Rural Paper Industry

Debate between Michael Fallon and Guy Opperman

Wednesday 2nd July 2014 Westminster Hall

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

I congratulate the hon. Member for Inverclyde (Mr McKenzie) on securing a debate on this important matter. As he said, the paper industry is an important one and always has been. The hon. Gentleman gave historical figures, and he might like to know that I was brought up in a paper mill village. Bullionfield paper mill in the village of Invergowrie supplied high-quality paper for more than 100 years, including, as I recall, paper for the Tokyo Olympics programmes.

The Government recognise the challenges facing all the energy-intensive sectors, including paper, and I welcome the industry’s positive recognition of Government support in its June 2014 review. That review commended the steps being taken by the Government to ease the direct and indirect costs that climate change policy places on the industry. Improving economic conditions have fed through, as the hon. Gentleman said, to a more successful year for most paper sectors. The data show that measures to help the paper industry have resulted in real growth in the sector. I want to comment specifically on what we are doing to help the paper industry with its energy costs and respond to what the hon. Gentleman said about the importance of job creation in rural areas. If there is time, perhaps I will give a little more detail on what we are doing to promote sustainable forestry.

The Government are increasingly concerned about the effects of high energy prices on the competitiveness of our energy-intensive industries, including paper. That is why we now make compensation payments for the indirect costs of the EU emissions trading system. We intend to make the first payments for the indirect costs of the carbon price floor this summer. Further measures were announced in the Budget: a cap of £18 per megawatt-hour on the carbon price support mechanism, which will benefit all sectors of the economy; and compensation for the costs of the renewables obligation and small-scale feed-in tariffs from 2016. That is the most significant policy cost affecting the price of electricity. The Chancellor also announced the continuation of the ETS and CPF compensation schemes until the end of 2020.

We have paid some £32 million in ETS compensation to 53 companies so far, across the UK, including £5 million to eight companies in Scotland, operating 17 sites between them. The paper industry shared £8 million between 28 companies, including three in Scotland: Ahlstrom Chirnside in the borders, UPM-Kymmene near Kilmarnock, and Tullis Russell paper makers, near Glenrothes. Those companies have been benefiting from the support that we are making available. I am pleased that paper, as an energy-intensive industry, is eligible for compensation across the whole spectrum of measures. The industry recognises that those Government support measures will save it up to £170 million over the coming years.

The hon. Gentleman said some important things about the role of the paper industry in helping to stimulate jobs in rural areas. That is a priority for the Government. We have introduced a range of policies and initiatives to promote growth in rural areas by helping to deliver new infrastructure, particularly broadband; by raising skill levels; and by supporting small and medium-sized enterprises. We are also trying specifically to support the rural economy by investing in rural tourism and supporting micro-enterprises. We have five pilot rural growth networks—not in Scotland but in Cumbria, in the north-east of England, and in the south of England—aimed at tackling specific barriers to growth in rural areas such as a shortage of work premises, slow internet connectivity and fragmented business networks. Those pilots are expected to create up to 3,000 jobs and support up to 700 new businesses. We want to share the lessons we learn from them with local authorities and local enterprise partnerships.

Tourism is an important driver of the rural economy. We must ensure that we are doing more to take advantage of the predicted growth in the tourism sector as a whole to ensure that the rural part of the tourism sector does not lose out. We are making funding grants available to tourism businesses to boost the rural economy through the rural economy growth review and rural broadband. We are also providing support for a high-quality tourism visitor economy through a £25 million package of support, including £6 million for partnership projects funded by the rural development programme.

I turn to the creation of sustainable forestry that can feed back into the industry. Forestry is a devolved matter, so any specific concerns the hon. Gentleman has relating to Scotland should be raised with the Scottish Government and Scottish Parliament. Throughout the United Kingdom, we are working to promote the future success of our woodlands by ensuring their sustainability. In January 2013, we set out our vision in a forestry and woodlands policy statement, which included our priorities for future policy implementation, focusing on protecting, improving and expanding public and private woodland, and recognising the multiple benefits that woodlands provide to the economy, to society and to the environment. Alongside that, we recognise that a strong timber industry helps to deliver the core objectives of protecting, improving and expanding woodland, and contributes to the growing strength of the rural economy.

