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Trade and Industry

Volume 455: debated on Thursday 18 January 2007

The Secretary of State was asked—

Oil and Gas Licences

1. When he expects to announce the award of licences under the 24th licensing round for oil and gas exploration; and if he will make a statement. (116319)

I hope to announce the great majority of the awards soon, but in light of concerns we are deferring our decision on a small number of awards to allow for further consideration of the impact that oil and gas could have on the environment.

I thank the Secretary of State for that answer and I am glad that he and his officials are taking time to consider the valid environmental concerns expressed by the Countryside Council for Wales and the delegation of constituents whom I brought to meet his colleague, the Minister for Science and Innovation, in the autumn. Given that concerns have been expressed, and given that Cardigan bay is protected by the precautionary principle in the European Union habitats directive, will he use the opportunity of the coming days and weeks to exclude the Cardigan bay special area of conservation from the 24th licensing round?

I agree with the hon. Gentleman that the environmental considerations are important and I am aware of the concerns about dolphins, not just in Cardigan bay but in the Moray firth. It may help the House if I say that we will go ahead with the award of licences in about 239 blocks. There are four blocks—three in Cardigan bay and one in the Moray firth—for which we are carrying out an appropriate assessment of the risks. I hope that that assessment can be carried out expeditiously so that we can reach a decision one way or another, but I understand the hon. Gentleman’s concern. Under the law, we have to carry out an assessment and I hope that we can do so fairly quickly.

Manufacturing Sector

2. What recent assessment he has made of prospects for the manufacturing sector; and if he will make a statement. (116320)

Manufacturing output experienced a welcome revival in 2006 as the sector began to transform in response to the challenges from globalisation and technological change. The Office for National Statistics data show that manufacturing output grew by 2 per cent. between the end of 2005 and November 2006.

I thank my hon. Friend for those remarks, but I put it to him that one of the problems for manufacturing in this country is that it has been shrinking in relative terms. That may be perfectly natural, but the sector feels that its voice is not heard as strongly as it ought to be heard. In particular, is he satisfied that when it comes to issues such as the setting of interest rates, the voice of manufacturing is properly taken into consideration by the Bank of England?

Of course, that is a matter for the Bank of England committee, and it will have heard what my hon. Friend has said on the subject. We take the manufacturing industry very seriously, and we are all aware of the restructuring that has taken place and the challenge of globalisation. Indeed, my right hon. Friends the Secretary of State for Trade and Industry and the Chancellor have just returned from a trip to India to explore some of those issues. The industry is now about value-added manufacturing. It remains important, as it accounts for some 14 per cent. of gross domestic product—the figure is rather higher, I think, in my hon. Friend’s region of England. Through a range of measures such as financial aid, skills, science and research and development, we are supporting manufacturing industry.

What assessment has the Minister made of the rising price of energy and its impact on manufacturing? Does he agree that the illiberal energy markets inside Europe will have an impact on the costs of energy and on manufacturing?

On the second issue, the UK, not least during our recent presidency of the European Union, has led the charge on liberalisation in the EU. We are very pleased with the way in which Commissioners now produce strong reports. There have been dawn raids on some of the offices of the major bodies in the energy sector, and the hon. Gentleman will have noted the recent statements from the European Commission. The battle is not over, but we are moving in the right direction. Of course, we are concerned about the recent increases—by “recent”, I mean those affecting us over the past year or so—and their impact on businesses. We are in constant discussion with industry, and the Secretary of State and the director general of the Confederation of British Industry chair a committee to explore those issues. However, the hon. Gentleman will have noted that in recent months energy prices have been coming down, and it is the task of Ofgem to keep a careful eye on that to make sure that those decreases are reflected in future prices. I am sure that Ofgem will do its duty.

While manufacturing certainly faces substantial challenges, does my hon. Friend agree that it is important that we play to our strengths in areas such as performance engineering and environmental technologies? Places such as the former MG Rover site in Longbridge offer great potential for those activities. Will he encourage Advantage West Midlands and all other partners to do everything that they can to bring those projects to fruition?

