Domestic Gas and Electricity (Tariff Cap) Bill (First sitting)

Michelle Donelan Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 13th March 2018 Public Bill Committees

[James Heappey]

Q On the last panel, Dermot, the price spike of two weeks ago come up. So, to follow on from Vicky’s questions, first, against your modelling, what event did we see two weeks ago? Was that a once-in-five-years event or a once-in-10-years event, in terms of the price spike it generated? Secondly, how do you model against the reality that there will occasionally be those price spikes, but at the same time that we will all urge you to take as much risk as you are willing to, in order to make the price cap a meaningful cap? It would be interesting to know how you strike that balance between the variability in the wholesale market, albeit that it happens very infrequently, versus our wish that you are as bold as possible with the cap.

Dermot Nolan: Absolutely. Two points on that. First, regarding, the events of last week, it is difficult to be precise. I would say they are more the type of once-in-five-years spikes. I will note that, if I may sound very gnomic, there are spikes and spikes. This was quite an acute spike in the gas price, and then there was a spike in the electricity price, but it was not that long-lived. Forward prices for four or five days did not change dramatically, so it was an abrupt spike but a short one.

The whole point of how to set the cap, and over what time period, is a fundamentally important one. The Bill suggests that the price cap must be updated every six months or less. There is an inherent trade-off. One of the things I particularly want to hear about from consumer bodies is over what period people want their prices to change. All the evidence we have in many ways suggests that people like smooth energy prices. They do not like spikes in their own bill. If the cap is set every six months, and a one-week spike is smoothed out over that six months, there is an appeal to that—you get relatively sure prices over a six-month period.

At the same time, you find that if there have been spikes of whatever form during a six-month period—if there has been, say, a fall in energy prices after two or three months—people say, “Why is this fall in wholesale prices not being reflected in my bill? Why do I have to wait six months for it? Why can I not have it after three months?” If we did a three-month price cap, that would ameliorate that issue, but we might be a little bit more vulnerable to spikes and changes in prices. How we balance that is not straightforward and is one of the things that we would particularly want to hear from consumer groups on during a consultation.

[Michelle Donelan (Chippenham) (Con)]

Q On that point, do you think six months is right? I know you have just described the trade-off between a three-month and a six-month period. Do you believe six months is the correct period? There are people that are concerned about flexibility and fluctuations. In the last panel, we heard that if everybody started buying their energy in advance, it could inadvertently cause a spike. What do you believe?

Dermot Nolan: I think six months is the maximum. If the Bill goes through as is, we will consult on it. I honestly cannot say what we would ultimately pick, because it would be an open consultation. Certainly, I cannot imagine, at this point in the way the energy market is, having prices change every week or month. I think it would be a consultation along the lines that I have already mentioned. There is no perfect number though. We would want to try to hear from consumers what they thought was best and what reflected their preferences.

[Vicky Ford]

Q One of the issues that has been raised is making sure that the price cap does not disincentivise investment in infrastructure. During the consultation, will you also be listening to infrastructure investors to take into consideration their views when setting the cap?

Dermot Nolan: We will listen to everybody when taking views on setting the cap. However, the infrastructure should not formally be part of the price cap. It should not affect the way in which the price cap will broadly be set in terms of interactions with suppliers and the prices of the inputs they purchase. So although we will listen to everyone, I do not think infrastructure investors per se will be crucially involved.

I came in at the end of the last session and heard about smart metering. We will have to consider the smart metering costs, but only in the efficient cost. One of the difficult tasks in setting any level of cap is deciding a precise, efficient cost for the firms and ensuring that those efficient costs are passed on in the cap.

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[Alan Brown]

Q I have a supplementary question. This is slightly tangential, but there is a proposed amendment that the Bill should aim to make sure that each SVT customer saves £100. Would an amendment that sets an absolute value within the Bill help or hinder you as a regulator?

Rob Salter-Church: At this stage it would be difficult to say exactly how much money a customer would be able to save through the price cap that will be put in place. We can say that—indeed, the Bill requires this—our first and primary objective is to think about protecting consumers, but we need to make sure that in setting the cap we also take account of the other factors that we need to consider, which is ensuring there are incentives for customers to switch and ensuring that suppliers are able to continue to finance their activities and fund things such as the smart metering roll-out. Although we are keen to ensure that we can save consumers as much money as possible, ultimately it would potentially create some unintended consequences to fix that amount at this stage in the Bill.

[Michelle Donelan]

Q I want to go back to the competition point. Some members of the previous panel supported a relative cap as well as an absolute cap in order to stop the cross-subsidisation that is happening between consumers. What are your thoughts on that? Would that be helpful?

