Whirlpool: Product Safety System

Jim Shannon Excerpts

Wednesday 26th April 2017 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to serve under your chairmanship, Ms Ryan. I commend the hon. Member for Hammersmith (Andy Slaughter) for bringing forward this issue, on which he has been a champion in debates in the House, including in a shorter Adjournment debate, when he fully put forward the issue and was supported by many of us here today and those from further afield. I thank him for bringing it forward today and am fully supportive of his purpose. He gave much detail on what has happened, and I will try to give my speech without repeating it.

I have had constituents in my office who are anxious and concerned about being told, “Just stay in the house,” when the machine is in use. Let me set the scene with an example of one constituent. My constituent and her husband work full-time jobs and also work some additional shifts to pay the mortgage. She leaves the house with her two-year-old and her one-year-old baby at 8.30 am. She returns at 6.30 pm, gives the children their dinner and bath and has them in bed for 8 pm, at which stage her 18-year-old babysitter takes over, to allow her to go to her evening meetings. She does not have the time to sit for the washing and drying cycle to complete, and cannot leave an 18-year-old in charge of a fire hazard with sleeping babies upstairs—that is unrealistic.

Her option is to sit and watch the washer-dryer cycle throughout the night. That is certainly ridiculous, but it is the reality of what the firm wants people to do, as the hon. Gentleman set out in his introduction. Is it a joke? No, it is not, and that is why in Westminster Hall today, with the Minister in her place—she has a very wide-ranging portfolio, given what she was here responding to yesterday and what she is doing today—we believe that legislation needs to be put in place that makes firms accountable and protects consumers, which it quite clearly does not at this moment in time.

I read the very succinct briefing provided by Which?—I am sure we have all had sight of that. Where a product could cause a risk to life or serious injury, Which? expects it to be promptly recalled by the manufacturers. What could be clearer or simpler than that? Yet we have firms who clearly disregard that and have a blasé attitude in how they respond. I ask again: how can we make those firms act with the urgency that we really need? All right-thinking people expect that, but we must make what is expected from manufacturers crystal clear.

As we know, Whirlpool acquired the Indesit Company, including its brands Hotpoint, Indesit, Swan, Proline and Creda, in 2014. In August 2015, Whirlpool informed Peterborough trading standards, as its primary authority partner, that up to 5.3 million dryers in the UK were affected by a fault discovered in more than 120 models. The magnitude of that number! The 5.3 million dryers in more than 120 models is nearly everything it has. Why has it not been coerced, persuaded or made to act more quickly? Those driers were also at risk of catching fire and required urgent modification to address the problem.

In August 2015, the company admitted what had to be done and notified trading standards, but the number of driers and models is very large. By 2016, about 750 fires had been reportedly linked to Hotpoint, Indesit, Proline, Swan and Creda tumble driers. Of course, since then there have been even more. A fire in a tower block in Shepherd’s Bush—I am sure the hon. Member for Hammersmith or other hon. Members will talk about it—left 50 people unable to return to their homes. The London Fire Brigade found that it had been caused by an Indesit tumble drier. We could see the horror that it caused on TV: it did not affect just one person, but all the other residents of the tower block. There are other examples—the fire brigade gave us one. Does Indesit not realise the danger? We do as elected representatives, and the people who own the driers and those whose homes have been damaged certainly do as well.

Which? found that those affected have been forced to wait far too long for a repair or replacement, and that customer service staff have given incorrect and potentially dangerous advice.

[Mrs Moon]

Does the hon. Gentleman share my concern that some of the machines have been sold on? When houses go up for sale, electrical goods go with them, and perhaps the second owners do not appreciate that the machine they inherit with their new home is dangerous, so they will not be looking to see whether it should be repaired.

[Jim Shannon]

I thank the hon. Lady for that very wise intervention. I had not given much thought to that. Sometimes the machines are sold on, but where is the follow-on? How does the company find out about those people? The people who have got them know about the problem from the adverts on TV, the stories in the papers and so on, but in many cases they do not know that they have something dangerous sitting in their home. The hon. Lady is right. We are trying to be positive in our questions to the Minister, but perhaps she will give some thought to that issue.

The hon. Member for Hammersmith spoke about home fires, and the hon. Member for South Leicestershire (Alberto Costa) spoke about some personal examples. There is a record of damage, and the company admits that there is a problem, so surely it should be held to account and should award compensation to people who have had massive fires in their flats and properties. Let us be honest: it is only for the grace of God that people have not been injured or died as a result of this issue.

Whirlpool has not acted in the best interests of consumers. It resisted a recall of the affected models and failed to repair and replace affected machines in a timely way. The affected consumers were told not to use their tumble driers. When someone is told not to use their tumble drier, they expect the company to come and repair it or replace it with something that works correctly.

[Ms Ritchie]

Does the hon. Gentleman agree that regulation is an issue? A series of recent product safety issues have brought into sharp focus the need for proper regulation and enforcement. Does he agree that the Government should focus their attention on that issue, too?

[Jim Shannon]

I thank the hon. Lady for those comments.

Clearly, the issue for us all is safety. As I said, it is only by the grace of God that nobody has been injured or killed. It is unrealistic to expect consumers not to use their tumble dryer for months on end, so it is possible that further fire and safety incidents will occur as a result of continued usage. Whirlpool should issue a full recall of all affected models immediately. If there are 5.3 million dryers, we will get them all back. If there are 120 models, we will work on that and get it done.

Which? reported that one in five—22%—of the affected customers surveyed in April 2016 were still waiting for their machine to be repaired or replaced. Does the company have no sense of urgency or safety? Are these issues lost on it? The Minister must be able to feel our frustration and anger. Other Members who speak after me will reiterate that. We need to be on the ball to ensure action is taken.

A third of customers who had their dryer repaired or replaced said they were dissatisfied with how the manufacturer handled the situation. I’ll tell you what, if I had been waiting since 2016, I would be very dissatisfied. I would be wondering what the company was doing and whether it had got the notification of the repairs to be done in a tray in a locked room where nobody ever goes. Six in 10, or 62%—it is rising all the time—of those who were surveyed for the first time in November 2016 and had decided to wait for a repair were concerned about using their tumble dryer, so the vast majority of those who own those dryers are concerned. One quarter—26%—of affected customers were told that they would have to wait longer than six months for their tumble dryer to be repaired. If only it did take six months to have it repaired, at least we would have a date. One in five—22%—were told that the wait would be between three and six months. Where is the company’s understanding of the inherent danger that those delays compound?

I will conclude with this comment because others wish to speak. We must ensure that consumer protection legislation is in place to deal with this issue. Current legislation allows that to take place. I believe the power is with the Minister: she can do this. I respectfully ask her, in the short time she has, to ensure that action can be taken after the election. It is incumbent on us all to ensure that this does not happen again. I thank the hon. Member for Hammersmith and all those who have come to Westminster Hall to support the safety not only of my constituents but of people throughout the United Kingdom of Great Britain and Northern Ireland, who rely on legislation to force manufacturers to do the right thing. The fact is that we have to force them. I believe we must deal with this issue.

--- Later in debate ---

[Margot James]

I am sorry that my hon. Friend has not had satisfaction from Whirlpool on that. Whirlpool wrote to me on 4 November outlining its engineer training programme and auditing programme of the machines that it has modified. I am happy to share that correspondence with him and other hon. Members.

We hear from industry and other experts that recall programmes typically have a success rate of resolving between 10% and 20% of affected products. In this case, Whirlpool’s resolution rate is over 40%, which is well above the industry norm. We can therefore posit that the action taken by Whirlpool in co-ordination with Peterborough trading standards has achieved more in terms of resolving cases than recalls typically achieve, meaning a greater number of consumers have been protected from potential harm.

[Jim Shannon]

Will the Minister give way?

[Margot James]

I will give way once more. There is more material that Members will be interested in.

[Jim Shannon]

We are talking about 5.2 million machines and 120 different models. Is there a timescale for how many years it will take for resolution to be arrived at and all those machines to be repaired or replaced?

[Margot James]

I can only reiterate what I have already said. Of those machines, 1.5 million have already been modified, and only 10% of cases registered with Whirlpool are outstanding. Whirlpool is modifying machines at roughly the rate of 100,000 per month.

The role of Peterborough trading standards has been discussed. That team has ensured that Whirlpool has taken responsibility for resolving the issue and agreed actions deemed proportionate to the level of risk. The initial risk assessment was peer-reviewed and agreed by two other trading standards departments, at Norfolk County Council and Hertfordshire County Council. As a responsible regulator, it has kept the issue and the evidence under continuous review and made decisions accordingly. It issued enforcement action to ensure that Whirlpool gave clear advice to consumers not to use the product before it had been repaired, and it has been in close contact with Whirlpool to agree and oversee the corrective action programme.

I note hon. Members’ comments about Whirlpool’s motivations and the extent to which it was moved by the threat of judicial review. It is impossible for me to comment on that speculation, but I would point out that Whirlpool had already resolved the majority of those 1.5 million cases prior to the threat of judicial review, which was later removed. As a result of Peterborough’s actions, Whirlpool did not, as Members implied, sit on its hands; it commenced a programme of corrective action back in November 2015. I have covered issues about Whirlpool’s customer service, so I will move on.

