Nuclear Power: Toshiba

Ed Davey Excerpts

Monday 12th November 2018 Commons Chamber

[Greg Clark]

We have a substantial pipeline of new energy projects, as a number of hon. Members have made clear. When it comes to the Moorside site in Cumbria, it was always available to developers to leave it. It will now revert to the Nuclear Decommissioning Authority. It will be open to developers to come forward to make proposals. However, whether with nuclear or other sources of clean power, we have a substantial pipeline of new projects coming forward to add to our energy supplies.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

When I was doing the Secretary of State’s job, there were plenty of such setbacks and delays to new nuclear, and they really worried me. I was worried about how we would keep the lights on in the 2020s and 2030s, given that the forecasts were reliant on so much new nuclear, so I looked at contingencies, particularly tidal lagoon power. Will he now reverse his views on tidal lagoon power and look at it quickly, because it can provide the firm reliable power that new nuclear offers and be built much more quickly than a new nuclear power station?

[Greg Clark]

The right hon. Gentleman is correct in noting that the scale of such projects means the companies proposing them need to have a plan that is financeable and, in this case, a source of technology that is available. I repeat what I said at the beginning, which is that the Westinghouse subsidiary of Toshiba went into chapter 11 bankruptcy. On the tidal lagoon project, I am in favour of diverse sources of energy—that is clear—but we have to recognise value for money for taxpayers and consumers. The Swansea tidal lagoon proposal was so far off being able to be financed that it was not value for money for either the taxpayer or bill payers.

Oral Answers to Questions

Ed Davey Excerpts

Tuesday 16th October 2018 Commons Chamber

[Kelly Tolhurst]

I must remind the hon. Gentleman that the British Business Bank has access to the £20 billion investment in the industrial strategy. Through our start-up loan scheme, we have made 57,000 loans, delivering £436 million in finance and creating more than 56,000 jobs. Access to finance has improved a great deal since I became an MP. The hon. Gentleman served on the Committee on which we made invoice financing another option for many small businesses.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

8. What recent assessment he has made of the effect of business rates on the viability of small businesses.

[The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)]

The small business sector is thriving. We have 5.7 million small and medium-sized enterprises, and we are ranked in the top 10 in the world for ease of doing business. As the right hon. Gentleman knows, the Government have taken significant action on business rates in each of the last three Budgets, including £9 billion of support announced in 2016, making sure that nearly two thirds of a million small businesses pay no rates at all.

[Sir Edward Davey]

Small retailers across Kingston and Surbiton have been hit by a combination of high rises in business rates and unfair competition from online retailers, who too often escape taxation. Will the Secretary of State talk to the Chancellor before the Budget, and to European colleagues before Brexit, to agree a new tax for internet retail, using the proceeds to slash business rates and save our high streets before it is too late?

[Greg Clark]

When the right hon. Gentleman was a Minister in the Business Department, he took part in a decision to defer revaluation, for reasons that he understands. I accept the point—it has been made strongly by the Retail Sector Council—that reflecting the contribution that high street businesses make to their communities is a significant need. As business rates are reviewed, that is one of the council’s recommendations that we will take forward.

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[Kelly Tolhurst]

As I have already outlined, we are committed to delivering a postal network that services the needs of our communities. If the hon. Gentleman has concerns relating to particular post offices, will he please contact me?

[Sir Edward Davey (Kingston and Surbiton) (LD)]

rose—

[Mr Speaker]

Oh, very well, Sir Edward—blurt it out, man!

[Sir Edward Davey]

Thank you, Mr Speaker. May I bring to the Secretary of State’s attention the power that he has to mutualise Post Office Ltd to allow sub-postmasters and sub-postmistresses, and their customers, to have a share in their own Post Office? Will he look at this, because it would bring greater sustainability to the post office network?

[Kelly Tolhurst]

That is something I am more than happy to look at in my new role, but it is something that you could have done yourself—[Interruption.] Sorry, Mr Speaker! It is something that the right hon. Gentleman could have done when he was a Post Office Minister.

Green GB Week and Clean Growth

Ed Davey Excerpts

Monday 15th October 2018 Commons Chamber

[Claire Perry]

I do welcome that, and it was my Department that conducted the research. There is a myth that we do not have many green jobs, as we already have 400,000 in the economy. On the basis of our current work, we think that the number could grow to almost 2 million. One of the reasons why so many large companies are changing the way they do business is that they think they have a bit of a recruitment crisis, because they know that so many young people would much rather work for a sustainable company than otherwise. Indeed, Thursday of Green GB Week is all about opportunities: how people can get into this business; and how we can motivate the next generation—from schoolchildren up to young adults—to think about working in what will be one of our great long-term growth areas.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

The Minister’s green words are great, but back on planet Earth the reality is somewhat different. What happened to the huge leap forward that Britain had with green power until recently? Does she think the present huge decline in renewables investment is anything to do with the Government? There is the ban on onshore wind, for example. How does she square that mad policy with the climate change challenge?

[Claire Perry]

Again, it is a bit sad to hear that from someone with whom I was very proud to work in coalition and who did so much in this area. I would unpick two of the right hon. Gentleman’s points. First, there is no slowdown. Renewables usage is absolutely accelerating, and we are now at 32%—[Interruption.] Again, if we combine more for less as prices fall, why are we falling into the trap of defining success as how much we are spending rather than how much we are getting? We are getting 32% from renewables. That, along with the investment in new gas, is the reason why we are able to phase out coal.

