Building Societies Act 1986 (Amendment) Bill

Julie Elliott Excerpts

Report stage
Friday 19th April 2024 Commons Chamber

[Julie Elliott (Sunderland Central) (Lab)]

I beg to move amendment 2, page 2, line 9, leave out from “(9B)” to end of line 11 and insert

“may not be made unless a draft of the instrument has been laid before, and approved by a resolution of each House of Parliament.”

This amendment changes the procedure that applies to an SI containing regulations under new subsection (9B) of section 7 of the Building Societies Act 1986 (inserted by the Bill) so that it is subject to the affirmative procedure.

[Madam Deputy Speaker (Dame Eleanor Laing)]

With this it will be convenient to discuss amendment 1, page 2, line 10, leave out from “to” to end of line 11 and insert

“approval by both Houses of Parliament”.

[Julie Elliott]

Thank you very much, Madam Deputy Speaker. The variety of Bills is in the strange nature of this place. We are going from the warm and fluffy Bill that we have just discussed, which I am delighted has received its Third Reading, to what is rather a dry Bill —but an important one none the less.

Amendment 2, which stands in my name, changes the procedure that applies to statutory instruments relating to proposed new subsection (9B) to section 7 of the Building Societies Act 1986. They will be subject to the affirmative procedure, rather than to the negative procedure as the Bill currently states. I tabled the amendment after talking to colleagues on both sides of the House. On reflection, it provides for closer scrutiny of the potential changes that could be made via secondary legislation under the Bill. The amendment does not change the immensely positive effect that I believe the Bill will have on the building society sector by bringing it in line with current practices, nor does it change the Bill’s aims, which will, in my view, enormously improve opportunities for people to get on the housing ladder. The result of the Bill will be a better landscape for first-time buyers, and the amendment just improves scrutiny.

[Sir Christopher Chope (Christchurch) (Con)]

I rise very much to support amendment 2 in the name of the hon. Member for Sunderland Central (Julie Elliott). I am grateful to her for effectively taking forward my amendment 1, which we were told was defective because, although it would achieve exactly the same purpose, it does not use the normal wording that Government drafters like.

After some discussion, it was agreed by the hon. Lady and the Minister that it was sensible to use the affirmative procedure in relation to these delegated powers, and that affirmative procedure is now reflected in amendment 2. It could have been reflected in amendment 1, but what is important is the substance of the matter. These are potentially very significant changes that could be made, and if they are to be made, it is important that they are open to proper scrutiny.

As we know, the negative procedure does not really enable proper scrutiny. As an example, Madam Deputy Speaker, you will recall that legislation was brought forward at the end of last year extending the breeds covered by the Dangerous Dogs Act 1991 to include dogs of the XL bully type. I tabled an early-day motion to try to amend that. That early-day motion was on the Order Paper, but it was never accepted or debated, meaning that that change, which affected hundreds of thousands of dogs and their owners, was made without any proper scrutiny in Parliament. That is why it is important to have the affirmative procedure where possible, and I am very grateful to the hon. Lady for having brought forward this amendment, which I support.

Amendment 2 agreed to.

Third Reading

[Julie Elliott (Sunderland Central) (Lab)]

I beg to move, That the Bill be now read the Third time.

It is a pleasure to bring this Bill back for further debate, as it now exists in an amended form. It is a key moment for a Bill that is important to the building society sector, and I must thank all colleagues from both sides of the House who have taken part as the Bill has gone through its various stages—they have been so supportive of the Bill. I am going to keep my remarks short so that if other Members wish to speak, they can do so, and to try to make sure that the Bill’s progress is as smooth as possible.

The Building Societies Act 1986 (Amendment) Bill will help level the playing field between building societies and banks, and will support building societies to be able to lend more money in a safe and secure way. To trade as a building society, the Building Societies Act 1986 requires the company to obtain a minimum of 50% of funding from its members—what is known as the wholesale funding limit. This Bill does not change that, and it does not dilute the unique ownership model of building societies. The fundamental nature of a building society—being run in the interests of its members—is not changed by the Bill; in fact, that is what makes the sector so special.

What the Bill does is disregard the following from the 50% wholesale funding limit: Bank of England liquidity insurance facilities, debt instruments raised to meet the minimum regulatory requirement for own funds and eligible liabilities requirements, and sums received under sale and repurchase agreements with a view to complying with Prudential Regulation Authority rules. This means that in times of national economic crisis, building societies will have more options within their gift for remaining comfortably solvent, and will therefore continue to serve in their members’ interests. The Bill is designed to allow future Governments to respond to the financial landscape of the day. That is why it does not specifically define funds, but instead defers the specification of funds to a later date through secondary legislation passed in this House. All the responses from the sector to the Government’s 2021 consultation on this issue, in advance of the Edinburgh reforms, were positive. Those reforms make the sector more robust.

The Bill also seeks to modernise the sector. It amends the 1986 Act to explicitly allow the option of real-time virtual member participation, bringing the sector in line with the requirements that the Companies Act 2006 places on businesses. It also enables the Treasury to introduce more flexibility for societies in relation to common sales and the execution of documents, in line with companies law.

The Bill is important because it would achieve a great deal in a very succinct manner, allowing the sector to operate on a more level playing field with banks. This is positive for a number of reasons, but especially in view of the sector’s support for first-time buyers. More than half building society lending goes to first-time buyers, and since 2020 building societies just in my region, the north-east and Cumbria, have lent them some £3.4 billion.

This Bill follows a number of previous private Members’ Bills—including that of my hon. Friend the Member for Preston (Sir Mark Hendrick), which received Royal Assent last year—that continue to modernise the sector. I will not restate all the facts that I presented on Second Reading, powerful as they are, but it is important to acknowledge that, while the housing sector has recovered significantly since the record low mortgage approvals during the covid pandemic and has recovered from the acute economic shock caused by the last Conservative Administration, mortgage approvals are currently still below the level that that we saw before the pandemic. That is why I think that a Bill such as this, which gives more choice to the building society sector to operate in the interests of its members, is a good thing.

As I have said, the sector has a strong record in supporting first-time buyers, and given that every £10 million of lending could support an additional 20,000 mortgages, I am proud to be introducing a Bill with the potential not just to support the housing sector and the wider economy, but to allow building societies to help more people on their journey to home ownership. I have spoken to many constituents in Sunderland who are struggling to get on to the housing ladder—young couples and families who just want the chance to have a place that is theirs and in which they can feel comfortable, away from a volatile and often unfair rental market. The Government’s failure to reform the sector is a debate to be had elsewhere on another day, but I expect this Bill to do more to support a sector that often goes above and beyond to support its members, and to help people get on to the housing ladder and secure a future for themselves. Its passing would be a landmark moment for the sector, and I look forward to seeing the positive effects that it would bring.

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[Julie Elliott]

With the leave of the House, I would like to thank all Members who contributed at various stages of the Bill. On Second Reading, I had not expected the political history lesson we had from Members on both sides of the Chamber, but it was quite entertaining. It is an honour to have a debate on a Bill on which everybody agrees; everybody can see the very tangible benefits it will have for all our constituents.

