Emission Reductions and Low Carbon Investments

Peter Grant Excerpts

Monday 12th December 2016 General Committees

[Mr Hurd]

We are open to mechanisms and discussion about the how. The point that we are trying to make is that we need to accelerate the process of taking surplus allowances out. We think the MSR continues to be the right primary tool for doing that; the issue is the pace at which it is done. We are trying to gather support for doing that on a bigger scale at a faster pace.

[Peter Grant (Glenrothes) (SNP)]

I have questions on three different aspects of the Minister’s statement. With your permission, Chair, I will go through them all now, so the Minister can deal with them together.

First, the Minister has confirmed that no decision has been taken as yet as to whether the UK wants to be in or out of the emissions trading scheme after leaving the European Union. What are the implications for the UK’s future influence on the rules of the scheme if we decide to stay part of the scheme but not part of the European Union? We would not have a place on the Council of Ministers and so on when EU directives were being agreed.

Secondly, although—

[The Chair]

Is this the second question?

[Peter Grant]

Yes.

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[Mr Hurd]

I have explained the decision we have taken. As with many of the climate-related issues in relation to the EU—we have participated in negotiations about the burden-sharing regulation following the Paris agreement and this scheme—we have taken a view that while we are still a member of the European Union we will participate fully in these negotiations. Whatever we do in the future in terms of our ongoing relationship, these negotiations matter for our national interest. It is entirely right that we are at the table negotiating fully.

Our participation in these reform discussions has been welcomed, as far as I can see, by our European partners. There has been no resistance, and no suggestion at all that we are not in a position to influence the future. In fact, our participation is welcome—not least because most people recognise that we were one of the principal architects of the scheme and one of the thought leaders on how we can make the mechanism work in the future. Our participation is welcome, and our influence continues to be real.

[Peter Grant]

With respect, the Minister is describing what happens now, while the United Kingdom is still a full member of the European Union. Although the directive is intended to run until 2030, it will not be long before we have to start looking at updates, reviews and amendments; the next time the European Union looks at amendments to these regulations, it is likely that the United Kingdom will no longer be a member. Is there any process in place by which states that are not members of the European Union can have a say and, if necessary, a vote on any future revisions of the directive?

[Mr Hurd]

We are talking about negotiating the principal elements of the reform of the emissions trading scheme. As far as I can see—it is a fairly opaque process—that is due to be completed by the end of 2017. That is when the base of the agreement is likely to be reached, and work can then begin on underpinning the implementation. That is well within the Brexit timeframe. Our view, therefore, is that we should continue to be a very constructive, positive, inquisitive voice at the table to ensure that the next phase of the emissions trading scheme—I would argue that it is in one of the most critical phases in its history—is structured in the right way.

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[Mr Hurd]

The hon. Gentleman’s first question—he tempts me to allude to models that I might have in my mind—takes me into the territory of providing a running commentary, which would have career consequences that I am not prepared to contemplate. The point is fundamentally right: we are one of the principal architects of this system. It matters a lot, because at the moment the emissions trading scheme covers 50% of our emissions, and we have very serious long-term carbon targets, so getting it right and making it work more effectively is absolutely in our interests. We have an opportunity to do that by shaping these negotiations. Once we leave the European Union, there are options to think through. The hon. Gentleman is right that there are models whereby countries continue to participate in a scheme and influence the rules. However, we are categorically not at the point where we have got a clear view on that. We have to look at it in the round and think through what is in the national interest.

On the hon. Gentleman’s second point, he is entirely right to recognise the structural failure—if that is not too harsh a criticism—of the emissions trading scheme in setting a price for carbon that drives behaviour. We are now talking about €4 a tonne, and I do not think anyone is arguing that that is as powerful a driver of behaviour as we would like. This country took a unilateral decision to implement the carbon price support mechanism. In that context the carbon price signal and the emissions trading scheme matter a great deal to us because ultimately the objective should be to ensure the level playing field across Europe we want so that our industry remains super-competitive. That in large part underpins his point. The point I am trying to make is about why it is in our interests to ensure that the reform of phase IV of the emissions trading scheme is sufficiently ambitious in terms of taking out surplus allowances to give the opportunity to narrow the divergence between the carbon price in the UK and that across the EU.