The right hon. Gentleman raised the question of banning. There is no ban on offshore wind. In fact, he was the Minister who led so many of the fights about offshore wind farms. Frankly, those fights threatened to derail many of the conversations about clean growth, because they were so terribly controversial. [Hon. Members: “Onshore wind!”] There is no ban on onshore wind. Onshore wind is still operating. What we were elected on in our manifesto—the Government’s manifesto—was that we did not think large-scale onshore wind development was right for England, and I am afraid I believe in carrying out our manifesto commitments.

Energy Policy

Ed Davey Excerpts

Monday 25th June 2018 Commons Chamber

[Sir Edward Davey (Kingston and Surbiton) (LD)]

I was Secretary of State for Energy when the tidal lagoon story began, so may I tell the current Secretary of State with responsibility for energy that his statement is wrong, wrong, wrong? The evidence that the price of future tidal lagoons would fall dramatically after the first lagoon at Swansea is overwhelming. That was exactly what happened with other renewable technologies, including offshore wind, as he has admitted. Will he promise the House today that he will publish every scrap of evidence and analysis that he has used to take this decision, and hold a debate in Government time on that analysis and evidence?

[Greg Clark]

The right hon. Gentleman will see from the analysis, and indeed from the conclusions that Charles Hendry and others have pointed to, that the technology inherent in the construction of the lagoon programme—whether building sea walls or the turbines—is not subject to the same degree of cost reduction as other energy technologies. We will be very open about this and publish whatever is not covered by a non-disclosure agreement with the companies concerned. He is, of course, welcome to scrutinise that.

Oral Answers to Questions

Ed Davey Excerpts

Tuesday 12th June 2018 Commons Chamber

[Sir Edward Davey (Kingston and Surbiton) (LD)]

19. What the Government’s policy is on tidal lagoons.

[The Minister for Energy and Clean Growth (Claire Perry)]

The right hon. Gentleman knows, more than many in the House, the need to invest in innovative technologies, while maintaining a focus on value for money. We have rightly looked at this project with very serious scrutiny. There are some very attractive things about it, but it has to pass the value for money test. When that decision is made, the House will be the first to know.

[Sir Edward Davey]

Does the Minister accept that nuclear and offshore wind needed pathfinder projects, first-of-a-kind projects, to prove the technology and the economics and to get the cost down. Why can tidal lagoons not have such a pathfinder project, just as Charles Hendry recommended?

[Claire Perry]

Partly because of the right hon. Gentleman’s great policy decisions, we have had a world-leading advance in offshore wind in terms of the cost at which we can deploy it. He is right to say that we have to consider the whole life cycle of technologies and that is exactly what we have been doing in considering tidal technology.

Nuclear Power

Ed Davey Excerpts

Monday 4th June 2018 Commons Chamber

[Greg Clark]

Of course, the opportunities for Wales follow from exactly the point that my right hon. Friend the Member for Sevenoaks (Sir Michael Fallon) made. The knowledge of the investment that will be made there provides great opportunities for people in north Wales and beyond to develop the skills that will be in high demand and to ensure that the engineering companies and other suppliers can gear up for this important work. Before I came to the House today I discussed the matter with the First Minister, and my right hon. Friend the Secretary of State for Wales spoke to Ken Skates, the Cabinet Secretary for Economy and Transport. We will work closely together to ensure that across Wales and, indeed, the United Kingdom, these opportunities result in real jobs and prosperity for the people of Wales and the UK.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

The Secretary of State knows that there have been two major revolutions in electricity since Hinkley Point C was initially agreed to: a dramatic cost reduction for large-scale renewable power and huge advances in storage technology. Given that renewables and battery storage will soon offer cheaper and more flexible security of supply than nuclear, where are those two historic shifts in electricity technology in his decision today?

[Greg Clark]

The right hon. Gentleman makes the very important point that we have seen progress in renewables and that we are seeing progress in storage. Today, nuclear provides just over 20% of the electricity we consume and wind provides 5.5%. My view is that we should have diversity in our energy supply—the wind will not supply all our needs every day. His point about storage technology is correct and he knows from the industrial strategy that we are investing in its development, but it is not at the stage where it can offer the reliable baseload power that nuclear, which supplies 20% of the UK’s electricity, offers now. That is a very important part of the mix.

Oral Answers to Questions

Ed Davey Excerpts

Tuesday 1st May 2018 Commons Chamber

[Mr Speaker]

Forgive me, but I want to get to other colleagues’ questions as well, so if it is a short sentence, I will take it, but if it is not, I will not. No? All right.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

Will the Minister tell us why it has taken so long to disburse some of the £320 million fund for district heating schemes? So many local authorities and other bodies want to apply for funding, but the Government are being slow in disbursing the money.

[Claire Perry]

I am not sure I agree with that, partly because we have to get this right and make sure that there is a competitive market and that consumers do not feel that these things are being imposed on them. We should celebrate the fact that we have £300 million to take these pilots forward. Pilot projects are under way in Manchester, Sheffield and Barking, and I look forward to funding many more.

Oral Answers to Questions

Ed Davey Excerpts

Tuesday 12th December 2017 Commons Chamber

[Joseph Johnson]

Yes, indeed. Cambridge is leading the way in this respect, as in many others. We want to see more collaboration between our universities and the world of business to drive commercialisation and to make the most of the R and D we are investing in.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

It is good news that the Prime Minister is attending President Macron’s summit on climate change in Paris today, but may I warn the Secretary of State that President Macron is positioning Paris as the world’s leader in green finance? To tackle that threat and to protect London, Ministers must back the Bank of England’s taskforce on climate-related financial disclosures and bring in new mandatory corporate requirements on fossil fuel assets.

