Sugary Drinks Tax

John McNally Excerpts

Monday 30th November 2015 Westminster Hall

[John Mc Nally (Falkirk) (SNP)]

I thank the hon. Member for Warrington North (Helen Jones) for securing this debate. I am grateful for the opportunity to speak in this debate on St Andrew’s day. Earlier today, I had a plate of cullen skink soup, followed by haggis, neeps and tatties, washed down with a tin of Irn Bru. [Interruption.] It was very enjoyable, and it was a delight to come in and smell it. By way of a disclaimer, I should inform hon. Members that my constituency is the birthplace of the wonderful Irn Bru, Scotland’s second national drink—I suspect hon. Members have an idea what the first is. To digress a wee bit, I am a supporter of a campaign, led by my constituents Paul Gilligan and David Reid and The Falkirk Herald, to reinstate an Irn Bru advertising mural outside the Howgate centre, as we now consider it a piece of social and civic art, such is the popularity of our drink.

I agree an awful lot with the hon. Members for Totnes (Dr Wollaston) and for Warrington North. I am a founder member of Central Rio FC, a football club in my area, and I had the privilege and pleasure of being its first coach. It has grown, and now about 400 to 500 children participate locally. It is a wonderful example of how our community works together. One of the first things that rang alarms in my head is that some of the children who came along would not drink water. Their parents said that they would drink only sugary drinks—Irn Bru, Coca Cola or whatever. We had to overcome that huge problem, so, again, I am delighted that we are having this debate.

[Maggie Throup]

On the point about sugary drinks and sports, does the hon. Gentleman think that a lot of confusion is created by the fact that sports drinks, which are supposedly good for people, are so loaded with sugar that they probably do as much harm as good, when balanced with the exercise that people are doing?

[John Mc Nally]

I could not agree more. That is one of the biggest problems. People drink lots of sugar, which gets them high quickly, but they then come down and go into a never-ending cycle of having to drink it again. It is an extremely worrying state of affairs for everybody, so I totally agree with the hon. Lady.

I believe that raising tax on sugary drinks would be an effective means of reducing childhood obesity. I thank all the MPs here, and I hope they all agree that Jamie Oliver should be applauded for setting up this petition and making use of his profile and that of the charity Sustain. I, for one, echo his concerns about the health and welfare of our future generations, and I share his belief that

“we can shift the dial on the epidemic of childhood obesity.”

I thank the right hon. Member for Leicester East (Keith Vaz), who is no longer in his place, for his diligent work in pursuing better public health awareness for the people of this country.

It is commonly known that sugar-sweetened drinks are associated with a higher risk of weight gain than similarly calorific solid food. Evidence indicates that there is a link between the habitual excess consumption of sugar, type 2 diabetes, and weight gain. A large study of European adults showed that there is a 22% increase in diabetes incidence associated with the habitual consumption of one daily serving of sugar-sweetened drinks. Sugar-sweetened drinks contribute a significant amount of sugar to children’s diets. A reduction in their consumption would, in my view, significantly lower the intake of sugar and therefore reduce obesity and the associated detrimental effects on personal health.

According to statistics released in 2014, 64% of adults in the UK are overweight or obese, which cannot be good for anybody. I am sure my hon. Friend the Member for Central Ayrshire (Dr Whitford) will talk about that fact later. International comparisons indicate that the UK has above-average levels of overweight and obese adults. The cost of our obese population is not just felt in the increased risk of a range of serious diseases, including type 2 diabetes, hypertension, heart disease and some cancers; there is also an economic cost. It is estimated that obesity costs the NHS up to £600 million in Scotland alone, and the McKinsey Global Institute estimates that the cost to the UK is equivalent to 3% of gross domestic product. The Scottish Government await the outcome of the Cochrane review on that issue.

Worryingly, for the majority of adults, obesity starts in childhood. Evidence shows that being obese in childhood increases the risk of becoming an obese adult. If we do not encourage adults and children to reduce their sugar intake, the economic costs and the cost to the NHS will continue to be a significant burden. Perhaps that is where a bit of libertarian paternalism is needed. As was said earlier, it is possible and legitimate to nudge people.

[John Glen]

Will the hon. Gentleman reflect on the fact that, sadly, a massive proportion of those who are obese are the poorest in our society? No Government of any party can ignore that fact. The poorest do not have a free choice when they buy sugary items.

