Enabling Community Energy

Jim Shannon Excerpts

Thursday 1st July 2021 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in the debate, Sir David, as always. I congratulate the hon. Member for Bath (Wera Hobhouse) on setting the scene and giving us all the opportunity to participate in the debate, and thank her and the hon. Members for Ceredigion (Ben Lake) and for Waveney (Peter Aldous) for initiating it. In particular, I want to mention the hon. Member for Ceredigion, whose Adjournment debate had the best turn-out for such a debate that I can recall and saw consensus of support for what he was saying that night. It is good to have the chance to reiterate and underline those points in Westminster Hall today.

I am pleased to say that I added my support for the Local Electricity Bill. Although it does not specifically apply to electricity services in Northern Ireland, I am always interested to learn more on such issues—I believe we should do so—to analyse whether we can avail ourselves of similar strategies. That is what I wish to do in Northern Ireland. We have only two examples of such schemes in Northern Ireland; I wish we had more. There is a challenge for us to try to achieve that.

Community energy paves the way for wider decarbonisation goals and drastic improvements in localised renewable energy, making electricity services more sustainable in our communities. We should be trying to grasp the principle of what we are trying to achieve.

The pandemic had a significant impact on Government funding for community electricity programmes. The United Kingdom has witnessed the emergence of 424 community energy organisations, with England having 290, Scotland 72 and Wales 60, whereas in Northern Ireland we are in the very poor position of having only two. It is not that we do not want to, just that the opportunities have not been there.

The Local Electricity Bill seeks to change the Electricity Act 1989 in England, so that Ofgem is permitted to grant local electricity supply licences to local generators that are not designated in existing legislation. With five local energy hubs in England, it is clear that they are leading the pack, as they are in football. Reports show that as of 2020, community energy contributed 278 MW of renewable energy. If we take it to what we can do, there is hope that by 2030 2.2 million homes will save over 2 million tonnes of carbon emissions every year. The challenge is there. I believe that the Government are committed to that, and all the regions of the UK should try to their best to achieve it.

Let me make a quick comment about Northern Ireland. Communities across the United Kingdom are starting to recognise the increasing popularity of localised energy organisations, including in Northern Ireland, despite there only being two electricity corporations there, and in Strangford in particular. The first, Northern Ireland Community Energy, was the first solar community-owned energy co-operative in Northern Ireland. To finance its recent innovations, £150,000 was raised and this was the first time Northern Ireland was able to buy into a community energy benefit society. Its continuing aim is to increase awareness of community electrical shares in Northern Ireland. The second, Strangford Lough tidal turbine, is the world’s first commercial-scale tidal energy project. I am very pleased to say that it is in my home constituency. I have visited the site and seen what it can do, and the possibilities, and I am pleased to see that this wonderful landmark can be used to promote the use of sustainable energy.

I believe we have an opportunity, given that in 2020 358,000 people were engaged with energy and climate change. I would like to think these numbers will be on the increase. I welcome the content of the Local Electricity Bill, introduced by the hon. Member for Waveney. I hope that it progresses as it has real potential to succeed. It encourages energy organisations to engage with local authorities as opposed to largely populated and financed firms. The debate is about local communities, and I certainly encourage that.

We must ensure that the funding for these projects is allocated. I call on the Minister and all involved to engage with Members in the Chamber today, along with the members of the community energy organisations. We can do better, and I believe we must.

[Patrick Grady (Glasgow North) (SNP)]

It is always a pleasure, Sir David, to serve under your chairmanship. I congratulate the hon. Members for Bath (Wera Hobhouse), for Waveney (Peter Aldous) and for Ceredigion (Ben Lake) on not only their efforts to secure this debate but their ongoing championing of the issue of reforming the energy market to support community production and distribution. They have consistently demonstrated, and have done so again today, the wide cross-party and cross-country support—I think every nation of these islands has been represented in the debate today, and every party, more or less—

[Jim Shannon]

Better together.

[Patrick Grady]

Some might say that. My hon. Friend the Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) might have slightly different views. This is all about devolving and empowering local communities, so I suppose it depends on what level we want to devolve it down to—[Interruption.] My hon. Friend is very sorry that he cannot intervene, but we can see him on the screen.

One of my local communities, which I am sure would quite happily be an independent country if someone would let it, is in Partick, in the west end of Glasgow. It is very supportive of the idea of the community council there; it backed a related Bill in the last Session and wants to see it come back again. Indeed, the Scottish National party as a whole support that; our usual spokesperson on these matters, my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown), sends his apologies for not being here today, but we can all be assured of his ongoing support, too.

Very briefly, in order to leave time for the Minister to respond to the debate, I will look at the importance of the principle and the concept of community energy, and at some of the experience that we have heard in Scotland. I also have a few questions for the Minister.

One of the best descriptions of the concept of community energy that I have come across came from the Glasgow Community Energy co-operative. Its share offer successfully completed on 18 June; it had over 170 applications and raised £30,000 of financing, which is helping to put solar panels on the roofs of a number of schools in the city. It has said:

“For us ‘community energy’ has a double meaning. Glasgow Community Energy aims to connect and empower local people through community-ownership and democratic involvement in our renewable energy co-operative, as well as by inspiring and sustaining community activism through our Community Benefit Fund.”

So, for the Glasgow Community Energy co-operative, community energy is about not just providing energy for the community but harnessing the energy of the community as well—that galvanising effect, that psychological effect if you like, which the right hon. and learned Member for Kenilworth and Southam (Jeremy Wright) referred to.

Of course, behind that are the long-standing pressures for reform of the electricity market, or the electricity bureaucracy as my hon. Friend the Member for Na h-Eileanan an Iar said. There is a need for energy production and supply to be reformed, particularly in the face of rapid climate change. The need to get to net zero, as we heard right at the start of the debate from the hon. Member for Bath, requires low-carbon production and transmission. In the year of COP—the year when the UK is supposed to show global leadership—this is an incredibly important opportunity.

Community energy is also important for other reasons, including for energy security, so that we are not dependent on imported gas or electricity, or any other form of energy from overseas. Increased domestic energy production is safer and better for everyone. It is also important to tackle fuel poverty, which is a growing problem. Community energy also relates to the concept of localism, ownership and democratic control. We heard from a number of the Conservative Members that this process could be seen as part of what is supposed to be the Government’s levelling-up agenda—I think the hon. Member for Barrow and Furness (Simon Fell) said that, and he was quite right to do so. We also heard about international examples; Germany and Denmark were referred to by a number of Members, including the hon. Member for North East Fife (Wendy Chamberlain). All of that speaks to the economic benefit that can be gained by local energy production companies. Employment opportunities also come with community energy, in installation, management, maintenance and so on. It is a win-win situation.

