Energy-intensive Industries

Joan Walley Excerpts

Thursday 11th September 2014 Commons Chamber

[Alex Cunningham (Stockton North) (Lab)]

I beg to move,

That this House welcomes the measures announced in the 2014 Budget Statement which reduce cost pressures created by the imposition of carbon taxes and levies; notes that without such measures, there is a serious risk of carbon leakage; further notes, however, that UK manufacturing still pays four times as much for carbon compared with main EU competitors because of taxes such as the carbon floor price; and calls on the Government to build on the measures announced in the Budget by producing a strategy for energy-intensive industries, as recommended by the Environmental Audit Committee in its Sixth Report of Session 2012–13, HC 669, in order to produce a fairer and more efficient system which delivers genuine potential for investment in a low-carbon economy.

I am delighted to have the opportunity today to open this debate and to move the motion in my name and that of the hon. Member for Redcar (Ian Swales). I am grateful to the Backbench Business Committee for granting time in the Chamber for this important debate about the impact of taxation on our country’s energy-intensive industries, which employ or support up to half a million jobs.

I know that other hon. Members, many of whom have energy-intensive industries in their constituencies, would have liked to be here today to contribute to this debate, but have rightly chosen to travel to my homeland to chat to my fellow Scots who have yet to make a final decision on whether or not to vote to keep the United Kingdom together. Just as I am sure they are here with us in spirit, I am sure that most, if not all of us, recognise and support their mission, which will have a direct impact on the issues that we are discussing today.

Before I get into the main body of my speech, I formally declare my membership of the all-party parliamentary group for energy-intensive industries, which campaigns on the issues to be raised today and whose members helped to secure this debate. Much of the debate will centre on the impact that carbon taxes and levies are having on our energy-intensive industries—EIIs—and will seek to encourage progress in working towards a strategy for EIIs that will deliver genuine potential for investment in a low-carbon economy.

Whether it be through petrochemicals, nitrate fertiliser or steel production, the Tees valley, where my Stockton North constituency sits, has long been synonymous with heavy industry and the thirst for energy that it necessarily entails. The town of Billingham, which is home to a large chemical centre, has played a particularly significant role in Britain’s industrial back story. The cooling towers and chimney stacks that still adorn, if not dominate, parts of the region’s skyline—along with the famed transporter bridge—are testimony to Teesside’s proud industrial heritage, but the decline of those industries will be hastened if actions are not taken to lessen the burdens imposed by carbon taxes and levies.

As Member of Parliament for Stockton North, I shall be speaking for Teesside and highlighting the various hurdles that many of our EIIs are facing there; but as a member of the energy-intensive industries all-party parliamentary group, I shall be speaking not just out of local or regional interest, but to highlight issues that are having an impact on industries the length and breadth of the country. The reach and scale of the problems extend far beyond the north-east, and to products such as cement, glass and ceramics.

If I may borrow a phrase from my hon. Friend the Member for Southampton, Test (Dr Whitehead), the next Government will come to power at a time when the three prongs of an “energy trilemma” are driving potentially competing agendas that must be addressed by any emerging energy policy. That means that, at the same time as taking steps to guarantee that our energy supply is secure, we require measures to ensure that energy prices for consumers, both domestic and industrial, are affordable, as well as movement towards decarbonising supplies to ensure that the energy sector contributes to carbon reduction rather than undermining it.

As I have already made clear, EIIs form the cornerstone of the United Kingdom’s manufacturing sector and, by virtue of that, the cornerstone of the wider economy. Figures for the sector vary, but the Environmental Audit Committee has suggested that EIIs employ 125,000 people in the UK. The UK’s foundation industries, which have a significant overlap with EIIs and account for higher numbers of supply-chain jobs, are reckoned to employ nearly half a million people—which amounts to roughly 20% of total manufacturing employment—generating gross value added worth £24.6 billion. Those industries account for between 3% and 4% of GVA across the UK economy as a whole. In the Tees valley alone, the process sector consists of more than 1,400 local firms in the supply chain, generating sales worth more than £26 billion a year and £12 billion of exports and comprising 50% of the UK’s petrochemicals GDP, while producing 60% of its chemical exports.

As well as being a key source of productivity, investment and employment, EIIs are central to our successful transition towards a low-carbon economy, manufacturing such “green economy” products as lightweight plastics, insulation, and components for wind turbines. For every tonne of carbon dioxide produced by the chemicals industry, more than two are saved downstream by its products. However, if we are to meet the carbon reduction targets set by the last Government—which, as Members will know, bind the UK to reducing carbon emissions by a third of 1990 levels by 2020, and 80% by 2050—significant reductions in emissions are required throughout the economy. In addition, as part of its EU obligations, the EU must obtain 15% of its energy consumption from renewable sources by 2020, which represents a fourfold increase on 2010. Electricity generation is expected to contribute most to the meeting of that target, primarily through the use of wind and nuclear power generation, but also through carbon capture and storage.

