Oral Answers to Questions
Clive Lewis Excerpts(7 years, 11 months ago)
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Harriett Baldwin
The hon. Gentleman is absolutely right to highlight the fact that the UK’s universities are unanimous in expressing the value that they put not only on higher education, but on the potential for those educated in universities to export in due course. He is absolutely right to highlight the fact that all other trade deals would be worse than the current zero-tariff trade deal that we have as a member of the EU.
Clive Lewis (Norwich South) (Lab)
8. What assessment he has made of which groups within the UK population will benefit from planned changes to (a) capital gains and (b) corporation tax.
The Financial Secretary to the Treasury (Mr David Gauke)
Changes to capital gains tax will provide greater incentives to invest in companies. Up to 130,000 individuals a year, including up to 50,000 basic rate taxpayers, are estimated to pay lower tax as a result of the changes to CGT. The further cut to the corporation tax rate to 17% announced at the Budget will benefit over 1 million companies, large and small, supporting UK companies to invest, grow and create jobs.
Clive Lewis
Treasury figures show that just 200,000 individuals will benefit from capital gains tax to the tune of £600 million in the first year—a giveaway of £600 million. On corporation tax, we have the lowest in G7—lower even than Saudi Arabia, Russia and China. At the same time, the Resolution Foundation found that the poorest 20% of families in this country will lose £565 over the course of this Parliament because of the Government’s policies. Where is the social justice in that?
Mr Gauke
One of the hon. Gentleman’s hon. Friends asked earlier about encouraging business investment, which we want to encourage because it is through having an environment in which businesses invest that we see improved productivity, the conditions for growth and people benefiting from higher wages. I say to the hon. Gentleman, and to the House as a whole, that pursuing policies that favour business investment and encourage businesses to invest, such as cutting CGT and corporation tax, is important for all our constituents.
Energy BILL [ Lords ] (Fifth sitting)
Clive Lewis Excerpts(8 years, 3 months ago)
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Clive Lewis (Norwich South) (Lab)
I thank the Minister for her comments. I shall speak against Government new clauses 1, 2 and 3.
Throughout the debate on the Bill—in Committee, on Second Reading and in the other place—we have heard that Government decisions on energy policy, particularly with regard to renewables, have had a corrosive effect on investor confidence. It is appropriate to go through the list again, because it is quite despicable: the solar subsidy has been cut by 64%; the biomass subsidy has been cut; the biogas subsidy has been cut; the green deal has been scrapped; the renewables exemption from the climate change levy has been ended; and support for community renewable energy products has been slashed.
Clive Lewis
I will make some progress through the list before giving way. The Government are attempting to sell off the Green Investment Bank and have baled out of their manifesto commitment by cutting £1 billion from carbon capture and storage. The list goes on. The early closure of the renewables obligations is the next chapter in the long, sorry list that I have just read out.
Oliver Dowden
The hon. Gentleman missed out a few things from his list—for example, the fact that 98% of solar panels were introduced under this Government; or that wind power, which has trebled under this Government, is set to increase by another 50%; or that we are on course to meet our 30% renewables target; or that we have doubled investment in renewables. Perhaps the next time he reads out his list he can add those further points to provide some balance.
Clive Lewis
I will come back to that point. Let us have a look at the renewable energy country attractiveness index, which saw a major reshuffling of the 10 most attractive countries for renewable energy potential and growth. One of the biggest losers was the United Kingdom, which dropped out of the top 10 for the first time since the information was published back in 20013. It was specifically because
“a wave of policy announcements reducing or removing various forms of support for renewable energy projects has left investors and consumers baffled”.
Rishi Sunak
I wonder whether the hon. Gentleman has seen the report from the Climate Action Network, which I understand is an umbrella group of dozens of NGOs involved in climate change, including Greenpeace and Friends of the Earth, which recently ranked Britain the second-best country in the world for tackling global warning, right behind Denmark, and represents a very strong commitment for tackling climate change. I would be interested in his thoughts on that.
Clive Lewis
I will come back to that. I am informed that it relates to climate change commitments, not the renewables that this Government and the previous coalition Government have invested in, or as my list just demonstrated, have been cutting left, right and centre. But let me give you a counter-quote from Neil Woodford, head of Equity Income, one of the best performing funds. In December 2014, he said:
“The electricity industry has for too long been the victim of a misguided, short-term and politically inspired policy mess. The Government has to be held to account for its policy decisions. As long as it (and its predecessors) believes that it can arbitrarily move goal posts in this way, without appropriate economic justification, the more likely it will be that the industry will continue to shun the necessary investment in electricity generation infrastructure that the economy so clearly needs.”
Clive Lewis
I will push on. I have a few more of those chocolate sweets I might give away. If successful, the Government will be going back on their own legislation and closing the renewables obligation for onshore wind a year earlier on 1 April 2016, a date that will not be lost on any hon. Members here. If successful, the Government will have adversely singled out the most cost-effective, low-carbon technology available to us, at a time when the Secretary of State herself admits that the UK is on track to miss its legally blinding EU obligation on renewable energy by an estimated 50 TWh hours, a shortfall of almost 25%.
The Government’s answer is ever more reliance on the EU emissions trading scheme—a scheme, as we have already heard while discussing clause 80, we need less reliance on in coming years, if we are to attain the most cost-effective pathway to our carbon budget commitments. So why is there an almost obsessive compulsion to attack one of the country’s most successful renewable forms of energy?
The only answer I can glean from the debate so far is that it boils down to a few ambiguous lines in the Tory party manifesto which it is fair to question. It says:
“We will end any new public subsidy for onshore wind.”
First, these are not public subsidies. Strictly speaking, the payments come out of bills, not the public purse. While the word “new” is also open to a broad interpretation, let us not forget that this is an existing, not a new subsidy—a subsidy that was already closing as part of the Energy Act 2013.
The Minister will also be aware of the huge amount of consensus and engagement with industry, proper consultation and pre-legislative scrutiny, that arrived at the 2017 wind-up day for the renewables obligation.
