Economies of the UK Islands

Bob Seely Excerpts

Wednesday 9th May 2018 Westminster Hall

[Alan Mak (Havant) (Con)]

I beg to move,

That this House has considered the economies of the UK islands.

It is a pleasure to serve under your chairmanship, Mr Rosindell. I thank the Speaker’s Office for granting this debate, the Minister for coming to respond and all right hon. and hon. Members for joining me. In particular, I thank my hon. Friend the Member for Isle of Wight (Mr Seely) for the important role he has played in instigating and securing this debate, and in launching the all-party parliamentary group for UK islands, of which I am proud to be a founding member.

Island geography has played a pivotal role in shaping Britain’s history, and has contributed to the culture, society, institutions and economy that we enjoy today. Similarly, the smaller islands that are part of the UK also have their unique history, communities and economic structures, stemming from their own geography. Nearly every aspect of life on these islands, including their economies, is impacted on in some way by their geography. The debate is about showcasing and celebrating the economic strengths of our islands, highlighting the challenges they face and exploring how central and local government can help our islands get fit for the future. We are all islanders in one form or another and we should work together to protect and enhance these extraordinary communities and their economies.

Within my constituency, Havant, I have the honour of representing more than 17,000 residents on Hayling Island, one of Britain’s most successful inhabited islands. The island has a fascinating history dating back to the iron age, stretching through the 11th century, the salt production industry and serving as a location for a mock invasion in preparation for the D-day landings. As important as Hayling’s remarkable past are the exciting possibilities for its economic future. Northney, West Town, Eastoke, Sea Front and Mengham all boast an array of strong, independent businesses. Some of these are small, such as the Hayling Island Bookshop, reputed to be the smallest independent bookshop in Britain. It was a finalist in the parliamentary best small shops awards. There are others, such as Bentley Walker, which started life as an electrical goods shop and has now diversified into a provider of satellite-based internet technologies, serving customers around the world. Others, such as Northney Ice Cream, the Coastguard Café and the Seaside Florist, are family-owned. All of these Hayling businesses and others have their own character. While owners and employers are always eager to help the local community, they also give the island its distinctive welcoming character and a strong sense of community, engendering a strong sense of loyalty among local residents.

That warmth has made Hayling a great place to visit and helped it to build a strong visitor economy. The tourism industry is worth more than £160 million to the Havant and Hayling area each year. Hayling’s beaches are award-winning; the three main beaches of the island have won both the European blue flag and the Keep Britain Tidy group’s seaside award flag for cleanliness and management. Eastoke Corner beach has been awarded a blue flag for more than two decades, attracting visitors from each of the three busy holiday parks across the island, which are also key employers.

Beyond the beaches, the island’s sailing clubs also bring in visitors who enjoy our natural environment. The annual Virgin kitesurfing festival also attracts thousands of water sports enthusiasts from around the world. The island’s remarkably low crime rate makes it a safe place for business to start and grow. The coastal and semi-rural nature of the island lends itself to the establishment of new businesses set up by local entrepreneurs such as John Geden, who established Sinah Common Honey. Each jar of honey is said to derive from nectar from more than 1 million flowers. Hayling’s rich rural environment provides a sustainable, natural dimension to Hayling’s economy. As of March 2018, only 115 of Hayling’s 17,573 residents were claiming unemployment benefits of any kind—just 1.2% of the population, compared with the English average of 2.1%.

Although Hayling’s unique geography is a source of economic strength and community spirit, the island and others around the UK also face unique challenges. There is a consistent need on Hayling Island and other islands across the UK to work harder to create sustainable and attractive employment opportunities for our residents, especially younger residents and school leavers. Any dip in opportunities for younger generations carries with it potentially destabilising knock-on effects for our wider economy. A brain drain, even a temporary one, can mean that our local businesses struggle to hire workers. The 2011 census indicated that there were 4,060 people living on Hayling Island who worked elsewhere, out of a working population of 9,934. Just under half our working residents commute off the island via a single road bridge most days of the week.

