Westminster Hall

Tuesday 15th October 2024 Westminster Hall

Tuesday 15 October 2024

[Peter Dowd in the Chair]

Scotland’s Economy

Tuesday 15th October 2024 Westminster Hall

14:59

[John Grady (Glasgow East) (Lab)]

I beg to move,

That this House has considered Scotland’s economy.

It is obvious that Scotland has the greatest of economic potential. It has some of the best universities in the world; a brilliant energy sector, with the skills and ingenuity to be at the forefront of the energy transition across the world; and the businesses of the future, such as the gaming industry in Dundee. People across the world love our country. Brand Scotland is a brilliant brand, and people across the world buy our products and, in the modern economy, our innovation and know-how. Most importantly, we value hard work, education and enterprise immensely, and I see that every day across my constituency of Glasgow East. In Scotland, we have always been, and will always be, aspirational. We also have the perfect raw materials for a modern economy. Despite that, Scotland’s economy has barely grown over the last 17 years and Scotland’s public finances are in a catastrophic state, with emergency in-year budget cuts imposed for the third year in a row.

Education is the foundation of a thriving economy. Scotland’s education system was the envy of the world, but that is not the case now. Our universities face significant deficits. Universities Scotland and other experts have made that clear, with real-terms resources to teach each Scottish student cut by 19%, the lowest investment in teaching across the UK and underfunding of research activity by £328 million each year.

It gets worse. The SNP Government have failed to act on the recommendations from the Withers skills review. That recommended a series of critical changes to skills training in Scotland to make our economy fit for the future and our people able to get the work of the future. When it comes to giving people the skills to get good work, delivery of real training speaks much louder than talking and endless consultation.

As for schools, the respected PISA—programme for international student assessment—reviews compare Scotland’s standards with those elsewhere in the world, and they show that Scotland’s educational attainment is falling. The SNP’s response—like a bad premier league footballer—is to blame PISA. With declining educational attainment, you might invest more in teachers—I should declare a minor interest here, because my children go to state schools in Glasgow—but that is not the case in Glasgow. The SNP council has cut 172 teaching posts from our schools this year, with the support of the Greens, due to its mismanagement of the city’s finances and the Scottish Government’s decisions to starve local authorities of much-needed resources.

That has real-world economic consequences. At least a quarter of businesses in Scotland report skills shortages and a lack of qualified candidates for roles. That means less well-paid jobs and less economic growth in Scotland, and it puts Scotland at a real disadvantage against other countries.

The last Labour Government acted on Scotland’s green energy potential. The amount of onshore wind capacity increased sevenfold, and our Government launched support for offshore wind, which was a brilliant success. I was excited to work on some of Scotland’s first offshore wind projects. Brian Wilson, the then Labour Minister and Scottish Labour MP, who put so much of this in place, left a brilliant legacy. That shows the positive power of a Labour Government and Scottish Labour MPs fighting for Scotland year in, year out and day in, day out. The last Labour Government left Scotland and Great Britain with a thriving renewable energy supply chain and industry—the ideal foundations for the road to net zero.

The Conservatives’ response, I regret to say, was stop-start support for renewables and a ban on onshore wind across England. They held one support auction that attracted no bids for offshore wind. It is negligence like that that means that people cannot afford to pay their bills, because wind and solar are now the cheapest forms of power. No one in their right mind would turn down cheap, low-cost, fixed-price energy over 15 years, but the Conservative Government seem to have done exactly that. Small wonder that our supply chain in Scotland is in turmoil.

Supply chain investors do not actually ask for much—just a fair bet, a reasonable measure of predictability, and a reasonable basis on which to conclude that there will be customers to serve over a reasonable period so that they can recoup their investment. The Conservatives failed to provide even that—the so-called party of business.

However, it is not all about the Conservatives. The Scottish planning system is slow and cumbersome. The principal legislation for large wind farms and electricity transmission projects remains sections 36 and 37 of the Electricity Act 1989. Wind farm developers have for many years complained about delays to consent for their projects. Consent for wind farms and transmission projects in Scotland is the responsibility of the Scottish Government. Delays put at risk the next wave of projects that are critical to economic growth and good jobs in Scotland and to getting energy bills down. All of this results in lost jobs and damage to supply chains. All of this means that people in Scotland are paying much more for their energy. And all of this puts Scottish business at a real disadvantage, because energy is a material part of their costs, and those costs are higher than they should be.

Turning to public finances, in September the SNP was forced to fill a £1 billion black hole in Scotland’s public finances within the year—this is not part of planned year-on-year budgeting. They did so in two ways. First, they spent much of the remaining ScotWind receipts, which are not recurring income, but one-off, windfall income that was meant to be dedicated to the energy transition, which is absolutely critical for places such as Grangemouth and Aberdeen. They also made £500 million of cuts, slashing NHS funding and raiding the transport budget, when our transport system is already incredibly unreliable. That is the result of short-term, quick-fix solutions to balance the books, with no long-term plan, no public sector pay strategy and no vision for our economy. After 17 years in power, the SNP has failed to grasp the concept of proper budgeting and long-term thinking. I would not recommend marriage with the SNP: for the honeymoon, you would be offered the Orient Express, but you would not even get the National Express—you would be hitchhiking on the M8 in the rain.

When faced with brutal budget cuts, surely the Scottish Government would make sure that they had spent the money they had, but that does not seem to be their approach. The SNP has failed to spend at least £250 million of European structural funding and may have to hand back up to £373 million of unspent funding. Let us pause for a minute. The UK was a net contributor to EU funds. This is money that Scottish businesses and workers paid into Brussels. We then got some of that back to spend in Scotland, and the SNP is sending it back again. Now, I love Europe and I am pro-European, but even I would venture to say that this is taking love for our fellow Europeans a little too far.

Since the SNP came to power in 2007, it has wasted more than £5 billion of taxpayers’ money on pet projects, failed industrial interventions, incompetence, costly agency spend in the NHS, overspend on infrastructure projects and, of course, the two famous ferries that do not sail. Scots also face much higher taxes compared with the rest of the UK. If I have understood it correctly— I must say I find it difficult to follow—the SNP’s position seems to be that the oil and gas giants who have made billions of pounds of windfall profits due to elevated oil and gas prices should pay less tax, but someone working in Midlothian on £29,000 a year should pay more tax than their counterpart in Northumberland.

The SNP seeks to blame others, including our very new Government. However, culpability for the state of the public finances sits with the SNP. Hon. Members should not take my word for it. The Scottish Government have been persistently and consistently warned that their approach to public finances is simply not sustainable. The gap in public finances has long been predicted by a wide range of organisations and fiscal experts, including the Institute for Fiscal Studies and the Scottish Fiscal Commission—an institute in Scotland similar to the Office for Budget Responsibility, although I am glad to say that Liz Truss did not get anywhere near it. The Scottish Fiscal Commission said of the Scottish budget that

“much of the pressure comes from the Scottish Government’s own decisions.”

The Auditor General has warned that the SNP’s short-term approach to budgets is not addressing unsustainable public finances in Scotland. We can have no confidence that the Scottish Government are able to address these problems. As Audit Scotland said in 2023:

“Historically there has been an implementation gap between public sector reform ambitions and the ability of the Scottish Government to deliver change”.

Translated into more normal language, that means that the Scottish Government keep saying they will do stuff, but they never get round to doing it.

The terrible state of public finances and higher income taxes in Scotland do not concern only working people: 82% of Scottish business leaders are concerned about Scotland’s tax divergence from the rest of the UK. Why? Because it makes it harder to recruit talented people to come and live in Scotland. I would venture to say that that is what we are desperate to do: have more people living, earning and contributing in Scotland.

There are wider problems.

[Stephen Gethins (Arbroath and Broughty Ferry) (SNP)]

The figures on migration show the opposite, and the hon. Member will join me in recognising that we welcome people from all over the world to come to Scotland. Will he also join me in recognising something that is a good for Scotland’s economy? Before the Brexit referendum, the Conservatives promised a Scottish visa—something that business and the higher education sector are crying out for. For the recent election, Labour figures promised a Scottish visa. I know that the hon. Member is not in the Government, but is that something he agrees with, along with his Scottish Labour colleagues?

[John Grady]

Scottish Labour and the Labour party are in favour of bringing talented people into Scotland, and the Scottish Government are welcome to work with us as we seek to ensure that that takes place. As I understand it, the Home Secretary is determined to ensure that it does, and I also understand that the Migration Advisory Committee is looking at the issue carefully. There is no doubt that we want to ensure that talented people can come and work in Scotland; the question is how to do it, and we are seeking to work with the Scottish Government productively on that.

One of the biggest challenges in the Scottish economy is productivity. One key way to get economic growth is to ensure that everyone can make more in the same time. The CBI-Fraser of Allander Scottish productivity index shows that Scotland is lagging behind the rest of the UK on 10 out of 13 productivity indicators, including business investment and business research and development spend. It is worth saying that business investment is simply not enough in the UK as it is, which is why our Government are so focused on increasing business investment and business research and development spend.

I regret to say that the problem comes down in significant part to the Scottish Government. In February 2024, Audit Scotland concluded:

“The Scottish Government’s 10-year economic strategy currently lacks collective political leadership and clear targets.”

That mismanagement has a terrible effect on Scotland’s public services. If Scotland’s economy had grown at the same sclerotic pace as the rest of the UK’s economy, it would be £8.5 billion larger. That would mean that there was more to invest in public services. As the Scottish Fiscal Commission’s work shows, Scotland would have £624 million more in tax revenues each year if we matched the UK’s abysmal performance under the Conservatives. Scotland desperately needs a Government who are pro-worker, pro-growth and pro-business, and that is what we will offer the Scottish people in 2026.

This crisis is due to the mess that the Tories and the SNP have made of our economy. Scotland’s independent Auditor General has warned that the SNP’s approach to public finances is unsustainable. Our public services face cuts because of the SNP’s buy now, pay later policies, and we have lost out on good industrial jobs, as they have gone overseas.

[Stephen Gethins]

Will the hon. Gentleman give way?

[John Grady]

I will make some progress, because I have another 26 pages to go.

The Scottish Government absolutely refuse to take responsibility for the catastrophic state of the Scottish economy and public finances. There is always some other factor, person or force majeure event to blame. I venture to say that the Scottish Government have an abundance of two things at the moment: brass necks and Teflon desks. There is no great mystery about who is responsible for the state of the Scottish economy: the SNP has been in power in Scotland for 17 years and, until July, the Conservatives had run this country for 14 years. The First Minister, the right hon. John Swinney, has been one of the central guiding minds and directing intellects behind those 17 years of incompetence; he was Finance Secretary for more than half of the SNP’s term in office and Cabinet Secretary for Education and Skills for five years.

Labour will take the steps needed to fix the Scottish economy. We are determined to bring outside investment into Scotland, which has been the focus of our international investment summit this week. We are developing a strong industrial strategy. Our new Employment Rights Bill will make work pay and protect the majority of Scotland’s business against competition from unscrupulous businesses that do not treat their employees fairly. An example of that is exploitative zero-hours contracts, which we will banish from Scotland.

GB Energy, headquartered in Aberdeen, one of Scotland’s amazing cities, will spearhead billions of pounds of investment in our energy system, including floating offshore wind, which is a brilliant opportunity for the north-east of Scotland, and hydrogen. We will work tirelessly to help our businesses export and to support our tourism sector. For the last 17 years, the Scottish Government have been selling Scotland to the Scots, but we know that Scotland is brilliant; we have to sell Scotland to the world, and that is what we will do. An early example of that is a deal with Brazil for the recognition of Scotch whisky worth up to £25 million.

I spent more than 27 years working as a lawyer with Scottish businesses before I came to this place, and I have never wavered in my belief that Scotland has the greatest economic potential. I have never wavered in my belief that Scotland’s economy can grow and deliver good jobs and the money needed to deliver the public services that Scotland deserves. That is Scottish Labour’s belief too. A growing economy gives people well-paid jobs and optimism about the future, and we are determined to deliver that. A growing economy delivers better public services, and Scotland’s public services must be improved. We are determined to rebuild our public services after years of neglect and mismanagement.

Next year is Glasgow’s 850th birthday. I am ferociously proud of Glasgow and of Scotland—including Aberdeen, where my mother came from and where I have spent so much time both on family matters and working. With investment and stable government, we can deliver the change that Scotland needs. We have got rid of one of the Governments failing Scotland; we need to get rid of the other. It is time for change in Scotland. It is time to deliver economic growth and better public services to Scotland.

[Several hon. Members rose—]

[Peter Dowd (in the Chair)]

Order. I remind Members that they should bob if they wish to be called in the debate. We have an hour and a half in total, and the Government and Opposition spokespeople will have 10 minutes each. Regrettably, given that at least 14 people have indicated that they wish to speak, the time limit on Back-Bench speeches will be two and a half minutes. I am afraid that I will be pretty strict about that in order to give everybody the opportunity to speak. Finally, I ask Members to bear in mind that if there are too many interventions, which should be brief, that limit may be reduced.

09:50

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in this debate. People may ask why I have chosen to speak on this matter, but the phrase “a rising tide lifts all ships” applies to the links between the economy of Northern Ireland and that of our Gaelic cousins across the sea in Scotland.

Let me first put on the record my sympathies to the family of Alex Salmond. This is the first Scottish debate we have had since his passing, although we expressed our condolences in the Chamber yesterday. My thoughts and prayers are with his family at this time.

The links between Northern Ireland and Scotland are not simply cultural, although those links are displayed by the numerous Scots bands at the 12 July celebrations and in our shared love of pipe band championships, our shared love of poetry and our shared language, with our Ulster Scots. It is not simply that my Scots brethren and sisters in this House will know what I mean when I call someone sleekit or a gern—by the way, just for the record, there is nobody here who is sleekit or a gern.

We are awaiting an Ofgem decision on whether Northern Ireland electricity can be sourced from Scotland. The scheme would involve building two converter stations—one in Northern Ireland and one in Scotland—and a cable of about 80 miles, depending on the final route, linking the two. That would be a physical manifestation of the trade that takes place between the two nations, Northern Ireland and Scotland, on a daily basis.

One of my staff members is allergic to a number of antibiotics. After the birth of her second child, she needed a particular antibiotic and was told there were none in Northern Ireland. A phone call from the local pharmacy, Andersons in Newtownards, to a small pharmacy in Scotland meant that she had a prescription in the morning, and by the afternoon the antibiotic was with her. The links and the pathways are there, and so too is the friendship.

This can be seen in the fight for our fishing fleet, which Members in this Chamber who long for Scottish independence and I—someone who fought for the Union—came together to win for the Scottish and Northern Ireland fishing fleets. Those are battles that we will continue to fight and win. My hon. Friend the Member for East Londonderry (Mr Gregory Campbell) recently highlighted during oral questions the need to strengthen the economic trade between Northern Ireland and Scotland, and that is certainly something that would help us all.

In conclusion, I support my Scottish brethren and sisters in their quest to secure more—more fishing rights, more manufacturing rights, and more investment in renewable energy and all the potential that is not fully realised in Scotland. I do so not to underline a theory that Scotland can stand alone, but because we are stronger when we stand together, and because the ties that bind are enhanced when we work as one body for the benefit of all in this United Kingdom of Great Britain and Northern Ireland.

09:52

[Frank McNally (Coatbridge and Bellshill) (Lab)]

I congratulate my hon. Friend the Member for Glasgow East (John Grady) on securing this important debate. After 14 years of economic mismanagement, my constituents deserve to see their wages go further, their public services performing better and their local communities thriving. For those aspirations to be met, we need good-quality, well-paid jobs that provide the security people need to plan for their futures and to have the economic confidence to spend in their local areas—to purchase in their local shops, and to support local cafés, restaurants and pubs, such as the Yard House in Coatbridge, which I had the privilege of visiting recently. So many of those establishments are facing real challenges.

In my community, I want to see the creation of jobs, investment in the skills that people need, and support for people who are seeking to develop those skills or to start their own businesses. I am pleased to see the work of our Labour Government. So much good work has already begun towards building a stronger, fairer economy in Scotland, which will provide the foundations to create those jobs: the Employment Rights Bill, which is set to ban exploitative zero-hours contracts, end fire and rehire and fundamentally tackle the scourge of low pay; the creation of the national wealth fund and GB Energy; and the significant event yesterday, which will deliver £63 billion of investment. I am keen to see what that means in reality for people across Coatbridge and Bellshill.

However, critical to that is improving Scotland’s economic circumstances and working to reset the relationship between Scotland’s two Governments. We must not underestimate the scale of the challenge we face. Labour market statistics published in July make for sobering reading, with unemployment rates and inactivity rates above those in the rest of the UK. Those figures show that rebuilding our economy and, more importantly, our communities, household finances and public services will not be easy or achieved overnight. That will require a level of analysis, investment and co-operation between the two Governments, which, sadly, we all know has been absent for far too long.

09:55

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

It is a pleasure to serve under your chairmanship, Mr Dowd. I congratulate the hon. Member for Glasgow East (John Grady) on a very thoughtful speech. I want to make three brief points.

When the North sea oil came, the then Labour Government saw to it that oil fabrication yards were established in different parts of Scotland, two of which in the highlands, at Kishorn and Nigg, I worked in. They were important because they helped halt and reverse highland depopulation—the curse of the highlands and islands for far too long. Welding and fabrication skills were relocated from Glasgow and the Clyde, and other parts of the UK, to those yards, and some of the greatest structures still working in the North sea today were built there, including the Ninian Central and Magnus platforms.

We have the skills there today, but they are ageing skills. The hon. Member rightly talked about the potential of renewables in the North sea, but virtually none of the nacelles and blades are made in this country. We have the fabrication and welding skills, so we should utilise them, as was done in the 1970s. If we do not do that, we are missing a trick.

My right hon. Friend the Member for Orkney and Shetland (Mr Carmichael) is rightly an avid exponent of the potential for space launch from Shetland. I, too, am a keen exponent of the potential of Sutherland in that regard. Orbex, which is based in Morayshire, currently employs 150 and hopes to have perhaps 500 by 2030. There is enormous potential, but the UK Government must match the level of funding coming from Germany and France for the space industry. That is a challenge for the Government, and I am sure they will do their best to meet it.

Lastly, so many of our skilled female workforce are unable to deploy their skills to the full to the betterment of Scotland’s economy because the care that they need for their children is simply not there. They cannot leave their homes to go out and make money for the family and serve Scotland in the best way they can. If we can get that right, we can realise the potential of our female workers; again, we would be very foolish not to.

Thank you, Mr Dowd—I believe I have kept within the allotted time.

[Peter Dowd (in the Chair)]

Yes, well done. I call Graeme Downie.

09:57

[Graeme Downie (Dunfermline and Dollar) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Dowd. I congratulate my hon. Friend the Member for Glasgow East (John Grady) on securing this important debate.

Back in the mists of time, in 2007, a new economic strategy for Scotland was announced by a new kid on the block, a certain Mr John Swinney, a member of a Government that would rely on Conservative votes for its survival. Let us see how it went.

In 2007 John Swinney promised a “wealthier and fairer” Scotland that would

“enable businesses…to increase their wealth.”

As has already been said, Scotland’s economy has performed far behind what we would have expected and hoped. Just this week we saw the latest NatWest regional tracker published, analysing economic activity across the UK, with Scotland languishing in eighth place out of the measured regions—not a good start.

John Swinney said Scotland would be “smarter”, yet in 2017, when he was Education Secretary, the Scottish Government admitted that young adults

“are more likely to experience low paid, precarious work, and cycling between this and unemployment”.

Just this week the Scottish Funding Council said that the

“reform of the post-school…landscape has not yet been implemented”.

So much for smarter and better opportunities.

It was said that Scotland would be “healthier”. As a former board member of NHS Fife, I could waste an entire speech explaining exactly how that has not been the case: £1.7 billion of NHS funding on agency staff, £1.3 billion on delayed discharge, and a chaotic, overreaching attempt to design a national care service. That makes it three down so far for the First Minister’s 2007 plan.

It was said that Scotland would be “safer and stronger”, but we have had the shambolic implementation of Police Scotland and lower police numbers since 2008. The First Minister also said that Scotland would be “greener”. Is there any consolation at the end? Well, I guess we could give him partial credit here. The Scottish Government did become greener, albeit for only a short time, when a calamitous coalition with the Green party saw climate change targets abandoned and a disastrous attempt to implement an ill-considered and ultimately abandoned deposit return scheme. Before SNP colleagues begin drafting their press releases about more powers, I point them to the foreword to the 2007 document, which said that the strategy could be achieved

“with the levers that we have”.

Scotland deserves better, and that is what this Labour Government—who have been in power for only a little over 100 days, rather than the 17 years of the SNP—are already attempting to deliver. We have established a national wealth fund, launched the largest increase in workers’ rights, launched GB Energy, announced a record-breaking £1.5 billion of funding for clean energy, and issued an industrial strategy focused on growth sectors where we know Scotland can and should perform better in the future. That is what we should be aiming for.

10:00

[Kirsty Blackman (Aberdeen North) (SNP)]

I appreciate your taking the time to chair this debate so excellently, Mr Dowd. I congratulate the hon. Member for Glasgow East (John Grady) on his speech. I am glad and relieved to hear that he is not proposing to marry me. I am married already, but I appreciate that he considered it, however briefly.

The hon. Gentleman mentioned Aberdeen as one of Scotland’s great cities; Aberdeen is the greatest city. I am literally here to say that. It is the greatest city not just in Scotland, but in the entire world. If anybody would like to spend time in Scotland, I thoroughly recommend Aberdeen. Thankfully, it is where Labour have chosen to put GB Energy. That makes a huge amount of sense, because we have been at the forefront of energy generation and subsea technology for so many years. The level of skills and expertise in and around Aberdeen is unparalleled.

We are, however, at a tipping point. There is a see-saw, where we need to see growth in jobs in renewable energy. I appreciate the comments and commitments that the Government are making, but if the change is to happen, we cannot lose the skills we have in oil and gas, because those people will go abroad to use their skills. We need to have that see-saw effect. We cannot pull oil and gas down in advance of putting renewables up. I have spoken incredibly passionately and regularly on climate change and the need to meet our targets, but the UK Government must consider the gap there will be in the middle if they choose to take action too quickly without ramping up jobs in renewables.

I am pleased to hear the commitment to a Scottish visa. I am really excited that we will have our own immigration system that works for the needs of the people of Scotland, rather than the populism of how the UK Government think that things should be for people in the south of England.

[Several hon. Members rose—]

[Peter Dowd (in the Chair)]

I remind hon. Members that they need to bob. The people on my list are different from those who are bobbing, so if you do not bob, you will not get called. I appreciate that I am tending to sound like a headteacher today.

10:02

[Dr Scott Arthur (Edinburgh South West) (Lab)]

It is a pleasure to serve under you, Mr Dowd. I congratulate my hon. Friend the Member for Glasgow East (John Grady) on securing the time for this debate, and thank him for touching on the university sector in his opening remarks. Scotland’s universities, which are among the very best on the planet, are more than just institutions of higher learning; they are vital engines driving our economy. From groundbreaking research fuelling innovation to nurturing the next generation of talent, universities play a pivotal role in shaping Scotland’s future. Anyone who doubts that only has to look at the support that Heriot-Watt University’s National Robotarium, in my constituency, gives businesses. That is just one example of how knowledge and expertise generated within our universities attracts investments, creates jobs and fosters economic growth.

I am proud that people living in Scotland have access to free university education, but I am ashamed that our universities are not fully funded to deliver that. Universities receive direct funding for each student via the Scottish Government, but that is currently around £2,000 less than universities in England get. The gap is only widening. If we are serious about growing Scotland’s economy, underfunding Scotland’s universities must end.

I am proud that our universities attract the best minds from around the world, both staff and students. This year, however, the number of visas issued to students coming from overseas to the UK overall dropped by 16% due to Conservative immigration policy. That is a failure, and is really concerning given the current state of the sector in both Scotland and England. It also only damages the multicultural vibrancy that should be at the heart of any university experience, such as the one that my son Ben gets at the University of Edinburgh.

In conclusion, Scotland’s universities are not just assets but essential catalysts for economic growth. By investing in education and research, we are investing in our nation’s future. That is why our universities must be nurtured and cherished, and their success should never be taken for granted.

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

The hon. Gentleman makes an important point about Scotland’s universities and the role that they play, particularly regarding investment in our universities. So does he agree that it was a mistake by the UK Labour Government to reverse investment in the supercomputer in Edinburgh?