James Cartlidge (South Suffolk) (Con)
Will the hon. Gentleman, my fellow East Anglian MP, give way?
James Cartlidge
Is the hon. Gentleman suggesting that billpayers are volunteering that extra per cent?
Clive Lewis
I will come to the point about the cost to billpayers later in my speech. Even with the retrospective grace period the Government have announced, many renewables companies will be adversely affected. Michael Rieley, senior policy manager for Scottish Renewables, said:
“However, many of our members will be bitterly disappointed that ministers are not going to allow projects which have submitted planning applications to be given a grace period.”
More importantly, as I have mentioned already, this retrospective chop-and-change approach by Government is damaging investor confidence in the wider energy sector.
Oliver Dowden
Will the hon. Gentleman give way to another East Anglian MP? [Interruption.] I do not agree with the designation but people at a higher pay grade have determined that.
Oliver Dowden
The hon. Gentleman talks about the poor investment record, and says that companies are being put off investment. Can he confirm that nearly £52 billion has been invested in renewables since 2010 when the Conservatives first came to power?
Clive Lewis
I have no doubt that they have made that investment in renewables. However, I am talking about investor confidence. I will give an analogy of investor confidence. I was in the Army, where we orienteered by taking a reference point from something 100 or 200 metres away that we could see on our map. However, if you want to make the best progress—if you want to allow your men to make the best speed—you look at the far horizon, find a point and aim for it.
That is what this is about: investor confidence for the long-term future. What the Government have done, with one fell swoop, by trying to end the renewables obligation early, is say they can chop and change as they see fit for political motives. That sends the wrong signal to the market and investors.
Simon Hoare (North Dorset) (Con)
I am grateful to the hon. Gentleman for being generous with his time. May I put to him this countervailing thought? The onshore wind sector is now very mature. It has got a good basis and is “proving its worth”. Is the hon. Gentleman saying that it should always be subsidy-reliant?
I do not buy this lack of market confidence. Paris and everything else point to a decarbonisation of energy generation. Investors are not going to have that policy pulled from under their feet. That should give plenty of market confidence to the private sector and others to invest. To have them continually drip-fed public money, irrespective of which purse it is taken from, has to stop. If the market pretends to be surprised by that, the Government would be surprised, because our policy was trailed very well months in advance of the election.
Clive Lewis
I thank the hon. Members for their interventions. We are not talking about subsidies ad infinitum. We are just saying stick to the plan; that is all we are saying. Whether it is solar or wind energy, subsidy should be seen as a glide path. What the Government have done is chop the wings off. I have lists of quotes from investors who will say that this is not the best way forward.
A report last week from Bloomberg New Energy Finance research forecast that these measures will see the UK lose at least 1 GW of renewable energy generation, enough to power 660,000 homes over the next five years. The figures suggest that after 2020 the renewables infrastructure will collapse to almost nothing because of a lack of investment.
David Hostert, the analyst behind the research, said:
“Without some form of change in policy support, we could see investment drop off a cliff after 2019.”
Meanwhile, Maria McCaffery, chief executive of RenewableUK, said:
“The Government’s decision to end prematurely financial support for onshore wind sends a chilling signal not just to the renewable energy industry, but to all investors right across the UK’s infrastructure sectors. It means this Government is quite prepared to pull the rug from under the feet of investors even when this country desperately needs to clean up the way we generate electricity at the lowest possible cost—which is onshore wind. People’s fuel bills will increase directly as a result of this Government’s actions. If Government was really serious about ending subsidy it should be working with industry to help us bring costs down, not slamming the door on the lowest cost option.”
I come back to the point on bills, Let us look at what this saves the average household. According to the Government’s own assessment, the changes will save just 30p on consumer annual energy bills and increase the UK’s carbon emissions by 63 million tonnes.
Ultimately, these measures are a backtracking, chaotic travesty. They make no sense, punish one of our most cost-effective and successful renewable industries and endanger this country’s energy security by undermining investor confidence. As such, I urge the Minister to drop them.
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
Tempted though I am to talk about solar, carbon capture and the Green Investment Bank, I will not go over issues that have been well covered in debate in both the Chamber and this Committee. Instead, I will focus on onshore wind.
As part of the Bill, the Government propose to close the renewables obligation to new onshore wind projects from April 2016, one year earlier than originally planned. As the only current mechanism that enables large-scale onshore wind to enter the power market, the proposed early closure of the RO poses a significant threat to the future of the onshore wind sector and the UK’s growing green manufacturing, export and investment potential, while increasing the difficulty and cost associated with achieving our decarbonisation targets.
We agree that swift passage of the Bill with clear and consistent RO grace period provisions is needed in order to provide certainty to investors in the onshore wind sector as quickly as possible. The renewables industry fears that the longer legislative uncertainty over RO closure persists, the greater the risk of otherwise eligible projects running out of time to deliver under the proposed grace periods. We share the concerns of the hon. Member for Southampton, Test in that respect.
We thank the Government for having the foresight to include grace periods in relation to onshore wind projects, but feel that the grace periods put forward by the Government do not quite fulfil the Conservative party’s own manifesto promise, and we urge further consideration in that respect. Both the Minister herself and the hon. Member for Daventry have spoken in this Committee of the manifesto commitment to ending “any new public subsidy” and allowing local people to “have the final say”.
Indeed, the Minister stated clearly her intent at the Energy and Climate Change Committee of 20 October 2015, when she pointed out that the primary purpose of the grace periods was ensuring,
“that those who have spent money in a significant investment and achieved everything technically to meet the cut-off date, but through reasons beyond their control have not actually made it, are not penalised for reasons beyond their control”.
The Conservatives have perhaps been true to their word on the first point, but by closing the RO one year early, they are not necessarily allowing the people in Scotland, Northern Ireland, Wales and England who have agreed to site wind farms in their area to have the final say unless, as a minimum, more comprehensive grace periods are implemented. We see much cross-party support in this House for such a consideration.