[Greg Clark]

Britain leads the world in climate finance, and one of the major contributions the Prime Minister and the Minister for Climate Change and Industry are making is in promoting the availability of green finance in the UK—that includes Edinburgh as well as London. That is getting a very good reception.

Budget Resolutions

Ed Davey Excerpts

1st reading: House of Commons
Tuesday 28th November 2017 Commons Chamber

[Greg Clark]

I am happy to talk to the hon. Gentleman. He will know that we work closely with the life sciences sector. The industrial strategy published yesterday included an important life sciences sector deal in which all the companies are working closely with each other, local institutions, local leaders and the Government. I am happy in that context to meet him and have those discussions.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

The Secretary of State talks about giving certainty to businesses and investors. Does he agree that the contracts for difference regime can be used to bring in zero-subsidy CfDs to give real certainty to people wanting to invest in our renewable energy? Will he commit to considering the case for zero-subsidy CfDs?

[Greg Clark]

Contracts for difference have brought down the price of renewable energy substantially. We have commissioned a review from Professor Dieter Helm—I know that the right hon. Gentleman knows him well—which has reported, and we will make our response to it. It would be wrong to pre-empt our consideration of that, but I hope that the right hon. Gentleman and others will give their thoughts on the Helm review. We have launched a consultation on that, as he knows.

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[Stewart Hosie (Dundee East) (SNP)]

It is always a pleasure to follow the right hon. and learned Member for Rushcliffe (Mr Clarke). I was struck by his discussion of his bus pass, state pension and winter heating allowance. It might be that the right hon. and learned Gentleman does not need these things, but if we begin to erode them and means test them, the problem is that those who do need them will not claim, and—I suppose this is an ideological position from the Scottish National party—we would then begin to erode social cohesion on other important matters.

I welcome much of what the Business Secretary says about the future economy, including on tackling long-term underinvestment in research and development, addressing the long tail of underproductive companies, recognising the importance of innovation, big data, the life sciences and the other sectoral areas he mentioned, and the absolute imperative for UK businesses to export more. However, the future economy cannot simply be about supporting new businesses with new products selling into new markets; it must also be about supporting businesses that are already here delivering for their customers, their shareholders and the economy, and particularly, as the right hon. and learned Member for Rushcliffe said, into the EU, which is a substantial market for the UK. So while I certainly welcome many of the specifics in the White Paper and what was said today, I make no apologies at all for talking about the impact of Brexit, which has the very real potential to undermine the good intentions of the plan.

I say that because the uncertainty created by the hard Tory Brexit plans is already harming the economy. The UK Government’s failure so far to secure a transitional deal is pushing many banks, in particular, and other companies to start looking to relocate to other parts of the EU for fear of being unable to trade freely there in April 2019. Indeed, the Bank of England has warned that 75,000 jobs might be at risk in the banking sector alone, and many of those may well move to the EU. It is vital that we remedy that, and do so quickly, as FinTech, which is mentioned in the White Paper, is undoubtedly one of the areas that ought to be able to make a positive contribution to the future economy of the UK. However, if we do not resolve this issue, meaning that banks’ head offices and decision-making functions go, I fear that FinTech and the ability to fund it will be subsequently reduced.

I also make no apology for saying that Brexit has the capacity to undermine the Chancellor’s plans for raising productivity, which we all agree will be vital if our future economy is to deliver success and prosperity for everyone across these islands. The UK is now at the bottom of the G7 for economic growth. The eurozone and other advanced economies are enjoying higher growth, as well as higher levels of consumer and business confidence. These plans and the money to be spent on them—some of the cash is substantial—might barely mitigate the damage of Brexit, rather than kick-starting the economy to power ahead, which we all hope they will do.

Let me put some flesh on the bones of that, because it is important. The OBR has slashed its forecasts for productivity, economic growth and pay growth. The new forecasts show that the economy is expected to grow at below its long-term trend of around 2% until well into the next decade. The downgraded OBR expectations lower significantly the predicted level of growth. Although the OBR previously said that growth would proceed at much the same pace as before the crisis, it has turned out to be much lower.

This goes back to something the Minister said as a throwaway. Borrowing will still be at £26 billion a year in 2022-23, but he said we want to live within our means. We all want to live within our means, but when we see a national debt of 87% on the treaty calculation, and when we see borrowing of £26 billion by 2022-23—the current account was supposed to be in balance or in surplus in 2015—I think we can say with some certainty that the Government have failed to deliver every single one of the targets they have set since they came to power, with a Tory Chancellor, in 2010.

[Sir Edward Davey]

Does the hon. Gentleman agree that the real story behind this Budget was the growth forecast, which will impact not only the borrowing he is talking about, but public spending and, frankly, the whole shape of the British economy and British society in the years ahead? Do we not need an urgent debate on how we really raise that growth rate? The industrial strategy was simply not up to that job, which is so tricky.

[Stewart Hosie]

I agree with the first part of that intervention entirely. The big story from the Budget was that the growth figures were marked down over the entire forecast period that productivity per head was almost halved for that period and that pay growth was marked down, which has an impact on real people. As for a debate, we have been having debates about the productivity conundrum and growth since before I was an MP, and given that I am now about 110, that was some time ago. I suspect that we need to look at the work that has gone into the White Paper. Let us get behind the things we can support and make suggestions when we can improve things—my goodness, there are some we can most certainly improve—but we do not need to go back to the drawing board again.

