Westminster Hall

Tuesday 26th January 2016 Westminster Hall

Tuesday 26 January 2016

[Mr George Howarth in the Chair]

Onshore Oil and Gas

Tuesday 26th January 2016 Westminster Hall

09:30

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I beg to move,

That this House has considered the potential role of UK manufacturing in development of onshore oil and gas.

It is a pleasure to serve under your chairmanship, Mr Howarth. Shale gas exploration is a key issue in my constituency. Exploration licences have been granted to five operators in Thirsk and Malton, covering the vast majority of my patch. I receive dozens of letters and emails about fracking every week and I care passionately that, if it goes ahead, it is to the great advantage, not disadvantage, of my constituents.

As a local man, I understand why so many local residents worry that the peace and tranquillity of North Yorkshire, including the stunning North York moors, will be disturbed, and why they feel that their lives may never be the same again. I do not believe that that will be the case. As long as fracking is conducted in a balanced and measured way, the advantages for our local and national economies far outweigh the disadvantages.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on obtaining this important debate. On his point about constituents who have concerns, how do we bring people along and convince them that there is no issue? What job of work needs to be done?

[Kevin Hollinrake]

I thank the hon. Gentleman for his intervention. That is a key issue, which I will come to later on in my speech.

The environmental reasons for moving from coal to gas are compelling. Global carbon dioxide emissions will be found to have declined in 2015, principally owing to reduced coal use in China and the US, and the Intergovernmental Panel on Climate Change and the US Environmental Protection Agency both credit the majority of the US reduction directly to the move from coal to shale. The World Health Organisation recently declared a state of emergency on air quality in many countries. It estimates that the cost of air pollution to the EU alone is a staggering £1 trillion and the human cost is even more dramatic: in 2010, about 600,000 premature deaths in the European region were caused by air pollution.

According to a report by the Health and Environment Alliance, coal-fired power stations are responsible for the following effects on UK citizens: 1,600 premature deaths; 68,000 additional days of medication; and 363,000 working days lost. Diesel cars and coal-fired power stations must become things of the past.

Geopolitically, domestically produced shale can help us develop a more effective foreign policy. Despite growing turmoil in the middle east, UK energy prices are falling in the markets, at the fuel stations and for our domestic energy. Traders can clearly see that the west is developing independent sources of energy and the British Geological Survey estimated that 10% of the predicted UK reserves could meet our gas energy needs for 40 years.

As with North sea oil and gas, fracking could lead to a new industrial supply chain. In 2014, 375,000 people benefited from employment and tax revenues of £2.1 billion resulted from the North sea oil and gas industry. Reports by the Institute of Directors and Ernst and Young indicate that shale gas could provide 64,000 jobs and £33 billion of domestic investment. Domestic is the most important word. This opportunity could spawn tens of thousands of jobs, and good jobs, too.

In my constituency, we have many world-class engineering businesses and a first-class training organisation called Derwent Training Association, which specialises in training top-quality light and heavy electronic and electrical engineers. Such businesses can be the innovators of the future, taking the industry forward and making it cleaner and more efficient. For example, it is possible to convert methane to hydrogen—a CO₂-free fossil fuel—and the University of Strathclyde has established the UK centre for hydraulic fracturing to develop quieter, more energy-efficient equipment.

Shale would offer significant opportunities for many UK industries. It is estimated that it would require 12,000 km of steel, worth £2.3 billion. Recycling of waste water by domestic businesses would also be required and that would be a £4.1 billion opportunity. Other opportunities include rig building and environmental monitoring. Our chemicals industry could also be a big winner by capitalising on cheaper natural gas liquids often found alongside shale deposits.

If the UK could demonstrate the success and environmental credentials of shale gas, we could export our knowledge, skills and technologies to other countries in Europe and further afield, just as we did with conventional exploration. We must not repeat the mistakes of offshore wind, where we are the market leader in generation but lack any significant supply chain.

In the future, power generation will be centralised, cars and home heating—probably using air source heat pumps—will be electric and battery storage will be commonplace. Some people will argue that a new fossil fuel is a backward step that will prevent the energy industry from innovating. I disagree. Yes, renewables should be part of the future, but subsidies will only hold back their efficacy. I think that we should have reduced subsidies more progressively, as has happened in the US, but the Government had little choice given the wild and unmanaged overspend overseen—or probably not seen at all—by the previous Secretary of State.

Let us think of the technology sector. Deep Blue is the computer best known for defeating world chess champion Garry Kasparov on 11 May 1997, but a modern smartphone is 30 times more powerful than Deep Blue and made without Government intervention or subsidy. Should not the Government simply set the parameters for CO₂ emissions and air quality and then let industry deliver the solutions? Is that not a better solution than paying homeowners unsustainable amounts of money to put solar panels on their roofs?

Of course, we can contemplate welcoming a new industry only if it is compatible with daily life in North Yorkshire. Last autumn, I paid a visit at my own expense to Pennsylvania to speak to local people, the US regulators, academics, protestors and operators about the impacts of the shale gas industry on the economy, the community and the environment. I did not see significant and widespread industrialisation of rural areas, but we do need to learn from early regulatory failures and carefully plan for the industry’s cumulative impacts.

We need a single regulator to make sure that there is a clear line of accountability. We need independent regulation and monitoring at every stage and, crucially, a rolling five-year local plan to co-ordinate activities. We need a local plan for fracking, covering a five-year roll-out and detailed solutions for key concerns. We also need traffic plans for the movement of heavy industrial equipment. Heavy industrial plant connected with shale gas, such as compressor stations and refineries, needs to be located in areas used to hosting industrial chemical sites.

We need minimum distances to settlements and schools and minimum distances between sites to prevent the industrialisation that many people are concerned about. We also need to consider the impact on other important parts of our local economies and, of course, the visual impact on our countryside, so we need buffer zones around our national parks and areas of outstanding natural beauty.

In an age of computer-generated imagery and simulated time-lapse photography, we can and must paint the picture for the public on how we can carry out fracking safely and discreetly, or risk years of delays owing to public concern. The effects on the economy and on job creation locally in Pennsylvania were positive, and I met various supply-chain businesses that were clearly thriving.

We must look at the whole picture. We cannot afford to ignore this opportunity. Under this Government, the economy is doing well and unemployment has come down, but we would benefit from having a clean, low-cost, low-carbon, home-grown energy source that supports domestic businesses, creates local, well-paid jobs and makes our economy and our nation strong by generating energy for generations to come.

09:40

[Angela Smith (Penistone and Stocksbridge) (Lab)]

As always, it is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate the hon. Member for Thirsk and Malton (Kevin Hollinrake) on securing this important debate on the role that manufacturing can play in the unconventional gas extraction industry.

This is not really a debate about whether the UK should develop a shale gas capability. The House has rightly focused on the need for a robust regulatory framework for such an industry, and it will no doubt continue to debate such important issues, but this morning’s debate is much more pragmatic. The question before us is clear: if the shale gas industry is going to develop within the clear regulatory framework agreed by the House, how do we best ensure that UK manufacturing can exploit to the maximum the supply-chain opportunities made available by that nascent industry? That pragmatic point is what is important to people up and down the country who have traditionally depended on manufacturing jobs to maintain their prosperity, living standards and family life. At its heart, this is about a debate that understands the importance of manufacturing to the UK economy.

In the US, which has had a shale gas industry for some time, one of the biggest winners has been the chemicals industry. Shale gas production in the US has seen feedstock costs reduce significantly, giving the chemicals sector a major competitive advantage over manufacturers in the EU and Asia. Shale gas ethane from the US is much cheaper than that from the EU, which is produced from naphtha, a refined form of crude oil. Cheaper energy, combined with cheaper feedstock, has kick-started investment in the US chemicals industry, attracting $138 billion of investment so far and funding 225 new projects.

In the UK, the chemicals industry is already a major exporter, with about £25 billion of exports. Yearly, it adds almost £9 billion to the UK’s GDP, as well as underpinning much of the manufacturing sector, including steel. In terms of competition, the chemicals sector could benefit greatly from a new source of domestic feedstock. It would benefit from lowers costs and, importantly, from shorter, more secure supply lines.

There should also be opportunities for many UK-based manufacturers in other sectors to supply an emerging shale gas industry. A report by Ernst and Young estimates that more than 39,000 indirect jobs could be created by UK shale gas extraction. It also suggests that the total spend involved in bringing UK shale wells into production would be £33 billion by 2032, which would include £17 billion on specialised equipment, such as high-pressure pumps and mixers. I note with interest that EEF has said that, although the majority of pumps are currently manufactured outside the UK, with some assembly done here, there is significant potential to increase UK production. However, if UK manufacturing is to benefit, it will be necessary to build the case for investment in those things, and that is my first ask to the Minister.

This is, however, not just about pumps; it is also about the sand that will be required for the fracking process. That will come from existing quarries and could generate a £2 billion spend in the UK from 2016 to 2032. This is also about the cement, for which there could be a nearly £1 billion market, and that cement could come from the UK’s four cement manufacturers. We cannot afford to dismiss that potential.

For me, as a south Yorkshire MP, however, the most exciting prospect lies in the opportunities the shale gas industry could create for steel manufacturing. Steel is in crisis. A global slump in demand, contractions in the oil and gas industry and the dumping of cheap, subsidised steel on global markets by the Chinese have combined with high energy costs and unsustainable business rates to create a debilitating sense of volatility in the industry. I acknowledge entirely that the industry must respond positively to the challenges it faces, but if UK steel is to develop a positive way out of its difficulties, it needs Government support.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

My hon. Friend is making a good case in relation to the UK steel industry, but the shale industry could help other integrated industrial sectors in the wider economy to develop, and one of those is carbon capture and storage. In a world where fossil fuels are getting cheaper, we should be using pots of funds originally used for renewables for CCS, and the Government should review their decision to get rid of it. In addition, non-conventional gas such as syngas, which comes from coal gasification—there are still tons of coal in the Durham coalfield under the North sea—could be less than 50% of the price of conventional gas. Those two pillars could lead to an industrial renaissance in some areas.

[Angela Smith]

I completely agree with my hon. Friend on both those points. On CCS, it is difficult for the Government to make progress on gaining public acceptance for the shale gas industry, and part of the argument against the industry has always been the emissions and the problem of using fossil fuels into the foreseeable future. CCS is one of the key ways we can deal with that issue and that argument. If there is to be a long-term future for any fossil fuel, the Government must think again about their abandonment of CCS technology.

We need to understand that the nascent shale gas industry offers one of those rare opportunities to create new demand for steel—something we badly need at the moment—and a new sense of hope that there is a positive future for one of our foundation industries. As United Kingdom Onshore Oil and Gas points out, the crisis that the industry faces will not be solved just by dealing with issues relating to energy and business rates, important though those issues are. It needs to be addressed by supporting UK steel to play a bigger role in manufacturing supply chains domestically and globally. This is about the Government supporting the development of a wider range of steel capabilities, by building the business case for the development of a UK shale gas supply chain.

What we do not need, as the hon. Member for Thirsk and Malton said, is a repeat of what has happened with the UK’s offshore wind industry, where we have missed opportunities to build a robust supply chain, despite our strength in the wind energy market. This time, the Government can get things right by working with industry and by supporting the building of a business case for developing shale gas. They can encourage confidence among investors and supply-chain companies and prevent the industry from meeting the fate that has befallen the green energy sector.

Steel’s opportunities as part of the shale gas supply chain focus on two main capabilities. First, as was pointed out earlier, the shale gas industry could need more than 12,000 km of high-quality steel casing, costing £2.3 billion. It could also need 50 drilling rigs, which would cost £1.6 billion to manufacture. So how do we make sure that we make the best of British, in meeting that potential demand? I suggest that we need first to identify the best means of making the UK contribution to the rigging requirements of the shale gas industry. That may or may not mean the domestic manufacturing of the rig components; but at the very least there is great potential for exploiting domestically the need to upgrade rig components to UK standards and to provide ancillary equipment. According to EEF, that market could be worth £1.2 billion. That is a good, practical, pragmatic way forward, which the Government could help to deliver.

As to the steel casing, the problem is, of course, that the UK manufactures welded tubing—not the seamless tubing required by the industry. UKOOG points out, however, that a significant amount of work is required on seamless pipes before they are ready to be used by the shale gas industry and that that could and should be done in the UK. That position is supported by EEF. I would prefer it if the necessary investment could be made to give a UK home to such a manufacturing capability once again; but, however we look at the issue, the Government have a role to play in supporting the steel industry to exploit the opportunities available and thereby to secure a better future for itself.

The Government need to support the establishment of the business case for all aspects of the shale gas supply chain, with particular urgency in relation to the steel aspects of that supply chain. As UKOOG points out,

“We are at the start of the shale journey and the steel industry needs help now.”

UKOOG has pledged to work with the Department for Business, Innovation and Skills to see whether any support can be given. That is incredibly helpful. What we want from the Minister today is a commitment to ensuring that that offer of collaboration from an industry that in a sense is new to the UK—shale gas extraction is new—is taken up enthusiastically by the Government; we want it to be translated into a supply chain strategy that guarantees that the best of British will lie at the heart of a successful, safe and environmentally sustainable British shale gas industry.

21:52

[Graham Evans (Weaver Vale) (Con)]

It is a pleasure, as always, to serve under your chairmanship, Mr Howarth. I congratulate my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) on securing this important debate. It is a pleasure to follow the hon. Member for Penistone and Stocksbridge (Angela Smith), who, in a campaigning speech, made some powerful points on behalf of her constituency and in favour of well-paid jobs and the future of the steel industry in south Yorkshire.

I am the chair of the chemical industry all-party group and co-chair of the energy-intensive industries all-party group. The UK chemical and pharmaceutical industries have a strong record as manufacturing’s No. 1 export earner. However, the fact that they are energy-intensive industries that compete globally means that their export success is critically dependent on secure and competitively priced energy supplies.

The chemical industry uses energy supplies both as fuel and as a raw material to make the basic chemicals that provide key building blocks for almost every sector of manufacturing and the wider economy. UK energy supplies are becoming uncompetitive and less secure. Supplies of North sea gas for use as raw materials and fuel are diminishing, and there is increased reliance on less secure supplies of imported gas. Our onshore oil and gas reserves offer an unrivalled opportunity to secure our energy supply for the future, crucially lessening our dependence on foreign energy markets while also creating tens of thousands of high-skill, high-wage jobs and generating billions in tax revenues.

The political realities in Russia and Ukraine, as well as parts of the middle east, show in no uncertain terms the increasing importance of energy security in the coming years. We cannot afford to be complacent. It is estimated that fracking has offered the US and Canada approximately 100 years of gas security, and it has presented an opportunity to generate electricity with half the carbon dioxide emissions of coal. Our shale reserves offer a stepping stone in our transition to a low-carbon future, especially the move from coal. Fracking can undoubtedly provide us with a legitimate, cleaner means of gradually bridging the gap between fossil fuels and renewable energy. Our energy security and the reduction of CO₂ emissions are critical considerations when we think about fracking as part of a broad energy mix, but I firmly believe that scientific and engineering evidence should be front and centre.

The safety and security of people, their homes and their businesses are paramount to any discussion. As I have said in the past, I cannot and will not support anything that may pose a risk to the health, safety and wellbeing of local residents, the natural environment, homes or businesses. Perhaps that is an area in which the Government need to do more to convince the great British public. I recently held two public meetings, in Frodsham and Helsby, where there is currently fracking exploration. I invited representatives of the Environment Agency, Public Health England and the Health and Safety Executive, together with a local property surveyor, representatives of Ineos with more than 50 years’ experience in the industry, and a rather sceptical professor.

The meetings were particularly well attended. It is interesting that the public bodies are relatively poor at getting points across. They are there to reassure the public, but they are reluctant public speakers. They are reluctant to engage face to face with members of the public, who have legitimate reasons to be concerned. People may have been told that their property will not be worth as much, that it may be susceptible to subsidence, or that their health may be at risk. There are many such stories—I regard them as scare stories, but they are based on what is said by powerful lobby groups such as Frack Free Dee, which point to what has happened in Australia and America in the past.

[Kevin Hollinrake]

I had a similar experience at a public meeting in my constituency. All the regulators were on a panel there, and it was clear that some questions and answers fell between the cracks. Does my hon. Friend accept that a single regulator with overall responsibility for the industry would improve public confidence?

[Graham Evans]

My hon. Friend makes a powerful point, and I agree. The three agencies involved are the Environment Agency, Public Health England and the Health and Safety Executive, and they go together as a threesome. If the Environment Agency says it cannot or will not attend, Public Health England and the HSE do not turn up. They go as a triple act. The people involved must of course be skilled in what their agency does, but I point out to the Minister that that should include being skilled in public speaking. That means speaking to the public in plain language, not jargon. People’s concerns are legitimate, but I also believe that there is evidence available to reassure the public. I am sorry to say that it is a struggle. We politicians are used to knocking on doors and being eye to eye, face to face, with the public, so we can argue and explain complicated issues to our constituents. However, the public agencies need to raise their game and stop using jargon.

[Kevin Brennan (Cardiff West) (Lab)]

The hon. Gentleman is making a compelling point. There was a day, obviously, when civil servants of that type did not engage at all with the public. Did he consider inviting a Minister to explain things, given that Ministers are responsible for policy and have the skills he is talking about?

[Graham Evans]

No, I did not consider inviting a Minister. It was a Friday night in the north-west of England, on a wild, windy and wet night. I would not expect my right hon. and hon. Friends to support me. We constituency MPs are perfectly placed. We are experienced enough, and we know the public and the area. I chaired the meeting, and I believe it is the role of the MP to do that, and to reflect all the concerns that exist. The public agencies are there to reassure the public, because not all members of the public believe what politicians say, but I also had independent people there. There was an independent professor there, who was a sceptic, but also a local businessman who was an expert in property values, and representatives of Ineos, a good local employer and well known chemical company.

Those public meetings were a great success. Despite the suggestion of the hon. Member for Cardiff West (Kevin Brennan), I would not expect a Minister to be at such meetings, but I would expect the public agencies to be there. My hon. Friend the Member for Thirsk and Malton made a good point, and we should have the expertise there to reassure the public. We are asked for guarantees; we cannot guarantee anything, but the whole point of the Environment Agency and Public Health England is to hold Government, the contractors and the companies to account.

I regard this as a first-world problem. We are a great manufacturing nation, and we need to keep it that way for high-wage jobs. When I became an MP in 2010 we had a wind farm application on Frodsham marshes, which went ahead. We also had four applications for energy from waste sites, otherwise known as incinerators, surrounding Weaver Vale. Two of those have planning permission, one is in operation and one is currently being built. Energy is clearly a thing of the 21st century in a constituency such as mine, which is part of Cheshire. Cheshire is regarded as a rural county, but it has expertise in engineering and chemicals.

The potential benefits of additional high-skill, high-wage engineering and manufacturing jobs and the increased security of our energy supply are too important to neglect. Hydraulic fracturing is an established technology and has been used in the oil and gas industries for many decades. The UK has more than 60 years’ experience of regulating the onshore and offshore oil and gas industry and is a world leader in the field. I believe that if the best engineering practices are used alongside a robust inspection system, fracking can be carried out safely in our constituencies. Engineering and chemical industries are a vital part of the northern powerhouse, especially if we want to ensure a high-wage, low-tax, low-welfare economy in the north-west of England.

10:01

[Stuart Blair Donaldson (West Aberdeenshire and Kincardine) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate the hon. Member for Thirsk and Malton (Kevin Hollinrake) on securing the debate. I read about his visit to Pennsylvania with great interest.

Onshore oil and gas operations use rigs, casing, pipework and other components in the drilling and stabilisation of wells. Those terms will be familiar to many of my constituents in West Aberdeenshire and Kincardine, and to many people throughout the north-east of Scotland who work in the offshore oil and gas industry. Indeed, unconventional oil and gas extraction already takes places to some extent in the North sea.

Furthermore, Scotland has a long history of unconventional onshore extraction. James “Paraffin” Young, who lived in my constituency in Durris for a time, was extracting shale oil in West Lothian as far back as the 1850s. At one time the industry employed 4,000 men, but the availability of cheaper forms of oil meant that it died out. I understand that concerns about the environment and the impact on public health were not taken as seriously in the 19th century as they are today, but the impact of unconventional oil and gas on our environment, communities and economy needs to be fully understood. That is why, on 28 January 2015, the Scottish Government introduced a moratorium on onshore unconventional oil and gas, including hydraulic fracturing. The Government also announced a programme of research into the issues surrounding it, as well as a full public consultation.

The moratorium will allow time for careful examination of the issues and proper engagement with the public in considering them. The comprehensive programme of research includes projects to investigate possible climate change impacts; a full public health impact assessment; further work to strengthen planning guidance; further tightening of environmental regulation; research on transport impacts; seismic monitoring research; consideration of decommissioning and aftercare; and economic impact research.

People who live near places where there could be onshore oil and gas extraction are rightly concerned about the potential impacts—other Members have mentioned that and given good advice on why local people may not need to be so concerned. That is why the Scottish National party-led Scottish Government are taking a pragmatic, responsible and evidence-based approach to the development of onshore oil and gas.

10:03

[Neil Parish (Tiverton and Honiton) (Con)]

It is a pleasure to speak under your chairmanship, Mr Howarth. I thank my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for securing the debate. He is quite a brave man—I can stand up and support fracking because it largely does not affect my constituency, but when fracking does affect a Member’s constituency, supporting it is a much braver thing to do. He made a measured speech, as did my hon. Friend the Member for Weaver Vale (Graham Evans). We have to ensure that the public understand what we want to do, because they want to be reassured that it will be safe.