I would like to take this opportunity to thank Ben Williams and Katy Stout of the Department of Chamber and Committee Services for assisting us in the inclusion of such a complex set of amendments. While I am on the subject of the extremely rare occasion when a Member of Parliament gives praise where it is actually due, instead of taking it for himself, I would also like to thank Scottish Renewables, RenewableUK and Energy UK, among others, for their significant contributions in respect of these amendments.
I apologise to the Committee in advance, but I would like to take some time to put on record a detailed explanation of the intent of each amendment, which should assist our collective decision-making process. Amendments (b) to (r) relate to new section 32LJ of the Electricity Act 1989, inserted by new clause 2, on the approved development condition. The new section sets out the Government’s grace period criteria for projects that may receive renewables obligation certificates after the 31 March 2016 deadline. However, the current grace periods do not cover a number of circumstances in which an onshore wind developer could reasonably have been expected to continue to receive support under the ROC regime but are excluded because of the 18 June 2015 deadline.
Amendments (b) and (c) are technical and are required to fix inconsistencies so that all of the amendments, taken as a whole, make sense when read together with the existing legislation. Amendment (b) is required because of the definition of planning permission in new section 32LJ(7). The grace period condition covers appeals and can therefore only cover applications under the Town and Country Planning Act 1990 and the Town and Country Planning (Scotland) Act 1997, since a right of appeal only arises in respect of such applications. The amendment limits the application of the grace period condition to such cases. Amendment (c) is required because amendment (o) now covers judicial review cases and there is therefore no need to refer to judicial review within new section 32LJ(4)(b)(i).
Amendments (d) and (f) ensure the availability of the grace periods to cases of non-determination, whereby the statutory period for the determination of a planning application expired on or before 18 June 2015, but where a time extension had been agreed between the developer and the planning authority which expired after 18 June. Amendment (d) covers examples of projects which receive permission after 18 June 2015 following a non-determination appeal, where extension of time for determination has been agreed following the expiry of the statutory period before 18 June. However, it does not benefit projects where an extension of time has been agreed and which subsequently received planning permission without an appeal. Amendment (f) is, therefore, required to cover projects where an extension of time has been agreed and which subsequently received local planning permission without an appeal.
These amendments are fair because they avoid penalising developers who seek to negotiate with a planning authority rather than appealing for non-determination immediately following the end of the statutory time period for such a determination. A case study for this would be the Binn Eco Park, Perthshire, for which I am happy to provide a synopsis, should one be required.
Amendment (h) ensures the availability of grace periods to cases where an application has been called in by Ministers. The amendment covers the situation where the statutory period for the determination of the planning application expired on or before 18 June but the application was referred to the Secretary of State, Welsh Ministers or Scottish Ministers and was subsequently granted after 18 June. The amendment is necessary to ensure that projects for which an application for planning permission was submitted within sufficient time to allow a decision to have been granted prior to 18 June, but which were subsequently called in and then granted, are not unfairly prejudiced.
Amendment (i) covers the case of projects that have had local planning permissions resolved on or before 18 June but were technically granted by the planning authority after that date. This amendment is fair because it covers projects where there was approval by the local planning committee on or before 18 June 2015 but an official written consent notice was given after that date. There are a number of projects where recommendations to approve were made prior to 18 June but delays stemming from pre-election purdah or resource constraints in local authorities meant that projects did not receive final consent or a full committee resolution until after this point. A great deal of investment will have gone into projects in good faith and without foreknowledge of the cut-off point of 18 June. A case study would be Twentyshilling Hill, Dumfries and Galloway, which is, of course, in the constituency of our Scottish Conservative MP, the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale.
Amendment (j) covers applications for section 36 consent made before 18 June, where the consultation period for local authorities and others had expired on or before 18 June. Industry believes this amendment should address a significant anomaly over eligibility for projects consented under the section 36 regime, compared to those consented under the Town and Country Planning Act 1990 and the Town and Country Planning (Scotland) Act 1997 regimes. Under section 36 of the 1989 Act, the relevant planning authority is not the decision taker but can object to the proposal, after which there must be a public inquiry and then a decision by the Secretary of State or devolved Minister, as appropriate. This process is analogous in practice to a refusal under local planning, followed by an appeal. While the Government’s grace period provisions, as drafted, would allow a successful appeal after 18 June to become eligible for the grace period, the provisions do not cover this analogous situation under section 36. This means that small extensions of larger sites, which must follow the section 36 route, are, in particular, treated disadvantageously in respect of grace period eligibility compared to sub-50 MW stand-alone developments.
Sub-paragraph (iii) also reflects the need to provide for cases that do not go to inquiry but where the other provisions of the amendment apply, in addition to cases that do go to inquiry. Were this not to be included, section 36 applications ultimately issued permission without a local authority objection and without an inquiry would be penalised in comparison with those which did go to inquiry.
Amendment (k) covers applications for consent made under the Planning Act 2008 before 18 June and when a deadline for receipt of representations has passed on or before 18 June. The amendment ensures that projects requiring a development consent order are eligible for the grace period in the same circumstances as an equivalent project requiring a section 36 process.
Chris Heaton-Harris
We had a conversation earlier—I believe the hon. Gentleman was in the room—about the importance of interconnections and what they bring, including risks, when it comes to our continent. To a certain extent, I agree with him.
I will start by doing something quite unique in this debate: quote the Conservative party manifesto verbatim, not because, as my hon. Friend the Member for North Dorset said, I did not read it in the first place—that would be a slur beyond belief—but because this whole debate is essentially dancing on the head of a pin about how words should be used. Let me start with the opening salvo. The bolded headline is:
“We will halt the spread of onshore windfarms.”
That is fairly definitive and certain: we are going to stop any more onshore wind farms. The manifesto goes on to say
“Onshore wind now makes a meaningful contribution to our energy mix and has been part of the necessary increase in renewable capacity. Onshore windfarms often fail to win public support, however, and are unable by themselves to provide the firm capacity that a stable energy system requires.”
This is the bit we are debating today:
“As a result, we will end any new public subsidy for them and—
to help the hon. Member for Stalybridge and Hyde, that is “and”, not “and/or”—
“change the law so that local people have the final say on windfarm applications.”
