Energy-intensive Industries

Lee Rowley Excerpts

Wednesday 6th July 2022 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I am grateful to the hon. Member for Bradford South (Judith Cummins) for calling this debate today. It is an important issue and it is right that we debate it in the detail and depth it deserves. I recognise how important this issue is in many parts of the country, both from the perspective of my constituency and from being a Minister for the past 10 months. I know that there are hon. Members, both present and not in attendance, who have a very extensive interest in this and are very concerned about the challenges— which we hope are temporary—that the industry faces. We recognise those challenges.

First, lest it be suggested otherwise—I am sure that is not the intention of the hon. Lady—I want to say that energy-intensive industries are important to the United Kingdom and important to the UK Government. They are important because they provide resilience within our supply chains over the long term; are representative of British manufacturing and the fantastic things it does; and provide a historic link to our past and our proud energy and manufacturing background.

That importance is why I have spent much of my time as a Minister over the past 10 months talking to our energy-intensive industries. I speak almost weekly with at least one representative—sometimes more—from the energy-intensive industries. I have been on regular visits, including to glass factories in the north-west, paper mills in the east midlands, steel factories in Wales—the UK Steel representatives in the Public Gallery are very welcome—and chemical factories in Teesside. Over the past 10 months, I hope that I, as Minister, have demonstrated to the industries that I am interested in hearing their views—views that the hon. Member for Bradford South has articulated—and in engaging in open dialogue.

We want to understand the industries’ concerns and issues and to work through them in a careful, calmed and reasonable process—in the way that public policy should be created—to work out what is reasonable and proportionate. We discussed the issues on Monday in one of our regular UK steel discussions with unions and companies representing the industry. At those meetings, we come together and have exactly the kind of strategic dialogue that the hon. Member for Bradford South was talking about. The Government will continue to do that in the coming months. I want to make very clear that energy-intensive industries are important in terms of what has been done, and we need to ensure that they are listened to and heard on an ongoing basis.

I want to be clear that there is a challenge. When I speak to colleagues, including my hon. Friends the Members for Scunthorpe (Holly Mumby-Croft) and for Stoke-on-Trent South (Jack Brereton), and Opposition Members who feel just as strongly, I know how important it is that we acknowledge that there are difficulties. There are global difficulties because of unprecedented circumstances—we all accept that—which we did not anticipate. It is very difficult to anticipate the first invasion of a sovereign country on European soil for 70 years, which is what Putin did. It is difficult to anticipate the price spikes and the volatility in the market that comes from that. That is not something that can be easily managed away, but none the less it has caused issues for a number of energy-intensive industries as well as the wider sector. The Government are working through how they can support that.

We recognise that this follows a number of years where energy-intensive industries have been clear that while the Government have brought forward support, undertaken dialogue and are doing what they can, there is a price differential compared with Europe, and we understand that. That is one reason why we brought forward the British energy security strategy in April. It includes many elements, addresses the long-term approach to energy and indicates our continuing support for industry.

[Jack Brereton (Stoke-on-Trent South) (Con)]

The ceramics industry in Stoke-on-Trent has been incredibly successful since the Conservatives came to power. We have virtually doubled gross value added. However, we now face serious challenges, particularly because of energy costs. Most or all of the ceramics industry has not been eligible for Government support because most of the industry is too small and many of the NACE codes do not qualify. Does my hon. Friend agree that there must be a level playing field and we must address this issue to ensure that support in place for the ceramics industry?

[Lee Rowley]

My hon. Friend is an absolute champion of the ceramics industry, and I know how important it is for his constituency. As he indicates, it has been a real success story for our country, and we want to ensure that it continues to be a success story. His advocacy in this place is absolutely the way to ensure that that happens. We accept that there is a challenge—there is no question of that. Over recent months, the Government have acknowledged that challenge in papers such as the British energy security strategy, which is important and has been welcomed by a number of industries as part of our ongoing dialogue, and have started doing things to address it.

I am glad the hon. Member for Bradford South has acknowledged and welcomed the compensation scheme. It is not something to quickly pass over; it is a substantial increase in money—if that is the yardstick we are using. It is substantial confirmation that we are serious about supporting our energy-intensive industries. From the extensive conversations I have had with colleagues in this place and with the industries themselves, the changes coming from that have been welcomed. When people say, “The Government need to do something”, the Government have done something.

The energy security strategy is clear that there will be a further consultation on a further element of what we are seeking to do, and I expect that to begin shortly. We are considering using that strategic dialogue, which the hon. Lady indicated is important, about what else is reasonable and proportionate to do over a longer period of time. None of these issues is straightforward or has a simple solution; otherwise, this Government or previous ones, including the Labour Government pre-2010, would have done it. It is a difficult and challenging problem and we need to do something about it, as the Government have done, and look at what can be done in the future.

I will address a few of the hon. Lady’s points. Unless we contextualise this conversation and conduct it in a reasonable manner, it will go off in all sorts of directions that are ultimately unhelpful. I understand that ultimately it is for other people to choose their words, focuses and emphases, but there has been progress on this agenda in recent months and that should be acknowledged. It is recognised that the Government are absolutely serious about supporting these industries.

[Judith Cummins]

I take that as some kind of criticism of my words, many of which were given to me to represent British industrial businesses. We have heard so much from the Minister about the difficulty, accepting that there is a challenge and listening, but he needs to act because British businesses and energy-intensive businesses are suffering and crying out for more help.

[Lee Rowley]

Those are exactly the kinds of statements that I think, with the greatest of respect, are not entirely helpful. The Government have acted, and it should be acknowledged that we have done so. Hundreds of millions of pounds have been brought forward in recent weeks, which should be acknowledged as a significant step forward. As I have already said during the past 10 minutes, we accept there is a challenge, and we are going to do more. We have already committed to bringing forward at least one additional consultation—

[Judith Cummins]

rose—

[Lee Rowley]

I am happy for the hon. Member for Bradford South to take some of my time. What exactly should we do?

[Judith Cummins]

I am happy to take up some of the Minister’s time. Shall I repeat the eight questions that I asked in my speech that he has not—[Interruption.]

[Judith Cummins]

I am happy to send the Minister a copy of the eight questions I asked him in my speech. He is yet to address a single one of them.

[Lee Rowley]

The challenge with this debate is that we all accept there is a problem, and we all accept that there is a wider context of global issues—some of which are beyond our control—but ultimately, the hon. Lady needs to propose as well as oppose. If she has a proposition, I would be very happy to hear it, as would the Government, but I did not hear a proposition in the 20 minutes that she spoke for.

“Do more” needs to be followed by another sentence that says precisely what to do, because when you talk to energy-intensive industries—I am not suggesting that the hon. Lady does not—and have detailed dialogue with them, you realise that there is a significant amount of nuance underlying this discussion. As my hon. Friend the Member for Stoke-on-Trent South has outlined, you have some energy-intensive industries that are very heavily based on gas. You have other energy-intensive industries that are very heavily based on electricity, as my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) has indicated. Other businesses that are not energy-intensive industries are also reliant on some unusual ways of procuring and using energy, and if we do not recognise that nuance in any solutions that we propose, ultimately—

[Graham Stringer (in the Chair)]

Order. I have let it go so far, but I do not have views on these things when I am in the Chair. The hon. Gentleman is not the only Member who has transgressed that rule during the debate, but can he refer to hon. Members, not “you”?

[Lee Rowley]

My apologies for not using the correct nomenclature, Mr Stringer.

The point I am making is that there is a variety of nuances underlying this discussion. We have energy-intensive industries that are heavily dependent on one source of fuel, and energy-intensive industries that are heavily dependent on another. We have some industries that are very heavily hedged and some that are not. We have some differences when it comes to the significance of the change in energy costs. We have some industries that are within the compensation scheme, and some that are without it. Some are in other schemes, and some have already applied for schemes that are already open, including the industrial energy transformation fund, which is another £300 million of Government funding—of taxpayer subsidy—to help the sector.

The point I am making to the hon. Member for Bradford South is not that there is not a challenge—I have repeatedly indicated that there is. It is not that we do not value energy-intensive industries, nor that I do not want to listen, and I accept that she is acting completely in good faith in trying to record and highlight the challenges that energy-intensive industries in her constituency face. However, the question is exactly what we do about it, and that strategic dialogue is under way at the moment.

[Mike Amesbury]

CF Fertilisers, which employs many people from my constituency of Weaver Vale, is located in the constituency of my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) and also has many employees there. Over 300 of those people now face losing their jobs. I know there have been discussions with a consortium that has come forward and some reference to a bridging loan, but that would require some intervention, hopefully from the Government, with a potential purchase. It may be beyond the scope of today’s discussion, but I would be interested to know how that is progressing.

[Lee Rowley]

I thank the hon. Gentleman for his intervention. I know that this matter is important to employees at the Ince factory, just as it is important to those at the Billingham factory. I have 50 seconds left of my speech, so I am afraid I cannot address that issue directly, but the hon. Gentleman has absolutely made his point and has been clear about the implications for that locality.

In the few moments I have to sum up, the key point I want to make is not that the Government do not agree there is a challenge, or that we do not think energy-intensive industries are valuable to the United Kingdom—they absolutely are. The point I am trying to highlight is that we are talking to those industries in a careful, calm and methodical manner, working out all the nuances and differences that underlie this issue, and seeking to determine how, over time, we can bring forward solutions that work for the long term. However, we must also recognise that £2 billion in support has been provided since 2013, and that we have done much in recent weeks, too.

Motion lapsed (Standing Order No. 10(6)).

Action on Climate Change and Decarbonisation

Lee Rowley Excerpts

Tuesday 5th July 2022 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

Thank you, Mr Deputy Speaker, for the opportunity to contribute to this debate. I congratulate my right hon. Friend the Member for Ludlow (Philip Dunne) on opening the debate so ably and posing the questions he rightly did, given his responsibilities as Chair of the Environmental Audit Committee.

Obviously, today is a quiet day in the eyes of the world, as the hon. Member for Bristol East (Kerry McCarthy) said. It may be correct that they are elsewhere, but we will none the less continue to discuss, debate and focus on the important issues that I think this Government have been serious about trying to address. We have been serious about trying to put frameworks in place and show a clear direction of travel, and we do that in the knowledge that net zero is a challenge. It is therefore right to ask the questions and undertake scrutiny, and that is why I want to focus today on the long term.

I think the important thing when we talk about net zero is to start from first principles. We often dive straight into this debate, and there have been some very good contributions today, but I think that first principles are a good place to begin. Most people in this place and across our country accept that human beings have had an impact on the world, and that that has changed over recent centuries. We all share the desire to tread more lightly on this earth and consider it appropriate that action is taken to do that.

The Government’s choice, and the choice of the centre right all around the world, is to seek to harness the immense power of capitalism, the immense ability of individuals and the immense ingenuity of human beings to find a way, in conjunction with Government, to achieve a resolution that ensures that we tread more lightly and get to the end point that we seek. That is on the basis of clear frameworks, of creating the conditions for investment—we are in the process of doing that—and of subsidy where that is reasonable and proportionate.

The first thing in a big task, which is what we have in front of us, is to have a plan, and the second thing is to execute that plan. Over the last year, we have now set out that plan—the net zero approach. Yes, it has assumptions in; yes, it is setting targets; and, yes, there will be challenges, but the whole point of a plan is to demonstrate direction. For those hon. Members who somewhat avoided this point in the debate, the plan has been lauded in the United Kingdom and elsewhere, and it was adopted early, demonstrating the commitment to trying to make progress. Now, the challenge is the execution of that plan.

