Draft Electricity and Gas (Energy Company Obligation) (amendment) Order 2017

Callum McCaig Excerpts

Wednesday 22nd March 2017 General Committees

[Jesse Norman]

As the hon. Gentleman will know, the Government made clear in a debate last Thursday and in other remarks that they would bring forward a consumer Green Paper and a response to the Competition and Markets Authority. A specific response on the issues he raises will be addressed in those documents.

The order will reduce the overall spend of the scheme from £860 million a year now to £640 million a year. That has been done to constrain the impact of Government policies on all consumer bills. In making the change we have also sought to ensure that the support offered by the ECO is focused more on those in more need.

[Callum McCaig (Aberdeen South) (SNP)]

In this and any future scheme, has any consideration been given to putting the burden on to the taxpayer as a whole, as that would be far more progressive and would go some way to reducing fuel poverty? As the Minister will know, those with lower incomes pay more on fuel bills and therefore a bigger share of the contribution to schemes that are meant to reduce fuel poverty.

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[Jesse Norman]

There are two points to make on that. First, the way to think about all these things is as part of a wider energy mix that is designed to solve the trilemma of security, affordability and decarbonisation. On the contribution of offshore wind, for example, it is true that there is some question as to its total cost when including intermittency. It is also true that, had it not been for the substantial Government investment in this area, we would not have the situation in which costs for this technology are falling faster and further than anyone would have anticipated.

[Callum McCaig]

On intermittency, I understand—and I put a question to the Minister’s colleague at Energy questions last week—that the Government are refusing to publish a report that they commissioned to look at that very thing. If there are questions on the cost of intermittency, publishing that report would greatly help us to have that debate in an informed manner. Will the Minister look at publishing the report by Frontier Economics on the full cost of electricity generation?

[Jesse Norman]

I am happy to look at the hon. Gentleman’s suggestion. On the point I was making to my hon. Friend the Member for Reigate, we are not starting from the position he described. That position has the effect of disguising costs. The reason why we have carbon emissions issues is precisely because of the externalities built into previous models of industrial development. Those substantial costs were not included in the true cost of production of the goods and services concerned. It is simply untrue to suggest, even by implication—I am not suggesting my hon. Friend was suggesting this—that there had been some Elysium or status beforehand in which costs were explicit and are now not; there were costs before that were not explicit and there may be costs now that are not. From a Government standpoint, there is no hiding of costs as regards expenditure by either consumers or the Government.

Let me say a couple of other things. The overall energy market approach my hon. Friend describes was well outlined recently in a report by the House of Lords Economic Affairs Committee, as he may know. It remains an important part of the accountability of Government that we respond to it and are aware of it as an alternative. However, it is worth saying that it would do nothing as such to alleviate the issues of fuel poverty that concern us today. In my judgment, it is not an answer to say that local authorities are somehow a go-to alternative. The truth is that the delivery of those and related measures by local authorities has historically been quite mixed.

On the setting the 10% figure, that was designed, based on the consultation, to allow for a period of experimentation during the transition period, precisely to assess whether that number could be raised in line with the suggestions that have been made. The number involved—even at 10% of £45 million—is not a trivial amount of supplier obligation. I think that is a reasonable and proper justification.

I will say a couple of things about the matters raised by the hon. Member for Southampton, Test. He asked why we were presenting the order so late. I share his concern about that. My preference would be for measures to be presented to Parliament as early as possible. The difficulty has been—in part, this refers to a couple of earlier points—last year’s changes in Government and knock-on effects, which have delayed the process. It is certainly not something that any Government would want to make a habit of, so I take the point.

I have a couple of comments to make in response to what the hon. Gentleman said about a reduction on a reduction: first, the number of homes in fuel poverty has continued to fall since 2010, and it is clear that the measures continue to have a powerful effect. It is also important to bear down on consumers’ bills. If the hon. Gentleman wants to introduce specific costed proposals for restoring the funding that he criticises the Government for reducing, it is incumbent on him to state by how much he would be prepared to put it up, and how much he would be prepared to burden taxpayers or consumers. In addition, we expect, by September 2018, to have met a target of 850,000 homes insulated. That leaves 150,000 by 2020, which is in line with the manifesto commitment made in 2015. The Government believe that they are on track.

As for the fourth carbon budget, the hon. Gentleman was talking about totals—and the challenge for the Government is to meet the fourth carbon budget in total. The support and advice that the Committee on Climate Change offers is always welcome and of interest to us, but the focus is on the total. The hon. Gentleman painted a beguiling picture of towels being tightened and retightened in the bowels of the Department; but I think it is fair to describe the process of aligning all the different carbon saving measures required to meet the budgets as complex and difficult. That is what the clean growth plan, which will be published in due course, will do.

Oral Answers to Questions

Callum McCaig Excerpts

Tuesday 14th March 2017 Commons Chamber

[Mr Hurd]

I thank my hon. Friend for pointing out how much progress we are making at the local level as well as nationally on the transition to green power. This has been facilitated by substantial investment through public subsidies and, as we look to encourage the deployment of renewable energy through competitive markets—preferably subsidy free—we are looking at what else we can do to facilitate that using the tools available to the Government.

[Callum McCaig (Aberdeen South) (SNP)]

Our concern on Hinkley is that the Government appear to be stacking the deck in favour of nuclear power over the much cheaper renewable energy. The strike price for Hinkley was £92.50 in 2012, compared with a much lower £82.50 for onshore wind in 2015, yet in the value-for-money assessment the Government assume a £90 strike price for onshore wind. Why are they inflating the price for renewables in comparison to Hinkley?

[Mr Hurd]

I hope that the hon. Gentleman does not want to give the wrong impression. He knows from his experience that one of the keys to a successful energy policy is diversity of supply. That is the key to energy security, which is the primary responsibility of every Government. Ensuring diversity of supply is absolutely evident in what we as a Government are trying to do.

[Callum McCaig]

The Minister has completely missed the point of my question, which was about comparisons. The Government commissioned Frontier Economics to look at the whole systems impact of electricity generation models, yet despite repeated parliamentary questions and freedom of information requests the report has not been published. If the Government have nothing to hide, why are they hiding things?

[Mr Hurd]

I am not aware of hiding anything. I am trying to make a point about diversity of energy supply. I would make a further point about prices, in answer to the hon. Gentleman’s question. One of the most encouraging things is the progress we have made in our policy structure on driving greater competition, through contracts for difference, in order to get better prices for consumers and for the taxpayer from the public subsidies that are available. I hope that that will be evident very soon in the results of the forthcoming auctions.

The Government’s Productivity Plan

Callum McCaig Excerpts

Tuesday 28th February 2017 Commons Chamber

[Mr Wright]

One of the weaknesses of government—this is based not on the colour of Administrations but on the nature and culture of Whitehall—is that it is silo-based. The lack of co-ordination is clear. In the modern age, with pressing economic challenges, we need greater monitoring, scrutiny, supervision and co-ordination across the Government.

