Infrastructure Projects (Community Benefit)

Thérèse Coffey Excerpts

Thursday 18th October 2012 Westminster Hall

[Mr Hayes]

The meeting that I chaired at the Cabinet Office to consider these matters, which I have mentioned, was with the nuclear skills academy. We agreed at that meeting that it would act as the conduit by which the skills that the industry needed were articulated and through which the mechanisms needed to meet them through the provision of money were organised. That is at the heart of the process. I commit to ensuring that that is pursued with appropriate diligence.

The Government’s strategy for growth that I described necessitates our seeing the bigger picture in respect of the benefits that communities might get in terms of learning, skills and jobs. In the previous debate, I outlined the significant rewards for communities in such areas. That is sustainable economic growth, some of which lies beyond the confines of section 106 agreements. My hon. Friend made the sound point that it is not enough to rely on section 106 in that respect because we are now talking about a much broader range of challenges—intergenerational, actually, as well as anything else.

The purpose of section 106 agreements is to mitigate the effect on local communities and to compensate for disruption, but they are not, as my hon. Friend rightly said, the ideal vehicle for dealing with developments that host infrastructure for national benefit over such a long period. We need to work with local communities to consider the broader challenges associated with such infrastructural development.

Locally, public support for new nuclear power stations is typically high, and as my hon. Friend said, people in his area have lived with nuclear power for a long time. He mentioned some who recalled the original nuclear build. We must, however, now change our assumptions about the character of such buy-in and engagement. As the new Minister, I am determined to think afresh about how communities can take a degree of perceived ownership of such projects. That does not, by the way, apply only to nuclear power but to infrastructural investment across the board in my area.

There is also a broader point to do with infrastructure investment more generally, but I will not comment on that because I never step too far beyond my ministerial brief. In energy certainly, for a while now the idea abroad has been that things are imposed, rather than people feeling the sense of ownership that my hon. Friend described. That is one reason why we have called for evidence on onshore wind, where that sense of imposition is widely felt.

We have asked people to make the case for community benefit—for the best way to ensure that communities feel that sense of ownership—and for how we can make further progress in ensuring that the vital say of local people helps to direct policy. The same case might be made for other forms of generation as well. We are not discussing only a rejuvenation of existing policy and certainly not a mere restatement of the status quo. This is a chance to create a new paradigm on community benefit, and that is what we shall do.

We have consulted extensively with local communities in all the sites that have been identified as suitable for hosting new nuclear power stations, with frequent visits and stakeholder meetings. Indeed, I insisted on engagement with the non-governmental organisations and met them yesterday. I had a fruitful and lengthy discussion with a range of NGOs in the area of nuclear, and I made the commitment that we will work on the basis of extensive consultation. I hope that we have a productive dialogue; although we will not always agree, it is important to respect opinions and to respond to fresh ideas.

Through such discussions, those large projects will bring national and local benefits, as well as a large number of jobs in both the construction and operational phases. Where communities are being asked to host large infrastructural projects that, although contributing significantly to national energy production and growth, will affect the local area, section 106 agreements need to be targeted effectively. I have said that such agreements are not enough alone, but they should not be disregarded. I want to say rather more about the agreements before I move on to what we will do beyond them.

Typically, a new nuclear power station will take up to 10 years to construct, as part of one of the largest infrastructure developments planned for the UK. There will be 60 years of operation, and current policy requires the building of an interim nuclear radioactive waste facility that can be safely operated for at least 100 years before the waste is moved into a planned geological disposal facility. The work force will be 5,600 at the height of construction, and there will be heavy traffic and associated noise.

I will take this opportunity to say a word about waste, which has also been mentioned in the debate, because there is a similar argument about disposal. There are ongoing discussions with a number of localities about the disposal of waste. Again, community engagement and community benefit are important, as is the process by which people can make decisions on such matters, and of course there must be appropriate consideration of the geological effects of any decisions. The new paradigm that I describe must include consideration of disposal, as well as new build, and we will ensure that that happens.

The recent agreement between EDF and the local authority under section 106 involved almost £100 million, which is a huge sum of money that will be spent in a way that benefits the communities affected by construction, including up to £8.5 million for housing funds; £12.8 million to a community fund for measures to enhance the quality of life in local communities; almost £16 million on highway improvement schemes; and more than £7.1 million to improve local skills and training, among other initiatives.

