UK Space Industry
Owen Thompson Excerpts(3 years, 2 months ago)
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Owen Thompson (Midlothian) (SNP)
I beg to move,
That this House has considered the future of the UK space industry.
I am delighted to have secured this important debate today and I thank the Backbench Business Committee for allocating time for us to consider such an important topic. We all need good news stories in these difficult times, and I believe that the growing space industry, with timely and sensible support from the Government, could quite literally provide a rocket boost to the economy and be a force for good for the country and the planet.
Space is one of the UK’s fastest growing sectors, trebling in size since 2010. It will inspire the next generation and provide fantastic opportunities in science, engineering and technology. It has huge potential for the levelling-up agenda, creating highly skilled jobs right across the UK from Shetland to the south-east of England. It can also play a crucial role in measuring and meeting climate change targets. I welcome the fact that space has been recognised as a critical national infrastructure, in that we now depend on space for navigation, communication, broadcasting, running public services and increasingly for national security. It impacts all our everyday lives and has the potential to really enhance them. So while I am delighted by the recognition of the scale of the potential for space, there needs to be a better co-ordinated and determined effort to support the industry to reach its goals, and I look forward to getting the details on that from the Minister later today.
Space is already a growing success story. It supports 41,900 jobs in 13 of the regions and nations of the UK, bringing in some £14.8 billion in 2016-17. The Scottish space industry also punches well above its weight and is home to almost a fifth of the total jobs in the UK sector, valued at £880 million in 2017-18. Scotland now hosts more than 130 space organisations, including the headquarters of 83 UK space firms. We now need to build on that strong base to be globally competitive at every stage of the process from the design and manufacture of smaller satellites through to the launch and the interpretation and application of the satellite data produced. We have our unique selling points, and we are making great progress. Glasgow is now a European capital for manufacturing small satellites, building more than any other place outside California.
Patrick Grady (Glasgow North) (SNP)
I congratulate my hon. Friend on securing the debate. He is absolutely right about the importance of the space industry and the significance that it has for Glasgow’s economy. Research in the space sector is hugely important as well. Madam Deputy Speaker, I was sporting a University of Glasgow mask, just as my hon. Friend was sporting an Irn-Bru mask. The University of Glasgow has played a huge part in the identification of gravitational waves, for example, which is helping our understanding of the universe as well as driving forward technological developments.
Owen Thompson
My hon. Friend is absolutely right. Use of the data that we can gather from space is important in so many different ways that can contribute to so much that we can take forward.
Innovations by companies such as AAC Clyde Space, Spire Global and Alba Orbital are already driving this world-class agenda. We are leading the way in rocket development in Europe through firms such as Skyrora in my Midlothian constituency and Orbex in Forres. We are making progress in the research and analysis side of the industry, and companies such as Ecometrica, Carbomap and Space Intelligence are helping to move Edinburgh towards becoming the space data capital of Europe. Edinburgh is the only place in the world to work with a NASA robot, the Valkyrie, outside of its headquarters.
Key industry players such as Ukrainian-born Skyrora boss Volodymyr Levykin tell me that they moved here because of the connections, the skilled workforce and our suitability as a place to live. Scotland is developing a space industry ecosystem, and the more it develops, the more it triggers further exponential growth. The Scottish Government were therefore right to identify space as a key priority for future growth. Their support has helped to give the burgeoning young industry a shape and structure, with the ambition to be Europe’s leading space nation and capture a £4 billion share of the global space market by 2030.
The Scottish Space Leadership Council has helped to bring together key figures from the public and private sectors, to ensure that their views are represented at all levels of government and to drive growth and collaboration, but we need co-ordination across all levels of government. A space strategy has often been promised, but we are still waiting to see it delivered. I am sure those watching today’s debate will be as keen as I am to hear what the Minister has to say on that front. To take things forward, we need to get low-cost access to space from UK soil. It is good news that seven UK spaceport sites are working together through the Spaceport Alliance to support launch activity. It is also good news that the space hub to be built in Sutherland’s A’ Mhòine peninsula received planning permission last year. With locational advantages for flight paths and access to orbits that 95% of small satellite launches require, it is now set to be a national centre for vertical launch and could support 400 jobs in the highlands and islands by 2025.
Yet getting the regulations in place is at times more like moving through treacle than rocketing away into a new space future. We need to get the regulations to permit rocket launches, to give clarity about how the system will work and to get it right. The framework was set up in the Space Industry Act 2018, but it is still not in place, and we still await the outcome of the consultation process. When we hear the results, I certainly hope that the Government will have listened carefully to industry voices and taken their concerns on board. So far there has been a lot of dither and interdepartmental confusion, and unfortunately a lack of determined leadership from the Government on these regulatory issues. I might be tempted, Madam Deputy Speaker, to suggest that a rocket somewhere might be helpful, but I shall resist. However, it is not always clear who is in the driving seat, if anyone.
We cannot jeopardise the achievements of an innovative home-grown industry by letting it drift and losing out on launch capability to neighbouring nations. The Minister will be aware of the real threat of international competition to UK launch businesses. One of our home-grown companies, Skyrora, has already tested a rocket with a 26 km altitude, but it had to do so from Iceland, where the regulations were taken forward, with all the essential safety aspects, but more quickly and far more favourably than has been managed here.