[Dr Arthur]

It was a mistake for the previous Conservative Government to commit to that project without allocating funding to it. My good colleague, the Secretary of State for Scotland, is working day in, day out to secure that funding.

If we are serious about growing Scotland’s economy, we must ensure that our universities have the funding they need, and that the voice of the UK’s universities is heard when it comes to setting immigration policy.

10:06

[Gregor Poynton (Livingston) (Lab)]

It is a pleasure to speak in this important debate on Scotland’s economy. Scotland once led the world in economic and industrial development. Alongside other parts of the UK, Scotland was the home of the global industrial revolution. However, Scotland’s economic present is not, I am afraid, as glorious as its past.

The economic legacy of both the SNP and Conservative Governments has been dismal. We now face a stalled economy that no longer works for working people. Wages are flatlining, there are fewer opportunities, businesses have been ignored and our global competitiveness is in decline. Both the SNP and Tory Governments have delivered little but chaos and uncertainty. Scotland’s economy has not been well served in recent years.

I am here to say, however, that Scotland’s economy can be better and can work for working people. We have incredible strengths: we are home to some of the best businesses in the world, to a talented and skilled workforce, and to leading universities at the forefront of human knowledge. We have huge potential in our natural resources as well, especially in a world where inclement weather can be seen as an economic asset.

In West Lothian, we have a fantastic set of businesses and an incredibly skilled workforce, including multi- nationals, indigenous scale-ups and early-stage start-ups. The modern West Lothian economy has been built on a diverse range of sectors: life sciences, engineering, construction, food and drink, distribution, aerospace, retail, software development and renewables. In the Livingston constituency, we are the long-term home for many of the world’s greatest companies, including Sky, Mitsubishi, Glenmorangie, Valneva and many more.

I thank the Secretary of State for Scotland, the ministerial teams, and the teams at the Department for Energy Security and Net Zero and the Department for Business and Trade for their support around the potential job losses at Mitsubishi Electric. I also thank Tom Arthur, the Scottish Government Minister for Employment and Investment, for his swift action to support the workforce there. They are skilled workers who are facing redundancy as a result of short-term economic pressures.

The decisions that lie ahead of us to grow Scotland’s economy will not always be easy, but taking the right choices to grow our economy and drive investment will create good jobs and new opportunities in every part of the country. That is the country we wish to build together.

10:08

[Richard Baker (Glenrothes and Mid Fife) (Lab)]

I thank my hon. Friend the Member for Glasgow East (John Grady) for securing this important debate on Scotland’s economy at such an important time. Scotland has a rich heritage in industry, commerce and innovation—a legacy on which we must build and be far more ambitious for our future.

Ten days ago I visited the InchDairnie distillery in my constituency, which is an exemplar of that approach to economic growth. The team at the distillery are leading innovation in one of our oldest but still most significant industries, developing new whiskies with grains sourced entirely locally, and they are a living-wage employer. They are investing in the future as well, by installing a new boiler system for the distillation process that is hydrogen-ready.

It is very appropriate that InchDairnie has taken that foresighted approach to its energy use when, in Buckhaven in my constituency, SGN is investing in a pilot programme for domestic hydrogen use in 300 homes in the community. That virtuous cycle continues with the hydrogen boilers used in those homes that were let by Bosch, which is a major employer in Glenrothes. The importance of those and many other renewable businesses in my constituency shows how vital the decision has been by this UK Government to deliver a step change in our ambition for Scotland and the UK to be a green energy powerhouse. That is why this Government’s decision to establish GB Energy, headquartered in Scotland in the wonderful city of Aberdeen and backed by £8 billion of investment from the windfall profits of oil and gas giants, is such a vital initiative for Scotland and for my constituency. This morning we have heard no alternative proposal to invest billions of pounds in that vital industry for the future.

To conclude, I very much agree with the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on the importance of our fabrication yards for the future of this industry. The Methil yard in my constituency that is currently going to be sold, with that process taking place under Harland and Wolff, has a fantastic role to play in the future of our renewables sector. The contribution of the 200 steelworker apprentices at that yard will be vital if we are to achieve that crucial ambition for Scotland and the UK to be a leader in green energy for the future.

10:11

[Joani Reid (East Kilbride and Strathaven) (Lab)]

I congratulate my hon. Friend the Member for Glasgow East (John Grady) on securing this debate. I take the opportunity to highlight one of Scotland’s economic successes, which is now unfortunately a huge economic challenge—the town of East Kilbride. It was Scotland’s first new town and I would argue its most successful, but it was a success as a result of an interventionist industrial strategy. It brought together incentives and investment from the local development corporation and central Government, which resulted in inward investment and technological manufacturing that led to the Motorola plan, the Rolls-Royce plan and many more. A strategic approach by Government to locate and disperse several service jobs means that His Majesty’s Revenue and Customs and the Foreign, Commonwealth and Development Office remain in the town today.

The town was a product of strategic thinking, planning and active intervention, and it was a place of hope and aspiration where families could find not just homes but communities, jobs and opportunities. However, the contrast between what it was and what it is now is stark. Although it is still one of our most successful new towns, East Kilbride is not what it once was. It used to have almost full employment, but after the manufacturers pulled out of the town, and the industries that replaced them—such as services and retail—faced some huge challenges as a result of the financial crisis, the town has failed to keep up with the pace of change. Also, the previous Westminster Government and the Holyrood Government have utterly failed in supporting the town. The town feels neglected and let down by two Governments, and the lack of any serious investment industrial strategy has left communities like mine in East Kilbride behind.

There is of course now hope with the new Government’s focus on growth and investment, as well as the creation of GB Energy. East Kilbride can use its space and its skills that were formerly used to deliver companies such as Rolls-Royce and Motorola. With a Government serious about driving investment, boosting our economy and creating jobs, towns such as mine in East Kilbride can be rebuilt and renewed. That is the focus of what this Government are trying to do. The work of post-war Governments who transformed our public realm can once again take place. It is a testament to the mission-led Government, who have a long-term strategic vision to rebuild Britain with an industrial and economic policy that puts working people, fairness and growth at its core.

10:13

[Tracy Gilbert (Edinburgh North and Leith) (Lab)]

I congratulate my hon. Friend the Member for Glasgow East (John Grady) on securing this important debate. Ahead of the general election, Prosper Scotland summed up the hurdles that the Government face, in addition to the challenges of decarbonisation and an ageing population, as well as even greater technological challenges, when it said:

“What is also evident is that our economy has struggled for the decade and a half since the financial crisis in 2007-08, a weakness that ill-prepared our society for when recent crises came.”

It is fair to say that that is a damning indictment of the Tories’ and SNP’s handling of the economy.

However, I believe that the best days lie ahead for Edinburgh North and Leith and for Scotland. We have the natural assets and the key ingredients to deliver economic growth. On the green economy and the sprint to clean power, Scotland already generates significant amounts of clean power, and if the Scottish Government give consent to Berwick Bank, we could boast the largest offshore wind farm in the world within a few years. We need to secure manufacturing and supply chain jobs to support the energy transition in Scotland, at sites such as the port of Leith in my constituency.

To deliver Brand Scotland, we need to rip through the border and sell Scotland not just to ourselves, but to the rest of the world. We have salmon, shortbread, Tunnock’s teacakes, Irn-Bru, Lind & Lime gin and Johnnie Walker—a distillery that not only sells whisky to the world, but welcomes more than 1 million visitors a year to its whisky experience in my constituency. We need to market those brands to every corner of the globe.

Edinburgh is the largest tech hub but, with the scale of innovation, we are creating more tech jobs than ever that cannot be filled. That leads me nicely to the key ask of this debate: for both of Scotland’s Governments to work together. With the devolution settlement, it is not possible for the UK Government alone to deliver economic growth for Scotland. That means celebrating achievements together, but also tackling the blockers—a bureaucratic planning system, a skills shortage and women struggling to enter the workplace, to name but a few.

Finally, for workers across Scotland, a fair day’s work must mean a fair day’s pay. I am delighted that the Labour Government brought forward the new deal for workers within their first 100 days, and I look forward to the biggest increase in workers’ rights for a generation becoming a reality for workers across Edinburgh North and Leith and Scotland in the coming years.

10:16

[Kirsteen Sullivan (Bathgate and Linlithgow) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Dowd. I congratulate my hon. Friend the Member for Glasgow East (John Grady) on securing this important debate.

I welcome the opportunity to speak about Scotland’s economy, not least because of the huge breadth of businesses in the towns and villages across my constituency, which is situated in the heart of the central belt with road and rail links to Glasgow, Edinburgh and beyond. From small independent businesses to large multinationals, spanning manufacturing, construction, hospitality, engineering, telecommunications, biosciences and retail, they all play a vital role in contributing to our local economy and supporting local jobs. Film and TV production makes an increasingly important contribution to the economy, with the filming of “Outlander” at Blackness castle and in the Bathgate hills showcasing the beautiful and versatile backdrops that the area has to offer. More recently, Bathgate welcomed Colin Firth for the filming of “Lockerbie”.

However, there are significant challenges that threaten to undermine our economic growth and prosperity, with the Scottish Government underfunding the vital investment needed in infrastructure projects and cutting initiatives to get more people on to public transport, with a £23.7 million in-year cut to the travel budget. Although my constituency is home to many fast-growing towns and villages, investment and infrastructure are not keeping pace with development, and nowhere is that more starkly seen than Winchburgh, which continues to await a new train station that would not only support a shift to sustainable travel and ease motorway congestion into Edinburgh, but unlock further economic growth, supporting local businesses and improving links to employment opportunities.

Another significant challenge facing communities is the swingeing cuts to council budgets. West Lothian council has had to find savings of £10 million per year for the last 16 years, while Falkirk council has the second-largest budget gap in mainland Scotland as a proportion of revenue spend. This is a story of two councils—one Labour-led and one SNP-led—both facing devastating cuts that will impact people and services across my constituency.

10:19

[Elaine Stewart (Ayr, Carrick and Cumnock) (Lab)]

I thank my hon. Friend the Member for Glasgow East (John Grady) for requesting this debate. He was right to call for this debate because for far too long Governments in the UK and in Scotland have failed to work together, failed to create opportunity and failed to put Scotland’s economy and people’s wellbeing before party politics.

Regions such as Ayrshire power the country’s economy through their vast coalfield site, but former coalfield sites right across the country have been left behind. If they were all to be combined, former coalfield sites in the UK would amount to the most deprived region in the country. Because of its unique history and landscape, Ayrshire has growth potential. We need to support the area by unlocking opportunities through more investment in skills infrastructure.

With Scotland at the heart of the UK Labour Government, our nation will lead the clean energy revolution. Ministers are already resetting relationships with the Scottish Government and working closely to ensure that these benefits are felt by Scots and people right across the UK. Scotland is a powerhouse of the clean energy mission, and GB Energy will drive forward investments in home-grown energy production and provide benefits to bill payers. In Ayrshire, we are keen to capture the spill-over effect from GB Energy’s being based in Scotland. GB Energy is about creating opportunity for clean economic growth, and I will work hard to ensure those opportunities also reach my constituency.

With the Government’s objective of doubling onshore wind energy by 2030, Ayr, Carrick and Cumnock hosts the largest wind farm currently under construction in the UK. The wind farm has embraced the community benefit model and will pump tens of millions into community projects over its lifetime. Growth in the clean energy economy is one aspect of the change that we need to deliver in our constituencies, but I agree with many of the points made about what this Government have already achieved in their first 100 days in office.

10:21

[Susan Murray (Mid Dunbartonshire) (LD)]

I thank you for chairing this debate, Mr Dowd, and I thank the hon. Member for Glasgow East (John Grady) for bringing this important topic to Westminster Hall. I thank all colleagues for their contributions—we are definitely stronger together. Building on the talent and experience in Aberdeen, by developing new industries with the support of the best universities in the world, can only help us to secure investment for the future, using Scottish talent and supporting areas of our economy such as the hospitality industry.

Scottish Government figures show that 338,000 small and medium-sized enterprises operate in Scotland. Those SMEs have created an estimated 1.2 million jobs, or 56% of private sector employment, and 42% of private sector turnover as of March 2023. Despite their economic contributions, small businesses are in decline in Scotland. Both the SNP Scottish Government and the previous Conservative UK Government have implemented policies that have resulted in high energy costs and a challenging economic environment, preventing SMEs from thriving.

The previous Conservative Government mishandled the economy and jeopardised public finances, which halted economic growth and increased the cost of our debt. Their bungled Brexit deal has harmed the economy and increased costs for businesses, with 38% of SMEs reporting that the UK’s exit from the EU has been a major obstacle to their success. Further compounding these challenges, the SNP cut more than £23 million from net zero and energy spending, breaking its promises and reducing crucial investment in renewable energy infrastructure. That decision directly impacted opportunities to lower energy costs for businesses, despite the fact that 72% of SMEs identify energy expenses as a significant obstacle to their success.

In my Mid Dunbartonshire constituency, some small businesses are facing electricity standing charges of £16 a day. The Scottish Chambers of Commerce quarterly economic indicator for Q3 2024 highlights anxieties about taxation in Labour’s autumn Budget. Pressures on cash flow and profit margins are already limiting growth and squeezing profits for businesses. Scotland, which hosts some of the largest wind farms in Europe, not only faces high energy costs for consumers, but fails to produce even a single wind turbine blade domestically. That fact is tied to the mismanagement of public contracts, including handing over £50 million to a firm that immediately collapsed, leaving no solution or recovery plan in place. Such setbacks not only undermine progress on renewable energy in Scotland, but limit the potential benefits for local businesses and communities.

Business and consumer confidence in Scotland is falling, but as a Liberal Democrat I am optimistic for Scotland’s future. The Liberal Democrats are committed to investing in innovation and skills to boost economic growth and create good jobs. We want to invest in community health services and fix the crisis in social care to get more people back into work. We want to ensure stability, certainty and confidence in public finance, while reducing the national debt as a share of GDP and maintaining essential investments such as those into our green transition. Finally, we are dedicated to repairing our fractured relationship with the European Union, restoring the benefits it once gave to Scottish businesses as well as to individuals.

10:26

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

It is a pleasure to serve under your chairmanship, Mr Dowd. I am grateful to the hon. Member for Glasgow East (John Grady) for bringing forward this important debate on the state of Scotland’s economy. As he highlighted, there can be no doubt that Scotland’s economy has suffered from 17 years of SNP rule. It is impossible for me to mention all the many contributors to this morning’s debate, but I want to mention a few.

First, the hon. Member for Dunfermline and Dollar (Graeme Downie) rightly highlighted the multiple failures of the SNP over the last 17 years, not just in relation to economic policy, but in other areas too. The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) talked about the importance of skills, particularly in rural areas such as his, and the same applies in my own area in the Scottish borders. Another challenge we face in the borders is access to childcare, which prevents young women from going back to work.

[Jamie Stone]

Does the hon. Gentleman accept my point that these skills are ageing? We still have them but, if we do not pass them on, they could vanish and it will be much harder to train a new generation of welders and fabricators.

[John Lamont]

I totally agree. We need to invest in the skills we have; otherwise they will be lost, particularly for more traditional industries. If the skills are lost there, they might never return.

I do not often agree with the hon. Member for Aberdeen North (Kirsty Blackman), but she highlighted an important point about the gap that is emerging, with skills in the oil and gas sector potentially being lost if the renewable sector does not accelerate more quickly. Those in the sector up in the north-east, in Aberdeen, highlighted that point repeatedly during my time as a Minister. They were concerned that there was such a stigma attached to the oil and gas sector now that new people were not moving into that area and would not then be able to move over to the renewable sector when that opportunity arose.

[Graeme Downie]

Does the hon. Gentleman agree that the failure of both the SNP and Conservative Governments to plan for the site at Longannet, which closed in 2016 and now lies empty, is a missed opportunity? Does he agree that all Governments in the future should be looking to work together on that, to bring thousands of jobs back to that area of west Fife?

[John Lamont]

I will push back slightly on the narrative that, up until the election of the new Government, the Scottish Government and the UK Government had not been working together on the project that the hon. Gentleman mentions, or on other areas. The reality is—as, again, I know from my own experience as a UK Government Minister—that there were huge amounts of co-operation between the Scottish Government and the UK Government latterly. Yes, we did not agree on the question of independence, but it is a myth to say that just because there is a new Prime Minister, a new Labour Government, all of a sudden there is a reset. I know the UK officials behind the scenes were working incredibly hard with officials in the Scottish Government to achieve the best for all of our communities; for all of us who represent Scottish constituencies. The project he highlights is an example where both Governments should be, and have been, working together to try to achieve positive outcomes.

The last Member I want to mention is the hon. Member for Edinburgh South West (Dr Arthur). I have to say I was very disappointed that he refused to oppose the new Labour Government’s decision to scrap the supercomputer project for Edinburgh University. I know it was going to be a huge boost to the university. I know that even in my own area, again in the borders, there were a number of people directly employed with that project and they were mightily disappointed when the new Government decided to rip up that deal.

[Blair McDougall (East Renfrewshire) (Lab)]

Will the hon. Member give way?

[John Lamont]

I will make some progress, if I may, as I have taken a number of interventions.

Our workers and businesses have been poorly served by a nationalist Government who have too often been distracted from the day job and who have too often overlooked and sometimes even ignored what small businesses have said.

Let me outline how stark the situation has become. A recent survey by the Fraser of Allander Institute at the University of Strathclyde highlighted two key points. First, just 9% of Scottish firms agree that the Scottish Government understand the business environment in Scotland. Secondly, just 8% of businesses agree that the Scottish Government engage effectively with their sector. Those statistics should have been a wake-up call for the SNP to reset its relationship with the business community. It has been promising that reset for years, but it simply has not happened and the consequences are now becoming clear.

Compared with 10 years ago, the Scottish economy has also grown more slowly than the United Kingdom’s economy overall. GDP in Scotland is 8.4% larger in quarter 2 of 2024 compared with in quarter 2 of 2014, whereas UK GDP is 14.3% higher. Although the nationalists may try to claim an excuse by citing different population-based figures, the Fraser of Allander Institute have already dismantled that, too. Its most recent economic commentary found that,

“even when the differential population growth in the UK and Scotland is accounted for…growth in Scotland per person over the last 10 years has been 6% for the UK, compared to 4.3% for Scotland”.

It is crystal clear that ever since the independence referendum, Scotland has suffered from an SNP slowdown. The SNP’s damaging business policies and harmful decision to bring the Greens, who do not even believe in economic growth, into government has cost our country dearly. Scotland’s economy is crying out for something different, but it is not happening at the moment. Labour and the SNP offer only more of the same old ideas. John Swinney and Anas Sarwar favour most of the same policies. They both want higher taxes on workers. They both expect businesses to pick up the bill for a bigger state. They have the same socialist ideology that has failed Scotland for decades.

The left-wing parties in the Scottish Parliament have become disconnected from the lives of normal people. They spend too much time on divisive policies and fringe obsessions like gender reform and they do not spend enough time, energy, and resources on driving Scotland’s economy forward. Scottish Conservatives are proudly standing up against that left-wing consensus of the political establishment in Scotland. Scotland’s workers, businesses and indeed our entire economy need a different approach. They need a new way forward.

[Tracy Gilbert]

Does the hon. Gentleman agree with me that the new deal for working people would lift hundreds and thousands of families out of poverty, and that can only be good for Scotland?

[John Lamont]

I am grateful for that intervention. I did not quite catch the first point, but the previous Government had a proud record of improving the lives of people across the length and breadth of Scotland by lifting people and families—and children in particular—out of poverty. That is a record the previous Government are rightly proud of.

I wait to hear what the new Government are going to do, and what the Budget will contain. I know from businesses, many communities and residents that there is a great fear of higher tax and more money going out of people’s pockets, which will do nothing to deal with poverty in many communities the length and breadth of Scotland.

The Scottish Conservatives are determined to deliver the stronger economic growth our country desperately needs. Under our new leader, Russell Findlay, the Scottish Conservatives will put forward a positive vision for the future of our country that champions the values of mainstream Scotland—opportunity, aspiration and decency. We will present positive new policies to fire up Scotland’s economic growth, create opportunities for workers and businesses, and reward aspiration with lower taxation.

10:34

[Martin McCluskey (Inverclyde and Renfrewshire West) (Lab)]

It is a pleasure, Mr Dowd, to serve under your chairmanship and speak on behalf of the Government for the first time. I begin by congratulating my hon. Friend the Member for Glasgow East (John Grady) on securing this debate on Scotland’s economy and congratulating all hon. Members on their contributions.

We have heard a lot about the positives and the potential of Scotland’s economy, such as the strength of Brand Scotland and our thriving biosciences sector; we have even heard from my hon. Friend the Member for Bathgate and Linlithgow (Kirsteen Sullivan) about our thriving film and TV sector. I am sure the crowds here today are just as great as that which turned out to welcome Colin Firth to Bathgate. However, we have also heard about the problems in the Scottish economy, and it is no secret that—along with the UK economy as a whole—it is underperforming. This has been identified by many Members, including my hon. Friend the Member for Livingston (Gregor Poynton) and the hon. Member for Mid Dunbartonshire (Susan Murray).

Fourteen years of mismanagement by the previous Government has resulted in persistently low levels of investment, poor productivity growth and rising inequality. That has led to this Government facing the worst economic inheritance since the second world war—a £22 billion black hole in the public finances. The Treasury reserves were spent three times over in three months, which is absolutely astonishing, and financial commitments were made by the previous Government that they knew they could not keep. That inheritance means tough decisions for the Government, but it is better to be honest and up front with people about the choices that we face. That is why my right hon. Friend the Chancellor will set out in her budget how we will fix the foundations of our economy so that we can tackle poverty, rebuild our public services and begin a decade of national renewal.

The economic inheritance we face is not just fiscal. It is also structural. My right hon. and learned Friend the Prime Minister and my right hon. Friend the Chancellor have made clear that the No. 1 priority of this Government is growth. To achieve that, the foundations of Scotland’s industrial economy need to change significantly. That is why we published our industrial strategy Green Paper yesterday. We heard from my hon. Friend the Member for East Kilbride and Strathaven (Joani Reid) about the importance of industrial strategy, and how it is not just dry, but something that really makes an impact on people’s lives.

[Jim Shannon]

I wish the hon. Member well, and hope that things go according to his plans and all our plans. In my contribution, I mentioned the interconnector between Scotland and Northern Ireland as a potential way to reduce energy and help us to grow together economically. I know he may not be able to respond to that point now, but perhaps he could come back to me at a later date. If so, I thank him.

[Martin McCluskey]

I thank the hon Member for his intervention, and for the points he made about the importance of working together—not just between the UK and Scottish Governments, but across these islands. I will ensure that officials write to him on that point.

Our industrial strategy calls time on short-term economic policy making, and establishes a UK industrial council on a statutory footing, to provide expert advice and long-term thinking.

[Dr Jeevun Sandher (Loughborough) (Lab)]

Can my hon. Friend confirm that his industrial strategy—and indeed GB Energy and our clean energy revolution—are not merely theoretical? They are working practically in the United States, the fastest growing economy in the G7, and are creating jobs in those former industrial areas. Indeed, this Labour Government will help to bring that about in Scotland, creating good jobs in those areas that need it most.

[Martin McCluskey]

I welcome that comment from my hon. Friend, and also congratulate him on his election to the Treasury Committee, where I am sure he will make a great contribution. He has set out exactly what the plans the Government have set out will do for Scotland, and the aspirations and ambition of those plans for our country.

Returning to the UK industrial strategy council, this body will work with specialist sectoral taskforces, and bring together the expertise of businesses, academics, and trade unions to help drive economic growth in all parts of our country. That will allow us to build on Scotland’s strengths and huge potential in key sectors, including advanced manufacturing, life sciences, financial services, clean energy, defence, and creative industries—all areas where Scotland is already beginning to thrive. Together with the establishment of GB Energy in Aberdeen, which the hon. Member for Aberdeen North (Kirsty Blackman) highlighted in her speech, and the creation of a national wealth fund, we will bring investment, jobs, and growth to Scotland.

[Graeme Downie]

Does the Minister agree that a key area for investment from the national wealth fund should be Scotland’s port infrastructure in order to ensure we are making the best economic use of our coastline, such as at places like Rosyth in my constituency?

[Martin McCluskey]

Ports are essential to the future of our country, and coming from a constituency with an important and thriving port, I absolutely agree with my hon. Friend.

