Leaving the EU: the Rural Economy

Debate between Andrea Leadsom and Ian Blackford

Tuesday 17th January 2017 Commons Chamber

[The Secretary of State for Environment, Food and Rural Affairs (Andrea Leadsom)]

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“recognises the importance of the rural economy to the UK, not least the food, farming and fishing sector which is worth £108 billion to the economy and employs 3.8 million people in communities across the whole of the UK; welcomes the continuity and certainty the Government has provided by guaranteeing the same level of funding to the agricultural sector that it would have received under Pillar 1 of the Common Agricultural Policy until the end of the current Multiannual Financial Framework in 2020; further welcomes the Government’s undertaking that all structural and investment fund projects, including agri-environment schemes and schemes under the European Maritime and Fisheries Fund that offer good value and fit with domestic objectives and are signed while the UK remains a member of the EU will be honoured for their lifetime even when this is beyond the UK’s departure from the EU; welcomes the opportunity that leaving the EU will bring to improve the management of fisheries in UK waters and to champion sustainable fishing; supports the continued investment in superfast broadband and the introduction of a Universal Service Obligation; shares the Government’s commitment to securing a deal in leaving the EU that works for all parts of the UK; and notes that one of the best ways of supporting rural communities is by having a strong economy that works for everyone.”

It will not surprise the hon. Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr) that I do not quite see it in the same way that he does. I thank him for giving us the opportunity to debate the rural economy, which is a vital part of our national economy. Hon. Members of all parties will know how diverse the rural economy is, and much of it is underpinned by our food, farming and fisheries sectors. Those industries have shaped all four parts of the UK and continue to do so. They are central to our heritage, landscapes and economic wellbeing, generating £110 billion for the economy each year and employing one in eight of us in all parts of the UK. We should all be proud of the world-class food and drink those industries produce and the role they play in our national life. The rural economy matters enormously.

Although leaving the EU offers huge opportunities to the farming and fisheries sector, it is vital that we provide the industry with as much continuity and certainty as we can. That is why we have already provided reassurance to all farmers across the UK that they will receive the same level of financial support under pillar one until 2020. For rural development programmes, agri-environment schemes and the European maritime and fisheries fund, we will guarantee projects that are signed before we leave the EU for their lifetime, even when this stretches beyond our departure from the EU.

The Government will also ensure that the devolved Administrations are funded to meet the commitments they have made under current EU budget allocations. Given that the administration of EU funding is devolved, it will be for those Administrations to decide the criteria used to assess projects.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

I would like to believe the promises the Government are making, but, of course, the Government have form. If we go back to the convergence uplift criteria, Scotland was supposed to be rewarded with £223 million of funds from the EU, but we are getting only 16%. We were promised a review in 2016—it has not happened. When will it happen, and when will our crofters and farmers get what is due to them? The real question on the devolution of agriculture to the Scottish Government and Scottish Parliament is about making sure we get the correct funding—it is about what happens not up to 2020 but after that.

[Andrea Leadsom]

I do recognise the hon. Gentleman’s point, and it is something I continue to look closely at in my Department. I will keep him up to date with progress on it.

Leaving the EU will give us the chance to develop policies for the rural economy that are bespoke to the needs of this country rather than the different approaches and circumstances of 28 different member states. As Secretary of State, I have made very clear my two long-term ambitions: first, to make a resounding success of our world-leading food, farming and fisheries industry—producing more, selling more and exporting more of our great British food; and, secondly, to become the first generation to leave the environment in a better state than we found it in. These ambitions look far beyond tomorrow; they are about long-lasting change and real reform. They form the bedrock of a balanced approach to policy, and the success of one is integral to the success of the other.

Energy Network Charges

Debate between Andrea Leadsom and Ian Blackford

Tuesday 5th July 2016 Westminster Hall

[Ian Blackford]

I am grateful to my hon. Friend for making that very valid point, which was raised in a recent Ofgem report. Perhaps the Minister will reflect on what we can do to give support to those on off-grid connections.

A recent study by Ofgem noted that households in the north of Scotland that use electricity for heating would benefit from a cost reduction of about £60 a year if there was a universal network charge. That would have a significant impact on the budget of someone on a low income or a pensioner.

Not only are we faced with high transmission charges, but many consumers in the highlands and islands suffer from a lack of choice in energy provision. As my hon. Friend just mentioned, many households cannot access grid connections for gas, among other things, and have to rely on other sources of fuel. It is often a choice between electricity and domestic heating oil. With such limitations, the last thing we need is price discrimination—that is what it is—being foisted on us by a Westminster Government. Where people live should not result in them being penalised through paying higher network charges. Where is the one nation that the Government speak of? It should be about equity and fairness, but that does not exist today.