Clive Lewis
Will the hon. Gentleman read the next paragraph in his party’s manifesto, which talks of
“committing £1 billion for carbon capture and storage”?
I would like to hear his comments on that, because the Chancellor has clearly cut that £1 billion pledge, which was in black and white in his manifesto. Government Members chop and change when it suits them, which makes our point about investor confidence.
Chris Heaton-Harris
I thank my hon. Friend; I could not have put it better myself and that is handy, because I was quoting from a Library document and I could not have told hon. Members what the next paragraph would have been, so I very much appreciate my hon. Friend’s help.
I gave a bit of a history lesson explaining why I set up what was almost a caucus, to use American terms on the day we are getting the results of the Iowa presidential caucuses. I think I could say that the 101 Members of Parliament I got to sign a letter and then campaign pretty hard were a caucus. The caucus that I led—it was not just me leading it; there were plenty of people taking a strong lead in this area—was certain about what it wanted to achieve when it came to the future policy for onshore wind. We wanted to make sure that onshore wind received no new subsidies. We were fed up with the way our communities had been treated.
As I said on Second Reading and as I think the Committee has agreed, I was quite happy about the second part of the commitment—a change to the law so that local people have the final say on wind farms—because I thought that that was pretty much the case, until a particular wind farm planning appeal came about. That was the Kelmarsh wind farm appeal, when the planning inspector ruled in favour of the development going through because he said that national policy in the area of renewable energy trumped all local concerns. And those local concerns were huge: they were concerns about a grade 1 listed building built in 1732 and about the site of the battle of Naseby. The inspector said in his report that this wind farm would have a “distinct visible presence” over Rupert’s viewpoint, King Charles’ oak viewpoint, Sulby hedges, the Royal Observer Corps lookout post and Mill Hill viewpoint. These are places and viewpoints from the battle of Naseby which I would argue—and I do argue with my colleagues—was the battle where Parliament fought for itself properly and won properly for the first time. The birthplace of Parliament was going to be overlooked by massive turbines, nearly the size of the London Eye.
The inspector said that national policy outweighs
“any harmful impacts it may have in terms of the setting of heritage assets, the living conditions of local residents in terms of visual impact and noise in particular, the…enjoyment of the countryside, biodiversity, notably bats, and other matters”
What I thought was a local issue to be dealt with local planners, which is where I think the whole Committee wants to return such matters, was being elevated to national policy level.
Clive Lewis
The hon. Gentleman is being generous in giving way. Will he be joining the community of Balcombe and other communities across the country who are opposing fracking in their areas? Will he be supporting them in the local decisions they are making, very powerfully, in opposing fracking? Fracking, as we have heard, will potentially have a national contribution to make, but locally, they do not want it. Will he respect their opinions as well?
Chris Heaton-Harris
As I said on Second Reading, we need to evolve our planning system so local communities benefit very much from any developments. I cited the French system which my fellow Eurosceptic colleagues will be very uptight about. There is a better way of dealing with planning when it comes to helping local communities to decide whether to take onshore wind, fracking or other things, but I do not think we are there yet.
To return to what happened in my constituency with onshore wind, with which this part of the Bill deals, we launched a very simple campaign. We got on board, some Members will recall, the former Energy Minister, my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes), who said, “Enough is enough. We are going to make changes.” I thought that was a good signal that the Conservative manifesto might have something fairly solid on this. The following Energy Minister, my right hon. Friend the Member for West Suffolk (Matthew Hancock), said on the Floor of the House on 6 March 2015—a date that in my mind definitely came before the General Election campaign:
“We have made it absolutely clear that we will remove onshore wind subsidies in the future, and that the current 10% that is in the pipeline for onshore wind is plenty.”—[Official Report, 6 March 2015; Vol. 593, c. 1227.]
I thought that was probably enough of a signal as to where our manifesto was going. Forget the petitions, the questions, the debates and all the other points that were made on the Floor of the House. I was very pleased when I saw the Conservative Party manifesto.
If Opposition Members choose to dance on the head of a pin about whether “new public subsidy” refers to renewables obligation certificates or anything else, perhaps that allows me to talk about things in the second part, which we have all agreed. Let us talk about the way that local people can have the final say on these matters. Let us talk about something the Committee has agreed on previously—how we decommission big energy projects.
It cannot be said that these are not big energy projects. Supposedly, decommissioning is a given—the costs are being set aside when it comes to the North sea—but it is not yet part of the Bill when it comes to onshore wind. The Committee debated earlier the jobs, the supply chain, recycling, the sites that are properly and safely returned to nature—all phrases used by the hon. Member for Southampton, Test about the decommissioning of oil and gas. Yet we currently have a system in place that simply does not allow for decommissioning bonds or any way to ensure that the developer ends up paying to decommission a huge chunk of metal being stuck in the countryside. If we are talking about making sure that local people have the final say on wind farm applications, perhaps we should allow them to include the costs of decommissioning to be stuck into a fund and subtracted from subsidy at source.
Clive Lewis
Can the hon. Gentleman envisage a situation where he actively campaigns against wind turbines that are already established?
Chris Heaton-Harris
There are communities out there now that are directly affected by amplitude modulation from wind turbines. I can cite Cotton farm in South Cambridgeshire. That constituency is on the border between two local authorities, both of which have passed motions in the council chamber and written to the Government asking for stronger guidance on these points.
Noise is monitored on a regular basis by a set-up in the community to scientific standards. When an onshore scheme is mooted, noise readings are taken using the same equipment, verified by a third party. Because we can predict when amplitude modulation is likely to occur—it depends on atmospheric conditions, meteorological patterns and wind speed—and can see all those factors happening in front of us, we can predict where the noise will fall. The developer can therefore be asked to shut the turbines down so that they do not cause harm, as has happened in Cotton farm a couple of times. I can absolutely see myself campaigning with other communities up and down the country to ensure that the amplitude modulation from turbines that are already up does not cause undue concern in local communities.
