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North Sea Oil and Gas Workers: Transitional Support
(1 day, 14 hours ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Kirsty Blackman (Aberdeen North) (SNP)
I beg to move,
That this House has considered transitional support for North Sea oil and gas workers.
I appreciate the chance to have this debate, Sir Desmond, because this is an incredibly important time for the oil and gas industry and those employed in and around oil and gas. I will lay out the context and where we are right now, and then talk about my key asks for the Government, given the current situation and people’s worries about the direction of travel.
I want to start with a quote from the seventh carbon budget:
“As of 2021, direct employment in oil and gas in Aberdeen has declined by nearly one-third since 2015. Household disposable income has fallen and poverty has increased…Some estimates indicate that around 14,000 people in the region will need to have moved to other roles or sectors between 2022 and 2030.”
That is such a stark comment from a well-respected organisation, which has produced an incredibly useful and informative report. It says that household disposable income has fallen and that poverty has increased, albeit not in line with the national average—everybody is feeling the pinch of the cost of living—but as a direct result of changes to the energy industry and the lack of pick-up in the renewables sector to compensate for that.
As a result of political uncertainty, the current situation and direction of travel, there is a real lack of confidence in the energy industry. We expect companies that have previously majored in oil and gas to fund a significant part of the renewables revolution. We expect them to put their money in and fund the offshore wind power that we will need. We expect their skilled workers to transfer into those industries. We are at the point now where we risk losing the significant edge that we have in skills, manufacturing capabilities and people. We risk losing that if the Government do not take action now to ensure that the transition is just and, importantly for this debate, managed properly.
As a result of the lack of confidence, final investment decisions by oil and gas companies, or companies working specifically in renewables and not so much in oil and gas, are being pushed back. Whether that is to do with their inability to get grid connections right now or the Government’s changes to the energy profits levy and extension of the windfall tax—which, by the way, has been stopped in every other country that had such a tax—companies feel that the Government are not going the right way.
Aberdeen and Grampian Chamber of Commerce’s energy transition survey shows that political uncertainty and concern about the political direction of travel has gone from the seventh top worry to the top worry in just two years. Whatever the Government think they might be doing, and whatever rhetoric they might use, the industry does not believe that they have quite got it right, so they need to change where they are going.
Barry Gardiner (Brent West) (Lab)
The hon. Lady speaks about the way in which other countries have ended their windfall tax, but does she accept that the basic rate of tax that was being applied by the previous Government to the oil and gas industry in the North sea was the lowest in the world, and that it is only with the windfall tax that it comes up to the global average?
Kirsty Blackman
I had concerns about the windfall tax in the first place. I thought that a windfall tax should be applied, but that it should have applied across the board to all those companies that made significant profits during covid, whether that was supermarkets, Amazon or oil and gas companies. Singling out the oil and gas industry was the wrong thing to do at the time. In terms of the comparative level of the tax, I do not know the answer, and I do not want to say something that is not right, but I felt that it was wrongly applied. A number of other companies made significant profits, and the oil and gas industry felt singled out, as though it was somehow different. I accept that it is different from other industries in a number of ways, but the levels of profit were not as high as they were in 2014, for example, and singling that industry out when supermarkets were making a much higher percentage profit than they had in previous years did not seem like the right thing to do.
I appreciate the Government’s work on a skills passport for the industry. That is important, but there is no point having a skills passport if the jobs are not there. We have not seen the offshore wind industry increase at the pace we would like it to, and we cannot do all the work necessary to reduce the amount of oil and gas without those jobs for people to move to. In response to ET40, the 40th energy transition survey by the Aberdeen and Grampian chamber of commerce, one company said that
“Forcing the end of oil and gas for our company before offshore wind is ready to replace the lost revenues”
is one of its biggest concerns. That is how a significant number of companies feel right now.
Companies are struggling to find people with the skills they need, whether in oil and gas or offshore renewables. The people who will be building offshore renewables will be working three-on, three-off shifts, in the same way that oil and gas workers do. It is really difficult to adjust to life on three-on, three-off shifts—it is not easy for workers to change their lives and ensure that someone is home looking after their kids if they have a family. Oil and gas workers have that transferability, because their lifestyle is already set up to do that.
We are at a tipping point. The risk is that these highly mobile, highly paid oil and gas workers will go abroad. The responses to the ET40 survey show that a significant percentage of these people are moving to postings abroad either within company or in other companies. Despite the massive disparities in disposable income, an unbelievable number of people who live in Aberdeen North have been on holiday to Dubai. The majority of Members in this room will not have many constituents who have spent holidays in Dubai, whereas I have heaps, because they have that level of transferability and portability—they can up sticks and move to another country, because drilling is the same there. They might be doing it at a higher carbon cost and with fewer terms and conditions, but they are still getting a highly-paid job. They can uproot to do that, because they are used to moving around the world.
If we do not take control of the situation now, we will lose the skills we need to power the renewable future, which is incredibly concerning. One of the UK Government’s founding missions is to grow the economy. We will not be able to grow the economy if we do not take advantage of this situation, and the time is now.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
The hon. Member is making a very good speech, and I congratulate her on it. She talked about fabrication skills. We have those skills in my constituency, but they are ageing. There will come a time when these people retire, and then those skills could be lost.
Kirsty Blackman
We have a huge amount of work to do, particularly with young people. When I talked to Developing the Young Workforce North East recently, I was heartened to hear that a significant number of young people in north-east Scotland still want to go into engineering, which is incredibly important, whether that is in fabrication or not, because engineering is involved in all of it. I am worried that we will lose that, because the industry is ageing, and the same thing is happening in offshore oil and gas. People see that their uncle, cousin or grandad was made redundant in oil and gas, and they worry about going into engineering.
If young people are not excited and passionate about the future of renewables, we will not be able to build the amazing tech that we need to ensure that renewables deliver a profit and work commercially, so I am concerned about skills. One of the key things that the Government could do is ensure more UK content and fabrication. We have amazing fabrication works—not so much in Aberdeen, but around the north-east and the rest of Scotland and the UK. That is a point that I wanted to make: this is a significant problem not just for Aberdeen but for the rest of the UK, given that only 25% of the jobs in offshore oil and gas are in the north-east of Scotland.
Stephen Gethins (Arbroath and Broughty Ferry) (SNP)
My hon. Friend is making an excellent speech, as always. On fabrication, does she see the connection between the universities, colleges and education sector and the transition? There has been some excellent work on fabrication in Arbroath and Broughty Ferry and Dundee, but of course more can always be done.
Kirsty Blackman
I absolutely agree, and my hon. Friend would expect me to talk about the University of Aberdeen and Robert Gordon University in my constituency. Along with North East Scotland college, they have been doing really important work as part of the Aberdeen city deal and the energy transition zone to ensure that we have skills for the future. Aberdeen council has created a significant number of jobs and things like foundation apprenticeships to encourage young people into the sector, but we need people to think about tech as well as make it. We have the right ingredients, but we need to ensure that everybody has confidence in the commitments that are being made. That is where the gap is. I have spoken to the Minister about that, and I have no doubt that he is strongly committed to that, but my concern is that the industry does not believe that the Government are strongly committed to a just and managed transition.
About 12% to 17% of people in Aberdeen city are directly employed in oil and gas, and a significant number are indirectly employed, but there has been a massive reduction in jobs since 2014. We have recently seen an increase in offshore wind revenue, but there are 4,000 fewer jobs so something is going wrong. My key ask is that the Government listen to people and have a plan.
The world looks very different now from how it looked in July 2024. When the Government were elected, Donald Trump was not in the White House and we did not have the global uncertainty caused by that. Something like 20% of the liquefied natural gas that we import comes from the US, and we are involved in global trading markets for oil and gas, so the increase in global volatility means that we need to think more seriously about energy security. We have had to do that since Russia invaded Ukraine and since covid, but the situation is even more desperate now. To ensure energy security, we must take control of everything we can, and we must not rely as significantly on imports as we will if the Government maintain their current direction of travel, particularly given that we do not have gas storage and are basically using LNG ships as offshore floating storage.
My key ask is for the Government to listen to people. The Minister does go out and listen to people, but they are saying that the Government are not getting it right. They are perfectly happy with some of the rhetoric, but they are concerned that action will not follow. They do not yet trust the Government’s commitment to a just and managed transition. Whatever the Government’s views—whether they are committed to a just and managed transition or not—they need to ensure that people believe they are.
That is the gap, and my suggestion for dealing with it is in line with the North Sea Transition Taskforce’s “Securing the Future of the Energy Transition in the North Sea” and Offshore Energies UK’s most recent report: we must ensure that there is a kind of mission control, so that there is somebody in charge of this. I appreciate that the Minister, the Secretary of State for Scotland and the Under-Secretary of State for Scotland are talking about that and are willing to answer my questions, but nobody seems to be in control. There is no oversight at a governmental level; there is no one person in the Government about whom everybody can say, “That person is in charge of the just and managed transition.” There is no group that has been set up.
We have all seen just transition plans from many organisations, including the Government, but nobody seems to be saying, “This is the just transition plan. This is what we are following. This is where we want to go.” A commitment from the Government that they would be willing to look at the key asks from the OEUK and in the North sea transition plan would make a big difference. We need to say, “This person is designated the just transition mandarin”—or however we want to style them—“and they are in charge. This is who we go to if we have a concern. This is who will ensure that decisions are being taken across Government to protect these jobs.”
There are other things the Government could do in terms of the £28 billion commitment and the spending review. There will be uproar if that £28 billion is cut during the spending review. I beg the Government not to cut that money. There is a Department for Energy Security and Net Zero consultation that has closed, and there is another consultation on the fiscal regime. My slight concern on those is about the timing. Oil and gas companies will make final investment decisions and plans for next year perhaps in August or September this year. If we do not have an outcome by that point, particularly on the fiscal regime, companies will say things are too uncertain and will not invest next year. Again, we will see the loss of jobs as a result.
The timing is key. The Government may not be able to announce their final decisions—around the fiscal regime, for example—but if they could give industry a direction of travel in advance of investment decisions and financial plans being made, we would not lose next year. I am really worried that we are at the point where we will lose next year and all the associated jobs as a result.
The Government are not yet getting this right. They need to do more listening and to ensure that they are taking control. The facts and the context have changed in the past year, because of the global changes and the job losses we continue to see. I am not asking the Government to row back on what they planned; I am asking them to consider that the context and the facts have changed and, therefore, that the plan needs to change to recognise that.
This is not about having to walk back from where we believe we should be. This is about ensuring that people in my constituency, and people across the country, who are employed in oil and gas—75% of workers are employed in the rest of the UK—have a secure future. We cannot see a gap as oil and gas jobs go down and renewables jobs go up, because we will lose all that talent and the incredible bonanza that we are at the best point to take advantage of. We might lose that just because people do not believe that the Government are committed enough. Now is the time to take these decisions and to ensure that people believe that the Government are committed to a just and managed transition.
Brian Leishman (Alloa and Grangemouth) (Lab)
It is an honour to serve under your chairship, Sir Desmond. My thanks go to the hon. Member for Aberdeen North (Kirsty Blackman) for securing this vital debate.
The fate of the skilled workers of the oil and gas sector hangs in the balance, and nowhere more so than in Grangemouth in my constituency. Once known as Scotland’s boomtown, Grangemouth has refined oil for more than a century. The refinery has been a generational employer for local families—a destination that has provided transformational opportunity for local people. It has provided world-class training and good pay, leading to improving living standards and community prosperity.
However, the owners, INEOS and PetroChina—the petrochemical wing of the Chinese state—have decided to call time on Grangemouth and Scotland’s refining capability. The first set of redundancies start in just a week’s time, and the thousands of job losses that will happen show the precarious position workers are in when private capital and a foreign Government own such a vital piece of infrastructure.
Regarding the refinery, I do not want to hear anyone insult the intelligence of the Grangemouth workers and utter the phrase “just transition”. Jobs will be lost, and the new energy industries are just not ready. That is the very definition of an unjust transition. I also do not want the Government to say that the £100 million growth deal for Falkirk and Grangemouth is the solution—not when the refinery is worth over £400 million a year to the Scottish economy. The £200 million from the National Wealth Fund that the Prime Minister announced at the Scottish Labour conference to entice new industries is welcome, but that money is conditional on private capital investment coming in with no planned Government ownership, meaning that workers, communities and Scotland will be in mercy of private capital and foreign ownership—again. Why are the Government not learning any lessons?
The refinery’s influence goes beyond the town. Grangemouth oil keeps Scotland’s 5.5 million people moving. I do not need to ask the Minister whether the refinery closing will compromise Scotland’s fuel security, because it obviously will. Scotland will now order oil in from mainland Europe—it will arrive, go through a vastly reduced quality control process, and then be distributed from the new import terminal at Grangemouth. Scotland will be dependent on European transportation logistics; an energy-rich nation will lose self-reliance—a farcical and dangerous set of circumstances.
Grangemouth only wants consistency, and that means the Government treating Scotland’s only oil refinery in the same manner as Scunthorpe steel. I put it to the Minister that the recall of Parliament showed that when there is a political will, things can get done. A Government can intervene and save jobs, a community and an industry. The argument that Grangemouth should be treated differently to Scunthorpe is total nonsense. The similarities are strikingly clear.
The Government could, and should, do the same for Grangemouth. It is the right thing to do for workers, communities and a nation’s security. That should be enough reason to intervene, but if it is not, I suggest that the Government have a look at the political implications: Scotland is watching, and our party will get a rude awakening at the ballot box in May 2026 over this issue. The Government should step in, save the jobs and extend the life of the Grangemouth refinery until the new energy industries are ready.
Harriet Cross (Gordon and Buchan) (Con)
I thank the hon. Member for Aberdeen North (Kirsty Blackman) for securing the debate. To say that it is really important does not really do it justice; what we are seeing in the North sea—job losses, investment drying up and companies folding or choosing to end their UK operations—is not us being alarmist or pessimistic or over-exaggerating. As most of us in this room understand, although that is sadly not the case across the House, those are the cold, hard facts.
Across the UK, approximately 120,000 people are employed in the oil and gas sector, of whom approximately half are in Scotland. The average oil and gas worker is in their mid-40s. This is their transition—not a future transition—and it matters now. In the UK, one in every 200 people is employed either directly or indirectly in the offshore energy sector, and that is significantly weighted towards oil and gas work. Those people work offshore on rigs and floating production storage and offloading units or onshore as geologists, geophysicists and petrophysicists and in our crucial supply chains. That increases to one in 25 across Scotland, about one in five in north-east Scotland and one in three if induced jobs are included.
The impacts of a poorly managed transition will be felt not just in Aberdeen, Aberdeenshire or north-east Scotland; the entirely of the UK will suffer. No other UK cluster has the energy capability of north-east Scotland—the skills, supply chains, university specialisms or experiences. If we in north-east Scotland lose our brightest, best, most innovative and most experienced energy workers in the transition from oil and gas to renewable energies, they will be lost to the whole of the UK.
We must not pretend, or mislead ourselves and others into thinking, that transferring to renewable energies is in any way incompatible with continuing to produce oil and gas from the North sea. It is not. More than that, continuing to support our domestic oil and gas sector will only help any transition to renewables to succeed. Will we still need oil and gas for years to come? Yes. It seems that that point is largely uncontested, and the Government have certainly confirmed it. So why—I still have not heard a coherent answer to this—are they effectively ensuring that we do not have a viable oil and gas sector? Removing investment allowances, increasing and extending EPL levels beyond those for any other mature basin and banning new licences do not support the sector, help domestic supplies or protect jobs.
OEUK suggests that 50% of domestic oil and gas needs could be supplied from the North sea until 2050, but only if there are policies to allow oil and gas to be extracted. Brent oil is today at $68 a barrel—almost half the $123 a barrel it peaked at in 2022, and below the EPL price floor of $71 a barrel. Why does the Minister expect North sea businesses to continue in the UK when they are being penalised for their product, despite the Government’s saying that we need it? As others have asked, how can the UK arms of multinational companies compete for funding and investment with energy sectors in other countries, which are so much more supported and encouraged and which offer far greater returns? When investment goes abroad, jobs follow, or are lost. It is that simple. I say it again: our oil and gas sector is vital to the UK’s energy transition.
When I speak to people involved in or with the sector, the vast majority talk about timing. Timing is the most crucial thing in supporting the energy transition, and I would like the Minister to reflect on it in his remarks. For offshore wind, for example, the RGU Energy Transition Institute estimate is an increase from approximately 11,000 jobs in 2024 to 46,000 in 2025. On the face of it, that looks great—35,000 new jobs—but more or less all those jobs will come on stream post 2030, by which time, on the current trajectory of job and investment losses, we are expected to lose 60,000 oil and gas jobs, 50% of which will be in Scotland. No skills passport will bring those jobs back. That is not a fair or just transition; for north-east Scotland, it is a disaster waiting to happen.
The issue is not just when the jobs need to come on stream; it is the type of jobs, as well as whether companies in the north-east will have remained afloat in the interim. At the moment, there are two main categories of jobs: the vast majority of our energy work is in operational activities, such as the day-to-day operations of the industry, while the remaining third—roughly—are in the capital expenditure, such as the building and manufacturing of kit. However, the manpower requirements for running and operating a rig far exceed those of, for example, a wind farm. Until the UK can increase its manufacturing base for wind infrastructure, allowing jobs to be created in capital work rather than just operational work, there is no prospect of transferring tens of thousands of workers from oil and gas to wind or other renewable energy sectors.
Similarly, timing is vital if companies are to keep their order books, if not full, then at least ticking over with traditional oil and gas contracts—again, assuming that the Government’s policies are changed to support the sector—before offshore wind contracts truly pick up. I recently spoke to the chief executive officer of a supply chain company, who had very real concerns about a void in contracts, which the company would not be able to get across, in the next two to five years. What company can retain a workforce if it has no work? These companies are vital to the transition, and we cannot afford to lose them to an expediated, unmanaged decline of oil and gas.
The RGU estimates that 80% of the oil and gas supply chain is transferrable to adjacent sectors, but the reality is that the supply chain will survive only if the transition is managed. If we run down production too quickly and before wind is effectively scaled, the capabilities and expertise will be lost. I end with a brief quote from the North Sea Transition Taskforce, which warns:
“Unless governments act swiftly, there will be no transition; the old North Sea will fade away, along with the skills of individuals and the entrepreneurial skills of businesses in the North Sea supply chain.”
Barry Gardiner (Brent West) (Lab)
I think this is the first time I have had the pleasure of speaking under your chairmanship, Sir Desmond; I am very pleased to have you in the Chair. I congratulate the hon. Member for Aberdeen North (Kirsty Blackman) on securing this important debate.
It is said that if you remember the ’60s, you were not really there—but if you were there in the ’80s for the closure of the pits, you will never forget. You will never forget the violence; you will never forget the politicisation of the police; you will never forget the devastation of communities. That was an energy transition—I was not just picking up on the remarks of the hon. Member for Gordon and Buchan (Harriet Cross).
This debate takes place at a key point in the transition away from oil and gas production in the North sea. With the Government’s consultation on building the North sea’s energy future under way, and with the clean energy mission driving forward at some pace, securing clean energy generation and the wealth creation and jobs that will go with it is non-negotiable if we are not to repeat the same unjust transition as before.
It is a simple truth that the North sea basin is in terminal decline. That is not a political choice; it is a geological reality. For too long, the previous Government buried their head in the sand and watched as jobs supported by the UK’s oil and gas industry more than halved over the past decade. That is why this Government are right to finally draw a line under new licensing and the illusion of endless new oil and gas.
The stone age did not come to an end for the lack of stone, and the oil age will not come to an end for the lack of oil. It will be because energy can be produced more cleanly and cheaply by renewable technologies. The demand for hydrocarbons is expected to peak globally in the next five years, but energy companies are still adopting business models focused on growing output volume rather than on maximising shareholder value. Creating the stranded assets of the future is bad management, and failing to build the skills base for tomorrow’s future is bad business planning.
The myth that North sea licences are the answer to our energy security is a dangerous one. Hundreds of licences have been issued over the past decades and there has been just 16 days’ worth of gas to show for it. We are lucky to have an abundance of renewable resources in the UK. That is the only route forward to deliver for the workers and communities who are tied to a declining oil and gas industry.
The current North sea transition deal is not fit for purpose. It places far too much responsibility on the companies themselves. Those companies are not delivering what is needed: a mere seven out of the 87 North sea oil and gas operators are even considering investment in renewable energy by 2030. We cannot outsource the future of our workers and our energy security to the very companies whose current business model is failing. We need a radical shift. The time for a coherent deal for the North sea is now. It is vital that the Government commit to bringing forward a bold and ambitious plan with the urgency that this time demands.
Beyond extraction lies an immense opportunity to build a world-leading offshore wind manufacturing sector here in the UK. Our existing wind farms, many of which are in Scotland, provide a fifth of global capacity. They prove what is possible. But it is a scandal—a scandal that the previous Government allowed—that the average North sea turbine is overwhelmingly built with material from abroad. We are exporting jobs and prosperity.
Great British Energy and the National Wealth Fund must be laser-focused on building up a thriving manufacturing sector. A properly resourced clean industry bonus is not just good policy; it has the potential to create 10,000 permanent, direct jobs and 13,000 indirect ones in areas that need it, such as the constituency of the hon. Member for Aberdeen North. Can the Minister confirm what conversations he has had with Cabinet colleagues about the clean industry bonus? Is there any scope to boost the funds behind the bonus to truly seize the moment?
Our renewable ambition is crippled by outdated ports and dockside facilities. The £1.8 billion in the National Wealth Fund is a good start, but if we are to truly lead in home-grown energy, it is crucial that it be expanded. The funding must be safeguarded and expanded, and the Government should be taking equity stakes in ports as critical national infrastructure.
The unjust transition at the refinery in the constituency of my hon. Friend the Member for Alloa and Grangemouth (Brian Leishman) and the situation in Port Talbot are warning signs that early Government intervention and investment are paramount if we are to secure the future of our workers. They deserve to experience a smooth transition. Over 90% of the UK’s oil and gas workforce have transferable skills, but they report a lack of support for transitioning into other industries. The energy skills passport is a start, but workers are footing the bill for their own retraining, which often duplicates their existing qualifications. The Government need to commit to streamlining the process. Crucially, the Minister should meet with the Treasury to deliver the £335 million-a-year training fund that unions and climate groups are rightly calling for—a fund that provides paid time off for workers to retrain.
We live in a volatile world. The era of relying on global fossil fuel markets is over. True energy and worker security lies in our own abundant renewable resources. The opportunity to create thousands of high-quality jobs in a new green economy is here. It is within our grasp. I urge the Minister to seize it.
Several hon. Members rose—
Sir Desmond Swayne (in the Chair)
Order. There will now be a five-minute limit.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
What a pleasure it is to see a fellow St Andrean in your august position, Sir Desmond. I am sure that the hon. Member for Brent West (Barry Gardiner) agrees.
I congratulate the hon. Member for Aberdeen North (Kirsty Blackman) on her comprehensive speech. It is greatly encouraging that one of our colleagues understands the situation as thoroughly as she clearly does—well done her.
