Economies of the UK Islands

Alistair Carmichael Excerpts

Wednesday 9th May 2018 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Rosindell. I, too, congratulate the hon. Member for Havant (Alan Mak) on securing the debate. It is a rare and welcome opportunity to discuss island issues. The hon. Gentleman said that we are all islanders. I am doubly blessed in that regard, because I am an islander by birth—I was born and brought up on Islay, off the west coast—and I am an islander by choice, having raised my family with my wife in Orkney. I have represented Orkney and Shetland here since 2001.

It is worth reflecting on what it means to be an islander and to live in an island community. Island communities are special places. Being an islander changes the way people see the world. One of my great bugbears is hearing people talk about insularity, meaning that islanders are somehow inward-looking. In fact, islanders are much more outward-looking, because they are dependent on their links with the rest of the world in a way that people in the larger conurbations on the mainland take for granted. To be an islander is not to be insular, however much that might offend the classicists, but to lead a different sort of life in a modern and connected world.

We are often excluded. Hon. Members have heard me speak before on the subject of all too often being excluded from or charged extra for deliveries that people in towns and cities take for granted. However, I do not want this speech to be a constant litany of the problems that island communities face. If nothing else, I hope the Minister takes away from the debate an understanding that our island communities have challenges, as every community in the country does, but we offer opportunities for the Government as well. Island communities can contribute in a whole range of ways to the work of Government, be it in Westminster, Holyrood or wherever else.

Many of the issues that we face as island communities are shared in common with communities across the whole country. Brexit is probably the dominant issue that I hear about when I speak to businesses in my communities. Orkney is a predominantly agricultural community and Shetland is a predominantly fishing-based community, where fishing still makes up about one third of the local economy. The shape of our future relationship with Europe—particularly in relation to the fishing industry and whether we will continue to have a relationship with Brussels and a common policy on fisheries, and the shape of future agricultural support, which is guaranteed only to 2022—is a big issue for our economy.

That highlights one of the biggest problems. As can be seen from the number of hon. Members present, there are not that many island communities in this country and we do not have that high a level of population, so we often fall off the end of the table because we need a slightly different provision and our island needs are not always understood. We are the most vulnerable to the law of unintended consequences.

Post-Brexit, as we move to reformed agricultural and fisheries policies, there are real opportunities to design them in a way that will work for farmers and fisherman across the whole country, and to build into them the flexibility that we have been denied over the years, which has been enormously detrimental to our fleet and the fishing industry.

The economic profile of most island communities is not dissimilar from that of Orkney and Shetland. We have an economy of predominantly locally grown small and medium-sized enterprises. For islands, as for all small communities, that is a good thing with real opportunities. It allows us to keep a lot of the money that we raise and spend within the island community.

The modern economy in our island communities, however, is a lot more than the farmers and fishermen that hon. Members might instinctively think of. In my constituency, I have several growing and successful software engineering companies. They offer well-paid and attractive employment opportunities to younger people who may have been away for higher education and want to return.

There is a role for Government, not just in terms of the economic development and growth of those companies, but in terms of the provision of infrastructure. One of the main hindrances to the economy in my constituency is the continuing poor level of broadband and mobile phone connectivity. The latter is slowly improving, but as the rest of the country looks towards 5G, most of my constituents can still only dream of 3G or 4G.

A different approach from the Government to rolling out that sort of infrastructure could be transformative for us. If we said to the big corporates such as BT, “Of course you can get a licence to roll out the next generation in Glasgow, Edinburgh, Manchester, London, Birmingham or wherever else, but you have to start at the periphery and work your way in,” that would mean that, instead of constantly playing catch-up and always following on, as a community with the opportunity to benefit most from that sort of innovation, we could be at the cutting edge.

In recent years, one of the most important parts of our local economy, on both Orkney and Shetland, has been the growth of tourism. We have gone from the days when bed and breakfast was provided by a few farmers’ wives to supplement their farming income to a position now where tourism is a significant part of our local economy. Obviously, it is part of an economy that is enormously vulnerable to outside influences, for example currency fluctuations. Also, terrorism and the attractiveness of our country as a whole will have a very long tail by the time that they reach Orkney and Shetland.

