Oral Answers to Questions

Matthew Pennycook Excerpts

Tuesday 15th December 2020 Commons Chamber

[Alok Sharma]

My hon. Friend is right: it is going to be a big moment for the UK in Glasgow next year and, of course, in the lead-up to it as well. I have been very encouraged and impressed by the commitment that young people are showing in tackling climate change. They have a vital part to play in ensuring that we deliver an inclusive and diverse COP26. In the run-up to the summit, we will be working closely with schools and young people, including by co-hosting the COP youth event, which will bring together 400 youth delegates from around the world to discuss a range of climate topics.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

According to Climate Action Tracker, the national net zero pledges that have been put forward today could, if achieved across the board, limit global heating to around 2.1°, but in terms of actual policies, the world remains on course for catastrophic warming of over 3°. Given the gulf between what Governments, including this Government, have promised on climate action and what they are on course to achieve, does the Secretary of State agree that it is incumbent on the UK as COP26 host to demonstrate to the world that it actually has a plan to deliver net zero? If he does agree, will he assure the House that the Government will publish a comprehensive and fully costed net zero strategy well in advance of November next year?

[Alok Sharma]

The hon. Gentleman makes an important point. I said that at the climate ambition summit. Leaders from around the world have come forward with ambitions, but we absolutely need to go further. I agree with the hon. Gentleman, and I think there is consensus on it in the House. With regard to his question on a net zero strategy, of course we will publish one. I also just want to make the point that, when we were talking about clean energy and hydrogen earlier, I stated that the Hydrogen Strategy Now group made a commitment on the £3 billion after the 10-point plan, but in fact it came before that.

Financial Assistance to Industry

Matthew Pennycook Excerpts

Monday 7th December 2020 General Committees

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Pritchard.

Let me say at the outset, for the purposes of clarity, that the Opposition support the objective that underpins this motion—namely, the need to minimise the risk of carbon leakage by taking steps to ensure that energy-intensive industries are not put at a competitive disadvantage as a consequence of the cumulative impact of carbon pricing on industrial electricity prices.  

It is obviously important that UK manufacturing should be able to remain competitive during the transition to a low-carbon economy, and we recognise that there is a need to continue to provide compensation for the indirect emissions cost of whatever carbon pricing policy replaces the EU emissions trading system.  For that reason, we will not be opposing the motion this afternoon.  

I would, however, like to take the opportunity to raise with the Minister two important questions that relate directly to the motion under consideration. The is about what carbon pricing policy will replace the EU emissions trading system. To put it another way: in respect of what arrangement do the energy-intensive industries that we are discussing require compensation during the next financial year? 

As I have said to the Minister on previous occasions, we cannot run the risk of a dysfunctional carbon pricing system in the year we host the critical COP26 UN climate summit.  As the Committee will know, only 24 days—eight sitting days—of this parliamentary term now remain until the transition period ends, and with it the UK’s participation in the EU ETS. Yet the Government have still not announced whether a stand-alone UK ETS or a carbon emissions tax will operate from 1 January should a linking agreement with the EU ETS not be negotiated and put in place by that date.  Surely, the Minister cannot believe it is fair that the emitters in question still have no idea what arrangements they will be operating under in just three and a half weeks’ time. My understanding is that a decision has been on the Prime Minister’s desk since late last month. If that is the case, what on earth is stopping the Government making clear to those affected what fall-back carbon pricing arrangement will operate in the UK from 1 January should the linked UK-EU scheme not materialise from the negotiations in the coming days and weeks?

In all candour, I have no expectation of getting an answer today from the Minister, but I would be grateful if she could at least acknowledge that the Government recognise that they owe those operators clarity on this issue as a matter of some urgency. I would also be grateful if she could clarify how her Department has been able to estimate that the compensation budget for the next financial year will stand at £140.6 million. Although we know that we have a carbon price floor in place from 1 January, we still have absolutely no confirmation of what will replace the EU ETS.

The second issue I want to raise concerns the long- term arrangements for addressing carbon leakage and ensuring that our energy-intensive industries remain competitive as we accelerate the pace of emissions reduction. We accept that compensation of the kind we are authorising today is necessary, but to avoid the cost of such compensation spiralling over the long term, as the price of carbon is increased, there must be sufficient long-term support to green the industries in question. After all, as the Minister will know, many if not all of the energy-intensive industries covered by the motion will not only benefit from compensation for the indirect emissions cost of carbon pricing, but will continue to benefit from reduced costs in respect of climate levies. They are, in short, in a relatively privileged position relative to other less energy-intensive industries. Therefore, as we accelerate efforts to achieve net zero, there will have to be greater use of conditionality to ensure that the financial support provided to compensate these industries is balanced by measures to ensure that their carbon intensity is steadily reduced.

