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Oral Answers to Questions
(11 years ago)
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Mr Robin Walker (Worcester) (Con)
1. What recent progress has been made on the relief operation in the Philippines.
Graham Evans (Weaver Vale) (Con)
3. What recent progress has been made on the relief operation in the Philippines. 5. What recent steps the UK has taken to send aid to the Philippines.
The Secretary of State for International Development (Justine Greening)
The UK has committed more than £50 million in support to victims of Typhoon Haiyan, helping to get shelter, clean water and emergency supplies to up to 800,000 people. The UK is also expanding the international effort through the deployment of HMS Illustrious, carrying aid and medical assistance to remote communities.
Mr Walker
I am sure that Members across the House can be proud of the UK’s contribution to the relief effort in the Philippines. Alongside the UK Government, UK charities are also playing an enormously important role. Would my right hon. Friend commend the efforts of small local UK charities such as New Hope in my constituency, which has donated all the proceeds of its Christmas party to the typhoon appeal?
Justine Greening
I certainly would. The generosity of the UK public has been astounding. I am particularly touched by small local charities such as New Hope in Worcester that have shown their support to those affected by the devastating typhoon.
Graham Evans
More than £13 million has been donated by the British public, who have once more demonstrated that we are a small nation with a very big heart. Will my right hon. Friend join me in recognising the extraordinary compassion of this country?
Justine Greening
I certainly will. I think that to date the Philippines public appeal has raised well over £65 million, which shows that the British public are incredibly generous in reaching out to people who have been affected by disaster. That generosity is appreciated by people in the Philippines, and when I visited the Philippines its Foreign Minister underlined his heartfelt support to the British people.
Steve Brine
Like Worcester’s New Hope, mentioned by my hon. Friend the Member for Worcester (Mr Walker), the Filipino Association in Hampshire is also making this year’s festive party a fundraiser to send money back home. What is the Department doing to help developing countries build resilience to natural disasters?
Justine Greening
We had already commenced work with the Government of the Philippines, in particular, on disaster resilience. For some time now, the country has done work in preparing itself to cope with these natural disasters, because it is in a part of the world that is particularly prone to them. The size of the typhoon would clearly pose challenges for any country, however prepared it was. There are still lessons to be learned about better preparation, not only at national level but at local level too.
Andrew Gwynne (Denton and Reddish) (Lab)
The transition from temporary shelter to permanent, well-built, robust homes can take time and cause hardship, so what is the Secretary of State doing to make sure that the process is completed as quickly and as efficiently as possible?
Justine Greening
The hon. Gentleman is right to raise that point. It may be some time before homes that are able to withstand such natural disasters are built. In the meantime, the United Nations, working alongside the Government of the Philippines, is co-ordinating an effort to make sure that we can provide shelter for people who need it. I should also say to him, as I have been clear with the House, that this is a real challenge because many of those people live in incredibly remote communities.
Gavin Shuker (Luton South) (Lab/Co-op)
May I begin, Mr Speaker, by conveying the apologies of the shadow Secretary of State, my right hon. Friend the Member for East Renfrewshire (Mr Murphy), who, as he has already informed you, is in the Philippines today? The Government have rightly activated the rapid response facility to commit funding to organisations working to help the population of the Philippines. It is now the 26th day since the typhoon hit, so what proportion of this funding has already been paid out?
Justine Greening
As the hon. Gentleman will be aware, we allocated £8 million to a variety of UK non-governmental organisations who, as part of the facility, quickly responded with what they felt was needed. We have allocated all the money that they have requested so far. Clearly, they will then go through the process of making sure that the supplies that the money purchases get out to people on the ground. At this point, I would expect and anticipate that those supplies are largely there. In fact, as he will also be aware, we have since sent many other cargo flights of supplies which have superseded them.
Gavin Shuker
Turning to another issue related to the Philippines, alarmingly the United Nations has predicted a spike in the trafficking of women and girls for sex in the areas heaviest hit, fuelled by the inevitable collapse of civic society and the widespread displacement of people following a disaster of this magnitude. What is the Secretary of State doing to protect the 65,000 women at risk of sexual abuse?
Justine Greening
First, we are highlighting the risks to women and girls in emergencies, which is why I held an international call to action summit the very week, as it turned out, that Typhoon Haiyan hit. In respect of the particular crisis mentioned, we have sent two of our specialist humanitarian experts who are particularly specialist in this area to work with the UN and the clusters that are providing support on the ground, to ensure that not only direct, but indirect support is provided across all the work that happens.
Sir Malcolm Bruce (Gordon) (LD)
Given the call on British development funds from the Philippines and the Central African Republic, and following the outfall from the conflict in Syria, how will the Department budget for what are, by definition, unpredictable disasters, given that it has now reached its budget ceiling?
Justine Greening
The right hon. Gentleman is right to reflect on the number of different parts of the world facing crises of one form or another that the Department for International Development is trying to play a role in assisting. As he will know, that is just part of the uncertainties we have to deal with as a Department. We have a budget set aside for humanitarian response, and ultimately it is a flexible budget. As the right hon. Gentleman will have seen over recent days, we announced additional support for the Central African Republic, because we felt it was appropriate.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Will the Secretary of State continue to encourage DFID to work with organisations at a national level so that they can benefit from local knowledge and expertise, both in this period of reconstruction and—I am sad to say—in the event of a reoccurrence?
Justine Greening
That is a very important point. To return to the earlier question about protecting women and girls in emergencies, working with local, community-based organisations can be the most effective way of reaching into communities and getting support to them quickly. The right hon. Gentleman is absolutely right to raise that issue, and that is one of the things we look to do.
Paul Uppal (Wolverhampton South West) (Con)
2. What steps she is taking to ensure that the interests of girls and women are central to the UK’s development programmes.
The Secretary of State for International Development (Justine Greening)
I have made girls and women a key priority for the Department. Investing in girls and women, giving them a voice, choice and control, has a transformative impact on poverty reduction and is critical to freer and fairer societies and economies. I also pay tribute to my hon. Friend the Member for Stone (Mr Cash), who is currently taking through the House his private Member’s Bill on gender equality in international development.
Paul Uppal
The Secretary of State has touched on this point already, particularly in her response to the shadow Minister, the hon. Member for Luton South (Gavin Shuker), but will she elaborate further on humanitarian cases and how women and girls in particular can be protected in future?
Justine Greening
That was the subject of the “keep her safe” call to action event that I hosted just a few weeks ago. Pledges of more than £40 million were made to that event. The focus is on going beyond the obvious things we can do to create safe spaces for girls and women, such as making sure that when we deliver food aid we do not increase risk to women. Simple things include lockable toilets so that women are able to go out safely, lit areas and solar panels that also act as mobile phone chargers so that girls can stay in touch with their families. It is a very practical agenda, but unfortunately it is not sufficiently delivered when we respond to crises, and that is why I am highlighting it.
Fiona O'Donnell (East Lothian) (Lab)
The Secretary of State will be aware that the International Development Committee recently visited Burma. I was very concerned about the lack of involvement of women in the peace process there. What is the Secretary of State doing to ensure that women are part of making and keeping the peace in Burma?
Justine Greening
I discussed that subject with Aung San Suu Kyi when she visited the UK a few weeks ago. Clearly, she is an incredibly important woman who can be involved in that peace process. Beyond that, much of the work the Department has done has been to reduce some of the ethnic tensions in various parts of Burma. The role that women play in that is obviously critical.
Mr William Cash (Stone) (Con)
May I congratulate my right hon. Friend and the Under-Secretary of State for International Development, the hon. Member for Hornsey and Wood Green (Lynne Featherstone) on all the work they have done in this area? May I also pay tribute to Opposition Members of all parties who have given such enormous support to my private Member’s Bill, which will be debated in Committee on 11 December?
Justine Greening
I am very happy to take that praise. It is an important Bill. It reflects the fact that no country can develop effectively when half of its population is excluded from that development. It is a matter not just of basic rights, but of ensuring that our Department and country have sustainable development approaches.
Mr Gregory Campbell (East Londonderry) (DUP)
We have many cultural differences with some of the nations that are recipients of assistance. What pressure is the Secretary of State applying to them to ensure that females are not systematically disadvantaged, despite getting aid from this nation?
Justine Greening
We can do a variety of things. First, we can pursue grass-roots programmes, as we do in many countries, that are aimed at improving women’s chance to get a job, to be educated through the girls education challenge, and to be able to have control over their sexual and reproductive health. We need to complement that with advocacy at domestic and national Government level, but also at international level, and that is one of the things on which I have worked alongside the Foreign Secretary in raising the issue of women’s rights.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
In times of disaster, women and girls are particularly vulnerable to exploitation. According to the non-governmental organisation World Vision, in Bangladesh, for example, 62% of marriages of under-18 girls between 2007 and 2011 took place in the 12 months after the disaster there. What is the Secretary of State doing to build that sort of protection into our UK development programmes and disaster planning?
Justine Greening
That is an excellent question, and it is why we have decided to raise this issue more internationally. We need to start from the right basis to respond to crises more effectively. Protecting women and girls should not be an afterthought when a crisis hits, such as Typhoon Haiyan in the Philippines; it absolutely should be one of the core priorities considered from day one. If we can do that, I believe we dramatically improve the chances of making sure that we protect girls and women over the course of a crisis as it evolves.
Harriett Baldwin (West Worcestershire) (Con)
4. What assessment she has made of the role of economic development in ending aid dependency.
The Secretary of State for International Development (Justine Greening)
The best way to end aid dependency is through creating jobs, raising incomes and generating tax receipts. Since coming into the Department, I have ramped up our focus in this area and encouraged UK businesses to join the development push. Earlier this month, I took 18 companies to Tanzania to showcase development-focused opportunities for investment, and a number of significant partnerships emerged as a result.
Harriett Baldwin
A key sign of economic development is when a country can afford a mission to Mars. Will the Secretary of State confirm that the important projects that UK aid has funded in India will come to a natural end in 2015?
Justine Greening
My hon. Friend is right to say that countries that are transitioning: development is taking place and, as it does, we too need to develop our approach on how we work with countries such as India. That is why I announced last year that we will move to a new type of development relationship with India, running down financial grants that are under way so that they finish by 2015 and, following on from that, having a relationship based on trade and technical assistance.
Andrew Miller (Ellesmere Port and Neston) (Lab)
What steps is the Secretary of State taking following the Science and Technology Committee’s report on sustainable scientific aid? In particular, what is she doing to support great institutions, such as the Liverpool school of tropical medicine and the London school of hygiene and tropical medicine, that are helping with the aid programme, and to follow up our recommendations?
Justine Greening
We have put substantial investment into research, which is sensible for understanding what works and making sure that the UK can really be at the forefront of understanding how to use technology to drive development. The hon. Gentleman will remember that the G8 particularly focused on nutrition. Many of our best institutions were involved in that event precisely because of the science and technology expertise that they offer.
Mrs Caroline Spelman (Meriden) (Con)
The Secretary of State has done a very good job in putting sustainable development at the heart of her approach to economic development. What steps is the Department taking to promote clean energy in developing countries?
Justine Greening
We work hand in hand with the Department of Energy and Climate Change, and the international climate fund gives us a resource base with which to help countries develop the sustainable energy system and approach they will need in the years to come. We have a real chance to make sure that we start them off on a firm footing, and that is precisely what we intend to do.
Richard Burden (Birmingham, Northfield) (Lab)
Does the Secretary of State agree that it is very difficult to have economic development if it is not possible to import and to export? In Gaza, that has left more than 1 million people on food aid, while fuel shortages mean that 3,000 people are affected by raw sewage running into the streets. What is Britain going to do in practice to end the blockade of Gaza?
Justine Greening
We are deeply concerned about the constraints that have been placed on the Gazan economy that prevent it from creating the wealth and prosperity that would put it in a position to support public services without foreign assistance. The hon. Gentleman will be aware that there will be a Westminster Hall debate on this matter tomorrow evening. I am sure that he will want to debate it more fully with the Minister of State.
Stephen Gilbert (St Austell and Newquay) (LD)
6. What steps she is taking to increase the capacity of developing countries to collect tax.
The Minister of State, Department for International Development (Mr Alan Duncan)
Tax collection is an essential element of any poor country’s development. Last month, DFID announced £6 million of funding for international projects to help poor countries with revenue collection and to combat tax evasion and avoidance.
Stephen Gilbert
It might surprise the House that the British overseas territories and Crown dependencies receive more foreign direct investment than Brazil, Russia, India and China combined. What more can we do to ensure that the former jurisdictions are not helping international companies to avoid paying tax to less developed nations?
Mr Duncan
At the Lough Erne summit, the Isle of Man, Guernsey and Jersey agreed automatically to exchange tax information on the basis of the Foreign Account Tax Compliance Act. All the overseas territories have said that they will conclude similar agreements with the UK. A pilot in the EU is developing the practice further. If accounts are more open and less hidden, poor countries will be in a much better position to raise their own taxes.
Anas Sarwar (Glasgow Central) (Lab)
Large multinational companies are avoiding paying tax in developing countries. Having tax transparency here can help to increase the tax receipts in those countries. When will the Government come forward with firm proposals to introduce country-by-country reporting right here in the UK?
Mr Duncan
The UK is leading by example. We are taking action to put our own house in order on this issue. We have announced that the UK will introduce new rules that require companies to obtain and hold information on their beneficial ownership. That information will be held in a central, publicly accessible registry maintained by Companies House.
Nic Dakin (Scunthorpe) (Lab)
7. What progress has been made on the most recent replenishment round for the Global Fund to Fight AIDS, Tuberculosis and Malaria.
The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)
I am pleased to say donors have pledged $12 billion, which is an impressive 30% increase on the amount that was pledged at the 2010 replenishment conference, demonstrating global confidence in the fund. The global fund provides excellent value for money and delivers life-saving results on a global scale.
Lynne Featherstone
The significant increase in DFID’s contribution to the global fund to £1 billion will contribute to the scaling up of proven TB REACH programmes that are included in the national strategic planning process. We have reviewed the mid-term evaluation of TB REACH, which shows that it is effective and that it reaches very important populations. However, given that there are so many small projects, there are concerns about sustainability and about the ability to scale up. We will obviously keep that in mind.
Mr Philip Hollobone (Kettering) (Con)
If left untreated, tuberculosis kills 50% of those with an active infection. Will the Minister ensure that as much funding as possible goes to the African and Asian countries where up to 80% of the population carry the latent tuberculin bacteria?
Lynne Featherstone
Yes, we are very keen to help the countries that have such a high burden. We are encouraging the global fund to change its remit to give more than 10% of the support to Nigeria. Interestingly, Nigeria pledged $1 billion to the global fund yesterday at the pledging conference. That is a tremendous move forward for that country.
Jeremy Lefroy (Stafford) (Con)
T1. If she will make a statement on her departmental responsibilities.
The Secretary of State for International Development (Justine Greening)
Since the last oral question session in October, I have visited the Philippines, where I witnessed at first hand the impact of Typhoon Haiyan, and to Afghanistan, where I met President Karzai. Earlier this month, I took an 18-company delegation to Tanzania to showcase the opportunities for development-focused investment. On 13 November, I chaired the call to action on protecting women and girls in emergencies. Today, I have issued a written ministerial statement that announces tough new controls on the Department’s programme management. Finally, I returned from Washington this morning, where I saw the successful replenishment of the Global Fund to Fight AIDS, Tuberculosis and Malaria.
Jeremy Lefroy
I thank the Secretary of State for that.
In the light of the Secretary of State’s decision today to shut the TradeMark Southern Africa programme due to very poor performance, what action is she taking to ensure that all programmes either deliver or, if they do not, are swiftly remedied or closed?
Justine Greening
I have set out today in my written ministerial statement ways in which we have significantly strengthened DFID’s programme and financial management procedures. I am taking further significant steps to strengthen our approach to value for money, including on procurement and ministerial oversight of new business cases. As I inform the House in my statement, weak governance in TMSA resulted in payments amounting to £80,000 via ring-fenced accounts held by the Ministry of Agriculture in Zimbabwe from 2011. That money was used appropriately, but the payments were in contravention of Government policy, so my statement today sets out that I am expanding our internal audit capability and ensuring that when programmes fail to deliver we can spot them, take decisions on them and, if they fail to get better, stop them. [Interruption.]
Mr Speaker
Order. These are extremely serious matters affecting some of the most vulnerable people on the face of the planet. May I appeal to Members on both sides of the House to attend to the exchanges?
Alison McGovern (Wirral South) (Lab)
Last week, the Deputy Secretary-General of the United Nations described the suffering of the Central African Republic’s population as “beyond imagination”. He said that the use of child soldiers and sexual violence was growing, and that the danger of a full-scale catastrophe was real. Has the Secretary of State met Ministers from the Foreign and Commonwealth Office and the Ministry of Defence to plan conflict prevention, and will she look to use resources from the conflict pool’s early action facility to help head off a horrific civil war and the inevitable threat to human life?
Justine Greening
We share the hon. Lady’s concern about what is happening in the Central African Republic. We have worked with the Foreign Office to examine what further steps we can take, and, as I said earlier, we have increased by £10 million the level of humanitarian assistance that we can immediately provide to that region. We will continue to consider what more we can do over the coming weeks. I also discussed the matter in Washington yesterday with the United States Agency for International Development.
Mr Robert Buckland (South Swindon) (Con)
T2. What more can Britain do to improve research into and diagnosis of autism spectrum conditions in developing countries?
Justine Greening
DFID is committed to investing in education in developing countries to support all children’s learning. As our programmes on inclusive education mature, we are looking for new partners to work with us to develop innovative and effective strategies for supporting children with learning disabilities in mainstream education environments.
Ann Clwyd (Cynon Valley) (Lab)
T4. Nearly 3 million civilians are cut off completely from aid in Syria. What is the Secretary of State doing to help those starving and desperate people?
Justine Greening
First, the right hon. Lady will be aware that shortly after the UN General Assembly, there was finally a presidential statement on humanitarian access in Syria. It is incredibly important that we now see those commitments fulfilled. My discussions with Valerie Amos, who heads up the humanitarian arm of the UN, show that we are making progress, but the right hon. Lady is right to point out that it is a continuing challenge. If we cannot reach people in Syria, that is a breach of international humanitarian law.
Mr Aidan Burley (Cannock Chase) (Con)
T3. Many of my constituents are concerned that we still have an aid policy judged by how much we spend rather than by what the money actually delivers. Although I welcome the Secretary of State’s decision finally to end aid to India, a country that has more billionaires than Britain, will she now go further and abandon the arbitrary 0.7% of GDP target, which is equivalent to an increase of £100 a year for every family in Cannock Chase?
Justine Greening
I think the Government have been right to honour their promise on providing 0.7% of gross national income. The challenge that we have is to ensure that it represents 100% of our national interest. That is precisely what I am doing, working with the Home Office and the MOD on stability in countries and with the Department for Business, Innovation and Skills and the Foreign Office on economic development. That makes sense to me.
Ian Lucas (Wrexham) (Lab)
T6. In Sierra Leone, good administrative arrangements are in place to combat corruption. What can the Secretary of State do to assist with political momentum to improve governance and root out corruption among politicians there?
Justine Greening
The hon. Gentleman is right to highlight corruption as it is something for which the Department for International Development has zero tolerance. When I was at the World Bank in October I had the chance to meet briefly the Finance Minister of Sierra Leone. We are planning to work together, not least on the corruption agenda, and more broadly to ensure that we increase oversight of public finance management.
Mr David Ward (Bradford East) (LD)
T5. The Government have a commitment to stabilising “fragile and conflict-affected states.” What is the Department doing to support the people of Kashmir in one of the most difficult and long-standing conflicts anywhere in the world?
Justine Greening
The tri-departmental conflict pool funds joint programmes in Pakistan and India-controlled Kashmir that support human rights, conflict prevention and peace building. That is administered by the Foreign and Commonwealth Office, and the UK also provides aid to Kashmir through national programmes operating in Pakistan and India.
Julie Elliott (Sunderland Central) (Lab)
Q1. If he will list his official engagements for Wednesday 4 December.
The Deputy Prime Minister (Mr Nick Clegg)
I have been asked to reply—[Interruption.] As I was saying, Mr Speaker, I have been asked to reply on behalf of my right hon. Friend the Prime Minister, who has been visiting China.
I am sure the whole House will wish to join me in offering our condolences to the family and friends of those who were tragically killed following the helicopter crash in Glasgow on Friday evening. Our thoughts must also be with those who are injured at this difficult time. I visited the site yesterday and was able to see the recovery operation at first hand. On behalf of the whole House, I pay tribute to the outstanding response and bravery of all the emergency services involved in what were extremely demanding circumstances.
This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall have further such meetings later today.
Julie Elliott
May I associate myself with the comments made by the Deputy Prime Minister after the very tragic events in Glasgow?
Under the Government’s proposed new formula for allocating health funding, Sunderland is facing cuts of £42 million. Does the Deputy Prime Minister think it is right to divert NHS funding from areas with higher levels of need to areas with lower levels of need, and how does he think that will impact on the winter crisis?
The Deputy Prime Minister
As the hon. Lady knows, NHS England is now in a position to make some of those big judgments—[Interruption.] We are having questions on what money goes where in the NHS from the party that, if I understand it correctly, still does not agree with our protection of the NHS budget. We are putting £12.7 billion extra into the NHS. I would be interested to know whether the Labour party agrees with that.
Dame Angela Watkinson (Hornchurch and Upminster) (Con)
Will the Deputy Prime Minister join me in congratulating the London borough of Havering, which has rehomed 1,000 previously overcrowded families into larger and more suitable accommodation as a result of the Government’s welfare policy?
The Deputy Prime Minister
I would certainly like to join my hon. Friend to congratulate the borough of Havering on the excellent work it has done. Overcrowding is a real problem, and hundreds of thousands of families are living in overcrowded properties in which children have no space to do their schoolwork. The fact that the Labour party has no answers to some of those fundamental problems that it created in the first place shows a bankruptcy of ideas.
Ms Harriet Harman (Camberwell and Peckham) (Lab)
I join the Deputy Prime Minister in conveying our deepest sympathy to the families of the nine people who lost their lives in the tragic accident in Glasgow, and in paying tribute to the brave work of the emergency services and the quite remarkable response of the people of Glasgow.
Will the Deputy Prime Minister tell the House whether, compared with last winter, this winter’s household energy bills will be lower or higher?
The Deputy Prime Minister
They would be higher if we had not taken the action that we have, and I would simply point out to the right hon. and learned Lady that her party’s economically illiterate policy is to impose—[Interruption.] In fact, her energy spokesperson said on television just two days ago, “Well, you can’t” control energy prices. So there we have it. The right hon. and learned Lady does not need me to point out that her policy is a con; her energy spokesman has done it for her.
Mr Speaker
Order. As always, we will get through, however long it takes. If Members can calm themselves sooner rather than later, so much the better.
Ms Harman
The Deputy Prime Minister has ducked and he has dodged and he has not answered the question I have asked. The truth is that household energy bills are not going down; they are going up. As for the measures—the £50 they have talked about—they are not enough to stop bills rising, but can he tell us exactly how much of the £50 will come from the profits of the energy giants?
The Deputy Prime Minister
I know the right hon. and learned Lady’s piece of paper says I did not answer the question, but I did actually answer the question: bills will on average be £50 lower than they otherwise would be. That is pretty simple. We have done that by adjusting the policies, while adhering to our green commitments, where Government policy has an influence on people’s energy bills. Her party’s policy is pure fantasy—total and utter fantasy. We have got £50; she has a fantasy freeze.
Ms Harman
The Deputy Prime Minister says he has answered the question, but he has not. He has not stood at this Dispatch Box and admitted that, as a result of his Government’s policies, energy bills are going up, not down. He has not admitted that. [Interruption.] He can, next time he answers. What he is trying to hide is that not one penny will come from the profits of the energy giants, who could well afford it. They are tiptoeing around the energy giants, allowing them to put up their bills. When it comes to standing up to the rich and powerful, this Government are weak, but when it comes to hitting the most vulnerable in our society, they have no qualms at all. Last week at the Dispatch Box the Prime Minister said that disabled people are exempt from the bedroom tax. That is not true. Will the Deputy Prime Minister apologise and put the record straight?
The Deputy Prime Minister
The right hon. and learned Lady talks about standing up to vested interests, in the week that we discover that the great courage of the Labour leadership to stand up to its trade union paymasters is—[Interruption.] Guess what? It is mañana, mañana, mañana; all too difficult, an absolute—[Interruption.]
Mr Speaker
Order. This House should be the bastion of free speech. Neither the Deputy Prime Minister nor the right hon. and learned Lady must be shouted down and we will keep going with this session for as long as it takes for proper order to be observed.
The Deputy Prime Minister
And, Mr Speaker, if I may say so, it should be the bastion of political parties free of vested interests, and it is high time that the Labour leadership does what it says and stands up to its trade union paymasters. The right hon. and learned Lady should stand up to her bosses first.
Ms Harman
I suggest the Deputy Prime Minister leaves it to us to worry about our party members, especially as so many of them used to be his. Given that for over 90% of people hit by the bedroom tax, there just is not a smaller property for them to move to, what would he have them do?
The Deputy Prime Minister
Under the right hon. and learned Lady’s Government, for 13 years housing benefit to people in the private rented sector was provided only on the basis of the number of rooms needed. We are applying exactly that same rule, which they administered for 13 years, to those in the social rented sector. For the reasons we heard earlier, we have at the same time many, many thousands of families in overcrowded properties and 1.8 million households still on the housing waiting list. As with so many other things, we are sorting out the mess they left behind.
Ms Harman
The right hon. Gentleman knows there is no comparison between what we did and what he is doing. Our change was for new claimants only. Their bedroom tax hits people who have lived in their property for years. They cannot afford the charges and they have nowhere to go.
The Deputy Prime Minister always says that the Liberal Democrats are making a difference in government. They certainly are: without the Liberal Democrats there would be no bedroom tax; without the Liberal Democrats there would be no trebling of tuition fees; and without the Liberal Democrats there would be no top-down reorganisation of the NHS. He says he is a brake on the Tories, but even I know the difference between the brake and the accelerator. Is he not the very best deputy a Conservative Prime Minister could ever wish for?
The Deputy Prime Minister
Without the Liberal Democrats there would not be a recovery. [Interruption.]
The Deputy Prime Minister
We have our differences on this side of the House, but the one thing that unites us is that we would not have gone on a prawn-cocktail charm offensive sucking up to the banks, which created the problem in the first place. We would not simply say to our children and grandchildren, “You can pay off this generation’s debts.” No one on this side of the House would have broken the British economy in the first place.
Ms Harman
The right hon. Gentleman talks about the recovery: there might be a recovery for the rich, but for everyone else there is a cost of living crisis. He will not stand up to the powerful and he will not stand up for the weak, but when it comes to being a loyal deputy to a Tory Prime Minister he will go to any lengths, break any promises and sell out any principles. The truth is that if people want to freeze energy bills and scrap the bedroom tax, it is not going to be the Tories and it is never going to be the Liberal Democrats—it has got to be Labour.
The Deputy Prime Minister
They are not a Government in waiting; they are not even an Opposition in waiting. It is 18 months before the next general election and we still have no clue from those six questions what the Labour party would actually do. Well, we know a few things: an energy con that would see prices go up rather than down; no apology for crashing the economy in the first place; and a total failure to stand up to trade union bosses. If they cannot manage to come up with some sensible polices and they cannot manage their own party, why should anyone think that they can manage our country?
Henry Smith (Crawley) (Con)
Q2. This weekend is small business Saturday and I will be supporting local firms in my constituency. Companies welcome the reduction in corporation tax and national insurance contributions that this Government introduced, but what more can be done to reduce business rates?
The Deputy Prime Minister
I suggest to my hon. Friend that he waits until the Chancellor makes his autumn statement. Small business Saturday is a brilliant event to encourage everyone to support small businesses in the UK. Of course, the previous Government planned to end more generous small business rate relief. We reversed that decision, saving small businesses on average £2,000—yet another example of this side of the House standing up for small businesses that were let down by that side of the House.
Graeme Morrice (Livingston) (Lab)
Q3. Tenants, councils, housing associations, welfare charities and disabled groups are against it. Liberal Democrat party policy is against it. Even Danny’s dad is against it. So why is the Deputy Prime Minister the last man standing in defending the bedroom tax, a policy as unpopular as Thatcher’s poll tax?
The Deputy Prime Minister
Of course I accept, as everyone does, that, in changing from one system to another, there are hard cases that need to be dealt with compassionately, and that is why we have trebled the discretionary housing payment—to allow local authorities to do that. Will the hon. Gentleman have a word, however, with his welfare spokesperson, who recently declared that the Labour party would be tougher on welfare than the coalition? Despite that, Labour has opposed £83 billion of welfare savings. Is it tough, or is it nothing?
Christopher Pincher (Tamworth) (Con)
Q4. As you will know more than many, Mr Speaker, over the past three years, the leadership of HS2 has shown a lamentable failure to provide clear and consistent information to residents and businesses affected by phase 1 of its proposals. Today in my constituency, it is holding a roadshow to tell my constituents about phase 2 of its proposals. Will my right hon. Friend work with his colleagues in government to ensure that HS2 provides decent information and decent compensation to everyone affected as quickly as possible?
The Deputy Prime Minister
I know that the hon. Gentleman has strong views on this matter, not least because of how HS2 might affect his constituency, and of course I agree that not only should full compensation be available, as it will be, but that the right level of information should be provided. The phase 2 route consultation, which started in October, is due to end in January, and as part of that process, 36 information events will be held near the phase 2 route, including the one he alluded to in his constituency. Those are opportunities for people to make their views known. As he knows, however, I am a staunch supporter of HS2. It is an important part of the wider revamping and modernisation of our national infrastructure, about which the Chief Secretary to the Treasury will be speaking shortly.
Ian Austin (Dudley North) (Lab)
Q5. There are more young people out of work in the black country than in any of the eight areas getting the Deputy Prime Minister’s youth unemployment fund, so will he extend that scheme to the black country, and if he is going to tell me that the city deal is the answer, will he call an urgent meeting to sort that out and get it under way much more quickly too?
The Deputy Prime Minister
I certainly understand the hon. Gentleman’s sense of urgency about getting these city deals and the second wave agreed, and we are working flat out to get that done. As hon. Members can imagine, there are lots of t’s to be crossed and i’s to be dotted, but we are determined to push through, both in his part of the country and elsewhere, the principle of ensuring that less power is hoarded in Whitehall and that more power, resources and freedom to use them are allocated to local communities, local enterprise partnerships and local authorities.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
Given that Northumberland faces more and more onshore wind farm applications on sensitive sites, may I welcome any reduction in the incentive for onshore wind farms, within our total commitment to renewables, which will be maintained, and may I thank my right hon. Friend for his part in this?
The Deputy Prime Minister
As my right hon. Friend knows and as the Chief Secretary to the Treasury will confirm shortly in greater detail, we have adjusted the strike prices for onshore wind and to solar panel installations, because we believe it is now viable to do so, and made more attractive further investment in the offshore wind industry, in which we are already a world leader. We must maintain that leadership for the benefit not only of areas such as the north-east, but for the country, all of which would be blighted by an economically illiterate energy policy.
Lucy Powell (Manchester Central) (Lab/Co-op)
Q6. Is the Deputy Prime Minister aware that on average women working full time have seen their earnings fall by nearly £2,500 since the election, and does he think that the married man’s tax allowance is the best way to help women, who are paying the price for his Government?
The Deputy Prime Minister
The hon. Lady knows the respective views in the coalition on the so-called married tax break, but I would point out that it is this Government who have ended the injustice under Labour of women being short-changed in the pension system; it is this Government who are raising the point at which people pay income tax, which disproportionately benefits women and will leave 1.5 million of them £700 or more better off; and it is this Government who are finally providing the affordable child care places that were not provided in 13 years under Labour.
Mr David Heath (Somerton and Frome) (LD)
Q7. The rural equivalent of waiting for Godot is waiting for high-speed broadband, but we had the really good news in Somerset this week that 82% of premises in my constituency will be connected by the end of 2016. The sad fact, however, is that more than 8,000 properties in the so-called last 10% will not be connected. Will my right hon. Friend now commit to deploying the funds set aside to finish the job? We do not want complex bidding systems or match funding, which will not exist; we just want the job done.
The Deputy Prime Minister
We are investing, as my hon. Friend knows, over £33 million already in extending the coverage of superfast broadband in Devon and Somerset, as part of the current rural broadband programme, and roll-out is finally accelerating. More than 10,000 premises are expected to be covered by the project by the end of the year and 74,000 by next July. On his point about the so-called final 10%, we announced back in June a quarter of a billion pounds of new money to extend superfast broadband coverage further by 2017. I hear what he says, and the plans will be set out in further detail shortly.
Phil Wilson (Sedgefield) (Lab)
Q8. Both Nissan and Hitachi are major investors in the north-east of England, and both have said that if the UK leaves the EU, it will damage future investment. Does the Deputy Prime Minister agree that the Conservative party’s hostility to Europe is bad for business and bad for British jobs?
The Deputy Prime Minister
I agree—and I am sure I speak on behalf of most people in all parts of the House—that it would be a spectacular act of economic suicide for the country to pull itself out of the world’s largest borderless single market. By some estimates, over 3 million jobs in this country are dependent, one way or another, on our membership of the European Union.
Mr Aidan Burley (Cannock Chase) (Con)
Q9. The people of Cannock Chase welcome the Government’s brave decision to introduce a cap on benefits, but when their average earnings are £23,900 a year before tax and the cap is set at the equivalent of an annual salary of £35,000 a year, they understandably still feel that people can be better off on benefits than in work. Will my right hon. Friend look at lowering the overall benefits cap or regionalising it, so that it always pays to work, wherever someone lives?
The Deputy Prime Minister
We have not taken an approach of regionalising the benefit cap—I know that is advocated by the Opposition, although very few details have been provided by them so far. We have taken a national approach, and we have therefore set the cap at a national average of £26,000 after tax, or the equivalent of £35,000 before. The vast majority of people in our country think that is fair: that people should not be able to receive in benefits more than they would gain if they were in work earning £35,000 before tax. As on so many issues, I would be very interested to know whether the Opposition now support or do not support this highly popular measure.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
Q10. The Government have today been pushed into action on business rates by Labour, but just as energy bills will still rise this winter, businesses rates too will still go up by an average of £250 next year? Does the Deputy Prime Minister agree that nothing less than Labour’s plan to cut and then freeze business rates will do?
The Deputy Prime Minister
The only thing that this coalition Government have been “pushed into”—which is what the hon. Lady said—by Labour is rescuing the economy after the disastrous state that it was in. We had to pull the economy back from the brink because that is where Labour left it. We have had to do emergency surgery to the banks because Labour sucked up to the banks. We have had to fill the black hole in the public finances because Labour created it.
Mr David Nuttall (Bury North) (Con)
Q11. As you know, Mr Speaker, I am always anxious to be helpful, so in the spirit of friendly co-operation with our coalition partners, I have given advance notice of my question. Given that the Deputy Prime Minister is at the Dispatch Box today only because the Prime Minister is in China drumming up more orders for British business, can he please tell the House what the Common Market share of world trade was when the UK joined in 1973 and what the EU share of world trade is today?
The Deputy Prime Minister
The EU share of world trade today I think is around 20%. I would merely say to my hon. Friend—in an equally friendly spirit to that in which I know the question was intended—that the Prime Minister has actually been advocating a new EU-China trade deal, precisely because the European Union remains, notwithstanding all the other changes in the world, a very powerful trading bloc on the world scene.
Ann McKechin (Glasgow North) (Lab)
Q12. Last week Goldman Sachs placed the value of Royal Mail shares at 610p each, but just two months ago it advised the Government that investors would walk away if they sold at over 330p. Does the Deputy Prime Minister believe that he has secured value for money for the taxpayer?
The Deputy Prime Minister
As my right hon. Friend the Secretary of State for Business, Innovation and Skills has explained, this is yet another example of our doing something that was ducked by the Labour Government. The price at which we set the sale was recommended to us independently, and was at the highest point of the range that we were provided with by independent advisers.
Bob Blackman (Harrow East) (Con)
Q13. Two weeks ago, Harrow council officers closed down an unlicensed house in multiple occupation. Eleven unrelated adults were living in a three-bedroom property, each paying £160 a week in rent to a rogue landlord. The council is now investigating a further 100 cases. Does my right hon. Friend not agree that it is time we criminalised rogue landlords to protect the vulnerable?
The Deputy Prime Minister
I am appalled to hear of yet another example of rogue landlords behaving unacceptably. As my hon. Friend knows, local authorities, including Harrow, have strong powers to tackle rogue landlords, and we expect them to make full use of those powers. Last October we announced a package to help hard-working tenants get a better deal when renting a home, including a commitment to look at property conditions in the private rented sector, and we will shortly announce which local authorities will receive a share in £3 million of funding to help them to tackle rogue and criminal landlords.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
Q14. When the Deputy Prime Minister signed the coalition agreement, with its commitment to giving parents and pupils more power to choose good schools, did he ever imagine that it would lead to the current situation in which Conservative-controlled Hammersmith and Fulham council is threatening to close the successful and popular Sullivan primary school—which was rated “good” by Ofsted—in the face of overwhelming opposition from parents, governors, pupils and local residents, in order to hand the site over for a free school?
The Deputy Prime Minister
My right hon. Friend the Secretary of State for Education is present, and I am sure that he will want to write to the right hon. Gentleman about that specific case. However, one of the things that the Government have done is remove the dead hand of bureaucracy and centralisation from our school system, to ensure that teachers are freer to teach in the way that they judge best in the classroom and parents have a greater role—when they want it—in the running of our schools.
Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)
In the context of the question from the hon. Member for Bury North (Mr Nuttall)—who is, perhaps, not my hon. Friend on this issue—does the Deputy Prime Minister agree that on Europe, where the coalition is concerned, actions speak louder than words? Does he agree that the Chancellor’s decision some time ago to assist the Irish economy, the Foreign Secretary’s very responsible conduct of the internal European governmental review, and, indeed, the Prime Minister’s own statement in China just this week that if we get a referendum he wants to recommend that we stay in, provide a great boost of confidence for people like the Deputy Prime Minister and me who are down-the-line Liberal Democrat pro-Europeans?
The Deputy Prime Minister
It is always a joy to hear the mischievous wit and wisdom of my right hon. Friend. As he knows, we are as one on the European issue. Of course we need to reform the European Union—we need to strip away bureaucracy when that can be done, and to make the EU more transparent and efficient—but we also need to continue to exercise British leadership in the European Union club of which we have been a member for so many years.
Andrew Gwynne (Denton and Reddish) (Lab)
Q15. Figures from the national health service show that 600,000 more people used accident and emergency departments last winter, an increase of 11% since 2010, and it looks as though the situation is set to get much worse this winter. Why?
The Deputy Prime Minister
I do not think that it is very helpful to the millions of people who work in the NHS to talk down their admirable efforts to ensure—[Interruption.] The hon. Gentleman really should stop talking down the NHS. He should also agree with us that it needs more money rather than less. He may be interested to know that while the right hon. Member for Leigh (Andy Burnham) was Secretary of State for Health, the average time for which people waited to be attended to in accident and emergency wards was 77 minutes. We have cut that in half, to 33 minutes.
Paul Uppal (Wolverhampton South West) (Con)
Last week the National Crime Agency arrested six individuals following allegations of match-fixing in the English Football League. Will my right hon. Friend assure the House that every possible measure is being taken by the Football Association, the Gambling Commission and the NCA to uphold the integrity of English football?
The Deputy Prime Minister
Absolutely; I am sure that the hon. Gentleman speaks on behalf of everyone in the House, and certainly of all football fans, when he says that it is important to get to the bottom of this. By the way, this is a rather good example of the excellent early work of the National Crime Agency. It was established precisely to look into these complex cases, and it will work across jurisdictions and with different agencies to ensure that any suspicion or hint of corruption in the great game is removed.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
The Deputy Prime Minister will be aware of the case that I am about to raise; it is an urgent matter that I would like him to address. A young constituent of mine fled a violent and abusive relationship in Italy and brought her three and a half-year-old son with her. She is now in Wales, and the High Court has since ruled under The Hague convention that she has to return to Italy on Monday. Will the Deputy Prime Minister use his best endeavours to ensure that the Italian authorities realise that arresting her would be unfair and disproportionate, and that it would be little short of abominable to take that young boy into a care centre pending the outcome of the proceedings?
The Deputy Prime Minister
I am aware of the right hon. Gentleman’s interest in this matter. It is a desperately sad case and on a human level I would love to be able to pronounce on it, but as he knows, Ministers cannot comment on or intervene in cases that are or have been before the courts, whether in this country or abroad. However, I am sure that the Foreign and Commonwealth Office will be able to provide consular assistance to the mother as she pursues her case in Italy, including providing details of English-speaking local lawyers and seeking updates from the local court about progress in the case.
Mr John Baron (Basildon and Billericay) (Con)
It might surprise the Deputy Prime Minister to learn that the Liberals have a reputation for advocating an EU in/out referendum at elections but not following that through when here in this place. Will he now put that right by encouraging his Liberal colleagues in the House of Lords to support our European Union (Referendum) Bill?
The Deputy Prime Minister
The hon. Gentleman and I joined forces in the Lobby in July 2011 to legislate for a referendum lock which, for the first time, guarantees in law that there will be a referendum if the rules of the European Union change or if there is a proposal for a transfer of sovereignty from this place to the European Union. That is the position my party believes in, and that is our guarantee in law to the British people: that a referendum will take place when circumstances determine that it should. I understand that his party is now having a debate that is changing that position, but my party will stick to what we legislated for in the summer of 2011.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
My hon. Friend the Member for Glasgow North (Ann McKechin) wanted to know whether the British taxpayer had got value for money in the sale of Royal Mail. Yes or no?
The Deputy Prime Minister
Our judgment is yes. Easy though it might be to make snapshot judgments about the value of the company according to the price on the markets on any given day, we are determined to take a long-term view on this issue, as on so many others, and not to score short-term political points.
Mr Peter Bone (Wellingborough) (Con)
Hasn’t the acting Prime Minister been outstanding today? Anyone listening on the radio would have thought it was my right hon. Friend the Member for Witney (Mr Cameron) at the Dispatch Box. I think that the right hon. Gentleman is turning into a Tory, and I would like to test that theory. New clause 1 of the Immigration Bill has been signed by 60 coalition MPs calling for the transitional arrangements for Bulgaria and Romania to be continued. Does he agree with that?
The Deputy Prime Minister
I am glad that the hon. Gentleman has not raised his morbid obsession with the early demise of the Prime Minister, which I know is the subject of his private Member’s Bill. I also want to thank him for his very mixed, double-edged compliment. On the question of the Bill, he will know that the Prime Minister and I, and the whole Government, made a series of announcements last week. We are tightening up the access to benefits for migrants who come to this country from other parts of the European Union. I believe that we should protect and defend the principle of the freedom of movement, but the freedom of movement to seek work is not the same as the freedom to claim. That is the distinction that this Government are now making.
Ennerdale Swimming Pool (Kingston upon Hull)
Diana Johnson (Kingston upon Hull North) (Lab)
I wish to present a petition from 2,171 residents in the Hull area, who have signed it in support of Ennerdale Swimming Pool. I thank Peter Richardson, Nina Curran and others at Kingston upon Hull swimming club for all their efforts. As Hull is the UK City of Culture 2017, I hope that a way can be found of protecting the long-term future of this pool that serves the entire city of Hull so well.
The petition reads:
The Petition of residents of Kingston upon Hull,
Declares that the Petitioners note that Ennerdale Leisure Centre’s swimming pool is the only swimming facility serving the entire Hull area that is recognised by the Amateur Swimming Association as being of competition standard; further notes that Hull City Council is considering proposals to close Ennerdale's swimming pool, due to the unfair level of local authority funding cuts that Hull is receiving from the Coalition Government, when compared to far less severe cuts being made to councils in wealthier areas of the country.
The Petitioners therefore request that the House of Commons urge the Government to request Hull councillors to work with service users to find ways of saving Ennerdale swimming pool and provide Hull with a fairer deal on funding that will enable Ennerdale swimming pool to remain open, alongside other valued sports and leisure facilities in Hull.
And the Petitioners remain, etc.
[P001306]
Rural Fuel Rebate in Cornwall
Andrew George (St Ives) (LD)
It is my honour to present a petition on behalf of 2,589 of my constituents in the mainland area of west Cornwall in support of a 5p a litre reduction in road fuel duty, which my constituents on the Isles of Scilly have enjoyed since the spring of this year. Given that the Government’s supplementary call for information closes on Friday this week, my constituents urge them to acknowledge that the forecourt price is neither the only nor the most appropriate proxy measure of rural transport poverty, especially as many households have no choice but to have a private car in order to maintain a living.
The petition states:
The Petition of residents of the UK,
Declares that there are currently proposals to extend the rural fuel rebate scheme to Cornwall, initially by five pence per litre.
The Petitioners therefore request that the House of Commons urges the Government and the European Commission to fully back the plan and to introduce it as soon as they can.
And the Petitioners remain, etc.
[P001307]
National Infrastructure Plan
(11 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
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Chris Leslie (Nottingham East) (Lab/Co-op)
(Urgent Question): To ask the Chief Secretary to the Treasury to update the House on the national infrastructure plan.
The Chief Secretary to the Treasury (Danny Alexander)
Thank you, Mr Speaker, for giving me this opportunity to explain the national infrastructure plan to the House. I thought I might have tested the House’s patience back in June with my lengthy statement on infrastructure, but I am glad that there is an appetite for further conversation on this subject.
In June, I set out our plans to invest more than £100 billion of taxpayers’ money over the next decade towards improving our transport networks, our energy networks and our digital networks, and in other specific infrastructure projects crucial to our civic life. This morning, the Government published the latest updates of the national infrastructure plan and the investment pipeline that goes with it.
First, the documents provide an update on the projects that have been delivered to date—I am sure that we will return to that later. Secondly, the documents update our plans to improve future delivery. The updated pipeline provides the most comprehensive overview of planned and potential infrastructure investment ever produced, which gives investors the long-term clarity and certainty they need to put their money into our infrastructure. The NIP also includes changes relating to legal and planning practices, including reforms to judicial review, for example, the creation of a special planning chamber to ensure that the planning system and judicial review process does not cause excessive delays in any infrastructure project.
Thirdly, the documents published today update some of the details of our previous infrastructure plan. Let me give the House a few details. First, we set out changes to the strike price regime for renewable energy, and they have a number of components. We have reduced slightly the support being offered in the future for onshore wind and large-scale solar production. We are also increasing substantially investment in offshore wind. In particular, we think that the strike prices we have announced, with the increase in 2018-19, are likely to lead to at least 10 GW of investment in offshore wind between now and 2020—more if the prices can come down. This is about meeting our growth commitments and our green commitments as cost-effectively as possible.
The NIP sets out decisions on the future of the renewable heat incentive and the prices that we pay for different technologies under it. The plan also sets out a few changes to some specific transport schemes. We have listened carefully to the public response to the consultation on the tolling of the A14 and we have decided not to go ahead with that tolling, but not at any cost in terms of the time taken to deliver that very important project. We have decided to provide new investment in the A50, a crucial road link where there are many delays and bottlenecks. We are working closely with Staffordshire county council and the local enterprise partnership to work through the delivery of that. We have decided to contribute £30 million to the development of the proposed “Garden bridge” in London. We have also made announcements about supporting Government procurement of electric vehicles and some other important developments, such as our plans to double our corporate asset sales target from £10 billion to £20 billion by 2020.
We confirm that the feasibility studies we set out in June, particularly on routes such as the A1 to Scotland, the A303, the A27 and the trans-Pennine routes, are well under way and that full plans for each of those routes will be set out by this time next year. Following correspondence from Sir Howard Davies in advance of the interim report by his airports commission, we have set out plans to improve surface access to airports around London—in particular, £50 million will be contributed to a new Gatwick airport railway station. The subject of rural broadband was mention in the earlier Question Time, and we are committing £10 million to identify the best technologies to reach those hardest-to-treat premises.
Finally, today’s publication lays out the commitment made today by a group of insurers to work with Government and regulators and invest £25 billion in UK infrastructure over the next five years. I am sure that hon. Members on both sides of the House will agree that that represents a massive vote of confidence by some of our most important companies in the UK economy. The plan also draws attention to the new agreement signed with Hitachi and Horizon this morning, which commits us in principle to offering a guarantee for their new nuclear power station in Anglesey. I am sure that hon. Members who have had a chance to look through the document will recognise that this is real evidence that we are making real progress on delivering infrastructure fit for our country’s future. The NIP demonstrates a long-term vision for our energy, transport and digital networks. It is a plan that is helping to secure long-term investment and that will lead to sustainable, strong long-term growth. As such, I look forward to the hon. Member for Nottingham East (Chris Leslie) welcoming it with open arms and congratulating us on the progress we have made.
Chris Leslie (Nottingham East) (Lab/Co-op)
Time and again, the Chief Secretary boasts about his grand plans for infrastructure, yet the reality is always such a let down. With the country facing a cost of living crisis, is it not about time that the Government invested in the fundamentals to strengthen our economy for the long term? When will all these reheated press releases finally translate into diggers on the ground? Is it not the truth that since this Government were elected, work on infrastructure has fallen by an astonishing 15%, according to the Office for National Statistics? A 15% fall in infrastructure output since May 2010 should be a badge of shame for this Chief Secretary to the Treasury, as it happened on his watch.
This is a Minister who has a long history of issuing press releases in the hope that they magically translate into delivery on the ground. Once upon a time, many years ago, his press releases claimed that £20 billion from the pension funds would go into infrastructure, but only £1 billion was pledged, and nothing has yet been invested. Why should we believe that today’s press release about a supposed £25 billion from insurance funds is actually going to happen? Will he confirm that there is no new Government money for infrastructure today? In fact, will he admit that he is cutting the capital infrastructure budget in real terms by 1.7% for 2015?
For all the spin from this chief press officer to the Treasury, three quarters of the projects in this pipeline will not be in service until after the next election. Nearly a fifth of them will not be in service until after 2020. Members might have a niggling sense of déjà vu. Should not the Chief Secretary be just a little bit embarrassed to go through this same routine again? He pretends that he has got this fantastic record when he is transparently not delivering. It is worse than the emperor’s new clothes. He has been left exposed by a failure to deliver, and his record is out there for all to see.
Does not the chopping and changing on the A14 tolling in Suffolk say everything about the Government’s incompetent approach to infrastructure delivery? Costs have shot up £200 million and they have wasted three years on faffing around. On flood defences, they have cut spending by £100 million. On green investment, can the Chief Secretary not see that business investors are tearing their hair out at the erratic stop-start approach to support for renewables? Are we supposed to be impressed that the Government are looking at options to bring in private capital for the green investment bank? It is beginning to look like the return of omnishambles.
On schools, the Government scrapped Labour’s Building Schools for the Future, but of the 261 schools that their replacement Priority School Building programme was supposed to deliver, construction has started on only two. There is not a single word in this proposal today about housing investment. The Chief Secretary’s emergency guarantees legislation for £40 billion of underwrites has been a flop. His new version of private finance has not taken off. None the less, I must give him some credit today for one major advance for society. On the front page of his press release today, he pledges £8 million for new light bulbs for NCP car parks. What a shining example of infrastructure investment that is. I must ask: how many Treasury Ministers does it take to announce a change in the light bulbs? It is one thing putting out press releases, but can he at least try to make them vaguely convincing? He even resorts to claiming credit for projects that started before the election. This is a Treasury that has neglected the fundamentals that we need for a economic recovery that is built to last. For all the hype, the hot air and those press releases, we are left with a shambolic infrastructure programme and cuts in infrastructure plans. When will he get a grip?
Danny Alexander
It is very rare that I find myself thinking that Labour Members must wish that they had the shadow Chancellor on the Front Bench asking the questions and not the shadow Chief Secretary—the former policy wonk in the shadow Chief Secretary role with no new ideas of his own whatsoever.
The shadow Chief Secretary is quite right to say that this plan is not about new Government money, as I announced £100 billion-worth of new Government policy in June. He is wrong, however, on his comparisons with capital spending. Capital spending is higher in this Parliament as a share of the economy than it was under the previous Government. He is also wrong to criticise our announcements on energy today. The announcements on strike prices have been welcomed by commentators as diverse as Greenpeace, which states that it is right to focus on the costs of offshore wind, and the Renewable Energy Association, which described today’s announcement as a good day for renewable energy and renewable heat. I remind the hon. Gentleman that this Government were the first to put in place a green investment bank, something his party never bothered to do when it was in office.
Hearing the hon. Gentleman talking about infrastructure reminds me that his party cannot even decide what it thinks about the most important infrastructure project in the country, let alone what to do about it. The moment the Labour party comes out with a proper policy on High Speed 2 is, I suspect, a long time away. That is a pretty pathetic failure on Labour’s part to back investment in the north, northern cities and Scotland.
On delivery, let me say this. Onshore and offshore, underground and overground—[Interruption.]—wired and wireless, tarmac and train track, this Government are delivering. [Interruption.]
Mr Speaker
Order. There has been far too much noise on both sides of the Chamber. I appeal to Members to hear the Chief Secretary and I will then facilitate questioning for an appropriate period.
Danny Alexander
As we show in our national infrastructure plan today, investment in infrastructure in this country was up an average of £41 billion a year in the last Parliament, and £45 billion a year in this Parliament. Frankly, given our record, it is not clear which part of the word “delivery” the hon. Gentleman does not understand. Of the 646 programmes in our infrastructure pipeline, 291 are in construction. Under this Government since 2010: 36 transport schemes, delivered; 353 flood defences, delivered; superfast broadband to 10,000 rural homes every week, delivered—[Interruption.]
Mr Speaker
Order. Mr Lucas, your apprenticeship to become a statesman has several years to run at this rate.
Danny Alexander
A new prison is being commissioned in north Wales, Mr Speaker, should the hon. Member for Wrexham (Ian Lucas) wish to visit. That will be delivered very soon.
I have already mentioned superfast broadband to 10,000 homes, and 150 railway station upgrades and 80 electricity generation schemes have also been delivered. Making Britain the best country in the world to invest in infrastructure—delivered, and confirmed by a £25 billion commitment today from the insurance sector, which the hon. Member for Nottingham East should have welcomed rather than criticised. We on the Government Benches are building the foundations of Britain’s economic future—the only thing the Opposition built was debt.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
I welcome the much-needed announcement on infrastructure from the Government this morning, particularly the announcement on Wylfa and the reduction in onshore wind. I can support both wholeheartedly. However, there is an announcement in the plan that is not much needed by my constituents—that is, that on HS2. On page 40 of the plan, the Government say that the hybrid Bill on HS2 will go through in a year. Is that not a totally unrealistic timetable and is there not a danger that the Government are cutting corners on this major infrastructure project, not least by allowing only eight weeks for a consultation on a 50,000 page document on the environmental statement? Is it not about time that the Government considered the subject again more carefully?
Danny Alexander
On HS2, I would say that far from cutting corners we are making every effort to ensure that the programme is delivered as quickly as possible. That is what I think the country needs. I welcome the right hon. Lady’s comments on Wylfa nuclear power station and I was pleased to sign the agreement with Hitachi and Horizon this morning. On onshore wind, I feel that I might have to disappoint the right hon. Lady. We have reduced the prices we will pay in recognition that the costs are coming down, which will make that market more competitive. It should not necessarily be seen as a reduction in the delivery of onshore wind at all.
Mr Alistair Darling (Edinburgh South West) (Lab)
I am sure that I was not the only Member of the House who had a sense of déjà vu when listening to what the Chief Secretary had to say. Indeed, I seem to remember announcing a number of those projects myself 10 years ago. Perhaps that demonstrates the problem we face, because successive Governments have found it very difficult to deliver on those large-scale projects, whether for housing, transport or energy, which we desperately need. I know that central Government planning went out of fashion about 40 or 50 years ago, but is there not a case for seeing whether central Government could take a grip of those projects and match them up with the funds, including insurance funds, which is a good thing, to ensure that they actually happen? They are too important to the country to be left to chance. I am sure that he does not want to join the long list of Ministers who have announced these projects, only to find a few years later that they are filled with disappointment because they simply are not there.
Danny Alexander
I am grateful to the right hon. Gentleman for his comments—as usual, he makes a much more cogent and compelling argument on these matters than his Front Benchers. In all seriousness, the document, “The National Infrastructure Plan 2013”, is intended to do precisely that—to set out a clear pipeline. The changes we are making—I pay tribute to my noble friend Lord Deighton, who has joined the Government as the Minister with responsibility for infrastructure—are intended to ensure that Departments are better equipped with the commercial capability to deliver projects, to ensure that central Government are better able to track in real time what is happening with the projects, and to ensure that we have the mechanisms to deal with problems and blockages that central Government might put in the way. For example, I chair the Cabinet Committee on Infrastructure, which exists precisely to crack some of those policy problems and ensure that I do not suffer the disappointment that the right hon. Gentleman is so clearly filled with.
Sir Alan Haselhurst (Saffron Walden) (Con)
I welcome the Government’s commitment to improving connectivity to the principal airports. Will my right hon. Friend say a little more on the prospects for improving the link to Stansted airport, which would help not only air passengers, but many commuters in my constituency?
Danny Alexander
My right hon. Friend is absolutely right. As part of what we have announced today in the national infrastructure plan, we are also commissioning feasibility studies for improving surface access, by both road and rail, to Stansted and Heathrow, and that is alongside the money for the Gatwick railway station and the feasibility study we have commissioned on the rail link between London and Brighton, including the important Lewes to Uckfield line.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Will the Chief Secretary say a little more about the sell-off of national assets? Many of my constituents feel bruised, because they all used to own a bit of Royal Mail, but now only a few rather wealthy people do. Will such transactions continue with the sale of other national assets? Harold Macmillan once said that the Tory Government were selling the family silver. Is the furniture now following?
Danny Alexander
The hon. Gentleman asks an important question. Let me address it briefly. On Royal Mail, he will know that 10% of the shares are owned by the employees, which I think is an extremely good step that has not been taken before in the sale of national assets. The Government should not own assets that they do not need and in which investment could be made more effectively in the private sector, particularly when their sale would release receipts that could then be used to invest further in our critical national infrastructure. That is why we are raising our target for sales from £10 billion to £20 billion. I think that we have been under-ambitious in the past. There are assets that could be sold, such as the Government’s stake in Eurostar. No final decision has been taken on that, but we are working towards ensuring that we can put those assets into the private sector, where they can be better run and better managed, and use the resources for the infrastructure projects contained in the plan.
Dr Julian Huppert (Cambridge) (LD)
I very much welcome the announcement that the A14 toll will be scrapped and congratulate my right hon. Friend on listening to me and so many others on that. I also welcome the Renewable Energy Association’s comment that today is a good day for renewable electricity and renewable heat. Will he continue to campaign for this Government to be the greenest ever and resist any temptation to do anything else?
Danny Alexander
I am grateful to my hon. Friend for his remarks on the A14. It is fair to say that he has been one of the most assiduous campaigners in the House for the toll to be dropped, alongside many other hon. Members from the east of England. I certainly maintain my commitment both to renewable energy and to ensuring that this Government are the greenest ever. With the first green investment bank, the first renewable heat incentive, the strike prices and incentives for renewable energy and the many other policies we have announced, we are well on the way to achieving that objective.
Caroline Lucas (Brighton, Pavilion) (Green)
I can only say “dream on” in response to that answer. Will the Chief Secretary admit that the falling costs of renewable energy confirmed by the cuts to onshore wind and solar subsidies announced today simply demonstrate that the Government’s grotesque subsidy for nuclear is economic madness, since it is now clearer than ever that it will be cheaper and quicker to cut carbon and meet our energy needs through renewable energy, rather than nuclear power?
Danny Alexander
I am rather surprised not to hear the representative of the Green party welcome our commitments to making onshore wind more cost-effective and the big commitment to offshore wind set out in the national infrastructure plan. We must ensure that we have balance in our energy mix, and having nuclear power stations alongside renewable energy is the right mix. The Government are committed to that and I intend to ensure that we see it through.
Andrea Leadsom (South Northamptonshire) (Con)
I welcome today’s announcement on the national infrastructure plan. However, with regard HS2, it was made very clear at the beginning that no individual should be left out of pocket for the sake of a national infrastructure project, so will my right hon. Friend look again at the response that I received from the Department for Transport to a parliamentary question, stating that there would be no support for those families and communities who wished to petition on the hybrid Bill and no financial compensation? In fact, to be able to petition they need to figure it out for themselves, from reams of paperwork, and pay a £20 fee for the privilege.
Danny Alexander
I have not seen the correspondence, but if my hon. Friend would like to pass it to me, I will gladly look at it. I have to say, however, that it sounds as through what the Department has recommended is in line with normal practice, and I would not necessarily want to recommend any changes.
Derek Twigg (Halton) (Lab)
Why is the Chief Secretary dropping plans to charge a toll on the A14 in affluent Cambridgeshire but continuing plans to force Halton borough council to charge tolls across the proposed new Mersey Gateway bridge and the current toll-free bridge in one of the most deprived boroughs in the country? Will he think again and drop the charges for the Mersey Gateway?
Danny Alexander
The decision on the A14 was taken in direct response to our public consultation. The A14 would have been the only road in the country to be tolled in that way. We said that we were considering that and wanted to know what people thought, and they told us what they thought. Tolling on estuarial crossings, I am reliably informed, is usual practice and an important part of financing such projects.
Neil Parish (Tiverton and Honiton) (Con)
I welcome the Chief Secretary’s pipeline of funding. Will he turn the tap on in relation to the A30 and the A303 running east out of Honiton so that it can be continuously dualled and we can have a second pipeline of roads into the west country?
Danny Alexander
I can reassure my hon. Friend that the pipeline of money is already open for that project, as I announced in June. The work is now being done to work out precisely what improvements are available for the A303 and the A30 in that important link to the south-west of England. The Government are committed to ensuring that the route is upgraded, which is why we are conducting a feasibility study. By this time next year, we will set out the details for the House.
Albert Owen (Ynys Môn) (Lab)
I very much welcome the positive step forward on the Wylfa nuclear power station and the conversion of the Liberal Democrats on new nuclear build. I also welcome the extra resources for offshore wind, which will benefit not only my constituency, but the whole north Wales region. One missing element from the infrastructure plan is port development in Wales, which is a reserved matter. Will the Chief Secretary agree to meet me, so that we can have a level playing field for both English and Welsh ports in the development of offshore wind?
Danny Alexander
I am grateful to the hon. Gentleman for welcoming the steps that we are taking on the Wylfa power station and on offshore wind. My right hon. Friend the Secretary of State for Energy and Climate Change has changed our party’s approach to the issue, which I think was the right and realistic recognition of our energy needs in future. With regard to port development, it might be better if the hon. Gentleman met a representative of the Department for Transport, but if that is unsuccessful, I would be glad to meet him.
Jesse Norman (Hereford and South Herefordshire) (Con)
The greatest catastrophe in infrastructure procurement over the past 20 years was the private finance initiative under Labour. My investigations this week have shown a pattern of poor construction and inadequate maintenance at Hereford hospital on the part of the PFI contractors, and that relates to fire compartmentation, hospital ventilation, infection control, the emergency alarm system and maternity. That has been damaging to patient and staff safety and gave no incentive within the contracts to save money. Will my right hon. Friend reassure the House that the evils of PFI under Labour will never be repeated in this new round of investments and that the apparently systematic pattern of delaying and thwarting necessary remedial actions will never be part of the plans that he has laid before the House?
Danny Alexander
My hon. Friend has played a very important role in scrutinising and making public many of the most appalling features of PFI under the previous regime, and I congratulate him on that work. As he will know, a few months back, we announced the new private finance 2 model, which strips out an awful lot of the things that he is concerned about. We are also engaged in a detailed cost review of PFI projects to try to make sure that, where we can, we reduce cost pressures, as we did successfully with the Romford hospital PFI.
Thomas Docherty (Dunfermline and West Fife) (Lab)
Will the Chief Secretary to the Treasury say a little more about what will be the benefits for Scotland as a result of his announcement?
Danny Alexander
I am grateful for that question. I will mention a couple of things. First, Scotland within the United Kingdom is one of the key places for developing renewable energy, particularly offshore wind. I hope that the strike price that we have set out today will be a real benefit to investors and potential investors in Scotland. Secondly, the availability of a lower rate from the Public Works Loan Board—in other words, cheaper borrowing for local authorities for key local infrastructure projects—is being extended from local enterprise partnerships in England to local authorities in Scotland and Wales, so that those areas, too, can benefit from it. Cheaper borrowing is one of the things that we certainly would not get if Scotland were ever independent. That is further confirmation of why we are better together.