We are taking tough decisions, but change is under way and investment is now flowing into the country. Just yesterday, as many hon. Members have mentioned, the international investment summit brought the chief executives of hundreds of the world’s biggest companies to the United Kingdom. They announced £63 billion of investment and 38,000 jobs for the UK. The companies included Scottish Power and its parent company Iberdrola, which doubled their investment in the UK from £12 billion to £24 billion, and Greenvolt, which announced a £2.5 billion investment in Scotland. That will benefit the whole country.

[Jamie Stone]

I congratulate the Minister on his appointment; I am sure he will do a very good job indeed. I may be a Liberal Democrat, but I recognise that one of the greatest achievements for the highlands of the 1960s Labour Government was the establishment of the Highlands and Islands development board, which did a great deal to reverse depopulation. Today, under the auspices of the Scottish Government, Highlands and Islands Enterprise—its successor body—is a shadow of its ancestor. I wonder whether the Minister would agree to talk to the Scotland Secretary to see how, working with the Scottish Government, we can revitalise HIE.

[Martin McCluskey]

I understand the importance of the Highlands and Islands development board. My partner’s grandfather arrived in Scotland only because he was the chief engineer in the Cruachan power station. That part of my family is here because of the work of the Highlands and Islands development board, so I make the commitment to the hon. Member to speak to the Secretary of State about those issues.

Delivering significant change to Scotland’s economy means working in partnership across areas of policy, not just industrial policy and employment rights but planning, housing, skills and access to health services. Many of these areas are devolved, and we are committed to resetting the relationship between the UK and Scottish Governments. That does not mean that we will never disagree, but where we have shared goals, we should be able to work together. The Secretary of State for Scotland has already begun working with the Energy Secretary, Gillian Martin, and Deputy First Minister Kate Forbes on a range of issues since coming to office.

One of those issues, which was mentioned by both my hon. Friends the Members for Glasgow East and for Edinburgh South West (Dr Arthur), was universities. I would agree with them that universities are a jewel in the crown of the Scottish economy. They drive innovation, create jobs and new businesses and deliver world-leading research and education. I know that the universities sector will be crucial to the future of the Scottish economy.

[John Cooper (Dumfries and Galloway) (Con)]

I have learned a lot today about this great new relationship, and I wish the hon. Gentleman all the best with that, but the universities sector is a very difficult area. In Scotland a cap has effectively been placed on the number of Scottish pupils able to leave school and go to university, while foreign students are incentivised. The universities sector in Scotland has a fine past, but does it have a great future?

[Martin McCluskey]

I would say that it does have a great future. I am not dismissing the fact that there are issues within the Scottish universities sector, which many of my hon. Friends laid out during the debate, but there is huge potential for the future of the sector and it is for not only the Scottish Government but the UK Government to make sure that it is realised. In terms of our relationship and working together, what we saw from the previous Government was a stand-off, and I do not think that works to the benefit of the people of Scotland. What the majority of Scots want to see are their two Governments working together to deliver better results.

[Frank McNally]

I welcome the Minister to his place. We have been talking about universities, but there is also a significant challenge in Scotland with the decimation of further education, particularly colleges. This is creating real challenges for people who are looking to upskill and reskill, and we must ensure that the people who are best placed to secure the jobs of the future are able to do so. Does the Minister agree that much more needs to be done by the Scottish Government to ensure that further education in Scotland gets the support that it deserves?

[Martin McCluskey]

I agree. I know from experience in my own constituency with James Watt college in Greenock—now part of West College Scotland—that there have been issues with investment in colleges. That largely impacts on opportunities for working-class young people, and for people who perhaps did not get the results that they wanted at school and need a second chance. The college sector always provided that for people, but at the moment it is struggling to do so in many places across Scotland.

[Gregor Poynton]

My hon. Friend talked the importance of the university sector to Scotland, and that is clear. I have two points on that. First, yesterday’s industrial strategy is welcome. This is about how we support scale-ups and start-ups coming out of our Scottish universities. There are already great examples in my constituency of Livingston, but also across Scotland. However, more work needs to be done to help them and to ensure that the great thinking that is going on in universities can come to be more commercial.

Secondly, I have been told by many people that there is not the same access to finance, and oftentimes these companies are either bought up or have to look to move to America. The work that the UK Government are doing to create a stable environment and to involve the City of London, as part of the UK, to try to unlock some of the £3 trillion in pension funds to invest in these scale-ups is incredibly important. It is important not just that we start them in Scotland, but that we can grow them to a significant scale.

[Martin McCluskey]

I thank my hon. Friend for welcoming the launch of the industrial strategy yesterday. It is important that we ensure that any opportunities from the university sector are spread right across the country, and that is what my right hon. Friend the Chancellor of the Exchequer is trying to do with the national wealth fund. Our university sector in Scotland is also trying to make sure that the opportunities from universities and those start-ups are pushed out beyond universities’ borders. My hon. Friend’s point about access to finance is important. The Government are trying to provide a stable economic environment, which we did not have under the previous Government. That gives investors confidence, as we saw yesterday when we doubled the amount that was invested in the UK at the global conference last year. That is testament to the confidence that business now has in the UK because of our stable political environment.

[Douglas McAllister (West Dunbartonshire) (Lab)]

Does my hon. Friend agree that the recently released Scottish Government industry statistics reveal worrying trends in Scotland’s food and drink sector, with output in the food and drink sector falling, employment falling and businesses failing? Those figures are absolutely scandalous. Both the SNP and the Tory Government failed to support Scotland’s world-class food and drink industry adequately. In my constituency of West Dunbartonshire, the whisky industry is a significant employer, so will food and drink be a key growth industry identified in our Government’s blueprint for growth, thereby maximising Brand Scotland and job opportunities in West Dunbartonshire?

[Martin McCluskey]

The food and drink sector will play a crucial role in the future of the Scottish economy. I am referring not just to the whisky sector, which my hon. Friend has mentioned and which I know he plays a key role in championing through the Scotch whisky all-party parliamentary group, but to other sectors, such as our great salmon sector. There are a lot of other opportunities in food, drink and tourism whereby the Scottish economy can thrive in years to come.

One area of Scotland’s economy on which the Governments have worked closely together in recent months has been the response to the commercial decision of Petroineos to end oil refining at Grangemouth. The oil refining operation has played an important role in Grangemouth’s economy for more than 100 years. However, as a clear sign of how we can work together for the Scottish people, the UK and Scottish Governments have announced a joint £100 million package to help to secure Grangemouth’s industrial future and protect its skilled workforce. Scotland has a proud industrial past, as we have heard from many hon. Members this morning, and, as part of the transition to net zero, it will have a bright industrial future, and one that will guarantee jobs and wealth for families for generations to come.

[Kirsty Blackman]

In relation to that transition, while the hon. Gentleman is in the mood for making commitments, will he commit to speaking to the Chancellor about the Scottish carbon capture cluster and the fact that it is looking for an outward show of confidence from the Government? I am not asking him to push for money today, but positivity about progressing the Scottish cluster for carbon capture would be incredibly helpful for the industry.

[Martin McCluskey]

We saw last week the Government’s commitment to carbon capture and storage. I am happy to take those points away and ensure that they are communicated to the Secretary of State for Scotland and the Chancellor.

The Government’s focus on growth is in the service of our mission to tackle poverty, remove barriers to opportunity and put the country back in the service of working people. It is appalling that under the previous Government, child poverty in the UK went up by 700,000 since 2010. Today, more than one in five Scots and one in four children are trapped in poverty, trying to get by on less than they need.

The child poverty taskforce, which this Government have established, is developing a strategy to reduce child poverty that will be published in the spring of next year. The previous UK Labour Government oversaw huge falls in poverty levels across the UK. It is what Labour Governments do—it is in our DNA—and we will do it again.

The vital work of the taskforce comes alongside the Government’s commitment to make work pay. Last week, we published the Employment Rights Bill, the biggest upgrade of workers’ rights in a generation. I welcome the comments from a number of hon. Members, including my hon. Friends the Members for Coatbridge and Bellshill (Frank McNally) and for Edinburgh North and Leith (Tracy Gilbert), supporting this agenda and how it will impact on their constituents.

This Government are calling time on unfair employment practices by ending exploitative zero hours contracts, introducing day-one employment rights and establishing a new fair work agency to enforce workers’ rights. That is all part of our plan to deliver economic growth for workers, businesses and local communities, right across the UK. As we have heard from others this morning, this Labour Government are pro-worker and pro-business, so these reforms will not just help Scottish workers but boost Scottish businesses of all sizes. We are going to tackle head-on the low pay, poor working conditions and job insecurity that have been holding our country back. Our plan will grow our economy, tackle in-work poverty and raise living standards for all.

We recognise that rebuilding our public services and economy will require investment, and the Chancellor has been clear that there will be no return to austerity. I want to emphasise that point: she has said numerous times that there will be no return to austerity. Although funding decisions and details will be presented at the upcoming Budget, the UK Government are committed to retaining the Barnett formula and funding arrangements agreed with the Scottish Government in the fiscal framework.

The framework provides the Scottish Government with greater certainty and flexibility to manage devolved public services, as well as higher per person spending. That does not remove the need for both Governments to take tough decisions to look after the public finances and stabilise the Scottish economy.

[Chris Murray (Edinburgh East and Musselburgh) (Lab)]

One of the challenges we have had in the Scottish economy in recent years is a gap between rhetoric and reality. For example, in the creative sector, which is based heavily in my constituency, the Scottish Government produced 10 strategies in nine months. That means that the creative industries just serve as a backdrop for photo opportunities for Scottish Government Ministers, who do not engage with the deep challenges and opportunities that the sector faces. Does my hon. Friend agree that the Government are finally making the correct response, which is to be honest with the public about the financial challenges that we face, and then to deal with the foundational difficulties in order to grow from there?

[Martin McCluskey]

I thank my hon. Friend for that intervention. Since he arrived here in July, he has been a significant champion of the creative industries and the arts. The example he gave of 10 strategies in nine months illustrates the kind of short-term uncertainty that has reduced investment in our economy. People did not get the certainty they required during the previous Conservative and SNP Holyrood Governments.

It is clear that Scotland’s economy faces challenges, but it is also brimming with potential. We are up to tackling those challenges and unleashing that potential. In our first 100 days, we have made significant progress in resetting the relationship with the Scottish Government. We have listened to the views of businesses and communities across the country, and we have set out a clear path to create the change that we were elected to deliver.

[Peter Dowd (in the Chair)]

I call John Grady to wind up.

10:54

[John Grady]

Thank you, Mr Dowd, and I thank every Member for their wonderful contributions to the discussion. The hon. Member for Strangford (Jim Shannon) mentioned the interconnector between Scotland and Northern Ireland; I worked on the first interconnector between Scotland and Northern Ireland as a baby lawyer. It was a great passion of Mo Mowlam. The Labour party has always backed great infrastructure projects that deliver growth for all in our family of nations. The interconnector delivered a secure supply of energy to Northern Ireland and a great outlet for Northern Irish renewables. This time around, the Labour party is absolutely committed to resolving the blockers on electricity transmission development, so that we can get energy projects up and running quicker. We need clean energy supplying British people and businesses with lower-cost energy.

Inflation is the enemy of small businesses. The hon. Member for Mid Dunbartonshire (Susan Murray) was quite right to focus on small businesses, which are a real motor for growth for a modern economy. We all recall the terrible 40 or 50 days of a Liz Truss and Kwasi Kwarteng Government, which brought immense damage not just to small businesses in Scotland, but to social landlords trying to plan their investments, facing unpredictable interest rates and out-of-control inflation.

My hon. Friend the Member for East Kilbride and Strathaven (Joani Reid) focused rightly on the implications of poor economic policy and fiscal management for our wonderful towns and cities in Scotland. The mismanagement of the economy has terrible implications for people trying to educate their children and get treated, with more than 40% of certain operations—such as hip operations—in Scotland carried out privately because the NHS does not have capacity. Economic growth is critical.

My hon. Friend the Member for Livingston (Gregor Poynton) mentioned the importance of Governments working together when we face industrial challenges. I applaud the Secretary of State’s work in trying to create a productive, closer working relationship with the Scottish Government. We will always put country above party. My hon. Friend the Member for Edinburgh North and Leith (Tracy Gilbert), representing a wonderful part of the world, mentioned employment rights. We are focused on giving people a fair employment.

The hon. Member for Aberdeen North (Kirsty Blackman) mentioned how wonderful Aberdeen is. It is a wonderful city, as my mother used to tell me every day of the week. We take the energy transition very seriously, which is one of the reasons why we are so disappointed that the SNP are spending the one-off ScotWind receipt not on energy transition, but on plugging a black hole created by their economic mismanagement. I close my remarks by thanking you, Mr Dowd, for your wonderful chairing of the debate.

Question put and agreed to.

Resolved,

That this House has considered Scotland’s economy.

Northern Ireland Veterans Commissioner

Tuesday 15th October 2024 Westminster Hall

11:00

[Peter Dowd (in the Chair)]

I will call Robin Swann to move the motion and I will then call the Minister to respond. There will not be an opportunity for the Member in charge to wind up, as is the convention for 30-minute debates.

[Robin Swann (South Antrim) (UUP)]

I beg to move,

That this House has considered the role of the Northern Ireland Veterans Commissioner.

It is a pleasure to serve under your chairmanship, Mr Dowd, in this Westminster Hall debate—the first that I am sponsoring. I want to take this time to cover a number of points, the first being how these things came about and the need for them, the second being the current situation and why I have secured this debate, and the third being recommendations to the Minister as to how the office should be delivered to benefit our veteran community in Northern Ireland.

The New Decade, New Approach document, co- authored by the British and Irish Governments in January 2020, saw the restoration of the Northern Ireland Assembly after a three-year period in which it had failed to meet or establish an Executive. Under annexe A, which covered the UK Government’s commitments to Northern Ireland, there was a section entitled “Our commitments to veterans”, which contained four points. The first was:

“Introduce UK-wide legislation to further incorporate the Armed Forces Covenant into law and support full implementation of the Armed Forces Covenant.”

The second was:

“Appoint a Northern Ireland Veterans' Commissioner to act as an independent point of contact to support and enhance outcomes for veterans in Northern Ireland.”

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman on his first Westminster Hall debate. It is clear that we have much to thank Danny Kinahan for; he is a man of integrity and a veteran himself, and his footsteps will be difficult to follow. One of the overarching themes from discussions with veterans as individuals and in groups has been the vital need for a replacement and that the replacement is themselves a victim. We do not desire a civil servant with experience of holding a pen, when only those who have experienced holding a weapon and wearing a uniform can know how we feel and what we need. Does the hon. Gentleman agree that that must be the case?

[Robin Swann]

To clarify, the hon. Gentleman means a veteran—that is the point that has been made very vocally by the veterans community.

The third point in the annexe was:

“Initiate a review of the Aftercare Service in Northern Ireland (ACS) which will consider whether the remit of the ACS should be widened to cover all HM Forces veterans living in Northern Ireland with service-related injuries and conditions.”

The fourth was:

“Ensure that the work of the War Memorials Trust who protect and conserve war memorials across the UK is better promoted and understood in Northern Ireland.”

In August 2020, the then Secretary of State, Brandon Lewis, announced that the former Ulster Unionist MP Danny Kinahan had been appointed as Northern Ireland’s first Veterans Commissioner. In the spirit of transparency, it should be noted that Mr Kinahan was my party’s previous MP in the seat that I now represent. His appointment was welcomed across the board. The then leader of the DUP, now Baroness Foster, said his appointment was a

“positive and long overdue step toward ensuring the needs of Northern Ireland’s large and vibrant demographic of armed forces veterans are practically understood and addressed”.

She added that

“he brings a wealth of experience to the role and I know he will be keen to embrace the huge in-tray that awaits”.

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

I congratulate the hon. Member on securing the debate. Does he agree that the pressing need for a commissioner was exemplified just this weekend in the national press, where the issue of the late Captain Robert Nairac was highlighted? It is also exemplified in the ongoing problems veterans face, with many of them having witnessed horrific and terrible incidents and still living with their thoughts about them.

[Robin Swann]

The hon. Member makes a valid point. I asked a question of the Northern Ireland Office on 12 December about the appointment, and the answer I got was:

“We will set out steps for the appointment of a new Northern Ireland Veterans Commissioner in due course.”

We are now almost a month on from that.

[Jim Allister (North Antrim) (TUV)]

Surely the greatest deficiency is the fact that there is no statutory basis for the Veterans Commissioner? If we are going to secure the long-term future of the essential provision that a Veterans Commissioner can offer, surely we need to have it on a statutory basis, as elsewhere in the United Kingdom. Is that not the most important step that the Government could take moving forward?

[Robin Swann]

I thank the hon. Member for his point, and I will come to it later when I quote him in regards to the concerns that were raised when Mr Kinahan resigned.

On Mr Kinahan’s appointment, the leader of the Ulster Unionist party at that stage, Dr Steve Aiken, said that it

“will be warmly welcomed by all veterans and the wider armed forces community across all of Northern Ireland”,

that Mr Kinahan would

“be a first-rate advocate for the many thousands here who have served”

and that

“by his appointment we have at long last joined the rest of the United Kingdom in providing that very necessary representation.”

[Gavin Robinson (Belfast East) (DUP)]

I congratulate the hon. Member on securing this debate. Having heard the comments of the former leaders of the DUP and the Ulster Unionists, it is important to place on record our appreciation for the work that Danny engaged in. He did not work in a party political way, but rose to the occasion as a veterans-first commissioner and a champion for veterans. Having worked with him throughout his time in the role, I think the hon. Member will come on to some important deficits and deficiencies, in terms of not only how the role was hampered and constrained by the Northern Ireland Office and the appointing Department, but how it lacked the resource that would have allowed the commissioner to engage properly with anything more than about a 10th of veterans in Northern Ireland.

[Robin Swann]

I thank the right hon. Member for his intervention—believe it or not, I was going to quote him later as well, but he has pre-empted that. Trust me, we are making cross-community representations to the Minister and the Northern Ireland Office.

Moving on from the warm words of congratulation on Mr Kinahan’s appointment, we are here today because, unfortunately, on 5 September—four years after the role was created, and having been reappointed for a second term—Mr Kinahan issued a statement announcing his resignation, which came as a surprise to some. It said:

“I can confirm that I have today resigned from my position as Northern Ireland Veterans Commissioner.

Following an open and frank conversation with the Secretary of State, I have sadly concluded that I cannot provide the independent voice that veterans require.

There is a feeling among some veterans in Northern Ireland that they have been forgotten and that they do not enjoy the same protections as their counterparts in Great Britain.

Veterans in Northern Ireland have particular needs and concerns which need to be addressed by the UK Government, which I have made very clear in our discussions.”

In closing, Danny said:

“Finally, I would like to place on record my gratitude to all those who have placed their trust in me and assisted me with my work over the last four years. I will continue to work in their interests where I can.”

[Alex Easton (North Down) (Ind)]

I congratulate the hon. Member on securing the debate. Does he agree that it is essential to empower the Veterans Commissioner and strengthen their authority, and that any enhancement is crucial to effectively protect and promote the interests of our veterans?

[Robin Swann]

I do agree with the hon. Member, and I will expand on that in my later comments.

In the Northern Ireland Assembly, Lord Elliott, then Ulster Unionist Member for Fermanagh and South Tyrone, said that Mr Kinahan’s resignation impacted directly on the veterans community and on the support available to veterans in Northern Ireland. He went on to say that Mr Kinahan

“cited an inability to: ‘provide the independent voice that veterans require’, which underscores a critical development in how veterans’ affairs are managed in Northern Ireland.”

Speaking of Mr Kinahan’s resignation, he said:

“That recent event has sparked widespread concern across the veterans community and beyond, making it a matter of immediate relevance…the recent loss of the Northern Ireland Veterans’ Support Office…underscores an alarming development that could lead to a gap in support. Given the sacrifices made by veterans, any perceived failure in providing adequate support is of exceptional public interest and requires immediate attention by the Assembly and the Northern Ireland Office.”

The hon. Member for North Antrim (Jim Allister), the leader of Traditional Unionist Voice, said that Danny Kinahan

“performed the role in very challenging circumstances and now is an opportunity for the Government to address fundamental issues before appointing a successor.”

As he said in his intervention:

“The role of Veterans’ Commissioner must be put into a statutory basis and Government must provide proper resources and a structure.”

He also pointed out something crucial:

“Something not widely known is that the post of Veterans’ Commissioner is currently only a part time role with just two staff. By way of contrast, the Victims’ Commissioner role is full time with a staff of seven.

Many veteran issues in Northern Ireland still need to be resolved. The previous government had a draft bill to align all the veterans’ commissioners across the UK and put the posts on a statutory basis…The new Labour Government needs to take this forward”.

The right hon. Member for Belfast East (Gavin Robinson), the leader of the DUP, said:

“Veterans throughout Northern Ireland and our party’s Veterans champions in local councils recognise the commitment”

displayed by Danny Kinahan.

So why the debate today? Why did the Veterans Commissioner for Northern Ireland come to the decision that he did? To sum up some of Mr Kinahan’s points from a meeting with him, the most significant issue facing the Veterans Commissioner is the lack of operational independence. The commissioner is restricted to part-time status, limiting their ability to fulfil the broad responsibilities of the role. The two staff members are assigned by the Northern Ireland Office and selected without input from the commissioner, reporting directly to the NIO, not the commissioner, which he felt undermined the commissioner’s authority to lead and manage the office.

The commissioner also faced considerable limitations in staffing decisions—for example, office staff were even empowered to propose bonus awards for themselves, rather than the commissioner initiating them. He requested a formal appraisal process to assess staff performance to address areas of improvement. That was not implemented, leaving him powerless to manage the office effectively.

The structural limitations imposed have transformed the role of commissioner into that of a figurehead: while the commissioner is the public face of veteran advocacy in Northern Ireland, Mr Kinahan felt that decision making was dominated by the Northern Ireland Office, rendering the commissioner’s role largely symbolic. He said that he also struggled to ensure that the Secretary of State received full, unedited reports, which he felt undermined the commissioner’s ability to influence policy effectively.

How do those concerns impact the role of the commissioner? The identification of support for veterans is inadequate. One of the commissioner’s primary responsibilities is to identify veterans and ensure that they receive appropriate public services. Northern Ireland does not have a comprehensive database of veterans, and no questions were included in the recent census to identify our veterans. The commissioner repeatedly raised the need for door-to-door leafleting to inform veterans of available support. As a result, he estimated that only between 5,000 and 10,000 of the 120,000 veterans in Northern Ireland are in contact with support services. That failure to engage veterans is a direct consequence of NIO involvement in the operations of the commissioner’s office and a refusal to allocate resources to key initiatives. It should also be acknowledged that the 40,000 veterans who served in the Ulster Defence Regiment under constant threat, which continued after their service ended, face different challenges and are now mostly at an age where a local focus is required.

On health services for veterans, the commissioner identified significant challenges in veterans accessing healthcare, particularly those in long-term pain awaiting surgery. He put forward a proposal for partnership with NHS England and King Edward VII’s hospital to provide veterans with faster access to surgery to achieve the commitments of the armed forces covenant and the Government. But he felt that that initiative was hampered, maybe by the over-application of section 75 of the Northern Ireland Act 1998.

The commissioner also expressed concern about the closure of our Veterans Support Office. That closure is a stark example of how veterans’ support in Northern Ireland has been undermined. The VSO was a trusted and, again, independent organisation that provided centralised support for veterans, and its closure has left a significant gap in services. The commissioner’s views were neither considered nor consulted in the making of the decision, which seems to have been driven by the NIO and by the Office for Veterans’ Affairs.

The concerns raised were also brought forward in the independent review of UK Government welfare services for veterans, published in July 2023. There were several key Northern Ireland recommendations. Recommendation 8 stated:

“A formal welfare services governance board should be created,”

which should include Ministry of Defence officials

“and the Veterans’ Commissioners for Wales, Scotland, and Northern Ireland.”

Recommendation 27 stated:

“Consideration to retaining the NIVSO brand, alongside that of the OVA, should be given.”

In conclusion, I will move to four recommendations for the future. These changes are essential to restoring the effectiveness of the Northern Ireland Veterans Commissioner and ensuring the office can fulfil its intended role. The first is to establish the full independence of the office. Commissioners’ offices must be fully independent from the NIO, with direct control over staffing, budgeting and decision making. The second is to increase the time allocation from the commissioner, from a part-time role to a full-time role, or at least to a more significant time allocation. The third is to reinstate the VSO as an independent and trusted body, with the commissioner playing a key role in shaping its service. The fourth and final recommendation is to improve reporting and communication. The commissioner should have the authority to submit reports directly to the Secretary of State and the ability to engage directly with relevant Ministers and Departments. That is why I have brought this debate and make these recommendations.