I have made the point before in this Chamber that we sometimes miss a trick in this country. I spent 10 years in the European Parliament—do not blame me for everything that happened in Europe over that period. In France, for example, when they build nuclear power stations they ensure there are houses, roads, infrastructure and leisure facilities. I am not saying we can do all of that with the fracking industry, but we can make the industry more beneficial for local residents. That is what we need to do, because at the moment we are not really selling fracking very well. That is the trouble; we need to sell it.

[Tom Blenkinsop]

Carbon emissions are obviously a big issue surrounding shale or any form of fossil fuel extraction. We have to treat CO₂ as not only a waste product but a potential by-product, because the chemical industry already uses it as feedstock for a lot of different things, including agriculture, the bottling industry, the canning industry and the food preparation industry in general. It is the purest form of CO₂ when it comes through those energy-intensives. We need to educate people about the benefits of fossil fuels, the CO₂ from which can be sequestered and used again, thereby reducing the emissions that they create.

[Neil Parish]

The hon. Gentleman makes a good point, but we have to ensure that the people who will be living around the mouths of the wells, where the shale gas comes up to the surface, feel that there is a direct benefit to them. It is good to appeal to the greater good, but it is also good to appeal to those who will see the fracking most. That is the particular point I am making.

[Angela Smith]

Does the hon. Gentleman acknowledge that there are already plans on the table to return to local communities some of the investment and profit from the shale gas industry—something like 6% of the value of the gas extracted?

[Neil Parish]

I think there are such plans. There are various ideas, such as sovereign funds, but again, we need to explain to the local residents that they will get that money. One problem in the past with many such schemes has been that the money has not filtered down to the local people who have to live right next to the entrance to a shale gas resource. That is what I want to see.

We need to ensure that we explain the situation to local people and that they know there will be something in it for them—I know that may sound basic—and that they are doing something for the greater good. I will go on to talk about industry, but the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) made a really good point: fossil fuel extraction is necessary. We need only take the agricultural industry, in which natural gas creates ammonium nitrate, to see that it is hugely necessary.

My hon. Friend the Member for Thirsk and Malton made a point about having a single regulator, which is a good idea. It is about reassuring the public. The fracking will take place far underground and there is little or no chance of any problems with groundwater supply, but people are talking about those things. Those who are against fracking make much of them, so they need to be reassured. We must ensure that someone goes to the areas in question and presents the case strongly, so that people feel reassured about the safety of fracking. People can always cite problems in certain parts of the world, which makes it doubly important that we reassure people.

[Tom Blenkinsop]

The hon. Gentleman is being generous with his time. I want to back up what he is saying. He is a fellow North York Moors MP, where we have the Boulby potash mine in the national park. The mine goes more than 1 mile underground and 2 miles out under the North sea. Although it does not use the same technology, it goes through the same strata that the shale and gas industry will go through and is completely controlled. When large developments such as that occur, there is initially big uproar and upheaval, but the mine now employs more than 1,000 people. Although it is sadly letting people go, without it, the community would not have benefited from the well-paid jobs and solid employment they have reaped over the past 30 or 40 years.

[Neil Parish]

The hon. Gentleman raises an interesting point. I became very much involved with potash, because it is important in growing crops. We have such a massive amount of potash that we can probably produce enough not only for this country but for virtually the whole world. As he says, everybody has to be reassured that the processes can work together.

I am really heartened by this morning’s debate, given what I was expecting—perhaps I am tempting fate, as Members may yet come in with the opposite view. I often think that when we are talking about shale gas, it is easier to support those who are protesting against it. They make an awful lot of noise and have a fair point to make, but they get almost undue attention, and I think we have to be realistic about the potential for shale gas and the resource that we have.

To pick up on a point that my hon. Friend the Member for Weaver Vale made, we are potentially very reliant on gas from Russia, given that it may well come through Europe to Britain. We also import an awful lot of frozen gas from the middle east by tanker through Milford Haven. All those routes are susceptible to problems, and we will need a lot of gas in future. As we reduce our carbon emissions, there will still be a great need for gas. I think about 40% of our heating in this country comes from gas, and when people have gas in their homes, they expect to be able to turn on the gas boiler or gas fire. It would be wrong of people on all sides of the political debate not to allow shale gas to be got out of the ground, although we have to make sure that the controls are there, that we can do it safely, and that local communities feel that they get huge benefits from it.

We will continue to need gas as we decarbonise, particularly for heating and manufacturing. If we are not able to extract shale gas, the UK will have to import. In 2014 the UK imported 48% of its gas needs, and in 2030, without shale gas, it will import three quarters. Shale gas is still in its exploration phase, and if production is successful, it could vastly reduce gas imports. National Grid projects that it could meet about 40% of UK gas demand by 2030, but we need to get the process up and running if we are ever to hit that figure. We have to make shale gas extraction much more acceptable to local people, and we need to have a single regulator.

Additionally, shale gas extraction has the potential to create more than 64,000 jobs, which would not only help our long-term economic plan but ensure energy stability, which, with our ever-growing population, is a matter of increasing concern. Furthermore, the shale gas industry could help to revitalise our struggling steel industry. If shale gas extraction were to take off in the UK, the industry could need more than 12,000 km of quality steel casing, which would cost in the region of £2.3 billion. I have looked into that, and it is interesting that the type of pipes that are needed are not manufactured in this country. If we were to go into shale gas in a big way, we could invest in the steel industry to get it back up and running.

[Tom Blenkinsop]

The two tube mills in Britain are in Corby and Hartlepool, and they could easily be adapted to produce non-welded tubing. Of course, there is also a very good site in Teesside that is no longer being used. Again, that site could be adapted to provide non-welded tubing if virgin steel were produced once again there.

[Neil Parish]

I agree with the hon. Gentleman, because a way of supporting our steel industry would be to make sure that we produced British steel that went into the British shale gas industry. We would also be certain that the steel pipes that we produced were of great quality. We should be able to reassure the general public about the quality of that steel piping, so it could be a win-win situation.

In the US, having abundant cheap shale gas has helped to attract $138 billion of investment in the chemical industry, which is funding something like 225 new projects. The US has also brought a huge amount of its manufacturing back to that country because of its supply of shale gas. I do not believe the UK has quite the resource that the US has, but it will make a significant difference.

This has been a good debate, with many ideas being raised that I hope the Minister will take on board. My final point is to repeat what I said at the beginning: we have to make sure that the plans are acceptable to local people and benefit them. We have to bring out into public exactly what safety measures are being put in place, and we have to make that argument clearly in public meetings. We should ensure that we bring shale gas out of the ground in this country, to create better energy security in the future.

10:16

[David Mowat (Warrington South) (Con)]

I congratulate my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for leading the charge on this. It seems that the key word in this debate is “manufacturing”, and it is good to have a discussion that focuses on that. I thought that the hon. Member for Penistone and Stocksbridge (Angela Smith), in particular, made an extremely good speech, not only about the shale industry and manufacturing in that area, but the impact on manufacturing generally. It is very hard to have a march of the makers when we have higher electricity and feedstock costs, and generally a higher cost environment than our competitors, particularly those on the eastern seaboard of the US. Those points were well made.

I support the shale industry, which I have spoken about in the past. I completely agree that the concerns of local MPs—I have a fracking site in my constituency—need to be listened to. The industry needs to be well regulated and safe. I will come on to—what did we hear?—the “pragmatic and responsible” position apparently taken by the SNP.

I completely support the need for good regulation and local involvement, but I also have to say that sadly, in my view, the shale industry in the UK is not going to take off with the current prices of oil and gas. At $28 a barrel, the US shale industry is closing down and it has much more significant economies of scale than we have—the cost is something like $50 or $60 a barrel over there, and the gas price is linked. There will have to be closures. Frankly, in Aberdeen, we are seeing the impact of $28 a barrel. That is only just starting to hit Aberdeen, because $28 is higher than the operating cost in the North sea, let alone development and exploration.

I will put that caveat to one side and turn to the manufacturing potential of the industry—I hope I am wrong, however, and that perhaps prices will increase. We do not know.

[Angela Smith]

I thank the hon. Gentleman for his kind comments. Is it not also the case that the shale gas industry is much more fluid, dynamic and has much lower start-up costs than the oil industry, for instance, and that, in the long term, shale gas probably has a better future?

[David Mowat]

All that is true—and it is much more tactical, quicker and goes on from one to another. It does not have the big up-front development costs of, for example, North sea platforms. That is true, but it is also true that the wells do not last as long. The fact is that in the US, the shale industry is a $50-a-barrel industry, and at $28 dollars, that industry is in trouble. That is the whole strategy that the Saudis are taking and is what they are trying to achieve. They are going to be successful unless other things make them stop.

The title of the debate, however, is “Onshore Oil and Gas”—not shale. I say that because it is worth remembering that we have an onshore oil and gas industry. We have drilling and have had it for the past 30 years in places such as the New Forest, without the level of controversy that appears to surround this industry.

Other Members have talked about this, but let us examine briefly what has happened in the US shale industry. The industry has reduced the cost of gas by two thirds and has been converting—unfortunately, this also might stop—liquefied natural gas import ports to become LNG export ports. Equally important, the US has met any climate change target that anyone has given it. It did not sign up to Kyoto, but it would have met it by miles because of the displacement of coal by gas in its carbon emissions.

I want the House fully to understand that if the world were capable of taking out all coal and replacing it with gas, which is a big ask, it would be equivalent to increasing the amount of renewables in the world by a factor of six. That would be real progress in emissions. When political parties talk about carbon emissions—we heard about that earlier—without giving cognisance to that fact, it is frankly disingenuous at best.

[Kirsty Blackman (Aberdeen North) (SNP)]

On emissions and greenhouse gas, it is relevant to think about methane emissions when natural gas is used instead of coal. We need to consider that, and not just the carbon emissions.

[David Mowat]

That is a strong point and I agree with it. It is extremely important that, as in the US, there are no methane emissions. We have seen over and again in places such as Pennsylvania that methane is not emitted and that some of the scare stories are not true. I am sure that when the Scottish Government conduct their pragmatic and responsible review of the industry they will find that out for themselves.

In the US—I will not repeat my points—there are two elements in what cheap energy can do in manufacturing. The US has created around 200,000 jobs in that industry but, more important, the estimate is 1 million jobs in the onshoring chemicals industry in the US eastern seaboard. The transformation is extraordinary. It is re-shoring industry from Asia, China, Europe and, frankly, the UK.

Organisations make marginal decisions—this is not about closing Teesside and moving it to the US. When it comes to the marginal decision of where to open the next production unit, it will not be in Grangemouth, Teesside or Runcorn, but in Pennsylvania or Cleveland because that is where energy prices and feedstock prices are so competitive that more money can be made. We need to be cognisant of that. We sometimes talk in this House as though it is a new industry, but it is not.

The question arises—it is a fair one—of whether that applies to the UK. I have heard it said many times that things are different in the UK. It is true that we have a smaller manufacturing base and a much smaller chemicals industry, so perhaps it will not be so dramatic. People sometimes say, “Well, US gas prices have reduced by 70%, but that can’t happen here because we are on a European grid.” Generally speaking, when there is more of a commodity, the price falls. It is true that we have a European gas price and a European hub, but we had a global market for oil and look at what shale eventually did to the oil price. We are still living with that.

[Tom Blenkinsop]

I take on board what the hon. Gentleman is saying about a sheikhs versus shale fight, but the reduction in general fossil fuel prices, because of the online, downstream effect of renewables in the last 10 years, has also had an effect on driving down fossil fuel prices. The future of shale could be very beneficial to energy intensives because of cost, which is at least 50% cheaper than conventional gas. In addition, most of those industrial sites in Britain are located close to where those feedstocks are found.

[David Mowat]

I meant to say at the start that with current prices where they are, I do not think we will see a massive upkick in the UK’s shale industry. I think that will happen where shale is available near a chemicals site—INEOS in Runcorn and in Grangemouth is an example—because the costs and economics are different.

[Tom Blenkinsop]

Rather than seeing shale as a means by which to reduce consumer prices for heating boilers, for example, we should also have an industrial strategy that targets the use of shale gas for cheap energy-friendly intensives because that would be a cheap benefit.

[David Mowat]

My point was more about feedstock. I have no problem with an industrial strategy along those lines, although I make the point gently that the million jobs that were created on the eastern seaboard of the US were the result not so much of industrial strategy, but of a massively cheaper economic model and business case and all that goes with that. We need to learn from that.

The Chairman of the Select Committee on Environment, Food and Rural Affairs, my hon. Friend the Member for Tiverton and Honiton (Neil Parish), made a number of points about the fact that we are running out of gas. This is not principally a discussion about whether we should have gas versus renewables. It is gas versus coal, as I said earlier, in environmental terms. Gas production is now 70% lower than five years ago and we are importing it from Qatar and principally from Norway, but increasingly from Russia. Centrica has a contract with Gazprom and around 10% of our gas will come from Russia by 2020. We need to understand that and be comfortable with the implications.

[Alex Cunningham (Stockton North) (Lab)]

I am sorry I was not here for the start of the debate. The hon. Gentleman has talked a lot about the proximity of supply and forward gas production over the years. Will he talk a bit about coal gasification, which could be so important and is so close to Teesside and the north-east, for our energy-intensive industries?

[David Mowat]

I am not sure whether that was a request for me to talk about coal gasification. I will not because I have been talking for 10 minutes, but I agree that it is a complex market and an opportunity for Teesside. Our country’s industry base in Teesside is extremely important to all constituents there, and I completely agree with that.

On Wednesday, I had dinner with the head of Ernst and Young in the UK and I said that one thing that annoys me about parliamentary debates is that we quote reports from people like Ernst and Young as though they are some sort of gospel. We all say, “That’s what they say, so it is true and I will go with that.” It said in its recent report that it estimates that 64,000 jobs will be created in the shale industry alone, 6,000 direct and the rest in the supply chain, steel and so on. I return to the US experience where more jobs were created in the industries that benefited from the lower feedstocks than in the direct industry—the chemicals industry and so on.

[Angela Smith]

I thank the hon. Gentleman for making that important point. Does he recognise that the steel industry unions are one of the biggest supporters of the shale gas industry in the US?

[David Mowat]

I think the steel industry unions are right, as are the chemicals and aluminium industry unions. The US, unlike the UK, still has an aluminium industry, principally because energy prices there allow it to happen.

[Neil Parish]

The US has reduced its gas price hugely to attract the industry. When we extract shale gas, will we reduce our gas price or will we keep it the same? That is an interesting point because, if we are to encourage the industry properly I suspect we will have to reduce our gas price.

[David Mowat]

Gas prices are set by the market. We have a spot price for gas which is set in the European gas market. People have made the point that the European price will not decline in the same way as in the US. That may be true, but I make the point again that they could have said that about oil and shale oil. We have seen what has happened there. Clearly, the more there is of something, all other things being equal, the more the price falls. Fuel poverty is not the subject of this debate, but many people are living in fuel poverty in our country and we should all be keen to have lower energy prices.

Before I close, I want to pick up on the pragmatic and responsible points made by the Scottish National party. All of us as Members of Parliament have a leadership role in our communities. We heard my hon. Friend the Member for Thirsk and Malton exercising his leadership role. Of course he faces pressures in terms of the environment of the Yorkshire dales, but he also understands that we need jobs in our country and we need to create wealth. Importing gas at scale from Qatar, Russia and Norway takes jobs away from our country and has an impact on industries in Cleveland and so on. That is the exercise of leadership. “Leadership” is an important word, and all of us in this place need to exercise leadership. Saying that we are going to have a moratorium on this activity because that is responsible and pragmatic when the reality is that this industry has been going for 10 years and can go to Pennsylvania, like my hon. Friend did, and have a look—it can do all of that—is what I would describe as negative leadership, and it is populist politics because there is a body of people out there who are receptive to that; and that is not what any of us were elected to this place to do.

[Mr George Howarth (in the Chair)]

We have approximately 30 minutes left. That should be adequate time for the three Front Benchers, but I caution them that the hon. Member for Thirsk and Malton (Kevin Hollinrake), who moved the motion, has said that he would like a few minutes to sum up at the end.

10:30

[Kirsty Blackman (Aberdeen North) (SNP)]

It is an honour to serve under your chairmanship, Mr Howarth. I thank the hon. Member for Thirsk and Malton (Kevin Hollinrake) for bringing this debate to the House; that is very much appreciated. I am delighted to follow the hon. Member for Warrington South (David Mowat), because he picked up on a few points from the SNP and this is a good time to discuss those. I am also pleased that my hon. Friend the Member for West Aberdeenshire and Kincardine (Stuart Blair Donaldson) said some of what I was planning to say, because that means that I can get through my speech a bit faster.

My hon. Friend laid out the SNP position. We are looking at a comprehensive programme of research, and the consultation is due to end in spring 2017. Mary Church, head of campaigns for Friends of the Earth Scotland, said:

“This framework for reviewing shale gas fracking and coalbed methane looks like a well designed process, over a sensible timescale…undertaking a thorough review of unconventional gas cannot be rushed.”

If we are to exercise leadership and take the public along with us on this issue, a comprehensive review and a moratorium in the meantime is a sensible approach.

[Graham Evans]

The hon. Lady quotes Friends of the Earth. Is that the same Friends of the Earth that distributes misleading information to the general public by direct mail?

[Kirsty Blackman]

I have never received any misleading information from Friends of the Earth, so I cannot answer that point.

I want to make a few points about fracking. I do not understand what the hurry is. As the hon. Member for Warrington South mentioned, the gas price is pretty low at this point. The risks are not that well known yet. Fracking has been undertaken on an industrial scale really only since the very late 1990s and early 2000s. It does not have a body of evidence behind it. In terms of the rush to do this, the UK Government are trying to paint this as a gas versus coal debate—looking at our energy needs in terms of gas versus coal—but we have been shouting about other things. We have been making the case for things such as renewables and putting them front and centre. I do not think that this is a gas versus coal debate, no matter how much the UK Government try to paint it as such.

[Angela Smith]

For the record, the term “fracking” is not that helpful to the debate, but surely the key point of today’s debate is the importance to the future of UK manufacturing of giving this industry the support that it needs to get going. On that basis, there is surely a sense of urgency around all this. UK manufacturing needs new industries and new activity in order to grow.

[Kirsty Blackman]

I appreciate that point and I will come on to manufacturing; I just wanted to answer first a few of the points that had been brought up throughout the debate. “Fracking” is the term that my constituents use and the term that is recognised throughout the UK. That is why I was using it.

It has been mentioned a lot that we should ensure that controls are in place and there is proper regulation. The Scottish Government’s point of view and the direction that we are taking is that we want to prove the safety first and, if we do decide to do this, ensure that the controls are in place after that.

[Kevin Hollinrake]

During the moratorium, what evidence has been collated about the safety or otherwise of shale gas?

[Kirsty Blackman]

We are still in the process of researching this. The research does not finish until later this year, and then in 2017 the public consultation will finish, so we are not at the point in time at which we will be publishing the evidence. I think that that is reasonable. It is reasonable to look at the research properly before we bring it all together—

[Tom Blenkinsop]

Will the hon. Lady give way?

[Kirsty Blackman]

Not now. I want to make some progress because I do not have long.

I want to talk briefly about carbon capture and storage, which is very important for reducing carbon emissions; that is not just about moving from coal to gas. I have mentioned already the issue in relation to methane emissions. I understand that there is some evidence that methane emissions are relatively low, but I would like to see the body of evidence brought together in a report on unconventional oil and gas.

I also want to talk briefly about the supply chain and the benefits in that respect. I represent Aberdeen, where we have been feeling the effects of the oil crash for much longer than a few weeks or months. For the past year, contractors have been finding it very difficult to get jobs and redundancies have been being made. In terms of the supply chain and supporting jobs in the UK, particularly in manufacturing around the supply chain, renewables would be very helpful. Also helpful would be looking at supporting the oil industry as it is now. I understand that the unconventional onshore oil and gas industry would bring jobs, but we need to protect the jobs that people currently have and are currently losing.

[Tom Blenkinsop]

I thank the hon. Lady for giving way; she is being generous with her time. The argument that I have certainly tried to make is that to have the industry that provides the solutions for renewables, which we still need to keep pushing hard for, we need the cheaper energy in order to retain the industry—so that we onshore that industry. For a steelworks to go forward and development to become cheaper and more efficient, it needs cheaper energy; and it is only the steel industry that provides the slab that is then rolled into tubes for monopiles that go into wind turbines, for example. It is the only onshore solution and it needs that cheaper energy.

[Kirsty Blackman]

I appreciate that. I am not sure how much the onshore oil and gas industry will affect the price of energy. I did not know a huge amount about the chemicals industry and things like that; a point was made about feed. However, we do have the lowest oil price for a long time, and natural gas is at a 10-year low as well, so energy prices should be cheaper as things stand, without the need for fracking.

[Tom Blenkinsop]

rose—

[Angela Smith]

rose—

[Kirsty Blackman]

I do not want to give way again.

I am concerned about the rush to fracking. The UK Government will not get a major tax take from it, because of the current position with the prices. We should not be rushing to do it. In terms of my constituency and protecting jobs in the north-east of Scotland, we need to be looking at supporting the conventional, established offshore oil and gas industry, as well as supporting renewables. The Government need to rethink their renewables obligation changes.