Dermot Nolan: Is this a relative price cap and an absolute price cap co-existing at the same time?

[Michelle Donelan]

Yes.

Dermot Nolan: I have only heard that recently. I am sceptical for a number of reasons. First, I think it is always difficult, and it is undesirable, to tell a company it cannot charge a price below a certain level, which is what a relative price cap might do. I would always be reluctant, personally, to endorse something like that. More generally, the absolute price cap will, to be candid, have an effect on the larger companies. It will drive down the prices at which they charge standard variable tariffs. They will react to that, hopefully, by becoming more efficient and so on, but it seems likely that, for the larger companies, it would reduce the differential between their standard variable tariffs and their fixed tariffs. The idea that they would then be able to cross-subsidise seems unlikely, so I do not see the need for a relative price cap on top of an absolute price cap.

As I said earlier, I think that anything that involves telling a company it cannot charge a low price is not a great thing. Further, if I may say, it complicates the cap. We can figure out an absolute price cap. It will not be easy to set, but we will muster every fibre we have to set the right cap. To complexify it further with a relative price cap strikes me as undesirable.

[Michelle Donelan]

Q You would say that getting this entire process put through simply will foster competition, and that is one of the goals you believe should be in the Bill.

Dermot Nolan: I think it will have an effect. We have a prepayment meter cap already. I said that switching is only one aspect of competition; I want to be clear on that. After the prepayment cap, we saw that some of the cheaper deals left the market, but not all of them did. Some stayed, including from existing suppliers, and there were still cheaper deals from some of the smaller suppliers. I think that is likely to occur. There might be a measured drop in switching for a period of time, but as long as the mechanisms are put in place, this can facilitate competition over the medium and long term.

[James Heappey]

Q This is similar to the question I asked at the end of the previous session. What does effective competition look like to you as the regulator? Are you looking at measuring this in terms of engagement within the market and net fall in the number of SVT customers? Is it based on some differential between SVTs and introductory or promotional prices? Alternatively, is this an opportunity for transformation? We bring in the price cap, but in the process we look at what has been wrong with our old energy system and what the innovation and disruption is likely to be that leads to something for the future, and whether this is your opportunity to deliver that.

Dermot Nolan: I think it is an opportunity for transformation. I have talked about some of the short to medium-term things we will do. Over the period of the price cap—this would probably be a legislative thing, working with the Department and ultimately with Parliament—it represents a chance to perhaps radically recast the supply market.

The supply market has become quite complex. I am not saying that the system of suppliers acting as vehicles for delivering the various obligations has not worked—in many ways, it has—but we see a situation in which a host of new suppliers will be entering the market in three to five years. These might be quite large ones that do not currently provide energy, and they could come in selling energy in a bundled product with other goods.

We will see electric vehicles being rolled out, and a price cap will have to deal with issues such as electric vehicle charging and how people are charged for them. I see a situation in four to five years’ time in which the energy market could have changed radically. The key point of the price cap is that it has to be flexible to any changes and fulfil its basic role of protecting consumers. With great respect to the suppliers in this room and suppliers already out there, I would hope that we could see radically different sets of people providing energy in five years’ time.

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[Claire Perry]

Q Thank you. Mr Moorey, you have not been super-supportive. Would you agree on the need for more protection for vulnerable customers?

Pete Moorey: I support everything that Rich said on the potential need for ongoing support for vulnerable consumers beyond the end of the cap as set out in the Bill. It is important, though, that we do not assume that vulnerable consumers across the board do not engage in the energy market. We know that the most vulnerable are often the savviest consumers. They have to be: they are on tight budgets and, therefore, they can be the most adept at engaging with markets. I know Peter’s organisation, National Energy Action, has done an awful lot of work with very vulnerable people to get them engaged and on to some of the best deals in the market.

Our—and, I hope, your—vision is ultimately of a market that is competitive and delivering good outcomes for consumers. That should include vulnerable consumers and the ability for those consumers to be as actively engaged in the energy market, as they are in many other markets—notwithstanding the fact that, as Rich said, there will potentially be some people who will need ongoing additional support. We would support that.

Peter Smith: There are two clear priorities that sit outside the Bill. The first would be to extend the warm home discount scheme to smaller suppliers; currently, smaller suppliers, with fewer than 250,000 customers, are not required to provide the warm home discount scheme. That means a real challenge on the doorstep in terms of encouraging households, particularly vulnerable households, to switch to the smaller suppliers. Those smaller suppliers are often able, at least on a price comparison website, to provide the cheapest deal but households do not know that they might be missing out on the warm home discount scheme.

