Dieter Helm Energy Review

Graham Stringer Excerpts

Tuesday 24th April 2018 Westminster Hall

[Graham Stringer (Blackley and Broughton) (Lab)]

I beg to move,

That this House has considered the cost of the energy review by Dieter Helm.

It is a pleasure to serve under your chairmanship, Mr McCabe. The motion has a slight ambiguity as to whether we are considering the cost of producing the report or the contents of the report itself, and I want to make it clear that we are considering the report itself, and not the £500 a day paid to Professor Helm for producing it.

The report is a devastating critique of Government policy over the past 10 years or so. That is not just this Government, but the coalition Government and the previous Government. The report’s extraordinary headline is that we will have paid £100 billion—that is one hundred thousand million pounds—more than necessary by 2030 for current energy policies. Consumers are paying 20% more for energy than would otherwise have been necessary. Thinking about the debates, rows and discussions we have about major infrastructure in this place, High Speed 2 will cost £40 billion or £50 billion, which is half as much. Some of my hon. Friends are against that highly controversial project, and many Government Members are in favour of it. Cost is a crucial issue, but it looks as though, for no real infrastructure benefit whatever, by 2030 we will be paying twice as much—£50 billion more—for an energy system that is, in the words of Professor Helm, “not fit for purpose”. One could also argue about the marginal differences in cost that people see for remaining in or leaving the EU. The sheer size of this £100 billion figure leaves many such arguments in the shade.

Professor Helm’s report is long—240 pages long—but if people want a simple version of his views, I recommend reading the transcript from when he was before the Business, Energy and Industrial Strategy Committee on 16 January. He knocked down some of the criticisms of the report when he was quizzed by Members. The transcript is much easier to digest and more to the point than the 240 pages of dense, well-argued points.

One can agree or disagree with the report, but it is logically coherent. One surprise is that, given the sheer magnitude of the figures involved, the Government have not responded in detail to it. I am sure there are responses that could be made. There could be disagreements on much of the detail in it, but it is a real failure that the Government have not responded to such an important report, which they of course asked for.

One thing that the report emphasises is how the energy market is working and has been set up. The Government have tried to pick winners, but as often happens, they have not. We would all like to pick winners; we would all like to win on the Derby or the Grand National, but most of us are not very good at it, and Governments by and large are not much better at picking winners in industry and energy. The people who are good are inefficient businesses—losers, rather than winners, if you prefer, Mr McCabe. They are good at picking weak Governments and lobbying and arguing for subsidy for less-than-competitive industries. The report says that they have done that, and it is devastating in its analysis.

Not only have the Government—as I said, I am not making a particular charge against this Government; this charge is levelled at the last three Governments—been subject to lobbying and wasted money, but in the background of the process are many lobbyists and green groups whose acquaintance with the truth sometimes leaves a lot to be desired. We not only have industry with vested interests, but groups such as Greenpeace lobbying in the background, many times dishonestly, to support policies that fit their ideological preference.

Mr McCabe, you may remember walking into the House of Commons before Christmas and seeing big signs outside sponsored by Greenpeace that said the cost of wind had been cut by 50%. That was an outright lie. It was challenged at the Advertising Standards Authority, and Greenpeace was made to take those adverts down. When Greenpeace and others were asked to justify their position, they said that they were using projected costs for wind farms in the North sea that had not yet been commissioned, let alone built. That is the background to a controversial policy area that the Government should by now have responded to.

I said that Professor Helm was coherent, which he is, but—this will come as no surprise to the shadow Minister, my hon. Friend the Member for Southampton, Test (Dr Whitehead)—I do not agree with the objectives that Professor Helm has always agreed with. They are the Government’s objectives, too, and I will explain why I do not agree. He starts the energy review by talking about the Government’s target in the Climate Change Act 2008 to reduce carbon emissions in this country by 80% from 1990 levels by 2050. I do not agree with that, and I will explain why. However, it is the Government’s policy and the law, and that is the basis of the review. His second objective, which he took as concrete, was the security of energy supply. Along with those two objectives, he wanted to see whether costs could come down.

My disagreement is that I have always thought that there should be a hierarchy of targets in energy policy. Security of energy supply should always be the top target, because if the lights go out, not only would we be in trouble as Members of Parliament for creating a system that does not keep the lights on, but the country would be in trouble. I have always thought that security of energy supply, rather than arbitrary carbon targets, should be the top priority.

Secondly, I would find it difficult to explain to my constituents and industry in my constituency if price was not one of the top priorities. For it to be tertiary is a mistake. Lower prices should be a priority, but a consequence of the policy is that they have been neglected, and they have gone up by more than they would have otherwise. That is where I disagree.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

I congratulate the hon. Gentleman on securing the debate; he makes some good points. I agree entirely with what he has just said about price, and with what the report seems to indicate. There has been a complete failure of competition in the domestic energy market; Governments always talk about it, but they have failed to deliver. There is still a predominance of the big six energy companies, effectively rigging prices. Does the hon. Gentleman agree that that needs to be fundamentally addressed if we are to have a proper energy market that benefits customers?

[Graham Stringer]

That is my reading of the report. I think Professor Helm goes slightly further than that—beyond the big six energy companies—and talks about the problems that have been caused by investing in costly new technologies that might have been cheaper to purchase later, but I essentially agree with the hon. Gentleman.

The price of energy is important not just in the way that I have described; it is also probably the most important industrial policy that this country can have. Matt Ridley pointed out in The Times some 12 months ago that at the start of the industrial revolution—this is from memory, so I might have the numbers slightly wrong, but they will not be far out—the cost of energy in Newcastle was about one 20th or one 25th of the cost of energy in China. We know what happened: this country, Europe and the United States boomed ahead because what previously required 20 horses could now be done with a few lumps of coal.

Recklessly putting up the price of energy has been a huge mistake for the country. When I say that, I do not want anyone to think that I am somehow in the category of anti-science. My background is that of a scientist, and I understand the opacity or otherwise of carbon dioxide to different wavelengths of electromagnetic energy. I understand the greenhouse effect in some detail, and I do not deny its existence—I think that what its impact will be is sometimes exaggerated, but that is a debate for another day.

We have been putting the price of energy up and closing coal stations—probably the coal stations should have been closed earlier, as Professor Helm says. As an intermediate pathway to the Government’s goals, it might have been sensible to use gas-fired power stations, which have half the carbon emissions of coal-fired power stations. If we look at the whole-world picture, we see what little impact we have—I think we produce about 2% of the carbon dioxide in the world. Over the next 10 years or so, 1,600 coal plants are planned in 62 countries around the world. China will make 700 of them. Approximately 65% to 70% of India’s energy production is from coal, but last Monday India cancelled the vast majority of its planned nuclear power plants.

Whatever impact we have will be minimal to negligible, yet we are putting the price of energy up for some of the poorest people in the country, including my constituents. We are also undoubtedly damaging industry, because due to the high price of energy we are, in effect, exporting many jobs to countries such as China, India and Malaysia, where they are often less efficient, and there is the carbon cost of the transport by ship or plane when we buy their goods.

Professor Helm, taking the Government’s policies as firm, has a number of suggestions. First, he believes that there should be one uniform carbon price. He points out, in a chart towards the end of the report, that we have many carbon prices at present, where we add to the cost of fossil fuels through many of the interventions to VAT. He believes that they should be unified, which would make things transparent. He also believes that there should be auctions for energy suppliers. Devastatingly, he says in the report that he is surprised, and I think it was a surprise to everybody else, that when things were put out to auction, rather than using interventionist prices, the prices dropped dramatically.