The Scottish Government fully back and fully reflect all of those positions, particularly the importance of decarbonising the entire energy system. Their most recent local energy strategy was published in January 2021 and says that the Scottish Government

“recognises that local energy cannot be delivered in isolation. It is not a standalone policy, but one that integrates and aligns with other key policies, including energy efficiency, eradicating fuel poverty, heat decarbonisation, local heat and energy efficiency strategies, and consumer protection. It will develop alongside and within a vibrant national energy network.”

The Scottish Government had a target of 500 MW of community and locally owned energy by 2020; that amount has been exceeded, so now we intend to increase the target to 1 GW for 2020 and 2 GW for 2030. Progress towards these targets has been positive, but changes to some of the UK Government’s subsidies, not least the closure of the feed-in tariff scheme, has undermined that progress. However, we continue to encourage shared ownership models as a means of increasing community-led involvement in commercial projects.

My hon. Friend the Member for Na h-Eileanan an Iar will be very happy to hear—indeed, I am sure he already knows—that the Scottish Government are particularly committed to helping the communities on our islands to become carbon-neutral. Indeed, some of the pioneering work in this area has been done on the Isle of Gigha, with its early adoption of wind power. The SNP manifesto for the recent Scottish election said quite clearly:

“We support Carbon Neutral Islands which would be in the vanguard of reaching net zero emissions targets by 2045. This will include pilots for some islands to run on 100% renewable energy, to create circular economies tackling and processing waste, and exploring more sustainable transport options. We will work with at least 3 islands over this Parliament to enable them to become fully carbon neutral by 2040.”

My hon. Friend has the opportunity to lobby for many of the islands he represents in his archipelago to take part in that pilot.

That brings us to the Government. The short question coming from all hon. Members is, why not? What is the harm? I thought the Tory Government was supposed to believe in the free market, entrepreneurship and the flourishing of local enterprise, so why do they seem to be in hock to the big players? Why are they in hock to the traditional companies, who perhaps have the most to lose?

The simple ask coming from Members today is to let the Local Electricity Bill progress. It has wide cross-party support and a wide range of civil society support, from the Churches through to different manufacturers of the technology that would be used, and more. The Bill provides a very simple framework that would overcome existing barriers to entry into the market.

There are other things the Government could be doing as well. They could look at a replacement for the feed-in tariff that was so important in bringing so much renewable energy to the market in the first place. They could also help to stimulate demand for better local, greener energy by diverting funding away from damaging new nuclear technologies.

At the end of the day, much of this is about a vision—a vision for a fairer, cleaner, greener, locally led energy future. Unfortunately, that seems to be a vision that the UK Government are currently sorely lacking.

UK Steel Sector: Supply Chains

Jim Shannon Excerpts

Wednesday 9th June 2021 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I, too, thank the hon. Member for Aberavon (Stephen Kinnock) for securing this debate. I remember his debate in the old Westminster Hall—perhaps I should say we are in the new Westminster Hall. I supported him then and I am back to support him again. The title of the debate is “UK Steel Sector: Supply Chains”, and I want to give the Northern Ireland perspective. It is always a pleasure to follow the hon. Member for Newport West (Ruth Jones). I thank her and the hon. Member for Newport East (Jessica Morden) for their contributions. Newport West and Newport East are well represented here today.

The issue is of great interest to me because, over the past month to six weeks, the supply chains and the construction sector in particular have been an issue for my constituency of Strangford. I have lived in the Ards peninsula for a long time, and many of the companies there are small and medium-sized businesses. Those companies employ people locally and are very important to the local economy. The supply chain of steel has become critical for them. Others have referred to the high price of materials, and steel has been mentioned to me by two companies that contract to build homes. They price for £150 per square foot of finished steel, but are now looking at an increase of a third, up to £200 per square foot. This will cripple the construction industry, undoubtedly having an impact not only upon the construction sector and those small and medium-sized businesses in my constituency, but on jobs, so it is very important.

In 2020, the UK steel sector contributed £2 billion in gross value added to the UK economy, equivalent to 0.1% of total UK economic output and 1.2% of manufacturing output. There are some 1,100 businesses in the UK steel industry, and the industry supported 33,400 jobs in the UK in 2019—0.1% of all the jobs in that sector, which is quite substantial. On top of that, there all the other construction sectors which are tied into it. The construction companies told me that it was not just the price of steel, but the prices of wood of piping that were an issue for them. However, steel is critical for the strategy going forward, especially as we come out of the coronavirus pandemic.

In 2019, the UK produced 7 million tonnes of steel, whereas China produced 996 million tonnes, and the EU produced some 157 million tonnes—8% of the world total. The UK was the eighth largest steel producer at that time. The differential and degree of reliance is clear, and this must be what we work to change. Our great nation, which was once the industrial force of the world, must return to self-reliance. To do this, our Government—the Minister in particular—must invest to enable us to produce our own steel. Government contracts must be at the top of this, bound to buy only British steel. Earlier, the hon. Member for Aberavon referred to the Ministry of Defence contract for Swedish steel to build ships. Why was it not our steel? That is the question that he asked, and it is a question I ask as well.

We know that covid has a role to play in terms of shipping and raw materials, with shipping companies raising prices massively. The cost of shipping a 40-foot container from Asia to northern Europe, for example, soared from £1,061 in the summer of 2020 to more than £5,873 in May 2021. The increases are astronomical, even more than a third. It is a significant, and sometimes unbearable, factor. The questions must be asked: where are the containers and is this price rise justifiable in the long term? I do not believe it is, which is why I look to the Minister and my Government to address this issue. I put it to the Minister that in any strategy considered, looking into the increase in shipping which is affecting every product on the shelves and every product on the construction sites must be a priority. I would be interested to gauge the Minister’s opinion on what the Government is doing to tackle the cost, which is putting small businesses into bother at a time when we must be rebuilding.

One builder said to me,

“How can we rebuild after covid, Jim, when I literally can’t afford the rebuilding materials— what happens to my team members whilst I renegotiate contracts with developers to cover the astronomical price rises?”

These costs are going to hit the construction sector. These false prices will have to fall, and there will be some crash when they do. House prices in my constituency have risen by 20%. We are seeing at first hand the cost of relying on others when once we had the finest steel industry in the world. We can, and indeed must, return to this, providing jobs and a quality product. It is time for the Government to once again put steel into our backbone and to back our own right here in the great United Kingdom of Great Britain and Northern Ireland—better together.

--- Later in debate ---

[Jim Shannon]

It is important that we have steel for offshore wind power and so on, but it is also important that we have steel available at competitive prices for the construction sector. What can the Minister do to assure me on that?

[Amanda Solloway]

I will, of course, pass on the hon. Gentleman’s question.