I want to acknowledge the remarks of the hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones) about the manufacturing of white goods. I was sorry to hear of the manufacturing losses in his constituency, but I am pleased to report that Whirlpool tumble dryers and some of its other white goods are manufactured not abroad but in Bristol.

I will turn to the working group on product recalls and safety. I take to heart the suggestion by the hon. Member for Hammersmith that the Government should look at the safety of all electrical goods and not just tumble dryers. That brief has been given to the working group. An online hub of information on product recalls, known as “Recall Central”, has been developed on gov.uk. That follows up one of Lynn Faulds Wood’s recommendations, cited by the hon. Gentleman.

When I took on the product safety brief, I reviewed the remit of what was then called the recall review steering group. Like the hon. Gentleman, I considered two years far too long to wait for discernible improvements in the system. In October, I rebooted the group and established the working group on product recalls and safety to develop credible options for improving product safety and the recalls system, setting a more challenging timetable of six months. I asked the working group to focus in particular on identifying the causes of fire in white goods and the action needed to reduce that threat.

The group is better resourced than its predecessor. Officials in my Department are supporting the group and are in regular contact with the Home Office about fire prevention. The group consists of experts in the fire services, trading standards, consumer groups and industry, including Electrical Safety First. The chair, Neil Gibbins, has extensive experience of fire safety, as former deputy chief fire officer for Somerset and Devon, and a background in enforcement.

I am grateful to Neil Gibbins and members of the working group for their work. They submitted their initial recommendations in December, which were published on gov.uk. Each meeting has had its notes published on gov.uk, and hon. Members can visit that site. The group submitted its full report to me earlier this month, which might explain why I have not yet published it, in less than the six months given to it. If it had not been for the Easter recess and the calling of the general election, I would now be planning the publication of the report. The group has already commissioned the British Standards Institution to develop a code of practice on corrective actions and recalls to improve consistency and transparency.

The hon. Member for Poplar and Limehouse (Jim Fitzpatrick) raised the issue of consumer behaviour and attitude, which is very important. The working group has commissioned consumer behavioural insights research, which I gather has almost concluded, to help ensure that the code of practice, and indeed the whole process of encouraging and motivating consumers to register their appliances, is taken forward in the optimum way.

I must leave time for the hon. Member for Hammersmith to wind up the debate, so I will conclude. In terms of Brexit, I would like to reassure Members that the Government have absolutely no intention of watering down consumer protection and consumer safety. The opposite may well be the case. I would also like to reassure the House generally that the Government take these issues very seriously indeed, and I look forward to the hon. Gentleman’s concluding remarks.

Post Office Closures

Jim Shannon Excerpts

Tuesday 25th April 2017 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for East Worthing and Shoreham (Tim Loughton) on securing this debate and on setting the scene so well. I thank him for giving us all a chance to speak by curtailing his time.

I am an advocate of the Post Office. I represent a community that is both urban and rural, and I have long been concerned about the isolation of my constituents—my rural constituents in particular—who rely on the Post Office. That reliance is greater in the Ards peninsula and Strangford—the area I represent—because the banks are closing. As other hon. Members have said, when banks close, they always state that they have an agreement with the local post office, but when the post office closes, people have to jump on the bus and go on long journeys on already limited public transport to towns to access banking services.

The news in January that the Post Office would close 37 of its largest branches, leaving more than 300 people out of a job, was shocking and unexpected. Although I understand that the idea behind franchising branches is to keep services

“where customers want and need them”,

and to allow post offices to operate in rural areas, the fact that the large post offices are under pressure does not bode well for smaller post offices.

During the five-day strike, members of the Communication Workers Union referred to jobs and pensions. Branch closures, including the proposed closure of my local branch, have unsettled them. The fact that the Post Office is now seeking partners for 37 of its directly managed branches as part of its effort to secure its services in communities around the UK has added to workers’ job uncertainty.

The fact is that each and every one of us as MPs has fought hard to ensure that benefit payments are made to post office accounts. The number of post offices has reduced by some 50% in the past 30 years, and people are uncertain about where they will be employed. Staff must have more security. I have been told that staff confidence levels are at an all-time low, and morale levels are at a critical level. I call on the Government to respond as a major stakeholder and investor in the Post Office, and I urge the Minister to confirm that this rate of closure will not continue and that there will be investment to enhance, rather than cut, services.

Just before Christmas, I received word of the strike action that was to affect my area. The letter stated:

“As you may be aware, the CWU has called for further strike action, on 19th , 20th and 24th December, in 300 directly managed Post Offices and, on 22nd and 23rd December, in our cash distribution operation.

I would like to reassure you, and your constituents, that people working in 97 percent of our network—the 50,000 individuals who work in over 11,000 independently-run Post Office branches—will not be involved in this industrial action.”

Those are not accountancy figures. They are people who work hard to pay their mortgage and who need our support. That is what I am doing now, and I ask the Government to do the same and to offer the support that is needed, not just for the workers in post offices but for those who use post offices across Strangford, the Ards peninsula and the whole of the United Kingdom of this great nation of Great Britain and Northern Ireland.

Fuel Poverty

Jim Shannon Excerpts

Tuesday 14th March 2017 Commons Chamber

[Paul Scully (Sutton and Cheam) (Con)]

The UK has one of the largest economies in the world, growing quicker than many of its neighbours. We have record levels of employment and a welfare system that, despite differences of opinions across the political divide, provides an effective safety net in most cases and stacks up well in comparison with several countries around the world. However, we still have a number of vulnerable people, including children and the elderly, who make incredibly difficult choices about whether to eat or heat each day.

It is estimated that around 2.4 million households in England are in fuel poverty, the definition of which varies somewhat. In the past, the Government considered a household that needs to spend more than 10% of its income to maintain an adequate heating regime to be in fuel poverty. That is still the case in Scotland and Northern Ireland. However, I can see the Government’s concern that that definition is too loose, with “income” and “adequate heating regime” meaning different things to different organisations. That is why fuel poverty in England is now measured using the low income, high costs indicator, whereby a household is considered to be fuel-poor if its required fuel costs are above the national median level and it would be left with a residual income below the official poverty line were it to spend that amount. Admittedly it is more technical and less snappy, but LIHC allows for a more focused approach to identify those in most immediate need.

The different methodologies make it more complicated to compare numbers across the UK, but the best estimate is that a total of 4 million households are in fuel poverty.

[Jim Shannon (Strangford) (DUP)]

Fuel poverty is an important issue for us in Northern Ireland. The hon. Gentleman will know that 17% of people across the UK are in fuel poverty, but in Northern Ireland the figure is 42%, which is massive. Does he agree that any fuel poverty strategy and funding allocation must take a co-ordinated, UK-wide approach to address that shocking statistic, which speaks more of fuel poverty levels in a developing country than in the United Kingdom of Great Britain and Northern Ireland?

[Paul Scully]

I am glad that the hon. Gentleman has had a chance to air that important point, because I understand the situation in Northern Ireland.

Governments have recognised fuel poverty as a problem and have put strategies in place. The numbers affected by fuel poverty have reduced over the past decade overall, but slowly, by around 1%. Cavity walls now insulated have doubled over that period, and Government figures clearly show that houses with solid walls and in which portable heaters are used, rather than central heating, are far more likely to be in fuel poverty. There are still some 600,000 houses without central heating. People who are privately renting are twice as likely to be in fuel poverty than those in local authority or housing authority properties. However, all the numbers are still too high.

There is regional variation, as we have heard, with the north-east of England having the highest proportion of households in fuel poverty despite also seeing the largest percentage decrease, some 5% over the past 11 years. However, there are also many hidden cases. The London Borough of Sutton is a relatively prosperous borough, but it has pockets of deprivation that can easily be overlooked when considering London on a macro level. Within those pockets live people who get stuck between the cracks when it comes to low pay, welfare support, high energy prices and homes that are not energy efficient. That is likely to include older people on a small fixed income who are living in a large house that may be difficult to heat. Downsizing may or may not be an option, but it is one part of the solution.

Age UK has calculated that there have been 2.5 million avoidable deaths among older people in England and Wales due to winter cold over the past 60 years. Cold weather causes a massive spike in associated health problems, such as heart attacks and strokes, and there is a strong relationship between poor insulation and inadequate heating of houses, low indoor temperatures and excess winter deaths among older people. Age UK goes on to estimate that, each winter, one older person dies every seven minutes from the cold weather. Age UK has a number of advice guides that I strongly recommend colleagues share with constituents, particularly the elderly.

Beyond the impact on the frail and elderly, we all know from our casework that children living in damp and mouldy homes are particularly at risk. They are almost three times as likely to suffer from coughing, wheezing and respiratory illness. Evidence also highlights that infants living in cold conditions are at greater risk of admission to hospital or primary care facilities. In turn, living in such conditions also affects educational achievement, either through increased school absence due to illness or because children are unable to find a quiet, warm place to study at home.

Financial stress about energy bills causes huge anxiety that can exacerbate mental health problems, leading to depression and, unfortunately, potentially suicide. Currently, more than one in four adolescents living in a cold house is at risk of multiple mental health problems. There are three particular variables that affect the figures: income levels, energy prices and the energy efficiency of people’s homes.