I note that a review and a consultation in early 2021 in relation to the compensation scheme have been mentioned, and the Minister touched on that in her remarks, but I would be grateful if she could reassure the Committee that the Government recognise the limits of the compensation mechanism in question over the long term as the price of carbon rises, and that they accept that more will need to be done beyond the schemes she touched on to accelerate the pace of decarbonisation in these industries, not least to manage the costs of the current scheme going forward.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

rose—

Climate Change Assembly UK: The Path to Net Zero

Matthew Pennycook Excerpts

Thursday 26th November 2020 Commons Chamber

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a real pleasure to respond on behalf of the Opposition to what has been an extremely interesting debate. I thank all Members who have contributed this afternoon, the members of the Climate Assembly for taking part in the process and, in particular, my hon. Friend the Member for Bristol North West (Darren Jones) for securing the debate and for the focused and well-argued speech with which he opened it.

As my hon. Friend the Member for Nottingham South (Lilian Greenwood) and others made clear, we are in the midst of a climate and environment emergency. With the concentration of CO₂ in the atmosphere continuing to rise unabated, the issue is not whether we can stop climate change—the climate crisis is, after all, already upon us—but whether we are willing to do what is necessary to transition to a net zero world in the coming decades and thereby arrest runaway global heating.

As my hon. Friend the Member for Bristol East (Kerry McCarthy) made clear, there is no solution to the climate crisis that does not confront the issue of carbon consumption, but even if viewed through the lens of production emissions, the UK is still not doing enough. Not only are we not on track for the net zero target that Parliament legislated for just over a year ago; we are not even on track for the less stringent one that preceded it. When it comes to the UK’s record on territorial emissions, there is much to be proud of, but progress to date is largely the result of having picked the low-hanging fruit, particularly in relation to the power sector. The decarbonisation involved—this is the key point—has only had a very limited impact on people. If we are going to get on track for net zero, we will have to make rapid progress in sectors such as transport and housing that are far more difficult to decarbonise and where the impact on people will be much more acute.

Faced with the sheer scale of the challenge, with all the disruption that the kind of systems change required entails, there are those who believe that we will somehow need to distance or even remove people from the decision-making process entirely. The Opposition take precisely the opposite view. The transition to a low-carbon economy is unavoidable, but the pace at which it happens in a democracy like ours and the extent to which it is orderly depends on the consent and, indeed, the active involvement of people and places—a point made by the hon. Members for Broadland (Jerome Mayhew) and for South Cambridgeshire (Anthony Browne). Far from that greater involvement leading to inertia or paralysis, the final report of the UK Climate Assembly suggests that if people are provided with the facts, and if they are given responsibility and a real stake in the process, they are likely to support bold climate action.

I do not have time to do justice to the many recommendations set out in the report, and in any case, my hon. Friend the Member for Bristol North West and others have done so in their remarks. I want to briefly step back and look at two of the fundamental principles that the overwhelming majority of Climate Assembly members felt should underpin the transition to net zero and that have been prominent themes in today’s debate: the need for strong leadership from Government and the need for fairness.

First, on the need for strong leadership, the Climate Assembly showed clear support for

“Leadership from government that is clear, proactive, accountable and consistent”

and leadership that allows for

“certainty, long-term planning and a phased transition.”

As things stand, the Government are not providing leadership of that kind. I have no doubt that the Minister will robustly refute that point. In truth, he knows as well as I do that the Government still do not accord emissions reduction the status that it warrants and, as my hon. Friend the Member for Brent North (Barry Gardiner) pointed out, there is still not the kind of grip from the centre necessary to co-ordinate and drive progress on ambitious climate action across Government and ensure clarity, certainty and consistency of approach.

We have seen plenty of announcements from the Government in recent months, some more significant than others, and a 10-point package—I will not call it a plan, because there is still no sign of a comprehensive strategy for achieving net zero and no serious attempt to close the net zero investment gap that exists. We have seen policy making that is at times so wildly inconsistent with that target that the Chancellor sees no issue whatsoever with delivering a spending review in which, in one breath, he talks about investment in a greener future and, in the next, he celebrates Britain’s biggest ever investment in new roads. The Government must do better.

The second point, which in the long run is probably more important, is that the assembly’s final report stresses the need for fairness to be at the heart of the transition. Historically, our country has a terrible track record of managing industrial change in a fair way. The loss of jobs and the damage to communities in previous transitions, particularly the brutal deindustrialisation of the 1980s, makes people rightly suspicious of claims that this time it will be different. The transition to a low-carbon economy is a much greater challenge in many ways than deindustrialisation, affecting in different ways almost every industry and region of the UK. The challenge ahead is to ensure that green policy is designed effectively so we mitigate the inevitable disruptive change that comes with that transition, and to ensure that people and places are protected and supported through it and—as the right hon. Member for Orkney and Shetland (Mr Carmichael) and others have argued—that there are tangible benefits, particularly for those most affected and the nations and regions hosting infrastructure. For that to happen, I would argue that people and communities will need to be actively involved in the process. Community power and worker voice will have to be factored into an industrial strategy when we finally see one.

