this violent extremism.
Mr Speaker
Order. Before I call hon. Members to ask further questions arising from the Prime Minister’s statement, I remind the House that, as the Prime Minister pointed out, two individuals have been charged in connection with the death of Drummer Lee Rigby. I emphasise to colleagues that the matter is therefore sub judice. Although it is clear that the public interest means that this is a matter that Parliament must discuss, and in respect of which I should indeed exercise my discretion, I am sure that hon. and right hon. Members will take care to frame their remarks appropriately.
Sir Peter Tapsell (Louth and Horncastle) (Con)
On Syria, may I put it to my right hon. Friend, first, that this is fundamentally a religious war between the Shi’a and the Sunni, which has raged within Islam for 1,300 years? Secondly, the Alawites, who are a branch of the Shi’a, will fight to the end, because they believe—and so does the large Christian minority in Syria—that they will be massacred if the Sunni overthrow the present regime. Thirdly, Russia will never allow the regime to be overthrown, because its overthrow would mean a humiliating defeat for President Putin, who made his reputation by crushing the Sunni rebellion in Chechnya.
The Prime Minister
I always listen carefully to my right hon. Friend. I would just make two points. The first is that when I see the official Syrian opposition, I do not see purely a religious grouping; I see a group of people who have declared that they are in favour of democracy, human rights and a future for minorities, including Christians, in Syria. That is the fact of the matter. Secondly, of course the Russians have long supported the regime, but they can see the damage that is being done to Syria and to their reputation throughout the middle east. That is why it is a good time to push all parties towards the political transition that is so deeply needed in this area.
Mr Jack Straw (Blackburn) (Lab)
On Syria, does the Prime Minister accept that that elusive but very necessary comprehensive peace deal requires not only that Russia should be a party to it, but that Iran should be? Whatever the difficulties, will he say what action he has taken to ensure that Iran is a participant in the peace conference and also what action we are taking to bring back full diplomatic relations with the Republic of Iran?
The Prime Minister
The right hon. Gentleman is right that the role of Iran is something that should be discussed; the point I would make is that Iran is currently playing a role, using its proxies and helping to massacre Syrian civilians. Clearly in the end what is needed more than anything else—more than the engagement of any regional player or indeed any superpower—is for the Syrian people themselves to see a transitional Government in whom they can have confidence. Clearly that has to involve elements of the opposition; it has to involve some elements of the regime, too. That is what a transition would involve.
Sir Menzies Campbell (North East Fife) (LD)
There was much in what my right hon. Friend said with which I would agree, but in relation to the supposed merits of lifting the embargo and supplying arms to Syria, I regret that I remain increasingly unconvinced. There are many questions to be asked, but perhaps the most fundamental question is this: what evidence is there that Assad would change his course so long as he enjoys the uninhibited and unconditional support of Russia, and the supply of weapons that goes with that?
The Prime Minister
I very much respect my right hon. and learned Friend and his views. The direct answer to his question is that Assad is most likely to change his view and accept a transition if he believes that he cannot win militarily. If we help to tip the balance in that way, there is a greater chance of political transition succeeding. If we don’t, we won’t.
Alan Johnson (Kingston upon Hull West and Hessle) (Lab)
Exactly a year ago, the Home Secretary said in her introduction to the draft Communications Data Bill:
“Without action there is a serious and growing risk that crimes enabled by email and the internet will go undetected and unpunished, that the vulnerable will not be protected and that terrorists and criminals will not be caught and prosecuted. No responsible Government could allow such a situation to develop unaddressed.”
Does not the absence of any reference to this in the Queen’s Speech suggest that that is exactly what the Government are doing?
The Prime Minister
I have great respect for the former Home Secretary, and I know that he knows how important the issue of comms data is. I hope that, when we bring forward proposals, we will have support from across the House of Commons for them. Comms data were mentioned in the Queen’s Speech, and we have specifically said that we want to look at how we can match IP addresses, because that is such an important part of what needs to be done. We should look at all the options, including non-legislative approaches, so that we can make some progress on this important issue. I look forward to having the right hon. Gentleman’s support, and to hearing his explanation to others in the House of how important this is.
Mr John Redwood (Wokingham) (Con)
I welcome the Prime Minister’s efforts to get us cheaper energy through shale gas, but did the EU recognise that its regulations and energy policies are making us completely uncompetitive in world markets, destroying jobs and giving us energy that our elderly cannot afford?
The Prime Minister
I think it is important that we ensure that Europe does not make the situation worse through new regulation that could stop the exploitation of shale gas. That was part of what we discussed at the European Council. Also, there is an opportunity to get cheaper supplies of energy if we can increase competition within the single market, and that should be the aim of our policy.
Hazel Blears (Salford and Eccles) (Lab)
I welcome the Prime Minister’s announcement of the taskforce on extremism. I see that as an acknowledgement that more needs to be done on the Prevent strand of the counter-terrorism strategy. Will he confirm that his taskforce will be fully inclusive? In other words, will he make an extra effort to involve women and young people, as well as the traditional voices that have been heard from the community? That will be absolutely essential if the taskforce is to succeed.
The Prime Minister
The right hon. Lady speaks with immense expertise and experience on this issue. In fact, I was thinking of inviting her on to the taskforce to give us the benefit of her wisdom from the time she spent in office dealing with this difficult problem. Rather than have a formal panel of advisers, we are going to seek advice from different individuals and groups who can bring real expertise. This must not be just another opportunity to discuss Britishness or British identity; it must be a set of actions in our universities, schools and colleges and on the internet—as well as in our prisons; for heaven’s sake, we are supposed to be responsible for those people, yet they are still being radicalised under our very noses—to deal with these problems.
Nicholas Soames (Mid Sussex) (Con)
Was there any discussion at the Council on the completion of the single market in services? If not, should that not be on the agenda of every future Council, in view of the fact that it can deliver tremendous growth?
The Prime Minister
My right hon. Friend makes an important point about one of the positive benefits that we can get out of the single market, which will involve completing the single market in services just as we have completed the single market in products. As an economy that is very reliant on services, we would benefit disproportionately from that. The matter was not discussed at this conference because it was called particularly to deal with energy and with the issues of tax evasion and aggressive tax avoidance, but I will ensure that it is discussed at future European Councils.
Mr Peter Hain (Neath) (Lab)
Surely the Prime Minister must accept that Britain’s insistence on Europe opening the door to more arms entering that ugly arena in Syria has led to two consequences. The first is the Russian escalation, with its introduction of S-300 missiles into the arena. The second is the near collapse, if not the actual collapse, of the vital international peace conference. The alternative is not inaction, as the Prime Minister has implied; it is serious negotiation to get the conference off the ground without preconditions, without insisting that Assad must go, which would stop the conference, and without insisting that Iran should stay out of the negotiations, which would also render the process stillborn.
The Prime Minister
I have great respect for the right hon. Gentleman, but on this occasion I have to disagree with him on both counts. First, it is completely wrong to pretend that Russia has changed its view of Syria or its supply of arms to that country because of the European Union’s decision. Russia has been supplying the Syrian regime with arms for decades, and it has done so during this conflict. To suggest otherwise is really quite naive. I fully support the idea of the peace conference, which is why I flew to see President Putin on the Black sea and why I held discussions with Barack Obama. We should do everything we can to bring the parties together at this peace conference, but I would put the question again: are we more likely to get some sort of compliance from President Assad at a peace conference that would result in a transitional government if he believes that he cannot win militarily? That is the question that we have to put to ourselves.
Dr Julian Lewis (New Forest East) (Con)
Will Parliament definitely get the opportunity not just to be updated and kept informed, but to vote on the issue of arms supplies from this country to the opposition in Syria, even if that involves recalling Parliament if we wish to take that decision during the recess?
The Prime Minister
One of the things that this Government have done is allow Parliament to hold votes on issues that Parliament wants to vote on. In the first 10 years during which I was an MP, that was completely impossible. It can now happen, so Parliament has that opportunity whenever it wants to.
Mr David Winnick (Walsall North) (Lab)
Has the Prime Minister noticed during the last few minutes how little enthusiasm there is in the House for lifting the arms embargo? Does he recognise that while we all deplore the terrible bloodshed in Syria, if arms are sent by France and this country, it is obvious that Russia will simply increase the amount of arms being sent? This is not the way to resolve the issue. The killing fields in Syria are bad enough; sending arms would just increase the killing.
The Prime Minister
The hon. Gentleman should look at the effects of the EU arms embargo. Did it stop Assad getting every weapon he wanted from Russia? No, it did not. Did it stop extremists in Syria getting weapons? No, it did not. But did it stop the countries such France, Britain and America that wanted to engage with the official opposition from working with them and from providing technical assistance, help and advice? Yes, it did. The point is that we have made not a decision to supply the Syrian opposition with arms—that would be a separate decision—but a decision to lift the arms embargo that affected the Syrian opposition in the way we have seen. That was the right thing to do.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
I am sure we all welcome the progress that the Prime Minister has made on tackling tax evasion, but I wondered whether he had an opportunity during the European Council to look at the code of conduct group on business taxation, which I understand has recently got bogged down in an increasingly difficult and complex set of assessments. Does he agree that it is important for this code of conduct group to move forward rapidly, and what proposals will he make to improve its effectiveness?
The Prime Minister
I am very grateful to my right hon. Friend for asking that question. What we have done in the European Union is, I believe, unblock what was previously blocked when a small number of countries were blocking the exchange of technical tax information between countries. Now that that is unblocked, I think there is plenty of opportunity for the body that she talks about and others to do the work necessary to make sure that proper taxes are paid.
Keith Vaz (Leicester East) (Lab)
I welcome the establishment of the taskforce and the Prime Minister’s commitment this afternoon to making its membership wider than just members of the Cabinet. Does he agree that internet service providers and search engines such as Google are far too laid back about removing extremist content? It is still possible this afternoon to go on to YouTube and see the hateful and inflammatory preachings of Anwar al-Awlaki. A year ago, the Select Committee recommended the establishment of a code of conduct; will the Prime Minister please look at this proposal again, so that the providers and the search engines take effective action?
The Prime Minister
I have great respect for the right hon. Gentleman and for the work of his Select Committee. The point he makes is a good one. I think we should always ask companies and organisations to behave with a sense of responsibility. Of course there are concerns about freedom and free speech, but there are also issues of proper governance and responsibility, which these companies should also think about. I will look very carefully at the code of conduct that he mentions and see what more can be done.
Mr John Baron (Basildon and Billericay) (Con)
The Foreign Secretary may well update us on the decisions made, but will the Prime Minister take this opportunity to confirm once and for all that if the decision is made to arm the rebels, he will come before this House so that we can debate it and vote on it before that policy is executed?
The Prime Minister
As I said, my right hon. Friend the Foreign Secretary has regularly updated the House on Syria in statements, and the House of Commons has plenty of ways, if it wants to, to hold debates and votes on this issue. All that has been decided to date is that we should lift the arms embargo on the official Syrian opposition—an opposition that we recognise as legitimate representatives of the Syrian people and as a group that believes in democracy, human rights and standing up for minorities. That is the decision that has been taken to date, and no further decisions have been taken.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
On behalf of the people of Woolwich, I thank both the Prime Minister and the Leader of the Opposition not just for what they have said this afternoon, but for their visits to Woolwich in the aftermath of the hideous killing of Drummer Lee Rigby. I thank them for their support, and for the commitment—a cross-party commitment—to take this agenda forward in the coming months and years.
Let me, however, gently remind Members that our own natural instincts often do not allow us to sustain unanimity across the House during periods of division. The agenda of building harmony between different groups and countering extremism is a long-term agenda that will not be won immediately. It will require ongoing commitment, and we will need to demonstrate that cross-party commitment in the long term if we are really to succeed.
The Prime Minister
I thank the right hon. Gentleman for all that he has done in Greenwich and Woolwich to bring people and communities together. There has been such a strong and positive response, and such a powerful condemnation by everyone of what happened to that brave soldier.
The right hon. Gentleman’s point about cross-party work is important. I think that there is quite a strong sense across the House that while we may disagree about individual items on the agenda, we need to do more to prevent young minds from being perverted, to stop this radicalisation and to confront this extremist ideology. I think that there is strong support for those proposals.
Mr Julian Brazier (Canterbury) (Con)
I welcome my right hon. Friend’s announcement about his taskforce. Does he agree that now—in the aftermath of this appalling incident—is a good time to remind judges considering cases relating to the deportation of preachers of hate that they, too, have a role in upholding the rule of law?
The Prime Minister
My hon. Friend has made an excellent point. I think that what we can do, through the words that we use, the speeches we make and the debates that we have in the House, is set the context for confrontation of not just the violent extremism, but the extremism and poisonous ideology on which these people thrive. However, it we must be made clear that in too many cases we have home-grown extremists: people who were born and bred here, and then radicalised here. Of course we must do more to kick out the preachers of hate and people who do not have the right to be here, but we have our own domestic, home-grown problem to deal with as well.
Simon Danczuk (Rochdale) (Lab)
I speak on behalf of every single resident of the borough of Rochdale when I say that we are immensely proud of Drummer Lee Rigby, and that all our thoughts are with his family and friends at this very sad time. Rochdale has very strong ties to the armed forces, particularly the Royal Regiment of Fusiliers, and those ties will not be diminished by what happened on 22 May; indeed, they have been strengthened. Will the Prime Minister join me, and all Rochdale residents, in pledging to support Lee’s family in whatever way necessary in the coming days and months?
The Prime Minister
I thank the hon. Gentleman for what he has said on behalf of everyone in Rochdale. It is clear that the whole country wants to reach out to Lee Rigby’s family in respect of the appalling loss that they have suffered. I went to Woolwich barracks after these dreadful events to talk to some of the soldiers and their families, and I was greatly impressed by not just the enormous solidarity but the strength of purpose that they showed. These terrorists who think that they will be able to divide us or scare us actually just bring us together.
Simon Hughes (Bermondsey and Old Southwark) (LD)
May I associate my colleagues, and the other communities in south London, with the Prime Minister’s comments, and with the expressions of condolence and support for the family, comrades and friends of Lee Rigby? I applaud the Prime Minister for making it clear that we should take a considered view of how to deal with this sort of terrible activity, rather than producing knee-jerk legislative responses. The immediate priority must be to support the Muslim leaders who are strong in their denunciation of this sort of behaviour, and to support the whole of our Muslim community, which has suffered extra attacks in recent years. Most people in that community are peaceful and law-abiding, and want nothing to do with the sort of behaviour that we have seen in the last two weeks.
The Prime Minister
My right hon. Friend is entirely right to say that there should be no knee-jerk reactions. We do not want immediate legislative responses, but on the other hand, I think that we must ask ourselves some pretty searching questions.
All of us in the House condemn this poisonous narrative, condemn this perversion of Islam and condemn this extremist narrative, but are we doing enough to ensure that we snuff it out in our prisons, colleges or university campuses? Are we doing enough to confront it and defeat it, online and elsewhere? I think that the answer to that is no. I think that there is more work to be done, and that we should do it in good order.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
When the Prime Minister said that the EU arms embargo has helped extremists on both sides, was he acknowledging that the Syrian opposition also includes extremists? Has he had any discussions with the Turkish Government, and what advice have they given him?
The Prime Minister
Clearly, parts of the Syrian opposition do include extremists and, regrettably, armed extremists. The point I was making is that the Syrian National Coalition, the official opposition, is a body that we can work with and is a legitimate spokesperson organisation for the Syrian people. Of course we have discussed this issue not just with the Turkish Government but with the Jordanians, the Emiratis, the Qataris, the Saudis and others. We want to do everything we can to channel support to those parts of the Syrian opposition that stand for democracy, freedom, human rights and all the things in which we believe in this House. We are better able to do that if we are engaged—if we are helping to organise these groups. That is what we are now involved in. We are not, as I said, making a separate decision about arming them, but that work is good work and will help to ensure that the Syrian opposition is moderate.
Bob Stewart (Beckenham) (Con)
Terrorists hide among, come from and are sustained by groups of people around them. Will the Prime Minister ensure that the taskforce for tackling extremism puts quite a lot of effort into trying to isolate these misguided people away from those who allow them to operate and who sustain them?
The Prime Minister
My hon. Friend is absolutely right in the way he puts it. It is not enough to target and go after violent extremists after they have become violent. We have to drain the swamp which they inhabit. That means looking at the process of radicalisation on our campuses. It means looking at Islamic centres that have been taken over by extremists and gone wrong. It means looking at those mosques that are struggling to throw out the extremists and helping them in the work that they are doing. It means going through all the elements of the conveyor belt to radicalisation and ensuring that we deal with them. That is what is important. That is the work that needs to be done.
Rushanara Ali (Bethnal Green and Bow) (Lab)
I join the Prime Minister and the Leader of the Opposition in relaying on behalf of my constituents, a sizeable proportion of whom are from the British Muslim community, our deepest condolences to the family of Drummer Lee Rigby after his appalling murder.
As part of the Prevent strategy and the new Prevent programme, will the Prime Minister look at the impact of the rising level of attacks on Muslim communities, including mosques, and the role of the English Defence League? Will the new taskforce look at proscribing such groups if the evidence suggests that their violent intentions will reinforce conflict in our country?
The Prime Minister
I thank the hon. Lady for what she says about the strength of feeling in the communities that she represents. Yes, I can confirm that the taskforce will look at all forms of extremism, and we should be looking at all the best ways of condemning the hate-filled people who are part of the English Defence League. In terms of proscribing organisations, we have to follow the law and what the law itself sets out before taking action.
Mr Edward Leigh (Gainsborough) (Con)
What will be the effect of this threat on the safety of the minority Christian population in Syria? They have already fled Iraq because of our misjudged intervention there, which made them the target of extremists. They are seen to be a supporter of Assad because he protects them and they only want a quiet life. They could now be a target for Hezbollah because we would be arming its opponents, and paradoxically, they could be a target for Sunni extremists because we have no control over where the weapons will end up.
The Prime Minister
How best to ensure a Syria that can protect minorities is an important issue. I would challenge the idea that Assad, in taking on those in the opposition, has shown any respect for people’s religion or ethnicity. His bombs, planes and apparent use of chemical weapons have been quite indiscriminate, so I do not accept the idea that somehow minorities will be better off in Syria under an Assad regime. I do not believe they will be. What we should be doing is supporting a Syria that will look after minorities, and that is what the official Syrian opposition is committed to doing.
Mr Dennis Skinner (Bolsover) (Lab)
Is not the Prime Minister aware that he is playing with fire when he talks about lifting the arms embargo and supplying weapons? Does he not understand history at all? The Americans a few decades ago thought they knew who the real enemy was, and they ended up arming Osama bin Laden and they paid a heavy price. What mechanism will the Prime Minister use to ensure that the weapons do not fall into the hands of the al-Qaeda supporters among the Syrian opposition?
The Prime Minister
I would make two points to the hon. Gentleman. First, even with the arms embargo in place, arms have been getting to extremist elements of the opposition, and we are more likely to stop that happening by being engaged rather than disengaged. If he wants to go through the history lessons, what about the history lesson of Bosnia? In this House—he was a Member of the House at the time—it was endlessly said that we must not intervene, must not help those who are being slaughtered by Milosevic and must not take any action; to arm them would create a level killing field, we were endlessly told. It was only when the Americans stepped in and helped the Bosnians that we were able to have a peace conference that brought about the peace that that country now enjoys.
Penny Mordaunt (Portsmouth North) (Con)
Further to that, does the Prime Minister believe that the fall of the arms embargo will help boost the status and clout of moderate groups within the Syrian opposition?
The Prime Minister
My hon. Friend makes the very good point that we need to engage with the Syrian opposition, and we are unlikely to be able to shape and support it in the way we want unless we have that process of engagement. That is what the Foreign Secretary and others have been doing, and that gives the best chance of what I think we all want on both sides of this House: a transition with a political settlement, and a future for Syria that all Syrians can support.
Angus Robertson (Moray) (SNP)
I associate the Scottish National party and Plaid Cymru with the Prime Minister’s words of condolence and the resolve to tackle extremism. Will he update the House on how his taskforce will work with the Scottish Government, which has devolved responsibilities for a range of powers, from justice to education?
On Syria, does the Prime Minister acknowledge the important role the United Nations peacekeepers have played on the Golan Heights for the last 40 years? Does he also accept that one of the unintended consequences of his diplomatic initiative in the European Union is that there is a very real risk that those UN peacekeepers will be withdrawn, and is he not concerned about that?
The Prime Minister
I would not accept any linkage between UN peacekeepers on the Golan Heights and the change in the EU’s position on the arms embargo. That would be an entirely false analogy to draw and, no matter what individual countries might say, I am sure the UN would not take that view. On the issue of how we can best access the information and expertise of the Scottish Government, obviously they will be able to feed in thoughts to the taskforce that I will be chairing.
Mr Shailesh Vara (North West Cambridgeshire) (Con)
I welcome the Prime Minister’s initiative in setting up the taskforce to which he has referred. He will be aware, however, that many of the individuals concerned receive their training in camps in other countries. With that in mind, will he give an assurance to the House that when he next meets his counterparts from those countries, he will ensure that the question of the training of these individuals in their countries is very high on the agenda?
The Prime Minister
My hon. Friend is absolutely right. We have a problem of radicalisation, sometimes taking place in this country and sometimes via people on the internet, but also sometimes by people travelling to Pakistan, Somalia or elsewhere and going to camps to be trained as extremists, jihadis and violent extremists. That is a problem we cannot opt out of. We cannot just pretend it is something we have to deal with domestically. We need strong international action and international partnerships to do that.
Jeremy Corbyn (Islington North) (Lab)
Taking the Prime Minister back once again to the issue of Syria, there is a civil war going on in Syria and he is now proposing to arm part of the opposition, which will then create a further civil war within a civil war. There can only be a political solution, and that political solution has to involve all the neighbouring countries, including Iran. Will he put some real energy and effort into getting a conference going that includes all the neighbouring countries, to bring about peace and a resolution there, rather than fuelling this ghastly conflict?
The Prime Minister
Where I agree with the hon. Gentleman is that the right answer is a political solution—a political settlement. That is what this peace conference should be about; that is the effort I will be putting in at the G8 when Presidents Putin and Obama are both sitting around the table. Of course we should do that; it is the key. The question I would put back to the hon. Gentleman is: are we more likely to bring that about if Assad has a sense that he cannot win militarily? His current thinking is that he can, and we need to change that in order to deliver a Syria in which everyone can play a part.
Andrew Selous (South West Bedfordshire) (Con)
I strongly welcome what the Prime Minister said about shale gas; we had further good news about the UK’s reserves only this morning. Given that other countries such as Argentina are forging ahead and exploiting their reserves, when does the Prime Minister expect the United Kingdom to be able to exploit its reserves to a significant enough degree to make a real difference to our energy needs?
The Prime Minister
The potential of shale gas is an important point, and what was said today about our reserves was welcome news. We had a seminar in Downing street that suggested they could meet 5% to 10% of our gas needs, but these figures are regularly changing as people look at the available reserves. Clearly, regulatory permissions need to be sought in this country, and we also need to ensure that our own regulation and legislation are fit for purpose.
Glenda Jackson (Hampstead and Kilburn) (Lab)
Surely the primary concern of this House should not be with the combatants in Syria, but with those innocent civilians who are being slaughtered every day by either side. If there are additional funds to furnish yet more munitions into an area awash with weapons—in my view the equivalent of pouring oil on to an almost uncontrollable fire—surely that money would be infinitely better spent in affording yet more humanitarian aid to countries bordering Syria, which at the moment seem to be the only countries affording any kind of protection to the innocent.
The Prime Minister
Where I agree with the hon. Lady is on the fact that we should be leading the way on humanitarian aid, and I think that Britain can be very proud of the fact that we are doing so. We are sending millions of pounds of taxpayers’ money to make sure that people in camps—in Jordan and in Turkey—are properly looked after, and I have seen that with my own eyes. I return to the example in Bosnia: we can go on supplying more and more humanitarian aid, but that alone will not help to bring about a political solution. If we want to bring about a political solution, we have to demonstrate that Assad is not going to win this via military means. We have to get the parties to come together around the table, and I think that as we have recognised the Syrian national opposition as legitimate spokespeople for the Syrian people, we should be giving them that support.