The Government have sought to tackle low incomes by addressing the underlying causes of poverty, rather than by using cash transfers that just lift people over an arbitrary threshold in the short term. Rising tax thresholds have taken 1.3 million of the lowest paid out of income tax entirely since the start of this Parliament and have allowed others to keep more of what they earn. The introduction of the national living wage, which is due to reach £9 by 2020, is delivering a pay rise for millions of low-paid workers. The lowest-paid workers saw their pay go up by more than 6% in 2015-16, well above inflation, through those and other measures. Working parents are also benefiting from increased support with childcare costs.

There are a number of reasons why energy prices remain stubbornly high, including the fact that oil prices have doubled from their low point since early last year. SSE has become the last of the big six energy companies to review its current prices, with 2.8 million of its standard tariff customers facing a 6.9% increase. On Thursday, my hon. Friend the Member for Weston-super-Mare (John Penrose) will lead a debate in the Chamber in which he will call on the Government to introduce a relative price cap that brings the worst-value standard variable tariffs within a margin of the best-value fixed deals. His premise is to maintain competition by not introducing a strict cap, while seeking to end the exploitation of loyal customers—the set of people who, in a properly functioning market, would be the first to be rewarded.

Price-wise, it is important to address prepayment meters, which are used by many people in or around the fuel poverty category. The best way to keep prices low is to switch more—through competition—but that is often easier said than done. Although the number of people who switched rose by 30% last year, around two thirds of bill payers are still on the worst-value standard tariffs, despite Energy UK data that suggest that energy switching rates in Britain are the highest of any large energy market in the world.

Together, the big six energy companies have a commanding share of the market, in spite of their losing market share in both domestic and non-domestic supply. Between April 2015 and March 2016, 14 new licensed suppliers became active in the domestic market. The new entrants have a variety of business models, such as not-for-profit, renewable and local supply schemes. The increase in competition is to be welcomed, with small and medium-sized suppliers growing to account for 14% of the domestic market in March 2016.

If I may be parochial for a moment, I should point out that not every alternative small supplier adds to the liberalisation of the market. The London Borough of Sutton, my home borough, has launched an initiative called SDEN—the Sutton decentralised energy network—which takes the energy generated by a new, unpopular incinerator in Beddington on the Croydon border and pipes it to a new estate of houses that is currently under construction in nearby Hackbridge. Although few residents in Beddington wanted an incinerator as their new neighbour, the concept of using recovered energy in new homes seemed reasonable at first glance. However, last year our local paper, the Sutton Guardian, reported a proposed tariff that was some 21% more expensive than Sainsbury’s Energy was charging at the time. Such a decentralised network, piping energy in this way, prohibits residents from buying their energy from any other source, thus forcing them to take it up and locking them into a contract without the possibility of switching—the very opposite of liberalisation, and from a Liberal Democrat-run council.

Smart meters have been touted as a way to reduce energy use and fixed costs and to allow easier switching. They allow energy companies to harvest a lot of data and remove the costs of meter readings from their bottom line, but will they serve the customer well? The first generation of smart meters, SMETS1—smart meter equipment technical specification 1—worked while the customer was with the particular supplier that installed the meter, but they were not flexible enough in their interoperability. The next generation, the SMETS2 meters, are meant to solve that problem, but unfortunately the roll-out date has been delayed.

An open system will allow for the greatest flexibility. Apps that can nudge customers into energy reduction and more efficient use of their appliances and heating can be of huge benefit. Time and again we see how open source means better, faster and more flexible innovation. A few years ago, Windsor and Maidenhead Council put its money where its mouth is and fitted very visible meters on council buildings to show its energy use, leading to considerable reductions in energy consumption. That is nudge theory working really well. That could and should happen in domestic settings, too, with technology used to highlight high usage and so change behaviour, rather than people getting a shock from a high bill sometime later down the line.

The Government are working to improve the energy efficiency of homes throughout the country. Households that struggle with their bills are eligible for insulation measures, including solid wall insulation, through the energy company obligation scheme. Homeowners and those in privately rented homes who are on specific benefits may also be eligible for support through heating improvements, including oil-fired boiler replacements, through the ECO affordable warmth scheme. I welcome the fact that more than 2 million energy efficiency measures have been installed in more than 1.6 million homes since 2013, and the Government have made a commitment to insulate a further million homes by 2020.

I further welcome the fact that a greater focus of this support for low-income households will be on working families, and that the Government will continue to ring-fence a proportion of delivery for rural areas. The warm home discount scheme continues to help ensure that households at risk of fuel poverty can afford to heat their homes. This helps more than 2 million households a year with £140 going towards their energy bills. Pensioners also get further help through the winter fuel allowance.

The Government retain the goal of insulating 1 million more homes by 2020. However, I remain concerned that the Committee on Fuel Poverty, which advises the Government on this matter, raised serious doubts in September 2016 that the 2020 and 2025 fuel poverty energy efficiency milestones can be achieved. It believes that, over time, the £2.1 billion per year spent on fuel poverty programmes such as the warm home discount and winter fuel payments needs to be better targeted at those most in need of assistance.

The WHD will be reviewed in this Parliament and, currently, only 15% of it is targeted towards those in fuel poverty. The winter fuel payment is universal and so clearly not targeted, but it is also committed until 2020. The Committee also believes that the Government should seek to attract new sources of funding to assist in meeting the fuel poverty strategy milestones. Examples it cites include modifying existing legislation to require private landlords to upgrade the energy efficiency levels of their properties; giving the same priority to improving household energy efficiency as to generating new renewable energy; and modifying existing legislation to attract more third-party capital. I would be grateful to the Minister if he commented on those thoughts in his response.

I was motivated to raise this matter after hearing about an initiative by the local Sutton business, MaximEyes. This energy consultancy has succeeded in winning a number of awards by working with its clients on energy management and efficiency as well as utility infrastructure and procurement. Its core business is about the best use of energy, so it is well placed to examine and help tackle fuel poverty as part of its corporate social responsibility. It approached me to help identify households in need that it could help to turn around as part of its Fuel the Change initiative.

The company aims to take 1,000 homes out of fuel poverty by 2020 as its business develops. It has created a solid partnership with the Foundations Independent Living Trust, which has the expertise and infrastructure to ensure that the funding is used in the most efficient way and that it reaches those who are most in need.

Businesses that address issues to which they can relate directly tend to have more effect. Writing a cheque gives bosses a warm, short-term glow, but using a company’s resources to tackle something connected to its core business, market or interests can have a far bigger effect on the beneficiaries.

I am delighted that a Sutton business is taking a lead, encouraging other businesses to join it and to put something back, especially in an area that can really save lives. I hope that Members will join me in the Macmillan Room next Tuesday at 1 pm to speak about this further with the MaximEyes team and with representatives of related businesses. Businesses can, and should, be a force for good. I know that the Minister and my Government colleagues take this matter seriously. There is much to commend them for in the way that they are tackling low pay. We need to continue to improve competition in the energy market and look at how we can grow our investment in our housing stock to ensure that homes are energy efficient. We must also use emerging technology, such as apps, to influence behaviour; battery storage, such as Tesla’s Powerwall; and of course renewables. We must also work with the construction industry and allied businesses to ensure that they play their part. I look forward to my hon. Friend informing this House about what more can be done in the future by Government, energy providers, businesses such as MaximEyes, charities and individuals in this really important area of fuel poverty.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)]

What a delight it is, Mr Deputy Speaker, to see you in the Chair. I thank my hon. Friend the Member for Sutton and Cheam (Paul Scully) for selecting such an important issue for debate this evening. I am very grateful to him not just for his interest in fuel poverty, but for his leadership in hosting a discussion in the Palace of Westminster next week. You may have detected, Mr Deputy Speaker, the subtle way in which he wove in the details of the time and place into his speech on how we can support efforts to tackle fuel poverty in the UK.

The Government recognise that fuel poverty is a significant issue, affecting households throughout the United Kingdom, as the Committee on Fuel Poverty rightly highlighted in its 2016 report. I massively welcome the insight and challenge to Government that the committee brings. I also welcome the fact that it can help us, by those means, to deliver a suite of solutions for those who need help that is as effective as possible. Only this morning, I spoke to David Blakemore, the chair of the committee since November last year, and I look forward to working with him and the committee over the coming years.

As my hon. Friend has said, fuel poverty is measured in England by the low income, high costs indicator. According to that indicator, a household is fuel poor if it has an income below the poverty line and, at the same time, higher than typical energy costs. It is a relative indicator that is essentially a balance of two averages. It is fair to say that the total number of households living in fuel poverty has been relatively static over the past few years. However, there has been a fall over time between 2010, when there were just under 2.5 million households in fuel poverty in England—as my hon. Friend will know, this is a devolved matter—and 2014, when the latest official statistics record 2.38 million households. Those households face an average fuel poverty gap of some £371, which is itself a measure of the severity of the problem.

Perhaps I can assure my hon. Friend that, as he has rightly acknowledged, the Government are committed to helping households in fuel poverty, or on lower incomes and living in homes that are expensive to heat. I congratulate him on rightly highlighting the broader measures that the Government have taken in recent years by raising income tax thresholds and introducing the national living wage. Both those things are, at the broadest level, important contributions to solving the problem. He also rightly focused on the significant public concerns about recent announcements of price increases by the energy suppliers. I am glad that, as a result of action by the Competition and Markets Authority, in February this year Ofgem announced details of a cap on the amount that suppliers can charge prepayment meter customers. This will take effect from April and will help to protect those customers from high energy costs.

