Oral Answers to Questions
Jesse Norman Excerpts(8 years, 2 months ago)
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Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)
Solar deployment is a UK success story, with almost 11 GW of capacity now installed. While it is appropriate to allow for a period of stability following recent changes to protect consumer bills, the Secretary of State continues to keep the performance of the feed-in tariff scheme under review.
Gill Furniss
A PricewaterhouseCoopers report in July showed almost 60% of companies are looking to diversify away from solar, and nearly four in 10 are considering leaving the solar market entirely, as a result of the Government’s policy changes. What steps will the Minister take to avoid business confidence in this important sector dropping further?
Jesse Norman
Actually, there is remarkably little sign that confidence in the sector is dropping. There is a recognition that those changes had to be made and the sector has responded remarkably resiliently. We must not forget that it has also been spreading expertise in solar internationally, which is another reason for thinking this is a real long-term success story.
Kevin Hollinrake (Thirsk and Malton) (Con)
I welcome the new ministerial team to their new roles. Kingspan, a significant employer in my constituency, has contacted me regarding concerns about the revaluation of business rates for cellphone rooftop solar. The result is a sixfold to eightfold increase in rates. Will my hon. Friend agree to meet me and representatives from the company to see how these effects can be mitigated?
Jesse Norman
Kingspan is a company I know very well, since it has a substantial operation in Herefordshire. Valuations in this area are made by the independent Valuation Office Agency. The Department is liaising with the industry and the VOA on this issue, but I certainly would be delighted to meet Kingspan and my hon. Friend to discuss it.
Dr Alan Whitehead (Southampton, Test) (Lab)
On that matter, has the Minister carried out any analysis of the effect of the proposed hike in business rates on payback periods for commercial and rooftop solar, and particularly school solar? Does he intend to change the tariffs if the proposed business rate revaluation comes into effect?
Jesse Norman
I simply repeat that the matter is under review. We have not seen what the agency will propose, but we will look at it closely when we see what it suggests.
Barry Gardiner (Brent North) (Lab)
The Minister talks about stability, but there has in fact been a 93% drop in solar installations this year. Following a 64% cut in subsidy to solar and an eightfold hike in the proposed business rates, it would appear that the next attack on solar renewables is already being planned. Will he tell us whether it is through incompetence or calculation that the changes to grid charges put forward by the regulator to end the unfair advantage to highly polluting diesel generators will in fact have a negative impact on small-scale renewables such as solar?
Jesse Norman
It is widely understood that the sector needed some changes to the feed-in tariffs, because their effect was to hit consumers very hard in the pocket. These charges are paid by consumers. Let us not forget that 99% of all the solar panels installed have been installed over the past six years.
David Morris (Morecambe and Lunesdale) (Con)
Christian Matheson (City of Chester) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)
I welcome the question from a colleague I have enjoyed watching at work with his incisive questioning on the Culture, Media and Sport Committee—tragically, he is about to direct that questioning at me. I can assure him that my Department has received a copy of the PwC report and carefully noted its findings. As I have said, solar has been a great success story over the past few years. The goal, now that costs have been brought under control, is to move the industry towards having the capacity to deliver without subsidy.
Christian Matheson
I thank the Minister for his generous comments and for his time as Chair of the Select Committee that I serve on, and I wish him well in his new role.
The PwC report estimates that a third of jobs in solar have been lost in the past year, with a third of companies expecting to cut more staff in the next 12 months. As the hon. Member for Thirsk and Malton (Kevin Hollinrake) and my hon. Friend the Member for Southampton, Test (Dr Whitehead) have suggested, rateable value changes will affect the industry further. Will the Government take into account the cumulative effect and actually do something positive for the solar industry?
Jesse Norman
Of course I share the hon. Gentleman’s concerns about any job losses as a result of changes in the industry. I made some points earlier about the way in which the industry is changing, and I note that the report picked out the resilience of the industry and its capacity to respond to change, potentially including that offered by Brexit. I simply say that it is noticeable that many schemes are already close to being viable without subsidy, in certain circumstances, and the key now is to move further towards that. As I have said, we will look closely at the valuation issues he has highlighted today.
Andrew Bingham (High Peak) (Con)
Robert Jenrick (Newark) (Con)
We have 50 Airbnb properties in Newark, and Uber has cut the cost of a night out in Nottingham by almost 50%. Will the Secretary of State follow the lead of his predecessor by supporting innovative, disruptive technologies rather than letting us bury our heads in the sand?
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)
My hon. Friend rightly highlights the importance of innovation in driving industrial growth, and it will undoubtedly be at the centre of the industrial strategy as it is rolled out.
Greg Mulholland (Leeds North West) (LD)
Following the recommendation of the Select Committee to remove Paul Newby as pubs adjudicator, new evidence has emerged that shows that he failed to properly declare his interests and also misled the Select Committee. So far, he has refused to resign. Will the Secretary of State now restore confidence in that post by sacking him?
Fourth Industrial Revolution
Jesse Norman Excerpts(8 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)
It is a pleasure to speak with you in the Chair, Mr Deputy Speaker. I congratulate my hon. Friend the Member for Havant (Mr Mak) and the hon. Member for Hove (Peter Kyle) on securing a debate on this very important topic.
