Tuesday 8 January 2008
[Sir Nicholas Winterton in the Chair]
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Blizzard.]
May I welcome all Members to this first sitting in Westminster Hall following the all too short Christmas recess?
May I return the compliments of the season to you, Sir Nicholas, and, indeed, to fellow Members?
The debate that I have been fortunate enough to secure is topical in many ways, not only because of the recent snow and cold spells that at least some of us have experienced, which reminded us that we still have winter in the UK, but because of the announcement by some energy suppliers of sharp increases in prices for gas and electricity. Those announcements have made the debate one of even greater urgency.
Although the media spotlight inevitably falls on these questions at this time of the year, it is not an issue that has just appeared on the political radar in Parliament. The all-party group on debt and personal finance, which I chair, had a joint meeting with the all-party group on poverty at which parliamentarians met grass-roots representatives, experts from the voluntary sector, fuel companies and industry regulators to discuss fuel poverty. We published a joint report following that seminar, and much of my speech will draw on its recommendations. The report is available on my website, for those who wish to pursue it in more detail.
No one can be certain exactly where energy prices will go in the future. There have been falls as well as increases in recent years, and there are questions about how far recent increases are due genuinely to world energy prices, or to opportunism by some energy suppliers. Some colleagues might wish to expand on that subject later in the debate. It is, however, pretty clear that whatever else happens, the long-run trend in energy prices will be upward due to market trends, growing demand, some diminishing energy sources and Government policies that are designed to reduce energy use and develop certain energy sources. For many householders, rising energy prices will inevitably lead to more fuel poverty, and if price increases on the scale of those that have been announced recently are repeated generally, as looks likely, many more thousands will surely be dragged into fuel poverty unless something is done about it.
I shall outline some areas in which the Government, the regulator and energy companies can do more to deal with the problem of fuel poverty, but I shall also give the Government credit for what they have done to tackle the problem so far. Indeed, the UK was the first country in the world to recognise that fuel poverty was a specific issue, and measures such as the winter fuel payment, central heating programmes and the energy efficiency commitment have all played an important role in tackling fuel poverty. Some 4 million people have been taken out of fuel poverty since 1996, but the reduction has slowed since 2004, when energy price increases started to hit. They have begun to undo much previous good work, and the recent increases will throw many more into fuel poverty if action is not taken.
I congratulate my hon. Friend on securing this important debate at this time, following the announcement by npower, one of the most voracious suppliers. The number of people in fuel poverty has more than stopped going down—it has doubled since 2003, despite the Government’s best and heroic endeavours, to which we pay tribute. Does my hon. Friend agree that Ofgem—he referred to it by implication a moment ago—should be given reserve powers to evaluate the so-called social tariffs, which many suppliers offer, to ensure a decent minimum standard and not just a voluntary, penny-pinching level? I put that point to the Minister just before the recess at Business, Enterprise and Regulatory Reform questions. Does my hon. Friend agree that that is an option for Ofgem’s terms of reference?
I certainly agree with my hon. Friend that Ofgem, and indeed the Government, must do more to make social tariffs a wider reality. If I have the opportunity, I shall refer to that subject in more detail in a few minutes.
My hon. Friend points out that the trend for the number of people in fuel poverty, having been on the downward slope for several years, is going up again quite rapidly. That is why we need new measures to launch a new attack on fuel poverty. I shall suggest some ways in which we can do so, and I shall draw on the recommendations of a report to which I referred. I thank all those who contributed to the ideas that I shall outline.
The hon. Gentleman has secured a very important and timely debate, but the question is not only about introducing more measures. Does he agree that the measures that have already been introduced, such as the excellent Warm Front, need fine tuning? The Warm Front measure is dysfunctional in one particular way. Sometimes, when a boiler needs changing, a Warm Front endorsed contractor must be sent to my constituency from London, of all places, and the work can cost £2,500 to £2,700. That requires a top-up from the individual, but they cannot afford the top-up, so they do not get the work done. However, a good, local contractor could do the work for £1,200 or £1,500. Does the hon. Gentleman think that there should be more flexibility to select good, local contractors who can do such work?
I do not know the details of the situation in the hon. Gentleman’s constituency, but Warm Front and parallel schemes in Scotland and Northern Ireland have been extremely important. They need to develop and evolve, however, and they need to be funded to reflect changes in the market and local conditions. Without committing myself on the hon. Gentleman’s specific point, I think that he makes a good comment about the need to make the most of those schemes and to make them as effective as possible.
I congratulate the hon. Gentleman on securing the debate. He is a fellow Edinburgh MP, and we are both well aware of such measures in a city that can sometimes be very nippy. Does he agree that one group that is often badly hit by fuel poverty is the disabled? Will he pay particular attention to pressing the Minister on what can be done to help that group?
If the hon. Gentleman will wait a minute or so, he might hear my answer to his question.
I shall turn to the recommendations that I want to put to the Minister and hon. Members. The winter fuel payment has been extremely important in helping many millions of pensioners to meet the cost of fuel bills over the winter months, but we must do more to examine ways of ensuring that payment increases take account of the increases in energy costs, because it will be important for many pensioners. In addition, there is a strong case for extending payments to other key vulnerable groups living on very low incomes. That might include households in which there are people with disabilities. People with long-term sickness who are on lower incomes should also be considered for winter fuel payments. There are cost restrictions, and the line must be drawn somewhere, but in many cases those groups are arguably in a worse situation than that of many pensioners. Those groups certainly deserve at least the same winter fuel payment, and I urge the Minister to consider that possibility.
I congratulate the hon. Gentleman on securing the debate. He makes the point that there are cost implications. Does he think that when prices spike and increase dramatically, the Government should consider using at least the VAT windfall to resource the measures that he would like, whether that means additional winter fuel payments, or more help with the insulation of existing and old properties?
That is obviously a possibility. The hon. Gentleman has also pre-empted a point on which I shall expand later.
The resource implications of a general increase in the winter fuel payment must be considered, but I strongly believe that there ought to be such an increase. Because it is a universal payment, an increase in line with those in energy costs would have substantial implications for the Government. In addition, the nature of energy prices is that they go down sometimes instead of up, and there could be all sorts of difficulties if winter fuel payments went up one year and down another.
One suggestion that we floated in our report, and that I suggest the Department should investigate, is an additional substantial winter fuel payment to go specifically towards fuel costs. It would effectively be a fuel voucher, paid in addition to the winter fuel payment to defined vulnerable groups—perhaps to all pensioners on pension credit or to other vulnerable households. It would rise in line with energy prices, if they rose beyond certain thresholds, and could be funded by a levy on energy suppliers or payments from them. When prices go up, energy suppliers tend to make more profit, so it seems fair that they should contribute to meeting the energy costs of those who are the most vulnerable. Such a scheme would not produce an extra cost to the Government, but would ensure a direct additional payment to those in particularly vulnerable situations that would be related directly to energy cost increases imposed by suppliers.
I, too, congratulate my hon. Friend on securing the debate. I am listening to what he is saying and I understand where he is coming from. I applaud the concept of additional financial support being given in some manner to vulnerable groups, but I am conscious that that might be seen by some power companies as an opportunity to push prices up and generate further profit off the backs of taxpayers and vulnerable groups.
I have written in my notes that there could be some drawbacks to such a scheme. I recognise that, but it would certainly be worth while to carry out research into the feasibility of a link between price increases and payments being made by the energy companies bringing them about.
The second matter on which I wish to make some suggestions is payment methods for domestic energy consumers. It is often said that the energy market in the UK is among the most competitive in the world, which is almost certainly the case. Unfortunately, those on low incomes often do not seem to receive many benefits from such competition. In fact, many low-income customers pay more for their energy supplies than other consumers. That can arise because they do not have access or the ability to commit themselves to direct debit payments, or because they prefer, or are forced, to use prepayment meters.
The gap between the energy prices paid by direct debit customers and those paying by prepayment methods, cash or cheque, has increased significantly in the past few years. Energywatch released figures last month showing that prepayment meter customers were paying an average of £195 a year more than customers who could access cheaper online tariffs. In the most extreme cases, consumers found themselves paying as much as £304 extra each year. Prepayment meter users are also three times more likely to be fuel poor, and last year alone 366,000 prepayment meters were installed by companies to recover energy debt, thus effectively barring consumers from switching to cheaper suppliers and payment methods.
It is vital that Ofgem and the Government address the gap between the prices paid by direct debit customers and those paid by customers using prepayment methods. It is not enough for the regulator to suggest that a solution for prepayment meter users is to switch supplier to take advantage of cheaper deals, because many are prevented from doing so as they are locked into a debt to their supplier. We must move away from the situation that the poorer someone is, the more they pay for their energy.
Does my hon. Friend accept that not all energy companies operate an enormous tariff difference? Some—unfortunately a minority—have equalised the tariffs for prepayment meters and direct debits. Does he agree that all companies could do that if they wished? As he says, the question is how those companies can be regulated so that they do so and follow the example of the companies that already have.
Indeed, and I put on record my recognition that some companies have done that, which shows that others could and should do the same.
I turn to a third matter: the social tariffs that my hon. Friend the Member for North-West Leicestershire (David Taylor) mentioned. An important feature of the energy market for domestic consumers is that a range of social tariffs is available to vulnerable customers, offering different benefits to various groups of consumers who might have difficulty in paying their energy bills. Such tariffs could play an important role in ensuring that there is a much more focused attack on fuel poverty, but I suggest that social tariffs are currently of only limited benefit and that much more use could be made of them.
The Government have previously indicated—in the energy White Paper, I believe—that they were considering taking powers in the forthcoming energy Bill to introduce mandatory minimum standards for social tariffs. I ask them to follow up that commitment by including such a measure in the Bill. They instructed Ofgem to examine suppliers’ packages of support for low-income consumers and report back. Ofgem’s report stated that the suppliers were making efforts to provide support to their fuel-poor customers, but it did not rank those measures or consider their effectiveness. That missed the point. There is no framework of standards for what constitutes a social tariff, which has resulted in a confusing situation for customers and those who advise people in vulnerable positions. That has allowed suppliers to attach the term “social tariff” to any product from rebates to existing tariffs, and in some cases the social tariff is more expensive than the normal tariff, which clearly should not be the case.
Are not the real politics of the situation shown in the fact that a statistic called “excess winter death figures” is being counted? I do not believe many statistics, but that one I do. Is it not a scandal that, in this day and age, people are dying of cold-related illnesses? Would any of the measures that my hon. Friend suggests make any difference?
My hon. Friend makes an important point that goes to the heart of the debate and shows why we need a package of measures that will make a difference now, this winter, not just in years to come. It also shows why we need to ensure that social tariffs perform the job that they are meant to do. In my view and that of many people involved in the debate, particularly in the advice sector, and others working on behalf of consumers, there needs to be a minimum standard and a mandatory basic framework for social tariffs to ensure that all suppliers offer social tariffs in such a way that consumers can make use of them to a much greater extent than has so far been the case. I hope that the Government will address the matter of ensuring a wider take-up of social tariffs in the energy Bill.
One group of customers who tend to be fuel poor is those who do not have the facility of mains gas and depend on liquefied petroleum gas and heating oil, which tend to be more expensive, calorie for calorie, than mains gas. Some communities, particularly ex-mining villages in my constituency, find that they cannot secure mains gas. Would not one way in which the Government could act to eliminate fuel poverty be to encourage companies to supply mains gas to more communities?
I am not in a position to comment on the hon. Gentleman’s constituency, but there is clearly a problem in rural constituencies that needs to be addressed. There is also a problem in very urban areas with particular types of housing in which it is difficult to provide adequate heating.
The figure offered to communities for joining up is so ridiculously high that it is a great disincentive. Does my hon. Friend agree that the Government could do something to help with that problem?
As I do not have a particularly rural constituency, I cannot comment on my hon. Friend’s suggestion. No doubt the Minister will wish to comment on that either now or in the future.
I return to energy efficiency. As well as taking measures to help people meet the rising costs of energy, long-term measures to improve energy efficiency and warm up the homes of the oldest and most vulnerable are crucial to solving this problem and will help to ensure that people can live in decent conditions. The creation of energy-efficient homes is important for domestic consumers and can also play a role in tackling the growing problem of climate change. The continuation and extension of grant schemes to assist with the cost of creating energy-efficient homes is crucial, but much more could be done. I do not have time to develop all those ideas now, but energy companies and regulators need to work harder to provide information about the benefits and grant schemes available to customers. That information should be presented in a simple and understandable format. Much is being done, but much more could be done by some energy suppliers in particular. There are specific problems in rural areas and certain types of urban housing that need particular attention and a focused approach.
The hon. Gentleman mentioned the elderly and most vulnerable, but should not families with young children also be high on the priority list for home efficiency schemes? At least 750,000 children live in fuel-poor households.
There is certainly a strong case for that. In my comments, I used the term “the oldest and most vulnerable”. There is a case for such an extension, but I also accept that a line has to be drawn somewhere. People with young children can be in a very difficult situation if they live in housing that is not properly heated or is energy-inefficient.
More could be done, using the energy efficiency commitment and its successor, to ensure that schemes are operated in an integrated manner to provide energy advice locally. Scottish and Southern Energy, and other companies, have made an interesting proposal to develop a single fuel poverty scheme, bringing together both the central heating programmes and the social aspects of energy efficiency commitments. Such proposals are worth investigating.
Finally, on energy conservation, a major effort must be made to improve the take-up of such schemes among private landlords to benefit their tenants. The full opportunity of taking up such energy efficiency and conservation measures has not yet been developed in that area in the way that it has for people living in various types of social housing.
I could say much more, but I want to allow my colleagues to contribute to the debate. Although I have taken quite a few interventions, I do not want to take up any more time on this important subject today. I conclude by noting that fuel poverty is not just about budgets and incomes. As my hon. Friend the Member for Norwich, North (Dr. Gibson) pointed out, it is a matter of life and death for the many people who are forced to live in cold and damp conditions in their homes. Hundreds of thousands more will suffer as a result of recent increases in gas and electricity prices unless something is done about this issue now. The Government set themselves an ambitious target to eradicate fuel poverty by 2010, and I know that my hon. Friend the Minister has been closely associated with that noble vision, both as a Member of Parliament and before he was elected. The difficulties being encountered in reaching that target should not lead us to lower our ambitions. Instead, we should redouble our efforts to ensure that we reach it and that that noble vision becomes a reality.
Order. Before I call the next speaker, I make a plea. Clearly, many Members want to contribute to this important debate, but I want the Minister to have adequate time to reply, as it is important that the Government put their position on this subject clearly and fully.
I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) on securing the debate. Fuel poverty is linked to deprivation: unaffordable fuel prices combined with poor housing stock, often characterised by inadequate insulation and inefficient heating systems, make life a misery for millions of people in our country. The latest figures show that more than 4 million households across Britain cannot afford to keep warm at a reasonable cost. I am proud that the Government have made great strides in tackling this problem with measures such as the winter fuel payment, but that is becoming increasingly futile, given that the energy companies seem intent on record-breaking price increases.
It is deplorable that, as we greeted the new year, npower, which makes billions of pounds in profit, announced another increase in customer bills. That move, so soon after Christmas, will cause only heartache and misery for millions of people, and I thought it rather cynical to slip out that announcement when most of the country was on holiday, celebrating Christmas and the new year. The average npower customer will now pay more than £1,000 a year for their energy, but many who use prepayment meters will pay even more, as my hon. Friend noted in his opening remarks. I join those who roundly condemn that move, and I am glad that my right hon. Friend the Chancellor has decided to take up this issue and meet the energy regulator. I hope that he will do his absolute best to ensure that the regulator finds ways to intervene in this matter, so that we can have the excessive fuel price increases dramatically reduced.
The impact of such price rises on fuel-poor consumers, many of whom are in low-income households, will be devastating and are likely to push thousands more people, including many pensioners, into fuel poverty. Many people who are fuel poor do not necessarily know that they are. That may seem an extraordinary statement, but many simply accept the difficulties that they are living in. I can illustrate that point rather markedly. Ahead of this debate, I contacted the secretary of the National Old Age Pensioners Association of Wales—I happen to be the association’s president—to ask for examples of how the new fuel prices will impact on pensioners. He did not have any examples, but thought that the majority of his members simply accept that rising fuel prices are a fact of life and said that, when they get cold, they will slip on an extra pullover or heat only one room. That should not be happening in Britain in this century.
Many pensioners in Wales have illnesses such as heart disease and diabetes, and many who are ex-miners have lung diseases. They often have high fuel bills because of their health problems and need to keep their homes at much higher temperatures than other people. That problem is even worse in older and poorly insulated houses. In Wales, older people bear the brunt of increases in fuel prices. Some 50 per cent. of the population there are pensioners, 20 per cent. of the population do not have access to mains gas and 250,000 households live in fuel poverty. Some 43 per cent. of fuel-poor households in Wales are pensioner households and almost 31 per cent. of those pensioners are single—often widows and widowers—and desperately trying to make ends meet. Those pensioners face a double whammy, because electricity prices in Wales are 10 per cent. higher than in England.
A report produced by Help the Aged in 2005 found that 1.5 million inadequately insulated homes across Britain are occupied by someone over 65 who cannot afford the heating costs.
My right hon. Friend spoke about his constituents in Wales. Is he aware of the geographical differences in fuel costs that are caused not just by the prices that the fuel companies charge, but by the cost of heating a home? It is said that it costs 68 per cent. more to heat a home in the north of Scotland than in the south of England, because of climate differences. Does he believe that that must be taken into account?
My hon. Friend makes an important point. There are such differences across the United Kingdom, and we must address them. The quality of life of so many people is affected by the difficulties that she mentions.
The Help the Aged report found that 22 per cent. of households with someone over 75 had no central heating at all. We take central heating for granted. When we get up in the morning, the heating is on and the house is comfortable, but many people do not have what we consider to be normal. That cannot be acceptable today.
The worst thing is that help is available. There is the Warm Front scheme in England and, in Wales, the new home energy efficiency scheme offers grants to older home owners and those living in rented accommodation and in receipt of benefits. Because of the previous Labour Administration, Scotland has done even better: it has a scheme that provides pensioners with new heating and insulation facilities regardless of whether they claim benefits. That is good, and perhaps the energy companies, which are making billions of pounds, might consider using some of their profits to help roll out such a scheme across the United Kingdom.
Help the Aged estimates that £800 million will be spent on Warm Front and home energy projects up to this year. However, it maintains that that is still not enough and that we must consider the whole of Britain if we are to make real progress.
Is not one of the most important things about schemes such as Warm Front the fact that we can link benefit entitlement checks to them? My right hon. Friend may like to know that, in my constituency, where nearly £6 million pounds has been invested by the Warm Front scheme, the average weekly income of the clients who have benefited has increased by £13 a week, which is fairly significant.
My hon. Friend makes an important point. We can see the benefits of actively intervening to tackle such problems.
Of course, it is all very well to have schemes—I commend the work that the Government are doing—but if people do not know about or participate in them, they are very much a waste of time. We must get the message across.
One important way to combat fuel poverty is to increase the income of many of those who are at risk of falling into the fuel poverty trap. My hon. Friend the Member for Edinburgh, North and Leith spoke about social tariffs. Like him, I hope that the energy Bill will include some positive proposals that will result in greater benefit to those who are in danger of falling into the fuel poverty trap.
I have no doubt that the winter fuel payment has had a significant impact on fuel poverty, but the decision taken in the 2005 pre-Budget report to keep fuel payments at the present level for the duration of this Parliament needs to be revisited if the regulator does not have sufficient powers to intervene to prevent the massive increases that the fuel companies are demanding. It is clear that the winter fuel payment has not gone up in line with rising fuel prices. Indeed, figures show that, between 2005 and 2007, the percentage of total fuel bills met by winter fuel payment fell from 36 to 34 per cent. The Government must address that issue.
We should consider ways of increasing winter fuel payments and, as other Members suggested, perhaps even widening the access to other vulnerable groups such as the disabled and, possibly, the terminally ill. With energy companies seemingly increasing their prices at will, we are faced with the difficulty that people will fall into fuel poverty as soon as energy prices rise. The great socialist James Maxton said that poverty is man-made and therefore open to change. Fuel poverty is man-made. It is up to us to do something about the situation and change it.
A happy new year to you, Sir Nicholas. It is a pleasure to follow my right hon. Friend the Member for Islwyn (Mr. Touhig). Many of the things that he said and that my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) said in his excellent speech are accepted overwhelmingly in the House.