It would be interesting to hear about the current status of the productivity plan because, as I said, it seems so 2015. It was intensely fashionable, but only for around 12 months. The new buzz phrase is “industrial strategy.” The strategy contains 12 pillars, as opposed to the 15 areas of the productivity plan, so we are seeing some efficiency. I welcome the Government’s willingness to embrace the phrase as a potentially positive thing, but it exemplifies one of the problems that we face. Successive Governments have tended to announce something, to provide a new initiative or to undertake a review. Policy flits like a butterfly from one thing to the next, with little if any meaningful impact on the ground on firms’ productivity or our constituents’ living standards, which is to the detriment of long-term economic competitiveness.

[Callum McCaig (Aberdeen South) (SNP)]

The hon. Gentleman is making a well-informed speech. He says that there is no influence on businesses’ productivity, but it actually has a damaging impact in certain cases. Take investment in renewables, for example. The industry ramps up and is able to support it, but then the pipeline that it is relying on is whipped away through Government policy changes.

[Mr Wright]

The hon. Gentleman is spot on. Constantly changing energy policy can undermine long-term investor confidence and the ability to ensure that foreign direct and other investment is attracted to this country. Businesses require as much certainty and clarity as possible. Of course, things change—“Events, dear boy, events”—but it is important to have a clear road map and to minimise policy tinkering as far as possible.

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[Richard Fuller (Bedford) (Con)]

It is a great pleasure to follow my hon. Friend the Member for Newark (Robert Jenrick). I agreed with almost everything he said.

Just to remind everyone why we are here, let me say that this debate is about the supplementary estimate for the Department for Business, Energy and Industrial Strategy. This is the point at which the Government own up at the end of the year to where they are spending too much or too little against what they said they were going to spend, and set out whether they are going to invest more or less than they said they would. The variance can sometimes involve outstanding amounts of money. For this year, the Department is requesting further resources to be expended not exceeding £10.7 billion; that resources for capital purposes be reduced by £10.5 billion; and that the sum authorised for issue out of the Consolidated Fund be reduced by £13.8 billion. Those are large changes, but to spare the Minister’s blushes, let me say that he knows well that that is because of major structural changes in the Department over the year that have moved it from being an expenditure-heavy sector to one that will be ultimately much more focused on capital.

I challenge anyone to wade through document HC 946 and understand where the money is going—if they can do so, they are a better person than me. Given that the Minister is so sensible, may I ask him to challenge the Government to put a couple of things into these documents that reflect the current times? First, on variance at the end of year—when Departments are looking for more or less money—can they explicitly say, “Here is where we have saved money”? As several hon. Members have pointed out, people accept that we have to live within our means, so why can we not use this end-of-year variance accounting to say explicitly, “These are the areas where we have wished to save money,” because it would be a good opportunity to get the message out?

Secondly, on capital budgets, it would be nice in an end-of-year summary to get a sense of the return on capital to remind us how the Government judge the returns on the projects they are asking about through the variance—either when they are cutting money, as in this case, or if they are asking for more money. That is my overall point about estimates. I am just asking for a few things to improve the process for those of us who cannot easily understand what is going on from looking at six columns of numbers.

This debate also comes in the context of the productivity plan and its younger sibling, the document on the industrial strategy. Those two documents sit together. I very much welcome the initiative of my right hon. Friend the Member for Tatton (Mr Osborne) and the current Secretary of State for Communities and Local Government—he was then the Secretary of State for Business, Innovation and Skills—to pull together these various projects into a productivity plan. Yes, that plan was a bit of a mixed bag of initiatives that could easily have suffered from the criticism that my right hon. Friends were just pulling things together into a single document but, my goodness, at least we had a single document against which we could evaluate projects and with which we could hold the Government to account on this crucial issue of productivity.

Productivity is one of those shrouds that politicians like to grab hold of so that they can worry. We like worrying more than we like being happy, and when it comes to the national economy, it has to be either our balance of payments deficit or our poor productivity level that politicians wish to grab. They like to do that because they like to intervene in the economy and try to improve it. I have to admit that, in many instances, the Government play a positive and active role in the economy, but when they look to do too much, they have to know when to stop, so I make my third recommendation to my hon. Friend the Minister, which is that he learns this most important word to use in his deliberations—the word “no”. That means, “No, we’re not going to spend money on that”, “No, we’re not going to invest in that project”, “No, you haven’t done your analysis correctly”, or, “No, that rate of return is not correct.”

I make that recommendation because the Minister will be inundated with a variety of people who will attach their requests to the broad principles in the productivity plan, or the even broader principles in the Government’s industrial strategy, so that their ideas might gain favour. He will have to analyse those deeply and make some people very disappointed and unhappy by saying that their projects and initiatives are not worthy of taxpayer investment. That is extremely important because, as my hon. Friend the Member for Newark (Robert Jenrick) said, we have a responsibility to future generations. We cannot carry on living beyond our means. Before we spend what is essentially their money, we must have an acute sense that, if we are investing for the future, the rate of return will benefit them.

The productivity plan had another tremendous advantage, because it focused our attention not on how much we were spending, but on how quickly we were implementing the projects to which the Government were committed. One of the projects in the plan—it was subsequently raised by the National Infrastructure Commission—that was highly thought of was the Oxford to Cambridge corridor, to connect through Milton Keynes and Bedford, and onward to Cambridge. I am pleased that the Department for Transport has heard the message and is now coming forward with new ideas to make that happen sooner than was envisaged even at the time of the productivity plan.

I ask the Minister to pay particular attention to how procedures involving the interaction of Departments can be enhanced. I am talking about the time a proposal spends sitting in the inbox of one part of this complex system of organisations, Departments and agencies that have to approve something before it moves to the outbox and on to the next Department. This applies particularly to aspects of the road highway between Oxford and Cambridge, where there is an opportunity to move the timeframe forward. I would be very grateful for the opportunity to talk to the Minister or his counterparts in the Department for Transport about this.

[Callum McCaig]

The hon. Gentleman is making an interesting speech. When he said that his advice to the Minister was that he should say no to projects, I assume that he did not mean the ones that he was putting forward himself, which are of course very valuable.

[Richard Fuller]

I would hope that the Minister would use exactly the same assessment for that project as he would for any other. We have to build an economy that works for everyone. We have the tools at our disposal to do that, and it would be good to see the Scottish Government using some of the tools at their disposal to do something productive about their own economy, rather than complaining all the time and blaming others, as the hon. Gentleman has just done.

Let me respond to the challenge from the hon. Gentleman. If the Minister believes, as seems to be the case on the basis of what the National Infrastructure Commission has said, that the corridor between Oxford and Cambridge is important, he has a responsibility under the principles of the productivity plan to implement the relevant initiatives, plans and investments as quickly and effectively as possible, and to set a new benchmark for the speed of implementation.

Let me briefly touch on two further aspects of the plan. First, the Government response to the Select Committee report talks about the commitment to “funding innovation”—yes, yes, yes. “Yes” is the word—I repeated it three times—that the Minister should be saying about innovation. When Governments seek to intervene through something as cumbersome as an industrial strategy, there is a risk that they do not listen to the voices of the entrepreneurs—those who are prepared to take risks or those who want to disrupt. As we leave the European Union, there will be a number of additional things that the Government can do on innovative financing, such as peer-to-peer lending, and especially to reduce some of the restrictions on the enterprise or seed enterprise investment schemes. That would get people investing in our early-stage businesses much more effectively.

