Draft Companies (Disclosure of Address) (Amendment) Regulations 2018

Drew Hendry Excerpts

Thursday 29th March 2018 General Committees

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Sharma, on a day when the Government are bringing forward sensible regulations for the reasonable protection of people. On that basis, and with the caveat of the earlier questions being answered correctly, we are happy to support this measure.

GKN: Proposed Takeover by Melrose

Drew Hendry Excerpts

Tuesday 27th March 2018 Commons Chamber

[Greg Clark]

It is important that we recognise the benefits and valued presence of GKN in many parts of the country. It is a pivotal UK engineering firm, with a long heritage. The commitment that I obtained from Melrose was for that to continue, and that is what it has set out, but it is for shareholders to judge the decisions that the future management may make.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I thank the Secretary of State for advance sight of his statement. He is right to seek undertakings at this stage, because the concerns are many and varied, including: taxpayers’ money being used in GKN’s programmes; defence contract concerns; and the location of GKN’s headquarters. Another concern is security of employment, as Melrose is not known for its hesitation in stripping out what it sees as unimportant to its aims. There are concerns about training, research and development, and the long-term security of sensitive intellectual property, and there are written concerns from the Pensions Regulator that the pensions of employees could be seriously weakened by the proposed takeover.

I understand from the Secretary of State’s statement that he will place Melrose’s response in the Library, but will he give the answers to my questions in the House today? Is he confident that the Melrose line of, “Buy, improve, sell” is not in actual fact likely to be, “Buy, strip and sell what is left”? What detail will he require to be satisfied of this, or is it, in Melrose’s words, to be done “in good faith”? If the Secretary of State for Defence is to receive assurance for his “serious concerns”, will he come to the House to confirm that he is happy with the answers given? Will the Secretary of State outline the mechanism by which Melrose will guarantee that jobs will not be shipped abroad, and that the pensions of GKN workers will be fully funded? Finally, will he assure the House that he will intervene if any of the questions asked about the many concerns that are left remain unanswered?

[Greg Clark]

I have set out in terms in my letter to Melrose and in my statement that, in many respects, the model of short-term ownership—especially for assets connected with defence purposes, in which long-term relationships are important—is in tension with the model of these industries. That is why I set that out, outside the statutory determination that I have to make. I suggested that the commitments that Melrose makes are legally binding. The takeover panel provides one mechanism for that, which I commend, but there are other ways in which the undertakings could be made legally binding.

The hon. Gentleman asked about the assessment of the Ministry of Defence. At the close of the bid—when all of the facts are known, including what has been said this morning—the Ministry of Defence and other agencies will make an assessment and advise me on whether there are grounds for an intervention in the interests of national security. I have made a commitment to this House that I will take that expert advice seriously and meticulously, and will make a decision when I have it before me.

On pensions, Melrose and GKN have been in discussion with the pension trustees and with the Pensions Regulator. It is for the Pensions Regulator to determine whether the arrangements are satisfactory for the interests of not just current, but future pensions.

Corporate Governance and Insolvency

Drew Hendry Excerpts

Tuesday 20th March 2018 Commons Chamber

[Andrew Griffiths]

As my right hon. Friend will know, we have not hung about in relation to improvements within the corporate governance structure. We will soon lay a further statutory instrument which will enhance even further the corporate governance measures we have introduced. The consultation will take place within the normal rules of a consultation, and we hope to bring forward proposals as a matter of urgency.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I thank the Minister for giving me advance sight of his statement. On engagement, will the Government consider proposals to force chief executives and company directors to engage directly with small business owners or groups of affected individuals? In the recent instances involving the Global Restructuring Group and the Royal Bank of Scotland branch closures, there has been a refusal on the part of directors to meet those affected. As my hon. Friend the Member for Glasgow North (Patrick Grady) pointed out, a lot of the problems that this consultation seeks to address could have been avoided simply through early engagement with those in charge.

With prohibitive costs often preventing individuals from pursuing legal options after being affected by insolvency, will the Government’s strategy look at ways of ensuring that legal recourse is available to those who will already be in financial difficulties as a result of insolvency? On contract and pensions protections, small businesses should not be the ones to suffer when a failed large company goes bust, and it should not only be in high-profile cases that the Government step in to protect pensions. What measures will this strategy take to ensure that small and medium-sized enterprises are protected when contracts or payments are halted due to a large company collapsing, and that any protection for creditors is mirrored by protection for workers and pension holders? These proposals are aimed at improving the range of options available following a company becoming insolvent. However, a proactive approach could help to prevent that from happening in the first place. Does the Minister agree that one way to ensure this would be for organisations to take profit warnings seriously and not to continue to hand out contracts to firms that issue them?

[Andrew Griffiths]

I thank the hon. Gentleman for his detailed and important questions, many of which related to small businesses. As the Minister with responsibility for small businesses, I take those questions extremely seriously. It is not just large corporate collapses, such as that of Carillion, that affect the thousands of small businesses in the supply chain. The collapse of a small business can affect other small businesses as well. We have all seen cases in our constituencies of small businesses losing money because of phoenix businesses that go into liquidation, change their name and reappear. It is the same people selling the same products, fleecing people time and again. We are giving the Insolvency Service the ability in this consultation to investigate companies that have already been dissolved, and that will go a long way towards sending the clear message to directors who think they can get away with fleecing small businesses in that way that the Insolvency Service will come and get them.

The hon. Gentleman talked about pensions. It is important that directors should clearly understand, through this White Paper and through the consultation, as well as through the Department for Work and Pensions White Paper, that there will be consequences if they fleece their pension fund, that there will be fines and penalties and that they could spend time in prison if they have been found to be fleecing their pension fund in an unacceptable way.

The hon. Gentleman also talked about the need for small businesses to be treated in an ethical way. In the spring statement last week, the Chancellor demonstrated a clear recognition and understanding that small businesses were being fleeced, particularly in relation to late payments. He said that he would consult on how we could end the “scourge of late payments”. If we could do that, we would see £14 billion taken from the pockets of big businesses and put into the pockets of small businesses. Also, when insolvencies such as that of Carillion do happen, payments will stay in the bank accounts of the company that had gone bust not for 128 days but for only 30 days.

GKN: Proposed Takeover by Melrose

Drew Hendry Excerpts

Thursday 15th March 2018 Westminster Hall

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for West Bromwich West (Mr Bailey) on securing this important debate on a strategic issue. He raised the long-term aspects of GKN ownership, and gave a warning about the short-term or illusory interest that might be shown towards shareholder gain. He also gave a warning about the relative sizes of the companies and reflected on GKN’s sheer breadth of manufacturing interest in aerospace and automotive.

The hon. Member for Redditch (Rachel Maclean) rightly raised concerns about possible local jobs losses due to the takeover; she indicated that it is very important that pensions protections should be put forward, and I will come back to that subject later in my speech.

It is certainly worth underlining the need to invest in young people and in the future by investing in science, technology, engineering and maths skills. It would be remiss of me not to say that that should very much include girls and young women. It should be noted that GKN has committed to young people and STEM subjects. The hon. Lady clearly is not convinced by the proposed takeover by Melrose.

The hon. Member for Birmingham, Northfield (Richard Burden) mentioned the range of assurances that are required about jobs and research and development, which I will come back to. He certainly seems to have no confidence in Melrose. He rightly raised the concern of other local politicians who are involved, including the council leaders and the Mayor. Importantly, he touched on the need for urgent reform of the takeover rules. Perhaps that needs to be looked at a bit more urgently. He also touched on the German model. We know that German manufacturing has been extraordinarily successful because it has been able to take a more long-term view and make long-term investments.

My hon. Friend the Member for Paisley and Renfrewshire South (Mhairi Black) got straight to the nub of the issue with what she said about the UK Government’s strategic positioning and industrial strategy. She rightly warned that without the proper resources and investment in manufacturing, the industrial strategy is very much at risk.

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

On that point, let me reassure the hon. Gentleman that the Government are committed to supporting the sectors that he talks about. We are investing £1.95 billion in aerospace and £1 billion in automotive research.