I must remind hon. Members, particularly those who are extremely keen to see progress, as we all are, that we are nine months into a 29-year process. That means that there are issues, things will change and there will be progress reports; we will come back with a progress report in the usual way later in the year. It will be appropriate to look at the status, and some people will, of course, want to go further. However, we have the plan and we are executing it, and I think we are showing a consistent, calm and methodical approach to these very serious issues that recognises where we want to go and how we should get there.

I turn to some of the speeches and interventions. My right hon. Friend the Member for Ludlow introduced the debate, and I am grateful to him for his opening speech. He rightly holds us to account, and he is right that we live in challenging times—something that has to be considered in today’s discussion and in all our debates in this place. We have consensus about where we should move to. He is right to ask the question, but I hope he does not think that our attempts to move forward methodically, recognising that there are still challenges and that we still need to take time to work out how to approach things, can be described as waiting for something to turn up. I am sure he will not think that. Sector by sector, industry by industry, and element by element, we have to work out where the market or individuals will resolve the issues themselves, where it is reasonable and proportionate for the Government to subsidise the development and execution of solutions, and where other solutions may work.

Let us take aviation, which was considered by my right hon. Friend’s Committee a few weeks ago. We are still relatively early in the curve of knowing exactly what technology we will use. Working that out will allow us to quantify the cost of that technology, and to work with individual aerospace companies on how to approach the subject. Using a framework, a strong approach and collaboration, we must work through how to get to the end point that we want in aviation.

[Caroline Lucas]

The issue is not just that the Government are not bringing forward good stuff fast enough—in other words, the delivery gap that the Committee on Climate Change referenced. The Government are also doing bad stuff. The Committee on Climate Change said that the Government’s plans for more new oil and gas projects in the North sea did not make economic sense. Will the Minister listen to that committee, which is there to give him advice, and look again at the reckless idea of extracting yet more oil and gas from the North sea? That will not get our prices down, and it will not help with the cost of living crisis.

[Lee Rowley]

The hon. Lady and I have spoken about this before, and I know she has discussed the issue with my colleagues. We recognise that we are in a transition, and that fossil fuels are required to get us to the end. The aim of the transition is to get us to net zero, and a requirement of net zero will mean that for certain processes, we will still have to use a much smaller amount of fossil fuels, accompanied by capture technology.

[Caroline Lucas]

indicated dissent.

[Lee Rowley]

The hon. Lady shakes her head, but the alternative is closing down large swathes of industry. If she wants to make that case to the electorate, she can do so and see whether they agree. There would be a lot of people unemployed or without livelihoods, and a lot of industries that would close down. It would not benefit the world as a whole, because those industries would just move elsewhere and offshore. Those are exactly the kinds of unintended consequences that the centre left in this country need to think through, understand and work through before they suggest—as they do, incorrectly, regularly—that they have a viable solution to climate change.

The hon. Member for Bristol North West (Darren Jones) is rightly keen on delivery, as am I. Having sat on the Public Accounts Committee for 18 months in the previous Parliament, I know that delivery is at the core of what we should all seek to do in this place. Policies are one thing, but making sure they are implemented can be very different. I hope the hon. Gentleman will accept that we are in the relatively early phases of some elements of the net-zero plan, and that he will give us time to develop the propositions, as we have done over the last year. We must ensure a strong delivery focus, just as my colleagues in the Department for Business, Energy and Industrial Strategy have done, and I am sure that will continue to be the case in the months and years ahead.

I have the greatest respect for the hon. Gentleman. We have worked closely together on other areas, and we share a similar corporate background. He will know from our time in corporate life about the importance in project management of sending signals and ensuring that clarity about where we are going. The combination of those signals, our track record, and the road maps that we have published for carbon capture, utilisation and storage, for hydrogen, for auto, and for other things will provide some comfort that we are making progress. We obviously have a disagreement about the level of state intervention in certain areas, and I am sure we will continue to debate that in forums such as this Chamber.

My right hon. Friend the Member for Kingswood (Chris Skidmore) makes a number of important points about ensuring that we have a long-term approach. To take aviation as the example again, the challenge is in ensuring that we understand exactly what that will look like and where it will go. However, I accept and acknowledge his point. He also rightly made a point about the importance of dependency, in this instance on fossil fuel producers. He and I have had discussions about not wanting to switch from dependency on fossil fuels to dependency on critical minerals. That is why the Government will introduce a strategy on critical minerals in short order.

I am grateful to the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) for his comments, in particular on onshore wind, which I will certainly pass on to my right hon. Friend the Minister for Energy, Clean Growth and Climate Change. He made an incredibly important point about the importance of having local supply chains where possible. On Thursday, I visited Siemens in Goole, and it was heartening to see that much of the supply chain for the amazing new facility coming to the East Riding is made up of local businesses and local people from across Yorkshire. They are ensuring that we have a fantastic train factory that will allow us to support net zero.

My hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) was right to highlight the importance of transition within net zero, which I have covered, and of not demonising but working with industry. My hon. Friend the Member for North East Bedfordshire (Richard Fuller) made an incredibly important point about individual agency. He spoke about the importance of taking people with us, and of ensuring that we undertake this massive task of treading very lightly on the Earth by 2050 with the consent of the people we represent. We do that by calmly and methodically setting frameworks and defining approaches.

The hon. Member for Falkirk (John Mc Nally), in summing up for the Scottish National party, talked about mechanisms for demand in the British energy security supply strategy. That should be looked at in concert with other strategies, documents and frameworks that have been brought forward. I encourage him to do that. The Labour spokesperson, the hon. Member for Bristol East, extensively referenced the Climate Change Committee report. As I said, we will respond on that in due course. We welcome all outside organisations’ comments, but it is important that there be recognition in the committee’s document of what the UK has achieved, that it is a world leader, and that it has set the right course. It is important that we provide all of that in the round.

I am grateful for all the contributions to what has been one of our better debates in this place. This is a hugely important issue. We recognise, as did most of the contributions, that this is a long-term issue. In some places, we have made huge progress—there has been a 40% reduction in carbon emissions in the last 30 years—but we have some way to go. That is the entire point of net zero, and of the Government working with business to harness the fantastic ingenuity of capitalism, so that we can make progress. I look forward to more of it being achieved, so that we can ensure that the objective of treading lightly on the Earth by 2050 is achieved.

[Mr Deputy Speaker (Mr Nigel Evans)]

I call Mr Dunne to wind up briefly.

Draft Construction Contracts (England) Exclusion Order 2022

Lee Rowley Excerpts

Wednesday 29th June 2022 General Committees

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

I beg to move,

That the Committee has considered the draft Construction Contracts (England) Exclusion Order 2022.

It is a pleasure to serve under your chairmanship, Mr Gray. The draft statutory instrument was laid before the House on 11 May for affirmative resolution. It is being made using powers under the Housing Grants, Construction and Regeneration Act 1996, which is typically referred to as the construction Act. The SI seeks to increase investment in water and sewerage infrastructure through a new procurement model. The specific order is limited to the model developed by Ofwat, which is known as direct procurement for customers.

The order has been drafted to provide a very narrow scope. It excludes only two types of construction contract from the provisions of part II of the construction Act. First, DPC head contracts, also known as competitively appointed provider contracts, are excluded from all requirements of part II of the 1996 Act. Secondly, DPC first-tier subcontracts are excluded from section 110(1A) of the Act. That will allow payments to DPC first-tier subcontractors to be conditional on obligations being performed in other contracts. All remaining construction contracts throughout the supply chain, in particular for small and medium-sized enterprises, will remain subject to all provisions of the Act. Application of the instrument is within England only, as construction is a devolved matter.

I will spend a few minutes setting out the rationale and context behind the draft statutory instrument. The design and construction of an asset can be procured by many different routes. Typically, the most common routes of procuring an asset are build-only, or design and build, where contractors will competitively tender for those types of contract.

DPC is a different type of contract from traditional procurement in the water sector, which would ordinarily be design and build, funded through five-year price reviews agreed between the water companies and Ofwat. Instead, DPC is based on a regulated water and sewerage provider—the water company in each individual area—competitively tendering for a third party to design, build, finance, operate and maintain a major infrastructure scheme. In DPC, the third party will likely be a special purpose vehicle, which will commonly include a construction company, a funder and a service provider. In turn, that SPV will enter into a series of subcontracts for the design, construction and maintenance of the asset.

In effect, that creates a new competitive model for water infrastructure financing, and then for delivery and operation, opening the market up to new participants. That can deliver significant additional value over and above the traditional approach, and we hope that it will do so. We hope that it will provide innovation, resilience and ultimately, in time, lower costs to customers.

On the legal context, part II of the construction Act creates a framework for fair and prompt payment through the construction supply chain, and a resolution procedure for disputes. Generally, the Act requires the legal framework for any transaction to be implemented through the construction contract. Where a construction contract omits to deal with an issue, or does so in a way that does not meet the requirements of the Act, the scheme for construction contracts, which has been around for a number of years, is implied. As a result of historical decisions, the construction Act has always prevented “pay when paid” clauses, which were often used previously as a way to delay payments to the supply chain. The Act also prevents any term in the contract that makes a payment conditional on the performance of an obligation elsewhere under another contract.

For many years, that legal framework has played an important role in improving the payment practices in the industry and is intended to cover a wide range of construction contracts. Notwithstanding that, the construction Act confers powers on the Secretary of State to disapply the provisions in limited circumstances. That has happened before: the construction contracts exclusion orders in both 1998 and 2011, due to the distinctive financing arrangements that the contracts underneath them were proposed, allowed that disapplication. For the same reason—a change to distinctive financing arrangements—we are seeking to use the exclusion again.

There is a risk that the proposed DPC contract arrangements could be challenged for non-compliance with the construction Act if changes are made. DPC contracts fall within the definition of a construction contract, and must therefore include construction Act-compliant payment processes and adjudication arrangements. If they do not, the scheme for construction contracts is deemed to apply in any case. However, if that happened in future DPC contracts, it would adversely affect the structure and operation of those project contracts, and would threaten the viability of the procurement model. The whole point of DPC is to do something differently so that the infrastructure can be developed and delivered, and the construction Act elements and the scheme should not be applied as a result of that.

As part of the development of the statutory instrument, a targeted consultation was undertaken with the relevant construction industry and water stakeholders. Most held the view that DPC was important in unlocking significant private sector investment and helping water companies to deliver in the future. It was confirmed that the specific contracts would be disproportionately affected by the provisions of part II of the construction Act if changes were not made. In the absence of such an exclusion order, the tendering parties for the new procurement model have indicated their unwillingness to proceed, due to the risk of being challenged on non-compliance with the construction Act and the impact of any successful challenge.

Equally, any regulation must be targeted to ensure it is used only for intended contracts. The majority of respondents were in favour of exclusion, although some concerns were expressed regarding the impact of first-tier subcontractors and the potential risks to the supply chain. Stakeholders spoke about potential challenges down the supply chain business model, and the potential pinch point for first-tier subcontractors.

It is important to highlight, however, in relation to points about consultation, that the first-tier subcontractor or its parent company will often be part of the SPV itself, which will ensure that it has good knowledge of the funding structure, the contract terms and the risk allocation under this type of new procurement model. That means that the contractor is in a good position to assess and therefore price in contracts any associated risk—the general position associated with more traditional construction contracts. Stakeholders acknowledge that firms that bid for DPC contracts are likely to have previous experience of other funding models, and will have full knowledge of the terms, including the changed terms for payments and dispute resolution.

Although the Government understand stakeholder concerns, we believe that the benefits outweigh the risks, and we have introduced this statutory instrument to support future investment in the water and sewerage sector. Ultimately, it will be for individual water companies to determine how best to approach the matter and to sign appropriate contracts where they can.

DPC is a competitive delivery model focused on increasing investment and making it go faster to improve water and sewerage infrastructure. The Government believe that that model has an important role to play in attracting the investment needed to improve the operation, resilience and sustainability of that UK infrastructure. Two initial DPC projects are under active development in England, and a further 18 may come forward when they meet eligibility criteria. Ofwat expects DPC to be used in future for many major water infrastructure projects.