11:27

[The Parliamentary Under-Secretary of State for Northern Ireland (Fleur Anderson)]

It is a pleasure to serve under your chairmanship, Mr Dowd. This is my first time responding to a Westminster Hall debate for the Government and I am delighted that it is on this issue; my grandfather was from Northern Ireland and served in the British Army, so this debate is very close to my heart. I am so grateful for his service and the service of all veterans.

I congratulate the hon. Member for South Antrim (Robin Swann) on securing this important debate—his first Westminster Hall debate as well—and on his work to improve support for veterans in Northern Ireland over many years, including reconvening the Armed Forces Liaison Forum when he was Minister of Health for Northern Ireland. I know he is deeply committed to ensuring that veterans in his constituency, and indeed right across the UK, receive all the recognition they deserve and the support to which they are entitled. It is a commitment shared by this Government and, I am sure, by all in this Chamber—

[Gavin Robinson]

I appreciate that the Minister is here today and speaks with a personal connection to this story. She will know that the commitments in NDNA were important and represented work done in the Defence Select Committee and through private Members’ Bills to make sure veterans in Northern Ireland had a strong voice, as their counterparts across the United Kingdom do. She should also know that the last number of years have proven very difficult for veterans, with the closure of the VSO and with the feeling that they are not treated the same as their counterparts across the UK. Does she understand that the most important initial step she could take would be to confirm that the NIO will advertise the position of Veterans Commissioner? Doing that now would indicate a commitment to that support.

[Peter Dowd (in the Chair)]

Order. This is a half-hour debate. I accept that people are intervening on a very important matter, but I ask Members to be careful and considerate with their interventions in such debates.

[Fleur Anderson]

Thank you, Mr Dowd. I thank the right hon. Member for his intervention. In fact, my next sentence was going to be one that will please him greatly, I think. I was about to say: which is why we have moved very quickly to advertise the position of the Northern Ireland Veterans Commissioner. In fact it will be advertised this week, with all the details available. This debate is therefore extremely timely and can serve as a very long job advertisement for the position. I hope that many people who listen to this debate, or read it in Hansard, will consider applying for this position. It is such an important position and one on which we have moved extremely quickly as a Government, demonstrating our commitment to supporting veterans.

[Jim Allister]

Will the Minister give way?

[Fleur Anderson]

If I keep giving way, I will not have enough time to speak, so I think I will continue.

Mr Kinahan was appointed by the previous Government, which established the role of the Northern Ireland Veterans Commissioner. I join the Secretary of State in expressing my gratitude for Mr Kinahan’s dedicated work over the last four years on behalf of veterans and their families living in Northern Ireland. As has been said, it was one of the commitments made as part of the New Decade, New Approach political agreement in January 2020, which helped to restore devolved Government in Northern Ireland.

As set out in New Decade, New Approach, the commissioner’s role was

“to act as an independent point of contact to support and enhance outcomes for veterans in Northern Ireland.”

Danny Kinahan, himself a veteran and subsequently an elected representative in Northern Ireland, took up the role on 1 September 2020. Over the last four years the commissioner and his team have worked to deliver that important support for veterans in Northern Ireland. Their work conducting direct veteran engagements and veteran information roadshows across Northern Ireland has been particularly valuable, as has their establishment of a veterans mental health committee, involving a number of key mental health service providers for veterans.

The commissioner was also involved in encouraging collaborative working with the veterans sector, working closely with veterans commissioners in Scotland and Wales, with regimental associations and with the voluntary sector. He also sought to ensure that Northern Ireland veterans’ views were heard in my Department and across Whitehall with regard to the Northern Ireland Troubles (Legacy and Reconciliation) Act 2023 and the development of the Independent Commission on Information Recovery and Reconciliation.

In delivering its role, the Northern Ireland Veterans Commissioner’s Office works closely with a range of local statutory and non-statutory stakeholders. Previously that included the Veterans Support Office, which was formed in 2018 to develop capacity to deliver the armed forces covenant in Northern Ireland and played a role in co-ordinating and signposting to charity provision. It closed in June this year, as the way that support for veterans is provided in Northern Ireland continues to evolve.

Many of the functions of the Veterans Support Office had over time been replicated by other organisations or superseded by other initiatives. That includes the establishment of the Veterans Commissioner’s Office, which now plays a leading role in communicating with and championing the needs of veterans resident in Northern Ireland, as well as building connections with partners delivering support to veterans across Northern Ireland.

The Office for Veterans’ Affairs has additionally created a new role, based in Belfast, to provide dedicated strategic co-ordination of organisations, programmes and initiatives that support veterans’ wellbeing in Northern Ireland. That post will become operational imminently and is a post that is evolving to continue to support veterans.

This is a Government of service that will always stand up for those who have served our country. My hon. Friend and colleague the Minister for Veterans and People is leading work across Government and with civil society to ensure that our veterans and their families get access to the health, housing, employment and other support that they need, wherever they reside in the United Kingdom. In Northern Ireland specifically, the specialist statutory welfare body for veterans, the Veterans Welfare Service, provides information and practical support to veterans and their families, including timely physiotherapy and psychological therapies to eligible veterans.

The £500,000 Defence Medical Welfare Service pilot additionally supports veterans’ health and wellbeing in Northern Ireland and provides insight that will improve our understanding of veterans’ health needs. Veterans in need of housing advice, meanwhile, can contact the Government’s single housing support pathway, Operation FORTITUDE, where a dedicated team of advisers works to assist veterans across the UK.

The armed forces covenant continues to be a key Government priority, with a commitment to fully implement the covenant in law. It ensures that the armed forces community is treated fairly across the UK, including in Northern Ireland, although its delivery is approached differently there due to Northern Ireland’s unique historical and political circumstances.

As the hon. Member for South Antrim mentioned, at the beginning of September the Northern Ireland Veterans Commissioner met the Secretary of State, who accepted his resignation. Mr Kinahan explained his reasoning, and it has been reiterated publicly. I join the Secretary of State in expressing my gratitude for Mr Kinahan’s dedicated work. I am delighted that we started work immediately on the appointment of the new Veterans Commissioner—I hope that will begin tomorrow, but maybe later this week.

The appointment of the new Northern Ireland Veterans Commissioner will be made on merit by the Secretary of State for Northern Ireland, following open and transparent process, which includes public advertising and independent assessment. Again, I encourage all suitably experienced people to apply for this important role. In the meantime, the Northern Ireland Veterans Commissioner’s Office has engaged and will continue to engage with veterans, signposting them to support, including while the new Veterans Commissioner is appointed. Indeed, I believe the office was involved in a successful event last month at Parliament Buildings in Belfast, which recognised and celebrated Northern Ireland veterans’ service in Iraq and Afghanistan, and which was sponsored by the hon. Gentleman’s party colleague, Lord Elliott.

In addition, the Government are committed to continuing to support veterans in Northern Ireland through the Veterans Welfare Service, which has field teams across Northern Ireland linked in with various partner organisations and statutory bodies, and with the different initiatives funded via the Armed Forces Covenant Fund Trust. That includes the Veterans’ Places, Pathways and People programme, known as the Veterans’ Pathway in Northern Ireland, which is led by the charity Brooke House and does excellent work on improving the co-ordination of mental health support to veterans among partner organisations locally. The charity Beyond the Battlefield was also awarded £100,000 in March 2024 to provide wraparound services for veterans in Northern Ireland who are homeless or at risk of homelessness.

I have listened carefully to the points the hon. Gentleman made about the basis for the role, including the ability to communicate, with veterans, health support and the other issues. I am pleased that he has raised those, and I am sure they will be read by any applicants for the role and by the future Veterans Commissioner once they are appointed.

In conclusion, I thank the hon. Gentleman for securing this important debate. The role of the Northern Ireland Veterans Commissioner is an important element of the support provided to veterans across a wide range of areas that I have already detailed, in recognition of their service to our country. Let me once again encourage everyone who is suitably experienced to apply for the post, and reiterate that this Government recognise the dedicated service of all our veterans and are committed to supporting the veteran community across the whole of the United Kingdom. This is a Government of service that will always stand up for those who have served our country, and we will continue to do so.

Question put and agreed to.

11:27

Sitting suspended.

Renewable Energy Projects: Community Benefits

Tuesday 15th October 2024 Westminster Hall

[Dr Rupa Huq in the Chair]

14:30

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

I beg to move,

That this House has considered community benefits from renewable energy projects.

It is an honour to serve under your chairmanship, Dr Huq. In all our careers, we have seen extraordinary changes, such as the advent of the internet, artificial intelligence and mobile phones. Going back 50 years, in the early stages of many of our lives, we had the North sea oil boom. The oil boom was extraordinary for many countries, not least Norway, which has saved US $1.7 trillion from it. Great Britain saved none of that money, however, and I am worried that we will save none of the money from the extraordinary renewables boom that is coming our way.

One of the biggest systemic changes in our life is happening right now: the move from fossil fuels to renewables. Many billions of pounds are being made, a huge number of jobs are being created and cheap electricity is being generated, but it is overseas companies, with overseas ownership of renewables projects, that we are seeing all over the UK. Precious little of the money ends up in the hands of the people who are being impacted by those projects.

The issue I have with these renewables projects, whether solar, wind, pumped storage or whatever, is that they are in rural areas. The locals suffer the visual impact, and we have all seen miles and miles of 200-metre-high wind turbines and field after field, sometimes of prime land, covered in solar panels. Villagers—people—have to face those industrial projects, and we really need to take them with us on this net zero journey.

[Tim Farron (Westmorland and Lonsdale) (LD)]

I congratulate my hon. Friend on securing this important debate. I represent roughly 1,500 farmers in Westmorland. All of them, pretty much, have water flowing through their fields and their land—often very quickly—but few of them take advantage of hydroelectricity, which could be a source of cross-subsidisation for farming, while also creating important renewable energy for our communities as a whole. Does my hon. Friend think that hydro-technology, in particular on farmland, is a great way forward? We can farm and produce renewable energy at the same time.

[Mr MacDonald]

Micro-renewables are the way ahead, and the more micro the better. Whether that is a solar thing on a roof or hydro for a farm, I could not support it more.

In 2023, as part of research in a written submission to Parliament, Octopus Energy showed that 87% of people would support a turbine in their community if it decreased their bills.

Now, I do not blame the landowner; these projects can allow farmers to retain the land in their family for generations to come. In some way, it is like discovering oil or gold on their land, and it is great that our bountiful wind and rain can be such an asset for us, especially in an era when coal is inaccessible and unacceptable, nuclear is being phased out, and gas is often imported from countries with an unacceptable moral standing, while also badly hitting our balance of payments and being environmentally unfriendly to transport to Britain. Renewables are absolutely the future.

The 68 million people in the UK are enormous beneficiaries of our renewables sectors, but the cost is borne by a fraction of that number—by those living in the remotest areas. Those of us in the Chamber represent populations who pay a 50% premium on electricity connection fees compared with those living in cities. The same people are not connected to mains gas, and therefore pay a great deal to have tankers deliver heating oil to their houses.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

I congratulate the hon. Member on securing this debate. As he will know, we are talking about fairness to communities. One of the unfair issues in terms of communities and the cost of electricity is standing charges, whereby households in north Wales and Merseyside pay £100 more a year than those in London. Does the hon. Gentleman agree that the present arrangement is fundamentally unfair and that things should be shared more fairly across the nations of the United Kingdom?

[Mr MacDonald]

I absolutely love that—I am going to make the right hon. Lady a dame in my first honours list. It is an absolute disgrace that people in rural Britain pay a premium to get renewables, even though it is us generating the electricity. The standing charge should be the subject of our next discussion.

Those of us in the highlands, and indeed in many other parts of Britain, have long, dark, windy and cold winters. When many people open the curtains in the morning, they look out on to a wind farm selling cheap, green energy to the big cities. The remote highlands and islands, the Scottish Borders, Wales, Cumbria and the west country are among our poorest areas.

[Mr Gideon Amos (Taunton and Wellington) (LD)]

Does my hon. Friend agree that community benefit and compensation for communities is important for not only the communities that experience these projects but the planning system? Take it from a former planning inspector: if we had a sensible and predictable level of community benefit, it would make granting planning permission smoother, with fewer objections.

[Mr MacDonald]

There is a recent change to planning in Scotland—I am unsure whether it extends to England—called national planning framework 4, which makes the economic benefit to the community part of the criteria for getting a plan in, so we are moving towards what my hon. Friend describes.

The areas I mentioned are among our poorest. They suffer from the highest level of fuel poverty, an older population, lack of affordable housing, poor transport infrastructure, struggling market towns, lower wages, and often worse education and health services than cities. Rural people have higher costs and lower incomes.

[Ann Davies (Caerfyrddin) (PC)]

In Caerfyrddin, we have the possibility of four lines of new electricity cables and pylons coming through. Does the hon. Member agree that the best community benefit for Caerfyrddin and our rural communities would be to underground the cables rather than have these pylon lines coming through?

[Mr MacDonald]

Somebody whose opinion I respect greatly told me that undergrounding cables was no more expensive. I was very surprised at that, because I had understood from the transmission line companies in Scotland that it was a great deal more expensive to underground them. I will definitely look into that, because I know that it is a requirement to underground them in Norway. We should explore that issue further.

So we have boom time in renewables, generating trillions of pounds over many decades, and we have a rural population that really needs financial help and investment.

[Claire Young (Thornbury and Yate) (LD)]

In the last decade, my constituency has seen a wide range of solar schemes with different community benefits, ranging from £20,000 a year for the 25 years of the project’s expected life, which is handed over automatically to parish councils, to just a £30,000 pot, which people have to bid into. Does my hon. Friend agree that there should be equity of treatment, and that there are benefits to having an ongoing relationship, beyond the monetary value it brings?

[Mr MacDonald]

I think my hon. Friend will be thrilled with the next part of my speech, which will answer that question. We have a huge financial need, and we have the renewables revenue, which we will talk about in a second. Money and need—bingo, we have a match. Is that not exactly what we are here in Parliament to facilitate?

I am pleased to hear that the Great British Energy Bill is largely here, as it holds the prosperity of much of rural Britain in its hands. It can insist that communities have a stake in local renewables projects and that we legislate to require all renewables projects to pay a significant sum to impacted areas. Amazingly, it made no mention of community ownership of renewables projects or of community benefits.

[Alison Griffiths (Bognor Regis and Littlehampton) (Con)]

I have been fortunate enough to visit your beautiful constituency, but in my beautiful constituency of Bognor Regis and Littlehampton, we have Rampion 2, a renewable wind farm that is due to go on to the sea closer to land than Rampion 1, with huge environmental and visible impacts. On your point about where the benefits sit, there is currently no requirement for any visitor centre to sit within the constituency impacted by the wind farm. Do you agree that any commercial benefits, such as a visitor centre, which will bring tourism and jobs, should reside in the most impacted constituency?

[Dr Rupa Huq (in the Chair)]

Order. For the benefit of everyone in the room, we avoid the word “you” because it refers to me. I remind all hon. Members that we speak in the third person.

[Mr MacDonald]

It is fair to say that building a visitor centre was not one of my list of key things to do with the money, but I shall add it to my list at around No. 97 —there is a space there. We will talk about this more in a minute, but fuel poverty, affordable housing and so on are probably the key uses for that money at the beginning.

The Lib Dem energy spokesman, my hon. Friend the Member for South Cambridgeshire (Pippa Heylings), has submitted an amendment to the Great British Energy Bill that would allow it to consider community benefits, and I very much hope that her amendment is taken forward.

I had a motion on community benefits passed in the Highland council. I have consulted the electricity generators and Ofgem. I have met Government Ministers here and in Scotland, discussed the issue with most knowledgeable people in all political parties and generally bored everyone I can find with it. There is consensus that it would be fair to require that the impacted rural people of the highlands and islands, of Scotland and of the UK as a whole benefit from bearing the costs of hosting our energy infrastructure.

The Highland council has done the work. It has a social value charter, which it would be pleased to share. The council and I agree on almost all aspects, except that the amount paid to communities should be a percentage of gross income from the projects, rather than £12,500 per megawatt. A percentage would allow communities to benefit from a soaring electricity price, as happened after Russia invaded Ukraine, and protect the project owners and utilities if the electricity price slumped.

Here is my financial proposal: 5% of revenue from all newly consented renewable energy, generated both onshore and offshore, should be paid to community energy funds. For onshore projects, two thirds of that should be paid to the affected council board, with one third paid to a council strategic fund. For offshore projects, all of that 5% of gross revenue should go to a council strategic fund. An existing renewables project should also pay money; I will explain that in a second.

[Anna Dixon (Shipley) (Lab)]

I am sure the hon. Gentleman will agree that the ownership of energy production is really important. The inaction of the last Government left the country reliant on energy produced and owned abroad, so I am proud of the work that this Government have done to found the publicly owned GB Energy, which will give us long-term energy security. I welcome this debate on the community benefits of renewable energy projects. I was reassured in the House just last week about communities such as Cullingworth in my constituency, where we are looking at proposals to host associated infrastructure—basically battery storage. Does the hon. Gentleman agree that those sorts of benefits should be for not just energy generation, but the associated infrastructure, such as battery storage? Community benefits should also come locally from those projects.

[Mr MacDonald]

I wholeheartedly agree. It should be the same for the transmission lines and the interceptors, for pumped storage and battery—really, the whole infra- structure of producing renewables.

So where is the 5% going to come from? It is really important that investors do not suffer from swings in British policy, and that they continue to invest in UK energy infrastructure. It is key that this increase is passed on to all consumers in the UK as part of a green tariff. My informed opinion is that paying that 5% to impacted communities would translate to about a 1.25% increase in electricity prices in Britain.

What should a council that receives that substantial amount of money use it for? Here are three examples of what has been happening already. One community fund near me gives £1,000 to each of the properties in the community. If 1,000 properties were given £1,000 each, that would be £1 million. Perhaps the locals managing the fund would allocate it to households that earn less than the UK median household income of £34,500. In any case, at a time of winter fuel allowance cuts, that would be most welcome. A second option is for the community to use the money to build affordable housing, and I know of a third community that injects money into its local care sector, for care homes.

Let me plagiarise the Highland council report in order to provide some context. In 2023, in the highlands, local communities received approximately £9 million. That is below the expected commitment based on Crown Estate Scotland’s guidelines, which suggest that developers should contribute £5,000 per megawatt, equating to £13.9 million. The total income from wind generation in the highlands for 2023 was estimated to be around £590 million. That calculation is based on a potential production of 11.8 GW. If all renewables—including hydro, offshore wind and pumped storage—were included, the benefit increased to 5%, and the amount of renewable energy doubled by 2030 to 22 GW, which is likely, then the community benefit would rise well above £50 million per year. That is a heck of a lot of money to highland rural communities. What would that be across the UK? £500 million a year? £1 billion? £5 billion over 10 years? This is a proper levelling-up fund for rural communities.

It was recently announced that two cancer wards on the island of Lewis in the Hebrides will share £4.5 million from a single offshore wind farm. That shows what can be achieved.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

Does the hon. Member agree that when we are looking at scaling up wind—floating offshore wind, for example, which will benefit Scotland and Cornwall, where I am from—we could look more closely at contracts for difference, and the licences and leases with the Crown Estate, in order to embed social value in them on a large scale and generate benefits such as apprenticeships or the building up of local supply chains? There are exemptions to the World Trade Organisation rules and so on, and we could manage to do that in quite a substantial way.

[Mr MacDonald]

I was a Highland councillor for quite a few years and sat on the planning committee. We heard application after application promising a large number of jobs and a large amount of local buying, yet we did not see that, but I do think we need to tighten up a great deal what is being offered in all the different aspects of renewables.

I have been looking at the situation overseas. In Denmark, new renewables projects must offer at least 20% ownership of their overall venture to local residents. In Germany, there is a local tax on renewables. In Heligoland, an archipelago in the North sea, three offshore wind farms were built in the mid-2010s, and the tax revenue taken in by the municipality was €22 million in 2016 alone. In Ireland, the contribution to community benefit fund is to be set at €2 per megawatt-hour of generation.

[David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)]

I thank my hon. Friend for securing this terribly important debate on the fact that rural communities are not being paid sufficiently to host the infrastructure that we need to get to net zero. Earlier this month I visited Awel Aman Tawe, a community energy charity based in my constituency that uses the revenue that it gets from a turbine that it erected itself to pay for regeneration in that deprived area of Wales. Does he think that is a preferable or more desirable outcome in comparison with other projects, such as Bute Energy’s project in Powys, where the developer is hiding the community energy funds behind layers of bureaucracy that might make them inaccessible to local residents?

[Mr MacDonald]

The absolute sweet spot of this entire discussion would be communities’ ownership of their own renewables, which they could control and distribute as they wanted. Indeed, that is happening in some places. Of course access to funding is the big issue, but that is the perfect solution.

Surely, one of our great injustices is that our poorer people, who provide half the energy to the UK, have the highest level of fuel poverty and the highest electricity bills, and suffer the industrialisation of their nearby countryside. Now is the time to resolve that injustice.

[Dr Rupa Huq (in the Chair)]

Members who wish to make a speech should stand, and then we will be able to calculate the time limit. I will begin calling the Front Benchers at 3.28 pm, so there is not a lot of time left, because we have had a lot of long interventions.

14:51

[Torcuil Crichton (Na h-Eileanan an Iar) (Lab)]

It is a pleasure to serve under your chairmanship, Dr Huq. I commend the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) for raising this important matter. Attendance in the Chamber shows just how important this element of GB Energy and the transformation we are going through will be to many constituencies.

I rushed here—via lunch, of course—from the Committee considering the Bill that will establish GB Energy. The Great British Energy Act will be the first Act to pass into law in this Parliament—Labour delivering change within weeks of coming into office. That Act and this transformation will change not only the way we produce power and the impact we have on a burning planet, but the way we live our lives. It could have a transformative effect for communities such as mine.

I commend the Minister for the way he has seized the agenda on GB Energy and seen the potential that the transition could have for places such as Na h-Eileanan an Iar, and the Isle of Eigg in the constituency of the hon. Member for Inverness, Skye and West Ross-shire, which the Minister visited recently. As we move to renewables, we should not forget that we are transitioning away from carbon, and we have to balance the transition with maintaining jobs in the North sea, which are a vital to many economies, communities and families in Na h-Eileanan an Iar.

The focus of the debate, community benefit, is one element of that transition. I prefer to describe and define it as “community share”. When people hear “benefit”, they think they are getting crumbs; when they have a share, they own it and control it. As it happens, my community has become the epicentre for community-owned wind farms in the UK. Community-owned turbines stretch from Barra in the south, to Galson in the north of Lewis. Those community-owned assets bring in millions of pounds each year to the communities that own them. Something like 23.5 MW is produced each year, which is a modest amount, but one that brings £3 million a year to small rural communities. Scotland’s community-owned wind farms provide on average 34 times more benefit payments to local communities than the equivalent privately-owned wind farms. If we do the maths, we can see the potential that community-owned energy schemes have to transform the whole of the UK. What is not to like about them?

Community-owned schemes, which in my community support everything from warm home grants to native tree planting, are a template for what could happen in constituencies across the whole of the UK. For renewal and expansion, these schemes need funding, yes, but primarily access to the grid. For us in the Western Isles, that means getting reserved space, by regulation or legislation, on a planned interconnector—a 1.8 GW subsea cable that will connect us to the mainland and enable turbines swinging in the Atlantic to turn on lightbulbs in Birmingham, the City and many other places.

[Dr Rupa Huq (in the Chair)]

Order. The time limit for speeches will be two and a half minutes, but since the hon. Member did not know that when he began his speech, I cannot hold him to it. However, if he concludes soon, that will be ideal, because there are 15 people yet to speak.

[Torcuil Crichton]

Yes, I will wind up quickly.

There has been an apparent breakthrough, in that three community-owned estates have come together with a plan for a 43 MW wind farm and have been given a connection on the grid. That grid connection is crucial, but so is the massive funding gap that these communities face between getting from concept, through environmental regulation and planning, to connection. That is where GB Energy has a role. I have advocated for a community energy unit within GB Energy to help communities tackle the minefield of financial and regulatory complexities. The Minister cannot snap his fingers and bring GB Energy or a community energy unit into being, but if officials from GB Energy were to shadow and assist those three estates in their efforts over the next two years, we would learn an enormous amount about community energy and create a template that other communities across the UK could follow.