[John Mc Nally]

The hon. Gentleman is right. Once again, it is the poorest who do not know how to make such choices. I hope to come on to that point later.

Although I welcome the proposal to increase tax on sugary drinks and agree with the rationale behind it, I am slightly cautious about it, simply because the body of evidence on this subject does not robustly demonstrate the effect it would have in isolation on rates of obesity and type 2 diabetes. I feel strongly that a raft of measures should be developed to reduce sugar intake and obesity. Taxation of this kind is an important tool in shifting the population’s dietary patterns. Educational messages alone simply will not achieve the reduction that we need, so fiscal and reformulation measures need to be introduced. We MPs can help to nudge that decision. We should improve the decision-making process to allow the choosers whom the hon. Gentleman mentioned to make better choices for their own welfare.

In conjunction with a sugar tax, we require legislation on the reformulation of foods to reduce overall calorie intake. If that is not possible, the industry should be compelled to reduce portion sizes—although not of Mars bars. We also need to introduce marketing restrictions on unhealthy foods to restrict the marketing of foods that are high in salt, sugar and fat to children. Restrictions should be applied most stringently to TV and online advertising, as evidence suggests that under-16s are strongly affected by advertising through those mediums.

We must improve our confused labelling system. We should continue to support a consistent front-of-pack labelling system and should extend caloric labelling, such as the traffic-light system, to all food and drink. Arguably, it is most crucial for the Government to invest more heavily in active travel by dedicating a national budget to walking and cycling; I am absolutely with the hon. Member for Warrington North on that.

The obesity epidemic is not going away. If anything, it will get worse for successive generations unless the Government take action. Implementing and evaluating a sugar tax as part of a childhood obesity strategy would be one step towards improving the health of our nation. I urge the Government to take heed of the petition and implement such a tax.

Finally, I holidayed in Cornwall this year, so I appreciate what the hon. Member for St Austell and Newquay (Steve Double) said about weight—such is the quality of the food in Cornwall.

Green Investment Bank

John McNally Excerpts

Thursday 29th October 2015 Westminster Hall

[Graham Stuart]

The hon. Gentleman, who has served in Government, will know that even within Government it is not enough to wish that institutions will behave in a certain way. We know that the incentives must be understood. For example, it is necessary to understand how schools will behave—the hon. Gentleman and I have experience of that. It is not enough for people to sign up in name to deliver a certain thing and for politicians to say that they will do it, because they will be moved by the complex sets of incentives in which they find themselves. If we do not understand how those incentives collectively impinge on those institutions, we will not truly understand how the institutions will behave. That is as true for education as it is for a bank.

It is not enough simply to say what we want and what should be aimed for; we have to understand how the framework of incentives for a private owner of the bank will lead them to behave in the way that Ministers and the rest of us want. I am impressed by the chief executive of the Green Investment Bank; I think he is passionate and honest in his belief about where the bank will go. Nevertheless, I want to understand how it will go there.

[John Mc Nally (Falkirk) (SNP)]

Does the hon. Gentleman agree that the assurances that the Scottish Government sought from the Tory Government remain unanswered? We seek assurances because we are still unconvinced that the purpose and direction of the bank will not be lost unless we retain some sort of public sector control.

[Graham Stuart]

I will come to that point on the continuing role of Government in a minute or two. It is not enough to say that something will be privatised. It could be privatised 100%, or it could be privatised 100% with strings attached, whose value we would have to try to estimate in advance—if something is sold 100%, the strings are not normally worth a great deal. Then there is the issue of whether a minority stake is retained and, if so, how it will be used. I will come to that point later, but the hon. Gentleman is right to say that such questions, not least those of the Scottish Government, persist.

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[Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)]

Thank you, Mr Crausby. I also thank the previous speakers for their contributions to the important debate, which highlights the importance of providing capital in renewables. I share many of the concerns expressed by the hon. Member for Hartlepool (Mr Wright), but I will focus on more local issues pertaining to the Green Investment Bank.

The bank in its initial form represented not only a vote in confidence in Scotland, but an investment in the future of our country and its people. Scotland was chosen as the location for the Green Investment Bank for a variety of reasons, the first being that as it was to be located in Edinburgh, which has 11 universities within an hour’s drive, an abundance of academic knowledge and research would be available to it.

It is worth highlighting that Scotland potentially has a wealth of green energy. The Vivid Economics report for the Department for Business, Innovation and Skills in October 2011 emphasised the need to ensure that green economic policies were implemented in practice to unlock financial capital.