The second element is to get on and use the data-sharing powers on which there was a recent consultation, which would enable Government to better share information about households eligible for the warm home discount scheme and could, therefore, benefit from the safeguard tariff.

Those two actions can take place regardless of this Bill. As we warned in the Business, Energy and Industrial Strategy Committee’s pre-legislative scrutiny, if we do not do those things, the cost might be that 500,000 low income and vulnerable households—many working-age—will miss out on approximately £260-worth of support this winter and next. It is an urgent priority.

Two things that can be done inside the Bill, reflecting on the previous evidence and remarks from the rest of the panel, would be to clarify in clause 2 that Ofgem should have due regard to households on the safeguard tariff. We are particularly worried that there is an assumption being baked in at this stage that the SVT-wide cap will protect exactly the same households as are protected by the safeguard tariff. That is not the case. We are also making an assumption that the relative values of those two different caps are going to be broadly the same. Again, that is not the case. We would like Ofgem to consider those two issues specifically. It is right that that is reflected in clause 2, and we support the hon. Member for Southampton, Test’s amendments that seek to achieve that outcome.

The final thing from my perspective is in relation to clause 8, where the conditions by which we remove this SVT-wide price protection need to be met. The opportunities that Dermot Nolan talked about to reflect on vulnerability within that context, particularly engagement for vulnerable consumers, are the clear priority and should be listed in the Bill to make sure that that assessment on competition is also reflecting on engagement of consumers, particularly the most vulnerable households. There would be a set of things that could be done to make that clear.

[Michelle Donelan]

I just want to follow up and build on the topic of consumers. How do you each feel this Bill will impact on the interest groups you represent? This is particularly pertinent to Which?

Pete Moorey: We represent all consumers, and the Bill may have a number of different impacts for all consumers. Clearly, for the large number of people on standard variable tariffs, it is going to mean a cut in their energy bills, which will be very welcome for them.

However, as you are probably aware, we have some concerns about the risks presented by a price cap and the impact that could have for consumers as a whole, which may well be mitigated by the measures in the Bill regarding Ofgem, ensuring that it maintains attempts to promote competition.

Nevertheless, the things that we are concerned about with the introduction of a price cap are that we do not see any softening of competition and that we do not see prices for consumers overall going up. It is likely that for some consumers we will see some price rises, as some tariffs get removed. We do not want to see a reduction in the standard of customer service, which is often deemed as being poor among the larger suppliers; the annual satisfaction survey that we do at Which? every year shows that the larger suppliers do very poorly on a whole range of metrics.

Also, we do not want to see less innovation in the market. So we do not want to see the introduction of a cap having an impact on the smart meter roll-out, or indeed on the transformation that Dermot Nolan spoke about, which we really support, around the introduction of new suppliers in the market, who may well be able to bring a transformation to energy, which is what we want to see.

I absolutely understand why the price cap is being introduced. I think the energy industry had opportunities, time and again, to stop this from happening, and they failed to react to that and to the problems that their customers were facing in the market. However, as we now introduce the cap, we have to be very mindful of those risks: the last thing we want is a price cap to come in, be removed at the end, and for us then to be left with exactly the same kind of broken market that we have now.

[Vicky Ford]

Q I want to push a bit harder on understanding the concerns of Which?, because I see smart meters being only a part of the whole move towards smart consumption and connected appliances that talk to each other—in order, for example, to use less energy at peak times of day. Such innovations are important. Do you want to ensure that the cap does not stop that sort of innovation and instead continues to encourage consumers to have a competitive offer?

Pete Moorey: Absolutely. Smart meters themselves are only the facilitator of a new kind of market. Gas and electricity is a homogenous product. Of course it is dull for consumers to engage with, and our expectations around them switching have been—by and large—fairly ridiculous really, given that there is generally little value in switching beyond the price that you can be saving, which can be significant. But beyond that, why people should really engage with this market has been bewildering to consumers, really.

However, we are now just starting to see potentially a very different energy market, because of smart metering and then smart appliances, as well as the introduction of electric vehicles, storage and a whole range of other changes. They should make energy an attractive industry for new kinds of players to enter, which may well mean that consumers start to be offered very different kinds of things. It may well be, as Dermot said, that there will be much more bundled products, whereby suppliers effectively offer to look after your whole house—your whole life—and that may well be attractive.

