Draft Department For Transport (Fees) (Amendment) (EU Exit) Regulations 2018
(5 years, 6 months ago)
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The Parliamentary Under-Secretary of State for Transport (Jesse Norman)
I beg to move,
That the Committee has considered the draft Department for Transport (Fees) (Amendment) (EU Exit) Regulations 2018.
It is a pleasure to serve under your chairmanship, Sir Graham. These draft regulations will be made under the powers conferred by the European Union (Withdrawal) Act 2018. They form part of the work being done to adjust our existing legislative framework in readiness for leaving the European Union next year. If approved, they will make minor and technical amendments to three Department for Transport fees orders to correct deficiencies that would arise from the United Kingdom’s withdrawal from the European Union. The fees orders relate to EU and domestic law.
The regulations are concerned only with amending the EU-related aspects of the orders. That will be done by removing references in the fees orders to the Secretary of State carrying out functions to comply with EU law. In practice, the functions will continue, but under domestic law rather than EU law.
The best outcome for the UK is to leave with a deal. If a deal is reached whereby we get a withdrawal agreement, the implementation date of this instrument could be changed by any subsequent Bill that the Government introduce to implement the withdrawal agreement into UK law. However, it is sensible to prepare for all scenarios, and that is what we are doing.
The functions contained in the fees orders all relate to road vehicles and drivers. The fees orders themselves do not set or amend fees; they set out in secondary legislation the matters that can be taken into account when setting fees for delivery of the functions specified in the orders. Although some of those functions are currently delivered under an EU obligation, that does not mean that Brussels has had any oversight or control over the setting of those fees.
The draft regulations will not themselves affect any stakeholders, because after EU exit the functions they relate to will continue to be delivered, albeit under domestic rather than EU law. The regulations do not alter the current level of fees charged for carrying out those functions. The detail of the delivery of the specified functions and the prescription of the actual fee levels that can be charged for the delivery are set out in other legislation.
It may be a source of comfort to the Committee to know that, before any change can be made to the fee level in other legislation, the Minister must have the Treasury’s agreement, conduct a consultation with organisations representing those affected and consider the impact on stakeholders. They must take account of the impact in deciding whether to proceed. Only after that process has been followed will the SI be laid before Parliament. I assure hon. Members that the making of these amendments will not in any way amend the process for changing statutory fee levels. In other words, this instrument does not make the process any easier.
In conclusion, the Government intend for the functions in the fees orders to continue, and other legislation is being amended to allow for that. We therefore need to update the fees orders for those functions to show that they will now be delivered under domestic law, as opposed to EU law, and to allow us to continue to take account of matters relating to the delivery of those functions. That will also ensure that when the fees are amended in the future, they continue to reflect accurately the cost of their delivery. In effect, the amendments in this instrument will ensure that the fees orders recognise EU exit but otherwise maintain the status quo. They do not extend the Secretary of State’s powers in any way. I therefore hope that the Committee will approve these regulations.
Rachael Maskell (York Central) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Sir Graham. I wish to raise a number of points on which I seek clarity and answers from the Minister.
I note that the function of the regulations, which, as was established in the House of Lords, have not been consulted on, could have an impact on fees once they are set, and thus on hauliers and ultimately on businesses that depend on hauliers. I am concerned that the cost of living may creep up not as a result of a direct rise in fees but as a consequence of the changes to functions and the change of jurisdiction where certain functions are carried out.
The regulations themselves seek to amend three fees orders: the Department for Transport fees orders of 1998, 2003 and 2009. While not altering the fees themselves, the regulations transfer the functions by which fees are set from determination in the EU to determination in the UK or to determination in Great Britain and separately in Northern Ireland, where that is appropriate. If the Government bring about any divergence in the mechanism for determining fees, how will that not impact on the fees themselves? It may be that synergy is sought from day one but that changes are introduced later.
In the light of the fact that the UK will make its own determination in these matters, how will this change the cost of providing staffing, premises, equipment and facilities for carrying out the functions that are now carried out in the UK under British jurisdiction rather than in the UK under EU jurisdiction? Will there be any additional cost in administering the legislation, with or without divergence, by the Department for Transport’s Executive agencies: the Driver and Vehicle Standards Agency, the Driver and Vehicle Licensing Agency and the Vehicle Certification Agency? What discussions have taken place with these agencies about the potential financial implications of the changes that the regulations will introduce?
I note that the applicable functions are wide-ranging: driver licensing, vehicle registration, international road haulage permitting, vehicle type approval certification, the approval of tachograph calibration centres, international road passenger transport authorisation, licensing to operate public service vehicles, licensing to operate goods vehicles, and enforcement against UK and non-UK drivers and vehicles that break the law on such matters. If we leave the EU at 11 pm on 29 March 2019, the Government may find that access to information to carry out the functions that are repatriated from the EU to the UK is restricted, and that in order for there to be no divergence, one of the agencies in question has to purchase data. If fees then went up, and there was an impact on the end users, I would have to ask why there had been no consultation on the regulations. There could be creeping cost implications from all sorts of things, including providing additional staff who have the responsibility of monitoring the process involved and of determining the scope on which the fees are based. Someone will have to pay for this. If we multiply that across all functions of Brexit, we will see a heavy rise in the cost of living. Even if fees do not rise, someone will have to pay for this.
If bilateral agreements are struck, charges could be increased as a deterrent mechanism, as Lord Berkeley said—for instance, to dissuade non-UK drivers from coming to the UK. We all know that this would be catastrophic, as the road haulage industry has a serious recruitment crisis at the moment. Clearly that could occur if the Government were to apply their desired border controls, and I hope that this is not the case. Divergence at any time could have cost implications and should have been consulted on. Will the Government simply look to recover costs, or will they see these measures as a possible revenue stream as the economy sinks further and further into crisis after we have left the EU? How will the functions be policed and will that require more resources? Will there be a further border check, and will that be through paper or electronic documentation in this modern age? The Minister knows that I have a particular concern about that.
As we saw from the discussion in the House of Lords, and in the light of the fact that no one has a clue about what is in the withdrawal agreement, there is some uncertainty about why we are discussing the regulations now. A hard Brexit, where we sever all links with the EU, would look very different from a Brexit where there is agreement on continuing our full membership of the customs union and the single market for a period of transition, and it would look very different from everything in between. While the Minister is hedging his bets and we are preparing for being driven off a cliff edge and for crashing out of the EU, it could be that the regulations are redundant from 29 March 2019, or they could require further variance, in which case we could find ourselves debating amendments to the regulations. Baroness Sugg seemed to imply in her response to noble Lords that that could be the case. Does the Minister agree?
Earlier this year we debated the Haulage Permits and Trailer Registration Act 2018, which will enable the UK to introduce new permits for non-UK road freight. At the time, the Opposition expressed our desire to remain within the community licences scheme. What progress has the Minister made on that, as it would also have an impact on the regulations? Have discussions commenced on that? If so, how are they progressing? Baroness Sugg has said:
“We hope to agree a mutually beneficial deal with liberalised access”.—[Official Report, House of Lords, 17 October 2018; Vol. 793, c. GC38.]
However, with just weeks—or perhaps we are now counting in days—until a deal is done, I find the word “hope” quite hopeless. How far away are we from having certainty on those matters? The vague responses by the Minister in the other place are certainly disconcerting.
Finally, paragraph 7.6 of the explanatory memorandum states:
“The Secretary of State will continue to carry out these functions, albeit under retained domestic law in place of EU obligations, and so will need to continue to set and collect fees and charges to cover their costs.”
If the costs of carrying out those functions are increased as a result of the regulations because additional personnel are required, which is a real possibility, how has the Minister scoped that piece of work? It seems to me that the fear of the Brexit cliff-edge is not recognising and knowing the unknown. What work, if any, has been done on that? I look forward to the Minister’s response.
The Chair
Before I call any other hon. Members to speak, I must say that, although I did not interrupt the hon. Lady, because I sensed that she was coming towards a conclusion, her remarks went a little wide of the specifics of the order. I hope that Members on both sides of the Committee will not seek to explore wider issues that are possibly being explored in the House at the moment. We will stick very much to the point of the order before us.
Martyn Day (Linlithgow and East Falkirk) (SNP)
It is a pleasure to serve under your chairmanship, Sir Graham. I am grateful to the Minister for his explanation of the regulations, which appear to be relatively straightforward. On that basis, I am content to support them today.
However, I point out that today’s order will be just one of many statutory instruments related to Brexit that will come before us. That prompts the question of just how much time and effort is being put into such work that could have been used for other things had we not been going through this process.
Jesse Norman
I am grateful to the two hon. Members for their contributions. I hope I can reassure the hon. Member for York Central on many of the questions that she raised. I take the point eloquently made by the hon. Member for Linlithgow and East Falkirk as appropriately rhetorical, in flagging the potential efforts to which officials and Ministers have gone in ensuring that we will be properly protected in the event of EU exit.
I remind the Committee of the extremely modest length of this piece of secondary legislation. There are a very small number of changes, which are, broadly speaking, to remove references to EU obligations and to repose in the Secretary of State some powers that presently lie with the EU. That is in line with the general principle of the European Union (Withdrawal) Act 2018, which is to relocate within UK law powers that presently operate under EU law.
