Whole Company Pay Policy

Jim Shannon Excerpts

Monday 16th July 2018 Commons Chamber

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

I start by placing on the record the fact that as of last month I am the owner of a single share in Sainsbury’s. It was my golden ticket to attending its annual general meeting earlier this week—but more about that parallel universe experience later in my speech.

First, I turn to fat cat Thursday. By lunchtime on Thursday 4 January, the top chief executives in the UK had earned more than their average employees would over the course of the entire year. The chief executives of FTSE 100 companies earn an eye-watering £898 per hour, which results in astronomical figures more like telephone numbers than salaries. I have no qualms about those at the top being paid well. I am not calling for a salary cap or a widespread cut to chief executives’ pay. My call is far simpler: for consistency, parity and fairness, for the importance of the contribution of those at the bottom being recognised in tandem with the contribution of those at the top. Put simply, I am calling for organisations to determine the pay and reward schemes of all their employees in one whole company pay policy.

I would like to discuss the common themes of pay ratios, remuneration committees and the living wage—the most wonderful of ideas that is disappointingly littered with loopholes. I would also like to bring to the attention of the House and the Minister an organisation that, in my opinion, epitomises all that is wrong when a company does not have a whole company pay policy. But let us start with pay ratios.

In 2002, the pay of a FTSE 100 CEO was an extortionate 79 times that of their average employee. Fast forward 16 years to 2018, and it has sky rocketed to 150 times. Let me put that into perspective. These are chief executives who are paid an estimated 132 times more than a police officer, 140 times more than a teacher, 165 times more than a nurse, and an astronomical 312 times more than a care worker. I am in no position to prescribe the highest acceptable pay ratio, but there can surely be no doubt in anyone‘s mind that those ratios are unacceptable, unjust and unfair.

Of course, there have been some developments in public policy. From 1 July 2019, companies with more than 250 employees will be obliged to reveal and justify their pay ratios. That can only be a good thing, because it will directly pressure the companies with the most extreme pay ratios to explain and to change them.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Lady for raising such an important issue, at a very late hour. Does she agree that, while raising pay scales sounds good, the fact that people are no longer paid for breaks, and the fact that other bonus schemes no longer operate, means less in the pockets of workers? Does she agree that such contracts should no longer be forced on any existing staff, at Sainsbury’s or, indeed, anywhere else?

[Siobhain McDonagh]

I completely agree. The downside of the living wage is that companies have often sought to recoup some of their funds by reducing the conditions of long-standing members of staff.

Can the Minister explain how the Government intend to determine correctly the pay ratios of companies that outsource their low-paid roles to look more equal than they actually are and what mechanisms the Government intend to introduce to ensure that such extreme ratios do not occur in the first place? May I suggest that he note the example of Sweden—which, incidentally, is ranked one of the happiest countries in the world— where companies with big pay gaps face fines if they fail to close them?

It is not just extortionate salaries that generate these unjust pay ratios, but extraordinary incentive schemes, often reserved for those who sit at the very top of organisations. The Companies Act 2006 made it clear that non-executive board members were responsible for all stakeholders, rather than just for shareholders, and that, of course, includes all staff. However, it is still commonplace for many organisations to fail to recognise that company performance is based on the contribution of all staff, not just those at the very top. I have no problem with the retention of incentive pay for executives, but such incentive schemes should be available to all staff on the same terms. Why should any organisation have a rule for some employees that is not a rule for all?

In December 2017, the Financial Reporting Council produced its proposed revisions of the UK corporate governance code, requiring remuneration committees to

“oversee remuneration and workforce policies and practices, taking these into account when setting the policy for director remuneration.”

That seems to me to be a common-sense way of providing sensible alignment between workforce and executive pay. It is a straightforward, practical, whole company pay policy.

The need for such a policy becomes all the clearer when we consider exploitative “pay between assignment” contracts. The theory behind such contracts is a guarantee of a basic level of pay when an agency worker is between assignments and thus out of work, but, in reality, staff are often kept on the contracts even when they have been working in the same job for years without such a gap “between assignments”. Let us take, for example, an Argos distribution centre where agency staff earn £7.50 an hour, while core staff can earn up to £11.86 per hour—63% more than their agency counterparts—despite performing exactly the same role with the same responsibilities and despite having worked at the organisation for the same length of time. Repealing these contracts has been continuously recommended by parliamentary Committees and even the Taylor report. I understand that the Government are currently deciding whether to subject these contracts to greater enforcement, but I completely agree with the Communication Workers Union that the need instead is for these contracts to be abolished once and for all.

Then there is the issue of the national living wage, referred to by the hon. Member for Strangford (Jim Shannon). In theory it is an excellent idea, but in practice it is a deceptive tool used by some of the biggest organisations to cut terms, conditions and salaries. When it was introduced, former Chancellor George Osborne declared that Britain would get a pay rise. The infuriating reality is that a huge number of high-profile organisations have instead used its introduction to save funds by negatively impacting their most long-standing staff—their basic salary goes up, but to the detriment of the rest of their working conditions. These organisations should be named and shamed: I am referring to the likes of Marks & Spencer, B&Q, Zizzi, Ginsters, Le Pain Quotidien, Caffè Nero and countless others that have sought legislative loopholes against the spirit of the law.