Professor Helm gives us his reasons on the interventions. I do not want to read too much of the report directly, but he says that the different interventions have made the market extremely complicated and expensive. He points out:

“The legacy costs from the Renewables Obligation Certificates (ROCs), the feed-in tariffs (FiTs) and lowcarbon contracts for difference (CfDs) are a major contributor to rising final prices, and should be separated out, ring-fenced, and placed in a ‘legacy bank’. They should be charged separately”.

On the complexity, Professor Helm’s answer to the Business, Energy and Industrial Strategy Committee was devastating, because some of the vested interests had been into the Committee previously and had lobbied. Some of the renewable energy people and some of the people from the Committee on Climate Change—all of them professors, you understand, Mr McCabe—had said, “There’s no problem with complexity whatever.” I think there is a problem, and anybody who has been in the real world for very long knows that there is a problem. Professor Helm’s key finding and recommendation on that was:

“The scale of the multiple interventions in the electricity market is now so great that few if any could even list them all, and their interactions are poorly understood. Complexity is itself a major cause of rising costs, and tinkering with policies and regulations is unlikely to reduce costs. Indeed, each successive intervention layers on new costs and unintended consequences. It should be a central aim of government to radically simplify the interventions, and to get government back out of many of its current detailed roles. This review explains how to do this.”

In taking on the professors who think that complexity is not a problem, Professor Helm said:

“It is empirically impossible to work out the costs of current policy, because each policy intervention interacts with every other policy intervention. Any cost-benefit analysis of a particular intervention has to do the plethora of interactions with all the other bits as well. If you want an empirical piece of proof, you need to have all that analysis done and then analyse the empirics of the counterfactual, of what would have happened if you did not have all that complexity.”

I agree with him: it is impossible.

The report also says that, having created that complexity:

“As a consequence of Electricity Market Reform (EMR), the government now determines the level and mix of generation to a degree not witnessed since these were determined by the nationalised industries”.

I suspect that if I had been a Member of this House when Lord Lawson, as Energy Secretary, proposed privatising the energy industries, I would have voted against. Nationalised industries at least have a direct line of responsibility between the taxpayer, who may benefit from them and subsidise them, and the controlled industry. What we have here is a complete mess: Government intervention, interfered with by lobbyists and vested interests with no accountability, which ends up with the poor consumer paying more than they need to.

Professor Helm criticises the Government for focusing too much on electricity and not enough on agriculture, which is a tiny part of the economy and creates about 10% of carbon dioxide emissions. He strongly believes—this should please the Government—in a free market solution. He believes that the auctions will not pick winners, but that the winners will pick themselves by being efficient in the auction process.

I want to deal with one of the main questions put forward by my hon. Friends who represent constituencies where Vesta, for instance, produces wind turbines. That question is whether the alternative, renewable energy business would have got going without intervention. Nobody can really answer that. When all that extra cash has been put into the energy market, there are bound to be spin-off benefits, but it cannot be known at any time, unless the market is tested, whether someone could have got more bangs for their buck for investing differently.

One area where I completely agree with Professor Helm is that we need research—not just the research carried out by vested interests who want to produce energy, but pure research. There is a long way to go in battery technology, which may be part of the solution. Unless something has happened since I left the Energy and Climate Change Committee, we do not even have a proper pilot scheme for carbon capture devices. All those things could be explored in a pure way and then, in the way that often happens after pure research, industry could look at what could be used and the way we are investing at the moment.

The final point made by Professor Helm is that tens of billions have been invested in subsidising wind farms in the north sea. On what basis can we say that was the right decision, rather than putting the money into carbon capture and storage? I do not have the answer to that, and I know the Government do not have the answer. They have opened their arms to vested interests and have ended up with a system that disadvantages our constituents and is essentially not fit for purpose. The Government need to respond thoroughly and properly to this important report. It is possible to disagree with it or to agree with parts of it, but it certainly needs a response.

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[James Heappey (Wells) (Con)]

It is a pleasure to serve under your chairmanship, Mr McCabe. I congratulate the hon. Member for Blackley and Broughton (Graham Stringer) on securing the debate.

I agree with much of what has been said. The Helm report is imperfect, although my copy is greatly improved by the artwork on the back of it contributed by my children. Such a report was always going to be imperfect. For the past 18 months, since the report was first discussed and commissioned, the whole industry and the Government have been holding their breath in anticipation of the response. It was always unlikely that the clouds would part and Professor Helm—as brilliant as he is—would provide the absolute solution for all future energy policy.

Professor Helm is right that the auction system we have been operating over the past decade or so is imperfect. It is complicated, and parts of it have given us the wrong result. Until recently, in the grid services markets, in particular, we ended up with lots of diesel coming through to meet that need. Clearly, that is not what the Government or anybody in the lobby in favour of decarbonisation hoped for. Clearly, it was not perfect. I accept Professor Helm’s criticism of the Government’s picking winners. More accurately, losers are very good at picking Governments. There is no doubt that some things we committed to in the past would not bear scrutiny today.

I do not accept that it is all doom and gloom. I accept the criticism from the hon. Member for Blackley and Broughton of the advertising that suggested that the cost of offshore wind had come down by 50%, but let that not hide the fact that the speed at which the cost of offshore wind has come down is a stunning success. Whatever the reduction is—we can debate that—there is no doubt that, only a few years ago, it was well over £100 per megawatt-hour, and it is now well below that. That is a consequence of the Government seeing the opportunity both from an energy perspective and for industrial strategy in the north-east of England. I think that is a good thing.

[Graham Stringer]

I appreciate the hon. Gentleman’s point, but does he agree that there has not been a huge technological advance in windmill technology over the past few years? The drop in costs probably represents how inefficient the energy market was previously, rather than an increase in wind turbines’ efficiency.

[James Heappey]

I do not have the evidence at hand to disagree with the hon. Gentleman absolutely, but my understanding from the industry—I accept that he is sceptical about the industry’s lobbying prowess—is that there have been some fairly significant improvements in the cost of manufacture and in the scale of the wind turbines that can be deployed. It may be that the cogs, wires and mechanisms within are no more efficient than they were—I honestly do not know—but if they can now be deployed much more cheaply because of the scale at which they are being manufactured, and if they can generate so much more electricity because of the size of these things, I think that those are cost reductions even if the underlying technology has not moved on. I suspect it has a little, but I do not have the evidence at hand to debate that point today.

Renewables have, I think, become the cheapest form of generation. Solar has been going gangbusters in the speed at which it has brought down its costs and so, too, has onshore wind, notwithstanding the political pressures against it in this place. It is increasingly hard to argue that the burning of hydrocarbon for the purpose of generating electricity is the cheapest way of providing electricity. More and more often, we can buy out the intermittency of renewables to deliver very cheap clean green energy, and it is no longer a choice between decarbonisation and cheap energy. It is just that the greener energy happens to be the cheapest as well. Crucially, what renewables also allow us to do, which will realise a big saving, is to decentralise the energy system. That will certainly bring with it significant reductions in the costs of transmission, and potentially even distribution as well.

I have said that our auction mechanism is imperfect, but it is worth noting that many other countries have sought to emulate what we have done with Government policy on the deployment of renewables. It has sped up our decarbonisation—spectacularly so—and has reduced the wholesale price of energy. I accept that that has been clouded by a combination of the energy companies not necessarily passing on the savings to consumers as quickly as they could and of the green taxes that the Government put on top of the wholesale price. That has meant that consumers do not see it, as some people in this room would, as the right thing, because, as the hon. Member for Blackley and Broughton said, they have not seen on their bill the translation of that change into their energy costs.