John Glen (Salisbury) (Con)
In welcoming the news about the progress on the feasibility study for the A303, will the Chief Secretary bear in mind my constituents’ concerns about Stonehenge and Winterbourne Stoke? Unless that area is properly unblocked, people will not be able to get down to Devon to enjoy Tiverton and Honiton. This has been going on for several generations, and we need to make sure that it is sorted in any plans that come forward next year.
Danny Alexander
I think Stonehenge has been there for more than several generations, and I do not intend to remodel it at this Dispatch Box or anywhere else. My hon. Friend is absolutely right to draw attention to one of the issues on that route. We are conducting the feasibility study to work out what are the right steps to take at every stage. I am sure that his concerns will have been heard by colleagues in the Department for Transport, and I will certainly make sure that they are taken on board, as the feasibility plan is developed.
Mr Pat McFadden (Wolverhampton South East) (Lab)
The Chief Secretary paid tribute to my right hon. Friend the Member for Edinburgh South West (Mr Darling). I hope that he will also condemn the stupid, destructive briefing against him that has been coming out of the Government in recent days.
I do not know whether the Chief Secretary has ever seen the film, “Groundhog Day”, but if he has not, I recommend that he go home and watch it later. Infrastructure spending fell by 3.7% in the third quarter compared with a year ago, the CBI has said that progress is too slow, and most of the projects in the top 40 list were begun under the Labour Government. Can he give us a simple answer to the simple question why we should believe this statement any more than those that he gives every year at this time?
Danny Alexander
I have seen the film, “Groundhog Day”, and listening to the right hon. Gentleman’s Cassandra-like remarks, it feels a bit like that in the House, because he has made them before. The plan is based on a detailed pipeline worked on with industry and with Government, and he should have a great deal of confidence in it. On the first part of his question, let me take this opportunity to pay tribute to the work of the right hon. Member for Edinburgh South West (Mr Darling), who is doing a fantastic job in leading the campaign to keep Scotland in the United Kingdom. I very much hope that we will continue to work together in making sure that this country stays together.
David Mowat (Warrington South) (Con)
A large part of the plan concerns Hinkley Point C and Wylfa, which are badly needed and vital, yet we are now hearing that the EU is minded not to give state-aid clearance for those programmes, which could delay them both by three to four years. Can the Chief Secretary put our minds at rest?
Danny Alexander
I can certainly put my hon. Friend’s mind at rest. He should not believe all the rumours that he hears about the European Union, particularly if they are circulating on the Conservative Back Benches. The truth is that we have just started the state-aid clearance process, which does take a bit of time and is there for good reasons. All the work that my right hon. Friend the Energy Secretary and his colleagues have done leads us to have a great deal of confidence that the clearance will be forthcoming.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
What mechanisms will the Welsh Government need to put in place to access finance directly from the infrastructure plan for their own projects—or is it a matter of the Treasury determining which capital projects will be spent on in Wales?
Danny Alexander
That is a very good question. The Welsh Government’s capital budget is allocated to them through the Barnett formula, so they have complete freedom to determine how they use the money. I urge them to consider the principles laid down in the infrastructure plan as applicable to Wales. I draw the hon. Gentleman’s attention to our decisions in responding to the Silk review, whereby the Welsh Government will now have borrowing powers, particularly to fund the M4 project, which is such an important investment not just for Wales but for the whole UK.
Ben Gummer (Ipswich) (Con)
I pay tribute to my hon. Friend the Member for Suffolk Coastal (Dr Coffey), who led the campaign on the A14 well in advance of the point at which the hon. Member for Cambridge (Dr Huppert) became pregnant on the matter. May I ask the Chief Secretary whether the diggers will arrive as promised in 2016?
Danny Alexander
Several hon. Members have been assiduous in their campaigning on this matter, but I can speak only for those who have come to lobby me personally. I am sure that a lot of remarks have been made by a lot of hon. Members, and I pay tribute to them all. The simple answer to the hon. Gentleman’s question is yes.
Fiona Mactaggart (Slough) (Lab)
The Chief Secretary will be aware that the major gateway for inward investment to Britain is Heathrow. In his announcement, he committed the Government to take forward projects such as the northern hub at Manchester airport, the Birmingham gateway and the development of western rail access to Heathrow. If he accelerated the latter, we could get western rail access to Heathrow within about three years. Why does he not get it going faster?
Danny Alexander
That is a bit of a laugh coming from Labour, which never bothered to look at the idea at all. Aside from that, this was one of the plans in the statement that I made in June where we set out a £100 billion plan for transport investment. I would happily arrange for the relevant Minister to give the hon. Lady a direct update on progress with the project.
Andrew Bingham (High Peak) (Con)
I welcome this plan, too. I draw my right hon. Friend’s attention to the feasibility study for the trans-Pennine route. I am delighted to see that in the plan, particularly with regard to the Mottram-Tintwistle bypass through my constituency and that of the hon. Member for Stalybridge and Hyde (Jonathan Reynolds). He and I have worked together and agree on that project, and I implore the Chief Secretary to bring it forward as quickly as possible. I look forward with great anticipation to the autumn statement, when I hope that we will have a solution to a problem that has bedevilled the House and my constituency for nearly 50 years.
Danny Alexander
The hon. Gentleman can be assured that that project will be considered as part of our work on the feasibility study on trans-Pennine access. It is good to hear that there is cross-party support for the project and, indeed, that there is any infrastructure project that Labour Members are prepared to support.
Sammy Wilson (East Antrim) (DUP)
Coming as I do from a part of the United Kingdom where an £18 billion investment project for the next 10 years has already been cut by 20%, the Minister will understand why I am cynical about this plan. How can we have any confidence in his estimate of the asset sales income to finance it given, first, that he cannot necessarily commit future Administrations to capital budgets, secondly, that the pension funds have already failed to deliver on private finance, and thirdly, that it must be seen in the context of the Government’s record on asset sales?
Danny Alexander
Let me start by paying tribute to the hon. Gentleman, who until recently performed a fantastic service to Northern Ireland in his role as Finance Minister in the Northern Ireland Government. He and I worked closely together in that regard. I would have thought that that work alone gave him confidence in the plans that I have set out. I do not think that his claim about the £18 billion for Northern Ireland is factually accurate, for reasons that he and I have discussed many times and, I am sure, will continue to discuss long into the future. As for the rest of the plan, he can be confident in it for the reasons set out in the document, which I very much encourage him to read and support.
Mr David Nuttall (Bury North) (Con)
Why do the Government still need to own Channel 4?
Danny Alexander
That is a good question, and I suggest that the hon. Gentleman raise it at Culture, Media and Sport questions.
Geraint Davies (Swansea West) (Lab/Co-op)
The Chief Secretary knows that 80% of the money in the infrastructure plan is being spent in London and the south-east to shore up the Tory vote, but is that also why the company behind the Atlantic array has ditched its plans for offshore energy off Swansea? If not, what is the explanation?
Danny Alexander
The hon. Gentleman will have to talk to the project developer about that. I completely refute his allegation with regard to where the infrastructure projects are taking place. One of the most important projects in the plan is High Speed 2, which will benefit the whole country, including, potentially, north Wales with regard to rail access. We have also made announcements about the M4 and borrowing powers for the Welsh Government. The largest single project where there is progress today is the Wylfa nuclear power station, which the hon. Member for Ynys Môn (Albert Owen) welcomed, and I should hope the hon. Member for Swansea West (Geraint Davies) would, too.
Mr Stephen O'Brien (Eddisbury) (Con)
In welcoming the statement and, in particular, knowing the Chief Secretary to be the guardian of value for money, which has led to the justification for non-carbon-emitting nuclear power, may I ask him to guide me to where I can find in all the HS2 documents that have now been published the business case that judges double-decking carriages to relieve the passenger capacity problem on the west coast main line versus HS2? Try as I might, I cannot find it. It does not appear to be there, even though it would seem to me the one business case needed to prove the case that has been made.
Danny Alexander
I might have been able to give the right hon. Gentleman a page reference if he had asked a question about the national infrastructure plan. I think that expecting an answer from me about the voluminous range of papers on HS2 is a little bit too much, but I will make sure that he receives an answer from my friends at the Department for Transport.
Nick Smith (Blaenau Gwent) (Lab)
Will the Government consider bringing forward the electrification of the south Wales valleys line? That would make a big difference to boosting employment in a deprived area.
Danny Alexander
I agree with the hon. Gentleman about the importance of electrifying the south Wales valleys line. That is why the Government added it to the Network Rail plan; it was not there before. I will certainly look at the case for accelerating it, if possible. The structure of this country’s rail industry is such that Network Rail is given a regulatory set of obligations and has to work out for itself the most efficient way to deliver them, but I would be very happy to ask that question of Network Rail and to share any answers with the hon. Gentleman.
Iain Stewart (Milton Keynes South) (Con)
Contrary to the rather dreary words from the shadow Chief Secretary, the hon. Member for Nottingham East (Chris Leslie), about the progress of infrastructure projects, is my right hon. Friend aware that very good progress is being made on reopening the east-west rail line through my constituency, with Network Rail engineers out doing the important surveying work ready to get the trains running again?
Danny Alexander
I think that “dreary” is rather a positive description of what the shadow Chief Secretary had to say, but I welcome the fact that he was given the opportunity to show from the Dispatch Box what a good plan the Government have, including the east-west line, and what a hopeless contribution the Opposition are making to this debate.
Diana Johnson (Kingston upon Hull North) (Lab)
On rebalancing the economy, why is the Chief Secretary able to spend £1 billion to put two extra Northern line tube stations in prosperous parts of London but not able find the money to fund the electrification of the line to Hull, and why is he spending £30 million on a new Thames garden bridge but nothing for putting a bridge over the A63 in Hull? Both those things are needed, following our successful 2017 city of culture bid.
Danny Alexander
I think that the hon. Lady is being unkind to the Government. We have cut the tolls on the Humber bridge, which I know she and other Members from that region welcomed. Under this Government, 880 miles of railway are being electrified in this country, compared with a full 9 miles during Labour’s 13 years in office. The chair of the Humber local enterprise partnership, Lord Haskins, recently raised with me the importance of the electrification of the Selby to Hull line, which is something I am looking at right now.
Andrew Griffiths (Burton) (Con)
I refer the House to my entry in the Register of Members’ Financial Interests.
On behalf of business and residents in Uttoxeter, may I thank the Chief Secretary for the huge investment in road improvements on the A50? Does he agree that this kind of investment in roads can help not only to improve road safety and cut congestion, but to deliver growth, jobs and prosperity in the north?
Danny Alexander
I wholeheartedly agree with my hon. Friend and I pay tribute to him, because he has made a fantastic contribution to making the argument for the project to Ministers, which has led to its inclusion in the infrastructure plan. He is right: road improvements are not just about dealing with congestion for motorists, but about unlocking growth opportunities for the whole country, and I think that is precisely what the A50 investment will do.
Mr William Bain (Glasgow North East) (Lab)
Given the pitiful rate of housing construction in Scotland presided over by the Scottish Government, Scotland faces a shortfall of 160,000 properties by 2035, but is the Chief Secretary able to point to a single announcement in his statement that would help contribute to alleviating a housing crisis across the United Kingdom?
Danny Alexander
Housing is not, of course, directly part of the national infrastructure plan—it never has been—but I can say a word about it. A number of the infrastructure projects will directly unlock housing developments. For example, the investment in the A14 will unlock sites for 10,000 or more new homes in that part of England. That is precisely the sort of project we need to see more of.
Our Help to Buy scheme, which is enabling people who cannot afford large deposits to get a mortgage and to get on the housing ladder, is helping people in the hon. Gentleman’s constituency and mine, as well as across England and Wales, to access the housing market. That, in turn, will help to stimulate house construction in Scotland as well as in other parts of the UK.
Jason McCartney (Colne Valley) (Con)
Does my right hon. Friend agree that if Opposition Front Benchers stopped their mithering, got out more from their Primrose Hill mansions and came up north, they would see a succession of major infrastructure projects finished ahead of schedule? For example, the M1 and M62 managed motorway schemes came in under budget and finished under time, and the new Acre Mill site at Huddersfield royal infirmary has nearly been completed. The trans-Pennine route is also being electrified and we have the northern hub. If the shadow Transport Secretary, the hon. Member for Wakefield (Mary Creagh) went to her constituency of Wakefield in two weeks’ time, she would see a nearly completed new railway station, which I use every week.
Danny Alexander
My hon. Friend makes the case incredibly powerfully. We are investing in infrastructure up and down this country. We are delivering massive investment. He gave a list and I could give an even longer list from the north, the south, the midlands and across the whole of the United Kingdom. The Labour party has called for consensus on infrastructure. That consensus could best be achieved by Labour setting out its support for the best long-term plan for infrastructure this country has ever had.
Richard Burden (Birmingham, Northfield) (Lab)
If the Government’s record in delivering infrastructure projects is as the Chief Secretary claims, rather than as my hon. Friend the shadow Chief Secretary claims, why did the Financial Times this week quote John Cridland, director general of the CBI, accusing the Government of “talking the talk” rather than delivering on projects, and why did Richard Laudy, head of infrastructure at the construction law firm Pinsent Masons, echo the view of much of the industry when he said he expected more “smoke and mirrors” from the Government?
Danny Alexander
Some things are beyond the ken of most of us in this world and the editorial decisions of the Financial Times are one such matter. There has been a very strong welcome from industry for this plan and its previous iterations, including, as we have heard, from constituencies where projects are being taken forward. That is precisely because this Government are the first to have a long-term plan for infrastructure with a clear pipeline of projects that are being delivered up and down the country. The hon. Gentleman should welcome that.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
There is so much to welcome in the updated national infrastructure plan, including the announcements about nuclear power stations and offshore wind. In particular, I want to thank my right hon. Friend for listening to the public consultation and the voice of business from Suffolk and cancelling the A14 toll. Like my hon. Friend the Member for Ipswich (Ben Gummer), I am very keen to get on with the project. Is there any chance of bringing it forward a few months?
Danny Alexander
I pay tribute to my hon. Friend for her important contribution to the debate on the A14. I said in my statement that the decision not to go ahead with tolls on the road will not delay the project. We are working with the Department for Transport to make sure that the time scale is as rapid as possible. I cannot give my hon. Friend any particular assurances at the moment, but I am sure my colleagues in the Department for Transport will have heard her comments.
Steve McCabe (Birmingham, Selly Oak) (Lab)
This is actually the coalition’s fourth national infrastructure plan in three and a half years. The Chief Secretary is not a press officer now; do we not need a bit more effort in implementation and rather less on presentation?
Danny Alexander
The hon. Gentleman’s party may not be very good at maths, but I am sure even Labour could work out that when a Government are in their fourth year in office and have promised to update a plan annually, they will give four iterations.
Glyn Davies (Montgomeryshire) (Con)
I, too, welcome my right hon. Friend’s statement, particularly his reference to a slight decrease in the strike price for onshore wind. Will he tell us exactly what that strike price will actually mean? Energy companies seem desperate to build wind farms on every hilltop in rural Britain, despite their impact on the landscape and the view of popular opinion. Does my right hon. Friend agree that there is scope for more than just a slight decrease in the subsidies to onshore wind and for a greater increase in those for offshore wind?
Danny Alexander
I am grateful for the question. The published strike prices are set out in table 3.D on page 50 of the national infrastructure plan. I do not intend to read out all the numbers, as I am sure you will be pleased to hear, Mr Speaker. The real point is that we are moving to competitive allocations for onshore wind and solar earlier than we thought, precisely because prices are coming down. There is a degree of competition to secure the best and most cost-effective projects, and that should help to secure the objectives that he and I share.
Kate Green (Stretford and Urmston) (Lab)
I note from the document published today that the Government will monitor progress on the Manchester Metrolink extension programme. What conversations are the Treasury and the Government having with Greater Manchester authorities and Transport for Greater Manchester to ensure that the extension link through Trafford Park is both properly financed and on time?
Danny Alexander
That is one of the projects that we will track under our new infrastructure tracking regime, which will make sure that any problems are surfaced for Ministers much more quickly than they have in the past. If the hon. Lady is aware of any particular causes of delay, I encourage her to let me know. I will of course make sure that Transport Ministers are aware of her concerns.
Henry Smith (Crawley) (Con)
In the week that Gatwick is celebrating its fourth year as a successful independently operated airport, I very much welcome the £50 million investment in upgrading the important connectivity of the rail station, which will help the local economy and help Gatwick as a preferred UK gateway. Does the churlish chuntering of the Opposition just prove that they have nothing to offer the economy in terms of recovery and investment?
Danny Alexander
I agree wholeheartedly with my hon. Friend on both his points. On the latter, I have said enough, but the Opposition are just completely hopeless on the economy, as they have demonstrated again today.
I travel through Gatwick regularly when flying back and forth to Inverness—this is not the reason why Gatwick is in the plan—and I have to say that the airport railway station does not present a great face to the world for people arriving in this country for the first time. That is why the investment is much needed, and we welcome the fact that Sir Howard Davies has suggested making such an improvement. The £50 million we are providing will of course need to go alongside investment by the airport, but provided that that is forthcoming, we can get on with the project.
Huw Irranca-Davies (Ogmore) (Lab)
How many of today’s announcements and the many re-announcements are in response to real tragedies for the economy, such as RWE’s decision to walk away from a potential £4 billion investment in the Atlantic array, which would have brought much-needed jobs? Has the Chief Secretary had discussions with RWE on resetting the strike rate, and would it now be at the table if he had done so sooner?
Danny Alexander
As RWE said at the time, its decision about the project was a commercial one taken for a range of reasons. It was aware of the timetable for setting out the strike prices. I know that my hon. Friends in the Department of Energy and Climate Change had conversations with that company.
Richard Fuller (Bedford) (Con)
I have listened to the many questions from hon. Members, but none has referenced the fact that, despite making progress on the deficit, the Government’s finances are still not in balance. Having listened to the scepticism of a former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), does my right hon. Friend think that the Government would do better by being more modest in their scope, more effective in their delivery and more stringent in their evaluation of the projects?
Danny Alexander
The evaluation of all the projects is very stringent, and I ensure that that happens, but we have also taken some very difficult decisions to constrain public spending in other areas to make more investment available for infrastructure projects. I think that that is the right balance, because infrastructure projects are so important for the long-term future of the country. Under-investment in infrastructure has been a British disease for decades, and we need to end it.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
Further to the very good question from the hon. Member for High Peak (Andrew Bingham), may I politely say to the Chief Secretary that since his announcement on 27 June of the transport routes feasibility study, it has been very hard to get details even of its terms? It took me three letters to the Department for Transport just to achieve that; it was obviously very busy delivering all the numerous projects around the country. Will he reaffirm his commitment to work with not only me and the hon. Member for High Peak, but colleagues from around the affected area—from Sheffield, Barnsley, Derbyshire—because trans-Pennine connectivity is truly awful at the minute? It needs a lot more attention than it is getting, and there is huge consensus in the House about trying to improve that.
Danny Alexander
I certainly agree that the Department for Transport is working very hard to deliver a large number of projects. I am grateful that that is recognised by at least one Opposition Member. As I said in my remarks, we need to make sure that local views are listened to as part of feasibility studies. I am sorry if the hon. Gentleman has had difficulties in getting across such views, and I will certainly pass that point on to colleagues in the Department for Transport. I wholeheartedly agree with him about the importance of trans-Pennine connectivity. That is why we initiated the feasibility study in the first place, and I hope that he will welcome its proposals when they are made.
Guy Opperman (Hexham) (Con)
A clear timetable and a change from the Labour Government’s failure to address the problems of the A1 and the A19, as well as rail projects, will be very welcome in the north-east. My right hon. Friend has visited Northumberland, and he knows that some truly rural areas have no broadband whatever. Will he expound in a little more detail how communities such as mine, which has no broadband and no possibility of getting it under the present schemes, can access the extra funding?
Danny Alexander
My hon. Friend draws attention to a very serious problem. Like him, I represent a large rural constituency, so I am very aware of these issues. Back in June, I announced additional funding to extend the target for the proportion of the population with access to superfast broadband. Today, we are announcing a small fund to stimulate innovation to find the best and cheapest technological solutions for getting superfast broadband to absolutely everybody, no matter how far they live from an exchange. We will get as far as we can towards that objective. If my hon. Friend has any ideas or if innovative companies in his constituency have any thoughts about that, I would be glad for them to contribute to the process.
Sheila Gilmore (Edinburgh East) (Lab)
Will the Chief Secretary rethink his view that housing does not have a place in infrastructure planning, particularly in relation to direct investment in affordable housing? Such investment would be a real win-win-win situation, because it provides the necessary houses, improves construction skills in apprenticeships and helps to bring down housing benefit spending far more effectively than the Government’s engaging in the kind of tinkering, such as the bedroom tax, that so much affects individuals, but makes no real saving.
Danny Alexander
I am very glad that the hon. Lady has given me the chance to talk about affordable housing, because I can refer to the fact that the number of affordable houses in this country fell by 421,000 during Labour’s time in office. We now have the largest annual house building programme for affordable homes through housing associations for two decades. I would have hoped that she would welcome rather than criticise that.
Mr Robin Walker (Worcester) (Con)
The coalition Government are delivering progress on new nuclear and transport infrastructure where the Labour Government utterly failed during their time in office. On the transport front, I particularly welcome the inclusion of the Birmingham airport runway extension—it will be completed in 2014, according to the document—which will provide direct links between the engine room of the British economy in the midlands and China and far east, where we are drumming up so much business.
Danny Alexander
My hon. Friend is absolutely right to highlight the runway extension at Birmingham airport. A year or so ago, with my hon. Friend the Member for Solihull (Lorely Burt), I had the privilege to visit that fantastic project, which will open up access to a much wider range of destinations from Birmingham airport, and that is a good thing for the whole country.
Alison McGovern (Wirral South) (Lab)
The Chancellor of the Exchequer has said that he wants to rebalance the British economy, but is now defending bankers’ bonuses in court. Today’s infrastructure announcement highlights the fact that the Office for National Statistics has said that infrastructure work has dropped by 15%. May I give the Chief Secretary to the Treasury an opportunity to say whether he still believes in rebalancing, and if so, what further steps must the Government now take?
Danny Alexander
I wholeheartedly believe in rebalancing the economy, which is why we are investing in infrastructure: £45 billion a year was invested in infrastructure in the first three years of this Parliament, compared with an average of £41 billion a year in the previous Parliament. Rebalancing the economy is about investing in infrastructure and the skills of our work force, and about supporting vital industries, such as the automotive and aerospace sectors, as we are again doing in this plan. The industrial strategy set out by my right hon. Friend the Secretary of State for Business, Innovation and Skills has played a very important role in rebalancing the economy. It will, however, be a long-term job to get away from the very unbalanced economy—all focused on London and the City—left to us by the hon. Lady’s party.
Mr Philip Hollobone (Kettering) (Con)
Thousands of houses are being built in and planned for the borough of Kettering, but the town of Kettering will grind to a halt under all the extra traffic unless new junction 10A is built on the A14. The junction would cost £30 million, but it would generate £1 billion of economic benefit to the local area under the Treasury’s Green Book rules. Despite the best efforts of everyone involved, and the lobbying of the Departments for Communities and Local Government, for Business, Innovation and Skills and for Transport, the funding has not been forthcoming. Will my right hon. Friend agree to meet me and a delegation from Kettering to see how we can solve the problem?
Danny Alexander
I am not aware of the specifics of junction 10A on the A14. Clearly, I do not want the town of Kettering to grind to a halt. We want the hon. Gentleman to be able to get here to his place of work as often as possible. It might be appropriate for him to meet a Minister from the Department for Transport to discuss this matter. I will gladly keep up to speed with what happens and hold a meeting if it is absolutely necessary.
Mr Speaker
I would go so far as to say that the continuing presence of the hon. Member for Kettering (Mr Hollobone) in the Chamber on a daily basis is a vital national interest.
Ian Lucas (Wrexham) (Lab)
Solar energy provides hundreds of manufacturing jobs in my constituency. The Government have presided over numerous changes to the investment framework for that industry and another change has been announced today. Will the Chief Secretary provide an assurance that there will be no further changes to the investment framework before the next general election?
Danny Alexander
Solar energy plays an important part in helping us to meet our energy obligations. However, I am sure that the hon. Gentleman would not argue that consumers should continue to pay costs at a high level as the costs come down in that sector. The framework that we have set out today will ensure that that does not happen. I hope that it will give a degree of confidence to that industry, which I know creates a lot of jobs in his constituency.
David Rutley (Macclesfield) (Con)
The Chief Secretary will know that progress is being made on the link road from Manchester airport to the A6. Will he join me in supporting the calls for a related relief road for the village of Poynton, which was promised in the 1990s and which will be vital in tackling the growing traffic congestion?
Danny Alexander
Again, I am afraid that I do not know the details of that project, but it sounds like there is a strong case for it at a local level. If my hon. Friend writes to me with the details, I will happily see how it could be progressed.
Peter Aldous (Waveney) (Con)
As a Suffolk MP, I, too, welcome the announcements on the A14 and the further investment in offshore wind. Does my right hon. Friend agree that those commitments will help to attract private sector investment and to create jobs that will be of significant benefit to the East Anglian economy and, in particular, to my Waveney constituency?
Danny Alexander
I agree wholeheartedly with my hon. Friend. The attraction of private sector investment alongside Government investment is one of the principal objectives of the national infrastructure plan. That is why I am so pleased today to welcome the commitment of £25 billion-worth of additional investment from British insurance companies in British infrastructure. It is precisely that sort of investment that will ensure that all of the projects are delivered.
Stephen Mosley (City of Chester) (Con)
I welcome the £15 billion of inward investment in infrastructure since 2010 that is detailed in the report. Does that not show, despite the best efforts of the Labour party to talk down our economy, that when foreign investors look at the UK, they see a country that is on the up and that has a bright future?
Danny Alexander
That is absolutely right. I am very grateful to the shadow Chief Secretary for giving us the opportunity to have this conversation in the House today and to demonstrate the paucity of his policies. If my hon. Friend is interested in foreign investment in infrastructure, there is a very good table in the document that has been published today, I think on page 87, which sets out a range of projects in this country that have been funded by overseas investment.
Mr Peter Bone (Wellingborough) (Con)
My constituents will greatly welcome the deputy Chancellor’s decision to scrap tolling on the A14. Last week, Councillor Thomas Pursglove and I launched a major listening campaign on the A45, which links the M1 to the A14. There are two pinch points: one at Chowns Mill and one on the last 5 miles of the road, which are not dualled. I am sure that the statement and the increased spending on roads will help us in that regard, but is there anything else that I should be doing to encourage people to do something about those problems?
Danny Alexander
I am grateful to my hon. Friend for welcoming the plan. In June, we set out considerable funding for the Department for Transport to deal with such local pinch points. Local enterprise partnerships have a role in identifying where action is needed. I urge him to engage with his local enterprise partnership, as I am sure he is already doing, because if it identifies such schemes as priorities for the area, they will in turn be made into priorities for Government funding and the problems can be dealt with.
Mr Speaker
I had anticipated a point of order, because I had received notice of one, but it appears that it will not be raised at this stage. So be it.
Recall of Elected Representatives
13:43 - The House divided: - Ayes: 127 / Noes: 17 - Question accordingly agreed to.
Zac Goldsmith (Richmond Park) (Con)
I beg to move,
That leave be given to bring in a Bill to permit voters to recall their elected representatives in specified circumstances; and for connected purposes.
All MPs are aware of just how strained the relationship between people and power has become. We have reached a depressing point in our history when even thoughtful commentators find it easier just to agree limply when they hear someone shrieking that all politicians are liars and thieves. To mount a defence goes against the collective popular gut feeling and requires more energy than most people have.
What worries me is how low that issue is on the Westminster political agenda. There is a sense that it is just a passing problem and that, in time, people will come back to the fold because there is no real alternative. Some even blame the expenses scandal, as if everything was okay before 2009. We know that it was not. Voter turnout has been decreasing for years. The memberships of political parties have plummeted to miserable levels. Among voters, there is an overwhelming sense that politics has become so detached and remote that, no matter how they vote or even whether they vote, nothing can change. I think that we are at an important turning point.
Democracy has evolved in this country, on the whole without too much violence. We should consider the first Reform Act of 1832, when the vast social transformation that had been brought about by industrialisation meant that politicians had no alternative but to yield to society’s demand that they broaden the franchise and give more people more ownership of their democracy. That happened again in 1867, when reforms were brought in that effectively doubled the number of men who were able to vote. More reforms followed in 1884. In 1918, the first women were allowed to vote, albeit only those over the age of 30 and with property to their name. That changed in 1928, when everyone over the age of 21 could vote, whether they were a man or a woman. In 1969, the voting age was lowered to 18. In one way or another, each of those steps has involved Parliament, sometimes reluctantly, handing power to people and edging us towards a purer democracy. Today, no one questions the wisdom of any of those reforms. I believe that it is time for us to take another step towards a purer democracy.
In the past few years, our world has changed beyond recognition. We have access to instant news from tens of thousands of different sources. Anyone can create a media platform and become a media baron. We no longer depend on a small handful of newspaper proprietors to inform our politics. Whereas voters used to rely on the odd newsletter and occasional newspaper report to find out about their MP, today’s voters can see in real time what their MP is saying and doing, and whether and how they are voting.
While those vast changes have taken hold, the way in which we do democracy has stood still. We still have a system in which, once elected, an MP is almost entirely insulated from any pressure from his or her constituents until five years or so later in the next general election. There is no mechanism that allows voters to sack their MP. An MP can switch to an extreme party, systematically break each and every promise that they made before the election, refuse to turn up in Parliament or refuse to engage in any meaningful sense with their electorate, but unless they are jailed for more than 12 months an MP is effectively unmoveable. It is therefore no surprise that, from the moment an election is over, the pressure is all top-down from the party, not bottom-up from the constituents.
In the heat of the expenses scandal, the leaders of all three mainstream parties seemed finally to understand the full extent of the public disillusionment with politics. Perhaps in a panic, they came up with a powerful idea: they promised to bring in a system of recall that would allow voters to hold their MPs to account at all times. That was a straightforward promise and recognition of the problem that showed a willingness to trust voters and to treat them as grown-ups.
However, now that the Deputy Prime Minister has been asked to produce a recall Bill, he has come up with an idea that is so far removed from genuine recall that it is recall only in name. It is an attempt to convey an impression of democratic reform without empowering voters in any sense at all. I am yet to find anyone inside or outside Parliament who supports the Government Bill.
True recall is a very simple mechanism. If a percentage of constituents—usually around 20%—sign a petition in a given time frame, they earn the right to have a referendum in which voters are asked whether they want to recall their MP. If more than half of the voters say yes, there is a subsequent by-election. By contrast, under the Government’s proposals, power will move up, not down, and to a parliamentary Committee, not to voters. The Committee on Standards—whose Chairman, incidentally, has already said that he does not want these extra powers—would determine, using extraordinarily narrow criteria, whether an MP qualified for recall. If that happened, there would be no recall referendum in which Members could defend themselves against whatever charges had been raised. There would effectively be an immediate by-election, fought in the national context. No Member, good or bad, would stand a chance under that process, not least because no association would be crazy enough to reselect a Member once the Committee had pointed its finger.
Instead of bringing in reforms to empower people to hold this institution to account, which was what all three parties promised, the Government want to introduce a system that empowers the institution to hold itself to account. Given that, I say good luck to the mavericks, the independent-minded MPs who are here on their own without the protection of party. Let us be clear that under the Government’s plans, an MP could refuse to perform any one of the functions required of them and still not qualify for recall. If the Government push ahead with the proposal, it will merely confirm all the prejudices that people have about politics. Voters will see that despite all the promises, they have not been empowered at all; they have been duped.
Perhaps putting it more politely than I have, the Political and Constitutional Reform Committee examined the Government’s Bill and said that their version of recall would
“reduce public confidence in politics by creating expectations that are not fulfilled.”
The Deputy Prime Minister has explained why the Government want a form of recall that is not actually recall, repeatedly expressing fears about what he describes as kangaroo courts. However, he must understand that, under a recall system, the only court is the constituency and the only jurors his constituents. It is true, of course, that there could be vexatious attempts to collect enough signatures to get rid of a decent MP, but in the average constituency the threshold would be about 15,000 voters. By contrast, most local parties would consider themselves lucky if they had more than 500 members. If 15,000 of my constituents signed a petition demanding my recall, I would feel a little silly trying to blame it on my opponents locally.
It is worth pointing out that recall already happens all over the world. It is not a novel idea, and it happens in its purest form. As far as I am aware, nowhere are there any examples at all of successful vexatious recall campaigns. In truth, the arguments against genuine recall, when we boil them down, are arguments against democracy itself.
For voters, of course recall makes sense. It would allow them to keep their MPs on their toes, even those in safe seats, and give them a much-needed sense of ownership over their democracy. However, I maintain that true recall is in our interest too, because it would begin the process of healing the broken relationship between people and power. In a true democracy, it would make no sense for voters to dismiss Parliament with the sweeping generalisations that are so normal today, because in such a democracy people would truly have the MP they deserved. If they were unhappy with their representative, they would have no one to blame but themselves.
Some years ago my hon. Friend the Member for Clacton (Mr Carswell) introduced a Bill similar to the one that I propose today, and he described parliamentary democracy as
“our supreme contribution to the happiness of mankind.”—[Official Report, 13 October 2009; Vol. 497, c. 168.]
He was right, but our fragile democracy has flourished because it has evolved, and it must evolve again.
Question put.
Lords Amendments | Time for conclusion of proceedings |
|---|---|
No. 105 | Ninety minutes after the commencement of proceedings on consideration of Lords Amendments |
Nos 1 to 104 and 106 to 113 | Three hours after the commencement of those proceedings. |
Energy Bill
15:26 - The House divided: - Ayes: 318 / Noes: 236 - Question accordingly agreed to.
16:48 - The House divided: - Ayes: 226 / Noes: 311 - Question accordingly negatived.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I must draw the House’s attention to the fact that financial privilege is involved in Lords amendments 50 to 53, 88, 89, 93 and 96. If the House agrees to any of these amendments, I will cause an appropriate entry to be made in the Journal.
Schedule 4
Application and modification of emissions limit duty
The Minister of State, Department of Energy and Climate Change (Michael Fallon)
I beg to move, That this House disagrees with Lords amendment 105.
The amendment would give the Secretary of State power to apply the emissions performance standard—EPS—to any existing fossil fuel power station that fits the pollution clean-up equipment that is needed to meet the tighter limits, set by the industrial emissions directive from January 2016, on emissions of oxides of sulphur and nitrogen. Under that directive, plants that do not fit clean-up equipment will from January 2016 be subject to a 17,500-hour limit on their operation, after which they must close, or, from mid-2020 be limited to just 1,500 hours of operation a year. The intention behind the amendment is to use the EPS as a regulatory tool for limiting carbon emissions from any existing coal-fired power station that is not otherwise forced to close and/or have its operation limited under the directive.
First, the Government do not consider that power to be necessary. Secondly, the measure risks deterring any investment in equipment needed to comply with the directive, the consequences of which could be detrimental to consumers. I remind the House that the EPS is intended to support the planning requirement that any new coal-fired power station must be equipped with carbon capture and storage. The EPS is, therefore, about ensuring no new unabated coal, and is a clear and unambiguous regulatory measure that signals our commitment to decarbonisation.
Mr John Redwood (Wokingham) (Con)
Will the Minister confirm that eight plants are closing under the EU directive already, and if any more plants had to close the lights would go out?
Michael Fallon
I was coming on to the list of stations that have closed. My right hon. Friend is absolutely right that we need urgently to replace the capacity that is coming off the system. Coal, as he will know, currently accounts for around a quarter of our reliable generating capacity, but that is set to decline rapidly over the coming years. Last year, Kingsnorth closed, this year we have seen the closures of Cockenzie, Didcot A and Tilbury, and we expect Ferrybridge C and Ironbridge to follow suit.
Ian Lavery (Wansbeck) (Lab)
The Minister mentions that coal is producing up to 25% of the electricity generated. Does he agree that the recent statistics prove that over the last 12 months that has been up to 50% and on average was 41%?
Michael Fallon
Coal has been an important part of the mix, and I hope the hon. Gentleman will be with us this afternoon in preventing further coal from being driven off the system.
Coal is being removed from the system due to a number of factors, including the old age of some of the plants, the impacts of environmental legislation, the increasing penalty on high-carbon generation applied under the carbon price floor, and increasing levels of low-carbon generation as we introduce more renewables.
Mr Mike Weir (Angus) (SNP)
If a plant fits carbon capture and storage equipment, as a demonstration plant, could it be caught by this amendment and forced to close or not generate so much energy?
Michael Fallon
There is an exemption under the Bill for a plant that fits CCS equipment. I have made that clear to the Carbon Capture & Storage Association and to those working on the various projects.
The coal fleet is old, having mainly been built in the 1960s and ’70s, with only one plant, Drax, under 40 years old. Most of these ageing power stations are now expected to retire completely between now and the mid-2020s. As I have explained, if a station is not to face restrictions and/or closure under the directive, it will need to invest in clean-up equipment. That would require a multi-year programme of investment in the order of several hundred million pounds. Over time, with the carbon price floor and a strengthening emissions trading scheme, the economics of coal generation will deteriorate further compared with gas. Furthermore, as more low-carbon generation comes on to the system through new nuclear and renewables, it will result in higher-carbon coal generation being increasingly displaced. The combined effect is that the economic outlook for coal generation is poor.
Our analysis is consistent with that outlook and shows that unabated coal generation will make up just 7% of total generation by 2020 and 3% by 2025, and probably 0% by 2030. There is no evidence at the moment of a large number of operators planning to upgrade their coal plants, but we should not rule out the possibility that one or two might do so.
We have heard the argument that the amendment would merely make available a tool for future Governments to use, if necessary, to limit the emissions from existing coal stations, but we believe the very existence of such a power would create an additional regulatory risk that could deter the small number of our most efficient stations which might otherwise choose to upgrade. As I have set out, under the directive, stations that do not upgrade will be subject to limited hours and/or forced to close. If the amendment were accepted, therefore, we would risk more coal stations closing earlier than might otherwise be the case.
I have also considered the argument that the amendment would provide greater certainty to investors looking to build the new gas plant that we all agree will be needed. However, the amendment would do so in a way which could create risks for our security of supply and increase costs to consumers. We already face a significant investment challenge with an estimated 16 GW of new gas plant, and about 45 GW in total of all forms of generating capacity, needed over the decade from 2015 to 2024. We are acting to facilitate that new investment through other measures in the Bill, notably with regard to the capacity market. However, we cannot be 100% certain about exactly when all that investment will be delivered. We need a managed transition to a lower-carbon future, in which our existing assets are managed prudently to avoid unnecessary costs to consumers.
Dan Byles (North Warwickshire) (Con)
Does my right hon. Friend agree that the transition we are trying to make in our economy, from what we have now to what we seek in 2050, is so complex that we cannot simply approach it in an ideological way and assume low-carbon energy sources will magically appear? Instead, we need a credible, investable and coherent plan for getting from where we are now to where we want to be.
Michael Fallon
I absolutely agree with my hon. Friend. When we are dealing with security of supply and keeping costs affordable for our consumers, we must avoid being ideological. Instead, we must be inclusive and welcome new generation from a series of sources.
The Department has looked at a scenario in which all our coal stations close by 2025, the results of which show that average household electricity bills would be about 3% to 4% higher—or about £22 to £28 higher—in the 2020s. That would require more gas plant to be built earlier to fill the gap—at greater cost, ultimately, to consumers. It makes no sense to accept an amendment that unnecessarily creates further risks to our security of supply and further increases costs to our consumers.
The measures in this Bill are about creating the right conditions for attracting the significant investment needed in our electricity sector over the coming decade. Such investment in lower-carbon alternatives will deliver an orderly, cost-effective transition away from high-carbon coal, and that should not be put at further risk.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
It is a pleasure to take part in the debate this afternoon, which may be the long-awaited final part of our deliberations on the Energy Bill—or maybe not. The House will not need reminding that we have had long, and at times detailed, discussions on this Bill. Indeed, I noticed while listening to the Minister’s opening remarks that the hon. Member for Wealden (Charles Hendry) is present, which reminded me that when the Bill was first published and subjected to pre-legislative scrutiny, it was in his hands, and it has since passed through the hands of the right hon. Member for South Holland and The Deepings (Mr Hayes) before his promotion to the heart of the Prime Minister’s office, and then on to the current Minister. We have been addressing this Bill for some time, therefore, and a couple of weeks ago we debated extending its time limit. During that debate, we made it clear that the Opposition do not wish to delay the Bill unduly because it is an important piece of proposed legislation, but although the extended deadline of the end of the year is fast approaching, we think there are some issues before us today that merit further serious consideration.
Indeed, these issues are before us today only because of consideration of the Bill in another place and, as the Secretary of State made clear when asked about his attitude to this particular measure, it is not necessarily as simple as sometimes portrayed by Members on the Government Benches. There have been a number of improvements to the Bill in relation to nuclear transparency, community energy and other areas, and much of that still needs to be done through secondary legislation and regulation, which will undoubtedly follow. In part those improvements have been prompted by amendment and debate instigated from both sides of the House and in both Houses, and it is in that context that I believe we should also give due cognisance to amendment 105 passed in another place.
Many of the Members present have faithfully stuck with this Bill through all its stages, and they will have heard me make the point that it is my personal belief that confession is good for the soul. I therefore wish to begin with a confession: I remain somewhat confused by the attitude of Liberal Democrats Members on this issue. A number of Liberal Democrat Members have taken part in our proceedings on the Bill, and have demonstrated their desire to see an improvement in our energy infrastructure and a commitment to decarbonisation. Indeed, if one refers to the speech made by the mover of this amendment in the other place, those were exactly the concerns expressed. Lord Teverson, the Liberal Democrat’s energy spokesman in the other place, is a conscientious and diligent contributor to discussions on energy policy, but I understand that the distasteful realities of coalition mean that Ministers are constrained.
The attitude displayed by the Minister today suggests that on this matter he has won the battle with his coalition colleagues in recompense for other measures we have heard about in the recent past. I wonder, however, whether this, like the 2030 decarbonisation target, is a Liberal Democrat policy that Liberal Democrat Back Benchers feel unable to vote for, or a Liberal Democrat tactic to keep those in the other place distracted. If they vote with the Government against Lords amendment 105, do they intend to vote for it again in the other place? If that is the case, the rest of us could simply leave it to the Liberal Democrats to decide between themselves, and between both Houses, which way they wish to face, or whether they wish to face both ways.
Mr Redwood
Given Labour’s long tradition of strong support of the coal industry, is the hon. Gentleman worried that the Bill will lead to a rapid collapse in coal demand and output in this country?
Tom Greatrex
No, I do not accept that and I will go on to explain why during the remainder of my remarks.
We have heard, and I anticipate we will hear more in the time available, about coal generation. Some in this House are hostile to coal-fired power. Indeed, a number of those who are most enthusiastic for unconventional gas cite its ability to use less coal as part of their case for shale. There are others who are supportive of the remaining indigenous coalfields and have strong constituency associations with coal-fired generation. A number have previously worked in that industry and I have a huge amount of respect for their knowledge and expertise. For my part, I think that coal-fired generation remains an important part of our generation mix. We are currently using, as my hon. Friend the Member for Wansbeck (Ian Lavery) pointed out, a significant amount of coal generation, particularly in the winter months. Earlier this week, the UK achieved a new generation record for wind, but coal is currently the predominant part of our generation mix.
My support for coal as part of that mix is not born of any historical romanticism about the industry so much as the positive opportunity presented by carbon capture and storage for a bright future for clean coal. That important point has been recognised by the joint industry and trade union clean coal group, which has expressed many of the concerns I have about the limited and slow progress on CCS in the past three years. That is an important point when we take comparisons into account. If Members have not had the opportunity to do so, I would ask them to consider the significant progress made in Canada on CCS. My hon. Friend, a member of the Select Committee on Energy and Climate Change, has drawn attention to the tantalising and real prospect of a commercially scaled CCS project being up and running in the early part of next year. That shows what can be done with a sense of purpose and real intent.
Caroline Lucas (Brighton, Pavilion) (Green)
Is the hon. Gentleman aware of the Carbon Tracker report that shows we need to leave four fifths of known proven fossil fuel reserves in the ground if we are to have any chance of avoiding 2° warming? That being the case, Carbon Tracker analysis found that, even with CCS, fossil fuel carbon budgets would be extended by only a very small amount. If we are serious about staying below 2°, CCS still does not help us—we need to get off coal with or without CCS.
Tom Greatrex
I respect the hon. Lady’s opinions, but I disagree with her on that point. CCS provides us with the best opportunity to meet our peaking capacity demands alongside the low carbon base load generation. I know she is against that in relation to nuclear and supports more variable low carbon generation in relation to renewables.
My hon. Friend has been keen, clear and committed to ensuring that CCS is not just about gas, but coal too. He makes a compelling case and I look forward to the Select Committee’s report on this important issue early in the new year.
David Mowat (Warrington South) (Con)
I like the hon. Gentleman’s point on CCS, but is he aware that Germany is building 11 GW of new, unabated non-CCS coal, with Holland building 4 GW? Those projects have kicked off in the past year or so and those countries do not appear to feel the need for CCS. Why are countries reading this matter so differently?
Tom Greatrex
I am grateful for that intervention. I anticipated that the hon. Gentleman would refer to this point, because we had a rehearsal in a Westminster Hall debate this morning. I have also read the report compiled for the Department of Energy and Climate Change on coal-fired power stations in Germany that he had in the Library yesterday. He will know from the report that the plants were sanctioned in 2007-08, which was pre-EU 2020 targets, pre-withdrawal of free allowances and pre-renewables. The trigger for German investment in coal was the first nuclear phase out, and the slow build of the plants commissioned in 2007-08 were the result of a number of plants using defective steel. They are likely to operate at a loss. They are completing commissioning to make less of a loss than if they had been abandoned—that is the reality.
I accept the hon. Gentleman’s general point about Germany. There is a danger that we almost fetishise the German experience. [Interruption.] I think I have made the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker) laugh, but I did not mean fetishisation in any unclean sense. The deployment of renewables in Germany has been significant and has expanded, with more community and diverse ownership of capacity. We can learn a lot from that, but, as a German academic expressed it to me this week, with the amount of coal-fired power currently being generated in Germany, one might think that the people who hold up Germany as the green case for the future cannot read statistics. The German view of CCS has been born of opposition to storing carbon underground, and the UK is more likely to store carbon under the sea. The German decision to accelerate the phase out of nuclear was perhaps not the wisest, given the emissions targets that it too has to meet.
David Mowat
We can both agree that Germany’s carbon emissions are one third higher per capita than in the UK. On the report he mentioned—I did not realise he was sitting next to me in the Library yesterday cribbing my report—he is right to say that some of the projects were kicked off a few years ago. The report also states that by 2030 Germany plans still to have 20% to 25% of electricity generated by unabated coal, whereas our target, as I think the Minister said earlier, is 3%.
Tom Greatrex
I did not actually read the report over the hon. Gentleman’s shoulder; I looked at it beforehand as part of my preparation. It may be that I have powers of clairvoyancy, as I thought he might raise this point—he has been consistent in doing so. On his substantive point, he is right on Germany’s trajectory in comparison with the UK. Returning to the amendment, the point he rightly makes concerns the Government’s existing and continuing position, unless the Minister intends to change it. I will come on to make some remarks about how the amendment would have an impact on existing policy.
The other point I wanted to make on CCS is that the Minister’s colleague in the other place, Baroness Verma, referred to no more coal without CCS. That is also the position of CoalPro, the Confederation of Coal Producers, which said, in correspondence with the Minister, that coal-fired power had to have CCS in the long term in order to meet our long-term admissions targets, and encouraged him to accelerate the demonstration projects on CCS. So there is unanimity among those with an interest in coal that CCS is the long-term answer.
Ian Lavery
Everybody would agree that coal is not going away, but will be here into the future. We will be burning even more tonnages between now and 2030, yet the Minister said that by 2030 we would probably have zero coal burning. I think that that is an absolute impossibility and that we need to progress with CCS as soon as possible. Where are we with the CCS projects?
Tom Greatrex
I agree with my hon. Friend about the need for progress on CCS, which is why I have continued to press the Government on it over the past two years. The Minister might correct me, either at the end of this debate or on the next set of amendments, but my understanding is that there should be some news on the two shortlisted projects, if not towards the end of this year, early next year. I am concerned, however, that with just two demonstration projects, in isolation, without the continuing regime of contracts for difference and other support, CCS will become almost a curiosity, rather than a continuing and integral part of how we reduce and minimise emissions from the peak in capacity we will require for many years to come.
A number of energy companies have made in correspondence much the same point as CoalPro. That was why we proposed an amendment, adopted by the Government, to provide flexibility in the early stages of CCS projects, in the commissioning period, to maximise the chance to achieve what we need to on CCS. That amendment was tabled alongside another one, similar to this amendment, that we discussed in Committee, one part of which the Government accepted.
Let us be clear about what the amendment would do and what it would mean for coal plant. Coal plants operating in 2013 effectively have three choices. The first is to leave the plant as it is, without investment, in which case it would close some time before 2023, depending on how quickly it used the permitted hours of operation to which the Minister referred. The second is to upgrade in order to conform to the industrial emissions directive, as has been done at least once, at Ratcliffe-on-Soar, and as others are considering doing. The third is to upgrade more significantly to extend the lifetime and meet the IED stipulations.
The coal-fired power stations in the first category would be unaffected by the amendment. If they burned through their allowances quickly, operating at 55% load factor, they would still run until 2020, and because of the likely profitability of the capacity market being introduced, I suspect that many would choose to run at slightly lower load levels until 2023. The Government’s emissions performance standards, already in the Bill, will apply to the third category of plant—those that extend their lives through investment. The amendment would impact on the second group and take effect, effectively, from 2023.
The EPS limits on carbon emissions are expressed as the amount of CO2 per kWh, but they limit the amount produced not per hour but per year. A typical power station, therefore, would be limited to a 40% to 45% load factor without lowering its emissions rate. That means running at a low load factor, to manage peaks in demand or in winter, or becoming serious about CCS. Neither choice is the end of coal generation in the UK.
From the Minister’s remarks, it seems that the Government are not persuaded by the amendment for several reasons.
David Mowat
The hon. Gentleman categorised the three types of power station and pointed out correctly that his amendment would apply only to one of them. We currently have about 23 GW of coal generation. To how much of that would his amendment apply?
Tom Greatrex
That depends on the decisions made on the first and second groups. On the third group, so far there has been relatively little investment, but I know that a number of companies are actively considering making it. They are waiting, partly for the completion of this Bill and regulations arising from it and partly for the detailed work on the capacity market, before making those investment decisions. As I said at the outset, that is why it is important we get the Bill though as quickly as possible, after considering these final points.
The Minister gave several reasons why the Government were against the amendment. The first, which he referred to almost in passing, was on technical and drafting grounds. In that regard, several points have been made by those anxious to ensure that existing investment is not disregarded, but I think that those points could be properly reflected in the regulations that would arise were the amendment to be successful. The second was that the amendment was unnecessary, because existing price control policies, notably the carbon price floor, had the same impact in effectively limiting coal plants to about 40% to 45% load factor. If so, perhaps the Minister, whose antipathy to the carbon price floor has been well-rehearsed—he has been reminded of it a couple of times recently, including this morning, so I will not embarrass him by doing it again—could help to persuade the Chancellor that the unilateral, untargeted measure of a carbon price floor is not needed because the Government could use the approach in the amendment instead.
The third argument was that the amendment would present a risk to security of supply. As the Minister is aware, the amendment would not bite until 2023, and if his boast earlier today in Westminster Hall—on investment decisions about to be announced for the enabling process—are accurate, that would give scope for any gap to be filled. I say that not least because we would continue to have that coal capacity operating in winter and at peak times through the capacity mechanism the Government are introducing.
The fourth argument concerned costs. The Minister neglected the point that the price of electricity was pegged to the price of producing energy from gas. However much coal is in the system, coal generators sell at the gas price, so bringing more coal into the system would not necessarily mean lower energy costs for consumers. It is worth restating that the EPS goes no further than the Government’s own prediction for scaling back coal in the energy mix. It is effectively a back-stop or, with some intelligent thinking, possibly an alternative to what they anticipate will happen in response to the EU emissions trading scheme and carbon price floor combined.
This morning, the Minister spoke in a debate, which I thought was a very good debate, about issues of balance in energy policy. He also spoke earlier this week, to a slightly different audience, about the order in which he saw the elements of the balance: security of supply, affordability, climate change, in that order. He is right to talk about balance, investment and impacts, and the very purpose of the Bill is to ensure we strike that balance in the most affordable and sensible way in order to secure a diverse and balanced energy supply for the future, while recognising the realities of climate change and the measures we need to take to address it, and to protect us from the vagaries of the volatility inherent in globally traded commodities. He will have seen this week’s figures from the International Energy Association on global energy demand projections over the next few years. Contrary to the impression he gave, the amendment is in line with the Government’s stated aims. It is proportionate and sensible and is certainly worthy of further consideration for inclusion in the Bill.
Mr Robert Syms (Poole) (Con)
I rise to support the Minister in his disagreeing with Lords amendment 105. This country has always had a balanced energy policy, with several things feeding into the mix, and I think it important that we continue that. The problem is, however, that we have not built enough capacity over the past 15 or 20 years. The changes under the Thatcher Government to the grid and the electricity market were successful in maintaining relatively low prices, but there has not been the same investment in capacity. That was made substantially worse by the last Government, who managed to produce a White Paper without mentioning nuclear power as part of that important mix.
We now face a difficulty. At some point, we have to close the Magnox stations. In addition, we have policies that are making coal less attractive, so that capacity is going off and needs to be replaced. Although there are plans and many firms are talking about building capacity, it is not being built. If we are not careful, we will have a gap, in that we will lose capacity and then have to either import or face the genuine risk that the lights will go out some time in the next several years. That is a serious thing. We can have all sorts of debates in this Chamber about the economy, quantitative easing, funding for lending and everything else, but if we cannot generate enough electricity to keep the lights on and industry running, that will be a poor indictment of the British economy.
Bob Stewart (Beckenham) (Con)
My hon. Friend obviously knows quite a lot about this subject. How much reserve capacity does he think we should have? Is it 10%, 20% or something else? Is there a figure that he would recommend?
Mr Syms
It is small in capacity terms for the economy. Normally, that is when the grid starts getting a little nervous. In the years ahead, the grid might have to be a lot smarter about managing our assets and resources to ensure that we can provide electricity. Renewables have their role, but they are sometimes less predictable than nuclear or coal-powered stations. That is one reason why, as the hon. Member for Wansbeck (Ian Lavery) mentioned, there have been occasions recently when coal has provided 50% of our electricity, which is rather more than the 25% that it is providing now.
Angela Smith (Penistone and Stocksbridge) (Lab)
The hon. Gentleman is making the case for ensuring spare capacity in the electricity grid. Would he therefore not concede that we need the same capacity in the gas grid as well? Recently, the Government refused to recognise the case for building extra gas storage capacity. Many people in the industry feel that that is a big mistake.
Mr Syms
It is important both that we have generating capacity, preferably domestically based, and that we increase our storage capacity for various forms, including gas. Of course, Ministers are also custodians and have to stand up for the consumer. If a company makes a costly proposal that will be reflected on people’s bills, Ministers have to take a view on whether that is the right or wrong thing to do. I hope that we get back to that debate and provide more storage.
David T. C. Davies (Monmouth) (Con)
I agree with much of what my hon. Friend says. Does he agree that one of the problems is that, unfortunately, Ministers and shadow Ministers have all been too quick to accept the arguments of the powerful green lobby about CO2 causing global warming, which clearly has not been the case for the past 15 years? Does he agree that we should now prioritise cheap, secure energy for our manufacturing industry, whether from coal, gas or any other means?
Mr Syms
Clearly, policy has to have a proper balance. There is a role for renewables and trying to provide the cleanest possible energy, and the Government have policies to ensure that. However, I return to my essential point, which is that we now have policies that are driving out older capacity—it might be less efficient or dirtier capacity—but we are yet to put in place the new, clean, gleaming capacity to produce for the future. If we are not careful, whoever forms the next Government—I hope that we will—will find themselves with a very real problem. I do not want the Chancellor of the Exchequer standing at the Dispatch Box talking not about tax or how the economy will grow, but about the constraints caused by our not investing in providing power for a growing and successful future economy.
I listened carefully to the Opposition spokesman; I just think that Lords amendment 105 is not appropriate. I return to my central point: we need to sweat our assets and keep them going until we are sure that we have the capacity to keep the lights on.
Dan Byles
On my hon. Friend’s point about investment, we hear about the oft-quoted trilemma in energy policy—the requirements for energy security, affordability and decarbonisation—but does he agree that we should actually be talking about the quad-lemma and that the fourth leg of our energy policy should be investability? If we do not have a credible and investible energy policy, we might as well switch the lights off and go home.
Mr Syms
Absolutely. At the end of the day, we must have the capacity to generate for what people want. We can make savings with insulation and things that we do with electrical equipment. We can do an awful lot to save energy, which will take care of some of the demand. However, with a growing, successful economy—there is every reason to look at the British economy with great optimism—I suspect that we will need more capacity. Not only do we need plans for investment; we need people breaking the ground and building these things, so that they can provide for what we want.
I have reservations about the amendment. I know that people talk about 2021 or 2023, but that will come very quickly, so although the investment and capacity might not come that quickly, my general view is that we should be a little cautious about the Lords adding more constraints, costs and limits on an important source of power at this point.
Dr Alan Whitehead (Southampton, Test) (Lab)
I am a little bemused by some of the talk that we are hearing this afternoon about the capacity crunch and the extent to which the amendment might exacerbate it over the next period, bearing in mind, first, that it would not take effect until after 2023 in any event and, secondly—this has perhaps gone rather unremarked—that the power plants that are not producing and that are offline and either light mothballed or deep mothballed are not coal-fired but gas-fired plants. About six of them are mothballed—even though those operators could operate perfectly efficient gas plants for their own operations—not because they cannot produce on a reasonable basis, but because of the spark spread for gas and electricity prices. Therefore, it is not a capacity crunch because there is no capacity; it is a capacity crunch, potentially, because of the way that plants operate relative to each other.
Nothing in the long-term prognosis has changed, in terms of what we have to do in the longer term or how we have to deploy capacity. Getting the right amount of capacity and the right amount of reserve capacity in the market is a combination of ensuring that capacity is properly utilised and that new capacity comes on stream in the right proportion to support the changing nature of our energy production market. As regards that progress over the next period, up to 2030, one of the remarkable things written in most DECC documents to come out on the matter concerns where we need to go in decarbonising our energy supplies.
DECC’s central target is an overall level of emissions of 100g per kWh by about 2030. Everyone knows what that means. Unless we hear this afternoon that the target has changed, there will no longer be room for large amounts of unabated coal to continue to operate in the system, whether in new, existing or refurbished plant, without carbon capture and storage in the period leading up to 2030.
There is currently a disjunction between what DECC says about its target and what the policy appears to suggest when it comes to whether those coal plants will become able to play a part in our future energy mix with carbon capture and storage, or will no longer play a role as base-load generators but either convert to other forms of supply—as Drax is doing in moving to biomass—or run at much lower levels, as peak and back-up plant, over a period, to keep within the overall targets. The amendment connects what we think that we are doing with what we ought really to be doing over the coming period and starts to dissolve the disjunction between what we think is in policy and what appears to be in policy.
One of the effects of uncertain signals about the direction in which we are going in respect of, for instance, decarbonisation targets is that people do not invest in one thing rather than another; they do not invest in anything. They do not do what they might otherwise have been doing, because they are not sure what the signals are telling them. I believe that the amendment gives a certain rather than an uncertain signal in regard to the long-term future of coal, thus enabling those who are thinking of investing in coal over the coming period to be clear about what to do, rather than unclear, as they are at present.
Ministers seem to be saying today that there will be much more operation of coal, and perhaps some new investment in coal, but they know that it cannot really be unabated, and they know that it cannot really operate for all those hours over the period. How certain can an investor be that what he invests in will not to be stranded in the intervening years? It depends whether we believe what Ministers are saying, or believe what is in the documents that they claim to support in their daily work at the Department.
Ian Lavery
Does my hon. Friend believe that if the amendment is passed, investment in carbon capture and storage will be more rapid?
Dr Whitehead
That is an important question. I think that if the amendment were passed and if it sent that “certain” signal in regard to future investment, it would bring about something that my hon. Friend and I observed recently in a Canadian province. Given the certainty of an EPS that would apply to all plants in the province in the future, the operators of a 150 MW power plant decided that if the plant was to continue to provide coal-fired power, it would need carbon capture and storage. As a result, next year there will be a very impressive plant, which will sequester all its carbon and continue to supply the Saskatchewan power system with coal-fired power. I understand that the operators made their decision in the certain knowledge that they would not be able to continue to supply unabated coal-fired power to the Canadian system for ever.
Angela Smith
Is it not the case that carbon capture and storage technology can be applied to gas-fired as well as coal-fired processes?
Dr Whitehead
Yes, indeed. If the Department is to reach its 2030 decarbonisation target, it is very likely that carbon capture and storage must be applied to gas as well as coal during the intervening period.
Mr Redwood
Given the hon. Gentleman’s knowledge of the industry, can he tell us when he expects to see a decent-sized coal-fired power station with carbon capture and storage up and running in the United Kingdom?
Dr Whitehead
The Saskatchewan power plant that I mentioned is not a new coal-fired power station, but an existing one that has been refurbished to take on carbon capture and storage. The right hon. Gentleman’s question should have been the other way around: he should have asked me when I might expect to see an existing coal-fired power station with carbon capture and storage attached to it in the United Kingdom if the amendment is passed. My answer is that if the amendment is not passed, it will be far less likely that existing coal-fired plants, which are effectively given a derogation by the Bill, will take on carbon capture and storage, although they know that they must do so sooner or later for the sake of future investment. They will do it in the end, but there will be uncertainty for some time before they do.
My answer to the right hon. Gentleman’s question is that I expect an existing coal-fired power station to start to address itself partly or wholly to carbon capture and storage much earlier if the amendment is passed than it would otherwise. That would put that station bang in line with the Department’s long-term decarbonisation aims.
Charles Hendry (Wealden) (Con)
Should we not learn the lesson of the Longannet experience? In that instance, we discovered that the cost of trying to retrofit carbon capture and storage technology to a very old power station that needed many millions of pounds of new investment made it uninvestable. Surely, it is likely that a new plant will be fitted with carbon capture and storage, rather than an old plant’s being retrofitted.
Dr Whitehead
With a relatively small amount of underwriting—far less than is proposed in the UK Government’s competitions—it was possible to undertake the retrofitting of the Saskatchewan plant alongside a refurbishment. The interesting issue was not the progress and, indeed, the completion under budget of the plant’s carbon capture and storage element, but the fact that the retrofitting itself—the upgrading of the coal-fired power station—caused the difficulties. Its operators estimate that future arrangements could cost 20%, 25% or 30% less than the first retrofitting. I do not agree that this is uninvestable; on the contrary, it is an essential part of the process of realigning energy objectives and power output over the coming period.
Dr Whitehead
Indeed. There is the question of what happens to the carbon dioxide subsequently and how it is injected. In Canada, it is injected into additionally drilled wells on land; there is a different process of injection offshore. At the Saskatchewan power station, the process involves the use of carbon dioxide for enhanced oil recovery, although most of it stays on the ground after the process in any event.
David Mowat
I am listening carefully to the hon. Gentleman’s argument about the acceleration of CCS as a consequence of accepting the amendment. Notwithstanding the Saskatchewan case, CCS is still an unproven technology in this country. For clarity, is he saying that the amendment would result in those stations being converted to CCS in time to prevent them from being switched off? It was implied from the Front Bench earlier that they would be replaced by gas power. Which of those two options does the hon. Gentleman consider to be more likely?
Dr Whitehead
Some of those plants could well be replaced by gas, and some could well close down. Indeed, some could well close down whether the amendment were passed or not. The problem for capacity in the market is that the signals being sent out at the moment are so varied and uncertain that a number of people who might otherwise invest in plant are holding back until, for example, the capacity market comes on stream or until there is more certainty about CCS or about coal generation. As we have seen already, there is a possibility that plants will close down by accident rather than by design. They could end up being mothballed because of market circumstances, rather than because of long-term planning based on capacity.
The amendment would improve that certainty tremendously by making it absolutely clear what was expected of coal-fired power in the future. Coal-fired power would not cease to exist; it would be able to run at certain levels per year, and any existing coal-fired power station that wished to run continuously after the early 2020s would have to have CCS attached to it. The amendment would send a simple, straightforward message.
