Government Levies on Energy Bills

Debate between Tom Greatrex and Jim Shannon

Monday 3rd March 2014 Commons Chamber

[Tom Greatrex]

I was very impressed by what I saw and heard from people at the conference in Belfast last week. The hon. Lady referred to the impact of the announcement on strike prices in the marine energy and wave and tidal sector. I am sure she is also aware that we are talking about nascent technologies, which could be a significant contributor in the 2020s. I hope she gets to the event that my hon. Friend the Member for Southampton, Test reminded her is happening tomorrow, because I am sure that others will be there who will be able to reiterate these points. It is also important, particularly for those technologies, that there is a signal beyond 2020.

The Minister seemed puzzled by the suggestion that an indication of the size of levy control framework beyond 2020 might be appropriate, but a 2030 de- carbonisation target would be appropriate. I am sure I need not remind the hon. Lady that that is supported by all parties in the House, other than hers.

[Jim Shannon (Strangford) (DUP)]

When the hon. Gentleman was in Belfast last week, did he have an opportunity to speak to anyone from the Northern Ireland Assembly about the role of the regulator in Northern Ireland who can have some control over energy prices in Northern Ireland? If he had such a discussion, has he been able to raise it with the Minister, and do the Opposition intend to give more power to the regulator so that prices for consumers can be reduced?

[Tom Greatrex]

I thank the hon. Gentleman for his intervention. I did not speak to any Assembly Members last week because I was there on Thursday when, as the hon. Gentleman will be aware, there were significant issues of immediate and pressing concern to Assembly Members and many others. Some Assembly Members who were due to be at the conference were unable to attend, for understandable reasons. However, I had the opportunity to talk to some players in the Northern Irish and Irish markets about the role of the regulators there, and I will send the hon. Gentleman a copy of our Green Paper so that he can see our proposals for a reformed and refocused regulator to ensure that there is a better balance in our regulatory regime.

The hon. Member for Southport said he had learned not to talk about estimates during estimates day debates. We had a master-class in that from the hon. Member for Angus (Mr Weir), who made a wide-ranging contribution on a range of energy policy issues, many of which were common ground to many of us, and we were able to agree with much of what he said. He touched on the impact on jobs and growth in his constituency from the renewables sector. As a fellow Scottish Member, I share his interest. Some engineering companies in my constituency are part of that supply chain, and I hope and anticipate that it will continue. The tone of this debate has been positive and thoughtful. The opportunity for my constituency and his to benefit most from opportunities in the renewables sector is underpinned by being part of the UK and the single energy market which we currently enjoy as a result.

The hon. Member for Brigg and Goole (Andrew Percy) touched on a number of issues, but most extensively those affecting Eggborough power station and his constituents. He may recall that I raised this issue at business questions just prior to Christmas, when I asked about the rumours that were circulating at that point. I think that the announcement in which the decision was confirmed was made on the day after the House went into recess. There are significant concerns about the way in which the FID-enabling process has progressed to date. I anticipate that further questions will be asked of the Government in relation not only to Eggborough but to other projects that slipped off the list and that had anticipated a different answer from the one that they got.

We are well aware of the proportion of the bills that consumers receive that is accounted for by levies within and outside the levy control framework: it is about 9% of the average bill, with the total amount added to bills being less than a third of the increase in bills since May 2010. It therefore does not stack up to attribute the majority of the increase in bills to levies, or green levies specifically. As the Minister is now well aware, 60% of the levies on bills have been introduced by the current Government since May 2010. I suspect that when he described the carbon price floor as an “absurd” waste of money and “assisted suicide”, he was not necessarily aware that it was a tax that had been introduced by his own Government. I am not sure whether those comments reflect his current view.

Apparently, as the Chancellor considers the Budget in the weeks ahead, he might reflect on the significant escalation of the additional element in bills. I join the Chair of the Select Committee and others who rightly noted that we in Parliament should be vigilant about the impact of levies on the bills of consumers and businesses. The oversight of a number of the arrangements relating to the levy control framework—which, as my hon. Friend the Member for Southampton, Test made clear, does not include all levies on bills—was a theme of several of our discussions in the Committee on the Energy Bill last year.

I ask the Minister to respond to some specific points. Will the capacity mechanism, and the demand-side options that will be considered as part of it, fall within the scope of the LCF in future? The Select Committee recommended that there should be a single annual report covering all DECC-funded schemes—those within and outside the levy control framework—to measure outcomes through spending, albeit that these moneys do not come from the consolidated fund. Have the Government looked into how that might be achieved, and does the Minister think it is a worthwhile exercise?

