Energy Policy
Greg Clark Excerpts(6 years, 9 months ago)
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The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
The UK has benefited from its membership of the European Atomic Energy Community since joining the EU and Euratom in 1973. The Government’s ambition is to maintain as many of these benefits as possible through a close and effective association with Euratom in the future, after the UK withdraws from Euratom, at the same time as withdrawing from the EU, on 29 March 2019. Our plans are designed to be robust so as to be prepared for a number of different scenarios including the unlikely outcome that there is no future agreement at all. Our No. 1 priority is continuity for the nuclear sector.
Since the 1950s, when the UK launched the world’s first nuclear power station, this country has been a leading civil nuclear country on the international stage, with deep nuclear research and nuclear decommissioning expertise, and with nuclear power playing a vital part in our electricity generation mix. It is vitally important that our departure from the EU does not jeopardise this success, and it is in the interests of both the EU and the UK that our relationship should continue to be as close as possible. We recognise and understand the concerns that the nuclear industry has raised. We agree it is essential that projects and investment are not adversely affected by the UK’s withdrawal from the EU, and can continue to operate with certainty.
To achieve this outcome, the Government’s strategy is twofold: through negotiations with the European Commission we will seek a close association with Euratom and to include Euratom in any implementation period negotiated as part of our wider exit discussions; and at the same time, to put in place all the necessary measures to ensure that the UK could operate as an independent and responsible nuclear state from day one.
Our strategy is therefore based on the following principles:
to aim for continuity with current relevant Euratom arrangements;
to ensure that the UK maintains its leading role in European nuclear research;
to ensure the nuclear industry in the UK has the necessary skilled workforce covering decommissioning, ongoing operation of existing facilities and new build projects; and
to ensure that on 29 March 2019 the UK has the necessary measures in place to ensure that the nuclear industry can continue to operate.
The Government have made good progress on separation issues in the last few months as part of phase one of negotiations with the EU. Negotiations have covered a set of legal and technical issues related to nuclear material and waste, and safeguards obligations and equipment. The next phase of discussions will focus on the UK’s future relationship with Euratom. We believe that it is of mutual benefit for both the UK and the EU to have a close association with Euratom and to ensure a future safeguards regime that will be equivalent in effectiveness and coverage to that currently provided by Euratom, including consideration of any potential role for Euratom in helping to establish the UK’s own domestic safeguards regime.
The UK’s specific objectives in respect of the future relationship are to seek:
a close association with the Euratom Research and Training Programme, including the Joint European Torus (JET) and the International Thermonuclear Experimental Reactor (ITER) projects;
continuity of open trade arrangements for nuclear goods and products to ensure the nuclear industry is able to continue to trade across EU borders without disruption; and
maintaining close and effective cooperation with Euratom on nuclear safety.
We understand the importance to businesses and communities, including those in the nuclear sector, of being able to access the workforce they need. Proposals for our future immigration system will be set out shortly and we will ensure that those businesses and communities, and Parliament have the opportunity to contribute their views before making any decisions about the future system.
Whatever the outcome of the negotiations with the EU, it is vital that Government pursue all options for providing certainty for the civil nuclear industry that it will be able to continue its operations, including that the UK has a safeguards regime that meets international standards by the end of March 2019 and that necessary international agreements are in place. Such elements are not dependent on the EU negotiations and the UK Government are well advanced in delivering this plan.
The UK is: establishing a legislative and regulatory framework for a domestic safeguards regime—the Nuclear Safeguards Bill will, subject to the will of Parliament, provide legal powers for the Secretary of State to establish a domestic regime which the Office for Nuclear Regulation will regulate; negotiating bilateral safeguards agreements with the International Atomic Energy Agency; and putting in place bilateral Nuclear Co-operation Agreements with key third countries.
As set out by the Prime Minister, the UK Government are proposing a time-limited implementation period where we continue to have access to one another’s markets on current terms and take part in existing security measures. This implementation period would cover Euratom too. The exact nature of the period will be subject to forthcoming negotiations including on the issues outlined in this statement.
As discussions with the EU move onto the important issue of the future relationship, I shall report back every three months about overall progress on Euratom, covering the EU negotiations and other important matters covered in this statement, by way of further written statements to keep Parliament updated.
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Oral Answers to Questions
Greg Clark Excerpts(6 years, 10 months ago)
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Stephen Metcalfe (South Basildon and East Thurrock) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
Two weeks ago I announced the location for the new national Faraday battery scale-up facility, which will be built in Coventry. On the same day, Jaguar Land Rover announced its intention to produce battery electric vehicles in the west midlands, thus bringing the region to the forefront of modern mobility in the United Kingdom.
Stephen Metcalfe
When it comes to autonomous and electric vehicles, public trust in the exciting technology involved is key to making the most of the opportunities that it presents. What discussions has my right hon. Friend had with industry to combat the Luddites and dispel the mythical fears of that exciting technology that are currently being promoted?
Greg Clark
My hon. Friend has made an excellent point. Part of the programme involves test beds to demonstrate the new technologies. The demonstrations will be open to the public so that they can see for themselves, and they will begin in Milton Keynes, Greenwich, Bristol and Coventry. However, people are already experiencing these technologies through satnav, cruise control and automatic parking, and I hope that increasing exposure will reveal their benefits.
Chris Elmore (Ogmore) (Lab)
The Secretary of State mentioned Jaguar Land Rover. As he will know, Ford in Bridgend, which neighbours my constituency and employs hundreds of workers there, is pulling out of the contract early. Has the Secretary of State had any conversations with Ford about the possibility of converging its lines to produce electric batteries for electric cars?
Greg Clark
The hon. Gentleman will be pleased to know that I shall be meeting the head of Ford’s European operations immediately after this session to discuss the fact that Ford has based its new development of electric and autonomous vehicles in Britain.
Alan Mak (Havant) (Con)
Britain has the potential to be a world leader in developing the new regulatory standards that will govern electric and autonomous vehicles. Will the Secretary of State work with industry, and with other Departments, to ensure that Britain leads the world and that other countries adopt our standards?
Greg Clark
I will indeed. The industrial strategy makes it clear that being at the forefront of the regulatory standards for these new technologies gives us a big advantage. The Automated and Electric Vehicles Bill, which is currently before Parliament, is intended to establish—before most other countries—the right regulatory standards, so that we can make progress with those technologies.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Secretary of State knows that no assessment of the impact of Brexit on the sector has been carried out by anyone, apart from the RAND Corporation, which told us this morning that this and every other sector will be deeply harmed by Brexit. What does he say in response to that important and thorough investigation?
Greg Clark
I think the hon. Gentleman knows that I have continuous discussions with all the sectors for which I am responsible, including the automotive sector. They lead me to make sure that, as part of our negotiating mandate, we get the best possible deal. The agreement achieved in Brussels last week, including the transitional phase, had been pressed for by the automotive sector in particular.
Mike Amesbury (Weaver Vale) (Lab)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
We know that the best way to improve our productivity is by investing in research and development, improving the level of skills in our workforce, upgrading our infrastructure, creating an attractive environment for new and growing businesses, and making sure that every place in the country can prosper. That is exactly what the industrial strategy does.
Mike Amesbury
Our productivity growth has been far worse than that of any other G7 country bar Italy. Does the Secretary of State admit that the Government public investment figures in the revised industrial strategy are far below those of leading OECD nations?
Greg Clark
No: if the hon. Gentleman reads the strategy he will see that there is a commitment to the biggest increase in research and development funding, both private and public sector, that we have ever had in this country. It has been the foundation of our success, and I hope the hon. Gentleman will join me in welcoming the progress we are making to be even better at it.
Jo Churchill (Bury St Edmunds) (Con)
Productivity in the construction industry is a key requirement of building houses. How will the Secretary of State ensure quality in on and offsite builds for the £1.7 billion investment in construction in the industrial strategy?
Greg Clark
I am glad my hon. Friend mentions that, because the construction sector is one of the areas in which there are big opportunities. It has a sector deal that has been concluded as part of the industrial strategy, and representatives of the sector have said that this represents a major opportunity, especially in offsite manufacture.
Rachel Reeves (Leeds West) (Lab)
The Secretary of State has just touched on the sector deals the Government are agreeing with different sectors of the economy. Some of the sectors with the lowest productivity, such as retail, hospitality and social care, do not have a sector deal, yet if we close the productivity gap in those sectors, we will help boost productivity overall compared with our main competitors. What are the Government doing to secure sector deals in those sectors?
Greg Clark
I am delighted to hear the hon. Lady’s endorsement of that, and she is absolutely right that there is an opportunity for sector deals for many sectors, including those she mentioned. We are already in discussions with many of those sectors, including the food and drink sector and the hospitality sector; we expect to see early sector deals concluded in them. I am delighted that the hon. Lady supports that.
George Freeman (Mid Norfolk) (Con)
I congratulate the Secretary of State on launching the industrial strategy—in particular the life sciences sector deal, which has already triggered £1 billion of new investment. Does he agree that the key now is to negotiate a Brexit deal that avoids a cliff edge but gives us the regulatory freedom to continue to lead in the all-important genomics and data of tomorrow’s medicine?
Greg Clark
I do agree with that, and I commend my hon. Friend as the former life sciences Minister who saw before many people the opportunities of the strategic approach. I think he has been honoured this very week by the learned societies for his contribution to promoting science in Parliament, and I congratulate him on that. He is absolutely right that we need to build on these successes. The life sciences sector deal is a demonstration that a long-term strategy can have immediate benefits; we have had more than £1 billion of investment on the basis of the confidence that the sector has in the strategy we have set out.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
With a few notable exceptions, I am sure we would all agree that technology has improved the productivity of this House, but the same is not true for our country: productivity has stagnated since 2010, and we produce 25% less in an hour than the Germans and French, crippling business and making us all poorer. Last week the Chancellor tried to blame disabled workers, but his own Budget fails to invest in science and productivity until 2021. Will the Secretary of State admit that the Chancellor’s ideological austerity, meaning we fail to invest in our engines of economic growth, is the real handicap here?
Greg Clark
I do not agree with the hon. Lady, and if she reads the industrial strategy she will see that the biggest increase in science and innovation investment for 40 years has been triggered by this. It is the right way to go, and it has been welcomed by all parties across the country. It would be helpful if the hon. Lady recognised that many other countries have benefited from a strong national commitment to improving investment in productivity, such as through science and innovation, and that gives confidence to overseas investors.
Brendan O’Hara (Argyll and Bute) (SNP)
Justin Tomlinson (North Swindon) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
The UK’s automotive industry is a great British success story and, building on the success of institutes such as the Advanced Propulsion Centre, we have agreed an automotive sector deal to ensure that we continue to reap the benefits from the transition to ultra-low and zero-emission vehicles. Our ambition is to build innovative and competitive supply chains to increase the value of UK content from about a third in 2011 to more than half by 2022.
Justin Tomlinson
What more is the Department doing to encourage further investment in UK car plants, particularly in my constituency with Honda and BMW?
Greg Clark
Both Honda and BMW have been part of the sectoral council that has helped to create institutions that have trained people, and developed research and development; they are a very valued part of the sector deal, which has been so warmly welcomed by the industry.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
My constituency contains many small businesses involved in the supply chains for the motor industry. These chains stretch right across Europe and are largely regulated by European Union law. Will the Secretary of State make a commitment that these will not be disrupted by Britain’s exit from the EU?
Greg Clark
Given what he said, I hope the hon. Gentleman will welcome the supply chain initiative, which is at the heart of the sector deal to increase the level of UK content. But one way or another the motor industry, like so many others, is based on its good relations, not just across Europe, but around the world, and it is essential that the deal we do allows that to continue and indeed to prosper in the future.
Amanda Milling (Cannock Chase) (Con)
The west midlands has a proud heritage in the automotive sector, and I welcome the Government’s recent announcements, which will see the region be a global leader in the sector. Does my right hon. Friend agree that supporting innovation and new technologies is key to addressing productivity and creating higher-skilled, well-paid jobs?
Greg Clark
My hon. Friend is absolutely right on that, and the commitment we have made to being the world centre for research in new battery technology, through the Faraday challenge, is already commanding attention right around the world. The investment in skills that accompanies this strategy will make sure that her constituents and others in the region will benefit from the jobs that result.
Richard Burden (Birmingham, Northfield) (Lab)
Every day, around £35 million-worth of components are imported to the UK from the EU for “just in time” delivery to plants. Many of those components help to build more than 6,500 cars and nearly 10,000 engines to be re-exported back into the EU. As we saw from the Operation Stack debacle a couple of years ago, it does not take much for disruption at the channel ports to completely clog up the south-east, losing millions and millions of pounds. What guarantee can the Secretary of State give the automotive sector that Brexit will not result in any extra customs checks that will clog up the industry?
Greg Clark
The hon. Gentleman is right to highlight the importance of ensuring that the agreement we reach will be free not only of tariffs but of the types of frictions he describes. It is important for our successful industry, and not just the automotive sector, that that is the deal we conclude. I hope he will welcome the progress that was made towards that deal last week.
Jack Brereton (Stoke-on-Trent South) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
The industrial strategy White Paper highlighted the emphatic support for sector deals, encouraging any sector to come forward with proposals on how, working in partnership with the Government, that sector can grow and increase its investment, productivity and earning power. A number of sectors have signalled their interest in developing a sector deal, including, as my hon. Friend knows, the ceramics sector.
Jack Brereton
I thank the Secretary of State for that response. Will he please update the House on the progress that has been made in developing a sector deal for ceramics?
Greg Clark
Very good progress is being made with the leaders of the ceramics sector, of which there is a significant cluster in north Staffordshire and Stoke-on-Trent, where Dr Laura Cohen leads the sector. In the months ahead, we hope and expect to be able to conclude a deal with the sector that will capitalise on the enormous opportunity, especially given the new uses of ceramics in, for example, the medical sector.
John Spellar (Warley) (Lab)
The Government are not just a funder and a regulator; they are also a customer. Would it help if national and local government acted like they do in every other country and bought vehicles built in this country by British workers, thereby supporting the companies and British workers?
Greg Clark
The most important thing is that we have excellent products here, and I am proud to say that we do in the automotive sector. The right hon. Gentleman will be aware that the Government changed the procurement guidelines to allow the importance of local impact to be taken into account. I hope he welcomes that.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
Thanks to the actions of this Government, it is widely recognised that the UK now has the most fiscally attractive regime in the world for investment in oil and gas. Does my right hon. Friend agree that a good sector deal would build on that and would mean that the north-east of Scotland could look forward to a future in which it is not only Europe’s energy capital, but the world’s?
Greg Clark
I completely agree with my hon. Friend. I had the privilege of leading a trade delegation to India that included many companies from Aberdeen and the north-east of Scotland that are selling their wares and expertise right around the world. That is one of the big opportunities in the deal that is being negotiated.
Peter Kyle (Hove) (Lab)
The steel industry met the criteria for a sectoral deal, it wanted one and applied for one, but it did not get one. Will the Secretary of State please explain why?
Greg Clark
The discussions with the steel sector are continuing and I fully expect to conclude an important and ambitious deal for this foundational industry.
Joan Ryan (Enfield North) (Lab)
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
Our industrial strategy is for the whole United Kingdom. I was pleased to hear from, and work with, people, businesses and institutions in Wales and colleagues in the Welsh Government as we developed the strategy. I have held important discussions with Welsh businesses from a range of sectors, including life sciences, steel and nuclear. Welsh innovators are well placed to benefit from the second wave of the industrial strategy challenge fund.
Liz Saville Roberts
In the past 10 years of successive Westminster Governments, productivity in my county of Gwynedd has fallen by 10%, while productivity in central London has risen by more than 5%. Such regional inequality is evidence that Westminster is not working for Wales. Does the Minister agree that we should be seeking the tools to build our own future?
Greg Clark
The hon. Lady is right in identifying that there are big regional disparities in productivity, and the long-term purpose of the industrial strategy is to work together with our leaders right across the country, with industries, and with universities and colleges to make sure that the drivers of improved productivity are in place. I know that the Government in Wales have participated in and endorsed the approach that we are taking, and I take her endorsement of our direction as further encouragement.
Peter Aldous (Waveney) (Con)
Mrs Kemi Badenoch (Saffron Walden) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
Since we last met, my ministerial colleagues and I have launched the industrial strategy White Paper, and we can already see it in action. Last week we launched the first sector deal with the life sciences sector, which has attracted significant investment in the UK from companies including MSD and GlaxoSmithKline. We are determined to do even more, and to make the UK the best place to start and grow a business.
Many colleagues from both sides of the House joined us in celebrating Small Business Saturday on 2 December. I congratulate the organisers of that great event, which saw more than three quarters of a billion pounds spent with small businesses.
I attended the global forum on steel excess capacity in Berlin, which agreed actions by all G20 nations to tackle unfair subsidies. Today, colleagues will have noticed that the Minister for Climate Change and Industry is accompanying the Prime Minister to President Macron’s One Planet summit in Paris.
Mrs Badenoch
We all know that rapid advances are being made in self-driving cars. Does the Secretary of State agree that now is the time to adapt our regulatory framework to ensure that it is fit for the future?
Greg Clark
My hon. Friend is absolutely right. That is why we have the Automated and Electric Vehicles Bill before Parliament. We are taking a lead in ensuring not only that we invest in research and development, but that we are ahead of the world in having the right regulatory system to support the adoption of this technology.
Dr Roberta Blackman-Woods (City of Durham) (Lab)
Wendy Morton (Aldridge-Brownhills) (Con)
Greg Clark
I agree with my hon. Friend. That is one reason why we have established a series of test beds between London and the west midlands, including the motorsport cluster. They are already attracting huge interest from around the world, reinforcing our reputation in the field.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Greg Clark
The renewables strategy that we have set out has been remarkably successful in bringing down the price of onshore wind and creating jobs, including in Scotland. As the hon. Gentleman knows, I have discussions with the Scottish Government, which have resulted in the remote islands policy that we have adopted. I will continue to have those discussions with his colleagues.
Mr Marcus Fysh (Yeovil) (Con)
Matt Warman (Boston and Skegness) (Con)
Greg Clark
I am delighted that my hon. Friend draws attention to this area, and he is a great expert in it. He will know that, in the industrial strategy, we established as one of the four grand challenges leadership in the world in artificial intelligence and the analysis of big data. A crucial part of that is making sure that our young people and people retraining have the skills to take up those jobs.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Mr William Wragg (Hazel Grove) (Con)
Greg Clark
I have regular and fruitful conversations with the Transport Secretary. My hon. Friend will know that, in Greater Manchester, as part of the industrial strategy, there was an investment of a quarter of a billion pounds in improving connections in and around the city. That is on top of the investment in connections across the north of England.
Preet Kaur Gill (Birmingham, Edgbaston) (Lab/Co-op)
Given the time that has passed since the promise of an energy price cap, will the Secretary of State confirm that he remains committed to implementing the cap for 17 million households, and will he outline the process by which the Conservative party is expected to introduce it?
Gavin Robinson (Belfast East) (DUP)
The Secretary of State may know that Unite the union officials from the Belfast Bombardier plant are in Washington and Montreal pressing the case against the egregious US tariff situation. Is the Secretary of State continuing to engage in this process and working towards a sensible resolution?
Greg Clark
I certainly am. As the hon. Gentleman knows, throughout this process we have been absolutely determined to send a clear message to Boeing and to the US Administration that this action is unfair. Its effects on Belfast are intolerable. I will have further conversations later this week to continue to press the case with all the parties concerned.
Lucy Frazer (South East Cambridgeshire) (Con)
I recently visited the Cambridge biomedical campus, which brings together academia, business and healthcare. Does the Minister agree that this is important collaboration, which will help boost productivity, improve our economy and create jobs for the future?
Sir Edward Davey (Kingston and Surbiton) (LD)
It is good news that the Prime Minister is attending President Macron’s summit on climate change in Paris today, but may I warn the Secretary of State that President Macron is positioning Paris as the world’s leader in green finance? To tackle that threat and to protect London, Ministers must back the Bank of England’s taskforce on climate-related financial disclosures and bring in new mandatory corporate requirements on fossil fuel assets.
Greg Clark
Britain leads the world in climate finance, and one of the major contributions the Prime Minister and the Minister for Climate Change and Industry are making is in promoting the availability of green finance in the UK—that includes Edinburgh as well as London. That is getting a very good reception.
Mark Pawsey (Rugby) (Con)
The Secretary of State has already spoken about the great news for the west midlands on electric vehicles. He will remember the all-new electric taxi being manufactured at Antsy Park in my constituency, and the taxi was certified for use in London this week. Does he agree that the opportunity for a platform for a delivery vehicle is also very important?
Greg Clark
I do agree with my hon. Friend. I congratulate the London Taxi Company on having the first electric taxi, manufactured in the west midlands, on the streets of London this very week—again, a big vote of confidence in our world-beating motor industry.
Jim McMahon (Oldham West and Royton) (Lab/Co-op)
Access to finance is critical for small businesses, but the protection in place when things go wrong is non-existent. Do the Government agree, and will they look at extending the role and remit of the Financial Conduct Authority in that regard?
Craig Tracey (North Warwickshire) (Con)
Does the Secretary of State agree that the key to a successful industrial strategy is that it focuses on all areas of the UK, obviously including North Warwickshire and Bedworth?
Greg Clark
I do indeed. One of the features of our industrial strategy, which takes an approach that previous business policies have not taken sufficient account of over many decades, is the importance of the skills and clusters of industries in local places. As my hon. Friend knows, that is very much at the heart of the industrial strategy that we have published.
Rachael Maskell (York Central) (Lab/Co-op)
On 8 March, the Chancellor announced a full review of business rates. On 14 March, the Minister responsible for small business said:
“The review will report in due course and in the not-too-distant future.”—[Official Report, 14 March 2017; Vol. 623, c. 178.]
Yet the industrial strategy barely mentions business rates, which are having a massive impact on businesses in York. When will this review start?
Budget Resolutions
Greg Clark ExcerptsTuesday 28th November 2017
(6 years, 11 months ago)
Commons ChamberRead Full debate Finance Act 2018 View all Finance Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
It is a great pleasure to open this final day of the Budget debate. In his Budget statement last week, the Chancellor described the choice before our country, standing as we do on the brink of a technological revolution—a choice between embracing the future, building on our strengths and taking our place as one of the nations at the forefront of the new world of innovation, or rejecting that, assuming a defensive posture and letting other countries seize the initiative. We choose emphatically the former. The Budget and the industrial strategy set out a long-term approach in which we can make our economy one that can prosper during the years ahead.