The concern is that the licence application process for launch will take far too long to process, resulting in the industry being uncompetitive. I hope the Minister can assure the House in her response today that there is a development strategy in place that embraces all parts of the space industry and has a clear imperative around which the Government, regulators and industry can coalesce to ensure the full potential of space ambition.
I was slightly concerned that, despite not having our home-grown regulation sorted, the Government were so happy and keen to sign the transatlantic technology safeguards agreement, to enable US launches from UK soil, potentially to the detriment of the industry here. The TSA was signed last June and announced by press release, but the text was not made public until October. Many industry players in the UK say they did not have a chance to read and comment on the plans until that point and had not been consulted on the details, nor was there an opportunity for questions and debate in this place, despite the promise given in response to written questions that I submitted. This might turn out to be a benign agreement, as the UK Government have claimed, but there has been no process to scrutinise it, and some aspects certainly raised the concern that UK start-ups could be ousted for big US-based corporate players.
The Government must do more to allay industry fears that it could transpire to be an exclusivity agreement, and they must reassure the industry that they understand and are sensitive to the commercial context in which these companies operate. The industry remains in the dark about how the agreement will actually function in practice, and it will only see the impact once it starts to acquire export licences. That kind of scenario testing should have been conducted openly and transparently beforehand.
Some might question why we are talking about space at all, in the midst of a public health emergency and when people cannot feed their families, but space shapes all our lives. The sector helps to keep us safe, and it is precisely the sort of high-skilled growth industry that we need to support to drive the economy to recover.
There is also a responsibility—the green role that could be carved out by the space industry, which the Scottish Government are certainly very keen to pursue. Space is central to tackling environmental and social justice issues around the globe. Forget the outdated image of a space race, with astronauts boldly going where no one has gone before. The future will be very much focused on making things better where we are now. Data from satellites plays a crucial role in the fight against climate change and finding solutions for major issues that scar our planet. Some 35 of the 45 essential climate variables defined by the UN are measured from space. Similarly, of the 17 sustainable development goals set by the UN with an aim of ending poverty by 2030, satellite data plays a critical role in 13.
Data from earth observation satellites has been used to combat wildfire spread in the Amazon, to monitor glacier melt and air pollutants, to aid disaster relief operations, to measure ozone damage, to measure damage from natural disasters, such as the Fuego volcano, to track and predict malaria outbreaks and to tackle illegal deforestation and pirate fishing vessels.
It is great to see Scotland leading the way. Satellites built and launched in Scotland can monitor the environment in ways not previously possible, including mapping global carbon levels. Glasgow University and Strathclyde University focus on that work with their innovation district, and I welcome plans for the new £5 million satellite centre involving the universities of Edinburgh and Leeds, which will use cutting-edge satellite technology to help combat climate change, including helping lower the risk of people being affected by flooding.
Rocket launches do not exactly have a reputation for being green, but the new space industry must be an environmentally responsible one. Efforts must be made to reduce harmful emissions at launches, and I would like to see a role for environmental regulators such as the Scottish Environment Protection Agency in regulating spaceflight. The good news is that modern micro-launches being developed are a world away from the traditional massive gas guzzling old ones. Orbex, for example, built a micro-launcher fuelled by bio propane, which produces 90% fewer emissions than standard kerosene. Skyrora has successfully tested a fuel called Ecosene, which is created from plastic waste that would otherwise have gone to landfill.
In conclusion, the UK space industry is a massively positive story, but to ensure a happy ending, the Government must: give clarity on their long-term strategic goals; sort out the regulations with urgency; improve the level of scrutiny and consultation in their agreements; show an understanding and sensitivity to market forces; and show ambition in harnessing the potential of space in boosting our post-covid recovery and in tackling climate change. We are at the edge of a vast universe of possibilities for the space sector, so it is vital now that the Government provide the necessary vision, energy and direction to propel us forward.
Madam Deputy Speaker (Dame Eleanor Laing)
As Members are aware, there is a three-minute time limit on Back-Bench speeches.
Future of Coal in the UK
Owen Thompson Excerpts(3 years, 5 months ago)
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Owen Thompson (Midlothian) (SNP)
I commend the hon. Member for North West Durham (Mr Holden) for securing the debate and I thank the Backbench Business Committee for granting the time for it.
The story of coal goes back a long way but, sadly, the future cannot continue like the past. It somewhat pains me to admit that, as I come from a coalmining community. Midlothian’s coalmining fabric is as entrenched in the community as the black strands in my Midlothian tartan tie, which I am wearing today. Dating back to the 12th century, the earliest extractions were by monks at Newbattle Abbey. The first Victorian super pit, the Lady Victoria colliery, still lives on as the National Mining Museum Scotland in Midlothian. Certainly, to anyone looking to visit, I would highly recommend Midlothian over Edinburgh, because Midlothian is clearly where the heart is.
Coal is no longer king, although realistically it will still have a limited role to play in the energy mix as we continue down the decarbonising pathway in a sensible and phased manner. It is currently still used in blast furnaces, domestic heat generation, food and drink production, chemical production and electricity generation, and 14.5 million tonnes of coal were needed to meet demand for energy generation alone in 2017. Like a veteran actor, the roles for coal are becoming fewer and fewer. Instead of frantically scraping the earth for more, it is better to gradually and graciously retire from the scene and hand the stage over to the players of the future.