[Drew Hendry]

I am grateful for the Minister’s intervention. It is good to know that that is the intention, but as hon. Members around the Chamber mentioned, that investment could be lost with GKN. Members will be interested to know what assurances he can give that that money will actually stay in the UK’s economy.

My hon. Friend the Member for Paisley and Renfrewshire South clearly pointed out the grounds on which the Minister could intervene—I understand that he has difficulties in terms of what he can say about national security and financial stability—and mentioned the uncertainties of Brexit as context for the need to ensure that investment and stability are maintained. Importantly, she also mentioned that the chief executive of the Pensions Regulator wrote to raise his concerns about the long-term prospects for GKN’s pension scheme.

The hon. Member for Birmingham, Erdington (Jack Dromey) rightly talked about workers in his constituency, Airbus’s warning about taking a short-term approach and the need for a long-term strategic vision. He gave dire warnings from history about the severe jobs cuts at Dynacast and the FKI group. He, too, mentioned the GKN pension deficit. I must say that I am not as assured as he is about the pension fund. Whichever company is in control—GKN or Melrose—must ensure that it is properly funded so that people do not lose out. He underlined the fact that the Government have the powers, should they choose to use them in this case, and rightly talked about his pride in GKN.

The hon. Member for Caerphilly (Wayne David) concentrated heavily on the fact that Melrose is trying to buy a major player in an industry in which it has no experience. He warned about the potential loss of defence and intellectual property, which the Minister should consider very carefully. His point that this may be the last chance to look at that was poignant, and it should be considered. Several hon. Members mentioned that the benefits of automotive and aerospace are realised over decades. A long-term approach is not only required but demanded by the people who will depend on the jobs, by the companies that will need the skills and by the public purse, and therefore the public services, which will be funded by the tax that is paid. Again, the Government should concentrate heavily on that.

I share the concerns expressed by Members around the Chamber about the rights of workers in these companies and their jobs, and about the fact that we should seek to maintain industrial and engineering capabilities, jobs and skills. I underline again the concerns that were raised about the pension scheme: any diminution of the company’s ability to pay pensions would be deeply troubling. I will not go over the points that other hon. Members made, but that is critical: people who have given their lifetimes to working in the industry should not be abandoned when the time comes for them to draw their pensions. GKN has pointed out that its pension fund has been driven down by Brexit and currency fluctuations. Hon. Members’ national security concerns must also be taken seriously, especially given the intervention on that subject by the Minister’s colleague, the Secretary of State for Defence. The Government must carefully consider all the contributions we have heard in deciding whether they will intervene.

--- Later in debate ---

[Andrew Griffiths]

I thank my right hon. Friend, who as always makes a salient and sensible contribution to the debate. I agree with him wholeheartedly that the defence of our nation is the most important point in any of these decisions.

As hon. Members have heard, the Enterprise Act 2002 grants Ministers statutory powers to intervene in mergers that give rise to public interest concerns only on the grounds of national security, financial stability or media plurality. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) raised the issue of that financial stability. It is the financial stability of the country’s economy as a whole. This Government take very seriously our responsibility to protect national security in particular, and we are robust in assessing any possible public interest concerns and carefully considering when those powers should be exercised. If necessary, they will be exercised.

I appreciate that there has been much speculation about the potential use of those powers in this case. However, as we heard earlier, public interest interventions are quasi-judicial in nature. It is therefore important that Ministers act, and are seen to act, impartially, on the basis of an open mind and of the evidence available. For that reason, it is not appropriate for me to comment on their use in this individual case. As hon. Members might expect, my right hon. Friend the Secretary of State and I have taken a close interest in events. He has spoken to the chief executive officers of both GKN and Melrose to understand their intentions and to make it clear that he wants an open line with the companies, consistent with his potential statutory role in the process.

The bid, however, is primarily a commercial matter for the parties concerned, and we wait to see how things develop. GKN shareholders now have until 29 March to decide whether to accept the Melrose bid. It has become clear that, regardless of whether the takeover by Melrose is successful, GKN will not be the same company we know today. Beyond the potential sale of the Driveline, both GKN and Melrose have outlined plans to sell the powder metallurgy business and other non-core businesses. There remains the distinct possibility that, irrespective of which party ultimately controls GKN after the resolution of the bid, it will choose to sell all or parts of GKN’s current business to foreign companies.

On 13 March, Melrose wrote to the Business, Energy and Industrial Strategy Committee at its request, setting out the company’s position on pensions and post-offer undertakings. In addition to the conversations held between the Government and the parties involved, the hon. Member for Newcastle upon Tyne Central, who raised the question of Unite, will be pleased to know that the Secretary of State has been in close contact with the union.

I know that some hon. Members have concerns about GKN’s pension schemes. Individual cases are a matter for the independent Pensions Regulator, but the Government are aware that the parties are in discussions with the pension trustees, who have made their expectations clear. The hon. Member for West Bromwich West raised the issue of R&D investment; Melrose has told the Business, Energy and Industrial Strategy Committee that it supports R&D and will maintain the level of investment in R&D that GKN has spent in the past, which I think was 2.2% of sales between 2014 and 2016.

The hon. Gentleman also mentioned the question of how France and Germany could block takeovers. The reality is that they cannot. The UK’s takeover rules are based on EU takeover rules, which apply to all European countries and limit the ability of national Governments to block mergers unless they are based on national security, financial stability or media plurality grounds. France and Germany would also be unable to block a takeover of that kind due to EU takeover rules.

My hon. Friend the Member for Redditch (Rachel Maclean) is a doughty fighter for her constituents, and I know how passionate she is about this issue. She asked whether we are confident about the assurances Melrose has given about the UK headquarters. Under the takeover code, companies can make legally binding post-offer undertakings, and that is an important element. The hon. Member for Paisley and Renfrewshire South raised the question of pensions. Of course, it is a matter for the Pensions Regulator and it would be inappropriate for me to comment; however, the Government understand that the Pensions Regulator is in discussion with all parties.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry)—I hope I got that right—asked what assurances we can give that Government R&D investment will stay in the UK. I can tell him that Government grants to support R&D are awarded on the basis of R&D carried out in this country, so the conditions of any contract with Government would mean that those responsibilities would transfer to the new company.

[Drew Hendry]

I appreciate the Minister’s giving way in the limited time he has. I want to make it clear that my concern was that the investment, and therefore the resulting intellectual property, might be lost elsewhere.

[Andrew Griffiths]

I understand the point that the hon. Gentleman makes.

Finally, my hon. Friend the Member for Redditch asks what the Government are doing to further strengthen the codes. I will highlight that the Government are exploring proposals to strengthen our powers to scrutinise investment for national security purposes, which would bring our regime in line with those of other developed countries. The national security and infrastructure investment review that my hon. Friend talked about closed in January, and the Government will publish its firm proposals in a White Paper this year.

The Government will continue to monitor the situation very closely over the days and weeks ahead, and I can assure hon. Members that we will always act in the best interests of the country.

Oral Answers to Questions

Drew Hendry Excerpts

Tuesday 13th March 2018 Commons Chamber

[Claire Perry]

As the hon. Gentleman knows, making these long-term decisions and creating costs for consumers over decades—whether in tidal lagoons or in nuclear—are matters that we have to take extremely seriously. We have to reduce the carbon emissions of our power supply, cut costs for consumers and create innovation that we can export around the world, and all of those considerations are being taken into account.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

To meet carbon reduction targets, the Government will need to support, among other technology, offshore wind projects. In Scottish waters, Dounreay Tri, Kincardine and Forthwind are working to deliver first generation projects with an immediate value of £200 million for jobs and the supply chain, yet due to factors outwith their control, they will struggle to hit the UK Government’s October deadline. Will the Minister meet me to discuss how we might support these projects in making their contribution to carbon reduction?

