Oral Answers to Questions

Albert Owen Excerpts

Tuesday 28th February 2017 Commons Chamber

[Mr Philip Hammond]

The most economical way for the Government to fund infrastructure investment is through conventional gilts—that is the lowest cost to the public purse. However, the Treasury backs infrastructure bonds and loans issued by the private sector through the UK guarantees scheme. At autumn statement, I announced that that scheme would be extended until at least 2026. It has played a vital role not just in underwriting and guaranteeing finance for projects, but in allowing a large number of projects to go ahead without the Government guarantee, simply by having underwritten the financing during the programme phase.

[Albert Owen (Ynys Môn) (Lab)]

What steps is the Chancellor—I agreed with his answer on clean-energy long-term projects—taking to support and facilitate with the Welsh Government and with the Department for Business, Energy and Industrial Strategy the Swansea Bay tidal lagoon project, following the Hendry review?

[Mr Hammond]

We have received the Hendry review report and we are considering the merits of the Swansea Bay tidal lagoon project, including discussions with the Welsh Government.

Cerberus Capital Management: Purchase of Distressed Assets

Albert Owen Excerpts

Wednesday 22nd February 2017 Westminster Hall

[George Kerevan (East Lothian) (SNP)]

It is a pleasure to speak under your chairmanship again, Mr Owen. This is a very complex issue. I shall try to cover it as briefly—

[Albert Owen (in the Chair)]

Order. The hon. Gentleman needs to move the motion.

[George Kerevan]

Indeed. I shall move the motion that we are to consider—actually, I do not have the official piece of paper with me; forgive me, Mr Owen.

As I said, this is a very complex issue. I want to be as fair as possible to everyone, including Cerberus itself. I will take interventions, but I ask hon. Members to delay introducing any individual cases until I have developed, as rapidly as possible, the—

[Albert Owen (in the Chair)]

Order. Will the hon. Gentleman take his seat? I want to start doing this properly; we have already had two debates in which the Member did not move the motion. If the hon. Gentleman just reads from the Order Paper, his motion will be in order.

[George Kerevan]

I beg to move,

That this House has considered the purchase of distressed assets by Cerberus Capital Management.

Cerberus Capital Management is an American private equity firm that specialises in distressed investing—purchasing so-called distressed or non-performing loans. Few people in the UK have heard of Cerberus, but it is the biggest purchaser of distressed assets in the world. Since 2010, Cerberus has acquired more than 1.2 million distressed or non-performing loans, worth more than $80 billion. Simply put, Cerberus is the world’s largest debt collector.

Let me begin by saying that so-called distressed loans are often anything but. Since the banking crisis of 2008, we have seen a sorry catalogue of thousands of instances in which banks have forced legitimate borrowers into distress or even insolvency through no fault of their own. The so-called distress that we are discussing is largely manufactured. That has come about for a variety of reasons: interest rate swap mis-selling, the infamous Royal Bank of Scotland global restructuring group’s dash for cash, and outright criminal fraud such as occurred at HBOS Reading.

Even where such egregious or criminal behaviour has not taken place, there are too many instances of banks deciding that they no longer wish to support small and medium-sized enterprise customers in sectors that the lender now considers non-core to its shrinking loan book. As a result, thousands of legitimate customers find themselves being sold on to firms such as Cerberus without their knowledge or against their wishes. Because loans to SMEs are unregulated, those customers have little or no redress. My intention today is to put on record the plight of those badly served bank customers and to expose the exploitative and often inadequate business model used by Cerberus—a model that is also bad for the British taxpayer.

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[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

rose—

[Albert Owen (in the Chair)]

Order. While Mr Mullin takes his seat on the Front Bench, let me say that the debate will finish at 5.44 pm, so Members have plenty of time, but they should leave at least 10 minutes for the Minister to respond to the debate and two minutes for Mr Kerevan to wind up.

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[Roger Mullin]

I agree entirely. Perhaps the Minister will give a more detailed response to that point than I can, because it dumbfounds me that such secrecy has surrounded so much of this.

Yesterday I spoke on the Criminal Finances Bill, so I feel particularly at ease speaking about this matter a day later. As we have heard from a number of Members, much of what has happened has involved what ordinary members of the public would call criminal activity. Indeed, some legal actions are under way; obviously I cannot speak about them in detail, but the fact that they are being pursued speaks for itself. I am not sure what the correct term is, but if there were ever an example of a company that operates to standards that are the very reverse—[Interruption.]

[Albert Owen (in the Chair)]

Order. The Minister and his Parliamentary Private Secretary may pass notes to each other but not speak. There should be only one speaker at a time.

[Roger Mullin]

If the messages that are being passed are going to answer some of my questions, I will not object too severely.

As I was saying, Cerberus is an example of a company that operates to standards that are the very reverse of a duty of care towards small businesses in our country. Surely we can expect the Government to be concerned about the effect on the good people who have suffered at its hands. In my constituency, a perfectly good trading company of many years’ standing was completely destroyed by the actions of Cerberus, in a similar way to another company mentioned earlier. It was willing to repay the loan, but the additional fees that it was stuck with and the way in which Cerberus operated drove it to bankruptcy. I will not name the company, because like other hon. Members I do not want to embarrass anyone who may be listening, but I am genuinely concerned about the health of the family who were treated in that way.

Let me comment on some points made by other hon. Members. My hon. Friend the Member for Ayr, Carrick and Cumnock (Corri Wilson) said in an intervention how difficult it has been to get a conversation between Cerberus and those affected by its actions. It seems that it is unwilling to speak except in the remarkable case that the hon. Member for East Antrim (Sammy Wilson) mentioned, when it sought to buy assets in Northern Ireland and was only too happy to make promises such as adopting a long-term strategy—that would be a novel thing for it to do.

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[Danny Kinahan (South Antrim) (UUP)]

Will the hon. Gentleman give way?

[Albert Owen (in the Chair)]

Order. The hon. Gentleman has finished speaking. I will call the Minister, who may want to give way to you.

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[Roger Mullin]

Minister, you have been talking for some considerable time. Am I being unfair in saying that the gist of your argument is that you do not consider that Cerberus has acted in any way unfairly—

[Albert Owen (in the Chair)]

Order. I know that the hon. Gentleman was referring to the Minister, not to me, but the Minister must respond now.

[Simon Kirby]

It is important that the Government attract good competition and secure a good price, but at the same time safeguard the rights of existing customers. It is not just our assessment that that happened but the conclusion of the independent National Audit Office. The Public Accounts Committee also concluded that the sale had been well executed. There is still work to be done in returning to the private sector assets that we acquired in the financial crisis. We will continue to do all we can to meet the same high standards and keep delivering the highest possible value to the British taxpayer.

[Albert Owen (in the Chair)]

Mr Kerevan has a minute to wind up the debate.

House of Lords Reform and Size of the House of Commons

Albert Owen Excerpts

Wednesday 19th October 2016 Commons Chamber

[Pete Wishart]

They should be thoroughly embarrassed about their membership there because it is the only thing that sustains them as a political force.

[Albert Owen (Ynys Môn) (Lab)]

I will vote with the hon. Gentleman tonight and I think it is a good motion, but I am not certain where this will lead. He talks about a reduction in numbers. Would not the best course be to abolish the other place? I had the privilege in a previous Parliament of proposing that, so that we start from zero. Will the hon. Gentleman outline a plan to replace the House of Lords?

[Pete Wishart]

I shall suggest certain things that we could consider to replace it. The House of Lords is unreformable and there is nothing we could do with it. It has got out of control. It is like a huge undemocratic leviathan cloaked in ermine that would continue to feed on patronage and cronyism. It has very few redeemable features.

Bank Branch Closures

Albert Owen Excerpts

Thursday 30th June 2016 Commons Chamber

[Christian Matheson (City of Chester) (Lab)]

I beg to move,

That this House is concerned about continued bank branch closures and the damage that this causes to local communities, small businesses and the welfare of senior citizens; and calls upon the Government to help maintain access to local banking.

The motion stands in my name and those of the hon. Members for Wells (James Heappey) and for Ceredigion (Mr Williams). This has been very much a joint effort and I pay tribute to them. I would like to thank the Backbench Business Committee for the opportunity to bring this motion and debate before the House today. When the three of us approached the Backbench Business Committee, hon. Members serving on it graciously offered us the day of the local elections as a possible occasion. Knowing that there was wide support for the debate and not wanting it to get swamped by external events, we declined and asked for a later date. That worked out well, didn’t it?

I have a smartphone in my pocket that has an app—let me explain to more senior hon. Members that that means an application—through which I can access my banking services, pay my bills, check my balance and transfer money between my accounts, none of which, I hasten to add, are sited offshore. I can probably even apply for a loan. Banking is changing, and in many ways it is becoming more convenient and perhaps changing for the better.

Convenience, however, does not rely solely on the possession of a smartphone. The physical presence of a bank is still important. Today, I shall not call for a halt to all technological advances in banking. I do not want to go back to the days of accessing cash by having to cash cheques in a branch, and I certainly do not want to go back to the days of using credit card devices that the shopkeeper used to have to fill in by hand and then run a mechanism over to print the credit card details on carbon paper.

[Albert Owen (Ynys Môn) (Lab)]

In my pocket I have a cheque book and a mobile phone, but when I go to the bank, I do not have much of a choice when it refuses to provide many services. The serious point is that many places in my constituency do not have a mobile phone signal, so people face even greater limitations on how they can provide or access services.

[Christian Matheson]

My hon. Friend makes an extremely useful point, and if he will bear with me, I may come on to say more about some of the areas that are suffering the most from these bank closures.

As my hon. Friend has perhaps alluded to, we need to recognise that for many—the elderly, people with caring responsibilities, and small business owners—high street banks’ programmes to close many of their smaller branches and centralise everything in the centre of large towns create havoc for individuals and businesses and damage local communities.

My interest in this issue was prompted by a spate of branch closures in the Hoole area of Chester. Last summer, NatWest announced it was closing its branch there. The excuse was that the branch was underused. Yet I and my team undertook a scientific survey of usage by standing outside and counting people going in over several hours that flatly contradicted the suggestions made by NatWest. HSBC had already gone in Hoole, and it was followed more recently by Lloyds, leaving only a Barclays branch as the so-called last branch in town. Bank branches around Chester had been closed previously, including in the Boughton and Saltney districts.