The gilets jaunes movement in France is only the most notable example of how badly designed green policy and a failure to embed fairness of process and outcome in the transition can erode the public support necessary for it, so we need to hear more from the Government about how fairness can be embedded in the net zero process, and we need action now to ensure that the benefits of the green transition are realised here at home. I have to say that that is something the Government, along with the SNP Scottish Government, have demonstrably failed to do in letting the BiFab engineering yards in Scotland go to the wall, putting at risk the UK’s supply chain for the deployment of offshore wind.

In conclusion, we very much welcome the Climate Assembly’s final report. While the deliberative process, such as the one used for it, is not a substitute for representative democracy, we believe that it can improve the way it works. In the Minister’s response, as well as addressing the various points made today by hon. Members, I very much hope that he will indicate that the Government also recognise the importance of actively involving the public in shaping the pathway to net zero, and that he will give the House a sense of what consideration, if any, his Department is giving to building deliberative processes into any forthcoming net zero strategy.

Fuel Poverty and Energy Price Caps

Matthew Pennycook Excerpts

Thursday 19th November 2020 Westminster Hall

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a pleasure to serve with you in the Chair, Ms Rees. I congratulate the hon. Members for Linlithgow and East Falkirk (Martyn Day) and for Ayr, Carrick and Cumnock (Allan Dorans) on securing the debate, and thank the Backbench Business Committee for granting it.

As all hon. Members have said, the scale of fuel poverty, which is present in every part of the UK, is staggering. I say that as a Member representing a constituency less than 10 miles away in which 5,500 households are in fuel poverty—this problem affects every part of the UK. The point about methodology and the consequent difficulties in making comparisons across the four nations was made, but the headline estimated rates show approximately one in 10 households in England and Wales are fuel poor, one in five in Northern Ireland, and one in four in Scotland. Those figures should be a source of shame for each nation. We have heard about the negative impacts that fuel poverty has on health, mental health, and morbidity.

The debate is timely as this issue affects millions across the country. Older people bear the brunt of it, but families—particularly single-parent families—and increasing numbers of younger people are also affected, and the issue has been exacerbated by the coronavirus pandemic. The impact has been felt not just because of sharp reductions in income, job losses, and people being furloughed or having to manage on some form of financial support from the state, but, as has been mentioned, because more time at home as the weather turns colder means much higher bills. In the context of the near standstill on the installation of smart meters and of the distinct lack of progress on energy efficiency, there is concern that this winter could see even higher numbers of deaths linked to cold homes.

That more can and should be done to address fuel poverty is, in my view, beyond dispute. A number of schemes already aim to tackle the problem, but they operate with varying degrees of effectiveness, and more attention needs to be paid to making them work better and over a long time. In the short term, we really need clarity on how those schemes will operate in the months and years ahead.

The warm home discount scheme was rightly extended by the Government last month, but we still have no idea about what that means for the amount of the discount or whether coverage will be extended to customers who sign up with smaller energy providers, for example. We need urgent clarity on how that scheme will work going forward.

In its last iteration, the energy companies obligation, which the hon. Member for Linlithgow and East Falkirk referred to, focused almost exclusively on low-income and vulnerable households. We know that it can make a contribution to reducing fuel poverty through energy efficiency measures, and hence lower bills for at-risk households. However, the ECO is now scheduled to run only to 2022. We need urgent confirmation from the Government that it will be extended beyond that date, and that the cuts made to its overall funding at the time when its focus was revised will be restored.

Beyond the targeted schemes that exist, the best way in the long term to combat fuel poverty is to design it out—to systematically insulate and make more energy-efficient the homes in which those in fuel poverty live, which are largely, it has to be said, in the private and social rented sectors. In most European countries, not just those with more temperate climates, the concept of fuel poverty is largely alien because the underlying efficiency of their housing stock is such that bills are entirely manageable by the vast majority of households. That is not the case across the UK, where we still have some of the worst insulated and least energy-efficient housing stock in Europe.

As the Scottish National party spokesperson mentioned, the manifesto on which Conservative Members stood in the last general election contained a commitment to spend more than £9 billion on uprating energy efficiency in homes, including a £2.5 billion home upgrade grant scheme and a £3.8 billion social housing discount fund. We have yet to see any sign of either measure or, I would argue, any real commitment to rapidly overhauling and upgrading the UK’s housing stock.