It has taken a lot of work from a lot of people to get to this point. I thank not only colleagues who have taken part at every stage, but Treasury officials, who have been extremely helpful; the Clerks, whose advice, support and guidance is, as always in this place, invaluable; the Whips; the Building Societies Association; and our sister party, the Co-operative party. They have all contributed, and helped with advice and support, as I have taken the Bill through the House. I commend it to the House.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Building Societies Act 1986 (Amendment) Bill

Julie Elliott Excerpts

Committee stage
Wednesday 7th February 2024 Public Bill Committees

[The Chair]

With this it will be convenient to consider clauses 2 to 4 stand part.

[Julie Elliott (Sunderland Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hosie. I thank all hon. and right hon. Members for considering my Bill and taking the time to come to Committee, especially at this time on a Wednesday morning; it is unusual for a private Member’s Bill to attract this many people. I thank the Building Societies Association, which represents the building society sector and its 42 member building societies and seven credit unions. It has provided excellent support on the detail of the Bill and is why the sector thinks it is so important. I also thank the Co-operative party for its support, and Anne-Marie Griffiths in the Public Bill Office for her wealth of knowledge and for being there for not just me, but all those who were successful in the ballot; she is a font of knowledge and a credit to the Clerks of this House.

I welcome the support of the Government and the Minister for this legislation. It was announced as part of the Edinburgh reforms but fell off the legislative process, so I am proud to take up the Bill as a strong new chapter in the mutual and co-operative banking tradition. I am also grateful for the support of the Minister and his officials at His Majesty’s Treasury, especially Logan Cuthbert and Nicola Brown, for all their work preparing for the drafting of the Bill, and for ensuring that the voices of the building society sector are heard and its needs met in the Bill’s detail.

The purpose of the Bill is to bring the building society sector in line with the Companies Act 2006 in some important, specific respects, which will put the sector on a more level playing field with banks and ensure that it can remain comfortably solvent during times of economic pressure while accessing further sources of funding. I will not go through all the arguments that I made on Second Reading as to why the Bill is so important, but I will run through each clause, consider its effects and comment on issues raised on Second Reading.

I have already said that the Bill is an important development of the Labour and Co-operative tradition of working people supporting each other; in that vein, I am proud to have the support of the Co-operative party on the Bill. On Second Reading, the hon. Member for Mid Norfolk talked about how it is also an expression of civic conservatism. Although our readings of the Bill might be different, I am grateful to Members across the usual political divides for coming together to support a Bill that is so important for a sector that supports so many people in all our constituencies and can impact so many lives for the better.

We should take a brief look at the numbers. The building society sector has more than 26 million members and holds more than £352 billion of mortgage assets and more than £313 billion of savings from individuals. What is so great about the sector is the support that it gives to first-time buyers. In the first nine months of last year, building societies in the north-east and Cumbria supported 4,000 first-time buyers, and since 2020 they have lent £3.5 billion to first-time buyers alone—that is one of the things that particularly interested me in taking the Bill forward. It is estimated that for every £10 billion of new lending capacity the sector could support 20,000 new first-time buyers, so if we unlock billions with this Bill, as I think there is the potential to do, we can truly help lots of people.

Clause 1 affects those potential numbers more than any other in the Bill. It describes the funds that can be disregarded if the Bill passes, and amends section 7 of the Building Societies Act 1986. Currently, to operate as a building society—there are 42 in the UK—each society must ensure that a minimum of 50% of its funds is sourced from individual members. That minimum 50% wholesale funding limit ensures that the building societies continue to serve the members they were created for. The Bill does not seek to change the 50% limit, but clause 1(2) provides His Majesty’s Treasury the power to specify certain sources of funding to be disregarded from that measurement. The disregarded funding comprises

“amounts drawn by the society from a specified liquidity insurance facility provided by the Bank of England…amounts represented by specified debt instruments issued by the society with a view to maintaining the minimum requirement for own funds and eligible liabilities”

and

“sums received by the society under a sale and repurchase agreement entered into by the society with a view to complying with a specified PRA rule.”

It sounds like gobbledegook, but it really will make a big difference!

The specified liquidity insurance facilities are not named because it is incumbent on the Government of the day to name the particular source of funding building societies can access by reference to the detailed descriptions applying from time to time. By not naming one now, we allow future Governments to specify the relevant funds at that time via secondary legislation, meaning that the Government can be much more responsive to the sector’s needs, and adapt and change when necessary.

[George Freeman (Mid Norfolk) (Con)]

I congratulate the hon. Lady on everything she has done to bring the Bill to this point. All of us here, and many listening, will be aware of the appalling situation when the Northern Rock building society, a once great pillar of northern building, became something very different. Can she give any assurances that the Bill is designed to support the best of building societies, which are properly rooted in good, connected capital, rather than what we saw then?

[Julie Elliott]

I thank the hon. Gentleman for reminding me of that situation, which affected an awful lot of my constituents, as Northern Rock and the vast majority of its members were based in the north-east. People still tell me on the doorstep today that they lost literally tens of thousands of pounds. The issue of malpractice and bad practice within building societies is separate from what the Bill does. If things are not being run correctly, there are other checks and balances that came in after the Northern Rock crisis to stop that—particularly the protection for deposits up to £85,000. It is a relevant point, but the Bill will not make that possible again; I am quite sure about that.

The specified debt instruments are not named either. Notably, this function is not to introduce risk into the process—it is to help to support building societies to remain comfortably solvent at a time when they need it most. Proposed new subsection 7(3)(e) of the 1986 Act is quite clear about sale and repurchase agreements. Clause 1(3) inserts appropriate new definitions into section 7 of the 1986 Act and gives the Treasury power to make regulations specifying the detail of funds and Prudential Regulation Authority rules. The regulations will be subject to the negative resolution procedure.

The approach has been consulted on by His Majesty’s Treasury and was backed by industry. It is what the sector needs, and this clause has the power to unlock billions. The removal of these considerations from the 50% wholesale funding limit means that building societies that want to can run much closer to the 50:50 ratio than the 70:30 or 80:20 ratios they do now. That is where my point about unlocking billions comes from. When we look at how many people are supported already and what a difference giving that freedom to the building societies can make, we see there is huge potential to help many more people access a mortgage for the first time.

Clause 2 amends schedule 2 of the 1986 Act to modernise the building society sector’s relationship with its members in line with company law. It sets out the possibility of holding and conducting building society meetings in a hybrid way so that persons who are not present together in the same place may attend, speak or vote. First, that is important to allow access to meetings for those who are unable to attend in person due to health or geographical issues. For example, the Nationwide Building Society is, as the label says, nationwide, so having hybrid meetings opens up the ability for more people to attend, because a physical meeting can be held in only one part of the country. The situation may well be different for smaller, local building societies, but the change is still important.

The second main argument behind the clause is simply that the change brings the building society sector into line with businesses and retail banks as defined in the Companies Act 2006. Building societies should not be held to different standards. The important mitigation is that it is down to individual building societies to consider what is best for them; if a particular building society wants to make the change, its members will need to vote on it and agree to it. That means that the clause does not enforce anything, but gives building societies the ability to change if their members want it; it gives more flexibility. I hope that helps any Members who might have worries about the clause. It is about putting building societies on a more level playing field with retail banks, and it is what the sector has asked for.