Similarly, we have heard a lot of good things from the Government about their commitment to improving management and leadership. It is easy for us to take that for granted. It is one of the soft things that arise when we think about productivity, but it is essential that the management and the leadership of our businesses have the resources, skills and capabilities to be expected from a global leader in business and a country that wants to trade freely and openly with the rest of the world.

Finally, in both the productivity plan and the industrial strategy, my personal feeling is that not enough reference is made to the future way in which employment and work will operate. We heard from the Chair of the Select Committee about how a lack of security in the labour market is a concern to not just the people directly affected, but all of us who want a country and an economy that work for all. We heard from my hon. Friend the Member for Warwick and Leamington (Chris White) about the potential of the fourth industrial revolution, but with that great potential to improve our productivity will come quite dramatic changes in the skills and work required from people who are currently employed in many segments of our economy.

In those sectors and industries, what will be the Government’s answer to the impact of achieving higher productivity? This is the other part of the point about what happened in the past that we discussed earlier. More people are employed, and we should not throw that away in pursuit of higher productivity because we should be able to accomplish both things. Similarly, in the future, we should not look only for increased productivity if it means that what for many people is part of their being—going to work, working hard and having purpose—will be dramatically changed by measures that are taken to invest in and take up the challenges of the fourth industrial revolution.

If the Government are silent about that in their productivity plan over the next few years, they will fail the British people. From what we hear from the Prime Minister, she will not do that, but we have to get the detail of what the plan will mean as we look beyond today’s estimates debate.

[Callum McCaig (Aberdeen South) (SNP)]

Let me begin by echoing what was said by the hon. Member for Hartlepool (Mr Wright). This estimates day debate is slightly archaic, in that, with the honourable exception of the hon. Member for Bedford (Richard Fuller), we are not actually discussing the estimates. Instead, we are discussing a report produced in February last year by the Business, Innovation and Skills Committee—a very valuable report—on a Government paper published in 2015. The hon. Member for Hartlepool said that that paper was rapidly becoming obsolete. That casts a favourable light on this process, which, I would say, became obsolete some time ago.

Rather than our discussing how the Government spend all their money, the Committee—and I mean no disrespect by this—has, essentially, presented its homework to the Chamber. That process has been entirely valid. It has been extremely instructive for someone who is not a member of the Committee to learn what it has done, and I commend it for its work. It would be interesting to know what a report from a Select Committee that did not contain a Government majority would say, because this report pulls no punches. I commend Conservative Members who engaged constructively with the process to ensure that the Select Committee did its job of holding the Government to account.

Let me now deal with the matter that should, or perhaps should not, be at hand: the report on productivity. I do not wish to repeat what has been said by many other Members at any great length, but there is clearly an issue. The general growth trend was 2% per annum before the financial crisis, and it is barely above that now, which the Office for National Statistics has described as unprecedented in the post-war period. As we have heard, ours is the second worst figure in the G7. It has been said that such comparisons may not give us all the detail, and that is certainly true, but there are some stark comparisons to be made in this context.

One of the most striking parts of the report, which was quoted by the hon. Member for Edinburgh West (Michelle Thomson) but which is worth repeating, concerns post-study work visas. It states:

“We recommend that the Government does not allow migration pressures to influence student or post-study visa decisions. Specifically, it should relax the post-study visa restrictions. It is illogical to educate foreign students to one of the highest standards in the world only for them to leave before they have had an opportunity to contribute to the UK economy.”

That, in a nutshell, is the critique of the Government’s immigration policy, and I do not think that it could be put any better. During a period of stagnating productivity growth, we have seen economic growth. Perhaps the two should not go together, but the reason we have no productivity growth but do have GDP growth is largely due to immigration. Following the ending of free movement of people and the pulling up of the drawbridge to immigration, we shall have to get serious about productivity, because if we are not going to secure growth from immigration, I shall be concerned about how we are going to secure it.

My hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) talked about tier 1 visas. I think that, in raising those two issues, my hon. Friends have nailed some of the imponderable follies surrounding an immigration system that does not work for our economy, and I fear that the situation will only get worse.

Of course, immigration is only part of the debate about our economy; productivity is also an important part of that debate. So how do we go about boosting productivity? I think there is a general consensus—although there are varying degrees of enthusiasm about the individual elements—that we need to invest in our infrastructure: our roads, railways, bridges and airports, and, crucially, our digital infrastructure. We need to invest in skills and training, we need pay growth, we need inclusivity in the workforce, and we need more internationalisation. The hon. Member for Bedford suggested that the SNP should get on with doing some of those things rather than criticising what others did. I can tell him that we have done them all, and that, as a result, Scottish productivity rose from 94.5% of the United Kingdom level at the time of the financial crisis in 2007 to 99.9% in 2015. In 2015, growth in Scotland was 3.5%, compared with 0.9% for the UK as a whole. The action we have taken has had a demonstrable benefit. I urge the Minister and his colleagues to look at what we have done in Scotland.

The right hon. Member for Wokingham (John Redwood) mentioned the oil and gas sector. Clearly, there are issues in the sector. The Scottish figures do not include figures for the offshore sector, but they do include many of the figures for the onshore activity in the oil and gas sector. That sector has a success story to tell. In the face of plummeting commodity prices, it has been able to bring down its costs dramatically. It has increased efficiency dramatically and put its business on a firm footing. It is ready for growth. My hon. Friend the Member for Aberdeen North (Kirsty Blackman) asked the Chancellor about the Budget at Treasury questions earlier. The sector is ready for growth and, with support from the Government, who hold the key tools for boosting that sector, it will be able to grow further.

My hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) mentioned avoiding working in a silo. The oil and gas sector has learned to look at other industries to see how it can boost its productivity. About a fortnight ago, I was at the opening of the Oil and Gas Technology Centre in Aberdeen, a collaboration through the city deal for Aberdeen between the Scottish and UK Governments, both universities and both local authorities in the region. The guest speaker was the chief executive of the Advanced Propulsion Centre in Coventry. The oil and gas industry is looking to learn how others have boosted their productivity in the face of difficult economic pressure.

As I say, the Scottish Government have invested in these things. One of the key things that has led to the boost in productivity in Scotland has been the introduction of the Scottish business pledge by the Scottish Government —some 330 businesses across all sectors have signed up to that. Its key component is the agreement to pay the living wage—that is the real living wage, as opposed to the national living wage. It has also agreed to sign up to two of the other options, which include no zero hours contracts, improved workforce engagement, investment in youth, having a balanced workforce, investment in innovation, internationalisation, connecting with the community and prompt payment of suppliers. Those moves are making a manifest difference.

May I draw attention to the living wage aspect? Earlier, the right hon. Member for East Yorkshire (Sir Greg Knight), who is no longer in his place, asked the Chairman of the Select Committee about workers and caravan parks and talked about the economy perhaps requiring low-skilled workers on low pay. I disagree with that premise. The tourism sector is vital to the UK, and is of specific importance to Scotland. Having well trained people who can welcome folk and explain things and who have built up experience is a benefit. When companies have higher wages—when they pay the minimum wage—they experience lower worker turnover. Those companies then have to spend less on training and on recruitment and they get a better outcome, so let us not diminish jobs that may seem to be unskilled. If we can invest in those, treat those people properly, with the respect they are due, and pay people a decent wage, they will have greater pride in their job and produce more.