I congratulate my hon. Friend on introducing the debate, which could not be more timely. I am sure that he will not mind if I recall that just about a year ago, on 23 January last year, I initiated a similar debate in which several points that have been made today were made, and rightly so. The difference was the atmosphere in which the debate took place, which was not like the one today. At that time, wholesale prices had gone down but the energy companies simply refused to pass the decreases on to consumers. Today, at the first hint of an increase in wholesale prices—and the message is there—the prices charged by some companies have gone up, and there is no evidence to suggest that other companies will not follow exactly that line. The House is entitled to be impatient.
I wish to thank the various consumer groups, including Energywatch, which campaigned strongly on the issue. Last year, in due course, we did secure a reduction. It did not really reflect the reduction on wholesale prices, but it was a reduction. We had high hopes that all our worries about the impact on constituents who are elderly, on low pay or in ill health would be addressed. My hon. Friend rightly referred to the Government’s admirable policies. We welcome not just tax credits, pension credits and other benefits but the specific payments for heating, which I understand amounted to some £2 billion last winter. We encourage the Government to recognise their social responsibilities, and I believe that they are doing so. However, there is another point that ought to be made.
Will the right hon. Gentleman give way?
Yes, but as many people wish to speak, may I ask the House to allow me to accept just one intervention?
I am grateful, and I shall be very quick. Before the right hon. Gentleman moves away from the issue of honest pricing by energy companies, is he aware that many of those companies forward-buy their energy at fixed costs? Therefore, perhaps it is time to extend Ofgem’s remit so that it can ensure that there is no improper profiteering.
I am grateful to the hon. Gentleman. If time allows, I intend to discuss Ofgem’s remit, which is of crucial importance.
The fact is that the recent price increases impact strongly not just on the quality of life of most of our constituents—certainly some of the most vulnerable in my constituency—but on other things as well. They undermine social obligations to consumers, and they noticeably undermine the Government’s income and inflation policies—I am pleased that the Chancellor has been active on that matter. The increases do not demonstrate a commitment to the most vulnerable individuals. When we raised this issue last year, the chief executive of one of the most prosperous energy companies wrote to Members of Parliament, including myself, and said, notwithstanding his company’s huge profits—the company was later sold to the Spaniards—that we had a responsibility to ensure that all the benefits were taken up and that we should have a better programme for house building.
We genuinely accept our responsibilities, but that does not mean that any Government should be seen to subsidise energy companies. The companies seem to take the view that fluctuations in energy prices should be dealt with purely by consumers, and that shareholders and profits have no role at all. I am not prepared to accept that concept, and believe that we are entitled to express our views because of the impact on our constituents. I want to raise the very important issue of disabled children and their families, which was mentioned by the hon. Member for Edinburgh, West (John Barrett). I am grateful to the Every Disabled Child Matters consortium for providing information on disabled children, which it obtained from a survey conducted by Contact a Family. It concluded that two thirds of families with disabled children struggle to pay their fuel bills each winter. One family of every 10 families with disabled children has had its gas and electricity supply cut off. Just imagine what that means. In addition to the problem of having disabled children, families have to sit in the dark and the cold—that is not acceptable in the new millennium. There is not a single Member of Parliament who would accept that and not say that the companies have a responsibility. They would say so, too, to the regulators.
In the debate that I mentioned earlier, we spent some time considering the issues and the role of the Office of Gas and Electricity Markets. I have had a meeting with the regulator and also exchanged correspondence with him. Ofgem has considerable powers which, for whatever reason, it has not yet chosen to exercise. I urge it to do so now. What is being done to make the energy market more competitive, and to introduce longer contracts? Just look at what is happening in Europe. Ten years ago, a family in Glasgow or in my constituency enjoyed reasonably low energy prices. People in Berlin paid somewhat more. However, because of the long-term contracts that have been introduced elsewhere in Europe, there has not been much difference in the long-term prices in Berlin. Our constituents, on the other hand, have had to deal with the problem of fluctuating prices being passed on to them, and they are uncertain about how to budget for the forthcoming year.
Last year, we had very high hopes of the European Commissioner for Competition, who said that she would not accept the absence of competition elsewhere in Europe. Markets appear to be closed to us. Competitors can invade our markets when prices happen to be low. The result is that there is not an even playing field in Europe. Europe should be more involved in such issues, and I say so with the respect that the Minister knows that I have for him. I am disappointed that Ofgem is not to the fore, using its powers and working with the institutions that exist, both to show that there is genuine competition and accountability and to produce a transparency that does not seem to exist in the energy industry.
As regards the increase in wholesale prices, which we are told is at the heart of our problems, how much of that increase impacts on the prices that have been imposed? I have it on good authority that some people believe that about 40 per cent. of energy company costs apply to fuel prices. If that is the case, I cannot see why there is an average 17 per cent. increase. There are regional variations that are very worrying. In addition to the point made about the north of Scotland by my hon. Friend the Member for North Ayrshire and Arran (Ms Clark), I gather that the increase in London and the east Midlands is about 24 per cent. It is very difficult for the Government to argue—I understand where they are coming from—in favour of an anti-inflation policy, when public sector workers who have been asked to accept limited wage increases face rising prices, particularly for energy.
I want to conclude by indicating the strength of feeling in constituencies such as mine, where people have worked hard in the mines, the steel industry, and engineering. As my right hon. Friend the Member for Islwyn suggested, when we look at the impact on people’s health, particularly elderly people, the need for heat, warm water, and proper supplies of well-cooked food is something that we as hon. Members and the Government must support. It is fine if companies introduce social tariffs, but what is profoundly unacceptable is that, despite the Government’s support, which I welcome, the energy companies think that the obligation to prevent fuel poverty rests with the Government alone. I do not accept that. I hope that when it comes to issues such as social tariffs, the companies will accept that they have a responsibility. The idea that in Britain, with the prosperity that we have otherwise enjoyed, there are people who have to choose between heating and eating is profoundly repugnant, and we believe that something should be done.
I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) on obtaining this debate. It is not only important, but topical given the recent announcements on fuel price increases, which are, to say the least, swingeing. It is extremely likely that the announcements by npower will be followed by rises from all the other utilities and that they will herald long-term high energy costs.
Against such a background, this Government’s very good progress on reducing fuel poverty has effectively been reversed, at least in terms of the number of people who are in fuel poverty, using the definition of 10 per cent. of household income spent on fuel. Some 6.5 million people suffered fuel poverty in 1996. That figure was reduced to 2 million by 2004, partly because of lower fuel costs over that period. However, since 2004, that trend has been reversed by rising fuel prices.
Even before the most recent announcements, the number of people in fuel poverty had risen in England by about 1.6 million, in addition to those who were in fuel poverty in 2004, simply because of the rise in fuel prices. That figure has fallen following changes to Government policy on benefits and entitlements, which have led to income improvements, and 300,000 people have been taken out of fuel poverty. However, only 100,000 people have been taken out of fuel poverty as a result of energy efficiency improvements, and the recent substantial fuel price increases will stretch the figures much further.
The current estimate is that about 40,000 more people will fall into fuel poverty for each 1 per cent. increase in the price of fuel. Heroic though our efforts have been, we will, in many instances, almost inevitably be fighting a losing battle if we attempt to combat fuel poverty largely by giving those in fuel poverty additional resources to pay the bills that the energy companies put through their letter boxes; this is a sort of caucus race, in which everyone goes round and round, and some get small prizes, but there are no winners in the end.
As hon. Members have said, it is important that benefits and winter fuel payments rise in line with additional fuel costs, but it is almost impossible for the Government to align increases in benefits and other arrangements in that way, given the variability of proposed fuel increases. Therefore, as hon. Members have suggested, other methods will be necessary in the next phase of the battle on fuel poverty to ensure that we take people out of fuel poverty and meet the ambitious targets that have been set. That raises the issue of what happens with winter fuel payments, as well as the central question of how we can give people the wherewithal to fight fuel poverty by making their houses energy efficient, which will make their bills lower and ensure that their houses are proofed against future price increases.
The recently announced carbon emissions reduction target programme, which will oblige energy suppliers to make provision for carbon reduction in households, will perhaps be worth £1.5 billion over the next three years, and the recently announced uprating in pension credit will also make a considerable difference. However, the programme that can and will make the most significant difference is the specifically targeted Warm Front programme, under which grants to undertake energy efficiency measures are made available to households that are overwhelmingly in, or are likely to be in, fuel poverty. However, the problem is that, although the overall amount that will go into energy efficiency over the next few years is increasing, 25 per cent. less will be spent on the Warm Front programme over that period under the comprehensive spending review. That raises the question of whether we have got the right mix of measures to deal with fuel poverty over the next few years.
Mention has been made of people with prepayment meters paying vastly over the odds, and I had the good fortune to obtain an Adjournment debate on that issue, to which the Minister gave a very positive rejoinder. In that respect, it is important for us to consider the issue of how we give people the wherewithal to avoid paying an additional penalty, over and above any other increase in their energy costs, as a result of the choices that they make—or, in some instances, have to make—when choosing their energy supplier.
Another important issue, about which we have perhaps heard less than we should have, is the suggestion that energy companies should be increasingly regulated differently and enjoined to change from providing as much energy as possible—by and large, they make money by supplying households with as much energy as possible and charging for it—to co-operating with households, in particular, to provide as little energy as possible under longer term contracts, which hon. Members have mentioned.
Under such contracts, investments could be made in household energy efficiency and in methods of producing energy, such as microgeneration, which companies could provide as part of the contract, and the savings would be shared between the householder and the energy companies, which would take them in the form of profits. I hope that changing utility companies to energy service companies in that way will feature prominently in the forthcoming energy Bill. In conjunction with other measures, such an initiative could make a great difference to the way in which we target the energy efficiency of buildings and people’s ability to become players in the market and to pay the energy bills that companies lay on them.
On the Warm Front programme, it would be possible to make up the shortfall in financing over the next few years simply be considering whether the winter fuel payment should be paid universally or whether it might be targeted, for example, away from the highest level of taxpayers, who, as a general rule, are less in need of the winter fuel payment than many others across the spectrum.
The issue, therefore, is not necessarily whether the resources are available, but whether we have struck the right balance between paying people to compete in the market and ensuring that homes are genuinely warmly insulated and that people are genuinely able to resist price increases because of the circumstances in their homes.
Before I call the last speaker before the winding-up speeches, may I ask the Opposition spokesmen to keep their remarks as brief as possible to allow the Minister a full 12 or 13 minutes to reply to the debate?
What better way to start the new year and blow away the cobwebs than to take part in an Adjournment debate under your chairmanship, Sir Nicholas. It is also a great pleasure to follow four such thoughtful and, at times, passionate contributions.
The Government have massively ambitious targets on fuel poverty. The former Prime Minister said that we are
“best when we are boldest”,
and we aim to abolish fuel poverty by 2016. Nothing is more miserable for an MP than meeting elderly people who cannot get out of bed because of the fear of getting cold during the day, and nothing is more depressing than meeting young people who cannot find a quiet, warm room in which to do their homework.
I am lucky enough to have half a degree in economics—I should stress that I have a full degree in total, but the other half is in history—and I can recognise an oligopoly when I see one. Some of my colleagues have, if anything, been too kind to Ofgem, because what we are talking about here is an oligopoly. Ofgem has considerable powers, but all the economic studies over the past year have clearly shown that prices have been very sticky indeed, with retail prices not following wholesale prices. However, Ofgem has not done its job. Thank God for Energywatch; it will meet its demise this year, and we will miss it, because it has kept the spotlight on fuel poverty and campaigned on social tariffs.
In the brief time available, I want to support my colleagues. We need cheering up on the Labour Back Benches as we go into the new year; I do not think that that is a secret. The Minister is the man to do that, by committing himself today to a minimum scheme for social tariffs in the energy Bill. That is, incidentally, also in the best traditions of one-nation Toryism, so I hope that it will receive Opposition support.
Let us name and shame, even if Ofgem will not. Let us praise British Gas and EDF Energy for their social tariff schemes, and let us shame npower. No one has said exactly how much it has increased gas prices—it has done so by 17.2 per cent. The increase in electricity prices is 12 per cent.
“How can Npower bosses sleep at night knowing poor people will die?”
said a letter in The Sun. The Sun got it right on that occasion. David Threlfall, the npower retail chief executive, should really take a look at himself. Surely he does not want to be the coming year’s Scrooge of the energy industry, as he was for the previous year. It is not good enough for npower to sponsor cricket and supply green energy to Wembley stadium and to say that it is exercising corporate social responsibility. It must follow the other responsible energy companies that have introduced social tariffs. I hope that the Minister can give us assurances about that.
I join other hon. Members in congratulating the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) not only on securing the debate and making a thoughtful contribution, but on his track record on the issues in question. We have heard some very well-informed and thoughtful contributions. I could not help thinking that, in the sequence of points made by the hon. Member for Edinburgh, North and Leith, he saved the most important until last, in that energy efficiency must, as the hon. Member for Southampton, Test (Dr. Whitehead) said, lie at the heart of the matter. I speak as the newly appointed Liberal Democrat spokesman on environment and energy. The interests of both the planet and individuals point in the same direction: we must tackle energy efficiency, rather than simply pay more money to people to pay more money to fuel companies, so that they can create hot air that will go through badly insulated lofts, walls, windows and doors. If we can make long-term changes to the housing stock, so that not just this winter, but every winter, people pay less because their houses are properly insulated, that will be the infamous win-win situation for the elderly, the vulnerable and the planet.
I was interested to hear the hon. Member for Southampton, Test say that only a tiny amount of the action on fuel poverty has been about energy efficiency, and I was disturbed to hear his figures about the Warm Front scheme, with lower amounts to be spent in real terms than are spent under the current programme. The Minister has been described as heroic—and I have great admiration and respect for him—but heroic Government efforts would mean that they would hit their target of abolishing fuel poverty by 2016 and abolish it for the vulnerable by 2010, rather than missing it by a million, with a doubling of fuel poverty in the past few years.
Labour Members are understandably cautious—there has been much coded criticism of the Government, but no explicit criticism. I think that they are struggling, because many of them would like a world in which the utility companies are publicly owned, and in which the objectives that we have discussed could be achieved directly by Government. We moved to a situation in which the utility companies were publicly regulated, and now we have, essentially, a free market. Many of the contributions to the debate reflect the frustrations that we all feel when something with a clear social cost and implications is left to the free market. The problem with fuel poverty is what happens when Governments do not do enough to intervene in the free market. Who sets the rules for Ofgem?
Will the hon. Gentleman give way?
I have only a few minutes, so I hope that the hon. Gentleman will forgive me if I do not do so. Ofgem’s rules are set by the Government. If it is not doing enough, why do the Government not make it do more, as that is where the buck stops? How do we ensure that more effective help is given to vulnerable groups? The Minister’s experience goes back a long way, especially in matters of social policy, and he will remember that at the start of the 1980s there was something called certificated housing benefit. In other words, people on income support, or supplementary benefit, as it then was, received a certificate that entitled them to have their rent and rates paid in full. The problem in the fuel market is that the utility companies often do not know who are the right people to allow on to the social tariffs. British Gas, in its briefing to hon. Members, talked about
“the huge wasted effort...from searching for eligible customers”.
However, the Government know who those people are, so why do not they ensure that individuals whom they believe to be vulnerable to fuel poverty have a certificate or an equivalent document, whether they are vulnerable pensioners, severely disabled people, or, as mentioned by my hon. Friend the Member for Richmond Park (Susan Kramer), families with young children? Why do the Government not ensure that those people have a voucher or certificate to give them the power to choose the best provider of insulation, home efficiency or whatever is relevant, rather than expecting the private companies, which have been deregulated and sold, to go round Britain trying to find out which of their customers are eligible? It is nonsense. The Government have the information, and they should use it to the benefit of those individuals.
The root problem—and I think that the hon. Member for Southampton, Test hinted at this—is that the business of energy companies is to sell as much as they possibly can. We should oblige them to adopt a goal of selling less energy. Their goals and incentives, over time, should be the emission of less carbon, the selling of less energy and the wasting of less fuel. However, at the moment, if I buy a new flat screen multi-whatever digital high definition telly, and use lots more energy, that is great news for the electricity company, because my electricity bill shoots up. The incentives are all wrong. We will get action only when the incentives for the private companies that have rightly been criticised by the right hon. Members for Islwyn (Mr. Touhig) and for Coatbridge, Chryston and Bellshill (Mr. Clarke)—the wrong incentives of selling us more and more to make more and more money—become instead the incentives of delivering energy more and more efficiently. A cap is needed—there has been talk about capping emissions—and if there were a cap on the emissions that energy companies could generate, they would have a strong incentive when selling to customers to ensure that those customers used energy more and more efficiently. Until we turn things around, and adopt a new way of thinking about energy supply, we shall not get the right incentive structure.
We have heard that the npower increase averages 15 per cent. or so across gas and electricity, and if it is mirrored by other suppliers it will add 500,000 to the fuel poverty figures. We have heard that the number of households in fuel poverty go beyond the figure of 4 million a year or two ago. It is not just a question of our missing the target: we are going in completely the wrong direction, and the scale and scope of the Government response is wholly inadequate. The new energy Bill must include firm action on social tariffs, and it is worrying that the Government have gone rather quiet on that. Leaving the matter to the companies and expecting poor and vulnerable households to shop around and choose between all the different social tariffs is not good enough. As an ordinary hon. Member trying to deal with constituents, I am baffled by the range of tariffs, schemes, grants and initiatives run by the Government, let alone those run by the companies. National Energy Action has said that although some social tariffs are genuinely advantageous,
“this constitutes a form of ‘postcode lottery’”—
because of course different suppliers operate predominantly in different areas—
“that is restricted and inappropriate as a means of resolving a major social problem”.
I agree that that is the case.
The strength of feeling in the debate, particularly in the brief but excellent speech of the hon. Member for Selby (Mr. Grogan), is right. The situation is scandalous. Leaving things to the market is not good enough. Leaving things to different initiatives by individual companies is not good enough. The Government have the levers of power in the market, and they should use them.
I, too, want to begin by congratulating the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) on securing the debate, and by paying tribute to him for the huge amount of work that he has done in this context over many years. Linked to that, I add my tribute to those that Energywatch has received this morning for its work. I also congratulate the hon. Member for Northavon (Steve Webb) on securing his position and on the way in which he has mastered his brief.
We have had a very good debate, but it is clear that we are heading in the wrong direction, as the hon. Member for Northavon said. The problem is getting worse. There were 1 million households in fuel poverty in 2003 and now, according to Ofgem, there are about 4 million. The Government have been strangely quiet about that. When the figures were falling they trumpeted them, but the last Government figures that we had related to 2005. We cannot obtain from the Government, in spite of parliamentary questions, more up-to-date information about the number of households that are affected. We must go to other organisations, such as Ofgem, and we end up with an absurd situation of shifting targets, which become meaningless.
The Government’s original commitment was to eliminate fuel poverty in every vulnerable home by 2010, but now the policy is simply to ameliorate the situation. There is an absurd commitment in the recently published fifth annual report on the fuel poverty strategy to eliminate fuel poverty in England and Scotland by November 2016. It is absurd, because the report gives a date of 22 November 2016. That is almost nine years away; perhaps the Minister can tell us whether it will be in the morning or the afternoon. Why do not we shift away from meaningless targets towards more concrete action?
What we have seen—and this is the real reason for change—an increase in fuel prices. When fuel prices fall, more people are taken out of fuel poverty; when they rise, inevitably more people are drawn into fuel poverty. Labour Members cannot have it both ways. When the numbers fall, they claim that it is a massive credit and triumph for Government policies but then, when wholesale fuel prices rise, they say that it is the fault of the energy companies. The right hon. Member for Coatbridge, Chryston and Bellshill (Mr. Clarke) said that at the first hint of an increase in wholesale prices, the companies put consumer prices up. I wonder what newspapers he has been reading. He talked about the “first hint”, but oil prices have reached $100 a barrel as a result of a gradual increase over a long period. The price of coal has doubled in the past year from $60 to $120 a tonne, and gas prices have gone up by 60 per cent. Those are real increases and they are reflected elsewhere. The right hon. Gentleman asked us to look at what is happening in Europe, but if he did so, he would see that in Germany, Spain and France, there have been applications, some of which have been approved, for fuel price increases of 10 per cent. We are talking about a global phenomenon, and the right hon. Gentleman does not strengthen his argument by misinterpreting the facts.