We have heard a lot since the European referendum about those who are left behind. We often hear that it is a priority for this Government to tackle fuel poverty, but fuel poverty is exacerbated by having higher network charges in the highlands and islands. I will focus on fuel poverty because there is a clear link between higher prices resulting from network charges and fuel poverty.

I am grateful to Changeworks, which has estimated the percentage of households in fuel poverty in the highlands region. It bands each locality in the highlands into groups. On its calculations, no district in my constituency has less than 47.9% of households in fuel poverty; indeed, in a number of districts fuel poverty is evident in at least 73.5% of households. I look across from my constituency to Na h-Eileanan an Iar, where fuel poverty affects 71% of households. That should shame every single Member of this House and every Government Member. Why should we accept that such a percentage of households in a wealthy country such as this should be in fuel poverty? It should be a priority for the Government to tackle the issue and eradicate such high levels of fuel poverty.

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

I am listening carefully to the hon. Gentleman, but he surely must accept that while the UK Government are doing all they can to support Scotland, this is a devolved issue, so the Scottish Government are responsible for tackling fuel poverty in Scotland? He will be aware that only last week, the Scottish Government stated that their 2016 eradication target would not be met. I am very happy to talk about what the UK Government are doing, but I am not comfortable with him blaming it all on the United Kingdom. It is a devolved matter.

[Ian Blackford]

I hope that people in Scotland have listened to what the Minister just said. It was quite astonishing: blaming the Scottish Government for fuel poverty that is visited on households in Scotland as a direct response to things that are the responsibility of this Government and to the failure so far to deal with the matters we are discussing today, such as network charges. I have outlined to the Minister that people in the highlands and islands are paying 84% more for connection charges than people in London. That clearly demonstrates that it is the responsibility of the UK Government. How dare the Government turn around and blame the Scottish Government! The situation has arisen because of austerity and failure to take opportunities, and the responsibility for that lies fairly and squarely in the hands of Westminster.

--- Later in debate ---

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

This is an incredibly important debate, and I congratulate the hon. Member for Ross, Skye and Lochaber (Ian Blackford) on securing it. Over the last year we have had numerous debates in Bill Committees and elsewhere about the vital importance of addressing fuel poverty. On that, we are absolutely as one.

I also agree with the hon. Member for Brent North (Barry Gardiner) that it is not that those outside of Scotland are doing fine and those in Scotland are being somehow penalised by the Westminster Government. While I do not think that any of the hon. Gentlemen from the Scottish National party would say that is the case, that is the impression they are giving. As the hon. Member for Brent North made clear, fuel poverty affects the whole of the United Kingdom, including Northern Ireland, which has a different distribution and transmission network. This is an issue for all of us and we need to address it as a United Kingdom, taking account of the interests of all our citizens.

[Ian Blackford]

In presenting this debate, I have tried to argue for fairness across the UK. I reflected on the fact that we have 14 regional markets, which I believe to be unfair, because that penalises people based on where they live. I argued about the specific circumstances of the highlands, but specifically I am asking the Minister to deal with that by creating a universal market throughout the United Kingdom so that everyone is treated in the same way. That is the correct manner for this House. It is not about dividing people; it is about recognising fairness and equity.

[Andrea Leadsom]

I will certainly address those issues; I wanted to make it very clear up front how important they are.

The costs of distributing and transmitting energy vary by location. Those differences are reflected in the charges paid by generators and consumers in a particular geographic area. The idea behind that cost-reflective approach is that it helps to drive down costs for all consumers, and it is proving successful. For example, Ofgem estimates that network costs are 17% lower in 2014 than before privatisation, while system reliability remains above 99%. However, it is right that the Government should consider action if one region has markedly different network charging levels from any other. It is also true that network charging mechanisms could never provide an efficient or effective way of providing targeted support to specific groups of vulnerable consumers within a region. I will explain some of the actions we are taking on both counts to ensure consumers right across Great Britain are receiving a fair deal.

The particular challenges of electricity supply in the north of Scotland relate primarily to the relatively large and sparsely populated terrain, meaning that it inevitably costs more to distribute electricity there than elsewhere. I reassure all hon. Members that the UK Government remain committed to ensuring that consumers in the north of Scotland do not bear an unreasonable burden of those electricity distribution costs. The response we published yesterday to our consultation on electricity distribution costs in the north of Scotland confirmed we will continue the hydro benefit replacement scheme at its current level. That scheme helps to protect electricity consumers in the north of Scotland by providing £58 million of assistance to the area, which is worth an average of £41 to each household in the region and is funded by charges on all licensed suppliers across Great Britain.