I want to look at the historical perspective. I am of such great age that I can remember the time before North sea oil. Far too many in my class at Tain academy went south when they left school. They disappeared: they were part of the highland clearances, if you like, in latter years. My father said to me, “When you leave school, you’ll find your best employment chances down south, not up here in the highlands.” Then North sea oil came and everything changed massively. The Nigg oil fabrication yard was constructed near my hometown of Tain. There was one at Kishorn in Wester Ross, there was one at Ardersier near Inverness, and there were many other sites in Scotland and England. It meant that local people could find high-quality employment; they had not had that opportunity before. There were highly paid and skilled jobs. People learned skills such as rigging and welding, as the hon. Member for Aberdeen North referred to.
I worked at the yard at Nigg. At the height of it all, no less than 5,000 people worked there, constructing the mighty Conoco Hutton production platform. Those were the great old days. Since then, as others have alluded to, the situation has changed. Today, like the hon. Member for Aberdeen North, I have many constituents who work offshore. However, the same opportunity or perhaps necessity is there for those who are considering moving abroad. It is the same story. Very often they move south because it is easier to get to wherever they want to work, which could be in Kuwait or wherever. We face that old dread demon of highland depopulation—people leaving again. We have an ageing population, and we do not have as many younger carers as we would like. Families are beginning to go, and that is part of the tragedy.
The reason I came down on the Saturday when Parliament was recalled is that British steel means everything in constructing oil platforms, and possibly floating offshore wind structures. Safeguarding the industry is hugely important to me, which is why I made the journey there and back to vote in support. However, as the hon. Member for Brent West pointed out, far too many wind turbines are made of steel that is not made in this country. Far too many parts of those turbines are not made in this country either.
Our great, shining hope is that one day we will be using the skills to which I referred to train young people to start building turbines, cells and blades here in the UK. We are not doing nearly enough as we should, yet at Nigg we have one the finest graving docks in Europe. It is a perfect site. Kishorn has been revived, yet we are still not making the bits and pieces that we should. Yes, we are putting them together and putting them into the North sea—the Beatrice field off my constituency is an example—but there is much more to do.
In the minute and a half that I have left, let me echo the hon. Member for Aberdeen North in saying that the world has changed since Putin and Trump. Oil is a strategic asset. We are lucky enough to have it. We should not talk it down all the time. We should look on the new discoveries as cash in the bank for the future. Oil is not just about burning hydrocarbons, but about pharmaceuticals and many other uses. We should always remember how fortunate we are that the good Lord gave us this strategic asset.
I will conclude where I began. So many of my class went away. In more recent decades it has been different: people have stayed. Every single job in oil and gas is crucial to remote highland communities. It is the people coming back from working three on, three off, or whatever, who keep the lights on in the straths and glens of some of the remotest parts of the highlands.
Seamus Logan (Aberdeenshire North and Moray East) (SNP)
It is a pleasure to serve under your chairship, Sir Desmond. I thank my hon. Friend the Member for Aberdeen North (Kirsty Blackman) for securing this important debate and for her thoughtful and passionate speech introducing it. Many colleagues have made excellent speeches, and I will not repeat their points.
The just transition must be both just and fair, so that sectors and communities are not left on the industrial scrapheap as they were during the Thatcher years. If the just transition means anything, it must mean something for the north-east of Scotland. It cannot be left to the market alone to sort those things out. To give one small example, I have recently been lobbied by the plumbing industry. A crisis is coming in a few years’ time because the financial problems facing the training and education sector mean that it cannot possibly meet its demands. One thing the Minister could do is nudge the private sector to invest in apprenticeships in those areas, so that we are preparing alternatives for young people as North sea basin declines.
The Scottish Government set up their Just Transition Commission in 2018 to provide scrutiny and advice on delivery. Northern Ireland is currently consulting on setting up its own commission; Wales established its commission in 2013. Where is the UK-wide just transition commission? The UK Government launched their North sea consultation in March as
“a dialogue with North Sea communities”
to develop a plan for making the best of this transition. I trust that in his closing remarks the Minister will tell us how that is going.
The chairman of GB Energy—perhaps the flagship project of this Government, with its headquarters in Aberdeen—described its work as “a very long-term project,” with the much-promised 1,000 new jobs taking perhaps 20 years to realise. Even then, it will be a mere drop in the North sea when it comes to replacing the jobs that will be lost in the years ahead. Unite’s Scottish secretary Derek Thomson recently said:
“If you look at how many jobs are going to go in the north-east, if GB Energy does not pick up the pace and start to move workers in there and start to create proper green jobs, then I’m afraid we could be looking at a desolation of the north-east.”
“Speeding ahead” is an interesting choice of words for the Secretary of State in this context, given that any decision on funding the Acorn project at St Fergus is now in a most uncertain position in the June spending review.
I have been asking about this since I was elected. The UK Government were able to find £22 billion for carbon capture schemes in Merseyside and Teesside last autumn, but they could not dig deep enough into their pockets for Scotland, which has much of the infrastructure already. I await June’s announcement with trepidation as speed and commitment to North sea communities in the north-east of Scotland have been thin on the ground so far from the UK Government. Will the Minister please give us a clue about the Government’s plans?
The Acorn project, the new power station at Peterhead and the investments in key strategic ports at Peterhead and Fraserburgh are key components of the just transition. A Robert Gordon University review of UK offshore energy workforce skills transferability showed that 90% of the oil and gas workforce have transferable skills to work in adjacent energy sectors. The just transition needs buy-in from the UK Government. It cannot be left to market forces, which are even more unpredictable in the current political climate, thanks to Trump and the ongoing energy crisis, and of course Putin too.
Households are facing a third rise in energy costs since Labour came to power. Indeed, the vast majority of the UK’s offshore wind capacity is owned by companies outside the UK. The typical North sea turbine contains more than three times as much material from abroad as it does from domestic manufacturers. The wider context is an energy market that is, paradoxically, working against both the interests of the consumer and the companies and investors who want to realise the green energy industrial revolution. If Members do not believe me, they should take a deep dive into zonal pricing.
The clean industry bonus, an extra revenue support in contracts for difference rounds, has the potential to bring quality jobs to the UK and in particular Scotland and the north-east of Scotland, but there is an absence of detail on whether specifics such as job quality will be a requirement for investors to receive financial support from the Government. Does the Minister acknowledge that private investment does not necessarily guarantee good, secure jobs? How will he ensure that the clean industry bonus delivers good-quality jobs in Scotland and supports workers currently reliant on the North sea oil and gas industry?
Carla Denyer (Bristol Central) (Green)
I welcome the opportunity provided by the hon. Member for Aberdeen North (Kirsty Blackman) to debate transitional support for oil and gas workers, who are already bearing the brunt of the North sea’s disorderly decline as reserves have dwindled without a clear agreed plan. In my first ever job in the renewable energy sector in 2008—17 years ago now—I co-wrote a report on the huge potential of British North sea ports to move into the renewable energy industry as locations where offshore wind turbines and associated infrastructure are manufactured and then shipped. While some of that has been realised, a lot of opportunities were missed as jobs went overseas. The need for action is now urgent.
We already know that new oil and gas projects are incompatible with averting the worst impacts of climate catastrophe. If the goal is also to provide North sea workers and communities with the long-term security that they deserve—and it must be—new oil and gas fields are still not the answer. Even with hundreds of new licences issued and new field approvals granted in the past decade, jobs supported by the UK oil and gas industry have more than halved already, and multiple sources predict a continued decline. We must protect those workers and provide security for that workforce, but in a declining basin that will not come from desperate attempts to double down on new drilling.
Let us take the specific example of the Rosebank oil field. Setting aside the significant climate harm that Rosebank would cause, the claim that the project will create thousands of jobs is inflated. Equinor’s own estimate suggests that only 255 direct jobs would be created in the UK over its entire lifetime. Equinor has decided to construct the main offshore vessel for Rosebank in Dubai, and unions are rightly furious that the project has yet to create a single UK design or construction job.
Meanwhile, analysis shows that properly investing in British clean energy supply chains could create over 20,000 jobs for workers in key areas such as Scotland’s oil and gas communities, many of whom, as Members have pointed out, have a lot of the transferable skills we need. Rather than bowing to the industry’s last-ditch calls for new drilling, will the Government do what is needed to protect workers? For too long, oil and gas companies have been in the driving seat of the North sea transition. Time and again, they choose to prioritise their own short-term interests over the long-term needs of workers and their communities.
As the hon. Member for Brent West (Barry Gardiner) said, alarmingly, just seven of the 87 North sea operators plan to invest anything at all in UK renewables between now and 2030. Instead, these companies are on a sunset ride, maximising profits from oil and gas while they still can, regardless of what that means for the rest of us. That lack of investment has clear consequences for workers, who are demanding clear pathways out of high-carbon jobs and into the renewable energy industry, where they know they have a longer-term future.
Oil and gas companies like to blame the windfall tax for preventing them from investing, but they had been failing to invest long before that levy was introduced. We have also seen companies choosing to make workers redundant while simultaneously banking excessive profits and issuing their shareholders huge payouts—more proof that they continue to prioritise their own private interests over the workforce.
Does the Minister agree that it is time to stop betting on private oil and gas industry companies doing the right thing? How does he plan to ensure that the interests of workers and communities, rather than just those of oil and gas bosses, are served in the Government’s plan for the North sea? The need for the Government to step in and manage the transition in the public interest is now urgent, and the current approach, which is overwhelmingly focused on de-risking private investment, is wholly insufficient to achieve that aim. It risks recreating the inequalities and failures of our current energy system, where wealth and jobs flow overseas.
The unjust closure of the Grangemouth oil refinery without plans to support workers is a damning indictment of that failed industry. To ensure good, secure jobs for workers and build wealth that lasts in communities that are already experiencing the sharp edge of the transition, we need an entirely new approach—one that plans ahead before private companies decide to abandon their workers. Alongside a clear, worker-led plan for the North sea, unions and climate groups are calling for the Government to commit to an emergency ringfenced funding package in the spending review. Will the Minister meet the Chancellor to ensure that those ringfenced funds are secured, and will he ensure that past mistakes are not repeated in the North sea transition?
Jim Shannon (Strangford) (DUP)
As always, it is a pleasure to serve under your chairship, Sir Desmond. I thank the hon. Member for Aberdeen North (Kirsty Blackman) for raising this issue. Although we will not always be aligned on all things—I can think of one in particular—the need to support workers is something we can certainly share a view on. What an introduction by the hon. Lady, who set the scene so well with detailed information and incredible knowledge. It is a great pleasure to see the Minister in his place. His commitment is never in doubt, and I think we will be reassured by his answers. It is also a pleasure to see the shadow Minister, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie). We look forward to his contribution, too.
The North sea oil and gas industry employs an estimated 150,000 to 200,000 workers in the UK. A significant portion is concentrated along the east and north-east coast, but I remind everyone that, while that may be the thrust of where the industry seeks its workers from, I have a number of constituents who have worked in the North sea oil fields for 20, 30 or 40 years—probably all their working lives. Indeed, I was coming home on the plane three or four weeks ago and the guy alongside me had previously been in Dubai, which the hon. Member for Aberdeen North referred to, and had also worked in the middle east. On the occasion I met him he was coming from Libya back to Northern Ireland. The sector employs people from all across Northern Ireland. I know about those from my constituency, but there are others from elsewhere too.
Although new projects and licensing rounds have been approved, they are unlikely to reverse the declining production and workforce in the North sea, as most of the remaining reserves are in existing developments. The industry also supports a larger workforce indirectly through the supply chain, so the impact will be felt across this great United Kingdom of Great Britain and Northern Ireland.
Those workforce figures mean that the Government must seriously consider questions of our energy supply and their implications, and I believe that they are doing so; indeed, I know that this issue is on the Minister’s agenda. The Government’s own data on the situation is telling, most helpful and encouraging, and I know that he will sum it up shortly.
The Department for Energy Security and Net Zero digest of UK energy statistics shows a 72% reduction in UK oil and gas production between 1999 and 2023, and the North Sea Transition Authority projects an 89% drop in UK oil and gas production by 2050. These statistics cannot be ignored; they show a trend. Analysis by the Office for National Statistics shows that direct jobs in oil and gas extraction fell by around a third between 2014 and 2023. Meanwhile, the findings of the 2023 Robert Gordon University study, “Powering up the Workforce”, included an estimate that the offshore renewables workforce—including those employed in offshore wind, carbon capture and storage, and hydrogen—could increase to between 70,000 and 138,000 in 2030.
That last figure, which shows the potential that exists, cannot be ignored. Indeed, the hon. Member for Aberdeen North clearly set out the transition from where jobs are today to jobs for the future. The Robert Gordon University study also found that over 90% of the UK’s oil and gas workforce have medium to high skills transferability and are well positioned to work in the adjacent energy sector. That cannot be ignored. It shows where we think we are; indeed, it has been the focus of everybody in this debate so far. The issue that the hon. Lady raised is clear. The Government are aware of the impending opportunity—or, if they do not take action, the impending unemployment problem. They must act urgently.
Oil and gas companies must have support for diversification training and help for staff to ensure that communities of oil and gas workers do not end up in a similar position to the coalmining communities who were abandoned when we knew of the difficulties, which took generations to combat. We have an opportunity today—the Government have an opportunity today—to act and see through the transition, taking advantage of the transferable skills that we have all referred to in this debate.
I believe that the North sea has more to yield than many Members have said today. Our opinions can differ on that, but we must be united in looking to the care of the sector in the near and medium term, and the Government must take the lead on that today. It is important that we look at the bigger picture. I referred to those from Northern Ireland, including some of my constituents, who have worked in the oil and gas sector for some 30 or 40 years. Their sons and others will look for opportunities. I want to make sure that, when the Government bring forward their thoughts about what is taking place, the opportunities for training and jobs will exist for us all. I always say that the United Kingdom of Great Britain and Northern Ireland has many talents and much work to do together. Let us continue to do just that.
Pippa Heylings (South Cambridgeshire) (LD)
It is an honour to serve under your chairship, Sir Desmond. I thank the hon. Member for Aberdeen North (Kirsty Blackman) for securing this critical debate and for her compelling speech, in which she laid out the situation in her constituency in terms of the number of job losses and the increasing poverty. As my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) did later, she also talked about the loss of skilled workers and jobs to overseas countries.
Managing the transition from a North sea dominated by oil and gas to a North sea with a future for commercially viable renewable energy is critical to the UK’s reaching its climate targets by 2030. The North sea can have a new and bright future if we get things right, which will enable us to strengthen our energy security, reduce skyrocketing energy prices for our households and businesses, secure the UK’s global leadership in floating offshore wind and, importantly, rebuild our manufacturing and port capacity while delivering transitional skills, pathways and jobs for the highly skilled workers and for the thousands of people currently employed in the supply chains for oil and gas.
We Liberal Democrats are opposed to the new oilfields at Jackdaw and Rosebank, and we want the Government to commit to the winding-down of the oil and gas industry, as was agreed among all countries at COP28. The reality is that new drilling will not provide jobs or protect workers in a declining basin.
Harriet Cross
It is estimated that Jackdaw could provide 5% of the UK’s gas needs. Would the hon. Member, and the Liberal Democrats, prefer that we imported that LNG from elsewhere instead?
Pippa Heylings
As I consistently said during the debate about the new oilfields at Jackdaw and Rosebank, none has provided the jobs predicted, which were all offshored to Dubai. On the gas dependency that we have talked about, it is critical that we make sure that we have homegrown energy so that we can take Putin’s boot off our necks. That is the way.
After 50 years of intensive extraction, the North sea is now an ageing and expensive basin. The transition away from oil and gas production is already under way, with reserves in terminal and irreversible decline. Jobs in the UK’s oil and gas industry have more than halved in the past decade: 227,000 direct roles have disappeared, despite the issuing of 400 new drilling licences and record profits for the major oil companies. Moreover, losses in supply chains far outnumber those in the industry. That is neither fair nor just. We must act now to ensure that the transition ahead supports the workers and communities who, as my hon. Friend the Member for Caithness, Sutherland and Easter Ross so eloquently said, have powered Britain for generations, and ensure that they are not left behind.
The future of the North sea can be bright: we boast some of Europe’s best sites for renewable energy. Our current installed capacity of 50 wind farms already accounts for about a quarter of global offshore wind capacity, and our offshore wind potential surpasses our projected energy demand, making it key to our energy security. However, the Liberal Democrats have always been clear that the only way to create long-term, secure jobs is to invest in supporting workers to transition into clean energy industries. The unjust transition of the oil refinery at Grangemouth is a clear illustration—a warning of what happens without early Government intervention and investment, showing that such decisions cannot be left to industry alone.
What jobs are we talking about? We are talking about new jobs within the new manufacturing supply chain and our own domestic green energy supply chain. The UK has consistently failed to seize the full economic benefits of our leadership in offshore wind. As we have heard today, the vast majority of Britain’s offshore wind capacity is owned by foreign companies, and the typical North sea turbine still contains three times more imported material than UK-made content. We need to make sure that our turbines are manufactured here and that our port capacity, in both manufacturing and fixed and floating offshore capacity, is enabled, or that will also be given to other countries. That could create an estimated 23,000 good green jobs, both directly and through supply chains.
Barry Gardiner
I appreciate the hon. Lady’s remarks. Does she agree that one way in which Britain could help ensure that the transition is not only just, but orderly and managed, would be to do what countries such as Denmark have done—join the Beyond Oil & Gas Alliance?
Pippa Heylings
Yes, we should join the Beyond Oil & Gas Alliance. We very much support that. Following COP28, we are looking forward to COP30. Hopefully, the UK can once again demonstrate global leadership, as part of an alliance of other countries that finally has a clear transition pathway.
Our UK port capacity is currently one of the key bottlenecks slowing our renewables roll-out. UK ports and dock-side facilities urgently require upgrades so that they can handle industrial-scale floating offshore wind, including access channel size, landside availability and crane capacity. The Government’s proposed National Wealth Fund is welcome, but we need to see that it is secured and even expanded.
We need to make sure that workers are prioritised as part of the new manufacturing industry and the supply chains. Research has shown that over 90% of the UK’s oil and gas workforce have transferable skills, but face a lack of support in transitioning to the clean pathway. As vice-chair of the all-party parliamentary group on climate change, I was pleased to meet an oil and gas worker from Aberdeen last month as part of a roundtable to discuss the challenges and opportunities facing workers. She described how Aberdeen has an abundance of STEM skills ready to drive forward the transition to clean energy, but workers are having to pay out of their own pockets to gain new qualifications, often duplicating qualifications that they already have.
It is clear that more concrete support is needed to support workers in finding and moving into alternative employment, from improving the energy skills passport to addressing training barriers and, more broadly, delivering a new deal for the North sea that has workers’ needs at its core. Will the Minister commit and show us how the Government plan to ensure that clear, accessible pathways are in place to support workers to move between industries?
In conclusion, Putin’s barbaric and illegal invasion of Ukraine exposes the risks of relying on countries that may seek to exploit our dependence on fossil fuels and use it to their advantage. Oil and gas workers built the foundations of Britain’s energy system. As we chart a new path forward, it is our moral and economic duty to ensure that they are not abandoned but empowered, respected and placed at the very centre of that journey.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
It is a pleasure to serve under your chairmanship this morning, Sir Desmond. I congratulate the hon. Member for Aberdeen North (Kirsty Blackman) on bringing such an important issue to Westminster Hall today and on opening the debate with such an eloquent and passionate speech on behalf of her constituents.
For many of us here today, this is a deeply personal debate. We all know or are related to people employed in the oil and gas industry off the north-east coast of our country. Finding a solution and ensuring that the transition is indeed just for those workers is vital for our constituents. We often talk about needing the North sea for our energy security, to produce the tax revenue for the Exchequer and to support supply chains and local economies. It sounds incredibly intangible at times, but for the 200,000 people employed in the oil and gas industry, directly or indirectly, the impacts of the transition in the North sea will be very tangible indeed. As the decline accelerates, we risk seeing lost incomes and lost futures in whole communities without a purpose. That is 200,000 employees up and down the entire United Kingdom: the oil and gas supply chain touches nearly every single constituency in the United Kingdom, but more than 68% of all direct employment is in Scotland, and more than 80% of that is in the north-east of Scotland, in and around Aberdeen.
In my own constituency of West Aberdeenshire and Kincardine, everybody knows someone who relies on the offshore industry for their livelihood. Just last week, during recess, I was in Westhill speaking to companies. That town is the subsea exploration capital of the world and home to Total, Technip, Tetra, Subsea7 and more. The oil and gas industry is the lifeblood of the north-east of Scotland. That is evident to anybody who visits.
Although I pay tribute to the hon. Member for Aberdeen North for the passion that she brings to the debate and her concern for her constituents, I cannot help reflecting on the rhetoric emanating from the Scottish Government over the past few years and their presumption against oil and gas, which has contributed to an increasingly pessimistic outlook for the North sea. When we engage with oil and gas companies, it is the language and the tone that we use to describe the situation in the North sea that they say is driving away the investment that they need to drive forward new technologies such as offshore wind, whether floating or fixed bottom. When we say “decline”, “ageing” or “terminal”, that does not give investors from overseas a thriving and attractive investment picture. We need to address that language.
Barry Gardiner
Does the shadow Minister believe that investors do not know that it is a declining field?
Andrew Bowie
Of course, the hon. Gentleman is right that it is a declining basin—everybody is aware of that—but we must be careful about the language we use about it. We should point out the positives that can be achieved through further investment and recognise the profits being realised by energy companies engaged primarily in the extraction and exploitation of oil and gas underneath the North sea. They will be investing in those new technologies, and they need to convince shareholders—who are deciding whether to invest in the middle east, south-east Asia, the United States of America or elsewhere in the globe—that the North sea is still an attractive place to invest.
The language that we use about that basin and the industry in the United Kingdom is incredibly important, so I urge the hon. Gentleman to engage with the industry and speak to individuals—as I have; I know that the Minister, the hon. Member for Aberdeen North and others do too—because that is exactly what they tell us. They want to contribute to the transition—indeed, they lead it—but they want the negative atmosphere overshadowing the North sea to change. That means changing some of the rhetoric and language used to describe the industry, which is so important to the economy of the north-east of Scotland.
Seamus Logan
I appreciate the hon. Gentleman’s point about the choice of language, but will he confirm whether he and his party still believe in net zero and the drive towards achieving our climate targets?
Andrew Bowie
Yes, of course we believe in net zero, but not in setting arbitrary targets and dates that are unachievable without making this country poorer or more reliant on foreign imports for our energy supply. The fact is that imports of LNG have doubled just to keep the lights on as we actively accelerate the decline in our own North sea oil and gas industry. That is nonsensical—it is madness. It is an act of national self-harm. We should revert to our policy of maximum economic recovery from the North sea while doing all we can to ensure that the companies involved invest in new technologies.
Pippa Heylings
I could not resist; I thank the hon. Gentleman for giving way, given the time limit. He is talking about how important language is, but is it not considered to be an act of national self-harm to talk down the incredible opportunity for the North sea to be a global leader?
Andrew Bowie
I am not in any way trying to talk down the North sea. What we need to do is talk up those companies—especially those in the supply chain—the technologies and the skilled workforce, which rely at present on a successful and profitable oil and gas industry, because we will need them to develop new technologies in the North sea. The ships engaged in drilling for rigs, for example, will be used to work on the new offshore wind farms. Right now, as work is drying up in the North sea as a result of the accelerated decline, those assets are being sent to other parts of the world and being redeployed or redesigned.