While the decarbonisation of electricity generation will be critical, along with measures to improve the energy efficiency of homes and transport, industry—which accounts for about a quarter of UK emissions—is rightly expected to make a substantial contribution. Given that EIIs account for more than 50% of industry-related emissions, they are expected to deliver reductions of at least 70% from 2009 levels by 2050. However, those obligations, although noble and justifiably ambitious, come with a set of associated difficulties.

EIIs operate in highly competitive global markets, and energy is typically their largest production cost. For instance, INEOS, which provides several hundred jobs at its Seal Sands site in Stockton North, tells me that electricity constitutes 70% of production costs associated with its manufacture of chlorine. As a consequence, energy price is business-critical, and it is only possible for the industries concerned to operate in countries with competitive energy prices. In other words, energy costs are influencing, if not directing, investment decisions for EIIs. At a time when the UK’s energy prices compare unfavourably with those in much of Europe and the rest of the world, that is bad news for the manufacturing sector as industries are driven towards more competitively priced markets such as the United States.

Let us take the cement industry, for example. Cement imports currently stand at 14% of UK consumption, up from just 3% in 2001. As the UK has enough cement import capacity to replace domestic manufacturing, there is a real risk that industries in the sector could take the decision to offshore production where costs would be lower. Such a decision would have damaging knock-on consequences. Not only will cement and concrete be vital for the construction of a new, low-carbon energy infrastructure, but the UK would stand to lose out on £2.84 of economic activity generated for every £1 spent on construction. Indeed, such “carbon leakage” can already be seen in the energy-intensive sector, with high-profile closures caused by these uncompetitive energy prices. BASF and Tata, for instance, last year announced closures resulting in over 600 job losses, doubtless a decision influenced by the energy costs, which are more than 50% higher than those of direct competitors elsewhere in Europe.

At the same time, other international companies are redirecting investment en masse to more competitive locations. While wholesale prices are driven by high gas prices, that is distorted by the very high policy costs imposed in the UK. Energy costs for industrial users in the UK are around 45% higher than in France and around 70% higher than in Germany—a competitiveness gap that is wider still in comparison with the US and China, where wholesale prices and policy costs are extremely low.

A stark example that hammers home the extent of this competitiveness gap is offered by GrowHow, based in my Stockton North constituency and at Ince near Chester, which has told me of the struggles it faces as a result of relatively high energy costs. Gas—GrowHow’s main feedstock—costs more than three times that of their Russian competitors, who operate on state-fixed gas cost. Similarly, German electricity prices on a delivered basis for very large users in 2013 equated to €38 per MW against £70 per MW in the UK.

The situation is set to get much worse over the next decade. The Department for Business, Innovation and Skills forecasts that UK energy and climate change policies will add around £30 to every megawatt of electricity for EIIs by 2020, substantially more than for any other country in the world. Needless to say, that is a huge threat to the entire energy-intensive sector—a threat that the next Government, regardless of colour or composition, must take steps to meet.

[Joan Walley (Stoke-on-Trent North) (Lab)]

I congratulate my hon. Friend on securing this debate. Does he agree that the huge energy security and energy affordability issues that we face place our manufacturing industries right at the cutting edge of how this debate is to be taken forward, but we must also not lose sight of the need in the long term to decarbonise, and in doing that we will be making our manufacturing industries more competitive? As my hon. Friend rightly says, there is a short-term issue in terms of transition to that low-carbon economy and it is for that reason that the Environmental Audit Committee, which I chair, recommended that there should be a particular strategy for companies that are intensive users of energy. We have not really seen any progress on that, and I hope that when the Minister replies to the debate we can really look at how we can make our manufacturing companies competitive, losing no time in making sure that we have an international agreement on climate change—because we must not lose sight of that—but keeping our manufacturing processes there in the short term to be there for the long term.

[Alex Cunningham]

My hon. Friend gives a comprehensive summary of where I think we should be, and I hope to develop some of the points she made later in my speech. This is not just about the short term; it is about planning for the future as well.

Of course, the situation with regard to these energy costs is set to get much worse over the next decade. As I have said, the Department for Business, Innovation and Skills forecasts that UK energy and climate change policies will add around £30 to every megawatt of electricity for energy-intensive industries by 2020—substantially more than for any other country in the world.

Beer Duty Escalator

Joan Walley Excerpts

Tuesday 5th March 2013 Westminster Hall

[Joan Walley (Stoke-on-Trent North) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Caton. I hope that you, the Minister and the hon. Member for Nuneaton (Mr Jones) will understand if I have to disappear for part of the debate to attend a meeting relating to my work on the Environmental Audit Committee, but I hope to be present for the closing speeches.

I congratulate wholeheartedly the hon. Member for Nuneaton on securing this timely debate. Only last week, in relation to a briefing in the Palace of Westminster, many of us sent postcards to the Chancellor, with the support of CAMRA and the Society of Independent Brewers, to say that the time has come for the Government to review the escalator. As the hon. Gentleman set out, the debate is relevant not only to the Chancellor and the Treasury but to the Department for Business, Innovation and Skills, because we are talking about British manufacturing and a sector that is at the core of all our constituencies. During the preparations for the Budget, it is vital that the sector’s contribution to the economy is recognised. In recent years, we have had lots of leaks in advance of the Budget statement, but in this instance I hope there might even be an early celebration of the Government looking again at what needs to be done.