Put simply, there should be more fairness. If someone is promised a pay rise, they should receive a pay rise. Organisations can dress it up however they like, but we, as politicians of all parties, need to call it out. That is exactly what I am doing today.

I have called this debate because I believe I have found an organisation that epitomises all the problems I have described so far, and more. Since 1869, Sainsbury’s has been a pillar of the great British high street. Over 148 years, it has established a reputation as a leading retailer that looks after, and out for, its colleagues and customers. But the organisation’s lack of a whole company pay policy has led to the most disgraceful discrepancies, whereby new contracts will see thousands of shop-floor staff have their salaries slashed while senior staff take home bonuses worth hundreds of thousands of pounds. If shop-floor staff do not sign these unscrupulous new contracts, they will be forced to resign. Here is the reality: 9,000 loyal and long-standing Sainsbury’s staff will see their wages fall by up to £3,000 per year by 2020. They will lose their paid breaks; their Sunday premium pay will be removed; the nightshift will be shortened; and their bonus scheme will go.

Some might argue that this is an unavoidable cost-cutting exercise for a key player in the struggling retail sector. Sainsbury’s itself argues that it is an exercise in fairness, ensuring that all colleagues doing the same role are paid the same. But I would argue that this is an organisation crying out for a whole company pay policy owing to those at the top being treated independently from those at the bottom. Either that, or I have misunderstood the definition of fairness, because while Sainsbury’s has scrapped the bonus scheme for its shop-floor staff, it has, astonishingly, awarded an eye-watering bonus of £427,000 to CEO Mike Coupe as part of his £3.4 million pay packet. No wonder he sings “We’re in the money.”

But this is no laughing matter. Many of these 9,000 staff have given decades of dedication to this organisation and tell me that they simply cannot afford to continue working there. While their salaries crumble, their bills, their mortgages and their rent are all still the same at the end of each month. I wonder if Sainsbury’s remuneration committee gave even a moment’s thought to these staff when they signed off their executive bonuses. Losing up to £3,000 per year might not seem like much to Mr Coupe when his pay packet equates to his taking home over three times that amount every single day, but for the thousands of staff losing out and their families every penny really does count.

I have done all I possibly can to raise the case of these staff with the Sainsbury’s board, which I expected, at the very least, to show some regret at the despair it is causing. Mr Deputy Speaker, I will let you be the judge of how regretful they are. Take the meeting I had with Rebecca Reilly, group head of communications, and Simon Roberts, retail and operations director, where I was astonished to hear the most long-standing colleagues who are losing thousands of pounds a year described as “anomalies”. Or take chief executive officer Mike Coupe, who, after his recent bruising session with the Business, Energy and Industrial Strategy Committee, refused to speak to me and raced away down the Portcullis House corridor. Or take the chaotic scenes at Sainsbury’s annual general meeting where, I am bewildered to report, my every move was followed by two senior Sainsbury’s staff.

After the meeting, I decided to use the opportunity to speak directly to the board members. This was their chance to justify their decision to me in person. Can you imagine how furious I was to see them hurried out of the room as I approached, surrounded by colleagues acting like bodyguards? I do not think I am scary, and I certainly do not think I am significant, but Sainsbury’s shop floor staff are significant and Sainsbury’s should be absolutely ashamed of the disgraceful disloyalty that they are showing these staff. Take Michelle, who has worked at Sainsbury’s for more than 20 years and stands to lose over £1,000 a year. She says that she has always loved her job, worked with amazing colleagues and been a proud and loyal employee for a good employer. That is why she found it so hard to speak out. Her petition on change.org has now been signed by 125,000 colleagues and customers from across the country.

Or take Mr and Mr Wilson, who have given over three decades of service to Sainsbury’s between them and yet anticipate that they will lose almost £6,000 a year as a family. Or, finally, take Mrs Taylor, who works in one of the 150 branches of Argos that are now located inside Sainsbury’s stores. Once the new contracts are introduced, Mrs Taylor can expect her hourly pay to be £1.20 less than that of her Sainsbury’s colleagues, despite working in the same store. That is what makes Sainsbury’s insistence that this is an operation in fairness so much less believable.

Could the need for a whole company pay policy be any clearer? What is needed is a policy where the pay for all staff is decided collectively at one point in time by one committee in the organisation. The consultation on these new contracts at Sainsbury’s is coming to a close. Hundreds of MPs have signed letters of support, and thousands upon thousands of colleagues and customers have spoken out. Even the Prime Minister has expressed concern. Perhaps the only hope left for these loyal staff members is a strong statement of support from the Minister this evening.

After a hard day’s work, the very least that an employee deserves is to take home a fair wage that is proportionate to that of their colleagues. Without a whole company pay policy, organisations such as Sainsbury’s can justify treating each level of their staff hierarchy independently and rewarding the minority at the top at the expense of those at the bottom. The damaging decomposition of workers’ rights under this Government has been widely felt. The enforcement of whole company pay policies would be the first step back to a country where hard-working employees can expect to receive a fair deal at work.

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

I congratulate the hon. Member for Mitcham and Morden (Siobhain McDonagh) on securing this evening’s debate. This is an important subject, and I commend her passion and her extensive campaigning on behalf of lower-paid workers in our economy. However, I know that she wants more than to be commended by me; she wants answers to her questions. I shall do my best to provide them. I recognise, and sympathise with, her view that executive pay in this country too often seems to exist in a bubble that is disconnected from the pay and experiences of ordinary working people.