The hon. Member for York Central asked why there had been no consultation on the order. The reason for that was delicately alluded to by the Chairman when he reminded us of the proceeding’s scope. The regulations do not set fees; they only govern what considerations the Secretary of State can take into account in any setting of fees. As I said, fees themselves cannot be changed, except with a staged process that requires the agreement of the Treasury, a consultation with representative organisations that are affected and a consideration of the impact upon stakeholders. There has been no consultation on the order because it has no such impact. All it does is relocate laws from one jurisdiction to another.
Jesse Norman
If I may, I will just finish what I am saying and then the hon. Lady can make further comments.
If there were any possible changes to fees, they would arise out of substantive Acts, rather than the scope that is demarcated by this purely formal change of location of powers. If that were to occur and there were some possibility that fees would have to go up, we would follow the process described, which would involve a consultation in the way the hon. Lady described. That answers her second question, which related to divergence, and her third question, which related to the cost of providing any functions. One cannot predict whether the functions cost would go up or down, but that is immaterial to these regulations, which bear on the considerations that the Secretary of State is entitled to take into account and were formerly taken into account under EU law.
The hon. Lady asked what discussions have taken place with agencies. Of course, discussions routinely take place between Ministers and agencies on a variety of things. In this case the agencies are aware of this change of law, but it is not—I repeat—a matter of changing the substance of any actual fees. Therefore, those conversations do not need to touch on anything other than the formal change that has been described.
The hon. Lady asked whether this will be used as a revenue stream after withdrawal from the EU. Fees are not used as a revenue stream. The whole point of this is to recover the costs associated with the activities in question. There is no revenue stream, in that sense, to be derived.
The hon. Lady said, “As the economy sinks into crisis.” I am afraid that her flair for rhetoric is getting the better of her. So far the economy is discounting any crisis—it continues to grow robustly and no one is expecting anything on that account. She then referred to a series of other matters that have been amply covered in discussions on the Haulage Permits and Trailer Registration Bill, with several points raised in Committee and before the House. I refer her to those discussions.
Question put and agreed to.
Draft Electricity and Gas (Energy Company Obligation) Order 2018
(5 years, 6 months ago)
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The Committee divided: - Ayes: 9 / Noes: 7 - Question accordingly agreed to.
The Minister for Energy and Clean Growth (Claire Perry)
I beg to move,
That the Committee has considered the draft Electricity and Gas (Energy Company Obligation) Order 2018.
It is a genuine pleasure to serve under your chairmanship, Mr Walker, and I am pleased to open this important debate. The energy company obligation requires energy suppliers in Great Britain to reduce domestic energy bills by installing energy efficiency measures. As Committee members know, partly because many of us have debated this issue, the Government place great importance on supporting low-income families, ensuring that their energy bills are as low as possible. To that end, we continue to provide direct financial support to vulnerable households through the warm home discount and the energy price cap, which has cross-party support and will protect some 11 million energy customers who have been stuck on poor value deals.
Our election manifesto restated our commitment to tackling fuel poverty by increasing the energy efficiency of our homes. In 2015, we also said that we wanted to reform the energy company obligation to provide more help to those who need it most. The order completes that reform and will result in the scheme focusing on low-income, vulnerable and fuel-poor households—rather than on a mixture of poverty alleviation and carbon reduction measures—until March 2022. It also supports the Government’s industrial and clean growth strategies by encouraging energy companies to deliver more innovative measures, supporting manufacturers and installers to develop more cost-effective, consumer-friendly products by providing a better route to market.
ECO has operated since 2013 and has currently installed more than 2.4 million measures in about 1.9 million homes. The scheme is funded through energy bills and we will continue the mandated level of £640 million per annum until 2022, but of course the negotiations could deliver a funding commitment beyond that date. Indeed, the clean growth strategy sets out our commitment to keep that level of funding for domestic energy efficiency until 2028.
The Government consulted broadly on the new scheme’s proposals. We received 239 responses, the majority of which were broadly supportive. We published the response to the consultation and laid the order in July. Should the Committee approve the order, the scheme will begin in November. We are aware of the need to maintain continuity of delivery, so the scheme design includes a number of aspects to enable as smooth a transition as possible.
Changes to the scheme reflect various measures: first, our strategic energy objective; secondly, responses to the consultation; and thirdly, the latest market position. As I have said, the measure attempts to focus the scheme as closely as possible on the alleviation of fuel poverty. It is designed to increase the innovation and flexibility that can be delivered by working with local authority partners, because a reasonable criticism of the scheme is that it has not been sufficiently targeted on those homes that need it.
The other important change is my decision to drop the thresholds at which energy suppliers must have an ECO. The current threshold is 250,000 suppliers. We are keen to have a level playing field in this market, and it is not fair that many suppliers do not have to pick up an ECO. There is evidence that suppliers who otherwise claim to be paragons of virtue are deliberately not growing their customer base because it will take them over the 250,000 threshold, which is completely wrong. It is also important that customers do not suffer a detriment if they switch from an energy supplier that offers an ECO to one that does not. We are therefore dropping the threshold, which was last set in 2013. If the order is passed, from April next year suppliers with 200,000 customer accounts will be obligated to offer the scheme. The threshold will fall to 150,000 from April 2020 and could continue to fall thereafter, reflecting a direction of travel in the retail market that we absolutely want to continue.
We have also expanded the eligibility criteria of the scheme so that households on certain disability benefits, their Ministry of Defence equivalents, and low-income working households in receipt of child benefit are newly eligible for support. That reflects my desire for the scheme to be targeted as much as possible at those who are struggling with low income and fuel poverty, and it increases the number of households eligible for support—from 4.5 million under the affordable warmth part of the previous scheme, to 6.7 million under the new scheme—which strikes the right balance between supporting those households most in need and keeping delivery costs low, thereby protecting bill payers.
As I have said, we have increased the proportion of the scheme that can be delivered under the local authority—the so-called flexible eligibility. I have taken that from 10% to 25% because we believe that local authorities are often well placed to identify those households who need help, including people with health conditions that are exacerbated by cold homes. We estimate that a further 300,000 households will be eligible for well-targeted support through that route.
It is important that we develop new products and provide a route to market as part of the investment we are all making, and suppliers will now be able to deliver up to 10% of their obligation using innovative measures not previously supported under ECO: first, by a demonstration action route, which allows suppliers to provide financial support to new products that have been tested in the lab and may have had limited testing in a live environment but now require wider testing; and, secondly, through innovation score uplifts, which are designed to encourage new products that are at a later stage of development but which have not been delivered under the scheme. Of course, while delivering a broader mix of measures we will continue to maintain safety and installation standards.
On heating equipment, the scheme allows the equivalent of 35,000 broken heating systems to be replaced each year so that low-income households can receive support should their heating system be beyond repair. Although other forms of energy efficiency may have greater long-term benefits, a broken boiler, particularly in cold weather, can be the immediate crisis point for a struggling family. Coal-fuelled heating systems cannot be replaced or repaired under the scheme, but we have listened hard to the sector and are allowing oil systems to be replaced so that poor rural households without a current viable alternative can receive support to heat their homes. In my constituency, where more than 40,000 households are off the gas grid, that measure could be very welcome.
Scott Mann (North Cornwall) (Con)
The Minister knows that I have some rural poverty, particularly fuel poverty, in my constituency and a lot of people who are off grid. I notice that there is a 15% rural sub-obligation in the order. Could the Minister expand a little on how that might help communities such as mine?
Claire Perry
That is an important point. We are keen to maintain at least 15% of that obligation to rural householders. My hon. Friend knows very well that although he represents one of the most beautiful parts of the United Kingdom, incomes there are lower than average and there is a huge amount of fuel poverty—and, indeed, other forms of poverty—in what would otherwise be picture-perfect rural villages. In fact, evidence from the Committee on Fuel Poverty, with which we have worked closely, suggests that fuel poverty is more prevalent in rural areas than in urban ones, and that is why we were keen to maintain the 15% element of the scheme.
My hon. Friend also knows from his wonderful county that we have fantastic heat pump manufacturers working not too far away him, and we have continued to allow ground source heat pumps to qualify for support under both ECO and the renewable heat incentive. We understand the potential for double dipping. We have limited that for other forms of technology but have made an exception for ground source heat pumps due to their high upfront costs and because they are putting in, through the cost of each individual scheme, long-term and potentially valuable infrastructure, which other forms of technology are not required to do.
To encourage installers to take a broader approach to improving the energy efficiency of homes, inefficient heating systems can be replaced if they are delivered alongside insulation measures. We have retained the solid wall minimum requirement, which is now set at the equivalent of 17,000 solid wall homes per year but, as many of us know from our constituencies, that is not always the appropriate technology. Therefore, we have introduced flexibility, by allowing suppliers to meet the minimum through a combination of other measures, as long as they deliver the same bill savings as solid wall insulation.
The changes we have made to the scheme are really important. They will help to upgrade the homes and reduce the energy bills of more than 1 million households living with low incomes or dealing with vulnerability. They will also pave the way for new measures. They will add further impetus to help to meet our fuel poverty and carbon reduction goals by encouraging more cost-effective and customer-friendly solutions.