Government policies have made the situation worse. We heard that the Warm Front budget has been cut from £350 million a year to £300 million. That was done deliberately to attract as little notice as possible in the run-up to Christmas. We heard that the overall budget over three years has been cut from a little more than £1 billion to £810 million. In addition, as we heard, the Warm Front scheme has failed many people because of the way in which it was set up. My hon. Friend the Member for Castle Point (Bob Spink) rightly highlighted the fact that a scheme in which only approved contractors can be used ends up with a grant being given, but because the approved contractor quotes much more than the grant is worth, the individual concerned must either must top it up or go without it, whereas a local contractor could do the job at a much lower price. Those are practical problems that I hope the Minister will address.
The Government have changed other policies and made the situation worse. Fuel companies used to visit vulnerable customers accompanied by an official from the Department for Work and Pensions. The company could tell people how they could improve their fuel efficiency and reduce their tariff. The DWP official could tell them which additional benefits they might be entitled to. The DWP stopped that scheme without explanation—indeed, it will not give an explanation—so will the Minister tell us why it did so? The change means that people who are entitled to additional benefits are missing out because that useful and valuable approach was dropped.
Will the Minister tell us, too, what is the total contribution to fuel price increases resulting from Government measures to tackle climate change and increase energy efficiency? Will he confirm that renewable obligation certificates, carbon emissions reduction targets, and the EU emissions trading scheme have added about £70 per £1,000 of fuel bills to customers? We are all keen to see efforts made in that direction, but is it not the case that some households have been pushed into fuel poverty as a direct result of those additional costs on their fuel bills?
In the course of the debate, we have focused a great deal on Ofgem’s role and the work it does to tackle fuel poverty. We should recognise, that in its current duties, tackling fuel poverty is a secondary duty, not a primary duty. I hope that the energy Bill will lead to a review of Ofgem’s duties so that we can decide whether tackling fuel poverty should be a primary duty. We should recognise, too, that Ofgem has taken important steps, in particular through its work with citizens advice bureaux, to help to tackle fuel poverty. It sends out 100,000 letters a year to vulnerable customers to tell them what are the cheapest tariffs offered by energy suppliers in their area. Ofgem has managed to secure the power companies’ agreement that they will not disconnect vulnerable customers. An enormous amount of work has been done, but I share the concerns expressed, in particular by the hon. Member for Southampton, Test (Dr. Whitehead), who speaks with expertise on these subjects, about prepayment meters. Much more needs to be done. Some companies have addressed the issue, but others, including companies such as npower, have failed to do so, and should be called to account.
Will the Minister tell us the outcome of the discussions between the Chancellor of the Exchequer and Alistair Buchanan of Ofgem following yesterday’s press announcement that he was to be summoned to a meeting? I imagine that that meeting has taken place, or at least that a date has been set. Perhaps it has not—I hope that it was not simply a media stunt that the Government could use to get themselves off the hook. What is the outcome and, specifically, what will the Chancellor ask Ofgem to do to address the problems?
The solution to the problems is clear. First, we need to make sure that more is done to encourage customers to swap providers. The price increases in the past couple of weeks are very concerning. However, they have been made by a few companies, not by the majority, so the reality is that changing supplier remains the best defence against increasing prices. Secondly—this point was made by the hon. Members for Northavon and for Southampton, Test—on energy efficiency, only 40 per cent. of houses in this country are properly insulated. Many of the worst insulated houses are occupied by people most trapped in fuel poverty. Unless we do more to address those issues, we will not address the whole problem. The Government have done some things, such as introduce winter fuel payments, but they have also introduced measures in the past year or so that have exacerbated the problems of fuel poverty. Hon. Members have highlighted those issues in the debate, and I hope that the Minister will assure us that the Government will take action to address those matters.
It is a pleasure to serve under your chairmanship, Sir Nicholas, and to have listened to the debate. The debate is not only important, but topical for our constituents. I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) on the way in which he introduced it—not only for form’s sake, but sincerely. We heard important contributions from my right hon. Friends the Members for Islwyn (Mr. Touhig) and for Coatbridge, Chryston and Bellshill (Mr. Clarke)—the latter takes a strong interest in such social matters—and from my hon. Friends the Members for Southampton, Test (Dr. Whitehead) and for Selby (Mr. Grogan), who demonstrated a great deal of expertise.
I welcome the hon. Member for Northavon (Steve Webb) to his role of Liberal environment and energy spokesperson. He is a colleague who has a great deal of expertise. We worked together on pensions some two and a half years ago—I rather hoped that I had shaken him off but that turns out not to be the case. We also heard an interesting speech from the Conservative spokesman, the hon. Member for Wealden (Charles Hendry). It was interesting, of course, because of the history of the matter—I do not have half a degree in history, so I do not bring the 50 per cent. of expertise that my hon. Friend the Member for Selby brought. The Government inherited from the Conservative party a massive amount of fuel poverty, which the hon. Member for Wealden did not acknowledge. Of course, we inherited a social security system whereby, following those years of a Conservative Government, it was felt proper that elderly women living alone could live on as small an amount as £69 a week under the income support system. Given that record, I listened to the hon. Gentleman with interest but also, if I may say so, a certain amount of cynicism.
Tackling what we now call fuel poverty involves a range of issues. We are talking about the impact of poverty and low incomes, energy-inefficient housing, cold housing and, especially at the moment, rising energy costs. Tackling those problems is a significant priority of the Government. We have set challenging targets and we remain committed to maintaining and strengthening the framework to help us to reach our 2010 target in England and, beyond that, to reach our ultimate goal of eradicating fuel poverty altogether in the whole of the United Kingdom by 2016 to 2018.
I shall say something about what the Government have achieved, which was acknowledged by colleagues, how the issue stands at present, and what we need to do in future. Since 1996, more than 4 million households in the UK have been removed from fuel poverty. Some £20 billion has been spent on fuel poverty benefits and related programmes. The Government introduced the winter fuel payment, which has helped some 11.7 million people, the importance of which was acknowledged by hon. Members. I am always struck when I talk to older people by the comfort that that £200 or £300 brings just before Christmas to many who are worrying about fuel bills and costs at that time of year. If counted against fuel bills, the winter fuel payment is estimated to have removed a further 1 million households from fuel poverty in the UK.
In addition, we have assisted more than 2 million households in the UK through energy efficiency measures of different types. I certainly agree with colleagues when they stress the importance of energy efficiency measures in housing—in both new build and the existing stock. I think that that is the key to tackling this issue, and doing so in a way that is in full accord with our climate change objectives.
The hon. Member for Wealden is right. I have to say to him that even in opposition one cannot have it both ways. Of course programmes such as the renewables obligation increase costs. That is inevitable and it puts pressure on the fuel poverty issue, but we need some consistency here. Surely such climate change measures are important.
Let us recognise that millions of homes have been lifted out of fuel poverty, but now, because fuel bills are increasing—much of the debate has focused on that increase—the number of people in fuel poverty is also increasing. It is important to recognise the context, although, to be fair, the hon. Gentleman did so. Wholesale energy costs are rising across the world because of global demand. A great global grab for energy is going on, not least in emerging economies such as China and India. Since January 2007, crude oil prices have increased by some 80 per cent. Gas forward prices have increased by 50 per cent. and, in north-west Europe, coal prices have increased by 85 per cent. There can be no getting away from the fact that those increases are bound to have an impact on domestic prices. However, it is important that we ensure that the supply companies are playing fair by customers, particularly the most vulnerable ones.
It is therefore altogether appropriate that my right hon. Friend the Chancellor of the Exchequer has written to the regulator, Sir John Mogg, the chairman of Ofgem, to ask for his assessment of the association at present between wholesale and domestic prices. I think that that is an important initiative because I am aware of the allegations—I think that they remain only allegations—that supply companies are not playing fair. We need to assess that very carefully. Colleagues have made points today that are very important to our constituents.
The recent announcement on the next comprehensive spending review period of 2008 to 2011 showed the Government’s continued commitment in the area of fuel poverty. Warm Front is the Government’s main scheme to tackle fuel poverty in England—there are related schemes in the other nations of the UK—providing grants for energy efficiency and heating measures to some of our most vulnerable households, not just the elderly. Funding for Warm Front will be just over £800 million for the period between 2008 and 2011. That is significant further investment in addition to some £1.6 billion that the Government have committed to date. Warm Front now offers a benefit entitlement check to all eligible households, increasing income on average by £26 a week and £1,300 annually.
We have been examining very carefully what data we can share with supply companies to maximise take-up—that is a familiar theme for some of us. Because of data protection issues, we have decided that we cannot legislate in this area. We will discuss the issue when we consider the energy Bill, particularly in Committee, but the Department for Work and Pensions is keen to help us on this matter so that we can reach the most vulnerable. That will be a feature of the discussion on the energy Bill.
In addition, new proposals laid before Parliament at the end of last year in the form of a carbon emissions reduction target—the successor to the energy efficiency commitment—mean that the major energy suppliers will be obliged to meet carbon reduction targets that will lead to investment of about £1.5 billion over the next three years to install better insulation and improve heating systems. A wide range of other measures will improve efficiency and increase comfort for many of our constituents. The measures will have a particular focus on priority groups such as older people, people on low incomes and those with disabilities. That will double what energy suppliers currently have to do to improve the energy efficiency of their customers’ homes, and much of that effort will help people who are most at risk of fuel poverty. That means that the total help available for energy efficiency for the priority group will rise by £680 million, compared with the previous spending period, to about £2.3 billion.
I take on board—of course I do; it was our proposal—the need to move to the concept of the energy services company that helps all households, whether better-off or worse-off, to reduce their energy demand. That is the revolution that we need to bring about in the future and I am very committed to that.
Will the Minister give way?
I should not, but I will, as it is my hon. Friend.
I am grateful. The Minister acknowledges the importance of providing ways in which low-income households can reduce their energy commitment. Is not one way of doing that to accelerate the implementation of smart metering? That gives real-time information and is the subject of the look smart campaign, which is supported by the Energy Retail Association, Energywatch and Utility Week magazine. I know that he is aware of that.
I certainly recognise that my hon. Friend is, as usual, three or four pages ahead of me. I want to mention the issue to which he refers. The development of smart metering is very important, allied to other measures to put an emphasis on educating all of us, as householders, about the importance of these things.
Understandably, much has been made of payment differentials and the problem for prepayment customers. That is a more complex area than it appears at first sight, because when we examine the data and the empirical evidence, we see that most poor people—easily the most—are not on prepayment meters. My brief tells me that only 5 per cent. of elderly people are on prepayment meters, so let us not be simplistic about the issue, because if we exert pressure to help the prepayment meter customer, that will be, in part, at the expense of other customers, many of whom are on low incomes.
That said, I share the concern that the differential is now far too great. I have myself put pressure on the company chairmen to examine the issue—I have written to them. I am pleased that EDF and Scottish and Southern have equalised their standard credit and prepayment prices for electricity, while Scottish Power offers prepayment customers a lower price for both fuels than that paid by standard credit customers. We are seeing movement in what I judge to be the right direction, but this is a debate that I am very much engaged in now with the supply companies.
We will continue to work with Ofgem to make it easier for customers to switch suppliers. A great deal of switching is going on. If people are concerned that they are being charged too much, considering switching is very important, but I think that I know enough about this subject to recognise that switching is easier said than done for some of the most vulnerable people, particularly if there is a record of debt payments. I want to discuss that matter further.
I have met the chief executives of all the supply companies to talk about social tariffs. As a result of those discussions, energy suppliers have come forward with significant new investment of about £16 million, and I hope that that will be only the start of the story.
We have had an important debate about this matter of great concern. I am proud of our record in government, but I am very concerned now about the impact of price increases on some of the most vulnerable, and I am absolutely determined that we make progress as soon as possible on this important issue on our social policy and energy policy agenda.
The House thanks the Minister for his reply, and I congratulate hon. Members on the excellent debate that we have had on this important issue.
Nitrate Vulnerable Zones
It is a great pleasure, as always, to serve under your chairmanship, Sir Nicholas. I am grateful for the opportunity to raise this issue, which relates to amendments that the Government will introduce shortly to the regulations governing nitrate vulnerable zones. Those amendments could cause significant harm to this country’s agricultural economy, particularly in certain sectors that are least well equipped to cope with the increased regulatory burden proposed by the Department for Environment, Food and Rural Affairs. I should remind you, Sir Nicholas, and the House of my entry in the Register of Members’ Interests.
The Government’s proposals for those sectors affected are potentially extremely significant, particularly for the long-suffering dairy sector. It is good to see the chairman of the all-party group on dairy farmers, my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), in the Chamber today; I hope that he will have an opportunity to catch your eye, Sir Nicholas, as the debate progresses. However, the proposals have much wider ramifications for farming practice and enterprise viability across much of the livestock and arable sectors in England. Indeed, the Minister for the Environment has indicated in a parliamentary answer that, if the 70 per cent. NVZ proposal is implemented, approximately 139,500 farmers will be affected and, if the action programme covers the whole of England, approximately 195,500 farmers will be affected, as could each of the 272 Members of Parliament with a farm in their constituency.
Before commenting on the proposal in detail, I should like to dwell for a moment on the objectives and evolution of nitrate vulnerable zones. According to DEFRA, nitrogen discharge from agriculture accounts for 60 per cent. of diffuse nitrate pollution of the aquatic environment. In layman’s terms, nitrogen pollution leaching into the watercourses stimulates algae growth, which damages water quality, in respect of both human activity—from the quality of drinking water to swimming in the sea—and biodiversity within our rivers and oceans. I accept that nitrogen can contribute to water pollution, but we have to ask ourselves whether draconian, new and costly regulations are the right answer to a problem that seems already on the way to being solved without them.
I am a member of the Select Committee on Environment, Food and Rural Affairs. It is true that farming has reduced its nitrate footprint over the past 10 years or so by about 25 per cent. The hon. Gentleman mentioned aquatic levels. The River Trent forms part of my constituency boundary, and there has been a significant reduction in nitrate levels over the past 15 years—approaching a quarter—so there is substantial progress. I hope that the Minister will take that progress into account when looking at the costs and impact of the suggestions that we are discussing at the moment.
I am grateful to the hon. Gentleman for his intervention. Indeed, I was going to mention the great progress that has been made in respect of the River Trent in his constituency.
How did we get to where we are today? The current proposals for extending and revising NVZs do not result from any new European Union directive; rather, they stem from DEFRA’s need to abide by commitments originally entered into under the 1991 nitrates directive, which was agreed as part of the EU Environment Council in June 1991 and adopted in December that year.
Will my hon. Friend give way?
I give way to my hon. Friend, who was probably there are the time.
I am not quite sure that I can claim that, but perhaps I could remind my hon. Friend that I had ministerial responsibility in the mid-1990s. Will he accept my assurance that at all times Ministers then, regardless of their party colour, were anxious to ensure that the European regulations were operated in a way that had minimal impact on United Kingdom agriculture?
Indeed. My hon. Friend pre-empts precisely what I was going to say. From my research through the history books into the development of NVZs, it is clear that the original intent was to maintain regulation at the bare minimum. The 1991 directive required member states to designate areas as NVZs where nitrate levels in water were at risk of exceeding 50 mg per litre and where the water was or might become eutrophic. I am sure that I do not need to tell you, Sir Nicholas, that the word “eutrophic” describes water that is rich in dissolved nutrients, photosynthetically productive and often low in oxygen during warm weather. Member states could implement an action programme either for an entire territory or within discrete NVZs.
The Conservative Environment Minister at the time accepted that the aim of the 1991 directive was to improve water quality by reducing nitrate pollution from agricultural practice. He thought that the zone could cover up to 2 million hectares, but crucially said that the precise area would be based on necessary monitoring and other studies by the Government and the then National Rivers Authority. Any additional measures were envisaged to take into account their cost and effectiveness. Those two critical tests of cost and effectiveness should be the guiding principles applied by the Government today in responding to the consultation and bringing forward their final proposals.
It took until 1996 before the initial 66 NVZs were designated, covering a mere 600,000 hectares—just 8 per cent. of England—and focusing on protecting drinking water sources. In 2000, the European Court of Justice found that the UK had failed to protect surface and ground waters and was relying only on protecting drinking water. So DEFRA consulted in 2002 on two options for full implementation in England and received some 13,000 responses. The Government on that occasion wisely decided to take the least regulatory approach to comply with the Court and, in October 2002, designated 55 per cent. of England as an NVZ, including the original 8 per cent. Much of that territory was in the west midlands.
Those designations must be reviewed every four years, unless the action programme applies to the whole country. Having completed their four-yearly review, the Government concluded that there had been some increase in nitrate pollution in certain areas of England and that the current action programme had not had a significant impact on nitrate pollution. Those findings have not been universally acknowledged, as I shall mention in a few minutes.
In August 2007, the Government published a further consultation paper inviting comments by 13 December, so that they could be in a position to respond shortly, with the stated intention of laying a statutory instrument before the House to come into force from 6 April 2008. I should be grateful if the Minister in summing up confirmed whether he is still working to that timetable.
So what is proposed and what are the implications for English farmers and the environment? The measures currently proposed fall under seven main headings: controlling where, when and how much nitrogen is applied, how manure is stored, requiring cover crops in place of bare stubble and requiring detailed records of manure storage and nitrogen applications to be retained for five years. I should like to describe those measures briefly.
DEFRA proposes to control where nitrogen is applied by increasing the designation of either a further 15 per cent. of farmland to take the NVZs up to 70 per cent. of England’s farmland or incorporating the whole of England in an action programme, as Ireland did in 2003, joining Austria, Denmark, Finland, Germany, Luxembourg and the Netherlands.
Interested observers, such as the National Farmers Union, do not feel that such a major increase in designation is justified. The NFU claims to have provided evidence repeatedly to DEFRA over the past two years analysing Environment Agency data that has shown nitrate levels reducing in many rivers, including in the River Trent in the constituency of the hon. Member for North-West Leicestershire (David Taylor). But we do not have to take the NFU’s word for it, since DEFRA itself admits in its NVZ consultation that
“Analysis of surface water concentrations for the years 1999 to 2004 shows that 77 per cent. of sites had a declining trend”.
First, DEFRA may consider an analysis over only five years too short to be reliable, but why does it refuse to recognise the validity of the Environment Agency’s calculations of nitrate levels in several rivers, which show that they have been declining steadily for 15 years since 1990? In addition to the River Trent, which we have talked about, other rivers have had a 10 per cent. to 20 per cent. decline in nitrates, including the River Nene at Peterborough, the River Thames at Goring Weir, the River Aire at Sneath—I could go on—where Environment Agency monitoring of nitrate as nitrogen is used.
As recently as 17 December 2007, in answer to a parliamentary question from my hon. Friend the Member for Tewkesbury (Mr. Robertson), the Minister himself said:
“My Department worked closely with the Environment Agency during the recent review of Nitrate Vulnerable Zones in England. The EA regularly monitors nitrate concentrations in waters and this monitoring data played a fundamental role in informing the recent review.”—[Official Report, 17 December 2007; Vol. 469, c. 1010W.]
Could he explain, then, why the evidence should not be used to allow a more refined designation, so that areas that have improved to an acceptable level can be de-designated? According to the refined method used to define NVZ designations in 2007, some 6 per cent. of England within the existing NVZ should qualify for de-designation. Areas that qualify should at the very least not be required to implement the new, more stringent action programme. That would save farmers a significant and wholly unnecessary capital investment.
A 100 per cent. designation would also exacerbate existing boundary anomalies on the edge of NVZs—for example, along the Welsh border, where NVZs are proposed to increase to only 3 per cent. of Welsh farmland, and in Scotland, where it is planned to increase them to only 14 per cent.
I congratulate the hon. Member for Ludlow (Mr. Dunne) on securing this debate. His constituency neighbours mine, and we share the River Teme as a constituency boundary. It seems strange, if the designation depends on science, to take different approaches in Wales and England.
I am particularly grateful to my constituency neighbour, the hon. Gentleman. I was not going to personalise my contribution by getting into the minutiae of water systems in my constituency, but it is true that a river such as the Teme could be subject to an NVZ in England but not in Wales. Similarly, my farm is divided by a watercourse. The water flowing into the River Lugg will be subject to the regulations, but the water flowing into the Teme will not. That seems peculiar, and it will have some impact on how we conduct our farm and business.
I am most grateful to my hon. Friend; I appreciate that he has already given way once. I wish simply to put on record an administrative principle that I hope he accepts. If Ministers are considering expanding the zones, they must not, under administrative law, close their minds to the possibility of reducing a zone if the objective indications argue for that decision.
I am grateful to my hon. Friend; I hope that the Minister will take note of his intervention. The increased costs on those within the zone, to which I shall come shortly, put them at a considerable competitive disadvantage compared with those engaged in similar enterprises in neighbouring areas outside the zone.