It is absolutely crucial that we equip all our islanders, especially our young people, with the skills to succeed in the economy of today and that of the future. I therefore welcome the fact that four of Hayling’s schools, Mill Rythe Infant School, Mengham Infant and Junior Schools and Hayling College are rated as good by Ofsted, with Mill Rythe Junior School rated as outstanding. As with many coastal communities, however, we still have pockets of deprivation and underachievement that hold back our economic potential and productivity.

Although schools across the whole Havant constituency, including Hayling Island, receive higher than the national average in per-pupil funding, I believe that the Government’s new national funding formula can do more to help pupils who suffer from the most extreme forms of deprivation, particularly in coastal communities. I have met the Minister for School Standards and the new Secretary of State for Education on several occasions to lobby them on this issue. I hope the Exchequer Secretary shares my desire to ensure that every young islander gets the best start in life, so that they can contribute effectively to our economy in the future.

The other challenge our island economy faces is the over-exposure of our business community to changes in the island’s service infrastructure. We live in an age of digitisation, as I have emphasised in my other work in this House on the economic opportunities of the fourth industrial revolution. As online banking increases, footfall in local banks will inevitably fall. This has led to the closure of Mengham’s NatWest and Barclays branches on Hayling, and I am sure other hon. Members face similar situations in their constituencies.

Although residents on the mainland can mitigate the closures by driving to a nearby branch that remains open, Hayling only had one branch of each main bank. In recent years, closures have forced many residents to travel to the mainland using the single road with increasing regularity. I am aware that this has been touched on and tackled elsewhere through the access to banking protocol, the Griggs review and the access to banking standard, and is ultimately a commercial decision beyond the Government’s control, but I want to raise it to emphasise the heightened sensitivity of the economies of the UK’s islands to changes in the economic infrastructure—they impact on us severely.

Public transport is key to a vibrant economy within an island as large as Hayling—transport between the island and the mainland, and in neighbouring areas, such as Portsmouth. Any diminution in service has a disproportionate impact on island communities for residents and visitors alike, especially on islands such as Hayling, which are both coastal and semi-rural. The Hayling ferry, for example, is a valued community resource that also helps the island economically. The ferry’s owners and operators are putting together a business plan to make it commercially viable in the long term, working with local councillors—something I support. I hope that my hon. Friend the Minister will join me in wishing them every success as they seek to secure a long-term solution to ensure that we have a positive local impact from the ferry. Road infrastructure is equally vital. High-quality road networks are important, particularly as new housing is proposed on Hayling Island to meet local demands. Digital, structural and economic services are vital to the economic wellbeing of our island.

We live in a world of unparalleled opportunity thanks to technological innovation and a host of businesses are now footloose thanks to the advent of the internet and online shopping. On Hayling Island, 96.9% of premises can receive superfast broadband, set against a UK average of 93.5%. We are fortunate to be close to the mainland with a strong digital infrastructure, but I know that many islands are not so fortunate. With services such as banking increasingly moving online, fast download speeds are essential. That should be an area in which the Government can support island communities.

I commend the Government’s efforts to date to support island communities. In 2011, the Government established the coastal communities fund and since then, four funding rounds have been completed, awarding a combined total of £173 million. Only 9% of that funding, however, has been awarded to projects based on islands, and 70% of that has been allocated to islands in Scotland. I do not begrudge any of the funds that have gone to those recipients. Instead, I seek to highlight our collective and continued need for sustained development and support for the UK’s islands, including Hayling Island.

In March 2015, the then Department for Communities and Local Government established coastal community teams in order to encourage,

“sustainable economic development and regeneration in coastal towns.”

Each of the 146 coastal community teams that have been established were awarded £10,000, yet only three were exclusively based on islands. I am delighted that one, the South Hayling Island coastal community team, was based on Hayling Island.

Although the coastal communities fund was established with the aim of providing funding to create sustainable economic growth and jobs, it has become largely project-focused rather than addressing the structural, systemic and strategic challenges faced by UK islands. Consequently, I hope the Minister and the Government will consider expanding or complementing the coastal communities fund so that it can provide stronger strategic and structural support to the economies of UK islands. The reformed fund would be exclusively available to island communities, such as Hayling Island, to apply for.