All our banks are now in the centre of Chester, which has several profound effects. First, it increases traffic into the city centre. Ours is already a congested city built on the beautiful River Dee, but when the Romans founded it and when it became a bustling market town in the middle ages, nobody thought to design it with the needs of 20th and 21st-century car use in mind. Keeping satellite branches is, strangely, good for the environment. More importantly, satellite branches support local businesses.

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[James Heappey]

To be fair to the banks, they did write to notify me of their decision, and the more noise I made in the media, the more willing they were to meet me here to discuss it. However, the right hon. Gentleman would be right to suggest—and I would agree—that it was not exactly a process whereby the local Member of Parliament was encouraged, as a representative of the community, to take soundings on what was actually of value to that community. It was more about assuaging my fears and trying to persuade me that various steps were being taken in mitigation.

I was talking about the vulnerable and the isolated. There are certain things that draw the elderly, in particular, out of their homes over the course of a week, such as going into town to do their banking and to visit the market and the library. When banks are removed from towns and people are told, “We will teach you to be better at using a computer”, that is all well and good, but it does not alter the fact that, for some, that journey into town will have been their interaction with the outside world for that week.

Moreover, digital exclusion is a real problem, in two respects. First, there is the issue of competence. There are people who are just not very good at handling their affairs over the internet. There are people who have been doing things in the same way for a lifetime, and who do not trust the process of putting their financial affairs in the hands of electrons on a screen. They want to give their money to a person over a counter, and see it locked away in the drawer and on its way to the bank’s vaults.

Then there is connectivity. I know this is not a rural-urban issue and I know that the Government’s broadband roll-out programme is making great advances in areas like mine, but the reality is that these banks are closing more quickly than the broadband network is being improved and so even those who are willing and able to do their banking online are not always able to do so.

[Albert Owen]

The hon. Gentleman is giving a very eloquent description of his area’s situation, which I am sure is mirrored across the whole of the United Kingdom. What he is suggesting is that there is no joined-up thinking. We have one Department—BIS—that is responsible for one area and the Department for Culture, Media and Sport responsible for another. There is also a survey by Government to retain and regenerate town centres, which has been ignored, because the hon. Gentleman highlighted four empty buildings in his relatively small town.

[James Heappey]

I am grateful to the hon. Gentleman for his intervention. While of course the Treasury will have an interest in the provision of banking, DCMS will have an interest in the provision of broadband, and the Department for Communities and Local Government and perhaps the Department for Environment, Food and Rural Affairs might concern themselves with the overall impact on the viability of communities in both rural areas and towns.

I am also concerned about the capacity of the post office network to pick up the slack. They are offered again and again as the route out of a bank closure, yet too often there are reasons why the Post Office cannot do more, and I will come to that shortly.

Finally, there is the availability of free-to-use ATMs in our town centres. Replacing an ATM outside a bank with something we need to pay a few pounds to use is not fair on the community that then finds itself needing to access its cash at that expense.

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[Albert Owen (Ynys Môn) (Lab)]

I congratulate my hon. Friend the Member for City of Chester (Christian Matheson) and the hon. Members for Wells (James Heappey) and for Ceredigion (Mr Williams) on sponsoring this debate and the Backbench Business Committee on allowing it.

As has been said, the high street banks are the hub of our communities. Not long ago, as my hon. Friend the Member for City of Chester said, they used to boast that they were the local banks. That is not the case for those who live in north-west Wales. As indicated by other Members, Wales has seen one of the largest number of bank closures across the UK. These are the very same banks that the taxpayers of local communities helped to bail out only a few years ago. We took the responsibility, as a nation, to secure the banking system, but all we have seen is closure, closure and closure.

These closures have been implemented by stealth. There is a trend: first, we see a reduction in services—appointments only in centralised branches—and then hours reductions, when already those hours are not what communities want. If someone works from 9 to 5 and has to commute, their bank will not be open when they leave their home or when they return to their local community. The banks have not adopted the flexible working hours that businesses elsewhere have arranged. Then there comes closure. More often than not, when a bank writes to its customers, after deciding to close a branch, it will call it the most difficult decision it has had to make.

No. The difficult decision would be to work with the local community and keep the bank open. Closure is an easy option for many banks. They have been encouraging people to use online services. My local branch still pulls me up and says, “Would you like to use online banking?” That is not encouraging over-the-counter services; it is encouraging people to move away from their local banks. I do not buy what the banks say about the difficulty of closing branches. It is an easy option for them. Many have overheads that they want to reduce to make maximum profit for shareholders, and that is what is behind many of the closures.

I accept that IT services in the finance industries are evolving and that younger people are happy to use an app. As I said in an intervention, I carry my iPad and my cheque book with me wherever I go, but my ability to use those services is limited in rural parts of my constituency where I do not get a signal. Once, the bank got in touch with me to ask whether I had made a certain withdrawal and it took me hours to pick up the message because of the lack of a signal. I went to the branch to discuss it and got excellent service, but quite often people are not given the choice of going into the bank branch.

Banks have been closing in villages in my constituency for decades. Some have been replaced by a hole in the wall in another shop—the Spar or the post office—but the post office closure programme has compounded the problem in many constituencies, with mass closures of post offices across the country. Although many have extended hours, they are not there to suit small businesses and individuals.

In my constituency, the problem is not limited to villages and areas of low population; it is found in the principal towns as well. The five principal towns on Anglesey have all experienced reductions in banking services. Those services are vital to tourists: they come to the area and want to get money, but the hole in the wall may not be working; or they have an inquiry that they cannot deal with through their local branch. People visiting my constituency and other parts of the UK who want to go in and have a face-to-face talk about their financial circumstances are unable to do so.

The Government here in the UK, the Government in Wales and local authorities across the United Kingdom are working hard to regenerate town centres, yet many of the high street bank branches in principal buildings in those town centres are closed. It is difficult for regeneration schemes to counteract closures on the scale that we have seen. There is no joined-up thinking here. The present Government have rightly talked about how valuable high streets are, but the banking industry is not pulling its weight, even though we, the taxpayers, bailed out some of the banks.

The Holyhead bank branch has reduced hours and people have to go to Llangefni, 15 miles away, for an appointment. Fifteen miles may not sound like a great distance, but people who do not have private transport may have to take two or three buses to get there and make the journey within those reduced hours. Peripheral areas of north Anglesey have been hit hard by bank closures. Again, it is difficult for people to get to alternative branches and they usually have to make an appointment.

Market towns have been built on trade; the banks have played an important part in their development and infrastructure has in part been built around the market and the banks. Such towns have been ignored for too long. I know the banks are private institutions, but they have community responsibilities. They are letting down their customers, in particular those in rural areas.

Other speakers have talked about regulation and the many inquiries that have been set up, but I am making practical points about individuals in the 21st century who want to access services face to face. The social value of banks and financial services in local communities is important. We have heard about elderly people wanting to come in to a branch and talk to someone; let us not ignore them. We have a growing older population in our country and we and the banks need to look after them. The banks have a social responsibility.

This debate is timely and I appreciate that we are having it because it affects each and every constituency. It is time the House of Commons started to tell the banks that they have to be responsible to the communities they serve. Those communities, their customers and the taxpayers helped to bail out the banks when they were in trouble. Communities are now in trouble. We are asking the banks to pull their finger out and act responsibly.

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[Harriett Baldwin]

The hon. Lady is right to ask that question, but if customers were surging into branches and transacting valuable business, the banks would not be being as radical as they are.

[Albert Owen]

Will the Minister give way?

[Harriett Baldwin]

A lot of Members will want to intervene. I have a lot of ground to cover and only seven minutes in which to cover it, so I will give way only very briefly.

[Albert Owen]

I am very grateful. I encourage the Minister to go to her local banks and talk to the staff. Their opinions have not really been voiced here today. They are the frontline of the banking industry and quite often we do not hear from them. It is because of reduced hours that she and I have limited time to go into our banks, but I do go in every Friday morning.

[Harriett Baldwin]

The hon. Gentleman is right to pay tribute to the wonderful staff up and down the land who staff our bank branches. The older members of our communities really value that interaction. It can be very important in protecting them against some of the online fraud, which, we have to acknowledge, targets older customers.

It is clear from the points raised today, and from the regular discussions I have with Members, that we are all in agreement that bank branches are an important part of the solution when it comes to access to finance for our local communities. It is one of my top priorities as Economic Secretary to ensure that financial services work for everyone and that they are on the side of people who want to work hard, do the right thing and get on in life. Having a good branch network is part of that. The role of banks in society is essential. I am glad that that has been acknowledged today.

In the interests of time, I want to just highlight some of the issues raised in the debate. First, in the past year we have made significant progress on access to banking services by improving access to the basic bank account. Many more banks now offer that. We have also reduced the practice of charging for failed payments, which was unacceptable. The industry has moved forward on that. I pay tribute to the hon. Member for Walthamstow (Stella Creasy). She has not participated in this debate, but she made such an impact in terms of bringing payday lending under the regulation of the FCA and the progress we are making on that. There has been much discussion about the access to banking protocol.

Oral Answers to Questions

Albert Owen Excerpts

Thursday 9th June 2016 Commons Chamber

[Mr Vaizey]

I will certainly do that.

[Albert Owen (Ynys Môn) (Lab)]

What discussions are the Minister and his officials having with Welsh Government Ministers and officials about the universal service obligation to ensure that we can have joined-up thinking when the Bills, which I support, come through? To cement this relationship between the Welsh Government and the UK Government, may I repeat my offer of Ynys Môn as the location for a pilot scheme?

[Mr Vaizey]

I would happily work with the hon. Gentleman and the Welsh Government. I have always found him and the Welsh Government to be congenial colleagues in regard to the roll-out of superfast broadband.

Tax Avoidance and Evasion

Albert Owen Excerpts

Wednesday 13th April 2016 Commons Chamber

[John McDonnell]

May I ask the hon. Gentleman—[Hon. Members: “Answer!”] I am. Calm down.

If the hon. Gentleman looks at my parliamentary record over the last 18 years, he will see that I was one of the first MPs to set up the tax justice meetings in the House that brought the Tax Justice Network here, and to do the necessary research. He will also see that, as shadow Chancellor, I have commissioned a review of HMRC’s activities in terms of the tax base, including those relating to avoidance and evasion. However, I understand his concern. I have worked on this issue on a cross-party basis for a number of years, and have criticised successive Governments for not doing enough.

[Albert Owen (Ynys Môn) (Lab)]

My hon. Friend has spoken of tax fairness. Does he agree that the Panama papers have revealed a channelling of moneys to the very rich while the poor have to pay their taxes, and that that comes on top of a Budget in which capital gains tax was cut for the top 3% through changes in personal independence payments for the disabled? Does that not show that we are not “all in it together”?