[Claire Perry]

We have worked very hard on the wind industry in Scotland—the hon. Gentleman and I both welcome the recent announcement about remote island wind, which is a really positive step forward—but the challenge is that the phasing out of the renewables obligations was set over four years ago. People have been fully aware of them, and we are currently not intending to extend the length of the grace periods. However, as he knows, I am always happy to try to build cross-party consensus on this vital agenda for this country.

--- Later in debate ---

[Richard Harrington]

As my right hon. Friend will be aware, the whole sector is important to us, and specifically the supply chain. I have met various players involved, and it is of critical importance to us.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

The UK Government have so far failed to announce a sector deal for oil and gas, and there was no mention of one in their industrial strategy. There is a need for a sector deal approach to the industry. The Scottish Government have been calling for such action. Will the Minister finally rectify this glaring omission and commit that vital support for the industry and the jobs and investment it relies on?

[Richard Harrington]

The hon. Gentleman should be aware that this is a priority for us. We are working very hard with the sector to come up with a sector deal, and I expect those talks to come to fruition very soon.

Energy Efficiency and the Clean Growth Strategy

Drew Hendry Excerpts

Thursday 8th March 2018 Westminster Hall

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Walker. We should all be friends in this Chamber today. I warmly welcome the fact that the hon. Member for Eddisbury (Antoinette Sandbach) has initiated this important and overdue debate. It is something of a scandal that the subject has not been debated for so many years. In this warm debate, I will give the Minister only a couple of bits of heat, which have actually been generated by the contributions of others, while I try to go through the constructive discussion we have had.

First, the hon. Member for Eddisbury rightly raised the issue of fuel poverty. She talked about the fact that this is an issue for many people, particularly in rural areas where lower incomes are more common and costs are higher. The weather is often less favourable and less warm. That is especially true for off-grid customers. In the highlands and islands, distribution charges mean 4p per unit more for customers than other parts of the UK, which is a particular additional problem. I call on the UK Government, as we have called on Ofgem and energy companies, to end this inequality without—importantly—increasing the cost for others: it can and should be done.

The hon. Lady also mentioned energy efficiency and the massive strides that need to be taken towards climate change goals. I was interested in her proposition about mortgage providers providing an incentive. That merits investigation, but I would insert a word of caution there. The measures used would have to be carefully thought out, because we do not want to see the unintended consequence that people who are trying to get on the housing ladder and get their first home are effectively priced out of the market by measures that may not be appropriate for their area and its housing stock. It is worth investigating, but I urge some caution.

The hon. Lady was quite right in saying that the onus should be on new developments to provide more efficient properties. Developers should take that up. I was caught by her comment that she was shivering in her home in London. I think it is quite unusual for people in London to find themselves shivering in their houses. When I was down in my flat last week, although we benefit from a district heating scheme, the insulation is so bad that it was actually very cold in the flat, because the heat was flying out of the windows. That is a good example of what happens. Is it not also the case, however, that that gives us an insight into what people in fuel poverty have to put up with throughout pretty much the whole of the winter? It is a good lesson for us to take away: we should be aware of the genuine suffering that people face through cold.

The hon. Lady, in her very good speech, said that energy efficiency measures should be thought of as infrastructure. I think that is a good idea, which is overdue for consideration. The Minister should take that into account, particularly in the light of the great heat challenge that we will have in the coming decades. It is an important suggestion, which should be taken forward. Of course, investment in energy efficiency creates jobs. That is a great thing to do not only socially and morally but for the economy. I think that is an important point to make.

The hon. Member for Redcar (Anna Turley) talked about not being able to meet emissions targets without taking on the industrial effects, and she was absolutely correct. Industrial decarbonisation has to be accelerated. The whole strategy needs to be given a lot more—if Members will pardon the pun—energy, and the attention that it needs.

The hon. Lady quite rightly talked about carbon capture and storage, and about the Teesside Collective and the investment that is required. She should be commended for fighting for her constituency in that way, particularly given the issues over steel. Happily, in Scotland we were able to save the steel industry, with the Scottish Government working with Liberty Steel to take over the plants in Lanarkshire. It dramatically affects the wellbeing of industrial neighbourhoods if they lose that significant number of jobs, and they should be prioritised for reinvestment. However, we should be wary—this is one of the points of contention with the Minister—of promises of investment in carbon capture, because in Peterhead the Chancellor said that we would invest £1 billion in carbon capture and storage, but the rug was pulled away from underneath that project and it was left without that funding. It will be interesting to see the Minister not only make those commitments but follow through on commitments for the different projects. I will return to that point when I respond to the comments made by the hon. Member for Ochil and South Perthshire (Luke Graham).

The hon. Member for Redcar talked about district heating, which has to come through far more importantly and strongly to support communities. There are great benefits to district heating schemes if they are got right. She and the hon. Member for Wells (James Heappey) also talked about renewable energy, which is very important in both industrial and domestic energy in taking the challenge forward.

Another bone of contention that I have with the Minister —perhaps she will tell us what she will do about it—is the shabby treatment of the solar industry. Energy efficiency in commercial and industrial properties could have been greatly enhanced by supporting the solar industry, yet Government policy has withdrawn that support. Investments in new solar projects have dramatically declined—they have fallen off the scale—so I hope that the Minister will have an answer on how it can be supported.

Heeps—sorry, the hon. Member for Wells—said that big infrastructure was “toys for boys”. On International Women’s Day, it is worth pausing to reflect on that and say to the Minister, as I and others have before, that we need to encourage more girls and young women into the energy industry so that, large, small or however the infrastructure is designed, it is no longer “toys for boys” but “toys for boys and girls”. It is important we continue to challenge the language that we use, although I know that was meant in the best possible way.

The hon. Gentleman also discussed whether the domestic supply was near to crisis. I know the Minister answered that point; but I will pose the slight warning that, owing to capacity, people in off-grid areas came perilously close to running out. Some in my constituency of Inverness, Nairn, Badenoch and Strathspey actually did run out of liquefied petroleum gas during that period. It was not job done. I appreciate what the Minister said, but there needs to be more focus on off-grid gas customers to ensure that we support them. I would welcome a comment on that either now or later.

[Claire Perry]

The hon. Gentleman and I, and I suspect others in the Chamber, share exactly the same off-grid problem. It is a problem of effective supply. At the moment, heating oil is relatively cheap, but a couple of years ago the price was going through the roof, so we end up with unmanageable spikes in demand, although we have many collective buying schemes. He knows that one of the ambitions of the clean growth strategy is to phase out fossil fuel heating for new build in off-grid areas—it is simply ridiculous that we continue to put oil boilers in—and to look at how we create a cost-effective technological pathway. My hon. Friend the Member for Eddisbury (Antoinette Sandbach) has installed a heat pump, which, as she mentioned, can require a lot of reworking of a home, which may not be cost-effective. We are all collectively determined to solve this problem. To me, the answer lies in investment, innovation and creating some good routes to market.

[Drew Hendry]

I thank the Minister for that intervention. I understand that she wants to create solutions, but the proof will be in the pudding. I look forward to seeing what tangible measures come forward.

The hon. Member for Wells also talked about comfortable homes improving productivity. It is absolutely true. Studies have shown that in cold homes, children’s educational attainment is held back. He is right to point out that people are more productive when they have reasonable places to live in, and we give our children the best possible start in life when we give them warm homes to live in and have their education in.

The hon. Gentleman made very salient points, which I was delighted to hear. The voucher scheme for fuel-poor households is a really good thing to follow up—it is another idea that has merit and deserves further investigation. If something could be produced on that level, it could help a number of people and, as he said, improve housing stock. A measure that could improve things right away is the rapid acceleration of the programme to put the latest generation of smart meters into homes. A lot more needs to be put in to ensure that that happens much more quickly.

[James Heappey]

The key to getting smart meters into people’s homes is not only that the technology will allow all sorts of smart solutions that will bring down energy bills for people who are using less, but that the new tariffs being brought forward by the insurgent energy companies and based around half-hourly settlement will allow people to access cheaper bills because they will be in a better market. The more that we can all, on both sides of the House, encourage smart meter deployment, the better job we will be doing for our constituents.