The proposal’s second impact concerns when nitrogen applications can take place. DEFRA plans to ban spreading slurry and poultry manure for up to five months during autumn and winter. It will extend the current ban of two to three months, which applies only to that 10 to 20 per cent. of NVZ land with sandy and shallow soil, to a ban for all land within the NVZ of between three and five months, depending on average rainfall, soil type and whether the slurry is being applied to arable or grassland. That is likely to have the perverse effect, even according to DEFRA’s own figures, of increasing the ammonia emissions from manure spreading by up to 9 per cent. Ammonia is a potent pollutant that other EU directives are targeted to reduce. It is a further irony of the proposal that, according to the NFU, the environmental damage caused by the extra emissions will cost up to £300 million.
The proposal will encourage farmers to empty their slurry stores on the first fine day after the winter spreading bans end, almost certainly in unison. That has been the experience in other countries with similar regulations, such as the Netherlands, where regulations apply to pig and dairy cattle slurry. Instead of spreading slurry little and often when soil and weather conditions align to make it suitable, farmers throughout the area will all rush to empty their stores at the same time, increasing the environmental risks of smell in dry weather and leachate in wet.
Thirdly, the proposals on how manure should be spread amount to a ban on high-trajectory, high-pressure slurry spreaders. That would slow down the process, increase the cost and require additional investment in further machinery.
Fourthly, the proposals prescribe limits on how much nitrogen can be applied to each type of crop, which will effectively limit the potential yield from any specific crop. Over the years, plant breeders have developed higher-yielding varieties of all types of crops. The measure flies in the face of the attempt to encourage a competitive, dynamic agricultural sector. Perhaps it is an example of the Prime Minister’s vision—from his bunker, he commands a new five-year plan for agriculture. The command economy will be alive and well on English farms.
Farmers can work within a farm-wide limit, so they should be free to apply fertiliser within that limit as they see fit to maximise crop potential. DEFRA recently conceded that it is willing to seek a grassland derogation from the general whole-farm limit of 170 kg of nitrogen per hectare. The derogation is essential, and I urge the Minister to confirm today whether he is seeking a grassland derogation of 250 kg per hectare, as is granted to other member states.
The proposal’s fifth and single biggest impact for farmers in affected sectors relates to the control of how slurry is stored. DEFRA proposes a minimum of six months’ storage for poultry and pig manure and five months for cattle slurry within two years of the regulations’ coming into force. That would impose a massive cost increase on hard-pressed dairy, pig and poultry farmers, many of whom would need to more than double their storage capacity, at a time when two dairy farmers a week have been leaving the industry due to the inability to make a living, poultry farmers have faced two avian flu scares in successive years and sharply volatile prices and livestock farmers, especially pig and poultry farmers, face a near-doubling of feed costs following last year’s grain price rises.
The capital cost of constructing suitable storage pits is estimated to be between £240 million and £400 million. DEFRA’s estimate seems completely out of touch with the reality of farming in Britain today. DEFRA assumes that farmers will have no difficulty in borrowing the capital cost and repaying it over 25 years, but banks—particularly in their current nervous and fragile state—might take a more jaundiced view about lending money to finance a sunk capital spend with no prospect of any return on investment. According to Promar International for Dairy UK, the capital cost for the average dairy farm will be £55,000. For the average pig farm, it will be £30,000, according to the British Pig Executive. For tenant farmers, such a commitment is likely to be particularly hard to fund. In an economic environment where dairy and pig farming has recently become a marginal activity for many, a bank prepared to lend might not take a 25-year view on repayment. Ten years seems more realistic, which would double DEFRA’s estimate of the annual cost of investment.
Does my hon. Friend appreciate that my constituents in Staffordshire will be among those most heavily affected by the proposals? Indeed, some years ago, one of the original NVZ pilot areas was located bang in the middle of my constituency. The provision is not only virtually unchallengeable as far as the European Union is concerned, as it will lay down the requirements very stringently, but my constituents tell me that it will be one of the worst things to affect the farming industry in my constituency, particularly dairy farming, since I became a Member of Parliament in 1984. It is that serious.
I am grateful to my hon. Friend, neighbour and indeed constituent for making that point so graphically. I hope that the Minister will take it on board. The purpose of this debate is to emphasise the level of feeling out there among the farmers, particularly dairy farmers, who will be affected by the regulations.
The hon. Gentleman makes a strong point. Will he comment on the commercial inconsistency of the Government’s position? They are heaping costs on to farmers through such measures, yet they do not acknowledge that, at the farm gate, farmers are under the cosh from supermarkets, which can dictate market conditions and state the terms and conditions under which farmers trade. Does the hon. Gentleman agree that the Government should not heap such costs on to farmers, while turning a blind eye to the way in which farmers are treated in the food supply chain?
That was another useful contribution. I was about to tell the House of measures that the Government could take to alleviate farmers’ problems, particularly those taken by the devolved Governments in Wales and Scotland. They are providing some relief there, but apparently not in England.
My hon. Friend spoke of the costs to farmers and the investment required for the necessary storage, and so on. Does he agree that the problem is seriously exacerbated by the Government’s decision to abolish the agricultural buildings allowance, a small but nevertheless beneficial way to help farmers to recoup the costs of that investment?
It is almost uncanny that every intervention raises a point that I would have mentioned later. My hon. Friend is absolutely right. Indeed, one measure that the Government might consider is to reinstate some relief for that investment through the tax code.
There are other costs in addition to the capital costs—for instance, the additional running costs of the proposed storage arrangements will lead to extra costs when dispersing slurry. Given the shorter time frame and the reduced volumes that can be spread at the same time, it will take longer, so there will probably be greater transport costs. I believe that those factors were not properly taken into account in DEFRA’s calculations.
Sixthly, the most significant aspect on farms other than dairy farms is the proposal to plant cover crops on ground harvested before 1 September that would normally be left as bare stubble over the winter. DEFRA argues that a cover crop would reduce nitrate leaching; it might do so, but I suspect only by a tiny amount. Will the Minister tell us where the idea came from and on what scientific basis it was made?
That change would have a significant impact in my constituency in Lincolnshire. Is my hon. Friend aware that that proposal forms no part of the directive, which has been gold-plated by DEFRA?
My hon. Friend is clearly another clairvoyant.
The proposal bears all the hallmarks of Labour’s ill thought out, opportunistic and yet all too characteristic gold-plating—piggy-backing on an EU directive, so that the Government can blame someone else for the idea. There is no requirement for such a measure in the nitrates directive.
The Minister suggests from a sedentary position that my hon. Friend is wrong. It would improve the quality of debate if the Minister were to intervene and explain to us why the assertion that the directive is gold-plated was incorrect.
Order. If the Minister wishes to intervene, I am sure that he will do so. However, he will have adequate time at the end of the debate to comment on what has been said during it.
The Minister declines your offer, Sir Nicholas, but he indicates that he will answer the point later, for which I am grateful. The change shows yet again a complete lack of understanding of practical farming and horticultural practice.
The hon. Gentleman is extremely generous in giving way again. A number of conservation schemes pay premiums to allow over-winter stubble, to protect farm birds. It seems that one arm of Government is working against the same arm.
Again, I was briefly going to touch on that issue, but the point is well made.
A requirement to plant a cover crop and then to plough it in before sowing a spring-planted crop would lead to additional costs in mechanical operations and labour, and it could increase soil damage through the possible the use of additional herbicides and the additional spring work necessary to establish seed beds. However, it would also be a direct encouragement to farmers to manage the land in such a way as to avoid the regulations—for instance, by harvesting after 1 September.
Or by doing more autumn-sown planting.
Indeed, and such planting might adversely affect the optimum rotation for the farm.
The loss of over-wintering stubble would lead to a significant loss of habitat for farmland birds, just as set-aside is coming to an end. The environmental damage from such a proposal—as my hon. Friend the Member for Stone said, it is in other respects encouraged by DEFRA—would far outweigh the tiny reduction in nitrate. The proposal should be dropped, and I very much hope that the Minister will indicate that he is minded to do so.
Finally, the imposition of a new record-keeping regime provides a further major set of proposals for farmers to contend with. It takes red tape to new dimensions, even for this Government. Those of a sensitive disposition may need to hold their noses when working through the excruciating details of the records required to be kept to comply with the provisions set out in the statutory instrument. I read them with mounting alarm.
Such records include not just what manure is stored, but what is spread and where. They must all be kept for five years. Maps hatched in specified colours must be prepared and risk assessments undertaken, including a physical inspection, which must be recorded before spreading takes place in accordance with the map. Calculations for storage must be made in accordance with the schedule, which sets out how much manure each size, type and age of animal or bird excretes—a word that I had not intended to use in the Chamber until today. Did you know, Sir Nicholas, that a laying hen excretes 120 g a day and that a duck excretes 400 g? However, a large suckler cow excretes an average of 45 kg a day, each and every day; over 11 days, that is equivalent to its body weight. That is according to DEFRA.
Failure to comply is an offence, with penalties of up to two years in prison. That is taking micro-management to a ludicrous level. Farmers, particularly livestock farmers, have a better understanding of how their animals behave, including how they defecate, than bureaucrats in Whitehall. Farmers should be trusted with a system of spot checking to ensure compliance, not compelled to spend endless spare time—time that they do not have—tied up in keeping essentially pointless records. Please rethink that, too, Minister.
Another consequence of the proposal is the impact on the production of home-grown milling wheat of bread-making quality. I have some personal knowledge of that, having grown milling in preference to feed varieties of wheat on my farm for 20 years. UK flour millers require wheat with bread-making characteristics, which include a high level of good quality protein. The varieties of milling wheat now available mean that, to achieve the required protein level, more than a third of UK crops will need more than 280 kg per hectare of nitrogen and 25 per cent. will require more than 300 kg per hectare.
Milling wheat achieves a premium price for farmers, which can be achieved only if it meets the millers’ high standards. Last year, wheat was grown on some 1.826 million hectares in the United Kingdom, of which approximately 35 per cent. had bread-making potential. Those farmers whose soils or land quality require higher than the proposed maximum 260 kg per hectare of nitrogen inputs to achieve those standards will be encouraged to grow more feed wheat varieties, thus lowering their returns and reducing the supply of home-grown quality wheat for the mills. That will increase our imports of such wheat from France, Germany, Canada and other countries.
British farmers have supplied an increasing proportion of domestic demand, which was estimated by the milling industry at 85 per cent. last year, with imports declining over the years from 70 per cent. to 15 per cent. Did the Minister’s environmental impact assessment consider the cost of the increased food miles and the associated carbon footprint increase that will result from reversing that trend, possibly to the point where the majority of the flour needed to make bread or cakes to feed the British public must be imported? Does the Minister remember what happened to Marie Antoinette when she was held responsible for rising bread prices?
It does not have to be like that. There is already significant evidence of reducing nitrate fertiliser use on cereal crops, by 25 per cent. over the past 10 years, while yields have continued to grow. Specialist farmers who produce bread-making wheat are skilled in applying nitrogen to maximise uptake by the plant, while minimising losses and wastage through run-off. That requires a flexible approach by individual farmers, applying manure and chemical fertilisers when it is right for the crop and in weather conditions suitable to maximise take-up and minimise leachate, not when they are told to do so by Whitehall.
Are more stringent requirements really necessary? I am not a scientist, but that decision should be based on scientific evidence rather than on bureaucratic convenience. As I have just said, nitrogen fertiliser use has declined by 40 per cent. in less than 20 years and by 25 per cent. in the past 10 years. That has come about for several reasons, including a decline in the numbers of livestock after the animal health diseases of recent years, which means that less manure is generated. Furthermore, crop efficiency in absorbing nitrogen has risen substantially, so less nitrate is being leached through the soil. Nitrate trends are static or falling for 77 per cent. of river monitoring sites, and for 25 per cent. of groundwater. DEFRA’s plans seem based partly on meeting the aims of other directives or other Government objectives.
The Government have pledged to avoid all gold-plating of EU legislation, but their implementation and enforcement of these proposals fly in the face of that pledge. These measures are very costly, but not very effective. DEFRA itself has calculated a reduction in nitrates of only 1 per cent. by extending the closed period, which is responsible for the main cost of increased storage. These measures might not be regarded as cost-effective if they were introduced under the water framework directive and could be disproportionate, but mysteriously, those tests do not apply under the nitrates directive.
I shall make an observation on grants and helping farmers. When the initial NVZ scheme was introduced in 1996, the then Government recognised the significant cost to farmers of meeting the manure handling and storage requirements under the action programme. They therefore established the farm waste grants scheme, which the current Government expanded, in 2002, when they substantially increased the designated area and then extended, in 2003, for a further two years. The scheme ended on 31 March 2006. Will DEFRA reinstate that or equivalent schemes to provide relief to farmers in England, who see their neighbours in Wales and Scotland being offered grants of between 40 and 60 per cent. of the capital cost of providing the storage facilities?
I appreciate that I have extended the length of my speech, but I have taken a number of interventions from colleagues unable to make their own contributions. However, finally, I have some specific suggestions for the Minister about what is needed to make the regulations workable. First, no more land should be designated as an NVZ than is justified by science monitoring—less than 70 per cent. Secondly, in areas where designation is questioned, there should be no additional storage requirement, plus the retention of existing closed periods and ideally other aspects too, while DEFRA undertakes more intensive monitoring.
Thirdly, capital grants comparable to the 40 to 60 per cent. grants available in Wales and Scotland should be introduced to assist with increased storage requirements, as well as tax deductible depreciation charges, following the loss of the agricultural buildings allowance. Fourthly, a longer period, such as four rather than two years, should be introduced, to allow the implementation of storage requirements, given the time needed to secure planning permissions, arrange funding and build. Ministers are keen to encourage anaerobic digestion facilities on farms, which will take even longer to plan and install than conventional storage, and they should be covered by these measures.
Fifthly, Ministers should press to secure a whole farm manure loading grassland derogation of 230 kg per hectare. Sixthly, rather than imposing a blanket obligation from Whitehall, slurry volume storage requirements should be arranged locally to match more closely the conditions on the farm, including soil type, rainfall and land use. The six-month storage requirement for pig and poultry should be reduced to five months, because there seems no justification for additional storage; it is a buffer zone put in place by bureaucrats. Finally, the record-keeping system should be simplified to allow a spot-check monitoring system, rather than a prescribed one.
We have about 25 minutes for Back-Bench contributions before the winding-up speeches, unless the Front-Bench Opposition spokesmen are prepared to shorten their contributions, because I want the Minister to have at least 10 minutes in which to reply to the many points raised.
Happy new year to you, Sir Nicholas, and your colleagues on the Chairmen’s Panel. I congratulate the hon. Member for Ludlow (Mr. Dunne) on securing the debate and on his speech, which was a veritable tour de force in its comprehensive approach to the subject before us. As he said, it took up quite a lot of the time for our debate, regrettably, so I shall try to be as brief as I can.
Since the 1980s, Governments of both major parties have tried to work harder to recognise the effect on British businesses and competitiveness of over-regulation, and Governments now try to rationalise existing regulation, to weed out regulations that are no longer necessary and, when new regulations are proposed, to ensure that they are justified by the science and that they are proportionate in addressing the problem with which they seek to deal. The Minister ought to say today that the Government are mindful of that approach when considering proposals for the further implementation of the nitrates directive.
If it is a yellow card for the Minister to regulate when he ought not to, it is certainly a red card for him to come before this Chamber with a proposal to gold-plate a European Union directive—to use regulations implementing a directive to bring into force further proposals that he and his civil servants think are a good idea. I hope that the Minister will tell us that there is no such proposal to gold-plate this EU directive.
I shall explain why my involvement in this subject is so strong. A number of farmers and other land managers in my constituency of Stafford have approached me with concerns about the Government’s proposals in their consultation. Michael Madders, who is president of the Staffordshire branch of the National Farmers Union and a constituent of mine from Coppenhall, came to see me with the Staffordshire NFU’s view of these proposals. The Minister knows those views because he has seen the relevant letter making four very sensible points and constructive suggestions. However, many of those points were covered by the hon. Member for Ludlow, so I shall not repeat them, as I would have done had I more time.
I shall mention another person who manages land in my constituency: Andrew Blenkiron, who manages the Chillington estates. I put it that way because most of the land is in the constituency of my parliamentary neighbour, the long-standing and hon. Member for South Staffordshire (Sir Patrick Cormack). However, Andrew Blenkiron also manages land in my constituency and thus wrote to me. I passed on the letter to the Minister and he replied, for which I thank him. I want to bring to the attention of the Chamber the strength of feeling among those who are very experienced in managing land locally. Andrew Blenkiron spoke about the “substantial and disproportionate impacts” of the proposed changes on businesses such as the one that he manages. He wrote:
“I am particularly concerned about the costs associated with the maximum manure application rates, extended closed periods for manure application and the requirement for growing cover crops over winter.”
The hon. Member for Ludlow covered all of those points.
It might help if I draw to hon. Members’ attention another quote that demonstrates Mr. Blenkiron’s strength of feeling:
“Perhaps the most insulting part of the consultation is Defra’s own estimate of the Nitrate reduction that will be achieved by the extended closed period and whole farm limit, a mere 0.5 to 1.0 per cent. change. As a livestock farmer I recognise the important role that I play in looking after the environment.”
He rightly goes on to mention, as hon. Members have done in this debate, the way in which farmers are responsible for the management of land and the way in which the Government reward them for sensible management through many stewardship schemes.
I have also hosted a west midlands meeting of Members of Parliament, the National Farmers Union and individual farmers. The hon. Member for Ludlow was one of the prominent Members of Parliament who took part in the discussion that day. Nationally, I have dealt with the National Farmers Union and the Country Land and Business Association. I have read the CLA’s briefing on the subject.
On behalf of all those who have made representations to me, I would like to point out to the Minister that land managers and farmers already have a good story to tell in relation to carbon dioxide reductions—a subject dear to the Department’s heart—and their record on nitrate reductions. The CLA briefing mentions a 30 per cent. decrease in fertiliser use during the past 20 years. When we discuss further restrictions, more stringent record-keeping requirements, and imposing burdens that most people think will have huge price tags, we, as Members of Parliament, are entitled to ask whether such measures are really justified. The hon. Member for Ludlow said that we should have regard to the evidence. I agree, as does the CLA in its briefing, which states:
“According to the Environment Agency figures 75 per cent. of rivers have downward trends over 5 years”—
in terms of nitrates—
“but we are told by DEFRA that they are not statistically significant. We therefore call on DEFRA to obtain statistically significant data to clarify whether they are downward trends.”
The challenge goes back to the Department to justify making changes when the current trends appear to be downwards and therefore requiring less action.
I have talked about the representations that I have received. How many responses has the Minister received to his consultation, and will he tell us whether he is already getting the sense that those responses overwhelmingly reflect the views that he has heard in this debate? I hope that the Department for Environment, Food and Rural Affairs has understood those messages and what matters crucially to farmers and land managers. Many of those issues were pointed out by the hon. Member for Ludlow, but I would like to emphasise some of them again. Many people are saying that nitrate vulnerable zone designation should be at no more than the level justified by science monitoring. The other side to that coin is that in areas where there is no longer a need for zones to be designated, there should be a procedure to stop or take away the designation.
Before Christmas, I asked the Minister for the Environment about that in a written question, which he answered on 17 December. I asked whether it was possible for the River Trent catchment area to be removed from the nitrate vulnerable zone designation because of the long-term downward trend in nitrate content in that river—again, the hon. Member for Ludlow referred to that in his speech. The Minister answered:
“My Department is considering under what circumstances removal of land from within a nitrate vulnerable zone may be possible in the future.”—[Official Report, 17 December 2007; Vol. 469, c. 1005W.]
The representation that I wish to make is that there might be a good side to the regulations if they allow for an area to be de-designated where the evidence shows that that should happen.
As far as I am aware, everyone wants the Department to make the maximum use of derogation. The hon. Member for Ludlow mentioned one proposal relating to derogation that the Department itself has introduced. Everyone says that the proposals are too inflexible on the lengths of slurry storage requirements, and many people point to the actual cost of that requirement. The president of the Staffordshire NFU estimated there would be a £50,000 additional cost for a dairy farm with a herd of 120 cows. That helps to show that, proportionately, we are talking about large amounts for people whose businesses can ill afford it. Help should be provided with those costs if the Government’s own regulations impose the requirement for investment.