Initially, 10 or 15 years ago, the equipment required to set these up was very expensive. Now, it can be done for about £3,000. Most communities, and certainly a number of developers, could afford that, which would possibly take this problem away. I am trying to make the point to the hon. Member for Norwich South that there are, as my nan would say, many ways of skinning a cat.
The Government have been particularly slow to implement these provisions. I would like them to go further. I am pretty sure I could get together a decent-sized political caucus to do that. If we seriously intend to argue against part of the Bill falling under the auspices of the Salisbury doctrine, and if we are going down the line of dancing on the head of a pin over these issues, the consequences further down the line for this industry will be a lot worse than if we accepted that the Government had a clear manifesto pledge that they are effecting today.
Clive Lewis
I thank the Minister for her comments. It has been an intriguing debate. I did not realise that the Minister was part of the “windy 101”. I have learnt something today.
Hon. Members on this side of the Committee believe, unfortunately, that the real reason these amendments are being made is to satisfy the interests of a few constituency MPs—some of them are here today—ahead of the UK economy. This will not save consumers money as the Minister has claimed, but will do the exact opposite by destabilising energy investment and adding to bills in the long run. We have internationally binding renewables targets to meet and it makes sense to do so in the most cost-effective way possible. Arbitrarily ruling out onshore wind when there are perfectly sensible locations that can accommodate it simply makes it all the more expensive for us to meet our targets. The amendments lie at the heart of what is wrong with the Government’s approach. The UK energy industry may account for just 3% of GDP, but it accounts for 18% of investment.
In 2013, jobs in renewable energy grew by 6% in the context of 1.2% growth in the wider economy. Public support for low-carbon technologies including onshore wind remains high even among Conservative voters. The sector is vibrant and dynamic, representing a huge opportunity for our future. What investors want to hear from the Government is a real long-term economic plan and stable policy regime. I am afraid that the amendments represent the polar opposite of that goal.
The Chair
May I make it clear that we are about to vote on Government amendment 5, not the amendments on which the Minister just responded.
Question put, That the amendment be made.
Spending Review and Autumn Statement
Clive Lewis Excerpts(8 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
This spending review delivers on the commitment we made to the British people that we would put security first—to protect our economic security by taking the difficult decisions to live within our means and bring down our debt, and to protect our national security by defending our country’s interests abroad and keeping our citizens safe at home. Economic and national security provide the foundations for everything we want to support: opportunity for all, the aspirations of families and the strong country we want to build.
Five years ago, when I presented our first spending review, our economy was in crisis and, as the letter said, there was no money left. We were borrowing one pound in every four we spent, and our job then was to rescue Britain. Today, as we present this spending review, our job is to rebuild Britain—build our finances, build our defences, build our society—so that Britain becomes the most prosperous and secure of all the major nations of the world, and so that we leave to the next generation a stronger country than the one we inherited. That is what this Government were elected to do, and today we set out the plan to deliver on that commitment.
We have committed to running a surplus. Today, I can confirm that the four-year public spending plans that I set out are forecast to deliver that surplus so that we do not borrow forever and are ready for whatever storms lie ahead. We promised to bring our debts down. Today, the forecast I present shows that, after the longest period of rising debt in our modern history, this year our debt will fall and keep falling in every year that follows.
We promised to move Britain from being a high-welfare, low-wage economy to a lower-welfare, higher-wage economy. Today, I can tell the House that the £12 billion of welfare savings we committed to at the election will be delivered in full, and delivered in a way that helps families as we make the transition to our national living wage.
We promised that we would strengthen our national defences, take the fight to our nation’s enemies and project our country’s influence abroad. Today, this spending review delivers the resources to ensure that Britain, unique in the world, will meet its twin obligations to spend 0.7% of its income on development and 2% on the defence of the realm.
But this spending review not only ensures the economic and national security of our country, it builds on it. It sets out far-reaching changes to what the state does and how it does it. It reforms our public services so that we truly extend opportunity to all, whether it is in the way we educate our children, train our workforce, rehabilitate our prisoners, provide homes for our families, deliver care for our elderly and sick, or hand back power to local communities. This is a big spending review by a Government that do big things. It is a long-term economic plan for our country’s future.
Nothing is possible without the foundations of a strong economy, so let me turn to the new forecasts provided by the independent Office for Budget Responsibility, and let me thank Robert Chote and his team for their work. Since the summer Budget, new economic data have been published which confirm this: since 2010, no economy in the G7 has grown faster than Britain. We have grown almost three times faster than Japan, twice as fast as France, faster than Germany and at the same rate as the United States. That growth has not been fuelled by an irresponsible banking boom, like in the last decade. Business investment has grown more than twice as fast as consumption, exports have grown faster than imports, and the north has grown faster than the south. For we are determined that this will be an economic recovery for all, felt in all parts of our nation, and that is already happening.
In which areas of the country are we seeing the strongest jobs growth? Not just in our capital city—the midlands is creating jobs three times faster than London and the south-east. In the past year, we have seen more people in work in the northern powerhouse than ever before. Where do we have the highest employment rate of any part of our country? In the south-west of England. Our long-term economic plan is working.
But the OBR reminds us today of the huge challenges we still face at home and abroad. Our debts are too high; and our deficit remains. Productivity is growing, but we still lag behind most of our competitors. I can tell the House that, in today’s forecast, the expectations for world growth and world trade have been revised down again. The weakness of the eurozone remains a persistent problem, and there are rising concerns about debt in emerging economies. These are yet more reasons why we are determined to take the necessary steps to protect our economic security.
That brings me to the forecasts for our own GDP. Even with the weaker global picture, our economy this year is predicted to grow by 2.4%. Growth is then revised up from the Budget forecast in the next two years to 2.4% in 2016 and 2.5% in 2017. It then starts to return to its long-term trend, with growth of 2.4% in 2018 and 2.3% in 2019 and 2020. That growth is more balanced than in the past. Whole economy investment is set to grow faster in Britain than in any other major advanced economy in the world this year, next year, and the year after that.
