Oral Answers to Questions

Peter Aldous Excerpts

Tuesday 25th May 2021 Commons Chamber

[Peter Aldous (Waveney) (Con)]

    With an enormous amount of work going to take place in the next few years in building energy and transport infrastructure, there are significant opportunities to enhance skills and create jobs in steel fabrication. What plans does my hon. Friend have for promoting fabrication hubs, including one in Lowestoft where skills and expertise has been developed over many years in the oil and gas industry, and exciting opportunities are coming forward in the offshore wind and nuclear sectors?

[The Minister for Business, Energy and Clean Growth (Anne-Marie Trevelyan)]

My hon. Friend makes an excellent point about seizing the broader benefits of the green economy, which are integral to our industrial decarbonisation strategy. We will continue to work closely with all those helping us to meet our net zero commitments, from 40 gigawatts of offshore wind power by 2030, to the Government’s commitments to deliver at least one more gigawatt nuclear power station, and substantial commitments to the next generation of nuclear. For all that, infrastructure investment and growing the skills base will be vital across the country, including in Lowestoft. We have set up the green jobs taskforce, which will report to the Government this summer and inform the next stages of our green skills plans going forward.

Budget Resolutions and Economic Situation

Peter Aldous Excerpts

Tuesday 9th March 2021 Commons Chamber

[Peter Aldous (Waveney) (Con) [V]]

From a Waveney and East Anglian perspective, the two main features of the Budget were the towns fund deal announcement for Lowestoft and the successful freeport bid for Felixstowe and Harwich. These two announcements are welcome and can play a key role in the covid recovery. Locally, the cornerstone of the Waveney recovery will be the £220 million public investment in the centre of Lowestoft in the next five years—not just for the towns fund deal but for the Gull Wing bridge and the Lowestoft flood defence scheme. We must ensure that these projects are built on time and on budget and that they act as catalysts for private sector investment and provide local people with the opportunity to work on them.

East Anglia has enormous potential to play a lead role in the emerging green economy. We can be a global leader and exemplar, and we must ensure that local people benefit from this. There are great opportunities in a wide variety of sectors: low carbon energy production, including offshore wind, nuclear and hydrogen; the storage of carbon in the gas fields of the southern North sea; sustainable, responsible custodianship of our marine and fishing resources, building on the work of the Centre for Environment, Fisheries and Aquaculture Science, which has been in Lowestoft for over a century; low-carbon shipping and maritime activities, not just in Felixstowe and Harwich but in Ipswich, Lowestoft, Great Yarmouth and King’s Lynn; and, finally, the emergence of net zero agriculture.

The policy framework that will enable us to make the most of these opportunities is emerging. The announcements in the Budget follow on from the publication in December of the energy White Paper and last month of the further education White Paper. Moving forward, we now need to put into practice the proposals in the further education White Paper so as to provide young and local people with the skills and expertise to take advantage of these exciting opportunities. We must move away from the low-wage economy that has been prevalent in East Anglia for too long.

The North sea transition deal that will be published in the next few weeks must properly recognise the full potential in the southern North sea. A lot of work is required, as well as investment, to rebuild a sustainable fishing industry on the East Anglian coast. The fishing aspect of the free trade agreement with the EU is not helpful and has set us back a few years, but with the right investment and responsible management, progress can be made. Finally, the arrangements and support provided for the Lowestoft and Great Yarmouth enterprise zone should be reviewed and properly aligned with these emerging and exciting opportunities.

UK Hydrogen Economy

Peter Aldous Excerpts

Thursday 17th December 2020 Westminster Hall

[Peter Aldous (Waveney) (Con)]

It is a pleasure to serve under your chairmanship, Ms McDonagh. I congratulate my hon. Friend the Member for Rother Valley (Alexander Stafford) on securing the debate. While hydrogen is the new kid on the block, and much work needs to be done to advance its use from a technical perspective and to enhance its economic viability, it is becoming increasingly clear that it will be a vital component of the zero-carbon economy.

Hydrogen is highly versatile and can be used in a variety of ways, whether in transport, heat, power generation or energy storage in industry and agriculture. It could also transform local economies all around the UK, bringing new business opportunities and new jobs to areas, many of which have been left behind. There are colleagues taking part in this debate from all around the UK. We are not in competition. The opportunities in our respective constituencies should complement each other. They are part of a jigsaw that covers all four nations, and we need to piece together that jigsaw to benefit all the communities that we represent.

The piece of the jigsaw that I shall concentrate on is Suffolk and Norfolk—including the Waveney constituency —in East Anglia. While we do not possess any significant industrial clusters, there is an opportunity to harness hydrogen across a large geographical area to create a blueprint for how it can be deployed at scale to decarbonise our energy, transport and heating systems and to revolutionise the way in which we do business, thereby bringing prosperity to the region. I shall briefly outline the opportunities available.