I emphasise that the exclusion order has been deliberately designed to be narrow in scope and to be used only for DPC contracts. The provisions will not, as far as we are aware, have any impact on SMEs throughout the wider supply chain. I commend the order to the Committee.

--- Later in debate ---

[Lee Rowley]

Many thanks to the hon. Member for Sefton Central for his constructive questions and comments. I will try to take them in turn, although I will take the third one first. I was not in the specific consultation meetings, but as I understand it consultation was undertaken over a number of months. I mentioned in my speech some of the things that the hon. Gentleman has pointed out. I will cover those in a moment, including the need to ensure that the model and the cash flows work and that ultimately those companies further down the supply chain can still get the money they need for the services that they pay for.

The consultation covered a significant number of operators in both the water industry and the construction industry, ranging from Balfour Beatty to Build UK, the Civil Engineering Contractors Association, Costain, Deloitte and EY. There were roundtables with water companies covering Yorkshire Water, South West Water, Welsh Water and United Utilities. My previous comments were a fair reflection of the aggregate opinion, which is that they are content to progress and recognise that this has the potential to be an important new tool. They want to make sure that the contracts are organised in a way that minimises issues, but also recognise that there is risk and that that has to be priced in through the commercial transactions undertaken either when people or organisations join the SPV or contract into it.

[Bill Esterson]

The Minister mentioned the consultees and named some fairly large businesses. Were SMEs and those further down the supply chain part of the consultation? What were their responses?

[Lee Rowley]

A number of industry bodies were consulted, including Build UK and the Construction Leadership Council, which try to take a holistic look at the views of the industry as a whole. In my other role, as construction Minister, I work with them very closely and know that they try to ensure that they prioritise the views of all across the industry, not simply those who may speak with a louder voice, for whatever reason.

Let me turn to the other two points, which are important and I am happy to address them. We hope that the special purpose vehicle will be a tool that can be used to bring forward significant infrastructure improvements in the future, but the ultimate decision about how it would be set up in the one, two, three or n number of cases where this happens will be down to the organisations that want to go into those SPVs. The hon. Gentleman asked how likely the first-tier contractor is to be part of the SPV or its entity, but I cannot give him a number, a percentage or an expectation, because ultimately that will be down to the market to determine. However, experts and officials have indicated that, given historical precedent and what companies that play in this space are likely to do, they would expect those companies building this infrastructure, such as pipes or sewage improvements, to take an early interest in the discussions and the transactions. It is not unusual for such companies to be in similar financial structures early on in the SPV process, but that will ultimately be down to them.

That leads on to the second question, which is how do we make sure that there is not a problem of payment further down the supply chain. There are two broad answers to that. First, for those who are not first-tier suppliers, the same requirements apply around payment as they do today. The contracting that would be undertaken for tier 2 suppliers would be undertaken on the basis of the construction Act, and that Act and the scheme of construction contracts contain clear clauses about payment upon delivery, not payment when other organisations or entities choose. That is not changing.

What is changing is, in effect, the box before that. The SPV and the first-tier operator will need, either through being a group of one or through the SPV contracting to a tier 1 operator, to price in risk appropriately and organise themselves appropriately. They will also need agreement with their funders to ensure that they have cash available at the point at which they will need the working capital to pay tier 2 suppliers or whoever they are contracting, to ensure that the output is delivered.

That is fully transparent at this stage, and that is exactly what the DPC is designed to do—to allow private companies to go out and seek investment to cover the build element, including tier 2 suppliers, and then recognise that they will start to get a revenue stream at the point when the infrastructure is delivered. That is entirely the point of it. The revenue coming from the water companies will not start until delivery. That means that if this works, and we have confidence that it will, the risk to the public purse is minimised because companies pay on results, not on proposal, and because a set of companies and individual actors will be entering into a contract to ensure that they price the risk of delivery appropriately and deliver it to get a long-term revenue source from the Government. I hope that those answers resolve the points raised by the hon. Gentleman. I am grateful for his contribution.

To conclude, I reiterate that the creation of any exclusion under the construction Act is the exception.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Before the Minister finishes, I note that it falls to Ofwat to monitor this legislation. Obviously, the very long-term timescales of some of the projects will be such that they may outlast our time as Members of this House. How is he going to make sure that Ofwat’s monitoring feeds back into Government if there is a problem in the future? If there is a problem, that could be significant. On the other hand, if the model works well, it could be used for other infrastructure projects.

[Lee Rowley]

I am grateful for that question. I had a long discussion with Ofwat yesterday about the importance of its monitoring role. The first stage is to make sure that this works. Obviously, given that we have not yet changed the rules—this order has not gone through yet—we do not have a clearly working example in progress. I am very open about that. There will be a number of pathfinder projects, and they will have to be reviewed. Ofwat has been clear that it will review and, if necessary, suggest changes. It would be entirely appropriate for the relevant Committees and Ministers to remain close to that process over the months and years ahead. The fact that two parties are interested, as well a third in one of the other three nations, should give us clarity about what we hope will happen in the coming years—namely, that this will be a successful model that will balance the kinds of things that we have spoken about.

From the perspective of the Department for Business, Energy and Industrial Strategy, I accept that this will need to be monitored closely. I encourage all the relevant Committees in the House of Commons to do that. We want this to work. We want to learn from the challenges and make sure that it does not fall into the problems that have resulted from other types of financing structures, with which I am familiar from my time serving on the Public Accounts Committee, chaired by the hon. Member for Hackney South and Shoreditch. We hope that that will not be the case in the future.

[Bill Esterson]

The Minister has said that there has not yet been an example of this disapplication, so we are not in a position to judge it. There are, however, two earlier examples of where the construction Act has been disapplied. Are those examples relevant or are they different and, therefore, not relevant?

[Lee Rowley]

The reason the Act was disapplied in 1998 and 2011 was, in effect, the private finance initiative. PFI has a different structure whereby the Government are still involved in contracting out the cost. The order, however, relates to the arrangement between two private parties—the water companies and first-tier building contractors—though admittedly for a piece of infrastructure that will be important to the citizenry of the United Kingdom. It will, however, be a different prospectus. I do not, therefore, think that we can draw conclusions from the previous disapplications. That is why we want to tread carefully, and why Ofwat is keen that we have some early pathfinders, so that we can learn and understand that the proposal works.

[John McDonnell (Hayes and Harlington) (Lab)]

I do not want to delay the Committee, but the explanatory memorandum states:

“Public interest in the Exclusion Order is expected to be minimal. There are two projects under active development and a further 18 strategic water resource schemes are being progressed which may meet

DPC eligibility criteria”.

We are, therefore, talking about projects being developed at a significant scale. Following on from the question asked by my hon. Friend the Member for Hackney South and Shoreditch about Ofwat and monitoring, do the Government intend to provide the House with regular reports on the schemes? If they are of a significant scale—they may be innovative, but they may also be an unknown quantity—we will want to monitor them more closely.

Secondly, on the consultation, the Minister skated over the issue of the SME response. It would be very useful if he could write to us specifically about the points raised by the SMEs, so that that can be built into further monitoring of the projects.

[Lee Rowley]

I am happy to write with more details on the consultation. Also, my colleague in the other place answered a parliamentary question yesterday and that contains more information, should Members be keen to understand it. As we have indicated, this is a staged process. The purpose is to change the regulations to allow projects to come forward, and then we will need to learn from those projects. There will be much to learn on top of the consultation in the months and years ahead.

On reporting, Ofwat will take a very close view and provide updates. I will, therefore, let Ofwat provide the reporting structures in the way it deems appropriate. On the point about significant scale, the right hon. Member for Hayes and Harlington is absolutely right to say that the proposal applies to projects of over £100 million. This is not about a few million pounds or a few hundred thousand pounds in individual areas; it is about significant infrastructure changes that should greatly benefit communities over the coming decades.

[John McDonnell]

I will try to make this suggestion in as constructive a way as possible. The Minister’s own involvement with the PAC will have demonstrated to him that Ofwat may not be the most effective means by which to monitor projects of this scale. It might well be that the Government will have a direct role to play alongside Ofwat in informing the House on how the new regulations are being implemented.

[Lee Rowley]

I am happy to consider that separately, and I will also correspond with the right hon. Gentleman on the other point that he has raised.

To conclude, I reiterate that the creation of any exclusion under the construction Act would be the exception, not the rule, and can be justified only in circumstances where the benefits clearly outweigh the costs. We think that that is the case with DPC, and that it has the potential to improve the pipeline of strategic water schemes that come forward, and to do so in a way that will both de-risk the taxpayer and ensure that independent companies and organisations with agency come together to deliver resources from which we will all benefit over the coming decades. I thank everyone for their contributions, and I commend the order to the Committee.

Question put and agreed to.

Industrial Development Act 1982: Use for Coronavirus-related Assistance

Lee Rowley Excerpts

Wednesday 29th June 2022 Written Statements

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

I am tabling this statement for the benefit of hon. Members to bring to their attention spend under the Industrial Development Act 1982. In addition to the obligation to report on spend under the Industrial Development Act annually, the Coronavirus Act 2020 created a new quarterly reporting requirement for spend which has been designated as coronavirus-related under the Coronavirus Act. This statement fulfils that purpose.

The statement includes a report of the movement in contingent liability during the quarter. Hon. Members will wish to note that measures such as local authority grants, the coronavirus job retention scheme and self-employed income support scheme, and tax measures such as the suspension of business rates are not provided under the Industrial Development Act 1982 and hence are not included below.

This report covers the fourth quarter of 2021, from 1 October to 31 December 2021, in accordance with the Coronavirus Act.

The Department for Environment, Food and Rural Affairs has a negative expenditure in the fourth quarter of 2021 because the process to recover grant money underspent by applicants began in October 2021.

The written ministerial statement covering the third quarter of 2021 was published on 7 March 2022.

Spend under the Coronavirus Act2020

Under the Coronavirus Act 2020, there is a requirement to lay before Parliament details of the amount of assistance designated as coronavirus related provided in each relevant quarter. In the period from 1 October to 31 December 2021, the following expenditures were incurred:

Oral Answers to Questions

Lee Rowley Excerpts

Tuesday 7th June 2022 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

The Secretary of State and the ministerial team regularly meet business representative organisations to discuss how Government can continue to support businesses and help them to grow. We regularly discuss the apprenticeship levy and are working closely with colleagues in the Department for Education to feed back the views of the business community.

[Dr Evans]

I was lucky enough to visit Forterra in my constituency near Desford, where it is building a £95 million brick factory. Forterra raised the apprenticeship levy because it is finding difficulties trying to get more people to come and work in the likes of the heavy goods vehicle sector. Part of the difficulty is the constraints around how the levy can be used. Will the Minister meet me to discuss how we can get rid of some of the red tape and be creative for those industries that are particularly struggling with the legislation and the restraints around the apprenticeship levy?

[Lee Rowley]

I congratulate my hon. Friend on speaking up for businesses in his area and on Forterra, which I understand from reading will be one of the largest brick factories in Europe. I would be very happy to meet him and I am grateful for any comments that he or other colleagues have about the apprenticeship levy.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

We are trying to find out this morning what the Secretary of State’s job is. It says “Industrial Strategy”, but how can we have an industrial strategy without skills? The Minister knows that something is seriously wrong with the apprenticeship levy—and what about kickstart? That has quietly died the death. It was the flagship training policy of this country. What the hell is going on on the Government Benches if they do not know what their job is?