Clause 3 is another modernising clause. In simple terms, it will enable the Treasury to introduce increased flexibility for societies in relation to common seals and the execution of documents, in line with company law. It reserves to the Treasury the right to make provision by regulations in future, upon which further consultation in the sector would be usual.

Finally, clause 4 states the territorial extent of the Bill, which covers all of the UK, and when the Bill will come into force. It also makes it clear that modifications of company law to which assimilation can happen as described in clause 3 cover those made both before and after the Bill comes into force.

The Bill does a lot for a sector that needs it and has asked for it. Building societies support millions of people up and down the country, and are much more adept at supporting first-time buyers than other parts of the sector. The Bill gives them much more flexibility to do exactly that.

[The Economic Secretary to the Treasury (Bim Afolami)]

It is a pleasure to speak to the Bill and, as always, to serve under your chairmanship, Mr Hosie. I congratulate the hon. Member for Sunderland Central on introducing it and on reaching Committee stage, which is no mean feat in this place for a private Member’s Bill.

It is clear from the hon. Member’s remarks that the Bill has the noble aim of supporting the future growth and success of the building society sector. As she said, it will do a lot for building societies, which have asked for this legislation—and the Government and the Treasury strongly support them. As my hon. Friend the Member for Mid Norfolk described, building societies are some of the best in the financial services sector for benefiting local connected communities, and that is the sort of activity we want to encourage.

The Bill will help by modernising legislation so that building societies can have more flexibility around their funding and certain corporate governance requirements. That delivers on the key asks from the sector. As the hon. Member for Sunderland Central said, it is rare that something gobbledegook can have a positive impact on people’s lives, but the technical amendments in the Bill—particularly around capital requirements, which I will explain briefly—will have a positive impact on the ability of building societies to contribute to their local communities in all our constituencies.

As member-owned financial institutions, the 42 building societies in this country work to support the financial resilience of communities throughout the length and breadth of the UK, because they encourage savings and responsible lending, and promote financial literacy and inclusion, which often gets lost. They also play a vital role in supporting their members to buy their own homes, and the hon. Member for Sunderland Central has spoken about the potential for the sector to further support first-time buyers. The Bill achieves all that by making provisions in three areas, which she has already set out, so I will give a shortened version.

First, the Bill amends section 7(3) of the 1986 Act. The year 1986 was a very—

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[Julie Elliott]

It is a pleasure to follow the Minister on an occasion when we all agree; it is an unusual situation. I thank everyone who has taken part in the debate and Members of all parties, officials and people in the building society sector for their support.

It has been a pleasure to take this Bill forward. If it becomes law, I hope it will make a real difference for all our constituents’ lives and enable more people to get a first foot on the housing ladder, which is so important to us all.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clauses 2 to 4 ordered to stand part of the Bill.

Bill to be reported, without amendment.

Building Societies Act 1986 (Amendment) Bill

Julie Elliott Excerpts

2nd reading
Friday 19th January 2024 Commons Chamber

[Julie Elliott (Sunderland Central) (Lab)]

I beg to move, That the Bill be now read a Second time.

It was a privilege to come out at the top of the private Member’s Bill ballot for this parliamentary Session. It is a ballot I have entered at every opportunity since I was first elected in 2010, so it was great to be drawn, but to be drawn first is a huge responsibility. I was on my way to get the train to my constituency in Sunderland, and when I got off the tube at King’s Cross, my phone had dozens of messages. My immediate reaction was that the Government must have called a general election, but no—that is something else we can look forward to in the year ahead. I had, in fact, been drawn at the top of the ballot.

I am delighted to be here in the Chamber to present a Bill that will make important and long-awaited amendments to the Building Societies Act 1986. It is a Bill that the sector wants; a Bill that is true to Labour and Co-operative values; and, importantly, a Bill that has received Government support. Although it will not solve all of the issues in the broken housing market, it could free up and make available more money to lend in mortgages, and because building societies lend more in percentage terms to first-time buyers, it should enable more first-time buyers to get on to the housing ladder. Clearly, there also needs to be wholesale reform of the rental market, in order to address the housing crisis that we have in this country today.

I must take this opportunity to thank everyone who contacted me about issues and with proposals for potential Bills. I would have happily taken many of them forward, but I could choose only one Bill. However, I feel that the Bill I have chosen can make a real difference to people’s lives, especially young people’s lives. I hope it will support first-time buyers and more community-based banking, in the interests of working people.

[Christian Wakeford (Bury South) (Lab)]

The entire point of building societies was to compete with banks on a truly level playing field—they were founded to enable working people to own their own home. That is why this Bill is so important. As my hon. Friend says, it will expand that ownership, particularly to young people and first-time buyers. Does she agree that not only should we absolutely be doing this, but it should already have been done?

--- Later in debate ---

[Julie Elliott]

I absolutely agree, but the bureaucracy of Government sometimes gets in the way of things happening.

The Bill will help level the playing field, enabling building societies to compete more fairly with banks. It will support them to lend more money in a safe and secure way. Over half of building society lending—55%—goes to first-time buyers. Crucially, as the building society sector directs a greater proportion of lending to first-time buyers than banks do—there is a theme here—that will benefit more people looking to get on to the housing ladder.

Modernisation of building society legislation is long overdue. There are some archaic requirements about the way building societies fund themselves that put them at a competitive disadvantage compared with banks. Competition in banking is good for consumers, and given that building societies drive innovation, particularly in supporting first-time buyers, strengthening the sector is a great route to supporting aspiration across the UK at the same time as supporting a sector that works co-operatively and mutually. Building societies work for the benefit of their members up and down the country, engaging in a system of co-operative banking for mutual benefit, not for profit.

We are lucky to have three building societies in my Sunderland Central constituency: Newcastle, Yorkshire and Nationwide building societies all have branches in Sunderland, so I see at first hand the excellent support they give to members. It is incredibly important to my constituents to have a branch that they can visit to talk through any financial issues and receive the support they need face to face. I see the work of building societies as both a strong British tradition and a strong Labour tradition. I am delighted to have the support of the Co-operative party and the Building Societies Association, which represent both traditions.

The first form of a building society was in 1775, when Richard Ketley brought people together in a pub—in what is now the constituency of my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) —to put money into a shared fund, collecting regular subscriptions until there were sufficient funds to be able to provide a house for one of them. They drew names, very much like the drawing of names for a private Member’s Bill, to decide which member would be the next beneficiary; this continued until all members of the group had a house. The arrangement required trust, hope and a commitment by the community that no one would be left behind.

At that time, most building societies were created as terminating societies, which meant that the building society terminated trade once all its members were housed, so many were created, housed their members and then disappeared. That practice continued until 1980. By 1825—50 years after the first building society was created—over 250 terminating building societies were in operation, although it took until 1845 for the first non-termination society to be formed: the Metropolitan Equitable.

