Offshore Wind Developments

Debate between David Mowat and Mark Lazarowicz

Tuesday 6th January 2015 Westminster Hall

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Thank you, Mr Gray, and I will bear in mind your comments about the length of our speeches.

I congratulate the hon. Member for Angus (Mr Weir), and his colleagues who approached the Backbench Business Committee, on raising this important issue. It is important for all sorts of reasons, not least that renewables, onshore and offshore wind in particular, provide a secure energy source in the control of this country and do not lead to dependence on less secure sources elsewhere in the world. Recently, volatility in energy price markets has reminded us how prices go up and down and that when we depend on other countries, we are clearly less secure.

Wind is a form of energy production that, as has been emphasised, is clean and contributes to our commitment to reduce carbon emissions. It also provides real employment opportunities. The hon. Gentleman referred to potential developments off the coast of Angus. I am not sure which constituency they are off—that depends on the starting point—but although they are not off my constituency, it is certainly among those that could benefit from developing offshore wind power off the east coast of Scotland. I take on board the points made about the potential elsewhere in the North sea as well.

Some time ago, the major Spanish offshore wind turbine production company, Gamesa, proposed a major plant in my constituency that could have brought in excess of 1,000 jobs to our area and the south-east of Scotland. The proposal now seems very much up in the air, however, and one reason for that is uncertainty about the direction of Government policy, along with uncertainty arising from international pressures that are beyond our Government’s control.

A real problem is certainly the lack of consistency and long-term vision to which my colleague on the Environmental Audit Committee, the hon. Member for Waveney (Peter Aldous), referred. A clear message and vision on the Government’s part is essential; there needs to be a clear long-term policy. The long-term support mechanism, the levy control framework, is an important issue that needs to be addressed if we are to see more investment in the offshore wind sector.

Another issue is the small budget available for the newer technologies such as offshore wind and marine. The size of the budget restricts development in the offshore wind sector and has a knock-on effect on other, newer technologies. In my constituency, we had the recent bad news about the closure of the Pelamis wave turbine plant, adding to other problems in the wave energy sector throughout the UK. Among the many complicated reasons for the Pelamis decision was long-term uncertainty.

Another problem when the budget is so small is that the more established technologies are much more likely than the less established ones to get what money is available. In effect, the limited budget is more likely to go to offshore wind, and therefore less likely to go to other technologies such as marine renewables. That is another effect of having only a small budget for newer renewable technologies.

[David Mowat]

The hon. Gentleman is the second speaker to talk about the need for consistency. I am sure that is exactly what the industry wants and needs, but in an industry whose business model relies on large amounts of subsidy, Government interaction in the process is reasonable. The industry must understand that, despite the desire for consistency, the Government are entitled to do their best to bring prices down to a level closer to grid parity—something we would all like to see.

[Mark Lazarowicz]

I do not disagree with some of what the hon. Gentleman says; in fact, he made a point I was about to make. I of course accept that we cannot subsidise any renewables technology at any price, simply because renewables are a good thing; but we also have to recognise that as such technologies develop and become more mature, the price reduces dramatically. We could end up in a vicious circle: if we do not support newer and initially more costly renewables technologies at the start, their price will never reduce and they will not become commercial, in relative terms, over a longer period. That comes back to the point about the need for long-term consistency and vision, and to the hon. Gentleman’s point about the Government’s approach.

Some renewables technologies will of course be more expensive initially. However, if we do not take up the immense opportunities available to develop them, nationally and internationally, other countries will do so and we will lose out. That is what happened with wind, when countries such as Denmark took over our position on engineering and exports. No doubt countries such as China will also take a leading role in renewables if we do not. What we have is a short-term strategy, not a long-term vision. I fully accept that the Government have taken some steps in the right direction, but they should do more. I hope the Minister will give a positive response to the suggestions made by the hon. Members for Angus and for Waveney, and others.

Energy Markets (Competition)

Debate between David Mowat and Mark Lazarowicz

Wednesday 26th March 2014 Westminster Hall

[Mark Lazarowicz]

Absolutely. That is one of the areas where a fundamental investigation is needed, with fundamental questions asked and fundamental changes made. I recognise that businesses have to make a profit for their shareholders and future investments. They are big businesses, so the profits will have big numbers in them. Nevertheless, there are fundamental questions. Today, SSE has made an announcement that promises an energy price freeze until at least 2016 and it is preparing to separate legally the retail and wholesale sides of its business. Those changes are in line with the policies announced by the Labour party last year.

[David Mowat (Warrington South) (Con)]

This debate is indeed timely, given the SSE announcement. The hon. Gentleman will also be aware that SSE announced this morning that of the four offshore wind farms it was planning, three will not now go ahead.