The whole point of locating the Green Investment Bank in Edinburgh, and vitally in Scotland, was the need to assist a necessary change in approach to develop low-carbon energy projects. The requirement for a green investment bank is more relevant now than when it was created. The development of green energy will make the economy capable of resisting the volatility associated with commodities, which can create price instability in the energy markets. Promotion of growth for the sake of growth can lead to boom and bust, so what is clearly needed is growth that is sustainable in nature, thereby ensuring longer term economic growth. The investment made by the Green Investment Bank in Edinburgh as a financial centre, with its expertise in asset management together with the factors associated with a highly skilled workforce, is now at risk due to the privatisation agenda.

It could be argued that one of the first acts of the new UK Conservative Government was to privatise the bank. That in and of itself not only creates a degree of market flux and instability, but shows that ideology overrules all other considerations. The Green Investment Bank has been marginalised. Its privatisation runs contrary to the principles of Vince Cable’s period in office at the Department for Business, Innovation and Skills.

[John Mc Nally]

I apologise to the House because earlier on I should have declared an interest in that a relative is associated with a company that represents the Green Investment Bank. Does my hon. Friend acknowledge that Edinburgh in particular was recognised by Vince Cable as a centre of excellence for the development of green energy? That was confirmed yesterday when the bank’s chief executive said that it wishes to keep its headquarters in Edinburgh because of the quality of its staff and their commitment to the green energy programme.

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[George Kerevan]

I am hesitant to stray too far, as I am sure you would stop us having a general debate about capital borrowing, Mr Crausby. I agree in general with the hon. Lady that in essence, there is a strong distinction between capital borrowing, which produces an asset and a rate of return, and borrowing to fund revenue. I assure the Government that the Scottish National party is more than committed to reducing the deficit on the revenue account, but we think that borrowing on the capital account is a positive, because it creates rates of return that the Government and Treasury will benefit from in the longer term. That is why this particular privatisation is a step too far.

There is a contradiction here, however. On Monday, I will sit on the First Delegated Legislation Committee, and we will discuss putting public money from the Treasury into the creation of a new investment bank—strange? We are capitalising the Asian Infrastructure Investment Bank to the tune of £2 billion. If we approve the order on Monday, the paid-in capital will be added to the UK’s overall public debt, so what we are about to do is try to privatise an effective investment vehicle in the UK that has been very successful in raising productivity in particular sectors—the Government’s prayer—and claim we are doing that to pay down overall debt. On Monday, however, we are about to put money into the Asian Infrastructure Investment Bank that will go on to our national debt.

Where is the Asian Infrastructure Investment Bank going to invest? It says it on the tin: Asia. It is a Chinese vehicle to invest in the new silk road, to invest in infrastructure developments right across Asia and to move Chinese goods into Europe. I am perfectly happy with that as a project, but if I were to choose where to put UK public money, the Green Investment Bank might come first. When the hon. Member for Beverley and Holderness has discussions with Ministers, as I hope he will, he might ask them what overall gain we have achieved by selling off the Green Investment Bank, only to add back into the national debt by providing public paid-in capital to the Asian Infrastructure Investment Bank.

[John Mc Nally]

In Scotland we are developing a clean and green image. We are working well with the Scottish Futures Trust. We are developing infrastructure projects with schools and hospitals, and developing charging points in all those places. Does my hon. Friend think that work could be placed in jeopardy?

[George Kerevan]

Indeed. The success of the Green Investment Bank has been in creating partnerships and a model of development. We are going to lose that. It is certainly the case—hon. Members on both sides of the House have alluded to this—that the strength of the Green Investment Bank is its staff and the expertise they have built up. Is that safe in the private sector? If a major investment fund in the private sector is looking for staff with the expertise to fund its expansion and its next level of activity, it goes and buys the staff. It can buy them individually, but that is usually more difficult when it comes to investment projects, because investment staff work as teams, rely on one another and build up collective experience. So the investment fund goes and buys the bank or the bit of the bank it needs to move over to its infrastructure development. My worry is that once we take away the public involvement, no matter how experienced and successful the team that runs the Green Investment Bank is, it will simply be snaffled by someone else. That is why we have to, at least in the interim, let the model develop as it is.