In addition, our response confirms that the Government remain committed to GB-wide funding for a Shetland cross-subsidy. That will protect consumers in the north of Scotland from the costs of replacing the ageing Lerwick power station in around 2020 and will be delivered through the hydro benefit replacement scheme. The full details will be confirmed once the replacement of Lerwick power station is known. That will have the effect of reducing costs for all consumers in the north of Scotland from the end of the decade.

The Government certainly note the calls, not least from SNP Members, for a move to a single national network charge, but we continue to believe that the priority must be minimising overall network costs for consumers across GB. As I mentioned, network charges vary regionally to reflect the costs of running the network in a specific area and the number of consumers those costs are spread across. Such a significant move away from the important principle of cost-reflective charging would be unhelpful as it risks weakening the pressure on each network company to keep overall costs down for its local stakeholders, which could lead to an overall increase in costs.

[Ian Blackford]

Will the hon. Lady give way?

[Andrea Leadsom]

I will in a minute. It is also important to note, as the shadow Minister pointed out, that a move towards a single national network charge would produce winners and losers. All hon. Members will be aware that in October 2015, Ofgem published a detailed analysis of regional differences in transmission and distribution network charges. It found that, for Scotland specifically, 1.8 million households would face higher bills through a national network charge while 700,000 would see reductions. For Great Britain as a whole, 16 million households would face higher bills while around 11 million would see reduced bills. Ofgem concluded that there is no compelling case, from a regulatory perspective, to move to a national network charge. However, we will of course continue to consider any new evidence that is presented on the matter.

[Ian Blackford]

I am grateful to the hon. Lady for giving way; she has been very generous with her time. Does she appreciate that we have a universal market for the delivery of telephone and broadband and we all pay the same price, regardless of where we live? We pay the same price for a postage stamp. We are still not addressing the fundamental point: people are paying higher prices for transmission of electricity simply because of where they live. We are generating higher levels of fuel poverty as a direct result of that.

On the whole argument about winners and losers, this is about fairness. The Minister talks about being “one nation”; we should be talking about delivering fairness to everybody and not discriminating against people, which is exactly what this Government are doing.

[Ian Blackford]

It is disrespectful how my country has been treated by this Government.

[Andrea Leadsom]

Thank you, Mrs Main.

As with other aspects of our network charging regime, Great Britain’s transmission charging regime is governed by the principle that the user pays. In other words, the costs of operating and maintaining the system are met by those who benefit from it: generators and demand customers. That ensures the economically efficient use of the transmission network and limits the overall cost to consumers across the country. I say to the hon. Member for Ross, Skye and Lochaber that it is not a postal system; it is a transmission system. He makes the case that there is one cost for a postage stamp. In a transmission system, the clear case has been made that locational pricing is needed to keep costs down for all, as that makes it more efficient for everybody. Otherwise, if I can simply add costs to the system in the knowledge that those will be socialised right across Great Britain, I will not face those competitive pressures to keep costs down.

[Ian Blackford]

indicated dissent.

[Andrea Leadsom]

I see the hon. Gentleman rolling his eyes but he must look at the evidence. He must also bear in mind that, in Scotland alone, there would be 1.8 million people whose bills would go up as a result of the measure he proposes.

The higher transmission charges for generators in certain areas of the country reflect the costs they impose on the transmission network in transporting electricity to demand centres. Conversely, demand customers in generation exporting areas pay lower transmission charges. The hon. Gentleman will be interested to note that that means Scottish generators pay higher transmission charges than their counterparts further south and nearer the centres of demand, but Scottish consumers face significantly lower transmission charges.

The hon. Gentleman rightly points out that fuel poverty is a big subject for both the UK Government and the Scottish Parliament, and is a devolved matter. This Government are fully committed to tackling fuel poverty, and it is clear that we must look beyond network charging mechanisms to do so. We absolutely want to be there right alongside the Scottish Government in dealing with fuel poverty, and I will run through some of the actions we are taking to tackle that issue.

Last week we published our proposals to reform the energy company obligation. We proposed to increase the support for low income and vulnerable households from £310 million to £450 million per annum. Scotland certainly receives more than her fair share of ECO measures with 40 measures per 1,000 households, compared with 28 measures per 1,000 households in England. There is clear evidence that through our fuel poverty measures we are seeking to support Scottish households in fuel poverty.

We also support low income households through the warm home discount. We have worked with both the Scottish and Welsh Governments on how those policies could be amended to tackle the root causes of fuel poverty in all UK nations. The devolved nature of fuel poverty action allows different nations to take measures appropriate to them, and each nation has policies tailored to address fuel poverty at the local level. We will work with the Scottish Government to set up a process and methodology for evaluating the impact of schemes implemented in Scotland—on their own and in conjunction with schemes implemented in England and Wales—on the GB energy market and any relevant UK commitments and obligations.