Although the amount allocated to the recent green homes grant is welcome, as an emergency measure lasting only for this financial year, and with some real questions about how effectively it can be delivered over that period, there is a real risk that it will ultimately have very little effect. Current statutory energy efficiency commitments require all fuel-poor homes in England to be levelled up to the energy efficiency standards of a current new-build home. At present, the Government are a very long way away from meeting those commitments, and we need urgent action to get us back on track.

So far I have focused on general issues relating to fuel poverty, but the title of the debate invites us to pay particular attention to the role of the energy price cap. The Opposition very much welcomed the price cap when it was introduced in January last year. After all, it was an idea—as the Minister may recall, labelled a semi-Marxist proposal by his party—that we put forward in our prospectus in the 2015 general election.

There was a clear need for a cap to address the issue of companies overcharging consumers, manipulating the goodwill of loyal customers and exploiting so-called sticky customers, many of whom are among the most vulnerable in the population. There is no doubt in my mind that the price cap has saved the poorest households considerable sums of money. It is estimated that the amount is in the order of £75 to £100 for those households on the default price tariffs.

However, as hon. Members will know, and as has been mentioned, the cap was introduced only as a temporary measure until such time as it could be proven that conditions for effective competition in the market existed. Those conditions clearly still do not yet exist. We were pleased that the cap has been extended for a further year after Ofgem reported as much to the Government, but issues of concern remain. The hon. Member for Linlithgow and East Falkirk spoke about the really important one of pre-payment meters.

We know that people on pre-payment meters are often fuel-poor customers. The energy price cap has folded into it the previously existing pre-payment meter price cap, which will lapse at the end of this year. Although protection for those who access their energy in that way will continue to some extent through the default tariff price cap, I hope the Minister agrees that we have to ensure that they are afforded long-term protection when the cap as a whole is lifted, as it inevitably will be.

This has been a good and important debate, albeit an under-subscribed one for the reasons that the SNP spokesperson mentioned. There is a huge amount of interest in this problem, as there should be given its scale. The Opposition urge the Government to devise a more comprehensive strategy on fuel poverty—one that addresses price, efficiency and problems of coverage and access, as well as the root causes. I hope that the Minister can provide the House with some reassurance that his Department is at least thinking along those lines.

SMEs and the Net Zero Target

Matthew Pennycook Excerpts

Tuesday 17th November 2020 Westminster Hall

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a pleasure to serve under your chairmanship, Ms Ghani. We always state this as a courtesy when opening our remarks in this place, but I am genuinely grateful that the hon. Member for Thirsk and Malton (Kevin Hollinrake) secured this debate, because the subject deserves far more attention in this House than it has received to date. When we talk about decarbonisation of the kind required by the net zero target, the focus is invariably on either big market trends or the action that the Government must take to drive emissions reductions across the largest emitting sectors of the economy. Although it is recognised that SMEs will be impacted by both, the assumption is always that they will simply adapt to any change made. To some extent, that will no doubt be the case, but, given that SMEs are the backbone of our economy, they need to be much more than an afterthought in our thinking about net zero, and much more thinking will need to be done about what targeted support they will need to ensure that the transition to net zero is as orderly as possible. The hon. Gentleman made very good points about the risks entailed when that does not take place and the need to learn lessons from history.

I intend to touch on three specific areas where there is clearly a need to do more to support SMEs in transitioning towards a local carbon economy. Before I do, I want to make two general points about the Government’s approach to climate action that have implications for them. The first is the need for a clear and credible net zero strategy. Setting a net zero target was an essential first step, but hitting that target requires a plan for its delivery. Despite having legislated for it more than a year ago, the Government have still not brought forward such a strategy. Indeed, core building blocks of it, from the national infrastructure strategy to the energy White Paper, have been repeatedly delayed. Although there will need to be a sector-specific component for SMEs in it, the most important thing is that the Government bring forward that comprehensive strategy as a matter of urgency to provide clarity and certainty for SMEs and other sized businesses, and a framework within which they can make investment decisions. The test of the announcement expected from the Prime Minister tomorrow will be whether it moves us forward towards that comprehensive strategy.

The second general point is that there is a real need for the Government to prioritise decarbonisation in any coronavirus stimulus package, and in particular a need to bring forward significant investment in low-carbon infrastructure. It is no good providing targeted net zero support for SMEs if the systems that they are embedded in and the infrastructure that they rely on are not transformed.

On the targeted support that SMEs require to make the transition in an orderly fashion, there are three areas, as I said earlier, that require more focus. First, SMEs clearly need more information and guidance on how to progress towards net zero. That not only means better access to tailored business, financial and legal advice; we need to do more to ensure that SMEs are persuaded of the commercial importance of planning for the transition to net zero early and the detrimental implications of not doing so.