Coal comprised just 2.8% of the UK’s primary energy demand in 2019, down from 16% in 2000. By comparison, we have seen more than a tenfold increase in renewable energy generation since 1998—particularly from offshore wind—driven by large, unforeseen cost reductions. That and other emerging technologies, including the potential role of hydrogen to help decarbonise heat, is where our energies should lie.
What there will not be under the Scottish SNP Government’s watch is any kind of fracking or any unabated new coal power generation. The last coal power station in Scotland closed in 2016. Should there be any new application, it would not be considered without having carbon capture and storage technology in place. Donald Trump liked to talk about trains loaded up with “beautiful clean coal”. It is a nostalgic image, and he certainly used it a lot when trying to win the votes of those in the industrial belt—understandably, those areas need optimism for future jobs—but the term is nebulous and it is unlikely his definition of clean coal included the trapping of carbon where it cannot do any harm. According to FactCheck.org, just 0.1% of American coal-fired capacity uses carbon capture technologies.
While they are not the key solution, some of the carbon capture and storage technologies could be needed to keep global warming below 1.5˚C. According to a report from the Intergovernmental Panel on Climate Change, Scotland could have a competitive advantage. The Scottish Government’s energy strategy committed to work with the industry to assess the opportunities for existing infrastructure we already have in Scotland’s industrial clusters. Depleted gas fields have vast carbon storage potential, and projects are well under way, although progress has been hampered in the past by poor investment from the UK Government. I hope that the Prime Minister’s new-found enthusiasm for a green revolution in UK energy priorities may more closely align with the Scottish Government’s priorities and that they can work together to support the carbon capture, utilisation and storage strategy.
As we work to cut emissions, I recognise the need to support our industrial bases and focus efforts on new jobs and economic opportunities that the green industries will bring, making sure that change is inclusive and we bring people with us. This is where the Government have gone wrong in the past. The proud coalmining communities of Midlothian were devastated during Thatcher’s era, and I am sure the motivation was not to clean up the environment. Pits were run down and closed with nothing but promises of the dole queue to replace them. Long and bitter disputes during the miners’ strikes and the poverty and suffering they caused were entirely avoidable. Instead, the Government at the time were itching for a fight, and they certainly got one.
In October this year, the Scottish Government announced pardons for miners who suffered from unfair convictions during the picket line disputes of 1984 and 1985. I have called for the UK Government to do their bit to close that chapter by finally agreeing to an inquiry into what happened during the policing of the strikes. They should help heal the wounds of the past.
The future of communities such as mine may not be built on coal, but it will be built on the backs of those miners and families, and their legacy lies in the grit, determination, warmth and comradeship of the people. Midlothian was forged in coal, and it makes us a fantastic workforce for the industries of the future.
Indeed, the old mines could still have a direct role to play in powering the economy, tackling fuel poverty and heating our homes, but in less conventional ways. For example, the HotScot project, developed by the University of Glasgow, is looking to tap into geothermal energy contained in disused flooded coal mines across the country. It is believed that heat trapped in the 600 cubic kilometres of disused mines throughout Scotland’s central belt could meet up to 8% of our domestic heating demands, and extracting it could create almost 10,000 jobs while slashing household bills.
Geothermal is a project that Midlothian has a long history of looking at, having commissioned a study into it in 2004, and the Scottish Government looked into it again in 2013. Unfortunately those projects were not viable at the time, although they were then exported to Spain and Holland, where they were adopted. I would encourage anyone who gets the chance to engage with a chap called Stevie Gillespie, who has an encyclopaedic knowledge of these things.
The transition from deep mining, a high carbon activity, was economically unjust for our coal communities, closing down not only the pits but the local economies, with enormous and long-lasting negative social impacts. The move to a low carbon economy could be a just one, if we choose to harness geothermal energy from the mine water that has flooded pits such as Bilston Glen and to tackle the industrial legacy that has left the surrounding communities behind. We can tackle the food and fuel poverty of our coal communities by tapping into this rich new source of energy, by installing district heating schemes in new and existing housing and by supporting local food production using heat to grow vegetables. Along the Forth estuary and the Clyde, we can capture and convert the heat to feed our people, producing food from the river banks instead of having people go to food banks. There are challenges to overcome, but exciting projects such as these could turn abandoned mines from liabilities into economic assets that could be an integral part of the green renaissance that we seek to build. We just need the commitment to make it happen.
Oral Answers to Questions
Owen Thompson Excerpts(3 years, 5 months ago)
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Peter Grant (Glenrothes) (SNP)
Owen Thompson (Midlothian) (SNP)
The Minister for Business, Energy and Clean Growth (Kwasi Kwarteng)
The Department has engaged regularly with the Chancellor and other partners across the devolved Governments, including in Scotland, since the beginning of the covid-19 outbreak to make sure that businesses have the right information, guidance and support that they need.
Owen Thompson
While I welcome the extension of the furlough, albeit belatedly, I would suggest the next step to repair mistakes made in handling the pandemic for businesses is to look at the failures within the business interruption loan schemes, which I outlined in a debate in this Chamber last week. Many companies are not taking on CBILs or BBLS loans, because having more debt around their necks is the last thing they need just now. Has the Minister carried out any analysis of the potential effects of offering businesses grants, rather than loans?