Tourism is also an industry that has big seasonal variations. People work long hours during the summer months but will perhaps just keep their businesses ticking over in the winter. Now, if somebody is in receipt of tax credits, for example, such big fluctuations of income throughout the financial year can be occasionally enormously problematic. Again, that is another example of the way in which the decisions made at the centre, which might work very well for 95% of people, can cause real difficulties in the way that they affect the remainder. When we hear about something benefiting the 95%, those of us who are islanders know that we will inevitably be largely among the remaining 5%.

The biggest opportunity for islands to contribute to our future wealth and prosperity in this country comes from the development of renewable energy. The first generation of wind turbines was tested in a prototype on Burgar Hill in Evie, in Orkney. Ever since then, those of us within the isles have been enthusiastic in our promotion of the next generation of electricity and energy development.

The development of wave and tidal power brings another opportunity. It is still very much in its infancy, but again it would require just a little bit of tweaking to make the regulation and the development funding work. Development money for wave and tidal power sits in a pot for developing technologies, alongside offshore wind. It is pretty well accepted that offshore wind is no longer a developing technology but is now a fairly mature technology. However, as a consequence of that development and the way in which the price of offshore wind has fallen, the full funding for developing technologies is then scooped up by offshore wind and the money that should be there to help wave and tidal power to develop is simply taken by offshore wind.

I do not begrudge offshore wind a penny of that money, but some dedicated pot of development funding for wave and tidal power would be of transformative benefit to the industry, and it would certainly be of enormous economic benefit to the island communities that I represent. Predominantly, though, it would allow us to contribute to the rest of the country.

We are not looking for any special favours or special treatment. We are not even looking for extra money from the coastal communities fund, although people should remember that that money came from the Crown Estate’s marine estate, and so we have contributed plenty to that fund over the years, through our fish farms, marinas and piers. We just want the opportunity to be allowed to contribute to the rest of the country to the fullest extent that we possibly can, and in that way we can all understand that through good times and bad we will share the risks and the opportunities.

[Mr Bob Seely (Isle of Wight) (Con)]

Thank you for calling me, Mr Rosindell; it is a pleasure to serve under your chairmanship.

I also thank my hon. Friend the Member for Havant (Alan Mak) for securing this debate and for being part of the all-party parliamentary group for UK islands. His presence here is very welcome and he spoke very eloquently about the needs of Hayling Island; once upon a time, when I was very young, I visited it and I remember how lovely it was. I also thank the right hon. Member for Orkney and Shetland (Mr Carmichael) for his contribution: it is always good to hear of the experiences of other islands.

As we know, this is not a debate about places such as the Channel Islands and the Isle of Man, which are Crown dependencies. This debate is about islands that are fully within the governance of the United Kingdom, but clearly they have physical characteristics that make them islands and give them distinct traits. Indeed, our islands are unique and special places, and to represent my island is a passion and a privilege, which I am incredibly grateful for. I love being here, but I would not want to represent anywhere other than the Isle of Wight.

Islands are, by definition, at the fringes of our nation, but they also help to define us, and they have a special place in our geography and culture. However, my argument to the Minister who is here today—I am very grateful for his presence—is that islands do not always get their fair share, because they are overlooked. In the case of my island and my constituency—the Isle of Wight—that is especially true.

By way of example, the Scottish islands get the Scottish islands needs allowance, or SINA, which comes from the Scottish Government. So they get the Barnett formula money, which is generous, and on top of that they get the SINA. If I remember correctly and have my facts right—I am sure the right hon. Member for Orkney and Shetland will correct me if I am wrong—the Western Isles, Orkney and Shetland get an extra £6 million a year through SINA, in acknowledgment of the fact that supplying Government services on islands tends to cost more than it does on the mainland. The Isle of Wight gets none of that money, despite the fact that we have a population four times bigger than that of the Western Isles, for example, and two, three or four times bigger than that of Orkney, Shetland and other islands.