According to the World Economic Forum, the fourth industrial revolution is characterised by a range of new technologies that are fusing the physical, digital and biological worlds. As my hon. Friend reminded us, it has, they say, the potential to transform and to integrate products and services to reshape radically the way in which things are made, the factories in which we make them, and the ever more personal and customised uses to which they are put. This can take many forms, be they new web applications, micro robots, peer-to-peer services, advanced manufacturing, personalised medicines and cyber-medical technologies. They, in turn, can be leveraged by big data, and better and more widespread digital connectivity.
I want to speak briefly about what I think the fourth industrial revolution is or might be, why it matters and what the UK is doing to promote these developments. Let me start by saying that I am quite sceptical about the language of the fourth industrial revolution. I share some of the scepticism of my hon. Friend the Member for Wells (James Heappey). Voltaire once rather sardonically remarked that the Holy Roman empire was neither holy nor Roman nor an empire. I worry that the fourth industrial revolution is neither the fourth nor particularly industrial, and not a revolution.
The natures and causes of the original industrial revolution are still, may I remind the House, rather contested. Was it the result of access to coal and high thermic value coal in particular? Was it the result of spreading trade? Was it the result of the bourgeois virtues of thrift and hard work, of tolerance and openness to other countries, or of science and technology? These are still contested matters among historians. What we can say is that it was based on steam, and that something like 150 years later there was one based on electricity.
Where does that leave us now? I think we need to go to the fons et origo, the foundation of all economic discussion: Adam Smith. I was particularly glad that the hon. Member for Inverclyde (Ronnie Cowan) highlighted the importance of Glasgow, since Smith was Glasgow University’s greatest professor at a time when it was, along with other Scottish universities, one of the greatest universities in the world. Smith was wise on many fronts. He was, alongside David Hume, a Unionist above all. He said:
“The Union was a measure from which infinite good has been derived”
to Scotland. He was wise in economics, by pointing to the importance of the division of labour. He pointed out in particular that the capacity for specialisation was limited by the size of the market. He said that we did not get porters in villages. These days we might say that we do not get Uber in towns—the market simply is not big enough.
I would suggest that change today has been powered by the same things it has always been powered by: bigger markets; technological innovation; better materials and access to materials; and, above all, the human appetite for risk and the questing nature of the human imagination. It was one my predecessors, Lord Willetts, who pointed out the eight technologies on which the previous Government founded their industrial strategy, ranging from satellites to agri-science. I think that that marks a better approach to thinking about these issues than talking airily in terms of revolutions.
There is a contrary view, which has been very well articulated by Robert Gordon in his book “The Rise and Fall of American Growth”. He argued that there was a golden century of innovation between 1870 and 1970, a time of genuine transformation through innovative technologies. As John Kay has said, someone who was born when Benjamin Disraeli was Prime Minister and lived to see Edward Heath would have witnessed horse-drawn transport give way to cars and aircraft, medical services that were non-existent replaced by cures for infectious diseases, as well as the introduction of electric light, indoor plumbing and colour television. Each of them was a transformative technology. Paul Volcker has pointed out that the greatest technological change of the past few decades in finance has been the ATM. Anyone who knows anything about finance has a great deal of sympathy with that viewpoint.
These technologies reshape. Gordon’s suggestion is that the capacity for transformative innovation has slowed. We have upgrades but we do not have the same life-transforming breakthroughs—breakthroughs such as the washing machine, which even more perhaps than the internet has shaped people’s lives—and the result is low growth and low productivity. I do not share that pessimism; for me, the things that matter are imagination, energy, the capacity for risk and the ability to work.
At this point, I should declare an interest by mentioning two projects with which I have been associated. One is the New Model in Technology & Engineering, which will be the first wholly new university for three decades. It will be based in Hereford, and is creating a curriculum along the lines of liberal engineering, tying the liberal imagination of the arts and sciences to the engineering discipline required to create genuine innovation. Its approach will be problem-based rather than curricular, and students will be taught in three-week blocks rather than attending specific lectures. There will be a 46-week curriculum. The university has links with Olin College in America, and with the universities of Warwick and Bristol in this country. It is not just a very important local institution in embryo, but a potentially national—disruptively national—institution in higher education, and I think that it will do an enormous amount to assist the technologies about which we have talked today.
The other project is, if anything, even more personal. It is a not-for-profit car that my father has designed—a flat-pack vehicle. Even you, Mr Deputy Speaker, with your astonishing breadth of understanding and knowledge, may be surprised to learn that the vehicle can be assembled by three people in a day. It costs a third of the price of a luxury 4x4, and it carries three times the weight. Its target price is under £20,000. It is astonishingly simple, and, of course, achieving such simplicity requires terrific design and terrific engineering. What the project shows is that great innovation does not require high technology; it can come through simplification, or a sense of the possibility that simplification can change manufacturing processes. This is a vehicle that has potentially revolutionary implications for developing countries.
Let me now deal with our own situation more widely. My hon. Friend the Member for Havant rightly highlighted the importance of policies that support enterprise, as did the hon. Member for Stoke-on-Trent North (Ruth Smeeth), and I very much share that view, but manufacturing companies in this country are overwhelmingly employers of 50 people or fewer, and those small firms account for more than 50% of manufacturing employment. Small and medium-sized enterprises will be the lifeblood of change over the next few decades, as they are today, because they are versatile in their manufacturing and light on their feet. They are also able to respond quickly as customers demand more customised, bespoke and niche products, using new materials and revolutionary production techniques such as 3D printing, intelligent machines and sophisticated computer design.