The short answer is yes. Two things are true of manufacturing. First, as I have noted, for reasons that we all understand, the manufacturing sector has declined not just in the UK but in all advanced societies. Secondly, we remain very good at aspects of manufacturing. We are still producing 1.6 million vehicles in this country, which is close to the peak of the early 1970s. Our aerospace industry is important and we are well placed in emerging environmental and energy technologies. It is about adding value, as well as what we are good at. In my judgment, we are good at many things.

The Minister may be aware—I know that the Secretary of State is—of the recently announced loss of 650 manufacturing jobs at NCR in Dundee, West. He may be aware, too, of the loss of 100 jobs in the Michelin tyre factory in my constituency and 50 more proposed losses at the Wood group. In addition, there are non-manufacturing job losses in distribution and food processing, so will the Minister share with us his early reflections on the prospects for rebuilding manufacturing in Dundee, and give the House and the people of the city and, indeed, the wider Tayside area an assurance that the Department will do everything possible to turn that dire situation around?

Of course we regret the loss of those jobs. Much of that, as the hon. Gentleman will know, is for the Scottish Executive, but the Government and the Department will work closely with them. As for finding future work for those people, the Jobcentre Plus network is extremely important. We regret the job losses, but I emphasise that overall the Government are doing a great deal to support the manufacturing sector, with a great deal of success.

The manufacturing sector in the west midlands will be disappointed by yesterday’s defence training review announcement—[Hon. Members: “Yes.”] Will my hon. Friend reassure us that there will be investment in the proposed national skills academy for manufacturing in the west midlands, which is particularly important for RAF Cosford and Telford?

My impression is that some colleagues were pleased by yesterday’s news and some were disappointed. I understand my hon. Friend’s disappointment, but we must see things against the background of a successful United Kingdom economy in which skills have increased and employment is at a record level. My colleagues would be happy to pursue the opportunity to discuss those matters with him.

With more than 1 million jobs lost, including NCR jobs in Dundee, all hon. Members are naturally concerned about the prospects for manufacturing. The key is increased investment. To be fair, the Chancellor has been positively frenetic in this area, as every year he introduces a raft of new initiatives, and every year he and other Ministers spend hundreds of millions of pounds. Can the Minister of State explain why, instead of rising, investment in manufacturing has fallen by 28 per cent.? Where does he think the Chancellor has gone wrong?

The Chancellor has gone right in so many areas, which, for all sorts of reasons, Mr. Speaker, I would like to discuss at length, but your disapproval is the main reason why that is inappropriate. I said that there was a revival in manufacturing in 2006, and we are spending a great deal in selective grants. The skills agenda and science and innovation, for which I am responsible, are crucial. The hon. Gentleman will understand that global factors affect the structure of the economy, but of course I share his concern about job losses. As I told the hon. Member for Dundee, East (Stewart Hosie), job losses are not good news, but there was even poorer news in 1981, when 673,000 jobs were lost in the manufacturing industry.

Wind Energy

The renewables obligation encourages renewable generation and its associated industry. It is supported by about £500 million of spending between 2002 and 2008 in the form of research and development, and capital grants on emerging low-carbon and renewable technologies, including wind energy.

I thank my right hon. Friend for that answer. Yesterday, the East of England Development Agency approved funding for a £9 million offshore renewable business centre in Lowestoft, which will accommodate a cluster of wind energy industries and create new jobs. It is the catalyst that will make Lowestoft the offshore wind energy capital of the UK, as the town is ideally situated in the middle of the East Anglian coastal areas that the Department has designated as suitable for most of the country’s offshore wind energy development. Will he join me in congratulating the EEDA board, and come to Lowestoft to dig the first sod?

The investment is very welcome. I am glad that the East of England Development Agency was able to make that money available, and I look forward to visiting Lowestoft. I know that my hon. Friend played a significant part in getting that decision, and I hope we can build on it. There has been a great deal of offshore development recently. Just before Christmas I announced the go-ahead for the Government’s interest in a very large wind farm, the London Array project. It is a pity that that has been blocked by a Conservative council.