I think that each and every one of us, if given a blank piece of paper, would come up with broadly the same plan with regard to fairness about investment, infrastructure, education, and supporting R and D and exports. I do not think that there is anything particularly new there. The question for me is: can we deliver that this time, or will this be to no avail if Brexit undermines the potential of any of these plans?

[Stewart Hosie]

My hon. Friend is right. Every single assessment that we have seen, starting with the leaked Treasury document of a couple of years ago, says that the worst-case scenario—if there are tariffs, other regulatory barriers and an immediate reversion to World Trade Organisation rules—is a 10% hit on GDP, full stop, before we start. I do not understand why anyone—even Tories, and certainly the bulk of the Labour party—voted to come out of the customs union. That was an idiotic thing to do. If we must leave at all, we should look to have the closest possible formal links, so that we maintain as much trade as possible on current terms.

[Sir Edward Davey]

Will the hon. Gentleman give way?

[Stewart Hosie]

I will in a little while.

The Resolution Foundation has reported that productivity growth in the 10 years to 2020 will be the lowest for 200 years. As a result, we have the worst economic growth forecasts that the OBR has ever delivered. Equally importantly, the forecast for the UK’s balance of payments current account as a share of GDP has also been downgraded significantly due to a slowdown in business investment and the deterioration of the UK’s net trade balance. That is expected to be a whole 1% deeper in deficit this year and next, and for the following year a 2% fall is predicted compared with the spring forecast.

We know that this is not a new problem. The Tory plans for post-Brexit policy—trade is vital if the future economy plan is to work—are delusional. The Tories aim to leave the single market, but apparently want to keep all the benefits of the club, while creating this preposterous “Empire 2.0” nonsense and signing trade deals across the globe. However, as my hon. Friend the Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) pointed out, the UK already has trade deals with almost 90 non-EU countries, besides the 31 other members of the European economic area, thanks to our membership of the single market and the customs union.

[Sir Edward Davey]

Will the hon. Gentleman give way now?

[Stewart Hosie]

In one second. These existing trade agreements will be vital if our economy is to thrive. I give way one more time.

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[Sir Edward Davey]

I am very grateful to the hon. Gentleman. I was trying to tee him up before. Given the growth forecast and the shocking impact that the situation will have on people’s incomes and the public finances, is not now the worst possible time to be leaving the European Union, the customs union and the single market? Is this not the most disastrous economic decision, given the economic forecasts?

[Stewart Hosie]

Of course, leaving the world’s most successful trade body and access to half a billion customers, tariff-free, would be an idiotic thing to do at any point. The fact that we are doing it now—and, more importantly, unprepared—is key. I will say a little more about that.

The existing trade agreements that are being discussed are vital if our economy is to thrive. The Government have suggested more support for exporters to new markets, but that seems to be at the expense of the trade routes that companies already have. To put some flesh on the bones of the last intervention, the EU accounts for 43% of the UK’s goods and services exports, and 54% of imports. The UK Government have failed in their intention of starting to negotiate the future economic relationship with the EU at the same time as negotiating the divorce settlement. The delays in the first phase of the negotiations are deeply worrying and undermine the plan. We risk approaching a Brexit deadline without having concluded negotiations, and without a transitional arrangement.

In case anyone is in any doubt about how our friends in the EU view this, Federica Mogherini has said:

“It is absolutely clear on the EU side that as long as a country is a member state of the EU, which is something that the UK is at the moment…there are no negotiations bilaterally on any trade agreement with third parties. This is in the treaties and this is valid for all member states as long as they remain member states until the very last day.”

We have heard all the rhetoric from the Trade Secretary, who has conceded that his staff do not have the ability to cut the deals. At the same time, the EU is continuing talks with multiple countries across the globe, including Australia and New Zealand, which many Members point to as post-Brexit allies. That means that we will be playing catch-up with the EU’s trade policy, and it will take years—possibly decades—simply to replicate the arrangements we already have, if we can even do that. Doing so is vital to the trading future of Scotland and the UK and to our future economy.

Another point to make about the EU concerns the free movement of people. Part of the plan is to attract the best and brightest. In my view, we must not just continue to attract them, but keep the ones we have. The 128,500 EU citizens employed in Scotland contribute some £4.2 billion to the Scottish economy. We must not send a signal to people—to those who are here, to those from the EU or around the world who want to come here, or to those who seek the collaborative partnerships in research and development contained in the plan—that the door is now closed. That would be catastrophic, whether it is said officially or that impression is given. It would add to the potential loss of 7% of gross value added to Aberdeen, of 6% to Edinburgh and of 5.5% to Glasgow—a £30 billion loss of GVA to the cities of the UK alone. We will therefore continue to defend Scotland’s economic interests now and in the future, and we will prioritise maintaining membership of the single market and the customs union for Scotland—and, so far as I am concerned, the free movement of people, on which this plan, to a large measure, is predicated.

I do, however, welcome much of what the Secretary of State has said alongside the publication of the industrial strategy, which aims to tackle the productivity slowdown and address the challenges and opportunities brought about by technological advance. We agree with many of the five foundations of productivity that he has laid out and many of the key policy areas that he has suggested, including raising R and D investment to 2.4% of GDP by 2027 and the increase in R and D tax credits rate to 12%, as well as the £725 million industrial strategy challenge fund.

We also welcome some of the smaller things, because although many of them are England-only or England and Wales-only, they are still good for the Secretary of State to do. They include the introduction of the T-levels, the additional money for maths, technical and digital education, and the £64 million for retraining. We welcome many investment announcements, including for infra- structure, broadband, energy and transport.