[Drew Hendry]

The hon. Gentleman makes a very salient point. It is important that we encourage these measures, especially for people living in poor households, because they are less likely to take this up off their own backs. A focused programme and looking at how we incentivise this rapid uptake for poor households is very important.

[Steve McCabe]

I agree with the hon. Gentleman and others about the potential of the smart meter programme. Does he concede that at the moment the problem is that it costs households? They do not know how much it is costing them, because the Government will not release those figures, and we do not know how much the Data Communications Company is costing. At the moment, while the potential is there, we have a programme that looks as though it is not on track and could lead to an inflation of energy bills, rather than savings for people.

[Drew Hendry]

That is something to be aware of. I thank the hon. Gentleman for raising that point and look forward to the Minister’s response.

The hon. Gentleman mentioned home insulation, which must be taken forward much more rapidly—I know I am using that word a lot today, but it is important because this is somewhere where we can make a real difference very quickly. In Scotland, as he pointed out, there is four times the progress on insulation. I make that point because it is important to thank the people, in particular in organisations such as Warmer Homes Scotland, who have been on the ground, working with consumers and making the breakthroughs by talking to people and persuading them to take on the new measures. If any hon. Member in the Chamber or anyone else wants to look at that, they will see the fantastic work being done.

[Luke Graham]

The Warmer Homes scheme was a fantastic initiative. I know that some of the terms changed in 2017 because a number of constituency cases were brought to me, with people sometimes being disadvantaged. Will the hon. Gentleman join me in working on addressing some of those issues to ensure we are still reaching as many people as we can?

[Drew Hendry]

I will come in a moment or two to what the Scottish Government are doing.

The hon. Member for Birmingham, Selly Oak (Steve McCabe) talked about energy efficiency schemes, and in Scotland some of those are changing the housing landscape. I want to point out one of the commercial companies, a private developer from the north of Scotland: Springfield Properties. It is not only looking at more energy efficiency measures in its buildings, but in Perthshire, where it has a new development of thousands of homes, it is putting in electric vehicle charging points for every single house. That is a very innovative thing for a private developer to be doing, adding to the fact that Scotland is leading the way in electric charging for vehicles.

[James Heappey]

The hon. Gentleman is making another important point. At the moment, when new houses are built in England, I think they are being built with 2 kV or 3 kV fuse boards, but an EV requires an 11 kV fuse board. I do not understand why we are building hundreds of thousands of houses with electrical connectivity that is insufficient to charge at full flow cars that are very likely to dominate the market in future. I hope that our friends at the Ministry of Housing, Communities and Local Government will amend that part of housing policy quickly.

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[Drew Hendry]

The hon. Gentleman makes a good point, and I share his hope that people are listening to the need to adjust those things. To achieve the outcome of improving homes, making them ready for the future through energy efficiency and tackling the clean growth challenge, it is important to take a holistic view.

I agree with the hon. Member for Birmingham, Selly Oak about introducing grants, loans and measures to help people to gain energy efficiency but, again, it is always good to look at those kinds of ideas with real caution. His talk about an equity release scheme should give us pause for thought about its unintended consequences. It is a good idea that merits investigation, but we need to reflect on whether it is a position that only people with assets could access and whether we would be forcing people to release those assets, instead of promoting it as a core policy across the board.

I hoped that I would not have any heat from the hon. Member for Ochil and South Perthshire, as is usual in exchanges between near-neighbours in Scotland, but he bravely brought up the carbon capture and storage challenge. I will not repeat my words to the Minister earlier, but in a positive sense, I ask her whether she will support the Scottish Government’s commitment to developing carbon capture in St Fergus. What will she do to put real weight behind that Acorn project?

My cheeky word of caution, which is in fact not cheeky but factual, is that in the vast majority of city deals in Scotland, the UK Government have failed to match the Scottish Government’s funding. If a city deal comes forward, I hope the hon. Gentleman’s constituency gets its fair share, unlike Aberdeen and Inverness.

[Claire Perry]

The hon. Gentleman and I debate Acorn and St Fergus frequently. I will double-check the numbers, but my understanding is that the UK Government have put in £1.6 million and the Scottish Government have committed a welcome £100,000. We are absolutely keen to support those projects and we continue to be a major investor in all sorts of levels of carbon capture and storage; I will address CCS and its future in my closing remarks. I will double-check those numbers and write to him, but I am confident that we have already committed several multiples of what the Scottish Government have to that project—and quite rightly.

[Mr Charles Walker (in the Chair)]

We are all looking forward to the Minister’s closing remarks.

[Drew Hendry]

I have not even got to the bulk of my speech, but I will try to speed up. I was getting to the end of my responses to hon. Members’ comments, which I was certain we had time for.

I will finish on a positive remark about the comments made by the hon. Member for Ochil and South Perthshire. I am pleased to say that geothermal investigation has been embraced around the Chamber. I am sure that he will support the delivery of the Scottish Government’s ambition for accelerated clean growth in Scotland.

To aid the debate, I will cast aside some of my notes. As we have heard in this debate, much more needs to be done on energy efficiency. In my meetings with energy companies and climate change activists, they all agree on one principle: not enough is done for energy efficiency in our homes and businesses across the nations of the UK. Old housing stock is part of that huge challenge.

On new housing stock, I was struck by the comments in an intervention about new heating systems and new ways of looking after buildings that can reduce costs for people. When I was the leader of the Highland Council, I was pleased to be involved in a Highland housing fair, which adopted a housing development model from Finland. Some houses on that scheme were so innovative that it was reckoned that they would have average energy costs of about £2 per year, so it can be done with the right will. They have been sold now, so someone who wanted to see them would probably have to knock on the householder’s door. It was a good project, and the Minister might want to consider more innovation like that.

I will skip a page of my notes. We welcome the industrial energy efficiency accelerator, but we look for more detail from the Minister. We want to see how that will move forward.

My conclusion will not be too lengthy, but I will touch on some things that are happening in Scotland. Energy efficiency has been mentioned several times; it is fundamental to Scotland’s meeting its ambitious climate change targets. The Scottish energy efficiency programme route map—I am sorry to tell the hon. Member for Wells that its name is now SEEP rather than HEEPS—will be published in May 2018.

Last December, the Scottish Government published their energy strategy, which will strengthen the development of local energy projects, empower customers and support Scotland’s climate change ambitions, while tackling poor energy provision. Our ambition to improve the energy efficiency of Scotland’s buildings is central to our efforts to tackle fuel poverty.

On 28 February, the Scottish Government’s Cabinet Secretary for the Environment, Climate Change and Land Reform published the “Climate Change Plan, Third Report on Proposals and Policies 2018-2032”, which details how the Scottish Government will meet their emissions target of 80% by 2032. With the Climate Change Bill, Scotland is sending a message that it is the place to do low-carbon business, which seems to be endorsed around the Chamber.

Energy efficiency is fundamental to Scotland. Heating and cooling Scotland’s homes and businesses costs £2.6 billion a year, and accounts for just under half the country’s greenhouse gas emissions. In June 2015, the Scottish Government announced that they would take long-term action to reduce the energy demand of residential services and industrial sectors by designating energy efficiency as a national infrastructure priority. Again, something that has been called for in the debate has already been done in Scotland. That was subsequently confirmed in the Scottish Government’s “Infrastructure Investment Plan 2015”.

Would you believe, Mr Walker, that I am going to cut my remarks considerably short? I wanted to go into a lot more detail about what is happening in Scotland, but given the response in the Chamber today, there is plenty of incentive for the Minister to look at that in detail.

As the Member for Inverness, Nairn, Badenoch and Strathspey, it would be remiss of me not to mention a wonderful development: the Scottish Government’s dualling of the A9 between Perth and Inverness. The A9 is set to become the world’s—well, Scotland’s—electric highway because of the Scottish Government’s investment in ensuring that it has rapid charging points all the way along. It will be a real boon for the electric vehicle proposition in Scotland, and it is just the start of much more work that will be done there.

The debate has been very constructive, and I thank the hon. Member for Eddisbury for introducing it. There is still an awful lot of work to be done, but hopefully the debate has given the Minister a bag full of ideas to take forward and develop in future.

