Carillion

Stephen Kerr Excerpts

Thursday 12th July 2018 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

I beg to move,

That this House has considered lessons from the collapse of Carillion.

I am grateful to the Backbench Business Committee for scheduling the debate for today, which is timely. This Sunday it will be six months since Carillion entered liquidation. When it collapsed, it employed 42,000 people, more than 19,000 of them working in the United Kingdom. It held liabilities of £7 billion, including a £2 billion liability to 30,000 suppliers and subcontractors, and it held just £29 million in cash to meet those liabilities. In the past six months, nearly 2,500 Carillion workers have been made redundant and more than 1,000 have voluntarily left what remains of the business. Projects have been mothballed and suppliers have faced ruin.

Since the collapse of Carillion, five Committees have looked into the issues surrounding its collapse. Along with the Work and Pensions Committee, my Committee—the Business, Energy and Industrial Strategy Committee—has considered the causes of the collapse. The debate is also timely because this morning our Committees published a special joint report containing 24 responses to our original report. It gave those criticised in the report, and those with a significant interest, a chance to respond ahead of the Government’s formal response to our findings. In the time that I have this afternoon, I shall set out what my Committee found, and what needs to change. I thank fellow members of the Joint Committee, some of whom are in the Chamber today, for their work to uncover the lessons from Carillion.

When it collapsed, Carillion had been in existence for 19 years. It was the second largest construction company in the UK, having grown through large and frequent acquisitions and Government outsourcing. Carillion’s directors, and those who know the construction industry, told us that it was a low-margin industry, and part of a highly competitive market with inherent risks. Businesses do collapse every day, and the process of business creation and failure is part of any well-functioning modern economy, but warning lights should have been flashing when such a big business was on the brink. We should demand the highest standards of corporate governance to help to ensure that British businesses are well run, but that did not happen with Carillion.

Despite its catastrophic failure, the Carillion directors, when they sat in front of our Committee, continually claimed that the business was sound, even after it had gone into liquidation, and that only a handful of contracts had brought it down. They even said that everything was fine until just a few months before the collapse. As late as the day before Carillion went into liquidation, the directors thought that they could avert the collapse. They seemed to have a sense of entitlement, and a belief that the Government would step in and bail out their failed business. In their evidence to us, they blamed everyone but themselves. They blamed the Bank of England, the Canadian construction market, Carillion’s suppliers, and professional designers of concrete beams.

However, the collapse of Carillion has meant that our Committees have been able to see the board papers and minutes from company meetings, many of which we have published. Looking inside the company, we have seen a business that acquired other businesses, and relied on unrecoverable “goodwill” to prop up its balance sheet; a company that kept increasing senior salaries and bonuses, and ensured that a dividend was paid regardless of its own health; a company that was paying suppliers late, and bidding for contracts that it could not afford to deliver on time or on budget.

Carillion’s largest acquisitions—of companies such as Mowlem, Alfred McAlpine and Eaga—allowed it to put “goodwill” on its balance sheet. Those notional values of each acquisition, totalling almost £1.5 billion, were allowed to sit on the balance sheet for year after year, without any link to reality and the real value. When the company collapsed, the goodwill was wiped out, too, showing its true value—a value of zero. Carillion’s board needed healthy balance sheets to continue its dividend policy of increasing its payout to shareholders, but the truth is that it paid those dividends regardless of whether it had the cash flow required for them. Right up to the spring of 2017, it was promoting its growing payout with little challenge—no challenge—from directors as to whether the money might have been better spent supporting the pension fund, for example, or any part of the failing business.

Despite the growing pensions deficit, there is one area where directors felt able to spend money, and that was on growing salaries for the leaders of the business. Its remuneration committee increased payouts on the basis of industry averages, rather than the performance of the business Carillion. A responsible business would see payment by results, not payment by averages.

When Carillion’s directors needed to prop up their balance sheets, they did so by putting pressure on the suppliers. Carillion was, ironically, a signatory to the Government’s prompt payment code, promising suppliers they would be paid within 60 days. When the code was launched in 2013, Carillion was already known to Government as being poor payers, but the National Audit Office report into the company showed that in signing it up to support the policy the Government seemed to turn a blind-eye to Carillion’s failure to meet its duties to suppliers.

We heard on our Committee from the Federation of Small Businesses that some businesses were waiting more than 120 days for payment and Carillion had become notorious as late payers. Carillion managed to use this to its advantage, arranging an early payment facility with the banks, meaning suppliers could receive payments earlier than Carillion’s 120-day terms but they would have to face a cut in what they were owed in order to do so. Carillion was effectively borrowing from its suppliers, propping up its balance sheets again without a care for the state of the balance sheets of the thousands of businesses relying on it and doing its work.

[Stephen Kerr (Stirling) (Con)]

rose—

[Rachel Reeves]

I give way to my fellow Committee member.

[Stephen Kerr]

The hon. Lady is making a powerful case for what we found in the inquiry. As evidence of this house of cards that she is describing, which it undoubtedly was, Richard Adam, the former finance director, told the inquiry that not only did he sell all his shares when he left the business, but he would not be prepared to put his own money at risk by being a shareholder.

[Rachel Reeves]

I absolutely agree. The directors of the business were not invested in the business. They were not part of the pension fund that collapsed and, as the hon. Gentleman said, Richard Adam, the finance director who oversaw the accounting practices that helped to contribute to the collapse of the company, sold his shares as soon as he could because he knew what we all now know: this business was a failing business that would not be around for much longer.

What we found in Carillion was a board focused on short-term fixes and growing payouts, with no plan for what would happen when the illusion was shattered. Looking at the poor treatment of suppliers when the company was solvent and the trail of destruction the management of the company has caused, I cannot see how Carillion’s directors can make any claim that they had anything other than their own personal interests at heart. In the latest responses that we have published today, Carillion’s directors continue to refuse to demonstrate any culpability for the state the company was in. They have denied that our report is accurate, but have given no evidence whatsoever to support their case.

Let me be clear: the directors of Carillion are culpable for the company’s collapse. They should be ashamed of their performance and they should not be allowed to take the helm of a company ever again.

--- Later in debate ---

[Sir Bernard Jenkin]

I totally agree with the concept that these contracts become too big to fail, and therefore, as I will explain, it becomes an illusion that the Government have transferred risk to these companies. These companies are a private sector extension of the public sector, and the public sector still carries the risk.

[Stephen Kerr (Stirling) (Con)]

My hon. Friend spoke earlier of contracts basically being awarded on price, rather than on any kind of value. Does he agree with the CBI’s response to the Carillion report that suppliers to the public sector need to “bid responsibly” for contracts and need to be “prepared to challenge” bad deals and to “walk away” from opportunities that will not yield long-term value? The reality is we have a group of companies in this country that seem to be addicted to bidding on price, and this becomes a self-fulfilling prophecy, à la Carillion.

[Sir Bernard Jenkin]

I agree, but unfortunately I think that the Government have fed that addiction. The pressures of austerity and the hunt for savings have encouraged the Government to try to get prices down and to be blind to the risks they are transferring to the private sector, resulting in the sickness of the sector. As I will explain, there is a misappreciation of the risks that private shareholders are prepared to bear, compared with the risks that we should be taking with public services and public money.

As I have said, the Government sometimes write into contracts that companies must accept the risk that the Government have got their own data wrong. An analysis disclosed by Serco found that this practice had taken place in 12 of the company’s recent procurements. That is in part driven by the decision to use contractual models such as payment by results that involve risk transfer on a huge scale. If the Government cannot assess the services they are trying to outsource, they simply cannot make an accurate calculation of a fair cost for the outsourcers, yet they tend to pretend to do so. In those circumstances, passing the risk on to contractors is unacceptable and, as we have seen, proves counterproductive, particularly if the Government are unable or unwilling to make a serious assessment of what is at risk when a company delivers public services.

PACAC found that the relentless drive to bring down costs has been among the most damaging factors. We received evidence from organisations and businesses in the sector that the Government have been “driven by price exclusively”, leading to a reduction in fees paid by up to 25% to 30%. Some people put it more bluntly. Rupert Soames, the chief executive officer of Serco, told us that

“in the four and half years that I have been running Serco I know one occasion”

when Serco had won a contract despite not being the lowest bidder. A survey conducted by the CBI revealed that 98% of businesses responding said that something other than “service quality” was the main reason why Government contracts are awarded. There are obvious problems with an undue reliance on price in the contracting process; industry leaders were concerned that “fudges” would

“allow technically poor but cheap bidders to continue... simply because the customer is desperate for the saving.”

Such bidders would then seek to renegotiate the price afterwards.

There are examples of all this going badly wrong. The Government, who are frequently the dominant purchaser in these markets, have great power to dictate prices to contractors. Professor Gary Sturgess, of the Australia and New Zealand School of Government—and why did we abolish our National School of Government and so have no equivalent institution?—told PACAC that companies were

“stupid to have gone ahead and entered into contracts... but this is a Government supply chain. ”

Representatives from the National Council for Voluntary Organisations said that, on average,

“large charities lose 11% on each contract they have with the government.”

There is something rather unpleasant about Government milking charities to subsidise public services, but that is, in effect, what is happening.

Instead of recognising that the focus on cost damages the ability of companies to meet the terms of their contracts and discourages innovation, the Government have taken a different approach. In some instances, they forgo performance penalties available to them, in essence declining to enforce the parts of the outsourcing contract that are designed to maintain the high standards of the service being provided, at the agreed price. In others, the Government have renegotiated the terms of some contracts. We received evidence from the Cabinet Office that just since 2016 the Government have renegotiated at least £120 million-worth of contracts in that way, including the Ministry of Justice’s flagship “Transforming Rehabilitation” scheme. The cost to the Government of the work necessary for the renegotiation itself is yet unknown.