10:38

[Kevin Brennan (Cardiff West) (Lab)]

We have had a very interesting debate. I have certainly learned a lot by listening to contributions from hon. Members on both sides of the Chamber. I thank everyone for that and congratulate the hon. Member for Thirsk and Malton (Kevin Hollinrake) on securing the debate. He told us that fracking—I am sorry to use that term—was a big issue in his constituency. Nevertheless, he made the case in relation to clean air, strategic interests of our economy, the industrial supply chain and jobs, including in the steel industry, tax revenues and exports. He slightly deprecated Government intervention in the economy, I think, by giving examples of economic progress where that had not happened. Then he outlined a whole series of Government interventions that he thought were necessary for this industry to work appropriately in the context of his constituency, so I think that there is a balance to be struck in relation to what the Government’s role is in developing a new industry of this kind.

[Kevin Hollinrake]

The deprecation that I expressed was more about providing short-term subsidies that are then withdrawn, rather than thinking long term. The interventions that I suggest are long-term interventions that would control and regulate the industry.

[Kevin Brennan]

I understand that, although I think that there is a case to be made for saying that some of the subsidies that the Government have withdrawn could have been planned in a longer term way. We will leave that point, however, because is not the subject of our debate.

I praise my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith), as other hon. Members have done, for her speech and for campaigning assiduously, particularly on behalf of the steel industry and her constituents. She put the case very well. Whatever we may think about the industry, the House has taken a decision, although it may not be the one that we wanted. There are clearly opportunities for British manufacturing, so we have to take a pragmatic approach and plan accordingly. We need a strategic approach to ensure that UK plc and jobs in the UK benefit to the greatest extent possible from the development of the industry. My hon. Friend outlined the potential for the UK chemicals industry and for manufacturing in general. She made some good points about the pumps that would be required for the industry, about sand and cement and about the steel industry. I congratulate her on her contribution.

The hon. Member for Weaver Vale (Graham Evans) described a public meeting in his constituency. I understand the difficulty of getting the message across. Energy generation is one of the great “wicked issues” of politics. We all know the rule in politics: everybody wants cheap, plentiful, clean energy at the push of a button, but nobody wants it to be produced anywhere near to where they live. Those two things, as we all know, are incompatible. We are required to wrestle with such wicked issues every day as constituency MPs, Ministers and leaders in our community and across our country. The hon. Gentleman was quite right to point that out.

I believe that Ministers might have a more direct role than the hon. Gentleman seems to think in taking the message to the public. That is part of Ministers’ responsibility, and they should not duck away from taking on difficult issues. In my experience, when Ministers take such responsibility, in the longer term they produce results for the Government in question—not that it is my duty to give them advice on how to win elections. I certainly think that Ministers have a direct role, although I appreciate that the Minister might not wish to spend his Friday nights in the way in which the hon. Gentleman described.

The hon. Member for West Aberdeenshire and Kincardine (Stuart Blair Donaldson) gave us an interesting insight, in his brief contribution, into the fact that the industry had its place in the 19th century. Shale was exploited in his constituency in the 19th century, so it is not a new concept.

The hon. Member for Tiverton and Honiton (Neil Parish) told us about his experience in Europe, and told us not to blame him for the bad things that have gone on there. Yesterday, other hon. Members and I attended a dinner with the aerospace industries. Since the start of the European collaboration that is Airbus, the European share of the commercial airline market has gone from 18% of the world market to 50%. It was made absolutely clear to us last night that that would not have happened without European co-operation and our membership of the European Union, so it is not all bad.

The hon. Gentleman described his friend the hon. Member for Thirsk and Malton as brave, and I am sure that he is. I am sure he would be equally brave if his majority were 456 rather than 19,456. He is quite right that it is always tough to have to wrestle with concerns from one’s own constituents.

The hon. Member for Warrington South (David Mowat) made, as ever, an informative and expert speech. He pointed out—this is the elephant in the debate—that the current wholesale price makes it substantially more difficult for the industry to get going than might otherwise be the case. He made a well-informed and interesting speech, in which he pointed out the potential for other industries.

We had a speech from the SNP spokesperson, the hon. Member for Aberdeen North (Kirsty Blackman), who laid out her party’s position. I wish my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) had made a speech. He made many interventions, all of which were interesting and, as ever, informative. We slightly missed out, but he did give us the benefit of his interventions.

It is my responsibility to set out our position as a party. We have already laid out the conditions that we wanted to see in place before the industry developed further, to ensure the implementation of the protections that hon. Members have expressed concern about. I will not go into great detail on that, because we have not got time. Given that the UK will rely on gas, on any estimate, until at least the 2030s and possibly beyond that—we are very reliant on imported gas from Norway and Qatar, as was pointed out during the debate—we support exploratory drilling, but it must not be at any cost. We made that clear in the amendments we tabled last year to the Infrastructure Bill. Despite conceding some of those points during the debate, the Government have somewhat reneged on them since the general election. We laid out a large number of conditions that we thought were necessary before exploratory drilling could go ahead. I will not list them now, because of the time, but they are well established on the record. That remains our party’s policy.

We have criticised the Government for allowing communities to decide whether they want onshore wind farms but not extending the same community involvement to this industry. There are questions about the appropriate level of local concern over a strategic industry of this kind. In relation to onshore wind, the Government have rather undermined their argument about the industry by the position that they have taken. I will not press any further on that point.

The development of this industry offers great opportunities for manufacturing industry in this country. One might call it “manufracturing”, as some have done. The Government must acknowledge that unless they bring forward an active industrial strategy, those opportunities will not be realised. We have heard about opportunities that have been missed with other industries, including offshore wind, because of a failure to understand and exploit the supply chain opportunities of a developing industry. There is a great danger that the same thing will happen in relation to this industry as it develops, unless there is an active industrial strategy. That must be driven by the Government being prepared to pull every lever at their disposal and bring all the appropriate parties together in the same room, as the previous Government did, for example, with the creation of the Automotive Council. In fairness, that was carried on beyond 2010 and is still in existence. It has brought tremendous benefit to UK manufacturing by getting industry and interested parties together and encouraging them to understand that there is a commonality of need, even where people are in competition with each other, for the sector.

[Tom Blenkinsop]

On the subject of an integrated industrial strategy, the comments of the hon. Member for Warrington South (David Mowat) about the east coast of America are quite interesting. The Obama Administration underwrote a lot of those projects with stimulus funding, which is part and parcel of the Obama Administration’s industrial strategy.

[Kevin Brennan]

On this side of the Atlantic, we tend to think that the USA is a laissez-faire society, but when we go there and see the reality of policies, not only at federal level but at state level, we soon find out that the picture is very different from our assumptions. Next time, I hope that my hon. Friend will prepare a speech, because we will not let him intervene so many times, no matter how interesting his contributions are. We look forward to hearing from the Minister about what he will do to make sure that the Government pull every possible lever.

[Mr George Howarth (in the Chair)]

Order. Before I call the Minister, I advise him not to take the Opposition spokesman’s suggestion of addressing us, as Queen Victoria accused Gladstone of doing to her, as though we were a public meeting.

10:48

[The Minister for Skills (Nick Boles)]

It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) on securing the debate. I had the advantage, or perhaps the disadvantage, of arriving in the Chamber this morning almost wholly ignorant on the subject. This Chamber, at its best, is the best university seminar in the world, and I will leave after an hour and a half a lot more knowledgeable on the subject.

Particularly important and welcome is how constructive and responsible the debate has been. Not a single contribution has been out-and-out anti-unconventional onshore oil and gas drilling. Concerns have been expressed and different approaches by different Governments in the country have been outlined, but nobody has suggested that onshore drilling does not potentially have a role to play in our future.

Interestingly, the focus—especially from Conservative Members—has been on the role of the Government and their various agencies in helping people to cope with change, the unexpected, and the things that baffle and worry them. I congratulate all my hon. Friends on the role they take as Members of Parliament in bringing people together, securing the contributions of relevant experts and helping to lead their communities. The hon. Member for Cardiff West (Kevin Brennan) observed the scale of the victory of my hon. Friend the Member for Thirsk and Malton in the last election, but I am sure that he would be as brave in leading his community wherever he was elected and with however few votes over his nearest opponent.

The suggestion of a combined regulator is interesting. There might be a more practical approach than merging regulators, which would be pretty complicated. I will ask Ministers—I suspect it will be those in the Department of Energy and Climate Change rather than the Department for Business, Innovation and Skills, but it might be a combination of the two—why all three agencies have to send people to meetings. I will ask whether it is possible to have people who, despite being employed by the Environment Agency or the HSE, can speak to all the different aspects, rather than, as my hon. Friend the Member for Weaver Vale (Graham Evans) pointed out, the agencies having to travel in packs. That seems slightly inefficient and suggests that there is not a joined-up view and that things can get lost in the cracks.

The Government’s policy on shale is that it can make a significant contribution to energy security, environmental protection and economic growth if it is managed carefully and regulated responsibly. Both Government and Opposition Members have mentioned the desire to arrive at just that balance, between recognising the opportunity and dealing with the risks and legitimate concerns.

On energy security, my hon. Friend the Member for Tiverton and Honiton (Neil Parish) mentioned that we currently import more than 50% of our gas, and my hon. Friend the Member for Warrington South (David Mowat) pointed out that by 2020, 10% will come from Russia. In the 2020s, based on current projections without the development of domestic sources of onshore gas, we will import more than 70% of our gas needs. Many Members have made the point that gas will always be a major part of our energy mix—or if not always, at least for the foreseeable decades. It is therefore important that we have a secure supply of it, ideally from domestic sources.

[Alex Cunningham]

I am pleased that the Minister has expanded his knowledge this morning. Does he plan to become equally knowledgeable about coal gasification? He could become an advocate for that part of the energy mix as well.

[Nick Boles]

The hon. Gentleman tempts me. No doubt if he secures a similar debate on that subject, I will have that opportunity. I am sure he is right that we can help to reinforce the competitive advantage of our existing chemical and steel industries, and others, through all sorts of innovative ways of securing energy supplies that are more environmentally sensitive than previous ones.

On the vital question of environmental protection, my hon. Friend the Member for Warrington South made the powerful point that, if all the world’s coal were replaced by gas, it would contribute the equivalent of a sixfold multiplication of the world’s renewables industries. Gas is a fossil fuel and, in the long run, we all hope not to be reliant on fossil fuels. Nevertheless, the transition from coal to gas is probably the most dramatic thing we can do to enable us to cut carbon emissions and prevent further climate change. That is why the Government are so keen to see the development of shale gas in the UK. There are substantial reserves, which will assist us in achieving our environmental objectives and providing economic security.

[Kirsty Blackman]

What about the possibility of supporting offshore oil and gas companies to extract gas from more difficult high-pressure, high-temperature wells, for instance, rather than putting the efforts into shale gas?

[Nick Boles]

In this constructive and responsible debate, I do not want to enter into partisan criticism. The hon. Lady and the hon. Member for West Aberdeenshire and Kincardine (Stuart Blair Donaldson) represent seats in Aberdeenshire, which, of all places in the United Kingdom, has a great understanding of and reliance on the oil and gas industries. It was extraordinary that they did not mention the Scottish election that is coming up in the spring, as that was perhaps one consideration that informed the timetable of the SNP’s no doubt responsible and serious moratorium on the development of the industry.

It was extraordinary that the hon. Member for Aberdeen North (Kirsty Blackman) said that the industry has not been in existence for very long and therefore we do not know whether it is safe, when she also mentioned that it started in a serious way in the 1990s. I wish that the 1990s were not as long ago as they are, but they are 20-odd years ago. The failures of the previous Government mean that we have lost a huge opportunity by being slow. We do not want to continue that irresponsibility.

I thought the most interesting part of the debate was the discussion about the vital interplay between the potential of unconventional oil and gas and coal gasification, and the competitiveness of industries that are fundamental to the UK’s prosperity and employment in the north-east and elsewhere, which face a challenging time. We have heard, in interventions by the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) and in the excellent speech by the hon. Member for Penistone and Stocksbridge (Angela Smith), about the dramatic effect that access to much cheaper and more local gas supplies has had on the chemical industry in the United States, and how vital it could be here. We have also heard about the opportunity that it would create for our hard-pressed steel industry if it were able to supply the dramatic needs estimated in the Ernst and Young report—£2.4 billion of steel tubing, and drilling rigs worth an estimated £1.65 billion. If the steel industry were able to take part in that and the chemical industry were able to benefit from the cheaper costs, we could benefit dramatically. Thanks to my hon. Friend the Member for Thirsk and Malton, we have heard a powerful case for a responsible, regulated and measured approach, but not for a moratorium. I congratulate him on securing the debate.

10:58

[Kevin Hollinrake]

Once again, it is a pleasure to serve under your chairmanship, Mr Howarth. I apologise for my initial lack of knowledge about protocol. I am grateful to Government and Opposition Members for the constructive way in which the debate has been dealt with. I am also grateful to the Minister. I quite understand that onshore oil and gas is not his normal brief, but skills and industry is, and we have heard compelling cases from Members on both sides of the House about the opportunities for the steel, chemical and engineering industries. There are huge opportunities for jobs for young people, which would give them a chance in life as young engineers. I welcome the recent announcement by the Secretary of State for Education that schools will be required to direct young people to engineering as well as to university, which will be key.

We need clear regulation. People have concerns about who they would go to if something went wrong—would it be the Environment Agency or the Health and Safety Executive? Having a single regulator, or a lead regulator, would deal with some of those concerns. We also need a clear, well articulated plan. The shadow Minister mentioned my majority. That is a clear case in point. We need to ensure that Members of all parties—whatever their majorities—are willing to support onshore drilling on the basis that it is the right thing for the UK and a real opportunity for UK manufacturing. It is incumbent on the Government to clearly illustrate how that can be done in a way that eases local people’s concerns.

Motion lapsed (Standing Order No. 10(6)).

Child Poverty

Tuesday 26th January 2016 Westminster Hall

11:00

[Peter Dowd (Bootle) (Lab)]

I beg to move,

That this House has considered levels of child poverty.

I am pleased to serve under your oversight, Mr Howarth.

“Even if we are not destitute, we still experience poverty if we cannot afford things that society regards as essential. The fact that we do not suffer the conditions of a hundred years ago is irrelevant… So poverty is relative—and those who pretend otherwise are wrong.”

I start by agreeing with the Prime Minister, who hit the nail on the head when he said that in his 2006 Scarman lecture. Consideration of the levels of child poverty is a matter of huge significance. A reasonable definition of poverty proposed by the Joseph Rowntree Foundation is

“when a person’s resources are not enough to meet their basic needs.”

In other words, being able to enjoy the activities of normal daily living is important. The Prime Minister agreed with that in practical terms.

I do not want our consideration to turn into a political football, but given the political choices that the Government have made in this policy area, it would be almost impossible not to stray on to that pitch. I take it as read that, at some point or other, a Government Member will mention the apparent mess in which Labour left the country; how the Government have got the country back on track and saved the day but that there is still much to do; how the country needs to fix the roof while the sun shines; how we have to live within our means; and, of course, every other cliché to which Ministers can lay their tongues. Unlike the world economic crisis of 2008, which was clearly and wholly the fault of the last Labour Government, even I acknowledge that the current international economic uncertainty has little to do with Government policies, but that cannot be an excuse or an alibi for the Government to shirk from ensuring that child poverty does not increase.

[Nick Thomas-Symonds (Torfaen) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Howarth. Does my hon. Friend share my concern about what the Social Mobility and Child Poverty Commission said just before Christmas:

“It has long been obvious that the existing child poverty targets are not going to be met. In fact they will be missed by a country mile”?

Does he agree that that is a damning indictment of the Government’s policies?

[Peter Dowd]

It is a damning indictment. If just one organisation was saying that, perhaps we could bypass it, but organisation after organisation is identifying that as a cause of concern. Somewhat topically, if the Government can exempt the most powerful of commercial institutions from paying their due taxes or can slope away from challenging the practices of bankers, who are the real culprits in the economic chaos of 2008, surely they can protect our children from the worst effects of those who seem unable or unwilling to pay decent wages.

The existence of any level of child poverty in one of the world’s wealthiest countries should be a source of deep concern to everyone in this room, but it should also be a source of shame that the levels of child poverty in this country are high and rising. I have many friends who either were or are teachers or health and social care professionals—they work or have worked to make the lives of children better, easier and gentler—but such professionals have a hard task. They have spent much of their careers seeing the number of children in poverty beginning to drop. For example, poverty reduced dramatically between 1998 and 2011, when 1.1 million children were lifted out of poverty, but that has changed over the past few years, as my hon. Friend said. Austerity has taken its toll, particularly on those who can least afford it. Figures from the Department for Work and Pensions indicate that, since 2010, child poverty has, at best, flatlined. Meanwhile, the number of children in absolute poverty has risen by half a million since 2010. That is 100,000 children every year, more than 8,000 children a month, almost 2,000 children every week or, put another way, 300 children a day for five years—year in, year out—which cannot be right.

Let us not beat about the bush. The unspoken question on many minds is whether that poverty is due to the fecklessness of parents. Well, I think not in most cases. More than two thirds of children affected by poverty live in households where at least one member is in work. God knows what type of work permits and enables such poverty, but they are, none the less, in work. End Child Poverty, an organisation considering such issues, is particularly concerned about the rising poverty in working families. As the Joseph Rowntree Foundation report, “A UK without Poverty,” noted,

“Too often, public debate talks about ‘the poor’ as if they were a separate group of people with a completely different way of life.”

[Imran Hussain (Bradford East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Howarth. Does my hon. Friend agree that low-wage, low-skill economies lead to an increase in child poverty? In my constituency, Bradford East, we have an absolute child poverty rate of 28.6%, compared with a national average of 18.2%, which is unacceptable. Does he agree that one solution is not this rhetoric of more employment, which the Government keep telling us, but to provide high-skill, high-wage jobs, so that families cannot just survive but live properly and children are brought out of poverty?

[Peter Dowd]

I agree with my hon. Friend, and I will come back to that in a moment.

[Nick Thomas-Symonds]

I am grateful to my hon. Friend for giving way again. He is making an important speech on an important topic, and I congratulate him on securing this debate. He has mentioned poverty suffered by people who are in work. Does he agree that the cuts that the Government are introducing to the work allowance of universal credit from April 2016 will make that situation worse? Perhaps that explains the enormous turnout of Tory Back Benchers to support the Minister today.

[Peter Dowd]

I agree with my hon. Friend. I spoke earlier about Members in the room being deeply concerned about poverty, but obviously not that many Government Members are concerned.

I will finish the quote from the Joseph Rowntree Foundation report:

“In reality almost anyone can experience poverty—over half of the population spent at least one year in relative income poverty between 1991 and 2003.”

Even if we accept that fecklessness is a factor, it is only part of the picture, and not a very big part. It becomes another alibi for doing little about the problem. Blaming poor people for being poor, even when they are working hard, is unconscionable. Shakespeare is always a good source for thought:

“And, being rich, my virtue then shall be,

To say there is no vice, but beggary.”

My late mother was a war widow. She died at the age of 95 and had been a widow for 50 years. Her mother was a war widow and a war mother—she died at the age of 106 and had been a widow for 67 years. Much, if not most, of their time was spent in relative poverty, with poverty for their children, too. Was that right? As the youngest, I feel that I was lucky, but luck should have nothing to do with it. That cannot be right.

The country’s economic structure plays a significant part in poverty. For example, the Government are still not concentrating on the effects of the productivity gap, which accounts for billions of pounds in lost GDP. My hon. Friend the Member for Bradford East (Imran Hussain) raised that issue earlier. Output per worker remains 2% below the pre-crisis levels of 2008, whereas in the rest of the G7, it is 5% higher. The Economist has said:

“The French could take Friday off and still produce more than Britons do in a week.”

In an article in MoneyWeek last year, Simon Wilson indicated:

“Bank of England calculations suggest if productivity had kept pace with the pre-2008 trend, the UK population might on average be 17% better off than it is today.”

Rather than pointing the finger at the poor, the Government should get that same finger out and address that driver of poverty.

[Jo Cox (Batley and Spen) (Lab)]

I have statistics similar those of to my hon. Friend the Member for Bradford East (Imran Hussain). In my constituency, one third of all children, 33%, live in poverty, which is heartbreaking and shocking for the many hard-working families there. Does my hon. Friend the Member for Bootle (Peter Dowd) welcome the major defeat in the Lords last night of the Government’s attempt to abolish income-related child poverty targets, and does he agree that it is simply not credible to tackle child poverty without acknowledging the worst issue, a lack of money? For the Government to attempt to abolish that target is simply reprehensible.

[Peter Dowd]

I agree with my hon. Friend, but I think a pattern is beginning to develop with this Government: they redefine everything when it does not suit them. So, for example, affordable housing now means a house costing £400,000 or £500,000. Everything is redefined to suit the Government’s agenda.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

To follow on from the point made by the hon. Member for Batley and Spen (Jo Cox), is the hon. Gentleman as concerned as child poverty charities are by the Government’s attempt to redefine child poverty? It is important to publish annual figures on income-related child poverty, if for no other reason than the long-term impact of such poverty on health, development, educational outcomes and life chances.

[Peter Dowd]

The hon. Lady makes an important point. As I said earlier, even the Prime Minister accepts that there is relative poverty, and all the jiggery-pokery with definitions is not going to make that untrue.

[Liz McInnes (Heywood and Middleton) (Lab)]

Is my hon. Friend aware that the Child Poverty Action Group has stated that it costs £29 billion a year to respond to the issues caused by child poverty? CPAG says that it is a false economy to drive up child poverty and that this Government should be considering measures to drive it down.

[Peter Dowd]

My hon. Friend is absolutely right. She has stolen my thunder—I will refer to that figure later—but she makes an absolutely valid point.