I come back to the BIS Committee the other day. The Green Investment Bank was essentially set up to meet a degree of recognised market failure. If that market failure has not been cured in some generic sense, taking the Green Investment Bank out of public ownership, control and involvement means that we go back to where the market failure was. What was the market failure? I want to add a little to what the hon. Member for Beverley and Holderness said. Infrastructure projects and energy projects are, in the main, highly expensive capital projects.

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[Kevin Brennan]

I do not want to tempt the hon. Gentleman out of his contentment. What advice were Ministers given when the guarantee was first enshrined in legislation? Was there any suggestion at that time that putting the green purpose in legislation might jeopardise any future privatisation? Is it possible that when the bank is privatised and its purposes are widened, its funds might be used to invest in things such as fracking?

[John Mc Nally]

The hon. Gentleman raises an issue that has been raised since SNP Members first arrived in the House from Scotland. We are extremely concerned about fracking in our areas, and I am sure others here are on the same wavelength. Everything my colleagues and I have seen since we arrived has been driving towards making fracking this country’s main source of energy. The fact that some of the subsidies under the renewables obligation will end a year early only goes to show that we were right in our thinking. Does the hon. Gentleman agree?

[Kevin Brennan]

That is a legitimate concern to raise. At a reception the other evening, I heard a BIS Minister describe fracking as a sustainable form of energy. If it is sustainable, a privatised Green Investment Bank could presumably invest in it. We need to hear whether Ministers think that that is possible.

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[George Freeman]

I am trying to remember the beginning of the hon. Gentleman’s question. Will I confirm that there are no safeguards? No, I will not confirm that. It will not be set out in legislation in the way that it is at the moment, but there will be a whole series. The shareholder agreement has not been drawn up yet. Despite the earlier comments of the hon. Member for East Lothian (George Kerevan) about articles of association, the funding and raising of subscription moneys for companies like this is a major legal undertaking. The business plan will be a material document in that process. The bank has set out what it is raising money to invest in. That has to be done when money is being raised. That is all subject to incredible legal scrutiny. The investors who are investing in the company have to sign warranties and give undertakings to their own investors that they are investing in what they say they are. Although they will not be set out in legislation, there are a number of safeguards to ensure that the bank will continue to operate in the green investment space.

[John Mc Nally]

Does the Minister agree with me—this is the firm view of me and the Scottish Government—that the UK Government’s amendments to the Enterprise Bill to remove public sector controls on the Green Investment Bank would require a legislative consent motion in the Scottish Parliament, given the impact on devolved law?

[George Freeman]

The hon. Gentleman makes an important point about the devolution settlement. I will come to that. I am not ducking it; it is an important point that I will come to.

On the protection of the bank’s green mission and green values, the Government recognise that people will rightly be concerned about whether repealing the legislation means that the bank’s focus on green investment is in any way diluted. Let me be very clear. As the Secretary of State has sought to make clear in his written statements on the matter, the Government’s intention is that, following a sale, the Green Investment Bank should continue to focus on green sectors, mobilising more private capital and further accelerating the transition to a green economy. As somebody said earlier, the clue is in the name on the tin. Green investment is what the Green Investment Bank does and where its value lies, and that will be the basis of its offering and the offer it makes to investors. It is clear from preliminary feedback that potential investors are interested in the Green Investment Bank precisely because of its unique green specialism, business plan and investment track record. We fully expect that potential investors will wish to maintain that focus and will be bound by the prospectus and green business plan that the bank is putting at the heart of that subscription.

As a key part of any sale discussions, potential investors will be asked to confirm their commitment to those values and the plan, and they will be asked to set out how they propose to protect them. The Government envisage that that will involve new shareholders agreeing to retain the specific green objectives in the bank’s articles of association and to ensure that the bank continues to be required to invest in a way that achieves a positive green impact.

The Government also expect that new shareholders will maintain the bank’s existing standards for reporting on its green investment performance and will continue to provide for independent assurance of that reporting. We fully expect that approach to be effective in securing the outcome we want, which is that new shareholders readily commit to maintaining the Green Investment Bank’s green mission and values.

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[George Freeman]

I will happily give an undertaking that we do not intend to give anything away and allow it to be turned into a zombie fund. My hon. Friend has had conversations with my right hon. Friend the Secretary of State about the matter. The Government, as the owner, clearly have duties in all sorts of ways. We have a fiduciary duty, duties to Parliament, the public account and the law, duties to ensure that we maximise the value of our investment, and political accountability to ensure, as I have stated repeatedly in this debate, that the bank in the new structure can remain an active and committed investor, fulfilling its green values and the specific safeguards that I have just set out.