If the energy companies are listening, I urge them to take these targeting measures seriously. I am fed up of going home to my constituency every Thursday and finding a card through my door offering me a new oil boiler. I am not living in fuel poverty. There are plenty of measures and plenty of information available to allow those companies to do the job properly and to target those households most in need. With the reforms in the scheme, we should work together to deliver that goal. I commend the order to the Committee.
Dr Alan Whitehead (Southampton, Test) (Lab)
It is a pleasure to serve under your chairmanship, Mr Walker. This is not any ordinary order; it is a complete ECO scheme in a box. The entire ECO3 scheme is there—all in one statutory instrument. As far as I understand, when and if the order is passed, the work of implementing ECO3 will be done and it will go ahead.
It is important, therefore, to talk about the entirety of the ECO scheme in the order and to compare it with the ECO schemes that went before it and with the programmes that went before them. We should consider what is at the heart of the order and ask: what are we in the UK doing about the appalling state of our homes and their energy efficiency, and what measures are we taking to bring the energy efficiency of those properties up to a decent standard?
Mr Mark Prisk (Hertford and Stortford) (Con)
I am unclear as to whether the hon. Gentleman thinks that the measure is sharply distinguished from the original scheme that he mentioned. I am concerned about the impact on fuel poverty not only in important areas such as Cornwall, but in areas that are often not defined as being in fuel poverty, such as Hertfordshire. What is his view of the comparative benefits of the two?
Dr Whitehead
The essential point about the overall aim of ECO is that it should be concerned with all those issues—with urban and rural fuel poverty and with bringing properties up to a decent level of energy efficiency to ensure that our properties are in a fit and good state with regard to climate change and energy use changes.
The concentration on fuel poverty could solve those wider issues to some extent, providing that the scheme is large enough to enable that to happen. We know that people living in fuel poverty are disproportionately concentrated in properties that have low energy efficiency. In the private rented sector in particular, a large proportion of properties are in bands E, F and G. A large proportion of people living in fuel poverty are in that tenure and in those property efficiency bands. In principle, concentrating on fuel poverty is a good way of targeting the wider issues, as long as enough other things are happening within the scheme. It all depends on the overall status of the scheme.
Several good things have happened between ECO2 and ECO3. I commend the Government’s decision to reduce the obligation threshold for suppliers. A large number of energy supply companies fall just below the current level of 250,000 accounts and are therefore not obliged to undertake any ECO measures. Problems also arise in respect of whether people who switch are eligible for certain schemes. Within a short period, the obligation threshold will be reduced from 250,000 accounts to 150,000, which is a Good Thing, with a capital G and a capital T. I thoroughly support it.
Claire Perry
I am craving support today. Does the hon. Gentleman support another measure, namely that which ensures that switching websites make it clear to people in receipt of discounts, such as the warm home discount, that they might lose them if they switch? We want to provide as much transparency in the system as possible, as well as to tackle supplier inflation. I hope that that is also a Good Thing.
Dr Whitehead
Indeed it is. As the Minister knows, I have been banging on about that problem for quite a while.
Dr Whitehead
I also agree with increasing to 25% the proportion of the obligation that can be met through flexible eligibility. As the Minister mentioned, local authorities often know more than most about the whereabouts and construction of the property stock in their area, so involving them in that way is a very positive move. Does she think that such an arrangement could lead to area-based schemes being headed up by local authorities as part of the obligation? She will be aware that ECO has been criticised because its set-up means that energy companies go out to find individuals and treat their homes but do not capture those next door or down the road who are in the same position. Does she think that flexible eligibility arrangements could lead to a better system of area-based activity?
I am not too impressed with the reduction in solid wall treatments in the ECO scheme; that is not a progressive arrangement as far as ECO3 is concerned. We really have to get stuck in to solid wall insulation across the country. There are 8 million solid wall properties in the UK, and solid walls are one of the property elements least treated for energy efficiency, so reducing the target from 24,000 to 17,000 is a retrograde step.
As I mentioned, I support in principle the idea of increasing the concentration on fuel poverty. However, we have to note, at least in passing, that it is one thing to concentrate a scheme on fuel poverty, but if that happens at the expense of all other aspects of the scheme, which is what has happened on this occasion, I am not sure that we will get the whole picture as far as energy efficiency is concerned.
I give two cheers for placing greater emphasis on fuel poverty, but I am concerned about the overall aspects of ECO, which is where that concentrated effort on fuel poverty sits. The Committee on Fuel Poverty has indicated that even that concentration on fuel poverty will not be sufficient to reach current statutory fuel poverty targets. That is a reflection of the overall size of the scheme and its ambitions within its overall setting.
On that overall setting, we need to be clear on two things. First, as the Minister has said, this measure should be placed in the context of the clean growth strategy’s current ambition in respect of the energy efficiency of existing buildings. It is extremely important to note that some 80% of existing buildings will still be here in 2050, and their energy efficiency may need to be uprated so that they do not need to be treated again before then. We cannot get going with energy efficiency in properties simply by building more energy efficient homes; we need to deal with existing homes.
Indeed, the Government’s clean growth strategy document makes clear their ambitions in that respect, stating:
“To achieve this 2032 pathway, we will need to ensure existing buildings waste even less energy. This pathway could see a further six to nine million properties insulated, especially focusing on those in fuel poverty where we are aiming to have the 2.5 million fuel poor homes in England improved to energy efficiency rating C or better by 2030. More broadly, our aspiration is that as many homes as possible are improved to EPC Band C by 2035, where practical, cost-effective and affordable.”
It is salutary to consider that ambition in the context of what ECO was and what it has become. When it was first introduced in 2013, ECO represented a change from the previous Government’s programmes—namely the carbon emissions reduction target, the community energy saving programme and the Warm Front scheme—which had made a demonstrable difference to the standard assessment procedure ratings of properties. If we look at the SAP ratings in household condition surveys carried out on properties when those schemes were in place, we will see that they improved substantially.
By the time they came to an end, CERT, CESP and Warm Front came to a combined Government, taxpayers’ spend of about £1.6 billion a year. ECO is essentially a market-based scheme and is set against customer bills; it was not described as such, but energy companies basically recovered their obligation through customer bills.
The first ECO that came in reduced that overall ambition to £1.12 billion per annum. That was the only spending on energy efficiency in homes at that particular point in 2013, and that was reduced further when ECO 2 came in, to £0.87 billion per annum. Not surprisingly, that meant that over the period there has been something like a 50% to 60% reduction in overall spend on energy efficiency measures and, as the Association for the Conservation of Energy has pointed out, in the period from the early 2010s up to the present, there has been something like an 80% reduction in energy efficiency measures in homes. ECO has presided over not just a substantial reduction but a crash in energy efficiency measures over that period. ECO3 is coming forward, and the obligation figure—which is in the SI, so it is not an imagined figure—is £0.64 billion. That is a halving of overall energy efficiency measures since ECO was first introduced, and since the further reduction that took place when the schemes put in place by the previous Labour Government came to an end.
If we set that ambition—or, should I say, lack of ambition—against the aspirations in the clean growth plan, we can clearly see that even if ECO3 is extended to 2028, as the Government has said and the Minister mentioned, at the present level, it will fail miserably to get anywhere near those aspirations. Will the Minister explain why she is advocating an ECO programme that will signally fail to get anywhere near those ambitions, and whether she has a host of new schemes in her pocket that could help to meet them. If we go to 2022 with ECO at its present level, even with the changes that have been made, and then agree that ECO will continue at that level to 2028, we will get nowhere near those targets. Not only that, but we will miss our one chance to get properties uprated over the next period in line with what the fourth and fifth carbon budgets tell us about the number of properties that need to be uprated. We will fail to make the contribution to energy efficiency, decreasing fuel use and reducing fuel poverty that will help develop an economy in which energy production is both energy efficient and low in carbon.
I am afraid that the Opposition cannot support the scheme in its present form. We have been developing policies that seek to insulate and uprate the energy efficiency of approximately 4 million homes per Government term, for at least two terms over the next 10 to 12 years. That sort of level is necessary to get anywhere near our carbon budgets—and, by the way, our scheme will not be done on the basis of an obligation. As with previous CERT schemes, it has to be done on the basis of all of us putting money into those schemes, to achieve the public good of energy improvement in properties. I am afraid that the market-based arrangements in the instrument will not get us anywhere near our goal. As I say, it would be good if the Minister were able to comfort me somewhat by saying, “We have a load of stuff that we have not told you about yet, which is going to meet the aspirations we set out so eloquently in the clean growth strategy. ECO3 is going to be part of that.” If that were the case, I might be willing to take a slightly different view of the instrument, but my understanding is that as far as energy efficiency in homes is concerned, this is the only show in town. If that show were a theatre production, it would close after three performances.
I am afraid that the Minister will not have the support of the Opposition this afternoon, although she has my personal support on a number of the changes she has sought to make within the existing ECO envelope on how ECO works. Overall, the scheme is not good enough; it is not good enough now, and it certainly will not be good enough by 2028, which is only four years away from the 2032 target. Really, the Minister has to go away and think through a number of measures that can get us there and come back and tell us what they are, so that we can all sit down together and sort out how we are going to get to the goal we all want to reach on energy efficiency in buildings.