[John McDonnell]

I think that what people found extremely disappointing in the Budget debate was that, as my hon. Friend says, the cut in capital gains tax was being paid for by cuts in benefits for people with disabilities. That did indeed demonstrate very starkly that we were not all in it together. Perhaps these revelations will enable us to take steps towards the establishment of a fair taxation system that will fund our public services effectively.

Charter for Budget Responsibility

Albert Owen Excerpts

Wednesday 14th October 2015 Commons Chamber

[Albert Owen]

(Ynys Môn) (Lab) rose—

[Mr Osborne]

I am going to make some progress.

I welcome the shadow Chancellor to his place, and I look forward to working with him when we can agree. In that respect, he made a good start, with his first big pronouncement on Labour’s approach to fiscal policy two weeks ago. He said:

“We will vote for it on the basis that we want to assure people that we will tackle the deficit, we will balance the budget, we will live within our means”.

That is precisely what the charter is for, and I thank him for encapsulating precisely the basis on which I urge all Members to support it, whatever their party. If they cannot support us, I urge them at least to abstain.

[Albert Owen]

rose—

[Mr Osborne]

I am going to make some progress. [Interruption.] I think we are making quite a lot of progress as it happens.

Of course, since the shadow Chancellor spoke a couple of weeks ago, he has performed the most spectacular U-turn. We were told when he got the job that he would be a divisive figure. I just did not realise the split would be between two opposing views both held by himself. I have been standing at these two Dispatch Boxes for 10 years, and today, as on such occasions in the past, I have a sheaf of quotes from people in the Labour party from the past couple of days. I could read them all out, but the truth is that the complete chaos, confusion and incredibility of Labour’s economic policy is more eloquently expressed by Labour MPs than by any of my colleagues. To call the whole episode a shambles is an understatement—like saying the charge of the Light Brigade did not achieve all its objectives.

The serious point is this: in my experience, shadow Chancellors come and go, but what is permanent is the economic approach the Labour party is committing itself to tonight. It is becoming the party of permanent fiscal irresponsibility and never-ending borrowing, the party that would run a deficit forever—a Labour party that is a standing threat to the economic security of the working people of this country. It is not too late for Labour MPs to dissociate themselves from this reckless cause that their party has embarked upon, so I say to them: join us tonight, vote for budget responsibility and economic sanity, for eliminating our deficit and for reducing our debt, and help us prepare Britain for an uncertain future. Let us give those who elect us a Government that live within their means, a country that earns its way in the world, and economic security for the working people of Britain. I ask the whole House to support the charter tonight.

Tourism Industry and VAT

Albert Owen Excerpts

Tuesday 17th March 2015 Westminster Hall

[Albert Owen (Ynys Môn) (Lab)]

It is a great pleasure to follow the hon. Member for Ceredigion (Mr Williams), who is a fellow Welshman. We are having this debate in Welsh tourist week, and we have had a very good week promoting the pleasures that people can experience when they come to Wales.

I pay tribute to the Cut Tourism VAT campaign group for its excellent campaign. If the Chancellor is minded to make an announcement tomorrow and follow suit with what we are asking for in this debate, it would be a lot to do with the long-term work of the Cut Tourism VAT campaign, and indeed, the cross-party support that it has received.

I am very much an opponent of VAT. I believe that, as a consumer tax, it is regressive and hits the poorest in our society, an argument that I shall develop later. I agreed with the Prime Minister when he said, as Leader of the Opposition only a few weeks before the last general election, that VAT was a regressive tax and that it has had negative implications for the economy. I have been consistent in my view and I believe that the rise in VAT in 2010 sucked oxygen out of the economy at a very difficult time and held sectors back, including tourism.

[Ian Lucas (Wrexham) (Lab)]

Does my hon. Friend agree that the temporary reduction in VAT that the Labour Government introduced in the previous Parliament was successful in creating the growth that this Chancellor inherited from that Labour Government?

[Albert Owen]

Yes, indeed; it was a brave step. [Interruption.] It is interesting that we are getting heckled from across the Chamber by people who voted to put VAT up previously, but are campaigning here today to cut it. We are not going to take any lessons from some Members here in the Chamber today. I believe, as does the hon. Member for Ceredigion, whom I congratulate on securing this debate, that cutting VAT would give a great example to the industry.

In the past few months, I have spent time in France and the Republic of Ireland, where I have seen our near neighbours benefit from a cut in value added tax.

[Mr MacNeil]

I agree with what the hon. Gentleman is saying about VAT, but I have to ask him this: when VAT was increased in this Parliament, why did the Labour party abstain on that vote?

[Albert Owen]

I do not speak for the Labour party, and if the hon. Gentleman checks the records, he will see that I do not vote with the Labour party when I think that that is right. I speak for myself. Unlike the sheep in the Scottish National party, who are all herded through one Lobby, I tend to have a little independence of spirit and mind when it comes to these issues. I feel very strongly that the case has been made to cut VAT on this occasion and I will certainly support any amendment tabled in the Budget to ensure that there is a cut. I hope that Conservative Members who voted to put VAT up before but now support a cut will follow their conscience and vote to cut VAT for tourism.

Since 2012-13, there has been growth in tourism right across the four nations of the United Kingdom. It is a resilient industry, but it is the industry itself that is asking for a cut, because it feels that it could contribute so much more in employment and generating wealth for regional economies and the UK economy if there was a cut.

As the hon. Member for Ceredigion said, Ireland has reduced its VAT on tourism to 9%. Only last week, I was in the Republic of Ireland. We were launching the new vessel that goes between my constituency and Dublin. Holyhead to Dublin has been branded the new Dover to Calais, and as Dublin is one of the fastest growing ports in Europe, that benefits my constituency. Also, as we are near neighbours, the vessel takes people, who come from places across the United Kingdom, from Wales to holiday in the Republic of Ireland. My colleagues from Northern Ireland will have experience of this. The crossing from Holyhead to the Republic of Ireland takes only two hours. Many tourism operators that book people going to Ireland overnight say that one reason why they are going to Ireland is that the Irish Government have focused on tourism, focused on the brand and focused on how tax reductions on accommodation help the industry.

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

Does the hon. Gentleman agree that many hotels that offer discounts and packages such as short-stay breaks, particularly in Northern Ireland, Wales and on the western fringes of Scotland, find that they are impacted by the very attractive bargains that can be offered by their counterparts in the Irish Republic precisely because of the VAT rate?

[Albert Owen]

Absolutely. That is the case I am making, and I am sure that colleagues from the south of England will see the same with France and, in particular, northern France and the Dover to Calais route.

This campaign, as I said, has been industry led. It has been led well by the industry, which has made a very articulate case. However, I believe that the campaign should also be people focused, because a lot of jobs could be created and many of the people who would be affected positively by a cut—

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On resuming—

[Albert Owen]

Before the break, I indicated that the campaign had been brilliantly led by the industry, but that we needed to focus on people and get the message across to the great British public. Cheaper and more fairly priced holidays for consumers in the UK would help those with low earnings considerably, because VAT disproportionately affects such people. I believe that VAT at 20% is simply too high. When a working-class family of four go out for a meal, they share a fifth of their bill with the Chancellor of the Exchequer. In a sense, everybody who goes out for a meal takes the Chancellor with them, because they have to pay 20% of the total to the Treasury. That is too much for many families, and it has reduced many people’s spending power.

A cut in the VAT rate would also have a positive impact on jobs. As has been indicated, most of the jobs that have been created in tourism are low skilled and for young people. I welcome any reduction in youth unemployment, which has been stubbornly high. Those who work in the industry have indicated that one of the first things that they would do if VAT were cut is employ more people, to provide a stimulus to their businesses and to the sector. In my constituency, an estimated 120 jobs would be created, which would boost the local economy by some £3.8 million. The measure could bring huge sums of money into local economies and the UK Treasury in the long term. I understand that it will be difficult to convince the Treasury when there would be, in the first instance, a hit on moneys that are coming into the Treasury—

[Nadine Dorries (in the Chair)]

Order. Mr Owen, you have had almost eight minutes, and I will have to restrict other speeches to six minutes. If you could draw your remarks to a close soon, that would be good.

[Albert Owen]

I misunderstood you, Ms Dorries. I thought that there was no time limit.

[Nadine Dorries (in the Chair)]

There is now.

[Albert Owen]

There is now, and I will abide by it. As someone who has consistently opposed increases in VAT, I believe that a reduction would help local economies, the tourism sector and the low paid in our society. It would be good for the country and good for jobs. I hope that the Treasury, on the eve of the Budget, will reconsider. If we are going to have a give-away Budget tomorrow, let the Chancellor give way on that important issue.

--- Later in debate ---

[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

It is a pleasure to serve under your chairmanship, Ms Dorries. I congratulate the hon. Member for Ceredigion (Mr Williams) on securing this debate and on his work to highlight the issue. We have heard some excellent and important contributions that have reminded us of the importance of tourism to UK plc, and the case has been passionately made for reducing VAT below the standard rate of 20% on services supplied to tourists, in order to improve the sector’s international competitiveness.

As we have heard, member states’ discretion to set lower rates on goods and services is limited by European VAT law, but there is a special dispensation for a lower rate on certain supplies associated with tourism, specifically including hotel accommodation, certain restaurant services and some types of admission charge, including charges for entry to amusement parks. Some member states have made use of that dispensation to charge lower rates, including the Republic of Ireland, which introduced a lower rate of 9% in July 2011. We heard a bit more about that from some hon. Members in their contributions.

The campaign is long-running. This is the second debate on the topic in which I have taken part; the previous one took place almost exactly a year ago, ahead of last year’s Budget, and was secured by the hon. Member for South Down (Ms Ritchie), the hon. Member for Brighton, Pavilion (Caroline Lucas) and the hon. Member for Strangford (Jim Shannon), from whom we have just heard.

The hon. Member for Ceredigion made a powerful opening speech focused partly on his constituency and the impact that a VAT reduction could have on the Welsh economy. He also made the point about a potential link between a VAT cut and economic growth. I take slight issue with his assertion that the Labour Opposition have not been robust in our approach to this matter; we have been robust, but unfortunately the answer that we have arrived at is similar to the Government’s rather than being the answer that he and others hoped for. Those hoping for a different answer from us and the Government include members of our own party; I acknowledge the role of Labour Back-Bench Members in the campaign, including that of my hon. Friend the Member for—is it Ynys Môn?