Domestic Gas and Electricity (Tariff Cap) Bill

Drew Hendry Excerpts

2nd reading: House of Commons
Tuesday 6th March 2018 Commons Chamber

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to follow my Select Committee colleague, the hon. Member for Eddisbury (Antoinette Sandbach), who made a number of important points, not least about reaching out to those who are not in the AB group. My hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) covered many of the aspects of the Bill in detail. My hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) also picked up on many of the issues.

One of the great pleasures of such a debate is that there is great consensus around the Chamber, but when we speak late in the debate, we find ourselves saying, “There are some things I want to repeat.” I will try to avoid that, because while welcoming the proposals, I want to highlight how much more there is to do to protect people with regard to energy costs.

I speak as a member of the BEIS Committee, and it was very clear to us that there are significant failings in the consumer energy sector and that intervention is needed, as consumers continue to get a raw deal. The alternative proposals from the consumer energy players were quite simply too little, too late, and it has become necessary to take action. Ofgem and the energy companies should not continue to make the same mistake on issues affecting consumers.

One of those issues is particularly important to constituents in the highlands and islands—distribution charges. In the highlands and islands, consumers pay 4p per unit more on restricted meters, so the average consumer is about £400 worse off. The need for the price cap, as with distribution charges, highlights the failure of the big energy companies to take positive action to protect vulnerable customers in constituencies in the highlands and islands and in other rural constituencies. The costs for people there are already higher. Many are off the gas grid. Many have to use much more electricity. The weather is colder. Income is often lower. There is a continuing, deepening crisis of fuel poverty, putting a weight on the backs of those already suffering straightforward poverty, especially those having to claim universal credit. We have seen some of the most severe cold weather in the past week. Who suffers more when it is cold? The poor, the vulnerable and the disabled. Although the cap is welcome, it is not a panacea, and much, much more needs to be done.

[Antoinette Sandbach]

rose—

[Drew Hendry]

I am happy to give way.

[Antoinette Sandbach]

I am very grateful—

[Antoinette Sandbach]

I will keep it brief, Mr Deputy Speaker. Does the hon. Gentleman agree that energy efficiency measures are key in this regard?

[Drew Hendry]

Yes, absolutely. There needs to be an acceptance that this is just one measure and there are many more measures—including on energy efficiency, which should have had much more attention from the Government.

There remains a need to remove legislative obstacles to data sharing for vulnerable customers to give them better consumer protection. There also remains—

[Patricia Gibson]

Will my hon. Friend give way?

[Drew Hendry]

Yes.

[Patricia Gibson]

I will make a very brief intervention if I may, Mr Deputy Speaker. As I said in my speech, we are having this debate because of the loyalty penalty that people pay. We see this in the energy industry, the insurance industry and a whole range of industries. Does my hon. Friend agree that we need more Government regulation across industries to stop people being punished for being loyal to their providers, whatever the market?

[Drew Hendry]

I absolutely agree. To assist, Mr Deputy Speaker, I will take no more interventions during the rest of this speech.

As I said, we need data sharing for vulnerable customers to give them better protection. There remains a risk, as was highlighted by the hon. Member for Rugby (Mark Pawsey), who is still in the Chamber, that suppliers may just increase their lowest prices to maintain profit. We will all be watching carefully to see how they react.

So what must now be done? In Scotland, the SNP Government are providing resources for financial health check-ups to help pensioners and those on low incomes to make the most of their money and to secure the best energy tariffs. The UK Government will, I hope, follow suit.

We call on the Government to place a new duty on energy companies to set out a clear timetable for reducing the number of people on prepayment meters, to implement the Competition and Markets Authority’s call to reduce the costs for households and to introduce a requirement for energy companies to prioritise the roll-out of new-generation smart meters to households at risk of fuel poverty. That can all be done in short measure.

When it comes to disabled people, even more action is needed. Disabled people face higher energy costs because of issues related to their impairment or condition. Those extra costs have a detrimental impact on disabled people’s financial resilience and ability to fully participate in society. The price cap goes some way, but the UK Government must now put in place longer term plans alongside the price cap to improve support for disabled consumers, including increasing accessible communication and digital inclusion and, as I mentioned earlier, building on more effective data use.

The challenges for disabled people are that they have no choice but to consume more. They have limited mobility, use more heating to stay warm and run additional technology and equipment. Over a quarter—27%—of households with a disabled person spend more than £1,500 a year on energy, and nearly 800,000 households across the nations of the UK spend more than £,2,500.

There must be a different way to deal with this. In Scotland, the Scottish Government have announced a publicly owned energy company, supporting efforts to take fuel poverty and climate change targets seriously. We will provide people, particularly those on low incomes, with more choice and the option of a supplier whose only job is to secure the lowest price for consumers and who looks after the wellbeing of those who lack the confidence or ability to engage effectively in complex energy markets. That will also allow us to deliver on broader energy ambitions for renewable generation and the maximisation of community benefit. By the end of this parliamentary term, the conditions will be in place to meet the set-up challenges.

In welcoming the Bill, I once again stress that this action comes too late in the day for many. Progress on helping hard-pressed consumers must now be much more rapid and effective, especially for those who are hurting the most.

Oral Answers to Questions

Drew Hendry Excerpts

Tuesday 30th January 2018 Commons Chamber

[Andrew Griffiths]

I absolutely agree with my hon. Friend: 4 million people have been taken out of paying tax as a result of decisions taken by this Government. The employment rate is 75.3%, which is the joint highest rate since comparable records began in 1971. We have record numbers of people in work, and unemployment is at its lowest for 40 years. This Government are on the side of the worker and the lowest paid.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Low pay stifles investment and holds back productivity. We in the Scottish National party believe that the economy is stronger when a real living wage is paid. The Minister’s own Department has rightly named and shamed 350 companies for failing to pay even the minimum wage. Does he therefore agree that the practice of companies paying no wages at all through unpaid work trials is morally repugnant? Will his Department support the ending of that shameful practice?

[Andrew Griffiths]

I should point out to the hon. Gentleman that more than 160,000 people in Scotland benefit directly from the national living wage. The Government are looking closely at employment practices. We engaged Matthew Taylor to look into employment practices and to come up with new ways to support people, particularly those in the gig economy. We very much value that work and will be coming forward with recommendations in the very near future.

--- Later in debate ---

[Andrew Griffiths]

We are always sensitive and aware of the impacts on the supply chain. We need a strong supply chain, but I point the hon. Gentleman to the Secretary of State’s previous answer on that issue.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Support for the small business sector will be even more urgent given the findings of the UK Government’s leaked Brexit analysis, which shows that in all current scenarios, businesses across all sectors and all parts of the UK will be hammered with between 2% and 8% reductions in GDP growth. Will the Minister confirm what planning his Department has undertaken in the light of those figures? Is he declining to publish because it is too embarrassing?

[Andrew Griffiths]

The hon. Gentleman will know that that issue is the subject of an urgent question later on in the House. I would hate to spoil his fun, so I will leave it to others.

Pubs Code 2016

Drew Hendry Excerpts

Wednesday 24th January 2018 Westminster Hall

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate the hon. Member for West Bromwich West (Mr Bailey) on bringing to the Chamber an important debate that affects many people’s lives.

Having managed bars during my career, I want to say a few words for the people who work in pubs and the hospitality industry. It can be a difficult and demanding job, but also very rewarding. All those people put in a shift and a half on many occasions, and do us proud, regardless of which nation of the UK they work in.

The hon. Member for West Bromwich West talked about difficulties with the adjudicator in England and Wales. He went into welcome detail about the challenges for operators—unfair expenses and difficulties in getting market rent. There were many things for the Minister to respond to. The impartiality of the operation is also an important factor to take on. The hon. Gentleman mentioned the onerous conditions placed on publicans, which I think will ring true for people who have been in such a difficult position.

The hon. Member for Chesterfield (Toby Perkins) said that the imbalance between powerful pub companies and people who are trying to run pubs is an historic market failure, which it is.