[Several hon. Members rose—]

[Dr Rupa Huq (in the Chair)]

Order. I remind hon. Members to bob, because we are still working out who wants to make a speech and who wants to intervene. There will be a two and a half-minute limit from now on. I call Sarah Dyke.

14:54

[Sarah Dyke (Glastonbury and Somerton) (LD)]

It is a pleasure to serve with you in the Chair, Dr Huq. I congratulate my hon. Friend the Member for Inverness, Skye and West Ross-shire (Mr MacDonald) on securing this important debate.

I commend the new Government’s aspiration to increase our renewable energy infrastructure. The previous Conservative Government’s failure to invest in renewable energy and insulate our homes led directly to the energy crisis, pushing up energy bills for everyone and squeezing personal finances. In Somerset we are investing in and expanding our renewable energy infrastructure. Under the net zero pathway, the equivalent of 45% of Somerset’s future expected electricity demand will be met by local renewable energy generation by 2050.

However, I believe that when communities host renewable energy infrastructure such as solar farms, they should benefit from it. When I asked the Secretary of State about this recently, he agreed—he was clear that when communities take on the responsibility of hosting clean energy infrastructure, they should benefit from it—yet when I wrote to the Minister for Energy, the response stated blankly that the Government have no formal role in ensuring community benefits in solar. That is not the case with onshore wind power, which the Government are taking action to ensure is covered. That leaves communities in Somerset that host solar infrastructure totally reliant on developers to offer tangible benefits. Developments are also ineligible for community infrastructure levy obligations in the way that new housing is. The lack of obligations on developers means that communities are unlikely to benefit from hosting installations, leading to ongoing tensions within communities.

That begs further questions about the Government’s development of Great British Energy, to which I hope the Minister might respond today. If GB Energy is going to invest in new ground-mounted solar farms, will it ensure that local communities benefit from hosting the infrastructure, as the Government have claimed is their aim? I look forward to hearing the Minister’s comments. I hope that we can continue to move forward and increase clean, green energy production.

14:59

[Ben Goldsborough (South Norfolk) (Lab)]

It is a pleasure to serve under your chairship, Dr Huq. I have quite a bit of energy infrastructure going on in my constituency, be it the proposed Norwich to Tilbury line, the East Pye solar farm that has just been announced or the Ørsted battery energy storage site to the north of my constituency. To say that this debate is not hypothetical for my residents—it is very much a reality—would be underselling the matter. We have talked about community benefit and community wealth-building, but that is not something my constituents are happy to hear. They want to hear the word “compensation”. They do not want to hear the word “hosting”, because, at the end of the day, a pylon is not being hosted; it is being placed in their back garden.

It is important to remember in this debate that we live in a wasteland of regulatory framework for compensation. Individual businesses that take on such projects to grow their own enterprises—don’t get me wrong; they are private enterprises and there to make a profit—must work within a regulatory framework to make sure they are held to account and made to pay for the local people who have to face those developments in their area.

We have seen locally that the National Grid, for example, provides its own funding and grant-based system, but funding is not granted to individuals; it is only general. It takes into account such things as social, economic and environmental benefit, but those are judged by the National Grid’s own criteria. That is not something for which the National Grid is held to account, and it does not ensure that local people have a say over what is coming back to them.

The situation becomes even direr when we talk about solar farms. The industry body is responsible for setting out guidance on what should happen to all member bodies within it. Again, that creates an issue where those residents in areas considering having infrastructure in their back garden do not feel heard. They do not feel that they are being listened to in terms of what they want and where they need it. We want to drive towards net zero and we need to drive forward with the industrial upgrade to our national grid, but we end up in a situation where we are throwing the baby out with the bathwater, putting people off our future development towards being a green superpower for the rest of the world to follow.

15:01

[John Cooper (Dumfries and Galloway) (Con)]

It is a pleasure to serve under your chairship, Dr Huq. I congratulate the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) on securing this a vital debate.

“Wha but lo’e the bonnie hills”,

the very first line of the song “Bonnie Galloway”—I will spare you by not singing it, Dr Huq—extols the virtues of the rolling uplands of the south-west of Scotland. Yet the tranquillity of the moors, farms and forests has been disturbed these last few years by the relentless march of wind turbines. Now Dumfries and Galloway is festooned with them and we have many more on the way. We are in the foothills of a renewables revolution.

Arguments for or against wind farms are not for today. I feel that battle has been lost, but we must fight a rearguard action against ever-bigger turbines. Giants of over 650 feet from base to rotor tip are the fashion, and they are moving ever closer to our towns and villages. I feel that we will see Governments happily trample local opposition to wind farms and turn a deaf ear to forcing power cables underground.

Whether we welcome wind farms or have them foisted upon us, we must wrest from them what community benefit we can. Communities already see little enough of the supply chain benefits. It is to be hoped that the previous UK Government’s efforts to create freeports in Scotland might see more of the manufacturing based here in Britain. I have hopes, too, that Labour will make good on a Northern Ireland enhanced investment zone, as mapped out by the previous Conservative Government, that included the western end of my constituency. That would be a game changer: imagine the jobs created if we could build those giant turbines in Stranraer and ship them out via the deep-water port of Cairnryan.

On renewables, we in rural Scotland have had much of the pain and little of the gain.

[Torcuil Crichton]

Will the hon. Gentleman agree that the difference between Dumfries and Galloway and many parts of the highlands and islands that have benefited from community or commercially-owned wind farms is community ownership of land and that, were that pattern to be repeated in his part of the world, communities would benefit not only from community land ownership, but from owning the turbines that spin?

[John Cooper]

I resist the invitation to back a land grab, but the hon. Gentleman makes a valid point.

We have a chance now to bake in greater benefits for our communities, and they should be seen, not as bribery to buy off opposition, but as the power giants entering partnership with communities. I still say that our communities need a far greater say over wind farm consents, but the urban-obsessed SNP in Edinburgh and Labour here in this place will not shift.

There is an undeniable whirlwind of change on wind power. We have the chance to reap a positive harvest from that whirlwind for the people living in the shadow of giant turbines and pylons. Let us seize that chance.

[Dr Rupa Huq (in the Chair)]

I am going to keep the time limit at two and a half minutes. If everyone is kind to each other, everyone will get in. A brilliant example will be Polly Billington.

15:04

[Ms Polly Billington (East Thanet) (Lab)]

It is a pleasure to serve under your chairmanship, Dr Huq. I was not planning on speaking in this debate, but I am moved to by comments that have been made. I think it is worth while, even in the short amount of time that I have, to remind people that our economy and Britain’s success over decades and centuries has been because of our securing an industrial revolution based on fossil fuels. I welcome the opportunity that we have here to establish a political consensus not to repeat the mistakes of the past, where the poorest end up bearing the brunt of any transformation and the wealth is concentrated in the hands of a few.

I share the sentiments of the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald), who secured the debate, that we need to see an increase in community ownership of our renewables—for very good reasons. He says the major problem is access to funding, but I would say it is only a problem unless we change the rules. I would like us to establish a political consensus on the transformation of the energy market reform so that we can harness what is an endless amount of renewable energy in our communities across the country. His suggestion of a green tariff would need to be in the context of energy market reform because, as has been pointed out by others, there are significant standing charges on people’s energy bills that militate against the kind of transformation we need in our energy sector.

When we have that community benefit, we also need to think very carefully about what powers we give and the governance structures around it, so that communities can choose how they spend the money. There is a clear argument for ensuring that energy revenue is spent on energy challenges in communities—which are often, as has been said, off grid and often some of the most fuel poor in our country. As a representative of three small towns on a very windy coast, I make the observation that there are poor people living in towns and cities, too, and we would not want to establish an energy market that did not recognise that. We should tackle those challenges as well.

I want to make a point about the ways of dealing with or mitigating the impact on our communities. Inevitably—

[Dr Rupa Huq (in the Chair)]

Order. We are finishing at 3.28 pm and there are still loads of people wishing to speak. I call Alistair Carmichael.

15:07

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

It is a pleasure to serve with you in the Chair, Dr Huq. I commend my hon. Friend the Member for Inverness, Skye and West Ross-shire (Mr MacDonald) for securing this debate. Once the Backbench Business Committee is up and running, this is a subject that deserves longer and more careful scrutiny.

Speaking from the perspective of Orkney and Shetland, I will keep things simple. Time is short and simple is what I do best. There are two things that I want people to understand about Orkney and Shetland. First, we have the highest level of fuel poverty of any community in the country. I hear what the hon. Member for East Thanet (Ms Billington) says about poor people in all communities, and she is correct, but the truth is that the further north we go, the more we are likely to find people enduring poor housing standards with long, dark, cold winters. That has an impact and it is felt most acutely in Orkney and Shetland.

The second thing I want people to understand is that when we talk about needing to find a template for making these things work, in Orkney and Shetland we have already done that. We have done it since the mid-1970s on our relationship to our oil and gas industry, which we have hosted. We have the two largest onshore terminals for oil and gas in western Europe—now coming perhaps into the autumn, if not quite to the end, of their existence. The reason there is such support for the oil and gas industry in Orkney and Shetland is that for the last few decades it has been a tremendous source of community benefit for us.

If there is an energy generation source, or whatever it is, in a community and the community sees the benefit of it—in a direct financial sense of money going into a trust or just in the availability and reliability of good-quality, high-skilled, well-paid jobs—people will be much more accepting. When, as is the case at the moment, we see Scottish and Southern Electricity Networks turning on the Viking wind farm in Shetland and being paid £2 million in August alone not to generate any electricity, that is where we see a disconnect. Dr Huq, there is a great deal more I could say about this subject—and I hope we will return to it—but just remember this: whatever the question is, the answer is to get yourself to Orkney and Shetland.

15:09

[Kirsteen Sullivan (Bathgate and Linlithgow) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Dr Huq. I thank the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) for bringing forward this important debate.

Communities have suffered the impact of more than a decade of botched energy policies and soaring bills, while our reliance on imported energy has put our energy security at risk. Many of our constituents will pay their monthly energy bills to a company based 600 miles and an ocean away. We know that our energy system is broken, but for too long it has felt far too distant to fix.

This Labour Government are already doing things differently with GB Energy, owned by the British people, which will invest in clean energy and ensure that our communities reap the benefits. At its heart is a commitment to support and expand community-owned energy projects, which are owned by the local people that use the energy.

That is not new, however. Local people already benefit from community-owned projects that exist and thrive across the country. The hon. Member for Dumfries and Galloway (John Cooper) spoke earlier about wind turbines. I know of many initiatives in my constituency that contribute to projects in local communities to deliver benefits for them. With community ownership we can deliver even more.

Let us be clear about this. Community ownership is a Labour party value, and it is not just a concept; it is about delivering benefits and value to our cities, towns and villages. The local power plan is a product of years of campaigning by the Co-operative party, and as a Labour and Co-operative MP I am proud that the Labour Government are going to deliver on this. At a fundamental level, community power is about giving people a say and a stake in the things that impact their daily life, such as those mentioned by the right hon. Member for Orkney and Shetland (Mr Carmichael): local jobs, lower prices and supporting local projects to deliver according to local priorities.

15:12

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

It is a pleasure to serve under your chairship, Dr Huq. I congratulate my neighbour, my hon. Friend the Member for Inverness, Skye and West Ross-shire (Mr MacDonald), on securing this debate—the first of what I am sure will be many debates in years to come. He has talked about what Norway has done, and he is correct to say that my constituents look out of the window when it is cold and see the turbines going round and round, but the money heading south. That is not a good thing at all. The coldest community in the whole of the British Isles is a village called Altnaharra in central Sutherland, where on 30 December 1995 temperatures hit an astonishing -27.2°. If that is not cold, I do not know what is.

My hon. Friend has talked about taking people along with us, and that is incredibly sensible advice, because they are paying a 50% premium above other buyers of electricity. If we can take people along with us on the Orkney and Shetland model, it will work—but the key is how we go about it. He also rightly mentioned affordable housing and how such a fund could be used to address this issue. I was recently in the village of Achiltibuie in Wester Ross, speaking to young people who had summer jobs there. I asked what they did in winter when the hotel closes. The answer was, “We have to head south.” Why? Because there is no housing in a place like Achiltibuie. There is absolutely no affordable housing. That is a dagger at the heart of the viability of communities in the highlands, because it leads to school rolls falling and so on.

My hon. Friend is quite correct to place this issue before us, and I hope he will be encouraged—though I am sure he will need no encouragement—to bring it forward again. It could have been tackled some years ago, but a perceived inertia at all levels of Government to actually do something about this issue meant it never was. There is a great opportunity here. Knowing the Minister, whom I congratulate on his appointment, and knowing my next-door neighbour and hon. Friend the Member for Inverness, Skye and West Ross-shire, I have every confidence that this will be the start of a discussion that, if we are positive about it, can achieve a fruitful outcome.

15:15

[Calum Miller (Bicester and Woodstock) (LD)]

It is an honour to serve under your chairship, Dr Huq. I commend my hon. Friend the Member for Inverness, Skye and West Ross-shire (Mr MacDonald) for securing this debate.

My constituency of Bicester and Woodstock has had multiple applications for solar farms, but they are dwarfed by the enormous proposal by the Blenheim estate and its development partners for an 840 MW solar plant, the so-called Botley West proposal. We need to make the transition to more renewables in our energy mix. The Liberal Democrats support that transition—we want to see 90% of our energy coming from renewables by 2030—but that high ambition makes steps to increase community benefit from any new scheme essential.

We must bring people with us on this journey by sharing the benefits. As with other aspects of renewable energy policy, the current framework is incomplete and hands too much control to the landowners and developers, often at the cost of local communities. We urgently need an approach to renewables that has a strong presumption in favour of meaningful community engagement and sustained community benefit.

Botley West has not met that standard. That is one of the many reasons why I and many of my constituents object to the current proposal. Originally, the developers offered the community a benefit fund of £50,000, amounting to £59.50 per megawatt of annual capacity. It is derisory. The £5,000 per megawatt of capacity recommended by the community benefits protocol would instead deliver £4.2 million each year to the local community if the scheme goes ahead as currently proposed.

I urge the Government to put in place a framework for new renewables that will place renewables schemes at the heart of community discussions and place our communities at the heart of debates on renewables schemes.

15:16

[Seamus Logan (Aberdeenshire North and Moray East) (SNP)]

I am pleased to serve under your chairmanship, Dr Huq. I thank the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) for calling this important debate.

Aberdeenshire North and Moray East, which I represent, and the constituency of my hon. Friend the Member for Moray West, Nairn and Strathspey (Graham Leadbitter) are the two constituencies most affected by these developments; I do not think anyone would contradict me on that point, which the Minister well understands. How are they affected? Well, the fisher folk are having to move among the pylons, the farmers are having to deal with the pylons and the underground cabling, and these are areas of outstanding natural beauty.

Those are important points to take on board, but I want to speak primarily about community benefit. The principles that guide us are early engagement, flexibility of approach, transparency and the recognition of community needs, but they are not statutory, which is part of the problem. They need to be put on a statutory footing.

In his maiden speech, the hon. Member for Inverness, Skye and West Ross-shire proposed

“that 5% of revenue from all newly consented renewable energy generated both onshore and offshore should be paid to community benefit funds.”—[Official Report, 5 September 2024; Vol. 753, c. 510.]

I find it very difficult to disagree with him on that point.

I also want to give a little bit of perspective. On 2022 figures, UK investment in new wind farms was €500 million; in Scotland it was €2.6 billion. That gives a sense of proportion. In the Highland area at the moment, 301 turbines have been approved under planning rules but not yet built, which far outstrips any other area of Scotland, including the constituency that I represent. In the midst of all this fuel poverty, Scotland’s people—particularly in my area, which is one of the coldest parts of the UK—are paying the highest standing charges in the UK. That has to change.

There are great benefits associated with community benefits given by these companies. I have an excellent example in Fraserburgh in my constituency, where the Moray East project made a substantial donation. I look forward to similar developments in the near future.

[Several hon. Members rose—]

[Dr Rupa Huq (in the Chair)]

Order. The time limit will now be reduced to two minutes.

15:19

[Olly Glover (Didcot and Wantage) (LD)]

It is a pleasure to serve under your chairship, Dr Huq. I commend my hon. Friend the Member for Inverness, Skye and West Ross-shire (Mr MacDonald) for securing this important debate.

It is important that we remember the context and seriousness of the climate change challenge, but as hon. Members have said, we need to bring people and communities with us, particularly where there are changes to their local landscape and area and where land is given over to solar generation before opportunities to use building roofs have been fully explored and exploited.

Renewable energy is essential to the decarbonisation of our electricity grid. My hon. Friend’s proposal of a 5% levy on gross revenue for community benefit would go a long way towards ensuring that communities, as well as businesses and investors, enjoy the advantages of investment in renewables. Revenue from such schemes could benefit my constituents in so many ways, not least by helping to plug the gap that our planning system has caused between the housing that has gone into the area and the supporting infrastructure. Such benefits would include more youth service provision—in some cases that means any youth service provision—in the largest communities of Grove, Wantage, Didcot and Wallingford; local road, walking and cycling improvements; a contribution to the proposed new railway station serving Grove and Wantage; the realisation of more opportunities for local healthcare improvements; and home insulation projects.

When we consider how best to combat climate change, the policies that most resonate with people are those that benefit planet, people and economy. Local electricity generation is one of the best examples. The proposed levy would ensure that people, as well as planet and economy, will benefit.

15:21

[Priti Patel (Witham) (Con)]

It is a pleasure to serve under your chairmanship, Dr Huq. I commend the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) for securing this debate. As the Minister will be well aware, my constituency of Witham is at the forefront of National Grid’s proposal for the Norwich-to-Tilbury upgrade of the national grid. I would like to put a number of concerns to him that my constituents and people across that part of mid-Essex have raised.

This debate is about community benefit, but with the pylon development scheme there is very little dialogue about community benefit. Guidance on the community benefits of the scheme is still under development; there are therefore no cost estimates or any details of what it will actually mean for my constituents or even for those affected by the proposal. I would welcome the Minister saying more about that when he winds up.

Alongside that, reports now indicate that there may be a cheaper option than pylons: tunnelling. Countries such as Germany have been at the forefront of that, along with innovation and technology. I would welcome more information from the Minister and the Department about whether that will be factored into the community discussion about wider benefits from the upgrade to the grid, and into the work that he will be undertaking. I do not think that it is deliverable by 2030, but clearly we need to make some progress.

The community benefit discussion is clearly live within the Government. May I ask when the Minister will meet Members who represent Essex and the east of England for dialogue and discussion, so we can go back to our constituents and give them some assurance about what this will mean for them?

15:23

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) on setting the scene so well. He high- lighted the importance of a good relationship in respect of renewable energy and the benefits for constituents. In two minutes, it is impossible to say all I need to, so I will not hang about. As we approach the conference of the parties, it is important to remember the benefits that these projects have for the local communities that we represent.

I always give a Northern Ireland perspective in these debates. Community Energy NI has revealed that community benefit is often associated with large-scale energy, and there are numerous wind farms across Northern Ireland. Many developments now offer community funding to a level of £5,000 per megawatt per annum over their lifetime. The energy strategy for Northern Ireland was published by the Department for the Economy in December 2021. For this action plan, the Government focused on potential energy schemes with regard to the consideration of onshore wind, solar and hydrogen.

There is fantastic potential across the United Kingdom for shared ownership options whereby a developer enters into a financial partnership with a community group or local residents. We are doing these things in Northern Ireland and we wish to do more. At present, community benefit packages are provided on a voluntary basis and there is no legal requirement in the UK for developers of energy infrastructure to provide community benefits.

I want to highlight one issue to the Minister. Legislation on energy is a reserved matter, but if we in Northern Ireland want to go ahead with a scheme, we need the planning Department; planning is a devolved matter. It is a case of marrying the two. How can we and how can the Minister work better with the planning Department in Northern Ireland to ensure that when we have projects that we want to expedite, we are not held up? I look forward to seeing how we can expand the possibility of better community renewables projects across the United Kingdom of Great Britain and Northern Ireland, especially to allow the devolved nations to play a part in that success.

15:25

[Llinos Medi (Ynys Môn) (PC)]

Ynys Môn, my constituency, is known as “energy island” and has a community-owned project in marine energy at Morlais, which is an example to all. Now there is a proposed large development for solar, covering 3,700 acres, around 2% of the island. The bigger of the two proposals, Maen Hir Energy, is five times the size of the UK’s largest active solar farm. The local corner shop would offer more jobs than this development on the island, which will have a detrimental effect on the economy by affecting agriculture and tourism. What assessment has the Minister made of the impact on our food security of the loss of good quality agricultural land?

The debate motion includes the phrase “community benefits”, but far too often it is a case of large developers offering tokenistic gestures and small sums of money. The community benefits should be renamed “community compensation”, because large developers often give a small amount of money to communities, which are then burdened by the economic and social cost of the project. With the other development on Ynys Môn, Alaw Môn, I have seen at first hand the developer changing the offer to the local community within a matter of days, offering one amount on a Thursday night and a reduced amount on a Tuesday night. That behaviour is totally unacceptable in our communities. It is shocking that developers are required only to make voluntary commitments to compensation, which can seemingly be changed at a whim.

To address the issue, we must move beyond compensation and look at meaningful ownership. Community-owned and led renewable projects could provide lots of local benefits such as cheaper energy bills, could increase resource efficiency and could help to meet our carbon reduction targets without compromising Ynys Môn’s landscape and economy. We need a step change in our energy system to ensure that real community benefit is felt by those who host clean technologies. I hope that the Government listen to the calls for change and take forward proposals that will bring meaningful benefits to local communities.

15:27

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Dr Huq. I thank the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) for securing the debate.

The greatest community benefit for people across the north of Scotland, in my constituency and neighbouring constituencies, would be paying less for their energy, along with the investment in jobs that comes with renewable energy. People are reliant on cars, are off grid, are on lower wages and have inefficient housing—that is a fact across the highlands and islands of Scotland. The impact on them of high energy prices is significant: for many, it is a choice whether to heat and eat. We hear that frequently, but it is a fact.

This winter, many communities in my constituency will experience temperatures in negative double figures for many days, which is quite normal. Communities such as Aviemore and Newtonmore are right up in the Cairngorms, where thousands of people live with those temperatures every single year. They understand what it is like to live in a cold, harsh winter climate.

I agree with many points that have been made today. The hon. Member for Na h-Eileanan an Iar (Torcuil Crichton) mentioned community ownership; we have examples of that being progressed in my constituency, which provides huge benefit.

I have a question for the Minister about transmission charges, which have a huge impact on the investment pipeline of these projects. If we do not get investment in these projects, we will miss out on significant community investment and significant community benefit. It cannot be right that people pay more for their energy when it is being bought hundreds of miles away at a cheaper price than they can buy it. That is unacceptable and discriminatory. The rug has also been pulled out from under those communities with the removal of the winter fuel payment for so many people.

[Dr Rupa Huq (in the Chair)]

I call the first of our three Front Benchers: Roz Savage, for the Liberal Democrats.

15:29

[Dr Roz Savage (South Cotswolds) (LD)]

It is a pleasure to serve under your chairship, Dr Huq. I thank my hon. Friend the Member for Inverness, Skye and West Ross-shire (Mr MacDonald) for bringing this debate to Westminster Hall, and hon. Members for their fascinating contributions. I rise to speak on an issue that is very dear to my heart, as an environmental campaigner rowing alone across three oceans to raise awareness of the ecological crisis and now as the Member for South Cotswolds about to present the climate and nature Bill—my private Member’s Bill—in the House tomorrow.

There is both promise and peril in renewable energy. The Liberal Democrats wholeheartedly welcome the steps being taken to revitalise British investment in renewables, which will start to rectify the missed opportunities of the previous Conservative Government, who never seemed to grasp the scale, scope and speed required to avoid environmental disaster. These new initiatives hold the promise of lower energy bills, high-quality jobs, greater energy security and the chance of actually meeting our net zero targets, but we must proceed with caution and wisdom.

The proposal for an excessively large solar farm in my constituency serves as a stark reminder of how renewable energy projects can backfire when poorly conceived. The solar development has provoked a visceral negative response from local communities, because it is the wrong size, in the wrong place and has the wrong ownership—foreign ownership. By allowing unsympathetic developments to mar our beautiful countryside, we risk alienating the very public whose support we need.

We need only look to the cautionary tale of our water companies to understand the perils of allowing foreign profit-driven entities to monopolise our essential utilities. The owners of companies such as Thames Water have prioritised profits over the needs of customers and the health of our natural environment, resulting in higher bills for customers, a lack of investment in infrastructure, and toxic pollution that is killing our precious waterways. We cannot afford to repeat those mistakes in our renewable energy sector; the transition to clean energy must prioritise the needs of our communities and the protection of our environments over the profits of distant shareholders.