[John Mc Nally]

The Minister mentioned that all parties would be involved in the discussions. As a Member of the third party in the House, I am taking it for granted that we will be involved in those discussions.

[George Freeman]

To clarify, I was not suggesting that we have a round table on the subject; I was merely extending an open offer to anybody who has any suggestions, in addition to the safeguards that I have explained, about ways to ensure that we deliver what I set out as the Government’s clear objective, which is to ensure that if the bank is put out for subscription, the subscription makes it clear that the bank exists to deliver its mission. We are all ears, but it must be within the context of the Government’s strategic policy intention of liberating the bank from the constraints of being defined as a public sector asset, and thus liable to Treasury lending requirements.

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[John Mc Nally]

Will the Minister take one more intervention?

[George Freeman]

One last intervention.

[John Mc Nally]

I am very grateful to the Minister for giving way again. At yesterday’s meeting of the Environmental Audit Committee, the chief executive officer of the bank stated quite clearly that he was happy to retain its headquarters in Edinburgh, with the staff. Can the Minister give us a reassurance that he agrees with the chief executive on this issue, which is an extremely important concern for us?

[George Freeman]

The hon. Gentleman makes an important point. Obviously, it is for the bank to make sure that it is in the right location. We originally put it in Edinburgh because, as he well knows, Edinburgh is a great centre of finance. It is one of the great capital centres of the UK and has a great history of green energy investment.

It is ultimately for the company itself to decide where its HQ is. I will just politely point out that the best thing that the Green Investment Bank could have in terms of investor security is security about the status of the United Kingdom. If that status was clear, I think that there would be a very strong prospect of the bank remaining in Edinburgh and happily raising money as part of a country with a great devolved Administration in a strong UK.

Mr Percy, I want to highlight—

[John Mc Nally]

I absolutely agree with the Minister—

[George Freeman]

I will happily give way again to the hon. Gentleman. [Laughter.]

[John Mc Nally]

That should probably be part of the Scotland Bill; we need more powers in Scotland on our way to independence.

[George Freeman]

I hear what the hon. Gentleman says; I simply highlight the potential contradiction between his first intervention and his second. It is the risk of Scottish independence undermining investor confidence in a business such as this one in Edinburgh that is counterproductive. However, we will not agree on that issue this afternoon.

I will just summarise matters, as it were, at a higher level. We have heard some really important messages this afternoon, and there has been a degree of agreement about the importance of getting this bank into a position where it can take the success of its first few years and go on to the next stage, to be a pioneer in bringing private capital into this market.

I was very struck by what the hon. Member for Hartlepool said, and I thank him for his kind words about my appointment to BIS. He referred to how well the bank has been doing and applauded that. However, he said he had been concerned that when we set the bank up it should be a bank and not a fund. That is an important point. We want this bank to be able to be a proper bank and to syndicate and grow in the years ahead.

The hon. Member for East Lothian said, “If it ain’t broke, don’t fix it,” and wondered whether there was some alternative agenda. I know that conspiracy theories are popular in this House—we all indulge in them occasionally—but I again assure him that there is no conspiracy here. The Government will be held to account for the success of the bank, which we set up. We want to be able to report back at the end of this Parliament that we liberated the Green Investment Bank from the constraints of a tough public spending round and allowed it go into the private markets and lead in the burgeoning green economy.

The hon. Member for Cardiff West spoke about the success of the bank. As my hon. Friend the Member for Beverley and Holderness highlighted, it is not often that two Front Benchers sitting on opposite sides congratulate each other on the success of initiatives. The hon. Gentleman asked me a lot of questions, which I hope I have dealt with. If I have not, I will happily deal with any outstanding ones later in the day.

We had very few incidents of party politics in the debate, but I have to close with a wry smile, because at one point the Government were accused of being prisoners of public accountancy convention. That accusation could certainly not be made about the previous Labour Government: they left us borrowing one pound for every four we spent. The former Chief Secretary to the Treasury thought it was funny to leave a note saying that there was no money left. A former Leader of the Opposition said he did not think the previous Labour Government spent too much and the current shadow Chancellor is committed to the overthrow of capitalism.

I am delighted to be opposite the hon. Member for Cardiff West, who did not speak such rubbish this afternoon. We have had a good debate, in which we have all agreed that we need the Green Investment Bank to go from strength to strength.