In 1836, the first legislation dealing with the industry was introduced, recognising building societies for the first time in this House through the Regulation of Benefit Building Societies Act. The legislation, along with previous court cases, led to the formal recognition of the rights of building societies as entities, resulting in a boom in the sector. By 1860, the number of building societies had risen to almost 3,000. In 1874, the Building Societies Act was passed—an historic precursor to the Building Societies Act 1986, which I hope to amend through my Bill.

The history of building societies has played an important role in the history of working people supporting each other in their mutual ambition of owning their own home, and in financial institutions serving the communities they represent. It is a trend that is even more prevalent today; as banks shut branches at an alarming rate, building societies are gradually taking a bigger share of branches in the community that remain open. Building societies now account for 28% of all high street branches in the UK, as opposed to only 14% 10 years ago. Although this may be caused by the closure of bank branches in the main, it shows a commitment to keep branches open by building societies, on which so many of my constituents rely. That face-to-face engagement, personal support and visibility is so important to many people. Branches are so much more accessible to those who have specific needs, especially in the digital age, where those with internet access often have the best opportunities and access to the best deals.

The original purpose of building societies embodies the famous phrase in clause 4 of the Labour party’s constitution, that

“by the strength of our common endeavour we achieve more than we achieve alone”,

with communities coming together to support each other and provide a strong and secure economic foundation for their collective futures. Families in Sunderland and across the country are struggling to find a secure home. Research by the Resolution Foundation shows that 80% of 25 to 34-year-olds would prefer to buy their own home than to rent. Home ownership is something many strive for, to provide financial security and ultimately to turn a house into a home. My Bill aims to support them in doing just that.

As I have said, it is quite clear that there is a housing crisis in this country, for homeowners and renters. We must at this point consider the damage done by the previous Prime Minister and her Chancellor, and the economic damage caused by her Government to the country, especially people with mortgages. I believe we also need reform in the rental sector to sort this out. The system is broken and is not working for people. The Bill will go some way towards making the housing ownership landscape easier for all.

[Sir Oliver Heald (North East Hertfordshire) (Con)]

I support the Bill, as I hope do Members across all parties. It is good to see something that will, hopefully, strengthen the principle of mutuality. Does the hon. Lady agree that is an important principle to retain, and is she confident that her Bill will do that? Will it lead to a situation in which there is less desire among building societies to become banks?

[Julie Elliott]

I agree. Building societies were certainly part of my life when I was growing up. I got my first mortgage with a building society—a very long time ago, because I am getting old. The principle of mutuality is really important and does set building societies apart from banks. They are a very different model and serve communities in a much closer way than banks do.

By introducing welcome flexibility to a sector that does so much for first-time buyers and others, the Bill, although it does not directly provide provision for the building of homes or assure the retail customer of any extended product lines, does provide more room for the sector to work in, given that its use of finance is different from that of banks as it lends significant amounts of money to first-time buyers.

The building society sector is made up of 42 separate building societies and currently has almost 26 million members. It holds over £352 billion of mortgage assets and £313 billion of savings from individuals. It is not a small sector, but it is a sector that can grow.

Building societies face significant challenges. The Bill has the potential to unlock billions of pounds in additional lending capacity for them. It is estimated that for every £10 billion of new lending capacity, the sector could support an additional 20,000 mortgages. As we know, over half of building society lending goes to first-time buyers, so the potential impact of the Bill is huge. Since 2020, building societies in the north-east and Cumbria have lent £3.4 billion to first-time buyers. In the first nine months of last year, they supported nearly 4,000 first-time buyers—4,000 people who last year started their journey of home ownership, with all the financial security and benefits that brings. Increasing lending capacity is incredibly important in supporting hard-working people. It is essential to the UK’s future prosperity and desperately needed for economic growth.

I want briefly to run through the four clauses of the Bill and the impact the changes will have. It is not a standalone Bill; it amends the Building Societies Act 1986 by inserting new provisions. Clause 1 deals with funds that can be disregarded by a building society for the purpose of calculating its wholesale funding limit. The 1986 Act currently requires them to obtain at least 50% of funding from their members—from individual member deposits. The retention of this 50% minimum requirement ensures that the members remain the primary owners of building societies; it is what makes the sector so unique. The other 50% can come from external sources. This balance will not be changed, but there is a need to modernise the rules governing the sector in order for building societies to compete with banks on a level playing field.

The Prudential Regulation Authority and the Financial Conduct Authority engaged with the sector on this issue in 2021. The conclusion of the Government’s consultation recommended the exclusion of some sources of funding from building societies’ wholesale funding limit calculations, as well as the modernisation elements that come later in the Bill. The recommendations were never implemented, which is why the Bill is needed.

Clause 1 will disregard the following from the 50% wholesale funding limit: Bank of England liquidity insurance facilities, debt instruments raised to meet the minimum regulatory requirement for own funds and eligible liabilities requirements, and sums received under sale and repurchase agreements, with a view to complying with Prudential Regulation Authority rules.

These changes will not dilute the unique ownership model under which building societies operate. They will not increase the financial risk to the sector, because these liquidity insurance facilities, the debt instruments and the sale and repurchase agreement sums will be effective tools at a time of national economic crisis to ensure that building societies remain comfortably solvent and active in the interests of their members. These changes will help to future-proof building societies from external factors, economic shocks or periods of financial stress.

The specified facilities and so on will be described in a statutory instrument laid by the Government of the day, which will provide additional detail to allow the funding disregards broadly described in subsection (2) to be activated. The Bill is designed so that any Government at any given time can react to the needs of the building society sector, the Bank of England and the Prudential Regulation Authority. Enabling such changes in regulation to be made by means of secondary legislation will make the sector much more sustainable and able to react to changes in circumstance.

The changes presented in the Bill formed part of the Edinburgh reforms. All the responses to the Government consultation were in support of these changes. Prudent lending is crucial to the UK’s economic growth. Making this change will make building societies safe, more secure, and competitive in the long term, without affecting their status as mutuals.

Clause 2 is about modernisation. It amends the 1986 Act to explicitly allow the option of real-time virtual member participation in building society meetings. The change presented in the Bill aligns the sector with modernisations made to company law by section 360A of the Companies Act 2006. It will allow virtual attendance and voting as part of hybrid meetings, making it clear that nothing in the 1986 Act precludes this. Allowing hybrid meetings will improve accessibility and will hopefully allow engagement from members who cannot currently travel to meetings, enabling a broader cross-section of members to participate.

Clause 3 is another modernising clause. In simple terms, it will enable the Treasury to introduce increased flexibility for societies in relation to common seals and the execution of documents, in line with companies. It reserves to the Treasury the right to make provision by regulations in future, upon which further consultation in the sector would be usual.

Finally, clause IV defines the territorial extent of the Bill, which covers all four nations, and specifies that the Bill

“comes into force at the end of the period of two months beginning with the day on which it is passed”—

the standard period set out in legislation.

The Bill has no implications for public funds, as the impact assessment shows, and does not contain any provisions that will require a money resolution or a Ways and Means resolution.