Patricia Gibson (North Ayrshire and Arran) (SNP)
I welcome the proposals outlined by the Minister so far as they go. They are moves in the right direction, but I agree that they do not go far enough. If I may crave your indulgence for a few moments, Mr Walker, the problem with the measures is that they do not compensate for the very high electricity bills that consumers will pay as a result of the favouring of very costly nuclear options, as opposed to much cheaper renewable options. That is not just my view; it is the view of the National Infrastructure Commission, which said that the brakes should be put on nuclear power, particularly since the prices of solar and wind technologies are likely to continue falling and at a much faster rate. Lord Adonis has added his voice to those calls. He called nuclear power stations very expensive and problematic, and said:
“Like Sir John Armitt, my successor as chair, I’ve changed my view in face of the evidence”.
I wish that the Government would change their view on nuclear in the face of the evidence.
We know that advances in grid technology have opened up the prospect of drawing power from multiple sources. Strike prices for nuclear are still significantly more than those for offshore wind. It is important that the Minister considers how the UK Government will fulfil the Public Accounts Committee’s recommendation for a full value for money assessment before signing any new nuclear deals, given the report on Hinkley C.
The Government are proposing to close the export tariff for rooftop solar from March 2019, despite solar being one of the cheapest forms of new power generation. I welcome any measures to try to mitigate fuel poverty, but, fundamentally, to do that in any meaningful way we have to look at the whole nuclear issue, as well as the solar and wind issue and the new technologies coming on stream.
Some 26.5% of Scottish households are in fuel poverty, which is simply unacceptable. That is the kind of thing I wish the Government would think about when they try to make inroads into fuel poverty with the measures we are discussing today, which are welcome, but simply do not go far enough. What does the Minister think of the Scottish Government’s plans to establish a not-for-profit public energy company to tackle fuel poverty while supporting economic development and climate change targets? Would her Government ever countenance considering such a measure and perhaps following suit?
Claire Perry
I thank Members for their interesting set of points. I welcome the support of the hon. Member for Southampton, Test for some of the measures in the scheme. To answer his question about whether the area-based approach allows us to deal with more than one household at a time, the answer is yes, we are encouraging infill measures for certain installations.
The hon. Gentleman asked about solid walls, which links to some of the other points. As he will know, solid wall insulation is one of the most expensive measures, costing an average of £8,000 a household. Historically, ECO has not been as focused on fuel poverty. Indeed, I have been told that one of the criticisms of ECO was that it was buying LED lightbulbs for rich people, which is not something that Government or bill payers’ money should be in the business of doing. With solid wall insulation, many of the contributions have been topped up with householder contributions. Clearly the households we want to be helping with this scheme will not be able to do that.
That is why the number has been cut, but it is also why we have encouraged installers to think more creatively. Often the benefits from solid wall insulation can be achieved by under-floor insulation, using the amazing Q-Bot robot that the BEIS innovation money has funded, or by better loft insulation or improvements in windows. Rather than just having a one-size-fits-all proposal, the idea is that many other measures can be delivered.
I can tell by the way that Opposition Members are whipped that, regardless of what I say, the hon. Gentleman will press the order to a vote, but let me at least have a try. He will know, because he is a very intelligent man, that the challenge with these schemes is to balance the carbon reduction against the cost and whom it falls on, and the creation of a competitive advantage. The Government should direct funding—whether taxpayers’ money or, as in this case, bill payers’ money—in a way that creates better products by pushing a particular market. The challenge is that, while we have been rolling out ECO, there has been a precipitous decline in the cost of some energy-saving measures. The cost of LED lightbulbs is down 80%. That was nothing to do with ECO; somebody just figured out how to make them much more energy efficient. I imagine that most people in this room have fitted at least one LED lightbulb in their home, not because the Government have suggested that they should get money for doing so, but because it saves them money on their energy bills.
The missing piece in what the hon. Gentleman was saying—he said that this is nowhere near enough, and that we need to spend more just to do the same—is that there have been dramatic price falls for many products, but not for those that this scheme has supported. This scheme, in focusing in on tried-and-tested technologies such as cavity wall insulation, has led to very little innovation. Look at what is happening around the world. Thermal paint, for example, can help with the heating and cooling of a property, but we ain’t doing none of that in this country using ECO money or other forms of money.
We are directing £0.64 billion a year into these measures. We must focus that on innovation to ensure we develop new products. We could support products such as home thermostat systems. I am not allowed to mention brand names, but smart thermostats can make a dramatic improvement in a home’s energy efficiency and can lead to bill savings—we want people to save money, as well as have a warmer home. They have not been supported by the scheme, even though they can save people substantial amounts. The purpose behind the scheme is to do something to drive down the cost of those products so more people can buy them, benefit from the energy efficiency savings and potentially invest their own money in the scheme if they can afford it.
Dr Whitehead
Will the Minister reflect on whether the cost per treatment of the innovations she is talking about has overcome the more than 50% loss in funding for ECO schemes since they were first introduced?
Claire Perry
If the scheme can pivot away from extremely expensive, highly interventionist measures, and deliver many more measures that in aggregate have the same cost, that would be a good outcome. The hon. Gentleman says that the Labour party has all these grand plans, but I see no evidence, as always with the Labour party, about how they will be paid for and who will bear the burden. He and I spent many a happy hour debating the price cap Bill. We know that consumers want warm homes and the eradication of fuel poverty, but do not want to overpay for their electricity or gas. I have a sneaking suspicion that the Labour party’s uncosted plans would inevitably lead to whacked up consumer bills and taxes.
Claire Perry
But no one has ever said how Labour will pay for any of this stuff—including the shadow Chancellor—so it is all ambitious pie in the sky as far as I am concerned. What we need to do is to balance continually the cost of what we are doing, the carbon dioxide reduction and the competitive advantage, because by solving our own problems in the UK we can help to solve the world’s problems.
Unlike the Labour party, I do not have a quiver full of magic arrows and the promise of a unicorn at the end of every garden. What I have is a serious and sober set of policies, based on regulation. As the hon. Gentleman knows, we have already regulated for an improvement of the energy efficiency of the worst-performing private rented homes in the market. Those regulations are in force, and we think they will have a material impact.
We are rolling out the world’s biggest smart meter programme. Why do people get smart meters? Because they want to take control of their energy, and because smart meters help them to reduce their energy consumption. By the end of 2020, every home in the country will be offered a smart meter, or an upgraded smart meter if they already have one, to ensure that there is no interruption of data.
We are investing our own money. Sorry—the Government do not have any money of our own; it is always other people’s money. That is another lesson for the Labour party. We are investing other people’s money in energy efficiency measures in many parts of the housing stock right across the country. I am also told that increasingly large sums of money are coming particularly from pension funds and other private sector investors who want to invest in such things because doing so is good for their investment return.
I want to create markets that invest in the right sorts of technologies and that bring in the greatest amount of capital. The hon. Gentleman knows, although his Front-Bench colleagues do not, that Governments can never take enough in taxes or control enough of the economy to make a difference by themselves. We always have to incentivise others to innovate and to invest. Another quiver in our bow is the £2.5 billion of innovation money that I am putting into the smart energy space over the course of this Parliament—money that is targeted to get costs down, get carbon down, and build a competitive advantage.
I am disappointed that I am unable to persuade the hon. Gentleman to support what I think is a very sensible set of measures, which manage not to overburden consumers, who are paying for them, and manage to take a scheme that has for too long not focused on helping those who are in the worst financial straits or living in fuel poverty, often in rural areas, and will then drive up innovation and the level of local flexibility, which will mean that the scheme is better targeted.
I conclude by addressing the point made by the hon. Member for North Ayrshire and Arran. We already have many co-operative energy companies running south of the border. There is no barrier to one being set up. If an energy company wants to start up and focus entirely on that issue, that is absolutely fine. She knows that I applaud what is being done by the devolved Administrations, but energy bills and large amounts of energy policy are set and, in many cases, paid for by Westminster taxpayers. It is good to see the innovation, but she should never forget who is actually paying for much of the innovation that we are seeing north of the border.
Patricia Gibson
Does the right hon. Lady think that the very high strike price for power from nuclear energy helps or hinders fuel poverty?
Claire Perry
I find the hon. Lady’s party’s ideological objection to a balanced energy supply to be really worrying. I encourage her, as the party’s expert on this subject, to go away and have a look at the modelling. In no modelling of any energy system that I have seen, and indeed that has been shown to me by even the most ambitious pro-renewables, are base load, peak load and renewables delivered at the same time.
Luckily, across all the countries we care about having an energy system that is secure, balanced, keeps the lights on and does not overburden consumers. Again, it is easy for the hon. Lady to take such ideological positions, because she never has to sit and think about the energy system in the round, but I would encourage her to think very hard about the fact that for households that she represents in her constituency, as for those in mine, what actually matters is keeping the lights on, keeping the costs down and keeping the carbon falling.
I suspect that we may divide on the order, but I commend it to the House.
Question put.
Draft Newcastle Upon Tyne, North Tyneside and Northumberland Combined Authority (Establishment and Functions) Order 2018
(5 years, 6 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Jake Berry)
I beg to move,
That this Committee has considered the draft Newcastle Upon Tyne, North Tyneside and Northumberland Combined Authority (Establishment and Functions) Order 2018.