On previous occasions, my hon. Friend has referred to business rates retention, about which he feels strongly. I understand that there is some confusion on the subject, and I shall attempt to untangle the misconceptions in my few remarks today. Business rates will be retained by local authorities that host nuclear power stations in the same way as growth in other sectors is retained. From April next year, local government as a whole will keep a share of the business rates collected, together with the growth on that share. The Government are currently considering responses to a technical consultation on the final design of the scheme, but it will provide a major boost for those authorities that grow their business rates revenues. A safety net will be available to provide support to those authorities whose business rates income falls below a certain percentage, and that will be funded within the system by a levy on those authorities that receive disproportionate benefit from growth in business rates.

Retention will mean a significant income for the local authority, but it will not mean that local authorities keep all the business rates. It is not, therefore, part of any proposed community benefit package, but only an effect of the huge increase of business rates to the area as a result of the operation of the power station. That is the confusion: people thought that retention was the community benefit package, but it is not, and the community benefit package will exist outside and beyond that. The business rates advantage that I describe will not last for ever—for a maximum of 10 years—and, as I said, that is neither long enough nor goes far enough to support local communities, so it would be an inappropriate vehicle given the scale of investment and the time scale discussed.

In the previous debate, my hon. Friend made the point that business rates would only be retained by the local authority that hosted the site—in the case of Hinkley that would be West Somerset—but I am delighted that, in the spirit of localism, the Government’s proposals for business rates retention also invited local authorities to work together to pool their business rates income, including growth from new development. That is a specific response to the representations of my hon. Friend and others. Today, he amplified that need to take a pan-authority view, rather than to get undesirable tensions between different local authorities as an unintended consequence of policy. I hope that he welcomes that further development.

Guidance was set out earlier this year in the Department for Communities and Local Government document, “Business rates retention scheme: Pooling Prospectus”. Local authorities have been invited to work together voluntarily to develop proposals allowing a number of authorities in an area to come together to share the benefits and risks of business rates retention. Pooling business rates would provide a new tool to deliver what is needed to promote growth and jobs, allowing investment decisions to support economic priorities. It would encourage collaborative working among local authorities, exactly as my hon. Friend described, rather than constraining such activity within administrative boundaries. It would allow the benefit from investment in economic growth to be shared throughout a wider area, potentially providing a growth dividend to pool partners. Pooling would also help local authorities to manage volatility in income by sharing fluctuations across budgets.

A combination of section 106 agreements and business rate retention will provide significant opportunities for local communities, but as I have said, they will not be sufficient on their own.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I apologise to the Minister and hon. Members for being late. I had forgotten about the switch to a 1.30 start in Westminster Hall.

One comment from the Minister is very welcome. Ongoing business rates means that there will be investment in skills and other opportunities throughout the plant’s lifetime, not just its initial commissioning. The focus on the pooling of rates is very welcome.

[Mr Hayes]

I described the assiduity of my hon. Friend the Member for Bridgwater and West Somerset in representing his constituents, and perhaps it is matched by that of my hon. Friend the Member for Suffolk Coastal (Dr Coffey), who has spoken to me repeatedly and at great length about the interests of her constituents. She hosts an existing nuclear power plant. I am grateful for her acknowledgement of the progress that is being made. I have never been an excessive stickler for punctuality, which I always think is the preoccupation of very small minds and people who do not have much to do.

A community benefit package should indeed go well beyond section 106 agreements. The sum of money is large, but community benefits must be more than that. The national infrastructure plan, which was published in 2011, committed the Government, as the hon. Member for Liverpool, Wavertree said, to introducing proposals by the end of the year for reform of the community benefit regime. Since the last debate, I have done a lot of work on this in a number of ways, as have my wonderful officials. We have looked at a range of means by which a community benefit package might be delivered, and we are close to a conclusion. The hon. Lady will be pleased about that because, charmingly and with appropriate diligence, she pressed me on the timetable.

I am pleased to say that we have made progress in considering the options. We are considering how a community benefit package can best be delivered in the interests of local people in line with the principles that it should be meaningful for the community, be spent by the community, be fair and equitable across different sites, and have a long-term impact.