[Peter Grant]

With reference to the 1.8 billion surplus allowances to which the Minister referred, simplistic economics theory of supply and demand suggests that supply is far too high and that we should cut it and reduce the overall emissions target for the whole of the EU. Is the fact that so many allowances are going spare an indication that the EU could be more ambitious in the targets it sets for others to reduce carbon emissions more quickly than we were doing previously?

[Mr Hurd]

That is a good question; let me break that down. On ambition, because we are talking about a cap and trade scheme, there is a debate about whether the level of ambition should be accelerated. The Council’s suggestion is that the current reduction of 1.7% a year should be escalated to 2.2%. There is a discussion about whether there should be more ambition, but I do not detect any real political traction behind that and therefore the focus of our energy—apart from on preserving fiscal sovereignty, pursuing simplicity and the other things I mentioned—is on gathering a coalition of the ambitious in terms of accelerating the withdrawal of surplus allowances from the system.

[Peter Grant]

My final question, I promise. As I look at the exchange of correspondence the Minister and his predecessor have had with the Chair of the European Scrutiny Committee, I note that his predecessor wrote on 23 November 2015, in agreeing to the request for the debate, that it would be better held in six or 12 months’ time once the shape of the new directive had become clearer. Almost exactly 12 months to the day, the Minister wrote to the Scrutiny Committee asking for scrutiny to be lifted because there was not time to hold a debate in the four weeks that remained before the Council decision. Can he see why that kind of behaviour causes members of the Scrutiny Committee and others to wonder how committed various Departments are to holding themselves properly to account and to parliamentary scrutiny? Will he explain why on 21 November neither he nor presumably his colleagues who set House business thought it would be possible to timetable a two or three-hour debate in the four weeks between then and the intended Council decision?

[Mr Hurd]

I opened with, in my experience, uncharacteristic candour on behalf of the Government in saying that I do not think our Department demonstrated best practice in that way. It is quite hard. We are having the debate 12 months after my right hon. Friend the Member for South Northamptonshire (Andrea Leadsom) made it quite clear that we were open to that. The situation has moved very slowly from one where there was frankly nothing to debate to one where under the Slovakian presidency everything was turbo-charged and moving fast. Our first instinct—I think a natural one—was to say that with things moving so fast perhaps we did not have time, but on reflection I am extremely glad we are having the debate.

I emphasise that I and the Department are aware of the importance of proper procedure, in terms of scrutiny clearance, not least in the present context. I have been candid about putting our hands up to say I am not sure we have demonstrated best practice; but we certainly intend to do so.

Student Loans Agreement

Peter Grant Excerpts

Monday 18th July 2016 Westminster Hall

[Paul Blomfield]

My hon. Friend is perhaps making all our speeches redundant: she has summed it up in a sentence. Nevertheless, I will continue.

My hon. Friend makes an important point. Let me cite one of my constituents who has written to me. Rachel Stamper is due to graduate soon from Sheffield Hallam University. She started her degree—a bachelor of arts in early childhood studies—back in 2013. She made careful calculations before she started. She looked at what the Government said—that she would have to pay back on the money she borrowed. Like everybody else, she was told that from April 2017 the £21,000 repayment threshold would start to rise annually with average earnings. She based her decision to go to university on that information, because she thought that she could trust the Government.

Rachel made the calculations about what she could afford on the basis of the trust that she put in the Government. Now, she expects to pay thousands more over the life of her loan, because, given her area of study, she will graduate with an incredibly socially useful degree, fulfilling a positive and useful role within our society, but she is not necessarily going to be a high earner. As Rachel said to me, this is about more than “just money”:

“A retrospective change will destroy any trust I, and future generations, have in the student finance system, and perhaps even more widely, in the political system as a whole.”

This proposal was part of a double whammy announced by the then Chancellor after the election last July. As Osbornomics seems to have been rejected by the new Prime Minister, perhaps we now have a little bit of wriggle room to examine some of its more toxic components. This change is clearly one of them, because the first part of that double whammy was the abolition of maintenance grants, which in many ways overshadowed the decision we are talking about today. Nevertheless, the change in the threshold is important because it will have a genuine impact on graduates.