Of course, with that comes the risk that that will potentially only benefit people like me, who perhaps have the ability and the money to engage with that market. We obviously want to see all consumers benefiting and we will need to be very mindful, as that change comes, about vulnerable consumers and their ability to benefit from the price cap, too. They should do, because the positive benefit could well be that you can target much more specific products at the most vulnerable, and ensure that they really are getting value out of their relationship with their energy supplier, or indeed with a whole range of other suppliers that could start to form a hub around smart meters and other smart appliances.

Domestic Gas and Electricity (Tariff Cap) Bill (Second sitting)

Michelle Donelan Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 13th March 2018 Public Bill Committees

[Dr Whitehead]

The app, to see what is being generated on any particular day, we will see that it varies from 4% or 5% to 20% or more, depending on the circumstances, so it certainly is true that there will be a variable amount of renewable energy to go round.

However, that is not the point as far as renewable energy suppliers who contract to supply wholly from renewable sources are concerned because they will provide themselves with power purchase agreements or will own their own generating capacity and guarantee that, come what may, what the consumer gets as a result of their tariff is renewable. In a sense, they will have pre-empted the “not enough to go round” point by guaranteeing with their arrangements that there is. I suggest, precisely for the reasons the hon. Lady set out, that that can be problematic for those companies. Nevertheless, that is what they guarantee as part of their tariff.

As far as brown energy companies that want to do a bit of greenwashing are concerned, the hon. Lady is absolutely right that if there is not enough green energy to go round they remove the portion of renewable energy from their supply and the tariff becomes browner, even though they say it is partially green. That is precisely what the amendment seeks to avoid, by making the starting point that the exemption applies to tariffs that are clearly wholly renewable and about which it can be said without a doubt that that is what they are—no messing about. That is why they should be exempted.

[Michelle Donelan (Chippenham) (Con)]

Further to the point made by my hon. Friend the Member for Chelmsford, I am a little confused as to why the hon. Gentleman would add “wholly” when he admits that that is a virtually impossible state for companies to be in at present. Would the amendment not make the Bill have a null and void section, if the word “wholly” was used when that was unachievable?

[Dr Whitehead]

Forgive me, but I was trying to distinguish between other companies and those that guarantee to provide a green tariff come what may because they have either their own supplies or a power purchase agreement with a supplier that guarantees to supply them come what may with renewable energy.

Let us remember that not all renewable energy is variable. Not all renewable energy is reliant on a variable supply being continuously variable. I have recently been to see a number of plants, one of which was a large solar farm close to the Minister’s constituency, which had a large battery installation next to it. The power produced from that source is continuous even though the solar is variable because of the existence of the battery. If a company offering a wholly renewable tariff has a power purchase agreement with that producer, it will have a reliable source of renewable energy come what may, because that is the contract it has made. That is essentially the contract that those companies are undertaking on their renewable tariffs.

[Michelle Donelan]

Is that not disincentivising the green company from growing? It knows that if it takes on more consumers, it cannot 100% guarantee to fulfil their needs on a cold day or in a cold snap. That would cap the green market, which is contrary to what we want to do—we want to encourage it to grow.

[The Chair]

Order. Before the shadow Minister responds, we will have a short comfort break.

Domestic Gas and Electricity (Tariff Cap) Bill

Michelle Donelan Excerpts

2nd reading: House of Commons
Tuesday 6th March 2018 Commons Chamber

[Michelle Donelan (Chippenham) (Con)]

For too long many of my constituents and people living across the UK have been trying to manage overpriced energy bills and have been punished for being loyal customers. In a poorly functioning energy market, all customers would switch between suppliers to get the best value tariff for energy. However, only a proportion of consumers have been doing that, so creating a two-tier, broken system. In fact, according to Ofgem, as of September 2017, 57% of customers with the 10 largest energy firms were on uncapped standard variable tariffs.

I make it clear that I believe in a free market, but I also believe in a free market that is fair—one where the consumer is king and has choice. Currently, loyal customers suffer and we have a two-tier, unfair, broken energy market. This Bill will enable a temporary intervention in the market and will support our manifesto commitment to extend price protection.

Currently, some 11 million households are unprotected and on poor-value standard variable tariffs. The rate of switching is not yet high enough to rectify that anytime soon, so loyal customers suffer. We effectively have a system in which switchers can save around £300 a year but customers of the big six who do not switch and who stay on default standard variable tariffs are overpaying each year. In fact, the Competition and Markets Authority has found that, between 2012 and 2015, customers of the big six collectively paid £1.4 billion a year more than they would have paid in a well-functioning market.