When we call on those assets to help speed up the deployment of new offshore wind farms, they will not be there—the skilled workforce that we will need to develop wind farms and other technologies will be overseas because those people will be offered high-paying jobs in existing energy sectors in the UAE, Qatar, Australia, North America and south-east Asia. We cannot just flick a switch and expect all those workers and the supply chain to be there. That is why we need a profitable and successful energy industry. Like it or lump it, at the minute that is reliant on continued investment in our oil and gas industry. That is good for our energy security and the Treasury, so it makes abundant sense to continue to support it.
The highly paid jobs in renewables that are going to exist simply do not exist yet—that is a fact. We were promised that by 2020 there would be 130,000 green manufacturing jobs, but frankly only a fraction have materialised. The hon. Member for South Cambridgeshire (Pippa Heylings) talked about the need to expand capacity in our ports. Aberdeen South harbour, in the port of Aberdeen, was built specifically to take advantage of the investment that it was assumed would come from the expansion of the deployment of offshore wind, but still to this day only 1% of its overall profit is driven by offshore wind and renewables, whereas 60% comes from the oil and gas industry. Until the balance shifts, we need to ensure that the companies driving that investment continue to invest in the North sea, but I am afraid they will not do so if this Government’s policies continue.
We need a just transition. As ever, the hon. Member for Alloa and Grangemouth (Brian Leishman) spoke eloquently about his constituency. Workers in Grangemouth, who are looking with great trepidation at what the future holds, tell us that there is nothing just about the transition as it stands. It is incumbent on the Government to do what they can to ensure the safety and security of jobs, the continued profitability and investability of our oil and gas industry as it seeks to transition into the technologies of the future, and the economic success and sustainability of north-east Scotland and the Scottish economy as a whole.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)
It is a pleasure to serve under your chairship, Sir Desmond. I join others in congratulating the hon. Member for Aberdeen North (Kirsty Blackman), not just for securing this important debate but for the tone with which she introduced it. Her seriousness and passion came through in her contribution. I genuinely thank her for that, as well as for all the conversations we have had on this important topic.
It has been a wide-ranging debate, but at the heart of all the contributions have been three key things, which I will try to sum up. First, we may all disagree on the timing, pace and detail of the transition, but there is an acknowledgment and understanding that a transition in the North sea is under way. It is important to recognise that. Secondly, if we accept that, as it seems we all do, then we need a credible and detailed plan for how to manage the transition. The hon. Member for Aberdeen North put it well by saying that the transition needs to be managed properly, and I will come back to that point. Thirdly, the workforce must be at the heart of any plan and transition. The shadow Minister made the point well: this is deeply personal for anyone with a job in the oil and gas sector, but particularly in north-east Scotland, where there is a significant concentration of workers in the industry.
Many Members have spoken about the importance of oil and gas in our energy story. A few months ago, I was pleased to be at BP’s headquarters to celebrate the 60th anniversary of the first licence being issued in the North sea, and there was a powerful video of the history of some of BP’s offshore infrastructure. The engineering skill that it has taken to extract oil and gas from extremely difficult North sea waters over the past 60 years is extraordinary and, as I have said on a number of occasions, we should be very proud of that workforce and everything it has achieved.
Oil and gas will continue to play a critical role in our energy mix and economy for decades to come. However, as we and the world embrace the clean energy transition, I want us not just to be proud of the history of the North sea but to be hugely ambitious and excited about the opportunities in the next chapter of our energy story. Our clean power mission is about not just driving forward clean power in this country but creating the jobs in manufacturing and industry that go along with it, and it is critical that those jobs materialise in the communities that have been mentioned.
It is right that we recognise that tens of thousands of jobs have been lost in the sector over the past 10 years. The truth is that we should have been planning for this transition a long time ago. My hon. Friend the Member for Alloa and Grangemouth (Brian Leishman) talked about Grangemouth. There is no greater example of the failure to plan for the transition than Grangemouth: we knew years ago that it was in a precarious position and should have been planning for the workforce at that point. My driving purpose in my role is ensure that we do not make the same mistake again in the wider North sea sector.
The hon. Member for Aberdeen North asked whether the Government are listening, so I want to say how much we have engaged with the sector and how much time I have spent in Aberdeen listening to the industry—not just the oil and gas companies themselves, but the companies involved right through the supply chains, in decommissioning and in training. I had an interesting visit to a training provider and met apprentices who are working in oil and gas in the immediate term but will transition into renewables. They are being trained both on oil and gas platforms and on the renewables jobs that come next. Exciting work is going on, and we need to capitalise on it and speed up such projects across the city and the north-east.
We have a fantastic opportunity to utilise the skills that are already in Aberdeen, which many Members have mentioned. Given the global race for skilled workers and for much of the equipment and the supply chains for the clean power missions around much of the world, we have a real opportunity to capitalise on that in Aberdeen. I suspect that the ears of Robert Gordon University will be burning after this debate, given the number of times it has been mentioned. I had a fantastic visit there a few months back to go through some of the data in great detail, and it was fascinating.
Members made the point about the number of jobs that are transferable from oil and gas into renewables. That presents us with an enormous opportunity to provide long-term, sustainable jobs for people. The pace at which we do that, and the methods we use to support the workforce to transition, are key, which is why, when we came into government, we were determined to work with the Scottish Government and with industry to move forward on skills passporting, and we have launched the first phase of that. There is clearly more work to do on expanding the passporting process, but that is a sign that we are taking practical action to support the workforce to transition.
The hon. Member for Aberdeen North asked about a plan for the transition, which was a good point to make. We have launched our consultation on the future of energy in the North sea. We were keen for that to be a genuinely open conversation with industry, communities and trade unions about what the future of energy in the North sea should look like—not a conversation focused narrowly on a series of specific questions. The consultation is still open: there is a week left for those who have not had a chance to submit their responses—I am sure that many thousands are watching this debate online—so please do submit them. It is a key opportunity. We have deliberately asked open, broad questions so that we can have a genuine conversation about the future of energy in the North sea.
The first section of the consultation deals partly with the data and the science about the decline of the North sea basin. The shadow Minister rightly made the point about language. I have always been careful about the language that I use, but it is important to recognise that the declining nature of the basin means that we have to start planning now for what comes next. As part of my engagement on the issue I have had a number of roundtables, including with trade unions a few weeks ago, to look at the specific support that is necessary for the workforce now.
Barry Gardiner
The trade unions and others have made a case for £335 million a year to be invested in skills and training to ensure that workers are not unpaid on their training days, among other things. What conversations can the Minister have with colleagues to ensure that that happens?
Michael Shanks
I thank my hon. Friend for his contribution to the debate. He is right that it is about not just the passporting and the training available but, importantly, the ability of workers to access it. I will take away that point, which also came up in the roundtable with trade unions. We have launched a number of skills pilots in four areas, of which Aberdeen and Aberdeenshire is one. The process there is slightly different from that for the other three, because skills are devolved to the Scottish Government, so the UK Government’s role is slightly different, but we want to work in partnership to ensure that we deliver. I will take away the point away and come back to it.
Andrew Bowie
I pay tribute to the Minister’s continued commitment to and engagement with the industry and the region. It seems, given the amount of times he is in and out of the north-east of Scotland these days, that he may be buying a second home in my constituency. Of course, we welcome that, because any engagement with the Government is positive. The tone with which the consultation on the future of North sea energy was launched was incredibly positive and has been warmly welcomed. However, there is also an ongoing Treasury consultation on the post-EPL fiscal framework; what engagement is the Department having with the Treasury on what that will look like? Is there any opportunity to speed up the process by which we can replace the energy profits levy?
Michael Shanks
I thank the shadow Minister for making that point. We deliberately launched the consultation on the future of energy and the Treasury consultation on the future of the EPL at the same time, because we want to bring them together to give certainty about the future of industry. My hon. Friend the Exchequer Secretary has been in Aberdeen a number of times and, indeed, we have we have had many of the same engagements, dealing with the fiscal forum and others and having the conversations. I engage with Treasury colleagues regularly on this question. The EPL, which has changed many times under both Governments, has not given industry the confidence it is calling for. We have been clear that it will end post 2030, and we want to put in place a regime that gives confidence about what the landscape looks like but still has the recognition of excess profits built into it. The consultation is open for, I think, another two or three weeks.
Barry Gardiner
The taxation regime is critical to the ability of companies to make profits in the North sea. We have the lowest base rate of tax on oil and gas production companies in the world, and it is only because we have the windfall tax that we take the rate up to the average. The Minister needs to look at the investment that would be available were we not subsidising the operations from the public purse. It is not quite the zero-sum game that he suggests.
Michael Shanks
I thank my hon. Friend for his contribution, but he tempts me into both concluding a consultation and speaking on behalf of the Treasury—two things that I absolutely will not do. But he made an important point. The purpose of the consultation—again, it is an open consultation with all those in the sector—is to get to the heart of some of these questions.
Kirsty Blackman
Will the Minister agree to consider the timescale of the consultation outcomes so that people have the earliest possible notice, in advance of next year’s budgets, if possible?
Michael Shanks
I was going to come to that point, which has been well made. In both consultations, we are looking internally at how quickly we can turn around the responses. Clearly, there is a balance to be struck, particularly in respect of the consultation on the future of the North sea. It is a hefty document and we expect a significant number of responses, which is a good thing. There is also a balance to be struck between turning around a response quickly and having a credible, detailed look at all the evidence that has been submitted, but we are trying to move as quickly as possible with both consultations.
I want to turn briefly to the point about the future, and the points that a number of Members made about investment in clean energy. It is right to say that the future of the North sea has enormous potential for offshore and floating offshore wind, and for a number of other industries, such as hydrogen and carbon capture. Since coming into government we have moved as fast as possible to drive that forward, including establishing, as the hon. Member for Aberdeenshire North and Moray East (Seamus Logan) mentioned, Great British Energy in Aberdeen—although I cannot help but notice that the SNP did not support that. It is all about driving investment, not just by creating jobs in Great British Energy’s headquarters but through the investments it makes in supply chains and developments throughout the country, particularly in the north-east of Scotland.
We oversaw a record-breaking renewables auction and, as many Members mentioned, we are currently working through the process of the clean industry bonus, which is designed to reward investment in good manufacturing jobs and clean supply chains. This gets to the heart of the point made by many Members about how we bring the benefits of the clean power mission to the UK, delivering the industrial jobs that too often have been missing in our transition. Of course, the clean power action plan will drive £40 billion a year of private investment towards our goal of clean power by 2030.
I am conscious of the time, but I want to reflect on two brief points that the hon. Member for Aberdeen North made in her closing remarks. The first is about listening to communities, which is important, and I will continue to do that, as will my colleagues. The second is about the oversight and management of the plan, which is a question we are looking at. I am always slightly resistant to simply saying that setting up a taskforce or a commission is the answer, but the point that the Just Transition Commission made, and that the hon. Lady also made, is right: we need to grasp it at the heart of Government, and we are actively looking at that.
I again thank the hon. Member for Aberdeen North for her important contribution. The future of the North sea is incredibly important for all our communities, particularly in the north-east, but also for our energy and our economy in a wider sense. We are determined to deliver a credible, just and prosperous plan for the future, for the workforce now and in generations to come.
Kirsty Blackman
I thank all Members, especially the Minister, for their considered comments. This issue is bigger than politics—it is more important than kicking around a political football. I am glad that so many people focused on the jobs. We want to ensure that we can take advantage of the opportunity and not just try to avert total disaster, because there is a prize to be won. I will finish with a quote from Paul de Leeuw from Robert Gordon University, who has said that the “urgency has shifted dramatically.” Therefore, Minister, the time to take action is now, in order to protect those jobs.
Question put and agreed to.
Resolved,
That this House has considered transitional support for North sea oil and gas workers.
Planning and Development: Bedfordshire
(1 day, 14 hours ago)
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Blake Stephenson (Mid Bedfordshire) (Con) [R]
I beg to move,
That this House has considered planning and development in Bedfordshire.
It is a pleasure to serve under your chairmanship, Sir Desmond. Mid Bedfordshire—indeed, all of Bedfordshire —has played its part in delivering new housing. My constituency was once home to the world’s largest brickworks at Stewartby. Our communities bear testament to our brickmaking history, with former clay pits now finding new life as lakes and homes for nature in the Marston Vale forest, and with former industrial sites, including the brickworks at Stewartby and Kempston Hardwick, set to be repurposed as places to deliver the homes and jobs of the future.
In the past month we have also had confirmation of the Luton airport expansion, the announcement of the new Universal UK theme park at Kempston Hardwick in my constituency, and the publication of the Planning and Infrastructure Bill. That comes on top of the recent announcement of East West Rail, work being done to develop local plans in all three of our council areas— I refer Members to my entry in the Register of Members’ Financial Interests as a Central Bedfordshire councillor—and the work of the Government’s new towns taskforce.
In this debate, I hope to highlight the ways in which the planning system can help shape the future of our communities in Bedfordshire, and some of the things that my constituents need assurance on from Government. I want to be clear at the start: I am not a nimby or a blocker, but if the Government are serious about building houses and critical infrastructure, we need to ensure that we do so in a way that is future-proof and resilient.
We need to turn blockers into builders, rather than create a new generation of blockers. In my experience, most of the people whom this Government have labelled as blockers are not ideological obsessives standing in front of the bulldozers of progress; they are people fed up with bad development. They are fed up of developers throwing up housing estates but not building communities, of soulless developments that could be found anywhere, and, most importantly, of developments that worsen quality of life.
Jim Shannon (Strangford) (DUP)
I commend the hon. Member for securing this debate. He has outlined some of the things being done in his constituency, such as using old industrial buildings for apartments. To add to his knowledge, in Northern Ireland we have been repurposing empty buildings in town centres, such as homes above shops—I said that to the Minister in a question just recently. Does the hon. Member agree that is something else that could be used to restore and build up our town centres while ensuring that we are not encroaching upon rural land, as so often happens across the whole United Kingdom?
Blake Stephenson
I absolutely agree. There is a lot of support for brownfield-first development, but also for gently densifying our towns and cities so that we have houses where people want to live within the existing infrastructure.
The Government have been elected with a clear mandate to build, build, build, and I accept that. But I hope that they will do the hard yards to plan, plan, plan, and ensure that the 1.5 million houses that they build are the right houses in the right places, as part of the right communities and with the right infrastructure. It is in that spirit that I bring forward this debate, because Bedfordshire is not a place that is standing still.
I congratulate the Government on completing the negotiations, begun by the previous Government, to secure the new Universal UK theme park at Kempston Hardwick. That will be a game changer for our local economy, and I will continue to support the Government, Universal and our councils as it progresses through the planning system, but to maximise its potential, it will be important to get the infrastructure right. That means we need to plan for the planes, trains, automobiles and accommodation. Through the planning system, we need to see work done to deliver the right accommodation that will be available in Bedfordshire for people to come and stay, hopefully to enjoy Universal and then stay a while in our towns and villages, spending their time and money enjoying everything that Bedfordshire has to offer.
As I noted earlier, I understand that Government have a mandate to “just get on and build”. I have some sympathy for their frustration with Members of Parliament like me who they see as trying to put the brakes on that ambition, but I hope the Minister will recognise that that is not my intention. I believe as fervently as he does that we need to deliver new homes for young people growing up right across Britain, but I believe we must do so in a way that is sensitive to our countryside and our communities, and that delivers the right homes in the right places with the right infrastructure.
The current planning system is not working for anyone. Too often, it blocks good development and allows bad development—development that erodes local character, that builds houses but divides communities, and that comes without the right infrastructure, leaving new residents and old alike frustrated and unwilling to accept the further houses the Government want to deliver in their communities. As this Government’s planning reforms progress, I hope they will take time to consider how the planning system can more effectively protect the character of our towns and villages, and how it can seek to disarm those blockers that the Government are concerned about by addressing the things they are concerned about, not by tying their arms behind their backs. That is a harder job, I accept, but is anything that is worth doing in politics easy?
In Bedfordshire, I would like to see the Government give us the tools through the planning system to protect everything that makes our communities such special places to live—protections for our historic character and our villages, protections for our beautiful and unique countryside against unending and unplanned urban sprawl, and protections for the great British pub; indeed, I would like to see more of them built as our communities expand.
In Mid Bedfordshire, we have always done the right thing and taken our fair share of housing—we have even taken Luton’s surplus housing need. We have done everything we were supposed to do, but our communities suffer the effects of bad development. Still, residents in Maulden see development crawling even further up the slope of the Greensand ridge, as their flood risk steadily worsens. Still, residents in Wixams find themselves fighting for a GP surgery that no one locally seems keen to take ownership of. Still, residents find themselves fighting developers who are keen to pocket the profits of development but less keen to deliver on their promises of well-maintained green spaces, proper flood protections and local amenities.
Alistair Strathern (Hitchin) (Lab)
As a fellow MP representing Central Bedfordshire, I know that while good people can have reasoned debates about the right locations for new housing, no one can defend the lack of infrastructure to keep pace with development that we have seen in parts of Central Bedfordshire. It is therefore all the more surprising that the council has one of the highest levels of unspent section 106 contributions in the country. Does the hon. Member agree that Central Bedfordshire owes it to its residents to ensure it is putting that money to good use, and that we owe it to the council to ensure we are removing all possible barriers to its providing the infrastructure that our residents are crying out for?
Blake Stephenson
Again, I must declare my interest as a Central Bedfordshire councillor. I learned recently of the sums that are held at Central Beds from section 106 contributions. The council is very good at collecting the sums but not necessarily at spending them, particularly in the right places and on the right things. Residents would be keener on development in their local communities if they knew that section 106 contributions would be spent there, not in some other part of the large unitary authority area. I welcome the hon. Gentleman’s intervention and thank him for it.
Worse still, these developers often put in planning applications for big developments, have those fights with the local community, make promises about local infrastructure, secure their planning permission, and then nothing happens. The community sits and waits while more and more other developments get planning permission around them, but the developers do not get on and build the things they have got permission for. Research by the Institute for Public Policy Research found that 1.1 million homes that were given planning permission between 2010 and 2020 were not built by 2024. That is 1.1 million homes that defied the Government’s blockers and got through the planning system but did not get built. So far, this Government seem to have failed to grasp that problem—there is nothing in the Planning and Infrastructure Bill that even acknowledges it. If the Government are determined to block the blockers and back the builders, perhaps they should take some action to stop the blocker builders that are failing to build out planning permissions that they have received, because they are having a real impact.
In Central Bedfordshire, planning inspectors have twice concluded that we cannot demonstrate a five-year land supply in recent months. That means that our countryside now stands virtually unprotected against speculative development, yet our communities have taken more than 20,000 new homes in the past 10 years. The Central Bedfordshire local plan sets out locations for thousands more, but despite its passage four years ago, key strategic sites in that plan sit without a single shovel having been put in the ground. This Government must hold the builders to account to get on and build things, and not put the blame for our broken planning system on my constituents’ desire to avoid flooded homes or see a GP.
Looking ahead, this Government are asking our communities in Bedfordshire to take tens of thousands of additional new homes. That future housing pressure will put our communities under huge additional strain. We need the Government to work with us to do more to ensure that developers deliver what they promise—and deliver it at the right point in development.
Richard Fuller (North Bedfordshire) (Con)
I am grateful to my hon. Friend for securing this debate. He has rightly pointed to the fact that Bedfordshire has been doing more than its fair share of growth for two decades. We are growing at two and a half times the national average, which has put pressure on public services, particularly GP services. Biggleswade in my constituency has been waiting years for a health hub to deal with the growing population. Does my hon. Friend, like me, want to hear a bit more clarity from the Minister today about new towns? The potential for new towns comes on top of the pressure we have from organic growth. Tempsford in my constituency has been highlighted for one of those new towns. We do not know whether the Government plan for that to be a community of 15,000 or 30,000; there are some reports of 250,000. We have no clue whether this Government are committed to infrastructure first, either. What are my hon. Friend’s thoughts on what the Government should be saying now about new towns such as the potential one in Tempsford?
Blake Stephenson
I thank my hon. Friend for that intervention—I forget which positions people have had over the years. I absolutely agree. I will discuss new towns later in my speech; it is important that the Government provide clarity, and clarity soon, on where those new towns will be built. In my constituency too, people want the infrastructure to be built at the right time—before people move into houses, not afterwards. Those promises need to be fulfilled much earlier in the development cycle. I mentioned some of those points just now.
I would like to see the Government either commit to requiring developers to deliver new infrastructure right at the start of development, or consider a programme of investment whereby the Government provide capital funding up front for councils to deliver the promised infrastructure, which they could then claim back directly from developers’ section 106 contributions.
I would like to see the Government go further on flooding, and commit to a ban in all circumstances on development on functional floodplains. New homes mean nothing if they flood. Rivers and valleys have been here longer than we have, and the water that flows through them will not simply get out of the way because of the size of the Government’s mandate. We must ensure that our housing policy keeps houses out of the way and restricts floodplain to amenity and recreational land as part of proper local placemaking strategies.
We must also ensure that the sustainable drainage infrastructure that gets installed with housing is effective and properly maintained. Too often, we see and hear of sustainable drainage systems that are nothing more than overgrown and sometimes blocked ditches, which offer no protection when the rain starts falling. We need a proper strategy to manage them, for example with ownership devolved to properly funded internal drainage boards that can provide expert maintenance. We need to embrace nature-based solutions to flooding—an opportunity presented by the Government’s proposed environmental delivery plans if they are strengthened to include a duty to consider such solutions.
I would like to see the Government commit to properly funding and empowering planners in urban areas with high housing targets to identify and release appropriate sites for urban densification—a point made by the hon. Member for Strangford (Jim Shannon). For too long, urban authorities have been able to restrict land supply and the duty to co-operate to foist urban sprawl on neighbouring rural communities. Development that builds dormitories on our countryside rather than densification in our towns and cities is development that fails us all.
We must end the easy fixes and see a focused strategy to densify our urban areas. In rural Bedfordshire, without such a fix we face a real and significant risk that our villages will be forced under the duty to co-operate to take thousands more homes for Luton in addition to the thousands of homes we took last time. Sticking-plaster planning politics where housing targets mean nothing because they are consistently and repeatedly delivered elsewhere does nothing to resolve the housing crisis and nothing to appease the Government’s blockers, who rightly wonder how it can be fair that they must continue to pay the price for failures in urban areas to deliver targets.
The Minister for Housing and Planning (Matthew Pennycook)
It is a pleasure to serve with you in the Chair, Sir Desmond. I congratulate the hon. Member for Mid Bedfordshire (Blake Stephenson) on securing this debate and on so clearly setting out his case and his concerns about the type of development and infrastructure provision he wants to see in his constituency.
Sustained economic growth is the only route to delivering the improved prosperity our country needs and the higher living standards that working people deserve. That is why it is this Government’s No. 1 mission and why our plan for change commits us to build 1.5 million new homes and fast-track 150 planning decisions on major infrastructure projects in this Parliament.
