Northern Ireland (Regional Rates and Energy) (No. 2) Bill

Lady Hermon Excerpts

2nd reading: House of Commons
Wednesday 6th March 2019 Commons Chamber

[Karen Bradley]

What we are doing today is setting the rate. We are not setting any of the reliefs or allowances or support that is already available. Nothing that is there is changing and we are not able to change anything with the Bill. We are just setting the rate, but the hon. Gentleman is right that there may be things that people in Northern Ireland would like to see. Again, if there were Ministers in Stormont, they could do the right thing for Northern Ireland. It would be wrong to transpose the situation for councils in England, Wales or Scotland to Northern Ireland because it needs specific measures, and only Ministers in Northern Ireland can appropriately and properly deliver those.

This approach to regional rates, and therefore the measures in the Bill, represent an important contribution to delivering a sustainable budget for 2019-20. The second element of the Bill concerns the administration of Northern Ireland’s renewable heat incentive scheme. I must make it clear that the UK Government have not taken the decisions on the revised scheme. This remains a devolved matter and the Government are taking forward this legislation at the request of the Department for the Economy. It is crucial that that happens because without this legislation, there will be no legislative basis to maintain the current cost-control measures.

[Lady Hermon (North Down) (Ind)]

I am grateful to the Secretary of State for allowing me to intervene. I have received a large number of emails mostly, if not exclusively, from individuals who are not constituents of mine but who feel extremely aggrieved by the proposals in this legislation. They entered into the RHI scheme in good faith and feel that they are now being unfairly penalised. I would like the Secretary of State to address that issue this afternoon. Will she assure those people who have raised concerns and who feel very strongly aggrieved by the Bill that there is fairness in the proposals, and that they will not find themselves making their way to the local court to challenge the legislation, because it is in breach of human rights, for example?

[Karen Bradley]

I will come on to the details of why the decisions have been taken, the advice that we have received from the Department for the Economy and the request that it put in. However, I assure the hon. Lady that the measures we are taking today are the only legal ways in which any subsidies can continue to be paid to anybody on the RHI scheme. Failure to do this will mean the closure of the scheme and no subsidies at all. We need to bear that in mind when looking at this matter. I well understand that people feel concerned when they have entered into an obligation in good faith and then the subsidies that they receive are reduced. I will come on to explain why that is the situation.

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[Tony Lloyd]

I am not being generous with my time because we have to tease out these important issues, and we have to get answers to give us some certainty that the scheme is both necessary and sufficient to protect the interests of those who have acted in good faith.

[Lady Hermon]

It is crucial that we tease out the details before we give our approval—if we give our approval—to this Bill. In the wind-up, I would particularly like the Minister to give further detail on what the Secretary of State said about how the Department for the Economy will seek support for affected participants: those who invested in the renewable heat incentive scheme in good faith. She failed to give any details at all about the efforts of the Department for the Economy to get some support for those who will be adversely affected if we approve this Bill. They had a legitimate expectation of the tariffs that would be paid to them for 20 years, so I would like details from the Minister.

[Tony Lloyd]

That is a fair point. There is nothing in this Bill that talks about post-legislative scrutiny. We need some capacity to measure the impact of the legislation after it leaves this House, because it will have an impact. The scheme was a disaster from its inception. That is most certainly true. It is also most certainly true that controlling the overall level of cost is and ought to be a matter of public policy, which is in the interests of people in Great Britain as well as in Northern Ireland. Coming up with legitimate control is not something that divides the House, but we need to make sure that we measure the impact on those affected, and that is simply not there.

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[John Penrose]

The right hon. Gentleman said that he was not quite sure why burning wood was any better than burning other things, because the emissions are similar. If my hon. Friend the Member for Richmond Park (Zac Goldsmith) were here, he would make the point that we have to be extremely careful about how we calculate the carbon footprint of some supposedly renewable fuels, because if we cut down virgin rainforests to grow things that are then pelletised and burned, the overall genuine carbon footprint is much worse than people like to pretend.

However, my hon. Friend would also make a sharp distinction between what I think is called long-cycle carbon—in other words, fossil fuels, where carbon has been locked away for millions of years, are a net release that makes an overall difference to the level of carbon—and short-cycle carbon, which is a sort of short-term recycling whereby things are grown in the course of our lifetime and burned. I will not try your patience, Madam Deputy Speaker, by going into the detail of the level of greenery, but I hope we can all agree that this scheme, with all its manifest flaws, intended to pursue a noble purpose.