With other initiatives to drive down energy costs and usage, as well as to promote switching, it is easy to question why a cap is needed. Well, it is needed. Those measures will help, but they will all take time, hence the need for a temporary measure. Let us briefly look at the key initiatives.

First, the roll-out of smart meters alone is predicted to take £300 million off consumer energy bills by 2020, giving consumers the knowledge to make informed energy and supplier choices, but that roll-out will take time. In addition, ensuring that properties are energy efficient is also essential, and the energy company obligation “help to heat” scheme will upgrade around 1 million homes by 2020—it will still help only a fraction of the population. The warm home discount scheme provides 2 million low-income and vulnerable households with a £140 rebate each year, but that helps only that specific group. The uSwitch campaign has gained traction over years, and the Government are also working with Ofgem to make switching suppliers even quicker and easier. But the annual switching rate in September 2017 was only 18%, meaning that five out of six households do not switch energy supplier. The number of people actually switching increased by 30% for electricity and 24% for gas. So the proportion of people switching is still far too low but the rate at which switching is increasing is growing dramatically. That indicates that it will become more the norm, but that it will take time.

We can argue today that we need to take responsibility for our own actions and for switching, but we also need to encourage and enable people to do this, and protect the most vulnerable in society. Leaving the system broken and ripping off loyal customers is not the right thing to do. In addition, there is a lack of awareness that switching needs to be done regularly, because as a good-value contract ends, it usually defaults to a single variable tariff. Martin Lewis, founder of MoneySavingExpert.com, has said that we need to make up our minds up between regulating prices, or encouraging competition and switching. However, I do not believe the two are mutually exclusive in this scenario. The regulation is just a temporary fix while we encourage switching and work to reduce energy prices.

Martin Lewis and some others also argue that a narrower price differential will discourage switching. That has not happened in Northern Ireland, and it should incentivise companies to find more efficiencies and reduce prices for switching customers. In addition, Mr Lewis himself warns that the cap will only reduce some customer bills by about a third of what switching would do. That shows the incentive.

I am delighted that the Government have accepted the Business, Energy and Industrial Strategy Committee’s sensible recommendations on the six-month reviews and on the Bill requiring Ofgem to consult on exemptions from the price cap for green tariffs, including the power to exempt them. That will protect green energy providers and give consumer choice. I agree with the Committee that we must also strengthen the definition, standards and checks to ensure that those that qualify as green are green and that this is not just used as a loophole. Good Energy, one of the leading green providers in the UK, is based in my constituency and has in the past expressed its concern to me that consumers select companies thinking they are green when they are actually only partially green. These companies can therefore afford to charge less, so we need to be careful about exemptions to the cap and ensure that the energy market is more transparent to give consumers informed choices. I look forward to hearing from the Minister on that.

In conclusion, I agree with the chief executive of Citizens Advice that this Bill is

“a significant step towards an energy market that works for everyone”.

But it is important that this provision is seen not as a stand-alone measure but as a temporary solution that will encourage switching, work to inform consumers of their energy use and bring energy prices down via a number of incentives.

Smart Meters Bill

Michelle Donelan Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 5th February 2018 Commons Chamber

There is still time for Ministers to show that they have not got their heads in the sand on this programme. There is still time for the Bill to be improved and for concern about rising costs and the impact on consumers to be taken seriously. I hope that the Minister will indicate tonight that he is prepared to accept some changes. I regret that we are not pushing harder for them as an Opposition, but I hope that the other place will look seriously at the risks of a technology white elephant, outrageous rises in energy bills and the risk of a failed smart meter programme brought about because some people just will not listen to common sense.

[Michelle Donelan (Chippenham) (Con)]

I would like to speak briefly on new clauses 2 and 3, which deal in essence with the accessibility of smart meters and their environmental impact.

Accessibility is crucial. Smart meters do make a difference by putting consumers in control of their energy use and thus their energy bills. That gives people the ability to budget better and can help to prevent debt, hence the importance of accessibility for all, which new clause 2 seeks to achieve. I have small rural villages and some very remote properties in my constituency, so I understand the need to prioritise access. Everyone should be able to benefit from smart meters, and it is important to note that those homes often double as offices.

New clause 2 seeks a review to see how we can support the technical development of smart meters to facilitate both greater accessibility for hard-to-reach premises and alternative arrangements for providing a home area network where the standard equipment does not work. My concern about the new clause is that a review would not necessarily affect existing policy, but it would require a great deal of time, resources and management, and might duplicate existing work. We can support and encourage the industry to make advances without calling for a review. While I agree with the aim of the new clause, I do not agree with the means, and I do not think that it would improve the accessibility of smart meters.