Kwasi Kwarteng
The provision of credit, as I have suggested to some of the hon. Gentleman’s colleagues, has been very generous during this covid-19 period. Obviously, we can refine the process and we are very open to listening to ideas from hon. and right hon. Members about how we can do that. I would like to point out that, last year, in his constituency of Midlothian, we issued something like £49 million-worth of credit. Many of the companies in his constituency have been very grateful and very happy to receive that money.
Coronavirus Business Interruption Loan Scheme
Owen Thompson Excerpts(3 years, 6 months ago)
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Owen Thompson (Midlothian) (SNP)
I beg to move,
That this House believes the Coronavirus Business Interruption Loan Scheme is not adequately fulfilling its role for SMEs across the UK; and urges Government intervention to ensure that all businesses are provided with the financial support they need.
I thank the Backbench Business Committee for allocating time for this important debate. My co-sponsor, the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) and I applied for this debate some months ago after hearing the anguish felt by business owners in our constituencies who could not access emergency support and were left struggling to find critical funds to see them through the crisis. I know that colleagues from across all parties in this House from all parts of the UK will have heard similar tales: people who did not know where to turn when the billions of pounds they heard being brandished about were no more than fantasy figures doing nothing to help the reality faced by the businesses they had to work so hard to build. The situation has been in constant flux and the support schemes have been a movable feast—or a never-ending famine, certainly for those who have been excluded so far—so I want to reflect on the current situation and dangers going forward, rather than dwell too long on some of the errors of the past.
A rising tide of debt is making the coronavirus business interruption loan scheme an issue again. Changes to the scheme announced by the Treasury so far do not go far enough to see businesses through to the end of this crisis. The pandemic has gone far beyond anything imagined when CBILS was first announced. England begins lockdown again today and most of Scotland remains severely restricted. The feared second wave is upon us and will possibly be worse than the first. Debt and desperation are rising, yet at the same time support is being cut, withdrawn or very reluctantly extended, without due time to plan or prepare. Those excluded remain so again, and banks are getting more tetchy about lending. There has never been a more crucial time to review the effectiveness of Government-backed loans and support, and to make sure we better meet the needs of everyone across the UK.
When lockdown began, CBILS was one of the first schemes out of the blocks, with a promise of £350 billion being made available in this and other Government-backed loans. Although grants would certainly have been better than loans, I commend the Chancellor for that swift action. It is a pity that after seven months, £62 billion—less than one fifth of that figure—has actually been approved via the various loan schemes. We need to find better ways to make funds accessible to those who need them and to hope that bold replacement mechanisms for CBILS and the bounce back loan scheme, with an emphasis on grants, can be found. Those would plug the gaps in the support already in place and would help to stimulate recovery.
Flaws in CBILS quickly became apparent. It was reported on 12 April, only three weeks after the scheme was launched, that 300,000 inquiries had been made yet only 1.4% of those went on to be successfully approved for loans. Some people did not pursue loans beyond the call to the bank, whereas others gave up before completion of the heavily bureaucratic process. Some seven months later, on 18 October, 73,094 companies had been approved for CBILS out of 159,277 completed applications—that is still an approval rating of less than half of those who completed the process, never mind those who were too worried about the debt to take it on in the first place.
Kevin Hollinrake (Thirsk and Malton) (Con)
I thank the hon. Gentleman for bringing forward this important debate, because although there have been successes with CBILS, there are some shortcomings too and it is right that we discuss them. I accept, to a great extent, the point he makes about grants rather than loans. However, he would probably accept that grants have been made as well as supporting loans, in the form of the job retention scheme and the business rate grants.
Owen Thompson
I do accept that point, and it is important that some of those grants have been in place. I would far rather have seen some of the large sums available through CBILS and the bounce back loan scheme made available as grants, as opposed to loans, which add to the debt burden on business.
Rachael Maskell (York Central) (Lab/Co-op)
I, too, am grateful to the hon. Gentleman for bringing forward this debate. Ninety-four businesses in my constituency have taken out a CBILS loan, but they are really concerned now about their ability to pay it back, even with the new measures put in place. Does he share my concern that we need to see some underpinning and underwriting in order to secure these businesses for the future?
Owen Thompson
I absolutely do and I hope that some of the points I will make later will address the hon. Lady’s concern.
Although improvements were made, the mechanics remain flawed, and take-up is not helped by the fact that the state guarantor is only for 80% of the loan, so risk-averse banks are the gatekeepers to lending decisions. Initially, banks were cherry-picking the very best—the blue chips and the big corporations—while lending to the rest was far harder to find. Now we see a second wave of banks becoming less willing to lend as the uncertainty of the crisis continues and worries grow about the ability to repay. We need the Government to step in to fix that. Of course getting cash to smaller firms was aided by the launch of the bounce back loan scheme in May, and again I commend the Chancellor for taking the action to introduce that. It is a faster process, with a far greater take-up, accounting for about two thirds of the total loans received, with about two thirds of those reaching small and medium-sized enterprises. That is aided by the Government guarantee of 100%, the capped interest at 2.5% and the lender agreeing not to charge fees. That is far closer to what I think CBILS should be if it cannot be a grant. It is a pity that bounce back loans remain limited to up to £50,000, which is nowhere near enough for the needs of many businesses around the country. I hope the replacement for CBILS will take account of the mechanics of the bounce back loan scheme.
