Draft Infrastructure Planning (Electricity Storage Facilities) Order 2020

Debate between Kwasi Kwarteng and Robert Syms

Thursday 17th September 2020 General Committees

[The Minister for Business, Energy and Clean Growth (Kwasi Kwarteng)]

I beg to move,

That the Committee has considered the draft Infrastructure Planning (Electricity Storage Facilities) Order 2020.

It is a pleasure to see you in the Chair, Mr Stringer. I am pleased that we have your direction for this hopefully short debate.

The draft order was laid before the House on 14 July. In the current situation, it is a very simple statutory instrument. Currently, for electricity storage facilities over 50 MW in England and over 350 MW in Wales, planning consent must be sought from the Secretary of State under the nationally significant infrastructure projects regime. For facilities below those thresholds, consent is derived from the relevant local planning authority. The SI simply removes the threshold and devolves all consents to the relevant local planning authority. We are doing this because there is strong evidence that the 50 MW threshold in England is distorting the sizing of projects and the nature of investment decisions. Here in England, there is clearly a clustering of storage projects sized just below the 50 MW threshold simply to avoid referral to the NSIP regime.

In 2019, we consulted on removing electricity storage, with the exemption of pumped hydro, from the NSIP regime in England and Wales. We received some 28 responses from the industry, and all bar two, I think, were broadly supportive of the change. For battery and more innovative forms of storage, the planning impacts are low compared with pumped hydro and other forms of generation. The extra time and cost of the NSIP regime is not thought to be proportionate and is also limiting the size of new projects to just below the threshold. The draft order removes these technologies, as I said, from the NSIP regime, so that consent will generally be sought from the local authority. To ensure consistent treatment, this will also apply to Wales, where the NSIP threshold, at 350 MW, is higher than that in England.

We feel that this measure will unlock investment in larger storage projects, support low-carbon jobs and help to decarbonise our energy system. Our assessment is that it could save the industry up to £7 million a year. As I said, the order does not remove pumped hydro storage from the NSIP regime, as hydro storage technology facilities have significant planning impacts, which we feel should be kept within the NSIP regime. Should Parliament approve the draft order, a parallel order will be required to amend the Electricity Act 1989 to ensure that consents for electricity storage fall within the local planning regime.

[Sir Robert Syms (Poole) (Con)]

I congratulate my right hon. Friend the Minister on a clear, concise explanation of what the Government are doing. It is rare in a Committee of this type that one actually understands what the Government are trying to do without doing handstands trying to read all the explanatory notes, so well done.

[Kwasi Kwarteng]

I thank my hon. Friend very much. I am pleased to say that I always try to boil down exactly what legislation does and to explain as simply as I can the Government’s aims. Having sat in these Committees, he and I know that many times people simply read out exactly what has been as presented to them, and in many instances—though not, I hasten to add, in this Parliament—Ministers have not really understood what they were saying. That was the impression I had as a Back Bencher, so I have tried to make things simple.

We will ensure that the statutory instrument applies for onshore and offshore facilities. We are working closely with the Welsh Government, who will pass their own legislation on storage located off the Welsh coast. The order will ensure that storage is treated appropriately in the planning system. That will unlock investment, which is critical to the net zero strategy that we have set ourselves.

CERN Pensions: UK Tax Treatment

Debate between Kwasi Kwarteng and Robert Syms

Thursday 15th March 2018 Commons Chamber

[Sir Robert Syms (Poole) (Con)]

I rise to discuss the UK tax treatment of CERN pensioners, but the subject goes rather wider than purely CERN. I mention CERN only because I have two or three constituents who are quite exercised by recent changes.

George Osborne brought in a change to do away with the concession whereby people with foreign pensions were taxed on 90% of their income, pushing that up to 100% in 2017-18. That has had a material effect on several of my constituents, but there must be people who worked for a number of organisations who are affected by the tax change when they land pensions back into the United Kingdom. I shall talk a little about CERN, but also about one or two other international organisations, because the more I look into this issue, the more complex it becomes.

CERN was set up by UNESCO in 1954 as an international organisation, based in Geneva, to carry out fundamental research in high-energy physics. The UK was among its 12 founding members; today, there are 22 member states. The host nations are Switzerland and France, and most of those who work at CERN on a day-to-day basis live in either Switzerland or France, in or around the vicinity of Geneva. CERN served as a model for successful European collaboration, and several similar organisations, working in fields such as space research, have since been created, based on its structure.