[Lee Rowley]

We always welcome all contributions, particularly constructive ones such as that one. The apprenticeship levy has been in place since 2015: among the most recent statistics, more than 100,000 people have begun apprenticeships and under-25s make up a substantial proportion of the number of people taking up apprenticeships. While we will always look at how we can improve things, a substantial amount of progress has been made in recent years.

[Siobhan Baillie (Stroud) (Con)]

5. What steps his Department is taking to promote fusion energy in the UK.

--- Later in debate ---

[Craig Tracey (North Warwickshire) (Con)]

22. What steps he is taking to ensure that UK businesses benefit from the UK leaving the EU.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

Leaving the European Union gives us a fantastic opportunity, over the long term, to chart a new course to bring further prosperity to the UK. The Government are committed to growing the UK’s economy by making the most of our Brexit freedoms, signing new trade deals, and, over time, lightening the regulatory burden.

[Julie Marson]

I have previously compared the role of Government to that of a cricket groundsman preparing the best possible wicket on which our players—our businesses, including mine in Hertford and Stortford—can play to their strengths. Will my hon. Friend outline the steps that we are taking to drop unnecessary regulation following our departure from the EU, so that our brilliant businesses can compete and win?

[Lee Rowley]

I am grateful to my hon. Friend for her important point. Unlike her, I am not able to make any comparisons with cricket, but we know that unnecessary regulation, where it exists, is a real burden for businesses, and we are committed to reducing it. There is also work under way on data laws, alcohol duty and imperial markings. There is the forthcoming Brexit freedoms Bill, and cross-Government work to look at reducing burdens. All of that should mean positive movement in this important area of policy.

[Craig Tracey]

Our insurance and financial services sector is a great British success story, and it helps to fund our local public services. The majority of employment in the sector is outside London and spread across many of our constituencies. Does the Minister agree that it is vital that we continue to support the growth of this industry, and that there must be a strong competitiveness duty on the regulator, so that we can make the most of opportunities now that we have left the EU?

[Lee Rowley]

I know that my hon. Friend does a huge amount of work in this area as chair of the all-party parliamentary group on insurance and financial services, and he has a background in the sector. Although he is tempting me to make policy that is dealt with by another Department, I know that his point will have been heard by my colleagues in the Treasury.

[Jim Shannon (Strangford) (DUP)]

Under the Northern Ireland protocol, Northern Ireland businesses pay mainland suppliers a fee to ship to them. Will the Minister consider refunding businesses this fee, which they must accept because the list of suppliers who will take on the hassle of the web of red-tape confusion is ever-dwindling, leaving very little choice when it comes to supplying goods to Northern Ireland?

[Lee Rowley]

The hon. Member is hugely committed to finding ways through the challenges around Northern Ireland, and I congratulate him on the work that he does. I will certainly pass back his comments, and I am happy to discuss them with him separately, if that is helpful.

[Peter Grant (Glenrothes) (SNP)]

Following on from the cricket analogy, one of the golden rules in that great game is that when your time is up, you walk; you do not wait until you are told.

The Minister is talking about the benefits to businesses of leaving the EU. When will businesses in my constituency start to feel those benefits? All they are seeing now is businesses closing because they cannot get the staff, because of interruption to their supply chain, or because their exports are getting held up on their way across the channel. When will things turn around after the disaster of Brexit, so that we are at least back to where we were before 2016?

[Lee Rowley]

That was a nice try from the SNP at linking those things. As the SNP and the hon. Gentleman know, there are substantial global issues at the moment that all Governments are grappling with, and the Government here in the United Kingdom have been very clear about their desire to support businesses and to help people through these difficult times.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

British business depends on British science for long-term national growth, and the No. 1 issue facing British scientists right now is our participation in the world’s largest science funding programme—the European Union’s £95 billion Horizon programme. Since 2007, British scientists have won over £14 billion from Horizon—more than we put in—but this is about more than money; it concerns international prestige. Horizon is a collaborative network of over 30 countries. Let us face it: this Government will never be able to replicate that. The Prime Minister said that he had an oven-ready Brexit deal; why is British science being left on the shelf?

[Lee Rowley]

I am not going to refight Brexit and revisit the positions we all went through in the last Parliament. Horizon is important. The UK Government have been very clear about our desire to continue with Horizon. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Mid Norfolk (George Freeman), who is the Minister for science, continues extensive work to ensure that that happens. The EU has a choice to make, and my hon. Friend will be in Brussels tomorrow to continue that conversation.

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

7. What recent progress his Department has made on securing business investment in the UK.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

In recent months, the UK has had a strong track record of attracting inward investment, including in cars—in Nissan, Stellantis and Ford —and in batteries, through Envision AESC; and Airbus announced a further ramping up of its A320 line in Broughton a few weeks ago. In April, the Department launched the new global Britain investment fund, which will build on our track record and encourage internationally mobile companies to invest in the UK.

[Dr Spencer]

I thank the Minister for his response. I draw the House’s attention to my entry in the register of interests, my chairmanship of the all-party parliamentary group on Finland, and my vice-chairmanship of the all-party parliamentary group on Sweden. Our relationship with Finland and Sweden has never been stronger; there is the mutual defence treaty, our support for their application for NATO, and the recent Sweden-UK life science agreement. Does my hon. Friend agree that Runnymede and Weybridge, with its connectivity, academic institutions and strong tech and life science sector, is a fantastic place to build on that investment and that relationship, and to bring in further investment from northern Europe?

[Lee Rowley]

I absolutely agree with my hon. Friend that his constituency has a very important role to play in the future of life sciences, and I commend his work on that strategically important sector. He mentioned the life sciences memorandum of understanding that we signed with Sweden last week. Our relationship with Sweden goes back more than three centuries and is worth £20 billion, and there are 100 Swedish life science companies in the UK. That is another example of close working across the globe on progress for everyone’s benefit.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

The Centre for Policy Studies is not alone in having just published damning research from business leaders. It states that Britain is becoming a less attractive place to invest; the UK is slipping behind other countries because of red tape, rising taxes and ministerial complacency. Could it be because we have a chaotic, rudderless, high-tax Conservative Government, with no industrial strategy and no plan for growth? Is it not time that the Secretary of State listened to businesses, tackled rising business costs and backed calls to spike the national insurance hike? He should know that it is the wrong tax at the wrong time.

[Lee Rowley]

That is a curious line of questioning from the Opposition Front-Bench team, given that Nissan has made £1 billion of investment in recent months in Sunderland, Stellantis has made an investment of more than £100 million in Vauxhall at Ellesmere Port, and there is additional investment in green technology and life sciences—the list goes on and on. Of course there is more to do, and of course as a listening Government we will always look at what more we can do to make us the most attractive place to invest in the G7 and across the world. We have a good track record that we will continue to build on.

[Judith Cummins (Bradford South) (Lab)]

8. What steps his Department is taking to help ensure affordable energy provision during winter 2022-23.

--- Later in debate ---

[Kate Griffiths (Burton) (Con)]

16. What steps he is taking to support the manufacturing sector.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

Manufacturing —from the heaviest of our industries to our most modern fourth industrial revolution factory—is the bedrock of our country’s resilience, and we are committed to supporting it. This year, we will launch a new manufacturing investment prospectus to promote the UK as the destination of choice for investment, and to signpost the support available to businesses.

[Holly Mumby-Croft]

Decarbonisation and the production of green steel represent a huge opportunity for steelmakers such as British Steel in Scunthorpe. Steelmakers are raring to go, but they need further policy guidance before they invest. Can my hon. Friend reassure me that he will continue to work closely, in the excellent way that he has done, with steelmakers to ensure that they have the guidance they need to reach those goals?

[Lee Rowley]

I can absolutely reassure my hon. Friend that we want to continue to work with British Steel, and with her—she is a champion for Scunthorpe and the surrounding communities—to ensure that it has a strong future, and to plot a pathway to treading more lightly on the earth.

[Kate Griffiths]

The recent report by Midlands Connect outlined that upgrading the A50/A500 corridor that runs through my constituency of Burton and Uttoxeter will unlock £12 billion for the economy and create more than 12,000 jobs. Will my hon. Friend meet me and other colleagues who represent the north midlands manufacturing corridor to see how his Department can support these upgrades and unlock enterprise opportunities across the region?

[Lee Rowley]

As a fellow midlands MP, I very much welcome the report from Midlands Connect about the opportunities that our region can take together for the long term. I know how hard my hon. Friend and her colleagues in Staffordshire work on this, and I would be happy to meet her to discuss the matter further.

[David Linden (Glasgow East) (SNP)]

14. What plans his Department has to bring forward legislative proposals on neonatal leave and pay.

Draft Contracts for Difference (Miscellaneous Amendments) Regulations 2022

Lee Rowley Excerpts

Monday 23rd May 2022 General Committees

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

I beg to move,

That the Committee has considered the draft Contracts for Difference (Miscellaneous Amendments) Regulations 2022.

I am grateful for the opportunity to contribute today. In the sixth carbon budget, the Climate Change Committee emphasised the crucial role that carbon capture and storage will play in reducing emissions from industrial processes, combustion, electricity generation and hydrogen production. The energy White Paper 2020 set out the Government’s view on how to achieve a low-cost, low-carbon electricity system. Although we cannot predict exactly what the generating mix will look like in 2035, we have made a commitment to decarbonise the UK’s electricity system by then, subject to security of supply, and we are confident that renewables will play a key role. However, in order to decarbonise while maintaining security of supply and ensuring that costs are kept low, we will need to balance renewable variability against continuing demand. To do that, we will need system flexibility, energy storage and non-weather-dependent, low-carbon power generation.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

On the Minister’s comment about being unable to predict the energy generation mix in 2035, can he at least predict what the mix will look like in 2030? Clearly, the Government have set their own targets—for example, on what offshore wind will look like in 2030. We have a so-called energy security strategy, which I would have thought is key to the Government being able to predict what the mix will look like and then plan accordingly to facilitate that.

[Lee Rowley]

I am grateful for the hon. Gentleman’s intervention. The point of what I am trying to articulate is that this is a journey that will potentially vary over the course of a number of months and years. We will not know whether it is 1%, 5% or 10%, but the journey of the overall mix is towards a renewable and clean energy future, and we are absolutely committed to getting there. We consider that thermal power with carbon capture and storage is one technology that will provide this at scale and help in the journey that the hon. Gentleman outlines.

In the subsequent net zero strategy, the Government committed to use consumer subsidies to support the construction of at least one power CCS plant, which is to be operational by the mid-2020s. In the round, these strategies illustrate the critical importance of carbon capture and storage technologies, and we have developed specific business models to bring forward carbon capture, utilisation and storage projects. Existing schemes are not considered fit for purpose, because such projects require specific support, given the need for co-ordination across the sector, with supporting infrastructure yet to be built. To enable this, we have developed the dispatchable power agreement. This is a carbon capture storage subsidy for gas-fired projects connected to a full carbon capture and storage system, and it is intended to provide low-carbon, flexible power generation.

The dispatchable power agreement contract is a bespoke contract based on the standard terms of the contracts for difference used previously in allocation rounds, but with specific amendments to ensure suitability for power carbon capture and storage. The dispatchable power agreement will be a key tool used to ensure low-carbon electricity generation by bringing forward investment in power carbon capture storage plants, and to incentivise such facilities to operate in a manner that benefits the UK energy market. The DPA incentivises investment in order to bring forward projects that are ready to build low-carbon generation capacity. The availability payment incentivises power CCUS projects to maintain a high level of capture rate throughout the life of a contract. It is commonly referred to in the business model and is intended to implement our commitment.

The draft regulations were laid before the House on 31 March 2022. The amendments in the instrument laid before the House today are therefore needed to ensure that existing regulations under the Energy Act 2013 can be used to award DPAs. Those regulations are used to award contracts for difference currently: the proposed amendments are not intended to impact the standard CFDs for the current allocation round or future allocation processes of the standard contract for difference.