Professor Helm also rightly mentioned that there are other areas for decarbonisation where the Government have not yet made as much progress as they might. Some very good things are being talked about within the Minister’s Department and I know that she is a big champion of the decarbonisation of heat and how we do that better. I am a Parliamentary Private Secretary in the Department for Transport and I know that a lot of work is going on there to look at how we decarbonise transport and the future of mobility.

My right hon. Friend the Secretary of State for Environment, Food and Rural Affairs is doing great things on waste. I accept the criticism of Professor Helm and others in this place that agriculture has been lagging behind. Representing a farming constituency, I know exactly why that is the case. It will be very challenging when we have to start telling people that they need to reduce their consumption of meat, milk, cheese and everything else in the interest of decarbonisation, but that conversation is surely coming.

The issue is how we translate all the advances in technology in the power sector into reduced bills. The Domestic Gas and Electricity (Tariff Cap) Bill, which I spoke to on Second Reading—I also served on the Public Bill Committee—should not be regarded as the process by which we do that. I am reassured by my previous discussion with my right hon. Friend the Minister, and I hope that the Bill will not be a temporary raid on the market.

The analogy that I like to use is that the current market, the caterpillar, is going into the chrysalis and on the other side we will have the butterfly that is the wonderful, digitised, decentralised energy system of the future. It would be disastrous if the caterpillar went into the chrysalis and after an inordinate period of time what emerged on the other side was still a caterpillar. We need to give Ofgem the latitude to use this as an opportunity not just to introduce a price cap, but to transform the energy system so that all of the savings that clean tech undoubtedly will afford start to translate into reduced bills for consumers.

In this place, we have a job to keep ahead of what will undoubtedly be a change in the mindset of consumers. Electric vehicles are not gaining in popularity among the electorate because we in Parliament have told people they are a good thing. They are gaining in popularity because they are unquestionably the future of motoring. They are technologically advanced, better than normal cars and cheaper to run, and people will be going for such things as a result of that, not because they are motivated by decarbonisation. We need an energy system that is ready to give them not only the ability to motor effortlessly because the charging network is all there, but from which, with their electric vehicles, they can take full advantage of the fact that they now have a battery parked outside their home and can participate in the energy system to further reduce their bills.

Increasingly, people will start to get the internet of things within their home and businesses. They might not realise that that transition is happening because all that it might mean at the moment is a smart speaker in the corner of the room from which they invite Alexa to tell them the weather. Increasingly, people will find that as their homes become smart, they will be able to participate in the energy system and access services that will allow them to deliver their domestic energy much more cheaply because something like Alexa, Siri, Google Home or whoever else will be able to run their homes more cheaply and will work out when they need to perform various functions to take advantage of cheaper market prices.

In turn, as policy makers we need to ensure that everything is in place for storage to be fully unlocked both in catalysing the research and development for grid scale storage and making sure that the market is ready for people who have storage in their business, home or community. We need to make sure that the market is ready for storage to participate.

Demand-side response has been spoken about for so long, but I am not sure we have the policy levers quite right yet to make sure that demand responds on a meaningful scale, particularly when aggregated across lots of domestic users and small businesses. We have the big users signed up to it, but delivering it when it is aggregated across a large number of consumers is very important. We need to accelerate that transmission because I suspect that consumer demand for those things will start to take off quite quickly in the next five to 10 years. There is a danger that we will get caught out having not put in place policy and regulatory frameworks for the new energy system that people will realise they want, and it will not be delivered if we do not get that right.

The other thing it is tempting to do when talking about Professor Helm’s report, which focuses on the big stuff, is to forget that energy efficiency is far and away the best way to deliver savings to consumers. I know the Government have made some eye-catching announcements on this recently, and it is absolutely right that we continue to see small gains in people’s homes and businesses as just as important as the things that we talk about in the North sea or the big power stations that we build here in this country. They will deliver the biggest savings by far for consumers in the short and medium term.

I will wrap up simply by saying that the report is not perfect—we know that—but it raises interesting points that have stimulated a conversation in Parliament and helped to focus the Government on what could change. We are in danger of losing the argument with the bill payer if we do not start to show how all the clean technologies can and will translate into lower bills for users. The longer-term challenge is how we make sure that we fully decentralise and digitise the energy system. With that comes an opportunity to balance upwards from behind the meter through the community and then the region, rather than having the current system that is run rather inefficiently by a centralised system operator.

Last week BP announced some eye-catching policies for their internal decarbonisation goals over the next 10 to 15 years, but what was interesting was to hear Bob Dudley. When asked about the role BP might play in helping its customers decarbonise, he was clear that getting carbon pricing right is the thing that will move the dial most obviously, particularly for the big industrial users of energy. As policy makers we need to start considering urgently how we strike that balance between prompting the right behaviour from industry and not being punitive when it comes to increasing the price of energy. The opportunity for a future hydrogen economy requires decades of planning as we seek to transition, so starting that conversation now is very important indeed.

The discussion that we are having today is excellent. There is a lot that the Government need to do, and that Professor Helm will have prompted them to do through his report. It is not perfect, but the fact is that renewables are driving down the costs of energy. We need to be able to translate that into cheaper bills for the consumer. I know that the hon. Member for Blackley and Broughton is sceptical on such matters, but I passionately believe that the evidence shows that what we are doing is the right thing, and that we should keep our course.

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[Graham Stringer]

It has been a good debate. I thank the Minister; I understand why she says she is reluctant to formally reply to the report in the short term. That is disappointing—an interim reply on the Government’s position would be useful. I am pro-renewables: I just think that we are at the stage where they have to answer the question of whether they can exist without subsidy. If they cannot, auctions look to be the way forward, as Professor Helm says.

Motion lapsed (Standing Order No. 10(6)).

GKN: Proposed Takeover by Melrose

Graham Stringer Excerpts

Thursday 15th March 2018 Westminster Hall

[Mr Bob Seely (Isle of Wight) (Con)]

Does the hon. Gentleman agree that in many cases Melrose aims to own businesses for only between three and five years, and during that time seeks to maximise shareholder value, selling on the parts of those businesses that it sees as underperforming, sometimes without regard to the long-term benefit of the business and its individual plants? Therefore, a takeover by Melrose may mean a break-up of GKN. Does he share my concerns and those of others like me, who are fearful for the GKN plants in their constituencies? There is one in the Isle of Wight.

[Graham Stringer (in the Chair)]

Order. I would remind Members that interventions should be brief.

[Mr Bailey]

The hon. Gentleman has put his finger on an issue that I will develop at some length during my speech. He is absolutely correct.

Perhaps I should state that, from a philosophical or ideological point of view, I am not anti-private sector. I am not anti-City. I recognise that globalisation is a potential force for good, even though it does throw up some considerable challenges and needs to be managed. I feel, however, that the role of Government must be to ensure that where vital national interests are at stake, the private sector is regulated in such a way that those interests prevail over what are often the short-term or illusory interests of the shareholders involved or the myriad City professionals and advisers that tend to make a lot of money from takeover bids. Some of the issues that arise from this proposed takeover bid are specific to GKN and Melrose, but others throw up broader, national issues.

GKN is a company of enormous strategic importance to the British economy. In 2015, it made sales of more than £16 billion worldwide and contributed £1.36 billion to our economy. It is one of the major—perhaps the major—tier 1 providers within the automotive and aerospace industries.

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[Several hon. Members rose—]

[Graham Stringer (in the Chair)]

Order. Five Back-Bench Members want to speak, and the arithmetic is straightforward. I intend to call the Scottish National party spokesperson at 4 o’clock, so I hope that people will respect that time.