To support the achievement of those milestones, the Government are progressing an ambitious planning reform agenda. In our first six months in office we overhauled the national planning policy framework to reverse the anti-supply changes made by the previous Government in December 2023 and to introduce a range of new pro-growth measures. Our landmark Planning and Infrastructure Bill, which will speed up and streamline the delivery of new homes and critical infrastructure, had its Second Reading on 24 March and begins its Commons Committee stage tomorrow. We have made a series of other changes, including taking steps to implement a new plan-making system that will help to facilitate sustainable growth, and we intend to announce, and in many cases consult on, further changes to the planning system over the coming weeks and months.
The hon. Member for Mid Bedfordshire raises a wide range of distinct issues, and I intend to cover as many points I can in the time available. However, he will forgive me if I set out at the start that, as I know he will appreciate, due to the quasi-judicial nature of the planning process and the potential decision-making role of the Deputy Prime Minister, I will not be able to comment on individual local development plans or individual planning applications, or for that matter on how individual local planning authorities may interpret national planning policy.
We believe in a plan-led system. As I never fail to say, it is primarily through local development plans that communities can shape decisions about how to deliver the housing and wider development that their areas need, and those plans must remain the cornerstone of our planning system. However, we are clear that local decisions must be about how to meet housing need, not whether to do so at all. As the hon. Gentleman is aware, through the revised national planning policy framework, published on 12 December last year, the Government implemented a new standard method for addressing housing needs to increase supply and better direct new homes to the areas where they are currently least affordable and therefore most needed. I certainly recognise—it is a point well made—the contribution that his constituency and neighbouring constituencies have made to housing supply over recent years.
The revised standard method is now the mandatory starting point for planning for homes. Local planning authorities, including those in the hon. Gentleman’s constituency, are expected to use it, although as I am sure he will be aware, they can seek to justify a lower housing requirement on the basis of local constraints on land availability, development and other relevant matters such as national landscapes, protected habitats and flood-risk areas. We expect local planning authorities to explore all the options to deliver the homes their communities need, including by maximising brownfield land—he will know that we have set out proposals for a brownfield passport to prioritise and accelerate the development of such land—and also by working with neighbouring authorities on cross-boundary housing growth and, where necessary, reviewing green belt.
It is probably worth touching very briefly on the specific areas the hon. Gentleman highlighted about villages and rural areas. The Government are committed to supporting rural communities to build new homes for local people and, in particular, to boost the supply of rural affordable housing. It cannot be right that young people in particular are often unable to remain in the villages they grew up in. That harms not only them and their families, but the vibrancy and long-term viability of those rural communities. That is why national policy promotes sustainable development in rural areas and why we want to see more affordable housing in them. That will also contribute to our wider ambition to deliver the biggest increase in social and affordable house building in a generation.
National policy makes it clear that local authorities should ensure that their planning policies and decisions respond to local circumstances and support housing that reflects local needs. That includes promoting sustainable development in local areas and ensuring that housing is located in areas where it will maintain and enhance the vitality of rural communities.
We also want more affordable housing in rural areas, and have already taken steps to support the delivery of that. For example, our golden rules for green development will ensure an affordable housing contribution 15 percentage points above the highest existing affordable housing requirement that would otherwise apply to the development, subject to a cap of 50%. That will unlock new affordable housing provision in a range of rural locations. Other measures, such as rural exception sites, can also make an important contribution. As I am sure the hon. Gentleman is aware, they allow local authorities to address the housing needs of rural communities by creating sites where local residents and others with a strong family or employment connection can live in affordable homes in perpetuity.
We recognise the strong support for those measures and the potential for strengthening policy in this area. That is why we made clear in our response to the consultation on the revised NPPF that we are giving further consideration to how we can better support rural affordable housing, including through the use of exception sites. That will include consideration of how we can drive greater uptake of rural exception sites and introduce a more streamlined approach. I will set out further details about our thinking on that matter in due course.
The hon. Gentleman and others rightly spoke about the need for up-front infrastructure for development. We recognise the importance of ensuring that new housing development is supported with appropriate infrastructure. He was wrong to say that we have taken no action in this area to date. The revised NPPF, published last year, includes changes designed to improve the provision and modernisation of various types of public infrastructure. He was absolutely right that we need to strengthen the existing system of developer contributions to ensure that new developments provide the necessary infrastructure that communities expect.
Richard Fuller
I am very grateful for the Minister’s thoughtful speech. One of the problems with the provision of public services in Bedfordshire—and, I am sure, some other high-growth areas—is that we are dealing with a backlog, due to the fact that for many years the population has grown too fast for us to provide the additional services. If the Government come forward with a new town in Tempsford, it is important that the Minister addresses the legacy issue—the backlog—as well as the provision for the additional houses that will come with the new town.
Matthew Pennycook
I thank the hon. Gentleman for that point, which is well made. I will certainly note that. We have had discussions about the matter previously.
In general terms, I will make a couple of points about infrastructure provision. First, local development plans should address needs and opportunities in relation to infrastructure, and identify what infrastructure is required and how it can be funded and brought forward. When a local plan is being prepared, practice guidance recommends that local authorities use available evidence about infrastructure requirements to prepare an infrastructure funding statement. I have mentioned some of the other changes that we have made in terms of the NPPF, and hon. Members know that the Government also provide financial support for essential infrastructure in areas of the greatest housing demand through land and infrastructure funding programmes, such as the housing infrastructure fund.
I want to be clear that what we have announced so far is just a first step. We recognise that there is more to do in this area across Government and with the sector to ensure that the right infrastructure gets built. I say gently to Conservative Members that the previous Government did not manage to find a solution to this thorny problem in 14 years. There is no simple and straightforward answer, but we are cognisant of the need to do more in this area, not least to ensure that we get more buy-in from communities for the development we need.
I agree that there is too much bad development, which unhelpfully plays into the yimby/nimby debate— I have never engaged in it because I find it reductive in many ways. Although there is a group of people in the country who want no development whatever anywhere near them—we will happily take them on—there is a far larger group that wants good development, with good amenities and infrastructure. We must therefore ensure that exemplary development is the norm, not the exception, as it is now.
I want to quickly touch on green belt, because the hon. Member for Mid Bedfordshire mentioned urban sprawl. The manifesto on which the Government were elected is clear that the green belt has an important role to play, and that a number of the intentions behind it, including preventing urban sprawl, have served our towns and cities very well over many decades. We will always look to brownfield first. Ours is a brownfield-first approach, as was the previous Government’s, and as I said, we took measures in the NPPF last year to strengthen that approach to brownfield land. We are also consulting on brownfield passports.
However, we have also been clear that there is not enough brownfield land in the country on brownfield registers, let alone in locations that are viable and that can be brought forward, to meet housing demand and need in full. We therefore need to look for a more strategic and smart way to release the right parts of the green belt—primarily and in the first instance low-quality, grey-belt land. Then, because of the value that the public attach to the green belt, we need a clear quid pro quo in terms of golden rules to ensure that sufficient rates of affordable housing and infrastructure come forward.
In the time left to me, I will cover a couple of the other issues raised by the hon. Member for Mid Bedfordshire: the environment, new towns and Universal Studios, although I am limited in what I can say on that final point. He will know that when it comes to development and the environment, we are absolutely convinced that we can do better than the status quo, which too often means both sustainable house building and nature recovery stalling. Instead of seeing environmental protections as a barrier to growth, we want to unlock a win-win for the economy and nature. As he will know, the Planning and Infrastructure Bill will introduce a new nature restoration fund, which will unlock and accelerate development while going beyond neutrality to unlock the positive impact that development can have in driving nature recovery. He has submitted many written questions to me on this point, so he is familiar with our approach, but I look forward to his engagement as the Bill progresses.
Blake Stephenson
Will the Minister take this opportunity to talk about building on flood plains? He may be coming on to this matter, but it is close to the hearts of my constituents and, particularly, constituents in North Bedfordshire. It is important that we do not build houses in areas that are going to flood.
Matthew Pennycook
I will turn to that point briefly in a moment.
On Universal Studios, the Secretary of State for Housing, Communities and Local Government has agreed in principle to consider any proposal. I am sure that the hon. Gentleman will appreciate that, given that the proposals remain subject to a planning decision, I cannot comment on any proposal, because to do so could prejudice the position of the Deputy Prime Minister. However, should the Department receive such a request, it will carry out a proper and impartial consideration of the planning merits of the proposed development.
The hon. Gentleman asked me to address flooding. We are clear that all local plans should be based on the best available flood risk data. The revised NPPF, which we published last year, makes it clear that developments of all sizes should use sustainable drainage techniques where the development could have drainage impacts, and should have appropriate maintenance arrangements in place. These changes will mean that sustainable drainage technologies are taken up more widely in new developments, but I can assure the hon. Gentleman that we continue to explore what further changes might be necessary. On a related matter, to avoid the issue of existing sewers not being able to adequately cope with new developments—we had an extensive debate just a few weeks ago about the investment cycle around the water sector being somewhat out of line with the planning cycle—there is more we can do in this area, and we are giving due consideration to that.
Finally, hon. Members are aware that the Government are committed to bringing forward the next generation of new towns. This Government’s new towns programme will include large-scale stand-alone new communities, as well as a large number of urban extensions and urban regeneration schemes, which will work with the grain of development in a given area. The unifying principle will be that each of the new settlements will contain at least 10,000 homes, although we expect a number to be far larger. Collectively, we expect that they could provide hundreds of thousands more homes in the decades to come.
As I have said in relation to development more generally, we want exemplary development to be the norm, not the exception. The next generation of new towns must be well connected, well designed, sustainable and attractive places where people want to live, and must have all the infrastructure, amenities and services necessary to sustain thriving communities. The new towns code will ensure that they deliver to the highest standards and help to meet housing need by targeting rates of 40% affordable housing, with a focus on genuinely affordable social rented homes.
As hon. Members are aware, last year we established the independent new towns taskforce, which is chaired by Sir Michael Lyons, to support this mission. It will submit its final report, including its final shortlist of recommended sites—I do not have that shortlist to hand, so I cannot tell the hon. Member for North Bedfordshire (Richard Fuller) whether Tempsford or any other site in the country will be the location of a new town—this summer, and then Ministers will select from the recommendations. There will be local buy-in where appropriate, but we are clear that we will make the decisions in the national interest where we need to do so.
Blake Stephenson
Will the Minister confirm whether new towns will contribute to current house building targets or be in addition to them?
Matthew Pennycook
I think I have answered a written question on this matter, but I put it on the record again, because I understand the need for clarity in this area. The Government have been clear, not least because the new towns will begin construction only towards the end of the Parliament, that new towns will deliver over and above the targets produced by the standard method. We will keep under review how the taskforce’s forthcoming recommendations on new towns interact with housing targets across the country.
To conclude, I congratulate the hon. Member for Mid Bedfordshire once again on securing the debate. I thank him for outlining his views on planning and development in his constituency. The Government are committed to establishing a planning system that delivers the homes—
Motion lapsed (Standing Order No. 10(6)).
Intellectual Property: Artificial Intelligence
(1 day, 14 hours ago)
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Mr James Frith (Bury North) (Lab)
I beg to move,
That this House has considered the impact of AI on intellectual property.
It is a pleasure to serve under you, Ms McVey. I am grateful to all colleagues who have joined us here today. None of us will wish to prevent the inevitable, exciting power of change. This is not about resisting that change, but about shaping it, determining what comes next, for what and for whom. The debate grows louder and louder, and more important by the day. Today, I hope that we can begin to mark a landing zone of shared positions.
Our creative industries, with their might and strength, remain deeply alarmed. Copyright is the foundation of their creations, our UK industry and livelihoods, across music, films, books, news, investigations, coding, games, paintings and much more. The Government have made strong commitments to our creative industries, but their upcoming industrial strategy for growth will fall well short of the priority placed on those industries if it does not ensure legal peace of mind and action on artificial intelligence for those creating some of life’s greatest experiences.
The Government and the Minister have said continually that they want creatives to be better paid and better looked after, with licensing in the AI age to come. Given the agreement on the need for licensing and remuneration, why do the loudest AI tech companies expect to train their machines on human-created content for nothing? The Minister has referred to learning the lessons of the Napster age. I ask him: does he agree that it was the assertion of copyright that ensured we live with Spotify, for example, and not a music industry cannibalised by piracy?
Artificial intelligence is reshaping life as we know it. Its extraordinary potential must be built on integrity. Ignoring rights, abandoning trusted status or undermining commercial principles make for bad policy and worse law.
Carolyn Harris (Neath and Swansea East) (Lab)
I congratulate my hon. Friend on securing this debate. Is he aware of the Society of Authors’ petition, which has 50,000 signatures so far, calling for action following Meta’s use of 7.5 million pirated books from the illegal LibGen database to train its Llama 3 AI? That is a blatant infringement of the authors’ copyright.
Mr Frith
My hon. Friend makes a precise and excellent point. Seemingly by the day, we learn of whole sections of our creative industries having their work ripped off. I will come on to what we need to do.
We need an assertion of first principles: economic fairness and an honest day’s pay for an honest day’s work—the cost of doing business and paying one’s way. Our mission for our creative industries cannot mean creative industry submission. The opportunity plan will not work if our creative industries are the opportunity cost. As Labour, we back the working people who make our creative industries so powerful.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
I thank my hon. Friend for securing this debate, because many of my Slough constituents have contacted me with concerns about the impact of AI on the intellectual property of creatives. We have a thriving UK creative industry, which contributed more than £120 billion to our economy in 2022. Just down the road from Slough, we have Pinewood studios and Shinfield studios, which have given us global hits over the years. Does my hon. Friend agree that those industries must be listened to properly before any legislative changes, to ensure that the film, book, media and other creative industries can continue to thrive?
Mr Frith
My hon. Friend makes an excellent point and demonstrates both the economic might of these industries—the sheer size of their contribution—and the fact that this is Britain’s best industry, giving some of the best life experiences. I know how well my hon. Friend is thought of.
Creative industries must not be expected to forfeit their legal rights for uncertainty. There is no doubt that AI will unlock huge gains in our society. The story some tell is selective, though. We are told that only if we deregulate will we unlock the AI economic growth, that the UK must hurry up or fall behind and that regulation will only slow us down, but the urgency to get the deal done is theirs. It is no coincidence that this hurrying up has intensified as the first US judgment has found that AI training is not deemed fair use.
Liam Conlon (Beckenham and Penge) (Lab)
Does my hon. Friend agree that the creative industries have shown us that they are willing to engage and embrace AI? The Financial Times was the first UK publisher to sign a licensing agreement with OpenAI, and Shutterstock has just this month signed a research licence with Synthesia, a London-based AI start-up. Does my hon. Friend agree that we should seek to create a framework that facilitates more of these deals and ensures that small, independent creatives can access them, too?
Mr Frith
My hon. Friend makes an excellent point. It is fundamental to future coexistence that the licensing and legal peace of mind that the industry requires, and is seeking, is uppermost in any future position that the Government take.
Let us take a closer look. We know that behind the AI models being created and trained are massive datasets, which are not built on transparency and trust, but on the unpaid labour of creators. Our concern must be to grasp the progress that AI presents, but not by dismantling or destroying a sector already giving Britain such substantial economic, cultural and social capital, both here and around the world. We are the creative superpower and our cultural exports are world class. Our IP industries are high-value, high-skilled and globally admired. Creative industries are not seeking to change the rules of the game; all they want is their rights to be upheld—rights that underpin the very licensing and remuneration that the Government have assured us, in person, are fundamental to any settled position.
The problem, though, is not uncertainty in the law, it is the opacity in the technology. UK copyright law is clear: if someone uses someone else’s work without permission, that is infringement. Arguments that cite complexity in an age of AI ignore the capabilities of the very web crawling under way.
Emily Darlington (Milton Keynes Central) (Lab)
I thank my hon. Friend for securing this important debate—we can see how important it is by the huge amount of people who have come to see the debate and who want to speak in it. Is he aware of the recent DACS survey of visual artists, most of whom live on pay under the minimum wage? That survey showed that 84% of artists would agree to license their work for fair remuneration. That would require a technical solution that is embedded in the metadata that is respected by AI and platforms. At the moment, anything uploaded on to our social media platforms has that metadata scraped. Does my he agree that, in looking for solutions, the Government need to make sure that we legislate with that in mind?
Mr Frith
I agree, and as I am about to say, there is ample proof of the stripping away of that very metadata, which could be the identifying feature when it is being used and scraped. With AI models, rights holders cannot see what is being used. This is not a crisis of legislation; it is an absence of transparency, attribution and recompense for the very content and resource that those giant machines are being built with and from.
Wendy Chamberlain (North East Fife) (LD)
I very much agree with the hon. Gentleman. The problem is not copyright law, but transparency and enforcement. My constituent Marion Todd, the author of the Detective Inspector Clare Mackay novels, found herself subject to LibGen, which the hon. Member for Neath and Swansea East (Carolyn Harris) referred to. Does the hon. Member for Bury North (Mr Frith) agree that we need a full response from Meta, and that the new clauses that the Lib Dems have tabled will address future compliance?
Mr Frith
I thank the hon. Lady for her intervention; I will expand on her point about transparency.
We must have transparency, and it needs to be granular, enforceable and practical. AI developers must be required to disclose which copyrighted works they used to train or fine-tune their models. TollBit’s “State of the Bots” report confirms:
“Whilst every AI developer with a published policy claims its crawlers respect the robots exclusion protocol, TollBit data finds that in many instances bots continue scraping despite explicit disallow requests for those user agents in publishers’ robots.txt files”.
Many AI companies say that this need not hamper AI, and it is their voices that I wish to amplify today. This is about creating a fair, functioning market for training data that benefits all sectors. Last month’s YouGov survey of MPs and the general public agrees: 92% of MPs believe that AI companies should declare the data used to train their models, 85% say that using creative work without pay undermines intellectual property rights, and 79% support payments to creators whose work is used in training. The public expect us to do our best for our UK industries, and that is why we are square behind the Government’s instincts on British Steel. Let us apply the Government’s instinct here, too, as well as their strong record and rhetoric on digital images, deepfakes, online harms and the principle that if it is illegal offline, it is illegal online.
Big tech always begins on the fringes before being regulated to the centre. We saw that most recently with age verification on app stores. Will the Minister commit to table Government amendments to the Data (Use and Access) Bill, in recognition of these supermassive concerns, to introduce a power to regulate for transparency, consent, copyright and compensation?
Mr Dhesi
My hon. Friend is making a very hard-hitting speech. Any reforms we introduce should ensure that artificial intelligence companies are more transparent about the materials they use to train their AI tools. Does my hon. Friend agree that that would benefit the development of AI while ensuring adequate protections for the creative industries and individuals’ intellectual property?
Mr Frith
It is absolutely imperative that we strike the right balance. This is not about pitting one side against the other; it is about coexistence and mutual interdependence.
Will the Minister consider introducing a stronger framework for personality rights under the data Bill, as proposed by Equity and the wider creative sector, to improve protections against the illegal exploitation of artistic works by generative AI companies? Will he also explain why the position is still to bundle transparency in with copyright?
The stories are increasingly familiar: entire creations and careers are copied and remixed into data, while the original human creator and rights owner is left out of the conversation entirely. One visitor I met from big tech likened the training of an AI on copyrighted work to the use of a library, but that argument dries up when we remember that libraries pay for their books, and it wilfully ignores the scalability differences between machine learning and human inspiration. If a warehouse traded in stolen guitars or paintings, we would expect action, but in digital form online, theft is somehow not just tolerated but to be expected. The logic that the creative industry feels it is being asked to swallow is that because tech saw it, read it or heard it, it can have it, own it and resell it.
Copyright is not an obstacle but infrastructure—a cornerstone of the British economy. As colleagues said, it makes possible the £1.24 billion contribution to UK plc. We should not be weakening it with vague exceptions or opt-out regimes. The Berne convention, signed by more than 180 countries, makes it clear that creators must not have to exert their rights for them to exist, and they should not have to sue to keep them. This violation of international copyright norms will undermine international relations and investment in our country. It will see capital take flight and cause economic damage.
I would like to introduce a new thought to the Minister: please consider the relationship with managed risk and the freedom of expression in a regulated model that creativity needs and relies on. Creatives take risks, and express themselves freely. For growth, we need an economy of risk takers with the freedom to express without fear that they will be ripped off. Without the legal frameworks that protect copyright, risk will not be embraced and creativity will dry up or move away. That is why there is so little faith in an opt-out model, or a strategic direction placing the burden on individual creators to prevent their work from being taken by tech. A technical solution does not yet exist to make such opt-outs meaningful. As they emerge, the same concerns and questions will need answering.
Worldwide, there is no comparable territory where this matter is settled. No functioning rights reservation has emerged in the EU, and in the US, further litigation is rife. California, the home of silicon valley, has a carve out—they do not get high on their own supply. The Chancellor and the leadership of our Government are right to propose on the world stage that the UK is a safe and certain bet for investment, but being the UK branch for US tech demands will not deliver that. New growth must ensure net growth. Industrial-scale unregulated scraping is not innovation; it is infringement. It erodes the commercial certainty that serious investors need.
In the regulation space, we have exciting growth opportunities in the emerging AI licensing sector. They demonstrate that copyright is well understood, and that there are scalable possibilities for licensing and ethical AI here in the UK. The emergence of platforms such as Created by Humans, Narrativ, ProRata, Getty Images, Musiio, Adobe and We Are Human, and relationships between Sony Music and Vermillio, Universal Music and SoundLabs, Lionsgate and Runway, and news publishers and Microsoft all point to new licensing with a duty of candour. With these examples, will the Minister confirm if the Government are considering building new foundational models led and built by UK AI firms?
In conclusion, this rapid technological change demands that we confront the decisions in front of us as a creative powerhouse. In this defining moment, we must stand with those whose creativity shapes our culture, economy and shared human story. Algorithms may calculate, but it is the human creativity behind it all that pours heart, history, hope and the human into and out of every note, frame and story. AI cannot be allowed to redefine the soul of creation. If we erode the rights that protect our creators, we risk not only economic loss but strangulation of those voices that tell our stories, reflect our struggles and inspire our futures. Let us affirm that in Britain we value not just innovation but the irreplaceable human spirit behind creativity, and protect the rights that mean that we thrive, for now and for generations yet to imagine, to dream and to create.
Several hon. Members rose—
Esther McVey (in the Chair)
Order. This is a well-attended debate, but I hope to get everybody in. I have spoken to the Front Benchers: the Minister will have 10 minutes, and the Opposition spokespeople have agreed to go down to five minutes, so there will be a limit of three minutes per speech for Back Benchers. I hope that all hon. Members will be suitably aware of their fellow Members who want to speak, and I ask that interventions be interventions and not speeches, or I will stop you.
Dame Caroline Dinenage (Gosport) (Con)
It is a pleasure to serve under your stewardship, Ms McVey. I congratulate the hon. Member for Bury North (Mr Frith) not only on securing this debate, and an excellent opening speech, but on his birthday.
One of the saddest things about this debate, and the pickle that the Government have led us into, is that it inadvertently pitches the AI sector and the potential for growth against our world-leading creative industries. That almost caricatures our creators as luddites against innovation, and that could not be further from the truth. There is no appetite in the creative industries to restrict this technology across the sector. They recognise the potential of AI—so many are already using it, and that is borne out in the statistics. In 2023, a Deloitte survey said that 74% of digital artists are already using AI, along with 67% of film and motion creatives. Those numbers will only grow over time.