The Government should look at what more they could do to support innovation in relation to SME business models and manufacturing processes. There are good examples of where this is happening in other countries across the world. The Dutch green new deal, for example, provides government-backed institutions to offer free technical advice to help businesses in Holland become more efficient. More could be done to augment and enhance the role of local government and local enterprise partnerships in engaging SMEs on the issue of net zero and helping them understand the business and supply chain opportunities that exist as part of it.

To date, while organisations such as the Carbon Trust and the Federation of Small Businesses have stepped in to provide SMEs with support along these lines, the Government themselves have done very little. Will the Minister outline in his response what plans, if any, the Government have to help inform and advise SMEs about how best to decarbonise their businesses? Secondly, as many hon. Members have said, SMEs undoubtedly need more help to access financing. Many have spoken about the pressure that SMEs are under as a result of the pandemic; the fact that they are struggling with high levels of debts and substantial losses of revenue. Many have also spoken about the financing gap that exists, not least the hon. Member for Grantham and Stamford (Gareth Davies) in his succinct and well-argued speech.

Other countries have created institutions to address this problem—the KfW in Germany, the Small Business Administration in the US, the Business Development Bank of Canada. I would argue that we do not have anything that does the same thing. There is a need to look again at what the British Business Bank could do, but also to establish a national investment bank with a clear green mandate—as we called for as part of our green economic recovery last week and challenged the Government to bring forward. Such a bank could provide low-cost, long-term financing to SMEs to help their transition in the way that the KfW has provided in energy efficiency loans to SMEs in Germany. Crucially, a national bank could be integrated into a network of regional outposts to ensure local delivery. We know that the Government have been discussing this for some time. Will the Minister confirm whether they have finally decided to establish such a bank? What sort of timeframe are we looking at for when it might be operational?

Lastly, SMEs need support with skills for their workforce. The Confederation of British Industry has estimated that nine out of 10 employees will need to reskill by 2030. That will require a national low-carbon skills strategy that embeds sustainability and net zero across the whole education system. We called for the Government to bring forward a national retraining strategy to deal with the immediate jobs crisis, while meeting the longer-term needs of a low-carbon economy. Much more could be done in this respect. Will the Minister explain what thinking the Government have done, if any, on a net zero skills strategy that will provide SMEs a workforce that is capable of successfully transitioning?

SMEs will be an essential component of the green transition, but to meet the challenge ahead, they need clarity, certainty, a wider package of investment and targeted support for information and technical advice, financing and skills. I look forward to hearing the Minister’s thoughts on all those areas.

Oral Answers to Questions

Matthew Pennycook Excerpts

Tuesday 10th November 2020 Commons Chamber

[Kwasi Kwarteng]

My hon. Friend, as he often does, raises a pertinent question relating to our energy strategy. Obviously, carbon pricing is at the centre of any move to try to decarbonise our energy mix. We have a track record on this, and we have also committed to 40 GW of offshore wind by 2030, which, through the auction process, is critical to delivering our net zero ambitions.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

If we are to sustain public support for the goal of net zero, it is essential that we maximise the benefits of the green transition here at home, but there are far too many examples where the promise of that green transition risks not being realised. One such case is the plight of the BiFab engineering yards in Fife and Lewis, which represents a clear failure to utilise industrial strategy to ensure that British firms win work and sustain decent jobs from the billions of pounds being invested in offshore wind installations just a few miles off the Scottish coast. Citing state aid rules, the SNP Scottish Government appear content to sit back and let the steel jackets in question be manufactured overseas. Can the Minister give a commitment today that the UK Government will step in and safeguard the future of mounting fabrication in the UK and these vital 450 Scottish jobs?

[Kwasi Kwarteng]

The hon. Gentleman will know that we are absolutely committed to maintaining a UK supply chain for the extra deployment of offshore wind that I alluded to earlier. With regard to this specific issue, we are in conversations with counterparts in Scotland and also speaking to people in the company.

Oral Answers to Questions

Matthew Pennycook Excerpts

Tuesday 29th September 2020 Commons Chamber

[Kwasi Kwarteng]

We do have extensive plans. We have further plans for decarbonising freight that will form part of the transport decarbonisation plan, which we expect to publish later this year. We work constantly with other Departments to ensure that we can reach our net zero targets. My hon. Friend is quite right to emphasise, in particular, the role that transport plays in carbon emissions.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

If we want business to play its full part in reducing emissions and to finance the innovation and infrastructure critical to the transition to a low-carbon economy, the Government need to address the very real barriers to private investment. One obvious way to do so is through a national investment bank with a clear mandate to channel both public and private capital towards projects that aid a green recovery and help the country to achieve its net zero target. Does the Minister’s Department as a whole support the establishment of such a bank, and if so, will he update the House on what progress has been made in convincing his colleagues in the Treasury to get behind the proposal?