PACAC found that the Government do not have a strong evidence base about when and whether to use the private sector, or whether such use will be more successful than using the public sector. This is what we call the decision to make or buy. The Treasury Green Book sets out a process that should be gone through when deciding whether to make or buy a service—whether to do it in house or put it out to contract—but we found no evidence that that was well understood or indeed followed. There is also a lack of a central database for outsourcing contracts, meaning that systematic analysis of outsourcing throughout the whole of Government is difficult at best, if not impossible. Nowhere is there an understanding of how much public service risk is being carried by each company, across all of its contracts and across all Departments. Without that kind of understanding, the Government are unable to prove the basic premise behind all forms of Government outsourcing: that the private sector is capable of providing a better service for better value. The basis for the claims made by the Minister who wrote the article in The Times earlier this week is data that is now some 20 years out of date. All this data should be published, as public confidence will not be strengthened without far more openness and transparency about how public contracts are let and managed. Nowhere is that more apparent than with private finance initiatives.

The ostensible purpose of PFIs was to take advantage of the expertise of the private sector in providing privately-financed infrastructure projects and buildings. However, despite having more than 20 years to research and form an evidence base, the Government were unable to justify their claims about the efficacy of PFI. In fact, in their testimony to PACAC, the Government claimed that PFI brought “discipline and rigour” to projects. But, while giving evidence, the chief executive of the civil service revealed that the real purpose is to make the public balance sheet look better. That motive can also be seen in the refinancing provisions for PFI, which allow the balance sheet to look better at the expense of the public finances.

It gets even worse than that. With private finance 2, it was decided that the proceeds of refinancing PFIs should be split between the contractors and the Government. After a school has been built and it is in the process of being managed, a lot of the risk has been carried, so the scheme can be refinanced at a lower rate of interest. It was decided that the benefits of that lower interest rate should be split 50:50 between the Government and the private sector. That was not the case with the original PFI scheme. It subsequently became apparent that, under the rather arcane public accounting rules, if such a change is made, the whole of the debt becomes public sector debt and is shown in the public sector borrowing requirement, so the Government said, “Oh, well, we’ll split it 70:30”. Therefore the Government now collect only 30% of the proceeds from refinancing a PFI contract. That is daft. It is the Government giving away public money just to satisfy silly public accounting rules. It should stop.

There are also issues concerning churn among civil service staff that make the management of public contracts difficult. Reports have highlighted the “insufficient continuity of staff” over the lifetime of a contract. On this front, the situation has been improving, but there is a great deal to do.

PACAC remains concerned that the Government are still taking a much too transactional approach to contracting and the management of contracts. It is vital not only that staff with commercial skills work alongside those within Government with other skills such as costing, IT and project management, but that those in the Government who manage the contract feel that those in the private sector are partners and collaborators. There should be trust and co-operation; it should not be an adversarial competition. When the Government make the decision to outsource a service, and when they accept bids from companies seeking to win the contracts for those services, it is crucial that the process of doing so is evidence-based and transparent.

It was to ensure that there was public trust in outsourcing, and in the Government’s capacity to do so, that Carillion was awarded contracts after it published a profit warning and after it had made other worrying sounds to the Government. That a company in the process of going bust should be awarded yet more contracts, giving it access to yet more taxpayer money, does raises the questions brought up by the hon. Member for Inverclyde (Ronnie Cowan) earlier. PACAC calls for the Government to re-examine how they assess contractors’ viability. Shareholders are prepared to take a far higher risk than the risk the Government should be prepared to take with public services and public money. The Government should publish their rationale for their decisions. Public service procurement cannot be done in the dark, cannot be done without evidence and cannot be done without the Government knowing what they are trying to outsource. It cannot be done on the cheap, and the public must be able to see that.

In conclusion, unless the right steps are taken and the right lessons are learned, a company very similar to Carillion, holding contracts of enormous public worth, could collapse again and all this will happen again. The public want companies that deliver public services better to reflect public-service values. Such companies are part of the public service, and if they do not demonstrate those values, they should not get the money.

Erasmus Plus Programme

Stephen Kerr Excerpts

Thursday 21st June 2018 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

I very much thank the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle) for securing this debate and the Backbench Business Committee for granting it. It is a very useful and timely debate for us to have. It has obviously created a lot of interest. I have been contacted by the National Union of Students, the British Council and Universities Scotland, which are all lobbying for the scheme to be kept because they see its importance.

Before I get into my comments, I will briefly take issue with what the hon. Member for Bexhill and Battle (Huw Merriman) said about the doubling of the scheme’s cost. The cost of the scheme is going to increase if the number of participants doubles. That is just how it is. It is not that the costs have spiralled out of control; the scheme is looking to increase the number of participants and to widen the type of participants involved in the scheme, which is really positive.

One thing that the House of Commons and the UK Government—not just this Government, but previous Governments—do not do particularly well is evaluate schemes to see how effective they have been, before deciding whether to take them forward. The Erasmus+ scheme has been incredibly effective and made a huge difference to people’s lives. I therefore understand why people are looking to increase the number of participants, so that more people can benefit from it.

In 2017, the Erasmus+ scheme was worth €21 million to Scotland. Daniel Evans from West Lothian College said that it was “life changing” and had made a huge difference to people’s lives. The effect of the scheme on individual participants is important, and Daniel Evans made the case that the scheme makes a really positive difference, particularly for the most disadvantaged students.

[Stephen Kerr (Stirling) (Con)]

As is well known I represent the constituency of Stirling, which is home to the world-renowned University of Stirling. The university benefits enormously from Erasmus+. The hon. Lady is describing the benefit of the scheme for its participants, but one point that was put forcefully to me by the university is that the whole university community benefits from the presence on campus, and in tutorials and lecture theatres, of more than 100 international students who come to Stirling under that programme.

[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.

Oral Answers to Questions

Stephen Kerr Excerpts

Tuesday 12th June 2018 Commons Chamber

[Claire Perry]

We have maintained, and will continue to maintain, our manifesto commitment that says that no more large-scale onshore wind development is right in England. That should reassure my hon. Friend and his constituents.

[Stephen Kerr (Stirling) (Con)]

rose—

[Mr Speaker]

No. This question was purely about Kettering—both the question and the answer—so we must move on.

--- Later in debate ---

[Greg Clark]

As with any other supplier, consumer protection rights are in place and available. I would be very happy to meet the hon. Lady to discuss this particular case and see whether we can help.

[Stephen Kerr (Stirling) (Con)]

Vulnerable customers can benefit from the use of smart meters. Will the Secretary of State update the House on how many SMETS 2 meters have now been installed and are connected to the Data Communications Company?

[Greg Clark]

I can tell my hon. Friend that 1,000 new SMETS 2 meters have already been installed. That is a significant milestone because it represents the beginning of the roll-out of the next generation of meters.

--- Later in debate ---

[Andrew Griffiths]

The hon. Lady will know that the retail sector is particularly impacted on by changes in consumer behaviour. More people are shopping online, and that is a challenge for the sector. There is no silver bullet, but through the retail sector we are sitting alongside industry and trying to understand the challenges it faces, such as on business rates and how we adapt to ensure that we not only help the sector to make that transition, but protect the jobs of the 3 million people employed in the sector.

[Stephen Kerr (Stirling) (Con)]

When will the Government respond to the joint report on Carillion by the Business, Energy and Industrial Strategy Committee and the Work and Pensions Committee?

[Andrew Griffiths]

I thank my hon. Friend for his question and thank the Select Committees for their work on Carillion. They did a truly remarkable job in holding the directors of Carillion to account and uncovering exactly what went on with the Carillion collapse. I think the report was issued on 16 May, and the Government have 60 days in which to respond, but I can assure him that we are doing all we can to meet the challenge.

Retail Sector

Stephen Kerr Excerpts

Wednesday 6th June 2018 Commons Chamber

[Rebecca Long Bailey]

I thank the hon. Lady for her intervention. Please will she congratulate her son on his recent promotion? Some of the Government’s commitments are welcome, including the national retraining scheme and the T-levels that she has just mentioned, but sadly they are meaningless in the context of the cuts that we have faced over recent years. For example, £64 million was announced for the national retraining scheme, but £1.15 billion was cut from the adult skills budget between 2010 and 2015. I hope that the Secretary of State will put forward proposals today to increase investment in skills, because if we do not invest in skills, we will not be able to take our employees on the journey that they need to make.

[Stephen Kerr (Stirling) (Con)]

The hon. Lady has been speaking for some time now, giving her analysis and talking about what the Government should do, but in her position as the shadow Secretary of State for Business, does she have any pearls of wisdom to give to retailers on what they should do to attract people into their retail outlets?

[Rebecca Long Bailey]

I thank the hon. Gentleman for his comments, and I do apologise for speaking for some time. If he listens, perhaps he will get some of those pearls of wisdom in due course. The point I am making is that the Government need to recognise that businesses need support. Businesses themselves need to innovate and to ensure that they drive productivity increases in-house, but the Government need to show dedication to providing the tools required to increase fertility in the business environment. Frankly, that is not happening at the moment.