It is a personal privilege for me to introduce this order, which was laid before this House on 4 September. First, it gives me the opportunity to have it recorded in Hansard that on 18 October at 8.40 am my wife gave birth to my second son, David Foster Radclyffe Berry. The reason why I have cut short my paternity leave is that, in my first week in this job, I gave my personal assurance to Nick Forbes, Norma Redfearn and Peter Jackson that I would do all in my power to see this hugely exciting deal for the boroughs north of the Tyne through to its end. I hope that we can move to the next steps in its implementation as it sails through the parliamentary process in this House and the other House.
In the 2017 Budget we announced that we were “minded to” introduce a deal for the boroughs north of the Tyne. Since then, those boroughs have been involved in negotiating a hugely exciting deal for the area with the Government. It will include £20 million a year of gainshare funding for the next 30 years, control of the adult education budget for those above 19 and the power for the combined authority to acquire and dispose of land. It will allow the Mayor to use compulsory powers and set up a mayoral devolution corporation as the foundation stone of North of Tyne’s housing and regeneration missions. In return for that exciting deal, there will be a directly elected Mayor. Whoever he or she may be—given that we do not have any female Mayors at the moment, it would be exciting if our first female Mayor represented the boroughs north of the Tyne—they will be a sharp, single point of accountability, and will be held to account by the people locally for the decisions they make.
The order implementing this deal is another step in the devolution agenda. On its own, North of Tyne generates almost £17 billion a year of economic output and some 815,000 people live there. It is a coherent economic geography, as defined under the legislation. More exciting still, the deal continues the devolution revolution in England. When the Labour party was in government, it started devolution in Scotland and Wales, and this deal firmly positions the Conservative party as the party of English devolution. I hope that my Conservative colleagues will be proud of that and that we can continue to build on it.
If approved, the draft order will lead to the establishment of a new combined authority for Newcastle upon Tyne, North Tyneside and Northumberland. It makes provision for a directly elected Mayor, who will be elected by all local government electors for the area. The first mayoral elections will take place on 2 May next year and the initial term will be for five years, with the next election taking place in May 2024. The reason for the slightly extended initial term for the Mayor is to ensure that his or her next election is coterminous with other elections for mayoral combined authorities. That is important and is something that the leaders north of the Tyne were keen to achieve. Across the UK, with the new powerful Mayors, we can get a drumbeat behind those elections and drive turnout.
The order also makes provision for the appointment of an interim Mayor until the election takes place. The Mayor will be appointed by the members of the combined authority. Although he or she will not have any power immediately devolved to them, they will chair the combined authority, enabling them to get on with delivering the deal that we have agreed. On a recent visit north of the Tyne, I went to the housing board that has already been set up. Even though we in this place and the other place have not completed all the parliamentary steps to make the deal happen, the people on the ground are already getting on with it.
The draft order allows the establishment of a new mayoral combined authority and will remove the local government areas of Newcastle upon Tyne, North Tyneside and Northumberland from their existing combined authority. The order is made pursuant to the Local Democracy, Economic Development and Construction Act 2009, as amended by the Cities and Local Government Devolution Act 2016.
The draft order will also deliver integrated transport arrangements across the whole area, with the two combined authorities covering the north-east making provision for the founding of a joint transport committee. The new committee will exercise transport functions across the two combined authorities and produce a joint transport plan. As with all combined authorities, they will have overview and scrutiny, as well as an audit committee, which will be established for the joint committee. It is important to ensure that the new committee is powerful and can deliver transport effectively across the area, not least because we want to ensure that the investment announced in the Budget—£337 million in the Tyne and Wear metro—is delivered in a timely manner for people who live there.
In laying the draft order, we followed the statutory process as specified under the 2009 Act, as amended by the 2016 Act. Establishing a combined authority is subject to a triple lock. A combined authority can be created only when the councils concerned have consented, the Government have agreed and, of course, Parliament has approved the necessary secondary legislation. I am happy to confirm that the three councils that constitute the new combined authority—Newcastle, North Tyneside and Northumberland—have consented to the provisions in the order under which we create their combined authority. The original combined authority and the three councils leaving it have consented to the change to their combined authority area, and all seven councils involved in the existing combined authority—soon to be two combined authorities—have consented to the establishment of the joint transport committee. It has not been easy, but we have got there in the end.
We have given consideration to the particular circumstances surrounding this proposal in relation to the establishment of the new combined authority, North of Tyne, and changing the boundaries of the existing combined authority, as the law requires. We have concluded that all the statutory conditions have been met. We also consider it appropriate to establish the new combined authority with regard to the requirement under the 2009 Act to ensure that we
“have regard to the need…to reflect the identities and interests of local communities, and…to secure effective and convenient local government.”
We have also considered the consultation carried out by the three North of Tyne authorities on their proposals. We are satisfied that no further consultation is required. In short, I confirm to the Committee that we believe that all the conditions have been met unambiguously. We therefore seek the Committee’s approval to make the order.
In conclusion, the draft order, if approved by this House and the other place, will establish a mayoral combined authority to which we will devolve significant and wide-ranging powers and significant budget. The deal will open the door to a new era to promote economic growth and improve productivity. As the area itself has said, the deal will create 10,000 jobs. More importantly than the order we are considering in isolation, the combined authority represents an exciting opportunity for the boroughs north of the Tyne to play their part in the new golden era for the north-east.
Unemployment in the north-east is now lower than it is in London. No one who visited the Great Exhibition of the North, as I did on several occasions, will forget it. In fact, that nationally significant event will be remembered for a generation, and not just for the 4 million visitors who went to it, but for the £184 million generated for the local economy—as a fellow northerner, I may say that we always remember the brass, if not necessarily the visitors. In addition, there is £337 million for the metro and £102 million total investment into the International Advanced Manufacturing Park, and of course we remain in discussion about an historic borderlands deal that will benefit Northumberland. This is a golden era of investment in the north-east, and I am pleased that it is a Conservative Government who are truly delivering for the region. We are the party of the region; we are the party of English devolution. I commend the order to the Committee.
Jim McMahon (Oldham West and Royton) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Sir David.
It is good to be here again talking about devolution. Hon. Members may expect me to rush straight into an attack on how superficial the Government’s devolution is, but before I go there, I congratulate the leaders of all seven local authorities in the area on what has been achieved, in what has been a very testing time for local relationships. The Government could have approached things differently. They could have been far more inclusive and created greater opportunities for further devolution to the existing local authorities, which are more than capable of delivering far more. They are tried and tested, delivering good value for money and good public services, and they should not have artificial requirements laid upon them.
When it was clear that a deal could not be done, some local authorities naturally took a pragmatic view of how best to attract more investment from Government. Let us not fool ourselves about what the order is and what it is not. At best, it is a light-touch mayoral devolution package. The type of powers being devolved do not even come close to the existing devolution deals across the country. The type of money being devolved down to local authorities in those areas pales into insignificance compared with the austerity cuts that they have faced since the coalition Government—cuts that continued with the majority Conservative Government.
Local leaders are sick of waiting for the Government to come to their aid with investment and an idea for the future economy. Instead, they are developing their own visions for their local identity. There are good examples of that right across the north-east from Labour-run local authorities, which are showing real leadership of their place. The Government, to be frank, have walked off the pitch entirely. Given the type of powers being devolved in this order, my question is: why stop there? Local authorities in those areas can deal with far more than is being given in the devolution settlement.
Powers are one thing, but we need serious money. Let us look at the amount of transport investment across the north-east. Compared with most other regions, bar Northern Ireland, it gets nowhere near its fair share of capital or revenue investment. We know how important transport is for boosting local economies, connecting people to jobs and attracting inward investment. If the Government are determined to see a golden era, as the Minister said, where is the cash? They cannot do that on the cheap. Despite the best endeavours of local politicians, their economies have been left for a very long period to fight for themselves while Government have turned a blind eye to underinvestment in those areas. I credit those councils for negotiating the devolution deal on offer, but where is the Government cheque book?
It strikes me that since George Osborne walked away—or was moved to one side—the Treasury has just not been committed to devolution. From a Conservative point of view, it was originally a Treasury-led expedition—perhaps for different reasons, but that is where it came from. At the time, I was negotiating as one of the leaders on the Greater Manchester combined authority. In those devolution deals that were being struck, I witnessed a real tension between the Treasury and other Departments about where powers sit and how power is to be wrestled away from Whitehall.
The construct of some of those deals was quite odd, but they were reflective of the struggles and the frustration in Government. I do not see any of that here; I see a Government desperate to show that devolution is still making progress, when actually it is fairly superficial. I see a Minister who, perhaps for the best reasons—although he hides it well—is trying to make progress. But I am not seeing any real power given away from central Government. I am certainly not seeing any significant money being given away from central Government. The Government have realised—we have known this all along—that those best placed to deliver decent public services and make the best of limited resources in public investment are people in their local communities.
The question still remains: given their track record of delivering good public services, why should councils that could not quite get over the line on a mayoral devolution deal be cast to one side, without any devolution proposed at all? Will the Minister explain why local authorities are not fit to take on more budget responsibilities in adult education, for instance? Why can they not take on more responsibilities for getting people into work? Why are they not capable of taking transport capital investment from the Government and using that as a catalyst to attract inward investment? Why can local authorities that are tried and tested, and trusted by the public not do those things?