I accept the hon. Lady’s numbers. We saw a staggering quadrupling in the average pay of FTSE 100 chief executive officers from the late 1990s to 2011 from just under £1 million a year to more than £4 million. I think that this has been imported from America, where the differences are even larger. Executive pay levels have largely stabilised since then, but shareholders and the wider society have increasingly questioned how such dramatic levels of reward can be justified, both in terms of individual performance and in relation to a company’s pay policy as a whole. The Government share that concern. We are not against CEOs being well paid for doing what is certainly a hugely demanding an important job. We accept that they have a lot of responsibility. For example, if part-time workers are included, Sainsbury’s has 180,000 people, and any one person who is responsible for 180,000 people certainly deserves rewarding well. I do not think that anyone would dispute that.

[Jim Shannon]

The point that the hon. Lady made with passion is that workers who have given effort, commitment and loyalty to a firm should be rewarded. The whole workforce should be rewarded, not just one person.

[Richard Harrington]

I absolutely agree, but pay is earned for several reasons. Hard work is definitely one of them. I am not comparing ourselves, but we are all here at 11.40 pm, so no one could say that we are not working hard. The dispute would come from the second reason for pay, which is how well someone is working and the their responsibilities. I would not ask the hon. Gentleman to intervene to say how well he thinks I am doing, but I certainly know that he and the hon. Member for Mitcham and Morden do a good job. I am not making light of the situation; I mean that reward is partly based on how well someone is doing and partly on how hard they work, but part of it is about responsibility. We would all agree that chief executives have a lot of responsibility, and they should not have job security because they are putting themselves on the line for workers, shareholders, banks or whomever it might be. This is a question of extent and of how much reward is performance related and how much of it is a basic salary. I hope that the hon. Member for Mitcham and Morden and the hon. Member for Strangford (Jim Shannon) do not think that I am trying to make light of this, because there is a significant issue here.

We may disagree on this, but I think the answer lies with transparency and accountability in how executive pay is set and in how it fits with wider employee pay and incentives. The Government have introduced major reforms on executive pay, and the first package in 2013 and the second package approved by Parliament just last week are important. The 2013 reforms compelled quoted companies to disclose each year the total pay and benefits of their CEOs and directors and to explain how that relates to company and individual performance. For the first time—this is important—we gave shareholders a legally binding vote on a company’s executive pay policy, with which all payments to directors must comply. Taken together, the two reforms have forced companies to be much more rigorous and transparent in their approach to executive pay.

However, more needed to be done, in particular to increase transparency and accountability in how pay at the top relates to pay and reward across the rest of the company. It is vital that companies demonstrate cohesion and a comprehensible line of sight between executive pay and the pay of other employees. They are all part of the company, and part of its success, and a confident organisation should be willing and able to explain how its approach to pay is consistent across all its employees. That is why the Government are now implementing major new statutory and code-based reform measures on executive pay as part of a wider package of corporate governance reform.

The headline reform measure—this is directly relevant to the hon. Lady’s speech—is to require all quoted companies to disclose and explain the ratio of their CEO’s pay to both the median average and the quartile pay of their UK employees. The pay ratio statement must include an explanation of

“whether, and if so why, the company believes the median pay ratio for the relevant financial year is consistent with the pay, reward and progression policies for the company’s UK employees taken as a whole.”

That will allow shareholders, employees and other interested parties to see how pay in the boardroom relates to wider employee pay throughout the company and, importantly, whether and how the directors of the company believe the differentials are justified. This is not just about employees, important though they are, because shareholders have strongly backed the introduction of pay ratio reporting and will be watching closely both the figures and the explanations, which they have made clear must be meaningful and relevant.

UK shareholders are increasingly vocal and assertive in holding companies to account on executive pay and other issues, which the Government support. The Government requested the Investment Association to establish the world’s first public register of shareholder dissent, so that there is a publicly monitored record of companies that receive more than 20% votes against executive pay packages. Halfway through the first year, there have been 140 significant shareholder rebellions on pay and other matters—more than the total for the whole of last year.

The Government have asked the Financial Reporting Council to consult on a number of new executive pay provisions in the UK corporate governance code, including a requirement for remuneration committees to explain what engagement with the wider workforce has taken place on how executive pay aligns with wider company policy. I am pleased to say that this new measure forms part of the revised corporate governance code published by the FRC earlier today—this is very topical—as part of a wider package of corporate governance reforms that require companies to put in place one or more of either a director appointed from the workforce, a formal workforce advisory panel or a designated non-executive director. It is complicated, but we are making developments. Companies will have to report on how they have had regard to the interests of employees. The statutory instrument was approved by Parliament last week and requires large companies to report each year on how they have had regard to the interests of their employees and on how it has influenced the decision making of directors.

All these measures will be in place from the start of January 2019, and I take the opportunity to thank everyone in this House, particularly the Business, Energy and Industrial Strategy Committee and the all-party parliamentary group on corporate governance, for their constructive contributions to this agenda over the past two years.

Before I finish, I will address some of the questions raised by the hon. Member for Mitcham and Morden.

