House of Commons
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Oral Answers to Questions
(10 years, 10 months ago)
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Naomi Long (Belfast East) (Alliance)
1. What assessment he has made of the open letter presented by an inter-faith delegation to the Minister responsible for the middle east and north Africa, on 14 May 2013, calling for the release of the seven Baha’i leaders in prison in Iran.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
I was proud to receive that letter from a large number of faith leaders in the United Kingdom. It is a powerful expression of support for the imprisoned Baha’i leaders in Iran. I hope that the concerns of those with faith will be heard anew in Tehran, and we continue to call for the release of the seven imprisoned Baha’i leaders.
Naomi Long
I thank the Minister for his comments and for receiving the letter and meeting us. On this day 30 years ago, 10 Baha’i women were hanged for refusing to abandon their faith. The continued incarceration of seven leaders is clearly of great importance to the Baha’i community, not just in Iran but around the world. What hope does the Minister have that the change in President may have an impact on the approach towards their persecution?
Alistair Burt
I am grateful to the hon. Lady not only for asking the question but for being present at the handing over of the letter. It remains the case that the human rights record in Iran is appalling. A lot of hope is being pinned on the possibility of change in Iran. As my right hon. Friend the Secretary of State said yesterday, it is rather too early to tell, but it has been reported that the new President talked at yesterday’s press conference about a more inclusive constitution. I am sure that we will wait to see what happens, rather than just judge on words. If there is any opportunity for the release of Baha’i leaders and for better treatment of the Baha’is and all other religious minorities in Iran, it would be warmly welcomed by the House.
Keith Vaz (Leicester East) (Lab)
There are 7 million Baha’is living all over the world, many thousands in the United Kingdom. Would it be possible to contact the faith and religious groups in this country, such as the Muslim Council of Britain, to see whether they could act as a bridge to the spiritual leader to discuss the release of these prisoners?
Alistair Burt
The excellent thing about the inter-faith letter that I received on 14 May is that it was signed by a collection of leaders from virtually all the faiths represented in the United Kingdom, and they made exactly that point—that spiritual leaders can speak to spiritual leaders. I have no doubt at all that those in the United Kingdom continue to urge religious tolerance throughout the world and they made that particular point in their letter.
John Healey (Wentworth and Dearne) (Lab)
2. What assessment he has made of the implications of the recent violence in Turkey for stability in the region.
Caroline Lucas (Brighton, Pavilion) (Green)
10. What reports he has received on the Turkish authorities’ response to the recent demonstrations in Taksim square.
The Minister for Europe (Mr David Lidington)
We are following events in Turkey closely and the Foreign Secretary and I have spoken in the past few days to our Turkish counterparts. We very much hope that matters can be resolved peacefully. A stable, democratic and prosperous Turkey is important for regional stability. Turkey remains an important foreign policy partner and NATO ally, and we shall continue to support its continuing reform agenda and encourage Turkey to respect its obligations as defined in the European convention on human rights.
John Healey
The Minister’s words were subdued. Is he not shocked to see this increasingly modern, secular and economically successful country arresting young people for using Twitter, blocking trade union demonstrations with riot police and now threatening to use the army on the streets against its own citizens? Will he and the Foreign Secretary now publicly urge the Turkish Government to respect people’s basic rights and freedoms of assembly and expression?
Mr Lidington
It is important that all human rights, as set out in the European convention to which Turkey, like us, is a party, are fully respected. Some of the images from Istanbul and Ankara are certainly disturbing. As friends of Turkey, we hope to see those problems resolved peacefully. We noted the statements last week by the Deputy Prime Minister of Turkey that the police had overreacted in some instances and an investigation into those actions was needed. We support all efforts to address the protesters’ genuine concerns through dialogue and consultation.
Caroline Lucas
Over the weekend, more than 100 civilians, including doctors and nurses treating the injured, were arrested and held in incommunicado detention. There have also been reports of beatings. In the light of that appalling situation, will the Minister not only state his hope, but call on the Turkish authorities to disclose the location of everyone who has been arrested and to release immediately medical professionals who are identified by the Turkish Medical Association? Will he also make a public statement condemning incommunicado detention, because we have not heard enough of the public outrage and it needs to be heard today?
Mr Lidington
We are obviously concerned about the reports of the arrest of lawyers and doctors who were treating injured protesters at the scene of the demonstrations. The freedoms of assembly, association and expression are important rights. It is fair to recognise that Turkey has carried through substantial judicial and political reforms in the past 20 years. It is a very different country from when the military ruled and the army were deployed on the streets at the first sign of a demonstration, but that does not detract from the fact that the basic freedoms and human rights that Turkey has signed up to need to be respected.
Richard Ottaway (Croydon South) (Con)
Although any response to protest must be proportionate, does the Minister agree that this is not the Arab uprising? The Turkish Government have been elected three times, and on the last occasion with more than 50% of the vote. If the protesters do not like the Government, the answer lies in the ballot box, not in violence.
Mr Lidington
My hon. Friend is right that the Government of Turkey have been elected three times with a decisive majority of votes from the people of Turkey. The electoral remedy is, indeed, available. It is also right to expect any democratic Government to abide by the national constitutional rules and international standards on human rights to which the country adheres.
Emma Reynolds (Wolverhampton North East) (Lab)
Many people will be concerned about the generality of the Minister’s answers. Will he comment specifically on the recent reports that 38 young protesters in one city alone in Turkey have allegedly been arrested for comments made on Twitter? What representations has he made to the Turkish Government about upholding freedom of expression and the freedom to demonstrate? In particular, has he voiced concerns about the recent comments of the Turkish Interior Minister, who said that arrests would be initiated on the basis of protesters’ use of social media?
Mr Lidington
It is important that the Turkish Government, like any other democratic Government, abide by the rule of law and follow due process in respect of any action involving the police and the criminal-legal process. When talking to our Turkish counterparts, the Foreign Secretary and I certainly make clear the extent of the public concern in the United Kingdom. Those of us who have long been firm friends of Turkey and who want to see its European ambitions fulfilled see the process of judicial and political reform as an integral part of fulfilling those ambitions.
Jeremy Corbyn (Islington North) (Lab)
3. What recent developments there have been in Government policy towards the Chagos islands; and if he will make a statement.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mark Simmonds)
As my right hon. Friend the Foreign Secretary stated in December last year, we are taking stock of our policy on the British Indian Ocean Territory. We are engaged in a programme of consultation, including with the Chagos islanders.
Jeremy Corbyn
Will the Minister put a timetable on that consultation? He will recall that it was in the 1980s that the islanders were last able to live on the islands. Surely it is time to go beyond apologies, guarantee a right of return for the Chagos islanders to the islands, and allow limited fishing and ecological tourism on the islands, rather than having a no-take marine protection area, which is the Government’s current policy.
Mark Simmonds
As I said in my previous response, we are undertaking a review. There is no fixed timetable for the conclusion of that exercise. It is important that the review is thorough and that it consults as wide a range of partners as possible, both inside and outside Whitehall. That cannot be rushed. However, I hope to provide the House with an update on the process before the summer recess.
Henry Smith (Crawley) (Con)
I thank the Minister for his answer. May I seek assurances that consultations on the future of the Chagos islands will include representations from the Chagos islands community in this country, most of whom live in my constituency?
Mark Simmonds
I am grateful to my hon. Friend for that question. Significant credit should be paid to him for the assiduous way in which he represents the Chagossian community living primarily in his constituency. I confirm that we will be consulting his constituents and Chagossians who live in Manchester, as well as those who live in Mauritius and the Seychelles.
Thomas Docherty (Dunfermline and West Fife) (Lab)
21. As I understand it, the current arrangement with the US Administration expires at the end of 2014. Will the Minister assure the House that, notwithstanding the vital role of the base, the Government will make it clear to the US Administration that we will not simply roll over that deal?
Mark Simmonds
If I may correct the hon. Gentleman, the existing agreement runs out in December 2016. The agreement set out in 1966 stipulated that it would automatically be rolled over unless one of the parties disputes it between 2014 and 2016. We welcome the US presence in Diego Garcia, which offers a shared strategic asset for both countries, but the hon. Gentleman has alighted on some of the main issues about resettlement—first is security, and the other serious issue is the potential impact on the United Kingdom taxpayer, which must be looked at thoroughly.
Grahame M. Morris (Easington) (Lab)
4. If he will consider the introduction of a ban on importing products from Israeli settlements in the occupied territories.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
During my recent visit to Israel, I raised our serious concerns about settlement activity at the highest levels, including with Prime Minister Netanyahu. We are working to ensure that settlement produce is correctly labelled so that consumers can make an informed choice. However, I do not believe that imposing a ban on settlement goods will promote peace.
Grahame M. Morris
I thank the Foreign Secretary for that reply; I do not doubt his good intentions, but the time for rhetoric is passed. The latest expansion of illegal settlements is making a two-state solution impossible on the ground. Will he consider further steps and accelerate the labelling proposals he mentioned so that consumers can make a choice as to whether they support the Israeli system of apartheid?
Mr Hague
The hon. Gentleman is right to say that settlement activity is steadily making a two-state solution impossible. That is why time is running out for a two-state solution, which was the case I made to the Israeli and Palestinian leaders on my visit to Israel and the occupied territories. We are taking up with other European countries the commitment of the EU High Representative to prepare EU-wide guidelines on the labelling of settlement goods—that is the direction we are taking on that policy. Above all, the answer is to get Israelis and Palestinians back into negotiations so that we can settle all the issues, including the future of settlements and final status issues. That is what we are concentrating on now.
Mr James Clappison (Hertsmere) (Con)
I warmly welcome what my right hon. Friend has said about trying to get both sides into negotiations, because that is the way of resolving issues such as settlements and the legitimate concerns of both sides. What progress has he made in persuading President Abbas and the Palestinians to drop their pre-conditions for talks, which are an obstacle to resolving the issues mentioned by the hon. Member for Easington (Grahame M. Morris)?
Mr Hague
We are encouraging both sides into negotiations. The Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North East Bedfordshire (Alistair Burt), was also in Israel and the occupied territories a few days ago, and spoke to President Abbas, as I did. We encourage the Palestinians to enter negotiations without pre-conditions; we also encourage Israel to approach those negotiations in a way that will allow them to succeed. I pay tribute to Secretary Kerry for the energy he has put into the process in his four and a half months in office so far. He and I discussed the issue in detail in Washington last week.
Richard Burden (Birmingham, Northfield) (Lab)
The Foreign Secretary has been clear over the years that settlements are not only undesirable but illegal. If the UK decided to impose a ban on goods from settlements, would it be within the law to do so?
Mr Hague
The question before us is not so much about what would be within the law as about what best promotes peace. We are at a critical stage—we are often at a critical stage in the middle east peace process, but this is one of those truly critical stages where the coming days or weeks will determine whether Israelis and Palestinians come back into negotiations on a two-state solution. That is the only way to truly resolve the settlement issue and create a viable and contiguous Palestinian state, and that is our objective.
Sir Bob Russell (Colchester) (LD)
Israel, by its policies, is a racist, apartheid state. Will the Foreign Secretary confirm that all the products we are discussing are produced on land that is illegally occupied?
Mr Hague
Yes, that is true. I absolutely agree, as other hon. Members have said, that settlements on occupied land are illegal. That is why the previous Government and my predecessor proposed and introduced the guidelines on settlement produce. This Government have continued support for them and, as I have said, we are discussing how to apply them across the EU. I believe we are taking the policy forward in the appropriate way.
Nia Griffith (Llanelli) (Lab)
5. Whether he has had discussions with the Government of Israel on their response to the recommendations of the report “Children in Military Custody”, published by a delegation of British lawyers in 2012.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
As my right hon. Friend the Foreign Secretary has just said, I visited Israel and the occupied Palestinian territories last week, when I had the opportunity to raise the issue of the report with the relatively recently appointed Israeli Minister of Justice. We will continue to press on the matter of children in detention.
Nia Griffith
It is a year since the publication of the “Children in Military Custody” report and the lack of reform is lamentable. Will the Minister press the Israeli Government on specific deadlines on specific issues, such as the implementation of the use of audio-visual recordings in all interrogations? Specific deadlines on specific issues could help progress.
Alistair Burt
In addition to my efforts last week, I will this week see the Israeli Attorney-General, who is paying a visit to the UK. I absolutely intend to raise that issue with him. The Government support the report. Provisions in it will benefit not only children, but how Israel is seen. Currently, some 238 children are within the Israeli judicial system, including 137 in Israel. The issues are pressing, and I will continue to raise them very straightforwardly with the Attorney-General when he is here.
Robert Halfon (Harlow) (Con)
Does my hon. Friend agree that the tragedy is that, unlike juvenile criminal trends in most societies, many crimes carried out by minors in the disputed territories are of a violent and ideological nature? What is his latest assessment of the Palestinian Authority’s sanction and glorification of violence?
Alistair Burt
The tragedy is that two groups of people have been separated for far too long, and the efforts that need to be made to bring them together have foundered constantly. The problem of children taking to the streets and throwing stones and the Israeli defence forces having to respond will not be settled until we have the overall settlement on which we are working so hard to support Secretary Kerry, as my right hon. Friend the Foreign Secretary mentioned a moment ago.
Mr John Baron (Basildon and Billericay) (Con)
6. What his policy is on the possible inclusion of Iran as a participant in the forthcoming Geneva conference on Syria.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
No decision has been made on participation. Our priority remains to see a diplomatic process in Geneva that succeeds in reaching a negotiated end to the conflict, but we will have to be prepared to do more to save lives and pressure the Assad regime to negotiate seriously if diplomatic efforts are to succeed.
Mr Baron
Politicians should leave no stone unturned in the pursuit of a diplomatic solution. Does the Foreign Secretary therefore understand widespread concern that we are not giving diplomacy the best chance if Iran, a key player in the region, is excluded? Will he do what he can to encourage its inclusion?
Mr Hague
It is of course important that the conference in Geneva brings together sufficient groups and powers to agree a sustainable settlement of the conflict in Syria, but it is also important to have the ability to start from common ground. That is what was agreed at Geneva last year—that a transitional Government should be created, with full Executive powers, formed from regime and opposition by mutual consent. We have seen no evidence that Iran agrees with that agreement, which we made with Russia and others. In the absence of such agreement, it is hard to believe that Iran would play a constructive role at the Geneva negotiation.
Mr Peter Hain (Neath) (Lab)
I hope Iran is included, because it is a key player, but whether or not it is included, can the Foreign Secretary say to the House in absolutely crystal clear terms that, if the Government decide to send arms to Syria, there will be a vote—I choose my words precisely—on a substantive motion before that decision is executed? Within that, I define as arms British planes policing a no-fly zone and possibly bombing anti-aircraft installations of the Syrian Government, and training, which could be training on the ground. Will he confirm a quote in The Sunday Times on Sunday:
“One senior Tory source said…‘The bottom line is that we will avoid at all costs a vote as we don’t think we can win it’”?
This is a cross-party matter.
Mr Hague
It is a cross-party matter. My right hon. Friend the Prime Minister and I have made the position clear, so I do not think that the right hon. Gentleman needs to look at “a senior Tory source”. There is no Tory more senior than the Prime Minister. [Interruption.] Occasionally, one or two might think they are, but there are no Tories more senior than the Prime Minister and he has made it clear that the Government have a strong record of holding votes in the House of Commons on these issues when it is necessary to do so. We certainly would not want to pursue any aspect of our policy on this issue against the will of the House of Commons. That is neither feasible nor desirable, so of course we have made clear that there would be a vote. I have also made it clear that we would expect it to be before any such decision was put into action.
Mr Speaker
Order. We are deeply obliged to the Foreign Secretary, but we have quite a lot to get through and we need to be a bit sharper.
Dr Julian Lewis (New Forest East) (Con)
I would like to think that I heard the word “yes” in that answer, but I am afraid I did not. Nevertheless, and notwithstanding the unholy alliance between Iran and the Assad regime, how does it help the interests of this country to change yet another Arab dictatorship into another Islamist state, complete with weapons of mass destruction for al-Qaeda to use against us?
Mr Hague
My hon. Friend must bear in mind that the change happening in Syria is not one that was activated here in the United Kingdom—it started in Syria. It came from the people of Syria themselves, as it has in many other countries, where many people want economic opportunity and political dignity for their own countries. The situation we face now is that the crisis is getting worse. We need a political solution and we will not get one if the more moderate and pragmatic parts of the Syrian opposition are exterminated over the coming months.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
I hope the Foreign Secretary can help simple folk like me to understand things a little bit better. My right hon. Friend the Member for Neath (Mr Hain) asked a specific and precisely worded question on a substantive vote under a certain set of circumstances. Was his answer to that yes?
Mr Hague
I do not know many other ways of having votes in this place on a specific issue than having a motion that talks about that issue. I was expanding on the right hon. Gentleman’s question to try to cover all eventualities. Of course we have a vote on an issue of that kind in the House of Commons. [Interruption.]
Mr Robert Walter (North Dorset) (Con)
Iran and Russia have consistently supported the Assad regime. Given the recent reports that 4,000 republican guards are to be deployed to Syria, is it not even more important that Iran’s presence at the conference is taken seriously? They are part of the problem and therefore part of the solution.
Mr Hague
My hon. Friend makes a valid point, but it is possible to argue that in both directions. As I said a moment ago, it is important to have at Geneva sufficient groups and sufficient powers to be able to make a workable and sustainable settlement of the conflict in Syria, but there is a balance between that and including those powers or groups that would make a settlement to the conflict impossible. None of Iran’s actions to date on Syria has been in the interests of promoting a solution or political settlement.
Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)
The Foreign Secretary has just reiterated the Government’s support for a Geneva II conference. Will he set out for the House whether he believes that the UK’s supplying arms to elements of the Syrian opposition would increase the likelihood of those talks taking place—or, indeed, succeeding—and how, if he and the Prime Minister decided to pursue that course of action, he would be able to provide assurances to the House on the likely end use of UK-supplied weapons?
Mr Hague
We have not taken any decision about that, as the right hon. Gentleman knows. As he also knows, I have said in the House before that if we did so, it would be in certain circumstances: in conjunction with other countries, in carefully controlled circumstances and always in accordance with international law and our own national law. But we have taken no such decision to do so. We are clear that to save lives and promote a political solution it is necessary to give more support to the national coalition of the sort we have announced before in the House. That remains our position, and we believe it helps a political solution.
Ms Margaret Ritchie (South Down) (SDLP)
7. What recent assessment he has made of the humanitarian situation in Syria.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
The humanitarian situation in Syria is dire. More than 93,000 people have been killed and 6.8 million are in need of humanitarian assistance. That includes at least 4.25 million internally displaced people and 1.6 million refugees. We have committed £171 million to provide food, health care, water and shelter for refugees inside and outside Syria.
Ms Ritchie
In view of the dire humanitarian situation in Syria, does the Foreign Secretary agree that the overwhelming thrust of policy in Syria must concentrate on humanitarian measures, rather than on arming the rebels or military intervention?
Mr Hague
There are many aspects to the problems in Syria. I was explaining to the media yesterday that our biggest effort is on the humanitarian side. The United Kingdom is one of the biggest national donors to help with the humanitarian situation. We are working on a further substantial increase in our humanitarian assistance, because the UN has called for another $5.2 billion over the next six months. As we speak, the Prime Minister is seeking agreement among the countries of the G8 that the humanitarian situation should be one of our top priorities.
Sir Menzies Campbell (North East Fife) (LD)
Does my right hon. Friend understand that the urgency of the humanitarian problem is underlined by the fact that in the camps, particularly in Jordan, rape, violence and forced marriage are commonplace, which has an impact on the economic and political stability of Jordan itself? Can he satisfy the House that his Government—our Government—[Interruption.] Old habits die hard. Can he satisfy the House that our Government are doing everything in their power not only to contribute in the way he described, but to persuade other nations, particularly rich nations in the Gulf, to do so as well?
Mr Hague
Our Government, of whom my right hon. and learned Friend is a vigorous supporter at all times, are indeed doing that, not only through the financial assistance I have described, but by sending specific support and equipment to Jordan to help ensure people are safely taken to camps as quickly as possible. We have also sent to the Syrian border some of the experts I have assembled on preventing sexual violence in conflict, and we certainly vigorously encourage other nations to join in meeting the UN’s appeal for funds.
Ian Lucas (Wrexham) (Lab)
Last week, I visited the Domiz camp in Iraq, where 150,000 fleeing Syrians have been given refuge and are being well looked after by the Kurdistan regional government and the United Nations High Commissioner for Refugees working together. Unfortunately, however, only 28% of Syrian aid is currently funded, and there is a shortfall this year of £3.8 billion as a result of people not meeting their obligations. Will the Foreign Secretary press the G8 at least for the members of the G8 to meet their obligations, so that lives and individuals on the ground can be helped?
Mr Hague
The G8 is going on now, as the hon. Gentleman knows. As I mentioned a moment ago, one of the priorities of my right hon. Friend the Prime Minister is to agree at the G8 that the G8 together will supply a large share, a large slice of the new UN appeal for $5.2 billion. On my many visits to the middle east region, including the Gulf, of which there will be more shortly, I strongly encourage other nations to take part. The new appeal is several times bigger than the $1.5 billion appeal for the last six months, which shows that we are now dealing with the biggest humanitarian catastrophe of the 21st century so far.
Mr Philip Hollobone (Kettering) (Con)
22. In Jordan there are large camps. Everybody can see them on our TV screens and see what is happening. In Lebanon there are proportionately a similar number of Syrian refugees, but they are not in camps and are dispersed among the towns and cities. Nevertheless, the problem is real. Will my right hon. Friend ensure that Lebanon is not overlooked in any aid funding?
Mr Hague
Yes, absolutely. I have visited centres for Syrian refugees in Beirut, where, as my hon. Friend rightly says, people are not in camps, although they are given vouchers, for instance, so that they can buy food locally. I pay tribute to the hospitality of the Lebanese people. The United Kingdom is, for instance, funding the construction of border observation posts for the Lebanese armed forces to try to assist the stability of the border in Lebanon.
Jonathan Lord (Woking) (Con)
8. What progress has been made towards agreeing a transatlantic trade and investment partnership between the EU and the US; and if he will make a statement.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
The Prime Minister, together with President Obama and European Commission President Barroso, last night formally announced the launch of negotiations at the G8. This was fitting, given the UK’s leading role in getting the TTIP under way. This is a once-in-a-generation prize: the biggest bilateral trade deal in history.
Jonathan Lord
An independent study by the Centre for Economic Policy Research has found that an ambitious EU-US free trade agreement could bring economic gains of £100 billion a year to countries in the EU. Will my right hon. Friend assure me that he will do everything in his power to bring about a successful agreement?
Mr Hague
This is a top priority for the Government. Interestingly, not only would such a deal bring the benefits that my hon. Friend mentions to the EU, as well as similar benefits to the United States; it is also estimated to benefit the rest of the world, outside Europe and the United States, to the tune of £85 billion.
Mr Iain McKenzie (Inverclyde) (Lab)
19. As we have heard, the agreement is potentially the biggest trade deal in history. Has the Foreign Secretary made any assessment of the benefits to Scotland of remaining part of the UK?
Mr Speaker
Order. That is extremely tangential to the question on the Order Paper, but a short, one-sentence reply will suffice.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
9. What recent assessment he has made of progress on human rights in Colombia.
The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)
Much progress has been made under the presidency of Juan Manuel Santos, notably the launch of peace talks. Clearly long-term challenges remain. We will continue to work closely with the Colombian Government to help to overcome them.
Jim Sheridan
Will the Minister join me in congratulating the non-governmental organisation Justice for Colombia on bringing together joint representatives from this House to meet the FARC representatives in the peace talks in Cuba? Can he tell us what human rights discussions took place between the Prime Minister and President Santos earlier this month in London?
Mr Swire
President Santos not only met the Prime Minister and discussed the peace process; he also met my right hon. Friend the Foreign Secretary and me, and we discussed those issues as well. I will shortly go to Colombia. I offered a meeting on 2 July, before I go, to the hon. Gentleman’s hon. Friend, the Member for Dunfermline and West Fife (Thomas Docherty). I hope to extend that invitation to his group, the parliamentary friends of Colombia, so that we can go through these things before I go to Bogota early next month.
Mark Pritchard (The Wrekin) (Con)
Is it not the case that under both President Uribe and now President Santos, human rights have greatly improved in Colombia? One of the great success stories is that kidnappings and murders are down, and we have seen a 90% reduction in FARC guerrilla activity, which means that Colombia can make progress.
Mr Swire
Yes, and we are very supportive of that. I re-read our annual human rights report yesterday. Key progress is highlighted in that report—the peace talks, the creation of the national human rights system and the work of the national protection unit, which now protects more than 10,000 Colombians—so we think things are moving in the right direction.
Robert Flello (Stoke-on-Trent South) (Lab)
18. Given the latest murder by the Colombian army—of a 17-year-old boy—thereby continuing the so-called false positives, and the fact that President Santos has now legislated to allow military courts to deal with its human rights abuses, so continuing army impunity, will the Secretary of State accept that he was wrong to say that the Colombian army no longer carries out extra-judicial murders?
Mr Swire
The Government have assured us that there will be no more impunity for servicemen, and I discussed this with both the vice defence Minister, Jorge Bedoya, during his visit here in March and subsequently with the constitutional court judge, Vargas Silva, who was here on 30 April. I will continue to discuss these matters. We are against impunity for the military, and we make our position on that very clear.
Bob Stewart (Beckenham) (Con)
The Government of Colombia are making extensive efforts to counter the dreadful trade in narcotics. Will the Minister assure us that we will give that Government as much support for counter-narcotics as is possible?
Mr Speaker
With reference to human rights, which is what the question is about.
Mr Swire
Indeed, and narcotics impinges on the human rights of people in Colombia and, unfortunately, of people here in the UK, Mr Speaker. Yes, we will give our full support—we are giving our full support—to the Government of Colombia. President Santos is a keen Anglophile, and we are very supportive as a Government of what he is doing in leading his country from the dark days of the past to a much brighter future.
Hugh Bayley (York Central) (Lab)
11. What matters he has recently discussed with the US Secretary of State.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
I met Secretary Kerry in Washington last week. Our talks covered Syria, the middle east peace process, the G8 summit, Afghanistan and climate change.
Hugh Bayley
At the start of his first term, President Obama said that he would close Guantanamo Bay within a year. Will the Foreign Secretary tell us how close the prison now is to closure, what is being done in the interim to ensure the health and well-being of Guantanamo detainees, what steps the Prime Minister has taken to secure the return of Shaker Aamer and whether it will be discussed during the G8?
Mr Hague
The President has made a number of statements about Guantanamo Bay, including in the last few weeks reiterating his determination to close it. We welcome that. I have discussed with Secretary Kerry the position of the last remaining UK resident, Shaker Aamer, and expressed our wish to see him return to the UK. We will see after the G8 whether it has provided an opportunity for the Prime Minister to raise the issue with President Obama.
Mr Julian Brazier (Canterbury) (Con)
Will my right hon. Friend stress the importance of engaging with Iran? Recent developments there must offer some hope, as this remains a major power in a region with so much destabilising it.
Mr Hague
Developments do offer some hope. We discussed the issue extensively yesterday on an urgent question. Positive statements were certainly made during the election campaign of Mr Rouhani, who has been elected as President of Iran. I am sure that the people of Iran will now look to him to deliver on those promises, and we will judge Iran by its actions over the coming months.
Angus Robertson (Moray) (SNP)
Within days of the UK and France pushing for the lifting of the Syrian arms embargo, the largest single contributing country to UN peacekeeping on the Golan heights announced the withdrawal of its forces. Will the Secretary of State confirm that in his discussions with Secretary Kerry, he stressed the importance of the United Nations for humanitarian and security aspects in and around Syria and affirmed that he would do nothing to undermine it?
Mr Hague
The United Nations has an absolutely central role, and the hon. Gentleman can be assured that we believe in that and that we always make that case. Austria gave particular reasons, including recent trouble on the Golan heights, for its intended withdrawal, but we want to see that force continue there and be fully staffed and supported.
Mr David Ruffley (Bury St Edmunds) (Con)
Aside from airing the possibility that western countries might arm the Syrian opposition, will the Foreign Secretary tell us what steps Secretary Kerry would like to take to bring Syria, and perhaps even Iran, to the negotiating table?
Mr Hague
Secretary Kerry has been instrumental in trying to launch the “Geneva II”, as we might call it—a process of negotiation to come in Geneva between regime and opposition in Syria, supported by all of us. Work on that continues, and one thing the Prime Minister is discussing with other G8 leaders is our unity and determination together to bring about a transition in Syria through a conference in Geneva. I pay tribute again to Secretary Kerry’s efforts on this.
Mr John Spellar (Warley) (Lab)
As we are witnessing the security handover to the Afghan authorities, may I remind the Foreign Secretary that we have been pressing him for some time to bring about greater involvement of the neighbouring powers—including Iran—in the maintaining of Afghanistan’s future stability and the securing of the gains that have been made, especially for women’s health and education? Has he made any progress on that during his discussions with Secretary Kerry?
Mr Hague
A great deal of progress has been made on it recently, over a period of several years. As the right hon. Gentleman will know, neighbouring countries, including Iran, have regular meetings with Afghanistan. Relations between Afghanistan and Iran are reasonably good, and we do nothing to stand in the way of those good relations. It is important for Afghanistan’s neighbours to co-operate with it on security, on counter-narcotics, and, of course, on the economic development of the country.
Andrea Leadsom (South Northamptonshire) (Con)
12. What plans he has to negotiate an increase in the role of national Parliaments within the EU.
The Minister for Europe (Mr David Lidington)
We believe that national Parliaments are the fundamental source of democratic legitimacy in the European Union, and we are working with EU partners and parliamentarians to find ways of strengthening Parliaments’ powers to hold to account those who make decisions in the EU.
Andrea Leadsom
A couple of weeks ago, at the Königswinter conference, the Foreign Secretary mentioned the concept of a red card that could stop future EU legislation that a group of member states found unattractive. Does he agree that the red card system, if implemented, should also apply to existing legislation, so that the European Union can be properly reformed?
Mr Lidington
My hon. Friend flagged up that proposal recently during her thought-provoking speech to the Hansard Society. It is an important, far-reaching and constructive idea which deserves serious consideration.
Mike Gapes (Ilford South) (Lab/Co-op)
Can the Minister confirm that the Parliaments of countries that are applying the rules of the European Union in order to gain access to the single market, such as Norway and Switzerland, have absolutely no influence on decisions in the EU?
Mr Lidington
I agree with the hon. Gentleman. Certainly, Norwegian and Swiss leaders have consistently told me that they think the UK is in a better position to gets its own way in EU negotiations than they are.
Sarah Champion (Rotherham) (Lab)
13. What steps the UK is taking with its international partners to prevent discrimination and violence against lesbian, gay, bisexual and transgender people.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mark Simmonds)
The United Kingdom works on human rights issues through international organisations, as well as bilaterally though our embassies and high commissions. Tackling discrimination on grounds of sexual orientation or gender identity is a UK priority. Our clear message is that human rights are universal, and should apply equally to all people.
Sarah Champion
Approximately three quarters of Commonwealth countries criminalise homosexuality. Will the Minister discuss the amendment of the Commonwealth charter to include LGBT equality, given the striking omission of discrimination on grounds of sexuality from the forms of discrimination to which the Commonwealth is rightly opposed?
Mark Simmonds
If the hon. Lady has time, she should look at the Foreign and Commonwealth Office’s human rights and democracy report. It contains a section on LGBT rights, respect for which is an integral part of the Government’s wider international human rights programme. We lobby consistently to try to ensure—through our bilateral relations, and also through multilateral organisations such as the United Nations, the European Union, the Council of Europe and, indeed, the Commonwealth—that people respect human rights, irrespective of gender and sexual orientation.
Mr Crispin Blunt (Reigate) (Con)
The freedom to be oneself is a pretty fundamental human right. Will my hon. Friend ensure that organisations such as the Kaleidoscope Trust—which has a rather distinguished president, and whose parliamentary friends group I chair—Human Rights Watch and the Human Dignity Trust are able to work with his officials in territories where homosexuality is criminalised, and to support those who are standing up for the rights of LGBT people there?
Mark Simmonds
My hon. Friend has made a powerful point. Of course I shall be happy to ensure that the relevant and important non-governmental organisations to which he has referred, along with others, engage with officials from the Foreign and Commonwealth Office. He is also right to draw attention to the significant challenges that exist in some countries, but I assure him and other Members that we lobby vociferously, not just in countries such as Uganda and Nigeria but in Russia and Iran, where there are particular problems that need to be dealt with to ensure that there is equality of rights.
Kerry McCarthy (Bristol East) (Lab)
I urge the Minister to prioritise talking to other Commonwealth countries about this issue in the run-up to the Commonwealth Heads of Government meeting. May I ask him specifically about Russia, however, where in the context of a wider crackdown on freedom of expression and human rights, the Duma has just passed a law introducing draconian penalties for propaganda for non-traditional sexual relations? Have the Government taken advantage of President Putin’s presence in the UK this week to push him on this issue and to urge him not to go down that path?
Mark Simmonds
As I said a moment ago, we consistently lobby—through bilateral relations and our embassy in Moscow, as well as through the multilateral organisations I referred to earlier, particularly the UN with its universal periodic review—to make sure that countries like Russia adhere to the international framework for human rights, especially as it relates to LGBT rights. I can give the hon. Lady an assurance that we will continue to lobby through both those two sets of organisations, bilaterally and multilaterally, to try to make sure that all people have equal access to human rights.
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
The Prime Minister will make a statement tomorrow on our G8 presidency. Not only have we secured the launch of negotiations for an EU-US trade deal, but we are also working on landmark agreements on tax and transparency.
Mr Brown
Will the Foreign Secretary update the House, from the latest information known to him, on the conduct of the Burmese army and its oppression of minority peoples in Burma? Has its conduct improved, and will he say something about the systematic use of sexual violence on those helpless minority peoples?
Mr Hague
We work hard with Burma on human rights, as the right hon. Gentleman will know, and the Minister of State, my right hon. Friend the Member for East Devon (Mr Swire), has been there quite recently. We have also started to establish military-to-military links so that we can have a dialogue with the Burmese military about these and other issues. There is still a lot of work to do in Burma on human rights, and we continue vigorously to take up issues such as the plight of the Rohingya people and continuing ethnic violence in some areas, but we are working with Burma to improve the situation.
Glyn Davies (Montgomeryshire) (Con)
T4. Having a well-targeted network of embassies is fundamental to extending British influence and trade across the world. How many new embassies have opened, and how many embassies that were closed under the last Government have been reopened, since May 2010?
Mr Hague
I am glad to be able to tell my hon. Friend that so far we have opened six new posts and upgraded a further six posts, and over a five-year period, we will be opening up to 20 new embassies and consulates. That is vital in order for Britain to be well-connected in the world, and it is a sharp contrast from the withdrawal of British diplomacy from many areas under the last Government.
Mr Speaker
We always knew the Foreign Secretary was a brilliant man; now we know he is also psychic.
Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)
The Foreign Secretary said in answer to an earlier question that he would judge President-elect Rouhani on his actions. What specific actions will he be seeking from the Iranian regime and the newly elected Iranian President himself, in order for them to demonstrate in the months ahead a renewed commitment to resolving the nuclear crisis by peaceful and diplomatic means?
Mr Hague
There are two main aspects to that. One is to meet the International Atomic Energy Agency’s transparency requirements, some of which I mentioned in detail when answering the urgent question in the House yesterday. That includes addressing the issue of the heavy water reactor at Arak and meeting the requirements for information across a wide range of matters that the IAEA has set out. The other thing is to respond constructively to the offer from the E3 plus 3 that has been on the table since February, and which would allow us to make a very significant start to defusing the tensions over the nuclear issue and resolving it. The new Administration in Iran will be judged on those two things.
Mr John Baron (Basildon and Billericay) (Con)
T5. The BBC World Service is a trusted source of impartial news for hundreds of millions of listeners across the globe, yet the FCO is cutting its budget by about £2 million. Given that history suggests that soft power is far more effective at promoting democratic values than force of arms, will the Foreign Secretary reconsider this ill-judged and rather short-sighted decision?
Mr Hague
The cut I announced last week was three quarters of 1% of the World Service budget, having not passed on any of the reductions in departmental budgets for the past two years. That is much smaller than spending reductions across the rest of the public sector in the UK, and I believe that a well-run organisation can take a 0.75% change in its budget. Of course by transferring the funding of the World Service to the licence fee in future, we will remove this problem of the World Service being affected by departmental budgets at all.
Mr William Bain (Glasgow North East) (Lab)
T2. The recent Africa progress report reveals that the moving of resources by companies into lower-tax jurisdictions costs the continent £25 billion a year. Can the Foreign Secretary guarantee that any deal on tax avoidance reached at the G8 will benefit Africa?
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mark Simmonds)
The hon. Gentleman is right to signify the importance and potential benefit to Africa of the discussions taking place at the G8. He also should be aware of the very positive and speedy way in which the United Kingdom’s Crown dependencies and overseas territories engaged with this important agenda, particularly as it relates to the automatic exchange of tax information, signing up to the multilateral convention on tax matters and putting in place action plans for beneficial ownership, which could have a significant positive impact on African economic growth and development.
Mr Gary Streeter (South West Devon) (Con)
T6. The Foreign Secretary was only 14 at the time of the last referendum on EU membership and therefore could not vote. So does he welcome the private Member’s Bill being introduced on 5 July that will give the British people an opportunity to vote on this important matter or does he share my concern that not all sides of the House are engaging fully in this important process?
Mr Hague
I was only 14, although I had a big influence on how my family voted even at that stage, in 1975. It is absolutely right that we put forward again the opportunity, in the next Parliament, for the people of this country to have their say in a referendum on the European Union. I note that the Opposition Whips have circulated guidance for Opposition Members saying that they are looking for suitable speakers so that the Chamber is not completely empty at the time, but I wonder whether that will make any difference, given the emptiness of their policy.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
T3. The Foreign Office Ministers will, I hope, be aware of the widespread concerns and worrying allegations about the conduct of aspects of the general election that took place in Malaysia in May. Such concerns related to intimidation at polling places, phantom voters and incomplete electoral rolls. Given the importance of the relationship between the UK and Malaysia, are any of the Ministers able to inform the House as to whether they will be taking those issues up with the Malaysian Government?
The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)
The hon. Gentleman is right to say that relations between the two countries are extremely important. Obviously, we have also seen those reports. I am going to Malaysia next week and I can confirm that I shall be looking into this at first hand.
Laura Sandys (South Thanet) (Con)
T7. Will the Foreign Secretary update us on the Government’s policy towards Tibet?
Mr Hague
The Prime Minister made clear our position in the House a few weeks ago: we recognise Tibet as part of China and we do not support Tibetan independence. We have well-established positions and dialogue on human rights, as the House well knows, but of course we also understand Chinese sensitivities and concerns about Tibet.
Chris Evans (Islwyn) (Lab/Co-op)
T8. Reverend Peter Cho of Tabernacle church, Newbridge in my constituency, has raised concerns this morning about nine North Korean defectors, including five children, who last month were forcibly repatriated by Laos and China. Does the Secretary of State share the concerns of Reverend Cho, the UN and other human rights organisations that these people could face false imprisonment and, potentially, execution?
Stephen Mosley (City of Chester) (Con)
T9. Will the Foreign Secretary update the House on his meeting with the Ecuadorian Foreign Minister and, in particular, on whether any progress has been made in securing the removal of Julian Assange from the Ecuadorian embassy?
Mr Hague
The removal of Mr Assange from the embassy would be easy to secure if he walked out. He will be arrested, in line with our law, if and when he does that. I had cordial talks yesterday with the Foreign Minister of Ecuador and explained again our legal obligations: we want a diplomatic solution, but it has to be within our law and we are legally obliged to extradite Mr Assange to Sweden. We did not make any breakthrough or substantive progress, but we have agreed that our officials will meet again to see how we can find agreement.
Meg Munn (Sheffield, Heeley) (Lab/Co-op)
What action is the Foreign Secretary taking to increase the proportion of posts in the senior management ranks of the FCO, including those of high commissioner and ambassador, that are held by women?
Mr Hague
I have, subject to the agreement of the Prime Minister and the Queen, appointed a higher proportion of women to those posts. I feel strongly about the subject and often discuss with the senior management of the FCO the need over the next few years to ensure that a higher proportion of senior positions, including senior ambassadorial positions, are held by women. I will continue the internal pressure over the coming months.
Martin Horwood (Cheltenham) (LD)
Will Ministers tell us how the balance of EU competences review is going and confirm that it has received strong representations urging the importance of Europol and the European arrest warrant in tackling cross-border crime, terrorism and human trafficking?
The Minister for Europe (Mr David Lidington)
The balance of competences review is going well and I believe that we are on course to publish the first six reports arising from it before the summer recess. As my hon. Friend knows, the new calls for evidence include calls for evidence on various aspects of justice and home affairs and I am sure that his submissions, along with many others, will be warmly welcomed.
Mr Frank Roy (Motherwell and Wishaw) (Lab)
Erdem Gunduz, the standing man of Taksim square, stood for eight hours in peaceful protest yesterday. Will the Foreign Secretary ensure that he and others like him will be able to demonstrate peacefully without interference from Turkish authorities?
Mr Lidington
We certainly make it clear in all our conversations with the Government of Turkey that we look to Turkey to continue its progress in democratic and judicial reform and to respect all the human rights obligations into which it has entered.
Caroline Dinenage (Gosport) (Con)
It is now more than a year since Leading Seaman Timmy MacColl went missing in Dubai, leaving a young family behind in my Gosport constituency. I know that the Minister has taken a personal interest in the case, but will he assure me that he will continue to put pressure on the Dubai police to keep giving this matter the attention and resources it deserves?
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
I thank my hon. Friend for that question. This case is extremely distressing for the family. I was in Dubai recently, where I met the chief of the Dubai police. We discussed the case and we are continuing, through our representatives there, to urge the authorities to do all they can to see what, if any, light they can shed on that sad disappearance.
Dr William McCrea (South Antrim) (DUP)
The transatlantic trade and investment partnership between the EU and the US has been a part of the G8 discussions in the beautiful surroundings of Fermanagh in Northern Ireland. Will the Secretary of State inform the House of what his hopes are for a successful outcome from those negotiations and for how they might progress?
Mr Hague
Yes, indeed. I hope that what has been agreed in the splendid surroundings in Northern Ireland, which will have been much appreciated by the G8 leaders, will now be taken forward vigorously. It is vital to maintain momentum on the issue, to place as few obstacles in the path of the negotiations as possible and to build political support on both sides of the Atlantic. I did so when I visited the Senate Committee on Foreign Relations on Capitol hill last week.
Mr David Ward (Bradford East) (LD)
Earlier, the Foreign Secretary reaffirmed the Government’s opposition to the boycott of settlement goods. Would he be prepared to provide some moral leadership by saying that he will personally agree to boycott such goods?
Toby Perkins (Chesterfield) (Lab)
Many people who have seen the appalling scenes in Turkey on their television screens will have been dismayed by the rather meek response from the right hon. Member for Aylesbury (Mr Lidington) earlier. Will he give us a little bit more of a sense of the outrage that people are feeling around the world and confirm that he is putting real pressure on the Turkish Government to respect the right to peaceful protest?
Mr Lidington
In our dealings with the Turkish Government, we have to respect the fact that they are a democratically elected Government—they are not the kind of military regime that used to rule Turkey. At the same time, however, we have to say to our Turkish friends that they have entered into commitments to democratic reform, judicial reform and human rights, and that all their friends elsewhere in the world look forward to their continuing to deliver on that agenda.
Alun Cairns (Vale of Glamorgan) (Con)
Last week four men were convicted by the Turkish courts of the reckless killing of Cerys Potter. This is a landmark judgment. Does the Minister accept that it will have an impact only if the Turkish authorities insist on basic health and safety standards in such exercises as white water rafting?
Mr Lidington
I pay tribute to the tireless work that my hon. Friend has put into campaigning on behalf of his constituents. I spoke to the Turkish tourism Minister following my meeting earlier this year with my hon. Friend and his constituents, and I plan to be in contact with the Turkish Minister again in the wake of the court judgment so that we can offer the support and assistance that the Turks may wish to have from us in respect of learning some of the lessons from this tragic case.
Mr Speaker
Order. I am sorry to disappoint colleagues, but demand has exceeded supply.
Aircraft Noise Pollution (Holywell)
Mr David Hanson (Delyn) (Lab)
I rise to table a petition on behalf of Sue Johnson and residents of Holywell, Flintshire. North Wales is a great manufacturing area for aircraft production and we benefit from tourism, but I hope that the petition can raise issues so that they can be looked at by the authorities, in order to help tackle this aircraft noise.
The petition states:
The Petition of residents of Pen Y Maes Road, Holywell, Flintshire,
Declares that the petitioners are opposed to noise pollution from low flying commercial jet planes, especially Easyjet, going to and from John Lennon Airport, Liverpool. John Lennon Airport changed their flight paths without consultation with any authorities in North Wales, and this has had a big impact on the environment in Holywell. Holywell has a population of over 6,000. It is the Lourdes of Wales with its Holy waters and attracts over 30,000 visitors a year. Holywell also has a large Community Hospital with elderly inpatients, and the aircraft noise can be heard from within the hospital.
The Petitioners therefore request that the House of Commons examines changing the flight paths to avoid Holywell, and so resume our peace and quiet.
And the Petitioners remain, etc.
[P001186]
Points of Order
Mr Peter Hain (Neath) (Lab)
On a point of order, Mr Speaker. Following the Foreign Secretary’s reply to my question earlier on British arms to Syria, may I seek your advice on how what is clearly a cross-party concern to have a vote on a substantive motion in the House prior to any action being authorised can be facilitated, certainly before the recess, which is barely a month away? Would it not be a disappointment if the House had to be brought back from the recess? Could an Opposition motion be tabled which could get cross-party support, including among the leading signatories, and be debated in Opposition time? Would that be in order?
Mr Speaker
There are a number of parliamentary opportunities potentially open to the right hon. Gentleman and others. First, there is the vehicle of the debates that take place under the auspices of the Backbench Business Committee. That would be one opportunity. Secondly, it is open to the Opposition to use an Opposition day and to proceed with the matter in that way, either with an exclusively Opposition-signed motion or a motion signed more widely. I must say I have the sense that the Government are hinting that they would not dream of executing a policy decision of the kind that is being considered without first seeking a debate in the House and a vote on a substantive motion. That would obviously be the democratic course. I think it is the democratic course on a substantive motion that the Government have in mind. I am not sure that there was any other idea ever in their mind, but I feel sure that if it was in their mind, it was speedily expunged as undemocratic and inappropriate.
Dr Julian Lewis (New Forest East) (Con)
Further to that point of order, Mr Speaker. Is there any way within the rules of order that I can place on the record that the Foreign Secretary was nodding vigorously during your remarks?
Mr Speaker
The hon. Gentleman has done that. He and others will take that as an explicit commitment by the Foreign Secretary that there will be no implementation of such a decision without the prior assent in the form of a vote on a substantive motion in this House of Commons. I think we are now clear. Happiness is now universal in the Chamber—well, almost universal.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
Further to that point of order, Mr Speaker. I think we could complete that happiness. When the Foreign Secretary answered my earlier question, which was further to the question from my right hon. Friend the Member for Neath (Mr Hain), as he sat down he was heard by Members on the Opposition Benches to have audibly said, “Yes.” If we could record that in Hansard, that would be very helpful, even though it was said from a sedentary position.
Mr Speaker
I think I will command universal assent when I say that the Hansard writers are expert, professional public servants of unimpeachable integrity who would not be bettered in any part of the United Kingdom in any professional capacity. [Hon. Members: “ Hear, hear.”] Good. We are agreed on that.
Mr George Howarth (Knowsley) (Lab)
On a point of order, Mr Speaker, of which I have given you notice. As you are aware, I have been pursuing the matter of sex offences and police cautions over many months now, and on 23 April, in pursuit of that I tabled a question to the Justice Secretary, which unfortunately fell with prorogation. I then retabled it on 13 May. When by 4 June I had received no response, my office contacted the Ministry of Justice and was told that the question would be answered “shortly”. When there was still no answer by 13 June, my office again contacted the Ministry of Justice and was told that it was “awaiting clearance from special advisers.”
There are two points to my point of order, Mr. Speaker. The first one is, and I hope you will agree, that the delay that I have experienced in getting an answer to the question is unacceptable. Secondly, is it acceptable that special advisers, whatever their responsibilities, can be used as a means of delaying response to a written parliamentary question? If you can satisfy me on those two points, joy will be unconfined.
Mr Speaker
I am grateful to the right hon. Gentleman for his point of order. The short answer to his twofold question is yes and no. I agree that it is unacceptable that he should have had to have waited for as long as he has done for substantive answers to his question, and secondly, it is not acceptable that anyone should be involved in a process of effectively delaying ministerial answers to hon. or right hon. Members.
The right hon. Gentleman and the House will appreciate that answers to parliamentary questions are not a matter for me directly, but I do deplore, in the most explicit terms, any failure to provide substantive answers in a timely manner. I also remind the right hon. Gentleman and the House that the Procedure Committee, under the distinguished chairmanship of the hon. Member for Broxbourne (Mr Walker), is monitoring departmental performance in this area. The right hon. Gentleman might wish to draw his particular unfortunate experience to the attention of the Committee. I hope that that is helpful and that the appetite for points of order has now been met.
Common Agricultural Policy
(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister of State, Department for Environment, Food and Rural Affairs (Mr David Heath)
I beg to move,
That this House takes note of European Union Document No. 15396/11, a draft Regulation establishing rules for direct payments to farmers under support schemes within the framework of the Common Agricultural Policy, No. 15425/11, a draft Regulation on support for rural development by the European Agricultural Fund for Rural Development (EAFRD), No. 15397/11, relating to a draft Regulation on establishing a common organisation of the markets in agricultural products (Single CMO Regulation), and No. 15426/11, a draft Regulation on the financing, management and monitoring of the Common Agricultural Policy; and supports the Government’s continuing efforts to amend these proposals in order to secure better value for money for the taxpayer and establish a greener, simpler CAP that enables the development of an innovative, competitive and market-orientated farming industry and thriving rural communities.
I am pleased to have the opportunity to debate these important issues in the House today. It is particularly timely because next week the Secretary of State will be going to Luxembourg in the expectation of securing a deal on the common agricultural policy at the Agriculture Council. With CAP reform subject to co-decision for the first time, the negotiations between the Council, the European Parliament and the European Commission have been intensive during the last few months, and indeed are likely to be during the next few days as well. It is thanks to the sterling efforts of the current Irish EU presidency that a potential deal is now within reach.
As many hon. Members will be well aware, the Government’s priority on CAP reform has been to negotiate a good deal for UK farmers, taxpayers and consumers, and that means working to deliver a greener, simpler CAP that continues to orientate itself to the market, increases the international competitiveness of EU agriculture, and increases our capacity to deliver environmental outcomes.
Mr Jim Cunningham (Coventry South) (Lab)
Does the Minister agree that successive Governments have tried to reform the common agricultural policy and there has been very little progress, although in the past previous Conservative Governments have tried to make out to the public that they have actually made some progress when they have not?
Mr Heath
The hon. Gentleman is right that it is a long, hard business to reform the CAP. The sadness is that occasionally within negotiations some member states want to turn the clock back, and even to forgo the reforms that have already been accomplished, so I will not pretend anything other than that this is a long, hard process and the advantages and the movement forward that we gain are not always as far and as quick as we would wish them to be.
We want to see an efficient and responsive agricultural sector not just across the EU, but globally, and the CAP should be central to helping us achieve that. It is therefore essential that the CAP continues to reform and to reduce reliance on damaging direct subsidies that do not offer good value for money or deliver the public goods we want. The UK has worked extremely hard to engage with like-minded member states throughout the ongoing negotiations to ensure that the CAP continues on the path of reform, but we know that other member states and elements in the European Parliament are determined to turn the clock back and reverse some of the hard-won reforms of MacSharry and Fischler. We simply cannot allow that to happen.
I will touch on a few of the priority areas that will be the focus of our negotiating efforts over the next week. First, market intervention remains a prime concern. As we all know, the CAP has made great progress over the years in reducing reliance on expensive and trade-distorting measures that interfere with the market and helped to create the butter mountains and wine lakes of the past. I was therefore very disappointed when in March the European Parliament voted through amendments that would move EU agriculture away from market orientation. Those proposals would increase budget pressures for old-style market support. That is not an acceptable use of taxpayers’ money. It hits consumers twice; they pay for their food once through their taxes and again at the tills.
The EU sugar regime, for example, constricts supply in the market and adds costs for British food and drink producers and ultimately for the consumer. The combined effect of EU beet quotas and high tariffs on cane imports means that the current EU regime has driven up the wholesale price of sugar by 35% and added 1% to the food bills of hard-pressed families. Members states had previously agreed to end the restrictive sugar beet production quotas by 2015, but there has been incredible pressure to unpick that agreement. In our compromise in March, we agreed a partial extension of sugar beet quotas to 2017. I am disappointed that Members of the European Parliament voted to extend the quotas further to 2020. That is unacceptable. The situation is compounded by the lack of a level playing field for sugar cane imports, something we are working to change. We need to remain fully committed to moving the CAP in the right direction towards greater market orientation. Nothing must be left to chance. Butter mountains and wine lakes must remain a thing of the past.
I know that many hon. Members have an interest in the proposed greening of the CAP. The Government believe that the CAP should reward farmers for the public goods they deliver, such as environmental benefits and protecting and enhancing wildlife. Pillar two of the CAP is the best place to fund that, which is why at the European Council in February the Prime Minister secured the additional flexibility to be able to transfer up to 15% of our direct payments budget to fund our rural development and environmental programmes.
Miss Anne McIntosh (Thirsk and Malton) (Con)
My hon. Friend will be aware of the concerns of the National Farmers Union and a whole alliance of farming organisations in that regard, and not just in north Yorkshire. Bearing in mind that our farmers already commit to many greening policies through stewardship schemes, 15%, or even 11%, would be unacceptably high and would make our farmers uncompetitive.
Mr Heath
I am afraid that is an area where the National Farmers Union and the Government simply do not agree. I believe that we currently have extremely good higher level stewardship schemes within pillar two, and I want those to continue and to prosper. I want us to ensure that we can continue payments on some of the older schemes, where we have accrued benefit, which I do not want us to lose. I am absolutely clear that where we use the pillar two payments in the most effective way, we will be doing so to enhance the position of those who work the land and confer on it public goods. For instance, one of my priorities will be to see what we can do in upland areas, where people farm in less favourable conditions and where it might make all the difference, but I simply do not agree that the best way to distribute money is necessarily through pillar one.
Huw Irranca-Davies (Ogmore) (Lab)
Will the Minister expand on that? Farmers have expressed their concern to me in recent weeks and months over the transfers to pillar two. How can more effective use be made of the arrangements so that those farmers are not put at a competitive disadvantage? What fine-tuning can be carried out? How can we get more bang for our buck in the pillar two funding?
Mr Heath
A simple answer—I appreciate that it might be considered a simplistic one—is that we target the funding better towards the places where it will have the most effect. We have a highly efficient and effective agriculture industry and we do not need to target funding at all sectors. We need to ensure that it reaches the places where it will have the greatest effect. As I have said, this is where we part company with the National Farmers Union, which would like us to maintain the maximum funding within pillar one. We believe, however, that pillar two is the most effective vehicle for benefiting environmental interests, which are important, and for directing support to the areas of this country’s agriculture that need it most.
Barry Gardiner (Brent North) (Lab)
The Minister is absolutely right to place the emphasis on pillar two. The figure for voluntary modulation to which he referred was 15%, but can he confirm that the figure for voluntary modulation has previously been as high as 19%? Can he also expand on what the 15% figure is going to mean for farmers, and on the implications for the Treasury in this regard?
Mr Heath
I cannot give the hon. Gentleman as full an answer as he would wish. First, we have not yet agreed the deal, so we do not know whether that voluntary modulation figure will stand. Secondly, a lot will depend on the design of the schemes and on how we implement them at national level. We have been pushing the argument in Europe that, in relation to the devolved Administrations, we want as much flexibility and local determination as possible in the design of operation. We want to give Scotland, Northern Ireland and Wales the opportunity to use their own discretion on behalf of their own farming businesses, as they will know the best way of implementing the schemes in those countries. If we are successful in our objective of achieving that flexibility, as we have been so far, we will effectively have a devolved CAP.
Dr William McCrea (South Antrim) (DUP)
Will the Minister acknowledge the need for regional flexibility to allow Northern Ireland to tailor any new policy to fit the needs of the local industry?
Mr Heath
Absolutely. That has been one of our key objectives during the negotiations, and we have worked closely with Ministers from the devolved Administrations in that process. On any objective assessment, the Secretary of State has been remarkably successful in getting those elements written into the scripts that have emerged from the Council. The difficulty now is that we need to reach agreement with the European Parliament, and we want to ensure that the elements survive that process.
Sir James Paice (South East Cambridgeshire) (Con)
Surely the answer to the hon. Member for Brent North (Barry Gardiner) is no, voluntary modulation was not at 19%. It was 9%; the other 10% was compulsory modulation that applied to every member state.
Sir James Paice
The hon. Gentleman accepts my point. That arrangement created a level playing field across the whole of the EU. The reason that the NFU is concerned is that it is probably only English farmers who could lose 15%, thus making this an issue of competition.
Miss McIntosh
The Minister said that only the devolved Administrations will be allowed to tailor their schemes to the needs of their own farmers, but that would be inherently unfair on the English farmer. I hope that he will agree that this is a wonderful opportunity to revisit some of the schemes, because some of the active upland farmers, who are often tenants, have been disadvantaged by the way in which the current schemes operate.
Mr Heath
I hope that I have not misled the House in any way on this. We will bring forward our own proposals that will apply to England. I was simply making the point that the devolved Administrations would not have to conform to an English model. They will be able to devise their own schemes that will work best for them.
Mr William Cash (Stone) (Con)
I am extremely interested in the Minister’s point about the United Kingdom having policies that are relevant to our own interests. In relation to the review of competences, will he tell us whether there is any intention to repatriate the common agricultural policy?
Mr Heath
That depends on how we define repatriation. We have been arguing strongly for increased flexibility at national and regional level for those countries that have devolved Administrations. The obvious examples are the United Kingdom and Belgium, both of which feel strongly about this matter. We need the option to define some of the terms and regulations that will be put in place, so that they match our forms of agriculture. There is already divergence within this country over the application of the CAP. For example, there are still historic payments in Scotland. In my personal view, there will eventually be a need for internal convergence on that issue, but it is for the Scots to decide on the rate of change and on whether that should happen sooner or later. I believe that it is a distorting element at the moment.
The UK Government also argued, however, that we did not want a sudden, bumpy transition that would put the Scottish Government in difficulties while they were trying to achieve their objectives. So, although we want internal convergence, we have asked for as smooth a transition as possible because that will be in the interests of the devolved Administrations. There is already a considerable degree of variation in the way in which the current scheme works. We are trying to ensure that that continues and is enhanced under the new rules.
Roger Williams (Brecon and Radnorshire) (LD)
The Minister has put on record his intention to help hill and upland farmers in England. At the moment, there are three rates for the single payment, relating to moorlands, severely disadvantaged areas and lowlands. Would it not be advantageous to upland farmers if we had only moorland and lowland payments?
Wayne David (Caerphilly) (Lab)
Reference has been made to Scotland in regard to the transition. Would the situation that the Minister has described apply also to Wales and England?
Mr Heath
Wales will have the same capacity as Scotland to apply its own CAP rules within the overall rules, although the rules that will apply in Wales will not be quite the same because Wales will not be starting from the same position as Scotland. There is already an increased degree of convergence in Wales. The situation is not exactly the same, but that freedom is in the script for the settlement that we have agreed so far.
Mr Heath
I should perhaps continue with my speech for a few minutes, rather than take any more interventions.
We do not believe that the original proposal for greening direct payments offered the same value for money as our existing agri-environmental schemes, and we have been working hard to move the negotiations in a positive direction. Any greening must be meaningful, administratively simple and deliver real environmental benefits for the taxpayers’ money that is spent on it. Value for taxpayers’ money is vital, which is why I am also opposed to proposals under which it would be possible to get paid twice for carrying out the same greening measures under both pillar one and pillar two.
No decisions have been taken on how greening will be implemented but, importantly, the position we agreed at the March Council included, as I have said, increased flexibility for member states and regions to deliver greening through a national scheme, if they so wish.
Huw Irranca-Davies
The Minister is being very generous in taking interventions. Will he respond to the concern of many farmers that the flexibility that the UK Government have understandably negotiated for our farmers could be interpreted very differently by farmers in other member nations and that it could, in fact, be interpreted to the disadvantage of our own farmers?
Mr Heath
Obviously, we try as far as possible to eliminate potential disadvantages. I cannot say that we will be successful across the board, because this is a negotiated settlement. Where possible we try to make sure that we all play to common ground rules, but with local interpretation. It is clear, for instance, that lowland dairy farming in this country is very different from growing olives on a Greek island. Different criteria apply and we want to make sure that we recognise the differences as well as the common basis.
Jim Shannon (Strangford) (DUP)
I appreciate the Minister’s understanding of this complex issue. Many farmers who have had to leave their comfort zone and consider doing other things will also be impacted by the CAP changes, so will help be made available to those who wish to diversify?
Mr Heath
I am grateful for that question. A lot will depend on the local determination in Northern Ireland for the options under pillar two, which provides the capacity for supporting diversification. The relevant Northern Ireland Minister will have to decide the extent to which voluntary modulation applies and whether the pillar two schemes will be devised to support diversification. The capacity is there and the decision on whether it will happen or not will be a local one.
Dr McCrea
The Minister is being very gracious in the number of interventions he is willing to take. The UK has received the lowest EU share of the rural development budget, which will impact on schemes such as agri-environmental schemes, the less favoured area compensatory allowance and farm modernisation. Will the Government balance the reduction in rural development with funds from, for instance, pillar one?
Mr Heath
The hon. Gentleman asks a basic question about voluntary modulation. We have already indicated that we will probably wish to see significant modulation from pillar one to pillar two in England. Obviously, other structural funds could be used for those purposes, if desired. On rural development, there is a need to utilise every possible source of funding to improve the rural economy. We are not simply talking about what is available through CAP funding to support agricultural and rural development.
Mr Speaker
Order. Before the right hon. Gentleman intervenes, may I gently point out that this is a 90-minute debate? The Minister’s speech is a matter of considerable importance and we listen to it with interest and respect, but no fewer than nine hon. and right hon. Members wish to speak in the debate, each and every one of whom is present and expectant. I know that Members will wish to tailor their contributions accordingly. If Sir James wishes, nevertheless, to persist—doubtless he will—I ask him to do so with great brevity.
Sir James Paice
I will be very brief, Mr Speaker. I would be grateful if the Minister put on the record the Government’s position on voluntary modulation but the other way around. Moving on from his argument about taking 15% from pillar one to pillar two, do the Government strongly oppose those in other countries who wish to have the flexibility to move money from pillar two to pillar one?
Mr Heath
We do not believe that is a sensible position. We are not likely to succeed in preventing it, but we will look very carefully at where it may be applied and whether it will distort the agricultural market overall.
I take to heart what you have said, Mr Speaker. I was trying to allow Members to ask legitimate questions, but let me now make progress.
Simplification must be at the heart of all our CAP reforms. That is one of the Government’s priorities. Whatever the outcome, we must have a CAP that is straightforward for farmers to follow and simple for our national Administrations to implement.
We have made progress at home, through the farming regulation taskforce, in looking at unnecessary red tape and reducing burdens on farmers. It is important that we do not undo that good work with complicated changes in the CAP. I firmly believe that we should be getting out of farmers’ hair and freeing them from the burden of unnecessary red tape. We have already made significant progress. Since 2011, we have identified £13 of savings to farmers for every £1 of compliance costs added.
I know, however, that there is more to be done and I am determined to take further steps towards a more risk-based approach to inspections that will allow farmers who consistently achieve high standards to earn recognition and receive less frequent visits. We must work together to achieve this. It is important that European rules do not knock us off our course. Having made such good progress at home, I do not want CAP reform to bring additional burdens.
On regionalisation, which I have already mentioned, amendments clarifying the regional implementation of the CAP are very important. A reformed CAP must deliver benefits for farmers, taxpayers and consumers throughout the UK, and to ensure that, we must have the clarity to implement the CAP in line with our devolution arrangements. Achieving this is a priority for the UK Government and the devolved Administrations, and we will push hard to get it next week.
I cannot conclude without mentioning the CAP budget. As hon. Members will know, the Prime Minister negotiated a 13% cut in the overall CAP budget at the European Council in February. The smaller EU budget negotiated by the Prime Minister is appropriate in the current economic climate, and the reduction to the CAP budget made an important contribution in that regard. This reduction in EU expenditure will be to the benefit of all UK taxpayers.
The allocation of the CAP budget between member states has not yet been finalised, but it would appear that the UK’s share of the CAP will remain roughly equal to its existing share. How the CAP budget will be divided between the UK regions and nations is still to be agreed. Discussions between my officials and their counterparts in the devolved Administrations are now under way and I understand that a number of models for the distribution of pillar one and pillar two funds are being developed.
I hope that the motion captures the UK’s vision for a future CAP. I look forward to the debate and hope that the House will support the Government’s continuing efforts to secure a greener, simpler CAP that delivers better value for the taxpayer and enables the development of an innovative, competitive and market-oriented farming industry and thriving rural communities.
Huw Irranca-Davies (Ogmore) (Lab)
We welcome this opportunity to scrutinise progress towards reform of the common agricultural policy. I was going to say to the Minister that it seems like we debated the CAP only yesterday, but then I recalled that we did so in Committee.
The Secretary of State and the Minister may regard it as a measure of success that they have not faced criticism from one side in their negotiations, but they have in fact faced criticism from all sides, including farmers, farmers unions, Ministers in devolved Governments—particularly, but not exclusively, the Scottish Government—and environmental groups. Perhaps the Secretary of State is attempting a divide and conquer strategy—splitting the competing interests in order to diminish their effectiveness and leaving him free to argue his own way in European Union negotiations—but such a strategy has real dangers that can only diminish the outcomes for the UK. Being surrounded by attacks on their negotiating stance leaves Ministers looking weak and vulnerable. I am sure that the Commission, the President and the European parliamentarians involved in decision making will have noticed that isolation at home and will continue to utilise that weakness in negotiations.
That is just on the home front. Likewise, in Brussels and Strasbourg, the days of the UK being at the vanguard of progressive, like-minded nations on CAP reform are, as in so many other areas of policy, a fond but distant memory. The Government are trying to lead and to build on the collaborative approach to previous negotiations, but they have alienated far too many former friends.
No one can have failed to notice the intervention today in The Daily Telegraph—my daily reading—of the Minister without Portfolio, the right hon. and learned Member for Rushcliffe (Mr Clarke), who draws an analogy between the Government’s approach to Europe and the heroic but doomed charge of the Light Brigade. The Secretary of State, like his Prime Minister, is boldly and valiantly galloping into the field of diplomatic battle: he and the Prime Minister are the Lord Raglan and Lord Cardigan of CAP reform and European relations, charging headlong into the cannons of Brussels and being scythed down, but nevertheless riding heroically into Eurosceptic mythology, mayhem and madness.
The Government have done their best to alienate potential diplomatic partners with their swivel-eyed lunacy—not my words, Mr Speaker—on the EU. That cannot but affect the negotiations on CAP reform and, as important, lessen the outcomes for UK farmers and consumers and for sustainable production here, in other nations and in the developing world.
Wayne David
On that fundamental point, does my hon. Friend agree that the idea that the CAP can be reformed in a big bang is nonsense? Reform must be predicated on sensible negotiations. The Minister without Portfolio, the right hon. and learned Member for Rushcliffe, says that there cannot be sensible negotiations if the British Government are confused about their position in Europe and send the message that they are essentially Eurosceptic.
Huw Irranca-Davies
My hon. Friend, who has great knowledge of this area, is right. It is as though the Government are playing with one hand behind their back. I have great sympathy for the Minister, because although he has great knowledge and wants to work in the best interests of UK farming, his colleagues are not making it easy for him.
Mr Heath
I thank the hon. Gentleman for those kind words. I am interested to know what is the position of the Labour party today. Does it support or oppose the budget reduction? Would it have failed to argue for the budget reduction, or does it agree that the Prime Minister had a success in those negotiations?
Huw Irranca-Davies
The Minister ought to go back and look at the voting record, because the Labour party voted collectively on that matter.
The thrust of the Minister’s speech was about a more competitive farming industry. We do have a strong farming industry. The question is whether he and his Eurosceptic colleagues can carry that forward through the negotiations. I commend the work of UKRep officials in trying to get the very best outcome from a misguided ministerial approach to the EU. They have stuck their fingers in diplomatic dams, while Ministers have been digging away the foundations. I suspect that the Minister has been somewhat dismayed and has done his best among a very bad lot, but it has been a model exercise in how not to win friends and how not to influence people.
Jacob Rees-Mogg (North East Somerset) (Con)
I am extremely grateful to the hon. Gentleman for giving way. He has a vision of the perfect negotiating strategy that his side might have. Might that include giving away half our rebate to get a fundamental reform of the agricultural policy? Will he remind me how successful that was?
Huw Irranca-Davies
There, once again, speaks the historic Eurosceptic wing of the Conservative party. We have always had the clear position that negotiations on the CAP, the common fisheries policy, on which I negotiated, and on Europe more generally are best served by honesty, transparency, frankness and collaboration. I must make some progress, given your dictate, Mr Speaker.
The Government’s approach both in the UK and in the EU has been wanting. Where does that leave us at this critical stage of the negotiations? At EU level, we are taking not two steps forward and one back, but one step forward and three back. The Secretary of State put it well when he wrote to the Chairman of the European Scrutiny Committee in February:
“overall I am disappointed in the outcome of the vote in Agriculture Committee”.
So are we. He continued:
“The amendments turn back the clock in terms of achieving good value for money from rural development, especially agri-environment, and do nothing to continue orientating European agriculture to the market.”
We agree, Secretary of State, we agree. He continued:
“There is a significant watering down of the greening proposals”.
It is all getting a bit gloomy, but there is worse:
“I would emphasise concern on the outcome of the vote on the single CMO where the compromises put a halt to, and even reverse, the direction of reform that CAP has been on”.
Yes, the direction of reform and the progress towards reform that had been achieved, including by Labour Secretaries of State working effectively, collaboratively and intelligently with like-minded progressive member states, are being reversed. How times have changed; how progress has stalled and even been reversed in some areas.
I remind the Secretary of State and his Ministers that his criticism of the lack of progress must be laid fairly and squarely at his own door. It is not enough to bemoan a lack of progress, or even a regression into old-style CAP production support, when that has happened under his leadership of the Department for Environment, Food and Rural Affairs, his Prime Minister’s leadership of the country and his party’s little-Englander, banner-waving, terrified-of-UKIP style of leadership. They have contributed to our current position. “Speak softly but carry a big stick,” has been replaced by, “Shout loudly and antagonise the neighbours.” Despite all that, we will continue here and in Brussels and Strasbourg to support the Government when they try to do the right thing. We just want them to try harder and negotiate cleverer. That is the backdrop to where we are now.
Many of the detailed contributions today will rightly be focused on farming and technical in character. Before I put some questions to the Minister, it is worth reiterating that Labour strongly believes that farming goes hand-in-hand with sound, sustainable farming practices. In addition to delivering food security and affordability, this CAP reform should not shy away from its broader sustainability remit. Profitable farm businesses are based on sustainable farming practices such as protecting and enhancing soil quality and the water environment; conserving special and priority species and habitats, landscape features and archaeological sites; minimising the carbon footprint of farming; promoting access to the countryside, high animal welfare standards and links to the wider rural economy and communities, and much more. That, by the way, is why pillar two and rural development cannot be overlooked while we strive to ensure the productivity and competitiveness of farming.
Collectively, the Government and their agencies have worked with farmers, landowners and non-governmental organisations throughout the UK over many years to deliver food security for this country; to produce affordable food for the consumer; to protect what we, visitors and tourists love aesthetically in our landscape and countryside, which boosts the wider rural economy; to conserve our habitats, wildlife and biodiversity; to enhance the wider public goods in management of our ecosystem and biodiversity; and, in all that, to adapt to the challenges of climate change. On top of that, farmers have been asked to work with the Government as the CAP moves towards a more market-oriented system, with less reliance on payments for production and more transparent use of public money for public goods.
The head of the National Farmers Union, Peter Kendall, is not alone among the farming unions in his concern that farmers are being left high and dry, confused and condemned by a Government who are as out of touch with farmers as they are with the EU negotiations. He states:
“Instead of delivering a genuine policy framework that embraces and fosters a modern, market orientated, competitive farming sector, free of unnecessary red tape, I fear we will be left with a complex mish-mash of competing and contradictory policy components which will leave farmers facing more bureaucracy and more distortions in the market than ever before.”
I ask the DEFRA ministerial team, who are leading our negotiations, how that came to pass on their watch.
How likely is it that the ongoing dispute over co-financing and the movement of funds between pillars one and two could scupper progress at the June negotiations? Equally important, if there is a delay, are there specific improvements that the Minister will seek in the time gained? Is there any possibility of using that time to reverse the undoubtedly backwards steps towards more old-style market support? Will he say whether the farming unions’ argument is correct that, because of the differential application of the transfer of funds between pillars one and two among nations, their members will unavoidably be placed at a competitive disadvantage? If so, will the Minister share with the House his analysis of how that is likely to affect profitability and competitiveness in each sector, as well as UK farming as a whole against our European neighbours? How will the Government ensure the level playing field to which the Minister referred? Our farmers are not afraid of competition, but it must be fair and open.
We have considered competitive disadvantage across the EU, but how will the Minister deal with the same question across constituent parts of the UK? For example, Scottish Ministers have made it clear that they want maximum flexibility to extend their support—including to sectors such as livestock—well beyond the levels of support that may be given to English or Welsh farmers. What is the Minister’s thinking on that and how will he respond to requests from Scottish Ministers for complete, up-front devolution of funding to the Executive? Will he argue against further use of coupled payments in devolved Administrations, or accept that that is part and parcel of devolution? If the latter, how will he explain that to farmers in England?
How will the Secretary of State respond to the view of the Country Land and Business Association, Tenant Farmers Association and farming unions in England that the introduction of greening elements reduces the need for such a substantial transfer of funds from pillar one to pillar two for environmental measures? Does the Minister believe that such transfers are essential to maintain environmental benefits and not substitutable for pillar one measures, or that they are additional and will extend the future scope of environmental measures?
Farmers want clarity on DEFRA’s position on opt-outs from greening proposals. Does the Minister intend that our farmers should be able to opt out of the specific greening measures proposed, forgoing just the 30% proportion of the new payment but without any further penalty; or will he hold them to complying with the whole package, with no opt-out other than a full one? I trust he can explain his position today.
It comes to something when the president of the NFU remarks candidly that “negotiators have come back from Europe with less than we started with.”
That is hardly a ringing endorsement of Ministers’ batting for British food, farming and rural communities. With the Secretary of State as Lord Raglan in this assault, UKRep and DEFRA officials are playing an heroic role as negotiators, unquestioningly negotiating through the valley of diplomatic death he has made for them. There is confusion and misdirection aplenty as UK interests get cut down again and again by the well positioned, well dug-in cannonades of other European nations. The French commander, Marshal Pierre Bosquet, exclaimed of the futile but spectacular charge of the Light Brigade:
“C’est magnifique, mais ce n’est pas la guerre.”
It is magnificent, but it is not war. Russian officers offered less praise and more regret, saying of the headlong charge, “C’est la folie.” It is madness.
Labour will continue to engage directly with farmers, farming unions, environmental organisations, MEPs, colleagues in devolved Administrations and Governments, and all who want to see CAP reform deliver for food security and affordability, environmental and wider public benefits, and rural communities. We will support the Government to get the best deal, despite a cack-handed approach to negotiations thus far. I wish the Minister good luck. Where he gets it right he will have our support, but there is a long way to go.
Mr Speaker
Order. The House will next be addressed by the Chair of the Environment, Food and Rural Affairs Committee. After her speech there will be a five-minute limit on Back-Bench contributions. We will hear from the Chair of the Committee with, I hope, suitable brevity.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I congratulate my hon. Friend the Minister on giving the House the opportunity to discuss the Committee’s two previous reports on this matter, and it is a pleasure to follow the hon. Member for Ogmore (Huw Irranca-Davies). I congratulate the Minister on the position he has reached in the negotiations, and thank my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice) for his sterling work in commencing proceedings. I will stick to English, Mr Speaker, tempting as it is to break into French, Danish or Spanish, as I think your strictures on timing would preclude that. I spent a number of months working on the first ever co-decision procedure on road transport as a Member of the European Parliament, and although I am delighted that the democratic arm of the European Parliament is participating in the negotiations, that obviously adds an extra dimension to those negotiations.
I thank hon. colleagues from all sides for the work they have done with me in looking to the next round of common agricultural policy reforms after 2013, and I will dwell for a moment on the background to our current position. I represent a deeply rural constituency—having moved from the Vale of York to Thirsk, Malton and Filey—and a greater upland area than I represented previously, as well as lowland areas. The backdrop of the wettest autumn, with substantial flooding in my constituency and many other parts of the UK, followed by the coldest spring has had a huge impact on the harvest. We are expecting a smaller harvest and I understand that less milk was produced. Most worrying is that the harvest is expected to be down by potentially 30%, and as I understand it, for the first time in 11 years the United Kingdom will be a net importer of wheat.
Against that backdrop of depressed farming incomes, and the implications for food security, I would like to press the Minister on certain issues, particularly the greening of the common agricultural policy. As a number of hon. Members have said, UK farmers already green to a much greater extent and at some cost to themselves. In particular, I draw the attention of the Minister and the House to the position of tenant farmers across this country—not just those in the uplands of northern England—who seem to have a unique position in the European Union. The Committee’s report “Farming in the uplands” stated that the Committee is conscious that the position of tenant farmers is unique to UK agriculture, and that the impact of any reform on that group should not be overlooked by either the Commission or DEFRA. We concluded that tenants—and indeed commoners, many of whom I represent—might be disadvantaged in accessing agri-environment schemes.
The concerns of tenant farmers about some other reform proposals are wider and reflected by the Tenant Farmers Association. Those concerns include that farmers might be disadvantaged by the proposed entitlement scheme, that only those who made a valid claim on at least one hectare of land in 2011 under the existing single payment scheme will be eligible for direct payments under the new regime, and that some landlords may use that to capitalise inappropriately on changes brought under existing tenancies in order to bank land ahead of any new regime. On the other side, the CLA has said that it is not aware of such things, but I hope the Minister will keep the matter under review.
Tenant farmers have also raised concerns about the active farmer proposals on which the Minister might like to update the House. Wildlife trusts, and others, have said that the proposals are potentially unworkable and catastrophic for the management of the land. The costs of administering some of the present schemes for tenant farmers are prohibitively high, with lawyers being retained and up to 30% of the agreement used just to administer the scheme. This debate is therefore a useful opportunity to review the position of tenant farmers under the CAP.
In response to our debate on interventions and a potential transfer from pillar one to pillar two, will the Minister state whether he proposes that the measure will be subject under pillar two to co-financing? I know it is the view of the NFU and others that it should be, but the question that the House must address, and the Minister answer, is whether the Treasury will be prepared to co-finance. We have a comprehensive spending review next week. Will there be money if there is a 13% reduction in the CAP budget?
That is another argument in favour of the status quo. I am slightly arguing against myself, because Filey and other parts of the Thirsk and Malton constituency receive rural development funds through the LEADER programme, which is all to the good—obviously, I am here to help Filey to receive more in that regard. I hope that the Minister will address that. He touched on the 13% reduction in the CAP, but we have let to learn what the reduction in DEFRA’s budget will be.
I have discussed the position of tenants, the weather conditions and the drop in farm incomes, which in turn has food security implications, which I hope the Minister will address, as well as updating us on active farming.
I shall say a few words about ensuring that there is no discrimination against the UK farmer. I understand that Scotland currently receives 16% of the UK pot of money, yet produces less than 12% of the UK’s agricultural output. We need to be aware of that and restore the balance between Scotland and England, particularly for the border regions of Northumbria, Yorkshire and County Durham, which are affected by the imbalance. Decoupled direct support plays a pivotal role, but we should not put further pressure on farmers in England, and there should be no further modulation. Any increase in voluntary modulation from 9% to 15% would be resisted by farmers. Many of the farming organisations have lobbied vigorously in that regard.
The Minister and his predecessor, my right hon. Friend the Member for South East Cambridgeshire, argued that there should be no distortions and no negative impact on competitiveness in any switch from direct payments to rural development. I therefore hope that the Minister can conclude that there will be no extra burdens on English farmers from the negotiations.
The proof of the success of CAP reform for the UK farmer will be in the way it is implemented in England. I am conscious of the roles that DEFRA and the Minister play—they both negotiate on behalf of the UK but have specific roles in relation to English farmers. I make a plea from the heart on behalf of those I represent and the wider farming community that our farmers are rewarded for their toil. The House needs to ensure that it sends the message that we intend to continue to be self-sufficient in food and remain a major exporter. A drift towards being dependent on imports is a drift in the wrong direction.
All power to the Minister’s elbow. We will continue to monitor developments extremely closely. The Committee wants to establish a greener, simpler CAP, with emphasis on the simpler, and a CAP that is competitive and provides for farmers and rural communities.
Barry Gardiner (Brent North) (Lab)
I am delighted to speak after the hon. Member for Thirsk and Malton (Miss McIntosh), the Chair of the Environment, Food and Rural Affairs Committee.
Food security delivered by a viable farming industry and the sustainable management of our natural resources must be compatible. It would appear that the CAP does its best to ensure that they are not. Greening is a lie. The proposals are not greening proposals. Modifications that are being made in the proposals to pillar one can be said to be greening in nature, but the proposals do not constitute the greening of the CAP as a whole. Only 13% of the funding under pillar one goes to specific greening measures. In many cases, good farmers are doing those things anyway. The real objection is that money is being used for subsidies around Europe instead of being used to encourage farmers to improve their practices and run better businesses. That is the tragedy of the CAP’s current structure. The CAP budget is €57.7 billion, which is around 40% of the EU budget. It is staggering that the money is being used predominantly to reward productivity and to increase product, and not to incentivise better businesses and improve the wider environment.
I compliment the Minister—I do not always do so—for the way in which he has handled the debate. He not only took a lot of questions, but sought to engage the House. There is broad consensus in the House on the position that the UK Government would like to get to in Europe. The tragedy is that the 27 different countries have very different farming industries. Many of them have a vested interest in having subsidies prop up their ineffective farming industries.
The key issues are on the use of funds. The right hon. Member for South East Cambridgeshire (Sir James Paice) was right to correct what I said earlier—10% modulation was compulsory and 9% was voluntary in the past. That meant a total of 19% modulation as opposed to the 15% voluntary modulation that the Government propose. The difficulty is that the 15% is 15% of less, and the 19% was 19% of more. The will have a dramatic impact on advancing the environmental stewardship schemes and the green elements of our budget will be dramatic.
I take on board the points made by the Chair of the Committee and the right hon. Member for South East Cambridgeshire about how the proposal will impact on farming businesses in the UK. This is not a zero-sum game, but if we put the money into the schemes that hon. Members would ideally like—the greening schemes that will improve our environment—we will, to an extent, disadvantage our farmers, because they compete against their counterparts in Europe with less subsidy. It is as simple as that. We might all believe that that subsidy is wrong and should not exist—subsidies should not exist to prop up failing industries—but it exists none the less, which is a disadvantage to our farmers.
Barry Gardiner
I do not have time, I am afraid.
The Chair of the Committee was absolutely right to put the central question: what is the Treasury going to do? Will it allow enough funds to DEFRA to ensure that we can put the money that is needed into the environmental schemes to support the natural environment White Paper it produced last year and to support our farmers, or will DEFRA budgets be cut in such a way that our farmers and the environment suffer? That is the question.
Sir James Paice (South East Cambridgeshire) (Con)
Time will curtail what I say in the debate—I will not say all I would have liked to say, which will please most of my hon. Friends—but the House will remember that I did most of the negotiations in their early days on behalf of the UK Government. I do not recognise any of the situations that the hon. Member for Ogmore (Huw Irranca-Davies) described in his somewhat flowery rhetoric.
All hon. Members know that, whatever the outcome of the trilogue discussions, this is a wasted opportunity. For the very first time since the introduction of the CAP, the negotiations take place against a background in which the days of surpluses and dealing with over-production are behind us. We now look to a future of what Sir John Beddington called the perfect storm of increasing demand and a decline in the rate of improvement in productivity. This was therefore an opportunity to restructure the agriculture industry across Europe and equip it to meet that challenge. Only last week, the OECD produced a report stating:
“Changing fundamentals have transformed agricultural markets. These changes appear to be here to stay and will shape the evolution of agricultural markets over the medium term.”
It went on:
“Instead, with energy prices high and rising and production growth declining across the board, strong demand for food, feed, fibre and industrial uses of agricultural products is leading to structurally higher prices”.
I could not have put it better myself, although I did put the case in a similar manner in the early negotiations. This was the opportunity and background against which we could start to wean farmers off direct support, an objective that I think is shared across the House. Unfortunately, those views fell on stony ground, particularly with the Commission, which was determined to refuse to accept the opportunity and challenge, preferring to embed direct payments by greening pillar one. As the hon. Member for Brent North (Barry Gardiner) said, it is a very pale shade of green. We ended up with a set of proposals that were much more complicated, and far from the simplification that the commissioner had proposed and said he was trying to introduce.
My right hon. Friend the Prime Minister negotiated the multi-annual financial framework settlement, which was, overall, an excellent settlement for the UK. The MFF saw a reduction in the overall EU budget and a reduction in the CAP budget, which, as the then Minister, I had proclaimed. Many Agriculture Ministers around the table wanted more to be spent, yet their own Finance Ministers were singing a different tune. That could not be said of the UK Government—we stuck to the same tune. The issue was bedevilled by the Treasury’s attitude to the rebate, not that there is anything wrong with the rebate fundamentally—I strongly support it. However, the Treasury would rather have its 70p out of the rebate than allow us to claim £1 from the CAP, and that has caused immense difficulties ever since. The MFF also saw the absurdity of France and Italy, in particular, getting what can only be described as substantial, handsome bungs of an extra €1 billion to €1.5 billion.
Enough has been said about the 15% issue, but we have to emphasise that this is a single market and our farmers have to compete across Europe. I cannot say that I speak for our farmers, but I think that most would accept whatever happened to the single farm payment as long as it happened to all farmers across Europe. They are unhappy with any proposition that affects England, but not their competitors.
Greening, as has been said, should have been done in pillar two. It is important that we understand that management of ecological focus areas is more important than mere area. The transition to a flat rate needs to be achieved within the seven-year programme. It is indefensible still to be paying farmers in other parts of the UK on the basis of what they did in 2001. The rural development funding, on which there was some discussion during the speech made by my hon. Friend the Member for Thirsk and Malton (Miss McIntosh), must include measures to help farmers to become more competitive and innovative, and not just on the environmental front.
This vital industry is part of our food supply chain and needs fair competition. I am afraid that the measure will not provide it.
Ms Margaret Ritchie (South Down) (SDLP)
I welcome the opportunity to participate in this debate on the reform of the common agricultural policy.
I represent a rural constituency in Northern Ireland where the active farmer is prominent, and there is a need to emphasise the role of the active farmer in single farm payments. Farmers have had to withstand difficult weather conditions in the past 18 months. A combination of wet weather last summer and one of the coldest springs have had an impact on agricultural production. Farmers and farming organisations in Northern Ireland, particularly those in my constituency, are looking forward to a fair wind in the CAP reform negotiations to ensure the resilience of farm practice and the business of farming in Northern Ireland.
I have had several discussions with the Minister, both in separate meetings and as a member of the Select Committee on Environment, Food and Rural Affairs. Central to the success of the growth of the agri-food industry as the bedrock of the economy is a good outcome from the CAP negotiations that will underpin our industry and farm production at all levels; make provision for new entrants; acknowledge the position of the active farmer in terms of payments; and, above all, ensure a stable income for farmers and for those who derive their livelihood from the farm base. This is a long-term political issue that will shape farming and agriculture not only in the UK, but in Ireland too.
Ms Ritchie
I thank the hon. Gentleman for his intervention. I absolutely agree that farmers need to receive a fair income for the work they undertake, notwithstanding difficult weather conditions, soil fertility or other matters.
We must use all the levers at our disposal, including those in the EU, to achieve the best possible outcome for our farmers and our industry. Only last weekend there were some suggestions that farmers in Northern Ireland would be left at a financial disadvantage as a result of the ongoing Government negotiations. I seek assurances from the Minister that the business resilience and capacity of farms in Northern Ireland will be protected in whatever outcomes emerge from the CAP. I have spoken to the Minister’s opposite number in the Republic of Ireland, who is heading up the negotiations, and he has said that farming in Ireland, both north and south, is similar. We are looking for similar outcomes.
I am aware that some farmers involved in full-time farming inherited their farms from their fathers, but in some instances they have not inherited entitlements. What can be done in the current negotiations, and in further discussions at UK level and at devolved level, to secure a position for those farmers who have no entitlements because they did not apply for them back in 2005?
Those are the two principal issues I wanted to raise. I wish the Minister a fair wind in the negotiations. As we enter their final stages next week, the bottom line is to ensure a good outcome for agricultural communities and farm enterprises.
Roger Williams (Brecon and Radnorshire) (LD)
I draw the attention of Members to my entry in the Register of Members’ Financial Interests.
Miss McIntosh
On a point of order, Mr Deputy Speaker. I omitted to refer to my entry in the Register of Members’ Financial Interests.
Sir James Paice
On a point of order, Mr Deputy Speaker. May I too apologise for forgetting to refer to my entry in the Register of Members’ Financial Interests?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Is there anybody else while we are on the record? If not, I call Roger Williams.
Roger Williams
Thank you, Mr Deputy Speaker. I am glad that my contribution has caused so much interest in the Chamber.
The shadow Minister was rather fierce in his criticism of the Minister. Only yesterday, a Minister from the Department for Environment, Food and Rural Affairs came to the House to make a statement on the common fisheries policy. That was always seen to be intractable, yet the outcome seemed to have the support of the whole Chamber. Indeed, we hope that the CAP negotiations will meet with the same success.
It has been said that little progress has been made in reforming the CAP—the hon. Member for Coventry South (Mr Cunningham), who is no longer in his place, said so at the beginning of the debate—but I must remind everybody that 25 years ago CAP expenditure amounted to 75% of EU funding, whereas it now amounts to just over 40%. In that time, the amount spent by the average UK family on food has decreased from 25% of disposable income to about 15%, although sadly that trend is moving in the opposite direction because of the increases in commodity prices. Back in the 1980s, the CAP depended on market support and intervention through export subsidies and import tariffs, which were really trade-distorting implements and very unfair on developing countries. Things moved on, however, and in 1993 the MacSharry proposals introduced direct payments that were not so trade distorting, and in 2003, the Fischler proposals decoupled support, which was another step forward.
Why do we still need a CAP? It was first introduced to ensure that people working in agriculture and the countryside had incomes comparable to those in more urban and industrial occupations. Sadly, it has been unsuccessful in doing that, and incomes in the countryside are still less than in towns. Many farming businesses in this country would be making no profit at all, if it were not for direct payments.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
How concerned is the hon. Gentleman, therefore, about the drive towards a referendum on the British state’s membership of the EU based on renegotiated terms, including the repatriation of the CAP and convergence funding? How concerned is he about the impact that that would have on the industry in Wales?
Roger Williams
I share the hon. Gentleman’s concern. The Farmers Union of Wales has made it clear that is sees EU membership as fundamental to a successful Welsh agricultural sector.
We need resilience in our farming communities and businesses. As has been pointed out, farming businesses across the country have experienced poor conditions in the past two years. The Chairman of the Environment, Food and Rural Affairs Committee pointed out that for two years now the UK has been a net importer of cereals, whereas we used to be a net exporter. We need resilience in our farming businesses, therefore, if they are to survive from one difficult period to another period in which they can rebuild their resources and capital. We will experience great difficulties with food security over the coming years. With the world population now reaching 7 billion and probably reaching 9 billion by 2050, the demand for food will increase, and it is thought that northern Europe, particularly its maritime areas, might be well placed after climate change to maintain its agricultural production. We should be looking to the CAP to ensure that.
I ask the Minister to address a number of issues that have already been raised. The first is co-financing of voluntary modulation. The UK farming community is concerned about voluntary modulation, because it would put it at a competitive disadvantage against other countries that compete with us on food production. Co-financing, if possible, could mitigate some of the problems perceived by British agriculture. Secondly, the greening proposals should be as simple and easy to follow as possible. The last thing we want are complex proposals leading to penalties being applied to individual farmers or DEFRA. I was on the EFRA Committee when the single farm payment was first introduced. The Rural Payments Agency made a terrible mess of delivering those payments and, as a result, a lot of DEFRA money had to be returned to the EU, rather than being spent on supporting our agricultural sector, so simplicity is important. Some large-scale arable and horticultural businesses would be willing to forgo the greening element—30% of the single farm payment—in order to maintain their focus on commercial activity, so what proposals does the Minister have for using those elements not taken up by businesses?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. There are four speakers and 16 minutes left.
Mrs Mary Glindon (North Tyneside) (Lab)
Last year, in its first report of the Session under the able chairmanship of the hon. Member for Thirsk and Malton (Miss McIntosh), the EFRA Committee stated that DEFRA had
“to put the UK’s case that the CAP should support both the agricultural sector and provide environmental protection”
and do so by engaging with reliable allies in the EU and by having the resources to put the case effectively and persuasively, so it was sad to read this week that figures from Brussels showed that the Government had not so far succeeded and had failed to protect pillar two funding.
The National Farmers Union claims that the UK will now be allocated the lowest share of funds of all member states on a per-hectare basis, meaning significant reductions compared with the current budget. It also states that in the first year of the new programme the UK’s allocation of budget will be cut by 16% and that this figure will rise to 27% in the final year, meaning that by 2020 UK farmers will see less money coming back to the UK than they contributed to the pot through the compulsory EU modulation transfers this year. This situation is exacerbated by the fact that other countries, including France, Italy and Ireland, have all managed to get a more successful deal so far.
The former Agriculture Minister, the right hon. Member for South East Cambridgeshire (Sir James Paice), echoed the concern that the Minister’s arguments will disadvantage English farmers, who will not be given a level playing field on which to compete. The Opposition want a level playing field and no advantage for our farmers.
Bill Wiggin (North Herefordshire) (Con)
I think the hon. Lady means that she does not want any disadvantage for our farmers. I hope she will take this opportunity to put the record straight.
Mrs Glindon
I thank the hon. Gentleman for correcting me. I did not realise I had said that. I clearly meant that we did not want any disadvantage.
How can the Minister guarantee that UK farming will continue to deliver environmental and other public benefits with severe cuts to its pillar two funding? By failing to protect our farmers, the Government are putting at risk our food security, future environmental benefits, conservation, animal welfare standards and the successful promotion of access to the countryside. The Government’s current CAP negotiations are letting down not just our farmers and rural communities, but the whole country. They have to be much more effective and persuasive on our behalf.
Nia Griffith (Llanelli) (Lab)
Very briefly, I draw the House’s attention to my entry in the Register of Members’ Financial Interests, although I can confirm that I am not in receipt of any European funds at the moment.
Quite clearly this debate will have to be curtailed. The key principles set out in 2011 were high sounding and were certainly things that we would support—for instance, better targeted income support, greening measures, support for young farmers, measures to stimulate the rural economy and simpler, more efficient CAP funding. We certainly want to see those things, but it is the transition that worries me most. Because of how we did things in Wales under the last set of changes—we kept a stronger historical element than in England—we have a bigger change to make. I pay tribute to Alun Davies, the Welsh Government Minister, who has had a considerable conversation with farmers in Wales. The Welsh Government have stated that they would like a much longer transition period—ideally 10 years rather than five, but if that is not possible, at least seven—to ensure that farmers do not go out of business because of sudden, cliff-edge changes.
That is important, because when a farmer goes out of business, it is not just a catastrophe for that farmer and his or her family and a change in their way of life; it also has a detrimental effect on the rural economy, food production and our food security. Moreover, it is incredibly difficult to re-start. We all know from when we have talked about things such as foot and mouth how difficult it is to re-stock, but to re-start altogether—to go into farming, build up expertise again and build up generations of breeding to get the best animals possible—is extremely difficult these days and takes a long time, so we do not want a sudden, mass exodus. We want a cushioned transition to ensure that we do not have casualties.
The Farmers Union of Wales is absolutely right to say that the current Euroscepticism is extremely worrying. Just as we do not want to see farmers thrown out of business because of an ill-thought-out transition, we do not want them to have trouble when they go to the bank, under the shadow of our possible departure from the EU and a sudden drop in their income. We do not want farmers to have to fight for funds to invest in our food production. We do not want them suddenly finding themselves unable to encourage their sons and daughters into farming because no one can see a future in it or because they are so worried about the changes in income that might ensue if we pulled out of the EU. I therefore hope that Government Members will be able to influence some of their colleagues who are making these unhelpful noises and will ensure that Britain is at the heart of the negotiations in Europe so that we get a good deal for Britain, a smooth transition and the best possible help for our farmers in future.
Kelvin Hopkins (Luton North) (Lab)
I wrote my first paper on the CAP some 33 years ago. I suggested at that time that either it should be abolished or Britain should withdraw from it. I have not changed my view, even though the CAP is very different from how it was then, although it is still essentially ill designed and inefficient, and a bit of a bureaucratic monster. I was supported at that time by the Consumers Association. Having a purely urban constituency, I represent consumers rather than farmers, although I absolutely support farmers, too.
Agriculture is very different in all the member states, and in some cases the difference is quite extreme. It would be better if member states managed their own agriculture and did not rely on a supranational regime imposed by the EU. It would be better for those countries and everyone else if that happened. If we must have transfers between member states, we should run the scheme as a fiscal transfer, so that the rich pay in and the poor draw out, but not try to manipulate agriculture in the way that happens at the moment.
The report from the Select Committee on Environment, Food and Rural Affairs suggests:
“A one-size-fits-all approach is not appropriate,”
and that
“The CAP is complex and burdensome.”
I agree. Some of these points do not necessarily apply to the whole of the CAP, but they seem to fit in with the case for returning agriculture to member states. Much of what we have heard in today’s debate seems implicitly, if not explicitly, to support that case as well. Each member state ought to decide what it produces, how much of each product it should produce, whether subsidies are appropriate, what should be subsidised and, indeed, what that member state should import. Those things should be left to those countries.
In Britain, we very wisely intensified our agriculture as a result of being an island and being threatened in the second world war. We developed an efficient agriculture sector that is still with us today, even though it seems that we are currently importing wheat. We want to continue to have a strong agriculture sector in terms of production for strategic reasons. We do not want to become beholden to other countries to feed ourselves.