So we do not get our fair share, and when it comes to “fair” funding we are unfairly funded. The central reason for that is simple: it is the Solent. Government funding systems are not designed to deal with isolation by water. The rural isolation grant and the rural farming grants are all predicated on a sense of isolation, but isolation on land and not isolation by water. One of the arguments that I am trying to make, and I have already made it to the Minister’s colleagues in other Departments, is that a fair funding formula needs to take into account isolation by water.

I have gone straight into the meat of my speech; I will now go backwards a little bit. We are very much open for business on the Isle of Wight; we are trying to attract new businesses to the island; and our regeneration team and our council have a very ambitious programme, which I absolutely support, and I will work hand in glove with them.

In fact, we have a unique scientific heritage. Marconi set up the first experimental wireless station off the south coast of the island, on St Catherine’s Down, which, by the way, is one of the sunniest places in Britain; seaplanes were built by Saunders-Roe in East Cowes; and we have major employers and a cluster of defence, composite and high-tech industries, including companies such as Gurit, BAE Systems, GKN, which is now part of Melrose, and Vestas. Indeed, a high percentage of the world’s large offshore turbine blades are made on the Isle of Wight at the Vestas factory. Vestas is doing great work on the island, and I thank it, as I do all employers, for its presence. So we are very much home to high-tech businesses that are at the cutting edge of their industries.

As I have said, however, there is a problem with providing Government services on the island. A University of Portsmouth 2015 study said that the extra costs of providing Government services on the Isle of Wight were £6.4 million a year, because of the costs of being an island. The university broke that figure down into three: first, the cost of self-sufficiency, because of the lack of spill-over of public goods provision; second, what it called an “island premium”, which is the additional cost of conducting business on and with islands, which the right hon. Member for Orkney and Shetland will know about; and thirdly, the sense of dislocation, which is the physical and perceived separation from the mainland and which could come from providing services to a smaller population and a smaller market.

I will give an example. At care homes, there was a clear mistake that we are rectifying. Elderly folks were put into care homes earlier than on the mainland, yet our care homes were costing more than the mainland because of the lack of competition between them. To some extent, another issue was their high quality. The cost was pushing additional burden on to our adult social care costs, which skewed our funding so that we could not spend the money on infrastructure to provide jobs and on a jobs agenda. That is absolutely vital in keeping our youngsters on the Island, which helps make us the vibrant and successful community that we are, and which we are building on as well.

In those three different ways—full self-sufficiency, the island premium and dislocation—there is an extra cost for Government services on the Isle of Wight. That has been estimated, in an academically rigid, peer-reviewed article, to be £6.4 million a year, and that does not include other factors that I would like to bring to the attention of the Minister. One of those is the Green Book estimate. Green Book estimates are the terms and references for Government investment, and they do not work for the Island because we are physically isolated. We cannot do the things that work for Southampton, Portsmouth or, indeed, for Havant, because we are physically separated. The Green Book estimates process counts against the Isle of Wight in providing infrastructure.

I have mentioned separation by water in terms of the rural isolation grant. For farming grants, things are prejudiced against us because we are in the wealthy south-east. In many ways, we get all the downside of being part of the wealthy south-east—we do not get that extra support as we are seen to be in the wealthiest area of the country—when in many ways our economy is similar to that of west Devon or Cornwall. There is some tourism, some culture, farming and little clusters of high-tech industry. Whereas lovely places such as Cornwall get money thrown at them through EU grants and Government support, we have had very little of that.

The amount of money we would ask for from central Government to make the Island even more of a success is really very small. I would love to sit down and have that conversation with the Minister in greater detail. The answer is not devolution, because the housing system sadly does not work for us, and we will be arguing why we are an exception. We want a modest, tailored package of support that recognises that we are an island. That £6 million extra in fair funding would be of benefit for the council, and would recognise that because we are an island, we need an A&E and a maternity unit, because someone cannot give birth on a helicopter going to the mainland, and the ambulance cannot wait for four hours to get the ferry overnight. Our funding in health services and many other things is skewed by the fact that we are an island, and that is not recognised.