We would not disagree with the four main challenges—artificial intelligence and the data revolution; clean growth; mobility; and an ageing society—although I am rather at a loss to see how the Government can trumpet clean growth when they have refused for a decade or more to address the challenge of the imbalance in connectivity to the grid, which damages the potential of offshore wind in the north-west of Scotland. If the Government could finally resolve the imbalance, which means that a charge is paid by the Western Isles whereas central London receives a subsidy, there might be unequivocal support for the policy of clean growth.

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[Sir Edward Davey (Kingston and Surbiton) (LD)]

This Budget had one redeeming feature: it was honest. It was honest about the weak growth prospects and how weak our economy is. I hope that the whole House will reflect on these dismal forecasts, because they have dramatic implications for our economy, people’s livelihoods, public finances and services, and the way in which we debate the issue of the day—namely, Brexit.

Look at what the Office for Budget Responsibility’s growth figures really mean for ordinary people and their incomes. Compared to the Budget just a year ago, it means that people will be earning £687 less by 2021. Wages in 2021 will still be lower—still buying less—than they did in 2008. The IFS talks about the danger of losing two decades of earnings growth in the longest squeeze on living standards in more than 60 years. This is dramatic stuff. Guess who is going to have the worst of it? The poorest households—the Resolution Foundation says that the poorest 20% will be hit the hardest. That is just unacceptable.

Let us look at the implications for our public services. The details of the Budget show that public service spending will be 3.6% lower in 2022-23 than today. If we exclude the NHS, it will be more than 6% lower. What does that mean? It means that our schools, police services, councils and care services will face cuts not just this year, but next year and into the future. This is not about jam tomorrow. It is about maybe jam in six or seven years’ time.

That is something I am incredibly worried about in my constituency. Already our schools are under huge pressure. We are dealing with an £11 million deficit in our special needs budget alone, and when we see that this Budget had nothing for our schools, tackling that will be really difficult. In my constituency, and across London, we are also seeing crime up and police officer numbers down. The Budget will do nothing to tackle the criminals and to fight back against the big increase in crime.

What does the Budget mean for Brexit politics? It means that the Conservative Brexit is failing our economy and failing our country. People who voted leave thought they were voting for better wages because there would be less competition from immigrants. Their wages are going to be lower. They thought they were voting for more money for our public services, such as the NHS. They are going to get less. They thought they were voting for an economy that will be better than before. They were not—it will be worse.

I say to the right hon. and hon. Gentlemen on the Treasury Bench that it is time they thought again about Brexit. The OBR has told people the truth.

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[The Chief Secretary to the Treasury (Elizabeth Truss)]

We have had an excellent debate this afternoon. We heard my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy lay out an optimistic vision for our industrial strategy. We heard my hon. Friends the Members for Banbury (Victoria Prentis), for Mansfield (Ben Bradley), for Dudley South (Mike Wood) and for Hitchin and Harpenden (Bim Afolami) and my hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer) talking about the positive measures in the Budget on skills, housing and tax. We also heard the usual fiction and portents of doom from the Opposition.

I repudiate the Opposition’s predictions. Our destiny is not preordained. We have the power to shape the future and to boost our growth and productivity. If we want to know what high productivity looks like, we need look no further than our high-growth companies. When it comes to start-ups, we are world leading, with more than 650,000 companies founded in 2016 alone. We have more than twice the number of $1 billion tech companies than anywhere else in Europe. By enabling companies to grow and, even more, to start, we can make sure all people in this country benefit from our world leadership in areas such as driverless cars and artificial intelligence.

The real revolutionaries in this country are not sitting on the Opposition Front Bench clutching their iPads and looking up debt numbers, while denouncing enterprise; the real revolutionaries are the businesses across Britain that take risks, create jobs and improve our lives. They are the people who are delivering day out, day in for our country. This Budget is about liberating those businesses to achieve their ambitions and to deliver for our future, and it is about making sure that they have the people, the capital and the space to succeed.

Of course we want to attract the brightest and best to our country, which is why we are doubling the number of high-skilled visas that can be granted each year, but we also need to unleash the talents of our own people, both to help power the economy and to make sure they can share in the opportunities that enterprise brings. The fact is that the previous Labour Government let down our children and young people. They left Britain short of skills; they dumbed down the curriculum; they created rampant grade inflation; they failed on technical education; and they left office with rising youth unemployment.

When Labour left office, youth unemployment was at 20%, which is why we brought in higher standards for English and maths, new academies and free schools, and new T-levels. Under this Government, we have seen more apprenticeships and the lowest level of youth unemployment for 13 years. I suggest the Opposition engage with the facts.

We are announcing even more in this Budget. We are tripling the number of computer science teachers and, as my hon. Friend the Member for Chelmsford (Vicky Ford) pointed out, we are giving schools £600 for every additional student studying maths A-level or core maths, the most valuable qualifications in the jobs market. We are learning from the best in the world, and I am delighted that my right hon. Friend the Minister for School Standards is here today because he championed the Shanghai and Singapore maths mastery programme that we are rolling out to a further 3,000 schools. We are also making sure that adults already in jobs have the opportunity to improve their skills through the national retraining scheme.

The Government know that private investment in high-growth businesses benefits us all through new technology, higher living standards and more jobs. This year, a record £2 billion was invested in FinTech alone. This Budget builds on that success by unlocking more than £20 billion of investment to finance growth in innovative firms. As my hon. Friend the Member for Mid Norfolk (George Freeman) said, £1 billion is also being invested in the life sciences sector.