On retiring, CERN staff receive pensions in Swiss francs. They are not ungenerous pensions—some are in six figures—because these people are extremely able, talented scientists who have committed themselves to science. CERN staff can either stay in one of the host states or move elsewhere. Many member states offer favourable tax treatment to attract such staff to their country. They range from Austria, which allows CERN staff to retire tax-free, to Spain, Malta and Sweden, where low rates have been negotiated, typically in the order of 10%.

The UK never gave any kind of special privileges to CERN retirees, but there was provision under our tax law that 90% of foreign pensions would be taxed. If someone is on a six-figure pension and the first £8,000 or £10,000 is disregarded, bringing them down in all the various tax brackets, that concession is worth having. CERN pensioners, who are particularly bright, have to decide where they are going to land themselves and their families when they have finished working. Many wish to move back to the UK, and they previously saw the UK Government’s more modest concession as attractive enough for them to retire to places such as Poole.

I make one very important point about CERN pensioners: they have not benefited from UK tax concessions in any way. They do not get the 25% tax-free cash payment that a UK taxpayer gets. Effectively, they have earned their pension by working abroad for an international organisation in which we have a big interest. They have come back to the UK and then been given a slightly better tax position, probably in recognition of the fact that many people who have foreign pensions do not benefit from the reduced rate available to those who contribute to pensions in this country.

Pensioners of other international organisations that are similar to CERN do receive special concessions from the UK Treasury. I understand that there are organisations that represent those who have worked for the UN, or its various agencies, and that discussions are going on about the appropriate rate. I also know that there are discussions about pensioners from the World Bank. A number of European organisations work under similar terms and conditions as CERN. Known as the co-ordinated organisations, they include: the Council of Europe; the European Centre for Medium-Range Weather Forecasts; the European Space Agency; the European Organisation for the Exploitation of Meteorological Satellites; the North Atlantic Treaty Organisation; and the Organisation for Economic Co-operation and Development. The International Service for Remunerations and Pensions, which is based in Paris, is responsible for the pay and rations of all those bodies. As I understand it, the civil servants who work for these co-ordinated organisations are taxed on only 50% of their salaries.

There are therefore examples of concessionary rates for organisations in which Britain participates, and my constituents have a very simple request: if the UK Treasury is not going to tax them on 50% of their income, which I somehow doubt that it will, they wish to go back to the 90% rate with which they were happy. Many decided to move back to the United Kingdom on the basis of that proposition. I stress that, because some of the pensions are high, over 20 years, the amount in question represents probably a couple of million pounds’ worth of sterling. We should bear in mind that the money is landed back in the UK in Swiss francs, and that it is not only taxed but spent in the United Kingdom.

There is actually a very strong economic argument for making a pitch to people with good international salaries to come back to the UK to retire in order to feed the very important column that is UK invisible earnings. My constituents thought that they would be taxed at only 90%, but feel that the rules have changed, so they would like the UK Government to reconsider.

When I asked the House of Commons Library what happened to civil servants who retired from the EU, I was told very politely that the EU taxed them and kept the money. I am very surprised that Her Majesty’s Revenue and Customs—it must be letting the side down—does not have any say over EU civil servants who retire back to the UK. I suspect that that is one of those fine points of detail that will be dealt with in the withdrawal negotiations. If those people were given a preferential arrangement, I would be extremely surprised if the UK Government were to change that and make those people’s pensions taxable at 100%.

This complex area involves a number of tax treaties and several international organisations, all of which operate to a different range of rules. My essential point is that a few of my constituents who worked hard in the scientific sector and earned good pensions thought that they had a proposition that meant that they were taxed at 90%, but now feel somewhat aggrieved that the previous Chancellor has pushed their rate up to 100%. As I have said, that was not the most generous tax proposition—those of other countries are far more generous—but that rate was attractive enough to get these people to move to places such as Poole. I hope that the UK Government will consider the options. Given that this is a complex area, I wonder if the Minister might be willing to meet me and a few CERN pensioners to discuss the matter more fully so that we can get to the bottom of whether they are being treated fairly and reasonably.

Finally, I congratulate the Minister on taking his post. He is among the Members on these Benches who I always thought was destined for high things. He had to start somewhere, and Economic Secretary to the Treasury is a fine and important post.

[Kwasi Kwarteng (Spelthorne) (Con)]

Exchequer Secretary to the Treasury.