Construction Sector Deal

Jim Shannon Excerpts

Thursday 5th July 2018 Commons Chamber

[Richard Harrington]

The sector deal shows that those types of skills will be adapted to building. Digital technology, artificial intelligence and precisely the STEM skills that my hon. Friend mentions are an important part of the sector deal and of the future construction industry.

[Jim Shannon (Strangford) (DUP)]

What discussions have there been with the devolved Assemblies on match funding for energy-efficient new builds? What is being done to encourage every region to make full use of this initiative?

Nuclear Sector Deal

Jim Shannon Excerpts

Thursday 28th June 2018 Commons Chamber

[Mr Gyimah]

I am glad that the hon. Gentleman has recognised that there is a huge opportunity for Scotland in this deal, given how much Scotland participates in the supply chain. As we are doing with the devolved Government in Wales, we will be working with all the devolved Administrations, where this is relevant to them, to make a success of this deal.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his statement. Does he agree that an essential component of this deal is the research and development component to make the use of nuclear power safer and more effective, and to better harness the ability of the UK to produce our own energy as opposed to relying on middle eastern fuel?

Erasmus Plus Programme

Jim Shannon Excerpts

Thursday 21st June 2018 Commons Chamber

[Lloyd Russell-Moyle]

I totally agree. The biggest employer in my constituency is the headquarters of American Express Europe and the biggest problem it has is finding young people with language skills to go into that sector—the Erasmus scheme really helps with that.

Being an alumnus of the University of Sussex and having part of that university in my constituency, it would remiss of me not to mention the role it had in founding the Erasmus programme. Hywel Jones served as the director of education, training and policy at the European Commission for 20 years at the start of the programme. In a recent speech, he talked about modelling the Erasmus programme on the work he had pioneered at the University of Sussex, where it had made sure that all disciplines, not just languages, although importantly including languages, allowed a study year abroad that was part of the degree programme, not just additional to it. His vision was to get that idea recognised throughout Europe. He said:

“I was convinced that such an idea could be developed on a European-wide basis”.

Well, that idea became Erasmus, and now Erasmus+. From the University of Sussex was born an idea that has become so entrenched in the learning of so many that for many students it is now a byword for student exchange itself.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this matter to the House for consideration. It is not just his university that does so well; other universities throughout the United Kingdom do equally well, with Queen’s University Belfast being one of them. In 2017-18, Queen’s attracted some €1.4 million for the Erasmus project—that is the sixth highest amount in the whole United Kingdom—and since 2012, 1,429 Queen’s students have benefited from funding to the tune of €4.68 million. Queen’s University in Northern Ireland is also doing its bit.

--- Later in debate ---

[Rachel Maclean (Redditch) (Con)]

It is an pleasure to follow my hon. Friend the Member for Chelmsford (Vicky Ford), and I thank the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle) for securing the debate. It is an honour to follow two Members who have played such a pivotal part in the scheme, which is valued by students in the UK and around the world.

We have heard what the programme has done for 9 million students all over the world since it started. It builds independence, life skills and an appreciation of international cultures. Moreover, when UK students take part in these programmes overseas, they project our values around the world, which is something that we should surely all welcome.

I will quote my son, who has taken part in Erasmus programmes in Germany. He puts it better than I do, in the way that young people do, when he says:

“I have had an enormous amount of language exposure over Erasmus schemes which have meant that my retention of German is incredible even now years afterwards. Living in a language ingrains it. It makes almost no sense to learn language without the degree of cultural and linguistic exposure Erasmus provides. Alongside language learning the schemes teach independence, mental resilience and social skills, which are difficult to teach in the classroom.”

He concludes by saying:

“In an increasingly divided world education should teach the plethora of cultural and international values which Erasmus experiences foster.”

I think I should probably get him to write all my speeches, actually—he does a pretty good job. That is a very clear testament to the value of Erasmus. I remember him at the ages of 15 and 16 coming back and telling me of his fantastic experiences.

While I warmly welcome and endorse the words of colleagues with regard to seeing this programme taken forward by the Government post-Brexit, I want to raise the slight concern of how the programme reaches out more effectively to more disadvantaged communities. In Redditch, we have no university, unlike the constituencies of some Members in the Chamber. We have a university in Worcester, but we do not have one in our town, and I fear that young people in Redditch might be missing out. I would like to hear from the Minister—today or at a later date—what Erasmus can do more actively to reach out and champion these values beyond privileged parents like me who will push my kids to do these things, as that will benefit the most disadvantaged societies.

Part of my constituency is Wychavon, which has one of the lowest indicators of social mobility in the country. That is quite surprising, because it is a relatively wealthy area of Worcestershire, but it is nevertheless the case. I am working hard to raise aspirations across my constituency through some of my work to bring in more mentors to work with young people, and by encouraging businesses in my constituency to sign up to the social mobility pledge championed by my right hon. Friend the Member for Putney (Justine Greening) and others. That is part of an overall push to help young people to benefit from these incredible experiences that their more privileged counterparts would perhaps take for granted. That is a very important aspect of this debate, and I am glad to have the chance to raise it.

I am interested to note that the Erasmus scheme is looking to reach out beyond our European partners. That is a welcome angle to the scheme, because we live in an increasingly globalised world, and it is really important that our young people have these opportunities.