We have many little clusters of excellence. Our tourism economy is significantly improving. We will very soon have one of the best broadband services in the world. Thanks to our wonderful local company, WightFibre, and the Department for Digital, Culture, Media and Sport—I thank them very much indeed—we are getting significant sums of money so that we will get ultra-superfast broadband for five out of six houses on the Island. If someone has a broadband business, the place they want to be is not London, Old Street, Moorgate or Brighton, but Cowes or Newport, where they will get broadband speeds comparable with Singapore. What I need to do, working with colleagues in the council, is determine how we get the other one sixth of houses in the more rural and very rural areas linked up to that as well, so that people can have Singapore broadband speeds in their little farmhouse in Newtown Creek, Brighstone, Chale or wherever.

Most importantly, education is critical to our future. It is improving and is becoming a success story. We probably need to work on restructuring our sixth forms, but most importantly, I would like to have a conversation with the Treasury and the relevant Ministers about getting significantly more higher education to the Isle of Wight, specifically a university campus. I would like that to be in Newport as part of our critical Newport harbour redevelopment. It may be that it goes elsewhere. Higher education would clearly lead to much higher levels of higher education, but it would also drive our software businesses, which the right hon. Member for Orkney and Shetland spoke about, and other key investments.

We have also won special status from the Arts Council, and we are building a much stronger cultural offer for tourism, education, aspiration and, critically, regeneration. It is important for the Minister to be aware of that. I would love to have a conversation with him about our farming and small businesses. I am having a conversation with the Minister for Agriculture, Fisheries and Food, my hon. Friend the Member for Camborne and Redruth (George Eustice), about mobile slaughtermen. Once we leave the European Union, we will be too small to have an abattoir, yet our field structure on the Island is perfectly suited to animal husbandry, and we are very keen to support local food production, which is good for multiple reasons, over and above employment.

[Mr Carmichael]

I understand exactly what the hon. Gentleman says when he talks about the Island being too small to have an abattoir—we have the same issue in the Northern Isles—but I suggest that is not actually the case. The Isle of Wight is surely too small to have an abattoir only in the way we regulate and manage abattoirs currently. A more sensitive system of regulation would surely allow a good business there.

[Mr Seely]

The right hon. Gentleman makes a very good point, and I am happy to take that correction. Post-Brexit, we need to change the rules for farming so that we have smaller abattoirs or mobile slaughtermen who can kill animals humanely on the farm to allow them to go into the human food chain in a way that does not exist at the moment.

Finally, I would like to have a conversation with the relevant Minister in due course about BAE and the need to have a complex radar technology demonstrator in Cowes. If we wish to keep radar technology in this country for the next 50 years—there is a critical national interest in doing so—the only realistic place to have it is where the aircraft carriers, the Type 45 and all the Royal Navy warships are made, which is in West Cowes at the BAE plant. I want to bring together BAE and Government to have that conversation. We are talking about small sums of money—£5 million, £10 million or £15 million—to secure a complex radar technology demonstrator, so that we can keep those high-tech jobs and that high-tech knowledge on the Island. I will wind-up now, Mr Rosindell. I apologise; I have taken a touch too long.

The Island is a success story, but I do not believe the Government have engaged with us enough over the past 10 to 20 years to maximise our success in building a new economy and an advanced education system, doing all the things we need to do regarding our infrastructure, such as our broadband and all the high-tech jobs, and making the Island the economic success story that it is. I reinforce the point about the coastal communities fund and the importance of the Treasury spending a little time and effort to understand islands, their unique circumstances and the amounts of money—very small in the great scheme of things—that could help drive enterprise and economic progress. More than anything, I want my constituency, the wonderful Isle of Wight, to contribute economically, rather than being a place that gets handouts from central Government because we say we are poor and do not have this or that. With a bit of help from the Treasury and the Government, and greater integration and support, we can drive our success story further.

--- Later in debate ---

[Mr Carmichael]

My constituents would not forgive me if I were to allow this opportunity to pass. I must point out that in the Northern Isles, despite a raft of promises over the years, we are still to see the reduced fares promised by the road equivalent tariff.

[Bill Grant]

I fully accept the right hon. Gentleman’s intervention. I hope that those endeavours will bear fruit and be recognised. I think that the NorthLink Ferries services do not attract the same support.