When I presented my first spending review in 2010 and set this country on the path of living within its means, our opponents claimed that growth would be choked off, a million jobs would be lost and inequality would rise. Every single one of those predictions has proved to be completely wrong. So, too, did the claim that Britain had to choose between sound public finances and great public services. It is a false choice; if we are bold with our reforms we can have both. That is why, while we have been reducing Government spending, crime has fallen, a million more children are being educated in good and outstanding schools, and public satisfaction with our local government services has risen. That is the exact opposite of what our critics predicted. Yet now, the same people are making similar claims about this spending review, as we seek to move Britain out of deficit and into surplus, and they are completely wrong again.
The OBR has seen our public expenditure plans and analysed their effect on our economy. Its forecast today is that the economy will grow robustly every year, living standards will rise every year, and more than a million extra jobs will be created over the next five years. That is because sound public finances are not the enemy of sustained growth; they are its precondition. Our economic plan puts the security of working people first, so that we are prepared for the inevitable storms that lie ahead. That is why our charter for budget responsibility commits us to reducing the debt to GDP ratio in each and every year of this Parliament, reaching a surplus in the year 2019-20 and keeping that surplus in normal times. I can confirm that the OBR has today certified that the economic plan we present delivers on our commitment.
That brings me to the forecasts for debt and deficit. As usual, the OBR has had access to both published and unpublished data, and has made its own assessment of our public finances. Since the summer Budget, housing associations in England have been reclassified by our independent Office for National Statistics and their borrowing and debts been brought on to the public balance sheet, and that change will be backdated to 2008. This is a statistical change and therefore the OBR has re-calculated its previous Budget forecast to include housing associations, so that we can compare like with like. On that new measure, debt was forecast in July to be 83.6% of national income this year. Now, today, in this autumn statement, the OBR forecasts debt this year to be lower at 82.5%. It then falls every year, down to 81.7%—
Mr Speaker
Order. Mr Lewis, get a grip of yourself, man. Calm. Take up yoga—you will find it beneficial, man. Now look, the record shows that the Chancellor stays for a very considerable period after his statement to respond to questions, and Members will always find the Chair a friend if they wish to question a Minister—[Interruption.] Yes, they will. Those who have questions to ask will be heard. Meanwhile, the Chancellor will be heard.
Royal Bank of Scotland
Clive Lewis Excerpts(8 years, 6 months ago)
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Jeremy Quin
I acknowledge and appreciate the hon. Gentleman’s point. I would have a much better case if I could say that all the problems were pre-crisis, but they were not; I fully acknowledge that. There are clearly issues that were endemic in RBS’s culture, and I sincerely hope that it has got a grip on that now.
RBS certainly does have a grip on its corporate structure and how it is conducting its business. It is now far more focused back on the UK and on UK corporate lending. It is the largest single lender to UK corporates, the largest supporter of SMEs, and the largest provider of mortgage lending. That is what we all want to see and wanted to see when the stake was initially taken.
Clive Lewis (Norwich South) (Lab)
The hon. Gentleman is saying that RBS has changed and improved its culture, but in The Times this week there was an article suggesting that it has been falsifying the mis-selling data that it has been giving out. I wonder what has actually changed if it is still misbehaving and, in effect, telling these porkies. Surely, in that case, it has not reformed itself and is just the same as it always has been.
Jeremy Quin
I have a lot of faith in the regulatory system that Ministers have put in place over the past five or six years under the coalition Government and this Government. What we need to focus on, as a House, is ensuring that we have the regulatory system that will deliver the results for our constituents and for the broader UK economy. I am nervous that the motion proposed by the hon. Member for Edmonton, although well intentioned, would delay support going into the economy.
I was serving in the Treasury when the stake in RBS was originally taken. I know that no hon. Member would be under any illusion that that stake was ever taken in a leisurely manner with a view to getting a tidy investment. The decision was taken by Labour with the very best of intentions, and it was the right decision to support the UK economy and the UK banking system at an absolutely critical moment.
Clive Lewis (Norwich South) (Lab)
I thank the hon. Member for Aberconwy (Guto Bebb) for his detailed analysis, and I thank other Government Members for their progressive contributions to today’s debate, some of which have been quite surprising from the perspective of Opposition Members. I would also like to thank my hon. Friend the Member for Edmonton (Kate Osamor) for introducing the debate and for her thorough speech. In fact, it was so thorough that she has left me only slim pickings for my own speech.
I want us to take a step back and remind ourselves of the bigger picture of the role RBS plays and has played in our financial system, and of just how high the stakes are when it comes to sorting out our banking system. Let us not forget why we own RBS in the first place. This is the bank whose reckless profiteering and pursuit of growth at any cost brought the UK economy to its knees—a bank that in 2009 made the biggest loss in UK corporate history and taxpayers paid a high price for its hubris; a bank whose ill-fated takeover of ABN AMRO has become a byword for corporate over-reaching, and whose former chief executive officer, Fred “the Shred” Goodwin, has become a byword for greed and irresponsibility. It is somewhat ironic that the poster child for the failings of privately owned banks has now become the poster child for the Government’s ideological insistence that banks are better run in the private sector. This bank’s own track record hardly bears out that assertion.
The Government would have us believe that there is no real alternative to reprivatisation, and that anyone who says otherwise is a 1970s throwback who simply wants to keep RBS in its current form forever, but, as we have heard from other Members today, there are plenty of alternatives. As my hon. Friend the Member for Edmonton so eloquently argued, keeping RBS in public hands does not have to mean running it all from Whitehall. It could mean transforming it into a network of local banks, accountable to their local communities—banks run in the public interest and not in the interest of a narrow few; banks that simply do not engage in the kind of speculative and risky activities that caused the global financial crisis in the first place, but instead are mandated to stick to their core social function of providing capital for sound businesses and providing banking services for local people.
Whether we look overseas at the thriving local public interest banks in countries such as Germany, Switzerland and Japan, or closer to home at the proposals of “firebrand radicals” such as Nigel Lawson, the Archbishop of Canterbury and Virgin Money, there is no shortage of ideas when it comes to the structural reform of RBS. What is lacking is the political will on the Government Benches for serious change. Indeed, the most worrying aspect of the Government’s attitude to RBS is the broader direction of travel that it represents. We are essentially being told, “Move along now. There is nothing to see here. We have fixed the problems that led to the crisis, and it can never happen again. It is safe to return to business as usual.” That was evident from the manner in which the sale of RBS was announced.
