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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.