In my constituency, the brewing and pub sector is a historic yet dynamic and vibrant part of the local economy; it creates jobs and is at the centre of the local hospitality industry. It is part of our cultural heritage and the social life of every community. For those reasons alone, the Minister should listen hard.

[Andrew Griffiths]

I congratulate the hon. Lady on taking part in the all-party beer group’s campaign to get MPs to work behind the bar of their local boozer. I know that she learned a great deal from that. Almost 100 MPs took part in that scheme. Does she agree that that shows how strongly MPs want to support our local pubs and that they value them greatly?

[Joan Walley]

I am grateful for that intervention. Many hon. Members belong to that all-party group and regularly attend its functions. I do not know, Mr Caton, whether you are one of them, but I know that you have many wonderful pubs in your constituency of Gower.

Members of Parliament join all-party groups not just to go along for half an hour or so, but to represent their constituents. They would not be part of such groups or put postcards into a barrel to send to the Chancellor if hundreds of people had not contacted them by e-mail and letter and through local pubs. I have visited many local pubs in my constituency and, as a Member of Parliament, have become involved in resolving all sorts of issues. If he listens to anyone, the Minister should listen to Members of Parliament who have first-hand experience of how important the issue is.

My constituency has 93 pubs and one brewery, and I want to speak on behalf of that brewery—the Titanic brewery. It has won awards and works alongside local pubs. The total number of jobs in the beer and pub sector in my constituency is 1,290, of which 668 are direct jobs and 327 are direct jobs for 16 to 24-year olds. It is very much part of local business. The total value that it adds to the local economy is a grand £32.1 million with £0.9 million invested in the local economy.

I am particularly proud of Titanic, and of Keith Bott and the employees, who play a leading role in the Society of Independent Brewers and have been at the forefront of campaigning for the Government to consider their industry during this economic recession. Times have changed since the escalator was introduced, and the Minister should tell us what progress he has made on the review since the last debate in Parliament back in October or November. I hope that he will give assurances on that.

Titanic plays an important and vibrant role in the life of my constituency. It is 27 years old and has grown from two to more than 130 employees, including 35 jobs in Stoke-on-Trent North alone. I draw particular attention to the Bulls Head, where anyone who wants to taste good real ale goes, particularly before a good football match.

The majority of that employment has been enabled by investment in pubs. It is worth noting that although the hon. Member for Nuneaton wanted to talk about the escalator, the value of the small breweries relief has made an enormous difference to many small breweries all over the country. If ever there was evidence that investment in a sector can bear fruit, it is that small breweries relief, which has made such a difference since its introduction back in 2002. The Government should now go one step further and examine the escalator.

The current policy of increasing duty above inflation may seem to be one way of raising revenue, but the Treasury’s figures show that that is misguided. They forecast a very small increase in duty revenue from this policy—small enough that no additional revenue is predicted. The policy is changing societal behaviour. An unintended consequence of duty increases—we heard about this during interventions—is that more and more people are choosing to drink at home or on a park bench, unregulated and unsupervised, and they are switching from beer to wine and spirits. Part of my career many years ago was working with homeless alcoholics, and I cannot stress enough the importance of having supervised places where people may drink responsibly. Pubs are such places.

This debate is critical not just for small breweries such as Titanic, but for the beer and pub industry as a whole, and the supply chain that contributes to it. Since the introduction of the beer duty escalator, excise duty has increased by at least 20p a pint. Beer sales in pubs and clubs have fallen by 23% and more than 6,000 pubs have closed. Beer taxation now costs the average pub around £66,000 a year. Instead of that, we should be creating more jobs, employing more people, and creating more wealth locally. That is possible if we do not have excessive taxation, which is simply not working in a time of economic austerity. For those reasons, I hope that the Government will listen to what is being suggested today.

Infrastructure (Financial Assistance) Bill

Joan Walley Excerpts

Monday 17th September 2012 Commons Chamber

[Danny Alexander]

I have a good deal more detail to get to in my speech, and I shall do so as soon as I have got through the various interventions that have been made. However, I shall not list individual projects before we have agreed guarantees for them, for the very good reason that it would be wrong to set out in this House those projects that could potentially benefit from the Bill, as doing so could either disturb the commercial position of some of the finance that has already been secured or undermine the discussions that we are engaged in to put in place such guarantees.

[Joan Walley (Stoke-on-Trent North) (Lab)]

When the Minister gives the details of where the investment will be going, will he tell the House what regard will be given in the decision-making process to the Climate Change Act 2008 and the work of the Committee on Climate Change? It would be short-termism and completely the wrong way to go about the policy if, for example, his infrastructure investment locked us into greater use of carbon rather than reduced use.