[Toby Perkins]

Obviously, we have introduced the code of practice—the hon. Gentleman has heard about some of the issues with its implementation, which hopefully Scotland can learn from. He will be aware that in the 2010 to 2015 Parliament, Scottish National party MPs voted for that code, because even though it was England-only legislation, they hoped that a similar provision might be introduced in Scotland. Will the SNP support the private Member’s Bill when it reaches the Scottish Parliament?

[Drew Hendry]

I intend to cover that point, and will answer it fully in a moment or two.

I congratulate the new Minister for pubs on his remit. If he listens today and is able to make the required changes, I am sure many people will raise a glass to toast his appointment. It is pleasing to be able to agree for a change with the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont). It is a rare occurrence. He mentioned a private Member’s Bill in Scotland—I will return to that—and rightly said that the pub landscape in Scotland is different from that in England and Wales. He mentioned the importance of pubs in the community, and again I agree. In areas where pubs are successful, they make a vibrant offering to the economy. He also mentioned Burns. As he will be aware

“gude ale comes and gude ale goes”—

wise words indeed. The hon. Member for Strangford (Jim Shannon) made an important point about who audits the auditors, which the Minister should address. He also made a point about community.

On the private Member’s Bill, there is cross-party support in Scotland for looking into a statutory code, and to back that up the Scottish Government commissioned a study to look at various pub models. Work on that is ongoing, but it is looking at whether pubs in the tied sector are more unfairly treated than those in other sectors. The conclusion of the initial investigation was that, as I said earlier, it is difficult to compare the market in England and Wales with that in Scotland, because they are so different due to Scotland’s independent free trade model. The Scottish Government are currently looking into whether such legislation is required, and I understand that discussions have been continuing right up to the minute about how to take that forward.

Since the Minister for pubs is here, I wish to underline that pubs need support. In Scotland, the SNP Government are working closely with public bodies and the industry to support jobs, infrastructure and the hospitality sector. Interestingly, the introduction of minimum unit pricing, which targets very cheap alcohol, could help the pub economy in Scotland because it will prevent people from buying cheap drinks in supermarkets, and allow them to spend more time in the controlled environment of a pub. The alcohol minimum pricing is set at 50p a unit. The chief executive officer of the Scottish Licensed Trade Association, Paul Waterson, has said:

“Cheap priced alcohol has turned Scotland into a nation of stay-at-home drinkers. Some 72% of total alcohol sales in Scotland are off-sales; 80% of this total, is sold by supermarkets. When people drink in uncontrolled environments, alcohol-related problems increase significantly.”

The brewing and pub industry in my constituency has had considerable success. Cairngorm brewery is nearby, as is the Black Isle brewery. The oldest bar in Inverness is Gellions, which was formed in 1841, and the Best Bar None awards have just declared through their best bar scheme that 22 venues in Inverness have won awards for outstanding efforts in helping to create a safer environment for the public. Will the Minister look into the small business bonus that has operated successfully in Scotland? Two out of five pubs now pay zero or reduced rates thanks to that bonus, which helps their viability.

[John Lamont]

Does the hon. Gentleman recognise that, because of the reforms to business rates introduced by the Scottish Government, many pubs, including many in my constituency, have seen their business rates go through the roof? The basis on which rates are now calculated means that many businesses are paying much more than they were under the previous regime, yet they are not seeing any additional income and many pubs now face closure.

[Drew Hendry]

The hon. Gentleman is trying to make a point. He will also be aware that the Scottish Government have acted to restrict the increase in rates for the hospitality trade, and put measures in place to ensure that pubs and other small hotels and businesses are not disproportionately affected.

In conclusion, the Minister has an opportunity to make a big difference to the pub industry and I hope he will listen to the points raised by hon. Members about the situation in England and Wales. I also hope that he will consider other measures to support the licensed trade, and ensure that the pubs in our communities are viable.

--- Later in debate ---

[Bill Esterson]

I will pass on that message from the Minister.

Given that I follow the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), I will point out that my constituency includes the oldest pub in Lancashire, the Scotch Piper Inn—there is a link there of some sort. We have three microbreweries and two micropubs, the Beer Station and the Corner Post. The hon. Member for Strangford (Jim Shannon) made a good point about the importance of pubs as community hubs, and I agree with his other comments about the need for accountability in the implementation of the code.

My hon. Friend the Member for West Bromwich West set out the key issues with his usual forensic accuracy, and he mentioned the concerns about the appointment and continuation in post of Mr Newby. I raised concerns about conflicts of interest in the debate two years ago, and such concerns have continued. Sadly, the predictions about Mr Newby’s difficulty in obtaining the trust of pub tenants have been all too well demonstrated. The cases against him by the Chartered Institute of Arbitrators—that he has continued to arbitrate and has not accepted the decision, and that he is in breach of the code of conduct for a body of which he is a member—have not helped, and they continue to give the impression that all is not well with the implementation of the pubs code.

My hon. Friend the Member for Chesterfield (Toby Perkins) was modest in not mentioning his role in securing cross-party agreement on amendments to the Small Business, Enterprise and Employment Bill in 2015. The cross-party agreement had a lot to do with his work, as well as that of Greg Mulholland and other Members across the House. We had the insertion of the market rent only option, but the delivery of that is missing, as is any assurance on the intention that tied tenants should not be worse off than they would be if they were free of tie. My hon. Friend made those points extremely well. As he said, it is vital that we make this work. That is why it is so important that we are having this debate.

I will go through three points for the Minister, who I welcome to his new role. His brief is interesting and exciting, and it is important for many people across the country. I hope he is able to get to grips with the real challenges and concerns that remain. Three questions have been brought to my attention in preparing for this debate. They have been covered, but I will attempt to summarise them. First, the Government may make the point that the code is complicated and will take time to bed in. That is true, but it is overly complicated and completely unnecessarily so. As other Members have said, that complexity has allowed pub companies to use their resources and their power in the relationship—my hon. Friend the Member for Chesterfield made this point—to make it difficult for pub tenants to challenge them and achieve the fair market approach that they should be entitled to. Because of the size of the legal bills, it is simply not possible for pub tenants who attempt to use the code to come up with the necessary resources.

The second point that the Government may make is that the Pubs Code Adjudicator, through the Government, was not prepared for the huge take-up. Few staff were in place at the start, and there was a delay in putting in place a deputy adjudicator, despite the overwhelming evidence of abuse. There were 15 years of inquiries by Select Committees, as my hon. Friend the Member for West Bromwich West set out in his opening speech. The system was not set up in the right way, and it should have been.

The third point that the Government may make is about whether there has been an improvement in the financial balance between the pub-owning companies and pub tenants. Ballpark figures suggested to me are that a pub company would typically earn £90,000 from an average pub, which possibly breaks down to £20,000 in rent and £70,000 from tied products. The tenant earns just £10,000. Because of the process, the delays and the inaction from the adjudicator, it is difficult to do anything about that; but for those who try, there has been something of a change, as my hon. Friend the Member for Chesterfield alluded to. There may be a slight improvement, with a £5,000 or £10,000 reduction in the rent and an increase in the tenant’s income to £15,000 or £20,000, but that is still not a realistic living wage for someone running a pub, and the pubco is still earning £80,000 or £85,000.

The point is that legislation was supposed to leave the tenant no worse off than they would be if they were free of tie, not marginally better off than poverty levels. That is the point being made by the campaigners. I pay tribute to all the campaigners who have lobbied so hard over the years—including for this debate—advocating for pub tenants. I include in that Liverpool CAMRA, which has been in contact with me a number of times over the years.

On their own, the three areas that I have set out are grounds for the Minister in his new role to make an early commitment, today or after he has considered the debate, to carry out a proper review of the application and implementation of the pubs code and how the adjudicator is operating. If he can address that and the other points made by my hon. Friends, we will make some real progress.