Michael Fallon
The hon. Gentleman seems to have just repeated an assumption that the amendment would take effect only from 2023. On the contrary, it asserts a power to apply EPS to an existing plant, which would involve upgrading under the industrial emissions directive. Nothing in the amendment prevents the power from being used at any time, as soon as the EPS had come into force following Royal Assent.
Dr Whitehead
The question is the extent to which plants can run, and what hours would be attached to them—a process that has already been undertaken under previous directives—during the period up to the early 2020s. The question for those power stations is not the point at which they switch over or at which they stop; it is whether they can continue unabated past the early 2020s. That is the key issue.
I commend the amendment to the House because of its congruity with current departmental policy and the certainty that it would confer. It brings together a number of elements relating to the trajectory for cleaner, lower-carbon energy, and it would send a clear signal to investors. In the medium and long term, that would give us far more certainty of reliable and secure capacity than we have at the moment.
Charles Hendry
I refer hon. Members to my entry in the Register of Members’ Financial Interests.
Like most other Members, I have received many postcards and e-mails from people urging me to support the Lords amendment, but those e-mails seem to have been based on a misunderstanding or a misapprehension, based on misinformation. That has been either wilful or accidental, but it is certainly there. They start by saying that, although the Government said that they would be the greenest ever, we are now burning more coal than we have done for many years. Those two statements need to be examined.
This Government are the greenest ever. We have seen an increase in renewables generation from 5% in 2010 to 16% now. We have seen the biggest investment in nuclear power for a generation, and we hope to see more coming through. We have also seen an added impetus being given to the renewable heat incentive today. All those factors demonstrate our direction of travel.
The suggestion that the Government have somehow been promoting an increased use of coal is fundamentally wrong. We are using more coal than we were just a short time ago. I looked at the figures just before the debate: 39% of the electricity being used in the UK as we sit here today comes from coal. That equates to 18 GW of the 46 GW. That is happening for two reasons. First, the price of coal is historically low compared with that of gas. The shale gas revolution in the United States has meant that the coal that used to go into the US market is now being deposited in the European market at a low price and people are therefore burning it.
Secondly, the owners of the coal-fired plants know that they have only a limited number of operating hours left, and they want to use them while the carbon floor price is lower, rather than as it continues to rise. People should not see this as a fundamental shift to coal; it is a short-term increase in its use and, as we have heard, those plants will be closing down in the near future. Some are closing this year, and more will close throughout the decade. The concern expressed in those e-mails by those who support the amendment has therefore been based on a misunderstanding.
I am concerned about the implications of the amendment for several reasons. The first relates to political risk. This is another measure that would increase the political risk attached to investment in the energy sector. We know that we need many tens of billions of pounds of new investment in the energy sector, right across the electricity spectrum. The people who own the plant that would be closed down by the proposal are the same people who we are asking to build new gas plant, new CCS plant and new renewables plant. If they see the UK becoming more unpredictable, that will make it harder to secure the levels of investment that we need. We must be wary of going down that route and adding further political risk to the issue.
My second concern relates to the coal industry in the United Kingdom. When I was a Minister, I tried hard to increase the proportion in the mix of coal from UK mines. It had been one third, and we got it up to over a half. I suspect that it is now below one third again, and probably falling. If we want to achieve the necessary investment in British mines to enable them to provide coal to the power stations—or indeed to ensure their existence at all—when CCS plant comes on line in due course, the investors will need to know that there is still a reason for them to invest in the sector. The Lords amendment would make it more difficult to secure that investment and therefore more likely that our own deep and shallow coal mining facilities would close down, which is something we would regret. We should not deliberately put ourselves in the position of being more dependent on imports than we need to be.
My final point relates to CCS. We are trying to send a message to people around the world that this country has the aspiration to lead the world into carbon capture and storage, and we have every reason to be positive and confident that we can do that. We have the expertise, and we have the depleted oil and gas reserves in the North sea that can be used for it. We should be going out and saying to all those people around the world who are interested in this technology that the United Kingdom is the place to do it.
However, I disagree with the hon. Member for Southampton, Test (Dr Whitehead) in that I do not think that the amendment would make investment in CCS more likely. I think that it would make it much less likely, because we would be seen as having a general hostility towards coal in the mix and we would therefore struggle to make the case for that investment. Given the challenges that we are facing, do we really want to link ourselves to a policy that would bring forward the closure of plant while doing nothing to speed up the opening of new plant? The amendment would be bound to enhance the energy security challenges facing this country, which would make it more difficult to decarbonise. That, in turn, would push up prices. For those reasons, I hope that the House will reject the Lords amendment.
Caroline Lucas
I welcome Lords amendment 105, as we need to close the Government’s loophole that would exempt existing coal-fired power stations from the emissions performance standard if they fit equipment to meet air pollution standards.
However, even if we vote today to put common sense and climate science above the special pleading of the coal lobby, the EPS will not be strong enough. The Energy and Climate Change Committee has called the EPS “at best pointless” and the Committee on Climate Change warns that allowing unabated gas-fired generation right through to 2045 carries a huge risk that there will be far too much gas at the expense of low-carbon investment, which would bulldoze the Government’s climate objectives. It is therefore a shame that the Lords amendment does not go further and that the official Opposition are not yet accepting the need to leave existing coal reserves in the ground, unlike their sister parties in places such as Norway, whose Labour party this month proposed banning the country’s $800 billion sovereign wealth fund from coal investments. I have some reservations about the level of the EPS, but none the less I firmly support the amendment as a step in the right direction.
Mr Redwood
I agree with my right hon. Friend the Minister that the House would be wise to reject amendment 105. I will not rehearse the arguments that he or my hon. Friend the Member for Poole (Mr Syms) eloquently put, but I would take issue with one thing that my hon. Friend said. He gave the impression that although he thought that the late Baroness Thatcher’s energy reforms, which were very radical, were broadly good, they created a problem in not leading to substantial investment. As the person who advised her on those reforms and worked with the very good energy Ministers at that time, I assure him that that system not only transformed our energy mix in a way that cut CO2 on a scale that even the hon. Member for Brighton, Pavilion (Caroline Lucas) might approve of, but it drove prices down by encouraging huge investment in the so-called “dash for gas”. It has been the most successful policy that any party or Government have ever followed both to give us cheaper energy and to drive down CO2. It also gave us a much better capacity margin than we have today.
In the few minutes available to me, I wish to stress that a big crisis is brewing, thanks to the dear energy and scarce energy policies of the European Union, egged on by the Green party. I do not think they care about the difficulty people are already finding with their power bills. The main reason those bills are surging is that we are deliberately changing over from relatively cheap energy generation to dear energy generation—that is the whole point of the policy. The policy is cruelly deciding that it wishes to decarbonise at the expense of the poor and of our industry. The deindustrialisation facing Britain and wider Europe is now intense. We are losing our aluminium industry, our petrochemical industry and many of the high-energy-burning industries, which, of course, are going to the United States of America or to Asia, because those places do not have the same artificial constraints on them that the European Union and the previous Government’s energy policies have imposed on us.
Mr Redwood
I am afraid that I do not have time to do so, as the hon. Lady spoke for some time and the debate is very limited.
We need to deal with both price and capacity. Price is the most immediate issue. Although things can be done on green levies, and I welcome that, the main driver of higher prices, which will continue over the years ahead, particularly if the amendment is passed, is the forced closure of cheaper stations and their substitution with much dearer, interruptible renewable sources of energy, which will be with us for some time to come, whatever policies are now followed.
Even worse is the way in which we are jeopardising capacity. Not only are we closing many stations without building new ones, but we are replacing base load stations with stations that produce interruptible energy only when the wind blows, so we are doubly vulnerable. Our stated capacity often is not genuine capacity because there is no wind, and the margin is far smaller. I do not wish to live in a country like that. I do not want to live in a country where every winter we fear that the lights might go out in places, and where, at times when people most need heating, there is not enough power left. It is a grave folly of the European Union and the former Government—I hope our Government are not going to perpetuate this—that we close the plants before anybody has built replacement plants. What kind of person would sensibly recommend doing that? We have heard from the Minister that six plants are already being closed, and we know that several others are at risk of closure under European directives. Please can we not close plants until we have the replacement capacity?
The investment incentive problem did not lie with the late Baroness Thatcher’s policy, which provided plenty of incentive, cheaper energy and big investment; the problem of incentive lies today with the muddle, confusion, high cost and deliberate obfuscation of the European-driven system, which means that our country, along with many others in the European Union, faces deindustrialisation on a big scale, cold winters without a guarantee that enough power is available and ever higher energy prices, thanks to these ridiculous policies.
David Mowat
I, too, oppose the amendment. I will make three points: on cost; on security of supply; and on how this country’s approach to tackling the issue increasingly departs from that of other countries in the world, not just in Asia and the US but in parts of Europe.
First, let us frame the problem. We have 23 GW of coal right now. I think we can all accept that about 8 GW of that will be turned off because of the large combustion plant directive, leaving potentially 15 GW subject to the amendment. I asked the shadow Minister what his figure was and although it may well turn out to be a little lower than that, it is of that order. We are talking about a huge amount of power to be replaced, yet we are doing this at the same time as our nuclear stations are coming off stream. Let us put this into context. Replacing 15 GW with wind power, which I guess is the direction that the hon. Member for Brighton, Pavilion (Caroline Lucas) would take, would require about five times as much wind generation as we currently have commissioned—onshore and offshore—leaving aside the intermittency issue, which I do not think we will be able to address.
David Mowat
I will not take the intervention, as I want to finish as quickly as I can to allow time for the other speaker.
We have a security of supply issue. To be clear, the debate is not about pollution, nitrous oxide or sulphur dioxide control, or even about the long-term plan to phase out coal. We intend to be at 3% by 2030. Our European partners, by contrast, do not have such an ambition. The debate is not about the Kyoto targets, which we have not met, but about the need to replace a vast amount of capacity, and to accelerate such replacement. We are unique in that our nuclear stations and our coal are so old. We also intend to use more electricity as we decarbonise the transport sector. If we are to meet the climate change budget targets, it will be about not just electricity generation but transportation. We are talking about more electric cars, which means yet more electricity. The task is absolutely enormous, and we are currently sitting here with a capacity surplus of around 4% or 5%. To accelerate that further would be folly.
Members have mentioned that we are talking about replacing possibly one of the cheapest methods of energy generation—the relatively old stations that are depreciated, and all that goes with that—with some other technology. In relation to today’s infrastructure plan statement, offshore wind, even with the new CFD numbers, is about three times the cost of those coal stations that are currently burning.
If we are seriously thinking of replacing about 15 GW of capacity with offshore wind and even gas, which is more expensive, it is hard to see how that would not put up energy prices. Of course it would put up energy prices both for our energy-intensive users and our consumers. Those Members who think that fuel poverty matters should give some thought about how they will vote this afternoon.
Finally, let us look at how we are dealing with the issue compared with many other countries. I have one statistic to put to the House. Renewables went up a great deal last year. Across the world, they went up by about 30 million barrels of oil equivalent, which is a high percentage. The use of coal across the world went up by three times as much to 100 million barrels of oil equivalent. Such increases are not just happening in Asia and China. Germany and Holland are moving ahead with brand new unabated coal power stations that will run for 20 or 30 years. In this country, we already have among the lowest carbon emissions per head and per unit of GDP of any EU country. The only major country that performs better is France, which has so much nuclear power, although our green lobby thinks that that is wrong as well.
I have not covered in any detail the havoc that would be wrought on what is left of the UK coal industry. The fact that Members are justifying voting for the amendment because it will bring forward investment in CCS, which is still unproven at the scale that would be needed to work in this country, is, frankly, almost vandalism.
Mark Reckless (Rochester and Strood) (Con)
It is a pleasure to follow my hon. Friend the Member for Warrington South (David Mowat). I was very impressed with his speech and with what he said about the growing disconnect on this issue between this country and most other countries in the world. With the exception of him and my right hon. Friend the Member for Wokingham (Mr Redwood), there seems to be an enormous disconnect between what Members of this House think and what our constituents want. Our constituents want cheap, reliable energy.
On Monday, we saw the Government trying to find ways to reduce by £50 the rise in electricity bills. For the Opposition, too, the debate is purportedly about trying to cut or at least to hold down bills. They say that for 20 months, from May 2015, they will fix prices. The reality is that the Opposition are co-operating with the Government Front Bench and the Liberal Democrats to fix prices for 20 or 30 years across vast swathes of our electricity generation capacity, and to fix prices at two or three times the current market price. That will drive costs through the roof for our constituents, who will be forced to pay such prices for decades to come, and yet the coalition and the Opposition purport to be having a debate about holding down prices, when the reality is the reverse. We see that again today in this rather surreal debate about whether we should force some of the cheap generation to close, as the Government support, or even more of it to close, as the Opposition want.
Mr Redwood
Has my hon. Friend noticed that the big industrial powers that are serious about industry—Germany and China—are adding coal capacity, and America is going for shale gas? They will take the industry, and we will lose it.
Mark Reckless
My right hon. Friend is correct. We have learned that the industry at Grangemouth, which the friends and funders of the Opposition—the unions—almost shut down, might stay open and even possibly make money, but that would only be on the basis of importing shale gas from the United States. We have this preposterous arrangement in which we have put an extraordinarily long moratorium on the development of shale gas because there were a couple of tiny tremors near Blackpool. If we, as a country, are serious about pushing ahead economically, we must generate better energy more cheaply and more quickly. Instead, we were involved in a Dutch auction between the parties and doing completely the reverse.
Lords amendment 105 is a case in point. We have the European Union closing down most of our coal plants, with the parties going along with it. Additionally, we are unilaterally indulging in this self-flagellation, through the emissions performance standard—which we have decided to impose as a unilateral burden on UK business while the Germans allow the construction of new coal—by preventing new coal-fired power stations being constructed. Of course countries outside the European Union produce power more cheaply.
What we see today is an attempt by the Opposition and the other place to make the situation even worse. The EU is shutting many of our existing plants. We are banning the construction of new ones, and the Opposition want to bring in a third deleterious measure to extend that ban on coal to part of the plants that the EU would allow to remain open if people spend vast amounts of money to comply with the industrial emissions directive. Labour and the other place would effectively be saying, “Ah, well, if you spend that money, we will put in place this additional burden after which you will then fit this pie-in-the-sky CCS, which is nowhere near to sensible commercial development in the UK, or, in reality, we will force you to close down, and drive up the price of electricity even further.”
The hon. Member for Rutherglen and Hamilton West (Tom Greatrex) suggested that electricity pricing depended on gas prices. I take that point to a degree. As an economist, I understand that in a competitive market, which I fear that this increasingly is not, marginal cost tends to equal price. There is a difference between the gas that is already there, where the development costs and capital costs are sunk—which, in terms of marginal costs being set to price, should be discounted for a rational person in a competitive market—and new gas, which is not coming on stream. It is partly not coming on stream because the Minister has said, “If you bring it on stream, we will give you a great subsidy as long as you wait for a few years and do not bring it on now.” Even Chris Huhne, who was at least an economist, thought that was madness.
Now, we are pushing that approach forward in the capacity market, stopping capacity coming on stream for that key period of a few years. It is a key period, because we are looking at an increasing crunch. DECC tells us that it has run the scenarios with Ofgem and has considered what will happen if the demand for electricity is a little greater than assumed. DECC assumes that energy demand will fall and so, to cover sensitivity, it has run a scenario in which it does not fall. All that does, however, is keep demand flat. What happens if—due to the success of the policies of this coalition, what the Chancellor is doing and the resurgence of growth in the British economy—energy demand increases? I dread to think, because of the lack of preparations that have been made—or, when preparations are being made, because of their extraordinary expensiveness. At the same time, we are proposing to cut the coal-fired plants, many of which are completely depreciated in capital and are producing electricity reasonably and cheaply. We are banning them either nationally and unilaterally or through our acquiescence in what the European Union is doing.
The hon. Member for Rutherglen and Hamilton West identified three sets of coal plants. If I understood him correctly, he missed out a fourth category—that is, those coal plants where the issue is not the industrial emissions directive but the large combustion plant directive. The power stations might be “hours expired” under that directive, but the plants are still there and could potentially be brought back on stream to generate cheap and reliable electricity for our constituents. However, the Opposition will not let them. Government Members will not let them, either. Not even the European Union will, even though the directive contains article 3(4), which provides for a member state to provide for a derogation, particularly when its plans to arrange for sufficient capacity in the energy market are not working as it had hoped. What better case could there be for doing that?
I am not saying that we should keep the plants open for ever. I go around Kingsnorth in my constituency, and it is a very old plant, but it can still work. This year, E.ON UK has a team of about 20 people in the plant, taking the stored energy out of springs and many other mechanisms throughout, making it safe for demolition by the contractor from early next year. We still have time if we apply for the derogation and tell the European Union, “We have a problem. We are running out of capacity because we have not put the sensible plans in place for electricity that we should have done. We used to have the most competitive electricity in the world, but we have messed the whole thing up on a totally cross-party basis. Can we keep these plants open for just a few more years?”
All I ask is for the parties in the coalition to get together and go cap in hand to the European Commission, to ask whether we can keep the plants open for a few more years. That might just allow our constituents to have slightly cheaper electricity, as old coal can be used rather than new gas, for which the capital costs will have to be paid as well as the marginal costs of the gas supply. That might just help us get through the electricity crunch a bit more safely, particularly if the economy is growing strongly, and it might do something to keep down the cost of electricity—that is preferable to the three parties competing to drive it up while pretending that they are doing the opposite.
The Labour party in the Lords would like us to make things even worse by ensuring that even more coal plants close even earlier. We should make things a bit better by trying to keep a few of the oldest coal plants open for a bit longer, to hold down electricity bills and keep the lights on.
Michael Fallon
With the leave of the House, Madam Deputy Speaker, I shall reply briefly as I sense that the House wants to reach a decision on this matter.
We have had a good debate. Let me emphasise again that I think that we have been considering a well-intentioned amendment. Nobody doubts the motivation behind it and the issue is not completely straightforward. It depends in the end on a judgment—when coal stations are already being lost to the system, do we want to accelerate the closure of coal? The hon. Members for Rutherglen and Hamilton West (Tom Greatrex) and for Wansbeck (Ian Lavery) asked a specific question—others have referred to this, too—about our progress with CCS. The CCS competition is progressing very well. Negotiations are proceeding and we expect to make a decision on the award of the front-end engineering design contracts around the turn of the year. As I have said, we have made amendments to the Bill in the other place to ensure that those projects will be exempt from the EPS for a limited period.
Michael Fallon
The hon. Gentleman might also want to know that CoalPro, the Confederation of UK Coal Producers, wrote to me on 8 November and said that the amendment
“has the potential to turn out the lights, send prices even higher and close down this industry.”
Ian Lavery
When does the Minister expect the first CCS generation plant to begin in the UK?
Michael Fallon
As I said, we hope to sign the first FEED contracts by the end of the year. They will involve a couple of years of engineering study. It will take some time for CCS to be scalable across the system, but we are committing a great deal of money to it and a great deal of effort to the two projects at Peterhead and Drax. I am in no doubt that we have technology that we can exploit, but it will take time.
In the end, as I said, this is a judgment. Is it right now to accelerate the closure of coal and to force all coal off the system by 2025? In my view, that will add to the risks to security of supply and—I must say this to my hon. Friends on the Liberal Democrat Benches—will certainly add to the costs for our constituents. We estimate that if coal disappears by 2025, there will be an increase in domestic bills of about 3% to 4%, or about £22 to £28, and an increase in non-domestic bills of between 4% and 6%. A large number of Members from all parties attended the debate in Westminster Hall this morning and complained about the costs being imposed on energy-intensive industries, and we estimate that their costs will increase by between 5% and 7%.
This proposal will increase the risks to our security of supply and add to the expense of our constituents. I think that is too great a risk and too high an additional expense and I urge the House to reject the amendment.
Question put, That this House disagrees with Lords amendment 105.
Helen Goodman (Bishop Auckland) (Lab)
On a point of order, Madam Deputy Speaker. Earlier today the Chief Secretary to the Treasury made a statement to the House about infrastructure spending. The Government have also been briefing about the sale of significant public sector assets. The list of things that might be sold includes Eurostar, the Royal Mint and Channel 4, and yet the Government have not produced a document. Is that in order? Could you advise us, Madam Deputy Speaker, on how we might get a full list, rather than the think-tank report, “Cash in the attic”, which seems wholly inappropriate?
Madam Deputy Speaker (Mrs Eleanor Laing)
The hon. Lady has made her point and I am sure that those whom she wishes to have heard it have done so, but she will appreciate that it is not a matter with which the Chair can deal at this moment in the Chamber.
Clause 1
Decarbonisation target range
Michael Fallon
I beg to move, That this House agrees with Lords amendment 1.
Madam Deputy Speaker (Mrs Eleanor Laing)
With this it will be convenient to discuss the following:
Lords amendments 2 to 75.
Lords amendment 76, and amendment (a) thereto.
Lords amendments 77 to 86.
Lords amendment 87, and amendments (a), (g) and (b) to (f) thereto.
Lords amendments 88 to 104.
Lords amendments 106 to 113.
Michael Fallon
As you have said, Madam Deputy Speaker, there are many amendments in this group and I will try to be as brief as possible in explaining each set.
The first set, amendments 1 to 15 and amendment 90, extend the decarbonisation provisions to Northern Ireland in order that any decarbonisation target range would cover the whole of the UK power sector. That was always our intention, but it was right that we should seek the agreement of the Northern Ireland Executive before making these amendments. The Assembly has since passed a legislative consent motion to confirm its support.
Turning to part 2 of the Bill, Lords amendments 25, 27 and 29 give effect to three substantive changes to contracts for difference. The remaining amendments on this topic—amendments 16, 19, 22, 23, 26, 28 and 30 to 34—are consequential.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I am grateful to the right hon. Gentleman for giving way on the issue of fuel poverty. My constituency is hit by transmission charging because the renewable energy has to go quite a long way down the line. The unit price of electricity for domestic consumers is more expensive for the same reason. Could we not argue that renewable energy that is generated in the Outer Hebrides can be considered to be serving the domestic market, and thereby eliminate some of those costs?
Michael Fallon
I think I understand that proposal, and I hope that the hon. Gentleman has welcomed the changes that are being made to the strike prices for renewable energy, which should certainly benefit the islands in the north of Scotland. However, I am happy to look specifically at that point.
Mr MacNeil
I do welcome the fact that the difference of islands has been recognised, but I am disappointed that the difference between islands has not. The situation in the Western Isles, the Outer Hebrides, is different from that in Orkney and Shetland due to the existing infrastructure situation.
Michael Fallon
I am sorry that the hon. Gentleman is not wholly satisfied. I thought that the change would be welcome, but I will look again at his specific point about transmission lines.
By fixing the strategy for the long term, the Lords amendments will ensure that our commitment to reducing fuel poverty, far from being reduced, will remain high on our agenda throughout the delivery of our ambitious programme for energy efficiency and the energy sector in the UK.
Amendments (a) to (f) to Lords amendment 87, tabled by the hon. Member for Derby North (Chris Williamson), would, among other things, put a specific fuel poverty target in the Bill. There is also amendment (g) to Lords amendment 87, tabled by the right hon. Member for Don Valley (Caroline Flint) and her colleagues. I think we all agree that there should be an ambitious fuel poverty target, but it is also our responsibility to strike the right balance between what is put in primary legislation, what is subsequently laid out in regulations and what we put into our strategy. We propose setting the target through secondary legislation, which strikes a better balance between the certainty of a legislative target and the need for flexibility in the future.
We know from the independent review by Professor Hills that the way in which we understand the problem can change over time. The issue that we face under current legislation is that there is a specific target that, although well intentioned, does not make sense in the context of how we have come to understand the problem of fuel poverty. For example, a focus on eradication as an end goal is not appropriate for our new definition, but we know that we can make a real and lasting difference to people’s circumstances by improving the energy efficiency of their homes. That is why we have proposed that that should be the basis of the new target.
Sammy Wilson (East Antrim) (DUP)
Does the Minister not accept that the whole thrust of the Bill, with its emphasis on decarbonisation and greater reliance on renewables—and the thrust of Lords amendment 105, had the Opposition had their way—is to make the whole issue of fuel poverty more difficult to address? We are moving away from cheaper fossil fuels towards more expensive renewables.
Michael Fallon
No, I am afraid I do not agree with the hon. Gentleman, although I was grateful for his support in the Division. We need more home-grown energy of all kinds, and we should not be ideological about it. We need more new nuclear to replace our ageing provision, more renewables—we are already increasing our proportion—and more gas-fired plant, as so much coal plant is coming off the system. We need more generation of all kinds.
Of course, the setting of the fuel poverty target and any changes to it, even if they are not in primary legislation, will be subject to full parliamentary debate. Given the importance of the matter, we have ensured that the provision will be subject to the affirmative resolution procedure in both Houses. I therefore do not think it makes sense to specify the target or a target date ahead of our making the detailed proposals after Royal Assent.
The amendments to Lords amendment 87 also specify issues that a strategy must cover. Our strategy will be comprehensive and cover a range of issues, including health, as we know that there are clear health benefits from action on fuel poverty. Finally, we have already committed to continuing to report on the 10% definition in the future, so I do not think it is necessary to include that in the Bill. I hope that I have reassured the hon. Member for Derby North and the right hon. Member for Don Valley, and that they will agree not to press their amendments.
The second new topic introduced to the Bill in the other place, by Lords amendments 88 and 96, is a provision enabling the Secretary of State to raise the ceiling for small-scale feed-in tariffs from 5 MW to 10 MW. The issue was raised in this House in Committee and on Report, and the Government have listened and responded by tabling amendments in the other place. We intend to limit the increase to community projects only. For commercial projects larger than 5 MW, we consider that market-based incentives continue to provide the best value for money to consumers. We will consult on the implementation of the change after the Bill has received Royal Assent.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
I, too, am pleased to welcome the Bill back to this House and grateful for the opportunity to speak on those aspects that refer to fuel poverty—namely, Lords amendment 87. Before I do so, however, the Minister mentioned Lords amendment 54 and its impact on the UK, and it is regrettable that the Scottish National party in Edinburgh chose to play constitutional games with the issue, rather than focusing on the smooth transition between the renewables obligation and contracts for difference. There has been correspondence between the Minister’s Department and the Scottish Government, and given that the SNP raised the issue in Holyrood, perhaps the Minister will commit to publishing that correspondence to ensure transparency and so that we can be sure the system is working well.
Michael Fallon
Given that the hon. Gentleman has raised that point, I confirm that over a long period—many months—we have given the Scottish Government full notice that we want the renewables obligation closed by March 2017. They have had every notice in correspondence at ministerial and official level and have been in no doubt of our intention for a long time.
Jonathan Reynolds
No, I am afraid that I will not give way.
It is important that we have the opportunity to discuss tackling fuel poverty, which is rightly of considerable interest to Members across the House. I pay tribute to Members in the other place for their hard and thoughtful work in tabling amendments to the Bill, and in particular to my noble Friend Lord Whitty for his amendment of 19 November, the basis of which forms part of amendment (g), tabled in my name and those of my right hon. Friend the Member for Don Valley (Caroline Flint) and my hon. Friends the Members for Rutherglen and Hamilton West (Tom Greatrex) and for Sunderland Central (Julie Elliott). It is welcome that the Bill at least now acknowledges the need to contain a fuel poverty strategy.
Our amendments, and those tabled by other hon. Members, seek to put some detail into that strategy and make the commitment for which we are legislating a meaningful one. I therefore hope to test the opinion of the House on amendment (g) to Lords amendment 87. Like my noble Friends in the other place, I agree that it is vital that the Bill contains a commitment for a fuel poverty strategy that is effective and can be used to hold the Government to account for their success or failure in pursuing it. Fuel poverty is a serious problem in this country and something on which we must improve. I am sure that the whole House was distressed by last week’s figures on excess deaths in England and Wales last winter. We should never accept such a figure or fail in our duty to prevent it from happening again.
As a result of the much greater age profile of the UK’s housing stock, we have some of the least energy-efficient dwellings in Europe. Worryingly, only Estonia has a higher proportion of its population in fuel poverty than the UK. Even under the Government’s new definition of what constitutes fuel poverty, the latest figures show that almost 2.4 million households in the UK are classified as being fuel poor. We need to see more action from this and future Governments on fuel poverty, and I believe our amendment will ensure that. I am disappointed that, without Lords amendment 87, the Bill will be unacceptably light in respect of dealing with fuel poverty.
The Government have serious questions to answer about the implications of their announcement on Monday on the number of households that will in future receive help with energy efficiency. I strongly believe that the energy company obligation can be much improved, and I note that the Secretary of State claimed in Monday’s statement that the fuel poverty-related components of ECO—the community obligation and the home heating cost reduction obligation—had not been reduced. However, many Members will be aware that most of the larger-scale retrofits that have been carried out in their own constituencies under ECO, whether by local authorities or registered social landlords, have been schemes that contributed towards the third strand of ECO, which has been substantially reduced—the carbon emissions reduction obligation, or CERO—because the other components of ECO allow much easier and cheaper measures to be installed. By reducing CERO, the big local area-based schemes, mainly in the poorer parts of the country, will be reduced.
The Government also announced that cheaper measures will now count towards CERO, too, and we will soon know from Ofgem how much of the carry-over from the carbon emissions reduction target will be allowed to count towards the energy companies’ progress towards their CERO targets. The industry believes that the 100,000 minimum installations that have been specified for solid-wall measures up to 2017 will now in fact become the maximum—an average of only 25,000 a year, when last year alone 80,000 were done. Against a total of 7 million solid walls still to do, progress will simply be too slow.
There has therefore never been a more urgent need to ensure that the Bill contains provisions for successive Governments to meet energy-efficiency targets in 2020 and 2030 and to reduce the numbers of households in fuel poverty, with an overall ambition of eradicating fuel poverty. Nothing else should satisfy the House, and I urge Members to support amendment (g).
I thank my hon. Friend the Member for Derby North (Chris Williamson) for the amendments that he has tabled that focus on this issue and for his work in ensuring that it is debated in the House today. He and I have discussed these matters on several occasions, and he knows that there is no difference of opinion between us on the desire for an ambitious fuel poverty strategy on a scale appropriate to the size of the challenge. He is absolutely right to highlight the need, in amendment (a) to Lords amendment 87, for an energy-efficiency programme that is focused on raising the efficiency rating of housing stock within the UK.
What we all want to see is whole-house retrofitting, not just, for instance, a new boiler going in without cavity or loft insulation being done at the same time. Ensuring properties meet a certain standard that progressively improves is the best way to prevent and eradicate fuel poverty. The only area where my hon. Friend and I differ is that I believe the best way to approach this is to ensure that such a strategy is accounted for in the Bill and then for the Government to have to produce a properly costed and deliverable strategy to ensure that we can achieve it.
In the event of a Labour Government, I want to be able to come to the House with a plan that says very clearly what we intend to do and how we will pay for it. I am conscious that there has been a great deal of over-promising and under-delivery in this area, not least on things like the green deal, and it would be better to do the opposite. That is why I believe amendment (g) is the better way to go, but I reiterate to my hon. Friend and all my colleagues that I am firmly of the view that we need that strategy to be bold, not only to tackle fuel poverty, but to reduce our carbon emissions and for the wider economic benefits it would bring.
I also thank my hon. Friend for highlighting the health impact of fuel poverty. That is addressed in his amendment (e), which I and my Front-Bench colleagues have also signed. As I have previously mentioned, there were more than 31,000 excess winter deaths in England and Wales last year. Not all those deaths can be attributed to cold housing, but there is evidence to suggest that illnesses caused by cold homes cost the NHS more than £850 million a year.
People classed as living in fuel-poor households are likely to suffer from heart problems, strokes, mobility issues and poorer mental health, including severe depression. There is also a social cost: for example, children in fuel-poor households often perform worse at school, and there is a marked increase in a child’s performance once they are taken out of fuel poverty. The stress faced by people managing household bills on a stretched budget should not be underestimated. We should all recognise that there could be significant health benefits from an ambitious fuel poverty strategy, and I welcome discussion of including that aspect in the assessment that the Secretary of State would have to make.
I genuinely believe that there are Members on both sides of the House who care deeply about fuel poverty. It is therefore my hope that amendment (g) will be considered properly by the Government. Despite the fact that energy and the price of energy is the number one political issue and the source of much partisan exchange, we all stand to gain substantially from improving the quality of our housing stock. The only way that we can make a difference in addressing fuel poverty is by having a programme that is ambitious in its aims and clear in its target for improving energy efficiency. Amendment (g) will ensure that this Government and any future Government cannot side-step their responsibility in seeking to eradicate fuel poverty. I hope the Government will support us on that. If they do not, I will seek to press it to a Division.
Caroline Lucas
I would like to speak in favour of the amendments tabled by the hon. Member for Derby North (Chris Williamson), and I apologise for having the floor before him.
There is a huge amount of noise about energy costs, with blame and accusations flying in all directions, but the basics are clear: the current approach to tackling fuel poverty is inadequate. According to National Energy Action, it is expected to reach just 5% of the fuel poor in England. Poorer households and individuals stand to suffer most from energy price increases, which they cannot afford. The most vulnerable people tend to live in the worst-quality and least energy-efficient housing.
Energy efficiency is the only serious solution to protecting householders from future price rises. We know that that is the direction that we have to go in, regardless of the discussion on the cause of rising fuel prices. We need a stronger commitment on energy efficiency and urgent action to deliver it from this and future Governments. An ambitious nationwide energy-efficiency drive would make a huge contribution to job creation and the economy, as well as being essential for carbon targets.
The amendment that I want to speak to sets out minimum energy-efficiency targets for homes occupied by low-income households. They would be an effective and lasting approach to ending the scandal of fuel poverty, and the reality that many of the UK’s poorest and most vulnerable individuals and families live in the coldest, most leaky homes. It would reduce seriously the health risks—respiratory and cardiovascular illnesses, mental ill health and depression—linked to cold homes, thereby reducing the burden on local health provision. It would make a significant contribution to the desperately needed cuts to carbon emissions from buildings.
The Energy and Climate Change Committee made it clear that there has been very limited progress on some measures, such as solid wall insulation, to cut emissions from existing buildings and called for new approaches to increase uptake. I am sure that DECC disregarded all that advice this week. I hope that we will not be there doing that again.
This effective and ambitious approach is needed because we urgently need action to stop the scandal that, in the 21st century, we still have people dying from the cold in their own homes. It is literally a scandal that we had 31,000 excess winter deaths last year—an increase of 29% on the previous year. We are a relatively rich and not terribly cold country, but many people are dying because they cannot afford to heat their homes.
The hon. Member for Derby North clearly understands the enormous benefit of an approach to fuel poverty that is based on minimum energy-efficiency targets. What a shame that he no longer holds a shadow communities and local government position, and what a shame that the shadow energy and climate change team favours what seems to be a weaker and vaguer approach and has tabled its own amendment rather than supporting his.
In recent weeks and months, many of my constituents have written to me to call for ambitious action on energy efficiency to tackle the scandal of cold homes. Many of them have moving personal stories to tell. Many of them have written about the Energy Bill Revolution campaign and the no-brainer of recycling the billions of carbon tax revenues received by the Treasury into a mass home energy efficiency scheme. Having clear fuel poverty and energy-efficiency objectives in primary legislation is a crucial first step to driving the nationwide housing upgrade that we need. Without such targets set in legislation, our constituents have no guarantee that this or any future Government will take the necessary action on fuel poverty.
I just want to say a few words about my amendment (a) to Lords amendment 76, which concerns the information that energy companies provide to their customers. Lords amendment 76 makes provision for the Secretary of State to require a licence holder to provide information to domestic customers to allow them to see for themselves whether any bill increases are due to an increase in company profit, or due to increases in other costs.
My amendment would make some modest additions to that welcome proposed increase in transparency. First, in relation to profits, it would allow customers to see how much UK corporation tax their energy supplier has paid in the past three years as a total and, crucially, as a proportion of its profits. The Minister said that that was not necessarily fair because there was not a direct correlation between corporation tax paid and overall turnover, but none the less it would be useful for people to have that figure when deciding to switch between energy companies.
Sammy Wilson
Does the hon. Lady really envisage individuals getting fuel bills showing profit and loss accounts, fuel mixes, past fuel mixes, trajectories of fuel mixes and so on? She says that this is about transparency, but does she really believe that the ordinary consumer will understand half this information or even be interested in half of it?
Caroline Lucas
I have much greater confidence in the wisdom of my constituents than sadly the hon. Gentleman appears to have in his. The bottom line is that people want information. They are being encouraged to switch between energy suppliers, but to do that they need well-presented information—I accept that it must be accessibly presented. I have no doubt that our constituents could perfectly well understand information on corporation tax paid and fuel mix, by which I mean the amount from fossil fuels and renewables.
Many other people want to speak, so I will end my comments there. I simply say to the Minister that the existing fuel mix disclosure obligation is not enough. We need more information, including trajectories, and it should cover more than one year and be properly comparable between different energy companies.
Chris Williamson (Derby North) (Lab)
I rise to speak in support of amendments 87 (a), (b), (c), (d), (e) and (f). I thank my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), the shadow Minister, for his kind remarks and for his support, in principle at least, for the sentiments expressed in my amendments.
I am pleased that the Minister said that the Government were committed to tackling fuel poverty, but actions speak louder than words, and if the Government are serious about it, they need to do a lot better than they have done so far and a lot better than the measures in the Bill. The 29% increase in excess winter deaths in this country is a scandal. As the hon. Member for Brighton, Pavilion (Caroline Lucas) said, this is not the coldest climate or one of the poorest nations on the planet, yet people are dying because their homes are too cold. That cannot be acceptable. That is why we need to place on the Government a clear and unambiguous obligation to eradicate fuel poverty.
I am not the only one critical of the Government’s record. Their own fuel poverty advisory group issued a press release recently stating that the Government were failing the vulnerable as winter deaths were rising, and the chair of the group said:
“No one should be dying because they cannot afford to heat their home.”
He went on to say:
“Urgent action is needed now to prevent a repeat of this morally unforgiveable level of excess winter deaths.”
He is absolutely right that there is a moral imperative, and the Government seem to be failing dismally.
Indeed, not only are the Government failing, but in my view their response has been pretty shameful. They have changed the definition of fuel poverty, which at a stroke has taken a couple of million people out of that category. That reminds me a little of the 1980s, when the previous Conservative Government used to fiddle with the unemployment statistics in order to reduce the numbers. The Government have cut the funding to tackle fuel poverty and capitulated to the big six energy companies. There will be no energy price freeze under this Government, just £50 back, so energy bills will go up for everybody across the country—just not by as much as they might have otherwise. It is a bit like stealing someone’s shoes, giving them back the laces and then telling them to rejoice. On top of that, this Government have scrapped the Warm Front scheme, cut the winter fuel payment and mangled the energy company obligation.
Passing the Bill as it stands, without a clear and unambiguous commitment to eradicate fuel poverty, is a bit like passing a death sentence on thousands of people who are living in cold homes across our country. That is why I tabled the amendments that are before us: it is essential that we set meaningful targets for 2020 and 2030. I know it is a lot of money—bringing the housing stock up to energy performance certificate band B by 2030 for all low-income households is estimated to cost £47 billion—but the money, or a large proportion of it, is there. For example, something over £1 billion in the energy company obligation could be used for that purpose. Simply refocusing that ECO money would remove 70% of the fuel-poor from fuel poverty by 2020; I therefore think that should be done.
In addition, there are huge health benefits to tackling fuel poverty in bringing all low-income households up to EPC band B by 2030. The chief medical officer made it clear in her report that
“Every £1 spent keeping homes warm can save the NHS 42 pence in health costs.”
That has been estimated to be another £1 billion or so. It would be very sensible to reduce the costs on the national health and to allow that money to be refocused on paying for the required investment in tackling fuel poverty. If we can reduce the demand for energy, that could also reduce the cost of upgrading our energy infrastructure. We know already that £100 billion is being talked about to subsidise new nuclear energy in this country. We would not have to spend quite as much if we could manage down the demand for energy. There is also around £4 billion in carbon taxes that could be focused on tackling fuel poverty.
The other benefit that would flow from my proposal is that at least 130,000 jobs would be generated. Not only would that address a massive social need, given that there are more than 1 million unemployed young people in our country, but it would be a big boost to our economy. We also have our legal obligations, as set out in the Climate Change Act 2008. If we are serious about delivering on those obligations, it seems pretty clear that we need to do something about managing demand in our country and not simply look at creating additional capacity. If we are to reach that decarbonisation target, we must do more to reduce the demand for energy in the first place.
The Association for the Conservation of Energy estimates that investment in tackling cold homes would reduce household fuel bills by some £530 at today’s prices, but I am afraid that tackling fuel poverty and cold homes will not be achieved by the feeble efforts made by the Government so far.
Mr Brian Binley (Northampton South) (Con)
The hon. Gentleman is making a compelling case, and I appreciate the compassion with which he is making it. It is a good case to make. Does he agree, however, that the last Government did not act very wisely, or indeed very compassionately, in this regard? Fuel poverty increased each year when they were in office. While I accept the hon. Gentleman’s arguments, I should like to hear him accept that the last Government did not do too well either.
Chris Williamson
I think that the hon. Gentleman is getting his facts a little mangled. Fuel poverty diminished in many of the years during which Labour was in power between 1997 and 2010. [Interruption.] I am afraid that that is a fact. It is clear that the Labour Government’s investment in tackling fuel poverty through, for instance, the Warm Front scheme and the decent homes agenda had a huge impact. Yes, we could have done more, and perhaps we should have done more, but we did a damn sight more than the current Administration propose to do. Perhaps the hon. Gentleman will accept that fact, at least.
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
Will the hon. Gentleman give way?
Chris Williamson
No. I will not take any more interventions, because I know that others want to speak in this important debate.
Chris Williamson
No. Others wish to speak.
This issue will not go away; it will run and run. The fact that people are dying in our country because they cannot afford to heat their homes properly is a stain on our national character. People should not be faced with the invidious choice between putting food on their tables and heating their homes adequately. We must do better than that, and, as one of the richest nations on the planet, we can do better than that.
I am grateful for the supportive comments of my hon. Friend the Member for Stalybridge and Hyde. I hope that Labour Front Benchers will look carefully at the amendments, and that, when we form the Government following the next general election, our programme will include meaningful targets which can have a real impact, enabling us to end the absolute scandal of people dying in our country because they are living in cold homes.
Mr Weir
I had not intended to say much, but the concerted attack on the Scottish Government by both Front Benches encouraged me to rise to oppose Lords amendment 54.
The purpose of the amendment, as the Minister briefly told us, is to close the renewables obligation throughout Great Britain. That is important, because until now the Scottish Government have been able to operate it distinctly from the renewables obligation in England and Wales, and have indeed used it in some different ways.
The closure of the renewables obligation and, in particular, the time scale were debated at some length in Committee, and I do not intend to repeat all that was said at that stage. However, the Minister said that the Scottish Government had full knowledge of the date when the Government intended to close the renewables obligation. I am sure that that is true, but the Government did not have the power to force the closure in Scotland, because it was a power that lay with the Scottish Government. Now the Government have introduced an amendment in the other place—in an unelected Chamber—to change the law and remove a power from the Scottish Parliament.
Successive Scottish Governments have used their devolved powers to advance renewables generation across Scotland, and the removal of that discretion has caused concern, particularly as there has been no prior consultation with the Scottish Government about its removal or about the introduction of this provision, especially at a time when the Scottish Government are conducting a live consultation on the closure of the renewables obligation. The Scottish Government have also used the renewables obligation to provide greater support for hydro schemes and higher renewables obligation certificate bands for floating offshore wind turbines.
Joan Walley (Stoke-on-Trent North) (Lab)
I want to try to put this matter into context. In my constituency, 6,110 households are in fuel poverty. The Lords amendment would drastically change the definition of fuel poverty. At the moment, about 3.2 million people are classified as being in fuel poverty, but that figure would go down to about 2.7 million under the new definition. There is real concern about the proposed change. I am also concerned about the change in the Government’s ambition, which was previously to eradicate fuel poverty and now appears to be merely to address it. That is no longer a strong commitment. The Minister will have to do an enormous amount if he is to convince the House that fuel poverty is really going to be addressed.
This is a cross-cutting issue. It is not just about what is going on in the Department of Energy and Climate Change; it is also about the cost to the health service and the implications for skills and employment. There are now 7,000 fewer people in the construction industry working on insulation than there were in December 2012 and, in a double whammy, we have had the announcement this week that the energy company obligation is to be cut back. There are households that desperately need investment in their insulation, but that investment is now going to be cut back. To make matters worse, the goalposts have been moved and, instead of having to complete 100,000 measures in one year, that work can now be completed in four years. Connecting all that together, we can see that there will be huge reductions, making it more difficult to address fuel poverty precisely when we should be stepping up the measures to deal with it.
The Environmental Audit Committee examined the whole issue of energy subsidy and one of its conclusions was as follows:
“To aid transparency, if the Government introduces its proposed new measure of fuel poverty, it should also continue to publish statistics on the current metric for the remainder of this Parliament, alongside the new figures. In the Autumn Statement, the Government should make clear how any changes to green levies will change the amount that those in fuel poverty will have to pay, by how much and how soon.”
I would like the Minister to respond on that.
Dr Whitehead
I wish briefly to speak in support of the amendments to Lords amendment 87 tabled by my hon. Friend the Member for Derby North (Chris Williamson) and my Front-Bench colleagues on the issue of fuel poverty.
As someone who has sat through the whole process of this Bill, from the very start to the finish this afternoon, I can tell hon. Members that during its early passage we were promised amendments in another place that would address fuel poverty. Here they are in front of us, but they are very feeble. I say that because central to Lords amendment 87 is the word “addressing”. For all the rest of the material in the Lords amendments about a strategy and so on, the amendment concentrates on the various things that have to be done to bring about a position of
“addressing the situation of persons in England who live in fuel poverty.”
Let us suppose that my wife asked me whether I was going to cook the supper tonight and I said, “I will do rather better than that. I will address the issue of cooking the supper tonight. I will have a number of recipe books at the ready and I will produce a strategy for cooking the supper. I will have some vegetables, which will also be ready to address the strategy of cooking the supper.” She would probably conclude that we would be having a takeaway this evening. That shows the central problem with Lords amendment 87: it would not ensure, whether in relation to the previous definition or the Hills definition of fuel poverty, that there will be a strategy in the future to bring about changes that move towards the eradication of fuel poverty.
The amendments to the Lords amendment 87 would simply replace that lack; they would put in targets to ensure that we can address the eradication of fuel poverty through a requirement on Government to act over the next period, rather than suggesting that they may or may not act, depending on how they wish to proceed. Let us not forget that this Bill, when enacted, will bind not only this Government, whatever their intentions, but future Governments on what they need to do about fuel poverty.
One central point about the amendments to Lords amendment 87 is that they make an explicit link between the imperative of moving forward on energy efficiency and the imperative to eradicate fuel poverty. We know that through radical measures to improve the energy efficiency of our homes, we undertake radical measures to eradicate fuel poverty, because of the congruence between people living in fuel poverty and people living in the least insulated homes in our country. It is a singular fact that the price of energy in this country is by no means the highest in Europe, but the bills we pay are among the highest in Europe, simply because of the overall energy inefficiency of our homes. Setting targets and underpinning them with an explicit assault on fuel poverty over the period is a win-win in terms of the move towards greater energy efficiency in our homes, the investment that that requires and the attack on fuel poverty that results.
If the Government are, as they state, serious about continuing to make an assault on fuel poverty, they have to do better than simply produce amendments that talk about “addressing” a position. The amendments to the Lords amendment seek to do better, and I hope that the House will support them this afternoon.
Michael Fallon
With the leave of the House, let me reply briefly to the points made in the debate. The hon. Member for Brighton, Pavilion (Caroline Lucas) and I disagree about the amount of information that should be put in Bills. She wants corporation tax and more about the fuel mix. Let us see what Ofgem comes up with in its search for greater transparency and then perhaps we can debate the matter again.
The hon. Member for Angus (Mr Weir), who is still in his place, suggested that we were trying to do something against the Scottish Government by the back door. I do not think that taking primary legislation can be characterised as doing something by the back door in whichever House it is introduced; it is right there through the front door.
Let me answer the points that the hon. Gentleman made. First, he seemed to suggest that the Government and the House had no right to close the renewables obligation for Scotland. Yes, we do have that right. The need to close it to new capacity has arisen due to the electricity market reform programme, which is a fundamental change to our policy for supporting renewables electricity generation, and electricity is a reserved matter under the Scotland Act 1998.
The hon. Gentleman asked me specifically about the grace period. We consulted on the grace periods to be offered at the point of RO closure. That consultation closed on 28 November, and our response will be published early next year and we will set out the detailed arrangements.
Mr Weir
I understand what the Minister is saying, but will he not accept that under the renewables obligation, the Scottish Government had discretions over how to operate it in Scotland? Until this amendment was tabled, there was nothing to say that the Minister intended to change the law on this particular point.
Michael Fallon
We have made our intention absolutely clear that the renewables obligation was going to be closed by March 2017. That has been made clear to the Scottish Government by officials and Ministers in correspondence over many months now. It is only right that the renewables obligation should be closed evenly for England, Wales and Scotland. I do not accept the hon. Gentleman’s point.
The hon. Member for Derby North (Chris Williamson) suggested that some of those involved in the fuel poverty area were not supportive of our change. He quoted Derek Lickorish, the chairman of the fuel poverty advisory group, but let me now quote him. David Lickorish said:
“I very much welcome the announcement in Parliament today by the Secretary of State that will place an enduring requirement for this, and successive governments, to tackle fuel poverty beyond the current legislation.”
The hon. Gentleman also quoted the Association for the Conservation of Energy. Let me tell him what Mr Warren said:
“It has been our long-held view that fuel poverty-proofing our inefficient housing stock is the only permanent solution to the scourge of fuel poverty. We therefore welcome as a step in the right direction the Government’s stated intention to adopt a new target to improve the energy efficiency of the homes of the fuel poor.”
I just want to make it clear that those voluntary organisations that are the most concerned in this area welcome the change that we are making.
Chris Williamson
I think the Minister will find that the organisations to which he is referring took the view that something was better than nothing, because nothing was previously on offer. It is stretching the point to suggest that these organisations are endorsing the Government’s approach, because that is far from the truth.
Michael Fallon
The problem the hon. Gentleman has is that fuel poverty went up. It went up in the boom years when the economy was booming and public expenditure was increasing year after year. That has been the particular problem with his definition.
Madam Deputy Speaker (Mrs Eleanor Laing)
With the leave of the House, we shall take amendments 2 to 86 together.
Madam Deputy Speaker
We will take amendments 2 to 53.
Lords amendments 2 to 53 agreed to.
Madam Deputy Speaker
The question is that the House agrees with the Lords in their amendment 54. As many as are of that opinion say Aye.
Madam Deputy Speaker
The Ayes have it.
Lords amendment 54 agreed to.
Lords amendments 55 to 86 agreed to.
After Clause 1
Fuel poverty
Amendment (g) proposed to Lords amendment 87.—(Jonathan Reynolds.)
Question put, That the amendment be made.
Mr Speaker
I have now to announce the results of the deferred Divisions. On the question relating to the draft European Union (Definition of Treaties)(Colombia and Peru Trade Agreement) Order 2013, the Ayes were 333 and the Noes were 61, so the Ayes have it. On the question relating to the draft Categories of Gaming Machine (Amendment ) Regulations 2014, the Ayes were 322 and the Noes were 231, so the Ayes have it.
[The Division lists are published at the end of today’s debates.]
Robert Flello (Stoke-on-Trent South) (Lab)
On a point of order, Mr Speaker. Further to the announcement you have just made, I think that hon. Members should be aware, especially those who voted for the free trade agreement or abstained, that on Monday, two days ago, peasant farmer Jorge Eliecer Calderón Chiquillo was killed by the Colombian army. I hope that hon. Members will think about that.
Mr Speaker
I am grateful to the hon. Gentleman, who has made his point with, if I may say so, great succinctness.
Thomas Docherty (Dunfermline and West Fife) (Lab)
On a point of order, Mr Speaker.
Mr Speaker
I hope that it is a point of order and that it is comparably succinct.
Thomas Docherty
Today’s Evening Standard reports that when Camp Bastion was attacked some 14 months ago, more than half the towers under British control were unmanned. The Secretary of State for Defence and the Chief of the Defence Staff told the Defence Committee just a couple of weeks ago that Britain had no responsibility for the attack. Has the Secretary of State indicated to you whether he wishes to update the House in the light of the very serious allegations in the Evening Standard today?
Mr Speaker
No. I am grateful to the hon. Gentleman for his point of order nevertheless.
Opposition Day
Business Rates
20:03 - The House divided: - Ayes: 216 / Noes: 271 -
20:16 - The House divided: - Ayes: 271 / Noes: 214 - Question accordingly agreed to.
Mr Speaker
I have selected the amendment in the name of the Prime Minister.
Toby Perkins (Chesterfield) (Lab)
I beg to move,
That this House recognises that the cost-of-living crisis is affecting businesses as well as families; notes that business rates have been rising and are due to increase further in April 2014, due to their link to the 3.2 per cent Retail Price Index increase in September 2013; and calls on the Government to take action to ease the burden of business rates on all sectors.
It is fitting that this debate should take place in the week leading up to small business Saturday, which has been so innovatively brought to the United Kingdom by my hon. Friend the Member for Streatham (Mr Umunna), and so graciously supported by the Prime Minister and the Secretary of State for Business, Innovation and Skills. It has become a truly cross-party initiative and a cross-Britain campaign. It says much about what we can achieve when the whole political and business world work together in support of Labour party ideas.
As the challengers of tired orthodoxies and the drivers of social mobility, small businesses share one nation Labour’s values completely. In fact, we could say that small businesses and one nation Labour share the same DNA. That is why my right hon. Friend the Leader of the Opposition said that one nation Labour would be the party of enterprise and small business when he became party leader back in 2010. Just as there is a lineage from owners of small businesses through to one nation Labour, the Conservative party, the party of old money and vested interests—it has an average age of 67, I am told—is inextricably linked to the defenders of the status quo. That is why Labour has led the running on the No. 1 cost of doing business issue, business rates, and why we have brought forward this debate.
Today is not the first time that Government policy has suddenly changed in the run-up to a Labour party Opposition day debate. Let us be honest—barely a day goes by when this Government’s policy does not change. The Chancellor’s pre-announcement today that business rates would go up by only 2% this year will be met with a mirthless smile by the thousands of small firms that told the Forum of Private Business, among others, that business rates is the No. 1 cost of doing business issue.
A measure of how detached the Government have become from the realities faced by businesses away from the City is that after three and a half years of small business rate relief, which is a valuable support for the very smallest, and with business rates still the No. 1 issue—13% of all firms say that the tax they pay on their business premises is greater than the rent, and many more find that it is pretty much the same—they announce that they are locking in that unfairness by capping rates at 2%. It is absolutely pathetic. Only the Government, who tried to sell an extra £70 on people’s energy bills as a cut, could think that a 2% rise in business rates is a cause for celebration—they could not be more out of touch.
Some of the Government’s policies seem to be dreamed up at a moment’s notice, but the announcement on business rates comes 71 days after my right hon. Friend announced the action that Labour will take on business rates. It is not even a rapid rebuttal. After all the speculation, it is no wonder that businesses are asking whether this is really it. We know that the Government are useless on this issue, so let us talk about the alternative—Labour’s proposal for real action.
We propose not a reduced increase, but a reduction of £410 a year on average for the 1.5 million businesses that have a rateable value of below £50,000. That will be followed by frozen rates in the year after that.
Sammy Wilson (East Antrim) (DUP)
This is an important issue. I accept the hon. Gentleman’s point that for many businesses, their rates are higher than their rent. However, in Northern Ireland, we have frozen rates for the past seven years, given half of small businesses a 20% reduction in their rates and provided a 70% reduction in manufacturing rates, but still some businesses are under pressure. Rates are only one aspect of the problems that face businesses. We need a much more comprehensive approach to deal with those problems.
Toby Perkins
I am grateful to the hon. Gentleman for that point. He is right that business rates are only one aspect of the problems, but they are clearly a very important aspect because businesses say that they are the No. 1 cost of doing business issue. He is right that we need to go further, but on that basis, this pitiful move by the Government is very disappointing indeed.
Mary Macleod (Brentford and Isleworth) (Con)
The hon. Gentleman has been to my constituency in west London. What would he do for businesses in London, because their business rates are high, but their rateable values are higher than the limit that he has set out?
Toby Perkins
That is an interesting point. I went to a newsagent in the hon. Lady’s constituency which certainly will not be paying business rates above the level that we have set. The vast majority of businesses will be below the £50,000 level. This policy is a significant step that will affect 1.5 million businesses. Every time we hear from Conservative Members, it is clear that the only voices in their ears are those of big business. They do not understand the reality of small businesses. That is coming across loud and clear once again today.
Even after today’s announcement, the bills this year will still go up by about £250, and that is when we are supposedly seeing action.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Will my hon. Friend give way?
Toby Perkins
I will give way to my hon. Friend, but I will not take too many interventions because I am conscious that a number of Members want to speak and I want them all to have the opportunity to do so.
Seema Malhotra
The British Retail Consortium has estimated that the business rate increase in April could mean that there is an increase of £240 million per annum, which could put more than 19,000 full-time jobs at risk. Does my hon. Friend share my concern that that will have a detrimental impact on retailers in our constituencies?
Toby Perkins
Absolutely. The statement by the British Retail Consortium is incredibly powerful because its members are telling it every day how important this issue is. That is why it is important that we see serious action.
Toby Perkins
I will make a little more progress, then I will let the hon. Gentleman come in.
British businesses will face a choice as we approach the next election between a Tory party that makes hollow gestures of this sort and a Labour Government who will offer them vital respite. Labour’s business rate cut is even more important than that; this is an important symbolic moment because a potential party of government is at last saying that enough is enough on business rates. That comes at a time when research by the British Council of Shopping Centres shows that Britain pays the highest rate of commercial property tax in the EU.
By contrast, we are set to have the lowest corporation tax in the G20 by 2015. Labour understands the importance of a competitive corporation tax rate. It might interest Conservative Members to learn that the biggest increase in corporation tax in the past 40 years was introduced by—I cannot hear the correct answer—Edward Heath in 1973. [Interruption.] It is true. In fact, no Labour leader has increased the main rate of corporation tax since then. For comparison, at the zenith of Thatcherism, in 1987, the main rate of corporation tax was 35%. The big cuts under the Labour Government saw it fall to 28% under my right hon. Friend the Member for Edinburgh South West (Mr Darling).
Mr Brian Binley (Northampton South) (Con)
Having been inspired by Margaret Thatcher to start two businesses, and having seen those businesses grow to now having almost 300 employees, but having suffered massively under a Labour Government, may I tell the hon. Gentleman that small business does understand what Labour does and knows what happens when we have a Labour Government? Things become much more difficult, and it becomes much harder to survive.
Toby Perkins
That is one viewpoint, but that of someone who has not seen an opinion poll recently, I think. Let us not hear anything from Conservative Members to suggest that Labour is the party of corporation tax rises, as history tells us that that is not the case.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
It is also worth reminding the Conservative party that it invented VAT, which has increased under every Tory Government since. No Labour Government have ever increased VAT. We also have to understand that since 2011, investment in small and medium-sized enterprises has decreased by £30 billion.
Toby Perkins
My hon. Friend makes an incredibly important point. He will remember, as I do, the Liberal Democrats’ posters and the Conservatives’ promises that there would be no VAT increases. He might well remember that the Chancellor, when he was shadow Chancellor, claimed that Labour would increase VAT and that it would be a bomb waiting to go off under the recovery. Of course, the Government then introduced the VAT rise before there was any kind of recovery, which is one reason why we have had three wasted years.
Yasmin Qureshi (Bolton South East) (Lab)
Is my hon. Friend aware that a recent business survey by the Forum of Private Business found that action on business rates was small companies’ No. 1 demand, and that John Allan, the chairman of the Federation of Small Businesses, has welcomed Labour’s consistent argument and demand for a freeze on business rates?
Toby Perkins
That is an incredibly important point. When Members take interventions, we often worry that it will add to the length of our contributions, but when they include things that we were about to say, it saves us all a bit of time. I am grateful to my hon. Friend for that point.
Toby Perkins
I am going to make a bit more progress. A large number of Members wish to speak, which makes it clear how important the issue is.
Our proposal is not to increase corporation tax from the current rate but simply not to take forward the planned 2015 cut, instead using all the money planned for that to reduce the business rate burden.
The Government have tabled an amendment to the motion, the final line of which states that the House
“rejects the policy proposals from Her Majesty’s Opposition on rates which would involve increasing corporation tax on all firms”.
That is what Government Members will be asked to vote for. First, under our proposals the rate would still be lower than it is today. More importantly, it would alter the corporation tax rate only of businesses that make more than £300,000 of profit. Government Members might well think that every single firm earns more than that, but I can tell them that 80,000 businesses would be affected out of a total of 5 million in the UK. That is just over 1.5% of all the businesses in the UK, not “all firms” as the Government’s amendment states. If they think that 1.5% of firms is “all firms”, they are either incompetent or totally out of touch. I suspect that it is both.
Toby Perkins
For some reason, on the subject of incompetence, the hon. Gentleman wants to intervene.
Richard Fuller
I am extremely grateful for that nice introduction.
I draw the House’s attention to my registered interests. I am a director of a small technology business and of a manufacturing business. The Government are still dealing with the deficit that the hon. Gentleman’s party’s Government left, and money is therefore scarce. For every element of taxation that he wants to reduce, the money would have to be found from elsewhere. How would Labour’s proposal help technology and manufacturing businesses, which are surely what we need to secure growth in the economy, rather than retail?
Toby Perkins
It is interesting the hon. Gentleman says that, because the point is that our business rate proposal was announced at the same time as we said how it would be paid for. It is the principle of ensuring that we do not make commitments unless it is clear how we will pay for it—in this case, the corporation tax cut is not being taken forward, and that will pay for the business rates. The Chancellor has just announced that he will not increase business rates, but I would be interested to hear from Government Members whether he will make it clear how that will be paid for. We have had numerous policies so far from this Government that seem to be just sticking it on the deficit.
Mr Clive Betts (Sheffield South East) (Lab)
My hon. Friend has made an important point because as well as small businesses, local authorities are under real pressure. Can he assure the House that his proposals will not reduce by one penny the money going to local councils?
Toby Perkins
I absolutely give my hon. Friend that assurance. It is entirely costed and there will need to be a reworking of the Budget to ensure that local authorities do not miss out. The other important point is that, as my hon. Friend will be aware, the Government amendment refers to the fact that local authorities can reduce business rates if they want. The idea that we can give local authorities huge cuts and say, “Well, if you want to reduce business rates, you can”, bears no relationship to the reality of local authority finances in many areas.
Toby Perkins
I will crack on a bit and then I will happily take a few more interventions. I am conscious of the time.
Toby Perkins
Because he has been so persistent I will give the hon. Gentleman the chance to intervene and then I will crack on. I have a feeling we will now hear an intervention of considerable importance.
Nick de Bois
I am grateful for the hon. Gentleman’s introduction, but he might like to ask his constituents whether or not my intervention is important. He complains that councils do not have the money to offer rebate—which, incidentally, is subsidised up to 50% by councils for offering a discount—but his own council in Chesterfield has failed to collect £4 million in council tax. If it made a bit of effort, perhaps it could get some of that back to business rates.
Toby Perkins
That is a disgraceful point given the cost of living crisis facing many of our people who are desperately struggling. The idea that it is the council’s fault if it is struggling to raise money from people in my constituency is absolutely remarkable.
Toby Perkins
I will make progress because interventions are not taking us anywhere. Our policy is clear: to reduce the business rate bill for 1.5 million small firms and ask 80,000 larger firms to pay what is still historically low corporation tax, even if it is slightly higher than the Government propose. That choice says a lot about Her Majesty’s Opposition, and the fact the Government reject it says everything that people need to know about them and the kind of economy that they want Britain to have.
The Government seem to be sending the message that they welcome firms that move their books here, but not their staff. They are discouraging those who want to build, work, base themselves or run shops here—a tax haven for the few, not a balanced economy for the many. Encouraging speculation and discouraging production: that says it all about a Chancellor and Prime Minister who have ears only for one section of the business community, not the real-life heroes in shops, workshops, factories and building sites who make up the real economy that they appear to know so little about.