[Danny Alexander]

The hon. Lady makes an important point. Of course, the Bill will not discriminate between projects on policy grounds. We have set out some criteria, which I shall come to, but there are many energy projects—particularly in the renewables field—that are being brought forward in this country as a result of that framework and the policies that have followed from it. Some of those projects may well fall into the category that needs the support from the guarantees that the Bill will provide. In that sense, the Bill should give us an extra tool to ensure that the renewables investment that we need can go forward in a timely fashion, which I hope she would welcome.

The House will know that the Treasury already has wide powers under common law, not limited by statute, to issue guarantees, make loans and give other financial assistance in support of infrastructure. In some cases, Secretaries of State have statutory powers to support infrastructure; in others, they would need to rely on common law powers. However, many Members will also know that there is a long-standing convention, dating back to 1932, that the Government should not rest significant and regular expenditure under common law powers on the sole authority of general supply legislation. Accordingly, in order to offer the support that we want to see, the Government need Parliament’s authority to incur expenditure in connection with agreements to provide financial assistance and to pay out on liabilities, should they be called on to do so. Today we seek authority for the Treasury, or the Secretary of State where appropriate, to incur up to £50 billion of expenditure in connection with giving financial assistance to infrastructure across the UK.

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[Danny Alexander]

The hon. Gentleman has cited the airport that I use most, apart from Inverness airport, because it services Inverness. I probably use it a couple of times a week. I have observed the investment programme, and it is certainly improving the facility. We hope that that improvement will continue.

[Joan Walley]

I am grateful to the Minister for giving way a second time. Does he agree that it is important for the Bill to provide for proper environmental impact assessments? Given that consultation is taking place in the House now that the Government have got rid of the regional spatial strategies, there is a requirement for us to ensure that environmental impact assessments take place. Will the Minister explain how that is linked with the requirement in clause 3?

[Danny Alexander]

I think it important for legislation to contain provision for appropriate environmental impact assessments, but this Bill is not the proper place for such a provision. Such assessments will have already taken place as part of the consenting process. As I have said, the Government will offer guarantees only to projects that can get under way in less than 12 months and have secured the relevant consents.

Green Economy

Joan Walley Excerpts

Thursday 28th June 2012 Commons Chamber

[Joan Walley (Stoke-on-Trent North) (Lab)]

I congratulate the hon. Member for South Thanet (Laura Sandys), who serves with distinction on the Select Committee on Energy and Climate Change, on bringing the debate to the Commons this afternoon, and I note that the Economic Secretary to the Treasury, the hon. Member for Norwich North (Miss Smith), is in her place, because if we really are going to make progress on this most important issue, we will do so only if the Treasury puts the whole issue at the core of its policy making.

It has always seemed to me perverse that we have a Green Book that is anything but green, so the time has come to ensure that the Treasury’s guidance on the national infrastructure programme, in particular, guarantees that every single policy is appraised and joined-up in taking further forward the agenda of securing more renewable energy and more energy efficiency.

I shall try very much to comply with the limit on speakers—

[Mr Deputy Speaker]

Order. The limit is eight minutes, and we will not go beyond that, so if we can please keep to it that will be much more helpful. I do not want to have to use a big stick, as I want to get everybody in.

[Joan Walley]

I, too, want everybody in the Chamber to get into the debate.

Let me bring to the attention of the House the two reports that the Environmental Audit Committee has produced, and which for the benefit of Members we have tagged on the Order Paper: the Committee’s twelfth report on “A Green Economy” and its sixth report on “Budget 2011 and Environmental Taxes”, which shows how we have examined the Treasury’s role in the matter.

We intended the two reports to be a starting point and an overarching basis on which the discussions that now need to take place throughout business, local government, the private sector and international development might be brought together, so that our policies—including what we do, and how we keep scrutinising what happens, in Parliament—can be tied to that agenda. We found that two years after making the commitment to increase the proportion of tax revenues accounted for by environmental taxes, the Government still have no strategy for achieving this commitment. In addition, they have not published their definition of an environmental tax. In our further follow-up inquiries, we will do what we can to obtain that definition and to scrutinise what is happening so that we get some real progress.

A further relevant aspect is the Rio+20 summit that took place last week. Its outcome was extremely disappointing given the lack of a highly ambitious outcome and follow-up action plan. However, all the different parties who were there, from business people, to legislators, to parliamentarians, to members of civil society were in absolute agreement that if the high-level leaders cannot come up with significant outcomes, everybody else has to raise their game. So it is with our Parliaments. I urge the Economic Secretary to demonstrate that she understands this issue by saying what she is doing through Treasury policy and in making sure in Cabinet meetings that there is a joined-up approach towards environmental taxes.