Not just in Britain but across the world, this is a time of change and opportunity. Artificial intelligence and the analysis of big data will transform the way in which we live and work, from the way in which we diagnose and treat cancer to the security of online transactions. The whole world is moving from being powered principally by fossil fuels towards energy sources that are clean, with enormous impacts not just in the energy sector but in the products and services that make use of it.
One such area is transport, where extraordinary innovation is changing how we move people and goods around our towns, cities and countryside. As a result of medical advances and rising prosperity, people across the world are living longer than ever before. One stunning statistic illustrates that transformation. In the United Kingdom today, 15,000 centenarians are alive, but of the people who are alive in Britain today, 10 million can expect to live to their 100th birthday—a transformation in our generation. An ageing population creates new demands in care to maintain their health so that they can make the most of their longer lives.
In all these areas, Britain is extraordinarily well placed to lead. We are an open, enterprising economy built on invention, innovation and competition. Our universities and research institutions are hotbeds of discovery, among the very best in the world. In a world where many of tomorrow’s businesses have not yet been founded, our powerful reputation for being a dependable and confident place to do business, with high standards, respected institutions and the reliable rule of law, is an enormous asset.
John Woodcock (Barrow and Furness) (Lab/Co-op)
Given that, will the Secretary of State back our local campaign to find a new buyer for the business manufacturing cephalosporins in Ulverston and Barnard Castle, given the highly unwelcome and damaging decision by GSK to review that landmark investment, which was announced by the Chancellor and Prime Minister after the 2011 Budget?
Greg Clark
I am happy to talk to the hon. Gentleman. He will know that we work closely with the life sciences sector. The industrial strategy published yesterday included an important life sciences sector deal in which all the companies are working closely with each other, local institutions, local leaders and the Government. I am happy in that context to meet him and have those discussions.
Sir Edward Davey (Kingston and Surbiton) (LD)
The Secretary of State talks about giving certainty to businesses and investors. Does he agree that the contracts for difference regime can be used to bring in zero-subsidy CfDs to give real certainty to people wanting to invest in our renewable energy? Will he commit to considering the case for zero-subsidy CfDs?
Greg Clark
Contracts for difference have brought down the price of renewable energy substantially. We have commissioned a review from Professor Dieter Helm—I know that the right hon. Gentleman knows him well—which has reported, and we will make our response to it. It would be wrong to pre-empt our consideration of that, but I hope that the right hon. Gentleman and others will give their thoughts on the Helm review. We have launched a consultation on that, as he knows.
Alan Brown (Kilmarnock and Loudoun) (SNP)
I note the Secretary of State’s comments about the Dieter Helm review, but will the Government commit to moving away from their nuclear obsession, given—as he acknowledged—CfD has brought down the cost of renewable energy?
Greg Clark
It is my view that we need to have a broad base of power supplies for our security in the future. We are now the world leader in offshore wind, which demonstrates that one comes not at the expense of the other, and that is the right and prudent way to proceed.
We have many world-leading industries, from financial services to advanced manufacturing, from the life sciences to the creative industries. In many cases, they are at the forefront of the technological revolution that is sweeping the world.
Damian Collins (Folkestone and Hythe) (Con)
What further assistance are the Government planning to give to research and development for small modular reactors as part of the nuclear sector, potentially a very important and useful source of energy? What consideration has the Secretary of State given to the suitability of existing nuclear sites, such as Dungeness in my constituency, as locations for SMRs?
Greg Clark
I know that my hon. Friend takes a great interest in this. We have an energy innovation programme, about which we will make some announcements before long. That will address the question of what types of technologies should be moved along from research to development and implementation. He will have an interest in that and I will make sure that he is given the details.
To capitalise on our strengths, we need to reinforce them and project them into the future. We also need to address our weaknesses. We are proud of the fact that more people are employed in this country than ever before—an extraordinary achievement, with 3 million extra jobs created in a time when the Labour party predicted that millions of jobs would be lost. But compared to some of our competitors, on average, we work harder and longer to produce at the same level as they do. We need to raise our productivity, as the Chancellor made clear in his Budget statement.
As the House knows, to a large extent, it is a problem of disparities, rather than a uniform picture. We have industries, companies, people and places that are among the most highly productive on the planet, but we have what the Bank of England has called an unusually long tail of companies and places whose level of productivity is below that of the top performers. The challenge is clear: to reinforce the performance of the top and build on those strengths, while spreading that excellence throughout the economy and the country. That is exactly what the Budget and our industrial strategy White Paper will do, by reinforcing strengths and addressing weaknesses in areas across the board. We talk about innovation, skills, infrastructure, the business environment and local economies.
Heidi Allen (South Cambridgeshire) (Con)
I wish to put on record my thanks to the Government for finding funding for the initial cost analysis for a station at Addenbrookes. Connecting that science and those brains with the wider country is exactly what we need to do. It is a vital piece of infrastructure and I am very grateful for it.
Greg Clark
I am grateful to my hon. Friend. That is a good illustration of how a strategy can bring forces together. That £5 million investment means that the infrastructure in and around Cambridge can be improved, and that will make the area even more attractive for companies and researchers to locate there, and it builds on the area’s strengths. The part of the world that she and the Economic Secretary to the Treasury, my hon. Friend the Member for North East Cambridgeshire (Stephen Barclay)—one of her close neighbours—represent has enjoyed great success, but I think they would both recognise the opportunity to extend that success to a larger area. That is exactly what we have in mind.
Vernon Coaker (Gedling) (Lab)
I agree with the Secretary of State about regional disparities and the way in which the industrial strategy tries to tackle them. The east midlands needs investment in capital to raise productivity, so I ask him to look into that. Will he also speak to the Transport Secretary and others about the Government’s failure to electrify the midland main line? As he knows, many of us have campaigned for that over a number of years, but the Government have now rowed back on it.
Greg Clark
I absolutely recognise that one of the big strengths of the east midlands is that it is connected to the rest of the country, and it is essential that those connections continue to improve. The hon. Gentleman will know that a fund was established in the Budget for cities and city regions to improve the connections in and around those cities. That is important, but it is in addition to the importance of connections to the rest of the country, so I will raise his point with the Transport Secretary.
Let me say something about ideas and the importance of innovation to our economy. We can be the world’s most innovative economy, given the strength of our science base and our researchers. Throughout our industries, we have some of the most creative people in the world.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I just want to probe the Secretary of State about what thinking has been going on in government following Bill Gates’s speech in the spring about taxing robots. We only have to go into a high street shop to see that many jobs have been displaced by machines, which are not taxed. If a person was still working there, they would be paying tax to the Exchequer, and that money could help future innovation. Have the Government given any thought to all these labour-saving devices and to getting some revenue from the way in which robots are doing many of the jobs that people used to do?
Greg Clark
We need to embrace the technologies of the future. If we are in the lead, we can benefit from being the place that develops, applies and manufactures many of these products. Whenever we have taken the lead in this country, we have reaped the benefits. It is in those areas where we have lost our advantage that we have ended up importing goods and services from around the world. We need to lean into the future and ensure that we are the place in the world where the firms of the future locate to develop and manufacture their products.
Tony Lloyd (Rochdale) (Lab)
The Secretary of State will probably not agree with this, but I believe that we still have a financial gap in this country, particularly when it comes to science and technology, because venture capitalists simply do not know how to make assessments on such things. Those people are also disproportionately located in this city region rather than other parts of the country. Will the right hon. Gentleman look seriously at the capacity of those industries to see whether we could make some structural changes that would benefit the whole nation?
Greg Clark
I will indeed. I am coming on to precisely that point. The hon. Gentleman has a distinguished record of leading Greater Manchester—with some success—in promoting the vitality and attractiveness of that important part of the economy.
John Howell (Henley) (Con)
Surely one of the ways in which we can improve innovation and productivity is by having better broadband and telephony. I heard what the Secretary of State said yesterday, but in my area we have zero G, not 5G. Would he like to encourage my area by saying that the strategy is meant for the whole country, not just towns and cities?
Greg Clark
It certainly is. There are significant opportunities in many of our rural areas, and it is essential that the progress we make in our towns and cities is shared with our rural areas, of which my hon. Friend’s constituency is a particularly attractive and productive example.
Several hon. Members rose—
Greg Clark
Let me make some progress now, because I am about to come on to the points that hon. Members are raising.
Last week’s Budget outlined the biggest increase in public research and development investment for 40 years. It is growing as a share of GDP and contributing to our commitment to invest 2.4% of GDP in research and development by 2027, rising to 3% in the long term. One aspect of this increased funding is a strength in places fund, which will grow our research and innovation strengths in every part of the United Kingdom, recognising that there are strengths in all parts of the country, not just in London and the south-east.
Kevin Hollinrake (Thirsk and Malton) (Con)
Rebalancing the economy is a key part of the industrial strategy, and one of the reasons why London gets a much better deal on investment is its ability to attract private sector investment, which the north has very little capability to do. Has my right hon. Friend any plans to try to resolve that issue, so that we can attract more private sector funding for infrastructure investment in the north?
Greg Clark
I have indeed, and I will come on to that in a moment, if my hon. Friend will bear with me.
Let me say something about skills. We are creating new job opportunities, but I say to the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil), who raised a point about robots, that if jobs change, we need to ensure that people have the ability to train and develop the skills they will need for the jobs that are being created. The consultation on the industrial strategy established what every Member knows: job opportunities, especially in companies in the technical sectors, require education and training, particularly in maths, digital skills and other aspects of our technical education. There are skills shortages around the country, and great careers would be available to young people and to those who are changing career if only they had that educational base. The significant investment in maths, digital and technical education that was announced in the Budget is therefore important, as is the national retraining scheme, which will work with employers and trade unions, beginning with digital and construction training.
On infrastructure, I can tell the hon. Member for Gedling (Vernon Coaker) that the Chancellor has announced an £8 billion increase in the national productivity investment fund, taking it to £31 billion, and extended it to 2022-23. That will enable us to invest in our physical infrastructure and also, as my hon. Friend the Member for Henley (John Howell) said, in our digital infrastructure as we develop the next generation of full-fibre networks, trial the use of 5G and boost mobile communication on our railways. That, too, is important right across the country. We will also support electric vehicles through the charging infrastructure fund. If we are going to manufacture those new vehicles, we have to be the place in the world in which they can be deployed most effectively.
Antoinette Sandbach (Eddisbury) (Con)
Green growth is clearly part of our future as we move forward in the economy. Does my right hon. Friend agree that hydrogen batteries are as important as electric vehicles?
Greg Clark
My hon. Friend is absolutely right to say that hydrogen offers big advantages. It is a clean fuel, and this country has great expertise in developing and applying it.
Let me say something about business finance, which has already come up in the debate. In a strategy that connects our areas of strength, it is essential that we allow the businesses that are growing across our country to benefit much more than previously from our financial services sector, which is one of the most significant in the world. The deep pool of capital that we have should be available to growing companies up and down the country. The Budget therefore includes a new £2.5 billion investment fund, incubated in the British Business Bank, to drive forward more investment into growing companies across the country. The British Business Bank will establish a network of regional managers by autumn next year, ensuring that it is not just in London and the south-east that these sources of finance and advice are available, as it is essential that they are in place right across the UK.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The reality is that the Office for Budget Responsibility downgraded forecasts for business investment, productivity and growth in the economy for the entire forecasting period, so what the Chancellor announced in last week’s Budget clearly does not go far enough.
Greg Clark
I think the hon. Gentleman misunderstands what was said. The OBR recognised that its forecast that the productivity rate would recover after the financial crisis, which it has been making for many years, has not been realised. There has been no new event; it has just recognised what has happened, which has had consequences for the financial forecasts. Faced with that, the right thing to do is to look seriously for the long term—I do not think that this matter divides Members—at how we can act on the foundations of productivity. Talking about investment in research and development, the infrastructure that we depend on and sources of finance for growing businesses in every part of the country is a serious response to the OBR’s revised productivity forecast.
Mims Davies (Eastleigh) (Con)
As 100 new jobs come to Hedge End and 500 to Chandler’s Ford, productivity and accessibility are really important to the Solent area. Will the Secretary of State work with local enterprise partnerships to ensure that infrastructure and the need for local investment feed into the industrial strategy?
Greg Clark
I will indeed. Throughout my time in this House and in this Government, I have promoted the importance of places and local leadership and of ensuring that investment decisions benefit from local knowledge and local decisions. The Budget and the industrial strategy reinforce that. To have a prosperous United Kingdom, every part of it needs to be maximising its potential, so the strategy very much works with cities, towns and regions across the UK. We are inviting areas to promote local industrial strategies that state what needs to be done locally to make a particular town, city or county fit for the future and able to attract new business investment.
Andrew Bridgen (North West Leicestershire) (Con)
Following the Secretary of State’s announcement of the industrial strategy, we had a meeting in Leicester just yesterday to discuss the infrastructure needs of the east midlands. The east midlands has traditionally been at the bottom of the Government funding league for infrastructure, but it is delivering the highest economic growth and the fastest wage growth in the UK outside London and the south-east. Think what we could do if we had our fair share of infrastructure spending.
Greg Clark
I will take that representation. My hon. Friend is right that the performance of the east midlands has been extremely positive. Some of its institutions—I think of universities in Leicester and Loughborough—are having a huge impact on the local economy. I look forward to visiting Leicestershire again soon to have discussions as part of the plan for local industrial strategies. I mentioned the fund for improving transport connections between city centres and the towns around them, and that is essential investment in the future competitiveness of our economy.
Angus Brendan MacNeil
The Secretary of State is being generous in giving way. How might the industrial strategy develop if we find ourselves with open borders and no border checks, which was talked about as recently as yesterday? If we are to have an open border with the Republic of Ireland, the UK will need an open border with everywhere else, meaning that the UK will not be running any tariffs at all. How will that affect the industrial strategy? Under most favoured nation status, if we have an open border with Ireland, we will have an open border with everywhere else.
Greg Clark
I am conscious that many Members want to speak and the hon. Gentleman is tempting me into a discussion that would take more time than I have. However, our future as a successful economy is about trading more with Europe and the rest of the world. That should be free of tariffs and free of friction, and that is what we want to achieve through our negotiations.
None of the investment in and improvement to the productive capacity of the economy would be possible without a fundamentally strong economy. The essential foundation of future prosperity is to be a place in which global investors can have confidence. It is sometimes easy to take for granted the progress that was made by my right hon. Friend the Chancellor and his predecessor in rescuing the economy from the catastrophic situation in which we found it when the Labour party left office. Britain had its largest deficit as a share of GDP since the second world war. So reckless had the Labour Government been with the public finances that in their last year in office—almost unbelievably—for every £5 of Government spending, £1 had to be borrowed. Unemployment rose by nearly half a million, the welfare bill ballooned and the number of households who had never worked had doubled. If we had continued on that course, Britain’s reputation as a dependable place for global investors to entrust their assets would have been lost, and it would have taken many generations to recover.
As a result of the steady and painstaking work of the British people, however, backed by the leadership of Conservative Members, we have cut the deficit by three quarters at the same time as cutting income tax for 30 million people. Britain has been one of the job creation hotspots of the world, with employment up by 3 million in just seven years and unemployment lower than at any point since 1975. However, just when the deficit is being tamed and we can look forward to falling national debt, which has to be repaid by future generations, the Labour party—I hope it will contradict me—has adopted a platform that is even more extreme than the policies that produced the previous situation. Labour’s proposal is to borrow an extra quarter of a trillion pounds. As if that were not enough, it also wants to increase taxation to what the Institute for Fiscal Studies has called the highest peacetime level in the history of this country. That would, as the IFS also said, make the UK a
“less attractive place to invest”.
It is no wonder that the reaction of employers the length and breadth of Britain has been one of alarm. The chief executive of the EEF said that those policies are from a bygone era. Do they have credibility? The answer is clearly no.
Greg Clark
I am about to conclude.
If we want a strong, competitive economy that is fit for the future, we need to live within our means, create good jobs and pay people well. We need to be a beacon of free trade and internationalism. That is what our industrial strategy and this Budget are about. Prosperity for all is the best alternative to the high-tax, anti-enterprise, job-destroying ideology that has taken over the Opposition Front Bench. Our Budget takes us into the future; the Labour party takes us into the past. I commend the Budget to the House.
Industrial Strategy
Greg Clark Excerpts(6 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
With permission, Mr Speaker, I will make a statement on the Industrial Strategy White Paper, which has been published today.
Today, at one of the most important, exciting and challenging times in our history, the future is unfolding before our very eyes. New technology is creating new industries, changing existing ones and transforming the way in which we live our lives. We need to ensure that we are well prepared to prosper in this future. The decision to leave the European Union makes that even more important. More decisions about our economic future will be in our own hands to take, and it is vital that we take them well.
We start from a position of considerable strength: we are an open and flexible economy, built on trade and engagement with the world; we have earned a reputation as a dependable and confident place in which to do business thanks to our high standards, respected institutions and the rule of law; we have achieved higher levels of employment than ever before in our history; we are known for innovation and discovery, with some of the best universities and research institutions in the world producing some of the most inventive people on earth; and we have commercial and industrial sectors, from advanced manufacturing to financial services, and from life sciences to the creative industries, which are among the best in the world.
Our industrial strategy will build on those strengths, but it will also address weaknesses. We need to do more to make the most of our untapped potential. As the Chancellor said in last week’s Budget, although we are proud of our strong record of high employment, our average productivity—output per hour worked—is less than it could be. Productivity may not be the most exciting term, but it really does matter for people all around the UK. High productivity means greater earning power and better paid jobs. For our country, it means more money to spend on our public services.
Today’s Industrial Strategy White Paper starts with the five foundations of productivity: ideas; people’s skills; infrastructure; the business environment; and the importance of every place in the country. For each, we are clear about the kind of economy that we need to be.
Our vision is that the UK will be the world’s most innovative economy. It will have good jobs and greater earning power for all, make a major upgrade to our infrastructure, be the best place in which to start and grow a business and have prosperous communities across the country. It is a long-term strategy, working to make changes now, but looking to the future, and we are taking action to realise it. Let us take research and development as an example. Our reputation is as one of the best countries in the world for science and research, but we cannot take that for granted; we must reinforce it. Last week, we announced an increase in public investment in R and D, with the aim of reaching a combined public-private spend up from 1.7% to 2.4% of GDP by 2027, and to 3% thereafter.
I strongly believe that there are few problems that cannot be solved by the innovation and ingenuity of British business and science. History has shown that partnerships between business, Government and science can work—from the outstanding collaborations that we have had in the automotive and aerospace sectors to the recent partnerships in our creative industries.
Strategy has to be for the long term; a short-term strategy is a contradiction in terms. Other countries have benefited from establishing policies and institutions that can endure. That is why, through the consultation on the Green Paper, we have worked with businesses, industry bodies, investors, trade unions, universities, colleges and research institutions, and many others to establish a shared commitment to the actions that we will take now and in the future.
After our consultation on the Industrial Strategy Green Paper, we saw an overwhelming response to the question that we asked on whether we should pursue sector deals, as industries came forward with plans for their future. Today, we have struck ambitious sector deals with four sectors: life sciences, construction, artificial intelligence and automotive. I welcome the huge interest on the part of other sectors that are coming forward with their plans. There are still those who hear the words “industrial strategy” and associate them with the mistakes of the past—of thwarting competition, shielding incumbents and continuing with the status quo. This is not the approach that we will take. Our modern industrial strategy is not about protecting the past. It is about taking control of our future as a nation.
We have set out four grand challenges—identified on the advice of our leading scientists and technologists—that will be supported by investment from the challenge fund and matched by commercial investment. The challenges are: artificial intelligence and the data-driven economy; clean growth; the future of mobility; and meeting the needs of an ageing society. Whether we like it or not, these challenges are sweeping the world. If we act now, we can lead from the front, but if we wait and see, other countries will seize the initiative. For each of these challenges, our industrial strategy sets out how we can seize the opportunity—from using AI to raise productivity in all sectors to making our energy intensive industries competitive in the clean economy, and from supporting the transition to zero-emission vehicles to harnessing the power of big data to diagnose illnesses earlier and improve the quality of life for so many people in this country.
Britain needs to be a leader, not a follower—a country that is ahead of the curve, not behind the times. This is an opportunity to rally behind this industrial strategy, to raise our productivity and to build a country that is fit for the future. I commend this statement to the House.
Rebecca Long Bailey (Salford and Eccles) (Lab)
I am pleased that the White Paper seems to acknowledge many of the fundamental problems faced by our economy, and give credit to the Secretary of State for adopting one of Labour’s policies to set national missions or “challenges”, as he likes to call them. But as I delve into the finer details of the paper, the aims of which may be well intentioned, it appears to be little more than a repackaging of existing policies and commitments.
The Office for Budget Responsibility figures contained in last week’s Budget were a damning assessment of the impact of seven years of Conservative austerity, with productivity, real wages, and GDP growth and GDP per capita revised down, but debt revised up. The Conservatives’ economic credibility has been shot to pieces, with people earning less than they did in 2007 until at least 2023. We have to go back to 1820, when George IV ascended the throne, before we find a time when productivity increased less than this over a 10-year period.
Today, I was full of hope—desperately hoping that the Government would press the reset button—but they have simply restated their plans for a £31 billion national productivity investment fund. As TUC analysis shows, this only raises investment to 2.9% of GDP, whereas the average for leading OECD industrial nations is 3.5 %. Labour even called on the Chancellor to use his Budget to level up regional investment in line with London, but only one—just one—of the named transport projects in the national productivity investment fund is in the north. The development of local industrial strategies is certainly welcome, but will the Secretary of State admit that they simply could not deliver the desired effects under the Government’s current investment plans?
The strategy restates the commitment to raise total research and development investment to 2.4% of GDP. This is moving in the right direction, but it is still behind world leaders and far less ambitious than Labour’s commitment to reaching 3% of GDP by 2030. The allocation of £725 million to the industrial strategy challenge fund is again welcome, but it seems to lack any real strategy. As Sheffield Hallam University recently found, the areas already identified by the fund
“account for little more than 1 per cent of the whole economy (by employment) and 10 per cent of UK manufacturing.”
Many of the policies focus on R and D spending in only a handful of specified sectors in which the UK already has a comparative advantage. This will do nothing to help the millions who work in large, low-wage, low-productivity sectors such as retail, hospitality and care, or people who do not live in the golden triangle made up of London, Cambridge and Oxford.
Finally, this industrial strategy fails to start from the bottom up. It is all well and good talking about leading the fourth industrial revolution, but this can only happen with a highly skilled, technology-savvy workforce. After seven years of Conservative Government, only 11% of students in England take IT at GCSE, and only 30% are at schools that provide it. That is certainly not laying the foundations for an economy of the future, and the amount of money for skills outlined today does not even begin to make up for the cuts inflicted on our education system since 2010. Indeed, the money allocated for the national retraining scheme amounts to only 6.6% of the funding slashed from the adult skills budget since 2010.