Mr William Cash (Stone) (Con)
On the question of the EU and tax, will my right hon. Friend give the House an assurance that the proposals in the conclusions are not the thin edge of the wedge towards a Europe-wide tax regime and that in respect of UK taxation regarding multinationals, the City of London and others, the ambit of taxation will remain firmly within this national Parliament?
The Prime Minister
My hon. Friend is absolutely right to have raised this issue, because often people have said that the reason we cannot get proper information sharing and tax sharing between European Governments is that it is subject to a national veto, and we demonstrated at that Council that that is not the case. So there is no change to unanimity—this absolutely should be an area of national decision making—but what we do want in Europe is countries to come together to share that tax information, so that we can make sure that companies are properly paying their taxes.
Anas Sarwar (Glasgow Central) (Lab)
The UK stands united, irrespective of colour, faith or origin, in its condemnation of the brutal murder of Drummer Lee Rigby. Will the Prime Minister join me in paying tribute to people of all faiths in London and, in particular, to Lee Rigby’s family, who have spoken out in favour of unity and against those who seek to divide, be they religious extremists, the British National party, the English Defence League or the Scottish Defence League?
The Prime Minister
The hon. Gentleman puts it very well. It was very impressive how strong and unified the voices were right across our country—from Muslim organisations, from all sorts of organisations—all condemning this attack in the strongest possible terms and demonstrating that although the terrorists want to divide us, they cannot.
Mr Speaker
I call Dr Thérèse Coffey. [Interruption.] The hon. Lady did wish to catch my eye but—[Interruption.] She has been a bit slow, so we will get to her in a moment. I therefore call Mr James Duddridge.
James Duddridge (Rochford and Southend East) (Con)
Thank you for calling me, Mr Speaker; I knew I would be lucky.
Let me take the Prime Minister back to the issues of tax transparency. Will he please update the House on the progress being made on the extractive industries transparency initiative?
The Prime Minister
I am glad that my hon. Friend has asked that question, because although the EITI is a rather unromantic sounding organisation, it is very important if we are going to ensure, in particular, that the poorer countries in our world that have mineral wealth find it a blessing and not a curse. Too often in the past, countries have had money and resources taken away from them and have not benefited from them. We are signing the EITI, the French are doing the same and there is a major push at the G8 to ensure that other countries do that, too. In that way, we can ensure that developing countries make the most of their natural resources.
Chris Bryant (Rhondda) (Lab)
It is truly shocking that the Prime Minister has twice now refused to guarantee a vote on his Syria policy, but I want to ask about something completely different. On 21 July 2005, Hussain Osman planted a bomb in Shepherd’s Bush. Eight days later he was arrested in Rome and within weeks the European arrest warrant brought him back to face justice in this country. Is the Prime Minister really still considering leaving the European arrest warrant?
The Prime Minister
The hon. Gentleman will have to await the outcome of the important negotiations on the justice and home affairs issues. Clearly, it is important to ensure that we work together with international partners to ensure that people face justice.
Mr Mark Spencer (Sherwood) (Con)
Following the dreadful events in Woolwich, there has been an outpouring of support for our armed forces. Is the Prime Minister aware that on 29 June, Nottingham will play host to Armed Forces day? I am wearing a ribbon as part of Radio Nottingham’s campaign to add to the profile of Armed Forces day. Would the Prime Minister like to join that campaign?
The Prime Minister
I will certainly join that campaign. Armed Forces day is a really good initiative and I have been to the last few events—one of them in Plymouth and one in Edinburgh. I am sure that Nottingham will do an absolutely splendid job of celebrating our armed forces and all they do for our country. The day is a really good opportunity for communities to come together and say a very big thank you.
Mr Gerry Sutcliffe (Bradford South) (Lab)
The whole of the communities that make up Bradford condemn the killing of Lee Rigby and I am heartened today that the Prime Minister has talked about the searching questions that need to be asked about the variety of bodies in which there is radicalism. We need more than a tick-box exercise, and I know it will be more than that. We need to get to the heart of the problem, and to do so quickly. Following 7/7, cities such as Bradford in west Yorkshire had expertise in such matters. The big thing is that it is about talking not only to the Muslim communities but to the whole community, and about celebrating differences. Over the weekend in Bradford, some mosques have opened their doors to the wider community. We must do more of that to ensure that people understand. It is even about the use of language. Last week, Nick Robinson talked about people of “Muslim appearance”, and it is things such as that that we need to resolve.
The Prime Minister
To give credit to Nick Robinson—which is not something that I always want to do—he immediately blogged on his website and said that that was a mistaken phrase and that he should not have used it. He recognised that immediately, which was right. What the hon. Gentleman says about this being an opportunity for all communities to open up and understand more about each other is, I am sure, right, but I want to ensure that the taskforce also considers the specific actions that can be taken in respect of organisations that are getting it wrong.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
Thank you for your patience, Mr Speaker.
Let me ask the Prime Minister about energy, which was a big part of the EU Council. It is important that we take advantage and encourage the Commission to deregulate so that we can exploit our own resources not just in this country but in other countries, too, so that we are not reliant on states outside the European Union for our future energy needs.
The Prime Minister
I am glad that my hon. Friend has been recognised. She is absolutely right, and we should be making sure that we can meet more of our energy needs. That means making the most of what we have, whether that means replacing our nuclear power stations, making the most of technologies such as offshore wind or exploiting new technologies such as shale gas. There is a danger that the EU will try to over-regulate and over-second guess the market rather than allow it to develop.
Mr Ronnie Campbell (Blyth Valley) (Lab)
On tax evasion, what can be done with the British overseas territories, such as Gibraltar, that are advertising for the spivs, the fund managers and the banks? All money is going into those countries—our countries. What can we do to stop them?
The Prime Minister
I have some good news for the hon. Gentleman: because of the lead we have taken at the G8 and the new changes in the European Union, the Crown dependencies and overseas territories have all agreed to share proper tax information with the UK. That is quite an important breakthrough in ensuring that we have a fairer tax system.
Duncan Hames (Chippenham) (LD)
No doubt the Prime Minister intends the exploitation of European shale gas reserves to replace our dependency on imports of liquefied natural gas from unpredictable parts of the world. How does he propose to stop it crowding out investment in domestic sources of energy, notably renewables, which result in far fewer carbon emissions?
The Prime Minister
I am not a protectionist; I do not believe that the aim of policy should be to cut off the access that Britain has to liquefied natural gas, whether it is coming from Qatar or anywhere else. What we want is a competitive energy market where consumers can benefit from competition and low prices, but we also want security of supply. That is why it makes sense to look at shale gas, as well as imported gas, gas from the North sea, and the renewable technologies. We should be open to all these technologies, rather than simply trying to pick winners.
Fiona Mactaggart (Slough) (Lab)
The Prime Minister has just said that it is best to act internationally, if we can, to tackle tax evasion, but if he cannot get swift international agreement at the EU and the G8 later this month, is he prepared to act on his own?
The Prime Minister
We have frequently acted on our own on tax evasion. It is better if we can do these things internationally, because otherwise we are only tackling a part of the problem. The G8 is a great opportunity to bring countries together to do that, but if there is further action that we have to take unilaterally, so be it.
Dr Matthew Offord (Hendon) (Con)
In recent weeks, I have held many meetings with organisations, including the Community Security Trust, to talk about the issue of extremism on university campuses. In fact, on the day of the Woolwich murder, I met the vice-chancellor of Middlesex university to discuss a recent incident in my constituency. I tell the Prime Minister that not enough is being done to prevent radicalism on university campuses, and I ask him to meet me and representatives from the CST, so that we can tell him of problems where they exist, and remedies that may address them.
The Prime Minister
I am very grateful for what my hon. Friend says. I have met the CST relatively regularly. It is an excellent organisation, and I commend the work that it does to keep people in our country safe. I will look carefully at its research and at his work to see what more we can do.
Kelvin Hopkins (Luton North) (Lab)
Austerity policies are causing serious economic damage across the European Union. Among other things, they are causing mass unemployment, particularly among young people. We are now suffering from a threat of civil disorder, which has already started—even in peaceful Sweden. Was there any discussion at the EU Council of unemployment and the threat of civil disorder?
The Prime Minister
There was a discussion about unemployment because, of course, the rising unemployment in many European countries is an issue of huge concern. The rates of youth unemployment in some southern European countries, such as Spain, Portugal, Greece and Italy, are truly horrific, so more work will be done, including at the next European Council, to look at what lessons we can learn from each other—at what we can learn from countries such as Holland and Germany, which have very low rates of youth unemployment—and I will take a full part in those discussions.
Charlie Elphicke (Dover) (Con)
I congratulate the Prime Minister on the excellent work that he has done in the European Union on tax transparency. Has he had a look at the comments made recently by Tim Cook of Apple and Eric Schmidt of Google, who say that it is worth reworking the tax system as a whole and making it fit for the internet and globalised age? Would my right hon. Friend consider making it much simpler, and enabling a much lower rate of corporation tax, to make this country even more competitive?
The Prime Minister
I thank my hon. Friend very much for that question. Of course, we are cutting the rate of corporation tax down to 20%, and I think we therefore have an even greater right than usual to say to companies, “Look, we have a low tax rate in this country; you now really should be paying it.” The point that I would make is this: of course tax evasion is illegal, but I think there is a case for saying that very aggressive tax avoidance also raises moral issues that companies should consider. That is a conversation that I have had with the CBI and others, who back that view, but we should make it easier for these companies by having international agreements that make it easier for them to make the right choice.
Mr David Hanson (Delyn) (Lab)
Funding for the Prevent programme over the past three years has faced public sector pressures, as have many Departments. In policing alone, the funding has fallen from £47 million to £18 million. Will the Prime Minister agree to look at the Prevent strategy again, and to publish alongside it what he believes the envelope should be for funding that stream of activity?
The Prime Minister
I think I am right in saying that for the past three years Prevent funding has been £39 million in the past year, £36 million in the previous year and £37 million in the year before that, but much of the responsibility for spending and for the individual choices is for local authorities. Of course there are always issues of resources, but there are equally important issues about making sure that we have the right policy and take the right approach in combating both extremism and violent extremism.
Mr Speaker
Order. I am keen to accommodate remaining colleagues but there is some considerable pressure on time. Therefore I am looking for a sharp mind and pithy expression, and I need look no further than Dr Julian Huppert.
Dr Julian Huppert (Cambridge) (LD)
The Prime Minister is right to say that we should not be cowed by terror and to reject knee-jerk reactions. Will he therefore join me in criticising those who seek to make use of the brutal murder of Drummer Rigby as a reason to advocate the full powers of a snoopers charter, which would not have prevented this tragedy from happening but would treat us all as suspects?
The Prime Minister
I do not think it is helpful to refer to taking action on communications data as a snoopers charter. We use communications data now—our police and Security Service use it now to combat rape, to trace children who have been abducted, to combat murder. In 95% of serious crimes, the police are using not the content of a phone call, but the data about the phone call—when it was made and who it was between. That is vitally important and we must have a mature and grown-up debate in this House about what we do as telephony moves on to the internet. If we do not have that debate, we are not keeping our country safe.
Nia Griffith (Llanelli) (Lab)
I welcome the pan-European resolve to tackle aggressive tax avoidance, but can the Prime Minister tell us whether on 20 May he used his resolve to challenge Eric Schmidt on Google’s behaviour in that respect?
The Prime Minister
As I said at the press conference after the EU Council, I raised at the meeting of my business advisory council my G8 agenda on tax transparency and aggressive tax avoidance and said how important it was that companies followed that, and Eric Schmidt contributed to that conversation. He supported the steps that we are taking in the G8, which is welcome. There is an important point here: one country taking action on its own will not solve the problem. We need to make sure that we do this not just across the EU, but in the G8.
Mr Ben Wallace (Wyre and Preston North) (Con)
When our security services and the police are trying to piece together a terrorist attack, they need to pore over comms data to find out where and when events were planned and by whom. Will the Prime Minister make it clear to those who oppose the comms data proposals that far from being a knee-jerk reaction, those proposals were first mooted in 2007 by the previous Government, who produced a draft Bill, and that this Government produced a draft Bill way before the recent attack?
The Prime Minister
My hon. Friend makes an important point. The draft Bill that we produced also had huge amounts of pre-legislative scrutiny. We have to recognise that there will always be civil liberties concerns about this issue, so we should look at how we can start moving the debate on, recognising that a block of telephony is covered by fixed and mobile telephony. As we move to more internet-based telephony, how are we going to help the police deal with that? We may have to take this in short steps, so that we can take the House with us and listen to concerns about civil liberties, but I am convinced that we have to take some steps, otherwise we will not be doing our job.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
I welcome the statement from the European Council and the Government, which says that proper information on “who really owns and controls each and every company” will be provided. Will the Government co-operate with the Scottish Affairs Committee in establishing who owns and controls the great landed estates in Scotland, in order that they can minimise both tax avoidance and subsidy milking?
The Prime Minister
That is the intention of this move. Having all countries sign up to an action plan for putting together registers of beneficial ownership by companies and the rest of it will help tax authorities to make sure that people are paying tax appropriately. That is a debate that we are leading at the G8 and in the European Union, and that should apply—we hope—to every country.
Alec Shelbrooke (Elmet and Rothwell) (Con)
Some of the comments that I received after the Woolwich attack could perhaps be most generously described as reactionary. Does my right hon. Friend agree that those who pick on a religion and the people of that religion would do better by visiting Auschwitz-Birkenau and understanding where intolerance may lead? Above all, it should be recognised that these people are no more than cold-blooded psychopathic murderers.
The Prime Minister
My hon. Friend puts it very well. The point is that there is nothing in Islam that can justify that appalling level of violence. Islam is a religion of peace and we should show respect to Muslim communities and people of the Muslim faith by recognising that and repeating it. As we do that, we also need to recognise that there is a problem with a perversion of Islam that is being used to poison young minds, and we will not defeat that ideology unless we take it on, argue against it and clear it out of universities, Islamic centres and other parts of our country. That is the battle we need to be engaged in, but we will not win the battle unless we take Muslim communities and British Muslims with us. I believe that we can.
Heidi Alexander (Lewisham East) (Lab)
Last week, the Lewisham Islamic centre discovered that it was the intended destination of a BNP march, which was subsequently rightly restricted to central London. Does the Prime Minister agree that following the horrific murder of Drummer Lee Rigby, now is the time for all of us to stand with the vast majority of Muslims for whom the actions of Michael Adebowale and Michael Adebolajo were an affront to their religion as much as an affront to our shared way of life?
The Prime Minister
The hon. Lady is absolutely right to say that the actions that were taken were not representative of Islam or Britain’s Muslim communities, the Muslim religion, or anything to do with Islam, which is a religion of peace. She is also right to say how important it is that we take action to stop marches and whatever when they are going to inflame tensions and passions in the way that she says.
Henry Smith (Crawley) (Con)
Tomorrow, Defence Secretaries from across NATO member countries meet in Brussels. Whether it be Syria or any other international security issue, may I seek reassurances from my right hon. Friend that NATO remains the cornerstone of our international defence, not the European Union?
The Prime Minister
My hon. Friend is absolutely right. NATO is the cornerstone of the UK’s defence and should remain as such. It has been very important to try to stop the EU in its endless efforts to try to duplicate NATO’s military structures. That is not at all helpful or sensible.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I appreciate that the Prime Minister has set up the taskforce, which is an important step, but we know that most of the real issues are at a very local level. What support and discussion will the taskforce provide for people such as parents, teachers and other community leaders who spot someone who is being radicalised and need help then and there? Perhaps the forced marriage unit could be used as an example, as head teachers locally tell me that it does very good work in this respect.
The Prime Minister
The hon. Lady is absolutely right that in order to respond to the challenge we need not just national taskforces and speeches and a narrative about how we confront violent extremism, but for that to filter down to the local level. We need local councils to take action as well, and to make sure that they support good practice in schools and help parents who are getting into trouble, and all the rest of it. We need to make it easier for people to seek help when they need it and to recognise the signs of radicalisation in their communities.
Dan Byles (North Warwickshire) (Con)
I, too, welcome the Prime Minister’s strong support for developing UK shale gas. Is he aware of the comprehensive Institute of Directors report published last month which showed that a UK shale gas industry could support up to 74,000 direct and indirect jobs, and that by 2030 it could supply up to a third of UK peak gas demand?
The Prime Minister
My hon. Friend makes an important point. I have not seen that specific report, but I will seek it out. Different conditions apply in America, but one sees there the growth of an enormous industry employing thousands of people, lowering energy costs, making the country more competitive, and ending much of its reliance on gas from overseas. We would be really foolish if we did not learn from that.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
How many other EU member states supported the UK Government in their wish to end the arms embargo on Syria? Is there not a danger that our Government’s policy, and that of France it would appear, is likely to result in a Europe more divided on the issue, thereby weakening our ability to influence a successful outcome to the proposed peace conference?
The Prime Minister
At the European Council for Heads of State and Government, which I attended, there was not a long discussion about the Syrian arms embargo. The work was done by my right hon. Friend the Foreign Secretary. There was strong support, though, from the French Government and there was some support from the Italian Government. Some of those countries that have newly joined the EU from the Balkans recognise the arguments that I was making about the mistakes that the west made with respect to Bosnia, so it is important to listen to them as well. The point about the EU arms embargo—this may be a point that colleagues on the Government Benches will particularly recognise—is that we decide our foreign policy as a nation state. In Europe, if we can agree something unanimously, we can have a combined position, but in the end this is something that we decide as an independent nation state.
Andrew Jones (Harrogate and Knaresborough) (Con)
I thank my right hon. Friend for his comments on the single market in energy. Does he agree that it is important to prioritise the safe exploitation of shale gas, as the opportunity for a cut in energy costs would be significant, especially for the manufacturing industry? That would bring a disproportionate benefit to communities in the north, which have a proud tradition of manufacturing.
The Prime Minister
My hon. Friend is absolutely right. The figures are striking if we look at what happened with shale gas exploration in the US and at how much of their energy it is now supplying and the effect it has had on their gas prices. Their gas prices are now half the level of those in the UK, so this is an important industry for consumers and for our competitiveness.
Mr William Bain (Glasgow North East) (Lab)
It has been revealed in its five most recent years of published accounts that on UK revenues of £11.5 billion, Google paid less than £11 million in tax over that period. If the Prime Minister is to offer the right leadership on the issue at the G8 and the EU Council, does he not have to admit to the country that that is just plain wrong? [Interruption.]
The Prime Minister
As someone behind me has just said, that is what happened under Labour. We need to make sure that we put in place rules, regulations, transparency and international action to ensure that companies pay their taxes properly. What I am pleased about is that over the past year, we have made some real progress on this agenda.
Sir Bob Russell (Colchester) (LD)
Twenty-four hours before Drummer Rigby’s murder, I bid farewell to the last Ministry of Defence police officer at Colchester garrison. Some 33 MOD police once provided security to military families in Colchester, but the Labour Government started the process of scrapping that dedicated service. In noting the Prime Minister’s support for the armed forces covenant, and in the absence of any Defence Minister, will he order the immediate reinstatement of MOD police at Colchester garrison?
The Prime Minister
I will ask the Ministry of Defence to look carefully at that. MOD police do important work, but as a House of Commons and a country we should be frank about the fact that our communities positively welcome having military bases and barracks at their heart. That is what I found in Woolwich and what I find in my own constituency with RAF Brize Norton. We should recognise that we do not protect our services by surrounding them with some ring of steel; we protect our services because we love and revere what they do.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
On Syria, like many Members and many people across the country I am increasingly uneasy about the potential escalation of the conflict with the lifting of the EU arms trade embargo. It seems a bit like cat and mouse tactics. I urge the Prime Minister to focus—I am sure that he is doing so—on the peace conference and a negotiated peace settlement. What plans are there, and what discussions have taken place, concerning support for Syria’s post-conflict position? We must learn the lessons from history, as other Members have said.
The Prime Minister
The hon. Lady is absolutely right. Any peace process worth its name has to start with a peace conference, getting the parties around the table and trying to work out the elements of the Syrian opposition and the Syrian Government that could form a transitional Government, but then we have to plan what the Syrian Government and a Syrian political settlement will look like afterwards. One of the lessons from history is that we do not want to see the institutions of the state destroyed. We want to see them properly serving the people.
Philip Davies (Shipley) (Con)
Did the Prime Minister mention at the EU Council the private Member’s Bill promoted by my hon. Friend the Member for Stockton South (James Wharton)? Did he make it clear that if the British people voted in any in/out referendum to leave the EU, that result would be accepted and we would not keep having a rerun of the referendum, as the EU normally does until it gets the result that it wants? If he did not make that clear, would he like to take this opportunity to do so?
The Prime Minister
My hon. Friend will be pleased to know that there was some interest among my fellow Heads of Government in the private Member’s Bill. I absolutely agree that we must have a referendum, not a neverendum. It is very important that, as with the referendum about Scotland’s future in the United Kingdom, we give the people the chance to decide and then obey their decision.
Jim McGovern (Dundee West) (Lab)
The Prime Minister mentioned the Government taskforce, and I think he said he would welcome input from the Scottish Government via the hon. Member for Moray (Angus Robertson), and also consider including membership for my right hon. Friend the Member for Salford and Eccles (Hazel Blears). Will it be a Government taskforce or a cross-party taskforce?
The Prime Minister
Let me be clear in case I have misled anyone. It is a Government taskforce, but it should listen to the expertise of people who have ideas and policies to help us tackle radicalisation. There are individuals in our country who have been radicalised, but who have seen the light and now realise how their minds were poisoned and have written persuasively about the issue. There are also Members of the House—I singled out the right hon. Member for Salford and Eccles (Hazel Blears) because she did such good work in government on this issue, and it would be worth while listening to her as well. That is how it will work. It is a Government taskforce but it will, of course, listen to the best ideas, wherever they come from.
Rehman Chishti (Gillingham and Rainham) (Con)
As someone from a Muslim background whose father was an imam, I very much welcome the statement from the Prime Minister. Will he reiterate that the actions of those two criminal thugs has nothing whatsoever to do with Islam and the Muslim community?
On Syria, will my right hon. Friend clarify what role he sees President Assad playing in any transitional Government, as that was not dealt with at the Geneva conference?
The Prime Minister
I thank my hon. Friend for what he says and confirm that, in my view, the acts that took place on the streets of Woolwich had nothing to do with Islam, nothing to do with Muslim Britain, and nothing to do with this religion of peace. My hon. Friend knows that as well as anyone.
I do not believe that President Assad can play a part in a transitional Government. We need a process so that people can see that elements of the Alawite community and the Syrian national opposition are properly represented, and so that people in Syria are able to unite behind a transitional Government. In my view, someone who has seen the murder of up to 80,000 people, the destruction of so many communities and the use of chemical weapons has no part to play in the Government of a civilised country.
Andrew Bridgen (North West Leicestershire) (Con)
On the inside cover of Chairman Mao’s little red book of revolutionary war, which remains a terrorist handbook, are printed only five words: “Kill one, intimidate a nation.” Does my right hon. Friend agree that our nation will never be intimidated by acts of extremists, be they from the Muslim community, the English Defence League, or anybody else?
The Prime Minister
My hon. Friend is absolutely right. Regrettably, this country has suffered from terrorists over many years. We suffered dreadfully at the hands of the IRA, but I think that taught us a lesson that if we stand true to our principles, we stand up for freedom and democracy and the terrorists can never win.
Mr David Nuttall (Bury North) (Con)
As my right hon. Friend the Prime Minister may be aware, Drummer Lee Rigby joined the Army as a cadet in the borough of Bury, which has long and historic links with the Royal Regiment of Fusiliers. Will my right hon. Friend join me in paying tribute to all those in Bury who have paid their respects and sent their condolences to his family, in particular the peaceful and law-abiding members of the Muslim community in Bury who are just as shocked and horrified at this heinous crime as those of other faiths and those of none?