We hear from almost every quarter about the serious concerns over our £130 billion creative industries—that AI, left unchecked, will represent an existential threat to their growth and very existence. Incidentally, that growth has outstripped that of the wider economy since 2010. Despite the potential of AI, we know that our creative industries are growing at an incredible rate. They are our global superpower—economically and reputationally, and that does not happen by accident. Those industries rely on the strength of a gold-standard British intellectual property regime, and they have made it clear to the Minister—and to every one of us in this room—that watering that down would rip the carpet out from under a tried and tested growth industry.
AI needs creators and the data they provide—but that data must be paid for, not stolen. Ironically, big tech relies on the strong IP regime as well; I am sure no one was more surprised than I was when Sam Altman at OpenAI noted, with irony, that DeepSeek had exploited its open-source model.
The Minister and I agree that the best way forward is to promote transparency across the AI sector. Where we disagree is on the Government’s prepared proposal for an opt-out system, which is utterly unworkable. That has been proven internationally. If they press on with this madness, we must find a way to safeguard the rights of creators by explicitly demonstrating where their work has been used in a commercial setting.
AI growth must not come at the cost of our creators and our world-leading creative industries. The two do not have to be mutually exclusive; there must be an opportunity here for this to be a country where both can flourish, in a transparent and accountable environment where everyone’s talents are recognised. I ask the Minister once again to think long and hard before he does anything that could rip up the potential of our world-leading creative industries. Both can grow collaboratively and make this country so much stronger.
Ms Polly Billington (East Thanet) (Lab)
It is an honour to serve under your chairmanship, Ms McVey. I first declare an interest: my wife is a professional photographer.
People who create art in any form add value to the world. They inspire people, provoke ideas and push boundaries—and deserve to be fairly paid for it. In East Thanet alone, we have the famous names of J. M. W Turner, Vincent van Gogh, Charles Dickens, Wilkie Collins and Jane Austen—all inspired by that constituency, all having called it home. Current creatives who live there must be paid to be able to do the same.
The image of an artist in a garret has become romanticised to the point that it is almost used as an excuse not to pay creatives properly. The Government are currently taking the Employment Rights Bill through its legislative stages and, once introduced, it will be genuinely transformative for people in low-paid and insecure work.
Simultaneously, the Government are consulting on proposals that could actively take away rights and protections from creative workers. The right to have one’s work protected by copyright law is enshrined in British law. Copyright exists to protect not just the wealth of the individual but the wealth of the nation. It is fundamental to the success of innovators, entrepreneurs and creatives—and it is fundamental to our economy. The claim that AI and tech firms will take their business somewhere else if they do not have free access to people’s work is, quite frankly, extortion. We do not expect or allow other industries to do that, so why do we think it is acceptable to force creatives to accept this deal?
I am not here to defend the status of our copyright laws—we are not starting from a high baseline in this country. Sadly, creatives are all too used to being ripped off and taken advantage of. The Government have acknowledged that our copyright regime is out of date, and I absolutely agree. However, it cannot be right that the answer is simply to make it harder for creatives—to make low-paid work even less rewarding and insecure work even more insecure.
If we choose to modernise copyright law to increase protections for our national cultural wealth, we can turbo-charge the growth potential of this industry. Currently, we are on a path to undermine an industry that is already insecure. One of the staples of British values is fairness; if someone does a fair day’s work, they get a fair day’s pay. Not only is allowing creatives to have their protection eroded not fair, but it is simply not British. We ask for simple fairness, the right to permit or protect, and the right to be paid.
Pete Wishart (Perth and Kinross-shire) (SNP)
It is a pleasure to serve under your chairship this afternoon, Ms McVey. I congratulate the hon. Member for Bury North (Mr Frith) not only on this debate, but on his birthday—I hope he goes on to enjoy himself much more than sitting in Westminster Hall for the rest of the day.
Of all the issues that the Government thought they would be confronting nine months after being elected, I do not think they thought they would be in some sort of spat with the creative industries, finding that they, almost as one voice, have real difficulties and issues with the Government initiative.
First, we have to pay tribute to the wonderful campaign that has been mounted over the past few weeks and months from all our artists and creatives. When everybody from Thom Yorke to Rupert Murdoch, from Paul McCartney to the director general of the BBC is upset, there really are difficulties. The Government asked the creative industries what they thought of their proposals, particularly of their preferred opt-out plan, and like a finely tuned chorus, the creative sector came back as one and told them it does not like it one bit.
Our constituents have been magnificent in the way that they have responded. For the 20-odd years I have been in Parliament I have tried to evangelise about the role of IP and the value of copyright, but one thing that has come out of this consultation is that, inadvertently, this Government’s clumsy attempt to martial this debate has made our constituents realise the value of copyright. They have got behind it and started to understand it and see that it is the basis of all the wonderful works they enjoy throughout their lives. They know it is our gold-standard copyright regime that gives our artists protection and renumeration and ensures that they are rewarded for producing all these wonderful works. One good thing that has come out of this is that the value of copyright has now started to be seen by all our constituents.
The Government are sincere in trying to bridge the gap between artificial intelligence and the creative industries, and they want to satisfy all sectors, but we have to see what we are up against—just have a look at some of the big tech companies’ submissions to the consultation. Have a look at OpenAI’s submission—even the opt-out proposal is too far for it; it wants unfettered access to our cultural treasure trove, without any inhibitions or difficulty. The first thing that the Minister has to say to the big AI companies is that our creative heritage—everything we have built in the past few decades—is not there to be plundered and taken for nothing.
We must make progress, and I really hope that the Government now decide that they will not pursue the opt-out proposal—it cannot work; there is no way that it could be a technical solution. We have seen that within the EU. The Government have to drop it. Look at this licensing system—the Minister has talked about it consistently in the past few weeks and months. Let us make sure that we unravel the idea of copyright from that of transparency; we have to make sure that those are separated. Let us use the Data (Use and Access) Bill—it is there in front of us, so why cannot we use it to make real progress on this issue?
Alison Hume (Scarborough and Whitby) (Lab)
It is a pleasure to serve under your chairship, Ms McVey. I congratulate my hon. Friend the Member for Bury North (Mr Frith) on securing this timely and important debate. I would like to draw Members’ attention to my membership of the Writers’ Guild of Great Britain.
I hope Members had a restful Easter break. Many writers particularly look forward to Easter every year, not least because of the eggs, but towards the end of March we see the payment from the Authors’ Licensing and Collecting Society land in our bank accounts. For writers who depend on payments for secondary uses of their work, that money is a vital income stream in what is a harsh freelance existence. I love seeing where my television dramas that I wrote many years ago have been shown; this year I learned that Swedish children had watched my UK-based science fiction series set in a world without adults. Creativity knows no boundaries but neither, it seems, does generative AI.
Collection societies such as the ALCS and those representing other creative working people ensure that we receive fair payment, and that our rights are respected. The ALCS has paid out £700 million to writers since 1977. The point that I rise to make is that many scripts end up on the internet, along with novels, books and other published work. The Government have proposed the introduction of a text and data mining copyright exception that would allow AI developers to use copyrighted works without explicit prior consent. One of the arguments put forward for that exception is that we need it because licensing does not work—but licensing does work. Rights-holders have been licensing their works to commercial users for over a century, adapting to emerging technologies and meeting the demand for multi-territorial licensing. Moreover, licensing is proven to provide commercial users with the legal certainty required for investment, while also protecting creators and rights-holders from unauthorised exploitation.
We cannot allow a lifetime of human creative endeavour to be gobbled up for free by the bots. This is the opportunity for the UK Government to lead from the front by ensuring that the Data (Use and Access) Bill includes granular transparency requirements so that AI companies must disclose what they use for free, and to put a stop to the unregulated scraping of creative content online. Freelancers are looking to this Labour Government to ensure that they are fairly rewarded for their work. We must protect our creative working people and ensure that their work pays, too.
Jim Shannon (Strangford) (DUP)
It is a pleasure to serve under your chairship, Ms McVey, and I congratulate the hon. Member for Bury North (Mr Frith) on setting the scene so very well.
I believe that we sit at the crossroads of cutting-edge technology and the legal frameworks that govern creativity with the different ways in which artificial intelligence impacts on intellectual property rights. In the United Kingdom of Great Britain and Northern Ireland, we can boast a historically strong and thriving culture of creativity across a very broad spectrum of the arts, science and technology. It is very important that we consider this issue.
Advancements in AI raise important questions about the protection of intellectual property, because who owns the output of an AI system? Is it the user, the developer, or the AI proprietor? Such questions inspire debate in boardrooms, courtrooms and centres of policymaking across the United Kingdom. In 2020, a UK-based artist used an AI tool to create a series of digital paintings that drew significant attention at a London gallery. The question that arose was this: who owns the copyright? The artist who used the AI technology, the developer of the AI system, or no one at all?
The current law, section 9(3) of the Copyright, Designs and Patents Act 1988, states:
“In the case of a…work which is computer-generated, the author shall be taken to be the person by whom the arrangements necessary for the creation of the work are undertaken.”
The problem with that, of course, is that it was written decades ago, before such technology as AI was even thought about. The challenge is when we address the nuances of today’s AI systems, where creativity is often a joint effort of human input and machine output.
The outcome of the consultation is important, because it will shape the creative industries for years to come. As the UK is a global hub for technology and law, with institutions such as the Intellectual Property Office and a thriving creative economy, it can set the precedent for how AI and intellectual property can co-exist. I believe that the first step must be legal clarity; we should revisit the 1988 Act specifically to address AI-generated works and conventions by creating a new category that pertains to AI-assisted intellectual property, with its own rules, including on ownership. We should also invest in education to empower creators and businesses to navigate the evolving intellectual property landscape. Finally, we need to balance innovation with fairness. As AI reshapes the landscape, we must ensure that the benefits of AI-driven innovation are shared in a way that is equitable and that does not place a monopoly of power in the hands of an elite few or restrict raw human integrity.
We should embrace this moment as an opportunity to redefine intellectual property for the age of AI and a future where technology and human enterprise work hand in hand to create a more resourceful and ambitious society. The time to start doing that is this day and in this debate.
Steve Race (Exeter) (Lab)
It is a pleasure to serve under your chairmanship, Ms McVey, and I congratulate my hon. Friend the Member for Bury North (Mr Frith) on securing this debate, particularly as it is his birthday. The debate comes at an important time for the country as we grapple with the ways in which we can continue to nurture our fantastically successful creative and cultural sector, and supercharge our economy with the opportunities that AI offers.
Across Devon, our creative industries contribute more than £250 million to the local economy every year, and support more than 11,000 jobs, with hubs in my city of Exeter, Plymouth, Totnes and our coastal towns, where there is a thriving festival scene. The sector is not only economically significant but deeply rooted in our communities. It is powered in our region by freelancers, microbusinesses and independent venues. It is also a driving force in regional regeneration and tourism.
Exeter is a shining example of what creative investment can achieve. As a UNESCO city of literature, it stands among a global network of places that recognise the power of human words to connect, include and inspire. Exeter’s literary legacy stretches back over 1,000 years from the 10th century Exeter Book to the dynamic work of contemporary writers and festivals today. Our city holds institutions such as the Exeter Phoenix, the Royal Albert Memorial Museum, Exeter library and the Quay Words writing hub. They are not just cultural assets, they are civic anchors promoting literacy, community engagement and creative opportunity for all.
We also have a thriving digital and gaming scene, a world-class climate science sector and a burgeoning life sciences economy. Creative tech includes an emerging immersive media, film and digital design sector across the city and the wider region. Although we have a creative economy that we want to grow, we also want to seize the opportunity of AI, which is able to change completely the way our economy works and will supercharge our science and creative tech sectors as well.
The Government are already creating space for those opportunities with the AI opportunities action plan. I have written to the Department in support of the Exeter science park’s application to host a new AI growth zone. Building the UK’s sovereign compute capacity to enable UK-based AI models and cloud computing across the country, including in Exeter, will be vital to securing the investment, jobs and future tech creativity that will continue to shape our lives, and meet some of the great challenges of our times, including the very greatest—climate change.
That must be built fairly, however, and not at the expense of human creators. I am a member of the Science, Innovation and Technology Committee, and we recently held a joint session with our Culture, Media and Sport Committee colleagues to delve further into these issues. I support our joint submission to the Minister on that basis. I want to ensure that the Government are working hard to find a balance between protecting the rights and nurturing the growth of our cultural and creative sector, while also grasping the opportunities of UK-based AI development.
Will the Minister commit to working with stakeholders involved in the area, cultural and technological, to build a system—possibly a globally unique and groundbreaking system that will be embraced by others in the future—built on technological solutions, providing granular transparency, consent, fair remuneration, and respecting and building on our copyright laws while also enabling AI training models to be built and trained here?
Vikki Slade (Mid Dorset and North Poole) (LD)
It is a pleasure to serve under your chairship, Ms McVey. I thank the hon. Member for Bury North (Mr Frith) for securing this important and timely debate, not only on his birthday but on that of one of our greatest creatives ever, William Shakespeare. I hope the hon. Member does not also succumb on his birthday like he did. [Interruption.] Did he not know that? Shakespeare was born and died on the same date.
My son, Isaac Slade, is studying musical theatre at university and wants to spend his life in the performing arts, a career he knows will be challenging. He and his peers expect long hours, low pay and the need to support themselves with hospitality and teaching work, all so that they can do what they love and entertain us all. The Government’s current position on copyright and AI risks making those careers even more precarious.
Gerard, an actor from Upton in my constituency, wrote to me calling the position dangerous. Margaret, a designer, explained that she no longer shares her work online. She is afraid it will be copied without her consent, without protection and without pay. She said:
“If this is allowed to happen, we shall become a dying breed. If we don’t get paid for our artwork, we will eventually go out of business.”
Are the Government suggesting that performers and creatives should work for free? I recently held a roundtable in my constituency when a musician, Peter from Wimborne, shared something that shocked me. He told me that when I am out walking my dog, listening to my calming classical playlist, the chances are that some of that music has been interspersed with AI-generated music. I had no idea. I am sure most people would be deeply concerned to learn that they might unknowingly be enjoying work taken and replicated without the original artist’s permission.
Today I met Equity, who explained the risks in very simple terms. Just as PRS ensures musicians are paid when their track is played on the radio, the same principle applies to the use of a voice or performance on screen. But without those solid copyright positions remaining in place, AI will use that voice without their knowledge, consent, or payment from people around the world.
The Government argue that loosening copyright laws may encourage AI companies to set up here, but where is the evidence? Why would they move here where their costs are higher if they can access that content from around the world? If they do come here, why should they be able to get rich off the voice of an actor, the song of a musician or the design of an artist? The people who created the work deserve to keep what is theirs. That is why I urge the Government to scrap the opt-out clause and support new clauses 2 to 6 to the Data (Use and Access) Bill, tabled by my hon. Friend the Member for Harpenden and Berkhamsted (Victoria Collins), which will protect UK creatives by requiring transparency in using the data, enforcing compliance of copyright, giving power to the Information Commissioner and preventing data from being scraped. Our creative sector is the soul of our culture and the heart of our economy. We must protect it.
Lizzi Collinge (Morecambe and Lunesdale) (Lab)
It is a pleasure to serve under your chairship, Ms McVey. I thank my hon. Friend the Member for Bury North (Mr Frith) for securing this important debate.
The question about machine learning tools—AI—and their use in intellectual property is a key test of our time. What we decide to do now will have ramifications culturally, socially and economically long into the future. Large language models, a form of machine learning such as ChatGPT, have already used pirated and copyrighted material without the consent of the people who created it to train their models. It should be self-evident that that is a problem. It is a well-established right that people retain ownership of their work, with limited exceptions for education or critique. We have clear copyright laws. We have collective licensing schemes, yet those have been ridden over roughshod by machine learning developers.
I am not a luddite. I am very excited about the potential for machine learning to make our lives better, just as other technology has done before. The potential for large datasets to identify health concerns and make diagnostics more accurate—with a programme able to predict the folds of proteins, saving scientists time that they can spend on the next thorny issue—is exciting stuff. It is important to remember that technology is morally neutral. The technology itself is not good or bad. It is a tool—nothing more, nothing less—and we as humanity get to decide how we use that tool. To use that tool, we need to understand it, at least in terms of how we interact with it.
For example, we need to know that AI can lie. It will invent things. One of the best examples I have heard was when a large language model tool was asked by a huge “Doctor Who” fan to tell him about “Doctor Who” episodes and it simply made some up—perfectly plausible episodes that did not exist and have never existed. If anyone here is ever tempted to ask ChatGPT, be warned: it might not tell you the truth.
As well as understanding the potential and limitations of the technology itself, it is also important that we create frameworks that align with our values and do not roll over for mega-corporations that really do not care for our values. Meta, which owns Facebook, has argued that individual creative works have no value in themselves as they individually barely affect the performance of large language models. As a Vanity Fair article pointed out, it is a bit like an orchestra arguing that it should not pay an individual musician because the solo bassoon cannot play the whole piece by itself.
If large language model tech as a whole relies on creative works, and it does, then some form of respect for the rights of creatives must be found. We have existing copyright laws. We could simply enforce them and ensure that the tools are there to do so. I urge the Government to treat machine learning for what it is: a tool to be used well or used badly. Let us choose well.
John McDonnell (Hayes and Harlington) (Ind)
I am the secretary of the National Union of Journalists parliamentary group and have worked with Equity through the Performance Alliance and the Musicians’ Union for the last 25 years. I just want to get on the record the union perspective. As other Members have said, often in these debates the workers have been portrayed as luddites. It is quite the reverse; it is the workers who are creating these mechanisms.
As hon. Members have said, all that the trade unionists are asking for is for their rights to be protected—protected through collective bargaining, which is the mechanism that we have used for over a century for negotiations between the trade unions and the trade associations. The request is straightforward: that copyright law should be respected. The hon. Member for Bury North (Mr Frith), who secured the debate, eloquently and comprehensively set out that that law is actually not unclear or disputed—it exists. The simple rule is that if someone wants to use someone else’s material, they must secure a licence with the rights holder. As a result, through that collective bargaining mechanism, we can protect everybody in future.
Ms Billington
Copyright is often enforced by people who have licensing departments to enforce it, but smaller creatives, such as many in my constituency, find it extremely difficult to enforce copyright as it currently stands. That is one reason why we should use this opportunity to strengthen our copyright law to protect those low-paid workers.
John McDonnell
That is exactly right. One of the key issues raised by the hon. Member for Bury North is that lack of transparency, because people are not even aware that their stuff is being used until a later date, and then they are outraged. The role of Government is to ensure that they can enforce that the AI being developed is compliant with the regulations. In addition to that, as has been mentioned, the Information Commissioner has made very clear the role of GDPR and how it applies in such cases, and that the issue is about ensuring, from Government, that there is proper enforcement.
The simple message from this debate to the Minister is to just drop the Government’s proposed text and data exception. Several hon. Members have made it clear that nobody has discovered an effective opt-out mechanism that is applicable at this time—maybe some time in the future, but certainly not in the immediate future.
The other issue is that the performers’ rights framework needs to be updated now. That demand has come from virtually every trade union, and other bodies representing individual artists as well. That is the debate we should be having—about how we could update and improve that framework, and about enforcing existing GDPR.
One of the briefings that I saw said that this country is a gold mine of creativity and creative content. Well, at the moment, there is a gold rush on. It is a wild west out there, and the people benefiting are the big US tech companies. I do not want to push the analogy too far, but we need a sheriff. That is the role of Government; the Government should not be taking us backwards rather than moving us forwards.
I hope that the Minister leaves this debate with a full understanding of the tenor not just of what is needed, but of the cross-party strength of feeling. We need the Government to intervene positively to protect people’s rights and to protect that gold mine of creativity in this country.
Samantha Niblett (South Derbyshire) (Lab)
It is an honour to serve under your chairship, Ms McVey, and I thank my hon. Friend the Member for Bury North (Mr Frith) for securing this crucial debate—a great way to spend his birthday.
I want to draw attention to the fact that my partner works in publishing. My background is not in publishing or the creative industries, but in the data and tech industry, and I am excited by what it can help us to achieve. I rise to speak not only about artificial intelligence, but about the kind of country we want to be in the decades ahead. We are at a crossroads. The United Kingdom is positioning itself as a global leader in AI, and rightly so—AI has the potential to transform every sector of our economy, from healthcare to transport and from education to climate science—but, as we drive innovation forward, we must also ensure that our values are aligned.
If we want to be the best place in the world to start, scale and grow an AI company, we must also be the most trusted. Trust is not built through ambition alone; it is built through transparency, fairness, respect for the rule of law and the protection of intellectual property. At present, many of the most powerful AI models have been trained on vast quantities of copyrighted material—books, articles, art, music and software—and often without the consent, knowledge or compensation of the people who created it. That is not hypothetical; it is happening now. In the last week, we have seen some big names in tech say that they want IP law to be ripped up altogether. I wonder how they would feel if tech firms with deeper pockets and bigger legal teams than theirs decided to simply take what they have. Pulling up the ladder of IP law may no longer seem such an attractive prospect.
Let us be absolutely clear: copyright is not an inconvenience or a technicality. It is the legal and moral framework that ensures that creators are rewarded for their contributions. Some people will argue that requiring AI companies to comply with copyright law would hinder innovation, but the opposite is true: legal certainty enables innovation. What stifles innovation is a regulatory vacuum where only the largest, best resourced firms can afford to operate in the grey areas of the law. We should not accept a model where creativity becomes collateral damage in the pursuit of speed or short-term profit for shareholders. Governments must prioritise the concerns of citizens.
Let us establish a clear, transparent and enforceable framework for the use of copyrighted content in AI training, and let us not waste any time or kick this can down the road by waiting for the results of the copyright and AI consultation. Let us act now. Let us amend the Data (Use and Access) Bill to ensure that companies providing generative AI services in the UK must comply with UK copyright law and be transparent about the data fuelling their models. After all, they should know what data they are utilising. It can be done; companies including Adobe, 273 Ventures and Flawless AI are doing it. Experts have made it clear that no opt-out models work. We have an opportunity to be world leaders—let us lead.
Natasha Irons (Croydon East) (Lab)
It is an honour to serve under your chairmanship, Ms McVey. I thank my hon. Friend the Member for Bury North (Mr Frith) for securing this important debate. I should declare that my husband is a voiceover artist.
As with every technological leap forward, whether from theatre to cinema or television to streaming, protecting the rights and income of our creators does not create a barrier to innovation or growth. As we move into an AI-powered future, it is even more crucial to protect creators with transparency, consent and compensation for the content used to train AI models.
Our creative industries are a great British success story, worth more than £125 billion to the UK economy and supporting more than 2.4 million jobs. What underpins that success is the principle that those who create content are paid for it, and copyright protections have been the bedrock of that principle for decades. The case for updating UK copyright law for training AI is that the current framework is unclear, but there is no such ambiguity. If someone plays music in a club without a licence or sells counterfeit DVDs, they are breaking the law. If AI companies wish to train their models on copyrighted content, they have to get consent to do so.