In fact, work is already being done with the industry-led alternative HAN forum to monitor activity through wider programme governance, with milestone publications available from quarter 1 of 2019. In addition, work is being done to facilitate supplier innovations to maximise benefits for consumers in no-WAN instances, which are currently less than 1%.

Let me turn briefly to new clause 3, which is designed to make smart meters more environmentally friendly. It must be stressed that the use of smart meters will, by reducing energy consumption, help not just consumers but the environment. The new clause would specifically provide for the efficient removal and disposal of old meters.

Again, while I agree with the principle of the new clause and I do want to ensure that smart meters are as environmentally friendly as possible, the issue is covered by existing waste legislation. In addition, a commitment was made in Committee to a roundtable on recycling issues such as these. That will include representatives from across suppliers, helping to reinforce obligations and highlight best practice in relation to meter recycling and disposal.

The second aspect of the new clause is a call for a review of exemptions for small suppliers from a legally binding requirement to roll out smart meters. Such a provision was tabled and dropped in Committee. However, small suppliers are not exempt from their obligations from 2020, so I am a tad confused by this proposal.

In conclusion, although I have focused on only two new clauses, I shall not support any of the proposals tabled today. I believe that the Bill that sits before us, following its consideration in Committee, is robust and fit for purpose.

Oral Answers to Questions

Michelle Donelan Excerpts

Tuesday 30th January 2018 Commons Chamber

[Michelle Donelan (Chippenham) (Con)]

A constituent of mine is a director of Tower Supplies, one of the leading small and medium-sized enterprises in the personal protective equipment sector, whose bid was recently rejected by Transport for London in the first round of the process with no explanation. The practice is for feedback to be given, but that does not always happen. Will the Minister work with the Ministry of Housing, Communities and Local Government and other Departments to ensure that the system does not hinder SME growth?

[Andrew Griffiths]

The Government are committed to ensuring that more small businesses are able to bid for such contracts. We want to support SMEs through the procurement process, and to ensure that they can be competitive and win such contracts. I shall be happy to meet my hon. Friend and representatives of the company that she mentioned in order to find a solution.

Student Loans Company

Michelle Donelan Excerpts

Monday 20th November 2017 Commons Chamber

[Joseph Johnson]

I cannot tell the hon. Gentleman the precise criteria against which the SLC was assessed. I can tell him that the organisation is steadily improving from when the coalition Government inherited it in 2010. As I have said, it is in its sixth consecutive year of performance improvement, and that is something that we should be celebrating. No one is denying that all organisations have room for improvement, and we want to work with the company to ensure that steps are taken in particular to improve the interface between itself and HMRC.

[Michelle Donelan (Chippenham) (Con)]

Does the Minister agree that it is imperative not only that university students get value for money but that they are able to see where their money goes, and that both of those elements will be promoted by the Office for Students, which will be launched on 1 January?

[Joseph Johnson]

I am happy to confirm that. Indeed, we are consulting on the new regulatory framework that the Office for Students will use as its operating manual. Among the things that we are consulting on is how we can clarify to students how institutions use their tuition fee income so that they—and the Government—can be confident that that income is supporting the core activities that we intend it to be used for: teaching, producing world-class research, and helping students to go on to get great outcomes in the world of work.

Nuclear Safeguards Bill

Michelle Donelan Excerpts

2nd reading: House of Commons
Monday 16th October 2017 Commons Chamber

[Chris Green]

I have already given way on this issue.

It is absolutely extraordinary to suggest that these materials will dry up overnight. Clearly, we are going to have a good relationship with the European Union and there are going to be sales of these products.

[Michelle Donelan (Chippenham) (Con)]

Does my hon. Friend agree that implying that the Bill will have an impact on the supply of medical isotopes is shameful scaremongering that could deeply upset and distress seriously ill people in this country?

[Chris Green]

Absolutely. I agree wholeheartedly with my hon. Friend. As has been highlighted, 500 medical procedures a year, involving 10,000 people in the United Kingdom, depend on these products, yet we hear that they are going to be withdrawn and taken away, or that they will be held at the ports.

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[Simon Hoare]

It is indeed, and who in their right mind would ever criticise a lawyer?