I will move on to Liberty Steel. The hon. Member for Newport East rightly highlighted its importance to many Members and their constituents, and its recent financial difficulties, which were also raised by the hon. Member for Rotherham. As the Secretary of State reaffirmed to the Business, Energy and Industrial Strategy Committee in an oral evidence session, we continue to monitor the situation closely and engage with the company, trade unions, local MPs and the wider steel industry. Liberty is important.

Advanced Research and Invention Agency Bill

Jim Shannon Excerpts

Report stage & 3rd reading
Monday 7th June 2021 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

Nos. 32, 33 and 34 have withdrawn, so we go to Jim Shannon.

[Jim Shannon (Strangford) (DUP)]

I cannot recall a time when we have rushed so fast through the speakers, Madam Deputy Speaker. At the beginning, as No. 35, I thought I would have three minutes. You have asked us to keep to six minutes, and we will do our best—indeed, I will keep to that.

I value the opportunity to speak on this matter of utmost importance. I also welcome the Chancellor’s announcement—I have my instructions for tonight as the one who will do the proxy votes on behalf of my party—that the UK Government will invest at least £800 million in this new agency as part of the Government’s wider commitment to increase public research and development funding by £22 billion by 2024-25 and to increase overall UK spending on R&D to 2.4% of GDP by 2027. It would be churlish not to welcome that and not to say how good it is to have those figures on the record here tonight. It is clear that the Government have given a commitment to ensure that this agency will be a success story.

When I see that many of our shops have been tied up not simply by Brexit but by the over-dependence on overseas manufacturing and production, I lament that because we were at one time the greatest industrial nation, with the greatest innovators. I believe we can be that again; all we need to do is follow the Government’s policy and strategy, as set out here tonight, and then we can all benefit across this great nation. I still believe that that title is ours, but for us to become all we can become in terms of leading groundbreaking blue-sky projects, we must put the money in, and the Government are clearly putting their money in.

I want to ask the Minister—last time, we did not have much time, and she was unable to respond—to ensure that the R&D and the spend benefit all the regions. The hon. Member for Newport West (Ruth Jones) and others referred to that. I want Northern Ireland very clearly to be a recipient of the R&D so that we have some of the benefit from this whole project. Technology does not come cheap, but the rewards are extensive. What we have achieved with the covid vaccine through investing money is an indication that greatness still awaits. The Government have been extremely successful in the coronavirus vaccine roll-out and in how they have benefitted and helped all the companies, whether with furlough or the grant scheme. Many businesses in my constituency are here today because of the Government’s commitment, and I want to put on record my thanks to them for that as well.

We all have a great affection for our mothers, and I have a particular affection for mine. She always said that her greatest investment was the time she invested to believe in her children. It is important that we take note of those wise words, and I hope that my mother will be very pleased with the investment she made in her four children. If God spares her, she will be 90 on 14 July, so she has had a long and very good life. When I phone her, as I did at about 6 o’clock tonight, she always asks me what is happening over here, and I always tell her, because she is really deeply interested. We are very fortunate to have a 90-year-old mum who is sound in body and mind and still able to tell this big boy what to do when the time comes. That is what a mother does—she tells you off no matter what age you are, and I am always very conscious of that.

We must invest in our own people and in their ability. That is why I support this Bill and why we will be voting with the Government tonight. I want to take this opportunity to press the Minister for an assurance that the investment to which I referred earlier will take place across the UK, and will allow the wonderful research and development that takes place in Northern Ireland to continue. We have a great scheme in Northern Ireland, which works really well, to avail us with increased support and funding. I believe that the Minister will be happy to give that assurance and I will be happy to hold her to that assurance. I look forward to her response.

Northern Ireland has the best education system in the United Kingdom. I thank my colleague Peter Weir, the Education Minister, for the great job that he has done in trying to secure our children’s ongoing education through covid. As a result of this education, we have highly skilled young people who have so much to offer in terms of vision and goals. I meet those young people every day in my constituency of Strangford and across Northern Ireland. We have some wonderful people. We need to encourage them and to ensure that they can be part of that future as well. We do this as well for my grandchildren and, indeed, for everyone’s grandchildren.

We should also allow those with grand projects to take on young apprentices, who will learn how to take innovative approaches. It is very important that we do these things. The R&D projects to give young graduates a place at the R&D table would benefit from their wisdom, experience, enthusiasm and learning. Again, I commend the Northern Ireland Assembly, and particularly Minister Dodds and the Department of Enterprise, Trade and Investment, for all that they have done, working alongside the Education Minister to ensure that we in Northern Ireland can be part of this great nation of the United Kingdom of Great Britain and Northern Ireland—always better together and always better if we can share what we have. I see my colleague and friend, the hon. Member for Aberdeen South (Stephen Flynn), having a smile to himself. But I mean it. I want him to stay in the United Kingdom. I do not want him to leave; I want him to be a part of it.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Nos. 36 to 40 on the speakers’ list have withdrawn, so we go to Virginia Crosbie.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)]

It is a pleasure to be here on this special occasion, and not just because, as my hon. Friend the Member for Guildford (Angela Richardson) pointed out, it was a very special birthday yesterday—40. [Laughter.]

I thank all right hon. and hon. Members who have tabled amendments and new clauses, and who have contributed today.

The UK has a world-class science system, and a proud history of research and invention. Today, in our continuing fight against coronavirus, the importance of those skills has never been more apparent. What is it that makes ARIA so special? It is the fact that we are strengthening our science system, enhancing our capabilities and finding a new level of ambition. That means that it will be a small, agile organisation with autonomy from Government and unique powers that equip it to support groundbreaking ideas, with the potential to profoundly change all our lives for the better.

The Bill brings forward a bold and ambitious policy that seeks to deliver the transformational benefits of high-risk R&D for our economy and society. I have spoken to many colleagues who share my genuine excitement about the possibilities that ARIA could bring. We have heard on the Floor of the House and in every previous debate that all parties support the principle of ARIA and what it will try to achieve. I am glad that today we are able to give ARIA the focus that it deserves.

A focus of today’s debate that has been raised by the hon. Members for Newcastle upon Tyne Central (Chi Onwurah), for Cambridge (Daniel Zeichner) and for Aberdeen North (Kirsty Blackman), among others, has been giving ARIA a primary research topic, through new clauses 2 and 3, and amendments 1 and 12. Given the challenges that we face today, those amendments understandably focus on climate change and health. Nobody in the House should have any concerns about the Government’s credentials on tackling climate change. We are proud to be the greenest Government ever. The Prime Minister’s 10-point plan and our COP26 presidency, to which the hon. Member for Aberdeen South (Stephen Flynn) referred, are demonstrating that at home and abroad, the UK is leading efforts to accelerate action on climate change.

