Twenty Third Conference of the Parties
Claire Perry Excerpts(6 years, 5 months ago)
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The Minister for Climate Change and Industry (Claire Perry)
The annual conference of the parties (COP) to the United Nations framework convention on climate change took place in Bonn, Germany, from 6 to 17 November. I led the United Kingdom delegation, accompanied by the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Suffolk Coastal (Dr Coffey). As demonstration of the UK’s action at all levels, the First Minister of Scotland Nicola Sturgeon and the Scottish Cabinet Secretary for the Environment Roseanna Cunningham also attended.
The UK’s priorities for COP 23 were to maintain the global political momentum to combat climate change and to promote the UK’s global climate leadership. We demonstrated this commitment to combating climate change through a series of high-profile announcements, most prominently the UK-Canada Powering Past Coal Alliance to phase out unabated coal power, joined at COP 23 by 28 countries and states. We announced over £300 million of programmes to support developing countries to tackle climate change. This included £177 million for sustainable infrastructure in Latin America; £40 million for a climate fund with Germany for reducing emissions in developing countries; £27.5 million to help the world’s largest cities tackle climate change; and £62 million towards two initiatives to support Latin America to halt deforestation. We also announced that we will double our funding for the Intergovernmental Panel on Climate Change in 2017 to £230,000—the scientific body whose evidence underpins global climate action.
The context of this COP gave it particular significance, in particular given the recent series of devastating extreme weather events, Fiji as the first small island developing state presidency, and the US’s intention to withdraw from the Paris agreement.
In the negotiations we succeeded in keeping the process on track towards agreeing the rules that will underpin the Paris agreement by the end of 2018, and in creating the conditions for a collective raising of ambition by 2020. Outside negotiations we highlighted our impressive domestic and international action including the recent clean growth strategy, and opportunities for the UK’s low-carbon sector. Since 1990, we have cut emissions by 42% while our economy has grown by two thirds. This means that we have reduced emissions faster than any other G7 nation, while leading the G7 group of countries in growth in national income over this period.
The Green is Great UK pavilion had nearly 50 events showcasing UK low-carbon expertise and opportunities. Highlights included the international launch of the clean growth strategy, the signing of the “Because the Oceans” declaration, and the showcasing of UK business, academic and NGO expertise.
During COP the UK ratified two important climate change agreements: the Doha amendment to the Kyoto protocol (on developed country action before 2020) and the Kigali amendment to the Montreal protocol (on phasing down hydrofluorocarbons), one of the first countries in the world to do so.
The UK, negotiating as part of the EU, secured its main negotiation objectives: progress in the multiple negotiating tracks on the work needed to implement the Paris agreement; and a clear vision for next year’s “Talanoa dialogue”—a collective process which will take stock of current efforts and drive future global ambition.
Other important outcomes from the negotiations included agreement to showcase and accelerate work on pre-2020 action; agreement of a gender action plan and a local communities and indigenous peoples platform to promote greater inclusion in climate action and UN processes; and the launch of an ocean pathway partnership to strengthen the inclusion of oceans in the UN climate process.
Climate change will rightly continue to be at the forefront of international activity over the next year: President Macron will host the One Planet summit in Paris next month; it will feature strongly at the Commonwealth summit in April 2018; it will be prominent in the work of the G7 and G20, hosted by Canada and Argentina respectively; and California will host a major summit for cities and regions in September 2018. Meanwhile the “Talanoa dialogue” process will run through the year culminating in COP 24 in Katowice, Poland and there is further detailed work to be done to conclude the Paris “rulebook” by the end of COP24.
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Draft Scotland Act 2016 (Onshore Petroleum) (Consequential Amendments) Regulations 2017
Claire Perry Excerpts(6 years, 5 months ago)
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The Minister for Climate Change and Industry (Claire Perry)
I beg to move,
That the Committee has considered the draft Scotland Act 2016 (Onshore Petroleum) (Consequential Amendments) Regulations 2017.
It is a pleasure to serve under your chairmanship, Mrs Moon. You and I have heard the term “handbagging” over the years. I apologise for my inadvertent use of the act before our proceedings commenced.
Christmas is coming and it is nice to put on the Santa hat. In opening the debate on the Scotland Act 2016 (Onshore Petroleum) (Consequential Amendments) Regulations 2017, I hope to deliver something that has been called for by Ministers in the Government north of the border and put in place the powers that will lead to further devolution. This process was recommended by the Smith commission. It was agreed that powers relating to onshore oil and gas licensing, apart from those relating to royalties, would be devolved to Scotland. The Scotland Act 2016 implements the Smith commission agreement by devolving a range of powers to the Scottish Parliament and Scottish Government. The Act transfers legislative competence for onshore petroleum to the Scottish Government, with the exception of matters relating to setting and collecting licence rentals. It also includes provisions for Scottish Ministers to exercise powers currently held by my right hon. Friend the Secretary of State or the Oil and Gas Authority in relation to onshore licensing in Scotland.
The consequential amendments before us deliver on a recommendation of the Smith commission agreement by complementing the provisions of the Scotland Act, and assist in giving the Scottish Parliament and Scottish Ministers greater control over their onshore oil and gas resources.
Ian Murray (Edinburgh South) (Lab)
Does the Minister agree with me, in the Christmas spirit in which she has commenced her speech, that these regulations, along with the many other regulations that have passed through the House, mean that the Scotland Act 2016 results in delivering the vow that was put together as part of the independence referendum?
Claire Perry
The hon. Gentleman makes a very fine point, and of course, in the spirit of Christmas coming early, my right hon. Friend the Chancellor of the Exchequer was in the Christmas spirit last week, when he brought forward innovative fiscal measures to support UK oil and gas companies, such as the introduction of a transferable tax history. Let no one say that this Government do not believe in the spirit of Christmas.
Michael Fabricant (Lichfield) (Con)
My hon. Friend mentions taxation. Has she had a chance to discuss this legislation with the Scottish National party, given that there has been very little legislation on tax under already devolved powers in the Scottish Parliament? Will this be merely gesture politics, or does she believe that the SNP will actually do anything with it?
Claire Perry
My hon. Friend invites me to stray outside the narrow remit of the regulations. Perhaps he would like to consider this as a smoothing amendment that gives the Government north of the border powers, should they wish to exercise them and use them wisely, to take some steps relating to the licensing regime.
The objective is to transfer the existing UK onshore licensing regime as it applies in Scotland to Scottish Ministers. The measure enables them in effect to bring forward the existing licensing regime, but to create a bespoke licensing regime should they wish to do so and should they think that that would benefit people north of the border. Two statutory instruments are needed to implement the relevant powers in the Scotland Act. First, these affirmative regulations make consequential amendments to taxation legislation, as my hon. Friend so astutely anticipated. Secondly, negative regulations will make consequential amendments to the licensing regime.
I am pleased to report, in the spirit of consensus, that my officials have been working closely with the Scottish Government, the Scotland Office, the Oil and Gas Authority and Her Majesty’s Revenue and Customs to prepare the regulations. Once the Scotland Act 2016 provisions are fully in force, the responsibility will be the full responsibility of Scottish Ministers, and they will be responsible for granting the relevant licences.
I come now to the detail of the affirmative regulations. These make minor consequential amendments to taxation legislation to reflect the role of Scottish Ministers as the licensing authority in Scotland, to allow the tax legislation to work as intended in relation to onshore areas in Scotland. As we all know, tax is other people’s money, and we have a fiduciary responsibility to spend it wisely—that was my insertion; it was not in my prepared speech. The regulations provide for the position both before and after the commencement of the Wales Act 2017, which makes equivalent provision for devolution of onshore oil and gas licensing to Wales.
The Smith commission agreed that powers related to the consideration payable for licences, and related matters, such as the keeping of accounts, the measurement of petroleum, and access rights for the purposes of measuring petroleum, will not be devolved to Scotland. That was set out and, I believe, agreed in sections 47 to 49 of the 2016 Act. Taken together with the forthcoming negative regulations, the provisions transfer responsibility from the UK Government to Scottish Ministers, and give them the powers to administer the existing onshore oil and gas licensing regime and, as I said, to create a bespoke one should they wish. With the devolution of onshore petroleum licensing, mineral access rights will also be devolved.
With regard to timing, the affirmative statutory instrument could be laid in Parliament only after the Wales Bill received Royal Assent earlier this year, as it makes amendments that anticipate amendments made by the Wales Act 2017. If the Committee approves these consequential amendments, a negative statutory instrument will follow the affirmative regulations to make consequential amendments to the licensing regime. The transfer of powers that we are discussing today does not constitute a regulatory provision, so we are not required to do a regulatory impact assessment. There has been no specific consultation on these technical amendments, since they are necessary to the effective operation of the provision set out in the Scotland Act 2016, which was of course consulted on separately.
To conclude, the regulations assist the Scottish Parliament and Scottish Ministers in achieving what they would like, which is greater control over their onshore oil and gas resources, complementing the provisions of the Scotland Act 2016. They make minor amendments to the legislation governing taxation to ensure a smooth devolution of powers for onshore oil and gas licensing to Scottish Ministers. They are an important step towards delivering the recommendations of the Smith commission agreement. I commend the regulations to the Committee.
Claire Perry
I welcome the comments from the hon. Member for Newcastle upon Tyne Central. In response to her question, yes the statutory instrument does cover the fracking regime. She asked an interesting question about whether the measure changes the size of the market for companies engaged in the fracking industry. I have not had conversations with them, but because there has been a temporary moratorium on the exploration and production of shale gas north of the border, my sense is that this will be expected and will be baked into business plans for companies that are looking to obtain fracking licences.
It is good to hear the support from the hon. Member for Kilmarnock and Loudoun as well. I suspect that the after-lunch Christmas spirit may not last through the late-night votes in the Lobby tonight, but it was good to start the afternoon in a spirit of consensus. I have no further comments and I commend the draft regulations to the House.
Question put and agreed to.
Draft Renewables Obligation (Amendment) (Energy Intensive Industries) Order 2017
Claire Perry Excerpts(6 years, 5 months ago)
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The Chair
Before I call the Minister to move the motion, I wish Colleen Fletcher, the Opposition Whip, a very happy birthday. I hope that your day gets better from here.
The Minister for Climate Change and Industry (Claire Perry)
I beg to move,
That the Committee has considered the draft Renewables Obligation (Amendment) (Energy Intensive Industries) Order 2017.
It is a pleasure to serve under your chairmanship, Ms McDonagh. May I join you in wishing enormous felicitations to the Opposition Whip, the hon. Member for Coventry North East, on her birthday?
The order will amend the Renewables Obligation Order 2015, which provides the legislative framework for the operation of the renewables obligation scheme in England and Wales. The draft order makes provision for indirectly exempting eligible energy-intensive industries from up to 85% of the policy costs of funding the renewables obligation scheme. It aims to avoid putting such industries at a significant competitive disadvantage and, as a second-order effect, to improve the cash flow and management of the scheme.
I will turn to the importance of the energy-intensive industries, or EIIs as they are often called. The transition to a low-carbon economy and the securing of our energy supplies must be done in a way that minimises the cost to business and domestic consumers. Our industrial gas prices are internationally competitive, but our industrial electricity prices have moved out of line with other European countries. As is set out in the clean growth strategy, which was published a couple of months ago, the UK’s industrial electricity prices for large consumers were the highest after Italy’s in 2016. That places our electricity-intensive manufacturing industries at a competitive disadvantage and increases the risk of international carbon leakage, where businesses relocate because of costs related to climate policies. That means that jobs and productivity are offshored, too.
To meet our legally-binding climate change and renewable energy targets, we have implemented a number of policies designed to incentivise the generation of electricity from renewable resources. The costs of those policies—or the investment—are recovered through obligations and levies on suppliers, which pass the additional costs on to their customers. The renewables obligation scheme is such a policy. Since 2002, it has been the main financial mechanism to deploy renewable electricity generation in the UK. We all know and should celebrate the enormous success we have seen in moving away from dirty fossil fuel power generation to renewable sources. In 2002, 2.9% of our electricity was created from renewable sources. Last year, the figure had gone up to 25%.
The RO scheme is funded through an annual obligation on UK suppliers to present a certain number of renewables obligation certificates to Ofgem, which is the administrator of the scheme, in respect of each megawatt-hour of electricity supplied. Suppliers pass the costs of meeting their obligation on to electricity consumers. The impact of those policy costs on the bills of energy-intensive industries can reduce the attractiveness of the UK and increase the burden on what can be important strategic industries. If the Committee is interested, I am happy to provide a full list of all the industries that currently qualify for the exemptions. It is things such as steel, petroleum products and ceramics—things that we all value and want to keep working in the UK.
We have been compensating eligible EIIs for the indirect cost of the renewables obligation since December 2015. That year, we announced that the Government would move from a compensation scheme to an exemption scheme to ensure that eligible industries have long-term certainty and remain competitive. As I said, there is a second-order effect in terms of making the cash-flow management for these companies even more effective.
On 30 October, the Electricity Supplier Obligations (Amendment and Excluded Electricity) (Amendment) Regulations 2017 were made, providing an exemption for EIIs from up to 85% of the costs of the contracts for difference scheme. The order aims to do exactly the same thing for the same group of industries and companies exposed to additional costs arising from the renewables obligation, and exempts them from up to 85% of the cost. The exemption scheme, unlike the compensation scheme, allows real-time changes in energy use to be taken into account and provides greater certainty to businesses. It means that businesses do not have to go through the fairly tortuous process of paying the bill and then applying for compensation, and seems to me a far more cost-effective way of delivering the scheme.
The administration of the RO exemption, including the application and certification process, will be carried out through processes that are already in place in respect of the CfD exemption. Of course, this comes at a cost. We recognise that the EII exemption will redistribute the costs of the RO to other electricity consumers. We estimate that that will increase average annual household electricity bills by about £2.30 in the period to 2027-28.
However, as I set out clearly in the clean growth strategy, although we have seen some increase in the costs of energy, related to the various policy decisions that we have all taken to invest in renewables and our clean future, the average energy consumption in a household has gone down, primarily because of far greater energy efficiency in the home, which includes the redistribution effect of schemes such as the energy company obligation that have directly targeted energy efficiency. That means that average household energy bills fell by £14 between 2012 and 2016. Colleagues will know that we have published a draft Bill that would require Ofgem to impose a price cap on standard variable tariffs. We believe that it is time to bring to an end the unjustifiably high prices paid by many of the most loyal customers of the energy suppliers.
Colleagues will also have seen that we asked Professor Dieter Helm to do an all-singing, all-dancing, super-deluxe review of the cost of energy and particularly business energy costs. We are taking the time to assess his proposals carefully and have launched a call for evidence to open up the debate. I encourage all colleagues to submit evidence.
As I also set out in the clean growth strategy, the pool of carbon emissions emitted by industry and businesses is now the largest in the UK. That is what we need to target, and we have the aim of improving energy efficiency by at least 20% by 2030. Of course, that will not only cut emissions, but reduce the costs that industries pay for their overall energy. We are working with the most energy-intensive sectors to implement the joint action plans that we have developed with them on industrial decarbonisation and energy efficiency.
The order makes a number of amendments to the Renewables Obligation Order 2015 to provide the legislative basis to exempt eligible EIIs from up to 85% of the indirect costs of the RO scheme. In particular, it makes changes to the methodology for calculating the size of the annual supplier obligation, referred to as the obligation level, to reflect the fact that it will be applied to a narrower consumption base, as up to 85% of electricity supplied to eligible EIIs will be exempt. That will result in a proportionately higher obligation in respect of electricity supplied to non-eligible consumers.
The order also changes the scope of the obligation to exclude electricity supplied to eligible EIIs. That means that the obligation level for electricity supplied in England and Wales will be applied to 100% of electricity supplied to non-eligible consumers and at least 15% of the electricity supplied by licensed electricity suppliers to eligible EIIs. The order imposes additional requirements on electricity suppliers to provide information to Ofgem and the Department for Business, Energy and Industrial Strategy about the supply of electricity to eligible EIIs for the RO’s end-of-year supplier compliance process.
The order sets out a process for introducing the exemption, which will entail calculating and publishing a revised version of the 2018-19 obligation level to take into account the new methodology. That process has been carefully designed to provide some lead-in time for suppliers and eligible industries to ensure that processes are in place to administer the exemption smoothly and that suppliers, especially smaller independent companies, have a chance to adapt their systems.
The Government intended the exemption to be introduced in January 2018. However, the timings for achieving that start date have passed, so, subject to parliamentary approval, we expect the process to be implemented from 1 April 2018 and to publish a revised 2018-19 obligation shortly.
It is worth reminding the Committee that the territorial extent of the order is England and Wales. We intend the exemption to apply right across Great Britain. The Scottish Government have devolved responsibility for administering the RO in Scotland, and they have approved an equivalent provision for delivery of the RO exemption through the draft Renewables Obligation (Scotland) Amendment Order 2017, so we have cut off the possible risk of carbon leakage. The exemption will not be introduced in Northern Ireland at this stage, but could be extended to Northern Ireland in the future. As a devolved policy matter, it will be up to the restored Northern Ireland Executive to take it forward if they so decide.
The House of Lords Secondary Legislation Scrutiny Committee raised a number of points following its scrutiny of the draft order. The main ones were why we had decided on the change so soon after the compensation was introduced and whether we were seeking state aid clearance to extend the renewals obligation to direct competitors, by which I mean companies that, given the threshold test for participation in the scheme, are in the same industry but will not be eligible for the help.
I will summarise the main points. With regard to the changes in the exemption, the compensation schemes were introduced in January 2016 following their announcement in the 2014 Budget. The autumn statement announced that we would move towards that exemption basis. As I said, we think that moving to an exemption scheme provides additional benefits to EIIs—namely, increased certainty, real-time support and a far more streamlined administrative process than a compensation scheme.
The point about direct competitors is very valid. We have submitted a state aid notification to the European Commission. The Commission does not think our proposal is compatible with relevant state aid guidelines, but I am very keen to explore alternative options that we could bring forward within the scope of the guidelines to preserve parity within industry groups.
The draft order will make the necessary changes to the Renewables Obligation Order 2015 to allow us to exempt eligible EIIs from up to 85% of the indirect costs of funding the RO scheme. It provides companies in many of our most crucial and strategic sectors with greater long-term certainty. The measures set out in the order reduce the price differential between our extremely important domestic industries and their international competitors, removing the opportunity for a competitive disadvantage and the temptation to offshore what we know are incredibly valuable industries and jobs right across the UK. I commend the order to the Committee.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
It is a great pleasure to serve under your chairmanship, Ms McDonagh. I start by thanking the Minister for bringing the draft order forward, and the Government for devoting attention to this important area—though not in as timely, transparent or logical a fashion as we would have desired.
For the benefit of the Whips and those Members with pressing engagements, I shall start by saying that the Labour party does not oppose this statutory instrument. We support the ends: the aim of lowering the cost of electricity for industries that use electricity intensively, where that cost is increased by green and social obligations. However, we have serious concerns about the means that the statutory instrument uses to lower those costs and regret that the Government are incapable of providing the support that energy-intensive industries merit.
Although energy costs account for 3% of UK business expenditure on average, there are sectors where that figure reaches 10%, including steel, cement, paper, ceramics, glass, chemical industries and others. They are referred to, as the Minister set out, as energy-intensive industries. Those industries play a crucial role in our economy, contributing more than £52 billion to our GDP and supporting 600,000 high-quality, skilled jobs. That is an important point, because our economy lacks high-quality, skilled, well-paid jobs.