[Mark Lazarowicz]

I see that that is how it has been described by some in the media. I have not had a chance to look at the SSE comments in great detail, but I am not sure that the causal linkage that the hon. Gentleman suggests exists. It was interesting, given the various comments on the Labour party proposals, that SSE has welcomed the need for long-term stability in the framework for investment. Perhaps the single biggest problem for long-term investment in offshore wind has been the confused and mixed messages sent by the Government recently.

[David Mowat]

rose—

[Mark Lazarowicz]

I will draw to an end, because I know a lot of colleagues want to speak in the debate, including the hon. Gentleman. There is an increasing focus on price, the customer, the structure of industry, long-term prices and long-term investment, and that focus comes from many quarters. If it had not been for the intervention of my right hon. Friend the Leader of the Opposition and our policies last year, we would not have seen this welcome concentration of minds on the issues. That has encouraged many to bring forward their proposals for change. I hope that this debate will contribute to getting the changes in the industry’s structure that are so desperately and urgently needed.

Scotland Bill

Debate between David Mowat and Mark Lazarowicz

Tuesday 21st June 2011 Commons Chamber

[David Mowat]

I want to make a few points about the excellent speech made by the right hon. Member for Birkenhead (Mr Field) on new clause 8, but before I do so I shall nail a couple of red herrings.

People have talked about priorities. It is absolutely right that the Scottish Government have the ability to set free prescriptions if that is their priority. It is absolutely right that there can be free tuition and almost free social care. Those priorities should be set in Scotland and it is the Scottish Government’s right to do that. The difficulty arises if they have a different baseline of spending. Nothing I have heard this evening convinces me or my constituents that there is no problem in that regard.

In the course of their remarks a number of Members said that we need more facts on these matters. Who can argue with that? Everyone is in favour of facts. In my previous career, however, when I heard people call for facts, it was often a delaying mechanism. There have been many reviews of the block grant formula over the past two or three years, most recently a superb piece of work by the House of Lords Select Committee in 2008, whose recommendation was unequivocal; similarly, Holtham. The Calman commission made the point that it was not a proxy for need. Most persuasively, Lord Barnett is clear that the formula was never intended to be used as it has been over the past 30 years. He, I believe, will table an amendment to that effect when the Bill goes forward.

I am not making the case for Scotland or Northern Ireland having less money or Wales having more. I am making case for the consideration to be based on need, and I will go wherever that takes us. “Based on need” means that we take into account relative population changes. One of the problems with Barnett is that over the past 30 years it has not properly reflected the fact that in both Wales and England population has increased more rapidly than in Scotland. Similarly, a needs-based formula would look at indices such as how many old people there are in a community, how many very young and how many disabled, as well as unemployment levels and indices of poverty. It is not rocket science. I do not mind what the answer is, but I will answer the question: what is likely to be the result of a needs-based formula?

The most coherent piece of work that has been done on this, notwithstanding the book by my hon. Friend the Member for Milton Keynes South (Iain Stewart), was by Professor David Bell of Stirling university. In evidence to the House of Lords Select Committee, his estimate was that the current allocation that Scotland receives is roughly 120% of that which is due in England and it should be closer to 105% or 107%. A difference of that order implies a yearly difference of £4.5 billion or, over the lifetime of this Parliament, a difference of £22 billion. I do not know if that is right, but Professor David Bell did a lot of work on that, as did the Holtham committee and others in respect of the House of Lords Select Committee.

The question might arise why we need to fix the problem now. There are a number of reasons—not just the fact that the Bill would be a convenient place to do it, although that is true, and not just because of the resentment that is felt in England and Wales. The right hon. Member for Birkenhead used an important word—“sourness”, which debases all of us and it is not the right answer to those of us who are Unionists. If we are not careful, we will be building up a bank of sympathy for devolution or separation in England.

The Bill for the first time equates Scottish levels of income tax to the level of the grant. I am concerned that unless we make the necessary reform to the block grant, it will become almost impossible to do in future. If the figure of £4.5 billion put forward by Professor Bell of Stirling university were correct, that would imply that Scottish basic rate of income tax would have to rise by about 11p in the pound to make up for that shortfall. But that is not the reason that we need to act; there is a moral reason.

I meet my constituents, have seminars and talk about the fact that we have lost Building Schools for the Future money in Warrington. We have lost the education maintenance allowance in Warrington and England. We could pay for an awful lot of things with some of the £4.5 billion. Of course, as many have said, there would have to be transitional arrangements, but that is not a reason for not starting. I think that it would be over 10 years or more.