An essential element in improving retail productivity is innovation, which is the best means of raising wages and boosting the competitiveness of British industry. Innovation is required by businesses themselves, as I have just pointed out to the hon. Gentleman, but the Government must commit more money to research and development spending. They referred in their White Paper to increasing that spending to 2.4% of GDP, which is welcome, but if they are really going to support low productivity sectors such as retail and ensure that we can compete on the world stage, they need to increase it to at least 3%, as other world leaders such as South Korea and Japan have done.

I also welcome the Government’s recent establishment of a Retail Sector Council, but I have heard very little information about it since its establishment. Will the Secretary of State update the House on how often the council has met so far and whether there have been any discussions with the Government about what role the Government can play in boosting innovation in the sector? Labour has pledged to establish a catapult centre in relation to retail, to lead on technological, managerial and employee innovation. This is important because the Fabian Society recently reported that increasing managerial innovation and sharing best practice in retail can drive productivity by improving quality, as well as sale and business growth, and I call on the Government to examine Labour’s catapult centre proposals.

Infrastructure investment is also a critical part of boosting productivity in the sector. We must recognise that the future of our high streets depends on quality infrastructure, transport links, parking amenities and high-speed broadband, as well as on the local anchor institutions that draw people in, such as entertainment and leisure facilities and libraries. The sums announced in the White Paper are sadly negligible, and the TUC has stated that public investment will be increased to just 2.9% of GDP, while the average invested by other leading industrial nations in the OECD is 3.5%. Again, I hope that the Secretary of State has some earth-shattering updates for me today, to restore our faith in what the Economic Justice Commission recently dubbed

“the most regionally unequal country in the whole of Europe”

in terms of investment in our regions.

This brings me to the subject of retail workers, who are vital to the success of the sector. They provide positive customer experiences, and a lack of staff can have an adverse impact on customer service levels. The impact of job losses in retail should therefore not be understated. They have a profound impact on families and communities right across Britain. Retail has traditionally provided entry-level, part-time and flexible jobs for millions across the UK, and it has often provided livelihoods for people who have had to leave declining industries in particular regions.

--- Later in debate ---

[Drew Hendry]

I would love to give the hon. Gentleman a direct answer, but I have not come across that situation myself. I will happily look into it. I will not come here and make up something that I do not know anything about, so I will look into the lease issue for him.

I will come back to what the Scottish Government are doing in Scotland later in my speech. In tough times, the last thing that retailers need is for costs to rise. When prices go up, the number of customers goes down. It is a natural cause and effect. The biggest current risk to the Scottish economy and the retail sector comes from the hard Brexit that is on the table now from this Tory Government. We still do not know what the Labour position is. [Interruption.] Well, we still do not know what the Labour position is on a hard Brexit. Hopefully, we will find out soon.

[Stephen Kerr]

rose—

[Drew Hendry]

Oh, Madam Deputy Speaker, have I ever refused the hon. Member for Stirling (Stephen Kerr)?

[Stephen Kerr]

And the hon. Gentleman maintains his record of giving way, so I thank him. He says that the biggest threat to the retail sector in Scotland is a hard Brexit, which is, I am afraid to say, all too predictable from the Scottish National party spokesman. That is not what the director of the Scottish Retail Consortium, David Lonsdale, says. He says that the devolved Administration’s increase in surcharges and business rates inflexibility have served to make it more expensive to operate shops in our town centres. We cannot go to a higher authority than the Scottish Retail Consortium to describe what is wrong with Scottish retail.

[Drew Hendry]

Of course, if the hon. Gentleman wants to trade in higher authorities, let us see if we can find one. Let us go to the Governor of the Bank of England, Mark Carney, who says that a hard Brexit will cost each family £900 per year—a reduction in income that people simply cannot afford and that will not aid anyone, especially retailers. Let us go to the Office for Budget Responsibility, which says that lower economic growth is predicted in each of the next five years—lower than the 1.7% in 2017.

The single market and the customs union remain vital for Scotland’s economy. It is a Herculean task to find a business person or a business organisation in Scotland that does not agree with that. Hard Brexit not only threatens the cost outlined by Mark Carney and others, but, according to the SPIE 2 report, means that costs will reach £2,300 per person per year compared with remaining in the EU. Report after report highlights the economic folly of the hard Brexit approach. All of that sucks up disposable income—the lifeblood of the high streets.

Let me return now to austerity and its effect on retail. Austerity is a choice. Dealing with a deficit can be done by encouraging growth, not by austerity. Between now and 2022-23, the Scottish Government modelling suggests that the Chancellor could provide an additional investment in Scotland of around £5 billion while still meeting the UK Government’s targets on structural deficit and debt reduction. These policies disproportionately affect the least well off—the very people who spend more of their income in local shops. On welfare cuts, the Resolution Foundation states:

“The coming year (2018-19) is set to be the second biggest single year of welfare cuts…(after 2012-13) at £2.5bn.”

Having been in a pilot area for universal credit for more than five years now, I can testify to the effects that it has had on the local economy by draining the ability for people to spend in their local shops. The people of Inverness in my constituency are all too aware of these consequences.

Of course, there is another effect that is likely to cause great problems and to be a damaging issue for retail. Retail needs people—to buy and to sell. The unique selling point of being in retail, particularly high street retail, is that customers can speak to staff and staff can show customers products. The Government’s proposed approach to immigration could mean that real-terms GDP in Scotland is 9.3% lower by 2040. That affects tax and employment not just for shops and businesses, but also for public services.

Over the decade to 2019-20, Scottish Government funding has been cut by £2.7 billion, which is 8.4% in real terms. The Scottish Government will only receive 2.5% or £37 million of the £1.5 billion funding for Brexit preparations allocated in 2018, so when we look at support for business, it is against a background of lower funding. The Scottish Government’s recent budget set out how reforms of the business rates, for example, will ensure that Scotland provides the best possible environment for business. Rates relief for small business in Scotland is more competitive than in England. We provide the most competitive reliefs package in the UK, worth a record £720 million—up from £660 million in 2017-18. From 2018, we will introduce a business growth accelerator that will see no bill rise for 12 months as a result of improvements or expansion of existing business property. It will also ensure that no rates are paid on new builds for a year when they are entered into the valuation roll.

Earlier I mentioned the small business bonus scheme, which was protected in the 2018-19 Scottish Government budget and has saved businesses almost £1.5 billion cumulatively since it was introduced in 2008. The scheme has provided record relief to almost 104,000 recipients over the past year. The estimated total relief under the scheme, which removes or reduces rates bills, rose to £230 million—an increase of £43 million from £187 million last year. This amounts to an average saving per property of £2,000. The maximum savings that a business can achieve through the scheme will increase next year from £6,990 to £7,200 a year. That is a record level of small business support. Andy Willox, the Scottish policy convener for the Federation of Small Businesses, said:

“Without this rates help, Scottish firms tell us they would scale back investment, and their plans for growth. This vital scheme forms the centrepiece of the Scottish Government’s package of help for smaller firms.”

The Secretary of State rightly talked about the need to diversify in retail, and we have to ensure that we take that factor into account. As he rightly said, most successful businesses are able to adapt and change with the circumstances they face and the opportunities that arise. Many successful retailers—small and large—have adopted online platforms alongside their traditional face-to-face retail. In fact, they are finding that a double benefit: not only can people find and access their products, but they also know somewhere where they can go and get direct advice about those products. It is of course important to set the environment to ensure that that can work properly.

Although the Scottish Government have committed to extending superfast broadband access of 30 megabits per second to Scotland by the end of 2021, the UK Government really have to up their act and understand that 10 megabits is not good enough for the rural parts of Britain that are not covered by the Scottish Government’s actions. The UK Government appear intent on cutting Scottish consumers out of the broadband universal service obligation completely, despite the fact that they are being asked to pay for it alongside consumers in other parts of the UK. In Scotland, we are investing £600 million through the first phase of our Reaching 100%, or R100, programme to achieve our goal of superfast broadband access for all. Procurement is under way and deployment will begin during 2019. Even though telecoms is reserved to Westminster, the UK Government’s contribution to R100 is just £21 million—only 3% of the total.

Figures provided by thinkbroadband show that the UK Government have met their target of 95% superfast broadband coverage, at the UK definition of 24 megabits and above. But, in fact, using the same data used by the UK Government and our own internal data, we have confirmed that we exceeded our target of 95% fibre broadband coverage across Scotland by the end of 2017. Our Scottish 4G infill programme aims to push 4G coverage beyond commercial roll-out by investing up to £25 million of public funding to deliver future-proofed 4G mobile infrastructure to help selected mobile notspots.

I agree with the Secretary of State that the quality of people’s working lives must be enhanced, and I join him in paying tribute to Aldi for making a commitment to being the highest paying supermarket. For too long retail sector wages have been too low for too many people. As I said in my opening remarks, working in retail is a rewarding job, but it is also challenging at times. Retail’s future workforce and customers are obviously going to come from the ranks of young people, so I will make the kind request that has been made eloquently in this Chamber by many other Members, for the UK Government to start to understand that they need to reward young workers, not punish them.

Research from the Scottish Parliament’s information centre shows that workers under the age of 18 would earn roughly £6,500 less than people who are over 25. The research further highlighted that 18 to 20-year-olds would find themselves £3,705 worse off—and apprentices £7,605 worse off—compared to workers over the age of 25. If the UK Government seriously want to reward hard workers, as they so frequently say they do, will they listen to the SNP’s demand and retract this deeply discriminatory decision that punishes workers solely for being young? It is a missed opportunity to provide economic empowerment to young people from lower socioeconomic demographics.