[Jim Shannon]

Just to emphasise the international element of all this, Queen’s University Belfast’s education strategy for 2016 to 2021 outlines its commitment to increase the number of international students who choose to study there. It also aims to increase the number of such students by 10% annually. That is an example of Queen’s University Belfast in Northern Ireland, part of the United Kingdom of Great Britain and Northern Ireland, doing the very same thing.

[Rachel Maclean]

I thank the hon. Gentleman and congratulate the university on its work in that regard.

Yesterday we saw the historic passing of the European Union (Withdrawal) Bill. With that legislation on our statute book, we can, thankfully, proceed to the next stage of EU negotiations. I am absolutely sure that our Prime Minister will want to include this very important programme in her negotiations. I absolutely and whole- heartedly welcome the fact that we have come together as a Parliament and passed that Bill so that she can get on with that. I add my voice to those who call for her to include this programme in the negotiations.

I want the Government to continue to step up on the wider agenda of raising aspiration, not only through programmes such as Erasmus, but through their other work across this whole policy space. For example, the National Citizen Service, which has been alluded to, is an excellent programme that I have seen young people benefit from. It is a fantastic example of what this Government are doing generally to help young people to have more opportunities through which they can benefit and develop themselves. Schemes such as Erasmus are a great testament to our British values and something to be welcomed. I look forward to hearing more from the Minister about his plans.

--- Later in debate ---

[Kirsty Blackman]

I thank the hon. Gentleman for that intervention, and I will come on to talk about those wider benefits. I will talk particularly about Aberdeen, but also the wider Scottish context.

In 2015, 2,098 students from Scottish higher education institutions travelled abroad—a huge number of students had that opportunity. Around 200 students a year from Aberdeen University get involved in the Erasmus+ scheme, and 350 students come to Aberdeen and become part of our university life. Aberdeen has the highest percentage of students who are EU nationals of any Scottish university, which make up a significant proportion within Scotland. Those EU nationals have shaped the university in my constituency, and made a huge difference. Indeed, 25% of people who live in Aberdeen city were not born in the UK, and a big reason for that is the number of students who come to both our universities—Aberdeen University and Robert Gordon University in the south of the city.

Scotland has much higher levels of participation in Erasmus+ than other parts of the United Kingdom, and 9.7% of students from Scottish institutions travel abroad. More than half of outward student mobility in Scotland is accounted for by the Erasmus+ scheme, so I cannot overstate how important it is. In England, fewer than 7% of students take time to travel abroad, so the scheme is particularly important for Scotland.

It is therefore important that we receive clarity. It is good that the UK Government have committed to participating in the scheme until the end of the current funding round, but universities need clarity now about whether they will be able to participate beyond that, so that they can plan for the future. Universities are looking at their courses and numbers of students who will go there in future years, and that clarity will make a huge difference.

Let me move on to the wider benefits of the scheme. Some 93% of learners agree that they see the value of different cultures after having participated in the Erasmus+ scheme, which is hugely important. If the UK Government wish to pursue a global Britain agenda—that is despite shutting us off from Europe in many ways that I would prefer they did not do—we need young people who are taking part in life in our universities to be able to travel, participate in and see the value of different cultures, and to make those links. The reality, however, will be more difficult.

[Jim Shannon]

One thing that came out of the information we all received was that 64% of employers considered an international experience important for recruitment, and that was up by 37% since 2006. If any evidence were needed to reinforce what the hon. Lady is saying, that is it.

[Kirsty Blackman]

I absolutely agree. Earlier we heard the statistics for students who are unemployed, and how low those numbers are for students who have studied abroad when compared with those who have not. That is incredibly important.

We need to make sure that we increase our links with the rest of the world, not decrease them. When our brightest and best students take part in the life of universities across Europe, they showcase the talent we have in Scotland, England, Wales and Northern Ireland. We are able to receive the brightest and best students from other places so they can study in our universities. I have discussed this with Aberdeen University. The students who come to study in Aberdeen go back to their country and continue to have links with companies in our constituencies and our cities. They keep up the links they make, which has a huge positive economic benefit. Being part of the scheme is incredibly important.

Insecure Work and the Gig Economy

Jim Shannon Excerpts

Wednesday 20th June 2018 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for Barnsley East (Stephanie Peacock) on setting the scene so well.

When I first saw the phrase “gig economy”, I thought of nightlife, but then all of a sudden I realised that this issue is about people’s lives. The debate is about casual workers and those on zero-hours contracts and, if we look across the whole of the United Kingdom of Great Britain and Northern Ireland, the rights of fully covered workers are clearly not happening for them. It is more like a nightmare, with no holiday pay, no sick pay or any idea of what wages the next week will bring.

From the beginning, however, I want to make it clear that many small shops and companies need that flexibility. It is important, and I think that every Member who has spoken so far has said that. So, if a small company employs a student during the summer time for a break of two or three months, or something like that, that is quite acceptable. We must also be aware, however, that many people consistently work up to four times longer than their eight-hour contract. The question is: why, and how can we do something to protect workers from being exploited?