[Albert Owen (Ynys Môn) (Lab)]

indicated assent.

[Shabana Mahmood]

I thank my hon. Friend. I hate to get people’s constituency names wrong, so I am glad to have got it right on this occasion. He made the point that it is Welsh tourism week, and Welsh Members of Parliament from various parties have been well represented in this debate. I recognise his long history of campaigning on this issue, and particularly his focus on the number of jobs and the amount of economic growth that such a change could create in his constituency and the Welsh economy as a whole. I fully expect him to continue lobbying Labour colleagues and a future Labour Treasury on the issue, as he has done alongside others throughout this Parliament, but I am afraid that I will disappoint him and other hon. Members throughout the House once again by not making a commitment that the next Labour Government will reduce VAT for the tourism sector in the way that they envisage.

--- Later in debate ---

[Mr Gauke]

The hon. Gentleman leads me to a different debate on the VAT treatment of golf clubs, which I am sure he will understand is a matter of some complexity and indeed of some litigation, too. So, Ms Dorries, I hope you will forgive me, but I will not be too diverted by the particular point that he has put on the record.

In the UK, we apply a zero rate of VAT to food, newspapers and books, and passenger transport. The UK also refunds VAT incurred by many world-famous museums and galleries, making them free to visit for all. In addition to the sector-specific reliefs, the UK’s VAT registration threshold is the highest in the EU, meaning that much tourist accommodation and many attractions do not have to charge any VAT to their customers.

As I have said, Ministers from both the Treasury and DCMS have discussed the Cut Tourism VAT campaign, and recently I have both met and engaged in correspondence with campaigners. VAT raises more than £100 billion a year, which has been critical in enabling us to manage the UK economy through tough economic times, and the latest figures from the Office for National Statistics suggest that reducing the rate of VAT to 5% for catering services, such as the supply of meals, snacks and drinks sold by restaurants, pubs, cafés and canteens, would cost the Exchequer £10 billion per year. Similarly, a cut in VAT to 5% for accommodation would have an estimated cost of around £2 billion a year to the Exchequer. I do not have to remind hon. Members that those costs would have to be met either by increasing other taxes, which may well have an adverse effect on growth and jobs elsewhere in the economy, or by increasing borrowing. That would risk raising interest rates, which would undermine our hard-won recovery and would have an adverse impact on families and small businesses.

[Albert Owen]

The Minister made the comparison with the Republic of Ireland, saying that we have had a comparable increase in the number of people visiting this country. Does he have any comparable figures from the Republic of Ireland that show the boost to the tourism sector there, and if so, is he taking them into account when he talks about the extra revenue that has come into the Irish Exchequer?

[Mr Gauke]

The point that I am making is that the number of tourists in both countries has increased at largely the same rate, at a time when one of them has reduced VAT and the other has not. Of course, these matters can be somewhat complex and there are many factors to consider, and when it comes to tourism matters, and particularly matters affecting in-bound tourists, we should not forget the importance of the exchange rate. It is very significant and, of course, recently the exchange rate has gone in different directions.

Low Carbon Energy Generation

Albert Owen Excerpts

Thursday 26th February 2015 Westminster Hall

[Mr Yeo]

I apologise. I made the same mistake last time my hon. Friend was responding to such a debate, but I am delighted to see him and I know that he will give us a robust response to any points raised.

I stress that my commitment to low carbon energy goes back more than 20 years. When I served in John Major’s Government as a Minister in what was then the Department for the Environment, among other things I dealt with climate change, which in 1993 was much less understood or even talked about. If someone mentioned climate change at a social occasion, people would look at them as though they were slightly strange. However, it did not take me long to be convinced that climate change was occurring—the scientific evidence was powerful even then—and that the changes we were observing were caused at least in part, and in my view in substantial part, by the increased concentration of greenhouse gases in the atmosphere in the past 200 years, which was a result of man-made activity and the industrial revolution in particular.

As I recall, in the 1990s the scale of the problem was much less certain. Today, the need for substantial cuts in greenhouse gas emissions is widely, even if not universally, accepted. As we approach the Paris conference of parties at the end of the year, the world’s attention will be increasingly focused on how we can achieve a more rapid decarbonisation of our economies.

Last November we had the historic joint announcement in Beijing by President Obama and President Xi of China in which they committed to cut emissions. Such a commitment would have been completely unthinkable even three years ago: for the US President to say what he did and for the Chinese to say that their emissions would peak on a date not later than 2030 simply could not have happened. In my judgment and experience, for the Chinese to say publicly that something will happen not later than 2030 means that they are absolutely certain it will happen well before that. I warmly welcome the greater determination of the US Administration to engage with this issue, which is still extremely controversial in parts of the United States.

Here at home we had an historic announcement this month. The three leaders of the major parties united in a public joint commitment to continue to take action to tackle climate change. I do not recall any other major political issue being addressed in quite the same unanimous way just two months before an election. I welcome both those important political developments.

Equally important is the transformation in business’ attitude. Twenty years ago, much of industry was reluctant to acknowledge the need to engage in finding solutions to climate change. It felt that such demands for reduced dependence on fossil fuels were a threat to their business models. Today, by way of contrast, in many parts of the world business leaders are ahead of policy makers in recognising both the urgency and the scale of the need to move away from models that are dependent on fossil fuel consumption.

I warmly congratulate the Government on confirming the fourth carbon budget for the 2023-27 period. That challenging budget, which was set four years ago, was reviewed last year and, to the coalition’s enormous credit, it confirmed it. I am sure that in private, parts of Whitehall argued strongly for a dilution of those targets, but they were confirmed.

I also warmly congratulate the European Union. That is not something Conservative colleagues frequently do, but its recent, excellent decision, supported by the UK, to adopt a cut in greenhouse gas emissions of 40% for its 2020 target was at the upper end of aspirations. That is good for two reasons. First, it sets a challenging figure that will force businesses and consumers across the EU to think about how they can help achieve it.

Secondly, it is a rational target. By setting an overall target for a cut in emissions, the need for any subsidiary targets is largely removed. I have always been concerned about the artificial imposition of targets for the proportion of energy that comes from renewable sources. They are not the right way forward; it is up to member states to decide how much they want to use renewables and other technologies. The European Union achieved a good outcome.

Achieving the UK domestic target, which is enshrined in law, and the EU target will require in particular substantial decarbonisation of the electricity generation industry. We have the technology that makes that possible; the question is whether we are willing to adopt it. In effect, a transformation must take place in the energy industry in the next 15 to 20 years. Because it has one of the longest investment cycles of any industry, we cannot leave decisions for another five or 10 years.

The decisions we make in the next two or three years—before the end of this decade—will have a huge and material impact on what happens later on. In effect, those decisions will determine at what cost the decarbonisation of UK electricity generation will be achieved. If we get those decisions wrong and we lock ourselves into too much dependence on fossil fuels, we will be forced into making emergency, very expensive changes in the late-2020s and early-2030s.

This debate is about how to decarbonise electricity generation, and I want to start with the nuclear industry. I warmly welcome the fact that, broadly speaking, there is bipartisan political consensus that the UK needs a nuclear component in its energy industry. The latest figures from the Department of Energy and Climate Change show that even now, following the shutdown of a couple of EDF’s reactors, nuclear still provides roughly a fifth of our electricity, so it is a substantial component. Nuclear, as supporters such as me constantly remind people, provides reliable, base load, low carbon power.

I do not want to turn this into too partisan an occasion, but there was a slightly wasted decade under the previous Labour Government during which nothing much happened on nuclear. However, the bullet has now been bitten and the decision to go ahead first with Hinkley Point was supported in all parts of the House—even the Liberal Democrats supported that, which showed a welcome change of heart. Unfortunately, the implementation of the decision to go ahead with Hinkley Point is proving to be tortuous and slow. I therefore commend the Government’s willingness—in fact, they have been positively welcoming—to perhaps have a foreign investor as the minority partner in Hinkley. I trust that the final investment decision on Hinkley will not be delayed much further, and I hope the Minister will give us an update on progress because many of us have been getting concerned. The timetable for this project has already slipped considerably, and it would be a huge relief to many people if we thought that final investment decision would be signed off imminently.

Of course, the future of nuclear is not just about Hinkley. It is the first step, but other projects are within sight, and I believe that gives Britain the chance to lead a European nuclear renaissance. We have huge advantages in this country, such as the political consensus to which I have referred, and the fact that our regulator is probably best in class; it enjoys universal respect. One reason why the accident at Fukushima four years ago did not derail progress on nuclear power in this country was that people trust the Office for Nuclear Regulation. In the wake of Fukushima, Mike Weightman’s report reassured people that such an accident could not occur here and the circumstances of it could not be reproduced here. That has helped to create in the UK a public opinion that is more supportive of nuclear power than that in many other countries. Interestingly, people who live closest to nuclear power stations are often the strongest supporters; they recognise that nuclear is a clean, reliable and safe technology that provides a decent number of well-paid jobs.

The interest that other countries are showing in the UK market reflects those circumstances. We now have interest from the Chinese, South Koreans, Japanese, Americans and Russians; they would all like to be here in the UK nuclear market. Some of them see the UK as a good starting point for the rest of Europe. Many of them will feel that going through and getting approved by the UK’s generic design assessment process is an imprimatur—a mark of approval—that would be useful to their technologies in other markets. Britain should welcome and take advantage of that interest. There is something here we can exploit and perhaps even use to gain a bigger share of the supply chain, with resulting benefits for our economy.

Nuclear clearly ticks the security of supply and cutting carbon emissions boxes, but the industry still has some work to do on the third aim of energy policy: affordability. The questions about cost are a work in progress. I am confident that there are ways of cutting the cost of nuclear. The nuclear industry, rightly, has very demanding safety requirements imposed on it. If the same requirements were applied to some other energies, their impact would be enormous. If the coal industry, for example, had ever had to cope with the safety demands made on the nuclear industry, it would have struggled to survive in the way it has.

However, we must be mindful of the importance of value for money. In this country, we are often supportive of first-of-a-kind technology. It is interesting, because we have a great record and history of innovation and research. However, there is a question mark over whether first-of-a-kind technology will be the cheapest. If nuclear is to roll out extensively, as I hope it will, and continue to supply a significant proportion of UK electricity generation capacity, we have to consider whether technologies that have been tried and tested in other countries first—in a home market—may then be able to offer us something.