Communities have to be involved, and it is clear that there is a significant gap in the GB Energy Bill around community energy. The Liberal Democrats firmly believe that communities living near large-scale energy infrastructure should receive tangible benefits. We are ready and willing to work collaboratively with the Minister and his Government to ensure that those benefits are guaranteed in the Bill. Our vision includes large energy suppliers working with community schemes to sell locally generated power to local customers at discounted rates; guaranteeing that community benefit funds receive a fair share of the wealth generated by local renewables infrastructure; empowering local authorities to develop renewable electricity generation and storage strategies; and giving small, low-carbon generators the right to export their electricity to existing suppliers on fair terms.

The success of our clean-energy economy, our ability to tackle the cost of living crisis, and the realisation of our climate targets all hinge on community buy-in. We need to win hearts and minds and persuade people that net zero projects are good for their communities, their pockets and our future national economy and security. To that end, we urge the Government to enact the necessary regulatory changes to truly support community energy. Community benefits for energy schemes should be guaranteed and community energy schemes should receive discounted rates for the clean electricity they contribute.

I will end on a personal note. As someone who has witnessed at first hand the beauty and fragility of our natural world during my ocean rowing expeditions, I am deeply committed to ensuring that our transition to renewable energy does not, in the process, destroy the beauty of the natural countryside we are working so hard to preserve for future generations. We need to get the balance right, and people have to be part of that equation.

15:34

[Mark Garnier (Wyre Forest) (Con)]

It is a great pleasure, as ever, to serve under your chairmanship, Dr Huq. I congratulate the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) on bringing forward this important debate. He raised this subject in his maiden speech, so he is clearly passionate about it. As someone who has been here for 14 years, it is a great pleasure to hear so many newly elected MPs bringing fresh perspectives to the House. Parliament is a better place for new MPs coming in and sharing their experiences; two minutes is not enough for some of these speeches.

In his maiden speech, the hon. Member raised valid concerns about the industrialisation of the countryside, which is an issue that all of us, certainly on the Conservative Benches, have consistently guarded against. Our belief is that the need for renewable energy must be balanced with the preservation of rural landscapes, ensuring that development is sustainable and respectful of local communities. Aside from his desire to see money flow back into communities, that is the only way we will get the public to support any plans for net zero and a decarbonised energy grid, as we heard from the Liberal Democrat spokesperson, the hon. Member for South Cotswolds (Dr Savage).

Unfortunately, the new Government immediately began to torment rural communities in their crusade for carbon neutrality by 2030 by removing key protections from the national planning policy framework just days after the election. Those provisions required developers to demonstrate that onshore wind projects had community support and that local planning impacts were properly addressed. In the new Secretary of State’s first week, he disregarded the previous Secretary of State’s legal planning guidance, which stated that the best and most versatile agricultural land must be avoided for new solar farm applications and that the cumulative impact of many solar farm applications must be considered together. Those decisions by the new Labour Government undermine the very communities that bear the burden of hosting new energy infrastructure while ensuring minimal benefit.

Even more concerningly, we understand that the Government intend to consult on bringing large onshore wind proposals into the nationally significant infrastructure project regime, which would further centralise decision making and diminish local input. It is vital that the Government listen to the views and concerns of local communities about onshore wind. Residents should have a say in projects that directly affect their environment and not be sidelined by top-down diktats from Westminster. We must ensure that local voices are heard and that community consent remains central to the planning process for renewable energy projects.

I also note the previous Government’s approach to community benefits and our commitment to ensuring that communities hosting vital energy projects were directly rewarded. We announced plans that people living near transmission infrastructure could receive up to £1,000 per year in electricity bill discounts—I am not sure it was per year, actually—providing meaningful financial relief to local households. In addition to those savings, we announced that funds would be available for local projects, empowering communities to invest in the initiatives that matter most to them, whether that is improving local parks, enhancing energy efficiency or supporting education programmes for young people. We had intended to publish guidance this year on making that a reality, so this debate is timely in allowing the Minister to give an update on all those plans.

When it comes to the impact of new grid infrastructure, pylons across much of our countryside will concern our residents most, and Labour’s accelerated push for pylons across rural landscapes threatens to blight our countryside. The rush to meet unrealistic targets will impose unnecessary visual and environmental costs on rural Britain, with little regard for the long-term impact on our natural beauty. The National Energy System Operator, formerly known as the National Grid, recently published a report that says that while grid enlargement by 2030 means pylons, grid enlargement by 2034 allows enough time to underground those connections and, at the same time, provide £600 million of savings in grid delivery.

The shadow Secretary of State, my right hon. Friend the Member for East Surrey (Claire Coutinho), highlighted during the election campaign that our party remains committed to protecting our landscapes. We propose learning from Germany where underground power lines have become the default presumption in designated areas such as national parks. That approach not only preserves the character of those unique places, but respects the wishes of local communities. Crucially, it could save bill payers money in the long term.

Over the last decade, technological advances have made it increasingly feasible to bury power lines, especially in sensitive areas. Unlike the new Government, we would have undertaken a rapid review to assess the advantages of alternative network technologies compared with overhead pylons. By exploring options such as underground cables and other innovative technologies, we can achieve energy grid decarbonisation without the impact on our countryside that Labour is apparently prepared to accept.

It is vital that we approach the energy transition with a clear vision that balances that transition with the need to protect our countryside and safeguard community interests. Labour’s plans seem short-sighted and fail to strike that balance.

Although we have real concerns regarding the Government’s plans for the countryside, I am extremely supportive of technologies that could have real community benefits—those that are innovative and easy to deliver, and that produce cheaper clean energy. I recently met experts from the University of Oxford and Oxford Photovoltaics, or Oxford PV, to discuss breakthroughs in solar power generation. They are working incredibly hard to produce lightweight solar panels so that the roofs of factories and warehouses can be used for solar panels without having to reinforce the building underneath.

[Seamus Logan]

Is the hon. Gentleman aware that the National Farmers Union of Scotland accepts the arguments and the case for pylons as opposed to underground cabling?

[Mark Garnier]

That is great. If people accept pylons, that is absolutely fine, but there are an awful lot of people who do not and we can look at where the alternatives could be cheaper.

[Jamie Stone]

Will the hon. Member give way?

[Mark Garnier]

I am mindful of time, but I will take one more intervention.

[Jamie Stone]

Does it not strike the hon. Member as strange that SSE proposed to underground the cable in the highlands from Dundonald to Beauly, yet says that it is impossible to do so in other parts? That is a very mountainous part of the highlands, so I think there is something in what my hon. Friend the Member for Inverness, Skye and West Ross-shire (Mr MacDonald), my constituency neighbour, said about it being possible.

[Mark Garnier]

I see; I might have misunderstood what the hon. Member for Inverness, Skye and West Ross-shire said. It is an engineering challenge, but we need to listen to the experts who know what they are talking about. I am not entirely certain that I understand the point that the hon. Gentlemen are trying to make, but if we can underground cables it would be better for communities, certainly if it is cheaper and better for the environment. If that means taking a bit of extra time, we need to get together to think carefully about that.

I will get back to my point about the University of Oxford and Oxford PV. Using that kind of technology, together with community-based power generation, has the potential to reduce strain on the national grid and limit the need for large-scale projects that can disrupt our landscape and our communities.

Through the Energy Act 2023, the previous Government committed to removing barriers to community energy projects by launching a call for evidence. I am interested to hear from the Minister whether the new Labour Government will honour that commitment—perhaps he will share that information with us in his remarks later.

The challenges that we face in transmitting renewable energy, particularly wind power, from areas of generation to areas of demand underscore the urgent need for grid upgrades. The current limitations in grid capacity, most notably the B6 boundary between Scotland and England, have become a major constraint on our energy system. The B6 boundary is the largest single network bottleneck, preventing vast amounts of wind power generated in Scotland from reaching higher-demand areas in England. As a result, we are facing enormous constraint payments, whereby wind turbines are shut down despite being able to generate clean and affordable energy.

That must be the greatest source of frustration for people living in areas of natural beauty such as the highlands and the Shetland Islands. Not only have those people had their landscape blighted but, if the equipment is not working at full capacity, bill payers will be paying for constraint payments in order for the equipment not to generate electricity. For instance, Orkney has some of the most powerful wind turbines in the UK, yet they often have to be turned off simply because the grid cannot handle the energy they produce. That is a glaring example of how our infrastructure is failing to keep up with the energy transition. The highlands and islands are energy-rich regions, but their potential is being stifled by inadequate transmission networks.

I turn to the biggest concern for many residents, which is how the Government will deliver the infrastructure required for a decarbonised energy grid by 2030. I must say to new Labour MPs that at the next general election in just four or five years’ time, all constituents—Labour MPs’ constituents in particular—will ask, “Did you meet your 2030 target?”, “What did you do to my energy bills?”, and “What did you do to the countryside?” Labour Members claim that their plans will save households £300 a year on energy bills, but it seems incredible that that saving will ever be achieved.

I asked in the House when we might receive a full systems cost analysis of Labour’s net zero plans by 2030, but we still have not had a proper answer—the answer given was, “In due course.” We need an answer to the question of how much this will all cost.

Although the Government’s pledge to cut everyone’s energy bills by £300 remains on their website, curiously no Ministers can bring themselves to repeat it. I have no doubt that the Minister would be delighted to do so if he gets the chance—he will have many chances, because I will wind up in a minute. Despite that promise, the actual price of the proposal will put a huge strain on taxpayers.

I have a number of questions for the Government, which I will put to the Minister. What are the full system costs associated with a net zero power grid by 2030? Will the Government confirm that they still plan to save households £300 a year on their energy bills? What baseline are they using—is it from the election? How do they plan to balance the urgent need for rapid decarbonisation with the development of emerging energy technologies? Will they support some of the innovative technologies that I mentioned or ones with longer lead times, such as nuclear? Will they explore alternatives to large-scale pylon construction, such as under- grounding and undersea cables, to protect communities and landscapes? Will they commit at the very least to match the community benefit regime set out by the previous Conservative Government of up to £10,000 off energy bills over 10 years for families in areas that have new energy infrastructure?

How we achieve this transition matters to all our constituents as it affects our natural world, our energy security and everybody’s energy bills. It is essential that it delivers real benefits to the communities most affected by renewable energy projects. We need to ensure that those communities are not just sites for energy generation but true beneficiaries, most importantly through lower energy bills. The Government’s rushed approach risks sacrificing long-term gains for short-term targets, leaving rural communities to bear the brunt of the costs without the promised savings.

The Opposition believe in a balanced approach in which the latest technologies are harnessed, communities are listened to and grid capacity is strengthened without degrading our natural landscape. We should support innovative solutions and new technology while focusing on lower energy bills and decarbonising the energy grid. I look forward to hearing from the Minister, who campaigned like a stalwart in opposition but now finds himself on the Front Bench in government—I congratulate him on his post, by the way.

[Dr Rupa Huq (in the Chair)]

For the second time in the same day, I call the Minister.

15:43

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

It is a pleasure to serve under your chairmanship again today, Dr Huq. It is good to look out and see so many of my colleagues from the Great British Energy Bill Committee here to discuss energy again. I am glad we got the Bill through Committee quickly enough for us to be here—we did not need our afternoon session.

I do not have a huge amount of time, and I want to get to as many hon. Members’ contributions as possible. Of course, I want to leave the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) time to conclude this important debate—I congratulate him on securing it. Hopefully he will see from the enthusiasm and the level of participation how important others find this subject. I know from his maiden speech and other contributions how important it is for him and his constituents.

Just a few weeks ago, I had the real pleasure of visiting the hon. Gentleman’s constituency; I went to the Isle of Eigg to spend a day learning about the community energy project there. Although in some ways that project is unique, it is a very good example of how a whole community can benefit from such projects. The community genuinely has the power in its own hands—it has its own micro-generation grid—and it has received other benefits as people have upskilled themselves so that they can understand how the grid works and manage it.

I thank all right hon. and hon. Members for their contributions. I will try to respond to as many as I can, but I will briefly start with the context. This Government have come to power facing three interlinked challenges—ensuring energy security, displaying climate leadership and bringing down bills for people across the country—to which our response is our clean power by 2030 mission. Clean power is the only way to protect our constituents from the rollercoaster of price spikes that we have faced over the past few years, and to deliver the climate leadership that we need. That is why we introduced the Great British Energy Bill within our first 100 days, and why it is progressing through Parliament as quickly as possible. Great British Energy, which will have its headquarters in Aberdeen, is an important part of our plan to increase the delivery speed of renewables projects and, crucially—I will come back to this point—to ensure that the British people have a stake in that energy future. The Conservative party has for many years accepted the premise of publicly owned energy companies, but it does not support the premise of the British people being part of a publicly owned energy company—just ownership by companies from beyond our shores. Of course, we welcome their investment in this country, but with Great British Energy, we are saying that we would also like the British public to have a part to play.

A number of hon. Members made points about community ownership. Although this debate is about community benefits, I think, as some hon. Members have said, there are links between them. The Great British Energy Bill is about setting up the company, but there is a wider context in the Government’s local power plan, which commits to much more community ownership of energy, and ensuring that communities large and small have the funding and, crucially, the capacity to take forward some of those projects themselves.

Delivering on our clean energy mission, which is undoubtedly ambitious, will require action on a number of fronts. I want to touch on infrastructure, which many hon. Members have mentioned. There is at the heart of the current Conservative party’s rhetoric on that subject a fundamental contradiction. We heard it from the shadow Minister, the hon. Member for Wyre Forest (Mark Garnier), but I also heard almost exactly the same words from the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) on the shadow Front Bench in the Committee earlier today, where on the one hand, there is a recognition that we need significant upgrades to the grid, and yet on the other hand, there is no desire to make a commitment to building any new infrastructure to deliver it. Both those things cannot be true at the same time.

I gently point out to Opposition Members that after 14 years of government, that is not a new problem. The grid did not suddenly fall apart in July 2024, with the Labour Government. That challenge has been facing the country for a long time. Indeed, I would meet Conservative Members halfway and say that even beyond the 14 years they were in government, there has been a challenge on the grid. However, they had 14 years to take action and did not. This Government are now moving forward.

If we want to see the connections issue resolved, and community projects able to connect into the grid, as hon. Members have mentioned, we do need to build some of that infrastructure. That requires communities to host the infrastructure, so I turn to a number of points that were raised about how we work in partnership with communities—using collaboration, not coercion. It is important that the entire mission is a national one—for Government, but also to ensure that every member of the public is part of our achieving clean power by 2030. Key to that will be reforms to planning regulations. To deliver the critical infrastructure that this country needs, nationally significant infrastructure must be built; our planning system is holding that back.

The planning and infrastructure Bill, which we will introduce shortly, will speed up and streamline the planning process. We will also be updating relevant national policy statements within the next year, in order to provide certainty to industry. In Scotland, the current electricity infrastructure consenting regime is from the Electricity Act 1989 and has not been updated in line with other legislation across the UK. The regime is too slow and is holding back investment. I am working closely with my Scottish Government counterparts on how we develop a set of proposals to reform that and speed up the new infrastructure development that we need.

I come back to the point that hon. Members have rightly made—that as much as we need to streamline the planning process because we need to build the infrastructure, communities must be at the heart of it. Public engagement and consultation will continue to be incredibly important, but so also will be a more holistic approach to planning energy infrastructure in the first place. That has been the root cause of many of the challenges that hon. Members have raised today. The lack of strategic planning for some of our energy infrastructure in the past has led to bottlenecks, which we want to avoid in future.

Finally, I turn to the point about communities living near clean energy infrastructure, including the transmission infrastructure that we need to build. Let us be clear: communities, by hosting that infrastructure, are providing a service to the country. It is essential that we build that infrastructure; it must be built somewhere. The challenge I have with some of the discussion on that subject is that we fall into the trap sometimes of saying, “Yes, we agree we need to upgrade the grid, but not anywhere near my constituency, please.” That will not work, unfortunately. We want to ensure that those communities that do host this infrastructure, on behalf of us all as a country, directly benefit from it. Communities are important, not just in terms of hosting infrastructure but in terms of the wider acceptance of the direction of travel that we are taking. We need communities to be with us if we are to achieve the necessary pace. At the moment, as has been raised, such community benefits are voluntary arrangements. They could be monetary or non-monetary schemes; there are a variety of different options across the country, some that work extremely well and others that, as many here know, do not work so well. The voluntary nature of arrangements for delivery of community benefits does lead to these significant variations.

[Jim Shannon]

As I outlined in my submission to this debate, infrastructure is a reserved matter, but back home in Northern Ireland it is a planning matter, which is devolved. The question is how the two combine. It is a very simple question. It might require a much more difficult answer, but I would really appreciate it if the Minister could answer, please.

[Michael Shanks]

That is a very important question and I was going to come to the hon. Gentleman’s specific point in a moment. He is absolutely right. Since I came into post, I have been working with my counterpart Ministers in the Scottish, Welsh and Northern Ireland Governments on how we can work together. Clearly, in Northern Ireland that is slightly different because energy is transferred, so the policy levers are slightly different. However, we do have the same outcomes in mind throughout the UK, which is really important. I will continue to work with Conor Murphy and the wider Executive to bring us together as much as possible, because the hon. Member makes a very important point.

On community benefits in particular, we are continuing—at pace—the work started by the previous Government to review how we can effectively deliver benefits for communities living near this infrastructure. We are looking at examples across Europe—we are not on this journey on our own; there are other countries that have been doing this for a very long time, and we are learning from that—and developing clear guidance on community benefits for both the infrastructure and the transmission networks. We will publish that in due course. Great British Energy’s role will be to build upon existing community energy schemes under way across England, Scotland, Wales and Northern Ireland. It will build on that experience to contribute more where it can.

I shall now respond to a few of the specific points raised by hon. Members. The point on solar projects, raised by the hon. Member for Glastonbury and Somerton (Sarah Dyke)—who is not in her place, but I will write to her on this—is an incredibly important one. Part of the aim of the solar taskforce set up by the previous Government and reconvened by this Government is to set out a very clear pathway for these projects.

Several hon. Members mentioned standing charges. The Government are looking at that issue right now. We accept that far too much of a burden and too much of bills comes from standing charges and we are working with the regulator to do much more about that.

Although I listed 12 other points from hon. Members, I am conscious that I have eight minutes in which to cover them. To allow the hon. Member for Inverness, Skye and West Ross-shire time to wind up the debate, I will close by saying that as a Government we take this issue very seriously. Our ambition is to bring communities with us on this journey. We want to do that through a collaborative approach, with all hon. Members, but also with communities at the heart of this. We will have much more to say on that in the weeks and months ahead.

15:59

[Mr Angus MacDonald]

I did forget to disclose that I may have a potential conflict of interest, the details of which are on the parliamentary website. I apologise for not saying so before, but I do not think anyone would find it a major such conflict. You did mention—

[Dr Rupa Huq (in the Chair)]

Order. The Minister did; not me.

[Mr MacDonald]

Sorry. The Minister mentioned community benefits, but in rather a weak way. The Members in this room—I think there have been 60-plus of us here—represent the majority of the land mass of Britain. I think the message we are sending loud and clear to the Minister is that we all feel very strongly about the community benefits, and we very much hope they will be significant. Thank you very much for allowing me to host this debate.

Question put and agreed to.

Resolved,

That this House has considered community benefits from renewable energy projects.

15:59

Sitting suspended.

Estate Adoption: North-east England

Tuesday 15th October 2024 Westminster Hall

[Carolyn Harris in the Chair]

15:59

[Emma Foody (Cramlington and Killingworth) (Lab/Co-op)]

I beg to move,

That this House has considered estate adoption in the North East.

Thank you for the honour of serving under your chairship, Mrs Harris. I am grateful to have this opportunity to move the motion, which is of considerable importance to my constituency of Cramlington and Killingworth. It is a newly formed constituency, made up of new towns as well as a number of villages, covering the north of Newcastle, south-east Northumberland, and north and north-west North Tyneside. As it is on the edge of different local authorities, over the past 10 to 15 years, our villages and towns have grown with significant levels of development. These developments provide important and needed homes for our communities, but there have also been significant challenges for those communities, and adoption and delivery of infrastructure are key among those challenges.

With the commitment of the new Labour Government to deliver the homes that our country needs, we need to ensure that we are not only building homes, but sustainable communities, with buy-in from residents. Delivering timely and appropriate infrastructure is a key part of that, because a home is not just the property that we live in, but the street that we live on, and the community we are a part of. For too many of my constituents, there are unacceptable delays in the delivery of even the most basic infrastructure. Residents who have worked hard, saved, and bought their first home, their family home, or their dream home, are left without adequate road surfaces, pavements, street lighting, pedestrian crossings, and road markings. Too often, people are left in limbo—passed from one organisation to the next, with each one trying to pass the buck—paying management fees and council tax, yet not having the basics, such as completed pavements, roads or communal facilities. Residents are left frustrated and angry, with a lack of communication from those responsible, a lack of accountability, and no certainty on when their estates will be finished.

[Melanie Onn (Great Grimsby and Cleethorpes) (Lab)]

The situation which my hon. Friend describes in her constituency is mirrored in mine; it is an issue that affects properties around the country. Locals in my constituency will know the old Birds Eye site. It was a brilliant idea to bring new housing into the town centre, on a brownfield site, but latterly it has been discovered that the estate is half-finished, the roads are unpassable, and the paths unusable. Does she agree that local authorities should be given additional powers and that there should be caps on the costs that local authorities are required to pay, to force developers to complete these estates so that people can live in their dream home?

[Emma Foody]

This is an experience that is shared around the country, and we need to look at all available options to we resolve this matter. We are not talking about months that residents are left in this situation, but years—five, 10, 15 years, in which families see their children grow up and leave home before a road is completed.

Before the debate, I asked my constituents for their testimonies and experiences of the range of issues that they face. David, who lives on the Fairways estate in the west of Cramlington speaks of roads and pavements on the estate that are largely without tarmac, which has made using bikes, wheelchairs, and pushchairs dangerous outside the home. He talks of how residents are cut off from other facilities such as shops, schools, and parks, because the necessary footpaths were not built for years. He says that only after constant pressure from residents did the developer build a footpath, which is unlit and poorly laid—it would be difficult to use a pushchair or a wheelchair on it—and it links one housing estate to another through a field. If people have a car, the roads are not much better. They are often unfinished, with is a higher risk of damaging vehicles. When the roads are icy, there is more risk of traffic accidents.

Another constituent, Iain, has been contacting the developer of Five Mile Park in Wideopen for three years regarding the road surface. The estate was constructed almost 10 years ago, and he has been given excuse after excuse about why work has been delayed on the roads, pavements and footpaths. The developer informed Iain that the road had been completed more than a year ago. However, poor-quality work by contractors means that it has not been brought up to adoptable standards. That is just one case of many in which a developer will claim to have completed roads, pavements or other infrastructure, but not up to a standard for the local authority to adopt them.

[David Smith (North Northumberland) (Lab)]

This is such an important debate. Likewise, in Amble in my constituency of North Northumberland, constituents have contacted me about a private developer that has left their estate in a scruffy and untidy manner and which is using a contractual error to try to escape blame. That is in the context of a 65% decrease in planning spending in the north of England, so there is also a key issue about the resources that local authorities need. Does my hon. Friend agree that private developers should be willing to bring estates up to an acceptable standard so that local authorities are not forced to adopt unkempt and unfinished estates?

[Emma Foody]

I thank my hon. Friend for raising those issues. I know it is something that is raised with all Northumberland MPs, and I agree that we need to look at all mechanisms to ensure that estates are at an adoptable standard.

In my constituency, Dan from West Meadows, another estate, shared his worries that local football pitches would never be brought up to the standard that has been promised. Mark, who lives in Backworth View, told me how the street lighting on his road has never been switched on in the five years he has lived there, yet he is paying full council tax and management fees. Many residents express frustration that they are paying both estate management fees and council tax, yet, because the estate is unadopted, they have poorer quality infrastructure, despite paying more.

Local authorities often feel the brunt of complaints from residents, but they hold little power to compel developers to bring private unadopted estates to the standards required for them to be adopted. Local authorities should not be footing the bill for delays and lack of delivery from private house builders. Too often, local authorities are hamstrung. The developers have long since left the site, so local authorities are left fielding complaints from residents, despite having little power to compel action. A chief planning officer at a local authority told me that the current system is skewed towards developers. They pick their own contractors, timeframes and materials, which are often not up to the standard for a council to be able to adopt their work, yet it is the local authority that is left with understandably frustrated residents long after the developer has gone.