[Kwasi Kwarteng]

It is no secret that there is plenty of discussion about a national infrastructure bank. The Green Investment Bank, which was set up in 2015, was successful, and this is something that we are constantly in conversations about.

Draft Professional Qualifications and Services (Amendments and Miscellaneous Provisions) (EU Exit) Regulations 2020

Matthew Pennycook Excerpts

Tuesday 15th September 2020 General Committees

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is an absolute pleasure to serve under your chairmanship, Ms Eagle. I thank the Minister for his comprehensive summary of the regulations. We recognise that the instrument before us is technical in nature and that its purpose is—somewhat refreshingly, I have to say, given the events of recent days—to ensure that specific provisions of the withdrawal agreement are given effect. As such, we will not seek to divide the Committee this afternoon, and I do not wish to detain Members any longer than I have to. However, I wish to put two brief points to the Minister. Hopefully he can provide his thoughts on both.

The first is a general point relating to certainty. As with so much of the secondary legislation that the Government have introduced of late, the instrument we are being asked to approve is presented in essence as a contingency piece of legislation. The Minister spoke about the temporary nature of many of the regulations and how they are given effect. However, with just 15 weeks remaining until the end of the transition period, it is becoming increasingly hard to view these regulations as such.

I know that I do not need to tell the Minister about the benefits that flow from professional qualifications, in terms of driving up standards of practice, giving confidence to UK employees and consumers, and improving contracts for workers. I know, too, that he is well aware of how many UK professionals depend on the mutual recognition of professional qualifications across the European economic area, the implications for their jobs and livelihoods should the Government not secure an adequate replacement framework by 31 December, and the impact of such an outcome on an area in which the UK enjoys a significant comparative advantage.

However, the UK, EU and Swiss professionals affected still await more information from the Government on their vision for a future recognition framework, and their frustration at its absence cannot be overstated. With just over 100 days remaining, all they have to go on at present is the commitments set out in the legally non-binding political declaration and in the withdrawal agreement, the permanence of which, as he knows, Ministers have called into question over recent days. I do not expect the Minister to comment on ongoing negotiations, but can he today provide those professionals affected with some comfort, and confirm that the Government are intent on securing a long-term agreement in this area that will provide for their future jobs and livelihoods?

The second point relates to the involvement of those professionals in a dialogue about the replacement framework that the Government are seeking to secure. The Minister’s Department launched its public consultation on the recognition of professional qualifications on 25 August, just 21 days ago. We obviously welcome the fact that consultation is taking place, but will he tell the Committee why it took so long for the Government to initiate it? That also begs the obvious question: if the Government are only now discovering what those who stand to be affected want to see negotiated to replace the current arrangements, what has shaped the Government’s negotiating position in this area to date? With the consultation due to close as late as October, it is difficult not to view the exercise as little more than window dressing. I hope he can reassure me on that point.

I urge the Minister to take this opportunity to reassure professionals and businesses here in the UK and in the EU not only that the Government remain committed to securing an efficient and robust mutual recognition system that will enable our talented professionals to operate in the EEA and Switzerland, as they have done for so many years, but that their views will continue to shape what is being fought for in the negotiations.

Draft Greenhouse Gas Emissions Trading Scheme Order 2020

Matthew Pennycook Excerpts

Tuesday 8th September 2020 General Committees

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Paisley. The matter that we are discussing this morning is important, and although, for reasons that I will come to, the Opposition support the establishment of a UK-wide emissions scheme and consequently do not intend to press the order to a Division, I hope that Committee members will forgive me if I spend a short time setting out a series of questions that I hope the Minister will be in a position to answer.

We know that carbon pricing alone will not deliver sufficient decarbonisation to achieve the net zero emissions target that we legislated for just over a year ago, but if we are to deliver significant reductions it is essential that the UK has a robust carbon price, however that is achieved, at the point that our participation in the EU ETS ceases at the end of the transition period on 31 December. Given the circumstances in which we find ourselves, the Opposition’s clear preference is for a UK ETS that is linked to the EU ETS. That latter option would retain for the country the key benefits that flowed from participation in the latter, with its larger pool of participants, including more opportunities for emissions reduction, greater cost-efficiencies, increased liquidity and a lower risk of market abuse.

We therefore support the order on the basis that a UK ETS is a precondition for a linked UK-EU scheme and recognise that, given the uncertainties around the ongoing negotiations with the EU, it is important that the legislation that will establish it is completed before the end of the transition period. However, I would be grateful if the Minister could provide some further clarity regarding the Government’s present position on the possible future link between the UK ETS, to be established via the order, and the EU ETS.