The Prime Minister
My hon. Friend says it all, and it is fitting that his should be the last contribution—[Interruption.] I am so sorry; I am sure the contribution of my hon. Friend the Member for Kettering (Mr Hollobone) will be equally fitting. My hon. Friend the Member for Bury North (Mr Nuttall) made an important point about the connection that our communities feel to our armed forces, which is felt by people from every community, including the British Muslim community. Let us not forget how many British Muslims serve in Britain’s armed forces.
Mr Philip Hollobone (Kettering) (Con)
Following the question from my hon. Friend the Member for Bury North (Mr Nuttall), Her Majesty’s armed forces represent and promote the very best of British values, yet it is a sad fact that Muslim recruits can face estrangement from their friends and family if they sign up. In the wake of the hateful murder of Drummer Rigby, what more can we do to promote Muslim support for, and participation in, Her Majesty’s armed forces?
The Prime Minister
My hon. Friend raises an important point. First, we should pay tribute to British Muslims, Sikhs and Hindus who serve in our armed forces and the brave things that they do. I argue that for all institutions—the Army, just as for a political party, the judiciary or anyone else—it is not enough just to open the doors and invite people in. We need to get out into minority communities and encourage people to join up and serve. Only when people see others from their background and community serving in the Army or on these Benches in politics will they truly feel empowered to do the same. As I said, that is a very good point on which to end.
Mr Speaker
I thank the Prime Minister, the Leader of the Opposition and all 62 Back Benchers who took part in those exchanges.
Energy bill (Programme) (No. 2)
Motion made, and Question put forthwith (Standing Order No. 83A(9)),
That the Order of 19 December 2012 (Energy Bill (Programme)) be varied as follows:
(1) Paragraphs 4 and 5 of the Order shall be omitted.
(2) Proceedings on Consideration and Third Reading shall be concluded in two days.
(3) Proceedings on Consideration shall be taken on each of those days as shown in the following Table and in the order so shown.
(4) Each part of the proceedings shall (so far as not previously concluded) be brought to a conclusion at the times specified in relation to it in the second column of the Table.
Table | |
|---|---|
Proceedings | Time for conclusion of proceedings |
First Day | |
New Clauses and new Schedules relating to electricity market reform other than any relating to electricity demand reduction, amendments to Part 2 other than amendments 1, 10, 34 to 47, 51 and 100, New Clauses and New Schedules relating to nuclear regulation, amendments to Part 3, amendments to Part 5 and amendments to Clauses 121 to 125. | 7 pm |
Amendments to Clause 126 and Schedule 14. | 10 pm |
Second day | |
New Clauses and new Schedules relating to decarbonisation, amendments to Part 1 and remaining amendments to Clause 5. | 4 pm |
New Clauses and New Schedules relating to electricity demand reduction and remaining proceedings on Consideration. | 6 pm |
(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on the second day.—(Gregory Barker.)
Question agreed to.
Energy Bill
19:01 - The House divided: - Ayes: 232 / Noes: 287 - Question accordingly negatived.
19:17 - The House divided: - Ayes: 20 / Noes: 503 - Question accordingly negatived.
19:34 - The House divided: - Ayes: 225 / Noes: 298 - Question accordingly negatived.
19:47 - The House divided: - Ayes: 227 / Noes: 304 - Question accordingly negatived.
20:38 - The House divided: - Ayes: 217 / Noes: 276 - Question accordingly negatived.
20:50 - The House divided: - Ayes: 213 / Noes: 280 - Question accordingly negatived.
The Minister of State, Department of Energy and Climate Change (Michael Fallon)
I beg to move, That the clause be read a Second time.
Mr Speaker
With this it will be convenient to discuss the following:
Government new clause 9—Capacity market rules: procedure.
Government new clause 10—Capacity market rules: further provision.
New clause 5—Expert panel—
‘Schedule [The Expert Panel] has effect.’.
New schedule 1—
‘The Expert Panel
1 Regulations shall establish a panel of experts (in this Act referred to as “the Expert Panel”) in accordance with paragraphs (2) to (6) below.
Duty to consult
2 (1) Regulations made by virtue of paragraph 1 shall provide that before—
(a) any contracts for differences are entered into under Part 1; or
(b) any investment contracts are entered into under Schedule 3
the Secretary of State shall seek advice from, and the opinion of, the Expert Panel in relation to the matters specified in sub-paragraph (2) below.
(2) The matters in relation to which advice and opinion is to be sought from the Expert Panel are—
(a) any advice provided to the Secretary of State by the national system operator;
(b) the financial and other terms on which it is proposed a contract for difference or an investment contract be entered into;
(c) whether the agreed strike price (or equivalent) and the term of the contract represents value for money for consumers; and
(d) whether, in all the circumstances, it is appropriate for the CFD Counterparty to enter into the relevant contract.
(3) Where the Secretary of State proposes to disregard in whole or in part any of the advice or opinion provided by the Expert Panel, he shall be under a duty to ensure the Expert Panel is provided with his reasons for disregarding or disagreeing with the advice or opinion and place a copy of the reasoning in the Library of the House.
3 (1) provide that it shall be the duty of the Secretary of State and the national system operator to provide the Expert Panel with all such information as it may require;
(2) require the Expert Panel to provide the Authority and Parliament with details of any advice and opinion provided under this Part;
(3) require the Expert Panel to publish minutes of its meetings; and
(4) permit the Expert Panel to publish such information as the Expert Panel thinks fit about the advice it gives.
Membership etc. of the Expert Panel
4 The members of the Expert Panel shall be appointed by the Secretary of State and shall comprise a Chairman, a consumer representative, a representative of the Committee on Climate Change, a representative of the Authority and such other members as the Secretary of State may decide.
5 (1) In appointing persons to be members of the Expert Panel, the Secretary of State must secure, so far as practicable, that the Expert Panel—
(a) is independent; and
(b) is comprised of technical, academic, economic, legal and such other experts necessary to give the informed advice required.
(2) The Expert Panel must not include any person who is—
(a) employed by an eligible generator, or who has been employed by an eligible generator in the previous 12 months;
(b) employed by an electricity supplier, or who has been employed by an electricity supplier in the previous 12 months; or
(c) employed by the national system operator.
(3) The Chairman and every member of the Expert Panel—
(a) shall be appointed for a fixed period, specified in the terms of their appointment, but shall be eligible for reappointment at the end of that period;
(b) shall not serve on the Expert Panel for longer than eight years in total;
(c) may at any time be removed by a notice from the Expert Panel to the Secretary of State following a majority vote.
Committees and other procedures of the Expert Panel
6 The Expert Panel may make such arrangements as they think fit—
(a) for committees established by the Expert Panel to give advice to it about carrying out the Expert Panel’s functions, providing such committees only include persons who are members of the Expert Panel;
(b) for regulating its own procedure and for regulating the procedure of committees established by them, including timescales of giving advice, as it sees fit;
(c) as to quorums and the making of decisions by majority.’.
Amendment 162, in clause 5, page 4, line 42, at end add—
‘with predominating weight given to (2)(c) the cost to consumers.’.
Government amendment 52.
Amendment 163, in clause 6, page 5, line 21, at end insert—
‘(c) which is a public document and will be made available, together with all related documents, by the Secretary of State and the parties to the contract.’.
Amendment 23, page 5, line 28, at end insert—
‘, with the exception of electricity generated from nuclear power stations’.
Amendment 32, page 5, line 29, at end insert—
‘ “Biomass” means fuel used in a generating station where—
‘(a) at least 90 per cent of its energy content is derived from relevant material (that is to say, material which is, or is derived directly or indirectly from, plant matter, animal matter, funghi or algae), and
(b) if fossil fuel forms part of it—
(i) the fossil fuel is present following a process—
(aa) to which the relevant material has been subject, and
(bb) the undertaking of which has caused the fossil fuel to be present in, on or with that material even though that was not the object of the process; or
(ii) it is waste and the fossil fuel forming part of it was not added to it with a view to its being used as a fuel.
“Qualifying combined heat and power generating station” means a combined heat and power generating station which has been accredited under the CHPQA.’.
Government amendments 53 to 60.
Amendment 33, in clause 10, page 8, line 28, at end insert—
‘(10) A direction may not be given under this section to a fossil fuel or renewable energy plant with a rated capacity of 15MW or greater that use any biomass unless they are—
(a) a qualifying combined heat and power generating station; or
(b) an operational carbon capture and storage plant.’.
Government amendment 61.
Amendment 24, in clause 11, page 8, line 37, at end insert—
‘(3) Payments offered under a contract for difference relating to the supply of electricity generated by nuclear power must not exceed payments offered under any contract for the supply of electricity from renewable sources.
(4) For the purposes of subsection (3)—
(a) the calculation of payments must include both the strike price and the duration of the contract;
(b) renewable sources are defined in accordance with Article 2 of Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources.’.
Government amendments 62 to 65.
Amendment 152, in clause 17, page 11, line 6, at end insert—
‘(2A) In determining for the purposes of an order under subsection (1) whether the maximum cost provided for by the order has been reached, or a cost greater than that maximum would be incurred, a cost is to be taken into account if, and only if, it has been incurred, or is to be incurred, in connection with low carbon electricity generation.
(2B) The Secretary of State may give a direction suspending the effect of an order under subsection (1) for such period, and in relation to costs of such description, as are specified in the direction.
(2C) Before giving a direction under subsection (2B) the Secretary of State must consult such persons as the Secretary of State thinks appropriate.’.
Amendment 164, in clause 18, page 11, line 33, at end insert—
‘(i) All consumers of electricity upon whom the costs of the regulations will fall.’.
Amendment 27, page 11, line 35, at end insert—
‘(3) Before making regulations under this Chapter which relate to nuclear electricity generation, the Secretary of State must ask the National Audit Office to carry out an examination of and produce a report on whether the terms of the contract for difference offer value for money.
(4) The Secretary of State may ask the National Audit Office to carry out an examination and produce a report on the terms of a contract relating to non-nuclear generation.
(5) The National Audit Office report and recommendations must be published one month before a contract is laid before Parliament.’.
Amendment 48, in clause 21, page 12, line 40, at end insert—
‘capacity may be secured by capacity auctions or by the establishment of a strategic reserve or by other means’.
Amendment 165, in clause 22, page 13, line 15, after ‘agreement’ insert—
‘is a public document to be made available, together with all related documents, by the Secretary of State and the parties to the agreement; and’.
Government amendments 101 and 102.
Amendment 29, in clause 22, page 13, line 21, at end insert—
‘(2A) Electricity capacity regulations may not make provision in respect of fossil fuel plants.
(2B) For the purposes of subsection (2A) “fossil fuel plant” means an electricity generating station which satisfies the conditions in Chapter 8, Section 42(4)(b).’.
Amendment 28, page 13, line 23, at end insert—
‘(3A) Capacity agreements may not be made in respect of nuclear electricity generation.’.
Amendment 49, page 14, line 6, at end insert—
‘(e) conferring on the Secretary of State the power by regulation to introduce a system of strategic reserve of supply; and
(f) conferring on The Secretary of State by regulation the power to designate a nominated person to hold and manage the Strategic Reserve on his behalf (“the Strategic Reserve Operator”).’.
Government amendment 103.
Amendment 50, page 14, line 9, at end add—
(a) A person is eligible to be designated as the Strategic Reserve Operator if the person is—
(i) a company formal and registered under the Companies Act 2006; or
(ii) a public authority, including any person whose functions are of a public nature.
(b) The Strategic Reserve Operator must contract with the System Operator for the circumstances under which the Strategic Reserve Operator supplies power to the System Operator.
(c) The Secretary of State must approve the drawing up of any contract between the System Operator and the Strategic Reserve Operator and may from time to time vary the terms of the contract should circumstances require.
(d) The Secretary of State must lay before Parliament a reasoned case for any change of content under subsection (5).
(e) Strategic Reserve regulations may make provision for payments to be made by electricity suppliers or capacity providers to a settlement body for the purposes of enabling the body—
(i) to meet such descriptions of its costs that the Secretary of State considers appropriate;
(ii) to hold sums in reserve;
(iii) to make payments to the Strategic Reserve Operator for the purpose of securing and operating Strategic Reserve capacity.’.
Government amendment 104.
Amendment 166, in clause 27, page 15, line 40, leave out ‘may’ and insert ‘must’.
Government amendments 105 to 107.
Amendment 94, in page 23, line 5, leave out clause 38.
Amendment 151, in clause 38, page 23, line 34, at end add—
‘(5) The Secretary of State may not exercise the power under subsection (1) if the consequence would be to raise the price of electricity for consumers.’.
Amendment 153, in clause 41, page 25, leave out lines 35 to 42.
Amendment 154, page 27, leave out lines 9 and 10.
Amendment 155, page 28, line 17, leave out ‘may’ and insert—
‘must, so as to make good the shortfall,’.
Amendment 156, page 27, line 14, before ‘make’, insert—
‘and insofar as subsection (12) applies must,’.
Amendment 157, page 29, line 8, leave out subsection (6).
Amendment 158, page 29, line 7, leave out ‘(10)’ and insert ‘(9)’.
Amendment 159, page 34, leave out from line 8 to end of line 37 on page 35.
Amendment 160, page 36, leave out from line 1 to end of line 46.
Amendment 161, page 37, leave out lines 18 and 19.
Amendment 167, page 36, line 5, leave out ‘the costs’ and insert ‘the publicly substantiated costs’.
Amendment 168, page 36, line 8, leave out ‘the income’ and insert ‘the publicly substantiated income’.
Amendment 169, page 36, line 24, at end insert—
‘(g) the costs to consumers’.
Amendment 170, page 38, line 10, leave out
‘A certificate purchase order may provide for’
and insert—
‘A certificate purchase order will require at least the same level of information as required under the Renewables Obligation and may provide for’.
Amendment 171, page 38, line 37, leave out ‘may’ and insert ‘must’.
Amendment 172, page 38, line 38, leave out ‘subsection (3)’ and insert ‘Section 32X’.
Amendment 95, in page 42, line 27, leave out clause 42.
Amendment 173, in clause 42, page 42, line 28, at beginning insert—
‘Unless the Secretary of State or the Regulator permits otherwise in the consumer interest,’.
Amendment 174, page 42, line 31, leave out ‘7.446’ and insert ‘8.760’.
Amendment 179, page 42, line 35, at end insert—
‘( ) Section 42(1) is not to apply in relation to CCS plant until completion of the commissioning and proving period that shall last no longer than 3 years.’.
Amendment 150, page 42, line 36, leave out ‘2044’ and insert ‘2029’.
Amendment 96, in page 43, line 41, leave out clause 43.
Amendment 175, in clause 43, page 43, line 43, at end insert—
‘or significant risk of other disadvantage to the consumer.’.
Amendment 97, in page 45, line 14, leave out clause 44.
Amendment 98, in page 45, line 32, leave out clause 45.
Amendment 99, in page 46, line 36, leave out clause 46.
Amendment 176, in clause 50, page 50, line 16, leave out
‘As soon as is reasonably practical’
and insert ‘Within one month’.
Amendment 177, page 50, line 16, leave out ‘five years’ and insert ‘one year’.
Government amendment 66.
Amendment 178, page 50, line 31, at end insert—
‘(d) assess and detail the impact on electricity prices to the various classes of consumers of the measures described in the Act.’.
Government amendments 119 to 125.
Amendment 21, in clause 121, page 92, line 15, leave out from ‘objects’ to end of line 17.
Amendment 22, page 92, line 17, at end insert—
‘(f) requiring a licence holder to ensure that—
(i) customers on prepayment meters shall be charged the lowest tariff available from that licence holder;
(ii) no more than 20 per cent. of each payment made goes towards meeting outstanding debt.’.
Government amendments 126 to 133, 68 and 134.
Amendment 26, page 106, line 40, in schedule 2, at end insert—
‘(2A) Before entering into an investment contract, the Secretary of State must ask the National Audit Office to carry out an examination of and produce a report on whether the terms of the contract offer value for money.
(2B) The National Audit Office report and recommendations must be published one month before a contract is laid before Parliament.’.
Government amendment 71.
Amendment 25, page 107, line 43, in schedule 2, at end insert—
‘(6A) An investment contract may not include provision to underwrite or provide state guarantees for all or part of the construction costs of nuclear generation plants.’.
Government amendment 72.
Amendment 9, page 108, line 24, at end insert—
‘( ) For the purposes of paragraphs 1 and 2, information is “confidential information” only if it constitutes a trade secret.’.
Amendment 8, page 108, line 26, leave out paragraph 3.
Government amendments 73 to 90.
Amendment 148, page 119, line 13, in schedule 4, at end insert—
‘(iii) substantial pollution abatement equipment dealing with oxides of sulphur, oxides of nitrogen, heavy metal emissions or particles is fitted to the generating station.’.
Amendment 149, page 119, line 39, leave out ‘42(5)(b)’ and insert ‘42(6)(b)’.
Michael Fallon
I rise to speak to Government new clauses 8, 9 and 10, and Government amendments 52 to 66, 68, 71 to 90, 101 to 107, and 119 to 135. I should also like to respond to the amendments tabled by hon. Members. I ask the indulgence of the House if my speech is necessarily fuller than it might be so that I can do justice to each of the six main areas in the group, namely the transparency of investment contracts; the counterparty arrangements; the capacity market; nuclear power; other issues including biomass, emissions performance standards and the costs of electricity market reform; and consumer tariffs.
I thank Opposition Members and other hon. Members for their contributions in Committee. The Minister of State, Department of Energy and Climate Change, my right hon. Friend the Member for Bexhill and Battle (Gregory Barker), said at the time that the Bill needed clear accountability and that Parliament must have the information it needs to scrutinise the delivery of electricity market reform properly.
New clause 5 and new schedule 1 seek to establish an expert panel to scrutinise electricity market reform. Let me assure hon. Members that development of the contracts for difference and investment contracts will be informed by close consultation with relevant experts. We have already taken a number of steps in that regard, which is why I suggest that new clause 5 and new schedule 1 are unnecessary.
Our decisions on strike prices for CFDs will be informed by analysis from the National Grid. The robustness of that analysis will be scrutinised by an independent panel of technical experts who will report to the Government. Their report will be published. Any divergence of opinion between the panel, the Government and National Grid will be reported and explained. Given the existing role of the panel of technical experts, I do not see a wider remit for another expert panel to look at CFDs.
I agree that investment contracts should be subject to rigorous scrutiny and the best available advice, which they will be. For investment contracts relating to renewables projects, I am minded to use the draft CFD strike prices informed by the robust process just outlined. For other low-carbon technologies, which are bilaterally negotiated, specialist advice will be sought as appropriate and there will be rigorous scrutiny. For example, for Hinkley Point C we have appointed technical and financial specialists to advise on whether any proposal represents value for money. We will publish details of that contract when and if it is negotiated.
Mr Mike Weir (Angus) (SNP)
I am listening closely to the Minister. Does he share the worries of many hon. Members? The Bill will presumably finish its progress in the House tonight, but we still do not know what the strike prices are. We have been promised the publication of a document setting out details including strike prices for months, but it keeps being put back. I am told that it will not appear before July. Does the Minister understand the concern about the transparency of the process because we will not know what the strike prices are before the Bill completes its passage?
Michael Fallon
The Bill is before the House today and tomorrow, and has some way to go before it completes its passage through Parliament. Let me assure the hon. Gentleman that he will have an indication of the draft strike prices before the Bill completes its passage. If he will allow me, I want to say more in a moment about how we can improve transparency.
Amendments 8 and 9, tabled by the right hon. Member for Don Valley (Caroline Flint) and the hon. Members for Rutherglen and Hamilton West (Tom Greatrex) and for Liverpool, Wavertree (Luciana Berger), focus on the important issue of transparency of investment contracts. The Bill requires all investment contracts to be laid before Parliament alongside a statement of their importance to Government objectives. For Hinkley Point C, we have also committed to publishing summaries of reports from our external advisers. There is a difficult balance to be struck between publishing as much as possible about a contract, while also allowing some commercially sensitive information to be withheld from publication. It is crucial that developers provide the information we need to show that a contract represents value for money, but it would be inappropriate to publish information that damages a developer’s commercial interests.
This point is relevant to amendments 163, 165, 166, 171 and 172, which were tabled by my hon. Friend the Member for Daventry (Chris Heaton-Harris) and relate to information acquired or produced under the Bill. It would not be appropriate to release commercially confidential information provided under the provisions, but let me reassure the House and the hon. Member for Angus (Mr Weir) that we will publish details on the CFDs and capacity agreements signed each year through annual updates to the EMR delivery plan, and details of how much of the budget has been expended. Secondary legislation, such as that under the capacity market provisions, will set out details of the information flows, transparency and handling of sensitive information. That includes information acquired under clause 27. Ofgem will continue to publish information gathered from generators about the biomass they have used.
John Robertson (Glasgow North West) (Lab)
On the rules governing what is considered sensitive, who will set the criteria: the companies themselves or the Government?
Michael Fallon
The judgment will be one for the Government, and I want to come on to a proposal on that. I also want to assure my hon. Friend the Member for Daventry, in relation to amendment 164, that there will be public consultation on the draft regulations in the autumn. On amendment 170, relative to what is currently required under the renewables obligation, we would remove only redundant information requirements under the fixed price certificate scheme. However, in answer to the hon. Member for Glasgow North West (John Robertson), I am mindful of the points made in Committee on the need to maximise transparency.
There are a number of other improvements we can make to investment contracts. First, following the good points made in Committee by the hon. Member for Brent North (Barry Gardiner) on the distinction between withholding and redacting information, I will make a commitment to publish a description of any information that is withheld and the reason for that. Secondly, I have tabled amendments 71 and 72, which remove the Secretary of State’s discretion to withhold information from a contract after it has been agreed, but before it is laid before Parliament. That means that any confidential information will have to be clearly identified as such during contract negotiations, and there is no further discretion then to withhold information once those are concluded.
Martin Horwood (Cheltenham) (LD)
The Minister is, however, describing a process in which information is published and laid before Parliament after the contracts have been signed. If, as is likely in the case of Electricité de France, we are talking about a 30-year contract, does he agree that it is practically pointless to have scrutiny after the event, when we would in effect be locked in for nearly a generation? What exactly does he expect Parliament to do if it then looks at the published details of the negotiations and does not like them?
Michael Fallon
I will describe in some detail the arrangements for the scrutiny of any deal done or any negotiations concluded at Hinkley, but I would suggest to my hon. Friend that Parliament is pretty good at scrutinising such arrangements, including through its various Committees. Likewise, it is of course also open to the National Audit Office to provide scrutiny.
Michael Fallon
I must make some progress, if the hon. Lady will forgive me.
The third improvement I am suggesting through amendment 52 is to place a duty on the Government to publish a report each year setting out how they have exercised their powers and carried out their functions under part 2 of the Bill. I hope that that provides particular comfort to my hon. Friend the Member for Daventry, who, through amendments 176 and 177, is looking to bring forward the five-year review in clause 50 and require speedy progress, but the review that he suggests would take more than one month, while enough time must elapse if we are to collect sufficient data to make an informed judgment. On his amendment 178, however, I can assure him that we will look closely at the impact on different consumers when carrying out the five-year review, as we already do with our impact assessments on electricity market reform. Finally, Government amendment 66, which follows a helpful suggestion in Committee—again from the hon. Member for Brent North—will bring the emissions performance standard within the scope of the review.
I turn now to the counterparty arrangements for CFDs and investment contracts. I have tabled several amendments on this topic—again, many of them responding to very reasonable points made in Committee. Amendments 53 to 55 and 74 to 76 set out the circumstances in which we might need more than one counterparty, while amendments 56 and 77 extend the notice period before a body can withdraw its consent to act as counterparty. Amendments 57, 62, 63, 78, 82 and 83 make minor changes to avoid any confusion over the use of the terms “obligations” and “liabilities”, while amendments 58, 65, 85 and 86 create a statutory guarantee that the counterparty will exercise its functions to ensure CFD and investment contract liabilities are met and place a duty on the Government to provide the powers to do this.
Michael Fallon
I will just finish this section.
