Pension Funds: Financial and Ethical Investments

Debate between Alan Whitehead and Richard Graham

Wednesday 22nd May 2019 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I congratulate the right hon. Member for Kingston and Surbiton (Sir Edward Davey) on securing this debate. I think he slightly understated the carbon bubble in his opening remarks. The carbon bubble—basically the evaluation of assets that we know will never be realised—is not something that might burst in the not too distant future. It will inevitably burst because energy companies have systematically overvalued their assets and put them on their balance sheets. Not only will the historical overvaluing be in question, but all the valuing for the future will be in question, basically in line with where we now know we have got to go on net zero in our economies.

I prefer to call the carbon bubble a carbon boil. I am afraid the image is rather poor, but what we can do with a boil is lance it before it bursts, and that is the exercise we should be engaged in right now. The suggestions that the right hon. Member for Kingston and Surbiton put forward for doing that were sound. However, pension funds are complicit in the carbon boil/bubble because, by and large, they consider their fiduciary duty to be about getting the best for their pensioners over the next few years. They do not generally look at the long term, and do not think they are required to do so as far as their funds are concerned. The Governor of the Bank of England recently described it as

“the tragedy of the horizon”.

[Richard Graham]

To reassure the hon. Gentleman and others, it is perfectly possible for pension fund trustees to take the view that their fiduciary duty of obtaining good returns to deliver the pensions expected is not incompatible with taking into account huge amounts of other issues, including climate change. It is important that we all recognise that. We have a duty to look at that as well.

[Dr Whitehead]

I agree with the hon. Gentleman that some pension funds are beginning to take a different view. Indeed, that different view is becoming more possible, but the general consideration of the fiduciary duty remains a short-term gain for pensioners in the funds. Of course, the people setting out on their working lives will not get the benefit of those pension funds for 30 or 40 years. During that time inevitably we have to move to the net zero carbon economy. It is therefore essential that pension funds have a duty to look at the long term.

Nuclear Safeguards Bill

Debate between Alan Whitehead and Richard Graham

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 23rd January 2018 Commons Chamber

[Dr Whitehead]

Yes, indeed. I suspect that the hon. Gentleman and I are going to agree substantially on this. We regard the Bill as necessary in the context of the possibility that, after Brexit, no arrangements can be brought about with Euratom, either associate membership or full membership. The Bill will then ensure that the nuclear industry is clear about its future and that the arrangements for our international obligations can be properly carried out in the absence of those arrangements. We have indeed been constructive and helpful during the Bill’s whole passage through Parliament. However, that does not detract from our thinking that a number of its procedural elements should be strengthened in relation to what we do while it is gestating and coming to potential fruition after the point at which the things that we are doing may not have had any success.

The hon. Gentleman will see that in some of our amendments we are also trying to make sure that Parliament is fully informed of what processes are under way while we get to the position that the Bill could, or could not, come into operation. That is important for Parliament’s sake. After all, we are in new territory with regard to this Bill, and we therefore have to do a number of new things in legislation that fit the bill for our future arrangements. That is essentially the beginning and end of what we are trying to do through this group of amendments.

[Richard Graham (Gloucester) (Con)]

I am puzzled why new clause 1 is necessary. All its ingredients are issues that form part of the transition negotiations that our country is going through with the European Commission. It therefore seems bizarre to try to legislate that

“conditions under which the UK is a member of EURATOM before exit day shall continue to apply”

during the transition. On that basis, we would be legislating for all sorts of things that form part of the negotiations to continue during the transition. What would the hon. Gentleman say to that?

[Dr Whitehead]

The hon. Gentleman has slightly got ahead of me, because I started by talking about new clause 2, and I am about to start talking about new clause 1. He thinks that new clause 1 may be superfluous. I would suggest that because this Bill is about procedure as much as fact, the new clause sets out a procedure that we need to undertake in the event of certain things not happening, and it is important that a number of those possible events are covered in the Bill. Should it not prove possible to remain a member of Euratom, for various reasons, it is important to consider the idea of a transition period after which we would then be in a position to fully carry out our obligations to the IAEA and other agencies separate from Euratom. That, indeed, is what the Bill is essentially trying to bring about. The Bill is predicated on the notion that membership or association with Euratom will not be possible, and it is therefore necessary to recreate the arrangements for nuclear safeguarding that have served us so well in a solely domestic form and thereby enabled us to negotiate separate voluntary arrangements with the IAEA and, indeed, separate bilateral agreements with a number of other countries, including the United States, Australia, Japan, and Canada.

--- Later in debate ---

[Dr Whitehead]

I would have thought that the Bill, in whatever form it eventually emerges, demonstrates the opposite. Yes, there are a number of negotiations to be undertaken. We do not yet know the results of those negotiations. We have not left Euratom, which, it is generally agreed, has served our purposes very well. The new clause would enable us to signal, in the event of all those negotiations not working, that we are nevertheless still able to fulfil our obligations to the IAEA and to show it that we have a regime in place that does the business with regard to nuclear safeguarding from the point of view of the IAEA’s concerns. Putting forward this Bill as a contingency measure, as the Secretary of State said was the case, is important in the uncertain position we are in at the moment. Nevertheless, we will need certainty, over a relatively short period, with the bodies that are responsible for policing and organising the nuclear non-proliferation treaties and the whole arrangements relating to nuclear safeguarding. I think, if I may say so, that that is the right way to do it as far as putting a Bill before the House is concerned. The Opposition do not dispute that: we think it is right to have the Bill as a contingency. Our concern, however, is whether there are sufficient elements to the process part of the Bill to ensure that it works as well as it could. That is really the point of difference on the Bill at the moment.

[Richard Graham]

The hon. Gentleman knows that this is incredibly important to him and several of his colleagues, and it is incredibly important to me, with EDF Energy’s operational headquarters for nuclear in my constituency and Horizon just down the road, so we are all coming from the same point. His specific proposal—I am talking about new clause 1 again—is very specific. It even mentions a period of two years, although the transition period that is being negotiated may well come to an end at the end of 2020. In effect, he is asking the Government to legislate on something over which they do not have control. Surely the better approach is to plan for the contingency, as he has already agreed, and recognise that the other elements—Euratom and other agencies—are all subject to a negotiation that this House cannot, by its nature, control.

[Dr Whitehead]

That is a little strange in that the Prime Minister referred to transition periods for the overall EU negotiations in her Florence speech, and the Secretary of State did so strongly in his written statement on 11 January. If the hon. Gentleman wants to be assured, as far as the nuclear industry is concerned, that there will be a seamless transition at the point at which we are no longer a member of Euratom, I would have thought he ought to be strongly in favour of aspiring to a transition period. As he knows and we know, the process of recreating in the UK all the things that have been done by Euratom for 40 years—we will discuss that later—will be extremely difficult, lengthy and problematic. It will certainly, in the opinion of many people, be extremely difficult to achieve in the period ahead if we corral those negotiations and are to complete them by March 2019. If he thought about it for a moment, he would recognise that the last thing we could conceivably want is a period of, in effect, nuclear shutdown, or of defaulting on our international obligations because we are not ready to carry them out on Brexit. That is why a transition period may be so important.

[Richard Graham]

Yes, of course we all want a transition period, which is precisely a part of the negotiations. What I struggle to understand is that the scenario the hon. Gentleman describes is in effect not within our control. The transition we are seeking is being negotiated—in fact, the Minister and other Front Benchers have made it absolutely clear several times that we want to continue the relationship with Euratom as deeply as possible—but I cannot see the need, in a legislative context, for his proposed new clause 1. In fact, I do not believe it would be possible for any Government conceivably to agree to it.