In the May 2019 consultation document on the future of UK carbon pricing, the UK Government and the devolved Administrations stated clearly that securing a linking agreement with the EU was their preferred option. In contrast, the explanatory memorandum to the order merely states that the UK Government are

“open to considering a link…if such a linking agreement…is in both sides’ interests”.

I obviously do not expect the Minister to comment on the ongoing negotiations, but I would be grateful if he could clarify that a UK ETS link to the EU ETS remains the Government’s preferred option, and that they are still actively seeking to secure it as part of the negotiations.

The Opposition hope that a linked agreement is successfully negotiated, but there is obviously a chance that that is not the case, or at least that no agreement is secured for some time following the end of the transition period. In those circumstances, in order to avoid a carbon pricing gap, the Government have made it clear that we would have to fall back on either the UK ETS that the order facilitates, but as a stand-alone system, as the Minister made clear, or a carbon emissions tax from 1 January 2021.

Both options are, I think, sub-optimal compared with the option of a UK ETS linked to the EU ETS, and both, as I am sure the Minister will be aware, are potentially problematic. The management of a stand-alone UK ETS will require a significant amount of Government intervention on the part of his Department, and even then risks being dysfunctional, with a highly volatile price plagued by low levels of liquidity and high levels of speculation.

In contrast, a carbon emissions tax provides certainty of price, but may be less cost-effective for business, more open to political interventions that risk undermining price stability and, because there is obviously no cap on total emissions, would require institutional safeguards to ensure that prices remain consistent with the UK’s net zero target. Some of those problems may be overcome by good policy design, but the workings of either scheme are not the focus of this morning’s discussion.

I am concerned about certainty for those covered by the arrangement. With just 16 weeks until the transition period ends, surely the Minister recognises that the emitters covered by either scheme require some certainty about which of those two options the Government will ultimately opt for as a fall-back if no linking agreement is in place on 1 January next year. That choice is not subject in any way to the negotiations taking place with the EU.

We have been asked to pass today’s order and will, one presumes, be asked to pass a similar order for those aspects of the carbon emissions tax yet to be legislated because the Government have not been able to resolve internally which of the two is their fall-back preference, and have therefore been forced to ask Parliament to authorise both options in advance of a decision. We know that officials at the Minister’s Department and at the Treasury have failed to reach agreement, but he should at least be able to tell the Committee when a decision will finally be made on what the preferred fall-back option is if the Government fail to negotiate a linked UK-EU ETS, ready to go in 16 weeks’ time, so that those affected can properly plan for what comes next. I hope that he can shed some light on those aspects.

Before I bring my remarks to a close, I have two technical questions about the UK ETS, which is the subject of the order, and I hope that the Minister might be able to shed some light on the Government’s thinking on both of them. First, he must surely accept that the proposed initial cap, which I concede is set 5% below the UK’s notional share of the EU ETS, is wholly inadequate as a tool for reducing emissions. UK emissions last year in sectors covered by the EU ETS stood at 129 megatonnes and are predicted to fall further next year. The allowance cap that the Government propose for a UK ETS through the order is 156 megatonnnes—well above that level.

I note the Government’s arguments about the impact of the pandemic and the economic emergency in predicting future emissions as well as the need to minimise the risk associated with the transition, but the arguments for that amount of proposed headroom are far from robust. Will the Minister explain why it was determined that the scheme’s starting point should not be the latest data on UK emissions in the traded sector, particularly given that the market stability mechanisms, which the Government argue will support the price, will not function in the first year of the UK stand-alone ETS?

Secondly, we of course agree with the Government that the cap should be tightened in line with a trajectory consistent with a net zero target and the Committee on Climate Change’s advice on the sixth carbon budget. We also appreciate that the market needs appropriate forewarning and that industry should have enough notice to prepare for that. However, given how important ambitious climate action is in this decade, as the Minister knows, why will it take until at least January 2023, and potentially until 2024, for that alignment to take place?

The Opposition support the establishment of a UK-wide emissions scheme as a necessary contingency, but I cannot stress enough to the Minister that, as he knows, we cannot have a dysfunctional carbon pricing system in place in the year we are to host COP26. The challenge of designing a watertight stand-alone UK ETS should be a spur to the Government’s efforts to negotiate a link-in agreement with the EU system as soon as possible.

Business, Energy and Industrial Strategy: Departmental Spending

Matthew Pennycook Excerpts

Tuesday 7th July 2020 Commons Chamber

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a real pleasure to take part in what has been a good debate. I commend the Chair of the Business, Energy and Industrial Strategy Committee, my hon. Friend the Member for Bristol North West (Darren Jones), for his characteristically thoughtful and articulate opening remarks. The quality of my hon. Friend’s contribution was matched by many others that followed, and I mention in particular the forceful and powerful speeches made by my hon. Friends the Members for Bradford South (Judith Cummins) and for Newcastle upon Tyne North (Catherine McKinnell). Given the toll that the pandemic has taken on our economy, it is right that they and a number of other Members chose to focus their remarks on the measures introduced by the Department to support businesses and individuals through the lockdown, and on what still needs to be done to address the gaps and deficiencies that exist.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

On that point, my hon. Friend will be aware that Airbus in Broughton announced 1,400 redundancies last week. Does he agree that when we see countries such as France and Germany offering multibillion-pound support for the aerospace industry, we too need a sector-specific strategy for the aerospace sector?