By contrast, the commercial companies approved for CBILS can set the rates for business interruption loans, with massive variation in what is offered, averaging around 6% but going up to almost 15%. One local business told me that the initial rate it had been offered was 34%. That may bail out companies in an immediate cash-flow crisis, but it will lead to crippling debt in the longer term when the taxpayer support ends. As The Sunday Times reported this week, some CBILS-accredited lenders are not only charging double-digit interest rates but are charging arrangement fees of up to 5%, a considerable sum to any business. Some are apparently marketing the loans as ways to fund management buy-outs or to refinance existing debts. It looks like some of these loans are less emergency support and more picking the bones of companies in trouble.
Covid-19 has certainly brought out the best and worst in our society. We have seen the very best in the public spiritedness of our communities, essential workers, volunteers and small businesses struggling to keep things moving supporting the vulnerable and saving lives. The very worst, though, are those who see the pandemic as an opportunity simply to make a quick buck on the back of other people’s struggles, whether through price gouging on hand sanitiser, creaming off cash from shadily signed Government contracts for personal protective equipment or, in this case, hiking up fees and interest on loans to desperate companies. There are always people out there who see a disaster as an opportunity to make money, but they should not be able to do so with a Government badge of approval.
Many companies are not taking on CBILS or BBLS loans because having more and more debt around their necks is the very last thing they need. Small and medium-sized enterprises in Midlothian told me that it was an absolute last resort, and that the schemes were far better suited to big players. They say they needed a short-term financial injection, not a loan, but businesses were being pushed towards debt as the only option. One local business that contacted me put it far better than I could have put it myself:
“Business owners are being unfairly expected to shoulder a massively disproportionate share of the burden. Many SMEs have been built up over years of toil and are supported by personal guarantees of directors who are being pushed into positions of potential or actual insolvency which can lead to personal bankruptcy. This is at the bequest of people in authority who are at no personal risk at all. Are they aware that these businesses are where the tax receipts come from that will be needed to pay back the debt now being built? Many of them took years to build into the position where they pay and collect a good level of taxes and if these companies are forced to fail it could take many years to build their replacements”
I hope the Treasury Bench will take note of those comments.
In May 2020, the Office for Budget Responsibility forecast a likely 10% default rate on the loans. By July, that was updated to 40%. In September, the Department for Business, Energy and Industrial Strategy’s annual report went even further, estimating losses ranging from 35% to 60%. TheCityUK recapitalisation group’s report estimated that UK businesses will have £100 billion of toxic debt by 2021, with £35 billion of that related to the Government schemes. The report warned that up to 3 million jobs across the UK, and 780,000 SMEs, are at risk if urgent action is not taken to tackle that projected £35 billion of unsustainable debt from covid loans.
Worryingly, there are reports of banks bringing in specialist debt collectors to help lead the recovery of loans. Of course, the loans spare the banks from the credit risk, but if they cannot be repaid, will we witness thousands of small family businesses pursued through the courts for recovery before the guarantee kicks in? The National Audit Office report into the bounce back loan scheme published on 8 October stated that
“the Bank expects lenders to pursue ‘appropriate recovery processes’”
if companies default. However, it is not clear what that means, and the UK Government need to provide clearer guidance on that process. Given that funds were provided on terms set by the Treasury, it is only fair that, as a minimum, there is a clear framework for recovery, so that customers are treated fairly and consistently, regardless of their banking provider. Even better, why not take the stress off the shoulders of small business and dump the debt that will only hold back recovery? There are also small businesses facing bigger debt on their loans than others, because they rushed to take out the loan when it was the only game in town. They could face a 50 or 60% increase in repayments compared with a bounce back loan. The banks do not seem particularly keen to make it clear that businesses may switch these loans, and I hope that the Government will help to get the message out there—that one simple step could make a big difference to so many companies.
As the pandemic crisis continues and companies try to adapt and rebuild, the best thing the Government could do would be to write off the outstanding debt to SMEs altogether. That would help small businesses have room to recover. The Association of Accounting Technicians called for the bounce back debts to be written off for small businesses, accounting for £40 billion of loans. It says that the “pay as you grow” scheme does not solve the problem; it just defers it, whereas writing off the debt would be a much-needed boost for SMEs and the economy.
Rachael Maskell
Charities have been pushed in the direction of CBILs as well, and of course that is completely inappropriate, so to add to the list, will the hon. Gentleman say that charities should have their debt written off as well?
Owen Thompson
Yes. Charities, who spend so much of their time having to collect from the public and are now having to adapt to new ways of doing that, are among those many who have been pushed into an impossible situation, where the only game in town is what they had to take. We absolutely need to look to see what we can do to support them, to help them out of this situation.
Kevin Hollinrake
It is an interesting point, but how would it be fair to people who did not take a loan, or to businesses that paid back their loan, if you wrote off the debt of businesses that did not pay back their loan? How could that possibly be fair?
Owen Thompson
Each business took its decision about what position it was in at the time. Many would face the prospect of going out of business; the heart of our communities would vanish overnight. One swift step by the Treasury could solve that, to support and maintain our communities.