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[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I thank my hon. Friend the Member for West Bromwich West (Mr Bailey) for calling this important debate and acknowledge the many impressive contributions by Members on both sides of the Chamber. We heard that GKN is one of the world’s oldest and most prestigious engineering firms. As an engineer myself, I can imagine people’s pride at knowing they are following in such an illustrious tradition. I appreciate the pride of the hon. Member for Redditch (Rachel Maclean) and my hon. Friend the Member for Caerphilly (Wayne David) at having GKN in their constituencies, and that of other Members, too.

GKN is at the centre of the fourth industrial revolution, boasting of strengths in defence, aerospace, automotive, batteries and the internet of things. My hon. Friend the Member for West Bromwich West set out the significance of its economic contribution, and my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) emphasised the significance of its investment in R&D in the United Kingdom. As the shadow Minister for industrial strategy and a chartered engineer, I believe that all those factors make GKN an important part of our future innovation economy. As my hon. Friends the Members for Birmingham, Northfield (Richard Burden) and for Caerphilly emphasised, it plays an important part in our national security, too.

Members on both sides of the Chamber critiqued the Melrose bid. Unite, which represents most GKN workers, has called the bid “predatory” and Melrose an “asset-stripper”. It calls for the Government to halt the bid, as does the Chair of the Business, Energy and Industrial Strategy Committee, my hon. Friend the Member for Leeds West (Rachel Reeves). Melrose contests that, but admits that it would cut GKN’s management, deliver a “fundamental” culture change, sell sections of the company and boost the firm’s profitability through what its CEO calls

“the catharsis of a change of control.”

It sounds like Melrose is an advocate of Schumpeterian creative destruction, but with little regard for what is destroyed or, indeed, created. In practical terms, that could mean the closure of sites and divisions across the UK, the loss of jobs, a threat to pensions, as we heard, and the disappearance of crucial engineering expertise.

As my hon. Friend the Member for Birmingham, Erdington emphasised, Melrose’s record does little to assuage those concerns. It does not make purchases for the long term. The biggest example is its stewardship of Brush Turbogenerators, bought as part of FKI in 2008. Since then, the firm has had five different managing directors, and just last month it announced that it would cut up to 270 jobs in Loughborough and shift production overseas, despite the fact that last year Melrose paid out bonuses worth £160 million to only four people. My hon. Friend the Member for Redcar (Anna Turley) remarked earlier this week that meeting representatives from Melrose was like “meeting neoliberalism in person.”

However troubling we might find Melrose’s practices, this is not about just one company; it is about how our economy works. The Secretary of State for Business, Energy and Industrial Strategy hosted and attended the first meeting of the University College London commission for mission-oriented innovation and industrial strategy, chaired by world-leading economist Mariana Mazzucato. In her new book, she argues that the “two faces of financialisation” are at the heart of capitalism’s fundamental failure. The first is the way in which the financial sector has stopped resourcing the real economy—making stuff. Instead of investing in companies that make stuff, finance is financing finance.

The second aspect is the financialisation of the real economy, with industry driven by short-term returns, which results in less reinvestment of profits and rising burdens of debt in a vicious cycle, which makes industry ever more driven by short-term considerations. Such finance is not neutral but changes the nature of what it finances. As we have seen in Melrose’s approach to managing Brush, its short-termism has led it to neglect the difficult, costly business of maintaining sunk assets such as factories or developing new technologies, such as those we heard about in the automotive sector. Melrose’s expenditure on R&D is proportionally less than a fifth of GKN’s.

Melrose’s track record indicates that it will focus on strategies such as offshoring jobs that neglect people and places but provide an immediate financial return. A Melrose takeover would therefore lead to the financialisation of GKN, placing UK jobs under threat and eroding our industrial base. That was very much the point made by Tom Williams, the chief operating officer of Airbus, when he said it would be practically impossible for his company to give new work to GKN after a Melrose takeover.

The debate is not about Melrose alone but about how our country’s economy works. As the Leader of the Opposition said last month at the EEF conference:

“The next Labour Government will be the first in 40 years to stand up for the real economy. We will take decisive action to make finance the servant of industry, not the masters of all.”

In the immediate term, as Members on both sides have said, there are powers that the Government can use to stop the Melrose takeover. When I mentioned that in the Chamber to the Secretary of State, he said, correctly, that according to the Enterprise Act 2002 he could intervene

“only in mergers that raise public interest concerns on the grounds of national security, financial stability or media plurality.”—[Official Report, 13 March 2018; Vol. 637, c. 711.]

As others, including Unite and the BEIS Committee have made clear, the proposed takeover raises national security concerns, given GKN’s close involvement with sensitive defence projects. While the Minister cannot answer in detail, will he answer in principle whether the Government believe that Melrose’s proposed takeover could raise public interest concerns on the grounds of national security? Will he explain what process the Government will go through in reaching a conclusion?

The Secretary of State also praised his Government’s corporate governance reforms, which

“have ensured that GKN had longer to prepare its defence, preventing the kind of smash and grab raid that Cadbury’s was subjected to under the previous Government”.—[Official Report, 13 March 2018; Vol. 637, c. 711.]

That has been mentioned in the debate. Kraft’s takeover of Cadbury in January 2010 did prompt changes to the takeover code in 2011 and further amendments to the takeover regime with the Enterprise and Regulatory Reform Act 2012, which set up the Competition and Markets Authority. I served on the Bill Committee, when Labour proposed amendments to strengthen the new CMA and broaden the scope of the public interest test. For example, one amendment would have allowed the Secretary of State to consider the effects of the proposed merger on the long-term competitiveness of the UK economy as part of the public interest test.

I sat and watched as the Government voted down amendment after amendment that would have provided them with a framework to act. Will the Government now explore and legislate for the expansion and broadening of the public interest test, which they failed to do six years ago? That would not be without precedent—for example, the financial stability clause, added in 2008 during the financial crisis. Can we tighten the financial stability test to include considerations of long-term financial viability, as suggested by the hon. Member for Paisley and Renfrewshire South (Mhairi Black)?

Only this morning, Unilever announced that it will relocate its headquarters from London to Rotterdam. One key factor in that decision was the greater protection afforded to the company by Dutch takeover law. Will the Government look at improving the protection offered by takeover rules to British companies?

Both Dana and Melrose have questions to answer with regard to the future of pension schemes that GKN is currently responsible for. Will the Minister explain what assessment has been made of the schemes and what assurances the Government have sought?

The Secretary of State talks of building an economy for the long term, just as his predecessor did. This is a litmus test for his industrial strategy. It cannot hold if time and time again our most successful and innovative companies are taken over and then taken apart. Investing in innovation is a long-term bet; Melrose is a short-term player. Do the Government have the will to build a high-skill, high-wage, high-productivity economy, or is casino capitalism what our future holds?

[Graham Stringer (in the Chair)]

Before I call the Minister, I ask him to leave three minutes at the end to allow Adrian Bailey to sum up.

Industrial Strategy

Graham Stringer Excerpts

Monday 27th November 2017 Commons Chamber

[Greg Clark]

I will indeed. I am grateful to my hon. Friend for his tireless work in chairing the all-party group on the fourth industrial revolution and promoting the importance of embracing the new technologies of the future. He is absolutely right that there is a big opportunity for small and medium-sized businesses in particular. We have succeeded in having some of our biggest firms comprehensively embrace new technology, and the strategy points out some areas in which we can work with small and medium-sized businesses to diffuse that across the economy more generally.

[Graham Stringer (Blackley and Broughton) (Lab)]

The key to any successful industrial policy must be low and competitive energy costs. Energy costs in the United States have halved, and the reductions in China and India have been similar, but ours have gone up. How will the Secretary of State change that damaging trend?