There is the opportunity to ensure a smooth transition in the southern North sea oil and gas basin by redeploying infrastructure and expertise built up over five decades to create a leading hydrogen production and carbon capture and storage hub around the Bacton gas terminal in the constituency of my hon. Friend the Member for North Norfolk (Duncan Baker). From there, we could connect into the planned European hydrogen backbone, as Bacton already hosts two gas interconnectors. Hydrogen exports could provide new and important revenue streams. With a large cluster of offshore wind farms already operational, being developed or planned off the coast of East Anglia, there is the opportunity to integrate hydrogen production and storage to provide a valuable alternative to curtailing power generation at times of surplus when the wind may be blowing too much.

There is also the opportunity to reduce emissions from large emitters such as the gas-fired power station in the constituency of my right hon. Friend the Member for Great Yarmouth (Brandon Lewis), which could be adapted to take a blended hydrogen fuel. This week, the Government announced their support for the Sizewell C nuclear power station in the constituency of my right hon. Friend the Member for Suffolk Coastal (Dr Coffey). Sizewell C has the potential to make huge quantities of green hydrogen using both electricity and heat, which can be used by transport and other industry. Next year, at Sizewell B, EDF plans to install a small hydrogen electrolyser that will fuel clean construction plant, HGVs and buses. The infrastructure for that could be made available to council vehicles and, in due course, other local businesses to run hydrogen-fuelled vehicles.

There is the opportunity to decarbonise portside operations and shipping activities at the east coast ports of Harwich, Felixstowe, Ipswich, Lowestoft, Great Yarmouth and King’s Lynn. From those ports, one would also seek to decarbonise road and rail freight. To turn to the rail network, the east Suffolk line, which runs from Ipswich to Lowestoft, is a vital link for the Waveney area to the rest of the country, but it does need to be improved with faster journey times. For that, we could use hydrogen-powered trains.

Finally, East Anglia is the breadbasket of the UK. I draw attention to my entry in the Register of Members’ Financial Interests due to family farms in Suffolk. There is an exciting opportunity for the region to be an exemplar of low-carbon agriculture, with hydrogen-fuelled tractors and combines, hydrogen-fuelled grain stores and vegetable processing plants, and environmentally friendly poultry rearing and processing facilities.

This is a compelling and exciting vision. What do we need to achieve it? Locally, we need to pull together a wide variety of interests across a large geographical area and many business sectors, so that we can promote the hydrogen economy of the east in a coherent and co-ordinated way. Nationally, Government must provide the framework for the industry to grow. The announcements in the past month are extremely welcome. The Government must now go further.

As we heard, the hydrogen strategy must be published as soon as possible. There must be a public endorsement of hydrogen as a central component in the transition to net zero, supported by a target percentage for hydrogen in the UK’s energy rates. There should be a support programme for the manufacture and deployment of UK fuel cell technologies, which matches world-class technology with investors of scale. There should be a move away from promoting competitions between regions and towards funding for well-managed, joined-up and collaborative initiatives. Finally, there should be clarity on the role of the UK’s regulatory framework with regard to hydrogen.

Hydrogen provides an incredibly exciting future for Waveney, Suffolk, East Anglia and the whole of the UK. There is a great deal of work to do. From my perspective, it is good to end what has been an awful year on an upbeat and positive note.

Oral Answers to Questions

Peter Aldous Excerpts

Tuesday 15th December 2020 Commons Chamber

[Alok Sharma]

We will have to look at what bids come in in respect of how that funding is used, but I say again—I made this point yesterday at the Dispatch Box—that it is not just public money; we are also talking about private sector money coming alongside it. The hon. Gentleman will know that Hydrogen Strategy Now, a campaign group of more than 50 companies, has said that it is ready to invest £3 billion in hydrogen projects, and that was after the publication of the 10-point plan.

[Peter Aldous (Waveney) (Con)]

What steps his Department is taking to support employment growth in low-carbon industries.

[The Secretary of State for Business, Energy and Industrial Strategy (Alok Sharma)]

Our 10-point plan for a green industrial revolution, which we set out last month, has an ambition to support 250,000 highly skilled green jobs across the UK by 2030. The plans we published yesterday in the energy White Paper will further position the UK as a global leader in the future energy industry, not least by supporting the development of jobs and green infrastructure in low-carbon energy such as hydrogen, carbon capture, usage and storage, and of course nuclear.

[Peter Aldous]

I am grateful to the Secretary of State for that answer. The scale of the opportunity for employment growth in low-carbon industries is immense. If the right approach is adopted, there can be enormous benefits to coastal communities such as Lowestoft and Waveney. How does the Secretary of State intend to transform the UK’s approach to energy skills in order to capitalise on these great opportunities?

[Alok Sharma]

Once again, a Conservative colleague talks about jobs, which is what the energy White Paper and the 10-point plan are all about. My hon. Friend is a tireless champion for offshore wind, and for jobs and growth, in supporting his constituency. He will know that we have set up the green jobs taskforce, which was launched in November and is led by the Minister for Business, Energy and Clean Growth, my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng). The taskforce brings together businesses and trade unions to assess how our jobs and skills should adapt to allow us to build back greener, and how the Government can support people in transitioning industries.