[Guy Opperman]

We all agree that we need more forestry to cope with existing businesses and the enhanced and expanding subsidised biomass businesses. Post-world war one, we planted Kielder in my constituency specifically to accommodate the need for large forestry infrastructure. I am worried that the Government do not have the big project ideas for large forestry planting going forward. Will the Minister expand on that? It is very much what businesses that I speak to, including forestry businesses, are looking for a steer on.

[Michael Fallon]

My hon. Friend is right, and I will address the steps that the Government are taking.

The forestry industry makes a significant contribution. It provided some £230 million gross value added in the latest year for which figures are available, an increase of 52% over the two or three preceding years. We are committed to invigorating the woodland economy, bringing neglected woodland back into management and helping to create jobs and growth. We support and are encouraged by the new sector-led “Grown in Britain” initiative, which is creating increased market demand for British wood products. Although it was launched only in October 2013, it already has the support of 200 organisations, ranging from forestry suppliers, processors and product manufacturers to big-name high street retailers and UK construction firms.

“Grown in Britain” is driving a change in forestry that could see the management and new planting of woodland become more economically viable. Strengthening and expanding our forestry supply chains is not only creating new market opportunities but, crucially, creating an incentive for increased private investment in woodlands. We are working with “Grown in Britain” to pioneer ways of making it easier for businesses to direct their corporate responsibility investments into projects that improve the ecosystem services delivered by woodlands and result in more tree planting.

We are also making good progress in expanding the woodland cover across England. It is now as high as it has been since the 14th century. We want it to increase by planting the right trees in the right places for the right reasons. We also want more of our woodlands to be managed sustainably to maximise their public benefits. We estimate that if we work together with the sector, we could help to achieve 12% woodland cover by 2060, provided that private investment in woodland creation increases in line with our expectation.

We continue to do our bit in supporting woodland creation. The total area covered by the woodland creation grant in the year to March 2014 was 2,691 hectares, which is more than the seven-year rural development programme target of an average of 2,200 hectares a year. In this financial year, some £30 million of rural development programme funding is being invested, £24 million of it on management of the existing resource and £6 million for planting about 4 million trees on 2,000 hectares of new woodland.

Our woodland carbon code also provides a mechanism further to enhance private sector investor confidence in woodland creation projects for carbon benefits. More than 142 projects have sought certification to the code, representing more than 14,000 hectares of new woodland being planted that will sequester more than 5 million tonnes of carbon dioxide during its lifetime. That is a huge increase from the position a year ago and reflects the growing interest in domestic carbon emissions projects and the success of the woodland carbon code.

On improving woodland management, more than 50% of England’s woodlands are now managed under the UK forestry standard, which sets good practice guidelines for sustainable forest management. The UKFS is a world-class forestry standard administered by the Forestry Commission, and is the foundation for good forestry practice throughout the United Kingdom. It is therefore fundamental to the delivery of sustainable forest management. It provides a valuable toolkit for helping woodland owners to manage their woodlands productively and sustainably. Its application can lead not only to increased timber yields but to better flood risk management, the safeguarding of clean water supplies and the conservation and enhancement of biodiversity.

Our ambition is to increase the proportion of existing woodland under the UKFS. In our forestry and woodlands policy statement, we estimated that working effectively together with the sector could bring two thirds of woodlands into active management in the next five years, with the potential to reach some 80% if markets develop. Good progress is being made, and already the area of woodland under active management has increased from 52% three years ago to 55% in March this year. The key to bringing more woodland into such management is economic viability, and a range of measures are promoting sustainable woodland management, underpinned by the UKFS.

We are actively supporting the sector-led “Grown in Britain” initiative in its efforts to increase demand for and supply of British wood and wood products. Although still in its early stages, the initiative is beginning to make a difference. For example, to date some 19 major UK contractor group companies with a collective turnover of more than £24 billion have pledged to look into ways of procuring more British timber for their construction projects. Their buying power will help to stimulate demand for British wood products, which should lead to more woodland management and economically sustainable woodlands, and in turn to more private investment in woodlands, which we all want to see.