[Albert Owen (Ynys Môn) (Lab)]

The hon. Gentleman makes an important point. Hinkley, of course, is going with technology that has yet to be proven. In my constituency, the Hitachi project is using reactors that have worked elsewhere and have been upgraded. That is relatively new to this country, but a rigorous process has been gone through. The fact that we have two different types bodes well for the future; we cannot put all our eggs in one nuclear basket, so to speak.

[Mr Yeo]

I agree with the hon. Gentleman, and I am sure he will enlarge on that point when he speaks in the debate, should he catch your eye, Mr Brady—there does not appear to be overwhelming competition for that. However, it is an important point that we need to bring out in the debate about nuclear. I welcome the fact that there are competing technologies that want to get started in the UK, but in deciding which ones we might “go nap” on, we need to focus on value for money. There will perhaps be an opportunity to choose between a number of them, and those that have been tried and tested elsewhere first may have a cost advantage that we should not be afraid of identifying.

Let me move on to renewables, on which there has been excellent progress since 2010. In stimulating new investment in renewables, the regime established by the electricity market reform process and all the accompanying legislation, which some of us have laboured for many hours to improve, is now one of the best in the world from the point of view of investors. Today’s news about the contracts for difference allocations confirms that. There is a lot of interest in investment in renewables here in the UK, and I warmly welcome the success of the CfD regime.

There is, however, a clearly topical issue in this regard that relates directly to my concerns about value for money. The strike prices announced today remind us—much more clearly than the previous, somewhat opaque renewables obligation certificates system ever did, certainly to the layman—of the relative costs of different renewables technologies. Of course, it is great news for consumers that the cost of solar is falling and the strike price is now significantly lower. The rapid and considerable fall in the cost of solar is partly a reflection of the enormous expansion of the solar industry in China, and that has had direct benefits for British consumers. It is now clear that solar can reach grid parity before long, even in this climate.

I am also delighted that today’s announcement makes it clear that a significant amount of new capacity will be provided by onshore wind. I am aware that it is an extremely controversial technology, particularly among many of my hon. Friends, but as we can see today, the truth is that onshore wind offers good value for money, relatively speaking. Of course, there are some—perhaps many—places in which onshore wind turbines are simply unacceptable, for environmental and other reasons, but I would regret it very much if, as a matter of policy, we turned our back on onshore wind altogether. That would turn out to be an expensive mistake, because even with prices for offshore wind falling—again, I welcome the strike prices announced today—onshore wind remains substantially cheaper.

My anxiety about offshore wind is that I do not see the potential for the huge fall in cost that occurred with solar. A large part of the cost of offshore wind is in the installation process of planting and anchoring a turbine in deep and rough waters. There may be a limited number of days on which the process can even be carried out, and the cost of the equipment needed on site is very high. That places a limit on the potential further reduction in the cost of offshore wind. I hope it will come down somewhat—I am sure it will—but I do not envisage a dramatic collapse in cost.

[Mr Yeo]

I accept the hon. Gentleman’s point. I am not suggesting that we should rule out offshore wind, but I am suggesting that we should be mindful of the fact that at the moment it requires a much bigger subsidy than some of the other renewable technologies, and we need to be hard-headed about what proportion of our available resource we devote to it.

Britain is of course the leader on offshore wind worldwide, so we have already achieved a great deal. Interestingly, there are some relatively shallow waters in Guangdong province in south-eastern China, and quite a big push is being made on offshore wind there as well. That may help the process of bringing the price down. Offshore wind will remain an important part of the energy mix, but I am concerned to ensure that we do not allocate too much of the resource available through the levy control framework to offshore wind.

Last year, we had an announcement about the final investment decision enabling contracts, which I think were announced last April and used up just over half the available resource under the levy control framework. A large chunk of that was allocated under contracts that were at higher prices than those today. Things are always easier with the benefit of hindsight, but looking back, I think that in our anxiety to get the process under way, we may have gone a bit further than we needed to at that early stage and are locked into some relatively expensive contracts. Be that as it may, the benefits of competition and the continuing fall in costs are reflected in today’s strike prices. I therefore urge the Government to be as technology-blind as possible in the future. They should leave local objections to individual proposals or projects to be resolved through the planning system, and try to help the best value for money technologies to continue to cut costs and to flourish.

I have already mentioned that I think that solar will reach grid parity. I think that onshore wind also has the potential to reach grid parity, and if that happens and a local community are happy to see some turbines in their neighbourhood, why should they not be allowed to construct them?

Let me move on to gas, which is not everyone’s idea of a low carbon technology, although compared with unabated coal, it certainly is a lower carbon technology. The problem for Britain with gas is that our reserves are running down, so we are importing a great deal of gas. Luckily, a lot of it comes from our friendly neighbour, Norway, and we are not dependent to any meaningful extent on Russian gas for our consumption. However, we are importing a lot of liquefied natural gas. Interestingly—this came out in the debate that we had a few weeks ago on what was then the Infrastructure Bill—David MacKay’s report in September 2013 pointed out that net greenhouse gas emissions from imported LNG are actually higher than those from shale gas extracted by fracking, so if we continue to use large amounts of imported LNG instead of exploiting what may be significant domestic reserves in the form of shale gas, using fracking, which my Select Committee has reported on twice and regards as potentially a safe technology, we are locking ourselves into a slightly higher emission pattern.

I believe that, no matter what, in the next 15 to 20 years gas will remain an important part of our energy mix. It is completely unrealistic for people to assume that we can get by without consuming a great deal of gas, so we should now press on with exploiting our shale gas reserves. To do that, or even to determine how great those reserves may be, we need to start drilling. I regret the fact that there appears to be continued delay, caused in part by local opposition, to embracing that opportunity.

Britain could be the leader in Europe on shale gas. If we get on with it now, we could write the European rulebook on shale gas. There would be benefits for contractors, supply chain companies and others. There would be an economic advantage for the UK if we delayed no further and pressed on with shale gas, as other countries would then follow our lead. They would overcome their current caution and follow us down the shale gas route. I therefore hope that we will not miss that opportunity. It is just as unrealistic to assume that we can do without lots of gas in the next 15 years as it is to assume that if we close down all our nuclear power stations, they can be replaced by low carbon renewables.

Of course, the lowest carbon energy of all is the energy that we do not use. In this context, I again urge the Government to promote demand-side response. There is still a great deal of misunderstanding about demand-side response. Many people think that it means imposing power cuts on consumers without notice and against their will. It means nothing of the sort. Demand-side response today involves harnessing the latest technology to facilitate voluntary cuts in consumption at peak periods by consumers who are paid for their ability to switch off their power at very short notice. The prize, if we embrace demand-side response, is enormous. It means that we can cut the total electricity generating capacity that has to be maintained. At the moment, we have to have high levels of capacity available even though it might be used only for a few days in the whole year. That is an incredibly wasteful arrangement. If we have a vibrant demand-side response sector, we will not have to have so much capacity. Every consumer will benefit from that, because at the moment every consumer is subsidising capacity that is scarcely ever used.

[Albert Owen]

The hon. Gentleman makes a very interesting point. Of course, marine technology is underdeveloped. If we had tidal, we could have greater control. In different parts of the country, the tides would be producing different types of electricity. We on the Committee on Energy and Climate Change looked at that, but not in enough detail. The Government need to look seriously at developing not just offshore wind, but the marine technology of tide and wave.

[Mr Yeo]

I agree, and I am glad that Britain is at least a world leader in research on some of the marine technologies. It is welcome that we are also, I believe, going to go ahead with experimental tidal lagoons in the west country. The potential from those is enormous, but it would be greatly facilitated if we embraced more demand-side response. It would also, of course, be greatly enhanced if our research on storage were successful in finding cheaper ways of storing electricity. That is another very urgent and hitherto somewhat overlooked area.

--- Later in debate ---

[Albert Owen (Ynys Môn) (Lab)]

It is always a pleasure to serve under your chairmanship, Mr Brady. It is also a pleasure to follow the hon. Member for South Suffolk (Mr Yeo), the Chair of the Energy and Climate Change Committee, of which I am a member. I was impressed by his very competent speech, and equally impressed by the fact that he delivered it from the modern technology of an iPad. He is the moderniser of the Conservative party, in many ways. I am pleased to have a quality Front-Bench team on both sides of the Chamber; the Minister and shadow Minister certainly know their brief. In addition, the Minister knows my constituency, so he is familiar with the places that I will talk about. I look forward to knowledgeable winding-up speeches from them.

I come to the debate from a similar background to that of the Chair of the Select Committee, who has just spoken eloquently about energy matters. Energy security and food security are issues that successive Governments have taken seriously, and which they must take even more seriously. In the first Queen’s Speech debate of this Parliament, I indicated that I would concentrate on two subjects during this Parliament: energy and energy security, and food farming and food security. I think that they will be dominant features of future debates.

On climate change, there are various similarities between my views and the hon. Gentleman’s. I have studied the matter for some time. The first job I ever had was to be a galley boy on an oil tanker, just after the middle east crisis. I remember the debates that took place at the time about oil sanctions and the conflict in Israel, and their global impact. We have learned nothing since then. At the time, we were talking about greater security, but when we had a windfall of oil and gas we more or less squandered it. We did not invest in some of the technologies that we are about to invest in, and that we have invested in during recent years. I believe that that was a wasted opportunity.

I disagree with the hon. Gentleman that this Government are the greenest ever. For many of the things that the Government have delivered, the consents were arranged by the previous Government. A lot of the hard work was done in the Climate Change Act 2008, and things such as the renewables obligation and the feed-in tariffs were the work of the previous Government. It is important to note that a consensus was built between the main parties at the time so that we could deliver continuity on such long-term projects.

There have been problems. I remember that when I arrived in the House in 2001, we had energy review after energy review, and nuclear was the big issue that split the Labour Government. It split the Opposition as well, and I remember the current Prime Minister hugging huskies in one of the colder regions of the world, trying to embrace Greenpeace and being very anti-nuclear, to the extent of thinking that it would be the last resort. Nuclear is now the Government’s flagship, and I am pleased about that change. The Secretary of State for Energy and Climate Change is another convert to the cause, which I welcome. I remember debating the subject with him when I first came to the House, and not only was he against nuclear but his party was never going to go down that road, yet we are now moving in the right direction and building consensus.