Energy White Paper

Peter Aldous Excerpts

Monday 14th December 2020 Commons Chamber

[Alok Sharma]

If there are parties out there who want to come forward with proposals for the hon. Gentleman’s constituency, we will of course look at them. The value of developing SMRs is that one will potentially be able to have factories in a number of places in time, and that will mean that we continue the agenda of levelling up across the country.

[Peter Aldous (Waveney) (Con)]

These proposals are extremely welcome as they provide a route map to the zero-carbon future. They can also bring enormous economic benefits to areas such as Waveney in Suffolk by creating a very wide range of jobs, whether working on Sizewell C or in offshore wind, reusing our oil and gas infrastructure, running local community electricity schemes, or retrofitting our homes and places of work. Can the Secretary of State confirm that a radical new skills strategy will sit alongside the White Paper?

[Alok Sharma]

My hon. Friend raises an incredibly important point. He will know that some weeks ago I set out some initial thoughts on a refreshed industrial strategy, and of course we must ensure that skills are at the front and centre of that. We in the Government have discussions around these matters, and I hope that during the early part of next year we will be able to set out a refreshed industrial strategy

Offshore Wind Transmission Connections

Peter Aldous Excerpts

Thursday 5th November 2020 Commons Chamber

[Peter Aldous (Waveney) (Con)]

I congratulate my hon. Friend on securing this debate. He is making his case extremely passionately. He has clearly done an awful lot of research for this debate, but I do not know whether he has seen this week’s Policy Exchange report, “The Future of the North Sea” that highlights the enormous potential of the North sea basin to generate jobs and to achieve our carbon reduction targets. Does he agree that the way to do this is to work collaboratively with industry, which wants to help, and to look at reviewing and changing the regulatory framework, as indeed Policy Exchange has suggested, but in a way that does not disadvantage industry?

[Duncan Baker]

My hon. Friend has, as he always does so beautifully and succinctly hit the nail on the head. This is all about our wanting to promote, help, collaborate and work together on such an important issue. Ever since we have been involved in this whole discussion, we have come together with the industry, and worked with people from across the world, mainly in Europe, who have brought such brilliant ideas to the table. Only through collaboration and working with them do I even stand here today to try to present some of the issues and why it is so important to work together. I thank him enormously for that contribution.

--- Later in debate ---

[Duncan Baker]

My hon. Friend has again picked up on the fact that some of this technology is already out there. It may be in its infancy, but it is on the way. It is being developed and, in some parts of the country, it is even starting to be there already. We just need to unleash it for the rest of the country to take advantage of it.

We often lose sight of why we are even talking about this issue. The current piecemeal approach was appropriate in perhaps the early stages, but as we quadruple our wind generation and commit our energies to decarbonising, we have to look again, and in my case and those of my hon. Friend the Member for South Suffolk and other Members here, pay particular attention to our coastal communities, where such technology has been such an enormous problem.

[Peter Aldous]

I appreciate the point that my hon. Friend is trying to make, but for coastal communities such as mine, these developments have been an absolute godsend in bringing jobs to the area.

[Duncan Baker]

My hon. Friend is absolutely right. There is enormous generation of jobs on the back of this green energy revolution. He is absolutely right to point that out and I do not dispute it in the slightest. The point I was making was that in coastal communities, where we are trenching into the side of cliffs—in areas of outstanding natural beauty—I want to make sure that we can properly improve things for the future.

This is now an issue of speed. We have all read the report that I referred to earlier, and I think we now have to get on with things as quickly as we possibly can. I know that the Minister is hugely supportive of the case, so I wonder whether there will be time in the Queen’s Speech next year for Bills to be laid out so that we can really get to grips with ensuring that the legislation can change for the better to benefit all our constituencies.

There are significant challenges ahead. Nobody should stand here and think that this is going to be a walk in the park, but we are offering a solution—a way forward. I want this day to be as important as it was 415 years ago, when Guy Fawkes, luckily, did not get his way. He did not get quite the explosion that he wanted, but perhaps five intrepid MPs from the east will help to blow us back on course with an energy solution that we need for a truly green future.

--- Later in debate ---

[Kwasi Kwarteng]

Perhaps regrettably, the subjects of the Queen’s Speech are beyond my pay grade, as people say, and I cannot possibly divulge what will be in the speech in that context, because frankly I do not know. However, my hon. Friend makes a serious point, and any subsequent legislation from BEIS, or that I try to introduce to the House, must consider the question of the regulatory regime and the environment through which we can develop the offshore network system. We are looking at that issue and taking it seriously.

[Peter Aldous]

Does the Minister agree, given the highly innovative solution that he is working up, that industry has been working ingeniously in the North sea for more than 50 years, and it has come up with the most remarkable technological solutions? Industry must be involved, along with us, with business, with the Government, and with regulators.