Before I go on to the details of the RHI scheme, I will address a few other points. The hon. Member for Belfast East (Gavin Robinson) asked a series of questions about Northern Ireland housing associations and, I think, was hoping to pin us down on when a piece of legislation might be introduced. I want to reassure him—my right hon. Friend the Secretary of State made this point, but I will repeat it—that the Government will take that forward as soon as parliamentary time allows.

The hon. Member for Rochdale (Tony Lloyd) asked about the stronger towns fund and said that he did not feel he had enough of an answer yesterday; I want to ensure that we try to provide that today. He will be aware that the Secretary of State for Housing, Communities and Local Government made an announcement yesterday. The Treasury will apply the Barnett formula in the normal way and confirm the funding for each region in due course. We do not know that yet, but it will come out, and we will seek to ensure that towns in Northern Ireland, Wales and Scotland can benefit, building on the success of the Government’s growth and city deals.

The hon. Gentleman also asked about the applicable costs of the RHI scheme. I will address that specific item before coming on to the broader points. The scheme guidance, which I am sure we are all itching to go through in huge detail, has been published, and it sets out clearly the eligible costs. They are primarily the costs of the boiler. He mentioned costs to do with installation, pipework and the like, and some of those are included as well. Interest costs on borrowing are apparently not included as an eligible cost in this scheme. I wanted to share that with everybody, so that we have a shared fact base before we go into Committee and discuss the detail of the amendment tabled by the Chairman of the Northern Ireland Affairs Committee, my hon. Friend the Member for South West Wiltshire (Dr Murrison).

Questions have been posed about the up-front payments and how they would be calculated for people who wanted to opt out of the scheme because they felt that if they remained in it, they would lose out too badly. Straightforwardly, an individual’s costs—that means the cost of installation, the capital cost of the boiler and other eligible installation and running costs—will all be included, and they will be reimbursed up to the 12% target rate of return for the revised scheme. All the additional costs of the renewable technology above a fossil fuel one will be reimbursed. That is crucial, because a number of Members have raised questions about what happens to people who are worried that they are going to lose out. The hon. Member for Strangford (Jim Shannon) read out an email he received from someone with precisely those concerns. If they are concerned that it will no longer be economic for them to stay in the scheme, they can opt out. It will be a free option for them, and they are guaranteed to have made 12% on their money if they decide to opt out at that stage.

[Lady Hermon]

The Minister needs to address the point raised by a number of right hon. and hon. Members about those who entered the scheme in good faith with the legitimate expectation that it would last for 20 years on a particular tariff. How do the Government square that and address that really key point?

[John Penrose]

I am very happy to address that point. There is one thing that I know a number of people have found shocking. In fact, the right hon. Member for East Antrim (Sammy Wilson)—I am probably slightly misquoting him, but this is broadly speaking what he said—was right to say that the RHI scheme as originally conceived has turned out, in spite of everyone’s best efforts, to be both a failure and a disgrace. Very sadly, he absolutely accurately describes what has happened.

It is also true to say—the hon. Member for Strangford was quite right to make the point—that very many did not go into the scheme with the intention of abusing it. Some of them were pastors in churches, and so on and so forth. The scheme was introduced for a good reason and, in the vast majority of cases, people entered into it for good reasons.

I therefore found it pretty shocking, and I am sure other people will share my shock, that of the participants involved—many of them with all the right intentions, as I have just described—80% have already, by today, received a 12% return for the entire 20 years of the scheme. If they did not get another penny piece, they would already have received a 12% return on their money. Even if there were another 14 years or however many years of the scheme left to run, since the day they entered it they have made a 12% return. The hon. Member for North Down (Lady Hermon) is absolutely right to raise the question of legitimate expectations, but the participants have done incredibly well.

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[John Penrose]

We will have to come back to the question of how to get more evidence into the room, as it were, but I will try at least to answer some of the questions that have been raised today. I appreciate that I will not be able to answer every one—the hon. Gentleman is absolutely right about that—but I will try to cover as many as I can.

The averages that I am describing are average rates of return, which are calculated according to a whole range of things. Capital costs differ, because some people have bought bigger or more expensive boilers and because all sorts of other costs are involved, such as installation and fuel, but the target number is the average rate of return. As we have heard, the rates of return that are actually achieved will be distributed around that average; some people will do better, while some will do worse. That is why the buy-out scheme for those who will potentially lose out is so important. It is also worth while pointing out that the average rate of return is directly comparable across the rest of the UK. It will become 12% in Northern Ireland and it is 12% in Great Britain. As I understand it and for what it is worth—I appreciate this is of tangential relevance, but it is perhaps interesting information—the intended return of the Republic of Ireland scheme is 8%, not 12%.