The low carbon economy has great potential for creating jobs, boosting GDP and making us a world leader in many technologies. I am pleased that there is now common ground for an energy mix. I say this in most energy debates, but I am unashamedly pro-nuclear, pro-renewable and pro-energy efficiency. I see absolutely no contradiction in holding those three views. We need the base load that nuclear can provide, along with clean coal and gas, and we need the flexibility that renewables give us. The hon. Member for South Suffolk mentioned peak demand. When we come down from peak demand, we must be able to switch off some of our technologies so that the right supply goes through the grid transmission system. We need that balance and, of course, we need to reduce use through energy efficiency measures to curb emissions. I welcome the progress on that over the past 10 or 15 years.

I am a member of the Energy and Climate Change Committee. In this Parliament, we have made an important contribution to shaping the debate on energy. The Committee has held inquiries into various energy sources, from marine technology to shale gas. As the Committee’s Chair indicated, we held an inquiry into shale gas early in the Parliament, and in 2011 encouraged the Government to make progress. I am afraid that the Government’s initial response was not positive, and here we are again saying that nuclear is a flagship and the way forward. We are shaping the debate in many ways. We have considered prices and the future affordability of energy for domestic consumers and businesses. We have scrutinised the profits of the energy companies, which was positive. We also considered the issues of fuel poverty. We have done a good job. All those inquiries have been topical and interesting, and the public understand their importance.

All parties in the House can agree on the need for stability and certainty on energy policy. That is what businesses and consumers want, and politicians need to shape a policy whereby we can offer such certainty for investors, whatever technology we are talking about. We can benefit from creating a thriving low carbon economy through energy generation. A low carbon economy will go through a number of phases. Importantly, today we are talking about energy generation, but there is also the phase of surface transport, of cars and trains, which are hugely important for the future. How will we carry goods and people across the United Kingdom efficiently not only in terms of speed and time but in terms of energy? We will need to move away from diesel and petrol towards electricity, which is a huge task. We also need to consider sea transport and the built environment. This is phase 1 of a long-term plan to decarbonise our economy, and there will be important economic decisions that create benefits.

The debate over the past five or six years has been interesting to say the least. Unfortunately, it has been hijacked by certain newspapers and different wings of the print media, which have shaped and coloured some of the political debate in the House. That is unfortunate because the consensus between the previous Government and the then Opposition, and between the current Opposition and the coalition, has been good for providing the stability and certainty that is needed. We tend to react, and it is easy to be anti something. I represent a constituency that has nuclear energy, early onshore wind and the potential for biomass and marine technology. People write to me who are anti each of those things, which it is very easy to be. We have to be sensible and have a balanced, mixed energy policy.

We need to take the public with us, and the House needs to show leadership and send the right signals to business and consumers. As we build, energy security will build a better economy with high-skilled jobs. My constituency is an island, and we have run on the “energy island” label. We have done many proactive things. The nuclear power station, which has been operable since 1971, is the core. Before that, there was a huge construction phase on which my father worked. He was very much in favour of nuclear power because, in the 1960s and 1970s, he was given the impression that, as we had cheap gas, oil and nuclear energy, electricity would be so cheap that it would be difficult to meter. That has not come to fruition, of course, but nuclear has provided a stable base load. Nuclear has been important in providing safe generation, jobs and skills. We were once the world leader, but we have let that slip.

I slightly disagree with the hon. Gentleman, who said that the previous Government did nothing. Very little was done in the 1980s and 1990s, and that continued into the noughties, too. Privatisation was framed on gas and electricity, and nuclear was difficult for the Government to sell. There was a lack of enthusiasm for reinvesting in and updating the technology. Because the technologies, such as magnox, were bespoke, it was difficult to move forward, so there was a phase when there was little investment. The planning system was problematic, too. We have resolved many of those things and, again, much of the spadework was done by the previous Government. I applaud this Government for proceeding with large infrastructure. There is a good planning system for such large projects.

On the island of Anglesey, the energy island, we not only have nuclear. We have a plan for an eco-park, at the core of which will be a 300 MW biomass generator. The vast majority of that electricity will go into the national grid, with the waste from the generator and from a fish farm being used to grow plants. The eco-park, which will be self-contained, will also have a distribution centre. There will be an opportunity for local direct grid investment, too. Exciting ideas are coming from low carbon energy development.

The Horizon nuclear project at Wylfa Newydd, or Wylfa B, is exciting. Investors, including Hitachi, have proceeded with that project, and I recently went to the site with the shadow Secretary of State for Energy and Climate Change, my right hon. Friend the Member for Don Valley (Caroline Flint). The site is vast and has created 1,000 permanent jobs. Importantly, there will be indirect jobs in the supply chain, too. The Leader of the Opposition also went to the site when he was Secretary of State for Energy and Climate Change—the project started in 2008-09.

The shadow Secretary of State and I also visited the energy centre, which is training and upskilling young people. We saw local apprentices between the ages of 17 and 20 who have an opportunity to use their skills in the local energy sector. Bringing and keeping prosperity in the area is something that we should add to this debate, because young people are important to our economy. The skills they are learning are not only usable in the nuclear sector; they are transferable, high-quality engineering skills. In the construction phase of Wylfa Newydd there is talk of some 6,000 to 8,000 construction jobs, which will be high-skilled in many cases. There will be opportunities for local businesses and individuals to work in the environment. There is cross-party recognition of the importance of vocational skills, which in the future will have parity with academic skills.

The energy island concept is more than just nuclear; it involves biomass as well, and there are opportunities for offshore wind. The Celtic array has been shelved for now, but Centrica was talking of huge investment. That potential not only benefits energy companies but the marine sector. In my constituency, we have an excellent company, Holyhead Boatyard, which runs tugs around the world and has moved into facilitating the offshore wind sector around the world with purpose-built boats. Its turbine transfer skill base ranges from apprentices to master mariners, with top engineering jobs in between. It builds crafts in the United Kingdom and maintains offshore wind. There is huge potential for low carbon energy sources such as offshore wind to benefit the United Kingdom, its ports and the maritime industries. That local company has an international reputation and employs people locally who also have the opportunity to travel.

As the hon. Member for South Suffolk mentioned, solar energy is a huge success story for the United Kingdom, although many parts are imported and assembled here. Onshore wind is controversial—I remind the House that Anglesey was an early pioneer of many early wind farms. I must say that I am not a fan of onshore wind farms due to their sheer scale. They are four or five times the size of the original ones on Anglesey. We should be developing offshore, and not just for aesthetic reasons of how they look on the landscape; the wind resource is better offshore, and as wind technology develops, they will be of greater benefit offshore. I agree that we can get down to grid parity in the future, as has been indicated, if we invest long-term in offshore wind.

Research and development are important—we have also taken the lead there—as are links between the energy industry, electricity generation and low carbon, and colleges and universities. The university of Bangor in my constituency has a faculty on Anglesey, the School of Ocean Sciences, which has been pioneering climate change research not just on UK and European shores but in the south Atlantic, where it has been doing excellent work on climate change. We can give individuals career paths not only in the operation of energy generation and low carbon, but also in research and development, software technologies and all the things that I have seen that faculty use on Anglesey. There is great potential for jobs in construction, engineering, mechanics, security, catering and supplies in the area. All those downstream jobs help build a more prosperous economy in areas where energy development is going forward.

This is an important debate. The United Kingdom is leading in many such technologies. If we have a proper long-term plan for energy with consensus and certainty, we can benefit GDP. I call Anglesey the energy island, and we are going forward with that concept, but of course Britain is an island, and Anglesey could be a microcosm for the whole of Britain. Britain could be a leader on the European continent. As an island, we could be self-sufficient using new technologies, but we could also be pioneers in the development of many of those technologies, showing the way for the rest of Europe.

Energy security will still be on the agenda for decades to come. The decisions made by the previous Government and carried forward by this one—I welcome many of the things that this Government have done—need to move forward to give the stability and certainty that I have discussed, so that investors, whether indigenous or foreign, can look to the United Kingdom and say, “This is the place where we want to invest in new and low carbon technologies to generate the electricity that companies need and domestic consumers want, at affordable prices for consumers.” We need to create top-quality jobs so that we can be a world leader and the United Kingdom can move forward.

This is not just a debate at the fag end of a zombie Parliament; it is a restatement of the fact that we as a United Kingdom are forward-looking when it comes to climate change and low carbon energy, and that we will create the quality jobs, education, training and transferable skills that are needed to make UK plc and Anglesey energy island world leaders.

--- Later in debate ---

[Mr Ben Wallace (Wyre and Preston North) (Con)]

I am delighted to serve under your Chairmanship, Mr Brady. I pay tribute to my hon. Friend the Member for South Suffolk (Mr Yeo). I am not sure if this will be the last time we debate and listen to his contributions, but I pay tribute to his work for his constituents and for his party in serving the Government over the years, and to his work for the Committee on Energy and Climate Change.

The Committee has done an amazing job, not only in building the consensus that the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) mentioned, but in demonstrating to someone like me that people do not have to live in a tepee to be green and do not have to switch off the lights and go backwards. To roll out a proper, successful, renewables-based energy policy, people have not only to understand targets for carbon reduction and the pressure of global warming; they have to understand the real world as it is, including finance, investment, risk and technologies. My hon. Friend has done a tremendous job as Committee Chair in bringing along both sceptic and enthusiast with the policy of renewables, and with an energy policy that has satisfied many of the historical splits across the parties that we have seen over the past 20 or 30 years.

Ministers could do a lot more listening to Select Committees, especially my hon. Friend’s, which has genuinely helped policy makers and has brought together the main parties in reaching a proper, grown-up solution to providing energy security and meeting our carbon reduction targets. My hon. Friend’s Committee marks a refreshing change. Members present will have spent time in other sectors of Government such as the Ministry of Justice, where constant party politicking goes on, or disagreement is often more important than consensus. I pay tribute to my hon. Friend’s work. He will be missed, as will the sensible way the reports have been presented to the Government.

There are only 19 sitting days left in this Parliament. That is a rather scary number for all of us. I noted the kind comments made by the hon. Member for Rutherglen and Hamilton West. I am not sure who will be the Energy Minister in 70 days. He will certainly make a fine Energy Minister—if he is successful. I cannot wish him that success; I would not do that. I would certainly not want Russell Brand or Alex Salmond as Energy Minister. The main parties are all in a good place, engaging in grown-up politics in working towards a proper energy policy. It is important to note that among the most vocal opponents of the Infrastructure Bill was the Scottish National party, whose Members have failed to turn up for today’s debate. They are no doubt posturing on some other subject this week. They are not even here to claim credit for some of the successful CfD contracts that have been offered today. We should not forget that we will only solve Britain’s energy crisis as Britain. We will only keep the lights on as Britain, not as separate countries focusing on what divides us, rather than what unites us.