Jeremy Quin
Does the hon. Gentleman accept, though, that there have been dramatic changes in the regulatory environment? Happily, we will not be returning to 2003, because of the ring-fencing that has been introduced and the extra capital: RBS now has a capital base of 16%. Have there not been improvements in that respect?
Clive Lewis
I think that there have been changes, but as I said earlier, in an intervention, the fact that RBS is back again, and possibly about to be investigated for yet more fraud, does not exactly encourage me to think that those changes have been deep enough.
As I was saying, the sale of RBS was announced not to Parliament, but to a white-tie dinner full of City grandees, in a speech that also promised the City a “new settlement” on financial regulation. We are now starting to see what that “new settlement” looks like, with the Government caving in to economic blackmail from the likes of HSBC, which threatened to move its headquarters unless key post-crisis measures such as the bank levy and the ring fence between retail and investment banking were watered down—that, I think, answers the point made by the hon. Member for Horsham (Jeremy Quin); with the competition authorities ruling out action to break up big banks, even though they acknowledge that their customers are getting a raw deal; and with rumours that the Chancellor personally arranged the sacking of Martin Wheatley, the head of the Financial Conduct Authority, who has a reputation for being tough on bank misconduct.
Some commentators have even suggested that the Government’s desire for a quick sale of RBS is partly responsible for their magnanimous attitude towards the big banks: that the Government do not want to do anything that could damage the bank’s share price in the short term. If that were true, it would be incredibly short-sighted. We would effectively be trading in the chance to build a genuinely safer banking system in our haste to return to the pre-crisis status quo.
Andy Slaughter
My hon. Friend is making some excellent points. Does he agree that when RBS was mainly in the public sector, both the present Government and the coalition missed an opportunity to try to act responsibly? An organisation called Move Your Money—it is run from my constituency, and I think that it was mentioned by my hon. Friend the Member for Edmonton (Kate Osamor)—represents and campaigns for consumers, but it needs a partner in the banking sector that will do what local businesses and local people want.
Clive Lewis
I entirely agree. When we listen to the debate, we begin to feel that the Government are acting not in the interests of consumers, but in their vested banking interests. That seems to be their priority. We seem to be back to the pre-2008 mentality that the banks should be given whatever they want and we can have economic growth built on a house-price bubble fuelled by an oversized banking system without worrying too much about rebalancing our economy towards manufacturing or what we will do when the whole house of cards inevitably collapses.
We should consider, however, the effects on ordinary people like Andi Gibbs in my constituency who owned a business pre-crash. He was in effect mis-sold products by RBS and ended up with the now infamous global restructuring group. He not only lost his business; he lost his home, his wife, his family and his mental health. This is the price people pay when we do not get the banking system right. We now have a fantastic opportunity to get it right, and we must not squander it.
Drew Hendry
I made a point earlier about provisions for consequences for the people who take action that means that others with houses and businesses suffer through the malpractice the hon. Gentleman is describing. Does he agree that now is the time to look at having regulations that would put in place such consequences for people who take such action?
Clive Lewis
The hon. Gentleman makes an interesting point, and I agree we should be looking closely at the retribution that should be dished out to those who in effect ruin people’s lives; that is right and proper.
Successive attempts to persuade banks to lend more to small business have fallen flat, with some, like the enterprise finance guarantee scheme, actually being abused by RBS to exploit its small business customers. There could hardly be a clearer illustration of the fact that we have failed to get to the root causes of the problems in our banking system. The Chancellor and the banks may want us to move on and forget about the crash, but the British people have not forgotten. Whether it is mis-selling of PPI, mistreatment of small businesses or rigging the LIBOR and foreign exchange markets, they do not see that banks have really changed.
The warning signs of another crash are building. We may not have long to make sure our economy is better prepared than it was the last time. The Bank for International Settlements recently warned that we are living in
“a world in which debt levels are too high, productivity growth too weak and financial risks too threatening.”
In the UK, household debt is rising again, with the Office for Budget Responsibility predicting that, by the end of this Parliament, it will be higher than it was in 2008. Just last week, UBS warned that the London housing market is the most overvalued in the world and is in “bubble-risk territory”. In other words, the so-called recovery is not a sustainable one based on higher wages, higher productivity and creating new green jobs. Instead it is being driven by consumer spending propped up by ever-growing household debt, and fuelled by a banking system that still finds it more profitable to inflate house prices than to lend to productive businesses.
Having successfully rebranded a crisis caused by too much private debt as a crisis caused by too much public debt, the Government are now presiding over a new debt bubble that threatens to do exactly the same as what happened in 2008. Maybe instead of continuing to rely on the same institutions that got us into a mess in 2008, we should be promoting new types of bank, with ownership structures and business models that clearly distinguish them from the status quo: banks that are not beholden to the need to maximise profits, but which have a social mission and can genuinely put customers and the economy first. Our stake in RBS gives us a unique opportunity to do this.
When the history of this period is written, will the current Government be remembered as one who learned the right lessons from the crash, or as one who turned a blind eye and squandered the opportunity to build a better banking system?
Tax Credits
Clive Lewis Excerpts(8 years, 7 months ago)
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Clive Lewis (Norwich South) (Lab)
My hon. Friend is not alone. In my constituency, 4,000 working parents will be affected by the working tax credit cuts, as will 6,700 children. This is, in effect, a work penalty. I ask her to support me in telling Conservative Members, “You are not the party of working people, and shame on you.”
Paula Sherriff
I thank my hon. Friend for his intervention. I absolutely agree that this is clearly a work penalty— to think that the Conservatives wanted to rebrand themselves as the party of working people, but instead we have this penalty.
A cleaner in my constituency with one child earning just over £13,000 a year will now lose nearly £2,000 of it. That, quite simply, is the reality of these cuts. As for the so-called national living wage, there is one simple problem: it is not actually enough to live on. That is why we had tax credits in the first place, and why the Living Wage Foundation takes account of them when it calculates the real living wage.