We also host the world’s last seagoing paddle steamer, the Waverley, based in Glasgow. She is a wonderful way to do what we say in Scotland is a trip “Doon the Watter” that takes people to various islands such as Arran and Cumbrae, which I am sure we will hear about later. It is a great opportunity to see the wonderful west coast. She also plies her trade off season down here in the Thames.

--- Later in debate ---

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I am very happy to speak in this debate today, and I sincerely thank the hon. Member for Havant (Alan Mak) for securing it. I also thank him for the celebratory tone with which he introduced the debate on our beautiful islands right across the United Kingdom and for recognising the unique challenges that our islands face, despite the many attractions that they offer both residents and visitors. Our islands are indeed beautiful but, as we have heard today, they can be quite fragile, too, and deserve special and separate consideration, so I am delighted to contribute today as I have the honour of representing the beautiful islands of Cumbrae and Arran.

Our islands not only face unique challenges, but share common challenges. I want to say a few words about the comments made so far. The hon. Member for Havant painted a beautiful picture of the island of Hayling, which he has made me think about visiting because he painted such an idyllic picture of it. We have also heard about the beautiful islands of Orkney and Shetland and the Isle of Wight. We had a round-up from the hon. Member for Ayr, Carrick and Cumnock (Bill Grant). I took a photograph surreptitiously as he paid tribute to the Scottish Government. Although the photograph will not have sound on it, it will be a moment captured in time as he went out of his way to pay tribute to the Scottish Government.

I represent the isle of Cumbrae, whose main population centre is the town of Millport. There are few people who grow up in the west of Scotland who do not have a childhood memory of cycling round Millport and this lovely island just off the seaside town of Largs, which I also have the privilege of representing. Cumbrae is a mere hop, skip and a jump from Largs. It offers the beauty and tranquillity of island life while being extremely accessible and a short ferry ride away. In the height of summer there are 40 sailings each way per day to the Isle of Cumbrae. People flock there not only for the beautiful scenery, but to visit the £4.2 million education facility, the Field Studies Council, which was built in partnership with the Scottish Government and has attracted visitors and scholars from across Europe, if not the world.

The Isle of Arran is a little more remote and offers towering mountains and luscious rolling landscape that can, in the right light, simply take your breath away. I mention such things not only for the sake of it, because it is such a nice thing to discuss, but because both islands enjoy a huge influx of visitors, especially, although not only, in the high season.

The hon. Member for Ayr, Carrick and Cumnock mentioned the road equivalent tariff, whereby ferry fares are set on the basis of the cost of travelling an equivalent distance by road, including a fixed element to keep fares sustainable and to cover fixed costs such as infrastructure. RET was introduced to the island of Arran in October 2014. I hope that my setting out the benefits of RET will help the Minister as he deliberates about how to stimulate island economies and help them to grow.

The right hon. Member for Orkney and Shetland (Mr Carmichael) expressed some disappointment that Orkney and Shetland appear not to benefit from those advantages. He will be aware that the Minister for Transport in Scotland announced that RET would be rolled out to Orkney and Shetland in the first half of 2018. That announcement was very much welcomed by his colleagues Tavish Scott and Liam McArthur. I am sure that the right hon. Gentleman will also, when he has time to reflect, wish to welcome the announcement.

[Mr Carmichael]

I am on the record as welcoming the good intentions; I am just frustrated that, almost 11 years since the same opportunities were given to communities in the Western Isles, we still have not seen a single penny piece in the Northern Isles. Surely, the hon. Lady understands why our communities are so frustrated by the decisions taken by her Government in Edinburgh.

[Patricia Gibson]

As I said, I understand the right hon. Gentleman’s frustration, because we all want to fight for our constituents and secure for them whatever advantages we can as soon as possible. He will also remember that I said that the Isle of Arran got RET in 2014. From what he said, that was a considerable distance behind the first roll-out. The fact is that the roll-out is a process and a programme. Obviously, the islands that are not at the front of the queue will be frustrated and impatient, as they should be. The fact is that RET—as I suppose his frustration suggests—is a huge benefit to island communities, and any island would be mad not to want to secure those advantages as soon as could be arranged.