Without doubt, the covid pandemic has clearly illustrated the critical role that R&D plays in the health and wellbeing of our population. Our vaccine roll-out is the envy of the world. The Government already invest around £2 billion annually in health and care research in the UK. It is therefore right that such priorities are taken forward by Government Departments and agencies, with clear direction and involvement from Ministers. That includes the important role that UKRI plays in delivering Government priorities for R&D. We do not want to duplicate those responsibilities.

Instead, as many colleagues have put it much better than I could, ARIA must make its own distinct contribution to be effective. That means being an organisation led by brilliant people with strategic autonomy—not directed by Ministers. The continued chopping and changing of ARIA’s mission set out in amendment 12 would hamper ARIA’s ability to commit to long-term programmes.

New clause 3 also seeks to impose obligations on ARIA regarding the transition to net zero. ARIA is covered by the Government’s existing net zero commitments and will be required to make information available through the Environmental Information Regulations 2004, which were mentioned by the hon. Member for Hammersmith (Andy Slaughter).

I turn to the contribution of the hon. Member for Oxford West and Abingdon (Layla Moran) on the role of Parliament. Amendments 3 to 6 would require the proposed chair and CEO of ARIA to be approved by both Houses of Parliament. Amendment 11 would require the Commons Science and Technology Committee to approve appointments by the Secretary of State and the remuneration of the appointees. I am extremely pleased that the recruitment campaign for the CEO was launched on 1 June and that we will launch the campaign for the chair on 5 July. All applications will be reviewed by an outstanding expert panel, which will include the Government’s chief scientific adviser, Sir Patrick Vallance. The Government’s guidance sets out that the ultimate responsibility for appointments rests with Ministers who are accountable to Parliament, as is the case with UKRI. There is no precedent for requiring the approval of both Houses for appointments.

I am grateful for the contribution that the Science and Technology Committee, chaired by my right hon. Friend the Member for Tunbridge Wells (Greg Clark), has made on this issue. However, I guarantee that this is an open, fair and robust recruitment process, and it is completely appropriate to find the right people to make ARIA a success. Amendment 9 would require ARIA to provide the Science and Technology Committee with the information it requests. The Osmotherly rules provide guidance on how Government bodies should interact with Select Committees, and they are clear that such bodies should be as helpful as possible in providing accurate, truthful and full information when giving evidence. I believe that that is sufficient to ensure a co-operative and constructive relationship between ARIA and the relevant Committees.

Amendment 10 would require the Secretary of State to consult the Committee before dissolving ARIA. Clause 8 already sets out the broad requirement on the Secretary of State to consult any persons they consider appropriate, and I am sure they will always consider it appropriate to consult the Science and Technology Committee about changes to the R&D landscape. The Secretary of State’s power to dissolve ARIA is subject to the draft affirmative procedure, which will ensure that Parliament has the opportunity to debate that decision.

Amendments 7 and 8 tabled by the hon. Member for Aberdeen South and amendment 14 tabled by the hon. Member for Newcastle upon Tyne Central seek to remove the exemption from the public contracts regulations and to subject ARIA to the Freedom of Information Act 2000. We have covered procurement extensively before, and I will reiterate why the exemption is so important. There are three key points.

First, ARIA is expected to commission and contract others to conduct research in pursuit of its ambitious goals. Often, ARIA will procure research services. That commissioning and contracting is a fundamentally different way of funding R&D to traditional grant making, and procurement rules do not apply. Secondly, this way of funding research is core to DARPA’s approach—the successful US model from which we learned when designing ARIA. As we heard in Committee, DARPA benefits from what is described as “other transaction authority”, which offers flexibility outside standard US Government contracting standards. By taking that innovative new funding approach that is so fundamental to its objectives, ARIA will benefit from similar flexibilities.

Let me turn to amendments 8 and 14. ARIA is about creating a certain culture of funding and groundbreaking research, as I heard time and again throughout my engagement with the R&D community. As my hon. Friend the Member for North East Bedfordshire (Richard Fuller) put it so eloquently, that kind of culture is difficult to achieve within all the rules that would usually apply to public bodies. We have thought carefully about alternative ways to ensure that high standards of conduct are upheld within this unique context.

The Bill requires ARIA to submit an annual report and statement of accounts, which will be laid before Parliament. ARIA will be audited by the National Audit Office and will be subject to value-for-money assessments. ARIA will interact with Select Committees in the usual way, and it will draw up a framework document detailing its relationship with BEIS. There will be further reporting requirements, such as the details of what is published in the annual report. Together, those provisions will ensure that the public are informed of ARIA’s activities and where it spends its money. Although the Freedom of Information Act 2000 allows for exemptions in certain circumstances, the request must still be processed, and that administration runs contrary to the lean and agile operation of ARIA.

I turn to amendment 2 on conflicts of interest. Schedule 1 allows the Secretary of State to make regulations

“about the procedures to be adopted for dealing with conflicts of interest”.

The framework document between BEIS and ARIA will commit ARIA to the code of conduct for board members of public bodies, which includes the obligation to publicly declare any private financial or non-financial interests that may or may not be perceived to conflict with one’s public duty. This principle-led, non-legislative approach is appropriate. It is the standard approach taken by many other arm’s length bodies, including UKRI, and I have no reason to believe that it is inadequate here. In addition, we have the existing reserve power in schedule 1, should it ever prove necessary.

On the issue of human rights, I recognise the intent behind new clause 1. Human rights are already protected in law in the UK through the Human Rights Act 1998, and ARIA will be subject to public authority obligations under that Act. I therefore reassure the hon. Member for Aberdeen South that ARIA will operate in a way that is compatible with the convention on human rights. It would be unlawful for it not to do so under existing legislation.

Amendment 13 would require details of ARIA’s geographical impact to be included in its annual report. I believe that it is incredibly important that ARIA’s funding benefits those who are not always reached by the current system. That is the Government’s policy and priority, as well as a priority for me personally. The R&D place strategy, due to be published this summer, will set out how R&D will contribute to our levelling-up ambitions. Details of ARIA’s operation will be set out more fully in a future framework document, and that is the appropriate place to stipulate the contents of ARIA’s annual report, including geographical information, rather than legislation.

[Jim Shannon]

The Minister is being generous with her time tonight. In my contribution, I was very keen, as were others, to ensure that all the levelling-up that the Minister refers to will happen in the regions as well—in other words, that Northern Ireland will get its share. It is important, as part of the United Kingdom of Great Britain and Northern Ireland, that we all benefit. May I seek her assurance that that will be the case?

[Amanda Solloway]

Of course, I give my assurance that we will issue the place strategy shortly, which will indicate all of this.