I want to raise issues relating to my own constituency, because we will not deal with this situation nationally or internationally unless we can deal with it locally as well. It is a matter of great concern to me that a large number of people in Stoke-on-Trent are living in fuel poverty. Indeed, of the 40,678 households in Stoke-on-Trent North, 10,120 are in fuel poverty, which is absolutely outrageous. It is a rate of 24.9%, which compares with the UK average of 18.6%—and even that is shocking. If ever there was a reason we should be getting support from the Treasury to address these environmental issues, it is that. We have a commitment to eliminate fuel poverty by 2016, and we will not achieve that unless we scale up everything that is done and look at how revenues can be reinvested so that whole communities see the importance of moving towards the renewables future that is so urgently needed.

I say this as someone who represents a constituency where the industrial revolution started because of our reliance on carbon.

[Ben Gummer]

Will the hon. Lady comment on the fact that the Labour Government spent almost £5 billion on trying to eradicate fuel poverty through various measures, with the consequence that fuel poverty went up in their 13 years in power?

[Joan Walley]

I am not going to get involved in any kind of partisan debate. Unless we can bring in measures that deal with fuel poverty in the short term and the long term, and get people’s commitment to work on this agenda instead of making political capital at the expense of everybody else, we will not deal with the problem.

In Stoke-on-Trent, we want to work with the coal authority to extract geothermal heat, which we see as one part of the solution in the context of all the other things that need to be done, to provide the jobs that are required, to provide training for people in the skills that will be needed for the new investment in renewables, and to see what we can do to bring about district heating schemes for city centre developments. We want to use the water that is underneath our city—albeit in what is, to date, an innovative way—to do what other countries, such as the Netherlands, have done to get the investment that is needed. We cannot do that without fiscal changes and incentives, and ways of getting innovation and new technology on board very quickly.

On fuel poverty, yes, we have had investment, but we have seen that piecemeal investments do not deal with the whole issue. That is why the previous Government invented the CERT—carbon emissions reduction target—scheme. If we deal with whole communities, often in areas of Victorian housing where there are huge issues with energy efficiency, it is possible to get the investment that is needed in one fell swoop. That is the kind of scaling up that is now so urgently needed.

We have aspirations to decarbonise our city. We have an untapped renewable resource, but at the same time we recognise the need for investment across a wide range of different industries and sectors. If this debate helps to take that agenda further forward, and if our Select Committees can examine and scrutinise every single action that the Treasury is taking to make these aspirations a reality, given the urgency of the need for greater energy efficiency, it will have been worth while.

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[Mr Lilley]

That is fine, but my hon. Friend has read her speech. It is a question I was hoping for.

The growth of such sectors is either natural, in which case it is splendid, or it is the result of subsidies, in which case it is tosh. Subsidies can boost one sector at the expense of the rest of the economy, but we cannot make ourselves richer by providing subsidies. If a person moves a pound note from their left-hand pocket to their right-hand pocket, they are no richer. Subsidies can make us worse off, however. If we invest in offshore wind, which is twice as costly as conventional energy generation, we get half as much energy for a given sum of money. That makes us worse off, not better off.

[Joan Walley]

Will the right hon. Gentleman give way?

[Mr Lilley]

Only if the hon. Lady is going to prove that we make ourselves better off by producing half as much electricity for a given sum of money. She is not. If she gives up on that, I am glad.

The only way in which subsidies might conceivably generate an economic revolution is if we subsided the producers of goods and services that we could export;, but we are not allowed to do that under European rules. Instead, what we do is subsidise users, consumers and those who install generating capacity in this country. Unlike the Chinese and the Koreans, we are not allowed to subsidise those who manufacture wind farms or photovoltaic cells. We may want to, but we are not allowed to. The pretence that the subsidies that we are giving will promote infant industries is untrue.

Living Standards

Joan Walley Excerpts

Monday 5th March 2012 Commons Chamber

[Rachel Reeves]

It is even worse than that, because the Chancellor is not even balancing the books.

[Joan Walley (Stoke-on-Trent North) (Lab)]

Does my hon. Friend agree that the 1,200 people in Stoke-on-Trent earning just under £17,000 a year who will be worse off under these changes desperately need the Government to listen to this debate and do something in the Budget about the comprehensive spending review, so that they do not have to pay the price for these unacceptable changes?

[Rachel Reeves]

My hon. Friend is right when she sticks up for the people of Stoke, who, like many of our constituents, will be hard hit by the changes, which do nothing to encourage people to go back to work, and instead encourage people to stay on the dole, because they will be better off on benefits than in work.

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[Helen Jones]

rose—

[Joan Walley]

rose—

[Mr Gauke]

Let me just make a little more progress.

We heard the hon. Member for Leeds West (Rachel Reeves) set out the challenges and pressures on living standards, but it takes some cheek for Labour Members to complain about the consequences of their own irresponsibility in power. Their position today in this motion relating to living standards is the equivalent of that of a man who sets his house on fire, then complains, after the fire brigade has extinguished the fire, that it has damaged his carpets. We accept that difficult decisions have to be taken, and we have taken them, but the British public know that we have had take them now because Labour failed to take them when it was in power.