This industrial strategy may well be a start, but I fear that the Government have simply produced a public relations gimmick that is thin on detail, thin on investment and thin on ideas. I truly hope the Secretary of State will listen to my concerns as well as those from business and the trade union movement over the coming months, because we have one chance to reset our economy, and if we let this slip through our fingers, the people of Britain will never forgive us.
Greg Clark
I am grateful to the hon. Lady. When she has the time to read the Industrial Strategy White Paper we have published today, I hope that she will reflect on the substance, content and ambition of this strategy and that she will come out in support of it.
One thing that the hon. Lady should know, and that every Member of the House knows, is that for our country to prosper, we need a sound economy. The last time the Labour party was in government, we had the biggest financial crisis since the 1930s, racking up billions and billions of pounds of extra debt for our children and grandchildren to pay. As usual, the Labour party has not learned the lesson from that, because its proposal is to borrow an extra £250 billion. In attracting the confidence of the world to invest in this country, the hon. Lady needs to make sure that the economy is sound. In the prospectus that she puts forward, there is nothing that is capable of achieving that.
In the weeks ahead, I hope the hon. Lady will discover that, around the country—from north, south, east and west, and from business organisations to trade unions to our respected scientific institutions—there has been substantial collaboration, based on the Green Paper, which has resulted in some major changes. It is a strategy for the long term—it is right that it should be the strategy for the long term—but it is being backed up by investment now. In the Budget just last week, we saw the announcement of the biggest increase in investment in research and development in this country that there has ever been. The hon. Lady should welcome that because it is being welcomed throughout the country.
With our partners right across the United Kingdom, we will implement this industrial strategy. I hope, when the hon. Lady goes out and talks to businesses and leaders across the land, that she will find that there is great support for this approach and that she will join us in seeking to implement it and to provide the certainty we need in the years ahead.
Several hon. Members rose—
Greg Clark
My hon. Friend is absolutely right, and I am grateful for his question. One of the challenges is that we have is to make sure, right across the economy, that we are taking the opportunities to raise the productivity and performance of sectors in which many people are employed. The tourism and hospitality sectors are very important in that. They feature in the industrial strategy as two areas where it is particularly important to work together with firms big and small, as we are doing, to establish training institutions and spread technology so that we can raise their performance to compare with the strongest performance elsewhere in the economy.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
I thank the Secretary of State for advance sight of the statement.
We welcome, finally, this overdue industrial strategy. We welcome also the recognition of the grand challenges of artificial intelligence, clean growth, future mobility, and the ageing society—all of which are very important to Scotland. It therefore says everything that there has been no consultation with the Scottish Government nor any attempt to match the Scottish Government’s economic plan, particularly given that the Scottish Government lead in life sciences. How will that working with the Scottish Government be taken forward?
This is not an outcomes-based approach such as we have seen working successfully in Scotland. A plan without knowing its destination is just a plan, and it does not guarantee success. If it did, it would answer the big question on skills. The Secretary of State said that there was no point in having short-term strategy, but it has been pointed out, in terms of the Budget, that the training and learning budget fell by 13.6% per person in real terms between 2007 and 2015. With the uncertainty over Brexit already affecting EU nationals, perhaps he could tell industries where the skills that will be required in the short to medium term will come from.
While we welcome the £7 billion, which is a very big number, for productivity, why, according to the Red Book, does it apparently not come into effect until 2022? Do we not need to address productivity now?
Greg Clark
I am grateful to the hon. Gentleman for his questions. Working together with the Scottish Government is very important. On some devolved matters, it makes sense for them to be joined up. Last week, I had the privilege of meeting Keith Brown, the Scottish Government Minister responsible for this area. When the hon. Gentleman gets a chance to read the paper, he will see that there is substantial reference to our close working with the Scottish Government. It is very important that we do that.
On skills, the hon. Gentleman is absolutely right. It is foundational that we should equip our people with the skills that they need to take on the jobs that are being created. He might have missed the fact that we have increased very substantially the number of hours that people are being taught in further education colleges, so as to raise them in line with the best in the world. That is a very important contribution to this.
On the extra investment that the Chancellor announced, the national productivity investment fund is to be further extended to 2022. That is why the figure that he announced was for that particular year.
Anna Soubry (Broxtowe) (Con)
I congratulate the Secretary of State on this document. The problem with Labour Front Benchers is that they think it is all about money. Money is important, but it is how and where we spend it that matters the most. We need an industrial strategy that is bold, realistic about the failings, and has a huge vision. This document has that. Will he commit to making sure that he continues to work with British business to put this excellent strategy into action?
Greg Clark
I am grateful to my right hon. Friend, not least for her excellent work as a Minister in the Department for Business, Innovation and Skills in laying the foundations for this work, which is of benefit to every single part of the country. One of the mistakes that was made over many decades by successive Governments was not to recognise the importance of local economies in creating the right conditions for businesses to succeed. That is prominent in the strategy, and I know that she has been a particular champion of it.
Rachel Reeves (Leeds West) (Lab)
Industrial strategy, particularly in sectors such as the automotive sector, depends on a model of just-in-time delivery. One concern of that sector, in particular, is that things will be held up at ports if we leave the European Union and the customs union. What assurances can the Secretary of State give businesses that we will have frictionless as well as tariff-free trade after we leave the European Union? Without that, productivity will deteriorate even further.
Greg Clark
The hon. Lady is absolutely right about the importance of making sure that we can continue and, indeed, expand our trade, not just with the European Union but with the rest of the world. She is absolutely right that the model of the automotive sector and many other sectors requires the availability at very short notice of components and products. That is why it is very important that the deal that we negotiate should give us the ability to trade without tariffs and with the minimum of friction.
Sir Desmond Swayne (New Forest West) (Con)
How confident is my right hon. Friend that we can measure productivity accurately?
Greg Clark
My right hon. Friend asks a characteristically acute question. It is true to say that some of the measures of productivity do not do justice to the importance of the issue. We would not, for example, want to substitute our model of very high employment for the model of some other countries, where there is very high productivity among people who are employed, but a large number of people unemployed. That would be the wrong thing to do. We propose in the strategy to set up an independent council, which will set a baseline against which our performance can be judged independently and which will report to the House. I think that that is the right way to apply rigour to the question that he raises.
Sir Vince Cable (Twickenham) (LD)
I welcome the statement, albeit that it has taken the Government two and a half years to conduct what is, essentially, a rebranding exercise. Does the Secretary of State agree that the essence of improving productivity is skills? If he is going to reverse the absolutely catastrophic decline now occurring in apprenticeships, he should go back to the model that he and I worked on. It would have increased the number and quality of apprenticeships and scrapped the apprenticeship levy, which has been appallingly maladministered.
Greg Clark
I had hoped that the right hon. Gentleman would give a more enthusiastic welcome to some things, which I thought he would be in favour of, not least the substantial increase in investment in research and development. When he was Secretary of State, we managed to maintain the level, but this is the biggest increase there has ever been, and I thought that he would welcome that.
Apprenticeships are very important. We have made great strides in improving the number and quality of apprenticeships. The new system is bedding in, and I think most observers recognise that the initial figures are not a guide to the future. The right hon. Gentleman is absolutely right that we want to encourage the take-up of more good apprenticeships.
Mr Mark Prisk (Hertford and Stortford) (Con)
Unlike my former Secretary of State, the right hon. Member for Twickenham (Sir Vince Cable), may I welcome what the Secretary of State has said, which is both insightful and forward looking? In the light of that former relationship, I encourage him to be willing and patient in dealing with collaboration, which is something that the right hon. Gentleman and I had to deal with.
May I ask my right hon. Friend about a local question, which also concerns life sciences? Hertfordshire has the highest life sciences sector concentration of almost any county. May I therefore ask Ministers to involve our businesses, our local enterprise partnership and our local authorities closely when it comes to life sciences—welcome as it is that investment has been announced today, albeit elsewhere?
Greg Clark
I am grateful to my hon. Friend for his welcome for the White Paper. He will see that one of its important features is the recognition that clusters—that is to say, businesses in the same sector all reinforcing each other—can lead to excellent performance.
On the basis of this strategy, substantial new investments have been committed in the life sciences sector, but these are the first in a pipeline of new investments that will follow all across the country and in every part of the United Kingdom, justifying the attention and the work that we have been engaged in—led by Sir John Bell, the eminent scientist—to make sure that we are the go-to place in the world for anyone with an interest in the future of the life sciences.
Chuka Umunna (Streatham) (Lab)
The publication of the strategy is welcome, but I have two asks of the Secretary of State. First, for this to succeed in the long term, it has to be able to survive changes of Government. Is it not about time that we set up a cross-party commission to build the political consensus needed to produce further iterations of the strategy? Secondly, let us be honest and recognise that the biggest institutional barrier to what he is proposing is the Treasury. Treasury orthodoxy has never properly got behind the concept of an industrial strategy. Is it not time to change his Department into a proper Ministry of economic reform that takes on all non-fiscal economic policy, across the Government, and which is equal to, not subordinated to, the Treasury?
Greg Clark
The hon. Gentleman makes an intriguing set of suggestions. Let me start by completely agreeing with him that it is right to establish and support a strong consensus on the long-term commitments that we need to make in this country. It seems to me that other countries around the world have benefited from having a shared commitment to policies and institutions that investors know are going to endure, and that is the approach we intend to take. That is precisely the reason why we have had such an extensive consultation, involving all parts of the country and all parts of the economy—and across parties. He is right that the best way for the strategy to endure is for it to have the commitment and involvement of people who have an interest in the future success of the United Kingdom.
This is true across Government, too. The hon. Gentleman is right to say that in times past—in decades past—the finance Ministry has regarded itself as precisely that, but I think the importance of accepting that our national prosperity requires business to succeed in all parts of the country is recognised. Anyone who looked at the Budget last week and saw the commitment made by the Chancellor to, for example, research and development, will recognise that this is a whole-Government commitment, but the hon. Gentleman is absolutely right that it also needs to embrace the whole country.
Robert Halfon (Harlow) (Con)
On the point made by the right hon. Member for Twickenham (Sir Vince Cable), it is worth noting and putting on the record that we have 900,000 apprentices at the moment, which is the highest ever figure in our island’s history.
I strongly welcome the industrial strategy. Does my right hon. Friend not agree that a key part of it is supporting further education and skills, including through institutes of technology? An important example is the multimillion pound investment in the new Harlow College skills academy at Stansted airport, which was visited today by my wonderful hon. Friend the Minister for Climate Change and Industry.
Greg Clark
I am grateful to my right hon. Friend for his comments. He worked very hard to achieve the success in the number of apprenticeships that we now have. He is right in what he says about Harlow College. That is a very good example of how working closely with a big local employer—in this case, Stansted airport—can make sure that the jobs available through the success of that airport and its associated industries can be taken up and spread among people in his and neighbouring constituencies. It is doing a fantastic job—I know my right hon. Friend was thrilled by the Minister’s visit today—and I am pleased to say that it features very strongly in the industrial strategy.
Mr Dennis Skinner (Bolsover) (Lab)
Does the Secretary of State seriously think that it is possible to convince the country that a Tory Government—I repeat, a Tory Government—have got the capacity to introduce a decent industrial strategy? In 18 Tory years while I was in the House, they closed down most of the shipbuilding industry, they got rid of a lot of the steel industry, they closed every single pit and now they are buying 40 million tonnes of coal from countries we do not even trust. These are the actions of a Tory Government, and—remember—let us stop this nonsense about trying to tell the people that unemployment is now lower than it was after a Labour Government, because during the Labour Government after the second world war, it was down to 2.2%, or 440,000, and when it hit 1 million, Ted Heath was in government. What a lousy bunch!
Greg Clark
What I say to the hon. Gentleman is that every time there is a Labour Government, it is a Conservative Government who have to reverse the chaos caused and revive the economy. To give him an opportunity to calm down and reflect on the policies set out in the strategy, let me make him a present of this copy of the White Paper, which I hope he will find inspiring reading. I am sure that he will look at the policies in detail and, when he comes back for the next Question Time, bring himself to commend them.
Conor Burns (Bournemouth West) (Con)
I commend my right hon. Friend’s statement. Many of us know how hard he has worked on the strategy, and how widely he has engaged. I invite him to use this opportunity to reaffirm the central role of Britain’s universities in future growth and technological advance. I invite him to visit my constituency and see what Bournemouth University has done to create an incredible new tech sector, resulting in Bournemouth being voted the fastest growing digital economy in the United Kingdom.
Greg Clark
I am grateful to my hon. Friend for his comments. The role of universities is absolutely vital. They have worked with us very closely on the development of the strategy. They are central to the local economy in almost every part of the country, and not just in educating the population—local people and those who travel to study—but in the research and leadership they offer. I would be delighted to visit Bournemouth’s excellent university with my hon. Friend, to congratulate it and to discuss how we can take its success forward in the local area.
Alison McGovern (Wirral South) (Lab)
The Secretary of State answered my hon. Friend the Member for Leeds West (Rachel Reeves) elegantly, but all he really did was restate the premise of her question, so let me give him another chance. Page 202 of the White Paper refers to a
“programme that will target areas where businesses need to improve to match the best in Europe.”
The problem with competing with businesses in Europe is that they will be members of the single market and, according to the Government, we will not. Has he made representations to the Prime Minister, asking her to change her position?
Greg Clark
I am interested that the hon. Lady has got to page 202 already—that is high productivity. Of course, as the White Paper makes very clear, we want not only to continue our international collaborations, but to deepen them. That is very important, because the most productive industries are international. A big part of our negotiations, which she knows full well are continuing, is focused on getting a deal that is not just in our interests, because exactly the same logic applies to our European partners; they have no more interest than we do in interrupting those deep and successful relationships. That is why we have made that commitment.
Rachel Maclean (Redditch) (Con)
I welcome the industrial strategy, as a proud midlands MP representing a constituency that played its part in building our reputation as the workshop of the world. Will my right hon. Friend please say a little more about how we will go further in addressing some of the productivity gaps between London, the south-east, Oxford and Cambridge and our regions? May I suggest that a great way to do that would be to build an institute of technology in Redditch?
Greg Clark
My hon. Friend makes an excellent proposal. Let me choose one of the aspects of the industrial strategy that is relevant: the importance of local leadership with the powers to make a difference. She is fortunate as a midlands MP, as we are fortunate in this country, to have Andy Street as the new West Midlands Mayor, who is already playing such a significant leadership role in the area. As my hon. Friend will know, last week, the Budget set out significant investment in the region’s transport system in order better to connect those areas that have not been well connected to Birmingham and other towns and cities in the midlands, which we know internationally is key to raising productivity.
Nic Dakin (Scunthorpe) (Lab)
I absolutely applaud the industrial strategy for saying that we need to build on our strengths. One of our great strengths is our foundation industries, such as steel. Will the Government get on with energetically pursuing a sector deal with the steel industry, so we can add it to the other four deals he announced today?
Greg Clark
I will indeed. The Minister for Climate Change and Industry—there is no more energetic person than the Minister of State—met the steel sector today to pursue those discussions. The sector features in the White Paper published today and the hon. Gentleman knows that I agree with him on its importance. I am full of enthusiasm for that being brought to a conclusion.
Oliver Dowden (Hertsmere) (Con)
I welcome the Secretary of State’s emphasis on creative industries and construction, both of which are large employers in my constituency. Does he agree that there is a real risk of inflationary pressure in the construction sector, particularly if we are to meet our ambitious housing targets; and that in the short term, as we leave Europe, that will mean a need for continuing immigration and, in the longer run, for encouraging more young people into this industry, which is often very well rewarded?
Greg Clark
As my hon. Friend knows from the Budget, we are committed to a big expansion of housebuilding. It is therefore important to ensure we have the skills and the workforce to take up those opportunities. One of the prime areas of focus in the construction sector deal is investment by the sector in training the next generation of construction workers, so we can avoid precisely the problem he describes.
Norman Lamb (North Norfolk) (LD)
Does the Secretary of State recognise the urgency of reaching a decision on our future participation in successors to Horizon 2020? Does he also recognise that further public investment will be needed to reach 2.4% of GDP on research and development spend? How will he ensure that that public investment is spent around the country, so that everyone benefits from it?
Greg Clark
I am grateful to the right hon. Gentleman for his questions. He is right that international co-operation in research—not just with other European countries, but around the world—is the foundation of our success. Typically, Nobel prizes are these days awarded to teams representing many different countries. We are very clear in the strategy that we want to continue and extend the joint work we do with other countries. On the increase required, he will see in the strategy document that it is to be allocated by our scientific community, but with a particular regard to how we can make sure that clusters of excellence in research all around the country can benefit from the increased funding.
Giles Watling (Clacton) (Con)
I commend the Secretary of State for his very positive statement. Does he agree that the tourism industry—worth £127 billion, 9% of GDP and vital to my constituents in the glorious sunshine coast of Clacton-on-Sea—should be at the forefront of any industrial strategy, as it is a powerful way forward out of recession and post-Brexit?
Greg Clark
I do indeed. Many of us have had the pleasure of visiting Clacton and Frinton, whether as day-trippers or in some other capacity, in recent years and look forward to doing so again. My hon. Friend is absolutely right that tourism is a very important industry. The sector has in some cases been associated with lower levels of pay than other areas. Working with the sector, we want to see how we can invest in improvements in productivity, so it can be a much better paid sector than has been associated with it in the past.
John Grogan (Keighley) (Lab)
Given the important chapter in “Industrial Strategy” about devolution, will the Secretary of State agree to meet the 17 council leaders in Yorkshire from all parties who are advocating a “one Yorkshire” devolution settlement, so they can work in partnership with the Government to deliver an effective industrial strategy for the county?
Greg Clark
I would be delighted to do that. It is a mark of the strategy that it points to the success of decisions made locally and having clear local leadership. There have been, and continue to be, discussions in Yorkshire on the best arrangement, but I am very happy to meet the hon. Gentleman and his colleagues.
Fiona Bruce (Congleton) (Con)
I welcome the strategy. Siemens, which has a pioneering digital factory in Congleton, is one of the companies that has led on the recent “Made Smarter” review. Does the Secretary of State agree with the principles behind the review, and that priority should be given to upskilling 1 million industrial workers to enable digital technologies to be successfully exploited, and so put the UK at the forefront of the fourth industrial revolution?
Greg Clark
I do indeed, and I would like to put on the record my thanks to Professor Jürgen Maier, the head of Siemens in this country, and his team for producing that very important report. It is a good example of how digital technology affects almost every sector in the country. He has recommended a series of steps that we will implement in the months ahead and that will be of great benefit to the whole economy.
Tony Lloyd (Rochdale) (Lab)
The Secretary of State will recognise that further education and apprenticeships are fundamental if towns such as Rochdale are to be part of the productivity change he wants to achieve. Will he, then, consider Greater Manchester’s long-held demand that the post-16 education and training budget be devolved to Greater Manchester?
Greg Clark
Yes, the success of the devolution arrangements in driving forward local economies has been considerable, as the hon. Gentleman, being the former Mayor, knows, and we want to see more of it. He is right to draw attention to the particular challenge—but also opportunity—of having towns within city regions place a particular focus on how they can be helped to play a bigger role in the rise in productivity now being experienced with the success of some of these devolved arrangements.
Alan Mak (Havant) (Con)
I thank the Secretary of State for his statement and for including the fourth industrial revolution as one of the key drivers of his industrial strategy policies. Will he continue to support small and medium-sized enterprises such as Havant-based 3D printing business Dream 3D, which is already using new technologies to create new jobs and improve productivity?
Greg Clark
I will indeed. I am grateful to my hon. Friend for his tireless work in chairing the all-party group on the fourth industrial revolution and promoting the importance of embracing the new technologies of the future. He is absolutely right that there is a big opportunity for small and medium-sized businesses in particular. We have succeeded in having some of our biggest firms comprehensively embrace new technology, and the strategy points out some areas in which we can work with small and medium-sized businesses to diffuse that across the economy more generally.
Graham Stringer (Blackley and Broughton) (Lab)
The key to any successful industrial policy must be low and competitive energy costs. Energy costs in the United States have halved, and the reductions in China and India have been similar, but ours have gone up. How will the Secretary of State change that damaging trend?
Greg Clark
The industrial strategy is very clear and makes that precise point. We have a substantial report from Professor Dieter Helm, the energy economist, looking at how we can meet our carbon reduction commitments but at the minimum cost to consumers, whether they be domestic or industrial consumers. I hope that the hon. Gentleman will have a chance to look at the report, which we will be responding to shortly, because our ambition is as he describes: to minimise the energy costs facing businesses.
Martin Vickers (Cleethorpes) (Con)
I particularly welcome the commitment in the document to local industrial strategies, especially the reference on page 226 to the Greater Grimsby project board, of which I am a member. It is a private sector-led board. Does my right hon. Friend agree that that is the best way forward for developing strategy, and will he commit to meeting the board in the not-too-distant future?
Mr Speaker
I had not previously been aware of the hon. Gentleman’s membership of that important board, but I am now.
Greg Clark
I was aware of it, and I am delighted that my hon. Friend asks this question. There is a big opportunity for Grimsby, Cleethorpes and the surrounding area to participate in the revival that this industrial strategy offers. The board, which involves the private sector and people with a big commitment to Grimsby and the area, is featured for the particular reason that its leadership is already achieving results, and we are very keen to push that forward.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
The Secretary of State will be aware that the best ceramics in the world are made in Stoke-on-Trent. I am partially heartened to see, on page 224 of this illustrious document, a reference to its ceramics industry. However, the Secretary of State has previously been very supportive of a sector deal, and the industry was hoping that details of it would be included in the industrial strategy, but they are not there. May I press him on that? What support can the ceramics industry expect from the industrial strategy, and would he be willing to meet representatives of the British Ceramic Confederation to talk about what support we can secure now, rather than waiting for the next round of deals to be published?
Greg Clark
I share the hon. Gentleman’s enthusiasm for Stoke-on-Trent and its leadership in ceramics. In fact, just last week I was talking to Laura Cohen, who leads the British Ceramics Confederation; and Abi Brown, the deputy leader of the city council, is a huge champion of the industry. As the hon. Gentleman pointed out, it features in the industrial strategy, and I think it is one of the sectors that have a stellar future. For instance, ceramics technologies can be applied to new uses in relation to medical and other devices. That is why the prospects of a sector deal are so exciting, and it has my full support and commitment.
Amanda Milling (Cannock Chase) (Con)
I welcome my right hon. Friend’s statement. A number of Members on both sides of the House have mentioned the importance of collaboration. If the industrial strategy is to succeed, it will require cross-Government effort to deliver the five foundations of productivity. Will my right hon. Friend outline the measures that have been taken to ensure that the strategy is genuinely embedded across Whitehall Departments?