One business woman who attended our recent business consultation in Plymouth put it rather well. She said:
“I don’t mind paying tax on my profits, but what I do object to is when I am struggling to get by and the Government keep putting up the bills on my premises. Let me make some profit and I’ll gladly let the Government share a little of the wealth.”
I could not have put it better myself. That is the reality of what businesses out in the community are saying.
Caroline Lucas (Brighton, Pavilion) (Green)
It is kind of the hon. Gentleman to give way and I support his motion, especially since vibrant and independent businesses in Brighton always tell me what a big challenge business rates are. Does he agree that since some of the smallest businesses are suffering the most, one thing the Chancellor could do tomorrow is increase the threshold for tapered relief to be funded—for example, from £12,000 to at least £15,000—so that more small businesses could be given some relief from those rates?
Toby Perkins
There are strong arguments in favour of increasing the threshold from £12,000 to £15,000 to help businesses, but the great thing about Labour’s policy is that it will benefit businesses right up to £50,000. Government Members do not think that that is relevant to businesses, but the reality of our economy is that it is very relevant indeed.
Recent studies by the Association of Convenience Stores, which has a huge army of owner-shopkeepers among its membership, underline the point and tell the full tale. Small shopkeepers are among the hardest-working people in our country. The majority work over 50 hours a week, often many more, and their shops are a vital part of towns and villages in every community across the country. Some 55% of its members say that their average earnings last year equated to less than the minimum wage, yet the average store has a rateable value of £14,000. So go and tell them that the Government are taking action—tell them that another 1% off the corporation tax rate for big business is more important than cutting their business rates nightmare.
Huw Irranca-Davies (Ogmore) (Lab)
Does my hon. Friend agree that there is another way that we could help these small businesses, whether Travella, the outfitters shop on the square in Maesteg, or the Talgarth bakery? Taking action on business rates is one way—and imitation is the best form of flattery, I say, as the Government try to mimic, in a pale way, what we are doing. Another way is to freeze the energy costs, which would save those businesses around £5,000 on average.
Toby Perkins
Absolutely. My hon. Friend accurately predicts a future part of my speech, which I might none the less give Members the benefit of, as the facts on energy prices are worth repeating and this is an incredibly important point.
Not by accident, one-nation Labour is in touch with the issues that small firms are facing. We have gone out of our way to ensure that the voice of entrepreneurial Britain is not only heard, but spoken by Labour. Around 1,000 businesses attended Labour’s business reception this summer, and from Harlow in Essex to Stockton in Teesside, we have listened to thousands of firms of all sizes.
It is incredibly important to me as a former small business owner to be Labour’s small business shadow Minister. There is a wealth of private sector experience across the shadow business, innovation and skills team, but I am excited that Labour will fight the 2015 election with many more strong business voices standing for election in our colours. From internet entrepreneur Victoria Groulef in Reading West and educational solutions entrepreneur James Frith in Bury North to business owners such as Sophy Gardner in Gloucester and Emily Darlington in Milton Keynes, the face of Labour will reflect that enterprise spirit that embodies what one-nation Labour is all about.
Bill Esterson (Sefton Central) (Lab)
As another former business owner, I can guarantee my hon. Friend that the Labour party really does understand that the face of business in this country has changed. That is why this debate is so important. Government Members do not seem to appreciate just how many more businesses there are these days compared with when the business rate regime was set up. [Interruption.] That is why this debate and my hon. Friend’s proposal are so important. [Interruption.] The challenges of online trading and the number of businesses mean that we have to address this crucial issue not just on the high street but for businesses as a whole.
Toby Perkins
That is a powerful point, and it is revealing that when my hon. Friend talks about the reality facing those small businesses he faces barracking from the Government Members. They do not understand the reality of businesses in our communities, and they make that clear every day.
Susan Elan Jones (Clwyd South) (Lab)
I find it rather disheartening that Government Members seem to downplay retail. Will they also downplay village shops, which are closing probably at a faster rate than ever before? This measure from the Labour party will prove a real lifeline to them if we are elected to government.
Toby Perkins
That is a vital point. In rural communities, village shops are absolutely crucial, and as Members have just heard, research from the Association of Convenience Stores says that many of the people who serve us in those stores are literally living in poverty. That should serve to show Government Members the reality of what is happening.
There is an inconsistency at the heart of the Government’s approach. They believe that the market decides and they do not believe in the role of government. That is why they scrapped the regional development agencies, which delivered and had real scope and expertise. That is why they scrapped Business Link, which was a useful single point of contact, and left businesses in need of support to fend for themselves. I do not pretend that Business Link or the RDAs were perfect, but they needed reforming, not scrapping, and the void left in their place has been one of the causes of the three wasted years of flatlining that we have seen since 2010.
Local enterprise partnerships have spent much of those three wasted years trying to make it clear what their purpose is, and the Government’s “mentors me” website has received four times more visits from firms offering to be experts than from people who need expertise. That says absolutely everything about how effective the “mentors me” website has been.
Mr Brooks Newmark (Braintree) (Con)
I am interested in the hon. Gentleman’s analysis. If the country has been flatlining, can he explain why 400,000 new businesses have set up since 2010?
Toby Perkins
The important question is this: how many of those businesses have gone under? In every recession, large numbers of people are unable to find a job, and they go on to set up their own businesses. I set up a business under similar circumstances—desperation is a pretty decent motive for setting up a business. The reality is that we have had three years of a flatlining economy and difficult circumstances. The hon. Gentleman might not be able to understand that, but the people in my community certainly do.
Tom Blenkinsop
Is my hon. Friend aware of the comments made by Hans Redeker from Morgan Stanley? He said:
“the UK recovery will turn out to be little more than a sugar rush unless investment picks up… The investment-to-consumption ratio is very low at 16% and falling. It is 22% in the eurozone and 23% in the US.”
Would my hon. Friend call that a copper-bottomed recovery?
Toby Perkins
I certainly would not. My hon. Friend makes an important point about the scale of the recovery, which so far has been less than a third of that predicted by the Office for Budget Responsibility in 2010. The full extent of the failure of the Government’s policy is there for all to see.
Toby Perkins
I hope that the hon. Gentleman’s intervention is rather better than the one he made last time. I will give him one more chance.
Mr Newmark
I just want to help the hon. Gentleman. Not only did the International Monetary Fund establish that we have the fastest growth of any major economy, but we have created 400,000 jobs. If we have failed so much, why is it that we have created 1.1 million net new jobs?
Toby Perkins
Once again, we hear from Conservative Members who think that it is a success if people are in work but in poverty. I had someone in my constituency surgery just two weeks ago who is doing three of the jobs that have been created and he still cannot afford to pay the mortgage—that is the reality of the recovery that they are delivering. The hon. Gentleman might sit there and tell his constituents, “Don’t worry, trust me, I’ve seen the figures and everything is getting better,” but people look in their wallets at the end of the month and know that in 40 out of the past 41 months wages have gone up by less than the costs that they face. That is the reality of the recovery that his party is delivering.
Lending to small firms has been a major problem since the banking crisis. Labour’s enterprise finance guarantee scheme made a difference, but the funding problem for small and medium-sized enterprises has become a crisis since 2010. Net lending has fallen in 24 of the past 30 months and SMEs still rank access to finance as a key business issue.
The Government are failing on the high street. They failed to give the Portas review serious backing and the local authority funding bombshell undermined the very organisations that Mary Portas envisioned would lead the small shop revolution. A cost of doing-business crisis is hitting British business, with 87% of firms reporting that energy costs have gone up in the past year and 83% of firms believing that the cost of doing business will be higher next year.
Andrew Gwynne (Denton and Reddish) (Lab)
My hon. Friend is absolutely right to set out the problems faced by small businesses. I have spoken to small businesses in my constituency across Tameside and Stockport. Many of them say that business rates are a major worry, not least because transitional relief is set to end in April next year. Does he agree that one reason why setting our proposal at £50,000 is absolutely right is that it allows small businesses to grow without getting clobbered by a massive business rates hike?
Toby Perkins
My hon. Friend is absolutely right: there is a real disincentive for many small businesses to grow. His local authority has taken innovative action to ensure that procurement goes to local small businesses, and that is an example to councils everywhere.
As much as anything, the Government’s failure on living standards has hit the pound in consumers’ pockets and pushed many of our stores to the brink. Three wasted years of wages falling behind bills every month means more hardship for Britain’s firms. Confronted by a stubborn opinion poll deficit, the Chancellor is simply flailing around in the dark for Labour policies that he can ape. He is convincing no one. We led on energy prices, but under this Government, bills still go up. We led on payday lending, on which he now thinks we were right. We told him that his funding for lending scheme was overheating the southern property market and failing to get finance to small firms, and now it appears that he agrees; and on business rates, we said things had gone too far, and now he says, “Okay, but just a little bit further.” We know that he does not have the answers. In fact, he does not even understand the questions.
Geraint Davies (Swansea West) (Lab/Co-op)
I am sure that my hon. Friend is aware that the growth now is driven completely by a combination of mortgages and consumer debt. That sort of bank lending is at its 2008 level, whereas business lending is 32% down, and in fact the share of small business has gone from 40% to 33%. That enormous collapse in funding for business is why productivity is down and wages are so low. We would change that, would we not?
Toby Perkins
Absolutely, and that brings me nicely to my next point. It is not all doom and gloom, because we are only 18 months away from a Labour Government. There is a better way under Labour. We are not just proposing a symbolic change to the role of business rates, but confirming real help for firms that, as the British Chambers of Commerce rightly said today, still face a hike in business rates.
On energy prices, we will save the average business £5,000 a year. On access to finance, we propose real action with the introduction of a proper business bank and a network of regional banks, alongside support for challenger banks and peer-to-peer lending. On business support, we are working on a proposal that recognises the support that is needed to make the most of great British business ideas. On late payments, which take more than 2,000 firms to the wall each year, we will take robust action to expose firms that pay late and end the scourge of late payments; and we will use the huge power of Government spending to point the way towards a future in which small firms finally pick up their fair share of Government contracts.
As we head towards small business Saturday, small firms can rejoice: at last there is a party ready to form a Government who understand why small firms think that business rates are so important. We have a party that gets that we will not solve the access to finance issue by expecting the banks to do differently with the next pound we give them from what they did with the last. We have a party that realises that business support matters and knows that shops will close if the people in their communities have no money in their pockets. The party that gets it is Labour. That is why we are calling for real action on business rates; that is why we will take action on the cost of living crisis facing businesses; and that is why all Members should back our motion. I commend it to the House.
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
I beg to move an amendment, to leave out from ‘House’ to end and add:
“acknowledges that this Government is taking decisive action to back business and make Britain’s economy work for everyone; notes that the Government has cut business rates, National Insurance and corporation tax for small firms despite the need to tackle the deficit left by the last Administration; observes that the value of small business rate relief has trebled since the general election and small business rate relief will be considered in the Autumn Statement; notes how the overall multiplier has been frozen in real terms; applauds the abolition of the unfair port taxes; welcomes the Localism Act which has made small business rate relief easier to claim and allows councils to introduce local discounts; notes with approval the rate relief in 24 enterprise zones; further welcomes the new empty rate relief for new build in contrast to the last Administration’s increases in empty rates; endorses the way in which local rate retention now gives councils new incentives to support local enterprise; and rejects the policy proposals from Her Majesty’s Opposition on rates which would involve increasing corporation tax on all firms, undermining British jobs and businesses.”
I congratulate the Opposition on securing today’s debate. It is fantastic to see that Labour finally has a policy on local government. Unfortunately, it is its only policy and it is not a very good one. It is all well and good calling for a cut in business rates, but strangely the motion does not mention that it would hike up business taxes to pay for it. As the British Chambers of Commerce has said:
“Labour must realise that you can’t rob Peter to pay Paul.”
The Institute of Directors has warned—the shadow Minister seemed to miss this point—that:
“The main corporation tax rate is paid not only by multinational corporations and FTSE 100 companies but by medium sized companies and smaller firms... It’s a dangerous move for Labour to risk our business-friendly environment in this way.”
The CBI added:
“I just think it’s divisive to take from one part of the business community to give to another... Whether you are small, medium or large you need to invest as a business and grow as a business and higher taxes don’t do that.”
Angie Bray (Ealing Central and Acton) (Con)
Like many people here, I want us to help businesses with business rates where we can, but not by cancelling the reduction in corporation tax, which is Labour’s policy. Does my hon. Friend agree that that would be totally counter-productive, because it is so often the larger businesses that provide the work and contracts on which smaller businesses often depend?
Brandon Lewis
My hon. Friend makes an excellent point. All businesses can be liable for corporation tax, so it affects all businesses. Unlike the Labour party, we recognise that we have to look at the picture for business as a whole, not just bits in isolation.
With such a lukewarm response from business, the Labour party is still a long way from the heady days of its prawn cocktail offensive.
Tom Blenkinsop
In her question to the Minister, the hon. Member for Ealing Central and Acton (Angie Bray) effectively referred to a trickle-down form of economics, yet household savings in cash ISAs and deposits were actually down from October 2012 to 2013 by £23 billion, or £900 per household. What has happened is an absorption of capital from the bottom upwards. Those at the bottom have been used as a line of credit, not the big businesses.
Brandon Lewis
Bearing in mind that manufacturing is up, I think the hon. Gentleman misses the point that putting up corporation tax potentially hits every business that is successful. If he has worked through his economics, I assume that he would want those small businesses to be paying corporation tax because they are successful enough to become the big businesses of the future, rather than being penalised by a Labour Government. Businesses are the lifeblood of our economic recovery. This Government are cutting corporation tax to help businesses to invest and expand.
Toby Perkins
I am grateful to the Minister for giving way, but he has repeated the mistake made in the amendment, and he would not want to mislead the House. Our policy will not increase corporation tax for all businesses; it will increase it for 1.6% of businesses. Will he correct the record?
Brandon Lewis
Increasing corporation tax will affect all businesses, for the very reason that my hon. Friend the Member for Ealing Central and Acton (Angie Bray) has already outlined. The hon. Gentleman is kind of missing the point.
Mr Betts
I presume that the Minister is not ruling out business rates not increasing by the retail prices index next year. If so, will he tell the House where the Government might find the money to achieve a lower increase in business rates? Will it come from local councils, the Exchequer or somewhere else?
Brandon Lewis
I thank the Chairman of the Select Committee on Communities and Local Government for his question; I am sure he will be here tomorrow to learn what the Chancellor has to say in the autumn statement.
Let us remember the context of this debate. Corporation tax was 28% under Labour; this Government are cutting it to 20%, the lowest rate in the G20. Labour’s plans for higher corporation tax would put jobs and investment at risk, but I appreciate that the Labour party has form on that.
Brandon Lewis
I will make a little progress and give way in a moment.
Let us look at Labour’s record and let us take, for example, the ports tax. The Labour Government imposed retrospective business rates on ports across England—unexpected bills that threatened to sink England’s export trade and destroy the country’s car industry. In an astonishing break from Cabinet collective responsibility, the then Home Secretary, the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), wrote to the Secretary of State for Communities and Local Government in 2009 slamming the policy. He said, “These businesses are” being
“damaged by a government that on the one hand is looking for ways to help small businesses through the recession, whilst at the same time is imposing a completely unfair retrospective system that will destroy jobs and put these companies out of business”.
He had a point. If the hon. Member for Swansea West (Geraint Davies) still wants to intervene, I am sure he will want to agree.
Geraint Davies
Further to the point I made earlier, the cuts in funding to business are particularly acute among small businesses. Given that, should not the priority be not to cut corporation tax across the piece, but to focus our fire where it is most needed, among small businesses, rather than giving the cut to all the big giants, who have more strength to weather the storm?
Brandon Lewis
I am not quite sure what cuts to business the hon. Gentleman is talking about, but he is absolutely right about targeting. I agree with him about that, which is why I am so proud of what this Government have done with small business rate relief, to which I shall turn in a few moments.
No impact assessment was made of the ports tax, no consultation was undertaken and no concern was shown about the effect on the wider economy.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
What has this got to do with the debate?
Brandon Lewis
This debate is about business rates and the ports tax was a business rate. If the hon. Gentleman has a look at his own motion, perhaps he will appreciate what he is here for. The ports tax policy also contravened the Treasury’s own guidance on retrospective taxation. However, as proposed by both coalition parties before the general election, this Government have scrapped Labour’s ports tax, cutting business rates by £175 million and reversing the smash-and-grab on small businesses.
Let me take another example: empty property rate relief. As Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) hiked up business rates by cutting back empty property rate relief, with no offsetting reduction. When was the stealth tax rise introduced? It was introduced at the very start of the economic downturn—precisely when businesses cannot find tenants for their empty properties. The Royal Institution of Chartered Surveyors slammed the change, saying it was
“purely a revenue raising exercise with no thought of the potential consequences”.
That is what we inherited from Labour, as well as the biggest deficit in our peacetime history. Unfortunately, we have not been able to reverse every Labour tax rise—I wish we could—but we have introduced new rate relief for empty new build property to help to kick-start development.
Let me raise another issue, which relates to my response to the hon. Member for Swansea West a few moments ago. I recognise that small business rate relief was introduced under the previous Administration, albeit funded by a higher multiplier on medium and large firms, but Labour made it as difficult as possible for small firms to claim, requiring reams of complex paperwork every year. In 2009, Labour Ministers blocked a Conservative-supported private Member’s Bill from the hon. Member for Mid Worcestershire (Peter Luff) that would have simplified the relief. This Government have changed that—the Localism Act 2011 made it far easier to claim—but we have gone further: with central Government funding, we have doubled business rate relief for small firms year on year, and an estimated 330 small firms are now paying no rates at all as a result.
Kate Green (Stretford and Urmston) (Lab)
Businesses report to me that when they appeal against business rates, it takes a long time for their appeals to be dealt with. The delays are due to the poor performance of the Valuation Office Agency, and I hope to have an opportunity to say more about that later. I realise that this is not the Minister’s direct responsibility, but will he undertake to have conversations with his colleagues in the Treasury to ensure that the agency performs as it should?
Brandon Lewis
I am delighted to be able to tell the hon. Lady that we have managed to reduce those delays. I shall say more about that shortly.
The value of small business rate relief granted in England has trebled, from £330 million in the last year of the Labour Government to £900 million in the last year. I note that the extra rate relief, which is temporary, is scheduled to end next April, but the Chancellor will be reviewing all taxes as part of his autumn statement. As I said to the Chairman of the Select Committee, the hon. Member for Sheffield South East (Mr Betts), we must wait and see what lies before us tomorrow.
We have done far more. We have capped business rate increases at the rate of inflation, with the result that there has been no real-terms increase in annual business rates. We have given councils new powers, via the Localism Act, to allow local business rate discounts to support, for example, local shops, community pubs, new business parks or vital local facilities. Under the local business rates retention scheme that was introduced in April, central Government now fund part of any discount that is granted. The discretionary discount is not just for Christmas; it can be applied at any given moment throughout the life of the current Parliament. Councils can do that now, with no complications, no pen-pushing, no bureaucracy, and no questions asked. It is real, targeted, localist tax relief that can be delivered by councils today.
Nick de Bois (Enfield North) (Con)
Does the Minister agree that what we are saying is that councils must make choices, and should think about how they spend their money? Enfield council, for instance, should ask itself whether it should spend £100,000 on sending councillors to conferences with officials and a further £100,000 on magazines promoting its work, when that money—with Government support—could be translated into nearly £300,000 for rate relief in specialist areas?
Brandon Lewis
My hon. Friend has made an excellent point. I hope that the councillors in Enfield have heard what he said, and are thinking about what they can do. Council reserves have risen to a record level. Given £2 billion of uncollected council tax and £2 billion lost through fraud and error, there is an awful lot that councils can do to ensure that they have the right funding and make decisions that will benefit their communities by producing economic growth and jobs.
Some councils are already using the powers in the Localism Act that this Government introduced, although I agree with my hon. Friend that more should be encouraged to do so. Basildon council has supported a small computer repair shop which offers home visits to its elderly and less “tech-savvy” customers. That is a very good example of localism-focused help. Stockton is supporting new businesses, from cafes to retailers, filling empty shops in the town centre and attracting new businesses. Milton Keynes has helped the famous Stables theatre to maintain the substantial recruitment that it brings to the area.
The Localism Act has ensured that no new supplementary business rate can be imposed without a backing of local firms in a referendum. The supplementary rate introduced by the Labour Government allowed extra business rates to be imposed, in some cases, without the support of local businesses. We have brought in a democratic check on any new rates, just as we have on council tax rises.
We have also introduced 24 new enterprise zones across the country. Those zones benefit from a 100% business rate discount, worth up to £275,000 over five years for a firm moving into the zone. All business rate growth within a zone will be retained and shared by the local enterprise partnership area for at least 25 years to help to support local growth and investment. Under this Government, enterprise zones have generated £500 million in private investment, and they have already created 5,000 jobs.
The United Kingdom is becoming the No. 1 destination for expanding multinational companies. That worldwide ambition is feeding flourishing local economies from Newquay right up to the Tees valley. I declare my interest as the Member of Parliament for Great Yarmouth; our New Anglia enterprise zone is encouraging vast growth in the energy industry in the east coast region. We are rewarding councils for promoting local economic growth by allowing them to keep half the funds from locally raised business rates. It has been estimated that these reforms will increase economic growth by £10 billion over the next seven years.
As the hon. Member for Chesterfield (Toby Perkins) said, we have postponed the business rates revaluation in England until 2017, which will prevent 800,000 firms from facing double-digit hikes in their business rates bills. I know that surveyors have been quite grumpy about that. Let us remember that it is those surveyors who stand to lose money from charging firms for rate appeals. For the record, the Government will not benefit by a single penny.
Independent analysis by the Valuation Office Agency has shown that the 2015 revaluation would have meant soaring bills for the likes of pubs, petrol stations and food retail. That would have pushed up the cost of living for hard-working families: a more expensive shop, a more expensive tank of fuel and a more expensive pint. Falling rents would not necessarily have translated into falling business rates bills, as the multiplier would simply have gone up to compensate for lower rateable values. The winner of a 2015 revaluation would have been office space in central London. Across England, three times as many premises would have lost out as would have gained. Small firms would have been paying for tax breaks for bankers in London.
Simon Danczuk (Rochdale) (Lab)
Does the Minister accept the analysis provided by Bill Grimsey’s alternative high street review, which shows—[Interruption.] Listen! It shows that Rochdale businesses will pay over £8 million more because the revaluation is not taking place.
Brandon Lewis
As I explained to Bill Grimsey when I met him a couple of weeks ago, I do not accept his premise or the way in which he has carried out his calculations. He has simply not allowed for the way in which the multiplier works.
The postponement of the revaluation will provide tax stability and certainty for businesses, as there will be no real-terms increase in business rates over the next five years. Labour Members often speak, as they have today, as though business rates never existed under Labour. Well, I ask Labour critics to bear in mind that the Labour-led Welsh Government have copied us and postponed the rates revaluation in Wales. In the words of Welsh Labour Ministers, this will ensure a more “stable business environment”. The Scottish Government have done the same.
The postponement of the 2015 rates revaluation has allowed the Valuation Office Agency to allocate more resources to clearing appeals. More than 641,000 appeals have been resolved since 1 April 2010, and the number of outstanding appeals has fallen in eight successive quarters. I recognise, however, that more needs to be done to speed up the rating appeals system that we inherited from the Labour Government. We also need to make it more transparent than it was under Labour. I can announce today that my Department will publish detailed proposals for consultation on that shortly.
Geraint Davies
The Minister mentioned Wales. Is he aware that properties there that have been empty for 12 months will now get 50% rate relief, and that new-build business properties will pay no business rates for 18 months? Will he look at that in a positive light when considering regeneration?
Brandon Lewis
I am sure that people in Wales looked at the powers we gave local authorities here and thought that it is something they want to do in Wales. I say again that we are talking about something that local authorities already, under this Government, have the power to do.
This Government absolutely recognise that the wrecked economy we inherited means that businesses are facing challenging times. It has been our job, where possible, to ease pressure on businesses of all sizes, and to use their skills and expertise to drive our recovery and ensure an economy that is ripe for growth. Some 1 million private sector jobs have been created and the deficit is down by a third. Those are not just happy coincidences; they are achievements of this Government’s economic plan.
Huw Irranca-Davies
Would the hon. Gentleman care to pass judgment on whether an increase in corporation tax, particularly for multinationals, from 20%, where the Government are taking it, to 21% would make us globally uncompetitive? My reading is that a 21% rate would put us very much in the top league of the internationally competitive on corporation tax rates.
Brandon Lewis
Again, I simply do not agree with the hon. Gentleman that putting up taxes on businesses is a good thing for business—it simply is not.
Alison McGovern (Wirral South) (Lab)
I find it difficult hearing Ministers constantly talking about 1 million new jobs. For the record the Minister should say how many of those jobs arise from different re-categorisation and how many of them involve zero-hours contracts?
Brandon Lewis
These jobs are very real; I believe that the figure is 1.4 million jobs under this Government. Places such as my Great Yarmouth constituency have some of the most deprived wards in the country, and I am delighted that its level of unemployment has fallen under this Government, having risen consecutively under the Labour Government, who deserted areas such as mine.
Hon. Members should also bear in mind that we have cut business rates, cut corporation tax and cut national insurance—those are all measures that help business grow, as is shown in the development of the 400,000 new businesses mentioned earlier.
Mary Macleod
My hon. Friend is right to mention all the many things this Government have done for business. Will he be willing to sit with me to talk about a full review of business rates, because the issue of business and taxation needs to be re-examined for this age?
Brandon Lewis
I thank my hon. Friend for her intervention. Obviously, the Treasury always keeps all taxes under review, and I am happy to meet her at any time.
Mr Newmark
Will my hon. Friend join me in congratulating Braintree district council on using the savings it has made to put aside £100,000 to give concessions to small businesses that want to come to the town or fill empty shops?
Brandon Lewis
My hon. Friend makes an excellent point, and I look forward to visiting Braintree this weekend for small business Saturday. He gives a good example of an area that has used its powers to do the right thing for local businesses, embracing some of the work through its Portas pilot and even going further. I congratulate Braintree district council and look forward to seeing in practice the excellent work it has done to bring down car parking charges for the benefit of local residents.
Let us be clear: Labour would have ducked the tough decisions taken to tackle the budget deficit—even within local government, Labour still has £52 billion-worth of cuts that it has not outlined. All Labour offers is more borrowing, more spending and more debt. Its plans do not reduce; they redistribute, in a sleight of hand.
Toby Perkins
I am confused by what the hon. Gentleman is saying because it bears no relation to reality. He will be aware that our business rate proposal is entirely costed. A moment ago, he appeared to be giving the impression that business rates were not a problem. If they are not a problem, why are so many businesses saying that business rates are the No. 1 cost to business issue in the country at the moment?
Brandon Lewis
The hon. Gentleman is kind of missing the point. Despite what the Labour Government did to this country, our Government have trebled small business rate relief to help the very small businesses that need that targeted help. We have reduced national insurance costs and corporation tax costs, and that has led to the 1.4 million extra jobs, the 400,000 new businesses and the growth in the economy that we are seeing at the moment.
Labour’s plans do not reduce; they redistribute, using a sleight of hand. By raising business tax, the Opposition are punishing those who have pulled us out of the previous Government’s economic abyss. Labour’s promise of tax cuts in the motion would breach the Trade Descriptions Act—read the small print. What the Opposition give with one hand, they take away in corporation tax with another. Only this Government are taking the bold action to get our economy working for everyone, to create more jobs and turn Britain around. I urge the House to reject the Opposition’s motion, and I commend the Government amendment to the House.
Madam Deputy Speaker (Dawn Primarolo)
Order. As a large number of Members wish to take part in this afternoon’s debate, there will be a six-minute time limit to start with on all contributions by Back-Bench Members. We will have to review the time limit during the course of the debate. It might be necessary to reduce it further.
Mr Clive Betts (Sheffield South East) (Lab)
This is an important debate because business rates are clearly an important cost—and a rising percentage cost—for many businesses, particularly small businesses, in the country. Business rates have gone up faster than turnover during times of economic difficulty. They are important for local councils because they comprise more than 50% of their revenue. If the Minister had until the end of the debate to explain the whole system to us, he would still need more time for the details. There is the retention of rates by local authorities, the provision of resources to the Exchequer which are then redistributed to local authorities, the set aside that the Treasury can keep, and the safety nets and the levies that go on to authorities that are in different positions. It is an incredibly complicated system.
One welcome thing that the Minister mentioned is a review of the appeal system. It is completely unacceptable that it can take up to 18 months or longer for appeals to be held. First, for the businesses themselves, they do not know how they will be placed when they are waiting for their appeal to be determined. Secondly, for the local authorities, an appeal casts doubts over their income stream. One thing the Minister could do before the review is announced and then carried out is to ensure that next year the element of hold-back for local authorities is removed. Ministers could take on board any uncertainties about the valuations and how they will work out through the appeal system, rather than leaving the problem for the local authorities to bear.
Andy Sawford (Corby) (Lab/Co-op)
My hon. Friend is raising an incredibly important point. There were 173,000 appeals this financial year still waiting to be dealt with at the Valuation Office Agency, and 170,000 at the Valuation Tribunal Service. The review should be very quick, otherwise businesses will go under.
Mr Betts
It has to be quick, and it will need more resources being put into it as well. The Minister cannot do this at nil cost. It will be interesting to see how this develops. Hopefully, as my hon. Friend says, it will develop very quickly.
In the longer term, we need a complete review of the business rates system. We need to look at the way in which valuations are carried out. The Local Government Association has called for that review, and I thoroughly support it. It should form part of a wider review of local government finance, and the Select Committee, which I chair, will now be carrying out a review of fiscal devolution to cities on the back of the London Finance Commission, which the Mayor of London has commissioned and which Labour and Tory London boroughs and the core cities have supported. I will not come to a view about whether its proposals are right, but it is interesting that there is now a call for a wider look at the whole basis of property tax in this country and the extent to which it can be devolved down to local authorities.
Were the Chancellor to make any changes tomorrow to business rates for next year—and we hope there will not be a commitment to increase business rates by RPI, as has been the case for the past few years—any reduction must not come at the expense of local councils, which are very hard pressed at this time of austerity and restraint on their spending. Any commitment must be made clear. We need to know the impact of lower business rates not just on councils as a whole but on each individual council in the country— I ask the Minister to put the details in the Library—once the levies and safety nets are taken into account. That must be made explicitly clear for their benefit.
Business rates are a real problem for firms up and down the country. The percentage of their turnover paid in business rates has increased, and that is putting real pressure on small businesses in particular. If the Government recognise that, and recognise the need for action, why are they so mealy-mouthed as to say, “No increase in line with RPI—we will simply reduce that increase to 2%”? If there is a problem, which the Chancellor might recognise tomorrow, why not go that bit further and at least freeze business rates or, even better, take up the suggestion of my hon. Friend the Member for Chesterfield (Toby Perkins) and cut them? If there is a problem, why not address it properly? If there is not, why go for a 2% increase? The Government have a fundamental question to answer on this issue.
The Government must also deal with the disproportionate impact of business rate increases. Firms in different parts of the country are suffering in different ways. In parts of the country where demand has not recovered, where growth has not increased and where there is poverty and deprivation, businesses are suffering more. A revaluation would have addressed precisely that.
Alison McGovern (Wirral South) (Lab)
Does my hon. Friend agree that that gives the lie to the Government’s claim to have rebalanced the economy?
Mr Betts
Absolutely. The economy is not rebalanced and some areas are doing better than others. The areas that are doing less well have businesses that are struggling and that is why revaluation would have been important.
The Minister says that a revaluation would somehow affect businesses adversely. No, it would not. A revaluation should be a zero-sum game as far as businesses are concerned. The Minister said that there was no benefit to the Treasury. Every previous revaluation has had dampening put in to protect firms that are likely to see a significant increase in their rates. There has always been a net cost to the Treasury as a result of any revaluation, particularly when there are big changes—as there could well have been if a revaluation had been carried out. The cost of any revaluation would have been borne not by businesses but by the Treasury, and I suggest that that is why the Government did not go ahead with it in the end. It was another stealth saving by the Chancellor to try to ensure that they did not have to put in the costs of protecting firms from large increases. At the same time, of course, he has caused additional costs for firms that are struggling in the less prosperous parts of the country, which has been the real disadvantage of not going ahead with revaluation.
I will also be critical of the previous Labour Government, who did not go ahead with a revaluation of council tax. In the longer term, delaying valuations has had major disbenefits. There might be short-term advantages, as it does not cause problems for the Government in explaining to some people why their taxes have gone up, but in the medium and longer term it is always a disaster to put off revaluations, because when they are eventually handled they become even larger, more difficult to deal with and more difficult to explain. That is the simple reality.
If we are thinking about the retail sector, we must consider the greater benefits that the postponement of revaluation allows for out-of-town shopping centres. When we consider revaluation and the whole system in future, we must consider the fact that the value of rates for out-of-town shopping centres, compared with those for smaller shops in the high street, is not fair at all. Were we to have a revaluation now, I would suggest that we took account of the fact that an increase in empty properties on the high street would likely see the valuation of shops there go down. If the planning system works as the Government intend and we have a town and city centre-first policy, the constraint on future out-of-town developments should put a premium on the existing developments and cause a relative increase in the rateable value of such properties. Postponing the revaluation has had a disadvantage for the high street and an advantage for out-of-town centres, and we should take account of that.
There are a lot of issues for the Government to consider. We need a longer term reform of business rates and to go back and consider revaluation, as it was not fair to postpone it. If there is a problem and we are to have some change to the business rates next year, let us make it a cut not—
Mr David Ruffley (Bury St Edmunds) (Con)
In 2008 and 2009, 500,000 businesses failed in the UK as a result as a result of disastrous economic policy management. One in 10 of those businesses failed in the east of England. The financial crash was particularly bad news for small businesses, because as we know small businesses are much more reliant on, and exposed to, direct bank lending as they do not have the same kind of access as large businesses to debt equity markets and other forms of sophisticated finance. They are under pressure.
In Bury St Edmunds, which over the past 10 years has been consistently rated as one of the most profitable county market towns in the east of England, there are still too many empty business premises, including in prime sites such as the corn exchange and the butter market. In Churchgate street in the historic town centre, two independent retailers of long standing, a shoe shop and a book shop, have had to move out because they can no longer bear the burden of rates. So there is a problem.
I praise the Minister, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), for setting out in what I thought was an extremely powerful and convincing speech exactly what the coalition Government have done over the past three years to support small business. It leads me to the conclusion that we can rightly claim to be the party of small business. The Chancellor, in particular, has done his bit. With the cut to 20p, we now have the most competitive rate of corporation tax in the whole G20. Also, let us not forget that the first £2,000 of an employer’s national insurance contributions have been wiped out. That is important because 450,000 small businesses now pay no employer NICs as a result of the Government’s action.
I want to focus on two things that I would like to see in the autumn statement that would allow us to go further and deliver more help to small businesses in the area of business rates. Let us not forget that small businesses, which I define as those with fewer than 50 employees, constitute 99% of all businesses in the UK and represent one third of private sector turnover.
I would first like to praise the extension of the small business rate relief discount in a targeted way from 50% to 100%. However, the problem is that it is due to expire next April. I will pray in aid the words of my hon. Friend the Minister, who has stated:
“Tax stability is vital to businesses looking to grow and help improve the economy.”—[Official Report, 18 October 2012; Vol. 551, c. 32WS.]
He is so right. Businesses do not want tax uncertainty. In tomorrow’s statement, I would like to see the SBRR not just extended for another year or two, but made permanent.
My second point relates to RPI uprating. Last September RPI was running at 3.2%. In Mid Suffolk, where my biggest town is Stowmarket, the full 3.2% whack would mean an increase of £216, and in Bury St Edmunds, where the local authority is St Edmundsbury borough council, the average business rate bill after reliefs is £12,865 and a full-whack increase of 3.2% would jack up business rates by £411, so we are not talking about inconsequential sums of money. If we cannot have a 0% increase, I hope that the CBI’s proposal of 2%, which has been costed at around £327 million, would go some way towards relieving the rates burden.
Time is short, so I will end my comments with one parochial example of a small retail business in Stowmarket, the second biggest town in my constituency. The business has a rateable value of £6,000. If action is not taken, the failure to extend the deadline for the SBRR, which it currently enjoys, beyond April next year or make it permanent would cost the business, with the 3.2% increase, an extra £1,430. If it is faced with the increase of a 3.2% uprating, plus no extension of the rate relief it currently enjoys, it will go under.
The Government deserve a big tick, because a lot has been done, but there is a lot more to do. I commend the measures we have taken so far. Let us hope that we see a bit more tomorrow.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
I thank my hon. Friends the Member for Chesterfield (Toby Perkins) and for Sheffield South East (Mr Betts) for their excellent speeches detailing a lot of the problems that are very familiar in my local area.
Like many colleagues, I am looking forward to small business Saturday on 7 December, when we will celebrate and support local small businesses on one of the busiest shopping days of the year. For the rest of the year, though, many of those businesses will be struggling because of inflation, with business rates increasing by an average of over £250 next April and the north-east seeing some of the steepest hikes outside London and the south-east. The average business rates bill in the north-east will increase by about £360, on top of an average increase of £1,500 since the 2010 general election. How do small businesses cope with these hikes? They face the tough choice of trying to pass on the increases to customers through higher prices, adding to the cost of living crisis, or absorbing the cost, squeezing their finances until they can no longer afford to stay in business. No wonder our high streets are littered with empty shops.
I would like to put on record my thanks to Redcar and Cleveland borough council, which bent over backwards in relation to the new SSI steelworks in Redcar. The council was owed to the tune of £20 million in rates and gave the company a lot of slack to make sure that we could keep steel production in Teesside—something very close to my heart. Having heard about that today, we also heard about job losses at the Lotte chemical site. In summer 2009, the former Labour Government, alongside One North East, the regional development agency, took the former company out of a position of administration and got a south Korean company called Lotte to come in and purchase it, and it got the polyethylene plant running again in April 2010. There are good examples from the past for the Government to look at, irrespective of which party was in power.
An important factor in my constituency—I raised this in a debate last week and the week before that—is female unemployment. Long-term female unemployment has risen by 144%, and that is having massive consequences on the high street. One element is weekly wages. Female average gross weekly earnings are down by £12.30 a week since the last general election, and that will have frightening effects on small businesses.
Alison McGovern
Does my hon. Friend agree that those statistics are all the more concerning when we consider that food price inflation has gone up by 18% since the crash?
Tom Blenkinsop
I keep coming back to that point time and again. This is not just about incomes but the availability of jobs and their levels of pay. As my hon. Friend the Member for Sheffield South East detailed, the number of jobs for women is limited, and that is particularly so in the north-east. In my area, the public sector, which was a large employer of females, has been haemorrhaging jobs, and 16% or 17% of workers are care workers, many of whom are women on zero-hours contracts. This has an effect on small businesses further down the supply line.
Every penny counts for smaller businesses who are constantly watching the bottom line, but when the worst comes to the worst—when a business is forced to close its doors for the last time—that leads directly to a decline in employment. Tackling soaring business rates would limit the number of shops closing, and this in turn would help to prevent unemployment rising. This Government set the business rates that so many are struggling with. At a time when the Government should be backing small business, they appear once again to be on the wrong side. Large companies will have already had about £10 billion in tax cuts by 2015. It is right that we should have a globally competitive corporation tax rate, and we have supported those tax cuts, but the next priority should be cutting business rates, supporting small and medium-sized businesses, and relieving the pressure on our high streets.
Small businesses are integral and, in many cases, long-standing institutions within our communities, but business rates keep going up and up. Our high streets and town centres need a blend of independent shops alongside bigger well-known retail stores. That mix is really important for a vibrant and thriving local economy.
Justin Tomlinson (North Swindon) (Con)
I completely agree about the importance of the high street. I am proud to be vice-chair of the all-party town centre group and the all-party retail group. One of the other big threats is internet sales—for example, an internet sports store may undercut traditional independent sports stores. What would the hon. Gentleman do in the business rates system to protect those outlets?
Tom Blenkinsop
In my area, going back to pre-1997 when the Major Government established the Teesside Development Corporation, we saw the birth of out-of-town shopping developments, which had a far more profound effect on creating new shopping habits in, for example, Stockton high street in my home town of Middlesbrough and in the market towns of east Cleveland. I take on board the hon. Gentleman’s comments: the situation is difficult. We need small businesses to absorb that new internet market, and rural broadband and other new, inventive technologies will be important for them in doing that.
This month the Forum of Private Business conducted a survey of its members on the cost of doing business, and the No. 1 demand of small firms was action to tackle the rising cost of business rates. Understandably, I am proud that my party is taking the lead where this Government are failing and that it is standing up for small business owners by announcing a cut in rates in 2015 and a freeze in 2016. That action could save small businesses such as pubs, shops and start-ups an average of nearly £450 over two years, while some firms could save £2,000.
It is worth reminding Government Members that VAT was a Tory invention and that every time a Tory Government come into power they increase it, while Labour never increases it, but decreases it. Air passenger duty is another Tory indirect tax, as is the fuel duty escalator of John Major’s Government. I repeat what I said last week: the Conservative party has an addiction to keep increasing indirect taxation on the individual and on business.
Unfortunately, 2015 will be too late for some businesses. The Government need to take action now, and tomorrow’s autumn statement seems the perfect opportunity to do so. Now more than ever small firms need our support. High streets are suffering due to pressure from high energy bills, rising business rates and a lack of bank lending. To get our economy growing at a respectable rate, we must support small businesses that have so much potential to deliver the jobs we need not only in the future, but right now in my constituency and high streets and town centres across the country.
Andrew Griffiths (Burton) (Con)
It probably will not surprise you to know, Madam Deputy Speaker, that I rise to talk about a specific type of small business, namely the pub. As chairman of the all-party beer group it is, of course, my role to promote and support the needs and aims of our brewing and pub industries. I think we all recognise that 80% of pubs in our constituencies are small businesses. On average, they employ 16 people. They are the lifeblood of our community—we meet there to socialise, have fun and hold public meetings—but they are also important drivers of the economy locally. They are important businesses in our communities.
I am glad that the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis) is present, because he is both the pubs Minister and the Minister for the high street. I think that few in this House have done more than him to stand up for and represent our pubs and to understand the issues that affect them. He has been a fantastic advocate for the industry in other Departments. I think that this is the most pub-friendly Government for many years, but there is more to do, because our pubs, as small businesses, are struggling.
Pubs are important not just for our communities, but for our high streets, which are changing and adapting. I think the Minister could do three things to support and help these vital small businesses in our communities. Something we could all do for small business Saturday is support a small business by having a pint of British beer in our local pubs in our constituencies.
Andrew Griffiths
Or an orange juice, of course.
The first thing the Minister could do relates to small business rate relief, which my hon. Friend the Member for Bury St Edmunds (Mr Ruffley) has spoken about. Small business rate relief was introduced in 2005 and is hugely important for pubs. It is a very good thing and was extended to 2013-14 by the Chancellor in the 2012 autumn statement. It offers 100% relief for small businesses and is worth £1,000 a year to pubs. For pubs that are struggling and trying to cope with changes in the economy, £1,000 a year is hugely important. Sixteen thousand pubs across the country benefit from small business rate relief and that is worth £27 million to the industry in total. The Minister could pick up the telephone to the Chancellor this evening to ensure that he listens not only to me but to all the hon. Members who have signed early-day motion 599. Let us extend small business rate relief for pubs in our constituencies to 2015, or permanently, as my hon. Friend the Member for Bury St Edmunds has suggested.
My second point is about discretionary rate relief. As the Minister will know, local authorities can offer it in relation to assets of community value, a fantastic thing brought in by this Government. Assisted by changes that came in earlier this year, local authorities can claim 50% of the discount back through the Treasury and the Department for Communities and Local Government. Will he do all he can to ensure that local authorities across the country take advantage of the scheme by offering it to their small businesses and helping pubs in their areas? I urge all right hon. and hon. Members to talk to their local authority about implementing the scheme.
My final point is about flexibility in relation to business rates. For commercial premises, business rates are assessed on square meterage, but for pubs, they are determined on turnover. Under previous legislation, if a pub’s turnover changed materially—“materially” is the important word—a concession could be offered. I urge the Minister to consider reintroducing such a provision to offer some relief to pubs that have a big change in turnover for the worse.
Toby Perkins
The hon. Gentleman is making an important point about the significance of business rates for pubs. I am sure that he knows this from his perspective, but will he give us an idea of how many pubs have a rateable value of more than £50,000? I would think that there are very few, so virtually every pub would be able to drink to Labour’s business rate cut for all businesses below that £50,000 level. Will he support that policy for the sake of British pubs?
Andrew Griffiths
I am always prepared to listen to anything that might support the great British pub, but as the hon. Gentleman is from the party that introduced the hated beer duty escalator and the smoking ban, he needs to think long and hard about what he can do to support British pubs.
Damian Collins (Folkestone and Hythe) (Con)
Does my hon. Friend agree that as Labour’s policy is barely worth more than £1 a day to businesses to which it will be offered, they would have to be pretty small beer indeed to get any value out of it?
Andrew Griffiths
I completely agree with my hon. Friend’s point. I also agree with those made by the hon. Member for Sheffield South East (Mr Betts) and, interestingly, by the hon. Member for Corby (Andy Sawford) on the speed of appeals. That issue is important because two thirds of pubs have appealed their business rates, and half of those decisions are still outstanding. Such delays can have a massive impact on small businesses that are really on a knife edge in terms of profitability and sustainability.
As I have said, the Minister is a passionate supporter of the great British pub and wants to lead a regeneration of our high streets, so will he take on board my three small points, pick up the phone to the Chancellor and do something to support our pubs?
Alison McGovern (Wirral South) (Lab)
I could talk for a long time about the Government’s economic policy, jobs and people’s incomes, and it would not surprise Government Members to know that I am not the biggest fan of their economic policy, but rather than do that today, I want to concentrate on small businesses in my constituency. Many of those businesses have worked incredibly hard to get through the past three years, and I feel that I owe it to them to stand up in the House and say a few words of support and congratulation, as well as to pass on some of the comments about business rates that they have made to me over recent weeks.
As I have mentioned, I am not a big fan of the Government’s economic policy, and I am not very keen on being in opposition—
Alison McGovern
I promise the hon. Gentleman that I will do everything in my power to make sure that I do not have much more of it.
It would not be good enough if I just came to the House and shouted my head off, although I may do so on occasion. Some of the most rewarding work that I have done as a Member of Parliament has been with businesses in my community, not least those in Bromborough village and Heswall, and as part of the New Ferry town team.
Bromborough in my constituency is the place where I grew up. It is a lovely place. Last Saturday, we had the Christmas event that is organised by the Bromborough village community association, which is led by local traders. Back in 2010, the village was becoming like a ghost town and shops were shutting left, right and centre. Local traders decided that up with that they would not put. They came together and worked with me to reshape the local parking arrangements and to organise market and community events that would bring life back into the village. They have been incredibly successful. They pre-empted small business Saturday by having their event last week. They deserve the biggest congratulations for what they have done.
Heswall has seen a lot of change in recent years. I have spent a long time listening to businesses talk about the problems that they have had with business rates and, more specifically, with appeals. I am interested to know more about the review of the appeals system that the Minister has set out. I have made representations before about that process and about the valuation office. I will work with businesses in Heswall to ensure that their views on appeals are known by the Minister.
When I met the Heswall and District Business Association recently, one of the traders asked me to relay their views to the Government. I am doing so today. They asked me to say that businesses in Heswall are fighting for their lives. I hope that the Minister has heard that. Small businesses out there, especially those in Heswall, have not had an easy few years, not least because of business rates. Immediate attention must be given to business rates generally and to the appeals system in particular.
New Ferry, which is just south of Birkenhead, had a tough time in the recession. I have chaired a town team that has sought to bring the community back together and to support New Ferry. It has recently had the excellent success of getting its Christmas lights up again. It is holding an event this Saturday for small business Saturday in which local traders are coming together just before Christmas to offer a 10% discount to people who shop in New Ferry. I would contrast the proactive attitude of those small businesses with the lackadaisical Chancellor, who said that he wanted to rebalance the British economy but has done the exact opposite.
Small businesses in my constituency have been clear in what they have said to me. Soccerloco Ltd said:
“The business rates system needs to be fundamentally reformed…this would play a small part in reviving the local economy”.
Wirral Tachograph said:
“The business rate relief has been a big help over the past few years.”
It said that that relief needs to continue to support small businesses, as my party has suggested. Finally, the award-winning Stuart Henry Kitchens, which is based in Bromborough, said:
“A rise in business rates will only force retailers like ourselves out of already expensive shops with higher rates into business parks which will kill the high street.”
I hope that anybody who does not think that our high streets are under enough pressure will listen to Stuart Henry Kitchens, because it knows what it is talking about.
Toby Perkins
My hon. Friend spoke a moment ago about the challenges faced by businesses in her constituency. She says that businesses are fighting for their lives. What does she think those businesses will think of a Government who are saying, “We can’t do anything about your business rates because we have to reduce taxes even further for those who are making over £300,000”?
Alison McGovern
I think that those companies will be bemused, at best. I think that they will be angry and frustrated that the Government are not listening to the voices of businesses such as those that I have just quoted. It is not enough to say, “All that matters is the headline rate of corporation tax—we’ll just cut that.” The Chancellor used to talk about flat taxes, but that disappeared as he realised that they would be ineffective. The Government do not really seem to have learned the lesson, and they do not seem to understand what is necessary to rebalance our economy, so that it is stronger at the grass roots and less dictated to by corporations, many of which do a great job for our country but a number of which do not.
If the Government really listened to the voice of small business, they would focus on business rates, as we have, and consider the pro-business step that the Labour party has suggested. One of the most important and enjoyable jobs that I have done in opposition has been to work alongside the small businesses in Wirral South, and I will endeavour to keep doing so.
Annette Brooke (Mid Dorset and North Poole) (LD)
I first draw the House’s attention to my declaration in the Register of Members’ Financial Interests: I am a part-owner of a very small business. I apologise in advance if I miss the winding-up speeches, because the debate is not taking place at quite the expected time and I have another engagement that I cannot get out of.
It is important to take on board what a huge burden business rates and rents are when taken together, particularly for smaller firms. That is a problem in my local shopping district, where, following on from a point made by the hon. Member for Wirral South (Alison McGovern), we will have our Christmas parade on Saturday. That event has been happening for decades and is incredibly important to our community. Broadstone chamber of trade organises it entirely, and hundreds and hundreds of people flood into our district shopping precinct, which is obviously good for trade. I am pleased that our district shopping centre qualified for £10,000 of Mary Portas funding, which was helpful. The business sector is also working within the neighbourhood forum, which is in the process of setting up its neighbourhood plan.
It is important to realise that, although there is a difficult economic climate, the Government have introduced many positive measures. The cutting of corporation tax, which has been mentioned, has been significant. Under the previous Government’s plans, there was a potential increase. The increase in small business rate relief has tripled its value, which is highly significant. Like other Members who have spoken, I will listen carefully to what the Chancellor of the Exchequer has to say about that tomorrow.
My hon. Friend the Member for Burnley (Gordon Birtwistle) campaigned to increase capital allowances, and the Chancellor thanked him personally in the 2012 autumn statement as he increased them tenfold. That helped small firms by offering them 100% tax relief on capital spending up to £250,000 for two years. The £2,000 employment allowance has been mentioned, and it has been incredibly important in helping small businesses take on more employees—a plus-plus all round.
There have been an enormous number of initiatives to try to counteract the failure of the banking system, which we inherited, and to try to get finance to small and medium-sized firms. The business bank is one of many. We are doubling the number of small and medium-sized enterprises exporting with help from UK Trade & Investment. I recently visited a local firm that has doubled its turnover in the past three years and has 130 employees, and it commented in particular on the support that it had received from UKTI. We have the regional growth fund, which is really important. Local enterprise partnerships are beginning to come together and work very well in some areas, and there are local enterprise zones, which have been mentioned in the debate. The Government have taken a lot of positive measures, which we should not overlook.
An interesting remark was made to me yesterday by the Wessex Federation of Small Businesses. It commented that many rents are inclusive of rates—a point that I had not thought about before—and that starter units within a larger complex do not benefit from business rate relief. Perhaps that issue could be looked at.
I endorse the comments made by my hon. Friend the Under-Secretary of State for Communities and Local Government (Brandon Lewis), who said that the Localism Act 2011 was important and brought in local choices and flexibility. If we are to have more discretionary business rate relief, it is the local area that knows best where to make those decisions. That is important for the potential of our high streets and district shopping centres.
I appreciate the move towards business rate retention by local authorities—although perhaps not the global sums of money involved—and I think that that is the right move to incentivise local authorities to attract business to the area. In the longer run, I would like a higher proportion of business rates to be retained within the local authority area, as that is the way we should go as a truly localist Government.
I will end with a comment from the Federation of Small Businesses, which said that the second wave of city deals—including for Bournemouth and Poole—will not have the same business rate retention as the first wave. I feel that would be a rather retrospective step, and I hope it can be looked at again.
Yasmin Qureshi (Bolton South East) (Lab)
Small businesses are the driving force behind future jobs and growth, and they now account for more than half the economy and most of the new jobs. In fact, in the next 15 years or so, small businesses will create more jobs that people are not even aware of yet. A recent survey by the Forum of Private Business found that action on business rates is the No. 1 demand from small firms. Many hard-working small businesses are relocating or closing down every week, and the fact that there are more than 40,000 empty shops on our streets is proof of that.
In my constituency, Bolton’s 9,000 businesses are being crippled by the increasing burden of business rates, and business rate liabilities will add £3.2 million to Bolton business costs from next April. The World of Wicker—a reputable business in my constituency—is now having to move out of its town centre location because
“business rates are too high”.
That is not an isolated case.
The average bill has now reached £14,000, compared with council tax of around £1,400. Obviously, some business premises tend to be larger than homes and they tend to be in town centres, but the bill should not be 10 times the size. At the moment, business rates bring in some £25 billion a year, which is just too high. Last year, the Government increased business rates by the biggest rise in 20 years, and during this Parliament, it is projected that another £6.5 billion will be added to the business rates bill.
Businesses all over the country are shouting about the damage that business rates are causing. John Allan, chairman of the Federation of Small Businesses, said that he
“welcomes the focus by the Labour leadership on this critical issue for small businesses. It affects thousands of our members across the UK and is one which we’ve been lobbying on for some time.”
This is not something the Labour party has dreamt up because it had nothing else to do; it is a real issue that small businesses are asking and campaigning for.
The Labour party has proposed to help small businesses and our high streets by pledging to cut business rates in 2015 and to freeze them in 2016. That will mean an average saving of nearly £450 for about 1.5 million properties. That measure has been costed, and it will happen instead of the Government’s planned corporation tax cut for multinationals in 2015. That tax cut benefits only about 2% of British businesses, yet 98% of those businesses will have an increase in business rates.
I welcome today’s announcement by the Government that there will be some changes. Government Members will have to accept, however, that the Opposition have been constantly arguing for reducing, freezing or stopping business rates. Now, eventually, something is being done, but it is not enough.
Under Labour’s plan, 1.5 million start-ups, workshops and shops would benefit from a cut and then a freeze in business rates. I do not understand why Government Members find asking for business rates to be frozen or reduced so difficult to comprehend. They are happy to cut corporation tax for companies earning over £300,000, yet they are also happy to show no concern for small businesses, which are the backbone of our communities and which need our support, and moreover they think that we are somehow in the wrong for raising their concerns. I ask the Minister to realise that small businesses need as much help and assistance as we can give them.
Nick de Bois (Enfield North) (Con)
Let me first make it clear that I believe that the business rates system we have essentially inherited over the years is fast becoming disproportionate for local shops and, frankly, it is an unfair tax. We inherited an appalling deficit, so we have to recognise that there is no easy fix. The Chancellor will inevitably want his £27 billion raised from business rates. However, the fact is that it is a property tax on business that is rightly perceived to be disproportionate for many, delivering no value, and unfair. Also, businesses cannot negotiate it, unlike just about everything else which is in their control. Shockingly, our business rates are a more significant tax on business property than comparable taxes in other European countries. Indeed, the Office for Budget Responsibility forecasts that business rates receipts will exceed council tax and fuel duties receipts in financial years 2014 and 2015.
There is a strong consensus—even in this House, I suspect—that the system is no longer fit for purpose, but we are in extremely difficult times, so there is no pretending there is an easy fix. I would like to see reforms that would have economic benefits, including a boost to jobs, which I believe will ultimately drive revenues through having more profitable businesses. There are serious concerns about the level of the tax on business, and there is a serious case for a review of the entire structure. I have lobbied publicly and privately for a commitment to that review and I think the case is overwhelming. The present situation means that businesses are at the mercy of an uprating system that is flawed and, to cut through the politics, the reality is that this has been going on for a long time. This is not a problem created by the Government parties.
Incidentally, I notice that although this is an Opposition day debate, there have been consistently more Conservative Members in the Chamber discussing this issue. I think it is worth putting that on the record. [Interruption.]. I pay tribute to all who have spoken in the debate, however, because all the contributions have been useful. [Interruption.] I am sorry Opposition Members do not like what I said, but it is a fact, so they will just have to deal with it.
According to the British Chambers of Commerce, an uprating of 3.2% would drive something like another £900 million in revenue. Interestingly, Opposition Members have been quoting the British Retail Consortium in support of their arguments, but they have not mentioned that the BRC said today that if speculation of a limit to a 2% rise is true, it would welcome that, as would its members, and that it sees see that as a clear indication of a direction of travel for business rates. As we on the Government Benches know, the key for businesses is as much the direction of travel of a tax—and having a sense of certainty as to where it is going—as having immediate relief. A real-terms cut is what will matter.
Having said that, we can do more, and we can do more now. I talked about section 69 of the Localism Act 2011 in an intervention, but the idea of scrutinising the powers of local authorities to make reductions did not seem to be met with universal approval by Opposition Members. I cannot understand why Opposition Members do not believe that local authorities should be challenging their expenditure and looking to apply discretionary relief by any means, supporting any sector of their local economy that they wish to support at a level that will attract 50% support from the Government. It is ludicrous that they do not embrace that and urge their councils to do it. I would welcome an intervention from anyone on that.
Simon Kirby
Is my hon. Friend surprised as I am that Brighton and Hove council spends £2.9 million on communication across the council, which could be used to help small businesses across the city, create employment and generate the economy?
Nick de Bois
I am grateful to my hon. Friend for his intervention and for drawing his local council to our attention. My council has spent £100,000 on conferences and, I understand, £106,000 on magazines, no doubt to promote a good message. That £200,000 in Enfield could have been subsidised by another 50% from the Government. If £100 million in rates and business rates is collected in our borough, and £3 million of discounts applied to the retail sector, or specific areas within the retail sector, that can translate into a significant cut to businesses. The council might not use those means, because it realises that there is a business audience scrutinising councils’ spending decisions and wondering why they do not manage the money they gather from taxpayers as if it was their own. That is what drives a business. Uncollected council tax seems to run year on year with no reduction. Enfield council is averaging nearly £1.5 million each year. Why is no effort made to improve that and divert those funds to support local businesses? The answer is that councils do not treat the money like it is their own.
Simon Danczuk
I understand the hon. Gentleman’s point about local authorities subsidising business rates for certain sectors, but does he not accept that that can be done inappropriately? In Rochdale, one café has been given 100% business rate relief, causing competition problems for other cafés in the local area.
Nick de Bois
I accept that there is the potential for spurring artificial competition. That should not be the case. Section 69 of the Localism Act is clever, because it covers non-competitive areas. It could cover shopping parades as opposed to other centres, or retail alone—it does not have to back business to business. I hope that councils judge it well.
Some 17% of authorities have chosen to apply discretionary relief and have taken advantage of £8 million of Government subsidy. That is not a high take-up rate. There is part of me that wonders about the motivation for councils not doing so: they simply do not want to do so, which I do not understand; they are unaware of it; or there has not been sufficient knowledge and lobbying in constituencies to drive it. I can think of reasons why a council might not want take such action: it might not want to hold itself up to scrutiny or make a decision that it feels carries less political weight than supporting its businesses. However, it is key that MPs take the campaign to the streets to make councils, of whatever colour or persuasion, implement a plan that can deliver savings to our businesses. That cannot be done alone.
Business rates, important as they are, will not be the only measure to help high streets, in particular, to succeed. We need a holistic approach that involves parking and encouraging a culture where people support their local shops and spend a bit of money locally where previously they might have spent it somewhere else. The one non-negotiable, however, and probably one of the most repulsive taxes on business at the moment is the fixed high charge of business rates, and local councils could do something about that now.
Bill Esterson (Sefton Central) (Lab)
I was going to welcome the remarks of the hon. Member for Enfield North (Nick de Bois).
Bill Esterson
I do welcome his opening remarks. He was absolutely right to say that business rates are a tax that is past its sell-by date. The need for reform has been well stated by him and many business leaders in the advice we have all received for this debate and over a much longer period. My hon. Friend the Member for Chesterfield (Toby Perkins) mentioned 1973 and the Heath Government. By way of context, it is instructive to consider the changes in business in the 40 years since.
When the hon. Member for Enfield North moved on to other matters, however—[Interruption.] I might detain him some time, I think. He talked about how councils should be supporting their businesses, and at the end he made some good suggestions about parking—I will give some examples of that from my own authority in a moment—but I disagreed with his point about 50% support for councils’ use of discretionary relief. I do not know the details of Enfield council, but the reality of the financial settlement that Sefton and other authorities in the metropolitan boroughs have received means that applying that 50% rule would be almost impossible, given the scale of the cuts to those authorities. In Sefton’s case, those cuts are more than 40%, and that is not untypical of the northern metropolitan boroughs.
Nick de Bois
I am not advocating cuts in social services or education. I am saying that there are areas of expenditure in a council’s budget that are relatively small and which, with 50% support, could make a massive difference to local retail shops.
Bill Esterson
I agree that small amounts of money can make a big difference to business—I will come on to that—but demand for social care for older and disabled people in places such as Sefton and the legal requirement to fund children’s services make it impossible to provide even relatively small sums of money, certainly on an ongoing basis.
Sefton has put aside a £1 million pot for the current financial year to provide support and has used it for some very good projects, including Christmas lights across the borough, in its various town and village centres, which has contributed. It also includes, I believe, £50,000 to accommodate free parking on Thursdays and Saturdays in the run-up to Christmas. That is part of small business Saturday, which my hon. Friend the Member for Streatham (Mr Umunna) introduced to this country and which was mentioned by my hon. Friend the Member for Chesterfield. Those sorts of initiatives, using small amounts of money, certainly work very well, but it is problematic to try to extend it across a borough with an initiative such as discretionary relief, when cuts of 40%-plus have been made.
In addition to the successes in Sefton on parking and the Christmas lights, we have a number of town teams, as I know do other Members, and they have supported some fantastic local businesses in the towns of Formby, Crosby and Maghull in my constituency alone. On Monday, I was pleased to go along to the opening of five small units in a disused shop in the centre of Maghull that the Labour borough council and Labour members of the town council had been instrumental in setting up. We have five traders, and I understand that trade is already brisk and that the initiative has been successful just in those first few days. That is a good use of the small amounts of money that the hon. Member for Enfield North mentioned, and it is quite right that we should talk about that.
I was surprised by the comments made by some Government Members about retailers. I think one or two of them implied that retailers were not important to the economy or the recovery, but they could not have been further from the truth. Retailers are at the heart of our communities. They and other businesses, particularly small businesses, suffer from high levels of business rates. When I travel round my constituency and meet small businesses, they raise the issue of business rates more than any other. Small businesses want to see action. The hon. Member for Enfield North mentioned the 2% freeze and the fact that the BRC and other business organisations have called for it. He is right about that, but they see it only as a first step—as something that is available because they feel that this Government will do it.
Those organisations also want to see what we are offering: a full business rate cut. We are talking about only a few hundred pounds with a 2% cap, whereas my hon. Friend the Member for Chesterfield is talking about a £450 cut. That is quite a significant difference, when costs are so tight and when we have retailers, as we all do, who are struggling to make ends meet and take enough money out of their businesses to survive.
Toby Perkins
Was my hon. Friend as appalled as I was to hear Government Members say, “Well, you know, £410 a year is only a pound or so a day to customers. It’s small beer”? If that is what Government Members think about business rates, does it not show how out of touch they are?
Bill Esterson
That is absolutely right. We have seen a massive growth in the number of small businesses. We now have 4.9 million businesses in this country; 40 years ago the figure was only 1 million. Of those 4.9 million, only 200,000 employ 10 or more people, while the vast majority employ a small number of people or are sole traders. For those businesses, a few hundred pounds makes all the difference and is a huge contribution. We were talking earlier about the difference that a small amount of money invested by a local authority makes, and the same is true when the money goes directly into the pockets of small business owners.