Many, including the NFU and the CLA, say that the requirements for winter cover crops should be scrapped. In this debate, hon. Members have referred to some of the beneficial effects of leaving cereal stubbles in over winter. We should at least draw the definition of what is required sufficiently widely to cover good environmental practice. That is my representation to the Minister on that subject, but I would like to point out that on his website, to which he refers from time to time as a place where we will find information about his Department’s policies, there recently appeared an announcement of a new consultation on helping businesses to cut carbon dioxide emissions. The website refers to the Department helping to
“cut duplication and unduly complex bureaucracy”
for farmers and other land managers who want to reduce carbon dioxide emissions. I hope that the Minister keeps the same attitude of helping to cut duplication and unduly complex bureaucracy at the forefront of his mind when he responds to this debate and deals with the issue of nitrates.
I congratulate my neighbour my hon. Friend the Member for Ludlow (Mr. Dunne) on securing the debate. I will significantly curtail my speech because I want to ensure that other hon. Members are called.
By way of introduction, I would like to point out that there is a terrible crisis in the dairy industry, as hon. Members are already aware. The price paid for milk to farmers by the supermarkets has until recently been absolutely disgraceful. On top of that, there is a terrible crisis of bovine TB throughout the country. In 1998 in Shropshire, 45 animals were slaughtered under bovine TB control measures, and in 2006, the figure was 915. There has been a massive increase in the number of animals slaughtered as a result of bovine TB. The recent foot and mouth outbreak also cost farmers throughout the country more than £100 million. So far the Government have offered only £10 million in compensation, which is wholly inadequate, and there is not much hope that the NFU will pursue the Government through the courts to give appropriate compensation to our farmers.
Nevertheless, we are making progress. We now have an all-party group on dairy farmers. I am chairman of the group and 189 Members of Parliament are members of it, many of whom are from the Labour party. I pay tribute to you, Sir Nicholas, as you are one of the most active members of the group and thank you for all that you contribute. I will, of course, send a copy of what the Minister says in this debate to all 189 members because I am sure that they will all be interested to hear the comments made today.
One of the most encouraging things that has happened is that the Office of Fair Trading has finally decided to fine the supermarkets for the way in which they have behaved. The all-party group met the OFT on many occasions and repeatedly pressed it on this issue. I am pleased that it will be fining supermarkets, but the group now wants to convince the OFT that fines should go not directly to Government coffers, but to farmers.
The nitrates directive will be hugely damaging to the dairy industry. It will result in a substantial increase in costs for dairy farmers. From the various studies that I have read, I calculate that it will add an extra £15,806 a year to the costs of the average dairy farm in Shropshire. That equates to a cost of compliance to the farmer of 1.34p a litre. Many dairy farmers will simply not have the capital available to cope with the NVZ proposals, if they are implemented. The 2008 forward planning booklet of the Hong Kong and Shanghai Banking Corporation estimates the average cost of production at more than 25p per litre, and that is before family labour is taken into account. Even with the improved prices, many farmers will not receive a milk price in excess of that amount.
The Environment Agency has shown that there have been falling trends in nitrates in 75 per cent. of rivers in the past 15 years due to decreased fertiliser applications. Why must we add additional measures when we are already achieving the objective? In existing NVZs, when a long-term nitrate decline is evident, new action programme proposals should be waived. That point was made by other hon. Members, and I hope that the Minister takes it on board.
I shall put three points to the Minister in my remaining few minutes—[Hon. Members: “Seconds.”] In that case, as I am generous to my hon. Friends, I shall conclude with one point.
My hon. Friend the Member for Ludlow mentioned anaerobic digestion, which is one of the most important points. I hope that the Minister will tell us that he has been to Germany or Sweden to see it in action because the Germans and the Swedes are advancing tremendously with anaerobic digestion. They are using farm waste to ensure that energy is produced, and ultimately the result is that far more animal waste is spread on farm land. I look forward to the Minister telling us what plans the Government have to support our farmers in order to ensure that they can enter the field of energy production, which ultimately will help everybody.
May I begin, Sir Nicholas, by saying how pleased I am to see you in the Chair this morning? I congratulate my hon. Friend the Member for Ludlow (Mr. Dunne) not only on securing the debate, but on the articulate and comprehensive way in which he introduced it. His speech was a tour de force on the subject of nitrate vulnerable zones.
My hon. Friend made three key points. I do not want to repeat what has already been said, but I shall highlight the three key areas, about which my hon. Friend was absolutely right. Given the scale of the proposed change and the negative impact on farmers, he was right to highlight costs and effectiveness as key determinants in the directive, and the necessity for a far more refined and focused designation of NVZs. I do not want to repeat the context, but it is important to re-emphasise the fact that farming has recently reduced its nitrate footprint dramatically, which is the point of the directive. Nitrate fertiliser use has fallen by 25 per cent. in 10 years, manure applications have been reduced, nitrate levels in rivers have fallen significantly, and as my hon. Friend rightly said, DEFRA’s own NVZ consultation showed that 77 per cent. of sites show a declining trend.
I shall make a few key points about Lincolnshire-specific issues, particularly on the gold-plating that DEFRA proposes regarding cover crops. I hope that the Minister will confirm that the Department will not gold-plate on cover crops or, indeed, that it will drop the whole proposal. There is significant concern among farmers and producers in Lincolnshire about the additional cost of the proposal and the damage that it may do. DEFRA proposes that cover crops be planted on land ploughed in autumn in preparation for the spring crop. In my constituency, many peas and brassicas are grown that are particularly sensitive to soil conditions, and cover crops will have a negative impact on those conditions, because the sowing and subsequent destruction of the cover crop will increase field operations and carbon emissions in direct contradiction of other DEFRA policies. It will prove harder to establish good seed beds in the fields for the next crops, which will inevitably lead to the greater use of herbicides and pesticides—again in direct contradiction of other DEFRA policies.
The proposal is agronomically unsound, because it defeats the object of autumn ploughing, which is to allow winter frosts to weather the soil, using nature rather than diesel to create a seed bed. Without the benefit of frost action, extra cultivations, herbicides and pesticides will be needed, planting will be delayed and the carbon footprint will increase. The crops that will be affected in my constituency in Lincolnshire—and elsewhere in England I suspect—are sugar beet, peas, brassicas and other vegetables.
Finally, as we heard, farmers may try to avoid the requirement by switching to autumn-sown crops or by harvesting later. That would result in fewer winter stubbles, upon which farm birds rely, and which form a vital part of another DEFRA policy—the entry-level scheme that encourages environmental protection among farmers. I urge the Minister to listen to what has been said in the debate and to the representations that he has received not only from Members, but from farmers and producers throughout the country. In an already difficult and challenging economic and agricultural environment, DEFRA should certainly not examine ways of gold-plating European Union directives by creating additional burdens and regulatory costs that will challenge farmers’ success. That is unhelpful, uneconomic and unwarranted.
Order. I want to allow two extra Members to speak, but if their remarks are not succinct, I shall not be able to do so.
I endorse the excellent speeches that my own MP, my hon. Friend the Member for Ludlow (Mr. Dunne), and others have made. It is interesting that so many of us have the same concerns, which have been expressed very well.
The proposals will have a devastating effect on many farmers in my constituency. The nitrate vulnerable zone pilot scheme was based in the centre of my constituency many years ago, and I have been following the issue for the past 15 or 20 years. The root of the problem is not gold-plating, although it contributes to the problem and it ought to be taken away. For practical purposes, the problem’s centre of gravity is the prescribed level of 50 mg a litre under the nitrates directive itself. As the National Farmers Union says, the level
“presents no human health impact but could trigger ecosystem changes in certain estuaries.”
I am deeply concerned, too, about the derogations made available to Denmark, the Netherlands, Germany, Austria and Ireland. Belgium and Northern Ireland have made applications, in particular for specialist dairy farms. The costs that my constituents will incur will be horrendous, and they are deeply worried about the issue. I find it extremely distasteful that differential grants in Scotland and Wales, which effectively mean that we pay a much higher rate in England, are paid for by our taxpayers. We subsidise what happens in Scotland and Wales, which is extraordinarily difficult to understand. I should like the Minister to address that point.
There are ways of dealing with the issue. The problem’s centre of gravity is the European directive, and ultimately, if a solution is not found by negotiation, under the supremacy of Parliament provisions that I have recommended in the past, we should take action to ensure that our farmers are not treated in a way that is detrimental to our own vital national interests.
I compliment my hon. Friend the Member for Ludlow (Mr. Dunne) on securing the debate. He may know that before Christmas, I called on the Leader of the House to find time for a debate in Government time about this very important subject. It is a sad indictment of the Government’s attitude to the countryside that we must hold the debate in Westminster Hall, not in the House itself.
I shall describe the plight of farmers in Norfolk in light of the disastrous effect of nitrate vulnerable zones. Although farmers in my constituency accept that the environmental impact of agricultural practices must be addressed, they are worried about the proposals. In Norfolk, farmers share concerns about the seemingly rushed timetable for implementing the new NVZ regulations, and about the costs that they will incur. However, they are particularly dismayed about the autumn cover-crop proposals and the closed period for spreading manure. Cover crops will prove costly in money and in time, as has already been said.
Spring crops, such as sugar beet on which the Norfolk economy relies, are dependent on autumn ploughing, and cover crops will seriously handicap farmers’ land preparation for spring. Cover crops could also devastate farmers’ yields. The National Farmers Union has gone so far as to say that cover crops might make it “impossible” for farmers to grow vining peas, potatoes and sugar beet, which would be a disaster for the Norfolk economy. If cover crops are mandatory, farmers may be forced to use more chemicals to produce a good seed bed, which is expensive and bad for farming practice.
Will the Minister respond to farmers in my constituency who believe that they will suffer from a lack of resources to try to meet DEFRA’s requirements while maintaining their usual farming practices? A constituent has told me that cover crop requirements will mean an end to winter stubble, which will have an adverse impact on birds and animals that use that stubble as an important food source. The sting in the tail is that the EU nitrates directive does not require cover crops to be included in member states’ action plans. How does the Minister justify the gold-plating of the directive, and does he accept that Europe has a lot to answer for in the directives by which British farmers have to abide, and which have not been thought through?
I have received a great deal of correspondence from farmers about new regulations on slurry and manure. As my hon. Friends have said, the increase both in storage requirements for slurry and in restrictions on spreading manure will be extremely expensive. Can the Minister guarantee capital grants for farmers if the slurry storage proposals go ahead as planned? Why is DEFRA considering regulations that would further penalise farmers who are already struggling because of animal disease, extreme weather conditions and bureaucracy?
I remind the House of my entry in the Register of Members’ Interests—that has probably used up most of my time.
I ask the Minister to help me see into the mind of the official who thought up the terms of compliance with the regulations. Oh, to have been on the Environment, Food and Rural Affairs Committee when he or she, and the Minister responsible for signing off the terms, appeared before it to answer questions on just how draconian, detailed and bureaucratic the regulations were and how much red tape was involved.
Will the Minister consider how the regulation conflicts so dramatically with what his Department is doing both on the countryside stewardship scheme, which has been successful in west Berkshire, and on other methods of increasing biodiversity? If he wants to see the future of stock farming in areas such as the constituency of my hon. Friend the Member for Ludlow (Mr. Dunne), he should come to the Berkshire downs, where it has all but disappeared, and see the impact that that has had on biodiversity and the excellent things that the Government want to achieve. The regulation will only add to that problem. Dairy farmers will continue to go out of business as the infrastructure that supports them disappears. I urge the Minister to have a rethink.
I welcome you to the Chair to oversee this welcome debate, Mr. Hancock, and I congratulate the hon. Member for Ludlow (Mr. Dunne) on securing it. It is incredibly important, and it ought to have taken place elsewhere, as has been said.
I notice that the Minister looks relatively relaxed; perhaps his football team, like mine—Burnley and Blackburn Rovers are normally hostile rivals—has benefited from the stress-free existence of willingly having gone out of the FA cup at the weekend, and is now settling down to a mid-table position. That is a contrived link—I hope that the Minister is not relaxed about the serious implications of the NVZ proposals for British farming, the tourism industry and the environment. People outside Parliament might consider that this is not the first time that Members of Parliament have talked poop, but it is right that we should do so on this occasion.
The Government’s proposals for the implementation of the NVZ directive are outrageously disproportionate. They will place a huge cost on the industry, yet DEFRA admits that the resulting reduction in nitrate leaching will be less than 1 per cent. They come at an incredibly difficult time, as we have heard, with foot and mouth disease placing a cost of at least £200 million on the farming industry. I imagine that we are having a slight respite from the impact of bluetongue and other damaging attacks on the industry, both natural and unnatural, but to add at least a £250 million price tag to increase storage capacity is unbearable considering the pitifully low compensation that the Government have provided to farming for foot and mouth. Almost none of that compensation has gone to lowland farms, yet the cost will have the greatest impact on them.
I was talking to a farmer who lives just up the road from me, Gordon Capstick of Heversham. He reckons that it will cost him, a relatively small dairy farmer, about £30,000 to improve his storage facilities. At a time when we are contemplating our navels about what we get paid, we are discussing a directive that, if imposed as planned, will create enormous cost increases for people, some of whom subsist on incomes below the national minimum wage.
Despite all that, the Government appear not to have planned any grant support to enable farmers to improve storage facilities. I hope that the Minister will tell us otherwise. Elsewhere in the UK, for example in Northern Ireland, farmers are given up to 60 per cent. grant aid, and elsewhere in the EU, close at hand in the Republic of Ireland, young farmers receive up to 80 per cent. grant aid in certain cases. We must also bear in mind the economic impact, given that storage requirements will undoubtedly reduce livestock numbers, as there will be pressure to maintain a lid on the amount of muck in tanks. Costs go up, and income goes down, so the measure is not wise, given the current situation in farming.
The impact on the countryside will be huge. Not only will there be a significant cost to farming, but there will be a massive impact on tourism. As we have heard, there will be a day, probably in March when, to coin a phrase, there will be a big stink. The tanks will be emptied on the first dry day, at just about the time when the tourists arrive in our part of the world. That will be terribly helpful! Hon. Members may know that we occasionally get a bit of rain in Cumbria, and there is every chance that the day following the first dry day will not be dry, and that it will chuck it down. Not only will the result be antisocial and unpleasant, there will be massive leaching into water courses.
Ironically, the measure threatens to be ecologically counter-productive. Members will have seen DEFRA’s own figures showing that it is likely to cause an increase of in the region of 9 per cent. in emissions of ammonia, which is a serious pollutant in its own right. I wonder whether the Government have considered the impact of the regulation in breaching other EU directives, particularly fresh water directives. The proposals appear to have been ill thought out, with precious little preparation time built in. As we have heard, the imposed building of new tanks will not happen overnight. They will be costly, and raising the finance will not be as straightforward as the Government think. In addition, planning permission will not be secured overnight, particularly in areas such as the Yorkshire dales and Lake District national parks, part of which I represent. Will there be a guarantee that farmers who cannot complete the installation of the new tanks in time, through no fault of their own, will be exempt from penalties?
There are clear examples of gold-plating in the NVZ proposals. We have heard two such examples: the first is the requirement for land that does not carry crops in the winter to be sown with cover crops. We have heard about the impact that that will have on farmland birds and, ecologically, on soil quality. It will be a massive drain on farm resources and extremely damaging to wildlife.
Does the hon. Gentleman accept that something that has not been mentioned—I apologise if I missed it earlier in his excellent speech—is the impact on the Environment Agency? In these days of flood prioritisation, I worry that the key monitoring agency might not be able to monitor nitrates properly and could be seriously under-resourced.
I am grateful to the hon. Gentleman for making that intervention, and I shall mention in a moment the impact of the regulation on monitoring bodies and the administrative framework.
I may have missed it, but I do not think that anybody has mentioned the second piece of gold-plating: the fact that DEFRA has decided to differentiate manures from different animals. The European Union makes no such requirement, as far as I can see, but still DEFRA seeks to enforce different minimum storage periods for cattle slurry and for pig and poultry slurry. That is an unnecessary complication that the Government have chosen to add to an already complex situation, which brings me to ask whether DEFRA is ready or, dare I say, even competent to deal with yet another complicated administrative system, which will be required to enforce and monitor all of this. The Minister must admit that DEFRA’s track record is not glittering in that regard. Does he really want to carry the can in a few months’ time when the administrative infrastructure that has to be constructed inevitably starts to implode?
The directive contains serious flaws, which prompts me to ask how we got here. Given that nitrate fertiliser use has fallen by 25 per cent. in the past 10 years, despite rising yields, that manure applications continue to decline, and that 77 per cent. of riversides show a declining nitrate trend, why has Britain been labelled a nitrate offender? Those charged with fighting our case in Europe have let farming down badly and I sincerely hope that it is not too late to tackle this issue. Will the Minister seek grassland derogation to 250 kg per hectare, as his Department has promised, which would at least provide some mitigation? Will he provide grants to support new storage or relax restrictions on slurry spreading? What about other mitigations? More generally, given the enormous cost to farming and the farming industry, and the ecological damage that the proposals will bring—in exchange for a tiny gain—will the Minister agree to return to Brussels to mitigate the impact of this directive? Will he also undo the restrictions that the Government have imposed over and above the requirements of the EU directive?
I remind hon. Members of my entry in the Register of Members’ Interests. As others have rightly done, I congratulate my hon. Friend the Member for Ludlow (Mr. Dunne) both on securing the debate and on the exceptionally comprehensive and reasonable way in which he presented all the issues. In many ways, he made other contributions superfluous, because he covered every aspect. However, I do not intend to follow his reasonable approach entirely. The most important thing to state is that the debate is not about the rights and wrongs of reducing nitrate pollution, so I hope that the Minister will not detain us on that issue. There is universal agreement across the House that we all want to do that, so we do not need to hear a lot of verbiage about why we need to do it. The issue is entirely about how we should do it.
The proposal is totally disproportionate and pays no heed to the realities of farming practice. It has clearly been drafted by people who have no idea about farming practice on the ground. It has been put to the House by Ministers who also have no understanding of farming practice and are therefore not in a position to challenge what is put before them. It goes far beyond what any reasonable interpretation of the directive would require, or what is necessary to comply with the directive. I agree with the hon. Member for Westmorland and Lonsdale (Tim Farron) that part of the problem is the directive. I hope that it can be renegotiated because it is far too detailed.
Several hon. Members have mentioned individual cases. Just this morning, I received a letter from a constituent of my hon. Friend the Member for Scarborough and Whitby (Mr. Goodwill). Mr. Cussons has a relatively small family farm of 63 hectares with 130 dairy cows. He estimates—he provides figures in the letter—that if he had to reduce the herd to cut manure production, it would cost £58,000 in reduced income. Increasing slurry capacity, as well as other factors, would bring the total to £148,000. On his 63-hectare farm, that is a cost to the business of more than £2,000 per hectare.
I accept that the 50 mg per litre requirement is laid down in the directive and that we have to work with it. My hon. Friend the Member for Stone (Mr. Cash) is right to say that there is some science to challenge that figure, but for the purposes of the debate, we have to accept it. However, the action plan is entirely disproportionate, especially at a time when even No. 10 Downing street is beginning to acknowledge the importance of having an element of domestic production and food security. As several hon. Members have said, the plan goes way beyond the directive and represents gold-plating. The Minister appeared to suggest that the measures on cover crops, which my hon. Friend the Member for Ludlow discussed, are not gold-plating, and I look forward to hearing his explanations on that point.
The whole issue of cover crops goes completely against traditional agricultural practice and the interests of the environment. They will cost some farmers their entry-level scheme. If they are getting points for winter stubble in an entry-level scheme to which they have signed up for five or seven years and if they now lose that, one must question how they can possibly achieve both objectives. The measures on cover crops will require much more energy use. I grew up farming in Essex, on heavy clay, where the frost for tilth was essential to get any sort of spring seed bed because otherwise we had to engage in what was called clod bashing to break up the soil, which used a lot of energy. Having tried to deal with the Labour Government for the past 10 years, I sometimes feel as though I am back clod bashing.
There has been a massive 25 per cent. reduction in the use of nitrogen, yet paragraph 5.12 of the document contains the insulting—there is no other way to describe it—statement that the programme could
“lead to cost-savings that will act to mitigate the costs”.
The document goes on to say:
“it is expected that the efficiency of nitrogen utilisation on farms will improve, thereby enabling farmers to reduce their input costs (e.g. manufactured fertiliser).”
If someone is paying £300 a tonne for their nitrogen, as opposed to £120 a tonne two years ago, they are already damn well looking at mitigating their costs. They do not need some pipsqueak writing it into a DEFRA document—it is already part of business practice.