[Chris McDonald (Stockton North) (Lab)]

I have also seen problems holding developers to account in my constituency of Stockton North, where we have estates such as Willow Sage Court, Wynyard and Queensgate, which have unfinished roads, a lack of facilities and high maintenance charges. The Competition and Markets Authority said in a report earlier this year that there was an increasing trend for this type of estate, and it recommended a set of national standards. Does my hon. Friend agree that we should have a national framework of standards for private developers, as well as sanctions for developers that do not deliver?

[Emma Foody]

I thank my hon. Friend for that contribution; it is as if he has seen the next part of my speech as I am going to reference the CMA, so I will progress and touch on the issues he raised.

I have mentioned the homeowners, the local authorities and the developers, but there is another third party that has an important role: the utilities and the broadband companies that have to deliver the infrastructure as well. In Earsdon View, residents remain on an unadopted estate, as the developer and the water company have been unable to resolve adoption. A resident on the estate, Jim, feels that the water company and the developer have passed the buck, and nothing has been done on the issue. As he put it, residents are left with “stalemate”.

Often, it is the relationships between developers and utilities companies that hold back the full adoption of water mains and other utilities. The knock-on consequence is that roads are left open and untarmacked while the disputes are ongoing. While such issues between developers, third parties and local authorities are haggled over, residents are left to pick up the cost through estate management fees. That fee is meant to support a contractor while they carry out work on the estate, but residents have shared their experiences of being left unsatisfied by the system of estate management fees, which are often unpredictable, opaque and confusing. Many argue that they are being ripped off, with fees that can increase by unlimited and unspecified amounts each year. Residents such as Oliver fear that if fees continue to go up and they were unable to meet them they would be unable to sell their property.

The CMA report earlier this year says that one of the things that creates the most distress for homeowners on such estates is the disproportionate response time taken by management companies, as well as their response when homeowners are unable to pay. Homeowners have had their property seized because they cannot meet the costs levied by estate management companies, yet residents are left powerless to challenge the unfinished state and poor quality of their estate. People echo earlier remarks that the existing system is skewed towards developers, with little access to justice for residents. I am glad that the Labour Government have already pledged to end the leasehold system. A developer that has not met its promises to homeowners should not be able to profiteer in relation to those same homeowners.

I am proud that this Government are taking the necessary steps to solve our housing crisis. We have a complete shortage of housing of all types. This Labour Government are being bold, with a target of 1.5 million homes during the Parliament; reform of leaseholds to end exorbitant ongoing costs for residents to live in their own homes and of the existing leasehold system; the end of section 21; and reform of the rental market. The Government have said they intend to introduce legislation to deal with the commonhold and leasehold issues that are still prevalent in today’s housing market, fixing the system—adoption should be part of that.

[Joe Morris (Hexham) (Lab)]

To pick up some of the points made by my hon. Friend about estate adoption, in particular in areas such as Medburn, Corbridge and Hexham in my constituency, residents contact me regularly, concerned about the state of their roads and the fact that we have unsafe compounds, often outside communal areas. In the rural communities that I represent, that can be particularly toxic, and it damages ongoing faith in the community and the community spirit itself. I hope the Minister can, in his response, elucidate a little the importance of adopting such estates, in particular the smaller settlements.

[Emma Foody]

I absolutely share the sentiments of my hon. Friend. I refer him to my earlier comments about how this is not just about building homes, but about building communities. To do that properly—the Labour Government have set out that they intend to do that—we need to be able to address the issue of unadopted estates.

The CMA report talked about common adoptable standards as one solution that would set out clearly the minimum standard that has to be met for a road to be adoptable. Where the standard is met, there should be mandatory adoption of amenities, with only a few limited exceptions. I would be grateful if the Minister responded to those suggestions in his reply.

Certainty could be provided to residents about the timescales within which the adoptable standards would be met. The Minister has talked about that previously. Such measures would give residents clarity and would enable developers to be held to account on timescales and delivery against them. The measures would strengthen the hand of residents and local authorities to hold developers accountable for putting in place the most basic infrastructure that residents ought to be able to expect. The measures would address the imbalance between developers and the rights of homeowners when it comes to adoption and delivery of infrastructure.

As my colleagues in the north-east and I have set out, residents should not be left for years on estates paying fees on top of council tax while there is unfinished infrastructure and a lack of any certainty of delivery long after the developer has left the site. People who have worked hard, saved and bought their own home deserve better than that. If we are to deliver the housing that this country needs and bring communities with us, addressing this issue and the timely delivery of appropriate infrastructure on estates is crucial to getting that buy-in. I know that this is something that the Minister will be working on, and I look forward to his response.

16:14

[The Minister for Housing and Planning (Matthew Pennycook)]

It is a real pleasure to serve with you in the Chair, Mrs Harris. I congratulate my hon. Friend the Member for Cramlington and Killingworth (Emma Foody) on securing this important debate. She has only been in the House for a short time, but she has already earned a well-deserved reputation as a hard-working and conscientious Member, and a doughty champion of her constituents’ interests. I commend her for the impassioned case she just made in support of action to ensure that residential freeholders living on private or mixed-tenure estates in her constituency and across the country are better protected from unfair costs, and that the infrastructure and amenities they rely on are brought up to an appropriate standard.

The distinct set of problems faced by residential freeholders on private or mixed-tenure estates is well known and well understood. The problems include, as my hon. Friend has just set out in some detail, excessive or inappropriate charges levied for minimal or even non-existent services, charges that include costly and arbitrary administration fees, charges hiked without adequate justification, and charges levied when residential freeholders are in the process of selling their property.

The general lack of transparency and clarity experienced by residential freeholders in respect of how their estate management charges and fees are arrived at, and how they break down, is compounded by the distinct lack of control experienced by homeowners on estates that have what is known as an embedded management company. Under this arrangement, which encompasses around 20% of freehold estates, the company running the estate is set in the title deeds for the properties, and residents have no ability to change it. They therefore lack the ability of homeowners on estates run by resident-led companies, often with the support of managing agents, to exert at least some influence over the level of estate management charges and how funds are spent. During proceedings on the Leasehold and Freehold Reform Act 2024 in the last Parliament, I pressed the previous Government, in my capacity as shadow Minister, to introduce a right for residents to take over the management of their estates. We are now giving careful consideration to the merits of doing so.

Residential freeholders on privately owned and managed estates clearly suffer from inadequate transparency in other unique respects. For example, it would appear to be fairly common for residential freeholders not to be notified of their future liability for charges early in the conveyancing process. Many learn of their exposure only at the point of completion. Even in instances in which residential freeholders are notified of their future liability in good time, many have to confront the fact that their contracts do not specify limits or caps on charges and fees. There is also a distinct problem with management fragmentation on many privately owned estates that have been constructed throughout the country over recent years, with residential freeholders, even on relatively new estates, frequently having to navigate scores of management companies, each levying fees for services in a way that further exacerbates the general lack of transparency and potential for abuse they face in respect of charges and fees.

A related problem experienced by residential freeholders in many of these estates, as my hon. Friend the Member for Cramlington and Killingworth and others have mentioned, is the quality and timely delivery of infra- structure and amenities. Historically, when a local authority was to adopt an estate, it would set clear standards and provide oversight to ensure that amenities were delivered to those standards, but the delivery of such amenities is now often left to the developer, with limited engagement from local authorities. I have heard countless stories—we have heard some more today—of how this development is leaving people living in homes on unfinished estates or with facilities that at best are substandard, and at worst can be dangerous.

At the root of many of these problems are the falling levels of adoption of amenities on housing estates by local authorities. If hon. Members have not seen it, I urge them to read the CMA’s house building market study, published in February, which is the most detailed study of the problem we have come across. It detailed how the problem appears to be driven by the discretionary nature of adoption, by house builders’ incentives not to pursue adoption in the first place and by local authority concerns. That must be acknowledged, because in the last Parliament, I often heard calls from the then Government simply to put the costs on to local authorities to force adoption, but there are concerns among local authorities, in the context of pressures on their resources and finances, about the future ongoing costs of maintaining amenities that are often delivered to a poor standard.

The situation is leading to poor outcomes for homeowners and, in some cases, potentially serious detriment from exposure to costs—too often opaque and difficult to control, and levied, as my hon. Friend said, in addition to council tax—for amenities that are open to use by the general public. The Government are clear that the current situation is unfair and unreasonable, and it must be brought to an end. There is a pressing need to better protect residential freeholders who are experiencing such problems on existing freehold estates, but also an urgent need to reduce the prevalence of these arrangements, which the CMA estimates represent a significant proportion of new housing supply across the country.

Underpinning many of the issues of concern raised today is the fundamental absence of regulation or oversight of the practices of estate management companies, and the fact that residential freeholders do not enjoy statutory rights equivalent to those held by leaseholders. The Leasehold and Freehold Reform Act 2024 took steps to give existing homeowners on such estates additional protections and enable them to hold their estate manager to account for the money that is spent.

The Act created a new statutory regime for homeowners based on leaseholders’ rights. It includes improved transparency over such charges to ensure that they are reasonably set, and a new right to challenge them if they are not. Bringing those measures into effect will require detailed secondary legislation, given the considerable amount of detail and thought that we need to put into them. We are working at pace, but I hope my hon. Friends will appreciate that it is important that we take time to get the detail right. If we introduce that secondary legislation and it contains flaws, their constituents and mine will suffer, so it is important that we take the time to get it right and engage with stakeholders. Work is ongoing in that area, however.

We are clear that the measures in the Leasehold and Freehold Reform Act are not enough, which is why, in the Government’s manifesto, we committed to ending the injustice of fleecehold and better protecting residential freeholders against unfair costs. That is why we reiterated that commitment in the King’s Speech. This is a complex area of policy, which is why the Government intend to consult with homeowners, developers, local authorities, management companies and others so that we can develop meaningful and effective solutions to these problems. The consultation that we intend to publish in due course will need to consider a wide range of trade-offs, including costs to homeowners and local authorities, potential impacts on housing supply and the links to the planning system. In direct response to the question that my hon. Friend the Member for Stockton North (Chris McDonald) asked, we will absolutely consider the recommendations made by the CMA and respond to its report directly in the interim, but it is one of a number of potential solutions to this problem. We want to consider everything in the round to ensure that we have the right answer when we bring it forward.

The reforms we intend to make in this area, in whatever form they ultimately take, sit alongside our wider plans to bring the feudal system of leasehold to an end, and they need to be seen in that context. This is a distinct subset of problems on private and mixed tenure estates, but it sits alongside a range of problems experienced by residential leaseholders and freeholders. That is why the Government will take steps to enact the remaining Law Commission recommendations around enfranchisement and the right to manage; it is why we will take steps to reinvigorate commonhold and ensure that it is the default tenure; and it is why we intend to take steps to tackle specific problems, such as the injustice of forfeiture and unaffordable, unreasonable ground rents. I hope to be able to say more on that topic soon.

I am grateful to my hon. Friend the Member for Cramlington and Killingworth and other hon. Members for raising their concerns about this issue. We acknowledge that it is a problem, and I hope that they will take my assurances at face value when I say that we are working on solutions to it and will bring them forward in due course. We want to listen to the experiences of hon. Members across the country—although this is a north-east debate, the problem very much affects constituencies in all parts of England. As I say, we are committed to taking firm action to end the injustice of fleecehold and better protect residential freeholders from those costs, and I look forward to bringing further information to the House to that end.

Question put and agreed to.

16:24

Sitting suspended.

Business Confidence

Tuesday 15th October 2024 Westminster Hall

16:30

[Mims Davies (East Grinstead and Uckfield) (Con)]

I beg to move,

That this House has considered business confidence.

It is a pleasure Mrs Harris, to serve under your chairmanship today.

“Sustained economic growth is the only route to improving the prosperity of our country, and the living standards of working people”—

so intoned the Labour manifesto published over 114 days ago, ahead of the general election. I am sure that most, if not all, of us across the House accept the basic and fundamental premise that such growth is what ultimately funds our vital public services, which are crucial to all our communities.

Reducing inflation, giving business confidence to invest and delivering growth was a hallmark of the outgoing Conservative Government. After a difficult few years affected by the pandemic, it remains important for all Members of Parliament to be business champions for our communities. I thank every business, in all our communities, for what they do every day—every business on our high streets, in industrial estates and in the rural economy. I am thinking of the self-employed: those taking a chance so that others can be employed, sectors can grow and families are supported.

Many businesses in the Mid Sussex, Wealden and Lewes districts are hidden—family businesses, start-ups in back bedrooms, future dreams and more opportunities. They are, above all, a way to connect our communities to a thriving local economy and an investment in our future. They are giving, truly, an opportunity to all. Very shortly, I will be hosting my “Taste of East Grinstead and Uckfield constituency” event in the House of Commons, a follow-up to my most recent business breakfast at the Highlands Inn in Uckfield. I am sure that many other MPs will be showcasing businesses in their constituencies and working with them in this way.

Despite lingering covid shocks and the devastating war in Ukraine, inflation reached 2% by May and economic growth rebounded strongly, reaching 0.5% in quarter 2. Our dominant services sector grew by 1.5% in the same quarter. Key to delivering economic growth is, of course, inspiring confidence—the so-called “animal spirits” in the oft remembered words of John Maynard Keynes. They are a vital pre-requisite. Indicators suggest that confidence was growing in the first half of this year.

Like many things, the new Labour Government have failed to live up to their own hype, let alone the aspirations of millions of working people or businesses who create those jobs and opportunities all across our land. I welcome the international investment summit and the £63 billion it raised, but I remind the House that almost half that investment had already been previously announced by the Conservative Government; I warn the Minister of the danger of double counting.

In a little over 100 days, the Institute of Directors economic confidence index has fallen to minus 38—the lowest since December 2022. The same index points out business investment intentions, showing the sharpest drop since the onset of the pandemic: it was plus 24 in July and minus six come September—the lowest since September 2020. CBI survey trends have shown that manufacturers thought that output would fall over the next year: minus seven compared with plus nine in August 2024. The latest purchasing managers index for the services sector is also, I am afraid, heading in the wrong direction, showing that our economic recovery is somewhat running out of steam under the new Government.

What is the cause of this reversal? Institute of Directors members cite ongoing concerns over tax changes and the cost of new Labour reforms. The British Chambers of Commerce stated:

“On the domestic front, many businesses are increasingly anxious about the direction of economic

policy, and taxation has now become their primary concern”.

Now, the biggest single concern for business leaders is tax. A survey undertaken by the Institute of Chartered Accountants in England and Wales cites tax as the chief concern—the highest ranking on the survey ever. Given the mood music emanating from the top of Government, how can that be a surprise? Both the Chancellor and the Prime Minister have repeatedly warned that further taxes are coming, but have repeatedly refused to tell us where—a hard winter, not just for pensioners but for business. We heard that clearly at the Dispatch Box, just last week. This is the result of a single structural decision to delay the Budget until October, which has simply allowed rumours in.

Already, the situation is changing the behaviour of businesses. A survey by Evelyn Partners shows that 29% of business owners are looking to sell, while hard data shows the Treasury pocketing the highest level of capital gains tax in 15 years as investors head to the exit door. That is hardly a recipe for the growth—let alone stability, which the Labour Party promised our constituents. Just last week in Prime Minister’s questions, and recently in the media, the Prime Minister refused to rule out a rise in employer national insurance. I remind hon. Members that the Labour manifesto was clear, stating that:

“Labour will not increase taxes on working people, which is why we will not increase National Insurance”.

The situation has created a falling away of job vacancies. I remind the Minister and his Government that local small business owners are clearly working people. This is a pure jobs tax. Labour’s position now seems to be that taxing working people is bad but taxing their jobs is good. It is no wonder that businesses are confused and concerned.

One agricultural business in my constituency recently wrote to me:

“I hear dark stories about the forthcoming budget and the possibility that the financial support for the agricultural sector of the economy is likely to be reduced or even slashed. If this were to happen the viability of my family’s enterprise would be at risk and the livelihoods of between 20 and 30 families would be threatened. Our business is focussed on producing milk, grain and timber for the nation and on caring for the environment in which we live and operate.”

I am sure that other hon. Members here will be bringing similar concerns from their own constituencies and reporting similar things.

[Helen Grant (Maidstone and Malling) (Con)]

I thank my hon. Friend for giving way and congratulate her on bringing this important and timely debate. Many farmers in my constituency of Maidstone and Malling are having a very tough, wet time, like the farmers in her own constituency. I believe that, for many, business confidence is pretty much at an all-time low. Does she agree that reducing red tape, regulation, bureaucracy and endless reporting, and having a slightly more light-touch approach in terms of planning and the re-diversification of farms, could boost business confidence and inspire and motivate farmers?

[Mims Davies]

I thank my hon. Friend. She is absolutely right: I have had conversations in my own district of Mid Sussex about supporting diversification in the rural economy. If things were changing on the high street, they would be supported; if they are in a rural business, they are blocked. I absolutely agree with my hon. Friend. I hope that the Minister is listening, although it seems that his party is not here to listen. I thank hon. Members here from the other parties, who are keenly supporting their own constituents too.

As I said, this is hardly a recipe for growth, let alone stability. A farming conference is coming up shortly at the South of England showground in Ardingly in my constituency, and that will be vital to business. Sponsorship in support of that has been absolutely key. I take this opportunity to wish good luck to Fallow Meadow, a new event space in West Hoathly in my constituency—another rural business taking a chance to diversify in order to support the family farm.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Lady for setting the scene so well. Does she agree that small businesses are the backbone of our communities—they certainly are in my constituency—yet were hardest hit post covid? Recovery has not been easy. Given the increase in the cost of living, small businesses are finding it increasingly difficult to stay competitive with the online monster. Does she agree that confidence can come only when the Government are working hard to regulate and tax online businesses effectively and support all businesses in this new tech age, so that the ones that have been there forever can still be there for the future?

[Mims Davies]

I thank the hon. Gentleman for his intervention, about his community and the local economy in Northern Ireland. This matters so much. These people are stridently working to earn wages every week—not only for themselves, but for their sectors, families and communities.

I agree with the hon. Gentleman’s point about the online challenge, which is gargantuan. It is absolutely right for us to seek to future-proof many of these businesses, which have been going for decades. It is difficult to start a business, let alone maintain one. If we let businesses fail because we do not support them for the future, we will look back in real horror.

Senior businesses, let alone small businesses, are already warning that the employment package announced last week will limit investment and reduce growth and jobs in years to come. Of particular concern is the cost imposed on small businesses. The Federation of Small Businesses is leading the charge on that, warning that small businesses will be looking at the changes with trepidation. The Government have only just managed to meet their self-imposed target of 100 days. They have left 70 measures to come in for 2026, meaning that uncertainty for businesses involved will carry on. That is a real concern.

Comments from Ministers over the past few weeks have caused chaos. First, the Leader of the House stated that there would have been a real risk of a run on the pound if the Government had not withdrawn winter fuel support from our pensioners; in the meantime, the Prime Minister had to disavow the Transport Secretary’s comments, stating that she did not speak for the Government. I say to Ministers that they speak not only for their Departments but for industry and sectors. They would do well to stop walking around with placards and remember that they are, allegedly, running the country.

I appreciate that the Prime Minister is new, and collective responsibility among Ministers is a cornerstone of Cabinet government. I am sure that this Minister will be working diligently to do what he can to support that. I was a Minister for a number of years—I was Employment Minister during the covid years—and I know how difficult it is. I genuinely wish Ministers well. Holding this debate today and being really honest about businesses’ and our constituents’ concerns has meant that the issues have been aired and heard. The national interest demands that the Government get a grip so that they can unleash the investment through the summit, spur economic growth, deliver those local jobs and live up to the promises that they have made to the British people. Otherwise, we are in for a long and costly five years.

In closing, I ask the Minister to reassure my businesses and our communities that the Government truly understand the impact of instability. What action will the Government take about Crawley college, for example? Unfortunately, it is shutting down engineering places as we strive for the new future. That concerns me because many businesses in East Grinstead and beyond need such engineering and apprenticeship places to support their future. Ministers should be truly working across Government to make sure that the next five years are a success for all our communities and constituencies, so that we have the public services and local economies that we are all striving for and aspire to.

[Carolyn Harris (in the Chair)]

Order. I intend to call the Front-Bench speakers at 5.8 pm. All Members should take that into consideration and keep their remarks under five minutes.

16:45

[Robin Swann (South Antrim) (UUP)]

Thank you for that direction, Mrs Harris; I will follow it directly. I want to focus solely on a small part of business confidence: the confidence of businesses across the United Kingdom in the UK’s internal market. As the hon. Member for Strangford (Jim Shannon) and the mover of the motion, the hon. Member for East Grinstead and Uckfield (Mims Davies), said, small and medium businesses are the backbone of our communities, and nowhere more so in Northern Ireland than in my constituency of South Antrim. We have a real challenge at the minute with the outworkings of the Windsor framework and how our small businesses can sell to, and purchase parts and other things they want to sell on from, the rest of the UK. They are having difficulty getting parts to sell and selling across the Irish sea.

Prior to this debate being called a small business wrote to me, which is why I thought it would be useful to come here. To survive, that small business went to online selling through Amazon. It was looking for some advice on what will happen after 13 December, when the EU’s general product safety regulation, which will apply to those selling online from Northern Ireland, will kick off. It said:

“As an online business this is starting to do us a lot of harm already. Places like Amazon where we do most of our business are making us do compliance reports for every item and we probably have over 60k items that have to be done one at a time.”

The GPSR is adding additional bureaucracy and cost to those small businesses to such an extent that suppliers are saying that they will no longer post to Northern Ireland, completely destroying business confidence across what should be our United Kingdom. I am meeting an English company later this week that tells me it wants to supply Northern Ireland, but, because of the introduction of the EU’s GPSR, it will look to cease trading into Northern Ireland. The GPSR comes into effect on 13 December: that is three weeks prior to the Christmas and new year sales, a crucial time for small businesses that rely on online sales.

Two bodies were recently created and announced by the Secretary of State for Northern Ireland: Intertrade UK and the Windsor framework independent monitoring panel. We thought that they could answer our questions and queries, but I have asked the Northern Ireland Office and we are still waiting for them to be appointed or established. All the while, the clock is ticking down on what our consumers, suppliers and sellers in Northern Ireland want to achieve. I hope the Minister can provide reassurance or guidance on that today, because I have asked the Department for Business and Trade and the Northern Ireland Office and still I can give no reassurance or guidance to the small and medium-sized companies in Northern Ireland who want it.

The hon. Member for East Grinstead and Uckfield referred to the international investment summit and the announcement of £63 billion of investment. I appreciate that she talked about double funding and the double announcement. I would have been happy if it had been indicated that any of that was coming to Northern Ireland. From what I see in the announcement that was made, England gets a fair share, Wales gets some and Scotland gets some, but nothing is coming to Northern Ireland. We would welcome any of the £63 billion or 38,000 jobs that were announced.

16:48

[Saqib Bhatti (Meriden and Solihull East) (Con)]

It is a real privilege to serve under your chairmanship, Mrs Harris. I congratulate my hon. Friend the Member for East Grinstead and Uckfield (Mims Davies) on securing this important debate in a very timely manner. It is so timely because the more I speak to businesses or business organisations, the more the phrase “holding pattern” comes up. That is down to of the uncertainty that has been created in the first 100 days of this Labour Government. Frankly, a lot of business organisations and businesses thought that the promise of change meant change for the better. Clearly, that was not the case, because, as we have just heard, the business confidence monitor of the Institute of Chartered Accountants in England and Wales—I am a chartered accountant by profession—has dipped. That is consistent with what we are seeing across the patch.

Politicians often refer to businesses and small businesses, which I used to cater for—when I was president of the Greater Birmingham chambers of commerce, the majority of our members were small businesses—as the lifeblood of our communities. That is a very easy phrase to put out there, but it has to be more than a slogan. They are the businesses that define what our communities stand for. They are the ones that create jobs, take risks and create the real wealth.

Like my hon. Friend the Member for East Grinstead and Uckfield, I welcome the investment, but I think the figures of the new and old money will be disputed— I am sure we will do that in the main Chamber and in here. As I have said before, the Government’s successes will be the country’s successes, so we welcome that level of investment, but investment only comes when businesses have confidence to invest.