In its report on the operation of the LCF published in late November, the National Audit Office highlighted the failure of the joint Treasury and departmental governance board to link spending and outcomes in its deliberations. What assurance can the Minister provide that that will be rectified? The NAO also drew attention to schemes not covered by the framework and recommended that the Department should not only explain how it will control aggregate costs of consumer-funded schemes but elucidate on whether, together, those schemes are delivering what they are intended to deliver. What action do the Government intend to take in response to that?

The NAO returned to an issue that has been a matter of concern to many of us in recent months in relation to the allocation of contracts for difference within the LCF and the risk of breaching the cap if the wholesale price falls—another point made by the Chair of the Committee.

The NAO recommended that the Department and the Treasury should supplement published reporting on individual framework schemes by reporting routinely on levy-funded schemes. Has the Minister given that any consideration? The LCF is important, but it is also important that there is sufficient published information and accountability and that it should be taken with the same degree of seriousness with which this House views public spending from the consolidated fund. As the Chair of the Committee said, taxpayers and consumers are mostly the same people, and the impact falls on the same shoulders. The balance between the impact of the levies on consumers and the point of those levies has to be very carefully struck. The discussion about that balance can be better informed by a much stronger level of analysis being provided to this House for scrutiny.

I hope that the Minister will reflect on these important points to ensure that there is better, more thorough and more comprehensive parliamentary oversight of the levy control framework for the future, so that we can all be confident that it is delivering the policies that the Government are expecting it to deliver.

Work Capability Assessments

Debate between Tom Greatrex and Jim Shannon

Wednesday 1st February 2012 Westminster Hall

[Tom Greatrex]

I entirely agree with my hon. Friend. Such issues were among those identified. My contention is that those problems should have been dealt with before the system was rolled out further, and we are now dealing with the consequences of those decisions.

The Atos half-yearly report for 2011 was very upbeat. It noted that operating margins had increased year on year to €166 million—an 11% increase from the first half of 2010. Its operating margin in the UK in 2011 was a healthy €34 million. The outlook for the second half of 2011 was similarly rosy: Atos expected profits to increase by 6.2%. I say all that not to congratulate Atos and marvel at how successful it has been, but to preface my next remarks.

Recommendation 13 of Professor Harrington’s first review was

“better communication between Decision Makers and Atos healthcare professionals to deal with borderline cases”.

In their initial official response to Harrington’s 2010 review, the Government accepted that recommendation, noting:

“Decision Makers already contact Atos healthcare professionals to discuss individual case issues in some instances… we will ensure this happens more often… Agreed measures will be adopted nationally during 2011.”

In a letter that I received from the DWP dated 1 November 2011, I was advised that good progress had been made on that key Harrington recommendation. The DWP letter claimed that

“Atos Healthcare Professional deployment in Benefit Centres has been trialled and has proven to be an effective way of improving communications to discuss borderline cases.”

However, on 20 December 2011, just over six weeks later, in answer to a written question that I had tabled, the Minister advised that

“at the end of the trial, Atos health care professional capacity pressures meant that the initiative could not be continued. From the start of December, DWP and Atos have agreed the implementation of a telephone helpline so that Decision Makers can speak directly to health care professionals to obtain medical advice in specific cases. This is an interim arrangement until Atos are in a position to reintroduce the deployment of health care professionals in benefit centres.”—[Official Report, 20 December 2011; Vol. 537, c. 1082W.]

That is a hugely significant development. This may have been due to when I tabled the question or when the Minister chose to answer it, but he slipped that answer out just before the Christmas holidays. The fact that Government policy is not being followed by a company in receipt of £100 million of taxpayer funding a year will startle many of my constituents and, I am sure, the constituents of many other right hon. and hon. Members.

I should be grateful to the Minister if he gave me answers to a number of questions. What exactly does the phrase “capacity pressures” mean? Does it mean that Atos cannot recruit the right number of health care professionals to undertake its work? Is it unable to fulfil its contractual obligations because of the amount of work that it has to get through? What discussions has he had with Atos about those capacity pressures? Does he believe that they undermine the ability of Atos to fulfil its responsibilities under the contract? What other services have been withdrawn as a result of capacity pressures in Atos? I am sure that if he is not able to answer, I will find a way of crafting written questions to get the answers from him.