Other important issues are the development of technology and fertiliser placement. Farmers are doing all that they can to reduce their nitrogen inputs because that makes sense. We have also had the issue of closed periods. With the exception of two rainfall categories, there is no differentiation, so the situation in Cornwall is the same as that in Cumbria—and in Cambridgeshire, although we have a lower rainfall. There is no reference to topography, so the same set of rules applies whether land is level or on a slope, or north or south-facing, and whatever the soil type. That is bonkers, and no respectable Minister with any understanding of, or sympathy for, this industry would put such measures before the House.
The hon. Member for Stafford (Mr. Kidney) rightly referred to the very small percentage reduction in leaching that can be achieved for what the NFU estimates is a £250 million investment in storage. Wherever one looks, there are serious problems, and I could go on. Paragraphs in section 4 of the document lay down unbelievably ridiculous detail about what farmers should do. The whole farm limit excludes woodland and roads, but makes no reference to the mix of crops. Slurry and manure cannot be spread on every crop—only on certain types of land. For example, they cannot be spread before potatoes. They can be spread only on crops for which the land is there and can be travelled on at that time of year. All sorts of husbandry constraints make the proposal nonsense.
The document promises us a “new decision support tool”. I look forward to a new decision support tool—
A general election.
Yes, hopefully it will be a general election.
The Minister must also address the issue of the time scale. Paragraph 5.17 of the document says that “We will explore”—wow!—
“the possibility of simplifying the process for obtaining planning permission for the construction of new manure storage facilities”
with regard to anaerobic digestion. The measures come in in three months’ time. Yes, there is a two-year process, but the Minister knows damn well—he has been a local government Minister—that if all he is doing is exploring the issue, there is no way that in two years and three months, every farmer will have manure storage up and running so that they meet the necessary obligations.
The proposals are typical of DEFRA’s approach over the past few years. There is an obsession with process rather than outcome. We are trying to achieve a reduction in nitrates in the water, but we have been given a huge list of prescriptions and a tick-box system. There is no room for discretion by farmers and no recognition that farmers can be trusted to know their local situation. There is no thought about the true cost to the industry. It really is now time for a whole new approach to how we deal with regulations. It is time to say to our farmers and other businesses, “We trust you. This is what we are trying to achieve. We will not tell you how to do it, but we will trust you to achieve it. If you do not, we will come down on you like a ton of bricks, but you know your farm, your soil, your finances, your rainfall and so on.”
I urge the Minister, even at this late stage, to reconsider the regulations and, for goodness’ sake, heed the universal appeal. Even Labour Members have been sensitively critical. They have all made the same point. I urge him to come back with something that achieves the objectives, but is reasonable for the industry.
I have asked the Minister not to reply to the criticisms about his antecedents as a farming expert. I now invite him to reply to this very interesting debate.
Thank you, Mr. Hancock. The debate has indeed been interesting and important. I understand its importance to Members of Parliament and their constituents in farming and related sectors. If I were not aware of its importance from the debate, I would be from the correspondence that I have received from hon. Members of all parties. I can tell hon. Members that I am receiving more letters on this issue than any other in my portfolio, including international climate change. That gives us an appreciation of its importance. In particular, the letters from individual farmers have been intelligent and well argued, and the parliamentary questions that have been tabled have also been well informed. Not all Members who have tabled questions are here.
I met representatives of the National Farmers Union only this morning, before this debate—it was a happy coincidence—to discuss these issues. I wish to answer the questions as best I can and to set out the Government’s approach.
The hon. Member for South-East Cambridgeshire (Mr. Paice) said that we agreed on the need to reduce nitrates and to address the problem. I emphasise that, but let me dwell on two points. The cost of treating water to meet drinking water requirements in respect of nitrates between 2005 and 2010 is estimated to be some £288 million in capital expenditure and £6 million in operating expenditure. The nitrate problem results in a cost on the other side of the equation as well. The cost of environmental damage to river and wetland ecosystems and to natural habitats is estimated to be some £716 million to £1.3 billion per year, so there are important issues in the balance. It is true that agriculture contributes approximately 60 per cent. of the nitrogen entering rivers in England.
The issue, of course, is the European directive. The hon. Member for Stone (Mr. Cash) provided one solution to the problem: attempt to get Parliament out of the directive. The hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) provided another: anaerobic digestion. He said that that solution was for the long term and would not answer the immediate problems, and I concur with him. It is an important opportunity that the Government will be pursuing in any event, but it is not an answer to the immediate question.
The fact is that the UK negotiated and agreed the directive in 1991. It might be old, and some would argue that its prescriptive approach is outdated—it is a prescriptive approach—but its environmental objectives are still relevant. So far, our efforts to implement the directive have been considered insufficient by the European Commission, and an infraction case has been opened against us. In our discussions with the Commission, we have expressed the firm view that the measures that we apply should be based on robust evidence and the status of our water bodies, and should go no further than our evidence shows to be necessary. However, the UK continues to have one of the highest levels of nitrate pollution in the European Union, and while monitoring data suggest that the nitrate levels in many surface waters are on a downward trend, we have no basis for concluding that the trend is significant or sustained. On the contrary, concentrations remain high and are increasing in some areas, particularly in groundwater.
So, what action are the Government planning to take? Our proposals for making additional designations of nitrate vulnerable zones and introducing a reinforced action programme were set out in a consultation document that was published in August last year. In developing the proposals, we took on board the views of people with a direct and indirect interest in the sector. Those views were gained through a series of workshops with farmers and meetings with their representatives and others. I can assure hon. Members that we have also had, and are having, extended discussions with the European Commission as part of the ongoing infraction proceedings.
How does the Minister answer the NFU’s claim that the nitrate level risk that is prescribed by the directive represents no human health impact? Surely that is at the heart of the issue.
As ever in these important debates, the Minister finds himself in a position of being unable to answer all hon. Members’ questions, however reasonable, because of the time limit. While I am in that position now, I can say that the consultation has taken place. It resulted in some 700 responses, which reinforces the seriousness of the matter. I will try to respond to the points that have been made, and I have an open mind on how we implement the directive.
Will the Minister give way?
Hon. Gentlemen are pressing me. If I give way, I will not be able to answer all questions that have been asked. I hope that that is understood.
Let me briefly finish this point and see where we are. The proposed revisions would bring us more in line with the action being taken in other member states, although I have to say that requirements are even more stringent in other countries. For example, in Finland, 12 months’ slurry storage is required. In other countries, satellites are used to check compliance. In Denmark, applications of fertiliser are restricted below the economic optimum.
The formal consultation ended on 13 December 2007. As I said, we had 700 responses to it, and I am in the process of considering them.
Will the Minister respond to the points made about the gold-plating of the regulations, particularly in respect of autumn cover crops?
What I have in mind on that is the importance of storage. I understand the point about cover crops, which the NFU made in the formal consultation and many hon. Members made in their letters. I have an open mind about it. There is no intentional desire to gold-plate the directive, which, as I have already said, some would argue is outdated. It is a prescriptive directive, and I have to bear that in mind. I reassure hon. Members that I have an open-minded attitude to the point about cover crops and the importance of stubble.
The hon. Member for Ludlow (Mr. Dunne), who initiated the debate, asked about the timetable. I am not committed to 6 April. It is important that I consider the responses. Areas to be improved can be de-designated and reduced—there is some flexibility. I am aware of the point about ammonia, which was raised by him and by the hon. Member for Cotswold (Mr. Clifton-Brown) and others in written questions. The hon. Member for Ludlow mentioned the level of feeling about cover crops. We are seeking a derogation from the measure on 170 kg of nitrogen per hectare per year. I shall consider his suggestion to go further, but I am presently in discussions on the 170 kg, and I have to balance European Commission requirements against the points that have been made by hon. Members.
A happy new year to you, Mr. Hancock, and to the other Chairmen. I am sorry that I have not been able to answer the questions in detail. I shall, of course, undertake to answer hon. Members who raised pressing points that have not been answered today or covered by responses to parliamentary questions and letters. I have no doubt that I will be in other debates as we move towards decisions on this important directive.
I thank the Minister and hon. Members for their co-operation. I hope that Members who are leaving will do so quietly as we move on to the next debate.
Local Area Agreement (Nottingham)
The title of this debate could hardly be drier, despite your eloquence in reading it out, Mr. Hancock, yet it is about the key social policy for the future of our society. In plain English, we are using early intervention policies to break the intergenerational nature of the cycle of underachievement in the UK, which will liberate the talents and potential of all our children rather than dooming them to repeat the failures of the past.
Every area must have a plan. The Minister for the Environment, who replied to the previous debate, knows very well that the local area agreement constitutes that plan. Nottingham, with its local and national partners, will use the LAA to pioneer a unique long-term strategy centred on a package of early intervention policies, starting at the prenatal stage, continuing through pre-school and school years, and completing the circle with parenting and relationship skills for teenagers that will enable the next generation of newborns to get the best start in life; a virtuous circle that replaces a vicious circle.
I pay tribute to all those involved in the policy, including our local strategic partnership, One Nottingham. Being recognised by central Government as a city that can demonstrate early intervention to others is an accolade indeed, especially as our partnership work was officially dubbed “failing” just two years ago. It marks the end of our first phase of development—the recovery of the local strategic partnership—and demonstrates the clarity that we all now share locally about our mission to tackle deprivation in a unique way. We have a 20-year programme of early intervention to pre-empt rather than to manage the consequences of personal and social failure.
Of course we must continue to swat the mosquitoes of antisocial behaviour, poor educational outcomes and worklessness. We must create the intellectual and professional space to drain the swamp of poor parenting and emotional and social dysfunction, too. The programme signals the beginning of the LAA as a vehicle for policy sharing. That in turn will herald effective and agreed budget sharing with all local partners. One Nottingham will seek to guide and evolve the policy over the next 12 to 24 months. It is a job that we will do with relish and imagination now that our local and national long-term goals can converge in the LAA. That is more productive and motivating than placating some irrelevant and burdensome central-targeting machinery that seems to have a life and an agenda of its own, separate from the task of improving the life chances of the people of Nottingham. Singing from the same LAA hymn sheet will end such discordance.
Hitherto, we had felt alone and exposed in introducing a serious long-term plan to alter radically the life chances of the people of Nottingham. However, the psychological impact of being asked to demonstrate the use of our LAA on early intervention is to give partners official recognition and permission to go ahead and tackle local challenges. The impact of those permissions in turning back 30 years of top-down conditioning of local officials cannot be underestimated. We thank the Government for their foresight in providing them.
We have overcome massive local challenges and have many more ahead. Our designation means that our key partners in national Government now understand what we are trying to do, and have confidence in us. We will seek to deepen our local and national engagement as we strengthen the social foundations of our city, and hopefully others will find that instructive. There are a number of areas in which national and local activities converge. On finance, we welcome the flexibility of the three-year funding set out in the comprehensive spending review, which will allow us to develop a local medium-term strategy with partners and end the destructive annual cycle, especially as it affects the voluntary sector, which the Minister and I discussed in our last Adjournment debate together. We will use the first three-year period to develop pooled budgeting and, much more ambitiously, seek to create—with support from the Department for Communities and Local Government, the Treasury and the Cabinet Office—the financial instruments necessary to recycle future savings from early intervention into the very investment necessary to initiate it. Although we do not seek Government funds, we need Government expertise. We have received extremely good assistance so far, not least from the Treasury and the Cabinet Office, as we tentatively explored the most effective financial instruments. The LAA gives us a three-year plan, which we can use to drive forward the necessary local cultural changes. That is a tremendous help. Short-term annual box ticking is the antithesis of effective planning. The Government have taken a brave step forward in recognising that and, despite some obvious resistance in parts of Whitehall—welcome to partnership working—we are moving towards a lower and more meaningful number of targets.
That process must continue and accelerate, because early intervention is about setting long-term intergenerational targets. To deliver lasting change and reduce the level of public resources required to mitigate the symptoms of multiple deprivation, we need targets and budget planning on a local and national level that recognise long-term ambition, which is neither risk nor, on occasion, imagination-averse. A good start has been made, but there is still some way to go.
In Nottingham, we will use the evolution of the local strategic partnership and the LAA to create space to allow a culture of joined-up planning, delivery and local budget setting. We have started to deliver an early intervention programme by co-ordinating a multitude of different services to improve the life chances of families in Nottingham. Government must be joined up to work in the same way. We hope that the creation of One Nottingham’s local and national partners’ forum, which has already had its first meeting in Whitehall, can evolve to show how that can be done. We welcome the concept of a cross-departmental agreement, or similar, that seeks to achieve that. We intend to put our sponsoring Minister to work to that end and to work on a number of other issues. We hope that our sponsoring Minister will not just be decoration, but a voice for us, moving us forward constructively within the Whitehall machinery.
We have received excellent support, too, from our Government regional office, field forces and other agencies. They need to come with us on to a higher level to incorporate that long-term approach much more intimately in their own work. The LAA focus on early intervention will show how we must work together with our local and national partners. Much of that is about process, but we must always remember why we are doing this. Early intervention is not an add-on. It is a prerequisite for transforming the lives of many of the citizens of Nottingham by breaking intergenerational cycles of underachievement, deprivation and social exclusion. If we can do that in Nottingham, there is no reason why we cannot do it elsewhere in the UK. Nottingham is a hard case, not least with its Victorian boundary, which includes former council estates in the inner and outer city but little else. Life expectancy in my city is four years lower than the national average, and varies within the city by 10 years between the most and least deprived areas.
There are high levels of child poverty in the city, and nearly two out of three children and young people live in workless or low-income households. Furthermore, despite a strong economy, almost half of Nottingham’s population—124,000 people—live in the 10 per cent. most deprived areas in England. My constituency also sends the fewest young people to university of any constituency in the United Kingdom. Finally, some 58 per cent. of births are out of wedlock—I make no moral judgment about that, but we must bear that factor in mind as we make progress on a number of problems in our city.
Partners have already tackled such problems across the board. There has been a 25 per cent. reduction in crime in the past three years, we have broken through the 50 per cent. five A to C GCSEs barrier this year, and there are many other examples from areas such as health and employment. However, heroic efforts by committed public servants in the here and now must be supported by a long-term strategy if they are to be sustained and built on. Early intervention is not a catchphrase, but a robust definition underpinning a specific package of measures. If it does not help to break the intergenerational cycle of disadvantage and deprivation, it is not early intervention.
Although we are already putting parts of our package in place, the most significant changes will not happen in the short term. We will be successful only if we remain patient locally and, above all, nationally as we build our policy interventions and change our culture. Our new local area agreement will be used as a tool to enable all partners to drive forward improvements and reshape services, with the early identification of issues and early intervention becoming standard practice—the modus operandi—for all partners across the city. That will take time, and I beg the Minister and his Department to bear with us—not to let us off the hook or give us an easy time—as we build. If they do, they will see developments taking shape through the years as part of a steady process.
Slowly and painstakingly, we are developing consensus across the city so that partners can work together in an integrated, holistic way. Some of that work will be about continuous improvement, building on much of the good work that is currently taking place; in other areas, we are prepared for radical innovation. For example, in its work on the social and emotional aspects of learning programme, Nottingham has taken the programme further than any other city following the intervention of the local strategic partnership, One Nottingham. Other examples of innovation include children’s centres and the intensive family support service, which has received match funding from One Nottingham and the Home Office. Work has been undertaken with health visitors, too, and we have tried to devise our own intensive health visiting scheme, along the lines of the nurse-family partnership that has been pioneered in 10 other cities. Another example of innovation is the targeted youth work undertaken under the pioneering Respect programme, which was invented in the city of Nottingham.
Nottingham, as an early intervention city, will break the intergenerational nature of underachievement and deprivation by identifying children, young people and families at the earliest possible opportunity, by intervening and by empowering people to transform their lives and their future children’s lives. As a demonstration area for the LAA, we have asked all our key partners to identify early intervention projects that are backed by a robust, proper evidence base and a research focus that is aligned to our mission. A sharp package of measures, some of which are already in place, and a clear implementation timetable will be endorsed and marketed in a way that is tangible to the public and professionals. We are preparing an exciting launch event—it might even involve the Minister’s own presence—with local and national partners in April 2008.
We are the first, so there is no blueprint. When we stumble, as we surely will, central Government must help us up, not berate us. One Nottingham, the local strategic partnership, will continue to lead our approach, with ever stronger governance and clearer lines of account. We will not only evolve our demands on partners in the public sector, but increasingly enable the business and voluntary sectors to step up to the plate, too. We will ensure that there are operational cross-cutting arrangements by, for example, allowing data and tracking to be used to facilitate early intervention and reinforce our commitment to a holistic, family-centred approach.
The Government’s decision to authorise our role as a demonstration area is a most welcome and timely boost, which will stimulate and firm up our thinking. We will use a wider group of local strategic partnerships and councils to bolster our learning and evaluation as we build an evidence base of what works. We already know that early intervention is about tying in best practice globally, nationally, regionally and locally, then tailoring specific policies to the local context.
Nottingham has set out its stall. We have made excellent progress and we relish the challenges ahead. Our Government partners must continue to help us over the coming year. First, they must provide public support to underpin the long-termism and patience that we require to be successful. Secondly, they can continue to help us, as I suggested earlier, to devise the financial instruments necessary to sustain early intervention for a generation. That will help us to avoid the massive and growing costs of subsidising failure by intervening early and cheaply to build success.
Local and national policy makers have realised that the financial, social and individual costs of late intervention are too high. Working locally and nationally as partners, through early intervention, we can find a better way in our city, which may give colleagues throughout the UK some examples of the way forward.
If the scheme is as good as the speech made by the hon. Member for Nottingham, North (Mr. Allen), I am sure that it will be a rip-roaring success. I invite the Minister to reply.
Happy new year to you, Mr. Hancock. It is a pleasure to have you as our Chairman—you have chaired a couple of Adjournment debates that I have taken part in. Let me also say happy new year to my hon. Friend the Member for Nottingham, North (Mr. Allen) and congratulate him on securing this Adjournment debate. He talked about One Nottingham, the local strategic partnership, but he did not mention that he actually chairs it—I assume that he still does, because he certainly used to.
This is the third in a trilogy of Adjournment debates initiated by my hon. Friend that I have answered, and they have always been a joy. Early intervention has been the strand running through them all. The first debate was about the “Every Child a Reader” scheme and reading recovery, and I can still recall the statistics that he used. According to his figures, which I still use, investing £5,000 under the scheme to enable a five-year-old to learn to read ultimately saves us about £250,000 a year, which is what it would cost if that child ended up involved in the criminal justice system. I also know from my time in what was the Department for Education and Skills that my hon. Friend encouraged Nottingham to be involved in the midwife and health visitor-led early intervention pilots, which he mentioned. His influence has therefore made a big difference to the way in which Nottingham focuses its local area agreement work.
I will say a little about Nottingham in a few moments, but let me first talk about the demonstration sites and the work that the Government have done on the framework, which I hope has helped to make possible some of the things that Nottingham wishes to do in the coming years.
The year 2007 was important because of the big changes that took place in the local government landscape. Piece by piece, we are delivering the framework that we promised in the local government White Paper. We saw the passage of the Local Government and Public Involvement in Health Act 2007, which puts local area agreements on a statutory footing and moves them from the margins to the centre of the new local government performance framework. We also undertook the dry run of the new local area agreements and published new guidance, so that everyone can, we hope, make a success of them. Furthermore, we got the new national indicator set down from 1,200 to 198, which was not an easy task, but it was an important achievement. Those are the main building blocks that will help to support a new and more mature relationship between local and central Government, as set out in the local government White Paper.
Local area agreements must add value to existing partnerships and lead to genuinely new and improved ways of partnership working. With that in mind, we have started to work with a small group of partnerships that will act as demonstration areas to help raise the bar in delivering ambitious local area agreements, as my hon. Friend has said. He mentioned that Nottingham is seeking not extra resource, but Government expertise. That is obviously a two-way process, with the Government seeking the expertise of Nottingham and other local authorities to help to shape future policy.
The new performance framework and the radical extension of freedom from centrally set targets have already removed many barriers previously faced by local authorities, but we recognise that systemic issues continue to be seen by many as a block to effective partnership working, thus limiting the delivery of more ambitious outcomes.
The aim of the demonstration areas programme is to adopt a problem-solving, collaborative approach, identifying and developing either local solutions to the barriers to delivery or changes to central Government policy. The demonstration areas are not piloting new-style local area agreements; nor will they be treated differently during the negotiations from those partnerships that are not involved.