The Government’s January 2014 evidence review of the drivers of poverty found that a lack of sufficient income from parental employment, not just worklessness, is the most important obstacle to getting children out of poverty. Of course, to pick up on what my hon. Friend said, the Government say that a high-skilled, high-wage economy will lift family incomes—ergo, poverty will fade away. In the world where many of my constituents live, it does not quite work like that. I am afraid that even combined with increased personal tax allowances, the increase in the minimum wage, or whatever the Government want to call it—another redefinition—does not go far enough to alleviate child poverty to any substantial degree.

There can be no doubt that child poverty is rising and that it has an effect on educational outcomes, health outcomes and job prospects in the longer term. Independent projections from the Institute for Fiscal Studies indicate that, as has been mentioned, child poverty is beginning to rise. Research by End Child Poverty identified that 4.1 million families and 7.7 million children have been affected by below-inflation rises in both child benefit and child tax credit over the past few years. Interestingly, poverty of aspiration by the Government in policy terms begets financial poverty, because it restricts the use of the very tools that could tackle the drivers of poverty.

In my constituency, child poverty in one ward has reached 40%. Across the constituency, it is around 30%. In other words, almost 7,000 children in my constituency live in poverty. That cannot be right. Remembering the point I made earlier about the number of children in working families who still live in poverty, youth unemployment hovers between 8% and 9% and adult unemployment at about 7%. The median wage is £470, below the national median level of £520 and the regional level of £480. What message is that sending to our children: “Start your life in poverty; get a job on low wages; and you’ll still be in poverty—and so, in turn, will your children.”? It is hardly the most encouraging of straplines for young people.

In 2015, £7 million in early intervention funding was allocated to Sefton Council, in whose area my constituency sits. That is a reduction of £10 million since 2010 in early intervention, the very thing we should be getting to grips with. How can that funding cut help alleviate child poverty? Problem debt in Bootle is £12.5 million. The Children’s Society suggests:

“Too often, when families are struggling with repayments, the response from creditors is unhelpful…a breathing space scheme”

would give

“struggling families an extended period of protection from default charges, mounting interest, collections and enforcement action”,

enabling them to seek advice and preventing them from falling deeper into the debt trap. That is a practical suggestion.

I believe that my constituency is not an outlier in statistical terms; it is typical of many areas, both rural and urban. It is lazy to suggest that people are shirkers. Levels of child poverty in this country are dreadful. They are a blot on the integrity of our society. The Government cannot solve all the problems, nor does anyone expect them to, but poverty costs money. As my hon. Friend the Member for Heywood and Middleton (Liz McInnes) said earlier, the cost to the UK of poverty is reckoned by one assessment at about £29 billion pounds: almost £6 billion in lost tax, £15 billion for extra spending on services to deal with the consequences of poverty and £8.5 billion in lost earnings to individuals. What a waste! Surely, even forgetting the human stories and experiences behind those figures, the statistics and costs are enough to make any Government reconsider their strategy for dealing with the child poverty that our country faces.

As Nelson Mandela said, standing just yards away from here while he addressed Parliament,

“poverty is not natural. It is man-made, and it can be overcome and eradicated by the actions of human beings.”

I have managed to agree with the Prime Minister and Nelson Mandela in one fell swoop, which does not happen very often.

11:17

[The Minister for Employment (Priti Patel)]

It is a pleasure to serve under your chairmanship, Mr Howarth. I thank the hon. Member for Bootle (Peter Dowd) for securing this debate. I agree completely with him that child poverty is an incredibly important issue, and that child poverty levels are too high in this country. Indeed, he and I discussed the indicator and its importance to addressing child poverty while discussing the Welfare Reform and Work Bill in Committee not long ago.

The issue is of immense importance. The hon. Gentleman referred to my right hon. Friend the Prime Minister in his remarks. Tackling child poverty is close to the Prime Minister’s heart, and it is at the heart of this Government’s agenda. We have committed to eliminating child poverty and to improving the life chances of children up and down the country. They are the future of this country. It is also important to recognise, as the hon. Gentleman has done, that poverty is not natural. At the same time, it should not be defined by arbitrary measures. We must look at the actual causes of poverty and how we as responsible Government and parliamentarians use policy levers to create the right solutions to address the actual causes of poverty.

[Nick Thomas-Symonds]

Does the Minister agree with what the Social Mobility and Child Poverty Commission said just before Christmas? It said that

“it is not credible to try to improve the life chances of the poor without acknowledging the most obvious symptom of poverty, lack of money.”

Will she take this opportunity to confirm that in defining child poverty, the Government will take into account income, as well as their defeat on this matter in the House of Lords last night?

[Priti Patel]

I recognise the defeat that took place in the House of Lords last night. It is a perfectly normal part of the parliamentary process. On income measures, we will continue to use the number of households below average income. On the point about the Social Mobility and Child Poverty Commission, the SMCP itself is clear that the current approach focuses on dealing with symptoms and not the underlying causes of child poverty. Of course, that is exactly the purpose of this Government.

In fact, we debated this issue very extensively during the passage of the Welfare Reform and Work Bill. We are focusing on the root causes rather than symptoms. It is also important to say that we are seeking to prioritise the areas that will make the biggest difference and help to transform the lives of children.

[Nick Thomas-Symonds]

Will the Minister simply confirm something? Does she agree that lack of money is an obvious measure of poverty—yes or no?

[Priti Patel]

Income is a significant part of this issue, but there are many other causes as well. Through the Welfare Reform and Work Bill, we are focusing on certain factors, because all the evidence tells us that the factors that have the biggest impact on child poverty and our children’s life chances, and consequently they become the real drivers, are focus on education, educational attainment and work, because they make the biggest difference to disadvantaged children, both now and in the future.

In particular, with the new life chances strategy we are focused, as I have already said, on tackling the root causes. The Prime Minister has already outlined that strategy, which sets out a comprehensive plan to fight aspects of disadvantage and extend opportunity. However, we should also recognise that many of those in poverty have to confront a range of challenges and issues, such as drug addiction, alcoholism and health issues, including poor mental health. It is important that we use the right public policy levers to bring the support together to deliver the right services and mechanisms for those households.

The strategy will include a wider set of non-statutory measures on the root causes of child poverty, including family breakdown, the problem of debt, and drug and alcohol addiction. These measures will sit alongside the life chances measures in the Welfare Reform and Work Bill. This spring in particular will present an opportunity to examine the details and to consider how we start to address these deep-rooted social problems, and how we can work collectively—by using public policy and the delivery mechanisms that we have in all our communities—to focus on how we can support children and transform their lives.

[Jo Cox]

I thank the Minister for giving way. I just want to push her a little bit on whether she will now accept the defeat last night and listen to a range of experts, the Social Mobility and Child Poverty Commission, and the public, who feel that the Government should report annually on income-related aspects of child poverty. While I acknowledge that child poverty is a complex issue, the income dimension is such a key part of it that it is not credible to ignore it.

[Priti Patel]

The Bill is going through the right process of scrutiny now in the Lords, as it already has in the Commons. Of course, we will consider all responses when it comes to considering the next steps in particular. That is the right and proper parliamentary process and of course all legislation goes through it.

Once again, however, I must emphasise that there is no silver bullet for this situation; there is no way in which child poverty can be just addressed overnight. A range of areas need to be looked at and, as I have said, tackling the root causes is a fundamental step in the right direction.

[Nick Thomas-Symonds]

The Minister is being very generous in giving way. Does she accept that trying to change the definition of child poverty simply confirms what the Social Mobility and Child Poverty Commission has said about missing the existing targets by a country mile? Are the Government not just trying to change the definition because they will miss the targets?

[Priti Patel]

I completely reject that assertion for many reasons, and I do not have the time now to have the full debates that we had in Committee; please forgive me, Mr Howarth.

This process is not about moving goalposts or changing definitions; it is about making a fundamental review of the approach that we take. I will not be tempted by the hon. Member for Bootle, who basically said that I would inevitably regale Members with what happened under Labour. However, this process is a fundamental shift in the strategy and the approach that are being taken. The approach is a holistic one, looking at the root causes and recognising that we have to address, for example, the number of workless households and the causes of worklessness, and ask why households have been workless in the past, and recognising that having work in households changes the future outcome for children and of course redefines child poverty and what it means to households.

We should also recognise in this debate that work plays a very important role in addressing the issue of poverty, including child poverty, because we know that work is the best route out of poverty. Evidence has shown that nearly three quarters of poor workless families who have found employment have escaped poverty. So these are some of the crucial underlying factors that we have to address, and of course work—

[Liz McInnes]

Will the Minister give way?

[Priti Patel]

I will give way just one more time, because there are other points that I want to make.

[Liz McInnes]

I thank the Minister and I will ask a brief question. If work is the route out of poverty, can she explain why two thirds of those who are defined as being in child poverty are in working households?

[Priti Patel]

We should also recognise that evidence shows that the highest poverty exit rate—75%—was for children living in families who went from part-time to full-time employment. Of course, as the economy grows, and through the introduction of the new national living wage as well, we will see those households benefiting much more when it comes to income in particular.

Regarding the hon. Member for Bootle’s own constituency, the latest figures show that the number of children living in households that receive out-of-work benefits fell by 7% between May 2013 and May 2014. Of course, we are seeing that trend develop by providing more employment opportunities, by recognising that, of course, work is the best route out of poverty, and by finding the right employment to support those families in particular to gain employment.

[Imran Hussain]

I accept that work assists with removing child poverty. Nevertheless, while the Government talk about mass employment and this road to economic recovery, in my constituency of Bradford East many of the jobs are zero-hours contracts, part-time work and poorly paid work. That does not assist my constituents and it certainly does not go towards eradicating child poverty in my constituency.

[Priti Patel]

There is good news in the economy and not all the jobs in the hon. Gentleman’s constituency will be part-time, low-paid or zero-hours, so he has made a sweeping generalisation. However, regarding his point about low-skill, low-wage work, he is right; that is a wider issue in the economy that we must tackle. Tackling it is based on getting a higher skill country and economy, which can only be achieved by our being competitive as an economy and by investing in education, which is exactly what this Government are doing, and by focusing on education as a key factor in transforming the outcomes and lives of children in particular. Educational attainment is the biggest single factor in ensuring that poor children do not end up as poor adults and get stuck in that cycle of dependency and that cycle of low wages and low skills.

We all know that good English and maths are important. There are plenty of studies—hundreds of them, and international studies as well as national ones—that recognise that those subjects are key aspects in improving children’s future life chances. Focusing on educational standards and having a new, vigorous curriculum are part of this Government’s commitment. However, educational attainment is also important. In areas of deprivation, turning around schools that unfortunately have been focused on low standards and low outcomes, and ensuring that we have more good and outstanding schools, particularly in areas of deprivation, including wards, is important, and we would all support that.

Hon. Members have obviously touched on measures in the Welfare Reform and Work Bill, but once again we must look at the changes that we are introducing, particularly regarding welfare. This process is not about individuals and using some of the terms that have been used: I think that the language that the hon. Member for Bootle used about shirking should not be used at all.

In the minute or so that I have left, it is important for me to emphasise that part of these reforms is focusing on the support that we can provide to individuals; not only cash payments but support to help people to get into work. That is exactly what the Welfare Reform and Work Bill is about.

I want to reassure the House about our focus when it comes to eliminating child poverty. The Government and this Prime Minister have been very clear about that. Our focus is on work and education, on a commitment to improving the life chances of all children and—importantly—on tackling the root causes of child poverty.

Question put and agreed to.

11:28

Sitting suspended.

Further Education Colleges (North-east)

Tuesday 26th January 2016 Westminster Hall

[Sir Edward Leigh in the Chair]

14:30

[Helen Goodman (Bishop Auckland) (Lab)]

I beg to move,

That this House has considered further education colleges in the North East.

It is a great pleasure to serve under your chairmanship, Sir Edward. I requested the debate after a meeting that north-east MPs had with the further education colleges in our region. We believe that the quality of education that young people get in FE colleges is central, not just to them and to their life chances and futures, but to the economy in our region, and we therefore have a number of questions to put to the Minister, which I hope he is able to answer.

The economic needs of the north-east are clear. We have the largest proportion of our economy in manufacturing, and it is very good manufacturing. We are the only region outside London to have a balance of payments surplus, because we are extremely successful exporters, and we want to build on that platform.

In preparation for the debate, I contacted the North East chamber of commerce, because it does fantastic work in our region, and it alerted us to where the skills needs and shortages are at the moment. It told me that according to the Office for National Statistics the proportion of adults in the north-east qualified to national vocational qualification level 4 was 7% below the national average; meanwhile the North East local enterprise partnership’s strategic economic plan highlights that by 2020 a staggering 120,000 more jobs will need a level 4 qualification.

The latest quarterly economic survey conducted by the chamber of commerce found that 71% of businesses in the service sector and 83% in the manufacturing sector were experiencing difficulties in recruiting staff, and the UK Commission for Employment and Skills’ employer skills survey reports that 18% of employers face a skills gap—the largest of any English region.

We know that there will be an increase in demand for skilled workers in contact centres, warehousing, manufacturing, construction, customer service, sales and food production and that it will be compounded by the demographic changes that our region faces. We know that 3,500 construction jobs will be created each year between now and the next general election, but we also know that the total population growth in the north-east is less than a third of the national average. We know that many people with skills are retiring—in engineering, the average age of welding machine operators is 50. The skills shortages are completely predictable, and it is absolutely straightforward and simple for us to know that, even to continue as we are, we need to train more people. That is why we are extremely concerned by the prospect of reviews that destabilise and threaten the FE colleges.

The FE colleges in the north-east are much better than those in the rest of the country. According to Ofsted, 95% of them are either good or outstanding, compared with a national average of 79%. Consequently, they are educating 200,000 young people. Bishop Auckland College is absolutely typical of the colleges in our region. It teaches technology subjects, such as construction, along with skills that are needed in the automotive industry, which are even more important now that we have not only Nissan but the new Hitachi plant in Newton Aycliffe. Also, everyone knows we need more skilled workers in childcare and in health and social care, and the college provides courses in those skills, too. It has approximately 900 full-time students and the number of apprenticeships has gone up to almost 1,000.

I am sorry to say that the policies that this Government implemented in the last Parliament and also seem to be proposing now give Bishop Auckland College the feeling that it is being destabilised. What are the Government’s policies? The first thing they did was to cut the education maintenance allowance. The Minister, when he went to Winchester, Oxford and Harvard, might not have needed the support of an education maintenance allowance, but many of my constituents do.

According to National Audit Office figures, there have been real-terms cuts in the sector of 27% since 2010, and although the funding settlement announced by the Chancellor before Christmas was flat in cash terms, it represents another 10% real-terms cut, and I ask the Minister why that is. Why does he believe that it is okay to spend £9,000 per student on university tuition, but only £3,000 per student in FE? That is not a sign of a country that takes its technical skills base seriously, and I urge him to look at the experience on the other side of the North sea—at what is happening in Germany—and say, “We were lagging behind in this area 120 years ago and we are still lagging behind.” Alison Wolf found that in her nationwide survey.

I also ask why the Minister has instituted area-based reviews. Obviously, if there are failing FE colleges in some part of the country, he can review them all he likes, but that is not the situation in our region. The hon. Member for Berwick-upon-Tweed (Mrs Trevelyan) smiles and nods, because she knows I am not making a political point. I am making a point about the quality of education in the north-east. When the Minister made the announcement about the reviews, he said that he did not want any arbitrary boundaries, but we have arbitrary boundaries. The Tees valley review is under way, but the north-east one has not yet started, yet constituents of mine are educated both in Darlington and Stockton and in Bishop Auckland and Durham. That seems very arbitrary to us. What will the Minister do to resolve different possible upshots from the reviews? We have been told that there is slippage, so we would like to know when he expects the north-east review to take place.

When the Minister announced the reviews, he said that he expected policy options to include rationalising the curriculum and considering opportunities for specialisation, merger, collaboration and closure. Improving the curriculum is always a good idea, as is collaboration, but closure is unacceptable and particularly problematic in a rural area.

The average distance travelled by the 16 to 18-year-olds who go to Bishop Auckland College in my constituency is 8 miles each way each day, and for those over the age of 19, it is 14 miles. If the college was closed and they had to go to Darlington and Durham, some of those young people would have journeys of 28 miles. It is not just the time and distance that are the problem; it is the cost. The bus fare from Barnard Castle to Darlington is £7 return—a £35-a-week bill—and for a young person living in Cockfield and going to Durham the cost would be £11 a day, or £55 a week. Those amounts are simply unaffordable. The Minister must know, notwithstanding his own wholly different educational and personal experience, that that would put some young people off doing what was best for them and for the country. Their whole future life possibilities will be limited by extortionate fares and excessive travel times.

When the Minister announced the reviews, he also said that any changes should be funded by the local enterprise partnerships and the local authorities. I was absolutely astounded by what he meant by that. Durham County Council is having to undertake cuts of 40% between 2010 and 2020. Against that massive reduction in the available resources, I simply cannot see how the council can be expected to take on new responsibilities for financing FE.

As I said earlier, Bishop Auckland College is facilitating 1,200 apprenticeships. In fact, I have an apprentice in my office—my third apprentice—and I have had extremely good experiences with them. They have improved the efficiency of the office no end. When I talk to the college, it says that the key logjam in increasing the number of good-quality apprenticeships is not what goes on in the colleges, but finding the placements with the employers.

I was interested to hear the questions that the chamber of commerce had about the apprenticeship levy. The first point it asked me to raise was whether the Minister intends to wrap up the apprenticeship arrangements under the Construction Industry Training Board with the apprenticeship levy. The construction industry has a good scheme that is working well. Everyone is happy with it. Rather than asking for it to be closed down and for the industry to get involved in something new, would it not just be simpler to let the industry carry on doing something that works well and to exempt it from the new arrangements? If it ain’t broke, don’t fix it.

The second point that the chamber of commerce made was that its members want longer-term funding, with agreements of at least two years to tie in with the fact that apprenticeships last for two to four years. That point was reiterated by the colleges. On numerous occasions in recent years, decisions about funding have been taken after they had begun to recruit for the following academic year, because the academic year and the financial year do not coincide. They are calling for three-year settlements. That proposal seems perfectly sensible, and I would like the Minister to consider it.

The thing that is really unclear is how the levy will be distributed. Which sectors will receive the money, and how will the Minister ensure that it reaches small and medium-sized enterprises? As the chamber of commerce pointed out, it is important that we prioritise current skills shortages and future skills shortages that we can predict from economic forecasts and how the regional economy is training. It also said—this seems completely reasonable—that we should prioritise those employers who already have a good training record.

The colleges and the employers are united in wanting a good inspection regime. It could continue to be Ofsted, but that good regime is vital to maintain the quality and, with that, the confidence that people have in apprentices. A recent survey for the UK Commission for Employment and Skills found that 18% of employers in the north-east offer apprenticeships and 37% of employers wish or intend to do so. That is the highest level in the entire country. They are showing their commitment, and they, the colleges and we wish to see that matched by the Government with resources and stable frameworks for policy and delivery.

14:44

[Mr Kevan Jones (North Durham) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Edward. I begin by congratulating my hon. Friend the Member for Bishop Auckland (Helen Goodman) on securing this debate. She outlined what is self-evident to many of us in the north-east: we have a good network of further education colleges.

I do not have a further education college in my constituency. My learners access Derwentside College in Consett and New College Durham. They also travel further afield to Newcastle and Sunderland and to other colleges in the region. As my hon. Friend outlined, some go to Darlington and Teesside. The colleges are an asset to our region. It is clear to anyone who speaks to or visits any of them that they are not inward-looking institutions—they are dynamic and forward-thinking. Derwentside College has a good liaison with local engineering companies, both large and small. It not only engages in recognising and understanding what further training is needed, but actively takes part in encouraging young people and adult learners to think of a career in engineering.

New College is an outward-looking institution that sponsors two academies: one in Stanley in my constituency and one in Consett, which is in the constituency of my hon. Friend the Member for North West Durham (Pat Glass). That initiative was spearheaded by John Widdowson, who is the chief executive of the college. He is working well to build the link between the school sector and the FE sector. He is giving great opportunities in Stanley to many young people. In addition, New College has 200 international students from across the world who come to study there.

I had the privilege last year of visiting Newcastle College’s new railway engineering academy. That initiative came from the college, which recognised that there is a skills shortage in the rail sector. It is now providing well-qualified people for jobs—in some cases, those jobs are highly paid—in the rail sector. That college is taking the initiative. In the north-east, we have colleges that are not just allowing the world to pass them by; they are taking the initiative to understand what the business community and their local communities require.

[Andy McDonald (Middlesbrough) (Lab)]

While my hon. Friend is acknowledging some of the work across the region, will he pay tribute to Middlesbrough College’s work on its remarkable new science, technology, engineering and maths centre? That was launched recently, very much with the involvement of local employers, the manufacturing base and the supply chain.

[Mr Jones]

Yes, I will. It is a good example of how local colleges are taking the lead, not by just putting on courses that they hope people will come to, but by working with employers to ensure that the courses they offer are needed by young people and adult learners and by local businesses. This might be an old-fashioned thing, but in our region, the colleges and the education sector are raising awareness that careers in engineering and manufacturing are a way forward and not a thing of the past.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

My hon. Friend raises an important point: further education colleges in the north-east already work together and are forward-looking. Newcastle College is engaging with new industries, such as the aeronautical industry and the energy industries. Does he share my concern that the area-based reviews may take the focus away from what is best for our industry and our young people? Too much time may be spent focusing on how to respond to the review. I would like to see more work on adult education in the north-east, particularly given the cuts to local services.