The SNP would encourage every employer to reward their staff fairly and, where possible, to pay the real living wage. Many of the most successful retailers, such as Aldi, are already committed to doing the best for their staff, and that is the right thing to do. The new national living wage rate of £7.83 an hour for over-25s came into effect on 1 April 2018, but the national living wage refers to average earnings, not living costs, and is therefore not a real living wage. The living wage differs in that it is calculated according to the basic cost of living, and therefore takes account of the adequacy of household incomes for achieving an acceptable minimum living standard. Incidentally, the Scottish Government were the first Government in the UK to become an accredited real living wage employer. Our young workforce and consumers—the very people who need to get into the habit of using retail and finding ways to stimulate the economy, and the people who will be paying taxes to support pensions into the future—must be included in a fair strategy.

To conclude, I ask Ministers—[Interruption.] I am getting some warm applause from the Tory Benches. How delighted I am to always find a few extra words to thank them for their attention during these exchanges! Will Ministers copy what has been working in Scotland with the small business bonus? Will they look at adjusting the rates system in that way? Will they finally listen to the endless stream of businesses and business organisations that have come forward to point out the perils of a hard Brexit direction? Will they listen to the people affected by the universal credit roll-out? This all cumulatively affects the future of retail and the ability of people to operate on the high street. It is time to help the whole of the economy. Listening to these points would definitely hit that mark. It is well past time to ditch the dogmatic approach to austerity.

--- Later in debate ---

[Stephen Kerr (Stirling) (Con)]

On the high street, there are very few things sadder than a boarded up storefront. It is the sign of a dream denied, a lost opportunity and of course lost jobs. I will not deny that in Stirling city centre we are finding it tough. On Friday afternoon, I spent some time with Lisa Sneddon, the owner of the Bluebell Teashop. I recommend it to all hon. Members—indeed, it is obligatory—when they visit Stirling. She told me of her concerns about the state of Stirling city centre. Those concerns will be all too visible to anyone who visits it.

The pressures on city centre businesses have perhaps been compounded by the temporary closure of the Kerse Road bridge crossing. The bridge is being replaced as part of the electrification of the railway. It has undoubtedly been much quieter in the city centre of late, and there has been a discernible drop in footfall. King Street is a particularly sad sight. This is the street that leads up to the castle. Stirling Castle is one of the most popular tourist attractions in the entire country, and it should be a lively thoroughfare, but since the loss of McAree’s department store, which had been on that site for 123 years, there has been a definite drop in footfall on the street and in the number of businesses taking up the slack. Among its reasons for closing, McAree’s cited the Scottish Government’s rates system and specifically mentioned the large business supplement—not really a large business supplement, but a large property supplement. In one year, its large business tax rose to £27,000, and that was the straw that broke the camel’s back.

In the last two weeks alone, at least six other stores have closed in the city centre, including Toys R Us, which has been mentioned; Maplin; The Boozy Cow; The Fat Cyclist—interesting names betraying the fact that these were individually owned and independent businesses; and Mr. Simm’s Olde Sweet Shoppe. All have closed their doors for good, and I cannot deny that I am concerned. It came to light yesterday in a report entitled “Retail and Leisure Trends Report”, from the Local Data Company, that 520 units on the high streets in Scotland had closed in the previous year—more than anywhere else in the UK, including Greater London. I have already mentioned what David Lonsdale, director of the Scottish Retail Consortium, had to say about those numbers.

There is undoubtedly a way to save our city centres. They can have a bright future, Stirling city centre can have a bright future, but the city centre needs to be skilful and repurposed. I will work with anyone who can help bring it back to its former glory. The landscape is changing, and bricks and mortar retailers must move with that change. People are buying online, and that is not only about choice; it is also about the convenience of shopping when and where the consumer chooses; it is a simple and relatively hassle-free experience.

Leigh Sparks, professor of retail studies at the University of Stirling, has called on retailers to demonstrate a more imaginative approach to customer experience, to create new concepts of retailing that stimulate consumers and to make their stores must-visit attractions in their own right. He has talked about retailers that have not done a particularly good job, among them Toys R Us. He said that

“when Toys R Us came to Britain, it was innovative and new. Yet the Toys R Us you see today is pretty much…the same as it was when it first opened—it hasn’t grown or offered the consumer anything new. The current pressure on retailing is weeding out the poorer retailers. We will undoubtedly be left with a smaller landscape. If it is smaller and becomes concentrated so it provides spaces that people want to use, then it will be a better landscape.”

I concur.

We need to see our city centres differently. We need to do much more to bring people to them, and that means that businesses need to work together in the business improvement districts already mentioned—we have one in Stirling city centre—to make the city centre a compelling and irresistible proposition, a positive destination. That means creating an experience that supersedes the perceived benefits—convenience and price—of shopping online. The high street needs to be more about retail experiences—entertainment, food, independent stores—that people want to have.

We cannot have more of what the Americans call “cookie cutter” department stores—where someone can close their eyes and spin around and find it difficult to identify which town they are in. We need more variety and to entice people not only to visit city centres, such as Stirling city centre, but to live in them. We need to make that possible. People living in the city centre will bring life and vibrancy to an important civic space, and public policies that create the right conditions for the revival and prosperity of the high street are now overdue.

Geothermal Energy: Clackmannanshire

Stephen Kerr Excerpts

Monday 4th June 2018 Commons Chamber

[Luke Graham]

I would not dare to claim to know more than my hon. Friend about his constituency, but I would say that a key part of the industrial strategy is to have more regional facilities and smaller-scale projects, and I am hoping to advocate doing so tonight.

As I was saying, for comparison, the carbon footprint estimate for an oil boiler is 310 to 550g CO₂eq/kWh or—for those who do not know—grams of carbon dioxide equivalent per kilowatt-hour of electricity generated. For gas boilers, the figure is 210 to 380, for biomass boilers it is somewhere between 5 and 200, although typically they are below 100, while the carbon footprint range for a solar thermal system is 10 to 35 grams of carbon dioxide equivalent per kilowatt-hour of electricity generated. By comparison, the figure for geothermal is only 10. As a result, geothermal energy systems are becoming an increasingly popular low-carbon energy system of choice.

Yet geothermal energy is barely utilised in the United Kingdom. In a Westminster Hall debate on clean growth energy back in March, there was a great deal of enthusiastic support among the small number of Members present. Those who spoke in support of geothermal energy in that debate came from areas where it already exists, or at least where it is being planned. I do not consider it a coincidence that where geothermal energy has already been explored and exploited, there was support and enthusiasm for it. It evidently works, and indeed, we should take note of the enthusiasm expressed in that debate. It is a clean energy source, with the potential to bring jobs and investment to our constituencies, and given the UK’s long history of mining, I refuse to believe that only Clackmannanshire has the potential for geothermal energy to be developed. There was of course one person in that Westminster Hall debate who enthusiastically supported the development of geothermal energy in the United Kingdom—the Minister responding this evening.

The UK has a target that, by 2020, 15% of its energy will be met by renewables. In 2008, renewables constituted just 2.25% of energy sources in the UK. By 2014, this had risen to 7.1%, and 8.3% by 2015. I could not find any more recent figures, so I would be grateful to the Minister if she told us how the UK is performing in 2018, and how it expects to meet its target in 2020.

Although geothermal is still relatively new to the UK, this type of energy is not a particularly new technology. For example, geothermal heating is used in over 70 countries already, while 24 already use geothermal electrical production systems. Furthermore, five countries—Iceland, El Salvador, Costa Rica, Kenya and the Philippines—generate more than 15% of their electricity from geothermal sources. However, across the whole United Kingdom, I could find only nine geothermal energy projects that are in operation or are being planned. Four are in Cornwall, two are in north-east England, and one—the original—is in Southampton. There are two small mine-water geothermal schemes in operation in Scotland: Shettleston in Glasgow and Lumphinnans in Fife, as well as a forthcoming project in Kilmarnock. To put that in context, the fifth largest economy in the world is being outdone by the 106th, 101st, 76th, 68th, and 39th largest economies respectively in geothermal development and energy production.

We still have a way to go. Evidently, we can and should be doing more to invest and develop that clean energy source. In 2013, only 900 jobs in the UK were supported by geothermal energy—500 were directly supported, and 400 indirectly. Given the potential for the expansion of that technology in the UK, there is a great deal of potential for the jobs market, both directly and indirectly. High-quality, skilled jobs would be supported by the development of the sector.

Here is the crux of the debate—why Clackmannanshire? Development of geothermal in the UK, as I have said, has been relatively limited so far, largely due to the availability of cheap North sea oil and gas. Geothermal energy is plentiful beneath the United Kingdom but, admittedly, it is not readily accessible, except in specific locations. One such location is Clackmannanshire. Abandoned coal mines in Clackmannanshire could become a source of energy, as the water that has poured into the mines since they closed has been warmed up by the rock surrounding it. It is hot enough to be used for a low-temperature heating system through a heat exchanger, with more potential for it to be used for energy production.

[Stephen Kerr (Stirling) (Con)]

My hon. Friend is speaking extremely well about this subject, and I bow to his knowledge in this area. On the notion of creating electricity from heat, would that extend to, for example, sewage? Would it be possible to create district heating systems in that way? Is it the same technology? Perhaps he can enlighten me.

[Luke Graham]

On district heating systems, yes. On sewage systems, I am not sure. That is something that we should explore, but when we look at the broader uses of the technology, certainly in energy and electricity production, as we have seen in other countries around the world, absolutely that can be done. There are exciting, direct uses of geothermal energy in countries such as Kenya, ranging from hydroponic farming to powering small communities. There are a number of exciting projects in operation, which is why it is important to run a pilot and secure investment so that we can realise the true potential of the technology.

