Westminster Hall

Wednesday 6th July 2016 Westminster Hall

Wednesday 6 July 2016

[Mr James Gray in the Chair]

Artistic Remuneration for Online Content

Wednesday 6th July 2016 Westminster Hall

09:30

[Mr James Gray (in the Chair)]

Before commencing our first debate, may I remind hon. Members that reference to people in the Public Gallery, no matter how distinguished they may be, is out of order and should not be done during the debate?

[Nigel Adams (Selby and Ainsty) (Con)]

I beg to move,

That this House has considered artistic remuneration for online content.

It is a pleasure to serve under your chairmanship this morning, Mr Gray. I thank my hon. Friends the Members for Somerton and Frome (David Warburton) and for Folkestone and Hythe (Damian Collins) for helping me to secure this important debate.

Everyone is aware that the creative industries are one of this country’s greatest assets. The Government’s own analysis shows that the gross value added of the creative industries in 2014 was in excess of £84 billion, which accounts for around 5.2% of the UK economy. Essentially, they have been a source of growth in recent years, increasing by 6% since 1997, compared with 4.6% for the UK economy as a whole. However, we would be doing the industry a disservice to consider its value in purely economic terms, because its impact is far wider.

Our creative industries are our voice to the world. Very little, if anything, contributes more to the UK brand around the world than our artists, writers and directors.

[The Minister for Culture and the Digital Economy (Mr Edward Vaizey)]

Hear, hear.

[Nigel Adams]

Quite right.

Just a few weeks ago, the trade body, UK Music, published a report on the value of music tourism to the UK, which showed that direct and indirect spending in 2014 from music tourism was £3.7 billion. Some 38% of live music audiences are music tourists: music lovers from outside the UK. They come because they love our world-class artists and our fantastic venues and festivals. It might be easy to take our creative industries for granted and to assume that the country that gave the world Shakespeare, the Beatles, Harry Potter and Banksy will also be at the forefront of the global culture landscape, but that would be a massive mistake. Indeed, we in this House have a duty to ensure that our cultural sector has the tools to grow, including a copyright regime that is fit for purpose in a digital online market.

Members may have read about the recent public disagreement between songwriters and artists and YouTube over royalties paid by the service. In the last few weeks, 186 major artists in the US and over 1,000 in the UK and Europe have signed public statements of dissatisfaction addressed to the US Congress and to Jean-Claude Juncker. Signatories range from Sir Paul McCartney and ABBA to Ne-Yo, Idina Menzel and deadmau5, and even includes the former French first lady, Carla Bruni, who is also a recording artist—although I do not have too many of her tracks on my iPhone.

Last month, I met members of PRS for Music and songwriters and composers whose music and songs are enjoyed around the world. I heard from them the dissatisfaction that millions of streams can result in just a few hundred pounds in royalties or, in some cases, no royalties at all. Most dramatically, I spoke to one songwriter who was entitled to 25% of the revenue from a song he wrote, but who had seen a mere £5.39 from almost 3.2 million plays of that song on YouTube by listeners who actively sought out that track. Meanwhile, the same songwriter saw several times that amount—a princely £87.79—from the 180 occasions on which the song was played in stadiums in the UK, despite those listeners being passive and hearing what others chose to play for them. That seems to be a pretty upside-down arrangement.

To show how far behind the law the balance is, Geoff Taylor of the British Phonographic Industry recently said that British artists saw more revenue in 2015 from the 2.1 million vinyl LP sales than from the 27 billion music video streams on YouTube and similar platforms. It is not difficult to understand the despair of a writer or artist who sees their life’s work online with little hope of any financial reward now or in the future. This is particularly a problem for less high-profile producers, writers and creative people, who are less likely to have additional income streams from endorsements or touring.

High-profile artists are often very concerned about this problem and its impact on other members of the creative community and their teams. A big artist will often get little sympathy and, as we have seen recently, there may even be a backlash from the media and consumers for speaking out about the problem if they are perceived to be well off. Fair or unfair, this reaction just makes it harder to expose the problem and to support fair remuneration for those in the industry who are less famous.

The basis of the music industry’s concerns is the so called “safe harbour” laws, which in the US, EU and UK give user upload streaming services the same protection from copyright as host providers, such as personal cloud locker services. This is despite the fact that they operate entirely differently and, more importantly, impact the market in different ways. Take, for example, a comparison between Spotify and the user upload site Dailymotion. Both sites allow users to search for and listen to Adele’s track “Hello”, one of the fastest-selling tracks of all time. Spotify is licensed to stream that track and thus pays the artist, songwriter, producers, musicians, publishers and labels that are so crucial to creation of the content, but Dailymotion does not. Due to ambiguity in the safe harbour framework, user upload services can claim to be mere hosts of their user’s content and, as such, are not required to share with the creators the wealth they generate for themselves. That does not seem fair.

When a business model is based on making available to consumers creative content created by others, surely we as lawmakers must ask whether this is right. In fact, the very premise of copyright is to ensure that creators are paid when their work is exploited by others.

It may be easy to argue that the current framework is good for consumers. How can it not be, when music can be enjoyed more easily than ever before? However, I would add a note of caution to such assumptions and suggest that the user experience may not be as positive as it might first seem. When faced with piracy, it was universally agreed that creative content has an intrinsic value that must be protected if the future generation of creators are to be nourished for society’s economic and cultural benefit. These principles remain true today and we must not replace one market failure with another.

Equally, there are impacts on the licensed streaming services to which many users pay a monthly subscription. These services are forced to compete on an unequal playing field with user-upload services that pay little or nothing to creators. They are forced to offer their own ad-funded services, which are often run at a loss or subsidised by income from the subscription service. The net result is less competition in the market for subscription pricing and ultimately consumers could lose out.

In March, the all-party parliamentary group on music, which I chair, hosted a dinner to discuss the growing music streaming market. The dinner was well attended by services such as Apple Music and Spotify, as well as representatives of the music industry. It was clear from the dinner that streaming presents many opportunities for the industry and that it is embracing them. However, there are challenges in ensuring the music industry captures this value, such as whether advertising revenue and ad-funded models are sustainable and the growth of ad-blocking and stream-ripping technologies that can have an impact on the amount of remuneration the industry receives in return. The legal position of safe harbours and how they interact with the market perhaps presents an even more fundamental problem, and this will continue unless action is taken.

The Creative Industries Council launched its strategy this week, with many recommendations to the Government and industry alike. The council is seeking legal clarity concerning the liability of platforms that actively host and market content. Specifically, it argues that to maintain an intellectual property framework fit for the digital age, such platforms should not benefit from safe harbours. The Government have indicated that they would support a clarification too. I would be grateful if my hon. Friend the Minister said what plans the Government have to respond formally to that recommendation and what further steps they are taking to achieve that.

[Kevin Brennan (Cardiff West) (Lab)]

I declare an interest, in that I earned £10.60 in royalties from PRS last year for my songwriting—and paid 40% tax on it. Will the hon. Gentleman address the role of search engines in all of this? I recall that a few years ago we did a search during a debate and found that most of the results that came up were from illegal sites. Is that an issue that he thinks the Government should also be doing more to address?

[Nigel Adams]

It is absolutely an issue that needs to be addressed. I have myself searched online and found that the results I get are from piracy sites. Something has to be done. There is a responsibility in this respect not just for Government, but for the search engines themselves. Perhaps afterwards I can help the hon. Gentleman spend his £5.60 as we discuss what should come out of this debate.

We are in a unique place to address these issues and ensure that we are world leaders in striking the right balance between the promotion of technology and creative innovation. With the recent vote to leave the EU, the UK Government will have full control over policies related to digital streaming and artist remuneration. Will the Minister undertake to investigate whether provisions can be put in place so that once we eventually leave the EU, our UK industries can fully achieve the value in their rights?

[Mr Vaizey]

Hear, hear.

[Nigel Adams]

That is encouraging. Will the Minister investigate, for example, the possibility of introducing a sunrise clause into the Digital Economy Bill? That could ensure that active hosts of content do not benefit from safe harbour when legal systems have been transferred and the European Communities Act 1972 is repealed.

It will not surprise hon. Members to hear me say that the music industry has undergone tremendous change and readjustment in its business models over the past couple of decades. The latest Intellectual Property Office and Kantar Media online copyright infringement tracker, published yesterday, concludes that the top three sources of music are YouTube, with 52%, Spotify, with 30%, and the iTunes App Store, with 20%. Use of Spotify has increased by 5% since last year’s tracker, while iTunes has fallen by 6%. The consumer trend is clearly moving away from music ownership. Copyright still reflects ownership for the creators of content and the infrastructure that supports it. We must ensure that those ownership rights are respected.

09:43

[Kerry McCarthy (Bristol East) (Lab)]

It is, as ever, a pleasure to serve under your chairmanship, Mr Gray. I congratulate the hon. Member for Selby and Ainsty (Nigel Adams) on securing the debate and on all the work that he has been doing with the all-party parliamentary group on music.

This issue is of real and growing concern to musicians and has been for some time. As an MP for Bristol, which a fairly recent survey showed had more musicians than anywhere else in the country, I thought it was important to speak in this debate, and I am pleased that my constituency neighbour and hon. Friend the Member for Bristol West (Thangam Debbonaire) is also here to speak. She will be joining me in supporting Bristol’s bid to be capital of culture in a few years’ time, and obviously the musical contribution that Bristol can make is a very important part of that.

I associate myself with the views expressed by the hon. Member for Selby and Ainsty on the need for further action to address piracy, and especially on how search engines facilitate piracy and the need to clarify the legal ambiguity of safe harbour provisions, which are allowing the development of parasitic digital platforms that leech value from this country’s creative industries. I will be interested to hear what the Minister has to say and whether he plans to introduce clauses into the Digital Economy Bill to address that loophole, but today I want to speak on behalf of artists and about the need for a more equitable distribution of digital royalties between them and their record companies.

For many years, artists have spoken out about the considerable difficulties that they face in trying to make a living from the royalties that they receive from streaming. Taylor Swift pulled her last album from Spotify to make that point. Clearly, Taylor Swift will not be short of money whether or not she sells material through Spotify, but it was important that she took a stand on behalf of the many musicians who rely on royalties to make a living. If they do not get sufficient revenues from digital streaming, they literally cannot afford to be professional musicians.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Does the hon. Lady agree that although an artist of the standing of Taylor Swift has considerable financial and musical clout across the globe, that is not shared by the hundreds and perhaps thousands of musicians who have not yet broken through and perhaps will never reach anything like the standing that she has? What we are trying to do today is represent those artists, as opposed to one who has made a breakthrough and can take a stand. We are representing the many who cannot do that.

[Kerry McCarthy]

I totally agree. A few years ago I went into BPI’s offices and the staff there showed me the impact of illegal downloading on record sales, using Adele as an example. It was quite startling to see, by the second, how many hundreds if not thousands of illegal downloads there were. I said to them, “Yes, that does make a certain point, but I want to see what impact it has on the income of a struggling indie band that is on the verge of breaking through.” It would be easy for people to say, “Well, Adele is selling millions.” Yes, she is clearly very wealthy and perhaps can afford for people to access her content for free, but it is the principle, is it not? That principle should apply across the board. I have always said that it is up to artists whether they want to make their content free. If they see that making their content free online is a good move for their career, that is their choice, but it is equally their choice to be paid if they want to be paid, and people should not download illegally.

Going back to the legal streaming services, if we are to secure the future sustainability of the sector and encourage vibrant new acts to come forward, it is vital that artists can earn a decent living in the digital environment. The problem will only become more acute in the years ahead, as digital music revenues will continue to outstrip those from physical formats such as CDs and vinyl. There is a bit of a vinyl revival, but that will always be a niche area. It is illustrative that when I was talking to my teenage and early twenties nephews and nieces the other day, I found that they had never bought a CD. I think it is on the verge of becoming a redundant format.

There is an issue about how Spotify calculates payments to rights owners. It is too complex to go into detail about here, but it means that the money that we as individual consumers pay for streaming does not directly go to the bands and artists we are listening to the most, and it penalises bands with strong fan bases.

The primary cause of the problem that artists face with streaming royalties, though, lies in the contract that they have with their record label. Those contracts continue to pay artists royalties for streaming as though the stream were a physical sale of a product. They are continuing with a royalty rate from the pre-digital era, so things such as the manufacture, storage and distribution of a physical product such as a CD or vinyl album are factored into the contract. That simply cannot be justified when there is no physical product on the market.

[Jim Shannon (Strangford) (DUP)]

Is not the case that the artists now have to accept that they need to be part of the digital streaming process whether they like it or not, and perhaps be dragged screaming and shouting into a new age where they do not want to be? That is the information that I am getting back.

[Kerry McCarthy]

It is always the choice of an artist how they want to market their product. Some artists are quite happy to do it on a part-time basis and just put their stuff on SoundCloud or whatever, or are happy just to be on the live circuit. It is clear that online content and streaming services are the future of the industry, but my point is that at the moment the musicians get only about 10% to 15% of what the label receives from the streaming service, because the physical cost of a product is built in. There are some contracts that are far more favourable to musicians, but by and large they are not, which the Musicians’ Union has been campaigning on.

In almost all cases, an artist will never see any of the online royalties at all, as their contract sweeps up the rights they have to royalties from the sale of recordings until they have paid back the advance they received from the label and any expenses incurred recording and promoting the artist. I argue that a fairer split of 50:50 would seem entirely reasonable, especially as this already exists for public performance and broadcasting income thanks to the equitable remuneration right. The Musicians’ Union has argued that when performers transfer their assailable rights, 50% should be a non-assignable equitable remuneration right, with the other 50% being an exclusive right assignable to the record company, to ensure that performers receive income from digital sales and streaming whether or not they still have an outstanding balance with their record label. For their part, record labels would be able to recoup their investment from royalties assigned to them under the exclusive right.

The Fair Internet for Performers campaign is taking this issue forward Europe-wide by campaigning for an amendment to EU copyright legislation. The hon. Member for Selby and Ainsty has already mentioned what the impact of Brexit would be and whether in a few years’ time we would be free to set our own rules. I would be grateful if the Minister clarified where we are in the limbo years, as we might call them. Will we adopt the EU copyright legislation as national legislation? Does he regard the EU legislation as a practical way of adequately rewarding artists in the UK for the streaming of their recorded performances?

It is vital to ensure that income streams actually reach creators, to ensure not only that performers can make a living from their art, but that corporations continue to have that talent to exploit, and for the future of new music and art, which I think all of us in this room would agree is incredibly important.

09:52

[David Warburton (Somerton and Frome) (Con)]

It is a pleasure to serve under your chairmanship once again, Mr Gray. I too congratulate my hon. Friend the Member for Selby and Ainsty (Nigel Adams) on securing the debate.

When Thomas Edison shouted “Mary had a little lamb” into his phonograph in 1877, he precipitated a musical earthquake, to use modern parliamentary language. By the time I was a teenager in 1977, buying albums and singles was not only the only way to get hold of the music we all wanted, but the primary way in which many of us defined ourselves. Artists then enjoyed an incredible boom. Someone might record an album on to cassette now and again, but that would usually result in a trip on the bus to Our Price Records—where I worked for five years—to get hold of the real thing: the 12-inch record, with all its magnificent gatefold glory, in all its splendour. When we got our hands on this object of desire, the artists would in turn get their hands on all the rewards for the joy that they had uncorked, but that is not so today. Now, the songwriting artist can uncork just the same degree of joy and deliver it to the world, which can receive it with the same degree of rapture but without paying a bean. We can click on YouTube and watch or listen to pretty much anything we like anytime and anywhere—unless we are in Somerset, where there is no internet or mobile signal—and do so for nothing.

[Kevin Brennan]

Is it not the case that people have always been able to listen to music for nothing? We could listen to music on Radio 1 for nothing when we were teenagers in the ’70s. In a sense, streaming is the equivalent of that, in that it does not involve ownership. The issue is the lack of reward for the artist under this new way of listening to music for nothing.

[David Warburton]

Absolutely. The hon. Gentleman hits the nail with all of his head. He makes a perfect point, which I am just about to come on to; he is reading my mind.

When we click and listen, not only does the artist’s music become more ephemeral, more fleeting, less substantial, less physical, less tangible, but it also becomes commoditised, losing its uniqueness, brand and differentiation. In the way of the digital world, the user feels it is only right that the content should be provided free of charge. So now we have artists who attract huge audiences and whose content is played and shared millions of times, but who receive just chickenfeed—nothing more than a trace of recompense, having entertained people across the globe.

This began perhaps 15 or more years ago with download sites such as Napster and Kazaa—for which, incidentally, my company in a previous life provided all the mobile content globally. The music industry was slow to pick up on this revolution, but having got to grips with the download model, and with sensible paying business models finally emerging through iTunes and so on, it is now facing a new assault from the online streamers.

[Jim Shannon]

If the streaming services become over-regulated, which is what this debate is very much about, it could well be the case that, as the Financial Times has said:

“It is just as likely that consumers would sate their appetites for free content by returning to piracy instead.”

Does the hon. Gentleman share that concern that the Financial Times, and many of us in this Chamber, have?

[David Warburton]

I not only share that concern but think there is a concern that the streaming sites where the content is available for free are, in effect, pirate sites; they are providing the service that pirate sites would otherwise provide. Just because users might be pushed to other pirate sites, that does not mean we should not address sites that seem legitimate and are also providing the service for nothing.

Since YouTube is protected and shielded by safe harbour, other streaming sites find it harder to encourage users to cough up and pay for a subscription. Why would anybody pay if the content is available for free? Fundamentally, there is a clear transfer of value taking place from the content creator to the online provider. If there is an obvious transfer of value, it must be made clear that the online provider has a duty to compensate the creator accordingly. This is not much like the last time the industry faced the digital world. That time the industry closed its eyes, covered its ears and pretended it was not happening, but this time there is little doubt that streaming music is likely to be the key destination for consuming the products of much of the music industry.

The emerging business model is, of course, the subscription service, because it is the ultimate business model—it has clear, definable revenues, near certain cash flows and transparent growth. But as the streaming services see subscription revenues surging and advertising revenues bulging, the artists—the fundamental source of all that—become pretty much forgotten. That is patently wrong, and we must address it.

Government have their part to play. If the concept of active and passive content hosting is included in the Digital Economy Bill—I am sure we all look forward to hearing the Minister’s views on that later—that could well prove to be the answer, preventing active hosts from hiding behind safe harbour. Government must now work with the industry and the platform providers—the streaming services, the hosts and the content providers—to build a consensus and a model that is sustainable for all parties and that, crucially, allows those who uncork and create the joy, upon whose efforts the whole edifice is built and whose sound and fury draws us all in, to be properly rewarded and have proper control over all that they create for the rest of us.

09:58

[Thangam Debbonaire (Bristol West) (Lab)]

Thank you for allowing me to speak, Mr Gray. I also give grateful thanks to the hon. Member for Selby and Ainsty (Nigel Adams) for securing this important debate, which is both necessary and timely. It is all the more timely for us to be discussing this issue now, when the country has voted to leave the European Union, as so much of the regulatory framework is currently set by the EU. I would be interested to know the Minister’s thoughts about that.

First, I declare my interest as a former member of the Musicians’ Union, which donated £6,000 to my campaign during the general election. I also recently visited part of YouTube’s UK operation, and part of Google’s massive UK operation, as part of a parliamentary visit last week to the creative industries that was organised by the Industry and Parliament Trust and the Advertising Association. I can report that Google does a good sandwich lunch and presented me with a very nice notebook. I can also report that it was from a YouTube channel “The Oma Way” that I learnt to do continental knitting from a German grandmother. As a former musician myself, I am very pleased that so many music lovers enjoy the ability to listen to music from the internet. I am also married to a musician and am close friends with a composer and other musicians.

Most importantly, Bristol West and Bristol generally is a very creative city, as my hon. Friend the Member for Bristol East (Kerry McCarthy) said. Many people work in my constituency in the creative industries. Musicians, composers and music lovers in Bristol West deserve and want a fair system for online remuneration—one in which musicians have much more control. So do I: that is why I am here, and I will be reviewing a couple of technical aspects of this knotty problem.

The situation with artists’ remuneration online is very far from straightforward, although there are those who would like it to be seen as so. There are many stakeholders in the process, each of whom would like to be seen as innocent angels, because it is not only Google who aims not to be evil. However, there needs to be a balance of rights and responsibilities that is proportionate to the power held by each stakeholder. Google, as the world’s No. 1 search engine, and YouTube, the dominant player in online video, both have far more power in this process than the consumer or the musician. The recording industry also has more power than the newest indie band or individual composer.

Within that process, there are search engines, file downloading sites, the recording industry, musicians, technical professions and, of course, the music lover. We owe it to everyone in that process to have a system that is not only transparent and fair, but relevant for our times.

Right now it is vital that the entire sector and Parliament are aware of what the results of the UK exit from the European Union will mean for the industry. The copyright directive, for example, which harmonises—to use an appropriately musical term—copyright law across Europe, including the application of copyright and control techniques on the internet, restricts the range of defences to copyright infringement. We do not yet know whether that area of UK law, directly derived from the EU directive, will be one of the pieces of so-called “red tape” that those who have campaigned for us to leave the EU will want to sweep away. Before I move away from Brexit, I would add that that would be a disaster for the UK’s music industry. I would like to know what the Minister, who I know is a music lover, is going to do to protect the industry during the Brexit process.

It is not sufficient for the more powerful players to say, “We are just providing the platform,” or, “We are only running our algorithm to give search results to consumers.” If the less powerful players, such as the musicians or trade unions or the recording industry, can easily find examples of unlicensed products on a streaming platform or in the results of an online search, so too can the search engines and the companies owning the streaming platform. They are the ones who are most in control of how the music is consumed and the options for performers and the recording industry to receive their fair share of advertising or subscription income, and they must be required to play fairly.

YouTube, for example, reports proudly that

“the rights holder has total control over what happens to their content on YouTube”.

That is simply not how performers experience it. As YouTube hosts user-generated content, it is the users generating the content and, jointly, the platform itself that have the most control. If an artist or recording company wishes to get their content blocked or monetised, they first have to know that it is there and then they have to contact YouTube to ask for it to be taken down or monetised. They can, and do, do regular searches of their name on YouTube or other streaming platforms, but if they can, so can YouTube.

YouTube has indeed invested $60 million to build a fingerprinting technology called Content ID to allow rights holders to identify when their works are used in the user-generated content. That technology has helped to compare millions of media files and hours of video, but it is insufficient for the job and is still leaving the responsibility with the performer and the recording industry to take action once they discover that there is unlicensed product on the platform.

YouTube now represents such a large proportion of total music consumption. That is great, but as a consumer of YouTube, I want to know that every single piece of music consumption is providing proper remuneration for the artists who create it and for the recording industry that provides the means to record it. I do not have that certainty, despite being involved in and modestly knowledgeable about the music industry and being modestly well briefed. Despite the phenomenal growth in online streaming of music content, YouTube contributes only about 4% of total music revenues—less than that contributed by vinyl, as my hon. Friend said.

YouTube makes use of a safe harbour provision in copyright law, as has been said, which allows it immunity from copyright liability providing it responds to takedown notices. However, that still places the responsibility away from the company itself and is therefore insufficient. I would like to see host companies such as YouTube and others take full responsibility without being able to hide behind the safe harbour provision, which was created 15 or so years ago, without any idea of how widespread music content uploading would become. I would also like them to move from a system of “notice to take down” to one of “notice to take and stay down”. Otherwise, the music industry continually has to play whack-a-mole, as new user-generated music content is uploaded.