I support the comments of the hon. Member for Waveney (Mr. Blizzard). In theory, we are all in favour of green energy—some more than others. In practice, nobody wants a wind farm with concrete pillars as tall as Lincoln cathedral next door to them. We have all encountered that in our constituencies. Will the Secretary of State use this opportunity to give a forthright commitment on behalf of his Government that we will shift the whole subsidy, the whole ethos and the whole burden on to offshore from onshore? That would be a welcome statement.

The hon. Gentleman has put his finger on the problem. We need to increase the amount of wind energy because that will make a major contribution to cutting the amount of carbon emissions going into the atmosphere. He is right that, in principle, we will get agreement—for example, in the House—that we ought to be building more wind farms, and that there ought to be more offshore wind farms. I tell the hon. Gentleman, in the most non-partisan way possible, that the problem is that up and down the country Conservative, Liberal and nationalist councils are blocking applications for onshore and offshore projects. If we are serious about getting more wind energy, we must realise that at some point we need to build more wind farms, or we will not meet the objectives that we have all set ourselves. It is all very well talking green, but we must also will the means of being green.

My right hon. Friend knows that much microgeneration is focused on wind power, and we are told that the network can deal with distributed electricity, provided it knows how much will be coming on in the future. Does my right hon. Gentleman intend to provide incentives for more microgeneration, and if so, will he share his views with the House?

Last year, when we published the energy review, we said that that area had been neglected in the past and that we could do a lot more for distributed generation, as it is known, whereby people generate electricity for their own use and sell back to the grid any that they do not need. There are technical difficulties, for obvious reasons, and I have always said that there are some limitations. We could not, for example, end up being substantially dependent on the actions of millions of individuals in order to get enough electricity to heat and light our houses and factories. However, small scale generation of electricity is extremely important. We want to encourage it and I hope to have more to say when I publish the White Paper in March.

Is the Secretary of State aware that the amount of wind energy capacity that is tied up in planning is equivalent to 5 per cent. of our national electricity supply? Does he accept that even when planning permission is granted, new capacity is delayed for up to 10 years by the rules on connection to the national grid, which require connections to be made in the order in which they were applied for, regardless of whether or not they have planning permission? In the case of Drummuir in Scotland, its planning consent will have lapsed well before its connectivity date of 2015, so it may never even be built. Will the right hon. Gentleman ensure that these issues are addressed in the White Paper when that comes out in March, and will he consider making it a primary responsibility of Ofgem to encourage renewable sources of energy so that the anomalies can be removed and green energy supply can reach its maximum potential?

The hon. Gentleman is right that there are two obstacles to wind energy. One relates to access to the grid. As we stated in the energy review that we published last year, we need to look into that. We are working with Ofgem to try and sort out the problem. It is nonsense that in dealing with applications, Ofgem has to treat a real prospect behind an application that might be speculative, simply because the speculative one came first. That needs to be addressed.

The second obstacle concerns planning. There is undoubtedly a problem in relation to a number of energy projects, especially in relation to wind energy—not just the farms, but the transmission. In Scotland, transmission lines between the area north of Inverness and the central belt have been blocked. Councils are blocking such applications throughout the country. We need to consider how we can change those procedures. I have always said that our planning system is completely out of date in this regard. We need to streamline the planning process, especially in relation to major projects, and I wait to see whether we will get cross-party support on doing that. The hon. Member for Wealden (Charles Hendry) said that it is all very well to go around the world saying that we are in favour of green energy, but here at home we have councils—the majority of which, I am sorry to say, are Conservative—whose actions mean that we will not get the green energy that we all say that we want.

Goods and Services

4. What steps he is taking to ensure that suppliers of goods and services provide sufficient information to enable customers to trace them. (116322)

The vast majority of consumer products are already required to carry the name and address of the producer or importer in the European Community. There are specific requirements for e-commerce and distance selling and for traders who use names other than their own. When the unfair commercial practices directive is implemented later this year, it will require that consumers are always provided with certain information, including identity and geographical address, where there is an invitation to purchase a good or a service.

I thank my right hon. Friend for his answer. It is not unusual nowadays to see fliers distributed through the door with merely a mobile phone number on them. Those who purchase by that route and are dissatisfied with the service offered often find that it is a pay-as-you-go number or one that cannot be traced later. Will the steps that he has outlined address that problem?