I am grateful to the hon. Member for Inverclyde for raising these important topics. The paper industry is important to us, and we recognise the challenges it faces and the high cost of the energy that it necessarily uses. I have outlined the measures we have taken to alleviate those costs. I have also explained how we see rural development as a major part of our economic recovery and our pilot work to improve the success rate of small businesses in rural areas. Finally, I have explained what the Government are doing to increase investment in private woodland and to drive up the proportion of woodland that is under active, sustainable management to increase the supply of timber to our own industries.

Oral Answers to Questions

Debate between Michael Fallon and Guy Opperman

Thursday 17th October 2013 Commons Chamber

[The Minister of State, Department of Energy and Climate Change (Michael Fallon)]

The Government want everybody to be able to access secure and affordable fuel supplies for heating their homes. This year’s “Buy oil early” campaign was launched on 11 September to encourage consumers to stock up early and join oil-buying groups, where cost savings can be found. I will continue to work through the all-party group and the ministerial roundtable on off-gas grid issues to see what further action is required.

[Guy Opperman]

I thank the Minister for that answer. Our concern should particularly be for vulnerable residents caught out by sudden spring cold snaps. Does he agree that there is scope for a pilot project in Northumberland in which a consortium of oil-buying clubs, parish councils and credit unions could be funded to assist such residents?

[Michael Fallon]

Yes; we very much welcome the development of local initiatives that can help promote a more affordable supply of heating oil to consumers. I look forward to seeing my hon. Friend’s final proposals for a pilot project in Northumberland and will then ask my officials to consider what support might be made available to assist him in taking it forward.

Energy Policy (Winter Preparations)

Debate between Michael Fallon and Guy Opperman

Wednesday 9th October 2013 Westminster Hall

[Guy Opperman]

rose—

[Michael Fallon]

I think I had better make some progress, because the hon. Member for Glasgow North West raised several points that he wants answered.

I will deal first with the green deal, the energy efficiency programme. I will not comment on the sleeping patterns of the Minister of State, Department of Energy and Climate Change, my right hon. Friend the Member for Bexhill and Battle (Gregory Barker), although I note what he said. We encourage people to think not just about keeping warm this winter, but about winter-proofing their homes for the future through a range of policies—not simply the green deal, but also the energy companies obligation.

The green deal is the Government’s most ambitious energy efficiency programme, and is designed to deliver improvements to homes and businesses throughout the country on an unprecedented scale and over a much longer time frame than a particular Parliament or public spending period. It is an ambitious 20 to 30-year programme. So far, there are more than 100 green deal providers and more than 2,000 individuals authorised to carry out assessments. Some 70,000 assessments have been done. The hon. Member for Glasgow North West asked specifically whether the interest rate was too high. Only 8% of households that have decided not to install green deal measures have said that it was because the finance package was unattractive.

[Guy Opperman]

Does the Minister agree that the energy policy is being affected by green deal funding and the domestic renewable heat incentive programme, which, certainly in Northumberland, has had tremendous take-up? Businesses such as the Centre for Green Energy in my constituency are expanding because of that policy.

[Michael Fallon]

I am glad to hear the good news from Hexham, because it is important to understand that those programmes are now up and running, and helping homes and businesses.

Alongside the green deal, there is the energy companies obligation, which has the twin objectives of reducing carbon emissions and tackling fuel poverty. Nearly 200,000 measures under the ECO have already been installed, with more than 60% delivered in low-income households in England, Scotland, and Wales. Alongside the green deal, the ECO carbon saving obligation supports the installation of measures for hard-to-treat situations—cavity or solid walls, and so on—which would otherwise be difficult to finance, but which are long-term energy efficient solutions. That is worth some £700 million a year.

The affordable warmth obligation—another part of the ECO—which provides targeted assistance to low-income, vulnerable people in private tenure households, through investment incentives to landlords, is worth about £350 million a year. That has already resulted in about 40,000 boilers being installed. In July we were already delivering 70% more heating measures through the affordable warmth obligation than were being delivered under the average rate of delivery for Warm Front, its predecessor policy. Finally, the carbon-saving community obligation, worth about £190 million a year, is supporting low-income communities, with at least 15% of funding delivering energy efficiency, particularly in rural areas. As of the end of July, we had already delivered more than 60,000 energy efficiency measures.