I am tempted to say—so I will—that the right hon. Member for Chipping Barnet (Theresa Villiers) demonstrated a certain failure by a Government of which she was a member for some years to support a pub in her constituency. I can assure her that the next Labour Government will stand up for pub tenants in a way that so far has not happened under this Government, and that will not happen unless they make the changes touched on in this debate. I was grateful to the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) for pointing out that in Scotland, Labour is at the forefront of introducing a pubs code north of the border.

[Drew Hendry]

It is a cross-party position.

[Bill Esterson]

Well, there is a Scottish Government of one minority party. Perhaps they will learn from what has happened here and get the implementation right.

We want to hear from the Minister, so I will make only a few further remarks. Tenants’ experience has revealed the process to be drawn out and complicated. Many have to turn to professional legal support, which is expensive and time-consuming. Most worryingly, there have been suggestions that the pubcos are knowingly gaming the code to make it more difficult for tenants to achieve market rent only. That essential plank of the pubs code sought to redress the balance between pubcos and pub tenants.

The adjudicator’s own independent report on the allegations suggested that pub-owning businesses may be operating the code in a way that makes it hard for tied pub tenants to access their MRO rights. It revealed the shocking lengths to which some pubcos go to wear down tenants, including intimidation, bullying and antagonistic, delaying and frustrating behaviour. Tenants are often given terms that make MRO appear as unattractive as possible, such as being arbitrarily forced to provide six months of MRO rent up front. Some pubcos have refused to allow the deed of variation of lease, thus forcing tenants who want MRO to agree a new lease under unfavourable terms. That is pretty damning. I give credit to the adjudicator for carrying out that review, but it is what he does with it and how quickly he acts that matters.

There is identified failure in the full implementation of the code, and Parliament’s intentions have so far not been followed. I look forward to hearing what the Minister has to say, and I thank Members for their comments. I hope he can give us a proper assurance that there will be the action that is needed, and not just words.

Nuclear Safeguards Bill

Drew Hendry Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 23rd January 2018 Commons Chamber

Furthermore, placing such an obligation on the Government would create considerable uncertainty in the negotiations and weaken our negotiating stance. It would also create uncertainty for businesses and people working in the sector, when Members on both sides of the House have made it clear that what they need is certainty. By definition, certainty would be hard to come by were the new clause to be accepted. For the reasons I have given, this proposal was defeated in the Public Bill Committee, and I will not support it on Report.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I am delighted to be here with the Minister, who is a genial and hard-working man. I know that he will try to answer some of my questions, and I hope his answers are clear.

When the Secretary of State launched the Bill, he said it was “straightforward”, but the amendments are required because there is nothing straightforward about leaving Euratom. The Scottish National party is concerned about the whole process. The hon. Member for Copeland (Trudy Harrison) talked about us being “there or thereabouts”, but that is not good enough when it comes to nuclear safeguards. As it stands, the Bill is a safeguards Bill without any safeguards; there is no contingency for anything going wrong, yet Ministers have failed to convince not just hon. Members in this Chamber, but industry and the people. Leaving Euratom will result in more cost and less value, and the opinion of many in the industry is that it will be impossible to set up an equivalent UK authority within the timescales outlined. That is the view of industry, the Office for Nuclear Regulation, the Nuclear Industry Association and the Nuclear Decommissioning Authority, all of which gave evidence to the BEIS Committee. I was delighted to hear the Chair of that Committee, the hon. Member for Leeds West (Rachel Reeves), point out the great concern about the Government’s ability to do as they propose. All the nuclear industry and all those bodies do not want us to leave Euratom; either they see no benefit in our doing so, or they are actively concerned about the consequences.

Ministers have simply ignored the difficulties and the overwhelming evidence before them. They have plodded ahead, and when asked “How?” they use their favourite word: hope. They hope that things will be in place—that agreements, funding and people will be available. Despite the impending loss of influence in developing policy in Europe on future nuclear decisions, the unanswered questions about cost, the difficulties in training or even recruiting replacement inspectors, they plod ahead. As the Minister said in response to questions on these matters in the Select Committee, “They don’t really know and we don’t really know.”

There are a lot of unknowns in the Bill, which is why it is imperative to amend it. The ONR says plainly that it might need more than a two-year transition period after 2019, yet the Government still provide no assurance.

[Stephen Kerr]

The hon. Gentleman says the Government give no assurance, but the Prime Minister, in her Florence speech, was explicit about the Government’s agenda in respect of a two-year implementation period. I cannot help concluding that the reason the hon. Gentleman advances this line of argument is that he has a destructive attitude toward the whole process, and his ultimate aim is to create a constitutional and ongoing sense of crisis. In fact, the Bill guarantees some continuity, including the two-year period.

[Drew Hendry]

The hon. Gentleman, like many of his colleagues in Scotland, likes to try to go to a happy place when faced with harsh realities. The fact is that a two-year transition period is viewed by virtually nobody as a responsible timescale in which to get up and running.

[Stephen Kerr]

Will the hon. Gentleman give way?

[Drew Hendry]

No, I am going to make some progress.

The UK, as it presses ahead with the folly of Hinckley C, will need thousands of workers, many skilled in the nuclear industries.

[Rebecca Pow]

Will the hon. Gentleman give way?

[Drew Hendry]

No, I am going to make some progress. I may come back to the hon. Lady, but we will have to see.

Many of those workers will need to be skilled in the nuclear industries, yet current policy does not support the ability to get those workers if there is no concession on the movement of people, but achieving even that is put into a harsh light when it comes to getting highly specialist staff to meet the new safeguarding functions. Those positions are already challenging to fill. Nuclear inspectors do not live on every street—in fact, they are very rare—and they are in global demand. The Minister says that such staff are required only in the tens, but can he tell me today how many are in place? I offer him the opportunity to intervene. He was asked in November about recruitment. I am trying to get his attention, Madam Deputy Speaker. Will he tell us how the first phase has gone? I will offer him another opportunity to intervene and tell us how many recruits are in place. Is it 15? Is it 10? Is it five? Is it one? Is it none? How many nuclear safeguard inspectors have been set up?

Prospect and Unite the union have given evidence, and Ms Ferns from Prospect said:

“A reasonable approximation is several years—it is not a matter of months but years for people to be able to do that job…It is a small talent pool…even in the best of times.”

Many Members today have cited the testimony of Dr Mina Golshan, the deputy chief inspector and the director of the Sellafield decommissioning, fuel and waste division in the Office for Nuclear Regulation. She has said:

“I have been very clear from the outset in previous evidence sessions, and in discussions with industry as well as BEIS, that it would be unrealistic for us to expect to achieve an equivalent regime to what is in place currently by the time we officially leave Euratom, and that is March 2019.”

The BEIS Committee report, “Leaving the EU: implications for the civil nuclear sector”, states:

“To deliver the new domestic regime the ONR will need to double the number of its inspectors by 2019, and triple its numbers by 2021. Skilling-up the new recruits on time will present additional challenges, as even existing specialists will require 12-18 months of training to become an inspector, and generalists may need five years.”

Those are hefty timescales.

Let us look at the cost. So far, the Government have earmarked £10 million for all the operations in Euratom, yet we can already see that there are going to be much more expensive consequences for the UK. That £10 million figure is dwarfed by the £50 million of Euratom funding that the UK receives for the Joint European Torus project—JET—so it will be interesting to hear from the Minister how that funding is going to be replaced. Leaving Euratom and the JET project has been described as “bonkers” by Steven Cowley, a physicist at the University of Oxford and a former director of the Culham centre for fusion energy, which hosts JET. He is absolutely right. Can the Minister tell us how that funding will be maintained?

Can the Minister also tell us about our future in ITER, the project to build the world’s largest tokamak? The ITER agreement was signed in 2006 by China, the EU, India, Japan, South Korea, Russia and the US, and the building of the tokamak has been under way in France since 2010. The official start of ITER’s operation is scheduled for December 2025. Euratom also funds DEMO, a demonstration fusion power reactor planned to follow ITER by 2050. The UK is a key participant in ITER and sends information, results and design studies from its JET programme to the French site. This co-operation will continue throughout the Brexit process, but it is unclear what the impact of Brexit will be on this co-operation and the continuation of these programmes. Perhaps the Minister can advise us on that. We need to know all this information. Without it, we will need safeguards in place.