Kevin Hollinrake
It is an interesting point, and it is worth having a debate about it, but lots of businesses, including mine—I draw the House’s attention to my entry in the Register of Members’ Financial Interests—took loans on the basis of a safety net. Not only did they not need it, but they were unsure about their commercial circumstances and they will be able to pay that debt off without going bust, and intend to. Are you intending to write off the debt to my business, which I did not need, which the taxpayer has funded, even though I do not need that money, on the basis that everybody should just get free money?
Owen Thompson
As I say, every business took the decision about why they needed to take a covid loan or a bounce back loan. This is about ensuring that we protect the jobs and security for those businesses going forward, and making sure that our communities are protected.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
My hon. Friend has been making a powerful speech. Does he agree that when businesses across the nations of the UK have not needed public funds, they have returned the money, in their many millions? Would that not be exactly the same circumstances that he would be calling for here?
Owen Thompson
Absolutely; I completely agree with my hon. Friend. This is about ensuring the security and the future of thousands of businesses across these islands. It is a bold move—I accept that—but we are in a crisis and bold action is exactly what is needed.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
I am wondering whether consideration might be given to certain sectors, because we know that, sector-specifically, there are areas such as tourism that have been able to make no money whatever over the summer. Could this be a medium by which that could be addressed?
Owen Thompson
That is an excellent suggestion. Tourism, events—a number of industries have no opportunity to make the income that they need at the moment. Looking forward, there is no immediate prospect of their being able to do so, which is where the threat of those loans becoming due for repayment really starts to come into its own.
The Government, when considering a replacement for CBILS, need to look at ways to use the remainder of the £350 billion promised to be released on direct grants, perhaps equity, and make sure that reaches those who actually need it. Many viable businesses have received nothing so far, and they are not going away either.
Today—5 November—is an important day to hold this debate. It is not just the beginning of the new lockdown in England, but it commemorates the date of a failed gunpowder plot. Let us make it our day to properly remember, and not leave a giant powder-keg sitting under the businesses across our nations. We must ensure that our businesses survive and our democracy works for the people it is supposed to serve. I urge the UK Government to act now, to prevent a debt crisis, to boost support for businesses, and to stop more jobs and livelihoods going up in smoke.
Owen Thompson
We have seen a great degree of consensus this afternoon around the important part that the loan schemes have played. There has been recognition of the absolute need for the schemes, but it is almost as important—if not more important—that we take the opportunity to highlight any shortcomings and the challenges ahead. As we look forward, I certainly want there to be as many opportunities as possible to ensure that the debt burden on so many small businesses across our nations does not become the next crisis that ends up tearing the heart out of communities the length and breadth of the country. There also remain countless businesses that are not able to trade in any shape or form in many different industries and sectors. That needs to be addressed.
I thank all Members for their participation in the debate. I suspect that it is an issue that we will return to in the months ahead.
Question put and agreed to.
Resolved,
That this House believes the Coronavirus Business Interruption Loan Scheme is not adequately fulfilling its role for SMEs across the UK; and urges Government intervention to ensure that all businesses are provided with the financial support they need.
Madam Deputy Speaker (Dame Eleanor Laing)
In order to allow the safe exit of hon. Members participating in this item of business and the safe arrival of those participating in the next time, I am suspending the House for three minutes.
Oral Answers to Questions
Owen Thompson Excerpts(3 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Business, Energy and Clean Growth (Kwasi Kwarteng)
The Department is aware of several projects being considered on rivers and estuaries such as the Wyre, the Duddon, Morecambe bay and the Solway firth, and we have had frequent contacts with developers. We remain open to considering well-developed, well-considered projects that can demonstrate strong value for money alongside other renewable generation.
Owen Thompson (Midlothian) (SNP)
Alok Sharma
As the hon. Member will know, the latest figures show that over 49,000 loans have been approved, to the value of more than £10 billion. There is a significant number of lenders attached to the CBIL scheme, but if he has specific cases, he should definitely come and talk to me.
Post Office Network
Owen Thompson Excerpts(4 years, 1 month ago)
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Marion Fellows
I thank the hon. Lady for her intervention. I totally agree with her. I learnt about the circular flow of income and cash many years ago. If we cannot withdraw money from the post office, we cannot nip next door to the baker’s and buy a bun or a loaf of bread, and the baker cannot use it to pay staff. Things come to a halt. It is basic economics, or economics 101 as it is now referred to.
Communication Workers Union officials have also queried the wisdom of closing Crown post offices—those directly managed by Post Office Ltd—given that the company is profit making. The union notes that franchising causes people to leave the service because jobs advertised by firms such as WH Smith, which holds a very large number of franchises, are lower paid than those at the post office. Last year's decision to turn 74 Crown post offices into franchises in WH Smith stores is also alarming, particularly given reports that franchising is being done without consultation with the existing local post offices, meaning the competition risks destabilising the network further. I believe we heard from the hon. Member for York Central (Rachael Maskell) in a previous debate that that happened in York. The Crown post office was closed, put out to franchise, and opened next to an already franchised smaller post office branch.
There must be more consultation and strategic consideration on franchising. That is a particular concern of the all-party parliamentary group on post offices, whose chair, the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss), is in the Chamber. Last year, the Post Office’s director of sales and trade marketing stated that it has no contingency plan in the event that WHSmith, which has experienced 14 consecutive years of sales decline, collapses. If WHSmith collapses, what will happen to the Crown post offices? We must ensure that further franchising happens only in consultation with other businesses.