I am very grateful for the contributions that right hon. and hon. Members have made today. The interest in the passage of the Bill in the House and in the R&D community is testament to the important role that ARIA will play in our future R&D landscape, creating a space in the system that is free to fund groundbreaking science in innovative ways, independent from ongoing Government intervention.

This is an incredibly significant moment, because the opportunity that ARIA affords us is truly limitless. By unlocking a new level of ambition, and by enabling truly bold and adventurous ideas to flourish, ARIA will allow us to take a huge leap into the future. Yes, this will mean embracing the unknowns that come from ARIA being free from Government control, but we should make that leap confidently, knowing that the brilliant people that ARIA will fund will change the world in ways that none of us in this Chamber would dare to imagine today. This is therefore a truly exciting time for all of us here in the Chamber—for ourselves, for our children and for our grandchildren—and I feel particularly excited for my young granddaughter, who will feel the benefits of the major breakthroughs that we will unlock through this Bill. I am sure that this opportunity is recognised by all hon. Members.

I hope that I have demonstrated the reasons that I cannot accept the new clauses and amendments that have been tabled, and I hope that Members will agree not to press them.

10-point Plan: Six Months On

Jim Shannon Excerpts

Tuesday 18th May 2021 Commons Chamber

[Kwasi Kwarteng]

I am not sure which is coming first—St Ives or Falmouth—but I am sure that arrangements can be made for such a visit.

[Jim Shannon (Strangford) (DUP)]

I thank the Secretary of State for his statement. Will he please outline how the intended £12 billion of Government investment—with potentially three times as much from the private sector—to create and support 250,000 green jobs will be distributed throughout the United Kingdom? In particular, what will happen in Northern Ireland, which currently seems to be increasingly outside of the UK plan but has the potential to play a tremendous role—for example, at Harland & Wolff in Belfast and, indeed, other booming sites of industry throughout Northern Ireland—in achieving our industrial revolution?

[Kwasi Kwarteng]

I am delighted that the hon. Gentleman has brought that question up. He will know that I speak regularly to my right hon. Friend the Secretary of State for Northern Ireland and the Minister of State, Northern Ireland Office, my hon. Friend the Member for Worcester (Mr Walker), about investment in Northern Ireland, particularly in relation to net zero. The hon. Gentleman will know about the offshore wind opportunities in Northern Ireland, I am particularly excited about the opportunities for hydrogen, and he will also know about the operation of Wrightbus and its efforts to bring hydrogen into the transportation system. There are exciting opportunities for Northern Ireland in relation to the net zero 10-point plan and I would be happy to discuss them with the hon. Gentleman.

Electricity

Jim Shannon Excerpts

Tuesday 27th April 2021 Commons Chamber

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I welcome the statutory instrument this afternoon to extend the warm home discount for another year. Indeed, what is there not to like about extending the warm home discount for a further year at least? It has been a very successful scheme. It is now coming up to its 11th year, and, as the Minister has mentioned, it provides £140 guaranteed for those in fuel poverty and in vulnerable circumstances to help with their fuel bills.

I have a sense that the SI is a little Augustinian. It is a little, in the saying of St Augustine, “Oh Lord make me good, but not now.” [Interruption.] Sorry, “not yet”. I should look at my “Dictionary of Great Quotations” a little more assiduously.

The Minister has mentioned the suggestions in the energy White Paper about the future of the warm home discount and the proposals not only to continue it beyond next year but to at least 2026. However, that is not addressed in this particular piece of legislation today. I assume that is because, as the Minister said, consultations need to be undertaken in order to refashion the longer-term warm home discount into a slightly different form. Indeed, in the energy White Paper, there is mention of what might be in store for us as far as that refashioning is concerned. In particular, it includes an increase in the envelope so that there is a substantially larger amount of money in the pot for extending the scope of the warm home discount; an increase in the size of the rebate, with a suggestion that it goes to £150, rather than £140; and a consultation on a reform of the targeting of the warm home discount so that it faces rather more towards fuel poverty than is presently the case.

All those things appeared in the White Paper, albeit in a fairly sketchy form, but more than some of them could have been done earlier. They need not have been put off to next year. I assume that a further piece of secondary legislation will be introduced to extend the scheme beyond one year. By the way, it is important that we have some certainty about the longer-term arrangements for the warm home discount so that we are not constantly hopping from one year to the next; we must have a longer-term view of the future of the scheme.

Not only could some of the things signalled in the White Paper, but not detailed or actioned, have been brought forward and put in this year’s extension, but there are further problems with the warm home discount scheme—I think the Minister is well aware of them—that have not been addressed in this year’s suggested extension. It is certainly true that there are a number of welcome things in this SI that relate, for example, to the way that the supplier of last resort arrangements are dealt with. It provides more certainty that a failed supplier’s warm home discount obligations do not disappear with the failure of the supplier and are carried over to obligations going to the supplier that is taking over as the supplier as last resort.

That welcome enhancement of the scheme does not resolve one of the fundamental problems relating to obligated suppliers. The Minister mentioned that she does not wish to change the threshold for next year’s WHD arrangements, but I am sure she is aware that the obligation level leads to the continuing problem of what happens to someone’s entitlement to the warm home discount if they switch during the year from a supplier that is above the threshold to one that is below it. Although I accept that the threshold has been reduced, there is still an issue of the loss, potential or actual, of that entitlement to an obligation on switching. The customer, of course, does not know which supplier has 150,000 customers or fewer than 150,000 customers when they do that.

[Jim Shannon (Strangford) (DUP)]

I declare an interest: I am the chair of the all-party parliamentary group for healthy homes and buildings. I understand that the scheme the Minister is proposing is important for people who need to improve their homes. Does the shadow Minister believe that the funding is in place to ensure that the finance is there for all those who wish to have their homes brought up to a certain standard?

Advanced Research and Invention Agency Bill

Jim Shannon Excerpts

2nd reading
Tuesday 23rd March 2021 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in this debate. First, I congratulate the hon. Member for Airdrie and Shotts (Neil Gray) and wish him all the best as he leaves this place. I always find him a very easy fella to get on with. We have worked together in many debates; usually I intervened on him, and maybe there was the odd time when he intervened on me. We have a good friendship, and I wish him and his family well. We will miss his friendship in the Chamber.

I am a strong supporter of Government’s aim to increase public research and development funding to £22 billion by 2024-25 and to increase overall UK spending on R&D to 2.4% of GDP by 2027. I welcome and am really pleased to see the Government’s proposals. I will not make a plea for my own constituency, but I will make a plea for Northern Ireland as an area where we believe that we can help each other.