Greg Clark
My hon. Friend has made an excellent point. Given that different industries are coming together—for example, the energy sector and the motor industry share an interest in battery storage—it makes no sense for the Government to operate in silos. Part of the purpose of the strategy is to ensure that Government policy in all the different Departments pulls in the same direction to support the industries of the future, to help them to create good jobs, and to improve the earning power of the country.
Christian Matheson (City of Chester) (Lab)
I find myself in the unusual position of agreeing with Lord Heseltine, who suggested that the best strategy for industry in the United Kingdom might be not to leave the European Union. However, we are where we are.
The aerospace sector has experienced some difficult times recently. A great many orders have gone abroad, particularly to the United States, with no reciprocation. What will the Secretary of State do to stand up for a sector in which we have a world-leading position, given that we do not have the relationship that we should have with some of our major partners?
Greg Clark
We do stand up for the aerospace sector. It is one of the most successful sectors in terms of joint working, both with the firms in the sector and with the Government. We have a good record of working together. As for ensuring that we obtain orders in this country, there is a big role for us all to play in spelling out the benefits to other countries of products and services that are made in and provided from this country, and I hope the hon. Gentleman will join me in doing that.
Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)
My right hon. Friend is a great ally of Teesside, and there is so much in the strategy document that is welcome, whether it relates to steel or to the Heathrow northern logistics hub. However, I want to focus briefly on carbon capture and storage. The Teesside Collective is keen to make progress on it. When will we know how we can go about bidding for the £15 million of feed funding that we are seeking?
Greg Clark
I am grateful to my hon. Friend for what he has said. I particularly commend the Mayor of Tees Valley, Ben Houchen, who was instrumental in, for instance, the proposals for the regeneration of former sites of special scientific interest that has been so well received on Teesside. I am aware that my hon. Friend initiated a successful Westminster Hall debate on this subject. As he knows, we want to get on with testing technology for carbon capture, utilisation and storage, and Teesside offers a particularly attractive environment for that because of the connections between the different users and suppliers in the area, but there needs to be a competition that can lead to an award. I know that my hon. Friend is proceeding with that, and I know that Teesside will be very well placed.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Page 218 of the White Paper shows that, after decades of economic misrule from Westminster, gross value added per hour worked in central London is 150% of the UK average, while in Wales it is only 81.4%. Therefore, a litmus test for the Secretary of State’s strategy should be how it tackles geographic productivity and wealth inequalities. What benchmarks is he using to determine success or failure in addressing those challenges?
Greg Clark
The hon. Gentleman is right to raise the issue. The productivity challenge that we face is about disparities. We have some of the most productive people and places in the world, but we have other places that are behind that level. The relentless focus of the industrial strategy is therefore on how we can close that gap by raising the earning power of those who are following. He will see that Wales—its industries and training and education system—is a prime area of focus throughout the strategy. I was pleased to work with Ken Skates, the Minister in the Welsh Assembly Government, to co-ordinate our work precisely to close that gap.
Kevin Foster (Torbay) (Con)
I am sure the Secretary of State will agree that a key test for the industrial strategy will be how it spreads prosperity to all parts of the UK. Does he agree that a good way of doing that in Torbay would be to agree the bid for an institute of technology to be built in Paignton?
Greg Clark
My hon. Friend makes another ingenious bid for the area. The history of technology in Torbay and the firms that have located there—I enjoyed meeting some of them on a visit with my hon. Friend a little while ago—provide particular reasons why it is an attractive location for such an institute.
Diana Johnson (Kingston upon Hull North) (Lab)
To improve growth and prosperity in this country, we need to ensure fair transport investment in all parts of the country. I have just received a written ministerial answer showing that the disparity in investment between the south and the north has widened since 2012. What is the Secretary of State going to do to get the Department for Transport on board with his strategy?
Greg Clark
When the hon. Lady studies the White Paper in detail, she will see that one of the proposals is to look at the dynamic effect of investments—how a transport investment can transform the prospects of an area. That can be taken into account, we propose, in making transport decisions in the future, which will be of benefit to her constituents.
Rebecca Pow (Taunton Deane) (Con)
I, too, welcome the drive to up productivity with its links to the clean growth strategy. Does my right hon. Friend agree that this approach to upping productivity is one of the best planks that we can put in place for continued prosperity and sustainability? Would he like to pay a visit to Taunton Deane, to look at the opportunities provided therein for some of the funding to come our way? We must not forget the south-west, and we have a great opportunity on our new Nexus business site.
Greg Clark
I would be delighted to visit my hon. Friend’s constituency. As she points out, not just in this country but all around the world economies are becoming cleaner and greener, and if we can establish leadership in the research and development and, critically, the translation of those discoveries into industrial products and processes, we can benefit substantially. We are already doing that in the offshore wind industry and others. It is a world full of opportunities for more of that, and of course the south-west has a particular role to play in that.
Alan Brown (Kilmarnock and Loudoun) (SNP)
The Secretary of State’s document rightly stresses the importance of transport infrastructure and digital infrastructure, yet when it comes to Scotland, his Government have just imposed a £600 million cut to the future rail investment programme and to date we have been underfunded in terms of superfast broadband. Will he confirm that Scotland’s funding from the £740 million digital infrastructure programme and the £400 million fund for electric vehicle charging will be allocated on need, which covers Scotland’s landmass and geography, and will not be based on arbitrary population or other measures?
Greg Clark
Of course we recognise that, and I have made the point throughout our discussions this afternoon that every place requires a consideration of its particular challenges. The geography of Scotland means that different decisions will be appropriate there compared with more urban parts of England, for example. We completely recognise that, which is why we are setting out a localist approach to ensure that we make the right investments for the right places.
Vicky Ford (Chelmsford) (Con)
I congratulate the Secretary of State on the industrial strategy, and on announcing more investment in science and research than any Government have done in the past 40 years, particularly in advanced technologies such as quantum technologies. Anyone who wants to see gravity sensing need go no further than Chelmsford. Does he agree that investing not only in blue skies research but in near-to-market innovation is key to ensuring that bright ideas happen and stay in Britain?
Greg Clark
I completely agree with my hon. Friend. Making new discoveries is something that we have a deserved reputation for, and we must not take that for granted. We must reinforce that success. Where we have been less successful, however, is in translating those discoveries into practice and, in particular, in creating manufacturing jobs here. That is why medical manufacturing has an important role to play in the life sciences sector deal, and I am thrilled that on the basis of that industrial strategy, major investments have been announced today from the American company MSD and the German company Qiagen, to reinforce the success of that important sector.
Paul Flynn (Newport West) (Lab)
How many pages of the Secretary of State’s strategy deal with the immense value of tidal power? It is non-carbon, it is green, it is British, it is eternal in its duration and, unlike other renewables, it is entirely predictable. Will he temper his manic enthusiasm and optimism by reading the National Audit Office and the Public Accounts Committee reports on Hinkley Point, which say that it will cost us £30 billion in subsidies that will be paid for by the poorest consumers?
Greg Clark
I am not going to temper my enthusiasm; quite the opposite, in fact. We have many opportunities in clean energy, with many breakthroughs in prospect. As was pointed out earlier, we have to ensure that the cost to consumers is taken into account, and that is the judgment that we need to make when it comes to projects such as the one the hon. Gentleman has just described.
Nigel Huddleston (Mid Worcestershire) (Con)
The Secretary of State is welcome to come and talk industrial strategy in Worcestershire any time. Can he confirm that the industrial strategy is intended not to be a 254-page document that will sit on a shelf gathering dust but a deliberate statement of strategic intent and policy that will change over time? Will he tell me how it will be refreshed and changed?
Greg Clark
My hon. Friend makes an important point. The purpose of the strategy is not just to inform the decisions taken by Government Departments—although it is important that they should be consistent with it—but to give confidence to investors so that they can predict the direction of policy. We have seen that today in the life sciences sector. It is important that the strategy is kept refreshed and up to date, and one of the proposals in the paper is to establish an industrial strategy council, which will be an independent body that can report to the House and others on progress and ensure that we are agile enough to keep up with developments in technology.
Justin Madders (Ellesmere Port and Neston) (Lab)
As the Secretary of State knows, the Vauxhall car plant in my constituency is facing a huge challenge for its survival, so the focus on the supply chain in the automotive sector, on page 202 of the strategy, is to be welcomed. In order to be a success, however, we will need more than good intentions. Will he tell us what financial incentives will be available to encourage suppliers to relocate to the UK?
Greg Clark
Part of the sector deal with the automotive sector will do precisely what the hon. Gentleman suggests—that is, look at the supply chain and create opportunities, backed by the industry and the Government working together, to make it easier for suppliers, including small suppliers, to locate in this country. He is bang on the money: that is what was proposed by the sector and it has been agreed in the sector deal. That shows the value of this strategic approach, with the Government and the sector working together to address some of the known opportunities.
Robert Jenrick (Newark) (Con)
From speaking to businesses and investors, Brexit is of course driving some uncertainty, but when they speak frankly, they say that their greatest fear is a hard-left Labour Government and the investment-destroying, punitive taxation that would come with them. What role is played in the industrial strategy by low, simple taxes and by great incentives, such as the world-class research and development expenditure credits?
Greg Clark
My hon. Friend makes an excellent point. Everyone should be seeking to build confidence in the UK economy. We make it clear in the industrial strategy that some of the UK economy’s strengths are that we are an attractive place for business to locate, which is why we are one of the biggest places for inward investment around the world, that we create more new businesses than any other country, that we are a competitive place with no sheltering for incumbents, and that we are a place of low taxes in which enterprise is rewarded. Those things are foundational to our success, and I cannot understand why any party would want to set itself against that.
Ruth Smeeth (Stoke-on-Trent North) (Lab)
The Secretary of State has already praised the wonderful ceramics industry, which has its home in Stoke-on-Trent, and the work done by the British Ceramic Confederation for the past two years on developing an industrial strategy. It is great to see a photo of my sector on page 224 of the White Paper, but we really need a strategy for Stoke-on-Trent, so will the Secretary of State meet me and my colleagues on the all-party parliamentary group for ceramics, which I chair, to discuss how we can move that forwards and develop what my constituency and city so desperately need?
Greg Clark
I am always keen to meet people from the ceramics industry and from Stoke-on-Trent and the surrounding area. It is a fantastic industry for the future as well as the present—great strides are being made. It is an endorsement of the approach in the Green Paper of asking whether we should have sector deals that there was such an emphatic yes that some sectors, including ceramics, submitted their own proposals, and I am keen to take them forward.
Chris Elmore (Ogmore) (Lab)
I am sure that the Secretary of State is aware that I chair the all-party parliamentary group for the coalfield communities—if he was not, he is now—and the group has done significant work on trying to look at the regeneration of such communities. In relation to the White Paper, how does he intend to bring jobs and investment to those communities, which have suffered over successive generations in terms of job losses, economic growth and, indeed, health outcomes?
Greg Clark
The hon. Gentleman makes an important point. The White Paper contains a substantial section on the importance of local places and the role they can play in reviving their economies. It looks in particular at establishing local industrial strategies that are not only about the big cities, but about smaller towns and communities. The strategy presents an opportunity to former coalfield communities and others to play a big role in helping to drive up their future prospects.
Oral Answers to Questions
Greg Clark Excerpts(6 years, 12 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Andrew Lewer (Northampton South) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
Our industrial strategy capitalises on our strengths as we build the next generation of motor vehicles. In July, we committed £246 million to the Faraday Battery Challenge to make Britain a centre for the development of battery storage. I have also announced £51 million to fund automated vehicle testbeds across the country. I am delighted to say that in October Ford opened its new European Mobility headquarters in Britain.
Matt Warman
Whether lorries or tractors, it is in rural areas where autonomous vehicles have the potential to make a particularly profound impact. Will my right hon. Friend assure me that the research that he is funding will look in particular at rural areas rather than simply focusing on our very well connected cities?
Greg Clark
My hon. Friend makes an excellent point. He is right in saying that, if this is to apply right across the country, the opportunities in rural areas are very important not just for the vehicles he describes, but for public transport. He will know that at the University of Lincoln, not far from him, excellent work is being done through the Centre for Autonomous Systems on the future of mobility. I hope that it will be a participant in this great wave across the country of research and development in the technologies of the future.
Andrew Lewer
Silverstone Technology Cluster supports many thousands of jobs in and around Northamptonshire, including in companies such as Cosworth in my constituency of Northampton South. What steps are the Government taking to support the Silverstone cluster?
Greg Clark
My hon. Friend is absolutely right that the choice that some of the world’s best motor manufacturers make to locate in the cluster reinforces our reputation. Last year, we launched the Aylesbury Vale enterprise zone, which supports the Silverstone high-performance technology cluster. It provides an environment that is helping to deliver new jobs in this sector. The local growth fund for his area includes an innovation centre, which is geared to automotive technology in the enterprise zone.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I urge the Secretary of State to say something to leading engineering businesses and the University of Huddersfield where we are doing a lot of research on autonomous vehicles, because they might have listened to “Today” on Radio 4 this morning and heard another Secretary of State using a mysterious kind of language. He was talking about “a new post-Brexit trade policy” and “a new trade remedies body”—what is a new trade remedies body?
Mr Speaker
I do not care what a new trade remedies body is. All I am concerned about is autonomous vehicles—electric or otherwise. Let us hear about the matter.
Greg Clark
The hon. Gentleman asks an important question. It is absolutely right that the researchers at the university will have huge opportunities in this area. The reputation for excellence that has been established in that university is well known not just across the country, but around the world. The Prime Minister and I had the privilege of attending a roundtable of the leading managers across the motor industry, including the supply chain. They are united in their excitement about what is the biggest change in mobility since the invention of the petrol and diesel engine. We are replete with these possibilities, and it is increasingly recognised that we are establishing a reputation for being the place in the world to come for them.
Nick Thomas-Symonds (Torfaen) (Lab)
Whether it is exporters of autonomous vehicles or other exporters within the automobile industry in my constituency, what they need going forward is a consistent regulatory framework. What kind of guarantees can the Secretary of State give to exporters such as those in my constituency as we leave the EU?
Greg Clark
The hon. Gentleman makes a good point. The predictability of the regulatory environment is extremely important for future investment. It is one reason why we have introduced the Automated and Electric Vehicles Bill, which will be ahead of the world in establishing the right regulatory environment for electric and autonomous vehicles. Again, this is something that has commanded the attention of the world, and it is exactly in line with what he says.
Mims Davies (Eastleigh) (Con)
As we take steps to grow the economy and decrease emissions, will the Secretary of State commit to working with all businesses involved on the noise that autonomous and electric vehicles make, as highlighted by my deaf and blind constituents, and to working with the disabilities agenda as this new technology moves forward?
Greg Clark
My hon. Friend is absolutely right that one of the advantages of the new technologies is that they give particular hope to people who find it difficult or impossible to use conventional vehicles. Part of the point of putting together the research in the automotive, renewable energy, healthcare and social care sectors is that we can join the benefits of all of them in a single programme.
Mr Dennis Skinner (Bolsover) (Lab)
If we are going to have these electric vehicles, these autonomous vehicles, and everything else is going to be wonderful, why bother with £100 billion on HS2?
Greg Clark
Because we need both. Our ambition is to make this country one of the best connected in the world so that it is possible to go from the capital to our midlands, northern cities and beyond quickly and efficiently, and have more capacity to move freight around the country. I would have thought, given the importance of the motor industry to Derbyshire, that the hon. Gentleman, as a Derbyshire MP, would welcome the investment and progress in the sector, including £250 million invested by Toyota in its excellent plant.
Barry Gardiner (Brent North) (Lab)
Germany has said 2030; Norway and Holland are aiming for 2025. The Chinese owners of Volvo say that all their new models will have an electric motor from 2019. As the climate conference in Bonn begins, does the Secretary of State consider that the UK Government’s plan to ban the sale of fossil fuel vehicles from only 2040 is somewhat lacking in ambition, failing to provide strong leadership, or downright pathetic and making the UK a laughing stock?
Greg Clark
If the hon. Gentleman reflects on our reputation in the world, he should know that, for international leadership on climate change, it is very strong. He would do well to commend rather than undermine that. In the past few weeks, we launched the clean growth strategy, which commits, across a range of areas, not just to meet our legal commitments and generate jobs in those important technologies, but to lead the world in exports. I would have thought that he would use his time at the Dispatch Box to commend the Government for a document that has been well received across the world.
Wera Hobhouse (Bath) (LD)
Tom Brake (Carshalton and Wallington) (LD)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
I have frequent discussions with the Secretary of State for Exiting the European Union. The UK continues to demonstrate that it is an attractive place for future investment. Companies such as Nissan, BMW and Toyota continue to invest, thanks to our highly skilled workforce, the strong partnership between the Government and industry and long-term investment in new technology and innovation.
Tom Brake
I am sure the Secretary of State is aware that some car manufacturers are questioning whether to make further investments in the UK because they are uncertain about the validity of type approvals after we have left the European Union. When will the Secretary of State be in a position to confirm that they will indeed be valid and that the trucks shipping components will not be stuck in long queues at either Dover or Calais?
Greg Clark
I have been very clear in my discussions with the industry, and, as I said earlier, last week we had a roundtable at No. 10 with the Prime Minister. It is essential for our trading relationship with the European Union not only to be tariff-free, but to allow the continuation of a means of production that involves multiple components going back and forth, often at very short notice. There are questions about, for instance, type approval and rules of origin, and we are working with the industry to ensure that those matters are part of the deal that we want to achieve. That is a course that I know Members in all parts of the House would commend.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
Mitsubishi’s headquarters are in Cirencester, where it employs 250 people and supports 113 dealerships throughout the UK. I wholeheartedly endorse my right hon. Friend’s remarks about needing to secure a Brexit agreement that supports the automotive sector, so that we can protect those jobs.
Greg Clark
I am grateful to my hon. Friend. The industry is aware of the firmness of our intention. It makes no sense to disrupt what has been a very successful relationship between this country and some of the home countries of those manufacturers: that is very clear in all our minds.
Rachel Reeves (Leeds West) (Lab)
Our successful car manufacturing sector exports nearly 1 million cars a year to the rest of the European Union. However, the Society of Motor Manufacturers and Traders has said:
“Brexit is the greatest challenge of our times”.
What is the Secretary of State doing to ensure that there are no costly tariffs or time-consuming customs checks in the sector after we leave the EU?
Greg Clark
We met the SMMT and all members of the sector to discuss every aspect of the challenges and opportunities ahead. The hon. Lady is of course right that Brexit is very much on the minds of every motor manufacturer, which is why the discussions we have had reinforced our commitment not only to secure a good deal at high level, but to make sure all the particular aspects for that industry are addressed. The industry was also enthusiastic about our clear commitment, with mounting enthusiasm being shown on the part of our partners, big and small, to invest in the future and to make sure that what makes Britain attractive as a place to locate continues to be so in the future.
Jack Dromey (Birmingham, Erdington) (Lab)
Ten years in low-paid work and then four years a Jaguar apprentice, I will never forget Warren waxing lyrical about the job that he loves, and moving into, in his words, the house of his dreams with the woman of his dreams. Does the Secretary of State begin to understand that, as a consequence of this Government’s disastrous mishandling of Brexit, investment has fallen by over 50%? Does he begin to recognise the damage the Government are doing to workers like Warren and the jewel in the crown of British manufacturing?
Greg Clark
If the hon. Gentleman talks to people in the motor industry, as in other industries, he will know that no one is more vigorous and active than I am in meeting prospective investors to explain our strategy and the attractiveness of the UK. As a result of the industry’s work, supported by the Government, we have had a commitment from BMW to build the electric Mini in the UK, Toyota is investing a quarter of a billion pounds in Derbyshire, Nissan has confirmed that it will build two new models in Sunderland, and other discussions are continuing. That work, in the context of the need for continued good access to the European market, is giving confidence to the industry. I would have hoped that it was a matter of consensus across the House that we should maintain that confidence, rather than seek to undermine it.
Nigel Huddleston (Mid Worcestershire) (Con)
Alex Burghart (Brentwood and Ongar) (Con)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
The UK’s automotive industry is a great British success story, and as I said earlier, the Prime Minister and I met senior executives last week and reiterated our determination to secure a Brexit deal that guarantees the sector’s competitiveness. I will continue to work closely with all companies in the sector.
Alex Burghart
I am grateful to the Secretary of State for mentioning Ford in an earlier answer, because Ford is a major employer in my constituency. What is his Department doing to ensure that this country is the epicentre for innovation in the car industry as we move out of the European Union?
Greg Clark
Through our industrial strategy, we have a clear focus on being the go-to place in the world for the future of mobility in all its different forms. Dunton in my hon. Friend’s constituency is home to Ford’s technical centre, which is obviously one of the major global forces in that future. It is particularly gratifying that Ford has chosen the UK to be the centre of its European operations for the future of mobility.
Nick Smith (Blaenau Gwent) (Lab)
Dr Paul Williams (Stockton South) (Lab)
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
Since we last met, my ministerial colleagues and I have brought three major pieces of legislation to the House: a draft Bill to cap consumer energy prices; new laws to ensure that every home and small business will be offered a smart meter; and the new Nuclear Safeguards Bill to maintain our nuclear safeguards as we leave the EU. We continue to develop new policy that will benefit businesses and wider society, and today we are publishing a call for evidence on Professor Dieter Helm’s independent review of energy. We have reaffirmed our position as a world leader in tackling climate change through the launch of the clean growth strategy, and I take this opportunity to invite all Members on both sides of the House to join us in celebrating Small Business Saturday, which is coming up on 2 December.
Dr Williams
Is the Secretary of State concerned that, although October’s figures show continued welcome manufacturing growth, almost half of the net jobs created in the UK since 2010 are in London and the south-east, where only a quarter of the population live?
Greg Clark
I would have thought that the hon. Gentleman would welcome the fact that jobs are being created in all parts of the United Kingdom and that we have the highest level of employment since records began. That is a signal of the success of the UK economy, but he is absolutely right that we want to make sure that every part of the United Kingdom reaches the height of prosperity it is capable of reaching, and through the industrial strategy we will have more to say about how we can propel that forward.
Wendy Morton (Aldridge-Brownhills) (Con)
Rebecca Long Bailey (Salford and Eccles) (Lab)
Last week, the Secretary of State repeatedly refused to confirm, when pressed by the Select Committee, that the energy price cap would be in place by next winter. Media reports have also suggested that the Government have already told energy investors that the draft legislation will be ditched if they feel the big six power firms are doing enough to tackle high bills. I therefore ask the Secretary of State, in the hope he will today provide a clear answer, whether the energy price cap will be in place by the winter of 2018 and, if not, whether the media reports are true that there is actually no intention of introducing price cap legislation?