It is great that councils have come together. Again, I pay tribute to the council leaders who have created the deal, but if the Government are clear that there has to be a devolution deal for the whole of England, they cannot be so prescriptive about what that devolution should look like. With all due respect, it is a bit hypocritical for a Minister who is not directly elected to say to local politicians that if they want a fraction of the power that is held by a Government Minister who is not directly elected, they must move to a directly elected model in return. We do not directly elect our Chancellor, our Minister for adult education or Ministers in the Department for Work and Pensions, and the Minister here today is not directly elected either. For a fraction of the power from this place, local communities are mandated by Government to have a mayoral model or they get zero. I do not think that is in the spirit of a balanced and equal relationship. For me, that is still central Government telling local authorities what they can and cannot do in a very old, tired and untrustworthy way.
If the Government are really determined to see power shifted and to give people back the control that we know they demanded during the referendum, at some point—and pretty quickly—they will have to introduce a devolution framework that covers the whole of England, so that every community is included without having one set against the other. We want to see not only powers and legislation passed in this place, but genuine resources devolved down.
It cannot escape the attention of anyone in this room that the region most affected by a hard Brexit—which is what some Government Members are looking for—will be the north-east. It will take a hit the likes of which it has not seen for decades. In that context, it is legitimate to ask whether the devolution on offer is sufficient to meet the challenges that lie ahead. It is progress and it is a step forward, but it cannot be the end. I say to the Minister: this is not “Game over”. This is not the end. The devolution on offer should be seen as minor progress—progress, by the way, that is mainly to the credit of local leaders in the local authority. The Minister needs to step up, get back round the table and ensure that further power and resources are devolved as soon as possible.
Mary Glindon (North Tyneside) (Lab)
It is an honour to speak under your chairmanship, Sir David. Notwithstanding what my hon. Friend the Member for Oldham West and Royton has said—he got all the hard-hitting bits out of the way—I want to declare my support for the devolution deal for North of Tyne and the creation of the new combined authority. I thank Newcastle, North Tyneside and Northumberland authorities for their hard work alongside Government to get us to this point.
Great things are happening in my constituency of North Tyneside. Our businesses and many people are doing well, but for some of my constituents life is much more of a daily struggle. This deal, with its focus on inclusive growth and an inclusive economy, is important to me, especially because local control and significant extra funding will give people in North Tyneside access to more and better jobs. They will be able to get the skills that they need to get into work. Even people who have had caring responsibilities for years will be able to get back into work after being without it for such a long time. It will help my constituents in poor-quality housing and poor-quality work to access the opportunities they need to give them a better chance in life.
I am pleased to say that businesses across North Tyneside—from those at the brilliant Quorum business park, to the world-class engineering companies along the north bank of the Tyne—are excited about the deal. As it grows and develops, and more powers are delegated from Westminster and Whitehall to the new authority, I look forward to these powers expanding into wider areas, such as the cultural economy. That sector is very important to me, given that I have a world heritage site in my constituency, at Segedunum in Wallsend, which I urge everyone to visit.
The deal can only make our already great area north of the Tyne an even better place to live and work, and, most importantly, it will create expanded opportunities for individuals and businesses—opportunities that currently do not exist. I sincerely hope that the Committee will agree to progress the order.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
It is a pleasure to serve under your chairmanship, Sir David. Last week, I held a debate in Westminster Hall on the £3 billion investment required to make the east coast main line fit for purpose and thereby ensure it helps to deliver the economic potential of communities served by the route, including in Newcastle, North Tyneside and Northumberland, which we all want to happen.
During that debate, I touched on the proud and pioneering role that Newcastle and the wider north-east played in the development of Britain’s railways, and therefore our country’s rapid industrial development. I also highlighted our region’s advanced manufacturing future, and the need to look forward to ensure that Newcastle and the wider north-east region can once again be part of a world-leading industrial powerhouse. I therefore broadly welcome the order as an important step in the right direction towards achieving that aim. That is not only because I am firmly in favour of the principle of devolving funding and powers to local areas, but because the combined authority is an important vehicle for delivering the sustainable economic growth that communities in Newcastle, North Tyneside and Northumberland—and, indeed, the wider region—require.
I am very proud of my home city and all it has to offer. A recently published survey by startups.co.uk rated Newcastle as the best place in the country in which to work, from a list of 66. Newcastle and the wider North of Tyne area have so much to offer UK plc if tools, funding and powers are provided to allow them to fulfil their potential. As the Minister noted, the North of Tyne devolution deal is worth £600 million over 30 years. It is forecast to generate £1.1 billion for the local economy, create 10,000 new jobs, and leverage £1.2 billion in private sector investment over that timeframe. I sincerely hope that these changes make a difference to the lives of people in my constituency and beyond. The desire to make young people in Newcastle and the wider north-east feel that they do not need to go elsewhere to get on in life is largely what drove me to come into politics, and for that reason, creating good, skilled, well-paid, long-term job opportunities and meaningful apprenticeships must be central to the combined authority’s work.
I take issue with the Minister’s claim about the level of investment in the region. Significant economic development, funding and spending powers were available to the wider north-east region for some time under the regional development agencies, which were scrapped by the coalition Government in 2012. Like many other colleagues in the region, I fought hard against the abolition of One North East, because I knew how well it supported economic growth and jobs in our area. To put the order in some context, I and many others have campaigned hard against the punitive funding cuts meted out to local authorities in our region since 2010. Alongside the rising cost pressures, those cuts mean that Newcastle City Council alone will lose £283 million by 2020—a situation that we all hope the Chancellor will address in his Budget next week.
The fact is, however, that what is on the table today is what is available now, under this Government. We are ploughing headlong towards Brexit. I very much agree with the analysis of our Front-Bench spokesperson, my hon. Friend the Member for Oldham West and Royton. The Government’s analysis indicates that Brexit will hit the north-east’s economy hardest, even under the Prime Minister’s preferred outcome of a comprehensive trade deal, so the ability to support the creation of good, skilled jobs in our area matters now more than ever. It is disappointing that other local authorities within the North East local enterprise partnership area will not be part of the process. I sincerely hope that the door remains open to them, should they decide to reconsider. Other colleagues on this Committee, and indeed the Minister, may want to comment on that.
I would be grateful to receive confirmation from the Minister that the current devolution deal is part of an ongoing process, with the agreement being approved today simply a first step towards achieving further powers and funding in the coming months and years. It would be particularly helpful to know whether that will include taking control of our allocation of the shared prosperity fund, due to be established by the Government to invest in areas such as the north-east that have benefited so significantly from EU structural funding. I certainly hope it will.
My final ask of the Minister is to review the myriad different organisations that now exist at a sub-national or sub-regional level, with varying geographies, and to consider how that makes it more challenging to achieve the closer partnership working—place-based decision making and spending—that we all want to see between the public and private sectors. In my region, that means that Newcastle and Gateshead are working together on tourism, inward investment and future housing strategy and on some aspects of NHS provision, such as the clinical commissioning group, but not on others. The North East local enterprise partnership incorporates seven local authorities, including Newcastle, North Tyneside and Northumberland. It will operate alongside the North of Tyne combined authority, as well as the newly reconfigured North East combined authority. Public transport decisions will continue to be made across the wider Tyne and Wear area, while our police and crime commissioner naturally serves the communities covered by Northumbria police, namely Tyne and Wear and Northumberland.
Those are just a few examples, but another recent one is the £24 million Opportunity North East fund announced earlier this month by the Education Secretary. I understand that it will cover the whole north-east region—that is, the areas covered by the North East and Tees Valley LEPs. Despite its aims of improving social mobility, opportunities and job prospects for young people and appearing to fit neatly with those of the North of Tyne devolution deal, it remains unclear who will be responsible for managing the funding. Again, it creates more complexity when what we need to see is place-based decision making. If the Minister could provide some clarity on those issues, it would be very welcome.
Jake Berry
Those were two excellent contributions from the Back Benches. I congratulate the hon. Member for North Tyneside, who correctly signposted the very strong thread of inclusive growth woven through the deal by the Government and the local authorities involved. Her refreshing contribution showed how, throughout this entire negotiation, politics has been laid aside and people of different political backgrounds and none have come together for the benefit of the entire area. It was an excellent contribution.
The hon. Member for Newcastle upon Tyne North asked whether the deal is the start of an ongoing process. First let us get devolution deal No. 1 done, through the Committee today and through the other place next week, but I very much agree that it should be the start of a conversation about the ongoing story of devolution across the north-east. She asked whether the shared prosperity fund would be allocated to the mayoral combined authority area. We are currently designing the shared prosperity fund, and we will consult on it widely. I will take her contribution as some early lobbying on behalf of the mayoral combined authority.