The UK Government must provide more incentives for new postmasters to open post offices that are independent of major chain shops. Will the Minister look at that and instruct Post Office Ltd accordingly? It is appalling that this year the majority of sub-postmasters earned less than the minimum wage for running a post office. The pay increase announced in November will not take place until next month. It is vital that the Minister acts to ensure that profits are not increased at the cost of a cut to postmasters’ pay, forcing permanent post offices to close. Will the Minister take urgent action to review the sub-postmaster contract introduced in 2012? I think I can safely say that it is no longer fit for purpose.
The National Federation of SubPostmasters has raised sub-post office closures with the UK Government and the Government-owned Post Office Ltd. A spokesman said:
“Our records show around two-thirds of closures are due to the resignation of the sub-postmaster”.
The spokesman pointed to low pay as the prime reason, saying that
“This is a particular problem for rural areas in Scotland, as well as across the UK, where people rely on their local post office for vital postal and banking services.”
Last year, an NFSP survey warned that one in five towns could lose its post office in the next year. Surveying a thousand workers found that 22% are planning to close, pass on the business or downsize staff. Sub-postmasters have been forced to go without holidays and take on extra jobs to make ends meet.
Owen Thompson (Midlothian) (SNP)
We often find in situations such as the one in Loanhead in my constituency, where the Bank of Scotland is completely abandoning the community by shutting the bank branch, that the Post Office is expected to step in. We are very fortunate to have an excellent post office in the community that is willing to do so, but those increased pressures surely contribute to stress for postmasters, which adds to the points that my hon. Friend made about the potential for closure. If post offices close, what then for our communities, where the post office has been the final vestige, picking up the pieces after the bank has abandoned them?
Marion Fellows
I totally agree. The crux of the matter is that if we allow things to continue as they are, there will be a continual and continuous decline in the post office network until it reaches a tipping point and is no longer viable. We will all lose out, but the most vulnerable in our society will be affected the most.
In 2019, it was announced that from April sub-postmasters will receive better financial remuneration from Post Office Ltd for key banking services that they provide to the public. At the NFSP annual conference, the Post Office Ltd announced that it will raise the rates. That is great—it will be a threefold increase—but we must ask ourselves why the Post Office felt the need to do that and why it was not done earlier. A local sub-postmaster came to me and said that he was getting the grand rate of £1.88 an hour for dealing with cash intake to his branch. He will feel much better that he will get more money, but post offices are taking the place of banks, and that is not always right.
I was part of a group of Scottish National party MPs who tried to ensure that banking service provision is properly remunerated. To be fair, the issue was also raised by Members from other parties. I raised the issue at Prime Minister’s questions, and my hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands) raised it during an Adjournment debate that he led last year. If people think that I sound repetitive, it is because I am being repetitive. Since I came to this place, five Ministers have been in place; today’s Minister is the sixth to have responded to a debate on post offices in which I have spoken. That cannot go on.
We welcome the changes that are happening, but it is vital that the details prove sufficient to protect postmasters’ livelihood and the network. Further improvements are needed to help to future-proof sub-postmasters’ business. The announced measures must not be the end of Post Office Ltd’s actions.
Richard Thomson (Gordon) (SNP)
It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) on securing the debate and on her earnest plea that post offices matter. They absolutely do. In each and every contribution to the debate, we have heard about many of the different ways in which post offices matter to our various communities and sections of them. My hon. Friend made a clear call for the sub-postmasters’ contract to be reviewed, and she pointed out that we need creative thinking about how the business model develops. It is a call with which I heartily concur.
I very much enjoyed the contribution from the hon. Member for Brentford and Isleworth (Ruth Cadbury), who spoke eloquently about the difficulty of maintaining the visibility of the service, about some of the problems with security and about the locations of people who are willing to take on the service, which are not always the locations where, in an ideal world, we would wish the service to be transacted. She made those points very well.
The hon. Member for Strangford (Jim Shannon) spoke eloquently about the issues in his constituency, but he got right to the nub of it when he spoke of the post office as a core part of village and rural life. He hit the nail firmly on the head. My hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands) spoke of the importance of a good and effective public transport network in ensuring continued access to the network, and he said that the service is beyond the diktats of market forces. Again, I heartily concur.
Let us look at some of the positive aspects of our post offices. A survey conducted in 2017 showed that 81% of respondents described the post office as important to them; 49% described it as very or extremely important and 97% described it as trustworthy—an unprecedented high figure. That shows the tremendous standing of the institution of the post office, which is not something that has been created in a marketer’s sketchbook. It is a reputation that has been built up over generations of much-valued service to individuals and communities, with a high-quality service at its very heart. The post office is at the heart of both urban and rural communities, and it has provided a universal service and common experience that we have come to value, wherever we are from.
We all understand that changes in the ways that people wish to access the services offered at post offices are inevitable. There is always a temptation to try to take everyone down the route of digital by default, regardless of whether we have the technological capability and sufficiency of broadband access, or the willingness or personal ability, to do that. We have to recognise that digital is not the default for many people, nor will it ever be. It should not be the default for accessing post office services, and we must not overlook the vital role that post offices provide not just to individuals, but to local businesses.