The process is about local authorities and their local strategic partnerships, Government offices, Departments and Ministers working collaboratively to consider the barriers to delivery and tear them down, sharing what is learned from the process, so that it will be possible, with the whole local government family, to create real success in the future, and for the Government, as I have said, to learn, share some of the best practice and drive policy changes. That will enable everyone to make local area agreements work for them.
The demonstration areas programme will be taken forward through a series of theme-based problem-solving workshops with a focus on working together to explore what works and what could work. Seven broad themes have been identified for exploration by the Secretary of State for Communities and Local Government. The detail of the themes and the scope and content of the workshops will be co-designed and owned by the participants. The process has already begun at official level with representatives from the partnerships, Government offices and Departments meeting to discuss the overall programme, asking for representatives to select the workshops that they would like to scope, design or attend. The broad themes are reacting to changing circumstances within the new performance framework; focusing on crime, worklessness, citizen empowerment, health, children and young people; housing and planning; and multi-area agreements.
There will be three main stages in taking the workshops forward. First, for each theme, there will be a planning stage meeting, which will involve working with key people from the demonstration areas, Departments and Government offices to scope out the theme and agree the content for a working session event and a ministerial workshop. It is proposed that two to three partnerships will help to lead each planning meeting and working session, and Nottingham will obviously be part of that, and a working session will follow. It will be an event of up to one full day, for interested partnerships, and the aims will be to get to grips with the main issues of the topic, including identifying the challenges, examples of current successful ways of working and potential solutions, and to agree the key issues to be taken forward for discussion with Ministers.
The third important element is the ministerial workshop, which will be an opportunity to discuss the agreed key issues identified at the working sessions and possible ways forward, including those issues identified for Ministers to take forward. As I have said, one stage of the process will involve the expertise of Government in supporting local authorities such as Nottingham, but Government will also learn from the expertise of local areas.
We are very pleased that Nottingham will be a demonstration area for local area agreements. It is a well deserved opportunity for Nottingham to be involved with partner areas and the Government in the sharing of good practice and the development of innovative local solutions to help deliver an ambitious local area agreement for the people of Nottingham. As my hon. Friend said, great progress has been made locally in the past two years. That is clear evidence of the progress that partners in Nottingham have made, working together as an effective local strategic partnership. As well as providing an opportunity to learn from others, being involved in the programme will allow Nottingham to demonstrate to other areas and to local government as a whole how they can benefit from its approach as an early intervention city.
We welcome such an innovative approach to tackling the ingrained intergenerational problems faced by many people in Nottingham. That approach encompasses a variety of mechanisms to support people across the board, ranging from support for mums-to-be who will need help with their babies, as my hon. Friend mentioned, through early years support for families provided by health visitors and local children’s centres, to providing teenagers with the right skills to make effective choices in relationships. My hon. Friend mentioned targeted youth support, and I have also mentioned projects, such as “Every Child a Reader”, which my hon. Friend has discussed in this Chamber on other occasions.
The Government are keen to see how the key partners working together in Nottingham will progress the ambitious programme to make improvements in services and break the cycle of deprivation and social exclusion. We would encourage Nottingham to take full advantage of the flexibilities allowed by the Government’s decision to announce, for the first time, a finance settlement that covers three years. Along with the new local area agreement that is currently being negotiated with central Government, that will provide a clear opportunity to plan ahead and to use the settlement to focus on the priorities that really matter in improving the lives and life chances of the people of Nottingham.
The taking of a long-term view on how to tackle the deep-rooted issues that affect the city is to be truly commended, and Nottingham and the other demonstration areas should view the new local area agreement as an integral part of the process and a way of changing the culture of partnership working to deliver long-term change. We understand that, as part of that planning for long-term change, Nottingham will be looking at how to use its financial flexibility to develop an invest-to-save model. The Government would be happy to explore that further with Nottingham and my hon. Friend as part of the demonstration process, as Nottingham firms up its ideas.
Nottingham’s involvement as a demonstration area will therefore give the city a chance to show what can be done when partners work together with a clear focus and the right tools for delivery. Nottingham will have a lot to share with other demonstration areas, other parts of the country and, importantly, Departments. It is vital that Nottingham should clearly demonstrate to central Government how its approach to early intervention is progressing, so that, across Whitehall, we can ensure that Government policy does not inadvertently put barriers in the way of delivering improvements in the way my hon. Friend alluded to. The Government are making strides in ensuring that Departments act in a more joined-up manner, and we would be happy to explore how that can be further enhanced through the demonstration site process.
We can assure partners in Nottingham that Ministers will continue to be interested in Nottingham’s progress as a demonstration area and in its approach to early intervention over the coming year. It was very nice to be invited by my hon. Friend to visit Nottingham, which is something that I am always delighted to do and have been able to do regularly as a Minister. It is nice for me, not least because I was a resident of the city for five years; it is where I did my degree and my masters degree. It is a great city, a great place to be and a place with unique challenges. It is great to see my hon. Friend and his colleagues doing so much to tackle the issues.
Order. I do not like to interrupt, but the time has evaporated. I thank the hon. Member for Nottingham, North and the Minister for an interesting debate.
Local Government (Planning)
The Under-Secretary of State for Communities and Local Government, the hon. Member for Gloucester (Mr. Dhanda), is clearly having a busy morning. He was kind enough to say that he would visit Nottingham at the end of the previous debate, so perhaps if I extend an invitation to him he will visit Lewes to deal with planning functions there. He has been to Lewes but he has not, as far as I know, spent five years there. The Under-Secretary of State for Communities and Local Government, the hon. Member for Hartlepool (Mr. Wright), is responding to this debate, but I would be happy for them both to visit Lewes if they wish.
This is an important debate for local accountability, which is why I have raised the matter. If local people are asked what are the functions of their local council or local government, the first thing they say is that the council empties the dustbins. The second thing they say is that the council deals with planning. People associate planning with local councils and, indeed, they think it ought to be a local council matter, but I am concerned that we are moving to a stage at which there is undue Government interference on a micro level with local councils’ planning functions.
There has always been Government regulation of local authorities and planning functions. It is right that there is planning policy guidance and statements, and it is not unreasonable of the Government to set an indicator of eight weeks in which the outcome of an application is to be determined. However, we have moved into other areas, which are of more concern. Not very long ago, I spent some years sitting on the planning committee of my local authority, as you may have done in Portsmouth, Mr. Hancock. The committee dealt with a wide range of applications, and it dealt with them well. A range of members served on the committee, some of whom had been around for a long time and knew the history of the area. Other members were brand new and had some good ideas. The chemistry of the committee was successful in delivering the planning function through the committee process.
In recent years, however, the Government have moved almost to exclude elected members from taking decisions on planning applications; there is a push to delegate as much as possible to officers. Why should unelected officers be more accountable than elected councillors? Of course, some applications fit in to a system and are clearly within the terms of the local plan. Such applications are either controversial or uncontroversial, so they can be clearly rejected or accepted. In my day, about 50 per cent. of applications were delegated, so I am not suggesting that councils should take every single decision. However, we are now getting to the stage where 80 or 90 per cent. of applications are dealt with by officers—the figure is even higher in some local authorities.
Council members find that frustrating, but so do members of the public. They do not understand why, when they elect local councillors to take decisions on planning matters and lobby them to that end, a decision on an application that is important to them should be taken by an officer of whom they have never heard in a room that they did not know existed. It might be a small matter in the big scheme of things, but if a person’s next-door neighbour gains permission for something that will intrude on them, it is a serious matter to them. The least that such people would wish to do is to lobby the local council and have some influence on the matter, but that is increasingly rare under the current system. Will the Minister explain why there has been a move to exclude local councillors from the majority of planning decisions taken by local planning authorities, as I believe that that is undemocratic and unaccountable?
The system has become corrupt—I do not mean corrupt in a financial sense, but in the sense that local authorities chase targets that do not necessarily deliver the best planning result for their area. The grant system in my local authority is known as a “game show” approach. Councils are forced to chase targets—often arbitrary targets—that they know will attract grants and which will therefore improve their financial position, rather than focus on the key planning issues in their area. What is worse, grants are managed on an annual drip-feed, which means that it is uncertain from one year to the next exactly how much will be coming forward. That makes it difficult for planning authorities to retain and, indeed, to attract staff.
Lewes district council in my constituency is so thin on staff, so tight is the ship being run, so few are the officers employed, that the director of planning, because of staff illness, is now determining simple household applications on his own. There is hardly anyone else in the department—that is how thin things have become because of pressures on finances and because of the drip-feed of planning grant. It is an issue for local authorities in London and the south-east in particular, but perhaps it applies more widely. The problems are going to get worse in times ahead.
I query, too, Government interference as regards the call-in procedure. I call it interference, but the Minister might regard that as pejorative: perhaps he would prefer to call it micro-management, or perhaps to use neither of those terms. Ministers say that they rarely call in applications. I do not know what the statistics are—perhaps the Minister has them—but my perception is that the call-in procedure has been increasingly used in the past couple of years rather than diminishing in frequency. I should be interested to hear the figures from the Minister if he has them.
An example from my patch is the controversial proposal for a wind turbine at Glyndebourne. I understand that the Minister cannot comment in detail on the issue because it is live, but he might address the general point. The proposal is for one wind turbine to provide sufficient energy to power Glyndebourne opera house, which is a prestigious building in my constituency. It has been called in by the Secretary of State, despite the fact that it has been subject to significant local consultation and debate involving local councillors, who are elected to represent people in the area, and despite the fact that the decision to allow permission was reached by the council committee following a long presentation featuring petitions and opportunities for comment from both sides. The decision was made on a cross-party basis, but the Government nevertheless decided to call it in. Worse, Glyndebourne subsequently applied for permission to erect a temporary meteorological mast for a period of one year only so that it could provide supporting information for the wind turbine application. For example, the mast would measure wind speeds in the area, which would affect how the turbine would react if and when it was established. However, the application for temporary permission, for one year, was also called in by the Government, despite the fact that it was again given approval on a cross-party basis by Lewes district council. The Government have called in applications for temporary permission that last for only one year, so one must wonder what is the purpose of local councils. Apart from being an instance of micro-management, that practice has hade an adverse effect on the applicant which, legitimately to establish the facts, set up the forthcoming public inquiry.
I wrote to the Secretary of State on 29 November to ask her on how many occasions the Government had called in applications for temporary permission in the past 10 years. Replying on her behalf, the Under-Secretary of State for Communities and Local Government, the hon. Member for Gloucester, who has left the Chamber—I had thought that he would reply to the debate—said that it was not possible to provide information on how many applications for temporary permissions had been called in during that period. The Government ought to use the measure sparingly, but they do not so much as keep a record, which concerns me.
Another relevant issue is the development plan system, to which the Government are wedded. The Minister might be aware of a recent survey by the Planning Officers Society that shows that the new system is widely believed by practitioners to be too onerous, inflexible and resource-hungry—those are the society’s words. It says that the system has become process-dominated and over-complex, to the point that even the Government’s regional officers and planning inspectorate are unsure how to interpret the legislation. As a result, local authorities receive inconsistent and ever-changing advice on procedure. The requirement for an auditable process—in other words, a tick-box mentality—overrides local authorities’ ability to plan creatively. The Government’s intention to improve the planning system is good, but the consequence is that local authorities are tied down in bureaucratic manoeuvres, which weakens rather than strengthens the planning process.
The Government are responsible for various negative impacts on the planning process. I have not even mentioned the plan for large numbers of new houses in my area, which by and large does not have the support of the local population. Leaving aside the question of whether it is right, it is seen as a top-down proposal under which the houses are imposed on the area by central Government or by an unelected quango representing “the south-east”. The question is not whether it is right to have the housing, but who makes the proposal and how it comes down to the local people. My constituents believe that they are being told what to have in their backyard and they do not like it. They think that that is undemocratic and so do I.
Occasionally, however, we look to the Government—I shall now argue against myself to some extent—to intervene on a major issue of national significance. I am referring to the proposal for an incinerator on my patch, which is opposed, unlike the Glyndebourne wind turbine, by thousands and thousands of local people. The application for an incinerator in Newhaven has major environmental, transport and economic implications. Controversially, the county council both made the application and granted it, but the Government said, “We are not interested in interfering in that matter.” People in my part of the world have therefore concluded that as far as planning is concerned, the Government are micro-managing when they should not do so, and on the rare occasions when they should interfere with a decision, they have failed to do so.
One policy the Minister may wish to consider is preventing local authorities from giving permission for an application that they themselves have made. When an application is made by a local authority, a different but comparable local authority— another county council, or the local district council for a county application or vice versa in a two-tier area—should be responsible for giving permission. It is not consistent with natural justice for the county council in my part of the world to act as judge and jury on its own hated incinerator, but that is what it has chosen to do.
The good news—I hope that it is good news—is that the Government have committed themselves to local area agreements, and I hope that that will reduce the micro-management that I have discussed. If the Government can follow through what they have said on local area agreements, that will be very welcome step that my party colleagues and I will support. I do not wish to suggest that the Government are anything other than well intentioned, but sometimes, in their genuine desire to improve matters and the planning function, their actions have the opposite effects to those that they intended. I hope that the Minister will take this not as an unhelpful rant from me but as a genuine attempt to raise issues that are of concern to my constituents, and will respond constructively.
It is a pleasure to serve under your chairmanship, Mr. Hancock. I wish you and the hon. Member for Lewes (Norman Baker) a happy new year.
I congratulate the hon. Gentleman on securing the debate and I commend the non-negative manner in which he presented his arguments. He has raised an issue that affects us all. Planning is of fundamental importance to the quality of people’s lives. When planning is done well, it allows us all to raise our game, to lift our spirits, and to achieve our hopes and ambitions to build thriving communities in which people want to live and work. It supports the economic development that is vital to create jobs and ensure our continuing prosperity as a nation—prosperity that should be widened to include all in society. Planning helps us to protect our natural and historic environment and to ensure that everyone has access to green space and unspoiled countryside. It facilitates the delivery of essential infrastructure, which allows us to travel and enjoy access to clean and affordable energy, water and waste facilities. It also supports us as individual citizens in improving our homes and property while protecting us from over-intrusive development. Planning does all that by helping us to ensure that development meets economic, social and environmental objectives in an integrated and sustainable way. The use of planning functions to facilitate place shaping—for want of a better phrase—particularly at a local level, is crucial.
As the hon. Gentleman rightly said, most planning decisions are best taken by those who directly represent local communities and understand their needs—and, I would add, through close and effective engagement with those local communities. That is essential. “Strong and prosperous communities”, the local government White Paper published in October 2006, sets out our proposals for giving local government and its partners more freedom and greater powers to meet the needs of its citizens and communities and to enable those citizens and communities to play a part. Planning is a core function of local authorities and is central to their role as place shapers. I have already made that point and I want to reiterate it again and again in my contribution because it is vital. We are committed to ensuring that decision making happens at as local a level as possible so that it can fully reflect local circumstances and needs. Planning functions undertaken locally also help to speed up decisions, which is helpful to all concerned and injects more efficiency into the whole planning process.
What is done locally? A tiny proportion of planning applications are decided centrally. Those cases are appeals that are recovered or planning applications that are called in for decision by the Secretary of State, typically when the proposed development is large or controversial, or has more than a local significance. I point out to the hon. Gentleman that the vast majority of planning applications—we have calculated that the figure is 99.9 per cent.—are determined by local planning authorities. In addition, local planning authorities take the lead in drawing up development plans for their area, shaping the vision for their locality and determining how their area can best create sustainable communities.
As the hon. Gentleman said, we are taking a number of steps to strengthen the role of local authorities both in deciding planning applications and in forward planning. I want to mention plan making at local, regional and national level in a moment, but before I do so, I shall highlight three current proposed changes with regard to planning applications.
First, we announced in November a new approach to permitted development for householders. There will be a new national baseline from which local authorities will be able to relax or tighten controls in particular areas, according to local circumstances. Local authorities will be able to introduce local variations by using local development orders to provide greater freedom for development and by using directions under article 4 of the Town and Country Planning (General Permitted Development) Order 2005 to provide further restrictions on development where local circumstances permit.
We will take forward two proposals from the planning White Paper, “Planning for a Sustainable Future”, that are designed to facilitate the use by local planning authorities of article 4 directions. The Planning Bill, the consideration of which starts in Committee today, contains a clause to strengthen the ability of local authorities to use article 4 directions when they see a need to protect specific neighbourhoods. If local authorities give 12 months’ notice of an article 4 direction, they will no longer be liable for compensation for the withdrawal of permitted development rights. We will also withdraw the requirement for the Secretary of State’s approval of article 4 directions. We will introduce secondary legislation in respect of householder development later this year.
Secondly, the hon. Gentleman, in an important part of his speech, mentioned the use of call-in. He talked about his perception that that has been increasing as the years have gone by in terms of numbers and the proportion of planning applications affected. I have to reject that—it has not happened. Let me give him the figures for cases considered and called in. In 2002-03, the number of cases considered was 1,459 and the number called in was 118. In 2006-07, the number of cases considered was 977 and the number called in was 51. Both the number of cases considered and the proportion called in are reducing, which is important. We want to go further and faster with that, which is why we published yesterday a consultation paper reviewing the existing suite of call-in directions whereby local authorities refer cases to the Secretary of State for consideration of whether they should be called in. We want to reduce both the number of referrals and the number of cases ultimately called in. That is part of our wider package of measures that are based on the fact that decisions are best made as locally as possible.
Thirdly, most minor appeals—for example, on householder development, new shop fronts, small change-of-use proposals, advertisements and works to protected trees—should be dealt with locally by elected councillors. As a former councillor, I was intrigued by the hon. Gentleman’s point about delegation to officers, because although I was not a formal member of my local authority’s planning committee, I substituted on it on many occasions. I should like to put it on record the important point that it is up to a local authority to determine the specific delegation to officers. The idea behind the principle is that elected councillors are there as strategic ambassadors for their area. It is important, in terms of the minutiae, for that to be dealt with as much as possible at officer level.
Does the Under-Secretary accept, however, that although the exact scheme is in the hands of local authorities, the direction of travel and the pressure from the Government have increased delegation to officers and away from council members?
I reiterate what I said a moment ago. It is important that councillors are effective in their communities and directly accountable to them—that will play a part in planning applications—but this is also about place shaping, which is the theme that I really want to reiterate and strengthen today in terms of determining what is important for particular areas.
That brings me nicely to the changes to our suggestions on the planning application process. Most minor appeals could be dealt with as locally as possible. Such planning applications would be dealt with in the first instance by a planning officer, before becoming eligible for review by a local member review body made up of local councillors, thereby injecting local democratic accountability. A review body could be established for specific authorities or on a joint authority basis
We are seeking an enabling power in the Planning Bill to allow the creation of local member review bodies. We are talking to the Local Government Association and other stakeholders, including through a working group, about how this might work in practice. The detail will be set out in secondary legislation, which we aim to have in place by April 2009, with a view to having local member review bodies fully operational by 2010.
It is important that we have local democratic accountability in respect of councillors and, more importantly, that voters and the electorate can go to councillors to air their concerns. We want that to happen. It already happens in practice, but we want to strengthen the process as much as possible.
I have dealt with the planning application process. It is vital that local authorities step up to the plate, are ambitious and aspirational, and have a key role in plan making. We are trying to strengthen that role in a number of ways.
Perhaps the Under-Secretary could just respond to my suggestion that one local authority should not be able to determine its own application.
I understand the potential perceived conflict of interests there. However, that point leads me nicely to my suggestions on the plan-making role.
Local councils will have a key, if not central, role in determining what areas will look like in 15 to 20 years and the process by which they are going to get there. That place-shaping role is important, as I have mentioned many times. There is a local aspect to that, but there is also a regional aspect, which is why all these decisions cannot be made locally. There is a regional perspective as well, which is why regional spatial strategies are so important. I shall mention that in a moment or two.
We are strengthening local authorities’ plan-making role in a number of ways. The Planning and Compulsory Purchase Act 2004 introduced a new system of local spatial strategies that were designed to foster positive place making and to address problems with the former system. A single local plan has been replaced by the local development framework, which consists of a suite of development plan documents. The key document is a high-level core strategy that is supported, where necessary, by other development plan documents intended to deliver that core strategy. The reforms included changes to the production of these documents to achieve greater flexibility to respond to changing circumstances and more meaningful community and stakeholder involvement—real involvement, not merely a tick-box exercise.
We published a consultation document in November 2007 proposing amendments to local development regulations and a draft replacement for planning policy statement 12 further to streamline the process and improve consultation arrangements. In particular, that change provides greater freedom for local authorities to decide what arrangements are best suited to their specific and often unique circumstances.
