Sewel Convention

Debate between Ian Murray and Alistair Carmichael

Monday 18th June 2018 Commons Chamber

[Ian Murray (Edinburgh South) (Lab)]

It is a great pleasure to be involved in this important debate and to follow the hon. Member for Dumfries and Galloway (Mr Jack), although I take umbrage at his claiming in opening his speech that this debacle, which has actually been made by his own Government, is somehow the fault of democratically elected politicians going through the Lobby to vote for Lords amendments to a major piece of legislation. That is our democratic right. I am sure that many of the hon. Gentleman’s constituents wrote to him last week to ask him to support the 15 amendments that came back from the other place, in the same way that many of my constituents wrote to me. That is what we committed to do and it is certainly what we did last week.

The blame for the House having only 19 minutes to deal with the devolution issues lies squarely with the Government’s programme managers—the Leader of the House and the usual channels—who decided to make it a six-hour debate, with a knife at three hours, so that the second three hours was eaten into by votes. They could have taken a completely different approach to the programme motion and allowed the votes to happen and then another three-hour debate after that. This travesty and devastation, and the grievance that has been given to certain parties in the House, is of the Government’s own making.

[Mr Carmichael]

The hon. Gentleman is absolutely right: the answer did lie in the timetable. The Government could have protected the time for debating that string of amendments but they chose not to. Does he agree that, especially considering the nature of the European Union (Withdrawal) Bill, to suggest that this House should somehow have to choose between debating the amendments from the other place and voting on them is quite ridiculous?

[Ian Murray]

It is quite ridiculous, and I cannot help but feel that the programme motion was put in place for that very purpose. The Government would have known that the House would divide on the vast majority of those amendments, such that that three-hour knife would, by the nature of the process of amendments coming back from the other place in ping-pong, reduce the time available for debate.

I shall come to why it affects the Sewel convention, but the reason why everyone is so frustrated and angry about the process is that the Secretary of State—I will not get into the personal politics; I disagree with his politics fundamentally, but he is an honourable man and has always dealt with me fairly, and I think he will perhaps look back and regret some of the Government’s actions in this process—promised at the Dispatch Box, on several occasions, that this elected House would get to debate the amendments on devolution that were being put to the other place. He promised that the amendments would come in Committee, and they did not, and that they would come on Report, and they did not. His own Back Bencher, the hon. Member for East Renfrewshire (Paul Masterton), who is in his place, said that he would reluctantly back the Government’s position on the Opposition amendments, after he was given assurances by his own Front Benchers that the amendments would come on Report.

The very fact that the amendments have been tabled in the other place, meaning that the elected House has been unable to debate them or, indeed, have any kind of say in them, has left us with a grievance to exploit, because we have not even debated on the Floor of this Chamber the fundamental issues relating to the Sewel convention, the individual parts of the amendments, the impact on the Scottish Government, the impact on the Scottish Parliament, the impact on the UK Government or the impact on UK-wide frameworks that are being put in place as part of the process.

Scotch Whisky Industry

Debate between Ian Murray and Alistair Carmichael

Tuesday 31st October 2017 Westminster Hall

[Mr Carmichael]

The hon. Gentleman tees up my next point for me beautifully. I promise that is the last time there will be a reference to “tee” this morning. The work in question was done for the Scotch Whisky Association by KPMG, an organisation that is not just going to tell clients what they want to hear. The work is underpinned and supported by the Treasury’s own figures. The increase in March damaged confidence and led to a sharp decrease in sales—1 million fewer bottles were sold in the first two quarters of this year, compared with last year. That can be tested against the experience of 2015.

I was a Cabinet Minister in 2015 and was proud of the fact that that Government delivered a 2% cut in the level of whisky duty. I cannot remember exactly, but I recall that the expectation in the Government at the time was that a 2% cut would cost in the region of £600 million. That was what we thought we would lose in revenue. In fact, however, a significant increase in revenue was delivered as a result of lower taxation.

[Ian Murray (Edinburgh South) (Lab)]

The right hon. Gentleman is a massive defender of the whisky industry and I am sure he likes a tipple himself. Will he comment on the way in which the Treasury is set up? Perhaps the problem is that the Red Book would have to determine a minus figure when the reality might be positive. The Treasury should look more imaginatively at how it taxes not only Scotch whisky but spirits in general.