In addition, energy suppliers are supporting low-income and vulnerable households through our warm home discount scheme, which is worth £1.1 billion up to 2015 and is expected to support about 2 million households a year up to 2016. It is composed of four elements. The first is a core group, whose members automatically receive a £135 discount on their bills. Consumers who are either under 75 and not receiving the savings credit part of pension credit, or over 75 on the qualifying date and in receipt of a pension credit, are eligible. The discount rises to £140 in 2014-15. For older consumers who have less access to technology, that automatic payment is a big advantage. We expect this year’s automatic payments to be made by Christmas. Indeed, hundreds of thousands of payments will be made this month, giving people confidence that they can afford to turn their heating up when the cold weather sets in. The broader group also targets low-income and vulnerable consumers, but provides energy suppliers with the opportunity to set the eligibility criteria, which must be approved by Ofgem. The third element is a legacy spend group for suppliers to continue to provide support for customers who had previously been on discounted tariffs and rebates.

The hon. Member for Glasgow North West raised the matter of winter fuel and cold weather payments. We are committed to supporting pensioners through the winter months, and we continue to provide winter fuel payments; £300 will be offered automatically this winter to Britons aged 80 and over, and £200 will be offered to households with a resident above the current state pension age for a woman. Last winter, more than 12.5 million pensioners received winter fuel payments, which delivered £2.15 billion in support. If the average temperature for a region is recorded or forecast to be 0° C or below for more than a week, pensioners and those receiving income-related benefits will receive a cold weather payment of £25 for each period. Payments are made on recorded and forecast temperatures, ensuring that those on prepayment meters are proactively supported. Last winter, 5.8 million cold weather payments were made, delivering more than £140 million in support.

Beyond basic financial concerns, cold weather is a major public health challenge. Any extra death because of cold weather is to be regretted. We believe that local authorities are best placed to address local public health issues, and £5.4 billion in funding has been made available from 2013 to 2015 in England. Public Health England will publish the third annual cold weather plan in the coming weeks, and will work in collaboration with other Departments, as the hon. Gentleman suggested. It will set out several levels of response, which will encourage year-round planning.

I have not had time to answer all the hon. Gentleman’s detailed questions. I hope that he will allow me to respond to those in writing. However, I assure him that the Government are committed to keeping the lights on. There is an investment programme, encouraging investment in new sources of home-grown energy, and a framework in place to ensure that those in the most need are protected during the colder months.

Royal Mail

Debate between Michael Fallon and Guy Opperman

Thursday 12th September 2013 Commons Chamber

[Michael Fallon]

The regulator is independent of the Government, Ministers and this House, and it is not possible for it to change legislation that we have passed. The cap remains in place.

[Guy Opperman (Hexham) (Con)]

My constituents in Northumberland want a six-days-a-week universal service, but with incentives and shares for staff, and want Royal Mail to have the commercial freedom to invest, innovate and compete with online and other providers. Will the proposal address the problems that successive Governments have failed to address over successive decades?

[Michael Fallon]

Yes, I believe it will. It will give Royal Mail the chance to face its future not just with confidence but with access to capital markets and the commercial freedoms it needs to respond to new opportunities, particularly in a rapidly growing parcels market.

Oral Answers to Questions

Debate between Michael Fallon and Guy Opperman

Thursday 6th June 2013 Commons Chamber

[Guy Opperman (Hexham) (Con)]

18. With reference to the findings of the all-party parliamentary group on off-gas grid, what plans he has to help residents living off the gas grid.

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

I am grateful to the all-party group on off-gas grid for its informative report. I chaired a round table in May with colleagues from that group, consumer groups, local government and industry, as a result of which a better consumer code of practice is being circulated by the Federation of Petroleum Suppliers. Fuel Poverty Action is developing recommendations on information sharing and vulnerable customers, and Ofgem is considering connecting electricity and gas priority service registers to other markets, including heating oil.

[Guy Opperman (Hexham) (Con)]

I thank the Minister for that answer and welcome the developments that have been made as the all-party group continues its good work. Will the Minister review the progress that has been made and meet the group again so that further representations can be made and we keep the providers of that type of power up to speed?

[Michael Fallon]

I reassure my hon. Friend that the round table I was privileged to chair was not a one-off event and I shall be organising a further meeting on 11 September to chase up progress. I am happy to meet specifically the all-party group, as well as continuing to chair the round table.

Topical Questions