Greg Clark
I can assure the hon. Lady that there is every intention of introducing a price cap, and there is consensus in the House around that. We have published a Bill and it is being scrutinised by the Select Committee. As soon as it has finished that scrutiny, we will look for an opportunity to introduce it to the House.
Rebecca Long Bailey
I am afraid that answer simply created even more ambiguity, so let us try a different topic. The Government scheme to deal with the social care back-payment announced on 1 November has been cited as “inadequate” by many care businesses and organisations, as it does not address the fact that many providers simply cannot afford to pay due to funding cuts, and some workers will not be paid what they are duly owed until 31 March 2019. Mencap has stated that many providers will be reluctant to take part in the scheme as they feel they will be
“writing their own suicide note”.
Therefore, I ask the Secretary of State: will the Government commit the necessary funding in the Budget to avert a crisis in the care sector, which could see many businesses struggle to survive, impacting on already fragile care services, and leave thousands of care staff without the wages they are owed?
Greg Clark
As the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Stourbridge (Margot James), has made clear, and as I believe the hon. Lady knows, this is a difficult and complex issue. We completely accept the need for confidence among the providers of care to some of the most vulnerable people in society, while recognising the legitimate claim, which has been upheld by the courts, of those who have worked in that sector. Bringing those two things together requires precision and care, so that this is robust and does not create further uncertainty if it were found not to be legally possible to advance it. That is why the interim proposal has been made, but I am happy to keep the hon. Lady informed.
Anna Soubry (Broxtowe) (Con)
Yesterday afternoon, we had an excellent debate in this Chamber about the benefits of European economic area and European Free Trade Association membership, with people on both sides of the Chamber supporting our continuing membership. I do not expect my right hon. Friend to pass comment on his own views on this matter, but I do know he will always champion the best interests of British business. To that end, will he undertake, in all the negotiations he is involved with at the highest level, to make sure that all options are kept open as to how we get a Brexit deal—that includes the EEA and EFTA?
Greg Clark
I represent strongly the views of the business community because they are absolutely vital for our continuing prosperity as a country. The whole of the business community wants to get the best possible deal for the UK, and the vast majority of Members were elected on a platform and a manifesto of obtaining that. I will be tireless in pressing the case for it.
John Mc Nally (Falkirk) (SNP)
John Penrose (Weston-super-Mare) (Con)
Dieter Helm’s recently published “Cost of Energy Review” says that
“the prices of oil, gas and coal have fallen…contrary to the modelling and forecasting of both the Department of Energy & Climate Change…and the Committee on Climate Change”.
He means that however hard they try and however worthy their intentions, mandarins and regulators are rubbish at discovering or predicting energy prices. Does my right hon. Friend agree that the provisions for the draft Bill’s absolute energy price cap, which would require mandarins and regulators to meet twice a year to pick a number, would repeat the same mistakes so should be replaced by something more closely linked to the few competitive energy prices that already exist?
Greg Clark
I know what a great campaigner my hon. Friend has been on this issue. We have published the draft Bill, which includes our intentions, and I hope that he will give evidence while the Bill is being scrutinised. We are eager to hear his views, and we are eager to hear whether the Select Committee agrees with his analysis.
Christian Matheson (City of Chester) (Lab)
Greg Clark
I agree with the hon. Gentleman that the Government, my ministerial team and I should be active in securing investment opportunities and continued employment by UK companies and international companies that invest in the UK, and we are. I do that tirelessly. In the case of Ellesmere Port, we have had discussions with Peugeot and it is interested, as we are, in investment in the new generation of vehicles, with which I know the hon. Gentleman is familiar.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
I am working closely on investment in utilities with the Greater Lincolnshire local enterprise partnership, which will shortly publish a report detailing areas of Lincolnshire in which infrastructure requires investment. One problem is that Western Power is prevented from making speculative investment by Ofgem. Can my hon. Friend the Minister tell me why there is apparently this regulatory barrier to investment and what she can do to help?
Ruth Cadbury (Brentford and Isleworth) (Lab)
Greg Clark
One of the things that the House has correctly required of the Government is that we should take account of the impact on local economies—for example, on small businesses. That is something that has changed in the impact guidance, and it is right that it has.
Mike Wood (Dudley South) (Con)
On the 100th anniversary of the communist revolution’s introduction of a system that impoverished and imprisoned tens of millions, what is the Department doing to promote the benefits of free markets for workers, consumers and society as a whole?
Greg Clark
I am grateful to my hon. Friend for that question, because the history and reputation of this country during the past 100 years, and especially during the past decade, has been based on having in this country a system of vigorous competition in which businesses compete not because they are guaranteed a position by the state but because they face pressure from competitors. That has introduced extraordinary prosperity that would be thrown away were we to adopt a different system, such as that proposed 100 years ago.
Grahame Morris (Easington) (Lab)
Steve Double (St Austell and Newquay) (Con)
The Secretary of State will be aware that Newquay’s bid to be the location of the spaceport is backed by organisations right across Cornwall, including the LEP, the chamber of commerce, the wider business community and the local authority. Will he update the House on what progress has been made in this important development for the UK space sector?
Greg Clark
I will indeed. My hon. Friend is a great champion of Newquay’s bid. The shortlisting has taken place and announcements will be made very soon.
Diana Johnson (Kingston upon Hull North) (Lab)
Smart Meters Bill
Greg Clark ExcerptsTuesday 24th October 2017
(7 years ago)
Commons ChamberRead Full debate Smart Meters Act 2018 View all Smart Meters Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
I beg to move, That the Bill be now read a Second time.
The Bill, which passed its pre-legislative scrutiny in 2016, is narrow in scope and technical in nature, but it is an important Bill that supports the delivery of the smart metering implementation programme to modernise an outdated part of our energy infrastructure. Smart meters are the next generation of metering technology and are an important element of a smarter energy system. We set out in the recent smart systems and flexibility plan how smart meters will enable technologies such as demand-side response, whereby consumers can gain financially if they lower or shift their electricity use at peak times. The data provided by smart meters will also help improve investment decisions in Britain’s energy infrastructure. A smarter, more efficient energy system could drive up to £40 billion in energy cost savings for consumers by 2050. Smart meters will help with that by giving consumers greater control over how and when they use energy. By allowing homes and businesses to better manage their energy use, we open up the possibility of flexible energy tariffs. Taken together with secure smart appliances, consumers will thus be able to benefit from using energy at times when it is cheaper. Shifting demand to match supply may be cheaper than building generation capacity to meet future demand peaks.
This is just the start. New innovative and disruptive business models and systems will be enabled, and will help deliver a cleaner, cheaper and more secure energy future. The smart meter roll-out is, as the Select Committee found, a vital infrastructure upgrade which supports our ambition to make Britain a world leader in energy innovation. Indeed, this is the first step on that journey—exchanging analogue meters for a digital model—and it will in itself deliver savings.
Alberto Costa (South Leicestershire) (Con)
I congratulate the Government on this Bill. Does my right hon. Friend agree that it is imperative that, in addition to having advertising from Smart Energy GB on the roll-out of these meters, small energy firms that are contacted by consumers, as I have done with my own, promptly respond to them on this matter?
Greg Clark
I am grateful to my hon. Friend for that, and he is absolutely right in what he says. If we want to have a fully smart grid, the more people that avail themselves of that the better. When members of the public share his enthusiasm, it is very important that they should be given the chance to have a smart meter.
Sir Edward Davey (Kingston and Surbiton) (LD)
Will the Secretary of State explain why the roll-out of the second set of smart metering equipment technical specifications—SMETS 2—has been so delayed? I understand, probably better than most Members, the frustration he will feel about the delays to the smart meter programme. Is not the concern that suppliers are going to fit lots of SMETS 1 meters, which will be a barrier to competition and reduce the benefits of the smart meter programme to consumers?
Greg Clark
I am grateful to the right hon. Gentleman for raising that concern. He is absolutely right that in moving towards a fully smart system we want full interoperability, which is what SMETS 2 achieves. It has been tested and will be rolled out from July next year. The key point is that those who have a SMETS 1 smart meter will be able to access the software upgrades that will provide that interoperability. That is an important aspect of the roll-out and I am pleased to confirm it to him.
Sir Edward Davey
I am grateful for that clarification, because it may put some minds to rest if they know that the software upgrades will be available. There is a danger that many suppliers, be they one of the big six or others, see the roll-out of as many SMETS 1 meters as possible as a way to stop competition and lock in their consumers. That should really worry everyone in the House. Has the Secretary of State weighed up the benefits of ensuring we have more competition through the roll-out of SMETS 2 meters against the obvious downside of delaying the 2020 deadline?
Greg Clark
Yes, I have. Again, I am grateful to the right hon. Gentleman for asking that question. It is essential that the upgrade is available so that the smart meters that are installed under the SMETS 1 standard will be operable under the SMETS 2 standard. That has been a key part of the development and testing for exactly the reason he mentioned.
Smart metering upgrades the interactivity of the energy system in general. One big advantage of it is that if the system is fully interactive, less unneeded generating capacity needs to be invested in, with consequent savings to consumers. Even in the initial operation, it is estimated that by 2020 consumers can make net savings on their household bills to the tune of £300 million. In addition to the bill savings, smart metering will deliver benefits to the energy industry and to the economy more widely. It seems to me to be essential that if we want to plan a prosperous future, building on our strengths, this country should be the place in the world that can best integrate renewable energy and battery storage—not least in electric vehicles—with the consumer. Smart metering is an important element of that.
Mr Jim Cunningham (Coventry South) (Lab)
Has the Secretary of State considered people in the poorer sections of society who might have difficulty paying?
Greg Clark
Yes, and it is important that all consumer groups should be able to access the benefits, including lower bills. That has been an important requirement, and the Bill addresses it by extending the necessary powers to ensure that we have the regulatory ability to insist that the roll-out goes to all consumers and is not restricted to the more affluent.
Sir Edward Davey
I am grateful for the Secretary of State’s answer to the hon. Member for Coventry South (Mr Cunningham). Is he trying to ensure that suppliers roll out smart meters to prepayment customers as soon as possible? The benefit of smart meters to those on low incomes who use prepayment is that some of the extra costs associated with prepayment go.
Greg Clark
The right hon. Gentleman is right: we especially want to extend smart meters to those on prepayment meters and those who might struggle to afford their energy bills, because the benefits of the savings are disproportionately better for them.
Amanda Milling (Cannock Chase) (Con)
Does my right hon. Friend agree that one of the biggest issues with the energy market is apathy on the part of consumers? We must try to get consumers to engage so that they understand their energy use and bills and can switch. Smart meters are critical to engaging the public.
Greg Clark
My hon. Friend is absolutely right. At the moment, an imbalance in information characterises the energy market. The suppliers know pretty well the consumption patterns of their customers, but those same data are not available to the customers to help them see whether they could make considerable savings either with another supplier or in a different type of tariff that might, for example, reward the use of appliances at off-peak times. It is a very important change.
Mims Davies (Eastleigh) (Con)
I note that the Bill is just the start in terms of innovation. However, a local college, a training provider for placing these meters, has raised this issue with me. It said that some energy companies have outsourced the placement work and the training and that the installation is not happening because the training courses are not sufficient. Do the energy companies have a question to answer when it comes to really helping consumers?
Greg Clark
My hon. Friend raises an important point. I would be very pleased to take up the particular concerns of her college. The energy companies do have an obligation to roll out smart meters. If they subcontract the work, they do not escape their responsibilities. Again, the purpose of the Bill is to extend the current regulatory powers through to the end of the roll-out so that we can ensure that the higher standards apply.
Alan Brown (Kilmarnock and Loudoun) (SNP)
I thank the Secretary of State for giving way one more time. On projected savings, consumer benefits are estimated in the Government’s cost-benefit analysis to be £5.24 billion. How much of that is based on consumers having to switch? In the same cost-benefit analysis, supplier benefits are estimated to be £8.25 billion. How will those supplier benefits be passed onto the consumer?
Greg Clark
The hon. Gentleman raises an important point. There are multiple benefits. About a third of the savings come from the possible reductions in the use of energy. Just over 40% comes from the supplier’s cost savings, which is a result of not having to read meters—that gets done automatically. We expect those savings to be passed onto consumers as savings in their bill. In the 21st century, it seems absurd that we should have to rely on someone physically coming to inspect, literally, a spinning metal wheel. That is decades out of date. To have such work done automatically provides important savings. Therefore, there are benefits to consumers and to the whole economy.
Sir Greg Knight (East Yorkshire) (Con)
Will my right hon. Friend confirm that, if a customer does not want to have a smart meter, they will not be forced to have one installed?
Greg Clark
I can certainly confirm that. There is no obligation on the customer whatsoever.
The roll-out is well under way. Some 7.7 million smart meters were installed by June 2017. The current rate of installation is around 350,000 a month, but that is increasing as energy suppliers continue to ramp up their delivery. As the right hon. Member for Kingston and Surbiton (Sir Edward Davey) mentioned, it is right that we should move on to the second generation of smart meters, the so-called SMETS 2 meters. One advantage of doing so is that the next generation of meters are between 20% and 30% less costly than SMETS 1 meters, thereby providing another good reason to upgrade.
In recognition of the importance of this upgrade and the value that it will bring to consumers, we are committed to seeing all homes and small businesses being offered a smart meter—but they are not compelled to have one—by the end of 2020.
Alan Brown
To help achieve that 2020 target, the install rate needs to go up from 350,000 a month to 1.25 million a month. How will that happen?
Greg Clark
There is a significant increase of the scale that the hon. Gentleman describes. Part of the reason for ensuring that we have these powers is so that the energy companies do not regard this as optional, and have to meet their obligations.
The Government are overseeing the process and that has enabled us to take steps to protect consumers. We have put in place a licensed central data and communications provider, the Data Communications Company. The information will not be held exclusively by the supplier. It is therefore available, with the consumer’s consent, to competitors. Through the DCC, energy companies and other authorised parties are able to collect energy data remotely and securely.
Let me take the House through the specifics of the Bill. Clause 1 extends by five years the Government’s powers to direct the roll-out of smart meters. Since the first legislation was introduced, the powers have lasted for five years at a time, which seems to be the right approach, rather than having powers in perpetuity. Therefore, it is consistent with our practice to come back to the House in order to renew those powers for five years.
Alberto Costa
I am, once again, grateful for the Minister’s generosity in giving way. I understand why the Government require the powers to be extended by another five years, but does the Minister agree that it is imperative that all energy companies, including the smaller ones that I mentioned earlier, give consumers information in a timely manner? The message plastered across the underground and in various papers is that consumers should contact energy suppliers, but from my own experience, those suppliers are not responding in a timely manner. What can the Minister say to assure me that energy companies will respond to consumers now, rather than in two years’ time?
Greg Clark
My hon. Friend again makes an excellent point. Companies are under an obligation to offer households a smart meter by the end of 2020, and these powers allow the Government and the regulator to hold them to their licence conditions in so doing. If he gives me the details of the particular supplier to which he refers, I would be happy to take up that case.
The powers are due to expire on 1 November 2018, so the Bill extends them for five years. An extension of the powers is necessary in order to ensure the successful roll-out by the end of 2020, and to maximise the benefits accruing to consumers during and after the end of the roll-out.
Clauses 2 to 10 introduce a special administration regime to ensure continuity of the smart meter continuation service currently provided by the DCC. Special administration regimes are common—in fact, typical—in network companies. They are primarily designed to guard against the DCC going insolvent due, for example, to cash-flow problems if one or more of its energy supplier customers were unable to pay its charges.
The DCC licensee is deliberately designed to have limited financial assets of its own to avoid the cost of holding large capital reserves, so it relies on timely and full payments from energy suppliers to meet its own contracted obligations to its subcontractors, which provide the communications network. If, for some reason—we regard this as being very unlikely—one or more of its larger customers did not make payments, there are provisions in the smart energy code to allow it to make emergency charges on other suppliers. If these emergency charges also went unpaid for some reason, there would be a theoretical risk that it could go into administration and cease service, so the special administration regime allows the Secretary of State—or Ofgem, with the Secretary of State’s approval—to apply for an administration order to be made in relation to the smart meter communication licensee. Such an order would direct that, while it is in force, the affairs, business and property of the company are to be managed by an administrator appointed by the court.
The aim of the special administration regime is to ensure that the functions of the smart meter communications licensee, under its relevant licences, are performed efficiently and economically, pending the company being rescued or its business being transferred to another company. In the unlikely event of the DCC’s insolvency, fundamental services may be disrupted. Therefore, it is prudent to have safeguards in place, as with other network operators, such that its continued operation is protected. This special administration regime is standard practice in the energy sector, and these powers are based on similar regimes that have been introduced—for example, for networks and suppliers.
The Bill allows the Government to continue to progress with the important goal for the national economy of delivering an energy system across the country that is smarter and more flexible.
Sir Edward Davey
I am grateful to the Secretary of State for giving way, and I know that he is on his peroration. One big policy issue is the interrelationship between the smart meter roll-out, with the 2020 deadline, and the energy price cap he has proposed. How does he see those linking together? Does he see the price cap going once all smart meters have been deployed?
Greg Clark
The draft Bill the Select Committee is going to scrutinise means that there would be a temporary price cap while the current uncompetitive conditions in the market continue. As we have discussed, one of the major advantages of the smart meter programme is that it corrects the imbalance of information between consumers and suppliers, and that is something Ofgem will want to take into account in deciding when to lift that price cap. So the connection with smart meters is very important.
The Bill is an important step in making sure we have one of the smartest, most flexible energy systems in the world, enabling us to take advantage of new technologies while at the same time delivering benefits for households and small businesses. I commend the Bill to the House.
Dr Whitehead
I am very sorry—it’s Don Valley now, isn’t it?
My right hon. Friend talked about the continuing imbalance of benefit in the roll-out of smart meters, with the benefit appearing to be accruing to energy companies, as opposed to customers. For our part, we support the idea of introducing smart meters across the country to replace the dumb meter system that serves the customer very badly and has historically done so, and is certainly not fit for purpose for the requirements of the different ways of supplying, using and measuring power that are coming our way with the energy revolution that is upon us.
The gain not only to customers but to our energy systems as a whole of having collectively installed, sufficient smart meters across the country to bring in new ways of measuring and predicting use of associating smart meters with smarter grids, thereby saving enormous amounts of further future expenditure in grid strengthening and capacity additions—all to the benefit of a smarter, more resilient, more efficient energy system for the future—suggests that supporting smart meters is right thing to do.
But then we come to the process by which smart meters are rolled out, and there is much to raise an eyebrow about. First, there is the Government’s original choice of who should undertake the roll-out—the energy companies: a model not adopted by any other country managing a smart meter roll-out programme, as my right hon. Friend the Member for Don Valley (Caroline Flint) pointed out. Secondly, there is, as a number of hon. Members have mentioned, the high overall costs built into the roll-out—costs that will eventually land on consumers in the shape of bills on their doormats. Thirdly, there is the truly lamentable performance so far in getting the DCC—the communications company responsible for making smart meters communicate well and on an interoperable basis—up and running so that smart meters, once installed, really can communicate with other and with the system. That communications company has now only just gone live, at the very end of the window for doing so before serious repercussions arise. Fourthly, there was the decision, halfway through the roll-out, to transition from one type of smart meter to another—a process akin to trying to change the wheel of a car while it is driving along the road.
All these issues raise legitimate and far-reaching questions about whether the goal of having a critical mass of smart meters in place by the end of 2020 is likely to be achieved and whether, in the short time available to us, moves can be made to get us back to that goal. The recent reports in the 2016 impact assessment suggest that we are not doing very well on installation—that we are set for an almighty bunching of installations in late 2018 and 2019 that is very daunting, even if vans of installers are not starved of meters to put up because they have been told not to install the old ones and are awaiting supplies of the new ones to install. I welcome the consultation on methods of resolving the possible hiatus in supply during the changeover from SMETS 1 to SMETS 2 meters. However, I am minded—I think the Government will have some difficult decisions to make in this regard—of what we need to do by 2020 in populating the country with smart meters to the extent that we can really make these changes possible, for our collective good, given the sheer number of smart meters that have been installed across the country.
We need to judge the very modest changes to the smart meter roll-out regime in this Bill against that wider background of decisions and progress made in the roll-out itself, and of how far away we are from the goal of having a national smart meter presence that makes all the other energy innovations—and cheaper energy and gas—possible, and to decide whether we should take the opportunity to add further elements of “getting on with it” into the Bill as it progresses through Committee.
We will not oppose this Bill on Second Reading. However, I place the Minister and the Government on notice that in Committee we will closely scrutinise the roll-out provisions currently in place to look at ways in which we can make amends for some of the frankly sloppy decision making that has occurred in the progress of the roll-out, and stiffen the sinews of the programme so that it works as well as it can. It is perhaps no coincidence that the—
Greg Clark
Will the hon. Gentleman confirm that the programme motion is generous in providing time for consideration of the Bill?
Dr Whitehead
The last time I heard about the progress of the programme motion, there was no agreement on the number of days that could be set out for the Committee stage, so it may well be the case that that concern will be reflected tonight. However, I would emphasise that as far as the main purpose of the Bill—
International Investment
Greg Clark Excerpts(7 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
The United Kingdom has a deserved reputation as one of the most open economies in the world, one that welcomes international investment and the benefits it brings. Our position as the fifth-largest economy in the world has been built on international trade and investment. Today’s Green Paper affirms our commitment to that approach, and sets out proposed reforms of our scrutiny of foreign investment to ensure that our national security is protected.
An open approach to international investment must include appropriate safeguards. It is vital that the UK Government can deliver on their primary duty to safeguard national security and ensure that the interests of the British people are protected, and it is important for the Government to have both knowledge of potential national security risks to the UK and the ability to act where necessary. Our review has highlighted the need for that to be updated to take account of the changing structure and size of companies in sectors that are critical to our national security. Our reforms will bring the UK in line with many major developed economies. We want to develop clear, consistent and proportionate rules which will enable us to scrutinise the ownership of our infrastructure, but which will also be well understood and will give international investors the clarity and transparency that they require.
We are proposing a two-stage approach. First, I am updating our current arrangements by consulting on amendments to the Enterprise Act 2002 to enable the Government, if necessary, to intervene in mergers that fall outside the current provisions. In most sectors, the thresholds in the Act allow the Government to intervene in mergers on public interest grounds only if the acquired company has a UK turnover of more than £70 million, or if the share of supply is 25% or more of the market. The thresholds are no longer appropriate for certain sectors, particularly those in which smaller companies may hold technologies that are critical to national security. For those sectors, we are proposing to introduce amendments through secondary legislation that would lower the turnover threshold to £1 million and remove the requirement for the merger to increase the share of supply to 25% or more.