Google is the world’s most used search engine. That presents another challenge: for Google to take responsibility for the results of its search engine, which routinely directs consumers to links to unlicensed sites. The British Phonographic Industry has sent more than 200 million notices to Google requesting it to remove illegal links to their members’ music. Again, that still places responsibility on the industry. Rights holders can supply machine- readable lists of sites that have been licensed to offer their content, so search engines could use those as a factor in their algorithms to improve the search visibility of sources of legal content. So far they do not. As my hon. Friend mentioned, the BPI can show how routinely search inquiries are returning links to illegal sites, on the first page, at the top. This matters: it is simply helping people—nay, positively directing them—to sites where performers’ music is stolen from them without proper payment.

Google employs very smart people, as I saw last week on my visit. I simply do not believe they are incapable of reforming their search engine algorithm. We would not tolerate a billboard that directed people to buy music from a shop that was using only stolen CDs, nor would we tolerate a radio station or TV company advertising such a shop. The time has come to require search engines to act responsibly, and I would be grateful if the Minister responded to that request.

As has been mentioned, the Musicians’ Union and the BPI both acknowledge that the development of online streaming has been a phenomenal success. For music lovers, it gives them access to an enormous catalogue of music. That is fantastic, but it is arguable that online streaming is equivalent to listening to the radio. Consumers do not possess that music and they know it. They cannot listen to it offline and the experience is more like a broadcast with curated playlists than iTunes or any of the download services. That suggests that the system of royalties for internet streaming should be closer to that for radio. I therefore support what my hon. Friend said about an equitable split of income—I think she may have said a 50:50 split—between musicians and the recording industry for online streaming, as well as an adequate “take and stay down” notice system for the online industry.

The equitable remuneration right was introduced in 1996 and ensures that performers enjoy royalty payments from the very first radio airplay of their recordings. Such a system also needs to exist for streaming. I believe it is both vital and possible to create a system whereby nobody in the process, from consumer to website owner, can hide behind the defence of “I did not know”, “I don’t believe the illegal sites are treating artists unfairly”, or “It’s not my problem: the way the artists are remunerated is up to the recording industry and nothing to do with us, the online industry”.

To sum up, I would like to know whether the Minister supports any or all of the following or whether he will consider them: a move from “notice and take down” to “notice and stay down” for notifying streaming services about unlicensed content; a shift in responsibility from the music industry to spot and notify search/streaming services to the services themselves, so that they take responsibility for what user-generated content is uploaded; a requirement for internet search engines to amend their algorithms to direct consumers to legal sites, not illegal sites, and also to co-operate fully with the music industry on this; and moving the licensing system to remunerate artists and composers fairly with the recording industry for online streaming, given that it is akin to radio in the user experience.

Reforming the licensing laws in any case for offline and online use and consumption may be a good idea, given that they are often seen as not simple to navigate and not transparent. I would be interested to hear the Minister’s thoughts on that point. Finally, we need to see that the music industry is protected throughout the process of leaving the European Union. The music industry deserves better than the situation we have at the moment for artists’ remuneration. Musicians deserve better; composers deserve better; above all, music lovers deserve better.

10:09

[Jim Shannon (Strangford) (DUP)]

I just want to make a small contribution to the debate. I congratulate the hon. Member for Selby and Ainsty (Nigel Adams) on presenting the case here in Westminster Hall and I am sorry I was not here at the beginning of the debate; I had another engagement at 9 o’clock and it went on a wee bit longer than I thought it was going to. However, I am adding this small contribution to support what he and other hon. Members have said.

According to the chief executive officer of Sony, streaming services such as Spotify are the “final destination” for the music industry, if it is to survive. Some artists are vehemently against Spotify and the like, but the reality is that, if they do not move with the times—this is the point that I tried to make in my intervention—they will be left behind. There are some concerns about that. I am not saying that we must accept the inevitability of everything in this world, swallow hard and move on, but sometimes the hard facts are in front of us and we have to look at them.

Global music sales slipped by some 0.4% in 2014 to £15 billion. The industry body, the International Federation of the Phonographic Industry, reports that download sales, largely through Apple’s iTunes, slumped by 8%, which shows that there have been changes in the industry and to how music is delivered. Total digital revenues rose by some 6.9% to £6.9 billion, with streaming services such as Spotify and Deezer increasing by 39% and delivering £1.6 billion of revenues.

Artists who are unhappy with the development of digital streaming services will have to accept the reality sooner or later. They must—and I say this with great respect—get into the tent and influence their relationship with streaming services, rather than having no input from a position of protest. If the emerging streaming services become over-regulated, as the Financial Times said,

“It is just as likely that consumers would sate their appetites for free content by returning to piracy instead”.

The purpose of this debate—as it often is in Westminster Hall—is to get a balance and to see whether we can find a way forward. It is about solutions and not about negativity. Government statistics show that 26% of users have accessed content illegally. Those are the facts. It must be unbelievably easy to do so and it suggests that the Financial Times’ prophecy would be fulfilled should those in the music industry, and in the new media and streaming services, fail to strike the right balance and find the right way forward.

It is only right that all people are compensated for their labour. Even the richest of artists deserve to have intellectual property and copyright rights respected under the law. It is important to strike the balance, for there is much to lose for either side if they fail to do so.

10:12

[Kevin Brennan (Cardiff West) (Lab)]

I had not intended to make a speech, but the debate has been so stimulating that I have awoken and got to my feet. I just want to make a few general points because I have not prepared any remarks.

Like my hon. Friend the Member for Bristol West (Thangam Debbonaire), I have been doing some activities with the Industry and Parliament Trust, which is an excellent body that allows parliamentarians to get a more in-depth knowledge of business. In my case, that has been in relation to the music industry. Over the past 18 months or so, I have been visiting all sorts of different businesses and aspects of the music industry from collection societies right through to record companies and small, independent songwriters and producers. I have had the opportunity to see all the different aspects of the music industry, as many different industries are involved in the production of music, which is a fascinating eco-structure.

Having observed lots of different aspects of the music industry over the past couple of years, it is pretty clear to me that there is a trend towards streaming; it is the main way in which consumers listen to music now and it will be into the future. That has implications for the way in which artists are remunerated.

Despite what hon. Members have said about CDs disappearing and so on, a surprising trend in the music industry has been the growth of the compilation CD, which has gone against the trend of declining CD sales in recent years as people want somebody to curate the vast amount of music that is placed in front of them on their behalf. People purchase compilation CDs because that curation is done for them. Those consumers are, generally, of a certain age but, nevertheless, that has been a surprising area of growth reported by some record companies.

There will always be a demand for physical formats of music. The growth of vinyl sales in recent years is an indication that people are hankering after something real, physical and tangible—with a gatefold sleeve and a wonderfully high-quality vinyl record—that they can tuck under their arm and carry down the road before going through the wonderful ritual of putting it on to their turntable and playing at home.

The growth in vinyl sales is not just among people like me who are rebuying all the albums that they gave away when they thought vinyl was disappearing 20 or 30 years ago, rebuilding their record collections and buying new music. It is also among young people. When I go into real, independent record stores such as Spillers Records in Cardiff—the world’s oldest record store and one of the finest establishments in the country—young people are at the head of the queue to buy vinyl. That physical format will remain because there will always be people for whom music is their ultimate passion and is much more than the wallpaper of their life. Music is actually tied into their identity as human beings in a powerful way.

[Kelvin Hopkins (Luton North) (Lab)]

Will my hon. Friend give way?

[Kevin Brennan]

I will in a moment but I am just getting worked up.

There will always be a minority of consumers who fall into that category, but there are millions of other people for whom music forms less of an obsession but is, nevertheless, an essential part of their life, even if they are not as obsessed as some of us.

[Kelvin Hopkins]

I agree very strongly about CDs and vinyl. Does my hon. Friend agree that, as CDs are a physical form of music, sleeve notes, artwork and all sorts of other things add to the enjoyment of that music? It is not just about the sound through a set of headphones.

[Kevin Brennan]

Yes, I agree, but the point that I was about to make is that there are many millions of consumers for whom that is less important than it might be for my hon. Friend and I, who pore over such things. I am sure that he can remember, as I can, who played bass or slide guitar on which track, the exact length of each track, and who wrote the lyrics and the music—all the details that we store up.

The consumer model that is emerging is that the consumption of music will become part of most people’s general consumption of creative content, which will include film, music, television programmes and so on. We are moving into a world where people can consume creative content of whatever variety any time, any place, anywhere. That will work as a general subscription model in which most general consumers will pay for their internet, television and music all wrapped up into one family package. People already do that with their broadband, television services and telephone services. It is sometimes a bit of a stretch for consumers to go from nought to £10 but it is less of a stretch—although times are tough—for some illogical human reason, to go from £60 to £70 when they are paying into a subscription service. The Government, in their policy development, need to think through the implications of that trend.

We need the right copyright structure, legal structure and penalties, where they are required, to ensure that the people who make creative content are appropriately rewarded, whether it is from physical sales—which will continue to be an important part of revenue to the industry—or when their work is part of a more general subscription service. We must deal with the illegal content and the legal loopholes such as safe harbour that allow content to be consumed online without creators getting the appropriate reward. The Minister is a thoughtful person and I hope that he has something to say about how the Government see a way forward.

10:19

[Pete Wishart (Perth and North Perthshire) (SNP)]

It is a real pleasure to serve under your chairmanship, Mr Gray, so long as you promise never to do those Scottish accents. I congratulate the hon. Member for Selby and Ainsty (Nigel Adams) on securing this important, though short, debate. I commend him for his diligence in chairing the all-party parliamentary group on music. I have an interest as a former recording artist, and I refer to my entry in the Register of Members’ Financial Interests.

In my 15 years as a Member of Parliament, I have had the great pleasure of speaking in most debates on issues related to the creative industries and the remuneration of artists. I have a sneaking suspicion that, in the future, I will be standing here once again to discuss the same issues and challenges that we have heard so eloquently described by Members on both sides of the Chamber this morning. At the heart of the matter is how we ensure that our artists and creators, and those who are prepared to invest in their talent and creativity, are properly rewarded for the fantastic works they produce. Rights holders and investors should be properly rewarded for all their commitment.

The hon. Gentleman mentioned the success of our industry—we have always been world leaders in music. Our incredible success over the past few years is testament to the array of talent across the United Kingdom not only in music but in all our world-leading creative and cultural sectors. As legislators, it is our job to continue to create the best political environment to allow that talent and creativity to grow, thrive and develop. We cannot be the artists, although the hon. Member for Cardiff West (Kevin Brennan) and I attempt it on occasion with the world-renowned MP4. Our main job is to ensure that we do nothing that disrupts the wonderful creation of talent. More than that, we must see what we can do to create the best possible environment and conditions for talent to develop, grow and prosper. We must also ensure that this country remains one of the top exporters of music worldwide, as we have done pretty successfully over the past few years and decades.

I remember securing one of the House’s first debates on the music industry, and at that point it was all about piracy and digitisation. Music was just about the first discipline to get involved in the tensions and difficulties of the move towards digitisation. We were the first creative sector to do so, and we blazed a trail for others. We challenged some of the things that were happening. In the early days of digitisation and the move online, a culture started to emerge that suggested that, because the internet was out there, everything should therefore be free and accessible. Political parties were created to foster that belief. Pirate politicians were elected in several European nations to serve and fulfil that strong political culture. All that was happening, and the music industry tried to find a way through and had to meet many difficulties and challenges as the first creative industry in that environment.

Over the years, music has been relatively successful in meeting some of the online challenges. Piracy is not the major issue, although it is still a big issue—I welcome some of the measures in the Digital Economy Bill, which will treat theft online in the same way as theft of physical products from a shop or supermarket. We have fired a shot across the bow of the good ship pirate over the past few years, and we are making steady progress. I congratulate successive Governments on their vigorous attention, and the availability of streaming services and safe harbours is a real attempt to address some of the illegal activity.

Even with that progress, artists, creators and rights holders still struggle to secure a just reward for their efforts. The hon. Member for Strangford (Jim Shannon) and others have mentioned that streaming has been a massive success. I am a massive user of Spotify, and I like the way that I am able to access music, as do millions of people across the country who buy into the service, which allows us to listen to music in the way we want. There are all sorts of playlists, and the service is designed to be attractive to users. Such services have been successful, but we must secure a properly functioning digital market that enables creators and rights holders in the music industry to secure the true value of their works online. One of the most important things that we have to do is to address what can only be described as the value gap between rising music consumption and decreasing revenues, which both undermines the rights and revenues of those who create and invest in their own music and distorts the marketplace.

Someone is growing rich off the fat of the creative endeavours of our musicians and artists, and I assure the House that it is not the artists. Somebody is massively profiting from the proliferation of music, and we owe it to ourselves to examine what is happening. I suggest that those who seem to be making the tidiest of profits are the platforms and hosts. Such companies add next to nothing to this country’s creative activity but somehow, because of their design, their algorithms, their marketing and their ability to provide access to this content, they seem to be making the largest profits.

[Kerry McCarthy]

Whenever I highlight the extent to which musicians rely on the income from their work, someone always answers, “Well, they can make money from touring and merchandise.” The big artists can do that, because the people who go to their concerts are prepared to pay vast amounts of money—such artists attract people who have the income to buy the T-shirts—but most bands cannot survive on touring and merchandise alone.

[Pete Wishart]

The hon. Lady is right. Making records and producing albums seems to be a loss leader for all the other activity that musicians are now expected and ordered to do to try to ensure that they are able to make a living from music. She has seen the figures from the Musicians’ Union that suggest just how depressed is the average musician’s income. I cannot remember the figure, but I am sure she knows better than I do that it is significantly low. That is a real issue for so many struggling artists. I am an unrecouped artist. I sold about 1 million records, but I have never received a penny for any of the records I sold when I was signed to a major record label. There was an expectation that we would make money from all this other activity. I concede that we did relatively well, but we did not do well from record sales. There is something incredibly wrong with the marketplace.

Streaming might be an opportunity for us to consider how we properly reward musicians for the works they produce. I am attracted to the 50:50 concept of the Musicians’ Union. Let us work towards recouping the investment that rights holders and record companies make in the artists, but let the artists start to earn a little from streaming services. Artists earn an absolute pittance from streaming services, and we should at least allow them to make that pittance a little more substantial.

[Thangam Debbonaire]

The hon. Gentleman is making some excellent points. Does he agree that the online industry’s domination of the income—it is keeping so much of the income and allowing the artists so very little—is equivalent to the person driving the van full of CDs having most of the income and the artists having very little? The online platforms are the vehicle. They are the last bit of the process between creation and consumption. Does he agree that it would be better if we tipped the balance back towards the creators, without whom the industry as a whole would be nothing? We need creative people and the creative industries that support them in getting their output recorded.

[Pete Wishart]

There is very little on which I would disagree with the hon. Lady. We must restructure that relationship, but I caution her and others. The music industry in this country has a successful business model, and we are world leaders. We produce the artists and ensure that they are supported. I have nothing against record labels and the music industry investing in that talent and bringing it on in the usual paternalistic way. That is what happened when I was a recording artist, and the model is still successful. Rights holders should be properly rewarded for their investment in artists.

That brings me to my next point, which is probably the most substantial point in all this. Several Members today have raised the issue of safe harbour, which we have to tackle; of all the things that the Minister takes away from today’s debate, I hope that it will be that one. Safe harbour is a useful innovation, because it has encouraged a number of people who were tempted by piracy and illegal sites to come across to a legal framework where they are able to access some of the content.

The music industry’s suggestion of distinguishing between active and passive safe harbours is a useful one. We all know what a passive safe harbour looks like: that is where people find a store of music, access it and do all the usual things. But when it comes to the manipulation of that music and to designing things in a particular way to try to create some sort of income for it, we get into the realm of an active safe harbour. At that point, royalties should be paid, to ensure that something comes back to rights holders and artists. I very much support copyright being extended to what could be considered as active safe harbours.

I am also attracted to the idea that streaming sites should be treated pretty much as a radio player—we heard about that from the hon. Members for Bristol East (Kerry McCarthy) and for Bristol West (Thangam Debbonaire), and it is a feature that we should be looking at. When I access Spotify, for example, I mainly use the radio services. I still do not see a distinction between listening to the radio in the morning and listening to the radio service on Spotify—I think they should be treated the same.

I am conscious of time and am obviously very keen to hear from the Minister, but I have a couple of things to say about where we find ourselves after the decision we made a couple of weeks ago about the European Union. The fact that we will not have access to the European Union is an absolute and unmitigated disaster for the musicians of this country. We will now be excluded from most of the debates about the digital single market, which is one of the biggest innovations in the placing of content online that we have ever seen in any part of the world. We have now taken ourselves out of that conversation about the structuring of the digital single market. That is a disaster for musicians in this country. I am not going to mince my words about this.

Another issue related to remuneration for artists that we will have to consider carefully is free movement of people in the music sector. One of the great innovations in the music industry in London is that we can draw in so many creative people who have so much to offer our industry—

[Mr James Gray (in the Chair)]

Order. I am reluctant to interrupt the hon. Gentleman, especially using my English rather than Scottish tones, but he really must restrict his remarks to the topic under discussion today, which is remuneration for musicians for online services, rather than the wider issue of the effects of Brexit on the music industry.

[Pete Wishart]

I am grateful for your comments, Mr Gray. I will restrain myself, but we have to acknowledge that at the heart of this there are significant issues and challenges for the remuneration of musicians because of the decision taken. The hon. Member for Bristol East mentioned the right to equitable remuneration. A huge conversation is going on in the European Union to ensure that that is progressed and, again, we are now denied access to that conversation. There are massive issues when it comes to online remuneration of artists. The massive challenge incumbent on the Minister is to see how we design things so that our musicians do not lose out in the online environment, given that we are now in a very difficult set of circumstances for the way our musicians operate.

I finish by reiterating that this issue is really important. Our job—our main function—is to ensure that we set the best parameters in an environment for our musicians to develop and thrive. We have a fantastic product and resource in this country: some of the finest musicians in the world. We have enriched the souls of populations throughout the world with the wonderful works our artists produce and we have to ensure that we do nothing to further disrupt their ability to make that wonderful music. I appeal to the Minister to look at where we are, to ensure we make the right decisions on behalf of our artists and to consider the strong points made by hon. Members today.

[Mr James Gray (in the Chair)]

I call Kelvin Hopkins.

[Mr Vaizey]

Hear, hear.

10:34

[Kelvin Hopkins (Luton North) (Lab)]

It is a great pleasure to serve under your chairmanship, Mr Gray—it is a great pleasure to serve opposite the Minister as well.

I congratulate the hon. Member for Selby and Ainsty (Nigel Adams) on securing this important debate and on his eloquent and well argued speech. I also congratulate all the other Members who have spoken on their eloquence and their erudition, which is rather more impressive than my own in this matter.

This area is clearly one in which further Government action is required to ensure that musicians, singers, songwriters, composers and producers receive their just financial reward—payment commensurate with their talents, creativity, hard work, popularity and need to make a decent living and receive appropriate rewards. As a former part-time jazz musician and a member of the Musicians’ Union in my youth, I have some acquaintance with the music industry, although I never had to depend on playing music for a living—unlike at least two hon. Members present, who have been professional musicians and to whom I greatly defer. For 15 years I was a board member of the National Youth Jazz Orchestra and I am now an honorary member of that organisation, so I have a background in and current contact with music, although I have to say that popular music is not one of my areas of expertise.

As it happens, in my first Adjournment debate in this Chamber some 18 years ago, I called for better financial support for jazz from the Arts Council and the state sector in general. Many jazz musicians have always struggled to make a living from their music, despite their brilliance and their passionate and dedicated supporters and listeners. The audience for jazz is similar in size to that for opera, but the support it gets is a tiny fraction of that for opera—although I am an opera lover as well and do not want to see opera deprived of funding in any way. Famously, the great Ronnie Scott subsidised his jazz earnings by playing tenor saxophone on the hit recordings of Tommy Steele in the 1950s and ’60s. Many other jazz musicians were also session musicians to sustain their primary artistic concerns.

Downloading and streaming were unimaginable in my youth. The music world is now infinitely more complex, with sophisticated techniques necessary to ensure that artists are properly paid and not simply exploited by the online industries. That is a particular problem for Britain and British artists, because of the sheer volume of brilliant music and musicians of all kinds that this country produces. In classical music we are one of the greatest of musical nations; in jazz we are second only to its original birthplace, the US; and in popular music we have had a dominant position in the world since at least the 1960s. It is therefore right that we take the problems raised by the hon. Member for Selby and Ainsty and other speakers in this debate with the utmost seriousness.

As we have heard, the BPI, the Musicians’ Union and others, as well as some of our greatest artists, have made a number of proposals for the Government to include in the Digital Economy Bill. The sums of money made by Spotify, YouTube and others are huge, and far too little of that goes to the artists in the music industry. New legislation is absolutely vital to ensure that that happens. Securing proper payment has always been a problem for musicians and those in the music industry. Much music and many musicians through the ages have depended on subsidy and sponsorship from the rich, from rulers, from the Church and more recently from the state. We now have a sector that is commercially viable—modern popular music—but it, too, needs state protection to ensure that the industry’s musicians, singers, writers and producers receive their just rewards. The Government must act to make that happen.

10:38

[The Minister for Culture and the Digital Economy (Mr Edward Vaizey)]

It is a great pleasure to serve under your chairmanship, Mr Gray; it feels like normal service has been resumed. I thank the hon. Member for Selby and Ainsty (Nigel Adams) for securing this important debate. I saw him briefly on the television as the Tory leadership campaign got under way, and he looked a bit like a special branch officer as he held open the door for one of the candidates getting into their armoured vehicle. But he has now returned to normal service, campaigning for the rights of artists as he has done since he became a Member.

The quality of the debate has been second to none, with fantastic contributions from the hon. Member for Bristol East (Kerry McCarthy), my hon. Friend the Member for Somerton and Frome (David Warburton), the hon. Members for Bristol West (Thangam Debbonaire), for Strangford (Jim Shannon), for Cardiff West (Kevin Brennan) and for Perth and North Perthshire (Pete Wishart), and of course the hon. Member for Luton North (Kelvin Hopkins), whom I have to formally welcome as the official Labour party spokesman on cultural matters. I gave my maiden speech just after he had spoken, so there will be a wonderful symmetry if I give my final remarks as a Minister with him sitting opposite me, before I get fired by the new Prime Minister in the coming fortnight. That would be a lovely bookend to my comet-like parliamentary career.

[Kelvin Hopkins]

The Minister is being modest. He stands to be promoted, rather than sacked.

[Mr Vaizey]

It is invidious of me to single out individual contributions, but I particularly welcome the contribution of the hon. Member for Bristol West. I did not get the chance to have debates with her while she was briefly the Opposition culture spokesman, but I thank her for her kind remarks about me in one of her speeches when she held that role. In that speech she showed what a huge contribution she would have made to debates on culture as a Front-Bench spokesman, and definitely will make as a Member of this House.

I do not want to be snarky, but I noticed that the spokesman for the official Opposition spoke for around four minutes, whereas the Scottish National party spokesman spoke for 15 minutes. Perhaps we are seeing the shifting sands in the SNP campaign to become the official Opposition, although sometimes brevity is the soul of wit. Before I am ruled out of order, Mr Gray—

[Mr James Gray (in the Chair)]

You are close.

[Mr Vaizey]

Let me get on to the subject in hand.

This is an important debate about a very successful industry. It is important for us to recall just how successful the British music industry is. For example, in 2015, one in six albums purchased around the globe were by British artists. We are the second-largest source of repertoire in the US and one of the biggest music markets in the world, alongside the US, Japan and Germany. Last year, Adele once again released the world’s best-selling album. Interestingly, that was the eighth time in 11 years that the global bestseller has come from the UK. Indeed, five of the world’s top 10 best-selling albums in 2015 were by British artists.