This statutory instrument introduces three changes to the existing regulations: the Contracts For Difference (Allocation) Regulations 2014—the allocation regulations —and the Contracts for Difference (Definition of Eligible Generator) Regulations 2014—the eligible generator regulations. The statutory instrument amends the eligible generator regulations specifically with regard to the definition of an eligible generator. Currently, new-build generating stations connected to a complete carbon capture storage system are eligible generators. The change we propose allows a retrofitted carbon capture storage project to constitute an eligible generator. It does that by widening the criteria for carrying out a generating activity to include altering an existing generating station into a generating station connected to a carbon capture storage system. By making that change, retrofitted power carbon capture storage plants can be eligible for the dispatchable power agreements.

The statutory instrument also amends the allocation regulations. Currently, the allocation regulations include a specific reference to the contracts granted pursuant to section 10 of the Energy Act 2013. The regulations refer to such contracts and the language suggests that they will include a strike price and a reference price within their payment mechanism. The amendment retains the reference to a strike price and a reference price, but also amends the language to state that such prices may be included, although an alternative payment mechanism that does not use those terms could be used in future. That ensures that contracts that do not specify a strike price and a reference price can be contemplated. It means that there will not be a requirement for those specific terms to be used in dispatchable power agreements, which will allow for the alternative mechanisms that I have suggested.

Finally, the statutory instrument amends the eligible generator regulations. Currently, an eligible generator is defined as connected to a complete CCS system, and a complete CCS system is defined as a system of plant and facilities for capturing some or all the carbon dioxide, or any substance consisting primarily of carbon dioxide, produced by or in connection with the generation of electricity by a generating station, and transporting the carbon dioxide or the substance captured and disposing of it by way of permanent storage. The proposed amendment was to add the words into limb (b) after transporting—

“including by way of non-pipeline transport methods”—

to make it clear that transport can contemplate alternative transport methods. The existing language does not necessarily limit the potential methods by which transport can be done, but it makes it unambiguous that this definition is not intended to be limited to pipeline methods. That is consistent with the consultation respondent who noted that it would be helpful that transport could be carried out by way of non-pipeline methods.

The proposed amendments in this statutory instrument are intended to facilitate non-pipeline transport generally. The proposed changes to the eligible generator regulations aim to be neutral regarding what those possible configurations could be.

To confirm that this statutory instrument is the most appropriate way to approach this area, in accordance with the Energy Act 2013, a consultation was carried out last year between July and September, and a response was given two months ago on gov.uk. We received 16 responses to the consultation; some directly involved in power CCS, some trade associations, some non-governmental organisations and other interested parties. The responses were largely positive and in favour of the proposed changes. Respondents requested some clarification, which have been provided in the official published Government response.

[Alan Brown]

Will the Minister explain why no impact assessment was done for the draft regulations? We are talking about consumer subsidies, so we should have an impact assessment of what it could mean for people’s energy bills.

[Lee Rowley]

I will be happy to answer the important point the hon. Gentleman raises when I conclude, along with any other comments made.

Let me conclude in order to give Members the opportunity to comment. The draft regulations facilitate the Government’s CCUS programme generally, but the decision to award support is separate. Decisions about the specific support that will come through those remain subject to the outcome of a separate process and value for money and affordability considerations. The measures introduced by the SI are aligned with the Government’s carbon budget and net zero targets, as they help to enable power carbon capture and storage projects. I commend the draft regulations to the Committee.

--- Later in debate ---

[Lee Rowley]

I thank everyone for their contributions. I welcome the welcome: as a Committee, I think we are broadly in assent with the substantive points in the regulations. Alongside that, there were a substantial number of questions, some about the specifics of the statutory instrument, which I shall address as best as I can, and some about energy policy more broadly.

While I accept hon. Members’ challenge to contextualise what we are talking about today, I hope that they will forgive me if I do not seek to delay the Committee too long by debating aspects of broader energy policy, such as the validity and value of nuclear, the potential alternative approaches with hydro, grid upgrades and the like, simply because they are broader than this relatively narrow SI and there are opportunities elsewhere in this place to debate them.

I completely understand and acknowledge the points made by the hon. Member for Kilmarnock and Loudoun, but “dribs and drabs” is perhaps a little unfair. We are trying, in a careful, cautious and incremental way, to address the specific issues that we need to address to ensure that our statute book works for some of the changes that we are making, with a very ambitious and broad-based approach to transforming and decarbonising the energy system over the long term.

The hon. Gentleman asked about the impact assessment. There is no requirement at this stage to undertake an impact assessment, although he can see from the process that we have undertaken, particularly around the consultation, that a significant amount of work was done to understand people’s views. When we have changed the law and we are seeking to put things through the process we are changing today, appropriate consideration can be given to various mechanisms. We have been clear that there will be changes, and I referred to some of them in my opening speech.

The hon. Member for Southampton, Test asked a number of detailed questions about biomass. My understanding is that BECCS could be eligible, provided that it is connected to the complete CCS systems that I talked about in my opening speech and that are mentioned in the broader contextual documentation that is available. However, on the broader questions about biomass, I again defer to the strategy, which will be published in due course.

[Alan Brown]

Paragraph 7.13 of the explanatory memorandum states clearly:

“It is not directly linked to the actual amount of electricity it produces but rewards the plant for being available when needed and capturing the level of CO₂ as required.”

That is still talking about dispatchable energy, whereas biomass would be a constant output. I do not see how that would allow BECCS to be included in the scheme, so I am looking for further clarity.

[Lee Rowley]

I am grateful for the hon. Gentleman’s question. My understanding is that we are allowing BECCS to be eligible in general, but the specifics and the detail—recognising that there are two different elements of both generation and capture through the energy value chain and how they interact—will need to be dealt with on a case-by-case basis and looked at in the round when we launch a process to move on as part of this process of changing the statute book.

My hon. Friend the Member for Windsor asked about the reference price and the strike price. I do not think there is anything more apparent here than simply adding an additional layer of flexibility. We are not saying that we are definitely doing something else, or that we definitely want to move away from reference prices and strike prices; to the point raised by the hon. Member for Kilmarnock and Loudoun, this is just about ensuring that we do not have to come back again if we determine in the future that a different model is appropriate—one that does not mention reference prices and strike prices but potentially mentions some other element.

[Dr Whitehead]

I wonder how that ties in with what is in the carbon capture and storage business plan about the articulation of strike price and reference price-type arrangements in capex and opex as the system progresses. That suggests that the system is more of an RAB system than a CfD system. In the Minister’s mind, how do the two interact?

[Lee Rowley]

I am grateful for the hon. Gentleman’s question. The narrow assessment that we are doing today is to try to ensure that the statute book is as flexible as it can be in the event that alternative models emerge. The technicalities of those alternative models would need to be debated and discussed with experts. For the moment, we are trying to ensure that the legislative framework allows for that variation, should it be necessary. Whether it will ultimately be necessary is a broader question, which will be addressed in due course.

The hon. Member for Kilmarnock and Loudoun raised some important questions about timelines for power plants, the number of power plants and where they will be located. I am sure he expects me to say this, but I am not in a position to outline the precise process by which the system will be operationalised, I am not in a position to confirm whether it is one or n, and I am certainly not in a position to confirm where those locations—singular or plural—will be. This is about getting the legislative and statutory framework ready to be able to make those decisions, which will be made in due course through the appropriate processes.

I make a similar point about bespoke versus auction processes, and about some of the technical questions that the hon. Gentleman asked about comparisons between new and older. He also asked about the broad true cost of transportation, whether it is pipeline or non-pipeline. He makes an important point, and that will all need to be considered in the round when we come to operationalise the changes in due course.

I hope that I have addressed many of the key questions relating to the SI. There is obviously a broader debate about energy policy and some of its elements, but I hope that the Committee is minded to support these technical changes to the rules and regulations that govern these areas, so that we have the flexibility to ensure that we can develop this technology and operationalise it successfully. I commend the regulations to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Contracts for Difference (Miscellaneous Amendments) Regulations 2022.

Fossil Fuel Extraction

Lee Rowley Excerpts

Tuesday 26th April 2022 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

It is a pleasure to take part in this debate and I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing it. Although she will probably be aware that we differ on some points, it is useful even at this late hour to talk about a number of the issues she has highlighted and to respond to some of the questions she has asked.

It is important to note, and I am glad the hon. Lady did at points acknowledge this to some extent, that the transition to non-fossil forms of energy will take time. While our demand for both oil and gas is already declining as we transition to other low-carbon energy sources, UK energy demand for both those fuels will continue for quite some time. That needs to be recognised, acknowledged and understood in public policy development and implementation.

If we announced right now that, from when we come back to this place tomorrow morning, our domestic oil and gas producers should shut up shop—[Interruption.] I accept the hon. Lady did not advocate that, but if we did, it would simply make the UK more reliant on foreign imports. It would not, in fact, lead to greater decarbonisation globally. Jobs would be lost and it would weaken our security of supply. Equally, there are shades of that scenario that remain true even if the hon. Lady indicates that she does not want to do it tomorrow, but at the earliest possible opportunity.

[Wera Hobhouse]

Will the Minister give way?

[Lee Rowley]

I will make some progress, if I may. That was the inference of the speech by the hon. Member for Brighton, Pavilion at other points.

Whether we like it or not, gas at the moment is the glue that holds our electricity system together. It provides the flexibility that has underpinned our roll-out of renewable energy. That is why we consistently see 30% or 40% of our energy on many days in 2022 provided by renewables rather than by fossil fuels. While we are using progressively less gas, it remains an important fuel during the transition.

As a mature basin, which the UK continental shelf is, where some fields are at the end of their lives, production will decline. That does not necessarily mean that there will not be continued development. It is legitimate both to accept the principle of decline and still to ensure that we develop and give the opportunity to develop where we can. Some of the things we have seen in recent months would indicate that it is sensible, in a long-term phase of reducing oil and gas production, that we seek to maximise oil and gas production in or close to the United Kingdom, rather than elsewhere.

[Wera Hobhouse]

Will the Minister give way?

[Lee Rowley]

I will not give way, because I do not have a huge amount of time left.

In taking that time and accepting that time will be needed to get there, we must also have confidence in the story we have to tell as a country. We have made significant progress in the past 30 years, under Governments of all colours: emissions down 40%, the economy up by nearly 80%, renewables now making up nearly 40% of our electricity generation in 2021, up from 7%, and by far the most advanced decarbonisation of any western country.

Those are not things just to be tossed aside as if they were inconsequential. They are important indicators of the desire and intent of this Government, building on the desire and intent of previous Governments, to make progress in this important policy area. I hope they provide some indication, if not to the hon. Member for Brighton, Pavilion and the tradition she is from, then to others who may be watching the debate, that we are serious about it and that we intend to ensure that we make good progress.

With that in mind, I turn to some of the questions the hon. Lady asked of the Government. She asked whether we would commit to any new extraction and when we would commit to a date for UK fossil fuel production finally ending. I would say gently to her that her question fundamentally misunderstands the challenges we face and what we are trying to do over the long term.

The ultimate goal is to get to a point where we are using as little fossil fuel as possible, but we are still in a transition, as the hon. Lady said, so we will need fossil fuels over the course of the 28 years she outlined. It therefore seems sensible to look at what we can extract in or near the United Kingdom. Even when we get to that 2050 date, although she did not discuss this terribly much, it is clear that we will still need fossil fuels at that point. It is a net zero; it is not an absolute zero. Even the documents that she has pointed to, such as the reports by the IEA and the Committee on Climate Change, all indicate that there will still be a requirement for oil and gas, with the relevant offsetting technologies, to be able to minimise the impact on the environment. I see the grand gestures of incredulity from those on the Opposition Benches. When the hon. Lady quotes from those documents, she should also acknowledge that within them there is a recognition that there will still be a requirement for oil and gas, and that extractive technologies to support and minimise the use of fossil fuels will mitigate their impact on the environment and on our earth over the long term.