While it is not often that Clackmannanshire has a competitive advantage over other local communities, we have a relatively unique geographical opportunity. However, there are more reasons to invest in Clackmannanshire. It suffers from high levels of deprivation, and a significantly high level of fuel poverty. Local authority surveys have identified the fact that one in three households in Clackmannanshire suffers from fuel poverty, rising to 49% among pensioners. Heat accounts for nearly half of energy consumption in Clacks and a third of its carbon emissions. Roughly 80% of that is consumed in homes and other buildings.

The local economy is vulnerable. It has a higher than average unemployment rate, the third lowest job density in Scotland, below average earnings, and of all the local authorities in Scotland, Clackmannanshire has the lowest rating for skilled qualifications. That is not to talk Clackmannanshire down. It may be the known as the wee county, but as I said in my maiden speech,

“it is not size but what you do with it that counts.”—[Official Report, 27 June 2017; Vol. 626, c. 524.]

I want to highlight some of the challenges in Clackmannanshire, but also give an idea of what a significant investment in the area would help to overcome. I want to look at the difference that such an investment could make in Clackmannanshire. It goes without saying that investment would bring valuable, skilled jobs to the area, and that is important, but it is more than that. Investment would help to develop spin-off businesses that would support the industry both directly and along the supply chain. We have already seen that. I was lucky at the weekend to be interviewed by the BBC, and local companies and local champions of geothermal have come forward in the past few days, keen to work with the Government and public and private sector bodies on a project not just in the county but in the wider region.

Developing geothermal energy in Clackmannanshire could see the area become renowned in the UK, not just as a leading low-carbon energy provider but for its energy innovation.

Office for Product Safety and Standards

Stephen Kerr Excerpts

Wednesday 9th May 2018 Westminster Hall

[Stephen Kerr (Stirling) (Con)]

It is a pleasure to serve under your chairmanship, Sir David. I pay tribute to the hon. Member for Swansea East (Carolyn Harris) and congratulate her on securing this important and timely debate.

Product safety standards is a subject on which we should all be focused. It is not so long ago that I wrote a column for my local newspaper, the Stirling Observer, which focused on product safety—especially of tumble dryers. I received an unexpectedly high response to that article compared with others I had written on more current constitutional issues that we might debate in the House and in Scotland.

I also reflect on the first ever surgery I attended as a newly elected Member, in the Mayfield Centre in Stirling. We advertised the event but only two constituents came along to speak to me, so I had some time to speak to the caretaker. He was delighted to speak to his new MP, because he wanted to point out to me an issue that, so far as he was aware, no one was speaking about: the regulation and safety of tumble dryers. Little did I know that, within a few weeks of that, I would be a member of the Business, Energy and Industrial Strategy Committee and that we would be conducting an inquiry into the safety of tumble dryers.

This is an important subject, as has already been mentioned by the hon. Member for Swansea East. Our inquiry found, as can be read in the published report, that companies such as Whirlpool have not made enough of an effort to take responsibility for their products and the consequences of their use when they are deemed dangerous. In fact, the report identified that a million faulty tumble dryers are in everyday use in this country. We also identified in the report gaps in the regulatory regime.

I should mention that, during the hearings that we conducted, Whirlpool made commitments about its willingness to respond to the concerns that we raised. We asked it to resolve issues with defective machines within two weeks. It said that it would do it within a week, but we have no way of measuring whether the company has been true to the commitment that it made and put on the record.

[Rachel Reeves]

I thank the hon. Gentleman for his work on our Select Committee in probing Whirlpool and Ian Moverley, who gave evidence—or at least answered a few of our questions, but not all of them. On the 1 million faulty tumble dryers that Whirlpool knows about, is the hon. Gentleman also concerned that Which? said that it had found as recently as last month through its mystery shopping that customers with these faulty tumble dryers were still being given the wrong advice? That means there are potentially still 1 million tumble dryers in our homes that could catch fire, like the ones we in the Committee heard about and the ones other hon. Members have given evidence on.

[Stephen Kerr]

I am grateful to the Chair of the Select Committee—I have the privilege of serving on it—for her intervention. She is absolutely right, and I share all those concerns—specifically in relation to the Which? report of recent weeks that suggested that Whirlpool customers were being advised that they could continue to use their defective models, even though they were known to be defective and presented a danger to the safety of the people who lived in homes where they were in use.

Similarly, I am also concerned to hear that the BBC and Which? have reported that some of the machines that have had their defects corrected have then caused fires. This is a significant issue and, as I said earlier, is something that should concentrate all our minds—particularly those of Ministers. I am sure that the Minister will wish to address these specific issues in his reply.

Questions need to be asked, and it is vital that the regulatory regime that we have meets the need that we currently place on it. As we take more products into our lives and rely more on technology, the more we need a regulator with teeth. The new Office for Product Safety and Standards is a promising development, but it will need to be tested against reality—the lawyers and the corporate spin machines that defend the spin cycles of the manufacturers.

I should at this point deviate to tell the House that I had a most interesting experience in the last few minutes while visiting a constituent of mine who is here in Parliament. She is at a drop-in event in Portcullis House sponsored by Genetic Alliance UK, which is a charity that works to improve the lives of patients and carers. I told her that I was coming to Westminster Hall to participate in a debate on tumble dryers—that is how I expressed it, even though the debate is broader—and she volunteered that her tumble dryer had been faulty. It was a different make from the one I have discussed. She returned the machine and was offered £100 and a new machine, but that machine was faulty. This product seems to have endemic issues.

I hope Members will forgive me if I dwell a little more on an issue that has bothered me a great deal since being elected: the apparent ineffectiveness of regulators. For example, Ofgem constantly failed to take on the electricity markets, which were obviously broken, and I have found Ofcom to be generally unresponsive to the wireless telephony and broadband connectivity issues of my rural constituents. The list goes on. The debate is not about that, but I am concerned that the new office could be another ineffectual regulator—toothless, ineffective, and sometimes even, sad to say, supine—instead of a body that the Government, and us as parliamentarians, have put good faith in to defend the best interests of people.

In some cases, regulators fail not because they do not have enough power but because they lack the will and suffer from organisational atrophy that causes inaction. The regulator in this field, the OPSS, must not fail. If it does, there is the possibility of lives being lost—actually, that is beyond a possibility; it is a fact—consumers being ripped off with faulty goods, and untold damage being done to property.

The situation regarding Whirlpool, which I have already mentioned, is one in which our Select Committee expected action on the part of the company. To our knowledge, that has not been forthcoming. Its actions have been inadequate. Instead of responding to the concerns that we raised with it and those of my constituents and others who have raised issues with me that I have passed on, it has resisted action and, in my view, done the bare minimum that it can get away with. An activist regulator would put paid to the inaction, and a test of the ability of the new regulator will be how it pursues this. It is essential that when questions are raised about products, companies act transparently. That is what we would expect, and what we would expect a regulator to insist on.

I look forward to hearing the Minister’s response to the debate.

[Several hon. Members rose—]

--- Later in debate ---

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I am pleased to take part in a debate with so much consensus, which does not happen often. I thank the hon. Member for Swansea East (Carolyn Harris) who has done a power of work on the issue and continues to champion the cause, as we all recognise. I thank the consumer organisation Which? for providing an excellent briefing, as has Electrical Safety First.

The Office for Product Safety and Standards is welcome, of course, as we have heard from a number of Members. As the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) pointed out, it is important as a way of strengthening our product safety regime and making sure that customers are aware of and, importantly, can have confidence in the availability of an effective system, should products need repair or replacement. However, caution is required about the impact. In its report the Business, Energy and Industrial Strategy Committee regretted the Government’s limited response, and the lack of urgency about acting on recommendations to address product safety issues. It found that reductions in funding for local trading standards and national trading bodies were having the negative effect that might be expected on the adequacy of the existing product safety system.

That finding, combined with the fragmentation of the current system, makes it difficult for consumers to have confidence in the consistent enforcement of the required standards across the UK. We have heard today of responses from the manufacturer Whirlpool to a defect in its tumble dryers, which clearly show the limitations of the existing system. Indeed, as a direct result of its slow response, 1 million homes still contain potentially dangerous appliances, as set out by the hon. Members for Leeds West (Rachel Reeves), for Merthyr Tydfil and Rhymney (Gerald Jones) and for Hammersmith (Andy Slaughter), who explained the dangers that have dogged consumers who have those machines and has, of course, been a champion in the area in question.

There is no doubt that progress in improving the safety of electrical goods has been too slow. I suspect that the Minister would probably agree with that, in his quieter moments. That is despite a widely supported set of recommendations, made in Lynn Faulds Wood’s independent review, published two years ago. That review, which had a national product safety agency as its central recommendation, concluded that that was needed as part of a long-overdue overhaul of the entire system. All hon. Members welcome the new Office for Product Safety and Standards, but as we have heard, it must have sufficient scope and resources to deal with issues of product safety across the UK.

[Stephen Kerr]

Despite what I am about to say, I do not wish to introduce a tone of discord, but I was distressed last week when, in the Scottish Parliament, our First Minister, Nicola Sturgeon, answered a question from Miles Briggs MSP regarding genuine concerns about the safety of babies being permitted to sleep in baby boxes. The response he received did not indicate to me that the First Minister shares any kind of genuine feeling for the fact that people are sincerely concerned about product safety and baby boxes.

[Patricia Gibson]

That question is a bit leftfield, but I am happy to take it head on.