Steel in particular has being crying out for support. It produces an economic output of £1.2 billion and employs 31,000 people, contributing 0.1% of the UK economy and 0.7% of manufacturing output. Let me emphasise again that those are high-quality, highly skilled jobs, which we wish to see retained and expanded in a productive economy.
The value that those industries bring to the UK economy in terms of jobs and economic output is therefore considerable. They are an important part of our manufacturing base and have a crucial role to play as part of any successful future industrial strategy. Energy-intensive industries are frequently foundation industries, producing materials that are an important part of supply chains for other industries in the UK. In an increasingly volatile world, we need strong foundation industries in Britain to ensure security in the supply of the materials on which our economy depends.
However, as we work towards a greener future and fulfil our international obligations to reduce carbon emissions, we need to develop manufacturing methods that are sustainable, including in their use of energy. That was what the renewables obligation, which was brought in by the last Labour Government in 2002, sought to achieve, by providing support drawn from energy bills for the development of renewable energy, and thus contributing to meeting the UK’s EU target to produce 15% of our energy from renewable sources by 2020 and our low-carbon goals. As the Minister set out, that system was superseded by a combination of the feed-in tariff for small-scale generators and contracts for difference for large-scale generators, but existing projects benefited from the renewables obligation and will continue to do so for a number of years.
This policy necessarily exposes companies in energy-intensive industries to higher electricity bills, to which they are more vulnerable than other electricity consumers. The costs are significant. For a business using 10 GW of electricity a year, we are talking about £215,000. As most energy-intensive industries operate in international markets, those costs place them at a competitive disadvantage, and increase the risk of investment leakage through businesses choosing instead to make investments in countries with less ambitious climate policies.
That would be disastrous for UK industry and for the security of our supply of foundation materials, as I have indicated. As the Minister hinted, it would also effectively export our carbon emissions: we would continue to use the same or greater amounts of steel, ceramics and other materials, but would have to import them from countries where environmental regulations are weaker. It is worth noting that even before the effect of the renewables levies, UK energy prices are high by global standards. UK prices were equal to industrialised country averages in 2010, but 40% higher than the average by 2015.
The order intends to address the continuing cost of the renewables obligation on energy-intensive industries. As the Minister set out, it will set up a regime whereby energy-intensive industries are exempt from 85% of the cost that would otherwise accrue to them as a consequence of the renewables obligation regime. It replaces a scheme set up in 2015 that provided for a rebate to go to companies operating in energy-intensive industries. That scheme was suspended in the summer of this year for reasons that the Government have still, even after the Minister’s speech, not made entirely clear. I would appreciate it if the Minister provided some more clarity on that point.
The new regime that will be established by the statutory instrument differs substantially from the scheme that was previously in operation, chiefly in so far as it exempts energy-intensive industries from renewables obligation costs, and places the cost of exemption on to other non-exempted energy users. It is quite literally robbing Peter to pay Paul.
Claire Perry
I want to clarify that, because I raised exactly the same question at the briefing. As I understand it, right now the funding for this obligation and for contracts for difference is basically paid for by taxpayers. It comes out of the BEIS budget. Taxpayers are also energy consumers, so this is simply a question of whether we take the money out of our taxes or directly from the companies. It seems to me that it is probably a much more efficient scheme to—
Claire Perry
The hon. Lady shakes her head, but she and I both know that getting money out of the Government is complicated. If we want to help these industries, which she and I violently agree are critical to Britain, given the jobs within them, it seems to me far more streamlined and beneficial for them to work directly with their suppliers, rather than having to apply to BEIS and get money out of taxpayers, which is essentially coming out of our pockets.
Chi Onwurah
I thank the Minister for that intervention—it is always good to have a debate—but I disagree with her strongly. It should be difficult to get money out of the Government; that could be called accountability. The reason we have a Government is that they take decisions on behalf of the population—the citizens as a whole—that support the Government’s values and objectives. The Department for Business, Energy and Industrial Strategy should set out those objectives, including greater renewable energy and support for our foundation industries, in its industrial strategy, and be prepared to support them financially. Perhaps that is a key difference between my, and Labour’s, vision of Government and that of the hon. Lady. We believe that the Government and the public sector can make positive interventions in an entrepreneurial and innovative way to fulfil the ambitions and the potential of our industries and citizens.
Claire Perry
The hon. Lady is very smart; she really is one of the few intellectual thinkers. The Government do not have their own money. Government money comes from the same people who are paying the electricity bills. It is other people’s money. It comes in as taxes and we also pay our energy bills. She and I, and everybody in this room, contribute to Government funds. I am sorry, but this is a very important point. As a Government—
The Chair
I am glad that there is a heated debate; that is all to the good. However, the Minister will get an opportunity to sum up, and I suggest to her that her interventions are becoming speeches.
Chi Onwurah
Thank you, Ms McDonagh. I am glad to have inspired such passion in the Minister. You must allow me a brief response on the difference between taxation and energy bills. Taxation is decided by the Government, comes generally from the people—hopefully in a progressive way, where the greatest shoulders bear the greatest burden; not as it is under this Government—and is then redistributed. When it comes to energy bills, however, the people who are the poorest and coldest may bear the greatest burden. Ms McDonagh is looking at me as if I may be exhausting her patience, so let me move swiftly on.
The explanatory memorandum suggests that the legislation will cause real problems, specifically for small and medium-sized companies, which will see their bills increase substantially. The Minister made reference to consumers, and the increase that they will see. According to the explanatory memorandum, for small business energy users the increase is likely to be £160 per year, but for a medium-sized business energy user it is likely to be about £6,700 per year. To put that in context, the Business Energy monitor sets out that the average small business spends just over £2,000 per year on electricity, and the average medium-sized business spends £3,146 per year on electricity. The increase necessitated by the statutory instrument is huge—seemingly a tripling of electricity bills for medium-sized businesses. I hope that the Minister will say what the actual impact on businesses will be in percentage terms, and what discussions she has had with the Federation of Small Businesses, for example, to assess that impact. From a party that styles itself as the party of enterprise and the entrepreneur, this is alarming to say the least.
How did the Government arrive at such a drastically unfair solution to what should have been a reasonably simple exercise of updating or replacing the rebate system? In spring 2016, the Department for Business, Innovation and Skills consulted on a new scheme to replace the rebate scheme. The consultation ran for eight weeks and looked in detail at the plans to implement an exemption scheme, receiving 69 responses. I am unclear as to how, after consulting on the proposals, the Government arrived at this solution, which will hit the bills of ordinary energy customers, and particularly small and medium-sized enterprises. Are the Government happy that this exemption scheme will put costs up for small businesses—the backbone of our economy? Have they considered any other methods of ensuring that non-exempted customers do not have to bear the costs of the scheme in the way that has been set out?
It is worth noting that the effect of the statutory instrument is to replace an energy-intensive industries compensation scheme for the effects of the renewables obligation with an exemption scheme. That means that the Government will save the money that previously went out in compensation and require the equivalent of what they have saved to go on to customers’ bills instead. The additional costs on bills undoubtedly will need to be shown. Is it the Government’s intention simply to lump them in with green and social costs, or to account for them separately? Will the Minister also say how, where and whether the money that has been saved—as she set out—from the BEIS budget is being spent, or whether it is returning to the Exchequer?
The Minister mentioned that the timing of the new scheme is falling behind. The explanatory note published with the order states a firm intention that the exemptions should come in on 1 January. The Minister set out that that date will now be missed, with a four-month delay until 1 April, as I understand it. Why has that delay been allowed to happen, and what effect will that have on the finances of energy-intensive industries? It gets worse, because the Government intend to make the changes set out in the instrument alongside another statutory instrument, the Electricity Supplier Obligations (Amendment and Excluded Electricity) (Amendment) Regulations 2017.
Claire Perry
I will endeavour to be brief and less passionate. I thank the hon. Lady for her thoughtful response. I am delighted that we are in violent agreement about the need to support these incredibly valuable industries and the thousands of high-skilled, productive jobs for the people they employ across the UK.
I will clarify a couple of points. The current scheme has not been suspended—I am not quite sure where that came from. It continues until the exemption is introduced, which will now be in April, so the normal rules will apply.
The hon. Lady asked a sensible question about the impact of the order on small businesses. SMEs can apply as well; it is not a size test, but a measure of what percentage of a company’s gross value added is spent on energy.
Chi Onwurah
I thank the Minister for that clarification; it is an important point. SMEs can apply for the exemption but they would need to be in energy-intensive industries, as set out in the schedules to the 2015 order, which I understand will be updated. They may not know, as yet, whether they can apply for it. They may have a large bill without necessarily being in an energy-intensive industry.
Claire Perry
I am happy to clarify again. First, because the schedule of energy-intensive industries is already known—businesses already know if they are classified as in that sector—the test is whether they are energy-intensive users, regardless of their turnover. The measure is based on energy as a percentage of profits and labour costs. Businesses of all sizes can apply. Because the order effectively aligns the RO measures with the CfD measures, it is the same certification process. Based on the legislation that we introduced recently, businesses will already know and will be able to say, “We have the certification and we will take that to our suppliers.” There should be certainty out there among businesses as to whether they can apply. The hon. Lady and I have the same thinking: what happens if energy bills fluctuate wildly? My understanding is that when a business is certified as eligible, that certification lasts for five years, so that gives businesses a sense of certainty for their future cost planning.
On the hon. Lady’s point about additional costs, the overall impact is assessed at something like 0.5% of energy costs. I will write to her with the exact number. She is right that we want to ensure that there is no enormous uplift for businesses. As I tried to point out, one way of thinking about it is that businesses already pay a number of obligations to the state, such as corporate taxes and business rates. In effect, some of that money was coming back to them in the form of exemptions, but it was not coming back to all businesses. I think the fact that businesses that were not getting the money back will now see a bit going on their energy bills provides a more transparent system, as she said.
This is not a new levy; it is an application of the old scheme. The hon. Lady understands about business and she knows that it can be difficult for someone trying to manage their cash flow to have to apply to Government and wait for money that could take several months to come through. Simply having that money taken off their bills before they pay them has to be a better way for a small business owner or a financial manager to operate.
I am delighted that we have the Opposition’s support on this. It is an important measure to support some of our most strategic industries. I thank Committee members for their patience and support. We want to try to safeguard the competiveness of these industries. I therefore commend the draft order to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Renewables Obligation (Amendment) (Energy Intensive Industries) Order 2017.
Oral Answers to Questions
Claire Perry Excerpts(6 years, 6 months ago)
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Alan Brown (Kilmarnock and Loudoun) (SNP)
The Minister for Climate Change and Industry (Claire Perry)
Carbon capture usage and storage has huge potential to play a vital future role in reducing emissions across a range of activities, but the technology has to be made more cost-effective to deploy at scale. That is why we have committed up to £100 million of public money in CCUS innovation in our clean growth strategy and why are working with the private sector and other Governments to drive up technological innovation and to drive down costs.
John Mc Nally
The clean growth strategy falls short of boosting the investment necessary to stimulate change in carbon capture and storage, and the industrial strategy Green Paper failed to mention it. In the light of the previous failure to deliver on Peterhead, what measures will the Minister announce to recover that investment?
Claire Perry
The world has not yet decided to invest in traditional CCUS. There are 21 at-scale plants operating globally, of which 16 rely on enhanced oil recovery as a revenue stream. It is simply not cost-effective enough in its current form for us to commit large-scale investment. We have to get the costs down. We are now in a world where the private sector wants to invest, however, and I am sure we would both welcome developments such as Project Acorn, to which both the UK Government and the Scottish Government have committed funds.
Alan Brown
The Minister does not like being reminded that the pulling of the £1 billion for the Peterhead project was a betrayal of the north-east of Scotland and the Scottish energy sector. She talks at the Dispatch Box about value for money, but the strike price of £92.50 at Hinkley is not value for money. When will the Government make real financial commitments to CCS in Scotland?
Claire Perry
In the world I live in, £100 million is quite a substantial financial investment in CCUS. It is striking that the Scottish Government invested only £100,000 in Project Acorn, as opposed to our £1.3 million. The point remains that the technology is not cost-effective. Only six plants in the world are operating without additional revenue from enhanced oil recovery. We want Britain to be the technological leader and to develop cost-effective solutions. I hope that we can work together to achieve that aim.
Dr Alan Whitehead (Southampton, Test) (Lab)
I welcome the return to some consideration of CCS in the clean growth plan, after the Government’s dreadful mistake in cancelling the £1 billion UK CCS pilot plants in 2015. What discussions has the Minister had with her Norwegian counterparts on the prospects for UK-Norway collaboration on that country’s advanced plans for carbon sequestration in the North sea?
Claire Perry
As the hon. Gentleman will know, Norway is currently a little bit unsure about the level of its own financial commitment. However, it has an excellent Energy Minister, with whom I have had multiple meetings and conversations. It seems strange to me that, having taken the hydrocarbons out of the North sea basin, we should not co-operate to put the carbon dioxide back, so there are frequent conversations. The hon. Gentleman will have seen the clean growth strategy, on which we would like very much to work with other countries—not just Norway, but the United States and Canada as well.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
We have just heard about the broken promise to establish a world-leading carbon capture project at Peterhead. That is another betrayal of the North sea industry: £1 billion was never invested, and 600 jobs were never created. Is it not true that when it comes to the North sea, this Government are no good at anything except breaking promises?
Claire Perry
Some might say that the Scottish National party is not very good at forecasting oil prices. As I have already said, no Governments have taken a very substantial bet in the past few years—I call it a bet because it is not cost-effective—but, as the hon. Gentleman will know, organisations such as the Oil and Gas Climate Initiative are asking us, “How can we work together in a public-private arrangement to deliver the best, most cost-effective solutions?” We need to create some technology that we can export, like the oil and gas services that have delivered such economic value in the North sea.
Drew Hendry
Support for the North sea was also promised by the former Prime Minister in January 2016, when he said:
“An Oil and Gas Ambassador will be appointed to…promote”
oil and gas
“around the world”.
However, the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Watford (Richard Harrington), told the Press and Journal recently that it was a “good idea” but he was “not aware” of it. He said:
“It’s not crossed my desk”.
Whose desk did it cross? Or was it just another fantasy— a false promise from a “say anything, do nothing” Government”?
Claire Perry
I can understand why there is not much solar installation in Scotland: it appears that the sun never shines north of the border.
I will take no lessons from the hon. Gentleman about support for the North sea, which is a vital industry. I cannot answer his point about the ambassador, but I shall be happy to discuss it with my colleagues.
Tom Brake (Carshalton and Wallington) (LD)
Michael Tomlinson (Mid Dorset and North Poole) (Con)
The Minister for Climate Change and Industry (Claire Perry)
The UK was a leading negotiator of the extraordinary Paris agreement in which 195 countries agreed to act to keep the global temperature rise well below 2°. In 2016, only two countries in the world cut their carbon emissions intensity in line with that Paris goal: China and the UK. Last month, our clean growth strategy set out how we intend to go further and faster in cutting our UK emissions to reach the Paris goal, while delivering economic growth.
Michael Tomlinson
Many of my constituents have contacted me with their concerns about climate change. Following Paris, what steps is the Minister taking to ensure that there is a global political movement to combat climate change?
Claire Perry
I will be going to Bonn next week for the 23rd United Nations climate change conference with the council of partners, where we will join other leading nations in reaffirming our commitment to the Paris goals and working on a variety of practical initiatives such as the phase-out of power generation from unabated coal. Britain, which started the industrial revolution using coal, now leads the world in phasing it out. We will also be working on the use of innovative financial solutions to mobilise private investment in low carbon technologies.
Jenny Chapman (Darlington) (Lab)
How does the Minister intend to support carbon capture and storage in the Tees valley, given that that, too, would improve our environmental ambitions and enhance economic growth?
Claire Perry
The hon. Lady will know that the Tees valley has been incredibly assiduous in campaigning in many ways to be a location for the deployment of the new technology. We are working actively with it and we would like to see some investment proposals coming forward.
Edward Argar (Charnwood) (Con)
In reaffirming the UK’s commitment to the Paris climate change deal, will my hon. Friend assure me that she had her colleagues will continue to pressure and persuade other countries that have not signed up to it or that might be reticent about its merits and about why they should be involved?
Claire Perry
My hon. Friend makes a good point: we are only as good as the partners that we are working with. Other countries, including India and China, have set progressive goals for their own countries involving very rapid decarbonisation. Paris remains fit for purpose and will not be renegotiated. We would like all countries, particularly the major OECD countries, to change their minds and get behind this groundbreaking agreement for the world.
Caroline Lucas (Brighton, Pavilion) (Green)
The Committee on Climate Change clearly states that fracking cannot be compatible with the UK’s climate change targets unless three key tests—on methane gas, on gas consumption and on carbon budgets—are met. Given that the Government have not shown that those tests can be met, will the Minister’s Department refuse consent for fracking in Ryedale, North Yorkshire, which is currently under consideration, or is she planning simply to ignore the advice from the Committee on Climate Change?
Claire Perry
We cannot comment on particular cases. Testing wells are being drilled at the moment, and we need to understand the scientific basis, so that we can prove or disprove these tests. I find it slightly odd that those who argue the loudest that people should accept the scientific basis for climate change refuse to have a conversation about the scientific basis that would prove or disprove the case for fracking.
David Hanson (Delyn) (Lab)
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
I am working closely on investment in utilities with the Greater Lincolnshire local enterprise partnership, which will shortly publish a report detailing areas of Lincolnshire in which infrastructure requires investment. One problem is that Western Power is prevented from making speculative investment by Ofgem. Can my hon. Friend the Minister tell me why there is apparently this regulatory barrier to investment and what she can do to help?
The Minister for Climate Change and Industry (Claire Perry)
I commend my hon. Friend and her local enterprise partnership for their work. We look forward to seeing that report and to having productive conversations. We do not want any barriers that impede economic growth in her constituency and region.
Ruth Cadbury (Brentford and Isleworth) (Lab)
Claire Perry
I am sure that my hon. Friend, like me, celebrates the fact that there has been an unprecedented fall in the price of offshore wind in the most recent auction, proving that the policy making—at least in this case—actually worked. We look forward to further investment in the industry, and are working with the sector on a sector deal that will have to address the issue of skills and apprenticeships. It is a vital industry; there is much more to do and much more growth to come.
Rachel Reeves (Leeds West) (Lab)
Diana Johnson (Kingston upon Hull North) (Lab)
Claire Perry
The hon. Lady is a great advocate for this and we discussed this matter during the recent urgent question. We want to do all we can to support the manufacturing future of that entire company, which is why we are focusing so much on trying to help it to get the overseas orders it needs.
Stephen Kerr (Stirling) (Con)
When does the Minister plan to respond to the Matthew Taylor review of employment practices in the modern economy?
Stephen Kinnock (Aberavon) (Lab)
Imminent changes to the operation of the EU emissions trading system register are likely to invalidate UK-issued carbon allowances from the start of next year. These measures, which have been brought about by Brexit, will have a significant impact on the steel industry. Will the Minister let us know what contingency measures are being taken to mitigate this impact in the event that an agreement cannot be reached with the European Commission on this issue in time?
Claire Perry
The hon. Gentleman is right to raise this important issue. He will be reassured to know that there are active conversations going on between my Department and the European Commission. He presents the absolute worst-case scenario, which we are confident that we will not reach.
Several hon. Members rose—
Claire Perry
I commend my hon. Friend for her tireless advocacy and leadership in the Conservative Environment Network and for the work she does on behalf of her constituents—Taunton Deane is very lucky. She and I share the aspiration to continue our global leadership role; indeed, the headline objective for the conference is about making everyone aware that there is no rowing back on the Paris agreement—in fact, we want momentum to accelerate. I will be using the conference to announce further investments and further approaches the UK is taking to push our world leadership position forward. If my hon. Friend can just be patient for a few more days, I am sure she will join me in celebrating those when we announce them.