Amendments 60, 64, 80 and 84 make it clear that supplier debts can be pursued through the courts and that payments to generators will be pro rata in the unlikely scenario that the counterparty does not have sufficient funds immediately available, while amendments 59 and 79 ensure that suppliers only face costs that are related to the regime, including operational costs of the counterparty. Amendments 61, 68 and 81 are minor corrections and clarifications to ensure that the settlement of payments can work effectively, and amendments 88, 89 and 90 introduce a duty to transfer investment contracts to the CFD counterparty, thus ensuring they transfer quickly once the CFD regime is in place next year—that reflects points made by the hon. Member for Southampton, Test (Dr Whitehead) in Committee—while amendments 73 and 87 are minor changes to align the drafting of schedule 2 with part 2.
I am sorry to have kept the hon. Member for Glasgow North West (John Robertson) waiting.
John Robertson
I thank the Minister for being generous in taking interventions.
Who will scrutinise the counterparties’ liabilities? We saw how everyone thought that the banks were safe and had plenty of money and that things were good, but it did not turn out that way, and even the Treasury’s own predictions over the last three years have not been met properly. What guarantee can the Minister give, therefore, that the counterparties will have sufficient finances to meet their liabilities?
Michael Fallon
I am happy to give the hon. Gentleman further written assurances on that. He might be on rather weak ground in discussing the regulatory framework put in place for the banks, given that we have had to take immediate and fairly radical steps to improve it, but if I can give him any further reassurances on his main point, I certainly will.
The third main issue covered by this group of amendments is the funding and governance of the capacity market. I shall deal with the remaining Government amendments and new clauses, which relate to that market and are, I hope, relatively uncontroversial, before coming to the more important amendments tabled by the hon. Member for Southampton, Test. New clauses 8 to 10 and amendments 105 to 107 will enable us to set out detail of the capacity market in a combination of two places: in regulations, changes to which would be made and overseen by the Secretary of State; and in rules, which once made by the Secretary of State could be overseen by Ofgem.
The intention is to give Ofgem the responsibility for consulting on and implementing future changes to those elements in capacity market rules, in line with evolutions in the existing market structure. These changes enable that. However, Ministers would retain accountability for key aspects of the scheme, such as capacity volumes and cost control. Amendments 101 to 104 make clear our intentions for the capacity market settlement body, which has overall responsibility for managing payment flows—in short, that capacity payments will have to flow through the settlement body; that it can discharge certain technical obligations and functions through an agent; and that it can recover costs only in connection with the obligations placed on it as the settlement body.
Amendments 45 to 50, tabled by the hon. Member for Southampton, Test, would allow a second, alternative capacity mechanism, known as a strategic reserve, to be included in the Bill. As I understand it, a strategic reserve would hold a small amount of capacity outside the market, to be deployed only in limited circumstances. The Government have always acknowledged the potential benefits of a reserve as a short-term measure. If it is necessary to respond to a short-term security of supply challenge, Ofgem already has powers it could use. For instance, it could strengthen the options that the national grid has, to ensure sufficient capacity is in place before the capacity market is implemented. However, I would suggest to the hon. Gentleman that a capacity market is a better medium-term solution to address the current investment challenge and ensure continued security of supply, for two reasons.
First, if used as a longer-term intervention, a strategic reserve could undermine the market signals for capacity providers by reducing revenue certainty. That is because of the uncertainty about when the reserve might be deployed and the negative impact on the revenue of other capacity providers. There is a danger that investors may decide that future Governments will be tempted to use the reserve too frequently—a reasonable concern in a world of rising prices—which would increase the risk of not getting a sufficient return on their investment. The resultant increase in financing costs would flow through to the consumer, with the long-term risk that less capacity is built and the Government are forced to create a larger and larger reserve, at which point the competitive market disappears. By contrast, a capacity market is open to all providers of reliable capacity, with the only exceptions intended to be plant receiving support under CFDs. This provides the right, market-based signals for both existing and new capacity. Secondly, offering both capacity mechanisms in the Bill—the capacity market and the strategic reserve—would create regulatory uncertainty about the Government’s preferred approach and, again, act as a disincentive to investment.
Let me turn, fourthly, to nuclear power. The Government have made it clear that nuclear generation has an important part to play in decarbonising electricity generation. It is a source of reliable generation capacity and it is a vital part of our energy mix. CFDs are intended to provide support to all forms of low carbon generation; hence I could not support amendment 23, as it would exclude nuclear generation. I also have concerns about amendment 24, which seeks to limit the amount paid under a CFD to nuclear generation to no more than what can be paid to renewables generation. It would not make sense artificially to link the amount of support for one technology with support for another. Support should be set based on robust evidence and advice that demonstrates, for instance, that the level of support makes a project economically viable—and thus will attract investment—and that it delivers our policy objectives while minimising costs for consumers. More widely, renewables support rates will vary over time, as has happened with the renewables obligation, and a mechanism to link support levels in this way, as proposed in amendment 24, could be cumbersome and could restrict our discretion to set support levels that might otherwise provide value for money.
Caroline Lucas (Brighton, Pavilion) (Green)
Does the Minister agree, however, that the Government’s position on nuclear ought to be guided by the coalition agreement, which clearly stated that new nuclear should “receive no public subsidy”? Is he not acting rather like Humpty Dumpty in “Through the Looking Glass”, in that he is making words mean what he wants them to mean? Subsidy means giving extra money to that technology; it does not matter that he is also giving subsidies to renewables. He seems to be arguing that it is not a subsidy if it is being given to renewables and to nuclear, but it is still a subsidy. Will he not recognise that and stick to the line in his own coalition agreement?
Michael Fallon
Of course I stick to the line. On this side of the House we all stick to the terms of the coalition agreement, and it is important that we keep doing that. I do not see any reference in the Bill to the word “subsidy”. When the hon. Lady sees the terms of any contract that might be concluded with EDF for Hinkley, or indeed with Horizon Hitachi for the next two stations, she will see that the word “subsidy” is not involved.
Amendment 25 would prohibit the Government from underwriting, or providing in investment contracts, guarantees to cover nuclear construction costs. Let me reassure the House, if there is a concern about construction cost overruns, that such overruns for new nuclear will be borne by the developer. There are two scenarios, however, in which it might be reasonable for certain construction risks to be shared. They include cases involving less mature technologies such as carbon capture and storage, reflecting the high level of uncertainty around those construction costs, and those relating to certain events outside a developer’s control, such as specified change in law events. An example could involve a law that specifically discriminated against nuclear.
More widely, I can assure the House that we will only sign a contract in respect of Hinkley that is fair, affordable and represents clear value for money for consumers. Amendments 26 and 27 would delay the Government’s making CFD regulations relating to nuclear power or signing an investment contract until the National Audit Office had first carried out a value-for-money assessment of nuclear power or the relevant investment contract. It would not be right to hold up the delivery of a major Government programme that is vital for economic growth and jobs across the country until the NAO had undertaken a review. We have already put a significant amount of expert scrutiny into the decision-making process to ensure a robust evidence base, and will be consulting on the draft electricity market reform delivery plan to augment that.
More generally, the major CFD regulations will be consulted on and will be subject to affirmative parliamentary approval. Investment contracts are already subject to close scrutiny by external advisers to ascertain whether they represent value for money. Combined with my earlier commitments and amendments to the Bill, this will ensure transparency of investment contracts.
Joan Walley
Is there not a concern about the role of the National Audit Office in all this? There is no way of achieving transparency during the negotiation process, and unless we accept the amendments proposing a panel to oversee the process, there will be no way of finding out what is being agreed before we are presented with a fait accompli.
Michael Fallon
My first answer to the hon. Lady is that there is nothing to prevent the National Audit Office from looking into anything it wants to. The Government cannot control that, and nor can she. Secondly, I have already said that summaries of the advice will be published, and it will be perfectly possible for Committees of this House to look into these matters and satisfy themselves that the appropriate advice has been taken.
Joan Walley
Is not part of the problem the fact that the National Audit Office and the Comptroller and Auditor General do not have statutory powers to scrutinise public spending on behalf of Parliament before the negotiations have been completed?
Michael Fallon
I am not sure that is wholly right. I think that the NAO has, as I recall, already been looking at High Speed 2—before the contract for it has been placed.
Michael Fallon
I want to be fair to the hon. Member for Brighton, Pavilion (Caroline Lucas), too, but I give way again to the hon. Member for Stoke-on-Trent North (Joan Walley).
Joan Walley
I am most grateful, but the point is that while the Comptroller and Auditor General might consider doing a review once a negotiation has been struck, at that stage it is too late to understand what has been included. We thus have a situation in which the Minister should perhaps comment on the role of Parliament in scrutinising this issue.
Michael Fallon
It is for Ministers to take these decisions and for Ministers to be accountable to Parliament for them. It is for Parliament to scrutinise the decision taken. I am sure the hon. Lady is not suggesting that Parliament itself should take this decision; in the end, it is for the Executive to take their decisions about investment and infrastructure and for those decisions to be fully accountable to, and scrutinised by, Parliament.
Caroline Lucas
I reiterate the point that the hon. Lady has just made because the National Audit Office cannot look at the issue at the key point where we need the information. My wider point is this. The Minister keeps saying that nuclear offers value for money, is fair and affordable and so forth, but how can that possibly be the case when this Government envisage locking taxpayers into a 35-year contract to pay around twice the current market price for power, with the money then going to line the coffers of the French nuclear power station operators?
Michael Fallon
I wonder how the hon. Lady seems to have more information about the final details of the contract than I do, as I would suggest to her that I am a little closer to it than she is. When the details are published, she will find that not everything that has appeared in the newspapers is wholly accurate.
Michael Fallon
I must be fair to the House and make some progress because I am only halfway through this group of amendments. If I am pressed to give way one more time, I will of course do so.
Martin Horwood
The Minister is very generous in giving way. I would like to ask him about one aspect, which was raised by Dr Paul Dorfman of the Warwick business school, and University College, London. They have speculated that the contract now being discussed with Electricité de France could be as long as for 40 years. In the spirit of parliamentary openness and scrutiny that the Minister has described, will he clarify whether that is an accurate guess?
Michael Fallon
My hon. Friend tempts me, but I am afraid that, much as I would like to do so, I am not able to speculate about the terms currently being negotiated with Electricité de France.
Finally on this group, amendments 28 and 29 seek to stop nuclear and fossil fuel generation from participating in the capacity market, which is designed to ensure the security of future electricity supplies. To ensure the most efficient mix of capacity and to avoid favouring specific technologies, the market needs to be technology neutral and support a range of generation sources, such as from fossil fuels, existing hydroelectric and nuclear plant and the demand-side response. I can confirm, however, that we do not intend to allow plant receiving a contract for difference, including new nuclear plant receiving a CFD, to participate in the capacity market. We do, of course, expect existing nuclear plant to play an important role.
Let me deal with some of the wider issues in this group of amendments, including bill impacts, biomass, liquidity and so forth. Amendments 32 and 33 specifically relate to biomass. I would like to thank my hon. Friend the Member for North Devon (Sir Nick Harvey) for raising this issue. His amendment 32 seeks to define biomass in the Bill. Let me make it clear to him that I see no problem with the definition he has drafted, but I suggest that this would be better left to secondary legislation, which would give us the flexibility to amend the definition over time to reflect changes in technologies or, indeed, in the evidence.
In respect of amendment 33, I would not want to limit the amount of support that an individual biomass generator could receive under a CFD, or to impose a condition that biomass generation greater than 15 megawatts could receive support only if it utilised combined heat and power or carbon capture and storage. That would risk excluding efficient forms of biomass generation or forcing all new generation to include combined heat or power, or carbon capture and storage equipment, which it might not be possible to utilise effectively, and I think that it would have the unintended consequence of increasing costs for consumers.
Barry Gardiner
I am grateful to the Minister, who has been extremely generous in engaging in debate. Will he clarify one point? My understanding was that the definition that had been proposed was already incorporated in primary legislation, in an earlier Act of Parliament, and that the objection that he seems to have to it would therefore not apply.
Michael Fallon
I should be happy to check that. I suspect that the hon. Gentleman may be right, but I think that some of my objections would still apply. These things change over time, and I should prefer to have them in secondary legislation. However, if I have wrongly suggested that this is a novel approach, I will certainly get back to the hon. Gentleman.
On amendment 94, we need to be sure that independent generators have a fair chance of entering the market. I am sure that my hon. Friend the Member for Rochester and Strood (Mark Reckless), and other Members who have signed his amendment, would support that. Ofgem will shortly be releasing details of its proposed reforms to improve market liquidity, and I welcome that progress. However, it is crucial for the Government to be able to act if Ofgem is unable to deliver ambitious reforms allowing more independent generation in a timely fashion. That is why we need the backstop powers in clause 38.
Amendments 95 to 99, also tabled by the my hon. Friend the Member for Rochester and Strood, would remove the emissions performance standard from the Bill. I know that my hon. Friend is concerned about its impact on coal-fired generation, and suspect that he feels that the carbon price floor provides sufficient market signals to disincentivise such generation, but the Government's objective is to deliver a clear and unambiguous message to investors that coal-fired generation must significantly reduce its emissions to have a long-term role in our energy mix.
The commitment to decarbonisation is delivered through economic signals such as support for the carbon price, through planning policy—which states that new coal-fired power stations should be equipped with carbon capture and storage—and through the EPS, a coalition commitment that places a firm limit on the amount of carbon that can be emitted, regardless of the price of coal or carbon. That commitment to reducing emissions would be undermined by amendments 173 to 175, and I hope that my hon. Friend the Member for Daventry understands why I cannot accept them. In relation to amendment 174, I should point out that the formula in clause 42 was carefully designed to ensure that potential emissions from new coal plant would be at least halved.
Amendment 148, tabled by the hon. Member for Brent North, would apply the EPS to existing coal-fired plant that installed pollution abatement equipment to comply with the industrial emissions directive. I understand his fear that, if the relatively low price of coal continues, it may lead to levels of coal generation that will put our decarbonisation objectives at risk. However, our electricity market reform measures should mitigate the risk of carbon “lock-in” by driving investment in new low-carbon generation which will increasingly displace generation from fossil fuel.
Amendment 150 would reduce by 15 years the period in which the emissions limit for a new plant is “grandfathered”. Grandfathering until 2045 gives investors in new gas plant the regulatory certainty they need that the EPS will not stop them from making a return on their investment, thus assisting the provision of the new plants that we require in order to replace ageing capacity. Let me be clear: we need gas-fired generation in our future energy mix to balance increasing levels of intermittent and inflexible plant coming on to the system. Amendment 150 would deter such investment and thus reduce, not increase, the reliability of our electricity supplies.
David Mowat (Warrington South) (Con)
The Minister has referred several times in the last few minutes to CCS technology. What is his core estimate of that being deployable on a commercial basis in the UK?
Michael Fallon
I am not able at the moment to give my hon. Friend a precise timetable. Last year, we had a competition, as he will recall, for CCS. We selected the two principal bids and we are continuing to negotiate, but as soon as I have more news on that, I will ensure that he is one of the first to hear.
I must thank the hon. Member for Brent North for amendment 149. He will see that the small error has already been corrected in the version of the Bill that was introduced to the House on 9 May.
My hon. Friends the Members for Daventry and for Waveney (Peter Aldous) have tabled a number of amendments to clause 41 covering the certificate purchase scheme, which is designed to replace the renewables obligation for the last 10 years of its existence. First, let me reassure my hon. Friend the Member for Waveney that the provisions he seeks to remove through amendments 153, 154 and 157 to 159 simply replicate legislation that exists under the renewables obligation. Caps have been set before, such as for bioliquids; exemptions already exist for very small suppliers; and costs of administering the scheme are already recovered from the RO buy-out funds. The powers he wants to remove through amendment 159 would, for example, be needed to revoke any incorrectly issued certificates. These provisions therefore ensure the continued effective operation of the scheme.
On amendments 155 and 156, requiring the immediate recovery of shortfalls in the levy from suppliers would be unnecessarily prescriptive. That may not be necessary if, for instance, the shortfall is very small and can be made up in the next round of regular levy payments.
Amendments 160, 161, 167 and 168 would either remove our ability to change future support levels for the scheme, or add further validation requirements on the underpinning evidence for a change. Although the Government do not intend to make banding changes under the certificate purchase scheme, I would not want to remove our ability to do so. As we have seen, where there is compelling new evidence to change support levels, such as to protect consumers, it is important that the Government can act, and these provisions are important as they set out the controls on any such change.
On the underpinning evidence, we already take a rigorous approach to the assessment of costs and income in banding reviews under the renewables obligation. I can assure the House that we would do so again in any review of support levels under the certificate purchase scheme.
Let me reassure my hon. Friend the Member for Daventry that, in relation to amendment 169, consumer costs will always be an important consideration in banding reviews. New section 32V(4)(e) in clause 41 makes specific provision for that.
That brings me to the last but most important issue in this group: the costs and benefits of electricity market reform to consumers. A number of amendments have been tabled by my hon. Friends the Members for Daventry, for Waveney, for Gainsborough (Mr Leigh) and for Christchurch (Mr Chope), and we must thank the last two of them for providing such excellent chairmanship of the Bill Committee.
First and foremost, let me be clear that electricity market reform—EMR—is good for the consumer. Gas prices are rising and are projected to carry on rising. We need to move to a more diverse energy mix, which breaks our dependency on both gas and fossil fuel generation. The contract for difference provides protection for consumers by ensuring that generators pay back when the market price goes over the strike price, and the price certainty it brings will reduce the cost of financing new power stations, and thus reduce costs to the consumer. EMR also serves the public interest by reducing carbon emissions and ensuring everyone can benefit from reliable electricity supplies. These are important matters, which is why I would not want to accept amendment 162 and make them subordinate matters when the Secretary of State is exercising functions under part 2 of the Bill.
On amendment 151, I would not expect use of the liquidity powers in clause 38 to increase costs for consumers over the lifetime of any intervention. The purpose of these powers is to protect consumers by driving competition and reducing prices. A positive outcome for consumers must be proven before action is taken, and that would be shown through an impact assessment, which would be published when consulting on any proposed use of these powers. On amendment 152, contracts for difference can only be for the purpose of encouraging low-carbon generation, so that change is not necessary.
Both today and tomorrow, we need to work in the best interests of consumers and ensure that energy is cheaper as well as greener. I hope that all Members on both sides of the House can see that EMR represents the cheapest way of securing a diverse, low-carbon and reliable energy mix.
I want finally to turn to the amendments involving tariffs and to speak to the relatively minor Government amendments in that group before addressing the amendments tabled by the hon. Member for Angus. In line with the Prime Minister’s crucial commitment to ensure that people are on the cheapest tariff for their preferences, Government amendments 119 to 133 will align the powers in clause 121 more closely with Ofgem’s retail market review proposals. Government amendments 119, 120, 122 and 123 further clarify that those powers cannot be used for the purpose of imposing price controls by limiting the powers of the Secretary of State to make provisions under clause 121 only to the list set out in subsection (3).
In line with Ofgem’s retail market review proposals, Government amendments 125, 127, 128 and 131 will restrict the power to move customers from one tariff to another only to those customers on tariffs closed to new joiners. Government amendment 126 ensures that suppliers will have at least one core tariff slot that is not prescribed. Government amendment 130 clarifies that the power to prescribe that a supplier offers fixed or variable rate tariffs does not equate to setting the price or term for the tariff. Finally, Government amendments 121, 124, 129, 132 and 133 reword a number of the definitions to ensure that the powers can be exercised in the context of existing requirements placed on suppliers as a condition of their supply licence.
Amendments 21 and 22 were tabled by the hon. Member for Angus and address concerns he raised in Committee. Amendment 21 relates to the proposed Secretary of State power set out in clause 121 to move consumers off poor-value dead tariffs. His amendment would leave the only basis on which people can be moved off poor-value dead tariffs as an opt-out for consumers. Moving customers off such tariffs is a key part of meeting the Prime Minister’s commitment on energy bills. I would like to reassure hon. Members that in the event that Ofgem’s reforms are unduly delayed, we fully intend to make use of the opt-out approach rather than an opt-in. As a result of Ofgem’s review, however, it could become clear that there are certain circumstances in which some consumers could be actively disadvantaged by an opt-out approach, so we consider it prudent to retain the option to pursue an opt-in approach if necessary. Consumers could be disadvantaged should it, for example, transpire that as a result of market changes they would actually be better off staying on specific closed tariffs or that taking an opt-out option means they face contractual difficulties, such as a breach of contract.
Mr Weir
I understand what the Minister is saying, but as it stands clause 121 says that there can be a switch to a different supplier or different terms, “unless the customer objects”. The customer can always come back and say, “No, I don’t want to do that”; even though the company is saying, “This is a better tariff for you”, the customer still has the ability to do that. The difficulty with including subsection 3(e)(ii) is that, as the regulatory impact assessment said, very many customers never get round to switching and do not react when they are given offers or told a better deal is available. Leaving that provision in would allow companies simply to offer customers these things but not push them forward.
Michael Fallon
There may well be consumers who are not aware that they are being left on these tariffs, so we need to be careful about that, too. Ofgem could, however, deal with such matters, and I want to make it absolutely clear that the decision on whether to take an opt-out approach or an opt-in one will be made by the Secretary of State, or by Ofgem acting on his behalf, and not by energy suppliers.
Amendment 22 would add a new power for the Secretary of State in relation to customers with pre-payment meters, and there is a difficulty with it, too. The amendment is in two parts: paragraph (f)(i) specifies that these customers should receive the lowest tariff offered by the supplier, regardless of meter type; and sub-paragraph (ii) specifies that no more than 20% of each of their payments should go toward repaying existing debts.
Clearly, the aim of the amendment is to help out the most vulnerable customers, and I wholeheartedly support that. The Government are keen to see that consumers who use pre-payment meters are not disadvantaged, particularly the 20% of the fuel poor who currently pay for their gas or electricity in this way. Since 2010, there has been a major step forward in the treatment of consumers with pre-payment meters, with all the large energy suppliers choosing to equalise their pre-payment tariffs with standard credit prices.
The second part of the amendment relates to changing the way debt is repaid by customers on pre-payment meters. Customers in this situation currently repay a fixed amount at fixed intervals, for example, each week. The amount repaid is calculated for each consumer on the basis of their personal circumstances and ability to pay. The amendment proposes a limit of no more than 20% of the top-up amount, which in practice would turn most or all repayments from a fixed rate to a proportional one.
There are at least three reasons why we should not legislate in that way, the first of which is the cost to consumers of changing meters to accommodate such a provision. Secondly, let us consider the following: if a family paid a total of £10 a week, with 20% going towards repaying the debt, it would take the family seven years to clear the debt. This plan would also require the family to continue to pay £10 a week or £20 a week during the summer months, when most pre-payment meter customers use very little gas. If they reduce the total weekly payment in that period, the overall repayment period of the debt will, of course, increase again. Thirdly, there are existing obligations on suppliers under their licence to take into account a customer’s ability to repay when setting a repayment schedule. Suppliers are currently obliged to develop individualised repayment plans that take account of ability to pay, but existing pre-payment meters are not designed to allow for debt levels to be deducted on a proportional basis.
Mr Weir
I understand what the Minister is saying and I understand his objection, but if he looks at the excellent report on the issue from Citizens Advice he will see that it gives an example of someone who had £7 of every £10 put into the meter taken towards debt. We are trying to introduce a limit—although perhaps 20% is the wrong figure—so that that sort of thing does not happen.
Michael Fallon
I will certainly look at that. I understand the purpose behind the hon. Gentleman’s amendment and I share it, but I hope that he will recognise that a percentage cap might not be the best answer. There might be other opportunities to return to the issue as the Bill progresses, and I hope that he understands the risk that setting a percentage limit could encourage suppliers to use that limit as a default position.
I do not think a legislative solution is appropriate, but we are investigating with suppliers what non-legislative action can be taken to improve the situation with prepayment meters. We have also recently announced funding for the big energy saving network, which is a co-ordinated network of voluntary organisations and community groups that will develop and deliver support for vulnerable consumers.
