Oral Answers to Questions

Greg Clark Excerpts

Tuesday 12th June 2018 Commons Chamber

[Scott Mann (North Cornwall) (Con)]

3. What recent assessment he has made of trends in the level of business investment in the food and drink sector in the south-west.

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

Food and drink grown and made in Cornwall is exported and enjoyed around the world. My hon. Friend, both as chairman of the all-party group on dairy and as North Cornwall’s MP, will welcome the £75 million investment by Dairy Crest in its Davidstow creamery, announced two weeks ago, to expand its cheese production by nearly 50%. We are working closely with the industry to ensure that companies continue to invest and grow, right across the UK.

[Scott Mann]

I am grateful to the Secretary of State for that answer, and I do welcome Dairy Crest’s recent announcement. The food and drink sector is flourishing right across the south-west, particularly in North Cornwall. We have some fantastic brands, including Tarquin’s Gin, Kernow Chocolate, Sharp’s brewery and Buttermilk fudge, to name but a few. Many of these small and medium-sized firms are looking to export for the first time. What discussions is his Department having with the Department for International Trade to expand some of these opportunities for those firms?

[Greg Clark]

We know that there is huge demand for these products. For example, one reason behind the expansion of the creamery is the increasing appetite in China for cheese produced in Cornwall. My hon. Friend mentioned Sharp’s brewery, and the investment in the facility at Rock now means that 340,000 pints of Doom Bar a day can be produced there. I hope some of those will leave these shores and be enjoyed around the world.

[Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)]

Controversially, Britain’s earliest pasty recipe comes from Plymouth rather than Cornwall. It dates from 1510 and was found in Plymouth borough’s accounts. Pasties are a key part of both Plymouth and Cornwall’s identity. What discussions has the Minister had to ensure that the name “Cornish pasties” is protected after we leave the EU, preventing anyone else around the world from forging pasties, whether Cornish or from Plymouth?

[Greg Clark]

Anyone who has enjoyed pasties in Cornwall or—dare I say?—Plymouth will attest to their unique qualities. We have products across the United Kingdom that are associated with the places where they are manufactured. It is an association of quality, and we will ensure that they continue to be protected as part of our negotiations.

[Colleen Fletcher (Coventry North East) (Lab)]

4. What steps he is taking to support the automotive industry.

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

The automotive sector is one of our great success stories, and our recently published automotive sector deal, as part of the industrial strategy, sets out how we will continue to support it in future. The partnership continues to deliver results. In April, Vauxhall announced an investment of over £100 million in its Luton plant to build the next generation of Vivaro vans. Last month, the Society of Motor Manufacturers and Traders, the sector body, reported that UK van production had increased by almost a fifth compared with last year.

[Colleen Fletcher]

Jaguar Land Rover is one of Coventry’s biggest employers. Recently, JLR revealed its intention to make Coventry the heart of its large-scale battery and electric vehicle production plans. This is welcome news for my city. With that in mind, what support can the Minister offer to Jaguar Land Rover to ensure that Coventry becomes the centre for large-scale battery and electric vehicle production?

[Greg Clark]

I am grateful for the hon. Lady’s question and I completely agree with her praise and support for that very important employer. JLR’s expansion plans and its plans to make electric vehicles in Coventry are reinforced by the Faraday challenge, which is part of the industrial strategy, and the national battery manufacturing development facility is based at Warwick University’s campus there to support that company and many others besides.

[Andrew Selous (South West Bedfordshire) (Con)]

Does the Secretary of State agree that it would be a cruel irony if Volkswagen, the author of the emissions cheating scandal, were to make large pay-outs in Germany and the United States, which would help those countries to boost their electric vehicle capacity, but made no similar pay-out to help the United Kingdom move ahead in this area?

[Greg Clark]

My hon. Friend is right that the consequences have to be borne by the companies that cheated the system. We need to make the transition to ultra low emission vehicles to make sure that we lead the world in this area. Just a few weeks ago, Toyota announced a big investment in the future of mobility here in the UK, based on the commitments that we are making as part of our industrial strategy.

[Matt Western (Warwick and Leamington) (Lab)]

21. Scrappage schemes have been used in the past to assist businesses and industries in a transition. Has the Minister costed a support package to scrap old diesel vehicles and assist in a managed transition to renewable/alternative energy vehicles?

[Greg Clark]

The hon. Gentleman is right that we need to see a managed change. Earlier, my right hon. Friend the Minister for Energy and Clean Growth pointed out that the next generation of diesel can play a big part in not only reducing greenhouse gas emissions, but improving air quality. We will shortly be setting out our proposals on how we make the important transition to zero emissions across our vehicle fleet.

[Lucy Allan (Telford) (Con)]

Hundreds of jobs in my constituency rely on the Jaguar Land Rover supply chain. Will the Secretary of State tell the House what he is doing to help car manufacturers to deal with the uncertainty of Brexit and the fall in demand for diesel vehicles?

[Greg Clark]

I will. My hon. Friend is right to comment on the supply chain. A big part of the automotive sector deal, which we concluded with the sector, is to boost the proportion of components that are sourced in the UK. This is a joint commitment that we make, as part of the industrial strategy, but she is also right to draw attention to the importance of our continued ability to trade with the rest of the European Union, free of tariffs and with low friction, so that we can maintain the just-in-time model, which is so crucial to our automotive sector.

[Sir Vince Cable (Twickenham) (LD)]

Following the loss of the Discovery model to Slovakia, which was a decision at least partly influenced by Brexit, what steps is the Minister taking to head off the risk to Jaguar Land Rover’s exports to China where the rules of origin will conflict with the interests of the company in the event that we lose the customs union and we no longer have sufficient UK content in the cars?

[Greg Clark]

The right hon. Gentleman is wrong about the decision that was made. In fact, it is a decision to prepare Solihull for the next generation of the Range Rover and the Range Rover Sport. JLR described that as a huge investment and a technology upgrade in Solihull, so I hope he will welcome that. He knows that the importance of making sure that we are able to continue to trade—this includes recognising rules of origin not just with the European Union, but around the world—is vital for this company.

[Mark Pawsey (Rugby) (Con)]

Many intending to purchase new cars are unsure what type of engine to opt for, partly as a consequence of Government taxation policies. That is having a serious effect on the British motor manufacturing industry. Will the Secretary of State confirm that there remains a future for clean diesel?

[Greg Clark]

I will indeed. We are not the only country that is seeing a fall in the sales of diesel. As I and my right hon. Friend the Minister of State have said, clean diesel and the new generations of diesel engines have a very important role to play in the transition to ultra low emission vehicles.

[Laura Pidcock (North West Durham) (Lab)]

Contrary to what the Secretary of State has said, over the past six months nearly 2,000 job losses have been announced in the UK’s automotive sector. This week in the media we have seen speculation about thousands of further redundancies caused by a combination of factors, including worries about possible consequences of a no-deal Brexit and the absence of the customs union. May I press the Secretary of State to set out how the Government will work with business, industry bodies and trade unions to ensure security of the automotive industry and those employed in it both in the immediate future and beyond UK’s exit from the EU?

[Greg Clark]

We work very closely with the industry with great success. Engine production in this country was up over 17% last year, reaching 1 million engines. That is a record. Never in the history of the British motor industry were more engines produced than last year. Over the past year, the net number of jobs that are being created—note the word “created”—in the automotive sector in this country is 9,000.We have a very good record of working closely with the industry to support an industry that is not only very successful today, but will continue to flourish in the future.

[Antoinette Sandbach (Eddisbury) (Con)]

5. What steps he is taking to support vulnerable consumers with their energy bills.

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

20. What steps he is taking to tackle rising energy prices.

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

The Government are committed to helping energy consumers. We have brought forward the price cap Bill, and more than 2 million low-income households receive £140 a year through the warm home discount.

[Antoinette Sandbach]

Does the Secretary of State agree that a wide-reaching energy efficiency programme would help vulnerable customers in Eddisbury and elsewhere, as well as helping the UK meet its climate change targets?

[Greg Clark]

My hon. Friend is absolutely right. One of the missions that the Prime Minister announced as part of our grand challenges in the industrial strategy is to reduce by 50% the energy consumption of homes built in the future. That has an important impact not only on our greenhouse gas emissions, but on the bills that people face.

[John Lamont]

With recent rises in fuel costs, many motorists in the Scottish borders feel like they have been taken for a ride. What steps are the Government taking to try to reduce the impact of higher taxation on fuel, and what analysis has the Department carried out on the allegations of rocket and feather pricing on petrol and diesel sales at the pump?

[Greg Clark]

I am grateful to my hon. Friend for the question. It is a very important market. Obviously, recent oil price rises have had an impact at the petrol pumps. It is important that prices are competitive and not, as he implies, subject to rising quickly and then taking a long time to decline. The Office of Fair Trading last looked at this in 2013, but I expect its successor, the Competition and Markets Authority, under Andrew Tyrie, a noted consumer champion, to keep this under close review.

[Rachel Reeves (Leeds West) (Lab)]

Up to 200,000 customers do not benefit from the warm homes discount because they get their energy from smaller energy suppliers. Is it not time to extend the warm homes discount, especially since energy bills are going up and we are trying to crack down on rip-off tariffs?

[Greg Clark]

The hon. Lady, Chair of the Business, Energy and Industrial Strategy Committee, makes a very important point. We are reviewing whether the threshold for exclusion is appropriate; I know that she will welcome that.

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

Some 169 households in my constituency have been affected by the mis-selling of insulation and solar panels by HELMS. This company was accredited by the Government under the old green deal scheme, so what will the Government do to compensate these people—often vulnerable pensioners—and how will they prevent such mis-selling from happening under the new green deal scheme?

[Greg Clark]

As with any other supplier, consumer protection rights are in place and available. I would be very happy to meet the hon. Lady to discuss this particular case and see whether we can help.

[Stephen Kerr (Stirling) (Con)]

Vulnerable customers can benefit from the use of smart meters. Will the Secretary of State update the House on how many SMETS 2 meters have now been installed and are connected to the Data Communications Company?

[Greg Clark]

I can tell my hon. Friend that 1,000 new SMETS 2 meters have already been installed. That is a significant milestone because it represents the beginning of the roll-out of the next generation of meters.

[Mr Gregory Campbell (East Londonderry) (DUP)]

As businesses look to expand their market share in the wider evolving world market beyond the EU ahead of next year, what priority are the Government giving to maintaining and trying to reduce energy bills to create employment and prosperity right across the United Kingdom?

[Greg Clark]

The hon. Gentleman makes an extremely important point. We have commissioned Professor Dieter Helm to look at how we can reduce the costs of our energy system for businesses and consumers. One of the advantages of the strategy that we have pursued is that we have brought down the costs of offshore wind—a major contribution—by targeting and investing substantially in it at a rate, as my right hon. Friend the Minister for Energy and Clean Growth said earlier, which has resulted in a reduction beyond what anyone expected even a couple of years ago.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

6. What steps he is taking to encourage investment in environmentally sustainable electricity generation.

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[Ms Marie Rimmer (St Helens South and Whiston) (Lab)]

15. What progress he has made on developing (a) sector deals and (b) local industrial strategies as part of the industrial strategy.

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

Our modern industrial strategy will boost productivity and earning power across the UK. We have announced four sector deals in areas including life sciences, the creative industries, the automotive sector and artificial intelligence. More will come in the weeks ahead. I am encouraged by the work of the mayoral combined authorities and local enterprise partnerships in developing local industrial strategies.

[Ms Rimmer]

I and my Front Bench colleagues have been informed that dozens of sectors have put forward proposals for a sector deal, including the steel industry, but have had little or no engagement from the Government. Will the Secretary of State confirm how many proposals for sector deals he has received and to how many he has formally responded?

[Greg Clark]

I am delighted to report that we have had a huge interest from sectors right across the country, including the steel sector. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Watford (Richard Harrington) and I have had substantial discussions with the steel industry and we look forward to developing that deal in the weeks and months ahead.

[Martin Vickers (Cleethorpes) (Con)]

What progress is being made on the Greater Grimsby town deal?

[Greg Clark]

I know this deal is close to my hon. Friend’s heart and that of his constituency neighbour. I have made a commitment to come to Cleethorpes and, I dare say, Grimsby to help with that negotiation. I look forward to doing so soon.

[Several hon. Members rose—]

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[Diana Johnson (Kingston upon Hull North) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

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

Since our last departmental questions, we have taken further steps to implement our industrial strategy. In early May, we launched UK Research and Innovation, with a budget of £6 billion a year, to drive forward our growing investment in research and development. The Prime Minister announced four missions that our grand challenges will achieve, including to save 20,000 lives a year through artificial intelligence-assisted cancer diagnosis. We have launched sector deals in AI, convened the first ever Retail Sector Council and launched a major programme to drive productivity in smaller companies. On the 150th anniversary of the creation of the TUC, from the party that established the royal commission that decriminalised trade unions, that brought in widows pensions and holiday entitlements, that created the national living wage—in other words, Mr Speaker, the true workers’ party—we wish the TUC a very happy birthday.

[Diana Johnson]

Of course, I say to the Secretary of State that the Labour party was founded by the trade unions.

My question is about retail. In Hull, retail employs 12,000 people. Hull’s House of Fraser store is going to close, with the loss of 207 jobs. Hull has three Poundworld stores that are under threat and there are also concerns about Hull’s Marks and Spencer store, which may be one of the 60 unidentified branches closing by 2022. After the Comet collapse, which cost taxpayers some £45 million, what is the Minister going to do to assist shop workers and protect taxpayers?

[Greg Clark]

The hon. Lady will concede that the efforts and engagement through the city of culture year between the Government and Hull were very substantial and very effective. I am familiar with the House of Fraser store in Hull. I know what an important part it plays in the life of the town centre. I understand that the council is confident that such a prime site, which I know well, will be taken up. I will work closely with the council to make sure, through the sector council, it has all the help it needs.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

T4. Will my right hon. Friend update the House on what he is doing to support vulnerable people in Mid Dorset and North Poole with their energy bills?

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[Lucy Powell (Manchester Central) (Lab/Co-op)]

T6. With Government support for the third runway at Heathrow coming on top of Crossrail 2, is this not yet another example of infrastructure spending going to the south-east of England? Will the Secretary of State now up the ante and make sure that we get the infrastructure spend to realise the northern powerhouse?

[Greg Clark]

We are getting on with major infrastructure investments that would be good for the whole United Kingdom and that the previous Government did not take.

[Richard Graham (Gloucester) (Con)]

T9. Like all good films, I hope that a Government response to the Hendry review is “Coming Soon”, but meanwhile, will the Minister share with us whether she agrees that the opportunities for marine energy, whether tidal stream, tidal lagoon or waves, are enormous? Does she agree that they deserve more support and encouragement to develop this fantastically innovative source of additional low-carbon, domestically produced energy?

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[Jim Shannon (Strangford) (DUP)]

Factory output has decreased, according to the papers today. Will the Minister outline what he can do to assist factory manufacturing and initiate a clear industrial strategy?

[Greg Clark]

As the hon. Gentleman knows, through the industrial strategy, which has been developed in close collaboration with the Engineering Employers Federation, and through investment in research and development and skills, we are doing everything we can to take the opportunities arising.

[James Cartlidge (South Suffolk) (Con)]

Given the success of auto-enrolment, will the Minister outline what steps the Department is taking to ensure that as the country saves more, we invest more in British industry?

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

The decision by JLR to invest in electric vehicles is very welcome, but equally the decision to produce the Discovery model in Slovakia is profoundly worrying. Does the Secretary of State agree that it underlines the need for tariff-free access for both cars and components in the EU?

[Greg Clark]

I agree with what the hon. Gentleman said at the end—of course we need tariff-free access with a minimum of frictions to these important markets—but I disagree that this is not a sign of significant confidence. JLR is investing in the next generation of vehicles. I hope he will welcome that.

[Melanie Onn (Great Grimsby) (Lab)]

What is the Secretary of State’s No. 1 initiative to ensure that the Greater Grimsby town deal moves from theory to reality?

[Greg Clark]

As I said to my hon. Friend the Member for Cleethorpes (Martin Vickers), I will come and sit down with Grimsby and Cleethorpes leaders to negotiate it myself.

[Rachael Maskell (York Central) (Lab/Co-op)]

There is clearly a crisis on our high street, so will the Minister ensure that business rates are fully addressed in this year’s Budget?

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[Greg Clark]

I work night and day to make sure that British and international businesses continue to invest in this country, and they have shown a willingness to do so. We want to be the best location not only for trade with Europe but for trade around the world, and that will form part of our negotiations.

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

What support can my constituents, who are among the 5,000 set to lose their jobs at Poundworld, expect from the Government?

Retail Sector

Greg Clark Excerpts

Wednesday 6th June 2018 Commons Chamber

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

To answer the question from the hon. Member for Salford and Eccles (Rebecca Long Bailey) about people emulating her Uncle Ray, 1,100 new businesses are being created in this country every day of the year —record levels. We are seeing a resurgence of entrepreneurship right across the country, which she will welcome.

I am delighted that we have the chance to talk about the retail sector, which, as the hon. Lady recognised, is vital to every one of our constituencies. The character and identity of all the towns, villages and cities that we represent are defined by the shops, stores, cafés, restaurants and pubs, which make up the most important places in our settlements. Whether independently owned or part of a chain, and whether large or small, they play a vital role. As constituency MPs, we all do everything we can to promote and boost them. Things such as Small Business Saturday engage all Members on both sides of the House to promote the importance of retail.