My hon. Friend asks a good question. That is exactly what the unfair commercial practices directive will do. If he has a case or cases that have prompted that question, I am happy to meet him with my officials and with his local trading standards officer to see whether there is any evidence in the marketplace in relation to a specific trading area that we can deal with immediately.

Despite the right hon. Gentleman’s reassurances, if he went into a supermarket he might find a product called Suffolk Choice bacon, which comes from nowhere near Suffolk. Dealing specifically with pork and pigmeat products, is he aware that products can be imported into this country that are completely unacceptable on welfare grounds when selling to consumers? What will he do to help to inform consumers about the abuse of labelling that is taking place, particularly as regards such products?

I can assure the hon. Gentleman that I have that matter under active consideration, although I have no specific knowledge of Suffolk bacon. In the past year I have lost 5 stone in weight, so I have eaten no form of bacon whatsoever—not even Scottish bacon from Ayrshire—but if he can convince me that Suffolk bacon is one of the best I may well break that taboo and start eating it again. It is a complex issue, but I will write to him with a substantive answer.

On the subject of things lost, can my right hon. Friend give us an update on where his Department stands as regards the Farepak inquiry and when it expects the report to be published?

I thank my hon. Friend. Arrangements are being made to close the fund that was set up and to audit the accounts. I repeat my commitment to place those accounts in the Library when they have been audited. The administrator is carrying on with his or her report and will be going back to the court to seek additional powers in respect of those investigations. The companies investigation branch is continuing its investigations and receiving co-operation. The Office of Fair Trading has sent Ministers a scoping paper, which we are considering. Next week, there will be a meeting with officials to consider the next steps forward. I reiterate the commitment that I gave to hon. Members on both sides of the House—when I have more substantive information I will bring it into the public domain. In addition, I will consult those Members with the closest interest in the matter, including Opposition spokespersons.

Post Office

The Government have worked closely with Royal Mail and Post Office Ltd to ensure that they can deliver high quality services that customers want. That includes the £500 million investment in Horizon, thus enabling the Post Office to develop its financial service businesses by opening its counters to 20 million bank customers and becoming the UK’s leading provider, for example, of foreign exchange services. The vast majority of post offices are private businesses that can also pursue commercial interests.

I thank the Minister for that reply and, for the record, his help over the summer. I also thank Labour party activists in Shrewsbury. We all campaigned to try to save our main post office in Shrewsbury but, regrettably, it closed and has been subsumed by WH Smith. What help will he give rural post offices in my constituency to ensure that they can continue to prosper? They provide an important service to the people in my rural community.

Notwithstanding my discussion with the hon. Gentleman and his constituents about Shrewsbury, I take a different view. The post office is still open. It has moved to different premises, but the services are available. Most customers’ experience of franchise arrangements for main post offices and directly managed branches moving to other premises has been positive. We are trying to maintain the largest national network that we can, including large branches in towns and cities. Although the example of Shrewsbury caused initial concern, I hope that it will prove beneficial to the hon. Gentleman’s community.

I can confirm that discussions have taken place between the Post Office and the credit unions national body on greater scope for working together. Regular dialogue will continue. Although working together would have a social role, it is not clear that it would generate much revenue for the Post Office. However, it would obviously increase footfall and ensure that the Post Office was further rooted in most vulnerable communities. Credit unions are on the up and expanding. I hope that they have a positive future with the Post Office.

When the gas, electricity and telecommunications industries were opened up to competition, it was vital that transmission and distribution networks were made available to competitors. The sub-post office network could and should be the distribution network for the competitors to Royal Mail for packets and parcels. However, I expect that Royal Mail Group would fight hard against that. Will the Minister assure me that he will do all in his power to ensure that that valuable new additional source of revenue is opened up to sub-post offices?

The hon. Gentleman makes a fair point and several people have raised the matter. However, it is not clear that such action would generate additional revenue. Royal Mail might well be replaced by competitors so the business would remain the same. The matter is constantly under review. Competitors can apply to Postcomm for a licence to operate. It is Postcomm’s decision under the universal service obligation.