Today’s debate is timely, because the CfD auction results have just been published. We have offered contracts—they obviously have not been accepted yet—to 27 projects. The good news is that the CfD auction showed that, amongst other things, competition has worked. We have had a good result from our focus on trying to ensure that we provide value for money for the bill payer, and on increasing energy generation. The auction price for solar, for example, was 58% less than the administrative strike price. It was 18% less for offshore wind and 17% less for onshore wind. The value for money that that represents helped lever in £45 billion of investment into the energy market between 2010 and 2013. I am always trying to explain to people in different sectors that there is only so much money in this world chasing only so much investment. We have to make investment attractive to money or it will go elsewhere—not just domestically, but internationally.

Both this Government and the previous Government have done a good job in recognising that we have to create the conditions to get investment into high-risk areas and those with maturing technology. The CfD process has been a real success. Let us remember that the aim is to reduce carbon emissions. The UK will emit 4 million fewer tonnes of CO₂ emissions a year as a result of the auction. No one can say that that is a bad result. It puts us on the right path to meeting our aim of reducing carbon emissions. At the same time, we have shown that, if we seek a stable framework, people want to come forward and share the risk. The overall cost of production will reduce over that period, and I hope that by the end of the first 15 years—or whatever the time scale is—the actual production costs of many of these generators will be even lower. I hope the Government of the day will remain attuned to when a technology moves from “maturing” to “mature”, when they need to incentivise newer technologies further down the path, and when they perhaps need to let go of more mature technologies that have run their course over many years.

I again make the point that 11 of the 27 projects are in Scotland. That is a good news story for Scotland. I pay tribute to Scottish Labour Members who have lobbied hard on behalf of the Scottish renewables industry and their constituents. That would not have happened in such an easy way if we were two separate countries. All our bill payers will be sharing the burden of electricity generation. As the shadow Minister said, when there was not much wind blowing in parts of Scotland or when Scotland had to rely on our market in England, it was just a formality; there was no artificial barrier to that happening. People who are attracted by the Scottish nationalists or the agenda of separation should remember that independence would fundamentally undermine and damage Britain’s ability to provide electricity for all its citizens across all the isles. That needs to be fully taken on board.

Given the competitive drive to reduce the cost or strike price, which has been a good thing, we think the CfD auction will result in average annual savings of £41 per family bill. The hon. Member for Ynys Môn (Albert Owen) is right: I love Anglesey. When we go on holiday there, I can look out the window and see the red light shining on what used to be the Rio Tinto tower. I am happy, as are the Government, to work to ensure that any barriers to biomass are addressed in the next round of CfDs. That could include help to reduce risks for biomass investment. By working together, we can ensure that biomass has a better showing in the next round. Personally, I would like that project to be successful. I know how important energy is to the island of Anglesey and the pragmatic approach it takes. It would be good news for Holyhead if that project were successful. I am always happy to help ensure that biomass is embraced.

On the subject of the capacity market, securing our energy security is incredibly important. It is all very well encouraging generation, but if the lights go out and we have not worked together to ensure that there is always some capacity, that is almost for nothing. The auction for the capacity market recently completed. We secured 49.3 GW at a clearing price of £19.40 per kW for delivery in 2018-19, which is good news. Consumers and the public can be sure that, alongside our commitment to develop renewables, we have also achieved more security and secured more capacity.

I know that my hon. Friend the Member for South Suffolk is a keen supporter of demand-side response. I asked officials to see an example of DSR, because how we use electricity efficiently and how we reduce demand are as important as how we cater for demand at other times. I urge Members to look at the example of ExCel, the big London exhibition site, which uses Flexitricity and has a genuinely good case model in how it uses diesel generators that switch on and off as demand requires. Flexitricity can control some of the generation remotely, reducing waste on the grid, and I hope to see more of that. The Department and I have certainly heard loud and clear my hon. Friend and his recommendation of and enthusiasm for DSR, which I hope is given a more prominent role in the next few years.

Other Ministers might get home or to their offices to find that the locks have been changed, because this is the second debate I have been at where Members have clearly demanded a future levy control framework and said that it is required. We hear that urgency. It is no comfort, but with only 19 sitting days to go, I anticipate that the Secretary of State will not be revealing that framework any time soon. We will certainly recognise that urgency in the near future. Whoever is in government, we will all be working to ensure that that long-term indication is in place. I hear with open heart and open mind the recommendation for a rolling seven-year framework to ensure that we keep things up to date. In my opinion, that would help to reflect advances in technologies as they develop. If we understand the impact that technologies have as they roll through, we might understand how much influence they will have on levies and everything else.

There is obviously a long list of renewables that we could talk about. The Government have clearly been happy to encourage offshore wind farm developments. We hear the fears about the high strike price and expense of offshore wind, but the CfD auction has shown that the direction is downwards. As the technologies have developed and competition has been brought in, we have started to reduce the offshore price, which I hope in the medium to long term will converge to be not so different from the onshore price, or near enough.

The Government are obviously committed to onshore projects as a way of generating energy. We are at a stage where many of us who see applications in our constituencies should and can say—the Government have shown this with where they have chosen not to support onshore wind farms—that investors should think carefully about whether they bring forward planning applications for a well-sited, well-researched location, or indulge in the speculative, lazy applications that we see in our constituencies. Out of the blue, a speculative application happens, and that is often what upsets and surprises constituents, coming as it does without any indication of logic or anything else. In those cases, the message should be loud and clear: “Do your research and work. Make sure that you are not speculating and trying to garner profit for profit’s sake rather than trying to fit into the community.”

[Sandra Osborne in the Chair]

The biggest drop in price in the CfD auction was solar’s 58% drop. The Government support solar at all levels, including below 5 MW, and with the feed-in tariffs. It has been encouraging to see how the solar industry has been imaginative in finding new sites that get the sun—for example, by renting roofs. The Government are certainly committed in the long term to ensuring that solar is part of the mix. We want it to be successful, and I hope to see more bids in the next CfD round.

[Albert Owen]

Before the Minister moves on from renewable energy, I am not making a partisan point, but does he share my frustration at the lack of development of commercial-scale marine energy? There have been a lot of good demonstrations of it that have not moved forward. What more does he think can be done to make it happen? Everyone agrees on the potential of wave and tidal energy, but it has not increased in scale. Since I have been a Member of this House—I was interested in energy from day one—it has always been three or four years hence, but it has not happened. What can be done so that we can get good commercial projects up and running in order to get the predictable energy supply that we need?

[Mr Wallace]

I am grateful to the hon. Gentleman for that question, because I too remember the grander schemes, such as the Severn barrage and the Wyre barrage in my constituency. They were quite large-scale, ambitious schemes. I checked before I came to the debate, and one of the Department’s priorities is the Swansea lagoon barrage. If we can get that up and running successfully, it is the kind of thing that will quickly trigger a roll-out elsewhere. As he says, wave and tidal energy have been just over the horizon for as long as I have been involved in such issues, but we are getting to a stage where the scale is right and not over-ambitious. From what I can tell, local businesses and people are supportive of the scheme in Swansea, so we should all try to help it to become a reality and sing its praises far and wide, should it be a success.

[Albert Owen]

I fully support the plans for Swansea. In my area, where there is good tidal flow, we have had a demonstration from Marine Current Turbines and Siemens, and we have seen the technology working in Strangford lough. Siemens did not take it to the next stage. The Government have done what they can. There are good renewable obligations and support in Scotland and other places, but schemes have just not gone far enough. I understand what the Minister says about scale, but I am not talking about a large-scale project; it could have developed in sections and become bigger. There is something missing. Will he consider that so that we can move forward with tidal energy?

[Mr Wallace]

I am happy to ask the Department about its observations on why Siemens did not choose to go forward, because we can learn from that. It may have been a commercial decision or there may have been an internal conflict of interest because the company wanted to focus on another technology, but it would be good to find out and move forward.

My constituency borders the two current shale gas sites. I want to put the Government’s position on the record: we are absolutely clear that we are not determined to rush for gas or to throw everything out just to get fracking going. The Government are in favour of fracking, but we want to be its arbitrator. We want to listen to the science behind it. We do not want to be in the pocket of the oil and gas companies or the green movement. The Government’s role is to take a pragmatic approach and ensure that shale gas proceeds, learning from all the experience around the world and from all the environmental studies and impacts that have happened, and use our position to ensure that we set a gold standard. We must move forward where we can, mitigating the effects on local communities through sovereign wealth funds and local community funding, but also through the planning conditions that can be set by mineral rights authorities.

Shale gas will and must be in the mix at some stage. I would rather buy my gas from Britain than from Mr Putin, so if people have objections on human rights grounds, there is one reason. I would rather not compress gas in big ships and take it around the sea if it is possible to get it from Britain. The Government’s position is not simply to progress recklessly on shale gas at any cost. Opponents of shale gas often paint it as if the rush for gas is true, but that is not the case. As we saw recently in the debates on the Infrastructure Bill—the Government accepted Opposition amendments—we will work to ensure that the industry is safe, that constituents are not affected unnecessarily, and that we all benefit from the process.

The last thing mentioned by the hon. Member for Rutherglen and Hamilton West was carbon capture and storage. We cannot avoid the fact that it will be part of an ability in which we must invest, and which we must develop to complement our energy generation over the next 20, 30 or 40 years. We cannot just pretend and have it as a tokenistic thing. It is going to be a fact and we must invest in it. The Government are doing what they can to help investment in the process. As with the barrage and tidal schemes, I look forward to the day when we start the process and get the pipelines and everything else in place. Whoever is in government, it is worth monitoring and investing in carbon capture and storage.

I hope that colleagues have felt that today’s debate has cemented the view that the current energy policy is travelling in the right direction for this country. It is based on reducing carbon emissions, encouraging different technologies and getting value for money for the bill payer. We cannot pretend that those issues are separate; they have to be hand in hand. We have to carry the public with us if we are going to develop energy policy successfully. We should be not pleased, but happy that the CfD auction proved that things are going in the right direction.

The economic benefits are clear. Since 2010, we estimate that more than £30 billion has been invested in electricity generation, principally in renewable technologies. In previous years, it might not have been the case, but that money has gone principally on renewable technologies, and £30 billion does not grow on trees. If we cannot get investment from the markets and the private sector, in the end we will have to get it from the taxpayer. It is a good thing that we have helped to change not only Government policy but investment policy and thinking in this country. As someone who, to some extent, came late to the energy debate, I am grateful for the work of the Select Committee and for its reports. I find them incredibly educational and I know that the Department finds them very useful in helping to create and shape new policy for the years to come.