More people are employed in retailing than in any other single industry in the country. Britain has long had a deserved reputation for being a retail environment of intense competition and innovation and for outstripping other countries in terms of the keenness of prices, the choice and range of products, and the pace of new offerings to consumers to meet their changing needs.

Any of us who has visited other countries, whether in continental Europe or the US, to take a couple of examples, will have noticed how comparatively advanced and well served our consumers are in this country. Already in this debate we have heard from many people who grew up with a retail background, which is not surprising given the sector’s importance. I make my own disclosure that my father was a retail milkman. My first job was delivering milk in the mornings as part of a small family business. My mother worked at the local Sainsbury’s. Such backgrounds are common among Members on both sides of the House. We all have friends, family and many constituents who owe their life and lifeblood to the retail sector.

The hon. Member for Salford and Eccles accurately describes the period of change the retail sector is experiencing. She is right to do so. As she says, in recent years, several familiar household names have disappeared from our high streets: Woolworths in 2009 and, more recently, Toys R Us and Maplin. Each and every case is a blow to the staff who work in those stores and, of course, to the customers. But we all know this is by no means new in British retailing. Each of the names I have mentioned was a disrupter and an insurgent in its day. Woolworths, for example, came as an American giant offering open shelves for consumers to serve themselves, rather than having to wait behind a counter, which was revolutionary and a major challenge to the prevailing model.

British Home Stores, much in the news in recent years, provided a one-stop shop containing everything under one roof, from light fittings to clothing and food. Again, that was a big disruption to the norm. The hon. Lady mentions Toys R Us. I am old enough to remember the dismay experienced by some traditional high street toy stores when out-of-town warehouses, including Toys R Us, entered the market. Those warehouses became familiar and many of us have bought toys for our children there. There is a story of constant change in the retail sector.

[Paul Blomfield (Sheffield Central) (Lab)]

The retail sector in the centre of Sheffield has been greatly strengthened by the establishment of a business improvement district. The Secretary of State will know that, outside London, the only model for business improvement districts is an occupier or a ratepayer BID, whereas London can have property owner BIDs. After lengthy consultation by the Government, there were proposals in last year’s Local Government Finance Bill to roll out the opportunity of property owner BIDs across the country, which was widely welcomed in the north of England. The Bill was lost in the wash-up. Do the Government have any plans to renew that proposal to enable property owner BIDs across the UK?

--- Later in debate ---

[Greg Clark]

I agree with the hon. Gentleman on the positive effect of BIDs. When I was a local councillor in London, I saw the benefits of the business improvement districts in the capital. The Local Government Finance Bill was a victim of the wash-up and I will raise the point with my colleagues to see where we are on further plans.

We have experienced constant change in the retail sector and, of course, at the moment we are experiencing an online revolution. We previously experienced the supermarket revolution and, again, I remember well my father’s milk rounds shrinking as supermarkets routinely began to sell fresh milk at a fraction of what the roundsmen charged.

There was never a time when the high street did not change and did not see the disappearance of brands that were regarded as anchors at the time. The hon. Member for Salford and Eccles is remiss in not stating the context of constant change. We all remember many examples of presences on the high street, going back many years, that are no longer there.

The evidence shows that British retail is transforming but is still vigorous. Following the hon. Lady’s speech, Members would be forgiven for imagining that retail employment is in a state of meltdown.

[Justin Tomlinson]

I echo my right hon. Friend because the hostility shown by the shadow Minister towards retail does not reflect the reality. Productivity grew by 4% in 2017, as reported by the British Retail Consortium. That is the reality.

[Greg Clark]

My hon. Friend is right. We all want to celebrate the success of retail in Britain and we all want to do what we can to further advantage it. In fact, the number of people employed in retail in the UK has grown substantially over the past 20 years, from around 2.8 million in 1996 to 3.1 million in the last full year for which figures are available, an increase of nearly 300,000 jobs.

[Helen Goodman (Bishop Auckland) (Lab)]

When I went to talk to my local jobcentre, it complained about the way the supermarkets treat their workers. My local jobcentre says it is grossly unfair and unreasonable to give people short 12-hour or eight-hour contracts. Is the Secretary of State confident that the increase in the number of jobs is an increase in full-time equivalent jobs, or is it just chopping up jobs that would previously have had a reasonable number of hours?

[Greg Clark]

The hon. Lady raises an interesting question. She will be interested to know that the trend over the period is towards more full-time jobs taking the strain from part-time jobs. The hon. Member for Salford and Eccles mentioned that part-time employment is valued by many people in the retail sector, but a higher proportion of jobs in the retail sector are now full time than in 1996.

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

Would the Secretary of State care to comment on a practice I see weekly at my advice surgery? Large numbers of my constituents, particularly among the Tamil community, are working 18 hours a week at Tesco precisely so that Tesco does not have to pay employer’s national insurance contributions.

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[Greg Clark]

I was not aware of that, and my colleagues and I would be happy to meet the hon. Lady to discuss her example.

It is not the case that in recent years we have experienced a collapse in employment—rather the reverse. The trend has been towards increasing and, more recently, more stable employment. We are seeing more full-time work, rather than part-time work, in the mix. Nor is it the case that more retailers are failing. The hon. Member for Salford and Eccles correctly mentioned some recent examples of retailers that have gone out of business, but it has always been the case that some retailers have failed and been replaced by others.

[Rachel Maclean]

Of course I regret that Marks & Spencer is pulling out of Redditch, but is it not the case that the consumer is the ultimate beneficiary when we see change in the sector? Consumers get new products, better prices and different things and new experiences they would not necessarily have had previously. That is what an entrepreneurial economy supported by this Government does.

[Greg Clark]

I agree. We want to make sure that our retail sector is dynamic and provides value and choice for consumers, as well as good career opportunities for members of staff.

[Melanie Onn]

The Secretary of State says that retailers are not failing, but the empty shops in Grimsby town centre tell my constituents something very different. Will he comment on that?

[Greg Clark]

Across the country, from time to time, businesses will close. I am familiar with Grimsby, as the hon. Lady knows, and one of the actions we are taking, which I know she will support, is to have a town deal with Grimsby to make sure that we maximise the advantages locally. Freeman Street in Grimsby shows this phenomenon has been happening not just over the past 12 or 24 months; there has been a long-term change. Local dedication, based on knowledge of the local environment, is required to have the best prospects for a revival.

[Kevin Foster (Torbay) (Con)]

The Secretary of State rightly refers to the fact that towns have to look at change. Does he agree that in many cases it will be for local authorities to examine what the needs of a modern town centre are as a destination, rather than at what its needs were in the 1950s and 1960s, in a very different retail era?

[Greg Clark]

My hon. Friend is exactly right about that. Of course many of our towns acquired shopping centres and shopping malls to make them more attractive at that time, which again was a big change. There is constant change in what the offer and draw of town centres is, and local authorities are very active in thinking about how they can make their places as attractive as they can.

According to the latest market data for the last five years, covering the period from 2013 to the end of 2017, 191 retailers in this country have gone into administration. That compares with the 202 that did so in the five years before, so we have not had the sudden collapse that the hon. Member for Salford and Eccles was hinting at. During the last five years, the number of stores affected by those failures was 7,429, compared with 19,639 in the previous five years. So it is very important that we do not paint a picture of British retail undergoing some sort of experience that has never happened before; we need to make sure that its dynamism results in positive outcomes and not regard this as completely out of the ordinary.

The hon. Lady cited examples of closures and, as I said, they are hugely hurtful and worrying for everyone caught up in them. However, she conspicuously failed to mention the other side of the equation. If she reads Retail Week in any given week, she will see example after example of stores that are opening and of companies that are expanding. She could have mentioned that just in January the Co-op committed that it will open 100 new stores during 2018, creating 1,600 jobs. Lidl is investing £1.45 billion in expanding its UK presence, and Aldi is now the fifth biggest retailer in the UK and it aims to have 1,000 stores by 2020. Lest anyone think that discount retail means discount wages, Aldi has pledged to become the UK’s highest-paying supermarket by 2020.

Our tastes and habits are changing. Home delivery from stores was once considered a relic of pre-war and immediately post-war times, but now it is increasingly standard for all the big supermarkets; Ocado has recently joined the FTSE 100 on the back of its growth. We have more and better choice through online retail than ever before, as colleagues have said. ASOS is now the UK’s largest clothing retailer by market valuation, and this week the British Retail Consortium showed that total retail sales increased substantially in May. The hon. Lady does the retail sector and the country a disservice by claiming that we are seeing an annihilation of the high street. We need to be much more practical and positive about the prospects.

However, our habits are changing. We are buying more and more each year— retail sales are buoyant—but we are choosing to buy more of that online, which of course provides a challenge. In 2007, 3% of total retail sales were bought online, yet in little more than a decade—by May this year—that had grown to 16.9%. That is a revolution in a short space of time. In the past 12 months alone, online sales rose by 11.9%, and clothing and footwear sales online rose by 24.1%. The consultants Oliver Wyman forecast that 40% of non-food retail sales will be online by 2030. That is how people are choosing to buy so, just as happened when supermarkets challenged individual shops, retail will look very different in the future. If we choose to buy 40% of goods online, not all the shops we have been used to will exist as they do today. As the British Retail Consortium says:

“We have too much retail space…there will be fewer shops and their role will be different”.

It says that they will be based on convenience fulfilment or, most likely, fulfilling a desire for experience and local community concentration. Those are the changes that the sector anticipates and wants to participate in.

[Kate Green]

I cannot dispute what the Secretary of State says about the changing patterns of online shopping. He made a comment earlier about the quality of employment in low-cost supermarkets. Does he accept that it is also important that those online retail settings offer excellent employment conditions? Too often we hear of exploitative practices in these warehouses and of the abusive treatment of workers, who are being denied toilet breaks and being asked to do heavy lifting without proper risk assessments having been carried out. They do that for very low wages.

[Greg Clark]

The hon. Lady makes an excellent point, and this was one of the reasons we commissioned the Matthew Taylor report, to which the hon. Member for Salford and Eccles referred. Knowing that employment patterns are changing and that different types of businesses are entering the market, it is right to consider what regulatory requirements we need in this new world to maintain the high standards we have insisted on in this country. That is the type of preparation—the strategic anticipation of what is required—that we are engaged in.

I applaud the way in which, in this time of adjustment, to prepare for the future, the retail sector is coming together, with its players working jointly. It has always been a rather fragmented sector, but in recent months we have seen a real sense of purpose in its coming together to work jointly with the Government and with local councils, as my hon. Friend the Member for Torbay (Kevin Foster) said, to address the challenges it has faced.

[Ben Bradley (Mansfield) (Con)]

Does my right hon. Friend agree that, as well as working at a national level to recognise the changes needed in our high streets, it is important that local councils work with local businesses to put in place a plan and vision for what the town centre needs to look like in future?

[Greg Clark]

My hon. Friend is right about that. The hon. Member for Salford and Eccles referred to local industrial strategies. The reason they are part of the industrial strategy is that the vision we have set out, informed by local councils, local leaders and retailers, is that that local dimension and knowledge, as I mentioned to the hon. Member for Great Grimsby (Melanie Onn), is vital in ensuring we have prosperity. So the sector was a major contributor to the development of our industrial strategy.

One commitment we made was to establish the Retail Sector Council, so that firms, large and small, can work effectively with each other and policy makers, emulating the successful model that the Automotive Council UK and the Aerospace Growth Partnership have established, with which Members are familiar. The RSC is chaired jointly by the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Burton (Andrew Griffiths), and Richard Pennycook, who, as many Members will know, is the former chief executive of the Co-op and one of our most respected retailers.

The RSC is bringing the sector together to work with Government and local councils, making recommendations on the areas of challenge that have come up already in today’s debate. Those include business rates, where the Government have made a clear commitment to make sure that the system is up to date for a world in which people increasingly shop online. Of course, that builds on the commitment we have made to wider business rates reforms and on the relief that has been given following the recent revaluation. That stands in stark contrast with the record of the Labour party, which doubled the average business rates bill during its time in office. We are protecting the small businesses in this country from its increase.

[Rachael Maskell]

Will the Secretary of State provide some more detail about how the Government are going to reform business rates, because we know the retail sector is crying out for reform of the system and he has not set out any details? I would really appreciate those now.

[Greg Clark]

I do not want to incur the wrath of my fierce hon. Friend, the Member for Stirling (Stephen Kerr), by speaking for too long, but there will be opportunities to do that. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Burton, will be responding to the debate. The Retail Sector Council has that as part of its remit and objectives. A review is taking place with the Treasury of precisely those matters. Of course that is so because this is one of the big challenges that stores with a high street presence face. The context of competition from online retailers is fundamental to that.

A major concern of the industry, through the new sector council, and of this Government, through the industrial strategy, is to drive higher levels of productivity and earnings for workers in the sector. There are huge opportunities to do both. The hon. Member for Salford and Eccles does a disservice to this very innovative sector and the people who work in it when she portrays it as some sort of backwater of uniform low productivity—it is far from that. In fact, in the past 20 years in the retail sector, output per hour has doubled; it has increased faster than the economy as a whole. Productivity in UK retailing is one of the highest of major European nations and one of the most rapidly growing. Pay in retail is increasing, responding to the recruitment pressures that come from the fact that unemployment is now at its lowest level for 40 years. That has been bolstered by the introduction of the national living wage, which has had a particularly beneficial impact on employees in the retail sector. As I have said, we want to secure improvements in the quality of working life that employees in the sector experience, which is why the Matthew Taylor report with its emphasis on good work is of such vital relevance to this sector.

Retail is already at the cutting edge of much of the innovation and new technology that we see. Our industrial strategy, with its major investment—the biggest increase in investment in research and development that we have seen as a country—is full of opportunities for further innovation. Through our industrial strategy challenge fund and grand challenges such as on artificial intelligence, this is a sector that will play a big part in that. Part of the reason for the creation of the Retail Sector Council is to enable the sector to do so.

The British retail sector is renowned as one of the most competitive and innovative in the world. It employs millions of people, and will continue to do so, in good jobs in every part of the United Kingdom. We recognise and embrace the challenge of responding to the changes that are taking place in retailing not just in this country, but across the world. We are investing in technology, investing in skills, ensuring that people can have satisfying and prosperous careers to look forward to in retail, and responding to the consequences of changing consumer preferences and the implications that that has for the future of the high street.

Those are the areas on which we will work in close partnership with the sector. Together we will ensure that, more than ever, retailing is something that is, in its quality, in the price that it offers to consumers and in the choice and innovation that it brings in, one of our world-leading sectors of the economy.

Nuclear Power

Greg Clark Excerpts

Monday 4th June 2018 Commons Chamber

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

With permission, Mr Speaker, I would like to make a statement on the proposed Wylfa Newydd nuclear power plant.

Britain was the world’s first civil nuclear nation. Nuclear energy has powered homes and businesses in this country for over 60 years and currently provides about 20% of our electricity needs with low-carbon, secure and reliable baseload power. Nuclear has an important role to play in the UK’s energy future as we transition to the low-carbon economy. However, we have always been clear that no technology will be pursued at any price: new nuclear must provide value for money for consumers and taxpayers.

In 2016, we agreed to support the first new nuclear power station in a generation at Hinkley Point C in Somerset. Developers have set out proposals for a further five plants to come online over the next few decades. As I said at the time the contract for Hinkley Point C was agreed, the Government expect future nuclear projects to provide lower-cost electricity than Hinkley Point C.

The next project in this pipeline is the proposed Wylfa Newydd power station, based at Anglesey in north Wales. The project developers, Horizon Nuclear Power, which is owned by the Japanese company Hitachi, has developed proposals to build two reactors with a combined capacity of 2.9 GW. Hitachi’s reactor design has been deployed on time and on budget in Japan, and last December, having satisfied our strict safety standards, it completed the generic design assessment process run by the UK’s independent nuclear regulators. Horizon submitted its application for development consent to the Planning Inspectorate last Friday.

I am pleased to confirm today that Hitachi and the UK Government have decided to enter into negotiations in relation to the proposed Wylfa Newydd project. This is an important next step for the project, although no decision has yet been taken to proceed and the successful conclusion of these negotiations will of course be subject to full Government, regulatory and other approvals—including, but not limited to, value for money, due diligence and state aid requirements.

A key focus of discussions with Hitachi has been, and will continue to be, achieving lower-cost electricity for consumers. Both the National Audit Office and the Public Accounts Committee have recommended that the Government consider variations from the Hinkley Point C financing model in order to reduce costs to consumers. In line with the NAO and PAC’s clear findings and recommendations, for this project the Government will be considering direct investment alongside Hitachi, Japanese Government agencies and other parties. Our partnership on this project will serve as a further example of civil nuclear collaboration between the UK and Japan, building on the memorandum of co-operation that was signed with that country in 2016.