If we and the EU do not like the legal advice, and if we want somehow to disaggregate membership of the EU and of Euratom, we could possibly get some different lawyers to say something different. I must say that I am about to dash out and get myself the stiffest of stiff drinks, because I am going to do something that I never thought I would do—[Interruption.] It is interesting that the Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Wycombe (Mr Baker), arrives in the Chamber just at this moment—his stage timing is exemplary—because I am going to pray in aid one Mr Dominic Cummings, a man I have not joined on a campaigning platform before. If even Mr Cummings, getting terribly hot under the collar, does not believe that leaving Euratom is some sort of demonstration of Brexit adherence or virility or some test to be passed, that should give us pause for thought. Because Euratom has not done anything wrong, and because it has not offended against the principles of this House or the country, I fully commend the strategy adopted by Her Majesty’s Government. We need to be pragmatic and sensible in laying the foundations for this important part of our economic life in case, at the end of the process, we find ourselves having to leave. I do not know whether we will end up like Switzerland, which has special status and is seen as an equal partner, or whether we will end up like the United States of America or Australia, which have looser agreements but are not seen as equal partners. Let us see.

Whatever we do and however we do it, I hope it will always be underpinned by the guiding principle that our decisions benefit our constituents and the country at large.

[Michelle Donelan]

Does my hon. Friend agree that the Bill provides a level of reassurance to the nuclear industry and its 65,000 jobs in this country?

[Simon Hoare]

My hon. Friend is a doughty champion of engineering, research and innovation in this place and in her constituency, and she makes an apposite point. Anyone who wants to see Brexit a success needs to understand that we will have political processes but that the regulatory and business communities want clarity and certainty at the earliest possible point. I agree with her entirely that the Bill provides that bridge, for want of a better analogy, between membership now and a regulatory regime in the future.

--- Later in debate ---

[Simon Hoare]

No, this is not dismissing them either. Are Members honestly saying that when a question is asked and someone answers it, weight can only be given to that answer if it compounds the premise of the question that was raised? [Interruption.] That might be how the Scottish National party goes about doing its politics and its business, but it is not a particularly good way of doing it. People have raised a concern that leaving Euratom may well have an impact on access to this vital ingredient. As this vital ingredient is not covered by Euratom now, it goes beyond eccentricity to suggest that by coming out of this organisation some sort of control is going to be placed on this ingredient, as the organisation we are potentially leaving does not have control of its trade in the first place. I say to Opposition Members that that is a non sequitur. We have been trying to answer calmly and rationally a concern raised by serious and sensible medical practitioners, and, as my hon. Friend the Member for Bury St Edmunds mentioned, we have heard from our Science Minister, who is held in high regard by those in the scientific and medical research community, irrespective of any of their political affiliations. Save for slashing our wrists and writing it in our life’s blood on the wall here in the House of Commons, I am not sure what assurance SNP Members are going to accept.

[Michelle Donelan]

Does my hon. Friend think SNP Members will accept that it is ludicrous to imply that medical isotopes would not be able to be imported should we leave Euratom, given that countries currently not in that organisation are importing those medical isotopes at the moment?

[Simon Hoare]

Once again, my hon. Friend makes the point in the most telling way. If we are providing no illumination to the hon. Member for North Ayrshire and Arran (Patricia Gibson), we are obviously providing a vast amount of humorous entertainment; I am glad she sees this issue as being so hysterically funny. I do not think setting a regulatory regime to allow all of our constituents to have ready access to a medical treatment is anything particularly to laugh about. People can accuse me of being po-faced and a prig if they so wish, and I could almost hear the Twittersphere doing just that as the words left my mouth, but I do not see this as a particularly funny point. My hon. Friend has made the point tellingly: countries that are not part of Euratom are importing isotopes in due time so that their shelf life does not expire. Unless we have some peculiar, Machiavellian, under-the-counter sort of plan to deny people medical treatment by putting the largest possible tariff barriers on these things and making sure that the inventor carries them across the channel in some sort of purpose-made velvet case that has been hand-sewn by his ancient grandmother, I really do not think this is going to be the situation. Therefore, the concern raised by medics can now be set aside.

--- Later in debate ---

[Jo Churchill (Bury St Edmunds) (Con)]

It is a pleasure to follow my hon. Friend the Member for Fylde (Mark Menzies). I join in this debate not as a Member who has a particularly close partnership with the nuclear industry, nor as someone with specific knowledge of Euratom. My hon. Friend the Member for North West Hampshire (Kit Malthouse) says that he voted to leave because of Euratom, but, a little like my hon. Friend the Member for North Dorset (Simon Hoare), I cannot possibly say that I voted to remain because of it. However, the nuclear industry and our nuclear future in all its guises is extremely important to us all. To that end, the Bill is a necessary measure in response to the decisions taken after the referendum—a plan B, as some have referred to it. I urge everyone to join me in giving the Bill an unopposed passage through the House this evening.