Energy suppliers have delivered nearly 700,000 measures in 500,000 low-income and vulnerable households since the energy company obligation began in 2013. That is part of a total of some 1.6 million homes that have been improved over that period, but this Government are going further to take action to tackle the root cause of fuel poverty, recognising that improving household energy efficiency is the most sustainable long-term solution to tackling the problem. Next week, the Electricity and Gas (Energy Company Obligation) (Amendment) Order 2017 will be debated in both houses to extend the scheme from 1 April 2017 to 30 September 2018. The measure will seek to reform ECO so that 70% of the support under the scheme will now be directed at low-income homes. That represents an increase from £310 million to £450 million a year that will be invested in improving the energy efficiency of homes that most need support. We expect that the reformed ECO will improve about 500,000 homes over the coming 18 months, and the Government have made a commitment to insulate 1 million homes over the life of this Parliament.

Recognising the fact that people also need immediate support with energy bills, we also have in place the warm home discount, which my hon. Friend recognised. The scheme provides more than 2 million low-income and vulnerable households with a £140 rebate off their energy bill each winter, when temperatures are lowest and bills highest. Together, the schemes mean that there will be at least £770 million of support for low-income and vulnerable consumers over the period 2017-18.

[Jim Shannon]

In my intervention on the hon. Member for Sutton and Cheam (Paul Scully), who introduced the debate, I mentioned having a co-ordinated plan across the whole of the United Kingdom of Great Britain and Northern Ireland so that we can collectively—in all the regions—take on the energy companies and work together. Has the Minister given any thought to how we could progress that?

[Jesse Norman]

As I have said, this is a devolved matter, so that does not specifically bear on it. However, on the wider question of whether there is scope for more joined-up thinking, I would absolutely welcome the hon. Gentleman’s suggestions, or indeed suggestions from the Northern Ireland Executive, as to how those things could be done, and we would give them a very warm interrogation. I am not sure what would come out—we would have to see the suggestions—but the warmth and the interest from our side are certainly there.

I should add that the role of regulation will also be important as we take action to ensure that tenants can live in a home that keeps them comfortably warm. The private rented sector regulations will target the least efficient, F and G-rated properties from 2018 by requiring landlords to improve those properties to at least a band E, unless a valid exemption applies. My Department is considering options for the implementation of the regulations, with a view to ensuring they can be implemented effectively by April 2018.

Of course, there is more work to be done. One important area will be to improve targeting on the households most in need—a topic my hon. Friend rightly raised. The Digital Economy Bill, which is going through Parliament, will be important in that regard, as it will make available better data on householders and properties. That, in turn, will reduce the costs obligated suppliers face in identifying households that are most in need, and it will allow more measures to be installed for the same cost.

I hope my hon. Friend will agree that the Government are taking this matter with the appropriate level of seriousness, but what I have described are all Government-led actions, whereas fuel poverty is a problem for all of society, and the Government cannot tackle it alone, as he rightly said. That is why partnership is a key theme of the fuel poverty strategy. It is important for the Government to play a leadership role, but it is also important for them to work alongside initiatives from local government, businesses, individuals and the charitable sector. Only by making the most of the varied skills and resources of each of these partners—the collective resources of society as a whole—can we collaboratively tackle the long-term social problems of fuel poverty.

In that context, I welcome the Fuel the Change initiative, which is due to be launched next week, and which my hon. Friend mentioned. I am looking forward to hearing the outcomes from the discussion led by my hon. Friend and Baroness Verma of how businesses can support the fight to tackle fuel poverty in the UK. This debate, and my colleague’s excellent speech this evening, are important contributions to that further conversation.

Question put and agreed to.

Vauxhall/Opel: Proposed Takeover

Jim Shannon Excerpts

Monday 20th February 2017 Commons Chamber

[Greg Clark]

The discussions are at an early stage. The leak of the discussions came out only in the middle of last week and I have had a number of meetings since then. I have been clear to the House that the successful operations in this country need to be maintained. The PSA side of the discussions has pointed out quite recently that Vauxhall is not yet its company to make contractual statements about, but the direction in which the discussions are going is clear. I will continue to be vigorous in extracting the best possible agreements about the future of Vauxhall here.

[Jim Shannon (Strangford) (DUP)]

I welcome the Secretary of State’s statement and what he has said so far. It is clear that Vauxhall’s UK plants are run to a high standard, with above-normal efficiency ratings, so will the Secretary of State outline what support he will offer to ensure that the plants are retained—and, indeed, enhanced—and that jobs are secured during any takeover? What influence, including financial assistance, can the Government exert to help?

[Greg Clark]

I am grateful to the hon. Gentleman for what he says. Again, I come back to the fact that Vauxhall’s UK operation is successful. It is efficient and effective, which is the reason, as with other car companies, why investments come to this country. We have had a successful programme of joint working with the automotive sector in areas such as research and development, and in training and upskilling the workforce. That programme continues and is available to any manufacturer that participates in the sector.

Oral Answers to Questions

Jim Shannon Excerpts

Tuesday 31st January 2017 Commons Chamber

[Jesse Norman]

I salute my colleague’s proper concern for support and investment in his constituency; that is absolutely right. The wider implications are being considered by the Government, and I remind him that the Hendry review asked for the issues to be considered specifically in the context of power generation, so those things go alongside the wider consideration we are giving to the report.

[Jim Shannon (Strangford) (DUP)]

The Hendry report refers to tidal energy. The Minister will know that the first large-scale tidal steam generator in Northern Ireland, in Strangford Lough, was four times more powerful than any other in the whole world at the time. What consideration will he give to ensuring that the energy being produced in Strangford Lough can be utilised for the benefit of the whole of Northern Ireland?

[Jesse Norman]

As I have indicated in a separate debate with the hon. Gentleman, that is a different, although related, technology. It was funded in part by the Government and has produced interesting results. This is a matter for close consideration by officials and we will continue to reflect on the matter. If he wishes to write to me further, I would be delighted to take a letter.

Photonics Industry

Jim Shannon Excerpts

Wednesday 25th January 2017 Westminster Hall

[Carol Monaghan]

I thank my hon. Friend for her intervention, and I will talk later about some of the applications of photonics. As she suggests, the central belt of Scotland is a hotbed for photonics, from Glasgow and Strathclyde in the west to Heriot-Watt and Edinburgh in the east.

[Jim Shannon (Strangford) (DUP)]

First, I congratulate the hon. Lady on bringing this matter to Westminster Hall for consideration. Whenever we did research on this issue, one point that emerged was that UK photonics companies export between 75% and 90% of their products, so their importance to the UK economy is immense, even though it is not well known and often overlooked. Does she agree that if the photonics industry across the UK is going to continue to succeed, it needs to be supported, which is something the Minister should consider?

[Carol Monaghan]

The hon. Gentleman makes some really important points and I will come on to some of the challenges that the photonics industry faces. Of course, one of them is that it is a relatively unknown area of the economy.

In Scotland, the presence of a number of major multinationals, combined with the outstanding research base, has enabled the central belt to become a world leader in the design, development and manufacture of high-value lasers. Laser sales are in excess of £200 million per annum and 90% of those sales are exports, bringing significant wealth to the region.

Scottish companies in the laser sector currently provide employment for around 3,000 people. The largest industrial players in Scotland are Thales, which is based in Glasgow, and Selex, which is based in Edinburgh, but other small and medium-sized enterprises are doing excellent work.

Another renowned company, Coherent Scotland, has gone from strength to strength in the last decade. It is not in my constituency but in the constituency of my hon. Friend the Member for Glasgow North (Patrick Grady). It manufactures lasers for industrial environments, such as the semiconductor market, as well as focusing on microscopy and micromachining. In the same area, we also have M Squared Lasers, which has won a string of awards for its innovative work in sensing.

UK Decarbonisation and Carbon Capture and Storage

Jim Shannon Excerpts

Tuesday 24th January 2017 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in the debate. I congratulate the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on raising the issue. I may have a slightly different opinion from my dear friend and colleague, my hon. Friend the Member for East Antrim (Sammy Wilson).

[Sammy Wilson]

Maybe I should not have given my hon. Friend the time.

[Jim Shannon]

My hon. Friend may regret it, but it will not diminish our friendship in any way whatever. It is good to have a broad church of opinion within our party.

I will pose some questions because it is important to do so. Environmental issues are of great importance, so it is essential that our strategy is effective. I say to the Minister that I am not sure that we have managed to achieve all we could or should thus far. That is the question many have posed, including the hon. Member for Coatbridge, Chryston and Bellshill during his introduction.

It is opportune that we are having the debate on the back of the industrial strategy Green Paper announced by the Department for Business, Energy and Industrial Strategy yesterday. Many believe that the Department has not achieved value for money for its £100 million spend on the second competition for Government financial support for carbon capture and storage. Other hon. Members have said that there must be an investment to get a return, and that the return will justify the investment.