As hon. Members noted during the debate—particularly my hon. Friend the Member for Somerton and Frome, who took us right back to the beginning of music streaming—the digital technology revolution in consumer behaviour, which is disrupting almost everything at varying speeds, has of course disrupted the traditional model for distributing music. In the decade or so that I have covered this brief, both as an Opposition spokesman and as a Minister, I have seen that change take place. Indeed, when I first became a Minister, we inherited the last Labour Government’s proposals to tackle piracy, which involved sending notices to individuals who were breaching copyright. At the time, I was sceptical about how effective that would be.

I do not want to prejudge matters, but I think the strategy we adopted has, to a certain extent, been successful. There has to be a combination of carrot and stick. We were successful—this is actually thanks to the music industry—in using existing fraud legislation in the courts to ensure that the most egregious pirate sites were blocked. Interestingly, because that was existing legislation, it did not provoke the kind of controversy that surrounds almost any attempt to “regulate the internet”. When such a measure was proposed in the United States, it resulted in a lively campaign, with people claiming that it would mean censoring the internet. Why anyone would accuse people who want to take down illegal content of censoring the internet is beyond me, but people somehow feel it is a legitimate point to make.

Alongside using legislation to block websites, the carrot, as it were, has been the rise of legal music services. I was particularly pleased to see the report issued yesterday by the Intellectual Property Office, which showed that the establishment of well-known music streaming services such as Spotify has helped to shift more people towards using legal sites. It is clear from reading the IPO report that we are not nearly out of the woods yet in terms of illegal downloading and listening, with some 7 million people in the UK apparently still accessing illegal content, but it is good that music streaming services have become more mainstream, even to the extent that I now use such a service. Some progress has been made.

Before Baroness Lucy Neville-Rolfe took over the intellectual property portfolio with such enthusiasm, I regularly held round-tables with Google and many others in the industry to discuss how they would help reduce access to illegal sites, with particular attention paid to searches that threw up such sites. I am pleased to say that the Minister in the other House has continued those round-tables. I have a huge degree of sympathy with those who say that Google could and should do more. Indeed, when it came to images of child sexual abuse, we were able to work with Google to ensure that something like 130,000 different search terms would result in a blank search return, so it is clear that Google can do work on its algorithm.

The Google argument is twofold. First, an image of child sexual abuse is clearly illegal and criminal, so Google feels it can act without the intervention of the courts. Secondly, Google likes to say that for material that infringes copyright there can sometimes be a grey area. Nevertheless, there is no doubt that it can do more. It has claimed that it has changed its algorithm, but any of us who go on Google every so often and type in the name of an artist to see what emerges will still see a list of illegal content websites coming up in the results. Google does work with some of the trade associations to ensure that links to illegal sites are taken down. As the hon. Member for Bristol West pointed out, the debate is shifting and Google is starting to take a more proactive attitude on such issues, in partnership with the music industry and artists.

We have also worked with the advertising industry. People put up websites with illegal content not as an act of altruism—if one can call it that when they are stealing somebody else’s property and giving it away—but to make money. We should not forget that. One way the people who run such sites make money is by having advertising on their websites, so we have worked closely with the UK advertising industry to ensure that legitimate advertisers do not see their advertising put on such websites. We lead the world in taking such action.

Before I address some of the substantial issues that have been raised, I should mention the Digital Economy Bill, which recognises the importance of tackling online infringement. We have extended the penalties for online infringement to match the penalties for physical infringement, as the hon. Member for Perth and North Perthshire mentioned, and the Bill will give us a chance to debate many of these issues again. I look forward to some of the brilliant contributions we have heard today being echoed in that debate. In congratulating hon. Members on their contributions earlier, I should have said how impressed I am by how many active musicians there currently are in the House.

On the issue of platforms, when we talk about safe harbour we are referring to the situation that has traditionally existed for the past 15 years. Intermediaries such as YouTube claim that they are passive recipients of content and that it is not necessarily their responsibility to police that content, although they claim that they do so voluntarily but do not have the resources to ensure that such content is not online. They claim simply to be a platform on which people can put their content.

As the hon. Member for Cardiff West said, the safe harbour legislation was introduced to encourage innovation. In many respects, it has been successful. When we debate these issues and look at the negatives, we should also remember the positives. A lot of platforms, and indeed the internet as a whole, have given an extraordinary opportunity to many artists who would potentially have remained undiscovered without them. Before the existence of the internet such artists had only one door to a successful career in the music industry, which was through the record labels. The internet has widened opportunities for artists as well as causing them considerable problems.

Obviously, what sits behind the idea of safe harbour is the e-commerce directive, but that is now quite legitimately a subject for debate, and it is perfectly appropriate for rights holders to argue that the hosting defence is being abused to allow copyright-infringing content to be hosted indiscriminately without their being remunerated. That is why the hosting defence creates a value gap, as it benefits intermediaries without compensating rights holders. The hosting defence also leads to a mismatch in negotiations, giving the whip hand to intermediaries rather than to artists themselves. There are also concerns about the different types of streaming business models, and about whether they provide the correct levels of remuneration to rights holders.

As a Government, we believe that businesses must act in a socially responsible manner. That applies to platforms, which should co-operate in the removal of copyright-infringing material without harming freedom of expression. However, as I said earlier, we must also recognise the role that platforms play in driving innovation.

[Kelvin Hopkins]

Too often we have heard Ministers just exhorting people to behave well. Is the reality not that we need strict, firm, strong regulation to make sure that things happen, so that we do not just have to rely yet again on warm words to help musicians when what they really need is legislation to protect them?

[Mr Vaizey]

The hon. Gentleman makes a fair point. Many hon. Members have asked what the position on the copyright framework will be going forward, given that as a member of the European Union we have sat within the EU copyright framework. They will know that the situation is currently being considered to ensure that the right balance is struck between providing the right incentives and having the right protections.

The European Commission is considering reform in this area as part of the digital single market package. Clearly, circumstances have changed in the last fortnight. The UK was a leading voice in the debate on the future of the digital single market, and the Government and individual Ministers have built strong relationships with the Commission and with leading nations such as France and Germany, which obviously also have strong voices in this debate.

It is my personal view that we will continue to have some influence on how things develop, because this is a very public debate and the UK, along with a number of other countries, submitted a letter a few weeks ago to make the point about platform regulation. We argued first that not all platforms are the same, so we cannot simply have one-size-fits-all regulation, and secondly that we must ensure that we do not throw out innovation. I have said consistently to the commissioners that the UK Government welcome a debate on platform regulation. We are not saying that the Commission should not examine the issue; at this stage, we are simply raising some of the concerns that exist.

[Pete Wishart]

People have suggested that we may be trying to use France and Germany as a proxy for our influence, to achieve our requirements in the digital single market. Is there any truth in that suggestion? If there is, is that not evidence of how we are being further reduced and diminished in our relationship with Europe, such that we expect others to do our bidding on our behalf?

[Mr James Gray (in the Chair)]

I call the Minister to speak with reference to the subject under debate.

[Mr Vaizey]

I am sorry if I gave that impression; that was not the point I was trying to make at all. The point I was trying to make was that countries such as France and Germany clearly have very strong views on the issue, and their voices are heard. The situation pre-Brexit was that the UK, France and Germany had slightly different positions on some of these issues but were all influential voices, and I was engaging quite closely with both the French Government and the German Government about their attitude, as well as with the Commission.

It is my intention, particularly as we remain a member of the European Union for the foreseeable future, that the British voice—the voice of British artists and the voice of the British music industry—is heard in future negotiations. At the moment, however, we are at a relatively early stage when it comes to formulating principles and identifying issues.

[Kelvin Hopkins]

I appreciate what the Minister is saying, but Britain’s interests in this area are far greater than those of the other nations he mentioned. We need to have national legislation that is at least as strong, if not much stronger, than what the EU proposes. Does he have any idea of the sheer volume of our interest in popular music compared with that of France and Germany? I would guess that the popular music industries in those countries are much, much smaller than ours.

[Mr Vaizey]

I accept that the British music industry is probably bigger than the music industries in France and Germany given the profile of British artists. However, a company such as the French firm Vivendi, which owns Universal, is a pretty big music company. I do not know what impact Brexit will have, but at the moment the projections are that we will overtake Germany in the overall value of our entertainment market. Nevertheless, the German market is currently bigger than the British one, and no one needs any lessons about how seriously the French take their own cultural offer and the work they will do to ensure that it is protected.

What I am really saying to the hon. Member for Perth and North Perthshire is that I see a partnership developing between France, Germany and the UK, in which we look for areas of agreement. However, I hope that at the heart of that partnership there will be an emphasis on protecting remuneration for artists and achieving a fair balance between the innovation that platforms have brought to the distribution of music, for example, and some of the issues that have been thrown up by trade bodies in particular. For example, it has been pointed out that the number of music videos on YouTube has doubled, yet the revenue for artists and labels has flatlined.

It is also important to remember that there are different emphases within the music industry itself. Clearly, the BPI does a fantastic job in representing the music industry and talking about issues such as safe harbour and copyright infringement, but of course the Featured Artists Coalition, the artists’ organisation that is so ably led by people such as the brilliant musician Sandie Shaw, has its own proposals that we need to consider properly and seriously, for example about transparency in the value chain.

I want to talk briefly about the relationship between creators, their producers and the publishers, because that relationship is absolutely vital in helping creators bring their product to market. Nevertheless, as we have already heard from some hon. Members, there is a fear that authors and performers are missing out as a result of restrictive, imbalanced or opaque terms and practices. We take such issues seriously. We want to understand how we can make progress and what the impact of certain reforms might be in different sectors and scenarios. We want to ensure that there is a balance; we want creators and performers to receive fair remuneration, but we also want investment in innovation and resources.

Any proposals that would result in restrictions on freedom of contract would need to be subject to rigorous examination. Transparency is an important feature of well functioning markets, and I know that creators would welcome moves to make it easier for them to understand the value that their works have generated. Again, there is an opportunity for partnership in that regard. For example, I welcome the BPI’s introduction of a portal that allows an artist to measure the remuneration they are receiving from streaming services.

I have covered a lot of ground, and this has been a great debate, but we should have the opportunity to hear again from my hon. Friend the Member for Selby and Ainsty about what progress he thinks has been made in the past hour and a half.

10:58

[Nigel Adams]

I thank the Minister for his remarks, and I also thank all colleagues who have contributed to this debate; it is great to see such cross-party agreement on this important subject.

As hon. Members can imagine, I have been contacted by quite a few people from within the industry about this debate, many of whom are artists. I will wrap up the debate by quoting a couple of people who have been in touch with me. First, I will quote a gentleman called Brian Message, who works in artist management. He says:

“The advent of the digital era introduced an opportunity for those involved in the music business to pull together for the economic benefit of all stakeholders. To our collective detriment, this did not come to pass.”

A songwriter, Rupert Hine, wrote to me to say:

“Put the world’s most ubiquitous search engine together with the world’s most ubiquitous noticeboard and you have created the one place on Planet Earth where you can view all the world’s Art and Culture for absolutely nothing. Great for the ‘Users’—but unsustainable for the ‘Creators’.

Artists are all but giving up. All the digital arts…are given away for free via Google’s YouTube. The world is not awash with Adeles and Coldplays or any fleeting product of broadcast talent shows. The world is full of artists trying to express themselves in a…way that moves us and makes us feel differently about the world and our place in it. For them, the meagre breadcrumbs collected from advertising revenue via YouTube is insulting—and more importantly unsustainable.”

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

Pension Freedoms

Wednesday 6th July 2016 Westminster Hall

11:00

[Rachel Reeves (Leeds West) (Lab)]

I beg to move,

That this House has considered advice and guidance on pension freedoms.

I am grateful for the opportunity to have this debate on the crucial issue of advice and guidance in the world of pension freedoms. In 2014, the Government announced one of the biggest shake-ups of the pensions industry in its history. Those changes will, as the Minister knows, affect millions of people. The reforms undoubtedly give people more choice over what to do with their pension pots—one of the most important decisions on their finances—but with those choices come great risks.

At the heart of the so-called pension freedoms is the idea that people with defined contribution pensions no longer have to buy an annuity. Instead, they have an unprecedented number of choices when it comes to making financial decisions. People are suddenly being asked to make an irreversible decision by weighing up how much to save; how long they will live; how much they need to live on; the risk of investments decreasing in value; how much they will be charged by pension providers; what tax they will have to pay; and what state pension they will receive. Let us not forget, they will have to live with the decision for the rest of their lives.

The Pensions Institute’s “Independent Review of Retirement Income”, which I commissioned from Professor David Blake when I was shadow Secretary of State for Work and Pensions, warned that:

“The unifying thread that runs through funded pension scheme is the requirement to annuitise enough pension wealth, at the appropriate age, to provide an adequate lifelong income in retirement when combined with the state pension – which is the rationale for establishing a private-sector pension scheme in the first place. It is this requirement which makes a funded pension scheme different from any other type of savings scheme.

When annuitisation becomes optional, that unifying thread is no longer present and there is a real danger that the pension system begins to unravel. At best, it just becomes a tax-favoured arrangement for operating a multi-purpose spending pot and once the money has been spent for one purpose, it cannot be spent on another. At worst, it becomes a honey pot for thieves and other opportunists: while you cannot steal someone’s pension, you can steal their pension pot, as a number of people are now discovering. Lying between these extremes are millions of people who are now in control of their pension fund and who will be trying to do the best for themselves and their families…many of these people could well find themselves in the same kind of control as a yachtsman in the middle of the Atlantic in a force nine gale.”

When the pension freedoms were announced, we in the Labour party were clear that we would in principle support reform. We recognised that annuities did not work for everyone, but that reforms must be accompanied by the provision of guidance to help people to make important and difficult decisions about how to use their money. In response, the Chancellor committed to a new guarantee enforced by law that everyone retiring with defined contribution pensions would be offered free, impartial, face-to-face advice on how to get the most out of their choices. That commitment materialised to some extent—although it was guidance, not advice—in the form of Pension Wise, a single guidance service launched to coincide with the introduction of the pension freedoms in April last year.

The Pension Wise service offers face-to-face or phone appointments to those aged 50 or over with a DC pension. In each appointment, impartial guidance is given on pension options and tax and there is a discussion of the options that may be most suitable for the client. The ratings from those who have used the Pension Wise website are positive. The gov.uk performance site shows user satisfaction at 89%. I pay tribute to all those who work at Pension Wise for providing an excellent service.

However, the problem, and the reason for the debate today, is not the effectiveness of Pension Wise; it is how few people are using the service. The Financial Conduct Authority estimates that fewer than one in five consumers are using it. In response to a recent parliamentary question I tabled, the Government revealed that there have been 61,000 completed appointments since launch. That represents only around 12% of DC pension customers who have accessed their pensions since the reform came in. That is deeply troubling, and I am interested in what the Minister has to say about improving the use and take-up of the service. Put another way, almost nine out of 10 people are not seeking advice or guidance from Pension Wise when cashing in their pensions. That figure is worrying and suggests that millions of people are not getting the impartial guidance they need. If that is the case, as it seems to be, we should be alarmed about the quality of financial planning guidance that some people are getting and the subsequent impact that could have on their standard of living in retirement.

The Government published their “Financial Advice Market Review” in March and their plans for a new comprehensive pensions guidance service. They have a shared objective of ensuring that all consumers can access the help they need to make effective financial decisions. As the review says:

“Both industry and consumer groups also felt that many people, even those who did not necessarily want or need regulated advice, would benefit from more support and guidance in financial decision-making.”

In addition to those efforts to bolster the pensions guidance offering, welcome regulatory scrutiny will also be applied to the evolving retirement market, with the FCA identifying pensions as a priority area in its 2016-17 business plan. Although those are welcome developments, the results will arrive too late to benefit the 1.5 million people expected to access pension savings before spring 2018.

Critically, evidence suggests that poor outcomes are likely for consumers who do not seek professional support with their retirement options. UK and overseas analysis shows that factors such as disengagement, underestimation of how long people will live and weak financial capability lead to poor outcomes. Although it is too early to say what the new pension freedoms will mean for outcomes, the FCA estimated the losses from failing to shop around when people were required to buy an annuity:

“The majority of consumers (60%) do not switch providers when they buy an annuity, despite the fact that we estimate 80% of these consumers could get a better deal on the open market, many significantly so.

We estimate that the aggregate benefits that consumers miss out on by not shopping around and switching is the equivalent of between £115m and £230m of additional pension savings.”

The OECD has suggested that, although the pension reforms might increase pensioners’ control of their money, which I welcome, they could be

“detrimental to both retirement income adequacy and incentives to work”

because of

“myopic behaviour and insufficient financial literacy”.

What is more, research from the International Longevity Centre-UK suggests that there is limited knowledge about relevant financial products and services. Only half of those with a DC pension said they understood what an annuity is “quite” or “very well”. Just one third said they understood what a joint life annuity is quite or very well. Most shocking of all, just 3% said they understood what income drawdown is quite or very well. These are people in DC schemes who have to make big decisions, yet they do not seem to have the knowledge about the products they have to choose between.

Research by the Pensions and Lifetime Savings Association found that 53% of people incorrectly believe drawdown products offer a guaranteed income. The majority of people believe that a drawdown product is a guaranteed income, which it most definitely is not, while one quarter believe that drawdown carries no investment risk at all, which is incredibly worrying.

Meanwhile, the Pensions Institute’s “Independent Review of Retirement Income” states:

“It is important to be aware of the risks involved in the generation of retirement income from pension savings”—

such as investment risk, inflation risk and longevity risk. It continues:

“Following ‘freedom and choice’, these risks are now borne directly by DC scheme members”

in a way that they were not when everyone had to annuitise. It continues:

“Even with improved financial education, it is unlikely that many people will fully understand some of these risks. This is because some risks have to be experienced before they can be genuinely understood, and often it is too late by that stage to do anything about them. In addition, many people will have problems understanding the full range of product choices that are now available. All this makes it difficult for many people to be in a position to make ‘informed’ choices.”

Demand-side weaknesses and lack of knowledge from people making decisions are compounded by the repeated failure of parts of the pensions industry to, in my view, treat customers fairly. Mis-selling in the UK retirement market has been catalogued at length by the FCA and its predecessor, the Financial Services Authority. Poor buying decisions have also been identified by some organisations and consumer groups to the National Audit Office, which in its report on mis-selling described the concerns as being centred on regulatory approaches that are

“based too much on monitoring and implementing detailed disclosure requirements, rather than assessing whether consumers truly understand what they are buying.”

If disengagement and low take-up of guidance remain the norm, it reduces competition and undermines confidence in the new pensions market. Again, I stress that this is a real concern when we have consumers without the information to make the best decisions, and a pensions industry that is not necessarily helping people to make the decisions that are best for them.

Pension Wise has run three national marketing campaigns across TV, radio, print and digital media, but take-up, as I said earlier, remains low at just over 10%. Such problems must be addressed. That is why I call on the Government to issue new guidance to make sure consumers seek proper guidance before drawing on their pension pots. At the moment, the so-called wake-up packs sent to DC pension customers ahead of retirement are often more successful in driving consumers to the providers’ own product solutions than directing people to the Pension Wise guidance service, something that Baroness Altman has pointed out:

“I have seen the retirement packs from some of the better pension providers who are hiding away Pension Wise. They are doing this while promoting their own internal help lines.”

The whole point of Pension Wise is to be readily available to the people who are making the decisions, but they are not directed there by their pension providers and will probably never find out about it. So what is needed is a new approach whereby customers who decide to cash in their pensions must either seek guidance from Pension Wise or actively opt out of doing so before progressing. That would not only improve outcomes for customers, but dramatically reduce the opportunities for mis-selling, cut the risk of savers falling foul of financial scams and other potential abuses, and help people to make the right decisions at such an important time in their lives. It would enable guiders to alert consumers to the existence of fraudsters who use techniques such as cold calls and text messages to con people into placing their savings into wholly inappropriate investments. The Government must take a number of additional actions to support that.

The Government must work with industry to introduce a system to allow pension providers to book guidance appointments directly for their customers, or to put them through, if they can make contact by phone, to the appointment booking service without a break in service. Such handovers should be based on ensuring that the customer journey is as smooth and continuous as possible and that as many people as possible get the right guidance. The Government should consider allowing providers to share certain data with each other, so that when a customer is passed from one service to another, the second engagement does not need to start from scratch, with the customer forced to repeat all the information that they had previously provided.

Looking further forward, the new pensions guidance body should also link with the pensions dashboard being developed by 2019. The dashboard will enable people to see all their pension savings in one place—that is welcome—help people to engage with retirement planning and prompt them to take action. It is critical, therefore, that there is co-ordination with the new guidance body, so that consumers are signposted and directed to access guidance when looking at their dashboard. Links to the guidance service should be embedded within the pensions dashboard from the start, and the Government should consider how to improve engagement as the dashboard is introduced. That will also encourage consumers to seek pensions guidance at an earlier stage.

Currently, people are prompted to seek guidance at the point of, or close to, making a decision on how to turn their pension savings into a retirement income—for example, when receiving a wake-up pack from their provider. Proactively contacting people at an earlier stage in their working lives would also give people more time to make changes to their savings strategies if needed. As with other measures to improve the customer journey, solutions should be tested with consumers to ensure that they are effective and meet their needs. Although I believe all this is critical, we must not take our eye off the bigger picture. The Blake review makes excellent recommendations for the direction of pension reform, and that should be the focus of future Government policy making.

In conclusion, failure to address low guidance take-up is likely to lead to negative outcomes for those most at risk of making poor choices, reducing pensioner wellbeing, undermining competition in the retirement market, and having a toxic impact on confidence in the pension system just when good progress is being made through the roll-out of automatic enrolment. The guidance structure is already in place in the form of Pension Wise, which has received positive feedback, as I set out earlier, from those who have used it; it has the scale and budget to deliver guidance to the full range of consumers who need it. But without action from the Government, take-up looks set to remain low. That is why I am calling on the Government to introduce the default guidance approach. Crucially, that would in no way undermine or inhibit the central purpose of the pension freedoms. Consumers would retain complete freedom to draw down as much or as little of their pension pot as they wish at any time they want.

That change would provide a vital safeguard for millions of people when they plan for their retirement. It would give them the security of knowing they have had the benefit of impartial guidance before making a decision that could have a huge impact on how comfortable they will be in retirement. It would have a dramatic impact in helping people to use their pension pots, which they have saved for, wisely. I urge the Government to take that on board to help to ensure that as many people as possible can enjoy a secure income in their retirement.

11:16

[The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)]

It is a pleasure to serve under your chairmanship this morning, Mr Gray. I thank the hon. Member for Leeds West (Rachel Reeves) for setting out her case. She speaks with considerable experience, given that she was the shadow Work and Pensions Secretary. I am glad to see the right hon. Member for East Ham (Stephen Timms) also joining us for this debate.

Pension freedoms, which have been widely welcomed, have raised interest and engagement in pensions significantly. The freedoms give people the opportunity to take responsibility for their own retirement. In the first nine months we saw nearly 540,000 pensions being accessed. People are clearly taking control, but, as the hon. Member for Leeds West said, they need to do so after receiving the appropriate information at the right time so that they can make decisions that suit their circumstances.

The Government recognised that in order for people to make the most of the new freedoms they needed to equip them with the tools to make decisions that suit their circumstances, so Pension Wise was launched. This service provides free and impartial guidance to those aged 50 and over to help them to understand what they can do with their defined-contribution pensions following the reforms. I am happy to say that it has been very successful. I hope to give some information to the hon. Lady during the course of this debate that will give her some comfort.