We are determined to help households facing the highest energy costs, including those that are off the mains gas grid, which are much more likely to face higher energy costs and more than twice as likely to be in fuel poverty as households connected to mains gas. Last year, we announced £25 million in funding through the central heating fund, which is designed specifically to help support non-gas fuel-poor homes by funding the installation of complete central heating systems.

Strong competition among suppliers is a key way to keep prices down, drive innovation and improve customer service. We have seen an unprecedented number of new companies enter the market over the last couple of years. There are now more than 40 companies competing to supply households in Great Britain. In 2010, there were just seven small suppliers and the big six.

[Mr Philip Hollobone in the Chair]

We have worked with industry to cut the time it takes to switch supplier from five weeks to a maximum of 21 days, and we are working with Ofgem to move to reliable next-day switching. The number of customers switching supplier continues to rise with 2 million energy accounts switched just between January and March this year—25% more than in the same period last year. As we know, on average consumers can save hundreds of pounds on a dual-fuel bill by switching, which is incredibly important for keeping their costs down.

We are taking a range of different actions and have seen some improvements through lower energy network costs and lower energy bills, but it is clear that this area requires continued attention. I thank all hon. Members who have participated in this valuable debate.

Oral Answers to Questions

Debate between Andrea Leadsom and Ian Blackford

Thursday 11th February 2016 Commons Chamber

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

8. If she will create one national electricity distribution market.

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

The Government do not intend to introduce national electricity distribution pricing as this would weaken each network company’s local accountability to its customers and risk an overall increase in network costs across Great Britain. We are currently consulting, however, on the level of protection provided to consumers in the north of Scotland, which amounts to an average of £41 per household this year.

[Ian Blackford]

I thank the Minister for that answer, but may I point out what she said just before Christmas:

“It is not right that people face higher electricity costs just because of where they live”?

I agree with her. Why does she not now take action to introduce fairness into the electricity market? Why are people in the highlands and islands paying 2p per kWh more than people elsewhere? Why are people in my constituency being discriminated against? Do the right thing and create a national market.

Fuel Poverty

Debate between Andrea Leadsom and Ian Blackford

Wednesday 3rd February 2016 Westminster Hall

[Ian Blackford]

I am grateful to the Minister for giving way. She said at Christmas that no one should be penalised for where they live. Is it not fair, right and sensible to have a universal market? People should not be penalised for living where they do.

[Andrea Leadsom]

I have just addressed that point. Conceptually, the hon. Gentleman makes a good point, but he must realise that many would be worse off. It is important to note that while fuel poverty is a devolved issue, some of our schemes to help tackle fuel poverty—

Fuel Poverty

Debate between Andrea Leadsom and Ian Blackford

Tuesday 24th November 2015 Westminster Hall

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

I congratulate the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) on securing a debate on such an important topic. I can absolutely assure him that, as my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) explained, we are all here to try to make a positive difference, and my heart is absolutely in this debate.

As we all appreciate in this Chamber, the fight against fuel poverty is a significant challenge. Some 2.35 million households in England were fuel poor according to the latest statistics. In Scotland, as so many Members have mentioned, fuel poverty affects nearly 40% of the population. In Wales, 400,000 households are affected. In Northern Ireland, the figure is nearly 300,000. We all use different measures of poverty, but it is a very serious issue, and the Government are determined to make sure that the price people pay for energy is as low as possible, which is why we have been acting to ensure that the impact on bills of paying for clean energy is controlled, limited and, where we can, lowered. We are also committed to making sure the market works effectively for consumers, including through our commitment to implementing as fast as possible the final recommendations of the Competition and Markets Authority, once those are achieved.

As the hon. Member for Inverness, Nairn, Badenoch and Strathspey knows, action on fuel poverty is devolved. I am sure he and his hon. Friends will be raising their suggestions for action on fuel poverty with the SNP Government in Scotland, as well as with me. I am absolutely committed to the responsibility that we have in the UK to tackle fuel poverty, but I note that alongside different measures of fuel poverty, different approaches are being taken by our nations to tackling the issue.

So there are GB-wide schemes that are designed to tackle the underlying causes of fuel poverty: inefficient housing through the energy companies obligation, and low household income through the warm home discount. We are working with both the Scottish and Welsh Governments on how these policies can be effectively amended to tackle the root causes of fuel poverty in all nations.

The devolved nature of fuel poverty enables different nations to take the action that is appropriate for them. Each of our nations has policies tailored to address fuel poverty at the local level, such as Nest and Arbed in Wales, the central heating fund in England or the home energy efficiency programmes for Scotland.

[Ian Blackford]

Will the Minister give way?