I mentioned in my intervention on the Chairman of the Select Committee that there have been damaging changes in policy. I, too, welcome the production of the Government’s industrial strategy. I hope that they will learn the lessons of previous mistakes. The constant moving of the goalposts was particularly acute in the energy sector, where expertise had been built up over a number of years, but the productivity increases were pulled away because of Government changes to the investment climate—onshore wind and solar PV have faced a headwind. The decision on carbon capture and storage was taken with zero consultation. That is not good for the economy or for productivity growth.

We also need to focus on Brexit. If we are serious about boosting productivity, let us ask ourselves how the productivity of our exporters is going to be increased by having to fill out forms because we have come out of the customs union. They will need to go through complex processes to export the same goods; more work for the same product. That will not boost productivity. How will the productivity of our university sector increase when students, academics and funding that had previously come from the European Union cease to arrive as a result of a hard Brexit? Our food and drink sector relies on the European Union for funding—through the common agricultural policy, for example. It exports a huge amount to the single market, and 8,000 nationals work in it. How is the productivity of that sector going to be boosted by Brexit? It is not, and we have to face that.

The Scottish Government, and my hon. Friends and I, have been clear about how we wish to proceed from a Scottish point of view. We have sought compromise over Brexit. We have sought to ensure that the UK as a whole stays in the single market and the customs union because we believe that that is the best thing for our economy and our productivity, for the reasons I have just outlined. Before we get too far down that road, however, I urge the Minister to look at the Scottish Government’s policy paper, if he has not already done so, and to react to it and respectfully agree that we will pursue that aim. To boost productivity, we need to invest in all the areas that I have outlined, but above all, we need to avoid the hard Brexit that is facing us. I plead with the Minister and his Government to listen carefully and to protect Scotland’s place in Europe.

Vauxhall/Opel: Proposed Takeover

Callum McCaig Excerpts

Monday 20th February 2017 Commons Chamber

[Greg Clark]

I agree with my hon. Friend. One of the strengths of our automotive sector is that it is particularly international. It benefits from and is strengthened by trade to and from not only the rest of Europe but the whole world. Vauxhall’s being owned by GM for such a long time is a reflection of the fact that the motor industry has long been international beyond Europe. The industry will be very prominent in our discussions.

[Callum McCaig (Aberdeen South) (SNP)]

I congratulate the hon. Member for Ellesmere Port and Neston (Justin Madders) on securing this urgent question. I welcome the hon. Member for Salford and Eccles (Rebecca Long Bailey) to her Front-Bench position, and I look forward to working with her in that role.

Like every Member of this House, my party’s thoughts are with those affected at the plants in Ellesmere Port and Luton and with all those who work in the supply chain or for the company in other ways. I welcome that the Secretary of State has led from the front in his interactions with the French and others.

What assurances has the Secretary of State sought and/or received from the French Government or from PSA about the plants, employment and, in particular, the terms and conditions of employees and pensions? We cannot ignore the impact that Brexit might have on this issue. If there is direct competition between a German plant and a UK plant—regardless of the undoubted strength of UK plants—given that 75% of a UK plant’s components come from, and 80% of its exports go to, the single market, it will be at a comparative disadvantage with European counterparts.

Given that the Secretary of State has said that he will do everything he can at all times to rule out the hard Brexit that has been proposed, will he reassess single market membership? We can leave the EU, but we do not have to leave the single market, and staying in the single market would protect employees at Vauxhall and right across the economy.

[Greg Clark]

I am grateful to the hon. Gentleman for his kind words. I thought it was important to have discussions immediately with both parties to the negotiations. It is fair to say that, as a deal has not been concluded and discussions are continuing, the prospective purchaser is clearly not in a position to give contractual guarantees. One of the important reasons for meeting was to have a clear understanding of the prospective purchaser’s purpose and to commit to having further meetings as the discussions continue—I will be having a further meeting later in the week. Of course, the conditions for workers and pensioners are uppermost in the discussions.

In the context of Brexit, I made it clear, as the Prime Minister did in her speech at Lancaster House, that we want to negotiate the best possible access to the single market, free of tariffs and bureaucratic impediments. It is also important to reflect on the fact that we have a very strong and successful domestic market, with Vauxhall having a particularly strong share of it. That was mentioned to me by both parties, GM and PSA; they are very aware of that, and we will emphasise it in the days and weeks ahead.

Green Investment Bank

Callum McCaig Excerpts

Wednesday 25th January 2017 Westminster Hall

[Caroline Lucas (Brighton, Pavilion) (Green)]

It is a pleasure to serve under your chairmanship, Mr Owen. I thank the hon. Member for Edinburgh West (Michelle Thomson) for securing this important debate. Like her, I am deeply concerned by the way in which the Government are proposing to sell off the Green Investment Bank. It is widely known that the Government’s preferred bidder is the Australia-based firm Macquarie. As has now been well documented, there are serious concerns about Macquarie’s corporate record and its commitment to the GIB’s environmental goals.

Macquarie has admitted rigging the Malaysian foreign exchange markets. It has settled charges in the US for violating underwriting laws related to a China-based coal company. It is currently facing legal action in the US for rigging Australian interest rates. In a separate investigation, it was found to have breached market integrity rules in Australia and to have “systemic deficiencies” in its compliance with financial services laws. Closer to home, its ownership of Thames Water has also been deeply controversial, with £10 billion of offshore debt loaded on the company and a £250 million pension deficit allowed to accumulate while profits were extracted.

Macquarie also has an appalling environmental record, funding fossil fuel extraction projects across the world. From open-cast coal mines in China to fracking here in the UK, it has a track record of supporting climate-wrecking projects. By any measure, Macquarie is unfit to be custodian of the UK Green Investment Bank; if anything, there is a very clear risk that it will destroy it.

The Government have so far refused to respond to those concerns. Instead, we see ample evidence that the Government are not only willing to allow an asset strip, but may have actually helped to facilitate it. With the support of Treasury-owned UK Government investment, 11 subsidiary companies of the GIB were set up presumably to allow Macquarie to asset-strip the UK’s Green Investment Bank. The Minister passed on the opportunity to deny Macquarie’s involvement in those changes in response to a written question I tabled last week.

Meanwhile, the Government continue to point to the creation of a special share as the answer to all our concerns. That is simply not true, as the hon. Member for Edinburgh West set out—we know that the special share will not protect the green purposes of the GIB under an owner such as Macquarie. In response to another written question I tabled, the Government made it clear that the special share will not ensure that individual investments are low-carbon. The special share will not stop asset stripping, will not ensure adequate capital is available for future investment and will not ensure an investment focus here in the UK. To protect the GIB as an enduring institution that is investing here in the UK, we ultimately and simply need the Government to stop this sell-off.