[Mr Jones]

I agree with my hon. Friend, because one of the important points is collaboration between colleges. Looking back, one of the problems in the further education sector was where we had competition between different colleges. That network of working together, which provides opportunities for young people and adult learners, is important. Speak to anyone in the industry and they will say that the 16-year-old leaving school today is unlikely to be in the same job when they retire at 65 or 67 or whatever the retirement age will be when they come to retire. They will need constant on-the-job training and will need to re-access the education system, so the further education sector is vital.

I chaired a meeting last night at an event organised by the Industry and Parliament Trust to talk about the aerospace sector, which has huge potential for growth not only in engineering skills, but in the soft skills of process management and other areas as well. All our colleges, certainly in Durham, are encouraging not only engineering apprentices, who are vital, but the growth sector of tourism in the north-east. I know that Houghall college and also Northumberland deal with land skills and agriculture, which people might think are industries of the past, but they are very important to rural communities in the north-east, and certainly the tourism sector is a growth area across the north-east.

I understand that the Government will want to tackle bad performance, and I support that. If a college or any institution is failing its learners, it needs to be dealt with, but I am not sure how the review will fit in with the rest of the education system. For example, I have already mentioned New College’s sponsorship of two academies, because it saw a clear need to link back into education. The sector is not separate from the rest of the education system, so I want to know how local schools and suchlike will be involved in the process.

My hon. Friend the Member for Bishop Auckland mentioned travel, which is a stark issue in my area and many rural areas. Many young people have to travel quite long distances to access courses. It might be easy in large cities such as London or Birmingham where there is a choice of providers close together, but in my constituency and in hers—for example, in Northumberland—people have to travel long distances, so the issue is not just about the number of colleges, but where they are. I totally agree with her that the abolition of the education maintenance allowance had a huge effect on young people’s ability to access courses.

[Ian Lavery (Wansbeck) (Lab)]

Does my hon. Friend recognise the problems in Northumberland? Northumberland College in my constituency is 60 miles from the Scottish border and 20 miles from the nearest fantastic city of Newcastle. Northumberland College has got fantastic results with 1,000 apprentices and £2.5 million invested in a new STEM centre. We have got fantastic results like we have never had before and a good rating by Ofsted. If there is any reduction in financing, or rationalisation, mergers or closures, does my hon. Friend agree that Northumberland could not be a part of that?

[Mr Jones]

I agree, but that is where the problem lies. I sympathise with the Minister. Having been a Minister myself, I accept that civil servants sometimes look at things through a London—not even a south-east—prism and think that if something is not happening in London or the south-east, it cannot be happening elsewhere. The idea that my hon. Friend has an outstanding college in Northumberland is perhaps something that they cannot comprehend. Any changes need to be right. One size will not fit all. We have a dynamic group of colleges. The issue is not about competition. That would be a retrograde step back to the bad old days when people were literally competing. That is not a good use of resources and not good for the learners themselves.

Another aspect that is important for the further education sector is to raise aspirations. If we are going to get people into engineering or hospitality and tourism, one thing that the north-east needs more than anything—the further education sector has a key part to play—is to raise aspirations. Sadly, in my own constituency, and in other constituencies as well, we have the problem of—it is a horrible word—NEET: not in education, employment or training. It is difficult to find out the numbers. There are individuals now who are not included in any statistics anywhere. They are not in the education statistics; they are not claiming benefits; and they do menial, part-time, casual work. That is okay while they are young, but they are missing out on the opportunities to get the qualifications that they need for the future, and in many cases they put themselves at great risk working on building sites or in conditions with no health and safety provision or any care for those individuals. Those are the people we need to reach. Sometimes, when the school system has failed them, the further education sector is a good way to access them.

I want to address two other points and how other Departments’ policies impact on the further education sector. Just outside my constituency, in the City of Durham constituency, is Finchale Training College. It was set up in 1943 for the rehabilitation and retraining of ex-servicemen. It does fantastic work with veterans who have mental health problems and physical disabilities. It has a long tradition of retraining them and getting them ready for work. It has also done other training work in the wider further education sector. It was a residential college until 2015 when the Government changed the rules in a move away from residential colleges, and we can argue the pros and cons of that.

In September 2015, the Department for Work and Pensions introduced the specialist employment service to help individuals who need extra help because of disabilities or other training needs. They would have gone into the residential system, but are now—I think positively—in the community. The system set up to deal with this is not only bureaucratic, but it has a detrimental effect on colleges such as Finchale. Contracts were issued nationally and large organisations such as the Shaw Trust, Remploy and others got the contracts. They have sub-partners and Finchale is a sub-partner for the Shaw Trust. The pathway for the people who need extra help into the system is via the disability employment advisers in local jobcentres. There are only two full-time disability employment advisers in the entire north-east; the rest are part time, and there is a problem. Access is gained through a computer-based system. On the first working day of each month, a number of places and contracts are put out. The employment advisers then have to match people to those.

In theory, there is a regional cap, so there should be 18 for the region, but that does not work in practice. So Finchale, which would have expected 70 students over the last period, has only got two, because as soon as a jobcentre in Croydon or south Wales logs on and gets in early, it can upload all its applicants to fill the places. So the idea that Finchale will access learners from south Wales or Croydon is not the case. There are an estimated 200 people in the north-east who need help.

[Sir Edward Leigh (in the Chair)]

Order. The hon. Gentleman is giving an excellent speech, but he has gone on now for 15 minutes. Several people want to speak, and I want to get everybody in, so can he now bring his remarks to a close?

[Mr Jones]

Will the Minister ask his Department for Work and Pensions colleagues to change the system? The system needs to have a regional cap and to allow for people at least to access it, because at the moment it is having a detrimental effect on colleges such as Finchale.

Finally, I would like to hear the Minister’s thoughts on regional devolution. We are told that post-16 further education will be devolved to the new regional body, whatever that will be. Will he guarantee that, if that happens, any cash will be ring-fenced or immune from cuts? When the public health budgets were devolved to local government, the first thing to happen was that they were top-sliced. One of my fears, I think rightly, is that the devolution agenda being pushed by the Government is more about devolving responsibility—without the cash to go with it—and then the blame when the new local authorities have to make the cuts. I am interested to know the Minister’s thinking.

We have world-leading colleges and further education institutions in the north-east. The Minister needs to work with them and not to try and implant in the north-east some blueprint that might look nice on his civil servants’ spreadsheets. If something is not broken, why try and fix it?

[Sir Edward Leigh (in the Chair)]

We have a number of people wishing to speak. Please keep your speeches down to less than six minutes.

15:01

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Edward. I thank my hon. Friend the Member for Bishop Auckland (Helen Goodman) for securing the debate.

Further education colleges in the north-east are important engines of economic growth and prosperity in our local communities, as well as significant drivers of social mobility. By 2022 the Tees valley will require 127,000 jobs in key sectors, but only 278,300 people out of a working-age population of 417,000 are in employment. The skills mismatch is incredibly important, and FE colleges can fill the gap.

Hartlepool, for a relatively small town, has a remarkably diverse range of post-16 provision. We have a sixth-form college, Cleveland College of Art and Design, and two schools with a sixth form. Hartlepool College of Further Education is the biggest provider of apprenticeships in the Tees valley and the second biggest provider in the north-east for 16-to-18 apprenticeships. It has a fully functioning aircraft hangar, with two jets and a helicopter, and we have real skills, expertise and quality in STEM. The college’s apprenticeship success rate was 86.4%, when the national rate was 70.3%.

As my hon. Friends have indicated, there are concerns that the Government’s reforms are pushing FE colleges to adopt significant changes in their business models, which will put their viability at risk.

[Alex Cunningham (Stockton North) (Lab)]

I am grateful to my hon. Friend and neighbour for giving way. Yesterday in Education questions the Minister dismissed my concerns about the cost of area reviews, which I am led to believe could result in millions of pounds of extra banking fees being incurred as loan agreements are ended and new ones created. Does my hon. Friend agree that any real financial benefit to colleges might be lost unless the Government step in and decide what will happen with those additional costs?

[Mr Wright]

My hon. Friend makes a fair point, but I would go further, because I worry about the area-based review in the Tees valley. May I ask the Minister why the review includes FE and sixth-form colleges, but not school sixth forms, 16-to-19 free schools or university technical colleges? If a comprehensive review of post-16 provision in an area is being undertaken, why include only certain providers? The 10 FE colleges in the Tees valley subject to the review account for only about 60% of provision, so how can a proper evaluation take place? The process seems opaque, and no one has been able to demonstrate to me clear and transparent criteria for how the area-based review is being conducted. Will he use this opportunity to do so this afternoon?

Furthermore, given that colleges are autonomous organisations, it is difficult to see how any conclusions of the review can be implemented unless the Government starve colleges of funding until they agree to the conclusions. Will the Minister respond to that point and confirm that colleges in the north-east that refuse to accept the findings will not experience disproportionately harsh cuts to their funding?

The Government’s key objective in skills policy is the target of 3 million apprenticeships by 2020. The apprenticeship levy has been proposed as a means to ensure that firms pay for training. I appreciate that core funding for 16 to 19-year-olds and adult skills will be maintained in cash, if not real, terms as a result of the spending review. However, the Minister knows that there remains acute pressure on college budgets. The Skills Funding Agency has suggested that about 70 colleges throughout the country could be deemed financially inadequate by the end of 2015-16.

A devastating impact on FE colleges in the north-east is possible. Will the Minister reassure the House, without referring to specific institutions—doing so might undermine confidence—that colleges in the region will have suitable resources? Will he explain how he anticipates that the combination of his main priority, apprenticeship expansion, with other FE college activities will complement one another, rather than the former being seen as a substitute or alternative for the latter?

I mentioned that FE colleges in the north-east are drivers of social mobility. For people in the north-east in their 20, 30s or 40s who have been made redundant—sorrowfully, we have had far too much of that in the north-east recently—or who may not have worked hard at school but now want to put their lives back on track, and yet are not in a position to take on an apprenticeship place, how does the Minister anticipate that FE colleges will be able to provide them with the necessary basic skills to make something of their lives?

I turn to the apprenticeship levy and, in particular, something that the Minister said when giving evidence to the Sub-Committee on Education, Skills and the Economy yesterday. About 2% of firms in England will be liable for the levy, and the Tees valley figure is broadly comparable to the national proportion—2.2% of our employers are large firms. In Committee I asked the Minister whether the Government position was that the levy will be a ring-fenced fund to be drawn on only by levy payers to fund apprentice training. The Minister said that large firms would have “first dibs” on the money raised from the levy.

That response prompts a number of questions. If that is the case, how will the 98% of smaller firms receive funding for apprenticeship training through the levy if they are waiting for scraps from the table? Will firms be able to carry the levy forward to subsequent financial years, so that if a large firm does not want to draw on it in year one, it will have that possibility in year two? Again, how will that help smaller firms? How will the system help FE colleges provide suitable financial planning? Will the “first dibs” approach be allocated on a national, regional or sub-regional basis—will it be large firms only in the Tees valley, or only in Hartlepool? How will the levy work?

As the Minister understands, the considerable uncertainty is undermining the ability of colleges in the north-east to plan and to provide their existing excellent further education provision. I hope that further detail will be provided this afternoon, so that colleges can get on with the job of ensuring that we can transform our regional economy and that people’s lives in the north-east are made better.

[Sir Edward Leigh (in the Chair)]

Congratulations—on the nail at six minutes. I call Anne-Marie Trevelyan.

15:07

[Mrs Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)]

Thank you, Sir Edward. I will do my best, although I am less practised than my colleagues.

Northumberland is one of our largest counties geographically, covering more than 2,000 square miles, but with a population of only 320,000. More than 50% of the population live in the small south-east corner of the country, where our excellent Northumberland College is situated, in the constituency of the hon. Member for Wansbeck (Ian Lavery). For students in the Hexham or Berwick constituencies, the travel times and distances from local towns such as Alnwick, Hexham, Haltwhistle or Berwick are enormous. From Berwick the journey is more than 50 miles each way. The need for an excellent college to offer courses that the local school cannot is vital.

Northumberland College, under the fantastic leadership of Marcus Clinton, ably supported by a brave and determined board of governors, aims to provide a world-leading college for our students. A network of highly specialist centres is being built to provide a regional centre of excellence for hospitality, for tourism and for land-based training. A technology park, a STEM centre and a wind hub in conjunction with the Port of Blyth are also being created. Northumberland College wants to ensure that every student can access the training that they need in their chosen field, but my constituents face a challenge in even getting to the college.

Since our Labour county council stopped funding post-16 transport some years ago, the college has had to pick up the bill so that no student is lost. It is vital that there is stronger careers advice in our high schools, and that the sixth forms and colleges work together. Unlike in other parts of the country, in rural north Northumberland the pressure on schools is not too many pupils but too few. The schools are therefore keen to persuade their pupils to stay on for A-levels to help their cash flow, even though the college might be the better choice for a pupil. I ask the Minister, as the hon. Member for Hartlepool (Mr Wright) did, why the area review is not looking at provision in sixth forms as well as colleges and encompassing the whole post-16 sector. It is a small sector in Northumberland, but vital if we are to make the best use of resources and get the best for our students and for the future economic benefit of Northumberland.

A student who wants to specialise in construction, engineering or IT in our new STEM centre, or in land-based studies, which are so important to rural Northumberland, may be better off going to Northumberland College than remaining in a school setting, but that will be a problem as long as the battle for funds is an issue. Our college could not do more on rationalisation and working with local businesses to build apprenticeship programmes, but sparsely populated communities present real challenges, which I hope the area review and the Minister will shortly consider closely.

On apprenticeships, I, like the hon. Member for Hartlepool, would like the Minister to clarify how SMEs, which are the lifeblood of Northumberland—we do not have any large companies, and every company is an SME—will access levy funding to help them take on apprentices. We are struggling to get clarity on that, and I would appreciate having the Minister’s guidance so that we and every SME that wants to be part of the apprenticeship programme can get our heads around the issue.

As the only college in our county, Northumberland College welcomes the recent moves to stabilise funding over the coming period, to introduce 19-plus loans and to support apprenticeship funding—my point about SMEs notwithstanding—and it is keen to discuss that with the Minister. It also welcomes the increase in funding for those studying the land-based industries, and I hope Northumberland will continue to lead the way on innovative and modern thinking about farming practices. Those funding streams are allowing Northumberland College, at Kirkley Hall, near Ponteland—and, soon, I hope, at a satellite campus near Berwick, if we can persuade a local farmer to take on a bunch of students—to maintain a really specialist resource that is important for our agricultural county and for the whole north-east region. I look forward to hearing shortly from the Minister about how we can get some real clarity on that and the other issues I have raised.

15:11

[Jenny Chapman (Darlington) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate my hon. Friend the Member for Bishop Auckland (Helen Goodman) on securing this important debate, and I am grateful for the opportunity to contribute.

I am not opposed in principle to area reviews, and it is right to assess from time to time the post-16 education on offer to young people and adults in any locality. We need to do that now because resources are scarce and colleges have been under immense pressure—more than they have ever been—in the past five years.

As a result of the environment the Government have created in recent years, I have seen some quite sharp practices taking place between colleges. In my area, we have the ludicrous situation that students have been enticed by offers of free travel to study at colleges further from home, when they could just as easily have studied the same courses in their home towns. That is not a sensible use of public money. Colleges are incorporated, but they are funded by the state, and taxpayers would expect such practices to be discouraged. My fear is that area review actually encourages such a lack of co-ordination and collaboration and that, once colleges agree whatever they agree with the area review team, the situation will deteriorate. I want to know what area review will do to cement collaboration between colleges.

I am all for student choice. I have no objection at all to Darlington students travelling further afield to access courses that are not on offer in the town or that are offered to a higher standard elsewhere. In fact, I would encourage that, and a small number of students from my area travel to Hartlepool to study on the courses mentioned by my hon. Friend the Member for Hartlepool (Mr Wright). I am pleased that they do that, and it is great that they can, but the lamentable state of public transport in the Tees valley is becoming an ever bigger obstacle to that happening more often. However, I do not like the gimmicky enticement of students who have not had the benefit of independent, well-informed advice about what is best for them.

College funding mechanisms certainly need to be looked at. Currently, colleges can do well as long as they can attract enough students on to their courses and keep them there, but they are not held to account adequately for the destinations of course leavers. Colleges operate in a market, but that market does not work sufficiently well for students.

My hon. Friend the Member for Hartlepool was absolutely right to refer to social mobility. There is a lack of quality advice and guidance for young people. Students are therefore not savvy consumers able to shape the market in the way that I am sure the Minister would wish. The Social Mobility and Child Poverty Commission put it well:

“There is a jungle of qualifications, courses and institutions which students find hard to penetrate. Quality is variable and there is little or no visibility about outcomes. Nor is the system working as well as it should for the economy with skills shortages in precisely those areas—construction, technical and scientific skills—that vocational education is supposed to supply.”

In the north-east, we have seen thousands of older potential students lose their jobs in the public sector—and now in steel, too. How will area review take account of the needs of older learners? I ask that because I looked at what happened in Scotland, which undertook an area review—indeed, I was expecting a Member from Scotland to be here. The number of colleges in Scotland fell from 37 to 20. At the same time, there was a reduction of 48% in the number of part-time students and of 41% in the number of students aged 25 or over. That is deeply concerning to those of us from the north-east, given the job losses I referred to.

[Chi Onwurah]

My hon. Friend makes an important point about adult education and the capacity of our further education colleges to meet a growing demand for which there is less support. As the chair of the all-party group on adult education, I hope that the Minister will be able to give us some reassurance that the destruction of adult education will not continue.

[Jenny Chapman]

My hon. Friend makes an important point. The review could do serious damage if we are not mindful of the impact on older learners, given the experience north of the border.

One of the real problems is the confusion about courses, funding streams and where courses lead. A UCAS-style website could be created for vocational education, so that any learner can see for themselves what progression they are likely to undergo and what employment and earnings opportunities they are likely to have, as a consequence of choosing any course.

It would be remiss of me not to refer to my two local colleges—Darlington College, which is ably led by Kate Roe, and Queen Elizabeth Sixth Form College, which is led by Tim Fisher. The heads of both colleges are fantastic individuals, but they are both grappling like mad with how on earth to take their colleges forward, given the context that we are likely to see. Colleges in Darlington are really struggling with what Darlington needs to look like in the 21st century. What should the course mix look like? Who are the students of the future? What will they want? What will the skills needs be not just in our local area, but in the region, in the country and internationally? I want students in Darlington to get the same opportunities as students in the Minister’s constituency, because that is not the case now. That is what we are meant to be aiming for. Those are the right questions for my colleges to be asking, and the Government should be focused on helping them to find answers.

Many of our colleges collaborate well, but there are too many examples of competition. I fear that the area review process will cement that counterproductive behaviour between colleges. As well as three-year funding security, colleges need external leadership. Unless we cement in some form of governance change—I do not know whether that should be done through city deals or some other means, but we do need strategic leadership on a wider scale—and force colleges to accept a direction that builds in employers’ needs, it is inevitable, given the likely future funding context and the competition for students, that different institutions will embark on wasteful enterprises and use novelty gimmicks to remain viable. That is in nobody’s interests: it is bad for the economy, bad for taxpayers and, worst of all, bad for our students, who need well-informed advice that is given without prejudice and based on a sound knowledge of the jobs market.

I am afraid that so far area review has been conducted away from the gaze of students and parents, and away from employers. That has to change. The colleges are our colleges. They are vital local employers and community resources, and they undertake a vital task. We all feel great ownership of our colleges and do not want that to be lost. As I have said, I am open to change, as are my colleges, but the Minister needs to understand that the rationale for that change must have the students’ best interests at heart.

15:20

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I commend my hon. Friend the Member for Bishop Auckland (Helen Goodman) on securing the debate, given the vital role played by further education in our region, which my hon. Friends have amply set out. I am pleased to have the opportunity to contribute, because on Friday I met the new principal of Newcastle College, Tony Lewin, at the college’s aviation academy, which is based at Newcastle international airport in my constituency and ably led by former RAF engineer Tim Jacklin.

The aviation academy is just one of a wide range of world-class facilities at Newcastle College, including the energy, chefs, construction, healthcare, lifestyle and performance academies, as well as the rail academy, which has already been mentioned. I like to think of the aviation academy as one of the college’s flagship operations, not only because it is in my constituency but because the facilities offered to learners are second to none. Students come from across the north of England to undertake FE courses in areas such as airport operations, cabin crew operations, aeronautical engineering, aviation operations and aerospace engineering. Some of them go on to take a foundation degree in aeronautical engineering or even an honours degree in aircraft engineering, operated in partnership with Kingston University.

Many of the courses are run in conjunction with high-profile names from the aviation industry, including Jet2 and Swissport, ensuring that the academy is delivering the skills that industry needs. Indeed, such are the facilities—including the academy’s very own fully functional Boeing 737, and workshops kitted out with latest hydraulics, landing gear, pneumatics and electrical and electronic equipment—that people come from across the world to undertake the courses. Current students come from as far afield as Mozambique, Namibia and the Maldives.

Of course, all that is being provided at a time of great uncertainty for the FE sector, which has too often been afforded very limited time to plan properly or strategically, as a result of budget cuts imposed by the Government over recent months and years at unacceptably short notice. I will not repeat all that has been said in the debate—my hon. Friend the Member for North Durham (Mr Jones) made a powerful case for the innovative approach taken by north-east colleges, as did other hon. Members—but it is worth reflecting on the open letter sent to the Prime Minister ahead of last year’s spending review by 128 FE colleges across the country that stated:

“Late and unexpectedly large reductions in annual funding allocations...make it increasingly difficult to plan ahead with any certainty. Significant funding cuts for the 2015-16 academic year were announced in March 2015 with a further round of cuts announced in July. The cuts applied immediately from 1 August 2015. The uncertainty this creates means colleges cannot invest in their staff, effectively plan their curriculum, and meet the needs of the local economy and communities which they serve. It has become almost impossible to plan ahead and work meaningfully with other agencies and partners who rely on us to deliver their education, training and skills requirements.”