[Stephen Timms (East Ham) (Lab)]

I agree that Pension Wise is providing a good service, but does the Minister acknowledge that, as my hon. Friend the Member for Leeds West (Rachel Reeves) pointed out, take-up of the service has been very low? In my area there is certainly evidence of skilled advisers sitting around twiddling their thumbs quite a lot of the time because the demand has not yet come through.

[Mr Vara]

The right hon. Gentleman makes a good point. I accept that we have more to do. I hope my comments will give him and the hon. Lady some assurance that we are doing things and we recognise there is more to be done. The hon. Lady referred to the number of appointments—73,000 so far—but 2.7 million visits have been made to the Pension Wise website. It is important to look at the two together, rather than just the appointments, because the information provided in the appointments is all available on the website. Many people are accessing the website and finding that they do not need an appointment. That needs to be borne in mind.

I appreciate that, as the right hon. Gentleman said, there is concern about take-up. It is important to remember that the service is not compulsory for everyone who wants to access their pension pot. Using Pension Wise is a voluntary option and people should be given the choice to plan for their retirement in the manner they see fit. However—I emphasise this point—it is important that people know the service is there to support them if they wish to use it.

Pension Wise has already run three national marketing campaigns across TV, radio, print and digital media. Those campaigns complement the current requirement for all pension scheme providers to signpost to Pension Wise whenever a wake-up pack is sent out to a member.

[Stephen Timms]

I am grateful to the Minister for giving way again. As he said, Pension Wise is a voluntary service. Has he noticed the point made by the Association of British Insurers that guidance for people transacting in the secondary annuity market, where the pitfalls are particularly troubling, should be mandatory?

[Mr Vara]

The right hon. Gentleman raises another good point. This is something we are looking at, although he will forgive me for not making any instant decisions. The secondary market is a broad market, with a huge amount of rules and regulations. We started with the initial concept of providing access to pension pots. That is now leading to other issues that rightly need to be looked at, but he will forgive me if I do not comment on those right now.

We have had three national awareness campaigns and we are working on a fourth. This is not an area where we feel we have done enough. There is more to do and we recognise that. The subject of pensions is complex and the Government recognise that there is more to be done.

Last year we consulted on how the provision of free, impartial financial guidance could be structured to make it more effective. The review confirmed that the current guidance offer can be confusing to the public. There is also an overlap in some services. That is why we have consulted on our plans to restructure the delivery of public financial guidance to make it more effective, by directing more funding to the frontline and providing more targeted support.

The latest consultation outlined our proposal for a new guidance model, which involves setting up a new pensions guidance body where individuals can get all their queries on private pensions answered in one place. There will also be a new, slimmed down money guidance body, to ensure people can access the debt advice and money guidance they need. The two bodies will work together to ensure that people who need both pensions and wider financial guidance are directed to the right place. The consultation ended last month and we are currently considering all the responses with a view to publishing our response this autumn.

Most people who seek information on pensions do not distinguish between guidance and advice; they simply want help. Regulated advice will be appropriate for some people, so there is still a need to make sure that affordable and accessible financial advice is available for those who want it. That is why the Government intend to consult, over summer 2016, on introducing the pensions advice allowance, whereby individuals will be able to withdraw up to £500 tax-free from their defined-contribution pension pot to redeem against the cost of financial advice before the age of 55.

Employees often look to their employers for help when it comes to pensions. To further encourage employer involvement, the Government will increase the current £150 tax and national insurance contributions relief to £500 for those employers who arrange pension advice for their employees. It is our view that that proposal and the pensions advice allowance could be complementary, so it would be possible for those who are able to use both to access up to £1,000 of tax-advantaged advice. Such initiatives can give people an understanding of their options, but no one knows their customers better than the pension providers themselves, and I know that organisations within the industry are starting to look at new and innovative ways of engaging with their customers. I hope we can work with the industry so that information and guidance is provided in a way that meets the individual’s needs.

The hon. Member for Leeds West spoke eloquently of the need to increase the take-up of Pension Wise. As well as the fourth awareness campaign that we are working on, Pension Wise delivery partners also promote the service locally in businesses and libraries, for example. A concern was also raised about getting proper advice. Pension Wise offers guidance on how to spot a scam, how people can protect themselves and what to do if they think they have been scammed, on its website and in appointments. If someone suspects they have been scammed, the service will signpost them to the Pensions Advisory Service and Action Fraud. In addition, Pension Wise is a member of Project Bloom and works with other members to raise awareness of scams.

The right hon. Member for East Ham spoke about the secondary market. I can tell him that Pension Wise guidance will be available to those selling their annuity, once the market launches in April 2017.

[Stephen Timms]

I thank the Minister for that answer. May I raise one other issue with him? The ABI says that it

“would like to see the new guidance arrangements enhanced so that providers who want to block transfers to protect their customers (because of concern about the receiving scheme) can refer their customers to the new body to receive impartial guidance on the risks from transferring funds to potential scams and fraudulent investments.”

Is that proposal from the ABI also something that he is reflecting on?

[Mr Vara]

Let me assure the right hon. Gentleman that we are keen to make sure that this works. We are not in any way restricting the stakeholders with whom we speak. We are working with all of them, including the ABI and a whole host of other organisations and people, to make sure that whatever guidance and regulations we put in place are right. We want to get it right as best as possible first time round. I assure him that we are very much taking on board the views of others out there.

To conclude, the hon. Lady was right to raise this important issue. I thank and commend her for doing so.

Question put and agreed to.

11:26

Sitting suspended.

Broadband in Wales

Wednesday 6th July 2016 Westminster Hall

[Steve McCabe in the Chair]

14:30

[Mr Mark Williams (Ceredigion) (LD)]

I beg to move,

That this House has considered broadband in Wales.

It is good to see the Minister here fresh from Colchester. He has had a busy day; he was in this Chamber first thing this morning. It is also good to see the shadow Minister, the hon. Member for Newcastle upon Tyne Central (Chi Onwurah), in her place. We were looking forward to a contribution from the hon. Member for Newport West (Paul Flynn) in his elevated role as shadow Secretary of State, but it is genuinely good to see the hon. Lady here in his stead.

I am grateful for the opportunity to raise this matter in the House. Today is a very important day in this House, not least given the events in the main Chamber. It is also a very important day for Wales, with the football this evening. We have the best of Wales—and, I am sure, of Scotland—in this Chamber to debate this important issue.

As many hon. Members know, the issue of broadband and internet connectivity is a recurring problem. Not a week goes by without concerned constituents contacting us. It is not unique to my constituency. Despite genuine improvements—some would say vast improvements—and the Government’s genuine attempts to meet their targets, there is a feeling that we are falling behind in many rural communities and in Wales more widely.

I welcome the Government’s intention to introduce a broadband universal service obligation and their ambition to give people the legal right to a 10 megabits per second connection, no matter where they live, by the end of this Parliament. The Prime Minister said:

“Access to the Internet shouldn’t be a luxury; it should be a right—absolutely fundamental to life in 21st century Britain.”

I could not agree more, and I am glad that that was put into the tentative stages of legislation with the introduction of the Digital Economy Bill yesterday. I look forward to that principle being put into law, but targets have come and gone before, and the proof of the pudding will be in the proverbial eating.

I also welcome the Government’s recent target to connect 97% of premises by the end of 2019. The many communities that are currently underserved with bad or non-existent broadband connections are enthusiastically waiting to hear whether that target will be met, and whether they will benefit or will be among the 3% left out. My constituents are certainly hoping for good news. I will hear of the challenge in the contents of my inbox—or, more precisely, given the subject matter, in the representations I get from constituents who use more old-fashioned means of communicating their disquiet.

There is a feeling—I think this will be endorsed by other hon. Members—that the peripheral parts of the United Kingdom are often left out and forgotten. The principles of entitlement do not always seem to extend to all parts of the United Kingdom. That is the basis of many of our concerns. None the less, it is welcome that successive Governments have talked about the importance of connectivity and have recognised that it cannot simply be left to the market to decide where we have access. Although in urban areas it is possible to rely on commercial businesses to fill the demand for high-speed broadband, the internet has become a necessity for everyone, including individuals trying to fill out Government forms online and business people such as farmers trying to do their taxes and apply for funding, some of which is an existential need. I have previously cited the example of the farmer in southern Ceredigion who had no broadband at all. He was forced to send a paper tax return to Her Majesty’s Revenue and Customs, and got fined for doing so. We managed to get the fine back for him, but he was told that next year he should pop down to the local library to submit his return online. There are not many libraries left in rural Ceredigion, and those that there are do not have sufficiently safe, secure or reliable broadband connections. That is the reality for many of our constituents.

We need only look at the comments made by figures in the technology industry and note our own experiences as constituency MPs to see how hugely the internet has changed our lives and how far we have to go to ensure that everyone has adequate access. The chief executive of Cisco, Phil Smith, said of Wales:

“I’m very surprised that broadband hasn’t got to the level of penetration it should. To be honest, it’s like saying you don’t have a road now, or you don’t have water. Companies, countries and individuals can’t survive without broadband; it’s not some optional nice thing to have; this is the way business is done.”

In Wales, where our physical infrastructure is challenging, broadband is even more necessary. Its importance cannot be overstated. That view is shared by organisations as diverse as the Countryside Alliance, the Federation of Small Businesses, Ofcom, the National Union of Farmers and the Farmers’ Union of Wales.

There have been improvements and substantial investment to improve the number of individuals and businesses able to access fast broadband speeds. Millions have been spent on improving the low figure of 55% superfast broadband coverage in Wales in 2014. Although we have failed to meet the aim of 96% coverage, I welcome the increase to 87%. The availability of superfast in rural areas of Wales increased to 50% last year thanks to the Superfast Cymru programme; yet, as a Member with a rural seat, I cannot help but be concerned that rural areas are still losing out most. Improvements are a good thing, but many of the 11% of premises in Wales that cannot receive the proposed USO broadband speed of 10 megabits per second are in my area. How can we improve the situation to ensure that those areas are not left behind? Surely areas that not only have some of the lowest speeds but contain some of the highest percentages of those without a connection altogether need to be prioritised.

The FUW noted recently, after its Meirionnydd branch visited a farm in Machynlleth—for those who are not geographers, Machynlleth is a town settled between the three historic counties of Montgomeryshire, Ceredigion and Meirionnydd—that the highest proportion of those with no broadband access are farm businesses. For farmers who have attempted to diversify their businesses by letting self-catering cottages and converting buildings into offices for use by others, connectivity is critical, yet many are at a significant disadvantage. Those who have children at home—increasingly, more online homework is required—are struggling. As I said earlier, almost all of them have to keep up with changing agricultural rules and apply for services online. It can be costly, if not impossible. More and more services are going online, so digital inclusion is vital.

According to Ofcom, in June 2015, more than 67% of my constituents had slow internet connections of less than 10 megabits per second, and almost 20% had connections of less than 2 megabits per second. That situation was replicated in other rural constituencies throughout Wales. Carmarthen East and Dinefwr—it is good to see the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) here—Montgomeryshire, and Carmarthen West and South Pembrokeshire join Ceredigion in the top 10 constituencies with the slowest broadband connections anywhere in the United Kingdom.

The issue of inadequate broadband connections affects not simply an isolated house here or there—the stereotypical cottage in a valley with roses around the front door. Whole communities lack adequate, or even usable, internet connections. For years, these issues have been plaguing Llangrannog in my constituency, which is a significant tourist community; the sizeable community of Llanfair Clydogau near Lampeter; and Synod Inn, down our main road between Aberystwyth and Cardigan—the most significant road in our constituency. There has been little progress. In Llanfair Clydogau, I am specifically dealing with broadband casework on behalf of not just individuals who write with concerns, but an entire community.

At this point, I want to place on record my appreciation for BT’s parliamentary unit, who I think were in the Members’ Dining Room earlier today. I was not there, but Clova Fyfe and her team in particular have been assiduous in responding to the individual concerns of Members of Parliament, and I genuinely thank the unit for that.

[Chris Davies (Brecon and Radnorshire) (Con)]

Will the hon. Gentleman give way?

[Mr Williams]

That is very timely. The hon. Gentleman has just walked in, but I will give way.

[Chris Davies]

I thank the hon. Gentleman for bringing forward this debate on a topic that I have spoken about on many occasions in this place. I was at the BT meeting, as was my colleague the hon. Member for Ynys Môn (Albert Owen). The people from BT were very helpful, as always, but they leave many questions unanswered.

[Mr Williams]

There we are. Perhaps the hon. Gentleman will shed some light on some of those unanswered questions a little later. I thank him for that intervention.

Communication with individual constituents is sometimes less satisfactory. Too many of my constituents have had template responses from BT and Openreach saying that they have absolutely no plans for the foreseeable future to improve the state of the broadband connection. That seems to be the case for large parts of the county. Even in some of our larger communities, such as Lampeter, which is an important university town, connections are at best poor. For many of the small businesses that I have visited there, the No. 1 request is for something to be done to improve broadband speeds and provision. Options for businesses, although an improvement over those for some of my rural communities, are sometimes limited.

For struggling small businesses, the quality of the broadband connection can often be the difference between keeping afloat and going under. That seems like a dramatic statement, but our reliance on broadband and communication, and—this is where that rural point comes in again—the fragility of the rural economy and some of our rural businesses mean that it is very important that they get their marketing right and, for some, their internet booking systems right. I have in mind specifically some of our tourism businesses. For many growing businesses, the inability to invest in a fast and more reliable connection that is not extortionately priced can be a stumbling block. I am sure that the Minister will agree that the opportunities for our economy of getting broadband right are immeasurable. For the rural economy, that would mean a great deal more potential being realised.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I hesitate to cut the hon. Gentleman off mid-flow; he is making a passionate and informative speech, as usual. He is totally right to note that broadband provision is an opportunity for economic salvation for rural areas, where our greatest assets are the beautiful landscapes and the social and leisure facilities that are available to people. In a world where leisure time is being compressed, adequate broadband infrastructure creates a huge economic opportunity. People who love horse riding, mountain climbing, mountain biking, rambling, surfing, coasteering and other such great activities are far better off living in areas like the constituencies that we represent than in the centre of London.

[Mr Williams]

I must say that I have not been on a horse for some time, I do not think I have ever been on a surfboard and I have a mountain bike that has remained in my porch for some time, but I take the hon. Gentleman’s point. He is right: there is huge potential in the area of outdoor pursuits and tourism. We have to face the reality that connectivity, whether we get it through broadband or our mobile phones, is now an integral part of all that. We cannot separate the two.

It has also been brought to my attention that many commercial internet providers and individuals have concerns about the role that Openreach has played in providing the infrastructure and in some of the specifics of the national broadband scheme, such as how funding is spent. Some of us here have been concerned for some years about the conflict of interest in a commercial provider such as BT holding a near monopoly of the country’s physical broadband infrastructure. I certainly welcome Ofcom’s proposals, which it set out in its initial conclusions from its strategic review of digital communications, to open BT’s ducts and telegraph poles to its rivals and for Openreach to be reformed to ensure a better service for customers and businesses. That should help to improve competition and the development of new technologies—something that those of us in rural areas, and indeed urban areas, would very much welcome. That is positive news, but issues still need to be addressed and many are concerned that BT has a limited incentive to invest in a fibre network and ensure improved speeds for people in Wales, due to the huge revenue that it continues to make from the legacy copper Openreach network.

However, although there is little hope that broadband connections will be provided by commercial deployment in my constituency—the Minister made the point at a briefing that I attended two or three months ago that absolutely no premises in Ceredigion could be viewed as economic and covered in that way—there is rightly concern that some areas are being needlessly subsidised at the expense of those that really need subsidy. It will come as no surprise that my assertion is that my constituency, other parts of Wales and other rural areas are the communities that need that.

According to Virgin Media, the 90% rule that underpins the national broadband scheme defines an area as eligible for state funding where 90% or fewer households currently have access to superfast broadband. Virgin Media believes that that threshold is set too high. As an MP for a rural area in which that threshold is nowhere near reached, I think that that is probably correct. I believe strongly that where there is a genuine market failure, the Government need to intervene to help to ensure that everyone has access to something that I would argue is a necessity. What research have the Government done to ensure that areas where up to 90% of households receive superfast broadband are indeed unable to achieve the final 10% or more via commercial deployment rather than Government subsidy? I ask that because I recognise, as I think we all do, that the pot for ensuring adequate broadband for all is not unlimited and it is vital that it is used as effectively as possible. If there are areas with high levels of superfast broadband that can fill the gap through commercial deployment, so that the subsidy can instead be used for rural areas where provision cannot come in any other way, it is important that that happens.

I welcome the fact that much of the money from the UK Government is given to Cardiff Bay to spend as they feel necessary. I welcome a number of their schemes, which are focused on helping some of the hardest-to -reach areas. Access Broadband Cymru provides grants of between £400 and £800 to fund the installation of new fibre broadband connections for those who would not be covered by commercial roll-out or who have connections of less than 2 megabits per second and also funds satellite technology as an alternative in some areas. Although I am by no means uncritical of the Welsh Government for missing targets and failing to ensure that rural areas are prioritised, I would also say, as an MP representing a Welsh constituency, that the existence of this Assembly scheme has not always been very clear. If that is not clear to me as a Member of Parliament, it is certainly not clear to many of my constituents. The first time that I heard of that scheme was at the Minister’s briefing in Portcullis House a few months ago. That speaks volumes about communication. He talked at that meeting about the millions of pounds that have been made available to the Assembly Government. It was alarming that many of us had not heard of that scheme.

[Chris Davies]

That matter was brought up with BT today. The fact that there are so many schemes available really is one of Wales’s best-kept secrets. Perhaps the British Government could play a part in pushing the Welsh Government and working closely with them to ensure that where there are gaps, the public and our constituents know that those schemes are available. They are there to help people and they can improve broadband accessibility if people are told about them.

[Mr Williams]

I am grateful to the hon. Gentleman for raising that. That is very true: hot off his meeting with BT, he brings useful information to the Chamber. I suggest that the point about collaboration between the Department for Culture, Media and Sport and the Assembly Government in Wales is important—all the more so as we proceed with the Digital Economy Bill. I have not yet looked in great detail at the Bill, which was introduced yesterday, but I wanted to ask the Minister about the relationship in meeting targets between setting them in London and delivery on the ground in Cardiff, which is really important.

I will conclude now. Thank you, Mr McCabe, for the opportunity to raise this important issue. I will not lambast DCMS for inaction because that is simply not the case. Significant progress has been made and the Government’s intention—[Interruption.] I detect that the hon. Member for Ynys Môn (Albert Owen) may usefully put on his boxing gloves in a moment or two. Where I will voice my deep concern, as befits the Member of Parliament for Ceredigion, is about the fact that many of my constituents are not realising the entitlements they are promised.

The National Farmers Union has spoken clearly— it also produced an excellent report, “NFU Spotlight on Farm Broadband & Mobile Networks”, which I commend—and campaigned energetically for the rights not just of its farmers, but of the broader community. Those considerations need to be taken on board. Many constituents in rural areas across the country are feeling let down and they expect a response from the Assembly Government and from the UK Government as well.

The Minister may be able to help us with this final, slightly more topical, point: the funding we have received from the European Union. Following the referendum decision to leave the European Union, I hope the Minister can tell us what impact it will have on Government schemes to provide broadband to rural parts of Wales. Since £90 million of the funding for the Superfast Cymru contract came from the European regional development fund, there is concern that areas such as mine in Wales will suffer unless funding is found from elsewhere. Has he considered that? Has he looked into that? Will he confirm that Wales will not lose out? Because the need is very much there.

14:53

[Albert Owen (Ynys Môn) (Lab)]

It is always a pleasure to serve under your chairmanship, Mr McCabe. I congratulate the hon. Member for Ceredigion (Mr Williams) on securing the debate, and I once again welcome the Minister, who has become an expert on rural Wales over the years from the broadband debates he has attended. I am sure that as all Members are doing, he will please the House by wishing the Welsh football team all the very best today. They are not just carrying the red dragon for Wales but carrying the flag for the whole of the British Isles.

I will not give the Minister a hard time, because he has moved towards many things that, when we used to argue about them, he said could never happen. I will not give a spin on that this time; instead, I will start by giving the Welsh dimension, which is what we are talking about. We had a timely meeting with BT today at which we were updated on many of its schemes. I will come on to how that links into the universal service obligation, because it is important that the gaps are plugged properly and that there is a co-ordinated plan. Although the Bill was published only yesterday, I will ask the Minister some questions about how the roll-out will be carried out.

In my north-west Wales constituency, 73% of properties have been connected through a scheme that, as the hon. Member for Ceredigion said, was funded by the Welsh Government, the United Kingdom Government and the European Union. As someone who believed, and still believes, in that partnership and has argued that the interests of Wales will be best served as part of both the United Kingdom and the European Union—[Interruption.] I see the Scottish National party representative nodding his head.

[Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)]

Only about the second bit.

[Albert Owen]

I think I had a false sense of security there. But seriously, that money was targeted and redistributed by the European Union to the areas of greatest need, and we in Wales, particularly rural Wales, were some of the main beneficiaries of that money. It was identified at Brussels level that that funding was needed in certain areas that met the criteria set out, and it helped the scheme to be rolled out as effectively in Wales as anywhere in the United Kingdom. That is down to the partnership between, and moneys from, different levels of government.

Some 73% of properties in Wales have been covered by the roll-out of a 30 megabits per second superfast broadband initiative, and 76% of Anglesey has been covered by the scheme. The average speeds are in excess of those in some other parts of Wales, so there is a good news story there. However, as with all good news stories, there are people who are not benefiting. The date for 95% roll-out has slipped from July 2016 to 2017. To be fair, there have been negotiations under the contract between the Government and BT Openreach, leading to the Access Broadband Cymru scheme providing grants of up to £800, which have helped individuals get fibre to their hard-to-reach homes directly. That is good news, but we need to see that happening more quickly.

As the hon. Member for Ceredigion said, many of the areas in the last 5% are rural areas that rely on tourism. They are beautiful areas, and people want to locate there. I will give an example—I am sure the Minister will be interested in this. I travelled on a train a couple of years ago, and a businessman who lived in Rhoscolyn on Anglesey told me that he worked in three places: in Canary Wharf, here in London; in Hawaii; and in Rhoscolyn. If he had a choice and the broadband speed was there, he would stay in Rhoscolyn to do his work. Unfortunately, he has to go to Hawaii and suffer out there or come here to London to work. There is a serious point there: in many cases people want to locate their business in the area in which they live, which helps the local economy. We need to have a level playing field when it comes to digital technology.

[Chris Davies]

It is interesting to hear that the hon. Gentleman is a great fan of the link between the Welsh Government, the British Government and the European Union, because the two of us were at the meeting earlier with BT at which it clearly stated that rural Wales is behind in dishing out and receiving broadband. It was told by Europe that there needed to be a lot of chimney pots to allow it to tick the boxes and “draw the money down” from Europe—that was its phrase. It is because of our connection with Europe that rural Wales is behind. I hope the Minister will now ensure that we go forward quickly and catch up from the mistakes made in the last few years.

[Albert Owen]

The hon. Gentleman and I were on different sides of the debate—I was a strong remainer and he was not—and I think he has misunderstood what BT said. It said that the Welsh Government wanted greater coverage in the contract, and that was the reason for the slow-up. Coverage was needed, so BT needed to get to as many properties as possible in urban areas. That was why the rural areas were left behind. Even with his anti-European ways, he is stretching it a little bit to blame the EU on this occasion. I am quite happy to lay blame, and on this occasion it lay with the contract between BT and the Welsh Government.