[Stephen Kerr]

It is about product safety.

[Patricia Gibson]

If the hon. Gentleman googles the Scottish Cot Death Trust, he will find that it has no concerns about baby boxes. However, if cardboard is set alight it does catch fire—there is a revelation for the hon. Gentleman—and the trick is not to light matches around cardboard. That is probably the safest thing for a baby.

As I was saying, the Office for Product Safety and Standards must be given sufficient scope and resources to deal with issues of product safety. It must be independent and have real teeth to protect consumers and prevent dangerous products from doing them harm. The Minister will be interested to hear that the consumer organisation Which? has expressed concern and disappointment that the full overhaul and fundamental reform needed to stop unsafe goods from reaching or remaining in our homes does not appear to be on the table. Disappointingly, it seems that the new office has not engaged with consumer organisations such as Which?, which I am sure the Minister would agree has some standing and calibre. I wonder why that is, and how consumers would view that lack of engagement. What does it mean when an organisation of such status cannot get the new office to engage with it? Perhaps that is something the Minister could unblock.

It seems a missed opportunity that the Office for Product Safety and Standards will apparently not address the systematic weaknesses in the existing enforcement framework, as set out by Which?, and it seems that there is no action plan for the new office—Which? has expended considerable effort in trying to elicit such a plan, but without success. This matter is fairly straight- forward because we all know about the ongoing failures in the product safety system, and recent product safety issues have brought into even greater focus questions about the adequacy of the current regulatory and enforcement system in the UK. There are concerns about a lack of effective co-ordination and direction in the new office, and if local authorities have no regulatory enforcement staffing resource, that might be a big problem. We know how under pressure trading standards officers are locally, and their role is extremely important for safety in our communities.

The OPSS must also consider product recall as part of its strategy—as the hon. Members for Makerfield (Yvonne Fovargue) and for Hampstead and Kilburn (Tulip Siddiq) pointed out, product recall has an average success rate of only 20%, and potentially, millions of unsafe products remain in unsuspecting homes. It must also consider online retail, as that must be held to the legal standards that apply to other forms of retail shopping and product safety—that point was also raised by the hon. Members for Makerfield and for Merthyr Tydfil and Rhymney.

Counterfeit goods are a huge problem, and we need a way forward to counter that issue. As the hon. Member for Hampstead and Kilburn pointed out, data collection and sharing for product safety is fragmented and incomplete, and we need a true picture of the scale of the problem of unsafe goods. An injury database could be used to help collect intelligence and quickly identify dangerous products, and that would be a positive step forward.

We have the opportunity to address current weaknesses in the system and make sure that it is fit for purpose in the potentially more diverse trading environment that the UK will be part of in years to come—that point was set out by the hon. Member for Kingston upon Hull West and Hessle (Emma Hardy). We have the opportunity to introduce a new national independent regime for product safety to ensure effective enforcement, market surveillance, and appropriate standards for goods. As the hon. Member for Strangford (Jim Shannon) reminded us, getting product safety wrong will, and indeed has, cost lives.

The post-Brexit world raises challenges, and we cannot have a situation where the UK diverges significantly from the rest of the EU, as that could only be to the detriment of consumers—I hope the Minister will reassure us on that point. We all agree that the new office is welcome, but we are concerned to ensure that it has the power, resource and strategic direction to help it achieve what we all want, which is a safe environment for our consumers who buy products in good faith and have a right to expect that they are safe.

--- Later in debate ---

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

It is a pleasure to serve under your chairmanship, as always, Sir David, with your vast experience of this place. I congratulate the hon. Member for Swansea East (Carolyn Harris) on securing this important debate, and I am grateful to hon. Members from both sides of the House for their thoughtful input. The hon. Lady is a true champion for her constituency, as I know from my work on the Parental Bereavement (Leave and Pay) Bill. She has made a huge contribution to the lives of people across our country, and I commend her not only for the work that she does, but for the way in which she does it.

Let me be clear that there is no doubt about the Government’s commitment to maintaining the highest level of consumer protection. I have a wide and varied brief. As the Minister responsible for small business, consumers and corporate responsibility, I cover postal issues, competition policy and retail. I lose track of the number of things that should be on my business card, but it would not fit in my pocket if it had everything on. I reassure the Chamber that consumer protection is of the utmost importance, however, and if anything keeps me awake at night, it is ensuring that this country has a product safety regime that keeps us all safe. The Government’s commitment led to the first ever national technical expertise to support local authority trading standards teams in their vital work of enforcing product safety.

There were some questions about the announcement in relation to the Office for Product Safety and Standards. I put my hands up; it was my first week as a Minister. I thought it was better to get the information into the public arena and for people to be aware of it. If there are suggestions that I should have come to the House or done it differently, I take them on board. We are always learning.

I announced the establishment of the Office for Product Safety and Standards on 21 January. That announcement responded to the central recommendation made by the working group on product recalls and safety. That group was set up by the Government to advise on the practical steps that could be taken to enhance the UK’s approach to product safety. It identified a need for a national technical and scientific resource to support decision making in local authorities and in the businesses they regulate. We will deliver that national capability through the Office for Product Safety and Standards. I have high ambitions for what the office will be able to achieve, and I am determined that the capability will be established quickly.

Since establishing the office, we have taken steps to deliver improvements, which I will say more about shortly, but it might be helpful to remind hon. Members where the responsibilities within the product safety regime lie, so we are clear about exactly where we should expect the office to deliver improvements. It has not been set up to do what others are already doing or should be doing.

Businesses are legally responsible for ensuring that the products they place on the market are safe, and for taking effective action to address any issues that arise once those products are in circulation. The Office for Product Safety and Standards does not take those responsibilities away from businesses, nor does it lessen them in any way. It gives us the scope to better enforce those requirements more consistently across the country.

Day-to-day enforcement of product safety is led by local authorities, which have teams of officers on the ground across the country, as we have heard. In that role, they provide vital services, such as being a point of contact, giving advice to consumers and businesses, and leading on investigations into potential non-compliance. I pay tribute to the work that trading standards officers do across the country. The establishment of the office does not move, alter or reduce that role. Local authorities remain front and centre in the delivery of effective protections.

The office will provide additional support for those local teams, who will be able to draw on the national testing facilities, leading scientific advice and technical expertise to help them to deal with the complexity of the issues they encounter. We have heard about the challenges in relation to resource, but this is a new, additional resource of additional expertise to help and support those trading standards officers across the country.

To clarify, the new office will have a budget for new product safety activities of an additional £12 million a year. As I said earlier, the budget for the first year in operation, 2018-19, is about £25 million, which includes £9 million of additional funding. In the following year, that £9 million will increase to £12 million. Those are substantial amounts of resources. The office will employ about 290 people, of whom 180 will be existing staff and 110 will be new posts. I hope that reassures right hon. and hon. Members.

[Stephen Kerr]

Will the new office that the Minister is describing in great detail have the power to hold to the fire the feet of big organisations, such as Whirlpool, in favour of consumers?

[Andrew Griffiths]

I absolutely reassure my hon. Friend. I think he won the prize for the best pun today when he talked about the spin cycle of those large companies. I noticed it, if nobody else did, and laughed internally. Clearly, the office has to have the teeth and the capabilities to hold those businesses to account. I reassure him that it will.

Nuclear Safeguards Bill

Stephen Kerr Excerpts

Ping Pong: House of Commons
Tuesday 8th May 2018 Commons Chamber

[Richard Harrington]

My officials have had a lot of discussions with the EU on Euratom, as the hon. Gentleman might imagine, and I am very satisfied with the stage we have reached. If he will excuse me, I will try to cover that in the rest of my contribution.

[Stephen Kerr (Stirling) (Con)]

During the Select Committee hearings on this matter, David Wagstaff, the head of the Euratom exit negotiations at the Department for Business, Energy and Industrial Strategy, indicated that progress in establishing new nuclear co-operation agreements with the USA, Canada, Japan and Australia was well advanced and that these would be completed in time for our departure. Did he mean next March or the end of the implementation period?

[Richard Harrington]

I can assure my hon. Friend that he meant March 2019. In answer also to the hon. Member for Leeds North West (Alex Sobel), I would like to assure the House that the UK and the EU have reached agreement on the terms of an implementation period that will run from 30 March 2019 until the end of 2020. The existing Euratom treaty arrangements will continue during this period and businesses will be able to continue to trade on the same terms as now. As part of this, the UK and the EU agreed that for the duration of the implementation period the EU’s international agreements will continue to apply to the UK. This will include Euratom’s existing nuclear co-operation agreements with the USA, Canada, Australia and Japan.

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The adoption of those treaties is an essential element of ensuring that there are no cliff edges as we leave Euratom. In Committee, representatives of the nuclear industry, among others, expressed the fear that leaving Euratom without introducing all the measures necessary to ensure a smooth continuation of function could create a gap in provision that would be devastating for the operation of civil nuclear in the UK.

[Stephen Kerr]

Does the hon. Gentleman welcome the progress that the Government are evidently making towards the conclusion of these agreements? That is good news, is it not?

[Dr Whitehead]

I think the hon. Gentleman has slightly anticipated what I was about to say. It is indeed good news that progress is being made in that regard, but there is not much time left between now and March 2019, and there are still a number of treaties to go.