Steve McCabe (Birmingham, Selly Oak) (Lab)
The Committee on Climate Change and a range of respected experts all point out that the existing clean growth strategy will fail on the fifth carbon budget and on the Paris commitments. The Minister must have some additional measures in mind. What are they?
Claire Perry
The Committee on Climate Change said this set of policies was one of the most wide-ranging that had ever been put forward. As the hon. Gentleman knows, the budgets end in 10 and 15 years’ time, and we are currently on track to achieve 94% and 93% of the things we need to do, a decade out. I think it is pretty good odds that we will achieve them.
Carbon Capture and Storage
Claire Perry Excerpts(6 years, 6 months ago)
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Alex Cunningham
My hon. Friend the Member for Stockton South (Dr Williams) was indeed in the main Chamber earlier. So was I; I was in the smoking debate, trying to persuade our country to give up the weed.
I agree entirely with my hon. Friend. The company he refers to consumes the same amount of gas at its other plant in Runcorn. It is crucial that CCS be spread across the country.
The Minister for Climate Change and Industry (Claire Perry)
May I address that question now, in case I forget later? The hon. Member for Stockton South (Dr Williams) is right to focus on the effect on companies such as CF Fertilisers. He will be pleased to know that I had a meeting with that company yesterday. We have had conversations on several issues, but the impact of this technology on its carbon dioxide emissions and its cost base is clear.
Alex Cunningham
I thank the Minister for that helpful intervention. I have seen companies across the area, including those that make up the Teesside Collective, working hard to decarbonise their processes, but engineering can only do so much. The Government appear to understand that. The clean growth strategy estimates that CCS could provide almost half the required emissions reductions in energy-intensive industries, helping them all on their way.
A recent study by Summit Power gives a simple explanation as to why the first CCS projects must begin operation in the 2020s: achieving the CCS capacity needed to meet the UK’s 2050 target requires a 30-year build-out rate. Any attempts to significantly shorten that period would place unrealistic expectations on the supply chain and the construction companies. The end result would either be a failure to meet the 80% target by 2050 or the deployment of alternative low-carbon solutions that are likely to be considerably more expensive. We need the first CCS projects to begin operation in the 2020s. Although the £100 million of funding to support that work is welcome, the Government will need to do much more if we are to realise our ambitions.
The Government’s recommitment to CCS sets out an ambition to deploy it at scale during the 2030s, which throws up some interesting questions. What exactly is meant by “at scale”? Does it mean deploying the first CCS projects in the 2030s, or does it mean that the projects will be up and running in the next five to 10 years and at the required scale 10 years later? To achieve large-scale deployment of CCS in the 2030s, it will be essential to have at least one phase, if not two phases, of operational projects in the 2020s to enable learning and cost reduction.
That was just one of the messages from yesterday’s APPG meeting, where we heard about CCS progress in three fantastic projects that could be the first building blocks in the construction of a world-leading CCS industry: the Caledonia Clean Energy project, the Teesside Collective and the Liverpool-Manchester hydrogen cluster. They are all in a strong position to get work under way to deliver projects that could be expanded or replicated with relative ease.
The Department is familiar with those projects and is providing some support, but the message to Government at that meeting was clear: each of the projects is costed, demonstrates relatively low cost and, most importantly, could make something happen quickly. The projects have invested heavily in development, worked with leaders in the field and done the numbers. Their plea was for the Government to come up with a timetable for decisions.
The Teesside Collective spells out what it needs in its briefing note, which the hon. Member for Middlesbrough South and East Cleveland alluded to. It asks for the allocation of £15 million in capture plant FEED funding to enable it to develop phase 1 of the project. It wants support for investment in a suitable CO2 store. It states that transport and storage costs will come down through new delivery models and that it is keen to work in partnership with Government to look at a cost-effective solution. It also wants the establishment of a funding mechanism to build and operate an industrial CCS network.
Will the Minister address those pleas and let us know what decisions we can expect from her? The industry desperately needs decisions. I invite her to attend a meeting of the all-party group early in the new year so that she can outline the Government’s thinking, listen to Members’ feedback and answer their questions.
I hope I will be forgiven for being a bit more parochial now. As other hon. Members have mentioned, NEPIC has identified Teesside as a location with a particularly strong competitive advantage in the deployment and commercialisation of CCS. My Teesside constituency is home to the Teesside Collective, a consortium of industries developing the first CCS project in the UK. Teesside has the workforce and the strong engineering skills required for CCS, largely as a result of long-standing expertise in the oil and gas, energy supply, chemical and process industries.
We know from the clean growth strategy that CCS has to do more than demonstrate carbon reduction and low cost. It also has to offer a competitive opportunity for the whole of the UK. There is every reason to believe that that aim can be realised. The UK has some of the best CO2 storage capacity in the world, a world-class oil and gas industry with the ideal skill set for CCS, and industries already located together in key regions. The economic benefits of CCS could be immense, with the Summit Power report concluding that developing it in the UK could deliver an estimated £129 billion of benefits. The clean growth strategy includes a commitment to developing a deployment pathway for CCS in 2018, but there is no detail about how that pathway will be developed or about the actions that may be included, so I hope the Minister can help us in that regard.
To make sure that, come the 2020s, the first CCS projects are operational, the Government need to implement a number of key actions in this Parliament to kick-start CCS clusters in a number of key regions. Countries such as Norway and the Netherlands have come forward with strong commitments on CCS, and it is time for us to step up and take our place among the leading group of countries that are developing this transformational technology.
I am ambitious and optimistic about the potential that exists and I am encouraged that we seem to be moving in the right direction. However, in closing I reiterate three messages: we need huge leaps to be taken, not tiny steps; the Government need to publish a timetable for the decisions needed to make real progress; and there are good, costed projects ready to go that can make our country a world leader in carbon capture and in creating and protecting countless jobs. I hope that the Minister will help us do that.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
It is always a pleasure to serve under your chairmanship, Sir David.
I congratulate the hon. Member for Middlesbrough South and East Cleveland (Mr Clarke) on leading today’s debate and speaking so eloquently about the benefits of carbon capture—and, of course, on throwing a strong pitch for his own constituency into the mix as well. In fact, all Members in this debate have spoken about the benefits of carbon capture, so I will not cover the ground that others have already covered, apart from perhaps touching on a couple of the points made. I will concentrate more on the policy.
As we know, carbon capture and storage has huge potential for decarbonising fossil fuels and it could be highly effective in reducing greenhouse gas emissions, as we have heard from many Members today. However, it was telling that, in the last contribution, the hon. Member for Stockton North (Alex Cunningham) referred to “tiny steps”, because that is indeed what these are: tiny steps on the way.
In Scotland, the SNP Scottish Government are already consulting on a new climate change Bill, with proposals—along with interim targets for 2020, 2030 and 2040—for a 90% reduction by 2050. That is as far as the reduction can go under current scientific advice. The independent expert advice from the Committee on Climate Change has said that that is the limit of feasibility and at the moment there is not enough evidence to set a net zero target.
However, I would caution the hon. Member for Middlesbrough South and East Cleveland. If he is successful and gets a promise about an installation, there is an elephant in the room. It is not the white elephant of Hinkley Point, which I will refer to later; it is the elephant that is Peterhead, where there was a shameful decision by the UK Government to pull the plug on a long-planned development. Peterhead is not far from the Aberdeen South constituency and it is where we saw a hugely damaging decision being taken, without warning, that will create a legacy that will deter investment incentives and dent consumer confidence.
That decision was a manifesto betrayal. That should be key—it was in the Conservative manifesto that the project would go ahead, and the cost to the taxpayer was £100 million. Peterhead was set and ready to accept a £1 billion contract and expected 600 jobs. I would therefore caution the hon. Gentleman about getting too excited about any promises, because by axing that project at the 11th hour, George Osborne committed what can only be described as a betrayal of the people in Peterhead.
Even now, the commitment to CCS, welcome as this small U-turn is, is still fairly mealy-mouthed, because in the detail it says: “subject to cost reduction”. That is the bare minimum of commitment, and the Carbon Capture and Storage Association has pointed out that it is counter to the way that technology actually develops. We have to invest in order to get the experience to get the drive costs down, so it is very difficult to see how an energy policy cherry-picked in this way, with these announcements and selected U-turns, will really provide a cohesive way forward for the industry. And all the while, in the background, we have the expensive and regressive nuclear policy at Hinkley C.
The SNP Scottish Government support the Paris agreement’s zero-emissions aim and we are providing significant funding in Scotland to establish the feasibility of the Acorn CCS demo project at St Fergus. Incidentally, that project is also supported by EU science funding of €1.9 million, and with SNP Government support the low carbon and renewable industry has created 58,500 jobs. That was the figure in 2015, which was up by a third from 2014.
Claire Perry
I know that the marching orders for the SNP, if not always for the hon. Gentleman himself, is that its Members have to be as gloomy as possible about everything at all times, but it is, frankly, really very sad that he has made no reference today to the high-wind offshore floating wind plant, which is one of the most innovative and creative things that is being done. It is being done by the UK Government, because this area is not a devolved matter, as he knows. That has been done because of the combination of the policy, Government leadership and work with industry to drive down the costs of offshore wind, exactly as we propose to do with this technology. Let us focus on what can be delivered and acknowledge that no country in the world is taking a major step into unreformed CCUS at the moment, and we want to do this together, so perhaps we could have just a bit more cheerfulness from north of the border.
Drew Hendry
I am grateful to the Minister for her short speech, or lecture, about how we should look at Government policy. I believe it is quite common now for us to be told that we should just hope for the best—that we should all be doing a “rah-rah” and saying, “This is all going to be great in the future”. No amount of deflection from the Minister will get away from the point that the UK Government, at the 11th hour, cancelled the Peterhead project, with no warning to the people involved, and that is shameful. On the point of the floating wind farm, which was launched yesterday, she will be aware that Nicola Sturgeon was there, not only to welcome the project but to launch it officially.
By making these policies—by making these small U-turns and small concessions—the Government are doing some welcome things. However, we want to see further, more significant U-turns. We want to see a significant investment, because, as has been stated, it is time for a long-term, robust UK policy for a low-carbon future. That is needed urgently. I urge the Minister to come up with some actual details about what the Government are going to do in the future to deliver it.
The Minister for Climate Change and Industry (Claire Perry)
As always, it is a great pleasure to serve under your chairmanship, Sir David.
I thank my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) for securing this excellent debate, to which there have been many thoughtful, detailed and factual contributions. My hon. Friend is a strong proponent both of the technology and of the area he represents. It was wonderful to hear the unanimity of views, in particular from the hon. Member for Redcar (Anna Turley), who speaks so passionately on behalf of her constituency; the hon. Member for Stockton North (Alex Cunningham), who made a very factual contribution about the importance of this technology; the hon. Member for Hartlepool (Mike Hill), whose predecessor also promoted the technology; and my hon. Friend the Member for Waveney (Peter Aldous), who, although not from the region, represents a coastal constituency and has a long-standing interest in this issue. As always, he spoke very well on this subject.
I tweaked the tails of the hon. Members for Kilmarnock and Loudoun (Alan Brown) and for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) slightly. I understand their points, but I sometimes wonder whether we do not have more solar deployment in Scotland because listening to the Scottish National party might lead us to think that the sun never shines north of the border, whereas we all know that it does very frequently. They made a fair point about the criticism that has been levelled at previous decisions, and that criticism has made me determined to find a copper-bottomed means of taking this technology forward. We all accept, and the report is clear, that it should be in our decarbonisation mix, but we need to develop it in a way that meets our triple test: it must ensure maximum decarbonisation, offer a clear route to an acceptable cost level, and help us boost the UK’s technology leadership so we grow the number of jobs in that part of the economy and our export potential.
I will try to answer all hon. Members’ questions. As always, some will not get answered, but I am sure my excellent Parliamentary Private Secretary, my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), will be assiduous in capturing any that are not answered and making sure that I answer them further down the line.
Alex Cunningham
The Minister talked about fact-based speeches. Does she accept that the costings for the projects I alluded to are good costings and demonstrate good value for money?
Claire Perry
I have not reviewed those particular costings. As the hon. Gentleman knows, I am never without my calculator. If there is one thing I want, it is value for money and a clear route to cost-effective deployment. Hopefully, we all want to go down that path.
It was excellent to hear cross-border, cross-party support for this technology. That is the way to boost investor confidence and ensure the clean growth strategy survives the vagaries of the political cycles. These long-term decisions benefit both us and our children and grandchildren.
All parties welcomed the clean growth strategy, and I thank their representatives for that. We are coming at this from a position of strength. We have the best decarbonisation and growth performance of the G7 economies. We are all determined to capture the enormous opportunity from the global pivot to low-carbon economies, and we want to ensure the UK’s productivity benefits from it. The strategy is broad and binding. It sets out clear targets and harnesses the power of innovation, on which we lead the world, to drive down costs and increase the pace of the roll-out of innovation. It also clearly sets out how we intend to meet some of the challenges.
Carbon capture, usage and storage is a vital part of the strategy. It is needed as a long-term strategic option so we can deliver the 2050 target at the least cost. It is crucial that we cut emissions from sectors that are hard to decarbonise. CF Fertilisers has done an excellent job in taking as much carbon as possible out of its industrial processes, but we understand that producing that vital product is carbon-intensive.
Carbon capture, usage and storage also gives us optionality. The hon. Member for Kilmarnock and Loudoun talked about the opportunity to decarbonise hydrogen production, and it is important that we maintain that option as we move towards our low-carbon future. As my hon. Friend the Member for Middlesbrough South and East Cleveland argued so well, capturing and effectively deploying this technology enhances the competitiveness and productivity of industrial regions such as Teesside, Merseyside, Grangemouth and south Wales. I do not want anyone listening to this debate to be in any doubt that, although some areas may be leading in terms of their ability to promote themselves as places to use this technology, that does not rule out other areas. We want it to be deployed effectively in all parts of the UK where there are industrial clusters.
The technology represents an export opportunity for firms such as Shell and Costain and new UK technology providers such as Carbon Clean Solution, which was funded by the Department for Business, Energy and Industrial Strategy to develop globally leading new forms of carbon sequestration for industrial processes.
Many companies are involved in the supply chain as well. I have been following with great interest the Eight Rivers plant, because it is UK-developed, completely breakthrough technology. It is funded with UK Government money deployed in Texas because of the package of incentives put around it, but the supply chain to the plant involves venerable companies such as Goodwin in Stoke-on-Trent, which is an amazing leader in high-specification metallurgy, and Heatric in Poole, Dorset. If we can capture such opportunities onshore, we bolster our onshore supply chain and, as the IEA has estimated, the global CCUS market could be substantial.
The problem, however, is this: we all accept that CCUS is important—we had some conversation on the nervousness in Norway about doing this—but while 21 CCS plants are operating at scale in the world, 16 are dependent on the revenues from enhanced oil recovery, which suggests that for only five plants on the planet has someone been able to persuade a Government or local player to subsidise the technology substantially, despite the potential of such technology. That tells me that the cost of the existing technology is too high and that there are potentially ways to deploy it more effectively.
That is why I want to change things—this is the point made by the hon. Member for Southampton, Test (Dr Whitehead)—and it is very much a personal commitment and something I strongly believe is exceptionally important. That is why we have put in place a much broader strategy on CCS. We want the prize of global leadership in the area: we want to be the people who break the deadlock, deploy CCS in the UK and capture the export opportunities.
We therefore have three areas in which I have set out actions under the clean growth strategy. First, we will constitute the CCUS cost challenge taskforce rapidly, because the model worked extremely well for offshore wind where we all accepted that the existing costs were too high. I take the point about risk sharing—the hon. Member for Kilmarnock and Loudoun is knowledgeable about this. There is a real question as to how much risk partners were able to accept in that structure. We are keen to probe our understanding of how to get down the cost of the deployment of the technology, so the new taskforce will be constituted in the next month. It will report to me and, as with the green finance taskforce, it will be set specific challenges to come up with ways to reduce the cost.
Secondly, we will publish a deployment pathway for CCUS over the course of the next year, which will include the points made about power capture, industrial capture, and transport and storage. We want specific delivery and investment models for each of them. We will continue to progress the work we are doing with the Teesside Collective, but will also work with other initiatives in Teesside, Merseyside, south Wales and Grangemouth, because there are other opportunities to do so and to learn from.
Alex Cunningham
I very much welcome the commitment to a timeline over the next 12 months. That is extremely welcome, and I wanted to say it specifically, but what else will the Minister do to help build the investor confidence to ensure that we can get the investors to put the money forward to make the projects happen?
Claire Perry
The hon. Gentleman has pre-empted what I was going to come on to, although I am conscious of the time and that I have to leave some for my hon. Friend the Member for Middlesbrough South and East Cleveland. For example, I too am meeting Statoil today— I am doing the rounds and going straight from this debate.
I am very conscious of the opportunities to work with organisations such as the Oil and Gas Climate Initiative, which for the first time is deploying new funding specifically into this area. We are very keen on substantial private sector investment. We are talking for the first time to the gas turbine blade manufacturers, who have never been involved in the conversation but who clearly depend for their long-term business survival on continuing to generate power with gas.
Internationally, I want to be sure that everyone is aware that we are perceived as a technology leader. We participate in Mission Innovation and its carbon capture innovation challenge. We are already exploring collaborative working relationships with countries such as Norway, which has an excellent Energy Minister. Collectively, between our two countries, we took the hydrocarbons out from under the North sea; surely there is cost-effectiveness in co-operating to put back the CO2 we have extracted. Given budget constraints, Norway in particular bears some interest, but there is also interest in working together in the United States, Canada and Australia.
We will therefore keep investing in our international CCUS programme and will organise and host an international global carbon capture, usage and storage conference next year to affirm that this is an area in which we want to take international leadership. We want to be the movers and shakers in this field.
As we have made hon. Members aware, we will invest in innovation to support such technology through our £100 million industry and CCUS innovation programme. We will make up to £20 million available for a CCU demonstration programme; we will support the next generation of technology; and in particular, as we talked about, we will support CCUS in some of the further out technologies, especially those to do with the removal of greenhouse gases. To ensure that that all works, I will personally chair a new CCUS council with industry to review progress and priorities.
I want hon. Members to be in no doubt that we are making a fundamental doubling down, as it were, on our commitment, but the guideline is that we must come up with a more cost-effective way of doing CCUS. We have to ensure that we produce the maximum reduction in emissions and we want to position the UK as the global technological leader in this space. That is at the heart of the clean growth strategy.
I will be delighted to attend the APPG and I am happy to have the conversation. As hon. Members should know, my door is always open. I feel that collectively—I choose the word advisedly—we are much better together on this sort of technology. The more we set aside any political differences, the more we ensure that we are perceived as a great place for investors—that would be great.
Sorry, I have one point to finish on quickly. I was asked about the response to the Public Accounts Committee. We accepted a majority of its recommendations, but we did choose to reject that one because, for one thing, it was based on outdated cost analysis. We want to convince everyone—I hope we have done—of the Government’s commitment to move forward on CCUS. I do not feel that we need to demonstrate its importance because that is already accepted.
I want absolutely and sincerely to say how impressed I am with the work of the Teesside Collective, which has made an exceptionally powerful case to be the first place to move forward with this technology. Discussions are very active, but it would be a bold Minister at my level who set out funding commitments ahead of the publication of the industrial strategy or the Budget. However, the case has been made, and made so well that—forgive my lapse into urban slang—I wonder whether “Teesside Massive” might be more appropriate than Teesside Collective. It is a powerful force, and it is wonderful to see so many colleagues from all parts of the House making the case.