The object of road equivalent tariff is to increase demand for ferry services by making ferry travel much more affordable and more accessible, to increase tourism and to enhance the local and wider national economy. That is why the right hon. Member for Orkney and Shetland, the hon. Member for Ayr, Carrick and Cumnock and I are so excited about it. In order to be as helpful to the Minister as I can—I always try to be helpful to my colleagues—I intend to paint a brief picture to show him the positive impact that road equivalent tariff can have, in case it is something that he wants to consider rolling out in the rest of the UK. It helps to offset some, though not all, of the challenges that are faced by island communities, which we have heard a wee bit about today.

In the case of Arran routes, such as the Brodick to Ardrossan route and the route between Claonaig and Lochranza, stimulation of the economy has certainly been achieved. Arran’s economy—if you can believe this, Mr Rosindell—has grown by 10%, which is a faster rate of growth even than China. That is something to prize, and it can perhaps be best explained by the price of the Ardrossan to Brodick route tumbling by a massive 46% for foot passengers, with a 64% reduction for cars being transported on that route. That comes at a cost of a mere £2.4 million a year to the Scottish Government.

I will set out the advantages that RET has brought in practical terms to the island. Analysis carried out by Transport Scotland has concluded that RET has significantly increased resident ferry travel across all journey purposes, and increased the demand for ferry services. In addition, the number of tourists has increased substantially, with the season extended from Easter and peak summer to the equivalent of the whole summer timetable. RET has enhanced the island-hopping tourist market with neighbouring islands. The Scottish Government are investing £1.8 million a year to support RET for the route between Cumbrae and Bute.

We know that job markets on islands can be challenging and fragile—we have heard a bit about that today. For Arran businesses, the impact of RET has been extremely positive, with increases cited in footfall and turnover. The tourism sector has accrued the greatest benefits, with hotels, guest-houses, campsites, golf courses and visitor attractions all highlighting the positive impact of RET.

Interestingly, RET has been particularly beneficial to the more remote areas of the island of Arran, particularly on the west coast. That is surely down to the increased numbers of visitors availing themselves of the opportunity to bring their cars on to the island at a much reduced cost, and exploring the farther reaches of the island, beyond Brodick and Lamlash. It is heartening to see a new £10 million distillery on Arran, and major expansion of the Auchrannie hotel and spa, which will enhance any visitor experience. RET has also allowed those who live outwith the island to take up jobs that have been challenging to fill, as students or seasonal workers can sometimes fill them. There is even a scarcity of staff to fill the increasing demand for workers in the hospitality industry, demonstrating the success of RET for the island.

Of course, there is no denying that RET has posed challenges for some businesses in the retail sector, because they are becoming increasingly exposed to competition with the mainland. However, studies show that the overwhelming consensus is that there has been a very positive impact on the island in terms of social, cultural and economic opportunities.

We know that connectivity is key, and that is very true of broadband connectivity for our islands. The Arran Economic Group reported last year that, based on cabinet installations, more than 90% of households and businesses now have access to superfast broadband, with take-up on Arran and Cumbrae at around 41%. There have been particular issues with the area of Machrie on Arran, but progress is being made.

We have heard some remarks about connectivity, regarding broadband and mobile phone signals. It is true that that is an issue, but as I always say to constituents when they raise such matters with me, the connectivity of broadband and mobile signal on this very estate sometimes compares to some of the difficulties that people have on the island of Arran and other outlying areas in our coastal communities. The broadband and mobile phone signal on this estate is sometimes, as you will be aware, Mr Rosindell, absolutely shocking. The fact that we have that problem in the middle of London, in the middle of the parliamentary estate, shows the scale of the challenges that our island communities face.

Arran also suffers from the lack of affordable housing. That is a challenge for future economic growth on the island, since it has an impact on the working-age population. One barrier is that 22% of homes on Arran are second homes, with a further 59 empty homes identified. We need to find ways of offsetting those issues, alongside plans to build new affordable homes on Arran. The Scottish Government have helped to fund 96 new homes in partnership working. That is a start, but clearly there is much more work to be done. The Scottish Government are investing £2.2 million on Cumbrae for amenity housing, but there is no room for complacency. Affordable housing remains a big challenge.