My hon. Friend the Member for Motherwell and Wishaw referred to economics 101 and the importance of the circular flow of cash. That is of particular importance as many banks retreat from our communities and, in many cases, the availability of ATMs in our communities is dramatically reduced. That retreat affects not only rural communities, but urban communities. Lack of access to cash is particularly felt in some of the less affluent urban communities, where the post office’s presence as a provider of cash is vital.
In addition to ensuring the flow of cash, enabling it to be spent locally is important. Many post offices are located within retail businesses in the area, and they also provide direct support to other businesses on the high street. More than 2 million small businesses, or 62%, use the post office at least once a month. In rural areas, 36% of rural businesses use the post office at least once a week to receive deliveries, send products, pay bills and, with the banks retreating from the high street, to deposit cash, as the post office increasingly—willingly or otherwise—takes on the role of cash handler of last resort in many locations.
The network could certainly fulfil that task, but we have to proceed with caution. We must recognise that many post offices simply do not have the physical security to handle large amounts of cash, and that many sub-postmasters are perhaps unwilling to take on a task that carries an increased risk of crime. Although my SNP colleagues and I would very much like to stem the banks’ retreat from the high street, it is important that if and when they do retreat, they are held financially to their responsibility to support the transition and ensure that the post office network is suitably equipped to take on that role, should that be what we want to happen.
Owen Thompson
On the point about the need for banks to have long-term contact with the post offices that step in where a bank has abandoned the community, does my hon. Friend agree that the postmasters in those post offices will have to pick up the pieces if that long-term connection does not happen? Months or even years down the line, when customers find themselves in a situation and the banks are long gone, the postmasters will have to pick up the pieces.
Richard Thomson
My hon. Friend makes an excellent point. When a service of that kind is withdrawn, the transition is rarely seamless, as I have seen in my constituency where banks have withdrawn and even post offices have reluctantly had to close. There is always a hiatus and an interruption in service, and it is difficult to quantify the degradation in that function that people experience as behaviour changes.
It is not difficult to map out a socially useful and sustainable future for the Post Office. Each of us has spoken at length about the socially useful role that it serves. The challenge is to make that role sustainable for those who provide and operate those services. It should not come as any surprise that as the level of direct financial support to post offices has declined in recent years, there has been a similar decline in the number of post office businesses.
The foundation of a sustainable post office business has to lie in making the everyday transactions sustainable and worthwhile for postmasters to carry out. That aspect of the business is potentially profitable; in 2016, it made a £35 million trading profit. Post offices must continue to be the access point—or the front counter, as has been said—to Government and other public services for people for whom digital is not and will never be the default option.
Postmasters should be properly compensated for the role that we expect them to perform. My hon. Friend the Member for Motherwell and Wishaw made the excellent point that a review of the current contract is absolutely essential. I very much look forward to hearing what the Minister has to say about that.
Although we need at least to maintain the network subsidy payment at its current level, we should also allow a new business model to develop. As I said, the Post Office has a trusted reputation, which it has used to leverage, grow and expand the business into areas such as telecoms and financial services. It should be allowed to expand its retail offering.
We have spoken about the Post Office’s importance as a distributor, collector and mover of cash; it should be able to develop the Post Office Money side of the business. We have heard about the constraints put on the Post Office card account and about the access that the Post Office allows to business banking for eight banks and to personal banking for twenty banks. The Post Office must be allowed to develop and build revenue from its own offerings in current accounts, business accounts, credit cards, saving products and domestic and international cash transfers. That will make the business sustainable.
The Post Office is a much-valued institution and service, but it runs increasingly on goodwill, which is not enough. I look forward to hearing the Minister set out her vision of the future of the service and how it can be made sustainable, not just in goodwill, but in the finances behind it.
Oral Answers to Questions
Owen Thompson Excerpts(4 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Andrea Leadsom
My hon. Friend is well aware of the Government’s ambitions to have a giga factory in the UK. It is vital for the success of our economy that we are able to find these new areas of technological growth that can support the uptake of ultra-low and zero-emission vehicles.
Owen Thompson (Midlothian) (SNP)
Patricia Gibson (North Ayrshire and Arran) (SNP)
The Secretary of State for Business, Energy and Industrial Strategy (Andrea Leadsom)
The Scottish Government received almost £100 million to help to prepare for Brexit in the run-up to 31 October last year. I am delighted that we now have a good deal with the European Union, so we will be leaving the EU at the end of January, but the implementation period will mean that nothing changes for businesses until the end of 2020. We are working hard on our future trading relationship with our EU friends and neighbours.
Owen Thompson
With the final destination of Brexit still vague, it is a disgrace that the UK Government are still failing to give businesses the information they need to navigate Brexit, with firms needing more than the Chancellor telling them simply to “adjust”. Will the Secretary of State finally accept the policy of the Scottish National party and the Institute of Directors of providing a £750 million one-stop shop for UK firms?
Andrea Leadsom
I am not surprised to hear that the hon. Gentleman is still determined to resist Brexit, but he will appreciate that this Government are getting on with it and ensuring that there is a great deal for businesses. On his point about Scottish businesses’ preparedness, my Department’s business readiness fund enabled various trade bodies, including the Scottish Chamber of Commerce and the Scottish fishing trade bodies, to receive hundreds of thousands in taxpayers’ money precisely to enable businesses to be Brexit-ready.