Vauxhall (Redundancies)
Claire Perry Excerpts(6 years, 6 months ago)
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Justin Madders (Ellesmere Port and Neston) (Lab)
(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on the announcement by Vauxhall to move staff in Ellesmere Port from two production shifts to one in early 2018, resulting in 400 redundancies in the next few months.
The Minister for Climate Change and Industry (Claire Perry)
Just over 53 years ago, the first Vauxhall Viva rolled off the production line at Ellesmere Port. Since then, seven generations of Astra have been built at the port. Most recently, the plant secured the contract for the mark 7, primarily based on the productivity and co-operation of the local workforce. That is why it is particularly disappointing to hear that Vauxhall is considering voluntary redundancies of up to 400 staff at the Ellesmere Port plant.
As we said last week, this is a concerning time for families, particularly in the run-up to Christmas. I assure the hon. Gentleman and other right hon. and hon. Members that, once again, the Government are standing by to do all we can to support those affected. The Department for Business, Energy and Industrial Strategy is continuing to speak with the company, the unions and the wider supply chain and the Department for Work and Pensions is standing by to provide advice and support to those affected.
I will address three points. First, I will set out what is actually happening to try to reassure people who may be affected by the announcement today. Secondly, I will give some background to what I understand are the reasons for it happening. Thirdly, I will put the announcement in the broader context of the automotive industry.
Today, I have spoken to the head and deputy head of Cheshire West and Chester Council, the chief executive of the local enterprise partnership, the general secretary of Unite the union and the chief executive of Vauxhall UK. The consensus view is that this is due to a downturn in the sale cycle, particularly that of the Astra model, and the company is working through questions about the plant’s overall competitiveness.
I am told that workers at the plant have been informed. The statutory consultation period will now take place and no final decisions will or should be taken until it has been completed. The company is hopeful that reductions can be managed on a voluntary basis, and we will continue to work closely with it on its planning.
I was pleased to hear today from the leader and deputy leader of the local council that a redundancy action support plan, which has been used before, will be put in place and will involve the LEP, the council and the Department for Work and Pensions all working together. Given that many of the people working in the plant travel across the border from Wales to their jobs every day, it is particularly important to note that the Welsh Government have been involved and stand by, ready to support any activities.
Given how many skilled workers may be affected by the announcement, we are particularly keen, as we discussed last week, to ensure that those skills are not lost to the industry. I have asked that the Government’s talent retention scheme be deployed, if appropriate, and both the company and Unite the union have agreed that that would be helpful and will agree to work with us. As I have said, I understand that this is a particularly troubling time and we are all absolutely concerned to minimise worries, particularly in the run-up to Christmas.
As I have said, I am told that this is happening because the C-segment class, in which the Astra vehicles sit, is not selling brilliantly across Europe and, in particular, the sales forecast for that model has not been as desired. Therefore, a decision has been taken to maintain the competitive position of the plant, and that announcement is being made today. The Secretary of State and I have consulted the company extensively on its future plans, both for the plant in Elsmere Port, particularly given its long and illustrious history, and for the company and its footprint in the UK.
That brings me to my third point about the broader context. As we have seen with many other companies, the technology in the auto sector is pivoting away from the traditional models, towards electric, potentially connected and autonomous vehicles. We are doing all we can to support manufacturers in that shift, and to position the UK as the leading place for those decisions and investments to be taken.
We have already delivered more than £500 million of public and private money through the Advanced Propulsion Centre. We will spend £1.25 billion of Government investment over the next five years to support that. The Faraday challenge is particularly important—we have invited all operators to contribute to it—and will help us ensure that we are the leaders in developing the electric battery technology of the future.
Of course, the auto industry has been an incredible success story. Thanks to the workers in the plants, we now have the highest productivity levels in Europe and sales of cars made in the UK are up 70% since 2009. It is a huge success story and we have generated many exports.
All of us in this House should think really hard about the message we are sending to those looking to invest in this industry in the UK—[Interruption]—and back the fact that we have highly productive plants and highly skilled workforces. Regardless of the changes that may happen in this sector, this is the place for auto companies to invest in the future. Perhaps Members who want to chunter otherwise should think about the messages we are sending to those investors.
Another important point—
Mr Speaker
Order. I am sure there are a lot of important points that could be made, but I gently say to the Minister that she has exceeded her allotted time by two and a half minutes. I think her other important point can either be neatly shoehorned into one of her, I hope, pithy replies, or it can be put in the Library, where in the long winter evenings that lie ahead colleagues will be free to consult the relevant material.
Mr Speaker
No, the hon. Lady has finished for now. We will hear from her again, probably before very long, but what I am trying gently to say to her is that was taking too long. I call Rebecca Pow—[Interruption.] Order. It is so long since the start of the ministerial reply that I had forgotten that we have not yet heard from the hon. Member for Ellesmere Port and Neston (Justin Madders). We shall hear from him first.
Mr Speaker
That was commendably within time, and a good example to other colleagues on both sides of the House.
Claire Perry
I absolutely assure the hon. Gentleman that we stand ready to work with him and his colleagues, the local LEP, the local council and anyone else, including the unions, to make sure that we have a good outcome and also an investment outcome for the future. As he will know, there is a huge amount of cross-party consensus on our industrial strategy and our clean growth strategy. The resulting confidence is shown by the fact that over the past few months we have seen some very significant investment news from auto industries in Sunderland, in Burnaston in the east midlands, and in Oxford. There is a vote of confidence: let us make sure that it continues.
Rebecca Pow (Taunton Deane) (Con)
Does the Minister agree that the UK automotive industry has in fact been a huge success story? Can she give assurances to PSA and others—I have companies in my constituency that make parts for cars, so this is very important to them, too—that this Government will provide, with their industrial strategy, a framework that ensures there is a major emphasis on the automotive industry as we go forward, particularly in the new technologies such as electric cars, other electric vehicles and battery storage, to mention just a few?
Claire Perry
My hon. Friend makes a compelling case. It has indeed been a success story, but I suspect that is not much comfort for those people going home tonight and discussing this over the tea table with their families. That is why we want to make absolutely sure that this country is the place for long-term investment. We know that this has happened as a result of the sales cycle, which has been disappointing for this car. We want to make sure that longer-term investment decisions in Ellesmere Port and other parts of the industry are backed up and supported and that this is the place to keep doing business in the auto sector.
Rebecca Long Bailey (Salford and Eccles) (Lab)
I thank my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) for securing this urgent question.
As we know, Vauxhall has announced that 400 jobs are potentially to be lost at the Ellesmere Port plant, only a few months after being bought by PSA Group. The Opposition warned at the time that Vauxhall’s UK plants and the 40,000 people employed in the wider supply chain could be significantly at risk. In response, the Secretary of State said:
“The Prime Minister and I have been engaged in discussions…to ensure that the terms of the agreement can give confidence to Vauxhall’s UK workforce now and for the future.”—[Official Report, 7 March 2017; Vol. 622, c. 570.]
Can the Minister confirm whether those discussions have been ongoing, and if so, what was their outcome? What conversations has she had with Vauxhall regarding the decision to move to a single production shift? It has been reported in the media that
“PSA made clear that future investments in the plant were on hold until negotiations on the UK’s future with the European Union had become clearer.”
Can the Minister therefore confirm whether PSA has sought Nissan-style assurances from the Government’s Brexit strategy? That has been much debated and discussed in the press, but we have not had any confirmation. If that is the case, what were those assurances and when were they given? If it is not, can she explain why the Secretary of State stepped in to support Nissan and, reportedly, Toyota, but not Vauxhall? Does she accept that such a case-by-case approach is the very antithesis of an industrial strategy and that the Government’s shambolic handling of Brexit negotiations is, quite frankly, undermining British manufacturing and all who are reliant on it?
Finally, will the Minister confirm—I am not content with the responses we have had so far—that she will give PSA and other manufacturers a clear signal today that the Government are supporting the sector throughout the Brexit process, whatever the outcome may be?
Claire Perry
As my right hon. Friend the Secretary of State said at the time, and as has been said again, the company made a commitment to keep the plant open, both at the time of the acquisition and at subsequent points. We believe that the company stands by that.
The hon. Lady asked whether there is dialogue. There is ongoing dialogue, as I mentioned in my opening remarks, with the company—we had another conversation with it today about what exactly this means—with those in the broader area supporting the workers and with the unions. It is incredibly important that we are all joined up on this.
I entirely reject the idea that we do not have a joined-up strategy when it comes to the auto sector. We have turned around a sector that was on its knees in 2008-09. Under this Government, it has been turned into one of the country’s major investment and export stories, and we continue to invest for the future. As I have said, some models will do well and some will not. Companies need to know that this is the best place to invest for the future, so that the Ellesmere port plant can continue to be, as it was in 1964, a flagship manufacturing plant and so that we can retain high-skilled jobs in the UK and in the area.
The hon. Lady asked whether we are sending a clear signal. We continue to send a clear signal to this company and others that we will stand by them as the future evolves, to make sure that we are not left in the slow lane of technological innovation, but that we lead the world. We will reassure companies as much as possible about the certainty that we require from the Brexit negotiations—namely that, as my right hon. Friend the Secretary of State and I have made incredibly clear, we should have the closest possible relationship with the single market.
Jeremy Lefroy (Stafford) (Con)
Is my hon. Friend working together with the company and local government to ensure that the skills of those highly-skilled people who may, sadly, lose their jobs in the next few weeks and months will be retained in the area and built on? One thing that we learned from Germany in the late 2000s, during the great recession, is that if those skills are retained in the area, it will be possible to boost not only other companies but Vauxhall if it begins, as we all hope it will, to take on people again in the future to work on other models.
Claire Perry
My hon. Friend is absolutely right. It is vital that we maintain those skills. It is worth noting that there is a significant cluster of other businesses in the region, which is home to Bentley Motors, Jaguar Land Rover, Getrag Ford, Toyota’s engine plant and Leyland Trucks. It is really important that we continue to invest in those skills to minimise job losses and to ensure that the country does not lose the talent that people have built up over the years.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
At the heart of this announcement, there are hundreds of families who are now worried about their futures. They will need more from the Government than warm words, so the Minister should ensure that they get the meaningful support that they need for their future.
Although the parent company has cited declining market share as a reason for its decision, it is also quoted as saying that it halted UK investment plans because of the Government’s lack of
“visibility on the future trading relationship with the EU”.
Figures show that direct foreign investment has vaporised in the UK. Instead of being given a level playing field —let alone the possibility of market advantage—business, workers and communities continue to be let down by this long and humiliating Brexit chaos. Will the Minister admit that to secure the future of jobs and investment, the only sensible option is to remain in the single market and the customs union?
Claire Perry
As I have said, I do not think that anyone wants us to re-run the Brexit debate. We need to get on with this and make sure that the outcome—it represents the majority view in the constituencies that the majority of Government and Opposition Members represent, so we must deliver on it—is the best possible result for the workers of Ellesmere Port, the workers that support the industry and workers right across Britain’s industrial and manufacturing base.
Sir Desmond Swayne (New Forest West) (Con)
We are exporting automobiles very successfully to the United States against a 10% tariff. How much better would we do with free trade?
Claire Perry
My right hon. Friend invites me to comment on the estimates held by Her Majesty’s Treasury, but I can tell him that we are one of the major exporters of automobiles in Europe and around the world, and we need to maintain that. Indeed, we make and export one in five of the electric vehicles driven on the continent, so we are already pivoting towards that new technology. Let us make sure we get more investment, so that we can continue to employ more people in the future.
Mr George Howarth (Knowsley) (Lab)
The Minister rightly praised the high levels of productivity and the skills of the workforce, and she mentioned—again, quite properly—the Government’s industrial strategy, but what sort of industrial strategy is it that takes no account of the changes that have taken place in our currency since the referendum and, more importantly, what account does it take of our deteriorating and chaotic future relationship with the European Union?
Claire Perry
Focusing on today’s announcement, my understanding is that domestic sales of the Astra have been the problem, not sales in Europe. The supply chain to the auto industry—the steel sector—has of course done rather well from the currency move, which has benefited many people working in other areas. We need to focus not on the vagaries of long-term currency movements, but on the long-term support we collectively give to this industry and the investment the Government can make in the technology of the future.
Kevin Foster (Torbay) (Con)
The Minister may be aware that, when I was a councillor in the midlands a decade ago, we faced the challenges affecting Jaguar Land Rover at that time and the potentially dire warnings—[Interruption.] Well, we need only look at where it is today to deal with that heckle. What reassurance will the Minister give me that this company will be supported to move towards the sort of success that Jaguar Land Rover now enjoys, creating thousands of new jobs, despite the scepticism of Opposition Members?
Claire Perry
I commend my hon. Friend for his experience. Again, there are frequent, regular and detailed calls about the company’s long-term strategy with regard to the UK and investment in this highly successful and very productive plant and in the people who work there. I also want to point out that the Ellesmere Port enterprise zone and the cluster of businesses around it has been incredibly successful.
Claire Perry
The hon. Gentleman shakes his head, but I am told by the head of the local enterprise partnership and the local council that it is, so perhaps he should consult a little more widely. I think that was a bit of low blow. This is about ensuring that we have the right support for the industry, that we have a thriving supply chain and that there are the best possible conditions for them to thrive and grow.
Christian Matheson (City of Chester) (Lab)
It did not take PSA long to renege on the assurances about investment that it gave the Secretary of State just a few months ago. Does the Minister accept that the workforce and the trade unions, over three successive new model rounds, have done everything that has been asked of them by the company and have achieved a level of performance that exceeded previous levels? May I suggest that sending in DWP officials is not the response that the Government should be making now? There should be a strong, robust response from her own Department, telling PSA, “It’s not on.”
Claire Perry
I am happy to agree with the hon. Gentleman that there has been an incredible level of performance by the people working in the plant. Indeed, Tony Woodley, a long-term member of the union from this plant who sits on the Automotive Council, just cannot speak highly enough about what has been achieved. [Interruption.] I have met him, because I chair that forum. Indeed, I spoke to Len McCluskey only today to discuss this situation.
We have to understand that when sales of models do not pan out as projected, there will inevitably be adjustments to a company’s performance. We have to make sure that we put in place the long-term investment framework, give the company the assurances it needs to invest—as I have said, it has committed to keeping the plant open—and attract the next wave of technology to these shores, rather than see it go elsewhere.
Mr Philip Hollobone (Kettering) (Con)
To lose 400 of the 1,800 local jobs is devastating news for Ellesmere Port, but I am struggling to understand the reasons given by the plant’s French owner, PSA. The Government have said that the UK automotive sector is the most productive in Europe, with 50% higher productivity than overall UK manufacturing productivity, and that last year saw a 17-year high in the number of cars built in the UK, yet PSA has said:
“Current manufacturing costs at Ellesmere Port are significantly higher than those of the benchmark plants of the PSA Group in France.”
How can the Government’s statement be reconciled with the attitude of the French owners?
Claire Perry
I have not looked in detail at the operation and fixed-cost production, but I suspect that if the plant is running below full capacity—as we know it is—because sales are weaker than planned, the cost per unit produced will be higher. That is why, before we have any further conversations with the company about the long-term prognosis, we need to be clear that while there may be blips in sales of particular models, we want PSA and other auto companies to keep their investment coming to the UK.
Rachel Reeves (Leeds West) (Lab)
Eighty per cent. of the cars produced at Ellesmere Port are for mainland Europe and 75% of the parts to make the cars come from mainland Europe. What assurances can the Minister give that, when we leave the European Union, there will not be additional customs checks or barriers to trade, because if there are, more jobs will inevitably be lost, not just at Ellesmere Port, but elsewhere in the car sector and in manufacturing more widely?
Claire Perry
The hon. Lady and I are in complete agreement about the need for a frictionless and close relationship with the single market. However, I think that we would both welcome the fact that, since 2011, the value of parts that UK manufacturers source from the UK supply chain has increased from 36% to 41%. Of course, one of the opportunities for manufacturers is thinking about onshoring production that they would currently buy overseas. The hon. Lady and I want the best long-term outcome, but the Government want to make it clear that the supply chain is as supported as possible for the future, through the Brexit negotiations and beyond.
Nigel Huddleston (Mid Worcestershire) (Con)
Will the Minister reassure me that unfair or inconsistent application of the state aid rules is not putting British car manufacturing at a competitive disadvantage?
Claire Perry
I am happy to give those assurances. Everything we have to do needs to be put through the prism of state aid rules. We were one of the great proponents of a level playing field. We have always played by the state aid rules in a way that other countries perhaps do not. Everything that we do has to meet those tests. It does that and will continue to do so.
Sir Vince Cable (Twickenham) (LD)
When I negotiated in Government alongside the trade unions in the discussions with General Motors to save and then expand the plant, it was clear that the whole business model for Vauxhall car production—and van production at Luton—depended on the common standards in the single market and the common tariff in the customs union. Since the Minister cannot guarantee either, what equivalent measures will she put in place?
Claire Perry
The right hon. Gentleman knows that that is absolutely part of the negotiations, but we are considering one of more successful and vital industries, and the voices of those in the sector are heard loud and clear in my ears and those of the Secretary of State, and very publicly. If we want to protect the jobs and get the investment that means our children and our grandchildren will work in those plants, we must secure the best possible deal for UK car manufacturers and the UK economy.
Alison McGovern (Wirral South) (Lab)
The Minister said earlier that the Government were standing by to help. She is correct: her predecessors in the job certainly stood by. When we asked for help with business rates and when colleagues across the House asked for help with energy costs, they stood by. For the good of all my constituents who work in the supply chain and directly for Vauxhall, will the Minister do a little better and commit to membership of the single market and customs union, which will keep them in their jobs?
Claire Perry
I admire the hon. Lady for speaking so passionately for her constituents, many of whom commute daily to work in the plant. She is more than welcome to come to any of the conversations we have with the auto industry about long-term investment here. We need to secure investment for the future because the whole automotive world is changing and pivoting away from diesel and petrol towards different forms of technology. [Interruption.] The hon. Member for Bolsover (Mr Skinner) talks about pivoting, but I am afraid that that is the way the world is going and I am determined that Britain will be at the forefront so that we can capture investment for the future.
Of course, the plant has reduced numbers previously, and then built up again. I gently point out that when it comes to practical help for those who might be affected and for whom this is clearly a worrying time, the LEP, the local council, the Department for Work and Pensions and Unite are ensuring that support is there and that people can find work quickly, if that is what they desire. There is also the talent retention scheme. We do not want to lose the skills that have been built up over the past 50 years for the industry and the country. It is vital that we work together to save those.
David Hanson (Delyn) (Lab)
Over 450 of the people who work at Ellesmere Port live on the Welsh side of the border, only 12 miles away. I am pleased that the Minister has said that she is meeting with the Cabinet Secretary for Economy and Infrastructure in Wales, Ken Skates, to discuss that. Will she give a commitment today to ensure that he is involved in discussions about the three big issues, which are cost, the performance in Europe and the clarity that the company seeks from the Government about future membership of the single market and a tariff-free economy?
Claire Perry
The devolved Administrations are of course rightly involved in all those conversations. I was heartened today to hear the head of Cheshire West and Chester Council say that they were working closely across the border, because they understand that so many people working in the plant commute across the border every day. It is interesting that that is perceived as the economic area, which crosses the border. It is absolutely right that we should not let artificial boundaries get in the way. On the issue of artificial boundaries, all of us in this House want a thriving automotive industry. As we have done with other strategic decisions, the more that we are all on the front foot on this together—showing that we are the place for future investment, rather than taking lumps out of each other across the Dispatch Box—the better.