[Mr Carmichael]

I am keen to encourage creativity within the Treasury. I must say that that message is not always well received in that particular Department and change is often slow in coming, but I encourage the Minister to pursue that agenda, because—to return to the experience of 2015—having anticipated a £600 million decrease, there was an increase of £124 million in revenue to the Exchequer. Although I obviously have some concerns about the Chancellor, I do not believe that he put the rate of duty up in March believing that he would take in less money. The underlying problem is that the elasticities that underpin the modelling used by the Treasury are clearly out of date. They have not been updated since 2013 and they have been wrong at least twice. They were wrong in a good way in 2015, when the cut in duty delivered an increase in revenues, but they were also wrong in March, when the increase in duties delivered lower revenues.

My essential message to the Minister is that to embark on a progressive increase of the sort planned, with a year-on-year 3% increase on the basis of Treasury modelling that is at best flawed and in need of updating, is ill conceived and risks the emerging growth not just in whisky but in other spirits. It is difficult to go on any social media platform these days without seeing an advert for yet another craft gin. Gin is another emerging spirit and important part of our export portfolio. From the outside, as the industry sees it, it looks as if one of our most successful industries is being punished by the Treasury at a time when, frankly, we are going to need the contribution it makes to our economy.

I say to the Minister that it is now time to be bold. The Chancellor could use 22 November as an opportunity to cut duty, as was done in 2015. If he is not prepared to do so, there is a good business case for at least a freeze or for walking away from the escalator effect. If he continues with the escalator, he must come up with some justification for it, because all the indications go in the opposite direction.

Turning briefly to the question of the medium to long term, there is an opportunity to recalibrate the way in which the Treasury engages with the industry. During my time in Parliament, the successful PILOT partnership scheme between Government and the oil and gas industry has allowed the Government to better understand what is happening in the industry and allowed industry to engage, see the direction of travel and plan accordingly. The Scotch Whisky Association now talks about a sectoral deal, perhaps for the whisky industry but more likely for spirits or alcohol manufacturers as a whole. I encourage the Minister to take that suggestion seriously. We have seen tremendous success as a result of the city and regional deals, a model that has worked well. Taking that to a sector such as spirits production or the whisky industry would be a new iteration of the model. Given the opportunities that exist, the model is well worth considering. Those are the medium to long-term opportunities. In the medium to long term, the Government can do good to help the industry and, most importantly, the communities that depend on it. In the short term, on 22 November, the very least they can do is stop doing damage.

Renewable Energy Generation: Island Communities

Debate between Ian Murray and Alistair Carmichael

Tuesday 4th July 2017 Westminster Hall

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I beg to move,

That this House has considered support for renewable energy generation in island communities.

I am delighted to serve under your chairmanship, Sir David, and I am pleased to welcome the Minister to his new role. He is one in a fairly long line of Energy Ministers during my tenure in the House—I am not entirely sure how many I have seen—but he brings with him a reputation for being a diligent and effective Minister, and I wish him well in his time in the Department. It is the convention on these occasions to say how pleased we are to have secured the debate. Although I will keep my tie on, I will break with convention by saying that I am not particularly pleased; I have been around this course for the past 15 years and I am immensely frustrated that debates of this sort are still necessary.

I think it will be helpful for those who might be watching our proceedings from elsewhere to be quite clear not only what the debate is about but what it is not about. It is not about individual projects that may be under consideration; there are a number in my constituency, including in Orkney and with Viking Energy in Shetland. To say that we need a strategy to unlock the potential of renewable energy generation is not to say that any individual project in itself is right or should go ahead, nor is it to be confused with the consultation currently being undertaken by Ofgem on replacing Shetland’s power station with a 278 km, 600 MW high-voltage direct current cable. That is exciting some comment at the moment, but it is a proposal of which I remain to be convinced; having been around this course for many years, I do not regard it as quite so difficult or challenging for that particular project to get a cable on the seabed.

The debate is about how Government and the forces of government can unlock the potential for renewable energy generation that we all know is there within our island communities. A study commissioned jointly by the then Department for Energy and Climate Change and the Scottish Government in 2013—the “Scottish Islands Renewable Project”—estimated that the Western Isles, Orkney and Shetland could between them supply up to 5% of Britain’s total electricity demand by 2030. That is a quite significant prize and it is within our grasp. However, it is something that we already know will only happen if we can get everybody working together.

In that connection, I welcome the intervention this morning from Councillor Donald Crichton, chair of the Sustainable Development Committee in the Western Isles Council, calling for cross-party consensus building on this. As he said, the Conservative party’s manifesto commitment at last month’s general election to

“support the development of wind projects in the remote islands of Scotland, where they will directly benefit local communities”

is an important and welcome step. Similarly, I also place on the record my appreciation of the efforts of Lord Dunlop of Helensburgh, who, in his time as a junior Minister in the Scotland Office and before, did a lot to push this particular issue.