[Kwasi Kwarteng]

My hon. Friend will know that I have visited his constituency and seen the wind farm installations off the coast of Suffolk. Industry and the operators of offshore wind farms, National Grid, and others, will be involved, and I am sure they will be consulted. They have come up with their own review, and people are very much engaged in that wider debate.

I am pleased that our review has been welcomed across the sector and across the House, and I am pleased to respond at any time—perhaps not at dinner time, but at any other time—to my hon. Friends’ insistence and brilliant advocacy on this issue. This is a remarkable instance of a group of MPs representing a locality pushing an important issue, not only for their constituencies but for the country as a whole. I commend them in their efforts and look forward to hearing from them. I hope that together we can all push forward and deliver on this agenda.

Question put and agreed to.

Electricity Generation: Local Suppliers

Peter Aldous Excerpts

Wednesday 14th October 2020 Commons Chamber

[Ben Lake]

I am grateful to the hon. Gentleman for making that point. He is right: there is so much potential across these islands. We just need to sort out some of the obstacles that are currently faced.

[Peter Aldous (Waveney) (Con)]

I thank the hon. Member for securing the debate. He refers to the obstacles. Does he agree that one way to overcome those obstacles is for the ten-minute rule Bill that I presented in the summer, which is due to have its Second Reading on 29 January next year, to be passed into statute, whether through the private Member’s Bill route or the Government adopting it?

[Ben Lake]

I thank the hon. Member, who has done incredible work in bringing forward that ten-minute rule Bill, which has the support of a great number of Members on both sides of the House. I very much want to put my support for that Bill on record, and I hope that if it does not progress as a private Member’s Bill, the Government will look to adopt its provisions.

--- Later in debate ---

[Kwasi Kwarteng]

No, I am afraid I am very hard pressed for time. I may have time later to take an intervention, but I need to press on with my remarks.

Ofgem, as I have suggested, has been consulting widely on how to use such facilities more effectively to bring innovation to the specified locality, as it were, in this retail market. I understand that the consultation closed on Monday 12 October, and I hope that small-scale generators who wish to supply local communities have responded fully to the consultation.

The hon. Member for Ceredigion mentioned, very ably and relevantly, the Licence Lite provision, which allows aspiring suppliers or local generators to apply for a supply licence and receive relief from compliance with industry codes. On existing mechanisms, the Electricity Act 1989 already allows the Secretary of State to exempt, by scale, electricity suppliers from having an electricity supply licence if they meet certain conditions. There have been examples, certainly in my tenure as Energy Minister, of people successfully applying for exemptions.

Being an electricity supplier, as I am sure the hon. Gentleman knows, confers the right of the licensee to supply electricity to customers, but it also bestows certain obligations, and that is very important to remember. Those obligations include payment of a proportion of network costs. Clearly, if one is operating in a situation where one is not a licensee, then one can avoid paying the costs on which the whole system depends. That is a critical issue. In some instances, the Licence Lite regime can remove this burden, but clearly we would not want to go down a route where large numbers of suppliers are simply exempting themselves from those obligations.

Network charges, as people will understand, are levied on all users of the network, and they send signals that reflect the costs that users impose on the network. There are a range of signals to encourage generators to locate close to sources of demand, and placing a source of generation close to areas of high demand will mean that the generator gets paid credits for helping to avoid further investment in the high-voltage transmission network. Essentially, that means suppliers are incentivised to be in areas of high demand. There will be a commensurate problem in areas of low demand, because how would they attract the relevant suppliers? Ofgem is working to reform these signals through improvements to network charges, and it is also working to develop local markets for flexibility, which goes to the core of what I think the hon. Gentleman is talking about.

I do not believe—and I think the Government, thankfully, are of the same opinion—that artificially reducing network costs for local electricity suppliers is going to be highly efficient, because it could distort the market. One is essentially incentivising a behaviour that may not be economical in the first instance, and that would mean higher costs falling on other consumers, which would increase as more local suppliers were subsidised. Creating a special category of local supplier brings its own complexities, and there may well be unintended consequences as a result.

Having said that, I commend the hon. Gentleman for thinking very deeply and creatively about this issue. This is part of an ongoing conversation. He was quite right to say at the beginning of his remarks that a lot of the structures that we have today reflect the conditions and circumstances before we legislated for net zero, and in many cases reflect conditions that operated 30 or 40 years ago. There is an ongoing discussion to be had about how best to adapt our institutions to modern circumstances.

[Peter Aldous]

My right hon. Friend has highlighted some of the challenges that the Government face. As we have heard from Members around the Chamber, we have shown enormous potential for local community energy supply to play a full role in decarbonisation and the covid recovery. Will the Government be setting out in the forthcoming energy White Paper how we fully realise this potential and meet these challenges? When can we expect to see that White Paper?

[Kwasi Kwarteng]

My hon. Friend is straying into ground that is not necessarily covered in this debate. I am very hopeful that the energy White Paper will be published soon. I think the Secretary of State said in front of the Business, Energy and Industrial Strategy Committee that it would be published in the autumn, and we are still in the autumn, so I am hopeful that it will come imminently.