Specifically, I am consulting on amendments to the thresholds for the dual use and military sector, and certain parts of the advanced technology sectors. The first relates to items that are currently subject to export controls. Hostile actors should not be able to acquire such items, or knowledge about how to make them, by buying UK-based businesses. The second relates to companies that are involved in the design of computer chips and quantum technology. Advanced technologies can create threats that are difficult to detect, and may mean that devices could be directed remotely should a hostile actor gain access.
The Green Paper also seeks public views about options for broader reforms to the way in which we scrutinise investment for national security purposes. In particular, we are seeking views on two proposals: broadening the range of transactions that the Government are able to review for national security purposes, and the introduction of mandatory notification of foreign investment in certain parts of the economy that are critical for national security, such as the civil nuclear and defence sectors. The Government intend any reforms to be firmly targeted at national security. While the national security assessment must, by its very nature, remain confidential, we will also seek to provide greater certainty and clarity for businesses in respect of the process itself. Our proposals will ensure that our arrangements for protecting national security are aligned with the practices in other major countries, and are more robust in response to the evolving nature of national security threats and technological change.
Let me say something about takeovers more generally, outside the area of national security. We have held discussions with stakeholders, including the Takeover Panel, about the current process. Those discussions have covered the need for more information and time to allow for the assessment of takeover bids by interested parties, and to enable assurances given during the takeover process to be properly assessed and compliance-scrutinised. We believe that the changes recently proposed by the Takeover Panel would improve the UK’s takeover rules, and we look forward to the conclusion of the consultation.
The Government will also act, when appropriate, to ensure that public funds are protected in mergers. In particular, we will take steps to ensure that Government-funded research and development grants can be clawed back following a takeover if the new company would have been ineligible to receive the grant. or if the purpose for which the grant was made has changed.
Let me now turn to an international investment announcement that was made late last night. On Tuesday, I briefed the House on the trade dispute brought by Boeing against Bombardier. My colleagues and I have been constantly engaged from the outset, and have considered all the alternatives that we can bring to bear to resolve the dispute. I am pleased to be able to tell the House that yesterday the boards of Bombardier and Airbus announced plans for a joint venture involving the C series aircraft. The deal is expected to be completed by the second half of next year. I have spoken directly to the chairman of Bombardier and the chief executive of Airbus about the joint venture specifically, and I have also discussed the matter with Chrystia Freeland, Canada’s Minister of Foreign Affairs. My top priority has been to emphasise the importance of giving certainty to Bombardier’s high-quality UK workforce, now and in the future.
As the House well knows, the Shorts factory in Belfast employs more than 4,200 highly skilled workers and supports a supply chain of hundreds of companies and many more jobs across the United Kingdom. Airbus also has a large presence in the UK, employing more than 15,000 people, and is firmly rooted in the UK’s advanced-technology industrial base. It is in all our interests for the C series to be successful. Both Bombardier and Airbus have made a number of important commitments to me, including commitments that C series wing manufacturing will continue in Belfast, and that the strategy will be one of building on existing strengths and commitments.
This announcement offers the potential to protect the interests of Bombardier’s Belfast workers and the UK supply chain. The UK is already Airbus’s wing factory for the world, and the announcement reinforces that position. The trade dispute brought by Boeing against Bombardier’s C series remains in place. We consider Boeing’s action to be totally unjustified, unwarranted and incompatible with the conduct that we would expect of a company that has a long-term business relationship with the United Kingdom. We reject entirely any suggestion that our support for Shorts contravenes international rules. We will continue to work to see the dispute resolved while Bombardier and Airbus complete their merger.
I remain in close contact with Airbus, Bombardier, and the Canadian and US Governments. I will be speaking to the chairman of Bombardier and the chief executive of Airbus again later this week for an update on progress. I will, of course, continue to meet the representatives, and to meet Members of Parliament with constituency interests, who have been assiduous in standing up for their constituents. I will do everything I can to secure, at all times, the best possible future for Bombardier’s Belfast workforce and its UK-based suppliers.
I commend my statement to the House.
Rebecca Long Bailey (Salford and Eccles) (Lab)
The news that Bombardier and Airbus will be forming a partnership will be welcome to the thousands of Airbus and Bombardier staff who are employed in the United Kingdom, but can the Secretary of State confirm that he has received unequivocal assurances from Airbus and Bombardier about the security of UK jobs in the long term? The pairing of two cutting-edge product lines is very exciting for the future of aerospace manufacturing, but it should not be an excuse for the Government to diminish their efforts to ensure that the unfair tariffs imposed in the United States are dropped. Will the Secretary of State give more details about the further action that he proposes to take? For example, has he written to the European Commission?
Britain clearly wants to be open to investment, despite reports that the Office for National Statistics is revising its investment position downwards. However, it would be naive to allow key businesses to be at risk from people who have no interest in the long-term success of a business, its workers and its pensioners, or in the long-term interests of the British economy.
Today’s proposals are welcome, but I have some concerns. First, I am concerned about the delay in the presenting of the proposals. In the last year or so, we have seen mergers that have called into question the adequacy of our merger regime to defend vital economic interests: jobs, research and development, and the significance of the company involved to the supply chain, to name but a few. For instance, our biggest chip manufacturer, ARM, was sold to Japan’s SoftBank. ARM is one of the jewels in our crown, developing cutting-edge chip design and generating thousands of jobs, yet there was no guarantee that R and D—or investment, or jobs—would be protected in the long run. The best that our takeover regime could generate was post-offer undertakings by SoftBank for five years on some of those issues.
That is not an isolated example in the high-tech world. The UK firm Imagination Technologies was sold to Canyon Bridge just a few weeks ago, and our automobile sector has also witnessed the shortcomings of the takeover regime. PSA’s purchase of Opel and Vauxhall raised concerns about jobs and investment. Yet again, our takeover regime was unable to guarantee that those things would be protected, and this week we have heard about the risk of voluntary redundancies. My first question to the Secretary of State is this: why did it take so long, given the manifest deficiencies in the regime to which we drew his attention earlier this year?
My second concern relates to the inadequacy of the proposals. They seem to lower the threshold tests that must take place before the competition authorities and the Government can scrutinise a merger. However, those lower tests apply only to the dual-use and military sector, and to companies that are involved in the design of computer chips and quantum technology. But there are other high-technology sectors that are also in need of the same protections, including life sciences, and food, chemical and automobile manufacturing, to name but a few on a very long list of sectors and business areas that are systemically important to UK plc. These powers would have given no assurances to companies like Unilever, for example, who might try to resist a takeover and have been calling for better safeguards in the takeover regime overall.
Similarly, it is not clear how these powers would have helped in many of the cases I have mentioned where they potentially do apply. Indeed, this morning when the Secretary of State was asked whether these powers would have altered the takeover of ARM, he stated that the turnover of that firm already qualified for scrutiny so this would have made no difference.
So, finally, does the Secretary of State agree that his proposals, while welcome, on the thresholds in particular, fail to protect companies that still fall within them, and will he confirm what further action he proposes to take, because action is desperately needed?
Greg Clark
I am grateful to the hon. Lady for her response and questions. On Bombardier, I am grateful for her recognition—which I hope and think is shared across the House and certainly in Northern Ireland—that this is a very positive step forward. I have been very clear that we will continue to seek to strike out and resolve the trade dispute that has been brought by Boeing. Given what we have been doing during the weeks since the initial complaint was made, I do not think anyone could accuse the Government of being anything other than full-hearted in our attempts to resolve this, and our efforts, with our Canadian Government counterparts, to find a secure source of guarantees for Belfast have been widely welcomed this morning.
In terms of the assurances given, Bombardier and Airbus have clearly said they regard the Belfast wing operation as foundational. They expect to expand the production, which means good prospects for those jobs in Northern Ireland and the supply chain across the United Kingdom. That is extremely good news. We will continue to pursue to the point of resolution the trade dispute. The hon. Lady asked about the European Commissioner: my right hon. Friend the International Trade Secretary has discussed this personally with the European Commissioner for Trade. We will leave no stone unturned in seeking a resolution of this dispute.
On the proposals in the Green Paper on international investment, I would have thought the hon. Lady should welcome the fact that we continue to be the third-biggest destination in the world for overseas investment. One of the major strengths of our economy is that we have a reputation for dependability and openness, and it is important that we preserve that while upgrading our systems of scrutiny to make sure that the national interest is protected, particularly in the case of national security. In saying that, I note that the hon. Lady suggests that there has been some delay in so doing, but the changes we are making were changes that were not made during 13 years when the Labour party had the chance to address these matters. I hope she will respond to the consultation and welcome it.
It is right that the threshold should be dropped in order to admit small companies: everyone knows that as technology develops, smaller companies can have a critical role to play in producing products that are part of a wider system. It is right to have that degree of scrutiny. But when the hon. Lady reads the Green Paper she will see that, in addition to those initial changes, we are consulting on whether there should be a wider set of powers to require the mandatory notification of mergers in other sectors of the economy, and we make some proposals around that. It is right to consult on that, but it would not be right for every single transaction in the economy to be required to go through an administrative process when it does not pose a threat to our national interest. That is the purpose of the consultation, and I hope she will welcome it.
The hon. Lady raises the question of Unilever. One of the features of the proposed takeover of Unilever was that the company—correctly, in my view—did not feel it had the time to prepare a proper defence of itself, given the current takeover rules. Following conversations that we have had, the Takeover Panel is proposing a more substantial period in which, at the request of the target company, it will have longer to prepare that defence. That will be welcomed across the economy. This is a consultation by the Takeover Panel so we will wait for that to conclude, but I have welcomed it as a positive step forward.
Amanda Milling (Cannock Chase) (Con)
Does my right hon. Friend agree that the record levels of inward investment demonstrate a strong vote of confidence in Britain, showing that we are open for business and an outward-looking and world-leading nation?
Greg Clark
I agree: it is a proud boast that we are the No. 3 nation in the world. We are by no means the biggest nation in the world, but to be No. 3 behind the US and China in terms of foreign direct investment is a real vote of confidence in this economy, and that is something I and my team and my colleagues across Government will always work hard to extend.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
I am grateful to the right hon. Gentleman for an advance copy of his statement.
The Scottish National party supports measures that best protect our citizens and measures that relate to national security. However, it is not clear why these proposals have been brought forward now, so can the right hon. Gentleman tell us why now, and what the UK Government’s long-term strategy is?
We also believe it is vital that Parliament is fully involved in this process. Will the right hon. Gentleman confirm that that is the case?
Finally, on military technology, the UK Government must look to their own track record. Will the right hon. Gentleman confirm that the same degree of stringent oversight and scrutiny is to be applied to arms sales abroad?
Greg Clark
I am grateful to the hon. Gentleman for his questions, although I am surprised that he did not want to welcome the investment decision in Bombardier. In response to his—perfectly reasonable—question, “Why now?”, it is right to upgrade our systems for scrutiny periodically. A national security risk assessment was carried out recently, which correctly pointed out that smaller companies have the potential to pose a threat to national security, and these measures respond to that. We are publishing a Green Paper; Parliament is being invited to scrutinise it, as the essence of a Green Paper is that it is published for Parliament, as well as people in the outside world, to examine. On military technology and the scrutiny of arms sales, I think the hon. Gentleman should know that that is already subject to a licensing procedure.
Bob Stewart (Beckenham) (Con)
Will my right hon. Friend confirm to the House that robust due diligence is always carried out on foreign investment when it might afford other Governments control of systems that are closely linked to national security, such as the grid?
Greg Clark
That is the essence of the proposals, and it is necessary to update them from time to time in line with the recommendations that arose from the national security risk assessment. It is very important—it is the first duty of Government—to make sure that we are protected from hostile threats.
Sir Vince Cable (Twickenham) (LD)
I welcome the Secretary of State’s recognition of the need to widen the public interest test, but express some disappointment that his definition of it does not appear to include cases where British companies that are fundamental to the science base would be at risk of acquisition, as in the abortive Pfizer AstraZeneca bid, and more recently in the successful bid for ARM, Aveco and the many smaller companies now being acquired on the back of a cheap pound.
Greg Clark
I am grateful to the right hon. Gentleman for his comments. He will be aware that under European law we are limited in the public interest test to questions of national security, financial stability and media plurality. That is the situation that exists, hence the proposals that we have are around strengthening national security. I ask the right hon. Gentleman to study the Takeover Panel proposals to give a longer period for the scrutiny of any bids in the public domain, allowing the target company to respond, because from what I have seen so far, that has received a very positive response in corporate Britain, and when that consultation concludes I very much hope it will be enacted.
Sir Desmond Swayne (New Forest West) (Con)
There are occupants of the Treasury Bench to whom I once taught economics, and I used to tell them that the United Kingdom owned more assets overseas per capita than any other nation on earth. Do we still believe in the free movement of capital?
Greg Clark
We certainly do, and I am delighted that my right hon. Friend has been part of the process of educating generations of Conservative Front Benchers. In fact, the UK’s stock of overseas investment is second only to that of the United States of America. For this country to be second only to the United States in terms of the value of the assets that we own overseas is a remarkable achievement, and he is right to pay tribute to that.
Gavin Robinson (Belfast East) (DUP)
I sincerely thank the Secretary of State and the Energy Minister, the hon. Member for Watford (Richard Harrington), for their steadfast support for Bombardier and Belfast. Does the Secretary of State acknowledge that, in encouraging a union between Bombardier and Airbus, Boeing has scored a spectacular own goal? Will he continue his commitment to supporting that partnership, both in terms of the tariff proposition from the US International Trade Commission and of the regulatory considerations to come?
Greg Clark
I will indeed, and I want to pay tribute to my hon. Friend, who is the constituency Member for the Bombardier Shorts plant in Belfast. No part of the United Kingdom could have a more vigorous representative of the interests of its constituents than his constituency. He and his colleagues have played an important role in this process. The reaction of Boeing is clearly a matter for that company, but I have been clear that as long as that unjustified and unmerited complaint is being pursued, we will vigorously defend it. We think that the complaint is without merit. As I said when I last updated the House, it is in everyone’s interest that the complaint should be withdrawn so that the relationship that Boeing seeks to have with this country should not be marred by the unjustified action that it is taking. My hon. Friend has my commitment on this.
Mr Marcus Fysh (Yeovil) (Con)
I welcome the Government’s attention to this area. I note that research and development in areas of critical national security often occur in the small and medium-sized enterprise sector. Has my right hon. Friend given any thought to how these proposals might impact on the propensity of people to invest in that sector?
Greg Clark
It is important that investors, especially those starting up a firm for the first time, should reflect on the fact that the UK is the best place in the world to establish new scientific and technological companies. They can invest with confidence. The ability to scrutinise investments should not put anyone off establishing a firm in this country. It is often possible to deal with security concerns through conditions and undertakings, and getting that framework clear and in place will give confidence to investors in the future.
Mark Tami (Alyn and Deeside) (Lab)
I welcome the Bombardier announcement—it is very good news. However, future Airbus investment in the UK will depend on a Brexit deal that allows the company to operate as it does now. The company has been very clear about that, and it will mean having a deal rather than no deal. For example, if a wing leaves Broughton but then needs further work, British Airbus employees can leap on to a plane and follow it. They might be away for days or even weeks. Will that be able to continue post Brexit?
Greg Clark
My colleagues and I meet regularly not only with Airbus but with the whole of the aerospace industry, which is one of our most successful industries, and we are well aware of how the sector and the companies within it work. This informs our negotiations to allow us to ensure that that way of working can continue.
Alan Mak (Havant) (Con)
I welcome the Secretary of State’s statement and the investment in Bombardier. As the fourth industrial revolution accelerates and new technologies emerge, will he consider introducing a call-in mechanism to allow flexibility when the Government scrutinise transactions for national security concerns?
Greg Clark
My hon. Friend is a great champion of the need to prepare for the fourth industrial revolution, if we are to benefit from it. Part of the reason for this Green Paper is consistent with the high standards that we have always had in this country for ensuring that our systems are up to date. We are suggesting that, in certain sectors that are relevant to national security, it would be possible, subject to the results of the consultation, to scrutinise transactions to assess whether they posed a problem.
John Woodcock (Barrow and Furness) (Lab/Co-op)
It is surely right to add smaller companies to the national security process, but this is only a Green Paper and secondary legislation takes time. Given how fast these fields of technology are moving, what are the Government doing right now to mitigate the risk of what we want to legislate to deal with in the future?
Greg Clark
The proposals can be introduced through secondary legislation, and I hope that they will find favour with the House so that we can proceed with that. There is an ability to act through other measures if there is a threat to national security, but the essence of these proposals is that this can be done in anticipation, rather than when a threat has crystallised. This is the right way to proceed, rather than waiting for a threat to be identified as imminent. This is about being prepared.
Kevin Foster (Torbay) (Con)
I welcome the Secretary of State’s statement and particularly the news about Bombardier. Does he agree that the Brexit vote was about us going out into the world and being part of the international trading community, not about withdrawing behind a wall? Will he therefore reassure me that, despite what we are saying about considerations of national security, we will remain an open advocate of free trade in the world?
Greg Clark
It is precisely because we are a leading advocate of free trade and open investment that it is necessary to have the right framework in place so that people can invest with confidence. In fact, in many cases, the steps that we are taking bring us into line with our competitor nations when it comes to trade, and I am absolutely confident that this regime will be respected and applied.
Tom Brake (Carshalton and Wallington) (LD)
On the subject of companies developing dual-use technology, can the Secretary of State confirm that as well as introducing powers to stop those companies falling into foreign hands, he will ensure that they will still be able to recruit workers from the EU? Those workers will often not be particularly well paid, as they might be graduates working in start-up companies. Also, will he clamp down on companies here that use subsidiaries in other countries to avoid UK export controls and sell dual-use technology that can be used to clamp down on dissent in middle east countries?
Greg Clark
On the right hon. Gentleman’s second point, an export control regime deals with these matters. On his first point, while the scope of the Green Paper is extensive, it is not a consultation on immigration policy. There will be other opportunities to pursue that.
Robert Jenrick (Newark) (Con)
I broadly welcome the proposals to change the takeover code and protect national security assets, especially smaller companies, but will the Secretary of State consider adopting a new principle that for every new policy that could be construed—however unfairly—as being protectionist or anti-business, at least two new policies should be brought forward that state as loudly as possible that Britain is open for business and a free trading country committed to free enterprise?
Greg Clark
We are saying loudly and clearly that we depend on free trade, and that free trade depends on our having clarity in the rules so that investors in our companies know what scrutiny they will be subject to. That is something that business has wanted, so it is good that we are going to be clear about that.
Alan Brown (Kilmarnock and Loudoun) (SNP)
These proposals are welcome as far as they go, but if, thinking about the bigger picture, we are looking at transparency in safeguards relating to foreign investment, we will need to stamp out the laundromat money-laundering schemes that channel billions of pounds through the UK. What steps are the Government taking to eliminate the vehicles for that practice, including the Scottish limited partnerships?
Greg Clark
My hon. Friends in the Treasury are, as the House knows, active and vigorous in pursuing measures against money laundering, and that approach is an important part of this regime’s reputation for applying high standards.
Wendy Morton (Aldridge-Brownhills) (Con)
I welcome the Secretary of State’s statement and his recognition of the importance of not only large strategic businesses, but the supply chain. Does he agree that it is vital that the rules for the scrutiny of foreign investment are clear, certain and proportionate?
Greg Clark
That is exactly what is proposed in the Green Paper. The focus is on national security, which is an important responsibility for the Government. It is important that investors and businesses know the procedures so that they can have the greatest certainty when conducting business, including when contemplating takeovers.
Tom Pursglove (Corby) (Con)
Will my right hon. Friend say a little more about the role of industrial strategy in helping to harness international investment?
Greg Clark
One of the strengths of the UK’s economy is our reputation for innovation and discovery through the application of science. Our industrial strategy deepens our commitment to that. We have seen the biggest increase in public investment in research and development for more than 40 years. Part of our strategic approach means establishing companies that make use of that technology, and having a regime under which companies that do use that technology can be confident about taking in foreign investment is part and parcel of the positive, mature regime that we want to establish.
International Investment
Greg Clark Excerpts(7 years ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
The Government are today publishing a Green Paper: “National Security and Infrastructure Investment Review”. This sets out proposals for amending the current regime in relation to national security and investment.
First, the Government are introducing amendments to the Enterprise Act 2002. For most sectors, the Government are only able to intervene in mergers involving companies with a UK turnover of over £70 million, or where the parties’ combined share of supply increases to 25% or more. This means mergers or acquisitions of some smaller businesses whose ownership is critical to our national security cannot be scrutinised.
The Government propose to amend the thresholds in two areas: the dual use and military sector, and certain parts of advanced technology, namely the design of computer chips and quantum technology. For these two areas only, we will lower the threshold for Government intervention to businesses with a UK turnover of over £1 million, and remove the requirement for a merger to increase a business’s share of supply to or over 25%.
The Government are also consulting on longer-term proposals, including:
introducing a ‘call-in’ power modelled on the existing power within the Enterprise Act 2002, to allow the Government to scrutinise a broader range of transactions for national security concerns within a voluntary notification regime; and/or
introducing a mandatory notification regime for foreign investment in parts of the economy which are critical for our national security. Mandatory notification could also be required for foreign investment in key new projects or specific businesses or assets.
These proposals will ensure that our arrangements for protecting national security are more closely aligned with those of major, developed economies, and more robust to the changing nature of threats to our national security.
The Green Paper delivers on the commitment made in the Queen’s Speech to bring forward proposals to consolidate and strengthen the Government’s powers to protect national security.
I will be making an oral statement in the House later today and placing a copy of the Green Paper in the Libraries of both Houses.
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Nuclear Safeguards Bill
Greg Clark ExcerptsMonday 16th October 2017
(7 years ago)
Commons ChamberRead Full debate Nuclear Safeguards Act 2018 View all Nuclear Safeguards Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
I beg to move, That the Bill be now read a Second time.
The Bill is straightforward. It ensures that when the United Kingdom is no longer a member of the European Atomic Energy Community—Euratom—we will have in place a legal framework that meets our future international obligations on nuclear safeguarding. Nuclear safeguards demonstrate to the international community that civil nuclear material is not diverted into military or weapons programmes. It is important to be clear about the definitions in and scope of the Bill, because nuclear safeguards are distinct from nuclear safety, which is about the prevention of nuclear accidents, and from nuclear security, which relates to the physical protection of nuclear material. Those topics are subject to different regulatory regimes.