Last week I had the pleasure of visiting Lithuania with other members of the European Scrutiny Committee. I found to my surprise that 30% of Lithuania’s agricultural land is not being used for production. That was not the case before Lithuania joined the EU and the CAP. Strangely, for a small country that used to be mainly an agricultural nation, Lithuania has now become a net importer of food, which is all due to the distorting effects, apparently, of the CAP. Even in the poorer countries, things are not going well under the CAP regime. Surely Lithuania would be able to produce agricultural products very cheaply and sell to countries that want to import them, but it is not doing that and is now a net importer of food, which is nonsense.
If we want to redistribute wealth and income between European nations—there is a case for doing that—it should be above board and done by means of fiscal transfers. A key factor of any renegotiation of our relationship with the EU should be getting out of the common fisheries policy, getting out of the CAP and avoiding all contact with single currencies.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
I am disappointed that we have such a short amount of time to debate these issues. We are talking about complex, extensive regulations that have significant implications for my constituents and everyone else who farms or works in rural industries or lives in a rural community, not just in Scotland but throughout the UK.
The Minister did an admirable job of setting out the structural flaws of the CAP, but he was a bit less forthcoming in presenting an alternative to it for the 60% of farmers who would not have a viable farm business were it not for the support they receive from the CAP. It is important to remember that the CAP is not only about market support; it is also about land stewardship, food security and sustaining resilient rural communities. I think we are all agreed that the CAP is a profoundly flawed system, but we have to be pragmatic about where we are in the negotiations and how we defend our rural communities and get the best possible deal for our farmers.
I will try to rattle through some of the issues in what is a short time frame, but I will be unable to say everything that I had hoped to say. I am pleased that there will be more flexibility for greening measures. I also think that the proposed definition of “eligible pasture”, which would include non-herbaceous grazing—in other words, heather—will be of significant benefit to upland farmers. However, I would still like more flexibility, so that people can qualify for greening measures through a number of options. I hope the Government will seek to resolve outstanding issues in the negotiations next week.
Another welcome step is the definition of an “active farmer”, which should help to tackle the long-standing problem of “slipper farmers”, whereby some people have received large sums of public money with little accountability or public benefit. I hope that will also form part of the final agreement. The flip side of the “slipper farmer” problem is that not nearly enough support was given to new entrants in the previous CAP. It is important that new entrants have a level playing field in entitlements with established farmers. Under the proposals, they should be eligible for an initial grant of entitlements in the first year of the new scheme, so long as they can show that they have been actively farming. New entrants should also be able to receive support from the national reserve.
The issue of the proposed cap on basic payments to individuals has been controversial in some quarters, but I personally think it is a progressive measure. A small number of large farm businesses receive levels of direct payments that are totally unjustifiable. We have to be transparent and accountable in how we use public money. It is only right that the redistributed surplus should be made available for more beneficial forms of rural development. I am pleased that the Commission proposes to increase CAP transparency by publishing the details of CAP beneficiaries and the money they have received.
Another controversial issue has been the use of coupled support, which I wanted to say more about. I know that progress has been made, particularly on the different views that exist across the UK about what is needed in certain circumstances. All I would say is that the beef sector is critical to the economy of north-east Scotland. It anchors hundreds of jobs in the rural economy and gives a welcome boost to exports, which is important. I have raised the issue of the compliance regime many times with Ministers over the last couple of years. I am glad that there is a more proportionate set of proposals on the table, which means that farmers will not be penalised for small oversights or administrative errors.
However, the big issue is the overall budget. In the context of austerity, we all understand that the overall pot is smaller, but the UK has negotiated itself the lowest share of the CAP budget of any EU member state. On average, member states get €72 a hectare, whereas the figure for the UK has fallen to €20. I do not think farmers want to be subsidised, but they do want to be on a level playing field and they want to be recompensed for their efforts to comply with European regulation.
I think we went into the CAP reform negotiations with a very strong case for a bigger share of the CAP budget for Scotland, but that is not what has come out. Compared with farmers in neighbouring countries—and, indeed, farmers in other countries and parts of the UK—Scottish farmers continue to get a very raw deal, even though many are stewarding land in environmentally responsible ways, providing a basis for a much bigger food and drink export industry. I do not think it is right for farmers in Scotland to get significantly lower payments than their counterparts in England, Wales and Northern Ireland. Nor do I think it right that those farming comparable land in Ireland receive €70 a hectare, in Finland €158 a hectare and in the Czech Republic €83 a hectare.
We need basic fairness in the system, and we just do not have it. Under pillar one, Scotland’s rate is so low that it means that the whole UK external convergence mechanism will benefit the UK by about €60 million. I hope that the Minister will confirm that that can come to Scotland. I hope that while we have a CAP system, we will continue to fight for the best deal for our farmers. I hope that Ministers will do that.
Mr Heath
I have limited time to reply to a very interesting debate, including to the rather ungenerous comments of the hon. Member for Ogmore (Huw Irranca-Davies). I always know that the more flowery his language, the more he secretly agrees with the Government. When he resorts to Alfred, Lord Tennyson, I know that I have total agreement across the Dispatch Box.
Some important points were raised. One was about the opt-out for greening measures. Yes, there is in the current proposals a penalty for opting out, but we are seeking to remove it if we possibly can, so that the penalty will be the loss of income from not applying the greening measures.
Several Members—the hon. Member for Thirsk and Malton (Miss McIntosh) and many others—talked about co-financing measures. It is our view and it is the Prime Minister’s negotiating position in the budget discussions that these arrangements will not require co-financing. It is obviously always possible for the Treasury to put more money into the pot, but I have to say that I do not see the prospects for that as extraordinarily high at the moment.
The hon. Member for South Down (Ms Ritchie) mentioned farmers without entitlement. We are continuing to negotiate on that, because we see—
Financial Transaction Tax and Economic and Monetary Union
(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
15:41 - The House divided: - Ayes: 215 / Noes: 311 - Question accordingly negatived.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I inform the House that Mr Speaker has selected the amendment in the name of Edward Miliband.
The Financial Secretary to the Treasury (Greg Clark)
I beg to move,
That this House takes note of European Union Document No. 16988/1/12, a Commission Communication on a Blueprint for a Deep and Genuine EMU: Launching a European debate, an Un-numbered European Document dated 5 December 2012, a Report from the President of the European Council: Towards a Genuine Economic and Monetary Union, European Union Documents No. 15390/12, a draft Council Decision authorising enhanced co-operation in the area of financial transaction tax, and No. 6442/13 and Addenda 1 and 2, a draft Council Directive implementing enhanced co-operation in the area of financial transaction tax; observes that the European Scrutiny Committee has reported on these documents and concluded that they raise questions relating to parliamentary sovereignty and primacy as well as fiscal and monetary issues; notes that the European Commission Communication states that ‘Interparliamentary co-operation as such does not, however, ensure democratic legitimacy for EU decisions. That requires a parliamentary assembly representatively composed in which votes can be taken. The European Parliament, and only it, is that assembly for the EU and hence for the euro’, and that the report from the President of the European Council concludes that ‘further integration of policy making and a greater pooling of competences at the European level should first and foremost be accompanied with a commensurate involvement of the European Parliament in the integrated frameworks for a genuine EMU’; further notes that the proposals for the Financial Transaction Tax have been challenged by the Government in the European Court of Justice; notes that recent European Treaties and protocols have emphasised the role of national parliaments throughout the European Union as the foundation of democratic legitimacy and accountability; and believes that this role is the pivot upon which democracy in the United Kingdom must be based on behalf of the voters in every constituency.
I am grateful for the opportunity to discuss these important issues and thank the European Scrutiny Committee for recommending them for debate. I shall focus on the financial transaction tax before turning to the matter of economic and monetary union. As many hon. Members, and certainly members of the European Scrutiny Committee, will know, the Government have applied to the European Court of Justice for the annulment of the Council decision authorising an FTT under the enhanced co-operation mechanism. I am pleased to be able to set out our concerns about the initiative.
Many Members will know that we have been here before, in 2011, when the European Commission proposed a wide-ranging financial transaction tax that would have applied across the entire European Union. Just like the current proposal, that tax would have applied to all trades, market participants and financial instruments; it would have applied to Government bonds, corporate bonds, equities, derivatives and other financing instruments, and to long-term and short-term transactions. Just like the current proposal, too, that tax would have affected the entire financial system, reducing returns to pension funds and savers, increasing companies’ and Governments’ financing costs and reducing European competitiveness at a time when the EU, frankly, needed competitiveness and growth. It might have been conceived as a way of raising revenue from a small number of people in the financial industry, but it would in fact have been paid by savers and by companies. The Commission itself forecast an impact—a negative impact, I need hardly say—on EU-wide gross domestic product of 1.76%.
The Chancellor made it clear that we would not accept the measure—certainly not at a time when the EU was trying to grow and attract business. He said the UK would have no part in it, and partly as a result, the proposal was dropped. Sadly, however, it was not dead, and this January, under a procedure known as “enhanced co-operation”, 11 member states chose to resurrect it. We believe that member states should be free to set their own tax policies, and if they choose to co-ordinate their tax policies, that, too, is their right. Although we believed and continue to believe that the proposed FTT is a bad idea, it is of course open to member states to pursue it—provided it is lawful, complies with the EU treaty and respects the rights and competences of those member states that choose not to participate.
Bill Esterson (Sefton Central) (Lab)
I am grateful to the Minister for apparently making the argument for international co-operation in order to overcome the concerns that he has raised. President Obama has made the point that Wall street was responsible for the financial crisis, so Wall street had a responsibility to solve the problem. Does not the same apply here, provided that there is an attempt at international co-operation?
Greg Clark
I will come on to the hon. Gentleman’s point. I would point out that President Obama and his Treasury Secretary are deeply concerned about the progress of this financial transaction tax, which does not meet any of the in-principle ambitions that people have had for some time. It is a cause of a great alarm among those who believe in free trade around the world.
The proposal under the enhanced co-operation procedure is modelled substantially on the 2011 version. It contains a feature known as the “establishment rule”, under which a UK financial institution would be deemed to be established in the FTT area for the purpose of the tax by virtue of the mere fact that its trading counterparty is headquartered in a country participating in the tax. So in practice, a UK pension fund purchasing a UK Government bond from a UK branch of a German bank would be obliged to pay the tax, and it would pay the tax not to the Exchequer in this country, as would have been the case if we had signed up to the FTT, but to an overseas authority. Likewise, a UK company with significant Treasury operations would potentially be in scope of the FTT when its counterparty happened to be headquartered in the FTT area.
Jacob Rees-Mogg (North East Somerset) (Con)
What obligation would the British Government be under either to enforce or to collect this tax if the FTT were adopted as proposed?
Greg Clark
That goes to the heart of our concern, because under the mechanism set out, we would be under such an obligation, which we consider to be a breach of the protections we enjoy, in particular not to have to incur costs when the benefits do not flow to a non-participating member state. That is precisely one of our objections.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
Does the proposal not expose the beguiling attraction of allowing enhanced co-operation as a gesture of good will to our European partners, when in fact it is a trap enabling them to exercise powers through qualified majority voting, without our participation, which then creates obligations in relation to our own financial transactions, even though they might be taking place outside the EU? My right hon. Friend expresses support for co-operation between free, sovereign states in their tax affairs, but that is not what we are talking about here, because enhanced co-operation is likely to result in obligations that are enforceable in European Community law, even though we have not had a chance to vote on them.
Greg Clark
My hon. Friend makes a powerful point. That is precisely why we are challenging the legitimacy of the proposal. The enhanced co-operation procedure is available to member states provided it is legal and compliant with the treaty, and our view is that it is certainly not. In particular, the extra-territorial effects—exactly what my hon. Friend is concerned about—are contrary to article 327 of the treaty on the functioning of the European Union, as it fails to respect the competences, rights and obligations of the non-participating member states. Furthermore, the decision to proceed with the FTT has extra-territorial effects for which there is simply no justification in customary international law. The Select Committee has been prominent in its scrutiny of that, and no doubt its Chair will have something to say about it.
We should consider the economic effects of the tax as well as the legal issues. What we are discussing is obviously very important to the economy of the United Kingdom, where 2 million people are employed in financial and related professional services. That sector has created a trade surplus for the country at a time when I think all nations should be trying to increase their trade, and its activities are highly integrated with those in other EU countries. Our best estimate is that 30% of over-the-counter derivatives trading in London involves a counterparty in a proposed FTT zone country; similarly, about 30% of investors in UK gilts are located overseas, which means that the FTT is even likely to affect UK Government funding costs.
However, it is not only the financial sector that would be affected. The European Association of Corporate Treasurers, which represents those who manage companies' finances throughout Europe, has said, very explicitly, that the FTT
“will fall on companies in the real economy, and compound the negative effects of the financial crisis.”
In this country, the CBI agrees.
Alison Seabeck (Plymouth, Moor View) (Lab)
What would be the implications of the UK’s rejection of the FTT? Would the Government raise the bank levy rate for what I believe would be the sixth or seventh time?
Greg Clark
As the hon. Lady helpfully points out, we, unlike many other European countries, have a bank levy. The levy is targeted to raise £2.5 billion a year, but it will raise more than that this year, because we said we would increase it to ensure that it raised the amount it was targeted to raise. It is rather higher than the French and German levies.
The CBI has said that the FTT proposal “discourages important business activities” and
“undermines the ability of the financial sector to promote economic recovery”.
The European fund managers association, which is responsible for the welfare of millions of pensioners throughout Europe, has described the FTT—again, very explicitly—as a tax on savers, which will threaten the operation of capital markets and have a damaging impact. I am interested to note that the hon. Member for Nottingham East (Chris Leslie) appears to be sanguine about the effects on savers. I should have thought that the views of pensioners and others with an interest in a prosperous retirement would concern us all.
Chris Leslie (Nottingham East) (Lab/Co-op)
I am not entirely clear about the Government’s policy. I think that, once upon a time, the Chancellor said that he was in favour of the principle of a financial transaction tax. Is that no longer the case?
Greg Clark
In fact, we already have a financial transaction tax. It is called stamp duty, and it has existed for a long time.
Let me say something about the opinions of markets outside the European Union. Representatives of other jurisdictions are appalled by the plans, particularly our major trading partners. In the United States, the Investment Company Institute says that the tax would “crash across borders”, and that
“All investors would be hit.”
The US Government also have serious misgivings: the Treasury Secretary, Jack Lew, has said that, despite objections from financial and non-financial trade associations and Government officials in the United States, Canada, Australia, Japan, Korea and other countries regarding the global reach and negative impact of the proposal, their concerns remain unanswered.[Official Report, 20 June 2013, Vol. 564, c. 5MC.]
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
The Financial Secretary mentioned stamp duty. Stamp duty has an extra-territorial application, which he used as a reason for not introducing a financial transaction tax. Further to the point raised by my hon. Friend the Member for Nottingham East (Chris Leslie), may I ask why, following a G20 meeting in Pittsburgh back in 2009, the then shadow Chancellor supported the principle of a financial transaction tax, and why he is opposing it now while not coming up with an alternative?
Greg Clark
I shall say more about stamp duty shortly, but I am sure the hon. Lady, who I am sure is a student of these matters, will be aware that it was agreed at Pittsburgh in 2009 that the International Monetary Fund should conduct a study to establish whether there was an international basis for proceeding. It conducted that study, and found that there was no such basis.
I hope that, given the international concern about the proposed tax, the House understands that we have no choice but to challenge it. Not only are there numerous problems with the design, but the proposal flagrantly disregards the position of those who choose not to participate.
The hon. Member for Nottingham East pointed out that the Chancellor had said that we had no objection to the principle of a financial transaction tax. Of course that is the case. How could we possibly have an objection to a financial transaction tax, given that we in the United Kingdom have had one since 1694? It is called stamp duty, and it is very different from the proposed design of this tax. It contains, for instance, an exemption for intermediaries to avoid the “cascade effect”, whereby at every stage of a transaction a tax racks up throughout the chain. That has a very negative impact on the costs faced by savers and companies. We have no objection to levelling the playing field with countries, including France, that have recently adopted stamp duty-type taxes of one sort or another, but other countries, particularly the United States, are far from being close to a consensus. If the hon. Gentleman has taken an interest in the matter, he will know that President Obama and his Administration have described this development as very troubling.
Of course Britain will play a leading role in promoting global standards when it comes to taxes, but I think the whole House would acknowledge that, in international negotiations, we should focus on what will give us a realistic chance of making a big difference to people, rather than choose to divert effort and negotiating capital into what, given the views of others, would be simply a gesture.
Andy Sawford (Corby) (Lab/Co-op)
The right hon. Gentleman is a fair-minded Minister when it comes to most matters on which I have dealt with him. I think he is right to say that it would be in the interests of this country to pursue a financial transaction tax—indeed, he has acknowledged that his party views it as such. Can he tell us how many times Ministers from our Government have made representations to the American Government on this matter, given the importance of financial services to both our economies?
Greg Clark
I am grateful to the hon. Gentleman for his kind words, but when we have a chance to participate in and lead international gatherings, we must decide where our negotiating capital or authority can best be deployed. The Prime Minister decided, correctly in my view, to pursue tax transparency at international level, through our leadership of the G8 and in other forums. I think that the hon. Gentleman, who is as fair-minded as he considers me to be, would be churlish not to acknowledge the considerable breakthrough achieved by the Prime Minister in recent months, and by the Chancellor before him in Mexico, in respect of tax transparency. I believe that that is an example of the palpable progress that even the Opposition should applaud.
Andrea Leadsom (South Northamptonshire) (Con)
In the context of transparency, does the Financial Secretary agree that creating an unlevel playing field in which some countries participate and others do not, which is what this financial transaction tax will do, could fall foul of the second markets in financial instruments directive, which requires best execution in all transactions? In an essentially international if not global business like financial services, might not those wishing to conduct transactions on behalf of their customers struggle with the idea of using a jurisdiction that had imposed an unlevel financial transaction tax?
Greg Clark
My hon. Friend is right. This runs contrary to the whole direction of the reform that we have been promoting and think it essential for the EU to promote, namely movement towards a single market in which operating across borders becomes progressively easier and more transparent. I do not think it sensible to do what the hon. Member for Nottingham East would prefer to do, which is make a global financial transaction tax a greater priority than what we are achieving in terms of tax policy, at a time when we are making great progress.
Nor would it be right to leave out of the motion the reference to the UK’s legal challenge to the current proposed FTT, which it is widely acknowledged would hit British pensioners—we know the Opposition have them in their sights at the moment—and which is the whole basis of this Committee’s scrutiny of the proposal.
Bob Stewart (Beckenham) (Con)
If an FTT were imposed on us, where would the money be sent? Would it be sent to the EU, a country or some quango? Where would the money go?
Greg Clark
It would go to the country which was liable for the transaction tax that fell due there, but it would not go to this country, despite the fact that we would incur the costs of enforcing it and collecting the money. There would be no benefit whatever to the UK taxpayer. It would be unfortunate if at a time when we should be enhancing Her Majesty’s Revenue and Customs’ ability to collect taxes, we were, in effect, requiring extra resources to be expended on something that was of no benefit whatever to UK taxpayers.
Neil Parish (Tiverton and Honiton) (Con)
Does my hon. Friend agree that in the context of the City of London needing to be attractive for financial transactions, all this tax would do is add yet another burden? We want more people to come to the City of London and trade, not fewer, and I feel that this tax would drive people away.
Greg Clark
I agree. It is not only the London economy that would be damaged; the whole European economy would be damaged, too. That cannot be in the interests of EU members, but members are, of course, sovereign and can make their own decisions, provided that that does not interfere with our competences and rights.
Andrea Leadsom
The hon. Member for Nottingham East (Chris Leslie) says, “Ah, the Financial Secretary is against it all together!” However, the European Commission itself has done an assessment that shows how extraordinarily costly this will be in terms of jobs and revenues to the member states who introduce it.
Greg Clark
That is absolutely right, although one of the unsatisfactory aspects of the FTT proposal is that it has been frustrating trying to obtain an accurate view of its impact from the Commission. Not enough analysis has been conducted. We know that the original estimate of the impact was a reduction in EU GDP of 1.76% and a loss of half a million jobs across the EU. Mysteriously, those figures have changed, but we have had no rigorous explanation for that.
In the limited time available to us today, I should address the other documents that are the subject of this debate, in particular the one on economic and monetary union. Late last year, the European Commission published its blueprint for a deeper EMU, and the President of the European Commission provided a report called “Towards a Genuine Economic and Monetary Union”. Those reports put forward ideas for possible steps to a more integrated euro area. They are of particular concern to the European Scrutiny Committee, chaired by my hon. Friend the Member for Stone (Mr Cash), and I am sure he will want to speak about the implications for the primacy of this House and this Parliament.
So far these are not formal proposals but contributions to a wider debate in Europe about what may be needed to bring long-term stability to the euro area. I am sure that further documents will be referred to the Committee and we will have the opportunity to debate them in this House, but I want to emphasise very clearly that the UK will not be part of these arrangements, and although leaders at the December 2012 European Council agreed on a more limited work programme than that set out in these reports, they do raise important questions that need to be addressed.
The European Council December 2012 conclusions were very clear that any new steps towards strengthening economic governance would need to be accompanied by further steps towards stronger legitimacy and accountability. The European Parliament has a role at the EU level as further integration of policy making and greater pooling of competences take place among the euro-area countries, but this does not mean the European Parliament has primacy over national Parliaments, whose role is absolutely essential and inviolate.
As my right hon. Friend the Prime Minister said in this House on 12 December in his post-Council statement —and in response to my hon. Friend the Member for Stone, I think—we believe that national Parliaments are closest to people across the EU and that is why they should be at the heart of providing democratic legitimacy within the EU.
Mr James Clappison (Hertsmere) (Con)
I am pleased to hear my right hon. Friend make those comments, but the vision so clearly set out in the motion about where primacy in the EU should lie is completely different from the EU vision that the van Rompuy report sets out, which proposes a step change with the European Parliament having primacy over national institutions. Does my right hon. Friend agree that we need to face up to this, and decide whether or not we want to be part of that vision?
Greg Clark
My hon. Friend is right, and that is why I was keen to have this debate and make sure the Committee’s concerns on this matter can be aired at an early stage. As I said a few moments ago, the proposals so far do not cohere into proposals that will come forward to be scrutinised, but this debate offers an opportunity for this House to send a clear message, as my hon. Friend may be able to do later, during this process of working-up ideas as to what this House’s clear expectations are with regard to the role of national Parliaments. That is very important.
Mr William Cash (Stone) (Con)
I hear what my right hon. Friend says, but in the light of the assumption, based on what the Chancellor has said, about the remorseless logic of allowing the core member states to go ahead with proposals for monetary union—which are implicit in the 52 pages of the blueprint alone—does he accept that our policy is allowing this to happen, and although we may not, it appears, be directly involved, we will certainly be affected by it?
Greg Clark
We have taken the view that the problems in the euro area that require resolution should be resolved by its members, and it is in the interests of the international economy that that should be so. My hon. Friend is right to point out, however, that our interests are engaged in this, and we will make use of our powers and rights in the EU to insist that those interests are protected. An early example of that is in the single supervisory mechanism, where through repeated interventions and insistence by the Chancellor and me at ECOFIN meetings, the Prime Minister was ultimately able to secure agreement by way of a text in the regulation of that mechanism explicitly stating that there should be no discrimination against any country or currency as a result of these arrangements.
These matters will come up from time to time, and protecting our interests requires eternal vigilance. The work that the Committee does in scrutinising and bringing matters to our attention in advance of discussions at European level is crucial to that, which is why the importance of this Parliament needs to be underlined, and will be by this debate.
Mr John Redwood (Wokingham) (Con)
Monetary union is like having a bank account with the neighbours, and now the neighbours who have put the money in are panicking about the other neighbours who are taking the money out. We see in these documents that EMU is going to progress with much tighter fiscal and banking controls. Is the Minister going to want to keep all British banks out of the extra controls, as we would then no longer be in charge of them, or does he think that the euro activities of our banks must be part of this new centralised scheme from Brussels?
Greg Clark
We have been very clear, and the single supervisory mechanism is a good example, as I have said. We have our arrangements for the supervision of our banks, which are centred around the Bank of England, and it is absolutely right that they should continue in that way, but as each of these proposals is made, we will need to look to our national interest and make sure that our rights are protected.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
That was a specific point, but I want to say that it is not only Members of the right hon. Gentleman’s party who have serious questions about primacy. On the European Scrutiny Committee, there is a cross-party problem in particular with the President of the EU’s report “Towards a Genuine Economic and Monetary Union”, which talks about contracts written by the EU—by the Commission—that will be binding on the countries that sign them, and that will then have penalties if they do not carry them out, taking power away from those countries. There is also the question of what happens then with the impact—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Connarty, you were late coming in, so then to make such a long intervention is not good for the Chair either, especially as you will want to speak, as will a lot of other hon. Members. Short interventions are required.
Greg Clark
The hon. Gentleman makes a powerful point, and I was wrong in seemingly indicating that it was only Government Members who share some of these concerns. He has a long and distinguished record of being not only concerned but an active force in drawing attention and suggesting remedies to some of these matters.
On the proposals before us, one suggestion that has been made is that there should be new mechanisms to increase the level of co-operation between national Parliaments and the European Parliament to contribute to this process—it certainly will not be the end of the matter. It has been stated that how it is done is a matter for the Parliaments to determine themselves. I understand that the Conference of Speakers of EU Parliaments agreed in April to set up such an inter-parliamentary conference to discuss EMU-related issues. The conclusions of that meeting state that the conference
“should consist of representatives from all the National Parliaments of Member countries of the European Union and the European Parliament”.
That reflects one of the recommendations in the Select Committee’s report.
The Government have consistently highlighted the importance of these issues since the December European Council. For example, it was highlighted by the Prime Minster in his Bloomberg speech in January, when he set out his agenda for EU reform. He was clear that the future European Union we need must entail a bigger and more significant role for national Parliaments. He said:
“It is national parliaments, which are, and will remain, the true source of real democratic legitimacy and accountability in the EU”.
My right hon. Friend the Foreign Secretary has said that
“if the European Parliament were the answer to the question of democratic legitimacy we wouldn’t still be asking it.”
He went on to outline a concrete set of ideas, including the proposal to have an EU “red card” system that would allow national Parliaments, working together, to block legislation that should not be agreed at the European level. Furthermore, we have said that we would support calls by this House to summon a European Commissioner to explain a proposal directly to this Parliament if the Committee demanded it.
Mr Jenkin
I wholeheartedly support the principles set out on the primacy of national Parliaments in the Prime Minister’s Bloomberg speech, but neither of the proposals that the Minister has just mentioned—the red card and the summoning of an EU Commissioner—addresses the primacy issue. The red card just creates another opportunity for our national Parliament to be outvoted by other national Parliaments, and summoning an EU Commissioner has no legislative effect whatsoever. What are the Government going to table in concrete terms that will assert the primacy of national—
Mr Deputy Speaker
Order. Mr Jenkin, I have mentioned that we want short interventions. That was your second intervention and you are hoping to speak as well. If you want Members to get in, we are going to have to use the time well—it is going very quickly.
Greg Clark
Thank you, Mr Deputy Speaker, I will be brief. Of course these are not panaceas; they are not solutions to the problem. I have said that when these proposals come forward in a more coherent form than they exist in these discussion documents, we will need to ensure that this House—rather than the European Parliament—unambiguously is the body we look to for the endorsement and the legitimacy of these things.
These are important debates. We are at an early stage of the discussions of economic and monetary union, but I applaud the desire of my hon. Friend the Member for Stone, on the part of the Committee, to discuss them at an early stage. I am sure that we will come back to them time and again. We are not expecting major decisions to be made in the weeks ahead, but as with the financial transaction tax and as always, we are very aware of the national interest and will always staunchly pursue and promote it. We will very much have in mind the importance of safeguarding the primacy of this House. Mr Deputy Speaker, I see from your look that both the Chair of the Committee and many other hon. Members are keen to contribute to our discussion, and I look forward to hearing their advice and guidance on both these important issues.
Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move amendment (a), leave out
‘further notes that the proposals for the Financial Transaction Tax have been challenged by the Government in the European Court of Justice’;
and insert
‘calls on the Government to support the principle of an FTT and to learn lessons from the EU proposal and work with other global financial centres, especially the US, to reach a consensus on a design set at a modest rate without creating negative economic consequences and which minimises international tax arbitrage;’.
Before I discuss the amendment, let me briefly deal with the latter set of issues that the Minister raised—the general issues of national parliamentary sovereignty, the remit of EU policy, enhanced co-operation and so on. Clearly, the European Scrutiny Committee is right to monitor the relationship between EU decisions and the need for public engagement and accountability. Most Labour Members, however, take a more positive view of the role that Britain should be playing in Europe, because the European Union should be a force for good that increases the chances of greater prosperity, peace and the values we hold being asserted with greater impact across the world. We are comfortable, though, with a degree of flexibility and variance across member states; “enhanced co-operation” could be used to our advantage here in the UK for the future.
Individual member states should have some latitude rather than follow a blind adherence to anything and everything emanating from Brussels. There is a danger that sometimes those who regard themselves as good Europeans—pro-Europeans—end up defending the poor decisions that the Commission and the European Parliament can sometimes come out with. There is nothing wrong at all with national Parliaments disagreeing with the European institutions; it is a healthy sign of an internal dialectic, a constructive challenge and a reality check for those who are more distant from public opinion. We should acknowledge that both the European Commission and the European Parliament need to be reformed to improve their accountability and transparency.
In the short time available to us today, let us not lose sight of what our electors sent us here to do. Our view is that the British people want us to focus right now relentlessly on getting jobs created, boosting prosperity, creating wealth, and helping to stimulate the economic recovery which is now three years overdue. Navel gazing into the constitutional niceties that fall between the gap of domestic or European institutions is slightly indulgent in that context; we should not lose sight of the most important priorities that our constituents want us to focus on. That is why we tabled this amendment.
Jacob Rees-Mogg
There seems a slight illogicality in what the hon. Gentleman has been saying. He says that he wants to create jobs but it has already been established that the financial transaction tax would destroy half a million jobs across Europe. How can he have it both ways?
Chris Leslie
The Minister was talking about the European variant of the FTT, but of course he was forced then to admit that we have already got a partial FTT of sorts—the stamp duty that is in place. I will discuss that in a moment, but it was very instructive that he was vehemently against the extra-territoriality aspects of the European version. Of course the EU version does need to change, and I am not saying in any way that it is perfect. His argument is, “They should stop extra-territoriality aspects in their financial transaction tax”, but our stamp duty contains many of those characteristics, and individuals—those trading UK shares and UK equities—are liable wherever that trade takes place in the world. So the Government clearly have not thought through their position on these things.
Greg Clark
The hon. Gentleman will know that stamp duty follows the issuance principle—in other words, the tax follows where the instrument is originated. The proposed FTT contains that and a residence principle, so it captures a far wider range of transactions, as well as this cascade point which stacks up and racks up the impact. So it is a very different FTT from, and a very much inferior FTT to, the stamp duty.
Chris Leslie
Why on earth then does the Minister not engage in the process, change people’s minds, get a better design, deal with this residence principle properly and let us have a financial transaction tax that is in all of our best interests, particularly across those global centres?
The Minister talked about not having objections to an FTT on equities, but he did not say anything about bonds or derivatives in that context. So I challenge him again on the principle: is he absolutely against any sort of FTT on bonds or derivatives? It sounded as though he was, but I say to him that he has to start waking up and engaging with other jurisdictions on these particular points rather than trying to stop it.
Mr Jim Cunningham (Coventry South) (Lab)
May I apologise to the Minister for coming in a little late? The same argument was used about the minimum wage. I recall that when this Government were in opposition, they were telling us that the minimum wage would cost a couple of million jobs.
Chris Leslie
The public are sick and tired of hearing more of the same from the Government—no solutions, just reasons for not doing anything differently. It should not need to be restated—although it clearly does for Government Members—that the global financial crisis and the collapse of many organisations in the financial services sector required an enormous bail-out from the public purse. That collapse in revenues led to an extra £300 billion on the national debt. As the Government have failed to turn things around, we can see that many of the consequences are still being felt today by our constituents and that we need to do something different.
Stephen Williams (Bristol West) (LD)
I just want to clarify that my position and that of my party is that a financial transaction tax could make a useful contribution to world development if it were introduced across all the global financial sectors. Is it the Labour party’s position that if the EU proposal, which, as constituted, would affect Paris, Frankfurt and perhaps London, were to go ahead, Labour would support it despite it not also applying to New York, Zurich, Shanghai and everywhere else?
Chris Leslie
I shall set out our position clearly: we do not think that the EU variant of the FTT is optimal. Of course it should be improved. We think there are better ways to design these things and I shall come to many of the arguments in a moment. I am delighted that the Liberal Democrats—well, the one Liberal Democrat who is in the Chamber—support the principle of a financial transaction tax. That is exactly why we phrased the amendment in the way that we did.
Let me read the amendment out so that the hon. Member for Bristol West (Stephen Williams) can consider it carefully, because I am minded to test the House’s opinion on it. We are calling
“on the Government to support the principle of an FTT”—
so far, so good—
“to learn lessons from the EU proposal”,
which, of course, we have to do, and to
“work with other global financial centres, especially the US”,
as clearly New York is central,
“to reach a consensus on a design set at a modest rate without creating negative economic consequences and which minimises international tax arbitrage”.
I am quite sure that in his heart of hearts the hon. Gentleman does not disagree with a single word of that.
Stephen Williams
The shadow Minister is absolutely right: I did not disagree with a single word he read out. It was, however, a selective reading of the amendment, because he left out the first couple of lines, which would leave out the reference to the fact that the Government are challenging the European Parliament’s decision in the European Court of Justice precisely because it affects this country adversely while we do not have global agreement. That is the problem.
Chris Leslie
Oh dear, oh dear, oh dear! The hon. Gentleman cannot seriously be suggesting that he is going to vote against the amendment because we have to leave out the reference to further noting that there is a Court challenge. I would have been quite happy to have tabled an amendment that did not leave out that bit of terminology, but—I am sure that you can confirm this, Mr Deputy Speaker—we did not do so because the Clerks tell me that a motion can only have 250 words. Of course, the Government use up their 250 words in the motion, so we needed to find space to insert the reference to the principle of the financial transaction tax. The hon. Gentleman should trust me: I have been considering the point and I did not want to leave anything out of the motion, but we wanted to put that reference in. I hope that with that assurance, he will think again, because the amendment is eminently supportable.
Greg Clark
Well, of all the ingenious ways to concoct a rationale. It is very instructive that out of all the 250 words, he chose to leave out the reference to the challenge to the European version of the financial transaction tax. He could have chosen many others. It is revealing that that is the part of the motion that he thought should be removed.
Chris Leslie
It is a sentence that takes note of something self-evident. Of course there is a challenge—we all know that there is a challenge and that the Minister’s agenda is to try to throw a spanner in the works and do what he can to stop that European variant of the FTT. He should consider what is in the motion; we did not particularly want to remove any of those other aspects of it. Taking note of the challenge was quite a good bit to leave out. Let me restate the case on which we must focus.
Chris Leslie
I want to make some progress, as there is not much time.
For the longer term, we must recalibrate the contribution of financial services to society. Of course, we must nurture a revival and restoration of the City of London’s primacy as the most trusted and professional place for financial transactions, but we cannot ignore the fact that most other jurisdictions are revisiting how banking and finance pays into society and what sort of responsibility we seek.
We have heard already from my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) about the IMF report after the G20 in 2009, which sought to think through new ways for the financial services sector to make a fair and substantial contribution to meeting the costs associated with Government interventions to repair it. In this country the interventions, in one form or another, cost near £1 trillion.
When in government, we started with the bank bonus tax, a payroll tax implemented by my right hon. Friend the Member for Edinburgh South West (Mr Darling), the former Chancellor. We thought that was a good idea then and we still think it is a good idea today. The Government then came along with the bank levy; we think that it is a good idea, but it has been poorly enforced. Ministers promised £2.5 billion in every year, but two years ago it raised just £1.8 billion and last year just £1.6 billion. Ministers keep coming back to the House and saying, “Don’t worry, we’ll deal with this shortfall.” The Minister has said that on numerous occasions, but we will believe it when we see it.
A bank levy and a bank bonus tax can only be part of the bigger picture. We must recognise that there is an ongoing systemic risk from financial services innovation and trading beyond the mainstream banks.
Mr Redwood
Do the Opposition think that a bank headquartered in London, with its group corporate structure in London and with international operations, should be regulated by the Bank of England to our standards or fully integrated into euro area regulation?
Chris Leslie
I think that any financial institution that could have a systemic impact on our economy and UK financial services needs to be regulated from within the Bank of England and by our regulatory structures. I hope that there will be a match between our arrangements and the European arrangements. That has been part of my anxiety about the Government’s design of the Prudential Regulation Authority and the Financial Conduct Authority in the context of the Bank of England and how they fit together with the supervisory structures in Europe. We have had that debate and I think it will continue to be played out over the longer term.
For the time being—for today—the time has come for the Government to get serious about a financial transaction tax. Doing whatever they can to put a spanner in the works and turning their back on the idea is just not good enough. At a time when deficits are persistently high because of rock-bottom growth, leading economies, including those of Britain and the United States, need alternative revenue measures from continuing financial market speculation to relieve pressures on lower and middle-income households and the public services they use.
There are many lessons from the banking crisis, the most obvious of which is that the sheer globalised might of financial trading can overpower the plans and defences of individual nation states. Governments should not just shrug and accept that fate, which is why the Opposition urge Conservatives and Liberal Democrats actively to champion a financial transaction tax and the reform agenda to harness international financial markets so that they serve our societies and our economies.
If ever there was a time to seek international consensus on a financial transaction tax it is now, as countries continue to deal with the aftermath of the global financial crisis and the large deficits it created. Deducting a tiny fraction of 1% of the value of trades in equities, bonds and derivatives could raise significant sums if introduced in a concerted way across the principal world financial centres.
The House of Commons Library has considered what would happen if we applied the EU variant of the tax in the UK and says that it would yield some £10 billion annually. I do not stand by that figure—I do not think that it is necessarily convincing or viable—but it prompts the question of what could be achieved in the UK by a tax with a more modest and sensible design.
I do not decry the 11 EU countries for forging ahead on the issue—it is a brave decision for those EU countries to go it alone. Even with the participation of Germany, France and Italy, there are still risks involved, and although we are not participating at present we should not withdraw from the debate, not least given the size and importance of the City of London.
Greg Clark
I am intrigued by what the hon. Gentleman has just said. He cites the House of Commons Library, which has said that the tax could raise £10 billion, and says that that would be useful. Is he arguing that such a financial transaction tax would be in addition to stamp duty? Is he proposing such a tax?
Chris Leslie
I think that we need to have a financial transaction tax, ideally in concert with other international centres, in addition to stamp duty. That would be a sensible and modest reaction to the modern circumstances of the financial services sector. As I said to the Minister earlier, he has got to snap out of his “no can do” attitude and to wake up and realise that the public want alternatives. They want different ideas, and the financial transaction tax could offer a good way forward.
Opposition Members support the principle of a financial transaction tax with the widest global participation. London and New York City are the two largest global financial centres. Our view is that enforcement of the FTT needs both to move in concert. The Government ought to support our amendment, which is totally unobjectionable. We should not have to wait for a change of Government to move this agenda forward. We should be building those alliances, especially with the United States. That is a very important task.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
The health of the financial services industry is important not just to London and New York, but in my constituency and my city as well. Is not the crucial point that we need international negotiations and international agreement on a way forward? We are all concerned about the impact on jobs in our constituencies. I know that in my area the biggest damage to the financial services industry has been the vagaries of the market, and the uncertainty and instability. That is what we need to tackle.
Chris Leslie
There are others who make compelling arguments about the need for intervention on the volatility of the high frequency trades, which are clearly many steps removed from the real economy. Some of the potentially beneficial aspects of a financial transaction tax might have a part to play in that, though we must be careful about negative economic consequences. We do not want the impact that the European variant might have.
Chris Heaton-Harris (Daventry) (Con)
When did this change in Labour’s policy come about? I distinctly remember, when I was in the European Parliament from 1999 to 2009, Labour MEPs who supported a financial transaction tax being slapped down by their Chancellor, who became Prime Minister. Is it a change in policy that Labour supports a financial transaction tax at European or worldwide level?
Chris Leslie
I did not know that the hon. Gentleman was so close to Labour Members of the European Parliament. I am not familiar with what they were thinking at that time, but on the Labour Benches here we are keen on the principle of an FTT and I have no idea why he is not. I do not understand why Government Members are taking such a stick-in-the-mud view of the issue when it is clear that some of the obstacles that are in the EU variant could be overcome if we engaged and took a leadership role. We have dealt with the stamp duty issue. There are ways of dealing with the extraterritorial and residence issue.
Andrea Leadsom
What is the hon. Gentleman’s assessment of the impact on job losses and costs to savers and pensioners in this country if we were to adopt the financial transaction tax?
Chris Leslie
I do not think there would be any such impact if we designed the FTT correctly and implemented it in the best interests of the UK, and if we persuaded the Americans to do likewise. Not all financial transaction taxes are the same. Stamp duty is very different from the FTT proposed by the European Union. That is a very broad concept and we need to look at it in a proportionate and modest way. I know that the hon. Lady is familiar with what I am talking about. She should read the amendment. I do not understand why she objects to it.
Andrea Leadsom
Surely the hon. Gentleman must realise that if there is a financial transaction tax, that money has to come from somewhere. If it is not coming from savers and pensioners and from moving business overseas, where does he think that money is coming from?
Chris Leslie
The hon. Lady knows very well that millions and possibly billions of financial transactions take place every day of the week—almost every hour—and it is a question of whether there is a social benefit that we should look at as a recompense to society at large, which should not see those financial transactions as totally disconnected from our economy and our society. We know that excessive risk taking and many of the problems that arose from the attachment to the derivatives trade and others got us into the problems of the global financial crisis. Rather than turning its back on it and not engaging, as the Government are doing, the financial services industry should engage in that and think about the design. Let us get it right and do it on our terms, rather than waiting to play catch-up.
Mr Jim Cunningham
Is not the answer to the Minister that Government Members want to protect the bankers? They do not want to make the bankers pay for what they did to the British economy and the world economy.
Chris Leslie
It sounds that way. The Government’s reticence to get involved and start engaging is telling. I still hold out some hope for the Liberal Democrats. The Lib Dem manifesto—who could forget that seminal political tract—promised that Lib Dems will
“work with other countries to establish new sources of development financing, including bringing forward urgent proposals for a financial transaction tax”.
I fully expect Liberal Democrat Members shortly to be in our Lobby—they can call it their Lobby, if they wish—in favour of the amendment.
Graham Stringer (Blackley and Broughton) (Lab)
My hon. Friend is making a much more moderate speech than I expected. He has made some serious logical points, but can he give an unambiguous answer to the question of whether it is his policy to go ahead with the tax if New York and Tokyo do not?
Chris Leslie
I want to do what we can to persuade New York in particular that including London and its financial centre in this would be the best way forward. The Americans already have a very small security exchange commission fee on individual transactions. In terms of the American principle, the foot is already in the door. I was in Washington DC in February to talk not only to Members of Congress, but to others involved in the issue. Far from the impression that those on the Government Benches have, I think we could work on the principle across the Atlantic.
It is true that Jack Lew, the American Treasury Secretary, has concerns about some of the extraterritorial aspects, but let us work on a solution and find a design that might fit, if that is an issue of principle. However we do that, we should not turn our minds away from it. Similarly, the cascade risk issues could be dealt with. There are issues relating to the impact on the repo market and the funding that many companies depend on there, but again, there are exemptions and ways of dealing with that problem and others, such as at what point a levy would be applied, whether the sale and buy-back of a security would be treated as one transaction, whether the charge would be waived on overnight repos and closing repos, and closing any loopholes that might fall open in the treatment of longer-term maturities. There are ways of dealing with these issues, but any Treasury worth its salt would be engaging on the issue, weighing up the pros and cons, dealing with them and making sure that we had a design of a financial transaction tax that offered some hope for the future.
A one-size-fits-all blanket approach will not reflect the complexities of our economy or the unintended impact that an FTT could have if it was poorly designed, but learning and adapting those early experiences of the EU approach should inform us in good time to engage in a proper dialogue on the most sensible joint approach between America in particular and the United Kingdom, ideally before 2015, but presumably after a change of Administration here.
Radical action is needed and a financial transaction tax is an idea whose time has come. For all the aversion to reform emanating from Whitehall and from the Minister, the public and the business community know that we are at risk of a lost decade of economic progress in this country if we do not take bold steps and change the rules of the game. A whole generation has been indelibly affected by that global financial failure, and the twin financial centres of London and New York are at the centre of what was a world-changing phenomenon. There is therefore an urgency for the UK to lead the way forward. We must move on from discussion of banks as part of the problem and start to settle on how they will help to repair our public finances and solve the challenges of our economy and society.
It is not clear what the Government’s policy is. They still claim in part that they are in favour of some sort of financial transaction tax, maybe a stamp duty, but they intend to oppose the amendment. Now is the time for action and leadership on an FTT. The public are sick of the Chancellor’s blind refusal to change course and look at alternatives, and it is now clear that we need serious change and new ideas, not more of the same. I urge the House to support the principle of a financial transaction tax and to support the amendment.
Madam Deputy Speaker (Dawn Primarolo)
Order. There is now a six-minute limit on contributions, which will leave a few minutes at the end for the Minister to reply.
Mr William Cash (Stone) (Con)
I thank the Financial Secretary for his extremely diligent approach to the debate. He has dealt with all the arguments on the financial transaction tax and I leave those on the record. It is extraordinary that the Opposition should promote the idea, but there is no need for me to go into that this afternoon. I am primarily concerned about the other aspect of the debate and the report, which is the question of primacy. Without primacy, there is no democracy in the House, and without going back to the financial transaction tax, that is a subset of the question of primacy, which is why the Scrutiny Committee insisted on having this debate. I do not think my right hon. Friend will mind my saying that there was a little uncertainty about having it, and I am indebted to him for the clarity with which he has understood this vitally important question.
Our democracy and legitimacy as a Parliament in this House is the basis on which we decide questions of taxation and spending. As my right hon. Friend the Prime Minister said, in the Bloomberg fourth principle, national Parliaments are at the root of our democracy. Therefore, it is absolutely fundamental that we stand by that. I veer away slightly from the trajectory of my right hon. Friend—which he takes for perfectly sensible reasons, but which I disagree with none the less—that somehow the blueprint, which is described as “launching a European debate” is somehow just a piece of blue- sky thinking. It is not. It is absolutely fundamental to the one question that lies at the heart of the Bloomberg speech, in the light of what is said in the Commission document and in the van Rompuy conclusions, both of which put the prime emphasis on the European Parliament, to all intents and purposes at the expense of national Parliaments. They use the word “commensurate”, but it is not commensurate. We cannot have two Governments dealing with the same subject matter. We cannot have two Parliaments dealing with the same subject matter. It is impossible, which is why we have to assert the primacy of this House, and, as the Prime Minister rightly said in the Bloomberg speech, it is at the root of our democracy.
Mr Redwood
I thank my hon. Friend for highlighting this crucial issue and bringing it to the attention of the House. Will he accept that those of us who will not have time to speak today are fully behind him in wanting to re-establish and re-assert the primacy of this House in all matters that are important to the British people, and we have a long way to go to do that?
Mr Cash
We have a long way to go, and in fact the journey is becoming longer. I am extremely glad that we are having a proposal for a referendum Bill, which will enable us to decide these questions, if it comes off. I also believe that there is an understanding among possibly 240 Government Members that there is a serious problem in relation to the EU. There are some who take a different view, but it is a tangential question for them. For us it is fundamental. The biggest demonstration of the problem is this fundamental relationship, which turns on primacy. That is what the Scrutiny Committee focused on, and that is what I will speak about, somewhat briefly.
Basically, the landscape involves a two-tier Europe. I am astonished that the shadow Minister should have said, in parenthesis, that he did not really want to go into—I paraphrase—the rather self-indulgent ruminations on institutional differences with monetary union and the like. I am certain that if the primacy question were properly explained to the hon. Gentleman and Opposition Members, they would appreciate that it is fundamental.
I pay tribute to the hon. Member for Linlithgow and East Falkirk (Michael Connarty) because he understands that. I am sure that he will not mind me referring to an interesting altercation the other day with Olli Rehn in a committee meeting that we had in Brussels. The hon. Gentleman made it crystal clear with regard to this idea of the centralisation, with the contracts that he referred to in an intervention, when he was rather abruptly caught short, The reality is that he understands that it is an infringement of our democratic relationship with the electorate. It is about the person in the polling booth voting and making a decision about the kind of Government that they want, and the kind of economy that they want. He and I may have a difference of view about whether there should be adjustments to the public purse. I would argue that if there is a black hole out there in the EU and the black hole prevents growth in the EU and we trade 50% with it, we cannot pay for the public services. The hon. Gentleman understands that.
This goes right to the heart of the issue of whether we are prepared to accept, at this fork in the road—which is what this document represents—this launching of the European debate, which we must carry forward to ensure that we retain primacy in this House over taxation and spending. The shadow Minister nods, so now he concedes that it is not a matter of self-indulgence, but a matter of significance. That is why the debate has to take place. I am afraid to say that the black hole, and the direction in which it is going—because of the two-tier arrangement that is being created, on which they are determined; I could quote from the documents, which talk about political integration that is needed within the hard core and they know what it means—will lead to a German Europe. They will control that hard core. The bottom line is that we cannot be part of it. That means that there is a change in the fundamental relationship, not merely for monetary union reasons, not merely for reasons of remorseless logic, but for political ones.
Barry Gardiner (Brent North) (Lab)
GDP is a measure of productivity, but it is not a measure of wealth, and it is not a measure of growth in the real economy. Derivative volumes have ballooned out of all proportion to the growth of the real economy. Some would say that that says much more about rent extraction by the financial services sector than a real world story of genuine and proportionate insurance.
When the global financial crisis hit in 2008, many banks were weakened precisely by their exposure to derivatives. In fact, Warren Buffett has described them as financial weapons of mass destruction. They have traded those derivatives at ever-increasing speeds. It is the institutions that are heavily involved in high value, high frequency derivative trading that would feel the biggest impact of the FTT, and whose riskier activities the rest of society has a vested interest in reining in. That is precisely the point that my hon. Friend the shadow Minister made. The public want to see these activities curtailed to reasonable levels such that they reflect the genuine risks of economic growth.
It was Avinash Persaud, the former J.P. Morgan and UBS executive, who in the Financial Times recently commented:
“this small tax on churning would limit some of these activities and help to refocus the financial system on to its purpose of the safe financing of real economic activity.”
That is a good thing and we should be open to the idea of exploring it with our colleagues across the water.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
My hon. Friend is making some strong points. Does he recall Lord Turner describing some of the activities to which he is referring as “socially useless capitalism”?
Barry Gardiner
My hon. Friend is absolutely right. The public want politicians to get back to focusing on the real productive economy. They are bewildered, frankly, by the spin-off of derivatives. I was on the floor of the New York stock exchange when it all went belly up on 24 September 2008, and I remember discussing what all the turmoil was about with members of the Senate Banking Committee in Washington a couple of days later. When I returned to the UK, it was clear that people could not understand how things had become so far divorced from reality.
The hon. Member for South Northamptonshire (Andrea Leadsom), who is unfortunately no longer in her place, made the point that an FTT on derivatives might hit pensioners. I do not think that is a convincing argument. Pension funds are obviously vital to our economy, and they buy derivatives to insure against the risk of poor performance by their portfolio, but those funds are much more likely to hold their derivatives until they reach maturity, which means that they would have to pay only a tiny amount under an FTT because their trades are far fewer—the very opposite of the type of short-term, superfast trading that grew in the run-up to the crisis. Most of the burden of paying the FTT would fall on superfast traders and speculative exchanges, which are very far removed from the real economy.
I want to introduce another note into the debate before sitting down. Our Government, along with many other participants in the United Nations framework convention on climate change, have stated that there will be a green climate fund. That fund will have to raise $100 billion each year by 2020—that is the minimum that the UK and our European negotiating partners think will be necessary to help developing countries increase their own economies, reduce poverty and offset the impact of dangerous climate change. The FTT would be an extraordinarily adept mechanism for raising those funds, which are vital to real growth in our economy. If we look at the UK economy, we will find that only 6% relates to the green economy, yet that 6% provided 30% of our economic growth in 2011. I would like to see the funds from the FTT predicated to use in the green climate fund.
Jacob Rees-Mogg (North East Somerset) (Con)
I begin by referring Members to my declaration of interests and by celebrating the 198th anniversary of the battle of Waterloo. We are debating Europe on Waterloo day, which commemorates an occasion when an alliance of nation states came together to defeat the ambition of a Frenchman to have a single European state, so it could not be a better day for debating these matters.
I will deal first with the financial transaction tax, because it is a rotten idea. The fact that we have stamp duty, a tax that has been around for centuries and is not paid on rapid transactions—it is paid only on long-term holdings—or by market makers, or for contracts for difference, or on American depositary receipts, is not an argument for saying that a financial transaction tax can work in the sophisticated financial system that the world operates today.
What the hon. Member for Nottingham East (Chris Leslie) consistently ignores is who the tax would ultimately fall on. In the wonderful world that he was creating, there was a tax that could be designed—not, of course, the one that the Europeans have designed, but another, imaginary tax—that would never seem to fall to anybody. It could take £10 billion out of the economy without anyone really having to pay for it, apart from some nasty, evil bankers who, when they take their hats off, can be seen to have horns underneath.
However, that is not the real world, because the transactions that take place in the City represent an underlying reality, be it the debt issued by the Government, mortgages sold on by banks, or pension funds being invested around the globe. Individuals would end up paying that tax because the costs of their doing business with banks would increase. We know that clearly from the mortgage market, complicated as it may be, because the ability to package mortgages and sell them reduces the cost of capital to banks and reduces the cost to people of buying their own homes. What the Opposition are saying is that they want to make mortgages more expensive. They want to put a tax on people who are least able to pay.
Chris Leslie
The hon. Gentleman was doing so well, but unfortunately the level of scaremongering undermines his whole argument. Is he really saying that there is absolutely no case for a tiny fraction, less than a tenth of one percentage point—[Interruption.] I am talking not about the EU variant but about the principle of a financial transaction tax. Is he saying that there is absolutely no case to be made for a financial transaction tax on derivatives or bonds when we have 50 basis points—half a percentage point—of stamp duty on UK equities, or is he also calling for repeal of UK stamp duty?
Jacob Rees-Mogg
There is no case for a financial transaction tax. It would be enormously destructive of this country’s financial system. The cascade effect to which the Minister referred is at the heart of this. When things are being traded dozens of times a day, what starts off as a little tax suddenly becomes a very big tax. The hon. Gentleman conjures £10 billion out of the air. We cannot withdraw £10 billion from the economy without it having an economic effect and without it being paid for by somebody.
Stephen Doughty
The hon. Gentleman is making a dramatic and scaremongering speech. If the FTT is such a terrible idea, I wonder why people such as Bill Gates, George Soros and, indeed, 1,000 of the world’s leading economists, backed the principle of such a tax.
Jacob Rees-Mogg
I seem to remember that 365 economists said that Margaret Thatcher had got it wrong in 1981, but one great and noble Prime Minister had got it right and 365 economists were flawed in their thinking. I would back the British politician against a collection of academic economists living in an ethereal world.
A financial transaction tax would ultimately be paid for by the British people through higher housing costs, lower pensions and possibly through higher Government borrowing costs leading to higher overall taxation. Of course the Labour party wants higher taxation, because that is what it has always been in favour of—more taxes, more spending and a worse economy.
I would now like to move on to the points made by my hon. Friend the Member for Stone (Mr Cash), because they, too, are extremely important. They relate to the European Union’s ambitions to become a superstate based on the euro. I accept that we are outside the euro, but that is not entirely a protection from the development of the EU along the lines of a single state with a single Government based in Brussels. Of the papers we are considering today, there is one from the European Commission showing that it wants within 18 months to have a eurozone seat on the International Monetary Fund’s board, that it wants within five years to co-ordinate eurozone tax and employment policies, and that it wants a political union with adequate pooling of sovereignty with central budgets as its own fiscal capacity and a means of imposing budgetary and economic decisions on its members. That means a single Treasury and a single fiscal union.
The danger for us is that, as the European Union obtains more powers for the eurozone, our association with it will become very different from the present one, and one in which we have little influence over what happens because we are outside it. Alternatively, we could get dragged into the arrangements because, as our experience of the European Union shows, our opt-outs will ultimately expire. We have seen that happening with the social chapter, and we will see it again next year with the decision on title V of the Lisbon treaty. We should therefore be very careful about the ambitions of the European Commission in relation to this single government for the eurozone.
We should also be cautious about what the President of the European Union, Mr van Rompuy, has to say. He has published a paper lauding the success of the euro and all that it has done. It states:
“The euro area needs stronger mechanisms…so that Member States can reap the full benefits of the EMU.”
That is a fascinating way of phrasing it: “the full benefits”. After all the other benefits that they have so far received, there are further benefits to give the member states if only they will join a tighter system of governance. I wonder whether the unemployed Greek youths have noticed all the benefits that they have received from this wonderful beneficent eurozone.
Mr van Rompuy has also been kind enough to say:
“‘More Europe’ is not an end in itself, but rather a means for serving the citizens of Europe and increasing their prosperity.”
I am proud to say that I am a subject of Her Majesty, and not a citizen of Europe. The idea that we need more Europe to benefit the citizens of the member states is palpably false. The more Europe we have had, the worse the situation has become. The more powers that have accreted to Europe, the more bureaucratic, less democratic and worse run has become the whole system of the European Union. The economies of the European Union have suffered because of the euro.
Jacob Rees-Mogg
I apologise, but I will not, as I have only 45 seconds left, and counting. I have had two extra minutes already.
I want to finish on the point of democratic legitimacy and accountability. I am glad that my right hon. Friend the Minister for Europe is in the Chamber, because it was his Bill in 2011 that so wisely reminded us that United Kingdom powers are ceded to Europe only by Act of Parliament and can be withdrawn. However, van Rompuy says that
“the involvement of the European Parliament as regards accountability for decisions taken at the European level”
is key. I deny that. It is this House that is key, and it is this House that should maintain our democracy.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
I have news for the hon. Member for North East Somerset (Jacob Rees-Mogg). Bill Gates was not an academic. Indeed, the hon. Gentleman might want to make a comparison with his own career, which his declaration of interest shows to have been in banking. He has defended that business strongly. Bill Gates is now doing something that a financial transaction tax would achieve universally, across the world. It would raise money from the speculative, gambling casino economy that the world has become and give it to those who are often mineral rich or agriculture rich but massively exploited by those of us who live on the fat of that speculation.
For me, a financial transaction tax is suitable only if it is a worldwide arrangement. It is certainly not suitable for the money-raising powers of the European Commission, yet that is what the Commission is proposing: just another mechanism for a fat, gorged organisation to take money from yet another sector of the economy. If it got rid of the common agricultural policy failures, 40% of the EU budget would be available for positive use, so perhaps the Commission should look at that, rather than at trying to get more money in from a transaction tax.
I was glad to hear my hon. Friend the Member for Nottingham East (Chris Leslie) clarifying our position on this matter, because I was worried that the drafting of our amendment did not make it 100% clear that we opposed the introduction of a European transaction tax at any time. Only in the context of advancing development worldwide can we justify the imposition of such a tax. If it is not done on that basis, it will have an adverse effect.
The hon. Member for South Northamptonshire (Andrea Leadsom), who is no longer in her place, spoke against the introduction of any kind of financial transaction tax. She did not seem to realise that, according to her argument, stamp duty, which is basically a national levy for national spend, should theoretically also be abandoned. Her argument was that any kind of financial transaction tax prevents jobs from being created. However, as we use taxation for positive purposes in most cases, there are reasons why people should pay taxes—even those fat bankers with horns on their heads whom the hon. Member for North East Somerset described.
Mark Lazarowicz
Before my hon. Friend moves on, I want to ask a question related to an international financial transaction tax. It appears that progress has been made on getting the UK overseas territories to be more transparent on tax. Is this not a good opportunity to encourage them also to be part of an FTT system, because we all know that a lot of the dodgy transactions take place in bank speculation in some of the countries for which we have an indirect responsibility?
Michael Connarty
That is part of a separate debate, but I agree that all territories controlled by any of the world’s major economies should be not just transparent, but properly taxed. Just because someone sticks a name on a door in the Cayman Islands and pays a Cayman citizen theoretically to be the director, there is no reason why they should not pay taxation wherever they make their money in the world. That would certainly be helpful.
Turning to economic and monetary union, the hon. Member for Stone (Mr Cash) lauded me highly, but slightly falsely. My main concern with Olli Rehn’s paper on a blueprint for a deep and genuine EMU is that it strongly suggests that countries will have their primacy removed. That is even more the case with the van Rompuy paper, “Towards a Genuine Economic and Monetary Union”. It is clear that those documents take away, in the first place, from the weakest of the 17 any right to set their own budget or any budget that has not been agreed by the Commission, and the associated penalties would further damage the economies of those countries.
My great problem with the proposals is that they are a threat to the European Union. I believe that they have become obsessed with the euro. Their documents refer again and again not to the European Union, European citizens, European Governments or European projects, but to the euro. The countries that are not keeping in line with the stability and growth pact are a threat to the euro, which has become the raison d’être of the European project for many people at its centre. The hon. Member for North East Somerset has described it, correctly, as a token for them to control Europe through a single body, the European Commission, in partnership, as its documents keep saying, with the European Parliament. We have no real say in this. The European Parliament legitimises what is done by the European Union. The power of the Lisbon treaty has not just tipped over; it has fallen into the abyss of the Commission-controlled EMU.
There is a negation of primacy and countries are being forced to do things in their budgets that are bad for their citizens. We are supposed to be a co-operative European Union. I voted for it in 1975 and would do so again, but I would like more tools to fight against those centralising powers.
There is also a failing austerity plan in all these countries: Greece, Italy, Portugal and Spain will be weaker economically and more impoverished and indebted at the end of this than they were at the beginning, but for what reason? What contribution will that make to the stability of a new economy? It means that the powerful countries in the north will become more powerful over the rest. I believe that when they are finished with the weaker countries, they will come for the rest of the 17 and start to control their budgets. If they had their way and if we were not outside the euro, they would be telling us that we could not do what we are doing to try to deal with our economy—not that it is being done very well in this country, because the austerity measures here parallel those demanded by the European Commission of the failing economies in the south of Europe.
I am worried that we will not have the ability in the future to ameliorate what will happen in the general European economy. That is what I mean by primacy. Not only will the primacy of those countries be destroyed; our ability to effect and do something positive for the economies of the European Union—through growth and sharing burdens, rather than through penalising and punishing countries—will be weakened.
Finally, when did the stability and growth pact not have any teeth or do anything? It was when Germany broke it again and again as it built investments in its own economy to make it what it is now: a strong, growing economy. I am worried that, as a result of the primacy that will be lost all over Europe, countries will lose the ability to reflate and build a proper economy.
Greg Clark
In the couple of minutes available to me, I will attempt to respond to what has been a spirited debate on both sides. It has been so spirited that the speech of the hon. Member for Nottingham East (Chris Leslie) rather startled the hon. Member for Blackley and Broughton (Graham Stringer), who did not expect to hear anything so—
Greg Clark
It was fainter praise than good.
I am grateful to my hon. Friend the Member for Stone (Mr Cash) for his kind words. I am glad that we were able to accommodate the two debates that he was keen to have. I welcome the contribution of the hon. Member for Brent North (Barry Gardiner), the characteristic tour de force on Waterloo day from my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) and the flinty contribution of the hon. Member for Linlithgow and East Falkirk (Michael Connarty), who shares many of the views of my hon. Friend the Member for Stone on the primacy of this place.
This has been a fascinating and enlightening debate. We have discovered that the policy of the Opposition in calling for a financial transaction tax turns out to be to call for an additional financial transaction tax. As has been clear from the exchanges across the House, we already have a financial transaction tax in this country; it is called stamp duty. The hon. Member for Nottingham East made it very clear that he proposes an additional tax on British savers, pensioners, mortgage holders and business of up to £10 billion. He said that that would come not from the magic—
Chris Leslie
On a point of order, Madam Deputy Speaker. It is important that the Minister’s misinterpretation of what I said should not be allowed—
Madam Deputy Speaker (Dawn Primarolo)
Order. That is not a point of order, but a point of debate. Resume your seat, Mr Leslie.
Greg Clark
I am grateful, Madam Deputy Speaker. It will be clear for people to see on the record that this is another proposed tax from the magic money tree that the hon. Gentleman frequently has recourse to.
We are not against a financial transaction tax in principle. We have one in stamp duty. The idea that we should not refer this matter to the ECJ is totally inappropriate. I commend the motion to the House.
Question put, That the amendment be made.
European Elections 2014
(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Europe (Mr David Lidington)
I beg to move,
That this House takes note of European Union Document No. 7648/13, a Commission Communication on preparing for the 2014 European elections and enhancing their democratic and efficient conduct, and No. 7650/13, a Commission Recommendation on enhancing the democratic and efficient conduct of the elections to the European Parliament; notes that whilst European political parties are free to support candidates for Commission President, this does not limit the European Council’s selection of a candidate; agrees with the Government that the suggestion for a common voting day across the EU is unhelpful and would achieve the opposite of the stated intention of increasing voter turnout; and further notes that there is currently no indication that these documents are going to be followed up by formal legislative proposals.
I welcome this opportunity to discuss these European Commission recommendations in the House. It is now less than 12 months until the 2014 European parliamentary elections due to be held from Thursday 22 May to Sunday 25 May. This debate is therefore timely. [Interruption.]
Madam Deputy Speaker (Dawn Primarolo)
Order. I am sorry Minister. Members who wish to have private conversations would be well advised to leave the Chamber. There are those who wish to debate the European recommendations, and it is not very courteous to the Minister either.
Mr Lidington
On 12 March, the European Commission published a set of recommendations and a communication concerning the 2014 European parliamentary elections whose contents also touched on other areas of European political life. The proposals do not carry legal weight; they are non-binding suggestions to member states and national and European political parties. The Government always welcome contributions to the ongoing debate about democracy in the EU, but I believe that these specific proposals mistakenly assume that there is a single European political identity—a single European demos—and ignore the fact that the fundamental source of democratic legitimacy within the EU is derived from national Parliaments accountable to their national electorates. I believe that we need to work to strengthen the links between national democracies, their Parliaments and EU institutions.
We consider it unlikely that these recommendations will become formal legislative proposals from the Commission, but if they were to take that form, they would need to be decided by unanimity. The relevant treaty articles are articles 22(2) and 223(1) of the treaty on the functioning of the European Union. As you will recall, Madam Deputy Speaker, under the European Union Act 2011, any measure introduced by the Commission and agreed by the Council and Parliament under article 223(1) would also require an Act of Parliament for the United Kingdom to give it assent. The consequence of that is that the UK would have a veto over any such proposed change.
I want briefly to set out the recommendations in more detail, addressing those that concern the conduct of European elections, before turning to the Commission recommendation that European political parties make known their candidate for the post of Commission President. The first and second recommendations put forward by the Commission are intended to promote connections between European political parties and national political parties. The proposals suggest that national political parties should explain their connection with European political parties and make clear that connection in their electoral documents. Political parties in this country are perfectly free to advertise their European affiliation if they so choose. Ballot papers in the United Kingdom will continue to be produced in accordance with UK law, as will party political literature. If a United Kingdom party wishes prominently to display its European political affiliation, it is free to do so, but there should be no question of compulsion.
Recommendation 4—the suggestion that member states ought to agree a common voting day for elections to the European Parliament—has attracted some attention in the media. At the moment, elections to the European Parliament take place over a four-day period, which in 2014 is set to fall between 22 and 25 May, as I mentioned earlier. I fear that a number of right hon. and hon. Members might have read reports that the EU intends to force the UK to hold elections on a Sunday. It is my happy duty to inform the House that this is not the case. The UK will continue to hold elections on a Thursday, as is our tradition, and I am sure that other member states will rest equally assured that they will be able to continue to hold elections on their day of choice. To mandate that a member state change its election day would achieve the very opposite of the declared aim of the proposals—namely, an increase in voter turnout—and would be detrimental to electoral diversity across the EU.
Kelvin Hopkins (Luton North) (Lab)
I have much sympathy with what the Minister is saying, but he seems to be eliding two things: the choice of election day being a national matter, not a European Union matter, and whether it should be a Thursday or a Sunday, which is the other component. They are two different questions. Whatever day it is, does he agree that we should choose it? That is the important point.
Mr Lidington
I have no quarrel or disagreement with the hon. Gentleman on that count.
Mark Field (Cities of London and Westminster) (Con)
Much as I think it would be quite wrong for anything to be mandated—the decision should be made locally—the so-called tradition of Thursday elections in the UK goes back only about 100 years. Perhaps it would be more sensible to consider a weekend election, for all the convenience factors that would come with that, but also because, in the case of these elections, it might allow us to hold elections on two weekend days some three or four weeks apart, rather than having to change our day for local elections, as we have, from the traditional first Thursday in May to 22 May, which is what is now envisaged for those elections and the European elections next year.
Mr Lidington
My hon. Friend is right that it used to be the case that general elections in this country took place over a number of days. Indeed, it was not completely uncommon for candidates to put themselves forward for election in more than one constituency. If the House were to consider a change of the sort that he and the hon. Member for Luton North (Kelvin Hopkins) suggest, it ought to be debated in the context not solely of European parliamentary elections, but of our electoral practice more generally, covering general and local elections, as well as European elections. I am sure that my right hon. Friend the Deputy Prime Minister will be interested to hear any proposals that Members wish to make.
Jim Shannon (Strangford) (DUP)
What consideration have the Government and the Minister given to the opinion of faith groups in relation to holding elections on any day other than a Thursday, and certainly not on a Sunday?
Mr Lidington
The hon. Gentleman puts his finger on one of the key problems with shifting away from our practice of voting on a Thursday—namely, that to pick any day over the weekend from Friday to Sunday would inevitably begin to trespass on the religious practices of faith groups in various parts of the United Kingdom. We would need to look at how the timing of a polling day might have an impact on people from such groups, and not just in respect of the voting day because a large number of constituencies and local authorities still count votes the day following polling day, so that has to be taken into consideration, too.
Andrew Percy (Brigg and Goole) (Con)
I am reassured by what the Minister says. I can tell him that, whether it be held on a Sunday, a Thursday or any other day, the people of Brigg and Goole will be equally uninterested in the European parliamentary election. I agree with my right hon. Friend on what he says about maintaining our Thursday elections. Has he assessed how much the ridiculous situation of paying for security and the guarding of ballot boxes from Thursday to Sunday costs us? Plenty of other countries around the world, such as Canada, have results coming in for elections held on the same day, but the results from eastern Canada are known before the people in western Canada have finished voting. Why can we not just go back to counting on a Thursday and save the taxpayer some money?
Mr Lidington
That is an interesting view. I do not know whether the Cabinet Office has the figures for which my hon. Friend asks. I think that the agreement reached some years ago within the EU—that voting should take place over a number of days—was designed to accommodate both the fact that different countries had the habit of voting on different days of the week and the wish not to declare votes early in case the votes in one country affected how votes were cast in another country. I have to say that I rather agree with my hon. Friend, as the prospect of that happening is, in practice, pretty slim. I doubt whether he will be influenced in his campaigning by the outcome of elections in Greece or Malta. The arrangements we now have were incorporated into European law, and it is not likely to change in the foreseeable future.
Mr Lidington
I shall give way briefly, but then I want to make some progress.
Kelvin Hopkins
We are proposing the alternatives of Sunday and Thursday, but there is also the alternative of Saturday, which would be convenient for many industrial workers. Saturday is a day of rest for many, perhaps not all, but this day would avoid the religious complications that the Minister mentions.
Mr Lidington
I hear what the hon. Gentleman says, but the problem with Saturday is, first, that a number of Jewish communities would find it difficult and, further, that we would still be left with the problem of asking people to count votes and declare results on the Sunday, which would present a difficulty for a number of Christian denominations. This is not a straightforward issue, but as I say it goes beyond the scope of the European Commission recommendations and it is probably best addressed in the context of a wider debate about the timing of elections in the UK.
The four technical recommendations from the Commission—recommendations 5 to 8—are directed at improving the conduct of European elections through EU directive 93/109/EC on information exchange. These four recommendations are not new proposals, but rather suggestions to member states on how to enhance their implementation of the existing requirements of the directive.
The Government are committed to fulfilling their obligations under this directive and we currently implement the legal requirements in full. We do, however, remain concerned about the practical demands of this process and about the burden of implementation being much greater than the prevalence of the problem it is designed to address—namely, double voting. The Government have noted the Commission’s recommendations in this area and we will take them into account in our preparations for the 2014 European parliamentary elections.
I should add, to reassure the House, that any move that the Commission might hypothetically make in the future to incorporate those four recommendations in a revised version of the directive would require unanimity under article 22(2) of the treaty on the functioning of the European Union.
The Commission’s third recommendation states that European and national political parties should make known their nominations for the post of President of the European Commission. Some European political parties are very likely to nominate particular individuals as their candidates for the post. They are free to do so if they wish, and I am sure that that will result in a lively debate among political parties. Indeed, I look forward to hearing from the hon. Member for Wolverhampton North East (Emma Reynolds) whether she and her party intend to campaign ardently in favour of Mr Martin Schulz, the President of the European Parliament, who is currently the only declared candidate on behalf of the Party of European Socialists as the proposed successor to President Barroso.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
On a point of order, Madam Deputy Speaker. Would it be relevant to our business if my hon. Friend the Member for Wolverhampton North East accepted the Minister’s invitation to discuss who might or might not be a candidate? Where does that feature on the Order Paper?
Madam Deputy Speaker (Dawn Primarolo)
I think that the Minister is stretching a point, as he has done several times already. I am grateful to the right hon. Gentleman for making that point. Perhaps we could return to the specifics of the debate, and any political jousting could take place outside the Chamber afterwards.
Mr Lidington
I am sure that, if the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke) wishes to put himself forward as a rival to Mr Schulz, he will find some support on the Opposition Benches.
It is being suggested in some quarters, and was hinted at in the Commission’s communication, that only one of the candidates named by European political parties can become President of the European Commission. I have read—as, I am sure, have other Members—a fair bit of confused reporting on the process for selecting the next President, and it may help the House if I briefly explain the system as it is described in the treaties.
As is stated in article 17(7) of the treaty on European union, the European Council, acting by qualified majority,
“Taking into account the elections to the European Parliament and after having held the appropriate consultations… shall propose to the European Parliament a candidate for President of the Commission.”
The candidate shall then be elected by a majority of the European Parliament’s Members. If the candidate cannot attain a majority, the European Council will propose a new candidate.
The House will note that there is no mention in the treaty of European political party candidates for the post of Commission President. In our opinion, such candidates were not envisaged by the requirement for the European Council to take account of the European Parliament elections. While there is nothing in the treaty to prevent European political parties from running candidates, there is also nothing to mandate the European Council to limit its selection of a Commission President to those in that particular pool, and any proposal to impose such a mandate would require amendment of the treaty.
Graham Stringer (Blackley and Broughton) (Lab)
This is mind-bogglingly irrelevant to the problems of my constituents. Would it not be better for the Minister to focus on abolishing six of the seven Presidents of the European Union?
Mr Lidington
I am speaking about this because it is very relevant to the communication which the European Scrutiny Committee has referred to the Floor of the House—indeed, it relates to one of the integral parts of that communication. While I am the first to argue that the European Union ought to slim down its bureaucracy, and I would probably agree with the hon. Gentleman that there are some European institutions whose absence we would not mourn because they do not contribute much to the well-being of European citizens, I believe that the arrangements for the election of a successor to President Barroso are quite important, because the holder of that office will be in a position to exercise a significant influence on policies that affect this country. It is therefore important that we are clear about the rules under which his successor will be selected. It is also important that the UK Government make it clear that we will resist any attempt to interpret the treaties as limiting the choice available to the European Council in a way that is not justified by the text of the treaties, but which some in other parts of Europe are keen to see.
Jacob Rees-Mogg (North East Somerset) (Con)
On that point, how does my right hon. Friend interpret the start of article 17(7) of the treaty on European union:
“Taking into account the elections to the European Parliament and after having held the appropriate consultations”?
Surely the only way to take into account the elections to the European Parliament is to consider the results by political party. If the Commission brought forward specific proposals in this regard, what legal response would the Government have, or how might the European Court of Justice interpret it?
Madam Deputy Speaker (Dawn Primarolo)
Order. Minister, you are stretching the debate very widely, as the document is not legally binding and therefore that is not to do with why this matter has been referred to the Floor of the House. This is not a blue-sky thinking exercise. Of course refer to the article to which the hon. Gentleman refers, which lays out the process, but please stick to what is on the Order Paper and what is before us now, not in future.
Madam Deputy Speaker
Mr Jacob Rees-Mogg, I am speaking to the Minister, not you. I was not ruling what you said out of order.
Martin Horwood (Cheltenham) (LD)
On a point of order, Madam Deputy Speaker. The motion specifically refers to the proposals from the Commission, which include matters relevant to the nomination of candidates for the post of President. The article quoted by the hon. Member for North East Somerset (Jacob Rees-Mogg) is therefore directly relevant. Are we free to discuss it in that respect at least?
Madam Deputy Speaker
With respect, Mr Horwood, if you had listened to what I said, you would have heard me say article 17(7) is relevant. I was just suggesting to the Minister that, given that the whole document is not legally binding, while it is important that he explains the current arrangements, I hope he will not continue to stretch the debate rather wider than the document in question provides for. So you can of course discuss article 17(7).
Mr Lidington
In answer to my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), let me explain our view on article 17(7). The European Council retains complete freedom to nominate whom it wishes. It is required to take into account the elections to the European Parliament, but there is nothing in article 17(7) or elsewhere in the treaty on European union that suggests the European Council is in any way mandated to limit its election to a particular pool of candidates. Indeed, it may be that no one political family commands a majority in the European Parliament, or it may be that different combinations of European political parties within the European Parliament prefer one candidate rather than another, and it may not be possible, simply by looking at which of the larger European groupings ends up in the lead after the elections next year, to determine what the preference even of the Parliament itself might be as to the preferred candidate.
Jacob Rees-Mogg
On page 14 of the package before us of the Commission’s communications, it specifically quotes article 17(7) in support of its point about political parties and the European presidency. I therefore wonder if it is reading more into article 17(7) than the Minister believes is there.
Mr Lidington
I believe it is, and I think it is fair to say that there are plenty of people in and around the European Commission, and indeed the European Parliament, who believe—perfectly honourably—that the way forward is to move towards a system in which it is the European Parliament, rather than the Heads of Government assembled in the European Council, that has the key role in nominating the President of the Commission and thereafter holding the Commission to account. These are people who believe that it is right and possible to create a European demos, and see that step as a way so to do. What I am saying to my hon. Friend is that I see, and the Government see, nothing in the treaty that requires the European Council to limit its freedom of action in the way that some are suggesting.
Chris Heaton-Harris (Daventry) (Con)
This point is not on article 17(7) per se. The motion uses the words
“notes that whilst European political parties are free to support candidates”.
The Minister will know that European political parties have huge amounts of money, which they are not allowed to spend on political campaigning in the course of elections. Surely this document has the potential to ride a coach and horses through that law, internal though it may be to the Parliament, because there are political parties across Europe, including some in the United Kingdom, that do use European political party funding to fund their whole party hierarchy.
Mr Lidington
It is important to distinguish a couple of points. First, nothing in these Commission documents is a legally binding proposal. I repeat: these have the status of recommendations, nothing more. The recommendation we are now debating is addressed to European political parties and national political parties, and it deals with how the Commission thinks they might better arrange their affairs. It is entirely up to both the European and the national political parties to decide whether they pay any attention to the Commission’s recommendations or not.
Secondly, there are provisions in the treaty on the functioning of the European Union to govern the conduct of European parliamentary elections. Those are embodied in a statute based on the relevant articles of the TFEU. For that statute to be amended, or for other changes to be brought forward, unanimity would be required under article 223, as I said earlier. The question of party political spending, including by candidates within the United Kingdom, is governed by the relevant United Kingdom statutes, including, most obviously, the Political Parties, Elections and Referendums Act 2000. At the moment, there is a clear legal distinction between certain measures that are set at European level and require the unanimous agreement of every member state, and the rules on party fundraising, party financing and election expenditure, which remain a matter for member states and are not touched in any way, even by these Commission recommendations.
I wish to conclude on the following point. I said at the start of my remarks that the Government believed there is a genuine problem of lack of democratic legitimacy within the European Union, but that these proposals suggested by the Commission do not provide the answer to that crisis. The Government’s preference would be to see a greater role for national Parliaments in holding European decisions to account. Although I will not expatiate on the detail, the ideas that my right hon. Friend the Foreign Secretary and I have proposed in recent weeks on the greater use of the yellow card mechanism or creating a red card mechanism, giving national Parliaments the right to block legislation that need not be agreed at European level, are intended as a contribution to a vigorous debate, which we have now launched, within Europe, not just within the UK. The absence of democratic legitimacy and adequate democratic accountability within the EU is a major political question that needs serious debate and consideration right across the European Union, but it is not answered by the proposals before us this evening.
Emma Reynolds (Wolverhampton North East) (Lab)
I welcome the opportunity that the European Scrutiny Committee has given the House to scrutinise these documents from the European Commission, one a communication and the other a recommendation, which make suggestions about the conduct and organisation of European elections by member states. The stated objective of the European Commission is to increase the democratic legitimacy of the EU and boost turnout in European elections. Fortunately, European communications and recommendations, as their names suggest, do not have legal force and, as the Minister stressed, the documents are not binding on member states. That is the only good thing about them.
The Opposition are pragmatically pro-European, but we do not agree with every directive, proposal or suggestion that comes out of European institutions. In this case, in particular, we disagree with the suggestions made by the European Commission and hope that our Government, when they are in Brussels negotiating on these and other documents, will put forward their opposition. I agree with the words in the motion.
Mr David Nuttall (Bury North) (Con)
On the question of democratic legitimacy, does the hon. Lady agree that one problem is that European elections are held according to the strange d’Hondt form of proportional representation? The vast majority of British electors have no idea how it operates, which might well be part of the reason why turnout is so low in this country.
Emma Reynolds
Turnout is low for many reasons, and I agree that that is one of them. I would have preferred us to keep the system we had before 1999, under which we had constituencies that were bigger than the Westminster constituencies, as we have fewer MEPs than we have MPs but they retained the link with their constituency and their local party—the constituency Labour party for us, or the Conservative association for Conservative MEPs. I am not quite sure what the Liberal Democrats call their local parties—
Emma Reynolds
They might not be sure.
The MEP would not only have a home constituency to look after but would have a political home to which they could refer, which was manageable and of a manageable size.
Kelvin Hopkins
I must say that I am delighted by what my hon. Friend has just said about first past the post as opposed to list system PR. Does she think that our party might possibly make a commitment at the next election to restore first past the post for European elections in Britain?
Madam Deputy Speaker (Dawn Primarolo)
Order. Much as the hon. Lady might be tempted by that question, can we stick specifically to the European document before us? Manifestos can be written elsewhere.
Emma Reynolds
My overall objective in this House is obviously to make my hon. Friend the Member for Luton North (Kelvin Hopkins) happy, but I will defer to your instructions, Madam Deputy Speaker, and will not go down that line of argument.
In this case, and in others, the European Commission seems to have disregarded a very important principle that applies to European co-operation—that is, the subsidiarity principle. It is clear and obvious to me and Members across the House that it should be the decision of democratic political parties in the UK to decide how to approach European elections and how to campaign for them, and that it is up to Ministers in our Government and to this Parliament to decide on which day we should hold those elections. One of the most concerning elements of the proposals is the one to hold the European elections on the same day across the European Union. The Commission argues that member states should agree on
“a common day for elections to the European Parliament, with polling stations closing at the same time.”
That argument is problematic in two different ways. First, as has already been stated, we have a tradition in the UK of voting on a Thursday that, I understand, goes back to the 1930s. It is now fixed in law that local and general elections must take place on a Thursday. The date of European elections is not fixed in law but, according to section 4 of the European Parliamentary Elections Act 2002, European elections should be held on a date fixed by the Secretary of State for Justice. Nevertheless, here as well, the convention is that European elections take place on a Thursday, in line with other elections, as I described.
There are different traditions in different member states of the European Union. We, the Danes and the Dutch usually vote on a Thursday, the Irish vote on a Friday, and some other member states tend to vote on a Saturday or a Sunday. I strongly believe that it should continue to be a decision made by member states’ Governments as to which day of the week elections should be held. Here in the UK it is essential that there is uniformity across the different sets of elections, so general, local and European elections should all take place on a Thursday.
There is already a problem with low turnout in European elections. I would like to see a higher turnout in those elections. The Commission states that it wants to boost turnout and increase democratic legitimacy. I fear that its proposal to hold elections on the same day throughout the EU would do exactly the opposite of the stated objective. It might further decrease voter turnout and would therefore do nothing to improve democratic legitimacy.
Secondly, the idea that polling stations should close at the same time is also problematic because of the differences in time zones across the EU. Polls that close at 10 pm in the UK would close earlier in Greece, for example. As early as 1960, the European Parliament adopted proposals for a “uniform procedure” for its member states’ elections, to be used by all member states, but in reality, five decades later, there is no uniformity in virtually any aspect of European elections. In most member states, including the UK, voters choose from a party list, whereas in other member states the single transferable vote is used. Voting ages vary as well, so there is no uniformity in these aspects of European elections. Artificially imposing the same election day would be problematic and, as I said, counter-productive.
The Commission also proposes that national political parties make clear their affiliation to pan-European political parties. Again, the European Commission has disregarded the principle of subsidiarity. It is none of the Commission’s business how my party—the Labour party—or the Conservative party, the Liberal Democrats or others want to campaign in the European parliamentary elections. It is up to the respective national parties to decide how best to campaign in those elections. We strongly believe that it should be for national parties also to determine the content of their party broadcasts, without suggestions from the European Commission.
There are some questions that I would like to put to the Minister. Have the Government informed the Commission of their concerns about the Commission’s suggestions, as set out in the motion? What is the Government’s view on how the Commission is likely to follow up these two documents? What is the view of the other European institutions—the European Parliament and the rest of the Council of Ministers?
Increasing participation in European elections and improving the democratic legitimacy of the European Union are objectives that we share, but the proposals that we are debating today will not achieve that aim. They are counter-productive and ignore the fact that according to the principle of subsidiarity, member states and not the European Commission should have responsibility for administering elections within their borders. We agree, as the Minister set out, that national Parliaments should have a greater role and we congratulate the Foreign Secretary on adopting the proposal of the shadow Foreign Secretary, my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander), for a red card system, which my right hon. Friend proposed in January this year. It took the Foreign Secretary a few months to come round to the idea, but we are glad that he is there. Such proposals should increase the democratic legitimacy of European Union decision making.
We are therefore content to support the Government’s motion on the European Commission documents, and urge the Government to make the strongest possible representations to the Commission that these proposals should be taken no further.
Martin Horwood (Cheltenham) (LD)
Being asked to support a motion that takes note of a non-binding set of documents means that this is possibly the least controversial European debate that we have ever had in the House, and I am entirely happy to support the motion. I agree with quite a lot of what has been said by Members on both sides of the House. If the Commission’s proposals are trying to encourage engagement and involvement in European politics, they are missing the mark. That will never be transformed by prescribing the minutiae of voting days or even by talking about precisely how and when who suggests what candidate for posts in the Commission. We have a responsibility as politicians to address these issues, and perhaps to stop discussing endlessly the minutiae of treaties and referendums and such matters—banging on about Europe, as the Prime Minister once memorably put it—and to focus on jobs, crime, the environment and all the important things that Europe has an impact on in our constituents’ lives, but that are rarely talked about in that context.
The media also have some responsibility to report European politics and debate on such issues instead of constantly reporting Europe as if the only debates were about referendums and treaties. It is frustrating that in other European countries news programmes report debates on issues of substance in the European Parliament, which never seems to happen in this country.
With regard to the specifics of the suggestions in the documents, on the voting day I agree with the hon. Member for Wolverhampton North East (Emma Reynolds) and others that there are huge practical problems with having a single voting day, and even more with having single voting times. We should be looking for more flexibility in voting as a possible contribution to higher turnouts, not lower, which these proposals seem to suggest. People lead busy lives, voting often is not their No. 1 priority on a particular day; that might be getting to and from work, getting the children to school or doing a million other things. I am sure we have all been in the situation of trying to persuade that one last voter to go out and vote, but finding that it is not quite as important to them as it is to us. Of course it is very important, and we are right to try to persuade people to turn out, but we need to make it easier, not more difficult.
That might mean, as the hon. Member for Cities of London and Westminster (Mark Field), who is no longer in his place, suggested, looking at weekend voting, and, as used to happen, at elections taking place over several days. That was the tradition for hundreds of years in elections to the Westminster Parliament. It might mean encouraging more postal voting, making it generally more flexible and open, and not being quite so hung up about having an election on a particular day at a particular time. We might end up testing out having elections on a Saturday or Sunday, or both.
Kelvin Hopkins
I very much agree with the hon. Gentleman. If we had elections over two days at weekends, Jews could vote on Sunday and Christians could vote on Saturday, and solve the problem.
Martin Horwood
Absolutely. And Muslims could vote on both, and the election could start on Friday. We could be very flexible. Cultural traditions might also be relevant. The Commission’s proposal fails the basic subsidiarity test. This does not need to be mandated, therefore it should not be, and there seems to be wide agreement across the House on that.
The proposals for the candidates for the presidency of the Commission are rather curious. I am proud to be a member of Cheltenham Liberal Democrats, of the Liberal Democrat party in the United Kingdom and of the Alliance of Liberals and Democrats for Europe, and intensely proud to be a member of Liberal International, where Liberals are fighting for things that we take for granted at risk to their own lives in many parts of the world. I know that other parties have slightly more hang-ups about being members of European political parties and have had some difficulties in that regard, but the proposals as far as they go seem to be fairly unexceptional.
The Commission’s proposals effectively talk about encouraging European political parties to nominate candidates, but actually they can already do that. A report by my colleague Andrew Duff, which the European Parliament will vote on at the start of July, goes rather further. It states that
“the candidate for Commission President who was put forward by the European political party that wins the most seats in the Parliament will be the first to be considered”
with a view to
“ascertaining his/her ability to secure the support of the necessary absolute majority in Parliament”.
That might be a legitimate and interesting way of interpreting article 17.7 of the treaty, but so long as they must only have regard to the candidate, the Councils of the European Union will not actually be obliged to choose that candidate or even to consider them in preference over others.
We need to create a situation that encourages more involvement, openness and accountability, and in that respect I think that it would be good to have greater democratic involvement in the process of promoting and choosing candidates, so long as it does not mandate it, because I think that a slight constitutional issue would start to emerge if we drifted into the mandation of candidates by political parties. That would start to blur the line between who are the Governments and politicians and who are the civil servants, which is a line that we draw very carefully in this country. In a sense, the Commission is the equivalent of the civil service and the permanent secretaries. In many respects, it should be the impartial servant of the political will of the Parliament and of the people and Governments of Europe in the Councils. We can decide at some future stage—this is certainly not something I support now—whether to have a European Government, but we do not have one at the moment and that is not something we should start doing in an accidental, piecemeal way.
I accept that there is a particular problem for the Conservatives on this issue. They belong to the fifth largest group in the Parliament—it feels rather good to say that—and the Liberal and Socialist groups are rather larger. I think it is a problem for the Conservatives that they are not represented in the mainstream conservative grouping, or Christian Democrat grouping, in the Parliament. I think that it was a regrettable decision by the British Conservatives not to take part in that, because I think it has reduced British political influence within the European political forum.
Mr Nuttall
I can assure my hon. Friend that not a single constituent of mine has ever expressed to me any dissatisfaction whatever with the position of the Conservatives in the European Parliament.
Madam Deputy Speaker (Dawn Primarolo)
Order. We are not actually discussing the position of the Conservative party anywhere in Europe; we are discussing the documents before us today. You can talk about article 17(7), Mr Horwood, but let us not venture any further.
Martin Horwood
Of course, Madam Deputy Speaker.
The second point is that there is an expression of what I used to call the Thatcher doctrine, which is to complain about the lack of democracy in the European Union but oppose all practical steps to increase democratic accountability because that would be seen as giving more legitimacy to the European tier of government. I think that is a regrettable approach.
Emma Reynolds
With regard to the motion, which mentions European political parties and their freedom to support candidates for Commission President, does the hon. Gentleman stand by the Deputy Prime Minister’s statement that the group the Conservatives joined in the European Parliament was made up of “nutters, anti-Semites and homophobes”?
Martin Horwood
I think that we are trying to raise the tone of the debate and not to refer to things that were said in the heat of the moment. I think that the Thatcherite idea that we should not give more democratic legitimacy is quite a destructive way to approach the European level of government. I am in favour of more democracy, more openness and more accountability.
Jacob Rees-Mogg
It is always too tempting to fail to intervene on my hon. Friend’s speeches, but the point that Margaret Thatcher was making was that there was no demos and that therefore there could be no democratic legitimacy. The first principle of democratic legitimacy is to have a people who care about each other.
Martin Horwood
Yes, and I think the European people do actually care about each other. When I take part in the councils of the Alliance of Liberals and Democrats for Europe—I am looking forward to this over the next few months as we move towards our London congress, which I am proud to have taking place in this very city—I care about the welfare of people outside the United Kingdom, and I think that other Europeans care about the welfare of this country as well.
Martin Horwood
No, I will not; I really must draw my remarks to a conclusion.
I believe that there is a European demos. It is expressed in the European elections, perhaps in a quite fragmented way, but it is none the less an expression of European political views by the people of Europe in perfectly democratic elections. It is right that a European Parliament elected in that way should play an increasing role in determining how the European Union functions. In increasing democracy, openness and accountability, these are reasonably uncontroversial proposals.
Kelvin Hopkins (Luton North) (Lab)
I shall just make the point that I was going to put to the hon. Member for Cheltenham (Martin Horwood) in an intervention. This idea about all Europeans caring about one another is fine—I love all my continental colleagues very much—but my identity is as a part of the British demos, not of a European demos, which I do not think exists. I think that was the point that the hon. Member for North East Somerset (Jacob Rees-Mogg) was making.
I am pleased to support my hon. Friend the Member for Wolverhampton North East (Emma Reynolds), who spoke extremely well. I agree with everything she said, even though there might be a smidgen of difference between our views on the European Union generally. Even more happily, we both seem to be in agreement with the Minister and the Government. That makes this a rare event, but a happy occasion.
We must absolutely not have parties at European Union level. Even at national level, party elites are sometimes too far removed from their activists and their voters. Having party groupings at international level acting as parties would make the gap between the voters at the grass roots and those who govern us even greater. That would be completely unacceptable.
Another problem involves finding political parties to bond with. The Conservatives have understandably had problems finding a home. If I were in their position, I would be happy to stand separately, but I know that that would create a problem of securing positions on committees and so on. So far as Labour is concerned, we could be linked with Pasok in Greece, yet Pasok is now cemented together with New Democracy and inflicting appalling austerity on the working people of that country. I do not want to be seen to be supporting Pasok in what it is now doing. It should be standing up for working people and against austerity. Indeed, that is what we should all be doing. We can have links and, occasionally, loose friendships with other parties when seeking convenient political groupings, but forming single political parties across Europe would be another step on the way to creating a state of Europe—which some people clearly want—with the Commission and perhaps the European Parliament forming the European Government. That would be a giant step in the wrong direction.
Another giant step in that direction was the introduction of a system of proportional representation for elections to the European Parliament. My hon. Friend the Member for Wolverhampton North East also mentioned this point. I have opposed such proposals before, and called in this Chamber for a return to first past the post and single Member constituencies. I hold to that position today. People would take the view that Europe was much more democratic if Members of the European Parliament represented a genuine constituency rather than an enormous region or even, in the case of Scotland and Wales, a country.
I oppose PR. I have opposed PR proposals for our own elections in Britain and for those in the European Parliament. Sadly, it has been used as a means of getting rid of the Eurosceptic left from the European parliamentary Labour party. Some 50% of the party’s 60 members were wiped out simply by being placed lower down the list, when the list system came out. They disappeared en masse. That certainly damaged our party, and it was very disappointing for the wing of the party that I belong to.
Another problem with the idea of having political parties at European level is that in many European countries there are two or three parties occupying the area that one party occupies in Britain. I recently visited Holland with the European Scrutiny Committee. It has a Socialist party and a Labour party whose Members sit next to each other, but in Britain they would easily be accommodated in our Labour party. If I were in Holland, it is conceivable that I would be in the Socialist party, but I would have to talk to them carefully about that.
There is a democratic deficit and, much as I deplore much of what Mrs Thatcher did, I think she was right to say that if we give too much democratic legitimacy to the European Union, democracy will start to leach away from our own national Parliaments, which would not be good. I want to see the democratic deficit addressed by restoring powers to national Parliaments, particularly the British Parliament. I want to see the restoration of effective power to the grass roots, including within parties. I am sure that all parties want that, but I want to see it in my party in particular.
Martin Horwood
If the hon. Gentleman thinks that holding elections at different levels leaches democracy away from other levels, does he think that democracy leaches away from the national level as a result of local elections or elections in London, Scotland, Wales or Northern Ireland?
Kelvin Hopkins
I think that power ranges over different levels. Over recent years we have seen power leached away from local government towards central Government. Local government is far less powerful than it was when I was a councillor 40 years ago. We had an enormous degree of independence that is no longer given to local government. If we allow too much of what we govern to go to the EU, democracy will leach away from our national Parliament. This is about powers. I want to see effective powers restored to national Parliaments, including—I discussed these in the Chamber earlier—those of the common fisheries policy and the common agricultural policy.
I also want first past the post, single Member constituencies and inner-party democracy in order to make sure that party activists, electors and ordinary people have real democratic power and feel that they have a stake in politics. If they do not feel that they have a stake, they might go elsewhere, which could be very dangerous and worrying for us all. When people feel that they can actually make a difference by being involved in politics and voting, that makes democracy meaningful. I would like to think that what we are suggesting today will help keep politics and democracy meaningful in Britain.
Jacob Rees-Mogg (North East Somerset) (Con)
I am usually very nervous when there is an outbreak of complete consensus across the House. It is usually a sign that we are all getting things wrong together, but I think that this occasion is the exception that proves the rule. We have heard from my right hon. Friend the Minister, the hon. Member for Wolverhampton North East (Emma Reynolds) and, amazingly enough, the Lord High Almoner of pro-Europeanism, my hon. Friend the Member for Cheltenham (Martin Horwood).
Martin Horwood
The hon. Gentleman may like to know that when I was a candidate in the Cities of London and Westminster I was once described as the Eurosceptic wing of the Liberal Democrats. I think the implication was that it was not very big.
Jacob Rees-Mogg
I am sorry to say that my hon. Friend has been led down the path of temptation towards pro-Europeanism since he stood in the two cities.