BT would have liked to roll the scheme out across the whole country. It advertised it by telling many people in rural areas of Wales that broadband would be rolled out to them by 2015 and 2016, but for a commercial reason that has not happened. They have been left at the back of the queue, and I do not think that is fair, because rural areas are already suffering in many ways. I keep saying, because it is true, that the areas where there are poor broadband services and speeds are those where there is poor mobile signal as well. In London, if someone cannot get broadband or is without it for a few days or weeks, they can rely on 4G. In many rural areas in Wales that is not possible. We want to get BT linked up with EE, and I know the Minister has been involved in that. There is the possibility of homes getting a TV, landline and mobile phone package, and such packages will improve in the future.

The issue I most want to raise with the Minister is the new Digital Economy Bill. I very much welcome it, as I did when I spoke in the Queen’s Speech debate. In many arguments with me, the Minister used to say that a slow-speed universal obligation was a ridiculous idea and would not be needed, and that the Government were going for top-speed. All of a sudden that is now the Prime Minister’s flagship policy, and to secure his legacy in history we are at last going to have a universal service obligation. Because he is a professional, the Minister has gone from arguing with me to taking full credit for that—he says that it was his idea all along. He was listening to us in those debates, arguing with us and then going away and putting pressure on the Prime Minister to ensure that we got a universal service obligation.

[Nia Griffith (Llanelli) (Lab)]

Does my hon. Friend agree that the highest form of flattery is imitation? If he can convince the Minister that it really was the Minister’s idea, it is far more likely to happen.

[Albert Owen]

I am not going to take credit for it, otherwise I would be as guilty as the Minister of saying that I influence things on my own. It was the idea of the shadow Minister, my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah), and it was in our 2015 manifesto, that we would have a universal service obligation. The Government said it was a silly idea and that they would concentrate on getting even faster service in some areas and then other areas could catch up later, but I am pleased to say that we are now at the same place. It is very good that we are, but I want to ask some questions about that.

The Minister made a speech and quite rightly stuck to his words that we would have a Bill in June or July. He is as good as his word. A draft Bill has come out, and we have had a consultation. It talks about 10 megabits per second, which he rubbished earlier as being too slow. That was what the consultation said, but he was not encouraging that; he wanted twice, three times or four times that. How is that going to be delivered in Wales? What kind of roll-out programme does he envisage? It is true we have not had the Bill yet and have not debated it at different levels, but I would like to know.

For 95% of Wales, the Welsh Government are rolling coverage out in a contractual arrangement with BT, which seems to be working, albeit not as fast as we want it to. It is patchy in England, with different levels of roll-out and take-up in different counties. Is the Minister clear in his mind that there will be the same delivery plan as for the local authorities in England, or will the Welsh Government roll it out? It would be interesting to know that, because my constituents in areas that are now far behind feel that they could catch up.

I again offer the Minister my island constituency to be a pilot for the scheme. We could plug the 5% gap and then roll out that ideal Anglesey model to the rest of the United Kingdom. Hard-to-reach areas, semi-rural, rural and urban areas could be connected up. We could be the pioneers, as we were with comprehensive education, which the Minister will be aware of. The isle of Anglesey was the first county in the whole United Kingdom to have comprehensive education, and I would like to see it as the pioneer of the digital economy with a universal service obligation across the island.

I make that serious point because I want to work with the Government and the Minister to ensure the Bill goes through smoothly, that we get the planning issues sorted and that we get the outdated telecommunications stuff up to date, which will be in the regulations of the Bill and the enhanced electronic communications code, so that we have seamless roll-out of a universal service obligation. I am sure the technology is there, and it may be that the minimum is 10 megabits per second and we will have extra capacity on stream very soon.

In pilot schemes in other areas of the United Kingdom, speeds of thousands of megabits are being talked about. We do not want to be that far behind and playing catch-up for the future. I hope the Minister will say how he intends to roll the scheme out and how it is going to be paid for. That is interesting—will the Welsh Government be making a contribution, or will it come from local authorities? We are unclear how that is going to work. Hopefully we will be able to get some European money during the Brexit negotiation period for areas that currently benefit from it. My constituents and industries in rural Wales want those certainties.

There are areas in my constituency that are without bus services, are seeing post office and bank closures and now have slow, almost non-existent broadband. That is not right in the United Kingdom. I am sure the Minister is a one nation Conservative and will want to see all parts of the United Kingdom benefit from this technology. I want that, and I know that colleagues who are here want to see rural areas become first-class areas. That is why I support what the hon. Member for Ceredigion says.

I know the Minister wants to achieve that and wants the notoriety of rolling it out. He has longevity in his job already; I am sure he is going to be the longest-serving Digital Economy Minister of all time. In doing that he will be doing a good service not just to his Government but to the country and the area I represent. We need assurances from the Government that they will work with the Welsh Government, BT Openreach and other providers to ensure we get 21st-century digital communications in rural areas of Wales, which deserve it. I hope the Minister is listening and that when he gets to his feet and congratulates the Wales football team he will be able to give us some answers as well.

15:06

[Nia Griffith (Llanelli) (Lab)]

I listened very carefully to the remarks of the hon. Member for Ceredigion (Mr Williams) and of my hon. Friend the Member for Ynys Môn (Albert Owen) and will not repeat many of the excellent things they have said. I will concentrate on three aspects of the problem. First, I will talk about funding. Secondly, I will talk about the issues of Ofcom and, thirdly, I will talk about the electronic communications code.

First, as was pointed out by the hon. Member for Ceredigion, £90 million of European regional development fund money goes towards the superfast broadband programme in Wales. That is out of £231 million, so it is a large proportion. There have already been delays in that programme and, were there to be any more delays, the worry is that that source of money could be cut off before the programme is finished. Can the Minister give us an absolute guarantee that that money will be there? Clearly, that is money from the ERDF and, according to the Brexiteers, as that money originally comes from the UK Government it should be used for the same items as it was designated for before Brexit. That is over and above any funding the Welsh Government get. We need a guarantee that that is going to be the case.

Secondly, I refer to the issue of the opening up of what they call the BT dark fibre. Many of us have experienced the frustration of BT Openreach effectively being a monopoly, which has led to significant problems for some of our constituents. There seem to be enormous problems and delays in communicating with it and getting things done. I have spent many hours trying to chase things up on behalf of constituents when they are not able to get through.

I am pleased that, in its strategic review, Ofcom has set out plans to reduce the UK’s reliance on Openreach by further opening up the network and that it has confirmed its plans to require BT to provide access to its optical fibre network for providers of high-speed lines for businesses. BT will have to give physical access to those fibre optic cables and there will therefore be an opportunity for competitors to link in to those fibres and provide the services we want to see for our constituents—but hopefully providing a much better service. I hope that will in turn encourage BT to provide a better service as well.

Will the Minister tell us how effective he expects Ofcom to be in forcing BT to do this? We have seen in the past that Ofcom sometimes has not moved as quickly as it might to chase up on things, and I would like a clear indication from the Minister as to when he expects all this to happen and what he expects BT to find coming its way if it does not comply with Ofcom’s requirements. So we really want a very firm Minister keeping a very strong watching brief on what happens there, so that we can be absolutely certain that the new opportunities for access are made available and that there is a better service provided to our constituents, many of whom have been waiting a very long time to see improvements to the facilities that they have.

I should like to turn to the electronic communications code, about which I wrote to the Secretary of State for Culture, Media and Sport in November 2005. The code matters because in Wales mobile coverage is also important in helping to provide internet access, but unfortunately disputes between landowners and mobile operators can lead to significant disruption. Now that the Government are planning to introduce a Bill to reform the code, I should like to ask the Minister what exactly the timetable is for that Bill and how long it will take before its measures are implemented and people begin to see a difference. What guarantees can he give about the precise content of that Bill?

In answer to a parliamentary question that I tabled, the Minister reiterated the Government’s intention that the reformed code should be clear, fit for purpose and promote choice for consumers. It is essential that the code covers wholesale infrastructure providers, which make up a significant proportion of mobile networks. The draft code published last year excluded such providers and was therefore not fit for purpose. The issue of retroactivity should also be considered as mobile operators have expressed concern that unless the code applies to leases that have already been signed, its effect will be limited.

In conclusion, I want to reiterate what my hon. Friend the Member for Ynys Môn and the hon. Member for Ceredigion have said. Nowadays broadband is as essential, if not more essential, than roads, water and electricity. We expect it to be universally provided and we want everything to be done to speed up the roll-out of the Superfast Cymru programme.

15:13

[Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)]

It is a pleasure to have a fellow Scottish voice in the Chamber this afternoon, Mr McCabe. I congratulate the hon. Member for Ceredigion (Mr Williams) on an excellent introduction in a balanced and measured speech. Quite often when we debate broadband in this House people are understandably emotive because, as he recognised, one of the biggest single items that hits our mailbags is poor broadband. That leads to a lot of, “Blame BT, it’s everyone’s fault, isn’t it a disaster?”, but we have to work with the Minister, who has been praised highly this afternoon. I am certainly concerned by that, but he is a fine chap and I am sure he will come back with some banter about the Scots. He has already warned me about that, although now that he has seen who is in the Chair, he might change his mind slightly.

It is important that we discuss the issue in a rational and sensible manner and that we also try to be constructive, and I thought the hon. Member for Ceredigion made an excellent start. His speech was balanced and measured. He recognised the progress that has been made. He also touched on some of the areas where he recognised there are further improvements being brought forward by the Government both in Wales and at the UK level. His quote from the current Prime Minister that

“access...shouldn’t be a luxury; it should be a right”

is an important one. I think there is a gap between the rhetoric and the vision of where we want to go. We need to do a lot more to realise the vision. If we do not have a plan, our vision is essentially just a dream. That is something we need to look carefully at if we really aspire to lead the world in this area.

Some of the issues that the hon. Gentleman raised from a Welsh perspective—businesses and farmers—are things that echo with my own constituents in the Scottish borders. He touched on BT structure. Service levels are an important aspect. We need a lot more sophistication when it comes to looking at service levels. In the internet age it is no longer a binary: it is working or it is not working. We need to look at speed. Do we get what it says on the tin? We need to look at how that is performing over time and, because it is electronic, we should be able to do that in an efficient and automatic way.

The EU funding question is an excellent one, given that we are going to be awash with money shortly, we are told. Can we at least protect the not inconsiderable sum of £90 million? That is a huge percentage. The hon. Member for Llanelli (Nia Griffith) pointed out that that is out of £231 million, so it is a sizable percentage.

The speech by the hon. Member for Ynys Môn (Albert Owen) was educational. He had me googling Scottish education to see whether I could challenge him on some of his claims; I might have to revisit them. He made an important point about partnership. What we are seeing in terms of the delivery projects that are out there and that will remain critical for future projects is that it is about partnership between the Welsh Government, the UK Government and the EU. In my constituency, the local authority has also put significant sums of money in. The last 5%—tourist areas—is also something that we need to be acutely aware of. There are other aspects in terms of safety and lone workers, but tourists increasingly expect to arrive in a place, use their device and decide what they are going to do and where they are going to visit. They look for offers based on connectivity, so it is critical that we have that. We should note the emergence of cars that will allegedly drive themselves, although they will not be coming near our constituencies if they cannae work.

I am slightly concerned about the constituent the hon. Member for Ynys Môn talked about, who has such a slow download speed that he flies to Hawaii. That sounds like the kind of story that I would try and tell my wife and not get away with. He also mentioned the USO. I think there will be a lot of discussion on the USO. It is an excellent idea. We need to ensure that the programme put forward has a level of agility. My concern is that it will come in a one-size-fits-all satellite offer.

I am not sure—perhaps the Minister will clarify—whether a roll-out is envisaged. I think it will be something that constituents ask for. One of the things I discussed at length with Ofcom was how we can make the scheme more flexible so that it can be applied in lots of different ways.

The Wales first model is almost right—I would sign up to a rural first model, if that is okay with Members. I know that, when it comes to mobile coverage, that is something that happens elsewhere in Europe.

I loved the way in which the hon. Member for Llanelli summarised the issue in three points and gave me an easy job of summarising what she said. From a funding perspective, the £90 million is a staggering figure. She mentioned access to ducts and poles, including BT dark fibre. She asked an interesting question: how effective will this be and how effective will Ofcom be in regulating it? I am a little sceptical in all honesty about how much other providers really want to use BT ducts and poles. It feels something like a stick to hit BT with, but we must ensure that they are given a framework that enables them to do it, and then we will see whether they are really willing to.

There will have to be a lot of pressure on BT, because it is just about making that available; it has to be fit for purpose. There need to be design tools that enable other providers to come in with solutions. From an electronic communications code perspective, the hon. Lady made interesting comments. Mobile clearly is used for internet access in a lot of rural areas. We have to tread carefully in some of the matters she discussed. Rather than delve into them here I look forward to revisiting them, especially in relation to some of her comments about wholesale.

I recognise many similarities between Wales and Scotland, not least sporting prowess. As the Welsh football team leads the way as the best team in these isles, and Andy Murray blazes across the courts at Wimbledon—Scotland leading the way in tennis and Wales in football—I await the Minister’s telling us where England is leading the way. Something else that Wales and Scotland share is low population density. Most of our population tends to be concentrated and centralised over a small stretch of territory. Both nations also have some of the most stunning scenery, as we have heard—but that is also challenging geography. Those two common factors of population spread and geography are at the heart of the problem of broadband coverage. That means that we need distinctive policy approaches for matters such as connectivity. If we are to make rural superfast broadband a reality, a one-size-fits-all approach will clearly not work.

The Scottish Government set out a highly ambitious vision for the country’s digital future, but a world-class digital nation requires that people living and working in Scotland, or visiting it, should be able to communicate and connect instantly using any device, anywhere and at any time. We used to call that, in the networking world, the Martini network—“any time, any place, anywhere”, for those who do not know the advert. The Scottish Government have been working hard to meet the challenge. The Digital Scotland superfast broadband programme, delivered via BT, is expected to deliver superfast broadband to about 95% of the premises in Scotland by the end of 2017. That programme is delivering more than £410 million of investment. On average it is connecting 7,000 new premises every week. On top of that, Community Broadband Scotland works with a budget of about £16.5 million to develop projects targeted at some of the harder to reach areas.

The reality, however, is that we need to go further. I am proud of the Scottish National party’s manifesto commitment to go further and, during the course of the present Holyrood Parliament—up to 2021—push superfast broadband to 100% of premises in Scotland. We realise that that is a challenge, but all of us in the Chamber know that it is possible. The only thing that stops us is ambition and a willingness to look at the models that will fit and work. That is where much of my effort, and the Scottish Government’s effort, is going at the moment.

The digital communications review from Ofcom has been welcomed, but it fell short in some areas—particularly in relation to rural remedies. The Scottish Government requested that consideration should be given to the simple fact that the market does not work in rural areas; we cannot rely on competition when it is uneconomical. We need to think about differentiation of approach for rural areas, in recognition of that. The Broadband Delivery UK scheme goes some way towards that, but we need to go much further. We also need to be careful that as we seek to push broadband further we do not end up putting little sticky plasters everywhere and finding we are back here in the same position in a couple of years, having put in a solution that has no future. We need to be careful that what we do has a future; and that, of course, means fibre, as far as possible.

As to the Digital Economy Bill, I shall be interested in whether the Minister finds there is an impact from the EU vote, and whether he thinks anything has changed. He is shaking his head, which is good news, because I am keen for us to push ahead with that measure. I have already mentioned the electronic communications code, but in relation to the universal service obligation I understand there are some rules and regulations and that there was a rationale for 10 megabits. I would like to understand whether that rationale is no longer valid. If the UK is leaving the EU, do we have freedom to set the USO at whatever level we want? I also think that, with the USO, upload is an issue as well as download, and that consideration should also be given to price and any data limits. Simply talking about download speed is a bit like looking at a car on the basis of how fast it can go. There is far more to it.

As we consider the new model, I thank the Minister for the level of engagement, and the approach that he has taken; I know I have done that once before. I find the Department for Culture, Media and Sport good to sit down and talk with, and to engage in proper, rational debate with. I believe that DCMS understands that the current model has limitations and was essentially a pragmatic roll-out. However, now there is no excuse. We know where the limitations are. We know about the 5%-plus—I suggest that it is significantly more than that in the constituencies of Members present for the debate. We really need DCMS and Ofcom to focus on rural remedies.

I recently chanced to bump into the Minister at a certain coffee establishment here, and I fear I was slightly boastful about the Scottish Government’s commitment to superfast broadband everywhere, which I contrasted with the measly 10 megabit USO. The Minister coined a phrase that I thought was fantastic—McBroadband. Given that Wales has raised the bar and shown the way when it comes to football, may I suggest that the Minister should not be ashamed to look at Scotland as we raise the connectivity bar, and to see McBroadband deployed across all these isles?

15:26

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

It is an honour to serve under your chairmanship, Mr McCabe. It is a great pleasure to respond to the debate for the Opposition. I congratulate the hon. Member for Ceredigion (Mr Williams) on securing this debate on an increasingly important topic. Like the hon. Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr), I also congratulate him on the tone and content of his opening remarks, which were an excellent introduction to the subject and to the situation of many of his constituents, as well as many UK citizens in other rural areas. His opening comments were complimentary to the Minister; it would be churlish to suggest that that was in any way connected with the fact that his party was in government, if not in power, when many of the important decisions that are driving our current lamentable situation were taken.

I fear that I have already changed the tone of the debate from one of mutual agreement to one of division, so let me go back to something on which we can all agree—that we wish the Welsh football team every success this evening. Indeed, if the team can defy the odds and march through to the finals of the European championships, and then triumph, perhaps it is not too much to hope that the Minister will defy expectations today and give us some satisfactory answers as to why so many people in Wales—and England and Scotland, for that matter—cannot get a decent internet connection, which I assume the Minister can do on the smartphone that he is looking at so intently. It seems that anything can happen in these extraordinary times, but I must say that concrete answers from the Minister would be an extraordinary conclusion.

We face a period of uncertainty—I am talking about Brexit rather than the football now. As we start to think about our plans for negotiating to leave the European Union, which have already been mentioned—although, astonishingly, I understand that the Government have not thought about them until now—it is time for us to get serious about our infrastructure and productivity and make sure that we have an economy that works for everyone. The economic benefits of better digital infrastructure are well known. The hon. Member for Berwickshire, Roxburgh and Selkirk and I share a background in telecommunications, I believe, and we can both be proud to call ourselves technology champions.

I think everyone would agree that the UK’s productivity problem has been one of the biggest challenges for our economy in recent years. We have the second-worst productivity performance in the G7. The Government’s own broadband impact study states that

“it is now widely accepted that the availability and adoption of affordable broadband plays an important role in increasing productivity”.

It is the Government’s policy to increase productivity, and they recognise the role broadband plays in that. I hope that they recognise the importance of productivity to the Welsh rural economy, as well as throughout the United Kingdom.

Why do we find ourselves in a situation now where so many people cannot get a decent broadband connection? As well as the economic benefits, there are significant social benefits. I mean not simply online gaming but online shopping and new applications in mental healthcare that are supported through digital infrastructure to enable better engagement and improve citizens’ wellbeing. It is unacceptable that some people cannot access those services.

Some people cannot access mandatory Government services and, worse, are penalised for not being able to access online services such as a mandatory job search. The internet opens up a world of education, social engagement and potential economic productivity—it is a window on the globe. All people across the United Kingdom should be able to expect that as a right, yet nearly 6 million people in the UK do not have access to decent broadband, and 130,000 businesses are struggling to make do with a connection of less than 10 megabits per second.

Wales is actually doing better than the rest of the UK for rural and business broadband—as well as in football. In Scotland, 50% of mid-sized businesses do not have access to superfast broadband, while in Wales the figure is “only” 38%. In England, 64% of rural premises are without superfast broadband, while in Wales merely—again, I use that word relatively—half of rural residents cannot access superfast connection speeds, which the European Union has said should be a universal minimum in just four years.

No doubt the Minister will tell us again of an unadulterated success, which is how he characterises the current broadband situation. As my hon. Friends the Members for Ynys Môn (Albert Owen) and for Llanelli (Nia Griffith) have mentioned, Wales lags far behind the other nations in mobile coverage. Only 20% of Wales is covered by all mobile providers, compared with 50% in England. I find that entirely unacceptable.

[Mr Mark Williams]

To allay the hon. Lady’s concerns about any generosity I expressed to the Minister earlier, does she agree that the Government’s mobile infrastructure project has been a complete failure, certainly in Wales?

[Chi Onwurah]

I thank the hon. Gentleman for his intervention. Lamentable as I find the situation when it comes to fixed and universal broadband, the mobile situation shames us as a nation. I take the train from Newcastle to London twice a week, and I am lucky if I can maintain a conversation on a quarter of that journey. On the wonderful occasions when I have had the pleasure and honour of visiting Wales, I have noticed that the mobile coverage is generally unacceptable. As has been mentioned, a constituent going to Hawaii to improve their mobile coverage is testimony to a failure.

Since the Minister took office six years ago, we have seen a series of ad hoc funding announcements. The crown jewel of all of them—the mobile infrastructure project certainly was not considered a jewel by anyone—was the £790 million rural superfast broadband programme, which has been handed entirely to one company. Whatever our criticisms of British Telecom, and I agree that it is unfair to hold BT entirely responsible for the current situation, the way in which the contracts for that tender were set out meant that we would end up in the current situation of monopoly provision. I certainly know that the Minister was informed, and indeed warned, of that possibility on more than one occasion.

It is true that the Government and the Minister are now finally waking up to the need to improve digital infrastructure. My hon. Friend the Member for Ynys Môn was very clear about where blame for the current situation lies. He was more modest about taking credit for the change in the Government’s approach and tone. The broadband challenge is now becoming the issue for the Minister that it should have been in the previous Parliament. I am concerned about that, because many Tory MPs find their mailbags bulging with complaints, and he is responding belatedly to that criticism from his own side. While we have potential solutions to the problem today, there is no solution for the incompetence that preceded it. People in Wales and beyond still do not know when they can expect the much vaunted universal service obligation to cover them and what that means for them practically.

I would be grateful if the Minister addressed the many excellent questions raised by my hon. Friends the Members for Ynys Môn and for Llanelli, and by the hon. Members for Berwickshire, Roxburgh and Selkirk and for Ceredigion. The Digital Economy Bill, published yesterday, is a real opportunity to address these issues and get Britain on the right track when it comes to infrastructure and digital rights for digital citizens. I am afraid that it will be a missed opportunity.

I would like the Minister to answer the following questions. Has he given up on hopes for competition—a word that appears only once in the Bill, in brackets—in the communications market? After the bungled attempts to reform the electronic communications code in 2015, why will this time be any different? What is his long-term vision for our digital infrastructure? We have heard about the importance of fibre. He seems to find it difficult to mention fibre, and certainly to set out when and how the UK will have universal fibre provision. How will the USO be funded? What talks is he in to ensure that that funding requirement does not fall disproportionately on rural areas?

Finally, will the Minister explain concisely exactly how the Digital Economy Bill will improve connectivity in Wales? The Bill will, I take it, be what passes for a vision for our digital society. That must include digital inclusion for rural areas in Wales and for my constituents in Newcastle who cannot afford the current superfast broadband provision. I hope he will set out his vision for ensuring that we have the digital infrastructure that we deserve and need in Wales and in the country as a whole.

15:40

[The Minister for Culture and the Digital Economy (Mr Edward Vaizey)]

I am grateful for the opportunity to speak under your superb chairmanship, Mr McCabe, and I thank the hon. Member for Ceredigion (Mr Williams) for this important debate about broadband.