We also want to make it easier for brilliant women founders to access capital. Research shows that, when making identical pitches, women are half as likely to secure early-stage investment, despite investors who invest in female-led businesses being, on average, more successful. We have asked the British Business Bank to look at that so we can see more brilliant women founders and start-ups getting that investment.

Finally, these high-potential businesses need space to grow and high-quality infrastructure. We are making it easier for businesses to expand their operations through new planning freedom and manufacturing zones. We are also investing a huge amount in infrastructure. As my hon. Friend the Member for Saffron Walden (Mrs Badenoch) pointed out, this Budget includes the highest amount any Government have spent as a proportion of GDP on economic infrastructure for 40 years. How can the Opposition talk about a lack of investment in infrastructure, given that this is the highest for 40 years? It is much higher than anything that happened under the previous Labour Government. This spending includes plans for the Oxford-Milton Keynes-Cambridge corridor and for the northern powerhouse. [Interruption.] Let me say to the Opposition that we are investing £337 million in a new fleet of trains for the Tyne and Wear Metro, and £300 million to ensure HS2 can accommodate future northern and midlands rail services. We are also creating a £1.7 billion transforming cities fund, which will give our great cities the investment they need, and they will be able to invest in local trams or light rail systems as they see fit.

[Sir Edward Davey]

Does the right hon. Lady agree that British companies—our new entrepreneurial companies —would like a nice big market to sell their goods to, on our doorstep?

[Elizabeth Truss]

Absolutely, which is why our focus is on getting the best possible deal in the Brexit negotiations. Maintaining a tight grip on Government finances is, as my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) pointed out, vital for any Government, and Opposition Front Benchers would do well to look at that when they are considering—[Interruption.] I see that the shadow Chancellor is on his iPad looking up what the—[Interruption.] I can help him out without an iPad. His plans would mean an additional half a trillion pounds-worth of debt. If hon. Members want to know how much extra interest the British public would have to pay every year, I can tell them that it is £7 billion. I do not need an iPad to know that.

This Government are prioritising our country’s long-term growth prospects. We are investing in the infrastructure and in the skills that our country needs to succeed. Whatever the Opposition say, it is not politicians or Whitehall that will turbo-charge our economy and bring the growth and improved living standards we all want; it is the enterprises up and down the country that are going to deliver that. The Opposition want to tax new industry to the hilt or, even worse, to run it themselves. I cannot think of a more scary prospect for businesses across Britain. We take the opposite view; we want to unleash enterprise and to make sure that businesses have the people, space and the conditions to succeed. This is a Budget that recognises where the true value of our economy is created. It is not through issuing blank cheques that we cannot afford, but by making sure that our enterprises have the skills, talent and space that they need to grow and to ensure that all our citizens benefit from our powerhouse future. That is why the House should support the Budget in the Lobby tonight.

Question put and agreed to.

Resolved,

That income tax is charged for the tax year 2018-19.

And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

Smart Meters Bill

Ed Davey Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Tuesday 24th October 2017 Commons Chamber

[Greg Clark]

I am grateful to my hon. Friend for that, and he is absolutely right in what he says. If we want to have a fully smart grid, the more people that avail themselves of that the better. When members of the public share his enthusiasm, it is very important that they should be given the chance to have a smart meter.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

Will the Secretary of State explain why the roll-out of the second set of smart metering equipment technical specifications—SMETS 2—has been so delayed? I understand, probably better than most Members, the frustration he will feel about the delays to the smart meter programme. Is not the concern that suppliers are going to fit lots of SMETS 1 meters, which will be a barrier to competition and reduce the benefits of the smart meter programme to consumers?

[Greg Clark]

I am grateful to the right hon. Gentleman for raising that concern. He is absolutely right that in moving towards a fully smart system we want full interoperability, which is what SMETS 2 achieves. It has been tested and will be rolled out from July next year. The key point is that those who have a SMETS 1 smart meter will be able to access the software upgrades that will provide that interoperability. That is an important aspect of the roll-out and I am pleased to confirm it to him.

[Sir Edward Davey]

I am grateful for that clarification, because it may put some minds to rest if they know that the software upgrades will be available. There is a danger that many suppliers, be they one of the big six or others, see the roll-out of as many SMETS 1 meters as possible as a way to stop competition and lock in their consumers. That should really worry everyone in the House. Has the Secretary of State weighed up the benefits of ensuring we have more competition through the roll-out of SMETS 2 meters against the obvious downside of delaying the 2020 deadline?

[Greg Clark]

Yes, I have. Again, I am grateful to the right hon. Gentleman for asking that question. It is essential that the upgrade is available so that the smart meters that are installed under the SMETS 1 standard will be operable under the SMETS 2 standard. That has been a key part of the development and testing for exactly the reason he mentioned.

Smart metering upgrades the interactivity of the energy system in general. One big advantage of it is that if the system is fully interactive, less unneeded generating capacity needs to be invested in, with consequent savings to consumers. Even in the initial operation, it is estimated that by 2020 consumers can make net savings on their household bills to the tune of £300 million. In addition to the bill savings, smart metering will deliver benefits to the energy industry and to the economy more widely. It seems to me to be essential that if we want to plan a prosperous future, building on our strengths, this country should be the place in the world that can best integrate renewable energy and battery storage—not least in electric vehicles—with the consumer. Smart metering is an important element of that.

[Greg Clark]

Yes, and it is important that all consumer groups should be able to access the benefits, including lower bills. That has been an important requirement, and the Bill addresses it by extending the necessary powers to ensure that we have the regulatory ability to insist that the roll-out goes to all consumers and is not restricted to the more affluent.