It is my understanding that CCS is a process to avoid the release of carbon dioxide into the atmosphere, and that it has the potential to help to meet the UK’s target for a reduction of CO₂ emissions in both the power and industrial sectors, which is commendable. We have pledged to cut 1991-level emissions by 57% by 2030. While that is a great goal, how will we achieve it? Hon. Members have outlined potential job creation and the opportunities that will come if it is done in the right way. To achieve the goal is most certainly a challenge, given the untried nature of the technology.

[Philip Boswell]

I point out to the hon. Gentleman that the technology is truly tried and tested. The curious scheme in Northern Ireland aside, I would urge both hon. Members from Northern Ireland, who are my friends, to read the Oxburgh report and contrast the less than £85 per KWh that is achievable under this system with the Hinkley Point strike price of £92.50. Furthermore, the networks already exist. That is the attraction of having an existing infrastructure.

[Jim Shannon]

I will respond to the hon. Gentleman’s intervention during my comments. The future costs for the duration of the CCS project are unknown, and perhaps the figures do not add up on all of the lines.

Two projects that were shortlisted for the CCS process both failed to meet the proposal goals. The work done centrally by the Department in sustaining negotiations for the second competition for the project with its preferred bidders must be noted—a process is in place. The hon. Member for Coatbridge, Chryston and Bellshill has clearly outlined some of the evidence, and I will pose some questions on that. I can clearly say that I support the principle of what we are trying to achieve, but I wonder whether it can be achieved by that process. There are lessons to be learned, and hopefully valuable commercial knowledge and technical understanding of how to deploy the competition projects will have been gained, as he said. If we have that information, let us see how we can use it to further the project.

There are currently no examples of large-scale CCS projects in the UK, and only 16 operational projects worldwide. BEIS should maximize its expertise for future CCS strategies and put into practice the lessons it has learned—in other words, the evidence should be used for the betterment of delivering such projects. If and when CCS projects are self-sustaining and economically viable, we will see clean electricity from renewable sources, which we wish to see and are committed to trying to achieve. However, the sticking point is in the phrase “if and when”, meaning we could achieve those things “if and when” the Government and BEIS find a happy medium and the in-between. Hon. Members are often tasked with finding a balanced in-between or the correct way forward.

The substantial future benefit of the CCS process is to avoid the release of CO₂, as several hon. Members have indicated. However, it is clear that there are serious problems and critical issues with such projects that we cannot ignore. As I have discussed, there are no large-scale examples of long-term storage projects in the UK, despite a series of UK Government and EU initiatives aimed at incentivising their development. It has been argued that CCS technology is too expensive to be commercially viable for private developers without Government support in the shape of a strike price. Government involvement is critical in taking this forward.

I am aware of the work carried out by the parliamentary advisory group on carbon capture and storage, which found that good design could make CCS affordable. However, I have reservations about the cost of CCS competitions to the taxpayer.

[Sammy Wilson]

Does my hon. Friend agree that a high strike price will be paid for out of the pockets of every one of his constituents who consumes electricity? That is the big problem with schemes of this nature, for which there is a move away from cheap fossil fuels to dear renewable sources.

[Jim Shannon]

The Minister will take note of my hon. Friend’s comments and am sure will respond later.

We have seen not one but two failed voyages into the unknown of CCS projects, for which we have spent £168 million with no further resolutions and only lessons learned. We do not want this to be like the Mary Celeste— setting sail, getting nowhere and disappearing. It is my understanding that the cancelling of the second competition will impact on investors’ confidence, who in future may demand better conditions before engaging with the Government again, which will prove detrimental to the cost-effectiveness of future projects.

We do not want this to harm the future and where we are going. I feel strongly that both the Government and BEIS need success guaranteed in both financial and environmental areas before embarking on such voyages in the future, and as such I believe that every consideration must be given to how this particular project will help us to achieve our goals, and indeed whether it can do so.

Exiting the EU: Science and Research

Jim Shannon Excerpts

Monday 19th December 2016 Commons Chamber

[Danny Kinahan]

I’m not a Brexiteer.

[Jim Shannon (Strangford) (DUP)]

I’m one.

[Liz McInnes]

You’ll get your chance.

Looking at British science, it is well known that Britain punches well above its weight in the international university league tables. It does so mainly thanks to EU grants. It is not awash with funding, and in fact has the lowest per capita spending on research of any G7 country.

The referendum outcome has led to uncertainty about its implications for the higher education sector. It is easy to trot out the phrase “Brexit means Brexit”, but, as ever, the devil is in the detail and, for the sake of the future of science and research in this country, that detail cannot be glossed over in a soundbite. There are two aspects of the human and intellectual cost of Brexit for universities. The first is the potential for another brain drain. The second is the potential restrictions on overseas research students.

I say another brain drain as it sadly would be nothing new. Many senior figures in British universities remember the lack of support from the Thatcher Government in the ’80s and the exodus of scientists abroad. It is ironic that the four British Nobel prize winners this year, Duncan Haldane, David Thouless, Michael Kosterlitz and Sir Fraser Stoddart, are all based in the US, having been forced out during the 1980s brain drain. British research scientists are worried that the Prime Minister’s mantra of “Brexit means Brexit” will lead to a lack of funding and grants for British science and the potential for a modern-day brain drain.

Added to that is the potential for UK universities to become less attractive to international research students. The vice-chancellors of the London School of Economics, King’s College, London, and Bristol have already voiced their fears about recruitment of international students, and the serious potential financial and human resource consequences for our universities.

The vice-chancellor of Cambridge University, Professor Sir Leszek Borysiewicz, is a stalwart remainer, but in common with many who voted to remain, he is a pragmatist and wants Cambridge to get the best out of Brexit. He says that to achieve this the Government must provide some basic clarity on what exactly Brexit means. He is asking for three things from the Government: clarity on the national status of university staff; a recognition of the collaborative ideal implicit in EU projects; and a Government guarantee of vital university budgets.

I hope the vice-chancellor’s requests will be heeded by the Government. He is, after all, what some might regard as something of an expert. Although the people of this country were urged not to listen to experts during the referendum, on this subject, and indeed on many others affected by the Brexit negotiations, it is absolutely vital that the Government pay heed to our finest minds. They are not asking for a running commentary; they are asking for clarity and a coherent, informed plan as to the exact nature and manner of our departure from the EU. The EU makes substantial financial contributions to research in UK universities. Research funding from the EU amounts to around £l billion per year, while our own national research budget is below international averages.

I represent a Greater Manchester constituency and universities across our region have more than 4,000 EU students currently on campuses. That equates to spending of £90 million per year not just on tuition fees, but on expenditure in the local economy. Manchester University, which is 29th in the world’s top 100 universities, received £48 million in research funding in the past two years alone. The loss of such substantial funding and a failure to attract EU students could not fail to have a detrimental effect on our area. I cannot lay claim to a connection with Mr Higgs, but in a recent interview on the effect of Brexit one of Manchester University’s most famous academics, Professor Brian Cox—who, like me, was born in Oldham—said:

“The central issue for science is that it’s a global pursuit. I work at the Hadron Collider at CERN in Geneva. That’s a global project. The thing scientists and universities are most worried about is movement of people around the world. We need to say this is a country where you’re welcome to live and study and do science. But at the moment, the image we’re representing to Europe and the rest of the world isn’t the right one.”

[Jim Shannon (Strangford) (DUP)]

I am very pleased to be able to speak in this debate. As a health spokesperson, I take a great interest in medical research and I am intensely proud of our universities in Northern Ireland, which are top in their field of medical research. I am also very happy to follow the hon. Member for Heywood and Middleton (Liz McInnes).

I always, unashamedly, go out to bat for Northern Ireland and Strangford, and I will do so today. As a Brexiteer—one who voted to leave and was very proud that the people of the United Kingdom and my constituency also made that decision—I see an opportunity. The Centre for Cancer Research and Cell Biology at Queen’s University Belfast is a cross-faculty, interdisciplinary research centre with over 300 clinical and basic researchers from across the world. It achieves the highest quality of research excellence. Research in the institute extends from population studies of cancer etiology, through tumour biology and clinical trials, to outcomes and health services research. The institute is committed to fostering transdisciplinary investigation of areas of cancer control that lie at the interface between fundamental, clinical and population research. The three are currently populated by approximately 250 faculty, graduate and post-doctoral trainees and support staff. Opportunities for graduate and post-doctoral training are offered in partnership with several departments at the university, including: biomedical, anatomy and cell biology, biochemistry, microbiology, immunology, pharmacology and toxicology, community health and epidemiology, mathematics and statistics, oncology, pathology and medicine, and Queen’s school of policy studies. All that is done with expertise at Queen’s University. The institute is supported by the Terry Fox Foundation, in partnership with the Canadian Institutes of Health Research.

This high level of research needs a highly qualified and specialised skill set. It is clear that in leaving the EU we need to ensure that that skill set is protected and that our universities are able to continue their priceless work. I support the recent call by the president of the Royal Society in the Financial Times to ensure that we continue to build on our position as a world leader in science and innovation. We are doing that in Northern Ireland, and we want to continue to do that. We are looking to the Government simply to make sure that that happens. I have every faith that the Brexit team understands the necessity of the arrangements that need to be put in place to ensure that this knowledge and skill share can and will take place. I see the Minister nodding in appreciation, and I am sure that it will be confirmed further in a few moments when he rises to speak.