If we ever needed proof or a supreme example of just how well we can do things—when I say “we”, I mean the United Kingdom of Great Britain and Northern Ireland; all of us better together under the Union flag, which is where the strength of our co-operation and friendship should be—who could fail to be amazed by the development of the vaccine? From the start to the end, we have got a number of effective vaccines on the streets within a year. After all the difficulties of the last year, the success story has been the vaccine and its roll-out. Which of us did not feel a wee bit better when the vaccines were announced by the Health Secretary in the Chamber? We could almost feel a smile on our face and a skip in our step. That was because of the scientists and the expertise that we have in this great United Kingdom of Great Britain and Northern Ireland, leading the way. That is why I believe that the science and the R&D can and, indeed, will succeed.

I can understand those who are concerned at the speed of the vaccine development—they know that R&D usually takes years, but the coronavirus is an example of where it can take less time. The difference that dedicated funding and governmental support makes is clear. The Government and the Prime Minister in particular initially made sure that money was set aside for the research. Clearly that was a good move, and we thank them for it. The money is there to roll out the programmes, hire the staff and purchase the necessary equipment, and we have vaccines available because we invested; our Government and our country—our great United Kingdom of Great Britain and Northern Ireland—invested.

Imagine what we could achieve if we put resources into other goals—if we thought big and funded those thoughts. Is it wrong to aim for the stars? I do not think it is. In the last year, we have aimed for the stars and achieved it. The right hon. Member for Kingswood (Chris Skidmore) referred to the moonshot goals. One of my favourite films is “It’s a Wonderful Life”. We all know the scene where James Stewart’s character talks about lassoing the moon, and it is not impossible to do some things we have always talked about doing in a romantic way. We can do great things in research and development through the moonshot goals.

Of course there must be regulation and restrictions. Common sense should go hand in hand with idealism, and we must ensure that safety is paramount. If we look at what we have done, it shows the best of British and the best of what we can achieve, with co-operation between Scotland, Wales, Northern Ireland and the mainland, as well as with our international colleagues; what a sight that is to behold. The Bill applies to the whole United Kingdom of Great Britain and Northern Ireland. Supporting scientific research and development sits within the legislative competence of the devolved nations—in my case, the Northern Ireland Assembly—although specific reservations exist, and I look forward to the devolved nations contributing to this process and passing their consent.

In a debate in Westminster Hall last week, at which the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Derby North (Amanda Solloway), was present, I mentioned Queen’s University Belfast and the great partnerships that it has in health research in particular to find cures for diseases such as cancer and diabetes. Every now and again, that research has dividends and they are able to announce some of the good things they have done. Again, I ask the Minister to ensure that we can all benefit from the partnerships with universities and companies. As others have said, universities across the whole of the United Kingdom can deliver opportunities for people to progress their degrees, carry out investigations and find cures.

Northern Ireland has an excellent workforce—highly skilled, young, capable and educated to the standard that we all want. To give just one example, cyber-security in Northern Ireland is the best in the United Kingdom—indeed, the best in Europe. I suggest to the House that our workforce, their skills and their capability be used as we all move forward together.

My one note of caution is that while we must be ambitious, we must also be realistic. There cannot be a blank cheque for any project, but I believe that clause 3, on long-term ambition, must have a common-sense element and that projects must have an end date. We must be aware of our finite budget and of the need to fund projects that can provide immediate results and benefits such as pancreatic cancer drugs. I am my party’s health spokesperson, so I am very interested in how we can work together to find cures for diseases and reduce the number of deaths they cause across the whole of the United Kingdom. I look forward the fund being made available for health projects, as well as technological advances.

I support our research and development, I support the Bill and I support this Government and the Minister in the work she does. The Bill gives us a vision of the future—a vision that we must grasp. We have a glimpse of what we can achieve, and the potential can and must be exploited in a reasonable way for everyone in the United Kingdom of Great Britain and Northern Ireland, always better together.

[Mr Deputy Speaker (Mr Nigel Evans)]

Before I call the next speaker, I point out that everyone remaining to speak in this debate is from one political party, so if you go wildly over the five-minute mark, you may be pushing one of your colleagues off the list. There is a challenge for Ian Liddell-Grainger.

Research and Development Funding

Jim Shannon Excerpts

Wednesday 17th March 2021 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to serve under your chairmanship, Mr Dowd. I congratulate the hon. Member for Cambridge (Daniel Zeichner) on setting the scene so very well, and other hon. Members on their contributions. I very much look forward to the Minister’s response. It is a pleasure to speak for the first time in a Westminster Hall debate that she will respond to.

One of the many lessons that can learned from coronavirus is that for the brightest scientific minds in the world—I say this unashamedly, because we all believe it and evidential base for it is very clear—the special ingredient is governmental support. That has made it happen. The Government deserve credit for the way the coronavirus vaccine has been found, and for the initiative, power and strength that they put in to make sure that happened. The roll-out of the vaccine is proof of the brilliance and expertise of our scientists. We should put that on the record and thank them. I am not a scientist—I never could be, as I would not have the brains for it— but many are. Thank the Lord that we have them and that they have been able to find the antidote for covid.

We need the right people with the right training and the right equipment to make the groundbreaking discoveries that we are capable of and to achieve what we need with Government backing. This debate is about ensuring we have that. That is what we are trying to achieve. We all know that we are in difficult financial times, and my party and I have backed the Government’s Budget and plans. However, there are a few issues. We need to invest in healthcare and in research and development. Those are the two issues that I want to speak about very quickly.

The UK Government have committed to investing £22 billion in UK R&D by 2024-25 as part of the target of 2.4% of GDP by 2027 and 3% in the long term. The Government have always been committed to R&D, but I want to pose a few questions. I do it gently and constructively, by the way. I always try to do that. That is the way I try to work with my contributions.

I read the briefing by the Royal Society, which outlined what it felt must be committed to enable our research and development to continue to provide the breakthroughs that coronavirus has shown we are capable of achieving. There are many reports of mutant strains, and we need to ensure that we have the people in place to respond to whatever the future may bring, in the way that we have in the past. I personally believe that we will have to live with covid-19. I think it will be like getting our flu injections, which I do every year. I have had my vaccine, and one hon. Gentleman said that his is coming. It is good to have that in place.

The Royal Society has said that further raids on the UK research and development budget will create a funding gap that undermines the Government’s commitment to increasing UK investment in R&D to 2.4% of GDP by 2027. We realise the potential of that to improve lives. It is good to have the research, but it is also good for jobs, the economy and the wages that go with it. Since then, the Government have confirmed the UK’s association with Horizon Europe—a valuable commitment to international scientific collaboration—but they have not given an assurance that the money to pay for it will be additional to the funds already committed to the research and development budget, so we seek a response to that. The Government previously recognised that and committed to addressing the funding gap that would open up if the UK did not associate with Horizon Europe. The payment for association is now taken from the existing research and development budget, so the Government are creating a new funding gap.