Kelvin Hopkins (Luton North) (Lab)
I would remind the hon. Lady that we are substantial net importers of motor products from the EU and especially of high-value-added components in the supply chain. Now that we are leaving the EU, will the Minister and the Government look to using state aid and public procurement programmes to benefit British motor manufacturing and Vauxhall in particular?
Claire Perry
I pay tribute to the many people who I am sure live in the hon. Gentleman’s constituency who work in the other major Vauxhall plant and who I know are as committed and productive as those in Ellesmere Port. He is absolutely right, and this is why we have to have the negotiation and why we have to come up with a good deal and ensure as seamless a relationship across borders as possible. He will know that 65% of the Luton plant’s production is exported to the EU. We want to make sure that continues.
Maria Eagle
Thank you, Mr Speaker; it is not helpful to call it a contest.
The Minister keeps saying that she wants frictionless access to the single market, but most of her colleagues in Government, in particular many in the Cabinet, are talking up the idea of leaving with no deal and walking out of the single market and the customs union. Given that the Ellesmere Port plant is weakened by going to a single shift and by losing skilled workers, as is inevitable, does she not understand that the general uncertainty caused by the lack of progress in the Brexit negotiations puts the plant at even greater risk in future of being fully and totally closed?
Claire Perry
I am not sure who the winner was in that contest, but the hon. Lady is absolutely right. She should not listen to the noises off, which people seem to be obsessed by, that are reported to come out of the Cabinet. There is an absolutely obvious view that we have to get a deal. We will get a deal that works for the UK and for businesses such as this in the UK, and we will have the opportunity over the next few days and weeks in the debate on the repeal Bill to show that we are unified on this and want to stand up for the businesses and those they employ in our constituencies.
Ms Angela Eagle
I have constituents who will be losing their jobs as a result of these extremely worrying announcements. The Minister has said that the Government are standing ready to help, but the future of the plant would certainly be enhanced if the plant were a front runner for a new model. What are the Government doing to ensure that it is?
Claire Perry
That is absolutely part of the conversation. I understand from listening to the general secretary of the union today and from talking to the company that decisions about the new model have to be taken in the next few years. It is incumbent on us all, therefore, to make sure that this is perceived as the best place to build that model. That is how to protect, preserve and enhance the jobs and productivity of the plant.
Margaret Greenwood (Wirral West) (Lab)
I refer Members to my entry in the Register of Members’ Financial Interests. Many in my constituency will be devastated by the news of the threatened job losses at Vauxhall’s Ellesmere Port plant. In the Secretary of State’s statement on Nissan in Sunderland on 31 October last year, he said that the Government pledged to work vigorously with the car industry to ensure that more businesses and supply chains could locate in close proximity to major manufacturing sites by upgrading sites and providing infrastructure. There is huge scope for that around the Ellesmere Port plant. He also indicated that in the EU negotiations the Government would work to ensure that trade between us and the EU
“can be free and unencumbered by impediments.”—[Official Report, 31 October 2016; Vol. 616, c. 680.]
What progress can the Minister report on those two commitments?
Claire Perry
If the Secretary of State were at the Dispatch Box, he would stand by all those comments. The hon. Lady is right. The chief executive of the LEP was at pains to point out the opportunities available from working together within the enterprise zone at Ellesmere Port in terms of reducing energy costs, which I know the hon. Lady cares about, and enhancing the business environment. She is right, therefore, that local solutions can help with this problem. Fundamentally, however, we stand by, we want to support the company and the industry and we want to make sure that these investment decisions are made as quickly as possible.
Richard Burden (Birmingham, Northfield) (Lab)
I put it to the Minister, though, that she is still glossing over the broader context, particularly given that the chief executive of PSA has himself said that a key consideration in the long-term future of Ellesmere Port is “visibility” of the UK’s future trading relationship with the EU. Is that uncertainty not also filtering through to the car market in the UK, where new car registrations were down 9.3% in October and the Society of Motor Manufacturers and Traders has said that economic and political uncertainty is a key consideration? Will she not accept what she has been told time and again—that ambiguous and contradictory messages from the Government about Britain’s future as regards the Brexit negotiations are making a bad situation still worse?
Claire Perry
I accept that ambiguity is bad for investment—that applies right across the sectors—and that is why we need a deal as soon as possible. I point out, however, as I did at the start, that when this company, and indeed all these European companies, look across their manufacturing bases, they will see that British workers in these plants are the most productive in Europe. In the last 15 years, we have seen major investment in the industry, which is delivering both current and new models. It would be incredible if companies did not want to invest on that basis.
Mr Ben Bradshaw (Exeter) (Lab)
As my hon. Friend the Member for Birmingham, Northfield (Richard Burden) said, the company’s statement makes it clear that uncertainty over our future relations with EU is jeopardising future investment in the plant. The Minister is a reasonable person—she was one of a small band of brave Conservatives to rebel during the article 50 process—so I ask her to acknowledge that the Government’s boneheaded determination to leave the single market and customs union is already costing jobs, livelihoods and prosperity up and down Britain.
Claire Perry
Just to clarify, the company’s statement about this change relates to sales of the model, which are not reaching its forecast potential, but that is something that, with the best will in the world, can always happen if a company gets the design or marketing wrong. The House has to work together to deliver the best possible deal for the country in the EU negotiations, and that is what the Prime Minister and the Cabinet are doing—[Interruption.] I have avoided making any political points in this statement, but it would be nice to hear just one position from Labour that its Members felt they could get behind for longer than 24 hours.
Diana Johnson (Kingston upon Hull North) (Lab)
It is another week in Parliament, another set of job losses in the north and another Minister being forced to come to the House to explain what the Government are doing. What has happened to the Government’s northern powerhouse strategy?
Claire Perry
I remind the hon. Lady that urgent questions are always tabled about job losses, but I do not recall ever answering one about job announcements. We have the lowest level of unemployment in the country for 40 years and the highest level of employment among women and young people. It is a fact that overall the UK economy has been a huge jobs-creating success in the last eight years. However, there will always be bumps, concerns that come along, particularly for people who are worried. In the run-up to Christmas, this is a very worrying time. That is why I do not have to be forced to come to the Chamber; I am very happy to come here and try to reassure Members on both sides of the House and the constituents whom they represent.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
The Minister spoke about the widespread consultations and the need to send the right messages. Given the importance of the European single market to the motor industry—productivity and exports—what conversations is she having with Cabinet Ministers and Conservative Back Benchers? They are prepared to leave the European Union irrespective of our commitment to the single market. What messages does she think that that is sending to would-be investors in this crucial industry?
Claire Perry
I assure the hon. Gentleman that both my right hon. Friend the Secretary of State and I hear the messages loud and clear from the auto sector and, indeed, from the business community as a whole—from businesses large and small. My right hon. Friend is assiduous in ensuring that the voice of business is considered in every aspect of the EU negotiations. That is what we have been doing. We continue to work on the best possible deal for Britain, and we will get behind it.
Mr Gavin Shuker (Luton South) (Lab/Co-op)
Last week it was Monarch, headquartered in my constituency. This week it is Vauxhall, headquartered in my constituency. Yet the Minister did not once use the word “Brexit” during her statement. Does she believe that these redundancies are being caused primarily by a lack of consumer confidence stemming from the Government’s chaotic approach to Brexit negotiations, or by a lack of investor confidence stemming from the Government’s lack of competence and leadership on Brexit?
Claire Perry
I was not at the Dispatch Box to answer questions about Monarch, but I understood that it was a very troubled company that was burdened with debt, and other airlines have reported record passenger numbers over the summer. The statement that we made last week about BAE Systems concerned the delay in landing some important overseas orders, and I hope that the House recognised how committed the Department was to ensuring that those orders were delivered.
Let me say again that this is not about Brexit. It is about a lack of sales of a model that is sold both in the United Kingdom and in Europe, which is having a near-term impact on the shift pattern at this port.
Matt Western (Warwick and Leamington) (Lab)
Thank you for calling me, Chair. Let me begin by saying that I feel very much for the people and families who are affected by this announcement.
Earlier in the year, the Prime Minister sought reassurances about safeguarding jobs. Clearly that was all a bit “peace in our time”. This is not actually about petrol, diesel, electric or C-segment; otherwise, why has the plant in Gliwice, in Poland, not been affected by similar closures? Carlos Tavares, the PSA chief executive, has said that it is hard to decide on the group’s strategy owing to a lack of clarity over the UK’s plans to leave the European Union. The jobs—
Matt Western
Thank you for clarifying that, Chair. [Laughter.] Sorry—Mr Speaker.
May I suggest that the Minister speak to Professor David Bailey of Aston university, and find out more about the impact on the components business, which underlies the reason for seeking to reduce the number of jobs in the UK? It is about the supply chain and Brexit; it is not about the C-segment.
Claire Perry
Let me reassure the hon. Gentleman. I chair the Automotive Council for the Government. The council brings together vital representatives of the manufacturing companies that are based here and of the supply chain, as well as technology leaders and union representatives. I spend a great deal of time talking to representatives of the industry about what is affecting their businesses. This is exceptionally disappointing for all the families who may be having conversations over the tea table tonight, but it is due to a failure to deliver on the sales projections for the Astra. It is our collective job to ensure that the industry has confidence in the UK when it comes to investment in the future.
Ian C. Lucas (Wrexham) (Lab)
As chair of the all-party regional group covering this area and former chair of the Automotive Council, I recently attended a Toyota event celebrating 25 years of production at the nearby Deeside plant, and the message coming from the automotive sector in connection with all different types of production is that the lack of clarity from the Cabinet and Government on this issue is undermining the sector. That is the clear message from the industry, and this Government need to get themselves in order. Will the Minister speak to the Cabinet to ensure that the united line she is talking about is conveyed to them?
Claire Perry
Forgive me, but the hon. Gentleman may be a bit behind on his facts. In March of this year Toyota announced a quarter of a billion pounds of new investment to upgrade its Burnaston plant in the east midlands. In July BMW announced that it will be producing the electric Mini here. These actions and investments are safeguarding thousands of jobs in our constituencies, and we should all be proud of that.
Mike Amesbury (Weaver Vale) (Lab)
Foreign direct investment has fallen from a £120 billion surplus before the referendum to a £25 billion deficit after. Vauxhall is of course part of that figure. Does the Minister still think this is nothing to do with the disastrous Brexit negotiations?
Claire Perry
At some point we have to accept that we have to get through these negotiations, that the best way to do that is to show a unified face to Europe, and that the most important thing to do is secure the millions of jobs and the billions of pounds of investment we need to continue to grow. Frankly, it is a bit rich for the hon. Gentleman to be trying to make the case for the Government being divided on Brexit when his own Front Bench does not have a clue what its Brexit position is today, let alone yesterday.
Mark Tami (Alyn and Deeside) (Lab)
The future of Vauxhall and every other motor manufacturer in this country depends on gaining the next model. What message does the Minister think her chaotic Brexit policy is sending to the people in the parent companies who are making those investment decisions today?
Claire Perry
My strong suspicion is that all auto companies are thinking about the future models being partially or fully electric, and about how they might introduce self or autonomous driving capabilities. This Government have sent some pretty clear signals that we think that is the way we should go, partly for all the air quality benefits that brings. I think the hon. Gentleman should be celebrating the fact that this Government have committed a quarter of a billion pounds to the Faraday challenge, to get the next generation of electric vehicle technology together, and over half a billion pounds from the public and private sectors to make sure we lead the world in connected and autonomous vehicles. That is the future of the models in this country. The manufacturers understand that, and we need to get the investment to ensure that the jobs we are talking about today are protected.
Tom Brake (Carshalton and Wallington) (LD)
I urge the Minister to redouble her efforts to support staff. PSA flagged up concerns over the competitiveness of this plant. Can the Minister explain how the competitiveness of this and other UK car plants, which rely so heavily on just-in-time production, will be maintained, let alone enhanced, post-Brexit, once more burdensome customs rules kick in, risking turning just-in-time production into never-on-time production?
Claire Perry
The right hon. Gentleman will have heard me say several times during this urgent question that that is exactly why we need to make sure we have the minimal amount of friction in terms of the supply chain. Indeed, the UK percentage of the supply chain is rising, which can only be helpful as it is much better for logistics. We should all pay tribute to something the right hon. Gentleman referenced: the incredible productivity and skill level built up by the people working in this plant, which we should all be focused on, and which is why Britain continues to be the best place for automotive investment. We have wonderful workers in this and other plants, and we want to be investing to support them in the future.
EU Environmental Council
Claire Perry Excerpts(6 years, 7 months ago)
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The Minister for Climate Change and Industry (Claire Perry)
I will attend the EU Environment Council, which will take place on 13 October in Luxembourg.
Following adoption of the agenda, the list of “A” items will be approved.
Under legislative proposals, the Council will debate two proposals with the aim to get an agreement in the Council of Ministers:
A regulation of the European Parliament and of the Council on binding annual greenhouse gas emission reductions by member states from 2021 to 2030 for a resilient energy union and to meet commitments under the Paris agreement and amending regulation No 525/2013 of the European Parliament and the Council on a mechanism for monitoring and reporting greenhouse gas emissions and other information relevant to climate change. This is known as the effort sharing regulation (ESR).
A regulation of the European Parliament and of the Council on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry into the 2030 climate and energy framework and amending regulation No 525/2013 of the European Parliament and the Council on a mechanism for monitoring and reporting greenhouse gas emissions and other information relevant to climate change. This is known as the land use, land use change and forestry regulation (LULUCF).
Under non-legislative proposals, the Council will seek to adopt conclusions on the EU priorities for the third meeting of the United Nations Environment Assembly (UNEA-3), and on the preparations for the 23rd session of the conference of the parties (COP 23) to the United Nations framework convention on climate change (UNFCCC).
The following items will be discussed under any other business:
1. Reports on recent international meetings:
Sixth session of the meeting of the parties (MOP 6) to the convention on access to information, public participation in decision-making and access to justice in environmental matters (Aarhus convention),
Joint high-level segment under the meetings of the parties to the Aarhus convention and its protocol on PRTRs,
Third session of the meeting of the parties (MOPP 3) to the protocol on pollutant release and transfer registers,
First meeting of the conference of the parties to the Minamata convention on mercury (COP 1), (Geneva, 24-29 September 2017)
13th meeting of the conference of the parties to the United Nations convention to combat desertification (UNCCD COP 13)
2. A more transparent, more effective and safer assessment of chemical substances.
3. Importance, for the implementation of the Paris agreement, of good co-ordination and coherence between the integrated national energy and climate plans for 2030 and the long-term emissions reduction strategies, as well as of minimum quality, comparability and transparency standards.
4. 50th session of the international seminar “Science for Peace the World Over” (Erice, Italy, 20-23 August 2017).
The UK has also secured an additional AOB to encourage those member states who are ready to proceed with early ratification of the Kigali amendment to the UN Montreal protocol to protect the Earth’s ozone layer to do so in time for the 30th anniversary meeting of the parties to the protocol, in Montreal this November.
Last October, agreement was reached in Kigali to amend the protocol to phase down hydrofluorocarbons (HFCs) globally by around 85% by the mid-2040s. This could avoid up to 0.5 °C of global warming by the end of the century, making a major contribution to the Paris climate goal of a 2 °C limit. The amendment will come into force in 2019 as long as at least 20 countries have ratified by then.
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Clean Growth Strategy
Claire Perry Excerpts(6 years, 7 months ago)
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The Minister for Climate Change and Industry (Claire Perry)
The Government are today publishing the clean growth strategy—an ambitious strategy to cut emissions while keeping costs down for consumers, creating good jobs and growing the economy. This is an important component of our modern industrial strategy. We are also laying our responses to the Committee on Climate Change’s 2017 progress report to Parliament and publishing a suite of related documents.
Clean growth can make a real difference to people’s lives, from reducing energy bills and improving air quality, to supporting new technologies and boosting earning power in high-quality jobs.
We start from a position of strength. We have already made significant progress towards our legally binding 2050 target to reduce emissions by at least 80% against 1990 levels. We exceeded the target emissions reductions of our first carbon budget (2008 to 2012) by 1% of the budget level and we project that we will outperform against our second and third budgets covering the years 2013 to 2022 by almost 5% and 4% respectively.
The UK is a world leader in cutting emissions while growing the economy. Provisional statistics indicate that UK emissions in 2016 were 42% lower than in 1990 and 6% below those in 2015. At the same time, the UK’s GDP has increased by 67% since 1990 showing that a strong, growing economy can go hand in hand with reduced emissions. On a per person basis, this means that we have reduced emissions faster than any other G7 nation and led the G7 group in growth in national income over the period.
The global transition to a low-carbon economy offers huge growth opportunities which the UK is well placed to take advantage of as a core element of our industrial strategy. Our low-carbon sector already employs over 230,000 people directly and another 200,000 through supply chains. Analysis for the Committee on Climate Change estimated that the low-carbon economy has the potential to grow 11% per year between 2015 and 2030—four times faster than the rest of the economy.
While we have performed strongly to date, the task ahead is significant. The clean growth strategy sets out policies and proposals across the whole of the economy and the country including business, housing, transport, power, the natural environment and the public sector.
Low-carbon innovation is at the heart of our approach, with over £2.5 billion of Government investment from 2015 to 2021. This forms part of the largest increase in public spending on UK science, research and innovation in almost 40 years.
The clean growth strategy is an important milestone in the UK’s work to cut emissions and grow the economy. But it is not the end of the process. Clean technology is developing at a rapid pace and costs are falling faster than many predicted—for example, the cost of offshore wind has halved in two years. We look forward to working with colleagues across both Houses and the devolved Administrations, and with people and organisations across the country, to ensure the UK can continue to lead the world in clean growth.
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Clean Growth Strategy
Claire Perry Excerpts(6 years, 7 months ago)
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The Minister for Climate Change and Industry (Claire Perry)
I should like to make a statement on “The Clean Growth Strategy”, which we are publishing today. It contains 50 policies and proposals, of which 30 are brand-new announcements today. As the Prime Minister said in her foreword to the strategy:
“Clean growth is not an option, but a duty we owe to the next generation”.
My Department is dedicated to creating an economy that works for everyone through our modern industrial strategy. That means putting more money into research, development and innovation, investing in skills throughout the country and working with businesses to encourage growth in the areas where the UK has an advantage. It also means identifying and capturing the economic and industrial opportunities of the future. With the signing of the Paris climate agreement—an agreement in which UK leadership played a pivotal role—there is an unstoppable global shift toward clean technologies, infrastructure, industry and jobs. This offers UK businesses and innovators a huge opportunity to shape the future of clean growth and to capture the benefits, so we can have hundreds of thousands more good jobs right across the country.
We have already shown that action on climate change and economic growth go hand in hand. Since 1990, we in the United Kingdom have grown our economy by almost 70%, and in that time we have reduced our emissions by over 40%, which is the best performance in the G7. The latest research shows that the UK was the fastest of any country in the G20 to decarbonise in 2016. This achievement shows that a low-carbon transition can go hand in hand with economic growth, and it is our belief that the UK can lead the world in creating clean technologies, jobs and businesses. This is the core message of the clean growth strategy. It will sit at the heart of our industrial strategy and will build on the successes I have already mentioned to benefit businesses, consumers, the air we breathe, our health and the climate.