I hope that Members are already aware of Innovate UK, which brings together entrepreneurs and innovators with great ideas. It runs funding competitions to identify the strongest opportunities, and connects with the best partners to get their products market-ready, be they digital or solid-state. The High Value Manufacturing catapult, enabled by Innovate UK, helps small manufacturers to adopt and use those technologies. In its first five years of operation, about £300 million has been invested in high-value manufacturing by that means. Over the past year, the HVM Catapult has worked with more than 1,650 private sector clients on more than 1,300 projects and 1,800 small and medium-sized enterprise engagements. It has the right equipment to support the adoption of advanced technologies. Its use of virtual modelling enables businesses to understand what technology could do for them, and to plan and remove risks. Through Innovate UK, we are supporting the £9 million CityVerve internet of things smart city demonstrator in Manchester. The Future Cities catapult is collaborating with Microsoft and Guide Dogs for the Blind to develop tools to make moving through cities easier and more enjoyable for partially sighted people.
Those are just some of the very interesting collaborations that this model of support between the private and public sectors is operating and offering. It is a virtuous circle, and the Government want it to be replicated many times. We need to increase awareness of and access to these catapults. We need to increase the number of catapults so that more small businesses can test out how to transform what they do and open up new market opportunities.
Peter Kyle
I cannot help but make the observation that only someone who has never shopped at Ikea would ever think it was possible to buy a flat-pack car and assemble it in a day.
Catapult centres are a fantastic idea. Does the Minister think there is merit in linking them more to some of the industrial materials, products and services that are being developed in parts of the heartlands that my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) mentioned?
Jesse Norman
I very much take the point. There is only one way to think of this flat-pack car: it is the product of three years’ development by the former chief designer at McLaren. That is the only way one could get a vehicle that would meet the criteria set out by the hon. Gentleman. On the issue of linking to industry, he is right. One of the things that is interesting about catapults is that they have proved to be quite flexible. There is no reason why that flexibility, as they grow in number and extend themselves, cannot be used to create even closer links. As he knows, there is what Lord Willetts used to call a “valley of death” between research and development. The tie-in to employers in education and to businesses in development is vital to stop that problem.
I thank colleagues and congratulate them on the debate, which has been extremely wise and intelligent. The Government want to be at the forefront of the changes that are being discussed here—the dramatic transformations in the landscape of our industry and commerce. We want to lead this revolution—whether it be the third or the fourth—as we led the first, and we plan to do so through the new Department for Business, Energy and Industrial Strategy and the industrial strategy, which will be unveiled in the next few months.
Kevin Hollinrake (Thirsk and Malton) (Con)
It is always a pleasure to speak with you in the Chair, Madam Deputy Speaker.
I congratulate my hon. Friend the Member for Havant (Mr Mak) on securing this very important debate and on his motion, which notes the importance of small and medium-sized businesses, the huge contribution they make and their expertise. The motion also calls on the Government to
“continue introducing and supporting policies that keep the UK at the forefront of this revolution”.
I wish to add to that, as I think we will need policies that support small businesses and let them take advantage of these opportunities in the future.
I welcome the opportunities that this industrial revolution will bring, but I have niggling concerns. I will always be a champion in this Chamber for small business, having set up my own business in 1992 and then several technology businesses later on, with varying degrees of success. Business is a huge opportunity for this nation and for individuals, and it can transform the lives of people right across this land, whatever their background. There is also an opportunity for the consumer here, of course, as this technology revolution in particular is transforming the way in which consumers shop and travel, and how they can socialise. We need to look at how some of these channels will be dominated by huge businesses and at the potential opportunities—or even the lack of opportunities, which I am most concerned about—within their supply chains for small business.
Let me touch briefly on the pipes that we need. My hon. Friend the Member for Wells (James Heappey) talked about ensuring that the country has the right infrastructure, and this is about mobile phone communication—not just 4G but 5G—and our broadband. We do not want a sticking-plaster approach, because we need to get fibre not just to cabinets, but right through to premises. Only 2% of premises in the UK have a fibre-to-the-premises connection, which is the futureproof solution that we need. In Spain, the figure is 60%. I have welcomed the Government’s £1.7 billion investment in this area in the past, particularly for rural areas, as it has made life much easier for many of my constituents and businesses. Nevertheless, I fear that we will hit the same bottlenecks in five and 10 years’ time unless we step up our investment.
Jesse Norman
Did my hon. Friend note the brilliant report on broadband that the Culture, Media and Sport Committee published in July, which highlighted the underinvestment by BT in the national broadband network that independent experts estimate to be in the region of hundreds of millions of pounds a year? That is directly attributable to the way in which BT’s investment policy is carried out, and it is to the detriment of shareholders.
Kevin Hollinrake
My hon. Friend hits on one of my favourite topics: the culture of corporate obfuscation that we get from BT and its willingness to underinvest to maximise profitability. We absolutely need to get BT to up its game. I agree with Ofcom, which says that one solution is to open up the ducts and poles to other operators. Perhaps in future, when there are bidding rounds for Government investment, local authorities or the delivery authorities should themselves be held responsible for ensuring that third-party operators—smaller operators—get access to those ducts and poles in the local areas for which money has been committed.
The Government are supporting small businesses and innovations in many ways. As the Minister mentioned, there has been a 38% increase in investment in Innovate UK since 2010. Research and development tax credits have a hugely beneficial effect on companies that want to invest in new technologies. The enterprise investment scheme has unlocked investor capital for new start-up businesses and made such businesses possible on the back of these tax concessions. I support the retention and perhaps expansion of the concessions to make sure that we get new businesses to take advantage of these opportunities.