I am pleased to say that Northern Ireland has the UK’s lowest proportion of workers on controversial zero-hours contracts. Indeed, a 2016 report from the Office for National Statistics revealed that only 1.9% of workers in Northern Ireland, or about 15,500 people, were employed in that way. In the UK as a whole, however, the figures are extreme, with 900,000 people on a zero-hours basis in their main job.

One of my major concerns about those on zero-hours contracts stems from the fact that, in my constituency, almost 23% of children live in poverty. That is partly due to people being on zero-hours contracts. When they are working 32 hours, getting that new pair of shoes for their child seems doable, but when they only get eight hours of work the next week, the question is not “Which shoes?” but “How are we going to eat this week?”

I want to make a quick point about food banks—I will only take a short time, because I want to be fair to speakers after me. In Northern Ireland, we gave out some 32,433 three-day emergency food supplies to people in crisis between April ’17 and March ’18, and some 13,300 of those went to children. That figure is up 13% on the past year.

I am making a point but being careful about what I say, because I know that people need to have some of these things, but I also know that they need protection. That is what this debate is about, and I congratulate the hon. Lady on it. People are struggling, and a way to help is to afford them certainty of hours and ensure that they do not feel forced into overtime for fear of losing their jobs. There is work to be done, and I look to the Minister to outline how we can begin to do that seriously, and to ensure that there is a true balance of mutually beneficial flexibility.

Geothermal Energy

Jim Shannon Excerpts

Tuesday 19th June 2018 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to serve under your chairmanship, Mr Evans. I congratulate the hon. Member for Bishop Auckland (Helen Goodman) on bringing forward this important debate. She brings incredible energy and enthusiasm to any subject matter, whether it is here in Westminster Hall or the Chamber, and I thank her for that.

To digress slightly, hailing from Strangford and having lived there for all but four years of my life, my initial interest in this subject began with the sight of the UK’s first SeaGen tide turbine, which harnessed nature’s resources. The hon. Member for Bishop Auckland referred to that with regard to geothermal resources, but in a passing way I want to explain why the first SeaGen tide turbine was interesting to me. I live on the edge of Strangford lough. At the entrance of the lough, at the narrows, the tides rush with an almost nervous but very strong force. The SeaGen project was able to harness that energy. My interest in that came about when I was wearing my former hat, a long time ago, on Ards and North Down Borough Council.

The world’s first commercial-scale tidal turbine was commissioned in Northern Ireland’s Strangford lough in July 2008. The project had two 600 kW turbines and required a total investment of £12 million. The energy produced equalled the power required by 1,500 households annually. That milestone indicated the completion of the demonstration phase of the project. We recognised that if natural resources were there, we could generate energy from them.

The subject of today’s debate—geothermal resources—is clearly slightly different, but the SeaGen project, right on my doorstep, gave me a real interest in this area. I was, and am, passionate about that project because I saw its potential. That interest led me to enjoy the research for today’s debate and learning that in Iceland—some hon. Members have intervened along these lines—geothermal energy provides around two-thirds of the country’s primary energy demand. I am not sure about running a pipe from Iceland to here, or whatever the proposal may be. Nothing in this world is impossible, but whether it is cost effective is the issue. However, Iceland’s achievement is incredible and less reliance on fossil fuels can be only a good thing.

It is time that we started to look at those things. The hon. Member for Bishop Auckland has generated the core of interest in the debate to enable us to focus on it and give the Minister time to prepare a detailed and comprehensive response, which I am sure the Minister and her staff are doing at this moment. We can then rely less on insecure middle-eastern trade and influence, and stand on our own two feet.

If someone drives a car or lives in the countryside their petrol and diesel bills will be bigger than most. Some people heat their house with oil. We do not have to worry about that much at this time of year, but at other times we do, and the price of oil is extreme. The countries that resource and supply oil will have a meeting this week, as my hon. Friend the Member for East Londonderry (Mr Campbell) mentioned, and there is some indication that the price may be reduced. The fact is that we are experiencing the highest oil prices for some four years. When I go to fill up with diesel on a Saturday morning at 131.9p per litre, that gives me an idea of it. Not too long ago, it was under 107.9p, so that is quite an increase.

The Library briefing paper indicated that the geothermal potential of the UK was investigated by a programme funded by the UK Government and the European Commission that ran from 1977-94. It identified the key heat flow areas of potential in the UK and, in May 2012, a paper by consultants Sinclair Knight Merz in association with the Renewable Energy Association, an industry trade body, argued that geothermal power could provide 20% of the UK’s electricity and all of the UK’s heat demand. Subsequent reports may have put the figures lower, but the common theme is that there is scope for further investigation of how we can harness geothermal potential in a cost-effective way.

I understand that in Northern Ireland we have some potential for geothermal interest—perhaps in North Antrim and Mid Ulster. There was also talk at one time of potential for development along South Down. I understand that this is not directly the Minister’s responsibility, but has any contact been made with the Northern Ireland Assembly, which is unfortunately not working at the moment in the way that it should, to see what part Northern Ireland can play in the strategic policy for the whole United Kingdom of Great Britain and Northern Ireland?

In 2017, a study estimated that the UK theoretically had enough resource available to surpass easily all UK energy demand in 2015. However, the amount that was technically available was much smaller than the theoretical resource, and recovery would depend on depths drilled and areas targeted. Although there might be some potential there, the costs of extraction might be such that doing so would not be financially feasible. Can the Minister throw any light on how we can play our part in Northern Ireland?