Why are we here today? Why are the Government proposing this change? My hon. Friend the Member for Warrington North made the point very well. Going back to 2012, the year before the system came in, many of us argued that the proposed new system was not only unfair, but that it had not been properly thought through—there was a back-of-an-envelope calculation of what the cost would be. In particular, we talked about the cost of unrepayable debt—the so-called resource accounting and budgeting, or RAB, charge. I remember the Universities Minister at the time, for whom I had a high regard, arguing on the Floor of the House and in the Select Committee on Education, on the number of occasions we scrutinised him about it, that he was confident that the RAB charge would settle at around 28%. As the conversation went forward over the years, he talked about 30% and then the upper 30s. Then it was 40% and finally, in our last exchange in the Select Committee, he said that the Department for Business, Innovation and Skills was modelling it at more than 50%, at which point the new system was clearly costing us more than the old system, on top of being unfair.

Something had to give, and it was clear before the last general election that something was going to give. I asked Ministers on the Floor of the House for assurances that they would not make students pay for the Government’s own mistakes by changing the terms of the system. I was told, in this great language that people use before elections, that there were no plans to do so. Well, no sooner were the votes counted than the plans were rolled out.

[Peter Grant (Glenrothes) (SNP)]

I have no doubt that the hon. Gentleman would have studiously examined, as we all did, all the election manifestos at the time. He will be aware that there was no mention whatsoever of the change in the Conservative manifesto, yet it was imposed within a few months of the party coming to power.

[Paul Blomfield]

The hon. Gentleman makes an important point, which goes back to the issue of trust that is at the heart of today’s debate. We pushed the Government on the matter in the previous Parliament and there was no indication that the change was going to happen. We looked at the manifesto, and there was no indication there either. As soon as the election was out of the way, it happened: graduates being forced to pay for the Government’s mistakes. As the hon. Member for Southport (John Pugh) said, there was a consultation on the change. People think, “A consultation—presumably that is because the Government want to listen,” which is not an unreasonable starting point. Some 84% of the respondents said, “This is a bad idea.” What is the Government’s response? “Great stuff. We’ll go ahead.”

We face a system in which not only are those who did not expect it being asked to pay more, but, as my hon. Friend the Member for Walsall South (Valerie Vaz) pointed out, those who will earn the least will be hit the hardest. The Government’s equality impact assessment said:

“In terms of lifetime earnings, our analysis shows the greatest financial impact will be concentrated on those with around median lifetime earnings (between £20,000 and £35,000)”.

The figures are clear—the Government’s own figures. A graduate earning between £21,000 and £36,000 will pay an extra £6,100. By contrast, those earning more than £40,000 will pay an extra £400 and those earning more than £50,000, an extra £200.

A recent Sutton Trust report shows that although the overall average extra repayment will be £2,800—on the trust’s numbers—the gender pay gap means that women graduates will be disproportionately affected. Black students will also be disproportionately affected. The Higher Education Statistics Agency destination of leavers data show that, although the variance in non-black graduates’ salaries is larger than that for black graduates, there is more of a bunching effect for the latter, between £20,000 and £30,000, which is the salary range that will be most affected by the proposed changes. All those discriminatory impacts conflict with the Government’s stated objectives of widening participation in higher education and of trying to get those who are not traditional participants engaged more fully. All that mess is because of the Government’s initial mistakes in introducing the 2010 system.

I represent more than 36,000 students, more than any other Member of Parliament. Thousands graduate from the two universities in my Sheffield constituency. Because of this measure, Sheffield graduates are being made to pay for the Government’s mistakes, with the terms of the deal being changed long after they signed up to it. If a second-hand car salesman tried, years later, to get a customer to pay more than the contracted deal, he would be referred to trading standards. With a bank, there would be action by the Financial Conduct Authority. Why should the Government be subject to different standards? This is fraudulent behaviour. It undermines trust in the Government and confidence in the student loan system. I urge the Minister to think again.

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[Peter Grant (Glenrothes) (SNP)]

You obviously do not know me if you are telling me I have additional time, Mr Pritchard. It is always a pleasure to serve under your chairmanship and a pleasure to serve under one of the jackets-off brigade of Chairs. I thank you for that.