The failure rate for high-tech businesses is very high, but investors will countenance that because the rewards are also very high. Investors know that it is almost a winner-takes-all bet. They know that if they get it right, they can land themselves with an Amazon, a Google, an Uber, an Apple, or even a Rightmove or a Zoopla. In many sectors, there is either no competition or competition from just one other body, which puts those businesses in a hugely advantageous position.
In some areas of technology, business inevitably wins, and the other thing that will inevitably win is the machine. I spent my summer holidays reading a very interesting book by Matt Richtel called “A Deadly Wandering”, which talks about the ability of machines to multi-task. Richtel talks about the cocktail party effect. He describes a person in a conversation at a cocktail party. He says that it is not possible for them to listen to another conversation if they are truly engaged in their own conversation, as they can only do one thing at a time. Apparently, they can recognise their name being mentioned, but that is about it. Computers, on the other hand, can do millions of things at the same time, and they can do them better. A new computer called AlphaGo was built to try to beat the world champion of the game Go. That is not just a game of logic, but a game of intuition, yet the computer beat the world champion Lee Sedol five times in a row. The computer hones its own skills. So machines will win and big business will win.
The biggest worry I have about some of the businesses that will win in the future is their ability to dominate the entire supply chain. Uber is a good example. When it first came along, we saw it as just something that connected people who wanted a taxi with people who were taxi drivers. Uber has been clear that in the future it wants to be the taxi driver as well. In fact, it does not want any taxi drivers; it will have autonomous vehicles, and will no doubt link up with huge car manufacturers. Toyota, Nissan and other companies are looking at this. Uber will be end to end, taking away small business opportunities from taxi drivers, delivery drivers and HGV drivers.
Paris Agreement on Climate Change
Jesse Norman Excerpts(8 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)
Thank you, Madam Deputy Speaker. This is my first time at this Dispatch Box. I have often wondered what the view would be like, and I must tell you that it is really not bad. [Laughter.] And I do not just mean the Scottish National party. I was lured, without difficulty but with great regret, from the Culture, Media and Sport Committee because of the challenges involved and the extraordinary fascination of the issues. I discovered on my first day the challenging, testing and strenuous nature of the Department: the Canadian swim technique of being welcomed to the Department, briefed, and then invited to manage two statutory instruments within four hours—on carbon budgets, I might add. I could not have been more pleased to do that, given the importance of the issue.
We have heard many passionate speeches about climate change from Members on both sides of the House. We have gone from the Oracle of Delphi, to the Philippines, to Swansea, to Malawi. We have gone from “Star Trek” to logarithms, and from bogs to lagoons. It has been a fascinating debate. There has been great expertise, some humour and some real wisdom displayed across the House. However, one very odd thing is that this has been an Opposition debate with remarkably little true opposition. We heard very eloquent words from the right hon. Member for Doncaster North (Edward Miliband), who was very kind about the new ministerial team. We have had the hon. Member for Southampton, Test (Dr Whitehead) welcoming the fifth carbon budget. We have had the hon. Members for Wakefield (Mary Creagh) and for Wirral West (Margaret Greenwood) praising the Home Secretary. Their tone has been absolutely admirable—constructive, bipartisan, intelligent and right— and it has been echoed by other colleagues across the House, particularly the hon. Member for Aberdeen South (Callum McCaig).
What a contrast with the manufactured indignation of Opposition Front Benchers. You may know, Madam Deputy Speaker, that John Gielgud’s Hamlet was famous for its choked ferocity. He had the capacity to bring a tear to any eye, such was the intensity of his engagement. The Opposition spokesman managed to bring a tear to the eye of those in the House but, alas, it was a tear of laughter. He reminded me more than anything, in his histrionics, of Dame Edith Evans in the role of Lady Bracknell; but instead of declaiming about a handbag, he gave us a lot of nonsense about the Government’s record.
Barry Gardiner
Can the Minister adumbrate one single point that I made in my opening remarks—one single point where I criticised the Government for backsliding—on which I was wrong?
Jesse Norman
There are many that one could pick on, but my point was a matter of tone.
Jesse Norman
I am enjoying the sedentary contributions from the Opposition spokesman, but he has had his moment. Let us focus on the two themes that came through, loud and clear, across all the speeches and interventions today. The first is that the issue of climate change is now in the absolute mainstream of our political debate. Whatever people’s specific views, climate change is recognised across all parties, in all the nations and regions of this country, as a central issue of public concern. The second point follows from that, and it is that we cannot and we must not view this country’s commitments in relation to climate change in a narrowly partisan or party political way. The Paris agreement has been welcomed by Members from across the House, as has the concerted action taken this week by China and the USA.
As the Prime Minister underlined only a few hours ago, this country has long exercised global leadership in this area. It has balanced great ambition with a sober recognition of the costs involved—costs that can hit not merely industry but often, directly and indirectly, the poorest people in our society. There is so much more to do, but what the UK has done is cause for celebration, not regret.
We can all agree that climate change is one of the most serious threats facing the world, and that has been brought home to us again today by the excellent examples highlighted in the contributions of the hon. Member for Glasgow North (Patrick Grady), my hon. Friend the Member for South Ribble (Seema Kennedy) and the hon. Members for Wirral West, for Llanelli (Nia Griffith) and for Wakefield, as well as by my brilliant colleague the Minister of State. We agree that climate change is one of the most serious threats facing the world. We agree that the UK has played, and will continue to play, a unique and important role in global action to tackle the changing climate. We agree that that action is an opportunity for growth, for new jobs and for improvements to health, to cities and to our daily lives.