We know that there are pressures on Scotland’s budget. I was quite bewildered by the comments made by the hon. Member for Isle of Wight (Mr Seely). He is standing up for his constituents, which is exactly what he is supposed to do, but I flinched when he called the Barnett formula “generous”, given that Scotland’s resource budget was cut by £211 million this year and will be cut by £538 million next year. I am sure that he wants more resources for the Isle of Wight, but I do not think that describing the Barnett formula as generous is the way to do that.

--- Later in debate ---

[Peter Dowd (Bootle) (Lab)]

It is a privilege to serve under your stewardship, Mr Rosindell. I congratulate the hon. Member for Havant (Alan Mak) on securing this debate and bringing the issue to the House to chew over—it is very important. The contributions from the hon. Member for Isle of Wight (Mr Seely), the right hon. Member for Orkney and Shetland (Mr Carmichael) and the hon. Member for Ayr, Carrick and Cumnock (Bill Grant) indicate the complexity, diversity and multifaceted aspects that this issue throws up. It must be seen in the context of the type of islands that we have in this country—from the Isle of Wight, with its 140,000-odd population, right through to some of the inhabited Scottish islands, which have perhaps five or six inhabitants. It is not quite as simple as saying that an island is an island is an island.

There is also the diversity of economic activities on our islands. The hon. Member for Ayr, Carrick and Cumnock talked about windsurfing, and I also got the impression that he has tasted whisky. I look forward to hearing his experiences of windsurfing—if not seeing the photographs—next time we debate.

As the hon. Member for Havant mentioned, one of the greatest problems faced by the economies of UK islands is poor infrastructure. The rising cost of transport for people who live on UK islands clearly has a knock-on effect on jobs, suppliers and the population, as many young adults are choosing to leave their island homes in favour of finding work in the rest of the country.

Another challenge is the higher levels of unemployment; the unemployment rate on many islands is well above the national average. The Isle of Sheppey’s unemployment rate stands at 2.6%, while those on the Scottish islands of Arran and Bute are 3.8% and 4.1% respectively. As has been discussed, many islands are tourist destinations, which means that a large amount of the work is seasonal. In the past, that might have been less of a challenge, but with weather becoming increasingly unpredictable due to global warming, it is much harder for those economies to plan and scale. It is not necessarily a major factor at this point, but it is a factor. In relation to the grouse—I mean gross, though grouse is very appropriate for Scotland—the gross household disposable income on UK islands is lower for workers in the Orkney Islands, the Isle of Wight, the Western Isles and Anglesey than for those in much of the rest of the United Kingdom.

Given the increasingly technological nature of advanced economies, the hon. Members for Isle of Wight and for North Ayrshire and Arran (Patricia Gibson) have quite rightly pointed out the vast differences in broadband connectivity and speeds between parts of the UK and the islands. That has a huge impact on island economies, particularly on the number of small businesses that operate remotely. Naturally, many UK island economies suffer from having less resources, which hon. Members have mentioned, and have a heavy reliance on a limited number of supply chains, which leads to the UK’s island populations paying more for goods and services. When combined with lower-than-average incomes, higher costs of household essentials are a key factor in driving poverty levels.

All those issues have been outlined with clarity by Members from across the House. We have had the analysis of the symptoms, but I am not sure we have had the practical things we can all do to help those communities—I hope the Minister will address that. It falls on me, as Opposition spokesperson, to refer to the elephant in the room: eight years of austerity. Many areas have suffered disproportionately from that because of the lack of investment in those communities, where they have struggled.

Let me take a couple of examples. I understand that Canvey Island has an independence party, with eight or nine councillors. I am not quite sure whether they are going to get to a referendum—but perhaps we should not go there, or talk about customs unions or single markets, as I am sure we have enough trouble with that at the moment. Canvey Island sits in the borough of Castle Point in Essex, a local authority that has seen nearly £1 million of Government grant disappear. Reports now suggest that Castle Point will be running a million-pound deficit in three years’ time.