We have heard a remarkable outbreak of consensus, which is important and is why the European Scrutiny Committee wanted the document debated. One of the things we learn from the processes of the European Union, particularly those of the Commission, is that things start at an early stage with a little document that has no legal force and is there for a general, genteel discussion. Nobody says very much about it, so the Commission assumes that there cannot be very much opposition to what is being proposed and that it is perfectly reasonable and achieving consensus. Then the document gets hardened up into a proposal and then into a directive or a regulation, and before we know where we are we are opposing a fully fledged, fully formed idea, which is, of course, much harder to do than when things are at an early stage, when the Commission can back down without significant loss of face and there has been no momentum in favour of the proposals.
I would caution us, none the less, against being too complacent about what the Commission may do next, because it has a treaty base—it is set out in the ESC report—for some of its proposals. The Minister has covered this, but article 10(4) of the treaty on European union says:
“Political parties at European level contribute to forming European political awareness and to expressing the will of citizens”.
The importance of a treaty base is that it gives the Commission the ability to bring forward proposals. Once it has the treaty base, although it may appear not to apply on a simple first reading, it can be used, it is justiciable before the European Court of Justice and it fits into the general European approach of centralising powers.
As you know, Madam Deputy Speaker, I am particularly concerned about article 17(7) of the treaty on European Union, which speaks of
“Taking into account the elections to the European Parliament”.
What the European Commission is trying to do—its own paper sets this out more clearly—is to establish the European Parliament as that which gives democratic legitimacy to the European Union. I contest that fundamentally. What gives democratic legitimacy to British involvement in the European Union is the European Communities Act 1972 and the sovereign will of this Parliament—a sovereign will that can be changed. I am therefore strongly opposed to the developing European theory that it is the European Parliament that is the basis of democratic legitimacy.
I would suggest that democratic legitimacy within Europe as it is currently constructed, based on the 1972 Act, lies with the Council of Ministers, because those Ministers are responsible to their sovereign Parliaments and have to report to them on what they have done. The paper from the Commission does not take that into account. Indeed, it tries to establish a new basis for the democratic legitimacy of the European Union.
If that view won widespread acceptance across member states, the question would arise as to whether our initial acceptance of powers for the European Union through the 1972 Act was still the basis of our membership or whether it had devolved to the new democratic structure set up by the European Commission and to the European Parliament. The Commission’s paper points strongly in that direction. Page 11 of the documents that we are discussing states:
“The role of the European Parliament as the representative democratic assembly of the Union has been underscored by the Lisbon Treaty.”
The same page speaks of
“the new definition of members of the European Parliament as ‘representatives of the Union’s citizens’ and not simply as ‘representatives of the peoples of the States brought together in the Community’.”
Even a straight reading of that shows the ambition of the Commission to build political validity through the European Parliament, which of course requires single European parties.
I am strongly opposed to single European parties, partly because if I put myself up in North East Somerset as representing the Conservative and Unionist party, plus a random collection of European parties, it would not help me, but also because it discriminates against parties that are very focused on their national interest. I was thinking about UKIP and what acronyms we might get if it coalesced with other parties across the continent. There would be FIP in France, DIP in Germany, HIP in Holland and GIP in Greece—GIP might be particularly appropriate in Greece. There would be a discrimination against parties that are particularly focused on the interests of their nation if we went down the route of what the European Commission proposes.
I am arguing that there is a fundamental flaw in the European Commission’s paper. That flaw is the idea that the European Parliament can be or is the body of democratic legitimacy for the European Union. By pushing that view, the Commission delegitimises national Parliaments and tries to accrete powers to itself, for example through the proposal on political parties, to promote its own view. It is therefore a matter for rejoicing, once again, on Waterloo day that there is such unanimity across the parties in this House. I hope that in two years’ time, when we have a full celebration of the 200th anniversary of Waterloo, funded by the Treasury, we will be safe and clear from aggressive Commission documents that try to steal powers from the British subject.
Mr Lidington
I am grateful to all hon. Members who have taken part in the debate. I do not want to detain the House long, so I will try to reply briefly to the various questions raised. My hon. Friend the Member for Daventry (Chris Heaton-Harris) asked how funding from European political parties and other EU sources might influence domestic election campaigns in the United Kingdom. I want to place on the record that participation in elections in this country, including European elections, is regulated by UK electoral law, and that includes the use of funding in campaigns. United Kingdom law prohibits the use of funding from sources outside the UK, including European political party funding. A prohibition on the use of EU funding by national political parties is included in the draft new European political party proposals—those are other EU documents that the House considered in Committee a few days ago.
The hon. Member for Wolverhampton North East (Emma Reynolds) asked whether the Commission is aware of the Government’s concerns about its communication, and the answer is a definite yes. Our—I was going to say reservation, but I think it is rather stronger than that— belief that the initiatives are simply misplaced and will not contribute to resolving the acknowledged democratic deficit of the European Union is well known, and United Kingdom officials and Ministers will continue to express their views on that in any future debates.
The hon. Lady asked about the position of the European Parliament, and as my hon. Friend the Member for Cheltenham (Martin Horwood) said, the AFCO committee of the European Parliament has produced a report that covers much the same area of policy as that addressed by the Commission’s communication and recommendations. Like the Commission documents, that report points towards a greater role for European political parties and the European Parliament in determining the successor to President Barroso in the Commission. The plenary Session of the European Parliament is due to debate and vote on the report next month, and I cannot predict how it will vote on that occasion.
The hon. Lady’s final question concerned what future Commission initiatives we expect to follow up the proposals. At the moment, there is no sign that the Commission plans to go further than its published recommendations, and the Government’s view is that the longer that remains the case, the better. We do not think that the recommendations add anything to the democratic problems that Europe faces.
I can give some reassurance to my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) about articles 10(4) and 17(7) of the treaty on the European union. The full text of those articles contains a number of statements about how the European Union should organise its business, but there is no provision for the Commission to bring forward legislation and put it to the Council or Parliament. I would contrast that with the provisions in article 223(1) of the treaty on the functioning of the European Union, to which I referred earlier. That provides for changes to the law to be initiated by the Commission, and to be subject to the unanimous agreement of all member states. The enabling power for new legislation is not included in the text of articles 10 and 17, and that is why I said that the only way it would be possible to impose a mandate on the European Council to limit its nominations for President of the European Commission to lead candidates nominated by European political parties, or even to the lead candidate of the leading party after a European election, would be through the mechanism of treaty change. As my hon. Friend probably knows as well as anyone else in the House, that would require a process and certainly the unanimous agreement of every member state, and have national ratifications.
Jacob Rees-Mogg
My question might be too hypothetical, but if the Council puts forward somebody who has never been associated with a political party, would that be challengeable in the European Court of Justice?
Mr Lidington
In theory, anything is challengeable, in the same way that almost any Executive decision in this country is challengeable under judicial review. Our view is that the duty on the European Council is no more and no less than that provided in article 17(7), which is to have regard to the outcome of the European Parliament elections and engage in the appropriate consultations. If the intention of the authors of the TEU had been a mandate, it would be spelled out in the wording of the treaty. My hon. Friend is right that there is an ambition on the part of a number of people in the Commission and the European Parliament not to seek treaty change—not at the moment, at least—but to bring about a working assumption that national Governments assembled in the European Council should limit themselves in the way they wish. As I have said, we strongly resist that assumption.
I conclude on this point. We have a set of recommendations that are not legally binding, and there is currently no suggestion of legislative proposals from the Commission to give effect to its recommendations. Any such legislative proposals would need the unanimous agreement of every member state, under whichever treaty article they are brought forward. I believe—this was the view on both sides of the House—that the recommendations are fundamentally misplaced. There is a serious problem across the EU, with public disaffection with the EU and how its decisions are taken rising to record levels. We have seen that reflected in part in the rise of populist parties—some democratic, some undemocratic and neo-fascist—in many different EU countries. For that real problem to be addressed, the EU needs to show in its priorities that it is focused on those things that really matter to the prosperity and security of the peoples of Europe. The arrangements by which the EU takes decisions needs to be reformed in a way that gives greater influence and authority to national Parliaments, to which Heads of Government and Ministers in the Council are ultimately accountable.
Question put and agreed to.
Resolved,
That this House takes note of European Union Document No. 7648/13, a Commission Communication on preparing for the 2014 European elections and enhancing their democratic and efficient conduct, and No. 7650/13, a Commission Recommendation on enhancing the democratic and efficient conduct of the elections to the European Parliament; notes that whilst European political parties are free to support candidates for Commission President, this does not limit the European Council’s selection of a candidate; agrees with the Government that the suggestion for a common voting day across the EU is unhelpful and would achieve the opposite of the stated intention of increasing voter turnout; and further notes that there is currently no indication that these documents are going to be followed up by formal legislative proposals.
Backbench Business
Sudan and South Sudan
(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mark Durkan (Foyle) (SDLP)
I beg to move,
That this House has considered the Government’s role in supporting peace and development in Sudan and South Sudan.
I thank the Backbench Business Committee for its decision to grant a request that I and several other hon. Members made to ensure that the House had this overdue debate on Sudan and South Sudan. The hon. Member for City of Chester (Stephen Mosley) and I went before the Committee last week, and although some of the other dozen hon. Members who had supported the petition were unable to attend because of their involvement in debates in the Chamber or in Committee business, we were successful in arranging the debate for an earlier date than we had reckoned.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
I congratulate the hon. Gentleman and his colleagues on securing the debate. United Nations resolution 1591 was passed in 2005, and its intentions were clear. Is it not despicable that the international community still has not responded to them?
Mark Durkan
I welcome the right hon. Gentleman’s support in securing this debate and I absolutely accept his point. Signals given by the international community, and promises made in various peace agreements by those in Sudan and South Sudan, were not always followed through. It is important that we take time to address this issue in the Chamber.
The previous debate on Sudan and South Sudan took place in spring 2011, in the countdown to South Sudan’s independence. At that time, there was some hope about the new country’s prospects. There was hope that more of the comprehensive peace agreement would come to fruition if it had a framework or context in which to work. The hopes and goodwill of NGOs and others in the international community were tragically dashed. The effect on the lives of so many people in both countries was cruel.
We sought this debate because we are coming up to the second anniversary of South Sudan’s independence and because we recently marked the 10th anniversary of the conflict in Darfur. Hon. Members from all parties wrote to the Foreign Secretary, the US Secretary of State and the Australian Foreign Minister to raise concerns about policy drift on Darfur. Perhaps we have been remiss as parliamentarians in not addressing this issue in this Chamber, but we know why that has happened. Other events have caught our attention: the Arab spring and its complex aftermath and the situations in Mali and Syria have taken our focus. The danger is that the international community is giving a signal that what is happening in Darfur is par for the course and there is not a lot more that we can do about it beyond the commitments we have previously made.
Bob Stewart (Beckenham) (Con)
The sadness is that this situation has been going on for so long. Some 20 years ago, my wife worked in southern Sudan for the International Committee of the Red Cross, and it was a basket case then. It is about time the world got together and sorted out this dreadful situation, so that the people there can live peacefully and bring up their children properly.
Mark Durkan
I recognise the passion of the hon. Gentleman’s intervention, and that is exactly why this debate is necessary. There is a danger that because South Sudan has been established, we think it can make its merry way forward, but it is a fragile state—the world’s youngest. It lacks serious governmental and administrative infrastructure, and there is a gross disparity in the position of women and girls in its society. For decades now, these people have suffered from the effects of conflict, and they are still suffering. Even now, seven of the 10 states in South Sudan display features of conflict and the depredations that come with it.
Sir Tony Cunningham (Workington) (Lab)
I recognise that this is a political debate with a Foreign Office lead, but does my hon. Friend not agree that there is still a huge humanitarian crisis in the area too?
Mark Durkan
I fully accept what the hon. Gentleman says—of course there is a humanitarian crisis, as I think many other hon. Members will also emphasise.
Since the fact of this debate was published, I have been struck by how many of us have been contacted by non-governmental organisations, which have provided urgent briefings and said how glad they are that we are having this debate. It is particularly telling that some of them said, “You cannot give out the locality-specific information that we are giving to you, because it could be traced back to us and compromise NGO operatives and associates in particular regions.” Their nervousness about being named and about their briefings being traced speaks volumes about the situation and their bravery and good work.
These NGOs do not take the side of particular political interests; theirs is purely a humanitarian effort, and like the Government—I know that we will hear from the Minister later—they welcome and encourage any positive steps, whether in the relationship between Sudan and South Sudan or towards improving conditions in the two countries. They are also clear about the risks and about the trespasses against human rights and humanitarian standards that take place all too frequently and are seemingly met with indifference. In Darfur, for instance, the United Nations-African Union Mission in Darfur has recently seemed to be saying, “Well, because there has been statistical easement in some features of the humanitarian crisis in Darfur, we should treat that as though the crisis is ending,” but clearly it is not ending. Even when there are statistical easements, factors and circumstances change, whether it is factors of conflict or seasonal factors or other trepidations that interfere with the situation, and as a result, people find themselves in an ever graver plight, so we cannot act like this is done and dusted on the basis of comprehensive peace agreements that are given only faltering acknowledgment.
I hope that the Minister will explain not only how engaged the British Government are with the political interests in both countries, but how much support they are giving to, and how engaged they are with, the various NGOs. I hope that he will also indicate how well the UK engagement effort works with that of the EU, given that the EU is the single biggest donor in the area, and respond to questions about the UN’s role. Given the misgivings about the UN’s action and the lack of reportage and serious monitoring in Sri Lanka, fundamental questions remain about UNAMID’s competence and sense of purpose in Darfur, where it does not report every transgression with equal seriousness.
Mr Tom Clarke
I am extremely grateful to my hon. Friend for being so generous in giving way. When he refers to agencies, including the United Nations agencies, does he agree that UNAMID falls short of its mandate of civilian protection and that many people have suffered because of that?
Mark Durkan
I fully agree with the right hon. Gentleman. We have all heard UNAMID described as the most expensive and least effective peacekeeping operation in the history of the world. UNAMID stands indicted, but if we do not seek to address and ameliorate that in some way, we, too, will stand indicted as parliamentarians.
The range of issues that can be addressed in this debate, and certainly the range of issues that have reached us in briefings from non-governmental organisations, is wide, but those issues also run deep. I do not intend to rehearse them all in opening this debate; the main point is to allow other Members to reflect those points and concerns, as well as the fact that, from time to time, there are indications of hope from these regions. That happens not just when we see flickering developments—all too often cancelled out later—in political engagement, dialogue, talks, deals on oil flows, and so on, but in relation to the potential to build and improve capacity in both countries. However, the key to that is overcoming the difficulties of conflict and all the preoccupations, the distractions and the depletion of resources and potential that conflict represents. That is why the international community owes more than just humanitarian support to the people of these two countries.
Mr William Bain (Glasgow North East) (Lab)
I refer the House to my entry in the Register of Members’ Financial Interests. Does my hon. Friend agree that one of the best ways in which we can diminish the conflict between South Sudan and Sudan is to implement in full the oil agreement signed last September? Is he aware that last year, when the rest of sub-Saharan Africa was seeing annual GDP growth of between 5% and 6%, GDP fell by 55% in South Sudan and by nearly 1% in Sudan? Is that not what is driving the continued problems between both states and leading to some of the health and education indicators we are seeing?
Mark Durkan
The hon. Gentleman is right. He has great insight into both countries, given that he so ably chairs the all-party group on Sudan and South Sudan. He rightly points to some of the declining profiles for South Sudan. I have many statistics on the social experience in Sudan and economic conditions. I do not intend to turn my opening speech into a presentation of the grave statistics on both countries, but some useful contributions can be made in this debate by a number of hon. Members.
When we look at both countries, it is important not only to look at them together in their historical and regional context, given some of the issues of conflict, but to look at them in their own right and, in particular, at the people of each country in their own right. I have referred to Darfur, but it is not the only place in Sudan where we see violence waged by the Government of Sudan against their own citizens. Only last week—I am sure other hon. Members will refer to this—we had a chilling report from Amnesty International entitled “We had no time to bury them”, which highlighted war crimes in Sudan’s Blue Nile state. That report, based on extensive interviews—where Amnesty International could conduct them—satellite images and the examination of various records, mounts a devastating critique of what the Sudanese Government have been able to do against their own people. That follows the pattern we saw in Darfur, although it is not confined to the Blue Nile state, but can be found in South Kordofan as well.
That gives rise to the obvious question that many people ask: how is it that we appear to be maintaining lines of engagement and agreeing aid packages, as part of multilateral rounds, with the Government in Sudan—because we want to help the people of Darfur—in ways that do not chime with our attitude to the behaviour of the former Libyan regime or the current Syrian regime or our attitude in other similar circumstances? I understand why the Government make their commitment alongside others, for instance, in the context of the Doha conference earlier this year. I know, however, that this House has heard from Darfurians who basically say that this is rewarding ethnic cleansing and doing nothing for victims. They fear that some of those moneys could end up being used by that same Government to further their violence against their own civilians. I am not saying that that is absolutely so or that there are no guarantees or measures to prevent or proof against that risk, but it is a risk that is genuinely felt. We have heard it genuinely expressed here within the precincts of this House, so I hope that the Minister will, as well as responding to questions from hon. Members, address those questions that come naturally from concerned citizens in Sudan and South Sudan.
I want to allow other hon. Members to speak. I am sure that they will cover the other points I would have made, and I look forward to hearing them.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We have six speakers and about one hour’s time, so I suggest Members try to take that into account when they speak.
Stephen Mosley (City of Chester) (Con)
I congratulate the hon. Member for Foyle (Mark Durkan) on securing the debate and also on the good points that he made. I heard another Member saying that this was a political debate; it is a political debate, but I say as a Conservative Member that I agreed with everything the hon. Gentleman said. He is quite right: it is two years since we last debated Sudan, when we held a Westminster Hall debate in the spring of 2011. At that time, the comprehensive peace agreement was being implemented. We were seeing the end of a 22-year civil war that had killed 2 million people, with 4 million people having left their homes. January 2011 saw a successful referendum in South Sudan, with 98.8% of the population voting in favour of independence.
Some concerns were expressed in our debate—over the future of Abyei, for example, where the referendum had been cancelled and postponed. There were concerns over South Kordofan and the Blue Nile state, as public consultations on the future of those two states were meant to take place, but had not happened. Then, too, the ongoing conflict in Darfur was at the forefront of our minds. On the whole, however, hope and optimism for the future were expressed in that debate. There was a belief that the independence of South Sudan would mean a new beginning for both north and South Sudan at that time.
I saw that myself when I visited Khartoum in June 2011. At this point, I should mention my entry in the Register of Members’ Financial Interests, which records my visit. This was a few weeks before South Sudan gained independence, and while we were there, we met Government Ministers, people from the National Congress party, embassy staff, Department for International Development staff, local businesses and representatives of the local Coptic church. When we met those people, we noted a huge amount of hope for the future. It was believed that 9 July 2011 would mean a new beginning for both Sudan and South Sudan.
One thing we picked up while we were there, and which is particularly relevant to this Parliament, was the high regard many people had for the United Kingdom. We were shocked to hear that the majority of cabinet members in Sudan were, despite all the problems, either educated in the UK or held British passports. There was an immense well of good will towards the UK and a huge desire among all the people we spoke to to increase links, trade and investment with us. There was a big will for Britain to get more involved in Sudan.
It is now, of course, two years since South Sudan got its independence, but I am afraid to say that many of the hopes we had two years ago have been dashed. Both Sudan and South Sudan are considered to be fragile states. Both countries face terrible humanitarian and development challenges, and the indicators are some of the worst in the world. It is 10 years since the start of the conflict in Darfur, and there is still no end in sight. Concerns remain about the Khartoum Government and their refusal to negotiate, comply with international law, and cease violence.
When I was preparing for the debate over the weekend, I read some newspaper articles about Sudan. Three of them jumped out at me immediately. I want to tell the House about them, because they give an impression of what is happening out there at the moment.
It was a tweet from the Minister that drew my attention to the first item. It concerned the shelling of a United Nations base which killed an Ethiopian peacekeeper and injured two more. It took place in Kadugli, in South Kordofan, and is thought to have been the work of fighters from the Sudan People’s Liberation Movement-North—SPLM-N—supported by South Sudan. The UN does not have a mission in South Kordofan, but it has one in Abyei, and the base was being used as a supply depot for that.
The article suggested that the rebels were targeting a football ground, as a football tournament was due to begin there today, but, as always in Sudan, it is not clear who was responsible. The UN Security Council and the Secretary General have condemned the attack and called on Sudan to bring the perpetrators to justice, but we do not know who those perpetrators are. It is assumed that they are members of SPLM-N, but we do not know for certain.
The second news item was about an oil pipeline that had been attacked in Abyei. In this case, the Sudan Government blame the South Sudan-backed rebels, but both the rebels and South Sudan deny responsibility. The attack came just days after Sudan had announced a further blockade of South Sudanese oil, which is due to begin in six weeks’ time. We heard from the hon. Member for Glasgow North East (Mr Bain) that an agreement had been reached last autumn to allow oil to flow through the pipeline in Sudan, but that agreement now seems to have broken down, and within six weeks the embargo will be reinstated.
Mr Bain
The hon. Gentleman is presenting a powerful and convincing argument. Does he agree that both states will be harmed by the shutting down of oil production, and that the hardship will be felt not just in Juba but in Khartoum? Does he also agree that we need a comprehensive agreement in relation to the disputed territories, and, in particular, a final resolution, through a referendum, of the future status of Abyei?
Stephen Mosley
I entirely agree with the hon. Gentleman. I think that the importance of oil in the relationship between Sudan and South Sudan is clear to all of us. Approximately 75% of the oil reserves are in South Sudan, and approximately 25% are in north Sudan. The South Sudanese Government are particularly dependent on oil revenues for their taxation income—I have heard that as much as 98% of South Sudan’s income derives from oil—but any measures that impede the flow of oil affect not just South Sudan but Sudan. They affect the oilfields on the northern side of the border. We must recognise that oil has a huge part to play, and ensure that any agreements that are reached to deliver permanent peace deliver a solution to the oil problems as well.
The third news story related to Jonglei, one of the states in South Sudan. Apparently, South Sudanese Government forces were blocking aid for 120,000 people who had fled to Jonglei to escape ethnic fighting. It is estimated that seven of the 10 South Sudanese states are currently in turmoil, and that fighting is taking place there.
Mr Tom Clarke
The hon. Gentleman is making a very well-informed and lucid speech. He has referred to events over the weekend, but is he aware that, as recently as last Sunday, an aerial attack carried out by the Sudanese air force on a village in Darfur killed a mother and her two children, aged five and seven? Sadly, the situation is ongoing.
Stephen Mosley
The question of aerial bombardment features large across all the problem areas in Sudan. The hon. Member for Foyle (Mark Durkan) mentioned the situation in Blue Nile state, and there have been regular bombing incidents in South Kordofan and Darfur. The Sudanese Government are also laying landmines, which is another concern. Both those things are contrary to international conventions, and both of them are classified as war crimes: deliberately targeting civilians is classified as a war crime. The right hon. Gentleman will be aware that four members of the Sudanese Government, including President Omar al-Bashir, are wanted by the international courts on war crime charges.
I would put South Sudan’s problems into two categories: they involve the relationship between South Sudan and north Sudan, but they also involve the internal problems facing South Sudan. There are many unresolved issues between Juba and Khartoum at present. We have talked about oil, so I will not dwell on that subject. There are also the problems over South Kordofan and Blue Nile, and the questions about their future. There was meant to be a consultation on the future of those two states, but it has not happened.
We have for years been promised a referendum in Abyei, so people in Abyei can decide whether they want to be part of the south or the north. Because many of the farmers in that area are migratory, there has been wrangling over the electoral roll for years; no decision can be reached, so there can be no agreement on a referendum. We have been promised that there will be a referendum this autumn, but we have been promised a referendum before, so we will have to wait and see whether it takes place.
There are also issues about support for rebel groups. Both the Sudanese Government and the South Sudanese Government are supporting rebel groups in each other’s territory. There are issues to do with the migration paths of pastoralists, too, who travel across the border on a seasonal basis. There are not just cross-border issues, however. South Sudan faces internal problems. There is conflict in seven of the 10 South Sudanese states. There is ethnic and tribal violence. South Sudan is not an elected democracy. Broad powers are given to the Executive, and we see high levels of corruption.
There is also a huge problem of lack of state capacity and infrastructure. South Sudan is one of the hardest places in the world to reach, and once there, it is incredibly difficult to travel about the country and reach some of the more isolated states.
Bob Stewart
I congratulate my hon. Friend on securing this debate. My wife was a delegate of the International Committee of the Red Cross in South Sudan. Indeed, she was taken hostage there by rebel groups. She set up a camp from scratch for 100,000 people. She firmly believes that one of the problems now is that we have set up these camps in inhospitable places, where we have to resupply them and keep them going. By doing that, we have caused a problem in an area that cannot sustain such a large population. These camps attract people. Hard as it would have been, perhaps we should not have done so much.
Stephen Mosley
I do not know that I agree with that, but my hon. Friend is right that many of the camps are very isolated and difficult to reach. There is some good news, however. A new camp has recently been completed at Ajoung Thok, and it has a very good reputation. The agencies are gradually moving people there from more isolated camps. They can supply them with food and water there, and allow them to start making the long-term decisions that will enable them to set down roots and start to develop livelihoods in those areas, because that is also a problem with humanitarian aid, and we have faced it in Sudan in the past. People are quick to supply food and emergency aid, but we are not so quick in providing more long-term solutions that allow people to survive and live on their own over time.
The hon. Member for Foyle mentioned non-governmental organisations, and while preparing for this debate we met representatives of a number of them. Normally when we speak to NGOs, we find that they are desperate for MPs to stand up in this Chamber to sing their praises and tell Members of this House about the good work they are doing. On Sudan and South Sudan the NGOs deliberately said, “No, we don’t want you to say what we’re doing. We don’t want you to say where we are doing it.” They face so many problems that they are afraid that if they highlight their situation, they may face repercussions. They have told us that they already face restrictions on visas, and the cost of permits is going through the roof. They are finding that it is becoming more restrictive to operate in both Sudan and South Sudan, and they asked us to make sure that when we talk about their situation, we talk in general terms rather than in specifics.
What we do know is that 1 million people remain displaced by the fighting, with more than 300,000 having been displaced since January—that is more than for the whole of last year. The problems in Sudan and South Sudan have not gone away; they are in a real mess. There is continued armed conflict and human rights abuse, and hundreds of thousands of people have fled and are living in camps.
This is a debate on the UK Government’s response to Sudan, so I wish briefly to mention the Sudan Humanitarian Assistance and Resilience Programme—SHARP—which the Department for International Development is running. The idea is to spend £67 million over three years, with half of that being in Darfur and the rest in the Blue Nile and South Kordofan states. The idea is to build household and community resilience, and to allow people to move on from aid dependence. It is a long-term project, and I congratulate the Minister and the Department on the work they are doing to ensure long-term success.
Sudan and South Sudan are not a problem that can be solved on its own by this country or by themselves; it needs all the international community to work together to help resolve the conflicts they face.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
First, I congratulate the hon. Members responsible for securing today’s debate and ensuring that these issues were debated in this Chamber. I hope to take only a few minutes, because other hon. Members are experts on this area and I am most certainly not. However, I wish to put on the record my concerns and, as these have also been expressed to me by many constituents, it is good to have the opportunity to do so.
As the hon. Member for Foyle (Mark Durkan) pointed out, Sudan and South Sudan is very much an area of the world where because some progress appears to have been made, the problem appears to have been solved—we know it has not been—and the world’s attention has focused elsewhere; the world moves on and we pay attention to other crises. Although positive steps have clearly been taken in the establishment of South Sudan, the problem has not gone away. Nobody expected that South Sudan’s independence would suddenly solve the problems overnight, but all of us would probably not have expected such a deterioration in the situation since independence. Plenty of fighting is going on. We recognise that a full-scale war is not—we hope—on the agenda, but the deterioration of the situation is such that all sorts of crises will develop or get worse. Perhaps this has been a classic example of how it is always easy to start wars in different parts of the world but very hard to end them and solve the underlying difficulties.
Hon. Members have given examples of the problems. One is clearly the failure to ensure that the peace agreement reached in Ethiopia was implemented. As my hon. Friend the Member for Glasgow North East (Mr Bain) pointed out, another is that the income levels of people in South Sudan have dropped, whereas those in the rest of Africa are increasing. That reflects the failure to resolve the issues concerning oil, which, as he pointed out, affect both South Sudan and Sudan. South Sudan could be one of the richest countries in Africa if the oil was being allowed to flow. So a resolution of that problem is important for all sides.
We have heard about the fighting, not just on both sides of, and across, the border between Sudan and South Sudan but within South Sudan, as well about the conflict and, to put it bluntly, repression continuing in Darfur. There are the issues with refugees and displaced persons to which the hon. Member for City of Chester (Stephen Mosley) referred, as well as problems with the lack of free media and with the ability of NGOs to operate, which occur on both sides of the border. There are also issues with weaknesses in civil governance and, in many respects, worse than weaknesses as regards freedom in both countries. Food shortages are increasingly a problem in many parts of both countries. The ongoing problem persists in Darfur and we have not solved it 10 years on—in many ways, we have not moved forward. We continue to see repression and fighting. The responsibility does not lie in only one place, but clearly we know where the main responsibility lies.
I want to highlight, in keeping with the theme of the debate, what the UK can do to try to move matters in a more positive direction and I want to ask the Minister a number of questions about how the UK will continue to play a role. Many Members have mentioned the United Nations-African Union Mission in Darfur. Clearly, its weaknesses are extreme and its mandate needs to be strengthened. We need more than that and I would be interested to know the UK Government’s view on how it can be taken forward.
The weaknesses of UNAMID also reflect the weaknesses in capacity of the UN and the African Union in the area. Much is made of the AU and of its weaknesses, but we should not forget that we increasingly expect it to play a major role in a number of different areas of conflict in Africa. It is involved in Mali, the eastern Democratic Republic of the Congo and Somalia. Crises are developing in other areas. The situation is increasingly worrying in sub-Saharan Africa and, as the Minister will be aware, in the Central African Republic.
Donor fatigue is also an issue. Countries are not pledging the money that is needed or that has been promised. The UK has been good in that respect, but other countries have not, and I would be interested to know the Minister’s perspective on that.
Mr Bain
Does my hon. Friend agree that one of the best ways in which the UK Government could continue to have a positive impact on both states would be to retain the Sudan unit? It was founded by our right hon. Friend the Member for Leeds Central (Hilary Benn) and it brings together the development, humanitarian and diplomatic functions of the UK Government in relation to both states. Would it not be a good idea in terms of aims such as expanding smallholder agriculture and empowering women in both states if we were able to retain the Sudan unit well into the future?
Mark Lazarowicz
Absolutely. That brings me to my final point: although it is important to deal with the immediate, pressing crisis, we need to try to consider ways of establishing security for the long term. One important way of providing security as well as peace settlements that stand the test of time is to ensure that there is food security. That tackles some of the immediate crises affecting the community and, by removing some of them, relieves some of the pressure on Government.
The UK Government have taken the lead in many areas. They cannot solve all the problems themselves—no one ever suggested they should—but I would certainly like to know what the UK Government intend to do to take the situation forward, given the increasingly serious situation in many parts of Sudan and South Sudan.
Pauline Latham (Mid Derbyshire) (Con)
I congratulate the hon. Member for Foyle (Mark Durkan) on securing the debate, as well as my hon. Friend the Member for City of Chester (Stephen Mosley). South Sudan and Sudan are very important areas in Africa and when South Sudan seceded from Sudan in 2011, the hopes of the world were there. Everybody thought it would work, albeit with many difficulties, including having to build a nation from scratch. Unfortunately, they are in a desperate situation. I visited the region with the Select Committee on International Development and our report shows a lot of the problems that there are.
As my hon. Friend the Member for City of Chester said, one cannot get about in South Sudan. One has to fly from one place to another, which is fine for us westerners going in, but impossible for the local population. There are about 15 km of made-up road in the whole country, which makes nonsense of local people trying to get anywhere.
So many people have been sent back from Khartoum even though they have lived there for generations. Because their origins are in South Sudan, they have been told that they are South Sudanese and they must return to their own country. However, the people who came from Khartoum and the surrounding areas spoke only Arabic. They may be well qualified—for example, as doctors or engineers. They had a wealth of western-style qualifications, but when they got back to South Sudan—they had never been there, neither had their parents or, in some cases, their grandparents, but they were classified as South Sudanese—they could not converse with the local people, who speak English as well as their own local language. So there was no way that those people, who were well qualified, could get jobs.
Those arriving in South Sudan had no homes to go to. They were put into camps, where there were no latrines. In the camp that we visited, there was open defecation, which is appalling, given that the area that we went to is often flooded. All the open defecation would then flood through the camp. The worry for the mothers of the children—some of the children had travelled with them and some had been born in the camp since they arrived—was that as there were no latrines, they had to go out quite a long way from the camp to be able to go to the toilet, which meant that they were frightened for their safety.
We, the UN and all the international agencies have a responsibility, when building camps, to provide latrines where children and women in particular can feel safe to go. None of that has happened in South Sudan. It must happen there and everywhere that camps are built; otherwise there will be rape and violence against women, girls and children, which is totally unacceptable.
There was no education going on for the people who had come back, so they could not even learn the local languages. They had no jobs to go to. Some of the people we met had been in the camp for nine months and had not even seen a doctor. One girl I spoke to had some form of chest infection. She was coughing badly, but she had had no access to any medical professional of any sort since she had been there. She had caught the chest infection or whatever it was on the march back, because the people had had to walk much of the way back to South Sudan. I keep saying “back” but of course it is not their home: they were born and brought up in Khartoum, but they had had to go to their place of origin.
It seemed to me that these people were being totally disadvantaged because the Sudanese Government had said, “We want everybody out.” It is still happening. We saw areas where the troops were and where there had been problems. We had to be very careful. The civil war that has been going on for generations in what had originally been Sudan has not stopped. We have heard today that there is no cessation to the civil war.
The humanitarian and development challenges in South Sudan remain and will continue for some time to come. We went there last year, but this year there are still people stranded at railway stations. Some 40,000 people remain stranded in open areas around Khartoum because they cannot get to South Sudan. A further 3,500 people have been stranded at Kosti railway station in White Nile state for more than 15 months. GDP is rising in other African countries by between 5% and 7%, but here it is bound to go down when such numbers cannot contribute to the country’s economic well-being.
James Duddridge (Rochford and Southend East) (Con)
My hon. Friend is a great advocate for international development. Far too often these trips are talked down, but clearly it is incredibly valuable to go there and speak from the heart and about the reality of what has happened. Much to my shame, I have not read the detail of the report. I would be interested in an analysis of its recommendations and to what degree the Government have already been able to respond and take action.
Pauline Latham
The Government are doing a lot of hard work and are working on the report’s recommendations. I do not have the report with me so I cannot go into the detail of each individual recommendation, but the coalition Government are working hard to alleviate the problems in South Sudan, and DFID is doing a lot of work in the Blue Nile area and South Kordofan. DFID is doing a huge amount of work with women and girls to make their lives much better. DFID is keen to promote the well-being and safety of women and girls, which have not been priorities for the Sudanese and South Sudanese Governments. The previous Secretary of State for International Development sent a huge number of textbooks to the schools, but when we returned from South Sudan we met its Education Minister, who said that it was great to get the textbooks, but it does not have the buildings or teachers to put them to use. Not just the children but the adults coming from the north into South Sudan need education so that they can get jobs and be economically active. Often they are skilled people, having lived a western lifestyle, but they cannot function if they cannot speak the language. As we all know, the older one gets, the longer it takes to learn a language, although being immersed in it makes it much easier.
I strongly believe that South Sudan could still be a success if the fighting stopped. I do not believe that the UN is doing as good a job as it could. It could work much harder to reduce the conflict and to work with the people in the area to make sure that they are safe and feel safe. It is important that the oil flow continues, because with the oil will come prosperity. Both the north and the south can be prosperous. They need that income to be able to build South Sudan, which is a beautiful country and needs investment for people to survive. It needs roads, schools, and hospitals and medical care. The standard of the very few there are is very poor. The north of the country, as it was when it was united, has starved South Sudan of resources. In Khartoum and in the north it is great, but in the south no one has anything. Our Government are working hard to help and mediation work is going on, but we need to ensure that the south can build and renew itself and become a proper functioning country. Until then, and until the violence and war end, it will never succeed. It could succeed, but we will need to work very hard to provide all those services. Our Government are providing a lot, as are other Governments, but that needs to continue for some time to come.
Jim Shannon (Strangford) (DUP)
It is an absolute pleasure to contribute to the debate. I congratulate the hon. Members for Foyle (Mark Durkan) and for City of Chester (Stephen Mosley) on securing it and the Backbench Business Committee on giving the House an opportunity to state its commitment to the democratic process in Sudan and South Sudan. Like the other Members who have spoken, I am very interested in peace and development in both countries. It is essential that the British Government do everything in their power to apply diplomatic pressure and to offer practical help in order to see true peace and development in both countries.
Those Members who have heard me speak about Sudan before will know of my concern—it remains—about the persecution of Christians and how that relates to the development of those countries. Members have spoken about many issues relating to the conflict, such as the need for education, health, schooling, hospitals, better roads, jobs and so on, and the humanitarian needs. Those are all important, but we must also consider the persecution of Christians. Last month I read an interesting report, and I have been waiting for the appropriate time to bring it to Members’ attention. Now is that time.
Oil is the critical factor, as other Members have said. We are well aware of the impact oil can have and what it can lead to, so we know how important it is for Sudan and South Sudan. Last February I had the opportunity to visit Kenya with the armed forces parliamentary scheme and to meet some of those involved in eastern Africa and to hear the political overtures being made there. Many thought that the way to address the issue might be to take an oil pipeline through Kenya, but it was apparent from the discussions we had, and from the political point of view and that of the army, that Kenya seemed reluctant to do that.
The defeat of the Sudanese army in a battle with rebel forces last month prompted concerns that the Government will retaliate by increasing their already intense pressure on the country’s minority Christians. That cannot be allowed to happen. Sudan’s Minister for guidance and endowments, Al-Fatih Taj El-sir, announced in April that no new licences for building churches would be issued—I hope that we never have to appoint a Minister for guidance and endowments in this place, because it would be a sad day if we came to that. The Minister explained the decision by claiming that no new churches had been established since South Sudan’s secession in July 2011. That was due, in his opinion, to a lack of worshippers and a growth in the number of abandoned church buildings. The reason was that most of those people were being repatriated to South Sudan. He said that there was no need for any new churches. He also said that freedom to worship is guaranteed in Sudan, but quite clearly it is not.
Missionaries from my constituency are working in Sudan, and I have been made aware, through their church, of some of the things happening there. There is a real need for the Government to address the issue. I hope that the Minister will be able to do that in his winding-up speech. Days before that announcement, the Catholic Information Service for Africa reported that a senior South Sudanese Catholic priest, Father Maurino, and two expatriate missionaries had been deported on 12 April. The two missionaries, one from France and the other from Egypt, work with children in Khartoum. According to Father Maurino, no reason was given for the deportations. He added that Christians were in trouble in Sudan as the Government were seeking to Islamise the country and eliminate the Christian presence. That makes the humanitarian crisis even greater.
In a published briefing, Christian Solidarity Worldwide has stated that since December it
“has noted an increase in arrests, detentions and deportations of Christians and of those suspected of having links to them, particularly in Khartoum and Omdurman, Sudan’s largest cities. There has also been a systematic targeting of members of African ethnic groups, particularly the Nuba, lending apparent credence to the notion of the resurgence of an official agenda of Islamisation and Arabisation…The campaign of repression continued into 2013, with foreign Christians being arrested and deported at short notice, and those from Sudan facing arrest, detention and questioning by the security services, as well as the confiscation of property such as mobile phones, identity cards and laptops. In addition to the arrests and deportations, local reports cite a media campaign warning against ‘Christianisation’.”
Those cases have been backed up not only by Christian Solidarity but by Release International, Open Doors and many other missionary organisations and Churches.
William Stark, an Africa specialist for International Christian Concern, told WorldNetDaily that President Bashir had attempted to paint the rebels as Christian troublemakers. Let us put it clearly on record that that they are not. How dare Bashir blame those with Christian beliefs for what is taking place? His Government have been fighting insurgents, whom he has labelled “Christian troublemakers”. Open Doors spokesman Jerry Dykstra has said that, despite the flimsy connection with Christianity, the Sudanese Government are calling for a war against those who do not believe in Islam or in jihad, and turning the teeth of their attacks on Christians.
I ask the Department for International Development or the Foreign Office to intervene and ascertain the intentions of Bashir and his Government. As things stand, Christian organisations representing missionaries and Churches are reporting that Churches have been closed and that foreign workers accused of proselytising have been expelled. Are the Government aware of this? What is being done to help those in that situation? To put it simply, there can be no peace and development in Sudan until there is an end to persecution. I ask the Minister to respond to these points and also to the points that have been made on humanitarian aid, health, education, roads and jobs, and on the humanitarian crisis that is taking place in Sudan and South Sudan.
Martin Horwood (Cheltenham) (LD)
I join others in paying tribute to the hon. Member for Foyle (Mark Durkan) for securing this debate, and to the extraordinary resilience of the people of Sudan and South Sudan, who have undergone what, for most of us, are unimaginable levels of suffering over the years. I also want to pay tribute to the international members of the non-governmental organisations, including the many British aid workers involved, and to their local partners. My former parliamentary researcher, Anna Harvey, was working in Sudan before she came to work for me in this place. She spoke of a beautiful country and of lovely, welcoming people, but the area in which she worked was engulfed in violence some years later.
What has happened to those beautiful countries is a great tragedy. We are talking about 500,000 people having died in Darfur province alone, and 2.5 million people still being dependent on food aid there. The hon. Member for Foyle was right to point out that the aid agencies pleaded with us for years not to ignore the unfolding humanitarian catastrophe in Darfur, but the international community was collectively very late in acting in a concerted way. He was also right to say that we must not let Darfur, Sudan and South Sudan slip off the political agenda again.
The hon. Member for Glasgow North East (Mr Bain) pointed out the contrast between the two Sudanese countries and the rest of Africa, parts of which are now seeing phenomenal economic, political and democratic progress. Sudan and South Sudan are noticeably divergent in their failure to achieve development objectives or to make progress on human rights and democracy. People often say that war is development in reverse, and that is true. It is the continuing conflicts besetting those two countries that are responsible for this state of affairs.
I do not suppose many people thought that independence in 2011 would provide a magical cure to those conflicts, but many were more hopeful that some of the issues might be resolved after the Addis Ababa deal in 2012. However, we still have the unresolved issue of the border around Abyei, where the continuing lack of a referendum is inciting violence and encouraging attempts to displace people. There are also continued interruptions to oil supplies and a lack of oil flow, both of which are damaging the prosperity in the north and the south—and both sides are clearly supporting military rebels, in breach of the Addis Ababa agreement.
Keith Vaz (Leicester East) (Lab)
Another problem is that of regional terrorism, whereby support is sometimes given by, for example, groups in Yemen to groups in Sudan that want to undermine what is happening there. A lot of evidence suggests that there are dealings between the two groups of terrorists, who seek to undermine both countries.
Martin Horwood
The right hon. Gentleman speaks with great knowledge and I am sure he is right. One of the risks that we have seen time and again in the middle east and north Africa region is that instability and violence invite in even less desirable elements—if that is possible to imagine—who want to destabilise further the situation in their own interests.
I am happy to pay tribute to the British Government for being fully aware of the issues. In January, my hon. Friend the Under-Secretary of State for International Development visited projects funded by the Department for International Development in Sudan, some of which address basic human rights. I gather that the water programme supported by DFID—this was probably the case under the previous Government, too—has now helped to provide access to clean drinking water for 800,000 people. I say to those who question whether it is right to spend 0.7% of our national income on international development that it is difficult to imagine money being spent more cost-effectively to provide such a huge number of people with such a basic thing as clean drinking water.
Another of the DFID projects that my hon. Friend visited promotes access to justice. This debate needs to address human rights and the rule of law, and many hon. Members have done so.
The Government’s most recent “Human Rights and Democracy” report discusses, as it has done for many years, Sudan, where human rights and democracy are, if anything, deteriorating. Political parties do exist, but there are frequent instances of harassment and imprisonment. Elections have taken place, but they are deeply flawed. Human rights defenders are detained and torture takes place. Other hon. Members have discussed instances of war crimes and the hon. Member for Strangford (Jim Shannon) talked about the persecution of Christians. Above all, there is continuing violence in Darfur, where hundreds of thousands of people have been displaced. It is sometimes difficult to escape the conclusion that the Bashir Government are almost using violence and interference in the oil supply for their own political ends in destabilising things and preventing democratic progress.
As the hon. Member for City of Chester (Stephen Mosley) has said, the most recent report states that an Ethiopian peacekeeper who was part of the United Nations peacekeeping force was killed and others injured in a shelling incident. It is an even more worrying development if UN troops are not safe from artillery fire. The situation is deteriorating and I would be interested to hear the Minister say what has happened as a result of that incident.
The hon. Member for Foyle slightly criticised the United Nations-African Union Mission in Darfur and the United Nations Interim Security Force for Abyei. Although they may not be doing a perfect job, we have to acknowledge the courage of the UN peacekeepers and the difficult situation in which they have been placed.
It is difficult for us to influence the Government of Sudan directly, but there are countries with whom they are friendly. China plays a significant role and has traditionally been identified as a friend and economic partner of Sudan. What pressure could we put on China? It would be difficult to ask the Chinese to address human rights issues in Sudan when they are no angels themselves in that respect, but they could at the very least stress the economic importance of maintaining the oil flows and the need to achieve stability in order to allow prosperity to develop. I would have thought that the Chinese would see the benefit in doing that. Will the Minister address the possibility of discussions with China about the situation in north Sudan?
I think that many of us shared in the good will towards South Sudan on its independence. It is very sad to see its security forces also implicated in rape, torture and extrajudicial killing. The Government of South Sudan face a difficult situation, particularly given the crisis in oil revenues. If we think that we have difficulties with cuts, we should consider the idea of losing half our GDP. That would cause a complete financial crisis that any Government would struggle to cope with, let alone one in such a fragile and developing situation. The Government of South Sudan also face multiple instances of violent instability across the country. The hon. Member for Mid Derbyshire (Pauline Latham) spoke well about the additional problem of forced displacements from the north.
We must try to understand the almost unimaginable problems faced by the Government of South Sudan. At the same time, they must receive the message loud and clear from the British Government that the good will that they had on independence will evaporate quite quickly if they do not try to address the human rights issues. If the abuses continue and if a culture of impunity is allowed to develop in South Sudan, as it clearly did in the north, that will be a worrying development.
It is to the credit of the South Sudanese Government that the terrible abuses in Jonglei state were followed by the arrest and charging of members of the state security forces who were involved. I would be interested to hear the latest news on that, but I have not heard of any prosecutions. It involved only a small number of people, so it would be good to hear whether progress is being made. However, there are also cases such as that of Deng Athuai Mawiir—excuse my pronunciation—the anti-corruption activist who was arrested. There is also the continuation of the death penalty. Even if we count only the official executions, there have been eight since independence.
Other Members have talked about the position of women. The south does have quite a good record. Some 26% of National Legislative Assembly seats are held by women and 12% of heads of Ministries, Departments and agencies are women. However, the overall position of women is not good and violence against women is widespread. It is part of the Government’s strategy to counter that.
The Foreign and Commonwealth Office’s stated priorities are to support UN peacekeeping, to support the African Union high-level implementation panel, to give financial and technical support to UN agencies and others, and to support capacity building in institutions in the south. Those seem to be exactly the right priorities. That is the right strategy in an intensely difficult situation. The only thing that we can ask in this Chamber and in this debate is that, if it is humanly possible, we raise our game even further and encourage our international partners to do likewise. If we can do that, we might thereby offer a positive message and hope to the people of this pretty unhappy region.
Ian Paisley (North Antrim) (DUP)
May I, too, preface my remarks by congratulating the hon. Members for Foyle (Mark Durkan) and for City of Chester (Stephen Mosley) on the way in which they introduced the debate? Their contributions were powerful and set out clearly the gravity of the situation and the seriousness of the problems.
It is right to celebrate the fact that South Sudan is the youngest country in the world, but it has had a troubled birth. There is an imperative on us, as a nation that cares, to demonstrate that we care through how we address the situation. This House is slowly but surely being sucked into a debate about and probably an action in another part of the world—Syria. I believe that this Government and this Parliament ought to have, if not more, then certainly equal concern about South Sudan and Sudan.
Since 2010-11, there has been utter silence about the situation in Sudan. That is a worrying trend, because the level of fighting has continued to rise and the humanitarian situation is again deteriorating. That conflict is being waged, but it is being met by total silence. That silence is a condemnation not of this House, but of the international community, who should be speaking out powerfully about the situation. It is a tribute to this House and to the Backbench Business Committee that this matter is the subject of debate today. This year alone, 300,000 people have been displaced in Sudan—another indictment of what is actually happening. If it were happening anywhere else, including parts of the middle east, it would be a matter for urgent questions and all sorts of other activities. I have some questions for the Minister, who I know will do his best to answer them, and I will reiterate some points that have been briefly touched on by other Members, as it is important to address them.
The Government of Sudan continue indiscriminately to target civilians with aerial bombardments. Such attacks are a clear violation of the UN Security Council’s resolution 1591, dated March 2005, which demands an end to such violence. What is the UN is going to do about resolution 1591? Will it insist that action is taken to protect citizens? Hon. Members have mentioned the atrocious attacks on civilians in the village of Jebel Marra, where there are already 500 orphans. The murder of a woman there on 16 June this year meant that two more children have been left without a mother. The Government of Sudan continue to obstruct aid agencies from operating freely within the region, and many of those agencies are struggling to cope with the 1.4 million people living in displaced persons camps with very little amenity—indeed, in many instances, with nothing. New arrivals are arriving practically every day to be faced with the opportunity to live under a tarpaulin shelter and scratch a living from the land.
That has been going on not for months or years but for more than a decade, which again is an indictment. The hon. Member for Cheltenham (Martin Horwood) was right to say that the UN is doing quite a lot—indeed, I think he said it is doing a good job—but if it has been paid $765 million by this Government and country since 2007, we would expect it to do a good job. The United Nations-African Union Mission in Darfur budget has cost an estimated $9.3 billion since 2007; one would have expected the problem to have been solved a long time ago. We are looking at a waste of resources, and I ask the Government to conduct an immediate inquiry into that expenditure to try to paint a picture of where the money is going, so that we can understand how it is being spent. For the life of me, I cannot understand how $9 billion has left a country in such an intolerable mess.
Martin Horwood
The hon. Gentleman is making an important point and it is right to question the cost of UN operations. Does he accept, however, that in some of these examples it is more important to try to build capacity and to offer training and support to improve the effectiveness of UN forces, rather than berate them about the amount of money we have agreed to spend on them?
Ian Paisley
I absolutely agree, and believe me, I am not berating. If the hon. Gentleman saw me berating, he would understand what berating actually means. I am simply asking questions, because the amount of money being spent is obscene for the amount of result. That is a fair point that is not that critical of the UN, and I think we have the right to make it.
The Government have a role to support peace, as the motion rightly states. In any country that has emerged from conflict—I speak with some personal experience—when conflict ends, stability starts to take over, and with that flows commercial activity. Capitalism is often accused of being cowardly, but if there is stability, capital and activity will start to flow. The Government must explain how they intend to encourage UK business activity to flow into that country when, as I hope it will, stability slowly but surely starts to make a foundation. What support will they give to British businesses that seek to invest and help develop the structure of that country?
It is also important to ask the Government what security support our nation can give to South Sudan, so that it can protect its people, borders and integrity, and so that we can continue to celebrate the birth of that new nation. What other assistance can our Government give? Can we encourage the UN to give money for the protection of the border, so that oil resources can be properly utilised and so that oil can properly flow, to allow the development of infrastructure and expenditure on South Sudan’s people?
I reiterate that the awful activities that in many instances are generated in Sudan against its neighbour are done not in the name of the ordinary people of Sudan, but in the name of a wrong regime. The regime must be challenged, but we must not penalise the ordinary people of Sudan because of it. As the Minister well knows, that is an incredibly difficult balance to achieve, but it is important that we spell out that principle loud and clear.
Ian Lucas (Wrexham) (Lab)
I thank the hon. Member for Foyle (Mark Durkan) for initiating the debate. He has done a great service in bringing the subject of Sudan and South Sudan to the House two years after it was last discussed in detail. I commend all contributors to the debate. They spoke with passion, eloquence and authority on the dreadful situation that prevails in Sudan.
I pay tribute to the all-party group on Sudan and South Sudan. All-party groups have, sadly, had a bit of a bad press of late, but this debate is a strong and powerful answer to those who criticise them. We have heard the personal testimony of those who have been to Sudan and South Sudan; they have been able to inform the debate with their personal recollections, which makes all hon. Members do our jobs better. So well done to the all-party group and all hon. Members who have contributed to the debate.
The hon. Member for City of Chester (Stephen Mosley) spoke with great insight, authority and passion about the situation on the ground, the difficulties people face, and how the hopes we had when South Sudan separated have unfortunately not been realised. My hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) highlighted an important aspect of the debate, namely that there are UN resolutions in place. The hon. Member for North Antrim (Ian Paisley) was right to question where the money has gone, because it is important that we hold all institutions to account, including the Government—that is the job of all hon. Members—the UN and those bodies that are established by it. If the job is not being done, it is our obligation to hold those institutions to account, and I am sure the Minister will do so.
The hon. Member for Mid Derbyshire (Pauline Latham) spoke of her personal experience of Sudan as a member of the International Development Committee, and particularly of women’s issues, the refugee camps and the inadequacies of the sanitation systems, which we need to improve. An important part of any new state is governance. The hon. Member for Strangford (Jim Shannon) spoke of the importance of religious freedom. The suppression of Christianity is not acceptable anywhere, including Sudan. The hon. Member for Cheltenham (Martin Horwood) spoke with his usual eloquence. He brought to the Chamber the experience of colleagues from his office who have worked in Sudan, and of the difficult situation that prevails.
The hon. Member for North Antrim spoke with great authority and presented the dilemma of what an international policy can achieve. The previous Government pursued an international policy, which the coalition Government continued with real commitment. Frankly, it is not working. It is now more than 10 years since the Sudanese Government launched military action against armed groups in Darfur, leading to the deaths of more than 300,000 Darfuris and the displacement of 3 million people. We heard from the hon. Member for Beckenham (Bob Stewart) that the problems in Sudan go back even further than that. The various examples cited in the debate show that the fundamental causes of the conflict remain. One can only feel for the people of Sudan and we must stand with them in sympathy and solidarity. The central fact is this: the appalling crisis that happened before is happening again. I listened to all the contributions to the debate, and I am sure the Minister did too. We need to work collectively to make progress and support the Government in holding international institutions to account.
We heard about the work carried out by NGOs and charitable organisations. They have provided us with examples of the difficulties on the ground and make a profound contribution to the day-to-day lives of individuals who have to live in a very difficult situation. Without their support, that situation would be worse. The security situation in Darfur continues to deteriorate. The Government of Sudan appear to continue to target civilians. Violence, insecurity and civilian displacement have increased since 2010, and rape and sexual violence continues to be used as a weapon of war. UN Security Council resolutions continue to be flouted.
International and media attention focuses on South Kordofan and Blue Nile, where the conflict between the Sudanese Government and Sudan People’s Liberation Army continues. There is a danger that the situation in Blue Nile and South Kordofan will turn into a longstanding conflict like that in Darfur. That must be averted at all costs. Recent figures from the Office for the Co-ordination of Humanitarian Affairs state that, just since January, more than 300,000 people have been displaced by inter-tribal fighting or conflict between armed movements in South Kordofan and Blue Nile. According to figures from the Government’s Humanitarian Aid Commission for government-controlled areas and from the Sudan Relief and Rehabilitation Agency for SPLM-N areas in South Kordofan and Blue Nile, more than 1 million people remain displaced or are severely affected by fighting. There are more displaced people this year so far than there were in the whole of last year. The situation is truly desperate, and addressing the conflict in these two areas is fundamental to finding a lasting peace between Sudan and South Sudan.
I was struck that Sudan was not mentioned once in Foreign Office questions today. That is why we need to thank the hon. Member for Foyle. There are so many other pressing issues at the moment, but the scale and breadth of the challenge in Sudan is profound. We ask the Government to press the UN Security Council to support and protect people across Sudan, particularly in Darfur, South Kordofan and Blue Nile state. The UK must continue to press the Sudanese Government and rebel movements to work towards peace. We cannot allow history to repeat itself. Recently, the UN’s Valerie Amos said:
“We cannot let Darfur slip off the radar of the international community”.
Unfortunately, that appears to have happened. In Blue Nile state—an area held by the Sudan People’s Liberation Army—there have been multiple scorched earth offensives. The humanitarian situation for those remaining there is dire, with civilians unable to tend their crops for fear of being bombed and food supplies scarce. The Sudanese Government continue to block humanitarian relief to civilians in rebel-held areas. We must ensure that access is given to UNAMID, humanitarian organisations and NGOs.
We hope that recent signs of co-operation and progress between the Sudanese and South Sudanese Governments continue. If it has been happening, it is probably due to international pressure, including from the UK and US Governments. We need to keep the pressure on. What are the Government doing to engage with the international community and to put pressure on the Sudanese Government and rebels to cease fighting? What recent engagements has the Minister had with international counterparts to help improve the prospects of a solution to the conflict in Sudan? Were Sudan and South Sudan an item for discussion at the G8 summit, and what steps were taken at the summit to address these issues? What discussions has the Minister had with the African Union high-level implementation panel to try to agree a transition to peace in Blue Nile and South Kordofan states? Will he update the House on progress with Qatar on the implementation of the 2011 Doha document for peace in Darfur?
This has been a harrowing debate. We have heard from all Members about the dreadful state of affairs that continues in Sudan and South Sudan. This is an issue on which the House needs to come together and work with the Government and international institutions to try to remedy the international community’s failure in Sudan and South Sudan over the past decade. It is important that we work together, and I am certain that the Minister will do his utmost to take the work forward in the days, weeks and months ahead.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mark Simmonds)
I begin by congratulating all hon. Members who have participated in this important debate. Their knowledge was exemplified by and built on the visits that people have clearly made to this important and challenging part of Africa. I agree with the hon. Member for Wrexham (Ian Lucas) on the importance of the all-party group on Sudan and South Sudan and its significant contribution to highlighting the importance of this issue in the House. He was right to mention that this subject was not raised in Foreign and Commonwealth Office questions this morning, but to be fair to the hon. Member for Foyle (Mark Durkan), he certainly managed to raise it in the previous FCO questions, and I have no doubt that he and other hon. Members will do so again.
I also want to congratulate the hon. Member for Foyle not only on securing this debate but on the detailed and passionate way in which he introduced the topic, highlighting the significant problems that exist. He was absolutely right to raise the challenges that exist, particularly the humanitarian crisis. If I have time later, I will say a little more about what we and the Department for International Development are doing about that. I join him and other hon. Members in putting on the record our recognition of the bravery and commitment of many non-governmental organisations in the work they do on the ground, albeit without being specific, as they request. He also raised the significant role of UNAMID, which is a joint UN-African Union force. It also needs to be put on record that Robin Gwynn, who is a senior FCO official and the United Kingdom’s special envoy to Sudan, is in Darfur today to discuss exactly how to reinvigorate the peace process and how we can support UNAMID and give it a greater focus.
The hon. Gentleman was also right to highlight the terrible suffering in Blue Nile state and South Kordofan—suffering that is sadly stretching and expanding into North Kordofan—and the importance of trying to ensure that the international community gets humanitarian access into those parts of Sudan when it is safe to do so. I can give the hon. Member for Wrexham an assurance that we are co-operating and discussing with multilateral organisations such as the United Nations and the African Union, as well as through the troika—the United States, Norway and the United Kingdom, which work together closely on these issues—and with other organisations, such as the Arab League, which also has an important role to play.
The hon. Member for Foyle was absolutely right to highlight the current deterioration of the situation in Darfur and the attacks on UNAMID, which have continued. We have also seen tribal clashes over land, which means that this is not a simple matter of the South Sudanese forces attacking those tribal groups. Things are much more complicated than that, but that does not take away from the suffering that is occurring. More than 300,000 people have been displaced this year—more than in the last two years—and 1.4 million internally displaced people are already in camps in Darfur. We are doing what we can to alleviate the human suffering and the humanitarian situation, and we certainly press the Government of Sudan very strongly to honour their commitment under the Doha peace agreement and allow unhindered humanitarian access.
The hon. Gentleman also talked about the risk that aid for Darfur will be used by the Government. I can give him an assurance that UK assistance in Darfur is delivered through UN agencies and NGOs and is carefully targeted specifically to benefit ordinary Darfuris, not Government institutions. Indeed, after the Doha conference there were significant and detailed strategic talks to ensure that all donor assistance is targeted in that way.
My hon. Friend the Member for City of Chester (Stephen Mosley) made an informed and knowledgeable speech. He was absolutely right to say how highly regarded the United Kingdom still is in Sudan and to talk about the significant educational links that exist. He also raised the importance of the humanitarian challenges, quite rightly highlighting the excellent work of the NGOs. If I may build on the sad point he made about the Ethiopian peacekeeper who was killed, we utterly condemn the attack. Indeed, last night I had the sad task of writing to the Ethiopian Foreign Minister to express our condolences at the loss of a young female Ethiopian peacekeeper.
My hon. Friend was also right to highlight the importance of oil to both economies and to acknowledge and congratulate those officials in the Foreign Office and DFID who work tirelessly to alleviate the suffering and do what they can to find lasting solutions to the problems that have dogged Sudan and South Sudan for far too many years. I can confirm to him that their focus on DFID, in addition to alleviating humanitarian suffering, is about building accountable, capable and responsive government, public financial management through the anti-corruption commission and supporting civil society.
Jim Shannon
On the issue of accountable management, is the Minister aware of any worker projects relating to land management or agricultural projects, perhaps to enable people to try to feed themselves? Is there a way for that to happen?
Mark Simmonds
I am grateful for that intervention. The Department for International Development does that sort of project, and the hon. Gentleman is right to highlight the importance of putting in place sustainable economic policies to give people a stake in the community and to be able to provide for themselves and their families in a sustainable way. Ultimately, that is the only way we are going to break the cycle of conflict.
Another key point raised by my hon. Friend the Member for City of Chester was the prevention of humanitarian access in Jonglei. I can give him an assurance that we consistently raise our concerns with the Minister for humanitarian affairs and did so only yesterday. Additional officials in the FCO and DFID Sudan unit are today meeting the South Sudanese foreign affairs ministry to make that point very forcefully again.
We then heard from the hon. Member for Edinburgh North and Leith (Mark Lazarowicz), who was absolutely right to reiterate and highlight the powerful point about the suffering of refugees. He was right to highlight, too, weak civil governance and food shortages. He made a very important point about the effectiveness of UNAMID. I share his concerns and those of his right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr Clarke) about the performance of UNAMID in respect of its core mandate to protect civilians. I can give him an assurance that the UK is working with the UN and the troop-contributing countries to improve the performance of troops and that we regularly raise with the Government of Sudan the restrictions placed on the mission by the Sudanese authorities, which are completely unacceptable. Officials are in regular touch with Mr Chambas, the new head of UNAMID, about more effective management of the mission.
My hon. Friend the Member for Mid Derbyshire (Pauline Latham) was absolutely right to highlight the lack of infrastructure in South Sudan, and the importance of roads for economic development and economic growth. She further emphasised the point that other hon. Members made about the importance of oil revenues and keeping the oil flowing to build up infrastructure and capacity. She also highlighted, with great articulation, the practical problems of flooding, lack of jobs and language difficulties, not to mention the significant economic challenges. We share those concerns about the situation of those of southern origin, who have been required to leave Sudan following the independence of South Sudan. DFID has provided financial support specifically to respond to the humanitarian and resettlement needs of the returnees.
Let me deal now with the important contribution of the hon. Member for Strangford (Jim Shannon), who focused his remarks on problems with religious freedom and the persecution of Christians. We are very concerned about the increase in the number of reports in recent months of intimidation and threats to Christians and to church premises—from other groups and, significantly, from parts of the Sudanese security services—as well as of the deportations of individual Christians of foreign origin. Our officials in Khartoum have, together with the EU, met members of the Sudanese Government to raise our significant concerns. In particular, we have urged them to investigate the attack on Christian individuals and properties. It is also worth emphasising that the UK embassy is providing assistance in a consular capacity to foreign Christians who have been affected by these problems.
Briefly, if I may, I would like to put on record even though I am a Minister in the Foreign Office, some of the very significant and important work being done by the Department for International Development, both in Sudan and South Sudan. The work focuses on responding to the underlying causes of conflict and its impact on the poorest and most vulnerable in Sudan—displaced people, particularly girls and women, the urban poor and the disadvantaged young. DFID will work to tackle the impact of unequal allocation of finance and unequal access to basic services.
Some of the figures are quite extraordinary, so let me quickly trot some of them out. About 800,000 people have been given access to clean drinking water; 20,000 young people have been helped to obtain education and training; 80,000 people have access to financial services; 10,000 sq km of land have been returned to productive use—the hon. Member for Strangford alluded to that—and 250,000 women and girls have improved access to security and justice. The list goes on, and it relates only to northern Sudan. In the southern part, our aid has enabled 2 million children to go through primary school, provided 750,000 people with malaria prevention and treatment, provided food security for 250,000 people, and given 470,000 people access to clean water and sanitation. Significant outcomes have been achieved, thanks to UK taxpayers’ money.
As always, my hon. Friend the Member for Cheltenham (Martin Horwood) made a very articulate speech. One of the key issues that he rightly raised was the influence that China can have in encouraging better behaviour on the part of the Sudanese Government, and we agree that it can play an important role in encouraging the Governments of Sudan and South Sudan to resolve their problems and build stability. We have regular discussions with China about Sudan in Beijing and at the Security Council in New York, as well as through our respective embassies in the two countries. I welcome China’s clear statement last week that Sudan should not shut down oil production, but should implement all agreements on their merits.
It was, perhaps, fair for the hon. Member for North Antrim (Ian Paisley) to suggest that there had been “silence” in the House, but I assure him that there has not been silence in Government Departments, in the United Nations, or elsewhere in international multilateral organisations in regard to the significant challenges faced by both countries. He rightly mentioned the importance of business, and I can give him a categorical assurance that DFID is working to improve the business environment in northern Sudan. He may be interested to learn that in the autumn an international investment conference will take place in Juba, in South Sudan, with the aim of stimulating inward investment and sustainable job creation in the area. He also rightly referred to the tension and the difficult balance that sometimes exists between the regime in northern Sudan and the wish to support the long-suffering people.
The hon. Gentleman made an important point about the cost-effectiveness of the United Nations missions. I was in New York 20 days ago, discussing that very issue with key UN officials. We have supported a UN review of the military and the civilian elements of the mission over the past year. That has led to some reductions in the size of the mission, intended to improve the focus on its core mandate, and we will continue to work with the relevant UN department to improve the mission’s performance on the ground. The hon. Gentleman spoke of the importance of security support for South Sudan, and I can tell him that we are working with the international community to assist the reform of security services there. The cross-departmental conflict pool is funding a major project to improve the leadership and accountability of the southern Sudanese armed forces.
A major challenge clearly faces the two countries in the context of their bilateral relationships and their relationships with the regional and broader international communities. There is a huge amount of work to be done before Sudan and South Sudan can finally put this regrettable chapter of their history behind them. I urge the two Governments, with the support of the international community, to focus on ensuring that any influence that they have over armed groups in each other’s territories is used to positive rather than negative effect. We must all co-operate, co-ordinate and provide assistance to ensure that the nine-point plan that was detailed at the United Nations General Assembly last September is implemented in full as quickly as possible, to the benefit of people living in both countries.
Mark Durkan
I thank all Members for their passionate contributions to the debate. Alas, although many important issues were raised, none of what we said did justice to the scale and nature of the problems faced by the people of Sudan and South Sudan, or bore adequate witness to the quality of the work and commitment of so many non-governmental organisations and others.
The issues raised have been addressed by both the Minister and the shadow Minister, and I appreciate the fact that the Minister has responded to Members’ questions, including those passed on to us by others, as we engaged in the subject through the all-party group on Sudan and South Sudan and other channels.
Many useful questions were asked about UNAMID and the United Nations, and an important message was sent about the competence and value of their involvement. We cannot just casually go with yet another international agency, perhaps with a big money spend; we are talking about what is meant to be a serious international intervention in a tragic situation, and it does not seem to be delivering what it should. That may in part be because we have not held it to account or followed through on the financial commitment or on the parliamentary scrutiny to the extent that we have elsewhere. Perhaps we need to shake up our own priorities.
In my opening remarks, I did not have time to acknowledge last year’s very good report on South Sudan from the International Development Committee, so I am glad that the hon. Member for Mid Derbyshire (Pauline Latham) stressed its importance. She reflected in a poignant and personal way the practical implications for, and experiences of, the people in South Sudan. That report bears more reading and reflection. Perhaps another of the procedural tweaks or adjustments that we need to make is to ensure that when there is a quality report by a Committee, we give it time in the House. Members should not be left to busk a year later at the Backbench Business Committee in order to secure a debate such as this one.
I thank all the Members who contributed today. The hon. Member for City of Chester (Stephen Mosley) helped secure the debate and highlighted a number of points. He praised the thinking behind the South Sudan Health Action and Research Project, or SHARP. There are questions to be asked about that project, but I do not think any of us question the motive behind it. How it translates into practice and its budgetary resource commitment and long-term backing are what is important.
The hon. Member for Strangford (Jim Shannon) raised points that were addressed by the Minister and the shadow Minister, as did the hon. Member for Edinburgh North and Leith (Mark Lazarowicz). The hon. Member for Cheltenham (Martin Horwood) rightly cautioned us about the need to ensure that whatever criticisms we make of UNAMID, we do not say or do anything that negates the bravery of those serving in that difficult situation.
The hon. Member for North Antrim (Ian Paisley) made some very important points, and he was not in “berater” mode. He is certainly never in traitor mode, but the fact that he was not in “berater” mode was a novelty. He asked about UN resolution 1591; I am just glad it was not 1690.
The shadow Minister, the hon. Member for Wrexham (Ian Lucas), rightly highlighted the importance of many issues, and put salient questions to the Minister, which he, in turn, addressed well. I was also grateful for the interventions from the hon. Member for Beckenham (Bob Stewart), the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke), the hon. Member for Glasgow North East (Mr Bain)—who chairs the all-party group on Sudan and South Sudan—the hon. Member for Workington (Sir Tony Cunningham) and the right hon. Member for Leicester East (Keith Vaz).
A number of Members talked about the position of women and children in both countries. It is a salient statistic that a girl in South Sudan is three times more likely to die in childbirth than to complete primary education. South Sudan has the highest rate of maternal mortality in the world. That is why we need to be thinking about these countries and paying attention to last year’s Select Committee report. We also need to be addressing the question rightly asked by people such as the hon. Member for Wrexham: if Sudan and South Sudan are not being discussed at the G8 but other countries suffering conflict are, what is the difference? We can explain in all sorts of strategic and regional ways what the difference is, but we need to make sure that there is no difference as far as our sincerity, our motive and the level of our humanitarian commitment are concerned.
Question put and agreed to.
Resolved,
That this House has considered the Government’s role in supporting peace and development in Sudan and South Sudan.
Business without Debate
Delegated Legislation (Committees)
Education Act 1996 (Travelling Families)
(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Richard Graham (Gloucester) (Con)
The subject of this debate may be obscure, but what is at stake is at the heart of this Government’s mission to build community cohesion, to inspire educational achievement and to encourage strong families. My goal this evening is for the Under-Secretary of State for Education, my hon. Friend the Member for South West Norfolk (Elizabeth Truss), who has been generous with her time in her Department and today in this Chamber, to ensure that the consequences of any proposed changes to legislation do not unintentionally damage the fabric of life of some 24,000 people; and that the Government’s drive to improve exam results is not at the cost of close-knit, resilient and independent families in communities where divorce and antisocial behaviour are conspicuously rare.
Let me explain my case in more detail. The origins of section 444(6) of the Education Act 1996 can be traced to section 39(3) of the Education Act 1944—the Butler Act—that remarkable creation of the second world war. Any proposed change to that section would therefore be a change to the Butler Act provision which has endured for 79 years. The reason for such a change may come from the consultation that the Government launched last November—“Improving educational outcomes for children of travelling families”—on whether to repeal the current legislation that protects travelling parents from being found guilty of school attendance offences in certain circumstances.
Those circumstances are where parents are
“engaged in a trade or business of such a nature as to require”—
them—
“to travel from place to place”
and where
“the child has attended…as a registered pupil as regularly as the nature of that trade or business permits”.
Mr Marcus Jones (Nuneaton) (Con)
On this review, does my hon. Friend agree that one of the fundamental issues is that the report produced by the Government does not make a proper distinction between Gypsies, other Travellers and showpeople? The issues that showpeople have, which I am sure he is coming on to deal with, are fundamentally different on this matter.
Richard Graham
My hon. Friend is absolutely right. He has highlighted precisely the point I was coming on to, which is that the consultation document makes specific reference only to Gypsy, Roma and Traveller children—indeed, they are defined more precisely as children of Irish Traveller heritage, and the acronym is GRT. The consultation noted that they were among the lowest achieving groups at every key stage of education.
My hon. Friend makes absolutely the right point by noticing that the showpeople—the travelling showmen—are a specific group that would be inadvertently affected by the repeal of the legislation, which, we believe, does not apply to them.
Michael Ellis (Northampton North) (Con)
Does my hon. Friend agree that this is a classic case of there being an exception to every rule? Is his argument that such an exception should apply in the instant case?
Richard Graham
My hon. Friend is absolutely right. One size does not always fit all, as he and I know from the different size of suits that we are wearing. Exactly the same is true for the showman community in the case of this section of the Education Act.
The specifics of the showmen are worth noting. They are not an ethnic group as the Romany Gypsies or, arguably, the Irish Travellers are, but a cultural one, united by the fairground industry. They are a community that put on in excess of 200 fairs weekly, many held in winter, too, both here and abroad. They can trace their ancestry back to charters and privileges granted as early as a fair held near the constituency of my hon. Friend the Minister in King’s Lynn in 1204. Adjacent to her constituency, the Norfolk fair, held every February since Tudor times, marks the opening of the travelling season. The community will mostly spend the next eight months on the road.
The showmen have one winter base and the whole family is typically on the road for the rest of the year. It is a travelling, traditional family business where the role of women is just as important as that of men. David Wallis, the president of the Showmen’s Guild of Great Britain, said earlier this year:
“Women…are the backbone of the industry, working in every area from accounting to driving, as well as fulfilling traditional roles as housekeepers and mothers.”
His point was that splitting the family unit up would be unthinkable. Educating the children on the road means that studies can be fitted around the demands of the businesses and wives can continue to work alongside their husbands.
The showmen are largely represented by the Showmen’s Guild of Great Britain, a trade body that has been in existence since 1889 and that is responsible for some 98% of the travelling showmen of Great Britain, representing about 22,000 individuals. There are also three other trade associations, the Amusement Catering Equipment Society, which represents 120 families, the Association of Independent Showmen, which represents 500 families, and the Society of Independent Roundabout Proprietors, which represents 140 families. They would all be equally affected by any change to section 444(6).
The Minister and you, Madam Deputy Speaker, would be disappointed if I failed to mention the Gloucester connection to the case I am making this evening. Showmen have been based on and around Alney island by the ancient Westgate crossing of the River Severn, an entrance to our city, for more than 100 years. For example, they participated in a great fair held for Edward VII on Alney island in conditions of a downpour almost as heavy as the one that heralded the great flood of 2007. They contribute to the diversity and unique heritage of a great British city and a constituency that has been represented in this House for more than 700 years. They contribute greatly to their nearest school, Kingsholm primary school, whose deputy head has written to me as follows:
“Over the years we have schooled many of the children from”
Alney island
“and other sites that house different traveller groups in the Gloucester area…we ask…that our families communicate with us about their travel plans so that we can prepare work packs for the children to take with them. We also ask that our families keep in touch during their travels…so we can facilitate a smooth integration back into school…Kingsholm C of E Primary School is enriched by the varied ethnicity and cultures of our families. Each and everyone is valued and celebrated…A significant majority of our”
showmen
“families hold their children’s education in high regard; both their academic and cultural education. In the main the children’s attendance when they are in Gloucester is exemplary and therefore we can maximise the impact of interventions in order to address any gaps the children may have due to their travelling.”
The Minister will be particularly interested to hear that last week, for the first time in its history, Kingsholm primary school was awarded “outstanding” status by Ofsted. This is significant because it is compelling evidence that the travelling showpeople are no hindrance to—indeed, contribute to—outstanding educational achievement.
Mr Marcus Jones
In addition to the excellent work that schools do with children of showground people, does my hon. Friend agree that with modern technology and the will of the showground people to get their children to learn and to achieve, there is a way in which, when they are away from their base school, showground people can make sure that their children are well educated?
Richard Graham
My hon. Friend is right. He understands his own showmen community in Nuneaton so well. What has changed is the way in which remote education can take place successfully. Currently, children with travelling parents are registered with one school in the UK and they keep their place when on the move. The school sets work, which is completed on the road and sent back via a laptop with a mobile internet connection, and the children rejoin the school on their return. This is considered effective and efficient by both the parents and the schools involved. Over recent years there has been a consistent rise in the number of pupils taking GCSEs within the showmen community. These are the children who have benefited most from vast improvements made to distance learning with the help of technology, as my hon. Friend pointed out.
Jim Shannon (Strangford) (DUP)
Is the hon. Gentleman saying that those children are meeting the high educational standards that children in Gloucester are meeting? Is that what he is trying to achieve for all the families involved?
Richard Graham
It is fair to say that the educational achievements of all communities vary from place to place. Showmen are a community spread across the whole of the United Kingdom in 10 different regions. I do not have precise statistics for their educational achievements. It is one of the issues that I will mention before finishing my speech, if the hon. Gentleman will allow me to, but he is right to raise the question.
Over the past few months I have created an online petition which has attracted almost 4,000 signatures, all opposing a repeal of section 444(6), and innumerable, often moving e-mails from around the country. I hope the Minister will not mind if I quote briefly from a handful of them. This is from James Breeze:
“Being a showman was a massive complement to my formal education. Can you think of a more stimulating environment for a child to live in? How things work? The value of service? The value of money? Social interactions? The list is endless.”
He goes on to talk about his nine GCSEs at A to C level, four A-levels, a 2:1 degree from Durham university and postgraduate diploma from Leeds Metropolitan university. He is now working in a significant role in a multinational company, managing a large team. He comments:
“This reinforces my view that a showman’s life combined with education as it is now gives the best life skills.”
In similar vein, Morgan Robinson comments in an e-mail:
“I come from a travelling showman background and as such have had to spend many weeks away from school in the summer months…I never fell behind, and in some circumstances, I was actually ahead by the time I got back to school!”
He lists his A-levels and GCSEs, and his chemistry degree course at the university of Warwick. He says:
“My hopes for after my degree is to get a job as an intellectual property lawyer”.
There are several such e-mails. I shall finish them with e-mails from two sisters based in Gloucester, Zoe and Olivia Sheldon. Zoe wrote:
“As a young showperson I have relied on this Act”—
section 444(6)—
“all of my school life. From the age of 4 my parents removed me from my base school…to travel with the fair for 6 months of the year.”
She continues:
“I was successful in gaining a place at Ribston Hall Grammar School for girls at the age of 11 and went on to achieve 11 GCSEs A* to C grades. My sister Olivia, also a student at Ribston, is now studying with the open university to achieve an English degree.”
Zoe finishes:
“The education of young showpeople is reliant on this Act and its abolition would result in the needless break-up of showmen families and cause a loss in the traditional showmen culture as it would force showmen children to be brought up outside of the showman way of life.”
Zoe’s older sister Olivia wrote:
“my sister and I are not isolated cases. I have several cousins and friends who completed/are undertaking University Degrees after having a similar educational background to mine. Among the Showman Community we are hearing more and more news of great educational achievements…Travelling Funfares can move vast distances to get to their next event and are sometimes only in a town for a couple of days, making the suggestion of registering at a different school at each location inconceivable and even detrimental to the education of Showpeople…such an education was imposed on some elder relatives of mine who found it ‘confusing’ as different schools were doing different subjects at different times. The end result was a poor education.”
She goes on to comment about the importance of forming long-term friendships at one school—people who know showpeople’s children when they come back from their travelling.
I met one or two of their older relations on Alney island, who described to me what it was like moving from school to school, in one case being forced to sit in the corner with a book while everyone else was learning. I cannot believe that that is what the Minister would wish to see among our children today.
I am conscious that time is moving on and we all wish to hear from the Minister. I also had a moving letter from Charlotte Barltrop, who worked in a circus for 10 years before getting a degree in theatre and professional practice at the university of Coventry. She now runs her own business teaching circus skills. She wrote:
“All my achievements wouldn’t have been possible if…I was not educated as a child and…was not able to travel whilst gaining this early education. The skills I learned as a child, both in and out of the classroom, are what has enabled me to have such an amazing career”.
I believe that the Minister’s response to the consultation will be published before long, but not, I hope, before she and the Minister for Schools, who shares responsibility for the response, consider carefully the case for the following constructive suggestions. First, we should make arrangements to measure the education results of different showmen groups as a separate entity from the GRT community on which the consultation has been based. Secondly, I encourage the Minister for Schools to meet me and others, such as my hon. Friend the Member for Nuneaton (Mr Jones), interested in the case of the showmen, and to visit Kingsholm primary school in Gloucester to see how achievement and remote learning can be combined. Thirdly, and above all, we should exempt the travelling showmen and circus communities from any repeal of section 444(6). That would be a pragmatic, practical and appropriate way to ensure that the lives of some 24,000 travelling showpeople are not unintentionally and dramatically damaged by the Minister’s admirable focus on driving up educational results.
I am grateful to the guild, its representatives, the other associations, my own constituents, and many around the country who have committed their time to sending e-mails and messages of support and information.
Richard Graham
I am sorry, but I have very little time left.
Not least, I am grateful to Lisa Deakin Stevens, the family of Matthew Stevens and many others, supported by the Westgate councillors. They have all contributed to my speech this evening, and I look forward to a sympathetic response from my hon. Friend the Minister, in the knowledge that she cannot pre-empt her response to the consultation, but in the belief that this debate may influence her response, and that she will see that what I have raised is a good cause for a valued community.
The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)
I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing this debate on an issue of great importance that means so much to travelling families, especially showmen and circus communities, who travel for work for large parts of the year. My hon. Friend represents his constituents with aplomb, and he has done it yet again. I also place on record my thanks to the hon. Member for Central Ayrshire (Mr Donohoe) and my hon. Friend the Member for Nuneaton (Mr Jones), and representatives of the Showmen’s Guild of Great Britain for their helpful contributions to the meeting that I hosted on 15 April.
The Government’s vision is one of a highly educated society in which opportunity is more equal for children and young people, no matter what their background or family circumstances. The Department’s overall objective is to ensure that everyone has a fair opportunity to fulfil their educational potential. We are making changes to the national curriculum and reforming our examination system to restore public confidence. These reforms will benefit all children attending school regularly.
We are seeking to improve school attendance. There are clear and tangible benefits for pupils who are registered at school and attend regularly. Only 37% of those who miss between 10% and 20% of school sessions manage to achieve five or more GCSEs at grades A* to C, which compares with 73% for pupils who miss less than 5% of school sessions. Our country has one of the largest attainment gaps between the highest and lowest performing students, and I believe that big gap in skills is another thing holding our country back.
My hon. Friend made an excellent case about the good practice in his constituency. I am pleased to hear that Kingsholm primary school has just been rated as outstanding by Ofsted, which we of course want many more schools to achieve. I recognise that there are differences in performance between different parts of the travelling community. Of those pupils recorded as absent due to travelling who come from a Roma, Irish Traveller or Gypsy background, only 8.2% achieve five GCSEs at grades A* to C, which I am sure we agree is not a good performance. The figure for other parts of the travelling community is 40%, which is not as good as the UK average of 58.8%, but it is significantly better than 8.2%.
My hon. Friend suggested that we should work together to produce more accurate results for the showman community, and in our meeting of 15 April we discussed coming up with more details, which I think would be useful. We do not believe that a child’s aspirations should be limited by their access to education, but I am sympathetic to the arguments he made for showmen and circus members today and on 15 April.
The recent consultation on whether to remove the defence for travelling parents engaged in a trade or business has been helpful in raising some of the issues affecting the various travelling communities. I agree that the issues are different for different travelling communities. I was encouraged that the consultation received nearly 2,000 responses. I would like to thank the individuals and organisations who took the time to respond. I think it is notable that, despite having smaller numbers, the showman community provided the overwhelming majority of responses—73%.
This is clearly a very complex issue. I agree with my hon. Friend that it would be wrong to rush to make any changes before considering the consequences. He made a good point that the legislation has been in law for quite some time. We certainly do not want to make any precipitous decisions on the matter. The reason I started talking about educational attainment, however, is that that is our goal, and we need to reach it one way or another.
Mr Marcus Jones
I thank my hon. Friend for the due consideration she is giving the matter. I ask her to consider the children of showground people who might suffer from conditions such as autism and find it difficult to change environments regularly. Will she therefore consider the impact that moving from school to school from week to week might have on a child with such a condition?
Elizabeth Truss
My hon. Friend makes a good point. That is certainly something we should take into account when making our final decision on the matter.
The complexity of the issue is the reason why we consulted, but I think that we should focus not only on the legal sanction element in the current arrangements, but on how we can improve the system so that we can better meet the educational needs of mobile families and place no limit on travelling children’s ambitions or potential to succeed. Both my hon. Friends have suggested ways, including the use of technology, in which we might be better able to serve people with different lifestyles.
My hon. Friend the Member for Gloucester confirmed what the responses to the consultation have been telling us—namely, that showmen try to avoid any interruption to their children’s education but that that has become more difficult in recent years, with many local authorities choosing not to run Traveller education services in the same way as they did previously. For some, that has meant the disappearance of peripatetic teachers who would visit fairgrounds. Local authorities should prioritise and run services in a way that is best suited to local needs.
My hon. Friend also mentioned the distance learning packs provided by schools. Many responses from schools and members of the showman community have indicated that they have good relationship with schools and that they are given access to distance learning packs. There are clearly new ways of communicating involving modern technology that could also be used. It is clear that when this works well it is to be encouraged, but this is not always the case and some people do not enjoy the benefits of such arrangements.
I have set out our vision and expectations for all children, and I maintain that, in raising attainment for all pupils, we will drive up attainment for travelling pupils as well. I will consider the responses to the consultation, together with the Minister for Schools, and I am grateful to my hon. Friend the Member for Gloucester for raising this matter and for his contribution to the discussion. He has highlighted some important concerns. As a follow-up to today’s debate, I suggest that he has a discussion with officials about some of the more technical issues. I know that he has come up with various proposals, including giving exemption to members of the Showmen’s Guild. There would be issues with that, however, because not all showman proprietors are necessarily members of the guild. There would also be concerns about having exemptions for a particular group, and the loopholes that that could create.
We need to look not only at the current proposal for legislation on attendance but at how we can better support families who are travelling. We need to ask whether there are different ways of doing this and whether we could make better use of modern technology. It would be helpful to explore those questions with the officials from the Department who are considering this matter. As I have said, I am not keen to rush to a precipitate judgment. We all want to raise attainment and to ensure that schools are providing a good service to the communities that they serve.
I will also pass on to the Minister for Schools my hon. Friend’s desire to meet him and discuss the issue further. That would be a good thing, because we have been discussing attainment among the different communities, and that is my right hon. Friend’s responsibility. Comparing the attainment among Gypsies, Roma, Travellers and members of the showman community will be important in reaching the final resolution of this issue.
I thank my hon. Friend for raising this issue and for bringing the delegation to the Department for Education in April. It is important that we get this right, and it is a pleasure to be able to work with hon. Members who take such a keen interest in a piece of legislation that might seem detailed but which will have an impact on quite a number of people.
Question put and agreed to.
Ministerial Correction
(10 years, 10 months ago)
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Business, Innovation and Skills
(10 years, 10 months ago)
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Mr Peter Bone (Wellingborough) (Con)
In my constituency, a number of businesses in the high street have unfortunately closed. If they go into liquidation, their employees receive pay arrears, holiday pay and notice pay, if necessary from the national insurance fund. If the business just ceases trading and is eventually struck off, its employees do not get pay arrears, holiday pay or notice pay. Will the Minister meet me to discuss that anomaly in the law?
Michael Fallon
I would be happy to do so, but I hope my hon. Friend will not be too gloomy about the state of the high street. He will know that, in the most recent year for which we have figures, some 22,900 store-based retailers opened and 21,000 closed—more stores were set up than were closed.
[Official Report, 13 June 2013, Vol. 564, c. 479.]
Letter of correction from Michael Fallon:
An error has been identified in the oral answer given to the hon. Member for Wellingborough (Mr Bone) on 13 June 2013.
The correct answer should have been:
Michael Fallon
I would be happy to do so, but I hope my hon. Friend will not be too gloomy about the state of the retail sector. He will know that, in the most recent year for which we have figures, some 22,900 store based and non-store based retailers opened and 21,000 closed—more retailers were set up than were closed.
Westminster Hall
(10 years, 10 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Unpaid Internships
(10 years, 10 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Hazel Blears (Salford and Eccles) (Lab)
It is a great pleasure to serve under your chairmanship, Mr Caton. I begin by thanking Mr Speaker, not only for allocating the time for the debate, but for his personal commitment to this whole agenda, which I will discuss later in my speech and for which I am very grateful; it has made a huge difference. I am also very grateful to colleagues from all political parties for coming along this morning. We have a good turnout, which indicates that the issue engages all parties and is very much a cross-party matter of concern. I have been grateful for support from Members of all parties, as I have tried to get consensus on this issue, so that we can move towards change; that support has been very valuable indeed.
Today I am speaking on a topic that I am really passionate about: the scandal—scandal is a strong word to use, but it is a scandal—of long-term unpaid internships. Nobody in this House would disagree that internships can be a valuable way for young people to get their foot on the career ladder, be it in the world of politics, journalism, public relations, the law, or fashion, or in any other kind of occupation. That is more important than ever, given the current economic climate, and given that more than 1 million young people are unemployed. We are not just talking about people who may have had a difficult upbringing and struggled at school; university graduates and even postgraduates are really struggling to find work.
Internships offer a chance for a young person to demonstrate to an employer their ability and suitability over a set period, usually at least three months. Young people apply for an internship hoping that—if they do well and like the company, and the company likes them—there could be a permanent job for them at the end of the period. However, my big problem with many of the internships currently on offer is that they are unpaid.
Recently I have seen figures that estimate that 92% of arts internships and 76% of internships in the public relations industry are unpaid. Some might say that is perfectly reasonable, given that there are no guarantees that the intern will be suitable for the role in the long term. However, the big problem is that the overwhelming majority of these roles are in London, which is the most expensive city in the country for people to live in. The London Evening Standard recently found that the average rent in London was poised to break the £1,000-a-month barrier, so three months working for free could cost an intern more than £3,000, just for accommodation, and that is without other living costs such as food and transport. Very few young people will have that kind of money saved up to enable them just to get by while they are doing an unpaid internship. Only those who already live with family in London or can call on the bank of mum and dad will be able to take up unpaid internships; that discriminates against a huge proportion of young people on the basis of geography and wealth.
Take someone from a less well-off household anywhere outside London who may have worked hard and scraped the money together, through loans, to get a degree. They have real talent to offer and they are more than capable of doing an internship in the industry that interests them—say, fashion—but how on earth can they possibly afford to work for free in our capital city? I spoke to one young woman recently who had an internship—I think it was with Karl Lagerfeld—and she worked for 12 hours a day, sewing sequins on couture gowns that retailed for £5,000. I asked her what her terms and conditions were. She did not receive a penny in payment. She said, “We very often get pizza and occasionally we get shouted at,” so it was not a very good environment at all.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I thank my right hon. Friend for championing this important issue. I take on board her points about young people from outside London, but does she not agree that even in constituencies such as mine, which is close to Westminster, many young people need to contribute to the family household income, and unpaid working is a real problem? Sometimes even they cannot do it.
Hazel Blears
My hon. Friend makes an extremely good point, and she has been a champion for the social mobility agenda for many years. The principle of working for free is wrong, irrespective of the circumstances, in London or outside London. I will just qualify that by saying that short-term work experience placements are perfectly suitable. However, long-term unpaid internships, wherever the intern lives, are wrong.
John Hemming (Birmingham, Yardley) (LD)
I congratulate the right hon. Lady on raising all these issues. I also thank Mr Speaker for allocating the time for this debate. Does the right hon. Lady share my concerns about social mobility, because this is about social mobility? Also, does she think that there are perhaps lessons to be learned from the history of the Bar? Initially, to get a pupillage, a person had to pay 200 guineas, but in 1975 that system was abolished and bursaries began to be introduced. Now there is a requirement to ensure that a pupil—who has to work as a pupil to become a barrister—is paid. That is perhaps something that other professions could learn from.
Hazel Blears
I am grateful to the hon. Gentleman for that intervention. I am also grateful to him for supporting Mr Speaker’s parliamentary placement scheme, to which the hon. Gentleman has shown a real commitment. He makes an interesting point about the law. I think that most of us would feel that the law might be one of those professions that had not made as much social progress as others. However, it is not just among barristers that there has been progress: some of the big law firms in London are now very conscious of the need to bring in a wider pool of talent to ensure that they are getting the very best people. As for barristers’ chambers, I will cite an example in a moment of something that I do not feel is right. Nevertheless, they have made significant progress.
John Hemming
I thank the right hon. Lady for giving way to me a second time. Does she agree that this issue is about getting a first step on the ladder? A person cannot get to the second step unless they get on the first step.
Hazel Blears
I absolutely agree. That is why this is about social mobility, because if someone cannot get their foot in the door as they do not have money or connections, or do not know the right people, it will be virtually impossible for them to use their talent and realise their potential. That is why I feel quite angry and passionate about this issue, and it is why I am so pleased that many Members share that passion and try to make a difference, as the hon. Gentleman clearly does.
Jim Shannon (Strangford) (DUP)
I congratulate the right hon. Lady on bringing this matter to the House for consideration by us all, and on the way she is introducing the debate. Does she feel that there is perhaps a need to change the mindset of big business and others who employ interns, to ensure that they give interns a minimum wage? Although internships are a good opportunity for young people to gain experience, for many of them, unpaid working is a real financial burden on them and their families. Is there a need for a sea change within big business?
Hazel Blears
I could not agree more with the hon. Gentleman that this issue is about behaviour change and changing the mindset. In the past, not only in the media or the law but in this House—I will come on to discuss this House—there was a culture of having unpaid internships, and I do not think that people really considered the impact on the young people.
We are making progress on this agenda. There are many companies now that, for good business reasons, want to access a wide pool of talent. Also, they feel that it is morally wrong to exploit young people through unpaid internships. If we look at some of the big consultancies, such as Ernst and Young, PricewaterhouseCoopers and Deloitte, and some of the big insurance companies, including AXA and Aviva, or some big construction companies, such as CH2M HILL, they are all now paying their interns. I congratulate them; they are leading the way. Some of this behaviour change is about naming and shaming the people who are doing the wrong thing, but it is also about praising the people who have been prepared to put their money where their mouth is and do the right thing. That is why I think we are making progress.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I congratulate my right hon. Friend on securing this debate. It is absolutely vital that we discuss the issue, and that we see urgent change. She has talked on two occasions this morning about the pool of talent. She also mentioned the vast array of companies and organisations that unfortunately still have unpaid internships, of which a majority are in the creative industry sector. Does she share my concern that that will lead to a reduction in the pool of talent, and will impact on one of the most important sectors in the UK economy, and that that could have long-lasting implications?
Hazel Blears
My hon. Friend makes a very interesting point. In fact, I think that we have an Opposition day debate tomorrow on the role of the creative industries in our regional economy. The evidence is overwhelming that creative industries are making a significant contribution to the GDP of this country; at the last count, I think they contributed 7% of our GDP, so they are really important.
Also, we very often find that the most creative people come from difficult backgrounds, and that because of their life experience they have a different perspective from other people. I met a fine art student recently. It was heartbreaking, because she clearly had talent, but she was devastated; she said to me, “I can never be a fine artist because of the culture of unpaid internships.” I think she could be a future Monet or Pissarro, but we will never see what she could paint, and she will probably end up doing a fairly normal job, yet she was incredibly creative. That is a great pity, and it is damaging us as a country, as well as damaging those individuals.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)
I apologise for not being able to stay until 11 am. I congratulate my right hon. Friend, not just on obtaining this debate and on her passion on this issue—I have never been in a meeting where she has not shown passion—but on the enormous amount of work she has done on the Speaker’s programme and on the Social Mobility Foundation.
We have all been in a dilemma in the past. I am committed to what my right hon. Friend is doing and will sign the pledge, but in the past we have all found ourselves not just having short-term volunteer work experience placements, which, as she says, is acceptable, but taking young people from university, on occasions—it is a long time since I have done this—on placements as part of a sandwich course, paying expenses, not realising what the burden on young people would be. In the light of the social mobility tsar’s reflections this week, would it be appropriate to work with universities with access programmes to ensure that resources are made available for those who are expected, and want, to take sandwich-course placements, including in this House?
Hazel Blears
I am grateful to my right hon. Friend and return the compliment: a lot of my political passion has been mentored and guided by him. I have never been in a meeting with him when he has not been passionate—occasionally angry, but determined to make a difference, which is welcome. As ever, he makes a practical suggestion. A number of hon. Members have contacted me, saying that during certain modules on university courses, students have to come to Parliament for up to three months and little support is available. Student loans are in place for that period, but we should be discussing that with the university sector and, if it is a compulsory element, more support ought to be available. Perhaps our campaign can take that forward in a practical way. I am grateful for my right hon. Friend’s suggestion.
Mark Field (Cities of London and Westminster) (Con)
It is important that we in Parliament collectively get our house in order, as far as this internship matter is concerned. We should, at the very least, pay a small amount of money to our interns and ensure that they are properly trained up, hopefully to get a permanent job, either in our office or someone else’s.
I appreciate what the right hon. Lady is saying and agree with the great thrust of it. I thank her particularly for the positive things she said about a number of City institutions that are trend-setters in this area. However, is she concerned that if we regulate to outlaw free internships, the risk is that rather than enhancing social mobility, there will be a black economy in internships, which will be taken up by those who are wealthy enough to rely on parents? How would she ensure that that unintended outcome of what she is proposing was avoided?
Hazel Blears
I am grateful to the hon. Gentleman for raising the issue, and for his advocacy for change, particularly in the City. He has put his finger on an issue that many people raise with me: if we regulate, do we drive the issue underground and exclude more people? There comes a point when a moral decision has to be made. Are we comfortable asking people—often young people—to work for nothing? It is worse than Victorian. Some 100 years ago, people used to pay to be apprenticed to a master, and used to pay for their articles and pupilage, as the hon. Member for Birmingham, Yardley (John Hemming) said.