Ultimately, the Bill does a lot of things in a succinct way. It will enable the modernisation of the building society sector and brings it up to date; it will put the sector on a more level playing field with banks; and it will potentially allow them more scope for supporting their members or future members. The Bill has overwhelming support from the sector, including from the Building Societies Association, the representative body of the sector, and its members. The BSA was founded in 1869 and is now the voice of the sector, representing 42 building societies and seven credit unions, and serving 27 million members up and down the UK.

The sector has helped 3.5 million people to buy a home with mortgages totalling over £375 billion. That accounts for 23% of total outstanding mortgage balances in the UK. The building societies that the BSA represents account for 19% of cash savings in the UK, and 40% of all cash ISA balances. Across the country, the sector employs 51,500 people, both full-time and part-time, working in around 1,300 branches in the UK. The BSA contributed greatly to the consultation process in 2021, and I am proud that it supports the Bill. I also wish to thank His Majesty’s Treasury for the support it gave me in preparing for today’s Second Reading.

The Bill will make building societies lend on a similar basis to banks, freeing up more money to help more working people in the UK. It has the potential to unlock billions of pounds of additional lending capacity at a time when so many people need it. I commend it to the House.

--- Later in debate ---

[Julie Elliott]

With the leave of the House, let me say what a pleasure it has been to speak in a debate in which everyone is on the same side—it is a refreshing change. It is not usual and the Minister must not think it will be the future of our confrontations. Let me thank so many Members for coming in this morning and taking part in the debate. All of them have given a slightly different perspective on why building societies are so important, and I want to refer to just a few of the points raised. I certainly did not expect this morning’s debate to contain so much political history, be it on civic Conservatism or Labour history. However, I have to inform the hon. Member for Mid Norfolk (George Freeman) that the clause IV to which I referred was clause IV of the new Labour party, under the leadership of the former right hon. Member for Sedgefield, which was introduced in 1995—a very different clause IV from the old one.

I also want to thank the hon. Member for Mid Norfolk for raising the issues of rural communities and villages. I come from a beautiful village called Whitburn, in the constituency of my hon. Friend and neighbour the Member for South Shields (Mrs Lewell-Buck), so I completely understand the way in which villages rely on the services of local shops and businesses. The hon. Member may not be surprised to learn that the more deprived parts of the country, most of which are in my constituency, face many of the same issues as rural communities.

I must also mention the contribution of the hon. Member for Dover (Mrs Elphicke), who has so much experience in this context. In fact, I first met her when she was doing her work in building societies. She has done a huge amount of work and probably understands the Bill better than anyone in the House, including me—this has been a sharp learning curve. It was nice that she quoted Ramsay MacDonald, the first Labour Prime Minister. As we have been presented with such an array of political history today, I should add that Monday will be the 100th anniversary of the first Labour Government.

As I said in my opening speech, this Bill is simple, straightforward and modernising. These are little measures that can make a massive difference, and I hope that when we discuss housing in the future, we can refer back to the difference they will make in freeing up more money and modernising the system to enable more people, particularly first-time buyers, to get on to the housing ladder.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).

Downing Street Garden Event

Julie Elliott Excerpts

Tuesday 11th January 2022 Commons Chamber

[Michael Ellis]

The Prime Minister will come to the House tomorrow for Prime Minister’s questions and the Leader of the Opposition, or his deputy, will have the opportunity to ask questions then. The hon. Lady asks whether we are all in it together; yes, we are all in this together. The Prime Minister knows—as Prime Minister, he sees the documents, the scientists and the medical professionals and he meets the families and visits around the country. He is in a better position than most to know the impact of this pandemic and he fully recognises it, not only because of his personal experience but because of what he has seen and witnessed on his visits, in his meetings and by everything else he has done as Prime Minister since this covid pandemic began. He does recognise that, he is on the side of the people of this country, and he is working to achieve the best results for the people of this country.

[Julie Elliott (Sunderland Central) (Lab)]

During this pandemic, many thousands of families have suffered when loved ones have been in hospital having surgery and operations without the benefit of visits from their families—nothing to do with covid but an impact of the restrictions. My family have been through that: my brother was in hospital in May 2020 and I could not visit him. He sadly died in April 2021 and we could visit him only in the last hours of his life. What my family have suffered is no different from the experience of many thousands across this country. We stuck to the rules and did what was expected. To find out through the press that the Prime Minister and Downing Street were partying at those times made me feel sick to the stomach and I felt utter contempt for their behaviour. When will the Prime Minister come to this House, confess what has happened and take responsibility for the actions under his watch in Downing Street? Sometimes, saying sorry is good but is not enough.

[Michael Ellis]

The Prime Minister will be here tomorrow, as I have said, in the normal course of events. He will continue to represent the Government of this country and recognises better than anyone the impact of this appalling pandemic on the people of this country.

Oral Answers to Questions

Julie Elliott Excerpts

Tuesday 11th December 2018 Commons Chamber

[Robert Jenrick]

My right hon. Friend the Financial Secretary visited Northern Ireland earlier in the year and met representatives of the aviation sector. We announced at the Budget that we will be proceeding with a technical working group to look into and analyse further the remaining issues with respect to the hon. Gentleman’s proposal to devolve air passenger duty in Northern Ireland.

[Julie Elliott (Sunderland Central) (Lab)]

13. What assessment he has made of the fiscal effect of the EU withdrawal agreement on the manufacturing sector.

[The Economic Secretary to the Treasury (John Glen)]

The Government have undertaken analysis to understand the impact of different EU exit scenarios on public sector net borrowing, which is a UK-wide metric, and we have published an assessment of the economic impact of EU exit on different sectors. For example, the analysis shows that manufacturing sectors are estimated to have a significantly higher output in the White Paper scenario than under the no-deal scenario.

[Julie Elliott]

I thank the Minister for that response, but is it not true that Office for National Statistics figures in the last few months have shown a 0.9% decline in manufacturing and a worrying 6.6% decline in the automotive sector? What are the Chancellor and the Minister doing to provide certainty to businesses in this area about the impact of this Government’s chaotic Brexit policy?

[John Glen]

I am grateful for the hon. Lady’s question. The automotive issue is related to other factors, including diesel. The Government are focused on investing in infrastructure in the north-east. I think that she would be very pleased to know that since 2010, we have had 66,000 new jobs in the north-east as a consequence of more business growth.

Short Money

Julie Elliott Excerpts

Tuesday 23rd February 2016 Commons Chamber

[John Penrose]

That is an intriguing proposal, and I thank my hon. Friend very much for it. I will take it as a constructive suggestion for the request for views.

[Julie Elliott (Sunderland Central) (Lab)]

Given the increase in costs of Spads since 2009 by some 56%, the proposed cut in Short money of 24% over four years is disgraceful. Is the Minister not ashamed of his Government’s attack on democracy and scrutiny in this House?

[John Penrose]

We have already covered these points. Short money has already gone up by 50%, and it has gone up by 30% in the past year. I think that people listening to these exchanges will be asking themselves how much it costs to run an Opposition and why politicians feel they are so much more deserving of cash than, for example, benefits claimants whose money has not risen at anything like the same speed.