[Michelle Donelan]

Does my hon. Friend agree that, while membership of Euratom has served the UK well, it is only prudent and simply good governance that we are prepared for every eventuality? It is common sense, which is perhaps why there are so few Opposition Members participating in and listening to this debate.

[Jo Churchill]

I agree wholeheartedly with my hon. Friend that this is common sense. The Opposition argue that we are being presumptive, but we are just being thoughtful by ensuring that things are in place to ensure a smooth passage.

As has been said, this is about soft collaboration. It is an important opportunity to reiterate that the Government’s aim is to ensure that collaborative research and development continues, with close working relationships between universities, both in Europe and across the world, and other organisations.

It is clear that nuclear is a global industry, given the foreign investment in the UK nuclear industry from France and China. The issue is particularly pertinent in Suffolk, with EDF and Sizewell C due to come on stream. It is for that reason that our future relationship with the European Union is so important to understanding the future of the sector in the UK, as well as what it will mean for jobs, skills and businesses.

I am reassured by the Bill’s commitment to maintaining our current safeguards and standards under Euratom. By leaving those unchanged, the UK can guarantee a close working relationship with the Euratom community and those further afield. That is a wise decision to ensure close working with our natural partners, as my hon. Friend the Member for Cheltenham (Alex Chalk) and others have said.

Closer to home, Sizewell C on the Suffolk coast is under consideration, having completed stage 2 of the consultation process. Its potential is huge: it could power 6 million homes with clean, affordable nuclear energy and create 26,000 jobs and apprenticeships in the region. It would be at the cutting edge of the UK nuclear industry and receive significant international investment. That point was ably made by my hon. Friends the Members for Fylde and for Copeland (Trudy Harrison), who stated that the nuclear industry gives nearly £1 billion to the UK economy. It is important that we acknowledge its monetary significance.

West Suffolk College in my constituency is a national centre for nuclear and it is preparing for Sizewell C. East Anglia is fast proving its worth as a crucial region for skills, research and innovation, with Cambridge sitting at its heart.

I appreciate that the Bill does not cover EU research funding, but given that we are discussing the UK’s nuclear industry, it would not be amiss to remind the House that the UK is a world leader in the most promising nuclear fusion technologies, which is not something on which we intend to compromise on Brexit. As my hon. Friend the Member for Fylde has said, we could be a world leader and it is important that we have the appropriate safeguards in place. That is why a smooth transition, which is contingent on continuity for the sector, is so vital.

The UK wants to explore ways in which continued collaboration, including in nuclear research and training, can be taken forward. For a vibrant region such as East Anglia, that is crucial not just for the possibility of major nuclear investment on our coast, but so that any investment opportunities are not lost on Brexit. Part of that understanding is that all our obligations on safeguards are met. We need to ensure that all systems are transparent and accountable with regard to material and how it is kept.

I will close my speech with two wider points thrown up by the Bill, and I hope the Minister will respond to them when he sums up the debate. On nuclear safeguarding in our communities, what assessment has he made of the role that my outstanding West Suffolk College and other colleges could play as centres of learning for any nuclear engineering apprentices working on my coastline and others, including Hinkley and the north-west? How will safeguards be built into that training? How will we future proof those people whom we will employ in the industry? How does the ONR cascade information through this system? Hinkley Point is a crucial model to learn from for future nuclear projects in the UK, especially in relation to its funding models.

As we leave the European Union, the need to draw skills and jobs to keep our nuclear sector vibrant becomes arguably more urgent, as my hon. Friend the Member for Bolton West (Chris Green) said. That includes those whose skills lie in repositories. We must ensure that we are scoping for the skills needed as we withdraw from Euratom so that we have, as this Bill states, a seamless continuation of the high standards of this industry, and the UK maximises and, as the Secretary of State said, even raises the standards within the IAEA.

Higher Education Funding

Michelle Donelan Excerpts

Wednesday 11th October 2017 Commons Chamber

[Michelle Donelan (Chippenham) (Con)]

Building on the point from my hon. Friend the Member for Kettering (Mr Hollobone), will the Minister explore making university finances much more transparent to ensure not only value for money for students but that the money is spent effectively and efficiently to enhance our fantastic institutions?

[Joseph Johnson]

Yes, we feel it is important that there is greater transparency in the sources and uses of university income. In the regulatory framework consultation in the coming weeks, we expect the Office for Students to make great progress in this area, so that we can boost student confidence that their tuition fee income will be spent clearly, well and for the purposes they want.