That manifesto commitment was welcome, and I am pleased that it has survived the cull of so many other commitments from that unfortunate document. However, we are looking to the Minister for some outline of what the commitment will actually mean in practical terms. If you will forgive me, Sir David, there is quite a history here, and it is important that we remind ourselves of some of it. A lot of the issues that underpin this history come from the fact that Ofgem—for reasons that are understandable in relation to non-renewable technologies—has for some time adhered to a system of locational charging. For renewable projects, far from the centres of populations and the ultimate points of consumption, that does not necessarily make the same sense, so we have looked for different ways around that over the years.

Back in the days of the late Malcolm Wicks, we tried the idea of a cap on transmission charges. That was brought in by him and the then Labour Government, and was then extended by Chris Huhne when he was Secretary of State for Energy, but that in itself did not provide the solution we had hoped for. We then moved on to the new contracts for difference regime, and within that it was suggested that we could have a dedicated islands strike price. Unfortunately, at the point that that was being submitted to the European Commission for state aid approval, it was felt that it could be delayed by the islands element, so it was removed for later submission. It was resubmitted at a later stage and went through the pre-approval application process, which concluded some time around the end of 2015.

In the meantime, we had a general election, and the Conservative Government that came in in 2015 had a manifesto commitment to have a moratorium on onshore wind developments. The point at which the Government decided to go ahead with the CfD auction round that we are currently part of, without any provision for the islands, sticks in my memory for two reasons. First, it was the morning after the American people had elected President Trump, and secondly, I remember very clearly taking the call from the Secretary of State on my mobile phone while I was going through Edinburgh airport. However, a consultation period followed, which should have ended in the early part of this year and to which we I think we still await the Government’s formal response.

I remind the House of that history at this point because it is germane to the debate. Although the commitment in the Conservative party’s manifesto from last month is new, the issue is not—it has been within the machinery of government for some considerable time. Although we hope that that commitment will be given the green light, it is far from the case that the work needs to start from scratch. What is now needed is the degree of political commitment to implement the commitment and to tell us exactly what it means, because time is not in plentiful supply.

If provision for the islands of Scotland is to be included in the next round of CfD auctions, we are looking at something that has to go through the machinery of government and possibly even the state aid consent procedures in order to be in place by the end of next year, so there is a need for some degree of urgency in the approach to this. When the industry hears from the Minister later, it will be looking for a degree of clarity. We are not looking for the blueprint on everything that is meant by the manifesto commitment, but we want to hear some sort of outline or framework through which this can be turned into a reality.

What are we looking at here? Are we revisiting the idea of an islands strike price, or are we looking at something that might, somehow or another, find a mechanism for including onshore island generation with offshore wind? I do not know just how doable that would be, or how workable it would be from the point of view of the industry, but those are some of the ideas that have been floated. Alternatively, does the Department have some new mechanism that is going to be brought forward?

In any event, when in all those processes will the work start in order to obtain state aid approvals? I understand that the Government will proceed on the basis that, regardless of what happens with Brexit, state aid regulation compliance remains a feature of our regulatory landscape for the foreseeable future. Is it the Government’s aspiration that any projects that would be brought forward under this new scheme would be eligible for the next round of CfD auctions? If that is the case, will the Minister at this stage consult within Government to get a commitment that the next auction round will not go ahead unless and until this scheme is in place and island-based projects are able to compete?

[Ian Murray (Edinburgh South) (Lab)]

I am grateful to the right hon. Gentleman for allowing me to intervene in the limited time he has. Will he explain to the House whether there is any other route to market for island wind if there is no access to the next round of CfD funding?

[Mr Carmichael]

The answer to that depends on what we mean by “route to market”. There are other ways in which the energy generated can be used, and a lot of innovative work is being done in relation to non-distributing technologies such as the use of hydrogen, but for all intents and purposes, for the projects being considered at the moment across the country, there really is not. Those in the industry will have a view on that, and if they bring forward something we are not currently considering, I think we will all be in the market for hearing it.

Finally and most obviously, we will want to hear in fairly early course exactly what is meant by the expression “community benefit”, which has been around the renewables debate for as long as I can remember and has meant different things to different people in different places at different times. If it is to form part of policy, a clearer definition will be necessary.