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

I thank my hon. Friend for securing the debate. I strongly support the proposal, and I am glad that he is raising it with the Minister, because one of the problems is that islands are sometimes too small for the Treasury to be interested in as economic enterprise zones, which we need on the Isle of Wight and in the Medina valley specifically. With an enlarged coastal communities fund, perhaps one that looked specifically at driving economic regeneration, relatively small sums of money could make a great deal of difference and would go down very well.

[Alan Mak]

I thank my hon. Friend for that sound intervention and again for his role in securing the debate. I entirely agree with his points. As I was saying, a reformed coastal communities fund would be incredibly important to coastal communities such as Hayling Island and his constituency. It would be exclusively available to island communities to apply for to help them to meet the specific and unique challenges they face as a result of their specific and unique geography. As I mentioned in my opening remarks, those challenges include an oversensitivity to changes in local infrastructure, expensive or sometimes congested transport connections to the mainland, a skills gap and a need to support local, independent businesses, all of which could hamper economic growth if not addressed.

In conclusion, we are all islanders. Britain and its satellite islands are a beacon to the world of how innovative, welcoming and economically successful islands can be. After all, the UK is one of the largest and most successful island economies in the world. However, to make our island economies sustainable and resilient, on Hayling Island and beyond, we must help to tackle the systemic and structural challenges they face. I hope that central and local government will play their part. By doing this, we can ensure that islanders across the UK enjoy the bright economic future they deserve, and that they not only are fit for the future, but get to the future first.

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[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.

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[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.

[Mr Seely]

She has also spent much of her time on the Isle of Wight, where she was very welcome.

[Bill Grant]

I thank my hon. Friend for bringing that to my attention. I am sorry for missing out the Isle of Wight. The Waverley is a wonderful asset to the nation and is the world’s last seagoing paddle steamer, supported by a charity and the nation.

Though uninhabited, Ailsa Craig is an island that sits off my constituency in the Firth of Clyde and plays host as a bird sanctuary to gulls, guillemots and puffins. Most importantly, it provides the granite for the best curling stones in the world, hand-crafted by Kays of Mauchline in Ayrshire. When we see curling on television, the curling stone almost certainly originated from the island of Ailsa Craig.

It is important to note in this debate that island communities in Scotland and across the United Kingdom are diverse. No two islands are the same, and although they often face a similar set of economic challenges, they each have their own unique circumstances: for example, population. Scotland has four islands with populations above the 10,000 mark, and those islands’ economies have different needs from the many Scottish islands with populations below 100. In the case of many of those smaller communities, probably the most pressing economic issue requires acting to prevent depopulation and working to secure the long-term future of those communities. Retaining young people on the islands to give them continued vibrancy is important.

The population of Scotland’s islands increased by about 4% between 2001 and 2011. That is a welcome development, which I hope will continue and even accelerate over the coming decades. In many cases it is very challenging to sustain island populations. Although Scotland’s four largest islands recorded an increase in that period, it is sad to note that communities of fewer than 50 inhabitants still experience, in general terms, the risk of a drop-off in population numbers. When we talk about the economies of the islands, therefore, we must be sure to include all the islands and not just the larger and identifiable ones such as the Isle of Wight.

Scotland’s small island communities are some of the most unique and beautiful places in the entire United Kingdom, and it is important that their future is secured as well as possible. Scottish islands of all sizes have great economic potential, and both the Scottish and UK Governments need to work together to ensure that that potential is fulfilled. The right level of investment and support, as mentioned earlier, is needed across the islands, but particularly in areas such as transport, fuel costs and maintaining the vital links that give islanders access to the basic services that people on the mainland simply take for granted.

Connectivity is vital for Scotland’s remote islands. For island communities as well as other rural and remote areas, broadband is necessary to ensure that the communities’ economies do not get left behind. I hope that the UK Government’s welcome intervention in the broadband roll-out in Scotland will deliver results sooner rather than later.