Caravan Industry: Hull and East Riding

Peter Aldous Excerpts

Monday 15th June 2020 Commons Chamber

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

As many Members will know, Hull is the capital of caravan manufacturing in the UK, and the Hull MPs have a strong tradition of standing up for the sector. My hon. Friend the Member for Kingston upon Hull North (Dame Diana Johnson) was instrumental in protecting the industry after the global financial crash in 2008. She was joined by my hon. Friend the Member for Kingston upon Hull East (Karl Turner) in the fight against the caravan tax under the coalition Government. I take up the baton with my Hull colleagues today to ask the Government to act to protect this vital industry.

I first wrote to the Government about the challenges facing the caravan industry in a letter addressed to the Prime Minister on 20 May, jointly with my hon. Friends the Members for Kingston upon Hull North and for Kingston upon Hull East. In it, we asked that caravan dealerships be opened at the same time as car dealerships and that, in line with the then current guidance for estate agents and house viewings, caravan parks should also be allowed to open for sales and meetings. I am happy to say that those asks were met by the Government, and I would like to take this opportunity to thank them for heeding the calls from the industry and acting upon them.

Like other businesses across the country, caravan manufacturers have benefited from the Government’s economic support measures, including the job retention scheme and the business interruption loan scheme. Unfortunately, all those measures have not been enough to alleviate sufficiently the pressure on the industry, and without further intervention, the future is stark. The position of caravan manufacturers sets them apart from others in the manufacturing sector, as they are entirely dependent on trade in the leisure and tourism sector.

[Peter Aldous (Waveney) (Con)]

I congratulate the hon. Lady on securing the debate. She is making a very good point. Does she agree that there is a need to consider the whole caravan industry supply chain, from the manufacturing that takes place in Hull and East Riding right through to coastal communities like my constituency? When you sneeze, we get a cold as well.

[Emma Hardy]

The hon. Member is quite right. Hull is the capital of caravan manufacturing in the UK, but that is not to say that it is not a vital industry in other areas of the country as well.

Because caravan manufacturers are not officially part of the leisure and tourism sector, they are not eligible for the extra Government support that leisure and tourism enjoy, so I am here to speak up for an industry which faces unique challenges and plays a pivotal role in the prosperity of a region that has no capacity to withstand its loss. The caravan industry is a great British manufacturing success story. The industry’s supply chain comprises caravan manufacturers and their suppliers, which feed into the UK retail network of caravan parks, dealerships and distributors. The industry contributes £9 billion a year to the UK economy and is a growing exporter. Employment within the supply chain stands at 207,580, and I understand that the hon. Member for Strangford (Jim Shannon) has the third largest caravan site in Northern Ireland in his constituency.

Construction Industry: Cash Retentions

Peter Aldous Excerpts

Thursday 27th February 2020 Westminster Hall

[Peter Aldous (Waveney) (Con)]

It is a pleasure to serve under your chairmanship, Mr McCabe. I congratulate the hon. Member for Kilmarnock and Loudoun (Alan Brown) on securing the debate. As he mentioned, he and I both have form on this subject, in that we have both introduced ten-minute rule Bills to address the deep-rooted problems associated with cash retentions in the construction industry. He presented his Construction Industry (Protection of Cash Retentions) Bill in 2017, and our former colleague David Simpson initiated a debate in this Chamber in January 2016 following the collapse of the Patton Group in Northern Ireland. That left £10 million of retention moneys outstanding, which SMEs never saw again. My own ten-minute rule Bill was presented on 9 January 2018, a week before Carillion collapsed with £800 million lost to creditors, many of which were SMEs caught with retentions outstanding.

The problem has plagued the construction industry for a long time and should really have been addressed in the 1990s when Sir Michael Latham produced his report, commissioned by both the Government and the construction industry, entitled “Constructing the Team”. It had a significant impact on the industry and led to part II of the Housing Grants, Construction and Regeneration Act 1996, generally known as the Construction Act. Unfortunately, one of Sir Michael’s recommendations remains outstanding and has never been implemented. That relates to cash retentions being retained in a secure trust fund. Two and a half decades on, we really should now be putting right that glaring omission. It is a scar that has blighted and held back the construction industry for many years and caused personal anguish and distress to the proprietors and staff of many businesses.

[John Spellar]

Is not the situation exacerbated by the fact that contractors and indeed their employees are way back in the list of preferred creditors?

[Peter Aldous]

That is true, and reminds me of something else I am handling at the moment where Her Majesty’s Revenue and Customs is put right at the top of the list. The right hon. Gentleman makes a good point.