Damian Collins
Does the hon. Gentleman accept that the cut to national insurance contributions, which is introduced in April and is worth £2,000, is worth considerably more than this policy from the Labour party? What we are asking for in this debate is a bit of context. Labour Members—the hon. Gentleman is in danger of falling into this trap—are presenting a relatively small initiative as some panacea to help small businesses, when it will do nothing of the sort and is small when compared with other measures that the Government have put in place.
Bill Esterson
No, I do not think our policy is a panacea; I think it is an important initiative that would give support directly. Members were talking earlier about how we would pay for the measure by not introducing the 1% cut in corporation tax and how that money would feed through into small businesses, and this point is similar, because what small businesses need is direct help. Expecting that support to feed through indirectly through the economy means it will take much longer to help. The help is needed now; that is why our proposal is so important. I hope that hon. Members will support my hon. Friend the Member for Chesterfield and his motion tonight.
Nick de Bois
On a point of order, Madam Deputy Speaker. In the excitement of being called to speak so early, I forgot to notify the House that my wife runs a business, which obviously pays business rates, that was formerly my company. I want to put that on the record and I am grateful to you for allowing me to do so.
Madam Deputy Speaker (Dawn Primarolo)
I am grateful to the hon. Gentleman, as I am sure the House is too. Transparency is always a good idea in the House and that will be shown in the record, so I thank him for his point of order.
Mrs Anne Main (St Albans) (Con)
I am pleased to be able to speak in the debate. There are many small businesses in St Albans, and I think that there is consensus in the House that business rates impose an onerous task on them in particular. As was pointed out by my hon. Friend the Member for Enfield North (Nick de Bois), they are a tax on properties, and they are indeed onerous. However, there are many other strands to the stresses and strains suffered by business, and many of my local businesses have welcomed the Government’s initiatives to cut red tape, keep fuel duty down and introduce economic stability.
It is no secret that under the last Government many people running small businesses—including a number who spoke to me—were unable to renew their loans or the terms with which they were being presented, because of the fragility of the banking sector and the economic crisis into which the country was sinking. Because of the onerous conditions that were being placed on their loans, they were being forced to lose members of staff, not to expand, or even to go under.
We must view the position in the round. Many small businesses were approaching a tipping point under the last Government because of the crises that they were being pushed into. We must deal with that now, although nothing can be fixed overnight. When the Secretary of State for Education came to St Albans, my local chamber of commerce welcomed, in particular, the fact that the Government were providing the apprenticeships and education that most small businesses had been crying out for.
Seductive though Labour’s proposals may be, I do not understand how robbing Peter to pay Paul can possibly be a good idea. I also notice the sheer lack of figures. We have been discussing which businesses would be caught or not caught, supported or not supported, by Labour’s proposals, but I can inform the House that the average rateable value of commercial property in St Albans city centre is £48,811.51, and the average in St Albans as a whole is £40,216. The city contains very few large premises; the valuations are high because we have such high property values.
Let me issue a plea to the Minister. St Albans is not inner London, and many small businesses there do not benefit from the small business rate relief for high-value areas. That problem was drawn to my attention a few weeks ago, long before the debate was scheduled, by Luisa and Oliver Zissman, who run Dixie’s Cupcakery in St Albans. I think we all agree that small businesses feel that they are being taxed and are receiving very little value in return for the business rates that they pay. That is exactly what Luisa Zissman said, but she also said that if other measures were introduced, business rates would not be so onerous. Some businesses, such as Dixie’s Cupcakery, produce a lot of packaging. Perhaps their recycled rubbish could be included in council recycling targets, because at present that is just a direct cost to their business.
I welcome the Government’s focus on markets. St Albans is the proud owner of one of the longest street markets in the country—some say in Europe—which is open on Wednesdays and Saturdays. Since 2010, with the Government’s encouragement, the concil has frozen council tax each year. I pay tribute to the leader of the Conservative-led council for cutting down on, for instance, the free sandwiches and coffee machines that used to be given to councillors. I urge the council to go one step further and get rid of the council election “thirds” that many of the councillors seem to like, thus saving £90,000 per election. As my hon. Friend the Member for Enfield North said, if councils made such savings they might have a bit more money to put towards businesses. However, I pay tribute to my council for cutting waste and keeping the services in St Albans. If it is possible for some recycling collections for small businesses to contribute to local targets so that they can save on overheads and other costs, so much the better. Our Christmas market—the first that we have had in St Albans—adds vibrancy to the city centre. All those things help other small businesses to survive.
I think that this Monday was supposed to be “internet frenzy spending day”. The fact is, however, that if we do not use our small businesses but go online and use the big companies, and if we Google Amazon to find out where we can get our books most cheaply instead of going to our local stores in our town and city centres, we are contributing to the demise of local businesses and the problems that are besetting them.
I am delighted that this Government are tackling some of the excesses of the previous Government, and that they are pragmatic enough to realise that they cannot do it all once. I welcome the moves that they have taken. I am sure people will say that this is just the first step; well, so be it. There will be many more steps to come. I hope that the Chancellor will bear in mind when he makes his announcement tomorrow that some businesses are not in London but in expensive areas outside the capital, and that they too need some sort of transitional help to ensure that their businesses can be successful.
Simon Danczuk (Rochdale) (Lab)
It is a delight to follow the hon. Member for St Albans (Mrs Main). Let me start by declaring an interest: I have recently initiated a business rates appeal in regard to Danczuk’s Deli, which opens this Saturday in Rochdale. I thought it right and proper that I should put that fact—it is not an advertisement—on record.
I have been banging on about business rates for some time now. I was doing it even when it was unfashionable. It is funny how things change. A Labour leader has been cheered to the rafters at the Labour party conference, not for proposing to nationalise the FTSE 100 companies or anything like that, but for proposing to freeze and cut business rates. Labour is the friend of small business, the Conservatives are perceived as the friends of big business, and the Liberals do not have any friends at all.
Labour is the friend of small business, but it does not stop there. Everyone is concerned about business rates, including the Confederation of British Industry, the Federation of Small Businesses, the British Independent Retailers Association, the British Retail Consortium, the British Chambers of Commerce and the Forum of Private Business—the list goes on and on. In fact, I want to ask the Minister to name a significant business person who thinks that business rates are fit for purpose. I invite him to intervene on me if he can do so. Let us be clear: there is dismay and concern about the business rates regime, not only in the business community but on the Minister’s Back Benches. I have done a little bit of research, and found out that the following Conservative MPs have all raised concerns about business rates: the hon. Members for Witham (Priti Patel), for South Suffolk (Mr Yeo), for Altrincham and Sale West (Mr Brady), for Watford (Richard Harrington), for Nuneaton (Mr Jones), for Brentford and Isleworth (Mary Macleod), for Selby and Ainsty (Nigel Adams), for Enfield North (Nick de Bois), for Newton Abbot (Anne Marie Morris), for Worcester (Mr Walker), for Rossendale and Darwen (Jake Berry), for North Swindon (Justin Tomlinson) and for Crawley (Henry Smith). We have heard from more tonight.
Even this Government’s Business Secretary raised concerns at a conference in March, saying that the business rates regime was “old fashioned”, and that there were
“all kinds of hidden distortions”.
He went on:
“Is the valuation base the right one? That is the fundamental question we should be asking.”
Never mind asking the Minister to name a significant business person who supports the current business rates regime; can he name anyone in his own party or in the Government who does so? The silence is deafening, because the reality is that nobody supports the present arrangements.
There was a simple solution that was used to address the inequalities in business rates and to retain some fairness in the system: it was the regular business rates revaluation. But what did the Government do? They postponed the revaluation, which would have re-aligned business rates with property values. People, particularly those in smaller businesses, are asking why the Government would want to postpone fairness. What is the logic behind retaining unfairness? That question needs to be answered.
On 16 October, in the House, the Minister for high streets—the Under-Secretary of State for Communities and Local Government, the hon. Member for Great Yarmouth (Brandon Lewis)—peddled the greatest line of all. He said:
“The biggest beneficiaries from a 2015 revaluation would not have been small shops, including in the north of England, but prime office space in London.”—[Official Report, 16 October 2013; Vol. 568, c. 817.]
That is simply untrue. In my constituency, people are paying more in business rates because the revaluation is not taking place. That has been proved. Cushman & Wakefield, a leading global property consultant, provides a quarterly central London index covering central London office space. It shows beyond doubt that the Valuation Office Agency had overestimated the effect on London offices of a 2015 revaluation and that, in fact, they would have paid more as a consequence of that revaluation. So I challenge what the Minister has said.
The British Property Federation’s lease events report, published last month, clearly states that
“retails outside of London and the South East saw rental income fall for all leases upon renewal or re-letting.”
Bill Esterson
One point that my hon. Friend is making is about the effect on retail. Is it not the case that tens of thousands of shops could close unless this issue is addressed, with the loss of hundreds of thousands of jobs? The jobs of young people would be particularly affected, because many young people start their careers in retail.
Simon Danczuk
My hon. Friend is absolutely right and he makes an important point; retail is the first rung on the ladder into employment for young people.
Craig Whittaker (Calder Valley) (Con)
This relates to fairness. I have frequented Rochdale on many occasions—in fact, I used to run a business on the high street there. One key thing about Rochdale is that it has a lot of empty shops. Does the hon. Gentleman agree that the biggest imposition on retail on the high street was the imposition by the previous Government of rates on empty properties?
Simon Danczuk
I do not agree with the hon. Gentleman at all. My area has the national average for the number of empty shops, and no more. Those rates encourage and enable landlords to fill the empty shops, because there is a need for them to have somebody paying business rates.
The revaluation policy has saved London businesses vast sums in business rates. Hackett on Regent street, a high-end fashion retailer, has saved nearly half a million pounds on business rates. Smythson on Bond street, where the Prime Minister’s wife is an adviser, has saved in excess of £850,000 on business rates because of the lack of a revaluation. Even the Government’s own adviser, Mary Portas, has said that this is “bloody mad”. Rochdale is subsidising Regent street, and it is just not fair. The Minister challenged my figures earlier. I have them here, and he has not seen them before because they were generated only today. Greater Manchester local authorities—all 10 combined—are paying an extra £61 million in business rates because the Minister decided to pull the revaluation.
The other significant point I wish to make is that the Government should cut business rates and then freeze them. They have the money to do that, because by stopping the revaluation, they have saved £1 billion by not implementing the transitional scheme that would have had to be in place under the revaluation. The Minister should explain something to us: if £300 million is being used by the Chancellor to make a cut to 2%, what is the other £700 million being used for?
Simon Danczuk
I will let the Minister deal with that when he winds up. I wish to make a few final points. We have the highest property taxes in the developed world and we need radically to reform business rates. The Minister should listen to his own Back Benchers. He should take heed of what Labour has been proposing. He should take heed of The Daily Telegraph and its excellent Fix The Rates campaign. We need a radical cut to business rates and we then need to see them frozen. I am glad that if this Government will not act on business rates, a Labour Government certainly will do.
Madam Deputy Speaker (Dawn Primarolo)
Order. I am cutting the time limit to five minutes, from now, for each Back-Bench contribution. The wind-ups for this debate will start at 7.46 pm. I hope that we will be able to fit everybody in, but we may not.
Mr Brian Binley (Northampton South) (Con)
Thank you, Madam Deputy Speaker, especially for telling me that my time has been cut short.
It is a pleasure to follow the hon. Member for Rochdale (Simon Danczuk), who made some telling points. I lost him somewhere along the line, but in the main he made constructive points. Sometimes it befits the elderly to give a history lesson to those who follow, and it is often a salutary exercise. We would not be where we are today if there were not a load of history behind all the stuff that we are now facing. That seems to have been forgotten by some of the younger Members on the Opposition Benches, so I will help them. I am going to elucidate and explain why we are where we are today. We had a structural deficit in the previous Government from 2002 onwards—[Interruption.] They don’t like it up ‘em. We saw the destruction of the most effective private pension scheme in Europe, and the sale of 25% of our gold reserves at the most ludicrously laughable low price. We arrived at a £160 billion—[Interruption.] The trouble is they do not like it. We arrived at a £160 billion deficit by borrowing £1 in every £4 we spent. No wonder we are in a spot of trouble. No wonder the Government are struggling to find their way to those uplands of economic well-being, and by golly they are doing it. I want to pay tribute to the Government for the way in which they have created 1,400,000 jobs, 400,000 new businesses and the fastest growing economy in the western world. Opposition Members can put their heads in their hands, but those are the facts and they need to face up to them.
Now let me talk about business rates. Sadly, the Government have not been able to do as much as they wanted to do because we were left with an appalling legacy. It would befit the Opposition to recognise that fact just a little bit more. In truth there is a problem with business rates; they do need reforming, but no political party and no Government in this country have ever wanted to face a revaluation, and that goes for that lot over there as well as our lot, and they need to remember that.
Business rates are causing hardship for businesses, and preventing others from growing. They bring in £25 billion to the Exchequer. The Federation of Small Businesses claims that 30% of small and medium-sized enterprises are paying more in business rates than they are in rents, so there is clearly a difficult problem. We need to recognise that together and the history that led up to it. If we all did that, perhaps the people out there would think that we were a little more adult.
We could see an increase in business rates of some £242 million, unless the Chancellor announces a decision tomorrow. That could mean 6,000 shops and 8,000 jobs disappearing. It is a real problem, particularly when we consider that 40,000 high street shops remain empty across the country. Local authorities need more to help them revitalise and grow the sector. I have heard some very credible schemes from Opposition Members, and I welcome them. In my constituency, we have a scheme called Northampton Alive in which 21 major projects are linked to creating 2,016 jobs for those not in education, employment or training by 2016, and to a people’s forum, so they can take ownership of how the town is changing—a new station, a new bus interchange and a new road to the west. Yes, we have got down to business in Northampton, and we have got down to ensuring that our businesses receive rate relief. We have the highest figure—£1.5 million—in the country, and I applaud Northampton council for doing that.
We all need to recognise that something needs to be done about business rates. I hope that my party does it very quickly, because the truth is that the Opposition did not do anything when they had the opportunity, and they should remember that fact.
Geraint Davies (Swansea West) (Lab/Co-op)
It is a great pleasure to follow the hon. Member for Northampton South (Mr Binley). Like him, I have started and owned a number of small businesses. I know that a number of Government Members have not, and some could barely run a tap based on what they have been saying.
I am a great supporter of small businesses in Swansea—people like Joe’s Ice Cream and Tomos Watkin’s. I have had them up here and I will be visiting them later this week. We should remember when we have these history lessons that the last time we saw mass bankruptcies was under the Tories, and that is happening again. Why? We have heard about growth—the fastest growth in Europe, I think they said—but when we analyse that growth, we can see that it is a combination of mortgage lending and consumer debt lending, which is now at its 2008 level. Bank lending for investment is down 32% and the share of small businesses in business lending is down from 42% to 27%. That is appalling for small business. Royal Bank of Scotland is the Government-owned bank, in essence, and its share of small business lending has fallen from 40% to 33%. It has double dealt and all the rest of it.
This is a big issue. I made some of these points last week and Mark Carney, the Governor of the Bank of England, has switched the focus of the direction of business away from mortgages. Productivity is still 5% in Britain whereas it is up 8% in the USA. That is why people are poor and cannot afford to deal with the cost of living crisis, which is why Labour is talking about energy and business rates. Labour is in touch with the reality for small businesses.
There is a clear choice. Do we want a corporation tax cut, when we have the most competitive rates in the world already and when companies need profit to pay that tax? Or do we cut costs, so that the businesses that are not making any profit can survive? My choice is small business. People talk about Peter and Paul and we are talking about small versus big, rich versus poor. We know what side the Tories are on with the millionaires’ tax cut and the rest of it.
Look at procurement. In Wales, 65% of procurement goes to small business, which generates local jobs and corporation tax paid to the Exchequer. In England, 6% goes to small business so the rest goes to big business—international businesses that do not pay corporation tax and employ people in Germany or wherever else. There is no evaluation of the overall economic impact on small business and what the country is doing.
We have talked about infrastructure again today and 80% of funding goes to London and the south-east. How much of that goes to small business? Very little. What about HS2? We are giving it away to the Chinese. What are the Government doing? They are hopeless at protecting our interests. There needs to be a big conversation among Government, big and small business and trade unions.
I am glad that there will be a cross-party debate next week about Ford, which is not funding pensioners—people who worked all their lives for Ford and were sent away because they were with Visteon. I am having my own dialogue with Amazon, a local company that I think is not paying fair tax. “Panorama” also showed that there is not fair treatment in Amazon and there is some suggestion that it might be in cahoots with the DVLA and Royal Mail on local wage setting. I will be asking the Office of Fair Trading to look into that.
I have worked for multinational companies in charge of global brands and we need fair treatment, fair tax and fair play. Incidentally, I did not vote for the EU-Colombia free trade agreement because of what is happening in Colombia to trade unionists and the like. It is important that we support initiatives such as Labour’s proposal on council tax and what we are doing in Wales. The bottom line is that on lending, procurement, infrastructure, business rates and energy costs, Labour means business—a strong business community moving forward to a future that cares, a future that works and a society that is united and strong rather than divided and weak.
I shall give up the rest of my time for future speakers, but let me just say that we must focus on small business and stop letting people such as Vodafone get off with £50 billion of income from their latest share deal while paying no corporation tax. Let’s get real, let’s get fair and let’s make Britain strong again.
Anne Marie Morris (Newton Abbot) (Con)
The Government are focused on small businesses and have a tremendous record. In regulation, we have the red tape challenge, with 6,000 regulations scrutinised and 3,000 to be given a severe hair cut. On tax, we have cut corporation tax and the employer allowance is extraordinarily good news, well loved and well liked. On access to finance, funding for lending has been one of the best success stories, but today we are talking about business rates.
As my hon. Friend the Member for Northampton South (Mr Binley) identified, business rates have been with us for a long time. They emanate from the Poor Laws in the 1500s and the Rating and Valuation Act 1925 was the origin of the modern tax, most recently affected by the Local Government Finance Act 1988. It started out very simple: rateable value times multiplier. It is absolutely right to say that over time it has become incredibly complicated. The issue is not only about affordability, although I certainly hope that the Chancellor can do something about that in his autumn statement, but about fairness and lack of transparency. Why is it unfair? It is unfair because rateable value is not calculated in a simple way. It can depend on whether a business is in town or out of town. It can depend on its gross internal area or net internal area, or whether it has a car park. For a large out-of-town store, for example, a car park is not included. The situation is different for pubs, because in the 1800s they were deemed to have a monopoly, so their rates were based not on rateable value or rent, but on turnover. These days, they do not have a monopoly, so that certainly needs to be addressed.
The reliefs are equally confusing. The small business rate relief is fantastic, and it is to the Government’s credit that they have doubled it in their time in office. Hopefully they will consider an extension. Charities still have 80% relief and it really does not matter what rateable value they have. There are special reliefs for some obscure businesses in rural areas. For example, pubs and petrol stations in rural areas get 50% relief, but up to a rateable value of £12,500. There are many other areas that are completely inconsistent.
We need transparency, because businesses do not understand how their rates have been calculated and cannot see what benefit they get. Redress is limited, because appeals can take months and, unfortunately, local authority discretion, which we welcomed in the Localism Act 2011, is not being used, as has been mentioned. With revaluations every five years, there can be a long time to wait.
However, there are solutions. The Government have a fantastic record, but there is more to do. In the short term, a small cap of perhaps 2%—that figure has been mentioned in the media—would be brilliant. I would welcome any extension of the small business rate relief, and I certainly agree with my hon. Friend the Member for Bury St Edmunds (Mr Ruffley) that it should be made permanent.
In the medium term, we need to review the statutory reliefs and consider whether we could revalue every other year—from my conversations with the valuation office, I think that would be possible—which would ease the burden of appeals. If we are serious about allowing businesses to see that they get some value, because half of the money from business rates goes back into the local community, why do we not state on the back of the bills exactly what the council has done for businesses? We might also look at reviewing the use of the multiplier, which currently is used only to distinguish between the different countries that make up the United Kingdom, but it could be used to better target reliefs.
In the long term, I agree with those Members who have said that the current system is simply not fit for purpose. We need a review. We need to look at it in the context of the importance of retail, the high street and small businesses in this country. Let us review the methodology and make it simpler and fairer. Let us look at how we calculate rates for each individual business payer so that they can understand it. Let us look at how we can encourage local authorities to do more to recognise the needs of small businesses and to help them. Let us make the process easier so that the system works.
Business rates remain one of the outstanding issues that need to be addressed. That in no way detracts from the Government’s fantastic record on what they have done for small businesses, but this needs to be addressed.
Kate Green (Stretford and Urmston) (Lab)
It is a pleasure to follow the hon. Member for Newton Abbot (Anne Marie Morris) and to contribute to the debate on behalf of businesses in my constituency. We are obviously focusing on small businesses this evening, and this is a pertinent debate for them, but it is also pertinent for the mighty Trafford centre in my constituency. It is perhaps not surprising that the debate covers the whole range of businesses in my constituency, when we consider that the average increase in business rates in Trafford has been considerably higher than the English average.
I want to pick up, in particular, on the Minister’s welcome comment about the Government’s intention to review the Valuation Office Agency’s performance in the system of appeals, because that is an area of great concern to businesses in my constituency. The long delays before they can see appeals resolved are putting some businesses under huge cash-flow pressure and others at risk of insolvency. Although the Minister claimed that the Valuation Office Agency’s performance has improved in recent months, it is not good enough for us to be in any way complacent. At this point, in relation to the 2010 list, performance in clearing appeals is considerably worse than it was at the same point in relation to the 2005 list, so clearly there is real pressure building up in the system and we need to unblock that and identify the drivers of those pressures. It is worrying that the data that enable us to judge the VOA’s performance are apparently being suppressed. We were receiving quarterly performance data, but now we are to receive it only six-monthly, apparently on the basis that that will enhance the service to users. It is difficult to see how less frequent reporting can do that. I hope that the review will have a comprehensive and honest look at the difficulties in the system.
Let me highlight a few issues that I hope Ministers will be able to pick up when they embark on the review. First, the VOA repeatedly expresses concerns about the actions of agents in relation to the handling of appeals, and sometimes suggests that they are one of the drivers of delay. In fact, many of the processes that businesses have to go through are extremely complex, and so any opportunities to simplify the appeals process would be very welcome. I think that agents themselves would say that.
Secondly, the VOA often argues that in many cases submitted to appeal, there is no change in the assessment at the end of the appeal process. Let us remember, however, that those cases include quite a number that never complete the process because there is a protective appeal or because the business becomes insolvent before the appeal can be resolved, which is obviously not good and may be because of delays in handling it or because the case has been re-appealed. It will be important to understand what is driving these no-change decisions and to be clear that we are focusing on the real issues and not just taking a broad-brush approach.
The whole ethos of what the agency is seeking to achieve needs to be part of the scrutiny that I hope the Government will undertake. Its role is not simply to protect the list, as sometimes seems to be the case, but to ensure true and fair business rate assessments. It is very important that that purpose is put absolutely at the heart of the review.
I hope that the Minister will look at some of the recent changes to statements of practice and guidance, which seem to have led to an unwillingness on the part of the agency to enter into constructive and meaningful negotiations in order to arrive at the right level of business rates for a particular business. There are serious concerns about the agency’s ethos and approach, and I hope the review will be able to uncover that.
Of course, it will be important that the agency has the resources to carry out appeals expeditiously, efficiently and accurately. I hope that that, too, is something that Ministers will take on board.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I call Robin Walker. The next two speakers have four minutes each.
Mr Robin Walker (Worcester) (Con)
I congratulate the hon. Member for Stretford and Urmston (Kate Green) on her speech. She drew attention to some important issues about the Valuation Office Agency that I have spoken about before and do not intend to touch on now, so I am grateful that she covered them. Like my hon. Friends the Members for Enfield North (Nick de Bois), for Newton Abbot (Anne Marie Morris) and for Northampton South (Mr Binley), I believe that business rates need fundamental reform, and I hope we can start that process tomorrow.
The Labour party’s motion does not just propose to rob Peter to pay Paul; it goes directly against its record in government, when it charged higher rates of tax on smaller businesses than on large ones and resisted the many attempts of my hon. Friend the Member for Mid Worcestershire (Peter Luff), through his chairmanship of the cross-party Business, Innovation and Skills Committee and his private Member’s Bill, to extend small business rate relief to many more small businesses. One of the best things that could be done to help small businesses was done when my hon. Friend’s suggestion of making the small business rate relief automatic for thousands of businesses was accepted, not by Labour but by this coalition Government.
Another was the doubling of the threshold for small business rate relief, but I regret that that was done only on a temporary basis with a deadline to expire in 2014. I hope that that can be addressed in tomorrow’s statement. I have had representations to that effect from the excellent Wise Owl Toys in Worcester and from Greenway Landscape Architects, who say that if they were asked to pay business rates on their office they would have to close it down and work from home instead. Both businesses point out that there would be no net gain to the Treasury or to local government from allowing the relief to expire in March 2014, as they simply could not afford to pay the rates that would be due.
We should do more to help small businesses, but helping the smallest businesses should not be the limit of our ambition. We should also be seeking to help businesses as they grow and create more jobs. One of the perverse consequences of the generous system of relief that the coalition has offered is that it creates a shelf that affects businesses when they wish to move to new premises or expand. In an ideal world, we should seek a more tiered system of business rate relief that works on a banded basis so that no business would be hit with a huge increase to its business rates bill as it grows. I accept that that might be difficult to achieve in the current fiscal climate, but we should consider whether we can delay businesses having to pay higher rates when they are creating new jobs or taking on large numbers of trainees and apprentices. That would be consistent with other Government initiatives, such as the employment allowance designed to encourage job creation. We should also consider the case that has been made for targeted rate relief for pop-up shops and malls, which can act as retail incubators and support entrepreneurs.
Those steps would be a start, but they do not touch on some of the greatest problems with the current system of rates, including the valuation system, which many hon. Members have already touched on. Put simply, our system of property taxation on business was designed for the 1980s, but we are trying to apply it to a 21st century world. Nowhere is that more apparent than in the retail sector.
Rumours of the death of retail have been greatly exaggerated. The Business, Innovation and Skills Committee’s inquiry has heard evidence of a thriving sector that is creating many more jobs and opportunities, even as it undergoes radical change. However, the rise of the internet and competition from online-only retailers creates additional pressure on the high street and the so-called bricks and mortar sector. Such competitors are unburdened by business rates and there is a risk, if we leave business rates unreformed, of creating a vicious cycle whereby business rates contribute to the declining retail footprint by putting shops at a competitive disadvantage and adding to their cost base and then, in order to generate the same revenue, rates have to be steadily increased on that declining base, which could end up killing valuable businesses. I hope the Government will consider the strong case being made for a freeze or a cap on business rates and to break the cycle of inflationary increases.
Of course, we should be looking to protect the high street and not just hand a big cheque to the biggest retailer, but, as my hon. Friend the Member for Bedford (Richard Fuller) has pointed out, we also need to be careful in business rate reform not to remove a burden from retail and put it on other areas, such as manufacturing.
I hope that tomorrow the Chancellor will be able to announce serious steps to reduce the burden and begin reforms to move away from our antiquated system to one better suited to the 21st century. I strongly support the Government’s amendment.
Damian Collins (Folkestone and Hythe) (Con)
Throughout this debate, the Opposition have promoted an idea that seems to suggest that big businesses live in a totally separate world from smaller businesses. When the major employers in my community, such as Saga, Dungeness power station and Eurotunnel, do well, do the small business community say, “What’s that got to do with us? It’s no concern of ours”? They do not, because they understand that the employees of large businesses are the customers of small businesses, that large and small businesses have a customer-supplier relationship and that the strength of the whole local economy is vital. That is why we take issue with a “rob Peter to pay Paul” exercise whereby the revenue for a very small, temporary tax cut for one sector of the business community is raised from another area of the business community. That is what the Labour party proposes to do.
As I said earlier, the cut is small. A cut in business rates that is worth barely more than £1 a day will not answer business people’s concerns about the business rating system. Members across the House have made good calls for a sensible look at reform. I was pleased to hear the Minister say that the Government are about to launch a review and are looking at the appeal system. I hope that we will be able to welcome news from the Chancellor of the Exchequer of smaller increases in business rates for the years ahead. As the structure of the economy changes and more businesses become part of the digital economy, with smaller industrial footprints and a different business model from that of the past, it is of course right that we look at these systems again.
The Chairman of the Communities and Local Government Committee made the point well in his very interesting speech that we should look at the town centre economy and how we can have a system that encourages investment and businesses to go back into the town centres. They may never be what they were in the 1950s—a purely retail environment where people did all their shopping—but we can get different types of businesses back in there.
The Government’s reforms to the business rating system, which encourage local authorities to promote more business activity in their areas and give them for the first time a financial stake in the success of the local business community, must be a good thing. Asking local councils to use the powers that they already have to create what are almost micro-enterprise zones and to give more discretionary relief to businesses in town centres and encourage more activity is exactly the right thing to do. We would support any measure that seeks to extend and look at other opportunities to reform business rates in that way.
The hon. Member for East Antrim (Sammy Wilson), who has great knowledge of the economy in Northern Ireland, said in an intervention that business rates are an important issue but that they must be seen in the round of the balance of other measures as well. The Government have introduced a series of measures that will help the small business community, not least the £2,000 cut in employers’ national insurance, which starts next April and is worth more than four times the Labour party’s proposed measure on business rates.
Labour Members have almost completely ignored the investment coming into regional economies through the regional growth fund. In east Kent, the £40 million regional growth fund is making a big difference to the local economy. Grants made through the county council to large and small businesses mean that they are employing people today. Grants are also helping businesses that are otherwise struggling with bank lending to get to the next stage and invest in their future growth.
Such measures, alongside targeted ones to support small businesses, are making a big difference, as is the ability to look creatively at how we can encourage more incubators for businesses, support more pop-up shops and give people starting their own small business the chance to get on to the high street and into physical premises sooner. All those initiatives are welcome, and taken in the round, they are strengthening our economy. For Labour to pick one very small measure and pretend that that makes it the party of small business is absurd.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
We have had an excellent debate, and many fine speeches have been made in support of our motion calling on the Government to take action to ease the burden of business rates on all sectors.
The Chair of the Communities and Local Government Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), welcomed the review of appeals announced by the Minister during his speech. That measure has been welcomed by hon. Members from both sides of the House. We of course await further details on the shape of that review.
My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) reminded the House about small business Saturday. That brilliant initiative, which is taking place on Saturday, was first championed by my hon. Friend the Member for Streatham (Mr Umunna). My hon. Friend the Member for Middlesbrough South and East Cleveland also reminded us that businesses need help throughout the year, and that would certainly be delivered by the cut and freeze in business rates that we are calling for today.
My hon. Friend the Member for Wirral South (Alison McGovern) spoke with passion about businesses in her constituency, and I congratulate them on their early small business Saturday. She told the House that small businesses are fighting for their lives. They need action now, which a cut and freeze in business rates would certainly deliver.
My hon. Friend the Member for Bolton South East (Yasmin Qureshi) reminded all hon. Members that the Leader of the Opposition has set the pace in this debate, just as he has on energy prices, leaving the Government to flounder and to make U-turn after U-turn.
My hon. Friend the Member for Sefton Central (Bill Esterson) spoke about the importance of retailers who, as he rightly said, are at the heart of our communities. They in particular are struggling with business rates, and they would certainly welcome our proposals to cut and freeze those rates.
My hon. Friend the Member for Rochdale (Simon Danczuk) has been campaigning on business rates for as long as he has been in the House. I congratulate him on his campaign to raise awareness about their impact. I look forward to visiting Danczuk’s Deli very soon, if he can sort out his own business rates issue.
My hon. Friend the Member for Swansea West (Geraint Davies) spoke eloquently on how Government is about choice. The Government are making the wrong choices for small businesses up and down our country.
My hon. Friend the Member for Stretford and Urmston (Kate Green) welcomed the review of the appeals process. She detailed the many concerns relating to the Valuation Office Agency that are shared by hon. Members on both sides of the House.
It is clear that businesses are facing a cost of doingbusiness crisis, alongside the cost-of-living crisis that is hitting families across Britain. Unless the Government change course tomorrow, businesses will be hit by an average rise in business rates of £430 next April, at a total cost to business of £700 million because of the impact of inflation. Business rates have already gone up by an average of £1,500 under this Government. The reality is that many businesses—in fact, more than one in 10 small ones—are now paying more in business rates than in rent.
Up and down the country, including in my constituency, businesses are being put in an impossible situation: either they pass on the increase in rates to their customers, or they continue to face a squeeze until they can no longer afford to stay in business. The pressures small businesses face are stark. Unless things change, business rates will have risen by an average of nearly £2,000 by the end of this Parliament. There are 40,000 empty shops in the UK—one in seven shops are empty—which is blighting the UK’s high streets and town centres.
The British Retail Consortium has estimated that the business rate increase from April next year will mean an increase of £242 million per annum for retailers. It has also said that the increase is likely to put 19,670 full-time jobs at risk, owing to potential shop closures and reduced investment. Our economy can afford neither change.
Why does this issue matter? Small businesses are the engine of our economy. Of the 4.9 million businesses in the UK, 99% are small or medium-sized enterprises. Between them, they employ nearly half the UK work force. Nearly 90% of the people who go from being unemployed to having a private sector job work for a small business. Small businesses are therefore making a huge contribution to tackling unemployment in this country. Small businesses are the driving force behind jobs and growth. They account for more than half the economy. Most of the new jobs in the next 15 years will be created by businesses that do not yet exist. Growth and small businesses go hand in hand. We cannot deliver excellent public services without the contribution that they make to the economy.
The cost of doing business crisis that has been delivered by the Government cannot go on. Our small businesses deserve better. That is why at our annual conference in September, we announced that the next Labour Government would cut business rates in 2015 and freeze them in 2016. That pledge would give businesses a much-needed boost and would mean an average saving of nearly £450 for more than 1.5 million business premises.
Some Government Members have said that that amounts to small beer. That is doing down the needs of businesses, particularly given that action on business rates is the single biggest thing that has been requested by businesses. I wonder whether the small beer phraseology will be used tomorrow if the Chancellor announces a cap of 2%, as is expected. No doubt, they will trumpet that saving of a couple of hundred pounds, even though our cut would deliver a saving of £450 on average.
Politics is about choices and priorities. It is right that the UK should have a competitive corporation tax rate, but it is also right to take decisions that help small businesses. We will cut business rates on properties with an annual rental value of below £50,000 in 2015 and freeze business rates for those properties in 2016. We will pay for that by reversing the additional cut in the main rate of corporation tax from 21% to 20% in 2015. The main rate of corporation tax is paid by companies with profits of more than £1.5 million—essentially, the larger multinational companies. Companies that have profits of less than £300,000 and that pay the lower rate of corporation tax will not be affected. By contrast, the Government have thus far failed to rise to the scale of the challenge. They have provided temporary relief for the very smallest properties up to a value of £6,000 and partial rate relief for properties up to a value of £12,000. Those measures do not go far enough.
As with energy prices, since our announcement in September, the Government have come under increasing pressure to listen and take action. We heard this morning that they have finally given in and that the Chancellor will announce tomorrow that business rate rises will be limited to 2% in England and Wales next year, rather than rising by 3.2% in line with the retail prices index. That still falls far short of what firms that are suffering from the cost of living crisis have been crying out for. Just as energy bills will still go up under the Government’s plans, business rates will still go up under this proposal. Firms will still see business rates rise by an average of more than £250 in April next year, and that comes on top of the £1,500 by which they have already gone up under this Government.
By contrast, under our plan, 1.5 million start-ups, workshops and shops would benefit from a cut and then a freeze in business rates. If the Government are going to change course, they should do so in a comprehensive and decisive way that would see rate bills cut. They should adopt Labour’s proposal. Nothing less than that comprehensive action will do because our small businesses deserve better than what the Government have delivered. I commend the motion to the House.
The Parliamentary Under-Secretary of State for Communities and Local Government (Kris Hopkins)
This has been an interesting debate and I welcome the opportunity to contribute to it. The Government have taken and will continue to take decisive action to drive growth and make Britain’s economy work for everyone. We have done so in spite of the need to reduce the massive deficit that was left by the last Labour Government. This debate is focused on business rates, but as the hon. Member for East Antrim (Sammy Wilson), the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis) and my hon. Friend the Member for Folkestone and Hythe (Damian Collins) pointed out, we must consider the broader context.
The Government’s ambition is for the UK to be the best place in Europe to start, finance and grow a business. We have therefore identified barriers to growth and the measures that need to be taken to overcome them. To that effect, the Government will introduce a £2,000 employment allowance for all businesses in 2014, to reduce their national insurance contributions each year. Up to 1.25 million businesses will benefit, with about 450,000 of them being taken out of paying employer national insurance contributions altogether. More than 90% of the benefit of that allowance will go to small businesses with fewer than 50 employees.
In addition, a further 1% reduction in the main rate of corporation tax from April 2015 was announced in the Budget. The rate will be reduced to 21% in April 2014, and then fall to 20% in April 2015. Based on current plans, the UK will have the joint lowest corporation tax in the G20 and by far the lowest rate in the G7 by 2015. That will increase return on investment, incentivise activity across the economy and make the UK more attractive to multinational companies and foreign investors. Those actions will help our economy continue to grow.
We have also promised that we will cut through red tape and make it easier for small businesses to claim small business rate relief. We have doubled that relief, and the amount that small businesses can claim has now trebled. Some £900 million in relief was granted in 2012-13. That is not all. We have frozen the multiplier in real terms, so it has never risen by more than inflation. We have also given local authorities powers to grant their own business rate discounts and funded some 50% of that local discount grant.
I wish to refer to some of the substantial contributions that have been made this evening. My hon. Friend the Member for St Albans (Mrs Main) outlined the wider business aid that the Government have provided and the excellent work of Conservative St Albans council. My hon. Friend the Member for Northampton South (Mr Binley) challenged the credibility of the Labour party’s ability to propose options for business and called the deficit that it left “appalling”.
My hon. Friend the Member for Newton Abbot (Anne Marie Morris) supported small businesses and welcomed the small business rate relief, but said that she wanted a transparent appeal process. We will shortly start a review, to which I am sure she will contribute. The hon. Member for Stretford and Urmston (Kate Green) also mentioned the appeal process, and I thought that she actually made a very good speech. The hon. Member for Sheffield South East (Mr Betts) mentioned appeals, too, and I look forward to hearing his contributions to the wider debate once the review is announced.
My hon. Friend the Member for Bury St Edmunds (Mr Ruffley) spoke in support of small businesses and the tax breaks that councils have introduced. He spoke passionately about local businesses in his constituency. My hon. Friend the Member for Burton (Andrew Griffiths), who chairs the all-party beer group, rightly talked up the pub industry, which makes a massive contribution to this country and provides significant small businesses in many villages, towns and cities. He encouraged us all to make the best of small business week by going to our local pub and drinking beer. I assure him that I will be taking his advice this weekend.
There were significant contributions from the hon. Members for Middlesbrough South and East Cleveland (Tom Blenkinsop), for Wirral South (Alison McGovern), for Bolton South East (Yasmin Qureshi), for Swansea West (Geraint Davies) and for Sefton Central (Bill Esterson), and although I did not agree with much of the contribution from the hon. Member for Rochdale (Simon Danczuk), it was thoughtful and entertaining in places.
My hon. Friend the Member for Folkestone and Hythe (Damian Collins) made the important point that small businesses are the customers of big businesses, and he completely shot the fox of those Labour Members who do not like corporation tax cuts. The hon. Member for Mid Dorset and North Poole (Annette Brooke) mentioned her support for the Mary Portas pilot in her constituency and for the Localism Act 2011. She believes, as I do, that people on the ground in the local area know best and should be listened to.
My hon. Friend the Member for Enfield North (Nick de Bois) recognised the massive deficit that the Labour party left at the end of their time in government and that the debate was very much commanded by coalition Members, despite being an Opposition day debate. He also raised the issue of uncollected council tax, and rightly so.
This has been a helpful and interesting debate. We appreciate that at times it is tough for people out there and that budgets have been squeezed, and that is why we have taken action to help people. We have increased tax-free personal allowances to £10,000 from April 2014, saving a typical taxpayer £705. We have frozen fuel duty for three and a half years, saving nearly £7 on a typical tank of fuel. We have helped local authorities to freeze council tax and introduced tax-free child care to support working families with 20% off their child care costs.
The bottom line, however, is that we can do that in a sustainable way only by addressing the huge deficit left by the Labour Government. The economy is turning the corner and the deficit is down by a third. Some 1.4 million private sector jobs have been created in three years by the Government, and interest rates remain at a near record low, benefiting families and businesses.
We still have much to do to address the issues that Labour left us, but this evening I assure the House that the Government are listening to those concerns and will take further action as finances allow. I ask the House to support the Government amendment.
Question put (Standing Order No. 31(2)), That the original words stand part of the Question.
Mr Peter Bone (Wellingborough) (Con)
On a point of order, Madam Deputy Speaker. Have you been made aware that a Minister is to come to the House and make an urgent statement, given that Sky News has been reporting all evening that tomorrow’s autumn statement will refer to a 1% cut in departmental budgets other than those that are protected? It is not an “if” or a “maybe”, but a definite. It is not the first leak of this kind, and the Chancellor must be mortified. I wonder if he will come to the House to announce a leak inquiry.
Madam Deputy Speaker (Dawn Primarolo)
I have not seen the Sky broadcast, and I have not been notified of any such inquiry, but I am sure that the hon. Gentleman is right, and the Chancellor will indeed be mortified. Mr Speaker has made it absolutely clear that any Government announcement should be made to the House first. I can be of no further help this evening, but the Leader of the House is present, and I am sure that he has noted the point that has been raised.
Business of the House (10 December)
Petitions
Diana Johnson (Kingston upon Hull North) (Lab)
I wish to present a petition from 2,171 residents in the Hull area, who have signed it in support of Ennerdale Swimming Pool. I thank Peter Richardson, Nina Curran and others at Kingston upon Hull swimming club for all their efforts. As Hull is the UK City of Culture 2017, I hope that a way can be found of protecting the long-term future of this pool that serves the entire city of Hull so well.
The petition reads:
The Petition of residents of Kingston upon Hull,
Declares that the Petitioners note that Ennerdale Leisure Centre’s swimming pool is the only swimming facility serving the entire Hull area that is recognised by the Amateur Swimming Association as being of competition standard; further notes that Hull City Council is considering proposals to close Ennerdale's swimming pool, due to the unfair level of local authority funding cuts that Hull is receiving from the Coalition Government, when compared to far less severe cuts being made to councils in wealthier areas of the country.
The Petitioners therefore request that the House of Commons urge the Government to request Hull councillors to work with service users to find ways of saving Ennerdale swimming pool and provide Hull with a fairer deal on funding that will enable Ennerdale swimming pool to remain open, alongside other valued sports and leisure facilities in Hull.
And the Petitioners remain, etc.
[P001306]
Andrew George (St Ives) (LD)
It is my honour to present a petition on behalf of 2,589 of my constituents in the mainland area of west Cornwall in support of a 5p a litre reduction in road fuel duty, which my constituents on the Isles of Scilly have enjoyed since the spring of this year. Given that the Government’s supplementary call for information closes on Friday this week, my constituents urge them to acknowledge that the forecourt price is neither the only nor the most appropriate proxy measure of rural transport poverty, especially as many households have no choice but to have a private car in order to maintain a living.
The petition states:
The Petition of residents of the UK,
Declares that there are currently proposals to extend the rural fuel rebate scheme to Cornwall, initially by five pence per litre.
The Petitioners therefore request that the House of Commons urges the Government and the European Commission to fully back the plan and to introduce it as soon as they can.
And the Petitioners remain, etc.
[P001307]
Sports Funding (Rural Communities)
That the draft European Union (Definition of Treaties) (Colombia and Peru Trade Agreement) Order 2013, which was laid before this House on 21 October, be approved.
The House divided: - Ayes: 333 / Noes: 61 - Question accordingly agreed to.
That the draft Categories of Gaming Machine (Amendment) Regulations 2014, which were laid before this House on 15 October, be approved.
The House divided: - Ayes: 322 / Noes: 231 - Question accordingly agreed to.
Stephen Barclay (North East Cambridgeshire) (Con)
There is a wide discrepancy in sports funding between cities and rural communities, far in excess of what can be logically explained by population levels or other factors that can produce spikes, such as national centres of excellence in specific sports. I hope that the Minister will clarify her Department’s understanding of that variance, and tell me what action will be taken to address it. Since 2010, North East Cambridgeshire has received on average £120,000 a year from Sport England, from its annual budget of £322.6 million. That represents just 0.03% of Sport England’s budget, and I am keen to hear from the Minister why officials feel that that figure is justified, given the Government’s sizeable contribution to sports funding.
The Library confirms that, since 1995, North East Cambridgeshire has received a total of £2.9 million compared with, for example, Hammersmith, which has received £56 million. That could partly be explained by the fact that the GB rowing team is based in Hammersmith, but does that really explain that massive discrepancy? We should also take into account that some areas are getting double funding. Some are getting Olympic legacy funding as well as awards from Sport England, for example. Hammersmith received awards for tennis and sailing in September.
I wish to draw the House’s attention to three issues that are driving this discrepancy, which has existed for some time. My parliamentary neighbour, my hon. Friend the Member for North West Cambridgeshire (Mr Vara), was highlighting in parliamentary questions in 2009 his concern that communities such as ours were not getting an adequate allocation of taxpayer funds.
Three factors are particularly fuelling the current issue, the first of which is the complexity of the number of bodies that are allocating funds on behalf of the taxpayer. Sport England itself has 11 different grant schemes, and my constituency has never had a grant under nine of them; we have only ever qualified for two of the 11 schemes. There is no yearly breakdown of how much Sport England allocates under the schemes, and there are different time scales for the spending envelopes, so they do not run in a holistic way that fits together. Sport England’s staff costs this year are £13.5 million, which, given that a sizeable proportion of its budget is outsourced to national Government budgets, is not inconsiderable in terms of administrative costs. Indeed, its chief executive earns more than the Prime Minister, although that seems not uncommon in the sports world.
In addition to the 11 grants that Sport England gives, 46 national governing bodies are also given grants, and each of those has myriad schemes. For example, the Lawn Tennis Association makes a split between capital investment and a separate revenue fund, and within those the criteria frequently change. Those who get involved because they love sport, and not because they want to be accountants or to fill out forms, are often confronted with an alphabet soup of grant-making bodies, and that is before they get the match funding of local authorities, charities and the other bodies that they must deal with.
The second issue driving this problem is the confusion in, and frequent changes to, the criteria applied. Some criteria appear actively to discriminate—for logical reasons—against rural communities. Participation is, understandably often a key criterion—bodies want people to play if they are giving a grant—but that tends to drive funding purely to cities, often on the basis of flawed research. For example, all the eight priority areas identified by the LTA were in cities; it did not sample one rural area, so its criteria are distorting the basis on which it makes its granting decisions.
We also encounter a remarkable lack of consistency, which is not just a rural issue. Let us consider boxing in London. It is funded by the Mayor of London, the Department for Culture, Media and Sport, the Department for Education, the Department for Communities and Local Government and local authorities, all of which have different criteria and assess in different ways. I am curious as to what is being done to simplify and standardise the way in which these grants are being allocated.
The third issue is the lack of transparency in awards. Of course we see individual awards—the £5,000 awarded to X or the £10,000 awarded to Y—but who is looking at whether all 46 national governing bodies are allocating in the same concentrated areas? Who is looking holistically to see whether some areas are underlapping and other areas are overlapping? Where is the accountability for those areas that are not directing funds to needs, such as the needs in my constituency? How do we get transparency on that issue?
Jim Shannon (Strangford) (DUP)
I spoke to the hon. Gentleman earlier to seek his indulgence in allowing me to intervene. Helpfully, all the sporting projects in the countryside in Northern Ireland are funded by the Department of Culture, Arts and Leisure and by councils. However, because of social isolation and the need to have sporting projects in rural communities, we have also sought help from Europe and through the Department of Agriculture and Rural Development. We have used that money to help rural communities. Does the hon. Gentleman feel it would be helpful if the Minister considered that as an option to help rural communities to seek and access funding?
Stephen Barclay
The hon. Gentleman makes an important point, which reflects the complexity of the different bodies and the role of the Department in drawing this matter together and producing data that he and I can use to scrutinise how effective the taxpayer pound is in getting to the front line. He is right to draw attention to the isolation in rural communities where there are not the same options as in the cities. That is why it is important that we do not miss out across the 46 different governing bodies.
I also want highlight the lack of accountability around how awards are allocated. There is a real irony here. If we look at elite sport—at British cycling for example—we see the power and accuracy of real-time data. Those data enable us to understand what is happening across the full activity, and yet for the Department and the national governing bodies, it is unclear how that is being demonstrated to Members of Parliament so that we can accurately see whether the £120,000 we are getting, which is a fifth of what Cambridge gets—and Cambridge is just down the road—is actually the right level. The Minister’s assistance on that point would be appreciated.
I want to bring my argument to life with a few local examples. Let me take the complexity of the various bodies. Wisbech tennis club in my constituency currently has 130 members, which is a 14% increase on last year, and yet it has only grass courts and no lights. The club is very restricted as to when it can play, in terms both of times of year and times of day. If it rains, play must be suspended. The Lawn Tennis Association advised the club in 2012 that its bid for two courts and lights was too modest, and that to win LTA support it had to put in a bid for four courts. Sport England then changed the funding of the LTA, which led the LTA to withdraw its support. It was a classic example of two sporting bodies giving conflicting advice, which meant that the bid failed.
The club then put in a second bid. It still followed the LTA’s advice of four courts, but took out the lights. Sport England turned it down. This was logical to a certain extent, because without lights the club could not get the same numbers of people playing. The club was therefore penalised a second time for following a national governing body’s advice on securing funding from another body, Sport England, which strikes me as a pretty illogical process.
A third bid is now proposed for next week. The club has already spent £8,000 to £9,000 on planning and other things to get to exactly where it was at the very start, which is a bid for two courts with lights. This is a sport in a growing market town with massive levels of immigration from eastern Europe. Tennis helps to bring people together in the way that sport does at its best.
Let us look now at communication. Coates football has teams of all ages and 11 acres of playing fields, but no changing facilities. I welcome the fact that Sport England confirmed funding for the club, which coincidentally came through last week, but unless the funding comes from the other bodies, there will be insufficient money to deliver the facilities. Again, we need the different bodies to work together.
The third issue is the challenge to national governing bodies. On Friday, I will have the privilege of attending March amateur boxing in the Braza club. Some 40 kids train at the club three or more nights a week, yet the club has never had a penny of grant from the Amateur Boxing Association, which is given £4.8 million by Sport England. As taxpayers, we hand over £5.8 million to boxing, yet only £1 million of that goes to the clubs directly. The question is: where is the rest going? The chief executive of the body is on a six-figure salary, yet the volunteers at March boxing have to pay a fee to the ABA. The Government are quite rightly allocating significant funds to the boxing body, but the kids who are training in the club and not causing trouble and the volunteers are not getting the support that they need.
The Rugby Football Union has done many good things. It has been involved in some good schemes with Thomas Clarkson in my constituency, but if we look at the data, we see that 0.74% of its annual funding goes to the eastern counties of Cambridgeshire, Suffolk and Norfolk, yet we form 4.5% of the population. How am I, as a Member of Parliament, supposed to assess whether that is the right level? What is the role of the Department in assisting me in doing so?
I welcome the allocation of funds from the Minister. I know that she is passionate about sport, and indeed the hon. Member for Bradford South (Mr Sutcliffe) was widely respected across the House as a Sports Minister who was passionate about getting money to the community groups, but there is an alphabet soup of bodies and there is complexity. Complexity always drives up costs. We are talking about volunteers in our community groups doing what we all want them to, yet the system is not getting the money to them in communities such as mine. I hope that the Minister will agree to meet me to discuss the bids coming in next week from Wisbech tennis club, Coates and March boxing club so that we can deliver on our shared objective of getting more people playing sport in rural communities such as north-east Cambridgeshire.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)
I thank my hon. Friend the Member for North East Cambridgeshire (Stephen Barclay) for raising the important issue of sport funding in rural communities. A key factor in our winning the bid to host the 2012 Olympic and Paralympic games was our ambition to inspire people across the whole country to take up sport.
The Government’s 10-point sport legacy action plan sets out in detail what we are doing to deliver lasting sporting legacy from the games for the whole country, including rural communities. That includes more than £1 billion of investment from Sport England for youth and community sport over the period 2013 to 2017. That is designed to inspire people from every part of the country to take up and enjoy sport—not just in our cities and towns, but in our rural communities too. It includes £493 million direct to sport’s governing bodies, as well money for school games and the development of community sports facilities. I emphasise that that applies across the country, in both urban and rural areas.
Sport England’s open funding programmes, such as Inspired Facilities and Protecting Playing Fields, do not discriminate according to type of area—that is, whether it is urban or rural. Applications for funding are assessed on their individual merits against the criteria for that programme. Sport England’s Inspired Facilities funding programme has already awarded grants to nearly 1,400 community sports clubs across the country to upgrade their facilities. Projects have ranged from fixing leaky roofs to installing showers and accessible changing rooms, and even supplying new lights at hockey clubs. I had the pleasure of switching on such lights in Kent just a few weeks ago.
North East Cambridgeshire has benefited too. In 2011, Sport England ran a funding workshop for local clubs in the area. As a result, I am delighted to report that six clubs in my hon. Friend’s constituency have been successful in receiving Inspired Facilities awards with grants totalling more than £300,000.
Of course, competition for funding remains extremely high and the quality of applications is increasing all the time. For example, in the previous round of Inspired Facilities, Sport England received more than a 1,000 applications for about £55 million of funding when it had only £16.2 million available.
If a club is unsuccessful in its application, Sport England offers individual feedback and support to help it prepare a stronger application for a future funding round. Sport England engages regularly with North East Cambridgeshire and has provided advice and guidance about the possible redevelopment of Ely leisure centre. Cambridgeshire county council has put in a bid for the Queen’s baton relay, which covers Fenland and my hon. Friend’s constituency and has activity planned in the Wisbech area.
Sport England is also promoting its Sportivate programme in the fenland area, where take-up rates are currently low. The programme gives all secondary school children the chance to experience a range of sports, from conventional ones such as golf and tennis to wakeboarding and free running. More than 225,000 young people have so far benefited from Sportivate, and I look forward to hearing that many more are enjoying those opportunity in the fenlands, too. The county sports partnership is also working with the College of West Anglia on a project for people who are not in education, employment or training, and that will include Wisbech.
My hon. Friend rightly referred to Wisbech lawn tennis club. I understand that there has now been some good and sensible dialogue between the club and the Lawn Tennis Association, that a staged approach to building the new facilities he referred to has been recommended and that the LTA has provided the club with a loan of £50,000. I also understand that an application for Inspired Facilities funding is currently under consideration. I wish the club every success in securing funding from Sport England.
My hon. Friend referred to participation. We are seeing very positive trends across the country, with 15.3 million adults playing sport at least once a week, which is 1.4 million more than when London won the bid to host the Olympic and Paralympic games in 2005. I am also particularly pleased that over 500,000 more women are playing sport regularly since we won the bid. Over 83,000 Sport Makers are volunteering regularly in their local communities, 16,000 schools have signed up to the school games programme, and around 100 county festivals of sport took place across the country this year. Through the 2012 games and other major events, we have raised the level of ambition in sport in this country for people in every community. Sport and leisure activities are vital to this country to energise young people’s ambitions and transform their lives.
I am grateful to my hon. Friend for raising this important issue and to the hon. Member for Strangford (Jim Shannon) for his contribution, and I will write to him about the matter he raised. I hope that I have provided my hon. Friend with some reassurance about the Government’s commitment to rural communities and to increasing participation in sport, regardless of where people live, whether in inner cities, small towns, seaside resorts or rural communities. If he remains concerned, I would of course be very happy to meet him. I also recommend that he organises a meeting with his Sport England regional representative—those representatives are very helpful and informative. The Government certainly take sport seriously and want to ensure that its broader social benefits for all communities are widely recognised and enjoyed.
Question put and agreed to.
Ministerial Correction
(11 years ago)
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Social Care Budget Changes
(11 years ago)
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Mrs Glindon
In the first two years of this Government, there was a frightening 66% increase in the number of people aged 90 and over coming into accident and emergency in a blue-light ambulance. When will the Minister accept that cuts to elderly care have increased pressure on the NHS, and are a major cause of the A and E crisis?
Norman Lamb
First, it is worth us all recognising that there is an increase in the number of frail elderly people in our society living with chronic conditions and that that is putting additional pressure on accident and emergency departments. The numbers have increased by over a million a year since 2010. However, the fact that there has been a reduction of 50,000 in the number of delayed discharges demonstrates that the social care system is doing incredibly well, and we should pay tribute to social care workers across the system who are doing so well to ensure that that improvement is taking place.
[Official Report, 26 November 2013, Vol. 571, c. 148.]
Letter of correction from Norman Lamb:
An error has been identified in an oral answer given to the hon. Member for North Tyneside (Mrs Glindon) on 26 November 2013.
The correct answer should have been:
Norman Lamb
First, it is worth us all recognising that there is an increase in the number of frail elderly people in our society living with chronic conditions and that that is putting additional pressure on accident and emergency departments. The numbers attending A and E have increased by over a million since 2010. However, the fact that there has been a reduction of 50,000 in the number of delayed discharges demonstrates that the social care system is doing incredibly well, and we should pay tribute to social care workers across the system who are doing so well to ensure that that improvement is taking place.
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Energy Intensive Industries
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Paul Farrelly (Newcastle-under-Lyme) (Lab)
I thank Members and the Minister for attending this early-morning debate, which appears on the Order Paper with the catchiest of titles: “Cumulative electricity tax burden for energy intensive industries”—truly a headline writer’s dream. Their presence speaks volumes for the importance industry gives this issue. I have been approached in the corridors this morning and in the past two days by people who cannot be here, but who are closely following the issue because they have had representations from their local manufacturers, too.
I and other colleagues applied for the debate at the urging of the British Ceramic Confederation, which represents tableware firms and brick and tile makers in my area—north Staffordshire—and across the country. Indeed, on Friday, I am visiting one of them—Ibstock Brick, in Chesterton, in Newcastle-under-Lyme—to view first hand its £20 million investment in brand-new kilns, which use the Etruria marl in the company quarries just a couple of miles away in Knutton and Silverdale, in my constituency. The fact that we are having this debate is also due in no small part to the urging of my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith), who has been cracking the whip for not only her local industry, but the sector.
The debate is very timely. It comes not only as energy prices for domestic customers have taken centre stage following the price-freeze initiative introduced by my right hon. Friend the Leader of the Opposition, but just a day before the autumn statement. The ceramics industry has lobbied the Chancellor of the Exchequer and the Minister hard for measures to tackle rising energy costs. It is not only the ceramics industry that has done that, but the glass, steel and chemicals industries—all sectors that describe themselves as highly energy intensive industries. In short, they are the cream of the UK’s manufacturing industry. We will no doubt learn tomorrow whether their pleas have fallen on deaf or, hopefully, receptive ears.
When it comes to my local ceramics industry and the potteries, I am more used to hearing cries of anguish over gas than electricity, because gas mostly fires the kilns. Only last week, 13 Members with ceramics interests, from across the parties and across the country, signed a joint letter to the Select Committee on Energy and Climate Change ahead of its session last Thursday on gas storage. A delegation of us also recently met the Minister to raise issues along the same lines on behalf of the industry. In our representations, we questioned the Government’s recent decision not to involve themselves in actively encouraging more storage to tackle gas price volatility and future security of supply. We were pleased that the Committee’s members took those concerns on board in their questioning of key representatives of the gas industry last week.
The debate is about the cost of that other staple and crucial energy source: electricity. On average, the ceramics industry uses more gas, but quite a number of our manufacturers employ some of the most electro-intensive processes in the UK and, indeed, Europe.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
I congratulate my hon. Friend on securing the debate. Three of the five biggest users of energy are located in Scotland, so he will understand my interest in this subject and, in particular, in the effect of Government policy. These industries are not able to get the grants available to their competitors in mainland Europe, which is leading to the possibility of job losses. Does he accept that the Government need to do more in those circumstances?
Paul Farrelly
I totally agree. Without a level playing field, the issue is not just the possibility, but the reality of job losses, not least in Scotland, and I will come to that shortly.
Derek Twigg (Halton) (Lab)
Before my hon. Friend comes on to Scotland, may I congratulate him on securing the debate? He is very knowledgeable on this matter. Is he aware that the INEOS ChlorVinyls plant in Runcorn uses electrolysis to manufacture chlorine? As a consequence, about 70% of the production costs on the site are accounted for by electricity. Some 1,800 people are employed on the site, so it is important that this matter be resolved. Is it not important that the Government look at the carbon floor price?
Paul Farrelly
I thank my hon. Friend for that intervention. I know the INEOS plant on Merseyside—it is an ex-ICI plant—very well, because two of my cousins from the extended Irish side of my family work there. Like all Members, I have had representations from INEOS, which is a major employer in my hon. Friend’s constituency. The company made exactly the same point—that 70% of its costs go on energy, so if we are substantially out of line with our competitors in Europe and the world beyond, it suffers a considerable disadvantage.
Neil Parish (Tiverton and Honiton) (Con)
I thank the hon. Gentleman for securing the debate. Germany has methods of subsidising high energy use-based steel, because it has high green taxes. The trouble is that the unforeseen consequences of our green taxes—they were, in all fairness, started by the previous Government—are mounting for industry. If we are to carry on with green taxes on bills, we must find a way to help these highly energy intensive industries; otherwise, we will export our business abroad.
Paul Farrelly
I thank the hon. Gentleman for what is the third intervention. I will come to the comparative prices in Germany, which has long had a strong green movement. In the past, it has also had the benefit of wide-ranging, simple schemes, not least in respect of coal, something that affected my constituency years ago. One of the things I want to come to later is the complexity under which our industry has to suffer.
David Simpson (Upper Bann) (DUP)
I thank the hon. Gentleman for giving way—he is a very popular individual this morning. One of the issues I have received the most lobbying on in my constituency is green taxes. We have the second-largest manufacturing base outside Belfast. The Government have promised to make business easier and more competitive and to remove bureaucracy, but we need to do something about this issue, because our manufacturing industry is not competitive out there, and we need to keep our jobs in the UK.
Paul Farrelly
I am grateful to be so popular for the first time in many a month. I do not want to make this party political, but one of the lessons the Government seem to have learned from the Labour party’s initiative on energy prices is that we need to have simplicity and to reduce prices for domestic customers. However, the same message needs to be learned in respect of industry across these islands.
As I was saying, the ceramics industry, along with other industries represented here by Members, uses some of the most electro-intensive processes in the UK and Europe. The advanced refractory and technical ceramics manufacturers, which make products that must withstand high temperatures, operate electric arc and indication furnaces at well over 2,000° C, which is getting on for half the surface temperature of the sun.
That brings me to one of the key points I want to make. Several of our major manufacturers in these highly competitive industries have already moved overseas, relocating inside and outside Europe, including in Germany and France—our major European competitors—and they have cited electricity costs as a key reason for doing so. That is happening in not just the ceramics, but other sectors, such as chemicals and steel. We have heard about INEOS, and Members will no doubt want to refer to the steel industry and the experience of Tata.
To take one further example, the German multinational chemical company BASF, which is a major employer near Manchester, just north of my constituency, wrote to me to underline that electricity and other energy costs have been responsible for rendering uncompetitive its 60-year-old Scottish pigments plant at Paisley—the group’s second most energy intensive plant. As a result, that plant will close in 2015, with the loss of another 150 jobs. That is the stark message from the industry about UK competitiveness. Manufacturers now typically pay between £80 and £100 per megawatt-hour in the UK. Some of their German competitors pay nearer to €40—not even £40—per megawatt-hour, which is less than half that price. In France, they pay €50. If nothing is done, and if UK electricity costs rise further, more businesses, investment and jobs here will be put at risk.
Joan Walley (Stoke-on-Trent North) (Lab)
I congratulate my hon. Friend on obtaining the debate. Must not we make sure that we can maintain manufacturing jobs in the UK, including in the ceramics industry, and support energy intensive industries, while enabling them to decarbonise? A key difference between the UK and Germany is the fact that in Germany the power sector has been transformed with a move towards clean energy. We must not lose sight of the necessary innovation and the transformation of the energy sector.
John Robertson (in the Chair)
Order. I ask hon. Members to keep interventions a bit shorter.