Oral Answers to Questions

Julie Elliott Excerpts

Wednesday 9th December 2015 Commons Chamber

The Minister for the Cabinet Office was asked—

[Julie Elliott (Sunderland Central) (Lab)]

1. If he will make an assessment of the effectiveness of the transition to individual electoral registration.

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

7. If he will make an assessment of the effectiveness of the transition to individual electoral registration.

[The Parliamentary Secretary, Cabinet Office (John Penrose)]

The Electoral Commission will publish its assessment of the first full registers under individual electoral registration next spring. In the meantime, I am delighted to inform the House that the transition to IER is now complete. Ghost entries of people who have died or moved house have been removed. We now have a register that is clean, more accurate and less vulnerable to fraud than ever before. This is a vital foundation stone as we move on to the next big challenge: finding people who are legally entitled to vote, but have never been on the register, such as expats, students and people in private rented accommodation, and persuading them to sign up.

[Julie Elliott]

I thank the Minister for his response. University towns and cities are some of the areas worst affected by the Government’s rushed changes to IER. Will the Government allow universities to block-register their students this year?

[John Penrose]

I think the hon. Lady and I may mean slightly different things by block registration, but there is common ground, in that some very useful and effective new work is being done in places such as Sheffield, which is dramatically improving student registration rates. With any luck, we can take its example and persuade others to do the same.

Green Deal

Julie Elliott Excerpts

Thursday 22nd January 2015 Westminster Hall

[Julie Elliott (Sunderland Central) (Lab)]

It is, as ever, a pleasure to serve under your chairmanship, Mr Gray. Usually the debate on these issues is longer than this has been, but I suspect the timing has made a difference.

I commend the work of the Energy and Climate Change Committee and agree with many of the comments made by its Chair, the hon. Member for South Suffolk (Mr Yeo). The report is an important one, given how disappointing the green deal has been.

The Committee hit the nail on the head in its first recommendation, stating that, 18 months in,

“the Green Deal has so far been a failure.”

Unsurprisingly, in their response to the report the Government disagree with that assessment, but I think it is fair to say that success of the green deal has been underwhelming.

The green deal was heralded by the Government as the biggest home improvement scheme since the second world war, but, frankly, DECC’s latest figures show unacceptable results, with only 4,721 completed green deals. The green deal is simply not a good deal. The interest rate is not competitive or attractive, and often the deal does not fund the measures that people want and need. The green deal is not the tool we need to correct large-scale market failure. Consumers and installers have been let down, and that is without even mentioning the debacle of the green deal home improvement fund.

We in the Labour party believe that we have solutions to the problems of the green deal, which I will take about briefly towards the end of my remarks, but I first want to highlight some of the Select Committee’s other recommendations, to which the Government should pay real attention. The report pulls no punches. Recommendation 1 described the green deal as a failure and urged the Government to deal with the barriers that prevent even adequate take-up. The Committee’s opinions are shared by the shadow Ministers. The most disappointing element of the Government response was the complete unwillingness to accept what the Committee and many others are saying.

Recommendation 5 is of great significance, and I will be interested to hear what the Minister has to say. The green deal and the energy companies obligation should dovetail and be complementary, but we have seen the complete opposite and I do not think that the Government know how to rectify that. Again, I was disappointed by the Government response, which was to claim that the green deal home improvement fund was part of the solution to the problem. I hope that the Minister can clarify how that judgment was reached, given the farce that followed the sudden closure of the first round in July and the numerous complaints that have followed. The fund is simply not a long-term solution, but is instead the Government throwing money at the problem.

The attractiveness of the green deal is also criticised in the report, with a key point made in recommendation 7:

“Unless the package is made more attractive to a wider group of consumers, Green Deal finance is likely to remain unappealing to many.”

Again rather disappointingly, the Government response points to the green deal home improvement fund as an answer. I fail to see how a short-term measure will provide a solution. I would prefer some long-term thinking by the Government, which has been sorely lacking so far. The green deal home improvement fund is not and never will be a long-term sustainable policy.

Finally, of all the excellent recommendations in the report, I will touch on recommendation 11: better targeting of energy efficiency measures on those who need help the most, primarily the fuel-poor. I share the Committee’s view that the Government should be doing more, and I was heartened to see tacit agreement in the Government response. However, their actions towards the fuel-poor do not match up. The affordable warmth element, which is explicitly aimed at those most in need, was scandalously cut by the Government in 2013 for political reasons, despite its having done a lot of good work. It cannot be stressed enough to the Minister that the best way to get household bills down and, crucially, keep them down is to prioritise energy efficiency and insulate people’s homes. The Government sought to do the opposite, which is quite frankly unforgiveable.

I am aware that it is all too easy to criticise the green deal, and the Government have only themselves to blame for that, but we in the shadow energy team have put our money where our mouth is, and in November last year launched our energy efficiency green paper, setting out proposals that we believe would solve the issues that the green deal and energy efficiency in general have been struggling with on this Government’s watch. Our policy has five key points relevant to the discussion today.

First, we would provide half a million personalised home energy reports a year, which would detail how households could save money on their energy bills through insulation and energy efficiency. I think many would agree that levels of public knowledge about energy efficiency and the products available, such as heating controls, are very low, but we can easily give the public that information and it will help.

Secondly, we would administer free energy efficiency improvements for 200,000 households in or at risk of fuel poverty every year, with an ambition to upgrade all such homes and end the scandal of cold homes within 15 years. This chimes with the report’s recommendation that more should be done to target those most in need. It should save the average household around £270 a year and provide a much needed boost given the failings of the ECO, especially following the disastrous changes to it in the 2013 autumn statement.

Thirdly, for those able to pay, we would replace the flop that is the green deal with a much less bureaucratic system. Most important, during the next Parliament we would offer up to 1 million interest-free loans to cover the costs of energy efficiency improvements—something that, as the report highlights, DECC is unwilling even to consider. For the private rented sector, which was singled out in the report, there would be a new target to upgrade properties to a minimum of EPC band C by 2027, which is far more ambitious than anything the Government have committed to.

We have also promised that energy efficiency will be designated as a national infrastructure priority under Labour’s proposed national infrastructure commission, giving energy efficiency the importance it has lacked under this Government. Finally, we would put in place a long-term, streamlined strategy to support investment in energy efficiency in the non-domestic sector.

The Committee’s report delivers some stinging criticism of the green deal—all of it warranted. I sincerely hope the Minister will take on board many of the points raised today. The report’s conclusions accurately sum up where DECC has failed on both the green deal and energy efficiency as a whole. It is clear to me that the only hope for a pay-as-you-save model and for energy efficiency as a whole is a Labour Government after the election.

[Mr Ben Wallace (Wyre and Preston North) (Con)]

I am delighted to serve under your chairmanship today, Mr Gray, and to be given a run-out as energy Whip on the subject of the green deal. The subject is close to my heart, as I represent a seat up in north Lancashire, where it is often cold. I am used to the cold, but that means that heating houses efficiently and ensuring the best value for money are important to me.

I thank the Energy and Climate Change Committee for giving the Government the opportunity to respond to the report and some of its criticisms and suggestions. I also thank its Chair, my hon. Friend the Member for South Suffolk (Mr Yeo), for presenting those to us today. I read the current and previous reports on the subject, as well as the Government responses to them, and a few things stuck out for me that I would like to address.