I am not an engineer—far from it. If a hammer cannot sort something out, I do not know what can, but that is just me being the DIY man around our house. When it comes to doing simple things, if it is easy and a hammer can do it, I am your man. When it comes to the concerns highlighted in today’s debate, it is our duty to commission reports from those who have the ability, who are experts and who know what they are talking about. I believe that renewable energy resources are very much worthy of investigation. The hon. Member for Bishop Auckland is really saying, “Let’s look at that—let’s see what we can do.” Is it possible to provide 20% of the electricity needs of the whole of the United Kingdom of Great Britain and Northern Ireland? If we can, it will be time well spent, and I support the hon. Lady in trying to achieve that goal.

I support the Government and the Minister in their pledge of £300 million to invest in district heat networks over the next few years as an important way of ascertaining the best way towards a self-sustaining ability to harness a power source that can address the entire UK’s needs. The £300 million seems like a lot, but when spread across the United Kingdom it might not be as much as we would think. However, if it initiates interest in the subject, it is something we should try to do.

In conclusion, I congratulate the hon. Member for Bishop Auckland on introducing the debate. I look forward to the speech of the shadow Minister, the hon. Member for Southampton, Test (Dr Whitehead), and to the Minister’s response. We in Northern Ireland want to be part of the strategy, and are keen to see how we can play our part to make that happen. I am keen to see how we can take advantage of nature’s best, and perhaps nature’s worst, for energy provision. If we can do that, I think it will be time well spent.

Oral Answers to Questions

Jim Shannon Excerpts

Tuesday 12th June 2018 Commons Chamber

[Mr Speaker]

Order. We have run out of time so we must have very brief questions. I think a sentence will suffice.

[Jim Shannon (Strangford) (DUP)]

Factory output has decreased, according to the papers today. Will the Minister outline what he can do to assist factory manufacturing and initiate a clear industrial strategy?

[Greg Clark]

As the hon. Gentleman knows, through the industrial strategy, which has been developed in close collaboration with the Engineering Employers Federation, and through investment in research and development and skills, we are doing everything we can to take the opportunities arising.

Geothermal Energy: Clackmannanshire

Jim Shannon Excerpts

Monday 4th June 2018 Commons Chamber

[Luke Graham (Ochil and South Perthshire) (Con)]

Thank you, Mr Deputy Speaker, for granting this Adjournment debate on geothermal energy in Clackmannanshire. I am grateful for the opportunity to talk about this potentially exciting, new, greener renewable technology in the energy sector and its ramifications for Clackmannanshire, Scotland and the whole of the United Kingdom.

Known as the wee county, Clackmannanshire is the smallest council area in Scotland, situated in the south-western corner of my constituency. It is tucked away beneath the Ochil hills, flanked by Stirling to the west, Kinross-shire to the east and the River Forth to the south. Despite being home to successful companies such as Diageo, United Glass, the William Brothers Brewing Company and innumerable small and medium-sized enterprises, Clacks is a former industrial and mining community and still has some of the most deprived areas in our country. Meanwhile, geothermal energy is a form of renewable energy in its relative infancy in the United Kingdom, with opportunities still being identified and explored, and it is struggling to enter the mainstream of energy provision in the United Kingdom.

While I am sure no one would suggest that Adjournment debates usually only cater to a limited audience, addressing the niche interests of Members, with limited implications for the wider country, on the surface this debate on a relatively minor energy source in one of the smallest council areas in the country may ungenerously be described as such. However, given the limited exploitation of geothermal energy in the United Kingdom and the potential for its use in Clackmannanshire, the implications of investment and development of geothermal for the wider industry sector and the country are enormous.

[Jim Shannon (Strangford) (DUP)]

I am grateful to the hon. Gentleman for giving way. I am here to support him and congratulate him on securing the debate. Does he agree that the impact of such projects on the local economy, and especially the long-term benefits, has to be a significant consideration for Government? Everybody in the United Kingdom could benefit from projects just like this.

[Luke Graham]

I thank the hon. Gentleman for his intervention, and I could not agree more. One reason why I applied for this debate is to espouse the long-term benefits of these projects and how that will align with the country’s industrial strategy.

Before I get too far ahead of myself, I want to look at the broader industry and the place of geothermal within the industry. According to the House of Commons Library, the total energy sector in the UK was worth £24 billion in 2016. In the same year, the industry as a whole invested £11 billion—the equivalent of £1 in every £16 invested in the UK. It is an industry that directly employs 148,000 workers and supports a further 582,000 through the supply chain, consulting and other energy-related activities. That is a total of 730,000 jobs supported in the UK by the energy sector. Meanwhile, around 22,000 people in Scotland are employed in the energy sector, with the oil and gas sector being a major part of that. The energy sector therefore represents an important industry not just in terms of its contribution to the total GDP of the United Kingdom, but in terms of jobs, investment, research and development and supporting industries.

Energy is important. It heats our homes, cooks our meals and runs the appliances, amenities and communications devices without which our tablets, laptops and businesses could not function. In short, it impacts on every aspect of 21st-century life. The 19th and 20th-century sources of energy have long since ceased to be seen as the future. Renewable energy sources are an ever increasing part of the suite of energy sources, and Scotland has been at the forefront of such innovations, with wind and sea power particularly prevalent in its contribution. I wholeheartedly support those steps and hope that the UK will continue to be at the forefront of such renewable energy options—not just wind and sea but others too, such as geothermal.