Will my hon. Friend ask the Post Office to consider entering into partnerships with catalogue businesses such as Littlewoods or Argos? Low-income families depend on those businesses, but there is a growing gap between families who are e-enabled and those who are not. Perhaps there could be an internet point in post offices and links with those businesses so that the Post Office can survive.

In his statement on 14 December, my right hon. Friend the Secretary of State announced a three month consultation period until 8 March for representations about spending the £1.7 billion additional money that we will use to support the Post Office’s sustainable network. There are several innovative and new ways in which we can improve the protection arrangements for the Post Office. New ways of doing business are an example of that and we welcome representations from colleagues, as well as outside organisations, about how best to expand the business.

As the Minister knows from our previous questions and discussions, suburban areas such as mine need the post offices as much as rural areas in order to be sustainable communities. Will he consider how he could expand the role of sub-postmasters to provide more products and services, perhaps using private mail services and new markets, to allow post offices to continue as profitable businesses?

As I mentioned a moment ago, the vast majority of the 13,800 post office outlets across the country are privately owned businesses. It is a matter for those business people to determine for themselves whether, for example, they apply for lottery or PayPoint terminals or engage in local partnerships with other franchises. These are opportunities for them to expand their businesses, and many people take advantage of them. Notwithstanding that, because of the nature of the business and the fact that it is not commercially viable at its present size, we are saying that there should be at least 12,000 outlets, and another 500 mobile outlets, and there has to be public subsidy to maintain that.

The Minister said that his Government are committing an additional £1.7 billion to invest in the post office network over three years. Surely, however, that sum includes money for the social network payments—that is, “ticking over” money—and compensation for redundancies and for the cost of closing post offices. Will he now tell us what sum will be left over to invest in new business and in training, equipment and marketing? Or is that amount so token that it has no hope of reinvigorating the post office network?

I would be happy to write to the hon. Lady to give her a complete breakdown of the figures, although I think that we have already given that information in answer to several parliamentary questions over the past few weeks. I must point out, however, that regardless of whether the money is going into compensation payments or social network payments, it is money that the Government are committing to protecting the post office network to ensure that we get it on to a sound financial footing by 2011, and to ensure that we have a national network. It is Government money, regardless of how it is being spent.

This week, it has been reported that several major companies and one major Government Department have switched hundreds of millions of pounds of business away from Royal Mail. Is it not the case that the Government are opening up Royal Mail to greater competition—and demanding that it behave like a private business—while denying it the freedom that it needs to compete effectively? How does the Minister expect it to do well when its competitors are free to compete with it, yet it is not free to compete with them?

We do not accept the hon. Gentleman’s point. Royal Mail has the freedom to compete. We have liberalised the markets to ensure that it is a competitive service industry. It is not consistent for Opposition Members to say that there should be freedom within the market, but then to tell us that the restrictions on Royal Mail are making the business less profitable. Royal Mail has the opportunity and freedom to compete.

Perhaps the Minister will write to me to explain how Royal Mail is free to raise capital in the same way as a private sector company. I look forward to hearing his reply. The management of Royal Mail has been pushing the Government to allow it to introduce an employee share ownership scheme. The Government have been considering that proposition for more than a year, but they seem incapable of deciding anything. Will the Minister tell us by what date he will have made a decision on that proposal?

On the hon. Gentleman’s last point, discussions are continuing and I am sorry that I am unable to give him a date at the moment. On his first two points—I apologise, but I think that two different issues are being raised—the freedom to compete is one issue, and Royal Mail has that freedom. The freedom to invest is a matter for the shareholder, in which capacity the Government clearly act on behalf of the taxpayer. My right hon. Friend the Secretary of State made a statement late last year on the freedoms that we have given to Royal Mail to use money from its reserves and to raise money to ensure that it can invest in the business.

The Minister will be aware of the great uncertainty and fear felt by many proprietors of sub-post offices. The cry that I hear is that they are not getting the information that they ought to be getting from the Post Office, and they are certainly not getting advance information about any problems that might affect them. Will the Minister be kind enough to look into those matters and try to speed up the process and make it more efficient? Those people are important to the industry, but they are beginning to think that there is no future for them.