The hon. Member for North East Hampshire (Mr Jayawardena), who is no longer in its place, mentioned medical isotopes. He said that it was scaremongering to say that they would no longer be available, and that treaties would be in place to allow access to them. However, the critical point is not whether people can get the isotopes; it is that they have a very short half-life. Sometimes they have to be used within hours of being produced in order to maintain their effectiveness. If they are sitting at a border point because there is no customs agreement, they will be completely useless. Will the Minister tell us how we are going to put in place the necessary customs arrangements to prevent that from happening?

[Layla Moran]

The issue is that we are leaving the single market and the customs union. Does the hon. Gentleman agree that, even if we have a customs arrangement, the fact that we are leaving the single market is what will cause the delays? As he rightly points out, the half-life of those radioisotopes will mean that fewer people will be able to be treated by them.

[Drew Hendry]

Without alternative arrangements to allow the free movement of such goods across borders, there will be considerable complication and delay, which could affect patients.

As it stands, it is a risk too far to leave Euratom without cast-iron guarantees. I respect the Minister and heard his messages of hope about having people in place. I heard him say that he would like to ensure that that will happen, but we have had no guarantees about the set-up or whether it will be in place. There are no figures and no definite timescales, and we have heard nothing from the industry to suggest that it is satisfied. Without cast-iron guarantees to protect such things, we know that the new arrangement will cost us more, deliver less and diminish our influence. Given the evidence, it is hard to see even how it could be delivered.

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As the hon. Member for Inverness, Nairn, Badenoch and Strathspey pointed out, we are on new territory, and it is possible for us to negotiate all kinds of new arrangements. I agree with him, in the widest context, that it is possible to reach a negotiated agreement that would take care of these matters. We are not an insignificant country, and ours is not an insignificant economy.

[Drew Hendry]

I am delighted to have given the hon. Gentleman so much material today. He seems to be fascinated by my words. He will concede, however, that I was talking in the context of our being foolish and reckless enough to leave both the EU and Euratom.

[Stephen Kerr]

That is interesting editing. I cannot recall word for word exactly what was said before and immediately after what the hon. Gentleman said, but I think that I clearly heard him say that it was possible, in these new circumstances, to negotiate new arrangements. We must indeed accept that we will need new arrangements, and that they will need to be negotiated. As was said earlier, we cannot take something like associate membership off the shelf—I think Members will have to accept that such an arrangement does not currently exist—but I agree with him that anything is negotiable. I come from a background of sales negotiation, and that was one of the mantras by which we lived: “everything is negotiable”.

I think that when wise adult heads are brought to bear, definite win-win outcomes are possible, as they are in the context of the Bill and its subject matter. I hope very much that the Government will use their powers under the European Union (Withdrawal) Bill and the powers that this Bill will confer on them to bring the appropriate measures to life at the right time, so that we can secure the continuity and the prosperity of the UK’s nuclear energy business.

[Drew Hendry]

As we have heard many times, and as the evidence has borne out, the industry is clearly desperate for the standards that we currently enjoy through Euratom to be maintained. We have heard time and again that the industry would prefer us to remain in Euratom or to have associate membership, but if that does not happen, which seems to be the direction in which we are going today, it has said that it would like the new standards to be the same as those of Euratom.

It is vital for us to secure a commitment that the UK agency will be able not only to cope with the new work but to obtain the necessary resources, at the levels that are required through Euratom. However, as I said earlier, I do not believe that that is achievable, given the challenges. Crucially, there are still not enough people with enough experience. No matter how much the hon. Member for Stirling (Stephen Kerr) wants to persuade children that science is a good idea, I do not think we have yet found a way to compress five years into two, and it will not be possible in that period to gain the experience nuclear inspectors require.

Two requirements still need to be met: one is for complete transparency in the process, so that those who have expressed concern and the industry can know what is happening; the other is, through the amendments, to get a guarantee that arrangements will be in place that ensure that nuclear safeguards are operated to the same standards as now. I am anti-nuclear and proud that my party is, too, but we have to protect people’s interests where the nuclear industry is concerned. Too many of us in the highlands remember the mess left at Dounreay. Anyone who wants to know what can go wrong in the nuclear industry should go up there and learn about what was left on the beaches and the radioactive material moved about in welly boots because the equipment had rusted, before the correct standards were put in place through Euratom.

[Mr Vaizey]

I cannot support the amendments, although I have a great deal of sympathy with the position set out by the hon. Member for Southampton, Test (Dr Whitehead). The amendment I tabled with colleagues from both sides of the House to the European Union (Withdrawal) Bill sought to ensure that the Government consulted fully on implementing a Euratom-like regime after we left, so I understand why he has tabled amendments to ensure that the Government are transparent in their dealings. I did not press my amendment to a vote because the Secretary of State and his very able Minister were clear about their responsibilities to keep the House informed about the arrangements being put in place to replicate what we have in Euratom; indeed, they published a written statement shortly after that debate and before the debate on Report, and they have committed to come to the House quarterly to make clear the progress being made. None the less, as I say, I have a great deal of sympathy for the Opposition’s argument.

I support the Bill because it puts in place some of the structures we will need to replace the arrangements we had as a member of Euratom. I have listened to much of the debate and heard some fine speeches, but however brilliant the speeches, I cannot help thinking that the entire debate takes place in a slightly Alice in Wonderland world. Over many months, I have made no secret of the fact that it is a source of deep and profound frustration for me and many colleagues that we are leaving Euratom. As I said in an intervention, we are leaving Euratom on a technicality. I urge any colleagues who are passionate about Brexit and the apparent freedom and greatness that it will bring back to this country not to try to wrap Euratom up in that thesis.

Euratom is a treaty that works extremely well. The UK is one of the world’s leading civil nuclear powers. Our industry is highly respected and essential to the development not only of current nuclear power, but of nuclear fusion, which is where my interest comes in, owing to the research institute at Culham. Under the Bill, we will engage over the next 18 months in a simple exercise of replicating almost as exactly as we can the arrangements we now enjoy under Euratom. We are not taking back control. We are not regaining sovereignty. We are not going out into the world as a global power. We are simply going to replicate perfectly serviceable arrangements that already exist, and we are doing so on a technicality. I am not making any particular criticism. This is simply an observation of the collateral damage that Brexit has caused to a particular sector. It will be expensive and time-consuming.

As I have said, I wanted to speak to the amendments to make it clear why I was not supporting them and to take the opportunity to thank Secretary of State and the Minister for all their work. They have been candid and open with me and the Chairman of the BEIS Committee and with other concerned hon. Members on both sides of the House about the work they are doing to try to limit any damage to our nuclear industry. They really have worked tirelessly on this issue. From my perspective—other Members might not agree—I think that they have listened and taken on board our concerns.

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The ONR is in the process of developing an expanded safeguards function, which involves the recruitment and training of additional inspectors. The SNP spokesman, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), and others mentioned the two-year and five-year time periods. Some people with a lot of experience in this field are being recruited, and they clearly would need two years or less. The five-year period involves a very high level of training. It is not possible to generalise, but I accept that some people, such as apprentices and graduates, will require much longer to train.

[Drew Hendry]

I am grateful to the Minister for pointing that out, but can he give us an indication of what proportion of experienced staff, versus trainees, he intends to have within two years?

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[Drew Hendry]

If power over these issues, as they affect Scotland, were in the purview of the Scottish Parliament, I am certain that Scotland would be staying within Euratom. However, here we are, and this Bill is going through this House. The Minister knows that I respect him on this issue; he has tried to engage with me very positively, and I thank him for doing that.

I would like to say that the Government and the Secretary of State have written in some checks, but I see no evidence of any. However, I do see hopes, promises and assurances. In the fullness of time, the Government will be judged on what happens to nuclear safeguards when their agency is set up and on how well it performs. For the sake of the industry, the safeguards and the people involved in it, I hope that it is a success.