[Lady Hermon]

The Minister, in response to a number of interventions, has repeatedly relied on data and detailed figures. Can he confirm that they are not in secret documents held in confidence within the Department for the Economy, and that they could be made public tonight and put in the House of Commons Library? I ask for the calculations to be published in the House of Commons Library within the next 24 hours. It is outrageous that we are being asked to approve a Bill tonight based on facts and figures that I certainly have not had sight of—perhaps others have—and I would like them to be made publicly available to the House within 24 hours.

[John Penrose]

There is an old saying that if you want something to be kept secret, you announce it on the Floor of the House of Commons and nobody will pay a blind bit of attention. I am trying to put some of the facts in, but I take the hon. Lady’s point. I will see if inspiration strikes me later on in my remarks as to whether that can be done, or whether my right hon. Friend the Secretary of State can help in that regard. It is clear from everyone’s remarks on Second Reading that there is not just a thirst and an appetite but a genuine democratic need for proper scrutiny and for more details to be understood. That is what I am trying to do by what I am laying out now, but I take the hon. Lady’s point. Other Members have made a similar point. We had comments to that effect from my hon. Friend the Member for South West Wiltshire the Chairman of the Northern Ireland Affairs Committee, the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) the SNP spokesman, my hon. Friend the Member for Lewes (Maria Caulfield), and the hon. Members for Gedling (Vernon Coaker), for North Antrim, for Strangford and for Bristol South.

I hope we have dealt with quite a lot of the points that were raised. The one point that I think remains at this stage—I am sure we will go into more detail in Committee in a moment—relates to process. Before I go any further, I should mention that a number of colleagues—there is clearly a political movement in North Antrim and in East Antrim—are pretty leery and worried about state aid rules. The hon. Member for North Antrim and the right hon. Member for East Antrim both raised this point and asked whether the state aid rules would continue after we leave the European Union. I am not sure if I am pleased or sorry to disappoint them both, but the answer is yes they will. We have agreed to port across, to begin with at least, all EU rules into UK law, including, obviously, state aid rules. They are both absolutely right to point out that it will then be up to this Parliament, rather than anybody else, to change them if we want.

However, we all need to be a little careful about what we wish for. For those of us who are free marketeers and free traders, or even those of us who are not but just want to see fair play, the changing of state aid rules needs to be approached with great care, because it can easily either slant the playing field in favour of foreign firms trying to export into Britain in ways that are unfair for British manufacturers and British producers, or alternatively create political favouritism and lobbying games. So we would need to approach that with a great degree of care. I know that it would be approached with a great deal of care on both sides of the aisle. It is theoretically possible, but on day one, I am sorry to tell the hon. Gentlemen from Antrim, they will not be changed and they will still apply.

Inspiration has just struck. I understand that the figures the hon. Member for North Down was asking about have already been published. They were published last May. We are trying to track down precisely where they are in order to make sure that they are properly available. I will come back to her, or my right hon. Friend the Secretary of State will come back to her, with the final version of the figures and make sure they are properly available. If we cannot track them down, we will try to come up with duplicates if we can.

[Lady Hermon]

The Minister said that the figures have been published. What I would really like are the calculations underlying those figures. We need to know how the figures were arrived at. Are those calculations in the public domain or can they be put in the public domain? That is what I would like to see.

[John Penrose]

I think the answer to the hon. Lady’s question is yes. I have not actually seen the figures—the ones published in May—but we will endeavour to clarify that and get them out there for her as soon as we can.

Let me finish by saying that there is a link between the decisions that have been taken by the Executive and where we are today. A number of colleagues asked whether the sunset clause will apply if we do not take a decision today. I remind people that back in March 2015, the Executive at the time took the decision to introduce some caps. Those were renewed roughly this time last year and expire at the end of March this year. That is the reason why we are so concerned about the timescale. I appreciate that this does not answer some of the questions about why we are having this conversation today rather than two weeks ago, or whenever it might be, but I reassure people that this is not something that someone has plucked out of the air. It has been extended on an annualised, fixed-term basis and is therefore due to expire at the end of this month. That is why this needs to be dealt with and sorted out, so that roughly 1,800 of the people who currently receive money can at least have the legal option of continuing to receive that money in future.

I should just say to the hon. Member for Gedling, who was muttering in concern, that when I said I had not seen the figures, I was talking about the precise figures that were published back in May. I have not seen those particular documents and therefore do not want to speak to what may or may not be in them at this stage rather than the broader point.

With that, I will sit down and let us move on to a more detailed conversation in Committee about the RHI scheme because there is clearly a material appetite to do that, and I do not want to stand in anybody’s way.

Question put and agreed to.

Bill accordingly read a Second time.