Autumn Statement

Joan Walley Excerpts

Tuesday 29th November 2011 Commons Chamber

[Mr Osborne]

I completely agree with my hon. Friend. What was really striking in the shadow Chancellor’s response was that the heart of his argument was, “We’re borrowing too much, so let’s borrow more.” I do not think that is a very convincing argument. The only reason why he advances it is that he, almost alone in the Labour party, cannot admit that the last Government borrowed too much.

[Joan Walley (Stoke-on-Trent North) (Lab)]

Can the Chancellor confirm that it is “rest in peace” for the “greenest Government ever”? As far as Stoke-on-Trent is concerned, can he tell the House why there is nothing in the autumn statement about why the Prime Minister came to Stoke-on-Trent and promised us a local enterprise zone? There have been two extra ones announced today, and still nothing for Stoke-on-Trent.

[Mr Osborne]

I completely understand why the hon. Lady is fighting hard for her constituency and her city. In the end, the proposal put forward by Stoke for an enterprise zone was not as compelling as the other enterprise zone proposals that were put forward at the same time. That was independently assessed by the civil servants. I am very happy to sit down with her, and indeed other Members from Staffordshire, to work with them on what we can do to make the proposal a success. I am very much open to considering whether we can get the enterprise zone bid into a state where it is successful and we can go ahead with it.

Finance (No. 3) Bill

Joan Walley Excerpts

Tuesday 26th April 2011 Commons Chamber

[Joan Walley (Stoke-on-Trent North) (Lab)]

Does the right hon. Gentleman accept, however, that there is concern about the amount of hidden subsidy for the nuclear industry in the Finance Bill, and given the coalition agreement that there is to be no subsidy for nuclear power, does he share my concern on behalf of manufacturers, particularly in my constituency, that if there is any windfall tax it should be directed to promoting energy and waste-resource efficiency in terms of manufacturing? Is there not a complete mismatch here?

[Danny Alexander]

I understand the concern, and I know that it has been expressed by a number of lobby groups, although I have to say that I think it has been grossly exaggerated. The purpose of the carbon price floor is to ensure a stronger, and strengthening, market over future years for investment in low-carbon energy. It will deliver a genuine incentive for green and renewable energies to be developed and invested in. Meeting the carbon reduction targets, which I think all Members support, will require several tens, or even hundreds, of billions of pounds of new investment in renewable and other energy sources, and I think that introducing a carbon price floor is exactly the right mechanism to achieve that.

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[Danny Alexander]

I recognise the force of the hon. Gentleman’s concerns, and I have great respect for the detailed way in which he puts them forward, which I have learned about through the relationship we have had as a result of his role as Finance Minister in the Northern Ireland Assembly Government. On this point however, I have to say that I think he is wrong. I hope that the carbon price floor will, alongside other measures, encourage investment in low-carbon power generation, including in Northern Ireland. That is what we are seeking to achieve through this mechanism. I think he also referred to energy-intensive industries, and we have announced that the climate change agreements, which are to the benefit of such industries, are to be rolled forward for another phase and that the relief given through those agreements is to be significantly increased. I hope that will ensure that such energy-intensive industries will be able to make the transition to lower, or different, energy use in a way that does not have the economic effects he describes.

[Joan Walley]

Given what the right hon. Gentleman has just said about the importance of investment, does he agree that the Budget should actually be giving the advantage to energy efficiency? Because of the delays in developing the green investment bank, are there not now real concerns about where we are going to get the resource efficiency from?

[Danny Alexander]

I agree that energy efficiency is important, of course. That is precisely why the Department of Energy and Climate Change has been working so hard to bring forward the green deal scheme, which will start next year. It is designed precisely to give additional encouragement and incentive, and to provide a mechanism for people to engage in the sort of action on domestic energy efficiency in which they have not previously engaged over the years, which I hope the hon. Lady agrees is very important. Also, there are not delays in respect of the green investment bank. Quite the contrary; we announced in the Budget both a trebling of the amount of public money going into the bank, partly through asset sales, and that it will start its operations in September next year, thereby providing yet another strand to the additional investment we all want to see in green energy.

The measure I have been discussing will make us the first country in the world to introduce a carbon price floor for the power industry. It will help to provide an incentive for the billions of pounds of investment in cleaner sources of energy that this country needs, so ensuring we are on course to meet our carbon reduction targets. We have also preserved the link between the climate change levy and prices, through clause 23, to act as a further incentive to low-carbon investment.

The Bill will also help to address other important social issues. The new duty on high-strength beers in clause 15 will help to tackle problem drinking, increasing the cost of a typical can of high-strength lager by 25p. That is coupled with a reduction in the duty on lower-strength beers to help encourage the consumption of alcohol in a more responsible way.

--- Later in debate ---

[Peter Aldous (Waveney) (Con)]

I largely support the Bill and the Chancellor’s Budget proposals. He has inherited a poor hand, which he has played well. He is sticking to his plans to reduce the budget deficit, a strategy that is supported by the International Monetary Fund and the OECD and that will ensure the country’s long-term prosperity.