The hon. Lady also spoke very well about simplifying the complicated picture in the north-east, and I take her comments on board. Frankly, it is regrettable that the combined authority area does not cover all the seven authorities that originally came to the Government to discuss the devolution deal. The way in which the three areas north of the Tyne came together and, despite that initial setback to their prospects, came forward with a very positive deal for the people who live there gives us all hope. Of course, the door remains open to other authorities in the area to start the conversation with the Government about their ambition for a devolution deal—perhaps even about joining this deal. The Government always remain in listening mode. Although she has not spoken, let me take this opportunity to congratulate my hon. Friend the Member for Berwick-upon-Tweed, who has been an exceptional champion for getting this deal done.
Let me deal with some of the shadow Minister’s comments. I spoke briefly about how it is not possible to do devolution 2.0 without devolution 1.0, so I hope he does not cause a Division but supports the draft order. He asked where the cash would come from. Look, £600 million is not an insignificant sum to invest in the north-east, and we heard from his own party’s Back Benchers how that will multiply up to more than £1 billion being invested in the economy.
I mentioned the new fleet of trains for the Tyne and Wear metro, the North East LEP growth deals, the international advanced manufacturing park at the Nissan plant in Sunderland and the £117 million Northern Spire bridge across the River Wear—I once accidentally described it as being across the River Tyne; I will try not to make that mistake again. Those projects total nearly £1 billion. In addition, this devolution cash will go directly into the north-east’s economy to drive it forward, so a total of more than £1.5 billion will have been agreed to and spent during the coalition Government and under this deal. I think that shows that the Government back the north-east.
The shadow Minister went on to say that the Government are desperate to move devolution forward but nothing is happening. I gently point out that in 13 years of a Labour Government there was no devolution at all for the English regions.
Jake Berry
I repeat: there was no devolution at all for the English regions. Clearly some people were not listening. The Opposition say we have not done enough, but we have created six metro Mayors, we are doing a deal north of the Tyne and, as I said, the Conservative party is the party of English devolution. That is typical. Frankly, it says everything about Labour Governments that they talk a good game—they talk about backing the north-east and the north of England—but it is simply that: talk. I can stand here as a Minister and say, “Here is £1.5 billion of cash going into the north-east. Here is a devolution deal for the north-east, designed not by the Government but by the people of the north-east, who rightly have an ambition to drive forward their own economy.” I hope the shadow Minister thinks about his party’s record. I know he has a car that dates from the 1980s—I saw that on his Twitter feed. I hope we are not going back to the Labour party of the 1980s, but we may be.
Finally, the shadow Minister asked about the devolution framework. The Government are committed to bringing that framework forward in the autumn, which, as he will have seen, the Secretary of State said to the Housing, Communities and Local Government Committee.
Phil Wilson
I am pleased the devolution deal is going ahead. If the local authorities that are not involved in the combined authority that will come out of the draft order—Durham, for example, which is my local authority—want to join it, will the Government accept that?
Jake Berry
I rather suspect the hon. Gentleman is asking me to write a blank cheque. If he listened, he will know that I said the Government remain open to discussions with the areas outside the combined authority that the draft order will create. I would welcome the other areas of the north-east coming to the Government and talking to us about devolution. Although this is a very good deal, it is unfortunate that some of the seven boroughs that started the discussions with the Government decided to walk away from those discussions. I hope and believe that if they came to the Government in the spirit of openness to negotiate a locally supported, ground-up deal, the Government would happily listen to their proposals.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Newcastle Upon Tyne, North Tyneside and Northumberland Combined Authority (Establishment and Functions) Order 2018.
Environment and Rural Affairs (Miscellaneous Revocations) Order 2018
(5 years, 6 months ago)
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Dr David Drew (Stroud) (Lab/Co-op)
I beg to move,
That the Committee has considered the Environment and Rural Affairs (Miscellaneous Revocations) Order 2018 (S.I., 2018, No. 739).
I am delighted to serve under your chairmanship, Sir Christopher. The Opposition believe that the order, which is dated 19 June 2018 and a copy of which was laid before the House on 20 June, should be revoked; in other words, we wish to revoke the revocations order. We know how many such statutory instruments we may face, so we do not necessarily wish to keep the Government for long tonight, but we have a few important points to make.
I make no apology for the fact that most of my speech will be about the Agricultural Wages Board, although no doubt we will have plenty of time to revisit the matter in our debates on the Agriculture Bill, which has been discussed in Parliament today. However, I will begin with a few general questions to the Minister. It is interesting that the Government are still trying to revoke orders on the milk quota. I am somewhat surprised that something that ended in 2015 is still being dealt with in 2018. It would be helpful if the Minister explained that.
As someone who supports the way in which land drainage works at a local level, I am surprised that we seem to be revoking orders on flood defence operating authorities. The question is really what we are putting in their place, because they are important to areas such as mine that are affected by flooding. Land drainage committees are essential to allow our areas to function without the threat of flooding.
On the issue of hay and straw, I would be interested to know why we are revoking something that seems to be standard practice. Given how difficult this year has been for many of our farmers as a result of rising hay and straw prices, where does that fit in? The explanatory memorandum from the Department for Environment, Food and Rural Affairs states that it is to do with the threat of foot and mouth. It would be interesting to know why and how we are controlling that, and why the existing legislation is being revoked.
The order is a bit of a curate’s egg; the orders that it revokes do not seem to have much in common. However, no doubt the Minister will be able to explain why we are doing what we are doing. I make no apology for speaking mainly about agricultural wages. It is sad to see what is left of the protections for workers in agricultural areas disappear completely. As a manifesto commitment, our party would reinstate the Agricultural Wages Board, but the agricultural committees, which were separate from it, are also worth trying to protect.
There is a labour crisis in rural areas. The supply of people working in the industry has been affected by the migrant issue. We have talked a lot about the seasonal agricultural workers scheme and whether the Government’s current attempt will make much difference, but unless we can provide more domestic labour, where will the labour come from? Farmers tell me that they cannot get labour, partly because we have no structure for payment any more. People are receiving lower incomes, which is not good either for them or for the way in which rural areas operate.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
Does my hon. Friend agree that post Brexit, the resourcing of labour in rural areas is paramount if those local economies are to flourish, and that the Agricultural Wages Board should be reinstated?
Dr Drew
I agree with my hon. Friend; it is important that we make that point. We differ from the Government on the issue and will continue to do so when we debate the Agriculture Bill, so I am not going to rehearse those arguments in detail now. There was quite a debate on Second Reading in relation to some of the proposals in the Bill about how poorly England has done. Scotland and Northern Ireland still have parts of the Agricultural Wages Board and, of course, Wales has its own code. In England, we have nothing. I gather that about 60% of farmers—this is not necessarily the view of the National Farmers Union, with which we will agree to disagree—said in their submissions that at the time of the Government’s decision to get rid of the Agricultural Wages Board, they were worried about how negotiations would take place. All the evidence suggests that wage levels have fallen in the agricultural sector, so it is difficult to recruit the people we desperately need, whether to pick fruit and vegetables, look after our dairy cows or do more general work. There is a crisis, which we all know about, and one way to put that crisis behind us is to ensure that we fund those workers properly—sadly, that is not currently the case.
I have touched on the inequality between the different territories in the United Kingdom, and I ask the Minister what research the Government have done on the impact of the removal of the Agricultural Wages Board to see if that is at least partly responsible for some of the crisis.
Mr Mark Harper (Forest of Dean) (Con)
I thank the hon. Gentleman for giving way—his constituency is just across the fantastic River Severn from mine. I was listening carefully to what he was saying. Why does he think that agriculture businesses cannot do what all other businesses do? If they are having trouble recruiting labour, that is a market signal that they should perhaps pay people a little bit more. We do not have a supermarkets wages board, or a wages board for every other industry. Why does he think farmers are incapable of understanding the market signals that every employer must understand?
Dr Drew
Tesco, for example, has a union agreement with USDAW and negotiates centrally, but also has some discretion to negotiate locally. Farm workers have no mechanism now, which is as much of a problem for farmers as it is for the farm workers. Our argument has always been that there is no structure at all, which has not helped the industry. We have made that point and will not labour it because we will table an amendment to the Agriculture Bill. That is a division between us, but one that we could resolve if there were some structure in place. The revocation of the Agricultural Wages Board has had an impact in lost wages, lost annual leave, and loss of sick pay—it was not just a wage-setting structure but one that gave the industry some stability. All this is made very clear by Unite, which is the union that represents farm workers. It has carried out regular surveys showing how difficult the position is for farm workers.
Given the crisis in recruitment, we hope that the Government will find a way to bring back that arrangement. It was not put in place by a Labour Government; Lloyd George brought it about with the trade bodies that he introduced and Winston Churchill—then a Liberal MP—took measures to put it in place, so it is surprising that a Conservative Government does not see its benefits. With the revocation, the remaining figment is being removed. Locally, agricultural communities played a part, and fed into the Agricultural Wages Board. If the revocation goes through, those committees will be completely removed. I hope the Government will listen to our proper and thoughtful contributions on the Agriculture Bill Committee, but we are giving them an early opportunity to think about what might replace the Agricultural Wages Board. I look forward to the Minister’s reply.