There is a point at which, as political leaders, we say what is right and wrong and then get people to change their behaviour. We should have some regulation, although I would not do a lot of regulation in this field. I suggested that we outlaw the advertising of unpaid internships, which in themselves are unlawful. At the moment, people can advertise things that are unlawful, which is farcical for legislators. We have to make a moral and political decision, and then get behaviour change, led by good companies and firms, and good advocates, who will go with us. There are 100 companies in the Deputy Prime Minister’s social mobility compact; that is a massive swathe of people who can be our advocates and ambassadors.
On the idea of driving internships underground, at the moment 95% of people are excluded anyway. If companies use word of mouth, they will not be able to bring in those from other areas of the country, or those who do not have any money. Sometimes, we just have to stand up and be counted.
John Hemming
Given that not paying people is unlawful under the national minimum wage regulations, and given that under the Serious Crime Act 2007 encouraging a crime is unlawful, I wonder whether advertising an unlawful thing and encouraging people to do it is already a crime. Perhaps the right hon. Lady’s efforts in this area could simply enforce the law.
Hazel Blears
I am grateful to the hon. Gentleman. I do not know if he has a legal background; does he?
John Hemming
I set up a computer business many years ago. I am a computer programmer.
Hazel Blears
I was going to say that I love clever lawyers’ suggestions; nevertheless, I love clever suggestions. If people advertising were complicit in an unlawful activity, perhaps we could look at aiding and abetting and being accessories; all those things are now going through my mind. I do not think that we are necessarily in that territory. I am grateful to Her Majesty’s Revenue and Customs for taking this issue more seriously, at the instigation of the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson), who has pressed HMRC to fast-track enforcement; I will come on to that later in my speech. More can be done, but the hon. Member for Birmingham, Yardley, makes an intriguing suggestion, and I am pleased that we have it on the record in Hansard that it might be worth considering.
Meg Hillier
Does my right hon. Friend agree that we have to guard against one important thing? If we move the threshold for people applying for positions that we hope would be paid or supported through a particular scheme, we could make it more difficult for children and young people from difficult backgrounds to reach the threshold, passing the interviews. We have to make sure that moving the entry point does not exclude some people from certain backgrounds.
Hazel Blears
My hon. Friend makes a good point. Social mobility is about young people’s journey all the way through, from primary school to secondary school, to further and higher education and to their first interview and their first job. It is sometimes difficult for people to pass on the first occasion, in front of an employer, if they do not have the social skills to be able to impress people. Sometimes in our education system, we might do well on academic qualifications, but increasingly the evidence is that people with soft skills—team building and relationship building—impress employers most and end up getting the job. My hon. Friend makes an important point. That is why we need more mentors, role models and support, all the way through that journey, to ensure that the cleverest and brightest of whatever background can come through.
Justin Tomlinson (North Swindon) (Con)
On that point, I am from a challenging background; I was at a school that was at the bottom of the league tables, and I understand the sentiment behind this debate, but as a Member of Parliament and a former business owner, I was always being offered enthusiastic interns when I did not have permanent positions. On five occasions, vacancies came up by coincidence and I snapped up the intern. They all went on to have senior management positions, with four of them going on to be officer/managers. It is about gaining those skills. The key is using interns constructively; encouraging them to apply for permanent jobs from day one, even if that means that they have interned only for a couple of days when an opportunity comes up; and, crucially, being constructively flexible and supportive while they are working.
Hazel Blears
I am pleased to hear from the hon. Gentleman. Sometimes in this House, our policy positions are rightly coloured by our personal experience, which we bring to politics and Parliament. I share some of the hon. Gentleman’s difficulties. I applied for 300 jobs when I first came out of college—no connections, no interviews. It was a difficult time. That is part of the reason why I am so passionate about this issue.
I am glad that the hon. Gentleman has employed people, and really glad that they are doing well. However, the people who could afford to do the unpaid internships will be a tiny proportion of people in the country, because most people cannot come to London, cannot afford accommodation and cannot afford to be part of that pool, even, and are therefore excluded. A few weeks’ work experience is fine, but people are routinely advertising for 12 months’ unpaid internship. I know young people—there are interns in the audience today—who have done a series of one-year unpaid internships. They have worked for two and three years for no pay. It is ludicrous and simply wrong.
Justin Tomlinson
I absolutely understand the right hon. Lady’s point about people advertising 12-month unpaid internships, which is not acceptable. However, the point about flexibility is that people might be able to intern for someone in the evenings, after they have done their stop-gap, part-time job. There is always an opportunity for people to round the edges off; employers just need to be flexible, to support people and to allow them that opportunity.
Hazel Blears
I agree entirely. I would say to employers that part of that flexibility and support is pay. If a student is doing a part-time job to get through university and an internship in the evening, that is not acceptable—that is not a life worth living. There must be some payment of the intern, who is working for the employer, in their company.
John Hemming
If I might disagree with my hon. Friend the Member for North Swindon (Justin Tomlinson), I am still a business owner, and I employ more than 250 people. I believe it is better to select people on their abilities, rather than on their parents’ wealth. Does the right hon. Member for Salford and Eccles (Hazel Blears) agree?
Hazel Blears
I apologise to the hon. Gentleman; could he repeat his question? I was just reading a note from the Clerk.
John Hemming
The point I was making is that I am still an employer, and I employ a large number of people on their abilities, not their parents’ wealth.
Hazel Blears
I am delighted to hear that. I am also delighted to hear the debate we are having. It is important that people give their personal views when we have a debate. From that, we get behaviour change. I have been campaigning on this issue for the past two years, and I have seen people’s opinions change. Some people started out by telling me, “We think these things are acceptable” or “We think the jobs will go underground”, or by raising other problems, but we have achieved significant progress. I am therefore delighted that we are having this debate. Incidentally, the hon. Gentleman has a significant record as a successful business person, so an employer’s business need not suffer if they pay their interns. In fact, it could prosper because they are doing the right thing: they get a great reputation, their brand is improved and they make significant progress.
Paul Goggins (Wythenshawe and Sale East) (Lab)
I join others in congratulating my right hon. Friend on obtaining the debate and on the tremendous campaign she has waged. Her exchanges with hon. Members on both sides of the Chamber demonstrate the power of her argument. On the one hand, there is the moral case that it is simply wrong for a business that uses people to exploit them by taking their labour for nothing. On the other hand, investing in young people’s talent is in the interests of not only businesses, but the wider economy. My right hon. Friend sets out the argument neatly under those two headings.
Hazel Blears
I am grateful to my right hon. Friend for his support. When we start a campaign, we sometimes think the forces ranged against us will be implacable and that we will never make progress. Through a combination of attrition, tenacity, determination and, sometimes, the fact that people just want us to shut up, we do start to change attitudes. Most people actually want to do the right thing; the issue is how we encourage them. It is a bit like the national minimum wage. When the Labour Government brought it in, everybody said that it would cost 1 million jobs and that people would not be able to sustain their businesses. The people who did not pay the national minimum wage undercut the good companies that did, and we have exactly the same thing with interns: good companies are doing the right thing by bearing the cost, while other companies, which are doing the wrong thing by not paying young people for their work, are getting a financial competitive advantage. We went on a journey with the national minimum wage; we are now on another journey, and I hope many more people will join us.
Luciana Berger
Does my right hon. Friend share the concern that I feel when hon. Members talk about interns supporting their internship by doing paid work in the evenings or at weekends? Unfortunately, that is difficult for people with caring responsibilities. It was carers week last week, and millions of people who care for a parent or child might want to get on the career ladder but cannot, because they cannot do that extra evening or weekend work to support their unpaid internship.
Hazel Blears
My hon. Friend makes an extremely good point. Life is difficult enough, but it must be virtually impossible for someone with caring responsibilities to get a foot on the ladder. At a time when so many young people are unemployed, we should be giving them stepping-stones to success, rather than putting further barriers in their way. It is a hackneyed phrase, but we need a level playing field so that people are not discriminated against on the grounds of wealth, class, background or caring responsibilities; they have as much right to do well as those in different circumstances. The fact that someone has privilege or wealth should not give them an unfair advantage, and many of us on both sides of the House came into politics because we believed in a different kind of society. This issue is an opportunity for us not only to exhibit our values, but to do something practical about putting them into practice.
Mark Field
The right hon. Lady rightly said that many companies increasingly want to do the right thing, although it is perhaps fair to say that it is easier for a company employing 250 people to do the right thing. My slight concern—I do not wish to indulge in special pleading—is that, in the creative industries, such as fashion, which the right hon. Lady mentioned, and some of the smaller media industries, it is almost part of the economic model to have a whole lot of interns coming into play. I am in no way trying to defend that behaviour, but if we are to move forward, particularly with legislation and regulation along the lines the right hon. Lady would propose, we need to make the case more strongly to such companies than, perhaps, to City-type firms, which very much buy into this agenda. Has she any thoughts about how we can make that point to companies and, essentially, tell them, “Your economic model simply will not be viable for the 21st century”?
Hazel Blears
The hon. Gentleman, who has extensive experience of business, makes a good point. Let me use an example I was going to use later. I have recently discovered that Universal Music UK now pays all its interns above the minimum wage and in line with the London living wage. Morna Cook, its director of human resources, has said:
“We pay everyone who joins us above the national minimum wage and in line with the London Living wage. It’s only fair that they are paid for the work they do. Most importantly it also means that anyone can apply, not just those who live in London or can afford to work for free—we’re a diverse business and it’s important that’s reflected in the people who work for us.”
Universal Music UK is a fantastic leader in the field, and it is doing the right thing.
I recently saw a piece by Julie Walters, the famous actress. She said she was increasingly worried that working-class people could not come through the acting profession because of the culture of unpaid internships and that middle-class people had to adopt working-class accents to play working-class parts in the theatre. Goodness me, what state are we in if that is happening? If we cast our minds back 50 years, we could not find black actors, and people had to pretend to be black to take up some roles. We are in the same place with people from working-class communities.
In fashion, Stella McCartney is now paying her interns. Again, she is a great leader. If we have people in the creative industries saying, “I used to have unpaid interns, but now I’ve seen the light, and I know the right thing to do,” they can act as real role models for change.
Meg Hillier
On the point about fashion, I have been working with the fashion industry in Shoreditch, which is a large fashion hub. A lot of work is being done to create proper, paid apprenticeships so that people are grown into the jobs. I completely agree with the hon. Member for Cities of London and Westminster (Mark Field) that there are still real challenges, but there is a move in the right direction, and we should recognise that, on the grounds that we should applaud the good as well as condemn the bad.
Hazel Blears
I am grateful to my hon. Friend for making that point. Fashion, like journalism, is beginning to change. Martin Bright, who runs an organisation called New Deal of the Mind, has been a real leader in getting more apprentices and young people employed on proper terms and conditions in the whole range of creative industries. He has done a fantastic job in making that happen.
Stella Creasy (Walthamstow) (Lab/Co-op)
Will my right hon. Friend give way?
Hazel Blears
I would be delighted to give way to my hon. Friend. Unfortunately, I did not see her because she was on my wrong side.
Stella Creasy
That is very rare for us both. I join everyone in paying tribute to my right hon. Friend for the work she is doing. Did the hon. Member for Cities of London and Westminster (Mark Field) not put his finger on the nub when he talked about the economic model that exists? He was talking not about internships, but about companies using young people to do jobs that are not training opportunities. Does my right hon. Friend agree that we could learn from the voluntary sector, which I came from, where a clear distinction is made between business-critical work and value-added work in understanding what it is appropriate to ask a young person to do as part of a work experience placement, for example, and what it is appropriate to pay somebody for? Indeed, young people should at least be given the national minimum wage, and employers in the public and private sectors not doing that should be held to account.
Hazel Blears
I could not agree more. That is one of the issues that goes to the heart of the matter. Is a company employing somebody who should be doing a job with set hours, set responsibilities and set tasks? If so, that person is a worker, and entitled to the national minimum wage under the law. Someone who is a volunteer is to a great extent entitled to come and go as they please. They give their labour because they believe in a cause. They may get excellent work experience, and many voluntary sector organisations do the right thing. We need a bit more clarity—and this is something I want to ask the Minister about—on the distinction between a worker and a volunteer. However, companies, and some voluntary organisations, although not the majority, have designed an unsustainable business model. The situation is the same as with the national minimum wage: people had a business model that depended on paying people £1 or £1.50 to do a job. A business that cannot run without exploiting people is not being run in the right way. People need to change the model they work on. If good companies can do it and make a profit, everyone else should take up that challenge.
Nic Dakin (Scunthorpe) (Lab)
I congratulate my right hon. Friend on securing the debate, which has been excellent so far, and will, I am sure, continue to be so. Access is the key. Whereas internships may be a barrier to access, work experience and the provision of work placements encourage it. We need to make that distinction.
Hazel Blears
Absolutely. I have been trying to think hard about the distinction, because I am an advocate of work experience. There are many people in my constituency who perhaps have not worked since leaving school. Perhaps their parents did not work, and in some cases their grandparents did not. They know nothing about the world of work, so work experience, for which they must get up and have discipline, behave themselves and work in a grown-up fashion, is essential to their personal progress. The issue is when a work experience placement becomes a long-term job. That is the point at which exploitation begins.
In France, after someone has worked in a position for eight weeks, they automatically become entitled to the national minimum wage. We could consider such a period. We need to get the distinction right. In my constituency I run something called Kids without Connections. Fifty local employers give four weeks’ work experience to youngsters who have never done any work. They get a record of achievement and a reference. They all come to Parliament. It is the first time they have ever been to London. We make a difference to some of those young people. Half of them have been taken on in full-time jobs. That would never have happened without a work experience placement, so that employers could see what they could do. I am a total fan of work experience, but in some cases it crosses the line and becomes exploitation, through clever titling of an unpaid internship.
Chris Bryant (Rhondda) (Lab)
My right hon. Friend is right in everything she says. Does not all that she has described play a pernicious role in Westminster and politics? Only for the children of the wealthy is it affordable to take on a long-term unpaid volunteer post or internship. Those people go on to get special adviser jobs, which are rarely advertised by any political parties, much to the shame of us all, and they end up as Cabinet Ministers. We end up with a tightly-drawn circle—
Chris Bryant
It is exactly the same in your party, as well, madam.
The circle of people who rise to the top of British politics is small, and getting smaller.
Hazel Blears
My hon. Friend could be making the speech that I made three years ago to the Hansard Society, when I said I was increasingly worried about the transmission belt—people working in a Minister’s office, becoming a special adviser, getting a safe seat and within three weeks of the election becoming a Cabinet Minister. The next morning when I walked into the Cabinet I was not the most popular person. James Purnell and my right hon. Friend the Member for Leigh (Andy Burnham) used to sit next to me. Everyone said “Are you having a go at me, Hazel?” I said, “Certainly not.” Eventually I looked round the table and said, “I think, ladies and gentlemen, you’ve made my point.” That situation was the very reason that when I came back to Parliament I set up the Speaker’s parliamentary placement scheme, for people from working-class backgrounds. In a democracy there is a need for people who can bring different life experiences to the table. No commercial company would want every one of its directors to be from the same background. Increasingly, the business case for diversity is being made strongly.
Mary Macleod
The right hon. Lady is generous with her time. I apologise for not being here for the beginning of the debate, but I was at another meeting. I congratulate her on the debate, which is important.
Do we need a clearer definition, to distinguish between work experience and internships? We are all very positive about the value of work experience, but sometimes the argument becomes all about the wealthy versus the poor, and that is not the issue. I started with nothing. My parents gave me no money; but I still went out and built my own connections, and asked about things, and tried to get work experience in that way. When I go into schools in my constituency I speak about building networks and connections. I say, “If you are struggling to get work experience, e-mail me, and I will try to help you find it.” Such things are important to build on.
I completely agree with the right hon. Lady about the long-term—
Hazel Blears
I am grateful to the hon. Lady for her intervention and also for taking one of our Speaker’s scheme interns, who has flourished. I know that she has given that young person a great deal of personal development time.
The hon. Lady makes a good point: it is up to everyone to make the most of their connections. The difficulty is that some people come with ready-made connections, and some find things more of a struggle. That is relevant not just to professions, but to anyone getting their next job. When we set up the future jobs fund there was a statistic that I found amazing, which was that seven out of 10 people get their next job from someone they know; only one or two get it from the jobcentre. Whether someone wants to be a plasterer or a joiner, it is about having wider connections and knowing some people. We are trying to give people the incentive and ability to make connections. It is far less likely that someone from a poorer background will know a lawyer or doctor or member of a similar profession. Therefore, it is much more difficult for such people to make those connections.
Fiona Mactaggart (Slough) (Lab)
My right hon. Friend has given a great account of her work. She mentioned the future jobs fund, and we have been talking about the dependence of the creative industries on unpaid interns. I was privileged to see how a network of creative businesses in London, from the Royal Opera House to the National Portrait Gallery and others, used the future jobs fund to establish a paid internship—they called the interns apprentices, although they were not full apprentices—sharing the learning between those different companies. They brought those young people in from the jobcentre, and they flourished. Those same young people then put on a jobs fair for others like them, to look at how they could get into those industries. When an opening is given to the less standard young people, they open the doors to others.
Hazel Blears
My hon. Friend makes a good point, with her characteristic optimism and belief in the future, which is what the debate is all about—a belief that young people’s talent and skills can make a difference. Often, particularly in the creative industries, people take a different slant on life because they have not come from a traditional background; and then the best music and drama happen. The role of the arts is to challenge people’s perceptions; so why not have young people in there, who are the best at challenging many of us whose views have become perhaps a little established? My hon. Friend makes a fantastic point, and I am reminded again of Martin Bright’s organisation, which did a huge amount with the future jobs fund. With so many young people unemployed, it is sometimes said that it is difficult to find the money to support people. However, if we do not, we shall lose a generation of talent, and the country cannot afford that.
I wonder if I might make a little progress with my speech now, although I am grateful for the interventions of hon. Members, many of whom, I know, are not able to stay for the whole debate. It has been helpful to hear their different points of view. I want to give not boring statistics but a few bits of evidence, now that we have heard about the principles of the debate. A couple of surveys have been carried out recently. One was for the European Youth Forum, and it painted a pretty depressing picture, in which just over half of all the interns surveyed had been paid at all; 41% of those who received some money found that their remuneration was insufficient to cover day-to-day living expenses; and in total a quarter were able to make ends meet. Nearly two thirds relied on financial support from their parents.
In another poll conducted by Survation for Unions21, 84% of people over 35 said that a young person in their family could not afford to do an unpaid internship in London. That is a massive exclusion barrier. The culture of unpaid internships is now so widespread that many young people no longer think about applying because they know that they will not be able to meet their living costs during the internship. Young people who have played by the rules, worked hard at school and taken on thousands of pounds of debt to get a degree are finding themselves cast aside in a career market that now often values experience over qualifications. Alan Milburn reported in March 2012 that more than 30% of newly hired graduates had previously interned for their employer, with that figure rising to 50% in some sectors, so unless someone has their foot in the door, it is very unlikely that they will be able to get a full-time job.
Many jobs are offered on the basis of whom people know, rather than what they know, which immediately puts people from families that do not have a background in a particular area at a disadvantage. It is interesting to see the controversy that has recently surrounded the appointment of the Government’s new social mobility tsar, James Caan. I welcome his appointment, but on the day he was appointed there was a story about him employing his two daughters. He said that his daughters had worked in other industries, that they had shown their worth and that they could therefore make a great contribution to his company, but the eruption of that furore shows how such things go to the heart of people’s sense of unfairness. People will always want to help their children because that is a natural instinct, but I ask employers and business people such as the hon. Member for Cities of London and Westminster to think twice; excluding people who deserve a chance will damage their business because they are not accessing the talent pool. I hope that in his new position Mr Caan will be able, from his own personal experience, to be a good advocate and ambassador for opening the field to people beyond family members, thereby ensuring that the wider field of talent is drawn in. I hope to meet him fairly soon, and I am sure we will have an excellent discussion about what he can do in his role.
There have been a couple of examples of parents being able to bid in auctions for unpaid internships for their family, which is pretty shocking. The Guardian recently reported that parents at Westminster school, which is a private school with pretty high fees, bid more than £650 for a mini-pupillage with a criminal barrister—[Laughter.] Perhaps I should say a barrister in criminal practice. Such auctions fly in the face of aspiration and social mobility.
Luciana Berger
Does my right hon. Friend share my concern that, in the very same auction, the Government’s adviser on high streets, Mary Portas, was also offering one of these unpaid internships that was going for hundreds of pounds?
Hazel Blears
Goodness! I do not know whether that was an unpaid internship in Mary Portas’s lingerie factory making ladies’ knickers, but it may well have been. I would tell Mary Portas or anyone else to think again, because the internship could have been offered with the best of motives to try to give people some experience, but who can bid £500, £600 or £700? Someone may well have benefited from work experience or an internship with Mary Portas because of her skills, entrepreneurship and experience—that would be a fabulous opportunity—so perhaps we should encourage her to offer a paid internship to someone from a disadvantaged background, which would be a fabulous thing to do. We shall see what happens. I am grateful to my hon. Friend for raising that issue.
There are compelling practical reasons for having paid internships. I remind people that long-term unpaid internships are against the law. Sometimes we get away from that point. Anyone doing a job that involves set hours and set responsibilities is a worker and is entitled to the national minimum wage—I do not know how many times I have to say that—and Her Majesty’s Revenue and Customs has a responsibility to make that crystal clear, which I know the Minister is pushing. Many businesses that I meet are genuinely confused: they do not know what the rules are and they would welcome some certainty about the difference between volunteers and workers and about who is entitled to the national minimum wage. I know the Minister is hoping to issue some guidance, which will be incredibly helpful. HMRC is doing more enforcement work, which is very welcome.
HMRC has stepped up its game. We have recently had information that, during the past year, HMRC has ordered nine firms to pay a total of £200,000 to people who had worked for them as unpaid interns. Over the past year, more than 26,000 workers have been paid back a total of £4 million after action by HMRC on breaches of national minimum wage laws and some of the nearly 1,700 complaints relating to unpaid internships. We are seeing a bit of a step change, but I would like to see HMRC, rather than responding to complaints, take a more proactive stance so that when it sees adverts that it thinks cross the line between volunteering and unpaid internships it proactively investigates those companies, rather than simply waiting for complaints. It is very difficult, almost impossible, for young people to make a complaint when they are perhaps hoping to get a full-time job with the company with which they are interning. Credit to HMRC for what it is doing, but, as we say in the Labour party, “A lot done; a lot more to do.” We want to see more action.
I pay tribute to the fantastic work being done by Gus Baker, Ben Lyons, the people at the Intern Aware and Internocracy campaign groups and all the mainly young people who have got themselves organised and decided not to wait for us politicians to take action but to get on with it and make a difference.
Gus came to the meeting that we had with the Minister earlier this year. We were grateful for her receptive response. She has recently handed a list of 100 companies to HMRC so that it can take action. I feel that we are making progress. This time last year, a third of the opportunities for young people advertised on the Government’s graduate talent pool website were unpaid; we are now down to some 3% or 4%. Things are changing dramatically. A few years ago, many unpaid jobs with Members of Parliament were advertised on w4mp; now it is just the odd job. Usually when I contact a Member to explain what is going on, the adverts come down. There are still one or two outliers in Parliament, and we encourage everyone to do the right thing.
I introduced a ten-minute rule Bill to outlaw the advertising of unpaid internships. The Bill did not make a huge amount of progress, as is sometimes the case with ten-minute rule Bills, but it enabled us to raise the issue. We got cross-party support, and if the Government can find time to amend the national minimum wage legislation— perhaps through secondary legislation, as I know how difficult it is to pass primary legislation—I encourage them to do something. We should say that it is not right to advertise something that in itself is unlawful. The law has ended up in a ridiculous state, and changing it would send a clear message to those who advertise unpaid internships that they should not do so.
I am delighted that Monster and Totaljobs, which run extensive online recruitment companies, have recently decided to take down any advert for unpaid internships or unpaid opportunities, and they have done that themselves because they think it is the right thing to do. I praise them for their leadership on the issue. The chief executive of Monster will talk to all his colleagues in the online recruitment industry to try to ensure that they all take similar action, which would be a huge step forward. Those companies operate multinationally across Europe, and they are standing up, being brave and doing the right thing.
The good companies are doing excellent work, but I was a little concerned to read recently that Wigan Athletic and Reading football clubs were advertising for highly qualified people to undertake unpaid roles as sports performance analysts. They are clubs with multi-million pound budgets, and such practices are totally unacceptable. I like to think that there was some sort of mystical karma in the fact that they both ended up being relegated from the premier league. Perhaps that was their just desserts.
We have talked about a few Members of Parliament who are still advertising for long-term unpaid internships, which is one reason why I proposed the Speaker’s parliamentary placement scheme. I put on record my gratitude to Mr Speaker for giving his backing, to the Minister for her support and to the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw), who has been a supporter from the outset. We have been able to bring 10 people a year to work in Parliament. We are now recruiting for our third cohort. They get paid £18,000 a year and get help with housing costs from Unite, which is a very generous firm that provides student housing and has allocated some lovely flats a 10-minute walk from the House of Commons. Probably they live in better conditions than most people working here. They work four days a week with an MP, and on Fridays a personal development programme helps them learn how the House works, how a Bill is passed, how to make speeches and so on. Some of them have gone on to fabulous opportunities.
I am grateful to my hon. Friend the Member for Slough (Fiona Mactaggart), who has taken one of our students, who has done so well in his placement. Yesterday he appeared in a film on the “Daily Politics” programme, and he did a fabulous job. He was a great advocate and ambassador.
Mary Macleod
I congratulate the right hon. Lady on her work on that scheme. Ellen Wright, who works in my team, has developed tremendously throughout and has managed to find fully paid work elsewhere; unfortunately, I did not have enough budget for her to stay on the team.
Hazel Blears
I know that Ellen has enjoyed her placement and has gone on to get an excellent job. She now has the basis for a good career. Who knows? We may one day see her back in politics, which would be amazing.
I thank the Government Equalities Office, which this year has supported the scheme financially for the first time. We have also been able to bring some people with disabilities to be part of the scheme, which has been tremendous for us. I hope that that financial support will continue; I think that the Equalities Office has been satisfied.
My speech has gone on for a long time, perhaps due to interventions—I know that a lot of people could not make speeches, so I hope that has been appropriate. Today I am launching a scheme about Parliament called “Let’s Get Our House in Order”. If we are to provide leadership on the issue, I want us to do as we say rather than simply urging other sectors to do the right thing. We have to show that we are doing the right thing. Many Members have said that they will come to sign our pledge—I promise it is not for temperance; it is for doing the right thing—in room W3 off Westminster Hall between 12.30 and 2 o’clock today. It is a promise to pay our interns.
I reassure Members who have had unpaid interns in the past that that was in the past. We are talking about changing the culture. Everybody is capable of redemption, in my view. I would not want any Member to feel because they have had an unpaid intern that they cannot possibly be part of the campaign. We would love those Members to be part of it, because they will have been on the journey with us. Mr Speaker himself took on a young woman some years ago as an unpaid intern. She was from his constituency and was desperate to come, and as she had some financial backing, she was able to do so. Mr Speaker will say that he would never do that again. He now knows that it is not the right thing, because it excludes the vast majority of people. At the very top of the House is somebody who has changed his mind because of his personal experience.
It sends a great message to the rest of the business sector that unpaid internships have no place in Britain in the 21st century. They exploit young people, deny them the chance to pursue their hopes and dreams and perpetuate the existence of a system and society in which it is where people come from, not where they want to go, that dictates their future. I started by saying, and I still think, that internships are a scandal in a country that supposedly prides itself on fairness and equality. We should put an end to that practice for the future.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
It is a pleasure to serve under your chairmanship, Mr Caton. The right hon. Member for Salford and Eccles (Hazel Blears) talked about redemption. Being a bad Catholic, one can deal with that, I hope. I join everybody else in congratulating her on her success and drive with the Speaker’s scheme and the wider issue of internships. I declare an interest: when I went to university in the 1970s, I do not think that there were internships. Because there were so few graduates, we just went into the market. I did not know anything about internships.
The figures that the right hon. Lady and others quoted seem to show that internships work. An article the other week said that university graduates on an internship scheme or some other kind of work are three times more likely to get a job, and that 61% of graduates in internships tend to get a job in that company or profession. Whatever the system is—we have imported the word from the United States—it appears to work. We must then ask what various hon. Members have asked: how do people get into the internship game?
I will declare another interest. I was a teacher for 37 years, including in social priority schools. In other schools, the drive was to give people confidence and push the talented ones to get somewhere. The hon. Member for Hackney South and Shoreditch (Meg Hillier) hinted at my experience of teaching in Leytonstone, where students could see the towers of the City of London, but, because of their background and circumstances, never dreamed that they could enter it. As she said, if there were an internship system, their families could never have afforded to say, “You can take six months,” or however long, while keeping them at home.
I am now the Member of Parliament for Lancaster and Fleetwood. Many of the students I see at Lancaster university could never dream of taking an internship in London—the great capital, the centre of most of the great professions and businesses—because, as everybody has commented, accommodation costs alone would wipe out their money, let alone the costs of feeding oneself and so on. It is just not possible. Arriving here as a new Member of Parliament, I saw how many people were in the system and knowledgeable about it, because their families were knowledgeable about it and could support them through it, and I began to ask questions.
The penny dropped when I saw an article in the London Evening Standard in 2010 about an auction of internships in the creative industry, including in top fashion companies—at a charity event, to be fair—for £10,000 or £15,000. I thought, “Out of the people I represent and the people I used to teach, who could ever afford to get into this game, even at the smallest level?” There was something wrong. In Parliament, which is supposed to set an example, although I know it sometimes fails to do so, the same system operated.
In the same week that I read that article, I listened, as all politicians do, to the “Today” programme. Suddenly, there was Baroness Morris of Yardley—Estelle Morris as was—chatting away with the right hon. Member for Salford and Eccles about the issue. Then I wandered into Parliament, and who was walking down the corridor but the right hon. Lady? The last time she and I had spoken was during a heated debate on television, when I was the Conservative opposing her and we had done the usual political thing. The fact is that across parties, we shared a common view that something was wrong.
People have rightly talked about equity—that is the passion behind the issue—but, as other hon. Members have said, it is also about the talent that we are losing through the system. This is a competitive world, a global race and all the rest of it. That talent is unable even to take a first step. Part of that first step—as everybody has said, it is also about money—is knowing that the system exists. We need to get that right. Being a Conservative, I do not want too much regulation, but we need to make the terms understood and to advertise them across the system.
To return to the students and pupils whom I taught in the east end of London, most of them would not know about internships unless teachers introduced the idea, and most teachers came from my generation and did not know what internships were. How were the students ever to learn that that system operates in most top businesses and professions as an add-on to graduation and a way of getting in? They lacked the knowledge even to start. It is a double issue.
I accept the restrictions. We must consider the definitions of internships and work experience. I am pleased that Her Majesty’s Revenue and Customs is now working on that, but we must also sort out how we can advertise in schools and universities, so that everybody with talent can see that they need to use that system to maximise their talents and contributions. There is a knowledge and advertising agenda. I also liked the right hon. Lady’s compliments to the Social Mobility Foundation, which has done a lot of work on the issue and is doing much with the Government agenda to get the system right.
How do we advertise the subject of internships? The right hon. Lady is proposing that Parliament sets an example, which would itself be a big advertisement: there is a thing called internships and, whatever a person’s background, they have a chance of getting in on this system. That is really important. As she said, paid internships are spreading through the House; I do not know the numbers or whether this figure is correct, but I saw the other day that 40% of internships are still not paid, which is enormous, and that unpaid system is still going on. If we have internships, we have to get right how they are termed in the House, even though that is a small-scale thing.
I do my own scheme, as well as supporting the Speaker’s parliamentary placement scheme. Every year, I keep some money aside to give someone a chance and to pay someone from Lancaster university to do a month in Parliament. I pay the minimum wage and all the rest of it. I have a rolling programme, so the interns appear to the Independent Parliamentary Standards Authority as paid employees. Anyone who looks at my numbers thinks I am a bad manager, because I have a huge turnover of people, in particular in summer and autumn, but they are paid internships. We need to get the House regulations right for what Members of Parliament are trying to do, so that no one can misconstrue things. I might be a bad manager, I do not know—ask the staff who work for me—but at the moment it looks as if I have a big turnover in staff. We need to get small things such as that right.
It is important for the Minister to get in, but I shall emphasise my main points: first, the equity issue; secondly, the loss of talent throughout the country because people are not entering internships; and, thirdly, when we begin to get this right and finally set an example in Parliament, we need to advertise what is going on throughout business and the professions. Internships are not some odd thing, but are part and parcel of business and professional life. Every student in school needs to know that internships are part of the system.
Martin Caton (in the Chair)
I am about to call Ms Creasy. I would be grateful if you could resume your seat by 10.40 am, so that we have adequate time for the wind-ups.
Stella Creasy (Walthamstow) (Lab/Co-op)
Thank you, Mr Caton. I promise you that I shall be brief—uncharacteristically, perhaps.
We have already spoken at length about the fantastic work that my right hon. Friend the Member for Salford and Eccles (Hazel Blears) has done on the subject of internships. I feel equally passionately about it, as a former youth worker and as a former intern. I had an internship at the Fabian Society in 1995—if anyone present, perhaps my right hon. Friend, was getting the society’s mailings at the time, that was me, with my blood from the paper cuts. I clearly learned a lot in the year I was there, but it was different, and we need to understand how the culture has now changed. That was back in history—the shadow Minister is looking at me, so I shall say back in 1995—but things have changed substantially since then. As a youth worker, I was horrified by the stories that young people told me about the requirement to work full time for six or seven months or more without pay, perhaps with occasional expenses. They did not see anything wrong with the system, because everyone had to do it. That is what we have to change.
My internship was pre-national minimum wage. The widespread abuse of young people who want to get a step on the ladder is bad not only for them, but for employers, because the badge of having done an internship is being devalued as a result of the changes. It is no longer as clear to employers as it should be that people who have done an internship have had a training opportunity to learn and develop their skill set, so that they are worth talking to—an internship used to be a badge of quality.
The question is how to get the best and to avoid the worst in such a scenario. I have worked in the voluntary sector, so I see some simple rules that we can learn from; it is not rocket science to fix the problems. I made an intervention about the difference between business-critical and value-added experiences; the issue is not only about whether people are being paid, but whether, when they do an internship, they are learning skills and developing themselves as an individual, so that they are someone who a future employer will look at and think, “Actually, that is someone who I want to have in my work force.” The voluntary sector is clear about what a volunteer can do and, frankly, businesses should learn from that. For a key, business-critical role in their industry, they should not be relying on someone who has not had the requisite training and who might not be able to take the pressures or deal with the possible demands. Offering people opportunities through value-added experiences, however —to learn about what we do, complement what we do and see what else is happening in the industry—is a very positive thing to do.
Today, therefore, I want to add to the debate how we get our own house in order. Having had experience in the voluntary sector and the community, as well as my personal experience, I am extremely concerned. Seeing how things operate in Parliament, I am frightened that some of the progress made in recent years is being put at risk by some of the decisions of our mutual friend, the Independent Parliamentary Standards Authority. Hon. Members have already discussed our concern that some MPs are advertising unpaid internships—as many as 260 MPs, according to some suggestions—but 183 MPs are definitely using the voluntary internship agreement. I looked into the issue and talked to IPSA about it, but I have real concerns, because a number of Members of Parliament and I have applied for additional support; there has been an increase in casework, the business-critical work that I need to do as an MP for a community facing a lot of pressures, because of the changes in policy in recent months.
IPSA accepts the case for me and other Members of Parliament to have an extra member of staff, but it refuses the funding, arguing that its job is not to deal with the shortfall in funding for MPs or with the increased pressures faced by them. A member of staff at IPSA even suggested that I might make up the shortfall by using unpaid internships. If we acknowledge the increasing pressure on MPs’ offices, we must recognise the resulting temptation for Members to deal with the consequences. I myself had to make some difficult decisions about what correspondence and activities I cannot undertake, because I do not have the staffing complement to deal with them. Having been an intern and feeling so strongly on the matter, I will not use unpaid interns, and I have been clear with my community about that.
Luciana Berger
Does my hon. Friend share my concern that, under the IPSA arrangements, we can have an unpaid volunteer or whatever—essentially, an unpaid intern—whom, from a limitless budget, we can pay expenses? If, however, we want to pay a member of staff—I want to pay interns a London living wage—we cannot use that limitless budget to support the intern with travel and lunch expenses. Such a situation helps those people who do not want to pay their interns.
Stella Creasy
I agree. That is exactly the point that I am coming on to. If we look at the voluntary arrangements, I am concerned that MPs might inadvertently be getting on the wrong side of the national minimum wage legislation owing to such pressures. There needs to be recognition that MPs who want to do the right thing and to offer those skills and training opportunities must be able to support that.
I have looked at IPSA’s finances, and it consistently over-budgets for MPs’ staffing costs—there is a £7 million underspend in the system every single year. IPSA tells me that the money is not carried forward, but simply returned to the Treasury. I encourage the Minister to have some serious conversations about whether, given the commitment to fund the positions and that MPs are saying, “We need that support, we want to offer those training opportunities”, IPSA could look at the possibility of feeding the money into schemes such as the one put in place by my right hon. Friend the Member for Salford and Eccles. I also encourage the Minister to seek urgently the legal advice given to IPSA about MPs’ voluntary arrangements, to ensure that no MP is inadvertently breaking the national minimum wage legislation and that there is clarity about what we can ask someone to do. MPs should be advised about internships and about value-added versus business-critical work.
We also need to look at university placements. I have been offered young people who want to do nine months in my office, unpaid, for a university placement. We must be clear that we can tackle the problems and get our house in order in a number of different ways. They are not difficult or impossible to do; it would be good for Parliament to do them. We should open ourselves up to get quality staff, who will then have a badge of pride—the young people will have had an internship in an MP’s office and been paid, so their ability to live in our capital city would not have been at risk, and they will learnt the requisite skills. Anyone who has had to deal with and train young people knows that someone who does not have a good skill set and who has not had good training is twice as much work for an employer as someone who does come with experience.
It is therefore in our interest to get things right and to challenge IPSA to understand the pressure on MPs’ offices, to ensure that we really can get our house in order. If the Minister wants to see some of my evidence on the problems, I will be more than happy to share it with her. I hope that she will look favourably on my pleas for her help in this matter, so that we can be the beacon that we want to be.
Ian Murray (Edinburgh South) (Lab)
It is a great pleasure, Mr Caton, to speak under your chairmanship in such an important debate. I pay tribute to my right hon. Friend the Member for Salford and Eccles (Hazel Blears), who has done so much in this House and in the country to highlight the plight of unpaid interns and issues relating to the world of work for young people. I thoroughly enjoyed her speech, and the passion with which she delivered it is unsurpassed in the House. It was a delight to hear what she had to say.
For some time, unpaid internships have been thought to be necessary for any young person who wants to fulfil their career goals, but they divide our young people into those who can afford them and those who cannot. I want to look at the scale of the problem. One poll has shown that two in five people aged between 18 and 24 believe that not doing an unpaid internship acts or has acted as a major barrier to them getting a job. Another survey showed that 40% of people who thought about applying for an internship reconsidered because they could not work for free, and 39% of people offered an internship had to turn it down for financial reasons. That highlights the problems with unpaid internships and what they do for young people’s aspirations and hopes.
Unpaid internships are rife in some industries. It was right to have highlighted some of the positives, particularly in the creative industries and others, but in those industries, young people are so desperate to start their career and get on the ladder that they often feel they have no other choice than an unpaid internship. The cycle is dismal: if someone wants to work in the fashion industry, for example, they must have experience before applying, and the only way to get that experience is to work in the industry for nothing. Even getting their foot on to that first rung of unpaid employment is not easy, and it may be more about who they know than what they know. Those are the key issues in this debate.
In his role as the Government’s adviser on social mobility, Alan Milburn reported last year that more than 30% of newly hired graduates had previously interned for their employer, and that rose to 50% in some sectors. That might be seen as a positive, in that some young people’s experience of an internship has taken them on to employment. The key to the problem is that when they are at university or leaving school, young people see that the only way of fulfilling their dreams and talents, and pursuing their desired career, is by taking an unpaid internship. That is where the cycle started, and it continues. I hope that this debate and my right hon. Friend’s work will stop that cycle in its tracks.
My right hon. Friend introduced a private Member’s Bill, the Internships (Advertising and Regulation) Bill, which was signed by my hon. Friend the Member for Hartlepool (Mr Wright), who is a member of the Opposition’s shadow business team and is a great advocate on the issue. When my right hon. Friend introduced the Bill, she said that
“for the sake of thousands of young people who are in similar circumstances today, whose hopes and dreams have often been dashed because they cannot do an unpaid internship, we must act quickly to ensure that they are treated with respect and given a decent start to their working lives.”—[Official Report, 5 December 2012; Vol. 918, c. 554.]
I could sit down now because that quote sums up this debate and all the issues relating to unpaid internships. However, I have a few more minutes, and I want to ask the Minister some questions.
It is appropriate to pay tribute to people outside Parliament who have done so much. They will be watching the debate, and some may be here listening. I know that I cannot draw direct attention to people in the Public Gallery, but I pay tribute to Intern Aware, Interns Anonymous and Internocracy, as well as the National Union of Students, who have done tremendous work in raising awareness among the press and the industry, and have met hon. Members. They have been formidable in raising the issues with us politicians directly.
It would be remiss of me not to recognise that this is a cross-party issue that has received support across parties, but conversely, some people have undermined the campaign by their actions in the House. I may go into more detail later. It is worth celebrating businesses that do well, and I was delighted hear from my right hon. Friend that Monster and other recruitment sites have taken it on themselves to do the right thing.
Part of the problem with where we are on the issue has to do with the rewards and success that people can get from paid internships. These programmes give young people a fantastic experience. All we are looking for in taking this forward responsibly is for interns to be paid properly for a day’s work. People providing unpaid internships exploit a loophole. I want to put on record the contribution of Kezia Dugdale, MSP for Lothian—I represent part of her constituency here—who offers paid internships at the living wage for three-month periods every three months. During her five-year term of office, she will have offered that opportunity to dozens of young people. Not only does she pay them the living wage, but she puts together a proper programme, which is another issue. If someone told me they would give me £10 if I could define “internship”, I am not sure that I could. However, one definition might be that it is properly paid with a proper programme of work allowing the intern to gain a tangible benefit.
It is important to recognise that people give up their time to volunteer without payment. Many charities and organisations that we rely on in our constituencies would find it difficult to operate without volunteers, but that is a completely separate issue, and goes to the heart of why we need proper definitions of “intern”, “volunteer”, “worker” and “employee”. The difference between “employee” and “worker” is difficult legal territory, which is where some of the big issues come into play.
I want to spend a few moments talking about the national minimum wage and its enforcement. I pay tribute to the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson), for the strides she has taken in trying to resolve some of the enforcement issues with unpaid internships and some of the current more general enforcement issues. It is worth emphasising that, as my right hon. Friend the Member for Salford and Eccles said, under the national minimum wage regulations it is against the law to have someone working set hours and doing set tasks without being paid. There is an explicit link between the national minimum wage and unpaid internships.
It is worth reflecting on the Government’s slightly schizophrenic approach to the national minimum wage. Once upon a time, the idea of a minimum guaranteed wage for people in the UK was pie in the sky and highly controversial. Now, in light of its impact on family life, the economy and indeed this place, there seems to be consensus that the national minimum wage is an integral part of work and the UK economy, and it has cross- party support. However, without the previous Labour Government, there would be no national minimum wage, and that is one of our proudest achievements. If anyone asks what the previous Labour Government’s proudest achievement is, the national minimum wage would be at the top. When it was introduced, it helped to raise pay for more than 2 million people, and some 50,000 low-paid teenagers received a boost in income when the minimum wage for 16 and 17-year-olds was introduced in 2004.
Crucially, in 1997 the policy was opposed when the Labour Government were taking the National Minimum Wage Bill through the House, and it is strange that there are still calls from Conservative Back Benchers to scrap it. I hope that the Minister will give a cast-iron guarantee that it is not only here to stay, but is the foundation of the bottom end of our economy, building on what is achieved in the economy. In 2010, many Conservative Back Benchers signed a private Member’s Bill to scrap the minimum wage and to undermine it for younger people. That emphasises the whole issue of unpaid interns, and it would be even worse if the national minimum wage regulations could not be used to highlight this important issue.
Intern Aware has complained about several companies that have exploited loopholes in the national minimum wage legislation, and has reported them to the Department for Business, Innovation and Skills. Will the Minister update the House on what she is doing about enforcement? Will she also update the House on the 100 companies she reported for not paying the national minimum wage, and on what stage enforcement has reached? Will she also explain how many enforcement actions have been taken by HMRC on the national minimum wage over the last year, how many resulted in criminal prosecutions against companies, and how many companies were fined for breaking the law?
I have concentrated on the national minimum wage; at the crux of dealing with the issue of unpaid internships is enforcing the system and the regulations that are in place. It is against the law to advertise for something that breaches regulations, but people are still advertising unpaid internships in newspapers and online, and if we cannot enforce the rules that are in place to deal with that, we will end up in a very difficult place. I have already mentioned the ability to follow a proper programme, which is important.
In a world where the odds are already stacked against our young people—we see that in the unemployment statistics—we need the Government to be much more active in ensuring that unpaid internships are made a thing of the past. Otherwise, we will continue in a downward spiral, and the issue will be not what you know, but who you know and how much you can afford. That would be very bad for the economy and for our young people in the future.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
I am delighted to serve under your chairmanship, Mr Caton, and I heartily congratulate the right hon. Member for Salford and Eccles (Hazel Blears), not only on securing the debate, but on her wider campaign—the “Let’s Get Our House in Order” campaign that is being launched today—and on the way in which she has driven the issue forward, leading to the launch of the Speaker’s parliamentary placement scheme. She has made sure that the issue is firmly on the agenda, and we are beginning to achieve some of the cultural change that we need to go alongside it. The determination, dynamism and passion that she has injected into the campaign has started to bear fruit. It is wonderful to watch, and I encourage her and hope that she will continue with it. I also welcome the strong turnout today. Not everybody has been able to stay, but the fact that 19 Members of Parliament from both sides of the House have come to a Westminster Hall debate is a clear sign that people feel strongly about the issue.
Internships can clearly play a positive role, as we all recognise, in people learning about the workplace, developing skills, or getting training, experience and networking opportunities. Employers can also benefit from fresh thinking in their organisation and, often, from finding great new permanent employees to join their team. Although a lot of the focus has been on pay, which I will come to, important points were raised by the hon. Member for Edinburgh South (Ian Murray) and by my hon. Friend the Member for North Swindon (Justin Tomlinson) about the quality of internships—about making sure that they are well structured and involve development opportunities, with the intern perhaps looking at different parts of the business, different types of tasks, and different skill sets over the time that they spend with an organisation.
We are trying to maximise good-quality opportunities by making sure that, first of all, the recruitment process is fair and open. The right hon. Member for Salford and Eccles mentioned the auctions that took place, which I find complete anathema. Such opportunities should be transparent and fairly allocated to those who will be best able to benefit from and contribute to the organisation as part of the experience. The process should be transparent and based on what a person knows, not who they know. Appropriate financial support should also be provided, which will depend on the nature of the opportunity. For a worker, that will be at least the national minimum wage, and good practice is expected, which will sometimes mean that the wage may even be higher. If the individual is a volunteer, it is obviously good practice to ensure that if there are out-of-pocket expenses, those are covered.
To give an example of a success, Channel 4 is offering 12-month internships for all ages. No specific qualification is required in advance—just talent and enthusiasm. All elements of its business are covered, whether someone is interested in going into the digital side, the marketing side, or commissioning, and all are paid substantially above the minimum wage.
To answer the hon. Member for Edinburgh South directly, the minimum wage is absolutely here to stay. It is a fundamental part of the protections that are important for employees in our society, and that is generally well accepted right across the House. That harks back to 1997, when I was certainly not eligible for the minimum wage; nor was I when it was brought in—I was 17 at the time—and I think he was in a similar situation, but thankfully we have moved on since then.
The Graduate Talent Pool website is definitely worth mentioning—if people want to go to it, the address is graduatetalentpool.direct.gov.uk. It is a way of encouraging employers, particularly small businesses, to offer graduate internships, and it ensures that those are available to the widest possible pool of recent graduates. It is free for employers and graduates, and it gives information and advice on all aspects of internships. The quality assurance process introduced in 2011 has really helped. It is a credit to employers, as the right hon. Member for Salford and Eccles said, that about 98% of the vacancies advertised on the website are paid; that shows significant progress.
I want to touch on the issue of definitions, which has come up in the debate. Although the word “intern” is a bit of an import and is not clearly defined, “worker” and “volunteer” are. The right hon. Lady set that out clearly. There is a checklist on gov.uk—if someone searches for “worker checklist”, they can get the complete lowdown—but basically, if someone is offering their time of their own free will and they can come and go as they please, they are a volunteer, but if they are required to perform specific tasks and can be disciplined if duties are not performed as agreed, they are a worker. Each instance depends on the facts of the case, but that is clearly set out, both for employees and volunteers, and for employers or organisations offering opportunities, so that they are able to understand what category they fall under.
The hon. Member for Walthamstow (Stella Creasy) set out how the voluntary sector has managed to find good ways of setting out which opportunities can be offered to which individuals. The issue is that there are some exemptions; if an internship is part of a further or higher education course, or if the individual is a volunteer, the national minimum wage does not need to be paid. That approach gives the flexibility that we need, while providing significant clarity for all those involved.
On the point about advertising, which relates to definitions, I understand the sentiment behind saying that all such adverts should be banned. I also understand the point made by my hon. Friend the Member for Birmingham, Yardley (John Hemming) about whether the Serious Organised Crime Agency would like to get involved. I am not sure whether it would, but one difficulty is that the adverts are not always clear about whether the person will be doing the role on a voluntary basis or as a worker; indeed, they may be on a higher education course and doing the role as part of a placement in between years, so they could be exempt. Therefore, an outright ban may be a blunt instrument, but if people think that an advert is for an illegal role, I encourage them to report it to the pay and work rights helpline.
I welcome the meeting that we had to discuss the issue earlier in the year, because despite the fact that an outright ban might be a blunt instrument, more can and should be done. We and HMRC have commissioned work to identify the adverts that have the greatest risk of offering opportunities that breach the law. That online research is being done, and the 100 employers that seem to be at the greatest risk of offering such opportunities will be written to, to advise them of the national minimum wage legislation that applies, and that they may be breaking the law. That is an important step forward. I am keen to ensure that we analyse the success of that, and see how that perhaps changes behaviour. If we can encourage businesses and employers to recognise not only the risk that they may be running, but the moral case, which has been discussed today, that is a good route to pursue. It is important, however, to keep that under review and see whether we can achieve success in that way.
The hon. Member for Walthamstow mentioned the Independent Parliamentary Standards Authority. It is not for the Government to tell IPSA what to do, but I am happy to write to it and draw its attention to the debate. I am sure that comments have been made and concerns raised that IPSA would be interested to read. I encourage Members to use other channels in Parliament, such as the Speaker’s Committee for the Independent Parliamentary Standards Authority, which would be an appropriate way of taking up those concerns. When the budgets for staffing were increased in 2012, being able to pay interns was a significant reason for doing so. I know that because my hon. Friend the Member for Bristol West (Stephen Williams), who sat on a Committee that was discussing those issues with IPSA, pressed strongly for that, and it made a big difference, encouraging and facilitating a lot of the changes that we have seen.
Stella Creasy
Does the Minister share my concern that IPSA has decided not to take that issue to the Committee to discuss it, despite the numbers of MPs who are making that point to it?
Jo Swinson
IPSA is an independent organisation, but concerns have clearly been raised in the debate that need to be raised with IPSA through the proper parliamentary channels. I shall certainly write to IPSA and draw the debate to its attention.
I recognise that time is running away from us, so I want to focus on what we are doing on enforcement. The pay and work rights helpline, on 0800 917 2368, is where people need to go if they have a complaint. HMRC will investigate and it will then be in a position to take action. It is also important to recognise that HMRC can also respect confidentiality, so the fears that some might have about coming forward do not need to be realised, because the matter can be dealt with confidentially. Since 2001, civil enforcement has benefited more than 200,000 workers with minimum wage arrears of about £45 million.
It is also worth people being aware that they can make a complaint up to six years—or five in Scotland—after the situation has taken place. I encourage people to be aware of that, and I apologise that there is not more time to respond to more points.
Hazel Blears
May I just add that one organisation that has been absolutely fabulous on this agenda, and on the Speaker’s scheme, is the Social Mobility Foundation, of which I am a trustee? I ask the Minister to put on record her support for the foundation.
Invisible Walls Rehabilitation Programme (HMP Parc)
(10 years, 10 months ago)
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Mrs Madeleine Moon (Bridgend) (Lab)
I am extremely pleased to be appearing here in front of you, Mr Caton. I appreciate that the Gower constituency is one where possibly few people end up in prison, but if they were to, the likelihood is that they would have the opportunity to serve their sentence in Parc, which is a local prison for Welsh offenders, so I am sure that your interest in this debate is similar to mine.
Not many MPs like to boast about their local prison, but then not many MPs have been invited to numerous presentations of awards for the staff and volunteers at their local prison. I have seen how a dedicated group of staff and volunteers at Parc have developed an innovative approach to rehabilitating prisoners in their care. Under the leadership of the prison director, Janet Wallsgrove, Corin Morgan-Armstrong and his team of staff and volunteers, along with numerous local organisations, have led the way in rehabilitative work. The team are very special, and their contribution deserves special recognition and wider implementation, which is why I am here today.
Invisible Walls is part of a wider network of support that Parc Supporting Families undertakes to make rehabilitation a central part of its work with prisoners. Underpinning that is a belief that a prisoner’s life does not stop once they are inside and that punishment should not apply to their family and especially not to their children. The payback for society from Invisible Walls comes from the fact that, for some prisoners, maintaining the family link is vital to successful rehabilitation.
As is always said in presentations about Invisible Walls, why bother? Why bother helping a prisoner to stay in contact with his family and children? Because crime, the consequences of crime and dealing with offenders is expensive. Reoffending costs anything between £9.5 billion and £13 billion a year. Those affected by crime—the victims and their families and the families of offenders—bear a cost that has a huge and lasting effect. Some 200,000 children in England and Wales have a parent in prison. That is two and a half times the number of children in care and six times the number of children on the child protection register. More children are affected by imprisonment than by divorce. The children of offenders are more likely to offend themselves. Six out of 10 boys with a convicted parent end up in custody themselves. The children of offenders are three times more at risk of mental health problems.
Let me quote the social exclusion unit:
“Research shows that the existence and maintenance of good family relationships helps to reduce re-offending, and the support of families and friends on release can help offenders successfully settle back into the community. Yet at every stage of a prisoner’s movement through the criminal justice system, families are largely left out of the decision-making process and rarely get the opportunity to support prisoners effectively.”
Invisible Walls has grown out of the work of Parc Supporting Families, which identified that engaging with a prisoner’s family had all-round benefits for the prisoner and their family, but especially for their children and the wider community. Invisible Walls has strong foundations. Parc Supporting Families first took over the running of the visits department. It changed both its physical space and how it feels to receive and to make a visit. The focus was shifted from simply being about security to engaging the family. Walls were decorated with prisoners’ artwork by the art intervention team—another team who have won awards for Parc. That was done in a café and a children’s play area, so that parents and children together can experience family-centred mealtimes, playtime and interaction.
Invisible Walls has three principal aims: to reduce the risk of reoffending and a return to prison; to reduce the risk of intergenerational offending; and to increase family and community cohesion. The effect that we often neglect is the effect that just one person with criminal intent living in a small community can have on that community, so increasing efforts to move an ex-offender back into playing a constructive and positive role in the community has huge benefits.
During the four years for which the project will run, 20-plus families a year will be identified for help. Those are families in critical need of support. They are families in which the father has a minimum of six months left to serve. Fathers must be drug free and undergo regular testing. They must sign a compact to undertake this often difficult and painful work. Prisoners are based in a dedicated family intervention unit. I must stress that both the prisoners and the officers who are engaged in this programme are not simply selected for it; they have to want to participate. It is no good asking either prisoners or staff who do not want to engage with this programme to take part.
The whole family are supported for as long as a year before release and, critically, for up to six months post release. The support comes in many forms. It includes advice on and support with parenting and physical and mental health support. Schooling, accommodation and substance misuse are tackled. Finance and debt and the issue of relapsing into offending are considered. Fathers are encouraged to build a relationship with their children. Individual and group sessions are attended. Prisoners talk, often for the first time, about their feelings and how their offending impacts on their family and community. This is often difficult work.
The Learning Together club teaches prisoners about what their children are learning in school. It helps them to engage with their children and their schoolwork; it enables them to help with their children’s homework during visits. Bedtime stories are recorded, so that children can maintain the link with their father while they are at home.
I must stress that the team at Parc are not working in isolation. The project is supported by a number of organisations and volunteers: Bridgend county borough council, the Wales Probation Trust, Barnardo’s Cymru, Harp Resettlement, Gwalia Housing and many others. Of special note is the £50,000 of funding that has come from the Big Lottery Fund. That was a first for the Big Lottery Fund and it is something that we should applaud. Changing prison culture from being inward facing to being outward facing, focusing on building relationships with outside agencies and maximising the opportunities that those relationships offer is not easy, either for prisons or for prisoners, and we must commend it.
I must tell you about one picture that I saw, Mr Caton. A child was asked to draw a picture of their family before they became involved in the scheme. The child drew mum on one side, the child in the middle and dad on the other side of the piece of paper. Between each of the individuals in the family was a closed door and, underneath, the child wrote, “They are arguing and I’m stuck in the middle.” After going through the Invisible Walls programme, the child was asked to complete another picture. This time, there were no doors, everyone was smiling and the child wrote, “Everyone is happy and we’re not arguing any more.” They say a picture paints a thousand words—those two pictures certainly do.
The Invisible Walls project and linked initiatives have proved successful. Successive inspection reports have focused on work with families as positive, with support for families being singled out for specific praise. There are not only inspection reports, however. The Welsh Centre for Crime and Social Justice, based in the university of Glamorgan, is undertaking an evaluation and research assessment of the scheme. That work began last year and will continue until 2015.
I ask the Minister to look at the research carefully and to consider how what has been put in place at Parc could be applied elsewhere. I want him to give an undertaking to look at what has been achieved and facilitate its future application. I understand that it has already been replicated at Her Majesty’s prisons Altcourse and Maghaberry in Northern Ireland. The staff at Parc have never been afraid to try something new, which is not always easy in state-run prisons. Private sector prisons—Parc is the only one in Wales—perhaps have such an opportunity, and we need to ensure that state-run prisons also have that opportunity. We might also remove the invisible walls between the quality work done in state and private sector prisons, and spread the capability to undertake such work across the prison estate.
As I have said, Parc is a local prison that accommodates prisoners close to home. That makes family intervention relatively easily and makes an Invisible Walls programme possible. I understand that the Ministry of Justice is working towards more prisoners serving the last six months of their sentence closer to their home area. If that period could be extended a little, there would be opportunities to assess prisoners for that work, which might prove most positive both financially and in tackling reoffending.
Wales has no prison for women, and more than 17,000 children are separated from mothers who are imprisoned in England. The plea from Welsh MPs is for the Minister to consider whether it would be possible to have something like the Invisible Walls project to work with women. Many of them are separated from not just their children, but their wider family, because of the distance between their family and where they serve their sentences.
Invisible Walls has generated new ideas, and there is a constant desire to improve and learn from the programme. One such idea is to build links between the prison and schools, specifically to support children whose fathers are in prison. Children of offenders experience a range of negative emotions, and are often vulnerable to being bullied and to becoming bullies, so they have an increased risk of exclusion from school. They may have experienced the trauma of witnessing an arrest, and they have felt the impact of being cared for by one parent.
Building a link between a school and the prison can help to counteract that trauma and to prevent problems from developing that might lead to the child ending up in the criminal justice system. The idea is very simple: the school signs an Invisible Walls accord, meaning that, when a parent is in prison, the head teacher identifies a single point of contact who is responsible for offering advice and guidance to children and primary carers confidentially. The person identified will almost certainly be the current child protection officer in the school, who already has the necessary training to fulfil the new role, while the prison would provide training, access to support online and an electronic library.
The scheme is in its early stages, but it has already gathered significant support. It might make a significant impact on the many vulnerable children at risk of becoming the next generation of offenders. I hope that the Minister will talk to the Department for Education and obtain its support. For the scheme to be established, it needs to be approved, so will the Minister personally give it his seal of approval? Will he undertake to talk to the Department for Education, so that the scheme can be rolled out to prisons across England? The cost is negligible, because the scheme builds on things and people already in place. It would make a difference to children and their families and, indeed, to schools and to the potential for education, because many people in prison have low levels of educational achievement.
Only if we think for the longer term and use projects proven to work will we bring down reoffending and steer the next generation away from prison. I appreciate that Invisible Walls is not a project for everyone, but it gives us the possibility of finding prisoners with whom such work could be undertaken and of making a huge difference to future reoffending. I look forward to the Minister’s response.
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
I congratulate the hon. Member for Bridgend (Mrs Moon) on securing this debate. On behalf of Her Majesty’s prison Parc and all the staff who work there, I thank her not only for how she made the case for the Invisible Walls programme, but for her support over a much longer period. The debate highlights an issue at the forefront of the Government’s plans to transform the criminal justice system.
The hon. Lady and I will be glad, as I am sure you are, Mr Caton, that crime has been coming down for some time. The overall level of crime recorded by the police decreased by 8% in the year ending December 2012, compared with the previous year. Such figures are encouraging, but they are not grounds for complacency. We can do much more to reinforce the downward trend, so that people can feel safe wherever they may be, at any time of the day or night.
As the hon. Lady pointed out, the key is to tackle reoffending by taking bold and effective steps to rehabilitate offenders—assisting, encouraging and guiding them away from crime into new, worthwhile and productive ways of life. That is precisely the intention of the Invisible Walls project at HMP Parc. It is worth saying that that matters because reoffending has been too high for far too long. Almost half of all offenders released from prison offend again within 12 months, and those with the very highest reoffending rates are prisoners with custodial sentences of less than 12 months. A staggering 58.2% of those released in the year to June 2011 reoffended within 12 months. The current system simply does not address the problem in the way we want, and many prolific offenders, with a host of complex problems, are released on to the streets with £46 in their pockets and little else, so the case for a new approach is clear.
We spend more than £3 billion a year on prisons, and almost £1 billion annually on delivering sentences in the community. Despite that investment, overall reoffending rates have barely changed over the past decade. The same faces come back through the system time and again, because most crime is committed by that relatively small number of prolific offenders. If we enabled them to turn away from crime, we could make a real difference.
As the hon. Lady will be aware, on 9 May we set out our plans in “Transforming Rehabilitation: A Strategy for Reform”, which took account of the comments received in response to the consultation paper that was published in February. The document sets out that, for the first time in recent history, every offender released from custody will receive statutory supervision and rehabilitation in the community. We are legislating to extend statutory supervision and rehabilitation to all 50,000 of the most prolific group of offenders—those sentenced to less than 12 months in custody.
The market will be opened up to a diverse range of new rehabilitation providers, so that we get the best out of the public, voluntary and private sectors, at local as well as national level. We will also introduce payment incentives for market providers to focus relentlessly on reforming offenders, giving those providers the flexibility to do what works, along with freedom from bureaucracy, but paying them in full only for genuine reductions in reoffending. We will create a new public sector national probation service, working to protect the public, and building upon the expertise and professionalism that are already in place.
Of particular importance, and of particular relevance to what we are discussing, is that we are putting in place an unprecedented nationwide through-the-gate resettlement service, which means that most offenders are given continuous support by one provider, from custody into the community. We will support the service by ensuring that most offenders are held, for at least three months before release, in prisons designated to their area. The hon. Lady asked me to consider how we might extend that period. It would, of course, be desirable to have the longest possible period of stability during a sentence, and she will be reassured to know that we hope that many people, particularly those sentenced to periods of 12 months or shorter, will be able to spend the entirety of their sentence in a local prison, which will enable precisely the sort of work we are talking about to go on with them.
The hon. Lady described how the Invisible Walls project seeks to help prisoners at Parc to avoid reoffending, and it also addresses the genuine risk that those prisoners’ children may themselves be drawn into crime. She rightly highlights what I think we all agree is a shocking statistic: six out of 10 boys with a convicted parent end up in custody themselves. The project involves an extensive programme of support to assist offenders to repair, develop and maintain healthy relationships while in custody, and the support continues after release. Prisoners who may be eligible to receive support are those who have no restrictions on contact with their children, and who will be resettling with their families in south Wales when they leave custody. That gives rise to the point about continuity.
As has often been observed—not least this morning—prisoners frequently have a wide range of complex interrelated problems that need to be addressed as part of a rehabilitation programme, and Invisible Walls helps offenders to find accommodation, employment, training, education and volunteering opportunities. As the hon. Lady says, the programme promotes physical and mental health—by addressing substance misuse for example—helps offenders to manage their finances, and manages offenders’ attitudes, thinking and behaviour, to give them the motivation to begin afresh.
The main focus of the project is on reducing reoffending and preventing prisoners’ children from turning to a life of crime by strengthening family ties. Research has shown that ensuring that a prisoner keeps in contact with his or her family while in prison has a direct effect in reducing the likelihood of reoffending. Some 7% of children in the UK will experience having a parent in prison before they leave school, and research shows that positive and regular contact with the imprisoned parent significantly improves a child’s outcomes, not only in school and at home but in later life.
An interesting aspect of what goes on at Parc is that prisoners are assigned a family integration mentor—FIM—who, as the hon. Lady knows, supports them and their family during the custodial period, and through the gate, into the community. The FIM links with other mentors, who help the offender and the family to address problems. Where we can arrange it, the support begins 12 months before an offender is released from prison and, crucially, continues during their first six months in the community. It therefore reflects very much what we have in mind for the system in the future, not just at Parc but elsewhere.
HMP Parc is operated by G4S, which set up the project in 2009 and, as the hon. Lady said, a number of outside agencies are now involved as well. She also referred to the invitation from Invisible Walls to schools in the Bridgend area to work with them to offer discrete and sensitive support to children with a parent in the prison, and she asked me to ensure that the Ministry of Justice has regular contact with the Department for Education. As she would expect, we have regular conversations about all the issues, and I will ensure that that project features in them, so that everyone, on both sides, is fully informed.
Part of the thinking behind the project is the need to move away from an inward-facing prison culture to an outward-facing approach, with strong partnership relationships with outside agencies, and that is precisely what our through-the-gate reforms are designed to achieve. What we can see going on in Invisible Walls is a good indication of the sorts of things that can work well elsewhere in the country too.
Invisible Walls received additional funding from the Big Lottery Fund in 2012 to expand the scheme from its original design, and that is an example of the sort of creative thinking we need if we are to make the big difference to reoffending that I spoke about earlier. The hon. Lady was right to point out that formal assessment of the project will not be complete until 2015, and we will carefully consider that assessment when it is available, but I hope that she can take it from what I have said today that we do not intend to wait for 2015 to see a number of elements of the project replicated in other places.
By opening up probation to a wider range of providers, we can bring additional skills and ideas into play, and the national probation service will retain its key role in managing risk, including the direct management of higher-risk offenders. The reorganisation of probation, and the creation of 21 new contract package areas, has presented us with an opportunity to consider release alignment. That is very much along the lines of what the hon. Lady was describing, regarding the continuity of approach that we all wish to see. It has long been recognised that closeness to home is an important factor in an offender’s resettlement process, and our reforms will strengthen existing rehabilitation services by drawing on the best the market has to offer and combining that with access to offenders at the start of their time in custody, and again before release. It might not be possible for certain longer-sentenced prisoners to stay in a local prison for the entire duration of their sentence because of needs attached to their sentence that can only be met elsewhere, but we intend that they be returned to a local prison for the few months leading up to their release.
Currently, 50,000 offenders each year are sentenced to custody for less than 12 months, and we anticipate that the majority of them will serve their entire sentence in a resettlement prison designated to their area. That means better continuity of supervision and rehabilitation services, as well as better family links and a network of prisons more specifically catering for the needs of that cohort of offenders.
Resettlement prisons are one strand of a comprehensive strategy of reform that seeks to tackle all aspects of reoffending. Invisible Walls displays the scope that exists for a wide range of organisations from the public, private, voluntary and community sectors to bring their skills to bear in enabling offenders to change their lives. I am glad that we have had the chance this morning to discuss the work of Invisible Walls and the wider context of offender management. No one imagines that changing entrenched patterns of offending is a simple matter, but the Government firmly believe that the measures we are putting in place will help to achieve a fundamental transformation, with enormous and lasting benefits for our society.
Alcohol Licensing Advertising
(10 years, 10 months ago)
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Gordon Henderson (Sittingbourne and Sheppey) (Con)
It is a real pleasure to serve under your chairmanship, Mr Streeter. Earlier this year, the Government held a consultation on licensing notices. In essence, Ministers are considering scrapping the statutory requirement for those applying for an alcohol licence to advertise that application in their local newspaper. In this debate, I intend not only to raise the concerns of my local newspapers and of those in the constituencies of many right hon. and hon. Members, but more importantly to speak up on behalf of the thousands of people in my constituency who rely for much of their local news on our local newspapers.
Karl MᶜCartney (Lincoln) (Con)
It is a great pleasure to serve under your chairmanship, Mr Streeter. I thank my hon. Friend for securing this debate. May I emphasise that he is speaking on behalf of not only thousands of his constituents, but certainly mine in Lincoln, and thousands of my colleagues’ constituents across Lincolnshire who are served by the Lincolnshire Echo, and who obviously have the same concerns?
Gordon Henderson
I welcome the intervention of my hon. Friend—a corridor friend—and I note how subtly he plugged his local newspaper. As it happens, I was about to say that my local newspapers include the Kent Messenger, Kent on Sunday, the Sheerness Times Guardian and the Sittingbourne News Extra. I have many local newspapers in my patch.
One of the most important sections in a local newspaper is the page set aside for statutory notices. To many people, that section is second only to the obituaries column, which is always the first to which they turn. The publication of statutory notices, such as for planning and alcohol licence applications, is an important revenue stream for hard-pressed local newspapers, all of which face increased competition from the internet.
An applicant for an alcohol licence is required to publish a notice in the local newspaper. From the same date, the applicant must also display a notice prominently on the premises for 28 days. Those requirements were designed to ensure that local communities were fully informed about, and given the opportunity to object to, alcohol licence applications, or to a pub, club, restaurant or off-licence applying to change the hours of its licence.
Gareth Johnson (Dartford) (Con)
I congratulate my hon. Friend on securing the debate. Does he agree that notices that go into local papers can be noticed by not only objectors to applications but their supporters, so the drinks industry should not fear such notices?
Gordon Henderson
I welcome the comment from my hon. Friend, whose constituency in Kent is also covered by the Kent Messenger, which he forgot to mention. He is right and, as I shall say later, newspapers not only carry the notices, but articles or editorials on the subject as well.
In the Home Office document, “A consultation on delivering the Government’s policies to cut alcohol fuelled crime and anti-social behaviour”, the section on reducing the burden of regulation on responsible businesses has a proposal to remove the requirement to advertise in local newspapers. Paragraph 9.21 asserts:
“The way people consume news locally is changing, both in its frequency and form. Local residents have opportunities to learn about applications online or by notices on the premises themselves.”
I have some sympathy with that view: there is no doubt that an increasing number of people have access to the internet, and people can read notices posted in a shop window, but I have some deep reservations.
To take the latter point first, reading a notice posted on the premises depends on the person wishing to read the notice knowing that it is there in the first place. It is of course possible that somebody might spot the notice by chance, and I suppose that the immediate neighbours of a proposed venue might notice one, but they would have to be pretty observant. New alcohol outlets or changes in licensing hours can frequently have an effect on the character or amenity of a wider area than the proposed site, but those who do not live in the vicinity are unlikely ever to see a public notice and will have no knowledge of an application.
On the suggestion that people can view applications online, I accept that for many people it is true that we live in a digital age. Indeed, in 10 or 20 years’ time, every home in the land might be connected to the internet, all local newspapers might deliver online editions and everybody might have access to the public notice section of their local authority website, but we do not live in the future. This is not 10 or 20 years’ time; it is now. Today, research shows that there is a real digital divide, in that 11% of adults in Britain still do not have access to the internet. More importantly, that figure is far higher among some income groups, geographic areas and age groups, particularly the elderly. For some elderly people, the digital divide means only the space between their fingers. Ironically, they take an interest in what goes on in their community, are likely to oppose an application for yet another pub, club or off-licence, and are more likely to read their local newspaper.
Karl MᶜCartney
I want to back up my hon. Friend’s point. Is he aware that national, representative, independent research by GfK National Opinion Polls has found that eight times as many people read a newspaper in the past week as had looked at their council’s website? In fact, 29% of adults had not accessed the internet at all in the past 12 months.
Gordon Henderson
I thank my hon. Friend for drawing that to my attention. I was aware of it, but I am trying in my speech to push aside all the statistics and to deal with the issue on behalf of real people with real concerns.
Another important consideration is that communities would lose one of their greatest assets. Local newspapers
“perform an incredibly important function in our democratic system.”—[Official Report, 12 November 2012; Vol. 553, c. 575.]
Those are not my words; that is what my right hon. Friend the Prime Minister said in relation to the Leveson inquiry. Indeed, the Leveson report said that local newspapers’
“contribution to local life is truly without parallel.”
The Newspaper Society estimates that the proposal could cost the already struggling local press industry between £6.2 million and £7.9 million a year. The Leveson report recognised that many local newspapers are no longer financially viable, but local newspapers report on stories such as local politics, occurrences in local courts, local events, local sports and the like, all of which would be thought too parochial to be reported by national or even regional media. In fact, it is through local journalism that some important issues are picked up by the nationals and brought to the nation’s attention. Leveson went on to say, of the local press, that
“their demise would be a huge setback for communities and…would be a real loss for our democracy.”
My concern is about not only the effect that the proposal will have on my elderly constituents and the local newspapers that they love to read, but alcohol licensing. We must ask ourselves why we have such stringent rules about who is allowed to sell or serve alcohol. It is because alcohol is a drug, and a very dangerous drug at that. Alcohol abuse can lead to addiction and often contributes to crime and antisocial behaviour. That is why it is controlled.
The Government are determined to cut alcohol-fuelled crime and antisocial behaviour, which is a highly laudable aim that I support. However, I find it hard to understand how reducing the alcohol industry’s requirement to get licences meets the aims of the Home Office’s policy of reducing the harmful effect of alcohol abuse on society. How will scrapping the statutory requirement to advertise alcohol licence applications in our local newspapers help ensure that those who sell alcohol are right and proper people to do so? How will loosening the current regulations ensure that we clamp down on the sale of alcohol to minors? How can the community find out about new licensed premises in their area or, even more importantly, applications for longer licensing hours, if they do not have access to the internet? The answer to that last question is their local newspaper.
Research shows that people take time to browse a newspaper and that many adult regular readers read the public notices section of their local paper. Publishing applications in local papers does not require readers to institute an active search for information; it is there in front of their eyes when they open their local newspaper. Public notices in local newspapers are published in a context that no other medium can deliver—a lively and engaging marketplace, both in print and online, which offers up issues such as the licensing of pubs and clubs for regular attention and debate. As I said to my hon. Friend the Member for Dartford (Gareth Johnson), we should remember that as well as printing the advertisement, local newspapers often run feature articles about contentious applications.
Let us ask ourselves another question: does the proposal save taxpayers’ money? No, it does not, because it is businesses, not local authorities, that pay for the advertising.
Gareth Johnson
As the cost of these notices is not picked up by the taxpayer, there is no downside for the taxpayer in having such notices. Quite clearly, though, there is a huge downside for the taxpayer and the whole local community if newspapers such as the Dartford Messenger are not supported and therefore go out of business.
Gordon Henderson
I agree with my hon. Friend. The cost of those advertisements is not a great burden on the businesses. It might be argued that the proposal would save taxpayers’ money. Fewer people will object to the proposed nightclub because they will not know it is proposed, which will save councils’ time. However, that is a rather cynical view, and not what the Government are aiming for. Indeed, the Government profess to want the public to be more involved with local decisions.
The Home Office’s impact assessment focuses on the small cost savings to the alcohol industry that might be achieved by scrapping the requirement. That assessment puts the cost of a relevant advertisement in a local paper at £450 plus VAT. It is worth pointing out, though, that the figure is disputed by the newspaper industry, which says that the cost is much lower than that. As someone who has had an off-licence and a restaurant in the past, I can say that I would never have paid £450 plus VAT for an advert in my local newspaper. However, even if that is the cost, it is not a huge burden to a small business, and it would hardly make a dent in a larger business’s overall advertising budget.
At a newspaper conference in December 2012, the Secretary of State for Communities and Local Government repeated his intention of sticking to the commitment that he made when taking up office, which was not to remove statutory public planning notices from local papers during the lifetime of the Parliament. How is alcohol licence advertising any different from statutory planning advertising?
To conclude, removal of the notices from local papers will erode the public right to know, and will damage local democracy. It will lead to licensing matters being decided without local knowledge and debate, and to the death of many local newspapers. I hope that the Minister will take into account my points when considering the results of the consultation and drop this proposal.
Diana Johnson (Kingston upon Hull North) (Lab)
I am pleased, Mr Streeter, to serve under your chairmanship this afternoon. I am speaking slightly sooner than I anticipated, but that is to the good.
I congratulate the hon. Member for Sittingbourne and Sheppey (Gordon Henderson) on securing this important debate. He made a compelling case for the continuation of statutory notices in local newspapers to inform local communities about applications for and variations to alcohol licences. I was particularly struck by his comments that came from his own experience. I think he said that he ran an off-licence and a restaurant and had experience of making applications for alcohol licences and paying for advertisements in local newspapers.
I was also pleased that the hon. Member for Lincoln (Karl MᶜCartney) was able to get in a mention for his local paper, and that the hon. Member for Dartford (Gareth Johnson) managed a mention in his second intervention. It is all to the good that we mention our local papers, and I will certainly be doing that in a moment.
On the current requirements, any premises looking to be granted an initial licence or to make a major variation needs to display a notice prominently on the premises and publish a notice in a local newspaper or, where a newspaper does not exist, newsletter. As we have heard, the cost of an advert is borne by the applicant, and such adverts are estimated to bring in between £6.2 million and £7.9 million for local newspapers each year.
As has already been said clearly and compellingly, the purpose of the requirements is to inform a community about licence applications to enable local people to have a say. It is important to remember that the Licensing Act 2003 gives the local community extensive grounds to object to a licence. There are four explicit grounds for objection: the prevention of crime and disorder, issues of public safety, the prevention of nuisance and the protection of children from harm. The right to object is fundamental to our licensing system, and anything that undermines that right is a regressive step.
The requirement to advertise is a significant cost to the licensed trade, but it is a cost only when a venue is looking to open up or make a major variation, which would normally be a licence extension. It is not a charge that is levied on long-standing community pubs unless they are looking to vary their licence. It is much more likely to be a fee encountered by a new venue in city centres, nightclubs, off-licences and supermarkets. That is important because a number of Members are, quite rightly, concerned to protect their local community pubs and not to impose further burdens on them. It is also important to note that the effect of ending that requirement is not a net benefit to industry. Rather it is a switch in resources from the local newspaper industry to the alcohol sector.
The Government propose to scrap the requirement to advertise in local newspapers. In future, people will have either to view the proposal on the premises or to actively seek out the information online, although unless they had seen the notice on the premises they would have no idea that they needed to check out the council website, as the hon. Member for Sittingbourne and Sheppey pointed out so effectively.
Research by GfK conducted on behalf of the Newspaper Society showed that the weekly reach of local newspapers was 67% of the population, compared with just 8% for local council websites, and, as has already been pointed out, many parts of communities do not have access to the internet. I was struck by the hon. Gentleman’s comment that for some people the digital divide means only the space between their fingers: they do not have access to the internet and would not know where to start to look on a council website. Could the Minister comment on that issue and say how the public will be informed about what is going on in their local area? Do the Government genuinely think that this change can be introduced without reducing the number of people who are made aware of new licences or variations to licences?
It is important that the Government recognise the unique role that local newspapers play in keeping a local community informed. In my own city of Hull, our local newspaper, the Hull Daily Mail, forms the basis of the local political discourse and is a well trusted source of news. The Hull Daily Mail is also very well read. It has lots of important local information, including licence applications.
I want to draw the Minister’s attention to two recent applications for lap dancing clubs in Hull. Although they were applications for clubs in the city centre, because of the nature of the establishments, people across the city may well have wished to object for a range of valid reasons. One was the proximity of the clubs to a boys school that is due to open in September. Because the school has a city-wide catchment area, those licences were of interest to many more people than would walk past the venue. Because the notification had to be advertised in the local paper, the whole community in the city could know about the application and so were in a position to object. Indeed, many people chose to object. What is more, the local paper followed up the story with an article after the hearing, to keep the community updated about what had happened. That was a proper dialogue, which informed local people and demonstrated the value of local papers.
I will now consider the measure that we are discussing today in the context of the Government’s alcohol strategy. I am delighted that the Minister is in Westminster Hall today, because he and I have debated the strategy over many months. In recent Public Bill Committees, we have spent a long time looking at the Government’s approach to dealing with alcohol.
The aims of the Government’s alcohol strategy are to reduce the social and individual harms caused by alcohol consumption, particularly health issues and anti-social behaviour. One of the features of the strategy is a general promise to rebalance the Licensing Act 2003 in favour of local communities. It does not appear obvious how preventing local communities from knowing about a proposed new licence will help to empower them. Perhaps the Minister can explain to me how it will do so, because it seems to fly in the face of that stated aim. It appears that the measure is much more about the “red tape challenge”—the Government’s desire to boast about reducing bureaucracy. In this case, they want to boast about reducing bureaucracy on the alcohol industry.
As I understand it, the measure has already been the subject of two consultations. The first consultation, which was launched in 2010, asked for suggestions as to how the Licensing Act could be deregulated. That consultation led to an impact assessment, which revealed the Government’s preference to end the requirement to advertise in local newspapers. However, nothing seemed to happen afterwards. In the second consultation, which was launched in November 2012, it was set out that one of the consultation’s four aims was to
“introduce stronger powers for local areas to control the density of licensed premises”.
However, the proposal that we are discussing today seems to limit the access of communities to information about new licence applications. Again, perhaps the Minister could comment on that issue.
One of the Government’s recent changes to the licensing system removed the vicinity requirement. That change, which was introduced in the Police and Social Responsibility Act 2011, means that someone can object to a licence application without having to prove a connection to a particular area. However, that measure is undermined by the removal of the requirement to advertise in a local newspaper, which prevents the wider community from finding out about a proposal.
Of course, it is important to look at the particular measure that we are discussing in the context of the wider alcohol strategy. We have to consider the change not only in the context of other changes to licensing but in the context of the local media market. I am unclear as to exactly what the Government are trying to achieve with this particular proposal. They have introduced a raft of changes to licensing. They have introduced both the late night levy and the early morning restriction order to try to increase the contribution of licensed premises to their local communities. The problem is that they expected local authorities to impose the levy and then give the money to the police. However, there is no guarantee that the money that has been raised will benefit the local community. Hence, as I understand it, no area has introduced a late night levy or an EMRO, and the £17 million that the Government promised would be made available for local communities has not yet materialised. Perhaps the Minister can update us on that issue.
The Government have also made a commitment to introduce full recovery of the costs of licence applications. An independent review conducted by Lord Elton found that the current shortfall in licensing revenue was approximately £17 million a year. So the Government have again committed to raising extra revenue from the licensed trade for the benefit of the wider community. Again, however, we are unclear as to what has happened to those plans.
Finally, there is the central plank of the Government’s alcohol strategy—minimum alcohol pricing. The Home Secretary came to the House to announce that policy; I think that she did so on a Friday, because it was so important. She then launched a consultation on the level of minimum unit pricing. Then she briefed the press that she had actually blocked the policy, which was her own policy. I am sure that the Minister will be able to tell us where the Government are in terms of introducing minimum alcohol pricing.
As we understand them, the Government’s stated aims are twofold: first, to empower the community to have a greater say in licence applications; and, secondly, to increase the contribution of the licensed trade to the wider community. However, the measures designed to achieve those aims have all collapsed, and today we are discussing the Government’s plans to do something that limits a community’s access to information about licensing and restricts the contribution of the licensed trade to the wider community.
It is important to consider the effect that this measure will have on local newspapers. The Government’s own impact assessment estimates that it will cost the industry up to £8 million in lost revenue. That is a big blow for an industry that is already struggling. A number of regional newspapers have had to close and many more are seeing their circulation fall to the point where they are on the verge of being unsustainable.
That situation creates several problems. The closure of local newspapers has resulted in significant news gaps, leaving areas without an adequate source of local news. The decline of regional newspapers is bad for communities, because it erodes the important role that newspapers have at the heart of local areas. The decline of regional newspapers is also bad for local democracy, as papers are no longer willing to challenge vested interests and hold people to account for financial reasons.
The decline of local newspapers is not because there is no appetite for local news or for the particular role that local newspapers play in their communities. Despite the decrease in circulation for paid-for regional newspapers, free local titles have seen significant increases. The latest circulation figures, for July to December 2011, show that 18% of free local newspapers increased their circulation. There is also huge growth in the number of online visitors to local newspaper websites. Those developments show us two things: first, local newspapers are under threat and need to find new sources of funding; and secondly, there remains a huge demand for local newspapers and the unique role that they play in serving our communities. Given those facts, the Minister should rethink implementing a policy that will seriously damage an already struggling industry and that appears to go against everything else that the Government’s alcohol strategy is meant to achieve.
The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
It is a pleasure to serve under your chairmanship on this occasion, Mr Streeter. The hon. Member for Kingston upon Hull North (Diana Johnson) and I had the pleasure of serving under your chairmanship during the Public Bill Committee stage of the Protection of Freedoms Act 2012. It is good to see you in the Chair again today.
I congratulate my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson) on securing this debate today, and on providing an opportunity to debate the important issues relating to the advertising requirements that pertain to alcohol licensing. My hon. Friend is a strong supporter of local media. He is proud to be a true man of Kent. I welcome his using the opportunity to champion the Kent Messenger and other local Kent titles, whose influence even reaches across the borders to my constituency. I hope that the Bexley Times and the Bexley News Shopper provide some local competition to his titles, too.
I also thank my hon. Friends the Members for Lincoln (Karl MᶜCartney) and for Dartford (Gareth Johnson) for their interventions. The strength of support for the local press and local media comes through clearly in our debate, and I will deal with those comments later, feeding back on a number of points during my response this afternoon.
I welcome the hon. Member for Kingston upon Hull North to her place. As she highlighted, we had many happy hours together, debating the detail of alcohol licensing policy during the Public Bill Committee stage of the Police Reform and Social Responsibility Act 2011, when we highlighted a number of important points and added to the scrutiny of the Bill. Although I no longer hold the policy lead on alcohol, which is with my hon. Friend the Member for Taunton Deane (Mr Browne), the crime prevention Minister—he is not able to respond to this debate because he is in Committee—I welcome the opportunity to revisit some of the ground that we debated at that time. I had not appreciated that the hon. Lady was a Daily Mail reader, albeit the Hull Daily Mail.
Local newspapers have more than 30 million readers in the UK, through their print titles alone each week—some 61% of all UK adults—as well as 62 million web users a month. My hon. Friend talked about the immense value and importance of local newspapers and that was emphasised by additional contributions by my hon. Friends the Members for Lincoln and for Dartford, particularly on the benefit that they provide to people who do not have internet access.
Like my hon. Friend, I am also committed to a strong, local, independent media. I reassure him that this Government regard the independent local press as essential for local democracy, as it helps local people to hold their local council and other agencies to account. The Government have recently introduced measures in the Local Audit and Accountability Bill to protect the independent press from unfair competition from council newspapers—the so-called “town hall Pravdas” that disregard the code of recommended practice on local authority publicity. The code restricts the publication of council newspapers and news sheets to once a quarter, but some local authorities are disregarding it by publishing their newspapers as frequently as weekly, taking paid advertising revenue away from the independent local press. The new legislation will enable the Secretary of State for Communities and Local Government to direct authorities to comply with the code.
The Government are committed to tackling alcohol-related harm and developing a licensing regime in which the public have a strong voice. At the same time, we want to lift the burden of bureaucratic processes from licensing authorities and responsible businesses. The proposal to remove the relevant requirement on licensing applicants, many of whom are small businesses, was introduced to remove what some see as an unnecessary burden. I should like to be clear and say to my hon. Friend that there is no desire to prevent local people getting information about new licensing applications or playing an active role in the licensing process. This Government have done more than any other to increase the ways in which local communities and local people have a say in whether pubs and clubs should be open in their areas, and for how long. Ensuring access to local information about licensing is key to that.
As the hon. Member for Kingston upon Hull North said, I led on much of the Government’s legislation in the 2011 Act, to overhaul Labour’s Licensing Act 2003 and rebalance it in favour of local communities. We gave local people a stronger voice by scrapping the old vicinity test that the hon. Lady mentioned, so that, now, anyone can make representations and object to licensing applications regardless of where they live in relation to the premises. In addition, we made it easier for licensing authorities to respond to local concerns about irresponsible businesses selling alcohol and close problem premises down. We have lowered the evidence threshold for decision making and the burden of proof to show that a premises is causing public nuisance or crime and disorder, for example. That is helping to ensure that the appropriate balance is given to local communities to make those decisions.
We have also given responsible authority status to licensing authorities, ensuring that those are better able to respond to the concerns of local residents by taking swift action to tackle irresponsible premises, without having to wait for representations from the police or other responsible authorities. At the same time, we have given local health bodies a greater say in licensing and increased the availability of information about alcohol licensing online.
More than 40% of violent crime is alcohol related. In October last year, new powers were introduced and made available to help local communities tackle the problems of crime and disorder caused by late-night drinking. The late-night levy allows local councils to charge pubs and clubs opening late at night for a contribution to policing costs. The early morning alcohol restriction order allows for alcohol sales to be banned between midnight and 6 am, if there are local grounds to do so. The powers commenced on 31 October 2010. Many licensing authorities, including the London borough of Islington, and Newcastle, are considering carefully whether the late-night levy could benefit their area. They must also consult publicly before introducing the levy. I hope that hon. Members will note that Newcastle has already begun to do so. Early morning restriction orders, as I said, were introduced at the same time and allow councils to prohibit the late-night sale of alcohol. A number of licensing authorities, including West Lancashire and Northampton, are considering such orders for their areas.
The hon. Lady asked me about minimum unit price. She will know that my hon. Friend the Member for Taunton Deane responded to an urgent question in relation to this matter and highlighted that the Government are carefully considering responses to the alcohol strategy consultation. We will publish a response to that in due course, taking into account all the representations.
As well as measures to tackle alcohol harms, the public consultation recognised the contribution that the responsible alcohol trade makes to our economy and society. The Government sought views on ways to cut red tape in licensing for responsible businesses, while not, of course, undermining safeguards against the harms that alcohol can cause. The consultation sought views on a number of areas relating to proposals to cut red tape, including whether to give discretion for licensing authorities to develop their own simplified processes for temporary event notices and reducing the burden of alcohol licensing for certain types of premises that provide minimal alcohol sales as part of a wider service.
It is important, as hon. Members have said, to recognise that the vast majority of our pubs are vital community assets, contributing to the economy and providing local jobs, in many ways at the heart of communities, fostering strong social values and encouraging responsible drinking. The alcohol strategy reflects that. It is also notable that each pub contributes an estimated £100,000 annually to its local community. The Government are helping pubs through a wide range of measures. In the last Budget, we scrapped the beer escalator and cut alcohol duty, resulting in a pint of beer being 4p cheaper than if we had done nothing. We have also extended the business rates holiday for a further year, until the end of March 2014, and got rid of much of the red tape that frustrated landlords and kept them from focusing on what they are best at: running a business and managing drinking in a safe environment. Most recently, on 15 June, we announced that new CCTV guidelines will mean that pub landlords no longer have to pay for intrusive and costly surveillance cameras where they are not needed.
One proposal to cut red tape that the alcohol consultation considered—it has obviously been mentioned in the debate—related to whether to remove the requirement for applicants to place advertisements in local newspapers or circulars when applying for a premises licence, provisional statement or club premises certificate or for a full variation of a premises licence or club premises certificate. Some in the licensed trade found that burdensome and pointed to other mechanisms whereby local people could find out about new licensing applications.
I understand hon. Members’ concerns. Similarly, I understand the specific issues raised by my hon. Friend the Member for Sittingbourne and Sheppey, as well as his motives in calling for the debate. Adverts in local newspapers are one way in which local communities can find out about premises licence applications, and I note the contributions that have been made about the importance of that and the reach it provides.
I should highlight that there is a requirement for applicants to advertise information about a premises licence application by displaying a notice at the premises. That, too, can be a way of alerting a community to the fact that a licence may be being sought in respect of the premises. Alongside that obligation, the Government have added a new requirement, from April last year, for licensing authorities to publish details of such licence applications on their websites. Some licensing authorities have gone further than the strict legal requirements, and they proactively provide e-mail alerts to those interested in licensing applications. The Government’s guidance to licensing authorities encourages them to ensure they comply with legal requirements. We will look to ensure that licensing authorities consistently publish the relevant information. I recognise the points made by my hon. Friend, but it is important to recognise the changing ways in which information is provided and the importance of online platforms in communicating information. We should look at innovative ways of strengthening that further.
The Government’s consultation received a large number of responses from business, the public and local government. A number of arguments have been made for and against the proposal, and the Government are grateful for how the public have engaged and for the information that has been provided, including by those in the newspaper industry and the licensed trade.
The arguments in favour of abolishing the advertising requirements include the burden it places on licensing applicants, who must pay for the cost of the advertisements. However, others have pointed out—this is reflected in the mood of the debate and the comments that have been made—that newspaper adverts provide a valuable source of information for those who might not see notices on premises or licensing authority websites.
Let me be absolutely clear: the Government do not wish to remove the say that local people and communities have in the licensing process. There is an important balance to strike, and we must consider whether there are already adequate ways for people to find out about premises licence applications. We also acknowledge the role newspapers have as a central point for local information. That, and the other points I have mentioned, need to be weighed up by the Government as we consider our response to the alcohol strategy consultation. As I said, we will publish our response in due course.
I am grateful for the contributions that have been made this afternoon, which amplify some of the representations that have been made as part of the consultation. We will reflect further on the clear points that have been made in the debate. We continue to listen to the points that are flagged up. I very much hope that that gives my hon. Friend some reassurance that we take this matter very seriously and that the proposal in the consultation document continues to be given detailed consideration. We will continue to reflect on the proposals, and we will publish our formal response in due course.
Railway Services (North Cornwall)
(10 years, 10 months ago)
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Dan Rogerson (North Cornwall) (LD)
It is a pleasure, Mr Streeter, to serve under your chairmanship this afternoon. I am grateful for the opportunity to raise rail issues in my constituency.
If you cast your mind back, Mr Streeter, you may remember a joke in a 1980s Eddie Murphy film, “Coming to America”. A waiter brings soup to a table and the customer asks him to try the soup. The waiter says, “What’s wrong? Is it the wrong soup?” The customer says, “Could you try the soup?” The waiter says, “Is it too hot?” The customer says, “Could you try the soup?” The waiter says, “Is it too cold?” The customer says, “Please try the soup.” The waiter says, “Okay. I’ll try the soup. Where’s the spoon?” I have told that joke several times in the last few days when people have said to me, “Rail services in north Cornwall? There aren’t any rail services in north Cornwall.” When I requested the debate, I think that I filled in the form with the words “Rail services for north Cornwall”, but it makes the point that, although many people in north Cornwall regularly use rail services to get in and out of the duchy or to travel to points further west, none of those services runs within the current boundaries of the North Cornwall constituency, which covers the same area as the old North Cornwall district.
Before the last general election, I had the honour of representing the town of Newquay, which has the Atlantic branch line from Par. At the time, there was a debate about the success of Cornwall’s other branch lines in driving up usage. The Par to Newquay line had not had such success at that time, although looking at the figures for the services to Newquay again, it seems that the numbers on that line have risen, too, which is a welcome development.
In the North Cornwall constituency as currently constituted, the railways were victims of the cuts in the 1960s. The famous north Cornwall line, which Sir John Betjeman wrote about and enjoyed travelling on, left from Waterloo, not far from here, and went via Exeter and ultimately through north Cornwall. It had connections to Bude, and ran through Launceston and other places where many people would love to go to if the railway line still existed. It also went through Camelford and Port Isaac, where the “Doc Martin” series attracts thousands of tourists every year, and then on to Wadebridge and Padstow. The services on that line were victims of the Beeching cuts. In 1990, a small section of the former railway around Bodmin was reopened by the Bodmin and Wenford heritage railway. It is a popular tourist attraction and does a great deal to conserve the rolling stock and to bring people to that part of the world.
I want to focus today on how we might use existing railways better to meet the needs of my constituents and what the prospects are in the longer term of developing rail services again throughout the north Cornwall area. The operators of the Bodmin and Wenford railway have plans—they are not without controversy in the area—to extend their services to Wadebridge along the Camel trail by the River Camel on the former track bed. However, in doing that, they would seek to protect the Camel trail, which has become a well loved part of our landscape for cycling, walking and riding, and brings many tourists to Wadebridge, Padstow and the surrounding area. Any development would have to protect that.
I am also struck by the operators’ commitment to work to bring tourists to Bodmin town, too, which perhaps has not benefited from the Camel trail in the same way. I am told that Bodmin has the second largest inward commute of any town in Cornwall after the city of Truro. Of course, most of that is by car, although there are some bus services. The railway comes to Bodmin Parkway—it was called Bodmin Road when I was growing up in the area—and continues on the main line further south and west. If we were able to offer services along the Bodmin and Wenford stretch back to Bodmin general station, where the group’s headquarters are located, it would bring tourists and commuters into Bodmin and back out again at the key points of the commuting day. That would be a real benefit.
Cornwall council supports the exploration of that option. The current portfolio holder, Councillor Bert Biscoe, was also the portfolio holder at the tail end of the previous Administration. He is keen to provide a solution and council officers believe that that option could make a contribution to dealing with transport issues in Bodmin. I would welcome any support that the Government could give to taking forward such a proposal.
My constituents further north in Launceston and Bude are still some distance from the rail network. My office is in Launceston and when people visit from Government agencies or companies to talk about constituency matters or casework and ask what the nearest station is, they are often surprised to find that it is Plymouth or Exeter, or that they must overshoot Launceston into Bodmin Parkway and come back.
Most people in that part of the world would travel to Exeter St Davids and pick up the service there or perhaps to Tiverton Parkway and use the service there. Some people in Devon—your county, Mr Streeter—have been talking about what contribution a parkway station at Okehampton might make for people in west and north-west Devon, as well as the north and east of my constituency. Devon county council has considered that as part of the regeneration of Devon and believes that it could make a contribution. If more services were offered at Okehampton, it would bring rail services that much closer to Bude, Launceston and the surrounding area, so people would not have to drive into Exeter, which is busy at peak times, or continue around it for some distance to pick up services at Tiverton Parkway. It makes a great deal of sense to look at that proposal, although there may be arguments about resilience. If there were problems with the line further south in Devon, there would be an opportunity for people to connect with rail services to Exeter and to pick up the main line there. Much could be said for development there.