AI companies may be harder to hold to account because their models are opaque, but that makes this a transparency and enforcement issue, not a legal one. Our content, our books, our journalism and our music are the oil needed to fuel generative AI systems. I do not think anyone would argue that oil should be mined and used for free by any other industry, so why should it be any different for the precious resource that is creative content? Creating generative AI systems with no accountability and no remuneration is not innovation; it is simply exploitation.
I welcome this Government’s commitment to our creative industries and to finding a solution fit for the future, but the current proposal of an opt-out system is unworkable and unfair. The Government even acknowledge that the technology to implement an opt-out system does not exist. We must uphold the rights of our content creators by upholding copyright protections and giving creators the transparency, consent and compensation they deserve.
Anneliese Midgley (Knowsley) (Lab)
It is a pleasure to serve under your chairmanship, Ms McVey. I thank my hon. Friend the Member for Bury North (Mr Frith) for securing this debate and wish him a happy birthday. I refer Members to my entry in the Register of Members’ Financial Interests: I am a member of the Musicians’ Union. Long ago, I worked in the music industry, so I know musicians not as headlines or playlists, but as people. Most of all, I am a fan—a fan of what they make and of what their work means to our shared national life—but I am inundated with concerns from them. Their fears are immediate and tangible, because the truth is that the music industry has long enabled the legal and largely unchallenged exploitation of those who make music.
Streaming has gutted the income of songwriters and performers. More than half of professional musicians now earn less than £15,000 a year, which is much less than the minimum wage. Their songs are played more than ever, but they are not seeing the money; someone else is. If copyright law is not handled correctly, musicians will once again lose out—used, imitated, unpaid.
Any serious discussion about AI must include a clear demand for transparency from companies developing such tools. Creatives deserve to know when and how their work is being used. Without that, there can be no fairness. To me, it is very simple: no one should be allowed to use someone’s work without permission or payment. That is called theft. Sidelining the creative sector that already exists comes with a bill, and right now, working artists are being asked to foot it. We in the Labour party believe in making work pay. That has to include the work of musicians.
Some of the proposals could favour faceless corporations that treat creativity as data and dress up appropriation as progress. Nothing is inevitable about that. We value culture, we value work and we must value those who create. I will end by repeating the plea of my friend from the other place, Lord Brennan of Canton:
“I want to make a plea for human intelligence and EI—emotional intelligence—over AI, artificial intelligence. AI is a great servant, including to the creative industries, but it would be a terrible master if we allowed it to become that.”—[Official Report, House of Lords, 6 February 2025; Vol. 843, c. 848.]
Lee Barron (Corby and East Northamptonshire) (Lab)
It is a pleasure to serve under your chairmanship, Ms McVey. I congratulate my hon. Friend the Member for Bury North (Mr Frith) on securing such an important debate. To me, it is about culture, creativity and human talent, and about people reaching their full potential in life and making sure that that is not taken away from them by things that can happen. This morning, I hosted a drop-in with Equity, and I met the Association of Photographers. They are worried, and rightly so: 58% of Association of Photography members say that they have already lost work to AI. That is more than £14,000 on average already lost by each professional photographer.
That is not work going; that is work being taken by generative AI. More than 15 billion AI-generated images are out there now, trained by using people’s intellectual property without permission, payment or those people even knowing. Photographers post their pictures on their websites, then AI companies send in web crawlers to scrape them—no consent, no warning. That is data theft, plain and simple. It breaks data protection laws, and we should call it out for what it is, because once scraped, they are gone—people cannot retrieve their property.
We would not allow that in any other sector—it is not right. We would not let someone steal our tools, so why would we let them steal our work, our face or our voice? That is robbery. Actors are finding their faces and voices turning up in ads and games that they never agreed to. AI watches people work and copies them. No one should lose their job and their creative talent to a machine that is trained on their own work—it is your face, it is your voice, it is your style, and it should be your choice. Consent must come first—no yes, no use.
Let us fix this. Let us give working people the rights they need in the AI age. We have copyright law for a reason, so let us update and strengthen it. Tech companies cannot just take—there must be rules and no opt-outs. There have to be protections and there has to be fair pay. Protect our artists, our voices and our jobs. This is not science fiction; it is happening right now, and we need to act now before irreparable damage is done.
Uma Kumaran (Stratford and Bow) (Lab)
It is a pleasure to serve under your chairship, Ms McVey. I congratulate my hon. Friend the Member for Bury North (Mr Frith) on securing this important debate and, in the words of my favourite artist, Stevie Wonder, “Happy birthday to ya”.
In my constituency, I have a brilliant example of how technological advances can expand the performing arts in the best way, with the wonderful “ABBA Voyage” and its famous digital avatars, or ABBAtars, as we call them. I have, however, also been contacted by more than 200 constituents, because we have a thriving creative hub in east London. They have very real concerns about what the development of AI means for their careers—the careers that they have devoted their lives to.
Motion designers, photographers and illustrators have been in touch with me, as has “The voice of the Northern line”. To give an example, a few people who work in illustration have written to me with their concerns, outlining that without suitable safeguards, their careers and businesses are being put at risk, not to mention their creative output, as we have already heard from hon. Members. The creative output of these illustrators is their craft and their life’s work, which they have honed—in some cases, they have spent decades training—but it is all at risk of being cannibalised. There is a tension between big-scale changes from technology and AI, which can enrich our lives, and the impact that those changes can have on individual creators, who are the engine of the culture that we consume. That tension needs to be reconciled.
I am proud that Britain is leading the way in so many technological advances, but we absolutely have to get to the bottom of the concerns that my constituents and others mentioned today have outlined. Could the Minister provide any assurances about how the Government are addressing those concerns and showing that they are listening to the voices of our constituents? Could he also outline how the Government will ensure that artists and creators retain control over their voice, style and licences?
Esther McVey (in the Chair)
To fit in the last couple of speakers, we will go down to two minutes per speech, but I will get everybody in.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Diolch yn fawr iawn, Cadeirydd. I congratulate the hon. Member for Bury North (Mr Frith), who spoke excellently, and there have been many excellent speeches today. I will speak briefly, but I want to raise some specific points. First, I thank Valerie Dunmore, who is the chair of the Society of Women Writers and Journalists, which was established in 1894. She came to see me specifically to raise these issues, and this gives us an idea of what is at stake.
Turning to the creative industries in Wales, we have heard how much the creative industries contribute in other areas, and in Wales itself, the figure was £1.5 billion. There are over 3,500 creative businesses in Wales; that number is increasing and the freelance workforce is growing. These industries all play an important part in preserving and spreading the Welsh language and culture. Film, drama, literature and music all sustain and produce a unique Welsh way of life, through the medium of both Welsh and English.
In February this year, newspapers and news organisations across Wales devoted their leading articles to this issue, warning that what is threatening their industry could have potentially catastrophic consequences for Welsh journalism. Creative groups in Wales, such as Teledwyr Annibynnol Cymru, say that they do not support an opt-out process. Instead, they suggest that any new regime should require creators to opt in, meaning that web crawlers cannot simply scrape content unless permitted to do so.
I wanted to bring the Wales-specific issues to the fore because the risk is that we always assume that the Welsh language works in the same context as that of the English language. It does not. We look at English creators as being vulnerable, but Welsh creators are even more so. I urge the Minister to respond by stating what impact assessment has been carried out in relation to the creative industries in Wales, and specifically the Welsh language, given its vulnerabilities.
Cat Eccles (Stourbridge) (Lab)
It is an honour to serve under your chairship, Ms McVey. I thank my hon. Friend the Member for Bury North (Mr Frith) for securing this important debate. This is a subject of huge concern to anyone who works in the creative industries. I have been contacted by many people in my constituency who are concerned about how the future will impact them and their work. I am the chair of the all-party parliamentary group for visual arts and artists, and we are looking at this issue closely to ensure that artists’ copyright is fully protected.
AI can provide many opportunities across many industries. Indeed, we have already seen AI images grace the cover of magazines and AI artwork sold at auction. However, it also comes with challenges, such as how we can ensure sustainable growth while safeguarding the value of people’s artistic work. Artists and creatives rightly have significant concerns about how AI could negatively impact their work, future opportunities and copyright. The breakneck speed at which AI is developing means that there is a widening skills gap, with people playing catch-up to ensure that their work remains relevant and current.
The role of Government in this emerging sector is crucial. Consent, control and remuneration for intellectual property must be at the heart of how the Government manage AI development. To prevent exploitation, we must ensure that the onus of protecting rights and intellectual property is not placed on rights holders. There are huge growth opportunities across the creative industries, worth billions to our economy. Our legal frameworks for AI and copyright must support artists and creatives to facilitate the protection of their intellectual property. Rights holders must be able to make nuanced decisions about the potential use of their work through standardised systems and be fairly compensated for that use. It is the role of Government to ensure that copyright is protective and enforced, so let us do that.
Jonathan Davies (Mid Derbyshire) (Lab)
I thank my hon. Friend the Member for Bury North (Mr Frith) for securing this important debate.
A study by the International Confederation of Societies of Authors and Composers found that people working in the music industry could lose up to a quarter of their income by 2028 as a result of generative AI. Those losses would happen on two fronts: unremunerated and unauthorised use of their work, and competition from AI-generated output. In opposition, the now Government proposed to grow the creative economy and create good jobs right across the country. That was rightly welcomed, but there is significant concern about the proposed opt-out approach to text and data mining. I add my voice to the concerns about the removal of Baroness Kidron’s amendments from the Data (Use and Access) Bill. The Government previously said that the Bill was not the right vehicle for such action, so I would welcome some clarification: if not now, when?
The EU has had an opt-out system for text and data mining since 2019, but no effective rights reservation solutions have been developed in six years. That system was introduced before the widespread adoption of AI, and the EU is now trying to retrofit solutions.
The Government have outlined that AI companies and creative industries would need to collaborate to solve these problems, so I would appreciate some guidance from the Minister about the work that is happening in that space. I know that the Government are waiting for the results of their consultation, but many creators would appreciate clarity today about the work that is taking place. The UK’s creators are asking not for special treatment but for fairness and for the unique value of their work to be recognised and protected in the digital age. Let us make sure that the law keeps pace not only with technology but with justice.
Esther McVey (in the Chair)
I thank Members for keeping so keenly to the time limit, which has allowed us to get everybody in.
Max Wilkinson (Cheltenham) (LD)
It is a pleasure to serve under your chairship, Ms McVey. I congratulate the birthday boy, the hon. Member for Bury North (Mr Frith), on securing this important debate.
In my constituency, we have thriving creative and tech industries off the back of GCHQ—Cheltenham has a lot of creative businesses. When I hosted my roundtable with the creatives, they told me that they are extremely worried about what they assume is being proposed in the Government’s consultation. When I talk to tech start-ups, they say they are also concerned about that because they are worried that the things they are doing to innovate are being scraped. That is a concern from an economic growth perspective, in both directions, and the Government need to acknowledge that.
Intellectual property rights protect human ingenuity. They are the legal and moral foundations that allow creators to share in the value of what they create, but artificial intelligence is blurring the line between human and machine authorship, and is raising urgent and complex questions. Who owns an AI-generated piece of music trained on thousands of copyrighted songs? How do we enforce rights when the inputs and outputs are hidden behind proprietary algorithms? The answer must be that creators own the rights to their work, and those rights must be protected.
For centuries, creators have honed their craft through years of study, practice and transformation. That contributes to what we all enjoy about the creative industries, but AI now allows machines to ingest and remix millions of works in seconds, fundamentally altering the relationship between inspiration and creation. If we talk to tech companies about this, we find that they do not quite grasp the difference between their innovation and that of the human mind. That unprecedented scale and speed demands stronger, not weaker, protections. Our creative industries generate £126 billion annually and are central to our economy and cultural identity. As AI continues to reshape content production, the intellectual property rights of our writers, musicians and artists must be safeguarded, not weakened.
As we argued during the debates on the Data (Use and Access) Bill, when innovation outpaces regulation, we risk losing public trust and undermining the creative industries that employ 2.3 million people across the country. That is bad for our economy. Throughout the debates on data legislation, we have consistently argued that consent must not be an afterthought but should be the default. If a human being has created something, they have the right to know how it is being used and to be fairly recognised and remunerated for that use. That principle must carry through to how we approach AI and intellectual property.
The tech companies claim that an opt-in system would be too technically complex to implement. Well, they would, wouldn’t they? But at its heart, this debate is not about technical feasibility. It is about being willing to respect creators’ rights from the outset, preventing theft, as Members have said, and supporting our valued creative industries. We have also warned against innovation washing: the idea that technical progress should come before ethical scrutiny. It is not anti-innovation to protect creators, but quite the opposite. A fair IP framework is what allows our creativity and innovation to thrive, and it is good for our economy, too.
So what must we do? First, we must ensure that web crawlers and AI models are bound by existing copyright law. That is why the Liberal Democrats have tabled amendments to the Data (Use and Access) Bill that would enforce existing copyright protections, rather than weakening them through a suggested opt-out system. Secondly, we need meaningful transparency. Our amendments would increase data and identity transparency for crawlers and models, ensuring that creators know how and where their work is being used to train AI systems. Thirdly, we need a clear path for consent and compensation. We have seen in the data Bill debates how opaque data-collection practices undermine public confidence. That lesson must apply here. Creators should have the right to opt in or opt out of their work being used in AI training, and there must be mechanisms for meaningful, proportionate compensation.
I also urge the Government to lead internationally on this issue. We have an opportunity to establish stronger protections that better serve our creative sector. The Independent Society of Musicians, the Authors Guild, the British Copyright Council and the Association of Illustrators—to name just a few of the many organisations representing hundreds of thousands of creators—all support that stance. The global nature of AI necessitates co-ordination through the World Intellectual Property Organisation and alignment with international partners, but British creators deserve robust protections that travel with their work across international borders.
This debate has repeatedly shown that, across party lines, we believe that creators must be protected—that is true of those who speak on behalf of the Liberal Democrats, the Government, the Conservatives and the nationalists, and those elsewhere, too. Creators must be at the centre. Data and innovation policy must work for people, not just for platforms, algorithms or corporations. Let us remember that behind every dataset are human stories: the novelist who spent years crafting her narrative; the musician who refined his composition through countless hours of practice; the visual artist whose unique perspective shapes our cultural landscape. Their rights are not obstacles to innovation, but its very foundation.
Dr Ben Spencer (Runnymede and Weybridge) (Con)
It is a pleasure to serve under your chairmanship, Ms McVey, and to respond on behalf of His Majesty’s Opposition in this very well-attended, knowledgeable and thoughtful debate. Given that so many Members have taken part, I can only make some brief remarks.
I want to focus on principles, which came up quite a few times throughout this debate. In a complex area, it is principles that help us get through. It seems to be tradition in this debate to say happy birthday to the hon. Member for Bury North (Mr Frith)—he will be clipping this so that it can go out on his social media. He spoke with knowledge and passion, and there is not much to disagree with in what he said. He also mentioned what I see as the core principles—transparency; the ability to enforce copyright; the ability to demonstrate where data comes from, so that we can see who owns it and what the root trace is; and a technological solution linked to that, in terms of demonstrating data ownership.
I also mention my hon. Friend the Member for Gosport (Dame Caroline Dinenage), the Chair of the Select Committee on Culture, Media and Sport, who reiterated this week, importantly, that all companies need property rights to be enforced, and that these two are not mutually exclusive. I thank her for her extensive work in this area to push forward this debate.
The previous Government were committed to the UK being at the cutting edge of tech and creative industries, and we remain committed to that in Opposition. We have heard the concerns of the creative industries loud and clear, but we do not believe that there is anything to be gained by treating the emergence of AI as some sort of zero-sum game, where one industry wins and another fails. It should not be an either/or. This needs to be mutually inclusive, not mutually exclusive, and we believe that it is possible to achieve that.
This is a challenging and complex area to get right. Solving this problem is not simple, particularly if we look at what is happening internationally and at extra-jurisdictional issues. Quite simply, other areas have not fixed this either. If there was a straightforward solution for this problem, it would be in process right now. It is important to recognise that from the outset, and to recognise the challenge facing the Minister in fixing the problem, but I have ambition for him. I believe that he can fix it, and I look forward to him doing so over the course of the next year. It is in this direction that we as Opposition want to take things forward.
We believe that getting this area of policy right will mean focusing on some key principles. Most importantly, there should be proportionate transparency in our AI industries about how they use creative content to train their models and generate content. That should be combined with recognition and enforceability of creative rights. The development of technology in the form of a readily accessible digital watermark will be instrumental in helping creatives protect their work online. Start-ups and small and medium-sized enterprises in our growing AI industries need to be supported to develop their models in a way that respects the rights of creatives. In that regard, the AI opportunities action plan identified the need to unlock public and private datasets to enable innovation and attract international talent and capital.
We tabled a series of pragmatic amendments to the Data (Use and Access) Bill in Committee that would have committed the Secretary of State to putting in place a plan to achieve those important aims within a reasonable period after the conclusion of the Government’s consultation on copyright and AI. We understand that the Government have received in excess of 11,500 consultation responses from stakeholders, which they are in the process of analysing. Given the concern that their original plans caused in our creative industries, we welcome the Minister’s announcement, following the closure of the consultation, that the Government have taken a second look at their preferred approach to regulating the sector. In particular, we welcome the renewed emphasis on the need for increased transparency about how models are trained, so that creatives can enforce their rights. This is a key area that has come up throughout the debate, and we called on the Government to set out an informed plan in Committee on the data Bill.
We appreciate that the impact of AI on intellectual property requires proper and careful consideration. We will work constructively to support the creation of policy and plans in this fundamentally important area. If we get it right, there will be tremendous economic and societal benefits to growing our AI sector and supporting our creative sector to continue to thrive. It is time for the Government to be clear about their plans, in order to create certainty for the AI and creative industries about the way forward and help promote an environment of confidence, paving the way for investment and growth.
The Minister for Creative Industries, Arts and Tourism (Chris Bryant)
Ms McVey, I am sure that if you were not in the Chair, you would be participating in this debate, because I know that you have an interest in this area not only as a Member of Parliament, but personally. I am not sure whether there is a recording of your performance in “The Vagina Monologues” years ago, but there are many other recordings of you around, and I am sure you would want to enforce your copyright in relation to them as well.
Today is not only the 48th birthday of my hon. Friend the Member for Bury North (Mr Frith) and Shakespeare’s 461st birthday, but Turner’s 250th birthday. I suppose we could all join in singing “Happy Birthday” since, interestingly enough, it came out of copyright in 2015 because Warner Chappell lost a lawsuit over whether it maintained the copyright. The fact that people had to pay for it is one of the reasons that it rarely appeared in films and instead people ended up singing “For He’s a Jolly Good Fellow”—or “For She’s a Jolly Good Fellow”—which always seemed rather odd.
I will not go through all the individual contributions to the debate, if that is all right with Members, because I want to deal directly with the specific issues as much as I can. My hon. Friend, whom I congratulate on securing the debate, talked about a landing point, and that is what I will try to talk about today.
There are some things that I think we all agree on. First, an honest day’s pay for an honest day’s work is a fundamental principle not just of the Labour party, but of the whole of British society in how we order ourselves. Another hon. Member said that creators deserve to be paid. I completely and utterly agree, and so do the Government. The right hon. Member for Hayes and Harlington (John McDonnell) referred to the performers’ rights framework. He is quite right: that does need some review, and we are looking at it. Interestingly enough, in one of the very early Westminster Hall debates I took part in, way back on 12 June 2002—the hon. Member for Perth and Kinross-shire (Pete Wishart), who is sitting across the Chamber today, led the debate that day—I said that we need to look at the performers’ rights framework. I completely agree that creators need to be remunerated.
Secondly, it is patently wrong to use pirated material to train large language models. I have to be careful, because—I declare my own interest as an author and member of the Society of Authors—it has been noted in several newspapers that my own work was scraped in the use of the Library Genesis dataset by Meta Platforms Inc. Such use is patently wrong and I do not think anybody disagrees with that.
Thirdly, we should never characterise the creative industries as luddites. That is simply and patently untrue. I recently went to Ninja Theory, a video games company in Cambridge. It uses AI all day, every day, as an integral part of making sure that any game it presents is at the cutting edge of modern gaming. The same could be said of so many creative industries, not just about their use of AI but about their use of innovation. I want to knock this on the head: nobody in Government is saying that the creative industries are luddites. It is perfectly legitimate for people to have concerns about their future remunerative stream, and we acknowledge that.
It is not just video games; musicians and people in so many other parts of the creative industries use AI. Indeed, we should not forget that a large chunk of the creative industries is tech companies that are developing AI. As several hon. Members have noted, those companies have their own copyright concerns—otherwise, how will they make a living into the future?—but the irony of some complaining about others stealing their work is not lost on anybody.
Fourthly, the creative industries are already engaging with artificial intelligence. Many of them are engaged in licensing already, and have been from the very beginning. That is not just true for newspapers, many of which have had an easier time delivering that if they have been behind a paywall; a whole series of different licences have now been arranged. I went to the London book fair and spoke to several publishers, all of whom were interested in bringing forward licensing with AI companies and want to do so with all the AI platforms, for the simple reason that, as some of the academic publishers put it, they want AI to be the best version of AI that it can be. A fundamental principle of a pipe is that what comes out of it depends on what is put into it, and the quality of responses produced by AI will depend on the quality of information that has been put into it. Many of the UK’s big academic publishers are trying to license and get remuneration for their work because they want to make sure that AI provides good, modern answers based on solid information.
Fifthly, transparency is vital but not simple, as the hon. Member for Runnymede and Weybridge (Dr Spencer) said. Several hon. Members referred to the European Union, which theoretically has transparency provisions in its legislation, but has yet to come up with a system that is both proportionate, and effective and usable. Frankly, there is no point in somebody dumping a list of millions or billions of URLs that have been scraped and looked at on some kind of website. Whether that was done on a monthly or weekly basis, it would hardly be usable, or a proper, effective means of transparency.
We need to get transparency, and the enforcement of transparency, right. That is why we have consulted on this area. There is a great deal more work that we need to do. I would like to do some of it with allies in other countries who are struggling with this too, but we need to do it with the creative industries and with tech. There must be somebody out there who could make a commercial living out of creating an app that could help us solve the transparency issue, but it is vital that we do so. We need to make sure that there is transparency, because otherwise how can anybody know whether their works have been scraped or not?
Chris Bryant
I am very reluctant to give way, if only because I have quite a lot of things to get through. I am really sorry. We will have another debate on this issue very soon, I am sure.
Sixthly, several Members referred to people wanting a “legal peace of mind”. I am not reiterating the line about whether or not there is legal certainty; that is not the point I am making. Many individual creators have been in touch with me directly—I am sure that they have been in touch with other hon. Members—to say, “I don’t know where I stand now under the existing law. I understand how Getty Images can go to court and enforce their rights, sometimes on behalf of themselves but also on behalf of the people they represent, but how do I do that for myself when I’ve just posted some of my works online, because I’m advertising my works? I don’t want to disappear from the internet, so the robots.txt system doesn’t work.”
That is a really important area where we need to do work. We have a framework of civil enforcement of copyright in the UK. It is robust and it meets the Berne convention issues that my hon. Friend the Member for Bury North referred to, but it is still easier for those who have lawyers and cash to use it. That is why we have collecting societies, which can be more effective in many areas, but the different segments of the creative industries that we are talking about have to be dealt with differently, because a musician, an artist, a photographer, somebody who writes or somebody whose words or voice are being used are all treated differently, or their rights are enforced differently at present, and we need to make sure that there is that legal peace of mind for all those people into the future.