[Greg Clark]

The industrial strategy is very clear and makes that precise point. We have a substantial report from Professor Dieter Helm, the energy economist, looking at how we can meet our carbon reduction commitments but at the minimum cost to consumers, whether they be domestic or industrial consumers. I hope that the hon. Gentleman will have a chance to look at the report, which we will be responding to shortly, because our ambition is as he describes: to minimise the energy costs facing businesses.

European Union (Approvals) Bill

Graham Stringer Excerpts

2nd reading: House of Commons
Tuesday 4th July 2017 Commons Chamber

[Margot James]

I cannot comment specifically on the likely impact on the treatment of war crimes in Serbia, a subject about which the Foreign Office is extremely concerned—as, I presume, is my hon. Friend—but I think it can only be a mark of progress for Serbia to be admitted in the way that this decision enables it to be.

[Graham Stringer (Blackley and Broughton) (Lab)]

The Minister says that this is a mark of progress, but I cannot accept that. This sounds like motherhood-and-apple-pie Eurospeak. Exactly the same words were used during the accession of Croatia, but has Croatia handed over its war criminals and does it have the rule of law yet? Both were promised. It has one of the longest borders in the EU, which is used for sex trafficking and human trafficking. We heard exactly the same then, but there have been no improvements. Why does the Minister believe there will be improvements with Albania and Serbia?

[Margot James]

To correct the hon. Gentleman, I do not think I said that I thought there would be improvements; I said that I thought it would be a mark of progress. I was trying to limit my enthusiasm to that degree, mindful of what he says about Croatia. However, I would say that it is early days and we can only go down the path of progress. The UK continues to support Serbia on its reform path, including through funding projects in Serbia.

Serbia has more work to do on anti-discrimination policies, improving the situation for vulnerable people and ensuring freedom of expression. Observer status at the Fundamental Rights Agency should help Albania and Serbia to reform in the areas we are discussing. Albania and Serbia should also be allowed to benefit from instances of good practice and evidence from other EU member states in relation to human rights. The Government are therefore satisfied of the need to support these two decisions.

The third and fourth decisions are necessary to implement a co-operation agreement between the EU and Canada on competition enforcement. The decisions will allow the agreement to be signed and allow conclusion of the agreement after it has been approved by the European Parliament. This competition co-operation agreement will replace an existing agreement that has been in place since 1999. It replicates and builds on the provisions in the earlier agreement by allowing the European Commission and the Canadian Competition Bureau to exchange evidence obtained during investigations, including confidential information and personal data.

The existing co-operation agreement with Canada dates from June 1999, and at that time the exchange of evidence between the parties was not regarded as needed. In the meantime, the bilateral co-operation between the European Commission and the Canadian Competition Bureau has become more frequent and deeper in terms of substance.

Smart Metering: Electricity and Gas

Graham Stringer Excerpts

Thursday 9th February 2017 Westminster Hall

[Derek Thomas (St Ives) (Con)]

I am glad to have the opportunity to talk about smart meters. I remember when we did the inquiry; it was something that I thoroughly enjoyed and learned a great deal from. I thank my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe), who is the Chair of the Science and Technology Committee, for introducing the debate today.

There is no doubt that we should welcome the roll-out of smart meters, and we do welcome it. There is a genuine opportunity to bring an end to physical meter reading. I live down a very long lane and twice a year some very delightful gentleman finds his way down to where I live, to read the meter. I will talk a little about how successful that has been later on.

I am not looking to put people out of jobs, but where technology helps us to get accurate information and manage our energy use, as well as to provide data that can help to manage the nation’s energy supply and planning, it needs to be welcomed, and I think the smart meter roll-out is welcome.

As we have heard, smart meters have clear benefits. Their introduction has the potential to help consumers to reduce their energy consumption, shift their energy demand away from peak periods, which the Chairman of our Committee referred to earlier, and improve customer choice. Choice is a particularly interesting angle; if smart meters allow people to switch suppliers quickly and to access better tariffs, they must be welcome.

All of these measures will help constituents in west Cornwall and on the Isles of Scilly. We already know that 80% of smart meter owners are taking steps to reduce their energy consumption. According to Smart Energy GB, individuals are turning off lights, switching off the heating at certain times and changing the way in which certain household appliances are used, all in a proactive effort to engage with their energy usage.

I was pleased to hear the hon. Member for North Ayrshire and Arran (Patricia Gibson) mention fuel poverty. My concern is that once people on limited budgets realise how much energy different appliances use, they will start to behave in a way that is harmful to them—particularly older people during winter months. So we need to be very careful about how we communicate with people and empower them to get the best out of their homes.

The smart meter roll-out on its own is not really good enough. I know that this is a slightly separate issue, but the Government must consider how we can improve the efficiency of people’s homes, particularly those of vulnerable people. Otherwise, the smart meter roll-out might actually be detrimental for those households.

Dr Sarah Darby of the Environmental Change Institute has said that smart meters are effective, smart systems that bring together every-day human intelligence and technical ingenuity. We are beginning to hear about some problems with the roll-out, and I am glad that we conducted the inquiry last year. We are well into the programme for 2020. As an elected representative in my first Parliament, I recognise that 2020 is coming around very quickly; it keeps me on my toes every weekend. Far more important, however, is the roll-out of the smart meter programme.

Technological advances should always benefit the consumer; it is really important that that is clear, otherwise we will never get proper engagement. However, the delay in the data communications company’s go-live date has put these benefits at risk. Originally, the company was meant to go live in autumn 2015; in reality, it was late in November 2016—more than a year later—and it was even later for the north of England.

That delayed start has meant that the 2020 deadline for the roll-out of smart meters across the country is rushing up on us. It has created an impractical timetable for suppliers. I am particularly concerned about the smaller energy suppliers. We are trying to encourage them into the market, yet we have created quite a challenge for them to supply their customers with smart meters. The delay to stage 1 of the roll-out has placed the availability of SMETS 1 meters under strain, as purchasing was done on the knowledge that their installation would have been completed a year earlier. I have been speaking to the smaller suppliers, and they are talking about the massive difficulty they have in sourcing the meters and the qualified competent engineers to fit them. There is now a need to extend the roll-out period for SMETS 1 meters to meet the delay in the go-live date and to address the functionality concerns about the SMETS 2 meters, which are being used for the mass roll-out of the scheme.

The lack of planning for the launch and the deadline for the roll-out of smart meters has increased costs and uncertainty for suppliers, who still have to meet the legally binding deadline of 2020. We know full well that if costs increase for suppliers, those costs will only ever go to the consumer. I am always referring to people struggling on limited budgets to meet their energy bills. The strict timetable has also meant that there is less time to test and learn the system, which could lead to greater problems down the line and has meant that many promised benefits for consumers cannot be delivered.

Additionally, part of the changes to the DCC functionality has removed the ability of consumers to switch between credit and prepay modes. In the inquiry, I remember talking about those with prepay meters and the kind of revolution that smart meters would bring for them. Prepay customers pay more for their energy, and they pay up front. Some of the people I meet have no choice; they are in properties that belong to other people. When I talk to social landlords, they see the roll-out of smart meters as an opportunity to help their tenants to reduce their bills and manage their finances more easily. What we are finding is that they are not able to switch between credit and prepay modes. The meters cannot deliver in the way we expected. That is a disadvantage for millions of prepay meter customers across the country as they cannot gain access to the market.