[Sir Edward Davey]

I am grateful for the Secretary of State’s answer to the hon. Member for Coventry South (Mr Cunningham). Is he trying to ensure that suppliers roll out smart meters to prepayment customers as soon as possible? The benefit of smart meters to those on low incomes who use prepayment is that some of the extra costs associated with prepayment go.

[Greg Clark]

The right hon. Gentleman is right: we especially want to extend smart meters to those on prepayment meters and those who might struggle to afford their energy bills, because the benefits of the savings are disproportionately better for them.

--- Later in debate ---

[Greg Clark]

My hon. Friend again makes an excellent point. Companies are under an obligation to offer households a smart meter by the end of 2020, and these powers allow the Government and the regulator to hold them to their licence conditions in so doing. If he gives me the details of the particular supplier to which he refers, I would be happy to take up that case.

The powers are due to expire on 1 November 2018, so the Bill extends them for five years. An extension of the powers is necessary in order to ensure the successful roll-out by the end of 2020, and to maximise the benefits accruing to consumers during and after the end of the roll-out.

Clauses 2 to 10 introduce a special administration regime to ensure continuity of the smart meter continuation service currently provided by the DCC. Special administration regimes are common—in fact, typical—in network companies. They are primarily designed to guard against the DCC going insolvent due, for example, to cash-flow problems if one or more of its energy supplier customers were unable to pay its charges.

The DCC licensee is deliberately designed to have limited financial assets of its own to avoid the cost of holding large capital reserves, so it relies on timely and full payments from energy suppliers to meet its own contracted obligations to its subcontractors, which provide the communications network. If, for some reason—we regard this as being very unlikely—one or more of its larger customers did not make payments, there are provisions in the smart energy code to allow it to make emergency charges on other suppliers. If these emergency charges also went unpaid for some reason, there would be a theoretical risk that it could go into administration and cease service, so the special administration regime allows the Secretary of State—or Ofgem, with the Secretary of State’s approval—to apply for an administration order to be made in relation to the smart meter communication licensee. Such an order would direct that, while it is in force, the affairs, business and property of the company are to be managed by an administrator appointed by the court.

The aim of the special administration regime is to ensure that the functions of the smart meter communications licensee, under its relevant licences, are performed efficiently and economically, pending the company being rescued or its business being transferred to another company. In the unlikely event of the DCC’s insolvency, fundamental services may be disrupted. Therefore, it is prudent to have safeguards in place, as with other network operators, such that its continued operation is protected. This special administration regime is standard practice in the energy sector, and these powers are based on similar regimes that have been introduced—for example, for networks and suppliers.

The Bill allows the Government to continue to progress with the important goal for the national economy of delivering an energy system across the country that is smarter and more flexible.

[Sir Edward Davey]

I am grateful to the Secretary of State for giving way, and I know that he is on his peroration. One big policy issue is the interrelationship between the smart meter roll-out, with the 2020 deadline, and the energy price cap he has proposed. How does he see those linking together? Does he see the price cap going once all smart meters have been deployed?

[Greg Clark]

The draft Bill the Select Committee is going to scrutinise means that there would be a temporary price cap while the current uncompetitive conditions in the market continue. As we have discussed, one of the major advantages of the smart meter programme is that it corrects the imbalance of information between consumers and suppliers, and that is something Ofgem will want to take into account in deciding when to lift that price cap. So the connection with smart meters is very important.

The Bill is an important step in making sure we have one of the smartest, most flexible energy systems in the world, enabling us to take advantage of new technologies while at the same time delivering benefits for households and small businesses. I commend the Bill to the House.

--- Later in debate ---

[Mark Pawsey]

I could not agree more. In many ways I regret the need for us to consider a price cap, because I believe the answer to the problem that we are trying to tackle is to make it easier for consumers to understand exactly how much energy they use and how much it would cost from another supplier and to make it possible for them to make an easy, effective switch.

[Sir Edward Davey]

In answer to the hon. Member for Warwick and Leamington (Matt Western), is not the real point that consumers on prepayment meters have to pay more than the rest of the population because of the cost of administering a prepayment meter and a move to a smart meter would remove that cost, so prepayment meter consumers are likely to benefit the most, and that aspect of the roll-out, which I tried to achieve as Secretary of State, should be accelerated?

[Mark Pawsey]

The right hon. Gentleman makes a superb case for getting smart meter roll-out moving as quickly as possible.

There are lots of reasons why we need to move on to SMETS 2 meters, but we have some problems with smart meters and SMETS 1. I had not come across those until this weekend, when I received an email from my constituents Mr and Mrs Lafferty, who are dual-fuel customers of First Utility. They were interested in the idea of a smart meter; they understood the benefits; and they arranged for an installation. In the first instance, that took two to three months, and regrettably the meter was installed in a location that was not particularly accessible to them, as elderly residents. Their daughter has to look at the meter. She also has to look at the meter because, just a few months after the installation of their smart meter, they decided to transfer to another provider, EDF, believing that there would be a better price. They were astonished to find, however, that their smart meter was not compatible. Their smart meter is now being used as a dumb meter, with their daughter having to visit their home to take readings. One concern is that such accounts discourage people from taking advantage of smart meters.

I put a message out on Facebook to my constituents to comment on the issue and, if I may, Madam Deputy Speaker, I would like to read one or two. One said that they

“had smart meter installed by one company. It worked fine, but then I changed company and it doesn’t work for the new company. Ridiculous that there isn’t a standard technology.”

The answer, of course, is that there will be, but we need to crack on with it. Another constituent said:

“good to see how much we were spending but it hasn’t changed the way we do things.”