My hon. Friend said that a technical solution for rights reservation does not yet exist and he is absolutely right. I think a couple of other Members made that point, and I know that the Culture, Media and Sport Committee, which is admirably chaired, has referred to some of these matters, including in a letter to Secretaries of State. But why do we not make it happen? I am determined to make it happen. Surely, it cannot be beyond the wit of the clever people who are developing all this technology to develop something. If we could get to a place where it was very easy for any individual, or everybody—
Chris Bryant
I only have 45 seconds left, so I am afraid that I cannot; I am sorry.
If we were able to deliver that over the next 12 to 18 months in the UK, then we genuinely would be leading the world and we would be answering the problems of transparency and provenance, and making sure that people were genuinely remunerated. That is one of the things I am determined to do.
My hon. Friend the Member for Slough (Mr Dhesi), who is no longer in his place, said that we must listen to the creative industries before any legislation is introduced. He is 100% correct. I absolutely commit that that is what we will do. Somebody else said that technology is not good or bad; I think they were almost quoting “Hamlet”. I will make the point that artificial intelligence was made for humanity by humanity, not humanity made for artificial intelligence, and we need to make sure that we get the balance right.
Finally, my hon. Friend the Member for Bury North started the debate by saying—because he had to—that we have “considered” the impact of AI on intellectual property. We have not adequately considered it yet. We have to consider it more. We were not intending to legislate in the data Bill, and there is no clause in it, on opt-out. There is no such clause. There is no need to take it out, because it does not exist. I am determined to get us to a place where people are properly remunerated, where they are able to enforce their rights, and where AI can flourish in this country and be used by the creative industries and the creative industries are not left by the wayside. In short, to quote the Bible, we will not sell our birthright for a mess of pottage.
Mr Frith
I thank everybody for their considered remarks. I have been so inspired by the turnout, not just of colleagues, but of industry representatives and other concerned stakeholders. It was remiss of me not to begin by referring to my wife, as is often the case: I failed to declare that she is a jobbing actor and a recording vocal artist. I apologise to her, and for my failure to follow protocol on such matters.
I will jump straight into the remarks by my hon. Friend the Minister. I cannot fault him for his engagement, but I will send him the questions that I posed to him, because I do not think that we got commitments to remove the opt-out clause or to a more clinical focus on the enforcement of copyright. If we addressed both of those issues, we would solve much of the problem that brought so many people to the Chamber today. I thank stakeholders for their engagement, and all those who wrote to me following my request for evidence.
Motion lapsed (Standing Order No. 10(6)).
Hair and Beauty Sector: Government Policy
(1 day, 14 hours ago)
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Julia Lopez (Hornchurch and Upminster) (Con)
I beg to move,
That this House has considered the impact of Government policy on the hair and beauty sectors.
It is a real pleasure to serve under your chairmanship, Ms McVey. This debate is about giving a voice to the thousands of small business owners crushed by the weight of tax demands. They are frustrated and exhausted —penalised, it seems, for doing everything by the book. They are expected to keep taking personal risks, to employ others and to pour all they have into building businesses and serving customers, even as the rewards for doing so shrink year after year. Those assumptions have bred a troubling complacency in Whitehall that these businesses will always just be there to tap up, and the crisis now gripping the hair and beauty sector is a stark example of the consequences.
High street hairdressing and beauty salons offer jobs and training to thousands of young people. These businesses are disproportionately led or staffed by women, many of whom need flexible hours to balance their caring responsibilities. We all know these people, because we have been served by them—even counselled by them—sometimes over many years.
However, today salons are under threat. The combination of the pressures they face is turning into a crisis, and the result will not just be a loss of revenue to the Treasury.
Alberto Costa (South Leicestershire) (Con)
I thank my hon. Friend for securing this important debate. Only a few weeks ago, I visited Sue Davis’s hair salon in Blaby in my constituency, and she introduced me to two of the young people my hon. Friend has in mind, Tegan and Poppy. Does she agree that the measures the Government have brought in not only damage the hair salon industry, but risk reducing the number of apprenticeships, making it possible that there will be no future Tegans and Poppys going into the hairdressing business in the first place?
Julia Lopez
That is precisely one of the issues I wish to highlight in today’s debate. This avenue of employment is being closed down for too many young people, because hiring apprentices has become far too expensive. I am sure other hon. Members are seeing apprentices being shed across their constituencies because the sheer cost of employing them makes it too difficult for salons to retain them. That is a terrible loss for those young people and for salons that need those skills and that skills pipeline.
As I was saying, the result of salons closing will not just be a loss of revenue to the Treasury: it will be young people without an apprenticeship; high streets where the empty units left behind are filled with front businesses—perhaps a dodgy nail bar, a vape shop or a barber that may not be playing by the rules; customers who lose a service that they loved and that gave them a sense of place; and entrepreneurs who wonder why on earth they bothered to do the right thing and who now question whether this country is the right place to put their energies.
I will set out the challenges facing these businesses, explain why we should all care and, finally, share with the Minister the asks from my local salons, so that we can keep these vital businesses alive, with the benefits that flow to us all. Let me start by setting out some of the pressures on high street salons.
Salons have weathered some extraordinarily difficult years with the pandemic. Take Wyndham Hair in Hornchurch, a business that has been operating since the late 1970s. Owners Johnpaul and Jane returned from covid burdened with debt due to the stop-start nature of operating restrictions. They restructured and streamlined, and are now debt-free and at their most efficient, but the business offers little more than a wage. Why? Well, VAT is a major factor.
Johnpaul and Jane chose to employ staff rather than rely on self-employed workers. That offers better security for their employees and quality control for them, but it comes with a financial penalty: as an employer, they pay VAT on services. Meanwhile, mobile or home-based businesses, or salons staffed entirely by self-employed workers, often avoid that. Those operating outside premises also duck regulatory costs such as those for trade waste, music licensing and more. That creates an unfair playing field. It is a bizarre situation, because we can effectively have two businesses, identical to all intents and purposes, operating under two different tax systems.
Hair and beauty is a labour-intensive sector, and around 60% of costs are wages. As I heard from Toby from the Salon Employers Association, salons trade in skill, not goods, and cannot reclaim VAT on their biggest cost, which is people. That pushes legitimate businesses to the brink and rewards those operating in the grey market. Self-employment is a legitimate business choice, but employment tribunal case law demonstrates that it is increasingly being used as a means of avoiding tax and employment laws. Without VAT reform, the British Hair Consortium forecasts that there will be a 93% drop in direct employment in the sector by 2030. That is not a typo; that is an emergency.
The long tail of covid and VAT were existing challenges. Rent and utilities increases also created pressure. Let us now add into that mix Labour’s disastrous October Budget, starting with the withdrawal of business rates relief. During covid, Conservatives supported high street businesses with grants and rates relief but, as of April, those have gone. Coal House Cuts in Upminster now faces a rates bill of £2,000, up from zero. The Vanilla Room in Hornchurch saw its rates bill rise from £7,500 to more than £18,000. Those are not minor figures; they are bills that keep people up at night.
Let us add in the increase in employer national insurance contributions. There is something pernicious about what the Chancellor has done here. Because of the change to thresholds, the NICs hike is hitting the types of business that employ a large number of lower-paid or part-time workers. For the Utopia beauty salon in Hornchurch that means a rise in employer NICs from £750 to £1,000 a worker. Many of its workers are single mums providing for their families, and it has already had to let go one of its tight-knit team. Because Utopia’s suppliers are facing exactly the same pressures, it is seeing cost increases of 5%, and energy and utility bills have trebled.
I am seeing an unmistakable theme in my constituency work: female business owners, with many female employees, are approaching me for the first time. I have been an MP for nearly eight years, and these are the types of people who never get in touch with their MP. To put some numbers on it, over 80% of the workforce in hair and beauty are women; 86% of businesses are female-owned; 40% of the workforce is part time, compared with 25% in the wider economy; almost one in three workers is under 30, so it is a young workforce; and 45% of the sector’s jobs are in areas with the highest levels of unemployment.
I want to say something that does not come easily to me because I loathe identity politics: it is hard to ignore the impact, let alone the irony, of a Chancellor celebrating herself for being the first woman to hold that office, while simultaneously hammering sectors that employ, serve and are often led by women.
Mr Richard Holden (Basildon and Billericay) (Con)
I thank my hon. Friend for securing this incredibly important debate. Just up the road from her in Essex, in Basildon and Billericay, well-groomed men and women are facing the same issues. I thought this was a poignant moment to intervene, because it is precisely part-time workers, many of them women, who are affected, often in female-run businesses. Does my hon. Friend agree that the combination of all these things—the increase in national insurance, the issues around business rates relief on the high street—is really hitting? But there is also concern about some of the legislation coming forward in the so-called Employment Rights Bill, which local businesses tell me is an unemployment Bill and which, rather than protecting workers, is causing more problems, because businesses just do not want people on their payrolls.
Julia Lopez
My right hon. Friend is absolutely right: this is about a series of things hitting these businesses. It is about new legislation, new taxes and the withdrawal of reliefs that had been supporting businesses. I am glad my right hon. Friend intervened, because I was in Hornchurch yesterday speaking to staff at Wyndham Hair. Johnpaul, who runs that business, is one of my right hon. Friend’s constituents, and he told me how supportive my right hon. Friend has been of his local high street, so I appreciate the support he is giving me in the debate.
As my right hon. Friend said, this is about a whole range of people sectors. It is not just about salons being hit with these staggering tax bills; it is also about the early years sector. That sector supports many other businesses that require good workers. When I talk to nurseries in my constituency, some of the bills they talk about are just unbelievable. In fact, they are so unbelievable that when I tell people about them, they do not believe it—they think the nurseries must have got their sums wrong, but that is absolutely not true.
One after-school and holiday club provider has seen her annual NICs bill go from £10,851 to £26,040. That is a small business, and it is being absolutely hammered. One nursery provider told me that the combined impact of NICs and the minimum wage is adding £30,000 to her payroll costs every month. Those are unbelievable numbers, which risk driving many nurseries to closure. That will dismantle the support network that allows many other women to go into the workplace.
The minimum wage is right in principle, but when we force a small salon with razor-thin margins to meet that extra cost on top of everything else, it becomes untenable. When we add to that the looming Employment Rights Bill, many salons are telling staff to go self-employed just to survive. That is not giving people more protections but ripping up the ones they already have.
That brings me to apprentices. Salons are letting them go very fast. For decades, this industry has opened doors for young people to learn skills and earn a living, and that ladder is being kicked away. At Coal House Cuts, the owners once proudly trained apprentices; now they cannot afford to. Wyndham Hair used to employ four apprentices; now they have one. The Vanilla Room is getting daily calls from laid-off apprentices, but it too has had to cut learner hours. Its owner, Kerry, told me:
“For the first time in 30 years, we just can’t afford to run apprenticeships. Our costs are up £28,000 on apprenticeships a year. How much does the government think salons make?”
After I put in for this debate, more stories poured in from across the country. This crisis goes beyond hair and beauty, because I am hearing the same from construction firms—another traditional route for working-class youth. Two vital pathways into work for working-class girls and boys are collapsing. Is this the future that Labour promised—a generation of young people priced out of skilled trades because Westminster could not design a Budget with small businesses in mind? That is surely the very opposite of what this Government say they want, and it is utterly incompatible with their drive to get people off welfare. Because beauty salons are facing so many different costs, they are also cutting back on training, in a sector where customers demand that they are up on the latest technologies.
So what will happen? First, there will be job losses and price hikes. One of the challenges for many salons is that their customers face the same economic headwinds, so they are spending less and visiting less often. Then there is the ultimate risk of closures. Every time a salon closes, it leaves more than just an empty unit; it leaves a void in the community—a place of connection, conversation and confidence gone. Speaking to Wyndham Hair yesterday, I heard not only about the services it offers but the support it gave its long-standing clients through covid. Those are the kinds of businesses that these people run. Utopia has clients aged 10 to 97; the 97-year-old goes to the beauty salon because it is her place of sanctuary. When legitimate businesses vanish, they are replaced by shady operations that are often fronts for illegal or exploitative practices. The rest of the high street struggles, apprenticeship routes collapse and tax receipts fall—they will not rise.
Sir Julian Lewis (New Forest East) (Con)
I know it is not the main thrust of my hon. Friend’s argument, but does she share my concern at the detailed exposés at the end of March in the Evening Standard and The Sunday Times about the huge proliferation of barber shops, which could not possibly all be conducting legitimate trade? For example, the Evening Standard talked about 17 barbers in and around a two-mile stretch of Streatham High Road, and about 25 on a similarly sized section of Kingsland Road between Stoke Newington and Haggerston. That is clearly criminal activity on a major scale.
Julia Lopez
I thank my right hon. Friend for that important intervention. As I was preparing for the debate, I read about some of the police operations in Manchester, where they have been cracking down on this kind of activity. The frequency with which they found that these were fronts for illegal businesses—often with links to international crime gangs—is deeply worrying. That is one reason why I want to raise the profile of this issue. We cannot lose legitimate businesses from our high streets, because what fills the void is something that none of us wants in our communities.
What can be done? I know how this works: the Minister sits in the Department for Business and Trade, not His Majesty’s Treasury, so he cannot give any substantive answers on the fundamental mistakes being made on tax policy. However, like any Business Minister worth his salt, he will probably share my concerns and wonder how best to get the Treasury to change course. He might even find this debate quite helpful to his own lobbying, just as the Under-Secretary of State for Education, the hon. Member for Portsmouth South (Stephen Morgan), and his officials did when I gave him evidence about the crisis now engulfing the early years.
Here are some practical asks that my salons would like the Minister to make of the Chancellor: VAT reform, with a reduced rate for labour-intensive services; the restoration of business rates relief and the overhaul of the outdated business rates system, particularly for high street premises; the revival of apprenticeship incentives; and revisiting the measures in the October Budget. Look, the Government should use global market turmoil as an excuse to mask Labour’s mistakes if that is what it takes, but let us get a U-turn on these economy-shrinking tax takes. They are not working. Confidence and employment are down. Growth projections have been halved. The tax take is going to shrink, and that will translate into a smaller pot for public services. Members do not need to take my word for it; the International Monetary Fund said so just yesterday, confirming its view that the UK’s growth prospects have been cut because of domestic factors.
To conclude, this debate must serve as a reminder that Government do not create growth—businesses and people do. Those businesses are now often paying increased rent, utility bills, professional fees, VAT and covid debt interest and, since April, giant hikes in business rates and the cost of employing people. It is just too much. People work to incentives, and right now the incentive to start a business such as a hair and beauty salon, grow it, take on staff with full employment rights and train apprentices is simply not there.
The Government say they care about growth, communities and employee rights, but their actions—I hope by accident rather than design—are crippling the very people who grow things, give heart to communities and employ people. I say to the Minister: use this debate and take these real stories, these stark warnings and the sector’s clear-eyed solutions straight to the Treasury—before it is too late.
Several hon. Members rose—
Esther McVey (in the Chair)
Order. I remind Members to bob if they wish to speak in this debate; it seems that quite a few Members want to. We will come to the Front Benchers at 5.10 pm. Although I will not set a hard deadline, speeches should be about three minutes.
Maya Ellis (Ribble Valley) (Lab)
It is a pleasure to serve under your chairship, Ms McVey. I thank the hon. Member for Hornchurch and Upminster (Julia Lopez) for securing this important debate on a sector that, as she rightly says, is often overlooked but is a critical part of many of our communities, including mine in Ribble Valley in Lancashire.
As I am sure my colleagues will reference, the hair and beauty sector is a thriving economic powerhouse, contributing huge amounts to the UK economy while increasing visitors to high streets and promoting community wellbeing. Given its impact on not only the economy but our physical wellness, we must ensure that the whole sector is regulated effectively. I want to highlight my concerns and those of the Ribble Valley residents I have spoken to about the regulation of the beauty sector in particular.
It is deeply concerning that aesthetic medicine, a medical speciality recognised by the Royal Society of Medicine, is often considered just another part of the hair and beauty sector. If it were cardiology or dermatology, there would rightly be huge concern over non-medical professionals performing high-risk procedures. Aesthetic treatments are not cosmetic extras; they can be invasive medical procedures with serious risks, including blindness, tissue necrosis and death. I have recently read several tragic news stories of individuals—such as Alice Webb, a mother of five—who have died after undergoing non- surgical treatments, including the increasingly popular Brazilian butt lift, known as the BBL procedure. No charges have been brought because it is still not illegal.
However, it was promising to hear that last December, Save Face, a Government-approved register of trusted practitioners, met with the Government to share Alice’s story and discuss potential solutions to stop untrained individuals from performing such procedures. One of my constituents, Dr Natalie Haworth, has said that as a medical professional with her own aesthetic clinic, The Doctor & Company, she has to routinely manage complications previously caused by poorly trained practitioners. Legitimate, medically-trained professionals such as Dr Natalie undergo training built on years of foundational medical education, ethical standards and regulatory oversight. A three to seven-day course cannot replicate that. The increase in unreputable training providers across social media is increasingly worrying. We must look into training standards to rectify the situation.
Across the UK, invasive procedures such as fillers, liposuction and facelifts are being performed in unregulated salons. These are overwhelmingly carried out on women, reflecting a systemic failure to take the risks seriously—often dismissed as a women’s issue or vanity. In a society where our beauty standards are shaped by social media and celebrity culture, there is no doubt that aesthetics treatments will continue to grow. In 2024 alone, the UK aesthetics industry grew by a considerable 8.4%.
Unregulated actors in this space lower the reputation of the whole industry, which in turn impacts the success of safe and legitimate services like those provided by my constituent, Natalie. We must therefore work to tackle the rise of unregulated cosmetic procedures. Will the Minister confirm whether the Government plan to follow up on the previous Government’s consultation on non-surgical cosmetic procedures? The Government must listen to women’s stories and work to act and legislate on aesthetic medicine to ensure that people’s safety is secured.
Meanwhile, the NHS shoulders the burden. A&E departments are seeing increasing complications from fillers, botox and laser treatments that should have been managed in a clinical setting. The industry must not be overlooked. We need to support trained practitioners and advocate for women seeking treatments by prioritising the raising of standards across this dynamic sector.
Bradley Thomas (Bromsgrove) (Con)
It is a pleasure to serve under your chairmanship, Ms McVey. I thank my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) for securing this important debate, about which I have had much communication from constituents, particularly those who operate their own health and beauty businesses in my constituency. Those businesses, of which we are all aware, are a cornerstone of our high street and community. They provide valuable employment; I was particularly struck by my hon. Friend’s comments about the volume of employment that they provide, particularly to female members of society. But the crisis that we face is urgent, the stakes are high and the voices of salon owners, staff and apprentices must be heard.
I would like to highlight an example from my constituency. A constituent who operates a salon in Bromsgrove got in touch. After 33 years of contributing to the local economy, creating jobs and nurturing talent, they face the heart-wrenching possibility of having to close their doors within the next 12 to 18 months. Severe financial pressures, exacerbated by Government policies, have pushed them to the brink, and without support, staff—including a promising new apprentice—may lose their livelihoods. One of the major challenges is the disparity caused by disguised employment practices. VAT-registered salons, such as theirs, are struggling to compete with establishments exploiting loopholes through which workers are falsely registering as self-employed to dodge VAT. That creates an unfair playing field, forcing ethical businesses to consider unsustainable practices simply to stay afloat.
However, the consequences of inaction extend far beyond individual salons. Industry forecasts paint a bleak picture: a 93% drop in employment by 2030, no new apprentices by 2027 and the loss of generations of talent. Rising costs—including, in this case, a wage bill of £52,000 before factoring in rent, national insurance and pensions—make it impossible for compliant salons to thrive under the current VAT threshold of £90,000. That is why support from the Government is not optional; it is essential. This salon owner, alongside many others, has taken proactive steps to bring attention to this crisis. They are a member of the British Hair Consortium and they have contributed to comprehensive dialogue with Government urging action—action that cannot wait.
I am also struck by the comment made by the hon. Member for Ribble Valley (Maya Ellis) about non-surgical aesthetic treatment; I have raised that before in the House of Commons myself. My constituent, Nicky Robinson, is quite happy to go on the public record as someone who often performs corrective action for surgery that has gone wrong. That is another dimension to an industry that presents an emerging healthcare crisis that I, too, urge the Government to address. I would also like the Minister to confirm when the Government will introduce a mandatory licensing regime that will protect not just consumers but those practising in this industry.
The beauty sector is not merely about aesthetics: it is about empowering individuals, building confidence and fostering community connections that we all know exist across our constituencies. It is time for the Government to recognise the importance of the industry and take the necessary steps to ensure its survival.
Cat Eccles (Stourbridge) (Lab)
It is an honour to again serve under your chairship, Ms McVey. I thank the hon. Member for Hornchurch and Upminster (Julia Lopez) for securing this important debate.
I was recently contacted by the owner of a local, international-award-winning hair salon in my constituency. Tim Scott-Wright runs a salon in the village of Wollaston and prides himself on training the next generation of hair stylists. Sadly, Tim does not think that he will be able to take on any apprentices this year due to the increased NICs and the increase to the national minimum wage.
It is important to say that Tim and others are more than happy to contribute a bit more to get Britain’s economy growing. However, he did not realise that it would impact his business so drastically. Tim told me about salons forced into the self-employed model to reduce costs, which can have the unintended impact of forcing workers into accidental tax avoidance. It also reduces training opportunities for the next generation. Salons are already operating on slim profit margins, and the current VAT rate places an unsustainable burden on these labour-intensive businesses. Unlike other sectors that benefit from lower VAT rates or exemptions, hair salons must pass those costs on to customers, making services less affordable and reducing demand.
A proposed reduction in VAT to 10% would provide immediate relief, allowing businesses to plan for the future and keep contributing towards our economy. I have already written to the Treasury and the Department for Business and Trade to urge the Government to consider a targeted reduction in VAT for hair salons, bringing it down from 20% to 10%. Many salons are facing severe financial difficulties due to a combination of rising operational costs, reduced consumer spending and the long-term impacts of the covid-19 pandemic. The hair and beauty industry is a vital contributor to the UK economy, supporting over 250,000 jobs and generating billions in annual revenue. Let us back our hair and beauty industry, make sure revenue is not lost in self-employed models and keep the sector thriving.
Dame Caroline Dinenage (Gosport) (Con)
It is a pleasure to serve with you in the Chair, Ms McVey. I start by congratulating my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) on securing this debate and articulating so comprehensively the issues that the hair and beauty sector face. I share her concern and frustrations, and those of the sector.
The hair and beauty industry contributes £5.8 billion to the UK economy. It is not just about how people look; it is important for our high streets, for individuals and for communities, yet the Government seem to insist on seeing the sector driven into the ground. Since the Chancellor’s spring statement, I have received messages almost daily from businesses across my constituency that are seriously concerned about their future. This is existential.
Just this week, a small salon owner who has been in business for over 27 years got in touch with me and said that this is the most challenging period that she has ever experienced. The Government’s changes to employer national insurance contributions and the national minimum wage will see labour costs for an average small salon in my Gosport constituency rise by over £25,000. That is completely unsustainable; as my hon. Friend the Member for Hornchurch and Upminster said, it forces people into the black economy or out of business altogether.