Perhaps we should turn to Hayling Island, which the hon. Member for Havant mentioned and knows well, as it is in his constituency and covered by Havant Borough Council. A couple of months ago, his local paper, the Portsmouth News, reported that the local authority had been forced to increase council tax by the maximum of 3%. The local population will have to pay that—a population that, as the hon. Gentleman said, are already stressing and straining. Why might a Conservative council feel the need to increase taxes on the good people of Havant and the island of Hayling? It faces a £1.2 million reduction in central Government support as a direct result of the Government’s policies. There is no way to duck that particular issue. The council leader, when describing the measures being taken to try to rescue some services said:

“We didn’t want to go down this route but we had no option”.

The council faces a significant reduction in central Government funding through the revenue support grant, which in 2016-17 was £1.4 million, is now £290,000 and from 2019-20 will be zero. That is a factor in the issues that the hon. Gentleman raised.

These are not isolated examples. If we consider any of the local authorities of the islands mentioned in this debate, the story is the same—deep and pernicious cuts that threaten the very existence of some of them.

[Mr Carmichael]

Of course reductions in public expenditure are difficult for island communities, as they are everywhere. The real difficulty that they face is not just the amount of money that they have to spend, but the fact that so much of it comes with strings attached and local authorities are given so little discretion over how to spend the money that they have. What island communities need more than anything else is the ability to make decisions for themselves.

[Peter Dowd]

I agree with the right hon. Gentleman, and his point feeds into the whole question of devolution within nations. Whether we like it or not, there is centralisation down here in Whitehall and Westminster. That is not a criticism, as it happens in all parties. In the past, I have called it—forgive the phrase, Mr Rosindell—the anal retention down here. It is not particularly helpful or productive. Local communities know their areas best and it is best for communities to get on and use their discretion, within as wide a parameter as possible, to provide services in their areas. They tend to know best.

Given how these local economies are often heavily reliant upon the public sector, following major structural changes to the economy of the last four decades, it is little surprise that some communities are under stress. The hon. Member for Havant referred to commercial practicalities. Sometimes, they will close down banks, pubs and other services. Do we permit that to happen, or do we do something to ameliorate it? It is sometimes the Government’s job to help and to intervene—not to direct or do too much, but to go in and help communities where such services are the lifeblood. In 10 or 15 years’ time, we will all be concerned that such services have de facto closed down, and we will ask what we could have done to support them.

Some islands are getting increasingly desperate about the way things are. All joking aside, some people on Canvey Island want independence because they do not feel they are getting the deal they should be getting. That underlines the point that the right hon. Member for Orkney and Shetland made about devolution and about local communities being able to run themselves where possible.

It is important that the Government begin to invest in the UK island economies and engage with their populations. Whether that means the Isle of Wight or a small island off the Scottish coast, that has to happen. It could mean investing to stimulate employment opportunities on UK islands, as the increasingly unpredictable cycle of seasonal work is clearly not enough to sustain island economies. Anglesey and Orkney have demonstrated that investment in renewable energy can deliver sustainable jobs and put the UK on the path to energy security, as the right hon. Gentleman said. The Government have to stop being blinkered; they must look at these issues and at how they can work with communities.

The Opposition have some transformative proposals, such as our plan for a coastal communities fund—a policy we have been consulting on since the election, and which we will begin to outline in due course. I believe it will address some of the issues that the hon. Member for Havant raised, deliver investment in a number of UK island economies and hopefully bring them back from the brink. In our grey book, “Funding Britain’s Future”, we set out an immediate increase in local government funding while we review council tax and business rates. That in itself will not prevent some communities from going over the edge, but we have to send them the message that we are here to help and support them, and that we will do everything we can to ensure they continue so that we maintain the diversity of our country. I am sure the hon. Gentleman will welcome that injection of investment into his community.

We need a radical rethink to help communities that feel under pressure, left behind and under threat. Tinkering at the edges is not good enough, and will not help island communities, in their diversity, to succeed.