I am grateful to the hon. Gentleman for his continued interest in getting a better deal for consumers. I hope that he has found my explanation on the amendments reassuring and will, on that basis, agree for the moment to withdraw them. I apologise to you, Mr Deputy Speaker, and to the House for taking an inordinate amount of time to respond to the amendments, but the group contains a range of amendments from a large number of hon. Members and I wanted to do justice to each one of them.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
I welcome the Minister to his first parliamentary interaction with the Bill. His predecessor, the right hon. Member for South Holland and The Deepings (Mr Hayes), took the Bill through Committee and we know from our experience today that the Minister can speak—although perhaps in slightly less florid language—for at least as long as his predecessor could on such matters.
A range of issues are covered by this group of amendments, and I am conscious that many Members want to speak about their amendments. I shall do my best to be as brief as possible, but I want to mention a few points both in response to the Minister’s speech and in support of some of the amendments tabled by me and my right hon. and hon. Friends.
I welcome Government amendment 66, which will put in place a five-year review of the emissions performance standard. That is very important. I am sure that my hon. Friend the Member for Brent North (Barry Gardiner) will try to catch your eye, Mr Deputy Speaker, to speak in support of his amendment 150. I hope that the Minister will take that seriously in the context of the length of the grandfathering period—gas investors suggest that their investment is usually over 30 years rather than 45—and give it a degree of consideration.
In relation to the EPS, let me say a few words about amendment 179 on carbon capture and storage. The provisions in chapter 8 on the EPS will have a significant impact on the future development of CCS. The Opposition have consistently and clearly set out our support for developing that technology, which we believe has a vital role to play in our future energy mix alongside other low-carbon technologies. We do not need to go over the same ground again, but I probably first raised with the Minister’s predecessor but one some of the issues about the £1 billion that was supposedly available for capital funding. We know what the Cabinet Office document said was available for this comprehensive spending review period, although I am conscious that the Minister’s Department—or one of his Departments, the Department of Energy and Climate Change—seems to have secured its negotiations with the Treasury on the CSR. I wonder whether the remainder of that £1 billion is part of the savings that have been offered up.
If we do not get the technology developed for CCS, we will face a significant gap in our ability properly to deal with the peaks in our generation requirements. That is why we tabled amendment 179. As the hon. Member for Warrington South (David Mowat) perhaps suggested in his intervention about carbon capture and storage, we are conscious that there have been bumps in the road in moving that technology towards commercial development; I think it is fair to put it in those terms. We are concerned, as are a number of industry bodies, that an unintended consequence of the Bill is that it makes that technology less likely to be developed.
The Minister was right to say that the exemption was in the draft Bill, but was taken out as a result of concerns, expressed by the Select Committee on Energy and Climate Change and others, that it could be a loophole allowing unabated coal generation. The way in which the amendment is framed—it relates to a specific commissioning period—helps to address that sensibly, and to ensure that CCS is given the best chance of developing and being part of the future-generation mix, as many of us wish it to be. I therefore intend to push amendment 179 to a Division.
There are a number of amendments relating to contracts for difference. I am sure that the hon. Member for Brighton, Pavilion (Caroline Lucas) and others will seek to speak to some of them. I wanted to say a word on new schedule 1 and new clause 5, which stand in the name of the hon. Member for Cheltenham (Martin Horwood) and a number of other Members from across the House, on establishing a panel of independent experts to offer advice and guidance to the Government before they enter into a CFD. Although the Minister was not on the Committee, I am sure that he is familiar with the tenor of our debates on the subject; we tabled a number of similar amendments in Committee, and argued strongly for an independent expert panel to offer transparency, expertise and, crucially, protection for consumers. That differs from the Government’s plan to set up a non-statutory panel, and would deal with the concerns that the non-statutory proposals do not go far enough.
I am sure that the Minister will be aware that in Committee we argued that for many people this is still a controversial issue. The best way to ensure confidence in the negotiations that are under way—I think I heard the Minister refer to “when”, rather than “if”, the contract is secured; I am not sure whether that was a Freudian slip—is to ensure transparency around the process. Having that panel is a sensible way of providing scrutiny and transparency. If those Members who tabled the amendment seek to push it to a Division, they will have the support of Labour Members.
On a related issue, amendments 8 and 9, which are in my name and the name of my right hon. Friend the Member for Don Valley (Caroline Flint) and my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), push the Government to be more transparent about agreements with generators through investment contracts. It would be churlish of me not to recognise that the Government have moved on the issue since Committee, and have listened to what the Opposition said in Committee about what information could be restricted. I listened carefully to what the Minister said about the information that is not made available being described. However, I am unconvinced that that goes as far as it could or should. I take the point that it may be appropriate for certain information not to be put in the public domain, particularly when we are dealing with nuclear energy, but that should be the very limited exception, rather than the rule. That is why amendments 8 and 9 make it clear that the exception will be for “trade secrets”, rather than “confidential information”, as the Government could decide what was, or was not, confidential. That is important for transparency and confidence.
The Minister will be aware that the representative of EDF Energy who gave evidence at the start of Committee proceedings was very clear about the importance of transparency. It would be slightly odd if the Government sought to restrict that transparency. We will never have the confidence that we should have in nuclear as part of our generation mix if people are able to gainsay aspects of agreements between the Government and companies. The best way of ensuring that that does not happen is to make all the information available; people can then make their judgments. I am sure that that would not stop some Members from being against nuclear power, but it would give a number of others—and, more importantly, people more widely—confidence that nuclear should continue to be part of our generation mix.
David Mowat
I have listened carefully to what the hon. Gentleman said about the need for an expert panel, and all that that implies. Is it the position of the Opposition Front Benchers that the Government should not be able to enter into a binding contract with EDF, after negotiating with it in good faith, without that coming back to Parliament?
Tom Greatrex
I understand, from what the Minister said, and what his predecessor said in Committee, that the agreed contract will come before Parliament, and I would expect that to happen, but an expert panel that included consumer representatives could help to bring a degree of rigour and transparency that will be important in ensuring that there is confidence if—or when, to use the Minister’s term—an agreement is reached.
David Mowat
Does the hon. Gentleman envisage the Government coming to an agreement with EDF that is subject to ratification by some panel? Would he expect EDF to negotiate on that basis?
Tom Greatrex
I expect that EDF would want the Government to be sure that the agreement that they were entering into was safe and sound, and conformed to the best possible degree of scrutiny. An expert panel could bring some of that scrutiny, rigour and analysis. That is, in the end, in the interests of not just the Government and EDF or any other company, but the whole energy sector. That is an important point that we pushed in Committee and will continue to push today.
Martin Horwood
I thank the hon. Gentleman for his support for my new schedule 1. In answer to the point just made, the schedule does not provide for a veto by Parliament on the contract for difference, but it does expect the Secretary of State to lay before Parliament written reasons why he disagreed with the advice of the expert panel, in the event of such a disagreement. It therefore provides greater assurance of scrutiny and transparency.
Tom Greatrex
I am grateful for that clarification. I hope that helps to address the point that the hon. Member for Warrington South sought to make; it also underlines the importance of the measure. It is possible and probable that the Government would come to a conclusion that members of the expert panel did not share, but as long as that was explained, I would not necessarily think that it was a problem. It may well be that the expert panel would come to a conclusion that the hon. Gentleman and others disagreed with and I agreed with, or vice versa. It is important that there is a degree of transparency and rigour in the process. That is why we will support new clause 5 and new schedule 1, if the hon. Member for Cheltenham divides the House on them.
The Minister touched on the capacity market and the amendments in the name of my hon. Friend the Member for Southampton, Test (Dr Whitehead) relating to the strategic reserve. The Minister seemed to use the same defence that we heard in Committee—that introducing a power to have a strategic reserve would send confusing signals. Indeed, his predecessor said:
“The new clause would allow us to have both a strategic reserve and a capacity mechanism. That might be the worst possible option, because it would send a confused signal to investors about the Government’s intentions.”––[Official Report, Energy Public Bill Committee, 24 January 2013; c. 329.]
The Government argued in Committee that it would be wrong to give the Secretary of State the power to introduce a new system or mechanism in future, as it would cause uncertainty. That is very different from the stance taken by the Government in the amendments that we will discuss tomorrow on 2030 decarbonisation, which give the Secretary of State a power to set a target if he so chooses, so the argument does not stand up to scrutiny. There are important points relating to a strategic reserve that I am sure my hon. Friend the Member for Southampton, Test will seek to make. I do not think that having that power in the Bill will necessarily have the impact that the Minister suggests.
A number of amendments relating to biomass have been tabled. It was the Minister’s predecessor who took through Parliament the statutory instrument dealing with the renewables obligation earlier this year. He made a number of commitments in relation to biomass, as I gently remind this Minister, in case they were missed in the comprehensive handover that no doubt took place earlier this year. His predecessor undertook to seek from those using biomass to generate power details about the sourcing of the biomass, and to make that information more widely available.
Dan Byles (North Warwickshire) (Con)
The hon. Gentleman is probably aware that the Energy and Climate Change Committee recently had a one-off session on biomass. We concluded that this is almost certainly an issue that the Select Committee will revisit in more detail because, as he said, there is differing evidence that needs to be thoroughly teased out. Sadly, however, the results will come too late to inform this debate.
Tom Greatrex
I thank the hon. Gentleman for his intervention. I am pleased to hear that the Select Committee will be examining the matter further. I should have said that the Committee did the Bill a great service through its pre-legislative scrutiny. We will return to some of the issues on which he, as a member of the Committee, may have supported the conclusions but may not vote in line with them tomorrow. The Committee has done good work on the Bill overall and I am pleased to hear that it will do further work. It is important that we get greater clarity so that the debate is properly informed.
Finally, I shall touch on the clauses relating to tariffs, which have been grouped with the wider electricity market reform amendments. I need not remind the House that it was seven and a half months ago that the Prime Minister stood at the Dispatch Box and announced that the Government would force energy companies by law to put everybody on the cheapest tariff. For the avoidance of doubt, his exact words were:
“I can announce…that we will be legislating so that energy companies have to give the lowest tariff to their customers”—[Official Report, 17 October 2012; Vol. 551, c. 316.]
The Bill in its 200-odd pages contains no provision to put every customer automatically on the cheapest tariff. Indeed, what the Minister said in his remarks and what his ministerial colleague said on the radio at the weekend and in Committee was slightly different—that tariffs would be in line with customers’ preferences.
The intriguing source of Tory energy policy who has been busy entering the world of Twitter today talking about the impact of the measures in the Bill on consumer bills is using a figure which Ofgem suggested would be the case if every person were automatically put on the lowest tariff. If that means that the Minister is suggesting that that is the case, his amendments are deficient because they do not do what the Prime Minister said and what the Prime Minister and others have repeated in the Chamber 12 times since last October. I noticed that the Minister chose his words carefully and said “in line with”. If he is not doing as the Prime Minister said, I anticipate that the Prime Minister may seek to correct the record later in the week when we have the opportunity to ask him about that.
The Bill addresses some aspects of the energy market but there is a huge gap in it, as it does not deal properly with the retail market. We flagged up that gap in Committee and we have been clear and consistent in our stance. We want to see the Bill as the mechanism for ensuring that we get the right level of investment in our energy infrastructure. There are other issues that will be raised in another place, but the heart of the problem is how our energy is bought and sold. That is not addressed properly in the Bill. This sticking plaster attempt to implement what the Prime Minister said in October—he was particularly flustered that afternoon, as I remember it—is patently not achieved by the measures to which the Minister spoke today.
There are real reforms that could and should happen in relation to the retail market. At a time when the Bill seeks to change other aspects of the energy market, it seems odd that we are not dealing properly with the retail market, which would provide greater clarity and transparency going forward.
During the course of the Bill’s passage, we have not opposed for the sake of opposition. We will continue in that vein, as I am sure will others in another place. We have sought to be constructive in the amendments that we tabled to try to improve the framework offered by the Bill. There is a considerable amount of information that is not available to us to scrutinise. I heard the Minister say that information would be published at a later date in secondary legislation, but we are conducting our scrutiny in Committee and on Report without information that would have been appropriate.
The Minister’s predecessor undertook to publish some of that secondary legislation in draft, but that never quite happened. No doubt Members in another place will seek some of that information. Although the Bill sets out the framework for contracts for difference, some of the crucial detail about the operation and the capacity market is not available for us to scrutinise. To be able to make a sound evidence-based and comprehensive judgment of the content of the Bill, we need a degree of detail that is still missing.
Although I accept what the Minister said about the affirmative resolution procedure being used, he is obviously aware that without some of that information it is difficult to test some aspects of the Bill. I am sure other Members who speak in the next 53 minutes will make the same point. We are reliant on the Minister’s words. I have no doubt that he is sincere in his comments about the Bill to the House, but he is the third person to occupy his role in the past eight months, and those in the role have not always said precisely the same thing. The degree of confidence, clarity and certainty needed to transform the Government’s agenda and intentions for the Bill into reality requires a great deal more information to enable us to make that sound judgment. I hope the Minister will provide that information in another place to enable the Bill to address our shared concerns and to ensure that we get security of supply and a reduction in carbon emissions, and the most affordable way of doing those things.
Madam Deputy Speaker (Dawn Primarolo)
Order. I remind the House that the debate must end at 7 o’clock. Quite a few Members wish to participate in the debate, so I ask each Member to make their contribution briefly so that we can facilitate as many contributions as possible.
Chris Heaton-Harris (Daventry) (Con)
I will certainly obey your request, Madam Deputy Speaker, and skate through what I have to say. I should declare an interest at the very beginning, because I run a campaign outside the House. It is a not-for-profit company and I do not take a salary or any expenses, but I declare an interest, in the spirit of the time and in the hope that others pushing amendments may do exactly the same later.
I was pleased to hear the Minister address many of the concerns that I have raised in my amendments. I did not bang on about the thing that most would have expected me to bang on about in my amendments. I believe that the Minister agreed with one of them, and just wanted to check; I am slightly concerned that that might be the case. Alas, it was not the amendment that I really wanted him to agree with—amendment 169, which concerns the costs to consumers of the outcomes of the Bill.
The motivation of my amendments was simple: to include a reference to the consumer interest and force the Secretary of State and the Government to have regard to that, and to require much greater transparency about the contracts created and the costs imposed by the Energy Bill. We all know that the Bill came out of the Government’s electricity market reform process, which began in 2010 and had three elements. The first is the carbon price floor, which has been introduced by the Finance Act 2013 and sets out a path for a minimum carbon price in the UK from the fiscal year 2013-14 from £16 per tonne to £30 by 2020.
There is a new renewable and nuclear subsidy mechanism. The Government will replace the existing regime with a contract for difference mechanism. This new mechanism will very largely transfer the price risk from the developer to the consumer by guaranteeing an achieved power sale price for each power station covered. Unlike the renewables obligation, the new contract for difference mechanism will also provide subsidy support to the developer of new nuclear, about which I know other Members have concerns.
Another strand is that the Government will create a capacity market that will seek to ensure the retention of sufficient existing generation capacity and the building of new capacity. The design of the capacity market is still ongoing, so the exact nature of the market in the future is unclear, and we do not know when it is planned to hold the first capacity auction. I believe that it will potentially be in 2014 for delivery in 2018. Then there are the bits about emission performance standards to talk about.
Realistically, though, there is an overall problem with the Bill, which was highlighted by the Opposition’s general agreement. It is a kind of renationalisation of the power sector—very, very nearly. To deliver their policy goals the Government require utility companies and third-party investors to build assets that are fundamentally not economic, often in technologies that are far from robust or mature. The Government have taken upon themselves the responsibility of deciding which generation technologies are bad, such as coal and unabated gas, and which are good, such as hydro or nuclear or wind perhaps. They have also decided the pace of change, that coal should largely be removed from the power matrix by 2024, and that unabated gas should operate only at peak from 2027. They have decided which future technologies should or should not be developed and are pushing forward with a leap of faith on as yet completely unproven technologies, as we have heard before, including carbon capture and storage.
The Bill will take Government intervention up yet another level. Under the powers granted by the Bill, the Department of Energy and Climate Change will allocate contracts for difference to developers in those technologies and at those locations that DECC favours. It will set the strike price and so determine the revenue of the asset, what the consumer pays and the returns on investment. It is very much a centralising measure. I am not convinced that it gives the opportunities for new sources that bubble up, as we might perhaps say in this case.
Graham Stringer (Blackley and Broughton) (Lab)
We might have an ideological difference if the Bill was actually nationalising the energy industry, but it is not; it is doing something far worse. It is guaranteeing profits for parts of the energy industry that have been chosen from a limited intellectual base. Does the hon. Gentleman agree that by picking so-called winners, which may be losers, the Bill is squeezing out money that could have been spent on research for better newer technologies?
Chris Heaton-Harris
I do agree. Let us look at what has just happened in America with the advent of shale gas and the development of non-conventional gas and oil exploration in the US. That has essentially destroyed the notion that the world has already hit peak oil or peak gas. If we compare projected gas prices—the Minister mentioned this—with what is happening in markets where unconventional gas is being developed quickly, we see that new developments could come forward if allowed in the future. I fear that we are picking winners on that basis. I know that all Members are concerned about greenhouse emissions and the like. The development of shale gas in the United States has reduced America’s greenhouse emissions. Therefore, there is an interesting benefit from doing these things.
To deliver the Government’s plans in the Bill will be hugely challenging, but they are even more challenging because there is a whole host of factors. If renewable technologies were easy to deploy at the utility scale, the Bill might be helpful, but they are not. If renewable technologies were economic to deploy, the Bill would be very helpful, but as of yet they are not. If nuclear power stations could be built quickly and economically, the Bill would help, but in the UK we struggle with building quickly and economically on that sort of scale. It may have been done overseas, such as in Finland, but, realistically, we cannot do that. If the public were willing to pay any price in their bills to fund this policy—this is my major concern, hence my amendment 169—the Bill might be helpful, but they are not willing to pay huge extra sums. These provisions are placing a huge extra regular contribution on bills, up to an estimated £600 each year by 2020 at the very least.
Mr Brian Binley (Northampton South) (Con)
Was my hon. Friend also surprised at the lack of reference to the impact on business in this country over the next 20 years? The Chancellor wants growth, yet the Bill will impede the ability to get that growth. Will my hon. Friend say a word about that?
Chris Heaton-Harris
I dare not say a word about small businesses in the presence of my hon. Friend, the champion of small business in the House. When I used to run my own small business, the power bill was one of the biggest items that could not be avoided, and the Bill will increase that.
The Bill does not help with the core concerns of many in the House about fuel poverty. Reliable estimates of fuel poverty are difficult to come by because the Department has been hedging its bets on publishing any detail. The latest estimates are for 2010 when 3.5 million households in England and 4.75 million across the UK were thought to be in fuel poverty, based on the 2012 poverty statistics released by DECC. The latest dataset used by the House of Commons Library to estimate the impact of changes to prices is for 2009. This suggests that the increased cost of electricity due to the renewables obligation alone may have pushed 100,000 households into fuel poverty. We should be very aware what we are doing when we increase the cost to consumers of their energy. It powers everything from broadband to their heating, and many other things essential to the country’s development, and we should be very aware about how it works.
David Mowat
I accept the thrust of what my hon. Friend says on matters such as fuel poverty, but I rise to defend the Bill a little. Does he accept that we have to cut carbon? If so, does he accept that the way set out in the Bill is a path forward towards that?
Chris Heaton-Harris
Yes, I accept that we need to be aware of our carbon emissions, and I actually think that being responsible for the environment and trying to deliver the best for it is a Conservative principle. The Bill has some good elements to it, but the centralisation that I mentioned and the increased costs to consumers, businesses and the like are outcomes that we should think more about. I will happily leave my contribution there so that other Members can speak.
Dr Alan Whitehead (Southampton, Test) (Lab)
I rise to speak to my amendments 48 to 50, which, as we have heard from Minister, are concerned with the development of a capacity market intended to ensure that we have the range of capacity that we will require over the coming years and decades. Not to put too fine a point on it, it is intended to ensure that the lights stay on and that there is a decent margin between what people demand and what we supply.
A capacity market is a choice. It is not the only option available to secure the necessary capacity for the future. It seems to me that that choice needs to be based not just on whether the right capacity margin can be maintained. We should also ask at what cost it can be done, with what reliability and at what risk. I suggest that the choice of mechanism for maintaining capacity that is being made in the Bill fails on all those counts.
I have not invented that conclusion; the Department itself produced an impact assessment on the two choices that it had considered for securing capacity—a strategic reserve arrangement and a capacity market arrangement. Among other things, that choice is about ensuring that the amount of money that can be obtained through the sale of power into the market at times when capacity is tight stays within reasonable bounds. The impact assessment suggested that, in future, those reasonable bounds might get larger and larger. At the moment there is a maximum of about £1,000 per megawatt-hour, but it could go up as high as £10,000, in which case the consumer would be paying an enormous amount for their electricity under certain circumstances. The whole idea of keeping the costs of the capacity market under control would be completely overthrown.
The question then arises: which method best suits the need both to keep the right capacity and to keep it at a reasonable price and with reasonable reliability? Hon. Members will not be surprised that costs of the capacity market option over the period 2010 to 2030 have been assessed at two and a half times those of the strategic reserve option, and the effect on bills at 11 times higher. At first sight, that is not a good sign of the capacity market’s ability to provide a good deal for consumers.
According to the impact assessment, the reason why the Department eventually chose the capacity market idea was the entirely theoretical one that a reliability market
“limits the scope for generators to receive scarcity rents.”
However, the fact is that by introducing a capacity market and auction system in the way that we are, we will effectively provide guaranteed free money for a long period for people who are building conventional generation that provides capacity.
It may come as a surprise to some hon. Members that by introducing an auction market for capacity, we are ensuring that there is a subsidy across all aspects of energy generation, not just some. There is potential for gaming of that arrangement. The Government will have to decide how tight the capacity is after considering what the market will look like four years ahead, and then they will have to create an auction. That choice will be necessary for the auction to take place at all, and it will determine how much money there is in the auction. If the market is gamed so that the capacity looks much tighter than it is, the amount of money will be larger and the price will be even higher.
It is no coincidence—I think that is the best way I can phrase it—that we already see the capacity market tightening. A large number of gas plants are going into either deep or shallow mothballing in advance of 2014, and the Government’s decision about what capacity will look like will be informed by that mothballing. Were I an energy company operative, I would be rather pleased about that, because I would imagine that I would do rather well out of a capacity market in the future.
Mark Reckless (Rochester and Strood) (Con)
Surely an even more important reason for the tightening of capacity to which the hon. Gentleman refers is the shutting down of several large coal-fired power stations under the relevant EU directive.
Dr Whitehead
Yes, indeed. A number of plants are to close down over the next few years, and given how the energy market works, which I have described, one would expect the ability to obtain rents at the margins of the market to encourage the development of new plant. The statement made by the development of a capacity market auction is that that mechanism will not exist, so a permanent underwriting of new plant development needs to be auctioned to allow that to take place.
The strategic reserve option, which works quite well in a number of parts of the world, is that certain plant—perhaps mothballed plant—is taken out of the market and then placed back into it at times of stress on the market. As a result of that action, rents are reduced. Indeed, the fact that there is a strategic reserve that can be put back into the market at stressful points damps down the possibility of rents being obtained. That option comes at a much lower cost and
“should be relatively simple to set up and administer as it is a relatively small intervention in the market”—
not my words but those of the impact assessment. It
“could avoid gaming in the capacity market if there is a plentiful supply of mothballed plant”,
as indeed there is right now. Overall, it
“has the potential to be the smallest intervention in the market and accordingly has least overall policy design and implementation risk associated with it.”
The capacity market, on the other hand,
“has a higher overall level of design risk given the relative complexity of the model…a Capacity Market, if not well designed, could create opportunities for gaming the new capacity auctions; and…is the more costly mechanism to set up and run and it puts a greater administrative burden on businesses who will participate in the capacity market.”
Again, those are not my words but those of the departmental impact assessment of the choice between a strategic reserve and a capacity market.
Yet a capacity market was chosen to underpin the entire energy market reform and the Bill. I imagine—in fact, I am pretty certain—that that is what we will eventually go for. However, I modestly suggest that it might be a good idea to put in the Bill the idea that if that does not work very well, as I also modestly suggest it probably will not, the Minister has the option of moving towards a strategic reserve arrangement. That would keep the costs down and damp down the gaming of the capacity market auctions that may well take place over the next few years. That would be helpful for our ability to run a coherent energy policy over the next few years, and I tabled my amendments in the spirit of that helpfulness and to ensure that, whichever way we decide to go, we do not shut the door on something that is cheap for consumers in the long term, better for the energy market overall, and will keep our energy supplies in good shape for the future.