Paul Farrelly
That was one of my hon. Friend’s shorter interventions, Mr Robertson. Her constituency, Stoke-on-Trent North, includes Burslem, the mother town of the potteries. She is the Chair of the Environmental Audit Committee and will be sadly missed when, as she has recently decided, she retires at the end of this Parliament. I totally agree with her; what we need is a balance. What I want to show today, in the light of the pleas from industry, is that we have not got it quite right yet.
David Mowat
I shall be as quick as I can—and I, too, congratulate the hon. Gentleman on obtaining the debate. The topic of Germany has been raised, and we should all understand that its emissions are higher than the UK’s per capita and per unit of GDP—by about 30%. Germany has more renewables than we do, but burns far more coal and will not go along the route that we have taken so unilaterally and quickly.
Paul Farrelly
The hon. Gentleman makes the point very simply; we must look at things in the round when we consider reform of the system. I want to explain that industry wants reform to be simple and far-reaching, to permit competition with big companies that enjoy great support in Germany.
We are all familiar with the concept of fuel poverty—elderly people or less well-off families spending significant parts of their income on keeping warm. That concept could, strange as it may seem, equally be applied to some of our major manufacturers. Energy can account for up to a third of all costs in the ceramics industry and up to 70% of costs for major chemicals manufacturers, as we have heard. Big international price discrepancies matter, and will matter more if prices continue their inexorable rise. Like the household bills that we have put under the microscope in recent weeks, the price that industry pays for electricity also breaks down into three main components. One is the wholesale cost, which is rising. Another is climate-related charges. Hon. Members will have to bear with me while I go through a short list of what they include: the carbon price floor, the EU emissions trading system charges, the climate change levy, the renewables obligation, small-scale feed-in tariffs and, to be added to that bevy of burdens in the future, contracts for difference under electricity market reform. The third component is transmission charges, which are also increasing ahead of inflation, and which also include climate-related costs in the form of subsidies for offshore wind and other intermittent renewables.
I do not want to torture hon. Members and the Minister into torpor and total submission, but I shall give a couple of examples, provided by the British Ceramic Confederation, of the present and future impacts on industrial electricity prices of some of the carbon taxes and climate levies. Today, without climate change policies, the baseline electricity price that is being paid is about £70 to £71 per megawatt-hour. The climate change policies add £4 to £14 to that, so the cost rises to between £75 and £85. It is reckoned that, in 2020, which is not so far off, on top of a forecast base of £79 per megawatt-hour, the policies in question will add £15 to £35 or so; and in 2030, with the same forecast base, the cumulative effect of carbon tax and levies will, it is estimated, add £25 to £55, taking the price of electricity beyond £100 per megawatt-hour, to a top-of-the-range £130.
Alex Cunningham (Stockton North) (Lab)
My hon. Friend referred to the bevy of burdens on energy intensive industries. When I talk to the likes of INEOS and GrowHow, in my constituency, they say they want certainty and simplification, which is surely the way forward, and a long-term policy, so that they know what is coming in five and 10 years.
Paul Farrelly
My hon. Friend anticipates the final paragraph of my speech—which is not too far off—with a plea for simplicity and predictability.
Industry’s message about comparative prices and prospective increases is simple. With non-baseload charges rising so rapidly, on top of wholesale price increases, the UK’s energy intensive industries will be at a growing disadvantage, not only compared with international competitors, but because of lower-cost countries internationally that are hungry for their investment. Of course, the fact that the playing field is so far from being level harms UK industry, but it will also do nothing to help with climate change or to reduce carbon emissions, if it means that manufacturing ends up in less energy efficient factories in countries with a laxer view of their environmental obligations. I know that my hon. Friend the Member for Stoke-on-Trent North (Joan Walley) is concerned about such prospects for carbon leakage.
Joan Walley
I refer my hon. Friend and the Minister to the report of the Environmental Audit Committee on the energy intensive industries compensation scheme and the issue of carbon leakage. There is a need for proper research on which to base future policy, to provide the necessary certainty.
Paul Farrelly
I hope that everyone will put the report on their Christmas reading list and that the Government will take note of the evidence base and the recommendations.
What is to be done? Industry, although deeply concerned, is not totally ungrateful to have had the Government’s ear in recent years. There has been a welcome for the announcement in the Budget that ceramics and other industries would be exempted from the full cost of the climate change levy. I recall that in giving that news the Chancellor paid tribute to his Tea Room discussions with my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt), who chairs the all-party group on energy intensive industries. Of course Opposition Members thought that that compliment meant that his political career was done for, but changes since then have happily proved us wrong. The reality is that the tax exemption is hardly what the British Ceramic Confederation calls a game-changer. Welcome though that gesture was, it will save only an estimated 2% of energy costs for ceramics, mineral and metallurgical companies. Similar things can be said about the £250 million package to compensate energy intensive industries in the 2011 autumn statement—relief that was extended in the recent Budget—and about the sentiments behind the exemption, which the industry argues is too limited, from the UK’s new contract for difference charges.
What further things would those vital industries like from the Minister today and from the Chancellor, if not tomorrow, then in the future? One thing is further news on practical implementation, without state aid complications, of the climate change levy exemption. Looking further ahead, they would like the compensation package that has already been announced to be linked to the carbon price floor, so that it remains for the duration of the policy, and so that its value will reflect the trajectory of the price floor, if that continues. The industries would also like a widening of the contract for difference exemptions, so that there will be help for more companies than the estimated 10% of the ceramics industry that it is thought will be helped. They would certainly like a bigger helping hand in relation to Brussels. There was dismay, a fortnight ago, in the ceramics, glass and cement industries at the discovery that they would be excluded from compensation under the EU emissions trading system, even though highly electro-intensive processes are employed in the sector.
Mr Donohoe
I am grateful again to my hon. Friend for giving way. I have had many representations from the glass industry about its being excluded. There is a highly successful glass factory in my constituency, but its concerns are so great that it is bound to lose jobs as a consequence of being excluded from compensation. Does he agree?
Paul Farrelly
I certainly do. As I move to the final page of my remarks, I have some brief comments on the glass industry that reflect my hon. Friend’s concerns.
What the industry wants most of all, however, is a radical change of approach to stop our international competitiveness from being eroded further and even faster. The carbon price floor has inflicted pain on the industry for no discernible benefit, and its dream scenario would have the Chancellor abolish it entirely tomorrow. As with the measures affecting household bills, energy intensive industries would also like to see new climate-related charges, such as contracts for difference, paid from general taxation, because the nature of their businesses are such that they cannot protect themselves against such charges.
Other hon. Members will no doubt want to talk about industries other than ceramics, but before I let them, I will just say a few words about glass, which is another staple industry that is crying out for help. British Glass tells me that, since the UK climate change agreements took effect at the turn of the millennium, half of UK glass manufacturing sites have closed, with some 3,500 jobs lost. Despite the difficulties, it is still a £1.7 billion a year industry, employing 7,000 in the UK, but because it faces rising costs through rising green taxes and being ineligible for the EU help that my hon. Friend the Member for Central Ayrshire(Mr Donohoe) referred to, it fears that yet more jobs will go. We will then simply import more glass, which is bad for our balance of payments.
Derek Twigg
My hon. Friend makes an important point. Energy intensive industries form a large part of our manufacturing base. All parties have said that they want to protect and, naturally, improve manufacturing. Otherwise, we will end up importing many more goods. That is why it is vital that we take radical action to ensure that our manufacturing industry is promoted and protected.
Paul Farrelly
I entirely agree. From my 12 years as a Member of Parliament, my experience is that—I hope the Minister can change this mindset—the UK’s generally laissez-faire approach to industry, as well as its studious approach to implementing directives, means that we, in effect, give less support to our manufacturers than France, Germany, Italy and other leading nations give theirs.
I want to end with a plea to the Minister, which I am sure will fall on receptive ears as I know him to be intensely practical. If the Government are not minded to be as radical as the industry wants, the industry would certainly like more simplicity, which is a particular plea from BASF and the chemicals industry. End the plethora of levies by merging them into a single carbon tax, with the existing rebate scheme under the climate change agreements, to cut costs and bureaucracy and to reduce the mind-boggling complexity around green taxes and levies that often reduces Members of Parliament to complete confusion.
Thank you for listening, Mr Robertson. I look forward to contributions from colleagues and to the Minister’s response.
John Robertson (in the Chair)
Order. We have five speakers and a limited amount of time. If hon. Members stick to around eight or nine minutes, everybody will get their fair share. Keep interventions as short as possible.
Angela Smith (Penistone and Stocksbridge) (Lab)
It is privilege to serve under your chairmanship once again, Mr Robertson. I congratulate my hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) on his lucid explanation of the case for more Government support for energy intensive industries.
My constituency plays host to Tata Speciality Steels, Naylor Industries plc, which is a ceramics manufacturer specialising in clay pipes, and Wavin, which also manufactures clay pipes and lies a bit further to the west of the constituency. We are home to a paper mill at Oughtibridge, which is unfortunately due to close in 2015, ending a 140-year history of paper making on that site. My constituency is also home to British Glass, and I am very proud about that.
Manufacturing represented 12% of national output in 2011 and 8% of employment. In my constituency, 14% of output was generated by manufacturing, which accounted for 11.8% of local employment. Manufacturing therefore still matters in my constituency and in south Yorkshire. The big manufacturing employers in my constituency, in steel and ceramics, are also high energy users, and it is estimated that about a third of their production costs relate to energy use. My work as an MP is about not only talking up manufacturing and everything that is needed to support it, but making the case to the Government on how they can help to secure cost-competitiveness in a global context. For many such industries, energy costs are a key factor.
What are the facts on energy costs for high-end users? Tata Steel stated on 2 December that wholesale electricity year-ahead prices are 70% and 45% higher than in Germany and France respectively. Policy-driven taxes and levies for the most intensive users were 2.5 and 6.5 times higher than in Germany and France respectively in 2011. The scale of difference is clearly large enough to turn profit to loss and to send out negative signals to potential investors.
Mr Gregory Campbell (East Londonderry) (DUP)
On that point, there is a large company in my constituency whose parent company, which is overseas, is constantly reviewing its overheads and the bottom line, which, for many, is the cost structure. Where such companies see the opportunity for reduced costs overseas, there is the serious possibility of their relocating.
Angela Smith
I completely agree with the hon. Gentleman. BASF pointed out only a couple of weeks ago that there is a real risk of losing at least 10% of European manufacturing capacity to the US, because of the much cheaper energy costs, but we will not go into that debate this morning.
On taxes and levies, the British Ceramics Confederation has pointed out that the Department of Energy and Climate Change’s analysis shows climate-related charges are already 19% of the base load price, and that will rise to 47% in 2020. The Engineering Employers Federation states that the Government’s estimates indicate that industrial electricity prices will have increased by 70% by 2030. Moreover, Tata Steel is clear that the green levy with the greatest impact today is the renewables obligation, which, along with small-scale feed-in tariffs, will cost £10.50 per megawatt-hour in the year from April 2014, which is an increase of more than 100% in three years. Tata also points out that many steel makers in Europe will either be completely exempt from the charge or have their charge capped at €0.50 per megawatt-hour. There is clearly a serious problem here for such industries in the UK; spiralling energy costs, compounded with myriad taxes and levies, are threatening our ability to compete, even within the EU.
The British Ceramic Confederation points out that, as my hon. Friend the Member for Newcastle-under-Lyme said, some of its manufacturers operate some of the most energy-intensive processes in the UK, and that several companies have already relocated to Germany and France, with electricity costs cited as a key reason. Even more worrying is the real risk that the current tax regime will do nothing to lower emissions globally if, as the confederation suggests, manufacturing focus is encouraged by costs to emerge in less regulated and less energy-efficient factories abroad. Carbon leakage is therefore a real threat. There is a great irony here, because energy intensive industries are making a huge effort to improve energy efficiency and thereby cut their costs. Tata uses 40% less energy today to produce the same amount of steel as it did in 1975. That is a 40% cut in energy costs as a result of its energy efficiency measures. Ceramics industries have been heavily involved in trying to improve their processes. Naylor Industries in my constituency continually strives to reduce costs by improving energy efficiency.
In summary, it is clear that we need reform of the current system of green taxes and levies, because of the risk of losing capacity, either to the EU or elsewhere, with the linked risk of carbon leakage. However, let me be absolutely clear: I have not, as yet, come across one industrialist who disagrees with the principle of green taxation. Everyone understands that a well-designed taxation system has a role to play in stimulating growth of the low-carbon economy, but that process has to be balanced with the critical need to avoid damaging the cost-effectiveness of the industrial base.
Our energy intensive manufacturers are important in their own right; I know that because I come from a family who have been involved in steel making for at least four generations. Such manufacturers are even more important given that the industries that we are talking about have a key role to play in providing components for the low-carbon economy—a point often overlooked by critics of the industries. Technical ceramics are used for nuclear, wind and solar generation. Clay pipes are 100% recyclable and have an incredibly long life. It takes 1,000 tonnes of steel of six different grades to produce each offshore wind turbine. The steel exterior for the Nissan Leaf electric vehicle was developed and produced in the UK by Tata Steel. Last but not least, the polyurethane foam insulation developed by BASF saves 233 tonnes of carbon over its lifetime for every tonne used in its production.
As my hon. Friend the Member for Newcastle-under-Lyme asked, how should the Government act to remedy the problem? It is worth listing the array of schemes in play, or due to come into play soon: the climate change levy; small-scale feed-in tariffs; the emissions trading scheme; the renewables obligation; the carbon floor price; the energy company obligation; the carbon reduction commitment; and contracts for difference. We also have the aggregates levy and the landfill tax, but both are well embedded, and nobody would touch them. I might not even have included all the schemes on that list, but the point is made.
For industry, the green tax landscape is burdensome in two key ways: there is the cost, and the bureaucratic tangle involved in ensuring compliance. For example, one business in my constituency employs a full-time, highly skilled individual simply to ensure that it meets all its obligations on green tax. The Government have committed to the red tape challenge; this is a clear red tape challenge that needs to be dealt with. That individual could be employed to improve energy efficiency in the plant instead.
I repeat: what is to be done? Industry has a few ideas and key demands. First, it wants a level playing field for European and non-European competitors on climate-related taxes and levies, to ensure that world-class companies in the UK can remain internationally competitive. EEF pointed out that an assessment of that could take place within the context of the fourth carbon budget review.
Secondly, industries need to see the detail of the promised exemption of ceramics and other industries from the full cost of the climate change levy from next year. The autumn statement would be a good opportunity to provide that detail, as well as detail about how the Government will negotiate a way through without falling foul of state aid rules. In addition, the expected change in guidelines means that the Government have an opportunity to exempt such industries from the renewables obligation and small-scale feed-in tariffs. EEF and the British Ceramic Confederation make reference to the impact of those two taxes on their members. Industries also want the £250 million package moulded around the ETS and the CFP to be in place for the duration of the latter policy, until 2030, and they want the value of that compensation linked to the upwards trajectory, as my hon. Friend pointed out. The contract for difference worries energy-intensive industries, too. They look for comprehensive exemption for industries, so that they can remain competitive.
Finally, both the steel and ceramic sectors point out that the Government could do a great deal for their members if capital allowances were increased for a wider range of energy-efficient technologies, so that a much higher proportion of the green taxes raised went back into such investments. I could also make the point about including a wider range of industries in the state aid guidelines. It is incumbent on the Government to ensure that they make that case to the EU.
The Government face a bewildering range of choices. They ought to consider two more radical proposals before making up their mind. Perhaps we need a consolidation of all the taxes and levies, or to simplify the system, to reduce the bureaucratic burden on our manufacturing companies and make it easier to work out what the cost burden should be and how best to compensate industries that are at risk of losing that competitive edge. Transparency and good environmental tax design could be achieved simply by revising and reforming the complexity of the current regime. I would like to hear the Minister’s comments on that.
Perhaps we could scrap the carbon floor price altogether—let us just get rid of it. It is a unilateral tax that is projected to pull in more than £2 billion for the Treasury by 2020, but it threatens to undermine the competitiveness of our key industries.
John Robertson (in the Chair)
Order. I ask the hon. Lady to bring her remarks to a close.
Angela Smith
Of course; thank you, Mr Robertson. The Minister needs to be clear today about the choices that the Government are prepared to make in response to the demands that I have just outlined. Indeed, the Chancellor needs to be clear in his autumn statement tomorrow that the political will to protect our energy intensive industries is there. We need to hear that. Our manufacturing base demands that. Industries deserve that. More than anything else, our country desperately needs to hear the Chancellor give us that message tomorrow, and the concrete proposals that will deliver a level playing field for energy intensive industries in the UK.
John Robertson (in the Chair)
Unfortunately, we lost a lot of time with the previous speaker. I now impose a limit of seven minutes. That may go down, depending on interventions. I ask Government Members not to look at the clock opposite them for guidance, as it is not working.
David Mowat (Warrington South) (Con)
Thank you, Mr Robertson. I will look at the clock behind my shoulder, or perhaps you will tell me when I am getting close to my limit.
I congratulate the hon. Member for Newcastle-under-Lyme (Paul Farrelly) on securing the debate. I have been an MP for three years, and I have taken part in many debates on green jobs and how we were not moving fast enough on green subsidies. It is good to have a debate today on the 900,000 jobs in our economy in the chemicals, steel, cement and ceramics industries. I will mention one more industry, which is represented in my constituency: the aluminium industry. It, too, is affected by high energy prices. Furthermore, although intensive industry is affected most by high energy prices, all industry is affected. We are trying to rebalance the economy back towards manufacturing, and gross domestic product growth correlates to energy use, so it is nonsense to say that only intensive industry is affected.
We are not talking principally about industries moving abroad, although that does happen; we are talking about marginal decisions about investments that do not come to our country, but go somewhere else. That is much less obvious. When an investment goes to Wilmington in the United States, instead of Teesside, or to Germany, instead of this country, nothing necessarily closes, but we do not get the expansion that we might have.
Let us look at our competitive position vis-à-vis Asia, the United States and Europe. Historically, perhaps because of cheap labour costs, we have been used to some manufacturing moving to Asia, but we are now finding manufacturing moving to the United States and to Europe. That is far more worrying.
Turning to the US briefly, it is worth noting that US gas prices have fallen from $9 per million cubic feet to $3 per million cubic feet. That is utterly transformational. It is not the Government’s fault—it has nothing to do with taxes—but when something like that happens to an economy, there is a stark transformation. It affects feedstock prices for the chemicals industry and energy prices right across the piece. It has had a massive impact on the US’s competitiveness, relative to ours. Luckily, the US is a couple of thousand miles away, so the impact will not be felt quite so much as it would have been had it happened in Europe; but the shale gas revolution in the US is one of the most important events to have happened in global politics in the past decade. Members who are tardy or reluctant to endorse our taking action on shale gas need to reflect on that fact.
A bigger and more worrying issue is the EU. Our big competitors are France and Germany, and we have already heard about the differential that is arising. The issue is not so much the differential today—some may disagree with me—as the direction of travel for all of us. We have talked a great deal about carbon targets since the Climate Change Act 2008. We are the only country that has carbon targets—no other country in Europe has the same degree of statutory enshrinement of carbon targets. That fact drives behaviour. We have seen that in the dismantling of the emissions trading system in Europe. To all intents and purposes, the carbon price in Europe is now €2 or €3 per tonne, but in the UK, due to the carbon price floor introduced in April, it is about €20 per tonne. That will be absolutely devastating. At the margin, power stations will go to Holland, which is now building coal stations, and supply us through interconnectors. I do not see where that gets us.
This is an issue for all industry, not just intensive industries. The Government have assigned £250 million to help intensive industries, but that will not be enough if we are going to give ourselves differentially high energy prices into the medium term. All of us in this place need to reflect on that. I do not want to cause discord between the two sides of the House, but we have a vote this afternoon on energy prices. Some of the Members asking today that we keep prices down—something I desperately want to do, both because of fuel poverty and for the reasons we have heard about industrial competiveness—have the chance to vote on an amendment brought forward by the Labour party in the House of Lords that asks that we accelerate the closure of coal-fired power stations in this country. In my opinion, that will have the direct impact of raising energy prices by between 3% and 5%. I see the Opposition Front Benchers are whispering to each other, so I may well be about to be told that the Labour party has decided not to support that amendment.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
On a point of fact, the amendment was from the Liberal Democrats. It will be interesting to see how they vote this afternoon.
David Mowat
I thank the hon. Gentleman for that information; whichever party brought the amendment forward, I am clean. I will not be supporting it, and I suspect that many of the people in the room are sympathetic to my petition. All I would say is that it is the official position of the Labour party that the remaining coal-fired stations in our country should be decommissioned on an accelerated basis, with all the costs that will incur for the industries we have been talking about. We should reflect on our debate this morning with regard to the debate this afternoon.
The decarbonisation target has a cost impact, as well. Nothing in the world is free. We have heard about PV tariffs; I went through the Division Lobby when the Government were reducing the subsidy for solar from six times grid parity to four times grid parity—a reasonable measure, but again, the Labour party divided on that. It is important to understand the impact of what we are voting for on fuel poverty and on the 900,000 jobs in these industries that we all care so much about.
Neil Parish
We have been sleepwalking into this situation for several years now. We have been driving energy prices up and up, and not only industry but domestic customers are paying for that. It is time we got overall energy prices down, not just for high users, but for everyone.
David Mowat
I thank my hon. Friend for that intervention. To wrap up, in terms of our position on Europe, I believe we need to cut carbon. It is important, and I am not a sceptic on that stuff. My difficulty is with the idea that we have to cut carbon unilaterally. We are responsible for 1.5% of the world’s carbon emissions. We produce two thirds as much carbon as Germany per capita, and per unit of GDP. That is similar to Holland and lower than the average in the EU, yet we are pushing ahead with unilateral actions that come with a severe price. We need to think hard about that when we negotiate our way through this maze.
The points that have been made about complexity are absolutely spot on. Myriad complexities have built up in the attempt to keep a diverse set of technologies available, and those complexities are really mindboggling.
I have put points to Labour Members about solar, about their party’s position on the decarbonisation target and about the opportunity this afternoon to vote according to their feelings on an amendment that would increase electricity prices further in the UK. I will also make a few points to the Minister, which he may wish to address. We should look at our tendency to act unilaterally, hemmed in as we are by the Climate Change Act and the fourth carbon budget and all that goes with it. I ask that we get away from EU directives on renewables and the rest. Yes, Germany is big on renewables, but it has far higher carbon emission levels than we do because it burns so much coal, and because it is building 10 more unabated coal-fired stations.
Joan Walley
Is it not the case that Germany is having to rely on a greater amount of coal now, in the short term—
Nic Dakin (Scunthorpe) (Lab)
It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate my hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) on securing this timely and important debate. The contributions so far have shown that this issue is important outside this place, for the communities that we serve and the future of our nation.
There has been a kind of renaissance in the cross-party consensus on the importance of manufacturing over the past few years. The current Government should share some of the congratulations on that renaissance, as should all politicians. However, when we look at how our energy intensive industries are being treated, it is ironic, because their treatment undermines that consensus. The hon. Member for Warrington South (David Mowat) has drawn attention to many of the dichotomies that we need to act on in that regard.
Foundational industries such as steel, glass and chemicals are crucial to a modern, balanced economy, and very much dominate the industrial scene in the part of the world that I represent. In Scunthorpe, Tata Steel, the UK’s largest steel maker, has just announced 500 more job losses, after announcing 1,800 in May 2011, so the issue of jobs is a live one. What Tata has said is exactly what my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) reported earlier: a comparison shows that UK energy costs are 70% higher than in Germany, and 45% higher than in France.
For someone sat in Mumbai making decisions about where to place investments, those figures are going to have an impact. It is crucial to take urgent action to ensure that that impact is not negative for the UK. Furthermore, as Member after Member has said, if we displace industry from the UK to places that are less energy efficient and less carbon friendly, we will increase the global carbon impact. That would be negative not just for the UK, but for the globe.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
The hon. Member for Warrington South (David Mowat) spoke about the explosion of fracking in America leading to an increase in manufacturing there. My great fear is that the traditional gas markets in the middle east, particularly Qatar, will start making overtures to industry to move to the middle east to produce there, rather than wait for the west to import their gas.
Nic Dakin
My hon. Friend makes an important point, which reminds us that we live in a global world with global decision makers and global impact. Tom Crotty, a director of INEOS, said:
“We are at a crisis point. We will not have an energy-intensive sector in this country in 20 years’ time”
if action is not taken. Karl Koehler, chief executive of Tata Steel’s European operations said:
“Our…manufacturing plants face electricity costs that are… 50 per cent higher than our key competitors in France and Germany…If the chancellor wants an industrial recovery and to rebalance the economy he must show real commitment to fair energy costs for foundation industries such as steel.”
The carbon floor tax is an interesting case study. It is a unilateral tax on manufacturing introduced by the coalition Government. They announced in 2010 that it would be introduced in 2013, and in 2011 gave a commitment to a package of support for energy intensive industries. In October 2012, the Department for Business, Innovation and Skills consulted on it, and it has now come into effect, but there is still no time scale for when compensation or mitigation will be in place because the carbon floor tax mitigation proposals are stuck in Europe. One would have thought that that would be checked out before we went down that route. Industry needs to be confident about when that mitigation will come into effect.
I have the highest regard for the Energy Secretary because he is on the side of manufacturing and wants the foundation industries to succeed, but in a written answer the Minister said that
“£16 million has been paid to 17 companies.”—[Official Report, 5 November 2013; Vol. 570, c. 142W.]
However, in a later written answer, he said that applications were still being considered, implying that nothing had been paid out. Last week, he said in answer to a question that 20 companies had had moneys paid out. There is still a bit of confusion about what exactly is happening. He is brandishing sheets of paper, which are probably complex but clarify the matter.
That demonstrates the fact that the landscape is confusing and complex. The carbon floor tax has been unilaterally imposed. There is no sign yet of any mitigation there. The mitigation of the European trading scheme seems to be trickling out. However, as my hon. Friend the Member for Penistone and Stocksbridge said, the issue of most concern to steel makers involves the renewables obligation and we need to ensure that that is addressed. The danger is that, if mitigation is not put in place, the current renewables obligation will be catastrophic to foundational industries in the UK.
What needs to happen next? We must maximise efforts to achieve state aid clearance on the carbon floor tax, to move to compensation or to implement quickly interim measures to give confidence to investors and our manufacturing base. We must extend the time horizon of the package, which is currently three years. Investment horizons in industries such as steel extend for decades. The principle of long-term certainty is accepted by the Government and Opposition for support schemes for low-carbon generation. We need the same sort of long-term certainty for these investments.
Robert Flello (Stoke-on-Trent South) (Lab)
I pay tribute to my hon. Friend and parliamentary neighbour the Member for Newcastle-under-Lyme (Paul Farrelly) for securing this debate. In terms of the long-term vision, energy issues are important, but it was not that long ago that jobs, particularly in the ceramics industry in north Staffordshire, were being lost abroad not because of energy costs, but because of labour costs. Should we not look at the issue in the round and take all aspects into account?
Nic Dakin
Absolutely. I am aware, Mr Robertson, that other hon. Members want to contribute to the debate, so I will close by reinforcing the need for urgent action now. The autumn statement tomorrow provides a real opportunity for the Chancellor to deliver support for our foundational industries, so that they are here today, here tomorrow and can be a confident part of our future.
John Robertson (in the Chair)
Order. I thank the hon. Gentleman for that. I am sorry that I must reduce the time for the last two speakers to six minutes each. I call Neil Parish.
Neil Parish (Tiverton and Honiton) (Con)
It is a pleasure to speak in this debate, and I thank the hon. Member for Newcastle-under-Lyme (Paul Farrelly)—
John Robertson (in the Chair)
Order. I called the wrong speaker. Did you stand up, Mr Parish?
Neil Parish
Yes. As you called me, Mr Robertson, I thought I would hold forth.
Mark Pawsey (Rugby) (Con)
I congratulate my hon. Friend on his quick-witted response to your invitation to speak, Mr Robertson. May I add my congratulations to the hon. Member for Newcastle-under-Lyme (Paul Farrelly) on securing this important debate? He made a strong case in support of energy intensive ceramic industries in his constituency. I want to speak about an energy intensive industry in my constituency and to refer to the packaging industry.
My constituency has a company that has manufactured cement for more than 150 years. It was originally called Rugby Cement, but is now operated by CEMEX. It is one of the largest plants of its kind and the most recently erected in the UK, involving total investment of around £200 million. It is operated by one the world’s largest producers of cement.
Energy costs for cement manufacturers takes up to 40% of gross value added, of which electricity is a significant part, but not in this instance the primary source of heat. In contrast with steel, aluminium and ceramics, the primary heat source in cement manufacture has traditionally been coal, but it is now increasingly alternative fuel, often derived from waste, ensuring that waste is put to good use instead of going to landfill. In that way, it contributes a significant environmental benefit.
The electricity is used in the process of grinding the clinker to create cement powder, in the movement of various materials in the plant and the blending process to create different varieties of cement products, and finally in the bagging of the finished product for transportation and sale. Therefore, significant amounts of electricity are used.
Before coming to this place, I spent 30 years in the packaging industry and I find myself chair of the all-party group on the packaging and manufacturing industry. It represents companies involved in the manufacture of paper, board, aluminium, plastics and particularly glass packaging. We have heard from hon. Members about the impact of electricity prices on the manufacture of glass and I will refer particularly to that used for bottles and jars. Manufacturers of cement and packaging have seen significant increases in the cost of energy. The British Glass Manufacturing Confederation has referred to a 14% increase in the past 12 months.
That increase has arisen partly as a consequence of the Government’s objectives on climate change and carbon dioxide emissions. Hon. Members on both sides of the Chamber today have recognised that the present and previous Administrations have gone too far and imposed an excessive burden on those manufacturers. The present Government have recognised that in their action to exempt the most energy intensive industries from that burden. The announcement by the Energy Minister in July this year was welcomed by many energy intensive industries as a start and a move in the right direction. I am sure, across the Chamber, that we hope the Minister will tell us that the Government will be able to go further. However, there are significant concerns that some industries have not benefited—cement and packaging fall into this category—because they are not eligible for the compensation that has been announced.
Both sectors have made representations that electricity costs in the UK are significantly higher than in other countries, and increasingly, manufacturers are multinational, with plant across the world. CEMEX, for instance, is a multinational producer, and it knows exactly what it costs to produce a kilo of cement at any location in the world. It is able to calculate where the most cost-efficient location is and a concern, which has again been expressed across the Chamber, is that if we are not able to provide additional forms of support in terms of energy costs, manufacturing will migrate to overseas plants rather than taking place in the UK. It will be an absolute tragedy if, as our economy recovers and turns the corner, our manufacturers are not able to take advantage of the growth in the economy and of the additional effect that that will have on UK employment.
That is particularly important in respect of the cement industry, because construction has been in a difficult place over the past five years. I am told that the supply chain is starting to see a renaissance and increased activity, and I very much hope that our UK-based manufacturers will benefit from that resurgence. I hope that the Minister will be able to provide reassurance today to Members across the Chamber about the work that the Government will do to support our energy intensive industries.
Nia Griffith (Llanelli) (Lab)
I rise to speak as the secretary of the all-party parliamentary group for the steel and metal-related industry and because steel is an extremely important industry in my constituency, which has 19% of its employment in manufacturing—considerably higher than the UK average. Steel and a lot of related metal industries and the automotive industry are extremely important to me.
I congratulate my hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) on securing the debate, and I would particularly like to congratulate my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) on her contribution. I shall try not to repeat her comments, given the shortage of time, but I would like to endorse everything she said.
Although huge efforts have been made over the years to improve energy efficiency, with steel production now being 40% more efficient than it was in 1975, it is becoming increasingly difficult to find additional savings. It becomes harder and harder, and one thing I have asked the Government before—and ask them again—is to take another look at such things as enhanced capital allowances and renewable heat incentives, to try to recognise and incentivise increased efficiency measures and better use of resources. In the long term, I think we also need to raise that issue as part of the EU emissions trading scheme, because when companies have really made a huge effort to make massive improvements, which is obviously helping us all globally to get emissions down, we need to try to recognise that.
Tata and many other steel manufacturers already recycle waste products in their factories and reuse a lot of the heat that they produce. Of course, metals are highly recyclable substances, and, again, those are the sorts of things that we should be supporting. However, it is a highly competitive world and we know that if we want to see UK-produced steel products and other products used in UK infrastructure, we have to get the price right.
On the use of UK products, I really would like the Government to move forward with the idea of targets for percentages of local content in big infrastructure projects and to look again at developing criteria on local economic benefits in assessing tenders for major projects. That has been done elsewhere in Europe, so it is not impossible to do it and still keep within European regulations. This is very important, and we could report how much local content was used, which would really flag up how much we think it matters that UK products are used in UK infrastructure. However, none of that can happen unless we get a competitive price. We must have a competitive price or we cannot even get out of the starting blocks on tendering for any UK infrastructure projects.
Energy is a major component cost, costing Tata Steel some £300 million last year. That is a huge bill. If we take a conservative estimate and say that energy costs are 60% more than in Germany—some colleagues have quoted 70%—the difference even then can amount to more than 10% of the product price. That is the difference between people being able to sell their product and not being able to. It makes a massive difference to competitiveness, and it is virtually impossible to offset that type of competitive disadvantage.
As we know, the carbon price floor is a unilateral tax. It was introduced in the UK and now we are in a muddle, trying to sort out the state aid rules in order to give help, whereas if it had not been imposed in the first place, we would not have to try and get the mitigation measure. The carbon price floor is a major disadvantage, putting us at a considerable competitive disadvantage as compared with places such as Germany and the Netherlands—we are not talking about cheap labour countries, but comparable countries in Europe.
Having said that, even if the state aid rules are sorted out, the rebate will only be 80%, so there is still an outstanding 20% that we will not be able to get. In addition, the renewables obligation is double what the Government’s mitigation measures will give back, so there is a real need to have a complete review of the whole green tax issue—of the complexity, as has been mentioned, and of the fact that the renewables obligation is what seems to be causing the most difficulty. I ask the Government to have a real look at the cost differential between the UK and elsewhere in Europe, which arises from the renewables obligation. As has been mentioned, the costs in other countries are something like 50 euro cents per megawatt-hour, whereas here we are looking at £10.50 per megawatt-hour. That sort of difference is creating a huge problem for our manufacturing industry.
I ask the Government to look at the whole issue—at the interplay of all these taxes. What we are saying today is that it is about the cumulative impact. It is about looking at the whole picture of all the different elements of the green taxes, not because the industries are against them but because the industries want a level playing field and for the system to work for everyone across Europe equally.
Julie Elliott (Sunderland Central) (Lab)
As ever, it is a pleasure to serve under your chairmanship, Mr Robertson. I add my congratulations to my hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) on securing this very important debate.
The Minister has been asked a number of questions, and a number of comments have been made to him by Members on both sides. Many have been from those who represent constituencies where these issues are very important, so I shall limit my contribution to give the Minister enough time to reply. There is no point in repeating all the arguments that have been made very well. Many key concerns are coming through regarding the tax system for energy intensive industries. I want to highlight one of the comments made by my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith): she called for clarity and pointed out that energy intensive industries support a well designed system of taxation and understand the need to decarbonise. I do not think the two things are contradictory, but one issue that most speakers have mentioned is the complex nature of the tax system and related issues. I would be very pleased if the Minister commented on those things.
Robert Flello
I want to make a very brief point—I am sure you would pull me up if I did otherwise, Mr Robertson. Are we not missing some of the wider implications? Germany has been mentioned time and again, but the way in which Germany is operating its system, getting rid of the monopolies and concentrating on local, not-for-profit providers, is completely different. That is the issue, really. It is about a fundamental root-and-branch review of how we do things, so that we do not have the six monopolies, but actually have a different way of doing things.
Julie Elliott
We can always learn from how other countries do things, although one of the things about Germany that is not publicised much is that it imports much of its nuclear energy from the Czech Republic, which is what sometimes leads to its cheaper prices.
I would like to comment on some of the things that have been said about the importance of our manufacturing industry, because manufacturing is a key part of our coming out of recession and moving into economic growth. It is not only something that this country should be very proud of historically as, moving forward, we are at the cutting edge of some of the best manufacturing in the world. I personally feel very strongly about that and I am pleased that a number of hon. Members have talked about its importance to our economy.
There are concerns that the carbon floor price, which was introduced by the Chancellor of the Exchequer, imposes an additional burden on energy intensive industries and hampers our competitiveness. It is also on an upward trajectory: it is going up year on year. It was increased again in last year’s Finance Bill. The hon. Member for Tiverton and Honiton (Neil Parish) is no longer present, but he talked about the carbon floor price being a green tax. It is important to state on the record that the carbon floor price tax is entirely a revenue-raising tax; it goes to the Chancellor.
We cannot afford to end up in a situation in which the carbon floor price damages energy intensive industries while at the same time achieves a weak carbon-abatement effect. It is important to take a sector-by-sector approach. The issues inherent in and the support required by the ceramics industry, for example, may not be quite the same as those in the steel industry.
I am particularly pleased that the Minister of State, Department of Energy and Climate Change, the right hon. Member for Sevenoaks (Michael Fallon), will provide the response on behalf of the Government, because I am sure that he will be able to provide some clarity on where he stands on the carbon floor price. Earlier this year, before he became an Energy Minister, he called the carbon floor price
“a fairly absurd waste of your money”,
before going on incidentally to announce that it had been introduced by Labour, although as I have said, it was introduced by the present Government in 2011. I would be interested to know where the Minister stands now on that statement. How can he square it with his support for the carbon floor price?
It is vital that we keep British industry competitive, while decarbonising its activity. Much more work is needed, in conjunction with energy intensive industries, to develop a plan for how to achieve that.
Tom Blenkinsop
I want to raise an important point in relation to the need for a plan. Today we have heard that Lotte at Wilton has announced that it is to close a plant, with the loss of 70 jobs, in the area next to my constituency. I remember when that plant went into administration in 2009 and NEPIC, the North East of England Process Industry Cluster, under the regional development agency, got Lotte, a South Korean company, in to purchase the plant and it got going again in April 2010. What we want, as my hon. Friend the Member for Stoke-on-Trent South (Robert Flello) said, is a rounded—all-round—plan in relation to how regions function, what type of regional investment we have and what—
Julie Elliott
I thank my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) for his comments. He gives another example of how missed the regional development agency is in the north-east—in our region.
It is right that the Government are taking steps to help energy intensive industries that must adapt to the EU emissions trading system and the carbon floor price. We do not want to see the UK’s carbon emissions just shifted overseas. However, if we are to meet our emissions targets and avoid catastrophic climate change, we need to reduce those industries’ carbon emissions.
Energy intensive industries are an important part of our economy, accounting for 4% of gross value added, and 125,000 people are employed by them directly or in their supply chains. Many energy intensive industries are at the forefront of the low-carbon economy, producing the mechanisms that we need to develop our low-carbon industries. That was set out in great detail by my hon. Friend the Member for Penistone and Stocksbridge. However, like all sectors of our economy, this one must decarbonise if we are to meet our crucial emissions targets. The transition to low-carbon power generation will keep energy prices down in the long run. The alternative is to remain at the whim of unpredictable yet ever rising gas and electricity prices.
As the EEF, which was formerly the Engineering Employers Federation, has pointed out, if the Government were serious about the transition to a low-carbon economy, with innovation and green jobs at the centre of that transition, they would be supporting research and development. We question why research and development on energy as a percentage of Government R and D spending is comfortably less than the OECD average. However, the bigger problem is the Government’s counter-productive, counter-science and counter-business decision not to adopt a 2030 power sector decarbonisation target, which was supported by the EEF, which represents many companies in this area. That decision, or rather non-decision, is scaring away investment, costing green jobs and jeopardising our future energy security.
David Mowat
The hon. Lady mentions that the 2030 decarbonisation target was supported by many companies in this sector. Could she name the energy intensive companies in this sector that support that target?
Julie Elliott
Actually, I did not say that; I said that the target was supported by the EEF, which represents many companies in this sector.
The Government need to be clearer on how they will provide support for energy intensive industries. In his autumn statement, in November 2011, the Chancellor announced that measures would be introduced to reduce the impact of the Government’s electricity market reform policies on energy intensive industries. My hon. Friend the Member for Scunthorpe (Nic Dakin) set out many of the issues in this area. That announcement was made almost two years ago, yet energy intensive industries still have very little detail on how that will work in practice. Perhaps the Minister can enlighten us on that today.
I understand that the Government concluded their consultation on the exemption eligibility for contracts for difference costs in August. What progress has been made since that time? Exemption costs for contracts for difference will be collected through the supplier obligation. Can the Minister provide some more detail on that obligation?
I would not dream of asking the Minister to pre-empt what might be revealed in the autumn statement, but if it is the Government’s intention to introduce further compensation, could he provide an update on the Government’s negotiations with the European Commission, when he or his officials last met representatives of the Commission to discuss this matter, when he expects to receive a final decision, and whether there is a plan B in the event that state aid is not granted?
To conclude, I hope that the Minister understands the difficulties that many energy intensive industries are facing with the current tax regime and that he will listen to the concerns raised by hon. Members. I am sure that he will be acting to make changes in the near future. I also hope that he would agree with me that the single best way to reduce energy costs for intensive users is to give further support to low-carbon technologies, which provide the best solution to keeping costs down in the long run.
The Minister of State, Department of Energy and Climate Change (Michael Fallon)
I am very grateful to the hon. Member for Sunderland Central (Julie Elliott) for giving me a little extra time to enable me to try to respond to some of the very good points made in the debate. I hope that, if I do not respond to them all, hon. Members will allow me to write to them on the points that I have missed out.
This has been a good debate. It has not just been a good-natured debate. I think that it has been a reasonably constructive debate and it is certainly a very important one. I congratulate the hon. Member for Newcastle-under-Lyme (Paul Farrelly) on instigating it and attracting such a good attendance on both sides of the House. He raised a number of points. He asked about our engagement with the industry. He will know that last month I met Staffordshire Members with the British Ceramic Confederation. I have also met representatives of BASF, which he specifically mentioned, to hear their particular concerns. We are always ready in the Department to continue to meet representatives of those industries that are most affected.
The hon. Gentleman raised the issue of gas storage. I know that he disagrees with our decision not to subsidise large-scale storage reservoirs, but there are fast-cycle gas storage plants being completed. Two have been completed already. Two more are due to be completed next year. That will double our gas deliverability. I do not accept that the decision not to subsidise gas storage makes any major contribution to that debate.
The hon. Gentleman asked about the position of refractory ceramics. My officials have visited some of those electricity intensive sites, and we are considering the case for including them within the carbon price floor compensation. He tempted me to speculate, in advance of the autumn statement, on the carbon price floor. I simply cannot do that. The carbon price floor is a matter for the Treasury, as he knows. What I can say is that, obviously, the Department for Business, Innovation and Skills is very much aware of concerns across industry about the level and the trajectory of the carbon price floor, and we certainly ensure that our views are known in the Treasury.
The hon. Member for Penistone and Stocksbridge (Angela Smith) made several points. She compared prices with those in France, but I ask her to reflect on the fact that France enjoys a huge amount of base load nuclear power. I hope that she will welcome the decision to replace our nuclear fleet and to invest in such base load nuclear power, a decision that was too long delayed. She also made some important points about simplifying the schemes. I am completely with her on that, and I will refer in a moment to what we have done in that regard.
My hon. Friend the Member for Warrington South (David Mowat) reminded us of the need to be competitive, and he spoke of the success of shale in the United States. I reassure him that we are encouraging the search for shale in the United Kingdom. A dozen companies are prospecting, and more applications to drill are coming in. I expect the search for shale to accelerate over the next few months. He usefully reminded us that we all bear responsibility for the way in which we vote in this House, and several of us have voted in favour of climate change objectives. Indeed, we have the opportunity this afternoon to vote down an amendment that would increase energy prices for industry and business.
The hon. Member for Scunthorpe (Nic Dakin) asked me about the working of the ETS compensation scheme, which has paid out some £18 million to 29 companies, including Tata Steel, in respect of several plants in the constituencies of hon. Members who are present: the hon. Members for Middlesbrough South and East Cleveland (Tom Blenkinsop), for Scunthorpe, for Central Ayrshire (Mr Donohoe), for Rutherglen and Hamilton West (Tom Greatrex), for Llanelli (Nia Griffith) and for Penistone and Stocksbridge, and my hon. Friend the Member for Warrington South. Those payments are flowing. They are backdated to January, and they will be made quarterly from now on. I will say a little more about the working of the scheme in a moment.
My hon. Friend the Member for Rugby (Mark Pawsey) championed the cement industry in his constituency, as I would expect him to. We recognise the pressures that that industry faces, which is why we have announced the exemption for mineralogical and metallurgical processes from the climate change levy. We are examining the case for the inclusion of cement and some ceramics—those that have come forward with evidence—in carbon floor price compensation.
The hon. Member for Llanelli spoke about energy efficiency, which is extremely important, and she also made an important point about local content. It is our intention to require, under contracts for difference, supply chain plans in respect of major contracts. Not only will that make those involved examine how they can drive up local content, but it will enable us to see more clearly where the local content is. I hope that she will welcome that measure.
The hon. Member for Sunderland Central suggested that the failure to set a decarbonisation target was somehow delaying investment. The House voted down the setting of a decarbonisation target in June, since when we have seen a wave of investment: not only the signing of the first new nuclear station in a generation but the introduction of a series of projects under our intermediate final investment decision enabling regime. She asked me what we were doing in respect of the Commission. My right hon. Friend the Secretary of State has regular discussions with the Commissioner. My right hon. Friend and I regularly go to Brussels to pursue cases such as CPF compensation, and we try to build support among other member states.
The hon. Member for Penistone and Stocksbridge made one of the most important points of all, namely, that there is a balance to be struck between green taxes, which the House has generally supported under successive Governments and which some of us have voted for, and ensuring the competitiveness of our industries. That can be a difficult balance to strike, and we are tackling it in two principal ways. We are helping to incentivise energy efficiency in industry and households, which several hon. Members described as important, and we are helping to relieve some of the short-term pressures on industry.
Joan Walley
Does the Minister agree that climate change agreements are an important way to incentivise clean power and meet decarbonisation targets?
Michael Fallon
I agree with that, and I will come on to climate change agreements later. The Government cannot control the volatility of global fossil fuel prices, but we can help industry to exploit energy efficiency potential, which will reduce the impact of rising prices. Some of our incentives are financial ones. The climate change levy is a tax on business energy use, and the EU emissions trading system is a cap-and-trade mechanism based on the emissions of energy intensive industries. The scheme is forecast to save the equivalent of 3,100 megatonnes of CO2 by 2020. To complement the EU ETS, we have a domestic scheme, the carbon reduction commitment energy efficiency scheme, which targets large non-energy intensive organisations. That is predicted to save the equivalent of 4,800 gigawatt-hours per year, which is greater than the annual energy use of all households in Manchester.
In addition to those financial incentives, we are working to incentivise industry through several other mechanisms. Climate change agreements, which the hon. Member for Stoke-on-Trent North (Joan Walley) referred to, are aimed specifically at energy intensive industries. They provide a discount on the climate change levy of 90% for electricity and 65% for gas, in exchange for commitments to achieve energy efficiency. She is right to remind us that they are a good example of an area in which Government and industry can work together to agree achievable objectives. More than 50 energy intensive sectors have negotiated agreements under the latest phase of the scheme, which are expected to result in an 11% energy efficiency improvement across participating sectors by 2020. Looking ahead, we have recently consulted on the new energy savings opportunity scheme, which will help larger businesses to identify energy efficiency measures that will result in average bill savings of £50,000 to £60,000 per year. Subject to legislation, the first audits under the scheme will be undertaken by December 2015.
The second leg of our reforms is the recognition of the competitiveness problems faced by some industries as a result of their energy costs, which lies at the heart of today’s debate. Rising electricity prices are a real concern for many businesses, which see them as a barrier to growth. The commitments to tackling climate change that the House has voted through have contributed to increases in those bills. That is why we have set aside up to £400 million to offset some of the costs of energy and climate change policies for the most energy intensive industries.
As we move to a low-carbon economy, it is vital to ensure that the more energy intensive industries are not placed at a competitive disadvantage in Europe or across the world, and they are not forced to consider relocating to other countries. Not only would that have a negative impact on our economy, but it might result in our exporting emissions to countries that are not strongly committed to cutting carbon emissions. Many energy intensive businesses are located in areas that have been hit hard by the economic downturn, so we have to ensure that we give them the best support available.
I have spoken about the energy contingency scheme. We continue to engage closely with the Commission on the carbon floor price, to obtain the necessary state clearance. Both packages are aimed specifically at the electro-intensive industries. It is important to highlight—
Podiatry Services
(11 years ago)
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Andy Sawford (Corby) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Robertson. I am pleased to have secured the opportunity to speak about podiatry services. I hope the Minister will forgive me if I speak a little briskly, but there are a number of issues that I want to cover. I am delighted that other hon. Members also wish to contribute.
In my constituency, which covers Corby and east Northamptonshire, podiatry services are delivered through Northamptonshire Healthcare NHS Foundation Trust. In May this year, the Nene clinical commissioning group and the Corby CCG initiated a public consultation on their proposal to make changes to the delivery of podiatry services, based on categorising the needs of patients as high, medium or low risk. I received letters from constituents and had constituents attend my surgery. For MPs, multiple contacts from constituents is sometimes a warning sign that there might be a problem. My constituents were concerned about the consultation, first, because they regarded it as ineffective, as it failed to communicate or engage with the users of podiatry services to any reasonable degree, and secondly because they thought it token. We know that the public are at times sceptical about consultation exercises, and with reason. It does not help when they see them as being more about selling a solution—a predetermined decision—than about genuinely engaging people in finding the best way forward.
We all recognise that services need to change for all sorts of reasons, not least due to our ageing population and the financial challenges that our local health care providers face. We MPs want to engage in consultations in which the public are genuinely involved and in which we feel that there has been rounded discussion about how best to work together, across the public sector and the different parts of the health system, to find the best way forward.
Jim Shannon (Strangford) (DUP)
Podiatry is important for everyone, and those who need treatment in particular. The optician will diagnose things that other people might not see; the podiatrist, too, can diagnose things that are wrong with someone’s body—for example, he can spot the onset of diabetes and other health issues, including in elderly people who do not know they have them. Does the hon. Gentleman agree that podiatry is vital in checking for ailments that someone does not know they have?
Andy Sawford
The hon. Gentleman is absolutely right, and I shall turn to that point in describing the consequences of some of the changes in my area. There is a pattern across the country. I am sure that he, too, will be concerned to ensure that services are available in his area.
On 30 July this year, the clinical commissioning groups announced that their governing bodies would approve the cessation of “low risk” podiatry. They have been unable to explain to me what the standard assessment process will be for categorising patients in that way. They qualified the announcement by stating that the decision would not apply to children or vulnerable groups, which was a response to the strong feedback that the public and I, and perhaps other hon. Members, gave. I challenged the Nene CCG on the definition of “vulnerable groups”, and it told me that the term refers to
“The frail elderly and people who are likely to neglect foot-care for financial reasons”.
That is good to hear, but it is not clear who will make that assessment, and on what basis. We must ensure that the most vulnerable can access care.
Mr Philip Hollobone (Kettering) (Con)
I congratulate the hon. Gentleman on securing the debate. He is serving his constituents extremely well on this issue. I had an e-mail from a constituent who says:
“I have an appointment this morning, where I am expecting to be told that I shall not be receiving any more services from”
the podiatrist.
“I have Psoriatic Arthritis in my hand and feet and other joints”,
and
“insoles made to help me walk. ‘I am unable to reach down to do my feet myself’ I told the podiatrist, to which he replied, It can’t be helped. He then said I would have to get my husband to do my feet.”
She goes on to say that her husband
“has issues himself, I cannot ask him to do yet another task for me.”
That is an example of a vulnerable person who clearly does not feel that she has been included in the exemptions that the hon. Gentleman describes.
Andy Sawford
I thank the hon. Gentleman for his intervention. I welcome his support for the debate. He is assiduous in working on local health matters; indeed, we have worked together on some issues. I welcome him raising his constituent’s concern. It illustrates the worry about the impact of the changes and the reality of people already being advised that services will be withdrawn—even those who the hon. Gentleman and I would hope would fall under the definition of “frail” or “vulnerable”, including those who may not be able to afford care.
Access is part of the problem. At the same time when the consultation exercise was carried out, the foundation trust reviewed its estates and facilities to make savings. It closed some podiatry clinics and relocated some services, making them more difficult to access. We are talking about people who may not have transport or who may have mobility issues, so difficulty in accessing services is a further problem.
In Northamptonshire, 107 private podiatrists are registered with the Society of Chiropodists and Podiatrists. I am grateful to the society for its helpful briefing for today’s debate. Those private podiatrists are expected to provide care to low-risk patients. Costs vary across the area, so will the Minister comment on how we can safeguard our constituents’ interests by ensuring that costs are affordable where people are told that they must meet costs themselves and that as many people as possible are not charged at all where there is a clear need, in accordance with the CCG’s stated wish to include the frail and vulnerable?
I have received letters from Northamptonshire Healthcare NHS Foundation Trust podiatry staff, who told me that their jobs were being put at risk. There have been 16 whole-time equivalent podiatry posts lost, including leadership posts and the posts of musculoskeletal and diabetes specialists. That is inconsistent with the Government’s stated aim of maintaining high-quality clinical services. The reductions will create a high level of clinical risk by putting patients at an increased risk of falls, ulceration and amputation. We all want to ensure that our local hospital services, for example, can meet growing needs. We do not want more people presenting at accident and emergency or needing hospital admissions because they were not effectively treated through podiatry services.
The staff in the local podiatry service down-banded to bands 5 and 6 will be expected to carry out the same role that they currently deliver at bands 6 and 7. The view of the Society of Chiropodists and Podiatrists is that that is a deskilling or de-professionalisation of the service. I am concerned about that. Podiatry is not the most glamorous or attractive part of medicine. Not everybody wants to deal with people’s feet, for reasons we can all understand, but such work is incredibly important. Those who do it are proud of their professional skills, and we do not want them diminished, or want people not to be paid at the right level for their qualifications, because in the end that will lead to a recruitment problem
I understand the importance of the quality, innovation, productivity and prevention challenge to the national NHS strategy. I met the chief executive of the Northamptonshire Healthcare NHS Foundation Trust on Friday to discuss the issues. She talked to me about the rationale behind the changes, but she also said that there had been “learnings”. What I am learning is that the term “learnings” in health care usually means, “We recognise that we didn’t go about this in the right way. We perhaps rushed too quickly.”
Does the Minister accept that if people cannot access services where they are needed, the changes in Northamptonshire, and perhaps other areas, could create long-term problems and prove to be a false economy? I hope she agrees with that. Will she look at the staffing changes in Northamptonshire? I was asked on BBC Radio Northampton this morning what an Adjournment debate achieves, and I said that one thing is that the Minister will take an interest in what is happening in my area. I hope that one outcome of today’s debate will be that she will look at the changes in Northamptonshire, if she has not had a chance to do so already.
I do not want the Minister to override the proper role of local decision makers in deciding on the best pattern of services in our area, but a sense check on the Government’s intentions around the shift to prevention and the best use of resources, and how short-term decisions are made locally to find savings, may be a counter to that.
There seems to be a contradiction between the Department of Health’s vulnerable older people’s plan and policies that put older people at higher risk through the downgrading of incredibly important and much valued services. Along with the demographic time bomb that the NHS is facing, there is also a diabetes challenge; 2.9 million people, or 4% of those in the UK, have been diagnosed with diabetes.
Nick Smith (Blaenau Gwent) (Lab)
I congratulate my hon. Friend on securing this debate. I recently visited the foot clinic at the Aneurin Bevan hospital in Ebbw Vale in my constituency about a fortnight ago, and I spoke to the fantastic podiatrists there. They told me about the huge and growing demands on their services because of diabetes. Does he agree that raising awareness of diabetes and the effect that it can have, particularly on people’s feet, is really important?
Andy Sawford
I thank my hon. Friend for his supportive intervention. He is absolutely right that diabetes can cause problems for people’s feet. Also, by examining people’s feet, the podiatrist can diagnose cases of diabetes and ensure that people get the treatment, help and support that they need. I am concerned that some of the estimated 850,000 people who are undiagnosed might continue to go undiagnosed if podiatrists are not able to provide proper, professional attention to people’s feet when they come into contact with them.
The National Institute for Health and Care Excellence clinical guidance on the prevention and management of diabetic foot complications sets out a foot care management plan to reduce the risk of problems occurring in those with diabetes. It is the clear view of the Society of Chiropodists and Podiatrists that there are not enough podiatrists to comply with the NICE clinical guidelines. We might expect the society to make that argument, but it chimes with my concerns locally that we have lost 16 podiatrists in our area. At a time of increasing diabetes, a reduction in podiatrists gives me real cause for concern, because the society’s view might be right.
Some 500,000 hospital beds in England each year are occupied by people with diabetic foot ulceration—more than all other diabetes complications combined. Only breast and prostate cancer have a higher mortality rate than diabetic foot ulceration. The number of amputations in England has risen from 5,700 in 2009-10 to more than 6,000 in 2010-11. It is reported that, given the increasing incidence of diabetes, more than 7,000 amputations will be performed on people with diabetes in England alone by 2014-15, unless urgent action is taken. If we look at our acute hospital budgets and compare the costs of a bed and of performing an operation and amputation—not to mention the impact on the individual concerned—we see that an increase in amputations in our area could prove far more expensive than continuing to provide the podiatry services that people have come to expect.
Does the Minister accept that the prevention and management of foot disease in people with diabetes is an essential component of every commissioned diabetes pathway, and does she share my concern that 80% of amputations each week are preventable? That is a stark figure. Can she give me an undertaking that clinical outcomes for vulnerable older people, including those with diabetes, will not worsen in Northamptonshire?
I wish to mention briefly some other issues in the short time I have left. By standardising best practice in the work of podiatrists in the UK, there is the potential to make net savings and reduce the number of accident and emergency admissions and amputations. NICE clinical guideline 119 looks at best practice. I hope that the Minister will consider how we can make sure that that guideline is followed in Northamptonshire with the resources available.
Finally, there needs to be greater parliamentary and public attention to podiatry issues. I very much welcome hon. Members’ attendance at this brief debate, and their interest and support. The subject is not particularly glamorous. Toenails, amputations and ulcerations are not things we want to think about over our breakfast, but they are important issues, particularly for some of the most frail and vulnerable people.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate the hon. Member for Corby (Andy Sawford) on securing this important debate. He is right to say that podiatry might not be at the more glamorous end of the health service, but of course it is important. I had a very good meeting with Diabetes UK within the first few weeks of taking on my new job as the Public Health Minister. Many of the points that he has raised were stressed, particularly the link with diabetes and with unnecessary and avoidable amputations. Being unglamorous does not mean that it is not important. I think we can agree about that.
The Government know that receiving personal care that is responsive to people’s needs is absolutely essential, and the service that podiatrists provide to local communities is vital in helping people to maintain their mobility, independence and well-being. We know that many other good things flow from maintaining mobility and independence.
Healthy feet allow people to be active and to exercise, which, as we know, has numerous benefits: maintaining better weight, improving muscle and bone strength, and keeping people’s emotional and mental health in a good place. There has been a lot of discussion about the isolation and loneliness of some older people, and the more active they can be, the less likely it is that they will be isolated and lonely.
With the elderly being the fastest-growing age group in Britain, increasing pressure is being put on health care, which will be reflected in the demand for podiatry care. Ensuring people have got healthy feet, preventing falls in older people, and proper and regular foot care can alert us to the early signs of other, more serious health issues, which is obviously important in people with diabetes.
Diabetes, arthritis and blood circulation problems are of particular concern, and they are big priorities for all parts of the NHS. Sometimes people are concerned that individual services or conditions are not always specifically named, but NHS England has very clear direction, through the NHS mandate, about looking after long-term conditions and older people, and podiatry is a key component of that mandate.
Jim Shannon
Will the Minister ensure that podiatry home visits continue for people—probably those in rural locations—who are unable to access the surgeries?
Jane Ellison
Access is an important factor. The hon. Gentleman is right to highlight the fact that improving and maintaining access is important.
Sometimes education is about making sure that people understand when to seek help and what the warning signs are. Podiatry is an important component of early alert work, as well as an important provision for older people and for people with long-term conditions. In situations in which services need to be changed, the NHS commitment is to make sure decisions are made in a clear and transparent way, so that patients and the public can understand how services are planned and delivered.
Through the mandate, NHS England is responsible for services and for working with local clinical commissioning groups to ensure that their services are based on the needs of the local population within the resources available—the hon. Member for Corby acknowledged the constraints—and there has to be evidenced-based best practice.
An important part of the reforms was to establish CCGs at the level at which commissioning decisions are informed. They are closer to their local communities and can respond to local needs, but they have access to good advice through NHS England, clinical senates and local professional networks. That commissioning process also takes into account the local authority’s views, with regard to the joint strategic needs assessment and, of course, the local health and well-being strategy, so these decisions do not exist in a vacuum: they are taken within a framework, all of which is geared towards local services responding to the needs of local people.
Of course, a big part of that—it is something I am always keen to stress—is the engagement with local democratically elected representatives. I am really pleased that the hon. Gentleman is so engaged with this issue. Whenever I have the chance to talk to people from any part of the health service in the course of my work, I stress the need to keep local councillors and local MPs closely informed and to work with them in making these key decisions, because I know that we are often the early warning signal when people have concerns. Like the hon. Gentleman, I have had people come to my surgery about these issues and that has been an early alert about when people might have concerns. It also allows us to respond to concerns that perhaps arise sometimes when a misunderstanding of a decision is causing undue alarm.
Andy Sawford
On the point about misunderstandings, the Minister is right. I do not want to alarm people across my area about services that they may still be able to access, but will she look at this issue in relation to Northamptonshire? If she has any opportunity to talk to the local CCGs or Northamptonshire Healthcare NHS Foundation Trust, will she ask them to make clearer what guidance there is and what assessment process there will be to ensure that people who can still access these services know that they can do so and are assessed as being in the group that can still access them?
Jane Ellison
The CCGs and NHS England are obviously aware of the debates that we have here in Parliament; I always undertake to draw to the attention of the correct parts of the NHS the debates that we have here. It is obviously not for me to tell CCGs what to do or what to commission. However, this is the whole point such debates —to highlight Members’ concerns, to give Ministers a chance to respond to them, and to explore how more could be done to allay those concerns and respond to them—so I am very happy that we are getting this discussion on the record.
The hon. Gentleman raised the issue of the education and training of podiatrists. Health Education England is working to ensure that there is an appropriate balance between supply and demand. We have already talked about the likelihood—indeed, the certainty—that demand for podiatry services will grow, because of our ageing population. HEE looks at the number of training places being commissioned. In collaboration with HEE, employers are also obviously keen to ensure that there are sufficient podiatrists to deliver the services that are needed. HEE will publish the national work force plan for England in early December—so, any time now. This year, providers have forecast their future work force requirements, which are obviously based on local service demand and which local education and training boards have moderated, to make adjustments for their education and training commissions. That piece of work is being gauged sensitively to look at local demand and the need for service provision. The assessment will be available in the published plan, which will show the position right across England.
Obviously, that process looks to the future, but we already know that the number of podiatrists working in the NHS has increased during the last 10 years, from 2,916 full-time equivalents in 2002 to 3,067 full-time equivalents in 2012, which is an increase of about 5% during that time. We are also continuing to develop the profession. The hon. Gentleman rightly highlighted that this is an area in which we need growing expertise. We introduced legislation that came into force on 20 August 2013 that enables podiatrists and physiotherapists to prescribe independently, following recommendations from the Commission on Human Medicines. Therefore, podiatrists who successfully complete education programmes approved by the Health and Care Professions Council, including conversion courses to allow existing supplementary prescribers to become independent prescribers, can begin to prescribe independently in 2014. That is a helpful step forward. Extending prescribing in this way will also help to support the key role that podiatrists play in shifting care into the community and improving the patient experience. It will benefit patients by making it more convenient for them to get treatment, as well as hopefully freeing up some valuable GP time.
We recognise that some of the people accessing podiatry services will be vulnerable; we have talked about that issue and the hon. Gentleman expressed his concern about it in his speech. We are reviewing how primary care, urgent and emergency care, and social care services can all work together as part of the integrated out-of-hospital response, looking at the whole person and considering the essential point that the hon. Gentleman made about how we can keep people out of hospital when they do not need to be there, by doing the good early alert work and ensuring that things do not progress to a point where we have the unnecessary amputations that he described.