[Matthew Pennycook]

Absolutely. My hon. Friend makes a very good point: other countries have done it and we have been calling for sector-specific packages for those in most need. The Government have done it for steel; let us get on and do it for aerospace and the other sectors that need additional support.

A number of other Members mentioned the environment and climate emergency. Given the primacy of the climate threat over the long term and BEIS’s lead role in ensuring that our country plays its part in tackling it, I want to use the time that I have to focus on the Department’s record in driving progress towards the net zero target for which we legislated just over a year ago.

Although 2050 is too late, we can continue to take pride in the fact that we were the first major economy to adopt a legally binding target to cut greenhouse gas emissions to zero. But setting a target is one thing; hitting it is quite another. As things stand, not only are the Government failing to do anything like enough to meet our legally binding 2050 target, but they are not even on track to meet the less ambitious target that preceded it. I am afraid Ministers give every impression of being entirely relaxed about that fact. How else do we explain that over the past 12 months, while basking in the virtuous afterglow of legislating for net zero, the Government have done precious little to set us on the road to carbon neutrality?

The Committee on Climate Change put it in characteristically diplomatic terms when it stated in a recent annual progress report that last year

“was not the year of policy progress that the Committee called for in 2019.”

The charge is irrefutable.

According to the CCC, last year the Government failed on 14 of the 21 progress indicators, fell further behind in many areas, and met only two of 31 key policy milestones. It is simply not good enough.

The human, economic and social cost of the coronavirus crisis has been severe, but as we turn our attention to rebuilding the Government have a once-in-a-generation opportunity to accelerate the decarbonisation of our economy and make up lost ground, and it is imperative that they seize it. There have been some positive signs in recent weeks that suggest that the Government may recognise the force of this argument. Take the package on energy efficiency measures that was trailed yesterday. We believe that the amount allocated to social housing is woefully inadequate, we take issue with the fact that the private rented sector has been almost entirely overlooked, and we have concerns about whether it will be possible to deliver in the seven-month window provided, but the investment is welcome. However, it has to be the first step, rather than the last word, when it comes to energy efficiency; the start of a long-term, year-on-year programme of support rather than merely a one-off annual boost. The same principle must apply in other areas.

All of which is to say that when it comes to judging the impact of tomorrow’s statement and the autumn spending review on our decarbonisation efforts, what matters is not only the scale and nature of the stimulus, but whether the measures to be announced form part of a co-ordinated long-term approach and are interwoven with the policy change required to drive emissions reductions through the remainder of this crucial decade.

If we are to get on track for net zero, the impetus ultimately has to come from the centre, but for obvious reasons BEIS has a crucial role to play in supporting the centre to set that strategic direction on decarbonisation and direct its spending appropriately to that end. Yet in several crucial areas the Department is still failing to provide the clear, stable and well-designed policy framework that businesses and investors require.

With that in mind, I will finish by putting a series of specific questions on the record, in the hope that the Minister may be able to answer at least some of them in his response. First, for the past year, as we have heard, we have been repeatedly promised that the energy White Paper, the aim of which is to provide much-needed certainty to business on the future energy system, is imminent, yet there is no indication in the estimates we are debating today that the Department is preparing for anything other than business as usual. Are we therefore to assume that the White Paper will be further delayed, or is it still the Department’s intention to publish it before the end of this year and then ask the Treasury for the necessary additional resources at a later date?

Secondly, when it comes to the decarbonisation of heat, the estimates merely appear to contain a broadly static commitment to expenditure on the renewable heat incentive. Leaving aside whether funds allocated to the RHI will be rolled over to underpin other proposed low-carbon heat schemes, does the Minister agree that the total resources currently allocated by the Department to heat are nowhere near enough to respond to the challenge presented by this most difficult of sectors?

Thirdly, taking the estimates in the round, is the Minister not uncomfortable about the apparent disparity between the lofty ambitions set out by his Department when it comes to low-carbon energy, particularly in the clean growth plan of 2017, and the focus of day-to-day spending by the Department on older, high-carbon sources?

Fourthly, and finally, given the commitment to phase out coal from our energy system entirely by 2024, why has the application for a new open-cast mine at Highthorn in Northumberland not been dismissed out of hand by the Government?