Martin Horwood
First, let me make it clear, particularly to Ministers, that I support the Bill. The attempt to lock investment in low carbon technologies into British energy markets is vital and demands an interventionist approach. In a sense, I agreed with a lot of what the hon. Member for Daventry (Chris Heaton-Harris) said in describing what are in effect subsidies and quite an interventionist approach in the Bill—something I think is justified for renewables and when bringing forward clean, greener technologies to tackle the urgent question of climate change. I also welcome the important Government amendments that try to ensure that consumers enjoy the lowest possible tariffs.
As is obvious from the debate, there is a growing chorus of scepticism about aspects of the Bill, and particularly subsidies that may be unearned. New clause 5 and new schedule 1 seek to address that issue, which is why I will press new clause 5 to a vote. I have managed to gather support for the new clause, and I acknowledge that of Which?, the Royal Society for the Protection of Birds, the Association for the Conservation of Energy, WWF, Friends of the Earth and Greenpeace, as well as my right hon. Friend the Member for Hazel Grove (Andrew Stunell) and the hon. Members for Stoke-on-Trent North (Joan Walley), for Brighton, Pavilion (Caroline Lucas), for Hove (Mike Weatherley), for Angus (Mr Weir) and for Rutherglen and Hamilton West (Tom Greatrex). I am grateful for support across the House, and for the implied support from Members close to the hon. Member for Daventry who are concerned about subsidies in general but include in that their particular concerns about nuclear power.
My worry is principally about nuclear because the subsidies in the Bill contravene the spirit of the coalition agreement. That agreement distinguished between renewables, where it implicitly accepted there was a case for subsidy, and the nuclear industry, for which it specifically ruled out a subsidy. Only a few years ago, the Labour Government line was also that there should be no subsidy for the new generation of nuclear power.
Amendment 23 and others tabled by the hon. Member for Brighton, Pavilion are specifically anti-nuclear, and there is a case to be made for distinguishing between nuclear and renewables, principally because renewables are emerging technologies. In many cases they are highly competitive, and over time they are generally getting cheaper. Nuclear is an old industry—56 years old—and has generally been getting more and more expensive. The latest new reactors at Olkiluoto—I hope hon. Members will excuse my Finnish pronunciation—and Flamanville in France are both many years behind schedule, and from the original estimates of between €3 billion and €4 billion are now heading towards estimates of more than €8 billion each—more than 100% over budget. I gather that the Finns and the French are now in litigation with each other over some of those costs and time overruns.
Mark Reckless
The hon. Gentleman refers to nuclear energy becoming more expensive, but I am not sure whether, like the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), he caught the Minister’s earlier reference to when the new nuclear contract is signed with EDF. Does he think that reference to when, rather than if, is likely to increase or decrease the price we pay for that electricity?
Martin Horwood
Perhaps courses in negotiating skills might be recommended for members of the Department of Energy and Climate Change on that front. To be fair, Ministers have made it clear that they do not intend to sign the contract with EDF at any price, but the difficulty is that we in Parliament simply do not know that there has not been adequate scrutiny.
Martin Horwood
I think Madam Deputy Speaker will catch me with her rather steely eye if I give way too many times, so I will move on.
In the UK, the nuclear industry is not very competitive and is overwhelmingly dominated by one nationalised industry supplier—Electricité de France. There are risks that we are in effect organising a massive transfer of funds from British bill payers, if not taxpayers, to a French nationalised industry of dubious profitability. The scale of that possible subsidy has been underlined by former Friends of the Earth directors, including Tom Burke who said:
“At a strike price of £100/MW and a 30-year contract life this would require a subsidy of £1 billion/year above today’s wholesale price for electricity. This would lead to a transfer of £30 billion to EDF from Britain’s householders and businesses. Should the whole of the 16GW of new nuclear anticipated by the Energy Minister be financed on similar terms it would cost householders and businesses £150 billion by 2050.”
That is an enormous commitment that we must scrutinise and ensure that value for money is inserted into the process.
David Mowat
Specifically on that point, the hon. Gentleman says that a strike price of 10 is unacceptable. Would he extend that to offshore wind?
Martin Horwood
I did not say 10, I said 100, and figures as high as 165 have been discussed and contract times as long as 40 years speculated about. The Minister has been unable to reassure us about that in the debate. It is true that high prices are talked about for offshore wind, but that is an emerging and quite competitive technology that deserves support. It is not a 56-year-old technology that has already proved to have a massive record of cost and time overruns. I am happy with supporting offshore wind but unhappy with supporting nuclear.
The effect of new clause 5 and a panel of expert scrutiny would be to ensure that all technologies negotiating contracts for difference were subject to scrutiny, including offshore wind and other renewables. New clause 5 and new schedule 1 are not specifically anti-nuclear, but they are anti-unearned subsidies. The Energy and Climate Change Committee called for that in its report, and Which? addressed it in the drafting of these provisions—I am grateful for that. Such scrutiny and transparency are particularly relevant when, as the Committee pointed out, a mature technology dominated by a single large supplier means there is little competitive pressure and the strike price naturally tends to rise in such a situation—even more so, as the hon. Member for Rochester and Strood (Mark Reckless) pointed out, if one side has almost conceded that it needs to sign the contract at the end of the process.
Alternatives have been discussed, such as scrutiny by the National Audit Office and others, and in a parliamentary debate some months ago it was suggested that the Public Accounts Committee play a role in this kind of scrutiny. The problem with all these suggestions, however, is that they investigate after the event. As I said in my intervention on the Minister, if we are talking about a contract of 20 or 30 years, it is practically useless to investigate whether it is good value after the event because we are locked into it for a whole generation. Right now, negotiations are under way with EDF for this contract.
New clause 5 and new schedule 1 would establish an independent expert panel, which would differ from the expert panel that the Government have already established. As the affordable energy campaign by Which? pointed out:
“A panel of technical experts has been established by the Government to scrutinise the evidence National Grid presents for the setting of CfD strike prices. However this panel does not have a sufficiently broad role. For example, it does not have value for money as part of its remit. The panel must have a clearly defined oversight role set out in the Bill”.
If the Government support the concept of an expert panel, why on earth can they not put it in the Bill, as defined in new clause 5 and new schedule 1? I would have thought they would have absolutely nothing to fear from that.
New clause 5 and new schedule 1 are in the same spirit as amendment 162, although I do not buy everything the hon. Member for Daventry said in support of his proposals. However, energy bills are a major cause for concern among consumers—all hon. Members know that. Whether we are proposing renewables or nuclear, a strong case needs to be made, and transparency and accountability need to be at the forefront. Consumers need a good deal as well as a green deal. The Bill does not guarantee to deliver that, which is why I shall press new clause 5 to a Division.
Caroline Lucas
I rise to speak to my proposals and give notice that I will press amendment 24 to a Division.
I am pleased to follow the hon. Member for Cheltenham (Martin Horwood), who made a compelling case, demonstrating that, even if the word “subsidy” does not appear in the document, we are talking about a public subsidy for nuclear, which goes against the coalition agreement. The bulk of my proposals on new nuclear simply seek to return us to the coalition agreement, which said that new nuclear should receive no public subsidy. Many people are hugely disappointed that Ministers are ditching their commitment so shamelessly.
A Government who genuinely want to tackle high electricity bills would not sign taxpayers and bill payers up to a 35 or 40-year contract—we do not know how long the contract will be for, but that is the ballpark figure out there. The contract would also involve paying around twice the current market price for power. As has been said, that money will line the coffers of French nuclear corporations.
If we were serious about tackling fuel poverty, we would not be going down that route, yet that is precisely what the complex mechanisms for providing financial support for nuclear in the Bill do. We should add the liability cap, underwriting, and indirect subsidies such as for decommissioning and for the unsolved waste problem. Essentially, we are writing a blank cheque for an expensive, inflexible old technology that we cannot afford and simply do not need.
A Government who were serious about tackling fuel poverty and high energy costs would instead pursue more effective ways of meeting our energy needs and decarbonising our power sector, namely through renewable energy, energy efficiency, demand reduction, and demand-side measures such as energy storage, genuinely smart grids and interconnectors.
The UK has the potential to be a massive industrial leader in renewables and efficiency—solutions that could deliver huge cost reductions and a substantial boost to the UK economic recovery, manufacturing and jobs, yet the Bill goes in the opposite direction. Moreover, the secrecy of the Department of Energy and Climate Change negotiations with EDF further undermines confidence in the credibility of the Government’s claims that the deal represents value for money for consumers.
Even if hon. Members are happy for the coalition to break its promise of no public subsidy for nuclear, one would hope that they had some interest in the Minister’s claim that any deal reached would be fair, affordable and value for money. Nuclear costs more than the alternatives and does not represent value for money. We have the opportunity to test that via the expert panel, or by giving the National Audit Office a role in ascertaining value for money, which one of my amendments would do, but Ministers do not look favourably on those proposals.
The truth is that nuclear is a mature technology that has enjoyed nearly 60 years of support. Despite that, the price tag keeps going up. The hon. Member for Cheltenham mentioned the price of nuclear in Finland and France. We should compare that with the fact that the costs of renewables are falling across the board. Last month, Citi Investment Research and Analysis highlighted that, in many cases, renewables are at cost parity with established forms of electricity generation. Recent analysis by Bloomberg New Energy Finance found that the levelised cost of onshore wind had fallen dramatically in recent years, that the best onshore wind farms in the world currently produce power as economically as coal, gas and nuclear generators, and that the average onshore wind farm will reach grid parity by 2016.
That is the point of my first three proposals. They are not anti-nuclear; they would simply ensure that Minister’s warm words on cost-effectiveness and value for money for bill payers were kept. They would also introduce transparency to a shockingly opaque process. If nuclear power is as cost-effective as we are told, I can see no reason why hon. Members would not support my proposals to ensure it. Amendment 24, which has cross-party support, would simply ensure that payments under a CFD for nuclear electricity are not greater than payments for any form of renewable generation, in terms of price per megawatt-hour and taking into account the length of the contract provided.
Amendments 26 and 27 deal with transparency and parliamentary scrutiny of investment contracts and CFDs. They are essential if the public and the House are to have any hope of deciding for themselves whether the terms provide anywhere near value for money compared with alternatives. They would require the Secretary of State to ask the NAO and Parliament to examine whether the contracts represent value for money, in line with the motion debated in a Backbench Business Committee debate on 7 February, and a letter sent recently to the NAO by a cross-party group of MPs and academics.
Mark Reckless
I am pleased to follow the hon. Member for Brighton, Pavilion (Caroline Lucas) and to hear that she intends to press amendment 24, a relatively moderate amendment, to a Division. She envisages subsidy for nuclear as long as it is not greater than the subsidy for renewables, but I would prefer a world in which we do not subsidise any energy production. Under this dog’s breakfast of a Bill, we will end up subsidising almost everything.
My worry with nuclear—my hon. Friend the Member for Cheltenham (Martin Horwood) addressed this—is the length of the contract. I do not go all the way with him on the £1 billion a year cost, or the very large sum grossed up over the period of the contract, but my calculations suggest something in the range of £600 million to £700 million a year just for the new Hinkley stations. That is a huge amount of money. Earlier, the Minister seemed unable to get to grips with the idea that the House might express a view on that. The contract is enormous and could put hundreds of pounds on consumers’ bills, and cost billions of pounds over the length of the contract. It would therefore be highly appropriate for the House to consider the matter, and for hon. Members to vote by positive resolution on whether we believe it is the right thing to do with our constituents’ money.
The key problem with the Bill is that it changes the law and puts very large subsidies to different technologies, which Ministers pick as winners in an opaque process, on a contractual basis that cannot realistically later be unpicked. The Chancellor has told us of an increase in the limit from about £2.4 billion to £9.8 billion per year, which is a quadrupling of the amount spent. That will be added to consumers’ bills for those various technologies, but the Bill implements that into contracts that cannot be unpicked. The nuclear contract could be absolutely enormous. I would like far greater concern for our constituents and the bills they pay for electricity.
We used to have the most competitive energy market in the world. I thought that the Minister believed in free markets, yet essentially what we are doing here is almost the final stage of replacing the freest energy market in the world with one that is rigged against consumers. The cost will be far more than the £9.8 billion figure, which ignores the fact that it is not just through the European Union and its directive that we are planning to close existing coal-fired plant, which are the cheapest at producing electricity. Unilaterally, we are banning the construction of new coal-fired power stations, when Germany has several new coal-fired plants under construction.
John Robertson
Will the hon. Gentleman clarify something for me? Is he saying that we should not worry or think about our obligations on climate change? If he is not saying that, how does he expect his electorate to pay for what he is suggesting?
Mark Reckless
I am sorry to hear the hon. Gentleman not focusing on his constituents’ heritage. Climate reduction and the carbon issue should relate to cost. The coal price has collapsed globally largely because of the success of shale gas in the US and its export of coal, and that means that the cost of the proposals is now far larger than it was. Global temperatures rose until 1998 or 2000. Since then, projections of an exponential increase in temperature have not been borne out by recent data. We have cut our emissions by 24% since 1990, which I think is larger than any other country. What we are left with is a complete mess of policy in the Bill, with various subsidies interacting and greatly increasing bills for our consumers, and I am not sure what the effect will be on reducing carbon emissions compared with, say, the US, which has had a big decrease.
We should look at the cost of coal and the extent to which carbon may be reduced by different things. In this country, we have a price of £16 per tonne on carbon. Under the EU emissions trading scheme, it is less than £2. We are making a great unilateral cross that we must bear when other countries in Europe, for example Germany, are constructing more unabated coal. We will have to buy electricity through the interconnectors, which will hurt our balance of payments and increase the cost to our constituents while we shut down our cheap coal plants. At the same time, shale gas has not come on stream due to the moratorium, as well as ownership and other regulatory restrictions. We will end up with some of the most expensive energy in the world and it is not clear what the impact will be on reducing carbon output.
At the same time as we are closing existing power plants because of the EU, we are banning unilaterally the construction of new plants. The cost of how much we are putting up electricity prices for our constituents should be added to the £9.8 billion figure. We would be much better off if we had a proper market in electricity production, rather than a market rigged against consumers. The Minister, through clauses 38 to 40, wants to introduce a huge network of conflicting subsidies that will let the Government, ex-post, change the conditions of someone’s electricity supply contract. All that will do is increase the price of investment to guard against that risk—yet another thing moving us away from the free market in electricity that might drive down prices for consumers who, certainly in my constituency, are finding the costs very difficult to bear. The previous Government’s policies were bad enough, but the Bill will lead to long-term contracts that may be impossible to get out off, and which will force consumers to pay higher prices for energy for years into the future.
Barry Gardiner
I rise to speak to amendments 148 and 150 in my name, and to amendment 179 in the names of my right hon. and hon. Friends.
Under the large combustion plant directive, 8 GW of old coal has to close by 2015. Of that, 6 GW has already gone, with the remaining 2 GW being considered for conversion to biomass. That leaves 20 GW of old coal set to stay on the system. Of that, approximately 15 GW is being considered for all options, which means that it could be opted into the integrated emissions directive, investing in air filters for NOx and SOx in order to comply. This plant would then not have to close in 2023, and would naturally seek to maximise its return on that capital cost by continuing to provide base load generation capacity unconstrained by the EPS.
Amendment 148 would ensure that where substantial pollution abatement equipment properly dealing with the oxides of sulphur, nitrogen, heavy metals or particles is fitted to the generating station in such a way that makes it compliant with the EU IED while still emitting above 450 grams per kWh, the plant would then be brought under the EPS framework. Without the amendment, many plants will succeed in circumventing the EPS, which would undermine the EMR, the UK’s carbon budgets, the incentive to invest in CCS and the coalition agreement, which committed the Department of Energy and Climate Change to introducing an EPS as a backstop to unabated coal. Remember, these old coal plants have already recouped their capital costs. Allowing them to avoid the EPS cannot therefore be justified, and I dispute what the Minister said about the importance of not accepting the amendment in order to allow new coal to recoup its costs.
Ian Lavery (Wansbeck) (Lab)
Does my hon. Friend agree that coal has a huge role to play in the energy mix of this country? It must, however, be on the basis of burning coal cleanly, using carbon capture and storage. The Government must get a move on and provide the finances to ensure that that happens as soon as possible.
Barry Gardiner
I am in 100% agreement with my hon. Friend. I am happy to put on the record that coal is the energy of the future for the next 40 years; not necessarily in this country, but around the world. Unless we develop CCS and export it to such countries as China and India, which are going to be using coal, the future will be bleak for all of us. It is imperative to incentivise CCS, which is why amendment 179, in conjunction with amendments 148 and 150, is so important.
The central purpose of the grandfathering provision in the EPS is to enable investors in newly consented plant to recover their costs prior to being forced to fit CCS and/or limit their running hours. The grandfathering date in the Bill as it stands is simply not credible. The EPS currently allows unabated gas to operate as base load until 2045. This is not plausible in a carbon-constrained world in which international commitments to reduce carbon are more likely to increase than otherwise. More to the point, grandfathering to 2045 reduces the policy levers available to government, and is likely to reduce the demand for CCS for coal and seriously undermine the credibility of CCS for gas. The EPS is the backstop; it is a very different policy lever from the decarbonisation target. As such, it should retain flexibility to account for policy failure. I have not sought, therefore, to amend the level of the EPS, because in a situation of extreme policy failure, we might need to continue to use some of the unabated gas into the late 2020s. The inclusion of a 2030 decarbonisation target should reduce that risk significantly, but it would remain a risk, and one for which the EPS would have to account.
Amendment 150 proposes a 15-year window up to 2029 providing an adequate commercial time frame and aligning itself with the 2030 power sector decarbonisation trajectory. It would provide increased investor confidence by being more credible than the current 2045, and by setting a shorter grandfathering period, new gas plant would be incentivised to begin operation sooner, assisting efforts to address energy security concerns in this decade.
Amendment 179 would remedy the problem of the Energy Bill’s requiring CCS projects to operate under the EPS regime from day one. The amendment would apply the EPS to CCS projects only once an agreed and clearly defined commissioning and proving window had passed. That approach would remove an unnecessary regulatory burden for project developers and lower the cost for consumers, as the EPS risk would not need to be factored into the CFD strike price, and would achieve the Government’s aim—
Title | Extent of repeal or revocation |
|---|---|
Electricity Act 1989 (c. 29) | In Schedule 16, paragraph 11. |
Water Act 1989 (c. 15) | In Schedule 25, paragraph 33. |
Radioactive Substances Act 1993 (c. 12) | In Schedule 4, paragraph 2. |
Environment Act 1995 (c. 25) | In Schedule 22, paragraphs 7 to 9. |
Energy Act 2004 (c. 20) | Section 78(1). |
Energy Act 2008 (c. 32) | Section 65. |
In section 112(3), the words “(other than section 65)”. | |
Marine and Coastal Access Act 2009 (c. 23) | In Schedule 14, paragraph 6. |
The Nuclear Installations Act 1965 etc. (Repeals and Modifications) Regulations 1974 (S.I. 1974/2056) | Schedule 1, except for the entry relating to section 25 of the Nuclear Installations Act 1965. |
In Schedule 2, paragraphs 1, 2, 3 and 6. | |
The Nuclear Installations Act 1965 (Repeal and Modifications) Regulations 1990 (S.I. 1990/1918) | In the Schedule, paragraph 1. |
The Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 1999 (S.I. 1999/1750) | In Schedule 1, in the entry for the Nuclear Installations Act 1965, in column 1, in paragraph (b), the words “6 and”. |
In Schedule 3, in the entry for the Nuclear Installations Act 1965, in column 1, the words—(a) “1(1)(b) and (2)”; (b) “and 22(1) and (2),”. | |
The Water Industry (Scotland) Act 2002 (Consequential Modifications) Order 2004 (S.I. 2004/1822 (S. 3)) | In the Schedule, paragraph 5. |
The Environmental Permitting (England and Wales) Regulations 2010 (S.I. 2010/675) | In Part 1 of Schedule 26, paragraph 2. |
The Natural Resources Body for Wales (Functions) Order 2013 (S.I. 2013/755 (W. 90)) | In Part 1 of Schedule 2, paragraph 41.’. |
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I beg to move amendment 2, page 192, line 9, leave out subsection (4).
Madam Deputy Speaker (Dawn Primarolo)
With this it will be convenient to discuss the following:
Amendment 3, page 192, line 18, at end insert
‘unless one or more consumers have suffered loss or damage greater than this value.’.
Amendment 4, page 192, line 24, at end insert
‘unless one or more consumers have suffered loss or damage greater than this value.’.
Amendment 5, page 198, line 31, leave out subsection (4).
Amendment 6, page 198, line 40, at end insert
‘unless one or more consumers have suffered loss or damage greater than this value.’.
Amendment 7, page 198, line 46, at end insert
‘unless one or more consumers have suffered loss or damage greater than this value.’.
Luciana Berger
Forgive me for the delay in getting to my feet, Madam Deputy Speaker. I was expecting the Minister to go first—I am so used to coming after him.
Amendments 2, 3 and 4 to part 1 of schedule 14 relate to gas customers. Amendments 5, 6 and 7 to part 2 cover electricity consumers. We are proposing these changes for a simple reason: we need to do everything we can to protect consumers who lose out when energy suppliers break the rules. I sincerely hope that Members on both sides of the House agree about that. My right hon. Friend the shadow Energy Secretary called for a system to guarantee compensation to customers who have been ripped off as far back as October 2011, which is a year and a half ago now, so it is nice to see that the Government are finally following our advice and doing something to give redress to consumers.
Mr Weir
On the arbitrary cap, I agree with what the hon. Lady has been saying, but it seems to me that the amendment would mean that a company faced unlimited liability for any consumer redress order that affected more than a single consumer, which could have serious implications, for instance for investment in any infrastructure that might be required. Will she address that point?
Luciana Berger
I am expecting to hear from the Government about that, and I intend to address the point later. After I have done so, I will be happy to respond to any further questions the hon. Gentleman might have.
As I was saying, the Bill also contains a crucial loophole. The new powers would not apply to current Ofgem investigations. That is why we raised concerns in Committee, and it is why we have brought back amendments addressing the point on Report. Before I address the specific issues, let me remind the Minister why this will matter a great deal to households across the country.
Over the last few years there have been far too many cases of people being mistreated or misled by their energy providers. In April last year EDF agreed to pay £4.5 million after an investigation found it had been mis-selling to customers, and in April this year SSE was given a record fine of £10.5 million for running a sales process where people were given information that simply was not true. There are other ongoing investigations into practices at E.ON, npower and ScottishPower, and overall Ofgem is currently carrying out 15 formal investigations into potential malpractice by energy suppliers. Its enforcement team is also informally reviewing an additional 12 cases.
That is why we agree that schedule 14 represents a step in the right direction. It gives the regulator the power to order companies to compensate customers who have been misled about their energy deal and tariffs and the arrangements by which they are put on those tariffs.
None of those ongoing investigations will be covered by the new powers now being introduced, however. That means that any company found guilty of wrongdoing in any inquiry that begins or concludes today, tomorrow, next week, next month or at any time before this Bill receives Royal Assent will escape the new penalties all together. Also, if in future the regulator finds that there have been other failings by suppliers that took place before the Bill became law, those companies will avoid sanction as well.
I wonder how the Minister can think that that is right. How will it be fair to consumers who have suffered bad practice by their suppliers that they are not to receive due compensation? Amendments 2 and 5 would close this loophole and make all energy firms that break the rules fully accountable both to their customers and the regulator. I hope the Minister will agree that that is the right thing to do and support these changes.
John Robertson
Does my hon. Friend agree that we have also not used the current rules properly? The fines that have been imposed of late do not even go back to the people who pay the bills. Does she agree that we should be looking to compensate the people who pay the bills, rather than give that money to the Treasury?