If the Conservatives were serious about an economy based on fair pay for decent work, they would be doing the opposite of what they propose in the Trade Union Bill and making sure that working people genuinely get their share of the wealth they create. The real winners will be the Tories’ paymasters in big businesses, because the most profitable companies in Britain will get the cut in corporation tax—not to mention the millionaires. We know what they really think of ordinary working people in Britain because the Minister for Employment said it herself in a book called “Britannia Unchained”:
“the British are among the worst idlers in the world”
who
“prefer a lie-in to hard work.”
If they thought that these cuts were so necessary and so reasonable, why did they not mention them before the election? Instead, we saw exactly the opposite, with the Prime Minister categorically denying on national television that any such changes would be made. We used to say, “You can’t trust the Tories with the NHS”; now we know that you cannot trust them, full stop.
Carolyn Harris (Swansea East) (Lab)
We have already heard from our hon. Friends and colleagues about the impact of these misguided cuts to tax credits. It is right that we repeat the figures—4 million families, 7.5 million children. That is the math of who will be affected by this policy, and we must never lose sight of that.
Clive Lewis
Has my hon. Friend any idea of the extra number of children who will be pushed into poverty because of this Government’s proposed work penalty?
Carolyn Harris
I shall mention it later in my speech, but I believe that there will be more than 200,000 by 2016, with the potential to rise to more than 600,000 with the culmination of the benefit and tax changes.
Both Barnardo’s and the Child Poverty Action Group believe that 3.2 million low-paid workers will lose, on average, £1,350 next year. Those being hit are the ones who are in work. This Government are forever telling us that work is the route out of poverty and that they will support those who do the right thing. Ministers tell us in the media, ad infinitum, that they will stand up for “hard-working families”. Well, they are not standing up for those families. According to the House of Commons Library’s analysis of the cuts, more than 580,000 of Britain’s poorest working families, earning between £3,850 and £6,420 a year, face losing 48p for every £1 that they earn as a result of the removal of tax credits.
I urge the Government to think again. It is not too late to do a turnaround. In fact, it would be the morally right thing to do.
Tax Credits
Clive Lewis Excerpts(8 years, 8 months ago)
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Peter Aldous (Waveney) (Con)
In laying this instrument before the House, the Government are pursuing the right strategic course of supporting working families through the tax system and encouraging earnings growth rather than doing that through the benefits system. For that reason, I shall support it, although I have serious concerns about the impact on working families in the short term over the next two to three years. I urge the Government to address these issues in the coming months before the measures come into effect next April.
The Government are right to be going in this direction. The current system is extremely expensive, and if nothing is done the cost will escalate to unsustainable levels. For me, it is wrong to be promoting what is, in effect, state dependency. It is also wrong that the Government are subsidising employers so that they pay low wages.
Clive Lewis (Norwich South) (Lab)
The hon. Gentleman talks about high productivity and high wages, and Labour Members would agree with him on that, but yesterday we watched him file through the Lobby and vote against trade unions. They are one of the key ways that we can raise people’s wages, and he is undercutting them. How does he explain that?
Peter Aldous
I thank the hon. Gentleman for making that point, but I am constrained specifically to the issues we are debating.
It is wrong that the Government are subsidising employers in this way. Moreover, the current system of tapering income thresholds and interconnectivity with other benefits is ridiculously complicated and opaque.
I welcome the Government’s proposals to increase the personal allowance and to introduce the national living wage. It is right that working taxpayers, especially those on low pay, should keep more of the money that they earn as an incentive to work. My concern is that in the short term, over the course of the next two to three years, those who will be hit hardest by these measures are working families, often with children, on low wages. These are the hard-working families—the people doing the right thing—that all political parties say they support and must support.
In my constituency, where the median wage is just under £24,000, many people will be seriously affected by these changes. As of May this year, 4,200 families were receiving working tax credits.
The Economy
Clive Lewis Excerpts(8 years, 11 months ago)
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Mr Osborne
Let me make a little progress before I give way to my hon. Friend. We do not see enough of the prosperity and opportunity produced by our economy shared across all parts of our United Kingdom. The Queen’s Speech addresses those weaknesses head on. The housing Bill will ensure that more new homes are built and that tenants of housing associations get the opportunity to buy their own homes.
Mr Osborne
But it is anti-aspiration to deny working people in housing associations the right to buy their own homes. That will be an early, key test of whether the Labour party has learned anything from its massive election defeat.
The enterprise Bill supports the small businesses that are the productive engine of the modern economy. The High Speed 2 Bill commits us to the vital modern transport infrastructure that we need. The Childcare Bill supports the working parents—especially the working mothers—who have never had the backing that matches their contribution to our economy. The full employment and welfare Bill delivers the 3 million apprenticeships and creates the work incentives in our welfare system so that every citizen who can work is able to.
Yesterday, we discovered that the UK had climbed up the global employment league table, overtaking Canada to have the third highest employment rate of any of the major advanced economies in the world, on the path to full employment that we have set out. There is the promise of further devolution, delivered in the legislation, to Scotland, Wales and Northern Ireland. Then there is the Cities and Local Government Devolution Bill, which helps to dismantle the failed model that says that we have to run the entire country from the centre of London. Instead, it empowers our great cities across England and adds to the foundations of the northern powerhouse that we are building.
That is the agenda that we offer—full of ambition, brimming with ideas, not afraid of the future but excited about what it can bring. What of the alternative? The Labour party has taken the unusual approach of erecting the headstone first and then conducting the post-mortem. What conclusion has it reached? The shadow Chancellor just said that this is not the Queen’s Speech that he would have wanted. The Queen’s Speech that he does want is not entirely clear. He said that Labour’s economic policy was not credible; that its spending policy meant that it spent too much; that its tax policy was punitive and, in his word, “crude”; that its housing and rent policy was unworkable; that its energy policy meant higher energy bills; that its European policy was anti-democratic; and that its business policy was anti-business. Other than that, it was all okay!