In my submission, with other colleagues, to the previous round of franchise discussions, I raised both those matters. I hope that the Government will consider them and that there is support for those changes and their potential for people in Cornwall and in Devon. In the longer term, it would be great to have the north Cornwall line back. That would be wonderful for tourism, but we must be realistic. There has been development along the track bed. We did not protect it in the same way as some other European countries protected lines when they mothballed them. We must deal with the situation that we have, but Councillor Biscoe particularly is supportive of looking at how to bring other forms of public transport back to north Cornwall to complement the buses that we still have.
Existing services to London are incredibly valuable. For people who have travelled from parts of the north coast—for example, to Bodmin Parkway to pick up mainline services there—the suggestion that they might catch a connecting service to Plymouth and pick up mainline services there would be unpopular because it would mean another change. I hope the Government will resist that. If we follow some of the plans set out by Cornwall council, we can protect the through services all the way to Penzance, which are incredibly valuable, and ensure that we tie in east-west commuter services through Cornwall to provide more regular services. People in my constituency who work in Truro, which is the retail centre for Cornwall and has big public service and public sector employers, often find that trains do not tie up with their shift pattern or their work pattern, so there is a big disincentive to using them, or a delay for those who must rely on them at the end or the beginning of the day. A lot more could be done if we can create more opportunities.
Cornwall council has had discussions with the Secretary of State, who kindly visited Falmouth recently and spent time with some of my parliamentary colleagues. Sadly, I could not join him on that occasion, but I have seen the case that was set out for him. Cornwall council is rightly proud of the contributions that it and the preceding Cornwall county council made in using European convergence and objective 1 money to improve rail facilities and ensure that we can up the capacity of the network in Cornwall, mainly in points further west, such as the Truro to Falmouth branch line.
There have been very impressive increases in numbers. Across the whole country, we have seen the rail network coming under increasing pressure as ever more people seek to use it—a welcome development—but branch lines in Cornwall have exceeded even that. They might be seen as backwater services, but the numbers have been upped significantly, and not just in terms of the tourist trade in Truro and Falmouth. We now have the university in Falmouth, which is increasingly bringing people into the area, so there are great opportunities to build on that work.
Cornwall has invested a great deal of money, alongside Government and European money, in securing those improvements. It wants to take that to the next level, so that growth, over and above the level of growth that we are seeing across the country, continues, and so that we get more people off the roads and on to rail services across Cornwall. The aim is not only to protect the nine through-trains a day, but to see a further 8% growth over the projected period. We aspire to having 23 mainline services a day along the length of the rail in the duchy, which would make the service much more attractive to use, as well as much more flexible for people’s work patterns and for tourists.
There are two issues about tourism and rail. The first is how attractive we can make it for people to come to Cornwall and to leave it, sadly, at the end of their stay. The second is about getting around Cornwall when they are there. If they want to explore all that Cornwall has to offer, they need frequent and reliable services to all the places that are along and at the end of the branch lines. If we can add to that with developments around Bodmin, or perhaps by bringing services closer to Launceston and Bude, we will make the area more attractive to tourists, as well as to local residents.
I welcome the fact that the coalition Government have invested a great deal in rail across the country, and that they are emphasising the importance of that for future economic development and in ensuring that we have a more sustainable way of getting around in general. However, Cornwall will not be at the forefront of electrification, so there are other ways in which we can seek to use Government investment creatively to encourage more people to use the railway. That has been done in previous years. The numbers are very impressive, but I hope that we can move forward again.
I hope that the Minister can support our two objectives. By bringing trains back into the town of Bodmin, using the heritage railway and working in partnership with it, we could bring more regular services to Okehampton, which would help us, and protect those through-trains, while offering more regular commuter services across Cornwall. With the delay in the franchise process, we have the opportunity to get it right, and I hope that the Government will be responsive to what Cornwall council and I are setting out.
The Minister of State, Department for Transport (Mr Simon Burns)
It is a pleasure to serve under your chairmanship, Mr Streeter. I congratulate the hon. Member for North Cornwall (Dan Rogerson) on securing this debate on rail services in Cornwall and the lack of rail services in his constituency. He touched on a number of important issues, including his plea for Bodmin. He raised, both directly and indirectly, the issue of the First Great Western franchise, which obviously has a significant impact on the supply of services to Cornwall. I would also like to develop comments about community rail, which I think may benefit him. However, if he will forgive me, I will deal with those points in reverse order to the order that he took them in. I will begin with the First Great Western franchise, because it is important and has significant relevance to his constituents and others, not only in Cornwall, but along the whole route to London, including your own constituents, Mr Streeter.
The First Great Western rail franchise is a matter of keen interest, as is shown by the hon. Gentleman’s contribution. It is right that there should be so much interest in this franchise. It serves a huge number of communities and businesses, and the Great Western rail network has an important role in the economy of the many parts of England and Wales that it serves, not least Cornwall. Railway connectivity provides crucial support for jobs and growth. Delivering high-quality rail services is, of course, also a means of addressing road congestion and pollution by encouraging modal shift.
The hon. Gentleman set out with clarity the importance of the Great Western rail network to the county of Cornwall and, by implication, to his constituents who use the rail services. To respond to passenger concerns about crowding and to support jobs and growth, the Government have prioritised investment in our rail network, as he said.
The programme of capacity expansion to which we are committed is bigger than anything since the Victorian era. A number of the most ambitious and important changes will be taking place in the Great Western franchise area. Ultimately, those projects will generate major benefits for passengers and for the economy of all the areas served by the franchise. A major challenge for the operator of the franchise will therefore be to facilitate the efficient delivery of those programmes, and to maximise the benefits that they can offer for passengers once completed.
Dan Rogerson
I am grateful to the Minister for giving way so early on in his remarks. He is rightly pointing out the Government’s commitment to investing in local services to increase capacity and so on. One aspect of that is works that are planned for control period 6, which is, as I understand it, from 2019 to 2024. Cornwall council is asking for that work to be brought forward to control period 5—from 2014 to 2019—to help allow those capacity improvements to be released. He may not be able to comment on that now, but I hope that he is aware of that desire on the part of Cornwall council.
Mr Burns
I am grateful to the hon. Gentleman, and I will return to that later in my comments.
One of the success stories of Britain’s railways is the large number of additional passengers now using them. However, that can bring crowding. As Department for Transport statistics show, train services on the franchise have experienced some of the highest levels of crowding. I am therefore pleased that additional carriages funded by the Government have been introduced to First Great Western train services. Those include additional carriages for services in Cornwall and in Devon. I should like to highlight the role that the additional moneys provided by Cornwall and Devon and the Devon and Cornwall rail partnership played in securing that additional funding.
At the end of last year, flooding at Exeter and other weather-related incidents across the Great Western network resulted in disruption to train services, as both the hon. Gentleman and you in particular, Mr Streeter, will be aware, because of the proximity of your constituency. I understand fully the sense of isolation in Devon and Cornwall when transport links are seriously disrupted, and I recognise the economic and other impacts on people and businesses in the region. As the flooding experienced on the Liskeard to Looe line showed, the disruption affected parts of the network not highlighted by the national media.
The Government published the investment in rail programme last July, setting out aims for the industry over the next five-year planning period that included longer-term resilience. In response, Network Rail published its strategic business plan, which, among other things, outlined high-level measures to increase its expenditure on flood mitigation. Those plans are being reviewed by the Office of Rail Regulation, which will determine the level of funding and delivery obligations over the next five years.
To ensure that the Department for Environment, Food and Rural Affairs and Network Rail are aligned, and to ensure that a multi-agency approach is adopted when resolving flood resilience issues, DFT and DEFRA Ministers have corresponded on the issue, and officials from the two Departments will be working together with Network Rail, with the aim of driving the issue to a satisfactory conclusion. Network Rail continues to look at possible measures to improve protection of the sea wall at Dawlish. It is still not clear that reopening the former route would be an affordable or value-for-money solution.
All these factors show why the Great Western franchise is a key part of the new rail franchising programme announced by my right hon. Friend the Secretary of State in March. On 31 January, he announced the termination of the Great Western franchise competition on the grounds that the proposition was not the right one and to allow for a more fundamental review of the franchise proposition. That was in line with the recommendation made by Richard Brown in his independent review. Having considered the options for the Great Western franchise very carefully, the Government decided to extend the current franchise agreement with First Great Western for a further period of 28 weeks to October this year. At the same time, the Secretary of State announced that he intended to negotiate an interim agreement with First Great Western to ensure continuity of train services. On 26 March, he announced that the plan was to develop the franchise proposition further during an interim agreement period lasting to July 2016.
The franchising programme that we announced in March is the right one. We want to secure the best possible rail services for both passengers and taxpayers, and this programme confirms our belief that franchising is the way to do it. By publishing the programme, we have provided the whole rail industry with a long-term plan, covering every rail franchise for the next eight years. That gives certainty to the market and supports the major investments in the country’s vital rail network that this Government are making.
The Government are intent that the interim agreement period for the Great Western franchise should not be a time of uncertainty or stagnation. The Secretary of State confirmed, in his 31 January statement, that the Government would continue with their multi-billion-pound programme of investment in the rail network, regardless of the delay to the franchising programme. He also confirmed that the Department for Transport would seek to ensure, wherever possible, that the benefits for passengers previously sought in new substantive franchise agreements were not delayed.
Concerns have been expressed by a number of people, including hon. Members, about the potential effects of the approach taken to the specification of train services adopted for the now terminated Great Western franchise competition. Those concerns focused in particular on the potential loss of through services to London. I should like to confirm that the train service specification adopted for the now terminated competition will not be used during the interim agreement period to July 2016. As I explained, that period provides the opportunity for a more fundamental review of the franchise proposition. During the period to July 2016, therefore, train services on the Great Western franchise will continue to be based on the train service specification in the current First Great Western franchise. That means, among other things—I hope that the hon. Member for North Cornwall will be reassured by this—that through train services between London and Cornwall and the popular London to Penzance sleeper train will continue to be required.
Hon. Members, local authorities and other stakeholders have shown a keen interest in improvements to local train services in the west of England, and this is where I should like to pick up on some of the points made by the hon. Member for North Cornwall about Bodmin. Local authorities in the west of England have established an impressive record of contributing to improvements to rail services in their areas, as he mentioned. They continue to develop schemes, and the invitation to tender for the now terminated Great Western franchise competition included a number of priced options that would enable local authorities to take those schemes forward. In Cornwall, they included enhanced Plymouth to Penzance local services; the extension of St Ives trains to Penzance; additional Looe line services; additional Exeter to Okehampton services, which the hon. Gentleman mentioned; and the Tavistock to Bere Alston line reopening, which will have an impact on his constituents and other people living in Cornwall, even though that line is in Devon.
I should like to confirm that First Great Western has been asked to provide prices for the priced options callable by local authorities during the interim agreement period to July 2016. First Great Western will be required to co-operate with local authorities in the continuing development of those priced options with a later call date.
Dan Rogerson
The Minister was setting out the Secretary of State’s admirable plan to ensure that any investment—any progress on improving services—should not be delayed by three years. If First Great Western wanted to invest in rolling stock, for example, could a mechanism be found whereby that could be transferred either to another provider or to First Great Western for the substantive franchise, rather than any investment being delayed until three years hence?
Mr Burns
I hesitate to give the hon. Gentleman a definitive answer, simply because I do not want to mislead him, but my immediate reaction to the question that he raises is that there is the possibility that that could be looked at, although obviously I can give no guarantees as to the ultimate outcome of any proposals or investigations.
The hon. Gentleman was extremely keen to explore the possibility of regular train services being reinstated between Bodmin General station and Bodmin Parkway, along the heritage railway that has preserved that rail route, and I listened very carefully to him. First Great Western will be required, during the interim agreement period to July 2016, to co-operate with local authorities in the development of new schemes. We believe that it is important for local authorities, rather than central Government, to make decisions on local priorities, so local authorities should identify what local funding sources are most appropriate for a rail scheme and decide themselves whether to fund a rail scheme such as the proposed reinstatement of regular trains to Bodmin General. I assume that, in the light of that, the hon. Gentleman will be in swift and concentrated discussions with Cornwall council to see whether that proposal could be moved forward at local level.
I should like to take this opportunity to highlight the great work done by the Devon and Cornwall Rail Partnership, which is one of several designated community rail partnerships operating on the Great Western network. Those partnerships of First Great Western, local authorities and local communities have been highly successful at promoting local lines and improving facilities at stations. Those routes are seeing unprecedented levels of growth in usage. I congratulate all those parties on the success that they have achieved through those efforts. I hope that they will continue to work to move forward and to improve, where that is feasible and possible, rail services in the peninsula of the south-west of England.
The hon. Gentleman asked whether it was possible to bring forward works from control period 6 into control period 5. I would be grateful if he could leave that with me, because I think that there are some complications in being able to do that, but I will certainly give him a commitment that I will look at it and I will write to him once I have had an opportunity to investigate fully the implications and the reality of what he asks.
I hope that the hon. Gentleman will accept that a considerable amount of work is being carried out by the Department, Network Rail and the rail operators themselves to ensure that they continue the forward movement of improving and enhancing the provision of rail services throughout Devon and, particularly, Cornwall. I cannot guarantee that the hon. Gentleman will find, in the next five or 10 years, his constituency awash with railway lines and services, but I can wish him well in his discussions with Cornwall council regarding his proposals for Bodmin. I wish him every success in those discussions.
Mr Gary Streeter (in the Chair)
Thank you, Mr Burns. All the participants for the next debate are present, so we can move swiftly on to an important debate about funding for NHS patients in York and North Yorkshire, and it is a great pleasure to call Mr Hugh Bayley.
NHS Funding (York and North Yorkshire)
(10 years, 10 months ago)
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Hugh Bayley (York Central) (Lab)
Thank you very much, Mr Streeter. At the end of April, the hon. Member for York Outer (Julian Sturdy), who I see in his place, and I met the health overview and scrutiny committee of City of York council to discuss the perilous funding settlement received by Vale of York clinical commissioning group. The meeting was also attended by Patrick Crowley, the chief executive of York teaching hospital NHS foundation trust, who said:
“The NHS system in North Yorkshire and York is on the brink of a crisis”.
At that meeting, the hon. Member for York Outer and I agreed jointly to seek a debate to discuss that crisis in Parliament. In the light of that, I hope, Mr Streeter, that you will allow the hon. Member for York Outer to make his own contribution to the debate. I am also pleased to see that the hon. Member for Selby and Ainsty (Nigel Adams) is present for the debate.
The funding for Vale of York clinical commissioning group has suffered a triple whammy. First, it started from the lowest base in Yorkshire and the Humber, because its predecessor body, the North Yorkshire and York primary care trust, received less money than any other PCT in the region. Secondly, the PCTs’ base funding was not split evenly between the five new clinical commissioning groups in north Yorkshire and York, and Vale of York CCG, which covers the city of York, received the lowest share of the funding. Thirdly, that meagre amount was top-sliced, because the former PCT had overspent its budget in the previous year. I will say a little more about all three issues, after which I will suggest an immediate remedy to the problems and a longer-term solution to the funding crisis.
The baseline funding received by PCTs in Yorkshire and the Humber in 2012-13 varied considerably across the region. North Yorkshire and York PCT received £1,475 per patient; Leeds received £1,550 per patient; Sheffield received £1,700 per patient; Wakefield received £1,800 per patient; and Barnsley received £1,900 per patient. Why did the other PCT areas get more? It was because the NHS funding formula allocates a base amount of money for each member of the public, adds or subtracts an element to reflect the age or youth of each person, and adds additional elements in respect of social deprivation. Areas of Yorkshire and the Humber other than north Yorkshire and York are deemed to face greater deprivation and, therefore, greater unmet health needs, and as a consequence they receive more money per capita.
The funding worked out through that formula, which reflects deprivation, was about £1,300 million for north Yorkshire and York in 2012-13. That sum was reduced this year by some £430 million, largely as a result of top-slicing for services to be provided on a national basis by the NHS Commissioning Board, which left some £865 million to be divided between the five clinical commissioning groups. However, they were not treated equally. Vale of York CCG received £1,050 per patient, whereas Scarborough and Ryedale CCG received £1,234 per patient, which is almost £200—20%—more per patient. The odd thing is that the same NHS foundation trust provides services for patients in Scarborough and Malton, which is part of Ryedale, and in the city of York. For some of those patients, however, there is substantially higher funding, which is likely to exacerbate the problems of postcode rationing. Some patients from the better-funded part of the patch will receive access to a wider range of treatments than those from the city of York.
How is the split justified? We are told that the funding was split between the clinical commissioning groups in north Yorkshire and York on the basis of the use that patients from their areas made of NHS services in the previous year. It is well known that middle-class people in more prosperous areas make greater demands of the NHS than do poorer people in deprived areas, so the two parts of the funding calculation for the Vale of York clinical commissioning group are pulling in diametrically opposite directions. The funding formula that allocates money to north Yorkshire and York reflects disadvantage, so north Yorkshire and York gets less than Barnsley, but the funding for the CCGs in north Yorkshire is split based on the use that they made of services, so relatively deprived inner-city areas of York receive less. The problems in those areas are not as severe as those in Bradford or Sheffield, but they are still greater than the problems faced by Richmondshire or Hambleton. It really is unfair to provide a baseline pot of money based on a lower allocation for north Yorkshire and York because it is deemed to have lower deprivation, but to choose the most deprived part of north Yorkshire and York and cut the funding further because people in deprived areas do not use health services as much as people in more prosperous areas.
I understand that when the funding body was determining how to split funding between the CCGs in north Yorkshire and York—indeed, across the country—it decided to use a demand-led formula rather than a needs-based formula, but it looked at what the results of a needs-based formula would have been. I asked the Minister whether he would release that information, but it was not readily to hand. If at least he released the figures on the north Yorkshire and York split, it would help us to work through with clinicians and health service managers in our patch whether the current double whammy, as I call it, is appropriate.
Julian Smith (Skipton and Ripon) (Con)
When the group of North Yorkshire MPs met the NHS on several occasions this year, did the hon. Gentleman feel, as I did, as though it was less than transparent with us about how any of the calculations were made?
Hugh Bayley
All of us in north Yorkshire and York share concerns about the low level of funding for our patch. I share the hon. Gentleman’s concern about the lack of transparency, which is why it would be enormously helpful for the Minister to ask his funding advisory panel to carry out the calculation I have mentioned. That would illustrate whether there is a problem such as I have suggested, and it would help us to tease out an appropriate solution.
The third part of the triple whammy is that as a result of historical underfunding—under the previous Government as well as the current one—the North Yorkshire and York PCT had a deficit of some £20 million or £30 million year after year. As a consequence of the deficit in the final year of its operation, some £12 million was top-sliced from the baseline funding for the CCGs in our patch. I was afraid that that would happen, so on 4 July last year, I asked the former Secretary of State, the right hon. Member for South Cambridgeshire (Mr Lansley), whether he would guarantee that each CCG would start off with a clean balance sheet, and he replied that
“we, along with the NHS Commissioning Board, intend all the new clinical commissioning groups across England to start on 1 April 2013 with clean balance sheets and without legacy debt from primary care trusts.”—[Official Report, 4 July 2012; Vol. 547, c. 930.]
I do not think that anyone could argue that that was a slip of the tongue, because paragraph 3.2 of the Department of Health’s “Handover and Closedown Guidance” for 2012-13 states:
“CCGs will not inherit legacy debt.”
Furthermore, paragraph 4.5 of “The Operating Framework for the NHS in England 2012/13” states:
“CCGs will not be responsible for resolving PCT legacy debt”.
What should the Government do about this issue?
The first, and immediate, action should be to honour the commitment given to me in the House—similar commitments have been given to other hon. Members from north Yorkshire—and agree, as was requested by York’s director of public health in a letter at the end of April, that the Department of Health will “absorb and manage” the final north Yorkshire and York deficit, which is some £10 million to £12 million. I understand that that has happened in some areas, and has given those new commissioning groups a start without carrying debt that has arisen from management by predecessor bodies.
Secondly, I ask the Minister to assure us that in good time for next year’s funding allocation the contradiction between the needs-based formula that divides funding between the old PCT areas and the demand-based fix, which was used this year to divide the PCT patch budgets between the various commissioning groups, will be resolved.
Julian Sturdy (York Outer) (Con)
It is a privilege to serve under your chairmanship, Mr Streeter. I congratulate the hon. Member for York Central (Hugh Bayley) on securing what is an extremely important debate for York and north Yorkshire.
The hon. Member for York Central, other hon. Members from north Yorkshire and I have tirelessly campaigned for some time to secure a fairer funding formula for York and north Yorkshire, so I am extremely pleased to be able to speak today about a matter that is so important to me and my constituents. The hon. Member for York Central has clearly set out the history of the primary care trusts—now the clinical commissioning groups—and their current deficit. However, despite the deficit having being reduced over the past 12 months, York and north Yorkshire CCGs—as the hon. Member for York Central mentioned—are still starting off on the back foot compared with all other CCGs across the country, and that is sadly resulting in a postcode lottery system for health care for our area.
As we know from the hon. Member for York Central, the disparity within the allocation of the funding formula is due to its failing to take into account the rural nature of our county and, most importantly, age.
Nigel Adams (Selby and Ainsty) (Con)
I totally agree with my hon. Friend’s point about age. In north Yorkshire, we have one of the largest numbers of over-85s in the country, and the formula simply does not give enough weight to the ageing population. I would have though that it was as clear as the nose on your face that consideration must be given to the rural nature of a county and the degree of ageing of its population.
Julian Sturdy
I entirely agree with my hon. Friend. That is why in my short contribution this afternoon I will focus solely on age.
We must note that under the previous Government the funding formula was changed and more money put into the national health service. In addition, deprivation was given more weight in the formula. On paper, ensuring that deprivation is the most important factor, seems, morally, the right thing to do. However, I believe that when that reasoning is put into practice it starts to fall down. The distortion within the funding formula has resulted in some areas being awash with money, leading to well-publicised vanity health care projects, such as the one in Hull, with its 72-foot ocean-going yacht at the cool price of £500,000. At the same time, York and north Yorkshire have consistently struggled, as ably put across by the hon. Member for York Central, to balance the books, which has resulted in their continuing to take difficult decisions about health care provision.
An example of such decisions is that the primary care trust had to stop offering routine relief injections for sufferers of chronic back pain. That decision has had a massive impact on the quality of life of many of my constituents—it has hampered their ability to work and has affected carers. I have raised that issue previously in this Chamber, yet people are again coming through my surgeries, as I am sure they are through the surgeries of other hon. Members here today, suffering from a lack of access to those important injections. The decision is consequently putting more financial pressure on areas such as welfare, and that far outweighs the cost savings made by local authorities under the funding formula. That demonstrates the lack of joined-up thinking under the current system.
It costs approximately eight times more on average for the NHS to care for a patient who is over the age of 85 than one who is in their 40s. York and north Yorkshire, as my hon. Friend the Member for Selby and Ainsty (Nigel Adams) has set out, has one of the highest population of over-85s in the north, and my constituents are really suffering under the current formula. York and north Yorkshire also has a high number of care homes, and a typical GP practice states that 50% of home visits can be taken up just by care home residents, even though that group makes up only 2% of the patients on its roll.
I therefore urge the Minister, through NHS England, to review the current funding formula, to ensure that age is given more weighting.
Julian Smith
Was my hon. Friend not appalled, as I was, that when as a group of north Yorkshire MPs we sought clarification about why the NHS Commissioning Board had not given weight to the new Advisory Committee on Resource Allocation formula on age, we were told that the minutes of the meeting in which the decision was made could not be released, against the interests of all the people in our constituencies?
Julian Sturdy
I entirely agree with my hon. Friend. The important thing, as has been mentioned, is clarity. We have not had clarity, and we really do need it, considering all the work that hon. Members have put into the issue in our patch.
The change we are discussing would guarantee a much fairer funding formula across the country, and ensure that funding went to those in most need and those who have the highest call on our invaluable national health service.
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
It is a pleasure to serve under your chairmanship, I believe for the first time, Mr Streeter.
I pay tribute to the hon. Member for York Central (Hugh Bayley) for introducing the debate and raising the important issue of health care funding. He, like all Yorkshire Members in the Chamber, is a great advocate for his constituents. It is important to debate such issues and, in particular, to look at perhaps the greatest determinant of need in the NHS, which is that many older people have very expensive multiple care needs—dementia, diabetes, heart disease—and to look at the very big human need, which is how better to provide dignity in elderly care. That is exactly why my right hon. Friend the Member for South Cambridgeshire (Mr Lansley) adjusted the formula, slightly changing the weighting for deprivation, to reflect such demographic challenges.
My hon. Friends and the hon. Member for York Central will be aware that the responsibility for health care funding now falls to NHS England. I have committed NHS England to reviewing the funding formula, and I am sure that it will listen carefully to today’s debate on north Yorkshire and elsewhere.
It is important to highlight how funding flows work in the NHS, and it may be helpful to say a few words about how the new arrangements have changed the way in which funding is allocated. As Members have pointed out, the NHS is paid for by taxpayers, and the money is allocated to the Department of Health by the Treasury. For 2013-14, the Department has set key priorities for NHS England through the mandate. I will outline the priorities that will help NHS England to prioritise funding within the NHS, and aid in the interpretation and use of the independent data given to it by the Advisory Committee on Resource Allocation.
The first priority in the mandate is the focus on preventing people from dying prematurely by improving mortality rates for the big killer diseases to be the best in Europe, through improving prevention, diagnosis and treatment. There is a clear priority to improve the standard of care throughout the system, so that the quality of care is considered as important as the quality of treatment or the clinical outcome. That will be done through greater accountability, better training, tougher inspections and paying more attention to what patients say, so that we have a truly patient-centred NHS, which is as important as providing care and dignity of care for older people.
There is a clear priority to improve treatment and care of people with dementia, and to focus on the important role played by technology—particularly in rural areas, through telehealth and telemedicine—in delivering better care in the community for older people. A key focus is on improving productivity and ensuring value for money to make sure that our health care system stimulates and supports the local economy in relation to not only the obvious importance of keeping local populations well and at work, but the benefits that can be gained from synergies with the life sciences and the supportive and stimulating research from such important places as Cambridge.
The Department of Health has set the mandate and a clear sense of direction for the NHS, with the priorities that are clearly there. The Department then makes allocations to several health bodies, including Public Health England, Health Education England, the NHS Trust Development Authority and NHS England. For 2013-14, NHS England received £95.6 billion, and some of that money will then, in turn, be allocated to clinical commissioning groups, but allocations to individual CCGs and the formula used to decide them are now the responsibility of NHS England, which has the key role.
In making those allocations, NHS England relies on advice from the Advisory Committee on Resource Allocation, as Members have said. ACRA provides detailed advice on the share of available resources available to each CCG to support equal access for equal need, as specified in the priorities set out in the mandate.
NHS England does not, therefore set income on an equal cost per head basis across the whole country; allocations instead follow an assessment of the expected need for health services in an area, and funds are distributed in line with that, which means that areas with a high health need receive more money per head. Under the formula, the 10% most deprived areas received more than 30% more per capita compared with the 10% least deprived, as the hon. Member for York Central outlined in his comments about Barnsley.
The calculation is based on several factors. In particular, it is increasingly based on the age of the population, the relative morbidity and unavoidable variations in cost. The objective is to ensure a consistent supply of health services across the country: the greater the health need, the more money that will be received. I am sure that we all support that.
The shift from a PCT funding formula to a CCG funding formula resulted in changes to the allocation for each particular area in 2013-14, as the hon. Gentleman commented. Funding now often takes place at a more local level—at the CCG rather than the PCT level—which we hope will ensure better prioritisation for local health care funding, with the funding formula being more sensitive to local health care needs.
The CCG model covers only non-specialised hospital and community care, as well as primary care prescribing, but the older PCT model also covered the whole of primary care, specialised services and public health, the costs of which were transferred to NHS England. There is, therefore, no direct comparability between the old PCT funding formula and the new CCG formula, for the reasons that I have outlined.
Nigel Adams
Whenever there are historical funding problems, such as those we experienced in north Yorkshire, there are inevitably leaks or stories about potential rationing and cuts to services. In my constituency in north Yorkshire, there has been lots of media speculation that a hospital opened by the Duke of Gloucester less than two years ago might close or lose its minor injuries unit. I have an awful lot of respect for the Minister, because he has done the job professionally, but I urge him to press NHS England to consider the funding case for north Yorkshire and other rural areas, and to consider the special circumstances that we have to deal with.
Dr Poulter
I will of course continue to press NHS England and raise concerns, as we have with representatives from the area, about the funding challenges being faced in north Yorkshire. It is also important to be aware that, because of how the new system works, with a mandate that sets clear priorities, NHS England recognises the need for a review of the funding formula for not only north Yorkshire, but nationally.
I agree with the remarks of my hon. Friend the Member for York Outer (Julian Sturdy) and the hon. Member for York Central about ensuring that funding goes to areas of greatest health care need. NHS England will obviously want to take account of rurality, age, the needs of older people and the complexity of care when it reviews the funding formula.
Hugh Bayley
The Minister says that Barnsley gets more money than north Yorkshire because of its higher level of deprivation, which I acknowledge, but why has the new formula given York less money than leafy Richmondshire and Hambleton, when York has higher levels of teenage pregnancy, drug addiction and deaths from asbestos-related diseases among people who had a career in industry. We have higher levels of deprivation than other parts of north Yorkshire, and yet we get less money. That cannot be right.
Dr Poulter
The hon. Gentleman makes a good case on his constituents’ behalf, but he should recognise that the Vale of York CCG—it serves not only his constituency, but others in the surrounding area—has received £357,891,000 which is the highest allocation in the area. He is right that its allocation is relatively lower per head than, say, that of Scarborough and Ryedale CCG, but I have outlined the factors that inform the capitation formula for funding, including density of population, and the obvious advantages of delivering health care in an urban environment.
I would be very happy to talk through such issues with the hon. Gentleman and my hon. Friends who are here today, and I am sure that we can arrange a meeting to do so in more detail than this debate allows. I also point out that NHS England will fundamentally review the funding formula to take account of demographics, age and rurality, which I am sure we all welcome. I look forward to meeting hon. Members in due course for further discussions and to see how I can assist them with the matters that they have raised.
Question put and agreed to.
Written Ministerial Statements
(10 years, 10 months ago)
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Tackling Aggressive Bailiffs
(10 years, 10 months ago)
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The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
The coalition agreement committed the coalition Government to provide more protection against aggressive bailiffs and unreasonable charges. Further to this, last year, Ministers pledged to review the guidance given to local authorities on the use of bailiffs to collect council tax.
This was in the light of unacceptable practices by some local authorities; poor advice from the old Office of the Deputy Prime Minister guidance, and the failure of the last Administration to deliver on their 2009 pledge to publish new guidance on good collection practice.
My Department has published new guidance to local authorities: “Council Tax: guidance to local councils on good practice in the collection of Council Tax arrears”. A copy has been placed in the Library of the House and is available on my Department’s website at: https://www. gov.uk/government/publications/council-tax. It replaces the previous Office of the Deputy Prime Minister guidance.
Councils will rightly want to ensure they collect council tax as far as possible, as every penny that is unpaid means higher bills for law-abiding citizens. But this does not mean that shady or aggressive practices are acceptable.
The new guidance directly tackles such issues as “phantom visits”, excessive charges and kickbacks from bailiffs to local authorities. Contracts should not involve rewards or penalties which incentivise the use of bailiffs where it would not otherwise be justified.
It also provides clear guidance on:
bailiffs providing the debtor with a contact number should they wish to speak to the billing authority;
local councillors remaining responsible for the action of bailiffs they have contracted;
in-house bailiffs having to explicitly state that they are part of the local authority;
councils publishing their standard scale of fees on their website, to allow public scrutiny and highlight unreasonable practices; and
actively encouraging councils to sign up to the Citizens Advice Bureau good practice protocol.
This statement delivers on the commitment made by Ministers—12 January 2012, Official Report, column 385W —to report back to the House. It also delivers on the commitment made to the hon. Member for Harrow East (Bob Blackman)—15 September 2011, Official Report, column 1206W—to review the unacceptable practices in the London borough of Harrow.
Telecommunications Council
(10 years, 10 months ago)
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The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)
The Telecommunications Council took place in Luxemburg on 6 June 2013. I represented the UK at this Council.
The first item was a full “tour de table” debate guided by questions from the presidency on the digital agenda for Europe—the role of the telecommunications and ICT sectors. The commissioner for the digital agenda, Vice-President Kroes, is planning to launch an initiative with the aim of achieving the goal of a further integrated European telecoms single market. It forms part of the goal to achieve a pan-European digital single market by 2015; though the telecoms single market measures may have a longer time scale before realisation.
This debate focused on two questions: garnering member states views on how to realise the ambition of a more integrated telecoms single market and views on further pan-European spectrum harmonisation. The commissioner for the digital agenda, opened the debate by urging member states to see the digital agenda as a vehicle for increasing growth and jobs, particularly for young people. She went on to say that the telecoms sector is too fragmented across member states and there are too many barriers that prevent cross-border trade in digital goods and services.
My intervention noted that the UK welcomed the idea of a further integrated single market in telecoms in principle, including the proposal for a telecoms passport which would allow telecoms providers the ability to be able to operate in any member state, along similar lines to the single European banking licence. However, I also suggested that that this proposal should not allow telecom companies the ability to base themselves in a member state with a weak regulator. I also stated that any proposals will need to strike the right balance between allowing consolidation in the telecoms market but still ensuring that there is vibrant competition.
On spectrum, I said that the UK had just carried out a successful spectrum auction and we would like to work together to develop guidelines that would produce a more joined-up approach towards spectrum management across the EU, but we would be cautious about uniform rules at European level.
The majority of member states broadly supported the principle of a single telecoms market. However, Germany, Belgium and Spain expressed scepticism on the need for any further telecoms regulation. Many member states also emphasized that one of the outcomes of these proposals should be that broadband is available to all citizens regardless of where they live in the EU. On spectrum, there was consensus among member states that there should be no changes that would reduce member states’ abilities to make their own decisions to how spectrum is allocated.
The next item was a progress report from the presidency, followed by an orientation debate on the proposal for a directive of the European Parliament and of the Council concerning measures to ensure a high level of network and information security across the Union (First Reading—EM6342/13). My intervention supported the high-level principles of the strategy but expressed concern that the current proposal was too prescriptive. I also said that voluntary data-sharing arrangements were very valuable and should not be threatened by mandatory reporting requirements. Finland, France, Sweden and Germany also shared my view that the regulation was too prescriptive. However, most member states believed that legislation was necessary but only in respect of sectors that were considered “critical” national infrastructure.
The presidency then provided a progress report on the proposal for a regulation of the European Parliament and of the Council on electronic identification and trust services for electronic transactions in the internal market (First Reading—EM10977/12). There was not a major debate on this item and I did not intervene.
The Council then looked at two proposals under the “banner” of digital infrastructure and services. The first item was the proposal for a regulation of the European Parliament and of the Council on guidelines for trans-European telecommunications networks and repealing decision No. 1336/97/EC (First Reading—EM16006/11). The second item was a progress report on the proposal for a regulation of the European Parliament and of the Council on measures to reduce the costs of deploying high-speed electronic communications networks (First Reading—EM7999/13). The Council and Commission noted both these items without any comment.
There then followed a progress report on the proposal for a directive of the European Parliament and the Council on the accessibility of public sector bodies’ websites (First reading—EM17344/12). The Council and Commission noted this report without any comment.
Any Other Business
Finally, the Lithuanian delegation informed the Council of their priorities for their forthcoming presidency. I did not intervene on this item.
Agriculture and Fisheries Council
(10 years, 10 months ago)
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The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)
The next Agriculture and Fisheries Council is on Monday 24 and Tuesday 25 June in Luxembourg. I will be representing the UK, accompanied by Richard Lochhead MSP, Alun Davies AM and Michelle O’Neill MLA.
Monday and Tuesday will concentrate on the common agricultural policy (CAP) reform package. There are no fishery items scheduled for this Council.
Council negotiations will centre on the four regulations that make up the CAP reform package. The Irish presidency will be looking to obtain a full political agreement on the CAP reform package during this Council.
Foreign Affairs/General Affairs Councils
(10 years, 10 months ago)
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The Minister for Europe (Mr David Lidington)
I will attend the Foreign Affairs Council (FAC) on 24 June and the General Affairs Council (GAC) on 25 June. The Foreign Affairs Council will be chaired by the High Representative of the European Union for Foreign Affairs and Security Policy, Baroness Ashton of Upholland, and the General Affairs Council will be chaired by the Irish presidency. The meetings will be held in Luxembourg.
Foreign Affairs Council
Western Balkans
At the FAC Ministers will discuss the western Balkans and the Serbia/Kosovo dialogue. Our views are set out in more detail below for the GAC, which will also discuss western Balkans issues.
Eastern Partnership
Ministers will discuss the eastern partnership, looking ahead to November’s eastern partnership summit in Vilnius. We expect the discussion to focus on expectations for the summit, particularly on whether the EU will be able to offer signature of the association agreement with Ukraine, and initialling of association agreements with Moldova, Georgia and Armenia. The UK remains committed to supporting these agreements on the basis of continued irreversible reform.
Southern Neighbourhood
Ministers will discuss the EU’s work in the southern Mediterranean, based on an evaluation paper to be produced by the European External Action Service/Commission, which should be released shortly before the FAC. I plan to use this opportunity to reaffirm the need for EU support to be responsive to progress made against a country’s commitments and actions towards pursuing political and economic reform; to press for strategic, country-level discussions and collective assessment of individual states’ reform progress at future FACs; and to reiterate the need for more effective co-ordination of the EU’s activities both internally and in consultation with member states, including through better use of strategic communications.
Syria
Within the context of the southern neighbourhood discussion, I expect Ministers also to discuss the latest developments in Syria, including G8 outcomes and progress on the Geneva II political settlement process.
Middle East Peace Process (MEPP)
Ministers will address the deteriorating prospects for a two-state solution, and the importance of supporting US efforts. This discussion will be an opportunity to agree the focus of EU policy and engagement on the MEPP for the coming months. I will focus on how the EU can support and contribute actively, alongside other regional and international partners, to efforts led by the United States to drive progress on the MEPP. This will include the incentives the EU could offer the parties to reach a negotiated solution, particularly on the economic and security tracks. I will press for conclusions which outline the EU’s approach and support to the US.
Afghanistan
This will be the first EU ministerial discussion on Afghanistan in over a year. It will be an opportunity to reaffirm EU commitment to Afghanistan post-transition, complementing the G8 summit discussion the previous week. I will press for further progress against the Tokyo mutual accountability framework, highlight the importance of elections in 2014 and note the achievement made on transition of security to the Afghan National Security Forces.
Climate Change
Ministers will discuss EU climate diplomacy, building on and reviewing progress since the previous discussion of this issue by the FAC in July 2011. We expect that conclusions will be adopted, which will reaffirm the EU’s commitment to addressing climate change as a strategic foreign policy issue, and as a threat to economic resilience and security. I will support the European External Action Service in calling for renewed climate diplomacy efforts by all EU actors, particularly with a view to the deadline under the UN climate negotiations to adopt a new global, legally binding agreement by 2015.
General Affairs Council
The 25 June GAC will focus on EU enlargement and preparation for the 27-28 June European Council. There will also be a discussion on the multi-annual financial framework, following the agreement reached at the February European Council.
In addition, there will be a meeting with the President of the European Council, Herman van Rompuy, which is expected to focus on them June European Council.
Enlargement
The GAC will look at enlargement. Key decisions on Serbia and Kosovo are due to be taken, following the December 2012 GAC conclusions. Ministers will discuss the Commission’s proposal to open negotiations on a stabilisation and association agreement between the EU and Kosovo. Discussion on Serbia will be focused on preparing for a possible decision on opening EU accession negotiations at the June European Council. Serbia and Kosovo reached an historic agreement in April 2013 which included some autonomy for Serb-majority municipalities in Kosovo and acceptance of Kosovo’s state institutions for the first time. The UK’s position on whether to support opening accession negotiations will depend on the progress Serbia makes on implementing this and existing agreements, and in normalising relations with Kosovo, by the time of the European Council. There may be brief discussion of Macedonia (former Yugoslav Republic of Macedonia) where the UK continues to support the Commission’s recommendation to open accession negotiations.
Preparation of the 27-28 June European Council
The GAC will prepare the 27-28 June European Council. The June European Council has an extensive agenda covering economic policy: including concluding the European semester, which gives macro-economic and fiscal guidance to member states, assessing implementation of the compact for growth and jobs agreed by the June 2012 European Council, industrial competitiveness and smart regulation; economic and monetary union; enlargement; strategic partners and possibly other foreign policy issues.
We will be clear that the best means to create jobs and growth and tackle youth unemployment is through structural reform and more flexible labour markets, opening up single market opportunities and pursuing ambitious trade deals. We will also seek to secure further progress in reducing burdens for small and medium enterprises. On economic and monetary union, we will make the case that strengthened governance must be voluntary for euro outs and continue to safeguard the single market.
The Multi-annual Financial Framework (MFF)
The GAC will discuss the legal architecture putting into effect the February European Council agreement on the 2014-20 MFF: the draft MFF regulation and inter-institutional agreement. The Irish presidency intends to secure a mandate from the European Council to approach the European Parliament, which may vote on the MFF at the 1-4 July plenary. Should the European Parliament vote in favour of the proposal through the consent procedure, the MFF texts will then return to the European Council for a final decision by unanimity.
It is important that we make progress on this important dossier, and the February European Council conclusions on the MFF must be translated faithfully into the legal documents. Recent informal discussions have focused on issues such as increased flexibility in managing the budget and for a mid-term review of the MFF, both possibilities which the February deal allowed for. I will argue strongly that the agreement must respect the MFF ceilings, that any revision of the MFF must respect the treaty provisions for unanimity in Council, and that our abatement be preserved.
Employment, Social Policy, Health and Consumer Affairs Council
(10 years, 10 months ago)
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The Parliamentary Under-Secretary of State for Health (Anna Soubry)
The Employment, Social Policy, Health and Consumer Affairs Council will meet on 20-21 June in Luxembourg. The health and consumer affairs part of the Council will be taken 21 June.
The main agenda items will be the following legislative proposals:
the tobacco products directive—it is expected that the presidency will aim to agree a general approach;
clinical trials regulation—where the presidency will report progress on negotiations;
medical devices regulations—where the presidency will report progress on negotiations.
Under any other business, the presidency is likely to provide information on the serious cross-border threats decision and matters relating to the import of active pharmaceutical ingredients in accordance with the falsified medicines directive; the transparency directive; and the EU drugs action plan.
The Lithuanian delegation will also give information on the priorities for their forthcoming presidency, which will run from July until December 2013.
Grand Committee
The Deputy Chairman of Committees (Baroness Pitkeathley)
My Lords, I remind the Committee that if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bell has rung and resume after 10 minutes.
Intellectual Property Bill [HL]
Lord Stevenson of Balmacara
My Lords, this group of amendments all relate to the proposed reporting duty placed on the Secretary of State in Clause 20 in relation to the creative industries. We welcome this proposal but the amendments, taken collectively, do two things: they build on the proposals in the Bill and they offer some alternatives for the focus of the reports that are to be made to Parliament.
Your Lordships will recall that the seeds of this debate are to be found in the discussions held on the Enterprise and Regulatory Reform Bill last Session, in particular the amendments put down to the Bill in Committee by the noble Lords, Lord Jenkin of Roding and Lord Clement-Jones, and others, which led the Minister to convene various meetings and, after discussion, to agree to introduce this proposal. Discussions of this type always make for better legislation, do they not? However, rereading the debate reminds me that then, as now, our aspirations were for a rather more expansive report than is currently proposed.
Like the Government, our amendments start from the position that IP is a hugely important component of this country’s economy. As the letter sent to the Times last March signed by members of the Creative Coalition Campaign said:
“Copyright is the central intellectual property right that underpins the creative and knowledge economy. Films, music, games, books, could not get made in their present quantity and quality without a robust system of copyright. It provides the legal foundation for the ability of companies to license or sell works, and to invest and to innovate”.
As we heard during the discussion of the ERR Bill, IP is at the heart of our economic success in this sector. The creative industries support around 1.5 million jobs and create more than £36 billion annually to UK GVA, calculated by the DCMS creative industries group. As a result of our belief in the importance of the creative industries, we believe that the annual report should not be limited, as the Government propose, to a view from the IPO, interesting though that undoubtedly would be. Surely the effect of the annual report should be a much broader review of the state of the copyright industries in the United Kingdom. The test is whether such a report will provide sufficient material to provide a discussion of how we are doing as a nation. It is not sufficient merely to hear how the IPO is doing in relation to its role of balancing the interests of intellectual property holders with the wider interests that the public may have in the extensive benefit that can be received from the early dissemination of information, knowledge and material.
In our view, it will be necessary for the annual report to cover plans for changes to legislation relating to IP and copyright; details of the expected impact on job creation; progress in supporting innovation; the impact of policy on economic growth more generally in the United Kingdom; engagement with other related government departments; engagement with stakeholders and details of lobbyists who have been in contact with the IPO; information concerning consumer behaviour and habits regarding the use of and access to copyright-infringing material and the subsequent economic impact; information containing manipulation of the internet search market; the impact of voluntary and non-voluntary action in tackling copyright infringement; and information about cross-border co-operation between our own jurisdiction and jurisdictions in the European Union and elsewhere. That is a long list, but it makes the point that what is needed is not so much a single point of view from the IPO but a broader conspectus of the current and future situation in this vital sector of our economy.
A report along the lines we are suggesting in these amendments will be an important first step in making our copyright industries a central part of our economic focus and ensuring that Parliament becomes better informed and can debate properly our progress. As my noble friend Lord Howarth of Newport said on Report on the ERR Bill, welcoming the Minister’s commitment that an annual report should be published by the IPO:
“It may not reach the top of the bestseller lists, but it is right in principle that the public should have the opportunity to be informed about what the current issues are and what developments in policy are or may be”. —[Official Report, 6/3/13; col. 1597.]
I beg to move.
Lord Jenkin of Roding
My Lords, along with a number of other noble Lords, I have several amendments in this group to which I would like to speak.
The noble Lord, Lord Stevenson, has reminded the Committee that the origin of some of this was in the debates on the Enterprise and Regulatory Reform Bill. One of the things we debated at some length was how far the IPO had a role to protect and promote the interests of intellectual property owners. With respect to my noble friend, we had an answer that was half dusty and half satisfactory. The dusty point was that he was not going to accept that the IPO should have that role and that was why we proposed having a director-general.
I am intrigued to see that the noble Lord, Lord Stevenson, has tabled what looks like exactly the same amendment as my noble friend Lord Clement-Jones and I tabled on that Bill.
Lord Stevenson of Balmacara
If I may help the noble Lord, I asked his permission—this is an intellectual property Bill, after all—and I thought that he had granted it. If he has not, I must apologise because I wanted to have exactly that point raised as it is on the agenda later on. I thought that if he would not do it, I would.
Lord Jenkin of Roding
I am most grateful to the noble Lord for his e-mail. I did not interpret it as asking for my permission because no permission would be needed. I treated it as a matter of courtesy that he was letting me know that he had tabled a similar amendment.
At this point I should say that I am in some personal difficulty today. I am speaking on the Energy Bill later and I ought to try to get back to the Second Reading debate as swiftly as I can. I will do my best to listen when the noble Lord, Lord Stevenson, moves that amendment but I am sure that he will understand if I have to desert the Committee for the Chamber.
Returning to Amendment 25F—I have amendments in the same group—the encouraging point in my noble friend’s reply in the debates on the ERR Bill was that he described himself as the Minister with the duty to promote and encourage intellectual property. We have taken that to heart. So I say at once that we welcome the clauses in the Bill which now provide for the annual report because this seems to be a valuable addition to the armoury of measures which are necessary to encourage and promote intellectual property in all its forms.
The noble Lord, Lord Stevenson, was quite right to say that we think the report ought to go wider than the Government have so far envisaged. I attach a lot of importance to that. I am grateful to the noble Lords, Lord Stevenson and Lord Young of Norwood Green, who have added their names to our amendment. Perhaps I should have added mine to theirs but that would have meant that I would have to stay, which may be difficult in the circumstances.
The imposition of a duty to produce an annual report on the work of the IPO in that form is welcome. It reflects the words that were used by the IPO’s chief executive John Alty, when he gave evidence to the Committee in the other place,
“as ensuring the IP framework supported innovation and growth”.
These are now reflected in the words in the Bill. However, it does expose one of the difficulties we face and which was faced to some extent at the last sitting of the Committee. The IPO has always claimed that weakening copyright with more and more exceptions will generate economic growth. This attitude has fuelled the anxieties of those who depend on the protection of IP for their living.
Amendment 26, to which I am grateful that others have added their names, is intended to make it completely clear that the report has to show that it is,
“the creation and exploitation of intellectual property”,
that has contributed to growth and innovation. If it is not protected, if there are too many exceptions, the incentive for people to do the work that creates and generates IP is to that extent weakened. As the noble Lord has already said, if we are a country that has to live on its wits and depend on its inventions and innovation to keep ahead of the rest of the world—in some cases I fear that we need to be catching up with the rest of the world, but that is very much part of this Government’s whole approach to these matters—we must recognise the very important role that IP plays in all this. The issues were raised very dramatically at Second Reading by my noble friend Lord Clement-Jones; I will not repeat the words but they are at col. 858.
I will deal with the other two amendments rather more briefly. The clause says that the Secretary of State should lay the report before Parliament. I do not think that that is enough. The legislation should call for a Statement, including the findings of the report and the action the Government intend to take. It should not just be lost in the tangled undergrowth of the huge tide—sorry, I am mixing my metaphors—of written reports to Parliament, of which there appear to be an increasing number. This is sufficiently important that we should require a Statement by a Minister in the House, which can of course be subject to question and answer. It will be open then to individual Members to decide if they wish to take steps to have the report debated.
Amendment 28 seeks to demonstrate the link between the role in promoting innovation and economic growth and the protection and promotion of IP; otherwise, one may find that intellectual property and rights owners’ ability to protect and monetise their rights will be seriously weakened in what it appears will be presented in the guise of pursuing economic growth. The Government are consulting on how they define and measure the creative industries in such a way that digital and tech companies will be classified as creative industries. I look forward to my noble friend correcting me, but I am concerned that, taken together, these two things could mean that the relaxation of IP rights, particularly copyright, would actually benefit the creative industries, when in truth they would benefit US-based and, increasingly, China-based global tech companies to the detriment of the UK creatives. Therefore, this amendment is intended as a safeguard for UK creatives and to ensure that the IPO takes into account how its actions affect those who create and own intellectual property.
As I have said, Clause 20 is a very welcome step forward and I would not want anything I have said to detract from that. But, as the noble Lord, Lord Stevenson, said, it needs to make it more explicit that the objectives are dependent on safeguarding the rights of IP owners.
Lord Howarth of Newport
My Lords, Clause 20 requires the Secretary of State to report to Parliament annually on how the activities of the Intellectual Property Office and legislation have supported innovation and economic growth in the United Kingdom. I very much welcome the Minister’s commitment to the production of an annual report, but the requirement in Clause 20 is too narrow. The responsibilities of government range more widely than the wording suggests. Amendment 26A would require the report to cover how,
“legislation, the policy of the government and the activities of the Patent Office have balanced the interests of the owners of intellectual property and the wider interests of society”.
By “society” I mean not only in this country but across the world.
New inventions and techniques have improved lives again and again, particularly since the Industrial Revolution. Intellectual property laws and their intelligent enforcement are essential for the stimulation of innovation. As my noble friend Lord Stevenson said, we need a robust system of intellectual property legislation. However, I contend that it is not always the case that strong intellectual property rights—and their strong assertion—improve economic performance or are an unmixed benefit to society. Incentives and rewards to inventors, innovators, creative people and investors need to be balanced against the public benefit of wider and quicker diffusion of knowledge, and the lower prices that may result from early competition.
We should seek in policy to balance the interests of businesses with those of consumers and academics. A judgment always has to be made about the costs and benefits of monopoly, and, where monopoly is mitigated, of licensing. It has to be made on the appropriate length and breadth of a particular patent. It has to be made on whether the price in economic inefficiency of restricting the diffusion and use of knowledge is outweighed by the benefit of increased innovation. The appropriate balance will vary according to the context.
A longer duration of intellectual property rights seems more appropriate in literature and the arts than in manufacturing. There may be differences, too, with luxuries as opposed to necessities, and in the advanced world as against the developing world. We should also ask what proportion of patents in any field a business should be permitted: for example, in the field of genetic modification. I believe that there are enormous benefits to GM, but it is legitimate to ask whether Monsanto should hold patents for the vast majority of seeds planted in the world.
There are risks and disbenefits in granting patents too easily, and there are reasons to be sceptical when we look at applications for patents. There are definitional problems. What is new? What is original? The great Jewish sage Maimonides said that there was nothing new under the sun. Delacroix said of Raphael:
“Nowhere did he reveal his originality so forcefully as in the ideas he borrowed”.
True originality is indeed rare.
Much research is publicly funded. Should the first private interest to exploit that research gain a large advantage over the rest? It has been suggested, rather colourfully, that the application of intellectual property law in the 20th and 21st centuries should be compared to the movement of agricultural enclosures in the 18th century. Do we want intellectual enclosures or do we want commons?
A monopoly-holder protected from competition will be under less pressure to innovate again. That result is surely perverse. Monopoly-holders may move aggressively to squash budding competitors by taking lawsuits against them or taking them over. Microsoft has practised those techniques over many years. The consequence of those practices is that research and innovation have been discouraged. Research efforts can be distorted where patents exist. A competitor business may be more attracted to coming as close as it can to copying an existing patent that is seen to be a money-spinner than to developing a new product or embarking on innovation in a new area. We have seen that in the pharmaceutical field. Where there are dense patent thickets, it is particularly discouraging to new entrants and competitors.
I will say a word about genes. I was Minister for Science between 1990 and 1992. The most difficult decision I had to take as a Minister in government was whether we should allow gene patenting in this country. All my instincts and values were against it, but I was driven to take the view that we had to do it. We had unfortunately had poor funding settlements for science from the Treasury in recent years and it was difficult to see how British scientists would be able to stay in the game of the human genome project. At the same time, the US Supreme Court and subsequently the US Patent and Trademark Office had made it clear that they would grant patents for discovery of genes in certain conditions.
However, what was “discovery of genes”? It was not the invention of genes; it was precisely discovery. It seemed to me wrong that natural genes should be patentable. Knowledge of that kind ought to be disseminated as rapidly as possible for the benefit of humanity. There were vast potential benefits, obviously, in the field of health. Of course, when patenting became established, there was a headlong rush to patent. Among the companies that were successful in that competition, Myriad Genetics patented two human gene mutations that affect the susceptibility of people to breast cancer and ovarian cancer. Having secured those patents, they demanded licence fees even from not-for-profit laboratories. In that way, the existence of patents discouraged screening and discouraged the search for improved screening technologies. The medical benefits arising from the human genome project were restricted.
Yet I do not think that those businesses made more money internationally, because poor countries could not pay the higher costs that arose from the existence of patents. I therefore welcome wholeheartedly the recent judgment of the US Supreme Court written by Judge Clarence Thomas which, as I understand it, reverses the position that the court took in 1980. Sandra Park of the American Civil Liberties Union has said about the judgment:
“Because of this ruling, patients will have greater access to genetic testing, and scientists can engage in research on these genes without fear of being sued”.
The annual report will, I hope, reflect on issues such as that. I hope that it will reflect on what policy ought to be in the life sciences now and in the future. We face the possibility of new techniques of so-called “human enhancement”—adjustments to the brain and other parts of the human anatomy—which there will no doubt be attempts to patent. The Chinese are investing enormous resources in the field of life sciences. We will want to know what the Government’s view is on appropriate policy in this field. I hope that the annual review will provide an opportunity for the Government to share their thinking with us.
What will the annual report say about graphene? Graphene is said to be the new miracle material: single-atom-layer carbon. It is the thinnest, strongest material with high conductivity and flexibility. It has potential uses in desalination, solar power, waste cleaning, packaging, super-fast computers, and super-strong and super-light composite materials. Graphene is hardly yet commercially viable, but the race is on to patent in the area of graphene. I understand that, in May, UK businesses and universities held 54 patents in relation to graphene; US businesses and universities held 1,754; and Chinese businesses and universities held 2,204. What intellectual property regime in relation to graphene will be in Britain’s and in the world’s interests? I hope that the annual report will expound on Government’s policy in this kind of area and the principles upon which they make their judgment. The business department and the IPO do not assume, I hope, that the more UK patents there are, the better. When Jonas Salk, the discoverer of the polio vaccine, was asked in a television interview who held the patent, he said:
“The American people, I guess”.
He chose not to exploit that massively important and beneficial discovery. Tim Berners-Lee did not seek to patent the world wide web and, indeed, considers that software patents stifle innovation.
Inequality of access to knowledge often compounds the evils of inequality of access to income. We should not, in this country, take a narrow view of our national interest and should not ignore the interests of the developing world, particularly where medicines are concerned. To do so would be short-sighted, even in our own interest. We do not know whether the population of the globe at the end of this century will be 10 billion or 11 billion people, although these are the sorts of projections. We should not deprive the developing world of the knowledge that will enable its economies to grow and allow them to be rescued from poverty. If billions and billions of people are to live in poverty unnecessarily, because of the restriction of knowledge to the advanced, wealthy, western countries, that would be wrong in itself and very perverse in terms of our own interest. At the World Trade Organisation, I hope that the United Kingdom will seek to remodel and liberalise TRIPS. Clause 20 should not be just about the Intellectual Property Office and legislation—the requirements of the report should relate to wider policy.
Cost-benefit analysis in this area is never easy. It needs economic far-sightedness, ethical judgment and wisdom. We need a regime that is flexible and pragmatic, not schematic, and yet clear and comprehensible. As my noble friend Lord Stevenson said, the annual report ought to reflect a broad view from government as a whole—not just from the business department and the IPO but very much from the DCMS, with its particular responsibilities to promote creativity, and also from the ODA, because we have responsibilities, which I have mentioned, in relation to poverty and the advancement of human interests across the world. I hope that the annual report will share the Government’s vision and analysis in these respects. That is why we need to amend Clause 20.
I will very briefly set out the reasons for Amendment 28ZA, also in my name, which are obvious. The ears of the Intellectual Property Office must be deafened by the clamour of lobbyists. The office must be pushed and tugged this way and that and be continually under massive pressures, although I am certain that it does its best to arrive at a sensible, appropriate and balanced policy amid all this melee. In a democracy, everybody is entitled to put their point of view to the IPO but everybody also ought to be entitled to know who is seeking influence. We need to be sure that policy does not echo who shouts loudest. I believe that Amendment 28ZA would strengthen the IPO and the business department in their search for a balanced policy, would encourage confidence in the intellectual property regime and would assist the Government in the very difficult task they have of arriving at an appropriate policy in relation to lobbying.
Lord Clement-Jones
My Lords, as the noble Lord, Lord Stevenson, said, the debate on the Enterprise and Regulatory Reform Bill was a very useful start to this whole discussion about the IPO report to Parliament. We have built up a considerable degree of consensus about what that report should contain. I welcome Clause 20 as a step in the right direction but the noble Lord, Lord Jenkin, put the points extremely well on Amendments 26, 27 and 28, to which I have also put my name. If we are going to have such a clause in a piece of primary legislation, we need to be explicit about the kind of reporting requirement that the Secretary of State has. I entirely agree with the noble Lord, Lord Jenkin, that those are absolutely essential requirements, particularly as regards Amendment 26, and that the report should be about the promotion of innovation and economic growth,
“arising from the creation and exploitation of intellectual property”.
After all, that is what the Intellectual Property Office is all about.
Lord Borrie
My Lords, I am delighted that the noble Lord, Lord Clement-Jones, indicated that he supports most of the proposed amendments to this clause, and that the Minister looks kindly upon them. I take the same view but I want to discuss the amendment proposed by my noble friend Lord Howarth of Newport more fully because this is the only place in the Bill so far where we have discussed the question of balance between the interests of the owner of intellectual property and those of the wider society, as he put it. This is the third day in Committee but, right from the start of our proceedings on the Bill, the rights and values of the creative industry relating to patents, designs and copyright have not been balanced with the wider interests of society. The various things that my noble friend and, indeed, the noble Lord, Lord Clement-Jones, mentioned, including the interests of society in there being more general competition and an absence of restrictive attitudes towards intellectual property, have not been considered.
One of the most vital matters, it seems—a whole area that is not being considered—is the length of time for which intellectual property rights should last. The Government have not felt it necessary—indeed, in the wording of the Bill it is not necessary—to explain why UK-registered design rights can last up to 25 years, that an unregistered design right can last up to 15 years and that a registered community design right can last for 25 years; I am relying on a government briefing paper that I have in front of me. Surely each of those things ought to be justified if one is looking at intellectual property and the way in which it fits into our desire for a prosperous Britain and creative industry, while being concerned that others who may want to be rivals in producing similar designs or objects should be considered as well—in the interests of the consumer and of the future, not just in the narrower interests which have prevailed under these years of monopoly which I have just mentioned.
My noble friend’s amendment is clear. He gave full examples of the way in which the balance would work out. It is a vital part of the Bill, if it is to generously notice that there are things other than those with which the Bill deals.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)
My Lords, before I begin I thank noble Lords for their engagement on the new reporting duty. This has given me an opportunity to clarify the Government’s intentions for this report. Noble Lords will, I trust, excuse a relatively long response, but many important issues have been raised during the course of this debate. I also hope that my noble friend Lord Jenkin is able to stay to hear my full response and that—how shall I put it?—a different sense of energy does not intervene. Many questions have been raised, and I will attempt to answer them all at the end.
Amendments 25F, 26, 26ZA, 26A, 26B, 26C, 27, 28 and 28ZA seek to broaden the scope of the proposed annual report and detail what the contents of the report should contain. I will address the amendments in turn. Amendments 25F, 26ZA, 26B and 26C, in the names of the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, would require the scope of the report to include an assessment of the impact of the Intellectual Property Office’s activities on job creation, in addition to their impact on innovation and growth. A direct relationship between intellectual property and job creation is practically impossible to draw. There are many different factors that will influence whether a business creates jobs. However, where there is evidence to suggest that the IPO’s activities may have had an impact on job creation, the report will indeed state this. Amendment 26C raises other questions to which I shall return later in my reply.
Amendment 26 tabled by my noble friends Lord Jenkin of Roding and Lord Clement-Jones, and to which the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, have added their names, would restrict the focus of the report to innovation and growth arising from the creation and exploitation of intellectual property. This point was raised during the Government’s consultation. In response, the Government said:
“The report will cover IPO activities which promote growth and innovation arising from the creation and exploitation of IP but the Government cannot restrict its focus to existing industries and business models. It needs to look at how the IP framework fits with technological change and the development of new business models. The report will therefore aim to present a fuller picture of the impact of the IPO’s activities on growth and innovation”.
I will explain what I mean by the expression “a fuller picture”. The report will also therefore contain an assessment of the Intellectual Property Office’s activities on growth and innovation arising from the use of intellectual property by third parties.
Let me give the Committee an example. Last year, the Government consulted on proposals to amend Section 60(5) of the Patents Act 1977 to provide an exception to patent infringement for activities involved in preparing or running clinical or field trials which use innovative drugs. This change would allow third parties to carry out a limited set of activities using another person’s patent-protected product in order to develop and assess the safety and efficacy of new pharmaceuticals. Responses to the consultation suggested that current UK legislation makes the UK a less attractive location to carry out this work compared with countries with broader exceptions. This may have economic implications for the pharmaceutical and clinical trials sectors, including loss of skills and expertise if trials are run abroad. The report will need to consider examples such as these where the use of intellectual property may help stimulate growth in the economy as a whole. I can assure noble Lords that in such cases it will indicate how the Intellectual Property Office has sought to balance the interests of rights holders and users.
Amendment 26A in the name of the noble Lord, Lord Howarth of Newport, seeks to include a requirement that the report should provide an assessment of how the Intellectual Property Office has,
“balanced the interests of rights holders with the wider interests of society”.
I am grateful that the noble Lord has defined this phrase to be not just UK-focused but global in scope. I entirely agree with what I believe is the principle behind the noble Lord’s amendment, that the wider interests of society are important in the context of IP rights. I can assure the noble Lord that the report will indicate where other policy objectives have been taken into account, alongside economic considerations—for example, where, say, freedom of speech, public health, or international development considerations have taken priority over economic ones. This is in line with the ethos of the report—transparency.
Amendment 26C, tabled by the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, seeks to place some requirements on the detailed contents of the report. Before responding directly, I should like to take the opportunity give the Committee some detail on what the report will contain. I will add that, as with all government agencies, the IPO already produces an annual report and accounts, containing an assessment of the development and performance of the organisation throughout the year, together with financial accounts. The IPO’s future plans are contained in the corporate plan published in spring each year and agreed with me as IP Minister on behalf of the Secretary of State. This plan also contains the targets that I set for the IPO and by which its performance is to be judged.
I have described the current reports and plans that the Intellectual Property Office produces. I turn now to the new reporting requirements that are the subject of this clause. I will set out the parameters of the report and give some examples to illustrate the kind of issues that would be included in it.
First, the report will provide information on legislative changes and any pre-legislative work such as consultations. Economic estimates will be taken from impact assessments. Looking back to the previous financial year, as an illustration, this would include the copyright measures in the Enterprise and Regulatory Reform Act and the designs consultation that has resulted in the measures that we have already debated in this Committee.
Secondly, the report will address the Intellectual Property Office’s activities in international negotiations and cross-border co-operation. An example is the work that is being done to deliver a unitary patent and unified patent court.
Thirdly, the report will discuss policy development work that has been undertaken to address the challenges facing the intellectual property system. These will change as time passes, but copyright licensing in the digital age is a good example of a current challenge that the IPO has been working on and which, therefore, the annual report would cover next year and for as long as it remains relevant.
Fourthly, the report will highlight the main outputs of the Intellectual Property Office’s economic research programme and how they relate to innovation and growth. Recent studies, for example, have examined the incentives provided by patents and the use of alternative methods of protecting innovation. The report will also summarise the findings of evaluation exercises. The first of these was published last month and concerns the Lambert toolkit, which contains model agreements and a framework for university and business collaborations. The toolkit was developed by a working group of interested parties, supported by the IPO. The research showed that the toolkit has had a positive influence on some innovative research partnerships between UK universities and businesses.
Lord Howarth of Newport
I very much appreciate what the noble Viscount has just told the Committee. It is very good news indeed. I wonder whether the information provided will include records of conversations, discussions or meetings that may have taken place. A link in the online version of the annual report would be sufficient to achieve that transparency, which would be very helpful.
Viscount Younger of Leckie
I thank the noble Lord for that question. We feel that we have gone as far as we can. Many of the meetings are highlighted on different websites, as the noble Lord will know. We have gone as far as we can to make the viewing of meetings transparent.
I will now address some of the questions raised in the debate. The noble Lord, Lord Stevenson, asked whether the annual report was not just a view about the Intellectual Property Office. He argued that it should be wider and suggested that it should be a report on how we are doing as a nation. The report will be the view of the Secretary of State, taking into account the extensive wider relationship that the IPO has with the creative and innovative industries. I hope that the earlier answers that I gave clarified and provided an answer to that general point.
The noble Lord, Lord Stevenson, made a number of references to the importance of the creative industries. He was right to do that. As I said during the passage of the ERR Act, the Government fully recognise the importance of the creative industries. They have also done much for UK creators, and are doing more, including supporting the design sector through the Bill. We are pressing ahead with the anti-piracy measures of the Digital Economy Act. We are also supporting the creative industries abroad through our growing IPO attaché network, which provides practical support to UK businesses by building relations with intellectual property agencies in host countries and improving the influence of the UK overseas. The UK now has attachés in China, India and Brazil, and is recruiting a fourth attaché for south-east Asia. However, the intellectual property system is not there to support just one sector. It is right that we look across the economy to its impact on a range of sectors. To that extent the noble Lord makes a fair point.
My noble friend Lord Jenkin suggested that it was not enough to report facts to Parliament, but that the report should set out proposed actions in a statement. As I said earlier, the report will be laid before Parliament, and publication announced by Written Ministerial Statement. I always welcome the opportunity to debate intellectual property issues with Members of the House, and it is of course open to any noble Lord to call a debate. Therefore I do not consider it necessary that we put this requirement in the Bill.
My noble friend Lord Jenkin also questioned whether exceptions would weaken the incentive to invest in intellectual property. However, exceptions can create opportunities for others, with little or no harm to the owners of rights. How does it harm an author if someone copies extracts of her work in the course of non-commercial research into it, or if blind people can read it in accessible form? The Government are introducing exceptions to create growth and value; not to transfer it between one interest group and another. The Government are looking for the right balance between many interests, as I am sure my noble friend is aware.
The noble Lord, Lord Howarth, asked how we would define what is new and what is original. In many cases, it is easier to know originality when one sees it rather than to attempt to define it. The noble Lord makes a fair point but the courts have a fairly settled approach to this so I hope that he will accept that they have the ultimate sanction on making decisions on that particular issue.
The noble Lord commented that strong intellectual property rights are not always beneficial. The Government agree with the noble Lord that a balance needs to be struck between IP rights holders and users. I know that the noble Lord has made this point in a previous debate. The report will make it clear when interests such as development are weighed against economic considerations.
The noble Lord raised an interesting point about graphene and whether the annual report would mention it. I am interested in this particular invention because when I last visited the Intellectual Property Office I was given an interesting briefing on this matter. It is one of the issues that the IPO is taking extremely seriously. However, we cannot say in advance what the report might say on individual issues, including graphene, or on particular technologies. The report will focus on the activities of the Intellectual Property Office so that, if the IPO carries out activities in an area, such as graphene, they will be included.
The noble Lord, Lord Howarth, asked how the Government would ensure that development would take place through patent thickets and he cited the example of the pharmaceutical sector. The IPO has published a report investigating the phenomenon of patent thickets and commissioned further research from academics to understand if there is a particular impact on small and medium-sized businesses. The annual report will provide an assessment of the research that is undertaken in this area. It is essential that policy is based on the best available evidence.
The noble Lord raised another interesting point concerning gene patenting and the gist of his question was whether it was right. The Government have noted with interest the judgment of the United States Supreme Court, to which the noble Lord referred. He will also understand that this particular area of patent law is governed in the UK by the biotechnology patents directive, a carefully negotiated consensus across Europe on this particular issue of which the noble Lord may be aware. Our law continues to develop on this matter with references to the European Court of Justice.
The noble Lord asked how we should protect health developments from businesses patenting medicines. The annual report will cover the activities of the Intellectual Property Office and their impact on innovation and growth, which I mentioned earlier, where these activities impact on other policy objectives. The report will make it clear how different objectives were balanced.
The noble Lord, Lord Howarth, also asked how the IPO considers global interests and stops the restriction of knowledge in the developing world. Our vision is that it must cover both incentives to invest in, for example, new medicines and, as part of wider government policy, access to medicines. The noble Lord also commented on the impact of international treaties, such as TRIPS. Where the Government are negotiating in these areas, I assure the noble Lord that the report will cover their impact.
The noble Lord asked whether the report will cover the Government as a whole. As a round-up, this is a report of the Secretary of State in respect of the IPO, and the IPO does not operate in a vacuum. The report will cover issues where the IPO works with other government departments.
The noble Lord raised a further issue concerning patents and asked whether patents were granted too easily and whether they stifle innovation. I am satisfied that the IPO only grants patents with a high presumption of validity. Its patent-granting process, the first in the world to achieve ISO quality accreditation, ensures that only those inventions that are new, take a significant enough step forward and are capable of industrial application are deemed to be worthy of patent protections. I hope that that is of some reassurance to the noble Lord.
Lord Stevenson of Balmacara
My Lords, I thank all speakers in this shortish debate. It was of high quality and we covered a lot of ground. It was particularly good that the noble Lord, Lord Jenkin, was able to stay for it. My noble friend Lord Young quipped that in these modern times perhaps the noble Lord, Lord Jenkin, given his skills, might clone himself and appear in two places at once. I quipped back immediately that that would almost certainly be, if it is not already, a crime under the intellectual property Act. It probably will be shortly and he could go to prison for trying it. We decided that that was not worth pursuing. I am sorry about that.
The debate raised a lot of issues. I thank the Minister very much indeed for his response—it was one of the best that I have heard in this Committee or in many others. He covered the ground extremely well, picked up every point and answered most of our questions in a very satisfactory way. In terms of what we are doing—trying to probe and get a sense of where the report will be coming from—I think that we are well satisfied.
However, the point is that the legislation does not quite say what the Minister said in his response. In the Explanatory Notes are simply two lines on the report in paragraph 91, which states:
“The report will cover new legislation and policy developments, including those related to copyright licensing, as well as the services delivered by the IPO”.
Given that the Minister spoke for some 10 minutes about what the report also contained, I wonder whether there is a bit of a gap between the written word and what we have heard. It may be possible to come up with a better formulation in the Bill, and we may want to come back and work further on that on Report. However, we are not far apart on this and, clearly, if the report does cover all the issues that the Minister listed, we would be well satisfied with that, in so far as it goes.
However, underlying the response was the nagging doubt about authorship. Who holds the pen in this report? That is the question we have to look at. The Minister, several times, said that it was okay because the Secretary of State would respond, not the noble Lord himself—as the Minister responsible for IP—or even the chief executive of the IPO. Later on, he changed that and said that it was “a” Secretary of State. However, there is not only one Secretary of State in the Cabinet and the Government. There is another Secretary of State, who currently has responsibility for the DCMS—although, if the rumours are to be believed, not for much longer—and who of course speaks for creators, appears at meetings speaking on intellectual property and sometimes appears with the Minister when the Minister is in his guise as intellectual property tsar. It is fairly obvious from those who attend these meetings, and I have heard a number of reports of them, that a differential approach comes across. It is impossible for the Government to have a single voice on this when the responsibilities are split. One point that has come through, in all the presentations that we have had this afternoon, is that the Government are not currently speaking for the balance of the two aspects. There is a sense here of an uncompleted need to address this issue. We might well come back to it.
The second point is that, within our debate, we picked up on a theme that has emerged in all our Committee sessions and which may run through to the end of this Bill. There is a growing unease about the way the balance is struck between the needs and rights of creators against those of wider society and between the rights of creators and of those who wish to exploit that creativity. I do not think we have settled it. I do not think it is possible to settle it in this Bill or without a lot more thought. I simply log that as being something about which we all hoped more would maybe come out in the report. This is an issue that we will have to address—if not now, then very quickly—in order to make the best of the way in which any future Government deal with intellectual property as an important sector of our economy.
As my noble friend Lord Howarth said, the most difficult question is about what our approach will be in terms of the economic return that can be earned by inventors, such that it does not squeeze out the benefits that will flow to those who wish to use and exploit those inventions. Are we thinking about intellectual enclosures or about commons? That is a very good formulation for a very complex problem, which I know that my noble friend has been dealing with for some time.
A third point comes out of this short debate. I apologise for going on at length but it is important to get it on the record. We are now satisfied that the sort of report that the Minister talked about would document very well what has happened in the Intellectual Property Office work over the year. But will it be sufficient for us to be able to address the issues of what it should be doing in future years? In other words, we have a simple written report and Written Statement—as the noble Lord, Lord Jenkin, said—simply landing in Parliament. Without the opportunity to interrogate, question and come up with ideas about what further work it might stimulate, the job will not be complete. Might the Minister think again about the point raised in the amendment of the noble Lord, Lord Jenkin, and the need not just for a report but for a Statement that could be debated? I know it is true that we can, as ordinary Members of your Lordships’ House, ask for a debate, but that is not the same as having a proper timetabled slot to look forward to, where we can consult with those outside, bring forward thoughts and events, and discuss the issue properly.
Finally, the question about how intellectual property is dealt with is so firmly in our minds that we need to think hard as we go through the rest of the Bill how we can better secure the debates that will be necessary around the wider context for this. It is true, as the Minister said, that BIS has the lead on this matter. However, without the wider community of Ministers also being engaged in it, that will not be sufficient. These are very important points to consider.
Viscount Younger of Leckie
The noble Lord’s question about who holds the pen on this report shows that everything is in the definite or indefinite article. I clarify that the Secretary of State for Business, Innovation and Skills will have the duty to report. However, the report will cover any relevant cross-cutting issues or activities, including work with DCMS or regulators such as Ofcom. I hope that that clarifies that point.
Lord Stevenson of Balmacara
I thank the Minister for picking up that point. Does it clarify it? No, but with that I withdraw the amendment.
Lord Jenkin of Roding
“Lookalikes
(1) A person (“A”) shall not, in relation to any goods or services, use any features of packaging, marking, labelling or decoration in such a way that the public is likely to attribute to A’s goods or services the reputation of another person (“B”) or the qualities or reputation of B’s goods or services.
(2) For the purposes of subsection (1) it is immaterial whether there is any similarity between the goods or services of A and those of B.
(3) Subsection (1) shall not apply to features of packaging, marking, labelling or decoration that are commonplace.”
Lord Jenkin of Roding
My Lords, it has long been my ambition to appear on the screen in two different places, but I think that is impossible. I have been looking to see whether other members of my family might appear on the screen at the same time. We have not achieved that. We do not set out to do that but it would be nice if it happened.
Amendment 28A deals with the long standing problem of lookalikes: products that are designed to look like well known branded products, with the intention—certainly the effect—of confusing the customer. For me, this is a very familiar problem. Many years ago I worked for what was then the Distillers Company, which had a number of very famous brands of spirits. It had a museum of lookalikes containing literally hundreds of bottles from all over the world that had been specifically designed to make them look like some of the Distillers Company’s well known brands, on which of course it had spent a great deal of money on advertising and had built up a very strong brand loyalty. One that I always remember looked exactly like a bottle of White Horse whisky until you looked very closely and saw that it was not a horse but an elephant. But from the other side of the bar you could not have possibly told the difference. There was another bottle of whisky that had “Scotland” in very large words on it and if you looked at it very closely, it said, “Label printed in Scotland”. There were hundreds of others.
This is not the first occasion that this subject has been raised in this House. On 24 February 1994, my late friend Lord Reay tabled an amendment during the passage of the Trade Marks Act about what he called unfair competition. I spoke in that debate, as did a number of other noble Lords. My noble friend Lord Strathclyde, who was then the Minister, recognised the problem but proposed no action. On 17 March 2000, we had the Second Reading of a Private Member’s Bill presented by my noble friend Lord McNally, the Copyright, etc. and Trade Marks (Offences and Enforcement) Bill, which was specifically directed at this problem of lookalikes. In the end he was persuaded to withdraw the Bill so nothing was done.
I have here—and I have no doubt other noble Lords will have seen similar things—a whole collection of what is sometimes called parasitic copying. Brands of margarine have a different word on the top but they look exactly like the very well known brands that are advertised by companies. There are shampoos, shower creams and lotions—all these things are well known. There is plenty of evidence that they do mislead consumers. My wife is a very careful shopper but on one or two occasions in the past few years she has been misled and come back home and said, “Oh, that is not what I meant to buy”, but it looked exactly like the one that she did mean to.
Lord Clement-Jones
My Lords, I rise to speak briefly in support of Amendment 28A. My noble friend Lord Jenkin eloquently set out the case for his amendment and there are very few points that I would wish to add. The case that consumers are being misled was strongly made out by a recent Which? report. As my noble friend said, it is clear that the CPRs—the consumer protection regulations—are ineffective because they are not enforced by the OFT and trading standards and there has been no review which would allow others to enforce those same regulations.
I have practised in the past as an intellectual property lawyer. Passing off is very difficult to establish in these cases but that is the basis on which you would normally expect to enforce ordinary civil actions against this kind of parasitic copying. All the evidence given to me by the British Brands Group suggests that it is extremely difficult to obtain the evidence required by the courts to show confusion, partly because consumers tend not to complain about low-priced items. It is very difficult to gather the evidence in store and courts often dismiss survey evidence as unreliable.
Another interesting feature, which the Minister might care to address, is whether or not the UK is upholding its obligations under the Paris Convention and TRIPS. Article 10bis of the Paris convention and Article 2 of TRIPS require signatories, which include the UK, to assure nationals of “effective protection” against unfair competition. Counsel has given opinion in the past that the UK is not compliant and I believe that the Gowers review gave some indication that that was the case as well. The Government have a case to answer on this question. It is a long-running sore among the owners of these brands and, as the noble Lord, Lord Jenkin, said, there is photograph after photograph of this type of parasitic copying. There is plenty of evidence that it takes place.
Lord Borrie
My Lords, the noble Lords, Lord Jenkin and Lord Clement-Jones, made a clear and convincing case for doing something about so-called lookalikes. I like the word “cheat”, which the noble Lord, Lord Jenkin, used, because it is a simple, human word, which does not rest on any statute. It is perfectly clear to people generally what cheating is. This is a form of cheating and I hope that something can be done about it.
I have seen the Which? report, which shows basic examples of lookalikes and the originals and shows how easy it is, when rushing around the supermarket, to pick up the wrong item when it looks exactly like the one you want to buy. That is very serious. The only question I have may be one for the Minister rather than the noble Lord, Lord Jenkin.
In the last session we passed a Bill establishing a grocery adjudicator. A lot of these problems arise with groceries, which are fairly widely defined in the Groceries Code Adjudicator Act. That Act provides a remedy for anti-competitive activity by supermarkets and other grocers in relation to the practices of suppliers of goods, groceries in particular. I was not very keen on the idea of a special adjudicator being set up and wondered why we could not use one of the existing bodies, such as the Office of Fair Trading, and give it a clear remit to deal with the problem. However, a special post was set up and the lady is now in office. She has a back office of some sort and deals with complaints from farmers and other suppliers against supermarkets which have done something anti-competitively. Why can one not use that particular office to deal with the problem that the noble Lord, Lord Jenkin, talked about?
Lord Howarth of Newport
My Lords, it is not only a form of cheating but a form of free-riding that is clearly unfair. I look forward to the Minister’s positive response to the amendment of the noble Lord, Lord Jenkin.
Viscount Younger of Leckie
My Lords, the amendment proposed by my noble friends Lord Jenkin and Lord Clement-Jones seeks to protect the distinctiveness of product packaging. The amendment relates to an ongoing concern by brand owners relating to what has been called “lookalike” or “parasitic” packaging. This is where businesses are said to mimic the packaging of brands with a reputation, whereby consumers believe that the lookalike product, normally cheaper than the branded product, shares its characteristics, such as its quality. My noble friend Lord Jenkin described the issue in similar fashion. This is considered to be riding on the coat-tails of a brand’s reputation.
The Government recognise that brands are a significant contributor to the UK economy. I can assure my noble friends that we are very much alive to the concerns of brand owners about so-called lookalike products. Indeed, the IPO has just published research that that it commissioned into the phenomenon of lookalike packaging, which we would urge all interested parties to consider. The report is publicly available and can be found on the IPO’s website. In relation to the harm that lookalike packaging does to both consumers and business, the findings were, perhaps surprisingly, fairly equivocal. In particular, although a high number of consumers felt disadvantaged by the accidental purchase of a lookalike, a substantial number saw it as an advantage. Furthermore, there is a fine line between confusing packaging and the use of “generic cues” to signal to customers. For example, the colour green can indicate “mint” on toothpaste. There is no particular business associated with this colour.
The Government are considering the findings of the report and look forward to discussing them with the industry but, as previously stated, the evidence was not convincing enough to initiate immediate action. Although the Government agree that brand owners should be entitled to preserve the distinctiveness of their products, a delicate balance exists between the proper protection of rights and the openness of the market to innovation and competition. Any proposal that changes the status quo should be considered with caution.
In particular, the Government do not agree that the amendment is an appropriate addition to the suite of protections already available to brand owners. The amendment would unduly broaden the scope of the rights currently enjoyed by owners of intellectual property relating to product packaging and upset the balance to which I have referred. In particular, the amendment would prohibit the use of packaging that tells consumers that a product has similar qualities to those of a competitor’s product, even where that is true and consumers are not misled in any way. The law already provides for the protection of distinctive packaging. Let me explain why.
First, where packaging is distinctive, it may be registered as a trade mark. It is an infringement of a registered trade mark where use of a sign takes unfair advantage of its reputation—the riding on the coat-tails that I mentioned earlier. Given sufficient reputation in the marketplace, this protection can apply to even simple examples of packaging, such as the colour purple, which Cadbury currently has protected as a trade mark for chocolate products.
Secondly, noble Lords will, I am sure, be familiar with the remedies under the common-law tort of “passing off”. The case of Penguin v Puffin is an example of the redress that is available under this tort when a competitor sails too close to the wind in mimicking rival packaging. There is a more recent example, where the threat of legal action from Diageo, the makers of Pimm’s, over the use of the term “Pitchers” by Sainsbury’s resulted in an agreement over new packaging for the Pitchers product.
A number of questions have been raised. My noble friend Lord Jenkin of Roding stated that there was plenty of evidence that parasitical lookalike packaging misleads consumers. I refer him to the report recently commissioned by the IPO, to which I alluded earlier in my speech. The study, called The Impact of Lookalikes: Similar Packaging and Fast-moving Consumer Goods, is very long—more than 400 pages—but the results cover a wide range of issues. The Committee might find it useful if I highlight some of the findings, as the issues were raised today.
Lord Jenkin of Roding
My Lords, I listened with great interest to my noble friend giving his answer, and I hope I shall be forgiven when I say that I have not read all 400 pages of the IPO report. From his description, it seems to provide “not conclusive evidence”. I am moved to say to my noble friend that, yes, of course some customers will be happy that they bought a lookalike product because it was cheaper. However, why did it have to look like the branded product? Why could not the own-label product be designed not to give the impression that it is riding on the coat-tails of a well known branded product? Of course some consumers will buy it deliberately because it is cheaper. I find that evidence very misleading. Consumers have bought a lookalike because it looks like the thing that they have always bought but is cheaper, so they like it. Why buy a lookalike? Why do supermarkets not design their own product? The answer is that it would not sell. There would not be a market. Lookalike products are crucial to their marketing. That is cheating. However, I will look very carefully at what my noble friend said, and perhaps take advice from some of the people who have more time than I do and have read the 400-page IPO report. In the mean time, I beg leave to withdraw the amendment.
“Director General of Intellectual Property Rights
(1) The Copyright, Designs and Patents Act 1988 is amended as follows.
(2) In Part VII (miscellaneous and general) at the beginning insert the following new section—
“ Director General of Intellectual Property Rights
(1) The Secretary of State shall appoint an officer to be known as the Director General of Intellectual Property Rights (“the Director General”).
(2) The Director General has a duty to—
(a) promote the creation of new intellectual property,(b) protect and promote the interests of UK intellectual property rights holders,(c) co-ordinate effective enforcement of UK intellectual property rights, and(d) educate consumers on the nature and value of intellectual property.(3) In performing those duties, the Director General must also have regard to the desirability of—
(a) promoting the importance of intellectual property in the UK,(b) encouraging investment and innovation in new UK intellectual property, and(c) protecting intellectual property against infringement of rights.””
Lord Young of Norwood Green
My Lords, I am sure that noble Lords will recall that on 29 October last, the All-Party Parliamentary Intellectual Property Group produced a report, The Role of Government in Promoting and Protecting Intellectual Property, which urged the Government to get a grip on how IP policy is made. The chair, John Whittingdale MP, said in a press release:
“The current system of creating intellectual property policy just isn’t working. IP needs a champion within Government, who will recognise its significance and who will have the influence to co-ordinate policy across different departments. From trademarks to patents, design rights and copyright, UK companies depend on their IP rights to succeed and thrive. In this difficult economic climate it’s especially important that Government backs British businesses on IP. We hope that Government will take note of our proposals”.
In Committee on the ERR Bill, a number of noble Lords called for the creation of a new post of director-general of intellectual property rights, who would have a duty to promote the creation of IP and to protect it where it exists. We have retabled—with permission—the original amendment, which states:
“The Director General has a duty to … promote the creation of new intellectual property … protect and promote the interests of UK intellectual property rights holders … co-ordinate effective enforcement of UK intellectual property rights, and … educate consumers on the nature and value of intellectual property”.
The problem with the present situation, in which we have a Minister—the noble Viscount—and an executive agency, the IPO, is that the IPO may be an efficient registration body for the registration of IP rights but is not, and has never purported to be, a champion of IP. On the contrary, it sees its role as the passive one of holding the balance between creators and users. As the noble Lord, Lord Jenkin, said when he proposed the original amendment, the creators and owners of IP must have someone in government to speak up for them. That was what the amendment was intended to establish.
When he spoke in the original debate, the noble Lord, Lord Jenkin, commented that he had had a lot of support for the proposal from around the industry. He quoted the BPI, which argued that the director-general should be accountable for ensuring a framework for IP that would promote investment in new content, protect the investment from theft and counterfeit, and educate consumers on the importance of UK intellectual property to jobs, growth and the export strength of the United Kingdom.
Intellectual property across copyright, trade marks, design rights and patents is at the heart of the success of a modern knowledge-based economy. It is not sufficient to have one department, one Minister and one executive agency to try to do it all. There should be Ministers and expertise embedded right across Whitehall. If you add in the need to educate people about IP and how it works, the case for a DG in this area seems very strong indeed.
The UK is a world leader in intellectual property. We all agree that how the Government develop IP policy is vital for our economy. The Government should match this ambition and champion IP as much as possible. The IPO cannot remain a passive registrar of IP. It clearly needs to be more overtly a champion for IP. The United States has obviously benefited from having an IP tsar, otherwise known as the Intellectual Property Enforcement Coordinator, who is responsible for national strategy and reports directly to the White House. We offered a similar title to the Minister in an earlier debate, but he seemed unwilling to put on the robes or adopt the persona. I did not think that he looked like Ivan the Terrible; Peter the Great had a more constructive role, both literally and metaphorically, given Saint Petersburg, if I recall. I am sure that the Minister knows that such wonderful casting opportunities do not come too often. This is the second time I have asked him.
Having said that, creating a director-general of intellectual property rights to sit within the Intellectual Property Office and serve as a champion of IP rights within and across government would increase the influence of the Intellectual Property Office across government and also strengthen the hand of the Minister responsible for IP. As the Alliance for Intellectual Property says:
“We believe such a post is needed to ensure that this success is properly recognised, celebrated and built upon to ensure its contribution to growth, employment, culture and society is properly maximised; for IP to be championed in a way it is in other nations”.
I beg to move.
Lord Clement-Jones
My Lords, as someone involved in the All-Party Parliamentary IP Group report of last year, which the noble Lord, Lord Young, mentioned, it would be churlish of me not to take part briefly in this debate. The white horse which I see the noble Lord now sitting on had a pretty good trot during the passage of the Enterprise and Regulatory Reform Act 2013. I do not really wish to reopen the issue with a semi-Second Reading debate on the role of the Minister and the idea of an IP tsar.
It has been quite interesting over the past six months, and is really important, that the Government and the IPO have demonstrated that they have intellectual property holders’ concerns at heart. We are of course in Committee but, in the previous debate, the noble Lord, Lord Stevenson, talked about achieving a balance. Here the noble Lord, Lord Young, is talking about unequivocally championing IP. I am very much at the end of the spectrum: although, as the Minister picked up, I am very keen on having an evidence base, I am still an unequivocal champion of IP so I found what he had to say very attractive.
The issue for me is not so much structures as attitude, increasingly. “By their fruits shall ye know them” is the key to all this. Are the Government going to implement the Digital Economy Act? Are they going to limit the exceptions to those that are really needed in the fields in which they are being introduced? Will they produce the right kind of report about innovation, growth and intellectual property? What is their approach to protecting intellectual property rights in broad terms? A lot of it is about attitudes rather than structures.
Many of us would love to see an IP Minister with the same hat as the Creative Industries Minister. Given that that is a cross-departmental matter, I suspect that it is never going to happen but I believe that the connection between intellectual property and the creative industries is extremely important and should be represented in a single-focus Minister. That would be a great step forward.
I have met the very impressive United States intellectual property tsar, Victoria Espinel, who has a valuable role in the American Administration. However, I am not sure that an intellectual property tsar would play quite such a valuable role in the UK system. I say that despite the fact that I signed up to the relevant amendment but, hell, we can always change our positions. The more the Minister keeps doing what he is doing, the less we will see the need for not an inspector-general but a director-general of intellectual property. However, he probably still has some way to go to convince us that the Government and the IPO really have the interests of the creators of intellectual property at heart.
Lord Howarth of Newport
My Lords, it grieves me to part company with my noble friend Lord Young of Norwood Green but I cannot agree with him on this matter. Of course, I agree with him that the Government and their appointees should back British business, but not to the exclusion of other interests and responsibilities. Of course, I agree that intellectual property should be championed, but I do not agree with him that it should be championed as much as possible.
In an earlier debate, we reviewed some of the unhappy consequences that followed the decision to allow patenting of the human genome. If a new public functionary called the director-general of intellectual property rights is to be created, it seems to me that that official, acting and speaking in a public capacity created by the Government, ought to maintain a balance in his approach to the whole question of intellectual property rights. He should champion the creation of new intellectual property rights where it is appropriate but he should also recognise where the limitations ought to be and where the public interest needs to be balanced.
I shall certainly not weary the Committee by repeating the arguments that I deployed in our earlier discussion about what should be covered in the annual report, but many of the arguments that I suggested should apply there also apply to this proposal. In any case, I think it is unnecessary to create such an appointment. It seems to me that the chief executive of the Intellectual Property Office himself ought to take this wide and balanced view. If his remit from the business department is narrower than that, none the less, the noble Viscount, in his capacity as Intellectual Property Minister, speaking and acting collectively on behalf of the Government as a whole, ought always to have regard to that wider range of interests and a balanced approach to policy.
Lord Borrie
My Lords, I want to intervene in a small way. I had a certain nostalgic feeling when reference was made to setting up a director-general of intellectual property because I was once the director-general of fair trading for some 16 years and I enjoyed that. I enjoyed the fact that the legislation that applied to me directed everything in a sort of pyramid set-up, whereby I was at the top of the pyramid and everybody else was down below. That was rather enjoyable, but surely my noble friends who have put forward this amendment must realise that it is terribly dated now. In the 1970s and 1980s, as each old-fashioned nationalised industry became privatised, a director-general was set up—for example, of Ofgas, Offer or Ofcom. They were all set up as sort of clones of the director-general of fair trading with specialised functions. However, roughly from the 1990s, into this century, all these offices have been remodelled on what I might call more private enterprise bases, whereby there is a board, a chairman and a chief executive. The same person can no longer be both chairman and chief executive in either private enterprise or the public sector.
Bodies that have been set up in recent years to do a job of this sort, to act as offices to receive public concerns and complaints and to bring forward policy, have been set up in the more modern way. If I may put it in simple terms, previously there has been an “Office of” something or other. Now there is the Financial Services Authority—or, rather, the Financial Conduct Authority—and the new competition body is not called the Office of Fair Trading or “Office of Competition” but the Competition and Markets Authority. It has a board, a chairman and chief executive. I am simply saying to my noble friends that I am not sure that I care for this amendment anyway, for the reasons given by my noble friend Lord Howarth, but it is technically not an up-to-date way of doing it.
Viscount Younger of Leckie
My Lords, Amendment 28AA would create a new statutory role of “Director General of Intellectual Property Rights”, with a duty to promote intellectual property rights. A very similar amendment to the Enterprise and Regulatory Reform Bill was proposed by my noble friends Lord Jenkin, Lord Clement-Jones and Lady Buscombe, who is not in her place today.
The functions of this new role are already being carried out. As Minister for Intellectual Property, I have a role to champion the IP system as a whole. That includes the vital role of not only protecting the interests of IP rights owners but considering the different interests of future businesses, consumers and other users and creators of IP. A balanced IP system promotes strong and competitive markets, and encourages innovation and creativity.
My role as IP Minister is to create and sustain the best possible balance. I am supported in this role by the IPO, whose objectives I set through its annual corporate plan. The IPO is responsible for promoting innovation by providing a clear, accessible and widely understood IP system that enables the economy and society to benefit from knowledge and ideas.
In particular, I am supported by the chief executive of the Intellectual Property Office, who is a director-general within the Civil Service. The chief executive is appointed by the Secretary of State. He or she is directly accountable to the Secretary of State, to me as the responsible Minister and to the Permanent Secretary as the principal accounting officer. The chief executive is responsible for the administration of the relevant statutes, in this case the Patents Act 1977, the Copyright, Designs and Patents Act 1988, the Trade Marks Act 1994 and associated legislation. He or she also advises the Secretary of State on all aspects of national intellectual property, related EU and international legislation and on relevant policy issues. It seems to me that these are precisely the tasks that one would expect a director-general of IP to perform, and we have a director-general doing them.
We have heard the suggestion that a director-general for IP owners is needed to convince holders of IP rights that the Government are supportive of their interests. The Government have already introduced or supported a wide range of beneficial measures, from enhanced R&D tax credits and incentives for animation to longer copyright for music performances, and from easier access to justice through the courts to encouraging a new IP crime unit in the City of London Police to tackle online IP crime. It is clear that we have done much for IP-intensive industries, as my noble friend Lord Clement-Jones acknowledged in the Grand Committee on the ERR Bill. I appreciate his general support today—when compared, perhaps, with his views during the passage of the ERR Bill—and I am grateful.
The need for balance in IP policy has been recognised for many years. For example, when the current Copyright, Designs and Patents Bill was debated in the other place in 1988, the former honourable Member for Sedgefield, Tony Blair, said the following:
“The difficult balance that we have to strike … is between ensuring that industry has a proper incentive to invest and recognising that the consumer must be protected against the lack of competition that will inevitably come from copyright protection. If we protect industry too much the consumer will suffer through the abuse of monopoly, and if we give too little protection to industry it will lose the incentive to invest. Our task is not to choose between the interests of industry and the consumer but adequately to balance those interests”.—[Official Report, Commons, 25/7/88; col. 38.]
I am most grateful to the noble Lord, Lord Howarth, for clarifying that point earlier in this debate.
The duties of the proposed director-general are significant in what they do not include. There is no duty to consider the impact on consumers, other businesses or the advance of research. He or she need not have regard to the benefits of competition, and the development of high-quality evidence does not appear to have been given priority. These are not optional extras but important considerations in their own right. Although the Government understand the intention behind the amendment, we do not believe that this additional role is necessary. In addition, I am not fully convinced that a role that does not acknowledge the balance of interests necessary to good intellectual property policy would benefit creators, rights owners or the UK.
The noble Lord, Lord Young, raised some important points, some of which I may have addressed earlier. He suggested that the IPO is efficient at registering but does not champion IP rights. As I mentioned earlier, the Intellectual Property Office is under my control as Minister for IP. I do not know about my transition from Ivan the Terrible to Peter the Great but reiterate that I am a proud Intellectual Property Minister. However, importantly, I do not agree that it is my role to champion current IP rights holders over future ones or to have one set over another.