The Minister for Agriculture, Fisheries and Food (George Eustice)
It is a real pleasure to serve under your chairmanship, Sir Christopher. The Environment and Rural Affairs (Miscellaneous Revocations) Order 2018 completes the various reforms and actions to simplify and clarify the statute book which have been identified through the red tape challenge initiative. On the point made by the shadow Minister, those reforms are not part of an EU withdrawal programme—as he said, we still have that to look forward to. They are the closing stages of the red tape challenge that took place between 2011 and 2015, which reviewed some 6,000 rules and regulations across Government. The Department for Environment, Food and Rural Affairs alone reviewed some 1,200 regulations, involving full public participation and external review. That led to recommendations to improve, simplify, merge or revoke 650 regulations.
The initiative was carried out against a clear objective: to ensure the maintenance of existing environmental and consumer standards. There was also a clear aim to remove needless red tape and bureaucracy and to support enterprise. Some of the reforms that were identified and implemented through the red tape challenge included the removal of outdated or redundant regulations to tidy up the statute book and the removal of overlapping or confusing guidance. Collectively, the reforms that were implemented by DEFRA under the red tape challenge were estimated to reduce business costs by around £300 million a year, as validated by the independent Regulatory Policy Committee.
It was in completing that work under the red tape challenge that the Environment and Rural Affairs (Miscellaneous Revocations) Order 2018 came into effect. It revoked a total of nine redundant SIs and came into effect on 11 July 2018. Turning to some of the key components that the shadow Minister raised, the order revoked a number of redundant provisions, including the Milk Quota (Calculation of Standard Quota) Order 1986, which was part of a redundant EU scheme that was first introduced in 1984, when EU production far outstripped demand. The quota regime was one of the tools that were introduced to overcome those structural surpluses. Successive reforms of the EU’s common agricultural policy have increased the market orientation of the sector, and in parallel provided a range of other, more targeted instruments to help support producers in vulnerable areas, such as mountain areas where the costs of production are higher.
Schedule 1 to the Agriculture Act 1986 provides for landlords to pay compensation to their tenants for milk quotas that are registered to them in relation to the land that makes up the holding, upon termination of tenancy of land in England and Wales. Those regulations ceased to have effect on 1 April 2015, following the final day of operation of the EU’s milk quota regime. Since the scheme ceased to have effect at that time, we believe that it is right to remove the redundant order, which serves no further purpose.
The Environment and Rural Affairs (Miscellaneous Revocations) Order 2018 also revokes the Importation of Hay and Straw Order 1979, which prohibited the landing in Great Britain of any hay or straw except under the authority of a licence. As the hon. Member for Stroud pointed out, that order was introduced to protect animal health by requiring all hay and straw to be licensed prior to importation into Great Britain, thereby allowing the Secretary of State to put in place the necessary conditions. Hay and straw are a potential source of the foot and mouth virus.
The Importation of Hay and Straw Order 1979 has long been superseded by EU legislation, which now provides conditions for the importation of hay and straw from third counties. As such, that order is redundant and has been superseded by the definition of hay and straw in the Trade in Animals and Related Products Regulations 2011, which allows England to set conditions for processed hay and straw that may still carry animal health risks. DEFRA takes our obligation to protect against animal disease outbreaks very seriously. As we leave the EU we will ensure that all relevant EU provisions relating to the importation of hay and straw are maintained in our domestic law through the European Union (Withdrawal) Act 2018, thereby ensuring continuity.
The order also revokes the Code of Practice on Environmental Procedure for Flood Defence Operating Authorities (Internal Drainage Boards and Local Authorities) Approval Order 1996. That rather long-titled order, granted approval in accordance with section 61E of the Land Drainage Act 1991, set out a code of conduct. As part of the red tape challenge, DEFRA consulted widely with a number of bodies, including the Association of Drainage Authorities and the Association of Directors of Environment, Economy, Planning and Transport regarding the revocation of the code of practice. No concerns were raised, since the principles of the code are now fully embedded in good practice in any event.
Finally, and by no means least, since I know that it was the main reason the Opposition chose to bring about today’s proceedings, the order revoked the remnants of the former agricultural wages legislation, which were no longer relevant and no longer in force following the coalition Government’s decision to abolish the Agricultural Wages Board in 2013 via the Enterprise and Regulatory Reform Act 2013.
The Agricultural Wages Committees (Transitional Provisions) Order 1974 simply dissolved the then agricultural wages committees in England and Wales, in order that they could be replaced by new committees in conformity with altered local government boundaries under the Local Government Act 1972. The Agricultural Wages Committees (Areas) Order 1974 then separately established, with effect from 1 April 1974, agricultural wages committees in line with the new altered local government boundaries. That order was repealed, in respect of England, by the 2013 Act, which abolished the Agricultural Wages Board and all the agricultural wages committees that existed at that time.
I simply say to the hon. Gentleman that the committees that existed in 2013 to support the Agricultural Wages Board have already been disbanded, and the legislation that established them has been revoked. Today’s order does no more than remove a redundant order from the early ’70s that simply pertained to local government boundary changes and the necessary reconfiguration of advisory committees that took place at that time, which was incidentally about the time that I was born. I hope that I have reassured him that, whatever his views about the need or otherwise for an agricultural wages board, the order we are revoking is neither here nor there, since it has ceased to have any effect since those local government boundary changes in the early 1970s.
I will touch briefly on the wider argument around the Agricultural Wages Board, since I have chosen to focus most of my comments on that particular order. As my right hon. Friend the Member for Forest of Dean pointed out, it is not necessary to regulate to increase wages in that way, when actually we have a very tight labour market, with close to full employment, and the market is driving higher wages.
The Agricultural Wages Board was conceived before the Labour party introduced the national minimum wage, which is now supported by Members on both sides of the House. More importantly, it was the current Government that introduced a new higher national living wage. The reality is that both the national minimum wage and the new national living wage have superseded the need for an old-style agricultural wages board, which had limitations. At best, it simply duplicated what was being done by the new national minimum wage. It also did not recognise the ability to pay certain staff a salary as it related all the time to an hourly rate of pay. That prevented some of the middle-tier management from being established on a proper footing with an annual salary, bonuses and the like. It was a restrictive system in that sense. It was built for a different era and I believe it has no place in the world in which we currently exist.
Dr Drew
As I said, we will have this debate again when we consider the Agriculture Bill. I do not necessarily agree with what the Minister said. I am interested to know whether he will be able to introduce research on the impact of the loss of the Agricultural Wages Board when we consider the Bill, given the acute problems with migration. We may disagree on the cause of that, but we would agree on the consequences, which are not good.
I welcome the Minister’s points on the other issues. The order is one of those strange things that has been put together to try to deal with a number of different features, and I understand now exactly why it has been done as it has. We have not really got to Brexit—that is for another day.
Mr Harper
Can I just clarify what the hon. Gentleman is saying? He threw it in, but I did not quite follow it. On migration, was he suggesting that unlimited access to a very large labour market helps to keep wages down at the lower end? If that is the case, perhaps our exit from the European Union is an opportunity for us to decide who we want to come to this country and for those at the lower end of the labour market to see an increase in their wages, which I think would be welcomed on both sides of the House.
Dr Drew
What the right hon. Gentleman says, as a former Immigration Minister, is very interesting. I know that he had to deal with such issues. I am just making the point that we do not have enough labour in rural areas, particularly in farm supply, and that we must address that. Like everything else, that is part of a much bigger debate, which no doubt we will touch on in the Agriculture Bill, but I am just looking at what is happening at the moment, with insufficient labour to pick fruit and veg.
I talk to my farmers, just as the right hon. Gentleman will to his, and trying to get labour to do milking and some of the general work is not easy, and that situation is particularly acute because we are losing migrant labour, for whatever reason. Many of my farms have traditionally employed people from abroad for periods of time, which is why we have been critical of the Government’s attempts to address this in the seasonal agricultural workers scheme. That should have been in place a long time ago to encourage people to come to this country for a specified period for specified work. That has not happened, and we will see how the new proposal operates, but it is a bit late and it seriously under-provides for the numbers we need in the current acute crisis.
Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)
I do not want to prolong the debate further but, reflecting on the number of orders that this order revokes, I wonder whether those have been captured as part of the one in, one out regulatory reform process—whether we have already seen ones in for these ones out. Or is it my hon. Friend’s view that they are being saved up for the 800 Brexit statutory instruments that we are shortly to get?
Dr Drew
I do not want to be taken away from what we are debating today. I am sure we will have plenty of other opportunities to talk about Brexit issues. However, given the Government’s emphasis on the number of statutory instruments that will be associated with the Agriculture Bill, we might as well get used to what we are doing because we will be testing a lot of them in the SI process. I would prefer that to be done through primary legislation with our amendments to the Bill, but that is not where we are today.
These orders are largely historic and we do not have any issues with the revocations, other than that we are laying down the ground rules of where we will try to move to in the Bill to get the Agricultural Wages Board back in some form. I accept what the Minister says. The board was not perfect, but it needed reforming, not abolition, and that is our great sadness on the Opposition Benches. I am indebted not only to Unite but to Sustain, which is not a trade organisation per se but tries to encourage different ways of producing our food. It feels very strongly, as do Opposition Members, that that would be better advanced if we had some form of agricultural wages board.
We are open to suggestions. If the Government want to come back with a way in which we can solidify and restructure the setting of agricultural wages and conditions, we are only too willing to be part of that process. Likewise during the Bill, we will not be there to wreck it but to reform, improve and enhance it.
Question put and agreed to.