I am pleased to be able to contribute to this debate, although if this issue ever finds its way to a specific vote in the Chamber of the House of Commons, I will probably not be allowed to vote on it, thanks to the delights of English votes for English laws, which assumes that nobody in my constituency is affected by the changes or even cares about them. My email in-tray suggests that my constituents are affected and do care.

For me, there are two principal arguments against what the Government have done. First, and most obviously, it is the wrong thing to do. It discourages students, especially those who are less well off, those from ethnic minorities and those who are disabled—the very people who have lost out on university education opportunities in the past—from fulfilling their full academic and professional potential.

Secondly, it is wrong because of the way in which the Government did it. They used a Commons majority to force through changes within a few months of an election. I should correct hon. Members who said that the proposal was not mentioned in the manifesto; it was, but it was written in such a way—it talked about maintaining improvements and progress made in 2010—that anybody reading that brief mention would think that it was an undertaking to abide by the promise made in 2010. It certainly was not an undertaking to throw that promise out of the window. The way the Government did it was wrong. The fact that they held a consultation, then ignored the views of 84% of respondents means that the entire consultation was a complete and utter waste of money. We have to wonder whether it was carried out just to create a veneer of respectability.

Some people would advance a third argument about the legality of the whole thing. I am not going to get into that argument because I am not a lawyer. For me, this is not about whether it is legal or illegal. It is wrong—end of story. Even if it is ever proven to be completely within the law, it is still wrong; that is why it should be changed. It is wrong because it stands in the way of us moving towards the kind of society that I and all Opposition Members want to see. If we believe the new Prime Minister, it is the kind of society that she wants to see, too.

The Government’s equalities assessment, which is cited in the House of Commons Library briefing, and which some Members have referred to, states that the average increase in repayments is likely to be greater among women than among men. Although the findings about the impact on people with disabilities and those from ethnic minority groups are not clear, there is a high likelihood that, because of their income range, they will have to pay proportionately more. This is not a step towards creating a society in which women, people with disabilities and people from ethnic minorities are finally able to make up for the disadvantages that they have had to bear for far too many generations. The Government can hide behind a fig leaf, as they did in the analysis by saying that the impacts are small, very small or relatively small, but a backwards step is a backwards step, regardless of how small it is. The fact that the Government made the change in the full knowledge, from their own research, that it is a backward step has to make us wonder how committed they really are, whether under the previous or the new Prime Minister, to opening up access to university education for all.

I believe that it is not work per se but education that helps people to deal with poverty. We can see perfectly well that more people are working, yet more are in poverty. The reason why so many people are in poverty is that they are working in low-paid and insecure jobs. The way to deal with that in the longer term is to increase the standards of education and the opportunities for education that are available to each and every person. Education should be limited only by a person’s ability to learn and willingness to work, not by their ability to pay, their parents’ ability to pay or, in some cases, their children’s ability to pay—that is how long the loans are going to continue.

All this is in marked contrast with what is happening under the Scottish Government. I want to talk about that briefly, because it demonstrates that the changes are not being made of necessity; they are a choice. In Scotland, we have a deeply held belief that education is for everybody, and that it should be a way of reducing inequalities, rather than perpetuating or even increasing them. While the Tories, with some support—with the honourable exception of the hon. Member for Southport (John Pugh)—trebled tuition fees in England, the Scottish National party Government in Scotland continued to protect our 120,000-plus undergraduates from having to pay tuition fees. The Scottish Government continue to fund the education maintenance allowance scheme, which helps 132,000 young people from poorer families to continue their school and college education. The Conservative Government down here have abolished that scheme.

We do not see financial support to students as a giveaway. It is obscene that the Government talk about the notional £100,000 of additional earnings that graduates can expect to earn over their lifetime. If graduates earn that much more because they are graduates, they will pay it back through their income tax anyway. That is how high earners should be taxed. They should not be taxed additionally because they happened to have attended university. I have never ever met a nurse, a teacher or a social worker who enrolled as a student of those professions to get rich. I have never known a student nurse, a student teacher or a student social worker who could tell me on the day they matriculated or the day they graduated how much they expected to be paid over their lifetime. That is simply not what brings people into those vital and all-too-often undervalued professions. Let us stop saying that these changes are minor because they do not make much difference to people’s long-term, lifetime earnings. They are enough to deter people who are scared of the idea of leaving university with a student loan debt that is two or three times as much as their first annual pay packet is likely to be.