That consensus is the prerequisite. It is the essential long-term basis for concerted action in this area by all Governments, at any time. It will be especially helpful to us as we look forward to the COP22 meeting in Marrakesh in November, which will help to set many of the rules relating to the Paris agreement and so will mark a shift from aspiration to implementation. That consensus, and the need to maintain it, is fundamentally why I still hope that the hon. Member for Brent North will not press this needlessly divisive motion to a vote.
The Government have made it very clear that they welcome the push by the US, by China and by other countries towards the early ratification of the Paris agreement. We remain firmly committed to that agreement and to ratifying it as soon as possible. The convention, however, is that all European Union member states ratify the agreement together, collectively. We hope that that will happen, as has been said, as soon as possible.
Unfortunately, it is not true, as was stated by the hon. Member for Sefton Central (Bill Esterson), that France has ratified the agreement. The Commons Library briefing of 6 September says:
“As set out on the UK French Embassy website it will not do so until all Member states and the EU are ready to do so, and will focus”—
in the meantime, on—
“encouraging other Member States to make progress”.
France was reported in the press as having ratified the agreement, but it has not in fact done so.
I appreciate that we have heard some perfectly proper concerns about the Paris agreement coming into force before the EU has ratified it. However, there is widespread international understanding that in the event that the agreement enters into force early, countries that have not yet completed their domestic processes to allow ratification to take place—very important processes of consensual ratification—should not and will not be prejudiced. Not to do so would mean that as many as 140 countries, including some of the very poorest and most climate-afflicted nations in the world, would be denied a full seat at the table. COP22 in Marrakesh in November will, I hope, take a formal decision to that effect.
Turning to recent history, few countries have been more active in decarbonisation than this one. We were the first country to set, through the Climate Change Act, a legally binding 2050 target to drop our emissions by at least 80% on 1990 levels. Far from not having a strategy, we have just signed off our fifth carbon budget, which sets the terms for the overall picture. The UK has made great progress in reducing its emissions, which had fallen by 36% by 2014 on 1990 levels. During the past five years, between 2010 and 2015, our domestic greenhouse gas emissions have fallen by 17%, which is the biggest reduction in a single Parliament. We already have domestic obligations that keep the UK well below the 2° rise in temperature goal mandated by the Paris agreement.
Dr Whitehead
The Minister mentions the signing off of the fifth carbon budget and my pleasure about that, but perhaps he missed the point I made earlier, which is that the Government are nowhere near in any possible way meeting the terms of the fifth carbon budget, as a result of the policies they have recently put in place. That is presumably of some concern to him.
Jesse Norman
It has always been understood that, as has been stated, the Government would announce measures during this Parliament that will address the concerns—the perfectly proper concerns—the hon. Gentleman raises. I do not demur from the point that the framework exists, with the independent check of the Committee on Climate Change, whose suggestions the Government have, broadly speaking, in every case accepted. I do not think there can be much doubt about the structure and credibility of the long-term framework that the Government are following.
Through the Climate Change Act and the carbon budgets, Britain has an advanced model for the requirements set out in the Paris agreement, with a national plan to curb emissions and the aim to improve the plan every five years, setting progressively tighter targets. That model has been widely admired abroad, and it has proven extremely helpful and influential to other countries facing the same challenges, including Denmark, Finland and France. With the confirmation of our fifth carbon budget in July, we are in a strong position to continue on this steady path of improvement. That is the goal of this new Department. Its creation shows that climate change has become an absolutely mainstream part of our political life.
Mary Creagh
I do not know whether the Minister has seen the conclusions of the Environmental Audit Committee report, but the transport sector is set to miss one of the Committee on Climate Change’s interim decarbonisation targets by over 50%. Will he comment on some of the specific challenges facing the transport sector and on the fact that we are set to miss our fourth carbon budget for 2027, which is in nine years’ time?
Jesse Norman
I think we all recognise that, on present projections, the UK will have more to do to reduce domestic emissions. As has been said, that is going to require an emissions reduction plan. It is too early to give specifics about what will be included in that plan, but I can say that it will aim to set out the Government’s proposals across key sectors of the UK economy over the medium to long term and will be specifically structured to meet such needs.
I turn briefly to the issue raised by the right hon. Member for Doncaster North, namely our relationship with the EU in the context of Brexit. His words were wise, well chosen and constructive. Although we will ratify the agreement as part of the EU, leaving the EU does not mean that the UK will step back from this agenda. Indeed, let us all be quite clear that the UK will not step back from international leadership as such, and remains as committed as ever to tackling climate change. We will continue to be an outward-looking country. We have an unrivalled set of relationships around the world and membership of key international groupings through which to make the case for action and to build bridges between different views and interests, as he said.
Even after Brexit, we expect to work closely with the EU and with individual EU member states with whom we will have a continuing shared interest in pressing the case for action on climate change. We will continue to use the authority from our track record to support domestic and international climate action and shape the wider international agenda.
As I have made clear, our history of domestic climate action puts us in a very good position to build on what was agreed in Paris. The COP22 conference in Marrakesh marks an important further stage in the implementation of that global agreement. The negotiations are very complex and will take time, and we should not necessarily expect headline-grabbing outcomes. But it is important to focus on the positive side, from an innovation standpoint; some very important contributions, including that of the hon. Member for Glasgow North, stressed the importance of innovation.