I want to speak about health, but I just want to give a quick plug to the battery initiatives. In my constituency—back home in Strangford—we are going to have a couple of those coming through, and I believe there is the potential for us to drive that. I want to take the opportunity to get clarity—we are not robbing Peter to pay Paul here, I presume. It is not enough to say that we are sewing it in, but the money for this year is for little more than a membership pack.

Will the Minister also confirm that there will be collaboration between universities and companies? Queen’s University in Belfast has been one of the great exponents of how businesses and universities can work in partnership to improve health. We have cancer care in Queen’s University. We had the Prime Minister in Northern Ireland just last week, and he was saying that very thing. The Prime Minister recognises that, and we as a Parliament should recognise it and try to push on it. I want to ensure that Queen’s University has the continued funding to continue to deliver its research on cancer and many other issues.

I look to the Minister to clarify and underline what the precise delivery of the Government commitment looks like for the future of R&D. We need that, and the Minister and the Government need to deliver it.

[Anthony Browne (South Cambridgeshire) (Con)]

I thank the hon. Member for Cambridge (Daniel Zeichner)— a fellow Cambridge city MP. I have the south of the city. It is fantastic to have this debate on this issue, which is really important for all the reasons he highlighted. It is enormously important for the country but also for my constituency.

Research and development is clearly absolutely vital for economic growth. We are a largely knowledge-based economy. It is a growing sector globally. It is growing far faster than general economic growth. It is absolutely right that we position ourselves as a science superpower. I fully welcome the Government’s target of R&D being 2.4% of GDP by 2027.

One thing that the pandemic has shown, and that we have always known in South Cambridgeshire and Cambridge, is that we are already a life sciences superpower. We do more testing per capita than any G20 country. The AstraZeneca vaccine, which the hon. Gentleman talked about, has been rolled out not just in the UK, but around the world, despite some wobbles in Europe at the moment, which I am sure they will get over. In my constituency, the Wellcome Sanger Institute does more genome sequencing of the covid virus than the rest of the world put together—that is a huge achievement.

The life sciences are the largest R&D sector in the whole economy. In 2019, it brought in £2.8 billion of investment, up tenfold since 2012. Although there are great amounts of private investment there, there is a huge role for Government support. The reason for that is that in the life sciences, there are often very long lead times. After the research and development stage, many years can pass before getting any revenues. There is also a lot of fundamental blue-skies research that is not necessarily directly related to commercial opportunity.

I want to mention bit.bio, a start-up company in my constituency that I happened to meet virtually yesterday. It has the technology to use the DNA from a human hair to create every type of cell in the human body in a functioning way. It has created functioning human muscles from a human hair cell in a laboratory, not for Frankenstein reasons, but because those human cells can be used to treat a lot of diseases. The company is at least two years away from any commercial application, however.

[Jim Shannon]

Could they use my hair?

[Anthony Browne]

They might be able to use the hon. Gentleman’s hair—he has some left and they could use the DNA.

The Government support the life sciences industry, through the biomedical catalyst, with £30 million a year— that is a very welcome and successful scheme. An Ipsos MORI report last year showed that for every £1 of Government money put in, it leveraged £5 of private sector investment. The 150 companies that won grants from the scheme have raised £710 million. That is a 5:1 ratio compared with a 2:1 ratio across Government funding for R&D in general, so it is a far better sector in which to leverage private sector investment. Six firms in my constituency have won grants from the biomedical catalyst in recent years, and I thank the Government for that.

One sign of success is that the quality of applicants has increased dramatically. Five years ago, one third of projects of sufficiently good quality got funding, but now only one in 25 does, because there are so many high-quality applicants. That means that there is a lot more opportunity to fund, and if the Government wanted to maximise the leverage of private sector investment across R&D in all sectors, they should increase the budget of the biomedical catalyst from £30 million to, say, £100 million. There are definitely enough projects there.

I have some good news and some bad news about what is happening at the moment—the Minister and I have exchanged letters on this. The biomedical catalyst has had a competition this year, and has decided the winners, three of which are in my constituency. They are poised to make the announcement about their great funding so that they can go out to investors and get more private sector investment in, showing what a triumph both the Government programme and their technology are. The bad news is that the winners cannot be announced because the biomedical catalyst has no budget as we speak. The money is there in BEIS overall, but there are Departmental negotiations going on. In the industry as a whole, that has led to a fear that no news is bad news, and that the rug is going to be pulled from under the whole scheme. The industry is finding the silence rather ominous.

My plea to the Minister is to prove the worriers wrong. Will she announce the budget commitment to the biomedical catalyst, unlock the investment in the companies in my constituency and across the UK, and help Britain and South Cambridgeshire retain their position as life sciences superpowers of the world?

Electricity

Jim Shannon Excerpts

Monday 1st March 2021 Commons Chamber

[Jim Shannon (Strangford) (DUP) [V]]

I thank the Minister for her presentation and for setting the scene so well.

Regulation 2 sets a rate for the operational cost levy and the electricity system operator regulations from 1 April 2021 in the midst of a pandemic with people being at home and unable to go out, putting immense financial pressure on them, especially those who are furloughed. I would therefore like the Minister to confirm that we have taken the opportunity to ensure that all levies that are to be imposed will not see the consumer adversely impacted. Further, does she believe that we have built-in protection for the consumer at this level against price gouging and monopolies? Consumers must get fair energy prices. I seek confirmation that there will be protection for the consumers. The hon. Member for Kilmarnock and Loudoun (Alan Brown) referred to the fuel-poor. I also make a plea for those consumers and seek to ensure that protection for them—indeed for all consumers, but especially for them—will be in place.

People are working from home and kids are on the tech all day to do their homework. The level of consumption has massively increased in a huge number of homes. We must consider this at all levels, especially now. I would like to ensure that this seemingly small and straightforward measure will not adversely impact the ordinary person financially. We must also look out for the fuel-poor, of whom there are more in my constituency than there were a year ago, and I believe that is the case in every other constituency as well.

UK Space Industry

Jim Shannon Excerpts

Thursday 4th February 2021 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Member for Midlothian (Owen Thompson) and congratulate him on setting the scene so well.

The Government’s target of 10% of the global space market by 2030 is something we all want to see. The latest figures, from the “Size and Health of the UK Space Industry 2018” survey, show:

“Total UK space industry income grew to £14.8 billion in 2016/17”,

which is estimated to represent

“5.1% of the global space economy”.