The hon. Lady asked whether I would advocate for the fossil fuel non-proliferation treaty. I am afraid that I will not, because my concern, having looked at the treaty, is not with its objective—because I think most of us agree with the overall principle of where we are trying to end up, when we pull back the hyperbole, the emotion, the emoting and all the like—but with the challenges underneath it and the scrutiny that we need to place on some of these discussions, which is useful in order to understand the different approaches to this. The authors of the non-proliferation treaty, Simms and Newell, in what they wrote in 2018, are not just talking about changes and achieving this in pulling together a treaty, but saying that the treaty has underneath it a clear lowering of demand, a clear lowering of material consumption, and clear changes to people’s diets. Ultimately, there are questions of choice, individual agency and personal responsibility that the treaty is seeking to gloss over.

Ultimately, one has to choose one’s own approach. I respect and accept the hon. Lady’s approach and I am grateful for her contribution. I think we do have shared aims, but we have to agree on much of the content of this. We want to get to the same place. However, this Government are trying to put the rhetoric and the complaints aside, and to base this on the reality of how we are trying incrementally, carefully and in a sustained way to reduce our impacts on the world as a whole—to tread more lightly on the earth but also to recognise that that will take time, to acknowledge that we have great opportunities in our country to get there, and to recognise that we are in a transition rather than an extinction.

Ultimately, my concern about the hon. Lady’s speech is that it was very long on critique and very short on answers. Those who oppose have a responsibility to propose. We have a set of plans, a set of frameworks, a set of documents and a set of strategies that are seeking to get us to the end point of this and do it in a cool, calm and incremental way. I look forward to those on the Opposition Benches making such proposals some time so that we can do the same critique that has been done today, because they will not hold up to what we have been able to achieve so far, what we are doing today, and what we seek to achieve in years to come.

Question put and agreed to.

Business to Business Selling

Lee Rowley Excerpts

Tuesday 19th April 2022 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

It is a pleasure to serve under your chairmanship, Sir Mark. I am grateful for the opportunity to respond. I am also grateful to my hon. Friend the Member for Rugby (Mark Pawsey) for securing this debate so that we can highlight the fantastic work that British industry and businesses do every day throughout the year. The ability to talk about that even for a few minutes is a great opportunity to celebrate their fantastic work.

I congratulate the APPG and my hon. Friend the Member for Rugby, who chairs it, on the work done under his chairmanship and under the chairmanship of the much-missed former Member for Stirling, who we all wish was still in his place. I was at the initial APPG meeting. I admit this was not an area of huge knowledge to me, but the former Member for Stirling was looking for Members to attend and managed to achieve quite a large number at the initial meeting. That was a testament to the former Member’s powers of persuasion and to the continuing ability of my hon. Friend to highlight this important issue.

I was involved in business for most of my career prior to coming to this place five years ago, so I have a little bit of experience in business-to-business selling. I used to be a management consultant and I would try to find somebody else who could do the business-to-business sales because I was not particularly good at it. I also worked in a bank for several years, building processes so that we could sell financial products to businesses. That brought home to me the importance of capable and competent individuals—and they were not easy to find, as my hon. Friend the Member for Rugby has correctly indicated. They have an incredibly difficult skillset, and I am in awe of those people who can walk into a room and sell at the level of technicality, competence and ability that so many B2B and professional salesmen have.

Such a skill takes many years to hone. We have an understanding in government that that skill is difficult to procure and not easily taught. It is often learnt on the job, but it is hugely important. My hon. Friend pointed out the difference between retail sales and business-to-business sales, which are often merged together but should be considered separately because they have very different skillsets. From a BEIS perspective, I assure my hon. Friend that the Department absolutely recognises the importance and value of business-to-business selling in the UK.

We know that the sector has been through a significant challenge, as every sector has, over the past couple of years. The pandemic has brought many difficulties for businesses and sectors all around the country, so I will take this opportunity to thank the sector for its work, its efforts and its contribution to the UK during that difficult time. I affirm that the Government value and wish to continue to support the sector where they can.

We have near full employment and lots of vacancies, but there are challenges regarding the skills that are more difficult to procure and create in the type of selling that we are talking about. In the past couple of years, gaps have appeared or been exacerbated. Covid has taught us that many business activities can be conducted successfully anywhere and that technology can allow us to get past geographical barriers, but ultimately it is the sales and the techniques that are hugely important.

My hon. Friend the Member for Rugby highlighted the international opportunities to go out and sell UK plc if we have the right skillsets in UK businesses to do so. We are proud to have already delivered a trade agreement with the EU, which came into force last year and has been debated many times in this place and beyond. It is the first that the EU has signed that grants tariff-free and quota-free access to its market, ensuring that British businesses can continue to have a strong trading relationship with our European neighbours and build on the skills that we have been talking about. It is the most liberal market access that either party grants to any trading partner, and gives us opportunities to sign new trade deals—the first opportunity in 50 years.

We have already signed trade deals with Japan, Australia and New Zealand, and this gives us the opportunity to use the skills already in place in UK plc and to seek new opportunities as we build that skillset even further. We will continue to support British businesses to be able to make that case all around the world—not just in the EU, but in all the new markets that are opening—through measures such as the 12-point plan, which will support SMEs to manage import controls, and the export support service, which provides a single point of entry and support for businesses exporting to Europe.

We have included a chapter dedicated to protecting the interests of SMEs in the trade and co-operation agreement, and have various helplines for customs and international trade. All those measures seek to give our businesses and salespeople, and the B2B people who are selling in and around these markets, the tools and the ability to help them with the knowledge and expertise to do what they do best—to find business and help UK businesses grow.

I turn to the importance of skills and productivity in sales. My hon. Friend the Member for Rugby is right to highlight the maxim that nothing gets made until a salesperson ultimately takes an order. There is the challenge of building skills in those who are just coming into the workforce, and of augmenting skills for those who are already there.

B2B sales can be a dynamic and lucrative business activity, which can attract young talent. It is for employers, ultimately, to convey the benefits of those roles for prospective workers. The Government are keen to highlight the opportunities in the B2B market, and the abilities and fantastic capabilities in UK plc. As Minister for industry, I look forward to doing more where I can, and I know that my colleagues elsewhere, in BEIS and beyond, are also keen to do so.

[Mark Pawsey]

Does the Minister think that having a chartered status for sales professionals would raise the esteem of the sector, and encourage more bright and capable people to consider it as a career option?

[Lee Rowley]

That is an interesting question, and one that many industries are debating. There is huge value in chartered status and the accreditation that it provides. At the same time, we must ensure that in creating those things—I am sure it will not be the case in this sector—barriers to entry are not raised at the same time, as that could exacerbate some of the challenges that my hon. Friend has rightly highlighted throughout the debate.

In the few moments I have left, I will touch on productivity and highlight the importance of the schemes already in place, such as Help to Grow: Digital and Help to Grow: Management. Help to Grow: Digital provides businesses with free, impartial online support and guidance on how the digital technology that my hon. Friend rightly highlights can boost their performance. Up to 100,000 eligible businesses can take advantage of discounts of up to 50%, worth up to £5,000, to buy some of the basic productivity-enhancing tools highlighted by my hon. Friend, such as customer relationship management and accountancy software.

On top of that, Help to Grow: Digital enables people to consider the best way, from an e-commerce perspective, to help businesses make the best of selling online. That will be useful for many people, but does not take away from the important point—highlighted by my hon. Friend the Member for Rugby, and the hon. Member for Strangford (Jim Shannon)—about people understanding what they are selling and having the capability, competence and technical knowledge to do so.

This has been a hugely important, if quick, debate. I am grateful to my hon. Friend the Member for Rugby and the APPG for continuing their important work in this sector. There are parts of commerce that do not often speak as loudly as others; they just get on with the job and do brilliant work, day in and day out. This is one of those examples—people who are really pushing UK plc to do more. They are working through how we can grow, do better, and collectively take on more jobs. I congratulate the sector on all the work it has quietly done over so many years; as the Minister for industry, I offer my personal support.

If it is helpful to my hon. Friend, I am happy to talk to the APPG on a different occasion, in more detail, about how we can work together on this issue. I am keen, if we can, to do a visit—or something along those lines—so that we can see, publicise and highlight all the great work in this sector, which has done so much over recent years to put UK plc in such a good position, and will continue to do so in the years ahead.

Question put and agreed to.

Oral Answers to Questions

Lee Rowley Excerpts

Tuesday 29th March 2022 Commons Chamber

[Suzanne Webb (Stourbridge) (Con)]

6. What assessment he has made of the capacity of the UK’s nuclear power generation industry to strengthen energy security.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

Nuclear energy is crucial in providing low-carbon baseload power, which, over the long term, assists in reducing our reliance on fossil fuels and our exposure to volatile global prices. We will continue to emphasise the vital role of the nuclear sector, including in the forthcoming energy supply strategy.

[Suzanne Webb]

Our very own atomic kitten, my hon. Friend the Member for Ynys Môn (Virginia Crosbie), and I are going on a road trip to Hinkley Point C. When I did my research for the visit, I noticed that £5 million-worth of business opportunities had been realised by 36 companies in the west midlands, including three in my constituency, on the back of Hinkley Point C. Does the Minister agree that our investment in nuclear energy is not just about clean energy but about the supply chain opportunities that it will bring to small and medium-sized enterprises and manufacturing in my constituency?

[Lee Rowley]

My hon. Friend is right to emphasise not only the importance of nuclear in concept but the huge significance of the supply chain, which is estimated to support more than 60,000 jobs across the whole of the United Kingdom, including in SMEs in Stourbridge and Ynys Môn. And if I may shove in my knowledge of early 2000s pop music, we are working hard to make the nuclear industry whole again. [Laughter.]

[Tim Farron (Westmorland and Lonsdale) (LD)]

That was written by a member of Orchestral Manoeuvres in the Dark, so we will give the Minister that.

Energy security is of vital significance, particularly at the moment, and nuclear is part of the clean energy mix. Does the Minister understand that the United Kingdom, which has the second highest tidal range on planet Earth after Canada, is not making anything like sufficient use of that permanent tidal energy? Will he look again at his Government’s policies on tidal, marine and hydro energy and give a boost not only to Cumbria and its energy coast but to the whole country?

[Lee Rowley]

The hon. Gentleman raises an important point about the importance of a diversified and secure energy supply. This is one of the reasons that the Government are looking at all forms, including tidal, and it is why we would encourage people from across the House to agree not just with tidal but with nuclear as well.

[Virginia Crosbie (Ynys Môn) (Con)]

In the 2018 nuclear sector deal, £20 million was pledged towards Britain’s first thermal hydraulic testing facility, in north Wales. Does my hon. Friend agree that it is vital that the UK establish world-leading capabilities in thermal hydraulics, and can he provide an update on the next steps for this vital investment?

[Lee Rowley]

My hon. Friend is an absolute champion of the nuclear industry. I believe that this proposal would make the UK third in the world. We are working hard to see what can be done and I will certainly pass on her keenness for progress to be made.

[Tommy Sheppard (Edinburgh East) (SNP)]

7. What steps he is taking to monitor the environmental performance of holders of existing Contracts for Difference in the context of new standards agreed at COP 26.

--- Later in debate ---

[Jack Brereton (Stoke-on-Trent South) (Con)]

8. What steps he is taking to support investment in UK manufacturing.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

The UK remains one of the world’s largest manufacturing nations, and the Government agree that manufacturing plays a vital role in the health of the UK economy. It is ultimately for British manufacturers to make decisions on their own strategies, but the Government continue to support them through a range of initiatives on productivity, costs, innovation and investment, ranging from Made Smarter to the catapults and the global Britain investment fund.