Luciana Berger
My hon. Friend raises an important point. Currently, the fines that are being raised are going into the Treasury, and many questions have been asked about where that money should go.
If the Minister does not support our amendments, will he tell us what indication he has had from Ofgem as to how many of its current 15 formal investigations will conclude before these new powers are introduced, and how many consumers could miss out on compensation as a result?
Following the discussions we had in Committee, I suspect the Minister might argue that we are proposing retrospective legislation. Let me be very clear about why that is not the case. These amendments do not alter any of the regulations energy companies currently need to abide by. That is the crucial point. We are not seeking to penalise companies for something that was not against the rules at the time. Our proposals would simply ensure that customers whose providers are found to have broken the rules receive appropriate compensation, including for investigations that fall before the Bill receives Royal Assent. I hope the Minister will bear that in mind and support this change.
Turning to our other amendments, we seek to enshrine an important point of principle in the new powers: that customers who have been treated unfairly can, and always should be, fully compensated. As it is currently drafted, schedule 14 places a limit on compensation to 10% of an energy company’s annual turnover. I ask the Minister to explain what would happen if the losses suffered by customers were greater than that. How was that arbitrary figure reached—and why not 11% or 15%?
John Robertson
Can my hon. Friend clarify what she means by turnover, as factors such as the central pot and whether generation is included as well make a big difference?
Luciana Berger
My hon. Friend raises a point we on the Opposition Benches have raised many times before about the challenges we face with our very opaque energy market, where we do not know the true cost of our energy and many of our generators are also our suppliers. We will wait for the secondary legislation to hear exactly what the Government mean by that term, but it is fair to say that we are dealing a lot in this Bill with a broken market, and it is a shame that the Government are not proposing legislation to fix it.
We accept that there is a relatively small chance of a compensation package exceeding 10%, but that is not an impossibility. If a case ever did exceed that amount, it is likely that an enormous number of consumers would have been affected. It would be irresponsible for the Government not to be prepared for that scenario. In Committee, the Minister said that if consumers suffer losses greater than the compensation they receive, they will still be able to seek further redress through the courts, but surely he acknowledges it would be better not to risk that happening in the first place by amending this Bill.
Surely that would be better than abandoning consumers and leaving them to endure a long and protracted court battle to get due recompense. We believe it makes more sense to guarantee that families will always receive pound-for-pound compensation when they have been mistreated, which is why our amendments specify that compensation would be allowed to exceed 10% of turnover if
“one or more consumers have suffered loss or damage greater than this value.”
The Department’s own impact assessment said that such a change would send a powerful signal to energy firms on consumer protection. That is our priority.
This Government claim that they are on the side of consumers and today they have the chance to prove it. Our amendments put consumers first, ensuring that mistreated families will not be short-changed, no matter when they were wronged or how much they are owed. Will the Government stand up for the many? The question for the Minister and his colleagues is simple today: whose side are they on?
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
The Opposition amendments seek to amend schedule 14 by removing restrictions on retrospective and unlimited liability. I understand the concerns and motivations of the Opposition, but I can assure them that this coalition is also committed not only to helping hard-working families and, indeed, all consumers with the rising cost of living, but to empowering consumers and protecting hard-working families from rip-offs and scams. So although I have some sympathy with the aim of amendments 2 and 5, which are intended to allow Ofgem to compel energy companies to pay redress for events that happened prior to the enactment of this Bill, I am troubled by the effect of setting a precedent by retrospectively applying powers in the energy market and by the impact that that would have on all consumers. There is a general principle that powers should not be applied by this House retrospectively. Beyond that principle, there is potential for very real, negative impacts on consumers.
The Government are committed to encouraging competitive pressure on the big energy market players, but the regulatory uncertainty these amendments would introduce would be likely to lead to an increase in the cost of capital for energy companies, and that, in turn, could push up bills for everyone. Furthermore, it could create investor uncertainty at the very time we are trying to encourage the necessary private sector investment required to move to a low-carbon economy and renew our energy infrastructure. More expensive finance would most heavily hit the smaller companies that are also covered by this legislation—the very small companies and entrepreneurs we want to attract into the sector. Under the previous Labour Government, competition in the electricity sector shrank to leave just six big supply companies dominating it. The last thing we want to do is accept amendments that could hinder new entrants to the market.
The amendments may also lead to increases in the cost of insurance premiums for companies, in order to cover the extension of liability for events that took place prior to the enactment of this legislation—again, that is likely to be proportionately higher for smaller energy companies. All these factors could push up the cost of living for hard-working families, at a time when, as we know, many can ill afford it. I understand the intention behind the amendments, but the unintended consequences could end up hitting the very people we are trying to protect, and so we cannot accept them.
Again, I have some sympathy with the intention of Opposition amendments 3, 4, 6 and 7, which seek to ensure that the amount of compensation that can be required through a consumer redress order is not limited. As I said at the outset, the coalition Government are absolutely committed to providing a fair deal to consumers. So when considering these amendments, we should look to balance the need for a redress mechanism that allows consumers timely and proportionate compensation, with an appeal mechanism that is proportionate to the potential liability faced by energy companies.
Under existing arrangements, consumers can obtain redress through the courts, but we recognise that the legal process is lengthier and does not offer a typically quick remedy for consumers who have been badly served or ripped off. That is largely because the courts offer recourse for consumers in cases where compensation may exceed the 10% limit set in this legislation. The legal process is necessarily equal to the potential sums at stake. The powers set out in schedule 14, however, contain appeal mechanisms, proportionate to the potential penalty, limited to 10% of an energy company’s annual turnover.
John Robertson
I ask the Minister the same question I asked my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger): what is classified as turnover? Does it just include retail or does it also include generation?
Gregory Barker
I will correct myself if I am wrong, but I believe we are talking about global turnover—we are talking about very significant sums. [Interruption.] This relates to the turnover of the company under investigation. [Interruption.] That was very helpful.
John Robertson
Just for clarification, is “the company under investigation” the mother company as well as the subsidiary company, or does it include all the companies that that company is part of?
Gregory Barker
The hon. Gentleman asks a fascinating and timely question, one which deserves a proper answer. He may have misheard me, because when I said “global turnover” what I actually meant was UK turnover. Nevertheless, that is clearly a very significant amount.
Our approach would allow for a relatively straightforward resolution of relatively simple cases. Accepting amendments to remove the cap would require us to make changes to the appeal mechanism, which could deny consumers access to the timely compensation they are due, as it could result in a far lengthier resolution of cases if the stakes are much higher. In considering whether such a trade-off is justifiable, we should take into account just how unlikely it would be for consumers to lose out on this scale. Exceeding a 10% cap of annual turnover would mean penalties and compensation of over a £1 billion for the very largest domestic energy supplier. The largest penalty imposed to date by Ofgem has been £15 million and under our legislation the cap for the largest would be set at £1 billion. A cap on redress is therefore unlikely to hinder Ofgem’s ability to impose appropriate redress orders.
In addition, there are unintended consequences of removing the 10% cap on penalty and redress, as that could also increase the costs of capital and insurance premiums for energy companies. Again, that would particularly affect the smaller companies—the very ones we are trying to attract into the sector—with all the adverse impacts on consumer bills that I mentioned earlier.
Energy companies should be in no doubt, however, that these powers are designed to ensure that consumers receive appropriate compensation. The combined 10% cap on penalties and redress will apply to each separate regulatory breach. If companies flout the rules on a number of occasions, they will therefore face correspondingly larger payouts. For the reasons I have set out, I hope that hon. Members will, on balance, agree not to press their amendments to a Division.
Mr Weir
I find myself in the unusual position of agreeing with a lot of what those on both Front Benches have said. I have a lot of sympathy with the amendments and, unlike the Minister, I do not find any difficulties with amendments 2 and 5. If a company has been doing over consumers, whether it has been doing it the day before the Act comes into force or the day after does not seem to make any difference. If we are seriously considering making such companies pay such large sums for their misdemeanours, I would be happy to support those two amendments. That would send a clear message that we are fed up with some of the things that have been coming to light in recent years and with how the consumer has been mistreated, taken for granted and, frankly, milked, by some companies.
My hon. Friend the Member for Glasgow North West (John Robertson), if I may call him that, made very good points about turnover.
Gregory Barker
I am grateful to the hon. Gentleman for giving way, particularly as I have only just sat down. Let me be absolutely clear on this important point. For investigations by Ofgem that are already under way, Ofgem will continue to negotiate compensation on behalf of affected consumers. Companies that fail to negotiate and agree satisfactory redress can expect Ofgem to reflect that lack of co-operation in the penalty it sets.
Mr Weir
I accept that, and I understand what the Minister is saying, but he said in his speech that the maximum penalty to date had been £15 million. Under the Bill he is talking about £1 billion. There is a massive difference between the two and my point stands: if consumers have been ripped off, it does not matter whether it happened just before the new system was introduced or just after that. The same should apply, in my view, and I do not have any great problem with that proposal.
However, I have a big problem with amendments 3, 4, 6 and 7. As I said in an intervention on the hon. Member for Liverpool, Wavertree (Luciana Berger), I have a worry—the same sort of worry as the Minister—about the effect that the amendments would have on the company. It seems that one aspect of the Bill is about trying to get investment into the energy industry. For far too long there has been insufficient investment; a lot of modernisation and new investment is needed to get our energy system up to scratch. The figure is 10% of the turnover, whatever that turnover will be—I am still not clear what the word covers. That takes me back to the days when I served on the Select Committee on Energy and Climate Change with my hon. Friend the Member for Glasgow North West and we had the big six in one day and asked them about their profits. We asked whether they had made their profits selling to the consumer and they replied, “Oh no, we didn’t do that.” We asked whether they made them through generation, and heard, “Oh no, we didn’t make it from that.” We asked, “Where did you make those profits? You have large profits,” and no one could answer the question. There is great difficulty in pinning down what is meant by profit and turnover. In a time when we have six big energy companies, five of which are effectively multinational companies—we have seen in recent weeks what happens with the tax of multinational companies—we need a bit more clarity about what is meant by turnover.
Although the sums involved in 10% of turnover are significant, my bigger worry is that a company could be under investigation for an alleged breach for a considerable time. If there is a set limit, whether it is 10%, 20% or whatever, anyone thinking of lending that company money for infrastructure projects—most of them borrow from large financial institutions or other lenders—will know the contingent liability and what they are dealing with. I grant that if the liability is absolutely unlimited the sums involved are unlikely greatly to affect the big companies, given their size, but the uncertainty might well affect them. As we all know, those lending sums of money of such magnitude will consider the state of the company. A potential unlimited liability going into many billions of pounds, if there has been such an incident, could seriously undermine the company’s ability to borrow the money for much-needed infrastructure in our energy supply system.
I have a great deal of sympathy with those four amendments and understand what the hon. Member for Liverpool, Wavertree is trying to do, but I have a difficulty with them. Perhaps when she winds up she could expand on them and reassure me on the points I have made.
We must also remember that the provision would affect not only the big six energy companies but all regulated persons. If I understand correctly, that would include the small companies that are trying to get into the market. The Government say that they want to bring new entrants into the market, including the smaller companies that are beginning to nibble away at the edges of the big companies. If they were faced with such a penalty—let us hope that none of them would be—it would be the death knell for them.
John Robertson
The hon. Gentleman makes a very good argument and I had not thought of going down that road. Does he accept that those small companies could, through no fault of their own, follow what the large companies are doing and get themselves into bother that they did not really think about when they first started doing whatever it was that they did?
Mr Weir
My hon. Friend makes an excellent point. Whereas the big six would be able to take that financial hit, many of the smaller companies would not be able to do so. These proposals would take us down a road that could have serious repercussions. Many small companies are beginning to break into the market. Many of them are particularly strong in renewables, for example, and that is one way in which much of our renewables investment might be generated in the future.
I ask the shadow Minister to think about my points. I have sympathy with the amendments and understand what they want to do. We all want to ensure that any energy company that has been mistreating consumers is dealt with severely. There are two sides to this, however, so let us not rush into doing something that could have profound and unforeseen results.
John Robertson
It is a pleasure to follow the hon. Member for Angus (Mr Weir). He was an excellent member of the Energy and Climate Change Committee when it was first put together and I am very sorry that he is not still a part of it—but there is time for him yet, as they say.
I agree with a lot of what the Minister said—I do not pick holes in things just for the sake of it—but it is not my place to worry about whether the big six have financial difficulties or whatever else. Personally, I could not give one jot about any of those companies. They are big enough to look after themselves and they certainly know the rules, because they know how to break them and get away with it.
I support every one of the amendments tabled by my colleagues on the Front Bench. I have no problems with them whatsoever. The only thing I have to say to the Minister is that I was slightly disappointed by his speech. He talked about hard-working families and, yes, I believe that hard-working families should always be looked at and looked after as best we can. My constituency has more than its fair share of elderly people and it has the highest percentage of single women in any constituency in the country, which probably means that most of them will be elderly. That means that they might have some difficulties that other people do not have. There are also quite a number of people who are disabled. We have found over the years that those are the people who do not complain, because they are frightened to, and who do not get the help they probably should get. Once again, we are getting to a stage when people think that their biggest bill is their electricity bill, their gas bill or both. According to some newspaper articles, people will be more worried about how they pay their fuel bills than how they pay their mortgage.
I do not worry about the big six, because they are making plenty of money, but we have to nail down what we mean by profit and turnover. Let us take EDF, a large multinational company that is to build a new nuclear power station, from which it will make a lot of money. It also has other power stations in the United Kingdom on which it makes money, and of course it is involved in retail as well, where it says it makes 2% profit. It makes some 17% to 19% profit from generation. It puts that 19% alongside the 2% when it comes to giving shareholders a dividend, but it tells Government that it is making only 2% profit. The company may therefore put up its prices—SSE did so only last October—yet these same companies are making enormous profits. They are telling people, “Invest in our company because you can get a return for your money.” That is not right.
Gregory Barker
I absolutely assure the hon. Gentleman that there will be no “get out of jail free” card.
John Robertson
That is a very good answer, but the Minister gave an answer earlier that was found to be wrong, so I will wait for a note to come over to him.
Barry Gardiner
I have listened carefully to the debate. Is there not in my hon. Friend’s mind, as there is in mine, a concern that we are putting on companies a financial penalty that will ultimately be borne by consumers? Should we not instead address the real problem, which is directors’ liability? It was noticeable in the recent SSE case that no criminal prosecution for fraud was brought, even though the maximum penalty was imposed. Would it not be better to impose a strict liability on the directors of the companies, so that it is not the consumer who ends up paying the fines?
John Robertson
My hon. Friend makes a very good point, which brings me to the next issue that I wanted to raise: what happens to the money? If we get £1 billion off a company—not that that is likely, because it would be a lot more than we get at present—or even £100 million, surely that company should have to pay that back to its consumers. It should not give it to the Treasury to spend, though I am sure it would spend it in a very nice manner. It should go towards what it was designed for: paying for electricity. That £100 million or £1 billion should go back to the customers of that company. I ask the Minister to look at that.
The Bill is a great deal better than it was when we scrutinised it on the Select Committee. Everything else about the Bill has been rushed. Look at the number of amendments tabled today, and the number of things that we are not being told—the strike price and so on. We are basically being given a promise that it will be all right on the night. We need to know what the Bill is. The Select Committee had five weeks’ scrutiny of the Bill, when normally the period is 12 weeks. Then we waited an inordinate amount of time for the Bill to come back to us. When we got it, we sent it back to the Minister and told him that it was a dog’s breakfast; it was terrible. We then got something else. It has been through Committee, and we have improved it. I implore the Minister to consider the amendments that hon. Members on both sides of the House are putting forward, and seriously look at using the best bits to improve the Bill further, because this is an okay Bill, but that is all it is; it is not good. It is probably slightly better than what we had at the start, but we still have a long way to go. I ask the Minister to consider that.
I also ask the Minister to look at the issue of people paying their taxes. We see that npower has admitted that it does not pay corporation tax. Another three of the major companies say that they do not pay much corporation tax. I am pleased to say that the two companies with Scottish links say that they do pay their corporation tax, although I would still like to look at the books.
There lies the biggest problem that we have with energy: looking at the books. What are the books? I have talked to Ofgem and to the Minister. What do the books cover? That goes back to the definition of cost and the definition of turnover. Where does the generation element come in and where does the retail element end? What happens to all the money that is made on either side of the box in the middle? That is a real problem. When billions of pounds of profit are made on one side and appear not to be counted, and billions of pounds are missing on the other side so the companies put the prices up, they keep making money but the consumers—the poor, the elderly, the disabled, the hard-working families that the Minister likes to talk about—are all suffering, and it appears that our Government do not care.
We should be doing more. We have even got to the stage where HMRC hired a gentleman called Volker Beckers, who was the chief executive of RWE npower. I bet he knows how to deal with tax for those energy companies. I hope he uses the same skill as he used for RWE not to pay corporation tax to get the same money out of the same company for HMRC.
There is much that is good in the Bill. I hope the Minister will consider the amendments moved by my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) and listen to what my friend the hon. Member for Angus said. Between us all, we will make the Bill better, but we must remember that at the end of the day it is the people who put us here that we should be looking after.
Luciana Berger
I have been listening carefully for almost an hour to the debate, and I listened carefully to what the Minister said. We on the Opposition Benches still intend to divide the House on amendments 2 and 3. Let me explain why.
I reiterate the point that I made about the number of investigations currently under way. Ofgem is carrying out 15 formal investigations into potential malpractice by energy suppliers, and its enforcement team is informally reviewing an additional 12 cases. On that basis we consider it crucial that consumer redress orders be issued in respect of contraventions that might occur before the Bill comes into force. I reiterate that that is not retrospective legislation; it just means that consumers can get the redress they deserve.
Amendment 3 protects an important point of principle. Instead of a cap on the amount of compensation that consumers can receive, customers who have been treated poorly should be entitled to receive what they are rightly due. If the Government are convinced, as I heard the Minister say, that the level of compensation would never reach 10% of turnover, whatever that definition of turnover might be, the amendments should not present much difficulty. They would take effect only if the harm to consumers was above the 10% threshold. If it is unlikely ever to reach that threshold, the cost of that risk would be relatively small, and if the level of damages were to exceed that level, surely the Government would want to ensure that customers who had been treated unfairly were properly protected.
Question put, That the amendment be made.
Business without Debate
delegated legislation
petition
Tim Loughton (East Worthing and Shoreham) (Con)
I present a petition on behalf of the residents of Lancing, West Sussex, who declare their concern about the Government’s proposals for pensions in the new White Paper on pension reform, “The single-tier pension: a simple foundation for saving”.
The petition states:
The Petition of residents of Lancing, West Sussex,
Declares that the Petitioners are appalled by the Governments proposals for pensions in the 'New White Paper on Pension Reform' - The single tier pension: a simple foundation for saving; further that the Petitioners believe it is unfair to give a pension of £144.00 to a pensioner who retires in 2017 with 35 years National Insurance Credit when pensioners today will have to remain on their current lower pension rate, many of whom will have accumulated Working National Insurance Credits of over 40 years or more; further that anyone who has drawn their state pension before 2017 will not be included in these plans and that will be a disadvantage to millions of older women who currently get less than £144.00 a week.
The Petitioners therefore request that the House of Commons urge the Government to discuss the matter of pensions for at least another 12 months and address any equality and discriminatory issues in the Pensions White Paper.
And the Petitioners remain, as in duty bound, will ever pray.
[P001182]
Timeshare Contracts
Fiona O'Donnell (East Lothian) (Lab)
I am grateful for the opportunity to debate the regulation of the timeshare industry. I want to start with a list of thank yous. It is appropriate that we are speaking about timeshare: I thank Ministers from the Department of Energy and Climate Change for disposing of their business so quickly that they have managed to share the time this evening more evenly. I thank the Minister and her officials for the interest they have taken in this issue. I look forward to working with them in the hope that we can find a way to solve the problems faced by the people I will be speaking about. I thank the various consumer organisations that have been supportive: Citizens Advice Scotland, Which? and the trade body of the sector, the Resort Development Organisation. Most of all, however, I would like to thank The Sunday Post, which has run a really effective campaign on the issue. That newspaper is often the subject of urban myths—according to one that does the rounds in Scotland, when the Titanic sank, its headline was “Titanic sinks. Govan man feared drowned”—but this campaign shows that those urban myths are a thing of the past.
For most people, owning a holiday home is little more than a dream, but a solution was apparently found back in the 1960s, with the birth of timeshare. Holidaymakers keen for their own slice of paradise without the full cost of owning a place abroad—something they could not afford—turned to this option. Under a timeshare agreement, individuals and families own not a whole property but the right to occupy a property for a specific period each year. Timeshares are binding, contractual agreements between owners and the company that owns and manages the property, with the owner paying a one-off fee and ongoing maintenance costs. The legal rights and obligations binding the company and owner are detailed in a timeshare agreement.
Timeshares were meant to offer families certainty and security. By investing in a property held in trust for mutual benefit, families could enjoy regular holidays in accommodation of a higher quality than that which they could otherwise have afforded. The idea of timeshare became popular, and recent figures from a European timeshare industry report show that more than 500,000 Britons own timeshares. It is a huge sector in the UK, therefore, and although much progress has been made in terms of regulation and better practice, there is still room for improvement because for many that holiday dream has turned into a nightmare.
During the boom years of the ’80s and ’90s, timeshares were often sold aggressively to tourists who were on holiday and without access to legal advice. Many contracts were not in English and deals were agreed in currencies other than sterling, meaning that maintenance fees have risen as the pound has weakened. Many timeshare owners unwittingly signed contracts that locked them and—it now transpires—their children in for life, because timeshare agreements regularly included an “in perpetuity” clause, extending the right to a property beyond the owner’s death. The only way for these timeshare owners to escape their timeshare is to sell it on, but there is little demand for second-hand timeshares, and many owners have been forced to use unscrupulous middlemen to find a buyer. Often, these issues are not reported, but they affect many families across the UK. This debate follows on the heels of scams awareness month, and it seemed an appropriate time to raise it in this place.
The Timeshare Act 1992 and the Timeshare Regulations 1997 were repealed by the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010, which came into force in February 2011. The 2010 regulations were introduced to transpose EU directive 2008/122/EC—on the protection of consumers in respect of certain aspects of timeshare, long-term holiday products, and resale and exchange contracts—which had been adopted on 14 January 2009. The directive aimed to enhance consumer rights, especially through stronger rules on the information that companies had to provide to consumers, including on the consumer’s right of withdrawal. Under the new rules, a private individual considering the purchase of a timeshare must be made aware of key information in their own language and in the standardised form. Buyers are also given rights of withdrawal, so that they can cancel a contract during a cooling-off period.
In short, new timeshares with contracts of more than a year must be sold with a 14-day cooling-off period, giving buyers a right to cancel. The seller cannot ask for any money within the 14 days, and if they do not inform the buyer about the cooling-off period, it can be extended to one year and 14 days. This is a great improvement on the previous situation, when there was a cooling-off period only if the timeshare agreement was for at least three years. Afterwards, the buyer can cancel the timeshare if the timeshare allows for it, although they may have to use a timeshare or resale company, which usually charges commission, in order to secure this.
The 2010 regulations sought to address a number of problems by extending protection to holiday products similar to timeshares, including holiday clubs, and improving consumer confidence by ensuring that important information is provided to individuals before they commit to timeshare purchases or resales. The Office of Fair Trading and trading standards officers are responsible for enforcing the regulations, which were broadly welcomed. Consumer bodies such as Which? had lobbied for increased protections. However, the regulations address problems with only certain aspects of timeshare agreements—for example, consumer rights when entering the contract. Meanwhile, issues such as termination of contracts and inheritance of rights and obligations remain regulated by national laws of European Union member states.
The EU Commission will review the application of the directive and report to the European Parliament and the European Council in 2014. I will be interested to hear whether the Minister thinks there might be an opportunity in that review to extend the remit of the regulations. The 2010 regulations indicate that policy makers recognised a need to reform the timeshare market, but protections did not address in-perpetuity contracts, which continue to affect countless timeshare owners. If the timeshare company is a member of the trade body, the Resort Development Organisation, owners can escalate complaints through an internal reconciliation process, although this may prevent future court action. There are also several bodies offering advice to timeshare owners. In addition to the 2010 regulations, the Unfair Terms in Consumer Contracts Regulations 1999 may be relevant in determining the legality of a timeshare agreement. It would be for the OFT to decide whether to investigate.