It is about not just domestic investment but international investors. The Labour Government often talk about what they have inherited. As I was the Minister responsible for tech and the digital economy up until the election, I know that we had the third most valuable tech economy in the world. We had some of the highest levels of investment and were the fastest-growing in the G7. That was all defined by the fact that people felt confident enough to invest. Weeks before the general election was called, we had about £2.5 billion come in in one week.

I want to stress the importance of business confidence and economic confidence. Damage is done when the Prime Minister talks about there being worse to come. On the back of the political choices the Government are making, there may well be worse to come, but they will not be able to deliver on the economic growth and public sector investment they want if the private sector does not believe that they can do it.

There has been a lot of chatter about moving the goalposts on fiscal rules. There is no magic money tree, as has been said. There is no definite way of putting money out there without the chickens coming home to roost. There is always a price to be paid, and the burden will be borne by the businesses of the United Kingdom. They will be the ones that will be taxed. It is incredibly worrying that we have not had clarity on the capital gains issue. I think there was a report yesterday, but I will wait for the Chancellor to come to the Dispatch Box to confirm that capital gains will not rise, because that will affect investor sentiment.

National insurance is very much in the media today, and that question is really hampering because if employers have to pay more national insurance, the cost will be borne by consumers. That will affect demand and recruitment and labour decisions—I say labour with a small l, but there might possibly be a big L involved at the next election if there is such an impact.

My community is very entrepreneurial and there are businesses there, as well as businesses in my business forum, which all hon. Members are welcome to join. Britain is a great place to do business, and it is a great place to invest and grow, but that is despite this Labour Government.

16:53

[James McMurdock (South Basildon and East Thurrock) (Reform)]

It is a privilege to serve under your chairmanship, Mrs Harris, particularly on this topic of business confidence. My constituency of South Basildon and East Thurrock is rich with potential. Basildon is the industrial powerhouse of Essex, and Thurrock commands a prime location on the Thames. That is not to say that both spots are without their challenges. Basildon faces a significant housing crisis, and the high street is suffering, as many high streets are. But with that comes a desire to improve things, and to improve things we need businesses to invest. It goes without saying that those businesses must have the confidence to do so.

Thurrock was unfortunately embroiled in an investment scandal to the tune of £1.5 billion and is in a very difficult situation. The interest servicing that debt alone is approximately 40% of its operating budget, so one can imagine the challenges it faces. That is exactly why we need investment and growth and business confidence. Some specific figures have been given on the dip in confidence, which I would say is—to put it lightly—unfortunate.

It would also be putting it lightly to say that I was somewhat dismayed to hear of decisions made in the past few weeks that will directly impact my constituency, such as the delaying—again—of the lower Thames crossing. I have spoken against the lower Thames crossing because I do not feel it is ambitious enough. Given the 15 years and £800 million spent on its planning, to be in approximately the same state of overextension in our road capacity in just a decade’s time—just five years after its completion—does not seem to be a good use of £9 billion of taxpayers’ money. That said, the decision taken was not to scrap the plan or not go ahead with it; the decision was to delay it, which I might consider to be uncertainty.

Furthermore, as we have seen in the papers, I was somewhat taken by surprise—that is also putting it gently—by the language used to respond to a business that does something legal, but which some people may not like, which was akin to language used in my university days. I am referring to the £1 billion project, relating to DP World, that was jeopardised. DP World is an extremely important business for not just my constituency but our country. It is the only operator with two deep-sea access area ports, and has direct freight to distribute goods across our country that come in from all over the world. It is essential. Whether people have workers’ rights in mind or not, for it to be treated with a slight lack of the professionalism that we might expect from those in high office was a shock to me, and to local businesses as well.

I conclude by saying that my constituency wants to enrich this country. My constituents want to work hard and to invest and they want their businesses to flourish, and they are willing to put in the time and effort to achieve that. We have all the ingredients to do those things. However, just this month alone, we have seen two projects totalling £10 billion very literally jeopardised. Does the Minister agree that that is not good enough, and that, going forward, more considered and professional language must be used when communicating with or about our major industries and businesses? Will the Minister also consider the approach to major infrastructure projects and how delaying them impacts not just residents but local businesses? There are knock-on effects of such delays—we have building projects right now that are literally dependent on the lower Thames crossing, which has been delayed.

16:58

[Clive Jones (Wokingham) (LD)]

It is a pleasure to serve under your chairmanship, Mrs Harris. I congratulate the hon. Member for East Grinstead and Uckfield (Mims Davies) on securing the debate. I am proud of my constituency of Wokingham, of Berkshire and of the Thames valley for being one of the UK’s centres for growth. The area is home to international investment that brings well-paying jobs and prosperity into our area, building an economy fit for the future.

In our small and medium-sized companies, we find innovation and sustainable local growth. The hope is that one day, those businesses will go on to rival the giants that dominate the scene today. The past has been prosperous, but the present is beginning to show some concerning cracks.

In Wokingham, between 2014 and 2022, the number of new business births per 10,000 people fell by 31%. The number of people of working age in Wokingham has decreased. In December 2022, the figure was 83%, but by December 2023 it had fallen to 78.6%. The regulatory burden on businesses to export is growing, with Santander UK’s trade barometer showing that only 22% of businesses say that it is easier to trade internationally than it was five years ago. Covid-19 will have had an effect on these figures, but businesses in my constituency tell me that the chaos and instability of the Conservative Government impacted their business just as much.

I will ask the Minister a few questions, to try to ensure that Wokingham, Berkshire and the Thames valley continue to have a prosperous future. First, will he back small businesses and empower them to create new local jobs, including by abolishing business rates and replacing them with a commercial landowner levy to help our high streets? Secondly, will he bring down trade barriers and enhance our relationship with our closest trading partners, including fixing our broken relationship with Europe? Thirdly, will he speak to Network Rail and the Secretary of State for Transport and convince them of the need for a western railway link to Heathrow airport? Finally, will the Minister for Investment meet me and the Thames valley chamber of commerce to understand what businesses need to attract further inward investment?

17:01

[Bradley Thomas (Bromsgrove) (Con)]

It is a pleasure to serve under your chairmanship, Mrs Harris, and I congratulate my hon. Friend the Member for East Grinstead and Uckfield (Mims Davies) on securing this important debate. She quite rightly pointed out that a strong private sector that is incentivised to invest is the foundation and cornerstone of the living standards and prosperity that we want all of our constituents to be able to enjoy.

Over the last four years, the UK has dealt with a financial crisis, a pandemic, and an energy shock caused by the war in Ukraine. Despite those changes, since 2010 growth has been higher in the UK than in every other large European economy, with unemployment halved and absolute poverty down. When the Conservatives left government, the UK’s was one of the fastest-growing economies in the G7. However, it is clear that the new Government’s policies and politics have hurt the confidence of businesses across the board; I hear that regularly across my Bromsgrove constituency.

[Mr James Frith (Bury North) (Lab)]

I am amazed to hear the hon. Gentleman’s tone the day after the business investment summit. Anyone would think that this debate is happening in a different world or galaxy. What about the billions of pounds that were pledged yesterday? That is action and commitment from businesses that have confidence in this Labour Government, with their mandate and their deep commitment to a new partnership with business. Did he not read the newspaper this morning? Those record-breaking figures spell the truth about Labour’s record-breaking commitment to business investment.

[Bradley Thomas]

In response, did the hon. Member not recognise the conditions that the Government inherited on their election in July? It has already been pointed out in this Chamber this afternoon that the Government have been rehashing billions of pounds’ worth of investment that the previous Government secured and are now passing it off as their own.

Returning to the points that I wish to make, the new Government have claimed that their election has positively impacted business confidence, but the Institute of Directors’ economic confidence index, which measures business leader optimism about the prospects for the UK economy, continued to fall in September to minus 38, having been minus 12 in August. According to the Office for National Statistics, 55% of respondents to a voluntary business survey about challenges facing the economy felt that their businesses’ performance would stay the same or decrease over the next year. The CBI’s industrial trends survey for September shows that more manufacturers think that output will fall over the next three months than think it will rise. Potentially most critically of all, GfK’s consumer confidence index fell to minus 20 in September, suggesting that consumers lack confidence in the vitality of our economy. In large part, that is due to concerns about tax rises—concerns shared by many businesses.

Instead of making the UK a hostile destination for investment, the Government should work to ensure that it is the most attractive destination possible for investment. To become an attractive destination for inward investment, we need to look urgently at the factors that will determine investment decisions. The tax burden, which rose following the global pandemic and the unprecedented level of support provided by the previous Government, is damaging business confidence through fear that there will be higher taxes after the Budget at the end of this month. We need to focus on incentives for businesses investing in large-scale capital projects, access to skills, a long-term industrial plan for the UK economy that will once again reward investment, and a concerted effort on skills development that will lead to a long-term uplift in industrial resilience. That is critical in a world in which our adversaries seek to gain advantage over us and blunt our economic edge.

We have a great opportunity to reduce our dependence on foreign imports and focus on the long term. That is particularly crucial to my constituency. I would like the Government to focus on small businesses and foster a greater sense of individual entrepreneurship at a grassroots level, which would be a massive benefit to constituencies across the country, town centres such as Bromsgrove’s, and rural businesses.

[David Pinto-Duschinsky (Hendon) (Lab)]

Will the hon. Gentleman give way?

[Bradley Thomas]

I will not, as I am about to wrap up.

My key asks are for the Government to be less ideological in their pursuit of investment in the UK, and to focus on the long term and on conditions that will ultimately drive businesses’ inward investment decisions. They should focus not just on the large corporates, although they are fundamental, but on promoting grass- roots entrepreneurship and cracking down on regulatory bureaucracy, which gets in the way of business investment decisions.

17:06

[Sarah Gibson (Chippenham) (LD)]

It is a pleasure to serve under your chairmanship, Mrs Harris, and to speak on behalf of the Liberal Democrats as their business spokesperson for the first time—I hope hon. Members will be nice to me.

I congratulate the hon. Member for East Grinstead and Uckfield (Mims Davies) on securing the debate. I share her concerns about the high street, retailers and microbusinesses—like her, I have many in my constituency. I welcome the international investment summit and the Government’s industrial strategy, which will give businesses certainty and incentivise them to invest in new technologies, grow the economy, create jobs and tackle the climate crisis. However, page 5 of the strategy makes it clear that the Government will focus on urban areas; there seems to be no strategy for growing the rural economy. The Government say that they will devolve significant powers to the mayoral combined authorities, but I must ask the Minister what their plans are for areas of rural England that are outside metro mayoral authorities, such as my constituency of Chippenham.

A recent report by the Department for Environment, Food and Rural Affairs stated that about 14% of manufacturing happens in rural locations, and a considerable amount of that is significant to those regional economies. Many of those small and medium-sized enterprises specialise in areas such as food processing and equipment manufacturing, a lot of which comes from the diversification of farming families. Rural areas are at the forefront of the UK’s renewable energy production: 70% of wind energy, and a lot of solar energy, is produced in rural areas. Chippenham has a large number of rural solar farms, which are important, up-and-coming local businesses.

Planning takes twice as long in the UK as it takes most of our EU friends and neighbours, which is a barrier to investment. I share hon. Members’ concerns about planning delays for farming families trying to diversify; our complicated planning structure creates unnecessary cost for lots of small businesses in rural areas. Dave Ricks of drug manufacturer Eli Lilly stated that planning processes are an “impediment” to opening businesses in the UK, unlike in the US, Ireland and Norway. Johnson Matthey, which manufactures hydrogen fuel cells in my constituency and is the UK’s biggest investor in research and development in that area, said that it is really concerned that we will lose out to China, just as we did with battery technology, if we do not support infrastructure for hydrogen networks—it too faces planning delays. A recent DEFRA report highlights that 18% of rural businesses cite poor infrastructure, particularly digital and transport networks, as a significant barrier to growth. Again, the rural infrastructure simply is not there.

I am sure that many Members agree that, although the Conservative Government failed business and workers on stability over the last few years, the need for stability could never be stronger. If we expect businesses to commit to promoting skills, equality and good governance, and to supporting their local communities, we need to create a stable business environment, with smart regulation and investment in infrastructure, research and innovation.

Like the hon. Member for Meriden and Solihull East (Saqib Bhatti), I ask the Minister to take SMEs seriously given their importance to our rural economy. A serious issue that has come up time and again in my constituency is unfair tax hikes, especially hikes to business rates. I share the hon. Member’s concern about national insurance rises for small businesses, and especially for employers. I share the pain expressed by the hon. Member for South Antrim (Robin Swann) about the red tape suffered by businesses in Northern Ireland; businesses in my constituency that export to the EU are suffering from similar red tape, and my hon. Friend the Member for Wokingham (Clive Jones) expressed his concern on behalf of small businesses doing the same in his constituency.

17:11

[Jerome Mayhew (Broadland and Fakenham) (Con)]

Thank you, Mrs Harris, for chairing the debate, and well done to my hon. Friend the Member for East Grinstead and Uckfield (Mims Davies) for securing it. What a good debate it has been. It has been a debate of two halves. From this half of the room—the Opposition half—we have heard lots of interventions and lots of thoughts about business confidence, while the other half of the Chamber was entirely empty for the majority of the debate.

There have been some very interesting contributions. My hon. Friend the Member for East Grinstead and Uckfield rightly thanked businesses in all of our constituencies. She focused in particular on the role of family businesses as the thriving local hubs of our communities, as well on as the economic growth that they provide. She correctly identified the importance of animal spirits, which are vital for growing an economy. In the first half of this year, confidence was growing in our business community, but what a disastrous change we have had, with business confidence now falling as a result of tax fears.

[David Pinto-Duschinsky]

Will the hon. Member give way?

[Jerome Mayhew]

No, I am not going to take an intervention. I feel quite strongly that if an hon. Gentleman cannot make it to the start of a debate, wanders in halfway through and then seeks to make an intervention to ask a question—

[Carolyn Harris (in the Chair)]

Order. Can we keep it to the debate, please?

[Jerome Mayhew]

I will, but I would just like to refute this. Perhaps if the hon. Gentleman takes out Hansard, he will find the answer to his question in the first half of the debate.

My hon. Friend the Member for Meriden and Solihull East (Saqib Bhatti) is right that business is in an uncertain holding pattern and that SMEs are the lifeblood of our community. The hon. Member for South Basildon and East Thurrock (James McMurdock) is quite right to say that his community is rich with potential. He expressed concerns, however, over the delay of the decision on the lower Thames crossing, and said that he thought the Government should have taken a more professional approach towards DP World. I agree with him. Finally, my hon. Friend the Member for Bromsgrove (Bradley Thomas) rightly pointed out that between 2010 and 2024, growth was higher in the UK economy than in all the main EU economies, and that there is opportunity if we focus on entrepreneurship and on rural businesses.

Throughout this debate we have highlighted the slump in confidence since Labour came to power—and not just in business confidence, but in consumer confidence. Why is that? Well, do not take my word for it. The ex-chief economist of the Bank of England, Andy Haldane, said that the Government’s approach has generated

“fear and foreboding and uncertainty among consumers, among businesses, among investors”.

Labour’s plan appears to have been, “We’ll come into power, we’ll say it’s all terrible and so much worse than we thought it was, we’ll say that there’s this black hole”—a black hole, by the way, that Treasury officials were unable to find when the Financial Times asked to see the data behind it—“and this will give us political cover for long-planned tax increases.”

The problem is that political games in this case have been paid for in lost jobs and futures. After nearly four months of inaction, this inept political vacuum has been filled by speculation, rumour, kite flying and denial. The “So what?” is that Government incompetence has cost jobs. The CBI has just said that it is clear that firms are holding back from employment because of Budget fears. The consultancy AJ Bell has said that directors of listed companies have doubled sales of shares since the general election—that is businesses voting with their feet. Evelyn Partners has said that a third of private business owners with turnovers in excess of £5 million have accelerated their exit strategies. Why? Because of fears about capital gains tax and inheritance tax relief. This is our entrepreneurial future being destroyed by the inaction of the Government.

It does not matter whether the rumours are true or false; the fact that they are rumours is having devastating impacts in its own right. Now the direction is clear, and it appears that the Government will increase employer national insurance contributions. As Paul Johnson of the Institute for Fiscal Studies said, that is a clear breach of the manifesto promise. When considering the issue previously, the Chancellor of the Exchequer said that an increase was an anti-business measure—I agree. The Office for Budget Responsibility has told us that an increase in employer national insurance contributions will lower wages.

Labour is pulling off the triple: misleading the public, harming business and lowering wages—all with the same policy. The more business sees of this Government, the less it likes them. When will this party of opposition that finds itself in government get a grip?

17:16

[The Parliamentary Under-Secretary of State for Business and Trade (Gareth Thomas)]

I too take the opportunity in the usual way to thank the hon. Member for East Grinstead and Uckfield (Mims Davies) for securing this important debate. At the outset, let me echo her thanks to businesses across the country for the wealth they create, the better communities they help promote and, crucially, the good jobs they offer. I do not know where her “Taste of East Grinstead” event is taking place, but if it is in the House, I will happily come along if I can. If not, I would be happy to hear from her separately about the particular businesses that turn up to that event.

As a number of interventions from hon. Members have made clear, small businesses, in particular, are the backbone of our economy. I feel particularly privileged to be the Minister for Small Businesses and to hear some of the remarkable stories about how those small businesses came into being and the successes they have had in each of our communities. That is why I am pleased that we have been making progress in government on following through on the commitments we made in opposition in our nine-point plan to back small businesses. If time allows, I hope to touch on some of those points.

I welcome the support of all hon. Members who have spoken for their business communities, even if I did not quite agree with the tone of all their remarks. All of us need the businesses in our communities to succeed, and it is great to hear so many Opposition and Government Members wanting to back them to succeed.

The Prime Minister could not have been any clearer about this Government’s guiding mission: we will go for growth at every opportunity. Growth and backing business is the surest path to prosperity and to improving the living standards of working people. We have made it clear that our goal is to deliver the highest sustained growth in the G7, more secure jobs, better wages and, as a result, much greater funding for our public services, including our brilliant NHS. It surely goes without saying that investment is key to driving that growth.

I gently say to Conservative Members that the problem is that the Administrations of the past 14 years sadly starved our economy of the investment it needed. Whether it is the fall-out from the poor-quality deal the Conservatives negotiated with the European Union after the Brexit referendum, the revolving door of Prime Ministers— I think every Conservative Member here backed Liz Truss’s disastrous mini-Budget—the seven separate growth strategies since 2010 or the 11 different Business Secretaries in as many years, I say to Opposition Members that all of that might help to explain why they lost the confidence of business at the last general election.

If Opposition Members are not convinced by that, I would underline that there was also no plan to help small businesses grow, export or get into new markets. Support in that area was cut back and, in some cases, axed completely. There was no delivery on repeated promises to comprehensively reform business rates and no serious plan to tackle the scourge of late payments, which many small businesses face at the moment. Vital infrastructure projects that were fundamental to growth in many communities were cancelled, sensible measures to open up opportunities for investment in green energy projects were blocked, there was no obvious plan to back the high street—a point made by the hon. Member for South Basildon and East Thurrock (James McMurdock) —and, in particular, there was no serious plan to tackle retail crime going forward.

The result is that British firms have not felt that investing domestically was an attractive enough proposition. There has been much reluctance to adopt new technology, to upskill employees or to plough money into research and development. Sadly, that is why the UK has sat right at the bottom of global rankings for business investment for quite some time—27th out of 30 in the OECD last year, behind Mexico, Slovenia and the Slovak Republic.

[Robin Swann]

I thank the Minister for that point, which goes back to my contribution. This is about seeing what the Government can do in the next few weeks to give small businesses in my community in South Antrim the assurance they need to continue their online presence and sell into the UK.

[Gareth Thomas]

I thank the hon. Member for his earlier remarks and his intervention. Let me be clear that my Department will continue to work with local partners in Northern Ireland, including InterTradeIreland, to develop and deliver our trade and industrial strategies. If the hon. Member wants to speak to me, I would be happy to help the small businesses that have written to him to join up with the support available in Northern Ireland.

Members across the House will be pleased that there is good news on growth. I welcome the generous support of the hon. Member for East Grinstead and Uckfield for the work done yesterday at the international investment summit and in the run-up to it. A raft of measures were announced to help boost business confidence going forward and to spur growth, and I will recap on some of them. We are determined to make it simpler for companies to relocate to the UK through a new corporate re-domiciliation regime, which I am sure will strengthen our position as a global business hub. We have announced a business-boosting lift to the thresholds on company sizes, which means we will have new legislation by the end of the year reducing the burdens on start-ups and SMEs, saving them nearly a quarter of a billion pounds. We will be consulting next year on our ambitious modernisation programme for the UK’s entire non-financial reporting regime. We are seeking to make shareholder communication easier, and we are clarifying the law on virtual annual general meetings.

Those improvements, helping to reduce red tape, could be worth up to £16 billion a year to investment going forward. As a result of the pro-innovation, pro-business, pro-wealth creation policies we are pursuing, big-hitting global businesses are confidently investing in the UK. The total investment pledged by international and British firms, both in the run-up to and during the summit yesterday, now stands at an estimated £63 billion, which will help ensure that 38,000 jobs are created. I would gently suggest that that is a resounding vote of confidence in both the UK’s economy and the Government’s growth mission.

[Mr Frith]

The Minister is making a powerful and clear argument for this Government’s commitment to a new partnership with business. Does he agree that although the sum of investment yesterday is important, grabs the headlines and gets people confident about the future, part of the brief he is responsible for is small businesses, and seeing that they get part of the large investment that was committed to? Will he explore in his final remarks how important that is to small business?

[Gareth Thomas]

If I may, I will come to that in one second.

One of the measures announced yesterday that will strengthen business confidence further, and which many businesses have been crying out for, as they told us when we were in opposition and as they have been telling us since we came into government, is an industrial strategy. All Governments have an industrial strategy, consciously or not, through act or omission. This Government are choosing actively to have and implement an industrial strategy to help businesses plan, not just for the next year but for the next 10 years and beyond. That strategy will not just help large businesses or ones in urban areas, which is something the hon. Member for Chippenham (Sarah Gibson) asked about—I congratulate her on making her first speech as an Opposition spokesperson—but benefit all parts of the country and businesses large and small.

Our industrial strategy will inject capital into eight high-productivity, high-export, high-investment sectors in which the UK has a significant competitive advantage: financial services, professional and business services, clean energy industries, digital and technologies, advanced manufacturing, life sciences, creative industries and defence. Above all, our industrial strategy will show that we are listening and responding to the needs of businesses.

To that end, we will engage on those more complex issues that we know are barriers to investment: skills, data, finance, regulation, energy prices, grid connections, infrastructure and planning, which a couple of hon. Members rightly referenced. We want to view every single one of those measures through the lens of investment promotion. That is how we will continue to build long-term confidence, ensuring that our policies are made with business, for business.

Hon. Members raised questions about our Make Work Pay plan, and the number of businesses backing that plan is striking. On flexibility for employees, over 60% of UK managers surveyed by the University of Birmingham a couple of years ago said that home working improved their teams’ motivation, and a staggering 75% said flexible working boosted their teams’ productivity —something Opposition Members have complained about in the past. It is a similar story on pay. Research by the Institute for Public Policy Research shows that 70% of managers believe that raising the national minimum wage to reflect living costs would help, not hinder, their businesses. The hon. Member for East Grinstead and Uckfield referenced the fact that many of the measures announced as part of our package will come in in 2026. That will enable us to continue to talk to businesses and employee representatives to ensure that we get the details right.

I have no doubt that the Budget on the 30th of this month will be a Budget for growth. We face a very difficult inheritance as a Government, and we have to fix the fundamentals of our economy. I gently say to the hon. Member for Broadland and Fakenham (Jerome Mayhew) that he may not be comfortable with the mess his party left us, but figures released last month show that there was another month of record Government borrowing, with debt at 100% of GDP. That is the inheritance that the previous Government left us. We have to fix those fundamentals, and we will do. It will be a Budget for growth, and I have no doubt that our economy and British business will continue to grow from strength to strength.

17:29

[Mims Davies]

I thank the Minister for his response and will welcome him with gusto to the “Taste of East Grinstead and Uckfield” event. I will forgive his amnesia about the national insurance contribution cuts, the changes that the Conservative Government made to VAT registration, the support that we gave SMEs, and the Help to Grow portal.

I thank all hon. Members for their support in this debate about business confidence, and I implore this Government, in their Budget, to give the country the stability that we need, because if there is a further jobs tax, it will have to be matched by people paying it in the public sector.

Question put and agreed to.

Resolved,

That this House has considered business confidence.

17:30

Sitting adjourned.