The UK is likely to need significant new nuclear capacity to meet our carbon reduction commitments at least cost, particularly as we electrify more of our transport and heating, so alongside entering negotiations in relation to Wylfa Newydd, the Government will continue to engage with the other developers in the UK new nuclear market on their proposals for further projects. This currently includes EDF over its plans for a follow-on EPR project at Sizewell C, CGN—China General Nuclear Power Corporation—over its proposals for an HPR1000 reactor at Bradwell, and Toshiba regarding the future of the NuGen project at Moorside, as well as Hitachi over potential further ABWR units at Wylfa and Oldbury.

It remains the Government’s objective in the longer term that new nuclear projects, like other energy infrastructure, should be financed by the private sector. Alongside our discussions with developers, we will be reviewing the viability of a regulated asset base model as a sustainable funding model, based on private finance for future projects beyond Wylfa, that could deliver the Government’s objectives of value for money, fiscal responsibility and decarbonisation.

Support for nuclear is reiterated in the nuclear sector deal that we will publish with the sector shortly. That deal, which the Government have developed in close partnership with the nuclear sector, will include ambitious proposals to drive down costs across the sector, including by reducing the cost of construction in new build and by investing in innovation in advanced nuclear technologies.

If the Wylfa project were to go forward following this period of negotiation, it would provide about 6% of our current electricity needs until nearly the end of the century, while supporting thousands of jobs, particularly in Wales, during its construction and operation. The actions this Government have taken will support a long-term pipeline for new nuclear projects in this country, and will provide the visibility needed to enable the industry to invest in skills, including through the National College for Nuclear, and UK supply chain capabilities across the country. I will continue to keep the House informed during the negotiations, and I commend this statement to the House.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

There is cross-party consensus that new nuclear will continue to play a vital role in the UK’s energy mix, and I am therefore pleased to hear that progress has been made, after some uncertainty, on the Wylfa nuclear plant. Given the well-documented failings of the Hinkley Point C deal, however, I am deeply concerned by the way in which the financing has been or will be negotiated—namely, the lack of transparency and parliamentary scrutiny thus far.

On 15 May, I wrote to the Secretary of State requesting information about the negotiations and I am yet to receive a response. Until the last few days, we have had to piece together snippets of information from the Japanese press, and titbits from energy and environmental groups. We have finally heard today that a deal will be negotiated with Hitachi, which media reports suggest will include a guaranteed strike price, loan guarantees and an equity stake in the project in exchange for direct Government investment.

I must say that this is a surprising shift from the Government’s ideological position against Government investment in new energy infrastructure, and I wonder whether the shift applies to other renewable technologies, for which support has been repeatedly cut by this Government. I suspect not. I must sound a note of caution. Without sufficient detail and transparency, the House is unable to determine the risks and benefits borne by consumers and taxpayers in the proposed deal.

Last year, the National Audit Office concluded on the Hinkley Point C deal that the Department had

“not sufficiently considered the costs and risks of its deal for consumers.”

The NAO made a series of recommendations, including mechanisms for reviewing value for money and the affordability of the deal; making it clear who is accountable for oversight and governance; ensuring that the cost and timing implications of alternatives are shown clearly; and developing a plan to realise the benefit across local economies and supply chains. Last year, I asked the Government to adopt those recommendations. So will the Secretary of State say whether he has done so and, if not, why not? However, if the Government have done so, will he publish all relevant documentation showing that each recommendation has been followed in relation to Wylfa or, indeed, confirm that they will be followed if they have not been processed yet?

Negotiations between the Government and Hitachi thus far appear to have been conducted behind closed doors. Will the Secretary of State say whether the House will be given time to scrutinise the proposed deal outline, or is this simply a done deal? If so, have any binding commitments been made or, for example, have any preliminary heads of terms or memorandums of understanding been issued? The NAO stated that

“making commitments to investors can limit flexibilities to react to a change in circumstances.”

The implications of that need to be understood and communicated clearly to decision makers. It is important to ensure that the cost and timing implications of alternative funding arrangements are shown clearly—again, that is advocated by the NAO. If such alternatives have been, or will be, examined, can the Secretary of State provide the House with details today?

I move on to safety issues. It has been widely reported in the press that Hitachi is seeking to “reduce or eliminate” its financial responsibility for accidents. Will the Secretary of State say whether that is true? If so, where will such liability lie and what safety impact assessments have or will be carried out from construction and operation through to decommissioning? Indeed, on the issue of decommissioning, will he explain who will bear that liability and how much the cost is likely to be?

Despite the good news for Wylfa, subject to the queries that I have outlined, it appears that further down the Welsh coast the news is not so good for renewables generation. Media speculation suggests an impending negative decision on the much-anticipated Swansea tidal lagoon project after years of planning and campaigning by Tidal Lagoon Power, the Welsh Government, environmental groups and MPs across the House. If that is true, it is outrageous. To assume that Swansea is somewhat redundant, given the plan for investment in Wylfa, is very short-sighted.

I understand that Tidal Lagoon Power has offered to negotiate further, but has not received a response from the Government. Under the plans, there would be a zero-carbon power plant producing energy for over 100,000 homes, creating thousands of jobs across Britain; turbines built in a wall in the sea that harness the power of the tides, so that we can turn the kettle on in the morning; world-leading infrastructure built in Britain using British steel to last more than a century; and the potential to export our expertise and products across the globe. An ambitious, decisive and forward-thinking Government would jump at a project like that, just as they have done with Wylfa. Well, perhaps not. Recently, someone joked to me that the desk of the Secretary of State was where good ideas went to die. I hope that that is not the case with the Swansea tidal lagoon, and I implore the Secretary of State one last time to stop messing about, and to sit down with the company and the Welsh Government to develop a deal urgently.

[Greg Clark]

I am disappointed that the hon. Lady did not continue in the spirit in which she opened her contribution. This is an important moment, and we are beginning a negotiation on a project that will supply energy to this country for the next 60 years, until towards the end of the century, which will create jobs and reduce our carbon emissions. She said that her party supported the proposal and that there was cross-party consensus—one could be forgiven for missing that in her tone—and it is important to establish that, because it is evident that any 60-year project will take place over the life of successive Governments. This country has given nuclear investors confidence over time that there is a strong commitment to such major infrastructure projects, so I hope that she will back the commitments that she and her party made in their manifesto last year to support new nuclear and recognise the considerable opportunities, as she put it, for nuclear power internationally and domestically.

The hon. Lady asked about the financing model. She urged me in a letter to reflect on the recommendations of the National Audit Office and the Public Accounts Committee to explore alternative financing models that can reduce the price of the electricity that is generated. That is exactly what I have set out—I have followed the recommendations of the NAO and the PAC. We are entering a negotiation—I think somewhere in her remarks there was a welcome for that—but the essence of doing so is that a deal has not been agreed. We need to explore that, and it is subject to the very tests that she set out and that the NAO and the PAC observed are required, including on value for money.

On safety, the hon. Lady should be reassured—there are many hon. Members who are familiar with the nuclear industry in this country—that the safety standards operated through our independent nuclear inspectorate are the highest in the world, and that the generic design assessment is the most exacting in the world. We always abide by the rulings and requirements of the independent regulators so that we can have full confidence in the safety of this important industry.

Finally, the hon. Lady mentioned other potential investments, including the proposal for renewable power in Swansea. She knows—we have had exchanges about it across the Dispatch Boxes—that I believe in a diversity of energy supply, but we need to make sure that value for money is offered for taxpayers and bill payers. A rigorous assessment is required and, as I have done today, I will update the House when the process is concluded.

[John Redwood (Wokingham) (Con)]

How will the Government ensure, if they have a stake in the proposed investment, that when it comes to buying power they are fair between that investment and other people in the market?

--- Later in debate ---

[Greg Clark]

My right hon. Friend takes a great interest in this issue. When I made my statement on Hinkley he advised that we should consider using the Government’s balance sheet in that way, and we will consider that as part of the discussions. As for the contracts that are entered into, one of the requirements of the state aid regime is that any contracts have to be on a non-discriminatory basis, which will guide the letting of any such contract.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I thank the Secretary of State for early sight of his statement but, to be truthful, it did not tell us any more than we have been able to glean from the media today. I find the Government’s nuclear obsession mind-boggling. When Hinkley was first proposed all those years ago it was on the basis that it had to be commissioned by December 2017 or there would be a risk of the lights going out. All these years later, it will not be generating at full capacity until something like 2030, which seems to undermine the need for new nuclear.

Hinkley is shocking value for money, with a 35-year megawatt-hour strike price of £92.50, whereas recent offshore auctions have returned bids of £57.50 per megawatt-hour over a 15-year period. That is the real cost benchmark that the Government should use. Considering that the National Audit Office concluded that it would be impossible to know for decades whether building Hinkley represented good value for money for UK taxpayers, it is utterly incredible that we are diving headlong into another costly venture. The Secretary of State has said that he wants to do a sector deal, but we do not know what value for money that will provide. It has been reported that the strike price for the new power station will be something like £15 per megawatt-hour cheaper than at Hinkley, but how much of that cost reduction is due to the billions of pounds of direct investment from the taxpayer?

Given the company’s questionable track record on safety, will the Government confirm that Hitachi will be financially liable in the event of any accidents? Given the unprecedented level of taxpayer investment, how will the Government demonstrate that they have met the Public Accounts Committee’s demand for a full value for money assessment before they finally sign off the deal, and how will Parliament be able to scrutinise that? When will we know the level of the financial commitments?

If the Secretary of State is so willing to commit taxpayers’ money directly for stakes in projects, will he consider paying for national grid upgrades to further facilitate the deployment of renewables, instead of tagging such upgrades on to the costs of renewable projects? As bad as the Government’s obsession with nuclear is, this is also about their attacks on renewable investment. When will they have a coherent energy policy and proper investment in future technologies rather than a technology that has had its day?

[Greg Clark]

I thank the hon. Gentleman for his comments. On statements to the House, I think all Members would recognise that I have come to the House at the earliest possible opportunity. It was today that the decision was taken to enter into negotiations. Members will know that I always keep the House updated and always will.

It is a bit rich of the hon. Gentleman to complain that new nuclear power will come online later in the 2020s, given that he and his colleagues have resisted the replacement of our nuclear fleet, which we have known needs to be replaced for all this time. It is an act of responsibility on the part of this Government that we are planning ahead for the replacement of the 20% of our electricity that is currently generated from nuclear power. It is important for consumers in Scotland and in the rest of the United Kingdom that we do that.

The hon. Gentleman criticised what he regarded as the value for money of the Hinkley project. He will have heard me say at the time that that represents the highest price we will pay for new nuclear. I expect future new nuclear power stations to come in at a lower price. I have made it explicit today that that is a requirement of the negotiation. However, this is the beginning of a formal period of negotiation.

The recommendations of the Public Accounts Committee and the National Audit Office have shaped the approach we are taking. The value for money test has to be met, and at all the key milestones I will ensure that Parliament has the opportunity to scrutinise the progress of the negotiations.

[Sir Michael Fallon (Sevenoaks) (Con)]

Does my right hon. Friend agree that this welcome announcement and the lower strike price that is being targeted underline the importance, if we want to keep costs falling, of securing continuity in the nuclear programme, so that the supply chain and the skills academy can look beyond Wylfa to Sizewell C, Oldbury, Bradwell and Moorside?

[Greg Clark]

My right hon. Friend is absolutely right. He contributed with distinction as an Energy Minister and therefore recognises that if we are to achieve not only the full cost benefits but the industrial and employment benefits, it is necessary to show that we have a pipeline that is being delivered in a steady and orderly way. If we do that, as we have done with offshore wind, in which he was instrumental, we can establish an industry that not only supplies to UK consumers at a lower cost but offers a big export opportunity.

[Rachel Reeves (Leeds West) (Lab)]

A thriving nuclear sector depends on the ability to move nuclear materials around safely and securely. At the moment, we do that via our membership of Euratom. What assurances has the Secretary of State been able to give Hitachi about our future relationship with Euratom, about nuclear co-operation agreements with other nuclear states and about the ability of the Office for Nuclear Regulation to recruit the safety inspectors we need?

[Greg Clark]

The hon. Lady will know from her involvement in the scrutiny of the Nuclear Safeguards Bill that we have made very good progress both on the proposed agreements with other nuclear countries and on our intended association with Euratom. I regard this as an area in which it is clearly in everyone’s interest to have the greatest possible continuity of the existing arrangements. That is no secret; it is known to any partner and any investor, including Hitachi.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

I welcome my right hon. Friend’s statement. He will know that the Wylfa Newydd project will be the largest construction project in Wales for more than a generation, so what discussions is he having with the Welsh Government to ensure that we maximise the opportunities for the Welsh supply chain, which will be the backbone of delivering this important project in Anglesey?

[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.

[Mr Laurence Robertson (Tewkesbury) (Con)]

Horizon Nuclear Power employs 350 people in my constituency, and I visited Hitachi in Tokyo fairly recently, so I welcome the Secretary of State’s announcement today. Does he agree that the fault over the past 30 years has been the failure of successive Governments to replace the existing nuclear power stations? I urge him to press ahead with these projects for the very reasons that he has given, of security of supply and the reduction of emissions.

[Greg Clark]

I agree with my hon. Friend. It is not a positive reflection on previous Governments that, knowing that this important contribution of more than 20% of our power supply was coming to the end of its life in the decade ahead, no plans were made to replace it. The fact that we now have a pipeline of nuclear power plants will provide confidence that that source of energy will be maintained and, as we have discussed, provide important economic opportunities for people to enjoy successful careers and prosperity in that industry.

[Albert Owen (Ynys Môn) (Lab)]

The Secretary of State’s statement on Wylfa Newydd is good news for my constituency, good news for north Wales, and good news for the UK nuclear industry and wider industry. If we are serious about tackling climate change, we need to be serious about new nuclear and get on with it as quickly as possible. My constituents will welcome this announcement, but they will want assurances that the skills agenda is going ahead and that local people can have the quality jobs that previous generations in my constituency have had for over 40 years. I invite the Secretary of State to come to talk to training providers, local government and the Welsh Government so we can get this agenda up and running.

[Greg Clark]

I am grateful for the hon. Gentleman’s welcome. He knows very well the potential of the development for his constituents and those beyond. I had the pleasure, during the Anglesey Day he hosted, to meet many of the companies that would benefit. It is the case, I think, that some young people already working on the site have been to Japan for training purposes, deepening their skills and broadening their horizons. They will be very important engineers of the future in the UK. I am delighted that, subject to the success of the negotiations, this opportunity will be available for them.

[Rebecca Pow (Taunton Deane) (Con)]

Does my right hon. Friend agree that, particularly with the electrification of more of our transport and heating, new nuclear is an essential part of providing the right energy load—including Hinkley Point C, adjacent to my constituency, with all the spin-offs it will bring—to meet our Government’s highly commendable carbon reduction commitments at least cost?

[Greg Clark]

I am grateful to my hon. Friend and I agree with her that nuclear should be a part of our energy mix. To be resilient, we should have a diverse energy mix. It is important that the cost of any project should be acceptable and affordable for bill payers as well as taxpayers. That will be an important principle in the negotiations, but if we are successful in that, it will make the contribution my hon. Friend describes.

[Caroline Lucas (Brighton, Pavilion) (Green)]

May I put it on the record that there is not cross-party consensus on nuclear power? My question is about renewables. Investment in renewables is at an all-time low. Funding streams for clean energy are at their lowest level since 2008, despite solar and wind being the cheapest form of new electricity generation. I want to ask the Secretary of State again how he can justify this multimillion deal to prop up an outdated and hugely costly technology. The chief executive of National Grid himself has said that baseload is an outdated concept because the cost of batteries will come down very quickly and that technology will be much cheaper than new nuclear by the time it comes on board. Renewables are much cheaper and safer, and they are ready now. Why does he not choose them?

[Greg Clark]

The hon. Lady has, as she describes, a fundamental disagreement: she does not see any benefit from nuclear to the resilience and supply of our electricity. That has long been her view, but I am surprised that she would talk down our country’s achievements on renewables. She should know that as a result of decisions taken by this Government and our predecessor, we are now the leading nation in the world for the deployment of offshore wind. Taking a strategic approach and investing in the future with a pipeline, just as we propose for new nuclear, has resulted in jobs being created around the towns and cities, in particular the coastal towns, of this country. I would have thought she would recognise and welcome that.

[Mr John Whittingdale (Maldon) (Con)]

Does my right hon. Friend agree it is important to maintain not just diversity of supply but diversity of suppliers within the nuclear industry? Will he therefore welcome the progress made in the construction of unit 3 of the Fangchenggang power station in China, which is the reference plant for the proposed HPR1000 reactor at Bradwell-on-Sea? Will he reaffirm his support for that project, subject to the generic design assessment and regulatory approvals?

[Greg Clark]

I agree with my right hon. Friend that having a diversity of energy sources is important, but so is having some degree of competition between suppliers. That is why I referred in my statement to the pipeline that is in prospect. On the GDA process, we of course welcome progress through that. For each of these projects, it is foundational that the safety case is demonstrated. It is important that they should meet that, but it is also important that they demonstrate that they offer value for money for both the taxpayer and the bill payer. In each of these cases, negotiations will focus on that as well as on other aspects.

[John Woodcock (Barrow and Furness) (Ind)]

Is not a key part of lowering the strike price for Wylfa that the Government are now proposing a direct stake in the project? If that is the case with the Japanese firm Hitachi and the Japanese Government, surely the Secretary of State will offer the same deal to Toshiba for NuGen in Moorside, which will sustain up to 20,000 Cumbrian jobs.