[Callum McCaig (Aberdeen South) (SNP)]

I thank the hon. Lady for giving way, and add my thanks to my hon. Friend the Member for Edinburgh West (Michelle Thomson) for her contribution in securing this debate. The whole basis behind the privatisation is that the market failure has been corrected. I simply do not agree with that. We may have seen progress in the power sector, but in transport and heat we are lagging way behind what we need to be doing to meet our carbon reduction targets. Does the hon. Lady agree that the Green Investment Bank can play a critical role in addressing the market failure that continues to exist in those sectors?

[Caroline Lucas]

I thank the hon. Gentleman for his very informed contribution. He will not be surprised to hear that I entirely agree with him. Anybody who thinks that market failures have been corrected is being extraordinarily complacent. Just a quick scan of the way in which we are not meeting the targets that we have—our climate, environmental and energy-efficiency commitments—would lead people to conclude that market failure remains, and therefore that the need for the Green Investment Bank to be in the public domain remains.

I believe that Ministers have it within their power to cancel the sale and pursue a different path. For the GIB to be properly protected, it should remain wholly owned by the UK Government. That is my bottom line, but if Ministers refuse to do that, various other options are available to them. We know that there was and still is on the table an alternative bid—it is the one that lost out to Macquarie. That bid would help to keep the GIB British, green and growing, so why are Ministers not pursuing it if they do not want to keep the GIB in the public domain?

UK Decarbonisation and Carbon Capture and Storage

Callum McCaig Excerpts

Tuesday 24th January 2017 Westminster Hall

[Callum McCaig (Aberdeen South) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Betts. I congratulate my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on both securing the debate and leading it in such an informed and passionate way. He set out the key issues around CCS, the history and, more importantly, the way forward.

I will also focus more on the way forward, but it is beholden upon us to look back slightly. The cancellation of the £1 billion competition that would have benefited the White Rose project and the project at Peterhead was deeply regrettable, in respect of both the way it was done—the announcement was snuck out after the autumn statement with little or no forewarning to the companies involved—and, as the National Audit Office report shows, the colossal waste of money.

At the time, I said it was clear that the Government knew the cost of everything but the value of nothing: the cost was £100 million to save £1 billion or £900 million. However, as we have heard multiple sources suggest, delays to the project could cost consumers £1 billion to £2 billion per year in the 2020s, and up to £4 billion to £5 billion per year in the 2040s. Colossal amounts of money could have been saved; if we do not act now, that will be lost through the additional costs that consumers will have to bear.

With the honourable exception of the hon. Member for East Antrim (Sammy Wilson), most of us accept, although not unquestioningly, the requirement to decarbonise our energy system—that is, “energy” in its widest sense. We often focus purely on electricity, but as some hon. Members have mentioned, there are many cross-synergies among the different forms of energy. That is why carbon capture should be considered.

May I place on the record my commendation for the Oxburgh committee report—those who served on the committee and the chair in particular? It is an excellent report and, as we have heard from those who did serve, the work was done in a way that did not prejudge the outcome. The report was an open, honest and thorough analysis of the costs and benefits that CCS could bring, but it also left on the table the option of not progressing. It was produced in September 2016. As far as I am aware, the Government have yet to offer much in the way of a response. I hope that we will hear from the Minister his considerations and those of his Department on the report and how they are seeking to take it forward.

As has been mentioned, there are clear synergies with the Government’s industrial strategy. I am talking about the ability to tie in research and development and have a world-leading technology that we can develop here on these shores. As the hon. Members for Waveney (Peter Aldous) and for Middlesbrough South and East Cleveland (Tom Blenkinsop) mentioned, this technology feeds into the Government’s honest appraisal that they need to do more to boost economic growth outwith this city of London and the surrounding environments.

Carbon capture does that very well. It ties in neatly with existing and former industrial heartlands, as the hon. Member for Middlesbrough South and East Cleveland suggested. It provides the potential for existing industrial producers, which in many cases are venting pure CO₂—that should not be happening in this day and age, but there is no mechanism for them to cease doing it—to maintain their competitive advantage. That is how we anchor these companies in constituencies such as the hon. Gentleman’s and in places such as Grangemouth in Scotland, where we have strong industrial hubs that can have a very bright future. They can continue to do what they are doing well now, but they can also develop new technologies into the future that the planet as a whole is going to need.

We had a degree of discussion about the clarity that will be required in terms of the process of leaving the EU. There are optimists and pessimists among us, and clarity will indeed be required. The plan of action has previously centred on European co-operation, be it the energy union, the emissions trading scheme or the united approach to the Paris talks. Whether that means that a singular approach by the UK could produce better results will probably depend on whether someone is a “glass half full” or a “glass half empty” sort of guy. I will err on the side of optimism. There is probably a degree more optimism in me following yesterday’s announcement on the industrial strategy that the Government understand and will take this issue seriously.

The key point is that, as the hon. Member for Waveney said, this features across all the key aspects of the industrial strategy and all the areas where we are struggling or perhaps are not doing as much as we can in terms of decarbonisation. We can look at heat, transport or electricity in isolation. We can look in isolation at what we do with energy-intensive industrial producers. Alternatively, we can look at those things in the round. If we look at them in the round and see how we can apply carbon capture to those technologies, we will find a much more affordable and viable way of decarbonising. Finding those synergies, finding the areas of expertise and developing the companies that have the knowledge to do this provides us with a real opportunity.

How do we go about doing that? The Oxburgh report and its various recommendations are the blueprint. The key take-away from that for me was that what we are discussing can be done and can be done affordably. It highlighted some of the failings of the previous approaches in basically outsourcing the risk entirely to those bidding into the competition. Breaking it up and allowing different companies, with different expertise, to join in the process in the area to which they are best suited will allow costs to be reduced, to an extent where we could see a contract for difference price of £85 per MWh, which is competitive with other forms of production.

In some ways, as my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) suggested, CCS could be more established and cheaper than what we are pursuing at Hinkley. That shows the urgent requirement for the technology to be included in the Government’s industrial strategy and emissions reduction plan; if we do not do that now, it will, as we have heard, get more expensive.

I have been in many a debate with the hon. Member for East Antrim in which his views on this issue have been expressed. I disagree with him from an ideological point of view, but also from a practical point of view. Yes, there are costs in relation to the infrastructure that will be required to decarbonise our power system, but to suggest that there are not costs from continuing to do what we are doing is simply not correct.

[Dr Poulter]

Is not there also a case in respect of fuel poverty? Improving insulation and taking other demand-side measures to reduce the demand for electricity is a very good thing in which to invest. It decarbonises, but it also saves people, particularly those on fixed incomes, money on their heating bills.

[Callum McCaig]

The hon. Gentleman is absolutely correct: the cheapest fuel that we will ever use is the fuel that we do not use at all. Investing in such measures will save money and reduce fuel poverty. The coal-fired power stations to which the hon. Member for East Antrim made reference will be coming off the system anyway. They will have to be replaced, and they will be replaced by something that will not come free. It will be expensive, but it can be expensive in a way that is good for the environment and good for our industrial base, or it can be expensive in terms of its fuel and its production and the cost to the environment.