That is a serious concern for any part of the country, but surely more so for the north-east, which continues to have the highest rate of unemployment anywhere in the country by some margin.

Of course, one of the key ways in which the north-east FE sector is supporting our regional economy is through apprenticeships. Indeed, the proportion of the north-eastern colleges’ adult education budget used for apprenticeships is higher—at 41%—than in any other region. I welcome any growth in the number of high-quality, meaningful apprenticeships because, as hon. Members may recall, one of the first things I did after being elected to this place in 2010 was to introduce a Bill to make better use of our public procurement system to deliver apprenticeship places. It was therefore with a wry smile that I read the Cabinet Office’s new procurement policy note, published in August last year, which clearly states that

“central Government procurement contracts with a full life value of over £10 million and a duration of over 12 months should be used to support skills development and delivery of the apprenticeship commitment”—

particularly as I was told again and again by coalition Ministers that what I wanted could not possibly be done because of EU law.

Yet there is further uncertainty for colleges, among others, about apprenticeships. Newcastle College wants to take an active role in the delivery of apprenticeships through the new apprenticeship levy. However, despite the Government’s proposal for the levy to be operational from April 2017, in just one year’s time, the college is concerned about the continued lack of detail on how the initiative will work in practice. One can see why the scheme will be attractive to large firms, which can offset their apprenticeship costs against their levy payment; and, of course, the Government claim that only 2% of firms—those with an annual wage bill of more than £3 million—will have to pay the levy in the first place. So, as my hon. Friend the Member for Hartlepool (Mr Wright) asked, what about those smaller firms who will not pay the levy? How will they access funding for the programme, and will they be able to do so in a way that is not mired in bureaucracy that will put them off? After all, such businesses currently deliver more than 90% of apprenticeships in the country, yet FE Week reported 11 days ago that the Department for Business, Innovation and Skills just cannot clarify the issue.

Other questions remain, including how Ministers will ensure that, instead of a race to the bottom, the new system will create a race for quality apprenticeships—quantity over quality is a big risk—what will happen to potential apprentices who cannot be matched with an employer; what happens to the funding for apprentices where a firm terminates an apprenticeship part-way through; and how the Government will prevent a dip in apprenticeship numbers while firms wait to see how the new plans pan out.

For colleges such as Newcastle, for SMEs and, most importantly, for should-be apprentices across the country, I implore the Minister to make the details of the scheme available without delay, so that colleges and businesses have the lead-in time to plan properly for the changes ahead.

15:27

[Mr Gordon Marsden (Blackpool South) (Lab)]

The story of the area reviews is one of a belated and, to be blunt, over-hasty response by the Government to a developing crisis that they should have seen coming over a period of time. I congratulate everyone who has spoken, including the hon. Member for Berwick-upon-Tweed (Mrs Trevelyan). All the contributions were strong and compelling arguments for the vital importance of FE in the north-east. I particularly congratulate my hon. Friend the Member for Bishop Auckland (Helen Goodman) on securing the debate in the first place.

Some of the common themes that have come out of the process have been about the nature of the north-east’s excellence, and the need not to jeopardise that in any way—not just the good manufacturing base, but also the service centre. It is not only for young people that that is important. In view of some of the statistics, such as that the average age of welders is 50, retraining and reskilling older people is crucial. I hope that the Minister did not miss the fact that virtually everyone who has spoken is worried about the unintended—I assume they are unintended—consequences of the over-hasty and rushed process I have referred to.

[Ian Lavery]

Is it not time that we cut to the chase? We have discussed Newcastle College, Northumberland College, Hartlepool College of Further Education, Bishop Auckland College, and colleges in Darlington, Durham and Teesside, among many others. All of them provide a brilliant education service to the people in their area. The reality is that we are here because we are extremely concerned that the area-based review will mean rationalisation or merger, which could both mean closure—or that it will simply mean closure. We are really concerned. We want some guarantees from the Minister that that will not happen in an area where the provision is much needed.

[Mr Marsden]

My hon. Friend repeats the eloquence that he and colleagues have displayed throughout the debate. Indeed, the questions he puts are essential, because what we have seen from the Government has been a continual process of cuts to funding both in-year and outside of it. An important point was made earlier about the inability to adjust in such a period of time. There has also been a lack of promotional budget for traineeships; cuts in the adult skills budgets, where the Government are still trying to find £360 million of efficiencies and savings; and the scrapping of the education maintenance allowance to which many colleagues have referred.

I am afraid that that theme continues, with the scrapping of higher education maintenance grants for some of the most disadvantaged students, which are crucial to many colleges in the north-east. I have looked at figures that show that will affect 380 students at Cleveland College of Art and Design, 377 at New College Durham and more than 50 at Bishop Auckland College—that is not to mention those at Northumberland, Tyne Metropolitan, Newcastle College and Newcastle Sixth Form College. Therefore a large number of colleges will be affected.

While all of that is going on, we have seen the Minister and the Government set timescales for the area reviews at unrealistic levels. The arbitrary nature of the way in which the reviews are being carried out does not point to a happy outcome, which is why in December the Public Accounts Committee expressed its concern that that will not deliver a more robust and sustainable further education sector. It said that

“The departments appear to see the national programme of area-based reviews, which they announced in July 2015, as a fix-all solution to the sector’s problems. But the reviews have the potential to be haphazard”.

That is rather understating it. On the basis of what we have seen and heard so far today, the words “bull” and “china shop” come to mind.

Colleges across the north-east have done great work to support not just young people, but older people in gaining skills and we have heard how vital they are to the sub-regional economy. That is why we cannot afford to see the Government’s area reviews damaging the link between colleges and businesses or the many decent networks of colleges and schools in the area. As I said to The Times Educational Supplement in October,

“FE is all about getting students”—

especially local people—

“into work in the local economy.”

However, the area reviews risk undoing all that hard work. In view of the potential for combined authorities in the north-east that may wish to take on skills, education and training powers, over-centralised, Whitehall-led area decisions taken now could hamper their ability to do so effectively. That is particularly the case for adult skills and community learning budgets, which are the ones most likely to be devolved under any combined authority umbrella settlement.

Reports from the many parties that have run reviews have raised concerns that there is no clear process for making difficult decisions. My hon. Friend the Member for Scunthorpe (Nic Dakin), who is a former FE principal, expressed that view to FE Week in October. The steering groups look unwieldy and the reviews do not have to involve all post-16 providers. I am also concerned that groups of 25 are far too large. I would like the Minister to respond to those points.

We know that there are issues of financial inadequacy. The National Audit Office’s report shows that 29 colleges were inadequate in 2013 and that will rise to about 70 in 2015-16. That is a consequence of the many errors and failures of the previous Government, which have been continued by this Government. For many people, the idea that we have one law for sixth-forms and FE colleges and another for schools, academies and free school sixth-forms who are not participating in the process or affected by it, beggars belief. If the reviews were about the quality of teaching and maximising FE colleges’ apprenticeships and outreach in the community, surely they should include all education and training providers. That point was made by Susan Pember, who was a distinguished civil servant in the Minister’s Department until not so long ago. As Martin Doel from the Association of Colleges and others have said, it is illogical that the process should continue without them.

All of the concerns raised have been highlighted in our discussion and it is imperative, as we have heard, that the local geography and economic conditions are taken into account in such reviews. In the north-east, as my hon. Friend the Member for Bishop Auckland demonstrated, the changes may be very harmful to the social fabric and social mobility of young people.

It is interesting that when the ideas for mergers and so on came to the Minister’s distinguished predecessor as Minister for Skills, the right hon. Member for South Holland and The Deepings (Mr Hayes), I am led to believe that he quietly shooed them away. He did that for a good reason, because he represents a rural constituency and therefore he knew well what some of the problems would be. The area reviews look set to force shotgun marriages on many colleges, with closures and mergers being put ahead of geography and economic sense.

It is also a pity, as my hon. Friends have said, that there has not been a broader role for learners, trade unions and the whole range of people affected by the changes. The National Union of Students has taken its own initiative and convened roundtables to mirror some of the reviews. An early report from its area review in the Tees Valley says:

“The travel infrastructure across Tees Valley needs to be improved significantly, particularly if learners are expected to travel further. At the moment, many colleges have to put on buses to enable students to come to college. With funding cuts and potential for a wider catchment of learners, this is not a sustainable model.”

It also mentioned an issue that we have not touched on today:

“We have significant concerns about the future of student support services, such as counselling, pastoral care and childcare, which are vital for widening access…and a commitment to ongoing support for disabled students…with physical and learning disabilities.”

My hon. Friend the Member for Stockton North (Alex Cunningham) mentioned the potential costs. Although the Minister said yesterday that he did not want such things to happen, we all know about the law of unintended consequences, so I hope that, if he does not answer that point today, he will write specifically to hon. Members to explain who will pay.

The truth of the matter is that all of the colleges we have heard about play a crucial role in partnering with businesses to provide the training and skills needed for the future in the north-east. We have seen that in the examples given and I could list many more, but I do not wish to add to those amply provided by my colleagues. We need to see the potential skills shortages and careers advice issue addressed, because they are crucial to sustaining those colleges. I was interested to see the recent Newcastle City Council taskforce report, which criticised standards as being inconsistent.

The experience of careers advice and training falls short not just in the north-east but across the country, yet the Government have continued their cuts, restricting the support it is possible to give young people. Just yesterday in the Chamber, the Secretary of State had no answer to my question on the adequacy of limited funding and volunteers for a national careers service and the area reviews may do little to help and plenty to hinder promoting FE in careers advice.

Critically, we cannot afford to let talented and skilled young people, and older ones, fall by the wayside because their colleges have closed and the funding is not there to develop the skills needed to boost regional and sub-regional economies. The Government’s area reviews, as they stand at the moment, are littered with problems and miss key components—they are simply a cost-cutting exercise. As we have heard, FE in the north-east is vital to improving the regional economy, so the Government must ensure that closures, mergers and cost-cuttings do not take place and do not destabilise the balance between education and work and that students do not lose the opportunity to go to a college near them. Otherwise, the Minister is in danger of presiding over a series of dysfunctional Rubik’s cube processes, which could do permanent damage to local economies and learners’ life chances in the north-east and elsewhere.

15:39

[The Minister for Skills (Nick Boles)]

It is a great pleasure to serve under your chairmanship, Sir Edward. I congratulate and, indeed, thank the hon. Member for Bishop Auckland (Helen Goodman) for securing the debate because I hope that it gives me an opportunity to reassure her on a number of points.

The hon. Lady said that the process of area reviews is destabilising colleges in the north-east. What destabilises colleges in not only the north-east but across the country is the Labour party holding an Opposition day debate in advance of the spending review and declaring that further education budgets will be cut by between 25% and 40%. Of course, what we actually saw in the spending review was a protection in flat cash terms of both the adult and community learning budgets and the funding rate for 16 to 19-year-olds—something that nobody in the college sector, the Opposition or anywhere else had predicted.

What also destabilises is hearing a series of speeches—with a few honourable exceptions, which I will come back to—from Members in which they wave appalling prospects of forced closures and people having to trudge hundreds of miles through the snow to get to a course, when absolutely nothing could be further from the truth and when they have literally no evidence at all for any of the fears they are trying to awake.

There are two approaches to opposition. The first is the approach that was admirably modelled by the hon. Members for Darlington (Jenny Chapman) and for Newcastle upon Tyne North (Catherine McKinnell), who said that she, in principle, could support the idea of an area review if it was genuinely intended to create stronger institutions that would be better able to supply the skills training required to meet the region’s skills needs. We also heard constructive suggestions from the hon. Member for Newcastle upon Tyne Central (Chi Onwurah), who has now left. However, I would say to the other Opposition Members that it does nothing at all for their colleges or the students who they claim to represent to terrify them into thinking that the Government are somehow slashing budgets when we are not or closing institutions when there is no proposal to do so.

[Mr Marsden]

rose—

[Helen Goodman]

Will the Minister give way?

[Nick Boles]

No, I am not going to give way. I am going to move on—[Interruption.]

[Sir Edward Leigh (in the Chair)]

Order. The Minister has intimated that he is not giving way, and I am afraid we have to listen to him quietly. It may be difficult, but Members must calm down.

[Nick Boles]

Hon. Members have asked a great many questions, and I want to try to answer as many as I can.

First, as well as seeming to think that my own educational background was a subject of interest for the debate, the hon. Member for Bishop Auckland suggested that I have no understanding of rural areas and the issues they face. I point out to her and the hon. Member for Blackpool South (Mr Marsden) that the constituency of South Holland and The Deepings neighbours—indeed, borders—my own. Your constituency, Sir Edward, also does. I, too, have a very rural constituency. I, too, have a constituency in which there are three towns that are more than 20 miles apart, so I entirely understand the issues. I am afraid that in Lincolnshire, fine and wonderful county though it is, we probably do not have much better public transport between towns than in the north-east, so to suggest that I have somehow brought an urban or south-east view to area reviews is ludicrous.

Secondly, the whole point about area reviews is that they are locally based. They are run locally, with local colleges taking these decisions. We of course accept that for the lower level of training in particular—level 1, 2 and 3 training—it is simply impossible to expect people to travel significant distances if we want them to continue in education. We do want them to continue in education, so we will absolutely not be looking to do that.

Opposition Members might want to ask themselves why the great and much admired Newcastle College is able to do so well. One reason is that it is big. In a single year, it secures £38 million of grant funding from the Skills Funding Agency alone, whereas many other colleges in the north-east receive £2 million, £3 million, £4 million or £5 million. “Merger” does not necessarily mean the closure of sites. In fact, what makes the closure of a site much more likely is a small, financially challenged institution that simply cannot cope with the overhead costs of running a college for very low volumes of training—

[Mr Kevan Jones]

rose—

[Alex Cunningham]

Will the Minister give way?

[Nick Boles]

I will not give way. I am answering all Opposition Members’ questions—[Interruption.]

[Sir Edward Leigh (in the Chair)]

Order.

[Nick Boles]

I will now move on to funding. With many of the Opposition Members here today having participated in that Opposition day debate in which they frightened their constituents and mine with the prospect of a 25% to 40% cut, I hoped that I might hear one word of welcome for the fact that the Chancellor was able to guarantee that the adult and community learning budget will be protected in flat cash terms throughout the spending review period—that is, until 2019-20—and that the 16-to-19 funding rate will also remain flat at £4,000 until 2019-20. Opposition Members predicted a 25% to 40% cut. We, through managing the economy responsibly, have secured funding stability, which I know their colleges welcome.

The hon. Member for Hartlepool (Mr Wright), as always, asked some important and serious follow-up questions, with the slight advantage of having quizzed me yesterday for an hour and a half. I will try to answer them, though they are not directly on the theme of area reviews. The change in the nature of apprenticeship funding is, of course, a critical element in looking at the future of any college’s finances. I hope that he will welcome, endorse and help to go out and spread this message. Currently, across the country, colleges secure only 30% of all the funding for apprenticeship training. The rest—two thirds—goes to private training providers. We all believe that private training providers have an important role to play, and none of us wants to fix the market for colleges, but I hope that he and other hon. Members will join me in urging colleges to set themselves the ambition of winning two thirds of that funding.

Colleges are incredibly well placed to provide training for apprenticeships, as many colleges in the north-east already do. It will be a significantly expanding budget. The apprenticeship levy, about which the hon. Gentleman has some understandable concerns, will increase apprenticeship funding in England to £2.6 billion by the end of this Parliament. Between 2010 and 2020, apprenticeship funding in this country will have doubled. What other education budget will have doubled in that period? That is a dramatic shift. Colleges are fantastically well placed to take advantage of that funding, and I hope that we can work together to ensure that more of them secure it.

The hon. Member for Bishop Auckland asked an important question about the interaction between the new apprenticeship levy and the Construction Industry Training Board levy. She is right to say that the CITB has the support of the industry, but she is perhaps a little over-generous to say that the scheme is not broke. The reality is that our construction industry yet again has gone straight from feast to famine and suddenly finds that it does not have the skills it needs, so something is not quite working in the provision of skilled labour. I am sure that that is as true in her constituency as it is elsewhere in the country.

We have made very clear to the industry and, indeed, to the CITB that it will be for the industry to decide how it wants to combine the two levies. It may well be possible to devise a solution whereby one levy is effectively netted off against the other, so that no individual levy payer pays twice but we continue to provide support. The CITB levy, as the hon. Lady will be well aware, will cover more employers than the apprenticeship levy. She has my commitment that we will work with the industry to ensure the two levies work well alongside each other.

A question was asked about the devolution settlements and whether the funding that might be devolved will be ring-fenced. Hon. Members will be aware that we have already devolved capital funding to local enterprise partnerships in relation to skills. That funding is not ring-fenced; it goes into the single capital pot that the partnerships have. I hope that Members will be reassured to know that even as adult skills funding starts to be devolved to areas that have secured devolution deals, local authorities in those areas will still be subject to the same statutory requirements to provide certain skills for free to certain members of the population. Local authorities might not have a ring-fenced budget, but they absolutely will have a statutory duty to meet that provision, as they do in relation to social services and all sorts of other services. I am sure that hon. Members will know from their own experience that local authorities take such statutory duties very seriously indeed.

The hon. Member for Darlington raised an interesting point and was the only person really to get into what she called the jungle of qualifications. I agree with her; it is often a baffling sea to any 16-year-old who comes in, seeking a set of courses to take them to a career. I hope that she will welcome and contribute to the review being conducted by a former Labour Minister, Lord Sainsbury. He is looking into constructing slightly clearer and more directive routes for technical and professional education, so that from the age of 16, young people are given a clear sense of what will actually take them into a job.

Finally, I come back to area reviews, which are the real subject of the debate. It is very important to understand and underline that colleges are independent institutions. We simply do not have the power, nor do we want to have the power, to tell them to merge, close or do any such thing. That is why—

[Several hon. Members rose—]

[Nick Boles]

I am not going to give way when I am in the middle of explaining something. That is why, of course, we have set up these reviews as being locally based and driven by the colleges. Of course, there is input from the Skills Funding Agency, because there is a great deal of expertise and because the Skills Funding Agency and the Education Funding Agency are the major sources of their financing. Frankly, however, many colleges—not least Newcastle College—also get a lot of funding independently, and quite right, too. They get it from business and do not need to look to the Government to tell them what their future is. We have invited all these colleges to work together and come up with a solution that will make them all more robust and more sustainable. It seems extraordinary to me that Opposition Members do not believe that any change could be positive.

[Several hon. Members rose—]

[Nick Boles]

Opposition Members just simply assume that every potential change is a threat and is somehow going to close a vital—

[Mr Marsden]

On a point of order, Sir Edward. You will observe that we have a considerable amount of time for the Minister to answer interventions, but he has refused to take any. Is it in order for him to do so, or is it just simply impolite not to?

[Sir Edward Leigh (in the Chair)]

It is certainly in order for him to decide whether to take interventions. Whether it is polite or impolite is for others to judge.

[Nick Boles]

Thank you very much, Sir Edward, for confirming my understanding of Standing Orders. I just want to conclude by reassuring hon. Members—[Interruption.] I just want to conclude my argument by reassuring hon. Members that area reviews are not top-down impositions. They are not going to come up—

[Mr Kevan Jones]

On a point of order, Sir Edward. I have never seen a Minister fail to accept any interventions. When time is not on a Minister’s side, it is fair not to, but we have eight minutes left and he has refused to have any Opposition Members challenge him on anything he has said, which is absolutely outrageous.

[Sir Edward Leigh (in the Chair)]

Well, that is not a point of order, but there we are.

[Nick Boles]

I hoped that Opposition Members would understand that, when I said that I wanted to conclude my argument, that was slightly different from saying that I wanted to conclude my speech. I will be happy to take some interventions when I have concluded the argument that area reviews are not going to be centrally imposed solutions. They are locally generated solutions that will provide a prospect for every college—about which Opposition Members have spoken in such glowing terms—to do an even better job in the future of providing vital technical skills to their young people.

I will start, if I may, by taking an intervention from the hon. Member for Bishop Auckland, given that she secured the debate, and I am happy to use the rest of the time to take further interventions.

[Sir Edward Leigh (in the Chair)]

I was going to call the hon. Lady to wind up at the end if she wants to, so does she want to let others come in first?

[Helen Goodman]

Okay, I will wind up afterwards.

[Nick Boles]

In which case, I am happy to give way to the hon. Member for Stockton North (Alex Cunningham).

[Alex Cunningham]

The Minister has not addressed the issue that I raised with him yesterday, which has been raised again today, about the banking fees that merging colleges will ultimately face as a result of any mergers that take place. They will run into millions of pounds across the country. What action will he take either to influence the banks or to ensure that those costs do not lie at the doors of colleges and that they get the benefit of any mergers that go ahead?

[Nick Boles]

I am glad that the hon. Gentleman has asked the question again. He is right, of course, that sometimes when there are changes to banking arrangements, fees arise, but those will be visible and transparent, and a college will only undertake an operation that might trigger those fees if it considers that, overall, doing so is in its interest. He will be aware that the Chancellor made it clear in the spending review process that there will be a facility to provide transitional funding for the implementation of area reviews. We will have access to that facility if we need it to support, for instance, a merger or some other arrangement; but ultimately, we will only support such a merger or arrangement if the colleges believe that it is worth doing, even if there are some transitional transaction fees. I hope that helps a little.