[Greg Clark]

I recognise the support for the nuclear industry that the hon. Gentleman espouses. This is a statement about a very good development in a particular negotiation. He refers to the project at Moorside. As he knows, it is not at the same stage. We are responding to recommendations of the National Audit Office and the Public Accounts Committee to consider other financing models. It is the start of a negotiation, but I feel confident that we should take that step to commence.

[Sir Desmond Swayne (New Forest West) (Con)]

But it is a nationalisation, isn’t it?

[Greg Clark]

No. The NAO report noted that all major energy projects have some involvement with the state. That is a feature of the current market not just in this country but around the world. We want to drive the best value for money for both the taxpayer and the bill payer.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Now that the British Government have decided to invest directly in nuclear projects, surely they will be doing the same for other energy projects, such as the Swansea Bay tidal lagoon, or will this be determined solely on the basis of the contract for difference financing model?

--- Later in debate ---

[Greg Clark]

We have decided to enter a period of negotiations and consider the NAO and PAC recommendations. This is an announcement about this particular project. The House will see me make an update as we progress with the negotiations.

[Bob Blackman (Harrow East) (Con)]

One of the consequences of the Labour party’s prevarication on the nuclear industry has been the deskilling of that industry. Will my right hon. Friend expand on his plans for skilling up our workforce, particularly our young people, so they get the opportunity to work in this thriving industry?

[Greg Clark]

My hon. Friend is absolutely right. I had the pleasure of visiting the National College for Nuclear in Somerset a couple of weeks ago. Seeing the opportunities that will be available to the next generation of nuclear engineers is an inspiring sight. I am pleased that this is now available for them.

[Matt Western (Warwick and Leamington) (Lab)]

The Secretary of State will be well aware that several years ago the German Government took the decision to decommission their nuclear reactors and invest heavily in renewables and other suppliers. Given the significant cost advantage of offshore wind and the UK’s geographic advantage in delivering it, what do the UK Government know that the German Government do not?

[Greg Clark]

I am surprised the hon. Gentleman mentions that, because one of the problems Germany has faced is that the return to coal has increased the pressure on its greenhouse gas emissions. I checked before I came into the Chamber, and coal was contributing just 1% of our current electricity generation, compared with 20.5% from nuclear. If we are serious about meeting our climate change ambitions, we have to take decisions that are consistent with that.

[Mr David Jones (Clwyd West) (Con)]

I congratulate my right hon. Friend on his statement, which will be widely welcomed in north Wales where Wylfa is such an important part of the regional economy. On timescale, he mentioned that the negotiations will be subject to, among other things, the requirements of state aid. Are we to infer from that that he anticipates the negotiations will be complete before 29 March next year, after which one would hope state aid would not be a consideration?

[Greg Clark]

My right hon. Friend is ingenious in his scrutiny of the timetable. If we start the negotiations on the regime while a member of the EU, it seems to me that we would not want to delay their completion until the date of Brexit.

[Catherine West (Hornsey and Wood Green) (Lab)]

What reassurances can the Minister give on genuine consultation with local communities over the long-term considerations of nuclear waste?

[Greg Clark]

The hon. Lady raises a very important point. The treatment and storage of nuclear waste is part of the consultation at the moment. Part of the safety assessment for all new and current nuclear plants is to make sure that the waste is stored and eventually disposed of safely, and part of any contract needs to provide for the money to address that.

[Richard Graham (Gloucester) (Con)]

I totally agree that starting the negotiations with Horizon, based in the Gloucester business park, to secure replacement nuclear capacity and to deal with increased demand for electricity is a very good thing. I wish my right hon. Friend all good luck in securing a balance of advantages to the taxpayer between a lower strike price on the one hand and—no doubt—some cost and construction risk on the other. The aspects he highlighted—greater security, low carbon, greater diversity, jobs, supply chains—all apply equally to the fabulous tidal lagoon project mooted for Swansea. I do hope he can secure a positive response to the Hendry review as soon as possible.

[Greg Clark]

I anticipated the direction in which my hon. Friend was heading. He will know that, as we have done in this case, we need to offer and obtain value for money for the taxpayer and the consumer. Just as in this case, that is part of the assessment to be made of the tidal lagoon proposal.

[Mr Clive Betts (Sheffield South East) (Lab)]

One aspect of a future nuclear strategy the Secretary of State did not deal with is small modular reactors. I have written him several emails about this. Davy Markham, in my constituency, is one of the few places that can actually machine the largest parts for these reactors, but it is in receivership. The receiver is selling off this capacity, and currently it looks as if it will go overseas. Will the Secretary of State take another look to see what role he and his Department can play in drawing up a plan to save that capacity for this country and make sure it forms an important part of his future industrial strategy, rather than simply being sold off to the highest bidder overseas?

[Greg Clark]

I referred in my statement to the nuclear sector deal and, in particular, investment in innovation in advanced nuclear technologies, which is the area the hon. Gentleman mentions. That initiative, which we will launch with the sector, is forthcoming, and of course I am happy to meet him to discuss the firm in his constituency.

[Mr Robert Goodwill (Scarborough and Whitby) (Con)]

The Secretary of State in his statement highlighted the need to drive down the cost of the construction and operation of this new generation of nuclear reactors. In that regard, are we likely to see more reliance on offsite modular construction techniques? If so, will that present opportunities not just for Wales but right around the country, including for the expertise that already exists on the Tyne, the Wear, the Tees and, of course, the Humber?

[Greg Clark]

My right hon. Friend is absolutely right. In the sector deal, we will set out the opportunities for small modular reactors, which we have been discussing and developing with the sector.

[Chris Ruane (Vale of Clwyd) (Lab)]

I pay tribute to my hon. Friend the Member for Ynys Môn (Albert Owen) for his tireless efforts in lobbying for this. He is Mr Energy Island. This £13 billion investment could be multiplied if we get the timing, co-ordination and planning right. Central Government need to co-operate with the Welsh Government, local government, the rail companies, further education, higher education and the private sector. Will the Secretary of State meet a cross-party delegation of north Wales MPs to make sure we get this crucial aspect right?

[Greg Clark]

I certainly will. The hon. Gentleman is absolutely right. As we have discussed across the Chamber, one of the benefits of a clear pipeline is the ability to plan ahead and maximise the local opportunities to the benefit of his constituents and many others in Wales.

[Mark Menzies (Fylde) (Con)]

I welcome the Secretary of State’s statement and continued support for the nuclear industry. Will he look at Springfields, the nuclear fuel manufacturer, which employs 1,200 people in my constituency, and do everything he can to ensure that the next generation of nuclear fuel is made right here in the UK?

[Greg Clark]

My hon. Friend is a consistent and passionate advocate for Springfields in his constituency. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Watford (Richard Harrington), who is responsible for industry, will be visiting very shortly. It is a matter for the company where it sources its fuel, but I know that my hon. Friend’s representations will be heard.

[Nigel Mills (Amber Valley) (Con)]

I urge the Secretary of State to back small modular reactors, which could be the solution for lower-cost nuclear energy. Is there more the Government can do to help the industry bring forward these ideas so that we can be a leader in the world and not a follower?

[Greg Clark]

My hon. Friend is absolutely right. We announced £56 million of research and development for small modular reactors last year, and we are now looking at the financing and the regulatory framework. I mentioned the forthcoming nuclear sector deal. He will see substantial reference to this point in that agreement.

[Mark Pawsey (Rugby) (Con)]

Today’s announcement is important and good news for the supply chain for the new nuclear plants. I wonder if I might join my hon. Friend the Member for Gloucester (Richard Graham) in asking the Secretary of State whether he anticipates a similar good news announcement for companies in the supply chain for the Swansea Bay tidal lagoon, such as GE Power based in Rugby.

[Greg Clark]

My hon. Friend tempts me to make a different statement from the one I made, but I note and have heard before his consistent advocacy of the benefits of that project to his constituency.

[David T. C. Davies (Monmouth) (Con)]

Has my right hon. Friend noted a cross-party view in the House that £92.50 is the absolute maximum we should be paying for energy generation, and will this feature in his deliberations on further energy projects?

--- Later in debate ---

[Greg Clark]

We made a commitment that the strike price agreed for Hinkley would be the high-water mark for new nuclear, and I note my hon. Friend’s recommendation that that apply more generally.

[David Morris (Morecambe and Lunesdale) (Con)]

In my constituency, we have two nuclear power stations, which is welcome news for my constituents, but we need a third. We have the site—the seventh site—and I could line up five developers under this proposal. Would the Secretary of State like to meet to discuss this further?

[Greg Clark]

I am happy to do that. I fondly remember a visit I made to a nuclear power station in my hon. Friend’s constituency some years ago. Perhaps he could bring me up to date with developments since.

[Several hon. Members rose—]

[Kevin Foster (Torbay) (Con)]

Thank you, Mr Speaker; obviously you are saving the best till last.

I welcome today’s statement and the Secretary of State’s commitment to a new generation of nuclear reactors. He will be aware of the close link in France between nuclear and the navy and civil nuclear power in terms of long-term careers for those who serve in the submarines providing the deterrent. Will he do the same with our industry?

[Greg Clark]

My hon. Friend makes a very good point. The engineering skills we need in the armed forces and their civil applications can lead to careers that cross both. I will make sure that his recommendation is followed through.

[Chris Philp (Croydon South) (Con)]

I warmly welcome this announcement, which, as the Secretary of State says, will help us to maintain a balanced, low-carbon energy mix. So many of these projects can be beset by delays—Hinkley C is an example—so may I urge him to progress this initiative with a sense of urgency and to carry forward the small modular reactor competition as quickly as possible?

[Greg Clark]

I will indeed. We will have more to say in the sector deal about small modular reactors. I stress to the House that we are entering a period of negotiations, and they have to meet some important requirements, but it is in all our interests that they proceed in an orderly way. The purpose of today’s announcement is to allow us to do precisely that.

[Mr Speaker]

In a moment I shall call the hon. Member for Walthamstow (Stella Creasy) to make an application for leave to propose a debate on a specific and important matter that should have urgent consideration under the terms of Standing Order No. 24. The hon. Lady has up to three minutes in which to make her application.

Energy Policy

Greg Clark Excerpts

Thursday 17th May 2018 Written Statements

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

The Secretary of State for Housing, Communities and Local Government, my right hon. Friend the Member for Old Bexley and Sidcup (James Brokenshire) and I wish to reiterate the Government’s view that there are potentially substantial benefits from the safe and sustainable exploration and development of our onshore shale gas resources and to set out in this statement to Parliament the actions we are taking to support our position. This joint statement should be considered in planning decisions and plan making in England.

The UK must have safe, secure and affordable supplies of energy with carbon emissions levels that are consistent with the carbon budgets defined in our Climate Change Act and our international obligations. We believe that gas has a key part to play in meeting these objectives both currently and in the future. In part as a result of the UK’s diverse range of energy sources, which include natural gas, we have had competitively priced energy since 1990 while reducing carbon emissions across the economy by 49%—a leading performance among developed nations. Gas still makes up around a third of our current energy usage and every scenario proposed by the Committee on Climate Change setting out how the UK could meet its legally binding 2050 emissions reduction target includes demand for natural gas. As set out in the clean growth strategy, innovations in technologies such as carbon capture usage and storage (CCUS) have the potential to decarbonise this energy supply still further and prolong its role in our energy mix.

However, despite the welcome improvements in efficiency and innovation from companies operating in the North sea, the ongoing decline in our offshore gas production has meant that the UK has gone from being a net exporter of gas in 2003 to importing over half (53%) of gas supplies in 2017 and estimates suggest we could be importing 72% of our gas by 2030. Our current import mix, via pipelines from Norway and continental Europe and LNG terminals that can source gas from around the world, provides us with stable and secure supplies. However, we believe that it is right to utilise our domestic gas resources to the maximum extent and exploring further the potential for onshore gas production from shale rock formations in the UK, where it is economically efficient, and where environmental impacts are robustly regulated.

We also believe that further development of onshore gas resources has the potential to deliver substantial economic benefits to the UK economy and for local communities where supplies are located by creating thousands of new jobs directly in extraction, local support services, and the rest of the supply chain. A potential new shale gas exploration and production sector in the shale basins of England could provide a new economic driver. We also see an opportunity to work with industry on innovation to create a “UK Model”—the world’s most environmentally robust onshore shale gas sector—and to explore export opportunities from this model, a core theme of our modern industrial strategy.

But to achieve these benefits, we need to work with responsible companies prepared to invest in this industry as they proceed with the exploration process, to test the size and value of the potential reserves and to ensure that our planning and regulatory systems work appropriately while assisting local councils in making informed and appropriate planning decisions. So we are setting out a series of actions, including those committed to in the Government’s 2017 manifesto to support the development of shale gas extraction.

Planning

The UK has world-class regulation to ensure that shale exploration can happen safely, respecting local communities and safeguarding the environment. The development of the shale gas industry so far has already led to millions of pounds being invested in the UK, supporting businesses and the supply chain, and creating British jobs. We have recently seen four planning approvals for exploratory shale development. The Government remain fully committed to making planning decisions faster and fairer for all those affected by new development, and to ensure that local communities are fully involved in planning decisions that affect them. These are long-standing principles. No one benefits from the uncertainty caused by delay which is why, in September 2015, Government set out a range of measures to help ensure every planning application or appeal was dealt with as quickly as possible.

However, recent decisions on shale exploration planning applications remain disappointingly slow against a statutory time frame of 16 weeks where an environmental impact assessment is required. So we are announcing a range of measures to facilitate timely decisions. These measures only apply in England.

Planning policy and guidance

This statement is a material consideration in plan making and decision taking, alongside relevant policies of the existing national planning policy framework (2012), in particular those on mineral planning, including conventional and unconventional hydrocarbons.

Shale gas development is of national importance. The Government expect mineral planning authorities to give great weight to the benefits of mineral extraction, including to the economy. This includes shale gas exploration and extraction. Mineral plans should reflect that minerals resources can only be worked where they are found, and applications must be assessed on a site by site basis and having regard to their context. Plans should not set restrictions or thresholds across their plan area that limit shale development without proper justification. We expect mineral planning authorities to recognise the fact that Parliament has set out in statute the relevant definitions of hydrocarbon, natural gas and associated hydraulic fracturing. In addition, these matters are described in planning practice guidance, which plans must have due regard to. Consistent with this planning practice guidance, policies should avoid undue sterilisation of mineral resources, including shale gas.

The Government have consulted on a draft revised national planning policy framework (NPPF). The consultation closed on 10 May 2018. In due course the revised national planning policy framework will sit alongside the written ministerial statement.

We intend to publish revised planning practice guidance on shale development once the revised national planning policy framework has been launched ensuring clarity on issues such as cumulative impact, local plan making and confirmation that planners can rely on the advice of regulatory experts.

Planning decision making

To support a decision-making regime that meets the future needs of the sector we will progress our manifesto commitments by:

Holding an early-stage consultation, in summer 2018, on the principle of whether non-hydraulic fracturing shale exploration development should be treated as permitted development, and in particular on the circumstances in which this might be appropriate.

Consulting, in summer 2018, on the criteria required to trigger the inclusion of shale production projects into the nationally significant infrastructure projects regime.

Further, we will strengthen community engagement by consulting in due course on the potential to make pre-application consultation a statutory requirement.

Support for those involved in decision making

We are aware that the shale applications and the planning process can be complex for local authorities. Building capacity and capability within local authorities to deal with shale development is a vital step towards speeding up decision making. We will help achieve this by announcing today:

The launch of a new £1.6 million shale support fund over the next two years to build capacity and capability in local authorities dealing with shale applications.

The creation of a new planning brokerage service for shale applications to provide guidance to developers and local authorities on the planning process to help facilitate timely decision making. The service would focus exclusively on the planning process and will have no role in the consideration or determination of planning applications. The service will not comment on the merits of a case and will also have no role in the appeals process.

In addition, the Government recognise that early engagement with local authorities, including capitalising on formal pre-application discussions, is critical in building confidence in decision making and securing support for development proposals and set realistic timeframes for decisions. We expect this to be formalised by a planning performance agreement providing certainty for all parties. And we then expect all parties—including decision makers in local authorities—to stick to the timetable.

Opportunities for redress

While we are confident that the measures announced in this written ministerial statement will speed up decision making on shale applications, we cannot be complacent. Therefore:

We will continue to treat appeals against any refusal of planning permission for exploring and developing shale gas, or against any non-determination as a priority for urgent determination by the planning inspectorate, making additional resources available where necessary.

Under the written ministerial statement in 2015 the criteria for recovering planning appeals were amended to include proposals for exploring and developing shale gas. This was applied for a two-year period subject to further review. The Secretary of State for Housing, Communities and Local Government has conducted a review and remains committed to scrutinising appeals for these proposals. We are therefore announcing that the criteria for considering the recovery of planning appeals are continued for a further two years. The new criterion is added to the recovery policy of 30 June 2008, Official Report, column 43WS.

The Secretary of State for Housing, Communities and Local Government will actively consider calling in shale applications particularly where statutory deadlines have been exceeded. Each case will be considered on its facts in line with his policy. Priority timeframes for urgent determination will be given to any called-in applications.