It is clear that UK research benefits from the immigration of top foreign researchers to the UK. These include several Nobel prize winners, so we must have in place the ability to ensure that they are able to live and work here for the benefit of the UK and our scientific and research industry. As the President of the Royal Society has said:

“Today, 30% of our academic research staff are from abroad and a third of UK start-ups were founded by non-UK nationals. We are second only to the US as a destination for global talent. Their presence ensures that we remain first-rate, and importantly, produces a first-rate environment for training home-grown talent. Losing them would be a disaster for our economy. We need to take immediate steps to reassure those who are here that they remain welcome.”

And they are welcome; we want them to stay. I hope the Minister will say this very clearly in few moments. The role played by foreign scientists and graduates must not be overlooked or underestimated. They are an essential component in the cog of our industry, and I am taking the opportunity to underline that fact and put it on the record in this Chamber today.

In 2015, over half of the UK’s research output was the result of an international collaboration, and these collaborations are increasing. The European Research Council, which is part of Horizon 2020 and funds frontier research purely on the basis of scientific excellence, has established a very strong international reputation. In Queen’s University, we have international partnerships with companies and businesses, with other universities across the United Kingdom of Great Britain and Northern Ireland and indeed across the world—all coming together to bring the needed scientific excellence right there at Queen’s University in Belfast in Northern Ireland. Although this funding stream does not require international collaboration, 58% of papers with ERC funding have co-authors who are based in other countries.

Collaboration enhances the quality of scientific research, improves the efficiency and effectiveness of that research and is increasingly necessary, as the scale of both budgets and research challenges grow. I am sure that in his response, the Minister will confirm that the collaboration that already takes place will continue post-Brexit and into the future. The primary driver of most collaboration, however, is the scientists themselves. In developing their research and finding answers, scientists are seeking to work with the best people, best institutions and best equipment that complement their research, wherever they may be. It just happens that most of those good people are in Belfast at Queen’s University.

This collaboration must be maintained and enhanced, which brings me back to my foundation point about Brexit: this is an opportunity to put in place mutually beneficial co-operation between countries that we must make the most of. I believe we have an opportunity to do just that. We work better as a team, and Brexit must take the opportunity to put in place the rules that enhance the games and bring the best results. I have every confidence in the Brexit Minister and his team here in this great nation of the United Kingdom of Great Britain and Northern Ireland—we are better together!

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Robin Walker)]

It is always a pleasure to follow the hon. Member for Sheffield Central (Paul Blomfield). First, I should like to echo his comments about the appalling loss of life in Berlin. I am sure that the whole House will join us in expressing solidarity with and sympathy for the victims. Our thoughts and prayers are with the families affected, and we should stand shoulder to shoulder with Germany and our European allies and partners after a terrible incident of this sort.

This has been an excellent debate and I would like to thank all hon. Members who have contributed, particularly the hon. Member for Richmond Park (Sarah Olney), who made an accomplished maiden speech and who spoke about Parliament bringing people together after the referendum. I agree that it is the responsibility of all of us to aim to do that. This has been the third in the series of debates on important issues arising in the context of the UK’s withdrawal from the European Union that was promised by the Secretary of State for Exiting the European Union, my right hon. Friend the Member for Haltemprice and Howden (Mr Davis). I would like to note how fruitful my ministerial colleagues and I have found these debates. I am also glad that the hon. Member for Sheffield Central has enjoyed them so much. I had the very first debate in Westminster Hall when the House returned after the summer recess, and it is a delight to conclude this term with the last major Government debate in the main Chamber.

The UK’s global status as a science and research superpower is fundamental to our wider economic competitiveness. The hon. Member for Newcastle upon Tyne Central (Chi Onwurah) described it as the engine of prosperity. This Government want the UK to be the go-to place for innovators and investors across the world, and we intend to secure the right outcome for the UK research base as we exit the European Union. This debate has highlighted some of the issues that we know we will have to consider as we negotiate to leave the EU, but retaining and building on our science and research base is a top priority that is shared by right hon. and hon. Members on both sides of the House, as we have seen today.

Before I begin to respond to some of the helpful points raised by Members, I would like to take time to point to the action that the Government have already taken to secure our place in the world of research and science.

The Government are determined to ensure that all relevant views from stakeholders are reflected in our analysis of the options for the UK’s withdrawal from the EU. We are conducting a range of meetings with stakeholders to build national consensus around our negotiating position. This includes a wide programme of engagement within the Department to ensure that the views of the research and science sectors are heard. I should like to reassure the hon. Member for Heywood and Middleton (Liz McInnes) that we are, in fact, listening to experts.

My ministerial colleagues and I have met a number of higher education institutions and groups, including Universities UK, the National Academies, the Russell Group and the Universities of Swansea, Reading, Ulster and Strathclyde, to name but a few. Just last week, I attended the new stakeholder working group on EU exit, universities, research and innovation, hosted by the Minister for Universities, Science, Research and Innovation, my hon. Friend the Member for Orpington (Joseph Johnson). The sector strongly supports our ambition to create an environment in which the UK as a whole can continue to be a world leader in research, science and the tertiary education sector.

We are also continuing to talk to representatives of the science and technology sectors. Between myself and ministerial colleagues, we have recently met Sir Mark Walport, the Government chief scientific adviser, as well as the presidents of the Royal Society and the Royal Academies and representatives from the life sciences, environment, chemicals, space and tech sectors. I want to reassure the hon. Member for Cambridge (Daniel Zeichner), who spoke passionately about data, that the digital sector has advocated a strong position on the freedom of movement of data.

I have also enjoyed giving evidence to the Select Committee chaired by my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe), and I welcome the report, to which the Government will respond in full at a later date. To answer a point raised by him and by my hon. Friend the Member for Twickenham (Dr Mathias), I point out that we are working closely with the Government’s chief scientific adviser and the Government Office for Science to ensure that we have access to the expertise that we need. I recently visited Surrey Satellites in Guildford to see at first hand the levels of innovation in the UK space industry, which the science Minister was right to praise in his opening speech. We will continue to meet such stakeholders in the coming months.

The Government have already taken action on some of the concerns raised by such groups. The Treasury will underwrite all successful bids for Horizon 2020 that are approved by the European Commission, even when specific projects continue beyond our departure from the EU, giving British participants and their EU partners the assurance and certainty needed to plan ahead for projects that can run over many years. The Treasury guarantee sends a clear message to UK businesses and universities that they should continue to bid for competitive EU funding while we remain a member of the EU. My right hon. Friend the Member for Loughborough (Nicky Morgan), with whom it was such a pleasure to work during her time as Education Secretary, gave an important example of where restored funding was a direct result of the guarantee. It will help ensure that the UK continues to be a world leader in international research and innovation.

We have provided further assurance to universities by confirming that existing EU students and those starting courses in 2016-17 and 2017-18 will continue to be eligible for student loans and home fee status for the duration of their courses. We recently extended that assurance to postgraduate support through research council studentships, which will remain open to EU students starting courses in the 2017-18 academic year. The funding support will cover the duration of their course, even if the course concludes after the UK has left the EU. As the Science Minister said earlier, we will decide the policy for the 2018-19 academic year in good time for applications.

The hon. Member for Sheffield Central and his Front-Bench colleague, the hon. Member for Newcastle upon Tyne Central, challenged the Government on our science funding, but at a time of tight control over overall public spending it is significant that the Government were able to protect the science budget, with a total investment of £26 billion between 2016-17 and 2020-21. We have been going even further to support a healthy science and technology ecosystem in this country. The Government recently committed to substantial real-terms increases in Government investment in R and D, rising to an extra £2 billion a year by 2020-21, to help put Britain at the cutting edge of science and technology. I join my hon. Friend the Member for South Basildon and East Thurrock, who is Chair of the Science and Technology Committee, and my hon. Friend the Member for Macclesfield (David Rutley) in welcoming that.

A new industrial strategy challenge fund will direct some investment to scientific research and the development of a number of priority technologies in particular, helping to address Britain’s historic weakness in commercialisation and turning our world-leading research into long-term success. To realise the full economic potential of new technologies, we have also announced a review of the support for organisations undertaking research through the tax system, looking at the global competitiveness of the UK offer. The Treasury will look at whether we can make this support even more effective to ensure that the UK continues to encourage innovation actively. Ultimately, we need to ensure that our world-beating science and research base maintains global research excellence in our institutions, innovation in our businesses, and strong local economies across the UK.

It was striking to hear hon. Members from both sides of the House, such as my hon. Friends the Members for Plymouth, Sutton and Devonport (Oliver Colvile) and for Canterbury (Mr Brazier), my right hon. Friend the Member for Loughborough, and the hon. Members for Bradford South (Judith Cummins), for Bristol West (Thangam Debbonaire) and for South Antrim (Danny Kinahan), speak passionately about the benefits that science, universities and research bring to their constituencies. While we can be confident that our fundamentals are strong, we need fully to evaluate the consequences, challenges and opportunities to UK science and innovation of leaving the EU. That will take time, and I am grateful for the support and challenge that we have received from this House and from a wide range of informed sources.