The noble Lord, Lord Young, questioned what the IPO has done to support rights holders and IP businesses. As I mentioned earlier, the IPO is taking a wide range of actions to help business. I refer noble Lords to my lengthy letter last week, which set out some of these activities on business support and enforcement. I have here—which I can wave, Chamberlain-style—a copy of the IPO achievements for 2012-13. Noble Lords are most welcome to read it.
The noble Lord, Lord Young, asked if intellectual property should be embedded in considerations across departments in Whitehall. Having the IPO as the centre of IP expertise and policy in government, to which departments can turn, helps to facilitate this. Furthermore, IPO policy officials actively reach out to other departments—DCMS and the Ministry of Justice, to name but two—on cross-cutting intellectual property issues. This system works for a wide range of policy areas and is the norm.
My noble friend Lord Clement-Jones said that the Government and the IPO must show that they have the interests of intellectual property holders at heart. He is right. The Government have done much, including extending the copyright term in music performances and the tax incentives for research and development in animation, which I mentioned earlier.
The noble Lord, Lord Howarth, said that the Government should not be championing intellectual property rights to the detriment of others; in other words, he was focusing on the public interest balance. Again, this is absolutely right. The IPO acts in the public interest, running the IP system in order to maximise innovation and creativity in the widest possible sense.
I hope that on the basis of the information I have provided, specifying in some depth the role of the chief executive of the IPO, as well as my own passion for the role as IP Minister, the noble Lord will withdraw his amendment.
Lord Young of Norwood Green
My Lords, I have not quite struck a consensus in Committee on this occasion. Even those who were supportive before seem to have decided that the ship was going down. Nevertheless, it has been a useful debate.
Of course, I concur with the critics, such as my noble friend Lord Howarth, who talked about the importance of getting the balance right between IP rights and public interest. I would not demur from that and I would not say that this is a perfect amendment. However, if nothing else, it has again required the Minister to define the way that, as the IP Minister, he acts within his department and with other departments. In that respect, it has been useful. It was unfortunate that he referred to Chamberlain, as his career was terminated rather abruptly, so perhaps he should choose another analogy in future when he is waving a piece of paper. Nevertheless, I take the point that he made.
The noble Lord, Lord Clement-Jones, was right to say that we will judge the Government by their actions. The reference to the Digital Economy Act brought a feeling of nostalgia and I hope that we will see it fully enacted. Nevertheless, I thank noble Lords for participating in the debate and, taking into account those responses, I beg leave to withdraw the amendment.
“Future of intellectual property
Subordinate legislation to implement the government’s policy statement entitled “Modernising Copyright” published in December 2012 will not be brought forward until the Secretary of State has published, and laid before both Houses of Parliament, a report setting out the government’s long term plans for the future of intellectual property in the United Kingdom.”
Lord Stevenson of Balmacara
My Lords, this amendment is designed to probe the Government’s intentions as regards the substantial baggage of copyright exceptions which stem from the Hargreaves report. We understand the deadline for written comments on the first batch of draft legislation is 17 July 2013, and that the IPO will be holding a series of open meetings in the week commencing 8 July 2013 to give opportunity for discussion. Although we welcome this, we have not had notification so far about the other batches or, indeed, any certainty on how many of these there will be.
Therefore, can the Minister say, first, that it is intended that the Government will make the draft legislation widely available so that the finer points of wording may be examined by parties with a broad range of expertise? If so, can he spell out the various stages remaining in this process for the information of the Committee?
Secondly, may I ask how the Government will manage the need to take a view of the impact of these regulations in the round? Will there be a debate or some other opportunity for both Houses of Parliament to get involved before the regulations are introduced? On the regulations so far published, we are already aware of some significant issues which are being raised across the industry. Can the Minister share with the Committee how the proposal to introduce an exception for private copying can be squared with the requirements of the EC copyright directive and its requirements for fair compensation for rights owners? In this context, is the Minister aware of concerns about the evidence base used for the Hargreaves review? For example, the Government justify the proposal not to provide a compensation system on the basis that the exception will cause minimal, if any, harm due to the minimal impact on sales expected to arise from the introduction of this permitted act and the opportunity that it provides for the value of private copying to be priced in at the point of sale.
The impact assessment accompanying the modernising copyright documents stated on page 15 that the research into private copying appears to confirm that pricing in is possible and is taking place. However, the research by Roberto Camerani et al, which informed the impact assessment, does not come to this conclusion and instead finds, in the case of music, that
“an assumption or view that online stores embed an additional cost into their product price for copying remains ambiguous”.
Moreover, the research concludes that, in the field of music, the researchers could not find any evidence in support of a widely held view that stores are including in their price a permission to copy. The assumption that the value of private copying is priced in at the point of sale is refuted by the research commissioned by the IPO itself, so how does the Minister justify the approach now being taken?
Draft Clause 28 in the CDPA refers to permitted private copies being made from a copy that is held by an individual on a permanent basis. This expression is not clear and is not currently recognised elsewhere as a means of distinguishing one copy in the lawful possession of an individual from another copy which might not meet the test of being a permanent copy. Can the Minister elucidate this? Will he clarify the concept of permanent copies, particularly when a sound recording or a film may include underlying works which have been licensed only on a limited basis for inclusion in a so-called permanent copy?
Draft Section 28B(4) of the CDPA appears to ignore how terms and conditions permitting access to copyright works increasingly relate to the application of technical protection measures. For example, programmes which can be viewed on BBC iPlayer may also be downloaded for viewing during an agreed period, not normally beyond 30 days. If customers can override the TPM contractual provisions, any terms which are intended to distinguish access to a catch-up TV service from a full video on-demand download service will be potentially ineffective. TPM measures have never been “strictly non-contractual”. Can the Minister explain how the government drafting takes this into account?
The current wording on “cloud” storage does not appear to prevent sharing from the storage. Can the Minister confirm that the draft regulations will be tightened to ensure that no one is permitted to permit anyone else to make copies of their “private” copies?
It is hard to see how the new quotation exception can apply to all copyright works, including photographs. Section 30 of the CDPA allows fair dealing of copyright works for criticism, review and news reporting but excludes photographs from the fair dealing provision. Can the Minister confirm that a similar carve-out will be introduced for photographs? The phrase “fair dealing for the purposes of quotation” does not clearly communicate in plain English the fact that uses which are normally licensed or otherwise exploited are not included. Can the Minister confirm that this can be looked at again?
The Minister will recall that when we discussed parody at length in Committee on the ERR Bill, the suggestion was made that parodists could rely on the concept of fair dealing, so that no further definition was required. This approach was strongly challenged in Committee, not least because parody is a very popular mode of entertainment in the UK and needs certainty. I accept that this is a tricky area but do not believe that the proposed new exception for parody will be sufficient if no definition or boundaries are set out in the regulations. It is also quite surprising, given the debate referred to, that no definition is being proposed to specify what would constitute “parody”, “caricature” or “pastiche”. Would the Minister not agree that it will be necessary at least to distinguish each of those from the others? To avoid further confusion in the application of any clearly defined exception linked to each of these expressions, rights owners are likely to argue that it should be made clear that when users rely upon the proposed exception, any parody, caricature or pastiche must not infringe the moral rights of the authors or performers. Can the Minister confirm that this matter might be looked at?
I apologise to the Minister for all the detailed questions, but I hope that they exemplify why more time needs to be allowed for these important changes. Unfortunately, I doubt very much whether single debates, even on a group of SIs, will be sufficient. I beg to move.
Lord Clement-Jones
My Lords, the noble Lord, Lord Stevenson, has found a novel way of responding to the consultation on exceptions. It is not a wholly welcome process nor, I am sure, will the Minister find it wholly welcome, since I suspect that questions fired with the rapidity of bullets can only really be answered in correspondence.
I am content to see the full suite of exceptions that will be put forward by the Government, which will of course need scrutinising. I hope that that will be both a formal and informal process, so that parliamentarians will have the opportunity to engage with the Minister and with the IPO on these exceptions—not simply through the debate that we will formally have when they come to the House as statutory instruments. I can see that the motives of the noble Lord, Lord Stevenson, are pure but I am not quite so sure whether the instrument he has used is appropriate.
Lord Howarth of Newport
My Lords, I support my noble friend Lord Stevenson of Balmacara in his proposal that the Government should publish a document of some sort setting out their thinking in relation to the suite of exceptions that they propose to legislate for. It will not be satisfactory if the first opportunity that Parliament has to consider these exceptions is in the highly constrained circumstances in which we consider unamendable orders, in fairly brief time, in Committee.
It would be very helpful if the Government would lay out their thinking in a report and better still—essential, I would suggest—if Parliament had the opportunity to debate that report, so that when we come to consider the specific orders and enact legislation on them, we do so in the context of a proper understanding of the thinking and strategic purpose of the Government. The Government have some very delicate and difficult judgments to make, exception by exception, and Parliament needs to take responsible decisions. Parliament will be better educated, and better placed to make appropriate judgments on this, if we have the opportunity to go through the preliminary stage that my noble friend suggested. The report need not be quite as ambitious as the one that he proposed in his amendment, which would set out,
“the government’s long term plans for the future of intellectual property in the United Kingdom”.
That could be quite a bulky document. However, if the report is focused on the issues raised in the exceptions for which the Government are minded to legislate, it would be very helpful to Parliament and to others as well.
Viscount Younger of Leckie
My Lords, I understand that the noble Lords, Lord Stevenson and Lord Young, are keen to discuss the Government’s plans on copyright exceptions arising from the Hargreaves review and their copyright consultation. The Government have already made their vision for the future of intellectual property very clear. They have endorsed the recommendations of Professor Hargreaves after his thorough report. We want to see a framework that maximises growth across the economy, not just for industries that are users of the intellectual property framework but for everyone.
I will set out for your Lordships a number of documents that establish the Government’s strategy for intellectual property. These include the report by Professor Hargreaves himself, published in May 2011; the Government’s response accepting the professor’s recommendations, published in August 2011; an international intellectual property strategy published in the same year, as well as an IP crime strategy covering a five-year cycle; and, most recently, the Modernising Copyright document, to which the amendment refers, which flowed directly from the Government’s response to the Hargreaves review and their subsequent copyright consultation that ran from December 2011 to March 2012. Taken together, the documents very clearly lay out the Government’s vision for intellectual property as an essential element of growth, and back up that vision with real plans for the next five years. Those plans are reflected in the IPO’s corporate plan, which I, as the Minister for Intellectual Property, have signed off.
I also remind noble Lords that the previous Government conducted many of their own reviews, such as the Gowers review, Digital Britain, Creative Britain and the 2009 copyright review. Following this number of reviews, now is the time for action and implementation, and I am pleased to say that this Government are now moving to implementation.
I am very grateful to the noble Lord, Lord Stevenson, for his engagement and interest in the Government’s plans to implement their proposed changes to copyright exceptions. This work, as the noble Lord is aware, is being taken forward not in the Bill but through secondary legislation, which we will all have ample time to debate. However, I understand why the noble Lord has raised the issue and recognise that while many are in favour of the proposed changes, some stakeholders still have concerns. Therefore, I will now try to respond.
First, the noble Lord asked for more information about the timetable for the technical review of copyright exceptions that the Government are conducting. As the noble Lord indicated, the IPO is seeking comments on the first set of draft exceptions by 17 July and has offered open meetings in the week of 8 July. This first set of technical drafts covers proposed new exceptions on private copying, parody, quotations, and changes to the existing exception for public administration. The next set of technical drafts will cover education, preservation and archiving, research and private study, and text and data mining. It is my intention that these will be published before the end of the week.
This will leave one remaining exception: that for disabilities. However, noble Lords may be aware that the UK is currently involved in discussions in Marrakech to agree a treaty on improving access for the visually impaired to published works. Therefore, it may be necessary to await the outcome of that important work before issuing proposals to update the disability exemption. I am sure that all noble Lords support this important work, which has the aim of facilitating access to books for visually impaired people across the world.
On the time available for public comment, the Government are keen to ensure that sufficient time is provided for all the technical drafts to be considered properly. Therefore, the same time to comment—six weeks—will be allowed for each technical draft. If any noble Lords here today wish to respond to the technical review exercise, the Government will be very happy to hear from them. In addition, I will be happy to meet any noble Lords who have a keen interest in this area.
I now turn to how, subject to satisfactory completion of the technical review exercise, the Government plan to bring the draft legislation before this House and the other place. These are statutory instruments, but the Government have committed to lay them before each House for affirmative resolution. This will provide an opportunity for Parliament to comment and to express its views. The noble Lord expressed concern about the time to debate the issues. I do not share the noble Lord’s fear that there will not be enough time for discussion on these issues. This House and the other place do not seem to shy away from debates on copyright. Copyright exceptions have already been the subject of debate on the Floor of both Houses in the context of the ERR Act and have been scrutinised by not one but two Select Committee inquires. However, I recognise the great interest in this area and, as I indicated, during the passage of the Enterprise and Regulatory Reform Act, the Government remain open to the idea of additional debates on the draft regulations if there is a desire from Members of this House and of the other place. I am happy to repeat that offer here today.
Lord Stevenson of Balmacara
My Lords, I thank all speakers for contributing to this, and to the Minister for his very full response. I was not expecting detailed rebuttal on any of the points I made on individual copyright exceptions. I look forward to the letter, which I am sure will be very interesting.
The Minister has actually covered all the ground very satisfactorily. We were not aware of the timetable for the second group of copyright exceptions. Six weeks takes us to the end of July, so I assume that that will be finished at roughly the time that the House rises. That would be good and gives us time to come back to that. I understand the point about the disabilities exception, which I do not think is contested at all but should benefit from the further discussions in the Morocco environment that the Minister talked about.
We recognise that this is a process for which there are precedents. The affirmative resolution process is what it is, but I recognise that the Minister has indicated in the past, and has repeated today, that he would be happy to respond to requests for additional debates. I think that would be the way forward and I am sure that we could have a discussion on that and then discuss it through the usual channels.
I am also particularly grateful for the news that there will be some new impact statements. We did not feel that the previous impact statements, which attracted criticism all round the House, including from the noble Lord, Lord Clement-Jones, were up to the mark on what they were trying to justify. Seeing some reworked figures with proper calculations being done will be a huge success.
I think that the amendment has achieved what we wanted: to probe a little further on this area and to draw out the need for more time and effort to be spent on these important and good proposals. I beg leave to withdraw the amendment.
“Compensation for financial loss
(1) Section 97 of the Copyright, Designs and Patents Act 1988 is amended as follows.
(2) At the end of subsection (2), insert “including in addition to or as an alternative to compensating the plaintiff for financial loss a lump sum equivalent to the amount of royalties or fees which would have been due had authorisation to use the relevant rights been requested”.
Lord Young of Norwood Green
My Lords, we have argued in Committee about whether or not criminal sanctions should be introduced to the design rights field. However, even if the Government’s current proposal is adopted, unregistered design rights will remain outside the criminal courts.
It has been argued that the present civil damages regime is ineffective and provides no deterrent to those seeking to infringe IP rights—infringements which, it can be argued, impact on economic growth. The current regime offers little opportunity for organisations to claim back the true costs of the losses they suffer, apart from the often nominal unpaid licence fee, as it takes no account of the profits a person may have made on the back of their infringement. Therefore, given that the only penalty available is an ability to reclaim the fee that should have been paid in the first place, a situation is created that provides an incentive to infringe.
The Gowers report of 2006 stated that:
“Damage awards should act as a disincentive to infringement”.
The 2007 Culture, Media and Sport Select Committee report into new media and the creative industries stated:
“The deterrent effect of the present law in this respect is near zero: it should be substantial, as are some of the illicit profits being made”.
The 1997 Law Commission report, Aggravated, Exemplary and Restitutionary Damages, stated:
“Substantial numbers of consultees considered that exemplary damages do or could have a useful role to play in filling these gaps. They fulfil a practical need. We agree”.
When pressed, the Ministry of Justice points to the fact that the civil regime is there only to compensate, while the criminal regime is there to punish. However, blurring of these boundaries already takes place. In January 2010, a judge awarded exemplary damages in a civil case involving a car insurance scam. In addition to ordering the individuals in the fraud ring to compensate the companies for £300,000 of losses, the judge ordered the ring to pay a further £92,000 as a punishment. The reason, he stated, was to send a clear message that this sort of action would not be tolerated.
The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights—TRIPS—requires that members provide enforcement procedures that “permit effective action” against infringement of intellectual property rights covered by the agreement, including,
“remedies which constitute a deterrent to further infringements”.
The EU directive on the enforcement of intellectual property rights echoes the TRIPS obligation. To satisfy the obligations imposed by TRIPS and EU law, many EU member states have adopted strong rules on civil damages for intellectual property infringements; for example, in Ireland aggravated and exemplary damages are available. In other markets, including Austria, the Czech Republic, Greece, Poland and Romania, rights holders can recover multiple damages. Lithuania provides for a form of statutory damages. These remedies are not available in the UK. In addition, Canada, the US and other countries have introduced statutory or pre-established damages.
Can the Minister say whether the UK Government believe that their implementation of the enforcement directive meets the requirement for member states to have “effective, proportionate and dissuasive” civil remedies? It is true that the courts are free to continue to apply their existing approach. A subsequent licence purchase, for example, may be deemed adequate to compensate for lost profits. Technically, this leaves the rights holder with the ability to recover unfair profits by suing the infringer. However, proving such profits can be exceedingly difficult in many cases, especially where the profit is a saved cost.
Much, if not all, of the substantive and common law that concerns the awarding of damages predates the development of the modern, digital-based creative economy. As a result, anomalies, deficiencies and inequities have become increasingly apparent, particularly for copyright interests. The amendment provides the ideal opportunity for these problems to be fixed. I beg to move.
Lord Clement-Jones
My Lords, I was not planning to speak on the amendment but the noble Lord, Lord Young, made such a good fist of the arguments that I wanted to say that this matter needs serious examination. In fact, when one looks closely, one sees that this is a relatively mild amendment because it does not really constitute exemplary damages. It simply rolls up royalties into a lump sum that otherwise could have been awarded by a court. Exemplary damages are rather tougher. Indeed, many rights holders complain that the provisions of the amendment would be inadequate when all they are going to get is just the equivalent of a royalty when, in fact, an infringement has taken place over a long period. One could go a lot further, but as a first step and as a way of stimulating discussion this is an interesting amendment.
Viscount Younger of Leckie
My Lords, Amendment 28AC would allow for the awarding of damages in copyright infringement cases that compensate a plaintiff for the infringement, as well as the additional damages allowed in some circumstances for copyright infringement. This is already catered for by Regulation 3(2) of the Intellectual Property Regulations 2006—SI 2006/1028—and damages may be awarded at the court’s discretion.
Copyright gives the creator of a protected work the right to control certain acts, such as how and when the work is copied or when it is issued to the public. Most cases of copyright infringement fall under the remit of civil law and are dealt with by the civil courts. Infringement can be a criminal matter, particularly where it is carried out deliberately and/or it occurs on a commercial scale. The UK legal system does not generally have principles of punitive damages in the civil courts. In some circumstances this is possible for blatant copyright infringement, but these provisions are rarely used. Civil remedies in UK law are aimed at settling disputes and provide restitution and compensation, while punishment is the purpose of the criminal courts.
Intellectual property law is complicated and in many circumstances it is possible for an individual or business to infringe accidently. As a result, although it is possible to obtain additional or exemplary damages for copyright infringement in some circumstances, this is not something that the Government intend to introduce more widely. In particular, the introduction of further exemplary damages for design rights and patents would almost certainly have a negative impact on innovation, as industry would become more nervous about infringement when developing new products. Further damages would also create a perverse incentive for some individuals and organisations to take legal action that might otherwise be inappropriate.
An important principle of UK law is ensuring that the level of penalty is proportionate to the level of wrongdoing. The Government believe that furthering exemplary damages could allow for disproportionate sanctions to be imposed on those who unintentionally infringe IP and would not support rights holders, or protect or enforce their rights. Above all, we have seen no evidence that exemplary damages work where they are available in other countries.
The noble Lord, Lord Young, questioned whether the UK Government are doing enough on enforcement. I am delighted that this gives me an opportunity to provide some highlights of what I regard as a serious and important matter. The UK’s legal system convicts pirates and counterfeiters, and 80% of criminal cases under IP legislation in 2009 led to a guilty verdict. In 2009, the UK convicted nearly eight times as many copyright offenders as in 2002. The assets seized from IP criminals were £21 million in 2010-11, which was more than twice the previous year’s figure. Figures vary from year to year, understandably, but there is an increasing trend in the value of assets recovered since 2004-05.
The noble Lord, Lord Young, spoke generally about whether the current system is working. To address his first question, we simply have not seen the evidence that the UK’s penalties are ineffective deterrents. UK piracy is relatively low, and Ofcom research suggests that it is not rising. That is not to say that we are complacent. However, I ask the noble Lord to withdraw his amendment.
Lord Young of Norwood Green
I thank the noble Lord, Lord Clement-Jones, for participating in the debate. I cannot say that we found the Minister’s answer totally satisfactory. We will reflect on the statistics that he gave us. I assume, as he only went as far as 2009, that we have not got any further statistics for 2009 to 2012. If he has, no doubt he will let us know in writing. We will reflect on his points and, in those circumstances, I beg leave to withdraw the amendment.
(c) make provision for applying this Part, or any of its provisions, to any country of a specified description;(d) make provision for the application of legislation to a country under paragraph (b) or (c) to be subject to specified restrictions.”
Viscount Younger of Leckie
My Lords, I will set out why the Government have tabled minor and technical amendments to this clause. The Committee will be relieved to know that my speech will be brief on this occasion.
Clause 21 is intended to simplify the way in which the UK currently meets its international obligations to extend copyright protection to works from other countries and their citizens, delivering clearer information for users. This need arises from the fact that the UK is a signatory to a number of international copyright conventions and treaties. This obliges the UK to extend copyright protection to works and performances created by citizens of other member countries, or to works that originate in other member countries. These obligations are reciprocal: UK copyright holders benefit from the same protection in those countries.
However, it became clear after the Bill was introduced that the clause as drafted would not provide the Government with the flexibility to extend as much, or as little, of the Act as is appropriate. The policy behind Section 159 is for protection to apply only where it is offered in return. This very much depends on which international agreements those other countries have signed up to, and whether they have opted out of some elements. The purpose of the Government’s technical amendments to this clause, therefore, is to better define the powers to extend only parts of the provisions of the Act to citizens and works from other countries, and where the United Kingdom is obliged to do so.
Amendment 28K is consequential and removes text that has become redundant, because the Bill will automatically ensure protection in future for works from the Channel Islands and the Isle of Man. I beg to move.
Lord Stevenson of Balmacara
My Lords, I am sure that there will be little response to the Minister’s brief but adequate explanation of these amendments. He also tried to write to us to explain what he was doing, but unfortunately the letter did not reach us until this morning. However, I have had the benefit of a brief read of that. It seems to us a sensible amendment, and we wish it well.
Viscount Younger of Leckie
I am grateful for the brief contribution from the noble Lord, Lord Stevenson. I have nothing further to add.
“(6A) Application under subsection (4)(b) or (c) is in addition to application by subsections (1) to (3).
(6B) Provision made under subsection (4)(c) may cover countries that become (or again become) of the specified description after the provision comes into force.”
“(c) make provision for the application of this Part to a country added under paragraph (b) to be subject to specified restrictions.”
“( ) In section 208(5) of that Act (which, so far as it gives power to designate any of the Channel Islands or the Isle of Man, is superseded by the new section 206(1)(ba)) omit “any of the Channel Islands, the Isle of Man or”.”
Lord Clement-Jones
“Remote e-lending
(1) Section 5(2) of the Public lending right Act 1979 (interpretation) is amended as follows.
(2) At the end of the definition of “lent out” omit “but paragraph (b) does not include being communicated by means of electronic transmission to a place other than library premises”.”
Lord Clement-Jones
My Lords, as your Lordships know, the public lending right is the legal right of authors to receive payment for the loan of their books by public libraries. Currently it applies to the loan of books only in printed format. It does not apply to e-books, audiobooks and e-audiobooks.
William Sieghart and a distinguished advisory panel carried out a review of a number of issues and concerns on the subject of e-lending in libraries. Their report, An Independent Review of E-Lending in Public Libraries in England, was published in March 2013. A number of recommendations were made to ensure that authors receive fair remuneration from the lending of digital, audio and e-audiobooks by libraries. The review recommended that the anomaly whereby rights holders are still not recompensed for the loan of their audio and e-books should be urgently addressed by extending PLR to cover e-books, audiobooks and e-audiobooks; that there should be an increase in the Government’s PLR funding to take this into account, so that writers and other rights holders are equitably compensated; that the provisions in the Digital Economy Act 2010 that extend PLR to on-site loans of audiobooks, e-books and e-audiobooks should be enacted; and that the Government should find space in their legislative programme, at the earliest opportunity, to enact primary legislation to extend PLR to remote e-loans.
I will say a word on the legalities around PLR. Authors who have granted publishers the right to publish their works as audiobooks or e-books will typically retain copyright in the work and will often retain the exclusive right to lend the work granted by Section 16(1) of the Copyright, Designs and Patents Act 1988. Under Section 18A of the CDPA it is an infringement of copyright in a literary work to lend that work to the public without the copyright owner’s permission. However, Section 40A of the CDPA permits public libraries to lend books that fall within the public lending right scheme. If the Digital Economy Act is implemented, the PLR scheme will be varied to include audiobooks and e-books. Until that happens, loans of audiobooks and e-books issued without a copyright owner’s authorisation perpetuate a situation in which lending rights are being infringed.
Loans of audiobooks are significant, considering that no payment is made to authors for their loan from libraries and that in many instances the libraries charge for the loans. The latest CIPFA statistics put the number of audiobook loans at 9.9 million for 2010-11 and 8.9 million for 2011-12. However, CIPFA treats e-audio separately in the 2011-12 figures and there is an additional figure to be taken into account of 287,000 loans for e-audiobooks.
In their response to the Sieghart report, the Government committed to pursuing legislation to extend PLR to remote lending in future parliamentary Sessions. They also agreed to consider commencing the relevant provisions of the Digital Economy Act. Their commitment to pursuing the legislation to extend PLR to remote lending was said to be subject to compliance with the EU copyright directive, with further funding dependent on evidence of remote loans.
What are the potential consequences if the Government do not implement the recommendations? The continuing failure to provide for lending remuneration in respect of non-print formats raises an important legal issue. While on-site e-book lending is a developing service, the ability to access audiobooks in public libraries is clearly highly valued by the public. The advisory panel heard that around 10 million audiobook loans take place each year, the vast majority of which are in hard-copy formats. Quite apart from the inequitable treatment of rights holders, the current situation also places the library service in a position where rights are being infringed on a daily basis. For libraries and authors, the longer-term consequences of a failure to implement the Sieghart recommendations expeditiously are clear: readers are increasingly choosing digital formats, anticipating on-demand access at the time and place of their choosing.
The Government should act upon William Sieghart’s recommendations without delay to effect the extensions to PLR envisaged by the Digital Economy Act, to provide adequate additional funding for these extensions and to fund and encourage appropriate models for remote e-book lending so that libraries can act within the law and authors can receive fair remuneration.
Since the Government are now committed to pursuing the legislation to extend PLR to remote lending, subject to compliance with the EU copyright directive, with further funding dependent on evidence of remote loans, why not use this Bill for the enabling legislation? I beg to move.
Lord Howarth of Newport
My Lords, I support the noble Lord, Lord Clement-Jones, very strongly indeed. I am very glad that he tabled this amendment. There is a palpable injustice that needs to be remedied and I can see no good reason why it has not already been done. It should be done very expeditiously indeed.
The historic authors’ public lending right scheme has always been run on a highly cost-effective basis. The cost of it has been minimal to public funds. But it has been valued very much by authors, not because it makes them rich—there is a low ceiling on the total remuneration they can receive through the scheme—but because it gives recognition to their copyright and their rights as authors. Rightly, they feel strongly about it. It is clear that the principles of the system need to be extended to e-books and should have been extended long ago to audiobooks. All the thinking has been done by Mr Sieghart and his colleagues.
To carry on with the present state of affairs is disreputable. I suspect that the constraint is seen as one of cost but even a token royalty or token remuneration would satisfy the principle, which I think is important to authors. I hope very much that the Minister, speaking on behalf of not only his department but the DCMS, will be able to encourage us today.
Lord Young of Norwood Green
My Lords, I thank the noble Lord, Lord Clement-Jones, for his comprehensive contribution, as well as my noble friend Lord Howarth. I think that they have covered the waterfront on this one. The only thing I would add is: can the IP Minister tell us what has happened to the Digital Economy Act? I look forward to his response. Basically, we support the premise that is contained in this amendment.
Viscount Younger of Leckie
My Lords, I thank my noble friend Lord Clement-Jones for his amendment. This amendment and the following one fall within the remit of the Secretary of State for Culture, Media and Sport. However, as I work ever more closely with my colleagues in DCMS where there is some crossover in policy, I am more than happy to discuss these amendments today.
The Government recognise the opportunities presented by the lending of e-books by public libraries and recently commissioned an independent review of e-lending in libraries in England, led by William Sieghart, which my noble friend Lord Clement-Jones referred to. Noble Lords will be aware of the public lending right—PLR—scheme which enables authors and other rights holders to receive payments in exchange for their works being loaned out free of charge by public libraries.
More than 23,000 authors, illustrators, photographers, translators and editors who have contributed to books lent out by public libraries in the UK receive PLR payments each year, up to a maximum of £6,600 per rights holder. This is, in effect, compensation for the mandatory nature of the PLR scheme. Rights holders are automatically included in the scheme, although some authors waive their right to receive PLR payments.
At present, e-books, audiobooks and e-audiobooks—which I shall collectively call e-books for convenience—are outside the scope of the PLR scheme. This is regardless of whether those books are downloaded on library premises or downloaded remotely, such as at home. It is very important to note that public libraries are able to lend e-books, both on library premises and remotely, without the PLR scheme being extended. Library authorities offering e-lending reach appropriate agreements to license the lending of e-books by contracting the services of third party aggregators who liaise with publishers on rights holders’ behalf.
Lord Young of Norwood Green
I welcome that nugget of information but it is a nugget in that there is quite a lot more in the Digital Economy Act. I was taking the opportunity to ask generally and I quite understand that that requires a complex answer. If the Minister will write to us with more information, it will be eagerly received.
Viscount Younger of Leckie
I was attempting to give a fuller answer in that I, too, understood that it was a slightly more complex question and that is why I would like to give a holistic answer covering the noble Lord’s general point about the timing and the rollout of the Digital Economy Act.
My noble friend Lord Clement-Jones asked why we should not just provide a token amount of remuneration in respect of PLR. By EU law, remuneration must be more than merely illusory. Although the UK has a degree of discretion as to the amount, the European Commission’s case law has said that it must be real and reflect the loss of remuneration, so the availability of funding is relevant to any extension. My noble friend also asked what the implications were if these changes were not made. To clarify that point, library authorities can continue to lend e-books without the extension of PLR.
The noble Lord, Lord Howarth, asked whether the issue is one of cost and, if so, whether a token amount can be paid. My noble friend Lord Clement-Jones made a similar point. The financial implications must be given consideration but I assure noble Lords that the Culture Minister is giving this proper consideration even as the challenging economic circumstances continue. With this in mind, I hope that my noble friend will withdraw his amendment.
Lord Clement-Jones
My Lords, I thank the Minister for that quite complex reply. I thank the noble Lord, Lord Howarth, for his support, and the noble Lord, Lord Young. I liked his question about what has happened to the Digital Economy Act. It is one of those mysteries, like “Who killed Cock Robin?”.
The Minister seemed to be saying that it is far easier to implement the Digital Economy Act for onsite e-lending than it is for remote e-lending. If I have elicited that as a response, we can at least start sorting out the wheat from the chaff. It sounds as if 26 June is a very significant date for whether or not we are going to be able to implement that part of the Digital Economy Act. I shall put on my party clothes if, on the 26 June, we know that there is going to be something in the budget for PLR under Section 43 of the Digital Economy Act. I shall put on even more party clothes if, after four years, we start issuing letters next year under the initial obligations code. The fact that it has taken four years to implement an Act will perhaps be in the Guinness book of records, although the noble Lord, Lord Borrie, who has a great memory for these things, may remember other Acts that have not been implemented. However, it is good news on that front. It sounds as if there is some willingness to implement the Act as far as that is concerned.
I am rather baffled that the Government should commission a report by somebody extremely distinguished, with a very distinguished advisory panel, which came to some very clear conclusions about remote e-lending, and then shuffle the whole thing off into a piece of research. I am sure that that is very frustrating for all concerned. The Minister talked about the bodies that were involved, including the publishers, but the authors—the ALCS and others—really need to be involved in this process. In many respects, all this is happening behind a somewhat closed door as far as the writers are concerned, but they should be involved. Clearly I am not going to get very far with that until the results of the survey are put together.
On the legal issue, not all libraries have reached an agreement with aggregators. There will be continuing infringement until we have either proper, blanket licensing—via the aggregators, publishers or whatever—or we have something in the Digital Economy Act, or another instrument, to bring remote e-lending within PLR. The situation will continue to be very unsatisfactory. I heard exactly what the Minister said about the status of remote e-lending under the copyright directive. I am not an expert on that directive but I doubt whether it is beyond the wit of man to find a way through that and to find some satisfactory way of including remote e-lending in PLR if the budget is there.
However, the number of hard copy or print books which are subject to PLR is diminishing over time, so the pool of money required to compensate authors—the Minister said that £6,600 is the limit under PLR—may not necessarily grow, because there will be a compensating diminution in the number of printed books taken out as against the quantity of digital lending. I would not be at all surprised if this required no additional funding and it was simply a matter of political will to recognise that the technology is moving in a particular direction and to make sure that authors are compensated as much for the loan of digital books as for the loan of print books. However, we will not get much further today. I thank the Minister for his considered reply and beg leave to withdraw the amendment.
Lord Clement-Jones
“Copyright in broadcast
Omit section 73 of the Copyright, Designs and Patents Act 1988 (reception and re-transmission of wireless broadcast by cable).”
Lord Clement-Jones
My Lords, I am afraid I have three amendments in a row. I do not know whether it will be “three strikes and you’re out”, but Amendment 30 is the second. I will first explain that Section 73 of the Copyright, Designs and Patents Act is a provision in UK copyright law that permits the immediate retransmission of the main PSB free-to-air services by “cable” in the area where the original PSB channel was broadcast. Crucially, Section 73 provides that the copyright in the broadcast, and in any work included in the broadcast, is not infringed by such retransmission. The effect of the section is to permit “cable” operators to retransmit PSB services without agreement or consent.
What was the original purpose of the provision? The policy justification for Section 73 in its current form was to encourage cable rollout in the 1980s and 1990s as a competing platform to terrestrial television. How have the courts interpreted the provision today? In the recent TVCatchup litigation in the UK and CJEU, TVCatchup, an online TV service provider, argued that its retransmission and commercial exploitation of the PSB services via the internet was lawful under Section 73 on the basis that “cable” ought to be given its natural meaning. The judge in the High Court litigation agreed, and stated:
“I see no reason why the cabling system inherent in the internet should not be regarded as ‘cable’ for the purposes of the Section 73 defence”.
This is not an interpretation that can ever have been intended by Parliament—nor, based on correspondence with the IPO, is it one that the Government believe is correct. In that correspondence in 2008-09 the IPO stated that,
“‘cable’ in section 73 as amended must mean the same thing as ‘cable’ in the Information Society Directive, the relevant requirements of which were implemented by the section 73 amendments in question. In the Information Society Directive ‘cable’ is not synonymous with ‘wire’ and is confined (as therefore, is section 73 CDPA) to the retransmission of broadcasts by conventional cable programme providers. The foregoing supports this Office’s view that the activities of IPTV providers such as ‘Zattoo’ who purport to rely on section 73, are in fact wholly outside the scope of that provision and that there are grounds for challenging them on that basis”.
The IPO also stated in the correspondence that the interpretation of Section 73 by the IPTV providers, and confirmed by the UK courts in the TVCatchup case,
“cannot have been Parliament’s intention”.
What are the problems with Section 73 now, in the light of that case? First, economic loss for PSBs and the UK creative economy. Section 73 is now being relied on by a series of service providers, most notably TVCatchup and FilmOn, to make money from PSB channels by retransmitting them via their own online services and placing advertising in and around the channels, which include BBC channels. Not only are the PSB services being exploited without agreement or payment to anyone, including contributors, but, perversely, Section 73 effectively permits these illegitimate online services to stream a small amount of content on the PSB channels, such as a number of old series for which online rights were not obtained and some sports coverage, that the PSB services themselves cannot stream online for rights reasons. This perverse consequence of Section 73 has attracted significant attention from underlying rights holders, including UK producers and foreign providers such as US studios, as well as from other industry bodies.
Services such as TVCatchup undermine the legitimate online streaming services and on-demand catch-up services provided by PSBs which, in the case of commercial PSBs, are a core part of ongoing efforts to make a financial return on the PSB investment in original UK content.
It is increasingly clear that TVCatchup in particular is operating at scale in the UK and has many millions of users. Indeed, it claims that it has close to 12 million registered users on its site. The key losses from this exploitation for the PSBs are loss of audience from legitimate PSB online streaming services, linear broadcast viewing and on-demand services, and, for the commercial PSBs, loss of advertising and sponsorship revenue from their own channels. By contrast with PSB exploitation of channels and content online, none of the TVCatchup revenue flows back into original UK content production or to underlying talent and rights holders. The scale and problem of this free riding is likely to increase substantially over the coming years as more and more households adopt connected TV—that is, IPTV.
Secondly, the original policy rationale for Section 73 has gone. Significant cable roll-out is now a thing of the past and the TV distribution market is now highly competitive. Cable is a highly effective and well resourced competitor to Sky and Freeview/digital terrestrial television. There is no reason to continue to grant a primary legislative advantage from the 1980s to one particular platform operator in the current competitive market. Moreover, the Communications Act 2003 introduced a “must offer” obligation on the PSBs under Section 272, requiring broadcasters to offer the main PSB services for carriage on the cable, as well as satellite, platform. In addition, Virgin Media contracts with the PSBs for the supply of all the other channels offered by the PSBs that are not covered by Section 73.
Thirdly, the provision is almost certainly in breach of European law and exposes the UK Government to damages actions. In its submissions to the CJEU on the TVCatchup case, the European Commission made clear that it had grave doubts about the compatibility of Section 73 with the 2001 copyright directive. I will not go into the detail of that. The Commission went on to observe that it was “very doubtful” that the UK court’s ruling that TVCatchup could make use of Section 73 for that part of its service transmitted over the internet “could stand”. Notwithstanding the Commission’s clear position, however, the CJEU could not deal with the compatibility of Section 73 in its judgment in the TVCatchup case because the UK court had declined the request of the broadcasters to refer the question of the compatibility of Section 73 to the CJEU in the first place. What should the Government do in the face of this?
In broadcasters’ meetings with the Government to date it has been very hard to understand the remaining policy rationale for Section 73, particularly given the “must offer” obligation that applies to the PSB channels. Broadcasters believe that repeal of Section 73 would be a sensible deregulatory measure that would end the unjustifiable damage which is being suffered by the PSBs, and would ensure that the UK continues to meet its Community law obligations. They believe that the forthcoming legislative programme, including this Bill, provides the Government with an opportunity urgently to consider repealing Section 73, assuming this cannot be achieved by secondary legislation following the passage of the Enterprise and Regulatory Reform Act. Repeal of Section 73 would not only assist broadcasters in their fight against parasitic websites—we have used that term earlier today—but would also ensure that UK legislation complies with the EU acquis and therefore reduces the risk of any potential infringement proceedings against the UK.
The negative commercial impact of retaining Section 73 is significant for UK public service broadcasters, and ultimately, as a result, the producers of the audio-visual content they broadcast. This impact will continue to increase if no action is taken by the Government to repeal these provisions. I beg to move.
Lord Stevenson of Balmacara
My Lords, I declare no current interest in this matter, although I was director of the British Film Institute when the Copyright, Designs and Patents Act was enacted. I was also author of a minor monograph that is still in print.
The amendment troubles me. Section 73 of that Act is only one component of a complex web of regulation that provides equilibrium in the UK broadcast market. It ensures that consumers who have already paid for PSB content through the licence fee or indirect taxation can get access to publicly funded content through a cable platform at no additional cost. It is true that Section 73 is a relatively old provision created when the cable industry was in its infancy. It is also true that the cable industry is in a different position than when Section 73 was conceived. However, the age of something should not determine value. Attempts to delete old things from existence can surely give no Member of your Lordships’ House much comfort.
However, the amendment gives the Government a chance to look again at the objective of Section 73 and to ask themselves whether the outcomes it delivers today are still relevant to their public policy objectives. I acknowledge that the recent TVCatchup case referred to by the noble Lord, Lord Clement-Jones, raises legitimate concerns about the use of Section 73 as a defence for the retransmission of free-to-air PSB channels online.
I understand that the Government are currently looking at how Section 73 might be amended and tightened to ensure that the beneficiaries of the clause are the intended platforms that are acting within the law. Perhaps when he responds the Minister will again put on his DCMS hat and let us know what progress is being made in that review, and indeed what progress is being made on the communications White Paper—another of the vanishing opportunities for the Government to intervene in these areas, which has been promised since 2010. It seems that we are no nearer to a publication date.
However, apart from the TVCatchup issue, I understand that Section 73 continues to provide PSBs and consumers with the most efficient route to access the PSB channels that most cable subscribers want and who equally do not want to have to pay twice for. Some noble Lords may be aware of the ongoing row between the PSB community and the Sky platform about the level of fees paid to broadcast on the commercial satellite platform. Indeed, one of the major gripes that PSBs have at the moment—and I understand that they been lobbying for this through the communications review process—is that they want to see an end to fees that they have to pay to platform providers to carry their content.
However, when setting out the Government position in his speech to the Oxford Media Convention in January 2013, the Culture Minister said:
“I welcome the steps Sky have taken so far to reduce retransmission fees to a much lower level. But we want them to go further, taking into account the undoubted value that PSBs offer to satellite platforms and their viewers, so that there’s a level playing field: zero fees either way”.
This would, indeed be a good outcome for consumers. However, the question remains of how to draft a clause to ensure that there is a level playing field between all platforms, with zero fees either way.
Unlike publicly funded platforms and unlike BSkyB, cable has never charged PSB channels to carry their content. Given that this zero charge/zero pay policy is the policy outcome required by the Government, and we understand that this issue will be considered in some detail by the Government when their communications White Paper is eventually published in the summer, the amendment seems somewhat previous, as well as contrary to consumer interests.
While the recent TVCatchup case may indeed require an adjustment to the current law, abolishing the clause entirely, as the noble Lord, Lord Clement-Jones proposes, seems entirely contrary to the interests of 4 million cable customers who access public service content, at no cost to those broadcasters, through the cable platforms. I hope that the Government will firmly resist the amendment.
Viscount Younger of Leckie
My Lords, the amendment would repeal Section 73 of the Copyright, Designs and Patents Act 1988—in short, the CPDA—and thereby remove the copyright exemption for the retransmission by cable of certain public service broadcasts, known as PSBs. The UK television industry is a great success story. We are world leaders, producing great programmes and formats that are then sold the world over. We want to see the continued success and growth of this vibrant, important sector of the economy.
Section 73 of the CDPA is just one part of the overall framework that supports the availability of TV and investment in television programming in the UK. This framework consists of a variety of rules and regulations that affect the production and availability of public service programming and its relationship with the services or platforms that carry it. These include the obligations on PSBs to offer their content to all relevant platforms, the rules governing payments by broadcasters for technical platform services, and the powers for regulators to compel these services to carry PSB content.
Lord Clement-Jones
My Lords, I am delighted to hear that the Government are looking at this. I do not know whether this is going to be the long awaited White Paper coming out at the end of July—again, I will put my party clothes on if this is the case, since we have been waiting 18 months for this. If it includes consideration of Section 73, so much the better.
I am glad that although the noble Lord, Lord Stevenson, disagrees with me, he thinks that there are legitimate concerns. However, this is not a matter of depriving 4 million consumers of the ability to see public service broadcasting over various digital media, because that is already covered by Section 272 of the Communications Act 2003. I hope that there is not going to be a knee-jerk reaction to Section 73 going and that people very carefully consider what Section 272 actually sets out; basically, it gives the right—and Ofcom enforces it—for Virgin, Sky and so on to show these public service broadcast channels over their own platforms.
I have not raised the whole issue of whether or not we adopt a US-style system with regard to the balance of trade between satellite and public service broadcasters and so on. That was not my intention at all. My intention was to draw attention to what, really, is cheating—we were talking earlier about cheating—by services such as TVCatchup, which has no commercial arrangements with the public service broadcasters. It inserts its own advertising in the breaks of commercial broadcasting. It is taking advantage of other people’s content. It is not paying for it. It does not feed back into the public service broadcasters in any shape or form. If one puts a TVCatchup app on an iPad or another tablet, there is no obligation to pay the BBC licence fee, so nobody is deriving any benefit from the services it provides other than TVCatchup itself. This why our public service broadcasters are so concerned and wish to see action on this. I very much hope that, come July, our honourable friend Mr Vaizey will take cognisance of a serious gap through which TVCatchup is driving a coach and horses. In the meantime, I beg leave to withdraw the amendment.
Lord Clement-Jones
“Criminal liability
(1) The Copyright, Designs and Patents Act 1988 is amended as follows.
(2) In section 107(4A)(b) (criminal liability for making or dealing with infringing articles, etc) for “two” substitute “ten”.
(3) In section 198(5A)(b) (criminal liability for making, dealing with or using illicit recordings) for “two” substitute “ten”.
Lord Clement-Jones
Noble Lords will be pleased to hear that this is a rather shorter amendment. Amendment 31 inserts a new clause which will increase criminal penalties for digital copyright offences. Criminal offences for online copyright theft have maximum penalties of two years’ imprisonment. Criminal offences for physical copyright theft have maximum penalties of 10 years’ imprisonment. This discrepancy came about because the new offences were introduced by secondary legislation using the European Communities Act 1972 as part of the UK’s implementation of the copyright directive in 2003. Penalties for new criminal offences introduced by secondary legislation via the ECA are limited to two years’ imprisonment. This was also after my right honourable friend Vince Cable’s Private Member’s Bill that became the Copyright etc. Trade Mark (Offences and Enforcement) Act 2002 and that increased penalties for criminal copyright offences to harmonise them with those available for trade mark offences at 10 years.
I strongly believe that criminal sanctions should not be dependent on whether the offence is taking place in an online or physical environment. Intellectual property is still being stolen, whichever format is being used. The problem that this has created for law enforcement was seen recently in FACT’s significant landmark private prosecution of Anton Vickerman. Vickerman was making £50,000 each month running a website which facilitated mass-scale copyright infringement. He was prosecuted and subsequently convicted on two counts of conspiracy to defraud and sentenced to four years’ imprisonment. This sentence would not have been possible if he had been prosecuted under copyright law.
This amendment does not introduce any new offence. It is simply about addressing an anomaly in the level of penalties available. The maximum criminal penalties for IP offences are: trade mark, 10 years; physical copyright, 10 years; registered designs, 10 years proposed in the Bill; and online copyright, two years. The Government prosecutors are happier using fraud legislation to obtain convictions against online infringers. Given this, there is no appetite to amend the CDPA. Trade associations such as FACT and the BPI anti-piracy unit tell a different story. While they do use the Fraud Act in some instances, it would not be applicable to all cases and offences. Fraud legislation is used because, owing to this discrepancy, there is no other option. The Fraud Act is used as a work-around because of the leniency in the CDPA.
In the Vickerman case, had he not conspired with someone, conspiracy would not have been a possible charge, which would have left a serious offence subject to a disproportionately low maximum penalty. What law enforcement and prosecutors need is a full package of legislative options available to them so that they can consider each case individually and use the piece of legislation that will get them the best result. This discrepancy aids defendants. They are able to point to the fact that the maximum penalty for these offences is only two years, and therefore that they are minor offences and should not be viewed as serious. This is incredibly damaging. Modern copyright law should focus on having a content-neutral and platform-neutral approach to infringement. I beg to move.
Lord Young of Norwood Green
My Lords, we support in principle the amendment of the noble Lord, Lord Clement-Jones, and would be interested to hear the ministerial response.
Viscount Younger of Leckie
My Lords, I listened carefully to the speech of my noble friend Lord Clement-Jones. In so doing, I was multitasking and was able to calculate that my noble friend has pledged to dress himself up in no fewer than three layers of party clothes, which, I imagine, must be quite an impressive sight. Given that this is the last amendment that I will be speaking to in Committee, I want briefly to thank all Peers who have contributed and engaged in Committee on the Bill. I realise that there will be more to speak about on Report and I look forward to further discussions.
The effect of the amendment tabled by my noble friend would be to increase the maximum penalty for online copyright infringement to 10 years’ imprisonment. While I recognise that there appears to be a discrepancy between the penalties obtainable from the two offences of online copyright infringement, with a maximum of two years’ imprisonment, and physical copyright infringement, with a maximum of 10 years under the Copyright, Designs and Patents Act, I cannot support harmonisation of the two offences, given my understanding of the area.
Prosecutors are already using our current fraud legislation to obtain convictions for online infringement, with substantial penalties, up to a maximum of 10 years’ imprisonment. The existing legislation allows for effective prosecutions to be made without reliance on any specialist intellectual property knowledge. Last year, for example, the owner of the website Surfthechannel—which linked to pirated copies of films and TV—was sentenced to four years in prison on two counts of conspiracy to defraud, more than the two years available under the CDPA.
The important economic aspect of this was addressed by the Digital Economy Act when it came into force in 2010. This raised financial penalties on digital offences to £50,000, in line with physical copyright theft. The Government have no evidence to support the suggestion that an increased sanction for online copyright infringement would either increase the number of prosecutions brought forward, increase the length of sentences passed down to those found guilty of infringement or deter more people from infringing. We have not consulted on this and we have no plans to do so.
With existing legislation already providing the necessary penalties and prosecutors having a range of options already at their disposal, at the present time I see no reason to increase sanctions under the Copyright, Designs and Patents Act, despite there being a slight discrepancy. In particular, changes should not be made without carrying out the appropriate consultation to gather evidence of the impact.
I hope that this has clarified the Government’s position to my noble friend, and I ask him to withdraw his amendment.
Lord Clement-Jones
My Lords, although the Minister has thanked everyone for their part in Committee, he has, sadly, ended on a somewhat stony note because he is saying that it would not be appropriate to introduce something without consultation but has absolutely no intention of entering into a consultation. That slightly puts one in a cul-de-sac in all this.
The Minister’s statement directly contradicts the experience on which I have been briefed by FACT and the BPI in terms of their ability to use fraud legislation and common-law conspiracy. Clearly, they either have not put their case sufficiently to the IPO or the IPO’s evidence is at variance for some reason. Perhaps it is talking to a different set of prosecutors. However, on a couple of occasions, as well as talking about party clothes, I have said that I am very much in favour of evidence-based legislation. I am very keen that we should have the evidence and that we do not legislate without it.
If we need further discussion and evidence, I very much hope that the Minister will be open to that despite the advice that he has received that the fraud legislation is relatively straightforward to use. That is certainly not what I have been told and I would not have tabled an amendment if I had believed that. The discrepancy is not minor but one of eight years, which is significant, especially if you were locked up for that period. You would, quite honestly, notice the difference.
However, the hour is late and we have had a good trot at a number of issues raised in Committee today and I beg leave to withdraw the amendment.
House of Lords
Badgers
(10 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Hoyle
To ask Her Majesty’s Government whether they still plan to carry out their proposed cull of badgers.
Baroness Northover
My Lords, we are using badger culling as part of a package of measures to tackle bovine TB. Two pilots will be undertaken this summer to assess the methodology for delivering an effective cull. This year there will be intensive monitoring of the effectiveness and humaneness of controlled shooting. A panel of independent experts will review the resulting report once the pilots have concluded. Only then will Ministers decide whether the policy should be rolled out more widely.
Lord Hoyle
I thank the Minister for that reply, but will she go a little further and say more about the criteria which the Government are using? Why does she believe that it is effective, humane and safe, and when exactly will the culls take place?
Baroness Northover
The noble Lord will know the scale of the problem that we seek to tackle and the difficulty of using the various measures that we have. That is why we are using a range of measures. The open season dates take account of the breeding season, so the assessment could happen any time from the beginning of this month on. Operators will be required to follow best practice guidelines, and it will be very carefully monitored. A number of organisations are involved in this.
Lord Elton
Will my noble friend remind us how many cattle have had to be slaughtered because of bovine tuberculosis in recent years? Is the number growing and what has been the cost of compensation?
Baroness Northover
My noble friend is absolutely right to highlight this. Last year 28,000 cattle had to be put down. Through this cull, we are looking at reducing the number of badgers by 5,000, so noble Lords can see the scale of this. The cost to the taxpayer over the last decade was £500 million for the cattle destroyed, and that could reach £1 billion in the next decade.
Lord Krebs
My Lords, as the Minister will be aware, the scientific assessment published on Defra’s website—I declare an interest as I was part of the panel that contributed the assessment—shows that culling badgers has a modest effect in reducing the incidence of TB in cattle; it is estimated to be 16%. Does the Minister agree that rolling out culling as a national policy to control TB in cattle is not really credible? Furthermore, will she tell us what assessment Defra has made of the reasons why 40% of farms in the highest-risk areas of the country do not get TB in their cattle?
Baroness Northover
The noble Lord has, of course, huge expertise, having been such a power behind the earlier, randomised controlled trials into this, which established the 16% figure that he has just talked about. That is why, faced with this enormous challenge, we are taking a range of measures, including more cattle testing, greater biosecurity and investing in research in vaccines. I noted his point about the herds that do not seem to be suffering from TB yet are in TB hotspots. I point him to the £250 million fund for new vaccination projects. It is undersubscribed. I suggest that he directs his research students to it, and I look forward to the enlightenment that he and his students bring on bovine TB, in the UK and around the world.
Baroness Parminter
Will the data from these trials, alongside the criteria against which free shooting will be judged humane or not, be published at the same time that the Secretary of State announces whether badger culling will be allowed in future?
Baroness Northover
The Government expect to be able to announce a decision on the reports in the early part of next year, when the information is in. I can assure my noble friend that the outcome of the monitoring of the pilot culls will be published. In the mean time, of course, other measures to seek to control bovine TB will also be taken.
Lord Taylor of Blackburn
My Lords, when the animals are killed, will there will be post mortems on their carcasses to see whether they are carrying TB or not?
Lord Soulsby of Swaffham Prior
My Lords, following what is now known as the Krebs trial, it is quite clear that alternate approaches are now necessary. What are some of these alternate approaches to controlling tuberculosis in wildlife and domestic livestock? This country is well known for its ability to sedate wildlife, take samples and all the rest of it. An approach based on the sedation of badgers, for example, would be a good way in which to approach this issue. One could take samples, vaccinate and all the rest of it. Has the Minister considered any of the approaches that I have mentioned?
Baroness Northover
I can assure the noble Lord that the Government have considered all approaches, welcome all suggestions and welcome research. Cattle measures are the foundation of our control programme, and ultimately we wish to be able to use vaccination for cattle and badgers. As I mentioned, there is much investment into research. The problems lie in the challenges with the vaccinations; the research that is being conducted at the moment has not produced a vaccine that can be used in the immediate term, either for cattle or for badgers.
Lord Knight of Weymouth
My Lords, it is vital that we find a workable solution to the spread of TB from badgers to cattle. The science strongly suggests that a cull is not workable, even if this pilot to test whether a cull is humane is successful. In Wales, an intensive effort to vaccinate badgers looks more hopeful, because vaccination does not risk spreading the disease through the perturbation effect of culling. Given that the vaccination trials in Gloucestershire are being carried out at a third of the cost of vaccination in Wales, is it not time for Defra to reduce the cost of mandatory training for vaccination, so that it is at least as cheap as the training needed to shoot badgers?
Baroness Northover
I will, if I may, follow up my previous answer. There is an injectable badger vaccine, to which the noble Lord has referred, which is being used in Wales. He will also know that this has a lot of practical difficulties. It has no effect on already infected badgers, it requires the annual trapping of new cubs to vaccinate them, and so on. We therefore look with interest at what the Welsh Government are doing. We note the enormous cost of that and are aware that an oral badger vaccine, if there was one, would indeed be quicker and easier to use. I therefore refer back to the noble Lord, Lord Krebs, and his students and hope that there will be further research.
Gaza
(10 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Tonge
To ask Her Majesty’s Government what discussions they have had with European partners regarding the right to security for Palestinian children living in the Gaza Strip.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, the EU Foreign Affairs Council discussed the situation in Gaza on 10 December 2012. In addition, officials from the UK representative to the EU and our consulate-general in Jerusalem regularly discuss the situation in Gaza with their European counterparts. Those discussions cover the security and human rights of Palestinians living in Gaza, including children. Our consul-general in Jerusalem visited Gaza with other EU heads of mission on 26 February.
Baroness Tonge
I thank the Minister for that response. Is she aware that 1,519 Palestinian children have been killed by Israeli action since September 2000, 109 of them during extrajudicial assassination attempts, and that last year alone 43 children were killed, 18 of them under nine years old? Is she also aware that over 10% of under-five year-olds in Gaza suffer from malnutrition and stunting, and that a child in occupied Palestine as a whole is five times more likely to die before the age of five than an Israeli child? I am anxious to know from the Minister whether the plight of these children and the illegal occupation of Palestine are now to be forgotten as the West concentrates on the tragedy unfolding in Syria.
Baroness Warsi
The simple answer to my noble friend’s question is no. I am aware of the statistics that she quotes and, indeed, have responded to the many Written Questions that she has submitted on this issue. The UK is deeply concerned by the humanitarian situation in Gaza, which is both a tragedy and unsustainable. It is for that reason that the Foreign Secretary has made it clear that the Middle East peace process is a priority for 2013. Noble Lords are aware that I have previously said from this Dispatch Box that this is an important—a decisive—year. That is why we continue to support Senator Kerry in his efforts—he has made five visits, I think, in the past two months—to move this forward.
Lord Davies of Stamford
My Lords, is it not the case that, any day that it wished, the Hamas regime in Gaza could lift the blockade and bring to an end the terrible purgatory under which the people of Gaza have been living for so long, simply by following the example of the Fatah Administration in the West Bank and accepting the quartet principles, including abjuring violence? Should we not be urging the Hamas regime to do just that?
Baroness Warsi
I hear what the noble Lord says but I think that he would agree that nothing in the Middle East peace process can be resolved by one group alone or by addressing only one issue, and that nothing there is simple.
Lord Wright of Richmond
My Lords, have the Government taken note of the statement yesterday made by a Minister in Mr Netanyahu’s Government calling on Israel to annex as soon as possible all the territories not handed over to the Palestinian Authority in Oslo, and also describing the two-state solution as dead? How do Her Majesty’s Government propose to react to that?
Baroness Warsi
Her Majesty’s Government’s position on this matter is very clear. We of course continue to support a negotiated settlement, leading to a safe and secure Israel living alongside a viable and sovereign Palestinian state based on 1967 borders with agreed land swaps, with Jerusalem as the shared capital of both states and a just, fair and agreed settlement for refugees. That is HMG’s position.
Baroness Falkner of Margravine
Can the House look forward to a statement on the G8 that addresses the issue of Israel/Palestine, given that my noble friend says that the peace process is a priority for the Government in 2013? Can she tell the House what discussions the Government are having within the EU, as we heard in media reports of the EU wishing to support Palestinian statehood in UN agencies, should there be no progress in 2013?
Baroness Warsi
My noble friend always comes at these matters with a huge amount of knowledge. I think that it would be inappropriate for me to pre-empt what may be in a G8 statement but I understand that discussions are ongoing. I think my noble friend would agree that, although of course the EU has a position on this matter, ultimately it will be the United States that is able to move this forward. With a President in a second term, the US is presented with just such an opportunity, and we are seeing positive signs from it.
Lord Turnberg
My Lords, the situation in Gaza is tragic but, as always, there are two sides to every story. Is the noble Baroness aware, for example, of the very large number of Gazan children sitting in Israeli hospitals with their families and receiving treatment for their severe cardiac disease and cancers? Is she also aware that Hamas tends not to publicise this and, indeed, has tried to stop it in the past?
Baroness Warsi
I agree with the noble Lord that there is a very human story. Nothing is as clear as the top headlines, and of course there are fantastic stories of the two communities working together in the way that the noble Lord describes.
Baroness Afshar
My Lords, are the Government aware that abuse of human rights by one Government in the Middle East being disregarded and tacitly supported by the West makes other transgressions against human rights by other Middle Eastern countries the norm, and that therefore it is dangerous for the whole of the Middle East?
Baroness Warsi
I agree with the noble Baroness. The commitment to human rights must be the same for every member state. That is why the Human Rights Council has the concept of the universal periodic review, under which every state presents itself to other nations and is tested against its human rights record. We are concerned that Israel has not engaged with the universal periodic review. We see some signs of movement but we urge Israel to come back, like the other member states, and to engage with the UPR.
Education: Sex and Relationship Education
(10 years, 10 months ago)
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Baroness Jones of Whitchurch
To ask Her Majesty’s Government what steps they are taking to ensure that all children have access to sex and relationship education, focusing particularly on the responsible use of the internet and social media.
The Parliamentary Under-Secretary of State for Schools (Lord Nash)
My Lords, sex and relationship education is compulsory in maintained secondary schools. As part of that education, we expect that pupils will learn to develop positive values and a moral framework that will guide their decisions, judgments and behaviours in all areas of life. The Government agree that responsible use of the internet is very important. We are introducing e-safety as part of the national curriculum in primary schools and this will be reflected in the new computing programmes of study at both primary and secondary levels.
Baroness Jones of Whitchurch
My Lords, I thank the Minister for that reply. I am sure that we all share the growing alarm at the evidence of young people using illegal internet pornography sites to learn about sex and then attempting to replicate it, including using social media, to put pressure on young girls to act out those roles, sometimes with absolutely devastating consequences. Obviously, this needs a cross-departmental approach in, for example, persuading the internet providers to behave more responsibly. However, does the Minister accept that the department needs to give more urgent leadership to schools on this matter? Does he, for example, accept that sensitive and personal issues around internet safety cannot be taught effectively in IT classes and that it needs specifically trained teachers? Does he also accept the need for all young people, from an early age, to learn about peer pressure and how to resist it, as well as how to have a positive body image, and to understand what makes a healthy relationship so that they can avoid exploitation and abuse in the future?
Lord Nash
I certainly share the concern of the noble Baroness. Young people should not be using pornography to learn about sex. Pornography does not place sex in the context of relationships. I can assure her that the Government are taking a very firm stance on this issue.
We have been working across the department since 2010 with internet businesses, charities and other experts through the UK Council for Child Internet Safety to find the best ways to minimise children’s access to potentially harmful online content and very good progress is being made. Trained teachers should be able to teach issues of internet safety effectively in computing classes, and there will be resources to support them in this. There are also organisations—such as CEOP, the PSHE Association and Teen Boundaries—that can provide resources and advice. However, I agree that we need to improve the focus on this area through teaching, schools and ITT providers, and I agree with her last point that the statutory guidance on sex and relationship education makes it absolutely clear that schools must focus on these areas.
Baroness Walmsley
My Lords, is my noble friend aware of the link that Ofsted identified in its report last year between bullying—in particular, internet bullying—and the success of a school’s PSHE programme? Given that link, and given the duties that schools, as public bodies, have in relation to the Equality Act, does not my noble friend think that PSHE should be compulsory in the national curriculum and not just advised?
Lord Nash
I know that the noble Baroness and I appreciate the importance of PSHE, but it is not this Government’s intention to make it compulsory. This Government trust schools and teachers to tailor their PSHE support to the particular circumstances in a school, which vary enormously. There are plenty of resources to enable them to do this, and all good school have an excellent PSHE programme.
Baroness Massey of Darwen
Does the Minister agree that giving advice about where to get help is important in health and relationship education? What support is being given for access to school counselling and to organisations such as Brook and the FPA, which give advice to young people? I declare an interest as president of Brook.
Lord Nash
SRE guidance makes it clear that pupils should know how to access support, counselling and advice, and we will expect all schools to ensure that pupils are aware of the available health services and expert organisations, such as Brook and the FPA. We acknowledge the value that these organisations contribute.
Baroness Farrington of Ribbleton
My Lords, will the Minister go a little further in explaining why the Government believe that, in terms of the curriculum, a very heavy top-down approach is okay in teaching history, but PSHE is seen as optional? Surely the Minister could talk to, for example, the Lords spiritual about the way that church schools in counties such as Lancashire view PSHE as being even more important than the bits of detail in history education?
Lord Nash
I am aware that church schools are very good at pastoral care. However, this Government take the position that being a child in the modern world is a very complicated situation. For some children in some schools, gang issues are very important. In other schools it may be forced marriages. We trust our teachers to tailor their advice to the particular circumstances of their pupils.
Baroness King of Bow
I understand the Minister to be saying that he wants to put trust in schools, and I agree with that. Will he also trust the experience of young girls? One third of British girls between 16 and 18 experience unwanted sexual touching at school, and 80,000 British women a year are raped. Will the Minister not agree, therefore, with the view that this subject should not be optional and that it must be studied at school? At the very least, will he agree to meet with me and members of the Everyday Sexism Project, which has documented the scale of this terrible problem?
Baroness Brinton
My Lords, given that, it seems, everyone who has asked a question today agrees that teachers are the best people to deliver specific sex and relationship advice to their pupils, when were the guidance notes on best practice in schools updated?
Lord Nash
The most recent guidance is from Ofsted, which recently introduced a very good report. Part B of that report contains some excellent recommendations on best practice. They flag up a number of very useful resources available to teachers, including the Sex Education Forum.
Kenya: Kenyan Emergency
(10 years, 10 months ago)
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Lord Steel of Aikwood
To ask Her Majesty’s Government what discussions they have had with the Government of Kenya following their decision to compensate victims of torture and ill treatment during the Kenyan emergency.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, the UK high commissioner to Nairobi raised the prospect of a settlement with senior members of the Kenyan Government in April and May, highlighting our wish to promote reconciliation. This included discussion with President Kenyatta during his introductory meeting on 30 April and with Foreign Secretary Mohamed on 30 May.
Lord Steel of Aikwood
My Lords, I welcome the Statement that was made in the other House but not in this one. In view of the fact that the High Court knocked on the head the argument of successive Governments that this was a matter for the Kenya Government, will the Minister say whether there has been any reaction from the Kenya Government since the welcome Statement was made?
Baroness Warsi
I am not sure whether there has been any reaction but it would be inappropriate for us to comment on their behalf as to what their reaction should be. They, of course, were given prior notice of the announcement and we have secured their buy-in for a memorial to the victims.
Lord Morgan
My Lords, is it not the case that information on these terrible atrocities was concealed by the custodians of the public archive over many decades? Will the Minister kindly, on behalf of the Government, make some pronouncement on the responsibility of successive British Governments for this appalling falsification of our history?
Baroness Warsi
I think the noble Lord will accept that by acknowledging the wrongs and expressing deep regret for what happened during that period, the Government have gone much further than previous Governments. I am not aware of the answer to the noble Lord’s specific question on archives but if there is an answer I will certainly write to him.
Lord Hamilton of Epsom
Does my noble friend accept that during the emergency tens of thousands of Africans were killed by the Mau Mau, many of them for not joining the Mau Mau? Are the Kenya Government doing anything to pay compensation to the victims who were tortured by the Mau Mau?
Baroness Warsi
My Lords, I do not intend to answer this question with a view to reopening the debate about the rights and wrongs of that period. Nor do I feel that it is appropriate for me to comment on how the Kenyan Government should respond to this.
Lord Luce
My Lords, since the Government have decided to contribute to a memorial in Nairobi to the victims of torture during the Mau Mau emergency, would it not be best to put this whole historic tragedy behind us by contributing to a memorial to all those who suffered—Africans and Europeans alike—during that emergency?
Baroness Warsi
I know that the noble Lord comes at this with great experience. If I am correct, he was there during the emergency period. It is something that I can take back but at this moment the commitment that has been made has been for this particular memorial.
Lord Anderson of Swansea
My Lords, has this welcome decision led to any similar claims from other victims of our colonial past—sometimes glorious, sometimes less glorious—and do we anticipate, following the precedent of this decision, any similar claims?
Baroness Warsi
It is important to understand that this was not compensation agreed: it was an out-of-court settlement in a specific case involving specific claimants. I do not believe that it sets a precedent but, of course, anyone who believes that they have a case can bring it.
Lord Triesman
My Lords, I share the views of many noble Lords about this very regrettable and sad part of our history. Noting that a successful election has been authenticated by all the judicial bodies in Kenya, does the noble Baroness feel that this might be a moment for a deeper and more significant conversation with President Kenyatta, with a view not just to rectifying what went wrong in the past, which we plainly must do, but to building a much more successful future with that country?
Baroness Warsi
I agree with the noble Lord; it is a moment for the relationship to move on. We have a huge amount of bilateral interest, including our commitment to regional security. Kenya is, of course, a vital partner for us on Somalia, providing both troops and a home for refugees from Somalia. In terms of development, we have a relationship that will probably amount to about £143 million this year. Some 20,000 Brits live in Kenya and 200,000 Brits travel to Kenya. We have a broad relationship and it is important that we can now focus on that.
Child Support and Claims and Payments (Miscellaneous Amendments and Change to the Minimum Amount of Liability) Regulations 2013
(10 years, 10 months ago)
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Baroness Stowell
That the draft regulations laid before the House on 20 May be approved.
Relevant document: 2nd Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 12 June.
Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Referral Fees) Regulations 2013
(10 years, 10 months ago)
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Lord Newby
That the draft regulations laid before the House on 21 May be approved.
Relevant document: 2nd Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 12 June.
Motion agreed.
Offender Rehabilitation Bill [HL]
(10 years, 10 months ago)
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Lord Ahmad of Wimbledon
That the amendments for Report be marshalled and considered in the following order:
Clauses 1 and 2, Schedule 1, Clause 3, Schedule 2, Clauses 4 to 7, Schedule 3, Clauses 8 to 12, Schedule 4, Clause 13, Schedule 5, Clauses 14 to 17, Schedule 6, Clauses 18 and 19, Schedule 7, Clauses 20 to 22.
Procedure of the House
The Chairman of Committees
That the 1st Report from the Select Committee (Backbench Questions for Short Debate: Grand Committee Sitting Hours) (HL Paper 19) be agreed to.
The Chairman of Committees (Lord Sewel)
My Lords, this report follows on from the decision on Back-Bench debates taken by the House in April. At that time, the Leader of the House proposed an increase in the number of Back-Bench QSDs. The report enables this intention to be implemented. It recommends that on days when a Grand Committee sits solely to consider Back-Bench Questions for Short Debate, the duration of such sittings should be extended from four hours to five hours. I beg to move.
Lord Foulkes of Cumnock
Can the noble Lord give us an absolute assurance that unlike the Procedure Committee’s report in the last Session, this will not have unintended consequences?
The Chairman of Committees
I think the logical problem at this stage is that I can give no guarantee that it will not have unintended consequences, because they will by definition be unintended.
Lord Geddes
Did the Procedure Committee give any consideration to extending the time above one hour if, for instance, more than 20 people were down to speak on a particular QSD, thereby limiting those Back-Bench speeches to two minutes?
The Chairman of Committees
I appreciate the noble Lord’s point, but on this occasion the committee did not give specific consideration to that. However, I am aware that speeches are increasingly being limited to a very short period of time indeed.
Motion agreed.
Energy Bill
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, this Energy Bill comes at a critical time for the country. Electricity demand is expected to double over the next 40 years, but around a fifth of the generation capacity that was available to us in 2011 is set to close over the coming decade, because power plants are either too old or too polluting. At the same time, we need to meet our obligations to reduce carbon emissions, as agreed in the ground-breaking, cross-party Climate Change Act 2008.
To achieve both security of supply and decarbonisation, we need to attract substantial investment in our energy infrastructure, particularly in low-carbon technology such as renewables, nuclear and low-carbon fossil fuels such as gas. We need to do this at a price that consumers can afford by helping to keep costs as low as practical and making sure that the market works for the people who pay the bills.
The Energy Bill will enable us to do this. It is a Bill for growth, and one that will support as many as 250,000 jobs in the energy sector alone. It will provide the security of energy supply that British consumers need. It will help to reduce electricity demand and to deliver affordable energy for consumers, with fewer, simpler domestic tariffs. It will ensure that we meet the ambitious climate and renewable targets set out in the Climate Change Act 2008, enabling the Government to set the world’s first legally binding target range for power-sector decarbonisation.
The Bill received strong support at Third Reading in the other place, commanding the largest majority in a vote at Commons Third Readings since the coalition came to power. This sends a clear message to investors, building confidence in the financial, legal and, importantly, political frameworks of electricity market reform. I hope that we can express an equally strong consensus in this House, sending the message that the whole of Parliament is united behind the Bill.
I extend my gratitude to the noble Lord, Lord Oxburgh, for his expert chairmanship of the Lords informal scrutiny group, which reconvened this year. I am extremely grateful to noble Lords who have attended the group’s meetings and contributed so eloquently, and to other noble Lords who met me separately. I look forward to their continued engagement in debates over the course of the Bill.
Let me turn to some key provisions in the Bill. Today, I want to set out the main proposals in the following areas. First, on decarbonisation, we are bound by law to cut emissions across the whole UK economy by 50% by 2025. The Energy Bill will help us to achieve this. The contracts for difference framework will offer long-term contracts for low-carbon technologies, giving investors confidence, and will enable renewables, nuclear and carbon capture and storage the chance to compete against conventional power stations. Importantly, this will be backed by the tripling in support for clean energy technologies by 2020.
We know that there are differing views in the setting of a 2030 decarbonisation target range for the power sector, and I would like to explain the Government’s position. By legislating now to enable us to set a decarbonisation target in 2016, we will be able to take into account the level of economy-wide emissions reductions that will have to be achieved by 2030 under the fifth carbon budget. We want to ensure that we are considering the pathway of the whole economy towards our 2050 target, rather than setting a sector-specific target in isolation, making sure that we minimise costs to both the economy as a whole and the bill payer.
We have also committed to providing further clarity up to 2030 by issuing guidance to National Grid on an indicative range of decarbonisation scenarios for the power sector to 2030, consistent with the least- cost approach to achieving our overall 2050 carbon target. No other country has yet set a power-sector decarbonisation target for 2030; the UK is the world leader.
This is not the only way in which we are leading. The Government’s decision on the UK’s position for the EU’s 2030 greenhouse gas target is another good example of our strong position. In arguing for a 50% reduction target in the EU, the UK has taken the most ambitious position of any member state. It is therefore important that we consider the wider European context as well as the level of UK economy-wide emission reductions to ensure that we do not pre-empt decision-making and agreements in the EU. However, it is important that we continue to take a leading role in that process and push for change, which we are doing. This Government are leading the way on climate change action.
Let me turn now to the proposals for electricity market reform. Electricity market reform is not a permanent intervention in the market. It is designed as the first step on the path towards sustainable and competitive low-carbon electricity generation in the UK. It will help to limit, and in the long term break, our dependency on rising gas prices globally, the main driver of increases in electricity bills.
We will send out a clear signal to investors that the UK is open for business, attracting the £110 billion investment that we need in this decade alone to replace our ageing energy infrastructure with a more diverse and low-carbon energy mix. The levy-controlled framework will provide £7.6 billion a year by 2020 to support low-carbon technologies, including infrastructure projects that are ready to go now.
The introduction of provisions for contracts for difference and a capacity market will transform the energy market to give investors the certainty they need. I will therefore spend a little time outlining how these important mechanisms will operate. First, the contracts for difference—CFDs—will give long-term electricity price stability, providing developers and investors with increased revenue certainty. Generators will receive a fixed price level—or strike price—for the low-carbon electricity they produce. When the market reference price is below the strike price, the generator will receive a top-up payment from suppliers. When it is above the strike price, the generator must pay back the difference, meaning that consumers are protected.
The Government listened to points made in Commons Committee regarding the nature of the CFD counterparty and in response clarified the drafting of the Bill at the Commons Report stage, making the policy intention of creating a single counterparty more explicit. The government-appointed single counterparty to these contracts will sign and manage the contracts over their lifetime and collect money from suppliers to meet the payments due to generators under the contract. Subject to Royal Assent, we intend to publish final strike prices for renewable projects in December 2013 and to issue the first contracts for difference in 2014. I know there have been calls to see the draft strike prices sooner and I am pleased to say that the Government intend to publish the draft EMR delivery plan in July.
The Bill also introduces provisions for a capacity market to ensure that there is sufficient reliable electricity capacity to meet peak demand. This will provide all capacity providers with an upfront steady payment to ensure that demand is met. Operators will not be dependent on volatile revenue from the energy-only market and consumers will be safe in the knowledge that there is a secure energy supply. At the Report stage in the Commons, we introduced provisions to enable electricity demand reduction to be part of the proposed capacity market, as well as the powers to take forward a pilot. Greater energy efficiency will help to reduce our carbon emissions, help to reduce demand at peak times—bolstering our security of supply —and help to reduce consumer bills.
The electricity demand reduction provisions in this Bill will incentivise the industry to deliver these benefits. Working through the capacity market will allow energy-saving projects to compete with power stations for new investment for the very first time. The Bill can incentivise permanent reductions when demand is at its peak, allowing for a more direct trade-off between generation capacity and demand reduction. It will also bring permanent demand-reduction projects into the same mechanism as shorter-term demand-side response measures to enable more effective, joined-up delivery.
In order to guarantee certainty for investors and industry, these new EMR mechanisms—contracts for difference and the capacity market—will be supported by a clear institutional framework. The Government will maintain responsibility for key policy decisions on contracts for difference, such as strike prices and on the capacity market, taking wider economic and sustainability impacts into account. We believe that the system operator, National Grid, is best placed to administer the capacity market and allocate contracts for difference, given its existing role and expertise in the UK energy market.
In response to stakeholder concerns, last year we worked with Ofgem to assess any potential conflicts of interest and published our findings in April. The report sets out that the risk of any conflicts of interest arising is low, but we have proposed a package of proportionate measures to ensure stakeholder confidence in the EMR delivery body. Ofgem will oversee the performance of the system operator and will continue its independent regulation of the market to protect the interests of consumers.
We are committed to helping independent generators secure a bankable route to market for their power as part of our wider goal of increasing competition in the electricity market. We understand that lack of liquidity is an issue for independent generators and suppliers, particularly in the forward markets. We recognise that improving liquidity would reduce barriers to entry, aid security of supply and increase the robustness of the reference price for CFDs. We support Ofgem’s objectives for reforms to the wholesale electricity market and we welcome the announcement last week of the measures it intends to pursue. However, given the importance of the issue and in the absence of significant improvements, government intervention may be necessary, and accordingly, we are proposing backstop powers in the Energy Bill to promote market liquidity. The Bill also includes powers to intervene to support investment by improving the route to market for independent generators for the sale of electricity. Although the CFD will reduce the risk for independent generators, we believe that it is important to be able to act if necessary.
We remain committed to encouraging a more diverse and competitive energy market and there are a number of related areas within the Bill that we will hope to consider further. They include giving greater certainty to independent renewable generators and, as indicated at Commons Report, we will continue actively to consider raising the threshold for the small-scale feed-in tariff scheme from 5 megawatts to 10 megawatts.
The support for electricity market reform seen at Commons Third Reading has been echoed by industry and the investment community. While we are advancing our reforms, we want to ensure that investment decisions are not postponed in the mean time. The Bill enables the Government to enter into investment contracts—an early form of contract for difference—with developers of low-carbon generation. These will be transferred to the CFD counterparty once it is established and regulations to collect payments from suppliers are in force.
The Bill also includes transitional arrangements for renewables as we introduce the contracts for difference in 2014. During the transition period between the introduction of the CFD and the closure of the renewables obligation, we will allow new generation to make a one-off choice between the two mechanisms in order to minimise any hiatus in renewables investment. For existing generation, the Bill contains measures to give confidence to generators during the final years of the renewables obligation. Fixed-price certificates will be issued in place of the current renewables obligation certificates and there will be an obligation on the purchasing body to purchase those certificates at a fixed price.
The emissions performance standard is an important supporting measure of EMR, providing a regulatory backstop on the amount of emissions that new fossil fuel power stations are allowed. The EPS reinforces our planning policy that any new coal-fired power station must be equipped with carbon capture and storage. The Bill sets out the statutory emissions limit at 450 grams of carbon dioxide per kilowatt hour—about half the level of emissions from unabated coal plant. The level is above that associated with new gas plant, as we recognise the role that it will have in providing reliable and flexible back-up generation as we transition to a low-carbon electricity system. Further certainty for new investors in gas is also given through the grandfathering of the limit to 2045.
In the light of our review of the role of Ofgem, the independent regulator, we are introducing a statutory strategy and policy statement. This will provide greater clarity and certainty about the strategic context of Ofgem’s role and clarify the demarcations between the roles of the Government, the regulator and other bodies. The Bill will further empower Ofgem to require energy companies to compensate consumers who suffer a loss as a result of a company’s breach of regulatory requirements. At present, Ofgem has the power to fine companies, but these fines are paid into the Consolidated Fund, so the consumer will not directly benefit unless the company offers redress of its own volition. Currently, Ofgem has no power to compel energy companies to compensate consumers. We are rectifying this situation through the Bill and securing a fairer deal for customers with provisions for a new enforcement power for Ofgem to require energy companies to provide redress.
We are also giving legal backing to Ofgem’s plans to ensure that consumers get the best deal by making the tariff system simpler and clearer for consumers. Our measures will help customers get the best deal by cutting the confusing array of tariffs by limiting suppliers to offering customers four core tariffs for each fuel and meter type, providing them with clear information about their tariffs to help them to make a more informed choice, putting them on the cheapest tariff in line with their preferences, and promoting competition by creating a market where suppliers are working hard to attract and keep their customers.
A range of other measures in the Bill deserve more attention than I can give them in the time available. Notably, they include measures to establish the Office for Nuclear Regulation as an independent statutory body with financial and organisational flexibility. There are also measures to allow the sale of the government pipeline and storage system and to enable offshore generators to build and test transmission assets for exporting their power with confidence that they are acting within the law. The Bill also contains two minor provisions regarding fees.
As I stated at the beginning of my address, this Bill arrives from the other place with overwhelming cross-party support. I look forward to a swift passage through this House to enable these important and urgent measures to pass into law and bring about a transformation of our electricity market. We are charged with a great responsibility to ensure the security and affordability of energy for many generations to come. Nevertheless, we are also presented with a significant opportunity to help Britain’s economic recovery through the creation of jobs and the delivery of a more stable and predictable energy market, as well as reinforcing our position as a world leader in tackling climate change. With that in mind, I commend this Bill to the House.
Baroness Worthington
My Lords, I thank the Minister for addressing us today and for introducing the Second Reading of the Energy Bill. I have been working in climate and energy policy for well over a decade—at UK and EU level. Energy is a fascinating subject. Much like the Mandelbrot set, its many layers of complexity seem completely endless. I keep uncovering whole new areas of mind-bending detail to get my head around, most recently in relation to nuclear fusion after an engrossing visit to Culham in Oxfordshire.
I have studied energy policy in a number of different roles: for an environmental NGO, for a power company, and as a civil servant. Over the years, I have come to the firm conclusion that energy policy is an area where we need the creativity and drive of markets governed by careful and well-designed regulation to guide market forces. What we do not want is for energy to become a political football, confusing and destabilising the market. We also do not want civil servants trying to second-guess what an economically optimised energy system should look like. Sadly, we begin this discussion of the Energy Bill with exactly those two sets of circumstances dominating—policy is becoming highly politicised and civil servants are set to start micromanaging almost every aspect.
There is a public spat going on between two different factions of the coalition Government, between those who believe that climate change is either not real, or that tackling it is too expensive to be bothered about, and those who believe that the vast majority of scientists are correct and that we have a moral duty to do something urgently to address the problem in ways that boost rather than damage the economy. The schism is so apparent that our new part-time Energy Minister, Michael Fallon, in an interview with The House magazine, refused to answer a simple question about his views on climate change, dismissing it as “theology”. There is a moral aspect to climate change and we will hear today from two eminent theologians. However, I have met many climate scientists, most recently the noted Oxford academic Myles Allen. Theirs is not a profession of faith or belief, but the careful study of facts and evidence and the articulation of future scenarios that accord with those facts.
Here are a few of them. The concentrations of carbon in the atmosphere, at around 400 parts per million, are higher than at any other time over the past 3 million years. Already our world has warmed on average by 0.8 degrees since the 1900s. A global average of this much equates to far higher levels of warming at the poles. The impacts of these levels, on, for example, the melting of the arctic sea ice, match the most pessimistic forecasts. They are happening at the fastest rate that has been predicted. Land-based temperature recordings, which some may cite today as evidence that we do not need to act, have levelled off for the best part of the past decade. However, ocean temperatures have not. The ocean is likely to dump part of its increased heat out on to land during the next large El Nino effect, which has occurred roughly once every decade and which could happen again at any time. Then land-based temperatures will once again rise. It would be reckless and arrogant for this Government—or indeed this Parliament—to ignore the scientific evidence and to try to change direction in terms of what is one of the over-ridingly important goals of energy policy today.
This is not a Bill solely about climate change; it is a Bill about our energy future. It is about how we maintain our energy security, now that North Sea oil and gas, just four decades after their discovery, are now rapidly declining. It is about the role nuclear power can play in the future and how confidence in the industry can be restored today. It should also be, first and foremost, about consumers and helping to ensure that they are protected through regulation that maximises competition and transparency in the market.
In addressing the trilemma of energy policy—how to keep the lights on without destroying our environment but making sure we can afford it—the Government could do one of two things. They could set clearly defined outcomes that the market must deliver or attempt to renationalise energy policy with almost every aspect dictated by government. Strange though it may sound coming from a Labour Front Bench, I strongly believe that it is the former we must do and that this Government are about to do the latter.
The Bill as it stands is a curious mixture of excessively wide enabling powers that enable the Secretary of State to do virtually anything he or she wants with anyone, at any price; or, if he or she so chooses, to do absolutely nothing. If this were not political enough, there are now some extra provisions to allow for even more finely grained politicisation. Targets can be set for particular technologies and for particular geographic locations. If you do not like wind farms, you can either ensure that the negotiations on the contracts are so protracted that they never get signed or, it seems, and to be on the safe side, set targets determining where they will or will not be accepted.
In terms of restrictive detail, when the powers to be taken are not enabling, they are disabling. The Secretary of State must not set a decarbonisation target until at least 2016, while the energy performance standard levels are fixed until at least 2044. The mix of sweeping generalisations with occasional restrictive detail results in an inelegant and potentially dangerous Bill, for which it is impossible to predict all the consequences, intended and unintended.
As the Government cannot agree on the overall purpose of this Bill, they have been incapable of presenting clear and concise legislation that can guide the market. They propose instead to take the reins of almost every aspect of investment decisions in the coming years. My great fear is that those seeking to take control are not up to the task. I imagine that the department is now realising, as I have, that the energy market is so complex that a single Secretary of State, overseeing a small department with a small number of civil servants, who are necessarily divorced from the real world, cannot and should not be deciding who builds what, when and on what terms—even if they enjoy the oversight of the great minds of the Treasury. The question I am sure that your Lordships are all formulating is: if this is the case, what would Labour do differently?
First, we would be unequivocal about the fact that, in keeping with the advice of the Committee on Climate Change, we would seek to decarbonise the electricity generation sector within the next two decades. We would set clear targets to achieve that outcome—targets that we know have the support of industry and civil society. Such targets need not dictate precisely how this outcome is achieved but give the market confidence that this is the path we are on and that we intend to stick to it. Secondly, to keep prices affordable, we would legislate to require greater liquidity and competition in electricity generation and create a new energy regulator with real teeth. Thirdly, to keep the lights on, we would focus on providing incentives to encourage more active participation in the management of demand, reducing peak demand and helping to soak up excess electricity in times of high supply. If necessary, we would also take powers to enable interventions that support National Grid in managing supply and demand.
That is what we would have done; it is not what the Government are doing. This is primarily because the impetus for this Bill was not to solve the energy trilemma. It was to provide EDF Energy with what it believed it needed in order to build Hinkley Point power station. Having decided on that outcome, the department has now had to concoct ever more complex layers of interventions to try to square the reality of the privatised market and state aid rules. A new reactor at Hinkley, if it can be delivered at reasonable cost, is a good idea. I am not disputing that. I am, however, deeply concerned about the contortions and complexities we are now having to add to an already complicated market in order to lure one company into building one project—a project that will not be ready until the middle of the next decade and that cannot help to address any security of supply concerns in the interim.
In an ideal world we would not be starting from here, but here we are and we must make the best of it. During the Commons stages we raised other important issues that we will continue to press in this House, such as the need to ensure adequate competition in the generation market so that independent generators can gain access. I was encouraged to hear the words of the noble Baroness today in that respect. We need to encourage community ownership of energy projects, which I am again very grateful for having received mention today. We also need much clearer regulation of existing fossil fuel stations, giving clarity about their closure schedule to spur investment in carbon capture and storage.
The irony is that this Energy Bill has helped to exacerbate the investment hiatus that the Government have created and that they should have been seeking to address. If, in the future, the Government will be paying everyone to build or operate plant then no company can risk moving ahead with plans until the details of these payments are clear. As a result, investment in our energy infrastructure has plummeted under this Government. This cannot be allowed to continue and Royal Assent must be achieved by the end of this year.
Let us aspire to signing into law something that creates stability in the market, so that we can stop the almost yearly cycle of energy Bills appearing before us and investors can get on with the job of addressing the challenges now inherent in providing us with energy. As we come to consider this Bill in Committee, some of the much sought-after detail should emerge from the department and we will be in a much better place to try to assess the impact of its many provisions in totality. The draft delivery plan, for instance, which is due to be published in mid-July, will include more details of strike prices for renewables, though regrettably not for nuclear or CCS, and much needed information about the Treasury’s levy control framework which will interact with provisions in the Bill in a very important way. It may sound like a lot of money but unless anyone wants to invest it will merely be a promissory note that actually may restrict investment in certain sectors and technologies.
I hope the Minister will agree that the more detail we have in front of us the better placed we will be to provide proper input. Can she give us an assurance that the department will release further information in good time so that it will inform our discussions? I am hopeful that we might be able to agree to consider relevant clauses in the Bill at the end of Committee stage rather than at the beginning. This will enable us to consider those clauses with the information in the draft delivery plan in front of us. This puts a lot of emphasis on to the department issuing its information before the Commons rises on 18 July. I hope that that will be in the public domain before 18 July.
There are things we do not like in the Bill, things we would have done differently, and things we would like to have seen given a higher priority; but we are not opposed to the broad objectives. Although lots of the detail is still missing, we are committed to restarting and increasing investment in low-carbon generation and, on those grounds, we do not seek to oppose the Bill.
We will have an excellent debate today. I am greatly looking forward to the contributions of noble Lords from whom we will have the pleasure of hearing. The number of speakers and the breadth and depth of their knowledge and experience is testament to the central importance of this issue. I am honoured to be a Member of this House and to be leading for the Opposition as we embark on the process of doing what we do best—scrutinising legislation in an environment at one remove from the cut and thrust of daily politics. In this House, we are able to take a long view and to take the necessary time to prevent poorly thought-through plans being pushed through and that is what we will do. We will seek to work constructively to improve the Bill. I very much look forward to the weeks and months ahead as we turn our attentions to this most important of subjects.
Lord Teverson
My Lords, I thank my noble friend the Minister for all the work that she, together with the noble Lord, Lord Oxburgh, has undertaken in preparing us for the moment when the Bill finally arrives in this House, and for all the teach-ins and the work that we have had to get here. One of the things that strikes me most is how great it is that this Bill has arrived. It was December 2010 when the original consultation paper on electricity market reform was published. Over the two and a half years since then, queues of industry suppliers, generators, NGOs and trade associations have tried to bend the ears of a large number of Members of the House to give us their views on this very complex legislation. We are here, and we can start this process in the Lords.
The reasons why this Bill is here are important, and they are important to go through. They include the future capacity to generate electricity for our economy and our homes and the security of supply, which is made more difficult by our own resources running out within our own geographical area. They also include keeping down costs. So often you hear about the subsidies for green energy adding to costs, yet we know that over the years 2004-12 the price of gas for households doubled from £400 to £800, and that was a sector that had no levy control framework. Electricity also went up by a huge amount, although by much less than gas, because of fossil fuels.
It is very difficult to see the future, but I am certain that with renewable energy, and in the longer term maybe even with new nuclear, with its low marginal fuel costs—zero, in fact, for wind and solar—we will ensure that our prices are far less dependent on unpredictable and expensive fossil fuels in future. The Department of Energy and Climate Change suggests that by 2020 energy prices will be just under £100 less than they would have been afterwards. To me, given the past performance of energy prices, that is absolutely credible because it is based on historical evidence. That is important for us to understand.
The real issue of the Bill is climate change. I congratulate the noble Baroness, Lady Worthington, on her description and her attack in that area. She is right that a major part of the Bill is to ensure that our electricity supply industry is not dependent on unabated fossil fuels into the distant future. It is of great concern to me that it is often not realised more broadly that coal now produces 42% of our energy generation. Once again it has replaced gas as the major fuel for electricity generation, yet it is a fuel that produces something like double the carbon emissions for every unit of energy than the cleanest gas generation. We have gone through the limit of 400 parts per million of carbon dioxide in the atmosphere and, as the noble Baroness well described, we still have all the symptoms of climate change, whether that be rising ocean levels at 3 millimetres a year, shrinking icecaps or retreating glaciers—not all of them, but the vast majority.
Let us look at the debates that there will be on decarbonisation and decarbonisation targets. I welcome the fact that there is provision in the Bill for a decarbonisation target. That was not there in the original draft Bill; it has been added. As for whether the year should be 2014 or 2016, maybe we are moving towards theology there.
Two of the things that are repeatedly mentioned to me are the risk of investment in the industry and future generating capacity. We know that the whole industry will look for less and less risk, and indeed those who provide finance will do the same in order to protect their investments, so, whatever they are given, I am sure they will ask for more. I spent a lot of years in the private sector, so I can ask what other industry is given a guaranteed price, index-linked, over several decades. No other industry gets anything like that—it would be heaven on earth for most industrialists—yet that is what we are offering electricity generators as part of the Bill. Frankly, you can start to become a little too greedy about the risk that you want to reduce if you go beyond that level.
I will come back to the agreements in that area. I see a tension within the Government. We have a £7.6 billion levy control framework commitment. That is a great win. It is substantial and it will ensure that in practice a low-carbon economy and a low-carbon network can actually be delivered.
Having said that, I feel that there are certain things in this Bill that still need to be done. I am sure that the Minister will agree with me on the vast majority of these. As for demand management, I suspect that this Bill was originally drafted by DECC officials who love shiny new power plants that impress their friends, look good when built and are great for press releases. However, we do not have such a demand. The UK electricity industry operates, on average, at 50% utilisation of capacity. To me, that is not good enough. We need to look at the demand side as well as the supply. I very much welcome the Secretary of State bringing forward demand-side factors into the capacity market, and hopefully beyond that broader demand reduction. I know that we will flesh out some of those opportunities in Committee. I welcome the Government’s very strong move in that area.
On emission performance standards, I am not quite so confident about the long-term nature of grandfather rights. I also question, and want to explore in Committee, whether there is still opportunity for coal to continue long term as a generating source of electricity under the Bill in its current state. Coal is so much cheaper at the moment, largely because of changes in the United States, along with other factors, that it may still be commercially possible to generate long term by paying the carbon floor price and re-engineering plants so that they are able to stop their sulphur emissions. I am not sure whether that is possible in this Bill as it stands, but I want to make sure that it is not. We need to take coal out of the generating system.
The other area, which I am sure Members from all around the House will be particularly concerned about, is the route to market for smaller producers. If there is one thing about the energy market that is similar to banking, it is its oligopolistic nature. That is what makes some of the strike price negotiations difficult. We need to ensure that the smaller producers, and indeed the smaller suppliers, within the market are able to have much greater access to a greater share of that pie. It is through that competition that we will ensure that price increases are far less than they have been in the past.
There is one last thing. One of the unsung things in the energy market is licence lite, which is being explored by the Greater London Authority. It is about small independent producers, in particular community schemes, being able to supply directly through local networks to final consumers at a consumer price, thus not needing subsidy for that energy. I would like to explore how that great initiative—unsung by DECC, I think—can be expanded more quickly and effectively throughout the United Kingdom.
As I said earlier, it was 2010 when the initial consultation document was produced. We need now to make sure that this Bill gets through this House, gets through it on time and lands on the statute book, so that those investors, however nervous, can invest.
Lord Oxburgh
My Lords, I declare an interest as honorary president of the Carbon Capture and Storage Association and a director of 2OC. I shall confine my remarks to electricity market reform or EMR.
National Grid figures show that unless new power stations are built by 2015, we shall be more vulnerable to loss of supply than we have ever been. To give an example, if in 2015, at a time of high demand, three power stations were to drop out unexpectedly—as they did three weeks ago—we shall be into rolling blackouts. The situation is serious.
Why are no new power stations being built? Everyone has known for a long time that the electricity market would have to be reformed. Potential investors are simply holding back until they know more about the market into which they will have to sell their electricity. The main aim of EMR is to use market mechanisms to achieve a secure, decarbonised electricity supply at the lowest possible cost. That might have been possible if this Bill had been presented two or three years ago. Then there would have been time for the contracts for difference and the capacity payments—central elements of the new market—to be thoroughly considered and properly auctioned. Today, Ministers make decisions by administrative means when they should have been the outcome of strategically planned competitions. These fundamental infrastructure decisions will determine how we generate electricity for decades to come and how much we pay for it. Nevertheless, recognising our present vulnerability, Ministers must move as fast as possible to seek bids for contracts to guarantee generating capacity. If they act rapidly, there should be just enough time to bring in new capacity for when it is needed.
What kind of electricity generation do we need? In this debate we shall certainly hear from proponents and opponents of different technologies, as if they alone could satisfy our requirements. There will be wind enthusiasts and wind-haters, and nuclear enthusiasts and nuclear-haters. In reality, every means of generation has its own cost structure and its own operational limitations that have to be taken into account in building a generation system.
For example, most of the cost for both nuclear and wind is fixed up front at the time of construction. Their costs of generation should therefore change little over time and they should offer something of a hedge against inflation. Both have low carbon footprints. However, the weakness of both is in their operational inflexibility. Nuclear is not able to ramp up and down fast enough to match the daily variation in demand, and wind is completely insensitive to demand. This is not fatal for either; it simply means that if they are used they have to be part of a system that takes advantage of their strengths and compensates for their weaknesses. By comparison, fossil fuel is dispatchable—it can be turned up or down relatively quickly to meet changes in demand. On the other hand, it is both exposed to the vagaries of international fuel prices and, unless abated by carbon capture and storage, carries a substantial carbon penalty. Other key elements of energy systems have their own costs and limitations.
The requirements of our system can be met in many ways with different technology combinations. However, the addition or removal of one component has consequences for all the others and for the system as a whole, including for transmission. A workable system will have a number of complementary elements that play different roles, add to its robustness through their diversity and have different implications for cost. With the powers that it is assuming in the Bill, central government takes full responsibility for the shape of our system. This is not necessarily bad, but we should certainly recognise that it is happening. The Government’s decisions over what CFDs and CPs to offer will determine whether we achieve an affordable and workable system that also meets its stated policy objectives. It is very easy to get this wrong.