Only recently, the Secretary of State for Work and Pensions set out her Government’s welfare reforms, arguing that they are aimed at incentivising people currently in receipt of benefits back into work and secure employment. But I would love to hear from the Minister how he thinks that tallies with the closure of small businesses in our communities, and the redundancies that will result. On top of that, the Government’s actions are set to make 1,000 apprenticeships across the country unaffordable, closing the door to young talent and diminishing training and employment opportunities. I heard from one local barber who has trained apprentices for years; he has now said that the Government’s changes mean he will not be able to afford to train another apprentice.
Businesses will suffer. Female-led businesses in particular will suffer, as well as female work opportunities. Communities will suffer, and in the end the Government will see declining tax receipts. Will the Minister admit that his party made a mistake, and set out how he will communicate with the Treasury to attempt a U-turn? I do not think that anyone on the Opposition Benches would blame him if his party took that sensible step. On Monday I will be hosting a roundtable for all the hair and beauty salons across my constituency, and I would love to know what the Minister’s message is to them.
Jim Shannon (Strangford) (DUP)
It is a pleasure to serve under your chairship, Ms McVey. I commend the hon. Member for Hornchurch and Upminster (Julia Lopez) for securing this debate. If you looked at me, Ms McVey, you would say that a beauty person could be working all day on that guy without making much difference. There is nothing on the top of my head, so when it comes to going to the barber’s it does not take me too long. I say that in jest: I am speaking in this debate on behalf of the constituents who have contacted me.
As the hon. Member for Hornchurch and Upminster and others mentioned, we are inundated by messages from local businesses and the consumers that they provide services to. According to the National Hair and Beauty Federation, there were more than 61,000 hair and beauty businesses operating in the United Kingdom in 2023. The hair and beauty industry is largely represented by small businesses. Those small businesses have mostly female owners, operators and workers, but not all. Three quarters of businesses employ fewer than five people, while 95% employ fewer than 10. Of people working in the beauty and hairdressing industry, 60.5% are self-employed—it is a specific group of people. There is also a downward trend: the industry has declined by 7%. Apprentices have also declined, as the hon. Member for Hornchurch and Upminster referred to, and some businesses are not taking apprentices on. Those are the issues.
The personal care and beauty industry as a whole grew its contribution to the UK economy by 11% in 2023, so there has been an upward trend in the businesses and what they do. Beauty and hairdressing is worth £5.8 billion, and it makes up a considerable chunk of the sector’s overall contribution to the economy. People tell me that it should be noticed that, for the large majority of hair and beauty businesses, turnover is less than £100,000. In its September 2024 industry survey, the NHBF found that 46% of salons and barbers surveyed made a profit, 41% made none—they broke even—and the rest just weren’t doing.
Those are not healthy statistics. The hon. Member for Hornchurch and Upminster was absolutely spot on when she outlined that business owners are facing a perfect storm of rising costs, including the withdrawal of business rates relief, the increase to employer national insurance contributions and higher minimum wages. Although people are happy to spend their hard-earned money on self-care, the industry struggles with profitability and needs more support. I look forward to what the Minister will say, because it is important we get this right.
The rise in the national minimum wage, the rise in national insurance contributions and increases in the goods supply price are leaving the industry with profit margins of a mere 2% to 3%. That is unsustainable. We need to correct it and offer support to small businesses and microbusinesses. I look to the Minister to see how we can help keep our beauty and hair businesses thriving, keep people in employment and keep people feeling good about themselves. That can be done only with greater support than is available right now. My wife says that when she goes to the hairdressers, she comes out and feels like a million dollars. I would say that she always looks like a million dollars, but that is just me.
Sarah Bool (South Northamptonshire) (Con)
I thank my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) for securing this most important debate. When thinking about the debate, I looked up some quotes on hair. My favourite was, “Invest in your hair: it is the crown you never take off.” That is a very true sentiment, although I apologise to the men among us who are perhaps lacking in the hirsute department. Naming no names—they are kings in their own right.
Hair is such an integral part of our being and our confidence, and we can appreciate how traumatic it is when people lose their hair while undergoing cancer treatment or suffering from alopecia. We often expect to walk on to our high streets and find a hair and beauty salon that can help to tame our locks or restore our nails, but we cannot take the sector for granted. According to the British Beauty Council and Oxford Economics, the sector contributed £8.541 billion to the UK economy in 2023, supporting the direct employment of more than 224,000 people.
I have many excellent hair and beauty salons in South Northamptonshire, but it really pained me when Defern Beauty in Brackley and The Beauty Works in Towcester met me and explained how desperate the position is for the industry. It was heartbreaking to see them explain how their life-long work is being eroded by this Chancellor. After NICs increases and business rate relief changes, they desperately need help.
One of their asks is for a review of the VAT position, which would help not only to save businesses and raise revenues for the Exchequer, but also to save apprenticeships. The British Hair Consortium’s February 2025 report explains that as VAT is applied evenly across goods and services, it has a disproportionate burden on labour-intensive industries such as hairdressing and beauty, where 60% of the costs are wages. When they are unable to reclaim the VAT on their primary cost, which is people, there is a distorted market with competition between VAT-registered and non-registered businesses, which incentivises VAT avoidance tactics such as bunching, disaggregation and disguised employment. We should not be surprised by the rise in cash-only salons, and should think carefully about what that means in practice. The consortium is also calling for a mandatory register of all hairdressing professionals. Without a register, VAT avoidance and disguised employment will continue unchecked, costing the Treasury billions while putting responsible businesses at a disadvantage.
My businesses pride themselves on taking apprentices and bringing the next generation along, but my fear is that, as the British Hair Consortium believes, apprenticeship starts are set to reach zero by 2027, which contravenes the Government’s objective of reducing inactivity among 18 to 21-year-olds. These businesses simply cannot afford to take on the next generation, which will stifle the industry in the long term. I implore the Government to engage with the industry and take immediate action. Hair is a beautiful form of self-expression. Where will we be left without it?
Saqib Bhatti (Meriden and Solihull East) (Con)
It is a pleasure to serve under your chairmanship, Ms McVey. I thank my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) not just for securing the debate, but for making eloquent arguments about the hair and beauty industry and the broader impact of the Chancellor’s damaging Budget last year, such as the impact on nurseries and its knock-on effects. Almost a quarter of a million people are employed in the industry, and it is a disproportionate employer of women and young people. In the short time I have in which to speak, I will limit my comments, because a lot has already been said by my hon. Friend and other hon. Members.
I had the pleasure of visiting the award-winning Aesthetics Hair and Sarah Bowron in Solihull and she eloquently put a lot of the arguments to me. This industry—these businesses—might have never contacted their MP before, because they have never felt the need to do so. Like many small businesses, they just get on with the job in front of them. I am sure that the Minister recognises this, but I am not sure that his colleagues in the Treasury do, so the very first message I would share with him is that small businesses are not there to be squeezed till the pips squeak. There is real concern that the rise in NICs, the reduction in the tax threshold, the impact on part-time workers, the reduction in rates relief and the impending Employment Rights Bill, as well as, of course, the highly competitive market in which the industry operates, will have huge impacts. We have already heard about the impact on the hiring of apprentices.
When there are disincentives on business, such as higher taxation, a much more competitive business environment or higher regulation, it is inevitable that businesses will have to look at where they can cut costs. Young people who come into apprentice positions, who have less training and are yet to learn the skills of the trade, so to speak, are the easiest ones to cut, because the businesses have to be able to continue to operate. I make no comments about his hairstyle or anything like that, but I am sure that the Minister will acknowledge that they are skilled people who do skilled work, and an apprentice cannot just be trained overnight. It takes time to do so.
Hearing from my constituent was certainly eye-opening and helped me to understand the impacts on their businesses. The fundamental point is that businesses in that competitive environment are being forced into a situation where hairdressers go for self-employment status, which means that they are below the VAT threshold, with less return for the Exchequer. That cannot be what the Chancellor of the Exchequer intended when she made her statement.
I have some thoughts about what the Chancellor was trying to do—basically, taxing everyone to appease some of the trade unions—but we will not get into all that right now. The reality, however, is that small businesses are the ones suffering. The impact has been huge. I also share the concern about the impact on high streets and the extended impact on tax avoidance and tax evasion, which of course we are very worried about.
Sarah Gibson (Chippenham) (LD)
It is a pleasure to serve under your chairmanship, Ms McVey.
I thank the hon. Member for Hornchurch and Upminster (Julia Lopez) for securing the debate. She made an important point about the fact that small businesses in the hair sector have endured a perfect storm: the pandemic, soaring energy bills, red tape and unfair tax bills. Everyone present today has called for the Government to recognise this industry’s importance to our economy, our high streets and the communities that we represent. With that in mind, I will pick up on three points made by my colleagues today about employer national insurance contributions, forced self-employment and apprenticeships.
The hon. Members for Strangford (Jim Shannon) and for South Northamptonshire (Sarah Bool) pointed out that the hike in NICs has meant that many small businesses in the industry are just breaking even, never mind making a profit. That is why the Liberal Democrats oppose the Government’s increase to national insurance. We believe it to be an unfair tax on jobs. The Government will reiterate that the employment allowance helped the smallest businesses, but the British Hair Consortium estimates that the changes could add more than £40,000 to the payroll costs of a typical business of this type.
This week, a salon in Royal Wootton Bassett in my constituency told me of a trend across the sector of encouragement to become self-employed, as has been mentioned by many colleagues today—“rent a chair”, my constituent called it. That did not come as any surprise to me, nor will it to other Members. The increasing costs associated with employing staff, coupled with the complex and fairly impenetrable Employment Rights Bill coming down the line, mean that many small businesses such as salons are struggling to plan ahead. These are small businesses whose owners run them in the evenings, not during the day, when they are trying to run the salon. They need clarity from the Government about that Bill and what it will mean for them, and they need support to retain some of their staff. If they do not get that support the industry will see a huge increase in the number of people becoming “chair renters”. I hope that the Minister will address some of the issues of clarity in that Bill.
In addition to the challenge of retaining staff, small businesses find it almost impossible to afford to host apprentices in the current climate—that point was raised by the hon. Member for Hornchurch and Upminster. Hair salons and the beauty sector have long provided a route into meaningful careers for young people, particularly those from disadvantaged backgrounds, but the current apprenticeship levy is not working for them. The Liberal Democrats would like a more flexible skills and training levy that helps businesses invest in their teams.
On Friday I will support a careers fair in Wiltshire that will connect students with lots of small local businesses. I hope that the Minister’s response will enable me to reassure those budding apprentices about their futures. I congratulate the hon. Member for Hornchurch and Upminster for securing this important debate.
Dame Harriett Baldwin (West Worcestershire) (Con)
It is a pleasure to serve under your chairmanship, Ms McVey. I add my congratulations to my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) for securing this important debate, and for clearly setting out the issues with Government policy for the hair and beauty sector.
It is truly SOS time—save our salons. In the debate, we have heard from across the country—from Ribble Valley, Bromsgrove, Stourbridge, Gosport, Strangford, South Northamptonshire, Solihull and Chippenham—about how important these businesses are to our constituents. They make not only a huge economic contribution but an enormous contribution to our personal wellbeing, to fostering community spirit and to tackling loneliness. We have heard about the economic contribution of over £8 billion, but the impact of salons in giving people an opportunity for a moment of peace in a frantic life should not be underestimated.
It is regretful that the Government’s recent decisions have put such uncertainty into the sector. We all acknowledge that the sector has had a long-standing issue that VAT cannot be reclaimed on its biggest expense: labour. We have also heard that, given about 60% of the sector’s costs are wages, the Government’s decisions in the Hallowe’en Budget, particularly the change in the national insurance threshold, have made things considerably worse for businesses in the sector. Many of the businesses are small or medium-sized, and they add so much to our high streets. They are being gravely affected by the Budget.
The British Beauty Council states that the assumption that these businesses
“can simply absorb the costs is hugely misguided. Instead, it will most likely prevent wage increases and deter people from hiring more staff therefore stifling growth”,
which is the very growth that the Government wish to see. Additional pressure has come from the rise in the national minimum wage, and another impact of the Hallowe’en Budget was that, as we have heard, the Chancellor reduced retail, hospitality and leisure relief from a 75% discount to a 40% discount. That has been another major hammer blow to the sector’s financial wellbeing.
We know that the Budget has had a big impact on the hair and beauty sector because the National Hair & Beauty Federation has just published a report examining it. It says that businesses in the sector are expected to incur an additional £139 million in costs, and that is before making any operational adjustments. Labour expenses alone will rise by £100 million. The report revealed that, as a result, 72% of businesses anticipate having to raise prices; no wonder the IMF is calling out the inflationary impact of this Budget. Furthermore, 45% of the businesses intend to cut their staff hours and another 45% plan to reduce their workforce. On average, each business expects to lay off 2.7 full-time equivalent employees and an apprentice. Overall, the sector’s profits are expected to decrease by 15%, with turnover down by £20 million and corporation tax therefore decreasing from £240 million to £200 million. Indeed, the sector’s total tax contribution is anticipated to fall by £44 million, which is a great example of the Laffer curve in reverse.
Following the Budget, the Hair and Barber Council polled hair professionals across the country. Of the 2,000 respondents, 42% are now considering closing their businesses in the next 12 months, 80% said they are now being forced to consider moving to self-employment, 94% said they are either extremely concerned for the future, or believe that a generation of apprenticeships will be lost, and 98% do not believe that the sector is valued by this Government.
Can the Minister confirm whether the Government commissioned any kind of impact assessment of the potential impact of the changes to national insurance in the Halloween Budget on the number of apprenticeships offered by high street businesses? We already know that the Employment Rights Bill will add a further £5 billion of costs across the whole of UK businesses, so what assessment has he made of the potential impact of the 2024 Halloween Budget on the level of employment of women in the hairdressing and beauty industries?
Another long-standing concern that we heard raised in the debate was about tax avoidance and criminal activity, particularly by illegal barber shops linked to money laundering. I tabled a written question to the Home Office on this subject and received the following response:
“According to a report by the Local Data Company and Green Street, the average number of barber shops per 10,000 people has more than doubled in the last 10 years, from 1.4 per 10,000 people in 2013 to 3.1 per 10,000 in 2023.”
What assessment has the Minister made of criminal activity among barber shops and what steps are the Government taking to tackle it?
We have heard today how important the hair and beauty sector is to our high streets and to everyone in our constituencies who uses it. The Government’s Halloween Budget has delivered a devastating blow to the sector and put its future in jeopardy. Will the Minister commit to reversing these damaging tax increases?
The Parliamentary Under-Secretary of State for Business and Trade (Gareth Thomas)
In the usual way, let me begin by congratulating the hon. Member for Hornchurch and Upminster (Julia Lopez) on securing this debate. Let me say at the outset that, as in all the debates that I am privileged to participate in, her and in the main Chamber, there are points in this debate for many other Government Departments as well as my own to consider. I am happy to make sure that those Departments have heard the different insights—let me put it in those diplomatic terms—offered by Members in this debate.
As well as hearing from the hon. Member for Hornchurch and Upminster, we heard from the right hon. Member for New Forest East (Sir Julian Lewis), my hon. Friends the Members for Ribble Valley (Maya Ellis) and for Stourbridge (Cat Eccles), the hon. Members for Bromsgrove (Bradley Thomas), for Gosport (Dame Caroline Dinenage), for Strangford (Jim Shannon), for South Northamptonshire (Sarah Bool) and for Solihull East (Saqib Bhatti), and the hon. Member for Chippenham (Sarah Gibson)—the spokesperson for the Liberal Democrats—and the hon. Member for West Worcestershire (Dame Harriett Baldwin).
Let me begin by responding to a couple of the points that came out in the speech by the hon. Member for Hornchurch and Upminster. I also take this opportunity to commend her and other hon. Members for the support they have shown for hair and beauty businesses across the UK, including in their constituencies.
While I was researching in preparation for this debate, I noticed that the hon. Lady ran a campaign to highlight the very best salons in her area so that they could be nominated for the British Hairdressing Awards. I do not know whether Wyndham Hair was one of those that she nominated, but I certainly wish it well in the coming months.
It is very important that we continue to champion this sector as individual constituency MPs, because of the significance that hair and beauty businesses have to our economy, our high streets and all our daily lives. Many Members have asked about the extent to which the Government engage with the hair and beauty sector, and I can confirm that I regularly meet the sector to understand its views and concerns. The very first business that I visited on my appointment was the excellent Pall Mall Barbers, founded by the remarkable Richard Marshall; he could not read or write when he started in the industry, and he now runs some eight stores in central London and New York.
As well as visits, those conversations with the sector include holding roundtables with key representatives of the industry, the next of which is due next month. I think those are important because the hair and beauty sector is one of the industries that I would gently suggest has been neglected for too long over the last decade. Economically, the industry contributes some £25 billion to the UK economy and employs over 550,000 people. Hair and beauty businesses, as Members have rightly set out, are found on every high street and in every town and village in the UK. They are essential for pulling people to the high street and help to generate the footfall that keeps other local businesses there.
However, it is true that the contribution of the industry is far more than an economic one, and the hon. Member for Hornchurch and Upminster also rightly drew that out in her contribution. It is an industry that should be championed for its female entrepreneurship, for the opportunity it brings to people from all backgrounds, and for its role, on occasion, in combating mental health challenges. For example, over 80% of hair and beauty workers are women, and almost of 90% of businesses in the sector are owned by women. Almost half of all jobs in the sector are in areas with traditionally high levels of unemployment, which I think underlines the contribution that the sector makes in getting people into work and into an exciting and creative career path.
Whether it is getting a fresh haircut, a massage or even just chatting to their beauty therapist, many people relish the conversations that their local salons offer. I am not sure there is much that a beauty therapist in Harrow West could do for me, but I certainly value the conversations and skill of the barbers at Paul’s in north Harrow in my constituency.
In short, hair and beauty businesses are a vital pillar of our high streets and communities. I recognise that it has been an exceptionally challenging decade for high street businesses, and that includes the hair and beauty sector. The pandemic, followed by the cost of living crisis and rising interest rates, forced many hair and beauty businesses into high levels of debt, depleted cash reserves and reduced profit margins.
Opposition Members may not like to hear this, but the Government inherited a very challenging fiscal position, so we had to make some very difficult decisions on tax, spending and welfare at the autumn Budget. Some of the measures in the Budget have concerned the industry, but I believe that those decisions are important for delivering long-term stability and, in time, and even more significantly, economic growth. Many hair and beauty businesses will benefit from some of the other measures that the Chancellor announced.
Dame Caroline Dinenage
It is entirely predictable that the Minister is trying to push the blame on to the previous Government for some of his Government’s decisions. Does he not agree that actually this is such a retrograde step? As a number of Members have tried to explain, what he is seeing from these small businesses is a decrease in the tax take and a decrease in employment opportunities. At a time when his Government have bet the house on growth, all he is seeing is a decline in growth. Surely that is a decision, not a position that he has been forced into, and it is a retrograde step.
Gareth Thomas
I would have thought that the hon. Lady would welcome the measures we took in the Budget to protect the smallest businesses. We increased the employment allowance so that almost 1 million employers pay no national insurance contributions at all. More than half of employers will see no change or gain from that package, and that includes many hair and beauty businesses, as the vast majority of them are micro-sized.
Sarah Gibson
Does the Minister not agree that, at the same time, he reduced the threshold at which that measure steps in, such that any allowances mean that it is counterproductive to most small businesses? There is an increase in NICs once they pay it, and the fact that they pay it on a £5,000 rather than £10,000 employment means that lots of part-time workers are suddenly liable for employment contributions when they were not before.
Gareth Thomas
I will go back to the point I made earlier. We inherited a very difficult fiscal position, which, to be fair to them, the Liberal Democrats do accept. Unfortunately, the Liberal Democrats never like taking difficult decisions in my experience, although they are happy to support the benefits of those difficult decisions.
We sought to protect small businesses as much as we could in the Budget, in order to repair the finances of the country going forward. We are also creating a fairer business rates system that protects the high street, supports investment and is fit for the 21st century. We have committed to reforming business rates from 2026-27 with a permanently lower multiplier for retail, leisure and hospitality businesses, which will include hair and beauty salons.
I also understand that the sector is competing against unfair and illegitimate businesses, as many hon. Members drew attention to. His Majesty’s Revenue and Customs recognises that tax can be very complex, and we are working with the sector to help businesses to remain within the rules. However, there are those who are engaged in criminal activity, and we take that very seriously. As has been well chronicled across various media outlets, the National Crime Agency has been co-ordinating Operation Machinize, during which 265 premises were visited and officers secured freezing orders over bank accounts totalling more than £1 million. Other work in that space is ongoing. We will continue to support law enforcement partners to tackle high street crime more generally. Improved funding to help those partners go after gangs was also announced in the Budget.
Later this year, we will be publishing our small business strategy, which will set out the Government’s vision for small businesses. It will focus on boosting a range of support to businesses to create thriving high streets, make it easier to access finance, open up overseas and domestic markets, build business capabilities, and provide a strong business environment. All those are vital to the growth and resilience of the hair and beauty industry, and I will certainly continue to work with the sector as the strategy develops.
My hon. Friend the Member for Ribble Valley specifically asked me about the consultation run by the previous Government, and whether the Government are going to respond to it. We are due to respond as soon as possible. The Department of Health is leading on that issue, so I hope she will continue to watch this area and campaign on it going forward.
In conclusion, I know that the hair and beauty industry is incredibly important to every high street and every community in the UK, and I will continue to champion it in the House and across Government.
Julia Lopez
I thank every colleague who has spoken so passionately on behalf of their local businesses and the local people who run them. I hope I have done justice to the local business in my patch for the challenges it is facing. I appreciate all those who supported me in preparing for this debate.
I thank the hon. Member for Stourbridge (Cat Eccles). She was courageous in admitting that national insurance has become a problem for some of her local businesses. My hon. Friend the Member for South Northamptonshire (Sarah Bool) raised the importance of hair to the sense of self. I neglected to mention a very important business in my Hornchurch constituency: Bear with the Hair, which helps women who are going through hair loss in relation to cancer treatment. These are the kinds of businesses that are being affected by these challenges.
My hon. Friend the Member for Bromsgrove (Bradley Thomas) and the hon. Member for Ribble Valley (Maya Ellis) raised the important issue of rogue operators. My real fear is that if we drive some of the legitimate operators out of business in the salons that are regulated, we will simply see more of this kind of activity proliferate. My hon. Friend the Member for Meriden and Solihull East (Saqib Bhatti) is always a strong voice on small businesses, and I appreciated his support today.
I wish my hon. Friend the Member for Gosport (Dame Caroline Dinenage) luck with her hair and beauty roundtable. She made the point very well that these taxes are fundamentally counterproductive. My right hon. Friend the Member for New Forest East (Sir Julian Lewis) is always very sound on security and economic issues. He raised the important issue of some businesses being fronts for international crime gangs, a concern that I share deeply. Finally, I would like to say that the hon. Member for Strangford (Jim Shannon) is beautiful inside and out—and I finish by saying that this measure is against Labour’s fundamental aims.