Members may not be aware that the Scottish Government continue to provide bursaries for nurses and midwives because we accept the need to train highly qualified nurses and midwives to run the health service in future. We continue to give non-repayable bursaries of £6,578 per year, with additional support if the student nurse or midwife has childcare responsibilities, for example. By comparison, the UK Government seem more interested in making sure every newly qualified nurse or doctor comes out of university with terrifying levels of debt. They should now expect to have unfair employment conditions imposed on them at any time on the Secretary of State’s whim without proper negotiation or consultation. The Government may think that bringing in immigrant workers will plug the desperate skills shortage in the health service, but they are closing the door to prevent those desperately needed workers from coming into the country. The Government then wonder why people do not have any confidence in them to run the health service or any other public service.

Even before these changes began to bite—figures were cited earlier, but these are the most up-to-date ones I was able to find—the average student loan debt for a new graduate in England was £24,540. In Scotland, it was just a shade over £10,500. That is the difference that can be made to a new graduate’s starting position if we have a Government who believe in investing in higher education and supporting students at a time when they should be concentrating on their studies, not worrying about their bank balance.

I cited those figures to demonstrate that the Government’s claim that they cannot afford a fairer system of student support is nonsense. It is perfectly affordable if they make it a priority. The Scottish Government think it is important and are prepared to make difficult decisions elsewhere to invest in education, not simply because of the benefits to the people who are educated, but because of the immense and immeasurable benefits that those people bring to our society by working in our health service, our schools, our public services and our private industries to boost the economy and generate wealth that we can all share in.

At 10 o’clock tonight, almost everybody in this Parliament who says that we cannot afford to treat our students fairly—not many of them are represented here—will vote to spend £200 thousand million on something whose only possible purpose is to commit a crime on an unimaginable scale. That is where our priorities are just now. If anybody watching this debate thinks it has been one-sided—I have done a rough calculation, and about 85% of people have spoken against what the Government have done—that is how one-sided the Government’s consultation was: 84% were against the Government. It is no surprise that the Minister is here on his own, and that none of his pals want to speak in defence of the policy. A couple have come along, but none wanted to speak. The imbalance in this debate is an indication of the depth of feeling across society as a whole against what the Government have done. It is not too late for the Government to change, and I hope they will do so very quickly.

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[Joseph Johnson]

It is important that we make progress across our system. In the guidance that I sent to Les Ebdon, the director of fair access, in February this year—by the way, that was the first guidance that he had had in more than five years—I explicitly gave him strong political support to ensure that all institutions, including those that see themselves as the elite institutions in this country, do the heavy lifting on access and that people who have the capacity to benefit from education at Russell Group institutions get the chance to.

In Scotland, as the hon. Member for Glenrothes (Peter Grant) may be aware, controls on student numbers continue to stifle aspiration and opportunity in a way that is simply no longer the case in England because of the way that we have put our student finance system on a sustainable footing. He made several points in this respect. I steer him towards a recent statement by the Sutton Trust that

“Scottish 18 year olds from the most advantaged areas are still more than four times more likely to go straight to university than those from the least advantaged areas.”

By contrast, the figure in England is 2.4 times. I also point him to a statement by Audit Scotland, which says:

“It has become more difficult in recent years for Scottish students to gain a place at a Scottish university as applications have increased more than the number of offers made by universities.”

[Peter Grant]

I do not know whether the Minister is aware that the Scottish Government have committed themselves to ensuring that 20% of students in Scotland come from the 20% most deprived backgrounds by 2030. In other words, the Scottish Government have committed to doing away with that imbalance completely by 2030. May we be told what the UK Government’s equivalent commitment is?

[Joseph Johnson]

Certainly. We, too, are committed to increasing the proportion of students from disadvantaged backgrounds who go to university. As I said a moment or two ago, we in fact intend to double that proportion by the end of this Parliament compared with the level that we inherited from the previous Labour Government in 2009-10, taking the proportion from 13.6% to 27.2%. We also want the number of students from BME backgrounds who go to university to increase significantly, by 20%.