What, therefore, needs to be done in this House? I emphasised at the outset that the highest priority must be to secure investment in new plant. Investors have choice over not only what kinds of project they invest in but in which country to do so. The Government’s stated strategy is to achieve a massive decarbonisation of UK electricity generation. In the short term, this is not the path of lowest cost. Given the long-term nature of energy investments, investors have to be confident that the Government will stick to this path and continue to reward low carbon in the future. For these reasons, the Government’s vigorous opposition to the cross-party amendment tabled in the other place, which would have included a reference to the 2030 emissions reduction target of the climate change committee, was particularly unhelpful. It has certainly been read externally as a weakening of government resolve. To make our energy system investable, we have to consider the reintroduction of that amendment in this House.
Secondly, we shall need to scrutinise the details of the CFDs and CPs, some of which have not yet been fully worked out. Consideration of the Bill in the other place had to be completed without this detail. The workings of the present electricity system are complex and in some respects less than transparent. We are promised more of this detail during the passage of the Bill through the House and this will need to be discussed as it becomes known. In parallel—as has been pointed out—there are important proposals from Ofgem for changes in regulating the market.
There are two important elements of any energy system on which the Bill is silent and which will have to be considered alongside the generation mix: namely, the interconnectors through which we can import and export electricity to our neighbours, which is always a possibility if we cannot generate ourselves; and secondly, our national provision for gas storage. This House has discussed gas storage on a number of occasions in the past, primarily in the context of security of supply in the face of declining North Sea production. We have noted that while our domestic gas storage is measured in days, our neighbours measure theirs in months. This concern has been alleviated—but only somewhat—by the construction of UK terminals to receive liquefied natural gas bought on the international market.
Today, however, storage can help UK consumers in another way. Storage would make it possible to buy gas in summer when prices are low and use it in winter when prices rise. This is a benefit primarily to consumers rather than suppliers. Suppliers simply pass on increased gas costs to the consumer, who has no choice but to pay them. The Government should carefully consider whether this potential consumer benefit can be captured, possibly by offering a capacity payment for gas supply at a guaranteed price and guaranteed time.
Finally, we also need to consider whether in future we can avoid the acute energy difficulties in which we now find ourselves. These are entirely attributable to successive Governments’ culpable neglect of energy and the absence of any overarching strategic energy policy. Energy capability and competence within the Civil Service was over the years run down. The responsibility for energy was shuffled between government departments, and folk memory and experience were largely lost. To make matters worse, ministerial appointments were treated in a similarly cavalier fashion, with few individuals in post long enough to shape policy. At a major energy conference in Oxford attended by several Members of this House a few weeks ago, one speaker asked,
“exactly who is to make and implement the key decisions? Government per se does not have the expertise”.
Those words received universal acclaim and a standing ovation.
Speaking in an earlier debate, I raised the possibility of establishing a senior expert advisory group within DECC that reported to Parliament and contained both internal and external members. The external members would have long tenure and provide both technical and commercial expertise, and would bring a strategic overview and degree of continuity that has been conspicuously lacking. I am consulting both inside and outside the House to see whether we can come up with any proposals that might ease the present situation, which is no longer acceptable.
I have already commented on some of the imperfections of this Bill, but we need it urgently. Our top priority must be to give investors the confidence to invest in power generation in the UK. Our longer-term objective must be to ensure that a situation such as we find ourselves in now does not arise again.
The Lord Bishop of London
My Lords, we have already heard several references to theology. I propose not to speak from a great altitude, but rather from the grassroots—although, as I worked my way through this hugely complex Bill, I found myself at times wondering whether it had been drafted for the sake of archangels in retreat. As speakers have remarked before, it is extraordinarily complex in parts. Our thanks to the Minister, the noble Baroness, Lady Verma, for the way in which she introduced the debate and for the courtesy which she has shown in making herself available for conversation with Members of the House in advance of this Second Reading. It is much appreciated.
Like previous speakers, I find that there are welcome proposals in this Bill that are urgently needed and address objectives that every Member of your Lordships’ House would surely support, including security of energy supply and its affordability, together with a reduction in carbon emissions.
I declare an interest as chairman of the somewhat ludicrously named Shrink the Footprint, which is the environment campaign of the Church of England, focused on our thousands of buildings with the support of tens of thousands of volunteers. I echo many of the points already made in this debate, but I shall not repeat them. At the same time, from a London perspective, with our growing population and increasing demand for electricity, which could be as much as 4% a year, I am also clear that the Mayor’s call for a change in the system which currently prevents distribution network operators from installing more capacity in the network without first receiving a formal request for a connection to the system from individual developers, deserves immediate and urgent attention.
In the limited time available, I want to focus on energy demand reduction, which an institution in our position has very much at heart. We have been exploring how to improve our own energy efficiency; there has been some success in my own diocese of London, where over a six-year period we have been able to save about 22% of our energy use. But like others, we need the help of government to achieve the next level. My question to the Minister is: will she undertake to amend Clause 37 to bring forward multiple pilot schemes for incentivising a reduction in energy demand, allowing not only for a capital market pilot but a premium payments pilot and enabling ordinary households as well as big business to be rewarded for demand reduction?
Earlier this year the right honourable Member the Prime Minister in a speech to the Royal Society said that,
“the economies in Europe that will prosper are those that are the greenest and the most energy-efficient. Energy consumption is set to grow by a third over the next two decades alone. And in a race for limited resources it is the energy-efficient that will win that race”.
Noble Lords will be aware that the Department of Energy and Climate Change launched a consultation in November last year, and a number of ideas for reducing energy demand emerged. But in the response to the consultation last month, the Government stated that, of all the various options, just one would be pursued, and a pilot was proposed. It is good news that a commitment to this pilot has been incorporated in the Bill at Clause 37, but despite widespread support in the consultation, the option of an incentive scheme available to anyone, including individuals, who deliver an approved level of energy efficiency, has been dismissed. It would be helpful if the Minister could explain why it is not possible to undertake multiple pilot schemes. Is it possible at this stage, or in Committee, to give some greater detail on the pilot that is proposed? How long it will last and how large will it be?
Reports from all over the country from people anxious to act in an environmentally responsible way detail the frustrations and complexity of the Green Deal. Will the Minister consider ways in which the Green Deal can be simplified and streamlined to improve take-up? For all its imperfections, this policy remains a potentially transformative long-term project, but it is so complex and paper heavy that it has resulted in only about 200 people to date accessing Green Deal finance.
Small to medium organisations, which include dioceses and individual churches, and faith communities of all kinds are finding the deal hard to implement, while it has also proved difficult for smaller independent companies and co-operatives to access the market. Here, I echo comments made by the noble Lord, Lord Teverson. On the point that he raised, I note that there is no specific mention of community energy in the Bill, although I was encouraged by what the Minister said in her introductory remarks. I hope that she will be able to enlarge on those a little later.
Allowing the participation of independent generators in the energy market, via the introduction of some kind of green-power auction, would help to increase competition, while encouraging the engagement of local communities with their energy production. This is an objective in tune with the Government’s emphasis on localism. The Shrinking the Footprint campaign, which I chair, is part of a general community energy coalition. Already church buildings across the country feed into the grid from more than 100 solar-panel installations.
In a highly complex society, security and affordability of energy are crucial. I imagine that noble Lords will have taken to heart the comments of the previous speaker on the enormous responsibilities that the Government are taking on through this Bill: any mistake will have grave consequences. We can all see the importance of the Bill. On these Benches there is general support and a commitment to work hard with other Members of the House to make it even better in Committee.
Lord Deben
My Lords, I refer the House to my declarations of interest and particularly to my chairmanship of the Committee on Climate Change. In that position I am bound by statute to be independent, and on this subject it is not difficult to be independent because all parties have a less than good record in facing up to the issues of energy. The noble Lord who spoke a moment ago was kind. Successive Governments have recognised that this is a tough thing to deal with and often better left alone. At one stage we had an energy Bill in which every date had been removed except 2050, which was well beyond the lifetime of any living politician. This enabled people to promise good things for the future without having to pay for them in the present. This Bill is entirely different and I congratulate the Government on bringing it forward. It seeks to face the real issues and accept the price of facing them. Sitting where I do geographically, I recognise that there are some who have not accepted the reality of the danger, so I ought to start by explaining why—for a simple reason—we do not have to argue about it.
There is no doubt that there is sufficient scientific belief and evidence that climate change is happening, is caused by human beings and could be disastrous. It is therefore a threat with which we have to deal. There are two ways that you can deal with a threat: the first is to insure yourself against it, and the other is to hope for the best. There is a problem with the climate-change deniers. I use the word denier because they are no longer sceptics. I am a sceptic—I wish that climate change did not happen. I am sceptical in the sense that I work with scientists, and therefore one is sceptical about everything that is put forward. The problem is that those who deny climate change start from the assumption that it is not happening; that if it is happening, we do not need to do anything about it; or that if we did do something about, it would be far too expensive.
In this Bill we are seeking to provide the insurance that any sensible father would have for his children. I am sure that there are no Members of your Lordships’ House who do not take out insurance against their house burning down, although there is a 99.8% chance of it not burning down. Yet we all spend about £140 a year protecting ourselves against such a thing happening because the horror of it is so great that it is not something that we wish to carry.
The chance of disastrous climate change occurring is enormously greater than the chance of your house burning down, yet we are now seeking to say that we should not spend certain sums. At the moment, for an average family the cost is about £60 a year and by the end of 2020 it will be £100 a year. We might increase that by about £20 if we take the serious and important step—I say this to the Minister—of having a carbon intensity target for 2030. Thereafter, what we will have insured against will in fact provide us with lower energy costs and a real future.
Therefore, the choice is between accepting the infallibility of those who deny climate change and accepting sensible insurance in order to recognise what the vast majority of scientists are putting forward. There really is no argument, and there is no argument in the view of the public. That perhaps explains why, however difficult it is, there remains, and is increasingly, a demand by the public that we do something sensible about this.
The question is: how do we get the very important matter of electricity reform to deliver a decarbonised source of energy for us? We cannot do all the things that we need to do to meet our statutory requirement of reducing our emissions by 80% by 2050 if we are not able, for example, to use electricity in a pure and clean form for motorcars and the like. Therefore, electricity decarbonisation is an essential part of what we are doing and the Bill paves the way for that. It does so by giving sufficient security to private investors to invest, but I warn the House that many other people are seeking to do the same.
Those who deny the issue, of course, are always saying that we are the only people doing this and that we are right out in front. In fact, GLOBE International, of which I am president, recently produced an independent report with the London School of Economics showing that more than 33 countries are dealing with this issue, some of them more extremely and better than we are doing. China, for example, has made a huge investment in making itself increasingly the centre of renewable energy. Mexico, South Africa and Korea are other examples. All around the world people are encouraging others to invest in order that they may achieve those ends. Therefore, if we want investment here, we have to recognise that we are in a competitive market. I say to my noble friend Lord Teverson that that is the issue concerning greed.
The fact is that if we want the investment and the jobs here, we have to provide the security that enables people to invest. That is why I again say to my noble friend that the very sensible proposal of the Committee on Climate Change that we should have a carbon intensity target for 2030 is essential not for climate change but so that we get the investment for Britain plc. If we want to show people that there is a continuum of support, that it will not drop over the precipice in 2020 and then arrive again in 2050, we have to have some kind of assurance. The beauty of the assurance that we have suggested is that it is not prescriptive. It does not say how we should do it; it merely says that there will be a clear indication that we want decarbonisation of electricity and that the carbon intensity target that we set will have to be reached by whatever means we wish. It might be achieved by advancing CCS, by having more nuclear or by producing more offshore or onshore wind, but we know where we are trying to do it, and we know that we are doing it so that all of us in this country can see the benefits of the investment we are making.
I want to be the first to congratulate the Treasury on producing £7.6 billion of investment to enable us to do that, but if that investment is to do Britain the best that it can, it must encourage people to bring their supply chains into this country and not maintain them elsewhere. It also means that we have to have very clear visibility between now and 2020. My noble friend has promised to let us have this information early. I hope that we will not go for just a year-by-year arrangement. We must know so that people who are making investment decisions now—which will emerge in 2018, for example—know exactly where they are going to be.
Against that background, I suggest that there is another issue which the right reverend Prelate the Bishop of London did not refer to but which I know is close to his heart. We are arguing this case in a world that will have 9 billion people. The idea that we will have cheap energy with the pressures of 1.5 billion more middle-class people demanding the sort of lives that we live, or the idea that there is some mysterious and magical world around the corner with cheap gas, seems beyond any sane measurement. Of course we have to use our fracked gas, of course we have to make sure that we use what resources we have, and of course we need carbon capture and storage to make that gas as low in its emissions as possible. At the same time as paying this very small amount to give us insurance against climate change, exactly those same efforts are giving us insurance against ever-higher gas prices. After all, the International Energy Agency has made it clear that gas prices are likely to rise—to double in the United States—over the next 10 years.
It will also give us sovereignty, and I will finish on that point. I do not want my children to be in the hands of Mr Putin’s children. It is a simple matter. If we can create our own energy here, we are not only protecting ourselves against climate change and taking insurance against high gas prices but ensuring that, by having a portfolio of energy resources, we in this country control this crucial element in our future. I therefore congratulate the Government on bringing the Bill forward. It needs one or two tweaks, and I shall be pressing for those tweaks—and I know that many will join me. It is the first time that we have had so far-reaching and far-looking a Bill before this House on a subject that has for far too long been at the bottom of the list of priorities.
Lord Roper
My Lords, it is a particular pleasure to follow my noble friend Lord Deben, who is a very effective advocate for this Bill, even if the levy-controlled framework is, I think, a little more complex than he described. Given the complexities and the length of this Bill, I have begun to regret that just over a year ago, when I ceased to be chairman of the European Union Committee and I decided to take up a new subject from scratch, I chose energy. Given what we have come to, I think it may have been a problem, but I am extremely grateful to the noble Lord, Lord Oxburgh, and to the DECC officials, who, in the informal group that has met on the draft Bill and more recently on this Bill, provided particularly useful tutorials in helping me to understand a pretty complex subject. As the noble Baroness, Lady Worthington, said, each time one thinks one understands it, one discovers yet another twist to the complexity.
Before giving this Bill a Second Reading, we have to agree that there is a need to decarbonise our electricity industry and, if that is the case, whether the principal elements of the electricity market reform set out in Part 2, the contracts for difference, strike prices and the capacity mechanism, are the right way to achieve such reform. On the first issue, over the past year, I have tried to follow the debate on global warming. Indeed, there are those who argue against it, sometimes —we may well hear them later—fairly effectively. But although there are significant arguments against the scientific consensus, I have reached the judgment that in applying the precautionary principle there is no case at all to resile from the commitments which this country took under the Climate Change Act 2008.
As referred to by my noble friend Lord Deben, the argument is also developed that our efforts are of little relevance given the absence of comparable actions elsewhere in the world, with the statistic of three coal-based stations being built a week in China perhaps being most frequently cited. In fact, as we have heard this week—indeed, he referred to the work done on climate change in China—China is rolling out an emission trading system starting in Shenzhen and then extending elsewhere in the country. It has been carrying out a significant programme of work on carbon capture and storage which compares favourably with what we have done in this country. Therefore, the argument that there is no point in doing anything because things will go wrong elsewhere does not seem to hold very much strength.
Given the case to move to a low-carbon generating technology and to encourage the necessary investment, what are the policy instruments which can do that most effectively? Sitting on these Benches and having been taught some of my micro-economics by Milton Friedman, I have to look very carefully at any attempt to intervene in markets. That often causes more harm than good. I was very glad therefore that my noble friend the Minister in her opening remarks was able to assure us that the contracts for difference and strike prices are transitory measures, particularly that they will be set on an administered basis for this transitional period. My noble friend also referred to the fact that the delivery plan will be published in July. I hope very much that when the Captain of the Gentlemen-at-Arms produces an order of consideration, the sections dealing with Part 2 can be placed towards the end of our consideration in Committee in order that we will have the benefit of seeing the delivery plan before we come to consider them.
Subject to that, the very useful impact assessment published with the Bill shows that the market failures and imperfections justify the proposals for electricity market reform in Part 2. Contracts for difference are the means of providing revenue certainty for low-carbon generators and thereby the incentive for investment in nuclear and renewable generators. They would enable development of such projects to obtain the finance for their investments and the impact assessment shows a significant net present value. As we have heard, the capacity market is the mechanism for ensuring security of supply and although the impact assessment in this case shows that there could be small net costs compared with a perfectly functioning energy market, it is very difficult to accept that we have a perfectly operating energy market. It seems a rather useful insurance mechanism to avoid loss of supply.
The question of the nature of the energy market is, as we have already heard, central to our consideration of the Bill. There has been much discussion on the illiquidity of the market, and Ofgem’s announcement last week is therefore of great importance. We shall need to consider it when we come to consider Chapter 6 of Part 2 of the Bill. The asymmetry of the market between the larger generators and suppliers and the smaller ones has led to many reports of illiquidity and difficulties for small developers of renewable projects in accessing the market. In the Commons, consideration was given to a green power auction market. This was resisted by the Government. Others have suggested an off-taker of last resort. It will be essential for us to return to this in Committee as energy market reform will not succeed unless we provide a satisfactory route to market for independent generators.
There have been difficulties in the recent past for such generators to get satisfactory power purchase agreements with large suppliers, and the nature of PPAs will themselves change with the introduction of contracts for difference. How do the Government intend to ensure a satisfactory development of PPAs after EMR? As my noble friend Lord Teverson and the right reverend Prelate said, Clause 37 is extremely important. It is the amendment which was introduced on Report in the Commons to deal with demand management. Although the reference is to a pilot scheme, I think that if I remember rightly, in moving the report, the Minister referred to several options within this pilot, so perhaps it is not quite as narrow as was suggested by the right reverend Prelate.
I also find some confusion, probably it is my ignorance, between permanent reduction in the demand for electricity as described by the right reverend Prelate, and demand-side response in the context of the capacity market. Will my noble friend tell me which of the two is being referred to in Clause 37?
I welcome the fact that Part 1 gives the Secretary of State a power to set a decarbonisation target range for 2030 and implicitly prevents him from setting it before 2016. As we have already heard, there will no doubt be discussion in Committee on the date. However, I hope that as well as the date, it will be possible to consider whether the Bill should be amended to require him to set a target rather than to give him the power to set a target, which is an important distinction.
Finally, I wonder if my noble friend can tell us about the position of the European Commission as far as any possible state aid implications of the Bill are concerned. Are we likely to have problems with that at a later stage? I think that this is a difficult Bill, but I look forward to continuing my education on the subject in Committee.
Lord Cameron of Dillington
My Lords, I must first declare an interest as a farmer and landowner with family and trustee interests in small renewable energy schemes.
Electricity is now as vital a part of modern human life as air, water or food. It is only a mild exaggeration to say that we cannot survive without it. So much depends on it: from the pumped water we drink and the growing and processing of the food we eat, to lights, heating and cooking, through music, communication, navigation, health, design and even democracy—think about this Chamber with its lights, air-conditioning, microphones and TV and radio services all dependent on electricity. Furthermore, our use of electricity can only increase: electric cars, for instance, could be a huge new field of demand.
It is therefore vital that we plan well ahead to ensure that we “keep the lights on”, Bear in mind though that that flippant phrase could equally well be replaced with “preventing catastrophic life-endangering situations”, or “maintaining the vibrancy of our economy”. Electricity is the vital fuel of modern life and it would be unthinkable for our system to fail.
Noble Lords will have gathered that in the trilemma between decarbonisation, the cost of power and the security of power, for me the greatest of these three is security. If we do not have security of power, the rest are as of nothing.
Ensuring security of power means that we have to plan ahead for more than one decade. Even a gas-fired power station, from conception through planning, construction and commissioning, can take the best part of a decade, while a nuclear station takes considerably longer. Furthermore, if you take a long-term view—decades rather than years—I do not believe that there is a straight choice between green energy and cheap energy. The danger of ever rising costs of fossil fuels in the long run is possibly even a greater danger than the initial high cost of alternative sources of energy.
For instance, looking forward, between now and 2030 it is likely that China will increase its use of gas by over 500%. What will that do to the world price of gas? Or you may prefer to look at, say, Germany, where since 2000 the price of electricity has gone up by 61%, of which 75% is due to the rising cost of gas rather than its support for renewables. It is the same in the UK. Only a small proportion of the increase in the cost of our power is due to renewables—less than 15%
So never mind the climate change debate—although I should make it clear that I am a firm believer in man-made climate change—in the long run we need as many alternative sources of energy as we can muster or encourage. Furthermore, we must never put all our generation eggs in one technology basket.
Therefore, the overriding need for and the purpose of this Bill, to me, is that during the next two decades or so we will need huge amounts of money to be released for investment into the generation of power, the transmission of power and even the saving of power—literally hundreds of billions of pounds. Coming straight, therefore, to the $64,000 question—or perhaps that should be the $1 trillion question—will this Bill be enough of a signal to release that kind of money for the markets? Possibly, is my answer.
Contracts for difference are excellent; they seem a fair way of supporting new technology and even old technology, speaking as one who lives not a million miles away from Hinkley Point. CFDs seem a fair way of balancing the demands of new sources of power against the interests of consumers should there be a dramatic shift in the marketplace. However, as other noble Lords have mentioned, I worry about the complexities and uncertainties of CFDs for the small-scale generator. We still need either a small-scale FIT or a green power auction mart or something similar to give the small-scale generators—or, more importantly, their banks and backers—the 15 to 20-year comfort they need to enable them to invest. These are expensive projects for often quite small players. With all the money needed up front, you cannot start small and grow as in a normal business venture. We need this investment.
The capacity market, again, seems a good way of keeping the lights on and all that entails. As I say, security is the key. However, I am concerned that, with the first auction in 2014, the intention is to have a capacity market in place only by 2018, and I ask whether we could not do it a bit quicker. Sadly, the baton of the 2015-16 power supply was dropped some time ago and power cuts at that time seem quite likely.
The only other problem with the capacity market exercise as currently planned is the likely lock-in to gas generation, possibly up to 2045. When we are trying to get out of expensive and non-renewable gas this is an unfortunate, but perhaps inevitable, result of our need for security in the medium term. I hope that CCS could be a solution.
I support the levy control framework as providing a cap on the effect of alternative technologies on fuel poverty and manufacturing competitiveness. We will have to consider both these issues in Committee but the levy control framework allows people to know where they stand, at least up until 2020.
That brings me to the major point of contention surrounding the Bill: do we or do we not need a decarbonisation target for 2030—or, more precisely, do we need to set a decarbonisation target for 2013 and 2014 or will it wait until after the next general election? Will a two or three-year delay make all the difference in releasing the billions of pounds desperately needed to keep the lights on?
If it was merely a question of buying wind turbines and towers to place offshore, say, in the 2020s, it would not necessarily matter. However, we know that Gemesa, Siemens, Vattenfall, Vestas and so on need the signals as soon as possible to start building the factories, to create the jobs and to build the parts necessary for such wide-scale investment in power in the 2020s.
The same goes for CCS, although this time the signal is as much for the Treasury as the private sector: it really needs the self-discipline to commit this time to what could be a very profitable area for the UK. There will be a huge worldwide market for CCS if we can create a safe and reliable system. I sympathise with the Government over decarbonisation targets. There is a lot of uncertainty about where our power sector could go over the next 15 to 20 years. Will we have a shale gas revolution? Will nuclear become too expensive to replace? Will the only practical source of power be gas and will CCS fail? Will the gas lock-in, which I spoke about, become an accepted feature of our energy landscape? Can we burn cheap coal-bed methane or will algae be the solution to the world’s energy problems? Will the economy soar and increase demand, or will it plummet and make cheap electricity the overriding need? It is hard to know which will be the safest road. We could go in any direction.
That is the key point. These same thoughts are going on in the minds of investors, too. They, too, do not know which way to jump. They, too, are tempted to hold back their billions until they see which way the cookie is going to crumble. Which technology is going to succeed in the UK? What is going to happen to the levy control framework after 2020? It is all very well the Government relying on the Climate Change Act, but that is about general targets across the board. What sector-specific commitments are the Government giving within the electricity industry? Why should investors commit their money if politicians cannot commit their and their successors’ reputations? In my view, the Government should provide certainty to investors. The target need not be as low as 50 grammes per kilowatt-hour, but a target is needed. Then the investment that follows will, in my view, bring down the cost of power, boost our employment and economy, and raise the certainty and security of power, which is really important.
Lord Lawson of Blaby
My Lords, like other noble Lords who have spoken, I begin by declaring an interest. It is a non-remunerated and non-pecuniary interest, unlike some noble Lords’ interests. It is the chairmanship of the Global Warming Policy Foundation. While I am about interests, perhaps I should declare two past interests, which I think are slightly more relevant to this debate: one which was remunerated, not particularly well, Secretary of State for Energy, and the other, president for a very long time—indeed I am the immediate past president—of the British Institute of Energy Economics. I have been tilling this soil for quite a long time. I am glad to say that next to me here is my successor as president, my noble friend Lord Howell, who was my predecessor as Secretary of State for Energy. Unfortunately, his other commitments prevent him from speaking in this Second Reading debate but I hope he will bring his great wisdom on this issue to bear in further stages of this Bill.
I do not blame my noble friend the Minister in the slightest for the fact that this is the worst Energy Bill in living memory and, indeed, probably the worst Bill of any kind that the present Government have brought forward. That may to some extent explain why it is so enthusiastically welcomed by the party opposite. It has, as the Minister made clear, one purpose and one purpose only: to reach the very demanding—that is an understatement—and radical decarbonisation targets in the Climate Change Act, which, as she rightly said, is something on which no other country has embarked. She seemed to think that was a good thing. In my opinion, it is just because no other country is so stupid.
The policy too has a particular characteristic. It has been characterised by our leading energy economist, Professor Dieter Helm of Oxford, as the Gosplan approach—his word, not mine. The noble Baroness, Lady Worthington, had a similar critique of this Bill. It is a curious, arbitrary form of nationalisation with much greater discretion for Ministers and officials than any of the old-fashioned nationalisations. The noble Baroness developed a powerful critique. It was probably the only aspect of her speech with which I agreed, but nevertheless she made a very important point. The other claims for the Bill are, of course, poppycock.
As my noble friend Lord Teverson pointed out, this is not a new Bill. It was first published in draft in 2010, and in gestation it inevitably goes back beyond that. Since then, absolutely everything of importance in the energy field has changed. Incidentally, we need to distinguish between the climate change issue and the energy issue. For example, Professor Helm, to whom I referred and whom I have known for many years, is, on the climate change issue, at the alarmist end of the spectrum, yet he has produced the most devastating critique of the Bill because he is, among other things, unlike some noble Lords who have spoken, a highly competent economist.
Anyhow, since the Bill first came forward, everything of significance on the energy scene has changed. On climate change, too, it is now agreed even by the Met Office that there has been no further recorded global warming for the past 16 years or so. That has led to a great debate among scientists as to whether, as seems likely, they exaggerated in the past what is known in the jargon as the climate sensitivity of carbon. There is an emerging consensus among scientists that the climate sensitivity of carbon is probably less than they thought. That means, importantly, that any dangers from warming, if they occur, are postponed well into the next century. It means that there is no urgency to go ahead in this way, not only because the uncertainties are in the distant future but because we have no idea what technologies will develop over the next 100 years. All we know is that there will be technological development, because there always has been and always will be.
Again, the Kyoto agreement has collapsed with no successor. The whole of the Bill was predicated on the idea of a global agreement, but we now know that there is no global agreement and that there will not be a global agreement on mandatory carbon emission controls. In the European Union, which is the closest to us in going in this direction—although it has no Climate Change Act as it is not so stupid—the renewables industry is in meltdown. Over the past five years, the share price of the renewables companies has fallen by at least 80%. The countries concerned are busy withdrawing their subsidies and one renewable company after another is going bankrupt.
The final thing, to which allusion has already been made and which is probably the most important, is the shale gas revolution. The development of fracking, as many noble Lords know, means that it is now possible economically to win gas from shale on a massive scale. Indeed, the United States, which was first in the field, is already doing it for oil as well. It is getting oil from shale. That has transformed the picture economically. The price of gas has collapsed in the United States, the price of coal has collapsed in accordance and even the oil price is looking a bit shaky. That also has an important geopolitical consequence as shale is in abundance throughout the world. In this country, we have large deposits in the north-west, in Lancashire—in the Blackpool region—and in other places. That means that we no longer need to have any fear of being beholden either to an unstable Middle East or to an unreliable Mr Putin. There is an abundance of fossil fuels throughout the world. Everything has changed. We have an abundant supply and a prospect of lower prices. As other speakers have said, on the old forecasts it was thought that prices of fossil fuels were likely to increase. Even the International Energy Agency now thinks—although obviously it is all very uncertain—that they are just as likely to fall as they are to rise in the future. Yet despite these revolutionary changes, the Government’s policy and the Bill itself are completely unchanged from when they first came forward. They are ploughing on as if nothing had happened, despite the fact that the whole energy scene has totally changed.
This is not just a stupid energy policy; it is also an extraordinary foreign policy. I see a distinguished former Permanent Secretary at the Foreign Office in his place, the noble Lord, Lord Kerr. He used to be my Principal Private Secretary, so he is obviously a good man. I remind noble Lords that in the other place the Energy and Climate Change Committee produced a report on low carbon growth links with China. It concluded, and I am not making this up:
“China … should be at the heart of HMG’s climate change mitigation strategy”.
There was, of course, a response from the Government as there always is to Select Committee reports. This was jointly from DECC, the Department of Energy and Climate Change, and the Foreign and Commonwealth Office. They said:
“We therefore welcome the Committee’s report, which rightly concludes that the UK has an important role in encouraging the trend to low carbon in China”.
They went on, correctly:
“As the UK is responsible for less than 2% of global emissions, we need all other major economies to reduce their emissions as well”.
They then added, and I quote:
“By demonstrating political leadership … the UK can have a powerful influence on the speed of transition to low carbon economic models in other countries”.
What on earth have they been smoking? Their view, it seems, is that the Chinese cannot make up their minds whether they really want to decimate their industry on the altar of higher energy prices and impoverish their still quite poor people even further and that they are only looking for a lead from the Foreign Office in Britain before deciding to do just that. What sort of world do they think we are living in? It is complete lunacy. China and India, despite what noble Lords may have heard earlier in this debate, have not the slightest intention of following us down this crazy path.
We must also look at the oil industry. Your Lordships may not like the major oil companies, but they are not stupid. If they really thought for a moment that we were going to move into a decarbonised word, would they be spending untold billions on exploring for new oil and gas—and even more for developing them? What about the financial markets? What happens when one of the oil companies makes a great discovery? Do the shares go down because, after all, fossil fuels are completely obsolete and they are pursuing a damaging strategy? No, the shares go up when they have a great oil or gas find.
This is an Alice in Wonderland world in which the Government live and in which this debate is taking place. Nor is this policy a harmless lunacy. UK energy costs and prices are inevitably bound to rise as a result of this Bill, which will become an Act, I am sure. The purpose of this legislation is to push up energy prices, because that is the only way that renewables, and even nuclear, can be made economic. British electricity prices are already, as a result of government policies in this area, among the highest in the world. According to the energy experts who have studied the Bill they are set to double by 2030. As we move from low-cost carbon to high-cost renewables, we will be damaging the economy and damaging industry and it will be the poorest families that suffer the most. I am astonished that we did not hear a word from the spokesman for the party opposite on the plight on the poor who are suffering from fuel poverty, and who will suffer even more as a result of this legislation.
This is a bad, bad Bill. There is not a single energy expert of repute, whatever his views on climate change, who believes that the policy enshrined in this Bill is sustainable. However, that is no consolation because the damage that will be done before the inevitable U-turn takes place will be incalculable.
Baroness Liddell of Coatdyke
My Lords, I, too, must draw attention to my entry in the register of Members’ interests as a director of the Offshore Renewable Energy Catapult. I should also take my lead from the noble Lord, Lord Lawson, who pointed out that he was a previous Secretary of State for Energy. I was a Minister for Energy but, being a woman, I was expected to multitask, so I was also Minister for competitiveness in Europe. Tempting though it is to follow and challenge some of the lines of the noble Lord, Lord Lawson, I notice that the noble Lord, Lord Stern, is in his place and is soon to speak. I think that he will probably do a much better job of it than I could conceivably do.
Yet like the noble Lord, Lord Lawson, I am not an unalloyed fan of this Bill. Professor Dieter Helm’s analysis of the Bill was actually very interesting. I see that the noble Lord, Lord Birt, is to speak later on. Perhaps he, too, could take up the issue of the bias against understanding contained in this Bill because it is of considerable complexity, and within that complexity there is the opportunity for a considerable mistake. However, the Bill is needed, although it may not be in the right shape. Also like the noble Lord, Lord Lawson, I am concerned about the lack of impact on fuel poverty, which I will come back to in my section on demand reduction. I am not going to say much about decarbonisation, but when you put those issues alongside the decommissioning of existing capacity, there is a crisis of security, as the noble Lord, Lord Oxburgh, pointedly set out.
It may have been the intention that this legislation would end uncertainty. The Minister referred to that in her opening remarks but, frankly, its long gestation period has added to the uncertainty, as well as the fact that we need more detail on the setting of the strike prices and the need for secondary legislation to support the Bill. We have a considerable difficulty here around uncertainty. If I may give just one example, Ernst & Young has recently done some research on the international investment market for renewable energy. Because of uncertainty in the British market, we have dropped to sixth place in terms of our attractiveness for that investment.
In the area of offshore wind, where Britain is actually a leader, we have lost our top position. If noble Lords want an idea of the scale of this, let me point out that last year, €4 billion of manufacturing capability was commissioned in Europe. Some 75% of the turbines for offshore wind were built in Britain. There is a huge opportunity for offshore wind and we have managed to fail to exploit it to the full because of the slow progress in proceeding with this Bill.
This Bill is an example of market manipulation. I do not have a problem with that; infant industries often need market manipulation. The noble Lord, Lord Roper, is right to ask for an explanation of where we are in negotiations with the European Commission on state aid. I would also be very interested to know if the Minister could enlighten us on where we are in relation to the impact on UK energy costs compared with our EU competitors. That is a critical balance, and not just in terms of how our economy operates. The noble Lord, Lord Oxburgh, referred to interconnectivity; the direction of flow with interconnectivity will be based on the relative prices on either side of the interconnector. Like the noble Lord, Lord Deben, I worry about sovereignty. This is one of the key issues of the past 10 years. If someone has the capability to switch off access to energy, they will have strategic control over what happens to the economy of this country.
Going back to the complexity issue, there are some aspects of EMR that have been tried elsewhere and some experience of capacity markets in the USA, but I am not aware of any country using the model of contracts for difference and capacity markets at the same time. I would be very interested to know how the Minister sees some of these issues working.
We also have a pressing need for diversity of energy-generating capacity. Many of us in this House are in our prime and we can remember the six-day war. We also remember what happens when we become overly dependent on one energy source as against another, and we must ensure that that does not happen again. There is a place for all sources of energy, including fossil fuels. This is a real challenge for the scientists and engineers who, for as long as I have been around, have been promising clean coal technology. Carbon capture and storage is the holy grail, but I have been waiting for far too long to see its commercialisation. The Minister skirted over nuclear in talking about the Office for Nuclear Regulation, but in a situation where EDF is in a monopoly position in negotiations with the Government, where are these discussions? What conclusions will we come to? The Committee on Climate Change has said that at least 16 gigawatts of future supply should come from nuclear, but it is difficult to see how that is going to come on stream in time to impact on the insecurity of supply that we have to deal with.
There are some of us who do not necessarily remember it but know that there was shale gas in this country before. I live very close to West Lothian, where there was quite an industry around shale gas in my father’s day. There have been recent announcements about the prospect of 37 gigawatts of gas generation being sanctioned, alongside the prospect of shale gas—with envious eyes across the Atlantic looking at how shale gas has impacted on US energy markets. Are we going to end up with a dash to gas being forced on us because we need security of supply? We need to get a move on with nuclear and with investment in renewable energies. We are seeking economic growth, so it is all the more critical that manufacturing capability which we can rely on in the future is developed. What is going to happen about strike price setting in practice? What will the setting of the strike price be, taking into account new nuclear? How will a competitive model eventually operate?
Let me turn now to the lines on capacity markets to deliver energy saving. Frankly, I think it is fanciful. I am with the right reverend Prelate when he asks why we are having only one pilot. Why are we not in a position to look at other ways of managing demand? One of the best ways of ensuring a robust energy market is to ensure energy efficiency. I ask the Minister to answer this in her summing up: if I were Mrs Liddell of Coatdyke in North Lanarkshire, living in a damp council house with inadequate insulation, possibly a post-war house with no upgrading since, how would that affect my fuel bill? It would not. And please do not tell me about the Green Deal; you need £150 even to get your foot in the door. That may buy a rather nice dinner in the Barry Room, but it is a king’s ransom for some of the people who are most intimately affected by this.
I turn my attention to an area that has caused considerable concern throughout the country: the mis-selling of tariffs for electricity. I am not suggesting that there needs to be some kind of retrospective legislation with regard to this, but I am asking that we get some clarity on the Prime Minister’s claim that people will be put on the lowest possible tariff. How is that going to work? We need that spelt out, and quickly. We need additional powers and resources for Ofgem, which at the moment is apparently looking at 27 cases of mis-selling, both formal and informal. Mis-selling is fraud against the most vulnerable in our society, and this Bill is not going to help that.
I look forward to our deliberations on the Bill. There are critical issues that need to be raised. We need an energy Bill but, sadly, I am not sure that this Bill as it stands is the finished article. I hope that by the time we get to the end of July, it might be.
Baroness Maddock
My Lords, I need to declare my interests as president of the Micropower Council—contrary to what noble Lords might have read in the Daily Mail, you do not get paid for being president of something—and vice-president of National Energy Action, a charity dealing with fuel poverty. Like the previous speaker, I will say a little about fuel poverty in my remarks.
There are many reasons to support the Bill but we have also heard about some of the problems surrounding it. Maybe we in this House can ensure that it is better by the time that it leaves us. However, it will address some of the challenges that we face such as the security of supply and the need to invest to meet our current and future demand for electricity. It has been estimated that we need at least £110 billion to do that. We need to improve the national grid, as others have mentioned; investment in the grid has been neglected for a long period. The Bill will also address our aim, which some people agree with and some do not, to decarbonise the electricity sector by the 2030s as part of the global challenge of tackling climate change. We hope that the Bill will support the construction of a diverse mix of renewables, new nuclear, gas and carbon capture and storage—many of the things that people have said in the debate that we need.
It is estimated that electricity market reform could provide around 250,000 jobs. Coming from the north-east of England, I think that creating jobs away from the south-east is really important. I associate myself with the words of my noble friend Lord Deben about the importance of a supply chain. Already in the north-east we have industries providing pieces for turbines for onshore and offshore wind, and I hope that that will continue.
My interest in how we protect our environment globally and locally stems from three years that I spent over 40 years ago living in Stockholm in Sweden, where I realised that if a home was properly insulated it cost a fraction of what I had been paying in England to heat one. I also realised, because I was teaching English at the time to old-age pensioners, that they did not die in the winter because they were living in cold and damp homes, and that there was no such thing as fuel poverty. Shortly after that we had the world oil crisis, which brought home to me the need to not be wasteful with our global natural resources. Whatever we believe about climate change, that is something that we should all be aware of.
In the 1970s, when I joined a political party, it seemed to me that at that time only the Liberals were genuinely concerned about these issues, although I must say that that is not the only reason that I was a member of the Liberal Party and am now a Liberal Democrat. In my early days, campaigning to be elected and serving as a councillor in Southampton, I was often mocked for what I was talking about with regard to these issues. I particularly remember being mocked when we were trying to introduce recycling in the city. At one point, three colleagues and I held the balance of power on the council and we managed to set up an environment committee. Not everyone at that time was a dinosaur and one of the colleagues that I worked with—we worked across party lines—was the honourable Member for Southampton Test, Alan Whitehead, who has played quite an important part in this Bill’s passage in another place. At that time we managed, using some geothermal energy, to set up a district heating system that has become one of the most successful in the country.
So when I was elected in another place, now 20 years ago, it is not surprising that I chose to promote the Home Energy Conservation Act. I was fortunate enough to be No. 1 in the ballot for Private Member’s Bills and, with the help of a lot of other people and organisations, that Bill became an Act.
I think that a majority of people today—although not everybody, including my noble friend sitting in front of me—are very concerned to protect our planet now that we have seen the data and how human activity affects our climate. In my early days of campaigning on these issues, it was a wild dream that Liberals would be in government and that we might see a Liberal Minister leading a Bill of this nature. So I am particularly pleased that my longstanding colleague, my right honourable friend Ed Davey, has been spearheading this Bill.
Given my background, I think that it is not surprising that the two things that I have chosen to concentrate on in this Bill are electricity demand reduction and help for consumers, particularly with fuel poverty. Several other noble Lords have mentioned electricity demand reduction. A major criticism of the Bill has been that, in its original form, it did not contain measures on electricity demand reduction. During the passage of the Bill in another place, the Government introduced amendments, which have been spoken about, to enable electricity demand reform to form part of the capacity market and for there to be pilot schemes. However, among many of those—including me—who are pleased to see this step, there are concerns about how capacity market measures will operate and whether they will actually achieve substantial reduction in demand, particularly permanent reduction. There are also concerns about the nature of “a pilot”, rather than several pilots, and what actions might follow as a result of such pilots.
Following the initial criticisms, there was a consultation from DECC to explore the options to encourage electricity demand reduction. Of the options put forward, a majority of respondents favoured a system of electricity-efficiency premium payments which would provide electricity users with a payment on top of the savings that result from reduced electricity usage. I strongly support something of this nature. During the time that I lived in Stockholm in the late 1960s and early 1970s, most of the electricity used in Sweden was hydroelectricity. However, they had had two or three very dry summers and there was a shortage of electricity. There was a huge campaign about how to save electricity and measures were advertised, from how many times you should open your fridge to persuading you and those you lived with to sit around one light when you were in your flat in the evening. It resulted in huge savings of electricity. There were no blackouts. The area that saved the most got their bills reduced. So there is evidence that this is something that works.
As to the role of the capacity markets, there is evidence that a capacity market is of limited use in rewarding energy savings—I believe that experiences in America have shown that to be the case. Payments from capacity markets are uncertain and it is not yet clear when or if a capacity auction will be triggered here. Could the Minister, when she replies to this debate, address this issue? As energy efficiency and demand reduction reduce the risk of capacity shortage, it is rather perverse to make support for them dependent on those shortages occurring. I hope that we will address this during the passage of the Bill.
Capacity markets are not suitable for delivering energy saving for households or small businesses. The complex design of the capacity market means that only large energy suppliers and other specialist companies are likely to participate. It is vital that we have mechanisms to capture savings from small businesses and homes if we are to achieve the full electricity-saving potential that the Government have identified. A capacity market is primarily designed to ensure capacity during troughs in supply, so it rewards energy efficiency for only its security benefits, not for the much larger benefits or for emissions reductions and affordability.
I am disappointed that on Report in the Commons, cross-party amendments that would have introduced simple transparent payments for households and businesses that save energy were not addressed favourably. Will the Minister look again at such proposals, which may come forward again during the passage of the Bill in your Lordships’ House?
Clause 37 allows the Government to introduce a pilot for electricity demand reduction. Will the Minister also look very carefully at this? I am not the only one to raise this matter today. We would like to see more than one pilot and a variety of schemes.
As I declared in my opening remarks, I am a vice-president of a national charity that works in the field of fuel poverty. The charity works with government and others to ensure affordable energy for disadvantaged customers through a wide range of activities. National Energy Action is currently helping the regulator Ofgem to refine the contribution of district network operators to permanently reduce electricity demand within the UK. District network operators will be subject to an energy efficiency incentive during the new distribution price control—ED1—and will be encouraged to foster innovation and support low-income and vulnerable customers through new social outputs. Therefore it would be very helpful if Clause 37 could be amended to show that the Department of Energy and Climate Change is aware of the role of district network operators in encouraging permanent electricity demand reduction.
Finally, I turn to consumer bills, which other noble Lords have already mentioned. I am pleased that there is something about this in the Bill. However, due to my experience of the big six energy companies and the various bills that I get from them, I am not holding my breath. I am always shocked by the way in which they try to follow whatever they have been asked to do. They recently began to try to explain to customers, partly because it is in the Bill, how much electricity and gas the customers have been using and how much they can save on one tariff. I usually pay my bill by cheque when it comes. I received a bill—I will not mention from which company—which said on the front that if I paid it by direct debit, I could save X amount of money. On the next page it told me that if I paid it by direct debit I would save 10p. On the front of the bill the figure was several hundred pounds. That does not give me confidence that even the proposals that the Government want to see from energy suppliers in assisting customers may be forthcoming.
A representative of one of the suppliers—I think it was British Gas—came up to me one day proudly talking about their bills and how they set them out. For many years, as noble Lords will have learnt from my comments, I have been a political campaigner. I learnt very early on where you put something on a page so that people look at it first when it comes through the door—the famous Liberal “Focus” leaflets come to mind. I suspect that British Gas had paid huge sums to people to advise them on how to set out their bills. However, the thing that they wanted you to read was down there on the page, not in the top right-hand corner, which is where everybody looks.
I hope that many of the things in the Bill will assist people who find paying their bills difficult—those in fuel poverty—and make sure that we have a secure energy supply. I am sure that the expertise that we have heard this afternoon, and will hear later this evening, should assist us all in ensuring that this Bill is a lot better when it leaves this place and achieves some of the things that we all want to see.
Lord Stern of Brentford
My Lords, I refer to my interests in the register, in particular my chairmanship of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, which is part of my role as professor of economics at the LSE. I am perhaps one of the few unretired professors of economics in your Lordships’ House, if not the only one.
I will not dwell on the science—after all, I am an economist. This House has often heard on this issue from two former presidents of the Royal Society, the noble Lords, Lord May and Lord Rees. Noble Lords can also consult the current president of the Royal Society, Sir Paul Nurse, and Sir Brian Hoskins of Imperial College, who leads for the Royal Society on climate change. If any noble Lords have new results that can overturn 200 years of research, dating from the great French mathematician and physicist Joseph Fourier in the 1820s, and can contradict the 98% of peer-reviewed papers that identify anthropomorphic climate change, they should immediately publish them in one of the learned journals.
If you want to learn more, consult the Royal Society, the US National Academy of Sciences or the French, Australian or Chinese academies—whichever you choose to turn to. It is surely to the learned societies, scientific societies and the journals that we should go for serious science. Taking the long-term view, the world is warming and the only plausible explanation is human activity. We cannot predict the outcomes with certainty; this is about risk management, but it is surely clear that we are embarked on a reckless and potentially irreversible experiment with the only planet we have.
The risks are more severe and will come earlier to the poorest among us, but we all face them, whichever country we live in and however well-off we are. Contrary to what the noble Lord, Lord Lawson, has just claimed, the broad estimates of climate sensitivity are fairly stable. If he wants a discussion about those estimates, I again refer him to those who know about these issues and study them professionally. I have discussed them intensively with Professor Myles Allen, of Oxford University, who has already been referred to, with Sir Brian Hoskins, whom I mentioned and leads on climate for the Royal Society, or with Julia Slingo, the chief scientist at the Met Office. We are all confident that the IPPC report, looking across the whole waterfront of the evidence and reporting this autumn, will say exactly that—the estimates of climate sensitivity are broadly stable.
Let me turn to where other countries are going. It is all too easy to say that we are small—accounting for perhaps 2% of global emissions—and to claim that other countries are doing little. That is not correct. I have worked on China as a professional economist and as chief economist to the World Bank for more than 25 years, including intense discussion over the recent 12th five-year plan. China is midway through that plan, which contains strong emissions reduction programmes. Its carbon intensity reduction target to 2020, relative to 2005, is 45%—considerably more ambitious than our own 30%. China is ranked third on the Climate Institute’s low-carbon index. China plans to peak coal use during this plan period—that is, within three years—and is considering peaking annual emissions by 2025.
Why is China doing this? I certainly agree with the noble Lord, Lord Lawson, that it is not because it studied the United Kingdom with great precision. It is doing it because it understands the grave risks of climate change and because it realises that there is a green race, which it intends to win, or at least compete in very strongly. That is the kind of race that we should seek. The US is now reducing emissions rapidly and energy-related CO2 emissions are back to the levels of the mid-1990s—achieved by a combination of substituting gas for coal and regulatory standards. They could meet their 17% 2005 to 2020 reduction targets without national legislation. Brazil is targeting 40% reductions for 2005 to 2020. I could go on. Those are three very big and important countries.
The world is doing too little, but it is absolutely not true that other countries are doing nothing. The more we recognise, country by country, what others are doing, the sooner the much needed acceleration of action will come. The global race is becoming a green one, and those who attempt to stay dirty will find other, cleaner countries understandably placing restrictions or tariffs on their imports. They will be WTO-compliant, because they will counter a subsidy on dirty. In this international context, UK climate change legislation is wise and forward-looking, not only from the perspective of climate change, fundamentally, but from the point of view of future growth. So, too, is this Bill wise and forward-looking.
What about costs to consumers? Energy bills have increased by around £400 for the typical household since 2004, from £600 to roughly £1,000. Of this increase, 80% was unrelated to carbon policies and was due largely to the increased price of gas, together with some increase due to investment in networks. Much of the remaining 20% was associated with investment in energy efficiency, which will bring its returns. In future, low-carbon policies aimed at supporting investment in clean power generation technologies will add £100 to the energy bill per annum of the typical household by 2020—around a 10% increase. There are opportunities to more than off-set this through energy efficiency improvements, particularly through more efficient boilers and appliances. The low-carbon policies are more likely to bring a reduction in bills by 2020 than increases. Over the past decade, the reliance on hydrocarbons has forced up prices.
Gas has a real contribution to make to emissions reductions in substituting for coal, but the benefits of shale gas in the UK are more likely to be in the energy security and profits that it could bring than in the price impact. Prices in the UK will be largely determined by Europe and world markets. Gas could indeed play a useful role in meeting ongoing demand for heat, balancing generation on the power system and gas generation of electricity with CCS if this is shown to be viable. It can be a valuable bridge to the medium and long term but, without CCS, gas cannot be the long term.
The future is uncertain, as many have remarked, and we will have to learn and be flexible. We will need a range of technologies and a smarter, more flexible and better interconnected grid. This will include improved energy storage, more interconnection with other European electricity networks and, crucially, better demand management. Additional R&D in all these areas will be essential to ensure that a full portfolio of options is available in the coming decades to manage the uncertainties and opportunities that are likely to emerge. Energy efficiency must, of course, be at the heart of all we do.
In thinking about investment, let us recognise that government-induced policy risk is the greatest threat to investment around the world, wherever you look, be it through threats of nationalisation, corruption, the speed of the law courts or whatever. That is a lesson that I have learnt in a lifetime as an economist specialising in development and growth, but also in a decade that I spent directly involved in supporting and financing investment, particularly infrastructure investment, first as chief economist of the EBRD and then of the World Bank. For the UK, clarity of policy is paramount to deliver the investment needed to decarbonise the power sector. The opportunity to leverage private sector investment now is potentially huge, with low interest rates, liquidity in much of the private sector strong and investors waiting for real clarity. It is the noises off and the apparent vacillation—the idea of constantly reviewing policy—that has undermined confidence. There is now a need for clarity in the wake of past confusion, and I warmly welcome the Bill as making a major contribution to reducing that confusion and giving a clear sense of direction.
We need substantially more strengthening of the necessary confidence. In particular, we need a stronger institutional structure to bring confidence to the investment framework. For example, the LSE Growth Commission, which reported in January and of which I was a member together with the noble Lord, Lord Browne, and others—I apologise for referring to the LSE again—recently proposed a new institutional architecture for infrastructure, including an infrastructure strategy board that could radically reduce medium-term policy instability. The energy and transport sectors are around 70% of this infrastructure story.
Lord Vinson
My Lords, the noble Lord, Lord Stern of Brentford, has failed to mention the cost of energy to British industry. Is that not a vital and essential part of maintaining jobs and our competitiveness, and helping us correct the huge export-import imbalance that we have at the moment? He has not mentioned anywhere the cost to industry. Is that not a fact that should come into his and his department’s calculations?
Lord Stern of Brentford
I do not have a department. I am chair of a research institute and an academic.
The cost of energy to industry is indeed an important factor in its competitiveness, but it is not nearly as important as the investment climate, wage rates, productivity and exchange rates. This is of fundamental importance. Primary energy in the UK and similar economies is about 5% of GDP. Even a 20% increase would give you a one-off 1% increase in costs. That does not move industry from one place to another. You can study some of the publications on our website. If you look at what determines where people are, the data are made up of those issues that I have described: investment climate, wage rates, productivity and exchange rates. This is an important part of the story, but a small one relative to other big factors. Furthermore and fundamentally, I have given reasons why over the medium term the policies that we have been describing here are just as likely to force prices down over 15 or 20 years as to raise them, if not more likely to do so.
A target for power sector decarbonisation that gives a crystal-clear signal to investors is essential. Without such a target and with potentially mixed messages from government, there remains a high degree of uncertainty that will deter investors. The best way to address this government-induced uncertainty is to include in the Energy Bill a target for power-sector decarbonisation, specifically a target to reduce the carbon intensity of power generation to 50 grams of CO2 per kilowatt hour by 2030, as recommended by the Committee on Climate Change as being necessary to meet overall emissions reduction targets. I urge your Lordships to support the Bill. It is a wise and sensible step in a good direction. It would be much stronger and wiser with a decarbonisation target.
In summary, there are five reasons for this target. It is the responsible way to play our part in a world at immense risk from climate change. It is necessary to reach the target for emissions reduction that we have sensibly set for ourselves. It is necessary for the credibility and clarity to foster the confidence necessary for the investment on the scale that we need. It will allow us to move still more rapidly into the world markets of the future. Finally, as that investment takes place, we will find that it plays a key role in fostering the investment and infrastructure that will deliver the energy security, affordable energy and growth that this country sorely needs.
Lord Judd
My Lords, as an emeritus governor of the LSE, I take great comfort in the presence of the noble Lord, Lord Stern, in our academic ranks.
By the 1980s, the management of the economy of the Soviet Union had become a nightmare and a very sick joke. The bureaucratic jungle that stifled decision-making and obscured responsibility was a breeding ground of disastrous corruption, inefficiency and ineffectiveness. Sometimes I wonder whether, paradoxically, the management of the UK and western economies is not increasingly being tempted into exactly that direction.
The roots of the problem seem to me to lie in our becoming prisoners of ideology. What is too often lacking is an overriding, self-evident commitment to the public good, based on social-ethical values, principle, pragmatism and common sense. Where for the fulfilment of that public good is public ownership more appropriate, and where is private ownership better equipped to deliver? There are complex challenges in trying to mix the two. The private sector is driven by profitability; the public sector should aspire to cost-effective, high-quality public service. Bureaucratic structures will never sort that out. Only a deep sense of shared responsibility and commitment with powerful leadership will produce the answer, but just how can that be achieved?
A naive faith in market ideology has been allowed all too much to blind us to common sense. Muscular, tough, pinpointed accountability is not always there. We of course recognise that to leave the management of such a fundamental necessity for society as energy to market forces alone would be unforgivable irresponsibility. We therefore have before us a scheme devised by very clever and dedicated experts which is intended to guide, restrain and police the market. However, I suggest that it is a scheme which is prepared within the context of market fatalism and which, as the right reverend Prelate the Bishop of London said, is beyond the comprehension of all but a small number of mandarins, politicians and academics—a scheme which has already been described by some as “theory gone mad”. It is so remote from the cut and thrust of real life and from basic realities in human behaviour that it is destined, I fear, to become a dangerous minefield of controversy between the different participants. Conspicuously absent is any underlying driving concern for the regeneration of a public service ethic of responsibility—an ethic which has been repeatedly and systematically undermined for the past half century, and an ethic without which we shall always be in trouble. Long-term sustainability, environmental issues, care for qualitative, aesthetic and scenic dimensions of any civilisation worth the name, climate change and security all make the ethic an imperative.
The prevailing intention of the Bill is to generate more electricity, but is that really the first priority? Is not the higher priority to assemble all the wit and skills, not least engineering and architectural skills, at our disposal to reduce the escalating need for always-greater energy consumption? With the majority of the world’s population yet fully to mobilise their fair demand for energy, does this not become critically urgent? Of course, there are genuflections in the Bill towards conservation but they are not in the engine room of the Bill. They are, in effect, in an aspirational department. Just where are the specific operational targets and who is pinpointed to deliver them? Where are the arrangements for the essential nationwide cultural education on personal responsibility? One has only to walk round the House of Lords at any time, let alone in the evening, to count the number of lights and the amount of equipment needlessly devouring power at unoccupied desks and in empty rooms. Where is our personal example to the nation in all this?
The electricity industry is expressing itself clearly, well and strongly on the Bill. Others in civil society are making challenging and significant observations. I think of Which?, the WWF, the John Muir Trust, the CPRE, the RSPB, the Campaign for National Parks, of which I am glad to be an honorary vice-president, and many others. They raise vital issues, to which I hope the Minister will respond well before Committee.
Matters surrounding the Bill which particularly concern me and on which I hope the Minister will be able to comment include the need for more specific demand reduction measures in the Bill. While I recognise the proposal to “bolt on” demand reduction to the capacity market, there is a remaining serious doubt about just what savings will really be achieved by this, especially for households and small businesses. Taking into account the experience of the US, where only a tiny percentage of capacity payments have in practice gone to demand reduction projects while the overwhelming majority have gone to fossil fuel generation, there is clearly a lot of hard work still to be done on this front. Investors, as has already been argued in this debate, need to be confident that there will be a minimum level of delivered energy savings. It would be tragic to miss a great opportunity of being among the world leaders in engineering and manufacturing capacity on all this. There are the dangers of a dash for gas and the need to ensure that non-generation, interconnected capacity and demand reduction can participate successfully in capacity auctions, receiving a growing proportion of capacity contracts. The indispensability of supply-side capacity auctions invariably requiring independent, transparent and published evidence, which must at all times be robust, is becoming self-evident.
It will be important for the Government to pilot multiple EDR schemes, including those designed for households and small businesses, to ensure thorough and meaningful evaluation. It is vital for an independent panel of experts to scrutinise strike prices agreed between government and investors before contracts are signed. There is still a need to establish the real total cost of transmitting electricity from planned large-scale wind power installations in remote areas to consumers and the economic viability of such projects. Let us take, for example, the issues raised by the escalating cost of the Beauly-Denny overhead transmission line. This was originally estimated at £330 million but it is already thought to be costing £557 million or more. There are lessons to be learnt, especially about the crucial importance of proper scrutiny, the proper consideration of options and the pitfalls of fast-tracking.
It is imperative to take peat lands fully into account in calculating targets for greenhouse gas emissions reduction. There is the imperative of debarring new grid systems from being routed through national parks and areas of outstanding natural beauty. Where they are to be adjacent to these priceless assets, let alone—God forbid—within them, it is imperative to place them underground or under the sea. Equally firm provisions are required on all forms of energy construction and infrastructure. The national parks and areas of outstanding natural beauty must be exempt from permitted development rights granted for renewable energy infrastructure which is likely to have a significant impact on landscape—for example, wind turbines.
On the face of the Bill there should be targeted and clearly identifiable responsibility for removing installations and infrastructure when they become surplus to requirements or obsolete. The continued indispensability of the visual amenity allowance introduced by Ofgem to fund the undergrounding of existing distribution lines should be underlined, as indeed should be the implementation of National Grid’s research findings that the allowance recently introduced for transmission lines should be doubled. There is a need for strengthened financial incentives, such as grants, payment tariffs, green taxes and charges for the adoption of low-carbon technologies, coupled with strengthened penalties for unsustainable practices.
It is surely essential to tighten emission performance standards still further than is envisaged at present. I am certain of the indispensability of more research into new forms of renewable energy, not least those that would be appropriate for national parks and areas of outstanding natural beauty. The current pilot to test the potential for underwater tidal energy generation in Pembrokeshire is very important, as indeed is the promotion of mini hydro-generation schemes for villages and hamlets. There is a need to take the potential contribution by geothermal heat far more seriously than, quite inexplicably in my view, we have so far done.
Whatever we do on energy legislation and policy should always have, as a non-negotiable principle, a determination to avoid scarring the unique and special inheritance of our countryside and open spaces. These are essential for our national morale, spiritual regeneration, psychological stability and physical and mental well-being. This should be clearly reflected in the Bill. If ever there were a sphere of life in which an effective, comprehensive and clear-cut national plan, with detailed provision for delivering its objectives, is essential, energy is exactly that. Social justice demands that it is not the already deprived and relatively less influential sections of our nation that are, in the end, landed with the heaviest burden of all the paraphernalia of energy production, distribution and maintenance.
Before I conclude, I will just say something about the nuclear dimension. If we are to go ahead with another phase of nuclear energy, it must be justified by convincing economic analysis, and it must never be secured on the basis of direct or indirect subsidies that are not available for the development of other technologies. It is also deeply disturbing to be entering into a new phase without yet having convincingly demonstrated how lethal waste, with all its hazards and acute dangers for our children and grandchildren and for very many generations ahead, is to be resolved. The recent saga in Cumbria has surely underlined beyond doubt the urgent requirement for a convincing, transparent and prioritised report by highly qualified independent experts on the most suitable and least hazardous sites in the UK. This will be for extremely long-term waste disposal. It will have to cover geological suitability, climate change and its consequences, security and other key factors.
Meanwhile, the existing highly dangerous waste is standing in the open. Radioactive birds and insects are multiplying. The acute dangers of terrorism, and now drones, remain. Time is not on our side. Urgency is paramount.
The Lord Bishop of Hereford
My Lords, as others have said, there is much to commend in the Energy Bill, which proposes significant and welcome changes to create an energy sector fit for the 21st century, not least the reforms to the electricity market and the attention paid to domestic tariffs. However, there are some glaring omissions, which seem to present an opportunity missed. I regret that the Bill does not put into law a requirement on the Secretary of State to set decarbonisation targets for the electricity sector. The reasons have been debated in the other place and there have been references to it in your Lordships’ House, but I would be grateful if the Minister would comment on simply leaving it as a power and not making it a requirement, a point raised by so many others.
Furthermore, it seems to me that to have phased targets would be a benefit. There has been debate about even the 2030 target, but that is many years away. Given our five-year electoral cycles, I would have more confidence that we would address seriously the 2030 target, let alone the 2050 target, if we were to give ourselves graded and stepwise targets along the way, and certainly a requirement that there be at least a 2030 one.
Given the focus on decarbonisation, I am surprised that there is not more emphasis in the Bill on nuclear. The noble Lord, Lord Judd, has just referred to it in relation to waste products and some of the risks—I will say something about those in a moment. It saddens me that the newly suggested body, the Office for Nuclear Regulation, is to be given tasks focusing only on safety and security. Those are, of course, crucial, and nobody questions that. However, it leaves aside many of the other dimensions of the nuclear option that I think we so greatly need. We need, not least, more money for research and development, and we need government investment. There has been a great deal of talk from other noble Lords who know far more about the economics than me, and about the way in which a decarbonisation target would itself help to lever in private investment. If we are to have investment in nuclear energy, with further middle and longer-term aspirations, it seems that without a government commitment, private money is less likely to follow.
It is worth reflecting, perhaps, when we consider nuclear energy in relation to our decarbonisation targets, that to produce 1 gigawatt of electricity, which would power a city of about 1 million people, would take 3.2 million tonnes of coal, which itself would produce 8.5 million tonnes of carbon dioxide—to say nothing of 900,000 cubic feet of toxic waste. Noble Lords will not be surprised to hear that, by contrast, those 3.2 million tonnes of carbon could be produced by 200 tonnes of uranium or 1 tonne of thorium. The green arithmetic is not too difficult for us to understand. That alone, notwithstanding what the noble Lord, Lord Judd, said, should surely justify putting more money into our nuclear research.
Back in 1975, nuclear fission research and development received about £450 million a year. The figure reduced a bit in 1980, and I believe that the current levels of investment are only 7% or 8% of the 1980 levels, let alone the 1975 heyday. Sir John Beddington, until recently, as Members of the House will be all too well aware, our government Chief Scientific Adviser, said that he could not see a future for UK energy without nuclear energy. It is currently producing about 18% of our energy needs, and he anticipated, as others have, that it could rise to well over the 80% that we are already seeing in France. It may be 86% here but, of course, this cannot be achieved without research and development funding. It needs the Government to lead on that. It needs a joined-up approach, not just in government money but in our national nuclear laboratories, which I would love to see become national again. It also needs a joined-up approach involving the NNL, as well as our universities, and the encouragement of our own industry in its development and research, both here and indeed overseas. John Beddington also said:
“Clearly I think that if we’re going to be thinking about a significant expansion of nuclear capacity as we move toward our goal in 2050 of an 80 percent reduction in greenhouse gas emissions, we need to keep options open … And part of those options is … having the R&D to think about taking it forward”.
There is reference in the Energy Bill’s summary impact assessment to decommissioning, which, I understand, takes currently about 69% of DECC’s £2.3 billion a year. Our own view about decommissioning is remarkably negative in that we see all the waste products, to which the noble Lord referred, only as waste. I do not think we have enough confidence yet to see them also as an asset—as a fuel. It will be quite possible to use some of the plutonium in MOX reactors, with both uranium and thorium reactors, to make the waste into a fuel and make it an asset rather than a liability. Exploration of that is urgently needed. I understand that this is happening in Canada and certainly in China, to which much reference has been made. Indeed, India, to which little reference has yet been made, is also investing huge sums of money in precisely these routes and these options. I ask again whether the Minister would give consideration to that, and whether a wider brief could be given to the new body that will be set up.
We need, therefore, to change our mindset as well as put money into research and development. If we were able to make some waste into an asset and use it for our nuclear fuels, perhaps that would help to reduce the decommissioning budget. It could also release money which could be put back into the research and development that originally enabled some money to be released. More of that is needed for us to be able to walk this path with greater confidence.
Reference has already been made, not least by my noble friend the right reverend Prelate the Bishop of London, to reducing the energy demands. A number of other noble Lords have spoken about Clause 37. I, too, would encourage that. As well looking at reducing our carbon footprint from energy, we also should look to complete the circle through reducing our carbon footprint by reducing our demands.
The number of lights switched on in the House has been mentioned. It may seem rather a small matter in comparison with the rather grander and much greater issues in the Energy Bill, but taking small steps as individuals would have a cumulative effect as well as give a lead. I would couple the comment about the number of lights that are on with the fact that it always amazes me that our printers are not set to a default mode of double-sided printing. We can make little steps. If we can get into that mindset, there would be a cumulative contribution and effect, even if it seems rather removed from the arithmetic that we are mostly addressing in this debate.
Noble Lords have also spoken about fuel poverty. I want to close by saying that I regret that this legislation is not bolder in addressing the inequality of domestic energy tariffs. The Government go some way towards addressing the complex and impenetrable tariffs that consumers face today, which is to be commended. However, I am not confident that this sufficiently addresses issues of fuel poverty. Members of the House are well aware that those who pay the most for their domestic energy are often the poorest in our communities. Many of those in fuel poverty pay inflated prices through the meters in their homes or are paying for other types of fuel, which are not addressed in this legislation. Is the Minister able to assure the House that the Government will address these wider issues, so that those currently experiencing fuel poverty can pay a fair price for their energy?
EDF recently said that it will have one domestic tariff if other energy companies follow suit. I understand that Ofgem does not recommend this as a way forward. It may be right. As we debate this legislation in this House, I hope that we will take the opportunity to send a clear message to Ofgem and the energy providers that the pricing structure needs to be fairer, more transparent and clearer. I wonder whether this debate also offers the opportunity to discuss again the possibility of setting a legal framework that requires domestic customers to pay more the more energy that they use. The current position whereby the more energy I use at home, the more likely my tariff is to reduce, is surely unsustainable. There is a cost to the earth and to the poor of the world who are most impacted by climate change as a result of our energy consumption. Surely the Bill provides an opportunity to reflect the wider costs of all our energy habits.
Earl Cathcart
My Lords, I should like to start with the assumption that the Government’s primary objective for energy must be to ensure that it is available and affordable. Self-sufficiency, sustainability, energy security and green energy are equally admirable aims but they are in my opinion secondary to the primary objective. It is no good achieving any of these secondary objectives if energy is not sufficiently available or affordable.
This is an ambitious Bill and I wish for a successful outcome but I have three areas of concern. My first, shared by the right reverend Prelate the Bishop of Hereford, is the alarming number of households in fuel poverty: 4.5 million, or nearly one in five households. This is appalling, if not embarrassing, for one of the richest countries in the world. We are being told constantly that there is no easy solution because if the present tariff system is changed it may put vulnerable households in a worse position. So, nothing is done. I would say, “Where there’s a will, there’s a way”. Unfortunately, there does not seem to be the will.
High fuel poverty probably has something to do with the fact that fuel prices have doubled in the past seven or eight years. That brings me to my second concern. If fuel prices have doubled in the past seven or eight years, what will happen to them over the next seven or eight years? Some experts have argued that they expect them to double again, which no doubt would exacerbate fuel poverty. I hope that the department has done its sums and that the Minister can reassure me that prices will not double. I am quite sure that prices will go up but the question is, by how much?
The Government’s aim is that our energy will come from nuclear and renewables, predominantly wind turbines, with gas as the back-up. Energy from wind is more expensive than that from fossil fuels, and offshore wind generation is more expensive than onshore wind. Also, the cost of building nuclear power stations is enormous but the Liberal Democrats will allow them to be built only if they receive no subsidy from the taxpayer. Therefore, this huge cost of construction will no doubt be passed on to the consumer. Two of our coal-fired power stations have already closed and the Government aim to tax the remaining ones out of existence. Until they finally close, no doubt they will recover this tax charge by passing it on to the consumer.
There is something here that I do not understand. We are taxing our coal-fired power stations out of existence—admittedly they are quite old—no doubt because of an EU directive, while India and China are planning to build 800 new ones between them. I know that China also has huge investment in nuclear and renewables but, all the same, it is still a huge investment in coal when we are scrapping ours. If it is because of a directive from the EU, why is it that Germany is to build 20 new coal-fired powered stations? Will Germany’s 20 new coal-fired power stations be required to have carbon capture and storage built in, or not? If not, why are we taxing ours out of existence? I just do not see the logic.
Getting back to my concern, I do not see how prices will not continue to increase, which will further pile on the agony for those already in fuel poverty and increase the number of households getting into fuel poverty. However, it is not just households: what will these rising costs do to the competitiveness of British business and industry, especially those few industries that are heavily dependent on energy?
Recently, my right honourable friend the Prime Minister, making a speech about Britain being in the global race, said that one goal is to make Britain one of,
“the top five places in the world to do business”.
Quite so, but probably not for those industries heavily reliant on fuel, especially as fuel prices in America—with its shale gas—China, India and no doubt others are already half of ours. Let us hope that our fuel prices do not drive any industries heavily reliant on fuel away from Britain. I hope that the Minister can reassure me on this.
This brings me to my third concern. With these huge changes proposed by the Government, have the Minister and her department done the sums to ensure that there will be sufficient power available for all our needs until such time as all the new proposed power stations are up and running? Is there a margin of error built into their calculations? What concerns me is that the Government are relying on nuclear to be a major part of the new mix, but the Government have yet to agree any contract with EDF, which, worryingly, is the only player in the field.
Obviously, we hope that the new power stations go ahead, but if they do it will take at least eight years, if not more, before the first is commissioned. What happens between now and then, especially as we will be taxing our existing coal-fired power stations out of existence before we have secured any deal with EDF? If agreement with EDF cannot be reached, is there a plan B? I am sure that some of these topics—fuel poverty, energy prices over the next seven or eight years and the possibility of a shortfall in energy during that time—will be raised in Committee. I look forward to the Minister’s response.
Lord Berkeley
My Lords, along with many other noble Lords I welcome this Bill and think it needs support, but there does appear to be quite a lot wrong with it. It is going to be difficult to scrutinise. It seems that every clause refers to regulations yet to be identified. I have checked the Bill and its schedules, and the word “regulations” appears 403 times. I do not know whether that is a record, but it is not going to be easy to scrutinise this legislation if it has 403 regulations. However, it demonstrates the need for us to be given a lot more detail if we are going to do our job properly. My noble friend Lady Worthington asked for some details before we get to Committee, but it would be useful if the Minister could tell us when we are going to get information about the regulations.
I am going to concentrate my remarks on the industry structure, but before I do so, it is important to support my noble friend Lord Judd, the right reverend Prelate the Bishop of Hereford, and many others who have emphasised the need for greater support and encouragement for reducing energy consumption. We seem to have incentives to meet demand with supply; I think that is wrong. We should have incentives to reduce demand. It is the same with water. Why are the water companies not installing meters to reduce consumption and plugging the leaks? London is one of the worst offenders but, of course, they make more money that way. We really need to change our policies because there are good environmental reasons for reducing the supply of both water and electricity, and thus reduce demand.
I am both interested in and worried about the negotiations with EDF on nuclear power stations because we have a single supplier looking for some kind of firm contract for 20 or 30 years. I wonder whether these are what one might call balanced commercial negotiations: a single supplier and a single customer in the Government. The Government are up against probably the best international negotiators in the world. I compare that with what went wrong a year or so ago with the west coast main line negotiations on the franchise when Virgin exposed a number of serious mistakes in the Government’s handling of them. It is probably true to say that one of the causes was that soon after the general election, the then Secretary of State announced with glee that 30% of the civil servants were to be sacked and that they were not allowed to take any external advice, particularly legal advice. Therefore, it was a contract—rather larger than the contract to build one of our aircraft carriers, which I think is taking place at the moment—between a civil service that had lost a large number of its best staff and was not allowed to take external advice, and an international company that probably has some of the best lawyers in the world. I hope that that does not happen this time, but I do not have much confidence that it will not. If we do not get it right, the customers are, quite frankly, going to be screwed for the next five, 10 or 30 years.
I turn now to biomass. I have been looking into this quite a lot because it seems to be the short-term solution to the energy problem which the Government are proposing, and certainly before the nuclear power station gets up and running in 10 years’ time—if we get it. As noble Lords will know, biomass requires a large investment. For Drax and Eggborough, two of the power stations doing it, it has certainly been a big investment: there is the plant, the special handling facilities and the trains—I was involved as chairman of the Rail Freight Group. One possibility is to import biomass from north America into Milford Haven, which has some of the deepest water in the UK, and that will need 42 trains a day. That is a big investment, plus all the handling equipment at both ends and, of course, the ships.
I understand that Drax and Eggborough together will produce somewhere between 8% and 10% of our capacity. If the agreement with the Government on the selling price for electricity which is contained in this Bill does not go ahead, the investment will not go ahead. I also understand that this biomass negotiation cannot be completed until the nuclear one is completed. What is going to happen next winter and the one after that? According to Ofgem, last winter we had 15% spare capacity over demand, but apparently this coming winter it is going to go down to 3%. If Drax and Eggborough do not go ahead, I think we will need some candles; it is going to be quite serious. I hope that the Minister can tell me what the timescale is for the nuclear negotiations and for any relating to biomass because I think we ought to know. These companies are not going to hang on waiting for a decision for ever. Whether it is in this Bill or elsewhere I do not know, but it needs to be done soon.
The real problem is that the market structure that we seem to have ended up with is wrong. The big six generators also have retail ability. The Government policy is to deliver somewhere between 35% and 50% of generating capacity by independent renewals, which entrenches the dependency of the independent renewal energy generators on the large vertically-integrated utilities through long-term power purchase contracts. That is the big six. My understanding is that the problem for the independent retailers is that the big six will buy from the independent generators only if they cannot supply themselves. Therefore, the big six retailers always buy from their own generators as long as they have the capacity; otherwise, they buy from the independents. Apparently it has very little to do with prices. Perhaps the Minister can put me right on this, but I am not sure how the independent generators have the comfort of an open market, which they need to attract investment.
The problem is vertical integration, which means that the generators are also able to retail. In my book, it promotes monopolies, higher costs and poor services. It happens on the railways, which I follow a lot. On the railways, the Government’s policy, which I fully support, is a total separation of the train operators and the infrastructure manager. You cannot have fair competition on the railways if the train operator also runs the infrastructure, and the same applies to electricity. Vertical integration is wrong. It means that the market does not work properly.
I have information that similar things have happened in Germany, where the market does not really work. It has four big suppliers and there is not much competition at the consumer end, although it depends on which part of Germany you live in. However, the big four do very nicely and prices are high. It is interesting that the German Government are doing their best to make sure that that the vertical integration model still applies to the railways across Europe, so they clearly know something, but I hope we do not have to continue with it in the UK. There is a serious risk to investment by the independents, as the noble Lord, Lord Teverson, said, and I question what Ofgem is doing about it. I thought Ofgem had a duty to protect consumer interests but, as it stands, this seems to be a Bill to allow the big six to print money, which I am sure they will love. I do not see much competition. I see higher prices than there would need to be if there was a functioning market.
In the course of scrutinising the Bill, I hope that we will discuss how to break the dependency of the independent generators on the large, vertically-integrated utilities for long-term contracts. That would send a clear price signal to the market that would encourage as many new entrants as possible to participate. It would enable them to sell their power in an open market rather than coming second to the big six once they have got rid of their own electricity at whatever price. Otherwise, the independents will not be able to invest and we will be looking at such a reduction in supply that I suggest we all go out and buy candles for next winter.
Baroness Parminter
My Lords, like others, I welcome the Bill. It is critical that investment in the energy sector is procured and any policy inertia or uncertainty now will have a crippling effect on delivering that, securing the energy we need and meeting our legally binding carbon reduction targets. It is the only sustainable way to help keep energy affordable for hard-pressed consumers.
It is naïve to think that policy makers can control price volatility but action can mitigate its impacts, particularly those of volatile fuel supplies. Customer bills are likely to increase long term if we do not develop a clear policy framework to ensure adequate investment in low-carbon sources.
This is about bills and about jobs. The CBI recently reported that in trying economic times the UK’s green businesses have continued to grow in real terms, carving out a £122 billion share of a global market worth £3.3 trillion and employing close to 1 million people.
We have heard today from some climate sceptics—one particularly vocal noble Lord is no longer in his place—but they are in a minority in this House and around the globe. It is interesting that in the United States some of the strongest climate sceptics, including Karl Rove, support government initiatives for renewable projects, such as wind energy credits, given that wind power generates well paying, desirable jobs in rural areas. It is also seen as a cost-effective insurance against the growing number of climate change disasters. Insurers said that last year was the second most expensive in American history for disasters related to climate change, costing them $139 billion. However, private insurance paid only a quarter of those costs, leaving taxpayers to cover the rest. As the Economist highlighted last week, by comparison, funding renewable energy properly seems rather cheap. That was the point that my noble friend Lord Deben, who is not in his place, made earlier in stating that this Bill is UK plc’s insurance policy.
The majority of us accept that the Bill is right to introduce a capacity mechanism that seeks to ensure domestic security of energy supply. It is also clear around the House that there is a majority in favour of demand side response measures. Like others, I am pleased that that issue was addressed on Report in the other place through the introduction of an amendment for a pilot scheme for electricity demand management. However, given the limited opportunity to scrutinise these demand management proposals, I add my voice to the near unanimous number in this House who have called for a close scrutiny of the proposals in Committee. I support the call made by a number of my noble friends and noble Lords on the other side of the Chamber for more than one pilot scheme to be a critical part of the Bill.
There is one difference between myself and my noble friend Lord Deben, who is not in his place, in that I would not say that sovereignty is the only means of ensuring energy security. Yes, it is important, but it is not the only means. Measures better to exploit the benefits of co-operation with our European neighbours through interconnection are omitted from the Bill. Greater interconnection could help with the reduction of costs, particularly by making more efficient use of renewable energy. This view was strongly endorsed by the recent report of the House of Lords EU Sub-Committee on Agriculture, Fisheries, Environment and Energy on European energy policy.
Levels of interconnection between the UK and mainland Europe are much more limited than, for example, the 20-30% of interconnection between Belgium and the Netherlands. I applaud the Secretary of State for the recent memorandum of understanding with the Irish Government to trade renewable energy but there are outstanding barriers to better interconnection. Ofgem has highlighted the problem of congestion in the south of England which would require the existing onshore grid to be strengthened to accommodate major trade flows.
The full benefit of interconnection can be delivered only from greater deployment of high voltage direct current lines which allow electricity to be transported over long distances economically. The Bill does not say anything about the potential of interconnection, or how necessary grid strengthening can be financed or, as crucially, how public support can be gained for significantly higher pylons than are currently used. I hope that in Committee we seek clarification from the Government on their policy intentions on interconnection, on overcoming the barriers to building up the European electricity grid and on enabling Britain to benefit from increased security of supply.
There is much to be welcomed in the Bill but I am disappointed that it is a vehicle to provide public subsidy for the nuclear industry. Nuclear may be low carbon but that fact cannot hide the astronomical costs of building—and, indeed, decommissioning, as the right reverend Prelate the Bishop of Hereford ably pointed out—nuclear sites or the failure, after 60 years, to find solutions to storing high-level radioactive waste. All this on top of the fact that the British taxpayer is liable for any clean up of a major nuclear accident. Corporate liability for any nuclear accident is capped at around £1 billion—a derisory sum given that the estimated total clean-up costs for the Fukushima nuclear accident are likely to top £160 billion.
I wish the Bill well, but as we are not an energy island a strong European energy policy framework is critical. I commend the Secretary of State for his leadership in Europe and for arguing strongly for a binding emissions reductions target of 50% on 1990 levels by 2030 in the context of an ambitious global climate deal. Such leadership will be aided by the successful passage of this Bill and help move us towards the all-important global climate deal in Paris in 2015.
Lord Davies of Stamford
My Lords, I always listen to the noble Baroness, Lady Parminter, on these subjects with great interest and respect. She has great command of the subject. I think what she said about interconnection was a very valuable contribution to the debate.
I do not think that anyone who has read the report of the noble Lord, Lord Stern, published a few years ago, or least of all who, like me, has seen the dramatic retreat of glaciers in the Alps and the Himalayas evidenced in photographs taken only 50 years ago, can be in any doubt at all about the reality of climate change and the challenges we face.
I see the purpose of this Bill to provide the country with a diversified and secure basis for future energy supplies on the one hand and to achieve our international obligations on decarbonisation on the other. I totally support both objectives and I certainly will be voting for the Bill on Second Reading in the very unlikely event that there is a vote.
However, there are at least four respects in which I very much disagree with the Government’s approach to energy, and I rather think that the noble Baroness, Lady Parminter, has persuaded me to add a fifth to my list: the need for greater investment in interconnection. First, this Bill does not require the Minister to produce a decarbonisation target. In this respect, I totally agree with the right reverend Prelate the Bishop of Hereford and others who have said that this Bill should be prescriptive and not permissive on this point. Secondly, I am very disappointed that the Bill says nothing about demand reduction. I have yet to hear the Government set out their strategy quite clearly on that. Certainly I cannot find such a strategy in this Bill and we definitely need it.
My third problem with the Government’s energy policy is that we have made a probably excessive commitment to wind power, certainly to offshore wind power. It seems to me that the Government, under pressure from their Back-Benchers, are using the planning system to stop more developments of onshore wind power and are pushing it all offshore. However, offshore is an extremely expensive form of energy and it does not make any sense at all. The usual comparisons are that the cost of nuclear energy is somewhere between 6p and 10p per kilowatt-hour and offshore wind power is somewhere between 11p and 16p, which is about twice as great. However, you are not comparing two comparable things. Wind energy is not base load. It is not even a reliable peak load that you can turn on and off as you require, which you can with a combined-cycle, natural-gas-fired, thermal power station. It is extremely expensive for something that is not that valuable. I think we have gone perhaps too far in that direction.
My real quarrel with the Government is about nuclear power. What they propose is not in any way adequate. I would not go quite so far as the right reverend Prelate the Bishop of Hereford who wants to see 80% of our electricity generated by nuclear fission. That is, as he rightly said, the case in France. That is going quite far and would deprive us of the potential quite considerable advantage of benefiting from shale oil fracking to produce gas in the future. It looks as though gas prices are going to come down quite dramatically as a result of that. We have large reserves in this country and it would be a pity to give up that bonanza.
What is more, for the reasons I have just mentioned, there are advantages in flexibility in having in your portfolio a considerable degree of capacity from combined-cycle natural gas generation as well as nuclear. It is very alarming that the proportion of our electricity produced by nuclear fission has now fallen to below 20%. It was 25% a few years ago. If the proportion does not go up to 80%, as the right reverend Prelate would like, I would certainly want to see it above 25% very rapidly and it should be 30% or 40%.
If I asked the Government why we do not build 20 new 1.6 gigawatt nuclear stations rather than 10—they have not got round to signing a contract for one yet—they would probably give two answers. I have never asked them so I am probably putting words into their mouths. First, they would say that it would be inordinately expensive and, secondly, that there is very limited appetite in the private sector for this type of risk. This has been demonstrated by the difficulty they have had in getting people to bid for their business in this context already. The two German potential partners, E.ON and RWE, have walked away.
The Government have produced this situation by their own errors. They have adopted the wrong model for nuclear generation—one that is based on misallocation of risk and which consequently is unnecessarily and excessively expensive and deters potential private sector investors. The risk of design, construction and operation should be borne by private sector investors and contractors. It is vital that the same partner is responsible for all three so that design and construction are informed at every stage by the need for maximally safe and efficient operation. That is clearly a role for a contractor, but the Government are quite wrong to think that it is better for the private sector contractor to manage the commercial risks involved.
The Government have already retreated and accept now that the counterparty for contracts for differences must be a single counterparty backed by the state. Previously they were saying that the generators could just deal with the suppliers in an open market. They got that completely wrong. They have realised now that they have to take back that risk for the Government, so they have already accepted the logic of my argument. However, there are many other respects in which commercial risks are better handled by the Government. For example, anything to do with network risk, the failure of the system, and difficulties with suppliers or distributors or anything of that sort is probably better handled by the Government as they have the means to intervene.
If there were a shortage of uranium in the world—very unlikely at present but we are talking 60 or 70 years ahead—the Government are much better able than a private sector contractor to deal with that. We have our own sources of uranium. I speak as the former Minister responsible for the Atomic Weapons Research Establishment. We have international agreements and so forth. There are many respects in which the state is better able to handle those risks than a private sector body.
Some risks have already been mentioned. The noble Baroness, Lady Parminter, referred to one of them, which the taxpayer or the energy consumer cannot walk away from anyway. For example, there are the risks of an accident costing beyond £1 billion and the risks of decommissioning. It is all very well to say that a contractor has to make provisions. Under the contracts that have now been negotiated he will have to provide for the costs of decommissioning, but who knows what they are going to be in 60 or 70 years time, or what the value of the fund accumulated in EDF Energy or any other contractor will be by that time. Again, in practice the state will be standing behind those risks and reinsuring them. There will be a contingent liability on the state.
What does all this mean? If you construct a model on that basis, you are passing to the private sector risks that it can less efficiently manage than you can yourself. Therefore they are going to cost more by definition. You are passing to the private sector risks, some of which remain with you anyway, so you are paying double for them. It is not a very intelligent policy. The private sector contractor will factor in those risks in his costing, which will be very expensive. What is more, because of the lack of competition in this business he will expect a very high profit and get away with a very high return, so the cost of capital is going to be extremely high.
With the long lead time in constructing nuclear power stations, the cost of capital will be a major factor, if not the most important factor, in the total cost. The Government have created the problem of the extreme cost of this business. I will give a simple example so that noble Lords can do their own calculation. The impact assessment predicts a cost of capital of 10% for nuclear power stations. I think that might be a little less than the likely level. The cost of equity is vastly more than that, I would have thought twice that at least. What the weighted average cost of capital will end up being I do not know. Take the 10%—do not take any figures that I might suggest—that is used in the impact assessment. That 10% is four times the Government’s cost of capital—2.5% is the 10-year gilt rate at the moment. The Government are paying four times more than they need. I think that is bad Government. It is a great mistake and they have gone for the wrong model.
I am sure that if you put that to the Government or to the Treasury, they will say that they could not have the state owning the stations and raising the finance from the gilt market because that would mean an increase in our total debt ratio, our debt to GDP ratio, and cause us problems in the markets. That is very naïve. First, it means that we are paying a very considerable price in economic terms for purely presentational advantage; and, secondly, that argument depends on the markets being so stupid that they cannot look through the presentation for the reality and do not actually know what is happening.
Of course, the markets are perfectly capable of doing that. The markets will factor in the contingent liabilities of the state for the environmental risk that I mentioned. They will factor in the contingent liability that the Government are now incurring in standing behind the counterparty for contracts of difference. That is obviously a contingent liability in itself. That is not a sensible answer; it is also a reflection of not very intelligent government.
I fear to say that we have sold the pass on that. Of course, we cannot go back to any other model for the construction of those vital nuclear power stations, but we should be aware that by going down this road we have deprived ourselves of a lot of investment that we might have had to build much greater nuclear capacity. That is a great mistake and we should look very critically at what the Government come up with in energy policy because, up till now, they have shown something very much less than the competence one would like to see.
Lord Browne of Madingley
My Lords, I declare my very extensive financial and non-financial interests in the energy sector, which are all set out in the Register of Lords’ Interests. I particularly draw your Lordships’ attention to my position as partner and managing director at Riverstone Holdings, which manages several energy-focused private investment funds with stakes in a range of UK-based and international companies. Those companies operate at all stages of the supply chain and in almost all energy markets.
When the Bill was first published, I wrote that it was complex and that it introduced a range of new risks into the market, threatening to deter planned investment. Since then, some of my concerns have been satisfied. For example, the move to a single counterparty CFD is particularly welcome, and lends the financial instrument at the heart of the Bill a creditworthiness that it was lacking. There remain risks in the Bill, such as the danger that the new regime will make it more difficult for smaller, independent generators to sell their power in a market dominated by large, vertically integrated utilities. Risks such as that must be assessed carefully and adjustments made if necessary.
I want to make two further points about the Bill. The first concerns any amendment to add a decarbonisation target. In my experience as a businessman and investor, a decarbonisation target for 2030 would have little impact. Decarbonisation is just a means to the essential and, indeed, existentially important end of reducing carbon dioxide emissions. Companies do not listen or react to long-term political aspirations, because there are too many technological, economic and political unknowns for them to be taken seriously.
The incentive structures contained in the Bill are far more important than targets or aspirations, because they are the mechanism for action. Only credible, consistent and creditworthy incentive structures can unlock the investment needed. Take carbon capture and storage, for example. CCS is a young technology which requires the state to underwrite some risk so that it is developed here in Britain. That will enable us to benefit in an even more environmentally sustainable way from our abundant domestic gas reserves, which, in any case, have a lower carbon footprint than imported gas.
However, investment in CCS, gas or renewables will not come from a decarbonisation target. It will come from simple incentive structures which allow different energy technologies to compete on a level playing field, with their full set of externalities taken into account, and which are implemented reliably, transparently and quickly. It is therefore critical that the Bill is not subject to yet more delay from wrangling over a decarbonisation target. Uncertainty about the direction and speed of travel has been far more damaging to investment than questions about the detail of policy.
My second point concerns the broader strategic framework within which the Bill sits. Decisions on energy policy and public investment in energy infrastructure are based on criteria which change frequently, depending on the people in charge and the priorities they decide to pursue. That has proven to be inefficient and damaging to investment in the North Sea, for example, which has seen cycles of windfall taxes followed by tax breaks followed by more windfall taxes. There is no need to reinvent the context every time an investment or policy decision is made. It would be sensible to set an overall strategy just once and then make subsequent decisions with those long-term strategic goals in mind.
The London School of Economics Growth Commission, of which I was a member with the noble Lord, Lord Stern, proposed an infrastructure strategy board to provide independent advice to policy-makers about strategic priorities. That would not be a radical innovation. It is the model followed by NICE, the healthcare body, and the Monetary Policy Committee. A panel of independent experts with knowledge, expertise and experience of the industry could consistently check everyday decisions against the long-term strategy set by the Government. That would be enormously helpful in the energy sector, where different technologies and fuels cannot be assessed in isolation. They are part of a system. Independent and expert advice could help to turn a set of disparate and often conflicting energy policy decisions into a real energy strategy. In this regard, I support the comments of the noble Lord, Lord Oxburgh, and I hope that the Minister will consider in her response whether that will deliver strategy.
We must judge the efficacy of the Bill by its results. Success will come from higher quality investment from a diverse set of investors; investment in a greater range of energy sources, including hydrocarbons used for power, such as gas and the encouragement of CCS; respecting existing commitments, such as the phasing out of coal; and an electricity price that maintains the competitive nature of British industry. Those are the tests against which the Bill should be judged. We have spent almost three years debating the structure of this reform package. I believe that it is now time for implementation and action.
Viscount Ridley
My Lords, I begin by declaring an interest in coal-mining on my family’s property, as detailed in the register, but I shall not be arguing for coal today but for its most prominent rival, gas, in which I have no interest.
I thank my noble friend the Minister for her courtesy in discussing the Bill and welcome the fact that the Government have grasped the nettle of energy policy, especially on the issue of nuclear power, after the deplorable vacuum left by the previous Government. However, I am concerned that we are being asked in the Bill to spend £200 billion, mainly on the wrong technologies, and that we will come to regret that. We are being asked to put in place a system that will guarantee far into the future rich rewards for landowners and capitalists, while eventually doubling the price of electricity and asking people to replace gas with electric space heating. That can only drive more people into fuel poverty.
We have heard a lot about the needs of energy investors and producers. We have not heard enough about consumers. If the industry gets an 8% return on the £200 billion to be spent, just two offshore wind farms or one nuclear plant would be declaring profits similar to what British Gas declares today. That will be an uncomfortable position for the Government of the day.
The Bill is a dash for wood and wind—two medieval technologies—and it is twice as big as the dash for gas of the 1990s. Between 6 and 9 gigawatts will have to be built a year for the next 16 years, compared with 2 gigawatts a year during the dash for gas. I am not sure it can be done, let alone affordably. In the case of biomass, the only way we can source enough is by felling trees overseas. As the noble Lord, Lord Berkeley, said, Drax will soon be taking more than 40 trains a day of wood pellets from North America. That is not energy security.
Under the Bill,
“‘low carbon electricity generation’ means electricity generation which in the opinion of the Secretary of State will contribute to a reduction in emissions of greenhouse gases”.
Shades of Humpty Dumpty: a word means just what I choose it to mean. We are being asked to pretend that the most carbon rich fuel of all, wood, is not a source of carbon. According to Princeton University, trees used for biomass electricity generation increase carbon dioxide emissions by 79% compared with coal over 20 years and by 49% over 40 years, even if you replant the forest. We are through the looking glass.
Offshore wind, meanwhile, is a risky technology with a track record of engineering problems, sky- high costs, disappointing lifespan and problems of decommissioning. At the moment, we generate less than 1% of total energy, or 6% of electricity, from wind, despite all the damage it has already done to our countryside and economy. We are to increase that to something like 30% in just a decade or so, maybe more if nuclear is delayed. It is a huge gamble, and if it fails, the only fallback is carbon capture and storage, a technology that has repeatedly failed to meet its promises at all, let alone affordably, a point made earlier by the noble Baroness, Lady Liddell.
Even if this wood and wind dash is possible, under the contract for a different system proposed in this Bill, while better than the renewable obligations that preceded it, the subsidy to renewable energy will quadruple by 2020. That is only the start. On top of that, there are system costs for balancing the unpredictability of wind; transmission costs for getting wind from remote areas to where it is needed; VAT; the carbon floor price; not to mention the cost of subsiding renewable heat and renewable transport fuels. Hence, at a conservative estimate, the Renewable Energy Foundation thinks that we will be imposing costs of £16 billion a year on our hard-pressed economy for several decades.
Why are we doing this? We are doing this because of four assumptions that were valid in 2010 but, as my noble friend Lord Lawson pointed out, are no longer valid to the same extent. First, we assumed we would not be acting alone, so we would not damage our competitiveness. Instead, not only is there no longer a Kyoto treaty, but China is planning to build 363 coal- fired power stations; India 455. On top of that, the European trading system has collapsed to less than €5 a tonne of carbon. Our carbon floor price is more than three times that: £16 a tonne, rising to £32 a tonne in 2020 and £76 a tonne in 2030. Acting unilaterally in this way does not save carbon emissions. It merely exports them and the jobs go with them. Northumberland’s largest employer, the aluminium smelter at Lynemouth, has closed with the loss of 500 jobs, almost entirely because of carbon policies.
The second assumption behind the Bill was that the cost of gas would rise, thus making the cost of energy rise anyway. The Committee on Climate Change said recently in a report that:
“Consensus projections are that gas prices will rise in future”.
This remark has been described by the utilities team at Liberum Capital as “genuinely amazing” in the light of recent events. Now that we know that gas prices have plummeted in the United States to roughly one-quarter of ours, thanks to shale gas; now that we know that Britain probably has many decades worth of shale gas itself; now that we know that enormous reserves of offshore gas near Israel, Brazil and parts of Africa are going to come on line in years to come; now that we know that conventional gas producers such as Russia and Qatar are facing increasing competition from unconventional and offshore gas; now that we know that methane hydrates on the ocean floor are more abundant than all other fossil fuels put together and that the Japanese are planning to explore them; in short, now that we know we are nowhere near peak gas, it is surely folly to hold our economy hostage to an assumption that gas prices must rise.
We will need the gas anyway. The intermittent nature of wind means that we will require increasing back-up and we cannot get it from nuclear because it is not responsive enough to fill the lulls when the wind drops. Far from replacing fossil fuels, a dash for wood and wind means a dash for gas too, only this time we will have to subsidise it because the plants will stand idle for most of the time and pay a rising carbon floor price when they do operate. Having distorted the markets to disastrous effect with subsidies to renewables, we are now being asked, under the capacity market mechanism, to introduce compensating countersubsidies to fossil fuels.
The third assumption was that the cost of renewables would fall rapidly as we rolled them out. This has proved untrue and, indeed, as the Oxford Institute of Energy Studies has shown, the cost curve for renewables inevitably rises as the best sites are used up, not least in the North Sea. I am told by those who work in the offshore wind industry that, at the moment, the industry has every incentive to keep its costs up not down, as it sets out to strike a contract with the Government. They will not have to try very hard. Even at low estimates, offshore wind is stratospherically expensive.
The fourth assumption on which this Bill is based was that the climate would change dangerously and soon. Once again, this assumption is looking much shakier than it did five years ago. The slow rate at which the temperature has been changing over the past 50 years and the best evidence from the top-of-the-atmosphere radiation about climate sensitivity are both very clearly pointing to carbon dioxide having its full greenhouse effect but without significant net positive feedback of the kind on which all the alarm is based. The noble Baroness, Lady Worthington, and the noble Lord, Lord Stern, both mentioned Professor Myles Allen and they will be aware, therefore, of his recent paper, which found significantly reduced climate sensitivity. If that is the case, the dash to wind and biomass may well continue to do more harm to the environment as well as to the economy for many decades than climate change itself will do.