Ambitious action on climate change should also lead to real opportunities for this country. As a result of the UK’s historical leadership we can build our progress towards a low-carbon economy both domestically and abroad. Low-carbon sectors are already an important and growing part of our economy. In 2014, more than 95,000 businesses were directly engaged in low-carbon and renewable energy activity, generating £46.2 billion in turnover and resulting in 238,500 full-time equivalent jobs. I particularly enjoyed and benefited from the remarks of my hon. Friend the Member for Wells (James Heappey) in that context, with his call for common sense and his emphasis on social justice and the importance of taking advantage of the economic opportunities.
Capital markets, too, play an increasingly important role in the transition to the low-carbon economy, and green finance is a major priority for the largest emerging markets. The green bond market, which funds projects with positive environmental or climate benefits, has grown from just $3 billion in 2012 to $42 billion globally last year. With London, the world’s most international financial centre, and with significant expertise and strong professional and legal services, this country is very well positioned to help finance the transition globally to a low-carbon economy.
I conclude by congratulating and thanking every Member who has contributed to the debate. It has been a very absorbing debate indeed. The number and quality of the speeches testify to the importance of the issues involved. The UK remains firmly committed to the Paris agreement and to its ratification as soon as possible. This country has not and will not step back from international leadership in combating climate change. We also remain committed to ambitious domestic action. The fifth carbon budget was set in line with the recommendation of our independent advisers, the Committee on Climate Change, as I have stressed. It is equivalent to a 57% reduction on 1990 levels.
We know that there will be complex challenges to decarbonising in the years ahead. That is to be expected. But our aim is to meet those challenges in a way that is fair and affordable, and maximises the economic benefit to the UK. That requires a whole-economy approach to delivering our climate change goals, one that effectively balances the priorities of economic growth and carbon reduction. Through the creation of the Department for Business, Energy and Industrial Strategy we will do just that.
Question put and agreed to.
Resolved,
That this House notes that the USA and China have both ratified the Paris Agreement on climate change; regrets that the Government has not accepted the Opposition’s offer of support for immediate commencement of domestic procedures to ratify the Paris Agreement; further notes that if the UK lags behind its G20 partners in ratifying the Paris Agreement it risks losing diplomatic influence on this crucial future security issue; recognises, in light of the EU referendum vote, the need to maintain a strong international standing and the risk of rising investment costs in UK energy infrastructure; and calls on the Government to publish by the end of next week a Command Paper on domestic ratification and to set out in a statement to this House the timetable to complete the ratification process by the end of 2016.
Draft Carbon Budget Order 2016
Jesse Norman Excerpts(8 years, 4 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)
I beg to move,
That the Committee has considered the draft Carbon Budget Order 2016.
It is a pleasure to serve under your chairmanship, Ms Buck, particularly in this new capacity. I would like to say a few words by way of background. Those present will be aware that not only am I not an expert on this topic, even by the formidably inexpert standards of the House of Commons, but I have been but a few hours in the job, so I certainly would not describe myself as being in a position to give absolute satisfaction on any questions that may be asked. There is no joy like the joy of watching a new Minister fall on his face and I will attempt not to give satisfaction in that regard.
Having said that, I am very pleased to open the debate on the draft Carbon Budget Order 2016. The order fulfils the requirement under the Climate Change Act 2008 for the Government to set five-year carbon budgets on the path to the 2050 target of an 80% reduction in emissions. It sets the level for the fifth carbon budget, covering the period 2028 to 2032.
Before discussing the order, I will reflect briefly on the Climate Change Act and what it means at the present time. Leaving the EU will bring challenges and opportunities to the United Kingdom. However, it does not change the fact that climate change remains one of the most serious long-term risks to our economic and national security. The Act was a groundbreaking piece of domestic legislation, passed with nearly unanimous cross-party support. Its success has inspired countries across the world including Denmark, Finland and France and, at its heart, the system of five-year cycles inspired a core part of the historic Paris climate agreement.
The certainty given by the Act underpins the remarkable investment, totalling about £40 billion, that we have seen in the low-carbon economy since 2010. The fifth carbon budget level set by this order continues the certainty into the 2030s. The order will set the fifth carbon budget at a 57% emission reduction on the levels of 1990, meaning that UK emissions will be capped at the equivalent of 1,725 million tonnes of carbon dioxide. That budget level is in line with the recommendations of our independent advisers, the Committee on Climate Change, as well as the views of the devolved Administrations.
As required by the Act, the Government considered a wide range of factors in proposing that level. Key to those considerations was proposing a carbon budget that balances how to keep on track to the 2050 goal with how to cut emissions as cheaply as possible. The Committee on Climate Change and the Government agree that that budget level will put us on a cost-effective path to that legally binding 2050 target.
One should be perfectly clear that the Government do not expect the budget level to jeopardise their commitment to keeping our energy supplies secure and bills as low as possible. It is not simply Governments and experts who agree; it is clearly in line with the views of business. The Confederation of British Industry, EEF and others have all welcomed the certainty that the budget level gives in the country’s journey to a low-carbon economy. I am also pleased to see that, in line with the Act, the budget level has been welcomed across the political spectrum. The shadow Secretary of State for Energy and Climate Change, the cross-party Select Committee on Energy and Climate Change and the Scottish National party have all expressed their support.