[Jack Brereton]

I very much welcome the Prime Minister’s response last week to my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) that energy-intensive manufacturers such as ceramics will be covered by the upcoming British energy security strategy. These sectors are more important than ever, particularly for future technology, and they need support to address high energy costs now. Will my hon. Friend the Minister do more to support ceramic manufacturers to invest in new technologies and increased energy efficiency?

[Lee Rowley]

There is no bigger champion of the ceramics industry than my hon. Friend and his colleagues from Stoke, who work as an excellent team in supporting the industry as a whole. The Government have worked with industry for many years to mitigate the costs of energy, including an aggregate of £2 billion-worth of subsidy since 2013. From our multitude of conversations on the ceramics industry with him and his colleagues, I know he will encourage manufacturers in his constituency to consider other opportunities such as the industrial energy transformation fund.

[Zarah Sultana (Coventry South) (Lab)]

Earlier this month, bosses triggered a consultation on redundancies at Liberty Pressing Solutions, a business in my constituency that produces high-quality products for the automotive industry. Financial difficulties at its parent company, the Gupta Family Group Alliance, have put its future in doubt, and with it the jobs of more than 200 people. I visited the factory and met the company’s skilled, dedicated workers, who risk being plunged into unemployment just as the cost of living crisis intensifies. What is the Minister doing to protect skilled jobs such as these, which are vital in transitioning to a green and sustainable economy? Will he meet me to discuss how we can save these jobs?

[Lee Rowley]

The hon. Lady is right to highlight the importance of a strong manufacturing base, which is one reason why we have spent so much time supporting and having active discussions with manufacturing. The challenges around Liberty are well known, and I have also visited Liberty sites in recent weeks and months. I am happy to meet her to talk further.

[Mark Pawsey (Rugby) (Con)]

Manufacturers will open their factory doors on 7 July in a UK-wide open house, which is an opportunity to showcase the diversity of the sector, the range of highly skilled jobs on offer and the amazing opportunities for reskilling and career development within UK manufacturing. Will the Minister join me in supporting National Manufacturing Day 2022?

[Lee Rowley]

I could hardly say no. I look forward to doing that and visiting many great manufacturers across the country. We are highlighting the brilliant work of the sector, and we continue to champion it as a vital part of the UK economy.

[Alex Cunningham (Stockton North) (Lab)]

The Government are well aware of the crisis they have created for energy-intensive industries such as those on Teesside. Now that the EU has set aside €50 million to help its firms with energy costs, British firms such as CF Fertilisers, which have no such support, face even tougher competition. I know the Minister is visiting the company tomorrow, but what will the Government do to address the impact of this EU funding on UK fertiliser production? Can he advise on when a decision will be taken about renewing the electricity compensation scheme for energy-intensive industries, which runs out on Thursday?

[Lee Rowley]

I thank the hon. Gentleman for his contribution. He will be aware of the substantial support we have given manufacturers over many years, including more than £2 billion to mitigate energy prices. I note that in Teesside there have been recent announcements that demonstrate the confidence people have within manufacturing as a whole.

[Shaun Bailey (West Bromwich West) (Con)]

My hon. Friend will know that small and medium-sized manufacturers make up the core of the manufacturing base in the Black Country, but many of mine in Wednesbury, Oldbury and Tipton will be slightly concerned that they have missed out on investment because of their size. Will he meet me and manufacturers from the Black Country to discuss how we can ensure that they make the most of the packages on offer for them to succeed?

[Lee Rowley]

My hon. Friend is a great champion for his constituency. I have been to the west midlands regularly to talk about the importance of the manufacturing base, and I would be happy to meet him to talk about West Bromwich.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

In the past, the Nigg oil fabrication facility in Easter Ross built some of the mightiest production platforms for the UK—I worked in that yard. Today, wind turbines for both onshore and offshore power seem to be built anywhere but in Scotland. The firm that owns the Nigg yard announced plans almost four months to get into fabrication, but since then we have not heard a lot. I do not expect the Minister to have the answer at his fingertips, but will he ask his Department to see how progress is- coming along on that front, because it is crucial for the local workforce?

[Lee Rowley]

I would be very happy to speak to the Department and come back to the hon. Gentleman on that.

[Richard Fuller (North East Bedfordshire) (Con)]

Investment is attracted to areas that have agile, pro-growth regulatory environments. In this country, we delegate a lot of the implementation of regulation to agencies, but the oversight and assessment of regulatory agency performance is weak. Will the Minister look at ways in which we can improve how we regulate the regulators?

[Lee Rowley]

My hon. Friend highlights an important point about getting the balance right between regulation, and ensuring that the output and productivity of these industries works. I would be happy to talk to him more if that is helpful.

[Mr Speaker]

I call the shadow Minister, Bill Esterson.

[Bill Esterson (Sefton Central) (Lab)]

The spring statement did not

“address the complex challenges facing the manufacturing sector”.

It just is not

“tenable for thousands of businesses”

and it is

“kicking the can down the road”.

Those are the words of three businesses that are asking for help. So how about this: first, cancel the 10% increase in national insurance payroll tax; secondly, cut energy bills by up to £600 per household; and, thirdly, set up a £600 million energy-intensive industries contingency fund? Our plan is following the evidence from the business community of what is needed. Why will this Government not help businesses that are crying out for support?

[Lee Rowley]

The hon. Gentleman highlights the importance of manufacturing, which we have already talked about in these questions. This Government are a champion of manufacturing—[Interruption.] I am so glad that all Opposition Members agree with me. If they really do, they would recognise that ensuring a strong manufacturing base is incredibly important. The Labour party can provide no lessons, on the basis that it decimated manufacturing before 2010.

[Jonathan Gullis (Stoke-on-Trent North) (Con)]

I am glad now to know who the Minister’s favourite in Stoke-on-Trent is. Steelite, based in Stoke-on-Trent North, Kidsgrove and Talke, received funding from the regional growth fund, but it is being asked to pay back £685,000 plus interest due to capital underspend. The reason for that is simple: a global pandemic came across in March 2020, so it was not viable for Steelite to invest in capital when it did not even know whether it was going to continue to exist or how long the pandemic was going to last. Will my hon. Friend meet me and representatives of Steelite to discuss how that funding can continue to stay, so that Steelite can add to its factory and therefore employ more people locally?

[Lee Rowley]

I am happy to meet my hon. Friend to talk about that in more detail.

[Mary Glindon (North Tyneside) (Lab)]

9. What steps he is taking to support small businesses with rising costs.

--- Later in debate ---

[Greg Smith (Buckingham) (Con)]

12. What assessment he has made of the potential role of synthetic fuels in achieving net zero targets.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

The net zero strategy highlighted the potential importance of sustainable and synthetic fuels as part of the transition to net zero and committed to additional strategies. In aviation, the Government have already announced their ambition to deliver 10% sustainable aviation fuels by 2030.

[Greg Smith]

In our inquiry, “Fuelling the future”, the Transport Committee has heard significant evidence of the role that synthetic fuels can play as drop-in fuels that mean that vehicles, aircraft, ships, cars and plant do not have to be changed—the fuel just works in them. Given this, will my hon. Friend commit to ensure that synthetic fuels and their development are given equal billing with other energy sources?

[Lee Rowley]

My hon. Friend makes two crucial points: first, that technological innovation—the ingenuity of human endeavour—is crucially important in helping us to get to net zero in the first place; and secondly, that it is very important that we let a multitude of technologies and innovations grow and develop, working in conjunction with private enterprise, to help to solve society’s challenges.

[Caroline Lucas (Brighton, Pavilion) (Green)]

14. Whether he was involved in the decision of the Oil and Gas Authority to change its name to the North Sea Transition Authority.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

The North Sea Transition Authority decided to change its name to reflect its important role in the energy transition, driving the UK upstream oil and gas industry towards net zero. My right hon. Friend the Secretary of State was consulted on and supported this change.

[Caroline Lucas]

No amount of greenwash can hide the fact that the Oil and Gas Authority’s primary purpose is to pump every last drop of oil and gas from the North sea, but the International Energy Agency report that was commissioned by this Government is clear that there can be no new exploration for fossil fuels. Let me pre-empt the Minister’s response by saying that no one is suggesting turning off the taps tomorrow, as he regularly claims. We absolutely need a transition that is fair to workers; what we do not need is a so-called climate pass to allow the Government to ignore climate consequences and license more explorations supposedly on the grounds of national security. Can he assure us that he recognises that climate change is itself an issue of national security, and that if we are serious about our net zero commitments there can be no exemptions from the climate compatibility checkpoints?

[Lee Rowley]

If the hon. Lady accepts the principle of transition, then she needs to accept the principle that we will need oil and gas for a number of years yet. That is logical, simple and understood. The only greenwashing that is going on is the Green party pretending that it is interested in green issues when it is only interested in socialism.

[Munira Wilson (Twickenham) (LD)]

T1. If he will make a statement on his departmental responsibilities.

Support for New Adoptive Parents

Lee Rowley Excerpts

Monday 21st March 2022 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

I am grateful for the opportunity to contribute to the debate and for the contributions of my hon. Friends the Members for Carshalton and Wallington (Elliot Colburn), for Scunthorpe (Holly Mumby-Croft) and for Central Suffolk and North Ipswich (Dr Poulter)—who is no longer present—and from the hon. Members for York Central (Rachael Maskell), for Pontypridd (Alex Davies-Jones) and for Sefton Central (Bill Esterson). This is an important debate that should be treated with the seriousness that colleagues have shown this evening, in accordance with the importance it clearly holds for those in the Public Gallery.

As many other hon. Members have already done, I pay tribute to the incredible work that adoptive parents do every single day. I am utterly and completely in awe of those who take on that responsibility and do so for a lifetime. It is incredible to see people’s willingness to do that and to support vulnerable young people in very difficult circumstances to ensure that they build a better life.

I have never spoken about it in this Chamber, but this is something that my partner and I have looked at on a personal level. I have not done it; I have not taken the leap from the springboard that some in the Gallery have done. I am trepidatious—it is very challenging, and we are still working it through. From looking at it, I know how difficult it can be and how much it impacts on people’s lives. The Government are immensely grateful for all the work done on a daily basis by adoptive parents up and down the country, whether in my constituency or any other represented here today.

The Government recognise that it is also a big endeavour for someone to be willing to go out and set up their own business, be an entrepreneur and think about how to support individuals and undertake private enterprise. It is another leap in the dark and another thing that takes time to do. We want to be supportive of self-employed people—those who want to set up their own businesses and who have the desire to go out there and innovate.

The debate covers two very important areas of policy. It is important that the Government think through the potential implications and the challenges that have been highlighted through the petition and by hon. Members today. Before I come to the substantive point, I want to say one more thing. I think the creator of the petition is in the Public Gallery. I was looking at their blog in preparation for this debate, and I read a post they wrote in December, when they were talking about why they had created the petition and why it was so important to them that Parliament consider the issue. At the time, the person was talking about how they had got 4,000 signatures—obviously it went much higher than that. In their blog they said:

“We want to have our voices…heard. To be visible, accepted, recognised and supported. In a nutshell, we want…rights…I don’t think we are asking for all that much. Although I know next to nothing about politics…I’ve managed to work out an e petition”.

I want to say to that person, who might be in the room, that although I cannot speak for my colleagues, I think most of us here did not come from political backgrounds. I certainly did not. My dad was a self-employed milkman, so I did not expect to be here, either.