That is something we need to get across. Another said:

“Not yet changed supplier, but I know when we or if we do, we will need to change the meter. The installer said they are working on a meter which would be easily compatible across all suppliers so wouldn’t need changing. So it might be worth waiting.”

We must not put people off in the short term, because of any issues that are happening right now.

--- Later in debate ---

[Patricia Gibson]

What the hon. Gentleman says sounds eminently sensible. The problem is that the better off and most well-informed people are switching and saving. That is being subsidised by the people who are unable to switch and save because they do not feel up to the task. The poorest households are actually subsidising the most affluent households, which have the ability and the expertise to switch and save. That is a real issue that has to be addressed. Similarly, as mentioned before, those on prepayment meters—the poorest households in our communities—must have access to smart meters if they want them.

It is important, as part of this process, that the Government’s regulatory framework clearly establishes the rights and obligations of all aspects of smart metering design, development, installation and operation, as well as monitoring and reporting. Customers must be reassured, and continue to be reassured, that their data and security are robustly protected in the course of the smart meter roll-out. There is concerning evidence, however, that smart meters are being installed before the programme’s requirements as an internet-connected energy system have been fully determined. The UK Government must do everything in their power to protect consumers during the roll-out. There were disturbing reports last March in the Financial Times of GCHQ intervening in smart meter security, claiming to have discovered glaring loopholes in meter design, and causing some alarm. Such concerns must be fully addressed.

The plan to install smart meters in every home by 2020 must not leave consumers out of pocket. It must be asked whether the cost of the roll-out will be borne by all energy consumers. The successful operation of smart meters can also be a postcode lottery. In areas with a poor mobile signal, there is a real chance that smart meters will not work. If we are applauding the merits of smart meters, this has to be borne in mind, because digital inclusion matters.

Almost 100,000 fewer households were in fuel poverty in 2015 than in the previous year in Scotland, but there is still much more to be done. The Scottish Government have commissioned a review, due to be completed next year, of the definition of fuel poverty in order to inform a new fuel poverty strategy that will be followed up by a warm homes Bill. There has to be a focus on those in most need of help to heat their homes.

[Sir Edward Davey]

The last time the Scottish Government reviewed the definition of fuel poverty, they came up with a definition that I did not think was very good, whereas in England and Wales we reviewed it and came up with a policy that secured cross-party consensus. May I urge the hon. Lady to go back to Edinburgh and look at the fuel poverty definition we produced here in Westminster?

[Patricia Gibson]

As the right hon. Gentleman knows, when something is being done well, others should learn from it—I am a great advocate of that approach—and if something is being done well in Westminster, the Scottish Government have no difficulty learning from it. I only wish that that was reciprocal.

We need to be mindful of those most in need of help to heat their homes, and that must involve a joined-up approach, as a wide range of policy areas are encompassed by any attempt to tackle fuel poverty. Citizens Advice has stated that consumers in vulnerable situations could miss out on the potential benefits of the £11 billion smart meter roll-out, which they will be helping to fund through their energy bills. Such risks might relate directly to the installation and/or the ability of these households to benefit from the smart meter system.

Generations of British consumers have been locked into a “risky and expensive” project by the UK’s subsidy deal for a new nuclear power station at Hinkley Point in Somerset. That is not my assessment, but the assessment of the National Audit Office. Under the terms of the 35-year contract, EDF is guaranteed a price of £92.50 per MWh it generates—twice the wholesale price. The subsidy will be paid through energy bills that the Government’s own figures estimate will translate into a £10 to £15 chunk on the average household bill by 2030.

I do not want to revisit last week’s debate, but I should mention at this juncture that the National Audit Office has also pointed out, worryingly, that withdrawal from Euratom

“might be interpreted as a change of law”,

resulting in an adjustment of the £92.50 price promised to EDF, or might even trigger a one-off payment to EDF through a compensation clause in the contract. I shall leave that for the Minister to consider in his own time, but the fact is that EDF has been guaranteed three times today’s price for electricity for 35 years.

Former Conservative Energy Secretary Lord Howell—among many others—has criticised the Hinklev deal, calling it

“one of the worst deals ever”

for British consumers and industry, and has protested against

“endless government guarantees of risk-free returns to the investors”.—[Official Report, House of Lords, 22 October 2015; Vol. 765, c. 789.]

We now know that when Hinkley has been completed, several renewable alternatives will be cheaper. When it comes to helping consumers to keep their bills down, it is hard to see how the white elephant that is Hinkley will do so. Perhaps, for that reason, it is easy to understand why I am so concerned about the fact that consumer protection has not always necessarily been at the heart of the Government’s thinking. The price cap is, of course, welcome, but there is still a huge subsidy from the taxpayer for the energy from Hinkley Point. It seems that we are giving with one hand and taking with the other.

Every household needs and deserves a safe, affordable energy supply. The Government strategy must be clear, and what is best for consumers must lie at the heart of the entire process. By contrast, in Scotland minimum energy efficiency standards will be developed and announced in the private rented sector, with consultations on how owner-occupiers can improve the energy efficiency of their homes with financial incentives. Ultimately, the Bill must be about empowering consumers and delivering better, smarter and cheaper ways of heating our homes. Smart meters are part of that, but they must deliver for all, especially our vulnerable consumers, and deliver in a way that enables data to be secure and protected. The environmental benefits are, of course, also important.

We support the Bill, but, as I have said to the Minister, we have reservations. We urge the Government to ensure that the important elements to which I have referred lie at the heart of the legislation.