The Paris agreement sends a strong signal to business and investors that the world is committed to long-term decarbonisation. The proposed budget level will ensure that the UK economy is best placed to realise the opportunities that that transition presents. Of course, the target is of value only if we accept the challenge of meeting it. Our emission reductions to date put us in a good starting position to do that. The UK met the first carbon budget and is on track to meet the second and third budgets. Provisional figures show that UK emissions in 2015 could be 38% lower than in 1990, and more than 3% below those in 2014. The last two years have seen the greatest annual emission reductions, against a backdrop of a growing economy, but it is clear that we need to do more to address the gap of approximately 10% currently faced in the fourth carbon budget.
The Climate Change Act requires the Government to set out their policies and proposals
“As soon as is reasonably practicable”
after setting a budget level. It is too early to give specifics of what will be included, but the Government’s new low-carbon infrastructure plan will provide policy direction and pathways for the transition over both the fourth and the fifth carbon budgets. It will set out what this Government are doing to build an energy infrastructure that is fit for the 21st century. The Government have already begun to talk positively with businesses, consumers and civil society on the development of our policies and proposals, and will continue to do so in the coming months.
In conclusion, the draft order sets the right budget level. It is in line with the views of the Government’s independent advisers, continues the UK’s leadership on climate change and has the support of politicians and businesses alike. It will provide the certainty needed for future investment in our continued transition to a stronger, low-carbon economy. I therefore commend the order to the Committee.
Jesse Norman
I am grateful to the shadow Minister and to the hon. Member for Aberdeen South for their comments. I shall pick up on each of them in order but try to address them collectively.
The hon. Member for Brent North asked why “Climate Change” was removed from the name of the Department. There is a very positive way of seeing that, which is that it is recognised that tackling climate change is a vital part of government: it is understood that it is a central challenge for the next 50, if not 100 or more years, and in a sense it has become part of the furniture of the discussion. The point of this consolidation of Ministries is in part to allow that understanding to spread across our whole industrial strategy. That seems to me a thoroughly important thing.
The seriousness of the Government’s position can be easily gauged by the fact that we have not demurred from the testing targets set by the Committee on Climate Change. That is the overall framework that sets the context for investor decisions, so that is a clear indication of the deep seriousness with which the Government take this.
On investor confidence, that framework is important, but a couple of other things are worth mentioning. First, investor confidence does not appear to be that muted. Siemens has reiterated its investment in the blade plant in Hull, and there are many other indicators that investor confidence remains remarkably high, as the Department and the Government wish it to be: the UK has been the fourth-highest investor in clean energy globally for the last five years; more than half of the total investment in the EU last year occurred in this country; and we continue to increase investment at a rapid rate, especially by international standards. There is no reason why one should feel concerned about investor confidence.
Barry Gardiner
The Minister may be aware of the Ernst & Young report on the index of the best countries in the world for renewable energy investment. We never used to be out of the top 10, but in the past two years we have fallen from eighth to 11th to 13th, so there is an independent scale showing that we are going in the wrong direction. He may also be aware that Vattenfall said that in the light of Brexit it was reviewing all its renewable energy investments in the UK, including its £5.5 billion array off the east coast of England. I am not accusing the Minister of complacency, but he must take this seriously.
Jesse Norman
I was confining myself to issues specifically relating to climate change, but there are reasons to be confident about the overall position. We have seen enormous further investment in the Nissan Leaf plant in Sunderland and there are other examples of recognition of the progress that this country continues to make.
The question was raised of the impact of Brexit on the EU emissions trading system. Of course, it is far too early to say whether the UK will remain part of the ETS, but the Government take the matter extremely seriously. Even were we to end up leaving the institutions around the ETS, the effect of that would be our having increased flexibility to set our climate change targets as we saw fit. Those targets could be more testing, less testing or exactly at the level required by the ETS itself, so there need not necessarily be anything particularly problematic about it.
On why the submission for the fifth carbon budget was not on time, the truth is that it was important to get the decision right. It will be understood that by 30 June the Government had quite a lot on their plate for other reasons arising over the previous three or four months. I have inquired into whether there is a question about the legality of the budget as a result, and the legal advice has been that it remains intact. There is no reason to think that the legal status of the budget has been affected by the delayed filing. It is also worth saying that we are talking about a period some distance in the future; therefore, we are not talking about something that begins tomorrow.
Barry Gardiner
I am grateful for that clarification. Will the Minister agree to provide a summary of the legal advice, or indeed the legal advice itself, so that we can see it and have the confidence he has that there could be no positive legal challenge?
Jesse Norman
Legal advice between an attorney and a client is privileged information, so it is not the Government’s practice to publish legal advice that is given, or generally even to publish summaries of legal advice, but I am happy to take the point up and consider it, as the hon. Gentleman has raised it.
On shipping emissions, the International Maritime Organisation has talks under way at the moment. This is an international issue and not something where one can simply make decisions based on simplistic calculations of port of origin or arrival. It is entirely appropriate that the Government continue that process of participating in those negotiations with the IMO. The point is important: shipping emissions, like aviation emissions, should in the fullness of time, if proper methods of calculating an agreement can be reached, be included in the scheme because obviously there are economic impacts and, potentially, perverse incentives that occur from not doing so. The wider point is well taken.
The point about ETS credits reverts to that which I made earlier. In general there is some benefit to having credits because they confer additional flexibility on Government. It would not send a useful signal to investors to have to make changes in policy just because of marginal differences in performance, which credits could address. The position is sensible, but again the point is taken.