This place is often very difficult for people who have no experience of it, as most of us did not before we came here. It is hard to understand and work out. We have weird, very strange approaches to things. We say things that we would never say down the pub. Most of us are quite normal people. We are not properly normal—we are in politics—but we are not far off. Ultimately, we understand the challenges and we recognise that there are issues out there. We know that parts of our broad legislative canon are sometimes challenging and do not make immediate sense, and are sometimes in tension with each other. If nothing else, I hope that from coming to Westminster Hall today you will recognise that and feel that you are being heard—

[Ms Nusrat Ghani (in the Chair)]

Order. The hon. Member must speak through the Chair and not say “you”.

[Lee Rowley]

I apologise for saying “you”.

[Ms Nusrat Ghani (in the Chair)]

It is noted, Minister. You may continue.

[Lee Rowley]

I am grateful to you for pulling me up on that, Ms Ghani.

Moving on to the substantive point, as hon. Members will note, the Government have responded to the petition. It is on the website and those who take an interest in the issue will have seen it. No doubt there will still be a continuing conversation and people will continue to push the Government, but I want to spend a few minutes explaining the reasons behind the response. There will be people in the Chamber, and people watching, who have different views, but I hope at the very least to be able to explain the rationale for why we are here. The Government should always listen and always think through such issues in detail. They should always try to understand the tensions between different policies, and I will take a few moments to outline the situation.

The Government want to support all adopters, including new adoptive parents, to ensure that they can access the support that their children and family need at the early stages of adoption. As has been mentioned by hon. Members already, in July 2021 we published our national adoption strategy, which highlights the key improvements that we expect to see in the adoption system. There is an incredible amount in it and an incredible amount of ambition, and it will take time to get there, but that is the direction that the Government and my colleagues in the Department for Education want to go in.

The strategy sets out commitments to improve services in three main areas, the first of which is the recruitment of sufficient adopters. Hon. Members have already highlighted the importance of ensuring that children who need adoptive parents can be matched with them, and we also have commitments both to match approved adopters with waiting children and to provide support to adopted children and their families, which is exactly what we are talking about today.

Earlier this month, we announced that the adoption support fund will continue to offer important support to adoptive and eligible special guardianship order families up to March 2025—to the end of the spending review period that we are in at the moment—through providing access to therapeutic services. When that was launched in 2015, it was a unique programme that provided funding to local authorities and regional adoption agencies so that they could access a range of support for families and tailor it, including psychotherapy and creative therapies following a review of locally assessed needs.

Supporting and ensuring permanency for children is a priority. I hope that it has been demonstrated that since 2015, through measures such as the support fund, we have been able to offer support to nearly 40,000 children. The additional funding just announced will take that to 10 consecutive years of funding. It is £144 million between next month and March 2025. I hope that demonstrates that the Government are committed to stabilising placements. It recognises the importance of the Government in that approach.

Today’s debate has been very reasonable and important, and the level of cross-party support, interest and gentle pushing—quite rightly—of the Government on such important issues demonstrates the willingness of Members from all parties to take the issue seriously and move it outside the normal bounds of party political knockabout that we often fall into in this place. I hope hon. Members and those in the Gallery recognise that there has been progress in recent years in trying to create a more level playing field for adoption and on making the processes easier and simpler, although there is still much to do in the future.

Let me turn to the specifics on maternity allowance. As colleagues know, there are two types of maternity pay available to pregnant working women and new mothers: statutory maternity pay and maternity allowance. Historically, both were primarily health and safety provisions that related specifically to people being in the workforce but needing safety and support for pregnancy prior to giving birth, for childbirth itself, and for breastfeeding. I recognise that the area is in tension, and I understand the clear arguments that have been made by Members from all parties, but because that support is based on the original principle the challenge is in recognising how we apply it. I am not saying, I would not dare to say, that there are not different challenges. The hon. Member for Sefton Central highlighted the challenges that adoptive parents go through at different times, but the principle behind the benefit that the petition seeks to equalise starts from a different proposition and a different perspective. That is why the Government are not coming forward at this time with the change that is being proposed.

[Rachael Maskell]

The Minister is right to say that the circumstances of an adoptive family are different from those of a birth family. However, the fact that there are different circumstances means that the Government should look at those circumstances specifically. My ask today is that the Government go away and consult on that, to have a better understanding of why these measures are so important.

[Lee Rowley]

I am grateful for the hon. Lady’s comments, and she makes an important point. I am not in a position right now to talk about any future consultation. I know that this is an area where the Government are always keen to get views and that my colleagues in the Department for Business, Energy and Industrial Strategy and across Government elsewhere, such as in Education, will continue to look at the issue and take views from colleagues in the House and outside, and from those who have strong views. I understand and acknowledge the hon. Lady’s point.

Let me turn to a few points that have been made in the Chamber today. My hon. Friend the Member for Carshalton and Wallington, who introduced the debate so well, highlighted a number of issues that he was keen to put forward. He highlighted some challenges with guidance and clarity, and I am happy to confirm that I will take those away. I am keen to speak to him about them in more detail, so that I can pass them on to my colleagues to see whether there is anything that might be possible.

My hon. Friend the Member for Carshalton and Wallington talked about variation around the country. As he and other hon. Members know, there is an inherent tension about where and how we structure our policies, and about where and how we put national requirements at the centre, versus local discretion. One answer to the question we are debating is that, as outlined by the hon. Member for York Central—I accept her challenge on this—there is a recommendation and an indication that local authorities should be able to provide discretionary funding where it is necessary and proportionate to do so. Although I understand her point about the challenge of going through the process—such processes can often be challenging—it is there. I hope it is used and that people watching out there who are thinking about adoption and who may be self-employed contact their council, should they feel that that would be beneficial.

The hon. Member for Pontypridd talked about a specific area of the policy on adoption, and I am happy to take that back. I am afraid I do not have an answer for her today, but given the importance of the point, and the profundity of it, it merits being given back to my colleagues, and I hope they will take her points seriously.

My hon. Friend the Member for Scunthorpe highlighted the challenges and opportunities of self-employment, as well as articulating clearly her support for this change. It is something I understand on a personal level—I think I mentioned a few minutes ago that my dad was self-employed as a milkman for 30 years, and one of the reasons he was doing that was to look after me and my brother when we came home. It was not that common in the 1980s for dads to make the tea, clean the house and things like that, but he did it, and that is a demonstration of how self-employed people try to keep all these balls in the air, try to juggle things and try to make it work. I understand and accept why we are debating this issue today, and its importance to a group of people within that community.

The hon. Member for Sefton Central made his characteristically very direct appeal to the Government on this, as he does on a range of other issues. I am grateful to him for sharing his personal experiences. I completely understand why this matter is so important to him on a personal level, and I respect and am grateful for those experiences being shared in public.

[Darren Jones (Bristol North West) (Lab)]

Thank you, Ms Ghani, for letting me intervene, given that I could not be here for the start of the debate. On the one hand, I have heard the Minister say that, personally, he agrees with what everyone in the Chamber has said today, but on the other, I think I have interpreted that the Government have not given him the authority to say that he will do anything about it. Is this therefore a question of policy or of money? If it is a question of money, has the Department quantified how much it would cost to extend these benefits to the people in question? If so, who would pay it? Is it an issue for the Treasury or for his Department?

[Lee Rowley]

I am grateful to the hon. Gentleman for his characteristically incisive intervention. My answer is that we continue to look at all the different elements of how we can structure support for new parents, whether birth parents or adoptive parents—not that that should matter in any way, shape or form—and to work through the most appropriate interventions possible. There will be opportunities later in this Parliament to look at this issue again. I am keen for people to continue to highlight their challenges and personal situations.

I hope I have articulated in my contribution so far the challenge of working through the intentions of every single element of different policies brought in for very good reasons at different times, but the fundamental point is that this particular benefit, which this petition seeks to extend, was ultimately brought forward for a different purpose from what is being talked about here. That does not take away from any of the important points being made by colleagues and the petitioners at large.

I would like to draw to a close, if I may—

[Bill Esterson]

Before the Minister does, will he give way?

[Lee Rowley]

I would be delighted.

[Bill Esterson]

The Minister has made the point, which I accept, about how, for health reasons, benefits for parental leave and maternity benefits were decided on for employment and self-employment. The principle seems to have been established for adoptive parents in employment, too. What I have not followed from his argument—I waited until the end to ask, to see whether he fleshed it out—is the rationale for saying that the principle has not also been established for adoptive parents in self-employment.

[Lee Rowley]

The principle is that while we recognise that the world of work changes—the hon. Member for York Central highlighted the moving parts around the Taylor review and other things around how work is changing—there is a difference between employed work and self-employed work. The cohort of self-employed, who we want to support, grow and help, is very diverse, and there are groups within it who have additional flexibilities as a result of self-employment. Some have the ability to work around their personal lives in terms of their work issues and the rest of it, and we accept that there is a group that does not. It is a question of recognising that the cohort is very diverse.

One reason for the recommendation and advice to local authorities about being able to give consideration to support for specific circumstances is to acknowledge the diversity within that cohort and to try to ensure support where people need it. However, it is also a recognition that this diverse cohort has different groups and different people with different needs.

In terms of the overall position, I recognise that there are strong feelings here and that there are significant views on this issue, both in the Chamber and in the Public Gallery.

[Darren Jones]

Will the Minister give way one more time?

[Lee Rowley]

Allow me one more moment and then I will happily give way.

I hope that I have been able to articulate that, although a number of people in this place will remain at odds with it, the rationale for the Government approaching this issue in the way we have and for why the policy is in place comes originally from a different prospectus—a different proposition—and we think there is some flexibility in the system to support those who need it.

[Darren Jones]

I am grateful to the Minister for giving way a second time and indulging me. I am just conscious that those in the Public Gallery may wish to know what might happen after this debate. Earlier in his closing remarks, the Minister said that there would be a further opportunity to push this issue in this Parliament. Could I probe him to give a bit more detail about that? For example, are we expecting a Bill in the Queen’s Speech—perhaps an employment rights Bill—where we might be able to see amendments or suggestions on this issue, or did he have something else in mind?

[Lee Rowley]

I am grateful for the request for clarification, because my point was about the general parliamentary process and the general opportunity for people to continue to campaign, to continue to make their voices heard and to continue to highlight things. I cannot give any commitments on behalf of the Government about what we will or will not do, other than what I have already said. At this stage, we believe that the position is as outlined in the response to the petition.

[Rachael Maskell]

Will the Minister give way?

[Lee Rowley]

If I can just say a couple more sentences, I will be happy to do so. I just want to draw towards a conclusion, before giving way to the hon. Lady.

We recognise that this is an important area of policy, we understand the challenge and we understand why the petition has been brought forward. I hope I have been able to articulate today the reason why the policy is the policy and to outline some of the discretion in the system, which hopefully has the potential to cover those who have concerns. I do understand the challenge, although I am sure the hon. Member for York Central is about to tell me about it for a final time.

[Rachael Maskell]

I just seek another commitment from the Minister. Will he meet the Children’s Minister to discuss this issue further, not least in the light of the Government committing to respond to the Taylor review in legislation? I would have thought that that would be a great opportunity to take this issue further and to ensure that we have the support in place for self-employed adopter parents.

[Lee Rowley]

I am very happy to give a commitment that I will meet the Children’s Minister and pass back the strength of feeling in the Chamber today. I hope the hon. Lady recognises the position I have outlined, which aligns with the petition response. I have set out the rationale for why the policy is the policy, the reason why we think discretion is in place and the hope, on that basis, that it covers sufficient scenarios, sufficient individuals and sufficient challenges, such that it is a reasonable and proportionate place to be.

Before I conclude, I again thank the petitioners and all those who have a significant interest in this issue. I also thank hon. Members for their willingness to debate it in such a serious and proportionate manner. The Government are grateful to people for continuing to raise these issues, even if at this time we think that the current situation and the current discretion should cover most of the challenges that we see on this policy.