For example, it will help British businesses improve how they use their energy, by aiming to increase their energy productivity by at least 20% by 2030, worth at least £6 billion for our British businesses. As announced today, we will establish an industrial energy efficiency scheme to help large companies cut their bills, and we have also announced today a new commitment to demonstrate international leadership in carbon capture, usage and storage, including with new investment in leading-edge innovation to drive down costs. Significantly, there are only five carbon capture and storage plants operating globally that are not reliant on using the CO2 for enhanced oil recovery. The technology can be better and the costs can be lower, and we intend to lead that challenge.
The plan announced today will also make our homes warmer and cheaper to run, as we invest about £3.6 billion to upgrade around 1 million homes through the energy company obligation and, as I announced today, extend that support out to 2028. Also today, we are setting a new ambition that every home in the country will reach an EPC—energy performance certificate—band C by 2035, where practical, cost-effective and affordable.
On our roads, our strategy will help reduce air pollution by increasing the number of electric vehicles and creating the best charging infrastructure in Europe. As announced a few weeks ago—the gun was jumped—we have also now set a plan to end the sale of new petrol and diesel cars in this country by 2040.
But just having the Government making these changes is not enough on its own. We must ensure that British businesses, innovators and entrepreneurs capture the economic opportunities of this transition, both at home and abroad. There are already 430,000 jobs in low-carbon businesses and their supply chains right across the UK. The most recent research shows that the UK’s low-carbon economy is growing rapidly, by between 10% and 12% a year from now until 2030, four times faster than growth in the broader economy as a whole. By that estimate, in just 13 years, we could see up to 2 million more UK jobs in this sector and increase our exports by up to £170 billion each year. We need to capture that opportunity. That is why this Government are making such a significant increase in spending on research, development and innovation—the biggest increase in 40 years—and today, for the first time, in the clean growth strategy I have shown how we are spending £2.6 billion of that innovation in supporting the transition to a low-carbon economy.
For example, through the Faraday challenge, we are investing nearly £250 million in battery technology, to guarantee that the UK leads the world in the design, development and manufacture of batteries for both electric vehicle development and distributed energy storage. The strategy announced today builds on that with new financial support for innovations in heating, energy efficiency, industrial fuels, and carbon capture and storage. I strongly believe that these are the right decisions to make and now is the right time to make them.
The success I am talking about today is built on many years of work, strongly supported by colleagues right across the House. I particularly want to highlight the contributions of the right hon. Member for Doncaster North (Edward Miliband), who is no longer in his place, and the right hon. Member for Kingston and Surbiton (Sir Edward Davey), and thank them for their efforts, both in government and opposition, which were pivotal in getting us to where we are today. I also thank the many other Members across both Houses who have doubled down and faced this challenge.
I also pay tribute to the former Prime Minister and former right hon. Member for Witney, who sustained his support for action on climate change despite the difficult economic circumstances we inherited. Maintaining a political consensus on the need for ambitious action both across Westminster and our devolved Administrations has been a critical part of the UK’s success to date.
Time and again, we have shown how the United Kingdom is a world leader in tackling climate change. We were the first country in the world to set a statutory Climate Change Act, which binds us to our five-year carbon budgets and has committed us to cutting our greenhouse gas emissions by at least 80% by 2050. I set out today in the strategy how we are on track to over-deliver on our carbon budgets 1, 2 and 3 and well on track to meet our requirements for carbon budgets 4 and 5.
By putting the measures in our clean growth strategy into action, we not only continue our work in cutting emissions, but we can also cut consumer bills, drive economic growth, create high-value jobs right across the UK and improve our quality of life. It is a win-win opportunity: it is ours for the taking, and I commend this statement to the House.
Dr Alan Whitehead (Southampton, Test) (Lab)
I welcome the final publication—after, we have to agree, many delays—of “The Clean Growth Strategy”, and I agree with the Minister that the UK has been, as it should be, towards the front of the pack in action to decarbonise our economy. I also agree that the responsibility for getting us to that position lies with the Members to whom she has paid tribute today. I also welcome the Minister’s clear position that she is fundamentally onside on the need to radically decarbonise our country to meet climate change imperatives—unlike, I have to say, many of her Back-Bench colleagues. I warmly welcome her efforts in this direction and clear commitment to the tasks we have to undertake.
I also welcome many of the additional policy directions that are contained in the document. I particularly welcome the commitment to further rounds of offshore wind to assist with the decarbonisation of the energy sector, and what I hope will be an intention to return to the development of onshore wind. These new policies and commitments, among many others, are important because it is clear that on present policies the UK is set to miss its key targets for decarbonisation, set out in the fourth and fifth carbon budgets, which this House has endorsed. That is surely the point of judgment for the efficacy of this plan: does it do what it is required by the terms of the Climate Change Act 2008:
“The Secretary of State must prepare such proposals and policies”
as
“will enable the carbon budgets that have been set…to be met”?
On that measure, it is clear from the report that the Government have failed in that task.
Even with the additional measures set out in this plan, as the report states on page 41, it is estimated that the UK will over-emit at the conclusion of the fourth carbon budget by 6% above that budget and at the conclusion of the fifth carbon budget by 9.7%. What additional proposals does the Minister have in mind to rectify that deficit—or does she consider that somehow we will get there without anything other than what is in this plan?
On getting there, does the Minister recognise just how far behind in decarbonisation we are in the heat sector? Does she consider that the funding set out for the renewable heat incentive up to 2021, which appears to be a restatement of what is already there, and of the energy company obligation, which appears to be a time extension of present funding for energy efficiency, will get us anywhere near the indicative heat decarbonisation and energy efficiency carbon reductions set out by the Committee on Climate Change in the fifth carbon budget?
The Minister will recall what emphasis the Committee on Climate Change placed on the role of carbon capture and storage. She mentioned in her statement that the Government now appear to be waking up once again to the idea that carbon capture and storage is a good thing. While I welcome that apparent renewed interest in actually doing something about the establishment of CCS, both for energy generation and energy-intensive industries, does she consider that taking away £1 billion of funding for the development of CCS, as the Government did in 2016, and replacing it with up to £100 million of development funding in this plan will get us anywhere near the level of CCS use that the Committee on Climate Change recommends?
The Minister will be aware of how very important the traded sector is in the UK in terms of carbon emission reductions. The traded sector is kept on track by the EU emissions trading scheme. In her report, the long-term importance of the EU ETS is underlined, yet we currently have no certainty that the UK will remain within the EU ETS on Brexit, or that there will be any commitment, if not, that a substantive and internationally connected UK trading scheme will be established that can continue to keep the traded sector on target. Does she agree about the importance of the EU ETS in this sector? Can she commit today to work towards continued UK membership of the EU ETS in the future?
I agree with the Minister that a low-carbon transition can go hand-in-hand with economic growth, and she has today and on other occasions emphasised that the use of industrial strategy to drive decarbonisation, while providing for jobs, supply chains and manufacturing in the process, is a very important fundamental platform for our decarbonisation approach generally.
Labour has committed itself to attain the key mission of industrial strategy that 60% of all energy—all energy, including electricity and heat—would arise from renewable and low-carbon sources by 2030, the middle of the fifth carbon budget. That would in itself ensure that the targets of the fifth carbon budget were met. Will the Minister today endorse the setting of that target and work with the Opposition to bring it about?
Claire Perry
I thank the hon. Gentleman for his refreshingly scientific comments. It is always a pleasure to discuss this subject with him. I will try to answer some of his questions.
I welcome what I think was a compliment; of course I am very committed to this agenda, but I have to say, and he can perceive this from the fact that the Prime Minister wrote the foreword of this document, that from the Prime Minister downwards—she also mentioned this at the United Nations Assembly a few short weeks ago—and right across the Government, we are all completely committed to this agenda, because not only is it the right thing to do, but the opportunities that arise from it are enormous. I would like to reassure him about that.
I want to spend a moment on what the hon. Gentleman points out is the carbon budget page—page 41. To reassure him, some of the estimates we have for our delivery of carbon savings from the policies and proposals in the plan today are very well advanced, and we have included carbon savings from about 30% of the new proposals today. Some of them, of course, we have to continue to work to shape, particularly in the light of issues like the Hackett inquiry around the Grenfell review of building regulations and fire safety, so we will be sequencing our consultations in accordance with such work, and that will enable us to set additional reductions in carbon budgets once we have further developed those policies.
I want to reassure the hon. Gentleman, however, and I have helpfully set out on page 41 the fact that, should we have to, and with the consent of the Committee on Climate Change, we can use flexibilities. My intention is that we do not have to use them. Because we have over-delivered, and will over-deliver so substantially on current projections, up to carbon budget 3, more than enough will have been built up in terms of flexibilities to cover carbon budget 4 with more left over. My sense is that, given the ambition, the pace of change and the extraordinary changes in the cost and adaptation of new technology, we will comfortably exceed these budgets. But he is right that we have a statutory duty to report on this. This is a very good example of legislation making politicians focus on what is important, over the political cycle. I thank him for his ability to question, which enables me to confirm those points.
The hon. Gentleman discussed the EU ETS. I am actually off to Luxembourg tomorrow. The UK’s piloting of the emissions trading scheme was absolutely vital in designing the scheme. We remain a very important partner, and I have been absolutely clear that we will do nothing that in any way disadvantages our own economy or that of our EU partners, as we negotiate the new terms of our relationship with Europe.
I admire the hon. Gentleman’s shadow ambition for renewable energy, but I want to be clear today that when we look at new technologies, it is important that we apply the triple test. First, the technology must decarbonise sufficiently; secondly, it must be affordable—we have to see a very good cost trajectory; and thirdly, it must build capabilities that Britain can build on, so that we can export and grow our own economy.
I would be delighted to sit down over a cup of coffee and review the hon. Gentleman’s plans for renewables and see whether they meet those tests. I think those are very appropriate tests, through which all technologies should be reviewed as we go forward.
Richard Benyon (Newbury) (Con)
My hon. Friend the Member for Taunton Deane (Rebecca Pow) produced a series of essays for the Conservative Environment Network recently. I do not know whether the Minister got a chance to read one on the circular economy by—by me, actually. [Laughter.] If she does read it, she will realise why I am so happy today to see that hardwired across the Government is an understanding that resource efficiency is not just something that we require of businesses, congratulating them when they achieve it, but that we must lead, and lead not only in this country but globally. I pay great tribute to what she has produced, but we should ask ourselves, “What more can we do as a Government to encourage business and Government to manage our resources more efficiently?”
Claire Perry
Of course I always assiduously read anything written by my right hon. Friend and neighbour. Like him, I welcome the fact that as part of our 50-point policy and plans we have No. 41, which is to develop a world-leading resources and waste strategy, on which I am working closely with my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs. My right hon. Friend the Member for Newbury (Richard Benyon) is absolutely right: it is right for the planet and it is right for business that we do this, so we will progress on that.
I have read the excellent document produced by the Conservative Environment Network, and I want to remind the House that the first person who raised the issue of man’s activities—men’s and women’s activities—on the impact of the climate was, of course, Mrs Thatcher, who understood the core Conservative principle that you take care of what you inherit and try to pass it on to the next generation in a better form. I am proud to be the latest person to carry that flag for Conservative environmentalism in this House.
Alan Brown (Kilmarnock and Loudoun) (SNP)
It is interesting to hear that Maggie Thatcher’s policy of shutting down coal mines and importing coal was down to some strategic vision about climate change. On a serious note, however, I thank the Minister for early sight of the statement and welcome the document’s publication, although she will understand that I have not yet had a chance to read it from cover to cover.
The clean growth plan clearly needs to be strategic and must bind other Departments. As the shadow Minister said, it must tie in and deliver the desired outcomes of the carbon budget and our climate change commitments. That is the spirit and intention of the strategy, but the Government need to ensure that that actually happens, so Treasury commitments are necessary. Some £2.5 billion of investment was outlined in the statement, but that is in reality only a fraction of the investment that is needed to decarbonise the UK.
All future energy scenarios rely on carbon capture and storage, but the strategy both includes and dismisses the use of CCS, so I am not exactly sure about the Government’s policy. We need a real commitment to delivering CCS, and the shadow Minister correctly said that pulling the £1 billion funding was farcical. Although the document states that £130 million has been spent on CCS R and D to date, that money has effectively been wasted. That was highlighted by a National Audit Office report, which said that the previous investment did not deliver any real outcomes. Investors need to have confidence in CCS, so the Government need to take a lead. The same can be said of tidal lagoons. If lagoons are to deliver, we need a much better show of commitment from the UK Government and we need it soon.
Another strategic aspect that the growth plan must link into is air quality. The strategy sets out the ambitions for ultra-low emission vehicles, but we need more than investment in charging points; we need real incentives to get people to purchase those vehicles, so a diesel scrappage scheme should be considered. The Government must also look at how they are going to tackle pollution from transport refrigeration units. A proper strategic review of infrastructure, transmission charges and energy efficiency is required, and it should consider in particular how to tackle private landlords. Onshore wind and solar are cheap, and such methods of electricity generation must be able to bid in the next round of contracts for difference. The Government need to keep an eye on this subject as the Brexit negotiations proceed and make changes as required.
Claire Perry
I thank the hon. Gentleman for an exhaustive and intelligent list of questions. I am happy to grab a cup of coffee with him and run through the document, because the strategy represents a genuinely UK-wide set of commitments. The Scottish and Welsh Governments have produced excellent plans using their devolved powers, which we welcome and in many cases support. As we implement the policies and design new ones, we are keen to work in a cross-Government and cross-party spirit of co-operation, because that is how we will get the best outcomes. I am happy to discuss all the opportunities with the hon. Gentleman and to listen to what he and his colleagues have to say. For example, I think we both welcome the remote islands announcement, which shows that we are absolutely committed to working within the current structure of various auctions and schemes to ensure that we maximise the contribution of low-carbon and low-cost energy from wherever we can source it.
Mr William Wragg (Hazel Grove) (Con)
I welcome this important strategy, but will my hon. Friend ensure that the resulting vital investment is directed at the most efficient and reliable sources of renewable energy, such as tidal power?
Claire Perry
My hon. Friend will know that we try to be technologically neutral in the auction structure to ensure that sources of energy are the lowest cost and the most effective in terms of decarbonisation, creating a strategic base upon which we can innovate and invest. The excellent policy work has been striking, and I pay tribute to some of my predecessors in the Department. For example, our work on offshore wind, which involved setting a framework, investing up front and then driving down costs, has been amazing. Those are the sorts of processes that we would like all renewables to go through. My hon. Friend mentioned water power, and we have the second-highest tidal range in the world after the bay of Fundy—I know that only because I was a geography student—and exceptional amounts of power are being generated from our coastline.
Sir Vince Cable (Twickenham) (LD)
Will the Minister tell us whether the newly privatised Green Investment Bank has fully signed up to the clean growth strategy? If so, how will its business plan be adapted or enlarged as a result?
Claire Perry
To reassure the right hon. Gentleman, not only has the Green Investment Bank—it is now known as the Green Investment Group—signed up to the plan, it has joined our green finance taskforce. We have asked our leading minds and operators in financial services, insurance, risk assessment and financial regulation to come together, so that we can not only mobilise the level of private capital that we need to drive this transformation in the UK, but export that incredible professional expertise right across the world. The taskforce is already coming up with solutions, and we will again be able to lead the world by mobilising capital and investing the right amount that we need to decarbonise.
Zac Goldsmith (Richmond Park) (Con)
I congratulate my hon. Friend on producing this brilliant strategy. It is brimming with ambition and full of good ideas, as we would expect from her. It is great stuff, but I just want to ask about one issue. The strategy tells us that transport emissions have been cut by 2% since 1990 compared with an average of well above 20% in all others sectors, so if we are to hit the 2050 targets, we will need something really radical in transport. The strategy talks about banning the sale of petrol and diesel cars by 2040, and I want my hon. Friend to reassure me that that will be equal to the challenge we face.
Claire Perry
My hon. Friend will of course know that per vehicle emissions have actually dropped. Cars are now about 20% more efficient, but we are using more of them. Reducing congestion and getting cleaner air is a really important benefit of taking action, but I hear what he is saying. The ambition is accelerating all the time. We announced ending the sale of conventional petrol and diesel cars and it is interesting that the Netherlands has come out with something similar. We are all doing this together. Things are the same with unabated coal. We said that we would phase it out by 2025 and Canada has said similar things. There is a genuine, exciting ambition, and things happen when we set such ambitions.
We have been talking about ending the sale of petrol and diesel cars for years, but we set the ambition and had that conversation and then many of the major manufacturers that are producing cars in the UK brought forward their plans for electric and ultra-low emission vehicles. For example, BMW announced that it will be building the electric Mini in the UK. This country already makes one in five of the electric vehicles sold in Europe, and it is through setting ambitions and then investing in innovations such as the Faraday challenge that we can be a world leader in making such vehicles and accelerating their transformation. However, this is not only about the vehicles; we also have to be able to charge them up. It is therefore important that we accelerate the roll-out of what we want to be the world’s most effective charging network, so that performance and price, not charging, are the only considerations when buying a car.
Alex Cunningham (Stockton North) (Lab)
I was not there myself, but the Minister told the Tory party conference that she viewed carbon capture and storage as a vital technology for the future, and I welcome its revival on the Government’s policy platform. They are certainly seeing sense. CCS is also vital for Teesside and for the jobs that the Minister talked about. Will she back the Teesside Collective project with real resources and, as she develops new initiatives, engage with the all-party parliamentary group on carbon capture and storage, which I chair?
Claire Perry
The hon. Gentleman is always welcome at the Conservative party conference. Like my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke), he does a great job of affirming the commitment and energy that is demonstrated by the Teesside Collective. As we say in the strategy, Teesside is one of several areas with rapidly advancing projects, and with our renewed commitment and desire to be world leaders in this area and in new investment I would like to see such ambitions taken forward.
Colin Clark (Gordon) (Con)
Does the Minister, like me, welcome new investment in exploration for gas—a lower carbon option than coal—in the North sea and onshore, helping the UK achieve its carbon targets?
Claire Perry
As we set out clearly in the document, we think that gas, particularly its lowest carbon form, absolutely has an important role to play in our energy mix. That is why a renewed focus on and investment in CCUS is important.
John Grogan (Keighley) (Lab)
I welcome today’s announcement about carbon capture and storage. Should I tell the regional dinner of the Yorkshire and Humber CBI, meeting in Leeds tonight, that there is fresh hope for the most ambitious carbon capture and storage project ever in this country—the White Rose pipeline project, which is backed by many in God’s own county?
Claire Perry
I hope that the hon. Gentleman will take back a positive message about the opportunities for businesses in Yorkshire and the Humber from the clean growth strategy and urge those CBI members to bring forward their ideas, so that we can capture them, make the investments and create the thousands of good jobs that we need.
James Heappey (Wells) (Con)
I warmly welcome the Government’s clean growth strategy—an excellent document with 30 new policies among the 50 policies and plans that have been announced. I pay particular tribute to the focus on energy efficiency. Will the Minister confirm that the 10-year extension of the energy company obligation will have a fantastic effect on the supply chains that do so much for home efficiency, and within commercial premises as well?
Claire Perry
I thank my hon. Friend for highlighting the fact that there are many new initiatives, particularly to do with the energy efficiency angle—especially business energy efficiency. Yes, there is the extension for ECO. Not only does that support a brilliant supply chain, but it helps the many people who struggle with fuel poverty. We are keen to use the money effectively to help upgrade more than 1 million homes and extend support for home energy efficiency until 2028 at the current level of ECO funding.
Anna McMorrin (Cardiff North) (Lab)
This long-awaited strategy sets out a good story, and I welcome the sentiment that it contains. In reality, however, it makes a mockery of clean growth and does not give any certainty for business. The ability to compete in global low-carbon markets and meet our needs from clean energy is the foundation of a prosperous low-carbon economy.