The focus of a community benefit package is on planning and investment for the time after the construction period, enabling long-term, sustainable growth by redeploying labour and creating new business opportunities. That will help to ease the transition between the fluctuating employment levels during construction, and the more stable and sustained employment levels associated with operation of the plant. That is important in relation to what we described earlier: skills and jobs. Many of the skills required in the construction phase will be transferable by their very nature, and quite different from the skills required during operation. What we would not want to do is to create opportunities for local people to acquire skills and to get jobs without thinking through how those skills and jobs might be dispersed over time. That is a significant challenge, but not one that we should duck. We need to think that through in terms of the benefits package that we devise and implement.

Another element on which I have placed particular emphasis in our discussion is the effect on people who will not directly benefit from the project in the ways I mentioned. A range of issues, including better transport, better community facilities, and so on, need to extend well beyond the immediate economic benefit that one might expect during construction and operation.

In line with the principles of localism—a subject dear to my heart—people in the community should determine what is needed and what will best serve their community. That is part of the paradigm I described. My Department has constituted a Hinkley strategic development forum in Somerset, as my hon. Friend the Member for Bridgwater and West Somerset knows. It comprises representatives from central Government, local authorities, the local enterprise partnership, the Chamber of Commerce and EDF to maximise local benefits from the development that is about to happen. That forum has just had its second meeting, and feedback has been extremely positive. The format seems to have been welcomed by the local community.

Such forums could be a suitable vehicle to help people with advice on the use of a community benefit package. Local authorities are involved in those forums, but there is an argument for involving other agencies in that way with the support of local authorities. We believe that all the district councils are working constructively to ensure that the whole area benefits from the development of Hinkley Point C. We see no reason why that would change if there were a community benefit package. Local authorities have the power to form partnerships to make that a reality for the long term.

We are clear that every package will have a particularity that reflects the circumstances of the area in which development takes place. Early this week I spoke on the Isle of Wight, which was wonderful, as you can imagine, Mr Walker—I am thinking not of my speech, but of the Isle of Wight, although both were wonderful—and I made the point that a developed capitalist economy tends to lead to the deadening effect of dull ubiquity. I want the packages to be characterised not by dull ubiquity but by the exciting particularity that is guaranteed by the strong involvement and shaping of them by local communities. They must be meaningful and provide some of the things I mentioned earlier: long-term economic stability for the area and recognition that the community is hosting infrastructure of national significance.

To pick up my hon. Friend’s point, packages should not be just an income boost for a single local authority. That would be quite wrong and counter-productive. Any community benefit package must be large enough to make a difference in the short term and have an immediate effect while promoting sustainable growth over a considerable time. Discussions have been going on for some time to put together proposals for a community benefit package that meets all the criteria of being meaningful, making a difference, managing to achieve a sustainable local economy, and having a lasting impact for generations with the aim of engaging the local community in the long term.

I will introduce proposals within the timetable agreed. I will do so to the House in the form of a statement, and I will of course ensure that my hon. Friend and the communities affected are informed. As a result of the representations that have been made in this debate, I have decided to write to all local authorities concerned and to ensure that there is an ongoing dialogue there as the proposals are made.

I recognise the point that the hon. Lady made that uncertainty is unhelpful. In any strategy, certainty is a prerequisite of confidence and there will not be commercial investment or social and cultural investment—investment of belief—among local communities unless we are very clear about our objectives and how we will meet them. I can tell the House that as a result of our debate, I have decided to meet the Economic Secretary to the Treasury today, with the aim of coming to an agreement shortly on the total value of the package. He will receive a text message from my Parliamentary Private Secretary and, knowing the diligence of the Economic Secretary, I am sure that he will be waiting for me when we finish the debate.

Progress has been made over the last few weeks and more detail will follow shortly. We are clear that communities deserve recognition and clarity on what that recognition will mean for them. As I have said, it will give me immense pleasure to provide that clarity in the very near future.

In conclusion—I know that there will be some disappointment that I am drawing my remarks to a close so speedily—much of the misunderstanding, or absence of understanding, around energy policy springs from the past excessive emphasis on cause, and the inadequate consideration of effect. We have talked too much about production and not enough about consumption, and there has been too much about supply and not enough about demand when discussing energy strategy. Part of the new approach that I have outlined is to put fresh emphasis on effect and on demand.