I fairly regularly get letters from right hon. and hon. Members about particular causes for concern in their own local directly managed branch or post office. If the hon. Gentleman would like to write to me about the concerns being expressed by his local sub-postmasters and mistresses, I would be happy to look into the matter and get an answer from Post Office Ltd for him as soon as possible.

Post Office Closures

7. What representations he has received following his statement announcing post office closures in England. (116325)

We have received a large number of responses from a wide range of people. There was a debate in the House on the post office network earlier this month.

I thank the Secretary of State both for that answer and for the statement that he made in December. Does he appreciate, however, that North Yorkshire is probably the most rural, as well as the largest, county in England? About 84 per cent. of its population live within a mile of a post office. Will he guarantee that that will still be the case in five years’ time? Will he free sub-post offices from the constraints of their current contract so that they can offer new services and not be so dependent on the subsidy in future?

I appreciate the point that the hon. Lady makes about North Yorkshire, but it is not the only rural part of the country. The objective that I set last December was to ensure that there is a national network of about 12,000 offices, and we are prepared to make the money available to support such a network between now and 2011. There will never be a network of anything like that size without public subsidy. About 4,000 branches could be supported on a commercial basis—perhaps 1,000 or so more—but I believe that the Government have an obligation to ensure that there is a national network. That is why we believe that the size of the present network needs to be reduced; otherwise, it will become more and more expensive. We should remember that the Post Office lost £2 million a week last year; this year, it will lose £4 million a week. That is why we had to take action. I set out the access criteria in the consultation document published just before Christmas.

Back in 1996, the main Crown post office in my constituency closed when the Co-op took over the franchise. In late 2005, the Co-op terminated that franchise early, leaving us without a main post office for two months. The new post office, 12 months after moving to a new building, is still a building site. Given such experiences, may I urge my right hon. Friend to strengthen the franchising arrangements to ensure that such a sorry tale does not happen again?

If the Post Office decides on a pattern of post offices, it is important that it remains in place. If a difficulty arises from a franchisee giving up the business—my hon. Friend alludes to the fact that the vast bulk of such franchisees are individuals in private business and are not part of the Post Office, except in transacting its business—we need to sort that out. Following on from the point about WH Smith made by the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), who is no longer in his place, it is important to realise that sharing of businesses offers the best future for many post offices, as that increases the number of people who come through their doors. That is the main problem that confronts the Post Office at present.

It has been announced that the Royal Mail sorting office in my constituency will close, with the loss of hundreds of jobs. Is the Secretary of State aware that Government policy and the Communication Workers Union are directly responsible for that, as they have blocked attempts by management to modernise and reform operations? As my hon. Friend the Member for Rutland and Melton (Alan Duncan) has said, hundreds of millions of pounds of business have been lost in the past few months alone. Will the Secretary of State now meet the Royal Mail’s senior management and deliver the changes that they need to compete in the private sector and save jobs in my constituency?

The hon. Gentleman has already arranged to meet the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Poplar and Canning Town (Jim Fitzpatrick), to discuss the specific difficulties at Reading. In relation to his wider point, the Royal Mail is now in competition with a number of other major operators. It will face stiff competition and have to undergo substantial changes. The Royal Mail board is committed to that, and it is important to recognise that change is essential if the Royal Mail is to survive.

From discussions with senior Royal Mail executives earlier this week, I understand that about half the projected 2,500 closures will be in urban areas with populations of greater than 10,000, which were reinvented by the earlier urban programme. Under that programme, volunteers were sought, and there were no compulsory redundancies, as it were, on any scale; on this occasion, that will happen. Does not that lead to problems, especially if a thriving business is given compulsory redundancy because there are other post offices nearby, whereas a struggling one is allowed to continue? Would not that be perverse?

I think that redundancy is unlikely, because most people are not actually employed by the Post Office. We expect about 2,500 branches to close, but as I said in my statement in December, we need to ensure that in each area the Post Office satisfies itself that there is a network that meets the access criteria I have set out. If that means that in some areas there are three post offices and there is business for two, it makes sense to review the position.