Lords amendment 3 addresses what is perhaps the most central point of the whole exercise. If those treaties are not securely in place before the date of withdrawal, we must have mechanisms for extending the period of coverage of Euratom, as it were—which means not just an extension during the implementation period, but an extension in its own right—until they are in place. We were told earlier in the Bill’s passage that all this was unnecessary, because everything would be put in hand before March 2019, and we have discussed the progress that has been made, but we have heard nothing about a plan B to be deployed in the event of its not being concluded. It may be that all the treaties will be in place, and we heard today that one of the bilaterals had been signed with the United States, but there are three more to be signed with major civil nuclear countries, and there is also the voluntary arrangement to be established with the IAEA. The Lords amendment gives us that fall-back protection, and a clear route towards obtaining it.

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[Dr Whitehead]

I am not sure that the term “inflexible decision” can be accurately addressed to this set of circumstances, because we have a very inflexible date by which these decisions will have to be made. If we have a provision that is based on the Secretary of State deciding whether things are going better or worse, and if the House then does not have time to apply to the European Commission for an extension, an objective judgment will be made about whether to make an application to the European Commission for an extension of Euratom’s overview, particularly in relation to nuclear safeguarding activities.

That is another reason why we seek to preserve the original clause and ensure that it goes into the final Bill. My hon. Friend the Member for Barrow and Furness (John Woodcock) mentioned nit-picking in respect of some of the wording of the amendment. It would have been possible, I think, to fix that wording without diluting the effect of the clause in the way the Government have done through their amendment in lieu. It still has the flaw in it that there is a period when the Secretary of State has the option to decide whether he thinks something is going to be done, as opposed to the absolute guarantee that it will have been done at the point of departure. For that reason, we seek to preserve the original clause, if necessary by means of a vote. Depending on the result of that vote, we might then offer the amendment in lieu back to the other place for it to decide whether it thinks it comes close enough to its intention not to be sent back to this House once more.

[Stephen Kerr]

I do not intend to detain the House with a long speech, but I want to commend the Minister on the way in which he has guided the Bill to this point and to assure him of my support for the amendment that he has tabled. He has been, and is being, attentive and responsive to the concerns he has heard; he has listened and responded, and I believe that that is what makes for good legislation. I also wish to add to his compliments to the hon. Member for Southampton, Test (Dr Whitehead), whose positive contribution to the progress of this Bill has been greatly appreciated by us all.

To be clear, we need this Bill. Leaving the European Union creates the necessary, even if unwanted, step of leaving Euratom. The Government’s stated preference is for Euratom to continue to provide safeguarding functions in the UK. That is a laudable example of the pragmatic approach that the Government, and in particular the Prime Minister, are taking to issues surrounding our departure from the European Union. I like to think that my conservatism is based not on ideology but on pragmatism, and it is pragmatism that is going to see us through the process by which we leave the European Union. This Bill is a vital contingency plan, because if it transpires that we cannot agree with Euratom to continue with the civil nuclear safeguarding, we will need to have the regulatory framework, the infrastructure and the capabilities in place to maintain our international obligations and responsibilities as an independent and responsible nuclear state.

[Bob Stewart (Beckenham) (Con)]

I was under the impression that we cannot remain in Euratom unless we are a member of the EU—we may want to, but we cannot, according to the rules.

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[Stephen Kerr]

My hon. Friend has the power of mind-reading because the next thing I wish to say is that given that it will not be possible for us to maintain Euratom membership, the Government have taken the realistic approach of declaring through the process of the current round of negotiations that we would like to achieve an “as close as possible” relationship with Euratom, however that might ultimately be described. Although there is no such thing today as an associate membership, perhaps it is possible to become an associate of some form or another to the end of achieving that “as close as possible” relationship that we desire.

[Kwasi Kwarteng (Spelthorne) (Con)]

My understanding is that we as a country want to leave Euratom. Does my hon. Friend agree that opening up a suggestion that we could have associate membership muddies the waters slightly in terms of the clarity of the debate?

[Stephen Kerr]

I am grateful to my hon. Friend for his intervention, but I do not think it does. The Minister has made it clear during the passage of the Bill that although we are leaving the European Union and our membership of Euratom will therefore end, we still want as close a relationship as possible with Euratom. The Government have been absolutely clear in their determination on this. They stated in a written statement published last September that

“it is vitally important that the new domestic nuclear safeguards regime, to be run by the Office for Nuclear Regulation, is as comprehensive and robust as that currently provided by Euratom. The government has therefore decided that it will be establishing a domestic regime which will deliver to existing Euratom standards and exceeds the standard that the international community would require from the UK as a member of the IAEA.”

I hope that the Minister will reconfirm tonight that it is still the Government’s intention to reach and maintain existing Euratom standards in respect to safeguarding. I recognise that it will take time to get to that point, but it would be useful if he indicated when he expects we will able to assume that we have everything in place to maintain the Euratom safeguarding standards, and if possible, how much that will cost.

I also commend my hon. Friend on his success in progressing towards his objective of putting in place what his amendment in lieu describes as “principal international agreements” and “corresponding Euratom arrangements”. These principal international agreements refer to and include the nuclear co-operation agreements that we will need to maintain because it is on the basis of these agreements that nuclear goods, including intellectual property, software and skills, can be moved between the UK and other countries. The Select Committee report summarised the evidence we heard and concluded that nuclear co-operation agreements were

“expected to depend on the existence of a mutually acceptable UK safeguards regime. Witnesses were concerned about any potential gap between leaving Euratom and setting up new arrangements, which would cause considerable disruption to nuclear supply chains”.

We also heard that

“nuclear cooperation agreements with the US, Canada, Japan and Australia will be crucial for maintaining existing operations and should be prioritised.”

I welcome the news that the Minister has brought to the House tonight about the IAEA, the draft voluntary offer agreement and the additional protocol. I also welcome the US-UK nuclear co-operation agreement. Perhaps he will give us more detail on how long it will take for the agreement to be ratified. I referred earlier to the optimistic note that David Wagstaff, the head of Euratom exit negotiations at the Department for Business, Energy and Industrial Strategy, brought to our Committee, where he indicated that the co-operation agreements were

“well advanced and…would be completed in time for our departure.”

I have heard again tonight that that means March 2019.

With reference to the principal international agreements, perhaps the Minister will update the House on our negotiations with Canada, Japan and Australia. Will all Euratom’s existing nuclear co-operation agreements continue to apply to the United Kingdom until such time as new agreements can be established? It is vital that our civil nuclear industry can continue to operate with certainty and that there should be minimum to no disruption to the sector as we leave the European Union. Britain must be in a position to continue to honour its international obligations—

[Layla Moran]

Will the hon. Gentleman explain what “minimum” would be acceptable? I do not feel that any minimum disruption would be acceptable; for me, no disruption is the only possible scenario. What would his minimum be?

[Stephen Kerr]

The hon. Lady is right to pick me up on those words, and I am grateful for her intervention. Because the Prime Minister has successfully concluded the implementation agreement with the European Union, the minimum that we should settle for is no disruption, especially in this sector.

I was about to say that we as a country must be in a position to continue to honour our international obligations, and to be the responsible nuclear state that we are. The importance of this Bill, with this amendment, is that in the event of there being no agreement with Euratom, which is not what we want, it will enable the United Kingdom to be in a position to act as an independent and responsible nuclear state. That is why the amendment should command support on both sides of the House.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I should like to begin by echoing the remarks of the hon. Member for Southampton, Test (Dr Whitehead) about the Minister’s participation in the Bill so far. He has indeed been helpful, inclusive and relentlessly courteous as we have gone through the process. I welcome the progress that has been made, but that must be set against the background of what we believe to be the folly of leaving Euratom in the first instance. The last time the Bill came before us, I said that despite the Government’s ideological intention to abandon Euratom—it is ideological; there has been no attempt to challenge whether there might be a possibility to stay in it—their proposals fell short of answering vital questions on the UK’s nuclear future. Those answers have been asked for by the nuclear industry, the medical profession, our research sector and virtually everyone associated with nuclear power. Simply put, we should not be leaving Euratom.

Even with some sensible amendments from the Lords that have been accepted by the Commons, the Bill still fails to answer many critical concerns. As I have stated before, we in the Scottish National party believe that the safest nuclear power is no nuclear power. In Scotland, we have demonstrated what can be achieved by alternative renewable energy sources, and there is still a vast potential to be tapped, especially offshore, for an abundance of low-cost clean energy. In contrast, the UK Government continue to chase the folly of new nuclear, including the white elephant that is Hinckley C. That means higher costs for consumers, and technologies whose capital costs continue to skyrocket.

Oral Answers to Questions

Stephen Kerr Excerpts

Tuesday 1st May 2018 Commons Chamber

[Greg Clark]

As the hon. Gentleman knows, this is why we have the Competition and Markets Authority, which is virtually certain to conduct an inquiry into this matter, precisely to look into all the aspects to which he referred. I mentioned that the CMA has a new chair in Andrew Tyrie, and I am sure that the issue will receive the most rigorous scrutiny.

[Stephen Kerr (Stirling) (Con)]

T4. The subsidy available to energy plant for burning wood is causing distortions in demand for virgin and recycled wood, which is constricting supply and increasing input costs for businesses such as Norbord in Cowie. Will the Minister meet me and representatives of the wood panel industry to hear at first hand about the issues that they are facing and the consequences?

[Claire Perry]

My hon. Friend is right to highlight a concerning issue. My officials are meeting representatives of the wood panel industry today, but I would be delighted to follow up with a personal meeting with him and his constituents.