The Government continue to commit to identifying underperforming local planning authorities that repeatedly fail to determine oil and gas applications within statutory timeframes. When any future applications are made to underperforming authorities, the Secretary of State will consider whether he should determine the application instead.

Shale Regulator

The UK regulatory regime for shale gas is considered among the most robust and stringent in the world. However, we acknowledge that it is also complex, with three regulators, the Environment Agency, the Health and Safety Executive and the Oil and Gas Authority, all with responsibilities for regulation. It is not always transparent to both the public and industry who is responsible for what. Therefore, the Government are setting up a shale environmental regulator which will bring the regulators together to act as one coherent single face for the public, mineral planning authorities and industry. We intend to establish the regulator from the summer.

We anticipate that the plans for the shale environmental regulator and future consultations will only apply in England.

Community Benefits

We strongly believe that communities hosting shale gas developments should share in the financial returns they generate. The Government welcome the shale gas companies’ commitment to make set payments to these communities, which could be worth up to £10 million for a typical site. Actions to support local communities are an important complement to the planning actions set out above. With that in mind, we want to go further, and we will work with industry to see how we can improve this offer.

In addition to this offer we also announced in the autumn statement 2016 that the shale wealth fund will provide additional resources to local communities, over and above industry schemes and other sources of Government funding. Local communities will benefit first and determine how the money is spent in their area.

[HCWS690]

Oral Answers to Questions

Greg Clark Excerpts

Tuesday 1st May 2018 Commons Chamber

[Nigel Mills (Amber Valley) (Con)]

6. What steps he is taking to ensure that the industrial strategy benefits consumers through increased competition.

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

The industrial strategy makes it clear that a competitive UK economy in which firms compete on price, service and innovation is one that serves consumers best. Our recently published Green Paper, “Modernising Consumer Markets”, sets out proposals to ensure that consumers benefit from new technologies and, in particular, that consumers’ data must be used to benefit them and not to act unfairly against them.

[Edward Argar]

I welcome that response. In ensuring that markets work for consumers, it is important that they work for vulnerable consumers, including those with mental health issues or dementia. Will my right hon. Friend enlarge on what he is doing to ensure that the markets work for those sorts of consumers?

[Greg Clark]

It is important that providers of services take into account the struggles of people suffering from mental ill health or dementia. The Green Paper sets out proposals requiring that minimum standards be applied, especially for utilities. In that regard, I applaud the work of the Alzheimer’s Society, which has launched the dementia-friendly utility guide, in which several companies are participating. That will help to make sure that people who deal with vulnerable consumers can assist them with bills, booking appointments and suchlike.

[Nigel Mills]

Does my right hon. Friend think that the competition regime that we have in the UK is fit for purpose, and are there sufficient resources to enable it to review all the major deals that seem to keep happening?

[Greg Clark]

I do think it is necessary to keep it under review, hence the Green Paper, because with the rise of new technologies, there are new challenges for regulators and new perspectives are required on mergers. We have increased the funding for the Competition and Markets Authority. My hon. Friend will have noticed that I appointed as chairman of the CMA Andrew Tyrie, who I think everyone on both sides of the House would recognise is a good, robust champion of the consumer.

[Kevin Brennan (Cardiff West) (Lab)]

22. One of the ways in which consumers are very often ripped off is through the practice of drip pricing in online purchases—particularly through the practice of outlaw companies such as Viagogo, for example, which uses it. What work is the right hon. Gentleman doing in relation to that and with his colleagues from the Department for Digital, Culture, Media and Sport?

[Greg Clark]

The hon. Gentleman raises a very important point. Again, this is at the heart of the Green Paper, which looks at how new technologies can disadvantage consumers. In fact, in the case that he mentions, prosecutions are in train. Very robust action is being taken against that kind of abuse.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Will the Secretary of State come down from the clouds? He knows that the biggest damage to all consumers in this country is coming from leaving the European Union. Did he see the LinkedIn report this morning that says that talented people in our country are fleeing overseas? Is that good for consumers?

[Greg Clark]

That was an ingenious piece of shoehorning, I must say. Part of our commitment is to make sure that we have a free trade agreement with the rest of the European Union that allows us to continue to serve markets right across Europe and the world. If the hon. Gentleman looks at the success of employment, including in his constituency in recent months, he will see that companies are employing people at rates not seen for many years.

[Ben Bradley (Mansfield) (Con)]

2. What steps he is taking to support growth in the small business sector.

--- Later in debate ---

[Damien Moore (Southport) (Con)]

T1. If he will make a statement on his departmental responsibilities.

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

Over the six weeks since our last questions, I have launched, as colleagues have heard, the creative industry sector deal, a partnership with industry to unlock growth for creative businesses across the UK. Last week, more than 50 leading technology businesses and organisations united to launch another sector deal worth £1 billion to put the UK at the forefront of artificial intelligence. Our industrial strategy is building confidence across the economy, which I saw at first hand in Luton a few weeks ago with the announcement that Vauxhall’s new Vivaro van will be made in the UK, securing 1,400 jobs and the long-term future of the plant.

[Damien Moore]

Many small businesses in my constituency of Southport are still struggling despite the Government’s various business rate relief schemes. What programmes and initiatives aimed at small business can my right hon. Friend recommend to help small business owners who are struggling in my constituency?

[Greg Clark]

I remember with great pleasure visiting a small dairy business—a milk business—with my hon. Friend. I hope that it is thriving. Since that visit, I am delighted to say that a number of loans from the Start Up Loans Company, totalling about £800,000, have benefited businesses in Southport. The Liverpool city region growth hub has been established to give advice and support to small businesses, too.

[Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)]

I welcome this morning’s news that the EU has secured a further 30-day exemption from the US’s steel tariffs. However, that merely prolongs the uncertainty facing the sector. What steps is the Secretary of State currently taking to secure a full UK exemption when the temporary one ends on 1 June, and when will his Department respond to the steel sector deal, a proposal crucial to the long-term sustainability of the sector?

[Nigel Huddleston (Mid Worcestershire) (Con)]

T2. What plans does his Department have to keep Britain a global leader in artificial intelligence?

[Greg Clark]

The sector deal will help, and has had an enthusiastic reception from the industry. This country is leading the way in the development of artificial intelligence. The Alan Turing Institute is attracting scholars from across the world. One part of the deal is to ensure that we have an extra 8,000 specialist computer science teachers in schools to ensure that the next generation can reap the rewards.

[Rosie Cooper (West Lancashire) (Lab)]

T5. Will the Secretary of State make an assessment of the potential merits of placing a requirement on private businesses seeking the long-term lease of roofs for solar panel fittings to inform their potential customers of their mortgage providers’ policies on such fittings before the lease is agreed?

--- Later in debate ---

[Greg Clark]

As the hon. Gentleman knows, this is why we have the Competition and Markets Authority, which is virtually certain to conduct an inquiry into this matter, precisely to look into all the aspects to which he referred. I mentioned that the CMA has a new chair in Andrew Tyrie, and I am sure that the issue will receive the most rigorous scrutiny.

[Stephen Kerr (Stirling) (Con)]

T4. The subsidy available to energy plant for burning wood is causing distortions in demand for virgin and recycled wood, which is constricting supply and increasing input costs for businesses such as Norbord in Cowie. Will the Minister meet me and representatives of the wood panel industry to hear at first hand about the issues that they are facing and the consequences?

--- Later in debate ---

[Greg Clark]

My colleagues in the Department are very clear that we need to make it possible, through our agreement with the European Union, to trade not only without tariffs but with the minimum of frictions. The hon. Lady describes some elements of that. It is absolutely the purpose of the negotiations to avoid the introduction of any unnecessary frictions.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

T9. Post Brexit, if the European Union restricts access to the Galileo satellite project, will the Minister undertake for us to restrict its access to the communications infrastructure of the Falklands and Ascension Island?

[Mr Jim Cunningham (Coventry South) (Lab)]

The Minister will know that I have Jaguar Land Rover in my constituency. What will be the impact on Jaguar Land Rover of the changes to tax on diesel engines?

[Greg Clark]

The hon. Gentleman knows, and the House knows, that there has been a fall in sales of diesel engines, not just in this country but across Europe. That has been the reason for some of the termination of the contracts there. We will be setting out, as a Government, the future regulatory path to clean up our roads of emissions. In doing that, we will be consulting with the industry.

[Martin Vickers (Cleethorpes) (Con)]

When does the Secretary of State anticipate being able to make an announcement about the Greater Grimsby town deal?

[Greg Clark]

I do not have a date in mind, but my hon. Friend’s persistent urging of me will make sure that it will be as soon as it can practicably be done.

[Laura Smith (Crewe and Nantwich) (Lab)]

Have the Government made any assessment of whether social care providers will go bankrupt this year due to the ruling on sleep-in shifts and the minimum wage, and whether this will have any impact on social care? If so, will they provide that assessment to the House?

--- Later in debate ---

[Jo Swinson (East Dunbartonshire) (LD)]

The industrial strategy rightly sets out opportunities arising from the new technology and STEM—science, technology, engineering and maths—sectors but says little about the increasing importance of skills that are unique to human beings, such as care. Does the Secretary of State recognise that part of our answer to increasing automation should be expanding employment in the care sector and the value we attach to it? If so, will he start treating this as a strategic priority?

[Greg Clark]

It is indeed such a priority. I am delighted to see a copy of the strategy in the hon. Lady’s hands. In fact, one of the four grand challenges that we have set out regarding areas in which we can be a world leader is to develop the opportunities that arise from an ageing population, and care is absolutely central to that.

Domestic Gas and Electricity (Tariff Cap) Bill

Greg Clark Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 30th April 2018 Commons Chamber

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

I beg to move, That the Bill be now read the Third time.

Creating a more affordable and competitive energy market that works for British families was a central pillar of the Government’s manifesto last year. Every household in the country depends on gas or electricity, or both—they are essential services on which we all rely. On average, each household spends about £1,250 a year on energy at home. It is one of our biggest household bills, and for the poorest 10% of households, energy is about 10% of their annual household expenditure. Yet in the past few years, prices for customers on standard variable and default tariffs have not declined; they have continued to increase. The further price hikes we have witnessed in recent weeks from a number of the big six suppliers are consistent with the analysis of the Competition and Markets Authority that that part of the market is not operating competitively.

The Government’s ambition is to make sure that Britain has an innovative, competitive, productive and prosperous economy. To underpin that, we need an energy market that works to the benefit of consumers, workers, investors and, of course, the environment. This Government recognised, as did the CMA, that for 11 million customers on standard variable tariffs, the market is not working. In many cases, prices are above what they would be in a competitive market.

The Bill therefore focuses narrowly on a problem that has been exposed as highly significant: overpricing for consumers who have remained loyal to their energy providers. This segment of the market has displayed weak competition. Such behaviour on the part of the energy companies must come to an end, and the Bill, along with other measures, will help to end the abuse. The Bill requires Ofgem to introduce a temporary absolute tariff cap on SVTs—default rates—that will protect consumers. That will go alongside complementary measures enacted by this Government, including the roll-out of smart meters, together with other reforms that Ofgem is making to the market. This has been welcomed by new entrants in the market, which are providing more choice for consumers that ever before. A number of them provided evidence during the Bill’s scrutiny.

I would like to take a moment to express my gratitude to hon. Members for the way in which they have engaged with the Bill throughout its passage. I thank Members on both sides of the House who have contributed to its development, especially those who served on the Select Committee, which gave the Bill valuable pre-legislative scrutiny, and those who served on the Public Bill Committee. The discussions were excellent and forensic, and the Bill has been strengthened during its passage through the House. I pay particular tribute to and thank my right hon. Friend the Minister for Energy and Clean Growth. I also thank the Clerks, the House authorities, the experts who gave oral evidence to the Committee, the organisations that took time to provide expert written evidence and my superb officials, who will continue their tireless efforts as the Bill proceeds.

I thank the Opposition Front-Bench team. In characteristic style, the hon. Member for Southampton, Test (Dr Whitehead) brought to bear his long-standing interest in and deep knowledge of these matters. Members have offered challenges and insight throughout the Bill’s passage, and their contributions will benefit the legislation. The debates have thrown light on important issues, such as the need for Ofgem to ensure that there is transparency when setting and reviewing the cap and to consider all customers, especially the vulnerable and the disabled, when doing so.

Our debates have resulted in a productive discussion on the important issue of the need for the exemption of green tariffs, about which my right hon. Friend the Minister for Energy and Clean Growth has written to members of the Bill Committee. My right hon. Friend is a passionate champion of green issues in the House, and that, combined with her advocacy for the consumer, has made this an ideal first Bill for her to take forward in her current role. We are grateful to her for that.

The debates have sent a clear and consistent message from the House that its expectation is that Ofgem should implement a robust price cap to be in place for the winter. The Bill will require Ofgem to protect consumers on standard variable tariffs. It will ensure that loyalty is no longer penalised while also ensuring that efficient suppliers can continue to do business.

As the House knows, the Government are committed to reforming the energy market. The Smart Meters Bill, which is progressing through the House of Lords as we speak, represents another important stepping stone towards a more competitive market. The Domestic Gas and Electricity (Tariff Cap) Bill will ensure that British families are protected as we correct an intolerable situation in which, according to the independent competition authorities, consumers have been exposed to paying £1.4 billion a year more than they would in a competitive market. That abuse should end. The Bill will not only give Ofgem the powers to achieve that, but introduce the requirement that it should do so, and I commend it to the House.

GKN

Greg Clark Excerpts

Tuesday 24th April 2018 Commons Chamber

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

With your permission, Mr Speaker, I shall make a statement about the takeover bid by Melrose Industries plc for GKN plc. On 29 March, Melrose announced that holders of 52% of GKN shares had accepted its offer, and as of last Friday, the figure had reached 88.5%.

As I informed the House on 27 March, the Enterprise Act 2002 sets out three circumstances in which a takeover can be referred to the Competition and Markets Authority on public interest grounds. They are financial stability, media plurality and national security. Any such reference must take place within four months of the completion of the transaction, and must result from a quasi-judicial decision, made impartially, on the basis of an open mind and solely on the evidence presented. No grounds were advanced for a reference on the grounds of media plurality or financial stability. To inform my decision on national security, I asked for a comprehensive assessment to be made by the Ministry of Defence and other bodies concerned with our national security.

The Secretary of State for Defence has written to advise me that the MOD has completed its detailed analysis and has agreed with Melrose a set of undertakings, specifically: to ensure that the Government are informed in advance of any plans to divest a business, a component of a business, or assets which engage in activities that the Ministry of Defence considers to have national security implications; to ensure that the Government have early visibility of any prospective purchasers, including structures of consortia and persons holding significant influence and control; to prevent the disposal of the relevant business, components of a business or assets without the consent of the Government; to ensure that the Government receive suitable protections from any subsequent purchaser in the event of any future sale of elements of the business; to ensure the continuation of contractual obligations to protect intellectual property and classified information; to ensure the continued maintenance of any capabilities with a national security dimension; and to provide the MOD with powers to inspect information and facilities to ensure the protection of classified information.

Those undertakings are combined with the undertakings that Melrose agreed to make in response to my letter of 26 March, including undertakings not to dispose of the aerospace business for at least five years without the Government’s consent; to maintain a UK stock exchange listing for at least five years; to ensure that the business remains headquartered in the UK, and that a majority of directors are resident in the UK; to ensure that both the aerospace and Driveline divisions retain the rights to the GKN name; and to guarantee that spending on research and development will take place on at least GKN’s previous level, amounting to a minimum of 2.2% of sales for the next five financial years. In important respects, those undertakings go beyond commitments given by the previous management team. Melrose has also agreed to meet my officials and me every six months to provide updates on its ownership of GKN.

On the basis of the commitments given relating to national security, the Ministry of Defence concluded that statutory intervention was not required. That is consistent with the other assessments that I have received. On the basis of the assessments that I have considered and the undertakings that have been entered into, my judgment is that there are not reasonable and proportionate grounds to make a statutory intervention on the grounds of national security.

GKN is a very important business, performing vital work in industries—aerospace and automotive in particular—with an expanding global market in which British innovation and excellence offer great opportunities. This takeover bid has entailed a vigorous debate about which of the two alternative British managements could most credibly reap those opportunities. The shareholders chose—initially by a small majority, and finally more substantially—new management. All UK public companies are subject to that challenge of how they can best be run: it is an essential part of the competitive business environment for which Britain is renowned.

The takeover bid has been important in wider ways. It is the first contested bid in which the new regime of legally binding commitments on future conduct has applied. The commitments that have been made reflect the strong interest of stakeholders—including employees, UK taxpayers, suppliers, and research and development partnerships—in knowing the future intentions of a bidder, provided in a way that is binding. These responsibilities, which broadly reflect those placed on directors of ongoing businesses by section 172 of the Companies Act 2006, are important to ensure that the longer-term and strategic interests of our economy are considered and addressed during takeover bids.

Now that such an ability to make post-offer undertakings has been established, I expect them to be implemented. The new management’s stewardship of these important businesses carries with it important responsibilities for our economy and our country. I look to the management to honour its commitments in both the spirit and the letter, and to create a strong future for GKN, its employees, its suppliers, and the industrial sectors in which it will play a major role.