I see continued confidence in the UK as a natural home for and world leader in science and innovation. Since the referendum, for example, we have welcomed many hundreds of millions of pounds of new investment in the life sciences and pharmaceuticals sector from Alnylam, GSK and AstraZeneca, as mentioned by my hon. Friend the Member for Macclesfield; an £80 million investment in space technology from Seraphim Capital; and important job announcements from Google, Facebook, Microsoft, and IBM, which will build four new data centres here in the UK. A recent survey by the CBI shows that 70% of businesses plan to increase or maintain their innovation spending following the vote to leave the EU. Only 7% plan to reduce their investment. The UK has always been one of the most innovative nations on the face of the earth, and I am certain that it will remain so.

I will now respond to some of the helpful points raised by hon. Members from across the House. We have covered a wide range of topics today, so I want to try to summarise the comments made and what I have learned across three key areas: funding, people, and collaboration.

As my hon. Friend the Minister for Universities, Science, Research and Innovation and I have both already set out, UK businesses should continue to bid for competitive EU funds while we remain a member of the EU, and we will work with the Commission to ensure payment when funds are awarded. The Treasury will underwrite the payment of such successful awards, even when specific projects continue beyond the UK’s departure from the EU. The Government have also reassured organisations that structural and investment fund projects signed before the UK withdraws from the EU will be guaranteed by the Treasury after we leave, up to 2020.[Official Report, 9 January 2017, Vol. 619, c. 2MC.] These projects will have to provide strong value-for-money evidence and be in line with UK strategic priorities. We have heard submissions from across the House on the future relationship with Horizon 2020, and it is too early to speculate on the detail of our future relationship with that and its successor programmes. The UK Government are committed to ensuring that we remain a world leader in research and innovation.

The views expressed in the House today, including by many who campaigned to leave, such as my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), my hon. Friend the Member for Canterbury and the hon. Member for Strangford (Jim Shannon), have echoed what we have been hearing from stakeholders on the importance of research mobility. We are carefully considering the impact of this across the sector, but our ambition is to create an immigration system that allows us to control numbers, and encourage the brightest and the best to come to this country.

[Jim Shannon]

May I invite the Minister to visit Queen’s University Belfast? That would encourage people there, it would be a chance to show businesses what we are doing and it would allow the partnerships at Queen’s University to grow even more.

[Mr Walker]

I would be delighted to accept the hon. Gentleman’s invitation. I have already visited one university in Northern Ireland, but I would be delighted to visit another, as soon as the opportunity arises.

There has been no change to the rights and status of EU nationals in the UK, or of British citizens in the EU, as an immediate result of the referendum. The Prime Minister has been clear that during negotiations she wants to protect the status of EU nationals already living here, and the only circumstances in which that would not be possible are if British citizens’ rights in European member states were not protected in return. I was glad to hear her repeat in her statement today her desire to see such a deal come early. Looking to the future, I will repeat again what my Secretary of State has said before:

“We will always welcome those with the skills, the drive and the expertise to make our nation better still. If we are to win in the global marketplace, we must win the global battle for talent. Britain has always been one of the most tolerant and welcoming places on the face of the earth. It must and it will remain so.”

Corporate Governance and Social Responsibility

Jim Shannon Excerpts

Wednesday 14th December 2016 Commons Chamber

[Louise Haigh (Sheffield, Heeley) (Lab)]

I thank you, Mr Deputy Speaker, for allowing time to debate this issue of critical importance today.

Having worked in corporate governance before I was elected, I am well accustomed to the fact that it is not a subject that excites or even particularly interests many people. I completely accept that, and it is demonstrated by how rarely it is raised or debated in this House. However, it is utterly fundamental to the workings of our economy and to how wealth is distributed across the country. What it essentially boils down to is this one key question: who does our economy work for?

In a year of global convulsions, that is a question being asked in unlikely quarters. When Mark Carney made his significant intervention, warning of “staggering inequalities” in an economy where many “lack a stake”, some voices said that he had strayed too far from his brief. Not only was his intervention appropriate, it was absolutely urgent, because while 75 companies on the FTSE 100 collectively made a profit of £32 billion last year, most ordinary people’s wages are predicted to flatline well into a second lost decade. That makes people justifiably angry and society less robust.

In is in that context that the Prime Minister’s corporate governance agenda should be seen, and although it was welcome that the Secretary of State for Business, Energy and Industrial Strategy should introduce proposals for reform, I am afraid that the signals are not good. The Prime Minister floated worker representation on boards on her first day in office, but then informed the CBI that that would be voluntary. In a statement to the House, the Secretary of State lauded his own success in bringing down average pay for chief executive officers from £4.3 million to £4.25 million—I am afraid that that is hardly a job well done.

I know first-hand the enormous creative potential that a well-functioning company, backed by a strong governance regime, can unleash. Unlike the Government, who appear to have stepped back from desperately needed reform, I know that the status quo cannot continue. It represents grotesque pay ratios between the top and the bottom, and astronomical executive pay. We have seen the corporate greed of BHS, Sports Direct, Gunstones, ASOS and JD Sports, which treat their low-paid workforce with little more than contempt; the behaviour of energy companies quick to hike prices to maximise profits, but slow to lower them when the market shifts; and the short-termism that has resulted in productivity flatlining and investment being stifled as directors seek to maximise shareholder value at the cost of everything else.

That is nothing short of a crisis of legitimacy in the shareholder model, because confidence is placed in shareholders that, in my experience, is undeserved and misunderstands the completely altered nature of shareholders in UK plc. Although I welcome the Green Paper, I fear that it clings to a model that belongs firmly in the last century. We are not dealing with the shareholders of 30 years ago, who had a stake in the UK and held shares for a significant period. In 1998, just a third of shares were owned by non-UK investors, but now the vast majority are owned by such investors. In fact, it is almost absurd to talk about shareholders as investors, as most do not hold the shares for long—some hold them for just seconds. The figures are contested, but the most reliable ones that I have seen suggest that the average holding period has fallen from eight years in the 1960s to just four months, and as much as 70% of trades are high frequency.

The equity chain is grossly over-intermediated, meaning that those with skin in the game have little or no involvement in the company at the other end of the chain. Investors tend to own only about 3% of a company at any given time. The notion that that fragmented group will clamp down on executive remuneration, or is interested in the voice of workers or the long-term contribution of the company to the communities that it serves, is either naive or disingenuous.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Lady for giving way in a speech on an important issue. Does she agree that the Government’s social responsibility does not lie simply in assessing how much GDP goes on benefits? It should be a living, breathing policy that takes account of the changing needs of the communities that the hon. Lady has discussed, rather than a document that is assessed at Budget time. Does she further agree that the previous Government’s big society ideal was never given the resources that it should have been given to take off? That should be considered and, indeed, reviewed.

[Louise Haigh]

I completely agree with those sentiments. Corporate responsibility is too often tacked on at the end of a company’s activities, in a completely separate report. It is not embedded throughout the organisation as it should be, which is why a strong, effective governance regime is vital to ensure that companies respect the communities in which they operate, the environment and their social impact.

At ASOS, despite the shocking evidence with which it was presented of mistreatment of its workforce, investors went ahead and backed the bumper pay package for executives. Why rock the boat when investors are getting their return? Since advisory votes on executive pay came into force, CEO pay has continued to climb to obscene levels, and the average vote in favour of remuneration packages has been a shocking 93%. The Kay review, commissioned by the coalition Government, which presented a fantastic analysis of the issues but fell disappointingly short on recommendations, said that

“the pursuit of shareholder value has distorted corporate principles”.

Rather than push against that open door, the Government seem intent on clinging to an outdated and inappropriate model that puts the interests of international shareholders above all else—above the interests of the workforce, of stakeholders, of supply chains and of the wider community. It does not make economic sense and it is deeply unpatriotic.

Yes, the shares in UK plc may rise and international investors will have their red letter day. What good is that if workers and communities here in this country do not feel the benefit? The Government cling to a model that says that hedge funds on Wall Street are more important, and should have a greater say over the direction of a UK company, than the workers whose mortgages, pensions and livelihoods are dependent on the success of that business. Rather than having a stake in the community, investors are increasingly coming to resemble buy-to-let landlords, skimming off profits with little interest in the community at large, yet they hold all the cards.

As the Bank of England’s Andy Haldane has said, if shareholders hold all the power,

“we might expect high distribution of profits to this cohort, at the expense of ploughing back these profits…or distributing them to workers”.

That is exactly what we have seen. Wealth for the 1% has grown unchecked while wages for the rest have stagnated.

It is not without reason that research and development spend in countries like our own is so low when the focus of investors and directors alike is on maximising the value of shares. That is why we need change. Our companies must look closer to home and above all to their employees, their supply chains and their communities, and give the people they rely on a stake. British workers create the wealth, the services and the products from which shareholders earn their reward. We should give them real influence in the businesses that they work for. We must modernise company law to correct the absurdity that denies employees a say but gives power to hedge funds.

If we give powerful voting rights to overseas investors who speculate in the shares of our major employers, it is right to give the programmer, the secretary, the driver or the picker who works for those businesses some power too. It is not about one or the other. It is about giving employees an equal stake. Having grappled with these issues in practice myself, I know that the big issue is that the more directors are accountable to increasingly anonymous investors, the more our top businesses end up being accountable to no one at all.