The Bill contains proposals that will help achieve two important objectives. First, the Chancellor is creating an environment that will encourage businesses to grow and to create new jobs. Policies such as reducing corporation tax, getting rid of red tape, reforming the planning system, investing in science and innovation and promoting apprenticeships will help create a business-friendly environment in which businesses can flourish and create jobs. The proposal to create 21 new enterprise zones is to be applauded, and I am an enthusiastic participant in the competition that he has launched, helping to promote an energy enterprise zone in Lowestoft, in my constituency, and the adjoining Great Yarmouth.

Secondly, the Chancellor has made proposals that will help to rebalance the economy in the move towards a low-carbon future. The establishment of a carbon floor price, the renewable heat incentive and the green investment bank will help achieve that objective. My personal preference would have been for the green investment bank to have had borrowing powers straight away, but I recognise the difficult financial constraints in which he has had to work and commend him for providing an additional £2 billion of investment to be added to the £1 billion already allocated, and for bringing forward the bank’s start date to 2012.

The Chancellor is to be congratulated on recognising the difficulties that people and businesses are experiencing due to high fuel prices, and on coming forward with proposals to ease the burden by cutting fuel duty by 1p, by deferring future fuel duty increases and by abolishing the fuel duty escalator and replacing it with a fair fuel stabiliser. However, those proposals are to be funded by an increase in the taxation of the oil and gas industry, which I believe requires further scrutiny and refining.

I make my observations having listened to people and businesses in my constituency who work in the oil and gas industry in the southern North sea. There is concern that, as matters stand, the proposals will discourage further investment, which could jeopardise jobs and threaten the move towards improving the nation’s energy security.

I have two specific concerns, which are along the lines of those set out in detail by the hon. Members for Aberdeen North (Mr Doran) and for Dundee East (Stewart Hosie). First, a flat-rate tax would unfairly penalise smaller oil companies looking to work marginal fields. Such an approach could well result in such projects becoming financially unviable and companies diverting their activities to other countries where the taxation regime is more favourable. Not only would that lead to the loss of local jobs and income to the Exchequer, but it would mean that, as a country, we would become increasingly reliant on energy imports, often from areas of high political risk. It is important that the Government do all they can to ensure that we utilise our own oil resources fully.

Secondly, I am worried that the proposals will have a significant adverse effect on the gas sector, which is particularly important in the southern North sea. As we have heard, the financial parameters of gas projects are very different from those of oil schemes. Gas prices are considerably lower than oil prices. Whereas Brent crude is trading at approximately $120 a barrel, UK wholesale gas trades at approximately $57 per barrel equivalent. Although development costs are lower, they are not lower by a proportionate amount, so a tax increase would push lower gas returns down ever further. That would result in gas projects becoming uneconomic, with the result that schemes would not proceed and lower-priced North sea gas production would be replaced by higher-priced gas imports. That would feed through to higher gas and power prices for domestic and business consumers.

The East Anglian coast has the opportunity to play a vital role in providing for the country’s future energy needs. I am worried that the proposals in question jeopardise that role, and I wish to make three further observations about them. First, they could discourage investment by energy companies that work on a global stage and are footloose in deciding where to invest. Britain has a proud record of providing a stable political and fiscal regime that is conducive to attracting such investment, and it is vital that we do not lose that reputation.

Secondly, offshore renewables provide an exciting future and can help towns such as Lowestoft and Great Yarmouth reverse years of economic decline and create new long-term jobs. Many of the skills employed in the oil and gas sector are transferable to wind and wave technology. If we discourage investment in oil and gas in the North sea, there is a danger that the supply chain and skills base could be irretrievably damaged. In due course, that could deter investment in renewable energy.

[Joan Walley]

The hon. Gentleman, like me, serves on the Environmental Audit Committee, and he speaks with great knowledge about the renewable industries. Does he agree that the problem that he describes would affect not just constituencies such as his but manufacturing areas such as mine? We are seeking to manufacture the ingredients, if I can put it like that, of the renewable energy industries. If the Government do not adjust their plans towards his vision, we will not have the manufacturing capacity that we need or the ability to get people back to work.

[Peter Aldous]

I agree wholeheartedly with the hon. Lady. I would love that manufacturing to take place in my constituency, but if it is not to be there, I hope it is in hers.

Finally, there will be a time lag before investment in offshore renewables results in electricity coming on stream. Until that happens, the gap needs to be plugged so that the nation’s lights do not go out. That could be achieved by making the best and full use of our national oil and gas assets in the North sea, thereby providing a triple dividend of more jobs, additional income for the Exchequer and improved energy security.

I request that the Government look closely in Committee at their proposed tax increase and that they address two issues. First, smaller oil companies should not be discouraged from making investments in marginal fields. Secondly, there should be a different taxation regime for gas to reflect the differences between the oil and gas sectors and the lower profitability of gas.

The Bill has a great deal to commend it, but it contains a fundamental flaw that I urge the Government to address.

Amendment of the Law

Joan Walley Excerpts

Thursday 24th March 2011 Commons Chamber

[Vince Cable]

I have been dealing with a great many interventions from members of the hon. Gentleman’s party. I am always happy to do that.