Sainsbury and Asda Merger

Stephen Kerr Excerpts

Monday 30th April 2018 Commons Chamber

[Andrew Griffiths]

I knew that the UK was a country of shopkeepers, but I had not realised that so many Members had retail experience in our supermarkets; it is encouraging to have such a well-informed debate. The hon. Lady raises issues about the supply chain and distribution sector. Clearly, that is not within the scope of the CMA investigation. The Enterprise Act 2002 clearly sets out the role that the Government and Ministers can play in relation to takeovers and mergers, and it is important that we stick to those established rules. That is what we will be doing in this case.

[Stephen Kerr (Stirling) (Con)]

Following on from the Minister’s last comments, it is right that concerns be raised about jobs and consumer choice, but will he confirm that producers will be able to provide evidence to the CMA on the potentially devastating effect of this concentration of market power through this market consolidation?

[Andrew Griffiths]

Not only can I confirm to my hon. Friend that producers’ voices will be heard in the CMA deliberation—this six-month detailed process that will consider all the aspects, vertical and horizontal, of the merger—but I positively urge him to go back to his constituency, engage with his dairy farmers and small suppliers, and make sure they contribute to it to guarantee that their voices are heard.

Domestic Gas and Electricity (Tariff Cap) Bill

Stephen Kerr Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 30th April 2018 Commons Chamber

[Dr Whitehead]

Indeed, the hon. Gentleman has a point, which is why now—on Report—the amendment would put a maximum number of months, not a specific date, in the Bill. One might say that hon. Members listened to each other in Committee regarding possible future amendments, which is why I tabled amendment 5 in this manner. However, the fundamental point of the amendment is still to get the Bill working, so that the cap is in place before the winter. Ofgem has said that it thinks it can have a cap up and running in five months, as we have suggested in the amendment. We therefore want the maximum timeframe of five months to be reflected in the Bill, so that the cap is guaranteed at around the time when people get their winter fuel allowance, not when winter returns, as it seems to do these days, in the middle of next spring.

Amendment 6 seeks to quantify the saving that customers might expect as a result of the cap, but we do not wish to make up a figure in so doing. We want to take the Prime Minister’s word on this, when she specified that customers would save £100 as a result of the price cap that her Government were about to introduce. To be precise, The Sun of 27 February this year had the splendid headline “Millions of Brits in line for £100 as Theresa May delivers on energy price cap promise”. This was just one of a number of sources reporting the Prime Minister’s price save promise, but The Sun went further, stating:

“Government insiders say the cap should save at least £100, potentially rising to £300 a year with increased competition and faster switching.”

Now, I do not know whether there are any Government insiders in the Chamber—or, indeed, whether the Minister is one of those cited—but we can assure them that we will take the conservative route on this occasion and propose only that the Bill will do what the Prime Minister says it will.

[Stephen Kerr (Stirling) (Con)]

I am slightly perturbed that the hon. Gentleman is quoting The Sun as the authority by which we make legislation in this House.

[Dr Whitehead]

On reflection, I can join the hon. Gentleman in being slightly perturbed that I am quoting The Sun in this context. I assure him that although I quoted The Sun, a range of authorities from the Daily Mail —getting better?—up to the BBC’s website suggested that the Prime Minister did actually say that people would save £100. If the hon. Gentleman thinks that quoting The Sun was not entirely appropriate under all the other circumstances, I can do nothing other than agree with him.

Amendment 7 would ensure that vulnerable customers, including those already protected by a tariff cap, do not lose that protection as a result of the overall cap being introduced.

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[John Penrose]

That argument has been advanced for both a relative cap and for an absolute cap; some people argue that it applies to both. We heard earlier a rather good explanation of why the argument does not really apply, which is that it would be commercial suicide, or a commercial kamikaze effort, for anybody to try to raise their prices in the switching market, which is highly competitive, because they would very rapidly start losing customers hand over fist. I understand that argument, but I do not think it would be relevant in practice.

[Stephen Kerr]

Just to underline the delicate nature of the balance that we are talking about in terms of caps, the majority view of the Competition and Markets Authority in its report was that a standard variable tariff cap would

“run excessive risks of undermining the competitive process”.

This would be likely to result in worse outcomes for consumers in the long run by

“reducing the incentives of suppliers to compete”

and

“reducing the incentives of customers to engage”,

so a delicate balance needs to be struck.

[John Penrose]

That is absolutely bang on the money. For goodness’ sake, the Competition and Markets Authority is suggesting such a thing, and that is after all its business.

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[Rachel Reeves]

I am pleased that my hon. Friend and fellow Leeds MP mentions White Rose Energy, which is doing fantastic work. It ensures that customers in Yorkshire have a greater choice of energy companies and genuinely puts customers first. During prelegislative scrutiny, we heard from other small companies, including Bulb and Bristol Energy who are also trying to support their customers.

No one in this House wants a situation where the most vulnerable customers see their prices rise because of the price cap. Perhaps Ofgem could operate the safeguarding tariff and the price cap we are debating today simultaneously. That seems entirely possible and desirable to try to avoid the issues that National Energy Action and others have raised from coming into effect.

I hope we will receive assurances from the Minister this evening that these risks will not be allowed to materialise. In that case, I will not press this amendment to a Division. Let me urge the Minister, however, to ensure that the Bill does its job of protecting customers and that energy companies are not able to use any loopholes that would mean prices rising for the most vulnerable customers: those we have the greatest duty to protect.

[Stephen Kerr]

It is a great privilege to follow the hon. Member for Leeds West (Rachel Reeves), the Chair of the Business, Energy and Industrial Strategy Committee.

There was no shortage of energy—or capping of energy—at yesterday’s Stirling Scottish marathon. There was, however, a lot of evidence of determination, particularly as competitors approached the finishing line despite the agonies that some were obviously going through. There was a great deal of grit on display. In addressing amendment 9, it is a lack of grit and determination—almost supine passiveness—that is causing me to have grave concerns about how Ofgem goes about its business.

During prelegislative scrutiny of the Bill, the Select Committee held an evidence session, to which my hon. Friend the Member for Eddisbury (Antoinette Sandbach) referred earlier. I am sorry to have to say this, but I was unimpressed by the evidence presented in January by Dermot Nolan, the chief executive of Ofgem. He did not come across as a person with an appetite for what I feel needs to be done. He lacked that grit and determination. He admitted to my hon. Friend that, in respect of Ofgem’s statutory duty to protect vulnerable customers,

“I accept the point that we could and should have done better on vulnerable customers. We have relatively recently put in place principles for vulnerability, which will give a stronger level of protection.”

When the hon. Member for Hove (Peter Kyle), who is not in his place, challenged Dermot Nolan on what was in effect an admission of failure on his part to fulfil his statutory responsibility towards the protection of those who are vulnerable, he answered:

“We have not done as well as we could have. I fully accept that.”

This perturbs me. It perturbed me then and it perturbs me now. The hon. Gentleman, who is an esteemed member of the Select Committee, seemed to me to hit the nail firmly on the head when he said to Dermot Nolan:

“If you do not mind me saying, throughout the testimony here and before, you have been describing what is happening in the market; you are the single most important player in the market, because you have the most extraordinary powers as a regulator, yet your testimony sounds so incredibly passive. Do you ever just roll your sleeves up and get stuck in? I do not really see the evidence of that.”

I share the concerns expressed so vividly by the hon. Gentleman.

Since becoming a Member of this House last year and having the privilege of being appointed to the Business, Energy and Industrial Strategy Committee, I have had the opportunity to hear first-hand evidence and testimony from a number of regulators. I have, in all honesty, been underwhelmed by every one of them.

[Mark Pawsey]

My hon. Friend is giving an account of the evidence given by Ofgem to the Select Committee. Does he share my concern that the Bill would give that very body the powers to set the energy price cap?

[Stephen Kerr]

I am grateful to my hon. Friend for his intervention. I share the concerns—I think they are shared across the whole House—about the performance of Ofgem as a regulator. I have broader concerns about the general performance of regulators full stop. Frankly, we seem to have a collection of regulators who either have powers but do not seem to be prepared to use them, or who do not feel they have adequate powers but are not prepared to ask for them. That seems incredible to me. I am very wary of leaving the issue of vulnerable energy customers to the discretion of Ofgem, because I am fearful that the discretion of Ofgem will mean that it will continue, by its own admission, to fail vulnerable customers.

This is an important issue that needs to be aired here and now on Report. Ofgem needs to sit up and take note. It is also important that we hear from the Minister, from the Dispatch Box, what change in the pattern of behaviour we should expect to see from Dermot Nolan and Ofgem. Will they have the determination and grit of the marathon runners in Stirling yesterday? Will they do something with the powers they currently have and the powers they will have when the Bill is passed? Above all, I want the Government to fulfil the promise of our Prime Minister who, on behalf of the Conservative party, said:

“Our party did not end the unjust and inefficient monopolies of the old nationalised energy corporations only to replace them with a system that traps the poorest customers on the worst deals”.

I am fearful that that is what we could do. I look for reassurance from the Minister.

[Caroline Flint (Don Valley) (Lab)]

I welcome back to the House this unfinished business. It has been a long-running saga and I have appeared in pretty much every episode for the past six years. I am hoping tonight will be my final appearance on this particular matter, with no repeats to follow.

I welcome the proposed absolute price cap. We have arrived at a place where there is much cross-party agreement, but it comes at a price. That price has been borne by consumers. The Competition and Markets Authority confirmed in 2016 that between, 2012 and 2015, the average detriment to the consumer—overcharging, in plain English—was £1.4 billion a year. The CMA found that the scale of overcharging, far from diminishing, was rising, reaching £2 billion a year by 2015.