The hon. Member for Kilmarnock and Loudoun has explained the problem and I shall not go into much detail about it. Retentions are ostensibly held as security in case a firm fails to return to rectify defects. In practice, they are often withheld to bolster the working capital of the group withholding them. Under standard industry contracts, they should be returned within 12 months of the handover of the works in question, but there are regular delays, often of up to three years. I have seen one case of a delay of 12 years, and some retentions have even been held in perpetuity, as they are never returned. Most of that cash is provided by SMEs. No other industry puts so much cash at risk and places such burdens on its small businesses. That abuse of retentions has a negative knock-on domino impact that cascades through the construction industry. It restricts investment in new equipment and facilities, prevents firms from taking on more work, and disadvantages them in relation to employing more people and investing in apprenticeships. At a time when we need to build more homes and invest in infrastructure, the construction industry should be operating at full throttle. Instead, owing to the self-imposed brake of retentions abuse, it is struggling to get out of third gear.

What is the solution? There have been many failed attempts to solve the problem voluntarily, and they have all got nowhere. We can continue to go round and round in circles, but we should be introducing a statutory solution with legislation that secures the moneys so that they will be able to be returned, subject to the other party having recourse to the money. The Construction (Retention Deposit Schemes) Bill that I presented and the hon. Member for Kilmarnock and Loudoun kindly supported proposed that retentions should be retained in a Government-approved scheme. That would operate in a similar way to what is required for shorthold tenants under the Housing Act 2004, whereby deposits taken from them must be placed in an approved scheme. Ring-fencing the moneys in that way will mean that they will be secure, and available to be released on time rather than, as currently happens, after a wait of three or more years—if ever. That will help to increase the velocity of cash in the system, and if moneys are secured in that way banks will be able to lend to firms on the back of such security.

It is appropriate to look briefly at the situation in other countries. The UK is now very much out of step with what happens elsewhere, where there is legislation ring-fencing cash retentions and/or providing security for construction payments in general. In Canada and the United States there is a system of charges that can be placed on a building or structure by a firm that has not received its payments. Australia and New Zealand have legislated to ring-fence the money. France has a statutory framework that requires bank guarantees to be used as security for payment in the construction industry. The Bill is a relatively straightforward one that amends the Construction Act and requires the Secretary of State to introduce regulation to protect moneys.

[Mr Hollobone]

My hon. Friend has a fan in Kettering. Mr Brian Griffiths, of Griffiths Air Conditioning and Electrical Contractors, which employs 30 people locally, has mentioned my hon. Friend to me in dispatches. Mr Griffiths is of the view, as am I, that the ready-made solution to the problem is my hon. Friend’s Bill, which the Government could simply introduce as a Government Bill. Not only is my hon. Friend outlining the problem extremely effectively, he is providing the Government with a ready-made solution.

[Peter Aldous]

I believe that the Bill is the framework for resolving the issues, and an awful lot could flow from putting it in place.

A retention deposit scheme seeks to safeguard the money. Cash retentions can still be deducted as security, but they in turn must be secured by depositing them in the scheme. Failure to do so will mean that any contractual clause enabling the deduction of cash retentions would be invalid. The Bill would finally bring closure to the many efforts that have been made over the past two decades and before to address the problem. In doing so, it would transform the prospects of many SMEs that make up the vast majority of firms in the UK construction industry.

To the outside world, nothing has happened since January 2018. The Brexit impasse brought the machinery of government to a halt. However, behind the scenes, a fair amount has been going on. As a result of the outstanding efforts of the Building Engineering Services Association and the leading electrotechnical and engineering services body, the Electrical Contractors’ Association, the January 2018 Bill secured the support of more than 80 industry bodies and trade associations, representing over 580,000 businesses and sole traders. It was the largest fair payments campaign ever formed in the UK, representing every level of the supply chain from across the construction and engineering professions. The British Chamber of Commerce, the Federation of Small Businesses and the Institute of Directors were also supportive. Only last week, Suffolk-based Breheny Civil Engineering, one of the largest privately owned regional civil engineering contractors, wrote to me in support of the Bill.

In the last Parliament, the Bill received strong parliamentary support, with more than 250 MPs from across the political spectrum indicating their support. Indeed, on the list that I have before me, in perfect alphabetical symmetry I am second from the top of the list and the Minister is second from the end. It is appropriate to acknowledge the work of previous Ministers at the Department for Business, Energy and Industrial Strategy who recognised the need for change, in particular my hon. Friend the Member for Rochester and Strood (Kelly Tolhurst) and our former colleague Richard Harrington.

Richard convened a roundtable meeting of industry representatives to address the problem. He very kindly ensured that I received invitations to the opening session in October 2018 and the concluding one in May 2019, although by then he was no longer a Minister. He made absolutely clear at the outset that doing nothing was not an option, and that we cannot continue to kick this particular can down the road. I got the impression that he wanted this reform to be his legacy from his time in office. Unfortunately, it was not to be. The outcome of the roundtable was not conclusive, though, on balance, my sense is that there was a clear preference for a retention deposit scheme as the Bill proposes, rather than an alternative surety bond-based solution.

Over the past 18 months, pay2Escrow has been modelling how a retention deposit scheme could work. The hon. Member for Kilmarnock and Loudoun outlined that scheme; pay2Escrow has taken me through its proposals, and I understand it has made presentations to officials at BEIS. I would anticipate that the Minister has been briefed on those.