Finally, on the 10% gap, I would simply say that we are some way away from the policy development stage. One naturally expects—in particular in an area such as climate change and emissions control—there to be a dynamic response from the economy as these budget constraints start to get set and embed themselves. We are already seeing some of that economic behaviour and one might easily expect to see more of that to come.
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
In respect of the gap that the Minister spoke of, will he perhaps look at making ground on the transport and the heating sectors, where much more can be done?
Jesse Norman
I have no doubt that the Government will continue to look, as part of the infrastructure planning process over the rest of this year, closely at that sector, as they will at other key contributors to carbon emissions.
Question put and agreed to.
Draft Climate Change Act 2008 (Credit Limit) Order 2016
Jesse Norman Excerpts(8 years, 4 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)
I beg to move,
That the Committee has considered the draft Climate Change Act 2008 (Credit Limit) Order 2016.
It is a great pleasure to serve under your chairmanship, Sir Roger. This order—I speak as someone who has gone from being a complete innocent on these topics to being a raddled veteran in the course of three hours—fulfils the requirement under the UK’s Climate Change Act 2008 to set a limit on the number of international carbon credits that the Government could count towards the third carbon budget, which runs from 2018 to 2022. The Act, which was passed with near-unanimous support, allows for the flexibility of using carbon credits to meet a carbon budget. That ensures that even if unforeseen circumstances cause our planned emission reduction measures to come off track, the UK can continue to ensure that we meet our emissions targets under the Act.
The order will set the credit limit for the third carbon budget at 55 million tonnes of carbon dioxide equivalent, which is only about 2% of the total carbon budget. That is the same amount of flexibility as the House agreed for the second carbon budget credit limit. In determining the appropriate third carbon budget credit limit—the subject of the present discussion—the Government have taken into account the advice of the independent advisers, the Committee on Climate Change, as well as the views of the devolved Administrations. We have also considered the range of factors required by the Act, including the economic, fiscal, social, scientific and international circumstances. Although the Committee on Climate Change recommended a zero credit limit, the Government have concluded that it is best to maintain a small amount of flexibility over the third carbon budget period. Although the Government’s policies are ensuring that we are on track for the third carbon budget, it is still prudent to allow ourselves flexibility in the future to manage the uncertainty in emissions projections. I therefore commend the order to the Committee.
Jesse Norman
I am very grateful to the shadow Minister for his comments. He and I are rapidly turning into the Mutt and Jeff of the climate change world, but it is a pleasure to address the concerns he raises.
Let me remind the Committee that this is not a matter of buying credits; it is a matter of setting a credit limit. The Government have never bought credits and do not contemplate doing so as part of either the second or third carbon budgets. It is also true to say that the Government have not ignored the Committee on Climate Change. On the contrary, we have engaged closely with it and adopted its main recommendations consistently. Here, however, there is some licence to deviate. The Government have done so in this case for the reasons I set out in my opening remarks. The first is following the precedent set by the previous budget. The Government understood that that was potentially problematic from the Committee on Climate Change’s standpoint, but we did that because we sought a degree of flexibility, and that degree of flexibility is again sought today.
That is not a way of getting ourselves off the hook. The progress made under both the second and third budgets is already manifest. In fact, that progress is sufficiently clear that it should not bring into question whether the Government are committed, because we clearly are making very good progress.
Barry Gardiner
The Minister and I are agreed that there is little likelihood of the credits being required. The key thing here is whether one follows the advice and whether one sets a precedent. He knows that the really difficult budget is the fourth carbon budget, not this one. Therefore, he has beseeched precedent by referring back to the previous carbon budget, saying, “Well, we allowed it there, so we should allow it here.” That is exactly the precedent that needs to be nipped in the bud because we need to send a strong signal to investors that the fourth carbon budget, which will be difficult to achieve, must be achieved through domestic action.
Jesse Norman
I think it is a point well made. I would go further and say that the Government do not disagree that the use of credit limits of this kind are not a way of getting off the domestic carbon policy reduction agenda. That remains central to the focus of the Government and the Department. It is, however, important to recognise that aspects of carbon reduction plans could be set back. For instance, although we have had some rather warm winters recently, it is not impossible that we could have a series of winters of unusual severity. It is not likely to happen and the Government do not believe that that will happen, but it is a possibility.
It is wise to have flexibility in general, provided that it is not open to abuse. Setting the limit at 2% over a five-year period—0.4% for each year—is not a total that can be regarded as abuse. The question is how one balances the direction and principle with an element of pragmatism that allows the Government a degree—but not too great a degree—of freedom of manoeuvre, and that is what the order provides.
I thank the hon. Gentleman for his contribution and reiterate that the Government remain committed to combating climate change. Climate change has not been downgraded as a threat, and is widely recognised across Government as one of the most serious long-term risks to our economic and national security. At the heart of the Government’s commitment is the Climate Change Act 2008 and its target to reduce emissions by 80% by 2050, as against 1990 levels. The interim carbon budgets have been set against that framework, and under the Act, we need to set a limit on the number of international carbon credits that the Government can count towards that budget.
Although we remain on track, it is prudent to recognise and accommodate a degree of potential uncertainty. That is why we have proposed a credit limit of 55 million tonnes of carbon dioxide equivalent—just 2% of the total third carbon budget. That represents an appropriate level of insurance, in case emissions turn out to be higher than projected. I therefore commend the order to the Committee.
Question put and agreed to.