As was mentioned before, 4G and 5G connectivity are vital to local economies across the United Kingdom, and island communities are no different. If our islands keep pace in terms of mobile connectivity, they have a better chance of keeping pace economically, which is essential for a vibrant future for the islands. The Islands (Scotland) Bill, which is currently going through the Scottish Parliament, will be judged on the outcomes it produces, and I hope that islanders will not be disappointed. Our islands, of all sizes, can and should have a bright future ahead of them.

Finally, if anyone is minded to secure a tranquil, peaceful holiday, they would do well to visit a Scottish island.

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[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.

[Mr Seely]

Will the hon. Lady admit that Scottish islands get two things that the Isle of Wight does not: the Barnett formula—whether or not she describes it as generous—and the Scottish islands needs allowance? They are twice as generously funded as the Isle of Wight.

[Patricia Gibson]

The islands do not benefit from the Barnett formula; Scotland is allocated funding through the Barnett formula. I cannot describe it as generous. I do not believe for one minute that the hon. Gentleman is wrong to fight for his constituents, but comparing their funding unfavourably with any funding formula for Scotland is the wrong way to go. One thing that the islands in Scotland benefit from that the Isle of Wight perhaps does not is the priority that the Government give them. That might be a way forward.

There are clear challenges. Our island communities matter to us, as of course they should. As the hon. Member for Ayr, Carrick and Cumnock mentioned, the SNP Government in Scotland has brought forward the Islands (Scotland) Bill, which seeks to build better national and local economic frameworks for island development and their unique needs. It seeks to ensure that any legislation that is passed will be “island-proofed” to make sure that islands are taken into consideration and not forgotten about. That will help our island communities to become more sustainable and vibrant as they face the future—something that we all wish to see. I hope the Minister will reflect on the benefits of RET and will investigate the provisions of the Islands (Scotland) Bill, and perhaps use that as a way of improving the lives, experiences and economies of the islands across the UK.

I end by urging all Members who are here today—and those who are not, but who have the good fortune to listen to the debate—to pay a visit to the beautiful islands of Cumbrae and Arran, where they will find the scenery breathtaking and the communities warm and welcoming. Like so many previous visitors, they will find that they wish to return again and again.

--- Later in debate ---

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

It is appropriate that you are in the Chair, Mr Rosindell, as you are Parliament’s greatest champion of a different type of island: our overseas territories and Crown dependencies.

I thank my hon. Friend the Member for Havant (Alan Mak) for raising this important issue and for enabling a range of Members from across the House, representing all parts of the United Kingdom, to participate and give a complete tour of the British Isles. One thing we have learned today is that, although the British Isles are a great archipelago of more than 6,000 large and small islands and isles, relatively few of our constituents live on them, and we are perhaps less appreciative of them than we should be. Perhaps more than at any other point in our history, we are disconnected from our coast and our coastal communities. The Government are keen to change that and to ensure coastal communities and islands are properly represented. Today’s debate is an important part of that.

We want to raise productivity, living standards and economic growth in all parts of the United Kingdom, and of course islands and island communities are an essential part of that. Members representing the Isle of Wight, Hayling Island, Orkney and Shetland, Cumbrae, Arran and others have told the stories of their communities, many of which have been very positive. An important part of what we have heard today is that, although living on an island can cause problems, to which the Government, at a national or a local level, must respond, there are also opportunities for economic growth. Wonderful benefits can come from living in communities that are close and, as the right hon. Member for Orkney and Shetland (Mr Carmichael) said, can be very outward-facing to the rest of the world.

We appreciate that the barriers to growth can include a lack of opportunity—which can be a barrier to social mobility—poor connectivity and relatively high costs for transport, public service delivery and goods in the private sector. Although living on an island has many benefits and wonderful opportunities, which anyone who has grown up on one no doubt always lives with, the mainland can exert a strong gravitational pull, particularly to the young, and can at times lead to a drain of talent and youth. However, we have heard today about a number of islands whose populations are rising, which is very positive indeed.