Let me echo the words that were said about tonight’s football match, which is an incredibly important game. Unfortunately, I will be at the Art Fund museum of the year dinner with the Duchess of Cambridge, but I know that her father-in-law is particularly keen on a Welsh victory tonight, as is the whole country. Gareth Bale sits firmly in midfield in my fantasy league team and Sam Vokes is a striker, so we are hoping for a good result tonight.

If the hon. Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr) thinks a Welsh sporting achievement and Andy Murray managing to make it to the quarter finals will rub English noses in it, let me remind him of the England rugby team and its 3:0 whitewash of Australia. It does not stop there either: perhaps we should talk about the test victory over Sri Lanka—I do not think Scotland plays cricket, but they may a bit. Of course, today Mark Cavendish won his 28th stage in the Tour de France, thus matching the record of the great cyclist, Bernard Hinault. [Interruption.] I see the Clerk leaning over to you, Mr McCabe, saying that I am out of order—that I have gone off the subject of broadband—but thousands of Welsh people tonight will be watching television and perhaps through a broadband connection, thanks to me.

[Chi Onwurah]

I admire the way the Minister has manged to segue from football back to broadband. Does he agree that it is to be hoped that all those in Wales watching the match tonight do not stream it from broadband connections, as their pleasure is likely to be interrupted regularly by the circle of death?

[Mr Vaizey]

No. I encourage them to watch it online. They can watch it online, on their iPads or on ITV Player.

Let me turn to the subject in hand. I have been in this job for six years and it may feel like wading through treacle, but when I hear someone as distinguished as the hon. Member for Ceredigion say those four words, “vast improvement in provision”, it makes those six years of hard labour worth it, because we have made a difference. I will come to some serious points, but I want to say that we have achieved a great deal and I will explain where we are.

I have always made the point that we had targets we wanted to achieve. We never said 100% of people would get superfast broadband under our programme. We said 90% would get it by the end of 2015 and we achieved that with 4 million additional homes and businesses, which will be 5 million by the time the programme effectively ends at the end of 2017. We have already completed 36 of the 44 phase 1 projects and we are well into phase 2, and on track to get to 95% by the end of 2017.

People seem to forget the baseline we started from when the programme was on the way. In Wales, fewer than one in three homes had access to superfast broadband in 2011, yet by the end of phase 2, which finishes this time next year, 96.7% will have been reached. This project alone will have provided access to superfast broadband for almost 750,000 homes in Wales. Half of all homes will have broadband because of this project. The figure is already almost 600,000 homes. The audited figure is 582,300, so we have probably passed 600,000 because we are always three months behind in auditing the figures.

It is worth remembering that in the constituency of the hon. Member for Ceredigion, for example, no superfast broadband was provided commercially—he reminded the House that I had made that point previously. Even though his figures are below the national figures and therefore look poor, it is telling that 55% of homes—20,000—in his constituency that now have access to superfast broadband have it because of this programme. Another 10,000 will be added by the middle of next year, with 85% superfast coverage in 30,000 premises that would not have been covered. Coverage in constituencies of Members across the House ranges from a lowly 79% in that of my hon. Friend the Member for Brecon and Radnorshire (Chris Davies)—luckily he has left the Chamber, so I can mention that figure publicly—up to around 92% in Ynys Môn.

[Albert Owen]

I know that the Minister would not want to mislead the Chamber—he would not be allowed to—but when he says “to homes”, he means to the cabinet. There is a technical difficulty in getting broadband from the cabinet to many homes. The cabinets may have been upgraded to provide a signal to homes, but it may not reach those homes.

[Mr Vaizey]

I know that the hon. Member would not want to mislead the House, and the quotation I hope he would take from what I said was “have access to superfast broadband”. There is a lot of terminology in this debate, but basically, yes, it is called fibre to the cabinet—it goes to the big green box—and sometimes people in homes who think they will have access to superfast broadband do not get it, but it is important to stress that the numbers we use are audited and tested by Broadband Delivery UK. We do not simply say, “Here’s a cabinet and therefore any home in the vicinity is going to get broadband.” We audit the figures and we are well aware that homes may be near a cabinet but do not get access to superfast broadband, because sometimes the circuit from the cabinet is confusing. [Interruption.] I am doing this for the benefit of Hansard, to see how they record it in the Official Report—perhaps it will say, “Minister waves his finger around in an odd way.”

The other good thing is that there is more money to be spent. The hon. Member for Ceredigion asked whether areas are being needlessly subsidised, so not only do I have to contend with colleagues; I have to contend with BT’s competitors, who are always keen to get in the door and tell everyone how useless BT is because they are promoting themselves. They say BT is being needlessly subsidised. We saw that one coming and constructed the contract so that if areas effectively become quasi-commercial because more people than we expected took up broadband, we get money back.

As I am sure hon. Members are aware, we have already gained £130 million and it is important to point out that BT has made that money available now. Under the strict terms of the contract, it could have held back for another seven years. We are expecting around £250 million back when the contracts are completed.

We have had additional money committed from BT and from underspend. We believe that with the existing money we can get to 97% rather than 95% of homes, albeit not by the end of 2017, but probably a little later. The underspend is around £150 million, to add to the gain share, so we are looking at about £400 million coming through. That will make a real difference and should help us to reach 97% of homes by the end of 2020.

Another of the points made—I think by the hon. Member for Ceredigion, although the Opposition spokesperson also talked about competition—was about the monopoly aspect. As we move to phase 2 and the contracts become smaller and a smaller number of premises are in play, we are able to bring in smaller providers—for example, we have got companies such as Gigaclear—who would simply not have had the capacity for the big phase 1 roll-out. As part of our market test pilots, to work out how to get to rural areas as cheaply as possible, companies such as AB Internet in Monmouthshire, for example, have already connected 1,500 premises as part of its pilot. The smaller players are now coming into play, and we are actively engaging with a wider supplier base. In total, five different suppliers from BT now have contracts under phase 2, and we have had approval for our new state aid national broadband scheme, which means we can power forward on phase 2.

Some other points were made. I want to reassure hon. Members that the ERDF funding is secure until the end of 2020. We want to put to bed the idea that somehow the European money will disappear. The hon. Member for Ceredigion said that Wales was left behind or left out. I really want to nail that one down. It is important to stress that no part of the United Kingdom was left behind. As I think was mentioned, the total amount of funding available to Wales was in the region of £220 million, and I talked about 750,000 premises being connected—some in very hard-to-reach areas. I think there was also mention of Wales being ahead of the game, in terms of broadband roll-out, compared with the rest of the country.

I want to turn to the future. We talked about the universal service obligation and we learned an important new fact, which is that that is not Government policy; it is the policy of the hon. Member for Ynys Môn (Albert Owen). And it is not the universal service obligation; USO actually stands for “You’ve got service from Owen.” That is how it will be known from now on. In fact, he is such a genial-looking character that I think we might use him in the adverts when the universal service obligation comes to bear. I hope he will take part in the Second Reading debate on the Digital Economy Bill, because I think my second roll-out of that terrible joke might get a better reception if he is better prepared for it. The universal service obligation is there as a safety net. As I said, I think we are going to get very far with the roll-out, but just to give the hon. Gentleman and, indeed, the Opposition an open goal, we have not yet worked out the detail of how the universal service obligation will work. We are working with Ofcom on a range of options, which we will consult on. There is a range of ways in which the USO can be put together.

Of course, the hon. Member for Berwickshire, Roxburgh and Selkirk, who knows his onions when it comes to this subject, made a point that really only the aficionados would have picked up on, which is about how flexible it is possible to be with a USO. As he rightly notes, to have simply a demand-led USO for one individual premise, with a cost cap if it reached over a certain amount, would be potentially a very inefficient way of delivering broadband. We have to be more thoughtful and flexible about how we can deliver broadband to the lowest area.

The hon. Gentleman also talked about whether leaving the European Union might change our potential to increase the speed, but although we have left the European Union, we cannot change the laws of physics. The reason we have gone for 10 megabits is that it is the most realistic speed that we can get in a cost-effective way to the most hard-to-reach areas, but of course satellite connections, for example, could exceed that. Obviously we do not want to write the speed into the Bill, because we want to be flexible to ensure that the USO keeps pace in the future as average broadband speeds increase.

We are also bringing in the electronic communications code. I heard what the hon. Member for Llanelli (Nia Griffith) said about whether it should cover wholesale providers. We have rejected that because the wholesale providers are really on a par with the communication providers, with the mobile network operators, and we think it would be quite wrong to give the mobile network operators a commercial advantage over the wholesale providers that have built a business based on supplying the marketplace. We want the electronic communications code to be—a bit like the USO—a fall-back position whereby, in relation to an individual landlord who is not in the telecoms business but is providing land either for a wayleave or a mobile mast, there is a forum and a tribunal where any dispute can be worked out and worked out quickly. We want to bring the roll-out of broadband infrastructure into line with the roll-out of all other kinds of infrastructure, such as electricity, to try to bring down the costs.

I will make a serious point here. This may well prove to be controversial with some landowners, but we have dealt with a lot of the stakeholder groups in the landowning community, who are realistic and know that you can’t have your cake and eat it. People cannot charge relatively high rents and at the same time complain about rural coverage. I hope that hon. Members will see the bigger picture and support these important changes, because, as the hon. Member for Llanelli said, we have taken a pretty tortuous route to get here.

Those are the two main changes that will come forward in the Digital Economy Bill. Going back to where we are on broadband roll-out, I have been looking at some interesting international comparisons. For example, if someone says that France has 25% coverage for fibre to the premises, people think, “Well, that’s terrible; we’ve been left behind because we only have 2% coverage for fibre to the premises,” but what we should be looking at is the outcome. Then we discover that cable, fibre to the cabinet and fibre to the premises are all in effect in the same geographic areas in France, so actually about 75% of the country does not have access to superfast broadband, whereas 90% of the UK does have access to it.

In fact, we have been very British about this. We have been incremental in how we have rolled out technology; and now, as we come to the end of phase 1 and phase 2, we are about to introduce G.fast, for example. Virgin Media, as hon. Members know, is investing £3 billion or £4 billion for 4 million more homes. We are starting to bring forward what one could call the ultrafast speeds just at the point when the public are ready, as consumers and businesses, to invest in them.

Again, we need to look at the outcomes. I was struck by another figure: how much data do people use in different countries? The average amount of data used in the UK is twice as much as the French use. In fact, the amount of data used by UK consumers has doubled in the last year while prices have remained the same, so arguably data for the consumer—the stuff we watch on the telly or the documents that we download—have halved in price. The UK consumer is actually getting a very good deal.

Obviously I do not want to underestimate the concerns of hon. Members, who have spoken very knowledgeably in the debate. As they rightly point out, broadband is a very big issue. It is a major issue in the rural MP’s postbag, and every MP who has spoken has shown their extensive knowledge not just of the situation in their own constituency, but of the situation with national broadband roll-out. We are coming through to the end of this phase and people are now beginning to see the tangible benefits of the programme, but of course there is more to do.

[Albert Owen]

I will not quote the Minister directly, but he said that he has not thought through how the universal service obligation will work—he has not worked out the details—but is he looking at geographical areas? If we have not spots of 1% or 2%, it is easier to concentrate on that than to have a hit and miss across the country. That is the first point. Secondly, when will we see the consultation, and how will Members of Parliament be able to feed into that?

[Mr Vaizey]

We have already consulted once overall about this, but we will consult during the passage of the Bill or shortly after it is passed, because we want to pass the principle into law. The hon. Gentleman is right: there are a number of ways of looking at this. We could have, for example, regional providers. If we wanted a USO in Ynys Môn, we might have two or three local providers rather than simply having one or two or three national USO providers. To pick up again on the point made by the hon. Member for Berwickshire, Roxburgh and Selkirk, we may want communities themselves to get a USO, rather than an individual. But as I said, I think the corner has been turned in terms of rural broadband roll-out. We are now looking forward to the publication of our digital strategy and the passage of the Digital Economy Bill, which will set out our plans to help the last 5%, but also be more ambitious for the whole country in terms of achieving a gigabit Britain.

15:59

[Mr Mark Williams]

I thank all hon. Members for their speeches and interventions. We have reiterated the concerns that many of us in rural communities have. I am not going to defend anything I said, other than to say that I think it would be churlish not to acknowledge the improvements that have been made in broadband provision over the last six years during the Minister’s tenure in office. However, expectations remain incredibly high. Those expectations to date have not been met fully, and they must be.

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

Olympic Games: Doping

Wednesday 6th July 2016 Westminster Hall

[Mr Andrew Turner in the Chair]

15:59

[Steven Paterson (Stirling) (SNP)]

I beg to move,

That this House has considered doping and the Olympic Games.

It is a pleasure to have the opportunity to bring this matter before the House today and to serve under your chairmanship, Mr Turner.

The issue of doping in sport is extremely serious, and we have to face up to it. Recent years have demonstrated the scale of the challenge and the need to ensure that we are vigilant in ensuring that systems are in place to detect and punish doping in sport and to protect clean athletes and, ultimately, the long-term health of athletes. Professional athletes dedicate their lives to their sport, training rigorously and making significant personal sacrifices in order to reach peak physical condition and compete at their very best.

There are umpteen examples over the years of cheats who have used banned performance-enhancing drugs not only to reach their physical potential, but to exceed it—sometimes greatly. Those cheats betray and undermine the dedicated efforts of athletes who play by the rules and seek to compete to the best of their natural ability, on a level playing field, under rules that everyone is aware of. In the modern day, that means that the World Anti-Doping Agency takes expert medical advice and produces a list of banned substances that no athlete competing in a sport may use as part of their training or preparation for that sport.

On 13 April I raised this matter with the Prime Minister during Prime Minister’s Question Time. He responded that it was to be discussed at the anti-corruption summit he was holding on 12 May. From the response to my follow-up letter on the subject following that summit, I was pleased to learn that the matter was indeed discussed and that a new international sport integrity partnership is to be launched next year, to better integrate the various international organisations and Governments in order to tackle corruption in sport. The response also mentioned the charter for sports governance, which was published on the day of the summit and outlines the main themes that will form a new UK governance code, which is currently being developed. I am sure the Minister will have more to say on that, and I look forward to those comments.

I turn to the context in which we find ourselves with regard to doping in sport. It is nearly 30 years since Ben Johnson failed a drug test after smashing the world record in the Olympic 100 metres. It is over a decade since Lance Armstrong was using performance-enhancing drugs to win the Tour de France, and four years since his offences were finally established and his titles stripped from him. We live in an age when the rewards in elite sports have never been greater, and thus the incentives to win at any cost have never been higher. In response to doping scandals such as those, the World Anti-Doping Agency was established in 1999 to promote and enforce a world anti-doping code, including a list of banned substances that is published annually. The responsibility for ensuring that an athlete does not take substances on the banned list lies with the athlete themselves.

The operation of the system is best exemplified by the recent failed drug test involving tennis player Maria Sharapova. Sharapova was the highest-paid female athlete in the world, but tested positive for a banned substance called meldonium. That drug is primarily used to improve blood circulation and is commonly used medically to combat heart disease. The substance was added to the list of banned substances on 1 January 2016, and Sharapova tested positive later that month at the Australian open tennis. Her defence was that she had been using the substance legally for 10 years and had not been aware that it had been added to the list of banned substances, having claimed not to have read several emails from tennis governing bodies advising of the addition of the substance to the list. She was banned from all competitions for two years, although an appeal is pending on the length of the ban.

The case raises important issues about performance-enhancing drugs in sport. First, given the constant evolution and development of pharmaceuticals, and medical and sports science more generally, it is inevitable that the list of banned substances will also evolve over time. Making additions once annually, at the beginning of each calendar year, and being absolutely clear that responsibility for compliance rests with the athlete is, I think, a reasonable way forward in order to be fair to all sides.

Secondly, however, the case raises the question of ethics. Sharapova did not need to take meldonium for any medical need; she took it because it enhanced her performance. I would argue that her actions in taking the substance purely to gain a competitive advantage justify the strict enforcement of the rules. If we accept that she was not aware of the rule change, it is difficult not to have sympathy for Sharapova, but she had ultimate responsibility for knowing what substances were banned and ensuring she complied with the rules. It may be tough on her, but those rules have to be applied evenly if we are to be fair to athletes who make the effort to ensure that they are clean and in compliance with the rules.

Andy Murray, the Olympic gold medallist, who hails from Dunblane in my constituency, is a model of sporting integrity and is on record as supporting the strict application of the rules. He stated earlier this year, on the news of Sharapova’s suspension:

“I think taking a prescription drug that you don’t necessarily need, but just because it’s legal, that’s wrong, clearly. That’s wrong.”

I am in full agreement with that sentiment, and the issue of prescription drugs may require further attention by the World Anti-Doping Agency when it considers what types of substances merit being banned in future years.

Turning specifically to this year’s Rio Olympics, the countdown has been somewhat overshadowed by the scandal of doping and associated corruption that has seen Russian athletes banned from the games and questions hanging over the participation of several other nations.

[Marion Fellows (Motherwell and Wishaw) (SNP)]

My constituent Yvonne Murray, who is now Yvonne Mooney, came third in the women’s 3,000 metres at the Seoul Olympics in 1988. She was beaten by a Soviet runner, Tetyana Samolenko, who five years later was found guilty of doping, and by a Romanian runner who had links to the Soviet doping programme. Ms Samolenko has been allowed to keep her Olympic medals, despite attempts by Ms Mooney to encourage the International Olympic Committee to take action. It claims that there was no way to prove that Ms Samolenko was doping at the time. Does my hon. Friend agree that athletes found guilty of doping at any time in their career should have all their medals removed, and that the medals of those who were placed behind them should be upgraded?

[Steven Paterson]

My hon. Friend makes a very reasonable point. Yvonne Murray has been cheated, or may have been cheated, of a medal by athletes who were doping. For me, that goes to the heart of why we need a regime that can successfully and robustly test and challenge athletes to make sure that they are clean. That is exactly why we need an effective regime combatting this.

The investigation of Russian athletes was instigated following an investigative documentary aired on German TV channel ARD entitled “Top-Secret Doping: How Russia Makes its Winners”. It alleged a systematic doping programme for the country’s athletes and widespread corrupt practice to conceal it. Following the documentary, the World Anti-Doping Agency established an independent commission to urgently investigate the allegations. The report by the independent commission was damning and led to the suspension of the Russian athletics federation in November 2015. That has, in turn, led to Russian athletes being banned from competing under the Russian flag at the Rio Olympics.

I would like to quote from the report, because it makes the scale of the issue crystal clear. In the summary of findings, it states:

“The investigation has confirmed the existence of widespread cheating through the use of doping substances and methods to ensure, or enhance the likelihood of, victory for athletes and teams. The cheating was done by the athletes’ entourages, officials and the athletes themselves.”

It goes on:

“In addition, evidence exists that confirms that coaches have attempted to manipulate or interfere with doping reports and testing procedures. They are also the source and counselling of athletes’ use of PEDs. The coaches are supported in their doping efforts by certain medical professionals.”

If I may, I will list the specific findings because they lay the position out. First, under the heading “A Deeply Rooted Culture of Cheating”, the report says evidence of

“cheating at all levels is widespread and of long standing.”

It includes the remark that many of the “more egregious offenders” were coaches who were themselves former athletes, and that a common justification for cheating was that everyone else was probably doing it.

Secondly, under “The Exploitation of Athletes”, the report states that as a result of that mindset, an open and accepted series of unethical behaviours and practices has become the norm. Even in cases where the athletes themselves seemed unwilling to participate in doping, they were threatened with not being considered for selection by the national federation. Thirdly, under “Confirmed Athletes Cheating”, the report states that the central allegation was upheld, although the independent commission found that a high percentage of athletes were unwilling to participate in, or co-operate with, the investigation.

Fourthly, under “Confirmed Involvement by Doctors, Coaches and Laboratory Personnel”, the report found evidence that the doping programme was systemic and widespread. The investigators were deliberately inhibited in their work by what was described as

“the intentional and malicious destruction of more than 1,400 samples by Moscow laboratory officials after receiving written notification from WADA to preserve target samples.”

Fifthly, under “Corruption and Bribery within IAAF”, the report identifies

“corruption and bribery practices at the highest levels of international athletics.”

The report is damning and reveals the enormity of the challenge we face. Its scale and findings cannot be underestimated. There was a collective disregard for athletes’ current and future state of health, and it was clear that with the right resources, testing can be and has been circumvented, whether through athletes getting advance notice of supposedly random tests or through the manipulation of the biological passport.

What is to be done? The World Anti-Doping Agency was founded

“with the aim of bringing consistency to anti-doping policies and regulations within sport organisations and governments right across the world.”

That is its mission statement, yet as its former president Dick Pound told me when I met him at Stirling University in April, WADA is expected to achieve that despite having an annual budget that is less than Maria Sharapova earned personally in endorsements last year.

The budget for WADA in 2015 was $29.5 million, with half the funding being supplied by states and half by the Olympic movement. Of that, the UK contributed $745,870. However, it is sobering that the investigation into Russian athletics cost $1.5 million—and that is only one sport in one country. According to Dick Pound, the WADA budget has been too low almost from the outset of its activities, and that example of the costs associated with pursuing just one investigation, which was clearly necessary given its findings, should be a wake-up call for anyone who shares the ideal of ridding sport of doping.

It is clear that WADA needs to be better resourced, and although I welcome the commitment and resources that the Government have put into the organisation, we as an international sporting community must collectively do more. There is a case for seeking more transparency and accountability from WADA. That is not meant as a criticism, but if we are to do what is necessary to beef up the role that it plays and commit the necessary level of resource, there needs to be an increased level of oversight.

For example, if the role played by WADA was better understood, it might be possible to increase and enhance the participation of stakeholders in efforts to challenge cheating in sport and improve policing and monitoring across a wider range of sports. Transparency would bring greater clarity to why decisions are made and why investigations are held, and it would force WADA to plan proactively for the long term to promote a culture change while changing conduct in the short term.

There is also a role for more education as a pre-emptive support and to help athletes avoid accidental doping, and I hope that that will be considered in future. Professional elite sports have never been more awash with money, and it is high time their representative organisations took greater responsibility for challenging the drug cheats. That means contributing more to the organisation that exists to do that work, with a code of practice that they have signed up to.

I hope that as the Government take forward discussions on a new governance code, they can bring their influence to bear on national sporting bodies and stress that as well as promoting and developing their particular sports, they have a shared responsibility to ensure that they promote and develop clean sport. We should also seek to encourage and protect whistleblowers in sport, including through anonymity, financial incentives or a faster and more effective mechanism within sports organisations to act swiftly and decisively on concerns raised.

A recent report in The Sunday Times regarding Mark Bonar raises important questions about the role of whistleblowers in the fight against doping, and about the accountability of UK Anti-Doping, which, according to the newspaper, was informed of Dr Bonar’s doping activities two years ago but failed to act. If that is true, how UK Anti-Doping is held to account is important, particularly in the light of the fact that it is taxpayer-funded to the tune of £6 million.

Given the Russian investigation, it is clear in which direction anti-doping efforts need to move: towards intelligence-led operations, which require greater involvement of stakeholders and whistleblowers. When WADA was set up, it provided global standardisation in the system of penalties and banned substances, and that system now needs to grow and incorporate greater intelligence and oversight of regional anti-doping and sports federations.

Media organisations such as The Sunday Times and the German TV channel ARD deserve huge credit for the investigatory journalism that they have provided to shine a light on these corrupt practices, but does that not also demonstrate a UK and world anti-doping regime that is reactive instead of proactive? Greater forward planning and a long-term strategy to change the culture are required, because the fight against doping in sport will be with us for the long term given the phenomenal amount of money in sport.