[Mr Kevan Jones]

I am glad that, despite the Minister’s arrogance, he has been shamed into accepting interventions. He is trying to portray the north-east colleges as somehow stuck in the mud and not wanting to change. I assure him, however, that he could not meet a more dynamic set of leaders who actually want change. I want to ask him specifically about the point I raised on the specialist employment service. Although I accept that that is a Department for Work and Pensions responsibility, will he assure me that he will raise it with his colleagues at the DWP?

[Nick Boles]

Of course, I am very happy to raise that with DWP colleagues; I regularly meet the Minister for Employment and actually I will meet the Under-Secretary of State for Disabled People soon. May I just make it clear on the record that at no time have I suggested that colleges in the north-east are stick-in-the-muds? Indeed, I have singled out several as exemplar colleges. I absolutely have said that some Labour Members who have spoken in the debate seem to be stick-in-the-muds and attached to defending existing arrangements, and I happy to repeat that claim.

[Mr Jones]

What the Minister is highlighting is that it seems as though he has made up his mind what he wants: he thinks big is beautiful. He rightly argues, as I said in my contribution, that Newcastle College is a good, forward-looking institution, but he clearly wants large colleges with satellites. That is not what local colleges in the region want; they want to co-operate with one another, so I am sorry, but he is being disingenuous if he is suggesting that he has somehow not made his mind up even before he started this review.

[Sir Edward Leigh (in the Chair)]

Order. Will the Minister give Helen Goodman a couple of minutes to wind up, please?

[Nick Boles]

Of course I will. I just want to give any other hon. Member the opportunity to intervene, Sir Edward. They seem to be very keen to intervene—but perhaps less keen now.

15:57

[Helen Goodman]

First, the Minister began his remarks by suggesting that some of us who spoke in this debate were scaremongering and that we had no evidence to suggest that options coming out of the reviews might include the closure of institutions. That is not the case. It was his document, “Reviewing post-16 education and training institutions: guidance on area reviews”—published on 8 September 2015, when he was the Minister—that floated that option. That is what people have noticed.

Secondly, the Minister knows perfectly well—he is an extremely well-informed man—that flat cash means real-terms cuts. That is what we have pointed out.

Thirdly, I asked the Minister why he thought it was right that the capitation was lowest in FE, as compared with universities and, of course, with sixth-form colleges. If this country is going to continue to develop a high level of technical expertise and manufacturing, we need to put more money into this kind of education, which needs small groups and high-quality equipment to teach these young people.

Question put and agreed to.

Resolved,

That this House has considered further education colleges in the North East.

15:59

Sitting suspended.

Merseyside Fire and Rescue Service

Tuesday 26th January 2016 Westminster Hall

[Mr Philip Hollobone in the Chair]

16:30

[Margaret Greenwood (Wirral West) (Lab)]

I beg to move,

That this House has considered the funding of Merseyside Fire and Rescue Service.

Sitting suspended for Divisions in the House.

17:00

On resuming—

[Margaret Greenwood]

It is an honour to serve under your chairmanship, Mr Hollobone, and I am so pleased to have secured this debate this afternoon on the future of Merseyside fire and rescue service.

I begin by congratulating Merseyside fire and rescue service on its response to the floods right across the north of England this winter. It was able to provide that response because it makes such a positive contribution to national resilience, and I think we would all agree that we would like to see that contribution continue.

Merseyside fire and rescue service has been at the receiving end of severe cuts from central Government since 2011 and it faces further damaging cuts under the current Government. The cuts have led to fire station closures, a reduction in the number of fire engines and the loss of firefighter posts. The situation is a serious one and so I would like to describe these cuts in some detail today.

We all rely on the emergency services to be there should we need them. The work of firefighters is heroic. They enter burning buildings to rescue people who are in extreme peril, and who are terrified, exhausted or unconscious. That is the work that our firefighters do. They are brave people who put their own lives at risk to save the lives of others and I am sure that the Minister himself understands that, because of course he was himself once a firefighter. Firefighters are highly valued public servants.

In Merseyside during 2014-15, there were 582 rescues from all incidents; a rescue was carried out by Merseyside firefighters once every 15 hours. Their value cannot be in doubt. So it is important that we do what we can to ensure that firefighters can carry out their work in as safe an environment as possible. That is the very least that we owe them.

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

I congratulate my hon. Friend on securing this very important debate. Does she share my concern that by 2020 there could be a cut of around 41% in the number of Merseyside firefighters in this vital emergency service?

[Margaret Greenwood]

I thank my hon. Friend for making that really important point, which I will return to. She is absolutely right. A cut of 41% in any workforce would add stress, but in an environment such as firefighting the resulting stress would be an unacceptable one to place upon firefighters.

With these points in mind, I will set out the scale of the cuts that the service has suffered since 2011 and their impact. I will then turn to the further cuts that were announced in December last year by the Government, and their implications, and I will ask the Minister to consider what all this means for Merseyside fire and rescue service.

Looking at the cuts from 2011-12 to 2015-16, we see that Merseyside fire and rescue service had a total cut from central Government of 32%, which is a huge and damaging cut. Like other metropolitan authorities, Merseyside relies to a much greater degree on its central Government grant than do county combined authorities such as Buckinghamshire. In 2010-11, Merseyside received 63% of its funding from its Government grant. Clearly, when the Government grant is cut, Merseyside receives a disproportionate cut in overall funding.

From 2011-12 to 2015-16, the cuts resulted in Merseyside fire and rescue service having to make £26 million worth of savings. What that meant on the ground is that we have lost nearly 300 firefighters, which is a cut of 31%; we have lost nearly 150 support staff, fire prevention and protection staff, and management staff, which is a cut of 35%; and we have had a 21% cut in our control staff, whose numbers are down from 42 to 33.

Cuts from central Government have also led to cuts in the number of fire engines on Merseyside, and in this respect the numbers are staggering. Back in 2011, we had 42 fire engines; we now have just 28, which is a cut of 33%. That cut has also led to a cut in the number of fire stations. On Merseyside, we are losing four fire stations as we go down from 26 to 22, which is a cut of 15%.

In my constituency of Wirral West, we currently have two fire stations—one at Upton and the other at West Kirby. Both are due to close and my constituents will no longer have their own fire stations but instead will be reliant on fire engines arriving from a neighbouring constituency. That will lead to longer response times, particularly into West Kirby and Hoylake, which are important urban centres. I am extremely concerned about this situation. Merseyside’s chief fire officer, Dan Stephens, has described the closure of those two stations, to be replaced by one station at Saughall Massie, as “the least worst option”. Clearly, that is not a ringing endorsement. The situation is far from ideal.

The loss of firefighters, fire engines and fire stations has led to an increase in response times across Merseyside over the five-year period from 2011 to 2016. Most notably, the response times of the second fire engine to attend incidents have increased by up to three minutes. That is worrying, because the crew of the first fire engine to arrive at an incident have to assess whether to carry out a search for people or to tackle the blaze. The arrival of the second fire engine is crucial, because with two crews the service can both tackle the blaze and carry out search and rescue. The Minister knows that minutes cost lives in a fire and that any increase in response times increases the risk of loss of life.

[Ian Lavery (Wansbeck) (Lab)]

The number of fire deaths is often misrepresented, but the facts and figures with regard to Merseyside are that in 2011-12 there were five fire deaths; in the year 2014-15, there was a doubling of that number to 10; and the indications are that the number could even treble in the next year or so. Does my hon. Friend share my deep concerns about this situation?

[Margaret Greenwood]

I thank my hon. Friend for that really important point, because of course someone might say that five is a small number—of course, every life matters—but when we see a trend such as that one it is significant. We also have to consider the wider trauma that is suffered, because of course one person who dies in a fire may have many relatives and children, and so the trauma is not just restricted to that one person. This is a very serious situation.

In addition to the increased risks to the public that we are seeing, we must also bear in mind what these cuts mean to the fire crews themselves. When a firefighter is committed to an incident wearing breathing apparatus, the length of time that they spend dealing with that incident and the activity that they undertake will have a bearing on the length of time they will need to recover away from the area of danger before they can be recommitted. Each time a firefighter wears breathing apparatus at an incident, the potential risk that they face increases, because of the amount of time they are exposed to hazards and the physical efforts of repeated use of breathing apparatus.

The speed at which other fire appliances arrive to provide additional crew in breathing apparatus is crucial to reducing the risk to firefighters and to providing an effective firefighting response. Dan Stephens, the chief fire officer of Merseyside fire and rescue service, has given his view of the impacts of the cuts so far. He says, “The reduction of appliance numbers resulting from the cuts to the Merseyside fire and rescue authority budget have increased response times for the first and subsequent appliances to life-risk incidents. The reduction in appliances has also impacted on the number of crews that can be released for risk-critical training and exercises on any given shift. The organisational capacity to undertake community safety interventions such as home fire safety checks has also been significantly reduced.” It is important that we take notice of the chief fire officer’s analysis of the situation that the cuts have given rise to.

[Mr George Howarth (Knowsley) (Lab)]

I am very grateful to my hon. Friend both for her good fortune in securing this debate and for the powerful way in which she is making her case. Does she agree that given the weight of the problem that she has described, it would be appropriate for the Government to treat the fire and rescue service in the same way that they have treated the police, which is to say there should be no further cuts to the fire and rescue service?

[Margaret Greenwood]

I thank my right hon. Friend for that excellent point, and I absolutely agree with it.

As though all that has happened from 2011-12 to 2015-16 was not enough, there are more cuts to come. The future funding settlement announced as part of the local government funding settlement at the end of last year—on 17 December—has left Merseyside fire and rescue service facing a 41.3% cash reduction in the revenue support grant, which is the grant from central Government, over the period from 2016-17 to 2019-20. That equates to approximately a 50% reduction in real terms. Once business rates are added, Merseyside fire and rescue service will see a cut in cash terms of 16%, or between 22% and 25% in real terms if we take inflation into account. Of course, we have to remember that that those cuts are on top of the cuts that the service has already suffered, meaning total cuts of £11 million over the four years. The cuts that are coming our way are likely to lead to the loss of another 10 fire engines, taking the number down from 28 to 18, and the loss of another four or more fire stations.

The overall impact of the cuts delivered and planned for by the coalition Government and the current Government, between April 2011 and March 2020, will be a 41% reduction in the number of firefighters—a loss of about 400—a 46% reduction in the number of support, fire prevention and management staff, to just under 200, and a 21% cut in control staff, bringing their number down from 42 to 33. We can also expect to see the number of fire engines reduced from 42 to 18—a 43% cut.

[Mrs Ellman]

My hon. Friend is generous in giving way again. Does she agree that it is of great credit to Merseyside fire and rescue service that it has maintained such high standards in the face of the cuts? It would be absolutely wrong for the Government to continue their course of action in the knowledge that there would be a calamity in due course.

[Margaret Greenwood]

My hon. Friend makes an excellent point. She is absolutely right that it behoves the Government to take the situation extremely seriously.

The combined numbers for the loss of fire stations mean that we would be down from 26 to 18—a 31% cut. The numbers are shocking, and the scale of the cuts dramatic. Frankly, I find it unbelievable that it is possible to cut the number of firefighters by 41% with no increased risk of loss of life.

[Steve Rotheram (Liverpool, Walton) (Lab)]

My hon. Friend paints a bleak picture of the impact of the cuts. In many ways, Merseyside fire and rescue service is a victim of its own success. It undertook to carry out preventive measures pre-2010, and that had a massive impact on the number of incidents to which it was called out. Last year, fire deaths on Merseyside doubled, but the low point in 2010 was because of those measures. Does my hon. Friend fear that the loss of 300 firefighter posts will have devastating consequences for firefighters’ ability to address the rising number of fire deaths on Merseyside?

[Margaret Greenwood]

I agree with my hon. Friend’s excellent point.

We have already mentioned the increased response times that are so critical when it comes to saving life. Independent consultants Greenstreet Berman suggest that by 2020, should the cuts go ahead, slower response times nationally will mean up to 41 additional deaths at dwelling fires, up to 91 additional deaths at road traffic collisions, up to 57 additional deaths at water incidents and 212 additional deaths at special service incidents. A significant increase in loss of life is predicted, so we must consider too what cuts in staffing on that scale will mean for those left working in the service. Anyone working in an environment that involves teamwork knows full well that the loss of 40% of staff would put pressure on those remaining.

As well as considering the impact on the service’s ability to respond to fires, we must also bear in mind the other essential work that the fire service carries out. In 2015, the Government published the latest edition of the national risk register of civil emergencies, which is the unclassified version of the national risk assessment. The register covers a range of civil emergencies that threaten serious damage to our welfare, the environment and security. A striking number of those threats are matters dealt with by the fire and rescue service, for example terrorist attacks, coastal and inland flooding, storms and gales, low temperatures and heavy snow, heatwaves and severe wild fires, pandemic influenza and other disease outbreaks, major industrial and transport accidents, and public disorder, such as during the civil disturbances of 2011. We must remember that a Government’s first duty is to protect its citizens, and the coalition failed in that duty in 2011, with the riots that took place in London. I happened to be in London at the time, and it was very frightening to be there.

Firefighters in Merseyside continually plan, prepare and train for those kinds of emergencies. Some of the risks posed by such events have increased in recent years, and with climate change many of the risks are likely to increase in the foreseeable future. The Government’s own analysis of flooding incidents responded to by fire and rescue services across England in 2014-15 shows a 15% decrease in the number of such incidents, but I think that we would all agree that this winter we have seen just how important fire and rescue services are in flood incidents, and we have all powerfully been made aware of how unpredictable extreme weather events can be. Merseyside fire and rescue service has supported every major flood event over the past 10 years.

We have to remember too the risk of terrorism. Terrorist incidents are, of course, by their nature unpredictable, but Merseyside fire and rescue must be able to respond to them. For example, it provided a terrorist firearms attack team for the NATO summit in Cardiff.

Other events are highly uncertain and difficult to quantify, and it is impossible to plan for multiple events. Everyone assumes that the fire and rescue service is prepared, equipped and staffed to meet every challenge. The Government’s planning for such risks assumes that sufficient firefighters are available to tackle the emergencies, and that the fire and rescue service in Merseyside is resilient in the face of such threats.

I want to talk a little about the drop in the number of fire incidents. Some have tried to argue that the drop justifies the reduced spending on fire and rescue services. That might have once been the case, but after receiving deep cuts in 2011, Merseyside fire and rescue service should not face any more. The latest round of cuts will adversely affect the service’s ability to carry out crucial fire prevention work in the community, which is particularly important when one considers the age profile of the local population, as in my constituency, for example. Older people suffering from memory loss, mobility issues, sight and hearing loss, and dementia increase the risk of domestic fires. The prevention work carried out by Merseyside fire and rescue service is as important today as it has ever been.

The increase in the number of road traffic incidents, to which the fire service across England has had to respond, should also be borne in mind. The coalition’s cuts to Merseyside fire and rescue service have damaged the service’s ability to respond to fire and a range of other incidents, many of them life-threatening. The cuts announced before Christmas will make matters far worse. The loss of 41% of firefighters, 46% of support, prevention, protection and management staff, and 21% of control staff will put an inacceptable strain on the remaining staff and affect response times. Cuts on that scale could also lead to loss of life.

I have looked but have been unable to find mention in the Conservative party manifesto that the Government intended to make dramatic cuts to essential life-saving services. I welcome a correction from the Minister if I am wrong. I very much doubt that the public will support this level of cuts or that they would be forgiving of such detriment to the service over time.

[Mr George Howarth]

My hon. Friend will be aware that Dan Stephens, the chief fire officer, said today that he believes that there is no capacity to absorb any further cuts. He also said that the situation is exacerbated by our low tax base and that

“the cuts we have sustained to date”

mean that the

“bulk of future savings”

will have

“to come from response”.

Is that not the case in a nutshell? My hon. Friend has described all the consequences—that more people will be at risk, more firefighters will be at risk, more people will lose their lives, more people will be injured and more properties will be destroyed or badly damaged.

[Margaret Greenwood]

My right hon. Friend makes an excellent point. Increasing response times is not an option if we take risk management seriously.

In the spending review, on 25 November, the Chancellor made great play of the fact that there would be no cuts in the police budget and that there would be real-terms protection for police funding. He said:

“The police protect us, and we are going to protect the police.”—[Official Report, 25 November 2015; Vol. 602, c. 1373.]

On closer inspection, the pledge does not look quite as watertight as it did when it was first made, but the U-turn does prompt the question: why are the Government not going to protect firefighters? Moving the responsibility for the fire service from the Department for Communities and Local Government to the Home Office offers the Minister an opportunity to pause, reconsider and drop the cuts, and I urge him to do so.

[Mr Philip Hollobone (in the Chair)]

I will call the Front Benchers at 5.38 pm. They will have 10 minutes each, and Margaret Greenwood will then have two minutes at the end to sum up the debate. We have got between now and 5.38 pm for other contributions. I have two names on the list in front of me—I am happy to take others—of which the first is Conor McGinn.

17:19

[Conor McGinn (St Helens North) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I am grateful to my hon. Friend the Member for Wirral West (Margaret Greenwood) for enabling us to have this important debate. She spoke passionately and outlined in some detail the severe difficulties facing Merseyside fire and rescue service and the fears that its staff, public representatives and the people of Merseyside have for its future. I agree with everything that she said, so I will restrict most of my brief remarks to the impact on my constituency.

Let me say at the outset that I deeply regret the situation that Merseyside fire and rescue service finds itself in as a result of the huge cuts to its budget, which have meant that it has had to reduce significantly the number of firefighters, appliances and stations across the region. I pay tribute to the fire authority and senior management in the service for how they have tried to mitigate the worst effects. I also commend the regional and national leadership of the Fire Brigades Union for how they have worked constructively to protect and defend their members, but also for how they have laid the blame where it truly lies, which is at the feet of this Conservative Government.

Following a consultation last year, it seems likely that St Helens fire station in my constituency will close. Eccleston station, in the constituency of St Helens South and Whiston, will suffer the same fate, with a new station being built to serve an area previously covered by two. This merger, as it has been called, is a bitter blow to those who work at the stations, and there are expected to be 22 job losses. It will also have a hugely negative impact on the local community, who value the station, their firefighters and the prevention and safety work done out of what is colloquially known as Parr station. More fundamentally, it raises questions about the impact on public safety, given the statistics that have already been quoted in this debate—notably the rise in response times and the increase in the number of fatalities across Merseyside, which is above the national average. It is currently proposed that the second fire engine at the new station will be crewed by whole-time retained firefighters, and there are concerns about the potential impact that will have on the already bad response times, especially at periods of high demand.

I am very fond of the Minister, but there is a pattern here. Over the past five years, £20 million has been taken from Merseyside fire and rescue authority, with a further £6.3 million to be found this financial year. My local council in St Helens will have had its budget halved by 2020. A planned new police station in Newton-le-Willows is now unlikely to be built, and St Helens courthouse is under threat of closure. The Tory Government call that savings. I call it theft. They are taking from the people of St Helens, Merseyside and the north-west of England what is rightfully theirs: their public services.

[Steve Rotheram]

My hon. Friend makes a powerful point on the cumulative impact not just of the cuts to the Merseyside fire and rescue service, but of the cuts to local authorities in our area. Does he agree that it is a targeted ideology of the Government to hit the poorest areas hardest? Unfortunately, Liverpool City Council has had a 52% cut, which is disproportionate to the cuts in other areas, such as Witney in Oxfordshire, which is the Prime Minister’s seat.

[Conor McGinn]

It certainly seems that way. Public services are not optional; they belong to the people of this country and the people of St Helens, Merseyside and the north-west of England. Those public services have been paid for by their taxes, built by their hands and staffed by their hard work. Firefighters and their families represent all that is best about our public services and communities. The Opposition will stand by them, as they have so often stood by us.

17:24

[Liz McInnes (Heywood and Middleton) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Wirral West (Margaret Greenwood) for securing this important debate. She is right to highlight the cuts to Merseyside fire and rescue service and to the six metropolitan fire and rescue authorities in general. They have borne the brunt of budgetary reductions between 2010-11 and 2015-16. My constituency is served by the Greater Manchester fire and rescue authority, which like its metropolitan sister in Merseyside is facing massive cuts that cannot mean anything other than a drastic reduction in its services. Following the local government settlement, Greater Manchester fire and rescue authority will have to cut £15.8 million from its budget by 2020, with a massive £12.6 million reduction in the first two years alone.

Today the Government announced greater collaboration with the other emergency services, but Greater Manchester already has numerous collaborative projects, which include a national flagship station at Irlam that includes police, fire and ambulance, and the development of the UK’s first safe and well assessments, which focus on health and crime prevention as well as fire safety and prevention. It is the first fire and rescue service in the UK to have all front-line firefighters and resources responding to cardiac arrests on behalf of the local ambulance service. It is also building a joint fire and ambulance station in Wigan; providing offices to Greater Manchester police in Stockport, Stalybridge and Mossley; launching the community risk intervention team to support Greater Manchester police and health services; opening prevention hubs with Greater Manchester police and Salford City Council to support troubled families; and developing and delivering joint realistic multi-agency public disorder training.

The Government announced joint working with the police with a lot of fanfare, but I put it to the Minister that it is already going on. A further cut of £15.8 million will undoubtedly have an impact on the projects I have just outlined and will serve to limit the type of joint working that the Greater Manchester fire and rescue service has done so successfully with the police and other agencies. That is surely a retrograde step, given today’s announcement.