As I have looked further into this issue, it has become clear that there is uncertainty in many areas of regulation. Other than the 2010 regulations, legal protection for timeshare owners is rather ad hoc. Indeed, Citizens Advice Scotland has said:
“The Citizens Advice Service in Scotland advised consumers on more than 300 queries about timeshares in 2012/13…Citizens Advice Scotland is concerned that many consumers are still…ripped off despite recent policy improvements around timeshares.”
Although there has been a fall in complaints about timeshare companies, Citizens Advice, consumer champions Which? and BBC’s “Watchdog” have all raised concerns about timeshare agreements in recent years. As the 2010 regulations were not backdated, many timeshare owners have been left to traverse the tangled web of contract law and property rights, sometimes in the UK and sometimes overseas. Some companies allow owners to terminate timeshare agreements on request, while others provide this option only to the sick or elderly. Owners should check, with the assistance of a legal adviser or Citizens Advice, whether provision exists in their agreement.
Margaret Kaney from Bridge of Allan contacted The Sunday Post about her timeshare. She is 70 years old and bought a timeshare in Scotland with her husband in 1994. They paid £6,600 for their timeshare, and maintenance fees have risen to £1,100 annually. Mrs Kaney’s husband died over seven years ago and then she suffered a stroke, which made travel difficult. Mrs Kaney has had her timeshare up for sale for two years. Following an intervention by The Sunday Post, she was released from her timeshare and the RDO promised that most of its members allowed owners who were over 70 to leave. The Sunday Post has informed me that, despite that assurance, other owners who have asked to end their contract have been met with refusal.
The Trading Standards Institute represents trading standards officials in the UK. An official from the Trading Standards Institute commented in general terms that if a person can prove that they can no longer afford their timeshare or if the conditions under which the contract was signed have changed, they may be able to dissolve it. In practice, timeshare holders can sometimes relinquish their timeshare in exchange—for example—for one year’s maintenance fees.
Myra Murray, aged 63 and from Wishaw, inherited a two-week timeshare with her husband, Alan, from his mother, who had had it for 30 years. They continued to pay maintenance costs for 20 years, and spent £3,500 on a further week’s worth of timeshare. The annual maintenance fee is now more than £1,000. Mr and Mrs Murray used the timeshare annually, but Mr Murray died in 2011. Mrs Murray now fears years of never-ending maintenance fees. She is trapped by an in-perpetuity clause, but the company has said that the contract could be brought to an end in three years’ time if she paid £5,400 up front. Mrs Murray feels that that offer is extremely unreasonable. She is also concerned about passing the debts on to her children. Her situation is simply intolerable. However, the TSI official has said that if a timeshare owner cannot come to an arrangement and is not in financial difficulties, it is their responsibility to sell the timeshare. Until a buyer is found, they are legally bound to pay maintenance fees.
Catherine and Peter Ross from Carluke spent £5,500 on a timeshare at Moness Country Club, but were not told that they would need to save two years worth of points to get one weekend in Florida. They ended up paying over £2,500 more to get a one-week timeshare, and they currently pay £500 annually in maintenance fees. They are trapped by an in-perpetuity clause and are allowed to advertise the timeshare for sale only on the company’s website.
In addition, bogus resale companies have proliferated. A recent EU directive tightened the rules on reselling and the charges that can be levied, but The Observer newspaper revealed last year that some people who had previously used bogus resale agents were now being targeted by bogus compensation companies claiming to be able to recoup money that had been lost. That was clearly a case of double scamming. Some companies offer buy-out schemes to enable owners to terminate their agreements, but the Minister’s own Department has warned against using those schemes.
The Department for Business, Innovation and Skills has stated that consumers experiencing problems with their timeshare should be cautious before committing to sell to, or seek the help of, any company without first seeking legal advice. The Department has said that it receives reports and complaints about the trading activities of some resale companies that offer a marketing service for an up-front fee. Sales seldom take place, and additional fees are charged. I hope that the Minister will be able to tell the House this evening what action she is planning to take in response to the information that her Department has gathered.
A Member of the House of Commons, my hon. Friend the Member for Ogmore (Huw Irranca-Davies) has played a part in exposing some of these scams. In October 2010, he took part in a BBC “Watchdog” exercise to highlight the dubious business practices and aggressive selling techniques of those resale companies. He was subjected to pressure selling, and three lawyers confirmed that the company involved had broken several laws.
In-perpetuity contracts lock timeshare owners in for life. After an owner’s death, the contractual obligations may pass to their children or to another beneficiary in their will. There has been conflicting advice over the enforceability of in-perpetuity clauses, and timeshare owners would like clarity. We are hoping for some clarity from the Minister tonight, or at least for an indication of the direction of travel that she is taking on this matter.
I should like to thank the House of Commons Library for providing me with further information on the timeshare sector in the UK and overseas. It informs me that if a timeshare is jointly owned with the right of survivorship, the surviving owner should automatically become the full owner. However, if the deed reflects sole ownership, the property may be handed down to another party according to the terms of the deceased’s will, trust or other legal document that specifies who will inherit his or her estate. In effect, a person could inherit a timeshare that they do not want and cannot afford. The beneficiary can formally disclaim the timeshare if they do not want it. That allows the executor to take charge of the property instead. They may then be able to sell or donate the timeshare. The owner of an unwanted timeshare might be better off disposing of it now, rather than leaving it as a problem for his or her executors.
The Sunday Post heard from a Lothians couple who bought a timeshare in 1997—a great year—for £3,800. They have a disabled son in his 20s and they worry about his future. They would like to start saving for his care, but are faced with annual maintenance fees of £530. They say the timeshare was sold to them as an investment for their children, but it is fast becoming a frightening burden as they are again trapped by an in-perpetuity clause. Meanwhile, the newspaper heard from a lady aged 79 from South Lanarkshire who bought a timeshare from Macdonald hotels in 1990 for £7,800. She insists that the timeshare was mis-sold to her. She is struggling to pay maintenance fees of £554 on her state and small occupational pensions. In addition, she has a grown-up disabled son who lives with her. They are unable to use the timeshare; they last used it seven years ago. She asked Macdonald if she could sell it back in 2010, but it suggested letting it out. This raised only £143.
An official from the UK European Consumer Centre, which provides impartial advice for UK consumers, agreed that in-perpetuity clauses are unfair as they pass responsibilities on to people who may not want them. The ECC gets complaints from time to time from people who have inherited a timeshare and have been told that they must continue to pay the maintenance fees or legal action will be taken against them. This is despite the timeshare itself being in someone else’s name. As far as the ECC is aware, no timeshare company has actually taken legal action against a consumer and been successful, although it can rely only on the information provided to them by consumers, and it may be the case that consumers have simply not informed it. The difficulty for UK consumers is that they can argue that the contracts are unfair, but in order to get a confirmed ruling, they have to go via a court and get a judgment, which can be both time-consuming and costly.
I have been informed by an official at the UK ECC that in Spain contracts for longer than 50 years, including contracts in perpetuity, are unenforceable as they are deemed unfair. Although this ruling is beneficial to UK consumers who have agreements with Spanish companies, could the UK Government not look at adopting such a rule in the UK? I look forward to hearing the Minister’s response on that.
With the launch of their draft consumer rights Bill, the Government claim to be acting in the best interests of consumers, but owners of unwanted and costly timeshares do not see any resolution of their worries in the near future. While recent regulations have improved the standing of people purchasing timeshares, those who already own timeshares have been left to fight for their contractual rights in the courts or through industry-run reconciliation processes.
Jim Shannon (Strangford) (DUP)
Does the hon. Lady feel that a way forward for those who have timeshares that they cannot get out of would be for the travel companies to purchase them or adopt a system for renting them out? The hon. Lady mentioned a rental system. We all know the pitfalls of such a system, but if a company was able to do it, it might be a way of enabling some people at least to get some benefit from the timeshares they cannot get out of?
Fiona O'Donnell
I am grateful to the hon. Gentleman for his intervention. I think that is an option that needs to be looked at. The sector needs to be more responsive, creative and imaginative, but the concern in the case with the Macdonald hotels that I quoted is that it brought in only £143. It was £143 rather than nothing, but perhaps companies need to get better at advertising and pushing the sector if additional rental capacity results from an agreement with an owner. The Minister may like to respond to the hon. Gentleman’s intervention as well as to my speech.
The contracts that formed the basis of these legal disputes were signed often unwittingly and over 20 years ago, with the timeshare owners often now elderly, ill and vulnerable. They feel they have no choice but to continue paying crippling maintenance fees. I appeal to the Minister to think about these real people I have spoken about this evening and about the hardship they have been caused. Surely there has to be a way to help them. I know that the Government are not fond of regulation if they can avoid it, but we are talking about often very vulnerable people who are coming to the end of their lives and who want some peace and security; they want to know that they will not have to pass on burdens to their children. I look forward to hearing the Minister’s response.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
I congratulate the hon. Member for East Lothian (Fiona O'Donnell) on securing the debate and on raising this issue. It is clear that many consumers such as those to whom she has referred are experiencing real problems. As she said, that esteemed publication The Sunday Post has been conducting a campaign. She made a small jest about the way in which some people have characterised The Sunday Post, but I would describe is as a fine publication that does a lot of great campaigning. I know that it is read by many of my constituents, and I am sure that it is read by many of hers as well.
The hon. Lady rightly pointed out that the issue involves real people, and that a number of them are clearly in an incredibly difficult position. I do not think that anyone could be unmoved by the case of Mrs Kaney, the elderly lady who was still being forced to pay £1,100 a year long after ceasing to benefit from a product that she had bought a long time ago when her husband was still alive, or by the plight of people who feel pressured into paying hundreds of pounds a year or else face a one-off cost of more than £5,000 to buy themselves out. Such costs can impose a huge burden and a huge worry on many families, particularly in these difficult times and, indeed, at any time.
I think it fair to say that the timeshare industry and service providers associated with timeshares and other long-term holiday products have had a pretty poor reputation for a long time. When I was preparing for the debate I spoke about it to some of my colleagues, and a common refrain was “Are timeshares still around?” Of course, given perpetuity contracts, they certainly are still around. Historically, companies in the sector have behaved abominably, pressurising people while they are supposed to be on holiday and trying to persuade them to buy products that they do not really want or even understand at the time. That has left a legacy of difficult issues for some timeshare owners.
Not only do timeshare contracts generally impose an annual obligation to pay maintenance fees in respect of the properties, but they can be very long-lasting. Although nowadays it is possibly more usual for timeshare agreements to specify a set period such as 10 years, and although people may indeed expect to be happy to visit a certain destination throughout the following decade, it is more difficult to predict whether in a few decades’ time a longer-term contract will still be desirable, and whether people will still be willing to accept the obligation that it involves.
No doubt when the timeshares were originally sold to people, they were assured that they would have an opportunity to sell on the contracts and that they would be worth a significant amount, but I suspect that those promises have not come to much when people have tried to sell. Some timeshare owners now find themselves with liabilities which, for one reason or another—age, altered preferences or a change of circumstances—no longer provide them with any actual benefit.
It is important to see the position in a balanced way. It is true that many thousands of timeshare owners in the United Kingdom, elsewhere in Europe, and indeed worldwide are very happy with the product and the opportunities that it provides, and it is true that, when properly sold and constructed, the product in itself need not be problematic and can be enjoyed by many people. At its best, the timeshare industry can deliver an attractive, high-end product that matches its customers’ requirements extremely well. However, it is not a product that is suitable for everyone. That is why the Department for Business, Innovation and Skills continues to recommend, despite the improved protections that have existed since 2011, that any prospective customer should always seek legal advice before accepting any kind of long-term contract that involves an ongoing financial commitment, including timeshare contracts.
I welcome the hon. Lady’s recognition that significant improvements have been made, and I shall say more about those improvements later. I think it important to note that, although the regulations came into force in 2011 under the present Government, they were formalised in 2010, and were the result of a great deal of work by the last Government and by European partners. This is not a party political issue. We all want better rights for consumers and I am always delighted to work with people across parties who are keen to achieve that, so I welcome the spirit in which the hon. Lady made her remarks. I would be happy to work with her on this.
I sympathise with the concerns that the hon. Lady raised about contracts in perpetuity or contracts that last for an incredibly long time which people no longer wish to have. Perhaps when the contracts were entered into, for many people, the idea of passing on the timeshare to family members was quite attractive but, with the elapsing of time, some consumers no longer wish to be involved in those contracts. The only way they can come out of the situation with any certainty is by pursuing the matter through the courts, which as we all understand is not necessarily an easy option or one that many people have the resources to pursue; or by negotiating with the resort operators, which can lead to wildly varying responses, as has been outlined.
The hon. Lady mentioned the UK ECC. When people inherit a timeshare and are told that they must pay the maintenance fees or legal action will be taken—despite the fact that the contract is in someone else’s name; it seems a bizarre obligation under general contract law— it is important to reiterate the point she made, which is that, as far as that organisation is aware, no timeshare company has successfully taken legal action against a consumer and won the case. That is something that many consumers who find themselves in this situation may be interested to know.
The hon. Lady mentioned the law in Spain, where many UK customers have timeshare contracts and where any contract longer than 50 years is unenforceable on the basis that it is unfair. The UK could look at such issues. In normal circumstances, we try not to intervene in individual contractual matters between two parties who can come to an arrangement that suits them. Instead we try to create a framework where the conditions under which fair and honest trading takes place are set out clearly and any imbalance in knowledge between trader and consumer can be addressed. The aim is to create a situation where consumers can make properly informed choices when they buy products and services.
The sale of timeshares, timeshare-related services and other long-term holiday contracts is an area where European-level legislation is considered necessary. We now have a wider range of protections in place. If significant evidence arises that there is general unfairness on an ongoing basis, that is something that the Government can keep under review. The evidence and the cases that the hon. Lady has presented help with that. I encourage consumer groups that have been campaigning on the issue to be prepared to put those cases together and to collect the evidence, particularly when it comes to the review in 2014, which I will come to as she asked for my views on that.
To return to what can be done to help the people who are having problems now— current timeshare owners—the trade body representing the sector across Europe, the Resort Development Organisation, makes it clear that its members recognise the damage that these legacy issues continue to inflict on an industry that is focused on moving on, developing and improving its customer service offer. They clearly have an interest in trying to improve the reputation of timeshare contracts, particularly because, often, the newer types of contract, as a result of the protections that are in place, bear little resemblance to those that were offered in the past. As a result, that organisation and its members are willing to engage with timeshare owners to try to resolve matters when ownership is impractical or unwanted, although, as the hon. Lady pointed out, that is not universally the case.
One element has not been touched on in the debate but is important. What might be the perfect solution for an individual timeshare owner who is stuck with a contract that they do not want, might have knock-on effects for people who own the other weeks of the year of the timeshare, or other properties in the resort. That is where the nub of some of the problems lies. Because the way the contracts are structured is such that there is a collective obligation to fund the maintenance and upkeep of the resort, if individual owners rescind the contracts or hand them back without them being sold to somebody else, the members who remain generally have to bear the increased costs and the burden of the lost revenues unless a new owner can be found. That might not be difficult for popular weeks, such as in the school holidays, but it can present difficulties for less attractive contracts. Many timeshare contract owners have already found that reselling is not straightforward. This is where some of the issues of individuals’ rights can rub up against one another. A huge extra burden can be placed on others without their having had the opportunity to do anything about it.
There is a body representing the interests of timeshare owners and owners’ committees which also says it is ready to assist and advise timeshare owners in difficulty who want to get rid of their timeshare contract: the Timeshare Association, also known as TATOC. It publishes a broad range of consumer guides, including a guide on timeshare disposal. It says that it is happy to engage with individuals to discuss their particular problems, and it has a track record of working with resort owners and managers to try to resolve some of the difficult issues.
I want to touch on one group that the hon. Member for East Lothian named: Macdonald resorts. At least one of the cases she mentioned was to do with Macdonald. The Scottish highlands is one of the places in the UK with a lot of timeshare resorts, and those of us who have been to conferences up in Aviemore will be very familiar with Macdonald hotels. Macdonald resorts is aware that significant concerns have been raised. The Timeshare Association has also been trying to engage the company in the issue, and I understand that a way forward has been identified for those who do not want to continue with their timeshares.
It is worth pointing out that Macdonald manages its resorts on behalf of the owners’ committees, and in these cases the owners’ committees had instructed Macdonald to take action against those who no longer wanted to pay the maintenance fees, because the remaining owners would be picking up the tab. It is important that sensitive negotiations to try to resolve such issues take place through organisations including TATOC, as competing interests are involved.
Fiona O'Donnell
Has the Minister considered a model along the lines of what we have in the travel sector, where a levy is made on companies, which is then a pooled resource that can be used when these situations arise?
Jo Swinson
The hon. Lady makes one suggestion about how these issues could be addressed. Clearly in addressing possible ways forward, a proper assessment would have to be made of the benefits against the cost to businesses, including businesses where these models were not being used, where there were not particular problems, or where they had been managing to resolve any issues in a much more consensual way. Without making any firm commitments, I agree that that suggestion might well need to be looked at as part of a broad range of potential solutions. It may well end up being a disproportionate response to the particular problem that needs to be addressed, but I certainly think it is worth considering.
Fiona O'Donnell
Has the Minister looked at the Spanish example and how they have managed to come to terms with that conflict of interests?
Jo Swinson
In the Spanish example, they also have the 50-year contract unfair term, where the contracts become unenforceable. We are dealing with different legal systems, of course, and different economic circumstances, but it is definitely worth looking to see whether any lessons can be learned from how fellow European countries have dealt with some of these issues. Also, as the directive will be up for review three years after it came into force, that presents an ideal opportunity to consider how it has been implemented both here in the UK and in other countries, and whether there is some best practice that can be shared.
Jim Shannon
On the Timeshare Association, the Minister mentioned that alternatives and other options had been found for people who have timeshares. Will she elaborate on that? What is the success rate? What are those options? If they were on hand, perhaps that would help people to identify some way forward.
Jo Swinson
I would not want to paraphrase the entire guide to timeshare disposal, which the TA produced and which could probably say it better than I could. I can recommend that publication to the hon. Gentleman, as it would be useful for him to have a look at it. In general terms, buyers can be found for the contracts in some cases, whereas in others resort owners have a points system in a second-hand market. For example, where the owner of a timeshare contract is no longer able to access the benefits of the contract, perhaps because the location is a long distance away and they can no longer travel far because of age or infirmity, they might be able to swap the contract, through that points market, changing to a different property or a different resort much closer to home. Sometimes people are just seeking variety, because they do not want to go to the same place they have been going to for 15 years, and that can provide a helpful option to individuals in this situation. A wide range of avenues can be explored. Of course I am also looking at the issues arising from some cases where, because of age or a particular medical reason, there clearly will not be any benefit to the individual. In some of those cases resort owners have also been able to show flexibility in taking back those contracts. So a range of different routes can be explored but I certainly encourage anyone who finds themselves in that situation to make contact, because each individual case will be different and getting specific tailored advice would be helpful.
Another issue that has been raised is that of bogus resellers and, indeed, bogus compensators—we end up rolling our eyes, thinking that there will always be people who want to rip other people off. It is a sad state of affairs that we get the bogus compensators as well as the bogus resellers. It is positive to be able to report that the Office of Fair Trading has taken proceedings in the High Court in relation to some of the sales and marketing practices of Incentive Leisure Group Ltd, Personal Travel Group Ltd and others, and that legislation is already in place to tackle bogus resellers. The enforcers, who include not only the OFT, but trading standards, can obtain enforcement orders against companies under the Enterprise Act 2002. Let me give an example of how that can be used. Final enforcement orders were obtained in March 2012 against seven individuals and the companies concerned. Among other things, those orders prohibit the companies and individuals from engaging in misleading sales practices when dealing with people who want to dispose of their timeshares, and the orders require customers to be given cancellation rights in certain circumstances. So legislation and protection is in place, and it can be, will be and is enforced. That can provide reassurance, in any event.
Long-standing timeshare owners can pursue solutions through a range of avenues, even though before 2011 they did not have the revised cover of the new European directive on timeshare products. I agree with the hon. Lady that these issues can be very distressing and difficult for the people in the situation she describes. On a positive note, however, these issues should increasingly become a thing of the past, because of the new rules that are in place, to which I referred.
The agreement of the new timeshare directive in 2009 brought with it a raft of new protections to provide consumers with the tools they need properly to assess the value and detail of not only timeshare contracts, but timeshare exchange contracts and, most importantly, contracts for other long-term holiday products. Although “other long-term holiday products” is a clumsy phrase, it had to be designed because when the first directive tightened the conditions under which timeshare contracts could be sold, effectively outlawing the worst of the timeshare sales practices that were so prevalent in the ‘70s and ‘80s, these other products suddenly emerged to circumvent that directive.
The new directive was implemented in the UK by the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010, and I will give the House a few examples of how we saw the rules tightened significantly. For example, much more information needs to be provided to consumers about how the contract can be terminated, the methods by which future costs, such as maintenance charges, will be calculated, the degree to which timeshare owners have a role in decisions about future costs and detailed information about precisely what rights are provided under the contract. All that information is considered to be part of the contract. Importantly, the directive also provides the consumer with 14 days in which to consider the decision and withdraw from the contract if they decide it is not for them after all. No money can be taken from the consumer until that 14 days has elapsed.
The regime is generally recognised as a success. As the hon. Member for East Lothian said, complaints about timeshare sales have decreased markedly and the industry reports provisions such as the perpetuity clauses she mentions as such a problem are increasingly rare. I am sure she welcomes that fact. She asked about the review in 2014 and, as with any directives that are implemented, we are looking at how the provisions are working.
It is important that when there is evidence of problems in the industry, it is properly gathered together. Of course, the UK Government are in a position to communicate with the Commission on any problems that have been found. Obviously, whether any changes are needed will ultimately be for European agreement, so I encourage those campaigning on the issue not only to pull together the evidence and the case but to consider what is happening in some of the other countries in the EU in order to see whether any links can be forged with those campaigns.
For those products that do not fall under the timeshare directive, other EU legislation provides for contractual rights on the sale of services and withdrawal rights in the case of off-premises sales. Those rights still apply. Irrespective of the extra coverage provided by the timeshare regime, the EU legislation outlawing unfair contract terms and misleading and aggressive commercial practices also applies, as it does to all consumer sales.
I acknowledge that there might be no easy answers for those who have timeshare contracts—agreed, in some cases, a long time ago—in which they have discovered that provisions that did not seem to have significant consequences at the time are now a significant burden and a worry. Aside from encouraging those affected to continue to engage with the contracting parties and associations that might be able to help, I hope that I have been able to reassure the House and the hon. Lady in particular that there are now far more robust protections for consumers in the sector. The signs are positive that the new protections are working. Unfortunately, there will always be some in the market who attempt to operate outside the law, as there are in other markets, but the new regime seems in the main to be robust enough to ensure that the issues that the hon. Lady has so understandably raised tonight should not arise in the future.
Fiona O'Donnell
I sense that the Minister is drawing her remarks to a conclusion, and I wonder whether she thinks it is good enough that there should be such a diversity of response from the different companies when people seek to end the contracts in perpetuity. Is that really good enough? Should there not be one standard throughout the sector?
Jo Swinson
The hon. Lady makes her point very strongly. By raising the issue in the House this evening, she has done a great service in raising its profile. I am sure that the resort owners and companies involved in timeshare contracts will be following proceedings in the House with great interest. As she pointed out, in some cases resort owners were moved to, let us say, more speedy and helpful action for customers when The Sunday Post got involved and drew attention to the issues. There can be great power in highlighting to the public eye cases in which companies are not acting how people would wish them to. The reputational impact of that can be a powerful motivator.
I know that the hon. Lady is an assiduous campaigner and I am quite sure that the debate is not the end of the matter for her. I wish her well with continuing to raise the issue and am happy to engage with her and with others campaigning on the issue in the future.
Question put and agreed to.