I gave the House a commitment that I would carry out my legal responsibilities seriously, meticulously and fairly, and that I would keep the House up to date at every phase of these proceedings. I believe that I have done so, and I commend my statement to the House.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

I thank the Secretary of State for giving me advance sight of his statement.

There are two issues that I must raise today: the fact that the reported assurances obtained by the Government, both in the letter of 27 March and subsequently, are not sufficient to guarantee the security of the long-term prospects of the company and, indeed, the workforce; and the inadequate capacity of the takeover regime to protect companies outside the very limited grounds of national defence, media plurality and financial stability.

First, as I made clear last month, the assurances obtained by the Government in Melrose’s letter of 27 March were sadly inadequate. Apart from the first five assurances which were post-offer undertakings, what was in the letter was completely unenforceable. For example, there were no post-offer undertakings on maintaining employment or tax residency, which could easily constitute such undertakings. Indeed, the maintenance of employment is vital to our national security, and the loss of these jobs will cause the diminishment of vital skills that are integral to our defence industry.

Putting aside issues of enforceability, what of the assurances that have been reported since 27 March? The reported veto power that the Secretary of State for Defence has to stop the sale of certain businesses will not, I am afraid, solve the national security problem. Melrose reportedly has a short-term outlook which undermines the long term that is required for defence projects. That is important, and a veto on the sale of certain parts of the business by the Defence Secretary will not help significantly. Sadly, the Government’s failure to address the short-term horizons of Melrose may damage the capability of a business to deliver projects that could last for 10, 15 or 20 years.

Secondly, our takeover regime is inadequate, and the Secretary of State is acutely aware of that. If a takeover falls outside the grounds of national defence, media plurality and national stability, the Secretary of State cannot act, even though the takeover may be harmful for the business, harmful for employees, harmful to research and development, and harmful to supply chains.

Let us take the case of Unilever. Last year it was threatened with a takeover, and there was nothing that the Government could do because the takeover fell outside the three public interest exemptions. Unilever has since commented on the inadequacy of the UK takeover regime, and its recent decision to place its headquarters in the Netherlands was, as reported by the Financial Times, arguably driven by a desire to escape the poor safeguards for takeovers in the UK. Labour Members have called on the Government to broaden the public interest test. The measures that the Government have proposed so far are not good enough. We know that, in GKN’s case, they already had the power to act and did not do so. However, our takeover rules would not have prevented Unilever from being taken over had Kraft been prepared to follow through, because that had nothing to do with any of the three exemptions.

I agree with the Secretary of State that our takeover regime must be open enough to encourage foreign investment, but it must also protect against short-termism and long-term damage to our economy and national security. Arguably, too often it is short-termism that prevails. Only this week we heard reports that the hedge funds that bought GKN shares to make Melrose’s takeover possible are now targeting Melrose, shorting the company on the stock exchange.

What we needed from the Secretary of State today was not just a waving through of the deal, but action, both in obtaining concrete assurances from Melrose on the future of GKN and its workforce, and in the form of clear plans to reform and widen our takeover regime to protect British businesses. I fear that the short-term predators already smell their next victim—and it is not just Melrose; it is Britain’s industrial future.

[Greg Clark]

Right from the outset, the hon. Lady has been unable to advise us of what specific undertakings she thought it was appropriate to obtain. She needs to understand that as this is a quasi-judicial decision, the statement that she made that she would block the bid would disqualify her from making that decision, as the right hon. Member for Twickenham (Sir Vince Cable) knows to his cost.

The evidence presented to me was that this was a British company taking over another British company, that no such takeover has ever been blocked on national security grounds, and that the Ministry of Defence and the other agencies said there was no reason for intervention on those grounds. I have to tell the hon. Lady that the previous directors of GKN themselves said that there was no reason for an intervention on national security grounds. She should reflect on the commitments that the Defence Secretary and I have secured to retain the aerospace division for at least five years, to ensure that the Government have the right to approve any future sale of any defence business or asset, and to invest in research and development to at least the current level. Not once in the past four months has she engaged in a similarly forensic way to set out what she thinks would be appropriate commitments.

The hon. Lady says that the commitments are inadequate, but they have been given as legal deeds and in some cases set out to the Takeover Panel as post-offer undertakings. The truth is that she has had the opportunity to engage with this matter, but having prejudiced her position by saying from the outset that the takeover should be blocked, she has given away the ability to have influence on what the regime should be.

The hon. Lady knows perfectly well what the Government’s powers on takeovers are, because the 2002 Act was passed under a Labour Government and sets out those limited powers, which are the same as in the rest of Europe. The difference between the Government and the Opposition is that when we came into government, we reformed those powers to allow post-offer undertakings to be given, so the situation when Kraft bid for Cadbury and undertakings were reneged upon cannot happen in the current circumstances. We have taken an active approach to ensuring that all stakeholders’ interests are secured, whereas the hon. Lady preferred to float above it all and simply say no before considering the evidence. We have proceeded responsibly, and she would do the employees of and stakeholders in GKN a service if she engaged more forensically in future.

[Sir Desmond Swayne (New Forest West) (Con)]

What are the sanctions if commitments are not honoured?

[Greg Clark]

Sanctions with regard to undertakings to the Takeover Panel are those for contempt of court, which include everything up to imprisonment.

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

I thank the Secretary of State for advance sight of his statement.

The Secretary of State mentioned holding Melrose to the spirit and letter of its commitments, but traders have been short selling £725 million, or 17%, of Melrose stock, effectively betting against it making a success of GKN. What action will he take if there is any breach of the spirit or letter of the commitments?

The Secretary of State did not cover jobs in his statement. I asked him following a previous statement to what extent he would require assurances to prevent assets from being stripped and jobs lost, and not just those in the MOD or national security. What assurances has he had on the financial restructuring involved in the takeover, which will mean more debt and less investment at the core of GKN? How will that situation progress the Government’s industrial strategy, and can he explain how allowing the takeover will protect the skilled jobs that we require and tackle productivity issues?

[Greg Clark]

I am grateful to the hon. Gentleman for his questions. He will know that one undertaking that has been given is a commitment to at least five years of research and development investment, including participation in the joint industry bodies, which have been a successful part of our arrangements in the aerospace and automotive sectors and are an important part of our industrial strategy. That is a valuable commitment that I would have thought the hon. Member for Salford and Eccles (Rebecca Long Bailey) and he would welcome.

The previous GKN management criticised the commitment to retain the aerospace business, saying that it should not have been entered into given that the sell-off of GKN’s automotive business had already been agreed to. It constitutes a longer-term commitment than was made during the latter period of the previous ownership.

The hon. Gentleman will understand that in obtaining commitments from a bidder, I have to bear in mind commitments that the incumbent management have or have not made. No commitments had been made on the total number of jobs, and indeed the sale programme involved a majority of the business. One of the features of today’s results announcement was that the debt of the previous business was higher than anticipated, and the plans that the new management have set out include paying it down.

[Lucy Allan (Telford) (Con)]

I thank the Secretary of State for his statement and welcome the undertakings that he has secured.

The future of GKN was determined by speculators who came on to the share register in the final weeks of the bidding process to make a quick profit. Does the Secretary of State agree that that is no way to determine the future of a great British manufacturing company, and will he now conduct a review of the takeover code to ensure that speculators cannot participate in that way in a vote to decide a company’s long-term future?

[Greg Clark]

I understand my hon. Friend’s concern, and a number of hon. Members have raised that point before. There are a couple of things to say about it. First, most people who have bought shares latterly during the takeover process bought them from longer-term shareholders, and one way in which a bid can be backed is for people to sell before the end point of that bid. That situation was looked at, appropriately, by Professor John Kay, who published a substantial review. His panel noted that one suggestion was that voting rights should accrue only if people had been on the share register for a specified period. The Kay review concluded:

“We were persuaded that the introduction of such provisions by legislation or regulation would involve practical difficulties and would be unlikely to achieve the intended effect.”

That was an expert review by a serious person, but of course in all circumstances such as this we keep our corporate governance arrangements under review, and I will certainly do that now.

[Rachel Reeves (Leeds West) (Lab)]

I would like to follow up on the point that the hon. Member for Telford (Lucy Allan) raised. Other countries have a rule that people must have been shareholders for a certain period before they can vote on a takeover deal. Some sort of financial transaction tax would also reduce short-term speculation in companies that leads to their being taken over in this fashion. I urge the Government to look again at the takeover code, particularly for businesses that are so integral to our industrial strategy and have received a lot of taxpayer funding, in this case for the R&D work that GKN has undertaken.

[Greg Clark]

I am glad that the hon. Lady mentions the R&D work, which is very important. The commitments that have been made on R&D, both to keeping up investment and to participating in R&D partnerships, are extremely important. She and her Business, Enterprise and Industrial Strategy Committee asked for undertakings to be given on that and a number of other issues, and were not satisfied with the undertakings that were offered. I persuaded the company to go further and obtained undertakings relating not only to national security but to R&D and the ownership of businesses, and I hope she will acknowledge that that is valuable.

On the hon. Lady’s point about differential voting rights for shareholders, I mentioned the John Kay report, which her predecessor Committee scrutinised—I think the right hon. Member for Twickenham (Sir Vince Cable) gave evidence backing the report’s judgment. I know that her Committee is correctly interested in keeping our arrangements up to date, and if she and her colleagues want to review these matters, what their predecessors said is a good example of how that can be done.

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

I congratulate my right hon. Friend on his statement, and on the work he has done on this difficult issue, especially in relation to securing the five-year guarantee for the aerospace business, which is unprecedented for a business such as GKN. Indeed, as he has just said, the last management refused to countenance such an arrangement. I visited the plant in my constituency a week or two ago and, despite some cynical scaremongering by some in the party opposite, the management and workers there are optimistic about the future and looking forward.

[Greg Clark]

I am grateful to my hon. Friend for his comments. It seems to me that when we establish a regime of post-offer undertakings, it is necessary to be active and to apply ourselves to the undertakings that it is important to secure. It is true that there has never been any commitment to own an important business such as that for more than five years, and I think that this will be valuable and welcomed by the employees in his constituency. I recognise his assiduousness in visiting the plant and talking to his constituents who are employed there.

[Sir Vince Cable (Twickenham) (LD)]

Further to the excellent intervention from the hon. Member for Telford (Lucy Allan), the Select Committee Chair, does the Secretary of State accept that the role of the short-term investors has been highly destabilising? They acquired 20% of the stock, they forced the takeover through and they are now short selling. If he is not persuaded of the merits of differential voting, how does he propose to deal with this problem?

[Greg Clark]

The right hon. Gentleman was not persuaded either. He commissioned a report, he had a respected and eminent individual look into this, and he gave evidence to the Select Committee to say that he was not persuaded. I have described some of the circumstances involved. Those who bought shares in the latter stages bought them from people who had decided they did not want to back the existing management. He knows that I take a great interest in ensuring that our regime of corporate governance is the best in the world. The fact that people can invest here with confidence forms an important part of our reputation. We have been successful over many years, and of course if the Select Committee wants to review the experience since the report that he commissioned, it has the ability to do that and I would be very happy to participate.

[Rachel Maclean (Redditch) (Con)]

The Minister will be aware that the global headquarters of GKN are in Redditch, and that this has been my first priority ever since we heard the news of the takeover. Is he also aware that I spoke to Melrose on Friday, and that it assured me that it has no plans to shut the Redditch office? It believes that many of the jobs will be reabsorbed into the functions of GKN. Does he agree that that is really good news, and contrary to some of the things we have heard in the media? Will he also comment on observations in the media about the Airbus relationship? Again, we have heard that the takeover could have a negative impact in that regard, but that is not what I have heard from Melrose, which thinks that the relationship could continue. Can he comment on that further?

[Greg Clark]

I congratulate and applaud my hon. Friend on being active and engaging with the new management to talk about the important headquarters function in her constituency. She has indeed secured good news from the company in that respect. I understand that the divisional heads of the aerospace and automotive businesses have been reappointed by the new management. Let us bear in mind that the incumbent management’s proposal was, latterly, that the automotive business should be sold, and that it would now be in the process of being sold. Airbus is clearly an important company, and there were some comments ascribed to it, although I do not think that they have been repeated. It will be important for the new management to set out its plans, so that all suppliers can have confidence in those relationships.

[Mr Geoffrey Robinson (Coventry North West) (Lab)]

Is the Secretary of State aware that short selling has been the decisive factor in this, and that that is a matter of great concern throughout the House? Also, he has rightly been concerned about the reputation of Melrose Industries plc for taking short-term measures. It cuts, closes and sells on at a profit. That is its reputation and, as far as I am aware, that is what it has invariably done. He has therefore sought longer-term undertakings—and five years is a significant period—that will keep the plants going and ensure that the company redoubles its commitments. However, his statement contained no indication as to whom those commitments are to be made, except presumably the Takeover Panel. What powers does the panel have to impose binding sanctions or, if necessary, to take the company through a legal process that he claims in his statement will be legally binding? On these crucial issues, he seems to have made no progress at all.

[Greg Clark]

This is the first time that any such commitment has been given on the ownership of assets for a period of five years. I have been active in establishing this regime, and I think the hon. Gentleman knows that, in my engagement with manufacturing and other industries, I have considered carefully the strategic importance of continued investment and stability. In the final analysis, there was a greater commitment to stability of ownership from the bidder than there was from the incumbent management. On the question of enforceability, I will place in the Library of the House the deeds that have been entered into in favour of the UK Government by the company. Some of them are under the Takeover Panel regime. As I said to his colleague on the Labour Front Bench, the effect of this new regime is that there will be sanctions up to imprisonment for a breach of those undertakings.

[Stephen Kerr (Stirling) (Con)]

I welcome the encouragement that my right hon. Friend gave to the Chair of the Business, Energy and Industrial Strategy Committee to look at the issues surrounding this takeover, and I am sure that the Committee will do that. Importantly, he also pointed out that this was a contest between two British management teams. Does he agree that the British taxpayer should expect companies that receive public money, either through contracts or through research and development, to be prepared to give an undertaking to take a long view when it comes to investment decisions?

[Greg Clark]

That is right, and I would also welcome consideration of these matters. Right from the beginning, I have made a commitment to the House that I would take a considered, comprehensive view and use the powers that I have, and that where I did not have statutory powers, I would say what I expected. When it comes to research and development, to the ownership of assets and, for today’s purposes, to national security, a long-term commitment is required, and it has been important to obtain undertakings in all those areas. I hope that the Committee will take a look at this.

[Frank Field (Birkenhead) (Lab)]

In his statement, the Secretary of State said:

“GKN is a very important business, performing vital work in industries—aerospace and automotive in particular—with an expanding global market in which British innovation and excellence offer great opportunities.”

Does he understand from his regular meetings with Melrose that it is thinking of adapting its business model so that these vital interests can be kept for a longer term than they would otherwise have been? If not, would this British company consider selling first to another British company?

[Greg Clark]

I am grateful to the right hon. Gentleman for his question, because I wrote and said that deliberately. I regard this company, operating in the sector that it does, as having an important long-term role. One of the reasons that there was a vigorous contest for this business was the recognition that there are immense opportunities involved. It is my purpose as Business Secretary to ensure that we reap those opportunities. That is why I requested what was in effect a change to the previous commitments that this company or any other had made, and I was able to do that on the aerospace side. As I said in response to the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), it was clearly not possible to extract another commitment on the automotive business, given that the incumbent management had committed to selling it forthwith. In the spirit of what the right hon. Gentleman has said, I think that he will reflect on what has been obtained for the first time in the UK takeover—namely, a commitment to a much longer-term perspective than had been the case, including the right for the British Government to approve any subsequent purchaser of defence assets—and agree that that is a significant step forward.

[Bim Afolami (Hitchin and Harpenden) (Con)]

I draw the House’s attention to the fact that, in the dark days before I came to this House, I spent several years in the City advising on mergers and acquisitions, and Melrose was one of the companies that I advised several times. Bearing that in mind, while there is of course a narrow range of scenarios in which the Government can intervene on a quasi-judicial basis, as the Secretary of State has already set out, will he confirm whether the Government will always ensure that we have an open globalised economy based on competition, not one in which politicians will capriciously intervene, which would be the approach of the Labour party?

[Greg Clark]

That is the right approach. The UK’s reputation for being a dependable place to invest and do business is based on clear rules and principles, and we have benefited from that. We make significant investments in the UK economy, we make significant investments in overseas companies, and we hold big assets. That is important to us, and we should be a trading nation, which means that we should be open to investment as we invest in other countries. That is the heart of our approach. However, it is important to keep the regime under review, and where there are long-term interests, such as in research and development, it is right that we have introduced an ability during a takeover bid to extract indications of how a bidder would approach things. That is what we have done in this case.

[Jack Dromey (Birmingham, Erdington) (Lab)]

It is a bleak day for British industry and British workers when a 259-year-old icon of British engineering excellence falls prey to a hostile takeover thanks to hedge funds moving in to make a quick killing. We will hold Ministers and managers to account for the promises that they have now made. Crucially, does the Secretary of State agree that the time has come for a fundamental review of our corporate takeover regime, because the idea that the British national interest can be sold down by the river by hedge funds moving in to buy 20% of a company is fundamentally wrong?