In closing, I want to mention the valuable research being undertaken at Stirling University in my constituency. Researchers have been working on these issues for 12 years, during which time they have developed expertise in the social, policy and educational aspects of it. Indeed, some of their work has been funded by WADA. The university’s focus is on excellence in sport and education, with the SportScotland institute of sport and other sports organisations in Stirling in close proximity. Given the expertise of the sports researchers and experienced athletes associated with the university, there is an opportunity to create a leading centre for anti-doping research and education here in the UK, and specifically in Stirling, where that expertise already resides. I hope that the Minister will consider that and perhaps meet me and university representatives in due course to discuss the idea in more detail. Again, I am very grateful for the opportunity to speak on this issue.

16:16

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Tracey Crouch)]

It is always a pleasure to serve under your chairmanship, Mr Turner, and I thank the hon. Member for Stirling (Steven Paterson) for securing this timely debate on an issue that strikes right at the heart of sporting integrity in the run-up to arguably the greatest sporting event on earth—the Olympics.

Although it is perhaps unavoidable that discussions on doping will be a factor around Rio 2016, given recent scandals, some of which the hon. Gentleman mentioned in his speech, we should remind ourselves how fortunate we are that the vast majority of athletes do not cheat and, from the British perspective, how fortunate we are to have UK Anti-Doping, one of the world’s leading anti-doping organisations. Its reputation has been gained through its robust, intelligence-led Clean Sport programme, including successful education initiatives and athlete testing across Olympic, Paralympic and professional sports. That reputation saw the World Anti-Doping Agency invite UKAD to manage the testing programme in Russia as part of the work to once again make Russia compliant with the anti-doping code.

We managed to secure enhanced funding for UKAD in the recent spending round, but given the work it already does with sport here in the UK and across the world, there is no doubt in my mind that that organisation has great potential to commercialise and expand its expertise. In a month’s time, our athletes will begin competing in Rio and UKAD is working with the British Olympic Association to create a robust and comprehensive pre-games testing plan. In addition, every athlete on the team will take part in a Clean Sport education programme and every member of the athlete support team will also undertake the Accredited Advisor of Coach Clean workshop, so they are fully versed on what to expect ahead of the games.

It would be helpful if that proactive approach could be replicated by every country ahead of a summer or winter games to help to guarantee a level playing field for all competitors. That desire drove the Prime Minister’s discussions at the anti-corruption summit in May and will form the basis of action in future.

The governance codes that are being developed, which the hon. Gentleman referenced in his speech, were set out in the sports strategy that I published in December. The codes are to drive reforms in governance, and we expect all sports to encourage clean, drug-free activity among their participants. The codes will deal with a number of matters relating to integrity, including doping and match fixing.

As concerning as it has been to read of the doping scandals around Russian sport in particular, it is important to recognise the work of the international sporting community in mitigating such doping scandals. Although the hon. Gentleman cited high-profile cases that have brought sports into disrepute, we must remember that there are thousands of sportsmen and women who have broken records without drugs and inspired generations. It is really important that we continue to remember that, because although there are some high-profile cases, many of which he mentioned, there are lots of really clean athletes out there who do their sport the best they can without enhancement.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

On the basis of fairness and high-profile cases, does the Minister have sympathy with Alain Baxter, the Olympic bronze-winning medallist of 2002 in the winter Olympics? He was banned and stripped of his medal for taking a Vicks inhaler made in the USA—as opposed to one made in the UK—as it had traces of levmetamfetamine. It was not on the banned list, but he still lost his medal as a result, even though he was not part of the scandal of cheating.

[Tracey Crouch]

There are always exceptions that make it difficult to create a rule. The hon. Member for Motherwell and Wishaw (Marion Fellows) talked about her constituent and the hon. Member for Stirling mentioned Sharapova. Of course, there are always lists of banned substances, but substances evolve and some people get innocently caught up in that. The athlete and all those around the athlete have a responsibility to ensure that whatever the athlete is taking is not on the banned list. We have deep sympathy for people such as the constituent of the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), but we have to apply rules to everybody. It is a complex issue, but we should remember that the vast majority of athletes go to the Olympic games and compete in all other sports in a clean way and with integrity.

Without doubt, the International Association of Athletics Federations vote to ban Russian track and field athletes from international competition not only reflected the strength of feeling about cheating; it also told the world that doping will not be tolerated. Although it is important that Russia was sanctioned, it is equally important that the next steps, such as ensuring future compliance with the code, were addressed immediately.

It is reassuring that, as part of a five-point plan for Rio, the International Olympic Committee announced that Russian athletes outside of track and field, and countries currently non-compliant with the World Anti-Doping Agency code, will now be subject to strict additional pre-Rio testing before being allowed to compete at the games. It is only right that those competing in Rio can do so in the knowledge that athletes from non-compliant countries have been tested and declared clean ahead of competition. That should give us added confidence that our British athletes are competing against clean athletes.

It would be naive to think that the testing methods and intelligence expertise in operation across the world counteract all doping. The desire of those to cheat and profit from doing so will always mean that dopers will do all they can to try to be one step ahead of the testing process. The hon. Member for Stirling mentioned the constant development in pharmaceuticals and he is right. We have seen that in other areas of legislation, such as that on legal highs. However, with that evolution comes better testing. As we have seen in recent weeks, the re-testing of samples, from both Beijing and London, has found a number of positive tests. That is a result of the ever-evolving testing and intelligence techniques, and it sends a message that there is no hiding place for any athlete who chooses to cheat.

On the point made by the hon. Member for Motherwell and Wishaw, the IOC’s “Olympic Agenda 2020” recommends that athletes who lose out on a medal to athletes who test positive receive their medals. I sincerely hope that the IOC takes forward that recommendation. The honourable thing would be to retrospectively take away a medal if it is proven that an athlete has cheated.

The hon. Member for Stirling mentioned WADA and the need for better transparency and accountability. I am not sure whether he is aware that I was recently appointed to WADA’s foundation board, which is the agency’s decision-making body. That is an important position for the UK at a time when a united, global approach to eliminating doping is required. The UK has long been an advocate of tough sanctions on doping and I look forward to working with my international partners to maintain the integrity of every sport.

At a national level, we cannot be complacent, and we are reviewing the effectiveness of our legislation to combat doping. Existing legislation under the Misuse of Drugs Act 1971 carries sentences of up to 14 years’ imprisonment for trafficking and supply of banned substances. The world anti-doping code now includes an automatic four-year ban, under which an athlete misses an Olympic games cycle. The review is currently under way and, should it become clear that stronger criminal sanctions are needed, we will not hesitate to act.

The hon. Member for Stirling is right to speak about the work of the University of Stirling with such pride, and I was interested to hear about the work that it continues to undertake. I would be delighted to meet with representatives of the university, and he can feel free to contact the office to arrange that.

The reaction of the international community in response to the doping headlines over the past 12 months sends a powerful message ahead of Rio, not least that a successful track and field nation such as Russia can be banned from an Olympic games. It is an unfortunate truth that doping is a part of sport and will always be a threat as long as people look to gain an advantage. As a result, we must never be complacent in the fight against drugs cheats. Every positive test hardens our resolve in the fight against doping. For Rio and beyond, it is important that we give clean athletes the level playing field on which to compete, which their hard work and integrity deserve and from which the next generation will be inspired.

Question put and agreed to.

16:24

Sitting suspended.

Electric and Hybrid Electric Cars

Wednesday 6th July 2016 Westminster Hall

14:20

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

I beg to move,

That this House has considered electric and hybrid electric cars.

It is a great pleasure to serve under your chairmanship, Mr Turner. It is great to see the Minister, who I am sure is very interested in electric cars.

[The Parliamentary Under-Secretary of State for Transport (Andrew Jones)]

I am.

[Neil Parish]

I look forward to having electric cars running all along the A303 and A30, with that road, along with the A358, completely dualled—that is an aside for the Minister, but I am sure he has already got the message.

The electric and hybrid electric car market is booming in the UK, with the number of hybrid electric cars increasing by 31% and the number of electric cars by 52% in the past year alone. Electric vehicles decrease emissions, reduce noise pollution and, critically, can help to dramatically improve air quality in our city centres.

[Sir Greg Knight (East Yorkshire) (Con)]

I declare an interest as chair of the all-party historic vehicles group and the owner of several historic vehicles. Does my hon. Friend agree that we should not accompany the incentivising of electric vehicles with a penalty against those who seek to keep part of Britain’s motoring heritage on the road?

[Neil Parish]

If we can dramatically reduce pollution levels by using electric cars, particularly in our city centres, we should be able to allow—dare I say it?—a little pollution from older vehicles. It is a matter of balance, and I agree with my right hon. Friend. I prefer a carrot for people to move over to electric cars, rather than a stick for those who do not.

The April 2016 report on air quality by the Select Committee on Environment, Food and Rural Affairs stated that each year there are between 40,000 and 50,000 early deaths due to air quality problems. Polluting vehicles are part of the problem, especially in our inner cities. The UK has a legal obligation under EU directives to address air quality. Of course, we can probably now have our own directives, but most people in this country would agree that it is good to set a target to reduce nitrogen dioxide levels to 40 mg per cubic metre or less and to ensure that, particularly in our inner cities, not only our cars but our vans and lorries—the vehicles that are actually polluting—are electric or hybrid.

[Michelle Donelan (Chippenham) (Con)]

Will my hon. Friend acknowledge that such measures would dramatically change areas, such as Bradford on Avon in my constituency, that suffer heavily from air pollution problems due to huge levels of congestion? Small pockets like that, as well as the big cities, could be dramatically transformed.

[Neil Parish]

My hon. Friend makes an interesting point. People who drive an electric car, especially a pure electric car, are not starting and stopping their engine in queues of traffic, where the highest levels of pollution are often found. It will take a little while to get to the number of electric cars that we want, but it will make a dramatic difference in areas such as Bradford on Avon, which she represents so well.

Now that we have left the EU, it is vital that the Government double down on air quality issues. [Interruption.] Well, we are about to leave—it is rumoured that there was a referendum. The new targets that we set must be as rigorous as those set by the EU. During the referendum campaign, nobody on either side argued against that—before the hon. Member for Brent North (Barry Gardiner) glares at me, I was actually on the remain side. We must set tough targets on both the location and levels of pollution, because we all want a clean environment. The Mayor of London has outlined even tougher measures to address the problems, including a £10 pollution charge and a faster roll-out of clean buses, so everyone is working towards that aim.

I will now talk about the Norwegian model—not for entry to the single market, but for electric cars. Some 25% of all new cars in Norway are plug-in electric vehicles, which compares with 1.3% in the UK. Although we have had interesting increases in the number of electric cars, which I mentioned earlier, those increases were from a low base. The increase in Norway was due to a long-term infrastructure drive launched in 2009-10 and incentives for electric cars, which include the abolition of import tax; reduced annual registration tax, or road tax; no purchase taxes; road toll exemptions; 0% VAT; access to bus lanes; free access to road ferries; and guaranteed financial incentives until 2018. Norway has been very ambitious, and I expect the Minister to be equally ambitious.

[John Howell (Henley) (Con)]

My hon. Friend is delivering a passionate exposition of his case. Will he join me in welcoming research such as that taking place at the Culham Centre for Fusion Energy in my constituency? The centre is particularly researching batteries, not only for electric cars but for driverless cars. The new generation of batteries that are being produced will power such cars for even longer.

[Neil Parish]

My hon. Friend makes a good point. Battery capacity affects mileage, the length of time between charges and, of course, how long the batteries last. One problem with the early hybrid cars was that their batteries did not last long enough. Such research is therefore key, as is research on hydrogen cars.

The two main barriers to increasing the number of electric cars are the number of charging points and the cost. According to Zap-Map.com, the UK currently has some 11,400 charge points at 4,000 different locations. By comparison, Norway has 6,500 charging stations at 1,580 locations. Norway has only a thirteenth the population of Britain, so comparatively it has many more charging points. The UK cannot be left behind. In Britain, on average, there are 4 miles between each public charging point; in Wales, it is a full 12 miles. Clear and visible charging points are a crucial way of encouraging more members of the public to invest in electric cars. The Government should commit to installing public electric chargers within 1 mile, on average, of every home in Britain—that is what the Minister has to do.

[Chris Davies (Brecon and Radnorshire) (Con)]

I am delighted that my hon. Friend has mentioned Wales, and I am sure the Welsh football team will be in everyone’s thoughts tonight. Many right hon. and hon. Members, and indeed the Minister, will know that Riversimple, a hydrogen-based car company in my Brecon and Radnorshire constituency, was out in New Palace Yard just a few weeks ago. I hope the Minister will tell us how the Government can support such interesting schemes and businesses. Such home-grown technology can help Britain to lead the way.

[Neil Parish]

I could not agree more. Although this debate is about electric cars, hydrogen will also play a really important role. May I take this opportunity to wish Wales all the very best for tonight? May they get through to the final, because England cannot seem to manage to do it. I hope Wales do very well.

A project in my constituency in Devon is currently considering a car hire hub at junction 27 of the M5. People will be able to come by train to Tiverton Parkway and hire electric cars. It has not been built yet but I hope it soon will be, because it is a really good idea for Devon and for the countryside.

It is also vital that the Government ensure that many of the new charging points offer rapid charging, either by alternating current or direct current. Rapid AC chargers can charge an electric vehicle up to 80% in 30 minutes. That is essential, because one reason why people do not always buy electric cars is that they fear they will take a long time to charge and that they do not travel a great distance. In 2015, only 20% of UK chargers were rapid chargers. When the Government roll out new charging points, they need to ensure that the majority of them are rapid, so that drivers can quickly recharge and continue their journey. The Government should ensure that every petrol station has rapid charging facilities.

[James Heappey (Wells) (Con)]

My hon. Friend makes an excellent point. Our hon. Friend the Member for Montgomeryshire (Glyn Davies) secured a similar debate in this Chamber a few weeks ago, in which I made the point that when the petrol combustion engine was rolling out at the beginning of the last century, the cars came before the petrol stations. Rather than focusing on the provision of charging points, the Government should focus on incentivising the take-up of electric cars. The charging points will surely follow.

[Neil Parish]

My hon. Friend makes an interesting point, and I shall move on to incentivising people to buy electric cars to get more of them on the road. However, I emphasise that the two aspects need to come largely together. The shortage of charging points may be one reason for people not buying the cars in the first place. We have to have both.

Actions the Government have taken include the plug-in grant of up to £5,000 for cars and £8,000 for vans; setting up the Office for Low Emission Vehicles; additional conversion funding for vans and lorries; funding for all Government car fleets to go electric—I see the odd Land Rover and Range Rover here outside, but I think all Ministers ought to be in electric cars—and tax benefits and exemptions for electric vehicles.

The Government should supercharge their efforts to incentivise electric vehicles. The Chancellor has rightly cut fuel duty since 2010; the Brexiteers raised the prospect of exempting fuel from VAT during the referendum campaign, but they seem to have gone remarkably quiet about it since then. There should be a similar push to incentivise the use of electric and hybrid vehicles in the Department for Transport and in Government more widely.

What about future policy development? Some innovative towns and cities, such as Milton Keynes, have new schemes—free parking, charging hubs, bus lane priorities—to boost electric vehicles. The Government should copy local authority best practice on electric cars. They must recognise that electric vehicles are part of the future of our transport. Electric car registrations are predicted to outstrip petrol and diesel vehicles by 2027, and it would be good to achieve that before then. Private car ownership is dropping in many cities, including London, with a move towards car sharing, car pooling and taxi services. Shared transport becoming cheaper should encourage the business community to adopt rapid electric cars more quickly. Transport businesses support electric vehicles, because they are reliable and efficient. The Government must be alive to incentivising businesses, through better infrastructure and lower cost, to move their car fleets over to electric vehicles.

To ensure that electric and hybrid vehicles, which are much quieter than conventional vehicles, are safe for blind and partially sighted people, we must make sure that they make some sound so that people know they are coming. It is a huge advantage to have very quiet vehicles, but if they are too quiet there can be a danger.

I am now getting to my recommendations—I am sure the Minister will be pleased that I have made a few along the way. Electric and hybrid vehicles are the future; they are cleaner, quieter, greener and go a long way to reducing air quality problems. The Government should greatly enhance current programmes. Fewer than 1% of cars on British roads are hybrid or electric vehicles at the moment, so we need to go much faster. The Government’s modern transport Bill will offer a great opportunity to take the necessary steps. I know we have heard this many times over recent months, but let us copy the Norwegian model. If we put the infrastructure in place and create the incentives, electric car usage will rocket.

Let us have a Government commitment to rapid AC or DC chargers within an average of 1 mile of every home in Britain, not the current 4 miles; proper, generous incentives for electric vehicles for both business and private ownership, including tax breaks, toll exemptions and access to bus lanes; an integrated part of the gov.uk website that shows every electric public charging point in the UK and how many rapid charging points are available; and a statutory obligation for every new petrol station to contain electric car charging points. Let’s get this show on the road. I look forward to the Minister’s response.

16:39

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship for the first time, Mr Turner. I congratulate the hon. Member for Tiverton and Honiton (Neil Parish) on securing this debate. One quite good thing about Westminster Hall debates is that they give me a chance to agree with Conservative Members, and I pretty much agreed with everything he said, including his recommendations and conclusions. He mentioned the need for continued tough regulations and targets on climate change and air quality after Brexit. I agree with that, but from a Scottish perspective I hope Scotland will remain in the EU, as the Scottish people wish.

The standard motion in a Westminster Hall debate is “That this House has considered” the topic. By default, for electric and hybrid cars, the answer is yes. The House has already considered the matter, and there have been different Government policies on it. However, those policies have changed, which is part of the reason why electric vehicle uptake is not as high as was originally predicted.

Everyone agrees that electric cars are good for the environment and they have the bonus that their running costs are estimated at 2p to 3p per mile, which is way cheaper than 16p per mile for the average family car that runs on conventional fuels. But, as the hon. Member for Tiverton and Honiton pointed out, up-front costs are a barrier to many people being able to purchase these cars, so the uptake has been way too small for us to start to make inroads in climate change targets. The Government need to take more action, and that action has to be joined up across the entire energy sector if it is to contribute to meeting climate change targets. I emphasise that I agree with the hon. Gentleman’s recommendations.

[Sir Greg Knight]

Does the hon. Gentleman agree that another barrier to many of us leading by example and using an electric car is the range of the vehicle? If he or I wanted to travel from our constituencies to Westminster by electric car, we could not currently do so without breaking the journey to recharge it.

[Alan Brown]

I agree with the right hon. Gentleman. The point was made earlier that the up-front cost is one barrier, but another is the availability of charge points and the distance cars can travel. I hope to touch on that a little later.

In 2011, the coalition Government published their strategy paper for electric vehicles, which predicted that between 1% and 2% of new car registrations in 2015 would be electric. That was a very modest target, but sales for the third quarter of 2015 were less than 1%—effectively, the target was missed by 100%. Between 2010 and 2015, only 42,700 out of 3.4 million new cars registered were electric. That is only 1.3%, so there is a long way to go. A 2050 horizon for nearly every car being electric is a reasonable timeframe and an acceptable target for the Government but, if we are to achieve that, instinctively, it feels that we need a much higher uptake than we currently have. To achieve that will require more Government action. Will the Minister explain what additional steps are planned?

We heard earlier that that wee independent oil-rich country called Norway has managed to achieve a market share for electric vehicles of 18%—that is what my notes say; if it is 25%, as the hon. Member for Tiverton and Honiton said, that is even better—so there are clearly lessons to be learned.

[Douglas Chapman (Dunfermline and West Fife) (SNP)]

The all-party group on energy heard last week from Statoil, the Norwegian state oil company. It said that, although setting tough targets on emissions is important, we really need to take action to change people’s behaviour. Does my hon. Friend agree that Norway is making a huge contribution in that regard? If we could mirror what Norway is doing—for example, by taking similar fiscal steps—that would be a good model on which the UK could base its plans.

[Alan Brown]

I totally agree. It is ironic that Norway has made so much money from oil but is now re-investing it and planning for the future by reducing emissions. There are clear lessons to be learned from how Norway set up an oil fund for future investment.

I return to Government policy. Further proof of inconsistency is shown by the fact that in March 2011 the coalition Government stated that by June 2011 they would publish a strategy to deliver 8,500 charging points throughout the UK. Come June 2011, the emphasis was on how charging would mainly take place at people’s homes. That was seen as a retreat from the original commitment. I agree with the logic—most people would prefer to charge their cars overnight at a charge point in their home—but in cities in particular that option is not available to many people. It is now July 2016, and there are still only 4,094 connection points, so it is clear that the planned accessibility is not there and that, as we have heard from other Members, that is a barrier to the increased use of electric cars.

In 2014, it was pledged that there would be a rapid charge point at every motorway station and a network of 500 rapid chargers throughout the country by the end of 2014. In 2016, there are still only 689 rapid chargers, so it is fair to say that that target was missed. Can the Minister update us on the status of the plan for a rapid charger at every motorway station?

General availability is patchy as well. Some 33% of connectors are in London and the south-east. I am pleased to say that Scotland is punching above its weight, with 15% of the UK’s total. That is partly thanks to the Scottish Government’s investment of £11 million in 900 publicly available charging bays. There seems to be ambiguity about charge points, which are the locations, and the number of connectors. That ambiguity seems to suit the Government when they answer questions, because the number of chargers gets conflated with the number of charge point locations.

[Michelle Donelan]

Does the hon. Gentleman acknowledge that certain authorities, such as Wiltshire unitary authority, have led the way and are ensuring that there are multiple charging points? In fact, there are many in my constituency. I agree that coverage is patchy in certain areas, but there are areas that we should hold up as beacons of how to do it right.

[Alan Brown]

rose—

[Mr Andrew Turner (in the Chair)]

Order. I should inform Members that, when the hon. Gentleman has finished, there will be five minutes for each speaker.

[Alan Brown]

I will take that as a cue to hurry up, Mr Turner. I appreciate the point made by the hon. Member for Chippenham (Michelle Donelan): good practice should be held up and rolled out.

There is no doubt that the Government can and do drive behaviour. Things just cannot be left to the free market. Previous changes in road tax certainly led me to select a hybrid electric vehicle as a company car—the tax was lower—but for others diesel cars are currently more financially accessible and are seen as having great mileage coverage. We know, though, that the flip side is that diesel vehicles cause the highest pollution in terms of particle emissions. That is further proof that a better long-term strategy is required.

[Mr Andrew Turner (in the Chair)]

Order. Are you about to finish your remarks?

[Alan Brown]

Yes. Sorry, Mr Turner.

It needs to be about more than just cars. The Scottish Government have led the way—Aberdeen now has Europe’s largest fleet of hydrogen-powered buses—and are working towards a low-carbon economy, as the UK Government should be. This debate is related to renewables targets, which have not been helped by the removal of subsidies for renewables. Finally, if the use of electric vehicles increases, we need a regulatory framework for their maintenance and a qualification regime for the technicians who will be working on them. A 500 V hydrogen cell battery cannot be tinkered with lightly.

[Several hon. Members rose—]

[Mr Andrew Turner (in the Chair)]

Order. Members should note that three people are down to speak and they have until 5.10 pm, when I shall call the Front Benchers. I am sure Members can work it out for themselves.

16:56

[Rebecca Pow (Taunton Deane) (Con)]

I commend my hon. Friend the Member for Tiverton and Honiton (Neil Parish) for bringing this important subject to our attention. As a member of both the Environmental Audit Committee and the Environment, Food and Rural Affairs Committee, which my hon. Friend chairs, I have been involved in two air-quality inquiries. The statistics are absolutely stark. We have to take action to improve air quality, not only on environmental grounds but very much on health grounds. Something like 40,000 to 50,000 people die every year because of air pollution, which is absolutely shocking.