The first thing to strike me about the report was that it did not feel as though the Committee disagreed with the concept of the green deal—the idea that Government should try to use incentives and grants to induce millions of people across the country to be more efficient in using energy to heat their homes. The overall policy aim of the green deal has been welcomed so far; a lot of the criticism has been based on the delivery rather than the concept.

I am sure that the Committee understands that the green deal is not just about finance, but I thought one mistake it made in the report was putting front and centre the idea that the green deal is a finance delivery mechanism. The Committee needs to recognise that the individual nature of people’s homes means that there is no silver bullet for or instant way of fixing the problems. Many of the issues identified in the report would affect dozens of Government schemes across the whole policy spectrum and the whole of Whitehall, because of the gap between the theory of a policy and its actual roll-out. No plan of any Government—if Labour is successful at the election and the hon. Member for Sunderland Central (Julie Elliott) is in government next year, she will recognise this—survives delivery in all circumstances. Governments have to adapt to what they see on the ground. The Government have recognised that fact, and in annex A of our response to the Committee’s report we list many of the changes we have made to the green deal as it has developed.

It is also important to realise that in this sector there is always a natural rivalry of priorities between fuel poverty and carbon reduction. That idea came out both in the Committee’s inquiry and as we have rolled our the green deal. However, I am concerned that the Committee focused too much on the green deal as a finance scheme rather than on our overall ambition to reduce carbon emissions and cut energy waste. Paragraph 8 on page 6 of the report opens:

“The Green Deal is a financing mechanism”.

That is perhaps where we disagree most with the observations in the report. The finance is a means to an end. It is about us trying to deliver schemes and mechanisms to make sure that we improve energy efficiency.

We should not forget that private sector finance is a highly mature and competitive work place and area for products. Our scheme will not always be able to provide the best financial offer every day, as doing so depends on circumstances not under our control, such as energy prices and other demands. Over the long term, we are confident that green deal financing will provide the best option, but at certain stages that will not always prove to be the case. We are getting there, though. During the Committee’s inquiry and subsequently, the Green Deal Finance Company has taken quite strong steps to streamline the process, cutting out some additional parts of the application that people felt—and the Committee agreed—had caused delays. That will make a significant difference.

Leaving aside the issues about the finance mechanism, the Committee raised some valid points that the Government need to keep on top of, including communication, behavioural challenges and the complexity of the process. On communication, it is a challenge for all Government schemes to make sure that they match the message to what people are thinking all the time. The good step we took of making sure we put more focus on working alongside local authorities has been a real success, and we have seen an increase in uptake. Councils such as Leeds and Nottinghamshire have started to make a real difference to the roll-out by getting across a strong message that it is in people’s own interests to cut energy bills, use less carbon and heat their houses efficiently.

It is not that easy to get people to change their behaviour. It does not happen overnight; it takes time—indeed, it takes a long time for Governments to change many things. My only message to the Opposition Front-Bench team is that we all go through the manifesto process and make brave statements, but changing the public’s behaviour will always be easier said than done. I am sure that if, this time next year, I am sitting in opposition to the hon. Member for Sunderland Central and asking, “Where is the first roll-out for 75,000-odd homes?” she will quote me back to myself on that point. Things are changing, though, and we are getting to a better place. The more expensive things are now being done. The low-hanging fruit is, to some extent, on track now and we have to get on to dealing with some of the more difficult areas.

We need to look at uptake, which has improved significantly in the past few months and hopefully will go from strength to strength. The demand for green deal plans has more than doubled since the start of 2014, and at the end of October we had a record-breaking week in which 570 plan applications, worth £2.2 million, were made. In comparison, there was an average of 190 applications per week in the first part of 2014. Raising consumers’ awareness of how they can improve their homes is an important foundation of our approach. By December 2014, some 445,800 green deal assessments had been carried out and a large number of people are now aware of what they need to do to improve their home’s energy efficiency. The next challenge is to get them into a plan.

The energy company obligation has been effective and has delivered the majority of the homes improved. We made important changes to the ECO to reduce consumers’ energy bills. We announced a further £540 million to be spent on energy efficiency over three years, and we announced an increase in that figure by £100 million last October. That investment enabled us to establish the successful green deal home improvement fund to incentivise households to install energy efficiency measures through cashback offers. Our green deal communities programme is working with 96 local authorities to get a better understanding of how to deliver efficiency measures on a street-by-street basis and how to integrate home energy efficiency improvements with other aspects of local authority activity.

Stakeholders and the Committee’s reports inform us that we are on the way to seeing better traction for the green deal. I am convinced that the figures prove that we are increasing our roll-out. People get what the green deal is and are able to access the finance they want, so I am confident that, as we go from strength to strength, the green deal will be accepted across the board.

The Committee report contains valuable steers, and I will tell the Under-Secretary of State for Energy and Climate Change, my hon. Friend the Member for Hastings and Rye (Amber Rudd), to take them on board. Those important and valid points were meant in the spirit of constructive criticism, as the Chair of the Committee said, and our response accepts that. We will work to improve our communications and ease of access to enable the green deal to change people’s behaviour across the board.

I do not need to be reminded that there is an election coming up shortly. Energy efficiency is bound to be a high priority for the incoming Government, whatever their political persuasion, because it is the most effective way to reduce carbon emissions and manage our energy demand. It is also good for societies not to waste resources. Whatever the carbon emission challenges are, we must be efficient. The Government have delivered a significant number of improvements to homes, and the innovative ideas to make Government support go further that we have implemented have attracted interest from other countries.

It would be tempting to ask the Labour party to tell the electorate what it is offering, but this debate is about the Committee’s report. However, the electorate must understand that those things will have to be paid for. The Government cannot intervene and encourage people for free, and offering 1 million interest-free loans will cost a lot.

[Julie Elliott]

May I advise the Select Committee that our proposals will not cost a penny more than what the Government are already spending in this area?

[Mr Wallace]

We will have to take the hon. Lady’s statement at face value, but given the previous Government’s track record on managing the economy and their books, I ask only that the electorate look closely at the figures that are produced.

The Opposition should reflect on the difference between roll-out and theory. I remember sometime in 2009 receiving 32 light bulbs at random from my energy supplier, because that was the way it was meeting the rather fudged, bizarre obligations placed on them by the previous Government. I think I still have them—the Labour party can have them back if it wants; it was probably the only contribution it made. We are confident that the green deal will go from strength to strength. The graphs, charts and the uptake show that we are moving in the right direction.

Offshore Wind Developments

Julie Elliott Excerpts

Tuesday 6th January 2015 Westminster Hall

[Julie Elliott (Sunderland Central) (Lab)]

As ever, it is a pleasure to serve under your chairmanship, Mr Gray. I wish you and all colleagues a happy new year. I congratulate the hon. Member for Angus (Mr Weir) and the Backbench Business Committee on bringing forward this important debate.