I presented my ten-minute rule Bill 10 days before the Government’s consultation on retentions closed. Yesterday, they published a summary of the responses. Of the 52 responses in Citizen Space, 60% thought that a retention deposit scheme could apply to the whole sector. Of the seven business representative organisations that responded to the same question, 71% considered that an RDS could apply to the whole sector. Some 82% of 55 responses in Citizen Space believed an RDS should set up on a statutory footing. Of the eight business representative organisations that responded to the question, 75% believed an RDS should be set up on a statutory footing. The Minister concludes his foreword to the summary by stating:

“We will continue to work with industry on these issues and the policy options for addressing the problem of unjustified and late payment of cash retentions.”

Will the Minister address three questions? First, does he agree with Richard Harrington that doing nothing is not an option? Secondly, will he facilitate a pilot for the retentions deposit model that has been worked up? Finally, will he work to secure Government time for the passage of the Construction (Retention Deposit Schemes) Bill?

[John Spellar]

The hon. Gentleman has done a tremendous amount of work on this issue. What does he think is the Government’s underlying problem? Where in government does he think is the blockage against what is universally agreed to be a desirable solution? Who is holding this up?

[Peter Aldous]

I will try to answer, although I think the Minister is the best person to do so. First, there was the Brexit impasse, when nothing happened. Secondly, over the years, the main contractors have probably thwarted it, saying, “No, it’s going to cause us cash problems and the whole edifice will be crumbling down.” That said, some people in those firms who initially said, “No, you don’t want to go down this line,” have actually changed their tune, and now say, “Come on, let’s get on with it.” Thirdly, there has been concern that it is too difficult to put in place, so we should put it in the “too difficult” tray. The point of the pilot and the work over the last 18 months is that a solution is now ready to go. Those are the reasons I think things have not happened for a long time, but now is the time.

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[Nadhim Zahawi]

I will answer the hon. Member for Sefton Central (Bill Esterson), because he asked an important question—why will the Government not expand the remit for the Small Business Commissioner to include the construction industry? The honest truth is that the Government do not intend to extend the scope of the Small Business Commissioner’s activity to the construction industry. Section 4(5) of the Enterprise Act 2016 states that where,

“the complainant has a statutory right to refer the complaint for adjudication by a person other than a court or tribunal,”

that complaint is excluded from the commissioner’s complaint scheme.

The Government believe that that is the correct approach to considering the complexity of construction contract disputes, which tend to be incredibly technical, and we do not intend to extend the scope of the commissioner.

In answer to the question from the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier), the research was published during the consultation process. I hope that that sets her mind at rest.

[Peter Aldous]

I am grateful to my hon. Friend for looking into this issue in such detail, and I appreciate that he has been in his role for only two weeks, but can he confirm that the status quo is ruled out completely and that he will be coming forward with alternative proposals?

[Nadhim Zahawi]

I think that my stating clearly and repeating over and over again that we are committed to dealing with this issue should give my hon. Friend the comfort he seeks that we are absolutely committed to dealing with this. Part of that process, as he can see, is the publication that we have made, and we will move forward to ensure we deal with it.

I will conclude by saying that there is no simple solution to the abuse of retention. Any changes would need to be implemented correctly and require consistent support from industry. I am clear that any solution must work for the industry and its clients, must be sustainable and must address all the issues and the need for both surety and fair payment.

Industry and clients need to work together to develop that alongside Government, as they are doing, and to define what the solution might be and how we create a process that gets us to that solution. I hope that that information offers some comfort to colleagues and some reassurance that the Government are committed—I say it one more time—to addressing the problems associated with the practice of cash retention.

UK Oil and Gas Industry

Peter Aldous Excerpts

Tuesday 25th February 2020 Westminster Hall

[Peter Aldous (Waveney) (Con)]

It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate my hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie) on securing the debate. Two weeks ago, I was privileged to be re-elected chair of the British offshore oil and gas industry all-party parliamentary group; one of the first tasks that I was assigned was to secure a Backbench Business debate on this subject—my hon. Friend has eased my workload considerably.

The oil and gas industry has been an integral part of the East Anglian economy for more than 50 years. Until recently, the industry’s sole focus was on maximising recovery from the UK continental shelf. That has changed as we set about decarbonising the economy and delivering on our legally binding target to reach net zero greenhouse gas emissions by 2050. Oil & Gas UK has published “Roadmap 2035: A blueprint for net-zero”, which outlines the role that the industry will play in a net zero future. It is very welcome that the industry recognises the difficult and enormous challenge that we face, not just in the UK but all around the world. It is important that the industry steps up to the plate and plays a lead role in delivering the transformation. It should continually ask itself, “Can we do more? Can we do better?”

At the same time, it is important for the Government and policy makers to work with the industry, acknowledging the key role that oil and gas played in the UK economy in the second part of the 20th century and continues to play in the 21st century. We must not unfairly stigmatise the industry and those who work in it, but should recognise that they are part of the solution and not the problem.