Our current nuclear safeguards obligations arise from our voluntary offer agreement—an additional protocol—with the International Atomic Energy Agency. The IAEA is the UN-associated body responsible for the oversight of the global non-proliferation regime. The first requirement flowing from the UK’s commitments on safeguards is to have a domestic system that allows the state to know what civil nuclear material it has, where it is and whether any has been withdrawn from civil activities.
John Howell (Henley) (Con)
Following conversations with the leadership of the Culham Centre for Fusion Energy, which is in my constituency, does the Secretary of State agree that their stance on Euratom is not about Euratom itself, but about knowing when all the details will be finalised?
Greg Clark
My hon. Friend, who has a close connection with his constituents who work at Culham, is absolutely right. He knows that we are keen to agree the greatest possible continuity for the arrangements for research at Culham as soon as possible.
Robert Neill (Bromley and Chislehurst) (Con)
Will my right hon. Friend confirm that there is nothing in the Bill that will prevent us from seeking associate membership or arrangements with Euratom under article 206 of the existing Euratom treaty, and that it remains Government policy to seek to do so?
Greg Clark
I can confirm that the Bill has been prepared on a contingency basis. The discussions around our continued arrangements with Euratom and with the rest of the European Union have not been concluded, but it is right to put in place in good time any commitments that are needed in primary legislation. Euratom has served the United Kingdom and our nuclear industries well, so we want to see maximum continuity of those arrangements.
Mr Deputy Speaker
It might have been helpful if the right hon. and learned Gentleman had asked that question to begin with, rather than giving a speech.
Greg Clark
Triggering article 50 of the treaty on European Union also requires triggering article 50 on membership of Euratom. That is not just the Government’s view; it is the European Commission’s view, too. The Commission clearly stated to the European Parliament that,
“in accordance with Article 106(a) of the Treaty establishing the European Atomic Energy Community, Article 50 of the Treaty on European Union applies also to the European Atomic Energy Community.”
That is the basis on which we are considering these safeguards.
Rebecca Pow (Taunton Deane) (Con)
Will the Secretary of State give an assurance that, as we leave the EU, the Bill will enable us to develop our own watertight system for complying with nuclear safeguards? As he says, that means introducing reporting and transparency to make it obvious that no nuclear material is going where it should not be going. We want assurances that all these boxes will be ticked, even if we leave Euratom.
Greg Clark
That is precisely the point of the Bill, and I will explain, perhaps at some length, the ways in which it might be done. I hope my hon. Friend will stay for that.
John Woodcock (Barrow and Furness) (Lab/Co-op)
The Secretary of State is being generous in giving way. We heard clearly enough that this is a contingency Bill. What I did not hear clearly is the Government’s policy on staying in Euratom. He says that the treaty requires us to come out, which is debatable. If it is the Government’s policy that we want associate membership status, will he make that clear now? Maximum continuity is a rather vague concept.
Greg Clark
It is very clear that membership of Euratom requires membership of the European Union, which is why we have this Bill. We have been satisfied with the arrangements we have, and part of the negotiation will be to ensure the greatest possible continuity, but that is to be negotiated with Euratom and the partners involved.
I have mentioned that the first requirement flowing from our commitments on safeguards is to have a domestic system that allows the state to know what civil nuclear material there is and where it is located, but the second fundamental principle of the global non-proliferation and safeguards regime is that there is some oversight of the system independent of the country itself. That provides obvious and necessary reassurance to the international community that material from civil nuclear programmes is not used other than for civil activities.
The UK has been a member of Euratom since 1 January 1973, and Euratom has carried out elements of both the domestic and the international activities set out in our agreements with the IAEA. The UK’s agreement with the IAEA on safeguards is a trilateral agreement, reflecting the relationship between the UK and Euratom. Upon withdrawal from Euratom, however, the UK’s main agreements with the IAEA will become ineffective, as they are predicated on Euratom membership. We are in discussions with the IAEA to agree replacements that reflect the UK domestic regime, including continued international verification by the IAEA. The Bill gives us the ability to give effect to precisely that regime. We have been working closely with the Office for Nuclear Regulation to ensure it will be ready to take on responsibilities for nuclear safeguarding that are currently delegated to Euratom inspectors.
Kelvin Hopkins (Luton North) (Lab)
Many professionals in the nuclear industry and outside academics are seriously concerned about the ongoing problem of what to do with nuclear waste from the civil programmes. Will the new arrangements simply parallel exactly what Euratom is doing or will they be stronger? Is the Minister not concerned that we still have to deal with the serious problem of long-term storage of civil nuclear waste?
Greg Clark
Let me say two things. First, we want to see maximum continuity of the standards—we do not want any reduction in them, as they have served us well and they give confidence to the industry. Secondly, the hon. Gentleman knows, from his many years in this House, that successive Governments have taken forward our long-term disposal of nuclear waste, and work on a long-term repository is being conducted, but that is a domestic responsibility, as it always has been.
John Redwood (Wokingham) (Con)
I welcome the Secretary of State’s approach. Will he confirm it will mean that all the operational work that happens in the relevant plants will continue as if nothing had changed? It is done to a high standard and we wish to preserve those standards.
Greg Clark
My right hon. Friend is absolutely right. As I say, I do not think anyone regards the arrangements that have prevailed as deficient, so it makes sense to replicate them as we can. We are being orderly in making sure that we have the right domestic framework in place in good time.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
My right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) referred to the fact that we have to make all these international agreements which have previously been reflected in agreements between the EU and international bodies and other countries. Is any other country outside the EU objecting to the likelihood that we will be seeking to make these arrangements, or to be a full member of the IAEA in our own right, with a voluntary agreement that it proposes?
Greg Clark
My hon. Friend will doubtless be aware that across the international community there is great recognition that there is little contention in this area. It is obviously in the global interest to have robust arrangements in place, and the discussions are taking place smoothly and without any contention.
Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)
I congratulate my right hon. Friend on pursuing this issue with calm and decency. Will he take the opportunity to reflect on some of the scare nonsense that we heard earlier, particularly with regards to medical radioisotopes? That was front page—it was said that people would not be able to get their treatment—but nothing at all in our decision would ever stop the export of any of those medical radioisotopes to non-EU countries.
Greg Clark
My right hon. Friend is right; there is nothing in that at all.
Let me state it another way: the Bill enables the United Kingdom to set up a domestic safeguards regime to enable us to meet international safeguards and nuclear non- proliferation standards after we withdraw from Euratom, no matter what the outcome of the negotiations. So we are being prudent and prepared, taking these steps now, in very good time. The ONR does not currently have this role because, under the Euratom treaty, all members, including the UK, subject their civil nuclear material and facilities to nuclear safeguards inspections and assurance carried out by Euratom. Euratom then provides reporting on member states’ safeguards to the IAEA, which conducts nuclear safeguards globally. The United Kingdom's new regime, established under this Bill, will ensure that the UK has the right regime in place to enable the ONR to regulate nuclear safeguards following withdrawal from Euratom—it could not be more simple. That will ensure that the UK continues to maintain its position as a responsible nuclear state following withdrawal from Euratom.
Dr David Drew (Stroud) (Lab/Co-op)
Will the Secretary of State assure me that interested parties in the industry, principally the Nuclear Industry Association and Prospect, the trade union, which represents most workers in the industry, will continue to be consulted, as at the moment neither is convinced that the Bill is better than Euratom?
Greg Clark
I will certainly make that commitment. One feature of the nuclear industry is that it is, appropriately, highly consultative. People from across the sector talk to each other. It is a community of experts and they take advice. We will certainly continue to do that.
The hon. Gentleman mentioned the Nuclear Industry Association, with which I have meetings and with which the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Watford (Richard Harrington) meets regularly. The NIA has said clearly that the publication of the Bill
“is a necessary legislative step in giving responsibility for safeguards inspections to the UK regulator”.
I have been clear with the House that the Bill is a prudent and timely set of measures that does not prejudge the discussions we will have with Euratom. I regard it as a model of good order.
Greg Clark
I give way to the Chair of the Business, Energy and Industrial Strategy Committee.
Rachel Reeves
The Secretary of State says that he speaks regularly to the experts in the sector and industry; can he give an example of anybody in the industry who would prefer the powers to be transferred to the ONR rather than for us to stay in Euratom? Is there anyone?
Greg Clark
The hon. Lady justifies what I said at the outset. The arrangements we have had with Euratom have been perfectly satisfactory, and we want to see maximum continuity. I hope she would agree, though, that it is necessary and prudent to take legislative steps so that if we are not able to conclude a satisfactory agreement—I do not expect that—we nevertheless have a world-class nuclear safeguarding regime. I would have thought she would welcome our doing that in good time and sensibly.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
The decommissioning of the UK’s ageing nuclear estate is a critical aspect of Euratom’s work, yet there is not a single mention in the Bill of decommissioning. Will the Secretary of State explain how the 17 nuclear sites that are currently in the process of decommissioning, including Trawsfynydd in my constituency, will be regulated and properly staffed and have the necessary expertise if the UK leaves Euratom?
Greg Clark
There is no difference in the arrangements. As I say, the Bill makes provisions for a safeguarding regime. It is not about safety or security; it is about making sure it can be verified that nuclear material that is used in the civil sector does not cross to other uses. The robust arrangements supervised by the ONR that we have in place for decommissioning continue.
Albert Owen (Ynys Môn) (Lab)
In response to my hon. Friend the Member for Stroud (Dr Drew), the Secretary of State said that Ministers regularly meet various industry experts and bodies. Will he go further and say that by the time the Bill is enacted it will contain a clause that says it is necessary to consult the industry as widely as possible? The trade unions and the trade bodies currently feel left out.
Greg Clark
Such consultation is the universal practice in the nuclear sector. The hon. Gentleman might serve on the Bill Committee, so perhaps he will be able to interrogate the issues he raises, but at every point the nuclear sector proceeds not through the unilateral fiat of Governments but appropriately, on the basis of expert advice. That is the culture of the nuclear industry and it will continue.
As I set out for the House in my written statement in September, our intention is for the new domestic regime to exceed the standard that the international community would expect from the UK as a member of the IAEA. The objective is for it to be as robust and comprehensive as that currently provided by Euratom. We are perfectly satisfied with the high standards that have prevailed under Euratom, so we do not want to take the opportunity to weaken them. As I have mentioned, we will also be agreeing new safeguards agreements with the IAEA. My officials have had meetings with officials from the IAEA at their headquarters in Vienna to take the discussions forward, and I am pleased to report that they are progressing extremely well.
On other aspects of the Euratom relationship, we have made it clear that we want to continue the successful co-operation. In June, I announced the Government’s commitment to underwrite the UK’s fair share of the costs for the Joint European Torus—the leading nuclear fusion facility in Oxfordshire—which supports 1,300 jobs, and we will continue to do that.
Let me briefly take the House through the clauses of the Bill. It is not a long Bill, as the House knows. Clause 1 amends the Energy Act 2013 to replace the Office for Nuclear Regulation’s existing nuclear safeguards purposes with a new definition. The ONR will regulate the new nuclear safeguards regime using its existing relevant functions and powers, so the measure is about clarifying its purposes. Clause 1 will also amend the Act by creating new powers so that we can set out in regulations the detail of the domestic safeguards regime, such as on accounting, reporting, and control and inspection arrangements.
Richard Graham (Gloucester) (Con)
The Nuclear Industry Association has made it absolutely clear that this legislation is necessary, but it has also spelled out that the best outcome would be for the UK to continue with some form of membership of Euratom. Will my right hon. Friend give the House an idea of whether he feels that the discussions so far with Euratom make it likely that we will be able to achieve some form of continuation of the existing arrangement?
Greg Clark
As I have made it repeatedly clear, we regard the arrangements with Euratom as having served this country well and we want to see maximum continuity. As far as I can see, all members of the nuclear industry regard that as being the case. This is a good example of where I hope it will be possible to agree quickly and with a maximum of consensus a regime that continues the high standards that we have observed.
John Woodcock
As the Secretary of State is of course aware, there is an extended search to find a new investor in the NuGen site. Potential buyers are looking on that with great interest. In his closest possible working with Euratom—or whatever his phrase was—is there a scenario in which there will not need to be new nuclear co-operation agreements, which could make the sale much more complicated and problematic?
Greg Clark
The fact of this legislation should send a signal to the world that we are absolutely determined to be forward facing and to make sure that we have a regime in place that can continue the high standards that we enjoy while pursuing, in negotiation with Euratom and with other countries, the same continuity of arrangements that we have enjoyed. I see absolutely no obstacle to that.
Clause 2 will create a limited power, enabling regulations to amend the Nuclear Safeguards and Electricity (Finance) Act 1978; the Nuclear Safeguards Act 2000; and the Nuclear Safeguards (Notification) Regulations 2004. This narrow power will mean that cross references in that legislation to existing agreements with the IAEA can be updated once new international agreements have been reached.
Let me summarise the four key points. We are totally committed to the current and future prosperity of the nuclear industry. It is an important part of our energy future, our security as a nation and our commitment to clean energy. We are committed to meeting all our international obligations and to retaining our world-leading status on nuclear research and development. We need the powers in the Bill to give the existing independent nuclear regulator—the ONR—a new role to regulate nuclear safeguards, alongside its existing role regulating the UK’s nuclear safety and security.
Alan Brown (Kilmarnock and Loudoun) (SNP)
I thank the Secretary of State for giving way one more time. I am not sure whether he is coming to an end, but he has not yet responded to the intervention on radioisotopes of the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith). Does that mean that the Nuclear Industry Association, Dame Sue Ion, the honorary president of the National Skills Academy for Nuclear, and the Royal College of Radiologists are right to express concerns about the future possible supply of radioisotopes, especially given that, in the past, there have been global shortages? The Euratom supply chain was prominent in managing those shortages of supplies.
Greg Clark
Radioisotopes are not in scope of the measures before us today; this is about safeguards; and I replied perfectly adequately to my right hon. Friend.
The Bill sits alongside other work streams around our future relationship with Euratom, with the International Atomic Energy Agency and with third countries, and as such has been drafted to cater for a variety of possible outcomes to these talks. I want to reiterate our commitment to maximum continuity of these arrangements. The reason we are leaving Euratom is the decision to leave the European Union. The two treaties are uniquely legally joined. We continue to support Euratom and want to see a continuity of co-operation and standards and a close future partnership with it.
We do not know what the final arrangements will be, so we are doing what any responsible Government would do by putting in place now a civil nuclear safeguards regime for the United Kingdom through this Bill so that we will be fully prepared whatever the outcome of negotiations. I commend this Bill to the House.
Rebecca Long Bailey (Salford and Eccles) (Lab)
As the Secretary of State has outlined, this Bill will provide the legal framework for establishing a domestic nuclear safeguards regime. Nuclear safeguards are essential obligations to ensure that work and materials for civil nuclear do not get transposed into work or preparations for military nuclear, and that is done under the umbrella of the nuclear non-proliferation treaty. Arguably, the UK already has a perfectly good set of nuclear safeguards through its membership of Euratom, so why is the Bill needed?
The Bill is a contingency measure, as the Secretary of State has helpfully illustrated. If we are to leave Euratom, and if there is no associate membership that gives us continued nuclear safeguarding provisions, we will need to put in place a new system of safeguarding, and that needs to be to the satisfaction of the International Atomic Energy Authority. Now that takes us into rather strange territory: we have not yet left Euratom; it is not clear whether we have to leave Euratom; the House has not agreed that we should leave Euratom; and we have not put in place any parliamentary procedure for agreeing that we should leave Euratom. In effect, the Bill is based wholly on the declaration that the Prime Minister made in her letter to the EU informing it that we were going to invoke article 50—
Greg Clark
Is the hon. Lady saying that it is wrong for this House and this Government to prepare, in a prudent and orderly way, to maintain the excellent safeguards that we have? Is she somehow criticising that preparedness?
Rebecca Long Bailey
Clearly, the Secretary of State was not listening to what I was saying. If he displays some patience, he will hear a bit more about my thoughts on the Bill’s contents.
Euratom was agreed to as a body and a treaty before the EU treaty came about, and to that extent it is, arguably, separate from the actual formation and operation of the EU. That of course is the subject of fierce legal debate. It is true that its disputes mechanism does involve the European Court of Justice, and its terms include the free movement of scientists but those are specifically applied to civil nuclear activities and do not stray on to a wider canvas. Subject to legal debate, it certainly may have been possible—
Rebecca Long Bailey
I will make some progress, if I may.
The Government stated in their notes on the Queen’s Speech that the Bill to be introduced on the future of safeguarding would also
“protect UK electricity supplied by nuclear power”.
This Bill clearly does not do that, which is perhaps why that claim has been dropped from the description of the Bill. But the challenge centrally remains, and it is likely that another Bill will be necessary to protect that electricity in its entirety. Will the Minister confirm when that legislation will be introduced?
Let us assume for the time being that maintaining membership of Euratom is not possible—by far the worst case scenario. How have the Government chosen to implement their limited stab at replacing the nuclear safeguarding regime? Well, they have chosen to do so by giving the Secretary of State all the power to make the changes. The Bill contains powers for the Secretary of State, by order, to provide all the detail and fill in the dots of the legislative changes without further meaningful recourse to the Floor of the House.
Clause 1 will give the Secretary of State powers to introduce substantial amendments to the UK’s safeguarding procedures and give effect to international agreements that are yet even to begin being negotiated without any further primary legislation. Furthermore, the Secretary of State will be given the power—also by order—to amend retrospectively, and without further meaningful recourse to the Floor of the House, no fewer than three pieces of existing legislation. Not only that, but he will have the power to amend those pieces of legislation, as the Government acknowledge in their explanatory notes accompanying the Bill, based on the outcome of negotiations with the International Atomic Energy Agency that the Government accept are not complete.
We have to take on trust that the negotiation with the IAEA to which Parliament will not be a party will proceed satisfactorily, and that the Secretary of State, in his infinite wisdom, will table the necessary amendments to primary and secondary legislation that will give effect to those agreements, whatever they are. While I am on this point, will the Secretary of State confirm the progress of such agreements and negotiations, and provide details?
Greg Clark
I hope the hon. Lady will be reassured if she actually reads the Bill. It is clear that the power to amend the legislation that she pointed out—I hope that she can see what I am pointing out—is limited to
“consequential, supplementary or incidental provision…transitional, transitory or saving provision.”
It is not a general power. It is intended to ensure that the transposition of one set of regulations to another can be made efficiently.
Rebecca Long Bailey
Let me take the Secretary of State on a little journey. If he listens carefully, he might see how dangerous the scope of certain parts of the Bill might be. The explanatory notes indicate that regulations under clause 1 will be subject to the affirmative procedure only “on first use”. It would be helpful if he confirmed that that wording is actually a terrible mistake, that he does not actually mean it and that, at the very least, all legislation on the domestic safeguarding regime will be subject to the affirmative procedure.
I would never cast aspersions on the Secretary of State, but, unfortunately, his ministerial colleagues have shown that they are prepared to use their delegated powers not just to avoid parliamentary scrutiny, but arguably to legislate in open defiance of the House. In particular, I refer to the recent rise in university tuition fees. The original Act allowed any statutory instrument raising the limit to be annulled by either House. Unfortunately, the Government first prevented any vote whatever, and then refused to accept the vote of the House against the regulations. In effect, they used secondary legislation to rule by ministerial decree. They tabled the regulations the day before Christmas recess and the Opposition tabled a prayer against them on the first sitting day after that. But, despite the conventions of the House, the Government dragged their feet for months until eventually conceding the point and scheduling a debate on 18 April. Of course, the Prime Minister dissolved Parliament before that vote could be held. After the election, the new Leader of the House said that there were “no plans” to allow time for the vote that her predecessor had solemnly promised from the Dispatch Box. It was left to my hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) to secure parliamentary time under the rules of Standing Order No. 24. In that debate, the Minister for Universities, Science, Research and Innovation tried to deny that any vote had been secured, leading Mr Speaker to intervene and tell the House:
“I had thought there was an expectation of a debate and a vote, and that the Opposition had done what was necessary”.—[Official Report, 19 July 2017; Vol. 627, c. 895-6.]
Drew Hendry
No, I am going to make some progress.
As I have said, the UK does not currently have any reactors capable of producing such isotopes.
Greg Clark
Perhaps I can help the hon. Gentleman. Euratom places no restrictions whatsoever on the export of medical isotopes, and so there are no further protections needed. It is irrelevant.
Drew Hendry
I do not think that the Minister is reflecting the view of the experts in the industry who are affected, and I will come on to underline that with some quotes.
Euratom supports the secure and safe supply and use of medical radioisotopes. If and when the UK withdraws, it will no longer—this is the critical point—have access to Euratom’s support, ending the certainty of a seamless and continuing supply. The Royal College of Radiologists points out that the supply of radioisotopes would be disrupted by leaving the single market, because transport delays will reduce the amount of useful radioisotopes that can be successfully transported to their destination.
Retail Energy
Greg Clark Excerpts(7 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
With your permission, Mr Speaker, I would like to make a statement to the House about the draft Energy Price Cap Bill, which we are publishing today.
Over the past 15 years, energy prices have risen by over 90% in real terms. Currently, most households in Great Britain are on tariffs that penalise rather than reward loyalty. In 2014, in response to widespread concern that competition in the retail energy markets was not serving customers’ best interests, the independent regulator Ofgem referred the market for investigation to the Competition and Markets Authority.
The CMA completed its investigation in 2016 and found that the retail energy market was not operating in a fully competitive way. It reported that customers of the big six pay an average of £1.4 billion a year more than they would in a truly competitive market. The CMA report said:
“Overall, our view is that the overarching feature of weak customer response gives suppliers a position of unilateral market power concerning their inactive customer base and that suppliers have the ability to exploit such a position through their pricing policies.”
Since the CMA findings, the big six energy suppliers have announced unjustified price increases in their poor value standard tariffs. Customers of the these firms have seen their energy bills increase by between 7% and 10% within the past 12 months, increases on prices the CMA had already concluded were too high.
The Government want the market to thrive, and we continue to promote competition as the best driver of value and service for customers. However, as my right hon. Friend the Prime Minister said last week, the Government are prepared to act when markets are not working for all consumers. The energy market is a clear example of this, as Ofgem itself said yesterday.
The energy market is on the cusp of a major change, in which smart meters will be offered to every household and business by the end of 2020. When fully rolled out, smart meters will make it easier for consumers to reduce their energy consumption and to access competitive deals. In the meantime, however, the CMA panel recommended a number of measures to improve competition and a temporary tariff cap for those with prepayment meters until smart meters are rolled out. As the CMA said:
“our remedies will take time to implement before they start to address the features that we have identified and, in turn, reduce the detriment to domestic customers arising from them.”