However, leaving that on one side, as my noble friend Lord Lawson said, the argument against subsidising wind and biomass does not depend on a benign view of climate change. It stands powerfully on its own merits, even if you think dangerous climate change is imminent. In 1981, my noble friend Lord Lawson, ignoring the prevailing wisdom of the day, as he sometimes does, decided against the predict-and-provide central planning philosophy and instead embraced the idea of letting the market discover the best way to provide electricity. The result was the cheapest and most flexible energy sector of any western country.
We have progressively turned our backs on that. Under this Bill, the location, the technology and the price of each power source is determined by one person—the omniscient Secretary of State. Recent occupants of that position have an unhappy history of not making wise decisions. Remember ground source heat pumps? They do not work as advertised. Remember electric vehicles? They have been a flop. Remember biofuels? They have caused rainforest destruction and hunger. Remember the Green Deal? Must we go on making these mistakes?
We have returned to a philosophy of picking winners, or rather, from the point of view of the consumer, of picking losers. Not even just picking losers, but hobbling winners, because of the obstacles we have put in the way of shale gas. America has cut its carbon emissions by far more than we have, almost entirely because of shale gas displacing coal. By pursuing a strategy that encouraged unabated gas, we could halve emissions and cut bills at the same time. Instead, I very much fear we will find we have spent a fortune to achieve neither.
Viscount Hanworth
My Lords, this Energy Bill is the product of economic doctrines that have misled a generation of Conservative politicians and have penetrated deeply into the Civil Service. For a while, they also strongly affected the thinking of Labour politicians. The project of energy market reform, which the Bill promotes, is an ongoing attempt to subject the circumstances of energy production and supply to the nostrums of free market economics.
The project is being pursued in circumstances that have been strongly influenced by a previous ideologically motivated reform, namely the privatisation of the country’s electricity industry that occurred in the closing years of the Thatcher Administration. The doctrines in question derive from the ideology of neoclassical economics, which envisages a world composed of perfectly competitive agents operating in free markets, which are devoid of government interference and regulation and have been purged of state monopolies. In this world, efficient financial markets operate in such a way as to ensure that investment projects, with very different profiles of costs and benefits, can be placed on an equal footing. In effect, future costs and benefits are to be discounted by a factor that declines as one advances into the future and is directly related to the market rate of interest, which is the reward for lending money.
The resulting discount factor may be equated, in theory, to the marginal social rate of discount—if one is prepared to postulate such a thing—but some believers are keen to assert that there is no such thing as society. However, a basic proposition of the doctrine, which must surely be rejected in the context of a national energy policy, is that public investment can and ought to be evaluated according to the desiderata that govern private and commercial investment. By adhering to this proposition, one is bound to favour short-term commercial gain at the expense of long-term social benefit. The actual world is not the ideal world that neoclassical economics envisages—and it never will be—but the proponents of the ideology pay scant attention to realities. When the opportunity arises and whenever they are in a position to do so, they are liable to attempt to make the reality conform to their idealistic visions.
The free market ideology suffuses the Bill but, as time has passed, some of the more implausible aspects of its original design have been amended and obscured. I shall begin my critique by looking at its central concept, which is a contract for differences to be applied to the price of electricity. This terminology has been borrowed from financial markets, where a contract for differences is a financial derivative designed to indemnify the party who has purchased it against the effects of fluctuations in the price of a financial asset, measured as departures from a so-called strike price. The writer of the contract is described as the counterparty.
The Bill originally envisaged a multitude of counterparties, constituting a free market. In that case, the terms of the contracts for differences would be discovered or revealed by the market; and, given that markets are deemed to be efficient, it was imagined that this would create an optimal outcome. The idea has gone into abeyance. The critics have asserted that, in reality, such a market would be beset by risks of confusion and by dangers of default and bankruptcy. The outcome is that there will now be a single government-owned counterparty and that the terms of the contracts will be set through an administrative process.
However, it remains the Government’s intention that the strike price will eventually be set through a competitive free market process. An expectation of the designers of the Bill appears to have been that a competitive environment would generate a single strike price that would be applicable to all electricity generators, regardless of the technology. The beautiful idea here was that there would be no need for strategic decisions regarding the appropriate technology mix of our future power generation. This mix would be discovered by the market, as if by the operation of a hidden hand, and the outcome, according to the theory, would be an optimal one. In my opinion, this is an absurd idea. The costs and benefits of the various technologies in question have very different profiles through time. Notwithstanding the hypothesis of efficient markets, these incommensurable futures cannot be mediated solely by commercial and financial transactions. Instead, they should be determined in the light of some careful strategic planning. Indeed, the markets have no perception of the future, other than as an aggregate of the dim perceptions of the majority of their agents.
Gas-powered electricity generation has the shortest of the time horizons and, for that reason, it accords best with the short-term preferences of financial and commercial markets. Its capital costs are the lowest and its running costs are the highest. However, an imponderable aspect of this option is the future price of the fuel. There are some highly contradictory predictions of what will eventuate. There are anxieties about the security of supply given that, at present, the principal sources are in Russia and the Middle East. There is also an expectation of rapidly rising prices in the face of an increasing world demand. On the other hand, it is observed that gas prices in the US have been falling in consequence of fracking. The optimists imagine that an ample supply of shale gas can somehow be magicked out of the ground on which this nation stands to replace the depleted supplies of North Sea gas.
Those sceptical of the reality of climate change, who include the Chancellor of the Exchequer, also envisage the exploitation of Arctic oil and methane, the supplies of which are presently uncharted and undiscovered. For them, the discovery and exploitation of ample supplies of hydrocarbons is an exciting prospect. For the rest of us, who constitute the majority, this is a terrifying prospect.
The second technology to be reviewed is that of wind-powered electricity generation. Here, the capital costs are high, but the energy that drives the windmills is free. However, the power supply of windmills is intermittent and must be balanced by a compensatory supply, which is liable to be gas-powered. The intermittency implies that a very large renewables capacity is required to guarantee a minimum level of supply. The costs of wind-powered electricity cannot be assessed in isolation and the severity of the problem of intermittency will be a function of the proportion of electricity supplied, on average, by the windmills. To propose that mindless markets should be capable, on their own, of adjudicating these matters so as to determine the optimal proportion seems absurd.
The third technology that needs to be considered is nuclear power generation. Here, the capital costs come in large indivisible lumps and the stations are of such longevity that we should be considering 60 years of operation following a period of as long as 10 years for their planning, construction and commissioning. Once the nuclear power stations are in place, their operating costs are the lowest of all. The outstanding difficulty affecting a nuclear project is the size of the lumps of the capital costs. In one way or another, national Governments have hitherto been involved in the construction of every nuclear power station. For a variety of reasons, which are a mixture of ideological predispositions and budgetary restrictions, the present Government have resolved that the capital costs of nuclear power should be borne entirely by commercial suppliers. There are few suppliers willing to bear such costs, and the majority of those who originally expressed an interest have withdrawn.
We are left with one major potential contractor, which is a French nationalised industry in commercial disguise. This is EDF, or Électricité de France. It is an outstanding irony that their pursuit of a free market ideology has brought the Government face to face with a foreign state-owned monopolist. This supplier is expecting to assess the future costs and benefits according to the criteria of a short-term commercial investment appraisal that envisages a rate of return in double figures. In such an appraisal, the future benefits of a nuclear power station, which are delayed in time and subject to a heavy discount, must be weighed against the current up-front costs. In order that the benefits should outweigh the costs in such a calculation, an exorbitant rate of return is demanded. Moreover, this return is being demanded for an extended period. We believe that a contract for differences, designed to provide secure revenue, would be extended over 35 years. This would be a perilous commitment for any Government to make.
There is an obvious recourse that should be available to any Government who are not blinded by their ideology or hamstrung by their fiscal anxieties. It is that the Government should, at their own expense, commission the building of nuclear power stations which should then be owned by the nation. If need be, the stations could be leased out to commercial operators but, given their low operating costs, such arrangements would be a matter of minor detail. In assessing the benefits of nuclear power, a marginal rate of social discount should be used that is considerably below both the commercial rate of discount and the 10% that has been used by the Department of Energy and Climate Change in its calculations of the so-called comparative levelised costs of electricity generation.
I am an ardent protagonist of nuclear power generation and of the yet-to-be-realised superior nuclear technologies that would be available to us if we were actively to pursue their research and development, as the right reverend Prelate the Bishop of Hereford so eloquently enjoined us to do. Nevertheless, I have difficulty in evincing any enthusiasm for the way in which the Government are approaching our nuclear future and our energy future in general.
Lord Stephen
My Lords, I start by referring to my interests as listed in the Members’ register.
This is an overwhelmingly positive Bill with overwhelming but not—as we have seen clearly today—unanimous support across the political parties and, indeed, the Cross Benches. Many positive changes have been made to the detail of the Bill and much of that detail is now absolutely correct. Some of the changes—for example in relation to the counterparty—have been referenced already. Having the Government underwrite the counterparty role is vital. The proposal to move the feed-in tariff limit from 5 megawatts to 10 megawatts is very welcome, while the early release next month of the draft EMR delivery plan, with the information on the strike price for the contracts for difference, will be crucial. In the short to medium term, the capacity market for gas will be crucial in keeping the lights on. The capacity market has not been an issue of huge political debate. It does not get hearts racing in the other place or on the Floor of this House, but it is very important to get it right. The first thing to happen will not be a switching-off of the lights; it will be instructions to major industrial users to stop using electricity. That will be very serious for our economy and for the messages that it sends out.
All those are good points in relation to the detail. In relation to the capacity market, I would be very pleased if more were being said—particularly in the medium to long term—to encourage the storage of renewable power. That is crucial to the credibility of the renewable sector. More could start to be done in the Bill to encourage that.
All of this represents a huge opportunity to the UK economy. The Minister said that there will be £110 billion of investment this decade and £7.6 billion per year by 2020. However, it has not happened yet. There needs to be real industry confidence. That confidence has been severely dented by delay and by the DECC versus the Treasury battle—the Conservative-Liberal Democrat battle—that we have witnessed over recent months and has been played out in the media. That sort of squabbling has done real damage. It is crucial to get not only a confirmed strike price but also EU clearance and political harmony on all of this.
I worry about EU clearance. It would be straightforward to get state aid clearance if this were only about renewables but it is not only about renewables, it is about nuclear as well. I worry about the potential delay and the impact that that could have on final investment decisions in the renewables sector. It is crucial to have continuity, consistency, clarity of political purpose and political support. In too many aspects of the industry, investment is stalled right now. Major international investors are voting with their feet and going elsewhere. I would predict that some of the big announcements that have been made—for example by turbine manufacturers—about inward investments into the UK will not happen due to the lack of continuity and the lack of clear political commitment. That is a real cause for worry.
Tackling climate change is urgent. It cannot wait. There is overwhelming evidence and overwhelming agreement about that among the scientists, the economists and other experts. We have heard it from the very good contributions made by the noble Lords, Lord Stern and Lord Deben. Global warming and climate change is perhaps an inconvenient truth but it is a truth nevertheless—and it is one that must be tackled now. The climate change deniers have got to be challenged. Do they have overwhelming, incontrovertible, infallible evidence on their side? To that I would say, “No, no and no again”. The Bill is a crucial and very major reform.
The ROC system is far from ideal. It is a system under which subsidy stays high even if electricity prices rise. Consumers’ money can therefore be very considerably wasted. It was a pretty complex and very British—solely British—solution. However, ROCs did at least create certainty and confidence in the industry. Contracts for difference are theoretically better, but the change has to be well handled to maintain confidence. So far that has not happened. Squabbling, as I mentioned, has led to a loss of confidence and the delay has created the sort of uncertainty that no industrial sector likes.
There is also a degree of illogicality in those who talk about being anti-onshore wind but in favour of offshore wind. If you want to protect the consumer and keep prices down, offshore wind is—as has been mentioned already today—much more expensive than onshore wind.
As for nuclear, I still have very serious concerns. It is slow to deliver. It is expensive. More than 60% of DECC’s budget is currently spent on nuclear. The nuclear waste is toxic and dangerous. It has a very long half-life. The nuclear sector relies on a depleting uranium supply from uncertain sources in politically unstable nations. Fusion would be a wholly different thing but we are far from there yet. Perhaps most importantly, investment in nuclear tends to reduce the urgency of the investment in renewables. As I have already mentioned, it could also lead to a delay in state aid clearance for contracts for difference, and clearly a huge amount of government resource has been taken up in the negotiations with EDF on the whole nuclear issue.
We need a simple and clear determination to stop burning fossil fuels. It is a declining resource. It will also be increasingly expensive, even if there are short-term reductions. It is a very damaging and polluting resource that causes climate change and global warming. There is no bigger issue facing the future of our planet, which is why this debate today is so important.
That brings us to decarbonisation. I would far rather see a decarbonisation target coming sooner. It is another area of coalition dispute—another Treasury versus DECC battle. There was no target in the original Bill, however, and I am very pleased that there is now provision for a decarbonisation target. Although I would be prepared to wait until 2016, the acid test will be the response and the attitude of others. Major investors, manufacturers of turbines, those involved in the renewable sector, those who make the final investment decisions, have made it very clear that they are looking for a strong decarbonisation target to support their investments. I certainly believe that it should not be an enabling or an optional provision. There should be a requirement on the Government to fix a decarbonisation target.
I want to make two final points. The first is on energy efficiency and demand reduction. There is huge potential in these areas, which are vital. They have been neglected areas of energy policy for too long. However, switching from fossil fuel—not just for electricity but also for our heating and our transport—will require very significant amounts of electric energy. That always has to be remembered.
Secondly, community renewable schemes are vital. The Bill rightly encourages them and will do more to support them. However, in the real world—in the practical world of finance—the current problems with the Co-operative Bank could be very damaging to many community projects. I believe that a great deal will have to be done to keep these projects alive. A Bill on its own will not be enough.
In summary, we need to get on with it. Let us have no more delays or divisions but instead show political clarity and unity in order to deliver the confidence needed to create thousands of jobs and billions of pounds of new investment and cleaner, greener and more secure energy for everyone in the UK—for business and for consumers. There are many other countries investing in renewable energy where the sort of political divisions that we have witnessed this afternoon simply do not happen. They are going for it and doing so with absolute determination, conviction and commitment. The Bill can help us to do that in the United Kingdom, and it must do exactly that. It should therefore be supported.
Lord Kerr of Kinlochard
My Lords, I mention my entry in the register of interests, particularly that it includes a mining company and a power company.
I will not detain your Lordships long. My understanding of this complex Bill is as yet incomplete, but it is a very different Bill from the one that the committee chaired by the noble Lord, Lord Oxburgh, reported on last July. It is a very different Bill from the one that turned up in the other place seven months ago. It is a very different Bill from the one that finished Committee stage in the other place at the end of the last session. More than 90 clauses were added at Report stage without substantive debate.
It is also an extremely dense text; a very complex text describing a very complex structure. With great trepidation, I have to disagree with the noble Lord, Lord Lawson of Blaby, who exempted me today—extraordinarily—from his strictures on everybody else in the House, the Bill, the Government and the Opposition. I was very grateful for what he said, but when he said that Dieter Helm was right to describe this as the Gosplan solution, he was wrong. I spent some time in Moscow as a young man and used to read a lot of Gosplan texts. They were clear, straightforward, decisive, precise and detailed. They were all wrong, of course, but it was all there with tremendous clarity. This text, and indeed the whole structure, seems to be a sort of magic toyshop with something for everyone, and a sometimes awkward balance between environmental aspiration and traces of the market here and there. It seems sometimes to put a little more emphasis on the greening of the economy than on cutting costs and keeping the lights on.
The Bill will take a lot of studying. Nevertheless, I welcome it because at least the long period of investment hiatus may be about to end. Companies cannot spend shareholders’ money unless the rules of the game are clear. Although I may not agree with all the rules of the game as proposed, clarity will be important. Without substantial investment soon, the lights will indeed go out. If and when the Bill passes, as I hope it will, a modicum of clarity will exist. It is not in the Bill now because the details on capacity mechanism and contracts for difference are apparently to be set out in subordinate legislation that we have not yet seen. I understand that the detail on CFDs, including draft strike prices, may appear in a draft delivery plan next month. Getting this right will be crucial to ensuring that investment in low-cost generation is cost-effective, and it is very important that this work should not be based on aspiration but should be founded on evidence-based analysis.
As for the capacity mechanism, I understand that the consultation on its design and the draft legislation is planned for the autumn and that the first auction will be next year, but that the first delivery year will not be until 2018-19, which puzzles me. Why the delay? Presumably, the Government are thinking about the construction of new capacity. However, the lights could go out well before 2018, and companies need to consider whether to run on or phase out existing plant. I hope that in Committee we will learn a bit more about how the auction system is to work and its timing.
Three points arise from the debate. First, I agree with virtually everything that the noble Lord, Lord Oxburgh, says on this subject but, again with great trepidation, I need to register a note of dissent from what he and the noble Lord, Lord Stephen, have said about the 2030 decarbonisation target and the absence of such a target in the new Clause 1 in Part 1 of the Bill. Here I agree 100% with the noble Lord, Lord Browne of Madingley. With all due respect to the argument advanced by the noble Lord, Lord Cameron of Dillington, from these Benches, companies like Siemens are not impressed by 2030 targets. Such companies make their decisions on what capacity they need and where they should site their plant on the basis of clear commitments. They are pretty cynical about targets, as am I about the idea of a legally binding target 16 or 17 years out. Bindings fray, and no Parliament can bind its successor. What matters for investors, as the noble Lord, Lord Stephen, says, is certainty and continuity. They need to see the underpinning of any targets by credible costings and a credible commitment to meet those costs. Realistically, that would not be attainable by 1 April 2014, and I do not think we are foolish to have failed to add to the Bill a requirement by 2014 to set a 2030 target. If that arises in Committee, I will be arguing against including such a target.
Secondly, I disagree with what the noble Lord, Lord Deben, said about carbon capture and storage, and here I am disagreeing also with the noble Lord, Lord Browne of Madingley. I am sure they are right that CCS is the technology of the future. A number of great companies have already spent a long time and large sums of money in trying to make it work economically, but no one has succeeded. I am sure that in 10 years’ time CCS will have a very important role to play, and I am as sure of that as I was 10 years ago when I first said it. It is the technology of the future and it may stay that way for a very long time into the future—alas, because it looks like a marvellous solution, but it is extremely hard to make it work.
Thirdly—this is very daring because here I am disagreeing with my old boss—the noble Lord, Lord Lawson, was kind enough to exempt me from his strictures on my old department and DECC for what sounded like rather absurd language about how the United Kingdom would influence the energy and environmental policy of China. I agree that there is a fly-on-the-wheel problem that one sees from time to time in such language. But the Chinese, too, deserve the Lawson lash because they seem to believe in climate change and to believe that it is at least partly man-made. They are building one nuclear plant every month, and investing hugely in LNG. They, like the noble Lord, Lord Lawson, are strong advocates of shale, and they have a huge exploration programme across China now; it is at an early stage but they clearly believe, like the noble Lord, that it too is the technology of the future. They have invested massively in solar power and have wiped out the European industry. They have a massive investment in wind power, and of course they are still burning enormous amounts of coal. They believe that the exponential increase in their demand, and the need to try to avoid dustbowls and desertification in northern China and poor air quality in the great Chinese cities force them to be as green as possible, and they would like to reduce their reliance on coal. Unlike us, they do not hang around. Like us, they think that they need to use every available source of supply. I hope that we will not hang around much longer and I look forward to the progress of the Bill in Committee and an end to the investment hiatus.
Lord Jenkin of Roding
My Lords, I start with a word of thanks to my noble friend Lady Verma and the noble Lord, Lord Oxburgh, for the several extremely useful meetings that we have had about the Bill over the past couple of months. I have found it invaluable to see what the departmental view is. We have had the opportunity of talking to many of the Minister’s officials.
I also have another source of advice. I try to talk as much as I can with the companies that would actually have to make this system work. At a breakfast meeting chaired by the noble Lord, Lord Oxburgh, it emerged in our discussions with the wind industry, the CCS people and the nuclear industry that the Bill is essential if there is to be any hope of attracting the capital that is needed for the huge investment that many noble Lords have talked about. Somebody went on to ask a rather awkward question: if we get the Bill in the form that the industry would like—and there is plenty of evidence that they like much of what they see—will we get the investment? The noble Lord, Lord Oxburgh, will remember that there was a long pause, then all the parties said, “No, we cannot guarantee that”. We have to have the Bill because without it there is no hope of getting the investment, but even with it, there is still no guarantee. I endorse totally what has been said by a number of noble Lords during the course of this debate, that the greatest danger is uncertainty. People, firms and companies will not invest when they are faced with uncertainty. We have been going through quite a period of uncertainty in this country and it has resulted in a considerable downturn in investment in the generation of energy. Somebody said a moment ago that they hope that that period is now ending. We shall have to wait and see.
I certainly support the principle that we have to get this Bill through. I hope that we will be able to finish the Committee stage before the long Recess. I foresee four or five weeks of pretty hard work. I have tried to cancel as many of my other engagements as I can to make room for it. I have been refusing things left, right and centre for the last couple of weeks.
One point by the noble Baroness, Lady Worthington, that I very much support is that this is in some ways a skeleton Bill that eventually will be filled in with various things, including a large number of regulations. I make a very firm plea: we may not get these regulations in Committee, but we must know what they are by the time we reach Report in the autumn. It will be impossible for the House to debate this in any meaningful way if we do not have a greater degree of certainty as to what is actually going to happen.
I started by thanking my noble friend Lady Verma. Having listened to the speeches, I do not envy her the problem of having to wind up this debate. It is a task that I did for various things over a number of years, and it is very difficult to do. After having listened to so many diverse views, often based on great experience and expertise, I do not envy her.
There is a general view that we face a very considerable problem. There is likely to be a 40% increase in demand for electricity by 2050, but we are facing the closure of about 30% of our existing generating capacity by 2025. Wind power is becoming more intermittent. In the opposite direction, the nuclear programme is less flexible. However, it is equally essential and we must have it. I believe that we are bound to face higher electricity prices for a variety of reasons. I do not think that we are going to find ourselves imitating the Americans. Even if we are able to develop our shale gas deposits, nobody knows how much is recoverable. We also have our environmental obligations, so these are very great challenges.
I find myself increasingly worried about security of supply for the next four or five years. Somebody mentioned the closure of power stations. I have been given a list of power stations that were running on 12 December 2012, but all of which are now closed: Didcot A—a huge one, Fawley, Littlebrook, Cockenzie, Kingsnorth, Uskmouth and Tilbury. That is a huge reduction in our generating capacity. Some have talked about a number of plants being put into mothballs. The problem with mothballing is that it takes time to start up again. The figures I have been given suggest that of 9.2 gigawatts of UK gas capacity that is now mothballed, 2.6 gigawatts are unlikely ever to operate again because they have been effectively dismantled. Of the rest, it will take anything from three to 18 months before they can become operational, because one has dispersed the labour force. The thing has been wound down, and it takes time to start up again. I have anxieties about this and I hope that my noble friend may be able to offer us some reassurance.
In the debate on the gracious Speech, I raised the question of the future competitiveness of our energy industries. In particular, I asked about the Ofgem letter that had been sent out in February to all the bodies concerned—a very wide distribution—proposing what it called “future trading arrangements”. The answer came in a paragraph of that long letter written by my noble friend Earl Howe after he had wound up that day’s debate. I have no doubt, however, that this particular paragraph was drafted by my noble friend’s department. I quote this letter of 3 June:
“The government welcomes Ofgem’s actions to improve competition by addressing poor liquidity in the wholesale electricity market. We agree that liquidity, especially in the forward markets, needs to improve and this Government is pleased to see Ofgem indicate a strong preference for intervention with a decision expected by Summer 2013”.
It may not feel like it, but we are nearly there. However, perhaps we have had a decision on this—I will come back to that. I am puzzled about the concept of liquidity, so I asked for advice on that from the department, which defined it as,
“the ability to quickly buy or sell a desired asset, commodity or financial instrument without causing a significant change in its price and without incurring significant transaction costs”.
I am not sure how much wiser that leaves me. I prefer to look at this in terms of competition. If there is a market—and much of this Bill is based on the proposition that there will be markets operating, albeit in the future—then we start from the position, as many noble Lords have already mentioned, of having the big six. They have a 98% share of the domestic retail market, a 78% share of the industrial retail market and a 93% share of the commercial retail market. Estimates typically show that the big six have a market share of 65% to 70%. They are an enormously dominant force in our electricity industry. I have had a number of meetings with the independents and those who support them, and they constantly complain about how difficult it is to break into this market. These big vertically integrated companies have enormous power.
However, it may be that help is on the way. Many noble Lords will have seen the announcement by Ofgem less than a week ago opening up the electricity market to effective competition. I quote from the Ofgem press release:
“Ofgem proposes to establish a more level playing field so independent suppliers can compete effectively with the big six … Big six suppliers and largest independent generators must trade fairly with small suppliers or face financial penalties … Wholesale energy prices to be more transparent with big six required to post prices two years in advance … Ofgem’s proposed reforms build on progress made by the industry, but seek to increase competition and address issues of fairness and transparency”.
That is a beacon of hope in an otherwise quite difficult situation. Will the Government support it? They always talk about having more competition in the industry. If they support it, will that require further amendment of the Bill or will it be covered by the powers that were added in the other place—now Clauses 43 to 45? I think that something more is required: a requirement to promote competition actually needs to be written into the Bill. I give my noble friend notice that I am contemplating an amendment to the clauses on the capacity market to add a requirement; in addition to the objectives of the capacity market set out in Clause 21, they should have an objective to promote and encourage competition in the generating market.
I hope that I am pushing at an open door. My right honourable friend Michael Fallon had a meeting the other day with a number of people who have been arguing for this. A report of the meeting states that:
“Michael Fallon noted that he expects a number of amendments to be tabled to the Energy Bill during its passage through the Lords, and did not have any objection in principle to the recommendation for a clause stating that one of the objectives of the capacity market should be to encourage competition”.
Again, I hope that I am pushing at an open door and I look forward to hearing my noble friend’s reply.
Lord Grantchester
My Lords, after much anticipation, the Energy Bill is before your Lordships’ House. I thank the Minister for her remarks explaining that the Bill is intended to establish a framework for delivering secure, affordable and low-carbon energy. I also thank the noble Lord, Lord Oxburgh, for his chairing of the cross-party seminars on the Bill, which have been extremely helpful.
These are vital moments for the transformation of Britain’s energy market. At the core of the Bill is the necessity, as older power plants become obsolete, for Britain to have enough power at a competitive price, with new infrastructure that could cost more than £100 billion, while mitigating the effects of climate change. It is always difficult to meet more than one target at once. All elements must therefore be taken into account in a multifaceted market where all technologies will be needed. While these supply-side solutions necessarily take up much debate, efficiency measures, together with management and reduction of demand, must not be allowed to slip from consideration.
The main players for 2050 are well known. I will first address nuclear. As my noble friend Lady Worthington said in her opening remarks, the Energy Bill has been characterised as a nuclear-led Bill. Nuclear has huge up-front costs, which are then fixed for life. However, on the negative side, it can be undercut by gas. By nature it is a base-load player, as it is not very flexible. I am concerned about the lack of detail in the Bill and the wide-ranging enabling powers it gives to the Secretary of State. How will a strike price be set that is fair in the long term—measured in decades—strikes a balance between risk and reward, and is a good deal for future citizens? We do not know, because the Bill is silent on power/price comparability, between price reductions from the progress in renewable technologies, with set returns to be guaranteed to nuclear.
Into this mix comes the impact of shale gas. We have yet to determine the extent of possible supplies and its environmental sustainability, which must be strictly adhered to with regulation. It can be safely said that falling prices are a long way off. At best, it seems that shale gas may achieve only a delay in price rises, rather than being a game-changer. The effect of shale gas in the US is to provide excess coal for export that is now being used as base load. Industrial emissions targets for coal and gas have resulted in the energy performance standard. However, there are a number of concerns about these proposals. First, the level proposed is very generous and would not require gas stations to constrain their emissions until 2044—the last possible moment that could be compatible with the UK’s legally binding target. Large amounts of unabated gas would not be compatible with the kind of decarbonisation targets the Committee on Climate Change suggests are necessary to take the country on a cost-efficient path to the target.
Secondly, it does not apply to old coal-powered stations that decide to fit new filtration equipment to allow them to operate post-2023. Old, inefficient coal stations may remain indefinitely on the system, unconstrained. That could not be compatible with carbon budgets or decarbonisation targets. A similar backstop to the one now proposed for new coal is needed for old coal. The Government may well look at this for marginal back-up, as peaking plant, and may provide capacity payment via the capacity mechanism, rather than being able to base-load. Thirdly, in support of the Carbon Capture and Storage Association, CCS plant may need a three-year exemption from the EPS while CCS equipment is being commissioned.
The further challenge concerns the position of renewables by 2050 and how they can be encouraged to be a rightful part of the UK’s energy mix. We can have renewable power only when we have them. Some say they are largely useless because of their inherent unreliability. However, they are vital because the resource is there and free. Will all technologies in the Bill be equal on the starting line? Indeed, should the Bill get all renewable technologies to the starting line?
There is widespread agreement that the Energy Bill must empower a wide range of new entrants to enter the electricity sector. If a more competitive, innovative and diversified electricity sector is to be part of the energy mix, all contributions must be encouraged to take part. However, the Bill delivers top-down solutions that favour centralised generation, reinforcing current patterns of ownership. Yet in Germany, myriad new types of investor are entering the market, often for lower returns than large utilities expect. In Britain, however, independent generators find themselves challenged to ensure that the Energy Bill is viable for them.
Solar power currently finds itself in a very difficult position. Investment has stalled following the EU-China trade dispute. Furthermore, all solar projects of more than 50 kilowatts are severely constrained by the very modest capacity limits. When these modest limits are exceeded, support reduces. The Energy Bill requires support for solar to be either through feed-in tariffs or contracts for difference. Given the severe constraints on FITs, this needs to be looked at again. The generation profile of wind and solar is very complimentary. If taken together, there are fewer extremes in capacity; intermittency need not be an unmanageable problem. A multifaceted energy mix must not end up in a mentality of silo solutions. A more inclusive approach, whereby everybody is aware of their energy needs and is encouraged to participate, could encourage up to 30% of the UK’s energy needs to be met by community schemes and small businesses; for example, farming and rural enterprises. That could be necessary for their own long-term survival.
An important aspect of how the Bill will bring forward different technologies is contained in the levy control framework, with a cap on the total amount of additional charges that can be added to consumer bills. The limit to this spending review period is £7.6 billion, which dictates the total value of CFD contracts that the Department of Energy and Climate Change can enter into. Yet the Bill is unclear about how the control framework and CFDs will work together. For example, when will the projects that have assigned contracts start to be counted towards a control framework? How equal and rigid is the allocation of support to different technologies and what will happen in the event of underallocation in one technology?
Will money be carried forward into future spending rounds or will it be lost if it is not spent? The existence of a cap encourages early application, yet what happens when a technology’s allocation is used up? Lastly, renewable projects can apply either for the renewable obligation or the CFD. Will projects essentially be forced to opt for the CFD, for fear of the cut-off deadline in the RO and being at the back of the CFD queue with no guarantee of funding? The Treasury appears to be trying to control low-carbon spending, while allowing uncapped spending on new centralised capacity on the grounds of security of supply, since money allocated under the capacity market mechanism is proposed to be outside the control framework.
There are concerns that the complex design of the capacity market means that only the large energy suppliers are likely to participate. To achieve the full potential electricity savings identified by the Minister’s department, it is vital that savings from SMEs and homes are captured too. The capacity market rewards energy efficiency only for its security benefits, not for other, much larger benefits. A variety of policy instruments is vital to encourage innovative solutions to all the targets. An additional policy is required to ensure access to market, where funding for payments is decoupled from the capacity auctions and sits outside the control framework.
Rewarding alternative energy efficiency would reduce the level of capacity payments needed for security of supply. This can be explored in Committee, along with ideas for more technology-neutral policies, in order to set clear objectives to decarbonise. It is certainly easier to get smaller projects away than to finance the huge construct. These rewards are necessarily focused on the supply side. As the Committee on Climate Change said in its pre-legislative scrutiny report, the draft Energy Bill was,
“fundamentally flawed by the lack of consideration given to demand-side measures, which are potentially the cheapest methods of decarbonising our electricity system”.
I am therefore pleased that the Government eventually brought forward measures on demand-side reduction, through amendments on Report in another place. However, as with much of the Bill, the new clauses leave us little clearer on the Government’s plans in this area, amounting to no more than an order-making power for the Secretary of State to embark on pilot projects. However, the idea to allow “negawatts” to compete against traditional megawatts is welcome. There are concerns, though, that the capacity market will remain the only solution to access to market. It would be vital for the department to undertake a number of pilots using other mechanisms to allow diversity and innovation. So far there has been little opportunity to debate these proposals, but they can now be Peer-reviewed in your Lordships’ House in Committee.
This side of the House welcomed the previous Energy Bill, which had energy efficiency at its heart. It introduced the Green Deal to bring about energy improvements to buildings and houses, cost savings and a reduction in demand. It is a great concern that investment has not been forthcoming, leading to a massive drop in jobs in the sector. The figures expected on the situation on 27 June underline the work that needs to be done. On Report in the other place, the key element of interconnectors to and from the European market was introduced. This will enable a strategic rethink of the levels and efficiency of supply-side generation. It will have the benefit of increasing the geographical spread of balancing energy, as was so well argued by the noble Lord, Lord Oxburgh. As before, much detail has to come forward for assessment of how this can be made effective.
The Bill is welcome. My noble friend Lady Worthington has outlined the approach that we on this side of the House will take. Once again, we will work constructively to clarify and improve many aspects contained in the Bill.
Lord Empey
My Lords, some time ago I had the opportunity to be Energy Minister in Northern Ireland for three years. Although it was only one part of my enterprise portfolio, it took up an amazing amount of time. Many noble Lords here today have served as Ministers and will be familiar with receiving a first-day brief from the Civil Service. In my case, I was advised that because energy was largely privatised, there would be little call on my time, merely a few regulatory functions to perform. How wrong that turned out to be.
Energy supply is a vital economic as well as a national security consideration, and this has become an even greater governmental responsibility in recent years. We read stories that the UK nearly ran out of gas during a recent cold spell that coincided with a breakdown in some part of the distribution and storage system. Whatever the truth, the point remains that ensuring a secure and affordable energy supply is one of the key requirements of good government.
The Government insist that this Bill is about establishing a framework for delivering secure, affordable and low-carbon energy. This is a sentiment that I am sure we all share. However, there needs to be a close examination of some of the aims and targets that we as a nation are being asked to sign up to. I know from our experience in Ulster that those same sentiments were shared in the 1980s and 1990s when the then Government signed us up to availability contracts, which have stifled competitiveness and kept energy prices unnecessarily high in Northern Ireland for nearly two decades.
Let us stand back for a moment from the complicated clauses in the Bill and look at what we should be doing and why. As a nation, the UK already suffers from a lack of economic competitiveness. We have to charge out to our customers the cost of our growing debt burden as well as our expensive welfare system. Despite the rhetoric of the Government and all parties, the export-led recovery has not yet happened. This is because we no longer produce enough manufactures and services at prices that international customers are prepared to pay. In this regard, therefore, what does this Bill do to our international competitiveness? Does it help us or hinder us? What does it do to reduce the overall amount of carbons pumped into the world’s atmosphere?
My contention is that the Bill leads to a reduction in the one and merely to redistribution of the other. I shall explain. Our competitiveness and the reduction of carbon dioxide in the atmosphere are inextricably linked. I believe that unilaterally adding cost to our energy supply for the genuine and admirable purposes of reducing carbon emissions here in the UK merely transfers the carbon emissions to China and other parts of Asia and the world. By making our already high cost base higher, it could be said that we will produce more of our energy from clean sources. That may be right. But the net effect is that, unless it is done simultaneously and universally by the major manufacturing nations, we reduce the amount of manufactures we produce and transfer that production to other places. While strides are being made in China to control emissions, there will be increased emissions, because China will be making the goods that we are no longer competitively making and in addition it will take a lot of energy to get those products to our shores from the other side of the world.
Climate change can be addressed only internationally and the EU and UK cannot allow themselves to get too far ahead of other nations. Otherwise, they will merely make themselves uncompetitive for no valid purpose. I believe that the climate is changing and that man is contributing to that change. We are certainly making a contribution, but its scale is hard to judge. Nevertheless, I do not accept the idea that it is purely manmade. Climate change is natural, but I believe that we are accelerating it. We can make a difference, and we already have. For instance, we took lead out of petrol, which has reduced dramatically the amount of lead in the atmosphere throughout the world. So we can make a difference, but let us keep it in proportion.
On the generation of renewable energy as well as nuclear, we are talking about adding a charge to consumers’ energy bills to subsidise the cost of renewables and nuclear-generated electricity. This is not a new idea, but we have to enable generators to produce electricity at a price that will allow them to borrow the money to provide the service. There is nothing wrong with that in principle, but the cut-in and cut-out points on the subsidy are critical. There is a lot of widely inaccurate speculation about what can be achieved by all this. The truth is that no alternative sources of energy come anywhere near the point where they could provide the UK with a constant and reliable source of energy. Wind is currently the major alternative, whether onshore or offshore. There is no doubt that it has a part to play, as do other forms of renewables, but let us not exaggerate its potential. In this country, energy demand rises during cold spells, which often coincide with high pressure in the atmosphere. High pressure usually means little or no wind. The classic example of this was in the winter of 2010-11 when we had five weeks of freezing weather and little wind. Without the traditional source of generation, we would effectively have been out of business.
I agree with the noble Viscount, Lord Ridley, who is no longer in his place. I cannot understand the difficulty in people grasping the fact that, even if we increase the amount of renewable energy from wind and other sources, we will still have to maintain every single megawatt of traditionally produced electricity, plus an amount to allow for breakdowns. We know that wind does not survive high pressure and that the other sources of renewables are vastly underdeveloped. Wind generation will reduce the amount of energy that is produced by traditional sources when it is functioning, but, when it is not functioning, you need to have the back-up. Therefore, the amount of generating capacity from traditional sources, whether fossil or nuclear, is not going to be amended significantly in the foreseeable future for that reason.
People are not going to tolerate the electricity supply going off. I often joke with colleagues that if the electricity went off during cup final people would be prepared to burn Chippendale furniture in the power stations to keep their lights on. The more wind that you have, the less efficient become the traditional sources of fossil fuel and nuclear supply, because that reserve, whether it is spinning or not spinning, will become less competitive. So the irony is that we will vastly increase the amount of electricity capacity in this country from renewables and non-renewables, but we still have to have the back-up. There could be five weeks of bad weather coming down the road and, if you have a series of breakdowns, you have to have power stations spinning, and they are spinning as we debate this Bill today. I do not see that people grasp that fact.
Energy from wind is great. In my own city, Harland and Wolff does not build ships any more—it builds windmills, and that is great. But the fact is that you have to have them backed up. Unfortunately, in a relatively small geographic area such as the British Isles, you have these weather patterns. Yes, we can do a certain amount with interconnection. I pioneered the gas and electric interconnectors with the Irish Republic, and we have an interconnector with Scotland. I am all for that, but the electricity interconnector has two 250 megawatt cables, and one of them is bust. So nothing is totally reliable; you have to have redundancy built in whatever the source, and you cannot have enough of it. That is the experience we all have.
In economies like India, the lights go on and off, and all the major universities and hospitals have huge amounts of generator back-up. In this country we pride ourselves on having a constant supply, which makes a huge difference to certain industries and activities that simply have to have constant, reliable supplies of electricity at affordable prices. I fully support the concept of reducing our carbon footprint as best we can—but we all know that it is vehicles that produce most carbon emissions, and not Mrs Bloggs at number 33. So this deals with only part of it.
We have indigenous potential in this country. Shale gas has been mentioned. At home in Northern Ireland we have vast resources of lignite from Lough Neagh right up through County Antrim. An Australian mining company came to me a few years ago to say, “We could open-cast mine it, because it is high-quality and low sulphur. We could build a big trench up the centre of County Antrim from Lough Neagh up to Ballymoney. We would put in an 800 megawatt power station and fill the hole in as we go along”. You can imagine the amount of interest that that had from the local community, who saw their towns, farms and everything disappearing into this great hole. Campaigns were launched, and I have to say that I took a far-sighted and courageous decision as Energy Minister to do nothing. I took the view that it should mature in the ground and that it was there if we needed it. But the truth is that we have resources and we may have to deploy them. Mr Putin and others have been mentioned, and there is no doubt in my mind that this is a national security issue, apart from anything else. We cannot allow ourselves to be at somebody’s mercy.
Research and development has not been mentioned very much. The European Union has significant resources in this area, and we have to do far more R&D into the technologies. All that we are doing at the moment is to use sticking plaster and adding bits on here and there. We are not putting enough money into the R&D of energy supply. I hope that as we go into Committee and on to Report we can drill down into some of these issues and perhaps improve the Bill as it passes through the House.
Lord O'Neill of Clackmannan
My Lords, this is an ambitious and important Bill. It is ambitious in that it is trying to achieve a unique objective—the establishment of a monitored and regulated market, which would incorporate carbon emission reduction and environmental sustainability by harnessing a variety of seemingly incompatible technologies—baseload generation involving nuclear and gas-fired CCGTs, along with biomass-adapted coal stations and smaller renewable thermals. Alongside that there will be interruptible renewables, such as on and offshore wind, hydro and small-scale, and probably as yet unproven, technologies, claiming to be renewable—and, of course, if you claim to be renewable, that is acceptable. Renewable is cuddly, small and nice. It is akin to WC Fields’ snake oil. There is basically no illness that it cannot cure. It can create jobs and reduce unemployment; it can increase productivity—it can do almost anything. The only thing that it cannot do is to produce electricity on a reliable basis in great amounts. The basic amount of electricity that we require has to come from baseload generation. The rest can be of assistance, but it cannot be a realistic substitute.
It is fair to say, however, before we go any further, that all these different technologies have inconveniently different timescales for development or for the life of the stations involved. Each different form of investment will require a different form of reassurance. This is the fundamental challenge in the creation of a new market.
Utilities have been seen historically as a fairly safe form of investment. You get a return of 7% to 9% one year after another. They can be long term. They can be pretty safe. Demand is likely to be constant. Today, technical uncertainty, because of the relative newness of some of the equipment, raises questions about the possibilities of a dependence on unproven technology, or questions of access and the interruptability of one technology against another. We do not really know about the maintenance of a lot of the technologies that we are talking about. We might therefore have unreliability of a technical character that we have not yet experienced.
For these reasons, the business of reassuring investors is a far greater challenge than we have had before. We have been told that we are going to get the grand design in July—we will have the delivery plan, the strike prices and the accommodation of capacity payments. We would like to have most of those things before the House rises. I take the point that this is to be incorporated within a market system. Perhaps not all of us have been students of the United Kingdom energy markets over the past 20 years but this is the fourth attempt that we have made at having a market. It is by far the most challenging one. We have had the pool system, NETA and BETTA, the three predecessors, each of which tried to correct something that was wrong with the other one. There was gaming or it was pooled; the next one was not quite good enough but the one after that would be better. This is the first arrangement that is actively seeking to incorporate within the market system questions of climate sustainability and emission reduction.
As a consequence of this and European decisions, we have to reject the coal option until such time as we have carbon capture and storage. Like fusion, that is always going to be 15 or 25 years away, depending on how optimistic you are. Coal is not an option, so we have hydrocarbons, nuclear and a range of as yet, in many instances, interruptable or unproven renewables. I am happy to have a mixture of gas and nuclear as the main components. I am not sure that we really want to change the character of this Bill to have, at the top, competition at all costs. That was part of the philosophy of the privatisers in the 1980s and early 1990s. We had a system then that, had it been taken to its logical conclusion, would have produced electricity generation along the lines of pre-Cavour Italy, when there was a succession of city states all running little power stations.
Our system never quite got to that state, but it created entities that were easy to absorb and take over. Now we rail against—or some people rail against—the fact that there are six utilities, six big players, which pretty well dictate everything. It is an oligopoly but it is a regulated oligopoly, and it could be better regulated. We could have clearer bills. We could have better tariffs. We could have systems with greater transparency. In some respects it is the toothlessness of Ofgem over the years which has allowed a number of these excesses to take place. We have to recognise that we are trying to keep many more balls in the air with our new market system than we have attempted before. That will carry risks. If we can get it, however, we will be able to secure the assurance that a number of investors are waiting for.
I am not totally pessimistic about the investment situation. When E.ON and RWE, in the shape of Horizon, its nuclear company, decided to get out of nuclear, they found a buyer, Hitachi, which was prepared to pay rather a lot of money, albeit at this stage for real estate. Nevertheless, it was prepared to buy access to the sites and the possibilities that those offered. As far as nuclear is concerned, people are not totally pessimistic and running away from it all the time. It is essential, however, that by July we get a clear indication of the strike price, the capacity payments and the nature of what the market structure will be. If we can get those with clarity and transparency we will get the beginnings of the investment that we require.
This is a large Bill. It covers a lot of areas. There is one point about the nuclear industry that has not really been made, although the Minister did refer to the establishment of the new nuclear regulatory authority. This is long overdue. When I was the chairman of the Nuclear Industry Association, I argued that it was frightening that we were seeing the departure of so many nuclear inspectors from the regulatory body to the potential players in the British nuclear industry. We now have a body that will allow the regulatory functions to be carried out in an appropriate way and the staff to be paid at the rates that the market would wear. It is highly appropriate that we are able to do that.
Under Mike Weightman, the chief executive, this body has achieved an international standing that not a lot of people fully appreciate. Mike Weightman went to Japan after Fukushima and produced a report that did not necessarily give consolation, but it was of a rigour and authority that established once again the very important position that the British nuclear industry has in the world. We talk about quangos and government bodies, but this is one that will be going out to bat for Britain in a variety of circumstances when other countries are getting into the nuclear business in a big way.
It would be churlish of me, before I finish my remarks, not to thank the Minister and her staff for the briefings that they have given us. I have to say, however, that I am reminded of F.E. Smith’s words when he said, “I may not be much the wiser but at least I’m a lot better informed by the process”. We know that there will be a lot of complexity in the Bill. For that reason the Committee stage will be exciting and interesting. However, I reiterate a point that has been made by colleagues this evening. We want to see a lot more of the flesh that there should be on the skeleton of the Bill before we get to Report. In Committee it may not be in quite the form that we want, but we can look at it carefully. If we can get a market settlement with the delivery plan in the public domain before the recess, we will have an interesting time in Committee and at Report. I wish the Bill well.
Lord Birt
My Lords, I declare an interest as a director of a UK renewable energy company and as an adviser to a fund that is a leading global investor in renewable power. Both bodies are noted in the register.
In the past 50 years, the UK has seriously lost its way with infrastructure. As my noble friend Lord Kerr reminded us a little while ago, unlike the Chinese, we do hang around. We have the least developed road and rail networks of any major country, we have struggled to expand our strategic airport capacity, and we have been slow to create an electricity grid and generation system fit for modern circumstances. This latter task is not easy. As we have heard during this long debate, we have to migrate from an era of plentiful but high-emitting coal and gas in the UK to a power system that balances three equally valid but competing objectives: security and reliability of supply; a substantial reduction in carbon emissions; and the need for economically priced electricity both for business and for consumers. The task may not be easy but we have addressed it with too little dispatch.
On renewables, far from being world leaders, we currently languish just above Malta in the relegation zone of the EU nations league for the proportion of national power produced from renewable sources. Many other EU countries, large and small, produce getting on for 10 times the proportion that we do in the UK. On nuclear, we overcame our temporary reluctance in 2005, but eight years later we have yet to contract a new generation of nuclear plants. Our storage capacity for gas, as others have mentioned, is notably low, especially by comparison with other countries, such as Germany. And we have failed, too, to build sufficient interconnectors with other electricity markets overseas, which would enable us to import more power, as the noble Baroness, Lady Parminter, mentioned earlier.
The well flagged consequence of those shortcomings is that the UK faces potential blackouts in the mid term and possibly even in the short term. If they happened, that would be a terrible indictment of our system of government—our ability to think and to plan ahead. Indeed, it would be a national shame. Will this Energy Bill put us on the right track?
The Bill sets out a new approach to the operation of the electricity market. Its cornerstones are tight emission standards, greater certainty over the long term on carbon pricing, more revenue assurance for low-carbon generation, and a mechanism to encourage reserve generating capacity. The Bill, as I think most have observed, is directionally sound but, by itself, will not meet the stiff challenges that the UK faces.
I have long supported the value of market mechanisms in both the public and private sectors, and I have long belonged to a consensus that is wary of the state picking winners, of state-owned and state-run enterprises, and of a strong directive role for government—of the kind that we still see, for instance, across the channel in France. However, the complexity of our national energy goals, embracing security and climate change, as well as economic efficiency, obliges us to find the right blend of market mechanisms and government direction, and that is very difficult to do. We need to see real and speedy progress towards nuclear commissioning, towards renewable rollout, towards greater interconnection and towards improved storage capacity and stand-by power.
Government will have to ascertain that the measures in the Bill do in practice give investors confidence, as the noble Lord, Lord Stephen, and others have emphasised. This is critical because modernising our power infrastructure probably requires—I suspect that the figure is far higher than the Government have so far estimated—something of the order of £250 billion to £300 billion of private sector capital over the next 10 to 15 years, most of which will come from outside the UK and from investors who, as others have noted, have other choices, not least as worldwide investment in this sector simply mushrooms the world over.
The risk is that the new construct of CFD and capacity payments, which is difficult to understand, as the noble Baroness, Lady Liddell, mentioned earlier—it is a construct designed to incentivise both nuclear and renewables—will prove, on the one hand, overcomplex for renewables, yet, on the other, insufficient to encourage the replacement of our existing fleet of nuclear plants. With the intermittency of renewables, about which many have spoken, and the uncertainty of gas supply in a volatile world, which I think has been underemphasised, a substantial contribution from nuclear is necessary to help manage national risk. Of course, I entirely acknowledge the challenge and difficulty of doing that.
Moreover, as we move forward, our politicians will have to be brave, as well as wise, and hold their nerve, for this transformation will be expensive, as the noble Lord, Lord Jenkin, mentioned earlier. Power prices will rise, even though the cost of some technologies—some renewables, for instance—is reducing very rapidly and is converging on parity with hydrocarbon technologies. Therefore, much beyond the passage of this Bill remains to be settled, and there is many a slip ‘twixt cup and lip.
I echo the noble Lord, Lord Browne, in saying that we will need to be vigilant to ensure—to paraphrase Jonathan Powell—that we execute, execute, execute. We need to monitor not just the introduction of the complex new systems proposed in the Bill but the outcomes, and whether these measures before us put us on a rapid track to a far more robust power infrastructure for the UK than we have now.
Lord Dixon-Smith
My Lords, it is many years since the late Lord Flowers, who knew a great deal about the nuclear industry, said to me that mankind had only one source of energy, and that was nuclear. However, mankind had a choice, which was to have his nuclear power station here or 98 million miles away. Lord Flowers knew which he preferred. I often wonder, when I get up in the morning, how many years’ worth of geologically stored solar energy mankind burns off every day to enable us to live the lives that we do. Carbon dioxide was locked in in such a way that it ultimately enabled the evolution of mankind. We need to think about that.
In the Bill before us this evening, we are discussing how to provide what I would call the procedural infrastructure to enable us to renew and refresh the electricity and energy generating industry after 15 years of what can be described only as gross neglect. However, that time was not totally wasted because it gave us the Climate Change Act, which establishes a CO2 target for 2050. We have to be extremely careful about what we do because everything we do must be consistent with that target. That target is 80% of our 1990 emissions. It is the amount of emissions that this country was producing in the 1850s, when the population was 22 million. Today we have three times the population and it is five times the energy consumption that keeps modern society going. It is quite an interesting comparison.
Energy investments by their nature are long-term, and 2050 is less than half my lifetime away now. We heard lifetimes discussed in political terms a little while ago, but I prefer the calendar. What we do, therefore, must be consistent with that target. We need to think through what that target means. I have not seen that done, so I will suggest some conclusions. We need to determine what industries we have at present that give carbon emissions, or carbon-equivalent emissions, that are so essential that they will have to continue beyond that date.
My list of industries is as follows. First, there is metal smelting; I cannot envisage how we will survive without that. Next, there is cement manufacture; again, I cannot envisage how we will survive without it. Next, there is agriculture, particularly with regard to livestock. I declare an interest as a farmer, but I have no livestock other than two children and seven grandchildren. Agriculture, of course, is a surprisingly large creator of carbon-equivalent emissions. Next, there is aviation. There is a great problem of energy density, and I rule out biofuels because we cannot today feed our existing population on this planet properly, and by 2050 there will be 2 billion more of us to deal with. Therefore, I do not think biofuels will be a viable alternative. I include shipping for a similar reason. Energy density is very important to those in that industry because ships carry cargo, so the less space that is taken up by fuel tanks the better.
Once you have gone through that list, you are a very long way towards the 20% target that we have set. If that is the case, everything else we do must become zero. All land-based transport, all our buildings and all our industries must have zero emissions. That is fundamentally important. Encouragingly, there is already a basket of technologies that could make that possible, but we do not know what technologies will win the economic race, as opposed to the calendar race.
That brings me back to the Bill for a moment. The contracts for difference established by the Bill, it seems to me, are designed to guarantee a return to investors for investing in new nuclear power stations in particular. In addition, there are safeguards in the contracts for difference to provide some protection for consumers—as far as I am concerned, consumers and taxpayers are one and the same—as regards long-term price increases. I do not envy those who are responsible for negotiating those contracts. An apparently high price today could appear to be a very reasonable price in the longer term.
I should explain that my view is coloured by my lifetime in farming. I shall use the example of farm tractor red diesel because its duty is heavily taken away. I began by paying one shilling and three and three-eighths pence for a gallon of farm tractor red diesel. That price was equivalent to about 1.3p. At present, the price is between 77p and 78p per litre. Those with quick minds will realise that we are talking about a price increase of several thousand per cent for energy, and we have been worrying about whether it might go up by 10% or 20%. Frankly, I find that quite difficult. In fact, we do not pay society a sufficient compliment for adaptability. I am not saying that we should be complacent because we should do everything to keep prices down. Returning to the contracts, a price that looks unreasonably high today might, in 20 years’ time, be an extremely good deal for the consumer. Therefore, it adds to the burden of responsibility on those responsible for negotiations.
The other thing that has happened, which could not have been imagined during the passage of the Climate Change Bill, was the advent of shale gas, and shale oil in the United States. We know now that we have large quantities in this country. They have not yet been totally confirmed and defined but they are there. We know that they exist in large parts of mainland Europe and under the eastern Mediterranean. We know also that there are considerable quantities in China. One way or another, if we can overcome the problems of providing that, it may be a very useful interim energy source.
Shale is much cleaner than coal. More importantly, using combined-cycle gas generators, it would be possible to use carbon capture and storage and to make it virtually emission-free. In addition, because you could produce clean smaller-scale power stations, you could site them near communities so that the waste heat could be used and they would become combined heat and power stations. That would be a revolution in power generation. At present, most of our power stations release nearly the same amount of energy to the atmosphere in the form of waste heat as they supply to the customer in the form of electricity. We really need to find a way around that problem.
All that may be daydreaming but the point is that we do not need more interim targets for carbon emissions because that final target already rules everything we do. It is not simply that that determines it; I am sure that there are still unknown technologies, which we will have to learn about and adapt to. Some of them may be more helpful than anything we yet know.
Lord Prescott
My Lords, I feel most inadequate as I have no commercial interests to record either in the register or anywhere else, except perhaps one: I was the UK and European negotiator at Kyoto. Therefore, my interest is to continue to argue the case for climate change—the scientific argument and the connection between carbon and the increase in climate change. This very good debate has reflected the different interests and the division between those who believe in the climate change argument and those who say, “No, it is a nonsense and we should not take any notice of it”. That was probably very much reflected in the evidence and clash of views between the noble Lords, Lord Lawson and Lord Stern. I think that the noble Lord, Lord Stern, well won that argument, but I am in that school of thought. I am an admirer of the comprehensive work that the noble Lord, Lord Stern, has done and the major contribution he has made to the climate change argument.
The noble Lord, Lord Lawson, was referred to by the noble Lord, Lord Deben, not as a sceptic but as a denier. You could tell from his speech that there is no doubt that he is a denier. Perhaps I could add the noble Viscount, Lord Ridley, to that argument. The noble Viscount is indicating that he is not and I take his correction. However, basically, they believe in leaving it to the market. I did not hear an alternative from either of them. There is a great deal of rejection about the science, what we should be doing, how it should be cheaper and how much more efficient it should be. I must say to him that the coal industry and perhaps a number of the banks are not the most perfect examples of the operation of the perfect market. At the end of the day, the state comes in and has to find the money for them.
Leaving that aside, what we have in the powerful argument of the noble Lord, Lord Stern, is what he actually said and what we all know: that thousands of scientists have come to a view about the connection with climate change. One can say that they are all wrong, but the odd voice against them does not lead me to think, “Which side of the argument should I take?”. I am for the connection. I think the evidence of the weather is there, but that debate is ongoing. However, there is quite clearly a connection. If the connection between the level of greenhouse gases and carbon is accepted, and if we want to prevent an increase in global temperatures, then it has to be kept at that level. As the noble Lord, Lord Stern, has constantly pointed out, we are at a dangerous level. One can reject the argument; once that is done, it is easy to do anything. They can attack every proposal around because they want to leave it to the market to decide. Evidence shows us that the market cannot determine everything in these matters, and it often means that a regulated framework has to be found.
Much of this debate is about the balance of the regulated framework of the market and government. There are many examples. I remember when I was in Government and we convinced the industry of the need for a climate change levy. I remember Tony Blair, the Prime Minister, ringing me up when I was abroad and telling me that we were going to introduce a climate levy. I said, “Oh, you mean an energy tax”. “We don’t call it an energy tax”, he said. That may be so, but the important point was that industry administered that climate change. The levy that was imposed actually helped to make industries more efficient, and that was what was proved by it. I understand that there is a balance in the regulatory form between what governments might do and what the private sector might do and I am prepared to concede that there may well be something in the way that the market operates.
The criticisms have been genuine and informative, and I am sure that in Committee there will be good debates on serious issues. No one is actually speaking out against the Bill. Those who criticised parts of it were saying, “I support the Bill, but there are some things that I don’t like”. I will not go into all the details because they have been mentioned in an excellent manner. However, I suppose I find myself in the same boat. I agree with a lot of the criticism. It is not as good as it could be, but it is a Bill worth supporting and I want to say why that is so.
One of my criticisms is that there is no balance of energy policy; there is doubt in all the areas. We do not know what is going to happen with nuclear and we are in separate negotiations with a French state company as to whether we are prepared to give them sufficient money to provide us with nuclear energy in about 20 years’ time, even though the energy gap is coming in the next 10 years. For wind turbines we have Siemens, who want to put massive investment into my industry and my area, but it is always complaining about uncertainty, as indeed is the case with solar power.
I rather agree with the noble Lord, Lord Teverson, that there is a role for coal. It might mean that a lot of money has to go into carbon capture, but we should be prepared to recognise the role that coal plays. Some 40% of the energy in this country comes from coal. It might not come from our own coal fields, but it is certainly coming from somewhere. There is going to be a lot more about as the Asian countries begin to develop their demand for oil and coal because it is where 60% of their energy will come from, and that will lead to increased prices. This Bill is not going to prevent an increase in prices; that is one of the realities that we are going to have to live with.
Biomass has also been criticised. It is all right not to believe in it and to attack every kind of industry for every kind of reason, but the reality is that if you do not accept the argument about carbon, then you can forget about the increase in carbon and just talk about price, production and security. But if you do believe in carbon, you have got to adjust the whole system, not only in this country but globally. That is what Kyoto is all about: to find an agreement to reduce the amount of greenhouse gases so that we can reduce carbon. There are challenges coming with climate change and the horrific circumstances that people are telling us about will come if we fail to achieve that.
The uncertainty produces real problems. In my area of Humberside we have 27% of the UK’s oil refinery capacity, 20% of its natural gas, 38% of its imported coal and 17% of UK electricity generation. All of those are an important part of the industrial base. Of course, the Siemens investment, which is now considering coming into this area, is plagued with uncertainty. Are we still going to have an energy policy? Are we going into wind turbines? I think the nimbys have more influence—and this Government gives them more—to actually turn against wind turbines. Whatever the arguments, whether or not they blow all the time, if you are prepared to accept that carbon is one of the limitations in the balance of your policy, you will end up with a different policy and leave it to the market. I know from historical experience that leaving it to the market will not provide a global solution to global problems. Why is that? Because when I was at Kyoto 1 there were only 46 nations; now there are 190 nations.
It is the politicians who have forced through some agreements, so let us not knock the politicians’ role in these matters, but getting a global solution to a clearly global problem requires a framework of consensus that is not easy to achieve. We have to recognise that developing countries which are looking to develop their riches, as we did in our industrial past, will have a high carbon growth. They depend on coal and oil and will go through our process of high carbon production. We poisoned the world and moved on, and now we want to continue doing it but feel that they have not got a place in it. If that race goes on, it will threaten any kind of global solution.
The Siemens investment, which will bring billions of pounds into our area, is an important factor that should be taken into account. I doubt that this Bill will achieve the kinds of things it seeks to achieve. Perhaps it will change in Committee. I am not sure that it will secure our energy or that it will reduce prices—I hope that it will—but in Committee we can discuss the process and find out more about the details, something that everyone has been calling for, so that we can understand it.
On the same argument, I can remember people saying that targets are not important. I believe that they are important, but we should not depend on targets because what we need is certainty. The noble Lord, Lord Browne, and others have said that we should have more certainty than targets. However, I still believe that we need the targets we set at Kyoto. By the way, many countries have achieved them. In the United Kingdom, not only did we achieve twice the levels set for us at Kyoto, but a million more jobs, growth in the economy and a reduction in gases. The argument that somehow Kyoto was a threat to employment and growth is not borne out by the facts in Europe, which is an important part of it. That was Kyoto 1 and we have to find an agreement on Kyoto 2, make no mistake about it, by 2016. The Americans do not like it. There is no difference between Obama and Bush on this matter, although Obama puts it in different words. They are still not co-operating on getting an agreement. The international negotiations are a challenge for us, but they are important.
Britain became the leader in most of these matters. It became the leader at Kyoto in 1997 and we set up the climate change levy in 2001. In 2006 we introduced the Climate Change and Sustainable Energy Act, and the Climate Change Act in 2008. In 2006, EU emissions trading was established, which was copied from us—it was not as good, but that is life—and the current Government have continued with their Green Investment Bank and this Energy Bill. Britain leads in trying to find a proper regulatory framework.
I have been happy to be involved—I notice the noble Lord, Lord Deben, is in his place—with a group called GLOBE International. I have been working with it for 12 months. The group has been working with parliamentarians in many countries. I am amazed that 33 countries have followed the lead, in different forms, that Britain has given. They can see that a statutory framework is essential if you are to get a global solution. It is coming from the back benches, not the Governments, because Governments are caught up with their civil servants. As our leader said before, there may be too much agreement and not enough common sense about it.
There is a way. We are leading the way towards the global solution which is needed for a global problem. We cannot look the other way and we cannot bury our heads in the sand. I am proud that Britain is leading and that this Government are following the same framework. The criticisms I have of this Bill are similar to the ones I have of other legislation, but at least Britain continues to lead the way on the most essential and difficult problem of how to deal with climate change. We need a regulatory framework. Britain is leading the way on that and I am glad that this Bill continues the process.
Lord Redesdale
My Lords, I am very honoured to take part in this debate because it shows how unique the House of Lords is. I do a lot of discussions about energy and climate change and I have not been in a debate recently where the fundamental basis of climate change has been questioned. Almost everybody believes that climate change is taking place. We had more than 200% of our normal rainfall last year. We are facing climate change and its consequences. How do we deal with that and how do we deal with energy generation, which is one of the biggest emitters of greenhouse gases?
We are acting as if the Energy Bill will solve the problem. It does not matter how well drafted this Bill is, it will not solve the problem. We have not built enough generating capacity for a long time. I was trying to explain this to a business audience. Politicians will not bite the bullet and build generating capacity because a power station lasts 50 years. The decision has to be made, the money has to be found and planning permission has to be obtained. It has to be built, it is used and then it is decommissioned. A Government with a maximum life of five years have to make that decision. They have to explain it to a press running a 24-hour news cycle, which has to explain to its readers, who are worried about last month’s bill not next year’s.
The culmination of that is that we have not built any power stations. There has been great talk about it but we are going to face a generating gap. Brownouts and blackouts are round the corner, as has been mentioned by a number of noble Lords. I declare an interest as chief executive of the Energy Managers’ Association. My interests are set out in the register. At a recent conference I put up a slide and asked whether people thought there would be an energy brownout in 2015, 2016 or 2017. We all had those clickers and more than 80% answered 2015. British business is beginning to get very worried about our ability to supply power and investors in British industry see it as a major financial risk.
There is no panacea. Many noble Lords have raised the issue of fracking as if it is going to solve our energy needs. The original estimate for our reserves of shale gas was that, if we used it all, we would be energy independent for a whole six months. Recently a report re-estimated the amount of shale gas at between seven and 10 years’ worth. It is an estimate, so let us take the lower figure. If we use fracking and get shale gas, that is fantastic. We are independent until 2020 for gas, after which it might all be gone. We just do not know.
In Poland, where the Government have not been so worried about the environmental constraints, they have been looking at pushing ahead with fracking but they have found that the gas is unrecoverable economically in the form it is in. America has an enormous amount of shale gas but it is in geological fields above shale oil. It was previously seen as a waste product and the difficulty of getting the oil out was that the gas was in the way. Now they are going after the gas. We do not have the same geology and we cannot claim that we are going to have a sudden bonanza. There may well be shale gas but in its present form it is more expensive to get out than would be economic at the moment.
It might be the panacea for the future but it probably will not be. To get the shale gas out we have to drill 140 test wells and we do not have the planning permission to do that. To recover the gas we need to drill 1,000 wells in the north-west. Members of Greenpeace will have a field day at all those planning permission hearings unless we change the law on planning permission.
This is the reality of what we are facing. We are very dependent on our generating capacity at the moment. Many noble Lords said that Europe is going to close down our coal-fired power stations. That is not the case. We have not built any for a very long time. The existing ones are very old, they are at the end of their run cycle and, in fact, we are increasing the rate at which they are shutting. The price of American coal has fallen as it has been displaced by shale gas so we have been firing up a lot of coal-fired power stations to run that generating capacity cheaply. This reduces the life-cycle of the coal-fired power stations we had in reserve in moth balls.
We will be reliant on natural gas. That is why I have an issue about decarbonising the electricity grid, because if you are doing it through natural gas, 70% of the energy is being thrown up the chimney of the power stations producing electricity. It is far better to put it in the grid and burn it in condensing boilers, which are about 94% efficient and are at the point of use. There is only about a 0.5% loss on the gas grid compared with the transmission loss on the electricity wires.
I am not certain that contract for difference will even work. I know that that probably puts me in a minority on this side of the House, where we are saying that it will work. Before everyone gets excited, I remember discussing the EMR years ago. The policy started before this Government were in power. That is the problem with energy policy. Even though it might not work, it is still coming through. I know that there are a number of reservations.
I do not think that anyone will object to the Bill as we need to push forward with the investment and the regulatory framework that means that people will invest in generating capacity. It has been the constant call of those who want to invest enormous amounts of money in the industry that we have a secure regulatory framework and security for investment.
The Bill must address the difference that we are facing in society today. The concept is that energy prices will remain at the historic low of the past 20 years. That will probably not be the case. We will probably go back to a position where energy is a far greater proportion of take-home pay than it has been in recent times. An opportunity arises from the rise in energy prices. A recent report stated that 44% of all energy used in this country is wasted. The simplest way to reduce the cost of energy is not efficiency but demand management at every level. We need to change the way that we view energy and instead of saying that we need to provide more and more energy at ever cheaper prices, we should start to pay realistic prices. It does not matter that there may be more finds of gas. Our problem is that China and India are starting to consider converting their coal-fired power stations to gas, and they are closer to the gas fields than we are.
I am secretary of the All-Party Qatar Group, and had a meeting with the Emir. I am not saying that just to drop names, although I am a very important person, of course. This was a while back. As I went in, he had a smile on his face because a Japanese delegation was leaving. He said, “Do you know what is really amusing? You are coming to talk to me about gas, but they just wanted to try to steal all your gas”. That was after Fukushima and the Japanese delegation was trying to get as much LNG as it could because they had to run their power stations. He was laughing. I found that quite scary, because it sent the price of gas up. Many areas will be looking for large supplies. There are not enormous supplies of gas out there that we can go to buy easily without political consequences.
The Bill is important. An important aspect of it should not be overlooked. The Government have said that they will be tabling amendments to address electricity demand reduction. Instead of just talking about one pilot, we should be looking at how we get the whole of the population to start changing the way that they use electricity. The place to start is business. The organisation that I run will start by introducing a concept called low-energy companies, where it trains a proportion of all staff up to energy management level 1 or 2, which involves the awareness of energy managers, and then starts to introduce energy managers. The importance of that is that very few businesses have energy managers. The last time we started hiring energy managers was in the 1970s, when the oil shock hit and prices were rising. We can create vast numbers of energy managers who can massively reduce the amount of energy that we use in British industry. That is very attractive to large companies, and we are launching it in London Zoo, in front of the penguin pool. We are launching it there because the penguin pool has a problem, which is that the penguins tend to defecate in the water. There are 100,000 litres of water in the penguin pool. The pool has to be filtered three times a day, which has a massive energy cost. You have to understand how to keep the animals fit and healthy, but if you are running a business, you also have to understand where the cost of the energy is. That is quite an interesting one.
We are bringing companies with more than 2 million employees who want to do it with their employers and they want then to push it on to their supply companies. The very real reason is financial risk. A number of these companies have been told by their suppliers that energy prices will probably rise by 20% a year for the next four years. That is quite a frightening statistic. Most people are talking about much smaller rises, but the energy companies have started to say that these larger price rises are coming down the line. If that is the case, British industry is going to have to do a vast amount more to make itself efficient, or it is going to go out of business. However, the other aspect of this is, of course, that it is not just a British problem. Other countries around the world are facing rising energy prices. Companies that think they can get cheap offshore energy prices are in for a shock in the future.
I hope this Bill is a success. I obviously believe that it will not be held up a great deal as there are incredibly important elements in it. I very much hope that we do not lose sight of making sure that one of the biggest gains in reducing energy prices is by not using energy in the first place.
Lord Greenway
My Lords, as the last Back-Bench speaker in this debate, I must admit to a certain amount of trepidation, especially when faced by a barrier of such expertise on the other Cross Benches.
I intend to take a slightly different tack from other noble Lords, but first I should like to say that I wholeheartedly agree with the remarks of the noble Lord, Lord Oxburgh. We are now reaping the rewards of government inaction in not renewing our nuclear capacity when it should have done so. That is a tragic mistake. When I came into this House some 38 years ago, we had the greatest experts in the world on nuclear energy among our membership. Alas, where are they now? All gone—we have lost that expertise and that is to be greatly regretted.
I entirely agree with the right reverend Prelate the Bishop of London and others who said that more effort should be made to reduce demand. The noble Lord, Lord Redesdale, who has just sat down, mentioned that as well. There are many ways in which we can educate people that electricity simply does not grow on trees, and that when they turn on a switch everything will happen. Great strides should be made in educating people in how to reduce their demand for and reliance on electricity.
Solar power has been mentioned only briefly. Living in the south-west, where the sun is supposed to shine rather more than in other parts of the country, I find it very strange that new towns being developed outside Exeter are not mandatorily fitted with solar panels by the property developers. That is something that should be done automatically, certainly in the case of commercial developments.
I said that I would take a slightly different tack and I will direct the major thrust of my remarks to the nautical side of power generation—that is, offshore wind, tide and wave. The first is the most prominent today, as it was the only alternative green energy source available following the Kyoto treaty. It is, as we have heard, an expensive and unpredictable way of generating power and the installation of offshore wind farms is considerably more expensive than that of onshore ones. That expense will increase as the future planned farms move further offshore into deeper waters. The industry is aware of this and is now looking to develop floating turbines to reduce the installation costs. Speaking as a mariner who has witnessed the odd storm in his time—I am sure one or two other noble Lords may have done so as well—I have grave doubts about floating wind turbines surviving a major storm at sea, particularly in deeper water. My doubts also extend to the development of wave power, where the same situation applies. To be really effective, wave power has to be some way offshore, where the waves are largest. A major Atlantic storm off the south-west would simply blow the whole thing away.
One of the unintended side-effects of the proliferation of offshore wind farms relates to navigation. This has certainly been exercising Trinity House, which is responsible for the provision and maintenance of aids to navigation. I declare a non-pecuniary interest as an Elder Brother of that organisation, which will be celebrating its 500th anniversary next year. Initially, the Crown Estate and the developers of offshore wind farms had little knowledge of where ships went and proposed sites that cut right across well used shipping lanes. I am happy to say that things have moved on since then, and that Trinity House and the other two general lighthouse authorities are now properly consulted beforehand. However, the positioning of some offshore wind farms has meant that shipping has often had to make considerable deviations around them, which of course leads to greater use of fuel and therefore greater emissions from ships.
In other cases, shipping is squeezed into comparatively narrow channels between wind farms. It is estimated that at these choke points, the risk of collision is increased by more than 400%. I have said on a number of occasions in this House that if you place an object in the sea, either a fixed structure or a floating one, sooner or later a ship is bound to hit it. Thankfully, many of the wind farms in the Thames Estuary are built on sandbanks, so a ship would run aground long before it ran into one of the turbines. However, as these wind farms move further offshore that will not be the case, so there is a danger that two large ships could collide and drift out of control through a wind farm, which would be rather akin to two large balls rolling through a skittle alley.
Great play has been made of the production of jobs but I see no real evidence of it, certainly not in offshore wind. Once the farm is built, it requires only 100 or so people to maintain it. As one noble Lord mentioned, maintenance is a problem. It is not often mentioned but in offshore wind, between 20% and 30% of the time people are unable to get out and do the maintenance because it is too rough. They are either sick or unable to climb the ladders if the swell is too big. I can only hesitate at what it would be like if you had a floating wind turbine, which would be moving. Anybody who has tried to get from one ship to another at sea will know the problem of getting on to that turbine from a moving ship.
I turn now to tidal power, which has received only a brief mention; I think it was from the noble Lord, Lord Judd. We are blessed with a fairly good tidal range in this country. In two areas, the Bristol Channel and the Channel Islands, we enjoy tidal ranges of around 40 feet at spring tides, which are second in the world only to the Bay of Fundy. There is enormous potential for tidal power generation. Unlike wind, tides are predictable for many years ahead and there are effectively four movements a day—two flood tides and two ebb tides.
I am surprised that no noble Lord has mentioned the proposed Severn barrage, about which we had a debate a few weeks back, which may be because the Select Committee in another place rubbished the idea rather effectively a week or so ago. I have never been in favour of a fixed barrier but there are alternatives. I understand that other developers are now looking at alternatives such as tidal lagoons or tidal fences, as I believe they are called. Tidal generation is proven. We know that the technology works; the Strangford Lough installation has been working for around four years. That, however, is a column-based installation. These suffer from the same problems as offshore wind turbines, in that they are very expensive to install.
To my mind, floating structures, which are being developed at the moment, are better propositions. These vary but one example is that being developed by Scotrenewables of Orkney. This is essentially a floating tube with two extending arms, each of which has a propeller in it. Systems such as this have great potential for fast-flowing estuaries such as the Severn, Thames, Humber and Mersey—areas where, as we heard from the noble Lord, Lord Prescott, power demand is already large and where existing power stations would enable relatively easy connection to the national grid. They would have the additional benefits of operating near the surface, where the tidal flow is strongest, and would be comparatively easy to install and maintain.
I know that the Government are aware of the work being done in this field, but I should like the Minister to confirm that they will not ignore the potential of tidal power. I am sure that the Government are only too well aware of the paltry sums that are being put into research and development in this field, compared with the money being lavished on offshore wind.
The noble Lord, Lord Cameron of Dillington, said that it is a question of which technology will succeed in the UK. The jury is out on that and I suspect it will be out for some further time. More importantly, will it be British-made? It certainly is not at the moment.
Lord Whitty
My Lords, this has been a fascinating, interesting and well informed debate. I pity the Minister who has to sum it up, so I will try to help her out by giving my view of the debate.
My thanks to the Minister and her staff for all the information that she has given to us, in particular to the noble Lord, Lord Oxburgh, and his group. That was a good preparation for this debate, and it is something that we perhaps should follow in other circumstances.
This is a radical Bill. It needs to be a radical Bill because we have a serious problem. However, it is also a flawed Bill. Many noble Lords have pointed to some of the flaws and suggested ways of addressing them.
Going back to first principles, there are three reasons why we need the Bill so urgently. The first reason—and the one that has been the most remarked on—is that it should be a means of achieving our decarbonisation targets. To decarbonise our economy we need to decarbonise electricity supply first. Without that, we cannot decarbonise transport and we cannot decarbonise building heating.
I was pleased that my noble friend Lady Worthington, followed by other noble Lords including the noble Lords, Lord Teverson, Lord Stern and Lord Deben, and latterly by my noble friend Lord Prescott, set out the case for us to take climate change seriously. It was a minority view within this House that argued against that. The noble Lord, Lord Lawson, and the noble Viscount, Lord Ridley, did not express a general view in the House. However, I would caution the Government that that does not necessarily reflect the degree of difficulty in explaining our commitment to decarbonisation targets to the country. There is some scepticism there. While most of us may disagree with the noble Lord, Lord Lawson, that does not mean that there is not a resonance out there, and a political problem for the Government in providing a narrative that can take consumers and business along with them in delivering the objectives of the Bill.
The second main reason, which is connected, is that a very large amount of investment is needed regardless of whether we are meeting decarbonisation targets— £110 billion is the figure that has been referred to. We need to ensure that it is brought here. To get it, as many noble Lords have said, we need greater certainty in what the regulatory framework will be, or at least significantly less uncertainty. We need that to keep the lights on and to provide for our longer-term energy security.
The third reason goes back to those who use the electricity—to household consumers and to British business. As it stands, and I cannot see any other way of doing it, the Bill places the whole burden of paying for the investment that is needed on consumers. That needs to be done in a way that does not damage British industrial competitiveness, that is fair to domestic individual consumers and, in particular, that will not worsen the terrible situation with regard to fuel poverty. I am afraid that there is virtually nothing in the Bill that provides a new regulatory framework to achieve that.
I therefore want to start on Part 2 of the Bill, which is the most important part, on the issue of consumers. The provisions on consumers in Part 5 of the Bill are, frankly, woefully inadequate. The Government, the industry and the regulator are all under scrutiny by consumers, and the Government need that credible narrative in explaining their Bills, their choices and their need for energy efficiency measures. A number of noble Lords, particularly the noble Baroness, Lady Maddock, referred to this issue. It is not only a question of energy efficiency but a question of fuel poverty.
We could have used the Bill to greatly strengthen the regulatory framework for the tariffs that we charge to domestic consumers, but it was very late in the proceedings in another place that we introduced Clauses 127 to 130, I think it is, on simplified tariffs. The Bill is still pretty vague about how they are going to work. I appreciate that there are political problems. The Prime Minister committed himself rather rashly a few months ago to simplifying tariffs, and Ofgem and DECC have been struggling to find a way of delivering that ever since. As yet, the Bill does not actually deliver that. The late addition regarding simplified tariffs is welcome, obviously. We all welcome simplification, but simplification in itself does not improve either fairness or effectiveness in driving consumers to better choices with regard to how they use their electricity.
At present, and the noble Earl, Lord Cathcart, and the right reverend Prelate the Bishop of Hereford particularly emphasised this, we have a tariff structure that is illogical in that it both encourages the use of electricity, since the marginal cost of electricity falls as you use more, and is socially unjust as it hits the poor more than it does the better off. That needs to be changed but the Bill does nothing to change it. As I understand it, the Ofgem activity to try to deliver the simplified tariff structure does not do anything either.
Nor does the structure ensure that the ECO mechanism, which is still in its infancy, performs in a way to reduce fuel poverty. At the moment there are fewer resources being devoted to fuel poverty than there were under the old system if you combine EEC, CERT and expenditure on Warm Front. They are also being used inefficiently. Unit costs for cavity walls, for example, are going up. At the same time, there are installers and workers in that area who cannot actually get work. That is aggravated because of the slow take-up of the Green Deal, but it would have applied in any case. At the moment the ECO is not quite a poll tax but it is close to one, and it is deeply regretted. It also disproportionately falls on electricity consumers as against gas consumers. There is no real logic in that. If we are discussing tariff reform, these issues also need to be tackled.
Tackling fuel poverty and providing for improved domestic energy efficiency need to be a central part of the energy strategy, as the noble Baroness, Lady Maddock, and my noble friend Lord Judd emphasised. The original part of the Bill concerned with consumers, when it first went to the House of Commons, was timely and related to redress. Indeed, we need to do something about redress; my noble friend Lady Liddell was pointing to the number of cases where there are problems of mis-selling to consumers. However, the provisions are pretty weak, as is the enforcement. For example, I do not understand why mis-selling redress is limited to five years. That is not the situation with financial services; a lot of the PPI claims that are going on go back years and years, so I do not understand why energy should be restricted in this way. There is also no provision for collective redress, which would be the most effective way of dealing with past problems.
I intend to come back pretty heavily on these consumer matters. My general approach is very similar to that of my noble friend Lord O’Neill, who has regarded, as I have, Ofgem as being pretty toothless in this area over many years.
I turn to a couple of other parts of the Bill that have been less remarked on. On nuclear regulation, again I agree with my noble friend Lord O’Neill that we need the ONR to be set up and that all parties are key to that. However, I do not understand why we have 50 clauses setting up the ONR when it is essentially a simple task of transferring the responsibilities from what was an agency of the HSE and putting it on to a statutory basis. We have 50 clauses and, I think, 60 pages of schedule setting up the ONR. Before we come to that part of the Bill in Committee, I think that the Minister and her officials need to set out where the responsibilities, duties and resources are actually different from those of the HSE and the ONR acting in shadow form within the HSE. Obviously there are advantages in having an independent quango of a new sort with new governance, as it can escape some of the restrictions on civil service pay and attract nuclear inspectors and others with expertise at rates which the market is now throwing up. This would keep it out of the restraints that are being imposed by the Treasury. I do not suppose that that was greatly remarked upon in Treasury circles, but it is the main and most immediate advantage of having the ONR put on a new basis. I largely approve of that. However, does it require all this superstructure?
Very briefly, I also ask whether the Minister can point out where these requirements on provisions for strategy and policy statements differ from the requirement on national policy statements that we already have on energy matters. I am not sure whether this is a step forwards or a step backwards in terms of the transparency of the Government’s strategic thinking.
I go back to Part 2 and energy market reform. Contracts for difference is a bold innovation, as has been pointed out, and in this exact form it has no parallel anywhere else in the world. When first proposed, it was greeted with scepticism by supply companies and others, but we have moved on and seem to be accepting that this is the only show in town. I agree with that. However, we have to recognise that it is, in some ways, a very odd proposition—particularly, if I may say so, coming from what is supposed to be a free market oriented Government.
It is neither a free market nor, of course, a command economy, but it has aspects of both. At the moment, it is all about the Government providing very long-term contracts that are technology-specific and, in many cases, location-specific, to large individual oligopolistic companies, effectively giving them a price guarantee for 10, 25 or 35 years. While that is not quite Gosplan, it is, shall we say, a little more Vladimir Putin than Milton Friedman. It is a partially centrally controlled system operated through an oligopoly. During the course of the Bill and once we have seen the draft delivery plan, we hope to be able to insert a little more competition and choice into this process, and a little more ability to have break points in the contracts where we can review, in the light of economic, technological and environmental change, whether they are still appropriate. However, that depends on a proper regulatory framework. I, like many other Lords, hope that the Minister can guarantee that if we get to Report stage in the autumn, we will have at least some of the major pieces of draft secondary legislation before us so that we can see what we are doing.
Probably all I can do now is put to the Minister the questions that have largely already been asked and ensure that she covers all these points. On CFDs, that includes whether she can give us an indication of the likely length of the contracts, whether there will be a break point and what exactly is the role of this rather shadowy counter body. Is it correct that it will be a public body now and that there will be only one of them? I believe that is the case, but we need to be quite clear what the nature of the body is and whether, even if it is a semi-private body, it clearly has the backing of the Government, as my noble friend Lord Davies asked.
Can independent generators easily access this system and bring different technologies into it? How do individual site-based generators or community generating projects fit into the scheme? Is there scope for a green market auction or is the Minister prepared to extend the ceiling for FITs above the five megawatt limit so that they can provide for community and other one-off generation schemes? Other noble Lords pointed to a potentially damaging hiatus between the ending of the ROCs system and the full effects of CFDs coming into play. Are the Government prepared to envisage extending the demise of ROCs beyond 2017? If not, a number of serious investment projects will be stalled. There needs to be some overlap until 2020 or even beyond.
CFDs are essentially for nuclear and renewable low-carbon technologies, so I am not clear how carbon capture and storage fitted to gas appliances fits into this. The noble Lord, Lord Dixon-Smith, referred to using the heat from gas or biomass generators. If we were to come up with a proposition that was seriously low carbon because it reused what would otherwise be waste heat, would that also qualify under CFD? Will the Minister respond to the questions about state aid and say something about the likely timescale? Will the investment contracts provisions, designed in part to cover a period when we might still be clarifying state aid, run into the same kind of problem as CFDs?
The Government have to answer a lot of questions on CFDs, as well as some on the capacity mechanism. A major improvement appears to be the recognition by the Government in Clause 37 that energy demand reduction and energy efficiency in general should be part of the approach of the capacity mechanism. The provision of energy demand reduction within the electricity distribution system itself—as distinct from action at the user end—must surely be a standard part of the capacity mechanism procedure. We therefore do not want just one, two or three pilot projects, but to work towards a situation where that is part of the capacity mechanism as a whole.
We need to see the regulations on the capacity mechanism. The noble Lord, Lord Teverson, and my noble friend Lord Grantchester said that we need to clarify the position of unabated coal-fired power stations that are extending their lives beyond 2023, when the EPS does not apply to them. They could benefit from the capacity mechanism if they made their capacity available.
Several noble Lords asked questions relating to interconnection. I asked whether the capacity mechanism would be capable of being delivered via arrangements on interconnections with the French nuclear system or Irish wind farms. If so, would they be treated as available energy or capacity in roughly the same way as domestic-based generation? The noble Lord, Lord Oxburgh, also asked about storage, which is a part of the availability of capacity.
The Government have a number of questions to answer. Colleagues will be pleased to hear that I have not gone through my full list and that I do not intend to do so. However, I will return in part to one of the most contentious issues: the decarbonisation target. I am in favour of strengthening the commitment to a decarbonisation target. The very weak provision in Clause 1(5) which simply allows the possibility of a 2030 target but does not require it, and in any case not before 2016, has already had a detrimental effect on confidence and understanding. Investors need to know that we are on a clear trajectory on this. Most of the investment decisions that will be contemplated in the next two or three years will relate to a period beyond the current target of 2020. If the House alters nothing else in the Bill, assuredly we must alter that.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, I start by thanking all noble Lords for their contributions in this debate. They have been wide-ranging but very informative. I particularly thank noble Lords who worked with me through the informal scrutiny group. Overall, I agree with the noble Lord, Lord Whitty, that there seems to be an overall sense of support for the Bill. Of course, there will be plenty of opportunity to scrutinise it thoroughly in Committee.
At the start of this debate, I emphasised how vital this Bill is, not just for the UK’s growth and jobs but, as noble Lords have said, for consumers across the country. This legislation marks a significant reform of the electricity market and it is important for industry, investors and consumers that we get it right. With that in mind, I look forward to debating the Bill in the spirit of collaboration. A large number of questions have been raised today and I will cover as many as I can in the time given, but I am sure that in the coming days I will have many opportunities to answer in more detail the questions that may not be answered today.
I thank the noble Baroness, Lady Worthington, for her overall support for the Bill, but I was slightly surprised and perhaps a little disappointed that she made a political point and overlooked the absence of investment and forward planning under the previous Government. The noble Lord, Lord Redesdale, made the point that the Bill is not a panacea but goes a long way to building long-term certainty for investment and energy security. As I listened to the noble Lord, Lord Prescott, I thought that this was perhaps the only Bill on which he and I will have so much in common. He is absolutely right. Without political will we cannot build political consensus. Globally, we have become the leaders in this area because we have gone out to build political consensus.
Beginning with the decarbonisation target range, a number of noble Lords asked why we do not set it now. As I said in my opening speech, the Bill enables the Secretary of State to set a legally binding decarbonisation target range for the power sector in Great Britain. This should be in 2016, when we are due to set in law the level of our economy-wide fifth carbon budget, covering the corresponding period. At that point, we will receive advice from the Committee on Climate Change on the level of the fifth carbon budget.
However, it is important that we do not set a target range in isolation. It must be done in the context of considering the pathway of the whole economy towards our 2050 target. It will also make sure that we do it in a way that minimises costs both to the economy and to taxpayers as a whole. Noble Lords said that it would be detrimental to investor certainty. I agree that investor certainty is absolutely essential to delivering our energy and climate goals at least cost, and considering investor certainty must be a fundamental part of our policy. We will continue to take practical steps to decarbonise the economy, while ensuring security of supply at the least cost to the consumer.
Investors recognise and welcome this. John Cridland, the director-general of the CBI, said that the Energy Bill,
“will send a strong signal to investors that the Government is serious about providing firms with the certainty they need to invest in affordable secure low-carbon energy”.
I am grateful to the noble Lord, Lord Browne, and others for explaining why setting the target in isolation would be unwise.
Turning to electricity demand reduction, the right reverend Prelate the Bishop of London and others asked about the prepayment schemes. I want to put on record that both prepayment and a capacity market approach are similar, in that they provide a payment for proving efficiency savings and are agnostic about where those savings are delivered. However, on balance, a capacity market was preferred, as it enables you to target reduction during valuable peak periods, and allows electricity demand reduction to compete against supply, ensuring that EDR is rewarded for the value that it provides to the system. It also avoids the need to create an additional delivery mechanism for electricity demand reduction.
The right reverend Prelate the Bishop of London and others asked about the flexibility to run more than one type of pilot for EDR. The spending power set out in Clause 37 allows the Government flexibility to run a pilot to test different approaches to incentivise electricity demand reduction. The Government will provide further detail on the pilot proposals as soon as possible.
Many noble Lords are concerned about putting the interests of consumers at the heart of what we are doing, and I agree completely that it is crucially important. That is why we have other measures alongside the Energy Bill that put consumers at the heart of being able to control their energy usage. That is why we are rolling out the smart meter programme alongside other measures such as the Green Deal, enabling people to change behaviour, which will assist in ensuring that we reduce our energy use. We have to inform consumers about how their energy is being utilised.
I turn to climate change, and noble Lords who are slightly sceptical about global warming and climate change. I am not a scientist, and I suspect that many in this Chamber today are not scientists, but renowned scientists are showing us that much is going on that is evidence of climate change. The summer extent of Arctic sea ice has declined by a staggering 40%. The Antarctic peninsula has warmed by more than 3 degrees centigrade. Glaciers in the high Canadian Arctic lost 580 gigatons of ice between 2004 and 2011 alone. These are serious figures, and we need to ensure that we take seriously climate science and the evidence and advice from climate scientists.
The noble Lord, Lord Stern, made a compelling argument on China’s commitment to act, and his expert opinion is recognised globally. We welcome the commitment that China is making and we are working closely with China to ensure that we are part of the process of assisting that country. That gives us a very good negotiating and bargaining position in the world, as the noble Lord, Lord Prescott, said.
A number of noble Lords talked about fuel poverty, among them my noble friend Lord Cathcart, the noble Baroness, Lady Liddell, and my noble friend Lady Maddock. The coalition is committed to doing all that is reasonably practical to end fuel poverty in England by 2016 and to helping people, especially low-income, vulnerable households, to heat their homes more affordably. The number of households in fuel poverty reduced in 2010 and again in 2011, although fuel poverty remains a huge challenge. A combination of rising wholesale energy prices and poor quality housing stock in Britain has meant that, despite significant investment, a large number of households are still in fuel poverty. I congratulate the previous Government on trying very hard to tackle that issue, and we are working and building on that. However, with energy prices projected to continue to rise, improving the thermal efficiency of Britain’s housing stock is key to addressing that urgent issue. That is why the Green Deal and the energy company obligation are flagship policies for improving the energy efficiency of our nation’s housing stock. In addition, the Government have a range of policies to address other contributing factors of fuel poverty, including the one-house discount, which helps around 2 million households per year, as well as winter fuel payments and cold weather payments.
I will also touch on domestic tariffs, which a number of noble Lords talked about. The proposals are to deliver the Prime Minister’s commitment and ensure that customers are offered the cheapest tariff. They will ensure that customers are on the cheapest tariff in line with their preference, the payment method that they have chosen and whether they have opted for standard variable rate tariffs, or a fixed-term or fixed-price tariff. The power in the Bill will allow us to require customers on poor, value-dead tariffs to be moved on to the cheapest standard variable rate tariff that the supplier offers. It will also require customers on fixed-price tariffs to be moved to the cheapest standard variable rate tariff that the supplier offers if they do not opt for another fixed-price tariff.
We are also capping the number of live tariffs that suppliers can offer. This package of measures means that consumers will be on the cheapest tariff that is in line with their preferences, but noble Lords are right; there is much more that energy companies can do and should be doing, and we will work with them to ensure that they are able to provide the best possible value for money for consumers.
The EMR part of the Bill will be the substantial part of it after decarbonisation. The noble Baroness, Lady Worthington, the noble Lord, Lord Roper, and other noble Lords asked whether we would commit to publishing the delivery plan ahead of the Committee scrutiny of EMR. We intend to publish the draft delivery plan before the Committee scrutiny of the contracts for difference provisions. We are working through the usual channels to agree a satisfactory order of consideration on this basis. However, as noble Lords know, it is critical that this Bill progresses as swiftly as possible.
We will have the opportunity to scrutinise the detail when secondary legislation comes before the House. Although further detail in the delivery plan will no doubt be helpful for informing consideration of the plan, it is important that we do not delay the Bill. That would risk investment, jobs and the security of the electricity supply. I encourage responsible debate that balances the detailed scrutiny, for which this House is renowned, with the need to get this legislation on the statute book.
The noble Lord, Lord Oxburgh, and other noble Lords questioned the Government’s expertise to undertake electricity market reform. I can reassure the noble Lord that we are not undertaking this singlehandedly. The department has established expert groups for the three main policy areas of the CFDs, capacity market and institutions. A panel of technical experts will scrutinise the analysis informing government decisions before they are made. National Grid will be the delivery body for EMR and is providing expert advice to the department. That does not stop noble Lords from contributing and giving advice to the department.
My noble friend Lord Cathcart asked about the cost of EMR to business. We have said that we will exempt the most energy-intensive industries from the costs of electricity market reform to ensure UK business can remain competitive. The Government will publish shortly a consultation on the scope of the exemption.
The noble Lord, Lord Davies, my noble friend Lord Ridley and other noble Lords mentioned shale gas. They asked whether this will reduce gas prices and whether government modelling of gas price rises is realistic. We expect electricity bills to rise as a result of rises in global gas prices. The potential impact of shale gas on gas prices is still uncertain. It is unclear how easy or cost effective it may be to extract shale gas or what will be available globally.
The noble Lord, Lord Grantchester, and other noble Lords asked about the emissions performance standard and grandfathering. The level of the EPS will be maintained until 2045 for plant consented under the 450 gram per kilowatt base level. It is essential to provide sufficient certainty to those investing in gas-fired generation that we will need over the coming years to maintain security of supply. Grandfathering will not prevent us meeting our objectives.
Turning to the capacity market, my noble friend Lord Jenkin and other noble Lords asked about proposals for a new clause to encourage competition. I agree with my noble friend that the capacity market should encourage competition between incumbents and new entrants, between technologies, including generation and demand-side response, and between new and existing plant. I look forward to discussing this in detail in Committee with him and other noble Lords.
The noble Lord, Lord Kerr, and others asked about the capacity market timings. The Government are minded to run the first capacity auction in 2014 for the delivery year of 2018-19. This is to allow new plant to compete alongside existing capacity to enable a competitive auction.
Noble Lords raised the question of interconnection. The Government are fully supportive of increased interconnection and are working with Ofgem to ensure that we have the right conditions to bring forward the planned significant increase. We do not think that a financial incentive is needed to bring forward this already-planned investment. It is very important that the Bill does not adversely impact on interconnection, and this is a key requirement in designing electricity market reform.
I shall touch very quickly on nuclear. My noble friends Lord Cathcart and Lord Ridley and other noble Lords asked about plan B if there is no new nuclear. The aim of EMR is to bring forward a diverse mix of low-carbon generation, including renewables, nuclear, CCS and demand-side measures. We can meet climate goals without new nuclear, and we have been clear that we will reach an agreement on a contract only if it provides value for money and is affordable.
The noble Lord, Lord Judd, asked about GDF. I know that the noble Lord takes a keen interest in this and we have had many conversations about it over recent months. The Government remain committed to the policy of geological disposal. Following their reflections and the continuing “lessons learnt” exercise, the Government have confirmed that they believe that the site selection process can be improved on. On 13 May this year we announced a call for evidence, which ran until 10 June. That will be followed by a public consultation later in the year, and I hope very much that the noble Lord will take part in that. However, GDF will be the Government’s preferred option in dealing with long-term nuclear waste.
In reference to the ONR, the noble Lord, Lord Whitty, asked why the Government are creating quangos when their intention is to do away with them. The ONR currently exists as an agency of the Health and Safety Executive, and the Energy Bill will establish it, rightly, as a stand-alone body outside the Civil Service. I think that the noble Lord himself agreed that that is the right place for the body. In that way, the expertise of those who serve in the ONR will be reflected in financial packages suitable to a body that has to deliver world-leading advice to a sector that requires that advice. The noble Lord asked why we had so many clauses in the Bill. It is absolutely right that the ONR should be a stand-alone body and that it goes through a full scrutiny process. That will give it a full mandate as a stand-alone body. He also asked about the feed-in tariffs from five megawatts to 10 megawatts. I am currently looking at that and I hope to have some further details to impart in Committee.
I am being told that I have only a minute to speak, so I will very quickly close. Once again, I commit to having further discussions inside and outside the Chamber on the concerns that noble Lords have raised. There have been many excellent contributions today. I look forward very much to the debates that are going to follow. In the mean time, I hope that the Lords’ informal scrutiny committee continues to work closely with me, and if any other noble Lord wishes to raise a concern, my doors are always open. I encourage noble Lords to use either or both of these avenues in order that the Bill might make progress to Royal Assent without delay. I am sure that noble Lords will concur with the statement that I have made, and on that note I urge the House to support this Bill and give it a Second Reading.