These are lofty goals, yet seeing the skill levels of workers in our nation—for example, the workers in the Shorts, formerly Bombardier, factories in my constituency and their ability to turn their hands and machinery to new complex designs—I sincerely believe those goals to be achievable. Many independent engineering firms in my constituency, such as Cooke Brothers, Huddleston and others, are ready, skilled, able and willing to turn their hand to this and to be part of the achievement in the space industry. We need, however, to be able to connect the design firm in Bristol with engineering firms in the Ards peninsula, or Newtownards town in Strangford. There is a job to be done to ensure that the UK-wide skills are utilised for the benefit of us all and that everyone gains in this great United Kingdom of Great Britain and Northern Ireland.

The majority of the income of the space industry— £12.4 billion—is generated by the downstream segment of the industry through space applications such as direct-to-home broadcasting. Upstream activities, including space manufacturing—launch vehicles, satellites, payloads, scientific instruments—generated an income of £2.4 billion in 2016-17. When we achieve our goal of doubling the UK share of the global industry, it will allow other areas, such as my constituency of Strangford, to come into their own and to play their part. I want to see us all gain in this great nation and to see the Department for Business, Energy and Industrial Strategy take an active role to make the connections and to support diversification of facilities UK-wide to be part of the growing global potential.

I was heartened to hear this quotation from Dr Michael McKay, the head of the strategy and co-ordination office in the directorate of operations at the European Space Agency:

“Northern Ireland possesses the high precision engineering expertise, research competence and innovative thinking that is necessary to meet the demands of tomorrow’s European and International Space Programmes and their application. Clearly identifying the opportunities where we can use these skills is the key to growth”.

Let us not lose that comment. We need to utilise that. I sincerely look to the Minister to understand how Northern Ireland will play an integral part in this tremendous opportunity for everyone.

Border Carbon Adjustment Tariffs and Decarbonisation

Jim Shannon Excerpts

Wednesday 16th December 2020 Commons Chamber

[Jerome Mayhew (Broadland) (Con)]

Border carbon adjustment: it may not trip off the tongue, but this is not a dull subject. This policy is the stuff that dreams are made of.

I ask hon. Members to imagine that, as they settle down in their beds, they start to wonder how we could create the economic environment for levelling up in our manufacturing heartlands, giving them a low-carbon head start on the rest of the world. As they turn over and start to count the fluffy sheep jumping over a fence, they catch sight of a free market that naturally seeks out the most effective way to reach carbon net zero and deliver on the Prime Minister’s 10-point plan. Finally, just as they drift off to sleep, they glimpse, as in a glass darkly, a Government leading the world at COP26, achieving an international approach that brings co-operation and rapprochement with our European and American friends and allies. Could this be real, or must it evermore remain but a dream?

Well, this is no dream, and we can turn it into reality with a border carbon adjustment. We know we need to reduce carbon to net zero by 2050, and centuries of experience have taught us that the free market is without equal in being able to solve challenging economic problems such as this. Yet, right now, our free market stands helplessly by, its creativity and innovation useless.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman on bringing this matter forward. He is right about the Prime Minister’s statement on environmental issues. Does he agree that we now have the potential to make a real and lasting change for the better by implementing environmental changes, but that we must also be aware that the pressure on businesses must allow them to continue to operate and not put them out of business? There is a balance to be got, I believe, and we have an obligation not only to the industry, but to the environment to get it right.

[Jerome Mayhew]

The hon. Gentleman is entirely right. That is one of the great benefits of a border adjustment: it allows us to raise domestic costs without being unfairly undercut by international imports coming in. We can square the circle. We can support the environment by setting a carbon price that is sufficient to change people’s behaviour, to make lower-carbon products more attractive in the economy than higher-carbon products, while at the same time facilitating our domestic industry to remain competitive.

It is because we cannot price carbon emissions that our market is currently floundering. The reason is that they are an externality. When I produce a piece of paper, I take account of the cost of the ingredients for the paper, the energy I will use, my overheads, my marketing spend, my transport and distribution costs, and my profit. However, in the free market exchange with my purchaser, the cost to society of the emission of carbon through that manufacturing process is not currently accounted for, because it is dissipated into the environment and we cannot put a price on it. That is why we have market failure on the price of carbon.

So what do the Government do to try to deal with that market failure?  They are left in a very difficult position. They try to change behaviour by announcing a reduction in targets, making piecemeal regulations as and when they become available, and picking innovation winners—we have a list, most recently hydrogen and modular new nuclear, to name but two. I very much hope the Government have got those expensive choices right. Based on the available evidence I believe that they have, but that is the point: only a properly functioning market finds the best way to allocate capital, with its invisible use of the combined knowledge of the sum of all the participants in that market. No Government can match that combined wisdom.

Our current approach to carbon pricing simply does not work. If we raise the cost of energy with our higher cost of carbon, our industry simply becomes uncompetitive, as the hon. Member for Strangford (Jim Shannon) pointed out a moment ago. Manufacturing simply moves abroad, or it goes bust and its place is taken by the raft of imports from higher-carbon countries—in addition to the very high cost of carbon in the import process and transport—like China. The result is damaging to jobs. It is, of course, damaging to our business. It is very damaging to our balance of trade. It is very damaging to our tax base and it is damaging to the climate. All in all, it is a damaging disaster.

Border carbon adjustment can transform that process: charge imports from a high- carbon economy the same carbon cost as we impose on our domestic industry via a BCA and the problem is solved. There would be no incentive for our manufacturers to base production abroad, since the costs would be equalised. Foreign companies would no longer have an unfair trade advantage. In fact, it would provide them with a direct incentive to reduce carbon usage in their domestic environment to avoid corrective tariffs. From a policy perspective—I am using China as an example—the Chinese Government would have a choice: either their exports pay a carbon price at our border and the money goes to our Exchequer; or they create a carbon price in their domestic market and they get to keep the money themselves. There is, therefore, a really positive incentive internationally for carbon reduction and the benefits to be spread. After all, climate change knows no borders. Better still, using the same calculation for border carbon adjustment but this time in reverse, our own factories would get the benefit of a carbon cost rebate at the border when they export, making their exports both cheaper and more profitable, increasing our competitiveness already on the international market.

There are many ways that you can skin this particular cat, Madam Deputy Speaker. We can either design a system whereby all products coming in or out of the United Kingdom have their carbon contribution assessed, or, if that is considered to be too complex, we can take baby steps. We can start off by applying a BCA towards the five or six most carbon-intensive industries and then take it from there. We would start with steel, fertiliser, petrochemicals, aluminium and energy. I will take two examples from that list by way of explanation.

First of all, with steel, an independent research project has been undertaken to assess the impact of a border adjustment tariff on the steel industry. Its conclusions were that were we to implement a BCA in the United Kingdom, it would increase the competitiveness of UK steel against many of its international competitors, at the same time as raising for the Treasury a tax windfall of between £270 million and £850 million if that carbon price was set at between £50 and £75 per tonne.