At the moment, the Government are failing to give a clear steer on emissions targets, have given no answers on the Swansea Bay tidal lagoon and are not investing in any meaningful way in renewable energy or energy efficiency. Will the Minister seek to introduce legally binding targets for renewable energy, as the Welsh Labour Government announced they would earlier this month? Successful markets need a clear strategic vision and leadership, and an effective regulatory regime. This Conservative Government have neither.
Claire Perry
It is a shame; I can only assume that the hon. Lady has not read the report. I genuinely think that for the first time we have the clearest set of cross-Government ambitions, policies, initiatives and funding—[Interruption.] The hon. Lady should have come to the launch, where the chief executive of Siemens talked about how businesses such as his completely welcomed and supported the strategy and were investing in their supply chains on the back of it.
We have an effective, legally binding regime that operates right across the UK. It is called the Climate Change Act, introduced with cross-party support in 2008. We have to produce our carbon targets. I have set out today why I think we are on a good trajectory towards them. However, I fear that the hon. Lady wants to be one of those “command and control” Marxists who wants to predict every single thing that happens in the economy at all times. That is not how innovation works. We set out a framework for investment. We try not to pick technologies; we want the lowest carbon, the lowest cost and the most innovation. We then work with the private sector to create the most innovative ecosystems, so that we can capture the opportunities. I will be very happy to have a cup of coffee with the hon. Lady and give her a slight cheering up. There is a lot of good stuff in the report, and she should be supporting it.
Nigel Huddleston (Mid Worcestershire) (Con)
I warmly welcome the clean growth strategy. How can we maintain the great momentum behind it across Departments?
Claire Perry
This is not an end point, but a stock take. Over the next few months, we will be bringing forward many of the detailed proposals that we need to deliver on these ambitions and policies. I would warmly welcome input from knowledgeable colleagues on both sides and the many stakeholders and campaigning organisations out there. We want to shape these policies for the future.
Sir Edward Davey (Kingston and Surbiton) (LD)
The greenest energy is fast becoming the cheapest energy. I thank the Minister for her kind words about my role and in that spirit take an approach unusual in this House: reserving my judgment on the strategy until I have actually read it.
I want to push the Minister on the importance of energy efficiency regulations. Will she confirm that the regulation on private landlords in respect of minimum energy efficiency standards is going ahead next April and will be fully enforced? Will she revisit and overturn the bad decision by the former Chancellor to scrap the zero-carbon homes standard on new build homes?
Claire Perry
The right hon. Gentleman and I are both really pleased at what has happened in the renewables sector. He is right to focus on energy efficiency because of course that drives down people’s bills—there is a huge win there. Yes, I can confirm that we are going forward with the legislation. He and I were both heavily involved in the design of the green deal, one of the facilitating mechanisms. Clearly, it did not work out as we would have liked.
We want to consider new ways of financing that transition, which is why we are asking our green finance taskforce to focus particularly on green mortgages and see whether we can bring forward other financing mechanisms. I understand the right hon. Gentleman’s point about zero-carbon homes, but I want to make sure that our regulations are absolutely fit for purpose, both for new homes and any additional works done. He would agree that we cannot do that work unilaterally without full reference to the Hackett review of the Grenfell fire safety issue. We intend to consider those regulations to see what more can be done, but it is right to sequence it in that matter.
Claire Perry
The answer is no. Although we have all invested in some of these progressive energy investments, prices are clearly falling. Only a couple of weeks ago, I opened the first subsidy-free solar farm in the UK. As we have pushed towards this low-carbon future, my right hon. Friend’s bills have likely gone down. He will be using less energy in his home because of the LED light bulbs he has installed and all the new appliances he has bought, which are much more energy efficient.
Mr Deputy Speaker (Mr Lindsay Hoyle)
If we had succinct questions, we might get succinct answers. “No” would have been helpful.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
The strategy rightly supports the continuing roll-out of district heating across the country. May I impress on the Minister the real risk that the environmental benefits of the technology will be overshadowed by systemic problems in the industry? There are scores of such schemes in my constituency and many more in the pipeline. In each and every case, constituents are convinced that they are not getting a fair deal on tariff pricing, standing charges, transparency on consumption and billing, and system performance. The situation cries out for effective statutory regulation. As the Minister takes the strategy forward, will she bear that issue in mind, so that we can win the confidence of consumers as the industry expands?
Amanda Milling (Cannock Chase) (Con)
Coal-fired power generation ceased in Rugeley last year. That commercial decision on the part of the owners represented the end of an era. The Government are committed to phasing out coal-fired generation by 2025. One of the frustrations for my constituents is when they go to other countries and see coal-fired power generation. Will the Minister outline what success we have had in encouraging other countries to follow our example of committing to end such generation?
Claire Perry
To reassure my hon. Friend, I should say that, as I mentioned, Canada has agreed to end it, as has the Netherlands. China has agreed to reduce its carbon emissions by 60% to 2032 and India has said that it wants to lead the world in solar generation. All countries—with the exception, perhaps, of one big one—have woken up to the fact that the world is moving away from coal. In doing so, they are creating prosperity and jobs.
Alex Sobel (Leeds North West) (Lab/Co-op)
I have spent the morning reading the clean growth strategy. On first reading, it appears mainly to be a repackaging of old announcements, with only small packets of new funding and increased existing funding being spent over longer periods. I am glad that the Minister touched on electric vehicles. The gap with respect to the old plans that we already have is 12 megatonnes of CO2. Today’s announcement does not bridge that gap, as can be seen in the chart on page 85 of the strategy. The gap remains. The funding for electric charge points is woefully inadequate, and I call on the Minister to look again at supporting large-scale electric vehicle charging funding, working closely with local authorities to ensure that EV charging points are in commercial and residential areas, not just on major roads. I ask her to commit to a minimum level of public EV charge points per head of population or per electric vehicle. I am glad she mentioned the Netherlands, because it has one public EV charge point—
Claire Perry
I would be happy to meet the hon. Gentleman. He will be pleased to hear that in the automated and electric vehicles Bill, we will be bringing forward new powers to make sure that all these things he has talked about in terms of statutory powers are at our disposal, because we want to have the world’s best rapid charging network.
Rebecca Pow (Taunton Deane) (Con)
Unlike some Opposition Members, I wholeheartedly welcome this strategy, with its commitment to the low-carbon transformation. It will have enormous spin-offs not only for the environment but for business, as was so eloquently outlined by my right hon. Friend the Member for Newbury (Richard Benyon). Home energy efficiency is a key part of our drive towards our targets, so will the Minister update us on what is being done to encourage house builders to play their part in this eventual drive towards zero-carbon homes?
Claire Perry
As I have mentioned, we need to look closely at new building regulations and sequence those appropriately. My hon. Friend will see that we are keen to ensure that we phase out having houses off the gas grid, as many in my constituency are, where they currently rely on what can be high-cost fossil fuels; we will start with new homes. That is a process of working with the industry, as getting people to think about energy efficiency happens not just because someone is sitting at home, but often because a builder, architect or plumber recommends it. We therefore need to work much more closely with industry to deliver on these targets.
Darren Jones (Bristol North West) (Lab)
My constituency already has onshore wind, solar generation and new battery storage technologies, but we have to seize the opportunities of tidal power, district heating from my local industrial estate of Avonmouth and the power of co-operatively owned generation, storage and distribution. Does the Minister agree that the investment that Governments make to create new markets is an important part of this policy approach? Will she confirm that her second test of affordability will not prevent this important public policy position from growing new markets and new technologies?
Claire Perry
I commend the hon. Gentleman for the efforts of his constituents and local businesses, and answer him by saying yes, absolutely; we are looking at the pathway on costing. I would be happy to have a further meeting with him to understand how this is done, because the problems that his constituents have solved are stopping many other communities taking these important steps. Perhaps we could set up a meeting.
Stephen Kerr (Stirling) (Con)
I welcome this important statement. May I applaud the Minister’s enthusiasm in presenting the strategy? I welcome the affirmation that action on climate and economic growth can go hand in hand, and that it is our plan to make the UK the world leader in creating clean technology jobs and businesses. Will she say whether the Treasury are considering changes to stamp duty to help energy-efficiency improvements?
Claire Perry
It is not energy but caffeine that is doing this. My hon. Friend asks an important question, and I welcome the opportunity to clear this up. We see many suggestions and all sorts of ideas about how we meet our carbon budgets, but tax matters such as stamp duty are ones for our excellent Chancellor and his Budgets. It would be a brave Minister who tried to make those points at the Dispatch Box.
Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)
I echo what colleagues from across the House have said about this being an excellent announcement, and I congratulate the Minister on everything she has done to bring it about today. I echo what the hon. Member for Stockton North (Alex Cunningham) said about how this will be particularly warmly welcomed on Teesside. May I invite the Minister to agree with me that Teesside is the natural starting point for CCS in the UK, owing to its concentrated and diverse industry, proximity to north-east storage sites and optionality for future low-carbon technologies, such as hydrogen?
Claire Perry
I hope there are many pints lined up in the bars in Teesside for both my hon. Friend and the hon. Member for Stockton North (Alex Cunningham), because Teesside makes a powerful case for exactly this sort of investment. We look forward to reviewing that, along with the other proposals that we have.
BAE Systems Military Air & Information Sites: Job Losses
Claire Perry Excerpts(6 years, 7 months ago)
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Mr Mark Hendrick (Preston) (Lab/Co-op)
(Urgent Question): To ask the Minister of State, Department for Business, Energy and Industrial Strategy if she will make a statement on the likelihood of over 1,000 jobs being lost across the north of England at BAE Systems Military Air & Information sites.
The Minister of State, Department for Business, Energy and Industrial Strategy (Claire Perry)
I know that the Government, and indeed all of us, are disappointed to hear the news that BAE Systems is considering reductions of up to 1,400 staff in its military air and information business, 375 in its maritime services division and 150 in its applied intelligence business. This is a concerning time for those working for BAE Systems, particularly in the run-up to Christmas. That is why I can assure the hon. Gentleman that the Government stand ready to support fully those affected. Indeed, colleagues across the Ministry of Defence, my Department and others are reviewing what support we can offer the company as it goes through this process. Of course, the Department for Work and Pensions is also standing by to provide whatever advice or support is required.
I would like to set out three main points. First, I will provide an update on the process; secondly, I will explain the rationale for the changes; and thirdly, I will set out what the Government are doing to support BAE Systems and this vital sector with our business. The company will now enter a 30-day statutory consultation process, and no final decisions will be taken about the level or type of redundancies until that process is complete. The Government will continue to work with BAE Systems to ensure that compulsory redundancies are kept to a minimum, and the company assures us that the reductions will be managed on a voluntary basis as far as possible. I emphasise that, as is usual in such cases, the DWP rapid response team is engaged and standing by, ready to deploy. It is incredibly important that the skills that people in the workforce have built up are retained in the UK industry as far as possible. That is why we will be using the talent retention system that was designed by my Department, working with the sector, to ensure that vital skills are not lost to the UK.
I turn now to the rationale for the announcement. The House should be absolutely clear that BAE Systems has taken this decision as a result of normal business practice. The decision is the result of internal restructuring and a drive to transform its business so that it can continue to be one of our most efficient and effective companies, generating export orders across the world. This is not related to any UK defence spending decisions. [Interruption.] Labour Members can shout all they like, but I hope that we can avoid getting politics into this. It was very striking how during conference speech after conference speech Labour Members—not the hon. Members opposite me, for whom I have great respect—went out of their way to criticise the industry that we are talking about. I suggest that we calm down and think about the people affected and what we can do to support them.
In the last year, the Ministry of Defence has spent almost £4 billion with BAE Systems, as part of the £18 billion—half of which is spent in the manufacturing sector—that we spend across Government buying products and services from UK industry. We continually bang the drum and lead the charge for our world-leading defence industry right across the globe, maximising export opportunities for companies such as BAE Systems and the thousands of people employed in their supply chains. Indeed, only last month the Defence Secretary signed a statement of intent with Qatar to buy 24 Typhoons and six Hawks from BAE Systems. This is extremely positive news, and it demonstrates continued confidence globally in Britain’s defence and aerospace industry. We will continue to work with BAE Systems to maximise opportunities for the Typhoon and the Hawk training aircraft, and the Type 26 global combat ship, in markets such as Saudi Arabia, Indonesia, Belgium, Finland, Canada and Australia.
In conclusion, we absolutely understand that this is a worrying time for those affected. We are determined to do all we can to support BAE Systems’ future export opportunities, and I stand ready to meet workers, unions or MPs who are concerned about the potential impact of the announcement in their constituencies.
Mr Hendrick
Thank you, Mr Speaker, for allowing this urgent question. Today’s announcement by BAE Systems has come as a huge blow to thousands of workers and their families across Lancashire in the run-up to Christmas. The majority of Lancashire MPs have today written to the Prime Minister seeking immediate action and offering to establish a taskforce to avert the disaster. We ask the Minister for a swift, meaningful and positive response to our request.
What intermediate and longer-term actions are the Government taking to win contracts around the globe, to fly the flag and to sell the Eurofighter Typhoon and the Hawk? That is essential to sustaining the UK’s leading-edge technology and sovereign capability, as well as highly skilled jobs and the massive supply chain in the north-west of England. In order to maintain a leading edge, we must look to the future. BAE Systems has taken a big step by developing a £12 million academy in Lancashire. Will the Government play their role and announce an industrial strategy for aerospace, as they have done with shipbuilding, and will they commit themselves to assisting BAE Systems to develop a sixth-generation manned fighter aircraft?
With my right hon. Friend the Member for Chorley (Mr Hoyle) and my hon. Friend the Member for Hyndburn (Graham P. Jones), I met Prime Minister Cameron to urge him to secure vital contracts with Japan and India. We were assured that there was good news on the horizon, but there clearly was not. The Minister mentioned Qatar and that is obviously positive, but it is nothing like the size of the other contracts. Lancashire builds the finest because we have the best workforce in the world. We do not want to be let down again, so I ask the Minister to use her good offices to impress on the Prime Minister the major concerns of Lancashire MPs and indeed of MPs from across the House.
Claire Perry
I commend the hon. Gentleman and many of his colleagues for their absolutely resolute support both for the company and the sector. Of course I would be delighted to meet the taskforce, and I think we should extend the offer to the workers and unions affected. It is absolutely clear that we need maximum communication about the process, or to encourage the company to ensure maximum communication, particularly at this worrying time.
The hon. Gentleman is right to say that the Government have a vital part to play in banging the drum for British exports. I have mentioned the Qatar statement of intent, and clearly there are ongoing conversations with countries, such as Saudi Arabia, that have expressed an interest in this technology. There is an appetite around the world for this technology. For every unit that is sold, the whole provision—supply and maintenance—will have a measurable impact on the work available for the hon. Gentleman’s constituents and those of other Members.
The hon. Gentleman asked about the industrial strategy for this sector. We are very keen—we are already having conversations about this with the aerospace sector—on a bespoke sector deal. He will know that we have worked with the industry, on initiatives such as the technology for the future combat air system, to set out what we need to do both across this export-facing part of the business and right across the supply chain to ensure we have the right level of investment and skills.
Dr Julian Lewis (New Forest East) (Con)
When BAE Systems says to the Government that this is normal business practice, will the Government reply to BAE Systems by reminding it that it is not a normal business, because it enjoys a near monopoly position in many parts of the British defence procurement structure? Will they therefore extract from BAE Systems a promise to work closely with the Government to examine to what extent any streamlining is really necessary and to what extent it can be ameliorated by common action, bearing in mind the special treatment that BAE Systems so often receives from the United Kingdom Government?
Claire Perry
My right hon. Friend is right to remind us that we spend almost £4 billion in procuring products and services from BAE Systems. Again, if we want to have a globally competitive, highly efficient bastion of success in this vital industry, it is really important to allow the company to go through its management processes. Of course we want to procure from BAE Systems, but we also procure from a wide range of other suppliers. It would be wrong for the Government to try to interfere in business processes, but we can say that we are committed to making sure that the company does this as sensitively as possible.
We also want to explore other opportunities. I am struck by the locations of some of the plants that may be affected, and I am also struck by the investment opportunities with, for example, the Siemens investment in offshore wind turbine production in Hull. There are opportunities for skilled engineering staff right accross the UK and right across the region. [Interruption.] I am sorry to hear the hon. Member for Kingston upon Hull East (Karl Turner), who knows Hull very well, talking down a major investment in skilled engineering. We remain absolutely committed to working with this company.
Nia Griffith (Llanelli) (Lab)
Employees and families across the country will be hit hard by the news that has come from BAE today. The loss of nearly 2,000 highly skilled jobs is nothing short of devastating for communities and local economies that have a proud history of defence manufacturing. Moreover, if these redundancies go ahead, there is a very real risk that these skills will be lost forever, with a knock-on impact on this country’s manufacturing capability. What support will the Government be offering to those highly skilled workers who have lost their jobs, and how will the Government support the communities affected?
A vibrant defence industry is vital for the security of this country and it brings immense economic benefits. In its statement, BAE points to uncertainty in future orders as a reason for the job cuts, and we know that the Government have pursued a stop-start approach which has not given the industry the long-term stability that it desperately needs. Will the Minister now agree that it is time for the Government to come forward with a proper defence industrial strategy to enable the sector to plan ahead? I know from my conversations with those in the industry that they are very concerned about the gaping funding holes in the MOD’s defence equipment plan. What action are the Government taking to address those and to give the industry confidence?
UK-based defence companies are also facing a great deal of uncertainty owing to the Government’s handling of Brexit. We know that the defence and aerospace industries have wide-reaching supply chains that cross many borders, so what steps are the Government taking to ensure that the sector is not disadvantaged by Brexit, and that companies do not take their manufacturing elsewhere?
Finally, the slowdown in Hawk production was also cited as a reason for cuts, but the Government could take immediate steps to counter that by bringing forward orders for nine new Hawk aircraft for the Red Arrows, thus securing their future as the face of the RAF and a global ambassador for British engineering across the world. That would provide a much needed boost to the industry. Can the Minister commit to doing that today?
This is no time for Government to stand by and do nothing. Ministers need to rise to their responsibilities and realise that proactive engagement with the industry could make a real difference to the workers concerned and to the future of our country’s defence industry.
Claire Perry
I am entirely in agreement with the hon. Lady about the need to engage closely to understand the reasons. To reassure her on a couple of points that she raised, this is not due to any stop-start change in the Government’s procurement; this is in fact due to gaps in bringing forward some of the export orders. As I mentioned, the Secretary of State has signed a statement of intent with Qatar, and indeed we are standing by to do everything possible to support further export opportunities.
The hon. Lady may not have heard, but I mentioned the talent retention system. She is absolutely right: for too long we have not thought about people and their skills and worked out whether there are other opportunities, especially in the region, to ensure that those skills are not lost. That is why we will be deploying the talent retention system that has been developed by my Department with this industry, and looking to see what more can be done.
To allay some of the hon. Lady’s questions about our commitment to shipbuilding, I can tell her that we have published the national shipbuilding strategy. I am told that we will be bringing forward the refresh of the defence industry policy document very shortly.
We need to focus on the people who may be concerned about this, meet them to gain an understanding of their concerns, and see what more can be done, particularly to ensure that those vital skills are not lost to this or other sectors.
Mr Mark Francois (Rayleigh and Wickford) (Con)
The tranche 3 variant of the Typhoon aircraft, especially when equipped with the new electronically scanned radar, will be one of the most capable and effective combat aircraft in the world. The Minister has already mentioned the letter of intent with Qatar for 24 Typhoons, and there are, as she has intimated, a number of other countries around the globe that are still interested in Typhoon, not least Saudi Arabia. Can she assure Members in all parts of the House that, just as the Government gave strong support to the Qatari deal, they will strain every sinew to try to support further Typhoon exports, not least in Saudi Arabia?