As I have said, losses have risen from £2 million every week last year to £4 million this week, and if we do not do anything the figure will go up and up and up. No Government will be in a position to go on supporting those losses. Everyone believes that given the huge changes in the nature of its business, and for all the reasons that we have discussed when we have debated the issue, the Post Office must take the necessary action. We are prepared to support it—we are willing to provide £1.7 billion over the next few years, in addition to other support that we are giving Royal Mail Group—but to say that there must be no change, or that business should not adapt to what its customers want, does not strike me as terribly sensible.

Bingley post office in my constituency closed before Christmas and a temporary post office was put in its place. According to a parliamentary answer, 99 per cent. of towns the size of Bingley have full post offices. Will the Secretary of State assure my constituents that his announcement before Christmas about post office closures will not stop the Government and Royal Mail doing everything possible to keep a permanent post office in Bingley, in view of the important part that it plays for local people and the support that it gives local businesses with the footfall that it generates?

My hon. Friend the Under-Secretary of State tells me that the hon. Gentleman is corresponding with him about the matter. I hope the Post Office can produce a solution that is satisfactory to him and to his constituents.

Bank Holidays

The Government have no plans to change the present arrangements. However, because some employers currently include the existing eight bank holidays as part of workers’ statutory 20-day annual leave entitlement, we are committed to making time off for bank holidays additional to that entitlement, which would give about 6 million people an increase in their holiday entitlement from 20 days per year to 28. We are currently consulting on draft legislation.

I welcome that, but the Minister ought to be a little more generous and increase the number of public holidays. May I suggest that Veterans day could be one of them? More important, given that St Patrick’s day is rightly treated as a big day, why should not St George’s day be treated in the same way? Why should we allow the extreme right to think that it is their day? St George’s day belongs to all people and all political sides, and it is a day for England to celebrate. Will the Minister consider that, as a good will gesture?

I know that my hon. Friend is a vigorous campaigner for St George’s day, and as a Londoner—note my classic cockney accent—I can assure him that I always celebrate it. However, I must disappoint him by saying that we have no plans to increase the number of bank holidays.

Much as I agree with the hon. Member for Chorley (Mr. Hoyle), who is my colleague on the Catering Committee, about the appropriateness of making St George’s day a bank holiday—it is my brother’s birthday, so he would be especially happy about it—is not part of the problem with the present regime the fact that bank holidays happen in the spring? There are two in May. Would it not appeal to the tourism industry if we moved one of them to the autumn, so that it could extend its “shoulder” season in both directions and make more money as a result?

The hon. Lady should not really support the idea of a bank holiday on her brother’s birthday as that, too, would fall in the spring. What she says about the calendar is accurate, but, as I told my hon. Friend the Member for Chorley (Mr. Hoyle), we have no plans to change the current arrangements.

I entirely agree with my hon. Friend the Minister about unscrupulous employers who deny people their full holiday entitlement. I have received many complaints about that from residents of my constituency. What action can they take now, before legislation is introduced, to try to put the matter right?

My hon. Friend makes a valid point: we are now in the early 21st century and many of us found it scandalous when we realised that, having legislated for 20 days of paid annual leave in 1998, some companies were incorporating the existing eight statutory bank holidays into those 20 days. I do not think that there is any support for those companies in any part of the House, and I hope that they will put their house in order before they are forced to do so by legislation. We are consulting on the introduction of those holidays, and we expect to introduce four later this year and four next year. However, that is a matter for consultation, but we look forward to the legislation being introduced in due course.

Small Businesses

The House is lucky this morning, as we are now hearing from another classic cockney.

On the latest available figures—those for 2005—there are 4.3 million small and medium-sized enterprises in the UK, a rise of 8.5 per cent. since 2003. They employ 13 million people and have a combined turnover of £1.2 billion. We estimate that government—national, local and the regional development agencies—spend £2.5 billion per year on about 3,000 schemes to support business in England, many aimed at SMEs. The Department of Trade and Industry is leading a pan-government programme to promote shared schemes and to rationalise them so that there are 100 by 2010, having also rationalised its own support.

I thank the Minister for that reply, but does he agree that the current system for small business support is incoherent, ineffective and hinders the development of the entrepreneurial economy? What assurances can he give that there will be genuine root-and-branch reform of Government business support schemes and quangos?