Dr Sarah Darby’s definition of smart meters also pointed to the importance of shaping human behaviours. We have already heard about that today. Improving energy use practices and consumer’s energy know-how are essential to ensuring that the full benefits of smart meters are realised. Data from the “Smart energy outlook” show that awareness of smart metering and its benefits rose by only 7% in the past year. That needs to be improved, and that is despite Gaz and Leccy. Gaz and Leccy are enormous role models for my children. We watch their adverts regularly. If you do not know Gaz and Leccy, Mr Turner, you must go home and do the research. It will add value to your life. I share an office with three other MPs, and they have spent considerable time in research, watching Gaz and Leccy. They are fantastic adverts. They are absolutely worth watching, and they help to get across the point that we are not in control of the energy we use. However, if we are seeing only a 7% increase in awareness, despite that brilliant media campaign, we are not getting the information out in the way we should. Unless consumers understand the benefit of smart metering, we are not going to win the battle.

I was a builder before I came here. I used to do barn conversions. For many years, in every barn conversion I completed, a smart meter was installed, but often concerns about how the data would be used meant that it was never used. Instead, it was just left on the side. Because it was not integral to the structure of the building, it would just be unplugged. Customers would tell me, “I don’t want my energy supplier knowing when I am making a cup of tea or when I’m getting out of bed or when I’m doing this or something else.” There is a real need to make customers aware of what data are collected, why they are collected, for whose benefit and how they are used. That is a battle we have not yet fully dealt with or addressed.

Smart metering will improve the temporal resolution of energy data, but it will still not differentiate between heating and other energy demand, nor will it show where in the building energy is used so the need to address energy efficiency in the home remains.

There are some connectivity issues with smart meters, and I want to talk about my experience. We did the inquiry last year. I explained that the gentleman walks or drives down my lane a couple of times a year. On an unusual occasion I met him, and he said, “Do you know, your meter is still showing ‘blank’”—I had an old-fashioned meter—“so I have not been able to take a reading for four years?” I said, “Okay. What can I do about it?” He said, “I don’t want to tell you this, because it will put me out of a job, but you ought to put a smart meter in.” I applied for a smart meter and had one fitted. The energy company had estimated how much energy I had used in the past four years. I disputed it and, with the help of my children, managed to reduce the estimate. The energy company gave me a new bill that was considerably less, although that is a matter for another debate altogether.

The smart meter was fitted. Once a month, I have to go outside and take a photo of my smart meter and send that photo over broadband to the supplier, because I do not have connectivity. My smart meter is not connected to anything, because I do not have mobile phone signal. That will be a challenge if we are going to provide 20 million smart meters—or however many we are supplying; it is quite a lot—by 2020.

I am the local MP and, interestingly, the local BBC presenter recently emailed me to say that he had a smart meter fitted, and he has to do exactly the same thing. It is a bit worrying if we are to win public support for smart meters if the local MP and the local BBC presenter have meters that do not work. Clearly, this is a private meeting, so I am not telling the world that my smart meter does not work, but I do enjoy telling the story.

[Graham Stringer (Blackley and Broughton) (Lab)]

I have no idea where the hon. Gentleman lives in Cornwall—he is clearly not getting a signal—but it is a much more general problem. At the present time, the smart meters are not functional in tall buildings. Does he consider that to be as big a problem as the one facing those living in the remoter parts of Cornwall?

[Derek Thomas]

The hon. Gentleman is absolutely right, and I thank him for that intervention. I raised the issue because I am wedded to the idea of getting smart meters. If we get them right, they are a fantastic thing, and we should be ambitious, but the roll-out will be flawed and difficult to recover if we cannot deal with the connectivity issues. The issue is not just for the Minister; it is for the whole of Government to recognise the challenge of giving each of us the best available modern-day technology. I will move on, because I am probably taking too long.

The roll-out of smart meters will undoubtedly help my constituents in west Cornwall and the Isles of Scilly, but there is work to do to convince them of the benefits and how smart meters can help them manage their energy better and in a different way, so that we do not place such a demand on, dare I say it, fossil and nuclear power. In Cornwall, we generate more energy than we use, such that wind turbines are turned off. If we get it right, and we learn to store energy, we will get people moving to electricity and away from oil for heating. We will be able to be much smarter about the generation and use of energy.

Smart meters have an important part to play, but the Government need to look at the challenge of delivering the programme by 2020. There is a real need for an independent review of the safety, cost and deliverability of the roll-out of smart meters. We must consider the pressure that suppliers are under to find and retain qualified engineers, to source the meters that will do the job and to ensure that they are fitted in a way that helps rather than hinders the consumer. The 2020 deadline is too ambitious. The cost and expertise required for installing smart meters has been underestimated, and if we stick to the current deadline, the impact on consumer experience will undoubtedly be negative. That is a shame, because this is a once-in-a-lifetime opportunity to get it right.

To conclude, it is clear that the intentions behind the roll-out of smart meters are good. I am absolutely a fan of the ambition, but we have to accept that the timetable is over-ambitious and potentially harmful to consumers. We therefore must use caution, re-evaluate the timetable and draw on the words of Benjamin Franklin—we must prepare properly, or prepare for smart meters to fail. I did not write that last bit, and I am not sure that it is the best bit of my speech. Thank you very much, Mr Turner.

[Graham Stringer (Blackley and Broughton) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Turner.

I think there is something in the pathology of Government in this country—civil servants and Ministers —that means that we do not seem to learn from every new IT or technology project that goes wrong; we just wait for the next one to come along and that goes wrong. I think it was as long ago as 2000 that the then Minister of State in the Cabinet Office, Sir Ian McCartney, produced a special report, which, from memory, covered 12 IT projects that had gone wrong at horrific cost. Everybody said what a good report it was—which it was—but have Government learned from that? No. One could go through NHS recordkeeping, the Home Office, national insurance record systems, Libra—there are a whole series of IT projects that have put huge costs on the public accounts.

There are some real difficulties with smart meters, and I agree with the hon. Member for North Ayrshire and Arran (Patricia Gibson). We have good reason to be alarmed, however sensible it is to be in support of people having more real-time information about the energy they are consuming. Who could disagree with that as a reasonable objective? But let us look first at the Government’s cost-benefit figures, which the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe), the Chair of the Select Committee on Science and Technology, referred to.

Written evidence to the Committee said that the process the Government had used to get a cost of £12.1 billion and a net benefit of £4 billion was intellectual slosh, when compared to eight other international studies, and asked some fairly fundamental questions. Why, when Texas has 350 pages of regulations to cover its smart meter system, does our system have 7,000 pages? I have not only had the pleasure of taking part in the Science and Technology Committee’s report; I also sat on the Select Committee on Energy and Climate Change with the shadow Minister, my hon. Friend the Member for Southampton, Test (Dr Whitehead). We asked just how many pages there were on the SMETS 2 meters, and it was a huge number of pages. One has to ask why there is no comparison. Why is it that in Italy and Spain the individual cost of meters is about half the price that they are in this country? The hon. Member for North Ayrshire and Arran pointed to one of the reasons. There are 11 objectives and in anything with 11 objectives, things will get lost.

One of the major objectives, however it is stated, is to stabilise the energy network. It can be destabilised because we are using intermittent sources of energy, such as photovoltaics and wind farms. When there is a big change in the wind or sunshine, that can destabilise the network. Smart meters can help to stabilise that. That is one objective. It is a national objective, the costs of which have been put on the individual energy consumer. I do not think that is fair. The German assessment—one of the eight other studies referred to—found that there was really only a benefit of moving to smart meters when individual consumption was more than 6,500 kwh per annum. That means there would only be a benefit for 10% of consumers.