[Greg Clark]

The hon. Gentleman talks about employees’ interests, and he has fulminated about the bid for a company that has an important plant in his constituency, but he has not made a single request or proposed a single safeguard to protect those interests. I do not know whether he has met the new management of GKN—I do not think he has—but my hon. Friends the Members for Filton and Bradley Stoke (Jack Lopresti) and for Redditch (Rachel Maclean) have made the effort and have discussed the important commitments that are being made, and the undertakings that I have secured will contribute to employment stability. The difference between my hon. Friends and the hon. Gentleman is that they have rolled up their sleeves and got involved, whereas he has contented himself with making slogans from the Back Benches.

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

The aerospace division is the jewel in GKN’s crown and is a vital part of Britain’s defence industrial base, so as a former Ministry of Defence Minister, I particularly welcome the guarantees that have been provided about the future of that part of the company. Will the Secretary of State say a little more about how he has worked closely with the MOD on that? Will he also assure us that the MOD will be a part of the six-monthly reviews?

[Greg Clark]

I will indeed, and I am grateful to my right hon. Friend, who speaks with considerable authority not just as a former MOD Minister, but as an ex-serviceman. Defence considerations are important, and I work closely with the MOD, which has provided a comprehensive assessment. That is the proper basis on which those with expertise in such matters can say what is required to safeguard national security, and I promised this House that I would abide meticulously by the expert advice that I receive. I am glad that I have had access to that expertise and have made my decision based on it. Of course, when it comes to considering the future opportunities for this company, our engagement through the industrial strategy is as important in the defence sector as it in the automotive and civil aerospace sectors.

[Richard Burden (Birmingham, Northfield) (Lab)]

The Melrose takeover of GKN was approved by 52% to 48% after 20% of the company had been snapped up by hedge funds. The Secretary of State has heard calls from both sides of the House for those with short-term interests to be excluded from making decisions on takeovers and for the public interest test to be expanded to include questions about research and development. He has rejected those calls today, but he says that he keeps matters under review. What form will his review take, and when does he expect it to report?

[Greg Clark]

On the hon. Gentleman’s first point, I have said to many colleagues in the House that when it comes to shareholdings, every purchaser in the latter stages has bought from a longer-term shareholder, who has in effect expressed a judgment on the company. This Government, previous Governments and this House have looked carefully at the rights of different classes of owners and have concluded that the hon. Gentleman’s suggestion would not be the right reform. However, he knows me well and I will of course consider the assessment of the conduct of this bid, but it would be wrong to mislead him by saying that I have formed a different view. I will take an objective view of the conduct of the bid, as will others in the House. The grounds for intervention are specified in the Enterprise Act 2002, which reflects the requirements across the European Union that every member state must apply.

[Bob Stewart (Beckenham) (Con)]

The old management was British, the new management is British, and the Secretary of State appears to have secured guarantees from the new management that it will do certain things that the old management had not guaranteed. Does that not imply that those who are working for the new GKN should sleep slightly more soundly in their beds?

[Greg Clark]

My hon. Friend puts it well and succinctly. Any takeover bid will obviously involve some anxiety for employees with long service, but whether or not the bid had succeeded, this was always going to be a period of change for GKN employees. As a result of the commitments that have been given, they can have more certainty about a confident future than would otherwise have been the case.

[Darren Jones (Bristol North West) (Lab)]

In the Secretary of State’s previous statement on this issue I asked two questions: whether the Government would ask Melrose for a commitment to the aerospace division of longer than five years, based on advice both from key customers and other stakeholders; and whether the Government would have a conversation with Airbus about the consequences of a short-term commitment of five years? Will the Secretary of State confirm to the House whether he asked Melrose for a commitment of longer than five years and whether he had a conversation with Airbus? If not, why not?

[Greg Clark]

On the hon. Gentleman’s first point, the commitment to five years is the longest that has ever been given and was not something that Melrose was willing to offer the Business, Energy and Industrial Strategy Committee. In fact, the further undertakings that have been entered into on defence matters, which are of course in the aerospace division, go beyond that period.

I mentioned in reply to my hon. Friend the Member for Redditch (Rachel Maclean) that Airbus’s chief executive has not repeated the reports that were made previously. I have discussed the matter with Melrose and its intention is to develop a relationship that it hopes will prosper in the future.

[Kevin Foster (Torbay) (Con)]

Given that this is the first time that the process has been used, the Secretary of State has rightly focused on the legal undertakings that he has been able to extract from Melrose. Will he speak a bit more widely about the general discussions that he has had about the future role of GKN’s assets in his industrial strategy?

[Greg Clark]

I have been very clear in my discussions with both sides during the bid. It is important to have equal treatment when taking a quasi-judicial decision. GKN has an important role to play in our industrial strategy in two important sectors. GKN will be part of an aerospace sector round table later this week, and I expect it to live up both to its responsibilities and to the opportunities in this most exciting of sectors.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

Takeovers are a good thing where they are likely to enhance value, but it is clear that this highly leveraged takeover by Melrose is likely simply to load GKN with £8 billion of debt. We know what will happen, as we have learned the lessons of history: the company will be broken up and sold off piecemeal to recoup the debt raised by Melrose to create false value.

We have also seen a lukewarm commitment on R&D. GKN’s current R&D is at only half to two thirds that of its main competitors. Why did the Minister not seek a more ambitious undertaking that the takeover will enhance value and increase GKN’s R&D spending target to that of its main international competitors? I echo the sentiments of other Members on the need to amend our shareholder takeover rules to ensure that short-term interests of people with no industrial knowledge or understanding of companies are not permitted to distort the interest of stakeholders in the long-term value of this company.

[Greg Clark]

For the first time in British corporate history, we have secured a commitment to spend, as a minimum, what the incumbent is already spending on research and development—that should be welcomed. Obviously, the reports of accounts and the disclosures that will need to be made to the markets will shine a light on the debt, but it is striking that it has been suggested today that £150 million was accounted for by unpaid suppliers’ bills at the end of the last quarter—I gather that is in the filings that have been released today—so I imagine the hon. Gentleman will want to study very closely with a beady eye the reports of accounts as they are published in the months ahead.

[Kelvin Hopkins (Luton North) (Ind)]

I am reminded of the Cadbury experience when it was taken over by Kraft. Undertakings were given about the factory in Bristol, which was sold off almost before the ink was dry on the deal. GKN is a company of national strategic importance not just to defence but to the wider economy and, indeed, to the Government’s much-vaunted industrial strategy. GKN should play a big part in that future.

If GKN were a German company in Germany or a French company in France this kind of speculative takeover would be prevented one way or another. One way to prevent it would be to have substantial stateholdings in such companies, and France, in particular, has done that over many years to make sure French companies remain French. Will the Government not look to France and Germany for the best way forward?

[Greg Clark]

Kraft’s takeover of Cadbury is exactly why we changed the rules so we can now have binding undertakings that are legally enforceable, unlike the situation that prevailed when the hon. Gentleman was in government. When it comes to the German system, in fact there is a substantial record of German companies being taken over.

[The Minister for Digital and the Creative Industries (Margot James)]

Vodafone.

[Greg Clark]

Yes, Vodafone’s takeover of Mannesmann is a classic case. KUKA, a German robotics company, has been taken over recently, as has Kabel Deutschland. There is a substantial record of takeovers in Germany. We have to operate the same public interest tests. What we have now is an ability to inquire into the intentions for the medium and long term, and to obtain legally binding commitments on that. I hope the hon. Member for Luton North (Kelvin Hopkins) would welcome that, because many of his constituents will benefit from it.

[Mr Speaker]

I greatly enjoyed the Secretary of State’s answer to the hon. Member for Luton North (Kelvin Hopkins), and I hope he will not take offence if I say that the hon. Member for Luton North was not himself in government—he looked rather shocked, nay affronted, by any suggestion that at any time in his career he might have been. The hon. Member for Luton North is a career Back Bencher and is immensely proud of the fact.

[Mr Gavin Shuker (Luton South) (Lab/Co-op)]

Workers at GKN’s Luton plant in my constituency are world leaders in ice protection systems for flight-deck windows and fast-jet canopies, and I believe they will share my dismay that the assurances the Secretary of State has put in place amount to little more than the new management picking up the phone and informing him before it does things that damage our national security and national interest. Is not the reality of the quasi-judicial nature of the decision-making process that he and future Secretaries of State will always veer on the side of caution, rather than face the prospect of being challenged in court when a takeover goes through?

[Greg Clark]

I am sure it is an unaccountable oversight that the hon. Member for Luton North (Kelvin Hopkins) has never served in government.

For the constituents of the hon. Member for Luton South (Mr Shuker), during the takeover bid, the incumbent management criticised the commitment to hold the aerospace division for five years. Given that a majority of the company was to be sold as part of the incumbent management’s plans, it is fair to observe that it is not clear there would be any greater stability—I put it as mildly as that—if the incumbent management had continued, rather than the new management that shareholders chose to manage the company.

Points of Order

Greg Clark Excerpts

Tuesday 24th April 2018 Commons Chamber

[Mr Speaker]

I am most grateful to the hon. Lady for her attempted point of order, which I would prefer to classify as a point of continued debate. I am sure it will be of intense interest across the House, and copies of this particular extract of today’s proceedings will probably be lodged in the Library. More particularly, I rather imagine that she will wish speedily to communicate what she has just said to many, many thousands of people across Salford and Eccles.

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

rose—

[Mr Speaker]

The Secretary of State has been prompted to come to the Dispatch Box. Who would dare deny him?

[Greg Clark]

Further to that point of order, Mr Speaker. I can only regret that I missed the extensive undertakings and the forensic examination by the hon. Member for Salford and Eccles (Rebecca Long Bailey). It is possibly down to the fact that she had prejudiced her consideration of this matter by saying that Labour would block the takeover, thereby making it completely impossible for her to have any role in it were she in my position as Secretary of State.

[Mr Speaker]

The shadow Secretary of State and the Secretary of State have now had their little bit of fun, in which, with my characteristic generosity, I have been willing at this early stage to indulge them. I do not think we need to pursue the matter any further for now. Doubtless, they will preserve these little titbits for their children, or possibly for subsequent generations.

--- Later in debate ---

[Mr Speaker]

It is an extraordinarily eccentric impersonation of a point of order not to seek any procedural ruling from me, although the hon. Gentleman is wise not to do so in respect of the contents of the Enterprise Act, but to deploy the ruse of a point of order to whizz past me at an aeronautical pace in pursuit of some debating reply from the Secretary of State. That is very disorderly behaviour, but as the mood of the House is, on the whole, quite an amicable one, let us hear the mellifluous tones of the Secretary of State, I hope for the last time today.

[Greg Clark]

I have high regard for the hon. Member for Birmingham, Erdington (Jack Dromey), and what he says is uncharacteristic of him. I am disappointed that the limit of his request is to block the bid, rather than to specify undertakings that could have been made and to engage in greater detail than simply saying, “No. Block it.” It would have been more fruitful on behalf of his constituents if he had delved a bit more into its substance, and I regret his not doing so.

[Mr Speaker]

I will sturdily resist any temptation to intervene further in that exchange. This private squabble may continue for a little while, albeit with good nature, I hope.

Business Update

Greg Clark Excerpts

Monday 23rd April 2018 Written Statements

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

The Financial Reporting Council (FRC) is the regulator responsible for financial reporting and corporate governance in the UK, as well as the designated Competent Authority for independent audit in the UK.

The Government have invited Sir John Kingman to conduct a comprehensive independent review of the FRC. Sir John Kingman has a wealth of private and public sector experience which he will bring to bear in his independent review. He will be supported by an advisory board which he will convene.

The review is part of the Government’s industrial strategy aim of creating a business environment that works for everyone, in which independent and effective regulation plays a key role.

The UK has a strong reputation as a dependable place to do business, but this needs to be continuously updated, and it is important to ensure that our regulators continue to drive high standards.

The root and branch review will assess the FRC’s governance, impact and powers, to ensure it is fit for the future. It is intended that the review will include a call for evidence, and will be completed by the end of 2018.

Further detail regarding the scope of the review is set out in its terms of reference, which have been placed in the House Library.

[HCWS635]

Industrial Strategy

Greg Clark Excerpts

Wednesday 18th April 2018 Commons Chamber

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

I beg to move,

That this House has considered the Industrial Strategy.

It is a great pleasure to open this debate. We are at one of the most important, exciting and challenging times in the history of global enterprise. All around the world, new technologies are transforming the way in which we live our lives as citizens, how we work and the products and services that we consume and supply. Whether it is in artificial intelligence, the digitisation of manufacturing, the clean energy revolution or breakthroughs in medicine, such is the scale of change that it has been described as the fourth industrial revolution. Britain is extraordinarily well placed to lead and benefit from this industrial revolution, just as we did in the first industrial revolution.

We are an open and enterprising economy, built on invention, innovation and competition. We are one of the world’s scientific powerhouses, producing more Nobel prize winners each year than any other country apart from America. We are synonymous with creativity, from literature to video games. People know that the UK is a hotbed of new ideas. In an uncertain world, we have a deserved reputation for being a dependable and confident place in which to do business, with high standards, respected institutions and the reliable rule of law. As this week’s Commonwealth Heads of Government meeting shows, we are—and always will be—proudly international. We are a crossing point for the world because of our geographic position, the importance of the English language, our global friendships and our vibrant culture.

Ten years on from the financial crisis, we have built a stronger economy than many people thought possible at the time. Unemployment is at its lowest rate for 43 years and there are more people in work than ever before. Our public finances have been transformed by rigorously reducing the yawning deficit that was inherited. We have world-beating industries—from financial services to the life sciences, and from the creative industries to advanced manufacturing.

As we look to the future, it is one in which Britain’s strengths are in increasing demand all around the world. The world is avid for our products, services, skills and know-how. To benefit from the opportunities before us, we need to prepare to seize them. We need to ensure that we join all the forces of our people and our economy to reinforce them and extend our strengths into the future, as well as capitalising on the new opportunities that have presented themselves. That is why I stood before this House at the end of November to launch our industrial strategy White Paper.

Deliberately, the exercise of producing the White Paper was a collaborative one. It was the biggest such consultation ever undertaken by my Department and its predecessors, drawing input from more than 2,000 organisations the length and breadth of the United Kingdom. I was particularly pleased that all the devolved Administrations contributed enthusiastically to the consultation. Employers, universities, research institutions, local government leaders and trade unions all contributed to the consultation that resulted in the White Paper, and there was a deliberate reason for this. It seems to me that if the nation is to have an industrial strategy, it has to be for the long term; we must orient our economy and society to the long term. The best way to ensure that policies and institutions endure is to take people with us, and to ensure that the advice and wisdom of all parts of the United Kingdom and all parts of the economy are taken and distilled into something of which all can feel a part.

[Alex Cunningham (Stockton North) (Lab)]

As the Secretary of State knows, Teesside is a powerhouse for industry, but in my constituency unemployment is still double the national average, and across the north-east of England it is considerably higher than the national average. Does he not agree that still more needs to be done to ensure that we balance industrial strategy in favour of those areas where there is high unemployment, and a lack of skills as well?

[Greg Clark]

The hon. Gentleman knows Teesside very well. One of the things he would welcome is that in recent years the long-standing disparity, going back decades, between constituencies like his and others in the country has narrowed. There is a real sense of progress and achievement on Teesside that I experience every time I go up there; I was up there a couple of weeks ago. However, he is absolutely right that we need to continue that progress. We need to reflect on the fact that, as I said, many of the industries, skills and attributes that are in demand across the world now—marine engineering, for example—are abundant in areas like Teesside. We must capitalise on that, and we have a massive opportunity to do so. The industrial strategy, as he knows—our friends and colleagues on Teesside contributed very fully to it—has, for the first time in an industrial strategy, a real, very clear attachment to the importance of recognising the contributions of different places. This came out very strongly through the consultation, so he is absolutely right.

[Kelvin Hopkins (Luton North) (Ind)]

We have just seen a hostile takeover of GKN. Some of my constituents work at a GKN plant in Luton. Does this not look like a return to the kind of cowboy capitalism we have seen in the past, where hostile takeovers lead to asset-stripping that will make short-term profit, rather than being about the long-term interests of the economy and our manufacturing sector?

[Greg Clark]

The hon. Gentleman knows that I have a quasi-judicial role to exercise in response to certain takeovers, so I cannot comment on that particular case. I would say, however, that in technologies such as automotive and aerospace, there is a high degree of interest and, indeed, optimism about the future capabilities of companies right across those sectors and their supply chains. I mentioned marine engineering; aerospace and automotive are also examples of areas of British strength. The industrial strategy commits to build on that. My intention in implementing the industrial strategy is that our current strengths will be extended.

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

Earlier, the Secretary of State used the term, “this nation”. Does he accept that he has responsibility for growth in the economies of all the nations of the UK?

--- Later in debate ---

[Greg Clark]

I do indeed. In using that expression, as I think was evident from the context, I was praising the contribution that has been made from all parts of the United Kingdom. I am looking forward to being in Edinburgh tomorrow to give evidence on the industrial strategy to the Scottish Parliament. The work that we have done with the Government in Scotland has been very important. We had a very effective consultation session in Edinburgh. Many colleagues in Scotland contributed to it, and they see the results of it there.

[Mr Jim Cunningham (Coventry South) (Lab)]

The Secretary of State talks about an industrial strategy, which, in general terms, we welcome, but running alongside that we need to have an investment strategy, particularly in new technological developments and in energy areas such as electric cars. Will he say something about an investment strategy as well, because the regulator plays a big part in this?