I am genuinely mystified by the stance of Government Front Benchers on the matter. I have read carefully the replies that Ministers have given when asked about this, and they seem to come back to two basic points. The first, which is often made, is that the formula is expedient. It is true that it is easy to do—my understanding is that the whole thing is done by one guy in the Treasury—but that does not seem a great reason to continue with it. The second is that we are too busy fixing the deficit to make the change and that it must wait. As I said in an intervention, I am prepared to accept that reason, but my understanding is that we are on target to fix the structural deficit by 2015, which is before most of the Bill’s financial provisions will take effect, so I see no reason why we do not start to set up the commission that would have to look at a needs-based formula for Wales, England and Scotland. The formula must be fair, transparent and moral.

One final point I wish to make is that I do not support the amendment in so far as it puts a limit of plus or minus 5% on the amount, which I think is wrong. The point is that it should be needs-based. I would be quite happy if a consequence of the needs-based analysis was that Scotland ended up, as I think it would, with more than 105%. I do not support the amendment for the technical reason I have explained, but its basic thrust is right and it is very important that the House addresses this.

[Mark Lazarowicz]

I want to make a few points on the question of whether corporation tax should be devolved to the Scottish Parliament, as the SNP proposes. Given the time, I will make my comments as briefly as possible.

There is a respectable intellectual argument that cutting business taxes has a beneficial effect on some businesses and encouraging growth, but we cannot assume that that will automatically be the case. What is important is the effect that a cut in corporation tax would inevitably have on tax revenues. SNP Members were asked time and again in the debate how they could cut corporation tax while protecting public spending, and time and again they did not answer. If their theories are right, businesses might grow in time, but they cannot claim that there will be immediate growth that will make up for a loss in corporation tax. That is not because there is a lack of entrepreneurial spirit among the Scottish people. We must accept that any taxation policy cannot just be a general theory that applies in any circumstance. We have to look at the actual situation in a particular location and at a particular time.

The fact is that the biggest beneficiaries of a reduction in corporation tax in Scotland would be the big banks and power companies, not small and medium-sized businesses. Why on earth would cutting bank taxation encourage the banks to invest more in the Scottish economy and promote jobs? There are many other ways to encourage business growth in Scotland, and at the moment the Scottish Government have those powers. The Bill will give them more such powers, which is what should be done, rather than cutting corporation tax for beneficiaries, which we cannot assume will benefit the Scottish economy and Scottish business.

Another point is that if the Scottish Government were to go ahead with a corporation tax reduction, as they suggest, how can we assume that there would be no response from the UK Government? If the Scottish Government’s policies were to lead to a substantial transfer of businesses from England to Scotland, there would of course be a response at UK level, and at the end of the day that would lead to an overall driving down of the UK Government’s tax base. That in turn would inevitably lead to cuts in public services and public spending, and the SNP has to recognise that if it is to address the issue seriously.

I am not opposed to looking again at taxation and to considering all options, but I do not want us to go ahead with proposals that could have consequences that we cannot reverse. If the SNP is to pursue that line, it has to give us more information about the consequences of its policies. If it does not do so, it will be rightly criticised for coming forward with ideas that are all talk and no reality.

Funding Formula

Debate between David Mowat and Mark Lazarowicz

Tuesday 18th January 2011 Westminster Hall

[David Mowat]

What defence of the situation is made in Scotland? I have heard two defences. We have heard the sparsity defence; I have also heard the defence in terms of oil revenues. It is argued that somehow, the £4.5 billion Barnett imbalance roughly compensates Scotland for the additional oil revenue that it has had to give up to the Union or whatever. That is a poor argument.

[Mark Lazarowicz]

Will the hon. Gentleman give way?

[David Mowat]

I will finish my point. Other affluent areas of the United Kingdom are liable for relatively higher levels of income tax, and we do not necessarily expect those areas to have better services.

Finally—I would like the Minister to address this point in her closing remarks—I am concerned that the Scotland Bill, as it is currently configured, will institutionalise the Barnett formula for ever by creating a link between income tax levels in Scotland and current levels of Barnett settlement. In other words, that extra £4 billion will be linked for ever to income tax levels in Scotland. What that means in broad terms is that in order for the Scottish income tax base to make up the £4 billion that Scotland receives over and above a needs basis, additional Scottish income tax of between 12p and 15p in the pound would be required. That will never happen.

For the same reason, it will be difficult to review the formula significantly after the link to income tax has been created. If that is the case, we seem to be stuck with the imbalance, which means that every constituent of mine—my constituency of Warrington, in the north of England, is not overly affluent—receives some £5,000 less over the lifetime of a Parliament than his equivalent in Scotland, which would not be the case if the funding were needs-based. That is not to say that England and Scotland should be the same. Holtham did not say that. The figure that Holtham used and that currently exists is 120% of the English settlement in Scotland, but 107% would probably be a fairer figure. That is not the same, but it is a lot closer than it is now. I am concerned that if the Scotland Bill passes unamended, we will institutionalise the matter for ever, which, frankly, will be bad for the Union.