Many of the barriers that island communities face are obviously a natural consequence of their geography and are common to all. Crudely, there are three types of island within the British Isles. The Isle of Wight is unique, in that it has a very large population—more than 130,000 people—and no bridge linking it with the mainland. I will turn to its specific demands in a moment.

The islands in the second category are mostly in Scotland, but there are a few off England, such as the Isles of Scilly. The populations of those islands, such as those represented by the right hon. Member for Orkney and Shetland, can still be substantial. They have no bridge to the mainland, and their remoteness poses particular problems, which require solutions, although they have smaller populations than the Isle of Wight.

Third are the islands, such as Hayling Island, that are connected to the mainland by roads. I do not want to diminish the challenges and issues they face, but they have commonalities with rural areas of the United Kingdom that have issues relating to remoteness. They are, to an extent, different from the islands that are separated from the mainland and do not have road links. I will address each of the three types. I apologise that this is a crude way of dissecting the issue, but it is at least a lens through which to look at it.

My hon. Friend the Member for Isle of Wight (Mr Seely) talked about the challenges and the opportunities of the Isle of Wight, which has a substantial population and no road connection to the mainland. The Government must think carefully about how we can assist it in delivering public services and ensuring its economy continues to grow. With the exception of the Isles of Scilly, it is unique—in England, at least—and we need to think about that when preparing new formulas for schools, local government, policing and other matters. I want to consider that with my hon. Friend in the future. I will talk about some of those issues in the time available to me.

A common thread for the Isle of Wight and all the other islands we have discussed today is digital. Although they are somewhat—at times, very—remote, the opportunities presented by the new economy are huge. They can help us break down some of the barriers and enable those islands to be highly connected to the rest of the world. We heard about new broadband opportunities in Newport, and I am sure there are other examples elsewhere in the British Isles.

We are focused on improving digital infrastructure on the Isle of Wight, in particular. It is clearly a critical part of life today. The Government are investing some £1 billion to ensure our digital infrastructure is fit for the future. I believe that the Isle of Wight was one of the first areas to benefit from the £400 million digital infrastructure investment fund. That was when investors Infracapital channelled some of the allocation into WightFibre to help to roll out full-fibre broadband to more than 50,000 homes, to some of which my hon. Friend the Member for Isle of Wight might have referred in his speech. Alongside that, Infracapital will invest £35 million of its own money to fund the expansion of the company’s infrastructure across the Isle of Wight. That is very positive and shows what we can do working together—although of course there is more work to be done.

On transport, roads are another vital part of the Isle of Wight’s infrastructure. From 2013 the Government will provide up to £477 million to Isle of Wight Council for a highways maintenance project through a private finance initiative that is under way. That will allow the council to carry out vital improvements and maintenance to local roads over a 25-year period.

We also recognise that transport to our islands must be adequate. That was not really touched on in my hon. Friend’s remarks, but having spoken to his predecessor in the past I know of concerns about the Isle of Wight ferry. Such concerns are no doubt common in other islands served by a single ferry company. The Competition and Markets Authority is aware of those concerns, which I expressed in my first meeting with the new CMA chief executive, Andrea Coscelli. The CMA is independent and the decision to take forward any investigation is its alone—the Government have no levers to direct the CMA as to which investigations it should choose, but I have raised the matter with him and know he is fully aware of it.

[Mr Seely]

I did not mention the ferries in my speech because I wanted to talk more broadly about the economy, but the relevant authorities are well aware that I would be keen to call for another investigation. However, I am not doing so at the moment because the new transport board on the Island is trying to work constructively with our ferry companies. I want to give that a chance to work first—for Wightlink, Red Funnel and Hovertravel to work together more closely and to be more supportive of the Island, driving our economy and being part of the solution, rather than part of the problem. That is why nothing is happening at the moment, but there is that option.

[Robert Jenrick]

I thank my hon. Friend for his constructive approach. I suggest that he engage with the CMA if he wishes to take anything forward.