[Greg Clark]

I am coming on to talk about that, but I will say now that one of the major breakthroughs in the industrial strategy is to recognise the utmost importance of investment in research and development, not only on the part of the private sector but on the public sector side as well. All around the world, advanced nations are investing in the future through R&D, and we have in the industrial strategy the biggest increase in research and development that we have ever seen in this country. It is a matter of pride that we were able to achieve that.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I very much welcome the fact that the Government are committed to the industrial strategy. When I was a Minister in the Secretary of State’s Department some years ago, we rebooted and renewed the belief in an industrial strategy in the wake of the financial crisis. I am glad that it has survived and that there has been a lot of continuity through the years of the coalition Government to his tenure. This is a welcome move away from the laissez-faire approach that we had in the 1980s, but it will only work if it is bought into by others beyond his Department. Given that many other countries are trying to do similar things, is he confident that he has the commitment right across the Government and the scale of resources and buy-in necessary from the Treasury and others to make this a success?

[Greg Clark]

The right hon. Gentleman makes an excellent point. First, in terms of what was achieved before, he is right to recognise that we are building on what have been successes. Successful arrangements that have been put in place in the process industries, for example, are recognised and built on in the strategy. It is very important that we have a long-term approach. He is absolutely right; this is not my Department’s industrial strategy, my industrial strategy or even the Government’s industrial strategy. The ambition for this strategy is to unite all the nations of the United Kingdom and the UK Government certainly, but also the leaders of our cities, towns, counties and universities. The approach we have taken in developing the strategy is precisely for that purpose.

I have a set of responsibilities which the right hon. Gentleman will know, from his tenure in my Department, are limited to those allocated to the Business Department. However, when it comes to skills or investment in transport infrastructure, for example, it is vital that all join together. One of the strategy’s purposes is that we can clearly brigade in a way that reinforces the different contributions.

[Wayne David (Caerphilly) (Lab)]

Will the Secretary of State give way?

[Greg Clark]

I will, then I will make progress.

[Wayne David]

On that point, one crucial aspect of our industrial base is the defence sector, yet one of the surprising things about the Government’s industrial strategy is that the defence sector is hardly mentioned, if at all.

[Greg Clark]

I would not read too much into that. The defence industrial strategy is a very important part of our overall strategy. There are many references to industries—I mentioned aerospace—in which the innovation that comes from defence work can have important spillovers for the wider economy. We recognise that across the world that tends to be the case. The defence sector is very important to the strategy, and when some of the sector deals that I will come on to discuss are agreed, the hon. Gentleman will see that in abundance.

Drawing on input across the United Kingdom, we have an approach that is the distilled wisdom of many different contributors. It is a vision to help businesses raise their productivity performance, which is essential if we are to increase the country’s earning power. If we want to pay ourselves better as a nation and a society, we need to earn the way to do that by creating better-paid jobs and putting our country at the forefront of the industries of the future.

Let me introduce the four grand challenges that we have set out. I mentioned that we are uniquely well placed in this country, having leadership in some of the areas of the future, but we should not take that leadership for granted. We should have a deliberate plan and programme to reinforce that success. The four areas we have set out in the strategy, on advice, are artificial intelligence and the data-driven economy; clean growth; the future of mobility; and meeting the needs of an ageing society. Those challenges have been identified on the advice of our leading scientists and technologists, and they will be supported by investment from the new industrial strategy challenge fund and matched by commercial investment.

Let us take each of those briefly. We know that, whether in the Alan Turing Institute or in our companies throughout the UK, we have some of the most innovative thinkers and practitioners in AI and the use of data. We already have that reputation, but we need to keep at the forefront of those developments. A big part of the strategy is to recognise that, historically, as all Members know, we have been better at the “R” of R&D than the “D”. We have had brilliant ideas, but sometimes we have let them slip through our fingers and seen them implemented in industrial processes and investments in manufacturing in other countries. A big part of the challenge is therefore not just discovery but applying those discoveries in UK industry.

[James Heappey (Wells) (Con)]

When travelling overseas on parliamentary business and visiting universities, I have noticed, particularly in America, that people are much more entrepreneurial in their research projects and mapping out a route to a market. What might the Department do to encourage that sort of entrepreneurial spirit in our universities?

[Greg Clark]

We are getting better at it. Most colleagues will have experience of their local universities and others, and most research universities have active programmes to spin out discoveries and reap the benefits. Again, through the industrial strategy challenge fund, funding is available on a match basis to universities to pursue that implementation of good ideas. My hon. Friend is absolutely right.

Let us take the future of mobility. The hon. Member for Coventry South (Mr Cunningham) and I have had many conversations about this country’s reputation not only for the efficient manufacture of vehicles—that is a proud record—but for innovation, whether in the west midlands or the world-beating cluster of Formula 1 businesses around Oxfordshire and Northamptonshire. The world comes to the UK for the next generation of technologies. Forty-year veterans of the automotive industry say that this is the most exciting time in their career, when not only the powertrain but the way in which vehicles navigate is undergoing a revolution. Around the world, there is increasing demand for that set of technologies and we have a strong capability in them. Again, setting a grand challenge is crucial.

We have set the Faraday challenge to be a world leader in the development and application of new battery technology. It is already attracting great interest around the world, and the hon. Member for Coventry South will know that the national battery manufacturing development facility will be located in Warwickshire at the heart of our cluster there.

On the ageing society, whether in Glasgow and Edinburgh or Cambridge, we have some of the best researchers in the world looking at medical breakthroughs that will be in increasing demand around the world. I make it clear that now and long into the future, we will invest in the facilities and the people to make us the place to come to research new innovations. As Members from Scotland will know, the Glasgow city deal had a big medical component to build on our success there.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Clearly, medical innovation and continued investment are welcome, but when dealing with an ageing population and workforce, we need not just innovation but immigration. We need immigration in the healthcare sector to support an ageing population. Does the Secretary of State agree that the Government should review their immigration policy, especially tier 2 visas, which are putting a block on experienced healthcare workers coming to the UK?

[Greg Clark]

As the hon. Gentleman knows—the industrial strategy is clear about it—we benefit from the contribution of workers, scientists and engineers from all over the world. There is no successful future for an economy that does not engage with the world. That means that we should be open to talent from around the world. We need to make sure, as every responsible nation does, that we have an orderly system for managing immigration from around the world. That is what we are achieving and what we will continue to achieve. It is very clear, on every page of the strategy, that this is a vision for an international Britain, rather than one that is moving towards a kind of national self-sufficiency.

[Vicky Ford (Chelmsford) (Con)]

I thank my right hon. Friend for giving way and for the commitment he is making to ensuring that world-class talent from across the world can continue to come to support science in Britain. When the president of the Royal Society came to speak to the Science and Technology Committee, he pointed out that world-class scientists need to be mobile, anthropologists need to work abroad and those working for the British Antarctic Survey need to go to Antarctica. Will he make sure that the visa system is able to provide that mobility?

[Greg Clark]

That is very important. One of the commitments in the industrial strategy is to increase the number of visas and studentships for international researchers coming to work in the UK. Nobel prizes were mentioned earlier. I had the privilege, when I was Science Minister, to go the Nobel prize ceremony. What is notable is not just that a lot of Brits receive these awards, but that most Nobel prizes in the sciences are given to teams of researchers and that those teams are usually international. That embodies the fact that the best ideas come from the connections that are made between researchers from different cultures and different countries.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

The Secretary of State mentions the critical need to attract high-quality education graduates from across the world to British universities. Does he also recognise that that is a critical part of growing our population? In Scotland, we had a declining population. The Labour Administration under Jack McConnell introduced a post-study work visa scheme, which reversed Scotland’s historic population decline. That is why today we have a great legacy of an expanding population in Scotland that is adding value to our economy.

[Greg Clark]

The overall population of the UK is growing, as the hon. Gentleman knows. It is important that our immigration system is set in a sensible way that recognises the needs of the economy and the needs of our society, and that is the approach being taken.

I talked about grand challenges. Let me turn to another important aspect of the industrial strategy, which is, candidly, to address areas of historic relative weakness in the UK economy. I talked about our strengths, but it is well known to every Member of this House that for many years now our productivity performance has not been as good as that of some of our competitors, and since the financial crisis it has been slower to recover. In recent quarters we have seen an acceleration of productivity growth, but I think everyone would recognise that it is the responsibility of this House and those of us in government to act on the foundations of productivity, so that we can maximise the productive capacity of the economy. A big part of the consultation was to consider what we can do to drive up our productivity performance.

There are five areas in which clear commitments and progress are required across the whole economy—indeed, across society, to go back to the comments made by the right hon. Member for Wolverhampton South East (Mr McFadden). This is not simply, if at all, in the gift of the Business Department. It requires a whole-country commitment to investing in the foundations of productivity. We have set out our plans and ideas on research and development, as I mentioned earlier. As new technologies are developed, the skills required by the workforce to make use of them clearly need to change as well. It is no good doing one if we do not do the other, so the skills element of the strategy is very important. It is important to recognise the different needs of different places, as I mentioned in response to an intervention from the hon. Member for Stockton North (Alex Cunningham).

We want to make sure that our business environment is not only competitive and open, but recognises the need to ensure that when companies start up—we have a great record of start-ups—they can attract the funding that they require to grow into medium and larger businesses. We want to make sure that the infrastructure on which our whole economy depends is competitive with the best in the world. Through the industrial strategy, we set out action across all five of those contributors to productivity.

[Ruth George (High Peak) (Lab)]

The Secretary of State has not mentioned the principal foundation of productivity: the workers of Great Britain. Obviously, investment in those workers is absolutely key to making sure that they see that their own investment in their work and productivity will lead to substantive benefits for them and their families. The response to the joint inquiry by the Work and Pensions and Business, Energy and Industrial Strategy Committees into the Taylor review on modern employment practices kicks a lot of the action into the long grass and into consultation. Will the Minister please admit today that workers are the foundation of productivity and that they need the Government to commit to solid action?

[Greg Clark]

It is not a question of admitting to it—I want to boast of it. When I talk about our strengths and talents, those are the strengths of the people of the United Kingdom as workers, researchers and leaders of local economies. The prosperity of our economy is founded on our workforce. The hon. Lady is absolutely right to emphasise the importance of investment in people. I have mentioned investment in research and development, but it is important for her to reflect that much of that is about investment in people, making sure that we have research funding and opportunities for researchers so that we have brilliant individuals as well as physical infrastructure.

When it comes to investment in skills and the workforce generally, the hon. Lady is absolutely right. I have mentioned the importance of skills training. One thing that we and Members from across the UK know is that there are shortages in many parts of the country, particularly in engineering and technology skills. That is before we have the full benefit of the opportunities set out in the industrial strategy, which highlights and commits us to a long-term programme of upgrading not just investment—although that is important—but the prestige attached to technical qualifications in this country, and to emphasising the importance of that. There is, for example, nearly half a billion pounds of investment in teaching maths, digital and technical education.

I am pleased that the hon. Lady mentioned the Matthew Taylor review, because it is exactly the right kind of strategic approach that we should take. We know that new technology is changing the world of work and that it poses challenges to established ways of working. Rather than simply ignoring that and not addressing those changes, in commissioning Matthew Taylor to review the emerging economy we equipped ourselves with some very important reforms that Taylor himself advised we should consult carefully on. That consultation came from a review commissioned by the Government, who absolutely have the intention to deliver on its recommendations. The consultation is the way to proceed with legislation and regulation.

[Mark Pawsey (Rugby) (Con)]

The Secretary of State refers to the prestige of an industrial qualification as a device to attract the most capable people into industry and manufacturing. Does he agree that it is also important for manufacturing to show in a more open way exactly what the manufacturing environment is like now? Far too many people see manufacturing in the style of dirty old factories such as those that existed a generation ago. The manufacturing landscape has changed, but I do not think that we have managed to get that message across to our young people to encourage the brightest and the best to make it a career destination.

[Greg Clark]

My hon. Friend is absolutely right. It is sometimes not known and cannot be seen what modern manufacturing is about. I had the great privilege and pleasure of visiting the Big Bang Fair at the National Exhibition Centre in Birmingham a few weeks ago, which does precisely what he advises. The excitement among the young people there, seeing the possibilities available, was palpable. It does a great job.

I know that you are rightly interested in other Members being able to contribute, Madam Deputy Speaker, so I will make some progress and give colleagues the chance to speak. Along with the measures in the Taylor review, it is very important, when new technologies require different skills from the existing workforce, that we back industry in providing the training that is needed. In that regard, the national retraining scheme being developed in conjunction with employers and trade unions, focusing initially on construction and digital skills, is a very important commitment. It is also vital that we upgrade our infrastructure, whether physical infrastructure or the broadband and mobile connections on which many new businesses depend, and again important commitments have been made in that regard.

When it comes to places, the leadership being given to many of our great cities by elected Mayors, not least those elected last year, must be combined with the ability, powers and resources necessary for them to make a difference to their areas. One of our commitments was a fund to enable local leaders better to connect not just city centres but the networks and clusters of smaller towns around our cities. An early example was the decision by Andy Street, Mayor of the West Midlands, to use the investment available through the industrial strategy to fund a metro extension to Brierley Hill and Wednesbury, which connects two important parts of the west midlands to Birmingham and the wider area.

On the business environment, we know that there is a problem of composition. We have some highly productive, highly performing businesses as well as what the Bank of England has identified as a long tail of less productive businesses, and transmitting the lessons from the best to the others is an important part of the work that we need to do.

I will conclude by saying a word about the importance of particular sectors. We have talked about the north-east and Teesside, the west midlands and other parts of the country. We know that the clusters of excellence in those areas can be very important not only in driving productivity but in attracting new investment and becoming the location of new businesses.

[Alex Cunningham]

One of those clusters is, of course, the chemical industry. People in that industry are extremely anxious about the possibility that the EU regulation concerning the registration, evaluation, authorisation and restriction of chemicals might go when we leave the EU. Will the Secretary of State update the House on where we are with negotiations on those regulations to ensure a common working platform for chemicals after we leave the EU?

[Greg Clark]

I would incur your displeasure, Madam Deputy Speaker, if I went into the European negotiations. Suffice it to say that if the hon. Gentleman reads the Prime Minister’s Mansion House speech, he will see a reference to chemicals. We take the advice of the Chemical Industries Association, which I meet regularly, into those negotiations so that we can continue to trade successfully in that very important sector.

I want to say a word about sector deals. As the right hon. Member for Wolverhampton South East mentioned, we know of the success of long-standing arrangements whereby major manufacturers, supply chains and the Government can work together—for example, in the automotive sector and the aerospace sector. These important institutions have taken a lead and boosted jobs and prosperity. In the industrial strategy consultation, therefore, we asked whether we should offer and engage in more sector deals with sectors that have not benefited from those arrangements. We asked business whether that proposal had merit, and the answer was an emphatic yes. These deals are about the Government working with sectors, but also about the sectors working with each other, in exactly the way that the right hon. Gentleman mentioned.

We have made significant progress. In December, I launched the life sciences sector deal with my right hon. Friend the Secretary of State for Health and Social Care. This deal for the long term is already attracting immediate investment, including from MSD, which is supporting nearly 1,000 jobs in the UK.

[Mark Tami (Alyn and Deeside) (Lab)]

The Secretary of State is talking about the long term, which is very important. For a company such as Airbus, the relationship with its suppliers, which is not a short-term relationship but a long-term one, is also very important. It is because such a relationship is so important that there are fears about how long Melrose will actually invest in GKN and keep hold of that company.

[Greg Clark]

The hon. Gentleman is absolutely right about the importance of long-term relationships. I have said that I cannot make an appraisal of that particular bid, since I have a decision to make, but it is on the record that I requested and obtained commitments from the bidder to investment in research and development, and indeed to the continued ownership of that aerospace business. I hope he will therefore recognise that I regard commitments to the long term as important.

I have mentioned the life sciences sector deal. We launched the automotive sector deal in January, and I launched the creative industries sector deal with my right hon. Friend the Secretary of State for Digital, Culture, Media and Sport just last month. We have in the pipeline a number of other sectors where great progress has been made, and we expect to make more announcements soon.

I hope it is evident that in the industrial strategy—whether looking to the future, harnessing our resources to make sure that we capitalise on our existing strengths, or looking objectively and candidly at areas in which we need to do better and in which we need to invest for the foundations of future productivity—the approach we have taken is to set out a strategy for the long term to which all parts of the United Kingdom can contribute.

We are not the only country in the world to recognise that a technological revolution is taking place. Wherever I travel I find similar concerns, and similar appraisals of the future are being undertaken by other countries. Our industrial strategy has already, in the few months since it was published, attracted widespread attention and respect around the world. We have already translated it into several languages because of demand, so any colleagues travelling around the world who want copies of it can approach my office for a translation in most languages, and we will have other translations made according to demand.

Our industrial strategy is a calling card for the future of the United Kingdom economy, and I hope Members on both sides of the House recognise that in pulling together our strengths and opportunities through it, we have a chance to tell the world, as well as our fellow countrymen and women, that this country has a great future ahead of it, just as we have had a very successful past. I commend the motion to the House.

[Several hon. Members rose—]