There is a great deal to be worried about, including the background, the assessments and the principles. The incompatibility between the SMETS 1 and SMETS 2 systems, which has also already been referred to, is a real problem that is yet to be solved. An even bigger problem is that when Ministers were asked by the Energy and Climate Change Committee—my hon. Friend the Member for Southampton, Test may well have asked the question—what will keep the costs of the project down, because the Government have no control over that, the answer was “competition”. When British Gas are the near-monopoly supplier of the meters, that is not good enough.

The costs are going up, there is no compatibility between SMETS 1 and SMETS 2 meters, and if someone changes energy supplier, the meter will not work, so all the benefits of knowing the level of consumption disappear. That points to a fundamental flaw in the design. The meters should have been supplied, owned and paid for by the network supply companies, not directly by the electricity suppliers. If competition is what is going to keep price down, but a customer cannot move easily and get the benefit of a smart meter, it simply will not work.

I would almost guarantee without asking that every person in this room has a smartphone—we meet some people without smartphones, but very few indeed. In a common-sense world, a sensible system of trying to get immediate information—I accept it would not work at the moment in the more remote parts of Cornwall and perhaps Scotland—would be for someone to get the information directly to their smartphone and to have the control on their smartphone as well. That would solve the problem of the system not working if they changed supplier and of having to go somewhere to look at the meter.

I was in the British Embassy in Finland nearly 17 years ago, when a representative of Nokia showed me how he could close the curtains in his house and change which electrical appliances were working. Yet we started 10 years later, putting in systems that are less good than that Nokia system was then. We have to answer the question of why the system we are putting in is essentially obsolete, and chunky. It does not seem sensible.

One point that has not yet been made is that of security. We had a private briefing from GCHQ, which was quite reassuring, but we also got contradictory evidence from the Royal Academy of Engineering, which told us:

“The smart meter network is being installed before its requirements as an Internet-connected energy system have been fully determined”,

and that

“the threat of cyber attacks—either to gain information, ‘steal’ electricity or disrupt supply—is real and pressing…Disruption to energy and gas supplies at a massive scale is possible, either from cyber attack or errors in software.”

It went on to say that those are not the only threats to the system, and that it could be threatened by rogue programmers.

I think the idea of having complete knowledge of the energy that one consumes is a desirable objective, but we are doing this in a way that will be not appreciated by the consumer and will probably cost them money. I have one final question for the Minister. There has been a large assessment of this scheme, and I understand that there were four years of freedom of information requests before the document was published. Will the Minister put it into the House of Commons Library? If he will not, will he explain why?

Exiting the EU: Science and Research

Graham Stringer Excerpts

Monday 19th December 2016 Commons Chamber

[Graham Stringer (Blackley and Broughton) (Lab)]

The debate about leaving the EU and science is not unique in having myths associated with it, and I wish to talk about two today. The first, which has been mentioned by a number of people, concerns problems with scientific collaboration and financing. As has been well documented and elucidated, this country benefits in its research budget: we are a net gainer in research. It has also been pointed out that we are a net donor when it comes to overall European funding. What is often not stated is that we are net contributor to the science budget as a whole—

[Joseph Johnson]

indicated assent.

[Graham Stringer]

I see the Minister is nodding. Science is funded through the European development funds and other funding, and when we look at that, we see that we are a net contributor. It should be possible, with human ingenuity, to sort out that funding issue.

Secondly, let me mention collaboration. There is not time to go into this fully, but one of my hon. Friends mentioned 17th century science. Isaac Newton put his theory of gravity together while a plague was going on. He used the work of Johannes Kepler, a German who put his work together by stealing work in Denmark and working on Italian and Polish work while the Thirty years war was going on. Science finds a way to collaborate across all sorts of boundaries.

I want to quote from the Science and Technology Committee’s report that my hon. Friend the Member for Lewisham West and Penge (Jim Dowd) referred to, “EU regulation of the life sciences”, which was published about a week before the referendum. It was passed unanimously by the various parties on the Committee, albeit after some debate, and it is worth reading. The myth is that somehow the EU is pro-science and is good for science, but the report states:

“Our predecessor Committee’s inquiries had showed some resistance from the European Commission to evidence-based policy making and science, including the hostility to GM Organisms (along with an arbitrary and unscientific use of the precautionary principle), the dilatory approach to revising the Clinical Trials Directive and the Electromagnetic Field Directive, as well as the sacking of Professor Anne Glover.”

The EU is hardly a body with a good record on science. The sacking of Anne Glover was a disgrace. She was sacked not because she was a poor scientist, but because she was a good scientist giving evidence about GM foods. Greenpeace, quite disgracefully, lobbied against her staying, and the Commission, spineless as ever, sacked her.

The clinical trials directive has already been referred to. Not only was it a bad directive that led to science leaving the EU because it was ineffective, it took too long and it was inconsistently applied—the EU is now proposing new regulations for 2018, which we hope will be more effective—but it has taken 20 years, while science and scientists have been leaving the EU, to put that directive right. The electromagnetic field directive was relatively quickly rectified, as it took the EU only 10 years to put that right. It was hindering work on machines for diagnosing cancers and other diseases using nuclear magnetic resonance spectroscopy and other instruments.

Then we come to the phthalates. One phthalate was banned, and the EU then banned a series of phthalates. Almost the first lesson that any pupil gets in chemistry is that sodium chloride is essential for life and potassium chloride is a poison. We cannot just say that because one phthalate might poison rats, which was the evidence base the EU was using, all phthalates will poison rats. An over-use of the precautionary principle has meant that the ban on GM foods has continued, and because of that this country does not have the benefit of a blight-free potato and many other beneficial agricultural products. During the referendum debates, we were told how good the EU was for industry. As I never tired of pointing out, our agro-chemical industry had almost disappeared because of the Commission’s and the EU’s attitude to science.

I will refer to two other non-EU agencies, mentioned in the debate, that show how anti-scientific the EU is. One is the European Space Agency, an excellent organisation that does some very good work indeed. When the Science and Technology Committee visited it in Rome just before the last general election, its senior scientists were desperate to keep the Commission out of their work because they were worried about its anti-scientific attitude. The Galileo project, which is funded primarily by the European Commission and is also used by the European Space Agency, is three times over budget and only halfway through—it will take about three times as long to complete as was expected.

My hon. Friend the Member for Lewisham West and Penge said that it was better to get things right than not get them right; I think the EU had its chance to get things right, but there was never any reform. Now we are out, we can look after our own science.

Exiting the EU: Higher Education

Graham Stringer Excerpts

Wednesday 23rd November 2016 Westminster Hall

[Hywel Williams]

The right hon. Gentleman asks a very interesting question, but given the shortness of time I shall not go too far in discussing it. The research that I and other respected academics in Wales have conducted shows that deprivation was an important factor. The constituency that received the most money from Europe—that of the hon. Member for Blaenau Gwent (Nick Smith), who is not here today—voted most heavily to leave. It is something to do with deprivation and being left behind, but it is also, of course, much more complicated than that. I should say that my constituency voted 60:40 in favour of staying in.

Plaid Cymru has been united in its determination to maintain membership of the single market and the customs union, at least, because that would be by far the least damaging option for the Welsh economy—first, because of the wide-reaching benefits of being in the single market and customs union for Wales; and secondly, because it will enable Wales to qualify for the cross-border and transnational programmes and research and innovation funding from which our higher education sector derives such benefit.