Before finishing, I repeat my tribute to my hon. Friend the Member for South Suffolk. I thank him for his work with the Select Committee and for his work for the whole House as well.

Offshore Wind Developments

Albert Owen Excerpts

Tuesday 6th January 2015 Westminster Hall

[Mr Weir]

We are in danger of having a debate within a debate. I will return to the points I was making on offshore wind, although nuclear power does come into this to some extent. If we are serious about the long-term development of offshore wind, we need clear targets and commitments for developers and we need to ensure that we give certainty to support supply chain investment and development. That would undoubtedly also involve providing the necessary conditions for competition, innovation and cost reduction, all of which are supposed to be the Government’s aims. Instead, there are mixed messages on energy policy and continuing uncertainty. Strike prices are set only to 2018-19 and the levy control framework is set only to 2020. There is no real commitment to a decarbonisation target. RenewableUK described the 2020 deadline as being like a cliff edge, because of the uncertainty on what comes after.

Those points were also raised in the Green Alliance report I mentioned, which concluded:

“The research has identified five actions the next government should take to realise the industrial and decarbonisation potential of offshore wind:

1. Set a 2030 carbon intensity target for the electricity sector of 50gCO2/kWh”—

given the Government’s previous response to that, I am not holding my breath—

“2. Confirm the scale of funding available to support delivery of low carbon energy infrastructure during the 2020s under the Levy Control Framework.

3. Provide more certainty for low carbon generators by confirming the timing of funding allocation rounds for the rest of this decade.

4. Stabilise the supply chain by committing to minimum levels of offshore wind deployment in the 2020s (dependent on generators meeting cost targets).

5. Draw on international experience to derisk UK offshore wind development and ensure a robust pipeline during the 2020s.”

The hon. Member for Upper Bann (David Simpson) made a point about the impact on the bill payer, which we also have to take into account. We cannot say that we will just pump money into any sort of development, irrespective of the impact on bill payers. It is not necessarily about putting more money into offshore wind. As I have said, by investing in offshore wind, we get more than just clean energy; we get industrial investment, jobs and the economic regeneration that many of us are looking for in our areas. It is about certainty and giving the industry a clear signal that the huge amounts of money it is putting into developing these projects will not be wasted and that there is a plan beyond 2020 to ensure that these developments will come on stream, produce energy and increase industrial investment.

[Albert Owen (Ynys Môn) (Lab)]

I congratulate the hon. Gentleman on securing this debate. Is another big issue not the cost to projects of connecting to the national grid? Many of these offshore wind developments need new infrastructure and the grid. The grid has a long-term forward plan. If we have short-term CfDs, short-term investment needed for consent and no guarantees of grid connection, the whole situation is even more uncertain than he is outlining.

[Mr Weir]

The hon. Gentleman makes a good point. I have spoken on many occasions about the difficulties that grid connections pose for many renewable generators, particularly in more remote areas such as the north of Scotland. There are a huge number of issues in relation to that. To be fair, efforts are being made to address some of those problems with the proposals for new lines down the east and west coast of Scotland and various other connections, but those are long-term projects. They will not be done quickly. The point is also that although many of these offshore wind projects are looking for consents now, it will be several years before they come on stream. I understand that from getting a CfD, it can be up to three years before the first turbines are operating or in place. There is a long-term aspect, but it is not beyond the wit of regulators to bring the two together.

[Albert Owen]

I understand what the hon. Gentleman is saying, but the point I am trying to make is that each of the individual projects will have to meet the cost of grid connection. It would be better to have the national infrastructure of the National Grid acting in the national interest by ensuring that the cost is spread across the country and not met just by the individual projects. A new grid connection costs hundreds of millions of pounds, which can in many cases make a bid uneconomic. That is my point.

[Mr Weir]

Again, I do not disagree with the hon. Gentleman. He tempts me into a discussion about the postage stamp model of transmission charges, which is a similar issue, but I shall not go there because I am coming to a close and other people want to speak.

The industry also raised concerns about the levy control framework and called on the Government to address the political uncertainty about whether 2020 is a budgetary cliff edge. Offshore projects have a four to five-year horizon from being awarded a contract for difference to the commissioning of the first turbines. The industry is concerned that there is no clear indication about what will be available post 2020.

The Minister may say that it is difficult to give a clear indication about the future—indeed, we cannot be certain about what the Government will look like in six months, never mind six years—but giving some indication of the projected budgets and the intended direction of travel would go some way to addressing the industry’s concerns. Ministers have not been so reticent about nuclear energy. They have, in principle, agreed with EDF a contract for difference at Hinkley Point at a strike price of almost double the current wholesale price of electricity. That contract will last for 35 years—more than double the length for renewables. There seems to be a willingness to do more for nuclear than for offshore renewables, which provide a much better platform for clean energy and for the industrial regeneration that is required in many areas of our country.

--- Later in debate ---

[Albert Owen (Ynys Môn) (Lab)]

Happy new year, Mr Gray. It is a pleasure to serve under your chairmanship. I thank the hon. Member for Angus (Mr Weir) and the Backbench Business Committee for this important debate.

I will try to carry out the difficult job of being a bridge between the anti-nuclear and anti-wind brigades in the debate, because I consistently support both forms of generation. I am pro-nuclear, pro-wind and renewables, and pro-energy efficiency. I see no contradiction in supporting all three if we are to achieve the goals of a long-term low-carbon economy, which is the way forward. We must be honest with the public when we talk about support mechanisms and subsidies. Each sector receives subsidies. The anti brigade say “Isn’t it terrible that the others get subsidies?” However, many of the technologies need to be upgraded, and some are new technologies, so they need Government support.

As a member of the Select Committee on Energy and Climate Change and the Committee that considered the Energy Act 2013 I supported electricity market reform. Any party in government over the relevant period would have needed to make progress on that. I agree with my right hon. Friend the Member for Delyn (Mr Hanson) that we need continuity and consensus when we talk about energy and long-term planning. We had that when the Government first came to power; and we had a sensible Energy Minister—I welcome the Minister to his place—but he was replaced by someone who was less pro-wind. He said in the Chamber that he supported it, but outside said he did not, following the line of many of the popular newspapers of the day. That is no way to make Government policy, and I think that the uncertainty has affected the future of development.

I want progress with—I hope—a change of Government this year, but also with consensus on energy policy, so that investors see certainty. During the Committee inquiry on energy market reform we spoke privately to businesses. They said that uncertainty and short-termism put them off investing in the United Kingdom. Those multinational companies will take their money anywhere development will happen. Visitors to Texas, where they have shale gas, will also see wind development there. Most countries are investing both in renewables and in either oil and gas, as in America, or nuclear where there is progress towards low carbon. I welcome the fact that my near neighbours the Irish Government now say that they cannot rule anything out, and are talking about new nuclear for the future.

I have been working closely with Labour colleagues in north Wales on the development of a low-carbon economy, not just for energy security, which is important, but for manufacturing and regional economic benefits. I have seen those benefits. The United Kingdom is an island economy, and I represent an island constituency. I want the maritime benefits not only of manufacturing, but of research and development and links with nearby universities. The university of Bangor, in the neighbouring constituency, has its ocean sciences faculty on Anglesey, and its research and development goes hand in hand with the development of offshore technologies. We need to make those links to get good quality jobs in the various regions of the United Kingdom. I support what is happening in Scotland in developing wind, and what is happening in east Anglia and elsewhere.

The United Kingdom is a small island that competes internationally, and we need to harness our resources, including wind, tide and waves, to maximise future benefits. That is why we need long-term vision, and policies to aid and abet it, to bring about top quality jobs—and the jobs in such industries are of top quality. There is a shipping company in my constituency called Turbine Transfers. It is international, operating across the world, and now makes purpose-built vessels for the offshore industry. It needs the certainty I have spoken of, so that it can build vessels to be crewed and maintained around our shores; that is the importance of offshore energy. With the electrification of our domestic system of surface transport—cars and railways—we will need low-carbon energy, and we need to focus on the long term. We have benefited in north Wales from taking such difficult decisions. I supported Gwynt y Môr when the Conservatives, in opposition, opposed it; but that development, to which the previous Government gave consent, is now a flagship policy of the Conservative Government. Such uncertainty and policy change is the reason for our lack of long-term investment. We need to move forward and get the quality jobs I have spoken about.

Hitachi is developing a nuclear power station in my constituency, which I fully support. I do not think that there is an either/or decision to be made over nuclear or renewables; I think we should have both. I have seen what skills have been developed over generations, and I want them to be transferable between different types of energy production. That is why I have been promoting Anglesey as an energy island—so that we can have a focus of attention and a centre of excellence, with links to universities, schools and technical colleges, to get the right skills base for the future, and high quality jobs. The hon. Member for Waveney (Peter Aldous) mentioned the accents to be heard when he travels around the world; and Welsh accents can be heard in energy development in Canada and elsewhere. I want to hear those accents back home, in a forward-looking industry where young people have opportunities to develop. Offshore wind, like oil and gas, has provided great opportunities for people in the United Kingdom, and we should keep those sectors in our country. That is why I support nuclear as well as wind and renewable energy.

I am worried about contracts for difference and the small pot for maritime development and renewables such as wave and wind. In 2001 when I entered the House, I was always being told that wave and tidal energy were about five to eight years away, and I am still told that now. We did not have the policy certainty that we could take advantage of, and we need that. I have been to see research and development in the Orkney islands, but things are not moving forward.

Finally—and this is the main reason for my taking part in the debate—I have seen abandoned projects in my area. The Rhiannon project was going to supply between 2 and 3 GW of energy in round 3, and the application for the consents was made. Hundreds of millions of pounds were spent, but the project was abandoned because, in my opinion, of uncertainty about the future. Of course, there was talk of technical difficulties, and as the hon. Member for Banff and Buchan (Dr Whiteford) said, there will be difficulties in future in deeper waters; but we need to plan for those. In future, there will be bigger projects, further offshore, harnessing energy more efficiently for the future. We need to take decisions now.

It is not a question of either nuclear or renewables. We need both if we are to move forward as a world leader. Nor is it a question of either tourism or energy development; we need both. My constituency is one of the most beautiful areas in the world, and tourism there has grown. We have a nuclear power station, we had early onshore wind, and now we have offshore wind development plans. The issue is Britain looking after its own interests with energy security, and attracting the high skill levels that the people of my area deserve.