To support that vision, the Government are working with NHS England on an out-of-hospital care plan for vulnerable older people. In doing so, we are engaged with patients, carers, and health and social care staff—all those important groups—to test those proposals and implement them. The final plan will be published later. I think that the hon. Gentleman will realise from recent announcements that my right hon. Friend the Secretary of State for Health has put enormous emphasis on the need for joined-up thinking about supporting people, particularly the frail elderly, and that is a clear priority that we have talked about a lot. All the things that the hon. Gentleman mentioned in his speech this morning are part of that process, to ensure that people understand that they have a named GP who can support them and to ensure that we spot signs of problems early. That personalised, proactive primary care is essential.
Andy Sawford
I see the Minister looking at the clock and I sense that she has a little more to say, but can she just say whether GPs will be able to refer people to podiatrists, in such a way that the service is free? Can GPs be a helpful way of ensuring that people in Northamptonshire who really need this service can get it?
Jane Ellison
Right across the country I would absolutely expect GPs, when they see the warning signs of problems, to alert people to the need for further care. That is one of the advantages of having a named GP; hopefully, they will spot the signs of problems early and recommend whatever the appropriate services are. That is very much part of the system that we envisage.
However, we also need multi-disciplinary teamworking; we need people to be joined up in their thinking. Obviously podiatry services are part of that. The hon. Gentleman has eloquently raised the concerns of his constituents and his own concerns this morning. One of the things that he focused on was the question of who are low-risk patients and how is someone assessed as low-risk. I understand that the CCGs involved modified their recommendations for future service provision in response to feedback received during the consultation, so children and vulnerable patients will still be able to access community podiatry services. However, I sense that his concern is that further work might be needed to flesh that plan out, and I know that the CCGs will have heard him express that concern; he has put it on the record today, saying that he is still concerned that those recommendations might still not be fully understood and that he would like to see more work done in that regard. I believe that the analysis carried out by the CCGs showed that only 1% of low-risk patients move into the medium or high- risk categories, but I know that he will want to have ongoing discussions about the nature of that assessment and about that figure.
I also believe that the CCGs involved took into consideration the number of local independent podiatrists who are registered with their professional body, with regard to the low-level community-based care. They are also rightly exploring the potential of developing a broader range of low-level foot care and podiatry services via the third sector and social enterprises, as part of their emerging health and well-being strategy. That is the right thing to do. Some of these services do not need to be delivered by a clinician of any sort; sometimes they might be delivered more appropriately in another setting. I believe that one of the advantages of an increasing emphasis on local planning and integrated service planning at a local level is that people can think outside the box about where certain services—particularly these important early alert services and low-risk services that can prevent people from becoming a higher risk—can be delivered.
The hon. Gentleman has put his concerns on the record; it is right that MPs have the chance to do that. The local CCGs will have heard the concerns that he and other Members who have intervened in this debate have raised, and I am sure that they will be looking to respond to and allay them. However, some of those concerns were based on speculation about what might happen if this piece of work is not got right, and it is important that we find the balance between having due concern about what might happen if services are not got right and if the commissioning of them is not right, and at the same time sending a very clear signal to those people who have medical concerns, such as diabetes or the early onset of other problems, that they must seek help and that they will receive that help. They must not be put off seeking help because of concerns about the future commissioning of services.
It was useful to put all these issues on the record, and I am sure that the hon. Gentleman’s local CCGs and other CCGs will be looking to respond further to the concerns that he and other hon. Members have outlined today.
Dermatology Funding
(11 years ago)
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Sir Edward Leigh (Gainsborough) (Con)
It is a pleasure to serve under your chairmanship, Mr Turner. I am grateful for this opportunity to debate issues relating to the provision of dermatology in the NHS. This area has received little parliamentary attention over the years, given the considerable morbidity and mortality for which skin disease is responsible. Indeed, I think I am right in saying that this is the first debate in the House of Commons in several years on dermatology and how it is treated in the NHS.
I should declare an interest, because we are always supposed to. I have a skin condition called rosacea. It is not that serious; I take antibiotics every day and it is controllable, but it has, of course, led me to take an interest in this subject.
In preparing for this debate, I consulted widely among the different interests in skin disease, and I am grateful for the insights that I was given. It is noteworthy that the same themes emerged from all quarters. Skin disease is extensive and has a great impact. It results in profound psychological consequences for many, especially for those with severe variants of conditions. It is under-treated in the NHS, and there are commissioning issues that relate partly to dermatology’s continuing to be something of a Cinderella disease. Talking to people, I heard the expression “Cinderella disease” time and again.
Most crucially, there is wholly inadequate training, notably among general practitioners, to enable doctors to handle the dermatology cases that will come their way in day-to-day practice. Why is this? There is a view that dermatology does not matter and that it does not kill. This is both complacent and wrong. Many skin diseases have horrendous effects, even when they are not fatal. Skin cancer is a major killer, and there would be benefits from renewed focus on this disease, both to help people avoid it in the first place and to identify and treat it quickly where it occurs.
The statistics on the burden of skin disease are eye-popping. Some 54% of the United Kingdom population experience a skin condition in any 12-month period. Of those, 14% seek medical advice, usually from a doctor or nurse in the community. Some skin conditions will be trivial, but many are not. Skin conditions are the most frequent reason for people to consult their GP with a new problem. Some 24% of the population visit their GP with a skin problem each year.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
I congratulate my hon. Friend on obtaining a debate on a subject that has not been discussed for a long time. I have looked at facts and figures on dermatology services in my constituency. Would it surprise him to hear that, in the first six months of the year, the trust’s dermatology department had 501 day cases, 4,160 new out-patient appointments and 7,951 follow-up out-patient appointments, and undertook more than 3,292 out-patient procedures? Does not that show the demand in the system for dermatological services?
Sir Edward Leigh
I am not surprised. I found similar figures in Lincolnshire. I should think that the same sort of problem will be found anywhere in the England.
The most common reasons for people visiting their GP are skin infections and eczema. Nearly a fifth of all GP consultations relate to a skin disease. Atopic eczema is the most common form of eczema. All my children have had it, and one of my boys suffered badly. Some children suffer grievously from it. It can affect people of all ages, but is primarily seen in children and affects up to 20% of children by the age of seven. Most people grow out of it, but a number of adults continue to show symptoms at a later age, some having the condition for life.
Eczema is typically characterised by red, sore and itchy patches of skin. For those who have it or those, such as parents, who have to care for a child with it, eczema can be highly debilitating. Sleep deprivation is common in children with eczema and, therefore, of course, in their parents. It causes major disruption to family life, not least because of the application of endless amounts of ointment. I know all about that.
Psoriasis, from which my brother and my mother suffered, has serious effects. It affects only 2% to 3% of the population, but often has devastating consequences for those who have it. Its onset is typically at 15 to 24 years, which is such a crucial stage in a person’s development. It is an immune condition that triggers excess replacement skin cells, which can lead to raised plaques on the skin that can be flaky, sore and itchy. It is a serious problem.
Then there is acne—I know all about that, too—a condition most commonly associated with adolescent teenagers. Although the condition is thought to be linked with hormonal changes during puberty, some 80% of young people above the age of 11 will have a degree of it at some point. It can affect people well into their adult lives, and it can be severe. Acne scarring is permanent. About 5% of women and 1% of men have acne over the age of 25. In a not inconsiderable number of cases, acne is widespread and ever-present, producing feelings of shame, despair and even, I am sorry to say, suicide in some cases. Acne is particularly tricky, psychologically, because it is often at its worst when the young emerging adult is feeling at their most self-conscious.
Other common conditions seen by specialists include vitiligo, urticaria, rosacea, herpes simplex, shingles, vascular lesions, benign skin tumours, benign moles, solar keratosis, viral warts, non-malignant skin cancers—I know all about that, too—and malignant melanomas. The list is almost endless, running as it does to a couple of thousand different conditions, each of which can have profound effects on the lives of those who have them. People who suffer from these diseases often do not want to speak about them. I am attempting, in this small debate, to give these people a voice.
It is worth saying that serious psychological effects are sparked by skin disease. We live in a society where we are subjected daily to images of perfection, selling everything from make-up, fashion and holidays to ice-cream. Skin conditions are sometimes very visible, and some people are highly prejudiced against those who have them, and make little attempt to hide that. That can lead to stress, depression, anxiety, and other related problems.
There is a beautiful picture in the Louvre of a child reaching out to an old man, probably their grandfather. The child is beautiful and the old man, who obviously suffers from rosacea, is deformed and hideous. The point of the painting is that beauty lies inside, not on the skin, but that is not often the view of modern society, so skin conditions lead to psychological stress.
Many of these facts—I could go on, but I will not—are set out in detail in the recent report on the psychological effects of skin disease published by the all-party group on skin. I pay tribute to my hon. Friend the Member for Mole Valley (Sir Paul Beresford) who chairs that group and does it well.
Despite the fact that skin disorders are both serious and the most likely reason for someone to go to their GP, training and knowledge of dermatology among primary care health professionals is generally very limited. Perhaps “very” is wrong, but it is certainly limited. Astonishingly, there is no compulsory requirement for dermatology training in undergraduate or postgraduate medical programmes of study. Dermatology is still not included in all undergraduate medical school curriculums; it is optional in some, and untested in others. In five to six years of medical training to become a doctor, the average medical school offers—I found this incredible— less than a fortnight of teaching in dermatology. This is often combined with another so-called minor field of medicine. I am told that many miss this teaching altogether, not regarding it as important, and joke about taking a “dermaholiday”. That is like the NHS employing an army of plumbers who are highly knowledgeable about boilers and blocked drains but who do not know how to trace a leak or mend a pipe. By failing to provide adequate education in dermatology, which is an important field of medicine, we are badly failing to meet the needs of patients.
Nic Dakin (Scunthorpe) (Lab)
I congratulate the hon. Gentleman on securing this important debate. He is setting out his stall extremely well. According to the consultant dermatologist at Scunthorpe general hospital who contacted me, 15% of patients presenting to GPs have a skin disorder of one kind or another, which underlines the hon. Gentleman’s point on the importance of including dermatology in GP training.
Sir Edward Leigh
In a moment, I will address the fact that skin diseases can have fatal consequences. As GPs often do not have adequate training, they are not able to spot conditions that can be very dangerous.
Training is important. In a 2008 survey of final-year medical students, only 52% of 449 respondents said that they felt they had the necessary skills to manage skin conditions. A lack of education and training may lead to fatal errors, and I stress that point because skin disease is not only about psychological damage. Skin lesions mistakenly taken to be benign can lead to cancer. Conversely, inappropriate referrals to secondary care can be costly and are blocking up big parts of secondary care. As awareness of litigation increases in the NHS, GPs are, unsurprisingly, less and less willing to take risks, so they refer more and more patients to secondary care. I understand that the general hospital in Lincolnshire—this echoes the point raised by my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan)—has seen a 26% rise in dermatology referrals for secondary care in the past year, and it is not alone.
The exploding incidence of skin cancer, an ageing population and side effects from new potent drugs are all driving referral rates. It has been guesstimated that there are 100,000 cases of skin cancer a year in the UK, but the number is not known for sure because the NHS does not collect figures for cancers that are not melanomas. Work this year suggests that the number may be nearer to 700,000; that is what dermatologists tell me, because they are dealing with such a volume of cases, day by day.
Studies show that the skill of GPs in diagnosing skin lesions needs improvement, and other studies raise concerns about the standard of skin surgery offered in primary care. In 2012, the Royal College of General Practitioners updated its curriculum statement on the care of people with skin problems. The statement goes a long way towards recognising dermatology as a key component of a GP’s training. The statement sets out a number of expected key competences within the field, but crucially, dermatology remains an optional component. For undergraduates, the British Association of Dermatologists recommends a two-week full-time attachment to a dermatology unit, with a realistic assessment at the end of the course. The association thinks that dermatology should also be taught when undergraduates work with general practitioners in the community. When trainee GPs are undertaking their two-year hospital placement, a six-month post in dermatology alone, in a combined post such as dermatology and general medicine, or in a combined minor specialty rotation would go a long way towards helping trainee GPs to take a special interest in dermatology, which is what we need.
The GP training period is likely to be lengthened by 12 months. I urge all interested parties—Health Education England, the royal colleges, the General Medical Council and the ultimate employer, NHS England—to use half or all of that extra time on a proper dermatology rotation, which would ensure that the GPs of the future are properly equipped to address their future work load. If that is to happen, funding must be made available to ensure that there is adequate consultant time to train budding GPs and to pay their salary while they undergo the hospital training.
Mrs Gillan
My hon. Friend is making a powerful argument. Does he agree that there is a worrying lack of provision for the psychosocial aspects of skin conditions? Is he familiar with Changing Faces, which, among other things, provides skin camouflage clinics? It sent me an e-mail when I was preparing for this debate saying that the King’s Fund has stated that there are only 3.7 posts across the country providing support for the psychosocial aspects of skin conditions, and the funding for those posts is under threat. Does he propose that funding should be found to try to support that vital work?
Sir Edward Leigh
I entirely agree. I talked to a doctor recently who said that one of his patients had not dared to go out for 20 years without wearing enormous amounts of special make-up because she was so worried about her condition. We should take that very seriously, because it affects hundreds of thousands of our fellow citizens and their feeling of self-worth.
The lack of dermatology education applies not only to GPs but to nurses and pharmacists, who also play a key role in the management of patients with skin disease. High and ever increasing sales of over-the-counter skin products suggest that people buy many products from pharmacies, yet training of pharmacists in the management of skin problems is limited, and evidence that they are providing appropriate advice is lacking.
There is considerable potential for improving self-care through the provision of high-quality patient information and the development of the knowledge and skills of community pharmacists in skin diseases. That would save the NHS money, as well as improve patient care, and it is a nettle waiting to be grasped.
The General Medical Council, working with the Royal College of General Practitioners, the British Association of Dermatologists, the Royal College of Nursing and the Royal Pharmaceutical Society, plus Health Education England and NHS England, has a duty to ensure that urgent priority is given to the provision of proper dermatological training for all GPs, nurses and pharmacists. That training should surely emphasise that most inflammatory skin diseases are long-term conditions and are likely to need ongoing care, often throughout a patient’s life. Similarly, the psychological effects of skin disease should be considered an integral part of any dermatological training course; I echo my right hon. Friend’s important point on that issue. There is good evidence for the effectiveness of general practitioners with a special interest in dermatology working within appropriate accreditation frameworks. More needs to be done to expand that group of clinicians, which is still all too small.
In addition to poor training at primary care level, there is also an issue with the number of consultant dermatologists. I pay tribute to my consultant, Professor Chris Bunker, who is well known in the field and is president of the British Association of Dermatologists. Compared with mainland Europe, the ratio of consultant dermatologists to the general population remains low in the UK, at 1:130,000. It is estimated that there is a 20% shortfall in consultant numbers in the UK.
Furthermore, there are significant issues related to vacancies in dermatology consultant posts—there were some 180 consultant vacancies at the last count. That is due both to an inability to attract people to posts in remote areas and to the widespread problem of funding being available for a post but the relevant deanery refusing to provide a training number that allows the post to be filled by a trainee.
As well as being unpleasant and demoralising for patients, some skin conditions kill; that must be emphasised. Skin conditions are not just a psychological problem. There were nearly 4,000 deaths due to skin disease in 2005, of which 1,817 were due to malignant melanoma, which is now the UK’s most common cancer. That is against a background of 13,000 malignant melanomas each year, a level that has increased 50% in little more than a decade. Those figures continue to rise, driven by the wide availability of cheap holidays in the sun, the continued fashion for using sunbeds and the inadequate resourcing of awareness campaigns. We must do more about that; improved public funding for awareness campaigns, better training and stronger regulation of the use of sunbeds are some of the most obvious answers to the problem, yet very little, if anything, ever happens. Despite skin disease being very common, the direct cost to the NHS of providing skin care is relatively modest. The overall direct cost to the NHS in England and Wales was some £1.82 billion at the last estimate, in 2006.
As of October 2013, there is no policy lead for dermatology in the Department of Health or NHS England; I put that point directly to the Minister. The majority of dermatology services are commissioned by clinical commissioning groups, but national oversight is necessary to co-ordinate care across the country and to drive the agenda. Prior to the April 2013 switchover, primary care trusts were responsible for commissioning dermatology services, but the Department did at least have a policy lead on overseeing service provision. No similar post now exists in NHS England, so no one—I hope the Minister can reassure us on this—champions this area, spots good practice, or drives change.
Earl Howe recently stated in the other place that dermatology would be spread across the five domains of NHS England, and that it would not, as was previously thought, sit primarily under long-term conditions in domain 2. That surely only heightens the need for a director to co-ordinate policy across the five domains. Even if only a junior post were to be created, patients and health professionals would be given a clear line of accountability and a person to whom they could appeal who was above their local CCG lead for commissioning. Given the prevalence of skin disease, a national clinical director for dermatology, which is what I am calling for, would not look out of place among the long list of such posts at NHS England. I urge it to consider such an appointment.
There is a lack of sources of peer-group, independent advice for people with skin conditions. Patient support organisations are mainly charitable institutions that rely, for the most part, on donations from individuals and pharmaceutical companies. People with skin disease place great value on the information and help provided by dermatology patient support groups. Skin disease is not a well-resourced area, and such groups struggle to make ends meet. There is no group at all, for example, to provide support to people with acne, the previous group having run out of funds some years ago. Given that such charities are almost certainly a cost-effective way to provide what might be life-saving support to patients, perhaps the NHS should consider being a little more generous in its funding.
I thank all those who have helped me to prepare this speech, particularly the British Association of Dermatologists. It is clear that a small number of important steps would make the greatest difference in this area of disease, including the appointment of a national clinical director to co-ordinate learning around the NHS and to drive uptake of new ideas and change. More important, however, is persuading the relevant bodies that I have mentioned to ensure that undergraduates emerge from medical school with a reasonable grasp of dermatology and that newly appointed GPs can recognise a malignant melanoma, which is probably the most important point of all. Those changes alone would have far-reaching, positive consequences for dermatology and for those with skin disease, and I urge the Minister to consider what can be done to make them a reality. I hope that this debate will make some difference.
Sir Paul Beresford (Mole Valley) (Con)
I congratulate my hon. Friend the Member for Gainsborough (Sir Edward Leigh) on obtaining this debate. I have tried quite often and failed, so he obviously gets on better with Mr Speaker than I do or has better luck in the ballot system. I also congratulate him on producing many of the statistics and conclusions that the all-party parliamentary group on skin has come up with, which has two advantages: the Minister has heard them, and I do not have to repeat many.
This is an important and reclusive area in the national health service, but I must start by making some declarations of interest, as we are supposed to do. First, as part of clinical practice, I have seen and referred patients with a number of skin conditions. The treatment of some has been urgent—my hon. Friend mentioned melanomas—and some semi-urgent, such as basal cell carcinomas. Such carcinomas are commonly called rodent ulcers and are just chopped out, but when I was in Palermo a few years ago I saw one that had been left on the side of a gentleman’s face and that looked something like a small, underdone McDonald’s hamburger. We do not see such things here, so whatever we say about the condition of dermatology in this country, that has gone—thank goodness. There are a number of common and disfiguring conditions. My hon. Friend touched on acne and a number of other chronic diseases, such as psoriasis, all of which some people do nothing about, but for which help is available if they look for it.
Secondly, I am chairman of the all-party parliamentary group on skin. I must admit that, shortly after the election, I was pressurised, bullied, pushed and dragged, kicking and screaming, to accept the post. One problem with many things that we do in this House is that, once close to something, it is hard not to get drawn in. It is a fascinating and complex area with a definite recognition problem. It is just not seen and accepted. My hon. Friend talked about funding but also touched on his family’s clinical problems; I shall resist doing so as my sons would never allow me. The area could do with more money, but more could be done more effectively with what we have. Much improvement can be made through education, which my hon. Friend touched on, a change in service approach and, most of all, a recognition of need.
One of the first really quite shocking points that was made to me as chairman of the APPG was that, while skin conditions account for the greatest proportion of patient visits to GPs, undergraduate education in such conditions for doctors, including those who will become GPs, is minuscule. I risk repeating my hon. Friend’s point, but it is worthy of repetition. Many student doctors spend a few weeks, possibly only one week, studying skin diseases and conditions. I am not sure whether it still applies, but I believe that education in skin conditions is optional in some medical schools. If someone wants to become a GP and opts not to learn about such conditions, they are in for one heck of a shock or run the risk of doing their patients a disservice. It is quite staggering considering that dermatologists are expected to manage over 2,000 different diseases of the skin, hair and nails.
Reputedly, as has been mentioned, 54% of the population are affected by skin disease each year, and, as my hon. Friend said, some 4,000 deaths are attributed to skin disease annually in the UK. Generally, the horrendous malignant melanoma is the main cause. The incidence of melanomas has increased by 50% over the past 13 years. The hot spots are many and varied and include Glasgow and areas of Surrey. I do not know why that is and I am not sure that anyone does. Skin cancer is the most common cancer and is the second most common cancer causing deaths in young adults. Prevalence of basal cell carcinoma equals that of all other cancers combined and increased by 133% between 1980 and 2000. Hand eczema is one of the most common reasons for disablement benefit in the United Kingdom, yet skin disease hardly ranks in the education that goes towards the basic medical degree.
As has been mentioned, we have 780 funded posts for consultant dermatologists in the United Kingdom, which is a positive. That would be impressive, but, as has also been mentioned, 180 to 200 vacancies need to be filled. To add to the difficulties, many of the posts are filled by locums who are not fully accredited dermatologists. Even more concerning is that there are few specialist facilities, which are not ordinary hospital facilities but those that provide specialist dermatological treatment, including dedicated dermatology psychology practitioners. It is little recognised that many skin diseases are always present or threatening to be present and can cause devastating effects on a person’s physical well-being and can lead to serious psychological problems.
The all-party parliamentary group on skin has produced evidence that highlights the extensive impact that skin disease can have on all aspects of patients’ lives, such as school, work or personal relationships and, as a result, self-esteem. Such conditions often affect career choices and even such basic things as where an individual can go on holiday. Who would want to sit on a beautiful beach or to go swimming from it when hit by eczema, psoriasis or any of the various pigment conditions? It just does not bear thinking about. Some conditions can obliterate what many of us would expect to be normal social, sexual or leisure activities. According to the British Skin Foundation, approximately 50% of people who suffer from skin conditions have been victims of verbal abuse—we can imagine a child with psoriasis in a school. One in six has self-harmed and 17% have contemplated or attempted suicide.
If I have one major ask of the Minister, it is that she go to one of the few—but top—skin clinics, particularly one that includes psychological treatment as a norm. She should talk to some of the patients with psoriasis or a number of other such disfiguring diseases. They are not necessarily death-causing, but they totally obliterate normal life. She can see how they are handling their conditions, as well as how modern medicine can improve their lives, in particular if they get psychiatric help. Most can be helped to keep their conditions at bay, but part of the package should require psychological help—we have an APPG paper on this. I ask the Minister to meet those patients, who range from the very young—babies—right through to the very old, and watch and listen to how they cope. That should encourage a national rethink on how the NHS treats this massive and often unrecognised area of medicine.
When the Minister visits new clinical commissioning groups, which she does, I hope that following our debate and in particular the point made by my hon. Friend the Member for Gainsborough, she will ask some pertinent questions about how commissioners draw up local service specifications for the bidding process for dermatological services. The parameters of dermatology bids need to be drawn up with expertise and experience, which many CCGs do not have. I hope that the Minister can encourage, bully, push and cajole those CCGs to buy in, pull in and seek expertise when drawing up the specifications. The British Association of Dermatologists recommends that, before carrying out a service tender, commissioners should undertake a health care needs assessment and a review of the current service provision and, most importantly, consult service users and local clinicians, especially those who know something about the conditions.
Mrs Gillan
I pay tribute to my hon. Friend as chairman of the all-party group on skin—however reluctantly he took the post, he does a good job and I am pleased to be a member of the group. Is he familiar with the teledermatology service pilot in Buckinghamshire where a short history and photos of a patient are sent to consultants who can then provide advice to GPs? If he is not aware of it, would he like to know more? If he is aware of it, will he recommend that the Minister look at it while examining what we do in this area? It could be a valuable addition to the tools available to help people with dermatological conditions.
Sir Paul Beresford
I thank my right hon. Friend. In answer to her first question, which was whether I was aware of the pilot, the answer is no. Would I be interested? The answer is yes. As for the Minister, I saw that she was writing the details down, so I do not think I need to repeat them.
The greatest change necessary is to encourage education. That has already been touched on at some length. The lack of knowledge among practitioners and clinicians is the problem. We need better education in the under- graduate curriculum and further improvement in post- graduate training, perhaps with a continuing professional development requirement. Training is also required to produce more consultants, more doctors and psychologists with a professional interest in dermatology and more specialist nurses. That is not a big ask, considering the size of the problem.
This is an area where investing more on education at every level, with better provision of specialist clinics should, in due course, ease some of the costs and pressures, in particular on primary care. There would therefore be a positive payback. I reiterate, however, the importance of the Minister seeing things first hand. I would be delighted to arrange an appropriate visit and join her if she is willing.
Jim Shannon (Strangford) (DUP)
I apologise for ducking in and out of the Chamber. I am trying to make arrangements to meet a couple of people, so I apologise to the hon. Member for Gainsborough (Sir Edward Leigh) and to other Members for not being here for the entirety of his speech.
I congratulate the hon. Gentleman on bringing the matter to the House for consideration. He expounded the importance of this matter to him personally. For others in and outside the Chamber, it is something that perhaps members of their families have and that they can relate to.
As the hon. Gentleman outlined, there is a need for sufficient funding. When we look at what this involves, we can quickly appreciate the importance of the subject. He referred to the 75% increase in skin cancer in the past year. As an elected representative with a particular interest in health issues—I am my party’s health spokesperson in this place—I have a close relationship with my counterpart and colleague in Northern Ireland, the Health Minister, Edwin Poots. He furnished me with figures that indicate that the increase in Northern Ireland is equal to the figures given earlier, if not just above in many cases. I find that as worrying as the hon. Gentleman did.
I have read the report and it is helpful to read some of the background information. A team from East Anglia recorded data. Some people will say that there are lies, damned lies and statistics. Perhaps that is not entirely fair, as they can provide helpful information. The team referred to an 11-year study that showed that basal cell carcinoma increased by 81%. They extrapolated their figures across the whole of the United Kingdom to come up with figures. Whether they are entirely accurate, I do not know, but I think that they do give a feel for the subject and an indication of the number of people who may be affected. The report said that
“around 200,000 patients had 247,000 cases of BCC treated surgically.”
That is just one type of skin cancer, which gives an idea of the magnitude of the problem.
I want briefly to give some details of what we are doing in Northern Ireland. Again, I do that from a positive frame of mind, because I believe that, if we are doing something, that can be helpful. The hon. Member for Mole Valley (Sir Paul Beresford) may not have known about the programme that is taking place in the area of the right hon. Member for Chesham and Amersham (Mrs Gillan), but if something good is happening, we should exchange those ideas to help each other. That is something that we initiated in relation to dermatology overall as well as skin cancer. In the past year, the Health and Social Care Board invested some £1 million recurrently and another £3 million non-recurrently in dermatology services, including psoriasis drugs. That is for a population in Northern Ireland, as the Minister will know, of 1.8 million, which puts the amount invested into some perspective.
My second son, like the hon. Member for Gainsborough, was born with what I would refer to as scaly skin, or eczema. I have to say that I did not wash him very often, but my wife would always wash him morning and evening up to about the age of six or seven, as well as creaming him twice a day. What was interesting was that eventually the eczema left him, but, as that left him, something else took its place: asthma. That was an unusual reaction, but as the eczema left, the asthma increased, so there is obviously, as the doctor at the time made us aware, a medical connection between the two conditions. The interaction was close and clear.
The Northern Ireland Department of Health has an additional £240,000 of recurrent funding confirmed for dermatology services in the Northern Health and Social Care Trust. That is only one of four trusts in Northern Ireland. The board is working with the others to finalise their recurrent funding requirements, which are estimated to be about £500,000. I mention that strategy of working together with the trusts because trusts and councils on the mainland could come together to do something similar to spread the cost.
The debate is about the funding of dermatology in the NHS. We are in difficult times, and everybody acknowledges that finance is not always available in the way it was in the past. We have to make better use of the money we have, and we have to try to do that in a way that delivers services and address all the issues. We have tried to do that in Northern Ireland, and I know the House and the Minister are also trying to make better use of the money that is available.
The Health and Social Care Board has also been working with local GPs to redesign the traditional patient pathway for dermatology assessments. Again, early diagnosis is important, and the figures in the background information for the debate indicate that. Some of the survivors of skin cancer I have spoken to would say the same. Some of those cancers are usually completely curable. One cancer, if caught in the early stages, might need surgery, chemotherapy and/or radiotherapy, but there is hope when the dreaded “big C”, as many people call it, comes upon us.
Initiatives have also included the funding of a photo-triage pilot. It will, I hope, help the Minister to hear what we have been doing. The pilot scheme will deliver its results in March next year, and it would be helpful if they were made available so the Minister can see what has happened. As part of the pilot, GP practices can refer patients with suspected malignant melanoma or—forgive my Northern Ireland accent—squamous cell carcinoma to a dedicated photographic clinic, which is used to triage the patient, thus reducing unnecessary out-patient attendances. That pilot can shorten the process and focus resources on the issue in hand. If the pilot is successful, as I hope it will be, the figures it produces will be helpful.
I want quickly to comment on sunbeds. Some Members have spoken about them, and others will speak about them as well, including perhaps the hon. Member for Romsey and Southampton North (Caroline Nokes).
Jim Shannon
Maybe not—I thought that might be one of the issues she would touch on.
In my previous job as a Northern Ireland Assembly Member and a member of Ards borough council, in my constituency, I had some influence on this issue. The council was concerned about the effects of sunbeds, and it was aware of the importance of controlling, monitoring and regulating them. It took decisions to do that, and other councils took similar initiatives. Again, that shows we have done things in the way they should have been done.
Again, I congratulate the hon. Member for Gainsborough on bringing this important matter to Westminster Hall for consideration. I very much look forward to the Minister’s response. I hope that my comments about what we do in Northern Ireland have been helpful, and that is particularly true of my comments about the pilot scheme and the way in which triage can work with GPs, hospitals and, more importantly, the patient.
Caroline Nokes (Romsey and Southampton North) (Con)
I assure you I will keep my comments brief, Mr Turner. I congratulate my hon. Friend the Member for Gainsborough (Sir Edward Leigh) on securing this important debate on the funding of dermatology in the NHS and on giving Members the ability to raise specific issues that may have been put to them by dermatologists, expert groups and patients.
I am a member of the all-party group on skin, although I am obviously not as exalted a member as my hon. Friend the Member for Mole Valley (Sir Paul Beresford), and I do not share the same expertise, but I have benefited over the years from personal experience of dermatological services. I am also the chair of the all-party group on body image, which has given me the privilege of working with organisations such as Changing Faces, which has brought to my attention some of the work that it does with patients with severe skin conditions. Changing Faces provides what it refers to as skin-camouflage clinics, and the word “camouflage” is interesting in this context. Many people who suffer from serious skin conditions will attempt to camouflage themselves—to hide away—because they are so self-conscious about their conditions.
I was present in this Chamber yesterday afternoon for a debate on the effects of the drug Roaccutane—a very effective, serious drug used to treat severe acne. I have a different Minister to address my comments to today, and I do not intend to rehearse the whole of yesterday’s debate, but there are some pertinent issues that I would like to draw to her attention.
Many sufferers of skin conditions will have depression and anxiety long before they ever get to see a dermatologist, and yesterday we heard in detail how important it is for dermatologists to have the time and the knowledge to be able to go through in detail the possible side effects of any medication that may be prescribed. Even dermatology drugs—drugs for the skin—can have severe side effects, including depression, and I am sure Members will agree that psychological illnesses need careful handling and treatment. Medical professionals need time to address concerns properly, but more than one consultant dermatologist contacted me before the debate to say that the specialism is under pressure and that time is at a premium.
Yesterday, the hon. Member for North Devon (Sir Nick Harvey) raised the issue of Roaccutane and the need for rigorous up-to-date research to ascertain why some groups of patients are more vulnerable to its severe side effects than others. When I say there are severe side effects, I should point out that there have been some incredibly tragic cases, in which young people who have been prescribed the drug have suffered terrible depression, and that has sometimes gone on for many months or even years after treatment has concluded. A number of young people have also committed suicide, and that is thought to be as a result of having taken this drug. Sadly, we lack up-to-date research and scientific evidence that proves a causal link between Roaccutane and suicide. The hon. Gentleman’s contention yesterday—I support him in this—was that only a public authority will be in a position to undertake the level of research required.
I would like to take the opportunity of today’s debate to highlight some points to the Minister. About 13 million people will present at their GP with a skin condition, and family doctors spend a significant proportion of their time treating patients with a skin problem, so dermatology is a significant part of the work of primary care. Dermatologists are concerned that the time they are spending on these conditions is not matched by the investment in research and that dermatology is something of a Cinderella service, as we have heard.
The overall burden of skin disease is large and growing, and to that mix we can add a lack of consultants and the drugs that can have a seriously negative impact on mental well-being, so it is not surprising that there are real concerns. With the specific case of Roaccutane in mind, I suggest that there needs to be better investigation of the causal link between the use of Isotretinoin and depression, self-harm and even suicide. That research is long overdue, and I have no doubt that it will fall to the Department of Health to make sure it is funded. I urge the Minister carefully to consider the case, which I wholeheartedly support, for better science, more evidence and independent study.
I know from work with organisations such as Changing Faces that those suffering serious skin conditions are far more likely than the general population also to suffer depression. Skin conditions can be extremely debilitating, especially for the young; they can cause a lack of confidence and an unwillingness to engage in social activities. At that particularly difficult and hormonal time, they can also have a disproportionate impact on mental well-being.
It is very careless to dismiss skin complaints as nothing more than a few spots or a bit of dryness or redness, especially if the face is affected. To the sufferer, such things can be a huge emotional and psychological burden. My hon. Friend the Member for Gainsborough spoke of the endless images in the media of physical perfection and perfect, flawless skin, and that all adds to the psychological stress.
I wish to focus briefly on training and the importance of making sure there are trained professionals to step into the 180 unfilled consultant posts the British Association of Dermatologists estimates currently exist. In some places, those posts are filled by long-term locums, who might be without the training and credentials required of a permanent appointee.
I would like to take the Minister back to the subject of Roaccutane. It is a highly toxic drug, intended for use in only the most severe cases and requiring very close supervision. It can be prescribed only by a dermatologist, the very specialism in which as I have explained there is a shortage; so patient waiting times increase, and the time the consultant has to spend with each patient reduces, along with the opportunity to discuss changes in their mood or mental well-being. The time for follow-up care is inevitably limited. That all comes together to give patients the impression of long waits and rushed appointments and results in a greater temptation to find a private consultant and pay for a private prescription. Among the families of people who suffered negative effects from Roaccutane, several have emphasised to me how many young people who had self-harmed were in receipt of private prescriptions because the families were too desperate to wait the six months for an NHS consultation.
My experience of consultant dermatologists working in the NHS has been nothing short of fantastic. The professionals with whom I have been in contact are dedicated and determined to get the best outcomes for their patients; and they have cut no corners. However, the growing dermatology case load puts them in an increasingly difficult position—perhaps particularly on the south coast. In places such as my constituency there are longer hours of sunshine and high life expectancy, and the incidence of cases of skin cancer is increasing. That all adds up to a stretched service. A local consultant dermatologist wrote to me outlining what he called a work force crisis, with a national shortage of consultants and considerable variation in the quality of dermatology provision across the country, as services are increasingly provided by those without appropriate training. That cannot go on. The service is demoralised and under pressure, and is struggling to identify where the next generation of skin experts will come from.
I urge the Minister to consider the situation closely. The specialism is crying out for the sort of TLC that the specialists are so good at giving their patients, which gives those patients the confidence to go out and face the world. I commend to the Minister the remarks of my hon. Friend the Member for Gainsborough about training, the threat of fatal mistakes in diagnosis and the need for a national clinical director in dermatology.
Rosie Cooper (West Lancashire) (Lab)
It is a pleasure to serve under your chairmanship for this afternoon’s debate, Mr Turner. I congratulate the hon. Member for Gainsborough (Sir Edward Leigh) on securing this important debate, which will be relevant to the 13 million people who present each year with skin problems, and their families.
I want to focus on psoriasis, on the often under-appreciated burdens that its sufferers bear, which go beyond the effect on their skin, and on the barriers to their getting the best care. On 1 November, I chaired a summit in west Lancashire, where seven of my constituents with psoriasis met the award-winning dermatology team at Ormskirk hospital, as well as some local GPs and the west Lancashire clinical commissioning group. I learned how psoriasis affects people, beyond the plaques on their skin, and the changes that we need to make to secure the high-quality care that my constituents and other psoriasis sufferers deserve.
Psoriasis is a terrible and lifelong condition. I have observed it through a personal connection, because after my mum died my father, who was 62, developed psoriasis. The Psoriasis Association tells me that the average member has been living with psoriasis for 32 years. The personal toll of living with the disease and its cumulative impact, which commits people to lifelong skin care, is enormous. The effects are felt beyond the individual and reach to people’s families, employment prospects and participation in society. The painful plaques are highly visible, which leads to rejection and stigma on top of everything else. Worse, 40% of people with severe psoriasis will develop psoriatic arthritis, which can lead to more pain as well as joint damage.
Psoriasis is also associated with mental health problems. It affects the skin and the joints, as well as people’s psychological well-being and life expectancy. Research has shown that the cumulative impact of psoriasis on people’s quality of life can be as significant as that of type 2 diabetes. One person in 10 with psoriasis considers suicide. I met such a person at the summit and it was heartbreaking to hear how the condition had affected her life. That is the most extreme end of the condition, but it shows the devastating impact that psoriasis can have on people’s lives.
Many positive things are happening for people with psoriasis, including the recent publication of the National Institute for Health and Care Excellence quality standard on psoriasis, which gives guidelines on treatment. The national standard constitutes progress, but the Psoriasis Association called it a
“minimum standard, not a gold standard”.
Psoriasis care is not always up to that standard. In some areas, even achieving the minimum standard is, sadly, an aspiration.
To an extent, the degree of understanding and appreciation of the full effects of psoriasis has a direct consequence on the funding of services. Despite the fact that 13 million people present with skin problems each year and that 15% of GPs’ time is spent managing patients with skin conditions, there is still a lack of understanding, even within the medical profession, about dermatology. I have been contacted by a consultant dermatologist who believes that dermatology has been neglected in medical schools and in GP training, so that GPs are often ill-equipped to deal with the variety, complexity and volume of cases. We need more specialist education for people such as GPs who look after patients when they are not in the care of the dermatology team.
Rosie Cooper
Figures provided to me show that 180 dermatology consultant posts in the UK are unfilled, out of a total of 830. In Ormskirk, the dermatology service struggles to attract doctors to fill full-time roles. It has a work load roughly equivalent to that of nearby St Helens, but whereas St Helens has seven consultants, Ormskirk has two. We also need specialist nursing capacity and more space in the department. Nearby services have several light-therapy machines, but Ormskirk has only one, so my constituents have to wait six or eight weeks for treatment—once they have had their referral, and on average there is an eight to 12-week wait just to be seen by a specialist. Ormskirk is an award-winning service, yet the team there do not have the resources they need.
A 2008 audit showed wide variations in treatment. Access to specialist treatments such as biologic drugs, specialist nurse support and psychological services is sporadic throughout the country. Access to psychological support is a major theme of the new quality standard for people with psoriasis, yet 80% of the 170 dermatology departments that responded to the 2013 BAD audit of services reported having no access whatever to psychological support for patients.
We know from research that early intervention and appropriate treatment for psoriasis will contribute to a person’s psychological well-being and ability to continue in the working environment. It really is not enough simply to treat the skin. I have seen pioneering dermatology services where patients have access to a resident psychologist as a routine part of their treatment. I want and need that level of support for my constituents. I hope that the Minister will encourage commissioners and dermatology services across the country to look at the evidence base and adopt that model.
That does not mean that we need to find a magical pot of new money; it means using existing tools to incentivise what works best. That could even save money in some cases. Commissioning groups are held to account through the outcomes indicator set; will the Minister encourage the National Institute for Health and Care Excellence to develop indicators covering dermatology? As in other areas, in dermatology we need better co-ordination between primary and secondary care; will the Minister encourage NICE to create a quality and outcomes framework indicator on dermatology, to incentivise that? Eventually, it would be great to see a best practice tariff or a national CQUIN—commissioning for quality and innovation—payment framework for psoriasis. At the moment, dermatology is such a Cinderella service that that seems ambitious, but we must aim for it. We need central clinical leadership to push dermatology up the agenda, to promote quality improvement and to reduce local variation.
Perhaps the Minister will tell us why, when other specialists are getting going with their strategic clinical networks and have plenty of clinical leadership from the centre, dermatology does not even have a national clinical director. From a response to a written question back in May, I learned that NHS England does not have a single person responsible for dermatology. Will she tell us whether that is still the case? We must recognise the burden that psoriasis places on people’s lives and ensure that dermatology services are properly joined up and properly funded. I hope that the Minister will task NHS England with making that happen.
Finally, will the Minister join me in congratulating the Psoriasis Association on a very successful psoriasis awareness week last month? The members have created a booklet, “I wish someone had told me…”, which is full of practical advice, and I recommend it to anyone suffering from the condition. We must all work together to provide a quality service for all patients with skin conditions, particularly psoriasis.
Mr Jamie Reed (Copeland) (Lab)
As always, Mr Turner, it is a pleasure to speak under your chairmanship. I extend my sincere thanks to the hon. Member for Gainsborough (Sir Edward Leigh). I understand that dermatology is extremely close to his heart, and the personal testimony that he shared with the House today was a frank and honest account of what many of our constituents live with daily.
I can scarcely remember a health debate in this place when the hon. Member for Strangford (Jim Shannon) has not been present and made a tremendous contribution. He did so again today, as did my hon. Friend the Member for West Lancashire (Rosie Cooper) and all hon. Members. If only the House could speak with such unanimity of purpose on other issues. The chairman of the all-party group on skin, the hon. Member for Mole Valley (Sir Paul Beresford), also made a telling contribution.
This might be the first time I have debated with the hon. Member for Gainsborough. I was supposed to have debated religious freedom with him at the Oxford Union in 2005 when I was a young Back Bencher, but under pressure from the Whips, I was unable to attend, so we will never know whether that exchange would have been contentious. However, I am delighted to debate the issue before us today.
“Dermatology” is a wide-ranging umbrella word covering more than 2,000 conditions of varying severity, all of which have a detrimental impact on the quality of life of those who are affected. “Cancer” is also a wide-ranging word denoting many different types, including basal cell carcinoma, squamous cell carcinoma, malignant melanoma and others such as Kaposi’s sarcoma and cutaneous T-cell lymphoma. Dermatology also covers skin rashes, skin infections and acne. Acne and skin rashes may not seem to be serious medical issues and do not often cause such serious complications as other skin conditions may do, but they are far from trivial, as we have heard, and may have a huge impact on the psychological well-being of the individuals who suffer from them.
The wide-ranging nature of dermatological practice means that episodes of treatment for conditions are extremely common. Skin cancer is one of the most common cancers in the world, as we have heard, and the NHS estimates that there are around 100,000 new cases of non-melanoma skin cancer in the UK each and every year. Thankfully, through excellent research and brilliant work by professionals and charities alike, skin cancer is becoming more and more treatable, but it is not “job done” and we must continue to strive for even better patient outcomes. I am sure that all hon. Members agree.
Skin diseases represent more than one third of diseases in children. One in five children in the UK have eczema. The British Association of Dermatologists, in its recent evidence to the Select Committee on Health, stated that children with serious skin conditions have their quality of life impaired to the same extent as those with chronic illnesses such as epilepsy, renal disease and diabetes.
Acne is a very common skin disease and affects many people. It is often trivialised as a passing phase for teenagers, but that is not the case and it can continue throughout their 20s, 30s and even 40s. The scarring left by acne is permanent and may have lasting effects on the psychological well-being of those who are affected. The British Association of Dermatologists says that it may have a major impact not just on someone’s relationships, but on their employment prospects throughout their life.
In this very Chamber yesterday afternoon, hon. Members debated the side effects of a drug, Roaccutane, used to treat acne. It is very effective in clearing up acne and is often prescribed to those who suffer the condition. It can be prescribed only by a specialist dermatologist because of its associated side effects, which, it is said, can range from relatively minor issues such as dry lips and chapped skin to serious mental health problems linked to depression and suicidal thoughts, as well as physical conditions such as diabetes and kidney problems.
When a significant number of people rely on such treatment to improve their quality of life, Government of all colours must give a commitment properly to fund research and development for new treatments. Many thousands of people rely on drugs such as Roaccutane and face the many risks associated with them. We must commit to developing new and safer drugs. Will the Minister give that commitment today? Will the Government help to facilitate the development of new medicines and new treatments for these conditions?
In 2009, the previous Labour Government legislated to introduce a ban on under-18s using sunbeds. That ban was an important step in protecting people of all ages from what can be harmful tanning practices. Will the Minister, who is responsible for public health, tell us what steps she is taking to increase awareness of the risks of using sunbeds? I certainly hope that she will retain the previous Government’s focus on the issue.
Other skin complaints have an impact on many millions of people in the UK and continued work is essential for progress to be made. I again thank the hon. Member for Gainsborough for securing this debate because at a time when funding and commissioning in the NHS have been thrown into turmoil—some clinical commissioning groups will have their funding slashed in the next couple of days—it is crucial that treatments and research are properly funded.
The funding of dermatology services in the NHS has been made ever more complex by the Health and Social Care Act 2013 with some treatments now being commissioned by NHS England on a national scale and others being left to local clinical commissioning groups, resulting in a fragmentation of services and a poorer experience for patients. The British Association of Dermatologists said:
“Provision of the type of care affected people need is under resourced, fragmented and of variable quality in terms of manpower and facilities. This is exacerbated by poor teaching and training of dermatology in medical schools and general practice, and underfunding of relevant research.”
These very serious concerns have been raised by a well-respected charity with unparalleled expertise in this area. Will the Minister tell us whether they have been raised by anyone else with her Department, and what action the Government are taking to tackle them?
The resources available for dermatological purposes are majorly overstretched. It is estimated that skin conditions result in 13 million consultations each year in general practice—I think we heard that figure earlier. If we had the pro rata equivalent of dermatology consultants in Germany, France, the USA and elsewhere, we would need almost 10 times as many as we have currently. Will the Minister also tell us whether there are recruitment plans in place to ensure that this highly specialised discipline is adequately catered for throughout the national health service? Not only is access to dermatological expertise in the UK subject to a postcode lottery in terms of quality, but the resources and the necessary work force are simply not there to care for the patients who rely on those services.
We have heard many testimonies today, and not just those of hon. Members here. When hon. Members speak of their own circumstances and difficulties, we achieve a better quality of debate and tend to edge towards better policy outcomes. In the light of the testimonies we have heard today and of what our constituents, patient groups, charities and professionals tell us, it is clear that the evidence points to a specialism under severe strain. It is underfunded, understaffed, under-resourced and, as a result, under immense pressure. The profession’s staffing levels are clearly a major problem.
Sir Paul Beresford
The biggest problem is education. It takes a very long time to give someone expertise, particularly in this area with around 2,000 diseases or variations of them. Will the hon. Gentleman think carefully and recognise that any unfilled consultant place goes right back to a lack of education under his Government?
Mr Reed
I am grateful for that intervention. I make the point repeatedly every time hospital doctor statistics are mentioned by Ministers. I absolutely recognise the hon. Gentleman’s point and welcome his making it: he is absolutely right to say that education is surely at the core of the problem.
Staffing levels in the profession are clearly a major problem. Will the Minister give an assurance today that those who need the services of a specialist dermatologist will have access to them? If not imminently, when? Should the Government bring forward effective proposals, I give the Minister the assurance that they will have the Opposition’s support. Where the Minister cannot answer my concerns, I would appreciate a written reply.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
It is a pleasure to speak under your chairmanship, Mr Turner. I pay tribute to the hon. Members who have spoken today and particularly to my hon. Friend the Member for Gainsborough (Sir Edward Leigh) for securing the debate. As has been illustrated throughout, this is an under-discussed area and it seems to be neglected in other ways, too. The debate has been valuable, and I have certainly learnt a lot during its course and in my preparation for it. Inevitably, there will be some points on which I cannot give a full answer today, but I shall endeavour to follow up with hon. Members if I cannot. I also pay tribute to the all-party parliamentary group on skin. I have looked at the recommendations in its recent report, and I pay tribute to the members of the group who have spoken today.
We have heard from several Members how many people are affected by skin disease and I shall not go over those numbers, which are very large indeed. There is a huge range of skin diseases; some are manageable and others are life-threatening, as we have heard. All have an impact on people’s lives and, in particular, can affect their personal appearance, as Members have highlighted in moving terms. In that way, skin problems perhaps represent more of a day-to-day challenge than many other conditions. They impact on all aspects of life, such as employment and personal relationships. It is, therefore, important to ensure that people with skin disease receive both the treatment and support that they need. As today’s debate has highlighted, considerable challenges remain, many of which we have not necessarily bottomed out during the debate, but we have begun to highlight some.
Let me first plug the national framework. Skin disease is a long-term condition, and through the NHS mandate we have made it clear to NHS England that we want to see the NHS among the best in Europe at supporting people with long-term conditions. We want them to live healthily and independently, with better control over the care that they receive. Those improvements are monitored through the NHS outcomes framework, for which ambitious expectations have been set out. In turn, the NHS will monitor the performance of clinical commissioning groups through the clinical commissioning group outcomes indicator set, on the quality of the services and health outcomes achieved through that commissioning.
As my hon. Friend the Member for Gainsborough highlighted, commissioning for most dermatology services is a matter for CCGs. They are better placed to use their clinical insight, local knowledge and local relationships to do excellent commissioning at a local level than Ministers in Whitehall, but I take on board the challenge about the more specialist areas. We are not leaving CCGs to commission without support. NHS England is working closely with them to ensure high-quality commissioning, and it has established commissioning support units and quality surveillance groups across the country. However, as my hon. Friend the Member for Mole Valley (Sir Paul Beresford) said, it is certainly something that I can raise on appropriate visits when the opportunity arises. As the Public Health Minister, given that so much of my portfolio is localised, I am very keen to draw attention to good practice where we see it.
There is an example in the area of my hon. Friend the Member for Gainsborough, where his local CCG has introduced a teledermatology pathway, which allows patients to be reviewed at their own practice. We also heard of an excellent example from Buckinghamshire, which I was speaking about with my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) during the break for the Division. The pathway in the area of my hon. Friend the Member for Gainsborough is being implemented across 10 practices from September. If it is successful, it will be rolled out across all the practices in the Lincolnshire West CCG. I am always interested to hear about good practice. A number of kind invitations for visits have been made during the debate and I look forward to following those up with Members so we can highlight people who are being innovative in a way that will help other commissioners.
As has been mentioned, with some highly specialist dermatology services for conditions that cannot be treated locally, it is appropriate for NHS England to commission them directly. NHS England has set out detailed service specifications for the services that it directly commissions. I realise that a number of Members have made points about the national clinical director, and that issue has been raised in other contexts, too. It is a matter for NHS England whether it appoints a national clinical director. I understand, from asking it the question, that there are no current plans to introduce an NCD for dermatology, but it is continuing to discuss with the British Association of Dermatologists the best ways to improve outcomes for patients.
As has been said, aspects of treatment of people with skin conditions can be considered under any of the five domains. That change in the new NHS focuses on people as individuals rather than on their conditions, which is why the patient pathway and not the organisations that treat them is given the closest attention. Many of the national clinical directors have cross-cutting roles—I have come across that in other areas of my portfolio—rather than roles that are related to individual medical conditions, so it is not the case that dermatology is being singled out. Clinical directors often cut across.
There is interest in the research—points have made about it—that is going on to get better results in dermatology and to come up with new treatment, so I shall touch on that. I reassure the Chamber that investment by the National Institute for Health Research in skin research increased from £4.7 million in 2010-11 to £8.7 million in 2012-13. That includes the NIHR investing £2.6 million over five years in the biomedical research centre at Guy’s and St Thomas’s and the King’s College London centre, which is leading the way in research on cutaneous medicine. The NIHR is dedicated to translating these scientific discoveries into improvements in treatment, which we hope will benefit patients at the earliest opportunity.
The NIHR has also awarded nearly £2 million to Salford Royal NHS Foundation Trust to undertake a programme of research on psoriasis. The studies will look at crucial issues, including individual patient experience, difficulties faced by service providers and identifying levels of risk in populations. I hope that the hon. Member for West Lancashire (Rosie Cooper) will take particular comfort from that, and I am sure that she will be interested in the outcome of that programme. The NIHR is also investing nearly £1 million in a trial of silk therapeutic clothing for the long-term management of eczema in children.
My hon. Friend the Member for Gainsborough will know that NICE has also published guidance on a range of dermatological conditions, including atopic eczema in children and psoriasis, and it has issued quality standards on those topics. NHS England is statutorily required to have regard to NICE quality standards, and we expect health and care professionals to take NICE guidance on the treatment of relevant conditions fully into account when deciding how to treat a patient.
NICE has also recommended a number of drugs for the treatment of dermatological conditions such as eczema and psoriasis. Patients have a right in the NHS constitution to access drugs and treatments recommended by NICE technology appraisal guidance that their clinicians want to prescribe.
As I acknowledged earlier, and as has been very much illustrated during the debate, skin disease can have adverse psychological effects on patients. The NICE quality standard on psoriasis recognises that and sets out that people with psoriasis should be offered an assessment of how their physical, psychological and social well-being is affected when they are diagnosed and when they undergo treatment. It is the responsibility of all commissioners, providers and clinicians to ensure that patients receive the psychological and emotional support that they need. Hon. Members may be aware of the IAPT—improving access to psychological therapies —programme, which is an NHS programme rolling out services across England offering interventions for people with depression and anxiety disorders. I understand that as part of that programme, NHS England is looking at how best to support people with psychological problems arising from their physical problems. That issue was raised a number of times during the debate.
I listened carefully to the comments of my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes), who highlighted that the issue of Roaccutane was discussed only yesterday in the Chamber. It is associated with rare, serious side effects and can only be prescribed by or under the supervision of a consultant dermatologist. The BAD has published guidelines for its members about when to prescribe it and how best to monitor patients for adverse effects during treatment. I will certainly make a point of catching up with my hon. Friend the Minister of State, who responded to that debate. I will ensure that we touch base with regard to the important subject that my hon. Friend the Member for Romsey and Southampton North has raised today.
The issue of GPs’ and other health workers’ education and training has come up a lot. My hon. Friend the Member for Mole Valley made it the focus of his speech. It is important that health professionals have the right training. Training and education of health professionals is a matter for Health Education England and the royal colleges. NHS England is statutorily required to have regard to the NICE guidelines, and we expect health professionals to have regard to them, too. I am aware that the BAD has produced toolkits and guidance. They are valuable resources for health professionals and should be promoted widely. NHS England has responsibility to support CCGs, as I said, with commissioning guidance and tools and it can flag up the relevant dermatology guidance and standards.
I understand that NHS England’s domain director for long-term conditions regularly meets the president of the BAD, who is also an adviser to the all-party group on skin. I am sure that the issues about the education of GPs are raised at those meetings.
The current framework for accreditation and re-accreditation of GPs with a special interest remains under review, following the transition to the new arrangements for the NHS in England. NHS England is working with the Royal College of General Practitioners and with dermatologists to produce an improved and consistent accreditation system. It is expected that there will be a report early next year, and I am sure that there will be interest from hon. Members in that.
I am concerned about the point that has been made about the shortcuts being taken on some of the training courses. I thought that what was highlighted today was quite alarming. I have heard that before. It is certainly something that I will put on the agenda for my forthcoming meeting with the Royal College of General Practitioners. I will report back to my hon. Friend the Member for Gainsborough, who raised the matter and said that there was considerable interest in it in the House.
Since 2002, there has been a 40% increase in consultant dermatologists, but I accept that that is from a modest base. It is clear that, although there was an increase of 28% between 2002 and 2012 in the total number of staff, we still have more to do, but things are improving. Health Education England needs to ensure that we have the right dermatological work force. I will ensure that it is aware of the issues that have been raised today and highlight the concerns of hon. Members.
Many of the problems highlighted in the debate have not really been funding issues, which I suppose makes a change in an NHS debate. They have actually come out of a lack of engagement that hon. Members have highlighted. I think that some hon. Members have even alluded to there being a sense of complacency sometimes with regard to skin conditions and they asked whether such conditions are taken sufficiently seriously. I am not sure that in this debate we have quite got to the bottom of why clinicians perhaps do not choose to specialise in or pursue this line of work, but today’s debate is useful in highlighting that.
Sir Edward Leigh
Will the Minister take away to her fellow Ministers the point that the psychology of all this is very important and, in particular, read the report from the group chaired by my hon. Friend the Member for Mole Valley (Sir Paul Beresford)? A lot of people, when they poke fun at others because of their appearance —their skin colour or something else—do not realise that they are causing them psychological damage. That is the particularly the case with children. It is an important point that we want to be taken away from the debate.
Jane Ellison
I am very happy to give a commitment to take that point away and I will certainly bear it in mind in other discussions that I have.
I am glad that some hon. Members have taken the opportunity offered by the debate to highlight the growing issue of malignant melanoma. It is absolutely right to say that we need to make more people aware of the dangers of skin cancer. I was struck by the point made by my hon. Friend the Member for Romsey and Southampton North about the regional variation and the fact that in her area it is a particular problem.
The Department has funded Cancer Research UK to continue to test approaches to encourage, in particular, men over the age of 50 to visit their GP if they have signs of skin cancer. I have to say that, if anyone can come up with a magic way of making men over 50 approach their GP about anything, that would be very welcome and they would be rewarded by all parts of the NHS.
Sir Paul Beresford
There is a largish American community in Surrey, just outside my constituency. They are very aware of skin protection, to such a degree that there is a slight recurrence of rickets.
Jane Ellison
That is perhaps a debate for another time, but I note the concern. There is a happy medium to be struck.
Hon. Members might be interested to know that in autumn 2013 Cancer Research ran a campaign in south Devon, utilising text message communications, phone consultations with specialist nurses and volunteer community outreach to try to address some of the barriers to getting harder-to-reach groups to seek advice about skin concerns. Between 2003 and 2011, Cancer Research also collected data via the Office for National Statistics monthly omnibus survey to measure awareness, attitudes and reported behaviour of adults in relation to sun protection. The Department is funding a repeat of that survey in 2013, so that Cancer Research can track changes over time. I think that the results will be very interesting.
Public Health England, in partnership with the Department, NHS England and other stakeholders, proposes to run a local “Be Clear on Cancer” pilot campaign in early 2014 to encourage the early detection of malignant melanoma. The South West Strategic Clinical Network will host that pilot. It will build on evidence from the work in this area that I have just described.
This is a sizeable challenge. We can only, as individual Members of Parliament, take every opportunity that we can to encourage people to seek help from their GP and not to put that off, because for some cancers, the only thing that explains different outcomes for men and women is the fact that men refer themselves later and therefore do not benefit from early diagnosis.
With regard to the point made by the shadow Minister, the hon. Member for Copeland (Mr Reed), on sunbeds, I can respond to him separately on some of the specific things that he asked. I will make the point that the figures that I have seen for the problems associated with sunbeds are highly regionalised and that is one reason why public health is now devolved to local government. Some local government areas are giving the issue real attention and making it a priority. It is perhaps better suited for that sort of local and regional priority than it is for a national campaign, but I take the point that he makes.
A range of support is in place to help GPs to identify malignant melanoma. There is NICE guidance, “Improving Outcomes for People with Skin Tumours including Melanoma”, and there are the “Referral guidelines for suspected cancer”. We cannot highlight them too often.
I would like to take this opportunity to recognise the hugely important role that patient support organisations play. As has been said, they sometimes operate on a shoestring. They make an enormous contribution in helping patients to understand and cope with their conditions. Sometimes, knowing someone who can stand alongside us and say, “I know how you feel and this is how we have learned to cope with it,” is very important as a supplement to clinical guidance.
I again congratulate my hon. Friend the Member for Gainsborough on securing the debate and raising the profile of what is an important issue. As I said at the outset of my speech, I have learned a lot in researching my response to the debate, and I will now have these important issues firmly in my mind in my meetings and visits, where I can raise them. I pay tribute to the work that my hon. Friend is doing and to the all-party group. I assure the House that I will make NHS England and all the relevant bodies that I have mentioned today aware of the issues raised in the debate and the depth of feeling expressed about them.
Press Charter
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Richard Drax (South Dorset) (Con)
It is a privilege to be under your chairmanship, Mr Turner, for this debate on press freedom as I see it. A colleague of mine would like to speak for a short time, so when I conclude, he will ask to speak. I know that others wish to intervene, and I would be very happy to take interventions.
Having been a journalist for some 17 years, this subject is dear to my heart. The principles of free speech and a free press are cornerstones of our democracy. At its best, our press is indeed Churchill’s
“vigilant guardian of the rights of the ordinary citizen”,
rooting out wrongdoing and holding the powerful to account. At its worst, it is vicious and petty, wounding those it should protect, but for all its faults, I am proud and fortunate to live in a country with a free and often irreverent press. It is a beacon of hope across the globe, which is why I was genuinely surprised when, back in March, 530 hon. Members dared to cross a threshold not crossed for 300 years.
In response to the Leveson inquiry, the Government established a new system of punitive exemplary damages in an amendment to the Crime and Courts Bill. Only 15 Members voted against, myself included, and some of the glorious 15, as The Spectator magazine called us, are here today.
Since then, the press charter has received Royal Assent. The legislation amounts to the toughest regulation of the press in the free world, and it has been greeted with widespread condemnation. In the US, where freedom of the press is enshrined in law under the first amendment, such legislation would be illegal. The New York Times states that the regulations will
“chill free speech and threaten the survival of small publishers and Internet sites.”
Many other countries have joined the chorus of disapproval. A senior delegation of “concerned” publishers and editors from the World Association of Newspapers and News Publishers will visit Britain next month. They are coming here, to this island that has stood and fought for freedom for so long, to demand an end to
“continued attacks on press freedoms”.
We are in poor company. Other countries that the team have visited include such bastions of free speech as Ethiopia, Libya, Yemen, Tunisia, Mexico, Honduras, Ecuador, Colombia, Guatemala, Ukraine and Azerbaijan. One really could not make it up.
Free speech organisations around the world are asking us to rethink. They fear that the changes set a dangerous precedent for non-democratic regimes, and our Foreign Secretary agrees. Why, then, are we going down this road? True democracies erect a barrier between Government and the press for good reasons, and there is no excuse for dismantling it. It is claimed that the royal charter protects press freedom because it can be changed only by a two-thirds majority in Parliament, but that is illusory. Such a majority rule was enacted in the Enterprise and Regulatory Reform Act 2013, but a simple amendment would allow a future Government to sweep it away at any time with a single-vote majority. Even the two-thirds safeguard is misleading, especially when we consider how an emotive topic such as Syria nearly persuaded the House to take the country to war. Large majorities are not as rare as the charter would have us believe, especially if the cause is deemed to be right, whether it be going to war or cracking down on the press.
Wind the clock back a bit. When Lord Justice Leveson published his report in November 2012, he called for “voluntary, independent self-regulation.” The deal stitched up at 2 am over a pizza by a group of politicians and the celebrity lobby group Hacked Off was far from voluntary, independent or self-regulating. The newspapers and magazines that it covers include the 1,000-plus regional and local papers that were exonerated by the Leveson inquiry, none of which was told that the meeting was taking place. There was no parliamentary scrutiny or consultation with the industry or the public on the terms of the state-sponsored royal charter, even though there are compelling constitutional questions about the imposition of a royal charter on an industry that does not want one. My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) has put those well.
Jacob Rees-Mogg (North East Somerset) (Con)
I am grateful to my hon. Friend for his flattering comments. Can he recall any occasion since the late Stuart period, when the Stuart kings were trying to establish an absolute monarchy, on which a royal charter has been used for the purpose of extending the power of the state? I hope that the Minister will be able to answer that point as well.
Richard Drax
My hon. Friend is extremely good on that subject, and I would not begin to question his knowledge. I am sure that what he says is the case, and we would both be grateful if the Minister answered that point in his wind-up.
The legislation also raises questions under human rights laws. The eminent human rights lawyer, Lord Lester, says that the new system may breach article 10 of the European convention on human rights. In a letter to The Times, he wrote:
“There is no need for further state intervention, as proposed by Hacked Off celebrity campaigners. We need a system of independent self-regulation that encourages professional standards and provides effective redress, avoiding unnecessary litigation.”