The local government White Paper, which I mentioned earlier, makes it clear that local authorities have a key role to play in shaping the vision for their locality and determining how their area can best create sustainable communities. The planning system is there to help local authorities achieve that: it is a plan-led system, because we need a proactive and integrated approach to development and place shaping, as opposed to a reactive, ad hoc and unco-ordinated approach. That addresses the hon. Gentleman’s specific point about local planning authorities deciding their own applications. It is important that that should not be done on an ad hoc, reactive basis, but as part of the local development framework.
The LDF core strategy is a key strategic document that determines the future shape and development of a locality. It should sit alongside and accompany the sustainable community strategy for a local area. Local authorities have a clear opportunity to lead the process of place shaping and to work with key stakeholders, such as developers, on the place-shaping agenda through their local development framework. We are urging local authorities to do this and to rise to the challenge, rather than allow the future development and shape of their areas to be determined purely by private developers, which is not in anybody’s interest, particularly in respect of house building, which the hon. Gentleman mentioned and I am passionate about.
I am grateful to the Under-Secretary. He is generous in letting me come back on this matter. I understand his comments about place shaping and, of course, the need for local authorities to plan ahead. However, with respect, he has not dealt with the fact that some local authorities wishing to give themselves permission for a particular application have their planning function compromised, because they will be aware of the financial benefit, or some other benefit, of giving permission and will end up giving themselves permission for something that they would not give anybody else permission for.
I think that I have covered that point quite comprehensively. I should like to see such things done as part of a coherent and strategic approach on which the local community has been fully consulted, with people having had an opportunity to discuss it. This is all part of the process. We need an approach whereby a local area can develop in a strategic, ambitious manner over the next one or two decades. So, in that respect, with the greatest respect to the hon. Gentleman, I think that I have covered that point as much as I can.
In the time available to me, I want to move away slightly from local planning considerations to talk about regional and national considerations, which are an important part of a coherent approach. As I have mentioned, although local authorities have by far the most important role in planning, it is important that decisions are taken at the right level. That is why we have regional policy, as set out in regional spatial strategies, and national policy, as set out in planning policy statements, to provide the wider context that we need, within which local authorities make local decisions.
Regional spatial strategies are important. Some matters, including housing, which we have mentioned, and transport and the natural environment, are not confined to local areas. It is important that we consider a wider perspective. That is why regional spatial strategies are so important and why the planning system operates at two levels: regionally, through the regional spatial strategies; and locally, as I mentioned earlier, through the local development frameworks. The RSS and the LDF constitute the development plan, with the RSS providing the broad development strategy for a period of 15 to 20 years, where various matters are taken into account, including the identification of the scale and distribution of the provision for new housing. I am a member of the Housing and Regeneration Public Bill Committee. On Thursday, we will be considering the Bill in detail, clause by clause. It is important that we have a local, regional and national basis for the provision of badly needed new housing.
We also have priorities for the environment, such as countryside and biodiversity protection, and for transport infrastructure, economic development, agriculture, mineral extraction, and waste treatment and disposal. The RSS provides the vehicle through which regions can promote sub-regional plans that reflect their real human geography, covering housing market areas or travel-to-work areas, and implement planning policies that are designed to deliver sustainable development at the sub-regional spatial strategy level.
I do not have time to mention the national planning considerations, which are vital and are, as I speak, being examined in detail by the Planning Public Bill Committee.
We are strengthening the leadership role of local authorities as place shapers for their communities. Working with local strategic partners, they are setting out a shared vision for their area over the next 10 to 15 years in respect of providing sustainable community strategies. I reiterate that planning has a central role in this process.
I am glad to have the opportunity to raise the issue of candidates’ spending before dissolution, as it is a matter of great concern to many of us. I do not know whether any of my hon. colleagues ever look at the register of political donations on the Electoral Commission website, but if they have done so recently, they will have seen quite a rush of Tory donations in the past few months, particularly to Tory candidates in marginal seats. I cite at random £55,000 to Harlow, £47,000 to Regent’s Park, £27,000 to Gillingham and £18,000 to Selby. Colleagues attuned to the issue will recognise those as marginal seats.
My hon. Friend the Member for Dumfries and Galloway (Mr. Brown), who will be fighting his seat at the next election, tells me that £15,000 has been donated to Dumfries and Galloway during the past few months. Hastings and Rye is another case in point, and there are also some Liberal Democrat seats to which large amounts of money have been donated recently.
Overall, Tory associations have raised almost as much from individual donations since the last election as they did in the whole period between 2001 and 2005. On the much more important matter of donations to Conservative central office, which is at a far higher level, the Conservatives have already raised more since 2005—£15 million in individual donations, never mind other kinds—than they did between 2001 and 2005, when they raised £14.8 million.
With no election expected this year, why the sudden rush? The truth is that many Conservative candidates are starting their campaigns now. In doing so, they are importing two of the least desirable characteristics of politics in the United States. We are spending a lot more money than we used to, and we are starting to spend it earlier, although we are nowhere near the obscene amounts spent in American politics yet. Spending has practically doubled in every US election this century. Bush spent $95 million on his primary campaign in 2000 and $269 million, nearly triple that, in 2004. Overall spending by all candidates on primaries, elections and conventions rose from $649 million in 2000 to just over $1 billion in 2004, and all the signs predict that it will rise even higher in 2008.
American politics, I readily confess, is now so distorted by big money that merely saying that we are not as bad as the Americans is not saying very much. Perhaps more alarming is the fact that candidates are following the American example by starting to campaign a couple of years before the election is remotely likely to occur. From all over the country, we hear reports that candidates are starting to deliver regular newsletters, not saying what they are doing—because, of course, they hold no position—but attacking the Government and the incumbent MP. That is exactly what we expect them to do during an election campaign, but they are starting two years early.
The stupid thing is that it is entirely our fault, as we have allowed them to do so. Until 2000, it was impossible for candidates to campaign between elections without it counting towards their election expenses. We accidentally changed the law in the Political Parties, Elections and Referendums Act 2000, so that candidates’ spending limits are switched on not by candidates themselves declaring themselves as candidates or starting to campaign, but by the dissolution. That was never intended; apparently there was a mix-up on the last day of the Bill’s debate in the House of Lords. Although the mix-up was unforgivable, I have never heard anyone take responsibility for it. I should be interested to know the inside story.
What is even more unforgivable in my book is the fact that, in the seven years since then, we have not closed what everybody acknowledges to be an unintended loophole. It is still there on the statute book. I am asking in this debate—I welcome my colleagues’ support, and I hope that the Minister will agree—that we close the loophole and that we do so in time to prevent Tory candidates from building up an unassailable advantage in the marginal seats. A White Paper is due this month, and it will be followed by a Bill on party funding. I am happy with the proposals expected in the Bill about comprehensive spending limits, not just on national spending in election years, but on all spending every year, and about a donation limit, which I hope will put an end to millionaire funding. All that is fine, and I care passionately about it, but it is unfortunately on a completely different time scale from the need to close what for brevity’s sake we call the Ashcroft loophole, although he had nothing to do with creating it but merely exploited it.
To have any beneficial effect, legislation to close the Ashcroft loophole must be on the statute book well before the next election—by summer, or by Christmas at the very latest—as the experience of the past few elections has shown us that candidates and parties tend to launch their campaigns in January of the year in which the election is held. They might be pre-campaigns and not official campaigns, but they are effectively campaigns. They start in the first week of January and last until March, and they set the parameters in which the election is fought. This time, however, Tory candidates have been advised to start campaigning even earlier. Just last week, at the Institution of Electrical Engineers on the Strand, a meeting was held entitled “Take Your Seats”. Candidates have been issued with a special website where they can log on with a password and PIN to find weekly instructions for fighting their campaigns. It is January 2008, and they are already fighting campaigns.
Already the Ashcroft money is starting to flow from central office to candidates in marginal seats. Ultra-marginal seats such as my own get £5,000. I did not apply for this debate out of pure self-interest; although the issue affects me, it affects some people far more. Battleground seats get £25,000—they are those with majorities of roughly 5 to 10 per cent., although I have never seen an official figure. Perhaps the hon. Member for Isle of Wight (Mr. Turner) can enlighten us. What are rather coyly called development seats—seats with double-figure majority percentages that the Tories hope to win—get £5,000, although it now seems that the Conservatives may raise their sights and give such seats more money. If the money has not arrived already, as an article in The Times last week stated, Lord Ashcroft
“will soon begin pouring money into constituencies”.
The article even mentioned some of the constituencies that would get the money.
Will my hon. Friend give way?
By all means.
Before that, I must say that Members who wish to intervene should notify the hon. Member who initiated the Adjournment debate and the Minister, but on this occasion, I am prepared to waive that rule if the Minister agrees.
I rise only because my hon. Friend mentioned Lord Ashcroft a number of times, and I wanted to ask him whether Lord Ashcroft is a UK resident for tax purposes. It is a matter that has perplexed many of us.
Lord Ashcroft gave an undertaking that he was. I look forward to hearing any comments from the hon. Member for Isle of Wight, who might know something that we do not about the answer. It is certainly of interest to all of us, as Lord Ashcroft is playing a large part in British politics, effectively attempting to determine the result of the next general election without any clear indication that he is even a UK resident.
I apologise, Mr. Hancock, for not notifying you of my wish to intervene. In addition to what we might call the West Belizean question, there is widespread concern, regardless of Labour, Conservative or Liberal Democrat interests, that all this is leading to the Americanisation of politics and that, ultimately, we will all be forced to spend a great deal of our time fundraising. Does not that concern my hon. Friend as much as the concrete and immediate issue?
We should all be concerned about it. Indeed, it is already in the history books. We know what happened in the run-up to the last election. As a freelance operation, Lord Ashcroft and two other donors channelled £1.3 million into marginal seats outside the Conservative campaign. Ashcroft was typically getting £20,000 or £40,000 cheques to candidates who met with his approval. We also know that it worked. Peter Bradley, who lost his seat in The Wrekin, has calculated that there was a higher swing in the seats that received that money than in other seats. We know that Lord Ashcroft agreed with that assessment because, although things were a bit gloomy at central office on the night of the last election, he was celebrating the fact that 25 of the 33 gains involved candidates to whom he had given money. We also know that he was planning to do the same next time, not as a freelancer outside the Conservative campaign, but as vice-chairman of the Conservative party, sitting in party headquarters and orchestrating things from there. He makes no bones about it in his book, “Dirty politics, Dirty times”—a most appropriate title.
It is vital that we should reimpose spending limits on candidates, not only at election time, but throughout the electoral cycle. The basic requirements of democracy are that it should be fought on a level playing field, that political power should be insulated from economic power and that money should not be allowed to buy power or even to try to buy it.
Money plays a part in the political process because representative democracy cannot function without parties and parties cannot survive without money. We need money to communicate with the voters, but as my hon. Friends may know, the Corrupt and Illegal Practices Prevention Act 1883 made it illegal for candidates to spend money campaigning outside the election period unless it was included in their election expenses.
Surely, none of us would want a return to the position that held before 1883, when candidates bribed voters without scruple. At the last unregulated election in 1880, one candidate made donations to 15 chapels, 17 churches, 23 cricket clubs and 150 societies in his constituency to secure re-election. A contemporary commentator calculated that the amount of money spent by candidates in that election was £2.5 million. It might not sound much now, but that sum adjusted to the retail price index would be £171 million. Indeed, set against gross domestic product—a more interesting figure—it would be £2.6 billion. In Victorian times, politicians in England were spending even more money than is now being spent in America. I do not accuse Lord Ashcroft of consciously trying to drag us back to the Victorian era, but that would be the end result if the loophole was left on the statute book.
Lord Ashcroft has tried to justify his actions in all sorts of ways. In an article entitled “Labour wants to hamstring threatening Tories”, he showed his talent for understatement by saying:
“Several Labour MPs have demanded that the Government change the law to restrict constituency campaigning between elections.”
That, I think, is a pretty universal view. He then went on to blame the communications allowance, which allows us to report back to our constituents on what we have been doing on their behalf in Parliament. The communications allowance did not start until April 2007, and Lord Ashcroft starting giving money to marginal candidates in 2004, so that justification cannot be taken seriously.
Lord Ashcroft also blames the incumbency factor—a justification, as he sees it, for correcting the inbuilt electoral advantage that Labour MPs enjoy. I asked the House of Commons Library to produce figures on the incumbency factor, but there turns out not to have been one in 2005. Those Tories who were sitting candidates did 1.3 per cent. better, but Labour and Liberal candidates who were sitting MPs did not do as well as the average. In total, there was no incumbency factor in 2005. It may come as a shock to my hon. Friends, but although we like to think that there was an incumbency factor—there may have been for us—on average, there was not; and in 2001, it was less than 1 per cent. That argument does not stand as a justification.
Although Lord Ashcroft’s blaming the communications allowance is a device, we should accord the argument some serious consideration. He said:
“Few would object to the idea of enabling MPs to stay in touch with their constituents”,
but he added:
“Inevitably, though, the effect of a glossy newsletter detailing a member’s tireless work and record of success, delivered free to every voter, will be to make it more likely that that member will be re-elected.”
I find that a rather strange argument. Surely, if a Member has been working tirelessly and comes to the electorate with a “record of success”, that should make it more likely that he is re-elected. Is that not the idea of elections? Is Ashcroft merely complaining that we work too hard and that our Government have been too successful?
Lord Ashcroft describes the parliamentary communications allowance as
“de facto state-funded campaign contributions”.
For the good of the House of Commons, we need to put that argument to bed. If it is true that all such money came from de facto campaign contributions, questions should be asked. However, we all know that, when we spend the communications allowance on producing annual reports and reporting back to the voters, we cannot mention party; we must do nothing more than give a description of what we have done. If that makes it more likely that we are re-elected, it can only be because the voters think that we are doing the right thing. I do not follow the argument that, because MPs are allowed to report back to their constituents, Conservative candidates should be able to spend unlimited amounts on campaigning between elections.
It is extremely important that we close the loophole. I look forward to an assurance from the Minister that it will be closed sooner rather than later. I cannot emphasise strongly enough that it will be no good closing it in the run-up to the election. It needs to be closed before then to prevent what we know happened in 2004 from happening in 2009 or 2010, but on a far larger scale—an unfair battle funded by Lord Ashcroft against MPs in marginal seats, using a loophole that we created.
I congratulate my hon. Friend the Member for Battersea (Martin Linton) on securing this debate. It is a crucial subject, and one in which all Members of Parliament have an interest. My hon. Friend put clearly and succinctly the arguments about the attempts by some people—he mentioned Lord Ashcroft; I shall return to him—to buy elections. I was interested in the statistics that he gave on the Victorian era. I hope that we follow neither the American system nor return to the Victorian era. Although they were brief, the contributions by my hon. Friend the Members for Pendle (Mr. Prentice) and for Broxtowe (Dr. Palmer) were important. Indeed, my hon. Friend the Member for Pendle has a private Member’s Bill on a related area. I look forward to hearing him expand on the subject in a few weeks.
My hon. Friend the Member for Battersea mentioned the communications allowance, which he said was used by Lord Ashcroft to challenge Labour MPs. The allowance is available to all MPs, regardless of party. If Lord Ashcroft thinks that sitting MPs’ use of the communications allowance somehow gives them an advantage, and if he wants to equalise the campaigning, perhaps some of his great wealth could be dispersed to Labour or Liberal candidates in Conservative seats. That might help to put to bed his rather illogical position on the allowance.
We all know that in politics mud sticks. Is it not the case that, quite rightly, the communications allowance cannot be used to attack another party or candidate? However, that does not stop Opposition candidates regularly having an unfair go at sitting MPs, who cannot respond in kind.
My hon. Friend is absolutely right. The House officials who deal with the communications allowance are very helpful and knowledgeable about the extent to which we can use it. However, he rightly made the point that candidates with no locus can say and do more or less what they want.
It is important to put on the record the fact that maintaining faith in the probity and fairness of our electoral system is a serious issue that is vital to the health of our democracy. Our democratic system should be the best that money cannot buy. I hope that that is what we are all striving for and seeking to achieve. It is one of the reasons that we set up Sir Hayden Phillips’ review of party funding, which concluded that
“the debate about the financing of our political parties is a debate about the health of our democracy and how we can improve it.”
We should not allow a debate on party funding to besmirch the role of political parties, which are important in, and a healthy part of, our democracy; we should continue to ensure that the electorate and the media are aware of that. Political parties play a vital role in our democracy and mature democracies around the world. It is important, however, that electoral expenditure is transparent. It must not distort an election or be perceived to do so, which is why ending the spending arms race is fundamental to building trust in our political system.
Some form of spending control has always been at the heart of our electoral reform. There has been a long-standing agreement in UK politics that it is right in principle to regulate candidates’ expenditure and that the aim of that regulation is to prohibit what could be considered as the buying of elections. My hon. Friend the Member for Battersea mentioned the 1883 Act, which, along with the introduction of secret ballots, helped to reform the electoral system, as he graphically illustrated.
Some 100 years later, in 1993, that measure was consolidated by the provision for the regulation of candidates’ election expenses, which set a maximum limit on expenditure for parliamentary elections. However, that did not go far enough in recognising the larger role that national political parties had come to play in our modern democracy. That became clear during the 1990s; so much so, in fact, that in 1998, the Neill Committee—the Committee on Standards in Public Life—carried out an investigation into party funding and concluded that
“parties’ belief that elections can only be won by the expenditure (mainly on advertising) of vast sums of money has given rise to something of an arms race. This in turn has put enormous pressure on party fundraisers to devise innovative ways of attracting donations. The result has been the well-publicised, very large donations to both main political parties and also the development of strategies—such as the fundraising dinner attended by senior party figures—which together give credibility to accusations that money buys access to politicians.”
We all know of examples that have arisen since then, and we still have work to do to rectify the situation. The Neill Committee commented on that arms race and I am sure that my hon. Friend and, indeed, colleagues on both sides of the House, would agree that spending on advertising is probably the least productive method of persuading the elector, as those of us know who regularly knock on doors and pick up the phone to contact them. A cap on spending, therefore, will become more and more essential.
As my hon. Friend said, we passed the Political Parties, Elections and Referendums Act 2000, which introduced a national limit on campaign expenditure, created the Electoral Commission, made funding more transparent by requiring that all donations of £5,000 nationally and £1,000 locally be made public, and outlawed foreign donations. In a sense, this comes back to a point made by my hon. Friend the Member for Pendle about whether someone who is not a taxpayer in this country, or if we are not sure that they are such a taxpayer, qualifies under the system laid down by the Act. My hon. Friends are quite right to challenge the transparency of such donations and to ask whether they fall within the current remit. Undoubtedly the Act was a positive step forward, but it has become clear that there are gaps that we need to look at. That was one of the reasons for Hayden Phillips’ review.
Lord Ashcroft has taken great delight in the fact that at the last election, 25 of the 33 candidates who won seats from Labour or Liberal Democrats received support from the fund that he set up with Leonard Steinberg and the Midlands Industrial Group. We know that a variety of such groups give money to Conservative associations. He is so proud of that that he has mentioned it in several books, including one called “Smell the Coffee”. Another inappropriate title! Clearly expenditure affects the result of an election to some extent, but nothing affects the result more than the work that we do as politicians on the ground. My hon. Friend the Member for Battersea made that point very clearly when he commented on the use of parliamentary reports to outline the work that Members do. It is important not to get this matter entirely out of proportion.
Encouragingly, there is a growing perception and consensus among members of all parties that action is needed to control party expenditure. The Constitutional Affairs Committee warned unanimously in a report in 2006 that we needed a tighter cap on overall party spending. That proposal was supported by Sir Hayden in his March 2007 report:
“PPERA sought to control the level of spending, but it has proved inadequate to the challenge”.
He went on to say:
“However robust the controls we put in place over the sources of the parties' income, the current problems of financial instability must be expected to recur unless we also do more to curb campaign spending. We should limit it through generally accepted, easily understood, and enforceable rules”.
The shadow Leader of the House at the time agreed, and said that the Conservative party supported Sir Hayden’s review. The right hon. Member for Horsham (Mr. Maude), too, supported the review, but sadly, during the summer, as the hon. Member for Somerton and Frome (Mr. Heath) pointed out, when Lord Ashcroft moved in to central office, the Conservative party took a different view and is now trying to block further attempts to achieve consensus on party funding.
I have every sympathy with the position outlined by my hon. Friend the Member for Battersea in this debate, and I hope that—
It being Two o’clock, the motion for the Adjournment of the sitting lapsed, without Question put.