You may ask, Mr Deputy Speaker, why geothermal energy? In simple terms, geothermal energy is valuable because it is generated and stored in the earth. It is heat extracted directly from the earth. It is generally available via shallow geothermal ground source heat pumps, which use the heat stored in the earth to generate electricity or provide heating. Geothermal is considered a renewable form of energy due to the vast amount of heat inside the earth and the continuous production of additional heat derived effectively from the earth’s core.

It is important to understand that geothermal energy is not the same as fracking, as some have tried to claim. For clarity, geothermal technology uses things such as mine water, closed boreholes and surface water, none of which has any similarity to fracking. Fracking is a process used to break up rock at great depths to release gas from ancient plant deposits. In the UK, this typically happens 2.5 km below the surface using a process involving large diameter boreholes and huge hydraulic pressures, and those are part of the concerns currently being debated. By contrast, with geothermal, the typical closed loop borehole, such as the one that would be used in Clackmannanshire, is no more than 200 metres deep, with a small diameter, and is installed in the same way and to the same standards as a water well.

We should consider the environmental impact, or relative lack thereof, of geothermal energy. It does not require combustion, unlike traditional energy plants, so it emits very low levels of greenhouse gases. It also eliminates the mining and transportation processes involved in fossil fuel energy generation. Finally, it takes up very little surface land, putting it among the smallest footprint per kilowatt of any power generation technology, including coal, nuclear and other renewables.

Marks & Spencer

Jim Shannon Excerpts

Thursday 24th May 2018 Commons Chamber

[Claire Perry]

As my hon. Friend knows, that is a difficult issue because local authorities rely on that revenue stream to fund other services, including buses in my constituency, and that is why the localisation of the rates, allowing local authorities to have more revenue from driving up activity in the high street and therefore rates revenue from the high streets, cannot come soon enough.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for her response to the urgent question. What consideration has been given to possible management and staff takeovers—such as by establishing co-operatives—of individual shops marked for closure? What discussions has the Minister had with Marks & Sparks in relation to that, and what help can the Minister and the Government give to help that happen?

[Claire Perry]

There has been close contact with Marks & Spencer at Government level to understand what is happening. There is also now a period of serious consultation between the company, unions and staff affected in those stores to make sure there is the best possible outcome for all.

UK Automotive Industry: Job Losses

Jim Shannon Excerpts

Tuesday 22nd May 2018 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for Warwick and Leamington (Matt Western) on securing this debate. I fully support his goal of highlighting the need to support the car manufacturing industry, since it props up so many local economies in many ways.

The manufacturing base across the entire United Kingdom is important, but it is particularly important in Northern Ireland because of Bombardier, which employs some 4,000 people in the manufacture of aeroplanes. Bombardier is an essential primary and secondary employer in my constituency, as well as in neighbouring constituencies. It represents about 10% of our total exports and 40% of direct manufacturing jobs in Belfast, and its impact on wider manufacturing and the supply chain is felt across Northern Ireland. Investment in Bombardier is an investment not simply in job security but in local spending power. The hon. Gentleman made that point in his speech, and we understand it only too well.

County Antrim, which borders my constituency, is home to Wrightbus, which is a world-class bus manufacturer. It is increasingly recognised as one of Europe’s leading providers of passenger transport solutions, having established a reputation built on a foundation of high-quality design and world-class engineering. Many of the buses in London today come from Wrightbus in North Antrim, and people can enjoy their very good finish. The company offers the largest portfolio of vehicles in the UK, covering midi, maxi, full-size, double-deck, articulated and hybrid-electric categories—no one would have thought there were so many kinds of buses, but there are. The widest range of chassis has elevated Wrightbus to being the largest independent manufacturer in the United Kingdom. I have done my duty to my hon. Friend and colleague the Member for North Antrim (Ian Paisley) by highlighting that tremendous manufacturer in his constituency and the jobs that it creates, not only in North Antrim but across Northern Ireland because people travel to take advantage of those jobs.

The importance of such industries to the Northern Ireland economy cannot be overstated. Indeed, the manufacturing industry—with special reference to the motor manufacturing industry—was worth 25% more in 2017 than it was in 2007, although growth appears to have levelled off in the past year. According to Library papers, the UK motor vehicle manufacturing industry contributed £15.2 billion to the economy in 2017. That was 0.8% of total output, and 8.1% of manufacturing output—those are very important figures—and it employed 162,000 people across the United Kingdom of Great Britain and Northern Ireland.

I am conscious of the time, Mr Bone, and I want to ensure that other Members get to speak. In conclusion, therefore, there is capacity for more growth, but we have to speculate to accumulate. The industry needs support to thrive and—much like our industry at home—the dividend to the local economy is incredibly valuable. It is not enough to wait until the industry is on its knees; we must invest and support, and ensure that skills are taught for long-term survival. Most importantly, we must ensure in the post-Brexit era that we facilitate the industry to thrive globally. That can be done only by working in partnership and by doing all we can to help the industry foresee and meet the needs of a growing global market.