There are two ways to go about this. We can be at the front of the queue; we can be a leader and we can have first-mover advantage. That protects our business, allows us to export and allows us to save money for our consumers and industrial producers. I hope that the Minister and the Government will take that course and back CCS for the long-term future of the UK and our energy industries.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

It is a delight to serve under your chairmanship, Mr Betts. I absolutely welcome this debate and congratulate the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on securing it and on his very interesting opening remarks. The hon. Gentleman is a strong proponent of carbon capture and storage—he has professional experience and expertise—and this has been a valuable discussion.

I will make some general statements before responding specifically to the concerns raised. We have not got much time, so I will have to move relatively quickly. As I am sure the House understands, the Government remain very committed to tackling climate change, and remain very committed to the Climate Change Act 2008 and the implications it has and will have for the coming decades. Climate change remains one of the most serious long-term risks to our economic and national security.

As a country, we have made great progress towards our goal. Indications are that UK emissions in 2015 were 38% lower than in 1990, and 4% below those in the year before. It is appropriate to recognise that, as well as to look ahead to the future to the emissions reduction plan, which we will publish in due course. I am happy to respond to the question from the hon. Member for Southampton, Test (Dr Whitehead). My colleague the Minister for Climate Change and Industry mentioned to the Business, Energy and Industrial Strategy Committee that that would be in the first quarter. I can do no better than echo his words.

As a Government, we remain committed to exploring all technologies that can support the process of decarbonisation, including carbon capture and storage. As has been recognised today, CCS has a wide range of potential applications in which it could contribute to the reduction of carbon in our environment. Those include not merely decarbonising heating and transport, but providing a pathway for low-carbon hydrogen and producing negative emissions when biomass is combined with CCS in power generation. CCS offers a wide array of potential strategic benefits. It has been rightly noted that it has the potential to help energy-intensive industries in this country to remain competitive.

I understand some of the concerns that were raised about the cancellation of the project last year. The project was absolutely not without benefits and, as the Committee recognised, there had been investments in front-end engineering and design. It was an ambitious scheme. Everyone in the Chamber believes that the Government should be ambitious in their expectations for climate change improvement and carbon reduction, so I think it is odd to criticise the Government’s ambition, when they have sought to be precisely that.

[Mr Philip Hollobone in the Chair]

The Government absolutely believe that CCS has a potential role in long-term decarbonisation, but it must be affordable. It is worth noting that we are not by any means the only country seeking to crack CCS from a cost perspective. Projects have been deployed, particularly in north America. However, the United States, Canada and Norway have all cancelled projects, so we are taking the time to look hard at CCS to see whether we can find a cost-effective pathway.

That does not mean we have not been investing in the meantime. As colleagues know, we have made a range of investments across the piece, including in Carbon Clean Solutions, which the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) mentioned—I would be delighted to meet him when officials can set it up—and in storage appraisal projects in the Northern Irish seas and the Summit Power CCS project at Grangemouth.

The Government continue to be very active. We commission research and provide support for innovation, and we remain engaged and seek to continue working with and learning from others, such as the United States, Canada and Norway. The hon. Member for Coatbridge, Chryston and Bellshill mentioned the Toshiba CCS plant in Texas. Officials have already met the promoters of that scheme and are contemplating visiting it when it is up and running to learn more as part of our overall picture. We remain part of a series of international initiatives designed to understand CCS better, and to learn from and deploy it as effectively as possible.

Therefore, we have not closed the door, by any means. Indeed, Lord Oxburgh was asked to set up and lead his parliamentary advisory group—I very much recognise the contributions made by Members in the Chamber towards it—precisely because we have not closed the door to CCS but are looking to use it, if possible, affordably and effectively. I put on record my thanks to Lord Oxburgh and the group’s members for their work.

On the specific issues raised by colleagues in the debate, I was invited by the hon. Member for Coatbridge, Chryston and Bellshill, who opened in the debate, to consider CCS as part of the industrial strategy. As I hope has been understood, we absolutely are doing that and will continue to do so.

My hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter), who is no longer in his place, asked whether we, as a country, would be affected by Brexit in this regard. I point out that, as a country, we are a signatory to the Paris agreement independently of the EU as well as through it, and it is therefore far from clear that Brexit will make a difference.

The hon. Member for Stockton North (Alex Cunningham) is right that we need to get the EU emissions trading system correct. My hon. Friend the Member for Waveney (Peter Aldous), in a very eloquent speech about the offshore potential for the UK continental shelf, said that we must be pioneers in CCS, but I slightly disagree with him on that point. There is an honourable place for us as an early mover, but not necessarily a first mover, in CCS. Such people often reap the benefits in technology and cost without taking a lot of the additional risks. That is a perfectly honourable position for this country to be in.

Hon. Members spoke about the Oxburgh report. I point out to the hon. Member for Aberdeen South (Callum McCaig) that even that report contemplates very substantial capital expenditure of potentially more than £1 billion and perhaps even £2 billion, as well as the CfD. The hon. Member for East Antrim (Sammy Wilson) asked who pays for these things. Well, that would be the cost, and the payment would be borne respectively by taxpayers and bill payers. The incentive structures would have to be determined in future discussion, but there would be a CfD, and the framework regulation is something that Lord Oxburgh properly discussed.

[Callum McCaig]

rose—

[Jesse Norman]

I am sorry, I cannot take interventions because I am really short of time, but I hope I have at least addressed the core point the hon. Gentleman made.

Let us be clear: the Committee on Climate Change seems to be contemplating a contribution on CCS from this country until 2030. No one can predict the future, so it is not clear that we are behind schedule from its point of view. However, it is very important to recognise that even the Oxburgh report is not just about a CfD, but about a potentially substantial capital cost, which would fall on taxpayers.

My colleague the hon. Member for Strangford (Jim Shannon) raised an issue about cost and effectiveness and was absolutely right. The hon. Member for Middlesbrough South and East Cleveland asked about the NAO report. I absolutely assure him that it has been given—and is being given—a lot of scrutiny within my Department.

Let me quickly wind up my remarks in the time that remains. The Government are actively interested in and engaged with the question of CCS. I very much thank hon. Friends and hon. Members for their wide-ranging contributions to a fascinating debate. This is not an easy issue to crack, but we are focused. The Government will set out our approach in due course and use the opportunity offered by the debate to further inform our thinking.

Industrial Strategy Consultation

Callum McCaig Excerpts

Monday 23rd January 2017 Commons Chamber

[Greg Clark]

My right hon. Friend will see in the approach we are setting out a vigorous continuation of many of the measures, such as the northern powerhouse, that he championed in his time in government that are making such a big difference in the north and other parts of the country. I can confirm that with the Minister for Universities, Science, Research and Innovation, my hon. Friend the Member for Orpington (Joseph Johnson), and colleagues in the House of Lords we will drive the reforms that have proved so successful in the past when expanding the institutions that contribute to our excellence in higher education. The standard and standing of higher education in this country have never been higher, which is a reflection of the soundness of the policies that have been pursued in recent years.

[Callum McCaig (Aberdeen South) (SNP)]

I give this proposal a cautious welcome. It is honest in some ways in its reflection of the state of the economy. In many ways it is brutally honest about some problems, including regional disparity and productivity. Likewise, it recognises some successes, such as the automotive and aviation sectors and, on page 90, Aberdeen as an oil and gas hub. The problems are not new, so how will the Secretary of State ensure that the same mistakes are not repeated? How will he ensure that existing industries are not sacrificed in the quest to support new ones?