Higher education is a major economic actor in Wales. It generates around £2.4 billion of Welsh gross value added and sustains almost 50,000 jobs. As for structural funding, I once worked at Bangor University, which alone has benefited from around £100 million of EU funding over the past 10 years. That investment supports jobs as well as capital projects. Swansea University’s campus on the bay was backed by £40 million of structural funds, plus a finance package worth £60 million from the European Investment Bank. These are huge sums of money. If we are to continue our success, the UK Government need to match the commitment of the EU to the principle of regional equalisation. That is why we call for a UK convergence strategy to replace EU funding, and on a needs basis.

I opposed, and still oppose, leaving the EU for many reasons: philosophical; historical; educational; the EU’s promotion of peace on our continent; and most importantly for me, at least, the EU’s cultural and linguistic diversity, and the normality of multilingualism, which is sadly not matched in this member state and certainly not in its Parliament.

Higher education has been a central feature of Welsh policy for many centuries. When we were last independent—a little matter of some six hundred years ago—there were three main planks of Government policy in Wales, one of which was the establishment of a university to join Padua and Oxford, which were already up and running. That ambition was not realised until the 19th century; it took us four or five hundred years to get our act together. Nevertheless, it is indicative of the importance that we place on higher education in Wales, and of the need to defend what we already have, that there are now seven higher education institutions in Wales.

I do not ignore the material benefit that we also derive from membership of the EU. It is no source of pride to me that we get convergence funding because our economy is on a par with some parts of the former communist states in eastern Europe. We get that money because we are a poor country with some extremely poor regions, one of which I represent. At least the EU has a policy of convergence funding for which Wales qualifies—alas—and our institutions derive great benefits from that funding.

[Graham Stringer (Blackley and Broughton) (Lab)]

I am sure that the hon. Gentleman knows that the UK is a net contributor to the EU, so that anything that comes back in regional funds is a loss. However, when we break the UK down into its regions and countries, only Northern Ireland and Cornwall are net beneficiaries. Will he accept that Wales loses out by the European funds in net terms, rather than gaining from them?

[Hywel Williams]

I would be much more prepared to accept that argument if the Government here in London had a similar regional policy, so that when we leave the EU one could be guaranteed that the money that comes from Europe will come from London instead. When David Cameron was Prime Minister, I repeatedly asked him to guarantee that this funding would continue post-Brexit, but he refused to give such a guarantee. I doubt that it is in the power of the Minister today to make up for that failure, but I look to him for at least some reassuring indication that this issue is actually on the agenda.

I will refer very quickly to cross-border programmes. In the first year of the Horizon 2020 scheme from 2015 to 2016, Welsh university staff have already succeeded in securing £25 million of funding. Those programmes help Welsh students and institutions to compete on the world stage, which surely must be our ambition. Identified research funding to Wales suggests that Welsh institutions received some €183 million between 2002 and 2013, and it is estimated that Wales received at least €29 million from lifelong learning funds, including Erasmus, from 2007 to 2013. Those funds are vital to encourage joint working and collaboration between academics and students in different EU member states and further afield.

I will briefly refer to my own university of Bangor. There are 2,000 international students in Bangor; the total student population doubles the city’s population, so the university is vital to the local economy. Can the Minister assure me that the UK Government are giving due consideration to the disproportionate effects of post-Brexit immigration controls on small university towns or cities, of which Bangor is one? That is a particular issue. Bangor University also has widespread international links, which I referred to in the debate on higher education the other day, including a site in China, so we are worried and concerned. Moreover, Trinity College Dublin has a site in Bangor for Japanese students to learn English. It is an excellent institution, but I think the staff there are also worried.

To cut a much longer speech short, the HE sector in Wales is one of the keys to unlock the doorway to our prosperity—

--- Later in debate ---

[Liz McInnes]

I thank my hon. Friend for that intervention, and yes I am. I was briefly a member of the Science and Technology Committee and I try to keep on top of the work that it produces. I fully support its call for EU funding to be replaced in some way by this Government, and I hope that we might get a response from the Minister today on that subject.

[Graham Stringer]

Is my hon. Friend aware of the previous Science and Technology Committee report that pointed out that the EU is inimical to UK science? The clinical trials directive has destroyed much research in this country; the EU’s ban on genetically modified food has destroyed much of the chemical-agricultural industry in this country; and the arbitrary sacking of the Commission’s scientific adviser was destructive to science. We have example after example of how the EU has damaged British science.

[Liz McInnes]

I thank my hon. Friend for that intervention. I am not aware of that report. I do not know when it was published. It certainly does not echo the views that I am expressing in my speech or the views of eminent vice-chancellors and scientists who work in the UK today. Perhaps if he can send me a copy of the report, I will look at it at a later date.

As well as the potential for a modern-day brain drain, we have the very real potential of UK universities becoming less attractive to international research students. Indeed, the vice-chancellors of LSE, King’s College London and Bristol have already voiced their fears for the recruitment of international students and how that will have serious financial and human resource consequences for our universities. The vice-chancellor of Cambridge University, Professor Sir Leszek Borysiewicz, is a stalwart remainer, but he recognises the result of the referendum and he wants Cambridge to get the best out of Brexit. He says that to achieve that, the Government must provide some basic clarity on what Brexit actually means. He asks for three things from the Government: clarity on the national status of university staff; a recognition of the collaborative ideal implicit in EU projects; and a Government guarantee of vital university budgets. I hope that his requests will be listened to and heeded by the Government.

Some people might regard the vice-chancellor of Cambridge as something of an expert, and although the people of this country were urged not to listen to experts during the referendum, it is vital that, on this subject and the many other areas affected by the Brexit negotiations, the Government take note of our finest minds and our experts. They are not asking for a running commentary, but for clarity and a coherent, informed plan as to the exact nature and manner of our departure from the EU.

The EU makes substantial financial contributions to research in UK universities. Research funding from the EU amounts to some £1 billion a year, while Britain’s national research budget, as I alluded to while discussing British science, is below international averages. The EU’s contribution to the income of UK universities has risen by more than 30% in the past five years. I represent a Greater Manchester constituency, and universities across our region have more than 4,000 EU students currently on their campuses. That equates to spending of £90 million a year—that is not just tuition fees, but expenditure in the local economy. Manchester University has received £48 million in research funding in the past two years alone. The loss of such substantial funding and a failure to attract EU students could not fail to have a detrimental effect on our area.

I have spoken about the economic positives and security of funding, but the academic, scientific and higher education sectors are not merely about money. Education at its core is about collaboration, common understanding and continual progress. Education has no boundaries and no borders, and science knows no country. We must decide where Britain’s place post-Brexit is going to be. I hope that it will be not in isolationism and introversion, but that the Government will set out a clear plan for diversity, collaboration and funding and for our universities to maintain their place and their standing in the world.

Exiting the EU and Workers’ Rights

Graham Stringer Excerpts

Monday 7th November 2016 Commons Chamber

[Greg Clark]

I have given way already to the hon. Gentleman.

This Government will not only maintain existing rights, but set a very high standard. Like most Members of the House, I want to deliver an economy that works for everyone. Workers’ rights have an important part to play in that. We will build on the work that the Government have done to combine the dynamism of the UK labour market with robust protections for workers.

[Graham Stringer (Blackley and Broughton) (Lab)]

I do not share the enthusiasm of my hon. Friend the Member for Swansea West (Geraint Davies) for the European Court of Justice. The ECJ’s Laval and Viking judgments undermined the minimum wage and changed the definition of what it was to go on strike, which loosened workers’ rights. Will the Secretary of State assure the House that he will look at those judgments with a view to increasing workers’ rights, guaranteeing the minimum wage against those judgments, and maintaining the previous definitions of going on strike?

[Greg Clark]

I will look at those judgments, but the hon. Gentleman establishes the point that the House is more than capable of setting high standards of protection, as it has done for many centuries.