Schools do not fall directly within my remit at the Treasury, but in advance of the debate I reviewed the performance of Isle of Wight schools. I appreciate that in some cases there are some long-standing difficulties. The new national funding formula will help to address that challenge. Under the new formula, the Isle of Wight stands to gain up to 3.2% for its schools, which represents an increase of £2.2 million, or £140 per pupil. Clearly the new formula’s interest in sparsity of population will help in some island cases, but not in all because some islands are relatively densely populated. In certain parts of the Isle of Wight, however, that sparsity provision will help—I believe two primary schools will be eligible for funding in that respect. Certainly the specific challenges of the Isle of Wight need to be considered in future funding formulations.

I shall turn briefly to the comments of the right hon. Member for Orkney and Shetland and to those islands that fall into the category of remote, or very remote, and without any of the direct transport links of a road bridge. Clearly, such islands require careful consideration by central Government. We shall work as constructively as possible with the Scottish Government in areas where we can collaborate. When the right hon. Gentleman was in Government, he created the 2014 island framework to encourage the UK Government to work closely with the islands around Scotland. We would like to see such initiatives continue.

The Government also recognise the issues with broadband, and we want to do what we can to assist in Scotland. For example, more than £50 million of the superfast broadband programme went to the Scottish highlands and islands to provide access to download speeds of at least 24 megabits per second. Recently, we announced the winners of phase 1 of the £25 million 5G testbed competition. That includes £4.3 million for the 5G RuralFirst testbed, which will be based primarily in the Orkney Islands.

As far as possible, we continue to support North sea oil and gas through continued Treasury investment, and a strong and stable fiscal framework for the oil and gas industry, most recently with the announcement of the transferable tax history, which has been widely welcomed by the industry. I take on board the comments of the right hon. Gentleman with respect to renewables and the essential role that they play, and will continue to play, in the future of islands such as the Orkneys and Shetlands. I shall take away his suggestion about wave and tidal funding.

Finally, on islands connected to the mainland by road, the most prominent one we heard about today was Hayling Island, which sounded like a wonderful place. I would love to visit the bookshop or the ferry and, on a day like today, we would all like to be on an island such as Hayling. Many of the issues raised by my hon. Friend the Member for Havant are common in other rural areas elsewhere in the United Kingdom, and we are concerned about them. We are, for example, making further investment in roads. We have launched the large local majors programme, which is potentially transformative for market towns and smaller communities that require significant road investment projects. I encourage my hon. Friend to take that up with the Department for Transport, if applicable.

We are also aware of bank closures, which have been widely debated in the House and are common to a number of communities throughout the United Kingdom, although I appreciate that in islands the effect can be greater than elsewhere. The schools funding formula will help many island communities, as it will in my hon. Friend’s constituency, and we would like to see that taken forward. Since 2012 the coastal communities fund has invested £174 million in projects focused on economic development, growing and regenerating coastal areas. The Isles of Scilly have benefited from the fund, as did the Hayling coastal community team in 2015, from £10,000. Funding round 5 is now open, with £40 million available to spend from April 2019 until the end of March 2021.

[Mr Seely]

Will the Minister give way?

[Robert Jenrick]

In a moment if possible, but I am conscious of time.

I encourage all Members present to take advantage of that fund, where applicable, feeding into it and putting in their applications as soon as possible. From the Treasury’s perspective, I shall continue to work with my colleagues at the Ministry of Housing, Communities and Local Government as we proceed to consider what the next stage of the fund will be. I shall ensure that the comments about islands we have heard today are fed into that process. I would like to work with my hon. Friends the Members for Isle of Wight and for Havant to ensure that the next iteration of the fund takes on those views and works for coastal communities.

I thank all colleagues who have attended the debate to discuss these matters. We are very committed to taking this agenda forward and to ensuring that island communities have the funding and support they require to have vibrant communities and economies. Over the course of the year, whether in making decisions about applications to the coastal communities fund or in shaping the UK shared prosperity fund—that is an important discussion to be had in Parliament over the year to come, and I again encourage hon. Members representing coastal communities to take it seriously and engage in it—we shall continue, I hope, to display our commitment to the islands of the British Isles and their communities.