[Alex Cunningham]

I congratulate the hon. Gentleman on being re-elected chair of the APPG. He has had one burden taken off him; may I provide him with another by asking that the APPG start to look at some of the safety issues? He knows that I bang on about that. I hope that he will join me in welcoming the proposed wider review of the helicopter elements of the basic offshore and emergency training, given the distances that people have to travel offshore. Will he join me in encouraging the Minister to engage, like the RMT, Unite and the other unions, in that review, so that the recommendations we get out at the end actually enhance safety rather than diminishing it?

[Peter Aldous]

I welcome the hon. Gentleman’s intervention and wholeheartedly endorse the point that safety is paramount. There have been some horrific accidents while we have been working on the UKCS; Piper Alpha comes immediately to mind. Post-Piper Alpha, following Lord Justice Cullen’s report, we did put in place a very good safety system, but we must never forget the vital importance of the responsibility that we owe to all those people who work in the industry.

[David Duguid]

Both hon. Members have made the excellent point that, like our environmental performance, health and safety in the oil and gas sector across the UK has been world class—in fact, world envied for a number of years—so that it is one of our exportable commodities as well. Does my hon. Friend agree that we and the Government need to continue looking at the export opportunities of not just the technology but the expertise?

[Peter Aldous]

My hon. Friend is spot on; I will make this point in the little time that I have. Extracting oil and gas from the UKCS has not been straightforward, but as a result this country has developed expertise and specialisations that we have been able to take all around the world. As we transform to zero carbon, to renewables, we must not lose sight of that: we must continue to play that world-leading role in energy production.

I shall briefly highlight what I see as the future features of the UK oil and gas industry. First, it has an ongoing key role to play in the country’s energy security. The demand for petrochemicals will be with us for some time. It makes sense for that to be supplied, as much as possible, from our own resources, in as carbon neutral a manner as possible.

Secondly, the industry must be a bridge to a low-carbon future, promoting the use of gas, hydrogen and carbon capture, utilisation and storage. As the Committee on Climate Change has highlighted, the latter has a pivotal role to play if we are to achieve—and hopefully better—the 2050 zero carbon target. It is welcome that the Government recognise that, have published the CCUS action plan and have committed £50 million of innovation funding to drive down the costs.

Thirdly, the oil and gas industry has an important role to play in collaborating and working with its counterparts in offshore renewables. The skills required are in many respects transferable. Such work is already taking place, with both oil and gas and offshore wind learning from each other and with opportunities emerging to pioneer inter-sector training and currency certifications. Gas-to-wire technology and gas platform electrification, powered by offshore wind, are emerging as new advances that provide additional resilience in supply, while assisting in decarbonising traditional methods of generation.

Fourthly and finally, it is vital that we do not forget the enormous amount of work that needs to be done in decommissioning oil and gas assets on the UKCS. In the southern North sea—that is what I am interested in, but it is a very small part of the basin—late-life and decommissioning expenditure is forecast at about £4.4 billion for the period up to 2027. That amounts to an average spend of about £445 million. It is important that we have a policy framework and investment strategy that ensures we secure as much of that work as possible for the UK and for East Anglian businesses.

For the oil and gas industry to deliver on those opportunities, Government and industry must work together. That will be done best through an oil and gas sector deal, which was included in the Conservative manifesto in the general election. I look forward to the Minister updating us on its preparation. I request, as have others, an assurance that the Government recognise the need for ongoing fiscal stability in the forthcoming Budget.

I conclude with a point that I have made during many debates on the oil and gas industry, in Westminster Hall and the main Chamber. One of the best features of the industry is the UK’s ability to export skills and expertise, learnt on the UKCS, all around the world. In any oil and gas basin around the world, one can hear Scottish, Geordie, Norfolk and Suffolk accents. We must ensure that that remains the case, with the UK leading the world in the transition to and delivery of low-carbon energy.

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[Kwasi Kwarteng]

Naturally—my hon. Friend appreciates that reaching the net zero carbon target is a cross-Government endeavour. The Department for Business, Energy and Industrial Strategy, for which I am responsible, and other Departments, including the Treasury, the Ministry of Housing, Communities and Local Government and the Department for Transport, must all be engaged to reach those targets. I am therefore happy to engage in such conversations; they are crucial to our ability to reach the target.

A lot has been said about the oil and gas sector deal. I am not bound by any promises made by previous Governments, but I assure Members that we are committed to an oil and gas sector deal in the course of this Parliament. It would be premature of me to go into details, because those are precisely what we are negotiating. I look forward, hopefully as Energy Minister, to being able to celebrate and launch the deal.

[Peter Aldous]

rose—

[Stephen Flynn]

rose—

--- Later in debate ---

[Kwasi Kwarteng]

I am not going to play the game of saying some arbitrary date. It is a serious, ongoing discussion. As I said, we will have a sector deal in the course of this Parliament. I will not be drawn any more on the timings.

[Peter Aldous]

rose—

[Stephen Flynn]

rose—