I commend the Department for Environment, Food and Rural Affairs for taking steps towards a clean air strategy. I welcome that, but we need to do a lot more. In this brave new post-EU world, I urge the Government to bring all that legislation on air pollution back here under our own hat and keep to all the stringent targets that have been set. I am sure the Minister will take that on board because it is really important.

Even in Taunton Deane we have two serious air pollution hotspots. I know the Minister will be interested to hear that one is on the A358—a road the upgrade of which we are desperate for and the Minister has assured me we will get—at Henlade. The upgrade we are hoping for should help to tackle the congestion. The other hotspot is in East Reach. Such problems do need to be tackled, which is where this debate comes in.

Electric and hybrid cars will really help—some are totally emission-free—but we need to encourage people to drive them. A Department for Transport survey showed that only 5% of people in the UK drive an electric car. The survey also found that 56% of people had never even thought about buying an electric car, so we have a long way to go and need to spread the message further.

What is the way forward? We need financial incentives and many of the things referred to by my hon. Friend the Member for Tiverton and Honiton. I particularly urge the Government to consider the Norwegian methods. We must also remember that education is important in getting the messages across. People do not realise how cheap electric and hybrid cars are to run and that the purchase prices are not as expensive as they think. Per mile, electric cars are five times cheaper to run than an average car. They carry no vehicle excise duty and the costs can be as little as 2p a mile. My hon. Friend the Member for Louth and Horncastle (Victoria Atkins) has an electric car and told me in the Tea Room that it costs only £8 to charge it fully—and she runs miles on that. It is really a no-brainer. In Parliament, we have two fast chargers and quite a lot of slow charging points, but it is still not enough.

[Douglas Chapman]

Will the hon. Lady give way?

[Rebecca Pow]

Will that give me more time?

[Douglas Chapman]

On the subject of charging, there is currently no requirement for local authorities to provide electric charging points. Although it would be useful to receive revised guidance from the Minister, would it be preferable if local authorities were obliged to provide charging points, so that anybody who decided to go electric would never face the threat of running out of power mid-journey? Does the hon. Lady accept that point?

[Rebecca Pow]

I thank the hon. Gentleman for raising that matter because I was about to move on to it. It is such an important point and other people have already referred to it. In Taunton Deane, for example, I was involved in the launch of the first ever charging point. That was in 2012 and it was at Hestercombe Gardens, which is now an internationally famous landscape and gardening site. The person launching that charging point was Michael Eavis himself, from Glastonbury, and he was driving the very first all-electric car; he was trialling it.

Although that was a great start, there is a dearth of charging points in my constituency. There are some at the park-and-rides and I think there is one at an electric bike shop, but sadly that is it. How can we expect people to buy these cars if they are uncertain about whether they can get from A to B? For example, on Friday I am venturing to Dorset to talk about ancient trees, but how can I set off in an electric car if I do not know whether I will get back or not because I cannot charge it up on the way? In these rural areas, there are no charging points.

This is a really big issue, but I am delighted that my hon. Friend the Member for Tiverton and Honiton has raised it today. As a result of my raising it with the leader of my council, he has realised that it is a big issue and he is now feeding it into the new district centre plans and future transport strategy to ensure that the council addresses the issue, because it is really important.

I will end with a few upbeat facts about electric and hybrid cars. I went to the test of the car in New Palace Yard the other day and it was absolutely fascinating. I thought the car was quite trendy and state-of-the-art. I could see myself in it; it was rather lovely.

A lot of these models are well-built and designed to last; they are not throwaway culture, like a lot of our other cars. They are all about miles, so they have less impact on the environment, consideration of which I am particularly keen to encourage. Many of the models are designed to be built locally, so we could have them built in our own constituencies. They are not exactly kit cars, but we could bring back the industry and make it local. In our brave new post-EU world, perhaps we will have to think about that, rather than being quite so tied to the German car industry. There could be great mileage in that idea.

[Mr Andrew Turner (in the Chair)]

Order. Can you please draw your remarks to a close?

[Rebecca Pow]

Thank you, Mr Chairman; I am absolutely about to draw my remarks to a close.

Electric and hybrid cars are a great way forward for a new and sustainable future. I fully support my hon. Friend the Member for Tiverton and Honiton, and I really hope that the Minister is going to think about some of the incentives. Get sparky about this and get electrically charged.

16:59

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in this debate and I congratulate the hon. Member for Tiverton and Honiton (Neil Parish) on securing it. He does excellent work in the other Committees that he chairs and it is good to know that he is also knowledgeable about electric cars.

In the very short time that I have, I will make a few comments. The global race to get ahead in the hybrid car game is really heating up. An example of that, as the hon. Gentleman said, is the hydrogen car that we had here just the week before last. I believe that there is an incentive from competition when it comes to performance of such cars and their price.

Let me take a few examples from the continent to show what other countries are doing in the race to consolidate the electric and hybrid cars industry. Some of them are from the EU; I have to say that I am glad that we are out of the EU, but I know that we cannot ignore the very important things that are happening within the EU. The German Government are giving a €1 billion subsidy to boost electric cars. There is a €4,000 incentive for each electric car, with a €3,000 incentive for a plug-in hybrid car. At present, there are 50,000 electric cars in Germany, but they hope to increase that figure. German automotive companies such as Volkswagen, Daimler and BMW have signed up to a programme that is open to all German brands and foreign brands.

The Netherlands is another country that has done a lot, although I have to say, in all honesty, that some have perhaps been a bit extreme. They were trying to vote through a motion calling on the country to ban sales of new petrol and diesel cars, starting in 2025. That has not succeeded—at long last there is some sense when it comes to passing legislation—but the fact that they were considering that is an indication of how far they are prepared to take these matters.

Record numbers of electric vehicles continue to be sold in the UK year on year. In the last five years, more than 60,000 plug-in models have been registered. I say this to the Minister: credit where credit is due. The Government’s “Go Ultra Low” scheme estimates that by 2027 electric-powered cars could dominate the market. I am not entirely convinced by that, but that is what the stats seem to indicate, with some 1.3 million sold every year. If that is the case and if that is what the Government are aiming at, it would be good news.

[Rebecca Pow]

Will the hon. Gentleman give way?

[Jim Shannon]

I am sorry, but it would be unfair on the hon. Member for Wells (James Heappey), who is following me.

The Government-backed plug-in car grant scheme has been instrumental in giving buyers an incentive to switch to electric power. I am conscious of the time, Mr Turner, so I will make this my last point. I have said this before in questions to this Minister and others with responsibility for the issue—I think another hon. Member also referred to this in an intervention—but what I want to know is: what comes first? Is it the plug-ins and the charging points or is it the new cars? They both have to go together. What comes first, the chicken or the egg? They have to go together, so let us look at that.

We cannot do it in Newtownards or in Northern Ireland, even though the Government have given a large amount of money to Northern Ireland through the Assembly to incentivise the process. I welcome that, but if we really want to do things in a constructive way, we need to have the charging points in the streets, to incentivise us as vehicle drivers to want to have an electric car, because we know it will get us from here to Coleraine and back or from here to Belfast. If we can do that as cheaply as the hon. Member for Taunton Deane (Rebecca Pow) suggested, I believe that is something we should do.

17:06

[James Heappey (Wells) (Con)]

I congratulate my hon. Friend the Member for Tiverton and Honiton (Neil Parish) on securing this debate.

I am enthusiastic about electric vehicles but realistic about the pace at which they can be rolled out, so while I will of course talk about the digitised and electrified nirvana that awaits, it is important to recognise that biofuels will probably need to do the heavy lifting in the meantime, as we try to meet our decarbonisation targets on the roads. I want to talk briefly about three areas of Government policy: fuel duty, low-carbon generation capacity and the preparedness of our energy system.

On tax, road duty is worth about £27.2 billion a year, which is about 4% of the Exchequer’s money. That is a significant amount of money that Her Majesty’s Treasury will not be ready to give up in a hurry. As far as I can work out, there are just over 30 million cars on the road, driving just under 400 billion kilometres a year, which means an average of about 13,200 kilometres, 760 litres of petrol and therefore about £460 of fuel duty per vehicle. The big challenge for the Department for Transport is to work out how that £460 of fuel duty per vehicle can be transferred to some other tax, be that car tax—although then we could be talking about paying £500 or £600 of car tax per vehicle—or a road pricing scheme. However, there is no way that I can see the Treasury giving up that tax take all together, so surely the DFT has a plan for what might go in its place.

On generation capacity, Bloomberg envisages that, on current expectations, by 2040 electric cars will require about 1,900 terawatt-hours of electricity around the world. That represents about 10% of what we are currently generating globally. That is quite a challenge, because the easiest thing to do is to build gas-fired power stations or, worse, coal-fired stations to meet that increased requirement for generation immediately. However, then we would not actually be achieving any sort of decarbonisation, because the cars would be charged with electricity that has been produced from dirty fuels, which are potentially more polluting and send more carbon into the atmosphere than using some modern petrol engines.

Therefore, we need to be focused on creating the renewable generation capacity to meet that increase in demand. However, people will want to plug in their car and charge it when it needs to be charged. They will not be willing to do so only when the wind is blowing or the sun is shining, so in parallel with embracing the opportunities provided by EVs, we need to ensure that we are considering the opportunities for storage of power and demand-side response within our energy system, so that renewables can be made to work.

Finally, on the preparedness of our energy system, Ofgem’s “My Electric Avenue” trial has demonstrated that there are significant limitations in the ability of our current distribution networks to provide charge, particularly when cars are clustered. As I understand it, around 30% to 40% of our energy system would immediately need to be improved if we are to make sure that charging is realistic. This is not just about the number of charging points; it is about the ability of the energy network behind those charging points to carry the energy to the required areas so that cars can be charged.

The Secretary of State has been to see the Energy and Climate Change Committee, on which I sit, on many occasions, and she has told us of a mythical cross-departmental Cabinet-level working group that is working on all these things. We have pushed her quite hard on who sits on it, how often it meets and where we can see the minutes of those meetings, but they do not seem to be forthcoming. Will the Minister reassure us that the Department of Energy and Climate Change, the Department for Transport and the Treasury are working on these issues in parallel? If he can give us an update on any of the issues I have raised this afternoon, that would be helpful.

17:10

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship for the first time, Mr Turner. I congratulate the hon. Member for Tiverton and Honiton (Neil Parish) on bringing this important subject for debate today. I agree with a lot of what he said. This is an opportunity for us for the future. I also reflect his ambition to see electric cars going up dualled carriageways. In my constituency, I am delighted that the Scottish Government are investing in dualling the A9, and I am looking forward to seeing electric cars on it soon. He is also right about the contribution of clean air and carbon reduction and mitigation effects. He is also right to call for faster action. There is an imperative to move more quickly to ensure that more people can take advantage.

My hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) talked about the impact of energy policy on the ability to use these vehicles, which I will come to. He was right to point out that Scotland has 15% of UK rapid chargers. We are punching above our weight, as he said. He made an important point about ensuring that there is some maintenance regulation. The safety of people working on these vehicles—the kind of voltages that these vehicles carry have the potential to kill instantly—must be a priority going forward.

The hon. Members for Taunton Deane (Rebecca Pow) and for Strangford (Jim Shannon) rightly talked about infrastructure being vital. If we are to encourage the use of such vehicles, we have to see infrastructure coming forward. The hon. Member for Wells (James Heappey) was absolutely correct that the journey is not only for electric vehicles; alternative fuels will be involved, and I will touch on that if I have a moment or two. I do think, however, that it is a bit of a stretch of the imagination to ask the UK Government to come up with a plan for these things.

The Scottish Government have an ambitious climate change target that includes phasing out all petrol and diesel-fuelled vehicles by 2050, although I am sure we will continue to see classic car events to look at the history. The electric vehicle road map, “Switched On Scotland”, which was published in 2013, sets out the Scottish Government’s ambitious vision to free Scotland’s towns, cities and communities from the damaging emissions of petrol and diesel-fuelled vehicles by 2050. This year has already seen the introduction of more than 200 electric vehicles across Scottish local authorities.

To support the delivery of that vision, the Scottish Government have invested more than £11 million since 2011 in the development of ChargePlace Scotland—a network of more than 900 publicly available electric vehicle charging bays. We are also supporting electric vehicle uptake through our “Switched On Fleets” initiative, which offers free, evidence-based analysis of public sector fleets, in turn identifying new opportunities for the cost-effective deployment of electric vehicles. A total of £2.5 million of grant funding is being offered to each of the 32 community planning partnerships between 2014 and 2016 to help them to buy or lease electric vehicles. Through that scheme, we expect to introduce more than 250 new electric vehicles into the public sector fleet, reducing fuel use and emissions in the process.

The “Switched On Scotland” road map focuses specifically on battery electric vehicles and plug-in hybrid vehicles, which are collectively referred to as plug-in vehicles. Electric vehicles have a positive impact on health, wellbeing and the environment. They can help to reduce greenhouse gas emissions, improve local air quality and reduce noise pollution. In Scotland, a third of all car journeys are less than two miles long, and nearly a quarter of all trips are one mile or less. Regular cars making those journeys emit a disproportionate amount of carbon into the air, whereas electric vehicles provide a cleaner method of transport.

I do not have time to go into all the issues, but I want to point out that the Scottish Government have been a key funding partner, along with the European Union, in the Aberdeen hydrogen project, which has seen Europe’s largest fleet of hydrogen-powered buses entering service on two routes in the city. As has been mentioned, we fully intend to reflect Scotland’s overwhelming democratic vote and retain our EU status, and we look forward to continuing that into the future.

Electric vehicles require power to run them, and the Scottish Government have done an incredible amount of work to ensure that renewable energy powers 100% of our energy use by 2020.

[Mr Andrew Turner (in the Chair)]

Order.

[Drew Hendry]

I am just coming to the finish, Mr Turner.

That work is not being helped by the Tory Government’s policies on renewable energy. They need a rethink.

17:15

[Barry Gardiner (Brent North) (Lab)]

It is a great pleasure to serve under your chairmanship, Mr Turner. It is also a great pleasure to respond to the hon. Member for Tiverton and Honiton (Neil Parish), who was as perspicacious as ever in introducing the debate. He has been plugging away at this issue for quite some time—no pun intended. I also welcome the contributions of the other Members who have spoken, particularly the sheer enthusiasm of the hon. Member for Taunton Deane (Rebecca Pow) and the analysis of the hon. Member for Wells (James Heappey), who made an important contribution to the debate.

The 60th anniversary of the Clean Air Act 1956 came this week. The hon. Member for Taunton Deane was absolutely right to refer to the number of people who die from polluted air in this country—the figure is 52,500 per annum. If that was the number of people dying from road accidents each year, the Minister would not still be in his place. The Government would have a crisis on their hands, and they would have had to respond, but because air pollution is a silent killer it has not got real traction in government.

I welcome the opportunity that this debate gives us to raise the issue up the agenda, particularly since the Mayor of London launched his air quality campaign on the landmark occasion of the 60th anniversary of the Clean Air Act. The former Mayor of London, sometimes known as the former future leader of the Conservative party, pledged in May 2009 that 25,000 charge points would be installed across the capital by 2015. The actual figure today is fewer than 1,000. In fact, the Government have said that they are committed to

“ensuring almost every car and van is a zero emission vehicle by 2050.”

I welcome that, but a target without a plan is just a wish, and so far the Government do not have a plan.

The Committee on Climate Change’s progress report to Parliament last week showed that the UK is set to miss its legal climate commitments for the 2030s by 47%. That is a staggering shortfall. Boiled down, the reason is that outside the power sector there has been

“almost no progress in the rest of the economy”.

One of the principal reasons that the committee gives for that slow progress on decarbonising is the lack of progress on decarbonising transport. It says that

“improved vehicle efficiency has been offset by increased demand for travel as the economy has grown and fuel prices have fallen.”

The committee notes the progress on funding being made available for electric vehicles up to 2018, but highlights that there are no vehicle efficiency standards beyond 2020. The long-term target of 2050 is simply hot air without a medium-term delivery plan.

I want to respect the Minister’s time, so I will move over a number of comments that I wished to make, but I will pick up on the important points that the hon. Member for Wells made about the structure of the network and the importance of capacity. He is absolutely right in what he said about power generation—there is no point in running clean cars on dirty fuel.

The interesting point about battery technology is that it is now moving on at such a pace that the modular packs will be able to be fitted to the properties and, if we have a disaggregated grid, localised solar and wind will feed into each house when it is being produced and into the modular pack. Those packs can then be used to charge the vehicles overnight in the home. We are moving to a structure in which that is possible, but it requires the Minister to do precisely what he was challenged to do by the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) with the mythical inter-ministerial group on clean growth. Will the Minister speak with his colleagues across Government to make sure that there is an integrated solution and not simply a transport solution?

17:20

[The Parliamentary Under-Secretary of State for Transport (Andrew Jones)]

I congratulate my hon. Friend the Member for Tiverton and Honiton (Neil Parish) on securing the debate and on imaginatively including the dualling of the A358, the A303 and the A30 in his speech. It is great to see the level of enthusiasm for electric vehicles. They can deliver a huge environmental benefit for our country and secure the future success of one of Great Britain’s great leading industries. That is why we are committed to positioning the UK as a world leader in electric vehicle uptake and manufacture.

As colleagues have articulated, electric vehicles deliver many benefits. We are all aware of the air quality challenges in our towns and cities. We will introduce clean air zones in five cities to urgently tackle the worst locations, encourage greener transport and introduce targeted access charges where necessary. We have already seen some changes made by the new Mayor of London, such as the ultra-low emission zone.

[Sir Greg Knight]

Will the Minister give way?

[Andrew Jones]

I am under extreme time pressure. If I have any time, I will come right back to my right hon. Friend.

The UK is not alone in addressing the environmental impacts of road transport. Action is taking place on a global basis to compel manufacturers to bring forward an increasing choice of cleaner and more efficient vehicles, to meet growing consumer demand and expectations. Our automotive sector has a great history of innovation, and we are seeing some of that now. With the help of a strong domestic market, we are in a great position to benefit from global demand for electric vehicles as the transition takes hold in the coming years.

A number of Members have mentioned the referendum. Let me be clear that our determination on electric vehicles and standards is not in any way changed by the result of the recent referendum. The drivers of transition to zero emissions are global in nature and will continue to apply regardless of our place in Europe.

The benefits of electric vehicles include securing the manufacturing of the future and health benefits. Let me run through the actions that we are taking. In our manifesto, we committed to the goal that by 2050 nearly every car and van on our roads should be a zero-emission vehicle. That will require all new cars and vans on sale to be zero-emission by around 2040. We have in place one of the most comprehensive support packages anywhere in the world, with committed funding of more than £600 million in this spending review period. Progress to date puts us in a very encouraging position. Vehicles that used to be exotic are now considered commonplace on our streets. In total, about 28,000 ultra-low emission vehicles were sold in the UK last year, which is more than in all the years since 2010 combined. We have had more than 70,000 claims for our plug-in car and van grants. I am particularly pleased that many of those vehicles are manufactured by Nissan at its Sunderland plant, which last year produced 20% of all electric cars sold in the EU.

A number of colleagues have spoken about the importance of charge points. There is an ever-expanding network of charge points for electric vehicle drivers. We have more than 11,000 public charge points, including 850 rapid charge points—the largest network in Europe.

I note the comparisons with Norway. Norway’s record is very impressive, and we work with the Norwegians and other leading markets. Our £40 million city scheme will introduce some of the measures that have been mentioned, such as bus lane access, free parking and rapid charging hubs. It is also worth noting that Norway has very high levels of vehicle taxation, which I am not generally in favour of. Many colleagues have spoken about that today.

There are 60,000 domestic charge points, which offer the cheapest and easiest way to charge up. Latest statistics suggest the average distance to the nearest charge point is just over 4 miles in Great Britain. I want to increase that density and reduce the distance even further.

One of the most important measures in support of electric vehicles is the plug-in car grant scheme, which provides a direct discount to consumers on the cost of an eligible plug-in car or van.

[Barry Gardiner]

On that point, will the Minister give way?

[Andrew Jones]

No, I am running short of time.

The grant currently stands at £8,000 for vans, £4,500 for pure electric vehicles and £2,500 for plug-in hybrids. We are spending at least £400 million on the scheme in the current spending review period, and with further incentives through the tax system, there are clear financial benefits to assist consumers with the up-front costs of electric vehicles.

The initial provision of charging and hydrogen refuelling infrastructure for electric vehicles, which many Members have spoken about today, is also something with which the Government must assist. Continued growth is possible only if the public have confidence in the infrastructure network. As my hon. Friend the Member for Wells (James Heappey) and the hon. Member for Strangford (Jim Shannon) asked, what comes first, the car or the charge point? It is neither—we have to do both. That is the Government policy: doing both in parallel, to address the consumer concern. Drivers expect reliable, affordable, available and easy-to-use infrastructure.

The good network that we have in place has already been supported with more than £30 million of investment in public charge points since 2011. The electric vehicle homecharge scheme offers drivers £500 towards the cost of a private home charge point. There are public charge points in Parliament and two charge points in Downing Street. The ministerial fleet was mentioned. There are four UK-built Nissan Leafs in that fleet and many more across the public sector, and an initiative is in place to increase that number.

Highways England has a £15 million budget to ensure that there is a charge point every 20 miles across 95% of the strategic road network, which should be a rapid charge point if possible. As vehicles’ ranges increase and infrastructure provision grows, it will be increasingly easy to travel the length and breadth of the UK in an electric vehicle.

Hydrogen vehicles have been mentioned. It was interesting to see the Riversimple vehicle, brought to Parliament in partnership with my hon. Friend the Member for Brecon and Radnorshire (Chris Davies). I had previously met representatives of the business at the London motor show. We are technology-neutral and I see hydrogen fuel cell electric vehicles playing an important role in decarbonising road transport. Because we are technology neutral, I prefer to talk about ultra-low emission or zero-emission vehicles rather than electric vehicles. The Government are providing £5 million to help develop 12 hydrogen refuelling stations to support the roll-out of fuel cell vehicles. All 12 stations are being commissioned this year and will provide a significant step in the refuelling network.

Working with eight leading car manufacturers, our “Go Ultra Low” communications campaign has started to address the attractiveness of these vehicles. Nobody has mentioned that they are quite fun to drive. The driver puts their foot down and there is power; there is no delay. That is a key part of the attractiveness message.

Our agenda is about tackling the infrastructure, providing incentives to purchase and communicating the benefits. Colleagues have raised many questions, including about duty. Mercifully, that is a question for the Treasury, but I will highlight Members’ concerns. These issues are being discussed at cross-departmental groups, particularly with the Department of Energy and Climate Change, because it is clearly understood that we only really see the benefits of moving to electric vehicles if we have sustainable power generation.

There are benefits that can be brought by different parts of local and national Government, including the “Go Ultra Low” city schemes—I am visiting Milton Keynes tomorrow. It is not a question of local government or national Government. It is a question of partnership, and using all our available levers to deliver these fantastic products.

I hope I am as enthusiastic about this agenda as colleagues have been throughout this debate, which has been great to see. This is an important part of our transport mix. We can see what the future looks like: it is connected and autonomous vehicles powered by electric motors. We can see the benefits to the public in air quality, cost and congestion. I want those benefits to come to people in this country as quickly as possible, which is why we have an attractive and powerful set of initiatives to deliver that.

Question put and agreed to.

Resolved,

That this House has considered electric and hybrid electric cars.

17:30

Sitting adjourned.