I do not agree at all. Yes, we need to rationalise, but let us be absolutely clear about what lies behind the hon. Gentleman’ question. At the last general election, his party wanted to cut £500 million from the core business support budget and to close down entirely the Small Business Service, whereas Labour is committed to investing in the small business sector and we will continue to do so. However, we also want to rationalise that to make it more effective; that is entirely different from the cut-and-run strategy that the hon. Gentleman supports.

As I put my house at risk in the dark days of high interest rates and mass unemployment to establish a small family business, I ask the Minister whether he agrees that the key thing that small businesses need in order to establish and prosper is a stable economy and low interest rates.

It was a beautiful house to put at risk; I have been in it on a number of occasions. My hon. Friend is right. We have had the longest period of a stable economy, and that is why under this Government small businesses are being created every day, whereas under the previous Government small businesses closed down in their hundreds every day.

Following on from the question of the hon. Member for Bassetlaw (John Mann), does the Minister accept that energy prices are one of the major costs for smaller businesses? Energy prices have risen dramatically in recent times, but the price at which the distributors and energy companies sell energy to smaller businesses does not drop in accordance with different market conditions. Will the Minister take an interest in that and ensure that those companies not only experience rapid rises in their profits and offer attractive packages to their executives, but offer competitive prices to small businesses?

That is a fair point. Wholesale prices will fall dramatically and that decrease should be passed on. We have taken action to build capacity in the North sea; my right hon. Friend the Secretary of State made an announcement on that some time ago, and we have also taken action in the European Commission. We very much agree that such savings should be directly passed on to small businesses.

Gas Production (Shetland)

The lack of gas infrastructure west of Shetland is a key constraint on development. We have established a group from industry and Government to work together on that. In addition, we changed the licensing scheme to encourage development; about 60 blocks have been licensed and activity is under way.

With news this week of further discussions on the decommissioning of the Brent field, it is becoming ever more important that we find new production to keep the North sea industry going. Does the Secretary of State recognise that if fields were brought together with an imaginative solution, that would provide 6 per cent. of the UK’s needs by 2016? Will he emphasise to the Treasury the importance of coming up with a regime that encourages a gas-gathering pipeline to make sure that we unlock that potential, because any gas left in the ground will pay no tax, provide no jobs and not contribute to this country’s energy needs?

The hon. Gentleman is right—it is believed that there is very substantial potential in that regard, if we can commercially extract oil from the west of Shetland. The difficulty is that it is some 600 km away from the nearest pipe that could take that oil ashore, and the other difficultly is that no one single field would be big enough on its own to act as a collecting point for smaller satellite fields. We are discussing with the industry the possibility of pooling resources in order to get a network to bring that oil ashore. The hon. Gentleman is also right in saying that, if we can get to the oil west of Shetland, that will make a very substantial difference by enabling us to get more oil. At this time, especially when North sea oil is in a long but inevitable decline, it would be an extremely useful addition to this country’s oil stocks.

Supermarkets

12. What recent discussions he has had with the Office of Fair Trading on the practices of supermarkets. (116330)

Neither I nor my officials have discussed the practices of supermarkets with the Office of Fair Trading. The OFT has asked the Competition Commission to investigate whether any features of this market prevent, restrict or distort competition, and, if so, what action might be taken to remedy them. The commission is required to publish its final report by 8 May 2008, but it is aiming to do so by October 2007. It expects to publish its emerging thinking for further consultation on 23 January.

I thank the Minister for that reply and for the action that has been taken, but does he accept that the supermarkets have managed to corral the market in an anti-competitive way? The price that they are paying farmers for milk, for example, is going down, which is in stark contrast with the price that consumers are being charged, which is going up. Under those circumstances, we need some action from the Government and from the Competition Commission to rein in the supermarkets, which, frankly, are out of control.

That is a nice try by the hon. Gentleman, but that is precisely why the Competition Commission is making its inquiry. Let us await its outcome on 23 January and then take part in the consultation. At that point, if the hon. Gentleman wants to discuss the matter further, I am happy to do so.