This will come as no surprise to those taking part in the debate—we talk about such things a lot, and I too was on the Committee that considered the Energy Act 2013 and have gone over the arguments at length many times—but I am pleased to have the opportunity, at this early stage in the new year, to reaffirm Labour’s commitment to cutting our carbon emissions by encouraging investment in clean energy through the system of contracts for difference. I want to make a few comments on some of the speeches. As my right hon. Friend the Member for Delyn (Mr Hanson) said, there is a broad consensus—barring the views of the hon. Member for Christchurch (Mr Chope), who has a slightly different view from ours. I, like some other right hon. and hon. Members, am committed both to renewables and to nuclear, which will both have an important part to play in the energy mix. We need both of them to reach our carbon emissions targets and negate the problems arising from climate change.

Many of the issues that have been raised are of concern to us—particularly the question of investment and security, and knowing the way forward. That has been raised with me in my capacity as an MP representing an area on the north-east coast, where many of the issues that have been discussed today are relevant, and where there is potential to benefit from development of the industry. Investors tell me that they want certainty. They want to know where we are going, and that there is a long-term plan. The decision cannot be one for four or five years. There is broad consensus, and much of what I want to say concerns that, but there are some issues.

Scotland, as we know, plays an important role in the UK’s clean energy generation. It is blessed with significant clean energy resources, including onshore and offshore wind, and wave and tidal energy have significant potential. Scotland’s leadership in clean energy is borne out in the funding that it receives from central Government. This year, having travelled many times north of the border in the referendum campaign—it is not that far from where I live—I have seen, as I have driven up towards Glasgow, hundreds and hundreds of onshore wind turbines, which I think are quite beautiful and add to the scenery on the drive. They are clearly a significant part of the economy north of the border.

Scotland currently benefits from a system in which resources from across the UK are pooled. Scotland hosts 8.3% of the UK population and around 9% of the energy bill consumer base from which we fund clean energy projects via the levy control framework. In 2012-13, Scotland received nearly a third of all renewable obligation certificates supporting renewable energy. Furthermore, Scotland will receive a significant proportion of the support given through feed-in tariffs, which in 2014-15 is projected to reach £817 million.

As has been said, the UK is a world leader in offshore wind, with as much installed capacity as the rest of the world combined. I see that as a positive for us, not a negative as the hon. Member for Christchurch sees it. It is therefore critical that we get the right structures and funding in place so that the cost of offshore wind continues to fall. To ensure that that happens and that the contract for difference allocation works for offshore wind, we need to boost the investment that drives cost reductions. We have seen the massive cost reductions that investment can bring in both solar and onshore wind.

Although Labour—and most parties, as the hon. Member for Angus said in his contribution—supported the Energy Bill as it progressed through Parliament, there were significant areas in which we were convinced that it needed to go further. I do not intend to précis our “Powering Britain” Green Paper, as I am quite confident that most people here have read it cover to cover. However, what was missing from the Energy Bill, in addition to reform of the wholesale or retail markets through which energy is traded, were policies to encourage further investment in clean energy. Labour is committed to setting a 2030 power sector decarbonisation target, which is supported by organisations as varied as the Committee on Climate Change, energy developers such as Siemens and Dong Energy and companies such as Asda, Sky and PepsiCo as a crucial tool to provide certainty and clarity to drive investment.

Labour will establish an energy security board. My right hon. Friend the Member for Delyn and my hon. Friend the Member for Ynys Môn (Albert Owen) mentioned long-term security. An energy security board will plan for and deliver on our energy needs for the future. We will give the green investment bank powers to borrow and leverage new investment. We are focused on looking beyond parliamentary terms and changes in Government to give stability for investors in the energy market.

[David Mowat]

I was listening carefully to the hon. Lady developing her point on Scotland. I thought that she was going to complete the point by mentioning the potential impact of independence, had it happened, on an environment in which one third of all subsidies are currently cross-border. I was wondering—

[Mr James Gray (in the Chair)]

Order. That would, of course, be quite wide of the mark. The hon. Lady might restrict her comments to the effect of CfDs on the offshore wind market.

[Julie Elliott]

I take that guidance from the Chair, but I will say that we won the referendum.

Given this Government’s refusal to set a 2030 power sector decarbonisation target or allow the green investment bank to borrow, it is unsurprising that investment in renewable energy has fallen. Furthermore, according to the Environmental Audit Committee, investment in clean energy is running at half the level necessary if we are to meet our carbon emission reductions. It is also worth pointing out that the majority of renewable energy projects that have come online since May 2010 started under the last Labour Government.

The offshore wind industry certainly welcomed the increase in the budget for less established technologies from £155 million to £235 million, although it was somewhat tempered by the downward revision in the reference price. Can the Minister confirm that the downward revision will have a significant impact on how much capacity is feasible for the same amount of budget? Currently, approximately 5 GW of offshore wind is in operation or construction, and about another 3.2 GW has been given final investment decision contracts. Do the Government have a fixed ambition for offshore wind, either by 2020 or another date, and can it be assumed that that ambition has been reflected in the allocation funding pot? Does the Minister share the view of industry experts who have projected that the £235 million equates to approximately 800 MW, and is he satisfied with the Government’s ambition for offshore wind in this allocation round? Those questions reflect some of the concerns expressed by hon. Members in this debate.

This Government’s mixed messages and active hostility to onshore wind and solar PV, the cheapest large-scale clean energy technologies, have acted as significant blows to investment in all clean energy technologies. In the last few months, the UK slipped to seventh place on Ernst and Young’s attractiveness index for investment in renewable energy, and Ernst and Young labelled the Government’s

“policy tinkering and conflicting signals”

as

“too much for investors…to handle”.

Does the Minister accept that the Government’s mixed messages have damaged investment?

Although offshore wind remains an area in which the UK proudly leads the world, employing thousands of people and generating the clean energy that we need to meet our carbon emissions commitments, it is clear that costs will have to continue to fall, and allocation rounds should be designed to reflect that priority.

Cost of Living

Julie Elliott Excerpts

Wednesday 27th November 2013 Commons Chamber

[Roberta Blackman-Woods]

I do not know where the hon. Gentleman got his figures, because I looked at the drop in unemployment and the numbers for youth unemployment in Durham showed a reduction of 19 in the last quarter. Although we welcome any increase in employment, he must pay attention to the quality of jobs that have been created. In Durham, a lot of people have lost good, stable, well-paid jobs in the public sector, and have taken insecure, low-paid, zero-hours-contract jobs in the private sector, if any employment at all.

As I was saying, the Government’s failure on living standards is impacting on people in the north-east. I shall go briefly through some of the issues that we are facing. With the current cost of living crisis, people are working longer hours for lower incomes, and despite being in work, many people find themselves in poverty. Government Members seem unable to grasp that.

[Julie Elliott (Sunderland Central) (Lab)]

As a fellow north-east MP, does my hon. Friend agree that for young people in particular, the often unsuitable and unstable employment that is out there if they manage to get a job—as she said, they are probably on zero-hours contracts—means that in many cases they have to do a variety of small jobs to make up some kind of income. That is not a long-term way to plan their future careers, is it?

[Roberta Blackman-Woods]

My hon. Friend makes an excellent point. We need to see much more action from the Government on securing decent employment and career paths for our young people, as we all want.