The CMA was in two minds over how widely interim protection should be applied. The panel’s minority opinion was that the temporary price cap should be extended to a wider group of consumers. In its words:
“They must be supplemented by a wider price control designed to give household customers adequate and timely protection from very high current levels of overcharging.”
The Government agree with that view, which is why I wrote to Ofgem in June to ask them what action they intended to take to safeguard customers on the poorest value tariffs. In response, Ofgem undertook to consult consumer groups to provide measures to protect vulnerable consumers.
We welcome Ofgem’s commitment yesterday to protect a further 1 million families, meaning over 5 million families will be protected from expensive standard variable tariffs for the first time; and we welcome Ofgem’s statement that suppliers must step up their efforts to get more of their customers currently on default tariffs on to better value deals. However, this does not address the scale of the detriment suffered by all consumers on expensive default tariffs and it still leaves 13 million families paying more than they would in a competitive market. These consumers are often on lower incomes, are elderly and are renters. I am determined that we will be on the side of all consumers and ensure that the market can become more effective. Our goal is to ensure a fair deal. The market is currently not delivering this, which is why the energy companies and Ofgem need to act. It is precisely for this reason that we are publishing this draft Bill today.
I have invited the Business, Energy and Industrial Strategy Committee to scrutinise the draft Bill, which provides for a price cap for domestic customers on standard variable tariffs and default tariffs. The cap will be temporary and will be set by the independent energy regulator, Ofgem. It will initially last until the end of 2020, with the potential to be extended by up to three years if needed.
The draft Bill will preserve the ability for the market to act competitively: there should be savings for customers on high-priced standard variable tariffs, but enough headroom to allow for effective competition and to give a reason for people to shop around. It is of the utmost importance that consumers are treated fairly and our priority must always be to act in their interests. The draft Bill would allow competition and innovation in tariffs between existing players and new entrants, but would ensure that the worst excesses of overcharging could not be visited on loyal and, in many cases, vulnerable consumers of energy companies. It would require Ofgem to impose the cap as soon as is practicable after legislation, but it does not stop companies acting sooner and they should do so.
To conclude, Mr Speaker, when £1.4 billion a year of detriment to British consumers is identified, following a thorough investigation, we have a duty to act. These measures are intended to safeguard the interests of consumers during the transition to a more competitive market. I commend this statement to the House.
Rebecca Long Bailey (Salford and Eccles) (Lab)
I thank the Secretary of State for advance sight of his statement.
Just two years ago, the then Prime Minister criticised Labour’s energy price cap policy, saying we wanted to live in a Marxist universe. Well, we certainly are in strange political times, that’s for sure. It has taken an extraordinary amount of time to get to this stage and enormous pressure from the shadow Front-Bench team and hon. Members on both sides of the House. It is impossible, however, for the price cap to protect families this coming winter. Ofgem has indicated it would take about five months after the Bill’s Royal Assent for the regulator to enact a price cap. Owing to the Government’s dithering, the 4 million households in fuel poverty, almost 1 million of which include a disabled person, will now face another winter of cold homes or astronomical bills. Will the Secretary of State explain why it has taken so long? Labour has been consistently calling for action and clarity on the Government’s position since the election and for a price cap for several years, but even today several issues require further clarification.
First, will the Secretary of State confirm why the draft Bill, which I have just perused, does not provide any direction from him on his preferred cap parameters but instead passes the ball to Ofgem? Will it be a relative cap or an absolute cap? Will he direct Ofgem to implement a different cap if he is not content with the one it proposes following the review? Secondly, will he confirm how long he anticipates the Bill’s passage taking and whether he will take any ancillary measures to expedite the usual scrutiny process?
Thirdly, reports this morning stated that the cap would apply to 12 million households, but the Bill is not clear on the cap parameters, as I have said, and leaves much to the discretion of Ofgem. Will the Secretary of State confirm, then, why the Government have seemingly rowed back from the commitment to knock £100 off the bills of 17 million households? Surely this should be explicit in the Bill or ancillary directions to Ofgem.
Fourthly, the Secretary of State is no doubt aware that Labour would introduce an immediate emergency price cap to ensure that the average household bill remains below £1,000 a year, which would save the average big six customers £142 a year. Had the cap been in place since 2010, the average customer would have saved more than £1,000 on their bills by now. Does he anticipate, in all this ambiguity, that the final cap will go anywhere near Labour’s proposals? If not, by how much does he expect bills to be reduced, if at all?
Finally, we are discussing the need for an energy price cap in the first place only because our energy market is fundamentally broken—even the Prime Minister acknowledges that. Labour understands that the price cap is only a temporary fix and so would radically reform the market by, among other measures, creating a publicly owned, locally accountable energy supply company in every region and ensuring greater transparency and fairness in the pricing structures of the supply and wholesale energy market. Does the Secretary of State accept that a price cap, although welcome, is only a sticking plaster and that radical reform of the market is necessary?
If so, how and when does the Secretary of State propose to reform the energy market and will he direct Ofgem to do it, rather than simply calling for a review, as the draft Bill suggests? Or have we got to wait until 2020 and the outcome of such a review before we see any real action? I hope that we do see action before 2020 because the cap is only guaranteed for the next two winters. Homes and businesses up and down Britain face a bleak winter and—it seems—further ambiguity and uncertainly regarding the Government’s position on the price cap mechanism and the wider reforms our energy market desperately needs.
Greg Clark
If one thing would be disastrous for consumers, taxpayers and business confidence in this country, it would be the hon. Lady and her Front-Bench colleagues’ proposal for nationalised energy companies. It is not even clear how it would be paid for, but there are only three ways: taxing more, borrowing more, or expropriating assets. If that is about achieving the confidence of British business, she has a long way to go.
The hon. Lady asked about the action being taken and the required pace. I remind her that in 13 years of Labour Government not a single protection was put in place for consumers. It was the Conservative-led Government who commissioned the Competition and Markets Authority report—something that the right hon. Member for Doncaster North (Edward Miliband), when he had the opportunity, signally failed to do—as a result of which 4 million consumers will benefit this winter from a cap on prepayment meter tariffs, which again is something the previous Labour Government failed to do in their 13 years in office.
Since taking on this role, I have been absolutely clear, on the basis of the CMA’s assessment, that we require nothing less than the eradication of that detriment of £1.4 billion, which is why, in response to my requirements, Ofgem has announced that a further 1 million will be protected this winter, with a further 2 million to follow. I have been clear, however, that that is not comprehensive enough, and it is because I am not satisfied that we are introducing the Bill. We published it and submitted it to the Business, Energy and Industrial Strategy Committee, which I hope will give it urgent pre-legislative scrutiny so that we can reflect what I think is a broad consensus in the House that the objectives should be an energy market that works for all and, before that, protection for the consumers currently suffering the detriment identified. I hope that there will be a consensus around that so that we can proceed with the Bill.
As I said in my statement, however, it is open now to energy companies to move people off the standard variable tariffs identified as overcharging customers. Indeed, Ofgem has made it clear that it expects them to do so. They should do so now and not wait for the Bill.
John Penrose (Weston-super-Mare) (Con)
I congratulate my right hon. Friend on embracing the huge cross-party consensus on protecting 17 million households from rip-off energy bills. This is a good day. It is great that we can now move on to discuss how, rather than if, we make it happen. In the spirit of consensus, will he listen to the widespread concerns that an absolute cap would throttle competition, be out of date as soon as the wholesale price of gas changed and mean energy companies spending more time lunching their regulator than delighting their customers, whereas a relative cap would preserve competition, make the customer king and provide far wider consumer choice?
Greg Clark
I pay tribute to my hon. Friend’s personal energy in this matter. He has been assiduous and tenacious in pursuing consumers’ welfare. The reason for publishing the Bill for pre-legislative scrutiny was to build the consensus that I know he will participate in. Our proposal is for an absolute cap—to ensure a clear limit on what can be charged—but I know he has thoughtful views that he will want to convey during the scrutiny process.
Alan Brown (Kilmarnock and Loudoun) (SNP)
I thank the Secretary of State for early sight of the statement and pay tribute to the hon. Member for Weston-super-Mare (John Penrose), the right hon. Member for Don Valley (Caroline Flint) and my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) for the cross-party way in which they have brought this to the House. I am sure that that is what has forced Government action.
With 18 million customers on default tariffs, today’s announcement is a welcome step forward. I hope that those customers get the benefit of the savings that have been talked about. We need to make sure, however, that there is not too much equalisation or coalescing of pricing around the cap and that customer service is not affected as a consequence of companies trying to find other ways to save money. As the Secretary of State rightly said, standard variable tariffs themselves are a problem. How will the Government guarantee that people are moved off them once and for all?
The end supplier is only a small component of energy bills. What steps will the Government take to review the profits that the distant network operators make? They make up a huge cost in energy bills. Government energy policy also impacts on energy bills. I refer the Secretary of State to the Hinkley project and the fact that future auctions have been announced but onshore wind cannot bid. To keep energy prices down, clearly we must have the most cost-effective energy generation policies in place, so it must be allowed to bid in the electricity generation market. In Scotland, the First Minister has announced that a public sector supplier will be set up and allowed to bid in the markets. Does the Secretary of State welcome that and is it something that the UK Government will follow? Energy efficiency is also a key component. The Scottish Government are committed to a warm homes Bill. Will the UK Government do likewise?
Greg Clark
I hope that the hon. Gentleman will be able to stay for the statement by my hon. Friend the Minister for Climate Change and Industry.
Greg Clark
He says that he will. I hope he will give a warm welcome to the proposals in the clean growth strategy, which will include something that many of his colleagues in Scotland, from all parties, have pressed for, which is the remote islands being entitled to bid in renewables auctions. I hope he will welcome that and, indeed, our leadership in renewables, not only in deployment—we are the world’s leader in offshore wind—but in the jobs being created around the United Kingdom in the supply chain.
When it comes to the proposals in the retail market that we have set out, I can confirm that it is absolutely the Government’s intention and requirement that competition should be preserved—indeed, extended—in this market. The Competition and Markets Authority said there was not enough of it at the moment. That is why part of its panel said that interim measures were needed while that competition comes in. That is important, and the requirement of the draft Bill is that Ofgem should take steps to ensure choice and vigorous competition as part of that.
Robert Halfon (Harlow) (Con)
I welcome the changes that my right hon. Friend has made today. I have mentioned this to him before, but can he look seriously at the issue of energy companies charging people a lot more money for their domestic energy bills if they do not pay by direct debit and instead pay by cheque or through their bank or post office? It seems outrageous that these customers have to pay a lot more when they are doing the right thing and paying on time, but not by direct debit.
Greg Clark
I am grateful to my right hon. Friend, who is always a doughty champion of consumers. It is right in a competitive market that decisions should be taken by the companies, but it is clear from the proposals that we have made that we expect responsibility to be exercised and that unfair advantage should not be taken, especially not of vulnerable consumers who are not as able to switch, for example—this may apply to payment methods, in the way that he described. That is absolutely part of the duty of the regulator to look after consumers.
Perhaps I could take this opportunity to reply to the point, which I did not respond to, that the hon. Member for Kilmarnock and Loudoun (Alan Brown) raised about the other costs on consumer bills. We have commissioned a review by the energy expert Professor Dieter Helm that will be inquiring into just such things and reporting shortly.
Edward Miliband (Doncaster North) (Lab)
Given that this policy was once described from the Dispatch Box as “a con”, “a joke”, “disastrous” and “living in a Marxist universe”, it would be churlish not to welcome the Secretary of State’s conversion to it today. Well done. He is very welcome to the party. However, I still think his voyage into the Marxist universe is a bit slow, if I can put it that way, because this is a draft Bill. It is four months since the general election. He said that there would be help this winter. He could have chosen to fast-track this measure with the Opposition Front Bench and get the help in now. Why so slow? Why not do it now?
Greg Clark
I certainly have not joined the Marxist universe that the right hon. Gentleman inaugurated and that has been taken up with such enthusiasm by those on the current Labour Front Bench. The problem with the proposal that he put forward—one of many problems—was that it would have frozen energy prices when prices in the wholesale market fell, so consumers would have been paying more. That is a good reason why we should act with the grain of the market rather than imposing a policy that would have been disastrous for consumers.
It is important that Ofgem has the powers and it is exercising some of them. I have been clear and candid with the House that I do not think it goes far enough, so through this Bill we would require that. We are putting that forward with immediate effect for pre-legislative scrutiny. It is important that we establish that it has the support of the House and then Ofgem can act on that, but it has been clear in its statement that, as the Bill is scrutinised, it will prepare and consult on the implementation requirements so that no time is lost.
Stephen Kerr (Stirling) (Con)
I welcome the statement. Does my right hon. Friend agree with me and many of my constituents in Stirling, who are currently paying too much for their energy bills, that a fully functioning competitive market is the best long-term driver for value for customers? Will he also say when smart meters will become universal? By that I mean not supplier-specific, which I consider to be anti-competitive.
Greg Clark
My hon. Friend makes an excellent point. He is absolutely right that a fully competitive market is what we want and what we will achieve. The essence of the problem for people on standard variable tariffs is that the energy companies have more information about the habits and behaviour of consumers than is available to their competitors. They therefore know which consumers will never respond, no matter how swingeing a price increase is, but other competitors do not have access to that information to address the imbalance. That is why smart meters are being rolled out. They are moving forward from the first generation, so that they are fully rich in the information available, and that is part of the roll-out that is taking place now.
Sir Edward Davey (Kingston and Surbiton) (LD)
Did the Secretary of State receive any of the advice that I did in his position that an energy price cap such as that which he is proposing could mean higher bills for the most vulnerable consumers, as seven of the eight members of the Competition and Markets Authority also feared? Will he confirm that without a cap we have seen a dramatic expansion of competition, switching numbers soaring and a sustained reduction in the number of consumers on variable tariffs? Is not the real reason he has gone for this temporary and timid price cap that he does not really believe in it?
Greg Clark
No. I have been determined from the outset to eradicate the abuse that the CMA has identified. It seems to me that if £1.4 billion of abuse has been identified, it is essential that that is eradicated. This problem is specific to modern markets—without the smart meters that will provide some relief from that—which is why it is important to provide interim measures, as the minority report of the CMA said. It is right to act on that. Everyone agrees—no one thinks that the market is fully competitive. The CMA in its majority report identified that the market was not functioning in a fully competitive way, and Ofgem said as much yesterday. As far as switching goes, in the last year only 16% of consumers switched, so 84% of the population did not. Until competition is fully established, it seems to me that people in that category deserve the Government to be on their side to ensure that they cannot be ripped off.
Rebecca Pow (Taunton Deane) (Con)
I congratulate the Government on putting the consumer first. It is a shocking revelation that £1.4 billion is being overpaid by consumers on their bills, so I welcome the fact that the Government are taking this seriously. Many of those customers are in Taunton Deane and many are the most loyal customers. Does my right hon. Friend agree that the only way to deliver best value for those people is through a truly competitive market and that nationalisation would certainly not be the answer?
Greg Clark
I agree with my hon. Friend. Many consumers who are loyal to a supplier, often for many years, assume not that they will get the best deal, but that a trusted brand will respect their loyalty and not abuse it. However, as the CMA has pointed out, that is not the case, and I think it is important that the issue is addressed before competition is fully established. As Ofgem said yesterday, highly priced, poor-value standard variable tariffs have had their day, and the energy companies should act to move customers away from them.
Caroline Flint (Don Valley) (Lab)
Much of what I am hearing is music to my ears, and I welcome the fantastic cross-party support. The draft Bill, however, is a vindication of Labour’s warnings since the data became available in 2011 that customers were being ripped off by the big six energy companies.
The Secretary of State has finally accepted that customers were overcharged by £1.4 billion between 2012 and 2015, but will he admit that what he is proposing today will not help the many millions of customers who will need help this winter? Why does he not stop wasting time? Why does he not use the extensive powers that the Labour Government gave him in the Energy Act 2010, under which he could bring an order to the House to cap prices right now? The dithering must stop. We have had the debate. Price caps already exist for those with prepayment meters and those receiving the warm home discount, and the Secretary of State should do this for everyone else now.
Greg Clark
I welcome the support from the cross-party group of which the right hon. Lady has been part, along with my hon. Friends. However, while she talks about the data being available, she seems to have forgotten that her party was in government for 13 years. It was this Government who exposed the degree of overcharging and it is this Government who are acting on it, so it is this Government who are standing up for consumers.
The right hon. Lady asked about relief this winter. As I have said, I welcome the extra relief, although I think that Ofgem should go further. It has said that it expects energy companies to move customers off the standard variable tariffs, but we are acting to ensure that that is backed up by an instruction and a requirement.
The use of the legislation mentioned by the right hon. Lady—I have of course examined it and taken advice—would have the consequence of increasing other prices, rather than capping the overall price, which is why the backstop power in the draft Bill is necessary.
Sir Desmond Swayne
I want to escape this Marxist universe. We cap university fees and, lo and behold, all the universities charge the maximum. Can the Secretary of State persuade me that electricity will be any different?
Greg Clark
As my right hon. Friend will know, there is a vigorous competitive market for deals that are available through a great many new entrants, and we want to expand that market. The CMA has established that at present there is insufficient competition in the standard variable tariffs. Our aim is to expand the competitive part of the market and in the meantime provide some protection for those who are paying too much on those tariffs.
Albert Owen (Ynys Môn) (Lab)
I welcome the Government’s intervention on the road to Marxism. I think that—apart from one—we are all Marxists now. I want to make a serious point, but I have been banging on about this for a long time, and I have been accused of lots of things, which is why I make that statement.
Speaking as a member of the Business, Energy and Industrial Strategy Committee, I think it is realistic to assume that the pre-legislative scrutiny will take some time. When does the Secretary of State expect the Bill to receive Royal Assent? Will that happen at the earliest opportunity, so that we can help the vulnerable people who are being ripped off? On the issue of competition, the Secretary of State mentioned a review. The energy companies said recently that the price hikes were due to transmission costs. Can we look into the uncompetitive nature of this broken energy market?
Greg Clark
As I said earlier, that is being considered as a separate exercise.
The hon. Gentleman referred to pre-legislative scrutiny by the Select Committee. I think that that is necessary so that we can establish a consensus and allow the technical scrutiny that is needed, so that once the Bill has passed that scrutiny and been introduced to the House, it can proceed with the strongest possible consensus.
Dr Julian Lewis
Given the time that will elapse before the cap is introduced, is there a danger that the energy companies will raise prices as much as possible in the hope of influencing the level at which the cap will be set? What will the Government do to prevent such a tactic from succeeding?
Greg Clark
Ofgem has powers, and that is one of the reasons why it is responsible for setting the cap. The prices must reflect the actual costs, and extensive powers are available to Ofgem to prevent that kind of abuse.
Diana Johnson (Kingston upon Hull North) (Lab)
Can the Secretary of State confirm that the Bill will shave £100 from the energy bills of 17 million households, as promised by the Prime Minister?
Greg Clark
Yes. The detriment identified by the CMA was that people on standard variable tariffs were paying too much. It will be for Ofgem to determine what the level should be, but I have made it clear that I expect the whole of that detriment to be removed.
Robert Jenrick (Newark) (Con)
There are still some people who believe in free markets. It is a lonely life, but I try to bear it with good grace.
I am naturally suspicious of caps, especially when they are introduced by a Conservative Government. Following the question asked by my right hon. Friend the Member for New Forest West (Sir Desmond Swayne), can the Secretary of State reassure me that the energy companies will not simply bunch up all the prices around the cap and that what little competition—imperfect competition—we see in the energy market today will not be further eroded so that more customers are put off from switching in the complacent, mistaken belief that they will get the best price, thanks to Government intervention?
Greg Clark
It is possible—and it is the practice—that companies, large and small, on the basis of their purchases in the wholesale market, can make offers to consumers in the competitive side of the market. Nothing will change that. Companies can offer attractive deals and have the same prospects—in fact, growing prospects, as we roll out smart meters—of access to customers who are engaged with the market.
John Grogan (Keighley) (Lab)
The Secretary of State has placed some emphasis on the roll-out of smart meters by 2020. How does he react to the figures published in The Daily Telegraph over the summer revealing that in the case of some companies, fewer than one in five consumers were accepting the offer of a smart meter?
Greg Clark
I do not recognise that figure. It is a fact that smart meters are being offered to every household in the country, and I think it is important that as they are rolled out, their benefits—not least the ability to secure lower prices—are made very clear to people.
Amanda Milling (Cannock Chase) (Con)
I welcome my right hon. Friend’s statement and the recognition that there are issues with the energy market, but consumer apathy is the real problem. Does he agree that more needs to be done to encourage people to switch, and to make switching easier?
Greg Clark
My hon. Friend makes a good point. One of Ofgem’s responsibilities is to stop the erection of barriers to switching. It seems to me, however, that it is not unreasonable for consumers to expect to be able to trust a particular brand—a particular supplier—rather than having to change their arrangements frequently, and to be confident that they will not suffer a huge penalty as a result.
Jim Shannon (Strangford) (DUP)
I thank the Secretary of State for his statement. I am not a Marxist, but everyone in the Chamber must see that this is common sense.
When the energy price cap comes into effect, what safeguards will be introduced to ensure that the big six do not switch customers to a tariff that is, in effect, a standard variable tariff under a different name?
Greg Clark
The hon. Gentleman makes an excellent point, and he will see when he looks at the Bill that there is precisely a requirement that these abusive standard variable tariffs cannot be replaced by something with just a different name.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
I know that the people of West Aberdeenshire and Kincardine—possibly, dare I say it, even more than those of Taunton Deane—will welcome my right hon. Friend’s commitment today to a thriving and competitive energy market, so will he confirm that nationalising the energy companies has, unlike the Labour party’s position, never been a consideration for this Government?
Greg Clark
I very happily confirm that. Not only would that be a disastrous signal to business throughout the United Kingdom but, as has been evidenced during the election campaign, it would leave a gaping black hole in the public finances, and we have had no explanation whatever about how that would be paid for.
Mr William Wragg (Hazel Grove) (Con)
I hope that there is no state monopoly on Marxist metaphors. If I may paraphrase Trotsky, the ends we agree on; it is the means of getting there. In welcoming the draft Bill and urging consideration of a relative cap, will my right hon. Friend reaffirm that competition within the energy market remains crucial for consumer choice and keeping bills down?
Greg Clark
I will indeed, and that is why the proposal, in line with the recommendation of the minority report of the Competition and Markets Authority, is a temporary price cap during the period in which competition is extended. We agree very strongly that the best way for markets to serve consumers, bring down costs and promote innovation is to have vigorous competition, and that is at the heart of the obligation and the duty on the regulator.