Will the right hon. Gentleman confirm that the allocation of new research and development money will be in addition to anything that would have come from the European Union and that he will provide long-term commitments to match EU funding? How much of that R and D spend will be outwith London and south-east England? Imagine how much worse regional disparities would have been without EU structural funds. Will he commit to long-term replacements for those funds?

On renewables and carbon capture and storage, the right hon. Gentleman will be unsurprised that I am a little disappointed by the lack of ambition in an industry that will be worth hundreds of billions, if not trillions, of dollars in the near future. Will he consider a sectoral deal for renewables? If so, will he work with the Scottish Government on how that could be done in Scotland? Access to finance is identified as a problem, and I share the concerns about the Green Investment Bank. It is short-sighted to sell it off when this key sector needs access to funding and when the bank is the perfect vehicle for that.

How will the consultation process work with the devolved Governments? However good this industrial strategy may be, we must accept that the biggest threat to the economies of both Scotland and the UK is lack of access to the single market and to skilled people that comes through our EU membership. Will the right hon. Gentleman seriously consider the Scottish Government’s plan that would see Scotland maintain its membership of the European single market?

[Greg Clark]

I thank the hon. Gentleman for his thoughtful remarks. I am impressed that he has reached page 90 already, which shows his diligence. He says that we are brutally honest, but if we are to look forward and have an industrial strategy that reflects the challenges we face, we need to be clear-eyed. On technical education levels and the imbalances, some areas are prosperous and some can catch up, so it is right to be ambitious in that.

The research and development money that the Chancellor announced in the autumn statement is separate from whatever might be decided on the European funds. It was independently granted and is available to universities and research institutions. The consultation on how that money is spent is part of the consultation on this exercise, and the money is for research and development. One of the points we make is that we have often been excellent at producing brilliant new ideas but less successful at commercialising them. Pushing further on how we translate good ideas into practice is an important feature of addressing that.

The hon. Gentleman mentions renewables, which of course are important in Scotland. The emissions reduction plan, which is currently being prepared, will particularly address that but, on the green economy, a chapter of the Green Paper has a big commitment to doing what we can to make sure that we obtain industrial advantage from the investments we are making in green technology.

Finally, the hon. Gentleman says that the biggest threat to the economy is the exit from the European Union. The United Kingdom has been very successful in recent years, and I would say that the biggest threat to that is if the successful alliance of our nations in the United Kingdom were broken up by the independence of Scotland.

Green Investment Bank

Callum McCaig Excerpts

Wednesday 11th January 2017 Commons Chamber

[Mr Hurd]

I thank my hon. Friend for her positive observation, and I pay tribute to her record and her absolute integrity and authenticity on protection of the environment and climate change, which are well respected across the House. I can give her this assurance. We have put before Parliament the whole procedure for protecting the green purpose of the GIB through the special share arrangements. It will be held by an independent company and it will have the power to approve or reject any proposed changes to the GIB’s green purposes. This is going to be set in company law. The five trustees were announced on 31 October 2016, selected through a genuinely independent process. If my hon. Friend looks at the names, she will see that they are independent and extremely credible. That is the mechanism that we have set out. I return to the point about the objectives of the sale. We want this to go into the private sector, so that it can do more of what it is doing—unfettered by the inevitable restrictions that the state has to put on it at this stage.

[Callum McCaig (Aberdeen South) (SNP)]

I thank you for granting this urgent question, Mr Speaker, and I thank the hon. Member for Brighton, Pavilion (Caroline Lucas) for putting it. We support it wholeheartedly. The Minister has repeatedly said that he wants to see more money raised through this, but it will not happen if the assets are stripped from the company and taken abroad. Also, this is happening at precisely the worst possible time. There are reports that we will see a 90% fall in renewables investment. That must be addressed, and the GIB should be the vehicle for doing that.

What assurances can the Minister provide that capital from existing assets will be reinvested in green projects in the UK? How will the golden share work when it comes to subsidiaries and, in particular, to having a say over asset sales? What reassurances can he give us that the headquarters in Edinburgh will continue? How will the Government ensure that the shortfall in investment in renewables will be met? Finally, in the light of the forthcoming industrial strategy and emissions reduction plan, will the Minister pause this sale, so that Parliament can properly look at these and see what role the GIB can play in that process?

[Mr Hurd]

The hon. Gentleman quite rightly talks about the need for investment in renewables, but it would be nice if he could give more recognition of the extraordinary progress this country has made in respect of the profound transition to clean energy and the fact that we have generated more electricity from renewable energy than from coal this year, which is a pivotal moment in our history. Investment continues to flow, and the GIB has played and I am sure will continue to play a very important role as a catalyst for all that.

I understand that the hon. Gentleman seeks reassurances and share his sentiments, but this is part of our process of evaluating the proposals before us against the criteria transparently set out and agreed through the House. It is through that lens that we now evaluate the proposals, which obviously includes attitudes to the workforce and sensitivities around jobs in Scotland. This is all part of the criteria and is, as I say, the lens through which we look at the proposals. Beyond that, I cannot say much because of confidentiality, and I hope the hon. Gentleman will respect that.

Oral Answers to Questions

Callum McCaig Excerpts

Tuesday 13th December 2016 Commons Chamber

[Greg Clark]

I will indeed. I would commend two things to my hon. Friend. First, we want to make sure that small manufacturers can access the extra funding for research and innovation that my hon. Friend the Minister for Universities, Science, Research and Innovation has described. Secondly, we want to address the ability of small and growing firms to obtain the finance to allow them to grow to the next stage, which is very important in having a vigorous competitive market, as my hon. Friend suggests.

[Callum McCaig (Aberdeen South) (SNP)]

From education to research and development, Scotland’s universities play a key role in boosting our economy across all regions and sectors. With that in mind, will the Secretary of State outline what the role of universities will be in his forthcoming industrial strategy? Will the recently announced new money for R and D be available to Scottish universities?

[Greg Clark]

Yes; universities are very important. We have had a number of very constructive sessions with university leaders and researchers. The hon. Gentleman is absolutely right that science does not recognise boundaries. Universities and researchers in Scotland have a fantastic record of success. In fact, with 8.5% of the UK population, Scotland attracts 10% of UK research funding, which shows that it can prosper and thrive with the new changes we are making on funding.

[Callum McCaig]

Science does not recognise boundaries. Universities Scotland estimates that 10% of research funding comes from the EU and that up to 16% to 20% of staff come from EU nations. With that in mind, will the Secretary of State ensure that, as we exit the EU, Scotland’s universities are not hit punitively by immigration sanctions and the withdrawal of EU funding?

[Greg Clark]

It follows from what I have just said—science does not respect boundaries—that the science community is very global and international. Of course, as the hon. Gentleman would expect, we will in the negotiations reflect the importance of that not just for Scotland, but for the whole United Kingdom.