To me, the phrase “capacity pressures” implies an undermining of the way in which the Government sought to deal with these issues, which was by saying that Harrington’s recommendations would be implemented in full. If that is not happening in the instance to which I have referred and perhaps in other instances because of capacity pressures in Atos, is that not a damning indictment of the failure of the system as it is currently set up?

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this matter to the House. No one decries the need for profit, but is it not time that we got away from profit and on to service delivery? Does the hon. Gentleman share my concerns about many patients who go through the process of a work capability assessment and particularly those with cancer, whose health deteriorates when they experience more stress? There should be an emphasis on people’s health, rather than on the profit at the end of the year.

[Tom Greatrex]

I thank the hon. Gentleman for his intervention. He puts his finger on a very important point. I am referring to the anxiety and concern that the process causes people, particularly if they are waiting for an assessment. If they enter the appeal process when they have had an assessment, they could wait up to eight months for an appeal. There is an issue about the whole of that process. Long time scales are involved because of the sheer number of people who are being dealt with—or not being dealt with. At the same time, we should never forget that those individuals are trying to deal with the process, and they are feeling huge anxiety. Particularly if they are already unwell, that could well affect their health. That is an important point.

Arch Cru Compensation Scheme

Debate between Tom Greatrex and Jim Shannon

Wednesday 19th October 2011 Westminster Hall

[Tom Greatrex]

I thank my hon. Friend, who makes an important point, which goes to the heart of this issue—the role of the FSA as the regulator and, it seems, the broker of a deal that might help to get something off its back.

It seems the FSA cannot work out what happened. It wants a line to be drawn under this issue, but thousands of unhappy people expected the regulator to prevent this abuse from happening. The FSA has said that the deal will return to investors approximately or up to 70% of their investment, and the words “up to” are quite significant. That 70% is based on the £54 million that has been returned already, £149 million from the sale of other assets, which were valued at that level at 31 March 2011, and an additional £54 million, which Capita, HSBC and BNY Mellon agreed to without accepting liability in a deal brokered by the FSA. However, that £149 million might well not be realised, especially when we consider that the asset base included Greek shipping and what have been described to me as rust-bucket ferries, as well as middle eastern property, the value of which—if there is any left at all—could have fallen, even in the short time since March, given the current economic conditions.

The question I put to the FSA—it was entirely reasonable, but the FSA was unable to answer it—was why it did not add up the asset sales and projected asset sales and subtract them from the investors’ losses to give a figure that would make the compensation up to 100% of what people invested. In that way, people could get their money back; they would not make a profit, but simply get back what they invested, based on the assurances they were given by an organisation that was regulated by the FSA when they took out their investment.

[Jim Shannon (Strangford) (DUP)]

One thing that has come to my attention through my constituents is that the FSA has given advice to investors pushing them towards independent legal advice. Some of that legal advice has led to further complications and added to the money they had already lost. Does the hon. Gentleman feel the direction the FSA pushed investors in should be addressed, given the extra heartache and money losses they have experienced as a result of seeking legal advice that has turned out to be wrong?

[Tom Greatrex]

I thank the hon. Gentleman for his intervention. I do not wish to get drawn into the background dispute between people who have paid into a class action legal fund and people involved in a different action group on behalf of investors. To be frank, I have spoken for far longer than I intended, and I want to give others the chance to get in. There are lots of complicated issues, and I want to focus on the compensation scheme before I draw my remarks to a conclusion. I hope the hon. Gentleman will forgive me.

The approach I have suggested would simply enable people to get their money back—to get up to 100%. This case has been described as one of the worst investment scandals of recent years. There was a similar scandal under the FSA’s predecessor, the Investment Management Regulatory Organisation, and the name Peter Young will mean something to many people here. The relationships and problems involved were broadly similar, but following the suspension of the fund in question in 1996, IMRO achieved a settlement whereby people got their money back. The deal was funded by Morgan Grenfell, which was broadly in the same position as Capita.

That settlement was agreed three months after suspension. Although IMRO took action against the chief executive of the fund manager, the offer was not paid until January 1999—two years and four months after suspension. In the case of Arch Cru, however, it is now two years and eight months since suspension, and only now are letters starting to go out to people with the payment offer—I understand that they are going out now or will be going out in the next couple of weeks. Why was the FSA unable to get close to the resolution achieved by its predecessor as regulator in a similar time frame? Why is up to 70% acceptable to the FSA, when IMRO managed to get 100%?