I must begin by acknowledging that the task is a massive one, although there are some encouraging signs. Manufacturing is growing at its fastest pace for 16 years, the car industry is growing by 12% a year, and we are seeing a real-terms growth of 5.5% in exports. However, when it comes to rebalancing the economy, I do not pretend that we are anywhere other than at the beginning of a very long march. It is a long march because we inherited a structure that was horribly unbalanced and unsustainable.

Let me remind Opposition Members of some of the things that we inherited, quite apart from the deficit. There was a hollowed-out manufacturing sector that, under the last decade of Labour government, declined by more than the manufacturing sector in any other western country, from 21% to 12% of GDP. Exports were growing at half the rate of growth of world trade. As we were reminded by the shadow Chancellor himself, household debt was running at 170% of GDP, a higher rate than in any country in the world as far as our statistics can establish. We had a property bubble that was more extreme than that in the United States, and banks were encouraged to grow until their balance sheets amounted to more than 400% of the British economy. We had grotesquely distorted pay structures and lending behaviour, and a financial vulnerability of Irish and Icelandic proportions.

[Joan Walley (Stoke-on-Trent North) (Lab)]

The Secretary of State has talked of sustainable economic growth. How does that square with the Government’s claim to be the greenest Government ever? Given that the Office for Budget Responsibility has been set up so as not to take account of green considerations, is there not a real risk that if the green investment bank is not a proper functioning bank from day one, it will not be able to lever in investment that could otherwise have contributed to the growth recovery that we need?

[Vince Cable]

The claim to be the greenest Government ever has been vindicated in significant part by some of the key announcements in the Budget—of, for instance, the establishment of the carbon floor price, which is the first effective carbon tax system in the world, and the green investment bank, to which the hon. Lady referred. It has been made clear for the first time that it will be a proper bank—a borrowing bank—although, as a public sector institution, it will have to reflect the position of the public finances.

--- Later in debate ---

[Vince Cable]

No, I have taken a lot of interventions, and the hon. Gentleman has already made his intervention from a sedentary position.

The role of government is not only to get out of the way when they are blocking growth, but to intervene when there is a genuine market failure. Training is one such area, and we are seeking to alleviate the problem by supporting apprenticeships. When we came into office, 150,000 apprenticeships were planned for 2010-11 to be part-funded by government. We have increased that number, even in an environment of cuts, by 75,000 over the spending review period and in this Budget we have added another 50,000. The problems of training are massive. Let us remind ourselves that we inherited a system in which 14% of the adult population have poor literacy skills—we are talking about the reading age of a 12-year-old—and 19% have grossly inadequate mathematical skills. That is the base from which we start. [Interruption.] A lot of people, both in this House and outside it, would take this issue of innumeracy among the public much more seriously than the Labour Front-Bench team.

In the Budget, the Government have also invested further in science, particularly in research infrastructure. Through a combination of policies—the protection of the ring-fencing of the science budget; the legislative action to protect scientists and others from libel action; and the launching of the technology and innovation centre and advanced manufacturing—we have made a very firm declaration of support for the science community and the commercial application of science.

[Joan Walley]

Before the Secretary of State leaves the issue of apprenticeships, will he tell the House whether the new money for apprenticeships will be dependent on employers coming forward? In my constituency, in the city of Stoke-on-Trent, employers have not come forward in the way we need them to do, so there is a real danger that the new apprenticeships will go to other areas of the country, where they are not needed so badly.

[Vince Cable]

It is new money and of course this has to be employer-led; otherwise, there would be no job to follow the apprenticeship. That is why it has got to come from the private sector and why this is the best way of investing in training.

In my concluding comments, I wish to move on to the issue of fairness. It is a legitimate challenge to any Budget to ask about its distributional impact.

Loans to Ireland Bill

Joan Walley Excerpts

Wednesday 15th December 2010 Commons Chamber

Further proceedings on the Bill postponed (Order, this day).

[Joan Walley (Stoke-on-Trent North) (Lab)]

On a point of order, Mr Deputy Speaker. Given that the Secretary of State for Energy and Climate Change has made an announcement this afternoon in respect of fuel poverty and the Warm Front scheme, saying that it is fully allocated, may I ask whether there has been any request from a Minister to make an oral statement to the House? Many people will be concerned about the cold weather and the urgency of having work done, and they will be fearful that that work cannot be completed before 31 March.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

As the hon. Lady is aware, that is not a point of order for me, but I am sure that the message is getting through to the Secretary of State as we speak. There are other channels that she may wish to use.

Loans to Ireland Bill (Money)

Queen’s Recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a),

That, for the purposes of any Act resulting from the Loans to Ireland Bill, it is expedient to authorise—

(1) the payment out of money provided by Parliament of any sums required by the Treasury for the purpose of the making of loans to Ireland by the United Kingdom; and

(2) the payment of sums into the Consolidated Fund.—(Mr Hoban.)

Question agreed to.