Preparing for today’s debate, I was reminded that Keynes wrote that bad ideas die slowly. He also wrote:

“Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

I am not pretending that reform in this area is easy. If we are honest, the reforms to fiduciary duties by the last Labour Government have had little impact, given that conservative legal advice invariably prejudices short-term shareholder interests. That is why transparency has to be at the heart of any reform. Large companies should report qualitatively on their impact on their communities, their environment and their workers, in the interest not merely of corporate accountability but of good management.

Reforms to section 172 of the Companies Act 2006 will inevitably be an important part of that. The Financial Reporting Council made the point that more focused reporting on exactly how companies are complying with the various elements of section 172 is crucial. That may very well have to become a requirement, as surveys suggests that a large number of shareholders are not aware of the very section on which it is their duty to hold directors to account.

Today Mark Carney supported better reporting on climate change risk, which is undeniably material for a growing number of sectors. However, I have real concerns about how effective section 172 is. After all, it was introduced back in 2006 and since then we have seen some extreme examples of corporate excess and recklessness that have brought the economy to its knees and led to a bail-out of such astonishing proportions that we will still be paying for it for decades to come. Section 172 has been in force for more than 10 years, and in that time a director has had to have regard to the interests of the company’s employees, the impact of the company’s operations on the community and the environment, and the desirability of the company maintaining a reputation for high standards of business conduct. It would be almost laughable if it were not such a desperate example of the corporate neglect which has maligned this country for decades.

Throughout that time we have lacked a regulator with teeth, yet still the FRC says that it should be incumbent on shareholders to enforce the provisions of section 172. The fact that the FRC is only now commencing its investigation into KPMG’s audit of HBOS, some nine years after the collapse and bail-out, should tell us all we need to know. There is a serious problem with the enforcement of our corporate governance regime. The Government need to go much further if they want to see meaningful change. I am not convinced by the argument that we should leave such a crucial aspect of company law to shareholders who have so consistently demonstrated little interest in it and an authority seemingly unwilling to take action.

In its current definition, the duty to promote the success of the company under section 172 is seen as serving shareholder interest. As John Kay found in his review of equity markets, with share trading playing an increasingly important role in the strategy of investors, it is not at all clear how short-term investors can support the long-term good of companies. The long-term success of a company must therefore be codified in changes to section 172.

Changes in the legal duties of directors to prioritise the long-term success of the company at large over shareholders would be a significant shift, but it is one that many voices that previously advocated only minimal change are now calling for. Employees having a statutory role at board level must also be a line in the sand. The Government must not row back on giving workers an equal stake and, with it, bringing their different priorities and fresh perspective to the boardroom. Diversity is vital in governance terms—not for moral or representative reasons, but to challenge and address what Margaret Heffernan has termed “wilful blindness”.

With that in mind, I would like to ask the Minister what proposals she has discussed and considered. Much has been said about introducing a statutory role, with a third of the board being drawn from workers, whose representatives would themselves be elected. Has the Minister considered those specific proposals? What assessment has she made of the quality of reporting on environmental, social and governance issues and the impact it has had on internalising costs? Has the Minister considered the need for advisory panels to sit alongside the board, which would draw from those directly referred to in section 172, bringing a much-needed voice to directors’ responsibilities under that section?

Surely the long-term goal has to be allowing other stakeholders an equal stake in holding the board and directors to account. The Government simply cannot afford to row back on that reform. At the heart of it is the crisis that Carney referred to: people lack a stake, and they cannot see a way to exert influence.

When I was working in the City of London, the risk taking, bonuses and pay packets were viewed as the symbol of the corporate neglect that has done so much to shake trust in big business and that played its part in bringing our economy to its knees. No doubt those things were and still are grotesque, unchecked by shareholder power and in need of urgent reform. There is a crisis of legitimacy over who governs our companies and, in turn, whose interests they act in. The Government would be wise to seize that with both hands, because we cannot ignore it any longer.

Tidal Lagoons and UK Energy Strategy

Jim Shannon Excerpts

Tuesday 6th December 2016 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to serve under your chairmanship for the first time, Mr Paisley. It is good to have a colleague in the Chair. I also thank the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) for presenting such a good case.

Strangford lough in my constituency is one of the most beautiful loughs in the whole world. I defy any Member of this House to come and have a coffee and a delicious scone in Harrisons of Greyabbey, sit on the veranda looking over the lough and argue that the view could be beaten. I would argue that the view could never, ever be beaten. Not only is Strangford lough the most beautiful, but it has the potential for so much energy production. Indeed, we were proud to trial the world’s first tidal current energy turbine, the SeaGen. Tidal power is an important part of any renewable energy plan as it is a guaranteed source of power and, unlike wind power, can be relied on every day. Generating electricity from two massive underwater propellers, the SeaGen was lowered into place in 2008 and bolted to the seabed in one of the world’s fastest tidal currents.

Strangford lough is one of Europe’s most protected areas, providing unique habitats for marine and bird life. It is a Ramsar area and also an area of special scientific interest. The location was chosen for the turbine project because it offered sheltered waters close to shore, but still exposed the generating device to the full rigours of the tides. The pull of the waters of the Narrows in Portaferry and Strangford is significant and in the early stages some of the blades were damaged. SeaGen generated 1.2 MW: enough power for around 1,500 homes.

There were of course environmental aspects and questions. A study of the environmental impact of SeaGen will, I hope, open the door for other such projects. There had been fears that large marine mammals such as seals would be hit by the propellers. We have a good colony of seals in Strangford lough. The environmental monitoring report that gave the all-clear stated:

“There have been no changes in abundance of either seals or porpoises detected which can be attributed to SeaGen; seals and porpoises are continuing to swim past SeaGen, demonstrating a lack of any concern or hindrance.”

[David Simpson (Upper Bann) (DUP)]

Does my hon. Friend agree that, as the United Kingdom prepares to leave the European Union, it is essential that we get the energy strategy correct across the whole of the United Kingdom, so that we can offer companies a competitive spirit for business?

[Jim Shannon]

I thank my hon. Friend for that intervention. As a businessman, he focuses on the issues that we want the debate to focus on. The Minister will, I hope, respond to that.

The SeaGen project ended and was dismantled in January this year. The years of operation have opened the door for other such tests. There has been consideration of similar projects on a larger scale in other coastal areas, so the SeaGen project in Strangford lough has given the necessary information to the Department to use for further projects. Perhaps the Minister will give us some idea of how the SeaGen project can be used for the furtherment of other projects.

My opinion is clear: the less dependent we are on crude oil and its supply from other countries, and the more we can get from our own renewable resources, the better. I support such projects for that reason.

The levy control framework, established by the former Department of Energy and Climate Change and Her Majesty’s Treasury, set a cap for the forecast costs of certain policies funded through levies on energy companies and ultimately to be paid for by consumers. Since November 2012, the framework has covered three schemes to support investment in low-carbon energy generation: the renewables obligation, feed-in tariffs and contracts for difference. It sets annual caps on costs for each year to 2020-21, with a cap of £7.6 billion in 2020-21, in 2011-12 prices. According to the latest forecast, the schemes are expected to exceed the cap and will cost £8.7 billion by 2020-21. That is equivalent to £110—around 11%—on the typical household fuel energy bill in 2020. That is £17 more than if the schemes stayed within the cap.

I will conclude shortly. I understand other Members want to speak, so I will not take extra time. We need to do more, and projects such as SeaGen at Strangford lough are possibly the way to go as they also seek to address the environmental impact duty that we must stick by. The environmental reasons for renewable energy are clear and compelling. Although I am not someone who would ban the use of fossil fuel or nuclear reactors as needed, I do feel we should make the most of the great resources that we have in our tidal energy provision. I am anxious to see how we can develop that in Strangford lough and throughout the Province—indeed, across this great nation of the United Kingdom of Great Britain and Northern Ireland—so that we rely less on fossil fuels and other energy sources that are not on our doorstep.

--- Later in debate ---

[Jesse Norman]

That is a perfectly reasonable question. Historically, the expectation has always been that technologies have to demonstrate that they are capable of benefiting from support. Given that the distance in the range of cost is so high, a judgment has been made that that technology has not done so at the moment, but other technologies have succeeded in doing so.

Other colleagues raised issues such as the rate at which costs might fall with other lagoons, the degree to which different projects could inspire different learning, and the first mover advantages, all of which should be resolved and discussed in the context of the Hendry review.

[Jim Shannon]

In my contribution, I mentioned the SeaGen project in Strangford lough in Northern Ireland—a pilot scheme sponsored by the Government to get results in relation to the environment. Perhaps the Minister is going to tell us what the results of that pilot scheme are so that we have some idea of what we are doing now.

[Jesse Norman]

I am sorry to have given up time for that intervention, because I was coming to that point. SeaGen, as the hon. Gentleman recognises, was a research test bed, and it is being decommissioned now. It received a £10 million grant from the Department, and those conclusions are being carefully assessed. It is a project in which there has already been public investment. [Official Report, 14 December 2016, Vol. 618, c. 6MC.]

It is clear that we cannot allocate subsidies to every technology that asks for them. We have said that our focus will be on key technologies that have the potential to scale and deliver long-term cost savings, in which the UK has a comparative advantage and whose costs to consumers are acceptable.