Fourthly, there is the issue of ensuring that these events do not happen again. Something needs to change if these things are not to happen again, and people who invest their retirement nest eggs or lump sums on the basis of being told that a fund invests cautiously are not to lose their money, not to have to battle through the press to get a hearing, not to have to get a debate in Parliament so that issues can be aired and not to experience the stress, anxiety and rank unfairness of losing their money in a high-risk gamble they were told was a cautious investment.

In this regard, the FSA is about to be replaced by the Financial Conduct Authority, and the relevant proposals are beginning their pre-legislative scrutiny. What will be put in place to enable the FCA to prevent something similar from happening again? All of us, including the Government, have an opportunity to get the proposals right, and that is why these issues are a matter for the Minister and the Government. The Minister and the Treasury correspondence unit have been clear that this affair is a matter for the regulator, not them, but when the ACD fails, the regulator admits it did not know what was happening because of the structure of an investment vehicle, and the basis of a payment offer is so woefully inadequate, these things become a matter for the Minister; it becomes the Government’s responsibility to prevent or minimise the risk of such things ever happening again.

It also becomes a matter of my constituents and those of other Members present being entitled to information, but the FSA and others are not releasing much information. That is why I am putting the questions to the Minister today. Does he believe that Capita fulfilled its role effectively? Does he accept that the FSA has been hampered in fulfilling its role as regulator by its structure? Does he understand that in not providing information, there is suspicion among the investors? Does he realise that on that basis, up to 70% is just not good enough? Does he now know that the FCA needs to be bolstered for the future? Given all the above, will he now ensure that there is a section 14 investigation into what went on with Arch Cru?

I have spoken for far longer than I had intended, so I will conclude. It is easy, when looking into the matter, as I have done over the past few weeks, to get into the details and get lost in the technicalities and minutiae of the regulatory regime, and in the reputations of blue-chip companies, the statements of their chief executives and other individuals, and even the reputations of some of those in high-profile positions in the investment fund. Ultimately, the matter is about people—people such as my constituent Mr Pringle of Cambuslang, whom I have been in correspondence with. He e-mailed me yesterday and asked me to include a final point in the debate, which I will conclude on. He said that

“my wife…and I invested all our pension money with the Cru in this ‘Low Risk’ venture. Being pension money we obviously did not want any high risk ventures that would put our money at risk…We are extremely disappointed in the FSA’s attitude towards this case, by saying that they think Capita’s offer is ‘Fair and Reasonable’. Not in any way is their offer ‘Fair and Reasonable’. Investing in Greek Shipping is not ‘Low Risk’!”

That is the crux of the issue. That is why it is a matter for the Government as well as the regulator, and that is why the Minister needs to respond to the debate this morning.

High-speed Rail

Debate between Tom Greatrex and Jim Shannon

Wednesday 13th July 2011 Westminster Hall

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

I congratulate my hon. Friend the Member for Clwyd South (Susan Elan Jones) on securing the debate and on the case that she has made for High Speed 2. There is no need to repeat the benefits for the business environment and the economy or the point about capacity constraints, because those points have been well made.

I want to touch on a couple of issues relating to Scotland and to my constituency and neighbouring constituencies. The Minister is aware of the group High Speed 2 Scotland, which has published papers looking at the benefits of high-speed rail for Scotland. I want to reiterate some of its key points on the environmental benefits in particular. Currently, some 7 million journeys to London from Glasgow and/or Edinburgh are undertaken every year, but 6 million of those are by air. I freely admit that I do the same more often than I would like to, which is the case for many people I have spoken to who must travel to London for business purposes. They would rather not do the journey by air but, unfortunately, the time taken by rail at the moment is too long. There is an issue to do with the opportunities for business in Scotland as well.

In the past, the Minister’s predecessors had discussions with Scottish Ministers about HS2 in Scotland. She will be under pressure to respond to many points, but I hope that she will touch on whether such discussions have continued and when she last met Scottish Ministers. I also hope that she will touch on the feasibility of, if we eventually reach consideration of an extension beyond the initial phase of HS2, and potential for building from north to south, rather than from south to north, because that might be useful.

[Jim Shannon (Strangford) (DUP)]

The hon. Gentleman is discussing Scotland. Other hon. Members have spoken eloquently about other parts of the country, and as a Northern Ireland MP my request concerns the HS2 opportunities for Stranraer, where the Northern Ireland traffic goes. Something should be done there, because all parts of the United Kingdom should benefit from HS2.

[Tom Greatrex]

I agree that all parts of the United Kingdom should benefit from HS2, which is why it is important that we look beyond the initial stage and start some of the planning discussion now, and why I want an assurance on looking at the feasibility of building from north to south.