Tidal Lagoons and UK Energy Strategy

Callum McCaig Excerpts

Tuesday 6th December 2016 Westminster Hall

[Callum McCaig (Aberdeen South) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Paisley. It has been a good debate and I congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on securing it and on the manner in which he made his case. It is notable that with the honourable exception of the hon. Member for Eddisbury (Antoinette Sandbach) everyone who has spoken so far in the debate has been in favour of the project; there were speakers from all the nations and several regions of the UK, and all bar one were in support. Debates such as this bring me out in a bit of a cold sweat, because I may have to brutalise some constituency names that I do not know how to pronounce. I thank all those who mentioned the constituency of the right hon. Gentleman and saved me from pronouncing it as if it might normally follow the word “Elvis”—that is how I would have read it. Such debates are an educational process for many of us, and this one has certainly been educational for me with respect to learning to pronounce the names of parts of the beautiful country of Wales.

The speech of the right hon. Member for Preseli Pembrokeshire touched many key points, and these were replicated by many Members who spoke. The project is potentially a key part of the Government’s industrial strategy, and the cross-party support that it enjoys is balanced by its cross-cutting benefits. It is not just an energy project; we have heard that it will boost tourism and support the steel industry. It also ticks a number of the boxes on which the Government are trying to deliver with their nascent industrial strategy. It links business with energy; it provides a low-carbon technology; it has the potential to spread the economic benefit and boost economic growth outwith London and the south-east of England; and it has the potential to develop a sizeable and exportable technology. Those are all things that, I think, we would like.

There may be issues as to the cost, as the hon. Member for Eddisbury said. However, as I often do when we discuss technology of this kind, I remind the House that we must ask not only the cost of doing something, but the cost of not doing it. It may be difficult to account for that, and it will be interesting to see whether the Hendry review touches on it. However, the right hon. Member for Preseli Pembrokeshire said that we should aim to emulate the Danes in their development of onshore wind. They have developed an industry and have world-leading technology and exports coming from that. I sought to intervene on the right hon. Gentleman, but my attempt was somewhat lost in the debate. As well as emulating the Danes, we need to make sure we do not emulate ourselves as to what we did in relation to onshore wind technology. The original leaders in that technology were here, and the lead was ceded to the Danes who picked it up and ran with it, and are now in an enviable position. Let us not repeat our mistake over onshore wind with tidal technologies.

Tidal lagoons and technologies are an important aspect of the matter, but not the only one. The hon. Member for Strangford (Jim Shannon), who is no longer in his place, mentioned the potential of the tidal scheme—SeaGen—in Strangford lough; and in the Pentland firth between Scotland and the Isles of Orkney there have been world firsts in the deployment of tidal turbines in an area renowned for its tides. That has potential, and I would like to question the Minister about the contracts for difference that were announced last month. We know that they have excluded technologies that are cheaper than offshore wind—onshore wind and solar will not be allowed to bid in—but technologies that are more expensive have also, effectively, been excluded. Essentially, we will have a competitive option process that only one technology will be able to win. That does not seem like fair competition to me—it would mean a broken promise to the tidal industry—and I hope that the Minister can address the matter. That promise of a de minimis amount of electricity through the contract for difference process has seen the development of several stages of proposals that would look to bid in—in particular, MeyGen in the Pentland firth. That could be part of a compelling story of a UK tidal industry, with the tidal lagoons and turbines as compatible—sister—technologies in which we could be a world leader. I wholeheartedly support the deployment of offshore wind, but not its being the only show in town. Because of the Government’s decision—their fixation, it would seem, on that technology—we risk losing one aspect of that story. I really hope that the Government will reconsider their decision and engage with those looking to pursue the schemes to see what can be done to develop them.

I will not take up my full amount of time, but I want to return to tidal lagoons. The scheme ticks many boxes and its development has support across the Chamber and, I think, Parliament as a whole. The lagoon will be a pathfinder in Swansea, the first of its kind. We have a history of developing energy technologies in which numerous firsts of a kind have turned into ones of a kind. I hope that Swansea goes ahead but, if it does, it must be a pathfinder. It must be a scheme that leads to the development of a technology. There is no point in our paying a large amount of money to do this once, then not learning from it, not reaping benefits for future development and, most importantly, not having the technology to export. I fully support the scheme, as does my party.

--- Later in debate ---

[Jesse Norman]

The fairest thing to do is to see what the report says before we come to a view about an appropriate timetable. It would be quite wrong to prejudge the report and its conclusions.

For all the enthusiasm of my right hon. Friend the Member for Preseli Pembrokeshire for tidal lagoons, I note that he has taken a measured approach, respecting the complex issues that are being raised, for which I thank him. As he said to the House when he was Secretary of State for Wales,

“The Swansea tidal lagoon proposition is very exciting and commands wide support across the business community in Wales, but we also need to recognise that the project is asking for a very significant level of public subsidy and intervention. It is absolutely right that”

the Government

“should conduct very robust due diligence in making sure that such projects will deliver value for the taxpayer.”—[Official Report, 13 January 2016; Vol. 604, c. 842.]

That is precisely what we will do. We will take the time necessary to look at the review’s findings in relation to tidal lagoons, particularly in the context of a wider assessment of the nature of the UK’s future energy mix and our plans to reduce carbon emissions.

Last month, the Secretary of State set out his vision for how the energy sector should develop, in the context of our new UK industrial strategy. He recognises that the Government’s role must be to create the right framework for growth, harnessing both existing and new technologies, to deliver more secure, cleaner energy at a lower cost. That is our goal: a reliable, clean and inexpensive energy system.

Of course, new technologies such as tidal lagoons may have a role to play, but not at any cost. My hon. Friend the Member for Eddisbury (Antoinette Sandbach) rightly raised several issues, and we look to the energy review and other discussions to resolve them. She raised not merely the issue of cost, but her concerns about the lack of intellectual property, planning uncertainty and delays. The Government should properly consider those issues as part of a wider decision-making process.

As colleagues know, the contract for difference allocation round, which we announced last month, is under way. Overall, our energy policies and priorities have not changed. It is worth saying, in relation to the remarks of the hon. Member for Aberdeen South (Callum McCaig), that it is not true that CfDs do not include tidal stream technologies, although it is true that there is no ring-fenced allocation for them within the auction. That is because our responsibility is to bill payers. Tidal stream, which is not a technology that we are specifically discussing in the context of tidal lagoons—it is a different technology—has a strike price about three times higher than that of offshore wind. Until those prices fall, it may be difficult for it to compete. When they do, it will come within the policy horizon.

[Callum McCaig]

In fairness to myself, I do not believe that I said it was excluded; I said it is effectively excluded, which the Minister may have touched upon himself. Ignoring the potential first mover advantage for tidal stream technology, how does he expect its price to come down if it does not have the support to deploy and develop a downward price trajectory?

[Jesse Norman]

That is a perfectly reasonable question. Historically, the expectation has always been that technologies have to demonstrate that they are capable of benefiting from support. Given that the distance in the range of cost is so high, a judgment has been made that that technology has not done so at the moment, but other technologies have succeeded in doing so.

Other colleagues raised issues such as the rate at which costs might fall with other lagoons, the degree to which different projects could inspire different learning, and the first mover advantages, all of which should be resolved and discussed in the context of the Hendry review.