Since 2009-10, Greater Manchester fire and rescue authority has saved £28 million, which amounts to a 25% reduction in budget. Similarly to Merseyside fire and rescue service, that has been achieved through cutting the numbers of firefighters; cutting support staff and senior management; revisions to firefighter shifts and crewing arrangements; increased collaboration with other services, as I have already outlined; and improved procurement, among many other savings. With those steps already taken, a further cut of £15.8 million will require an unacceptable reduction in the fire and rescue cover that the service can provide. The scale of the new cuts will require the loss of a further 312 firefighter posts and the reduction of night-time cover from 56 fire engines to 33, meaning that Bury, Stockport and Trafford will have only one engine that is immediately available. The cuts will reduce front-line firefighters to 1,000 by 2019. In 1996, the authority had more than 2,000 firefighters. Fewer firefighters means fewer crewed-up fire engines being immediately available. As other Members have outlined, the consequence is that it will take longer to get to incidents and fires will spread more extensively.

Greater Manchester fire service has delivered more than 425,000 home visits and reduced fires by 42% over the past six years, but the trend of reduced incidents is now levelling off and in some places reversing. Between July and September last year, special service calls, such as road traffic collisions and flood responses, rose by 28% compared with the same period in the previous year. The numbers of non-domestic fires, accidental house fires and fire casualties have also increased. Further cuts will have an impact on preventive work, resulting in increased risk, more fires and more casualties.

On Boxing day last year, two thirds of Greater Manchester fire and rescue service’s available resources were deployed to provide flood rescue response across the county. Firefighters rescued nearly 1,000 people in less than 24 hours. Future incidents of that size will leave large parts of Greater Manchester with no fire and rescue cover. The Fire and Rescue Services Act 2004 does not place a statutory duty on fire services to respond to flooding, and Greater Manchester fire and rescue service will be unable to maintain its current levels of response to flooding following a further £15.8 million in cuts.

Greater Manchester fire and rescue service is one of the most innovative brigades in the country. As we go forward into a devolved administration in Manchester, our communities should have the power to decide the type of fire and rescue service that they need. Cost-benefit analysis shows that for every £1 invested in firefighter provision in Greater Manchester, £18 is returned in benefits to the local economy—a contribution of £1.27 billion in 2014 alone. I urge the Government to take note of those figures and ask themselves whether further cuts to our fire and rescue services are a false economy. If the answer is yes, which I believe it is, the Government must think again before they put short-term financial savings ahead of public safety.

17:31

[Peter Dowd (Bootle) (Lab)]

I am pleased to speak under your stewardship, Mr Hollobone, and I congratulate my hon. Friend the Member for Wirral West (Margaret Greenwood) on securing this important debate.

As a former chair of Merseyside fire and rescue service, I feel I have a little knowledge—some would say very little knowledge—of the area that it serves. As a former Fire Minister, my right hon. Friend the Member for Knowsley (Mr Howarth) also shares significant knowledge of the service. The headquarters of the fire service is in my Bootle constituency. I visited the service HQ only a few weeks ago, and I am pleased to say that there is a jointly located command and control centre, shared with the police. That was an initiative taken and implemented without Government diktat, so Merseyside is already ahead of the curve in that regard. Discussions have also taken place to one degree or another with the ambulance service over the potential relocation of its control centre within the Merseyside fire service.

The service has excellent partnership arrangements with the police and local authorities, and, over the years, has developed excellent relations with community groups, voluntary organisations and the faith sector. It is no easy task to go out and make contact day in and day out to build up relationships with those organisations, and they respond constructively and positively.

Merseyside fire and rescue service can truly claim to be an integrated partner within the various communities that go to make up Merseyside. In addition, its relationships with the business community are absolutely second to none. Put simply, Merseyside has an excellent service that has a record of being proactive—in that, too, it is second to none. Over the years it has not only responded in the physical sense to actual fires, but has been responsive in ensuring that prevention has been at the top of its agenda. That takes time, determination and both financial and human resources, which are incrementally disappearing.

Merseyside fire and rescue service has risen to the financial challenge, albeit an unfair one, that the Government have set it over the past five years. Merseyside is a diverse community. It has a major river running through it, with two strategic road tunnels running beneath. It has major dock estates on both sides of the river and a burgeoning cruise terminal, with a major expansion of the Seaforth dock under way. It has an airport, two universities and major regional, national and international hospitals of repute within its care. It has two excellent football teams, in addition to Liverpool FC. It also has Aintree racecourse, which hosts one of the largest horse-racing events in the world. Meanwhile, Merseyside fire and rescue service has brought down the number of fires over the years with an innovative fire prevention strategy. The number of deaths and injuries have gone down to remarkably low levels, and that excellent record is in jeopardy. There is no doubt about that at all. It has done all that without kicking up a fuss and under great financial pressure, but that can go on only for so long without having serious effects on the resilience of the service.

The six metropolitan authorities, out of a total of 46 services, accounted for 57% of the budgetary reduction in the service as a whole between 2011 and 2013. Little is changing under the Government’s proposals; in fact, it is getting worse. During the same period, Merseyside fire and rescue service’s budget was cut by 13%—one of the highest cuts, and double the average—while others received increases. That is simply not fair and not equitable, and it is on top of all other the major cuts to local government services across the region over the past few years, which my right hon. and hon. Friends have mentioned. Put simply, that financial inequity is wrong, particularly when lives and livelihoods are at risk. The Government really have to think again.

17:36

[Lyn Brown (West Ham) (Lab)]

As we have heard, and as the figures that I have show, the Merseyside service faces a 41% cut in the support it will get from the Government over the next five years. It is calculated that that means it is likely to shrivel from 962 firefighters in 2011 to 564 in 2020, almost halving its firefighting workforce. Fire engines have been depleted from 42 to 28—it is possible that another 10 engines are to go—and four of Merseyside’s 26 stations have closed, with another eight under threat. It is a really dramatic cut in front-line services by anybody’s measures.

My hon. Friend the Member for Wirral West (Margaret Greenwood) made an excellent speech, supported by the other Merseyside MPs. She was absolutely right to bring the subject to the House’s attention and to seek to get the Government to understand, even at this very late stage, just what these cuts mean to our constituencies and constituents. It is not just Merseyside—other fire services have been hit hard, with a 15.6% reduction in the cash budgets of metropolitan services and a reduction of 5.9% for non-metropolitan services. As the National Audit Office has said:

“Spending power has fallen most in areas assessed by the Department as having highest levels of…need.”

There are likely to be more incidents in areas of the highest need, as the Minister knows only too well. It is in the cities—in poorer metropolitan areas just like Merseyside—that fires are most likely to happen and to cause the most damage. Spending forecasts show that the trend is likely to continue. According to the House of Commons Library, metropolitan services are going to lose more spending power than combined county services, which means that services such as Merseyside’s will continue to face the toughest cash squeeze. Where is the risk-based allocation that used to inform Government spending on fire services?

Since 2010, our fire and rescue service has had to deal with year-on-year cuts totalling an estimated £236 million—about 22.5% of its overall Government funding—and a further 8.8% this year alone. That has led to real reductions on the frontline. We have 5,000 fewer firefighters in England than we had in 2010. I travelled around the country earlier this year—I was the shadow Fire Minister prior to the election—and I talked to people at both metropolitan and non-metropolitan services. Some of them told me that their services would not be viable in the future. Those words chilled me, as they should chill the Minister.

Those who see logic in slashing fire budgets seem to believe that as there are now fewer fires it is safe to have a depleted fire service, but that argument is utterly specious. It completely disregards other important services that firefighters provide in key areas such as flood fighting, terrorism and others that we have heard about today. As my hon. Friend the Member for Wirral West said, a key factor in the smaller number of fires is the 670,000 home fire safety checks that the fire service carries out every year. Since 2004, when the checks began in earnest, the proportion of homes with fire alarms has increased from 74% to 88%. Those checks save lives as well as preventing fires—double the number of fatalities happen when a fire occurs in a building without a smoke alarm. To cut the fire service because the number of fire incidents has been reduced successfully, saving lives in the process, would be like cutting the number of mammograms because the number of deaths from breast cancer is going down. It is complete madness.

We should therefore be in no doubt that the cuts faced by services such as Merseyside will put the public at greater risk. Indeed, as we heard earlier, the independent consultants Greenstreet Berman suggest that by 2020, slower response times nationally—they are now at their worst level for 20 years—could lead to more than 100 additional deaths a year. The cuts may well lead to the Government failing in their first duty: to keep the public safe.

Fire deaths in Merseyside have already increased over the past five years of cuts. I know we are dealing with small numbers at the local level, so I do not want to talk about percentages because they can be totally misleading, but the trend concerns me deeply, as it should concern the Minister.

The funding cuts faced by the Merseyside fire service and other beleaguered services are all the more difficult to manage because the Government have consistently shown little or no leadership on the future of fire services. Now, however, after a long period of inertia, the Government are suggesting a patchwork, top-down reorganisation. They are effectively proposing to put fire services under police and crime commissioners, or to place the police on the boards of fire services to be part of their management. They are also suggesting a single employer.

There is real concern that all that will mean that the fire service becomes subsidiary to the police and ceases to be a statutory service in its own right, and that the fire service will be the one to see the reductions in budget and staffing—no longer two equal services working side by side for the public good, but one subordinate to another. Where PCCs take over, what guarantees do the public have that fire budgets will be maintained? Merseyside has a right to ask for that, and for an unequivocal assurance from the Minister that this top-down proposal will not be used to introduce privatisation.

The reorganisation is, I assume, to save money. Why, oh why did the Minister not look to Wales or Scotland to work out how a reorganisation could be done to save money and yet protect the frontline? Was it simply a “not invented here” reaction, or something more nefarious? As the shadow Fire Minister before the election, I thought hard about what an incoming Labour Government could do to save money, in Merseyside and elsewhere, and protect the frontline. I consulted experts, and they told me that there were only three ways to work within the Tory-Liberal Democrat spending plans: merge the service into one; volunteerise the whole service; or privatise it. Which of those options is today’s announcement moving us towards—a service staffed completely by volunteers or a privatised service?

As the Minister knows, firefighters run into danger when the rest of us are running away. They are professional and work with determination and expertise to protect us all from the most appalling risks. They should be valued and listened to, not ignored. The Minister knows that better than anyone, and I urge him to take stock of the funding on Merseyside and in all the other areas of the country that are struggling to make massive reductions.

The Minister must respond to the impressive and passionate case that Merseyside MPs have made today about fire service funding, and not fob them off with some fairy tale about reorganisation providing more money for the frontline. Budget reductions and his suggestions for mergers with the PCCs put him in danger of creating a Cinderella service. That fairy tale ended happily, but today, sadly, I see no Prince Charming on the horizon.

[Mr Philip Hollobone (in the Chair)]

I call Prince Charming.

17:45

[The Minister for Policing, Crime and Criminal Justice (Mike Penning)]

It is, as everyone has said, Mr Hollobone, a pleasure to serve under your chairmanship yet again.

I welcome the shadow Minister, the hon. Member for West Ham (Lyn Brown), to her role. I thought we had got rid of each other after the psychoactive substances debate, but here we are again. I do not know which of us feels sorrier. This is the first time that she has attacked me, which is probably a sign of the future, but we can still be friends outside the Chamber.

Colleagues from Merseyside are present today and I understand what they have said, although I do not understand or recognise some of the figures that have been used. I will come to those in a moment.

I congratulate the hon. Member for Wirral West (Margaret Greenwood) on securing the debate and on making all these colleagues come out of the main Chamber for this debate, which is obviously important. I will answer as many of the points as possible. Naturally, if I cannot answer them all, I will write to colleagues. Actually, I want to write to colleagues from throughout the area—to colleagues who are not present as well—to clarify some of the figures, because I just do not recognise some of them. If I am wrong, I will obviously make that clear later and apologise, but let me give an example. The shadow Minister talked about core spending power between now and 2020, and a 41% cut was alluded to. Actually, it is 3.4% and a reduction of £2.1 million. There is obviously a discrepancy between the figures that my officials have produced for me and the figures that have been used in the debate.

One thing that slightly surprised me was this. The local authority is concerned and obviously has lobbied extensively, yet my notes tell me that Merseyside had the opportunity formally to respond to the local government financial settlement if it was concerned about the funding cuts, but it did not do so, so it did not take part in the consultation. I might be wrong, but those are the notes I have. I would think that if there were concerns, they would have been expressed.

[Steve Rotheram]

Will the Minister give way?

[Mike Penning]

I will make a tiny bit of progress and then give way.

I am very conscious that a former Minister and a former chair of the Merseyside fire and rescue service are present. I pay tribute to the hon. Member for Bootle (Peter Dowd), because he went through an enormously difficult time in reforming the Merseyside service. I know that that was not an easy thing for him to do, so I pay tribute to him for the work that he and his board did.

For a short period, I was a fireman in the fire and rescue service in Essex, and I was the branch representative of the Fire Brigades Union for a very short period—until we fell out—and so no one is more conscious than I am of the work that our firefighters do on a daily basis. A lot of it is not seen by the public, even though the public expect them to do it. I am very conscious, having been to Lancashire, of the work that is done through mutual aid agreements. I saw help come across those borders—there were no borders and no lines on maps; firefighters just went across to help in the way that they should have. Firefighters from my constituency in Hertfordshire were also in the north-west, assisting with high-velocity pumps. A lot needs to be learnt from the type of flooding and rescue work that was done. The Prime Minister has already announced a review of not only how we protect the public better from flooding, but how we respond and where the facilities should be.

It is also important that we acknowledge the changes that have taken place in the structure of the fire service, certainly since I joined in ’82, as well as what has happened over the past few years. I pay tribute to the Fire Brigades Union, which in my time, would never have agreed to some of the changes that have taken place, especially in the manning of stations. However, practicalities relating to the modernisation of the service meant that when I was in Lancashire only the other day, all the whole-time station staff I met were what I would call day-manning staff. Other crews come down at night and are on call. It seems to be working really well there. It was first piloted, I think, in Woodham Ferrers in Essex, back in the ’80s. When I was there, we went to day-manning stations. It is about a different sort of facility, looking at what the requirements are and when staff can come in.

[Mr George Howarth]

rose—

[Mike Penning]

I give way to the former Minister.

[Mr Howarth]

I am grateful to the Minister. I join him in paying tribute to the FBU for the concessions that it has been willing to make, but does he not recognise that, because it has already made those concessions, the scope for any further reductions is inevitably much smaller?

[Mike Penning]

In some respects, I agree with the right hon. Gentleman. We have come some way, but I do not think that anyone would say that we have fully come through. For instance, the figure I have for the number of retained firefighters in Merseyside is 25, which is very low. That may be because we are looking at day-manning stations among other things, but the use of retained firefighters is how it is done in many parts of the country. Sadly, that is not the case in London, where there are no retained firefighters, which I find strange. We need to continue to look at that.

I do not have the full figures for Manchester, because the debate is about Merseyside fire and rescue service, so I will have to write to the hon. Member for Heywood and Middleton (Liz McInnes). My officials were scurrying away behind me to ensure that I had some details, but it is probably better if I write to her. I will say again that I do not recognise some of the figures on the amount of losses. We can all throw figures around, but let us get down to the facts.

Colleagues have talked about the small but significant increase in deaths in Merseyside, and that needs to be addressed. The statistics are always difficult: one death is too many, and one of the first things I said when I took over this responsibility just over three weeks ago was, “Yes, we have reduced deaths nationally enormously, but hundreds of people still die in fires and we need to get that figure down even more.” With the fire service in Merseyside and my specialist teams, I will personally look and ask for analysis as to why that figure has moved.

A couple of comments are very important. I am brand-new into the job. I was a firefighter, but that was a long time ago and the service has changed enormously since then. The one thing that has not changed is that, while we go in one direction, the fire service and other emergency services are going in the other direction, so it is right that we continue to pay tribute to fire services across the country and acknowledge the work that they do and that there have been many changes. In the debate, I was listening carefully about who is manning what and where.

Some colleagues said that their fire station may not open—I refer in particular to the hon. Member for St Helens North (Conor McGinn). It might well open if it were a fire and police station. It is difficult to convert a police station into a fire station because the big red trucks do not get into the foyer so well, but we can plan constructively in the community. I always use the analogy that a church is not about buildings; it is about people coming together, and that is what we are talking about with the emergency services.

The reforms we announced today based on the consultation are not top-down but an attempt to move further forward. As chief fire officer Paul Hancock said today, there is a general warmth towards them in the service. This is not about taking one force, putting it under another and undermining it—as a former firefighter, why would I do that? I am trying to ensure that those on the front line have the opportunities and finances there and that we do not waste money in silos with headquarters here and there when they could come together. Why is it that in any part of the country the fire and police headquarters are not in the same building? Why are human resources and procurement not done together?

Since I took over responsibility for the fire service, I have published information on the 43 police authorities in which I listed about 20 average products that they buy for front-line operational use, so that the public can see how much each PCC and chief constable is spending on that equipment. The variation is enormous. For instance, on a type of approved body armour, there was a £300 difference between one piece of kit and another. On batons, the figure was about £80. I intend to do similarly for the fire service. I am not telling anyone that they should go to a specific organisation to buy their equipment, but I think the public should know what is being spent and how it is being spent. In vehicle procurement, the fire service should be part of the e-auctions process to ensure that taxpayers’ money is spent correctly.

[Mrs Ellman]

Will the Minister give way?

[Mike Penning]

I will give way in a second, but I want to make a tiny bit of progress.

The equipment has changed dramatically from when I was in the fire service. We need to look carefully at the equipment we have for the 21st century. For instance, when I was in Lancashire, six fire appliances were sadly damaged due to the flood. Their crews watched the Army vehicles go through. Squaddies will drive through anything, but their vehicles are adapted to go through it, whereas six of the fire appliances got trapped in the water, went off the road straight away and were quite seriously damaged. The engines were damaged as well. We need to look at the manufacturers to make sure we have the right equipment.

[Steve Rotheram]

In case there is any confusion, Merseyside fire and rescue service submitted a response to the consultation on behalf of and jointly with other metropolitan authorities; I want to clarify that point. My hon. Friend the Member for Bootle (Peter Dowd) may well be mistaken and myopic in his choice of football team, but he was absolutely right on the statistics we used, which were provided by Merseyside fire and rescue service itself. He was there, along with a number of other Merseyside MPs, when the Leader of the Opposition visited the joint control centre that the Government are pushing in Bootle. The chair of Merseyside fire and rescue service, Councillor Dave Hanratty, has asked me to extend the same invitation to the Minister. The chief gave out that information, and he is very careful about being absolutely non-political and impartial, so the Minister can come along and get the briefing for himself.

[Mike Penning]

I will come. I have been to Merseyside many times in my ministerial role, not least when I announced the decision to open the cruise terminal in Liverpool, which was opposed by many areas in the south of England. I know Merseyside very well, and I will come as soon as my diary allows.

I would never say that anybody has intentionally used a figure that is not correct. Of course, everybody thinks that the figures they use are correct. All I have said is that the information I have is slightly different. It may be a question of semantics—who knows? Let us get the facts right, and then we will know.

The biggest thing I want to make sure I get across to the House is that I am new and I have an open mind. The Prime Minister has put me here for a reason, and it is obviously a logical reason. The role of Fire Minister is back in the Home Office where it was when I was a firefighter in the ’80s, interestingly, and it is logical that the emergency services are together. I will look carefully at why Merseyside has seen this slight but significant increase in deaths. It is very important we look at that and find out what has been going on.

17:57

[Margaret Greenwood]

I thank the Minister for his response and his proposition to look carefully into the increase in deaths; that is welcome. However, I have to say that I find his response on the business of figures somewhat baffling, because all the figures I have presented to him have come from Merseyside fire and rescue service. I wonder why he has not challenged the figures I have come up with of £26 million in cuts during the coalition and a further £11 million cuts to come. It does not matter whether we talk in percentages; those are huge cuts and that is a vast amount of money. Talking about merging HR functions and so forth is all well and good, but it does not really go to the nub of the issue. This is all about saving money, and that is the issue we are so concerned about.

[Peter Dowd]

In 2010-11, Merseyside received 63% of its funding from Government grants, so any cut in Government grant has a disproportionate effect. Does my hon. Friend agree that the Minister would do well to look at that particular element in his assessments?

[Margaret Greenwood]

My hon. Friend makes an excellent point. Of course, not all areas of the country receive that level of grant, but to us it is massively important. These cuts are real, and they are being felt already. We have already lost 300 firefighters. I am losing all the fire stations in my constituency. These cuts have not been magicked out of a small percentage; they are real cuts we are seeing.

I commend the Minister for paying tribute to the way in which the FBU has responded to modernisation, but I wonder what more he wants. The FBU has gone a long way to meet the cuts dealt to it already. As my right hon. Friend the Member for Knowsley (Mr Howarth) said, with the fire services having made those concessions and responded so valiantly to the scale of the cuts last time, there is nothing left to cut without detriment to services.

Finally, I would like to welcome the Minister to come to Merseyside and urge him to look at the figures very closely indeed.

[Mike Penning]

I will look at them before I come.

[Margaret Greenwood]

I therefore urge the Minister to consider the possibility of dropping the cuts. If the cuts are of the scale that we have presented today, which I believe they are, there is a strong case for cutting them. Merseyside deserves a fire service that it can rely on and that is well funded, well resourced and does not put its firefighters at risk.

Question put and agreed to.

Resolved,

That this House has considered the funding of Merseyside Fire and Rescue Service.

18:00

Sitting adjourned.