Claire Perry
I am nervously rising to answer a question from my right hon. Friend, who knows more about this than many of us will ever know. He is absolutely right: not only have we signed the statement of intent, but only last month the Secretary of State got on a plane to Saudi Arabia to press the case for using these aircraft, not just for the upfront sale but for the thousands of jobs that depend on the long-term upgrade and servicing.
All Members across the House should be supporting these export deals and the jobs that are reliant on them. It was a shame that hon. Members—[Interruption.] Well, they say, “Here we go.” Perhaps they were not listening at conference. It was a shame that the right hon. Member for Islington South and Finsbury (Emily Thornberry) used her moment on the Labour party conference podium to attack the Government for strengthening co-operation and the deals that this brings with our key regional ally. Let us get behind this industry, so that we can protect and invest in this technology for the future.
Carol Monaghan (Glasgow North West) (SNP)
This morning’s news is deeply worrying for BAE workforces across the UK, and we have only just heard that that includes 15 workers in Fife. Of course, it is not just the 2,000 BAE workers who will be affected but the small and medium-sized enterprises, the supply chains and the communities as well. The SNP offer our sympathy this morning to all those who are affected directly and indirectly by today’s announcement.
This is the latest evidence of the Government failing to deliver on defence programmes, and this is not just about an export industry. This is about undermining skilled jobs, undermining our own defence industry and undermining the defence of the UK as a whole. What are the Government doing to investigate what has gone wrong in BAE?
Skilled workers have been mentioned a number of times. Skilled workers are exactly that—skilled. They cannot easily move from one position to another; extra training is required, so what are the Government doing to assist them? And what has been done to provide guarantees to those who are currently still employed in the sector?
Finally, can the Minister now confirm that future MOD orders will come as a steady drumbeat, and not be plagued by the dithering, delays and indecision that have contributed to today’s announcement?
Claire Perry
I appreciate that point, and of course the hon. Lady is right to speak for those who may be concerned about their job future, but she represents, proudly, I know, a country that has built two of the largest ships the Royal Navy has ever purchased and that has contracts to build eight Type 26 frigates and five offshore patrol vehicles—two decades’ worth of shipbuilding contracts signed by this Government. She refers to a stop-start approach. That is why the strategic defence and security review system has been brought forward. That is why we are absolutely determined to spend taxpayers’ money wisely, and supporting British industry, UK industry, is fundamental to that. I suggest that she has a look at some of those proud ships—the QE2 class—and perhaps she will come back just a little bit more cheerful.
Mark Menzies (Fylde) (Con)
As the Member of Parliament for Warton, where final assembly of Hawk and Typhoon takes place and where 750 of the jobs that will be lost are largely located, I urge the Minister to work, as the Government did in 2011, to mitigate job losses. Then a 3,000 headline figure was mitigated to 100 compulsory losses. A similar effort must be put in this time.
Secondly, thank you for the work that the Government are doing on supporting defence exports, particularly to Qatar and Saudi Arabia, with the Prime Minister’s visits to Bahrain and Saudi and the Defence Secretary’s visit to Qatar. Please will the Minister not be put off by siren voices that want us to disengage from the largest export customers for these aircraft?
Claire Perry
My hon. Friend makes the case very powerfully. Of course, at Warton there are some additional benefits from the F-35 contracts being brought forward, but he is absolutely right to say that we must be really focused on these jobs and the uncertainty, but we must also be resolute in pursuing export opportunities for this fine British company.
Karl Turner (Kingston upon Hull East) (Lab)
The Red Arrows renewal programme is well overdue and is entirely in the Government’s gift. If it was renewed, it would save jobs at Brough and the Lancashire plants. Get on with it!
Claire Perry
I am sure that the hon. Gentleman’s pulses beat a little faster when the Red Arrows come over, as mine do when they fly over my constituency. I hear what he says and will discuss it with Ministers, but will he please work with me and others to ensure that this uncertainty is minimised for those in his constituency?
Anna Soubry (Broxtowe) (Con)
Does my hon. Friend agree that it is somewhat concerning, if not a little peculiar, that those who are standing up, notably representatives of the SNP, to condemn these job losses sing the praises of BAE, quite rightly, yet support a policy of being opposed to all arms sales, notably to Saudi Arabia?
Claire Perry
My right hon. Friend knows that I share her position. I would make the point that these are potential job losses and that we are at the start of the process. There has to be a consultation period. A significant amount of work needs to be done with the unions, the workforce, broader industry and skilled employers right across the affected regions to ensure that we do not lose skills, that we minimise job losses, and that any job losses that do come forward are managed through voluntary redundancy.
John Woodcock (Barrow and Furness) (Lab/Co-op)
The bottom line is that, had exports gone to plan, these sites would not be in this position. We have heard a lot of commitment in words, but we need to see action from the Government. May I make what I hope is a constructive suggestion? The Minister’s point on participation has been heard and I suggest she does not repeat it now. There are ambassadors all around this House, including on the Labour Benches, who could help in an official position to deliver and to get orders for their workforces in their communities. Will she please consider that?
Claire Perry
I commend the hon. Gentleman, and the people he represents in Barrow, for flying the flag and doing such an amazing job for such a vital British industry. He knows better than anyone else the importance of maintaining those skills. At this point, I think we will all put our shoulders to the wheel and do whatever we can to fly the flag for British exports. I would be delighted to work cross-party to do just that.
Victoria Atkins (Louth and Horncastle) (Con)
BAE Systems is a vital employer in my constituency. It maintains the Typhoon jets that fly from RAF Coningsby and many of my constituents commute to Brough in Humberside, where BAE Systems provides highly skilled careers and apprenticeships. Sadly, we have heard today that Brough is to lose 400 jobs. In that spirit, I very much hope the Government will work with BAE Systems to ensure opportunities for employees and apprentices at Brough. Can my hon. Friend confirm that the commitment to spend 2% of our budget on defence will continue, and that the Government will continue to support this great British company?
Claire Perry
We will of course spend at least 2% of our national income on the defence budget. We will do all we can by working with the company and other players, in particular through the talent retention system. One crucial point, in response to the hon. Member for Llanelli (Nia Griffith), is that we cannot lose these skills from the British workforce. They are vital and they have been acquired over many years. We have to ensure that they are maintained and that the productivity they generate is developed.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
What are Her Majesty’s Government doing to sell the Type 31e frigate to the United States? The Secretary of State for Defence has mentioned that that is a possibility. Secondly, will the Minister urge the Secretary of State for International Trade to come to the Chamber to explain what exactly he is doing for BAE?
Claire Perry
The hon. Gentleman will know that my right hon. Friend the Secretary of State for International Trade is flying the flag relentlessly for all aspects of the British economy, including British ships. I am sure he would be delighted to answer a written question or a letter from the hon. Gentleman on that point.
Mr Bob Seely (Isle of Wight) (Con)
I spoke to BAE this morning as soon as I heard the news. What support will the Department for Work and Pensions provide to those affected? Will the Government assure me that any support package includes Isle of Wight workers affected at the BAE Cowes plant in my constituency? May I also highlight the importance of the advanced radar programme on the Isle of Wight, both for UK defence and for island jobs?
Claire Perry
The Department for Work and Pensions has a well tried, tested and effective rapid response deployment process to get in and talk to companies and people affected during the consultation process to make sure they are aware of any statutory rights and responsibilities, but also of any opportunities. I understand my hon. Friend’s point about the Isle of Wight and I will make sure it is reflected in any work going forward.
John Spellar (Warley) (Lab)
I am afraid the Minister really does not get it. When the French, the Americans or the Russians pursue a contract, they take a relentless whole-of-government approach. Incidentally, that is how it was under Prime Minister Tony Blair. On behalf of the industry and its skilled workforce, will the Government up their game and secure new contracts, especially with Saudi Arabia and the Gulf states?
Claire Perry
The right hon. Gentleman is brave to mention the former Prime Minister’s name. Of course this is a whole-of-government responsibility. [Interruption.] In other countries, leaders of the official Opposition do not stand up in public and criticise exactly the sort of defence deals we are trying to sign, or put at risk the renewal of technologies such as Trident, which are absolutely vital to our technology and knowledge base. I suggest he has a word with the Labour Front Bench and then perhaps we can have more of a conversation.
Richard Graham (Gloucester) (Con)
BAE’s huge contribution to skills, jobs and exports depends not least on cross-party political support for our exports to foreign Governments. Some on the Opposition Benches absolutely understand that, but the fact of the matter is that the Labour party leadership loses no opportunity to criticise what those of us in the Prime Minister’s trade envoy team are trying to do. Will the Minister confirm that although there will be job losses in some parts of BAE, there have been significant increases in other divisions, for example at least 350 new jobs in its cyber division?
Claire Perry
My hon. Friend is absolutely right to point out that this is a very dynamic business, which has to respond to globally changing conditions. It employs almost 36,000 people right across the UK. He is also absolutely right to point out other opportunities. It is absolutely critical that we back these British businesses, focus on export opportunities and work together. Many of us represent constituencies affected by these sorts of announcements and we all fly the flag for one the most successful companies in the world—BAE Systems. Let us get on and do it.
Ruth Smeeth (Stoke-on-Trent North) (Lab)
Our thoughts are with the workforce and their families who have received such devastating news. Let us be clear that the people who build and develop our military platforms are as vital to our national security and sovereign capability as those who operate them. We simply cannot afford to lose their skills. Will the Minister commit to developing a defence aerospace strategy, and to meeting immediately unions and employers across the sector to ensure we are not in this position again and can retain our sovereign capability?
Claire Perry
Like me, I am sure the hon. Lady is very pleased that we now have an industrial strategy that focuses on these vital sectors, putting together sector deals working with unions, employers and government. The offer has been made to all sectors to come forward with deals. As I understand it, the aerospace sector deal is well advanced.
Yvonne Fovargue (Makerfield) (Lab)
What actions is the Minister taking to ensure that all the young people who have started apprenticeships with BAE Systems and may be affected will be able to complete them, not only retaining the current skills we have but building the skills base for the future?
Claire Perry
The hon. Lady is right to highlight the vital role of apprentices. I think we are all proud of the fact that we now have over 3 million apprenticeship starts. Until we know—this will become clear through the consultation process—the details of any redundancies and the types of jobs that are being laid off, it is too early to comment, but she raises a very important point and I will take it under consideration.
Gordon Marsden (Blackpool South) (Lab)
The job cuts at Warton and Samlesbury are twice what they were in November 2015, so it is not surprising that people in Blackpool and Fylde will be concerned. The supply chain has been mentioned. What specifically will the Minister and the Department do with buyers to ensure apprenticeships in supply chains are also supported, and that the Lancashire local enterprise partnership is given the support and resources it needs to support both BAE and the supply chain?
Claire Perry
We stand by ready to understand any potential impact, once the scale of any job reductions is known, and to support the Lancashire local enterprise partnership and other companies in the area to process, cope and adapt to any changes.
Chris Stephens (Glasgow South West) (SNP)
I have constituents who are BAE employees and, even though they are perhaps not directly affected, I know that they will be nervous. May I press the Minister on Ministry of Defence procurement processes? Specifically, will the Department look at work that is currently going out to international competition? I think that that could be avoided and that the work could be held in the UK.
Claire Perry
I refer to my earlier answer about the level of UK Government investment in Scotland, particularly in shipbuilding. We have to look at every procurement decision and understand whether it has the right capabilities for the sorts of conflicts that we ask our armed forces to undertake and what is best value for money for the taxpayer, so it will always be a mix. We should all be proud of the fact that the Government directly spend almost £4 billion a year with BAE Systems and about £18 billion a year with the British industrial sector.
Diana Johnson (Kingston upon Hull North) (Lab)
The Minister will win no friends in east Yorkshire by saying that people who might be made redundant from BAE Systems can go and get jobs in the renewables industry at Siemens. We need both sets of jobs in both industries—both, not one—to flourish in our area. I am not convinced at all that the Minister is taking our sovereign capability seriously if these jobs go. That is important to our national security, so what will she do about protecting it?
Claire Perry
The hon. Lady speaks passionately on behalf of her constituents. To put this in context, we are talking about a company that employs around 36,000 people right across the UK. It has to go through—as all companies do—a process to make itself as efficient and effective as possible so that the maximum number of productive jobs can be maintained. The level of engagement of the MOD and Secretaries of State is striking—getting on planes, signing the statement of intent with Qatar and pushing for the Saudi deal. This is what we need to do. She is right to say that we need both sorts of jobs. We need a vibrant, highly productive industrial sector that operates right across the UK, which is why she should welcome the industrial strategy and the work going on in the low-carbon economy.
Dan Carden (Liverpool, Walton) (Lab)
I worked at the Unite trade union when this country was faced with the steel crisis. This Government had to be dragged, kicking and screaming, from a position where it would take no action to a position where it was willing to take a 25% stake in the industry. We are seeing the exact same thing again. If there was a serious industrial strategy, the Minister would take action and guarantee those jobs for the future of the industry.
Claire Perry
I lead for the Government on the steel industry. Indeed, I am working with the steel sector on its sector deal right now. The steel sector is dependent on the opportunities that come from companies such as BAE Systems being able to invest and thrive in the UK economy. The hon. Gentleman should commit to work with the steel companies’ customers, as we want to do, to ensure that they can offer the maximum market for the products of the vital and critical steel industry.
Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)
It has been a bad week for the defence industry. These job losses come on top of rumours that the Government are scrapping the Royal Navy’s amphibious ship capability, and the threat to the Royal Marines. Does the Minister agree that the Government are presiding over emerging sovereign defence capability gaps, and do something about it?
Claire Perry
I gently say that the hon. Gentleman should focus more on the facts and less on the rumours. We have committed to raising our national spending target to more than 2% of national income. We have undertaken strategic defence and security review programmes that have clearly set out a defence strategy for the future. We have invested in two decades-worth of shipbuilding contracts north of the border. I am always happy to discuss the facts. I suggest he puts down the muck sheets and focuses on the facts.
Julie Cooper (Burnley) (Lab)
The Minister talks about seeing things in perspective, but the perspective is this: the loss of 750 jobs in Lancashire is absolutely devastating for individuals, families, communities and the industry itself. Will she not only work hard with BAE Systems to mitigate these losses, keep them to the lowest possible number and protect as many jobs as possible, but look to protect jobs in the supply chain in constituencies such as mine in Burnley, whose very success and existence relies on BAE Systems thriving?
Claire Perry
As I said, we are keen to work closely with the company as it goes through this process. The offer is there for the hon. Lady and others who have important companies in their constituencies to work together, speaking to workers and the unions to ensure that we minimise the number of job losses and maximise skills retention both in this company and in the supply chain.
Mr Paul J. Sweeney (Glasgow North East) (Lab/Co-op)
When I worked at BAE Systems, more than 1,700 of my colleagues across the British shipbuilding industry were made redundant in 2013. At the time, that was predicated on investment to create a world-class industry, but that investment is no longer happening. We see the same across these cuts. Every time it happens, a major plank of British industrial capability is lost, whether it is the ability to build tanks or carry out the final assembly of the F-35 aircraft. We cannot compete in shipbuilding internationally or in submarine manufacturing to the same extent that we could. Will the Government commit to reviewing how they finance capital infrastructure investment in defence and ensure that we are doing this in the best possible way?
Claire Perry
The hon. Gentleman raises the point—I defer to his considerable knowledge of the company—that companies need to be competitive in order to thrive and export, and we are told that that is the reason for today’s announcement. But we are spending £60 billion over the next 10 years on shipbuilding in the UK. That is one of the biggest investments in shipbuilding that I can remember. We are doing what we need to do domestically but, equally, we need to support the export opportunities for these companies right across the world.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
The latest announcement of the loss of 400 jobs in Brough will be devastating to communities such as Hull and East Riding. I am sorry, but the response so far reeks of complacency. It is not good enough to say that Siemens have created jobs in Hull so that workers from Brough can find jobs elsewhere. We want more jobs, not fewer. So here is a simple question for the Minister: will she choose to save jobs by bringing forward the order for Hawks for the Red Arrows, or will she choose to see 400 jobs go?
Claire Perry
The hon. Lady should be incredibly proud of the fact that one of the highest rates of jobs creation has been in Yorkshire and the north-east. We have to support our industries, which we do through our procurement strategy and our support for exports. I was told that in the recent years to 2015, the county of Yorkshire created more jobs than the whole of France. We should be celebrating that success.
Christian Matheson (City of Chester) (Lab)
In order to be competitive, we have to retain the skills that it looks like we are going to lose, but things are going in the wrong direction. Has the Minister seen the estimates from Unite that suggest that 25% of our defence expenditure by 2020 will be in the United States alone? Are we not missing a defence industrial strategy that will stem that, so that we are paying people for skilled jobs, not to be unemployed?
Claire Perry
I am happy to look at the sums, but I am sure that the hon. Gentleman understands that we have to ensure that we are buying the technology we need from the best places across the world when we are supporting our future defence capabilities. We are continuing to invest in and support this vital sector. He will be pleased to know that we are working closely with Unite and other unions where we are producing industrial strategy sector deals. The role and commitment of the workers that—particularly in the steel industry—has been vital in getting us to where we are cannot be underestimated. That is why the door is open for consultations and conversations with workers, the unions and colleagues from across the House.
Cat Smith (Lancaster and Fleetwood) (Lab)
Some 750 of these potential job losses are in Lancashire, which rightly worries many of my constituents who work there. The loss of these highly skilled and well-paid jobs will have a devastating impact on the Lancashire economy. Will the Minister tell us more about what conversations she is having with the local enterprise partnership in Lancashire, what resources and support we can have in the area, and what conversations she is having with the Department for Work and Pensions about the potential job losses and the devastating impact on my constituents?
Claire Perry
We are right at the start of the process. Indeed, the company was not supposed to make the announcement until tomorrow, as I understand it. We want to have those conversations with the LEP and other employers with the aim of minimising the number of potential job reductions made by the company and maximising the redeployment of those people who have acquired such valuable skills over their time of work.
Helen Jones (Warrington North) (Lab)
Those of us with constituents who work in the supply chain for BAE Systems, as well as those who have constituents directly employed by the company, are disappointed to hear the Minister’s statement because she talked about managing decline. The Opposition want to see proper investment in the skills we need and in defence industrial strategy so that we do not have to buy technologies from abroad. We need the Government to bring forward orders in order to protect jobs. They can do that now. Why is the Minister not doing that?
Claire Perry
This is not about managing decline. We have a record number of people in work and have committed more than 2% of our national income to national defence. [Interruption.] And we have more than 2 million apprentices, I am told. The hon. Lady will understand that businesses and companies evolve and grow and invest in different technologies. The procurement of the F-35 fighter has brought forward jobs for BAE Systems. I appreciate her passion, but if she wants to stand on the platform of a party that wants to support exports in this vital sector, she needs to come across to the Government’s side of the House.
Liz McInnes (Heywood and Middleton) (Lab)
The Minister has made a great deal of what was said at the Labour party conference, but what impact will these job losses have on making this a country that works for everyone, and how will it help my constituents to live the British dream?
Claire Perry
I commend the hon. Lady for doing her homework. As the company goes through its normal business processes, we all have to stand by ready to do whatever we can through the consultation process to ensure that the minimum number of people lose their jobs and the maximum number, with those vital skills, find other opportunities. The whole Government stand by ready to do that. Looking ahead, I call that maximising the British dream.