Instead, what we have is state licensing of the press. That was unthinkable only six years ago, when the Select Committee on Culture, Media and Sport concluded:
“statutory regulation of the press is a hallmark of authoritarianism and risks undermining democracy.”
I could not have put it better myself.
Unfortunately, much has changed in the past five years. The American satirist H. L. Mencken famously said that in a democracy,
“journalist is to politician as dog is to lamppost.”
Now, with the aid of organisations such as Hacked Off, which is totally unrepresentative, the lamp post has turned on the dog. The motivation of some of my colleagues is dubious, to say the least. The sharpening of axes has been heard for some time. Cash for questions, cash for honours, cash for lobbying, mortgage flipping, duck houses, moats—the list goes on. As for Hacked Off, it simply wants to curb what it calls the “excessive” power of newspapers. I appreciate, as I am sure everyone does in this room and in the country, that there have been examples of appalling behaviour, and victims are understandably angry, but let us not forget what spawned the Leveson inquiry: phone hacking, which is already a criminal offence. As Lord Lester has said, the country’s
“plentiful criminal and civil laws”
already regulate the press.
Far from nothing having happened as a result of Leveson—a complaint that I hear all too often—the repercussions have been profound. The biggest newspaper in the country closed down, and 61 journalists were arrested. Prosecutions are ongoing in a number of courts across the land. Those in favour of the royal charter say that it will not impinge on a free press, but I disagree, as does Fraser Nelson, the editor of The Spectator. He wrote that as soon as Lord Leveson’s recommendations were published, the number of calls he received from Members increased markedly, all suggesting that comments with which they were unhappy should be removed or clarified. That is precisely the chilling effect that I and many others feared and have warned against.
Today, we have reached an impasse. The press is unwilling to sign up to the royal charter. Instead, the newspapers have gathered all the recommendations of the Leveson inquiry into their own set of regulations for the Independent Press Standards Organisation, which I have here.
Philip Davies (Shipley) (Con)
Does my hon. Friend agree that not a penny of taxpayers’ money should be spent on setting up a recognition panel, which the Secretary of State accepts might be entirely redundant? It would be useful if the Minister set out whether any public money has already been spent on setting that up. Does my hon. Friend agree that it would be much better instead to allow the establishment of the Independent Press Standards Organisation, which will be up and running in early 2014 and would enable statutory control of the press to be avoided?
Richard Drax
I could not have put it better. My hon. Friend, with his free and independent mind, speaks wisely. We ask the Minister to comment on that point.
Most newspaper editors and publishers are willing to sign up to the IPSO regulations. They are tough, and they are independent of both politicians and the press. For example, no editor would be allowed on the arbitration panel, and potentially crippling financial penalties of up to £1 million could be placed on titles that step out of line. Far from being toothless, the regulations would bring swift and fair redress to those who have been badly treated.
Lord Leveson called for a system that all sides could agree to—I ask hon. Members to note the use of the word “all”—and evidently the royal charter fails in that regard. It seems as though the Government have seen that for themselves. The Secretary of State for Culture, Media and Sport was reported to have said last month that the press charter could be redundant if newspapers produced an effective system of self-regulation. They have done so, and I have it right here.
Perhaps one day we can create a British Bill of Rights that incorporates freedom of speech and freedom of the press, which would give us the same protection as the American first amendment. Despite the fact that all three parties are agreed on the royal charter, I hope that self-regulation will prevail. It is in all our interests.
Mr Christopher Chope (Christchurch) (Con)
My hon. Friend refers to self-regulation; is he aware of any other system of press self-regulation anywhere in the world that is as stringent as the proposals?
Richard Drax
My hon. Friend and almost neighbour makes a good point. I shall answer it with what might be a humorous point. After the 15 of us had voted against the Government on that day, I was called within minutes, not by the BBC or any organisation in this country, but by the news desk of the Russian equivalent of the BBC, to ask what I was doing. I find a certain irony in that.
Mr Andrew Smith (Oxford East) (Lab)
I apologise for missing the very beginning of the hon. Gentleman’s contribution due to the retiming of the debate. I congratulate him on securing it. Does he understand the scepticism there will be among many members of the public due to the previous failures of self-regulation? The proof of the pudding will be in the eating, and we will know how effective this self-regulation is only when it is exercised. That is how the public might develop confidence in it.
Richard Drax
The evidence—the cake—is in the IPSO documents, and the public can tuck in whenever they want. As I understand it, when the press signs up to the IPSO regulations, those regulations will be contractual, so the press will have to follow its own rules. What more evidence does the public need than the document that I am holding? If all the papers, and others who sign up, agree to the regulations, which they say they will, we will have gone a long way towards reassuring the public that something has at last been done.
With those comments, I shall close. I hope the Minister is able to comment on the Secretary of State’s remark that if the press gets on with setting up its own regulatory body, the Government will withdraw the royal charter and allow the press to regulate itself, and, most importantly, safeguard freedom of speech and the freedom of the press in this great country of ours—the United Kingdom.
Mr Richard Bacon (South Norfolk) (Con)
I shall be brief. I congratulate my hon. Friend the Member for South Dorset (Richard Drax) on his speech. I, too, was impressed by what the Secretary of State said. I hope that we will hear the sound of back-pedalling from the Minister when he speaks. There should be no doubt that what the Government propose is state licensing; my hon. Friend made that clear. If the Minister is unwise enough to say anything to the contrary, no one should take too much notice. The legal underpinning by statute—it might be divided between various bits of architecture, but the effect is the same—would mean that those who do not sign up, and they alone and they uniquely, will be exposed to exemplary damages. I had a call from the Russians as well, by the way. I found it as disturbing as my hon. Friend did that they should want to interview me about press freedom.
Karl Popper wrote “The Open Society and its Enemies”, and Sir Edward Boyle, the former Conservative Minister of Education, wrote an essay on that book, in which he said that Popper had first made him realise that of all human rights, the most important was the right to criticise one’s rulers. The problem with what the Government had proposed—I hope that I can say “had”—is that the Government would set the parameters for what was and was not acceptable criticism, and opinions will differ on what is and is not acceptable criticism at any one time.
I have a document from the Nuclear Decommissioning Authority, commissioned by KPMG, which contains criticisms of Nuclear Management Partners Ltd, its contractor, for very poor leadership and for intervening to a very limited extent. It cost hundreds of thousands of pounds of public money. I know that Government do not want it in the public domain, because the copy that was first sent to me was redacted. I have now got hold of an unredacted copy. The conversation about what should and should not be in the public domain is obviously a permanent one. The idea that the Government should be the arbiter of that is wrong.
We have the expression “a free press” for a reason. The people who are prepared to toy with these new ideas bring to mind the expression of George Orwell, who spoke of
“playing with fire by people who don’t even know that fire is hot.”
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)
It is a great pleasure to serve under your chairmanship, Mr Turner. I thank my hon. Friend the Member for South Dorset (Richard Drax) for securing this important debate. I have read his fine contributions to our various debates on press self-regulation, so I knew before the debate about his extensive experience as a journalist. He reminded us that he was a journalist for 17 years, so his remarks and his passion should be taken with the utmost seriousness.
I am not entirely certain—it is not in my brief—how many of my hon. Friends present today were winners of The Spectator parliamentarian of the year award, but I offer those who are present and who have won that award my heartfelt congratulations. Although I was at the beginning of the lunch, I was called away to a meeting, so was not present at see them receive their award. This is the first opportunity I have had to congratulate them. In passing, I also welcome the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Grantham and Stamford (Nick Boles). Given that he is going to witness a fellow Minister being beaten up over the next 15 minutes, perhaps this is a respite from the ordeals he has faced at the hands of colleagues over the past 12 months or so.
Mr Vaizey
I will finish my last joke before I get on to serious points. The Spectator has led a robust campaign against the royal charter. I am not one of those MPs who rang The Spectator; I have not rung to complain about its coverage of my activities. I recently took part in one of its discussions on the future of technology companies. I cannot quote exactly from memory, but the blog afterwards said something like, “The Minister said the Government was doing a lot in this area, but none of his examples were convincing.” I give way to my hon. Friend.
Jacob Rees-Mogg
Is the Minister aware that the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Grantham and Stamford (Nick Boles), is very wise when it comes to the question of the freedom of the press?
Mr Vaizey
We have certainly noted the Under-Secretary of State’s comments. Unfortunately, I opened the door to that point by referring to his presence.
I shall take the opportunity provided by the debate to discuss the issues raised about the royal charter. It is more than a year since Lord Justice Leveson—Sir Brian Leveson—published his report, which ran to an astonishing 1,987 pages in length and, I think, 5 lb in weight. The report covered a vast territory. It examined the existing self-regulatory structure of the press, as one of its core themes. It set recommendations—to which the Government responded—for, I would say, a reformed system of independent press self-regulation. Let me take this opportunity to remind the House what those recommendations were.
The key elements of the recommendations in the report can be summarised as follows. The first was maintenance of a vigorous free press. The second was having the maintenance of press self-regulation at the heart of the new system that delivers the key principles set out in the report. The third was to have incentives that encouraged the press to use that self-regulation system and created benefits for those who signed up to and followed it. In addition, an independent recognition body should be able to recognise that a press self-regulator was adhering to the principles.
Richard Drax
I am going to ask a horribly cruel question. Has the Minister read the IPSO document? I entirely endorse every word of the speech that he is making— it almost sounds like my speech—so I hope that he will conclude at the end that my colleagues and I are right.
Mr Vaizey
I have not read every word, but I have examined the principles and been briefed on the matter. To pick up on what my hon. Friend says, we can recognise a huge amount of common ground between us.
The independent recognition body should be able to recognise when a press self-regulator is upholding the principles. By adhering to them, the press can take advantage of incentives. It is important to remember that the recognition body is there, first, to recognise the self-regulator, and then to carry out periodic checks every few years to ensure that the self-regulator adheres to the Leveson principles. It will not be, and was never intended to be, involved in the self-regulation of the press.
Mr Vaizey
I would put it another way: the Government would incentivise those who join an independent self-regulator that adheres to the Leveson principles.
All three main parties have agreed that the royal charter is the best way to deliver the recognition body that Leveson recommended. I referred earlier to the fact that I have read all the speeches of my hon. Friend the Member for South Dorset. I was able to point out that he had been a journalist for 17 years, because he mentioned it again in this debate, but let me prove that I have read his speeches: I know that the fact that all three main parties have adhered to the idea of a royal charter will not persuade him, as he said in one of his speeches that when the three parties were agreed, it set alarm bells ringing for him.
Richard Drax
The Minister, in typical fashion, took the words out of my mouth. I could not have said it better myself.
Mr Vaizey
We are making considerable progress. My hon. Friend has so far said that the speech I am giving could be his, and now he says I am as eloquent as he is.
There has been much concern expressed in the House and in some quarters of the press about the charter damaging press freedom. I recognise that those arguments have been put, but I have to state that the Government do not believe that to be the case. The Government are clear that free speech and freedom of the press are vital; they underpin our democracy. The Government would not seek to implement anything that endangered those fundamental principles. Indeed, the Prime Minister was clear from the outset that he had serious misgivings about taking any action that could infringe free speech and a free press.
Richard Drax
I am most grateful to the Minister for giving way so often. The Prime Minister also assured us that there would be no statutory underpinning of the royal charter by law, but there now is. What has changed?
Mr Vaizey
My hon. Friend has taken the words out of my mouth. I was going to say that that is why statutory legislation was avoided and why a royal charter was chosen to establish the recognition function instead. It is important to get the point across that politicians will not be able to meddle with the charter on a whim. There are clear safeguards built into the charter to ensure that it cannot be amended unless a very high, strict bar has been surpassed. Any proposed change must be ratified by a resolution of both the House of Commons and the House of Lords, as well as with the unanimous agreement of the board of the recognition panel.
Richard Drax
As I said in my speech, what happens if we have a change of Government? We cannot hold future Governments to legislation if they change it. It does not matter whether the fraction is two thirds or whatever it is now; the legislation will be wiped out by one vote, if indeed it was a close call, would it not?
Mr Vaizey
The Government went to great lengths to ensure that the royal charter could not be meddled with at will. The statute states clearly that change would need the unanimous agreement of the recognition panel, and that both the House of Commons and the House of Lords must approve a change. Two thirds of Members must agree to the change, as well as the members of the body itself.
Mr Vaizey
As I said earlier, the Prime Minister made it very clear that statutory regulation of the press was not a road he would ever go down. The recognition body is not a regulator of the press; that is a really important point to get across. The recognition body comes into being through a royal charter, not through legislation.
Mr Vaizey
I do have plenty of time—that is right—and 1640 obviously refers to the time that the debate closes, rather than to the Stuart period of history referred to earlier by my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg).
It is important to stress that the press royal charter cannot simply be changed by Ministers without recourse to Parliament. That is a very important point. All other charters can be changed or dismantled by the Government of the day without any recourse to Parliament at all. In the case of this charter, safeguards have purposefully been put in place to stop any such meddling.
Philip Davies
Will the Minister address the question that I posed in my intervention on my hon. Friend the Member for South Dorset (Richard Drax)? Has public money been used in setting up a recognition panel? If not, will he make a commitment that it will not be, given that even the Secretary of State has admitted that the panel could turn out to be completely redundant?
Mr Vaizey
It is on the record that a degree of public funding will be required to ensure that the recognition panel is established and able to take applications for recognition, but that is time-limited. I cannot confirm exactly whether any public money has been spent so far, so I will write to my hon. Friend. As far as I am aware, none has been spent so far, but I cannot, on the basis of the note I have been passed, absolutely confirm that.
Dr Julian Lewis
The Minister is being extraordinarily generous in giving way. I would like to suggest a way forward by drawing, I hope, a not-too-tortured parallel. We had a vote, which was referred to in the opening speech of my hon. Friend the Member for South Dorset (Richard Drax), on Syria. If that vote had gone the other way, I doubt whether the chemical weapons would have gone, or whether we would have had the deal with Iran. The Government are now claiming credit for those things having happened, even though they were defeated in a vote. Can the Minister see where I am going with this?
Dr Lewis
Well, it will become clear. I doubt whether we would have had on offer anything like as tough a regime as that constituted by IPSO without what the Government have done up till now. Would it not be an idea to give it a trial and see whether it works? The Government could then legitimately claim credit for having brought it forth, when otherwise it would not have come forth.
Mr Vaizey
My hon. Friend tempts me, perhaps uncharacteristically, to claim credit where it might not be due, but I recognise the force of the point that he makes. It is important to stress that the independent self-regulation body that is being set up by the press is welcome. It is also important to stress that it is entirely a matter for the press whether they choose to seek recognition for that body. As I have said, the benefits that come through being recognised by the recognition panel are entirely voluntary. I do not think it is any secret, and I am sure that my Secretary of State has put it on the record, that we are delighted with the progress that the press has made in this area.
I recognise the force of the argument that my hon. Friend the Member for South Dorset has made, but as I say, the charter itself will not play any direct role in regulating the press. It is there simply to recognise and periodically review any independent self-regulator, and when I say “review”, it will not even review the workings of that panel, but will look to see that it still adheres to the principles that are set up—
Leasehold Reform
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Jim Fitzpatrick (Poplar and Limehouse) (Lab)
Mr Turner, it is a pleasure to see you presiding over this debate this afternoon. I am also very pleased to see the Minister here in Westminster Hall and the hon. Member for Worthing West (Sir Peter Bottomley), who has led on this issue in this House for a number of years now. I know that he wants to make a contribution to the debate before the Minister responds, so I am very happy to see that he is here.
This is a growing issue. I have had a number of cases in my constituency of Poplar and Limehouse in the past 16 years involving people in very expensive properties; professional and qualified individuals, residents who paid large sums of money for the homes that they inhabit. They are being ripped off and exploited by unscrupulous property management companies and individuals who have spawned these management companies.
That is my own local perspective. However, this is a national issue. As I understand it, about 5 million people are in leasehold tenure in the United Kingdom and only one other country has that degree of tenure. A note on the statutory instrument that we debated last week in Committee—the Redress Schemes for Lettings Agency Work and Property Management Work (Approval and Designation of Schemes) (England) Order 2013—said that 40% of all new properties are under leasehold tenure. East London, where we have massive regeneration and lots of new properties and conversions, is I think one of the areas with the biggest number of properties under leasehold tenure. This is not a situation that will go away. It has been growing for years and will continue to grow.
When we were in government, I know that we tried to address the issue to a certain extent. We had a number of stabs at it, but sadly we did not cover it. I am very hopeful that the Minister will be able to say that the coalition is still very interested in the subject and want to address it.
It is not just leasehold tenure that is an issue. I have to declare that I live on an estate that was previously managed by Peverel, which was previously owned by the Tchenguiz brothers, who were quite notorious. An Office of Fair Trading report is due out this Friday; I will mention that later. I am a freeholder, but because I am on an estate that is run by a property management company I have a covenant and therefore I am included and have a role to play. I want to put that on record, so that I am not accused of any conflict of interest.
Despite the reforms in the statutory instrument, there are still specific problems, including unfair charges for repairs, insurance and electricity supply, and complex procedures for residents to seek redress; those procedures are supposed to be informal. When residents get to land valuation tribunals—I know that the structure of those tribunals is itself being reformed—property management companies turn up with heavyweight legal teams, including barristers, and put people under massive pressure. One other difficulty is that, even where residents win their legal cases, the legal costs incurred by the property management companies, which were supposed to be capped at £5,000 but are not, suddenly appear on the bills of the residents for the following year as part of their service charges. That is grossly unfair and adds insult to injury.
Mr Andrew Smith (Oxford East) (Lab)
I congratulate my hon. Friend on raising this very important issue. Does he agree that these problems are a particular nightmare for elderly residents who simply cannot cope with the pressure that they are put under and the extent of the rise in costs?
Jim Fitzpatrick
My right hon. Friend anticipates a point that I will make later, namely that these problems are not restricted by class, age or geography. They relate to properties ranging from pensioner and retirement flats that have a value of only £50,000 through to million-pound properties in my part of east London. However, when we are talking about pensioners in their retirement homes and other such communities, the trauma and the stress caused by these issues is even greater. Although there are some restrictions in the legislation about the fees that these property management companies can charge, and measures dealing with the ability of local authorities to prosecute these companies when they see that there is a transgression, local authorities appear to be unwilling or unable to respond legally.
I know of a number of cases. In my constituency, I have two high-profile cases running at the moment: one on the Canary Riverside development and one on the West India Quay development. Both involve companies owned by the Yianis Group and are operated by Octagon Assets. They are in major disputes with residents, who have real problems in getting their situations resolved. The right to manage estate ballots procedure is very complex, especially where there are absentee owners who are sub-letting, and it is also very expensive. At the Kingsmere development in Brighton, it cost residents £30,000 to take action and they failed to secure the right to manage their own properties. An individual in Battersea, Mr Dennis Jackson, entered a dispute with his property management company about £7,000. He incurred legal costs of £76,000 and nearly lost his £800,000 flat, which he now has to sell to pay for his legal fees. That example shows the level of professional individuals we are talking about. They have to relocate to deal with the problems they have had to face.
We have had predators such as the Tchenguiz brothers and Peverel, the largest property management company in England, with many complaints from pensioners and others about onerous and unnecessary maintenance work and about exacting fees; my right hon. Friend the Member for Oxford East (Mr Smith) mentioned the pressures on pensioners. There is no requirement on these property management companies to demonstrate value for money, or to ensure quality of service.
I would be grateful if the Minister, when he responds to the debate, brought us up to speed on the OFT investigation into Peverel and on the leasehold inquiry, which I believe has been announced. I know that he will not be able to say too much without compromising embargoes and so on, but I know that there have been announcements, so it would be good to put on the record today exactly what is happening.
I congratulate the Leasehold Knowledge Partnership both in respect of the full OFT investigation into residential leasehold and the securing of the OFT report into the Peverel-Cirrus price-fixing racket, which involved warden call and electronic door systems in retirement leases. Again, that relates to the point that my right hon. Friend made about pensioners. I believe that the report is due out this Friday, but I would be grateful if the Minister confirmed that.
I thank the LKP and Carlex for their briefings and the information that they have given me, particularly the information about repayments to residents: £1 million to residents at St George Wharf; £500,000 to residents at Charter Quay; and £400,000 to residents at Chelsea Bridge Wharf. Those are huge sums, and they demonstrate that something has gone badly wrong in this sector.
We have had the statutory instrument and the redress scheme. I asked the Minister’s colleague—the Under-Secretary of State for Communities and Local Government, the hon. Member for Keighley (Kris Hopkins), who presided over the statutory instrument—about the redress scheme. He was able to say that the scheme, which has now been extended, means that, if someone is not in the scheme they will not be able to operate. Perhaps the Minister could say a little more about how the scheme will make it simpler for residents and tenants to be treated fairly. Also, can he give any information about the OFT inquiry, its duration and the liaison between his Department and colleagues in the Department for Business, Innovation and Skills about that?
The fundamental question is whether the Government accept that this issue must be addressed, with solutions in due course—
Jim Fitzpatrick
Do the Government accept that this growing issue will not go away and that action is needed? Certainly, the OFT announcement suggests that the authorities recognise that, although whether that is because the Government have told them, I am not entirely sure. It would be good to hear the Minister’s view on that.
Returning to my right hon. Friend’s intervention, leasehold crosses class and age boundaries, and includes everything from expensive lofts and expensive apartments to retirement bungalows and flats, and it is not geographically limited, either. The issue affects the whole country.
On the Delegated Legislation Committee, the Minister’s colleague, the Housing Minister said that he is prepared and happy to meet me, the hon. Member for Worthing West and other colleagues with an interest. I would be grateful if the Minister confirmed that meeting. Obviously, the OFT inquiry means that things will be happening in parallel, but it would be good to put that directly to the Housing Minister and the Department at some time in the future.
Sir Peter Bottomley (Worthing West) (Con)
I thank the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) for using the Delegated Legislation Committee to draw the Government’s attention to the matter, and I congratulate him on securing this debate.
I welcome the Minister, and I hope that he will pass on to his departmental colleagues and to Ministers in the Ministry of Justice the fact that something needs to happen to make things fair, to give people freedom and to avoid what I have called criminal behaviour in leasehold deals, price-fixing cartels, the cheating of freeholders and excessive exit fees and fiddles. Opportunist lawyers are playing the system, and at times the Property Chamber—or the Leasehold Valuation Tribunal, as it was—has not been led with the determination that secures justice for people sorting out ordinary disputes between a leaseholder, a managing agent or a freeholder.
I would like to invite the barrister Justin Bates, for example, to say out loud the ways in which opportunist managing agents and freeholders can frustrate an application to the Leasehold Valuation Tribunal or the first stage of the Property Chamber, where, as the hon. Gentleman said, the fee is fixed at £500, yet a lawyer can explain to the respondent, the managing agent or the freeholder, “You can make applications to delay the hearing, you can apply to go to the county court or you can bounce between the two. And, by the way, if you take the advice of some lawyers and apply for the right to manage, it can take up to 18 months for the courts to dispose of the fact that you do not have to have the letters RTM in the name of the proposed management company that would replace the managing agency appointed by the freeholder.” As my hon. Friend the Minister will know, the freeholder appoints and gives instructions to the managing agent, and the freeholder has every interest in the managing agent doing what the freeholder wants and not what is right by law or necessarily in the interest of the leaseholder.
I first became involved in the matter indirectly because of my Worthing home, which is leasehold. The other five owners and I took up an offer from the freeholder to buy the freehold. It took us two exchanges of letters to agree a price. The managing agent appointed by the freeholder was very good, and we continue to use that managing agent now. That is an example of how the system is supposed to work. If we had had a dispute over the price, we could have gone to the Leasehold Valuation Tribunal and solved it, but we did not need to do that.
Also in my constituency is a block of flats where a number of people—poor, old and some of whom were dying—found themselves applying to get back money that had been wrongly taken from them. It took well over a year to get the case to the Leasehold Valuation Tribunal. Partly because of my intervention, the freeholder recognised that what it had done was wrong and it offered £70,000 to the leaseholders, which was accepted. The sum was less than the leaseholders would have got in court, but at least it solved the problem.
The hon. Member for Poplar and Limehouse rightly mentioned Martin Boyd and Sebastian O’Kelly and their work with the campaign against retirement leasehold exploitation. LKP has saved millions of pounds for hundreds of people. The Government’s Leasehold Advisory Service does its best, but it does not have enough money or resources, and sadly it has to take advertisements from people who should not be advertising at all, let alone through a Government advisory service. I name Mr Benjamin Mier, who, when shown a report by the Judicial Conduct Investigations Office, resigned his position. If he had not, the report would have been made public. Because he resigned after reading the report, we do not know what is in it—actually, we do know what is in the report because we know what he had been doing, but we do not have that information formally. People only have to read the comments of the chairman of the Leasehold Valuation Tribunal to know what Mr Mier did.
Besides answering the debate today, for which I am grateful, will the Minister please ensure that the whole Government come together, follow the OFT investigation into what is going wrong commercially and consider what the Serious Fraud Office had, and the OFT has, on Peverel, which has been named? I would also like the Minister to consider Mr Israel Moskovitz, who, again, has played the system to avoid his leaseholders in Plymouth getting into dispute resolution, the Leasehold Valuation Tribunal, or the right to manage or the right to purchase.
The Association of Residential Managing Agents, with our former colleague Keith Hill as its arbitrator, has some of the right ways forward. It ought to be illegal for any managing agent or freeholder to take a commission from an insurance company without having an open book and without showing that what they are doing is in the best interest of leaseholders.
I am pleased that the right hon. Member for Kingston and Surbiton (Mr Davey), who is also the Secretary of State for Energy and Climate Change, and I had meetings with the OFT that have led to the decision this week to investigate. There is more to come. Bluntly, it is wrong that were I a convicted fraudster who came out of jail yesterday, I could set up as a managing agent today without having to meet necessary and obvious standards. Such standards are not just for those who live in big flats on the Thames—those with lawyers and expensive flats—but for small people who cannot get anything other than a leasehold property of their own in which to live, hopefully without undue cost.
We must make the system such that managing agents have a duty to paying leaseholders to get the best possible service at the right price and leaseholders do not have to pay for things that are not needed. The OFT will address the door-call systems whereby many hundreds of blocks of flats—there are probably six in my constituency, and I know there are such flats in the constituencies of both the Chancellor of the Exchequer and the Prime Minister, and there are probably some in most constituencies—are forced to have unnecessary renewals at prices fixed by almost a cartel. They are not actually cartels, because the two other so-called bidders do not do the work. If I were 99% of the market, I do not think I should get relief from the OFT rules by confessing my sins after the Serious Fraud Office had passed my case to the OFT.
I will not go on, because there will be other opportunities for the House to consider these matters. The hon. Member for Poplar and Limehouse has rightly spoken for millions of people, and it is time that Parliament and the judiciary took action to stop such scandals, costs, frustration and worry for ordinary individuals who are just trying to live quietly at home.
The Parliamentary Under-Secretary of State for Communities and Local Government (Nick Boles)
It is a pleasure to serve under your chairmanship, Mr Turner. I feel much safer with you watching over us.
I congratulate the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) on securing this debate and on speaking with both passion and persistence on an issue that I know is of great importance to his constituents. I also thank my hon. Friend the Member for Worthing West (Sir Peter Bottomley) for his contribution and his persistence in pursuing the matter, which some might view as arcane but is a very real source of worry and distress in many people’s lives.
I am responding to this debate in place of the Housing Minister, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Keighley (Kris Hopkins), as he is required to respond to an Opposition day debate on business rates. I may not be able to address all the issues, and if I try to do so, I might not address them as intelligently as he would have done, but I know that he is happy to write to hon. Members to follow up on any issues. Of course, he is also happy to hold the meeting mentioned by the hon. Member for Poplar and Limehouse, to which he has already committed.
Residential leasehold is indeed an important and growing housing sector. Many leaseholders, like my hon. Friend the Member for Worthing West, are happy with their home, but we recognise that some leaseholders are not. The Housing Minister’s postbag makes that very clear.
The hon. Member for Poplar and Limehouse has raised a wide range of issues, and I will attempt to address as many as I can in the time available. I am glad to have been asked how the redress schemes will assist leaseholders and others. Since 2010, the Government have become increasingly aware of the issues in the residential leasehold sector, particularly to do with the quality of service. The Enterprise and Regulatory Reform Act 2013 gives the Secretary of State for Communities and Local Government the power to require all residential letting agents and property management agents in England to be members of a Government-approved redress scheme. We are making good progress on implementing those powers, and we expect to start approving such schemes early in the new year.
Sir Peter Bottomley
I have a brief technical point that I do not expect the Minister to answer today. In law, a leaseholder is a tenant, but leaseholders are not always counted as tenants, so will he try to check whether the schemes will cover leaseholders, as well as people normally referred to as tenants? Perhaps the Housing Minister can come back to us on that.
Nick Boles
My understanding is that it will, but we will certainly write to my hon. Friend to reassure him. I skipped over a sentence that seems to imply that it will be the case, but we will confirm that to all right hon. and hon. Members present.
I want briefly to address the right-to-manage legislation. I must admit that this is the first time I have ever heard about it, so I may not make as much sense as hon. Members deserve. The leasehold right-to-manage legislation is designed to be available to as many private sector leaseholders living in blocks of flats as possible. The right was designed for use on a block-by-block basis. Applying the legislation to estates is complex and might result in the right becoming less, rather than more, accessible. Right-to-manage ballots can be complex and potentially expensive, and the legislation sets out in detail the procedures that all involved must obviously follow and comply with. The provisions aim to protect the interests of all parties, including those of the leaseholders. I am sure that my hon. Friend the Housing Minister will be happy to discuss that further if appropriate.
The hon. Member for Poplar and Limehouse mentioned high charges to leaseholders for repairs, insurance and utilities. The law provides leaseholders with a range of important rights to do with service charges, including the right to be consulted, the ability to challenge the reasonableness of charges at independent tribunal and the right to obtain information.
The right hon. Member for Oxford East (Mr Smith) mentioned older and vulnerable leaseholders, who may find it onerous or stressful to attend a tribunal or to exercise their rights. Free initial legal advice is available from the Leasehold Advisory Service—LEASE—which is funded by my Department.
Sir Peter Bottomley
I want to add a tribute to Anthony Essien, the chief executive of LEASE. He and the Master of the Rolls, as the head of the Court of Appeal, would agree that judgments by the Leasehold Valuation Tribunal and on appeal need to be trawled through, so that instances of when poor, ordinary people have been frustrated at great cost and worry can be collected. As the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) said, the costs pile up and then come back as service charges. More work is needed.
Nick Boles
I hope that I will be able to address, at least in part, the question of the ability of property management companies to recover their legal costs from leaseholders, even in cases where the leaseholder is the successful party, by adding them on as service charges for the following year. Whether the landlord can recover his legal costs, and if so, in what way will depend on the terms of the individual lease. Even when a lease does allow the recovery of legal costs as a service charge, the courts and tribunals still have the power to prevent that from happening by issuing what is known as a section 20C—of the Landlord and Tenant Act 1985—order, if they judge it appropriate. Of course, to get such an order does require someone to go through the court or tribunal. Each case will be determined on its merits, and independent legal advice should be obtained, but where leaseholders believe that they have grounds to do so, they should consider applying to the court or tribunal for such an order.
I want to address questions about the Office of Fair Trading. There have been several reviews, and I want to ensure that I get the information correct. I am advised that the OFT is carrying out an investigation into property management groups that use associated companies to supply security systems and other services, and I believe that it expects to report on that shortly. The OFT is also undertaking a separate market study of property management, but that is only in the initial stages, so I am unable to say exactly how long it will last or when it will report. I do know, however, that the OFT is seeking views on the scope of the study, which should be provided by January. I am absolutely certain that the Housing Minister will be able to provide more detail when he meets hon. Members.
At the end of his speech, the hon. Member for Poplar and Limehouse asked what is perhaps the most important question, which is whether the Government are saying, “Nothing to see here, move along,” or whether they are recognising the problems and abuses and the fact that, while some steps have been taken, including those in the Enterprise and Regulatory Reform Act 2013, other subjects may need examining. I reassure the hon. Gentleman and others that we do understand that there is abuse and that there are vulnerable people who are not best placed to defend themselves. We are open to conversations about ways to improve matters without massively over-complicating systems or adding hugely to the burden on either the taxpayer or leaseholders.
Sir Peter Bottomley
Does the Minister agree that, in addition, the professional standards bodies for surveyors, bankers, barristers and others should review whether the actions of some of their members should lead to reviews of whether professional standards are being met? If someone does something illegal, that is clearly wrong, but someone doing something that is against the public interest should not happen in a profession.
Nick Boles
It is certainly the case in other professions that people can be struck off, even if not found guilty of a criminal offence, for breaking the code of that profession. I am sure that every profession will want the public to have full confidence in its professional standards and in its maintenance and enforcement of them.
Question put and agreed to.
Written Statements
National Infrastructure Plan 2013
(11 years ago)
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The Chief Secretary to the Treasury (Danny Alexander)
This Government are committed to reversing the effects of historic under-investment and equipping the UK with world-class infrastructure.
The Government are today publishing the “National Infrastructure Plan 2013”, which updates their plan for the next decade and beyond, and announcing a package of measures which will further support their ambition.
Economic regulators’ study
The Government recognise the value of fully independent regulation for economic infrastructure, and remain committed to this system. There is nevertheless scope for broader consideration of the way regulators work together and with the Government on issues related to cross-sectoral infrastructure delivery. They have therefore initiated a joint HMT/BIS study to look particularly at developing better joint working, more clearly explaining the role of economic regulation, and facilitating cross-sector infrastructure investment. Recommendations from the study will be made in spring 2014.
Broadband fund and local procurement
The Government will open a £10 million competitive fund in 2014 to market test innovative solutions, delivering superfast broadband services to the most difficult-to-reach areas of the UK; the Government will continue to support local bodies to develop appropriate strategies to procure additional coverage in areas not covered by current plans, using the £250 million allocated at spending round 2013.
Public Works Loan Board (PWLB)
The Government are allocating the remaining £800 million of borrowing at the Public Works Loan Board (PWLB) project rate as part of growth deals. This will be available to LEPs working in partnership with local authorities in 2014-15 and 2015-16 and allocated on a competitive basis alongside the single local growth fund.
The Government are also announcing that local authorities in Scotland and Wales will have access to the Public Works Loan Board project rate to support priority infrastructure projects. A total of £400 million of borrowing will be available from 2014-15 to 2015-16, subject to agreement with the devolved Administrations on the precise mechanics and conditions.
Airport surface access
The Government are today taking forward measures proposed by the Airports Commission by introducing a package of improvements to airport surface access. These measures include making available £50 million for a full redevelopment of the railway station at Gatwick airport (subject to satisfactory commercial negotiations with the airport), setting up a new study into Southern Rail access to Heathrow, and including access to Stansted on a current study of the East Anglian mainline.
Sir Howard Davies’ letter recommending these measures has today been published on the Airports Commission’s website.
Queen Elizabeth Olympic Park
The Government will support the London Legacy Development Corporation and Mayor of London in developing their plans for the Queen Elizabeth Olympic park. This includes plans for a new higher education and cultural quarter on the park, in partnership with University College London and the Victoria and Albert museum.
Ultra-low emission vehicles
The Government will invest £5 million during 2014-15 in a large-scale electric vehicle readiness programme for public sector fleets. The programme aims to promote the adoption of ultra-low emission vehicles, demonstrating clear leadership by the public sector to encourage future widespread acceptance.
River Thames Garden Bridge
The Government will provide a £30 million contribution to support the construction of a new Garden Bridge across the River Thames in London. This will supplement funding from Transport for London and private donations.
A50
The Government will provide funding to support improvements to the A50 around Uttoxeter starting no later than 2015-16 (subject to statutory procedures) to support local growth, jobs and housing; this project will be subject to the usual developer contributions.
A14
The Government are confirming that there will be no tolling on the planned A14 scheme between Cambridge and Huntingdon (one of its “top 40” priority investments), construction of which is planned to start in 2016; it has listened to concerns from local residents and businesses who rely on this road and, following a consultation, have decided to take forward a scheme which does not include a tolling element
Driverless cars
The Government will review the legislative and regulatory framework to ensure there is a clear and appropriate regime for the testing of driverless cars that supports the world’s car companies to come to develop and test them here. The review will report at the end of 2014.
The Government will also provide a prize fund of £10 million for a town or city to develop as a test site for consumer testing of driverless cars.
Strike Prices
The Government are today announcing the “strike prices” for key renewable energy generation technologies from 2015-16 to 2018-19. These prices confirm the level of support that private sector developers will be guaranteed to be paid for their electricity through a top-up from the wholesale price, under the new electricity market reform regime.
The Government will announce further details on contract terms by the end of 2013.
Judicial Review Reform
The Government will establish a specialist planning court with set deadlines to accelerate the handling of cases, take forward work to ensure that minor procedural claims are dealt with proportionally and allow appeals to “leapfrog” directly to the Supreme Court in a wider range of circumstances.
Development Benefits
The Government want to ensure that households benefit from development in their local area. Building on the measures already in place (including the neighbourhood funding element of the community infrastructure levy and the new homes bonus), the Government will work with industry, local authorities and other interested parties to develop a pilot passing a share of the benefits of development directly to individual households.
Planning System
The Government are taking further steps to speed up the town and country planning system.
The Government will consult on measures to improve plan making, including a statutory requirement to put a local plan in place.
The Government will legislate to treat planning conditions as approved where an authority has failed to discharge a condition on time, and will consult on legislative measures to strengthen the requirement for planning authorities to justify any conditions that must be discharged before building can start.
The Government will consult to reduce the number of applications where unnecessary statutory consultations occur and pilot a single point of contact for cases where conflicting advice is provided by key statutory consultees.
Nationally Significant Infrastructure Project Planning Review
The Government are today launching a review of the nationally significant infrastructure planning regime and are publishing a discussion document on making this regime even more effective.
The Government will freeze planning application fees for the nationally significant infrastructure planning regime for at least the remainder of this Parliament.
“Top 40” Planning Applications
To support the delivery of “ the top 40”, the Government will ensure where possible that these projects have the option to use the regime. These projects and programmes have been identified by Government as critical priorities for delivery and, while each application to use the nationally significant infrastructure regime must be considered on its merits, Government will have regard to this “top 40” designation in those considerations.
National Networks National Policy Statement
Alongside the national infrastructure plan the Government have published the National Networks National Policy Statement (NPS) for consultation and parliamentary scrutiny
UK Guarantee Scheme
The Government have agreed the terms of a UK Guarantee facility with the GLA to support up to £1 billion of borrowing for the construction of the Northern line extension to Battersea power station (subject to a satisfactory Transport and Works Act order). This in turn has facilitated a commercial agreement between the GLA, Transport for London and the developers at Battersea power station for the redevelopment of the site.
In addition the Government have approved a guarantee for a £10 million deal under the scheme to help provide finance for the installation of energy-saving lighting equipment across a portfolio of car parks managed and operated by National Car Parks Limited (NCP) resulting in a 60% reduction in energy consumption.
And the Government have confirmed that they have entered into a co-operation agreement with Hitachi and Horizon with the aim of being able to agree an in-principle guarantee by the end of 2016 to support the financing of a new nuclear power plant at Wylfa Newydd, subject to final due diligence and ministerial approval.
UK Insurance Growth Action Plan
As part of the Government’s “UK Insurance Growth Action Plan”, also published today, UK insurers have agreed to work alongside partners with the aim of delivering at least £25 billion of investment in UK infrastructure over the next five years, including, but not restricted to, projects in the published infrastructure pipeline.
Asset Sales
The Government have identified further assets with the potential for sale and the target for the sale of corporate and financial assets will be increased from £10 billion to £20 billion between 2014 and 2020.
Copies of the “National Infrastructure Plan 2013” will be available on the gov.uk website and have been deposited in the Libraries of both Houses.
The Charity Commission's Powers
(11 years ago)
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The Minister of State, Cabinet Office (Mr Nick Hurd)
I am today publishing for public consultation a range of proposals to strengthen the powers of the Charity Commission to tackle serious abuse in charities and to extend the range of criminal offences that would disqualify people from being a charity trustee. The consultation will run until 12 February 2014.
Deliberate abuse of charities remains rare, but where it does take place it is important that the Charity Commission has the tools it needs to act swiftly and decisively to protect public trust and confidence in charities. The National Audit Office has criticised the Charity Commission for failing to effectively regulate charities. The Charity Commission has accepted that it needs to improve its regulatory effectiveness, and there is already evidence of progress under the direction of its new board.
The National Audit Office also recommended that Cabinet Office support a legislative bid for stronger Charity Commission powers. The proposed changes on which we are consulting have been requested by the Charity Commission, which fully supports this consultation.
The changes include:
proposals to extend the criminal offences which automatically bar a person from acting as a charity trustee; a proposal for a new discretionary power for the Charity Commission to disqualify a person who is unfit from acting as a charity trustee; a proposed new power to enable the Charity Commission to effectively close down a charity; a proposed new statutory warning power; extensions of several existing powers and technical changes to close various loopholes.
I am particularly keen for charities and their representative bodies to contribute their views in the consultation and help to shape and prioritise the proposed changes. These changes will benefit charities as they will promote public trust and confidence in the effective regulation of charities.
The consultation is available on http://www.gov.uk and I have arranged for copies to be deposited in the Libraries of both Houses.
Care Leavers
(11 years ago)
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The Secretary of State for Education (Michael Gove)
Today I am announcing the Government’s intention to propose an amendment to the Children and Families Bill that will make a significant change to the legislation regarding care leavers. This amendment will be tabled for the House of Lords Third Reading of the Children and Families Bill.
The amendment will place a new legal duty on local authorities to support every care leaver who wants to stay with their former foster parents until their 21st birthday (“staying put” arrangements). This duty will come into force from April 2014 and we will be giving local authorities £40 million over the next three years to put the support arrangements in place.
A growing number of local authorities already offer young people the choice to stay but with little financial support it can be challenging for their foster families. Now all councils will have to follow their example.
This is a further reform to our much wider package of support for care leavers, including changes to the rules so 16 and 17-year-olds remain in care until they are ready to move out, and much greater financial support for young people leaving care at 18.
Children in care typically have much lower educational outcomes and are more likely to be out of education, work and training. Today’s announcement is the latest in a series of reforms the Government have made to improve both the stability and outcomes for young people leaving care.
We have:
launched the care leavers’ charter—a contract between local authorities and young people leaving care—which sets out the support they can expect right up to the age of 25, with over 120 local authorities now signed up;
introduced the junior independent savings account for all care leavers, with over 40,000 accounts now open with a £200 contribution from Government;
published the cross-Government care leavers’ strategy, which for the first time sets out in one place the steps the Government are taking—from housing to health services, from the justice system to educational institutions—to support care leavers to live independently once they have left their placement;
written to all local authorities asking them to dramatically improve financial support for care leavers, resulting in tripling in the number of councils now paying £2,000 or more through the setting up home allowance;
improved accountability by publishing an annual data pack, outlining statistics
on care leavers’ education and employment status, and from this autumn Ofsted’s local authority children’s service inspection framework will place extra emphasis on the outcomes of care leavers.
Supporting care leavers to stay with their former foster carers will allow them to leave stable and secure homes when they are ready and able to make the transition to independence. It will also help them enter adult life with the same opportunities and life prospects as their friends. I hope this significant change we are proposing for care leavers will have widespread support.
Electricity Market Reform (Renewable)
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
I wish to inform the House that today the Government are publishing the Contract For Difference (CFD) strike prices for renewable technologies, alongside an update to the key CFD contract terms. This information is being published ahead of schedule in order to provide further certainty to industry and investors.
Contracts for Difference are one of the main mechanisms created as part of the electricity market reform (EMR) programme. EMR is the central component of the Energy Bill, currently being considered by Parliament, which will address the need to attract unprecedented levels of investment in the UK electricity sector over the coming decades to replace our ageing energy infrastructure with a diverse, low-carbon energy mix.
CFDs will stimulate investment in all forms of low-carbon electricity generation by providing efficient, long-term support. The CFD reduces the risks faced by low-carbon generators, by paying a variable top-up between the market price and a fixed price level, known as the strike price. As well as reducing the exposure to volatile and rising fossil fuel prices, the CFD protects consumers by ensuring that generators pay back when the price of electricity goes above the strike price.
The strike prices and updated contract terms being published today have been set to meet the Government’s objectives on renewable energy, decarbonisation, security of supply and minimising cost to consumers, and are informed by the feedback and evidence received through the delivery plan consultation, conducted during the summer of 2013. The consultation included draft strike prices for renewable technologies, and was followed in August by the publication of further detail on CFD contract terms.
The strike prices published today provide:
a basis for renewable electricity to achieve at least 30% of generation by 2020, in line with the EU renewable target;
a strong foundation for offshore wind. DECC modelling suggests that 10GW is achievable (in line with the 8-16GW range in the draft delivery plan). This is not a target and actual deployment will depend on technology costs;
good value for money for consumers by ensuring that the overall level of support remains within the LCF and that where cost savings can be made they are reflected in revised strike prices; and
continued ambitions for other technologies that are expected to be in line with the draft delivery plan and the renewable roadmap.
The pipeline of projects under development in the UK in established technologies is strong enough to permit earlier introduction of competition. The European Commission is expected to publish new environmental and energy aid guidelines for consultation soon. Given the approach set out in the recent DG Energy guidance, it is expected that the new state aid guidelines will require the UK to move to competition for more established technologies. The Government will confirm their approach and details of how this will operate through the delivery plan and engagement with stakeholders early in 2014.
The CFD contract terms have also been updated to take into account feedback received from a wide range of stakeholders following publication of detail on the terms, along with a draft CFD contract, in August 2013. The Government have now made a number of changes to further support the ability of developers to bring forward investment at lower cost to consumers. In particular the updated terms provide flexibility to reduce capacity, protection against unexpected events and protection against changing circumstances.
The Government’s full response to the consultation on the draft delivery plan, is intended be published later this month alongside the EMR delivery plan. The delivery plan will include further detail on the strike prices. The documents will also be accompanied by a detailed explanation of the Government’s final policy positions on the CFD contract terms.
Government also announced today that 16 projects have reached the next stage of final investment decision enabling for renewable process to secure an early form of contracts for difference. The final selection of projects will take place in spring 2014.
The documents, “Investing in renewable technologies—CFD contract terms and strike prices” and “Final Investment Decision for Renewable: Update 3: Contract Award Process”, are available on the Government website.
Renewable Heat Incentive
The Minister of State, Department of Energy and Climate Change (Gregory Barker)
I am pleased to announce today the publication of DECC’s Government response document “Non-Domestic Renewable Heat Incentive: Improving Support, Increasing Uptake”, which sets out a range of improvements and increased support under the non-domestic renewable heat incentive (RHI).
This responds to the consultations “Expanding the non-domestic scheme”, “Air to Water Heat Pumps and Energy from Waste” and “Non-Domestic Scheme Early Tariff Review” as well as addressing the outcome of four calls for evidence related to bio-propane; large biomass, ground-source heat pumps and landfill gas.
The non-domestic RHI scheme has been open to commercial, industrial, public sector, not-for-profit and community generators of renewable heat since November 2011. The scheme is designed to bridge the gap between the cost of fossil fuel heat sources and renewable heat alternatives through financial support for owners of participating installations.
Given low levels of uptake for some technologies in the scheme and additional evidence from stakeholders, we decided to re-examine the evidence on the assumptions and cost data used to set the level of tariffs when this world-first scheme for renewable heat was launched. It is vital that we get the level of support right so that the market can invest with confidence, cost reductions can be achieved and the market can grow sustainably.
We gathered new data on the assumptions used to set tariffs and used this in conjunction with evidence from the industry to calibrate new tariff levels. Subject to state aid approval, we intend to increase the support available for renewable combined heat and power (CHP) plants, large biomass boilers (over 1MW), deep geothermal, ground-source heat pumps, solar thermal and biogas combustion up to 200kWth. We are also introducing new support for air-water heat pumps and commercial and industrial energy from waste, along with improvements to our budget management policy and further policy development on providing increased tariff certainty for large-scale schemes.
Also published today are further details of the domestic RHI, related to budget management policy, phasing of legacy applications and treatment of some types of subsidy, as well as confirming the tariff for solar thermal at 19.2p/kWh, as per our commitment when publishing the domestic RHI policy in July 2013.
The changes set out in the publications I am announcing today are summarised on gov.uk and are subject to parliamentary and state aid approvals. They are designed to stimulate considerable growth in the deployment of renewable heating technologies in the coming years and we expect that these tariffs will drive significant deployment so that the industry can grow and invest with confidence.
Single Payment Scheme
(11 years ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)
The window for payments to farmers in England under the EU CAP single payment scheme (SPS) for 2013 opened on 1 December 2013.
On 2 December 2013, the first banking day of the payment window, the Rural Payments Agency paid over £1.48 billion to 95,600 farmers, more than ever before on the first banking day of the payment window. This equates to 89.3% of the estimated fund value and 92.3% of customers. This represents the highest number of customers receiving their payments from the Rural Payments Agency on this day, which continues to build on the agency’s best ever performance last year. This is excellent news for English farmers and for the wider rural economy.
The agency will shortly contact all of those farmers who are unlikely to receive their payments in December to explain what further work is necessary to validate their claims and to set out an estimated timetable for payment.
The agency is working to a commitment, set out in its business plan for 2013-14, to pay 86% of payments by value and 93% of customers by number by 31 December 2013 and 97% of payments by value and 97% of customers by the 31st March 2014.
The payments made on the first banking day equate to 89.3% of the estimated fund value, meaning the agency has already exceeded its end of December target of 86%, paying £100 million more on the first day this year than it did last year. I will keep the House updated on its progress against delivery to customers.
Justice and Home Affairs Council
(11 years ago)
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The Secretary of State for the Home Department (Mrs Theresa May)
The Justice and Home Affairs (JHA) Council is due to be held on 5 and 6 December in Brussels. My right hon. Friend the Secretary of State for Justice and I will attend on behalf of the United Kingdom. The following items will be discussed.
The Council will begin in mixed committee with Norway, Iceland, Liechtenstein and Switzerland—non-EU Schengen states—where Ministers will consider the latest situation in relation to Romania and Bulgaria’s accession to the Schengen acquis.
That will be followed by a debate on the latest Commission report on the functioning of the Schengen area. This item is considered by the Council every six months following a debate on Schengen governance at the 2011 June European Council. While we only participate in the police and criminal justice elements of Schengen, having chosen to retain our own border controls, the UK has an interest in its wider functioning due to the impact on the UK of illegal immigration transiting Schengen states.
During the main Council there will be a discussion on the EU’s response to the Lampedusa tragedy, with a report from the new Commission-led “Task Force Mediterranean”, which is developing a coherent set of measures to tackle dangerous sea crossings by migrants attempting to reach the EU. The Government are pleased with the work of the taskforce to date and want to ensure that it remains focused on preventative action in third countries, including by combating people smugglers.
The Commission will present its final report on free movement abuse, requested by the Council in June. The Commission’s communication, published on 25 November, outlines the current legal framework and sets out five existing actions previously announced by Commissioner Reding in October, including work on a handbook to tackle sham marriage, clarifying the habitual residence test and increasing European social funds available for integration. The Government plan to express their disappointment that the Commission continues to fail to take seriously the concerns raised by member states about fraud and abuse, and press for further action.
The Council will return to the issue of the potential threat posed by foreign fighters, with a discussion around ideas to be presented by the EU counter-terrorism co-ordinator, Gilles de Kerchove. We expect these to focus on four key areas: information exchange, preventative action, criminal justice response and co-operation with third countries. The UK has sought to inform this work drawing on our experience in taking forward our domestic counter-terrorism strategy, Contest.
We understand that there will be a discussion on both days on strategic guidelines on future work in the area of justice and home affairs. The Government welcome substantive debate on this issue since they take the view that member states must use this opportunity to set the direction for future work in this area, with the JHA Council closely involved in preparing, and subsequently overseeing implementation of, the new guidelines. The Government support a shorter, more strategic set of guidelines than in previous work programmes, focusing on the full and effective implementation of the legislation that has already been adopted, and practical co-operation in priority areas, as opposed to new legislation or a detailed list of measures to be adopted. The Government’s priority areas for EU action are: preventing the abuse of free movement rights; strengthening the EU’s external borders; action against modern slavery; more effective return of foreign prisoners to their country of origin; and improved exchange of criminal records.
Under AOB there will be presentations from the incoming Greek presidency on its work programme and from the presidency on current legislative proposals and the outcome of the EU-US justice and home affairs ministerial meeting. In the margins of the Council a—non-binding—political declaration for the new mobility partnership with Tunisia has been scheduled for signature by participating member states. The UK will participate.
The justice day will begin with a discussion on the concept of the one-stop shop mechanism contemplated in the draft data protection regulation. The presidency has indicated its wish to reach a partial general approach on those aspects, though it is possible the Council will conclude that this would be premature.
The Council will be aiming for general approach on the European account preservation order to facilitate cross-border debt recovery in civil and commercial matters. The UK has not opted in to this proposal because of concerns about whether defendants’ interests were sufficiently safeguarded.
The presidency will facilitate an orientation debate on the proposal for a regulation of the European Parliament and of the Council amending Council regulation on insolvency proceedings.
This will be followed by a discussion aimed at achieving a general approach on the proposal for a regulation of the European Parliament and of the Council amending regulation 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I) to allow the new unified patent court to be recognised as a court for the purposes of the regulation.
There will be information by the presidency on the proposal for a regulation of the European Parliament and of the Council on a common European sales law.
On non-legislative activities, there will be a presentation by the Commission and exchange of views on the justice related aspect of 2014 European semester, including the “Justice Scoreboard”.
The Council will seek to adopt three sets of Council conclusions: on the evaluation of the European Union Agency for Fundamental Rights, the EU Citizenship Report 2013 and on combating hate crime.
The presidency will provide a state of play report on the accession of the European Union to the European convention on human rights.
The presidency will also provide an update on work achieved on e-justice during its term and will be seeking agreement on a strategy for this work as it goes forward.
Tackling Radicalisation and Extremism
(11 years ago)
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The Secretary of State for the Home Department (Mrs Theresa May)
The extremism taskforce was set up in the wake of the killing of Drummer Lee Rigby in Woolwich to look closely at whether the Government were doing all they could to confront extremism and radicalisation. It met for the first time on 3 June, following which the Prime Minister gave a statement to the House, Official Report, column 1233. On 26 November, the taskforce convened for the final time.
During the last five months, the taskforce has considered a range of measures to confront extremism in all its forms, including in communities, schools, prisons, faith institutions or universities.
We have today published a document that sets out the conclusions of our discussions and the practical steps that we have agreed to address the gaps in our response to extremism. This includes:
placing Prevent and the Channel programme, which supports individuals at risk of being radicalised, on a statutory footing;
consulting on new legislation to strengthen the powers of the Charity Commission;
considering the case for new types of order to ban groups which seek to undermine democracy or use hate speech, and new civil powers to target individual extremists;
working with the internet industry to restrict access to terrorist material online, improving the process for public reporting of extremist content online and identifying extremist content to include in family-friendly filters;
taking steps to ensure local authorities are supporting people on the front line of tackling extremism, and intervening where they are not taking the problem seriously;
giving additional support to local communities which are on the front line of tackling extremism by supporting integration projects and setting up a dedicated public communications platform; and
addressing extremism in institutions by improving oversight of religious supplementary schools, finding trained Muslim chaplains to challenge extremist views on campuses and restricting the ability of extremist and terrorist prisoners to radicalise others.
Copies of the document are available in Library of the House and on the www.gov.uk website.
Mesothelioma
(11 years ago)
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The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)
Mesothelioma is a tragically aggressive and terminal occupational disease. It kills approximately 2,200 people in England and Wales each year, with sufferers having a median life expectancy of only seven to nine months from diagnosis. Yet claims for compensation for mesothelioma are often subject to delays and fraught with procedural and evidential difficulties, made all the more acute by the imminence of the claimant’s death.
The Government have conducted a consultation on proposals intended to improve the speed and efficacy of the process for claimants to recover compensation in cases where a liable employer or insurer is traced. That consultation, which closed on 2 October 2013 and elicited over 100 responses, also incorporated the review required by section 48 of the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act 2012 regarding the application to mesothelioma claims of conditional fee agreement reforms contained in part 2 of that Act.
The Government have reformed the way in which no-win-no-fee conditional fee agreements operate. It has always been the Government’s intention that those reforms should apply to all areas of civil litigation, including personal injury compensation. Those reforms came into force generally in April 2013, although not in respect of proceedings for mesothelioma claims. Extending the reforms to those proceedings was delayed until a review had been undertaken and published in accordance with section 48 of the LASPO Act.
The Government have carefully considered the responses and have concluded that they intend to apply sections 44 and 46 of the LASPO Act to mesothelioma cases, as for all other personal injury cases. The Government do not believe that the case has been made for mesothelioma cases to continue to be treated differently, in particular by comparison to other personal injuries, which can also have profound consequences for the sufferer.
To ensure that key changes to the mesothelioma claims process are addressed in a synchronised manner, we propose to apply the LASPO provisions from July 2014, at the same time as the compulsory payment scheme for victims of mesothelioma is planned to come into force under the Mesothelioma Bill, subject to Royal Assent. Under the Bill, introduced into Parliament in May 2013 by the Department for Work and Pensions, victims of mesothelioma who are unable to trace their liable employer or their employer’s insurer would be eligible to claim compensation from a dedicated fund even though it is not possible to trace the persons actually liable to compensate them.
The Ministry of Justice has also carefully considered responses to its other consultation proposals. We have declined to take forward a dedicated Mesothelioma pre-action protocol supported by a fixed recoverable costs regime as they currently stand on the grounds that there is not a strong enough case that they will meet the Government’s declared aim of ensuring that mesothelioma compensation claims are settled quickly—where necessary —and fairly. In light of our consultation response the ABI will wish to reconsider the final consultation proposal, an electronic Secure Mesothelioma Claims Gateway, which they had proposed to host and fund.
At this stage we still hope to identify potentially valuable reforms to mesothelioma claims process from the responses to the consultation and the Government will work closely with interested parties to discuss how these can be taken forward.
The Government will publish their response to the consultation, and the report under section 48 of the LASPO Act, shortly.
Consultation on National Networks
(11 years ago)
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The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)
The Department for Transport is launching today a public consultation on the Government’s draft National Policy Statement for National Networks (NN NPS) in England. I am laying the draft before the House and placing copies of the consultation in the Library of the House. The Department is also publishing, in parallel, its appraisal of sustainability of the draft National Policy Statement, incorporating a Strategic Environmental Assessment as well as an assessment of the NPS under the Habitats and Wild Birds Directive. Consultees will be able to comment on these if they wish.
The Planning Act 2008 introduced a new planning regime for Nationally Significant Infrastructure Projects (NSIPs). These are infrastructure projects that support the country through the generation and distribution of energy, the disposal of waste and the transportation of goods and people. Such projects have the potential to affect a wide range of people and businesses, from those who will use them, to those who live or work close to proposed sites.
This NN NPS addresses a key concern of scheme developers and promoters by providing a clear articulation of the overall policy against which the Secretary of State for Transport will make decisions on applications for nationally significant infrastructure projects on the national road and rail networks. It describes the need for development of these networks and Government policy for addressing it, within the context of the Government’s long term goals for sustainable transport.
It means that Government policy on national network development is easily accessible in a single document. This will make it easier for decision makers, applicants and the wider public to understand Government policy on the need for NSIPs and the way in which developments will be assessed. It provides the right balance between a well connected and high performing road and rail network with sufficient capacity to meet the country’s long term needs, while protecting the environment and minimising social impacts. It demonstrates this Government’s commitment to deliver the infrastructure and investment the economy needs for continued growth, making the planning system easier to navigate.
The public consultation being launched today, invites views on the extent to which this national policy statement meets its aim of providing planning policy for decisions on the development of national networks. The consultation closes on 26 February 2014 but I encourage people to respond earlier where possible.
Under Section 9(7) of the Planning Act 2008 the Department is required to stipulate the relevant period in which, if either House makes a resolution, or a Committee of either House makes recommendations with regard to the proposal to designate an NPS, a statement will be laid in response. I hereby stipulate the relevant period as that beginning today and ending on 21 May 2014.
The documents and consultation are available at:
https://www.gov.uk/government/consultations/national-road-and-rail-networks-draft-national-policy-statement.
EPSCO Council—Brussels, December 2013
(11 years ago)
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The Minister of State, Department for Work and Pensions (Esther McVey)
The Employment, Social Policy, Health and Consumer Affairs Council will be held on 9 December 2013 in Brussels.
The council will seek general approach on the posting of workers and on the enhanced co-operation between public employment services (PES).
There will be exchange of views on the annual growth survey 2014 (AGS), draft joint employment report (JER) and alert mechanism report (AMR). Ministers will be asked to approve the scoreboard of employment and social indicators under the JER and endorse the updated Employment Committee (EMCO) report on employment performance monitor and benchmarking. The chair of the Social Protection Committee (SPC) will report on ex-ante co-ordination of major reforms.
The Commission will present its communication on the “quality framework for traineeships” and report on the state of play with the implementation of the Youth Guarantee/Youth Employment Initiative.
The council will adopt a recommendation on effective Roma integration measures in the member states and council conclusions on the “effectiveness of institutional mechanisms for the advancement of women and gender equality”.
The council will note progress reports on improving the gender balance among non-executive directors of companies listed on stock exchanges and on implementing the principle of equal treatment between persons irrespective of religion or belief, disability, age or sexual orientation.
Under any other business the Commission will present its communication on free movement and a proposal for a directive on seafaring workers. The presidency will report on ongoing issues and there will be a presentation from the incoming Greek presidency on its work programme.
DFID Programme Management
(11 years ago)
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The Secretary of State for International Development (Justine Greening)
TradeMark Southern Africa (TMSA) is a DFID project that aims to promote regional integration and trade in southern Africa, working with African regional economic communities. This is an agenda to which the UK Government are fully committed and which deserves effective support.
Investigations carried out by DFID’s internal audit department and by the Independent Commission for Aid Impact (ICAI) ahead of its forthcoming report have revealed serious flaws in the governance and programme management of the TMSA programme. While we have found no evidence of fraud, these investigations have revealed a number of serious concerns including weakness in delivery, management, oversight and financial monitoring. According to our investigations, they in part stem from serious errors in the design and implementation phase in 2007-10. TMSA guidelines were not updated to reflect ministerial priorities of value for money and good procurement practice.
TMSA has played a positive role in establishing frameworks for collaboration by three regional economic communities. However, while achieving some results, it has not achieved a significant number of the key objectives expected.
Our investigations also confirmed that following DFID’s commitment in July 2009, £67 million of funds deposited in 2010 have been only partly committed. The remaining uncommitted funds, approximately £42 million, will now be reclaimed by Her Majesty’s Government.
Weak governance also resulted in payments amounting to £80,000 via ring-fenced accounts held by the Ministry of Agriculture in Zimbabwe from 2011. Although our investigations show that this money was used appropriately and as intended for a fruit fly eradication project to promote trade and reduce poverty, this payment was in contravention of UK Government policy.
One of the objectives of setting up ICAI as an independent watchdog to scrutinise UK aid was to ensure that problems like this are uncovered and dealt with. I am fully prepared to stop funding to programmes that do not offer value for money or that fail to achieve their objectives and I have given notice to commence shutting down TMSA with immediate effect. In parallel DFID is exploring alternative, more effective mechanisms to support the important steps being taken in the region to drive trade and regional integration.
The oversight of TMSA has clearly fallen below expected standards. As a result DFID is making changes to its capability and expertise in DFID southern Africa to strengthen oversight and financial control.
This Government have significantly strengthened DFID’s programme and financial management procedures, and placed a strong emphasis on value for money. I have taken significant further steps to strengthen DFID’s approach on value for money, including on procurement and ministerial oversight of new business cases and contracts. However I have also determined that programme management controls will be further strengthened including in relation to mandatory annual reviews and programme improvement plans so that under-performing programmes are properly reported and that remedial steps can be taken when programmes are failing to deliver. Programmes with significant weakness that fail to improve significantly will be considered for closure.
In addition, I am expanding DFID’s internal audit capability to enable an enhancement of its risk-based approach targeting internal audit effort more effectively and increasing its frequency of review of key areas. This will also ensure that country offices can be subject to review every two years rather than the current average of four.
I will continue to take robust action on value for money throughout the Department, and I will continue to take decisions to exit under-performing programmes and redirect resources into those that deliver poverty reduction and value for money for taxpayers.